<PAGE>
PROXY STATEMENT
Pursuant to Section 14(a)
of the
Securities Exchange Act of 1934
-------------------------------
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c)
or Section 240.14a-12
Seafield Capital 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/ $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:
Not Applicable
------------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
Not Applicable
------------------------------------------------------------------------
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):
Not Applicable
------------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
Not Applicable
------------------------------------------------------------------------
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>
[LOGO]
SEAFIELD CAPITAL CORPORATION
2600 Grand Boulevard, Suite 500
Kansas City, Missouri 64108
------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To be held on May 8, 1996
------------------------
The Annual Meeting of Shareholders of Seafield Capital Corporation (the
"Company") will be held on Wednesday, May 8, 1996, at 10:00 a.m., local time at
the Hyatt Regency Crown Center -- Empire C Room, located at 2345 McGee Street,
Kansas City, Missouri, for the following purposes:
1. To elect three (3) directors, each to serve for a term of three (3)
years;
2. To ratify the appointment of KPMG Peat Marwick LLP as the Company's
independent auditors for the year ending December 31, 1996; and
3. To transact such other business as may properly come before the meeting
or any adjournment thereof.
The Board of Directors of the Company has established March 22, 1996 as the
record date for the meeting. Shareholders of record at the close of business on
that day will be entitled to vote at the Annual Meeting and any adjournments
thereof.
You are cordially invited to attend this meeting. It is important that your
stock be represented at the meeting. Even if you plan to attend the meeting, you
are urged to complete, sign and return the enclosed proxy card as soon as
possible to ensure that your shares will be represented at the meeting. If you
attend the meeting, you may revoke your proxy by voting in person.
By Order of the Board of Directors,
[SIG]
W. T. GRANT II
CHAIRMAN OF THE BOARD
[SIG]
STEVEN K. FITZWATER
SECRETARY
April 10, 1996
<PAGE>
SEAFIELD CAPITAL CORPORATION
2600 Grand Boulevard, Suite 500
Kansas City, Missouri 64108
------------------------
PROXY STATEMENT
------------------
ANNUAL MEETING OF SHAREHOLDERS
to be held on May 8, 1996
------------------------
INTRODUCTION
This Proxy Statement is being furnished to the shareholders of Seafield
Capital Corporation, a Missouri corporation (the "Company"), in connection with
the solicitation of proxies by the Board of Directors of the Company for use at
the Annual Meeting of Shareholders of the Company to be held on Wednesday, May
8, 1996, and any adjournments thereof. The address of the principal executive
offices of the Company is 2600 Grand Boulevard, Suite 500, Kansas City, Missouri
64108. The telephone number at that address is (816) 842-7000. The distribution
to shareholders of this Proxy Statement, together with the accompanying proxy
materials, will commence on or about April 10, 1996.
At the Annual Meeting, shareholders will be asked to (i) elect three (3)
directors, each to serve for a term of three (3) years, and (ii) ratify the
appointment of KPMG Peat Marwick LLP as the Company's independent auditors for
the year ending December 31, 1996, all as set forth in the Proxy Statement.
VOTING AND PROXIES
The Board of Directors of the Company has established March 22, 1996 as the
record date for the meeting. Only shareholders of record at the close of
business on the record date are entitled to notice of and to vote at the Annual
Meeting, and any adjournments thereof. At the close of business on the record
date, the Company had outstanding 6,466,217 shares of Common Stock, par value
$1.00 per share ("Common Stock" or "Company Common Stock"). Each share of
Company Common Stock outstanding on the record date is entitled to one vote
except in the case of the election of directors wherein cumulative voting
applies. The presence in person or by proxy of the holders of record of a
majority of the shares of Company Common Stock entitled to a vote at the Annual
Meeting shall constitute a quorum for the transaction of business at the
meeting.
Shares of Common Stock may be voted cumulatively in the election of
directors and directors are elected by plurality vote. See "ELECTION OF
DIRECTORS." The affirmative vote of the holders of a majority of the shares of
Common Stock present in person or by proxy at the Annual Meeting is required to
ratify the appointment of KPMG Peat Marwick LLP as the Company's independent
auditors for 1996.
There is no definitive statutory or case law authority in Missouri as to the
proper treatment of votes withheld in the election of directors or abstentions
or broker non-votes respecting any other matter submitted for a vote of
shareholders. The Company believes withheld votes and abstentions and broker
non-votes should be counted for purposes of determining whether a quorum is
present at the Annual Meeting for the transaction of business. In the absence of
controlling precedent to the contrary, the Company intends to treat such
withheld votes, abstentions and broker non-votes in this manner.
1
<PAGE>
All shares of Company Common Stock represented by a properly executed form
of proxy received by the Board of Directors pursuant to this solicitation will
be voted in accordance with the instructions, if any, given in such proxy. If a
form of proxy is duly executed but does not specify the manner in which the
shares should be voted on any matter or matters, the proxy will be voted for
each of the nominees for director herein referred to (see "ELECTION OF
DIRECTORS") and otherwise in accordance with the recommendations of the
Company's Board of Directors as set forth herein. A proxy may be revoked at any
time prior to the exercise thereof by a notice from the shareholder received in
writing by the Secretary of the Company, by submission of a duly executed form
of proxy bearing a later date, or by voting in person at the Annual Meeting.
The entire cost of this proxy solicitation will be borne by the Company. The
Company will make arrangements with brokerage firms, banks, nominees,
fiduciaries and other custodians to supply proxy materials to beneficial owners
of Company Common Stock and will reimburse them for their expenses in so doing.
In addition to solicitation by mail, proxies may be solicited by the directors,
officers and employees of the Company by personal interview, telegraph,
telephone or additional mailings. Such directors, officers and employees will
not be additionally compensated for such solicitation, but may be reimbursed for
expenses in connection therewith.
ELECTION OF DIRECTORS
The Board of Directors of the Company presently consists of ten directors
and is divided into three classes, two having three and one having four
directors. Proxies cannot be voted for a greater number of persons than those
nominated. Generally, one class of directors is elected annually, with each
director of that class elected for a term of three years.
The Board of Directors has nominated for election as directors of the
Company at the 1996 Annual Meeting three (3) nominees indicated below, each to
serve as a director until the 1999 Annual Meeting and until his successor is
duly elected and qualified. All of the nominees presently are members of the
Board of Directors. Each nominee has indicated his willingness to serve if
elected and it is not anticipated that any nominee will become unavailable for
election. In the event that any nominee should become unwilling or unable to
serve as a director, it is intended that all duly executed proxies will be voted
for the election of such other person, if any, as is designated by the Board of
Directors. If no such person is designated as a replacement, the Board of
Directors will make an appropriate reduction in the number of directors to be
elected.
Under Missouri law and the Company's Articles of Incorporation, shares may
be voted cumulatively in the election of directors. Accordingly, a shareholder
is entitled to three votes for each share owned, one for each director to be
elected. A shareholder's votes may be cast equally among all nominees, may be
cast in favor of a single nominee or may be distributed among two or more
nominees.
The enclosed form of proxy provides a method for shareholders to withhold
authority to vote for any one or more of the nominees for director while
granting authority to vote for the remaining nominees. The names of all nominees
are listed on the proxy card. If you wish to grant authority to vote for all
nominees, check the box marked "FOR." If you wish to withhold authority to vote
for all nominees, check the box marked "WITHHELD." If you wish your shares to be
voted for some nominees and not for one or more of the others, check the box
marked "FOR" and indicate the name(s) of the nominee(s) for whom you are
withholding the authority to vote by writing the name(s) on the blank provided
immediately below the "FOR" box.
Unless authority to vote for one or more nominees is withheld, all votes
represented by a properly executed proxy will be cast equally among all of the
nominees listed below. If authority to vote for one or more nominees is
withheld, unless directions to the contrary are stated on the proxy card, votes
represented by a properly executed proxy will be cast equally among the
remaining nominees. Directors are elected by a plurality vote.
2
<PAGE>
The following table sets forth as to each nominee, and as to each director
whose term continues after the 1996 Annual Meeting, such person's age, principal
occupation and business experience during the last five years, positions and
offices with the Company, certain other directorships held, involvement, if any,
in certain legal proceedings and the year such person first became a director.
NOMINEES FOR TERMS TO EXPIRE IN 1999
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION, BUSINESS EXPERIENCE AND DIRECTOR
NAME AGE OTHER DIRECTORSHIPS HELD (1) SINCE (2)
- -------------------------- --- --------------------------------------------------------------- ---------
<S> <C> <C> <C>
Lan C. Bentsen 48 Managing Partner of Remington Partners (Investments) since 1986
1995; prior to its sale in 1994, Mr. Bentsen was Chairman and
Chief Executive Officer of Sovereign National Management, Inc.
(property management).
W. D. Grant (3)(4) 79 Consultant to the Company since August 1990; Chairman of the 1948
Board until May 1993. Mr. Grant also is a director of LabONE,
Inc. and Boatmen's First National Bank of Kansas City.
John H. Robinson, Jr. 45 Managing Partner of Black & Veatch (design and construction). 1990
Mr. Robinson also is a director of Commerce Bancshares, Inc.
<CAPTION>
DIRECTORS WHOSE TERMS EXPIRE IN 1998
<S> <C> <C> <C>
John C. Gamble (3) 50 Managing Partner of the law firm of Allen, Matkins, Leck, 1989
Gamble & Mallory, Irvine, California.
Michael E. Herman 54 Private investments since 1990 (partner Herman Family Trading 1991
Company); President of Kansas City Royals Baseball Team (major
league baseball) since 1993; Chairman of the Finance Committee
of Ewing Marion Kauffman Foundation since 1990. Mr. Herman
also is a director of Boatmen's First National Bank of Kansas
City, Cerner Corporation, Janus Capital Corporation and
Agouron Pharmaceuticals, Inc.
James R. Seward 43 Executive Vice President of the Company since May 1993; Senior 1990
Vice President from August 1990 to May 1993 and Chief
Financial Officer since 1990. Mr. Seward also is a director of
LabONE, Inc. and Response Oncology, Inc.
<CAPTION>
DIRECTORS WHOSE TERMS EXPIRE IN 1997
<S> <C> <C> <C>
W.T. Grant II (4) 45 Chief Executive Officer of the Company; Chairman of the Board 1980
since May 1993; President prior to May 1993. Since November
1995, Mr. Grant has also served as President, Chairman of the
Board and Chief Executive Officer of LabONE, Inc. Mr. Grant
also is a director of Commerce Bancshares, Inc., Kansas City
Power & Light Company, and Response Oncology, Inc.
