<PAGE> 1
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:
[X] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted
by Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
AMERICAN PREMIER UNDERWRITERS, INC.
(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] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1),
14a-6(i)(2) or Item 22(a)(2) of Schedule 14A.
[ ] $500 per each party to the controversy pursuant to Exchange
Act Rule 14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
and 0-11.
1) Title of each class of securities to which transaction
applies:
2) Aggregate number of securities to which transaction
applies:
3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (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:
<PAGE> 2
PRELIMINARY COPY -- APRIL 14, 1995
AMERICAN PREMIER One East Fourth Street
GROUP, INC. Cincinnati, Ohio 45202
Telephone (513) 579-6600
- - - ------------------------------------------------------------------------------
Dear Shareholder:
You are cordially invited to attend the 1995 Annual Meeting of
Shareholders of American Premier Group, Inc. (as successor issuer to American
Premier Underwriters, Inc.) to be held on Tuesday, June 6, 1995, at 10:30 A.M.,
local time, at The Cincinnatian Hotel, 601 Vine Street, Cincinnati, Ohio.
Notice of our Annual Meeting and Proxy Statement are attached. Please
read them carefully.
At the meeting there will be a report to the shareholders as to the
affairs of our Company and a discussion period during which shareholders will
have an opportunity to bring up matters of interest concerning our Company.
One of the Proposals for consideration at the Annual Meeting is a
change of the Company's name to "American Financial Group, Inc.", which we
believe is more representative of the Company's principal businesses, which are
financial in nature.
Even if you plan to attend the meeting in person, we would be grateful
if you would sign and return your proxy to ensure that your shares will be
represented at the meeting if you are unable to attend. If you do find it
possible to attend the meeting and wish to vote in person, you may withdraw
your proxy at that time.
As you will note from the enclosed proxy material, the Board of
Directors recommends that you vote FOR each of the proposals set forth in the
Proxy Statement.
Sincerely,
CARL H. LINDNER
Chairman of the Board and
Chief Executive Officer
April 26, 1995
YOUR VOTE IS IMPORTANT. PLEASE DATE, SIGN AND RETURN PROMPTLY THE ENCLOSED
PROXY FORM WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING.
<PAGE> 3
AMERICAN PREMIER One East Fourth Street
GROUP, INC. Cincinnati, Ohio 45202
Telephone (513) 579-6600
- - - ------------------------------------------------------------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON JUNE 6, 1995
The 1995 Annual Meeting of Shareholders of American Premier Group, Inc.
(the "Company") will be held at The Cincinnatian Hotel, 601 Vine Street,
Cincinnati, Ohio on Tuesday, June 6, 1995, at 10:30 A.M., local time, to
consider and act upon the following proposals:
1. Election of nine directors;
2. Amendment of the Articles of Incorporation to change the Company's name to
"American Financial Group, Inc." ;
3. Approval of the Company's Stock Option Plan and certain amendments thereto;
4. Approval of the Company's Employee Stock Purchase Plan; and
5. Such other business as may properly come before the meeting.
Only shareholders of record at the close of business on April 21, 1995
are entitled to notice of and to vote at the meeting.
By Order of the Board of Directors,
Robert W. Olson
Secretary
April 26, 1995
<PAGE> 4
AMERICAN PREMIER GROUP, INC.
PROXY STATEMENT
This Proxy Statement is being furnished at the direction of the Board
of Directors of American Premier Group, Inc. (the "Company") in connection with
the solicitation of proxies in the accompanying form from the holders of the
outstanding Common Stock of the Company for use at the Annual Meeting of
Shareholders to be held on June 6, 1995, and at any adjournments thereof. The
principal executive offices of the Company are located at One East Fourth
Street, Cincinnati, Ohio 45202. It is expected that the mailing of this Proxy
Statement and the accompanying form of proxy to shareholders will commence on
or about April 26, 1995. A copy of the Company's Annual Report to Shareholders
for 1994 is enclosed with this mailing to all shareholders entitled to notice
of and to vote at the Annual Meeting.
On April 3, 1995, American Premier Underwriters, Inc. ("APU") completed
the acquisition (the "Acquisition") of all of the common stock of American
Financial Corporation ("AFC"). In connection with the Acquisition, each then
outstanding share of APU Common Stock was converted into a share of Common
Stock of American Premier Group, Inc. ("American Premier Group"), a new company
formed to hold both APU and AFC. For further information regarding the
Acquisition, see "Certain Transactions." As used herein, unless the context
otherwise indicates, the terms "Company" and "American Premier" refer to APU,
as the predecessor issuer, for the period prior to April 3, 1995, and refer to
American Premier Group, as the successor issuer, for the period after April 3,
1995.
OUTSTANDING VOTING SECURITIES OF THE COMPANY
Holders of record of the Common Stock of the Company at the close of
business on April 21, 1995 (the "Record Date") will be entitled to notice of
the Annual Meeting and to vote at the Annual Meeting and at any adjournments
thereof. At the Record Date, shares of Common Stock were issued and
outstanding. Such shares do not include 9,953,392 shares of Common Stock owned
by the Company's 83%-owned subsidiary, American Financial Enterprises, Inc.
("AFEI"), which AFEI is not entitled to vote and which are therefore not
considered to be outstanding for purposes of this Proxy Statement.
Holders of Common Stock are entitled to vote cumulatively for the
election of directors, which means that each such holder shall be entitled to
as many votes as equals the number of shares held by such holder on the Record
Date multiplied by the total number of directors to be elected at the Annual
Meeting, and may cast the whole number of such votes for any one candidate or
may distribute them among any two or more candidates. On all other matters,
holders of Common Stock are entitled to one vote per share. In order to invoke
cumulative voting, notice of cumulative voting must be given in writing by a
shareholder to the President, a Vice President or the Secretary of the Company
not less than 48 hours prior to the Annual Meeting.
ACTION TO BE TAKEN UNDER THE PROXIES
All shares represented by a properly executed proxy will, unless
previously revoked, be voted at the Annual Meeting or any adjournments thereof
in accordance with the directions on the proxy. Unless a contrary direction is
indicated, such shares will be voted in favor of Proposals 2, 3 and 4. Unless a
contrary direction is indicated, such shares will, except to the extent the
proxy holders exercise their discretion to cumulate votes, be voted in favor of
the nine persons nominated for director by the Board of Directors. If
cumulative voting is properly invoked, unless a contrary direction is
indicated, a properly executed proxy will give the proxy holders authority, in
their discretion, to cumulate all the votes represented by the proxy and
allocate them in favor of any one or more (which may be less than the entire
number) of the nominees if any situation arises which, in the opinion of the
proxy holders, makes such action necessary or desirable.
The management of the Company knows of no other matter to be presented
at the meeting upon which a vote properly may be taken, but it is intended that
as to any such other matter the proxy holders will vote in accordance with
their judgment as to the best interests of the Company. Should any nominee for
election as a director become unable to accept nomination or election, which is
not anticipated, it is intended that the proxy holders will vote for the
election in his stead of such other person as the Board of Directors may
recommend.
PROPOSAL 1
ELECTION OF DIRECTORS
NOMINEES FOR DIRECTOR
The number of directors to be elected at the 1995 Annual Meeting is
nine. The nine directors so elected will, upon such election, constitute the
entire Board of Directors.
In accordance with the Company's Code of Regulations (the
"Regulations"), the only candidates eligible for election at a meeting of
shareholders are candidates nominated by or at the direction of the Board of
Directors and candidates nominated at the meeting by a shareholder who has
complied with the procedures set forth in the Regulations. Shareholders will be
afforded a reasonable opportunity at the 1995 Annual Meeting to nominate
candidates for the office of director. However, the Regulations require that a
shareholder wishing to nominate a director candidate must have first given the
Secretary of the Company at least five and not more than thirty days prior
written notice setting forth or accompanied by (a) the name and residence of
the shareholder and of each nominee specified in the notice, (b) a
representation that the shareholder was a holder of record of the Company's
voting stock and intended to appear, in person or by proxy, at the meeting to
nominate the persons specified in the notice and (c) the consent of each such
nominee to serve as director if so elected.
<PAGE> 5
Set forth below is certain information relating to the persons who were
nominated by the Board of Directors in April 1995 for election as directors at
the 1995 Annual Meeting. The information is based on data furnished to the
Company by the respective persons named. The new term of office for which each
nominee is a candidate runs from the 1995 Annual Meeting of Shareholders until
the Annual Meeting of Shareholders to be held in 1996 and until his successor
shall have been elected and qualified.
<TABLE>
- - - -----------------------------------------------------------------------------------------------------------------------------------
<S> <C>
NOMINEES FOR ELECTION AT THE ANNUAL MEETING
--------------------------------------------
(LISTED IN ALPHABETICAL ORDER)
NAME AND AGE POSITIONS WITH THE COMPANY AND PRINCIPAL BUSINESS AFFILIATIONS DURING PAST FIVE YEARS
- - - ------------ -------------------------------------------------------------------------------------
Chairman of the Audit Committee and member of the Compensation Committee. Until his
retirement in 1986, Mr. Emmerich was managing partner of the Cincinnati office of the
independent accounting firm of Ernst & Whinney. He is also a director of Citicasters Inc.,
Carillon Fund, Inc., Carillon Investment Trust, Gradison Custodial Trust, Gradison-McDonald
Municipal Custodial Trust, Gradison-McDonald Cash Reserve Trust and Summit Investment
THEODORE H. EMMERICH 68 Trust.
Director since 1988
Senior Vice President and General Counsel. During the past five years, Mr. Evans has
been Vice President and General Counsel of AFC, a diversified financial services company.
JAMES E. EVANS Mr. Evans is also a director of American Financial Enterprises, Inc. and Citicasters Inc.
49
Director since 1985
Member of the Compensation Committee. During the past five years, Mr. Hunt has been
THOMAS M. HUNT Chairman of the Board of Hunt Petroleum Corporation, an oil and gas production company.
71
Director since 1982
Chairman of the Board and Chief Executive Officer; Chairman of the Executive Committee. Mr.
Lindner has been Chairman of the Board and Chief Executive Officer of the Company for more
than five years. During the past five years, Mr. Lindner has been Chairman of the Board
and Chief Executive Officer of AFC. He is also a director of American Annuity Group, Inc.,
American Financial Enterprises, Inc., Chiquita Brands International, Inc. and Citicasters
Inc. Mr. Lindner is the father of Carl H. Lindner III, S. Craig Lindner and Keith E.
CARL H. LINDNER Lindner.
75
Director since 1982
President; Member of the Executive Committee. Mr. Lindner has been President of the
Company since February 1992. Prior thereto, he had served as Vice Chairman of the Board of
the Company since October 1991. During the last five years, Mr. Lindner has been President
CARL H. LINDNER III of Great American Insurance Company, a property and casualty insurance company owned by AFC.
41
Director since 1991
- - - -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
-2-
<PAGE> 6
<TABLE>
- - - ------------------------------------------------------------------------------------------------------------------------------------
<S> <C>
NOMINEES FOR ELECTION AT THE ANNUAL MEETING
-------------------------------------------
(LISTED IN ALPHABETICAL ORDER)
NAME AND AGE POSITIONS WITH THE COMPANY AND PRINCIPAL BUSINESS AFFILIATIONS DURING PAST FIVE YEARS
- - - ------------ -------------------------------------------------------------------------------------
Vice Chairman of the Board; Member of the Executive Committee. During the last five years
Mr. Lindner has been President and Chief Operating Officer and a director of Chiquita
KEITH E. LINDNER Brands International, Inc.
35
Director since 1995
Vice Chairman of the Board; Member of the Executive Committee. Since March 1993, Mr. Lindner
has been President of American Annuity Group, Inc. During the past five years, Mr. Lindner
has also been Senior Executive Vice President of American Money Management Corporation, a
subsidiary of AFC which provides investment services for the Company and its affiliated
companies. Mr. Lindner is a director of American Annuity Group, Inc., Chiquita Brands
S. CRAIG LINDNER International, Inc. and Citicasters Inc.
40
Director since 1985
Chairman of the Compensation Committee; Member of the Audit Committee. During the past five
years, Mr. Martin has been Chairman of the Board (since 1993), President and Chief Executive
Officer (until 1993) and a director of MB Computing, Inc., a computer software and services
WILLIAM R. MARTIN company. Mr. Martin is also a director of American Annuity Group, Inc.
66
Director since 1994
Mr. Martinelli was President and Chief Executive Officer of the Company from 1982 until
1987. He is Chairman of the Board and Chief Executive Officer of Buckeye Management Company,
a Company subsidiary which is the sole general partner of Buckeye Partners, L.P., a limited
partnership principally engaged in pipeline transportation of refined petroleum products,
ALFRED W. MARTINELLI and is a consultant to the Company. He is also a director of American Annuity Group, Inc.
67
Director since 1982
- - - ------------------------------------------------------------------------------------------------------------------------------------
Each of the foregoing nominees for director is also a director or nominee for director of APU and AFC, which became
subsidiaries of the Company as a result of the Acquisition.
In December 1993, Great American Communications Company ("GACC") completed a comprehensive financial restructuring that
included a prepackaged plan of reorganization filed in November of that year under Chapter 11 of the Bankruptcy Code. Although not
a director or officer of GACC during 1993, Carl H. Lindner had been Chairman of the Board and Chief Executive Officer of GACC prior
to 1993 and was again elected Chairman of the Board of GACC in January 1994. GACC is now named Citicasters Inc.
</TABLE>
3
<PAGE> 7
The following table sets forth information, as of the Record Date,
concerning the beneficial ownership of equity securities of the Company and its
subsidiaries by each director and by all directors and executive officers as a
group. Such information is based on data furnished by the persons named. Except
as set forth in the following table, no director or officer owned beneficially,
as of the Record Date, more than 1% of any class of any equity security of the
Company outstanding at that date or any equity securities of any of the
Company's subsidiaries.
<TABLE>
<CAPTION>
- - - -------------------------------------------------------------------------------
AMOUNT AND NATURE OF
BENEFICIAL OWNERSHIP (a)(b)
------------------------------------------
COMMON STOCK
----------------------------
OBTAINABLE ON
PREFERRED EXERCISE OF
STOCK (c) HELD (d) OPTIONS (i)
---------- ---------- --------------
<S> <C> <C> <C>
Theodore H. Emmerich.............. -- 400 11,819
James E. Evans.................... -- 25,000 11,819
Thomas M. Hunt.................... -- 3,000 11,819
Carl H. Lindner................... -- 11,122,627(e) 652,722
Carl H. Lindner III............... -- 4,654,013(f) 327,270
Keith E. Lindner.................. -- 4,653,131(g) --
S. Craig Lindner.................. -- 4,653,130(h) 11,819
William R. Martin................. -- -- 5,000
Alfred W. Martinelli.............. 212,698 -- 458,618
All directors and executive
officers as a group 212,698 25,197,570 2,069,643
- - - -------------------------------------------------------------------------------
<FN>
(a) Unless otherwise indicated, the persons named have sole voting and
investment power over the shares reported.
(b) Does not include the following ownership interests in subsidiaries of the
Company: Messrs. Emmerich, Evans, Hunt and all directors and executive
officers as a group beneficially own 500, 17,500, 347 and 28,740 shares,
respectively, of the common stock of American Annuity Group, Inc.; Mr.
Evans and all directors and executive officers as a group beneficially
own 116,000 and 279,360 shares, respectively, of the common stock of
American Financial Enterprises, Inc.; and Mr. Martin and all directors
and executive officers as a group beneficially own 37,033 and 53,599 shares,
respectively, of the preferred stock of American Financial Corporation.
(c) The shares listed for Mr. Martinelli, and for all directors and officers
as a group, constituted all of the shares of Preferred Stock outstanding
at the Record Date.
(d) The shares set forth for Messrs. C.H. Lindner, C.H. Lindner III,
K.E. Lindner and S.C. Lindner and all directors and officers as a group
constituted 21.7%, 9.1%, 9.1%, 9.1% and 49.1%, respectively, of the Common
Stock outstanding at the Record Date. For information as to the
percentages of outstanding shares beneficially owned (within the meaning
of Rule 13d-3 under the Securities Exchange Act of 1934) by such Lindner
family members, see "Principal Shareholders."
(e) Includes 974,385 shares held by his spouse and 153 shares held in his
account under the Company's Savings Plan, over which shares he has
investment power but not the power to vote.
(f) Includes 17,941 shares held by a trust over which his spouse has voting
and investment power and 581,710 shares which are held in various trusts
for the benefit of his minor children for which Keith E. Lindner acts as
trustee with voting and investment power. Also includes 884 shares held in
his account under the Company's Savings Plan, over which account shares he
has investment power but not the power to vote.
(g) This number excludes 1,357,424 shares (described in footnotes (f) and
(h)), which are held in various trusts for the benefit of the minor
children of his brothers, Carl H. Lindner III and S. Craig Lindner, over
which Keith E. Lindner has sole voting and investment power but no
pecuniary interest.
(h) Includes 60,539 shares held by his spouse as custodian for their minor
children or in a trust over which his spouse has voting and investment
power and 775,714 shares which are held in various trusts for the benefit
of their minor children for which Keith E. Lindner acts as trustee with
voting and investment power.
(i) Consists of (i) shares of Common Stock purchasable through exercise of
the vested portion of stock options granted under the Company's Stock
Option Plan and (ii) 446,799 shares of Common Stock obtainable by
Mr. Martinelli, and by all directors and executive officers as a group,
through conversion of Preferred Stock held by him.
</TABLE>
4
<PAGE> 8
COMMITTEES AND MEETINGS OF THE BOARD OF DIRECTORS
The Company's Board of Directors held nine meetings in 1994. The Company's
Board of Directors has three committees: Executive Committee, Audit Committee
and Compensation Committee.
