<PAGE> 1
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement / / Confidential, for Use of the Commission
/X/ Definitive Proxy Statement Only (as permitted by Rule 14a-6(e)(2))
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
CONNING CORPORATION
-------------------
(Name of Registrant as Specified in Its Charter)
- -------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1) 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
[CONNING LOGO]
NOTICE OF THE ANNUAL MEETING OF
SHAREHOLDERS OF
CONNING CORPORATION
TO BE HELD MAY 12, 1998
TO THE SHAREHOLDERS OF
CONNING CORPORATION:
The Annual Meeting of the Shareholders of Conning Corporation will be held
at the Ritz-Carlton Hotel, 100 Carondelet Plaza, St. Louis, Missouri on
Tuesday, May 12, 1998, commencing at 9:30 a.m., at which meeting only holders
of record of the Company's Common Stock at the close of business on March 31,
1998 will be entitled to vote, for the following purposes:
1. to elect one director for a three-year term;
2. to ratify the appointment of KPMG Peat Marwick LLP as the Company's
independent accountants for the fiscal year ended December 31, 1998; and
3. to transact such other and further business, if any, as may properly
come before the Meeting.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ LEONARD M. RUBENSTEIN
Chairman of the Board and Chief Executive Officer
/S/ MATTHEY P. MCCAULEY
Secretary
St. Louis, Missouri
April 8, 1998
EVEN IF YOU PLAN TO ATTEND THE MEETING IN PERSON, PLEASE MARK, DATE AND
SIGN THE ENCLOSED PROXY CARD AND MAIL IT PROMPTLY. A POSTAGE-PAID RETURN
ENVELOPE IS ENCLOSED FOR YOUR CONVENIENCE.
<PAGE> 3
[CONNING LOGO]
CONNING CORPORATION
700 MARKET STREET, ST. LOUIS, MISSOURI 63101
PROXY STATEMENT
RELATING TO THE
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 12, 1998
This proxy statement is furnished to the holders of Common Stock of Conning
Corporation (the "Company" or "Conning") in connection with the
solicitation of proxies for use in connection with the Annual Meeting of the
Shareholders to be held May 12, 1998 at the Ritz-Carlton Hotel, 100 Carondelet
Plaza, St. Louis, Missouri at 9:30 a.m., Central time, and all adjournments and
postponements thereof, for the purposes set forth in the accompanying Notice of
Annual Meeting of the Shareholders. The Company is first mailing this Proxy
Statement and the enclosed proxy card to shareholders on or about April 8,
1998.
Whether or not you expect to be present in person at the meeting, you are
requested to complete, sign, date, and return the enclosed form of proxy. If
you attend the meeting, you may vote by ballot. If you do not attend the
meeting, your shares of Common Stock can be voted only when represented by a
properly executed proxy.
Any person giving such a proxy has the right to revoke it at any time
before it is voted by giving written notice of revocation to the Secretary of
the Company, by duly executing and delivering a proxy bearing a later date, or
by attending the Annual Meeting and voting in person.
The close of business on March 31, 1998 has been fixed as the record date
for the determination of shareholders entitled to vote at the Annual Meeting.
As of the record date, there were 13,250,000 shares of Common Stock outstanding
and entitled to be voted at such meeting, and 76 holders of record.
Shareholders will be entitled to cast one vote on each matter for each share of
Common Stock held of record on the record date, except in certain circumstances
described under "Voting Matters." A list of shareholders entitled to vote at
the Annual meeting will be kept at the Company's principal offices at 700
Market Street, St. Louis, Missouri 63101 for a period of ten days prior to the
Meeting, and will be available for inspection at the Meeting.
A copy of the Company's Annual Report to Shareholders for the fiscal year
ended December 31, 1997 accompanies this proxy statement.
The solicitation of this proxy is made by the Board of Directors of the
Company. The solicitation will be primarily by mail. In addition, proxies may
be solicited by telephone or telefax by directors, officers or employees of the
Company who will receive no extra compensation for their services. Expenses in
connection with the solicitation of proxies will be paid by the Company.
<PAGE> 4
ELECTION OF DIRECTORS
NOMINEES AND CONTINUING DIRECTORS
The Company's Board of Directors is divided into three classes, with terms
expiring at the annual meeting of shareholders in successive years, commencing
with the 1998 Annual Meeting. All of the current directors were elected
pursuant to action of the Company's shareholders in June 1997. Commencing at
this Annual Meeting, all directors standing for election will be elected for
three-year terms, with one class of directors being elected at each annual
meeting of shareholders. At the Annual Meeting, one director of the Company is
to be elected for a term expiring at the Annual Meeting in 2001, or until his
successor is elected and qualified. Certain information with respect to John A.
Fibiger, the nominee for election as director proposed by the Company, and the
other directors whose terms of office as directors will continue after the
Annual Meeting is set forth below. Each director has served in his principal
occupation for the last five years, unless otherwise indicated. Should Mr.
Fibiger decline or become unable to serve (which is not expected), the proxies
(except proxies marked to the contrary) will be voted for such other person as
the Board of Directors of the Company may recommend. Mr. Fibiger has agreed to
serve as a director if elected. The Board of Directors nominates directors and
will accept recommendations for director nominations from shareholders. See
"Shareholder Proposals and Director Nominations."
NAME, AGE, PRINCIPAL OCCUPATION OR POSITION, AND OTHER DIRECTORSHIPS
TO BE ELECTED AS A DIRECTOR FOR TERM ENDING 2001:
JOHN A. FIBIGER, 65 Mr. Fibiger has been a director of the Company since
June 1997. Until April 1997, he was Chairman of the Board of Transamerica
Occidental Life Insurance Company as well as a director of four of its wholly
owned life insurance subsidiaries. He is currently a director of two of such
subsidiaries--Transamerica Life Company of Canada and Transamerica Life Company
of New York. Mr. Fibiger joined Transamerica Life Companies as CFO in 1991. He
was named President of Transamerica Occidental Life Insurance Company, one of
the seven Transamerica Life Companies, in December 1994. A 38-year veteran of
the life insurance industry, Mr. Fibiger was Vice Chairman, President and Chief
Operating Officer of New England Mutual Life Insurance Company in Boston and
held positions with Bankers Life Nebraska (now Ameritas) and Lincoln National
Life. A past board member of the Society of Actuaries, Mr. Fibiger was the
first chairman of the Interim Actuarial Standards Board and served as President
of the American Academy of Actuaries. He is a past member of the Council of the
International Actuarial Association.
TO CONTINUE IN OFFICE UNTIL 1999:
RICHARD A. LIDDY, 62 Mr. Liddy has been a director of the Company since
November 1996. He is President, Chief Executive Officer and Chairman of the
Board of General American Life Insurance Company, and President and Chairman of
GenAmerica Corporation and General American Mutual Holding Company. From 1982
through 1988, he was Senior Vice President and Executive Vice President of
Continental Corporation, and President, Financial Services Group of Continental
Insurance Company. He is also Chairman of the Board of General American Capital
Company and The Walnut Street Funds, Inc., each a registered investment
company, Chairman of Paragon Life Insurance Company, Reinsurance Group of
America, Incorporated, Security Equity Life Insurance Company and Security
Mutual Life Insurance Company of New York, and a director of Ameren
Corporation, Brown Group, Inc. and Ralston Purina Company.
JOHN C. SHAW, 64 Mr. Shaw has been a director of the Company since June
1997. He is the founding partner of the Shaw Group LLC, a management consulting
firm specializing in transformation management. In March 1998, he was named
Dean of the Peter F. Drucker Graduate School of Management at Claremont
University. From 1994 to 1997, he served in the Office of Chairman of Well
Point Health Network, Inc., a publicly-traded managed healthcare company. From
1966 to 1994, he was a partner of Deloitte & Touche, most recently serving as
Vice Chairman. Previously he has served as national director for Strategic
Planning, Partner-In-Charge of the New York office and a member of the Board of
Directors and Board of Governors for Touche Ross. Mr. Shaw has taught at
Stanford Business School and the Wharton School, lectured at several national
seminars and authored several books and articles on modern business techniques.
2
<PAGE> 5
NAME, AGE, PRINCIPAL OCCUPATION OR POSITION, AND OTHER DIRECTORSHIPS
TO CONTINUE IN OFFICE UNTIL 2000:
LEONARD M. RUBENSTEIN, 52 Mr. Rubenstein has been a director of the
Company since its formation in August 1995. Mr. Rubenstein, C.F.A., has been
Chairman and CEO of the Company since 1995 and serves as Chairman and CEO of
Conning Asset Management Company. Mr. Rubenstein has 25 years of investment
experience. Prior to his position with Conning, Mr. Rubenstein spent 23 years
in the investment operations of General American Life Insurance Company
("General American"), where he held various positions, including Executive
Vice President of Investments. From 1984 to 1991, Mr. Rubenstein served as Vice
President of General American. He is a director of a number of General American
subsidiaries, none of which is registered with the SEC except Reinsurance Group
of America, Incorporated. Mr. Rubenstein is a past president of the St. Louis
Society of Financial Analysts.
MAURICE W. SLAYTON, 59 Mr. Slayton has been a director of the Company
since its formation in August 1995. Mr. Slayton has been President of the
Company since 1995 and also serves as Chairman, President and CEO of Conning &
Company, a subsidiary of the Company. Mr. Slayton joined Conning in 1973. Prior
thereto, he had 12 years of experience with Hartford Steam Boiler Inspection
and Insurance Company and National Life of Vermont in a number of insurance and
investment positions. He is currently a director of several insurance related
entities, none of which is registered with the SEC except PennCorp Financial
Group, Inc. Mr. Slayton is a member and past president of The Hartford Society
of Financial Analysts.
