SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. ___)
Filed by the registrant [X]
Filed by a party other than the registrant [ ]
Check the appropriate box:
[X] Preliminary proxy statement
[ ] Definitive proxy statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
THE TRAVELERS INC.
(Name of Registrant as Specified in Its Charter)
N/A
(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (Check the appropriate box):
[X] $125 Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2).
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
_____________________________________________________________________________
(2) Aggregate number of securities to which transaction applies:
_____________________________________________________________________________
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:1
_____________________________________________________________________________
(4) Proposed maximum aggregate value of transaction:
_____________________________________________________________________________
[ ] 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:
_____________________________________________________________________________
--------------------
1
Set forth the amount on which the filing fee is calculated and state
how it was determined.
<PAGE>
PRELIMINARY COPY
March , 1995
---
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders
of The Travelers Inc. on Wednesday, April 26, 1995. The meeting will be held
at Carnegie Hall, 881 Seventh Avenue, New York, New York, at 10:00 a.m. local
time. The entrance to Carnegie Hall is on 57th Street just east of Seventh
Avenue.
At this meeting of stockholders, we will be voting on a number of
matters. Please take the time to read carefully each of the proposals for
stockholder action described in the proxy materials.
Thank you for your continued support of our Company.
Sincerely,
Sanford I. Weill
Chairman of the Board
and Chief Executive Officer
<PAGE>
THE TRAVELERS INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
The Annual Meeting of Stockholders of The Travelers Inc. (the "Company")
will be held at Carnegie Hall, 881 Seventh Avenue, New York, New York, on
Wednesday, April 26, 1995 at 10:00 a.m. local time, for the following
purposes:
ITEM 1. To elect to the Board for a three-year term one class of
directors, consisting of five directors;
ITEM 2. To consider and vote upon the proposal to amend the
Certificate of Incorporation of The Travelers Inc. to change
the corporate name to Travelers Group Inc.;
ITEM 3. To ratify the selection of the Company's independent auditors
for 1995;
ITEM 4. To vote on a proposal submitted by a stockholder which proposal
is opposed by the Board of Directors;
and to transact such other business as may properly come before the Annual
Meeting.
The Board of Directors has set the close of business on March 10, 1995
as the record date for determining stockholders entitled to notice of and to
vote at the Annual Meeting. A list of stockholders entitled to vote at the
Annual Meeting is maintained at the Company's headquarters, 65 East 55th
Street, New York, New York.
All stockholders are cordially invited to attend the Annual Meeting.
By Order of the Board of Directors
Charles O. Prince, III
Secretary
March , 1995
---
IT IS IMPORTANT THAT THE ENCLOSED PROXY CARD BE SIGNED, DATED AND PROMPTLY
RETURNED IN THE ENCLOSED ENVELOPE, SO THAT YOUR SHARES WILL BE REPRESENTED
WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING.
<PAGE>
PRELIMINARY COPY
THE TRAVELERS INC.
65 East 55th Street
New York, New York 10022
__________________
PROXY STATEMENT
__________________
ANNUAL MEETING OF STOCKHOLDERS
This Proxy Statement is being furnished to stockholders of
The Travelers Inc. (the "Company") in connection with the
solicitation by the Board of Directors of the Company of proxies
for use at the Annual Meeting of Stockholders of the Company (the
"Annual Meeting") to be held at Carnegie Hall, 881 Seventh
Avenue, New York, New York, on Wednesday, April 26, 1995, at
10:00 a.m. local time, and at any adjournments or postponements
of such meeting. This Proxy Statement and the accompanying proxy
card are being mailed beginning on or about March 31, 1995, to
stockholders of the Company on March 10, 1995, the record date
for the Annual Meeting (the "Record Date"). Employees of the
Company who are participants in one or more of the Company's
benefit plans may receive this Proxy Statement and their proxy
cards separately. The Company's Annual Report to Stockholders
for the fiscal year ended December 31, 1994, will be delivered
prior to or concurrently with the mailing of the proxy material.
Stockholders of the Company are cordially invited to attend
the Annual Meeting. Whether or not you expect to attend, it is
important that you complete the enclosed proxy card, and sign,
date and return it as promptly as possible in the envelope
enclosed for that purpose. You have the right to revoke your
proxy at any time prior to its use by filing a written notice of
revocation with the Secretary of the Company prior to the
convening of the Annual Meeting, or by presenting another proxy
card with a later date. If you attend the Annual Meeting and
desire to vote in person, you may request that your previously
submitted proxy card not be used.
As a result of prior transactions including the payment of
stock dividends in 1993 and the merger with The Travelers
Corporation ("old Travelers"), certain of the Company's records,
including but not limited to those relating to stock option
grants and deferred directors' shares, include fractional share
amounts. The Company cannot issue fractional share interests,
however, and accordingly fractional share amounts have been
deleted from the numbers reported in this proxy statement.
VOTING RIGHTS
As of the Record Date, the outstanding stock of the Company
entitled to receive notice of and to vote at the Annual Meeting
consisted of shares of the Company's Common Stock,
--------------
$.01 par value per share (the "Common Stock"), and 4,406,431 shares
of $4.53 ESOP Convertible Preferred Stock, Series C, par value
$1.00 per share (the "Series C Preferred Stock"). The Series C
Preferred Stock was issued in exchange for the Series A Preference
Stock of old Travelers following the merger of old Travelers with
and into the Company (the
<PAGE>
"Travelers Merger") effective December 31, 1993. Each share of
Common Stock is entitled to one vote on each matter that is voted
on at the Annual Meeting and each share of Series C Preferred Stock
is entitled to 1.3 votes on each matter that is voted on at the
Annual Meeting. The Common Stock and the Series C Preferred Stock
will vote together as a single class on all matters scheduled to be
voted on at the Annual Meeting. Neither such class is entitled to
cumulative voting.
The Company's other series of preferred stock, $1.00 par
value, including the 8.125% Cumulative Preferred Stock, Series A,
the 5.50% Convertible Preferred Stock, Series B, and the 9.25%
Preferred Stock, Series D, have no right to vote on any of the
matters that are scheduled to be voted on at the Annual Meeting.
SECURITY OWNERSHIP OF CERTAIN BENFICIAL OWNERS
To the best knowledge of the Company, as of the Record Date no
person "beneficially owned" (as that term is defined by the
Securities and Exchange Commission (the "SEC")) more than 5% of the
Common Stock outstanding and entitled to vote at the Annual Meeting
except:
Shares of
Common Stock Percentage
Beneficially of
1 1 2
Name and Address of Beneficial Owner Owned Class
------------------------------------- ----- -----
AXA Assurances I.A.R.D. Mutuelle 18,684,143 [5.8%]
AXA Assurances Vie Mutuelle
Alpha Assurances I.A.R.D. Mutuelle
Alpha Assurances Vie Mutuelle
Uni Europe Assurance Vie Mutuelle
AXA
The Equitable Companies Incorporated
The Equitable Companies Incorporated
787 Seventh Avenue
New York, New York 10019
FMR Corp. 22,952,069 [7.15%]
82 Devonshire Street
Boston, Massachusetts 02109
-------------------
1. Based on Schedules 13G filed with the Securities and Exchange
Commission by such beneficial owners in February 1995.
2. Calculated on the basis of the number of shares of Common
Stock outstanding and entitled to vote at the Annual Meeting
as of the Record Date.
All of the Series C Preferred Stock is held of record by Dory
& Co., the nominee of Shawmut Bank Connecticut, National
Association, 777 Main Street, Hartford, Connecticut 06115, as
trustee (the "ESOP Trustee") acting on behalf of the employee stock
ownership feature of The Travelers Savings, Investment and Stock
Ownership Plan (the "TESIP Plan"), which was assumed by the Company
in connection with the Travelers Merger and is currently continuing
in place. As of the Record Date, the shares of Series C Preferred
Stock were beneficially held by approximately [22,000] holders
through their participation in the TESIP Plan.
QUORUM; VOTING PROCEDURES
The presence at the Annual Meeting, in person or by proxy, of
the holders of a majority of the shares of
2
<PAGE>
Common Stock and Series C Preferred Stock outstanding and entitled
to vote shall constitute a quorum. Pursuant to applicable Delaware
law, and subject to the voting of Series C Preferred Stock by the
ESOP Trustee, described below, only votes cast "for" a matter
constitute affirmative votes. Votes "withheld" or abstaining from
voting are counted for quorum purposes, but since they are not cast
"for" a particular matter, they will have the same effect as
negative votes or votes "against" a particular matter. The votes
required with respect to the items set forth in the Notice of
Annual Meeting of Stockholders are set forth in the discussion of
each item herein.
Unless contrary instructions are indicated on the proxy card,
all shares of Common Stock represented by valid proxies will be
voted FOR items one, two and three and AGAINST item four listed on
the proxy card and described below, and will be voted in the
discretion of the proxies in respect of such other business, if
any, as may properly be brought before the Annual Meeting. As of
the date hereof, the Board of Directors knows of no other business
that will be presented for consideration at the Annual Meeting
other than those matters referred to herein. If you give specific
voting instructions by checking the boxes on the proxy card, your
shares of Common Stock will be voted in accordance with such
instructions.
The ESOP Trustee, as the record holder of the Series C
Preferred Stock, will vote shares of Series C Preferred Stock that
have been allocated to TESIP Plan participants' accounts in
accordance with instructions received from such participants.
Shares of Series C Preferred Stock as to which no instructions are
received and shares that have not been allocated to the accounts of
participants in the TESIP Plan will be voted by the ESOP Trustee in
the same proportion as votes in respect of allocated shares as to
which participants in the TESIP Plan have given instructions.
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth, as of the Record Date, the
Common Stock and Series C Preferred Stock ownership of each
director and certain executive officers of the Company. As of the
Record Date, the directors and the executive officers of the
Company as a group (25 persons) beneficially owned
-------------
shares of Common Stock and shares of Series C Preferred
----------
Stock (or approximately % of the total voting power of the
-------
Common Stock and Series C Preferred Stock outstanding and entitled
to vote at the Annual Meeting), including an aggregate of
---------
shares of Common Stock that such persons may acquire pursuant to
options exercisable within 60 days of the Record Date. As of the
Record Date, all current and former employees as a group, including
the executive officers of the Company, beneficially owned or had
acquired through employee stock incentive or purchase plans an
aggregate of approximately million shares of Common Stock and
-----
beneficially owned all of the shares of Series C
---------------
Preferred Stock, which amount of Common Stock includes an aggregate
of shares of Common Stock that such persons may
---------------
acquire pursuant to options exercisable within 60 days of the
Record Date. Had such million shares of Common Stock been
-----
held of record on the Record Date, such shares of Common Stock and
Series C Preferred Stock would have represented approximately %
----
of the total voting power of the shares of Common Stock and Series
C Preferred Stock then outstanding and eligible to vote. These
amounts are based upon the Company's records of beneficial
ownership by its current officers and ownership by all employees
under The Travelers Inc. Stock Option Plan (the "Option Plan"), The
Travelers Inc. 401(k) Savings Plan (the "Savings Plan"), The
Travelers Inc. Capital Accumulation Plan (the "CAP Plan"), The
Travelers Inc. Employee Incentive Plan and The Travelers Inc.
Employee Discount Stock Purchase Plan. These amounts also include
beneficial ownership by employees and executive officers under The
Travelers Corporation 1988 Stock Incentive Plan, The Travelers
Corporation 1982 Stock Option Plan and the TESIP Plan, which plans
were assumed by the Company in connection with the Travelers
Merger, and the Primerica Corporation Long-Term Incentive Plan,
which was assumed by the Company in connection with the merger with
Primerica Corporation in 1988. The actual ownership by employees
is not determinable by the Company since employees may own shares
of Common Stock in street name.