Executive Committee: The Executive Committee consists of four directors:
Carl H. Lindner (Chairman), Carl H. Lindner III, S. Craig Lindner and Keith E.
Lindner. The Committee's functions include: analyzing the future development of
the business affairs and operations of the Company, including further expansion
of businesses in which the Company is engaged and acquisitions and dispositions
of businesses. With certain exceptions, the Executive Committee is generally
authorized to exercise the powers of the Board of Directors between meetings of
the Board of Directors. The Executive Committee met once in 1994.
Audit Committee. The Audit Committee consists of two directors: Theodore
H. Emmerich (Chairman), and William R. Martin. Neither is an officer or employee
of the Company or any of its subsidiaries. The Committee's functions include:
recommending to the Board of Directors the engagement of independent accounting
firms to audit the financial statements of the Company and its subsidiaries and
to provide other audit-related services and recommending the terms of such
firms' engagements; reviewing the engagement of independent accounting firms to
provide non-audit services, including the terms of their engagements; reviewing
the adequacy and implementation of the Company's internal audit function;
reviewing the policies, procedures and principles of the management of the
Company for purposes of conformity to the standards required by the Foreign
Corrupt Practices Act; establishing procedures designed to provide and encourage
timely access to the Committee by the independent accounting firms engaged by
the Company, its internal audit department and its principal financial officers;
and conducting such investigations relating to the Company's financial affairs
as the Committee or the Board of Directors deems desirable. The Committee's
functions also include: supervising, reviewing and reporting to the Board of
Directors on the performance of management committees of the Company responsible
for the administration, and the management of the investments, of the pension
and savings plans of the Company and its subsidiaries. The Audit Committee met
five times in 1994.
Compensation Committee. The Compensation Committee consists of three
directors: William R. Martin (Chairman), Theodore H. Emmerich and Thomas M.
Hunt. The functions of the Compensation Committee are disclosed under
"Compensation - Compensation Committee Reports". The Compensation Committee met
five times in 1994.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR THE
ELECTION OF THE NINE NOMINEES AS DIRECTORS.
EXECUTIVE OFFICERS
On April 7, 1995, the persons named below were elected as the executive
officers of the Company to serve in the capacities indicated at the pleasure of
the Company's Board of Directors.
Carl H. Lindner Chairman and Chief Executive Officer
Carl H. Lindner III President
S. Craig Lindner Vice Chairman of the Board
Keith E. Lindner Vice Chairman of the Board
James E. Evans Senior Vice President and General Counsel
Neil M. Hahl Senior Vice President
Thomas E. Mischell Senior Vice President--Taxes
Robert W. Olson Senior Vice President and Secretary
Fred J. Runk Senior Vice President and Treasurer
Information regarding Messrs. C.H. Lindner, C.H. Lindner III, K.E.
Lindner, S.C. Lindner and Evans is set forth above under "Nominees for
Director."
For more than the last five years, Mr. Hahl has been Senior Vice
President of APU, Mr. Mischell has been a Vice President of AFC, Mr. Olson has
been Senior Vice President, General Counsel and Secretary of APU and Mr. Runk
has been Vice President and Treasurer of AFC.
The Board of Directors, on the recommendation of the Compensation
Committee, has fixed the following annual salaries for each of the four members
of the Lindner family listed above:
Carl H. Lindner $900,000
Carl H. Lindner 900,000
S. Craig Lindner 900,000
Keith E. Lindner 900,000
5
<PAGE> 9
In each case, payments of the above salaries will be reduced by the amount of
any salary or director fee payments received from affiliates of the Company,
including American Annuity Group, Inc. and Chiquita Brands International, Inc.
Such salaries are, in the aggregate, approximately $3,400,000 less than such
Lindner family members were receiving prior to the Acquisition. The
Compensation Committee will in the near future develop an annual bonus system
for such Lindner family members that will make a substantial portion of their
total compensation dependent on the Company's future performance, including
achievement of pre-established earnings per share targets. Such bonuses would
likewise be reduced by the amount of any annual bonus payments received from
affiliates of the Company. Overall, the annual cash compensation of such
Lindner family members from the Company and its affiliates is expected to be
substantially less than they received prior to the Acquisition when AFC
was privately owned.
COMPENSATION
Summary of Compensation
The following table summarizes the compensation of the Company's Chief
Executive Officer and its four other most highly compensated executive officers
for 1994 (such five executive officers being herein called the "Named Executive
Officers").
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
- - - ------------------------------------------------------------------------------------------------------------------------------
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
----------------------------------------------------------------------- ALL OTHER
OTHER ANNUAL SECURITIES UNDERLYING COMPENSA-
NAME AND PRINCIPAL POSITION YEAR SALARY ($) BONUS ($) COMPENSATION OPTIONS GRANTED (2) TION (3)
(1) ($) (# OF SHARES) ($)
- - - ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
CARL H. LINDNER 1994 $ 981,250 $ 800,000 - - $49,063
Chairman of the Board and 1993 893,750 1,000,000 - 50,000 99,712
Chief Executive Officer 1992 787,568 400,000 - 150,000 65,837
- - - ------------------------------------------------------------------------------------------------------------------------------
CARL H. LINDNER III 1994 1,010,897 800,000 - - 50,538
President and 1993 879,167 1,000,000 - 105,000 97,201
Chief Operating Officer 1992 598,361 325,000 - 561,360 42,662
- - - ------------------------------------------------------------------------------------------------------------------------------
1994 572,897 360,000 - - 37,883
NEIL M. HAHL 1993 542,372 450,000 - 25,000 62,667
Senior Vice President 1992 502,077 249,750 - 103,570 50,952
- - - ------------------------------------------------------------------------------------------------------------------------------
ROBERT W. OLSON 1994 482,431 280,000 - - 33,368
Senior Vice President, 1993 456,619 350,000 $10,633 20,000 51,962
General Counsel and Secretary 1992 422,681 183,750 - 93,310 43,264
- - - ------------------------------------------------------------------------------------------------------------------------------
MICHAEL D. KRAUSE (4) 1994 431,250 160,000 - 131,364 27,050
President of the Non-Standard
Automobile Insurance Group
- - - ------------------------------------------------------------------------------------------------------------------------------
< FN>
(1) Paid in 1993 pursuant to a 1983 agreement obliging the Company to pay Mr. Olson an amount related to the taxes paid by him as
a result of his exercise in 1992 of an employee stock option granted to him in 1982.
(2) Represents grants of options to purchase Company Common Stock, except that 1992 includes grants of options to Messrs. Lindner,
Lindner III, Hahl and Olson to purchase 150,000, 125,000, 81,752 and 71,492 shares, respectively, of the common stock of
General Cable Corporation. All of such General Cable options expired unexercised during 1994.
(3) Consists of Company or subsidiary contributions under the defined contribution retirement plans (the "Retirement Plans") and
Company matching contributions under the employee savings plan (the "Savings Plan") in which the Named Executive Officers
participate (and related accruals for their benefit under the Company's benefit equalization plan (the "Equalization Plan"),
which generally makes up certain reductions caused by Internal Revenue Code limitations in the Company's contributions to the
Retirement Plans and the Savings Plan), as follows:
</TABLE>
6
<PAGE> 10
<TABLE>
<CAPTION>
Name Year Retirement Plan Savings Plan
- - - ---- ---- --------------- ------------
<S> <C> <C> <C>
Carl H. Lindner 1994 $49,063 -
1993 99,712 -
1992 65,837 -
Carl H. Lindner III 1994 50,538 -
1993 97,201 -
1992 42,662 -
Neil M. Hahl 1994 28,643 $ 9,240
1993 53,673 8,994
1992 42,224 8,728
Robert W. Olson 1994 24,128 9,240
1993 42,968 8,994
1992 34,536 8,728
Michael D. Krause 1994 27,050 -
</TABLE>
(4) Mr. Krause was first deemed an executive officer of the Company
during 1994 by reason of the nature of his responsibilities as an officer
of subsidiaries of the Company. Accordingly, information for years prior
to 1994 is not presented.
Messrs. Hahl and Olson each have arrangements entered into in 1987
providing that if such person's employment were involuntarily terminated without
cause at any time prior to age 65, he would receive from the Company a severance
payment equal to his then current annual salary plus his then current target
bonus opportunity under the AIC Plan (as hereafter defined), and would be
entitled to full vesting of all Company stock options held by him (which would
be exercisable for up to two years after such termination), full vesting of his
accrued benefit under all employer-sponsored savings and retirement plans and
continued participation for up to one year in all employer-provided group
insurance plans.
Stock Options.
The tables set forth below disclose stock options granted to, or exercised
by, the Named Executive Officers during 1994, as well as the number and value
of unexercised options held by them at December 31, 1994.
<TABLE>
<CAPTION>
OPTION GRANTS IN 1994
- - - ------------------------------------------------------------------------------------------------------------------------
INDIVIDUAL GRANTS POTENTIAL REALIZABLE
- - - --------------------------------------------------------------------------------------- VALUE AT ASSUMED ANNUAL RATES
NUMBER OF OF STOCK PRICE
NAME SECURITIES PERCENT OF APPRECIATION FOR OPTION
UNDERLYING TOTAL OPTIONS TERM (4)
OPTIONS GRANTED GRANTED TO EXERCISE --------------------------------
(1) EMPLOYEES PRICE (2) EXPIRATION 5% ($) 10% ($)
(# OF SHARES) IN 1994 ($/SHARE) DATE (3)
- - - ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
CARL H. LINDNER - - - - - -
- - - ------------------------------------------------------------------------------------------------------------------------
CARL H. LINDNER III - - - - - -
- - - ------------------------------------------------------------------------------------------------------------------------
NEIL M. HAHL - - - - - -
- - - ------------------------------------------------------------------------------------------------------------------------
ROBERT W. OLSON - - - - - -
- - - ------------------------------------------------------------------------------------------------------------------------
MICHAEL D. KRAUSE 31,364 14.0% $26.00 5/12/2004 $ 512,841 $1,299,640
100,000 44.6 26.69 10/13/2004 1,678,520 4,253,699
- - - ------------------------------------------------------------------------------------------------------------------------
</TABLE>
[FN]
(1) The options were granted under the Company's Stock Option Plan (the "Stock
Option Plan") and cover Company Common Stock. They vest (become
exercisable) to the extent of 20% per year, beginning one year from the
respective dates of grant, and become fully exercisable in the event of
death, disability or retirement or in the event of involuntary termination
of employment without cause within one year after a change of control of
the Company. Pursuant to the terms of the Acquisition, each option
outstanding under the Stock Option Plan was automatically converted from
an option to purchase shares of APU Common Stock into an option to
purchase an equivalent number of shares of American Premier Group Common
Stock on the same terms and conditions, including exercise price per
share, that pertained to the APU option.
7
<PAGE> 11
(2) Represents the fair market value of Company Common Stock on the date of
grant.
(3) Subject to earlier termination in case of termination of employment.
(4) Represents the hypothetical future values that would be realizable if all
of the options were exercised immediately prior to their expiration in 2004
and the market price of Company Common Stock had appreciated in value at the
annual rate of 5% (to $42.35 per share for the 5/12/94 grant and $43.48
per share for the 10/13/94 grant) or 10% (to $67.44 per share for the
5/12/94 grant and $69.23 per share for the 10/13/94 grant) in 2004. Such
hypothetical future values have not been discounted to their respective
present values, which are lower.
<TABLE>
<CAPTION>
AGGREGATED OPTION EXERCISES IN 1994 AND 1994 YEAR-END OPTION VALUES
- - - ---------------------------------------------------------------------------------------------------------------------
Number of Securities Value of Unexercised
Underlying Unexercised in-the-Money Options at
Name Shares Options at December 31, 1994 December 31, 1994 (1)
Acquired on Value (# of Shares) ($)
Exercise Realized ---------------------------------------------------------------
(# of Shares) ($) Exercisable Unexercisable Exercisable Unexercisable
- - - ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
CARL H. LINDNER _ _ 620,904 83,636 $3,143,743 $291,698
- - - ---------------------------------------------------------------------------------------------------------------------
CARL H. LINDNER III _ _ 260,998 389,452 458,326 569,869
- - - ---------------------------------------------------------------------------------------------------------------------
NEIL M. HAHL 18,809 $64,729 283,247 57,091 1,229,895 167,284
- - - ---------------------------------------------------------------------------------------------------------------------
ROBERT W. OLSON 6,897 23,735 255,966 50,909 1,080,513 148,437
- - - ---------------------------------------------------------------------------------------------------------------------
MICHAEL D. KRAUSE _ _ 31,181 168,819 175,015 116,683
- - - ---------------------------------------------------------------------------------------------------------------------
</TABLE>
[FN]
(1) Based on the closing price of American Premier Common Stock on the New York
Stock Exchange at December 30, 1994 of $25.88 per share.
The Company's Stock Option Loan Program permits officers, employees and
directors who are participants in the Stock Option Plan to borrow from the
Company up to 95% of the purchase price for the Company shares acquired upon
exercise of an option (plus any applicable withholding taxes payable upon
exercise). Under the terms of such Program, the interest rate on such loans is
the applicable federal rate for loans compounded semiannually in effect under
Section 7872 of the Internal Revenue Code as of the date of the loan. Since
January 1, 1994, loans under this Program have been outstanding to the following
executive officers of the Company as follows:
<TABLE>
<CAPTION>
NAME LARGEST AMOUNT OUTSTANDING AMOUNT OUTSTANDING ANNUAL
SINCE JANUARY 1, 1994 AT RECORD DATE INTEREST RATE
- - - ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Neil M. Hahl $ 123,269 $ 123,269 3.98%
161,099 161,009 3.65
197,006 197,006 6.55
189,992 189,992 7.55
- - - ----------------------------------------------------------------------------------------------------------
Robert W. Olson 120,802 0 7.06
107,221 107,221 3.98
214,770 214,770 3.65
147,722 147,722 6.55
- - - ----------------------------------------------------------------------------------------------------------
</TABLE>
8
<PAGE> 12
In addition, since January 1, 1994, the Company has held notes aggregating
$8,906,236 bearing interest at 9% per annum that were delivered by Mr.
Martinelli, a director of the Company, during previous years when he was an
executive officer of the Company in payment of 95% of the purchase price for
convertible Preference Stock of APU issued to him under the Company's
now-terminated Career Share Purchase Plan. In connection with the Acquisition,
all of the Preference Stock of APU was automatically converted into Preferred
Stock of American Premier Group having the same terms and conditions that
pertained to the APU Preference Stock. All of the foregoing loans and notes are
secured by a pledge of the stock purchased in connection therewith.
AFC holds an $85,000 unsecured note due 1996 bearing interest at 7% per
annum delivered by James E. Evans, Senior Vice President and General Counsel of
the Company, on April 7, 1995, in connection with the sale to him of certain
investment securities in 1991.
Defined Benefit Retirement Plan.
The APU Retirement Income Guarantee Plan (the "RIGP") covers those
employees who were participants in APU's former defined benefit retirement plan
when it was terminated in 1985 and replaced with the defined contribution
Retirement Plan. The RIGP is generally designed to provide such employees with
an additional retirement benefit to the extent that their benefits under the
replacement Retirement Plan are less than they would have received if the
terminated retirement plan had continued.
Estimated annual benefits under the RIGP (and related accruals under the
Equalization Plan, which generally makes up certain reductions in such benefits
caused by Internal Revenue Code limitations) payable to participants at the
normal retirement age of 65, are illustrated in the table below.
<TABLE>
<CAPTION>
PENSION PLAN TABLE
- - - ------------------------------------------------------------------------------
YEARS OF SERVICE
--------------------------------------------------------
REMUNERATION 15 20 25 30 35
------------ ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
$ 700,000 206,800 275,700 309,600 343,500 377,800
800,000 236,800 315,700 354,600 393,500 432,800
900,000 266,800 355,700 399,600 443,500 487,800
1,000,000 296,800 395,700 444,600 493,500 542,400
1,100,000 326,800 435,700 489,600 543,500 597,400
- - - ------------------------------------------------------------------------------
</TABLE>
The estimated benefit amounts set forth above are based on a percentage
of the highest average compensation (defined as base salary plus annual bonus
amounts) during any five years of employment preceding retirement and are
calculated under the single life annuity form of pension. In accordance with the
RIGP's provisions, the above figures have been reduced by the percentage equal
to 1.5% for each year of service of the estimated maximum annual benefits
payable under the Social Security Act in respect of each category. The amounts
shown in the table would be further reduced by the accrued benefit under the
former retirement plan when it was terminated, as well as by the aggregate
amount of APU contributions under the Retirement Plan and related Equalization
Plan accruals (plus or minus net investment gains or losses thereon).
Messrs. Hahl and Olson have 12 and 15 full credited years of service
with APU, respectively, under the RIGP (and the Equalization Plan). The other
Named Executive Officers do not participate in the RIGP. For purposes of the
above table, compensation includes base salary plus annual cash bonuses (as
reflected in the Summary Compensation Table set forth above), but does not
include extraordinary cash bonuses, deferred awards, other forms of deferred
compensation or severance pay.
Compensation Committee Report for 1994
Set forth below is the report of the Compensation Committee of the
Company's Board of Directors with respect to executive officer compensation for
1994.