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION, BUSINESS EXPERIENCE AND DIRECTOR
NAME AGE OTHER DIRECTORSHIPS HELD (1) SINCE (2)
- -------------------------- --- --------------------------------------------------------------- ---------
<S> <C> <C> <C>
P. Anthony Jacobs 54 President of the Company since May 1993 and Chief Operating 1987
Officer since 1990; Executive Vice President prior to May
1993. Mr. Jacobs also is a director of Trenwick Group, Inc.,
LabONE, Inc. and Response Oncology, Inc.
David W. Kemper 45 Chairman of the Board since 1991, President and director since 1982
1982 and Chief Executive Officer since 1986 of Commerce
Bancshares, Inc. (bank holding company) and Chairman and Chief
Executive Officer and director of Commerce Bank, N.A. (St.
Louis). Mr. Kemper also is a director of Ralcorp Holdings,
Inc., Wave Technologies International, Inc., and Tower
Properties Company.
Dennis R. Stephen 45 Chief Operating Officer since 1994, and prior to that Vice 1993
President - Life Operations, of Tennessee Farmers Life
Insurance Companies (insurance).
</TABLE>
- ------------------------
(1) Unless otherwise indicated, each nominee or continuing director who is not
an employee of the Company has held the position indicated as his principal
occupation for at least the past five years, and each nominee and continuing
director who is an officer of the Company has held his present position with
the Company, as his principal occupation for at least the past five years.
LabONE, Inc. and Response Oncology, Inc. are majority-owned subsidiaries of
the Company.
(2) The year shown is the year during which the individual named first became a
director of either the Company or its former subsidiary, Business Men's
Assurance Company of America ("BMA").
(3) Mr. Gamble is the brother-in-law of W. T. Grant II and the son-in-law of W.
D. Grant.
(4) W. T. Grant II is the son of W. D. Grant and the brother-in-law of Mr.
Gamble.
BOARD MEETINGS AND ATTENDANCE
During 1995, the Board of Directors held five meetings. Except for Mr.
Herman, each of the nominees and continuing directors attended at least 75% of
the aggregate of all meetings of the Board of Directors and all committees
thereof on which he served.
COMMITTEES OF THE BOARD OF DIRECTORS
The Company's business is under the general management of the Board of
Directors. Under authority conveyed by the Company's Bylaws to create
committees, the Board of Directors has established, among others, an Executive
Committee, a Nominating and Compensation Committee and an Audit Committee. The
members of each such committee are elected by a majority of the full Board of
Directors.
To the extent provided in the resolution authorizing its establishment and,
except to the extent otherwise limited by law, the Executive Committee is
empowered to exercise all authority of the Board of Directors in the management
of the Company. The Executive Committee reports all actions taken to the full
Board of Directors at its next meeting. The Executive Committee, which is
elected by a majority of the whole Board of Directors, presently comprises W. T.
Grant II, who is the chairman, John C. Gamble, W. D. Grant, P. Anthony Jacobs,
David W. Kemper and James R. Seward. The Executive Committee took action by
unanimous consent on five occasions in 1995.
The Nominating and Compensation Committee establishes the compensation of
senior management, approves salary increases for elected officers, administers
the 1984 and 1989 Stock Option and Incentive Plans, monitors the administration
of employee benefit plans and recommends appropriate
4
<PAGE>
changes thereto, and reviews supplementary pension and termination arrangements
of highly-paid employees. It also considers, and recommends to the Board of
Directors, candidates to serve as directors or consulting directors of the
Company and persons to be designated as executive vice presidents or senior vice
presidents of the Company. The Committee will consider suggestions of candidates
for director made by a shareholder if submitted in writing by December 10th of
the year next preceding an annual shareholders' meeting, accompanied by (a)
appropriate biographical material, (b) a description of all arrangements or
understandings between such shareholder and each nominee and any other person or
persons pursuant to which the nomination or nominations are to be made by such
shareholder, (c) such other information regarding each nominee proposed by such
shareholder as would be required to be included in a proxy statement filed
pursuant to the proxy rules of the Securities and Exchange Commission ("SEC")
for a person nominated by the Board of Directors and (d) the consent of each
nominee to serve as a director of the Company, if elected. The Nominating and
Compensation Committee presently comprises David W. Kemper, who is the chairman,
Lan C. Bentsen, John C. Gamble, Michael E. Herman, John H. Robinson, Jr. and
Dennis R. Stephen. The Nominating and Compensation Committee held three meetings
in 1995.
The Audit Committee meets periodically with management, the internal
auditing staff and representatives of the Company's independent auditors to
assure that appropriate audits of the Company's affairs are being conducted. In
carrying out these responsibilities, the Audit Committee reviews the scope of
the internal and external audit activities and the results of the annual audit.
The Audit Committee is also responsible for recommending the public accounting
firm to serve as independent auditors for each year. Both the independent
auditors and the internal auditors have direct access to the Audit Committee to
discuss the results of their examinations, the adequacy of internal accounting
controls and the integrity of financial reporting. The Audit Committee comprises
John H. Robinson, Jr., who is the chairman, and David W. Kemper. The Audit
Committee held three meetings in 1995.
COMPENSATION OF DIRECTORS
GENERAL. Each director who is not a regularly compensated employee of the
Company ("Non-Employee Director") is paid a fee of $10,000 per annum for his
services as a director, plus a fee of $750 for each Board of Directors meeting
attended and, if a member of one or more committees, an additional fee of $500
(or $650 if such person is the chairman of the committee) for each committee
meeting attended. Non-Employee Directors also are provided $400,000 business
travel accident insurance coverage ($1,000,000 in the case of Mr. W. D. Grant,
who is also a consultant to the Company) for all business travel and are
reimbursed for expenses incurred in attending meetings. Non-Employee Directors
receive stock option awards under the Company's 1991 Non-Employee Directors'
Stock Option Plan upon becoming a director and are also entitled to participate
in the Stock Purchase Plan.
STOCK PURCHASE PLAN. The Seafield Capital Corporation Stock Purchase Plan
is a stock purchase plan which is open to all current Non-Employee Directors of
the Company who made a one-time irrevocable election to participate. Such
persons contribute an amount equal to all or part of their directors'
compensation, based upon such elections. In the case of any individual who first
becomes a Non-Employee Director in the future, all director compensation would
be contributed to the plan. Employees of the Company, and of participating
Company subsidiaries designated by the Chairman of the Board, may also
participate by contributing the lesser of 2% of their salary or $30,000. The
Company matches each participant's contribution at a rate of 50%. Company Common
Stock is purchased on the open market each month and each participant receives
as many shares as his contribution, plus the Company's matching contribution,
will purchase. No employees presently are designated by the Chairman of the
Board to participate and, accordingly, none of the individuals or
5
<PAGE>
members of the group identified in the Summary Compensation Table are presently
eligible to participate in the Stock Purchase Plan. For 1995, matching Company
contributions for participating Non-Employee Directors were as follows:
<TABLE>
<CAPTION>
MATCHING
COMPANY
NAME OF DIRECTOR CONTRIBUTIONS
- ------------------------------------ ------------------
<S> <C>
Lan C. Bentsen $ 7,575
W. D. Grant 6,750
Michael E. Herman 5,625
David W. Kemper 7,850
John H. Robinson, Jr. 7,350
Dennis R. Stephen 3,625
</TABLE>
1991 NON-EMPLOYEE DIRECTORS' STOCK OPTION PLAN ("1991 DIRECTORS' PLAN").
Under the 1991 Directors' Plan, each Non-Employee Director of the Company is
entitled to a one time grant of options to purchase 15,000 shares of Company
Common Stock at a price per share equal to 100% of the fair market value of a
share of Company Common Stock on the date the option is granted, with the
options becoming exercisable as follows: on and after the first anniversary of
the date of grant, 5,000 shares may be purchased; on and after the second
anniversary of the date of grant, 5,000 additional shares (a total of 10,000
shares) may be purchased and on and after the third anniversary of the date of
grant, 5,000 additional shares (a total of 15,000 shares) may be purchased;
subject, however, to the limitation that no option granted under the 1991
Directors' Plan may be exercised more than ten years after the date of grant.
Upon the termination of an option holder's term as a director, the option is
exercisable only as to those shares as to which the option could be exercised on
the date of termination. All rights under an option terminate to the extent
unexercised ninety (90) days after the date a person ceases to be a director, if
termination is for any reason other than death, and twelve (12) months after a
director's date of death.
Rights under an option also will terminate in the event of the liquidation
or dissolution of the Company or in the event of a merger or consolidation in
which the Company is not the surviving corporation. However, a holder will have
the right, immediately prior to such termination, to exercise an option in whole
or in part without regard to the foregoing installment exercise provisions.
The 1991 Directors' Plan specifies that each person who was a Non-Employee
Director on the date the Company's shareholders approved said Plan (i.e., May
15, 1991) would be granted an option as of the date of such approval. Each
person who is thereafter elected or appointed to serve as a Non-Employee
Director shall be entitled to receive an option as of the date such person is
first elected or appointed.
In accordance with the foregoing and pursuant to the 1991 Directors' Plan,
the following current Non-Employee Directors have been granted options for
15,000 shares of Common Stock. Those held by Dennis R. Stephen were granted
August 11, 1993, the date he was first appointed a director, and have an
exercise price of $32.00 per share. All of the other Non-Employee Director
options were granted May 15, 1991 and all have an exercise price of $21.50 per
share:
<TABLE>
<CAPTION>
NAME
- --------------------------
<S> <C>
Lan C. Bentsen
John C. Gamble
W. D. Grant
Michael E. Herman
David W. Kemper
John H. Robinson, Jr.
Dennis R. Stephen
</TABLE>
6
<PAGE>
Certain of the options granted to Non-Employee Directors have been
exercised; Mr. Gamble exercised 15,000 options in 1995 at a time when the market
price for Company Common Stock was $34.25 per share and Mr. Kemper exercised
5,000 options in 1995 at a time when the market price for Company Common Stock
was $34.75. As a result, at February 15, 1996 the option holdings of Non-
Employee Directors were as follows: Mr. Bentsen, 15,000; Mr. W. D. Grant, 5,000;
Mr. Herman, 15,000; Mr. Kemper, 5,000; Mr. Robinson, 15,000; and Mr. Stephen,
15,000.