As of the Record Date, no individual director or executive
officer beneficially owned one percent or more
3
<PAGE>
of the Common Stock outstanding and entitled to vote at the Annual
Meeting, except Mr. Weill who beneficially owned
--------------
shares ( %) of Common Stock, including shares
----- ---------------
that he had the right to acquire pursuant to options exercisable
within 60 days of the Record Date. As of the Record Date, no
individual director or executive officer beneficially owned one
percent or more of the Series C Preferred Stock, and no director or
executive officer beneficially owned any shares of any other series
of the Company's preferred stock. Except as otherwise expressly
stated in the footnotes to the following table, beneficial
ownership of shares means that the beneficial owner thereof has
sole voting and investment power over such shares.
<TABLE><CAPTION>
Amount and Nature of Beneficial Ownership
----------------------------------------------------------------
Common Stock Stock Options Total
Beneficially Exercisable Common
Owned Within 60 Stock
Excluding Days of Beneficially
Options Record Date Owned 1
Name/Title -------- ----------- -----
----------
<S> <C> <C> <C>
C. Michael Armstrong 6,875 2 6,875
Director
Kenneth J. Bialkin 148,919 148,919
Director 2
Edward H. Budd 3 153,216 207,851 361,067
Director
Joseph A. Califano, Jr. 4 29,265 2 29,265
Director
Douglas D. Danforth 36,005 2 36,005
Director
Robert F. Daniell 6,246 2 6,246
Director
James Dimon 470,973 227,076 663,314
Director and Executive Officer
Leslie B. Disharoon 76,319 2 76,319
Director
Gerald R. Ford 21,617 2 21,617
Director
Robert F. Greenhill 1,616,477 266,666 1,883,143
Director and Executive Officer
Ann Dibble Jordan 2,948 2 2,948
Director
Robert I. Lipp 5 412,161 124,601 536,718
Director and Executive Officer
Dudley C. Mecum 6 39,230 2 39,230
Director
Andrall E. Pearson 29,479 2 29,479
Director
</TABLE>
4
<PAGE>
(Table continued)
<TABLE>
<S> <C> <C> <C>
Frank J. Tasco 8,795 2 8,795
Director
Linda Wachner 7,295 2 7,295
Director
Sanford I. Weill 7 3,811,676 1,546,150 5,357,559
Director and Chief Executive
Officer
Joseph R. Wright, Jr. 22,267 2 22,267
Director
Arthur Zankel 8 90,991 2 90,991
Director
All Directors and Executive 7,093,804 2,533,447 9,901,984
Officers
as a group (25 persons) 9
</TABLE>
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1. This information includes, as of the Record Date, the following
shares which are also deemed "beneficially owned": (i) the
following number of shares of Common Stock granted in payment of
directors' fees to nonemployee directors under the Company's
plan, but receipt of which is deferred: Mr. Armstrong, 2,227;
Mr. Bialkin, 28,919; Mr. Budd, 3,268; Mr. Califano, 19,829; Mr.
Danforth, 24,983; Mr. Disharoon, 28,919; Mr. Mecum, 28,919; Mr.
Pearson, 28,919; Mr. Tasco, 6,795; and Mr. Wright, 14,867; (ii)
the following number of shares of Common Stock issued in exchange
for shares of old Travelers common stock held under the old
Travelers Deferred Compensation Plan for Non-employee Directors,
receipt of which is deferred: Mr. Armstrong, 3,787; Mr. Lipp,
674; and Mr. Weill, 907; (iii) the following number of shares of
Common Stock held (as of January 31, 1995, unless otherwise
noted) under the Savings Plan of the Company or its subsidiaries,
as to which the holder has voting power but not dispositive
power: Mr. Dimon, 2,674; Mr. Lipp, 4,438; and Mr. Weill, 4,870;
(iv) the following number of shares of Common Stock under the
savings and investment feature of the TESIP Plan: Mr. Budd,
3,069; and (v) the following number of shares of Common Stock
awarded pursuant to the CAP Plan, and in the case of Mr.
Greenhill under his employment contract, as to which the holder
may direct the vote but which remain subject to forfeiture and
restrictions on disposition: Mr. Dimon, 39,945; Mr. Lipp, 41,747;
Mr. Weill, 84,863; and Mr. Greenhill, 528,323.
2. Nonemployee directors are not eligible to receive stock option
grants under the Company's plans.
3. Includes 703 shares of Common Stock held by Mr. Budd's wife, as
to which Mr. Budd disclaims beneficial ownership. Mr. Budd also
owns 1,163 shares of Series C Preferred Stock awarded under
the TESIP Plan. The TESIP Plan was assumed by the Company in
connection with the Travelers Merger. The TESIP Plan includes a
tax-deferred savings and investment feature (similar to the
Savings Plan) that permits investment in the Company's Common
Stock. In addition, the employer match feature of the TESIP
Plan is currently made in the form of Series C Preferred Stock,
held of record by the ESOP Trustee, and convertible into one
share of the Company's Common Stock for each $66.21 of stated
value of the Series C Preferred Stock. Accordingly, the number
of shares of Series C Preferred Stock set forth in this table
(as of February 28, 1995) may (by virtue of such currently
exercisable conversion right) be deemed to represent beneficial
ownership of an aggregate of approximately shares of
----------
Common Stock. Mr. Budd is the only director or Executive
Officer who owns shares of Series C Preferred Stock.
4. Includes 800 shares of Common Stock owned by Mr. Califano's wife
and 120 shares held by Mr. Califano as custodian, as to which Mr.
Califano disclaims beneficial ownership.
5
<PAGE>
5. Includes 10,000 shares of Common Stock held by Mr. Lipp's
children, as to which Mr. Lipp disclaims beneficial ownership.
6. Includes 711 shares of Common Stock owned by Mr. Mecum's wife, as
to which Mr. Mecum disclaims beneficial ownership.
7. Includes 100 shares of Common Stock owned by Mr. Weill's wife,
as to which Mr. Weill disclaims beneficial ownership.
7. Includes 3,000 shares of Common Stock owned by Mr. Zankel's wife
and 1,200 shares held by a trust of which Mr. Zankel is a
trustee, as to which Mr. Zankel disclaims beneficial ownership.
9. This information also includes as "beneficially owned" (i) an
aggregate of shares of Common Stock and 1,163
----------------
shares of Series C Preferred Stock held under the Savings Plan
of the Company or under the TESIP Plan, as to which the holder
has voting power but not dispositive power, and (ii) an aggregate
of shares of Common Stock awarded under the
-------------------
CAP Plan, as to which the holder may direct the vote but which
remain subject to forfeiture and restrictions on disposition.
--------------------
Section 16(a) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), requires the Company's officers and
directors, and persons who own more than ten percent of a
registered class of the Company's equity securities, to file
reports of ownership and changes in ownership with the SEC and
the New York Stock Exchange (the "NYSE"), and to furnish the
Company with copies of all such forms they file. Based solely on
its review of the copies of such forms received by it, or written
representations from certain reporting persons, the Company
believes that, during the year ended December 31, 1994, each of
its officers, directors and greater than ten percent stockholders
complied with all such applicable filing requirements.
ITEM 1:
ELECTION OF DIRECTORS
The Board of Directors of the Company is classified into
three classes. The five directors serving in Class I have terms
expiring at the Annual Meeting. The Class I directors currently
serving on the Board, Messrs. Budd, Califano, Dimon and Tasco and
Ms. Jordan, have been nominated by the Board of Directors for
re-election to three-year terms at the Annual Meeting.
Each Class I nominee elected will hold office until the
Annual Meeting of Stockholders to be held in 1998 and until his
or her successor has been duly elected and qualified, unless
prior to such meeting a director shall resign, or his or her
directorship shall become vacant due to his or her death or
removal.
The following information with respect to the principal
occupation and business experience and other affiliations of the
directors during the past five years has been furnished to the
Company by the directors. All ages are given as of the Record
Date. Directors' terms as stated below include periods of Board
membership with Commercial Credit Company ("CCC"), a predecessor
corporation of the Company.
CLASS I: NOMINATED FOR ELECTION AT THE ANNUAL MEETING FOR A TERM
ENDING 1998
Edward H. Budd
Mr. Budd, 61, has been a director of the Company since 1992.
Mr. Budd joined The Travelers Corporation in 1955, and was
elected President and a director in 1976. He became Chief
Executive Officer
6
<PAGE>
in 1981 and Chairman of the Board in 1982. Following the
completion of the Travelers Merger in 1993, Mr. Budd served
as Chairman of the Travelers insurance operations and as Chairman
of the Executive Committee of the Board of Directors of the
Company. In September 1994, Mr. Budd retired as an officer of
the Company and its subsidiaries. He is also a director of Delta
Air Lines, Inc. and GTE Corporation and a member of The Business
Council.
Joseph A. Califano, Jr.
Mr. Califano, 63, has been a director of the Company since
1988. He is Chairman and President of the Center on Addiction
and Substance Abuse at Columbia University, an independent not-
for-profit organization established to combat all forms of
substance abuse. From 1983 to 1992, he was a Senior Partner at
the law firm of Dewey Ballantine, which performs legal services
for the Company from time to time. He is a director of Authentic
Fitness Corporation, Automatic Data Processing, Inc., Chrysler
Corporation, Kmart Corporation, New York Telephone and Warnaco
Inc., and a trustee of the American Ditchley Foundation, New York
University and The Twentieth Century Fund. He serves as Chairman
of the Institute for Social and Economic Policy in the Middle
East at the Kennedy School of Government at Harvard University,
and as a Governor of New York Hospital, as a Director of
Georgetown University and a member of the governing council of
the Institute of Medicine of the National Academy of Sciences.
Mr. Califano served as Secretary of the United States Department
of Health, Education and Welfare from 1977 to 1979. He was
Special Assistant for Domestic Affairs to the President of the
United States for the period from 1965 to 1969, and held various
positions in the United States Department of Defense from 1961 to
1965. He is the author of nine books.
James Dimon
Mr. Dimon, 38, has been a director of the Company since
September 1991. He is President, Chief Operating Officer and
Chief Financial Officer of the Company. In November 1993, he was
named a member of the newly-created Office of the Chairman of the
Company. He was, from May 1988 to September 1991, Executive Vice
President and Chief Financial Officer of the Company, and was
Senior Executive Vice President and Chief Administrative Officer
of Smith Barney Inc., the Company's investment banking and
securities brokerage subsidiary ("Smith Barney"), from 1990 to
1991. He is also a director, Chief Operating Officer and a
member of the Executive Committee of each of Smith Barney and of
Smith Barney Holdings Inc. ("SB Holdings"), the immediate parent
company of Smith Barney. From 1986 to 1988, Mr. Dimon was Senior
Vice President and Chief Financial Officer of CCC, the Company's
predecessor. From 1982 to 1985, he was a Vice President of
American Express Company and Assistant to the President, Sanford
I. Weill. Mr. Dimon is a trustee of New York University Medical
Center and Chairman of the Board of the New York Academy of
Finance.
Ann Dibble Jordan
Ms. Jordan, 60, has been a director of the Company since
1989. She is a consultant and serves on the Board of Directors
of Johnson & Johnson Corporation, Capital Cities/ABC, Inc.,
Hechinger Company, the National Symphony Orchestra, The Phillips
Gallery, Child Welfare League, National Health Laboratories,
Automatic Data Processing, Inc. and the Salant Corp. She was
formerly the Director of the Department of Social Services for
the University of Chicago Medical Center from 1986 to 1987, and
was also Field Work Associate Professor at the School of Social
Service Administration of the University of Chicago from 1970 to
1987. She served as the Director of Social Services of Chicago
Lying-in Hospital from 1970 to 1985.