9
<PAGE> 13
REPORT OF THE COMPENSATION COMMITTEE
The Compensation Committee of the Board of Directors consists of three
directors, none of whom is an employee of the Company or any of its
subsidiaries. The Committee's functions include reviewing, and making
recommendations to the Board of Directors with respect to, the compensation of
the Company's "senior" executive officers, as defined from time to time by the
Board. For 1994, the term "senior" executive officers included the Chairman of
the Board and Chief Executive Officer (the "CEO"), the President and Chief
Operating Officer (the "COO") and each other executive officer whose annual base
salary exceeded $350,000. During 1994, the Board generally delegated to the CEO
the authority to approve the compensation of executive officers other than
"senior" executive officers. However, the Compensation Committee has the
exclusive authority to grant stock options under the Company's Stock Option Plan
to employees of the Company and its subsidiaries, including executive officers.
A. COMPENSATION OF EXECUTIVE OFFICERS.
The Company's compensation system for executive officers of the Company
has three principal components: annual base salary, annual incentive bonuses and
stock option grants. For the Named Executive Officer who was deemed an executive
officer during 1994 by reason of the nature of his responsibilities as an
officer of Company subsidiaries (the "Subsidiary Officer"), the compensation
system includes a fourth component -- long-term incentive compensation ("LTIC").
Under this system, a significant portion of an executive's compensation, in both
the short-term and the long-term, is linked to the Company's performance.
Before making decisions regarding salaries, bonuses, option grants and
LTIC awards for "senior" executives, the Committee's practice is first to
informally discuss such matters with the CEO and the COO and then to solicit
their formal recommendations based on such discussions. After the Committee has
acted on such matters, its practice is to present its recommendations to the
full Board for its approval (except in the case of stock option grants, which
are not subject to Board approval). The compensation decisions discussed in this
report accorded with recommendations made by the CEO, the COO and the Committee.
Annual Bonuses. Annual bonuses for all executive officers other than the
CEO and the COO are determined under the Company's Annual Incentive
Compensation plans (the "AIC plans"). Under the AIC plans, cash bonuses may be
granted to key employees (including executive officers) for performance during a
calendar year (a "Bonus Year"). A bonus base amount for each AIC plan
participant is established (by the Committee in the case of "senior" executive
officers) at the beginning of a Bonus Year based on a subjective determination
of what would be appropriate in each instance. Bonus bases are generally set at
higher percentages of annual base salaries for "senior" executive officers than
for other participants, reflecting the Committee's belief that as an executive's
level of responsibilities increases, so should the portion of such executive's
total compensation opportunity that is performance-based and therefore "at
risk." The AIC plan bonus that is ultimately awarded may range from 0% to 200%
(or in certain cases a lower maximum percentage) of the bonus base. For 1994,
bonus bases for "senior" executive officers participating in the AIC plans
ranged from 37% to 100% of annual base salary.
The CEO and the COO did not participate in the AIC plans in 1994, but
were eligible for such annual bonuses as the Board, based on the Committee's
recommendation, approves. As was the case in previous years, bonus bases were
not established for 1994 for either the CEO or the COO because the Committee
believed that the determination of the annual bonus for the Company's top two
officers should not be constrained by reference to a fixed amount.
The annual bonuses awarded to "senior" executive officers (including the
CEO and the COO) for the 1994 Bonus Year were approved by the Committee and the
Board in February 1995. The bonuses for the "senior" executive officers other
than the CEO and the COO were awarded under the AIC plans and ranged from 40% to
160% of their bonus base amounts.
The bonuses awarded to "senior" executive officers for 1994 (which are
disclosed in the Summary Compensation Table included in this Proxy Statement)
were, except in the case of the Subsidiary Officer, based on assessments of both
Company performance and individual performance during 1994. As explained below
under the discussion of the CEO's compensation, after reviewing a number of
objective and subjective factors, the Committee made a qualitative judgment that
although the Company's performance and accomplishments in 1994 did not reach the
Company's particularly superior levels attained in 1993, they were still
outstanding. The Committee also reviewed with the CEO and COO the individual
contributions that each such "senior" executive officer, including the CEO and
the COO, made to such performance and accomplishments, focusing particularly
10
<PAGE> 14
on the two categories of achievement discussed below under the discussion of the
CEO's compensation. The Committee concluded that each of such "senior"
executive officers made very substantial contributions to such achievements and
therefore approved bonuses that were lower than those awarded for 1993 but still
higher than for 1992. In so doing, the Committee did not specifically relate any
measure of performance or any accomplishment to the level of bonuses awarded.
Nor did the Committee assign relative weight to any specific performance factor.
Rather, the Committee members made the subjective determination that the bonuses
awarded were appropriate in view of their qualitative judgment that 1994
represented an outstanding year of achievement for the Company that was in large
part attributable to the talents and efforts of its "senior" executives.
The bonus awarded to the Subsidiary Officer for 1994 was determined in
accordance with an objective formula established by the COO at the beginning of
the year (prior to the Board's determination in 1994 that he should be deemed an
executive officer of the Company). The factors used in this formula were based
on the 1994 financial results of the Non-Standard Automobile Insurance Group
companies.
In 1993, Congress enacted a $1 million ceiling on tax-deductible
remuneration paid after January 1, 1994 to the five most highly compensated
executive officers of a publicly held corporation. The limitation does not apply
to remuneration payable solely on account of the attainment of one or more
performance goals approved by a compensation committee of outside directors and
by shareholders.
As indicated above, the Committee's practice with respect to annual
bonuses is performance-based. However, the Committee does not adhere to
pre-established performance goals in determining annual bonuses because it
believes that shareholder interests are best served when outside directors on a
compensation committee apply their considered business judgment to qualitatively
evaluate senior management's performance and accomplishments at the end of a
given year and to make compensation decisions based on such evaluations. By
using this latter approach, the Committee believes that it retains the
flexibility needed to make the compensation decisions it deems best for the
Company without feeling obligated to award inordinately high or inordinately low
bonuses that might otherwise be called for by a pre-established formula or
system that may not have properly accommodated unanticipated or unusual
developments.
Because the Company's existing system for determining the bonuses of its
executive officers does not rely on pre-established performance goals,
compensation to the Company's "senior" executive officers that exceeds $1
million will not be tax-deductible. For the reasons set forth above, the
Committee believes it is not appropriate to change the Company's annual bonus
system in order to preserve the full tax deductibility of such compensation. The
Board concurs in this belief. In this regard, it should be noted that, because
of its substantial net operating loss carryovers, the Company's requirement to
pay federal income taxes is substantially eliminated through 1996.
Stock Option Grants. Stock options represent an important part of the
Company's performance-based compensation system. The Committee believes that
Company shareholders' interests are well served by aligning the Company's
"senior" executives' interests with those of its shareholders through the grant
of stock options. Options under the Company's Stock Option Plan are granted at
exercise prices equal to the fair market value of Company Common Stock on the
date of grant and vest (become exercisable) at the rate of 20% per year. The
Committee believes that these features provide an optionee with substantial
incentives to maximize the Company's long-term success. The stock option tables
included in this Proxy Statement, including the table disclosing options granted
in 1994, reflect the Committee's policy of granting options to executive
officers that are commensurate, in the Committee's subjective judgment, with
their respective positions and ability to positively impact the Company's
performance. In deciding the sizes of the stock option grants to executive
officers in 1994, the Committee took into account the sizes and dates of
previous option grants to such executive officers.
The Committee intends to take the steps necessary to preserve the tax
deductibility of executive officer compensation arising from the exercise of
stock options that would otherwise be lost by application of the recently
enacted ceiling on such deductibility discussed above.
Annual Base Salaries. The Committee's policy is to approve annual base
salaries and salary increases for "senior" executive officers that are
appropriate, in the Committee's subjective judgment, for their respective
positions and levels of responsibilities. In February 1994, the Committee
approved increases in the Named Executive Officers' salaries, as reflected in
the Summary Compensation Table included in this Proxy
11
<PAGE> 15
Statement. The Summary Compensation Table also reflects an additional salary
increase approved by the Board of Directors for the Subsidiary Officer in
connection with his promotion in October 1994.
LTIC Awards. The Subsidiary Officer holds units granted to him under
LTIC plans in years prior to 1994 which entitle him to receive cash payments if
certain financial performance criteria related to certain Non-Standard
Automobile Insurance Group companies are met over a multi-year period. No units
were granted to him in 1994.
B. COMPENSATION OF THE CEO.
The annual bonus awarded for 1994 to the CEO (which is disclosed in the
Summary Compensation Table included in this Proxy Statement) was determined on
the basis described above under "Compensation of Executive Officers' -- Annual
Bonuses". More specifically, the Committee evaluated the Company's achievements,
both financial and non-financial, for the year and the CEO's contributions to
those achievements. The Committee concluded that although the Company's
performance in 1994 did not quite measure up to the truly exceptional results
produced in 1993, 1994 was nonetheless an outstanding year for the Company. In
reaching this conclusion, the Committee considered the following: First, the
Company achieved superior financial results in 1994. Excluding realized capital
gains and losses and adjustments in the Company's net deferred tax asset, income
from continuing operations rose to $1.55 per share, an 11% increase over 1993.
These results included a 10% growth in operating income from the Company's
insurance operations, excluding realized capital gains. In 1994, as in prior
years, the Company's insurance operations were able to grow and still maintain
underwriting profitability, reporting 19% growth over 1993's net written
premiums and a 97.0% combined ratio. Second, the Company completed important
final steps in its strategic objective of divesting its non-insurance assets,
including in particular the sale in 1994 of the Company's last major
non-insurance asset, consisting of notes and stock issued by General Cable
Corporation, for $176.7 million as part of the acquisition of all of General
Cable's stock by Wassall PLC. Although this sale resulted in a one-time capital
loss of $75.8 million, it was considered beneficial to the Company because it
removed from the balance sheet, at a fair price and in a single transaction, an
asset that may have been of concern to the Company's current and potential
shareholders. The Committee concluded that the CEO's leadership contributed
substantially to these accomplishments and made the qualitative judgment that
the size of bonus awarded to the CEO for 1994 was warranted.
The CEO's annual base salary was increased by 8.1% - from $925,000 to
$1,000,000 - in February 1994 by approval of the Committee and the Board. The
Committee concluded at that time that such salary increase were appropriate
based on its assessment of the CEO's level of responsibilities and in view of
his particularly outstanding performance in 1993 and his potential to maintain
or improve on that performance in future years.
In approving the 1994 compensation for Mr. Lindner as CEO, the Committee
and the Board took into consideration the fact that he had significant
responsibilities during 1994 as an executive officer of other enterprises. Mr.
Lindner was Chairman and Chief Executive Officer of AFC, which owned 40.5% of
the Company's outstanding Common Stock during 1994 and is now a subsidiary of
the Company as a result of the Acquisition, and has held similar positions in
certain corporations in which AFC has substantial equity interests. Although Mr.
Lindner devoted time to matters relating to other enterprises, the Committee
believes that his overall compensation from the Company for 1994 was appropriate
and reasonable. This judgment is based on the Committee's conclusions that Mr.
Lindner fully and effectively discharged the responsibilities of his position
with the Company to the Company's substantial benefit.
Members of the Compensation Committee: William R. Martin (Chairman)
Thomas H. Hunt
Alfred W. Martinelli
12
<PAGE> 16
Compensation Committee Interlocks and Insider Participation
Alfred W. Martinelli, a member of the Compensation Committee of the
Company's Board of Directors during 1994, was also during 1994 the Chairman of
the Board and Chief Executive Officer (but not an employee) of Buckeye
Management Company ("Buckeye"), a Company subsidiary which is the sole general
partner of Buckeye Partners, L.P., a publicly-traded limited partnership
principally engaged in pipeline transportation of refined petroleum products.
Mr. Martinelli was President and Chief Executive Officer of the Company from
1982 to 1987. The Company loans outstanding to Mr. Martinelli during 1994 are
described above under "Stock Options".
Neil M. Hahl, Senior Vice President and a director of the Company, was
also during 1994 President and a director of Buckeye.
Performance Graph
The following graph compares the yearly percentage change in the
cumulative total shareholder return on the Company Common Stock with the
cumulative total return of the Standard and Poor's ("S&P") 500 Stock Index and
the S&P Property-Casualty Insurance Index from the end of 1989 to the end of
1994.
<TABLE>
[The Performance Graph assumes that $100 is invested on December 31,
1989 in American Premier Common Stock, the S&P 500 Stock Index and the S&P
Property-Casualty Insurance Index, including reinvestment of dividends, and
graphically shows the performance of such respective investments for the five
year period ended December 31, 1994, including the following data points:]
PERFORMANCE GRAPH
<CAPTION>
1989 1990 1991 1992 1993 1994
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
American Premier
Common Stock 100.00 74.03 100.14 106.81 142.92 118.31
S&P 500 Stock
Index 100.00 96.89 126.42 136.05 149.76 151.74
S&P Property-
Casualty
Insurance Index 100.00 97.71 122.33 143.26 140.73 147.62
</TABLE>
Directors
The fee schedule for the Company directors, paid only to directors who
are not officers or employees of the Company, is as follows: annual fee,
$37,000; attendance fee for each Board of Directors meeting, $1,250; annual
committee fee, $7,000; attendance fee for each committee meeting, $1,000; and
annual committee chairmanship fee for the Audit Committee, $10,000, and the
Compensation Committee, $10,000. In addition, directors not also officers or
employees of the Company are compensated $1,500 per day and reimbursed for
related out-of-pocket expenses for special services requested of them by the
Chief Executive Officer beyond the normal responsibilities of a member of the
Board of Directors or of a Board committee.
The Board of Directors has a program under which a retiring Company
director (other than an officer or employee of the Company or any of its
subsidiaries) will, if he has met certain eligibility requirements, receive upon
his retirement (in a lump sum or, at his election, in deferred payments) an
amount equal to five times the then current annual director's fee. For purposes
of this program, retirement means resignation as a Company director or not being
nominated for reelection by shareholders as a Company director. To be eligible
for the retirement benefit, a person must have served as a Company director for
at least four years while not an officer or employee of the Company or any of
its subsidiaries. In addition, a Company director will not become eligible for
the retirement benefit until he reaches age 55. A director who receives a
retirement benefit must agree to provide consulting services to the Company on
request for five years following his retirement without further compensation
(except reimbursement for expenses). Under the program, a death
13
<PAGE> 17
benefit equal to the retirement benefit will be paid (in lieu of any retirement
benefit under the program) to the designated beneficiary or legal
representative of any person who dies while serving as a Company director,
whether or not he was eligible for a retirement benefit when he died. This
death benefit will not be available to a director who at any time during the
two years immediately preceding his death was an officer or employee of the
Company or any of its subsidiaries.
In addition to providing for the grant of stock options to key
employees, the Stock Option Plan provides for automatic grants of options to
each non-employee director of the Company. During 1994, each non-employee
director (other than Mr. Martin) was granted an option under the foregoing
provisions of the Stock Option Plan to purchase 1,000 shares at an exercise
price of $27.94 per share on June 1, 1994 and, on September 15, 1994, as a new
director, Mr. Martin was granted an option to purchase 5,000 shares under the
Stock Option Plan at an exercise price of $26.44 per share, the exercise price
in each case being the fair market value of Company Common Stock on the date of
grant.
In addition, for their services on special committees which during the
first half of 1994 considered and made recommendations to the full Board
regarding the proposed purchase (ultimately abandoned) of AFC's personal lines
insurance businesses and regarding the sale of the Company's notes and stock of
General Cable Corporation, Messrs. Martinelli, Emmerich and Hunt each were paid
a total of $27,500. See "Certain Transactions".
CERTAIN TRANSACTIONS
On April 3, 1995, APU completed the acquisition (the "Acquisition") of
all of the common stock of AFC. In connection with the Acquisition, (i) each
then outstanding share of APU common stock was converted into one share of
common stock of the Company, (ii) each then outstanding share of AFC common
stock was converted into 1.435 shares of common stock of the Company (after
giving effect to the Settlement discussed below), and (iii) APU and AFC become
subsidiaries of the Company.
The 28.3 million shares of common stock of the Company issued in the
Acquisition to the former shareholders of AFC, consisting of Carl H. Lindner,
members of his family and trusts for their benefit, constitutes approximately
55.2% of the outstanding Common Stock of the Company. Mr. Lindner is Chairman of
the Board and Chief Executive Officer of both APU and AFC and, following the
Acquisition, has continued in that role with the Company. Immediately prior to
the Acquisition, AFC beneficially owned approximately 18.7 million shares (or
approximately 44.8% of the outstanding shares) of APU, which were, in effect,
acquired by the Company upon consummation of the Acquisition. Accordingly, the
net increase in outstanding common shares resulting from the Acquisition was 9.6
million shares. The Acquisition was approved by APU's Board of Directors based
on the recommendation of a special committee of Board. In making its
recommendation, the special committee relied on an opinion of Furman Selz
Incorporated that the number of shares of Common Stock of the Company to be
issued to the shareholders of AFC was fair to the shareholders of APU (other
than AFC) from a financial point of view. The Acquisition was approved by the
shareholders of APU at a Special Meeting of Shareholders held on March 23,
1995.
Prior to the Acquisition, certain employees of AFC participated in AFC's
Book Value Incentive Plan (the "Incentive Plan"), which was established in 1980.
The Incentive Plan generally provided for the granting of Units measured by an
adjusted book value of AFC common stock at the time of grant with distributions
based on the increase in the value of the Units to the date of exercise to the
extent vested. The Incentive Plan, which was approximately 95% vested
immediately prior to the Acquisition, terminated upon completion of the
Acquisition, at which time full vesting was granted and payments were made in
cash to holders of the Units, including the following persons who were directors
or executive officers of the Company prior to the Acquisition as follows:
Name Payment
---- -------
Carl H. Lindner -0-
Carl H. Lindner III $5.95 million
S. Craig Lindner 5.95 million
Keith E. Lindner 5.95 million
James E. Evans 1.48 million
14
<PAGE> 18
The amounts to be paid to participants in the Incentive Plan were specifically
considered as part of the negotiations between the special committee of APU
directors and AFC, and the considerations of the special committee in this
regard related solely to the interests of the APU public shareholders.