CONSULTING AGREEMENT. Mr. W. D. Grant serves as a consultant to the
Company, for which he was paid an annual retainer of $50,000 in 1995. In
addition, pursuant to his consulting agreement, the Company reimbursed Mr. Grant
$5,000 for costs incurred by him in 1995 for financial planning, investment
advisory and tax return preparation services.
CERTAIN TRANSACTIONS AND ARRANGEMENTS
At the time of the Company's sale of 95% of the stock of BMA, in July 1990,
W. D. Grant was a party to a supplemental retirement agreement with BMA. Upon
Mr. Grant's retirement from BMA on July 31, 1990, he began receiving payments
under such agreement. In June 1992, the Company entered into an agreement with,
among others, the 1990 purchaser of BMA stock, pursuant to which the Company
sold the remaining 5% of the stock and settled with the purchaser regarding a
guaranty of BMA's mortgage loan portfolio which the Company had given in
connection with the 1990 transaction. As a part of the consideration for the
June 1992 agreement, the Company agreed to assume BMA's former responsibility
for future obligations to W. D. Grant under his supplemental retirement
agreement. The annual amount owing to Mr. Grant under such agreement is
approximately $130,000, payable to Mr. Grant until death, and thereafter at a
reduced level to his spouse until her death.
In July 1992 the Company loaned William H. West, M.D., Chairman of the Board
of the Company's majority-owned subsidiary, Response Oncology, Inc.
("Response"), $500,000. Principal and accrued interest, at the rate of 6.74%,
are due in July, 1996. As of December 31, 1995, accrued interest on the loan was
$127,141. Payment of said loan is secured by a pledge of 26,062 shares of
Response common stock.
Prior to his resignation in October 1995 as Chairman and Chief Executive
Officer of LabONE, Inc., the Company's 82% owned subsidiary, Bert H. Hood was
indebted to LabONE in the principal amount of $150,000. The sum had been loaned
to Mr. Hood to assist him with the payment of certain personal expenses.
Interest was charged at the rate of 7.75% per annum. The entire principal
balance and all accrued interest was paid in connection with Mr. Hood's
resignation by deducting the principal and accrued interest from the severance
payment due to him.
SECURITY OWNERSHIP OF MANAGEMENT
The following table and notes thereto indicate the shares of Company Common
Stock and of the common stock of the Company's majority-owned subsidiaries,
LabONE, Inc. ("LabONE") and Response Oncology, Inc. ("ROIX"), known to the
Company to be beneficially owned as of February 15, 1996, by
7
<PAGE>
each director (including the nominees for election as directors) of the Company,
each of the executive officers named in the Summary Compensation Table beginning
on page 11, and by all directors and executive officers of the Company as a
group.
<TABLE>
<CAPTION>
SHARES OF COMPANY SHARES OF COMMON SHARES OF COMMON
COMMON STOCK STOCK OF LABONE STOCK OF ROIX
BENEFICIALLY OWNED PERCENTAGE OF BENEFICIALLY OWNED BENEFICIALLY OWNED
NAME (1)(2)(13) CLASS (14) (1)(15)(16) (1)(18)(19)
- ------------------------------------- -------------------- ---------------- ------------------ ------------------
<S> <C> <C> <C> <C>
Lan C. Bentsen....................... 23,380(3) -- -0- -0-
John C. Gamble....................... 114,231(4) 1.8% -0- -0-
W. D. Grant.......................... 1,272,315(5) 19.7% 36,514 -0-
W. T. Grant II....................... 156,141(6) 2.4% 29,231 5,400
Michael E. Herman.................... 18,042(7) -- 1,817(17) 2,560(20)
Bert H. Hood......................... -0- (8) -- -0- (8) -0-(8)
P. Anthony Jacobs.................... 49,867(9) -- 23,500 9,400
David W. Kemper...................... 11,885(10) -- -0- -0-
John H. Robinson, Jr................. 19,316 -- -0- -0-
James R. Seward...................... 44,940(11) -- 7,400 9,400
Dennis R. Stephen.................... 10,801 -- -0- -0-
William H. West, M.D................. -0- (8) -- -0- (8) 817,760
All directors, nominees and executive
officers as a group (14 persons).... 1,673,066(12) 25.7% 98,467 969,160
</TABLE>
- ------------------------
(1) A beneficial owner of a security includes a person who, directly or
indirectly, has or shares voting or investment power with respect to such
security. Voting power is the power to vote or direct the voting of the
security and investment power is the power to dispose or direct the
disposition of the security. Each person listed has stated that he, either
alone or with his spouse, has sole voting power and sole investment power
with respect to the shares shown as beneficially owned, except as otherwise
indicated.
(2) Shares of Company Common Stock shown as beneficially owned include shares
issuable upon the exercise of stock options granted under the Company's
1984, 1989 and 1991 Stock Option and Incentive Plans that were exercisable
on February 15, 1996 or that became exercisable within 60 days thereafter,
as follows: Lan C. Bentsen, 15,000 shares; W. D. Grant, 5,000 shares; W. T.
Grant II, 5,000 shares; Michael E. Herman, 15,000 shares; David W. Kemper,
5,000 shares; John H. Robinson, Jr., 15,000 shares; James R. Seward, 5,000
shares; Dennis R. Stephen, 10,000 shares; and all directors and executive
officers as a group, 76,000 shares.
(3) Includes 7,075 shares held by a family trust for the benefit of Mr.
Bentsen's children, as to which he disclaims beneficial ownership. An
unaffiliated person is trustee with sole voting and investment powers.
(4) Includes 40,679 shares owned by Mr. Gamble's wife and 9,376 shares held by
his wife as custodian for her children, 45,000 shares held in a trust for
which his wife serves as co-trustee with W. T. Grant II, and in that
capacity shares voting and investment powers, and 12,291 shares held by his
wife's son. Mr. Gamble disclaims beneficial ownership of the foregoing
shares owned by his wife or her son or over which she has trust powers.
(5) Includes 237,960 shares held by a family trust for which W. D. Grant serves
as a co-trustee, and in that capacity shares voting and investment powers
with UMB Bank, Kansas City, N.A. (until February 1995, the other co-trustee
was Boatmen's First National Bank of Kansas City); includes 30,817 shares
held by a family foundation of which W. D. Grant shares voting and
investment powers with UMB Bank, Kansas City, N.A.; also includes 26,850
shares owned by the wife of W. D. Grant, as to which he disclaims beneficial
ownership.
8
<PAGE>
(6) Includes 30,293 shares held by W. T. Grant II as custodian for his
children; includes 45,000 shares held in a family trust for which W. T.
Grant II serves as a co-trustee with Laura Gamble and in that capacity
shares voting and investment powers; also includes 11,585 shares owned by
the wife of W. T. Grant II, as to which he disclaims beneficial ownership.
(7) Includes 400 shares owned by Mr. Herman's wife, as to which he disclaims
beneficial ownership; 1,556 shares are owned by the Herman Family Trading
Company of which Mr. Herman is a general partner and approximately 73%
owner.
(8) Until his resignation October 24, 1995, Mr. Hood was the Chief Executive
Officer of the Company's majority-owned subsidiary, LabONE, Inc. ("LabONE").
During all of 1995, Dr. West was the Chief Executive Officer of the
Company's majority-owned subsidiary, Response Oncology, Inc. ("ROIX").
Neither Mr. Hood nor Dr. West is or was a director or corporate officer of
the Company.
(9) Includes 1,000 shares owned by the wife and 200 shares owned by the son of
P. Anthony Jacobs as to which he disclaims beneficial ownership.
(10) Includes 6,239 shares held in a family trust for which Mr. Kemper serves as
a trustee, and in that capacity shares voting power and has sole investment
power.
(11) Includes 1,500 shares held in a family trust for which Mr. Seward serves as
a co-trustee with his mother, and in that capacity shares voting and
investment powers.
(12) Includes (i) 76,000 shares of Company Common Stock issuable upon the
exercise of stock options granted under the 1984, 1989 and 1991 Stock Option
and Incentive Plans that were exercisable on February 15, 1996 or that
became exercisable within 60 days thereafter and (ii) an aggregate of 10,346
shares held under the Seafield Capital Corporation 401(k) Plan and Trust
(based upon the Plan statement as of December 31, 1995) which are held in a
trust of which The Investors Services Trust Company is the trustee, but as
to which the trustee is obligated to grant voting rights to the Plan
Administrative Committee, comprising executive officers of the Company, if
requested by said Committee.
(13) Includes as to each of the following individuals, the following numbers of
shares held in their respective accounts under the Seafield Capital
Corporation 401(k) Plan and Trust as of December 31, 1995 (based on a plan
statement of that date), as to which shares the individual shares investment
power but, except in the case of Mr. Seward who shares voting power as to
all 10,346 shares held in the 401(k) Plan, does not have voting power: W. T.
Grant II, 1,066 shares; P. Anthony Jacobs, 1,786 shares and James R. Seward,
640 shares (plus an additional 9,706 shares as to which he shares voting
power as a member of the 401(k) Plan Administrative Committee).
(14) The percentages represent the total number of shares of Common Stock shown
in the adjacent column divided by the number of issued and outstanding
shares of Common Stock as of February 15, 1996 (6,462,933 shares), plus, in
each instance, all shares of Common Stock issuable to the person or group
named upon the exercise of stock options granted under the Company's 1984,
1989 and 1991 Stock Option Plans that were exercisable on February 15, 1996
or that became exercisable within 60 days thereafter. Percentages of less
than one percent are omitted.
(15) Shares of LabONE stock shown as beneficially owned include shares issuable
upon the exercise of stock options granted under the LabONE Long-Term
Incentive Plan that were exercisable on February 15, 1996 or that became
exercisable within 60 days thereafter, as follows: W. D. Grant, 22,000
shares; W. T. Grant II, 27,431 shares; P. Anthony Jacobs, 22,000 shares;
James R. Seward, 4,400 shares; and all directors and executive officers as a
group, 75,831 shares
(16) Percentages of shares beneficially owned are less than 1% for all directors
and executive officers individually and as a group; the shares shown as
beneficially owned do not include 10,712,200 shares of LabONE owned by the
Company as to which each director of the Company has shared voting and
investment power as a member of the Company's Board of Directors. Each Board
member disclaims beneficial ownership of the LabONE shares owned by
Seafield.
