<PAGE>
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
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section240.14a-11(c) or
Section240.14a-12
TRAVELERS GROUP INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11
(1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
(5) Total fee paid:
------------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount previously paid:
------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
(3) Filing Party:
------------------------------------------------------------------------
(4) Date Filed:
------------------------------------------------------------------------
<PAGE>
[LOGO]
TRAVELERS GROUP INC.
388 Greenwich Street
New York, New York 10013
March , 1997
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders of
Travelers Group Inc. on Wednesday, April 23, 1997. The meeting will be held at
Carnegie Hall, 881 Seventh Avenue, New York, New York, at 9:00 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 important
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>
TRAVELERS GROUP INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
The Annual Meeting of Stockholders of Travelers Group Inc. (the "Company")
will be held at Carnegie Hall, 881 Seventh Avenue, New York, New York, on
Wednesday, April 23, 1997 at 9:00 a.m. local time, for the following purposes:
ITEM 1. To consider and vote upon the proposal to amend the Restated
Certificate of Incorporation of Travelers Group Inc. to provide
for the annual election of the entire Board of Directors;
ITEM 2. To elect twenty-one directors to the Board;
ITEM 3. To ratify the selection of the Company's independent auditors for
1997;
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 5, 1997 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 will be maintained at the Company's headquarters, 388 Greenwich Street,
New York, New York prior to the Annual Meeting.
All stockholders are cordially invited to attend the Annual Meeting.
By Order of the Board of Directors
Charles O. Prince, III
SECRETARY
March , 1997
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>
TRAVELERS GROUP INC.
388 GREENWICH STREET
NEW YORK, NEW YORK 10013
------------------------
PROXY STATEMENT
------------------------
ANNUAL MEETING OF STOCKHOLDERS
This Proxy Statement is being furnished to stockholders of Travelers Group
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 23, 1997, at 9:00
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 , 1997, to stockholders of the Company on March 5, 1997, 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, 1996 will be
delivered to stockholders 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 1996 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 shares for directors, 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 641,285,616
shares of the Company's common stock, par value $.01 per share (the "Common
Stock"), and 3,012,293 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 Convertible Preference
Stock of old Travelers following the merger of old Travelers with and into the
Company (the "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 2.61
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 class is
entitled to cumulative voting.
The Company's other series of preferred stock, $1.00 par value, the 8.125%
Cumulative Preferred Stock, Series A 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 BENEFICIAL 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.
<PAGE>
All of the Series C Preferred Stock is held of record by Dory & Co., the
nominee of Fleet National Bank of Connecticut, One Federal Street, Boston,
Massachusetts 02211, as trustee (the "ESOP Trustee") acting in connection with
the employee stock ownership portion of the Travelers Group 401(k) Savings Plan
(the "Savings Plan"). As of the Record Date, the shares of Series C Preferred
Stock outstanding were beneficially held by approximately 23,826 holders (the
"ESOP Holders") through their participation in the Savings 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 Common Stock and Series C Preferred Stock
outstanding and entitled to vote shall constitute a quorum. Pursuant to
applicable Delaware law, 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 all of the items
listed on the proxy card and described below, and will be voted in the
discretion of the persons designated as 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 ESOP
Holders' 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 ESOP Holders
will be voted by the ESOP Trustee in the same proportion as votes in respect of
allocated shares as to which ESOP Holders have given instructions.
SECURITY OWNERSHIP OF MANAGEMENT
The Company has long had broad policies to encourage stock ownership among
its directors, officers and employees to align their interests with the
interests of stockholders. The Company believes that these policies have been a
significant factor in the excellent returns achieved by stockholders since the
Company's initial public offering in 1986. Included among these policies are the
following:
- Directors have received fees in Common Stock since the Company's initial
public offering in 1986.
- The Company has, since 1990, required a broad group of its employees to
take a significant portion of annual bonus payments in restricted stock.
- The Company has granted options to more than 10,000 employees.
- The Company is currently implementing its WealthBuilder program, which
provides for automatic, annual grants of options for all employees (except
senior executives) into the Savings Plan.