AFC and the Company's directors are defendants in nine actions (the
"Actions") filed by shareholders of APU shortly following the December 12, 1994
public announcement of the definitive agreement for the Acquisition. Of the
Actions, six are class actions and one is a derivative action pending in the
Court of Common Pleas of Hamilton County, Ohio, and two are class actions
pending in the Court of Common Pleas of Philadelphia County, Pennsylvania. The
Actions generally allege that the Acquisition results in self-dealing
transactions which dilute the equity interests of the Company's shareholders,
and involves the purchase of AFC at a price which is excessive and unfair to the
Company's public shareholders. Prior to the Settlement described below, the
Actions sought to (1) enjoin the Acquisition until full disclosure of all
material facts has been made; (2) establish an independent special committee to
evaluate the terms of the proposed Acquisition and employ appropriate procedural
safeguards to protect the interests of the Company's public shareholders; (3)
rescind the Acquisition or pay unspecified rescissory damages; and (4) recover
unspecified compensatory and rescissory damages and court costs and attorneys'
fees.
As a result of negotiations between counsel for plaintiffs and
representatives of defendants, the parties have executed a memorandum of
understanding which settles all of the claims in all of the Actions, subject to
court approval and confirmatory discovery (the "Settlement") . The defendants in
the Actions deny any liability, that they acted or failed to act in any manner
that could rise to a claim of breach of fiduciary duty, or that they have
violated any law. The defendants agreed to the Settlement solely to avoid the
burden and expense of further litigation and to facilitate the consummation of
the Acquisition, which they believed to be in the best interests of the
Company's public shareholders. The Settlement required that Carl H. Lindner and
the members of his family (who collectively owned all of AFC's outstanding
Common Stock) to reduce the number of shares of the Company's Common Stock that
they would receive in the Acquisition by 290,000 shares and required certain
revisions to the Proxy Statement/Prospectus mailed to APU's shareholders in
connection with the Acquisition. The Company's public shareholders benefitted
from the Settlement because there are fewer shares of the Company's Common Stock
outstanding. The defendants have agreed not to oppose the application of
plaintiffs' counsel to the Court for up to $2,000,000 in fees and up to $100,000
in costs to be paid by the Company.
In June 1994, as part of an agreement for the purchase of all of the
outstanding stock of General Cable Corporation ("General Cable") by Wassall PLC
("Wassall"), the Company sold to Wassall the then outstanding $253.5 million
principal amount of General Cable notes and the 1.15 million shares of General
Cable common stock (11.6% of the outstanding shares) that the Company had
retained in connection with its 1992 spin-off of General Cable common stock to
Company shareholders. The Company was paid $169.8 million for its General Cable
notes and $6.9 million for its General Cable stock and recorded a loss of
approximately $75.8 million on the dispositions. In addition, the Company
received a $19.2 payment from Wassall in consideration of assuming
responsibility for certain actual and potential environmental and other
liabilities principally associated with General Cable's then recent sale of two
companies. Immediately prior to the sale to Wassall, AFC owned 5.78 million
shares of General Cable common stock (45.6% of the outstanding shares), which
it sold to Wassall as part of the transaction for $27.6 million. The
transaction was approved by the Company's Board of Directors based on the
recommendation of a special committee of the Company's independent directors.
In making its recommendation, the special committee relied on an opinion of
Donaldson, Lufkin & Jenrette Securities Corp. that the aggregate consideration
to be received by the Company in the transaction was fair to the Company from a
financial point of view.
The respective investment portfolios of the NSA Group insurance
companies and of Republic Indemnity Company of America ("Republic Indemnity"),
which is the Company's workers' compensation insurance subsidiary, are managed
by American Money Management Corporation ("AMMC"), a subsidiary of AFC, for an
aggregate annual management fee equal to 0.20% of that portion of the aggregate
value of such companies' investment portfolios which is less than $500
million and 0.10% of that portion of such portfolio value which exceeds $500
million. The aggregate market value at December 31, 1994 of the Company's
insurance company portfolios managed by AMMC was approximately $1.7 billion.
AMMC also manages the Company's fixed income investment portfolio and, prior to
the sale of the respective businesses, the fixed income portfolio of certain of
the Company's pension plans related to certain businesses sold during 1994, for
an annual fee equal to .025% of the aggregate value of the respective
portfolios, subject to a $125,000 annual minimum fee. The aggregate market value
of the fixed income investment portfolio at December 31, 1994 was approximately
$751.7 million. Each of the foregoing fees is payable in quarterly installments
based on asset values measured as of the end of the preceding calendar quarter.
AMMC was paid an aggregate of approximately $2.3 million under the foregoing
agreements in 1994.
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<PAGE> 19
The Company's insurance subsidiaries received an aggregate of
approximately $167.6 million in premiums from Great American Insurance Company,
a subsidiary of AFC ("Great American"), and its insurance company subsidiaries
under various reinsurance arrangements in 1994. The Company's subsidiaries
paid Great American insurance companies an aggregate of approximately $67,000
in premiums for 1994 for general liability and other insurance coverage, and
paid approximately $656,000 in commissions for 1994 to insurance agencies
owned by Great American.
The Company's subsidiaries provide various risk management and real
estate management services to AFC and its subsidiaries and affiliates.
Operating costs for services provided under these arrangements are allocated
to AFC based upon estimated hourly rate charges for salary and fringe
benefits, supplies and rental expense in respect of the services performed.
AFC and its subsidiaries and affiliates were billed approximately $420,000 in
the aggregate for the services of such Company subsidiaries in 1994.
The Company leases office space for its headquarters in The Provident
Tower building in Cincinnati, Ohio, which is owned by AFC. Rental amounts paid
or payable to AFC under the lease were approximately $850,000 for 1994. Under
the lease terms, the Company also paid a proportionate share of operating and
tax expense increases.
In 1994, the Company utilized the services of Provident Travel
Corporation, an AFC subsidiary which is a travel agency, to facilitate business
travel by Company employees on terms and conditions customarily offered by
commercial travel agencies in the area.
Information with regard to transactions involving persons who are or
were directors or executive officers of the Company is not included herein with
respect to periods during which any such person did not hold such a position
with the Company.
PRINCIPAL SHAREHOLDERS
The following shareholders are the only persons known by the Company to
own beneficially 5% or more of its outstanding Common Stock on the Record Date.
As a result of their ownership of Company Common Stock, control of the Company
may be deemed to rest in the four Lindner family members listed below.
<TABLE>
<CAPTION>
- - - ---------------------------------------------------------------------------------------------------------
AMOUNT AND NATURE OF OWNERSHIP
NAME AND ADDRESS ------------------------------------------------------------ PERCENT
OF OBTAINABLE UPON OF
BENEFICIAL OWNER COMMON STOCK HELD (a) EXERCISE OF OPTIONS (b) TOTAL CLASS (c)
- - - ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Carl H. Lindner, Jr.
One East Fourth Street 11,122,627 (d) 652,722 11,775,502 22.7%
Cincinnati, Ohio 45202
- - - ---------------------------------------------------------------------------------------------------------
Carl H. Lindner III
One East Fourth Street 4,654,013 (e) 327,270 4,982,167 9.6%
Cincinnati, Ohio 45202
- - - ---------------------------------------------------------------------------------------------------------
S. Craig Lindner
One East Fourth Street 4,653,130 (f) 11,819 4,664,949 9.1%
Cincinnati, Ohio 45202
- - - ---------------------------------------------------------------------------------------------------------
Keith E. Lindner
250 East Fifth Street 4,653,131 (g) - 4,653,131 9.1%
Cincinnati, Ohio 45202
- - - ---------------------------------------------------------------------------------------------------------
Harris Associates L.P.
2 North LaSalle Street, Suite 500 3,453,050 (h) - 3,453,050 6.7%
Boston, Massachusetts 02109
- - - ---------------------------------------------------------------------------------------------------------
</TABLE>
[FN]
(a) Unless otherwise noted, the holder has sole voting and investment
power with respect to the shares listed.
(b) Represents shares of Common Stock which may be acquired within 60
days through the exercise of vested options granted under the Stock
Option Plan. The Lindner family members listed above hold vested and
unvested options to purchase the following numbers of shares:
Carl H. Lindner 704,540
Carl H. Lindner III 400,000
S. Craig Lindner 400,000
Keith E. Lindner 400,000
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<PAGE> 20
(c) The percentages of outstanding shares beneficially owned (within the
meaning of Rule 13d-3 under the Securities Exchange Act of 1934) by
Carl H. Lindner III, S. Craig Lindner and Keith E. Lindner are 8.5%,
7.6% and 11.7%, respectively, after attributing the shares held in various
trusts for the benefit of the minor children of Carl H. Lindner III and S.
Craig Lindner (for which Keith E. Lindner acts as trustee with voting and
investment power) to Keith E. Lindner.
(d) Includes 974,385 shares held by his spouse and 153 shares held in his
account under the Company's Savings Plan, over which account shares he has
investment power but not the power to vote.
(e) Includes 17,941 shares held by a trust over which his spouse has voting
and investment power and 581,710 shares which are held in various trusts
for the benefit of his minor children for which Keith E. Lindner acts as
trustee with voting and investment power. Also includes 884 shares held in
his account under the Company's Savings Plan, over which account shares he
has investment power but not the power to vote.
(f) Includes 60,539 shares held by his spouse as custodian for their minor
children or in a trust over which his spouse has voting and investment
power and 775,714 shares which are held in various trusts for the benefit
of their minor children for which Keith E. Lindner acts as trustee with
voting and investment power.
(g) This number excludes 1,357,424 shares (described in footnotes (e) and (f)
above), which are held in various trusts for the benefit of the minor
children of his brothers, Carl H. Lindner III and S. Craig Lindner, over
which Keith E. Lindner has sole voting and investment power but no
pecuniary interest.
(h) Includes 1,017,500 shares as to which Harris Associates L.P. acts as an
investment advisor with certain rights to vote but without the sole right
to direct the disposition thereof.
SECTION 16 REPORTING
Michael D. Mauer, a former officer of the Company, was late in filing
one Form 4 report required pursuant to Section 16 of the Securities Exchange
Act of 1934 for one transaction in Common Stock.
PROPOSAL 2
AMENDMENT OF THE ARTICLES OF INCORPORATION TO
CHANGE THE COMPANY'S NAME TO "AMERICAN FINANCIAL GROUP, INC."
On April 7, 1995, the Company's Board of Directors approved an
amendment to the Articles of Incorporation changing the Company's name from
"American Premier Group, Inc." to "American Financial Group, Inc.", subject
to shareholder approval at the 1995 Annual Meeting. The proposed new name is
considered by the Board and management to be more representative of the
Company's property and casualty insurance and annuity businesses, which are
financial in nature.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR THE
PROPOSAL TO CHANGE THE COMPANY'S NAME.
PROPOSAL 3
APPROVAL OF THE COMPANY'S
STOCK OPTION PLAN AND CERTAIN AMENDMENTS THERETO
GENERAL
Effective April 3, 1995, the Company's Board of Directors adopted and
assumed the APU Stock Option Plan (the "Stock Option Plan") and amended and
restated the Stock Option Plan to (i) increase the number of shares of Common
Stock available for grants of options under the Stock Option Plan after April 3,
1995 to 4,000,000 (subject to anti-dilution provisions) and (ii) to limit to no
more than 500,000 the number of shares of Common Stock which may be the subject
of options granted to any participant in the Stock Option Plan during a
twelve-month period. Each of these amendments is described below.
The Stock Option Plan provides for the grant of stock options to key
employees of the Company or its subsidiaries (the "Key Employee Program") and
non-employee directors of the Company (the "Outside Director Program") to
purchase shares of Common Stock at not less than 100% of the fair market value
on the date of grant of the shares covered by the options granted. Fair market
value is defined as the mean between the high and low sales prices of the
Company's Common Stock on the New York Stock Exchange Composite Tape on the date
of grant. Approximately 250 persons are eligible to participate in the Stock
Option Plan.
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<PAGE> 21
INCREASE IN MAXIMUM AGGREGATE NUMBER OF OPTION SHARES
The Board of Directors has amended the Stock Option Plan to increase
the number of shares of Common Stock available for grants of options under the
Stock Option Plan after April 3, 1995 to 4,000,000 (subject to anti-dilution
provisions). Prior to such amendment, 2,138,817 shares of Common Stock remained
available for such grants. The Board of Directors believes that the amendment
is necessary to permit the continued use of stock option grants as an important
component of the Company's executive compensation system. At the Record Date,
there were unexercised options outstanding under the Stock Option Plan to
purchase __________ shares of Common Stock.
LIMITATION ON SHARES SUBJECT TO OPTION GRANTS
During 1993, Congress amended the Internal Revenue Code by adding new
Section 162(m) which denies a federal income tax deduction to any publicly held
corporation for compensation paid to specified executives to the extent that a
specified executive's compensation in any year exceeds $1,000,000. However,
compensation which is "performance-based" is not counted against the $1,000,000
limitation.
Section 162(m) provides that stock options granted at fair market value
will qualify as "performance based" compensation if they are granted pursuant
to a plan which contains a specific shareholder approved limit on the number of
options which may be granted during a specified period to any particular
executive. In order to satisfy this requirement, the Board has amended the
Stock Option Plan to provide that no more than 500,000 shares of Common Stock
may be the subject of options granted to any Stock Option Plan participant in
any twelve-month period.
1995 SURRENDER AND GRANTS
On April 7, 1995, the Compensation Committee granted options to S.
Craig Lindner and Keith E. Lindner, each of whom is Vice Chairman of the Board
of the Company, to purchase 388,181 shares and 400,000 shares, respectively, at
an exercise price of $23.97 per share. Such grants were made subject to
approval of the Stock Option Plan at the 1995 Annual Meeting. In addition,
Carl H. Lindner III, President of the Company, on that date surrendered an
option granted in 1993 to purchase 105,000 shares at an exercise price of
$28.19 per share and an option granted in 1992 to purchase 145,450 shares at an
exercise price of $24.06. As a result, each of these three executive
officers currently holds options to purchase 400,000 shares of the Company's
Common Stock at a weighted average exercise price of approximately $23.97 per
share. The mean between the high and low sales price of the Company's Common
Stock on the New York Stock Exchange Composite Tape on April 7, 1995 was
$23.75 per share.
SUMMARY OF THE STOCK OPTION PLAN
The following description is qualified in its entirety by reference to
the text of the Stock Option Plan, as amended and restated, which is set forth
in Annex A to this Proxy Statement.
Purposes. The purposes of the Key Employee Program are to aid the
Company and its subsidiaries in attracting and retaining employees of
outstanding competence and to enable selected key employees of the Company and
its subsidiaries to acquire or increase ownership interests in the Company on a
basis that will encourage them to perform at increasing levels of effectiveness
and use their best efforts to promote the growth and profitability of the
Company or a subsidiary. The purposes of the Outside Director Program are to
provide each of the Company's non-employee directors an added incentive to
continue in the service of the Company and a more direct interest in the future
success of the Company.
Administration. The Stock Option Plan is administered by a committee of
the Company's Board of Directors, consisting of at least two directors
designated by the Board, each of whom is a "disinterested person" as defined in
Rule 16b-3(c)(2) under the Securities Exchange Act of 1934. The Committee has
full and final authority to designate the optionees, the number of shares
covered by options granted, the date of the option grants and other terms and
conditions of the options under the Key Employee Program. The Committee has no
such discretion in administering the Outside Director Program. Currently the
Committee consists of three directors: William R. Martin (Chairman), Theodore
H. Emmerich and Thomas M. Hunt.
18
<PAGE> 22
Option Shares. Subject to mandatory adjustment by the Committee for
stock dividends, stock splits and other specified non-cash distributions to
holders of the Company's Common Stock or other specified changes in the
capital structure of the Company, the number of shares to be issued pursuant to
options granted under the Stock Option Plan, as amended, may not exceed
13,237,163 Shares, consisting of 9,237,613 shares with respect to which Options
had been exercised or were outstanding as of April 3, 1995 plus 4,000,000
Shares with respect to which Options may be granted after April 3, 1995.
Options to acquire no more than 250,000 Shares may be granted pursuant to the
Outside Director Program. Options to acquire no more than 500,000 Shares may be
granted to any participant in the Plan in any twelve-month period. Shares
subject to expired options are available for future grants of options. No
option may be granted under the Stock Option Plan after September 9, 2000.
Key Employee Program. Employees (including officers and directors who
are also employees) of the Company and any of its subsidiaries (as defined) are
eligible for grants of options under the Key Employee Program. Options
granted under the Key Employee Program have a duration of ten years (ten years
and three days in the case of a Non-Incentive Option, as hereinafter defined);
the Committee may specify a shorter period on the date of grant. Options vest
to the extent of 20% each year (or in accordance with a different schedule if
the Committee determines, in its sole discretion, that special circumstances
exist), beginning one year from the date of grant, provided the employee
remains in the employ of the Company or any of its subsidiaries. Any options
vested but not exercised during any year may be exercised during any succeeding
year prior to their expiration. An employee will become fully vested in each
of his options in the event of termination of employment with the Company or
any of its subsidiaries for reasons of death, Disability or Retirement (as
these terms are defined in the Stock Option Plan); or upon termination of
employment by the Company or a subsidiary for any reason other than discharge
for cause within one year of (i) the merger or consolidation of the Company
into, or sale or transfer of all or substantially all of the Company's assets
to, another corporation or (ii) the acquisition of effective voting control of
the Company by any individual or company or by any individuals or companies
acting in concert; or if the Board of Directors (or Committee) in its sole
discretion determines that acceleration of the option vesting schedule would be
desirable for the Company.