7
<PAGE>
Frank J. Tasco
Mr. Tasco, 67, has been a director of the Company since
1992. Mr. Tasco is the retired Chairman of the Board and Chief
Executive Officer of Marsh & McLennan Companies, Inc. and is
currently a director. He is also a director of New York
Telephone Company, New England Telephone Company and Borden, Inc.
He was a member of President Bush's Drug Advisory Council and
is at present Chairman of New York Drugs Don't Work. Mr. Tasco
is Chairman of the Board of Directors of Phoenix House Foundation
and a member of the Board of Directors of St. Francis Hospital,
Roslyn, New York. He is a member of the Council on Foreign
Relations, the Lincoln Center Consolidated Corporate Fund
Leadership and the Foreign Policy Association.
CLASS II: TERM ENDING 1996
C. Michael Armstrong
Mr. Armstrong, 56, became a director of the Company in
December 1993. He is Chairman and Chief Executive Officer of
Hughes Electronic Corporation, a designer and manufacturer of
advanced electronic systems for automotive, defense, space
communications and industrial applications, located in Los
Angeles, California. Mr. Armstrong joined IBM Corporation in
1961 and was appointed Senior Vice President in 1983. In 1988 he
became a member of IBM's Management Committee and in 1989 was
appointed Chairman of IBM World Trade Corporation, positions
which he held through February 1992. Mr. Armstrong was elected
Chairman and Chief Executive Officer of Hughes Aircraft Company
in March 1992. In December of 1994 he was elected to his current
positions in Hughes Electronics, the parent company of Hughes
Aircraft and Delco Electronics Corporation. He is a member of
the Board of Trustees of Johns Hopkins University, is chairman of
the advisory board of Johns Hopkins Medical School, and is a
member of the CEO Board of Advisors of the Business School of the
University of Southern California. He is a member of the Board
of Trustees of The Conference Board, the Council on Foreign
Relations and the Supervisory Board of the Thyssen-Bornemisza
Group. Mr. Armstrong is Chairman of the President's Export
Council, the premier national advisory committee on international
trade. Mr. Armstrong is also a member of the National Security
Telecommunications Advisory Committee and the Defense Policy
Advisory Committee on Trade. Mr. Armstrong serves on the Board
of Directors of The Times Mirror Company and The Los Angeles
World Affairs Council, is Chairman of Sabriya's Castle of Fun
Foundation, and is on the California Business Roundtable.
Kenneth J. Bialkin
Mr. Bialkin, 65, has been a director of the Company since
1986. He has been for more than five years a partner in the law
firm of Skadden, Arps, Slate, Meagher & Flom, which performs
legal services for the Company from time to time. Mr. Bialkin is
also a director of The Municipal Assistance Corporation for the
City of New York, Oshap Technologies, Ltd., Tecnomatix
Technologies Ltd. and Sapiens International Corporation N.V.
Robert F. Greenhill
Mr. Greenhill, 58, became a director of the Company in
August 1993. In November 1993, he was named a member of the
newly-created Office of the Chairman of the Company. He became
Chairman and Chief Executive Officer of Smith Barney, the
Company's investment banking and securities brokerage subsidiary,
in June 1993. He also serves as Chairman and Chief Executive
Officer of SB Holdings. Mr. Greenhill was President of Morgan
Stanley Group, Inc. from January 1991 to June 1993. Morgan
Stanley has provided investment banking services to the Company
or its subsidiaries in the ordinary course from time to time.
Mr. Greenhill joined Morgan Stanley in 1962 and became a Partner
in 1970. In 1972, he directed
8
<PAGE>
Morgan Stanley's newly-formed Mergers and Acquisitions
Department. In 1980, Mr. Greenhill was named director of Morgan
Stanley's Investment Banking Division with responsibility for
domestic and international corporate finance, mergers and
acquisitions, merchant banking, capital market services and real
estate. In 1980, he also became a member of Morgan Stanley's
Management Committee which was the firm's policy-making group.
He became a Vice Chairman of Morgan Stanley Group, Inc. in
January 1989. Mr. Greenhill is a trustee of the Whitney Museum
of American Art, a trustee of the American Enterprise Institute
for Public Policy Research, and a member of the International
Advisory Board of the British-American Chamber of Commerce.
Dudley C. Mecum
Mr. Mecum, 60, has been a director of the Company since
1986. Since August 1989, Mr. Mecum has been a Partner in the
firm of G.L. Ohrstrom & Co. (a merchant banking firm). Formerly,
he was Chairman of Mecum Associates, Inc. (a management
consulting firm) from 1987 to 1989. He was President of
Environmental and Engineering Services and was a senior executive
and director of Combustion Engineering, Inc. from 1985 to
December 1987. Mr. Mecum was Managing Partner of the New York
office of Peat Marwick Mitchell & Co. (now KPMG Peat Marwick LLP)
from 1979 to 1985. He served in the United States Government as
Assistant Director of the United States Office of Management and
Budget in 1973 and as United States Assistant Secretary of the
Army (Installations and Logistics) from 1971 to 1973. Mr. Mecum
is a director of Fingerhut Companies, Inc., Dyncorp, Vicorp
Restaurants, Inc., Lyondell Petrochemical Corp. and Roper
Industries, Inc. Mr. Mecum is also a director and Chairman of
Alden Industries, Inc., a privately held company manufacturing
commercial water heaters and boilers.
Sanford I. Weill
Mr. Weill, 61, has been a director of the Company since
1986. He has been Chairman of the Board and Chief Executive
Officer of the Company and its predecessor, CCC, since 1986; he
was also its President from 1986 until 1991. He was President of
American Express Company from 1983 to 1985; Chairman of the Board
and Chief Executive Officer of American Express Insurance
Services, Inc. from 1984 to 1985; Chairman of the Board and Chief
Executive Officer, or a principal executive officer, of Shearson
Lehman Brothers Inc. from 1965 to 1984; Chairman of the Board of
Shearson Lehman Brothers Holdings Inc. from 1984 to 1985; and a
founding partner of Shearson's predecessor partnership from 1960
to 1965. He is Chairman of the Board of Trustees of Carnegie
Hall, and a director of the Baltimore Symphony Orchestra. Mr.
Weill is a member of the Board of Governors of New York Hospital
and is Vice Chairman of the Board of Overseers of Cornell
University Medical Center and a member of the Joint Board of New
York Hospital - Cornell University Medical College. He is a
member of Cornell University's Johnson Graduate School of
Management Advisory Board and a Board of Trustees Fellow. He has
served as Chairman of the Joint Mayoral/City Council Commission
on Early Child and Child Care Programs during the Dinkins
Administration.
Joseph R. Wright, Jr.
Mr. Wright, 56, has been a director of the Company since
1990. From 1989 to 1993, he was Executive Vice President and
Vice Chairman of W.R. Grace & Co. (an international specialty
chemicals and healthcare company) and President of Grace Energy
Company (an international energy services company). Mr. Wright
is currently Co-chairman and a member of the Board of Directors
of Baker & Taylor Holdings, Inc. (an international book and video
distribution company), a member of the Board of Directors of GRC
International, a member of the Board of Trustees of Hampton
University and the Freedom Foundation, and a member of the
President's Export Council, Chief Executives Organization, World
Business Council, National Academy for Public Administration, and
the Citizens for a Sound Economy. He was Director and Deputy
Director of the United States Office of Management and Budget
from 1982 to 1989, a member of
9
<PAGE>
President Reagan's Cabinet from 1988 to 1989, and Deputy
Secretary of Commerce from 1981 to 1982. Prior to that, he was
president of two Citicorp retail credit card subsidiaries and a
partner of Booz, Allen & Hamilton. He received the President's
"Citizenship Award" in 1989.
Arthur Zankel
Mr. Zankel, 63, has been a director of the Company since
1986. He has been Co-Managing Partner of First Manhattan Co. (a
research and investment management company) since 1980. He is
also a director of Vicorp Restaurants, Inc. and Fund American
Enterprises Holdings, Inc. and a trustee of Skidmore College,
Carnegie Hall and New York Foundation.
CLASS III: TERM ENDING 1997
Douglas D. Danforth
Mr. Danforth, 72, has been a director of the Company since
1987. He has been the Managing Partner of the Pittsburgh Pirates
Baseball Club since 1988. He was Chairman of the Board and Chief
Executive Officer of Westinghouse Electric Corporation from
December 1983 to December 1987, and was Vice Chairman and Chief
Operating Officer of Westinghouse from 1978 to 1983. Mr.
Danforth is a director of The Rubatex Corp., The Sola Corporation
and The American European Association. Mr. Danforth is also a
Trustee of Carnegie-Mellon University, Syracuse University,
Allegheny Health Education and Research Foundation, Inc. and the
Pittsburgh Trust for Cultural Resources. He is also a member of
the Executive Committee of the Allegheny Conference on Community
Development, and a director of the Pittsburgh Foundation.
Robert F. Daniell
Mr. Daniell, 61, became a director of the Company in
December 1993. He is Chairman of United Technologies
Corporation, a broad based designer and manufacturer of high
technology products, located in Hartford, Connecticut. He joined
the Sikorsky Aircraft Division of United Technologies Corporation
in 1956 and served as President of Sikorsky Aircraft from 1981 to
1983. He was a Senior Vice President of United Technologies from
1983 to 1984 and served as its President and Chief Operating
Officer from 1984 to February 1992. He was elected a director of
United Technologies in 1984 and Chairman in 1987. He served as
Chief Executive Officer of United Technologies from 1986 to April
1994. Mr. Daniell is a director of Shell Oil Company. He is
also a member of the Conference Board and The Business Council.
Leslie B. Disharoon
Mr. Disharoon, 62, has been a director of the Company since
1986. He was Chairman of the Board, President and Chief
Executive Officer of Monumental Corporation (an insurance holding
company) from 1978 to 1988. He is a director of The Johns
Hopkins Health System, Aegon USA, Inc., GRC International Inc.
and M.S.D. & T. Funds, Inc., and President of the Caves Valley
Club Inc.
Gerald R. Ford
The Honorable Gerald R. Ford, 81, has been a director or an
honorary director of the Company since 1986. Mr. Ford was
President of the United States from August 1974 through January
1977, having served as Vice President of the United States from
December 1973 through August 1974. He is a lecturer and a
business consultant to several corporations. He serves as a
director of Alexander & Alexander Services, Inc. and is an
advisory director to Texas Commerce Bankshares, Inc. and American
Express Company.
10
<PAGE>
Robert I. Lipp
Mr. Lipp, 56, has been a director of the Company since 1991,
and is a Vice Chairman and Group Chief Executive of the Company.
In November 1993, he was named a member of the newly-created
Office of the Chairman of the Company. Upon completion of the
Travelers Merger, Mr. Lipp was named Chief Executive Officer of
The Travelers Insurance Group Inc. ("TIGI"). From 1991 to 1993,
he was Chairman and Chief Executive Officer of CCC, a wholly
owned subsidiary of the Company. From April 1986 through
September 1991, he was an Executive Vice President of the Company
and its corporate predecessor. Prior to joining the Company in
1986, he was a President and a director of Chemical New York
Corporation and Chemical Bank where he held senior executive
positions for more than five years prior thereto. Mr. Lipp is a
director of The New York City Ballet.
Andrall E. Pearson
Mr. Pearson, 69, has been a director of the Company since
1986. He has been a Professor at the Harvard Business School
since 1985. He was President of Pepsico, Inc. from 1970 to 1984.