COMMITTEES AND MEETINGS OF THE BOARD OF DIRECTORS
From November 1996 to June 1997, the Board of Directors was comprised of
Mr. Rubenstein, Mr. Slayton, Mr. Liddy and four senior officers of the Company.
In June 1997, the size of the Board was reduced to five, the four senior
officers resigned as directors, and Mr. Fibiger and Mr. Shaw were elected as
directors. The Board of Directors met a total of two times during 1997, both of
which meetings occurred after June 1997. Each incumbent director attended all
of the meetings of the Board and committees on which he served during 1997.
The Board of Directors currently has an Audit Committee, a General
Compensation Committee, and an Executive Compensation Committee. The Board of
Directors does not have a standing nominating committee. Prior to October 1997,
the only committee of the Board was a Compensation Committee. The Audit
Committee, of which Messrs. Fibiger, Liddy and Shaw are members, did not meet
during 1997. This Committee is responsible for overseeing the integrity and
reliability of the Company's accounting and financial reporting practices and
the effectiveness of its system of controls. It also recommends a public
accounting firm to be retained for the coming year and reviews the work to be
done by such firm. The General Compensation Committee, which consists of
Messrs. Rubenstein, Slayton and Liddy, met once, in December 1997. This
Committee establishes and oversees the compensation policies of the Company's
operating subsidiaries and determines all compensation, other than executive
stock-based compensation. The Executive Compensation Committee, which was
formed in October 1997, determines all stock-based compensation awards to
executive officers and also reviews decisions of the General Compensation
Committee regarding executive compensation generally. This Committee is
comprised of Messrs. Fibiger and Shaw and met once between October and December
of 1997. The Compensation Committee that existed until October 1997 was
comprised of Messrs. Rubenstein and Slayton and made all compensation
decisions. The Compensation Committee held one meeting between January and
October of 1997.
DIRECTOR COMPENSATION
The Company pays each director who is not employed by the Company or an
affiliate of the Company a $10,000 annual retainer. The annual retainer paid to
each non-employee director for 1997 was pro rated for the portion of the year
during which such director served. The Company also pays each non-employee
director $1,000 for each Board meeting attended in person and $500 for each
telephonic Board meeting attended, plus expenses. In addition, commencing
January 1, 1998, the Company pays each non-employee director $750 for each
committee meeting attended in person and $375 for each telephonic committee
meeting attended, plus expenses.
Directors of the Company are also eligible to participate in the Company's
1997 Flexible Stock Plan. Upon the closing of the Company's initial public
offering in December 1997, the Company granted stock options to purchase 5,000
shares of Common Stock to each of Messrs. Fibiger and Shaw, the two
non-employee directors. Such options
3
<PAGE> 6
have an exercise price of $13.50 per share (the initial public offering price)
and vest in annual increments of 1/15th, 2/15th, 3/15th, 4/15th and 5/15th,
commencing December 19, 1998. The options become fully exercisable upon the
director's retirement. In addition, Mr. Liddy holds an option to purchase
25,000 shares of Common Stock at an exercise price of $7.00 per share, which
vests in 20% annual increments commencing December 7, 1997. This option was
granted as part of an incentive stock option grant to certain officers and
directors in 1996.
COMMON STOCK OWNERSHIP OF MANAGEMENT AND CERTAIN BENEFICIAL OWNERS
The following table sets forth certain stock ownership information, as of
March 1, 1998, with respect to (i) each person known to the Company to be the
beneficial owner of 5% or more of the Company's outstanding Common Stock, (ii)
each director of the Company, (iii) each executive officer of the Company named
in the Summary Compensation Table, and (iv) all directors and executive
officers as a group.
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF PERCENT
BENEFICIAL OWNER BENEFICIAL OWNERSHIP OF CLASS
---------------- -------------------- --------
<S> <C> <C>
GREATER THAN 5% SHAREHOLDER:
General American Mutual Holding
Company............................... 8,304,995<F1> 62.7%
700 Market Street
St. Louis, Missouri 63101
DIRECTORS AND NAMED EXECUTIVE OFFICERS:
Leonard M. Rubenstein, Chairman of the
Board and Chief Executive Officer..... 223,565<F2> 1.7%
Maurice W. Slayton, Director and
President............................. 494,187<F3> 3.7%
Mark E. Hansen, Executive Vice
President............................. 331,307<F3> 2.5%
Fred M. Schpero, Senior Vice President
and Chief Financial Officer........... 47,046<F4> <F*>
John A. Fibiger, Director............... 2,000 <F*>
Richard A. Liddy, Director.............. 55,000<F5> <F*>
John C. Shaw, Director.................. 1,000 <F*>
All directors and executive officers as
a group (7 persons) <F7>................ 1,154,105<F6> 8.4%
<FN>
- --------
<F*> Represents less than one percent.
<F1> Shares beneficially owned by General American Holding Company, a
wholly-owned subsidiary of General American Life Insurance Company, which
is a wholly-owned subsidiary of GenAmerica Corporation, which is a
wholly-owned subsidiary of General American Mutual Holding Company
("GAMHC").
<F2> Includes 183,565 shares of Common Stock subject to stock options that are
exercisable within 60 days.
<F3> Includes 175,999 shares of Common Stock subject to stock options that are
exercisable within 60 days.
<F4> Includes 12,000 shares of Common Stock subject to stock options that are
exercisable within 60 days.
<F5> Includes 5,000 shares of Common Stock subject to stock options that are
exercisable within 60 days. Mr. Liddy is a director and executive officer
of GAMHC and certain of its affiliates. He disclaims beneficial ownership
of the shares beneficially owned by GAMHC.
<F6> Includes a total of 552,563 shares of Common Stock subject to stock
options that are exercisable within 60 days.
<F7> Effective April 1, 1998, the Company designated five additional executive
officers and effective May 1, 1998, Mr. Hansen will no longer serve as an
executive officer, although he will continue to work for the Company. See
"Executive Compensation." Based on their current stock ownership
positions, the Company's executive officers and directors as of May 1,
1998 (11 persons) beneficially own a total of 1,451,242 shares, including
630,310 shares subject to stock options that are exercisable within 60
days. This amount represents approximately 10.5% of the Company's
outstanding Common Stock.
</TABLE>
4
<PAGE> 7
SECTION 16(a) BENEFICIAL OWNERSHIP
REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors, executive officers, and persons who beneficially own more than ten
percent of the Company's Common Stock, to file reports of ownership and changes
in ownership on Forms 3, 4 and 5 with the Securities and Exchange Commission
and The Nasdaq Stock Market, and to provide copies of such forms to the
Company.
Based solely on the Company's review of the copies of such forms it has
received, or written representations from certain reporting persons, the
Company believes that all its directors, executive officers and greater than
10% beneficial owners complied with all filing requirements applicable to them
with respect to transactions during 1997.
COMPENSATION COMMITTEE REPORT
ON EXECUTIVE COMPENSATION
Until October 1997, the Company had a Compensation Committee comprised of
Messrs. Rubenstein and Slayton. In October 1997, the Company established a
General Compensation Committee, comprised of Messrs. Rubenstein and Slayton,
and an Executive Compensation Committee, comprised of Messrs. Fibiger and Shaw.
In December 1997, Mr. Liddy also became a member of General Compensation
Committee. The General Compensation Committee is responsible for making all
compensation decisions with respect to non-executive officers and all cash
compensation decisions for executive officers. The Executive Compensation
Committee makes all decisions regarding the award of stock-based compensation
to executive officers and reviews decisions of the General Compensation
Committee regarding total executive officer compensation. Prior to October
1997, the Compensation Committee was responsible for making all compensation
decisions.
The Company's compensation to executive officers and key employees is
comprised of three principal components--salary, cash bonus and stock
options--and, in certain instances, private equity fund carried interest
participations. The Company considers incentive compensation, in the form of
cash bonus and stock options, to be an important component of overall
compensation as the amount and value of an individual's bonus and stock options
are significantly dependent upon the Company's financial results and the
performance of the Company's stock. The Company believes this approach aligns
the interests of management and shareholders and encourages management to focus
on the Company's long-term business objectives and growth. Members of the
Company's management team also have a significant direct stock ownership
interest in the Company. The Company's significant officers (Senior Vice
Presidents and above) own approximately 22% of the Company's Common Stock,
including vested stock options. Pursuant to the terms of an Amended and
Restated Shareholders' Agreement among the Company, its shareholders and
optionholders, and General American Life Insurance Company, which was in place
prior to the Company's initial public offering, the Company is required to
maintain its general approach and methodology regarding cash compensation and
private equity fund carried interest allocations until August 1998.
The Company is a party to employment agreements, entered into in August
1995 (the "Employment Agreements") with its executive officers and certain
other employees. The Employment Agreements have three-year terms that expire on
August 11, 1998. Under each Employment Agreement, the employee is entitled to
receive a minimum annual base salary, subject to increases pursuant to periodic
salary reviews consistent with the Company's compensation policies, and is
entitled to participate in the Company's bonus and private equity carried
interest programs. See "Executive Compensation--Employment Agreements and
Other Compensation Arrangements."