Upon an employee's termination of employment with the Company or any of
its subsidiaries (i) either for cause or voluntarily without the Company's
consent, the option will immediately terminate; (ii) under circumstances other
than those specified in clause (i) above and for reasons other than death,
Disability or Retirement, the option will terminate 90 days from termination of
employment or on its normal expiration date, whichever occurs first; (iii) in
the event of death, the option will terminate one year thereafter or on its
normal expiration date, whichever occurs first; and (iv) in the event of
Disability or Retirement, the option will terminate two years thereafter or on
its expiration date, whichever occurs first.
Outside Director Program. The Outside Director Program provides for the
automatic grant to each non-employee director of (i) an option for 5,000 shares
on the later of October 27, 1988, or the effective date of such director's
initial election as a member of the Company's Board of Directors and (ii) an
option for 1,000 shares on each June 1 occurring prior to the termination of
the Stock Option Plan, beginning June 1, 1989. Each such Option is fully
vested upon grant. Options granted under the Outside Director Program have a
duration of ten years and three days from the date of grant. In the event of a
non-employee director's termination of service as a member of the Board of
Directors for any reason, options granted to such director will terminate on a
date which is (i) the later of ninety days after the date of such termination
of service or six months and ten days after such director's last purchase or
sale of the Company's Common Stock prior to such termination of service, or
(ii) the expiration date of the option, whichever occurs first.
Exercise of Options. An option may be exercised in whole or in part after
it is vested and prior to its termination generally by payment of the option
price plus any taxes to be withheld (i) in cash or by check, (ii) in exchange
for Common Stock of the Company having a fair market value on the date of
exercise equal to such amount due or (iii) by a promissory note payable to the
Company in accordance with the provisions of the Company's Stock Option Loan
Program.
Merger, Consolidation, Etc. The Stock Option Plan provides that in the
event that the Company proposes to merge into, consolidate with, or sell or
otherwise transfer all or substantially all of its assets to another
corporation and provision is not made pursuant to the terms of the proposed
transaction for the assumption
19
<PAGE> 23
by the surviving, resulting or acquiring corporation of options outstanding
under the Stock Option Plan, or for the substitution of new options therefor,
each outstanding option will become 100% vested and the holder thereof will
have the right to purchase any shares then subject to his option prior to a
date specified by the Committee preceding the anticipated effective date of
the proposed transaction. Upon consummation of the transaction, each option
will terminate to the extent not exercised prior to the specified date. If
the transaction is abandoned, any vesting which shall have occurred solely by
virtue of the proposed transaction will be annulled and the normal vesting
schedule will be reinstituted.
Federal Income Tax Consequences. The following is a summary of the
principal federal income tax consequences of transactions under the Stock
Option Plan based on current federal income tax laws. This summary is not
intended to be exhaustive and does not describe state or local tax
consequences.
Options under the Stock Option Plan may be granted as options intended to
be "incentive stock options" within the meaning of Section 422 of the Internal
Revenue Code of 1986 ("Incentive Stock Options") or as options which are not
intended to be Incentive Stock Options ("Non-Incentive Stock Options"). All
options granted to non-employee directors of the Company are Non-Incentive
Stock Options.
No income is realized by the optionee at the time a Non-Incentive Stock
Option is granted. Upon exercise, ordinary income is generally realized by the
optionee in an amount equal to the difference between the option price (the
amount paid for the shares) and the fair market value of the shares on the date
of exercise, and the optionee's employer receives a tax deduction in the same
amount. Upon disposition, appreciation or depreciation after the date of
exercise is treated as either short-term or long-term capital gain or loss, as
the case may be.
Income is not recognized by the optionee upon the grant or exercise of an
Incentive Stock Option. If shares of Common Stock are issued to an optionee
pursuant to the exercise of an Incentive Stock Option granted under the Option
Plan, and if no disqualifying disposition of such shares is made by such
optionee within two years after the date of grant or within one year after the
receipt of such shares by such optionee, then (a) upon sale of such shares, any
amount realized in excess of the option price will be taxed to such optionee as
long-term capital gain and any loss sustained will be a long-term capital loss,
and (b) no deduction will be allowed to the optionee's employer. The exercise
of an Incentive Stock Option will give rise to alternative minimum taxable
income to the extent of the excess of the fair market value of the shares
exercised over the option price irrespective of whether there has been a
disqualifying disposition.
If shares of Common Stock acquired upon the exercise of an Incentive
Stock Option are disposed of prior to the expiration of either holding period
described above, generally (a) the optionee will realize ordinary income in the
year of disposition in an amount equal to the excess (if any) of the fair
market value of the shares at exercise (or, if less, the amount realized on the
disposition of the shares) over the option price thereof, and (b) the
optionee's employer all be entitled to deduct such amount. Any further gain
or loss realized by the participant will be taxed as short-term or long-term
capital gain or loss, as the case may be, and will not result in any deduction
by the employer.
If an Incentive Stock Option is exercised at a time when it no longer
qualifies as an Incentive Stock Option, the option is treated as a
Non-Incentive Stock Option. Subject to certain exceptions for disability or
death, an Incentive Stock Option will not be eligible for the Incentive Stock
Option tax treatment described above if it is exercised more than three months
following the termination of employment.
Amendment and Termination. The Board of Directors may amend or terminate
the Stock Option Plan at any time without the further approval of the
shareholders. However, without such approval, the Board may not amend the
Stock Option Plan so as to increase the maximum number of shares for which
options may be granted or change the option price or eligibility provisions of
the Stock Option Plan. Furthermore, no such termination or amendment may
adversely affect the rights of an option holder without his consent.
Other Information. As of the Record Date, options for the following
numbers of shares of Common Stock granted to the following individuals and
groups were outstanding under the Stock Option Plan: (i) each Named Executive
Officer: Carl H. Lindner, 704,540 shares; Carl R. Lindner III, 400,000 shares;
20
<PAGE> 24
Neil M. Hahl, 340,338 shares; Robert W. Olson, 306,875 shares; and Michael D.
Krause, 200,000 shares; (ii) all current executive officers as a group,
2,563,572 shares; (iii) all current directors who are not executive officers as
a group, 39,557 shares; (iv) each nominee for election as a director (not
otherwise named): Theodore H. Emmerich, 11,819 shares; James R. Evans, 11,819
shares; Thomas M. Hunt, 11,819 shares; Keith E. Lindner, 400,000 shares; S.
Craig Lindner, 400,000 shares; William R. Martin, 5,000 shares; and Alfred W.
Martinelli, 11,819 shares; (v) all employees as a group (including all current
officers who are not executive ofticers), 328,819 shares. The recipients of,
and numbers of shares subject to, future grants under the Stock Option Plan are
not determinable at this time. See "Compensation-Stock Options" above for
further information regarding outstanding stock options granted under the Stock
Option Plan to the Named Executive Officers. The closing price of the
Company's Common Stock as reported on the New York Stock Exchange on the Record
Date was $ per share.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR APPROVAL OF
THE COMPANY'S STOCK OPTION PLAN AND CERTAIN AMENDMENTS THERETO.
PROPOSAL 4
APPROVAL OF THE COMPANY'S
EMIPLOYEE STOCK PURCHASE PLAN
Effective April 3, 1995, the Company's Board of Directors adopted and
assumed the APU Employee Stock Purchase Plan (the "Stock Purchase Plan") and
amended and restated the Stock Purchase Plan to reflect such adoption and
assumption. The Stock Purchase Plan, which has been in effect for employees of
APU and its subsidiaries since June 1, 1990, provides eligible employees with
an opportunity to purchase from the Company shares of Company Common Stock at a
discount to current market prices through regular payroll deductions.
The following description is qualified in its entirety by reference to
the text of the Stock Purchase Plan which is set forth in Annex B to this Proxy
Statement.
PURPOSE OF THE PLAN
The purpose of the Stock Purchase Plan is to enable employees to acquire
or increase ownership interests in the Company on a basis that will encourage
them to perform at increasing levels of effectiveness and to use their best
efforts to promote the growth and profitability of the Company and its
subsidiaries.
ELIGIBLE PARTICIPANTS
Employees of the Company and of subsidiaries designated from time to time
by the Compensation Committee of the Board of Directors, who have at least
three months of service with the Company and do not own 5% or more of the
Company's Common Stock, will be eligible to participate in the Stock Purchase
Plan. Eligibility generally ceases upon termination of employment with the
Company or a designated subsidiary. Approximately employees would have
been eligible to participate as of the Record Date.
SECURITIES TO BE UTILIZED
The maximum number of shares of the Company's Common Stock which may be
purchased by eligible employees under the Stock Purchase Plan is 3,000,000
(subject to anti-dilution provisions). As of the Record Date,
shares had been sold by the Company to participating employees. Shares sold to
participating employees by the Company may be previously acquired treasury
shares or authorized but unissued shares or, if and to the extent authorized by
the Compensation Committee of the Board of Directors of the Company, shares
sold to participating employees may be shares purchased in market transactions
by the agent referred to below.
METHOD AND PRICE OF PURCHASE
Each eligible employee may elect to have a specified amount, not to be
more than 25% of base salary or wages, deducted from each regular paycheck.
The amounts deducted during any "Deduction Period" (one, two or three calendar
months, as determined by the Compensation Committee) will be used to purchase
on
21
<PAGE> 25
the last business day of such Deduction Period or as soon thereafter as
practicable (the "Purchase Date") the maximum number of whole and fractional
shares of Common Stock which such amounts can purchase at the Purchase Price
(as defined below). Payroll deductions will be held by the employing
corporation subject to withdrawal by the employee, and not bear interest,
pending their application to share purchases. Dividends received on shares
held in an employee's account will, unless otherwise directed by the
Compensation Committee, be used to purchase additional shares.
The Purchase Price for each whole or fractional share purchased will be
85% of the fair market value on the Purchase Date, defined as the mean between
the high and low sales prices of the Company's Common Stock on the New York
Stock Exchange Composite Tape on the Purchase Date. No employee may, in any
calendar year, purchase shares which had an aggregate fair market value
exceeding $25,000 on the respective Purchase Dates. In addition, if a
participating employee sells shares purchased under the Stock Purchase Plan
during the first year following the date of purchase, that employee will not be
eligible to make further purchases under the Stock Purchase Plan, or to have
any amounts deducted from paychecks for such purpose, for a period of one year
after such sale (or for such shorter period, if any, as the Compensation
Committee shall have established),
PLAN ADMINISTRATION AND TERMINATION
The Stock Purchase Plan will be administered by the Compensation
Committee of the Board of Directors. The Committee is empowered to interpret
the Stock Purchase Plan and to delegate ministerial functions to management.
Custodial and record keeping functions for the Stock Purchase Plan will be
delegated to a bank trust department or other financial institution as agent.
At present, Merrill Lynch, Pierce, Fenner & Smith Incorporated acts in such
capacity. The Board of Directors may amend or terminate the Stock Purchase
Plan at any time, without further shareholder approval. However, without such
approval, the Board of Directors may not change the number of shares
purchasable or the eligibility requirements under the Stock Purchase Plan.
Unless earlier terminated, the Stock Purchase Plan will continue in effect
until the maximum number of shares available under the Stock Purchase Plan has
been purchased.
INCOME TAX CONSEQUENCES
The following is a summary of the principal federal income tax
consequences of transactions under the Stock Purchase Plan based on current
federal income tax laws. This summary is not intended to be exhaustive and
does not describe state or local tax consequences.
The Stock Purchase Plan is intended to qualify as an employee stock
purchase plan within the meaning of Section 423 of the Internal Revenue Code of
1986. Income will not be realized by an employee who elects to participate in
purchases under the Stock Purchase Plan when the shares purchased are
transferred to him. If an employee disposes of such shares more than two years
from the date on which he is granted the right to purchase shares under the
Stock Purchase Plan, the employee will be required to include in income, as
compensation for the year in which such disposition occurs, an amount equal to
the lesser of (i) the excess of the fair market value of such shares at the
time of disposition over the Purchase Price or (ii) 15% of the fair market
value of such shares at the time of the purchase. The employee's basis in
those shares in his hands at the time of such a disposition will be increased
by an amount equal to the amount so includible in his income as compensation,
and any gain or loss computed with reference to such adjusted basis which is
recognized at the time of the disposition will be short or long-term capital
gain or loss depending upon the holding period for such shares. In such event,
the Company (or the subsidiary by which the employee is employed) will not be
entitled to any deduction from income.
If an employee disposes of the shares purchased under the Stock Purchase
Plan within such two year period, the employee will be required to include in
income, as compensation for the year in which such disposition occurs, an
amount equal to the excess of the fair market value of such shares on the date
of purchase over the Purchase Price. The employee's basis in such shares in
his hands at the time of disposition will be increased by an amount equal to
the amount includible in his income as compensation, and any gain or loss
computed with reference to such adjusted basis which is recognized at the time
of disposition will be capital gain or loss, either short-term or long-term,
depending on the holding period for such shares. In the event of a disposition
within such two year period, the Company (or the subsidiary by which the
employee is employed) will be entitled to a deduction from income equal to the
amount the employee is required to include in income as compensation as a
result of such disposition.
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<PAGE> 26
OTHER INFORMATION
As of the Record Date, the following individuals and groups held the
following numbers of shares of Common Stock under the Stock Purchase Plan: (i)
each of the Named Executive Officers: Carl H. Lindner, none; Carl H. Lindner
III, none; Neil M. Hahl, shares; Robert W. Olson,
shares; and Michael D. Krause, shares; (ii) all current executive
officers as a group, shares; (iii) all current directors who are not
executive officers as a group, none; and (iv) all employees as a group
(including all current officers who are not executive officers),
shares.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE COMPANY'S
EMPLOYEE STOCK PURCHASE PLAN.
PROXIES
Solicitation. Solicitation of proxies is being made by management at the
direction of the Company's Board of Directors, without additional compensation,
through the mail, in person or by facsimile or telephone. The cost will be
borne by the Company. In addition, the Company will request brokers and other
custodians, nominees and fiduciaries to forward proxy soliciting material to
the beneficial owners of shares held of record by such persons, and the Company
will reimburse them for their expenses in so doing. The Company has also
retained Morrow & Co., Inc. to aid in the solicitation of proxies for a fee
estimated at $10,500 plus out-of-pocket expenses.
Revocation. The execution of a proxy does not affect the right to vote
in person at the meeting, and a proxy may be revoked by the person giving it
prior to the exercise of the powers conferred by it. A shareholder may revoke
a proxy by communicating in writing to the Secretary of the Company at the
address indicated above or by duly executing and delivering a proxy bearing a
later date. In addition, persons attending the meeting in person may withdraw
their proxies. Unless a proxy is revoked or withdrawn, the shares represented
thereby will be voted or the votes withheld at the Annual Meeting or at any
adjournments thereof in the manner described in this Proxy Statement.
QUORUM AND VOTES REQUIRED FOR APPROVAL
The presence at the Annual Meeting, in person or by proxy, of the holders
of at least a majority of the shares of the Common Stock of the Company
outstanding at the Record Date shall constitute a quorum for the Annual
Meeting. In accordance with the Ohio General Corporation Law and the Company's
Articles and Regulations, all valid proxies will be counted toward the presence
of a quorum, notwithstanding directions thereon to abstain from voting on one
or more of the proposals to be voted upon at the Annual Meeting, but such
abstentions and broker non-votes will not be counted in the election of
directors.
The nine nominees receiving the highest number of votes shall be elected
as directors. As indicated above under "Outstanding Voting Securities of the
Company", cumulative voting is applicable to the election of directors.
The affirmative vote of the holders of at least a majority of the
outstanding shares of Common Stock will be required to adopt Proposal 2
(relating to the change of the Company's name), and abstentions and broker
non-votes will have the same effect as a vote against such Proposal. The
affirmative vote of the holders of at least a majority of the shares of Common
Stock voting on the matter will be required to adopt Proposal 3 (relating to
the Company's Stock Option Plan) and Proposal 4 (relating to the Company's
Employee Stock Purchase Plan), and abstentions and broker non-votes will have
the same effect as a vote against such Proposals.
INDEPENDENT AUDITORS
The accounting firm of Deloitte & Touche served as the Company's
independent auditors for the fiscal year ended December 31, 1994. Because the
Acquisition was completed this month, the Company has not yet selected its
auditors for the current year.
The Company expects representatives of Deloitte & Touche to attend the
Annual Meeting, to be available to respond to appropriate questions from
shareholders and to have the opportunity to make a statement if they so desire.
23
<PAGE> 27
SHAREHOLDER PROPOSALS FOR 1996 ANNUAL MEETING
Proposals intended to be presented by shareholders at the 1996 Annual
Meeting of Shareholders must be received by the Company not later than December
28, 1995, in order to be considered for inclusion in the Company's proxy
statement and form of proxy relating to that meeting. Any such proposal should
be communicated in writing to the Secretary of the Company at the address
indicated above.
By Order of the Board of Directors,
ROBERT W. OLSON
Secretary
Cincinnati, Ohio
April 26, 1995
24
<PAGE> 28
ANNEX A
AMERICAN PREMIER GROUP, INC. STOCK OPTION PLAN
1. PURPOSES
The American Premier Group, Inc. Stock Option Plan (the "Plan") is
divided into two programs: a key employee stock option program (the "Key
Employee Program") and an outside director stock option program (the "Outside
Director Program").