- All of the members of the Board of Directors and the most senior
executives of the Company (the "Planning Group") have committed not to
dispose of any shares of Common Stock held by them, so long as they remain
directors or officers, except for donations to charity, for certain
limited estate planning transactions or for use in connection with
participation in the stock option and restricted stock plans of the
Company (the "Stock Ownership Commitment").
2
<PAGE>
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 (33 persons) beneficially owned 21,809,756
shares of Common Stock and 2,306 shares of the Series C Preferred Stock (or
approximately 3.4% 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 5,806,940 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, award or purchase plans an aggregate of approximately
212 million shares of Common Stock, which amount of Common Stock includes an
aggregate of approximately 16 million shares of Common Stock that such persons
may acquire pursuant to options exercisable within 60 days of the Record Date
and 4,863,648 shares of Common Stock issuable upon the conversion of the Series
C Preferred Stock. Had such 212 million shares of Common Stock been held of
record on the Record Date, such shares of Common Stock would have represented
approximately 33.6% of the total voting power of the shares of Common Stock then
outstanding and eligible to vote. These amounts are based upon the Company's
records of beneficial ownership by all employees, including its current
officers, under the Travelers Group 1996 Stock Incentive Plan (the "1996
Incentive Plan"), the Travelers Group Stock Option Plan (the "1986 Option
Plan"), the Savings Plan, the Travelers Group Capital Accumulation Plan (the
"CAP Plan"), the Travelers Group Employee Incentive Plan ("EIP"), the Travelers
Group Stock Purchase Plan, and various compensation plans for executives of
Smith Barney (as defined herein). These amounts also include beneficial
ownership by employees and executive officers under the old Travelers 1988 Stock
Incentive Plan and the old Travelers 1982 Stock Option Plan, which plans were
assumed by the Company in connection with the Travelers Merger, and the old
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 of the Common Stock outstanding and
entitled to vote at the Annual Meeting, except Mr. Weill who beneficially owned
12,531,325 shares (1.9%) of Common Stock, including 3,780,793 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.
3
<PAGE>
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF BENEFICIAL OWNERSHIP
-------------------------------------------------
COMMON STOCK STOCK OPTIONS
BENEFICIALLY EXERCISABLE TOTAL
OWNED WITHIN 60 COMMON STOCK
EXCLUDING DAYS OF BENEFICIALLY
NAME/TITLE OPTIONS(1) RECORD DATE(2) OWNED(1)
- -------------------------------------------------------------- ----------------- -------------- --------------
<S> <C> <C> <C>
C. Michael Armstrong.......................................... 20,407 20,407
Director
Kenneth J. Bialkin............................................ 306,931 306,931
Director
Steven D. Black(3)............................................ 439,341 185,168 624,509
Executive Officer
Edward H. Budd(4)............................................. 437,446 247,786 685,232
Director
Joseph A. Califano, Jr.(5).................................... 66,517 66,517
Director
Douglas D. Danforth........................................... 92,409 92,409
Director
Robert F. Daniell............................................. 18,544 18,544
Director
James Dimon(6)................................................ 1,264,263 549,700 1,813,963
Director and Executive Officer
Leslie B. Disharoon (7)....................................... 161,731 161,731
Director
The Hon. Gerald R. Ford....................................... 46,807 46,807
Director
Ann Dibble Jordan............................................. 5,263 5,263
Director
Robert I. Lipp................................................ 1,027,621 185,039 1,212,660
Director and Executive Officer
Dudley C. Mecum(8)............................................ 87,816 87,816
Director
Andrall E. Pearson............................................ 68,051 68,051
Director
Joseph J. Plumeri, II......................................... 242,565 242,565
Executive Officer
Frank J. Tasco................................................ 24,179 24,179
Director
Linda J. Wachner.............................................. 18,163 18,163
Director
Sanford I. Weill(9)........................................... 8,750,532 3,780,793 12,531,325
Director and Chief Executive Officer
Joseph R. Wright, Jr.......................................... 51,960 51,960
Director
Arthur Zankel(10)............................................. 183,884 183,884
Director
All Directors and Executive Officers as a group (33)
persons)(11)(12)............................................ 16,006,540 5,806,940 21,813,480
</TABLE>
- ------------------------
(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
4
<PAGE>
directors' fees to non-employee directors under the Company's plan, but
receipt of which is deferred: Mr. Armstrong, 10,641; Mr. Bialkin, 66,931;
Mr. Budd, 12,835; Mr. Califano, 47,645; Mr. Danforth, 58,567; Mr. Disharoon,
66,931; Mr. Mecum, 66,931; Mr. Pearson, 66,931; Mr. Tasco, 20,179; and Mr.