He is a director of The May Department Stores Company, Pepsico,
Inc. and Lexmark Inc. Mr. Pearson is also a general partner of
Clayton, Dubilier & Rice, Inc., a private investment firm and the
Chairman of the Board and a Director of Kraft Foodservice Inc.,
which is owned by Clayton, Dubilier & Rice, Inc.
Linda J. Wachner
Mrs. Wachner, 49, has been a director of the Company since
1991. She is Chairman, President and Chief Executive Officer of
the Warnaco Group, Inc. and of Warnaco Inc., a Fortune 500
apparel company, and Chairman and Chief Executive Officer of
Authentic Fitness Corporation, an activewear manufacturer. Mrs.
Wachner is also a director of QVC Network, Inc., the American
Apparel Manufacturers Association, and the New York City
Partnership. She currently serves on the Policy Committee of The
Business Roundtable, the Board of Trustees of The Aspen Institute
and Carnegie Hall, and the Board of Overseers of Memorial Sloan-
Kettering Cancer Center. In 1994, Mrs. Wachner was reappointed
by President Clinton to the Advisory Committee for Trade Policy
Negotiations, on which she also served under President Bush and
President Reagan. She is a member of the Council on Foreign
Relations.
MEETINGS OF THE BOARD OF DIRECTORS
The Board of Directors met six times during 1994. Each
director attended at least 75 percent of the meetings of the
Board of Directors and Board Committees of which he or she was a
member during 1994 or the period thereof during which he or she
was a member.
COMMITTEES OF THE BOARD OF DIRECTORS
The following are the current members and functions of the
standing committees of the Board of Directors.
Executive Committee. The members of the Executive Committee
are Messrs. Budd (Chairman), Bialkin, Weill, Wright, and Zankel.
The Executive Committee meets in place of the full Board of
Directors when scheduling makes it difficult to convene all of
the directors or when issues arise requiring immediate attention.
The Executive Committee met once during 1994.
11
<PAGE>
Audit Committee. The members of the Audit Committee are
Messrs. Mecum (Chairman), Armstrong, Califano, Danforth,
Disharoon, Tasco and Wright. The primary functions of the Audit
Committee, composed entirely of nonmanagement directors, are to
pass upon the scope of the independent certified public
accountants' examination, to review with the independent
certified public accountants and the Company's principal
financial and accounting officers the audited financial
statements and matters that arise in connection with the
examination, to review the Company's accounting policies and the
adequacy of the Company's internal accounting controls, and to
review and approve the independence of the independent certified
public accountants. The Audit Committee met seven times during
1994.
Nominations and Compensation Committee. The members of the
Committee are Messrs. Zankel (Chairman), Bialkin, Daniell, Ford
and Pearson, Ms. Jordan and Mrs. Wachner. From time to time, the
Committee acts as a nominating committee in recommending
candidates to the Board as nominees for election at the Annual
Meeting of Stockholders or to fill such Board vacancies as may
occur during the year. The Committee will consider candidates
suggested by directors or stockholders. Nominations from
stockholders, properly submitted in writing to the Secretary of
the Company, will be referred to the Committee for consideration.
The Committee represents the full Board of Directors in matters
relating to the compensation of Company officers and, from time
to time, recommends to the full Board of Directors appropriate
methods and rates of director compensation. It also administers
the Company's Option Plan, the Company's CAP Plan and those
option plans of old Travelers assumed by the Company in
connection with the Travelers Merger. The Committee is also
responsible for administration of The Travelers Inc. Executive
Performance Compensation Plan (the "Compensation Plan") approved
by stockholders at the 1994 Annual Meeting. The Committee met
eight times during 1994.
Ethics and Public Affairs Committee. The members of the
Committee are Messrs. Bialkin (Chairman), Budd, Califano,
Daniell, Ford, Mecum and Wright, and Ms. Jordan. This Committee
was established in April 1994. The Committee reviews and
approves the Company's compliance programs, relationships with
external constituencies and public activities. The Committee met
three times during 1994.
Finance Committee. The members of the Committee are Messrs.
Dimon (Chairman), Armstrong, Danforth, Disharoon, Pearson, Tasco
and Zankel, and Mrs. Wachner. This Committee was established in
April 1994. The Committee reviews issues relating to funding
requirements, significant investments, complex financial
instruments and credit rating issues which arise in the Company's
operations. The Committee met three times during 1994.
RECOMMENDATION
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR
---
THE ELECTION OF EACH OF THE FIVE NOMINEES IN CLASS I, EDWARD H.
BUDD, JOSEPH A. CALIFANO, JR., JAMES DIMON, ANN DIBBLE JORDAN AND
FRANK J. TASCO, AS A DIRECTOR OF THE COMPANY FOR A THREE-YEAR
TERM. Assuming the presence of a quorum, directors shall be
elected by a plurality of the votes cast at the Annual Meeting by
holders of Common Stock and Series C Preferred Stock, voting as a
single class, for the election of directors. Under applicable
Delaware law, in tabulating the vote, broker nonvotes will not be
considered present at the Annual Meeting and will have no effect
on the vote.
12
<PAGE>
EXECUTIVE COMPENSATION
REPORT OF THE NOMINATIONS AND COMPENSATION COMMITTEE
OF THE BOARD OF DIRECTORS ON EXECUTIVE COMPENSATION
Statement of Philosophy. The Company seeks to attract and
retain highly qualified employees at all levels, including
particularly executive officers whose performance is critical to
the Company's success. In order to accomplish this, the Company
is willing to provide superior compensation for superior
performance. Such performance is measured on either a company-
wide or a business unit basis, or using both criteria, as the
nature of an executive's responsibilities may dictate.
Compensation of executive officers in 1994 consisted of base
salary and performance-based bonuses, a significant portion of
which was restricted stock awarded pursuant to the Company's CAP
Plan. Bonuses are generally discretionary, but for the chief
executive officer of the Company and the four most highly
compensated other executive officers they are determined under
The Travelers Inc. Executive Performance Compensation Plan (the
"Compensation Plan") discussed below. In addition, under the
Company's long-standing policy of providing economic incentives
to its employees at all levels in the form of stock ownership,
the Company from time to time grants stock options, not only to
executive officers but to a broad range of employees. All
executives who are members of the Company's Planning Group have
previously represented that, for so long as they are members of
such group and participate in the reload program under the Option
Plan, they will not dispose of their shares of Common Stock
except for donations to charity or for use in connection with
participation in the stock option and restricted stock plans of
the Company.
It is also the Company's policy to take all reasonable steps
to obtain the fullest possible corporate tax deduction for
compensation paid to its executive officers by qualifying for the
exemptions from limitations on such deductibility under Section
162(m) of the Internal Revenue Code of 1986, as amended (the
"Code"). To this end, in 1993 the Company requested and received
stockholder approval for changes to the Option Plan to meet such
Code requirements, and in 1994 obtained stockholder approval of
the Compensation Plan, which is designed to have such effect.
Executive Performance Compensation Plan. The Compensation
Plan establishes certain performance criteria for determining the
maximum amount of bonus compensation available, including that
portion of bonuses payable in the form of restricted stock under
the Company's CAP Plan, for those executive officers who, on the
last day of the Company's taxable year, consist of the chief
executive officer and the four other most highly compensated
executive officers of the Company or its subsidiaries named in
the Summary Compensation Table in the Company's proxy statement
from time to time (the "Covered Employees"). The Compensation
Plan sets forth performance-based criteria based on the
consolidated net income of the Company and its subsidiaries for
executive officers who have wide-ranging responsibilities for the
Company's overall performance and, with respect to Mr. Greenhill,
based principally upon the results of SB Holdings, the corporate
entity under his direction as its Chairman and Chief Executive
Officer.
The creation of a bonus pool in which the Company's Chief
Executive Officer and four most highly compensated other
executive officers, other than Mr. Greenhill, participate is
contingent upon the Company achieving at least a 10% Return on
Equity, as defined in the Compensation Plan. If a Return on
Equity of at least 10% is achieved, a bonus pool of 1.4% of
Adjusted Net Income, as defined in the Compensation Plan, will be
established. If Return on Equity exceeds 10%, the amount of the
bonus pool is subject to cumulative increases based upon the
extent to which the Return on Equity exceeds the 10% minimum
threshold. Accordingly, the Return on Equity calculation
established under the Compensation Plan is the basis on which
both the availability and size of the bonus pool is determined.
13
<PAGE>
The Compensation Plan also establishes that up to 31% of any
bonus pool established will be available for bonus awards to the
chief executive officer and up to 23% will be available to each
of the other three eligible participants (other than Mr.
Greenhill). Any portion (up to $3 million) of a share of the
bonus pool calculated for any of those four eligible executive
officers for a particular bonus year may be awarded by the
Committee to such person in a succeeding year to the extent not
awarded for the bonus year; provided that such award by the
Committee will only be made to reward extraordinary performance
by any such executive officer.
Under the Compensation Plan, Mr. Greenhill will not be
entitled to a bonus unless the Defined After-Tax Earnings, as
defined in the Compensation Plan, for a Bonus Year exceed $100
million. If Defined After-Tax Earnings exceed $100 million, Mr.
Greenhill will be entitled to receive 2% of Defined After-Tax
Earnings from $49.75 million up to and including $750 million,
1.5% of Defined After-Tax Earnings in excess of $750 million up
to but not exceeding $1 billion, and 1% of Defined After-Tax
Earnings in excess of $1 billion.
In the event that bonus compensation thresholds are met and
the percentages set forth in the Compensation Plan are applied,
the Committee nevertheless retains discretion to reduce or
eliminate payments under the Compensation Plan for any of the
participating executive officers (other than Mr. Greenhill) to
take into account subjective factors, including an individual's
performance or other relevant criteria.
1994 Committee Review Process. Executive compensation, other
than the compensation of the Chief Executive Officer, is reviewed
and approved annually by this Committee, which is composed entirely
of nonemployee directors. Compensation of the Chief Executive
Officer of the Company is established by the Committee. The Committee
considered and gave various weights to both qualitative and
quantitative factors, including such factors as earnings, earnings
per share, return on equity and return on assets. In conducting
such review, the Committee has generally examined changes in the
Company's financial results over time, both overall corporate
results and on an operating unit basis, and comparative data for
comparable companies, to the extent it is publicly available.
However, the analysis of corporate performance in financial
reporting terms alone is not determinative. The Committee has given
significant weight to qualitative factors in approving 1994
compensation with particular emphasis on the performance of the
Company's executive team in a year in which significant initiatives
were implemented at both Smith Barney and the Travelers insurance
companies following completion of major acquisitions in 1993,
several major dispositions were completed, a major joint venture was
established, and the scope of responsibilities of several of the
most senior executive officers was expanded.
With regard to its consideration of compensation for the
chief executive officer and the four other most highly
compensated executive officers of the Company, the maximum
amounts available for bonus awards to each such person were
determined pursuant to the formula set forth in the Compensation
Plan. Under the Compensation Plan, the maximum bonus pool for
1994 for the four eligible executive officers was approximately
$22.4 million. The amounts awarded to such persons is set forth
in the Summary Compensation Table below.
With regard to its consideration of compensation for the
chief executive officer and the three other most highly
compensated executive officers of the Company other than Mr.
Greenhill, the Committee utilized the assistance of the
Actuarial, Benefits and Compensation Consulting Services of the
accounting firm of Ernst & Young LLP ("Ernst & Young").
Based on the factors considered by the Committee as
discussed elsewhere in this report, and on the views of Ernst &
Young, the Committee has concluded that the compensation of each
of the senior executives named in the Summary Compensation Table
was appropriate.