The purposes of the Key Employee Program are to aid American Premier
Underwriters, Inc. (the "Company") and its Subsidiaries in attracting and
retaining employees of outstanding competence and to enable selected key
employees of the Company and any Subsidiary to acquire or increase ownership
interests in the Company on a basis that will encourage them to perform at
increasing levels of effectiveness and use their best efforts to promote the
growth and profitability of the Company or any Subsidiary. Consistent with
these objectives, the Plan authorizes the granting to selected key employees of
options to acquire shares of Company stock ("Options") pursuant to the terms
and conditions hereinafter set forth. As used herein, the term "Subsidiary"
means any domestic or foreign corporation, at least 50% of the outstanding
voting stock or voting power of which is beneficially owned, directly or
indirectly, by the Company.
The purposes of the Outside Director Program are to provide to each of
the Outside Directors added incentive to continue in the service of the Company
and a more direct interest in the future success of the operations of the
Company. Consistent with these objectives, the Plan authorizes the automatic
granting to Outside Directors of Options pursuant to the terms and conditions
hereinafter set forth. As used herein, the term "Outside Director" means a
member of the Board of Directors of the Company who is not an employee of the
Company or a Subsidiary.
2. EFFECTIVE DATE
The Plan became effective on September 9, 1980 (the "Effective Date").
The Plan was assumed by the Company from its Subsidiary, American Premier
Underwriters, Inc., and adopted, amended and restated, effective April 3, 1995,
subject to approval at the 1995 Annual Meeting of Shareholders by the
affirmative vote of shareholders entitled to cast at least the majority of the
total number of votes represented (a quorum being present) at such Annual
Meeting.
3. ADMINISTRATION
(a) The Plan shall be administered by a committee of the Board of
Directors of the Company (the "Board of Directors"), consisting of at least two
directors designated by the Board of Directors (the "Committee"), each of whom
shall be a "disinterested person" as defined in Rule 16b-3(c)(2) under the
Securities Exchange Act of 1934, as from time to time amended. All Committee
members shall serve, and may be removed, at the pleasure of the Board of
Directors.
(b) For purposes of administration of the Plan, a majority of the
members of the Committee (but not less than two) eligible to serve as such
shall constitute a quorum, and any action taken by a majority of such members
of the Committee present at any meeting at which a quorum is present, or acts
approved in writing by a majority of such members of the Committee, shall be
the acts of the Committee.
(c) Subject to the express provisions of the Key Employee Program, the
Committee shall have full and final authority to decide when Options will be
granted under the Key Employee Program, to select the key employees to whom the
Options will be granted, and to determine the number of Shares (as defined in
Paragraph 4 hereof) to be covered by each Option, the price at which such
Shares may be purchased and other terms and conditions of such purchase. In
making these determinations, the Committee may take into account the key
employee's present and potential contributions to the Company's or a
Subsidiary's success and any other factors which the Committee may deem
relevant.
(d) The Committee shall have no authority or discretion or power to
select the participants who will receive Options under the Outside Director
Program, to set the number of Shares to be covered by each Option under the
Outside Director Program, or to set the Option price or the period within which
the Options granted under the Outside Director Program may be exercised or to
alter any other terms or conditions specified in the Outside Director Program.
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(e) Subject to the express provisions of the Plan, and, in particular,
the limitations set forth in Paragraph 3(d) hereof, the Committee shall have
full authority to interpret the Plan and any stock option agreements evidencing
Options granted hereunder, to issue rules for administering the Plan, to
change, alter, amend or rescind such rules, and to make all other
determinations necessary or appropriate for the administration of the Plan.
All determinations, interpretations and constructions made by the Committee
pursuant to this Paragraph 3 shall be final and conclusive. No member of the
Board of Directors or the Committee shall be liable for any action,
determination or omission taken or made in good faith with respect to the Plan
or any Option granted hereunder.
4. OPTION SHARES
(a) The stock subject to the Options granted under the Plan shall be
shares of Common Stock, $l.00 par value, of the Company ("Shares") and except
as otherwise required by Subparagraph (b) of this Paragraph 4, the aggregate
number of Shares with respect to which Options may be granted under the Plan
shall not exceed 13,237,163 Shares, consisting of 9,237,613 shares with respect
to which Options had been exercised or were outstanding as of April 3, 1995
plus 4,000,000 Shares with respect to which Options may be granted after April
3, 1995, provided, however, that Options to acquire no more than 250,000 Shares
may be granted pursuant to the Outside Director Program. Options to acquire no
more than 500,000 Shares may be granted to any participant in the Plan in any
twelve-month period, except as otherwise required by Subparagraph (b) of this
Paragraph 4. If an Option expires, terminates, or is otherwise surrendered,
in whole or in part, the Shares allocable to the unexercised portion of such
Option shall again become available for grants of Options under the Plan. As
determined from time to time by the Board of Directors, the Shares available
under the Plan for grants of Options may consist either in whole or in part of
authorized but unissued Shares or Shares which have been reacquired by the
Company or a Subsidiary following original issuance.
(b) The aggregate number of Shares purchasable under Options pursuant
to the provisions of the Plan and the number of Shares and the Option price for
Shares covered by each outstanding Option shall be proportionately adjusted for
any increase or decrease in the number of issued Shares resulting from any
stock dividend, stock split or similar event, any other capital adjustment
(including a reclassification of Shares or recapitalization or reorganization
of the Company), or the distribution to holders of Shares of rights, warrants,
assets or evidences of indebtedness (other than regular cash dividends) in such
manner as the Committee in its sole judgment determines to be equitable.
5. KEY EMPLOYEE PROGRAM
The provisions of this Paragraph 5 are applicable only to Options
granted pursuant to the Key Employee Program and Options to key employees shall
be granted only in accordance with the provisions of this Paragraph 5.
(a) Effective Date. The Key Employee Program became effective on
September 9, 1980.
(b) Eligibility. Grants of Options under the Key Employee Program
shall be confined to key employees of the Company or a Subsidiary (including
officers and directors who are also employees of the Company or a Subsidiary)
who can make a meaningful contribution to the Company's or Subsidiary's
success; provided, however, that no Option under the Key Employee Program shall
be granted to any member of the Committee.
(c) Incentive and Non-Incentive Options.
(i) Subject to the provisions of Paragraphs 5(c)(ii) and 5(e),
Options granted under the Key Employee Program shall be designated
either (A) "Incentive Options" (which term, as used herein, shall mean
stock options intended to be "incentive stock options" within the
meaning of Section 422 of the Internal Revenue Code of 1986, as
amended (the "Code")) or (B) "Non-Incentive Options" (which term, as
used herein, shall mean stock options not intended to be "incentive
stock options" within the meaning of said Section 422). In the case
of Options granted prior to January 1, 1987, the aggregate fair market
value of the Shares (determined as of the date the Option is granted)
for which an Optionee may, in any calendar year, be granted "incentive
stock options" under this Key Employee Program and all other option
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<PAGE> 30
plans of the Company and its subsidiaries (and any other corporation
that may become a "parent corporation" of the Company within the
meaning of Section 424(e) of the Code) shall not exceed $100,000 plus
any applicable unused limit carryover to such calendar year. In the
case of Options granted after December 31, 1986, the preceding
sentence shall not apply. The limitations of the preceding sentences
shall not apply to the grant of Options designated Non-Incentive
Options under the Plan.
For purposes of the Key Employee Program: (1) the "fair market
value" of a Share shall be the mean between the high and the low
prices of the Shares on such date on the New York Stock Exchange
Composite Tape (or the principal market in which the Shares are
traded, if the Shares are not listed on that Exchange on such date)
or, if the Shares were not traded on such date, the mean between the
high and the low prices of the Shares on the next preceding trading
day during which the Shares were traded, (2) the "fair market value"
of any other stock shall be such amount as determined by the Committee
in accordance with the provisions of the Code and the Income Tax
Regulations thereunder then in effect with respect to "incentive stock
options" and (3) the "unused limit carryover" from a calendar year
shall be 1/2 of the amount (determined as of the time the option is
granted) by which $100,000 exceeds the aggregate fair market value of
the stock for which an Optionee (as defined in Paragraph 5(d) below)
was granted "incentive stock options" (within the meaning of said
Section 422) in such calendar year under all plans of the Company and
its Subsidiaries (and any corporation that may become a "parent
corporation" of the Company within the meaning of Section 424(e) of
the Code), provided that there will be no unused limit carryover from
any calendar year prior to 1981.
No Incentive Option may be granted to any individual who, at
the time of grant, owns stock possessing more than 10% of the total
combined voting power of all classes of stock of the Company or any
Subsidiary (or any corporation that is a "parent corporation" of the
Company (within the meaning of Section 424(e) of the Code)).
To the extent that any provisions of the Key Employee Program
relate to Incentive Options, such provisions shall be interpreted in a
manner consistent with the requirements of Section 422 of the Code, so
that Incentive Options will qualify as "incentive stock options" under
said Section 422.
(ii) Each Option granted under the Key Employee Program prior
to January 1, 1982 shall (A), if the aggregate fair market value of
the Shares covered thereby shall be $100,000 or less, be designated an
Incentive Option or (B), if the aggregate fair market value of the
Shares covered thereby shall exceed $100,000, be split into (1) an
Incentive Option for Shares having an aggregate fair market value as
close as practicable to, but not exceeding, $100,000 and (2) a
Non-Incentive Option for the remaining Shares which are not covered by
the Incentive Option; provided that the Optionee shall, prior to
August 13, 1982, have entered into an amended stock option agreement
(or, if the Optionee's Option shall have been split as aforesaid,
separate amended stock option agreements) with the Company providing
for Incentive and Non-Incentive Options as aforesaid. In the event
that the Optionee shall not have entered into an amended stock option
agreement (or agreements) prior to August 13, 1982, any Option granted
to such Optionee prior to January 1, 1982 shall be a Non-Incentive
Option.
(d) Terms and Conditions of Options Granted to Key Employees.
Each Option granted pursuant to the Key Employee Program shall be
evidenced by a written stock option agreement between the Company and the key
employee to whom the Option is granted (the "Optionee") in such form or forms
as the Committee, from time to time, shall prescribe, which agreements need not
be identical to each other but shall comply, inter alia, with and be subject to
the terms and conditions of this Paragraph 5(d). In addition, the Committee
may, in its absolute discretion, include in any such stock option agreement
other terms, conditions and provisions that are not inconsistent with the
express provisions of the Key Employee Program. Separate forms of stock option
agreements shall be used to evidence Incentive Options and Non-Incentive
Options.
(i) Option Price. The price at which each Share may be
purchased pursuant to an Option granted under the Key Employee Program
shall be not less than 100% of the higher of the "fair market value"
for each such Share (A) on the date the Committee approves the
granting of such Option (the "Date of Grant") or (B) on a future date
if such is fixed on the Date of Grant by the Committee, and in no
event shall such price be less than the par value of such Shares. The
"fair market value" of the Shares on any date shall be the mean
between the high and the low prices of the Shares on such date on the
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New York Stock Exchange Composite Tape (or the principal market in
which the Shares are traded, if the Shares are not listed on that
Exchange on such date), or if the Shares were not traded on such date,
the mean between the high and the low prices of the Shares on
the next preceding trading day during which the Shares were traded.
Anything contained in this Subparagraph (i) of Paragraph 5(d) to the
contrary notwithstanding, in the event that the number of Shares
subject to any Option is adjusted pursuant to Paragraph 4(b) hereof, a
corresponding adjustment shall be made in the price at which the
Shares subject to such Option may thereafter be purchased.
(ii) Duration of Options. Each Option granted under the Key
Employee Program shall expire and all rights to purchase Shares
pursuant thereto shall cease on the date (the "Expiration Date") which
shall be the tenth anniversary of the Date of Grant of the Option;
provided, however, that the Expiration Date of any Non-Incentive
Option granted on or after May 17, 1984 shall be the third day after
the tenth anniversary of the Date of Grant of such Non-Incentive
Option; provided, further, that the Committee may specify for any
Option on the Date of Grant of the Option any shorter period than the
foregoing.
(iii) Vesting of Options. Each Option granted hereunder may
only be exercised to the extent that the Optionee is vested in such
Option. An Optionee shall vest separately in each Option granted
hereunder in accordance with a schedule determined by the Committee in
its sole discretion, which will be appended to the stock option
agreement. In the absence of any special circumstances, the Committee
will cause the Options to vest in accordance with the following
schedule:
<TABLE>
Number of years the Optionee
has remained in the employ Extent to which
of the Company or a Subsidiary the Option is
following the grant of the Option vested
--------------------------------- -------------------
<S> <C>
Under one 0%
At least one but less than two 20%
At least two but less than three 40%
At least three but less than four 60%
At least four but less than five 80%
Five or more 100%
</TABLE>
In the event that an Incentive Option and a Non-Incentive
Option have been granted simultaneously to an Optionee, they shall be
considered a single Option for (but only for) purposes of the
foregoing schedule and the portion thereof attributable to the
Incentive Option shall vest in accordance with such schedule before
any of the portion attributable to the Non-Incentive Option shall
vest. Anything contained in this Subparagraph (iii) of Paragraph 5(d)
to the contrary notwithstanding, an Optionee shall become fully (100%)
vested in each of his or her Options upon his or her termination of
employment with the Company or a Subsidiary for reasons of death,
Disability or Retirement (as defined in Subparagraph (v)(D) of this
Paragraph 5(d)); upon his or her termination of employment by the
Company or a Subsidiary for a reason other than discharge for cause
within one year of the merger of the Company into, consolidation of
the Company with, or sale or transfer of all or substantially all the
Company's assets to, another corporation or the acquisition of
effective voting control of the Company by any individual or company
or by any individuals or companies acting in concert (a good faith
determination by the Board of Directors that such control has been
acquired shall be final and conclusive); if in the sole discretion of
the Committee, the Committee determines that acceleration of the
Option vesting schedule would be desirable for the Company; or if such
Options vest pursuant to Paragraph 7 of the Plan.
(iv) Exercise of Options. A person entitled to exercise an
Option may exercise it in whole at any time, or in part from time to
time, by delivering to the Secretary of the Company written notice
specifying the number of Shares with respect to which the Option is
being exercised, together with payment in full of the purchase price
of such Shares plus any applicable federal, state or local taxes for
which the Company (or a Subsidiary) has a withholding obligation
in connection with such exercise. Such payment shall be made in whole
or in part (A) in cash or by certified check or bank draft to the
order of the Company, (B) in the case of either an Incentive Option
granted after March 23, 1983 which so provides at the time of grant or
any Non-Incentive Option, by personal check or money market check to
the order of the Company or the exchange of Common Stock of the
Company acquired by the person entitled to exercise the Option more
than 6 months prior to the date of exercise and having a "fair market
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<PAGE> 32
value" on the date of exercise at least equal to the price for which
the Shares may be purchased pursuant to the Option plus any
applicable federal, state or local taxes for which the Company (or a
Subsidiary) has a withholding obligation as noted above (including any
such taxes with respect to income recognized by the Optionee upon the
disposition of the Common Stock of the Company used to effect such
exchange), or (C) in the case of either an Incentive Option granted on
or after January 26, 1984 which so provides at the time of grant or
any Non-Incentive Option, by a promissory note payable to the Company
but only in accordance with the provisions of, and from a person
otherwise eligible under, the Company's Stock Option Loan Program, or
any successor program, as in effect from time to time (the "Loan
Program"), (1) in a principal amount up to 100% of the payment or such
applicable lower percentage as may be specified by the Committee
pursuant to the Loan Program and (2) bearing interest at a rate not
less than the applicable test rate prescribed under Section 483 of
the Code, or any successor provision, or such higher rate as may be
specified by the Committee pursuant to the Loan Program.
Notwithstanding the foregoing, the Committee may, in its sole
discretion, authorize such payment, in whole or in part, in any other
form. Each Incentive Option granted under the Plan before January 1,
1987 shall by its terms provide that it may not be exercised while
there is outstanding any "incentive stock option" (within the meaning
of Section 422 of the Code) which was granted to the Optionee at any
earlier time to purchase stock in the Company or in a corporation
which, at the time of the granting of such Incentive Option, is a
Subsidiary (or a corporation that is a "parent corporation" of the
Company within the meaning of Section 424(e) of the Code) or in a
predecessor corporation of any such corporation. For purposes of the
preceding sentence, any "incentive stock option" (within the meaning
of Section 422 of the Code) which has not been exercised in full
(including an "incentive stock option" which has been "modified,"
within the meaning of Section 424(h)(3) of the Code, prior to being
exercised in full) shall be considered outstanding until the
expiration of the period during which under its initial terms it could
have been exercised.
(v) Termination of Employment. Unless otherwise
determined by the Committee, the following rules shall apply in the
event of an Optionee's termination of employment with the Company or a
Subsidiary:
(A) Except as provided in Subparagraph (v)(G)
hereof, in the event of an Optionee's termination of
employment with the Company or a Subsidiary either (1) for
cause or (2) voluntarily on the part of the Optionee and
without the written consent of the Company, his or her Option
shall immediately terminate.
(B) In the event of an Optionee's termination of
employment with the Company or a Subsidiary under
circumstances other than those specified in Subparagraph
(v)(A) hereof and for reasons other than death, Disability or
Retirement (as defined in Subparagraph (v)(D) hereof), such
Option shall terminate on the date which is 90 days from the
date of such termination of employment or on its Expiration
Date, whichever shall first occur, provided, however, that if
(x) the Optionee is a former officer of the Company subject to
the provisions of Section 16(a) of the Securities Exchange Act
of 1934 and (y) such Option is an Incentive Option granted on
or after March 28, 1985 or a Non-Incentive Option, such Option
shall terminate on (1) the date which is the later of (a) 90
days from the date of such termination of employment or (b)
six months and ten days after such officer's last purchase or
sale of Shares prior to his or her ceasing to be such an
officer or (2) its Expiration Date, which ever shall first
occur, and provided further that the Committee may, in its
sole discretion if determined by the Committee that it would
be desirable for the Company, fix a date for termination of
such Option which is not later than the third anniversary of
such termination of employment or on its Expiration Date,
whichever shall first occur.