The following summary describes the Company's executive compensation for
the fiscal year ended December 31, 1997, during which time the Company's
executive officers were Leonard M. Rubenstein (CEO and Chairman), Maurice W.
Slayton (President), Mark E. Hansen (Executive Vice President) and Fred M.
Schpero (Senior Vice President and CFO). Effective April 1, 1998, the Company
designated five additional executive officers and effective May 1, 1998, Mr.
Hansen will no longer serve as an executive officer, although he will continue
to work for the Company. See "Executive Compensation." As used throughout
this report, "executive officers" refers to the persons who were executive
officers of the Company as of December 31, 1997.
5
<PAGE> 8
SALARY
Pursuant to their respective Employment Agreements, the minimum base salary
of Messrs. Rubenstein, Slayton, Hansen and Schpero was set in 1995 at $257,500,
$250,000, $225,000 and $115,000, respectively. These base salaries are reviewed
annually, generally during the fourth quarter of the Company's fiscal year.
Various factors are considered in evaluating salary levels, including job
level, responsibility, knowledge and experience, productivity, personal
contributions and the relationship of fixed to variable compensation. Based
upon these factors, the Compensation Committee increased Mr. Rubenstein's base
salary to $270,000 for 1996 and $278,000 for 1997, representing a 4.9% and 3.0%
increase, respectively. The aggregate increase in base salary for all of the
executive officers was approximately 4.4% for 1996 and 3.4% for 1997. In
reviewing salary levels in December 1997, the General Compensation Committee
did not increase salaries for any of the executive officers.
BONUS
The Company generally establishes a bonus pool at the end of each fiscal
year. Substantially all of the Company's employees, including all of the
executive officers, are eligible to participate in the bonus pool. The amount
of the pool is based on a percentage of the Company's operating income before
"amortization of goodwill and other" and incentive compensation, for the
year. The bonus pool percentage increases as operating income exceeds results
for prior periods. The Company does not have a written bonus plan.
The amount of each participant's bonus is based primarily on a subjective
determination as to the employee's individual performance and achievements
during the year using factors similar to those used in the salary level
decisions, as well as objective measures of the performance of the employee's
division (primarily revenues). Any special contribution to the Company's
performance is an additional factor in the individual bonus determination. For
Messrs. Rubenstein, Slayton and Schpero, the Company's overall performance, as
measured principally by operating income before amortization of goodwill and
other and incentive compensation, is used in lieu of division performance.
Although this general approach is followed in determining each eligible
employee's bonus, determination of the amount of each bonus is predominantly
discretionary and is not subject to a precise formula.
In December 1997, the General Compensation Committee established the amount
of the 1997 bonus pool and the individual bonuses payable to all participants,
including the executive officers. In determining Mr. Rubenstein's bonus of
$282,000 for 1997, the General Compensation Committee took into account the
Company's strong performance for 1997, including the approximate 25% increase
in operating income before "amortization of goodwill and other" and incentive
compensation from 1996 to 1997. In addition, the Committee considered Mr.
Rubenstein's contribution to the Company's initial public offering in 1997. Mr.
Rubenstein's bonus includes the cost of certain pension and post-retirement
health benefits that are deducted from the bonus. See "Executive
Compensation--Compensation Summary." The Executive Compensation Committee
ratified the General Compensation Committee's bonus determinations for
executive officers in early 1998.
STOCK AND STOCK OPTIONS
The Company believes that stock and option ownership is a significant means
of aligning the interests of management and the Company's shareholders. Members
of the Company's management received stock and options in connection with the
Company's merger in 1995. (See "Certain Relationships and Related
Transactions".) Since then, the Company has facilitated increased stock
ownership through employee stock offerings and the award of stock options. As a
result, the Company's significant officers currently own approximately 22% of
the Company's Common Stock (including vested stock options), including an
aggregate of approximately 8% that is owned by Messrs. Rubenstein, Slayton,
Hansen and Schpero. See "Common Stock Ownership of Management and Certain
Beneficial Owners."
The Company has adopted a 1997 Flexible Stock Plan (the "1997 Plan") that
provides for the award of benefits of various types, including stock options,
stock appreciation rights, restricted stock, performance shares, cash awards
and other stock-based awards, in order to attract, retain, motivate and reward
officers, employees, directors and certain other individuals, and to encourage
stock ownership by such persons. The 1997 Plan is administered with respect to
executive officers by the Executive Compensation Committee, with respect to
non-employee directors by the full Board, and with respect to all other
participants by the General Compensation Committee. The maximum number of
shares of Common Stock that may be issued under the 1997 Plan is 2,200,000
shares. Prior to the adoption
6
<PAGE> 9
of the 1997 Plan, the Company had similar plans in place. To date, the Company
has granted options to purchase a total of 2,522,689 shares under all such
plans. A total of 914,811 shares are available for future issuance under the
1997 Plan.
At the time of the Company's initial public offering in December 1997, the
General Compensation and Executive Compensation Committees granted a total of
955,000 employee stock options (the "IPO Grant") in order to help equalize
stock and option ownership among a more widespread employee group. The Company
consulted with an independent compensation consultant in establishing the
program and determining the total number of options. Due to their already
significant stock and option holdings, Messrs. Rubenstein, Slayton and Hansen
did not participate in the IPO Grant (see "Common Stock Ownership of
Management and Certain Beneficial Owners"). Mr. Schpero is the only executive
officer to have received a stock option (for 25,000 shares) pursuant to the IPO
Grant.
As a result of the initial public offering, certain incentive stock options
("ISOs") granted to some of the Company's employees in 1995 were
recharacterized as other than ISOs for federal income tax purposes. The Company
compensated the holders of such options for such recharacterization by granting
new non-qualified stock options at the time of the initial public offering (the
"ISO Recharacterization Grant"). The number of new stock options awarded was
based on an assessment of the cost to each holder of having his ISOs
recharacterized. The Company consulted with an outside compensation consultant
in making its determination. As a result, options to purchase a total of
320,189 shares were granted upon the closing of the initial public offering,
including options to purchase 59,565 shares, 55,999 shares and 55,999 shares to
Messrs. Rubenstein, Slayton and Hansen, respectively.
All options granted pursuant to both the IPO Grant and the ISO
Recharacterization Grant have an exercise price of $13.50 (the initial public
offering price of the Common Stock). All stock option awards to executive
officers were approved by the Executive Compensation Committee in December
1997. See "Executive Compensation--Stock Option Awards."
PARTICIPATION IN PRIVATE EQUITY FUNDS
Employees in the Company's Private Equity Group are responsible for
managing the assets of five private equity funds sponsored by the Company. The
managing general partner of each Fund is generally formed as a limited
liability company or limited partnership, with one of the Company's
subsidiaries serving as general partner. In addition to management fees, the
managing general partner is entitled to receive a carried interest in each fund
representing up to approximately 20% of specified gains of the fund as
determined under the applicable fund agreement. Traditionally, near the end of
each fiscal year, the compensation committee of the Board has allocated among
certain employees of the Company participation percentages in the managing
general partner's carried interest of each of the funds. The carried interest
paid to the managing general partner, if any, is split among the Company's
subsidiary, as general partner, and these employees based on their individual
percentage interests. Participation percentages have generally been allocated
in five tranches, with each tranche subject to a climbing vesting schedule that
varies by fund, generally over a period of up to seven years. Although the
Company determines the extent to which an officer may participate in the
carried interest paid to a fund's managing general partner, the Company does
not determine the amount of actual distributions. The amount of any carried
interest for each fund is paid by the fund and is solely dependent upon the
performance of the fund. With the exception of Fund I, there have been no
distributions of carried interests to date. See "Certain Relationships and
Related Transactions."
The compensation committee has historically allocated interests to key
employees both within the Private Equity Group and outside the group. The
factors used in allocating such interests are substantially the same as those
used to determine bonuses, but are significantly weighted based on an
individual's level of involvement in the Private Equity Group. Management
believes that private equity allocations provide an important incentive for
members of the Private Equity Group to manage the funds effectively and to stay
with the Company. In addition, based on the Company's teamwork philosophy,
management believes that significant officers outside the group play a role,
both directly and indirectly in terms of their contribution to the Conning
organization, which in turn contributes to the success of Conning's private
equity funds.
Allocations for Funds I and II are complete. The initial allocation with
respect to Fund V was determined by the Compensation Committee in August 1997
when the Fund was organized. The initial Fund V allocations for the executive
officers ranged from 0.25% to 1.35%, with Mr. Rubenstein receiving a 0.55%
percentage interest. In early 1998, the General Compensation Committee made the
second allocation for Fund V, as well as the final allocation for
7
<PAGE> 10
Fund III and the third allocation for Fund IV. The percentage participations
for the executive officers were the same for all three Funds and ranged from
0.20% to 1.2%. Mr. Rubenstein received a percentage interest of 0.35% in each
Fund.
See "Certain Relationships and Related Transactions--Participation in
Private Equity Funds" for more information.
SECTION 162(m)
Section 162(m) of the Internal Revenue Code limits the deductibility for
federal income tax purposes of certain executive compensation paid by
publicly-held companies. Certain types of compensation are excluded from the
limitations. The Company believes the deductibility limitations under Section
162(m) are not applicable to stock options and other awards granted under the
1997 Flexible Stock Plan or predecessor plans. With respect to other components
of compensation, the Company has not taken any action to exclude annual
incentive compensation from the limitations on deductibility.