Wright, 37,160; (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, 7,801; Mr. Lipp, 1,389; and Mr. Weill,
1,860; (iii) the following number of shares of Common Stock held (as of
January 31, 1997) under the Savings Plan of the Company or its subsidiaries,
as to which the holder has voting power but not dispositive power: Mr.
Black, 7,796; Mr. Dimon, 6,110; Mr. Lipp, 9,952; Mr. Plumeri, 118; and Mr.
Weill, 10,604; (iv) the following number of shares of Common Stock awarded
pursuant to the CAP Plan, as to which the holder may direct the vote but
which remain subject to forfeiture and restrictions on disposition: Mr.
Black, 158,284; Mr. Dimon, 128,111; Mr. Lipp, 86,166; Mr. Plumeri, 101,794
and Mr. Weill, 213,265; and (v) 2,153 shares of Common Stock, the beneficial
ownership of which is attributable to Mr. Budd, assuming as of February 28,
1997 the conversion of the 1,333 shares of Series C Preferred Stock held by
Mr. Budd as an ESOP Holder into such shares of Common Stock. Mr. Budd is the
only director or executive officer who owns shares of Series C Preferred
Stock.
(2) Non-employee directors are not eligible to receive stock option grants under
the Company's plans.
(3) Includes 20,000 shares of Common Stock owned by Mr. Black's wife, as to
which Mr. Black disclaims beneficial ownership.
(4) Includes 1,405 shares of Common Stock owned by Mr. Budd's wife, as to which
Mr. Budd disclaims beneficial ownership.
(5) Includes 1,600 shares of Common Stock owned by Mr. Califano's wife and 240
shares held by Mr. Califano as custodian, as to which Mr. Califano disclaims
beneficial ownership.
(6) Includes 300,000 shares of Common Stock owned by Mr. Dimon and his wife as
tenants-in-common.
(7) Includes 2,800 shares of Common Stock owned by Mr. Disharoon's wife, as to
which Mr. Disharoon disclaims beneficial ownership.
(8) Includes 1,685 shares of Common Stock owned by Mr. Mecum's wife, as to which
Mr. Mecum disclaims beneficial ownership.
(9) Includes 200 shares of Common Stock owned by Mr. Weill's wife, as to which
Mr. Weill disclaims beneficial ownership.
(10) Includes 400 shares of Common Stock held by a trust of which Mr. Zankel is
a trustee and 6,329 shares owned by Mr. Zankel's wife, as to which Mr.
Zankel disclaims beneficial ownership.
(11) This information also includes as "beneficially owned" (i) an aggregate of
70,757 shares of Common Stock and 2,306 shares of Series C Preferred Stock
held under the Savings Plan of the Company, as to which the respective
holders have voting power but not dispositive power, and (ii) an aggregate
of 1,027,298 shares of Common Stock awarded under the CAP Plan, as to which
the respective holders may direct the vote but which shares remain subject
to forfeiture and restrictions on disposition.
(12) The Board of Directors of the Company has determined that all members of
the Planning Group are "executive officers" of the Company, notwithstanding
that certain members of the Company's Planning Group are executive officers
of subsidiaries of the Company.
------------------------
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 ("Section 16(a) Persons"), to file reports of ownership and changes
in ownership with the SEC and the New York Stock Exchange, Inc. (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, 1996, each of its officers, directors and
greater than ten percent stockholders complied with all such applicable filing
requirements.