(C) In the event of the death of an Optionee and
either while he or she is employed by the Company or a
Subsidiary or, if Subparagraph (v)(B) or (v)(D) hereof is
applicable, during a period of time following his or her
termination of employment, such Option shall terminate on the
first anniversary of the Optionee's death or on its Expiration
Date, whichever shall first occur.
(D) In the event of the Optionee's termination of
employment with the Company or a Subsidiary for reasons of the
inability, due to mental or physical infirmity, of the
Optionee to discharge the regular responsibilities and duties
of his or her employment with the Company or a Subsidiary, as
the case may be ("Disability"), or for reasons of termination
of employment other than discharge for cause (1) at or after
age 65 or (2) before age 65 provided the Optionee has at the
time of such termination satisfied the age and vesting
requirements for normal or early retirement pursuant to the
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<PAGE> 33
terms of any "defined benefit plan" (as such term is defined
in Section 3(35) of the Employee Retirement Income Security
Act of 1974, as amended ("ERISA"), or any successor provision)
maintained by the Company or a Subsidiary (including the
American Premier Underwriters, Inc. Retirement Income
Guarantee Plan and any similar Subsidiary plans) in which the
Optionee participates or (3), if the Optionee does not
participate at the time of such termination in such a "defined
benefit plan," at or after age 55 and before age 65 provided
the Optionee has been employed by the Company or any of its
Subsidiaries for at least five full years (any of which
terminations shall constitute "Retirement"), such Option shall
terminate on the date which is two years after the date of
such termination of employment or on its Expiration Date,
whichever shall first occur.
(E) An Optionee's transfer of employment between the
Company and a Subsidiary or between Subsidiaries shall not
constitute a termination of employment and the Committee shall
determine in each case whether an authorized leave of absence
for military service or otherwise shall constitute a
termination of employment.
(F) For purposes of this Subparagraph (v) of
Paragraph 5(d), employment with any corporation that is a
"parent corporation" of the Company (within the meaning of
Section 424(e) of the Code) shall be treated in the same
manner as employment with a Subsidiary and, with respect to
any Incentive Option, the term "employment" shall be defined
in accordance with Section 1.421-7(h) of the Income Tax
Regulations (or any successor regulations).
(vi) Surrender of Options. The Committee may permit the
voluntary surrender of all or a portion of any Option to be
conditioned upon the granting to the Optionee under this Key Employee
Program of a new Option for the same or a different number of Shares
as the Option surrendered, or may require such voluntary surrender as
a condition precedent to a grant of a new Option to such Optionee.
Such new Option shall be exercisable at the price, during the period,
and in accordance with any other terms or conditions specified by the
Committee at the time the new Option is granted, all determined in
accordance with the provisions of this Key Employee Program without
regard to the price, period of exercise, or any other terms or
conditions of the Option surrendered except as provided in the final
proviso in Paragraph 5(d)(iv) above.
6. OUTSIDE DIRECTOR PROGRAM
The provisions of this Paragraph 6 are applicable only to Options
granted pursuant to the Outside Director Program and Options to Outside
Directors shall be granted only in accordance with the provisions of this
Paragraph 6.
(a) Effective Date. The Outside Director Program became effective
on October 27, 1988.
(b) Terms and Conditions of Options Granted to Outside Directors.
Each Option granted pursuant to the Outside Director Program shall be
evidenced by a written stock option agreement between the Company and the
Outside Director to whom the Option is granted (the "Optionee") in such form or
forms as the Committee, from time to time, shall prescribe, which agreements
need not be identical to each other but shall comply, inter alia, with and be
subject to the terms and conditions of this Paragraph 6(b). In addition, the
Committee may, in its absolute discretion, but subject to the provisions of
Paragraph 3(d), include in any such stock option agreement other terms,
conditions and provisions that are not inconsistent with the express provisions
of the Outside Director Program.
(i) Initial Automatic Grant. Each Outside Director shall be
granted an Option designated a Non-Incentive Option for 5,000 Shares
on the later of (A) October 27, 1988 or (B) the effective date of such
Outside Director's initial election as a member of the Board of
Directors. Such grant shall occur automatically without any further
action by the Board of Directors.
(ii) Subsequent Automatic Annual Grant. On each June 1
occurring prior to the termination of the Plan, beginning June 1,
1989, each Outside Director who is in office on such June 1 shall be
granted an Option designated a Non-Incentive Option for 1,000 Shares
automatically without any further action by the Board of Directors.
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<PAGE> 34
(iii) Option Price. The price at which each Share may be
purchased pursuant to an Option granted under the Outside Director
Program shall be equal to the "fair market value" for each such Share
as of the date on which the Option is granted (the "Date of Grant"),
but in no event shall such price be less than the par value of such
Shares. The "fair market value" of the Shares on any date shall be
the mean between the high and the low prices of the Shares on such
date on the New York Stock Exchange Composite Tape (or the principal
market in which the Shares are traded, if the Shares are not listed on
that Exchange on such date), or if the Shares were not traded on such
date, the mean between the high and the low prices of the Shares on
the next preceding trading day during which the Shares were traded.
Anything contained in this Subparagraph (iii) of Paragraph 6(b) to the
contrary notwithstanding, in the event that the number of Shares
subject to any Option is adjusted pursuant to Paragraph 4(b) hereof, a
corresponding adjustment shall be made in the price at which the
Shares subject to such Option may thereafter be purchased.
(iv) Duration of Options. Each Option granted under the
Outside Director Program shall expire and all rights to purchase
Shares pursuant thereto shall cease on the date (the "Expiration
Date") which shall be the third day after the tenth anniversary of the
Date of Grant of such Option.
(v) Vesting of Options. Each Option granted under the Outside
Director Program shall be fully exercisable and vested as of the Date
of Grant.
(vi) Exercise of Options. A person entitled to exercise an
Option may exercise it in whole at any time, or in part from time to
time, by delivering to the Secretary of the Company written notice
specifying the number of Shares with respect to which the Option is
being exercised, together with payment in full of the purchase price
of such Shares plus any applicable federal, state or local taxes for
which the Company (or a Subsidiary) has a withholding obligation in
connection with such exercise. Such payment shall be made in whole or
in part (A) in cash or by personal check, money market check,
certified check or bank draft to the order of the Company, (B) by the
exchange of Common Stock of the Company acquired by the person
entitled to exercise the Option more than 6 months prior to the date
of exercise and having a "fair market value" on the date of exercise
at least equal to the price for which the Shares may be purchased
pursuant to the Option plus any applicable federal, state or local
taxes for which the Company (or a Subsidiary) has a withholding
obligation as noted above (including any such taxes with respect to
income recognized by the Optionee upon the disposition of the Common
Stock of the Company used to effect such exchange), or (C) by a
promissory note payable to the Company, but only in accordance with
the provisions of, and from a person otherwise eligible under, the
Loan Program (1) in principal amount up to 100% of the payment or such
applicable lower percentage as may be specified by the Committee
pursuant to the Loan Program and (2) bearing interest at a rate not
less than the applicable test rate prescribed under Section 483 of
the Code, or any successor provision, or such higher rate as
may be specified by the Committee pursuant to the Loan Program.
Notwithstanding the foregoing, the Committee may, in its sole
discretion, authorize such payment, in whole or in part, in any other
form.
(vii) Termination of Service. In the event of an Outside
Director's termination of service as a member of the Board of
Directors for any reason, his or her Option(s) granted pursuant to the
Outside Director Program shall terminate on (A) the date which is the
later of (1) 90 days from the date of such termination of service or
(2) six months and ten days after such Outside Director's last
purchase or sale of Shares prior to his or her ceasing to be a member
of the Board of Directors or (B) its Expiration Date, whichever shall
first occur.
(viii) Terms Control. Except as expressly provided in this
Paragraph 6, grants of Options made pursuant to this Paragraph 6 shall
be subject to the terms and conditions of the Plan; however, if there
is a conflict between the terms and conditions of the Plan and this
Paragraph 6, then the terms and conditions of this Paragraph 6 shall
control.
7. MERGER, CONSOLIDATION, ETC.
In the event that the Company shall, pursuant to action by its Board
of Directors, at any time propose to merge into, consolidate with, or sell or
otherwise transfer all or substantially all of its assets to another
corporation and provision is not made pursuant to the terms of such transaction
for the assumption by the surviving, resulting or acquiring corporation of
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outstanding Options under the Plan, or for the substitution of new options
therefor, the Committee shall cause written notice of the proposed transaction
to be given to each Optionee not less than 40 days prior to the anticipated
effective date of the proposed transaction, and his or her Option shall
become fully (100%) vested and, prior to a date specified in such notice, which
shall be not more than 10 days prior to the anticipated effective date of the
proposed transaction, each Optionee shall have the right to exercise his or her
Option to purchase any or all Shares then subject to such Option, including
those, if any, which by reason of other provisions of the Plan have not then
become available for purchase. Each Optionee, by so notifying the Company in
writing, may, in exercising his or her Option, condition such exercise upon,
and provide that such exercise shall become effective at the time of, but
immediately prior to, the consummation of the transaction, in which event such
Optionee need not make payment for the Shares to be purchased upon exercise of
such Option until 5 days after written notice by the Company to such Optionee
that the transaction has been consummated. If the transaction is consummated,
each Option, to the extent not previously exercised prior to the date specified
in the foregoing notice, shall terminate on the effective date of such
consummation. If the transaction is abandoned, (a) any Shares not purchased
upon exercise of such Option shall continue to be available for purchase in
accordance with the other provisions of the Plan and (b) to the extent that any
Option not exercised prior to such abandonment shall have vested solely by
operation of this Paragraph 7, such vesting shall be deemed annulled, and the
vesting schedule set forth in Subparagraph (iii) of Paragraph 5(d) shall be
reinstituted, as of the date of such abandonment.
8. NONTRANSFERABILITY
Options shall not be transferable other than by will or the laws of
descent and distribution or pursuant to a qualified domestic relations order as
defined by the Code or Title I of ERISA, or the rules thereunder. Options may
be exercised, during the lifetime of the Optionee, only by the Optionee.
9. NO RIGHTS AS STOCKHOLDER OR TO CONTINUED EMPLOYMENT
No Optionee shall have any rights as a stockholder of the Company with
respect to any Shares prior to the date of issuance to him or her of the
certificate or certificates for such Shares and neither the Plan nor any Option
granted under the Plan shall confer upon an Optionee any right to continuance
of employment by the Company or any Subsidiary or interfere in any way with the
right of the Company or Subsidiary to terminate the employment of such
Optionee.
10. ISSUANCE OF SHARES; RESTRICTIONS
(a) Subject to the conditions and restrictions provided in this
Paragraph 10, the Company shall, within twenty business days after an Option
has been duly exercised in whole or in part, deliver to the person who
exercised the Option a certificate, registered in the name of such person, for
the number of Shares with respect to which the Option has been exercised. The
Company may legend any stock certificate issued hereunder to reflect any
restrictions provided for in this Paragraph 10.
(b) Unless the Shares subject to Options granted under the Plan have
been registered under the Securities Act of 1933, as amended (the "Act"), (and,
in the case of any Optionee who may be deemed an "affiliate" of the Company as
defined in Rule 405 under the Act, such Shares have been registered under the
Act for resale by such Optionee), or the Company has determined that an
exemption from registration is available, the Company may require prior to and
as a condition of the issuance of any Shares that the person exercising an
Option hereunder furnish the Company with a written representation in a form
prescribed by the Committee to the effect that such person is acquiring said
Shares solely with a view to investment for his or her own account and not with
a view to the resale or distribution of all or any part thereof and that such
person will not dispose of any of such Shares otherwise than in accordance with
the provisions of Rule 144 under the Act unless and until either the Shares are
registered under the Act or the Company is satisfied that an exemption for such
registration is available.
(c) Anything contained herein to the contrary notwithstanding, the
Company shall not be obligated to sell or issue any Shares under the Plan
unless and until the Company is satisfied that such sale or issuance complies
with (i) all applicable requirements of the New York Stock Exchange (or the
governing body of the principal market in which such Shares are traded, if such
Shares are not then listed on that Exchange), (ii) all applicable provisions of
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<PAGE> 36
the Act and (iii) all other laws or regulations by which the Company is bound
or to which the Company is subject.
(d) Separate Share certificates shall be issued upon the simultaneous
exercise of Incentive Options and Non-Incentive Options.
(e) Each Incentive Option shall require the Optionee to agree that if
he shall make a disposition (within the meaning of Section 424(c) of the Code
and the rules and regulations thereunder) of any Shares covered by such
Incentive Option within one year after the date of transfer to him of such
Shares or within two years from the date of grant of such Incentive Option,
then in either such event the Optionee shall promptly notify the Company, by
delivery of written notice to the Secretary of the Company, of (i) the date of
such disposition, (ii) the number of Shares covered by such Incentive Option
which were disposed of and (iii) the price at which such Shares were disposed
of or the amount of any other consideration received on such disposition. Each
Incentive Option granted under the Plan shall authorize the Company (or a
Subsidiary) to make such provision as it may deem appropriate for the
withholding of any applicable federal, state or local taxes that it determines
it may be obligated to withhold or pay in connection with the exercise of such
Incentive Option or the disposition of Shares acquired upon exercise of such
Incentive Option.
11. SUBSTITUTE OPTIONS
Anything contained herein to the contrary notwithstanding, Options
may, at the discretion of the Committee, be granted under the Plan in
substitution for options to purchase shares of capital stock of another
corporation which is merged into, consolidated with, or all or a substantial
portion of the property or stock of which is acquired by, the Company or a
Subsidiary. The terms, provisions and benefits to Optionees of such substitute
Options shall in all respects be identical to the terms, provisions and
benefits to optionees of the options of the other corporation on the date of
substitution, except that such substitute Options shall provide for the
purchase of Shares of the Company instead of shares of such other corporation.
12. TERM OF THE PLAN
Unless the Plan has been sooner terminated pursuant to Paragraph 13
hereof, the Plan shall terminate on, and no Options shall be granted after,
September 9, 2000. The provisions of the Plan, however, shall continue
thereafter to govern all Options theretofore granted, until the exercise,
expiration or cancellation of such Options.
13. AMENDMENT AND TERMINATION OF PLAN
The Board of Directors at any time may terminate the Plan or amend it
from time to time in such respects as it deems desirable; provided that,
without the further approval of the shareholders of the Company by the
affirmative vote of shareholders entitled to cast at least the majority of the
total number of votes represented (a quorum being present) at a meeting of
shareholders of the Company, no amendment shall (i) increase the maximum
aggregate number of Shares with respect to which Options may be granted under
the Plan, (ii) change the Option price provided for in Paragraphs 5(d)(i) and
6(b)(iii) hereof, or (iii) change the eligibility provisions of Paragraphs 5(b)
and 6 hereof; provided further that the provisions of the Plan applicable to
the Outside Director Program may not be amended more than once every six
months, other than to comport with changes in the Code, ERISA, or the rules
thereunder; and provided moreover that, subject to the provisions of Paragraph
10 hereof, no termination of or amendment to the Plan shall adversely affect
the rights of an Optionee or other person holding an Option theretofore granted
hereunder without the consent of such Optionee or other person, as the case may
be.
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ANNEX B
AMERICAN PREMIER GROUP, INC. EMPLOYEE STOCK PURCHASE PLAN
1. PURPOSE
The purpose of the American Premier Group, Inc. Employee Stock
Purchase Plan (the "Plan") is to enable employees of American Premier Group,
Inc. (the "Company") and its Subsidiaries to acquire or increase ownership
interests in the Company on a basis that will encourage them to perform at
increasing levels of effectiveness and use their best efforts to promote the
growth and profitability of the Company and its Subsidiaries. This is to be
done by providing employees a continued opportunity to purchase shares of the
Company's Common Stock, $1.00 par value ("Shares"), from the Company through
periodic offerings commencing June 1, 1990 or as soon as practicable thereafter
(the "Effective Date"). For this purpose, except as otherwise provided in
Section 18, the maximum aggregate number of Shares which Participating
Employees (defined in Section 4 below) may purchase under the Plan is
3,000,000.
The Plan is intended to comply with the provisions of
section 423 of the Internal Revenue Code of 1986, as amended (the "Code"), and
the Plan shall be administered, interpreted and construed accordingly.
2. ADMINISTRATION
(a) The Plan shall be administered by a committee of the Board
of Directors designated by the Board of Directors (the "Committee"),
consisting of a least three members, each of whom shall not have been eligible,
during the one-year period prior to the later of the Effective Date or such
member's appointment to the Committee, to receive a right to purchase Shares u
under this Plan, or to receive stock or an option to purchase stock of the
Company or a Subsidiary under any other plan maintained by the Company or a
Subsidiary under which such member has been eligible for selection on a
discretionary basis. Any member of the Committee who does not satisfy the
foregoing requirement shall not serve in his or her capacity as a Committee
member for purposes of administration of the Plan until one year has elapsed
from the date he or she was last eligible to receive such stock or such an
option under the Plan or such other plan. If, at any time, there are fewer
than three members of the Committee eligible to serve in such capacity for
purposes of administration of the Plan as a result of the preceding sentence or
otherwise, the Board of Directors shall appoint one or more members of the
Board of Directors, who shall qualify hereunder, to serve as members of the
Committee solely for purposes of administration of the Plan. All Committee
members shall serve, and may be removed, at the pleasure of the Board of
Directors.