Respectfully Submitted:
<TABLE>
<S> <C> <C>
COMPENSATION COMMITTEE GENERAL COMPENSATION COMMITTEE EXECUTIVE COMPENSATION COMMITTEE
(from 1/1/97 to 10/24/97) (from 10/24/97 to present) (from 10/24/97 to present)
Leonard M. Rubenstein Leonard M. Rubenstein John A. Fibiger
Maurice W. Slayton Maurice W. Slayton John C. Shaw
Richard A. Liddy (since 12/19/97)
</TABLE>
COMPENSATION COMMITTEE INTERLOCKS
AND INSIDER PARTICIPATION
The Company's Compensation Committee that existed prior to October 1997 was
comprised of Messrs. Rubenstein and Slayton. The General Compensation Committee
established in October 1997 was originally comprised of Messrs. Rubenstein and
Slayton. Mr. Liddy became a member of the General Compensation Committee in
December 1997. The Executive Compensation Committee, also established in
October 1997, is comprised of Messrs. Fibiger and Shaw.
Mr. Rubenstein and Mr. Slayton are both executive officers of the Company.
Neither Mr. Fibiger, Mr. Liddy nor Mr. Shaw is or has been an officer or
employee of the Company or any of its subsidiaries. Mr. Liddy is an officer of
General American Mutual Holding Company, the Company's principal shareholder,
and certain of its affiliates, including General American. See "Certain
Relationships and Related Transactions" for information regarding certain
transactions involving Messrs. Rubenstein, Slayton and Liddy, as well as
General American. Mr. Rubenstein serves as a director (but not on the
compensation committee) of Reinsurance Group of America, Incorporated
("RGA"), of which Mr. Liddy is Chairman of the Board. Mr. Liddy is not paid
any compensation by RGA, but he holds options to purchase shares of RGA stock.
8
<PAGE> 11
EXECUTIVE COMPENSATION
COMPENSATION SUMMARY
The following table sets forth the compensation paid to or earned by the
Chief Executive Officer and the three other executive officers of the Company
during the last two fiscal years.
<TABLE>
SUMMARY COMPENSATION TABLE
<CAPTION>
LONG-TERM
COMPENSATION<F2>
ANNUAL COMPENSATION<F1> -------------------
-------------------------------- SECURITIES
NAME AND FISCAL UNDERLYING OPTIONS ALL OTHER
PRINCIPAL POSITION YEAR SALARY<F3> BONUS<F4> (# SHS)<F5> COMPENSATION<F6>
------------------ ------ ---------- --------- ------------------- ----------------
<S> <C> <C> <C> <C> <C>
Leonard M. Rubenstein 1997 $278,000 $282,000<F7> 59,565 $39,910
Chairman and Chief Executive 1996 270,000 325,000 20,000 32,913
Officer
Maurice W. Slayton 1997 $268,000 $325,000 55,999 $37,755
President 1996 260,000 325,000 0 12,300
Mark E. Hansen<F8> 1997 $243,000 $100,000 55,999 $33,255
Executive Vice President 1996 235,000 275,000 0 12,300
Fred M. Schpero 1997 $125,000 $163,500 25,000 $16,875
Senior Vice President and Chief 1996 120,000 120,000 10,000 11,604
Financial Officer
<FN>
- --------
<F1> Perquisites and other personal benefits are not included, as they do not
exceed the lesser of $50,000 and 10% of total of salary and bonus for any
named executive officer.
<F2> Does not include the award of or distributions with respect to
participation interests in private investment funds sponsored by the
Company. See "Certain Relationships and Related Transactions."
<F3> Includes amounts deferred at the election of the executive officer under
the General American Life Insurance Company Executive Deferred Savings
Plan, with respect to Mr. Rubenstein, and the Conning & Company Profit
Sharing and 401(k) Savings Plan, with respect to Messrs. Slayton, Hansen
and Schpero. Both of such plans are defined contribution plans.
<F4> Bonuses are for services performed during the applicable fiscal year.
<F5> See "--Stock Option Awards--Option Grants in Last Fiscal Year."
<F6> For Mr. Rubenstein, amounts represent contributions by the Company under
the General American Executive Deferred Savings Plan and Augmented Benefit
Plan (defined contribution plans). For Messrs. Slayton, Hansen and
Schpero, amounts represent contributions by the Company under the Conning
& Company Profit Sharing and 401(k) Savings Plan and Augmented Benefit
Plan (also defined contribution plans).
<F7> Mr. Rubenstein continues to accrue certain pension and post-retirement
health benefits under General American benefit plans. See "Employment
Agreements and Other Compensation Arrangements." Although the cost of
such benefits are deducted from Mr. Rubenstein's bonus for 1997 and 1996,
such cost has not been deducted from the bonus shown above. The actual
bonus paid to Mr. Rubenstein for 1997 and 1996 was $245,345 and $292,100,
respectively.
<F8> Mr. Hansen has informed the Company of his desire to reduce his work
schedule. As a result, the Company and Mr. Hansen have agreed that,
effective May 1, 1998, Mr. Hansen will work for the Company on a part-time
basis for reduced compensation. In connection with the change, Mr. Hansen
will no longer be an executive officer of the Company, but will continue
to serve as Executive Vice President of Conning Asset Management Company.
</TABLE>
STOCK OPTION AWARDS
The Company adopted the 1997 Flexible Stock Plan (the "1997 Plan") to
provide for the award of benefits of various types, including stock options,
stock appreciation rights ("SARs"), restricted stock, performance shares,
cash awards and other stock-based awards. The Company adopted the Plan to
attract, retain, motivate and reward officers, employees, directors and other
individuals, to encourage ownership of Common Stock by such persons, and to
promote and further the best interests of the Company. The 1997 Plan is
administered with respect to executive officers by the Executive Compensation
Committee, with respect to non-employee directors by the full Board, and with
respect to all other participants by the General Compensation Committee. The
exercise price of any stock
9
<PAGE> 12
options awarded under the Plan shall be no less than the fair market value of
the Common Stock on the date of grant. The other terms of options are
determined by the appropriate Committee or the Board, as applicable. The
maximum number of shares of Common Stock that may be issued under the 1997 Plan
is 2,200,000 shares. To date, options to purchase a total of 1,285,189 shares
have been awarded under this Plan. The maximum number of shares subject to
options and SARs that may be granted to a participant in any year is 500,000.
Prior to the adoption of the 1997 Plan, the Company had similar flexible stock
plans, pursuant to which a total of 1,237,500 options were awarded between
August 1995 and January 1997. The Company has not awarded any other type of
benefit under the 1997 Plan or the prior plans. Under all of such plans, in the
event of a Change in Control (as defined therein), the appropriate Committee or
the Board, as applicable, may provide such protection as it deems necessary to
maintain a participant's rights, including to: (i) provide for the acceleration
of the exercise or realization of any benefit; (ii) provide for the purchase of
a benefit upon the participant's request for cash equal to the amount that
could have been attained upon the exercise or realization of the benefit had it
been currently exercisable or payable; (iii) make adjustments to the
outstanding benefits as it deems appropriate; and/or (iv) cause the outstanding
benefits to be assumed, or new benefits substituted therefor, by a surviving
corporation.
The following tables show information regarding awards of stock options in
1997 and the number and value of unexercised options held by the named
executive officers at December 31, 1997. No SARs were granted in 1997. All
options were awarded pursuant to the 1997 Plan. No stock options were exercised
by the named executive officers in 1997.
<TABLE>
OPTION GRANTS IN LAST FISCAL YEAR
<CAPTION>
POTENTIAL REALIZABLE VALUE
AT ASSUMED ANNUAL RATES
NUMBER OF % OF TOTAL OF STOCK PRICE
SECURITIES OPTIONS APPRECIATION
UNDERLYING GRANTED TO EXERCISE OR FOR OPTION TERM<F6>
OPTIONS EMPLOYEES IN BASE PRICE EXPIRATION --------------------------
NAME GRANTED(#) FISCAL YEAR<F3> ($/SH)<F4> DATE<F5> 5%($) 10%($)
---- ---------- --------------- ----------- ---------- ---------- -------------
<S> <C> <C> <C> <C> <C> <C>
Leonard M. Rubenstein................... 59,565<F1> 4.6% $13.50 12/19/2007 $505,712 $1,281,573
Maurice W. Slayton...................... 55,999<F1> 4.4% $13.50 12/19/2007 $475,436 $1,204,848
Mark E. Hansen.......................... 55,999<F1> 4.4% $13.50 12/19/2007 $475,436 $1,204,848
Fred M. Schpero......................... 25,000<F2> 1.9% $13.50 12/19/2007 $212,252 $ 537,889
<FN>
- ---------
<F1> Options were fully vested on December 19, 1997. Options represent part of
a non-qualified stock option grant to certain employees in order to
compensate such persons for certain tax liabilities resulting from the
recharacterization of their existing incentive stock options ("ISOs") as
other than ISOs for federal income tax purposes upon the Company's initial
public offering ("ISO Recharacterization Grant"). The new options are
non-qualified stock options, not ISOs. Options are forfeitable if not
exercised within a specified time after the holder's death, disability or
termination of employment for any reason. See "Compensation Committee
Report on Executive Compensation."
<F2> Option becomes exercisable with respect to 1/15th, 2/15th, 3/15th, 4/15th
and 5/15th of the option shares on December 15, 1998, 1999, 2000, 2001,
and 2002, respectively. Option becomes fully vested upon the holder's
retirement (termination of employment by the holder after attaining age 65
or after attaining age 55 with 10 years of service). Option is forfeitable
if not exercised within a specified time after the holder's death,
disability or termination of employment for any reason. The option is a
non-qualified stock option.