5
<PAGE>
ITEM 1:
APPROVAL OF DECLASSIFICATION OF BOARD OF DIRECTORS
The Board of Directors has unanimously approved an amendment to the Restated
Certificate of Incorporation of the Company to declassify the Board of
Directors, such declassification to commence with the present Annual Meeting of
Stockholders, and directed that the amendment be submitted to a vote of
stockholders at the Annual Meeting. The form of the proposed amendment (the
"Amendment") is attached to this Proxy Statement as Annex A.
Article SEVENTH of the Company's Restated Certificate of Incorporation
currently provides for the division of the Board of Directors into three
classes, with each class consisting as nearly as possible of one-third of the
total number of directors and having a staggered three-year term. The Board of
Directors is of the opinion that many potential investors are opposed to the
concept of a classified board and, in keeping with its goal of ensuring that the
Company's corporate governance policies maximize stockholder value, has
determined that eliminating the classified Board of Directors and instead having
all of the Company's directors elected annually would best serve the interests
of the Company and its stockholders. As proposed to be amended, the Restated
Certificate of Incorporation of the Company would provide that at each Annual
Meeting of Stockholders, commencing with the present Annual Meeting of
Stockholders, the renominated directors and any new directors nominated by the
Board of Directors, will be elected for a one-year term. In addition, directors
whose terms would otherwise not expire until 1998 or 1999 have agreed, assuming
the Amendment is approved and becomes effective, to forego the remainder of
their terms and to stand for re-election at the present Annual Meeting of
Stockholders. *Accordingly, commencing with the present Annual Meeting of
Stockholders, all directors will be elected annually to hold office for one-year
terms.* The Board has approved and recommends to stockholders that the
Company's Restated Certificate of Incorporation be amended to declassify the
Board as described above by deleting Article SEVENTH of the Restated Certificate
of Incorporation and substituting therefor a revised Article SEVENTH as set
forth in Annex A to this Proxy Statement.
If the Amendment is approved, the Company intends to file the Amendment
immediately with the Secretary of State of Delaware upon which filing it will be
effective. In addition, the Board of Directors has approved conforming
amendments to the Company's By-laws which will become effective upon the
effectiveness of the Amendment.
RECOMMENDATION
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE <*>FOR</*> THE
PROPOSED AMENDMENT TO THE COMPANY'S RESTATED CERTIFICATE OF INCORPORATION TO
DECLASSIFY THE BOARD OF DIRECTORS. Assuming the presence of a quorum, the
affirmative vote of at least seventy-five percent (75%) 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 2:
ELECTION OF DIRECTORS
The Board of Directors has fixed the number of directors at 21, an increase
of three directors, and, in order to fill the three vacancies created by the
increase has nominated a total of twenty-one candidates for election at the
Annual Meeting. The directors currently serving on the Board whose terms expire
at the Annual Meeting, Messrs. Danforth, Daniell, Disharoon, Ford, Lipp, Pearson
and Mrs. Wachner, and those
6
<PAGE>
directors who voluntarily shortened their terms, Messrs. Armstrong, Bialkin,
Budd, Califano, Dimon, Mecum, Tasco, Weill, Wright and Zankel and Ms. Jordan
have been nominated by the Board of Directors for re-election, and Messrs. Jones
and Masin and Ms. Arron have been nominated by the Board of Directors for
election, in each case, assuming the approval of the Amendment and the
subsequent proper filing of the Amendment with the Secretary of State of
Delaware, to one-year terms at the Annual Meeting.
Each 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.
In the event the Amendment is not approved by the requisite number of votes,
the directors comprising Class III, whose terms expire at the Annual Meeting,
will be nominated for election to three-year terms, Mr. Jones will be nominated
for election as a Class III director to serve a three-year term, Mr. Masin will
be nominated for election as a Class I director to serve for one year and Ms.
Arron will be nominated for election as a Class II director to serve for two
years.
The following information with respect to the principal occupation and
business experience and other affiliations of the nominees during the past five
years has been furnished to the Company by the nominees. All ages are given as
of the Record Date. The terms of current Directors as stated below include
periods of Board membership with Commercial Credit Company ("CCC"), a
predecessor corporation of the Company.
The mandatory retirement age for all members of the Board of Directors other
than the Honorable Gerald R. Ford is 75.