(b) For purposes of administration of the Plan, a majority of the
members of the Committee (but not less than two) eligible to serve as such
shall constitute a quorum, and any action taken by a majority of such members
of the Committee present at any meeting at which a quorum is present, or acts
approved in writing by a majority of such members of the Committee, shall be
the acts of the Committee.
(c) Subject to the express provisions of the Plan, the Committee
shall have full discretionary authority to interpret the Plan, to issue rules
for administering the Plan, to change, alter, amend or rescind such rules,
and to make all other determinations necessary or appropriate for the
administration of the Plan. All determinations, interpretations and
constructions made by the Committee pursuant to this Section shall be final
and conclusive. No member of the Board of Directors of the Committee shall be
liable for any action, determination or omission taken or made in good faith
with respect to the Plan or any right granted hereunder.
(d) The Committee will engage a bank trust department or other
financial institution as agent (the "Agent") to perform custodial and
record-keeping functions for the Plan, such as holding record title to the
participating employees' Share certificates, maintaining an individual
investment account for each such employee and providing periodic account status
reports to such employees.
(e) The Committee shall have full discretionary authority to
delegate ministerial functions to management of the Company.
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3. ELIGIBLE EMPLOYEES
All employees of the Company, and of such of its Subsidiaries as may
be designated for such purpose from time to time by the Committee, shall be
eligible to participate in the Plan, provided each of such employees:
(a) has been employed by the Company or any of its Subsidiaries for
at least three months,
(b) is customarily employed for more than 20 hours per week,
(c) is customarily employed for more than five months per calendar
year, and
(d) does not own, immediately after the right to purchase Shares
under the Plan is granted, stock possessing 5% or more of the total combined
voting power or value of all classes of stock of the Company or a Subsidiary.
In determining stock ownership for purposes of the preceding sentence, the
rules of section 424(d) of the Code shall apply and stock which the employee
may purchase under outstanding options shall be treated as stock owned by the
employee.
The term "Subsidiary" as used in the Plan shall mean any corporation
in an unbroken chain of corporations beginning with the Company if each of the
corporations other than the last corporation in the unbroken chain owns stock
possessing 50% or more of the total combined voting power of all classes of
stock in one of the other corporations in such chain, and such term shall also
include any corporation (other than the Company) in an unbroken chain of
corporations ending with the Company if each of the corporations other than the
Company owns stock possessing 50% or more of the combined voting power of all
classes of stock in one of the other corporations in such chain.
For purposes of this Section, "employment" shall be defined in
accordance with the provisions of Section 1.421-7(h) of the Treasury
Regulations (or any successor regulations). Employees eligible to participate
in the Plan pursuant to the provisions of this Section are hereinafter referred
to as "Eligible Employees."
4. ELECTION TO PARTICIPATE
Each Eligible Employee may participate in the Plan by filing with the
Company an election to purchase form (the "Form") authorizing specified regular
payroll deductions. Eligible Employees who so elect to participate in the
Plan are hereinafter referred to as "Participating Employees." The Form must
specify the date on which such deduction is to commence, which may not be
retroactive. Payroll deductions may be in any amount, but not less than $10
per payroll period, specified by the Participating Employee up to 25% (or such
lower percentage as may be specified by the Committee) of the Participating
Employee's annual rate of base compensation (as defined by the Committee) in
effect at the time of his filing of the Form. All regular payroll deductions
shall be recorded in a non-interest bearing account which the Company (or the
Subsidiary which employs the Participating Employee) shall establish for
Participating Employees (the "Payroll Deduction Account").
All funds recorded in Payroll Deduction Accounts may be used by the
Company and its Subsidiaries for any corporate purpose, subject to the right
of a Participating Employee to withdraw at any time an amount equal to the
balance accumulated in his or her Payroll Deduction Account as described in
Section 7 below. Funds recorded in Payroll Deduction Accounts shall not be
required to be segregated from any funds of the Company or any of its
Subsidiaries.
5. DEDUCTION CHANGES
A Participating Employee may at any time increase or decrease his or
her payroll deduction by filing a new Form. The change may not become
effective sooner than the next pay period after receipt of the Form. A payroll
deduction change (which shall include any increase or decrease) may not be made
more than twice during any calendar year.
6. LIMITATION ON PURCHASE OF SHARES
No employee may be granted a right to purchase Shares under this Plan,
and any other stock purchase plan of the Company and its Subsidiaries under
section 423 of the Code, at a rate which exceeds $25,000 of the fair market
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<PAGE> 39
value of such Shares (determined on the date of purchase of the Shares) for
each calendar year.
The foregoing limitation shall be interpreted by the Committee in
accordance with applicable rules and regulations issued under the Code.
7. WITHDRAWAL OF FUNDS
A Participating Employee may at any time prior to a Purchase Date
(defined in Section 8 below) and for any reason withdraw from participation in
the Plan, in which case the entire balance accumulated in his or her Payroll
Deduction Account shall be paid to him or her as soon as practicable
thereafter. Partial withdrawals will not be permitted.
8. METHOD OF PURCHASE AND INVESTMENT ACCOUNTS
The term "Payroll Deduction Period" shall mean a period of one, two or
three calendar months, as determined by the Committee. The term "Purchase
Date" as used in the Plan shall mean the last business day of each Payroll
Deduction Period (or as soon as practicable thereafter) commencing after the
Effective Date. Each Participating Employee having funds in his or her Payroll
Deduction Account on a Purchase Date shall be deemed, without any further
action, to have been granted on such Purchase Date, and to have exercised on
such Purchase Date, the option to purchase from the Company the number of whole
and fractional Shares which the funds in his or her Payroll Deduction Account
would purchase at the Purchase Price (as hereinafter defined) on such Purchase
Date, subject to the Share limitation in Section 1 and the restrictions set
forth in Section 6. Such option will be deemed exercised if the Participating
Employee does not withdraw such funds prior to the Purchase Date. All Shares
so purchased (including fractional Shares) shall be credited to a separate
Investment Account established by the Agent for each Participating Employee.
The Agent shall hold in its name or the name of its nominee all certificates
for Shares purchased until Shares are withdrawn by a Participating Employee
pursuant to Section 10 below.
All cash dividends paid with respect to the whole and fractional Shares
in a Participating Employee's Investment Account shall, unless otherwise
directed by the Committee, be credited to his or her Investment Account and
used, in the same manner as payroll deductions, to purchase additional Shares
under the Plan on the next Purchase Date, subject to the Share limitation in
Section 1 and the restrictions set forth in Section 6. Shares so purchased
shall be added to the Shares held for the Participating Employee in his or her
Investment Account.
9. PURCHASE PRICE
The Purchase Price for each whole or fractional Share shall be 85% of
the fair market value of such whole or fractional Share on the Purchase Date
(as defined in Section 8 above), provided that the Purchase Price shall in no
event be less than the par value of such Share.
Fair market value shall be the mean of the high and low sales prices
of such Shares on the Purchase Date on the New York Stock Exchange Composite
Tape (or the principal market in which the Shares are traded, if the Shares are
not listed on the New York Stock Exchange on such Date), or, if the Shares
shall not have been traded on such Date, the mean of the high and low sales
prices of such Shares on the next preceding day on which sales were made.
10. WITHDRAWAL OF CERTIFICATES
Subject to Sections 13 and 21 below, a Participating Employee shall
have the right at any time to withdraw a certificate or certificates for all or
a portion of the Shares credited to his or her Investment Account by giving
written notice to the Company, provided, however, that (a) no such request may
be made more frequently than once per calendar quarter and (b) no Participating
Employee shall be entitled to receive a certificate for any fractional Share.
The Company will pay any stamp taxes imposed in connection with the issuance of
any certificate under the Plan.
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<PAGE> 40
11. REGISTRATION OF CERTIFICATES
Each certificate withdrawn by a Participating Employee may be
registered only in the name of the Participating Employee, or, if the
Participating Employee so indicated on the Participating Employee's Form, in
the Participating Employee's name jointly with a member of the Participating
Employee's family, with right of survivorship. A Participating Employee who is
a resident of a jurisdiction which does not recognize such a joint tenancy may
have certificates registered in the Participating Employee's name as tenant in
common or as community property with a member of the Participating Employee's
family, without right of survivorship.
12. VOTING
The Agent shall vote all Shares held in an Investment Account in
accordance with the Participating Employee's instructions.
13. LIMITATION ON RESALE
Notwithstanding anything in the Plan to the contrary, if any
Participating Employee sells any Share purchased under the Plan (or withdraws
any certificate representing such Share) during the first year following the
date of purchase of such Share, such Participating Employee shall not be
eligible to make further purchases under the Plan, or to have payroll
deductions made for such purpose, for a period of one year after such sale (or
for such shorter period, if any, as the Committee shall have established).
14. RIGHTS ON RETIREMENT, DEATH OR OTHER TERMINATION OF
EMPLOYMENT
In the event of a Participating Employee's retirement, death or other
termination of employment, or in the event that a Participating Employee
otherwise ceases to be an Eligible Employee, (a) no payroll deduction shall be
taken from any pay due and owing to the Participating Employee thereafter, and
the balance in the Participating Employee's Payroll Deduction Account shall be
paid to the Participating Employee or, in the event of the Participating
Employee's death, to his or her designated beneficiary under the Plan (and, if
none, then to his or her estate) and (b) a certificate for the full Shares
credited to the Participating Employee's Investment Account will be forwarded
to the Participating Employee (or, in the case of his or her death, such
beneficiary or estate) and any fractional Share interest held in such
Investment Account will be disposed of and the proceeds, less any selling
expenses, will be remitted to the Participating Employee (or, in the case of
his or her death, such beneficiary or estate).
15. RIGHTS NOT TRANSFERABLE
Rights under the Plan are not transferable by a Participating
Employee other than by will or the laws of descent and distribution, and
are exercisable during the employee's lifetime only by the employee.
16. NO RIGHT TO CONTINUED EMPLOYMENT
Neither the Plan nor any right granted under the Plan shall confer
upon any Participating Employee any right to continuance of employment with the
Company or any Subsidiary, or interfere in any way with the right of the
Company or Subsidiary to terminate the employment of such Participating
Employee.
17. APPLICATION OF FUNDS
All funds received or held by the Company under this Plan may be used
for any corporate purpose.
18. ADJUSTMENT IN CASE OF CHANGES AFFECTING SHARES
In the event of a subdivision of outstanding Shares, or the payment of
a stock dividend, the Share limitation set forth in Section 1 shall be adjusted
proportionately, and such other adjustments shall be made as may be deemed
equitable by the Committee. In the event of any other change affecting Shares
(including any event described in section 424(a) of the Code), such adjustment
shall be made as may be deemed equitable by the Committee to give proper effect
to such event, subject to the limitations of section 424 of the Code.
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<PAGE> 41
19. AMENDMENT OF THE PLAN
The Board of Directors may at any time, or from time to time, amend
this Plan in any respect, except that, without approval by the shareholders
of the Company entitled to cast at least the majority of the total number of
votes represented (a quorum being present), no amendment shall be made (i)
increasing the maximum aggregate number of Shares which may be purchased by
Participating Employees under this Plan other than as provided in Section 18 or
(ii) changing the designation of employees eligible to participate in the Plan.
20. TERMINATION OF THE PLAN
The Plan and all rights of employees under any offering hereunder
shall terminate:
(a) on the day that Participating Employees become entitled to
purchase a number of Shares greater than the number of Shares remaining
available for purchase in accordance with Section 1, as adjusted by Section 18.
If the number of Shares so purchasable is greater than the Shares remaining
available, the available Shares shall be allocated by the Committee among such
Participating Employees on a pro rata basis; or
(b) at any time at the discretion of the Board of Directors.
Upon termination of this Plan (i) all amounts in the Payroll Deduction
Accounts of Participating Employees shall be carried forward into the
Participating Employee's Payroll Deduction Account under a successor plan, if
any, or promptly refunded, (ii) all certificates for the full Shares credited
to a Participating Employee's Investment Account shall be forwarded to him or
her and (iii) any fractional Share interest held in a Participating Employee's
Investment Account shall be disposed of and the proceeds, less any selling
expenses, shall be remitted to him or her. The Board of Directors shall have
the right to suspend the Plan at any time.
21. GOVERNMENTAL REGULATIONS
(a) Anything contained in the Plan to the contrary notwithstanding,
the Company shall not be obligated to sell or deliver any Shares or
certificates under the Plan unless and until the Company is satisfied that such
sale or delivery complies with (i) all applicable requirements of the New York
Stock Exchange (or the governing body of the principal market in which such
Shares are traded, if such Shares are not then listed on that Exchange), (ii)
all applicable provisions of the Securities Act of 1933 and (iii) all other
laws or regulations by which the Company is bound or to which the Company is
subject.
(b) The Company (or a Subsidiary) may make such provisions as it may
deem appropriate for the withholding of any taxes or payment of any taxes
which it determines it may be required to withhold or pay in connection with
any Shares. The obligation of the Company to deliver certificates under this
Plan is conditioned upon the satisfaction of the provisions set forth in the
preceding sentence.
22. SOURCE OF SHARES
Shares to be purchased from the Company under the Plan shall be (a)
previously acquired treasury Shares or (b) authorized but unissued Shares.
Notwithstanding anything to the contrary in this Plan, if and to the extent
authorized by the Committee, the Agent may make purchases of Shares on behalf
of Participating Employees under the Plan through market transactions rather
than purchases from the Company.
23. REPURCHASE OF SHARES
The Company shall not be required to repurchase from any Participating
Employee any Shares which such Participating Employee acquires under the Plan.
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PRELIMINARY COPY
AMERICAN PREMIER GROUP, INC.
COMMON STOCK
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS FOR ANNUAL
MEETING ON JUNE 6, 1995
Registration Name and Address PROXY
The undersigned appoints James E. Evans, Neil M. Hahl and Robert W. Olson, and
each of them, attorneys and proxies, with the power of substitution to each, to
vote all shares of Common Stock of American Premier Group, Inc. (the "Company")
that the undersigned may be entitled to vote at the Annual Meeting of
Shareholders of the Company to be held on JUNE 6, 1995, at 10:30 A.M., local
time, at The Cincinnatian Hotel, 601 Vine Street, Cincinnati, Ohio, and (if
cumulative voting is invoked by a shareholder through proper notice to the
Company) at their discretion to cumulate votes in the election of directors, on
the proposals set forth below and on such other matters as may properly come
before the meeting or any adjournment thereof.
THE PROXY HOLDERS WILL VOTE THE SHARES REPRESENTED BY THIS PROXY IN THE MANNER
INDICATED BELOW. UNLESS A CONTRARY DIRECTION IS INDICATED, THE
PROXY HOLDERS WILL, EXCEPT TO THE EXTENT THEY EXERCISE THEIR DISCRETION TO
CUMULATE VOTES IN THE ELECTION OF DIRECTORS, VOTE SUCH SHARES "FOR" EACH OF
THE FOUR PROPOSALS SET FORTH BELOW. IF CUMULATIVE VOTING IS INVOKED BY A
SHAREHOLDER THROUGH PROPER NOTICE TO THE COMPANY, UNLESS A CONTRARY DIRECTION
IS INDICATED, THIS PROXY WILL GIVE THE PROXY HOLDERS NAMED ABOVE AUTHORITY,
IN THEIR DISCRETION, TO CUMULATE ALL VOTES TO WHICH THE UNDERSIGNED IS ENTITLED
IN RESPECT OF THE SHARES REPRESENTED BY THIS PROXY AND ALLOCATE THEM IN FAVOR
OF ANY ONE OR MORE OF THE NOMINEES FOR DIRECTOR, IF ANY SITUATION ARISES WHICH,
IN THE OPINION OF THE PROXY HOLDERS, MAKES SUCH ACTION NECESSARY OR DESIRABLE.
IF ANY FURTHER MATTERS PROPERLY COME BEFORE THE MEETING, SUCH SHARES SHALL BE
VOTED ON SUCH MATTERS IN ACCORDANCE WITH THE BEST JUDGMENT OF THE PROXY HOLDERS
NAMED ABOVE.
The Board of Directors recommends a
vote FOR each of the
following proposals
<TABLE>
<S> <C> <C>
1. Election of directors:
__ FOR AUTHORITY to elect __ WITHHOLD AUTHORITY
the nominees listed below to vote for every
(except those whose names nominee listed below
have been crossed out)
THEODORE H. EMMERICH CARL H. LINDNER S. CRAIG LINDNER
JAMES E. EVANS CARL H. LINDNER III WILLIAM R. MARTIN
THOMAS M. HUNT KEITH E. LINDNER ALFRED W. MARTINELLI
</TABLE>
2. Amendment of the Articles of Incorporation to change the Company's
name to "American Financial Group, Inc.".
__ FOR __ AGAINST __ ABSTAIN
3. Approval of the Company's Stock Option Plan and related amendments
thereto.
__ FOR __ AGAINST __ ABSTAIN
4. Approval of the Company's Employee Stock Purchase Plan.
__ FOR __ AGAINST __ ABSTAIN
- - - ------------------------------------------------------------------------------
DATE: _____________________________, 1995 SIGNATURE: ________________________
SIGNATURE: ________________________
(IF HELD JOINTLY) IMPORTANT: PLEASE
SIGN AS NAME APPEARS HEREON
INDICATING, WHERE PROPER, OFFICIAL
POSITION OR REPRESENTATIVE CAPACITY.
EXECUTORS, ADMINISTRATORS, TRUSTEES,
GUARDIANS, ATTORNEYS AND CORPORATE
OFFICERS SHOULD GIVE THEIR FULL
TITLES AS SUCH. IN CASE OF JOINT
HOLDERS, ALL SHOULD SIGN.
TO VOTE YOUR SHARES, PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY FORM USING
THE ENCLOSED ENVELOPE.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