<F3> Percentages are based on all options granted to employees during 1997.
Options granted to Mr. Rubenstein, Mr. Slayton and Mr. Hansen represented
18.6%, 17.5% and 17.5%, respectively of the ISO Recharacterization Grant
(see note 1). The option granted to Mr. Schpero represented 2.6% of the
options granted to employees as part of the Company's regular 1997 option
program, excluding the ISO Recharacterization Grant.
<F4> All options were granted at the time of the Company's initial public
offering in December 1997. The exercise price represents the initial
public offering price of the Common Stock.
<F5> All options are subject to earlier expiration in certain events related to
termination of employment.
<F6> Amounts represent the potential realizable value of each option at the
time of grant, assuming that the price of the underlying shares
appreciates in value from the date of grant to the end of the option term
at annualized rates of 5% and 10%. These assumed appreciation rates are
set by the Securities and Exchange Commission and are therefore not
intended to forecast possible future appreciation, if any, of the
Company's stock price.
</TABLE>
10
<PAGE> 13
<TABLE>
AGGREGATED OPTION EXERCISES AND FISCAL YEAR-END OPTION VALUES
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
OPTIONS AT FISCAL YEAR-END AT FISCAL YEAR-END<F1>
-------------------------- -------------------------
NAME EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
---- -------------------------- -------------------------
<S> <C> <C>
Leonard M. Rubenstein................... 183,565/16,000 $1,602,986/$156,000
Maurice W. Slayton...................... 175,999/0 $1,552,397/$0
Mark E. Hansen.......................... 175,999/0 $1,552,397/$0
Fred M. Schpero......................... 12,000/33,000 $133,700/$159,250
<FN>
- --------
<F1> Represents the difference between the December 31, 1997 closing price of
the Company's Common Stock ($16.75) and the exercise price of the option,
multiplied by the number of shares underlying the option.
</TABLE>
EMPLOYMENT AGREEMENTS AND OTHER COMPENSATION ARRANGEMENTS
The Company is party to employment agreements, entered into in August 1995
(the "Employment Agreements") with all of its then executive officers and
certain other employees. The Employment Agreements have three-year terms that
expire on August 11, 1998. Under each Employment Agreement, the employee is
entitled to receive a minimum base salary which was set in 1995, subject to
increases pursuant to periodic salary reviews consistent with the Company's
compensation policies. The minimum base salary set for Messrs. Rubenstein,
Slayton, Hansen and Schpero was $257,500, $250,000, $225,000 and $115,000,
respectively. In addition, each employee is eligible to participate in the
Company's bonus and private equity fund carried interest programs. The
employee's employment may be terminated without cause: (i) at any time upon the
mutual written agreement of the parties; (ii) immediately upon the employee's
death or total disability; or (iii) upon not less than 30 days' advance written
notice by either party. The employee's employment may be terminated by the
Company upon written notice at any time for any of the following reasons, each
of which constitutes "termination for cause": (i) a material breach of the
Employment Agreement by the employee, which breach is not cured within 20 days
after written notice by the Company; (ii) the employee's fraud, embezzlement,
dishonesty or unlawful acts in connection with the business of the Company or
its affiliates; (iii) the employee's felony conviction; and (iv) the employee's
substantial and continuing willful failure to perform, or grossly negligent
performance of, the duties of the employee's position. Upon termination of
employment, the Company has no obligation to the employee except for
compensation due the employee under the agreement through the termination date;
provided that, in the event of a termination by the Company other than for
cause (excluding terminations by agreement or on account of death or
disability), the Company is required, for the balance of the term of the
Employment Agreement, to pay the employee an amount equal to 150% of his annual
base salary for each year (or pro rated portion thereof) and to provide all
insurance, welfare, sick leave and other benefits described in the Agreement.
The Company paid certain employees a cash signing bonus upon execution of
the Employment Agreements, including bonuses of $195,000, $95,000 and $35,000
to Messrs. Slayton, Hansen and Schpero, respectively. Upon termination of the
Employment Agreement for cause or because of the employee's resignation, the
employee is required to repay a specified percentage of the signing bonus,
depending upon the year in which such termination occurs: Year 1 (100%), Year 2
(66.6%), and Year 3 (33.3%). Each employee is prohibited from disclosing,
directly or indirectly, to any other firm or person any of the Company's or its
affiliates' confidential information, including customer lists, trade secrets,
and know-how relating to its or their businesses. Additionally, each employee
has agreed that until August 1998, regardless of whether the employee remains
employed by the Company and regardless of whether the employee's termination,
if any, is with or without cause, neither the employee nor any entity
controlling, controlled by or under common control with the employee will (i)
engage in, or have any direct or indirect interest in any other person, firm,
corporation or other entity engaged in any business activities that are
competitive with the business activities of the Company and its subsidiaries,
or (ii) become an employee, director, adviser, consultant, independent
contractor or agent of any such person, firm, corporation or other entity,
except with the Company's prior written consent. Mr. Slayton's Employment
Agreement provides that, for the term of the agreement, Mr. Slayton will be
employed as President of the Company and will have responsibility for (i)
marketing for the Company, (ii) managing the Company's Hartford office, and
(iii) participating in identifying and negotiating acquisitions.
11
<PAGE> 14
The Company does not have a defined benefit plan. Mr. Rubenstein, as a
result of his 25 years of service with General American, is eligible to
continue to participate in the General American Pension Plan and Trust, a
qualified defined benefit plan, and the General American Augmented Plan, a
non-qualified defined benefit plan, as well as General American's
post-retirement medical plan (collectively, the "GA Retirement Plans").
Retirement benefits under the GA Retirement Plans are based on a participant's
final average compensation and credited years of service. Mr. Rubenstein's
final average compensation has been predetermined and represents his estimated
final average salary and bonus as if he were to remain an officer of General
American from December 31, 1995 (the date on which his benefits under the
qualified plan were frozen) through his retirement at age 65. Mr. Rubenstein
will receive credit for years of service under the GA Retirement Plans while
serving as Chief Executive Officer of the Company and has agreed to pay for the
cost of the additional retirement benefits, which has been determined to be
approximately 10% of Mr. Rubenstein's assumed annual General American salary
and bonus in any year. The amount of any bonus paid to Mr. Rubenstein by the
Company will be reduced by this cost. Such amount was approximately $36,655 in
1997. Based on Mr. Rubenstein's predetermined final average compensation, the
annual pension benefit payable by General American to Mr. Rubenstein upon his
retirement from the Company at age 65 would be $367,000.
Mr. Rubenstein serves on the General American cabinet as an advisor to
General American's top management and, as such, participates in the General
American Long-Term Incentive Plan. Mr. Rubenstein's initial participation in
this plan predates the formation of the Company in 1995. Mr. Rubenstein is
eligible to receive cash incentive awards pursuant to the plan based on General
American's achievement of certain consolidated performance targets over
three-year periods. The amount of incentive payments, if any, represents a
percentage of Mr. Rubenstein's salary at the beginning of the relevant period.
The percentage varies depending on the extent to which General American's
performance targets are met or exceeded. Payment of one-third of any awards
will be deferred under the General American Executive Deferred Savings Plan
until Mr. Rubenstein's retirement at age 65. Amounts deferred are subject to a
five-year vesting schedule and certain other conditions. The first three-year
period ended December 31, 1997, as a result of which Mr. Rubenstein received an
incentive award of $77,250 (one-third of which is deferred) in the first
quarter of 1998. All payments under the plan are made by General American.
12
<PAGE> 15
PERFORMANCE GRAPH
The following graph compares the cumulative total return on the Company's
Common Stock, based on the market price of the Common Stock and assuming
reinvestment of dividends, with the cumulative total return of companies in the
Standard & Poor's 500 Stock Index and the Russell 2000 Financial Services
Index, for the period beginning December 16, 1997 (the date the Company's
Common Stock began trading on The Nasdaq Stock Market) and ending December 31,
1997.
The indices are included for comparative purposes only. They do not
necessarily reflect management's opinion that such indices are appropriate
measures of the relative performance of the Company's Common Stock, and they
are not intended to forecast or be indicative of future performance of the
Common Stock.
[Performance Graph]
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------
PERIOD ENDING
-----------------------------------------------
INDEX 12/16/97 12/19/97 12/26/97 12/31/97
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Conning Corporation 100.00 100.43 103.39 113.56
- ---------------------------------------------------------------------------------------------------------
S&P 500 100.00 97.82 96.76 100.31
- ---------------------------------------------------------------------------------------------------------
Russell 2000 Financial Services Index 100.00 99.32 100.14 103.08
- ---------------------------------------------------------------------------------------------------------
</TABLE>
13
<PAGE> 16
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
THE STRATEGIC MERGER. The Company is the successor to the businesses
conducted by Conning, Inc. and its operating subsidiary, Conning & Company, an
85-year old Hartford, Connecticut based insurance specialty asset management
firm, and Conning Asset Management Company (formerly known as General American
Investment Management Company ("GAIMCO")) pursuant to a merger effected in
August 1995 (the "Strategic Merger").