14
<PAGE>
Base Salary. Increases in base salary paid to all executive
officers are determined periodically, based upon the individual's
performance, any change in the scope of responsibilities and the
individual's seniority and experience. Examination of
competitors' pay practices in this area is conducted periodically
to ensure that the Company will be in a position to attract new
talent and retain current valuable employees.
Incentive Bonuses. Discretionary bonus awards are generally
a substantial part of total compensation of Company executives.
Factors considered included not only individual performance but
also performance of each business unit for which the executive
may be directly responsible, and such individual's contributions
to overall Company policy and strategic decisions through
membership in the corporate Planning Group that consists of the
most senior executives of the Company. Because a percentage of
executive compensation is paid in the form of restricted stock
under the Company's CAP Plan, bonus awards are not only a short-
term cash reward but also a long-term incentive that ties future
realization of benefits by such executives to the enhancement of
stockholder values. The restricted period applicable to awards
to executive officers under the CAP Plan was extended from two to
three years beginning with the awards made with respect to 1994,
in furtherance of the long-term nature of such compensation. In
addition, the Compensation Plan resulted in determination of
maximum bonuses payable under such plan to the chief executive
officer and the other four most highly compensated executives.
Stock Options. Other than grants of stock options that
arose by operation of the reload feature of the Option Plan
approved by stockholders in 1992, no grants of stock options were
made except those to Mr. Plumeri in connection with his
assumption of greater corporate responsibilities as Vice Chairman
of the Company and to Mr. Lipp in connection with his assuming
responsibilities as Chief Executive Officer of TIGI. In making
option awards generally, the Committee considers the number of
options previously granted to each executive in order to
determine whether the total number of shares covered by all
outstanding option awards adequately reflects the individual's
importance to the future success and profitability of the
Company.
Compensation of the Chief Executive Officer. The Committee
believes that 1994 was a year of accomplishment for the Company,
marked by another increase in operating earnings per share
compared with 1993. Externally there were a number of strategic
dispositions, as well as the successful consummation on January
3, 1995 of the formation of a joint venture with Metropolitan
Life Insurance Company of the companies' respective group health
care businesses. Mr. Weill provided the leadership for these
accomplishments. No grants of additional stock options were
made, other than by operation of the reload feature of the
Company's Option Plan upon Mr. Weill's exercise of his Control
Data Options (as defined herein) and the reload options
associated with such exercise.
THE NOMINATIONS AND COMPENSATION
COMMITTEE:
Arthur Zankel (Chairman)
Kenneth J. Bialkin
The Honorable Gerald R. Ford
Ann Dibble Jordan
Andrall E. Pearson
Linda J. Wachner
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The persons named above under the caption Election of
Directors -- Committees of the Board of Directors -- Nominations
and Compensation Committee were the only members of such
committee during 1994. Mr. Bialkin, a member of that committee,
is a partner in the law firm of Skadden, Arps, Slate, Meagher &
Flom, which performs legal services for the Company from time to
time.
15
<PAGE>
Summary Compensation Table
The following Summary Compensation Table sets forth
compensation paid by the Company and its subsidiaries to the
chief executive officer and the four other most highly
compensated executive officers for services rendered to the
Company and its subsidiaries in all capacities during each of the
fiscal years ended December 31, 1994, 1993 and 1992. The format
of this table has been established by the SEC. ALL SHARE NUMBERS
IN THE COLUMN ENTITLED "SECURITIES UNDERLYING STOCK OPTIONS (NUMBER)
OF SHARES" AND IN THE FOOTNOTES TO THE TABLE HAVE BEEN RESTATED TO
THE EXTENT NECESSARY TO GIVE EFFECT TO THE TWO STOCK DIVIDENDS
DECLARED AND PAID DURING 1993.
SUMMARY COMPENSATION TABLE
<TABLE><CAPTION>
Long Term
Compensation
Annual Compensation Awards(A)
-------------------- -------------------
-------------------- ----- ------- --------- ----------- ----- ------------ -----------
Other Restricted Securities
Annual Stock Underlying Stock All Other
Name and Salary Compensation Awards Options (number) Compensation
Principal Position Year ($) Bonus ($) ($) (B) ($) (C) of shares ($) (D)
---- ------- --------- ----------- ------ ------------ -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Sanford I. Weill . . 1994 $1,025,000 $2,653,750 $ 224,219 $1,528,327 525,517 $ 3,416
Chairman of the 1993 1,018,750 3,030,313 242,290 1,618,515 2,057,219 2,404
Board and Chief 1992 957,308 1,603,750 190,821 1,028,317 4,871,102 1,900
Executive Officer
Robert I. Lipp . . . 1994 589,167 1,600,208 866,365 96,641 1,982
Vice Chairman and 1993 532,083 1,276,979 666,691 184,541 1,900
Group Chief 1992 503,846 910,000 519,955 400,613 1,576
Executive
James Dimon . . . . 1994 629,167 2,145,208 12,224 750,894 84,031(E) 1,336
President, Chief 1993 518,750 1,430,312 726,202 450,530 1,132
Financial Officer 1992 453,462 885,000 486,664 483,104 1,132
and Chief Operating
Officer
Robert F. Greenhill (F) 1994 995,000 4,034,755 50,000 2,128,770 -0- 44,150
Chairman and CEO, 1993 516,635 3,448,341 19,982,785 1,333,333 -0-
Smith Barney Inc.
Joseph J. Plumeri II 1994 655,833 1,304,542 5,333 764,600 100,000 293,350
Vice Chairman 1993 187,500 1,175,625 499,166 200,000 -0-
</TABLE>
Ownership of Common Stock as of the Record Date for the
named individuals -- Mr. Weill: shares; Mr. Lipp:
--------- --
shares; Mr. Dimon: shares; Mr. Greenhill:
------ -------- ---
shares and Mr. Plumeri: shares.
------ ----------
(A) The shares reflected as grants of stock options for 1992,
1993 and 1994 were in each case reload options created
automatically upon an exercise of outstanding options by a
surrender of previously owned shares, except for options
covering: 230,666 shares granted to Mr. Dimon in 1993;
1,333,333 shares granted to Mr. Greenhill in 1993; 50,000
shares granted to Mr. Lipp in 1994; and 200,000 and
100,000 shares granted to Mr. Plumeri in 1993 and 1994,
respectively.
(B) Except as set forth in this column, none of the executive
officers received other annual compensation during 1994
required to be set forth in this column. The aggregate amount
set forth for Mr. Weill for 1994 includes perquisites of which
$52,766 was for use of Company transportation. The aggregate
amount set forth for Mr. Greenhill represents reimbursement
for financial planning services.
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<PAGE>
(C) Restricted stock awards are made under the Company's CAP
Plan. The CAP Plan provides for payment, mandatory as to
senior executives and certain others within the Company, of
a portion of compensation in the form of awards of
restricted stock at a discount (currently 25%) from market
value. Under the current award formula in effect under the
CAP Plan for corporate executives, the following percentages
of annual compensation are payable in the form of shares of
restricted stock:
Annual Compensation % In Restricted
Stock
Up to $200,000 10%
$200,001 to $400,000 15%
$400,001 to $600,000 20%
Amounts over $600,000 25%
Annual compensation generally consists of salary and
incentive awards. Except under limited circumstances, the
recipient of restricted stock is not permitted to sell or
otherwise dispose of such stock (except by will or the laws
of descent and distribution and except in connection with
participation in the reload program) for a period of two
years from the date of grant with respect to grants made for
years prior to 1994 and three years with respect to grants
made for 1994 and after (or such other period as may be
determined to be applicable to various classes of
participants in the sole discretion of the Committee).
Except as noted in footnote (F), all of the awards listed in
the table for 1992 and 1993 vest on the second anniversary
of the date of grant and for 1994 vest on the third
anniversary of the date of grant if the executive continues
employment with the Company during the vesting period. Upon
expiration of such restricted period, and assuming the
recipient's continued employment with the Company, the shares
of restricted stock become fully vested and freely transferable.
From the date of grant, the recipient may vote the restricted
stock and receives dividends or dividend equivalents on the
shares of restricted stock at the same rate as dividends are
paid on all outstanding shares of Common Stock. As of December
31, 1994, and including the grants made in January 1995 in
respect of 1994, the total holdings of restricted stock and the
market value at such date of such shares for each of the persons
in the Summary Compensation Table were as follows:
Mr. Weill: shares ($ ); Mr. Lipp:
--------- ---------- -------
shares ($ ); Mr. Dimon: shares ($
---------- ------- ----------
); Mr. Greenhill: shares ($ ).
------ --------- -------------
The year-end market price was $32.375 per share.
(D) Includes the Company matching grant for 1994 pursuant to the
Company's Savings Plan (in the form of Common Stock having a
market value of $1,000 at December 31, 1994) for Messrs.
Weill, Lipp, Dimon and Greenhill and supplemental life
insurance paid by the Company. In the case of Mr. Plumeri,
also includes the value of certain incentive awards and
other benefits granted by the seller and assumed and
satisfied by Smith Barney in connection with the acquisition
of the domestic retail business of Shearson Lehman Brothers
Inc. by Smith Barney. In the case of Mr. Greenhill, also
includes dividend equivalents on restricted stock.
(E) Includes 32,297 shares covered by options awarded at
the election of Mr. Dimon in lieu of restricted stock awarded
to him under the CAP Plan.
(F) Mr. Greenhill joined the Company in June 1993. In addition
to the restricted stock awarded under the CAP Plan (referred
to in footnote C above), Mr. Greenhill received a restricted
stock award pursuant to his employment agreement. See
"Employment Protection Agreements," below. Such award
covered 533,333 shares, with an aggregate year-end market
price (at $32.375 per share) of $17,266,656, and vests at a
rate of 20% per year on the anniversary of the date of
grant.
Stock Options Granted
The following table sets forth information with respect to
stock options granted during 1994 to each of the executives named
in the Summary Compensation Table. All options granted arose
under the reload feature of the Option Plan except for Mr. Lipp's
grant covering 50,000 shares and Mr. Plumeri's grant
17
<PAGE>
covering 100,000 shares. For Messrs. Weill, Lipp (except as
noted) and Dimon, these reload options arose upon the exercise of
reload options associated with the stock options granted by
Control Data Corporation ("Control Data Options") in 1986 when it
was the parent company of the Company's corporate predecessor to
facilitate the public offering of such subsidiary's stock.
The "Grant Date Present Value" numbers set forth in the
table below were derived by application of a variation of the
Black-Scholes option pricing model. The following assumptions
were used in employing such model:
- stock price volatility was calculated by
using the closing price of the Company's
Common Stock on the NYSE Composite
Transactions Tape for the one-year period
prior to the grant date of each option;
- the risk-free interest rate for each option
grant was the interpolated market yield on a
"3.78-year" Treasury bill on the date of
grant, as reported by the Federal Reserve;
- the dividend yield on the date of the option
grant (based upon the actual dividend rate of
either 12.5 cents per share during the first two
quarters of 1994 or 15 cents per share during the
last two quarters of 1994) was assumed to be
constant over the life of the option;
- exercise of the option was deemed to occur
3.78 years after the date of grant, based
upon the Company's historical experience of
the average period between the grant date and
exercise date for those options that have
vested; and
- a discount of 9.45% was applied to the option
value derived from the model to reflect the
nontransferability and risk of forfeiture of
such employee stock options during the
average 3.78 years between grant date and
exercise date referred to in the preceding
paragraph.
The potential value of options granted depends entirely upon
a long-term increase in the market price of the Common Stock: if
the stock price does not increase, the options would be worthless
and if the stock price does increase, this increase would benefit
both option holders and all stockholders commensurately.