9
<PAGE>
(17) Consists of shares owned by the Herman Family Trading Company of which Mr.
Herman is a general partner and approximately 73% owner.
(18) Numbers of shares reflect a 1 for 5 reverse stock split, effective November
1995. Percentages of shares beneficially owned are less than 1% for all
directors and executive officers, except that William H. West, M.D.
beneficially owns 10.9% and all directors and executive officers as a group
beneficially own 12.6% of the number of ROIX shares of common stock
outstanding at February 15, 1996 (7,371,589), plus the number of shares of
ROIX common stock issuable upon the exercise of stock options held by Dr.
West or members of the group, as the case may be, which were exercisable on
February 15, 1996 or that became exercisable within 60 days thereafter.
(19) Shares of ROIX common stock shown as beneficially owned include shares
issuable upon the exercise of ROIX stock options and warrants that were
exercisable on February 15, 1996 or that became exercisable within 60 days
thereafter as follows: W. T. Grant II, 5,000 shares; P. Anthony Jacobs,
5,000 shares; James R. Seward, 5,000 shares; William H. West, M.D., 157,780
shares; and all directors and executive officers as a group, 292,620 shares.
(20) Consists of 2,200 shares owned by the Herman Family Trading Company of
which Mr. Herman is a general partner and approximately 73% owner, and 360
shares owned by Mr. Herman's wife, as to which latter number of shares he
disclaims beneficial ownership.
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
The Company believes that its officers and directors have timely reported
all 1995 transactions in Company Common Stock required to be reported by Section
16(a) of the Securities Exchange Act of 1934.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table indicates the shares of Company Common Stock
beneficially owned by the only persons (other than persons set forth in the
preceding table) known to the Company or its management as beneficially owning
more than five percent of the Company's Common Stock as of January 1, 1996.
<TABLE>
<CAPTION>
AMOUNT AND NATURE PERCENT OF
NAME AND ADDRESS OF BENEFICIAL OWNER OF BENEFICIAL OWNERSHIP CLASS (1)
- --------------------------------------------- --------------------------------------------- ---------------
<S> <C> <C>
Twentieth Century Companies, Inc. Total -- 389,300(2) 6%
4500 Main Street sole voting power -- 389,300
P. O. Box 418210 shared voting power -- -0-
Kansas City, Missouri 64141-9210 sole disposition power -- 389,300
shared disposition power -- -0-
</TABLE>
- ------------------------
(1) The percentage represents the total numbers of shares of Common Stock shown
in the adjacent column divided by the number of issued and outstanding
shares of Common Stock as of February 15, 1996.
(2) As reported in a Schedule 13G filing as of December 31, 1995.
COMPENSATION OF EXECUTIVE OFFICERS
The following table sets forth compensation received by the Company's Chief
Executive Officer, the three most highly paid executive officers, other than the
Chief Executive Officer, holding office at December 31, 1995 and whose salary
and bonus for 1995 aggregated $100,000 or more, and one
10
<PAGE>
individual who served as an executive officer during a part of 1995 but who was
not so serving at December 31, 1995, for services rendered in all capacities to
the Company and its subsidiaries for the last three years.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
AWARDS PAYOUTS
------------ ------------
LONG-TERM COMPENSATION
---------------------------
SECURITIES
ANNUAL COMPENSATION (1) UNDERLYING
NAME AND PRINCIPAL ----------------------------- OPTIONS/SARS LTIP PAYOUTS ALL OTHER
POSITION YEAR SALARY ($) BONUS ($)(2) (#) ($)(10) COMPENSATION ($)(11)
- ---------------------- ---- ------------- ------------ ------------ ------------ ---------------------
<S> <C> <C> <C> <C> <C> <C>
W. T. Grant II 1995 $ 329,167 -0- 800(7) -0- $24,931
Chairman of the Board 1994 320,000 -0- 3,200(7) -0- 24,689
and Chief Executive 1993 320,000 -0- -0- $ 1,168,000 34,597
Officer of the
Company(3)
P. Anthony Jacobs 1995 247,990 -0- 800(7) -0- 42,220
President and Chief 1994 238,825 -0- 3,200(7) -0- 39,557
Operating Officer of 1993 231,167 -0- -0- 730,000 49,408
the Company
James R. Seward 1995 146,346 -0- 22,800(8) -0- 21,105
Executive Vice 1994 140,938 -0- 3,200(7) -0- 21,106
President and Chief 1993 136,417 $ 10,000 -0- 562,100 17,485
Financial Officer of
the Company
Bert H. Hood 1995 211,769(4) -0- 20,000(9) -0- 484,815(12)
Chairman of the 1994 200,641 -0- -0- -0- 26,676(13)
Board, President and 1993 83,333(4) 100,000 200,000(9) -0- 76,849(14)
Chief Executive
Officer of LabONE,
Inc., through October
1995(5)
William H. West, M.D., 1995 209,726 148,250 62,500(7) -0- 102
Chairman of the Board 1994 185,000 -0- -0- -0- 137
and Chief Executive 1993 185,000 -0- 73,600(7) -0- 102
Officer of Response
Oncology, Inc.(6)
</TABLE>
- ------------------------
(1) Compensation deferred at the election of an executive officer, pursuant to
the Company's or its subsidiaries' 401(k) Plans, is included in the year
earned.
(2) The Company discontinued its cash bonus program in 1991 and replaced it with
Restricted Stock Awards (see footnote 8 below). The Company's Compensation
Committee and Board of Directors retained, however, authority to make
discretionary bonus awards in special circumstances; it was pursuant to that
authority that a 1993 bonus was awarded to Mr. Seward. The Company's
subsidiaries which employed Mr. Hood and Dr. West during the years indicated
continue to have cash bonus programs. Cash bonuses for services rendered
have been listed in the year earned; in some cases they were actually paid
in the following year. In the case of Mr. Hood and Dr. West, bonuses were
paid by the company with whom the individual is or was employed based upon
said company's operating results and the performance of the individual.
11
<PAGE>
(3) Since November 1995, Mr. Grant has also served as President, Chairman of
the Board and Chief Executive Officer of LabONE, Inc., an 82% owned
subsidiary of the Company.
(4) Mr. Hood's employment with LabONE, Inc. began in August 1993 and terminated
October 24, 1995.
(5) LabONE, Inc. is 82% owned by the Company.
(6) Response Oncology, Inc. is 56% owned by the Company.
(7) Consists entirely of options to purchase shares of common stock of Response
Oncology, Inc. Of the options shown in the table as granted to Dr. West in
1993, 53,600 were options granted in 1992 and repriced in 1993. Numbers have
been adjusted to reflect a 1 for 5 reverse stock split effective November
1995.
(8) Consists of options to purchase 22,000 shares of common stock of LabONE,
Inc. and options to purchase 800 shares of common stock of Response
Oncology, Inc. The number of Response Oncology, Inc. shares has been
adjusted to reflect a 1 for 5 reverse stock split effective November 1995.
(9) Consists entirely of options to purchase shares of common stock of LabONE,
Inc.
(10) Represents the dollar value of shares of Company Common Stock granted as
Restricted Stock Awards under the Company's 1989 Stock Option and Incentive
Plan, which became performance vested in the year indicated. Restricted
Stock Awards were made in 1991 to replace the Company's annual cash bonus
program which was discontinued in that year. After Restricted Stock became
performance vested, it time vested, generally in equal parts on the 1st, 2nd
and 3rd anniversaries of the date of performance vesting. Thus, generally,
the Restricted Stock which performance vested in a given year was not
available to the grantee in that year. While SEC rules require that the full
value of performance vested Restricted Stock be shown for the year in which
performance vesting occurs, the benefit of said Restricted Stock was not
available to the grantee until full time vesting occurs, which generally is
in subsequent years. In January 1995, the time vesting of certain shares of
Restricted Stock was accelerated from 1996 until 1995. The value of
Restricted Stock which fully time vested in 1995, 1994 and 1993 (valued at
the date of full time vesting) for each of the named executive officers was:
<TABLE>
<CAPTION>
EXECUTIVE OFFICER 1995 1994 1993
- --------------------- ----------- ----------- -----------
<S> <C> <C> <C>
W. T. Grant $ 926,713 $ 657,310 $ 94,012
P. Anthony Jacobs 579,213 410,810 58,762
James R. Seward 437,885 239,555 30,562
</TABLE>
No dividends (or payments in lieu thereof) are paid on Restricted Stock
until all restrictions lapse (including holding period restrictions
following performance vesting). See "Report of The Directors -- Compensation
Committee on Executive Compensation" for a discussion of the Restricted
Stock Awards. All shares of Restricted Stock held by any of the named
executive officers had performance vested by December 31, 1993, with the
value of such shares which performance vested in 1993 (valued at the time of
performance vesting) being shown in the Table as an "LTIP Payout" for 1993.
All of these shares had time vested as of December 31, 1995.
12
<PAGE>
(11) Includes the following contributions paid or accrued to the named executive
officers' accounts in the Company's, or one of its subsidiaries', as the
case may be, 401(k) Plan ("401(k)") and Money Purchase Pension Plan ("MPP"),
pursuant to a Supplemental Retirement Agreement ("SERP") with said executive
and for term life insurance for said executive:
<TABLE>
<CAPTION>
TERM LIFE INS.
401(K) MPP SERP PREMIUMS
---------------------- ------------------------- ------------------------- ----------------------
EXECUTIVE 1995 1994 1993 1995 1994 1993 1995 1994 1993 1995 1994 1993
- -------- ------ ------ ------ ------- ------- ------- ------- ------- ------- ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
WTG..... $4,620 $4,620 $4,497 $15,562 $15,596 $16,509 $ 2,673 $ 2,453 $11,571 $2,076 $2,020 $2,020
PAJ..... 4,620 4,620 4,497 15,562 15,596 16,509 20,473 17,836 26,945 1,565 1,505 1,457
JRS..... 4,620 4,620 4,497 15,562 15,596 12,126 -0- -0- -0- 923 890 862
BHH..... 4,620 4,620 -0- 15,562 15,455 -0- -0- -0- -0- 325 325 -0-
WHW..... -0- -0- -0- -0- -0- -0- -0- -0- -0- 102 137 102
</TABLE>
The initials above are the initials for the following executive officers: WTG --
W. Thomas Grant II; PAJ -- P. Anthony Jacobs; JRS -- James R. Seward; BHH --
Bert H. Hood; and WHW -- William H. West, M.D.