In connection with the Strategic Merger, the Company, General American and
the Company's other shareholders and option holders entered into a Shareholders
Agreement, which provided for certain restrictions on transfer, rights of first
refusal, purchase obligations and purchase rights with respect to the Company's
securities. Most of the provisions of the Shareholders Agreement terminated in
December 1997 upon closing of the Company's initial public offering (the
"IPO"). The surviving provisions require that, until August 1998, the Company
maintain its general approach and methodology regarding cash compensation and
private equity carried interest allocations.
Prior to the IPO, the Company's outstanding capital consisted of Voting
Common Stock, Non-Voting Common Stock, Series A Convertible Preferred Stock
(the "Series A Preferred Stock") and Series B Convertible Preferred Stock
(the "Series B Preferred Stock"). In June 1997 General American exercised a
call right under the Shareholders Agreement to purchase 1,594,995 shares of
Series A Preferred Stock, representing approximately 50% of the outstanding
Series A Preferred Stock, for the negotiated price of $11.25 per share, with
Messrs. Slayton, Hansen and Schpero receiving cash payments of $3,579,615,
$1,747,215, and $159,975, respectively. Prior to the amendment and restatement
of the Shareholders Agreement in June 1997, General American had the right to
purchase up to 50% of the Series A Preferred Stock only upon the occurrence of
an initial public offering of the Company's Common Stock.
Each employee who entered into an employment agreement in connection with
the Strategic Merger received a signing bonus that is subject to forfeiture in
the event such employee's employment is terminated under certain circumstances
prior to August 11, 1998. Of the $195,000, $95,000 and $35,000 signing bonus
paid to Messrs. Slayton, Hansen and Schpero, respectively, $65,000, $31,667 and
$11,667 is subject to forfeiture. See "Executive Compensation--Employment
Agreements and Other Compensation Arrangements." In connection with the
Strategic Merger certain employees of the Company also entered into option
cancellation agreements and received payments from the Company that are subject
to forfeiture in the event any such employee's employment is terminated under
certain circumstances prior to August 11, 1998. Of the $1,176,196, $804,491 and
$55,237 payments paid in connection with the option cancellation agreements to
Messrs. Slayton, Hansen and Schpero, respectively, $265,961, $129,829 and
$11,887 is subject to forfeiture.
In connection with the Strategic Merger, the parties agreed to indemnify
each other for breaches of representations and warranties, certain tax matters
and certain litigation matters. Most of these indemnification obligations
expired by their own terms on February 11, 1997. The indemnification
obligations of the former shareholders and option holders of Conning, Inc. that
survived beyond that date have been released, which benefited all of such
holders, including Messrs. Slayton, Hansen and Schpero. General American's and
the Company's obligations to indemnify the former shareholders and option
holders of Conning, Inc. remain in force with respect to certain potential tax
liabilities of the Company and the former holders.
In connection with the Strategic Merger, General American loaned the
Company $13,000,000 on an unsecured basis bearing interest at 7% per annum,
payable as follows: (a) semi-annual interest payments from January 1, 1996
until September 1, 2002, (b) principal payments of $4,333,333, together with
accrued interest, on September 1, 2003 and September 1, 2004, and (c) a final
principal payment of $4,333,334, together with accrued interest, on September
1, 2005. As of January 1, 1997, the outstanding principal balance on this loan
was $2,000,000, all of which was paid in February 1997.
IPO RELATED TRANSACTIONS. Upon consummation of the IPO, the Non-Voting
Common Stock and the Series A Preferred Stock converted automatically on a
one-for-one basis into shares of Common Stock. The Series B Preferred Stock was
convertible upon demand on a one-for-one basis into Common Stock upon payment
of a conversion price of $1.67 per share. In April 1997, Messrs. Rubenstein,
Schpero and Liddy converted 40,000, 20,000 and 50,000 shares of Series B
Convertible Preferred Stock, respectively, into shares of Non-Voting Common
Stock. As a result of the IPO, in December 1997, 40,000 shares of Non-Voting
Common Stock held by Mr. Rubenstein, 318,188 shares of Series A Preferred Stock
held by Mr. Slayton, 155,308 shares of Series A Preferred Stock held by Mr.
Hansen, 14,221 shares of Series A Preferred Stock and 20,000 shares of
Non-Voting Common Stock held by Mr. Schpero, and 50,000
14
<PAGE> 17
shares of Non-Voting Common Stock held by Mr. Liddy automatically converted
into the same number of shares of Common Stock. Also upon consummation of the
IPO, all options that were granted in connection with the Strategic Merger
became fully vested, including 120,000 options held by Mr. Rubenstein, 120,000
options held by Mr. Slayton, 120,000 options held by Mr. Hansen and 10,000
options held by Mr. Schpero.
The Company paid a dividend on the Series A Preferred Stock and the Series
B Preferred Stock, representing amounts that would have been payable on the
next dividend payment date, pro rated through the closing date of the IPO, in
the aggregate amount of approximately $213,000, of which General American
received approximately $96,000 and each of Messrs. Rubenstein, Slayton, Hansen,
Schpero and Liddy received less than $25,000.
In connection with a reserved share program administered by the
underwriters, approximately 125,000 shares of the Company's Common Stock was
purchased in the IPO, at the initial public offering price, by directors,
officers and employees of the Company, directors of General American, and
family members of the foregoing, including 825 shares, 2,000 shares and 1,000
shares purchased by Messrs. Schpero, Fibiger and Shaw, respectively.
TRANSACTIONS WITH GENERAL AMERICAN AND AFFILIATES. General American Mutual
Holding Company, a Missouri mutual corporation, beneficially owns approximately
62.7% of the Company's outstanding Common Stock. General American Life
Insurance Company, an indirect wholly-owned subsidiary of General America
Mutual Holding Company, is a Missouri state life insurance company, principally
engaged in issuing individual and group life and health insurance policies and
annuity contracts. The Company's subsidiary, Conning Asset Management Company,
acts as the investment adviser for the general and separate accounts of General
American and certain of its affiliates, including the General American Capital
Company funds, COVA Corporation and its subsidiaries ("COVA"), Reinsurance
Group of America, Incorporated and certain of its subsidiaries ("RGA"),
Paragon Life Insurance Company, General Life Insurance Company, General Life
Insurance Company of America, Security Equity Life Insurance Company and the
General American Life Insurance Company Pension Plan Trust. Conning also acts
as the investment adviser for Security Mutual Life Insurance Company of New
York, which has entered into a strategic alliance with General American. Such
advisory agreements are generally terminable by the client upon 30 to 90 days'
notice without penalty. The Company is generally compensated on the basis of
fees calculated at a percentage of the market value of the assets under
management. The fees are billed and payable quarterly in arrears. Investment
management fees from these affiliated entities for the year ended December 31,
1997 amounted to $17.2 million.
Pursuant to an Administrative Services Agreement, General American provides
the Company with certain management and administrative services (including
legal, employee benefit, payroll, personnel, facilities and information
services) at the Company's request. As consideration for these services, the
Company pays General American a monthly fee based on General American's cost,
computed in accordance with General American's current cost accounting system.
The Company paid General American $9.3 million for administrative services
rendered during 1997. The Administrative Services Agreement is terminable by
General American on 180 days' written notice and by the Company on 90 days'
written notice. General American, however, has agreed not to terminate the
Agreement prior to July 19, 1998.
Effective July 31, 1996, Conning Asset Management Company entered into an
agreement with General American for the lease of approximately 25,000 square
feet of office space located at 700 Market Street, St. Louis, Missouri. The
lease has a five-year term, is terminable by the Company upon 30 days' notice
and calls for annual lease payments of approximately $600,000. The Company also
subleases from General American, pursuant to a written sublease, five of its
eleven office sites for its various mortgage loan and real estate offices. The
five offices are located in California, Florida, Georgia, Illinois and Texas.
The sublease terminates with respect to a particular location immediately prior
to termination of the applicable lease. The underlying leases have terms of
varying lengths ranging from month-to-month to a fixed term ending in 2000.
Either party may terminate the sublease with respect to one or more locations
on 90 days' written notice. The Company's total annual base rent for 1997 under
the sublease totals approximately $124,000. The terms of all of the foregoing
leases and the sublease (collectively, the "Leases") were designed to
approximate the cost to General American of owning or leasing such spaces. The
Company made rental payments to General American of approximately $792,000
during 1997. The Company believes that the prices and other terms under the
Leases are at least as favorable as those prices and terms being offered
generally in the same marketplaces by unrelated parties for comparable spaces.
The Company and General American Mutual Holding Company are parties to a
Tax Allocation and Tax Sharing Agreement dated as of June 12, 1997 (the "Tax
Agreement"). The Tax Agreement provides, among other things, that
15
<PAGE> 18
the tax liability of the General American Mutual Holding Company federal
consolidated tax return group (the "General American Tax Group") during the
period that the Company was a member of such group (i.e., from June 12, 1997 to
December 19, 1997) will be allocated among the members of the group in
proportion to their separately calculated tax liabilities. The Tax Agreement
also provides that any savings resulting from the tax benefits of a particular
member will be paid to that member, rather than accruing to the benefit of the
other members, and requires, among other things, that certain payments be made
between the Company and General American Mutual Holding Company in the event
there is a change in the tax liabilities of the Company for the covered period.