18
<PAGE>
<TABLE><CAPTION>
OPTION GRANTS IN 1994 (A)
Individual Grants(B)
------------------------------------------------------------------------------------------------------
% of
Total
Number of Options
Securities Granted
Underlying to all Exercise or Grant Date
Options Granted Employees Base Price Expiration Present
Name (number of shares) in 1994 ($ per share) Date Value ($)
----- ------------------ ----------- ------------- -------------- -----------
<S> <C> <C> <C> <C> <C>
Sanford I. Weill 16,798 0.33% 39.625 02/18/03 $ 172,715
508,719 9.94% 32.625 10/30/02 $ 4,463,339
Robert I. Lipp . 34,370 0.67% 32.625 11/02/02 $ 295,914
12,271 0.24% 32.625 02/22/03 $ 105,649
50,000 0.98% 33.250 11/26/04 $ 442,159
James Dimon . . 10,267 0.20% 39.625 02/19/03 $ 105,564
41,467 0.81% 32.625 10/30/02 $ 363,818
Robert F. Greenhill 0 - - - -
Joseph J. Plumeri II 100,000 1.95% 32.125 10/28/04 $ 858,013
</TABLE>
(A) Ownership of Common Stock as of the Record Date for the
named individuals -- Mr. Weill: shares; Mr. Lipp:
--------- --
shares; Mr. Dimon: shares; Mr. Greenhill:
------ -------- ---
shares and Mr. Plumeri: shares.
------ ----------
(B) The option price of each option granted under the Option
Plan is not less than the fair market value of the Common
Stock subject to the option, determined in good faith by the
Committee. Under current rules established by the
Committee, fair market value is the closing sale price of
Common Stock on the NYSE Composite Transactions Tape on the
last trading day prior to the date of grant of the option.
Options (other than certain reload options) generally vest
in cumulative installments of 20% on each anniversary of the
date of grant such that the options are fully exercisable on
and after five years from the date of grant until ten years
and one month following such grant (in the case of non-
qualified stock options, which represent all options
currently outstanding). The Committee has discretion to
establish a slower vesting schedule for options granted
under the Option Plan.
Participants are entitled to direct the Company to withhold
shares otherwise issuable upon an option exercise to cover
in whole or in part the tax liability associated with such
exercise, or participants may cover such liability by
surrendering previously owned shares (other than restricted
stock).
Under the reload feature of the Option Plan, participants
who tender previously owned shares (including CAP Plan
restricted stock) to pay all or a portion of the exercise
price of vested stock options or tender previously owned
shares or have shares withheld to cover the associated tax
liability may be eligible to receive a reload option
covering the same number of shares as are tendered or
withheld for such purposes. Such optionee may choose to
receive either (i) unrestricted incremental shares (as
defined below) and no reload option, or (ii) incremental
shares subject to a period of restriction on the ability to
sell or otherwise transfer such shares (except in certain
circumstances) and
19
<PAGE>
a reload option to be granted in accordance with the
applicable terms of the Option Plan. The initial Committee
determination has set the restricted period at two years.
Although the optionee may not transfer his or her
incremental shares during the applicable restricted period,
such optionee receives such shares free and clear upon
completion of such restricted period without any risk of
forfeiture, even if such person has retired or is otherwise
no longer an employee of the Company. Unless the Committee
in its discretion modifies or eliminates such restrictions,
optionees are permitted to transfer their incremental shares
during the restricted period only under the limited
circumstances of (i) a contribution of such shares to a
charitable organization, or (ii) an event of financial
hardship demonstrated to the reasonable satisfaction of the
Senior Vice President, Human Resources, of the Company. If the
exercise price of an option is paid by delivery of a number of
shares of restricted stock, then the optionee will receive, in
connection with the exercise, an equal number of identically
restricted shares of Common Stock.
Further, in order for an optionee to receive a reload option
in connection with his or her exercise of a vested option,
the market price of Common Stock on the date of exercise
must equal or exceed the minimum market price level
established by the Committee from time to time (the "Market
Price Requirement"). The Committee has established that the
initial Market Price Requirement shall be a market price on
the date of exercise equal to or greater than 120% of the
price of the option being exercised. If a market price does
not equal or exceed the applicable Market Price Requirement, a
vested option may be exercised but no reload option will be
granted in connection with such exercise.
"Incremental shares" are those shares of Common Stock
actually issued to an optionee who exercises an option by
surrendering previously owned stock or restricted stock
awarded under the CAP Plan to pay the exercise price of an
option, or by surrendering previously owned stock or
requesting the Company to withhold the appropriate number of
shares otherwise issuable, to cover the withholding tax
liability associated with option exercise. The number of
incremental shares issued is typically the number of option
shares exercised minus the number of shares deemed
"surrendered" to pay for such exercise and minus the number
of shares used or withheld to satisfy any resulting tax
liability in connection with such exercise.
The market value on the date of grant of a reload option
establishes the exercise price of such option, and such
option will have a term equal to the remaining term of the
original option, except that the reload option will not be
exercisable until six months after its date of grant.
Reload options are designed to encourage employees to
exercise options at an earlier date and to retain the shares
so acquired, in furtherance of the Company's long-standing
policy of encouraging increased employee stock ownership.
With standard stock options, sale of at least a portion of
the stock to be acquired by exercise is often necessitated
to cover the exercise price or the associated withholding
tax liability. The employee thereby receives fewer shares
upon exercise, and also forgoes any future appreciation in
the stock sold. By use of previously owned shares to
exercise an option, an employee is permitted to gain from
the past price appreciation in such shares, and receives a
new option at the current market price. The reload option
so granted enables the employee to recognize future stock
price appreciation.
STOCK OPTIONS EXERCISED
The following table sets forth, in the aggregate, the number
of shares underlying options exercised during 1994 and states the
value at year-end of exercisable and unexercisable options
remaining outstanding. The "Value Realized" column reflects the
difference between the market price on the date of exercise and
the market price on the date of grant (which establishes the
exercise price for the option) for all options exercised, even
though the executive may have actually received fewer shares as a
result of the surrender of previously owned shares to pay the
exercise price or the tax liability, or the withholding of shares
to cover the tax liability associated with option exercise.
Accordingly, the "Value Realized" numbers do not necessarily
20
<PAGE>
reflect what the executive might receive, should he choose to
sell the shares acquired by the option exercise, since the market
price of the shares so acquired may at any time be higher or
lower than the price on the exercise date of the option.
ALL SHARE NUMBERS HAVE BEEN RESTATED TO THE EXTENT NECESSARY
TO GIVE EFFECT TO THE TWO STOCK DIVIDENDS DECLARED AND PAID
DURING 1993.
<TABLE><CAPTION>
AGGREGATED OPTION EXERCISES IN 1994
and
1994 YEAR-END OPTION VALUES(A)
Number of Securities
Number of Underlying Unexercised
Securities Value Options at Value of Unexercised
Underlying Options Realized ($) 1994 Year-End in the Money Options
Name Exercised(B) (C) (Number of Shares) at 1994 Year-End ($)
---- ------------------ ------------ -------------------------- --------------------------
Exercisable Unexercisable Exercisable Unexercisable
----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Sanford I. 582,244 $6,737,609 725,686 3,522,712 $ 0 $19,478,517
Weill
Robert I. 55,111 $ 527,051 47,023 391,460 $ 0 $ 1,629,334
Lipp
James Dimon 62,721 $ 748,369 116,455 524,461 $ 0 $ 2,017,834
Robert F.
Greenhill -0- $ 0 266,667 1,066,667 $ 0 $ 0
Joseph J.
Plumeri II -0- $ 0 40,000 260,000 $ 0 $ 25,000
</TABLE>
(A) All of the stock options exercised by Messrs. Weill, Lipp
and Dimon in 1994 were reload options arising from Control
Data Option exercises.
(B) This column reflects the number of shares underlying options
exercised in 1994 by the named executive officers. The
actual number of shares received by each of these
individuals from options exercised in 1994 (net of shares
surrendered or withheld to cover the exercise price and tax
liabilities) was: Mr. Weill, 56,727 shares; Mr. Lipp,
8,470 shares; Mr. Dimon, 10,987 shares; Mr. Greenhill,
0 shares; and Mr. Plumeri, 0 shares.
Ownership of Common Stock as of the Record Date for the
named individuals: Mr. Weill: shares; Mr. Lipp:
----------- --
shares; Mr. Dimon: shares; Mr.
------- ---------
Greenhill: shares; and Mr. Plumeri:
----------- -----------
shares.
(C) "Value Realized" is in each case calculated as the
difference between the market price on the date of exercise
and the market price on the date of grant, which establishes
the exercise price for option exercise. Other than shares
of Common Stock used in connection with employee
compensation plans or charitable contributions, none of the
above employees has ever disposed of any Common Stock.
21
<PAGE>
PERFORMANCE GRAPH
The following line graph compares annual changes in
"Cumulative Total Return" of the Company (as defined below) with
(i) Cumulative Total Return of a performance indicator of equity
stocks in the overall stock market, the S&P 500 Index, and (ii)
Cumulative Total Return of a "Peer Index," each for the last five
years. The Peer Index is the S&P Financial Index, which
comprises the following Standard & Poor's industry groups: Money
Center Banks, Major Regional Banks, Other Major Banks, Savings &
Loan, Life Insurance, Multi-Line Insurance, Property and Casualty
Insurance, Personal Loans and Financial Services (excluding the
Company and both of the government-sponsored entities: the
Federal Home Loan Mortgage Corporation and the Federal National
Mortgage Association). The Peer Index has been weighted based on
market capitalization. "Cumulative Total Return" is calculated
(in accordance with SEC instructions) by dividing (i) the sum of
(A) the cumulative amount of dividends during the relevant
period, assuming dividend reinvestment at the end of the month in
which such dividends were paid, and (B) the difference between
the market capitalization at the end and the beginning of such
period, by (ii) the market capitalization at the beginning of
such period.
The comparisons in this table are set forth in response to
SEC disclosure requirements, and therefore are not intended to
forecast or be indicative of future performance of the Common
Stock.
THE TRAVELERS INC.
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN
[GRAPH]
1989 1990 1991 1992 1993 1994
---- ---- ---- ---- ---- ----
The Travelers Inc 100.0 81.40 142.18 177.61 289.40 245.03
S & P 100.0 96.89 126.35 135.95 149.64 151.61
Peer Index 100.0 81.14 118.00 147.37 162.58 158.68
------------
Assumes $100 invested at the closing price on December 31,
1989, in the Company's Common Stock, the S&P 500 Index, and
the Peer Index, representing the S&P Financial Index
(excluding the Company, and both of the government-sponsored
entities: the Federal Home Loan Mortgage Corporation and the
Federal National Mortgage Association). The Peer Index has
been weighted based on market capitalization.
22
<PAGE>
COMPENSATION OF DIRECTORS
Pursuant to the Company's By-Laws, the members of the Board
of Directors are compensated in a manner and at a rate determined
from time to time by the Board of Directors. It has been the
practice of the Company since its initial public offering in 1986
to pay its outside directors in Common Stock, in order to assure
that the directors have an ownership interest in the Company in
common with other stockholders. Compensation of outside
directors and designated honorary directors of the Company
currently consists of an annual retainer of $75,000, payable in
Common Stock. A director may elect to defer receipt of
compensation, in which case the annual retainer will be paid
entirely in shares of Common Stock. In the case of directors
electing current receipt of compensation, only such portion that
approximates the current tax liability incurred by the director
in respect of such compensation is paid in cash, and the balance
in Common Stock.
Directors receive no additional compensation for
participation on committees of the Board. Additional
compensation, if any, for special assignments undertaken by
directors will be determined on a case by case basis, but no such
additional compensation was paid to any director in 1994.