(12) Includes $464,308 in severance payments in connection with Mr. Hood's
resignation October 24, 1995 as an officer and director of LabONE, Inc.
(13) Includes $6,276 for moving and storage of household goods.
(14) Includes a $60,000 signing bonus paid to Mr. Hood upon the execution of his
Employment Agreement with LabONE, Inc. in August 1993 and $16,849 in
relocation expenses in connection with his move from Dallas, Texas to the
Kansas City area.
13
<PAGE>
OPTION GRANTS IN LAST FISCAL YEAR
No Company options were granted in 1995 to any executive officer shown in
the Summary Compensation Table. The following table sets forth information
respecting options granted in 1995 by Response Oncology, Inc. ("ROIX"), a
56%-owned subsidiary of the Company, to ROIX's 1995 Chairman and to Company
corporate officers who are members of the Board of Directors of ROIX, and by
LabONE, Inc. ("LabONE"), an 82%-owned subsidiary of the Company, to LabONE's
Chairman at the time and to a Company corporate officer who is a member of the
LabONE Board of Directors. All ROIX options granted to Company corporate
officers are presently exercisable. The options granted to ROIX's Chairman vest
upon successful funding of a specified financing (which funding has not as yet
occurred). The LabONE options granted to LabONE's Chairman and to the Company
corporate officer vest over five years. All such options granted in 1995 are
non-statutory options, receiving no special tax benefits, and have a term of ten
years. All such options are entitled to the benefit of cashless exercise
provisions of the option plans pursuant to which they were issued. None of the
option grants in 1995 included tandem SARs, performance units or other
instruments, or any reload or tax reimbursement features.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
------------------------------------------------
PERCENT OF POTENTIAL REALIZABLE VALUE
NUMBER OF TOTAL OPTIONS AT ASSUMED ANNUAL RATES OF
SECURITIES GRANTED TO EXERCISE STOCK PRICE APPRECIATION FOR
UNDERLYING EMPLOYEES IN OR BASE OPTION TERM(4)
OPTIONS FISCAL PRICE EXPIRATION ----------------------------
NAME GRANTED(#) YEAR(3) ($/SH) DATE 0%($) 5%($) 10%($)
- --------------------- ---------- ------------- -------- ---------- ------ -------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
W. Thomas Grant II 200(1) .05 % $ 8.4375 01/01/05 -0- $ 1,061 $ 2,689
200(1) .05 % 10.625 04/01/05 -0- 1,336 3,387
200(1) .05 % 10.00 07/01/05 -0- 1,258 3,187
200(1) .05 % 16.875 10/01/05 -0- -0- -0-
P. Anthony Jacobs 200(1) .05 % $ 8.4375 01/01/05 -0- $ 1,061 $ 2,689
200(1) .05 % 10.625 04/01/05 -0- 1,336 3,387
200(1) .05 % 10.00 07/01/05 -0- 1,258 3,187
200(1) .05 % 16.875 10/01/05 -0- -0- -0-
James R. Seward 200(1) .05 % $ 8.4375 01/01/05 -0- $ 1,061 $ 2,689
200(1) .05 % 10.625 04/01/05 -0- 1,336 3,387
200(1) .05 % 10.00 07/01/05 -0- 1,258 3,187
200(1) .05 % 16.875 10/01/05 -0- -0- -0-
22,000(2) 4.4 % 14.125 02/10/05 -0- 195,429 495,255
Bert H. Hood 20,000(2) 4.0 % $ 14.125 02/10/05 -0- $177,663 $ 450,232
William H. West, M.D. 62,500(1) 15.6 % $ 12.50 09/07/05 $2,344 $495,142 $1,251,190
</TABLE>
- ------------------------
(1) Consists entirely of options to purchase shares of ROIX's common stock. The
numbers of options have been adjusted to reflect a 1 for 5 reverse stock
split effective November, 1995.
(2) Consists entirely of options to purchase shares of LabONE common stock.
(3) Represents the percentages of options granted in 1995 by the companies whose
stock is the subject of the options.
(4) The dollar amounts under these columns are the result of calculations at 0%
and the 5% and 10% rates set by SEC rules and are not intended to forecast
possible future appreciation, if any, in ROIX's or LabONE's stock prices.
14
<PAGE>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND YEAR-END OPTION VALUES
The following table provides information on option exercises in 1995 by the
named executive officers and the values of such officers' unexercised options at
December 31, 1995. Except as noted, the information pertains to options for
Company Common Stock.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS IN-THE-MONEY OPTIONS
SHARES AT YEAR-END (#) AT YEAR-END ($)(3)
ACQUIRED ON VALUE --------------------------- -----------------------------
NAME EXERCISE (#) REALIZED ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- --------------------- --------------- ------------ ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
W. T. Grant II 141,492 $ 1,232,789 5,000 -0- $ 18,900 $ -0-
27,431(1) -0- 133,726(1) -0-
4,000(2) -0- 9,188(2) -0-
P. Anthony Jacobs 100,500 $ 648,772 5,000 -0- 28,125 -0-
20,343(1) 1,657(1) 99,172(1) 6,007(1)
4,000(2) -0- 9,188(2) -0-
James R. Seward 41,667 $ 332,865 5,000 -0- 18,900 -0-
-0- 22,000(1) -0- 13,750(1)
4,000(2) -0- 9,188(2) -0-
Bert H. Hood -0- -0- 200,000(1) -0- 75,000(1) -0-
William H. West, M.D. -0- -0- 95,280(2) 92,220(2) 470,050(2) 17,500(2)
</TABLE>
- ------------------------
(1) Consists entirely of options to purchase shares of common stock of LabONE,
Inc. ("LabONE") and the value (i.e. market value of underlying securities
minus option exercise price) at December 31, 1995 of such options.
(2) Consists entirely of options to purchase shares of common stock of Response
Oncology, Inc. ("ROIX") and the value (i.e. market value of underlying
securities minus option exercise price) at December 31, 1995 of such
options. Number of options reflects a 1 for 5 reverse stock split effective
November 1995.
(3) The closing price on December 31, 1995 of Company Common Stock was $34.00;
of LabONE common stock was $14.75; and of ROIX common stock was $12.50.
EMPLOYMENT AGREEMENTS; TERMINATION OF EMPLOYMENT; CHANGE-OF-CONTROL COMPENSATION
ARRANGEMENTS; AND SEVERANCE AGREEMENTS
THE COMPANY -- CHANGE-OF-CONTROL. The Company has entered into certain
Termination Compensation Agreements with Messrs. W. T. Grant II, P. Anthony
Jacobs and James R. Seward. Under the Termination Compensation Agreements, each
such officer could receive, in the event his employment with the Company is
terminated by the Company (for a reason other than death, normal retirement or
permanent disability) or is terminated by him for good cause, within three (3)
years following a change-of-control of the Company, a lump sum payment up to
three times the officer's average annual gross income for the five tax years
preceding the year of termination.
A "change-of-control" under the Termination Compensation Agreements
generally is deemed to have occurred if, as the result of (i) a tender offer or
other acquisition of securities of the Company any person, entity or group
becomes the beneficial owner, directly or indirectly, of securities of the
Company representing 25% or more of the voting power of outstanding Company
securities, or (ii) a contested election of directors, either the persons who
were directors of the Company immediately prior thereto, or new persons whose
nomination was approved by two-thirds of the directors in office immediately
prior thereto, cease to constitute a majority of the Board of Directors.
15
<PAGE>
Had a "change-of-control" taken place on December 31, 1995, the following
executive officers identified in the Summary Compensation Table would have been
entitled to receive, had their employment ceased on that date, lump sum payments
in the following amounts under their Termination Compensation Agreements: W. T.
Grant II -- $2,993,116; P. Anthony Jacobs -- $1,762,012; and James R. Seward --
$1,126,050.
THE COMPANY -- SEVERANCE AGREEMENTS. The Company has entered into certain
Severance Agreements with Messrs. W. T. Grant II, P. Anthony Jacobs and James R.
Seward. Under the Severance Agreements, each such officer would receive a lump
sum severance payment in an amount approximating 250% of his annual base salary
if his employment with the Company is terminated as a result of or within one
(1) year following a "fundamental change" in the Company. A "fundamental change"
would occur if, among other things, the Company were to liquidate, sell
substantially all of its assets, merge with an affiliate wherein the Company is
not the surviving company or engage in some other transaction the result of
which is the termination of the Company's corporate existence or the cessation
of its business, provided that any transaction which constitutes a
"change-of-control" for purposes of the Termination Compensation Agreements,
shall not constitute a "fundamental change" for purposes of the Severance
Agreements.
Had a transaction constituting a "fundamental change" in the Company
occurred December 31, 1995, the following Executive Officers identified in the
Summary Compensation Table would have been entitled to receive, had their
employment terminated on that date, lump sum payments in the following amounts
under their Severance Agreements: W. T. Grant II -- $827,500; P. Anthony Jacobs
- -- $623,975; and James R. Seward -- $368,225.
SUBSIDIARIES -- EMPLOYMENT AGREEMENTS; CHANGE-OF-CONTROL. LabONE, Inc.
("LabONE") had an employment agreement with Bert H. Hood, its former Chief
Executive Officer, who is named in the Summary Compensation Table as a 1995
executive officer of the Company. The Agreement provided for the employment of
Mr. Hood for a three-year term ending in 1996, renewable annually thereafter for
successive one-year terms unless LabONE elected not to extend the Agreement. Mr.
Hood's compensation under the Agreement consisted of a signing bonus of $60,000,
an annual base salary of not less than $200,000, an annual incentive bonus to be
established by the Compensation Committee of the LabONE Board of Directors after
consultation with Mr. Hood, the purchase by LabONE of Mr. Hood's Texas residence
for a purchase price net to Mr. Hood equal to the average of the fair market
values of the residence established by two independent appraisers, the granting
of a nonqualified stock option to Mr. Hood for 200,000 shares of LabONE common
stock, and participation in LabONE's other fringe benefit programs for
executives. In the event of the termination of Mr. Hood's employment without
cause (as defined in the Agreement), the Agreement provided for the payment to
Mr. Hood of a lump sum severance payment equal to his base salary due for the
balance of the term of the Agreement, plus one year's annual base salary. If a
change-of-control of LabONE (as defined in the Agreement) occurred at any time
while Mr. Hood was in LabONE's full-time employment, and within one year after
such a change in control Mr. Hood's employment was terminated for any reason
other than permanent disability, death or normal retirement, the Agreement
provided for the payment to Mr. Hood of compensation equal to three times his
average annual compensation for the most recent five tax years (subject to
certain limitations prescribed in the Internal Revenue Code) and for the
cancellation of any remaining term of the Agreement. Under the Agreement, Mr.