In addition, under the Tax Agreement, General American Mutual Holding Company
will indemnify the Company against any tax liabilities of the General American
Tax Group that are not attributable to the Company, and the Company will
indemnify General American Mutual Holding Company against any tax liabilities
of the Company. From August 11, 1995 (the date of the Strategic Merger) to June
12, 1997, the Company was not a member of the General American Tax Group but
was a party to a Tax Sharing Agreement with General American providing for
indemnification rights and tax sharing liabilities in a manner similar to the
current Tax Agreement for the period during which Conning Asset Management
Company was a member of such group. The tax liabilities of the members of the
General American Tax Group prior to the Strategic Merger, which included
Conning Asset Management Company, are allocated under a Tax Allocation
Agreement dated as of October 30, 1992, in a manner similar to the Tax
Agreement.
The Company's mortgage origination activities historically have been
operated pursuant to informal agreements through General American. The Company
generally receives a fee associated with loan originations of approximately 1%
of the loan balance. The Company also receives ongoing servicing fees and
management fees with respect to mortgage loans in portfolios managed by the
Company. During 1997, the Company originated approximately $384 million of
mortgage loans on behalf of General American and its affiliates. Total fees
received from General American and its affiliates for loan originations,
servicing and management fees during 1997 totaled approximately $8.9 million.
The existing and proposed agreements between the Company, on the one hand, and
General American and its affiliates, on the other hand, may be modified or
renegotiated in the future, and additional transactions or agreements may be
entered into between the Company and General American and its affiliates.
As of December 31, 1997, General American held unsecured recourse demand
notes from certain shareholders of the Company totaling $2,634,050, including
$280,000 due from Mr. Rubenstein and $84,000 due from Mr. Schpero. Interest on
such notes accrues at 6% per annum and is payable semi-annually beginning in
July 1997. Principal payments on such notes are due annually beginning in
January 1998 in the amount of 25% of the gross bonus earned by the obligor in
the immediately preceding year. These loans were issued to finance the purchase
and conversion of Series B Preferred Stock
Mr. Liddy is Chairman, President and Chief Executive Officer of General
American and is an executive officer and director of certain of General
American's affiliates. His son has been employed by the Company since 1995. Mr.
Rubenstein is also a director of certain of General American's affiliates.
PARTICIPATION IN PRIVATE EQUITY FUNDS. The Company, directly or indirectly
through intermediary partnerships, is the general partner, with a 1% general
partner capital interest, of the following private equity funds: Conning
Insurance Capital Limited Partnership II and Conning Insurance Capital
International Partners II (together, "Fund II"), Conning Insurance Capital
Limited Partnership III and Conning Insurance Capital International Partners
III (together, "Fund III"), Conning Connecticut Insurance Fund, L.P. ("Fund
IV") and Conning Insurance Capital Limited Partnership V ("Fund V"). At
December 31, 1997, the Company's commitment to fund future required capital
contributions was approximately $2.2 million. The Company had established
similar relationships with respect to Conning Insurance Capital Limited
Partnership and Conning Insurance Capital International Partners (together,
"Fund I"), which terminated pursuant to their terms on December 31, 1995.
Each Fund has a term of eight to ten years, subject to certain extensions for
liquidation purposes. Fund I commenced in December 1985, Fund II commenced in
December 1988, Fund III commenced in December 1993, Fund IV commenced in
December 1995, and Fund V commenced in August 1997. The Company and its
predecessors received investment management fees from the Funds, in the
aggregate, of approximately $5.5 million during 1997. The Company through its
subsidiary has committed to Conning Connecticut Investors, L.L.C., a limited
liability company of which the Company is the general partner and managing
member, up to approximately $4.0 million for purposes of capitalizing the
general partner. The amount is payable only in the event of insolvency on the
part of the Conning Connecticut Investors, L.L.C. The Company is also entitled
to a carried interest, or performance fee, in each Fund representing up to
approximately
16
<PAGE> 19
20% of specified gains of the Fund, as determined under the applicable
partnership or limited liability company agreement.
Certain officers and directors of the Company and its subsidiaries receive
participation percentages annually over a five-year period in a portion of the
Company's carried interest in the Funds. These participations are subject to a
climbing vesting schedule that varies by Fund, generally over a period of up to
seven years from the date of receipt of the participation percentage. At the
end of the five-year period, the Company's percentage of the carried interest
ranges from 25% to 40% of the original amount, depending on the Fund. At
December 31, 1997, the percentage interests in the general partner of Fund V
held by Messrs. Rubenstein, Slayton, Hansen and Schpero were 0.55%, 1.35%,
0.375% and 0.25%, respectively; the percentage interests in the general partner
of Fund IV held by Messrs. Rubenstein, Slayton, Hansen and Schpero were 0.50%,
2.80%, 1.40% and 0.45%, respectively; the percentage interests in the general
partner of Fund III held by Messrs. Rubenstein, Slayton, Hansen and Schpero
were 0.50%, 6.07%, 3.19% and 0.57%, respectively; and the percentage interests
in the general partners of Funds I and II held by Messrs. Slayton, Hansen and
Schpero were 8.54%, 5.86% and 0.84%, respectively. As of December 31, 1997,
determination of participation percentages was complete for Funds I and II;
Fund III had one allocation remaining; Fund IV had three allocations remaining;
and Fund V had four allocations remaining. With the exception of Fund I, there
have been no distributions of carried interests to date and the value, if any,
of carried interest participations cannot be readily determined. Distributions
of the carried interest from Fund I made to Messrs. Slayton, Hansen and Schpero
totaled $97,681, $67,075 and $9,657, respectively, during 1997 and $43,904,
$30,148 and $4,340, respectively, during the first quarter of 1998.
General American and its affiliates other than the Company have committed
or invested a total of $30.0 million in four of the Funds. A subsidiary of
Transamerica Occidental Life Insurance Company ("Transamerica"), of which Mr.
Fibiger was Chairman of the Board, has invested a total of $4.0 million in two
of the Funds. General American and its affiliates may participate in the
distributions from the private equity funds on a pro rata basis with other
limited partners in the private equity funds. General American and certain of
its affiliates, which may include the Company, may invest in new private equity
funds in the future as limited partners.
REGISTRATION RIGHTS. The Company has granted certain rights with respect to
the registration of 6,710,000 of the 8,304,995 shares of Common Stock
beneficially owned by General American (the "Registrable Securities").
Subject to certain limitations, General American and permitted assignees have
the right at any time after December 15, 1998 to require the Company to
register the sale of such shares under the Securities Act of 1933 (a "demand
registration"). The number of demand registrations is limited to two. A demand
registration must be requested by holders of Registrable Securities
representing at least 10% of the outstanding Common Stock and must include at
least 10% of such Registrable Securities. The Company is not required to effect
more than one demand registration in any twelve-month period. The holders of
Registrable Securities are also entitled to include such shares in a registered
offering of securities by the Company for its own account or the account of any
other security holder (a "piggy-back registration"), subject to certain
conditions and restrictions. A piggy-back registration is counted as one of the
demand registrations if the holder sold at least 80% of the Registrable
Securities it requested be registered. In addition to such demand and
piggy-back registration rights, after December 15, 1998, the holders of
Registrable Securities representing at least 10% of the outstanding Common
Stock may require the Company to file up to two registration statements
relating to such Registrable Securities on Form S-3 under the Securities Act of
1933 when such form is available to the Company (a "Form S-3 registration").
A demand registration on Form S-3 will count as a Form S-3 registration. A
registration on Form S-3 must relate to the offering of securities, including
the Registrable Securities, at an aggregate price to the public of at least
$5,000,000. The Company is not required to effect more than one such
registration on Form S-3 (including any demand registrations registered on Form
S-3) in any twelve-month period. The registration expenses of holders of
Registrable Securities (other than underwriting discounts and commissions) will
be paid by the Company. The registration rights expire for any holder owning
Registrable Securities representing less than 1% of the outstanding Common
Stock on the date such holder is able to dispose of all of its shares in any
90-day period pursuant to Rule 144 under the Securities Act of 1933, and, in
any event, on the date such holder's Registrable Securities can be sold
pursuant to Rule 144(k). The registration rights are not assignable by General
American other than to General American Holding Company, a direct or indirect
subsidiary of General American or General American Holding Company, a parent of
General American or General American Holding Company, or a direct or indirect
subsidiary of such parent.
17
<PAGE> 20
The Company has also granted the holders of the 2,070,005 shares of stock
outstanding prior to the IPO not owned by General American the right to require
the Company to file a registration statement on Form S-3 on or about December
15, 1998 covering the resale of such shares if a Form S-3 is available to the
Company; provided that (i) the Company would be under no obligation to maintain
the effectiveness of such registration statement for more than twelve months
and (ii) the holders of such stock enter into a registration rights agreement
at that time containing such limitations and conditions as the Company deems
appropriate. Messrs. Rubenstein, Slayton, Hansen, Schpero and Liddy have such
registration rights with respect to 40,000 shares, 318,188 shares, 155,308
shares, 34,221 shares, and 50,000 shares, respectively.
ITEM II--RATIFICATION OF INDEPENDENT ACCOUNTANTS
KPMG Peat Marwick LLP was the Company's independent accounting firm for the
fiscal year ended December 31, 1997. The Board of Directors has selected KPMG
Peat Marwick LLP as independent accountants for the year ending December 31,
1998. A representative of KPMG Peat Marwick LLP is expected to be present at
the 1998 Annual Meeting to respond to appropriate questions and to make a
statement if he or she so desires. If the appointment is not ratified by the
shareholders, the Board of Directors is not obligated to appoint other
independent accountants but the Board will give consideration to such
unfavorable vote.
The Board recommends a vote FOR the ratification of the selection of KPMG
Peat Marwick LLP as the Company's independent accountants for fiscal year 1998.