Directors who are employees of the Company or its subsidiaries do
not receive any compensation for their services as directors.
RETIREMENT PLANS
Prior to January 1, 1994, executive officers and employees
generally were eligible to participate in The Travelers Inc.
Pension Plan (the "Retirement Plan") during their first year of
service. Effective January 1, 1994, eligibility begins on the
later of attaining age 21 or completion of one year of service.
Benefits under the Retirement Plan vest after five years of
service with the Company or its subsidiaries. The normal form of
retirement benefit is, in the case of a married participant, a
joint and survivor annuity payable over the life of the
participant and his or her spouse, or in the case of an unmarried
participant, an annuity payable over the participant's life.
Instead of such normal form of payment, participants may elect to
receive other types of annuities or a single sum payable at
retirement or other termination of service.
When expressed as a single sum payment option, benefits
accrue for the first five years of covered service at an annual
rate varying between .75% and 4.0% of the participant's
qualifying compensation, depending upon the participant's age at
the time of accrual. "Qualifying compensation" generally
includes base salary (before pre-tax contributions to the Savings
Plan or other benefit plans), overtime pay, commissions and
bonuses. Under rules promulgated by the Internal Revenue Service
(the "Service"), a ceiling of $150,000 for 1994 (subject to
annual adjustment) is imposed on the amount of compensation that
may be considered "qualifying compensation" under the Retirement
Plan.
During the period of the sixth through the fifteenth year of
covered service, benefits accrue at an annual rate of between
1.25% and 5.0% of the participant's qualifying compensation,
depending upon the participant's age at the time of accrual.
After a participant has completed 15 years of covered service,
benefits accrue at an annual rate varying between 1.25% and 7.0%
of the participant's qualifying compensation, depending upon the
participant's age at the time of accrual. There are also minimum
benefits provided for under the Retirement Plan.
Subject to the statutory maximum benefits payable by a
qualified plan (as described below), a participant also accrues
annually an additional amount calculated as 1.0% to 2.5% of
qualifying compensation (again depending upon his or her age) for
that part of qualifying compensation in excess of the amount of
the Social Security wage base. There is an interest accrual
added to the participant's single sum entitlement. This interest
amount is determined by multiplying the prior year's single sum
by a percentage determined annually by the Company.
23
<PAGE>
The Retirement Plan contains transitional provisions for
employees who meet certain age and service requirements.
Employees who by January 1, 1990 either had reached age 63, or
had reached the age of 55 and had more than 20 years of service,
and, in each case, were participants in the Retirement Plan, are
eligible to retire under the provisions of the plans applicable
to them prior to the effective date of the establishment of the
Retirement Plan.
The statutory maximum retirement benefit that may be paid to
any one individual by a tax qualified defined benefit pension
plan in 1994 is $118,800 annually. Years of service credited
under the Retirement Plan to date for each of the individuals
named in the Summary Compensation Table are as follows: Mr.
Weill, 8 years; Mr. Lipp, 8 years; Mr. Dimon, 8 years; Mr.
Greenhill, 1 year; and Mr. Plumeri, 22 years.
The Company and certain Company subsidiaries provide certain
pension benefits, in addition to the statutory maximum benefit
payable under tax qualified pension plans, under non-funded, non-
qualified retirement benefit equalization plans ("RBEPs"). The
benefits payable under RBEPs are unfunded, and will come from the
general assets of each plan's sponsor. In 1993, the Committee
amended the RBEPs in two respects: first, to exclude certain
executives of the Company and its subsidiaries (including each of
the persons named in the Summary Compensation Table) and
employees of certain subsidiaries from further participation in
the RBEPs, and second, to limit the compensation covered by such
plans to a fixed amount of $300,000 (equal to twice the 1994
statutory maximum qualifying compensation without giving effect
to any future adjustments) less amounts covered by the Retirement
Plan, thereby limiting benefits payable under the RBEPs to all
participants. No benefits were accrued in 1994 under any of the
RBEPs for the account of each of the persons named in the Summary
Compensation Table.
Effective at the end of 1993, the Committee also froze
benefits payable under the Company's Supplemental Retirement Plan
("SERP") covering supplemental retirement benefits to designated
senior executives of the Company and its subsidiaries. At that
time, 24 individuals were SERP participants, including each of
the individuals named in the Summary Compensation Table other
than Mr. Plumeri. The maximum benefit payable under SERP is also
reduced by any benefits payable under the Retirement Plan (or its
predecessor plans, if applicable), under any applicable RBEP,
under any other Company or subsidiary sponsored qualified or non-
qualified defined benefit or defined contribution pension plan
(other than the Savings Plan or other 401(k) plans), and under
the Social Security benefit program.
Estimated annual benefits under the three benefit plans of
the Company for the five executive officers named in the Summary
Compensation Table using the applicable formulas under the
Retirement Plan and the frozen RBEP and SERP Plans and assuming
their retirement at age 65, would be as follows: Mr. Weill,
$622,522; Mr. Lipp, $293,616; Mr. Dimon, $245,484; Mr. Greenhill,
$134,672; and Mr. Plumeri, $168,962 (Mr. Plumeri's annuity under
the Retirement Plan includes accrued annuity transferred from the
retirement plan of Shearson Lehman Brothers Holdings, Inc).
These estimates were calculated assuming that the interest
accrual was 8% for 1989 through 1991, and 6% for 1992 through
1993 and 5.5% for 1994 and thereafter until the participant
retires at the age of 65, and that the current salary of the
participant, the 1994 dollar ceiling on qualifying compensation
(which was set by legislation adopted in 1993 at $150,000
annually), the 1994 Social Security wage base and the current
regulatory formula to convert lump-sum payments to annual annuity
figures each remains unchanged.
EMPLOYMENT PROTECTION AGREEMENTS
The Company has entered into employment protection
agreements with certain of its executive officers. Under the
agreement with Mr. Weill, the Company agrees to employ Mr. Weill
as its Chief Executive Officer (and Mr. Weill agrees to serve in
such capacity) with an annual salary, incentive participation and
employee benefits as determined from time to time by the
Company's Board of Directors. The agreement contains automatic
one-year renewals (unless notice of nonrenewal is given by either
party).
24
<PAGE>
In the event of his termination of employment without cause, the
agreement provides that Mr. Weill will be paid and entitled to
receive other employee benefits (as in effect at the termination
date) through the remaining term of the agreement and will be
entitled to two years additional vesting and exercise of his
stock options (and a cash payment based on the value of any
portion of the stock options that would not vest within such
additional period). During such period of continuing payments
and stock option vesting and exercise, Mr. Weill would be subject
to a noncompetition agreement in favor of the Company.
Mr. Greenhill entered into an employment agreement dated
June 23, 1993 under which he agreed to serve as Chairman of the
Board and Chief Executive Officer of SB Holdings. The agreement,
as amended to date, has a term of seven years and provides for
annual compensation based upon a percentage of the consolidated
after-tax earnings of SB Holdings and its subsidiaries and
certain designated Company subsidiaries. Under the agreement,
Mr. Greenhill was granted an option to purchase 1,333,333 shares
of the Company's Common Stock at an option price of the then-
current market price of $34.50 per share (all share numbers and
prices in this paragraph have been restated for the subsequent
stock split in August 1993). The option has a ten year life and
vests at a rate of 20% per year on the anniversary date of the
grant. If Mr. Greenhill's employment is terminated because of
his death or disability, by Smith Barney without cause (as
defined in the agreement), by Mr. Greenhill if Smith Barney is in
material breach of the agreement, or at the end of the term of
the agreement, that portion of the option that was exercisable on
or within two years after the termination date will remain
exercisable during such two-year period, and Mr. Greenhill will
be entitled to receive a cash payment for the shares covered by
the unexercisable portion of the option. Mr. Greenhill also
received a grant of 533,333 shares of restricted stock, vesting
at a rate of 20% per year on the anniversary of the grant date.
If Mr. Greenhill's employment terminates under the circumstances
described above, the restricted stock grant will also be subject
to continued vesting during the two-year period following such
termination, and Mr. Greenhill will be entitled to a cash payment
with respect to unvested shares. Mr. Greenhill is entitled to
receive compensation payments calculated for various
circumstances under which his employment may terminate. During
any period after termination in which he receives compensation
under the terms of the agreement, Mr. Greenhill will be subject
to a prohibition on hiring certain former employees of Smith
Barney and its subsidiaries.
Mr. Plumeri is a party to an employment agreement with Smith
Barney, a subsidiary of the Company. Under an amendment to the
agreement, he has agreed to serve as Vice Chairman of the Company
through July 30, 1996. Under the agreement, Mr. Plumeri is
entitled to an annual base salary and consideration for an annual
discretionary bonus under the Compensation Plan (or, in the event
that Mr. Weill ceases to be chief executive officer of the
Company during the term of the agreement, to specified levels of
bonus payments). The agreement provides that Mr. Plumeri will
participate in the CAP Plan, will be reimbursed for the cost of
certain life insurance and will be entitled to participate in
other employee benefit plans generally available to senior
executives. The agreement also provides that Mr. Plumeri will be
entitled to specified payments in the event Mr. Plumeri's
employment is terminated. Under the terms of the agreement, Mr.
Plumeri received option grants under the Option Plan which are
reflected in the table of Option Grants above. During any period
after termination in which he receives compensation under the
terms of the agreement, Mr. Plumeri will be subject to a
prohibition on hiring certain former employees of the Company and
its subsidiaries.
CERTAIN INDEBTEDNESS
Certain executive officers have from time to time, including
periods during 1994, incurred indebtedness to Smith Barney, a
wholly owned subsidiary of the Company and a registered
broker-dealer, on margin loans against securities accounts with
Smith Barney. Such margin loans were made in the ordinary course
of Smith Barney's business, were made on substantially the same
terms (including interest rates and collateral) as those
prevailing for comparable transactions for other persons, and did
not involve more than the normal risk of collectability or
present other unfavorable features.
25
<PAGE>
CERTAIN TRANSACTIONS
Pursuant to the terms of his employment agreement, Mr.
Greenhill is entitled to be reimbursed for use of personal
aircraft for company business at an arms' length rate charged for
air charter by an unaffiliated third party. In addition, the
Company has engaged two aircraft companies of which Mr. Greenhill
is the sole stockholder for travel by other Company executives for
company business at the same arms' length rate. During 1994, such
reimbursements totalled approximately $965,000.
ITEM 2:
AMENDMENT TO THE COMPANY'S
CERTIFICATE OF INCORPORATION
The Board of Directors of the Company has unanimously
adopted a proposed amendment to Article FIRST of the Company's
Restated Certificate of Incorporation and recommended that such
amendment be submitted to the stockholders of the Company for
approval and adoption. The proposed amendment would change the
name of the Company to Travelers Group Inc. following approval by
the stockholders. A copy of Article FIRST as proposed to be
amended is attached hereto as Annex A.
The Board of Directors believes that the new name will
better emphasize the multiple services provided by the Company
and its subsidiaries.
If approved, the proposed amendment to Article FIRST would
become effective upon the filing with the Secretary of State of
the State of Delaware of a Certificate of Amendment to the
Company's Restated Certificate of Incorporation, which filing is
expected to take place shortly after approval by the
stockholders. The affirmative vote of the holders of a majority
of the outstanding shares of the Company's Common Stock and
Series C Preferred Stock entitled to vote at the meeting is
required to adopt the proposed amendment to Article FIRST.