Hood agreed not to compete with LabONE for a period of two years after the
termination of his employment with LabONE.
On September 7, 1994 LabONE loaned $150,000 to Mr. Hood. Mr. Hood delivered
to LabONE his unsecured promissory note evidencing the indebtedness, payable
September 7, 1995. The note was renewed by LabONE on September 7, 1995, with the
new note being payable on the earlier of September 7, 1996 or the termination of
Mr. Hood's employment under his Employment Agreement with LabONE. Interest
accrued on the note at a rate of 7.75% per annum, payable quarterly.
Mr. Hood resigned his positions as Director and Chief Executive Officer of
LabONE on October 24, 1995, at which time he was paid a lump sum severance
payment of $464,308 under his Employment
16
<PAGE>
Agreement with LabONE. The outstanding principal balance of $150,000 on LabONE's
loan to Mr. Hood and accrued interest thereon was paid in full by deducting Mr.
Hood's indebtedness to LabONE from the lump sum severance payment due to Mr.
Hood.
Response Oncology, Inc. ("ROIX") has an employment agreement, dated January
1, 1992, with Dr. William H. West, its Chairman of the Board, who is named in
the Summary Compensation Table as a 1995 executive officer of the Company. The
agreement is effective through 1996, subject to automatic extension from year to
year unless terminated by either party. Dr. West's base annual compensation is
$225,000, subject to review each year. In the event his employment is terminated
without cause, Dr. West is entitled to a severance payment equal to 150% of his
then current base salary. In his employment agreement, Dr. West agreed to
refrain from disclosing any information respecting ROIX, to refrain from
competing with ROIX during the term of his employment and for two years
thereafter, and to refrain from hiring or soliciting employees or clients of
ROIX for two years after his employment terminates.
OTHER ARRANGEMENTS. In 1991 the Company's Board of Directors approved a
Supplemental Retirement Agreement with Mr. Jacobs pursuant to which he will be
entitled to either a lump sum payment or actuarially equivalent periodic
payments upon or commencing, respectively, with his retirement at or after age
55 or his earlier death, disability or involuntary termination of employment.
The amount of the lump sum payment is to be determined by assuming (i) the
hypothetical deposit into a fund of $12,000 on January 1 of each year,
commencing with 1991 and ending on the date of his retirement, death, disability
or involuntary termination, and (ii) that amounts deposited earn interest at 9%
per annum. The amount payable to Mr. Jacobs under the Agreement, assuming his
retirement at age 65, would be $443,700.
REPORT OF THE BOARD OF DIRECTORS -- COMPENSATION COMMITTEE
ON EXECUTIVE COMPENSATION
Set forth below under the subheading "The Company -- Executive Compensation"
is the report of the Nominating and Compensation Committee of the Company's
Board of Directors on Executive Compensation. The only executive officers shown
in the Summary Compensation Table, commencing on page 11, to which this report's
discussion of compensation policies is applicable are the Company's Chief
Executive Officer and Messrs. Jacobs and Seward; the other executive officers
listed in the Summary Compensation Table are corporate officers of public
company subsidiaries of the Company and are not corporate officers of the
Company. The Nominating and Compensation Committee of the Company's Board of
Directors does not have responsibility for and in fact does not establish
compensation policy for officers of those subsidiaries; the Board of Directors
of each subsidiary has its own compensation committee, which establishes
compensation policies for the executive officers of that subsidiary.
Under the subheading below entitled "Subsidiaries -- Executive
Compensation," there is a discussion of the compensation policies established by
the Compensation Committee of LabONE, Inc.'s Board of Directors respecting Bert
H. Hood, who served as LabONE's Chief Executive Officer until his resignation on
October 24, 1995 and who is a 1995 executive officer of the Company named in the
Summary Compensation Table, and the compensation policies established by the
Compensation Committee of Response Oncology, Inc.'s Board of Directors
respecting William H. West, M.D., its Chief Executive Officer during 1995 and
one of the Company's 1995 executive officers named in the Summary Compensation
Table.
The discussion of compensation policies respecting corporate officers of
subsidiaries of the Company is made over the names of the Company's entire Board
of Directors. It constitutes a summary of the reports of executive compensation
submitted to the Company's Board of Directors by the Compensation Committees of
those subsidiaries. The Company's Board of Directors has taken no action with
respect to these reports, nor has it participated in their preparation.
17
<PAGE>
THE COMPANY -- EXECUTIVE COMPENSATION
The Company's executive compensation program is administered by the
Nominating and Compensation Committee of the Board of Directors. The Committee
is composed of six Non-Employee Directors. Following review and approval by the
Nominating and Compensation Committee, all issues pertaining to executive
compensation are reported to the Board of Directors, and, except for awards
under the Company's stock based compensation plans, are approved by the Board of
Directors.
COMPENSATION POLICIES
GENERAL. Following the 1990 sale of its life and health insurance business,
the Company had a diverse group of assets consisting of a significant amount of
cash, a holdover portfolio of direct real estate investments, interests in
several venture capital investments, and a majority ownership of LabONE, Inc.
("LabONE"), whose principal business is laboratory testing services for the
insurance and clinical testing industries. The Board of Directors determined
that the appropriate strategy for the newly structured holding company would be
to increase shareholder value by deploying its cash in developing businesses
that provide services to the insurance and health care industries while
liquidating its real estate portfolio and other assets that were not consistent
with this strategic focus.
As a result of this dramatic shift in the environment for the Company's
management from operating in the mature and regulated insurance industry to
investing as a holding company in early stage businesses with high growth
potential, and correspondingly higher business risks, the Nominating and
Compensation Committee initiated the design of an executive compensation system
which would reward behavior that reinforced the new direction of the Company.
The Committee concluded that this system should emphasize long-term performance
in support of the Company's long-term objectives. The resulting equity-based
compensation program was tied to long-term increases in shareholder value, as
measured by the price of Company Common Stock, and not to annual earnings or
other short-term measures of performance. The annual cash incentive program was
discontinued in 1991; the current executive compensation structure has only two
elements -- base salary and a long-term, stock-based compensation component.
BASE SALARY COMPENSATION. The Committee's policy is to establish base
salaries for each of the Company's executive officers at approximately the
median of salaries for comparable positions at non-manufacturing general
industrial and financial services companies. In 1995, executive officer salaries
were based upon a 1990 survey of such comparable positions conducted by
compensation consultants, adjusted for market changes since 1990 as reported to
the Company by such consultants.
No deliberate effort was made to include companies in the consultants'
surveys which are a part of the comparative indices used in the Performance
Graph (see page 24). The Company believes that it generally competes for
executive talent with companies similarly sized, from a market capitalization
and revenue standpoint, regardless of a company's industry or line of business.
Base salary for executive officers is not directly related to Company
performance; however, as discussed below, most of the remaining portions of
executive officers' compensation are wholly dependent upon increases in the
market price of Company Common Stock.
LONG-TERM COMPENSATION PLAN. Development of the Company's long-term
compensation plan evolved in two stages. First, grants of non-statutory stock
options were made in December 1990 to vest in thirds in 1991, 1992 and 1993;
most of these were "premium" stock options, or options whose exercise prices
were above the market price on the date of grant, so that significant increases
in the Company's stock price would be required before the options had value. The
market price of Company Common Stock was $23.25 when these option grants were
made and the option exercise prices ranged up to $30.22. All of these options
are fully vested. The number of options granted and the various exercise prices
were not determined on the basis of any formula; they reflected the Committee's
subjective judgment after considering the then current market price of Company
Common Stock, the
18
<PAGE>
Committee's judgment as to the period of time required for implementation of the
Company's new strategy, and the Committee's estimation of stock price increases
likely to occur over the ten-year life of the options.
The second stage in developing the long-term compensation plan occurred in
1991 when the annual cash incentive plan was terminated and a program of
restricted stock awards was designed and implemented to reinforce the long-term
emphasis of the earlier stock options. The restricted stock awards granted in
1991 were in three tranches, with vesting first conditioned on the market price
of Company Common Stock attaining an average over twenty consecutive trading
days of $26.00, $30.00 and $35.00 per share, respectively. These vesting
thresholds represented market prices from 17% to 58% above the market price of
$22.125 on the date the restricted stock awards were granted. The prescribed
market price thresholds which constitute the performance vesting requirements of
the restricted stock awards were achieved in 1991, 1992 and 1993, respectively.
Once performance vesting occurred, an additional "time vesting" period began;
each restricted stock award tranche generally "time-vested" in thirds over three
years.
In early 1995, the Nominating and Compensation Committee reviewed the
long-term compensation program described above and decided to accelerate the
time vesting of two tranches of restricted stock awards which had performance
vested but which had not time vested as of December 31, 1994. Absent
acceleration, time vesting of one of the tranches would have occurred in October
1995 and of the other in October 1996. The Committee concluded that the
restricted stock awards have achieved the Committee's objective of creating
incentives for the Company's management to increase shareholder value. The
Committee believes that the extent of management's stockholdings is such that
their continued attention to enhancing shareholder value can be expected;
therefore, the Committee believes that the acceleration of time vesting of the
final tranches of restricted stock has not adversely affected management's
performance.
The overall long-term compensation plan was intended to replace the former
annual cash bonus program over a five-year period and to assure that only a
sustained increase in shareholder value would provide a reward to the executive
officers. The Committee believes the objective of the Plan -- to strongly align
shareholders and management interests -- has been met and that the level of
stock ownership that has been attained by management constitutes a continuing
long-term incentive plan in support of the Company's strategic objectives.
In early 1995, following the Company's announcement of an intention to
consider a new corporate strategy, the Committee also approved severance
arrangements for executive officers who are corporate officers of the Company.
These severance arrangements will apply only if an officer's employment is
terminated as a result of a "fundamental change" in the Company which does not
constitute a "change-of-control" as described on pages 15 and 16 above. Certain
events which constitute a "fundamental change" and thus which could cause
severance payments to be due to executive officers, as well as the magnitude of
those payments, are discussed under "The Company -- Severance Agreements" on
page 16.