VOTING MATTERS
The close of business on March 31, 1998 has been fixed as the record date
for the determination of shareholders entitled to vote at the Annual Meeting.
As of the record date, there were 13,250,000 shares of Common Stock outstanding
and entitled to be voted at the Meeting, and 76 holders of record. Shareholders
will be entitled to cast one vote on each matter for each share of Common Stock
held of record on the record date, except in certain circumstances described
below. The Company's Restated Articles of Incorporation, as amended (the
"Articles") do not permit cumulative voting in the election of directors.
The affirmative vote of the holders of a majority of the shares of the
Company's Common Stock entitled to vote that are present in person or
represented by proxy at the 1998 Annual Meeting is required to elect directors,
to ratify the selection of the independent accountants and to act on any other
matters properly brought before the Meeting. Shares represented by proxies
marked "withhold authority" with respect to the election of any one or more
nominees for election as director and proxies marked "abstain" on other
matters (including the ratification of the selection of the independent
accountants) will be counted for the purpose of determining the number of
shares represented by proxy at the Annual Meeting, except in certain
circumstances described below. Such proxies will thus have the same effect as
if the shares represented thereby were voted against the nominee or nominees
and against such other matters, respectively. If a broker indicates on the
proxy that it does not have discretionary authority as to certain shares to
vote on a particular matter, those shares will not be considered as present and
entitled to vote with respect to that matter. If no specification is made on a
duly executed proxy, the proxy will be voted FOR the election of the director
nominated by the Board of Directors, FOR the ratification of the selection of
KPMG Peat Marwick LLP, and in the discretion of the persons named as proxies on
such other business as may properly come before the Meeting.
In order to limit the likelihood of a deemed assignment under the
Investment Advisers Act of 1940 or the Investment Company Act of 1940 of the
advisory contracts that the Company's subsidiaries have with their clients, the
Articles limit the voting power of shares of Common Stock in certain
circumstances. The Articles provide that a person or "group" (which includes
affiliates and associates of a person, as defined in the Articles) that owns
(as defined in the Articles) more than 20% of the voting shares of the
Company's issued and outstanding capital stock ("Voting Stock") shall have
the right to vote not more than 20% of the outstanding shares of Voting Stock
entitled to vote. The remaining shares of Voting Stock owned by such person or
group ("Excludable Shares") shall have no voting rights and shall not be
counted for quorum or shareholder approval purposes. These provisions do not
apply to General American Mutual Holding Company or its subsidiaries or
affiliates, direct or indirect subsidiaries of the Company and certain employee
plans established or to be established by the Company. The Company's Board of
Directors may approve the exemption of other persons or groups from the
provisions described above. Although this limitation is intended to have the
effect of decreasing the chance of any "assignment" from occurring, no
assurance
18
<PAGE> 21
can be given that such an "assignment" will not occur under these or other
circumstances. The Company has the right to inquire of any owner of Voting
Stock, or person who purports to exercise voting rights with respect to such
stock, and the owner will have the obligation to provide such information to
the Company as the Company may reasonably request, as to the number of shares
owned, whether such shares are owned by any other person and the identity of
such person, whether affiliates or associates of such person own any shares,
whether such person is a member of a "group" owning such shares or whether
such person, or any of such person's affiliates or associates, has any
agreement, arrangement or understanding with any other person with respect to
the Voting Stock.
As of March 31, 1998, General American Mutual Holding Company beneficially
owned approximately 62.7% of the shares of Common Stock entitled to vote at the
Annual Meeting. General American Mutual Holding Company has indicated its
intention to vote its shares FOR the election of Mr. Fibiger, the director
nominated by the Board, and FOR the ratification of the selection of KPMG Peat
Marwick LLP. These votes would be sufficient to elect Mr. Fibiger and to ratify
the selection of KPMG Peat Marwick LLP.
The Company knows of no other matters to come before the Meeting that are
not described in this Proxy Statement. If any other matters properly come
before the Meeting, the proxies solicited hereby will be voted on such matters
in accordance with the judgment of the persons voting such proxies.
A list of shareholders entitled to vote at the Annual Meeting will be kept
at the Company's principal offices at 700 Market Street, St. Louis, Missouri
63101 for a period of ten days prior to the Meeting, and will be available for
inspection at the Meeting.
SHAREHOLDER PROPOSALS AND DIRECTOR NOMINATIONS
Shareholder proposals intended to be presented at the 1999 Annual Meeting
must be received by the Company by December 10, 1998 for inclusion in the
Company's proxy statement and proxy relating to that meeting. Upon receipt of
any such proposal, the Company will determine whether or not to include such
proposal in the proxy statement and proxy in accordance with regulations
governing the solicitation of proxies.
In order for a shareholder to nominate a candidate for director, the
Company's Bylaws require that timely notice be given to the Company in advance
of the meeting. Ordinarily, such notice must be given not less than 60 days nor
more than 90 days before the first anniversary of the preceding year's annual
meeting; provided, that if the date of the annual meeting is advanced by more
than 30 days or delayed by more than 60 days from such anniversary date, then
the shareholder must give such notice not earlier than 90 days nor later than
60 days prior to such meeting or 10 days after notice of the meeting is mailed
or other public disclosure of the meeting is made. In certain cases, notice may
be delivered later if the number of directors to be elected is increased. The
shareholder filing the notice of nomination must describe various matters
regarding the nominee set forth in the Company's Bylaws, including such
shareholder's name, address, occupation and number of shares held. In order for
a shareholder to bring a proposal before a shareholder meeting, the Company's
Bylaws require that timely notice be given to the Company in advance of the
meeting. Ordinarily, such notice must be given within the time limits described
above for director nominations. Such notice must include a description of the
proposal, the reasons therefor and other specified matters. The Board may
reject any proposal that is not made in accordance with these procedures or
that is not a proper subject for shareholder action in accordance with the
provisions of applicable law.
In each case the notice must be given to the Secretary of the Company,
whose address is 700 Market Street, St. Louis, Missouri 63101. Any shareholder
desiring a copy of the Company's Restated Articles of Incorporation or Bylaws
will be furnished a copy without charge upon written request to the Secretary.
19
<PAGE> 22
Please mark
your votes as /X/
indicated in
this example
MANAGEMENT RECOMMENDS A VOTE FOR THE FOLLOWING PROPOSALS:
---
1. ELECTION OF DIRECTOR
FOR the nominee WITHHOLD
listed to the right AUTHORITY
(except as marked to vote for the nominee Nominee: John A. Fibiger
to the contrary) listed to the right
/ / / /
2. RATIFICATION OF SELECTION OF KPMG PEAT MARWICK LLP AS THE COMPANY'S
INDEPENDENT ACCOUNTANTS FOR THE YEAR ENDED DECEMBER 31, 1998.
FOR AGAINST ABSTAIN
/ / / / / /
If you plan to attend
the Annual Meeting, / /
please check here:
The undersigned hereby acknowledges receipt of the Notice of the
Annual Meeting and accompanying Proxy Statement dated April 8,
1998.
The proxy will be voted as specified. If no direction is made, this
proxy will be voted FOR Proposals 1 and 2.
Please sign exactly as your name appears to the left. When signing as
an attorney, executor, administrator, trustee or guardian, please give full
title as such. If signing on behalf of a corporation, please sign in full
corporate name by President or other authorized officer. If signing on
behalf of a partnership, please sign in partnership name by authorized
person.
Dated:_________________________________________, 199__
- ------------------------------------------------------
(Signature)
- ------------------------------------------------------
(Signature - if held jointly, both holders must sign.)
If address appearing to the left is incorrect, kindly make
correction.
- -------------------------------------------------------------------------------
* PLEASE DETACH PROXY HERE, SIGN AND MAIL *
[CONNING LOGO]
April 8, 1998
Dear Shareholder:
We invite you to attend the 1998 Annual Meeting of Shareholders of
Conning Corporation, to be held on Tuesday, May 12, 1998 at the Ritz-Carlton
Hotel, 100 Carondelet Plaza, St. Louis, Missouri at 9:30 a.m., Central time.
It is important that your shares be represented at the Annual
Meeting. Whether or not you plan to attend the Meeting, please review the
enclosed Proxy Statement and sign, date and return the enclosed proxy
card promptly to ensure that your shares will be voted. A postage-paid return
envelope is enclosed for your convenience.
If you plan to attend the Annual Meeting, please check the
appropriate box on the proxy card before mailing it.
Thank you.
<PAGE> 23
CONNING CORPORATION
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned does hereby appoint Matthew P. McCauley and Fred M.
Schpero, or either of them, the true and lawful attorneys in fact, agents and
proxies of the undersigned to represent the undersigned at the Annual Meeting
of Shareholders of CONNING CORPORATION (the "Company") to be held on May 12,
1998, commencing at 9:30 a.m., Central time, at the Ritz-Carlton Hotel, 100
Carondelet Plaza, St. Louis, Missouri, and at any and all adjournments and
postponements of such Annual Meeting, and to vote all the shares of Common
Stock of the Company standing on the books of the Company in the name of the
undersigned as specified and in their discretion on such other business as
may properly come before the Annual Meeting.
(Continued, and to be signed, on the other side)
* PLEASE DETACH PROXY HERE, SIGN AND MAIL *
<PAGE> 24
Appendix
Page 13 of the printed Proxy contains a Performance Graph. The information
contained in the graph is depicted in the table that follows the graph.