RECOMMENDATION
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR
---
THE PROPOSED AMENDMENT TO THE COMPANY'S RESTATED CERTIFICATE OF
INCORPORATION TO CHANGE THE COMPANY'S NAME. Assuming the
presence of a quorum, the affirmative vote of a majority of the
votes entitled to be cast at the Annual Meeting by the holders of
all of the outstanding shares of Common Stock and Series C
Preferred Stock, voting as a single class, is required to adopt
the proposed amendment to the Company's Restated Certificate of
Incorporation. Under applicable Delaware law, in determining
whether this item has received the requisite number of
affirmative votes, abstentions and broker nonvotes will be
counted and will have the same effect as a vote against this
item.
ITEM 3:
RATIFICATION OF SELECTION OF AUDITORS
The Board of Directors has selected KPMG Peat Marwick LLP
("Peat Marwick") as the independent auditors of the Company for
1995. Peat Marwick has served as the independent auditors of the
Company and its predecessors since 1969. Arrangements have been
made for a representative of Peat Marwick to attend the Annual
Meeting. The representative will have an opportunity to make a
statement if he or she desires to do so, and will be available to
respond to appropriate stockholder questions.
26
<PAGE>
RECOMMENDATION
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR
---
RATIFICATION OF THE SELECTION OF KPMG PEAT MARWICK LLP AS THE
COMPANY'S INDEPENDENT AUDITORS FOR 1995. Assuming the presence
of a quorum, the affirmative vote of a majority of the votes cast
by the holders of shares of Common Stock and Series C Preferred
Stock present and entitled to vote on this item at the Annual
Meeting, voting as a single class, is required to ratify the
selection of the Company's auditors. Under applicable Delaware
law, in determining whether this item has received the requisite
number of affirmative votes, abstentions and broker non-votes
will be counted and will have the same effect as a vote against
this item.
STOCKHOLDER PROPOSAL
The Company has been advised by one holder of Common Stock
of its intention to introduce at the Annual Meeting the proposal
and supporting statement set forth below. The Board of Directors
disclaims any responsibility for the content of the proposal and
for the statement made in support thereof, which are presented as
received from the stockholder.
ITEM 4:
STOCKHOLDER PROPOSAL REGARDING NATIONAL HEALTH CARE REFORM
Mr. Jack F. Moore, Secretary of the Board of Trustees of the
National Electrical Benefit Fund, 1125 15th Street, N.W.,
Washington, D.C. 20005, the holder of 70,900 shares of Common
Stock, has notified the Company that he intends to present the
following proposal at the Annual Meeting:
RESOLVED:
That the shareholders of Travelers'
Corporation ("Company") urge our board of
directors to examine the Company's position
on the important public policy issue of
national health care reform. From this
examination, the board of directors will
produce a written report that describes how
the public policy positions our Company is
advocating on national health care reform
will effect the economic, social and personal
welfare of our Company's shareholders,
workers, customers, suppliers, the
communities in which we do business, and the
nation as a whole. The report shall also
disclose the scope and the cost of the
Company's national health care reform
advocacy activities since 1991.
The report shall exclude any proprietary
information, be prepared at reasonable cost,
not impose an undue burden on company
employees, and be available to shareholders
within six months after the 1995 annual
meeting of shareholders.
SUPPORTING STATEMENT
27
<PAGE>
National health care reform has been the
pre-eminent public policy issue over the past
four years. Today's health care system has
produced 50 million Americans with inadequate
insurance and 37 million Americans with no
insurance at all. The inability of the
current health care system to provide
universal coverage has produced great
personal hardships, billions of dollars per
year in uncompensated care, and an upward
cost spiral that threatens the
competitiveness and profitability of our
Company and many other American businesses.
Travelers' management has decided to
publicly participate in the national health
care debate. Travelers is a member of the
steering committee of HEAL -- the Health Care
Equity Action League. HEAL's public policy
positions include:
- the creation of a
standard benefits package
by the Federal
government, "in
consultation with states,
localities, businesses,
labor, insurers and
providers."
- the taxation of employee
health care benefits that
exceed "the cost of a
standard health care
benefit package when it
is established" as a way
to control health care
costs.
- opposition to employer
mandates, payroll taxes
to finance health care
premiums, and government
price controls.
Travelers' health care reform proposal
is highly controversial. Particularly,
attempting to control costs through the
taxation of employee health benefits. Such a
policy could create a large tax burden for
our Company's employees, customers, and
working families in America.
We strongly believe that prior to
getting our Company involved in a politically
contentious, ideologically charged national
public policy debate, such as health care
reform, our Company's board of directors has
a responsibility to examine the impact of the
various national health care reform proposals
on our Company's shareholders, workers and
other corporate constituencies and disclose
those findings to shareholders. We believe
thorough analysis and timely disclosure prior
to entering into public policy debates helps
insure that our Company acts responsibly.
BOARD OF DIRECTORS' STATEMENT IN OPPOSITION
TO THE STOCKHOLDER PROPOSAL
As the owner of insurance companies providing health care
insurance and as an employer providing health insurance to its
employees, the Company has in the past and continues now to
actively study and participate in the development of policy with
respect to health care. The Company participates, both directly
and through health care reform coalitions to support efforts to
enact reforms. The Company also helps various
28
<PAGE>
groups of clients, agents, employees and shareholders to learn
about and express their opinions on various reform proposals.
In light of the Company's on-going activities, the Board of
Directors views the proponent's proposal that the Board of
Directors examine the Company's policies with respect to health
care as a redundancy and that the time and expense required to
research, prepare and distribute a report would be a wasteful and
inappropriate use of corporate resources.
RECOMMENDATION
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE
AGAINST THE FOREGOING STOCKHOLDER PROPOSAL. Proxies solicited by
-------
the Board of Directors will be so voted unless stockholders
specify otherwise. Assuming the presence of a quorum, the
affirmative vote of a majority of the votes cast by the holders
of shares of Common Stock and Series C Preferred Stock present
and entitled to vote on this item at the Annual Meeting, voting
as a single class, is required to adopt the stockholder proposal.
Under applicable Delaware law, in determining whether this item
has received the requisite number of affirmative votes,
abstentions and broker non-votes will be counted and will have
the same effect as a vote against this item.
COST OF SOLICITING PROXIES
The cost of soliciting proxies and the cost of the Annual
Meeting will be borne by the Company. In addition to the
solicitation of proxies by mail, proxies may be solicited by
personal interview, telephone and similar means by directors,
officers or employees of the Company, none of whom will be
specially compensated for such activities. The Company also
intends to request that brokers, banks and other nominees solicit
proxies from their principals and will pay such brokers, banks
and other nominees certain expenses incurred by them for such
activities. The Company has retained Georgeson & Company, Inc.,
a proxy soliciting firm, to assist in the solicitation of
proxies, for an estimated fee of $8,500, plus reimbursement of
certain out-of-pocket expenses.
SUBMISSION OF FUTURE STOCKHOLDER PROPOSALS
Any stockholder who intends to present a proposal at the
next Annual Meeting of Stockholders and who wishes such proposal
to be included in the Proxy Statement for that meeting must
submit such proposal in writing to the Secretary of the Company,
at the address set forth on the first page of this Proxy
Statement, and such proposal must be received on or before
December 1, 1995.
OTHER MATTERS
The Board of Directors and management of the Company know of
no other matters to be brought before the Annual Meeting. If
other matters should arise at the Annual Meeting, shares
represented by proxies will be voted at the discretion of the
proxy holder.
29
<PAGE>
ANNEX A
It is proposed that Article FIRST of the Restated
Certificate of Incorporation of The Travelers Inc. be amended to
read in its entirety as set forth below:
FIRST: The name of the Corporation is:
TRAVELERS GROUP INC.
30
<PAGE>
P
R PRELIMINARY COPY
O THE TRAVELERS INC.
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
X OF THE TRAVELERS INC. FOR THE ANNUAL MEETING
APRIL 26, 1995
Y
The undersigned hereby constitutes and appoints Sanford I. Weill, James Dimon
and Charles O. Prince, III, and each of them his or her true and lawful
agents and proxies with full power of substitution in each, to represent the
undersigned at the Annual Meeting of Stockholders of The Travelers Inc. (the
"Company") to be held at Carnegie Hall, 881 Seventh Avenue, New York, New
York on Wednesday, April 26, 1995 at 10:00 a.m. local time, and at any
adjournments or postponements thereof, on all matters properly coming before
said Annual Meeting, including but not limited to the following matters:
1. Proposal to elect one class of directors (consisting of five
directors: Edward H. Budd, Joseph A. Califano, Jr., James Dimon,
Ann Dibble Jordan and Frank J. Tasco) to a three year term.
2. Proposal to amend the Certificate of Incorporation of The Travelers
Inc. to change the corporate name to Travelers Group Inc.
3. Proposal to ratify the selection of KPMG Peat Marwick LLP as the
Company's independent auditors for 1995.
4. Proposal submitted by a stockholder which proposal is opposed
by the Board of Directors.
If shares of The Travelers Inc. Common Stock are issued to or held for the
account of the undersigned under employee plans and voting rights attach to
such shares (any of such plans, a "Voting Plan"), then the undersigned hereby
directs the respective fiduciary of each applicable Voting Plan to vote all
shares of The Travelers Inc. Common Stock in the undersigned's name and/or
account under such Plan in accordance with the instructions given herein, at
the Annual Meeting and at any adjournments or postponements thereof, on all
matters properly coming before the Annual Meeting, including but not limited
to the matters described above and on the reverse.
You are encouraged to specify your choices by marking the
appropriate boxes, SEE REVERSE SIDE, but you need not mark any
boxes if you wish to vote in accordance with the Board of
Directors' recommendations. Your proxy cannot be voted unless you
sign, date and return this card.
SEE REVERSE SIDE
<PAGE>
/X/ Please mark votes
as in this example
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
HEREIN. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR PROPOSALS 1,
2, AND 3, AGAINST PROPOSAL 4 AND WILL BE VOTED IN THE DISCRETION OF THE
PROXIES (OR, IN THE CASE OF A VOTING PLAN, WILL BE VOTED IN THE DISCRETION OF
THE PLAN TRUSTEE OR ADMINISTRATOR) UPON SUCH OTHER MATTERS AS MAY PROPERLY
COME BEFORE THE ANNUAL MEETING.
The Board of Directors recommends
a vote FOR proposals 1,2, and 3 and AGAINST proposal 4
1. Election of Directors (see reverse) FOR WITHHELD
[ ] [ ]
(the Board of Directors recommends
a vote FOR this proposal)
[ ] FOR, except vote WITHHELD from
the following nominee(s):
--------------------------------------
2. Change corporate name (see reverse) FOR AGAINST ABSTAIN
[ ] [ ] [ ]
(the Board of Directors recommends
a vote FOR this proposal)
3. Ratification of auditors (see reverse) FOR AGAINST ABSTAIN
[ ] [ ] [ ]
(the Board of Directors recommends
a vote FOR this proposal)
4. Stockholder proposal (see reverse) FOR AGAINST ABSTAIN
[ ] [ ] [ ]
(the Board of Directors recommends
a vote AGAINST this proposal)
The signer(s) hereby acknowledge(s) receipt
of the Notice of Annual Meeting of
Stockholders and accompanying Proxy
Statement.
The signer(s) hereby revoke(s) all proxies
heretofore given by the signer(s) to vote
at said Meeting and any adjournments or
postponements thereof.
NOTE: PLEASE SIGN EXACTLY AS NAME
APPEARS HEREIN. JOINT OWNERS SHOULD EACH
SIGN. WHEN SIGNING AS ATTORNEY, EXECUTOR,
ADMINISTRATOR, TRUSTEE OR GUARDIAN, PLEASE
GIVE FULL TITLE AS SUCH.
_______________________________________
_______________________________________
Signature Date