CEO COMPENSATION
The compensation of the Company's CEO is determined in accordance with the
policies outlined above for all executive officers; he receives a base salary
targeted at the median of salaries paid for comparable positions at other
non-manufacturing general industrial and financial services companies. He
received a base salary increase effective March 1, 1995 to maintain a salary at
that median. The CEO's salary will not be increased for 1996 because of the
change in the Company's strategic direction, adopted in 1995. The CEO is also a
participant in the Company's long-term, stock-based compensation plan referred
to above. Measurements of Company performance are not a significant factor in
establishing the CEO's base salary; however, substantially all of the remainder
of the CEO's compensation is wholly dependent upon sustained increases in the
market price of Company Common Stock.
19
<PAGE>
OTHER COMPENSATION PLANS
The Company has adopted certain employee benefit plans in which the
executive officers are permitted to participate on the same terms as all other
employees who meet applicable eligibility criteria, subject to any legal
limitations on the amounts that may be contributed or the benefits that may be
payable under the plans. Currently, the Company offers a 401(k) Savings Plan and
a Money Purchase Pension Plan, both of which are defined contribution plans.
The Company has entered into supplemental retirement agreements ("SERP")
with certain highly paid executive officers to provide tax deferred accruals of
amounts proportionate to the benefits available to non-highly compensated
participants in the Company's plans (as adjusted based upon compensation
levels), but which exceed benefits permitted under the Company's plans due to
certain tax law limitations. Amounts accrued for the benefit of the Company's
CEO and other executive officers under SERPs are shown in footnote 11 to the
Summary Compensation Table on page 13. The SERPs are unfunded; amounts payable
represent unsecured liabilities of the Company subject to the claims of the
Company's other creditors.
COMPLIANCE WITH INTERNAL REVENUE CODE SECTION 162(m)
Section 162(m) of the Internal Revenue Code, which took effect January 1,
1994, generally disallows an income tax deduction to public companies for
compensation over $1 million annually paid to the Company's Chief Executive
Officer or to other executive officers named in the Summary Compensation Table.
Qualifying performance-based compensation is not subject to the deduction
limitation if certain requirements are met. The Company believes that all
outstanding stock options and restricted stock awards respecting Company Common
Stock, as well as the stock option plans pursuant to which such options and
awards have been granted, qualify for an exemption from the deduction limit.
Based upon the current levels of non-performance based compensation for the
Company's executive officers, the deduction limit is not expected to have a
material impact on the Company in 1996. The Company currently intends to
structure and administer future performance-based compensation of its executive
officers in a manner that complies with Section 162(m) and the regulations
thereunder.
SUBMITTED BY NOMINATING AND COMPENSATION COMMITTEE
David W. Kemper, Chairman
Lan C. Bentsen
John C. Gamble
Michael E. Herman
John H. Robinson, Jr.
Dennis R. Stephen
SUBSIDIARIES -- EXECUTIVE COMPENSATION
LABONE, Inc.
Until his resignation in October 1995, Mr. Hood was Chief Executive Officer
of LabONE, Inc. ("LabONE"). LabONE is 82% owned by the Company. The remaining
18% of LabONE'S stock is publicly held. Mr. Hood was not a corporate officer or
employee of the Company. His compensation was determined pursuant to LabONE'S
executive compensation program which is administered by the Compensation
Committee of LabONE'S Board of Directors. While the Company's Chief Executive
Officer is Chairman of this Committee and one other Company director is a
member, the Committee's membership also includes three individuals who are not
directors, officers or employees of the Company. LabONE'S Compensation Committee
operates independently of the Company's Board of Directors. That Committee's
policies respecting LabONE executive officer compensation, as reported by
LabONE'S Compensation Committee to the Company's Board of Directors, are set
forth below. Compensation decisions by LabONE'S Compensation Committee are
entirely unrelated to the Company's performance, but they are, to the extent
described below, related to LabONE'S performance.
20
<PAGE>
The philosophy governing LabONE'S executive compensation is based on a
belief that management and LabONE stockholders have a common goal increasing the
value of LabONE common stock. The business strategy for achieving this goal is
expressed in LabONE'S mission statement:
"LabONE is dedicated to maximizing the return on investment for [LabONE]
stockholders . . . to providing the lowest-cost, highest-quality
laboratory testing services for [its] clients . . . to providing a
working environment that emphasizes accountability for results, and
rewards employees based on their contribution to LabONE'S success."
Three principal elements of LabONE'S executive compensation -- base salary,
annual incentive plan, and stock options -- are used to motivate and reward the
accomplishment of annual corporate objectives, reinforce a strong orientation
toward operating excellence, provide variability in individual awards based on
contributions to business results, and maintain a competitive compensation
package to attract, retain and motivate individuals of the highest professional
quality.
Salary ranges were developed based on a survey initially conducted in 1986
by an independent consultant and updated in 1989. Base salaries are targeted at
the 60th to 65th percentile of pay for comparable positions in "All Industrial
Base Salaries" surveyed by the consultant. In determining base salary levels,
LabONE'S Compensation Committee considers individual performance evaluations.
Measurements related to LabONE'S performance are not a significant factor in
base salary decisions since they are the sole factors in determining incentive
awards and the value of stock options.
LabONE'S Annual Incentive Plan is designed to motivate and reward the
accomplishment of targeted operating results. Prior to the beginning of each
fiscal year, LabONE'S Compensation Committee establishes an earnings per share
goal under the Plan based upon the Committee's judgment of reasonable earnings
per share growth over the previous fiscal year. No incentive payments are made
if the minimum net earnings threshold is not met. The size of the incentive pool
increases pursuant to a formula established by LabONE'S Compensation Committee
as net earnings increase over the minimum threshold. The incentive pool is
distributed in cash ratably to designated LabONE officers and managers at year
end according to a pre-established weighting. The weighting is based upon LabONE
senior management's subjective evaluations of each individual's potential
contribution to LabONE'S financial and strategic goals for the year, and is
reviewed and approved by LabONE'S Compensation Committee. No bonuses were paid
under LabONE'S Annual Incentive Plan for 1995.
The LabONE Compensation Committee, as well as LabONE'S Board of Directors,
believes that significant stock ownership, through stock options, by key
employees and directors is a major incentive in aligning the interests of
employees and stockholders, because value is only provided if the stock price
increases and because stock options have an effective long-term reward and
retention function.
LabONE stockholders approved a Long-Term Incentive Plan in 1987 and
increases in the number of shares which may be issued under that plan were
approved by LabONE stockholders in 1991, 1994 and 1995. Under this plan, ten
year non-qualified stock options are granted to executive officers and other key
employees when they are hired or promoted into eligible positions. These grants
are made on a one-time basis with vesting to occur over periods from three
months to five years.
Mr. Hood's compensation as Chief Executive Officer of LabONE was determined
by negotiation of an employment agreement at the time of his initial employment
with LabONE in 1993, which employment agreement was subsequently amended in
November 1994. See "Employment Agreements; Termination of Employment and
Change-of-Control Compensation Arrangements; and Severance Agreements --
Subsidiaries -- Employment Agreements; Change-of-Control" for a description of
the employment agreement as amended. A significant portion of Mr. Hood's
compensation under his employment agreement was represented by LabONE stock
options which tied his level of compensation to LabONE'S future stock
performance. Upon the termination of Mr. Hood's employment with LabONE in
October 1995, Mr. Hood was paid a lump sum severance payment of $464,308 as
provided for in his employment agreement. No annual incentive bonus was paid to
Mr. Hood for 1995. All of the stock options granted to Mr. Hood have expired
unexercised.
21
<PAGE>
RESPONSE ONCOLOGY, INC.
During 1995, Dr. West was Chief Executive Officer of Response Oncology, Inc.
("Response"), which is 56% owned by the Company. Dr. West owns approximately 11%
of Response's outstanding common stock and the remaining 33% is publicly held.
Dr. West is not a corporate officer or employee of the Company. His compensation
is determined pursuant to Response's executive compensation program which is
administered by the Compensation Committee of Response's Board of Directors.
While three Company directors serve on Response's Compensation Committee, the
Committee's membership also includes three individuals who are not directors,
officers or employees of the Company; it operates independently of the Company's
Board of Directors. Policies respecting Response executive officer compensation
as reported to the Company's Board of Directors by Response's Compensation
Committee, are set forth below. Compensation decisions by Response's
Compensation Committee are entirely unrelated to the Company's performance, but
they are, to the extent described below, related to Response's performance.
The guiding principle of the Response Compensation Committee is to establish
a compensation program which aligns executive compensation with Response's
objectives, business strategies and financial and operational performance. In
connection with this principle, the Response Committee seeks to:
(1) attract and retain qualified executives in the highly competitive health
care industry who will play a significant role in the achievement of Response's
goals,
(2) create a performance oriented environment that rewards performance with
respect to the financial and operational goals of Response and which takes into
account industry-wide trends and performance levels, and
(3) reward executives for strategic management and the long-term enhancement
of Response's stockholder value.
Compensation for Response's key executives, including Dr. West, consists of
three elements: base salary and benefits, a performance-based annual cash bonus
and stock-based compensation. While the Response Compensation Committee seeks to
weigh each element separately, it is their collective value that is considered
in ensuring that Response's executive officers are compensated in a manner that
advances both the short-term and long-term interests of Response's stockholders.
The base salary for each Response executive officer, including Dr. West, is
set on the basis of the salary levels in effect for comparable positions in the
industry, adjusted for the executive's experience and performance level and
internal comparability considerations. Response monitors industry salary levels
with the assistance of a compensation consultant. Based on an industry survey,
the 1995 base salaries of Response's executive officers, including Dr. West,
were competitive with salaries for individuals in comparable positions.
The performance-based annual cash bonus for each Response executive officer,
including Dr. West, is based upon pre-established financial goals as well as the
achievement of strategic objectives and milestones. The primary financial goal
set by the Response Compensation Committee has been a target level of Response's
earnings before interest and taxes ("EBIT"). An aggregate incentive pool is
determined by taking a percentage of EBIT and allocating it among all
participants in the Response bonus program. In establishing a minimum level of
EBIT, below which no bonuses are earned, the Response Compensation Committee
considers Response's performance for the prior fiscal year and the amount of
increase budgeted for the ensuing year. The percentage of EBIT credited to the
bonus pool increases in stages if Response's actual EBIT exceeds budgeted EBIT.
Response executive officers may earn from 10% to 100% of base salary through the
bonus program. Achievement of Response strategic objectives and milestones may
also be factors considered in determining the amount of an officer's
performance-based annual cash bonus; such objectives and milestones may
22
<PAGE>
include the opening of new IMPACT-Registered Trademark- Centers, development of
infrastructure necessary to sustain Response's future growth, obtaining
financing on favorable terms, or more recently with diversification into the
physician practice management business, the number of physicians under
management.
Pursuant to Response's various stock option plans, the Response Compensation
Committee periodically awards stock options to, among others, Response's
executive officers, including Dr. West. Such stock-based compensation provides a
long-term incentive for Response executive officers to become a meaningful
stockholder of Response and provides a mechanism for aligning the interests of
Response's executive officers with those of its stockholders. The Response
Compensation Committee believes that such stock option grants are the foundation
of its overall compensation packages, because such grants recognize both
productivity and profitability, while at the same time giving recipients a
vested long-term interest in the success of Response through stock ownership.
------------------------
While the foregoing discussion of the compensation policies of LabONE and
ROIX is made over the names of the Directors of Seafield Capital Corporation, in
compliance with SEC rules, it has not been prepared by the Company's Board of
Directors; as indicated above, the discussions of LabONE and ROIX compensation
policies are summaries of reports submitted to the Company's Board of Directors
by LabONE'S and ROIX's Compensation Committees.
SUBMITTED BY THE
SEAFIELD CAPITAL CORPORATION
BOARD OF DIRECTORS
W. T. Grant II, Chairman
Lan C. Bentsen
John C. Gamble
W. D. Grant
Michael E. Herman
P. Anthony Jacobs
David W. Kemper
John H. Robinson, Jr.
James R. Seward
Dennis R. Stephen
23
<PAGE>
PERFORMANCE GRAPH
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN AMONG
SEAFIELD CAPITAL CORPORATION, THE
NASDAQ COMPOSITE INDEX, THE S&P HEALTH CARE COMPOSITE INDEX,
A LABONE PEER GROUP AND THE RUSSELL 2000 INDEX.
The graph below assumes $100 was invested 12/31/90 and dividends were
reinvested.
NOTE: The stock price performance shown on the graph below is not
necessarily indicative of future price performance.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
SEAFIELD NASDAQ S&P HEALTH CARE
<S> <C> <C> <C> <C> <C>
Capital Composite Composite LabOne Russell 2000
Corporation Index Index Peer Group (2) Index (3)
1990 $100 100 100 100 100
1991 $135.95 156.84 153.94 255.86 146.05
1992 $173.54 181.08 128.94 160.61 172.94
1993 $181.45 207.79 118.12 125.25 205.64
1994 $180.84 201.15 133.66 112.44 201.89
1995 $185.55 281.44 210.77 83.31 259.31
</TABLE>
<TABLE>
<CAPTION>
YEAR END DATA 1990 1991 1992 1993 1994 1995
- ----------------------------------------------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Seafield Capital Corporation $ 100 $ 135.95 $ 173.54 $ 181.45 $ 180.84 $ 185.55
NASDAQ Composite Index 100 160.56 186.87 214.51 209.69 296.30
S&P Health Care Composite Index (1) 100 154.01 128.92 118.09 133.58 210.85
LabONE Peer Group (2)(3) 100 255.86 160.61 125.25 112.44 83.31
Russell 2000 Index (3) 100 146.05 172.94 205.64 201.89 259.31
</TABLE>
- ------------------------
(1) The S&P Health Care Composite Index is the line-of-business index with which
Response Oncology, Inc. compares itself. Response is 56% owned by the
Company and is one of the Company's two primary operating subsidiaries.
(2) The LabONE Peer Group is a group of nine clinical laboratories
(Boi-Reference Labs, Laboratory Corp. of America, Meris Labs, Oncormed,
Pharmchem, Psychemedics, RX Medical, Unilab and Universal Standard Medical)
selected by LabONE, Inc. for purposes of comparing its cumulative total
shareholder return. LabONE is 82% owned by the Company and is one of the
Company's two primary operating subsidiaries.
24
<PAGE>
(3) The Russell 2000 Index is an index of companies the mean of whose market
capitalizations approximates that of the Company. The Company believes that
an index of companies with similar market capitalizations provides a good
basis for comparing total shareholder returns. Because the Company is a
holding company with subsidiaries operating in difficult industries, the
Company believes that it cannot reasonably identify a peer group of
companies for comparison. The LabONE Peer Group is believed to constitute
some basis for comparison because of the importance of shareholder return on
LabONE, Inc.'s stock to the total shareholder return on Company Common
Stock. However, even a comparison of LabONE, Inc. to the LabONE Peer Group
is suspect because the universe of publicly traded, reporting companies does
not include any (other than LabONE) whose principal business is laboratory
testing for the life insurance industry; all companies in the LabONE Peer
Group are principally in the clinical testing business. The Company does not
use a published industry or line-of-business index, although the S&P Health
Care Composite Index (the industry index with which Response Oncology, Inc.
compares itself) is believed to constitute some basis for comparison because
of the importance of shareholder return on Response Oncology, Inc.'s stock
to the total shareholder return on Company Common Stock.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Company's Nominating and Compensation Committee ("Compensation
Committee") during 1995 comprised Lan C. Bentsen, John C. Gamble, Michael E.
Herman, David W. Kemper, John H. Robinson, Jr. and Dennis R. Stephen. None of
the persons who served as members of the Compensation Committee during 1995 (a)
are employees or officers of the Company or any of its subsidiaries, (b) are
former officers of the Company or any of its subsidiaries, or (c) had any
relationship or transaction with the Company requiring disclosure under the
SEC's rules, except as discussed below.
The Company and certain of its subsidiaries conduct normal banking
transactions in the usual course of business with, among others, Commerce Bank,
N.A. (Kansas City) ("Commerce") and Boatmen's First National Bank of Kansas City
("Boatmen's"). Mr. Kemper is Chief Executive Officer and Mr. Robinson is a
director of Commerce's holding company. Mr. Herman is a director of Boatmen's.
In the Company's opinion, charges for services rendered by these banking
institutions are commensurate with the costs charged by other financial
institutions for similar services. The Company and its subsidiaries may continue
to use both of these banking institutions for certain services in 1996.
Mr. W. T. Grant II, Chairman of the Board and Chief Executive Officer of the
Company, serves as a director of Commerce Bancshares, Inc., a company whose
chief executive officer, David W. Kemper, serves as Chairman of the Company's
Nominating and Compensation Committee.
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
The firm of KPMG Peat Marwick LLP has been the independent auditors of the
Company since 1959. The Board of Directors has again appointed KPMG Peat Marwick
LLP to serve as the Company's independent auditors for the year ending December
31, 1996. While not required to do so, the Board of Directors is submitting the
selection of the independent auditors for ratification in order to ascertain the
views of the shareholders. If the selection is not ratified, the Board of
Directors will reconsider its selection. Ratification of the selection requires
the affirmative vote of the holders of a majority of the shares of Company
Common Stock represented in person or by proxy at the Annual Meeting.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR RATIFICATION OF
THIS APPOINTMENT.
A representative of KPMG Peat Marwick LLP will be present at the Annual
Meeting to make a statement if he desires to do so and to respond to appropriate
questions.
25
<PAGE>
SHAREHOLDER PROPOSALS
Shareholder proposals intended for inclusion in the proxy materials of the
Company for the 1997 Annual Meeting must be received by the Company at its
executive offices on or before December 10, 1996, in order to be eligible for
inclusion therein.
OTHER BUSINESS
As of the date of this Proxy Statement, the Board of Directors is not aware
of any matters to be presented for action at the Annual Meeting other than those
described herein. If any other matters should come before the meeting, it is the
intention of each of the persons named on the enclosed form of proxy to vote all
duly executed proxies in accordance with their best judgment on such matters.
By Order of the Board of Directors
Steven K. Fitzwater,
SECRETARY
Kansas City, Missouri
April 10, 1996
26
<PAGE>
/X/ Please mark your votes as in this example.
1. ELECTION OF DIRECTORS
NOMINEES: LAN C. BENTSEN, W.D. GRANT, JOHN H. ROBINSON JR.--EACH FOR A
THREE (3) YEAR TERM.
(CUMULATIVE VOTING APPLIES--SEE PROXY STATEMENT)
FOR WITHHOLD
/ / / /
FOR, except vote withheld from the following nominee(s):
--------------------------------------------------------
2. APPROVAL OF INDEPENDENT AUDITORS FOR AGAINST ABSTAIN
/ / / / / /
3. IN THEIR DISCRETION UPON ALL OTHER MATTERS FOR AGAINST ABSTAIN
/ / / / / /
The Board of Directors recommends a vote FOR each of the nominees for election
as directors and FOR each of the proposals. If you sign and return this proxy
it will be voted in the manner directed herein. IF YOU DO NOT DESIGNATE HOW
YOUR SHARES ARE TO BE VOTED THE PROXY WILL BE VOTED FOR EACH NOMINEE AND EACH
PROPOSAL.
If you do not mark any boxes in items (1) through (3), you will be deemed to
have granted authority to the named proxies to vote for the election of the
three nominated directors, to vote for the proposal in Item 2 and to vote in
their discretion on all other matters which may properly come before the
meeting.
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
Signature(s)________________________________ Date_____________________, 1996
NOTE: Please sign exactly as name appears hereon. Joint owners should each
sign. When signing as attorney, executor, administrator, trustee or guardian,
please give full title as such.
<PAGE>
SEAFIELD CAPITAL CORPORATION
PROXY SOLICITED BY THE BOARD OF DIRECTORS
The undersigned hereby constitutes and appoints William D. Grant and
W.T. Grant II, and each of them, jointly and severally, as proxies, with full
power of substitution and revocation, for and in the name and place of the
undersigned, to vote all of the shares of $1.00 par value common stock of
Seafield Capital Corporation, a Missouri corporation (the "Company"), which
the undersigned is entitled to vote at the Annual Meeting of shareholders of
the Company to be held at the Hyatt Regency Crown Center--Empire C Room, 2345
McGee Street, Kansas City, Missouri, on Wednesday, May 8, 1996, at 10:00 a.m.
local time, and at any adjournment or adjournments thereof, as fully and
with the same effect as the undersigned might or could do if personally
present, as indicated on the reverse side of this card.
(To be the signed on Reverse Side)
(See Reverse Side)
2