The following twenty-one individuals have been nominated for election at the
Annual Meeting for a term ending 1998 (except in the limited circumstances
described above):
<TABLE>
<CAPTION>
<C> <S>
[Picture] JUDITH ARRON
Ms. Arron, 54, is the Executive Director and Artistic Director of the
Carnegie Hall Corporation. Ms. Arron was previously the Manager of the
Cincinnati Symphony Orchestra and Cincinnati May Festival. Ms. Arron is
Chairman of the National Advisory Board for the Bone Marrow Transplant
Program at the University of Colorado Health Sciences Center in Denver. A
member of the European Concert Halls Organization, Ms. Arron has also
served on the board of the International Society of Performing Arts
Administrators and is currently a board member of the American Symphony
Orchestra League. She also serves on advisory committees for the Music for
Life Aids Benefits in New York, the Seaver Conducting Awards, the School
for Strings, the Brooke Russell Astor Awards for the New York Public
Library and the Knight Foundation Symphony Orchestra Advisory Committee.
</TABLE>
7
<PAGE>
<TABLE>
<C> <S>
[Picture] C. MICHAEL ARMSTRONG
Mr. Armstrong, 58, 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 was previously an
officer of International Business Machines Corporation ("IBM") where he
was a member of IBM's Management Committee and Chairman of IBM World Trade
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. Mr. Armstrong is Chairman
of the President's Export Council, a member of the National Security
Telecommunications Advisory Committee and a member of 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 a
member of the Supervisory Board of the Thyssen-Bornemisza Group. He is
also a member of the Council on Foreign Relations and the California
Business Roundtable.
[Picture] KENNETH J. BIALKIN
Mr. Bialkin, 67, has been a director of the Company since 1986. Mr.
Bialkin has been a director of Travelers Property Casualty Corp. (formerly
known as Travelers/ Aetna Property Casualty Corp.) ("TAP"), an 82% owned
subsidiary of the Company, since 1996. He has been for more than five
years a partner in the law firm of Skadden, Arps, Slate, Meagher & Flom
LLP, 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.
[Picture] EDWARD H. BUDD
Mr. Budd, 63, 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 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.
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.
</TABLE>
8
<PAGE>
<TABLE>
<C> <S>
[Picture] JOSEPH A. CALIFANO, JR.
Mr. Califano, 65, has been a director of the Company since 1988. He is
Chairman and President of The National 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, HealthPlan Services Inc., Kmart Corporation, New York and New
England Telephone Companies 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, as a Governor of New York Hospital, and a member 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 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.
[Picture] DOUGLAS D. DANFORTH
Mr. Danforth, 74, has been a director of the Company since 1987. 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 Sola International Inc., American European
Associates and Dal-Tile International Inc. Mr. Danforth is also a trustee
of Carnegie-Mellon University, Syracuse University and the Pittsburgh
Trust for Cultural Resources. Mr. Danforth is Vice Chairman and a trustee
of the Allegheny Health, Education and Research Foundation. He is also a
member of The Executive Committee of the Allegheny Conference on Com-
munity Development and a director of the Pittsburgh Foundation.
[Picture] ROBERT F. DANIELL
Mr. Daniell, 63, 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 GTE Corporation and Shell Oil Company. He is also
a member of The Conference Board and The Business Council.
</TABLE>
9
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<TABLE>
<C> <S>
[Picture] JAMES DIMON
Mr. Dimon, 40, has been a director of the Company since September
1991. He is President and Chief Operating Officer of the Company. He is
also Chairman of the Board, Chief Executive Officer and a member of the
executive committee of Smith Barney Inc., the Company's investment banking
and securities brokerage subsidiary ("Smith Barney"). Mr. Dimon has been a
director of TAP since 1996. From May 1988 to June 1995 he was Chief
Financial Officer of the Company. He was, from May 1988 to September 1991,
Executive Vice President of the Company. Mr. Dimon was Chief Operating
Officer of Smith Barney until January 1996 and was Senior Executive Vice
President and Chief Administrative Officer of Smith Barney from 1990 to
1991. He is also the Chief Executive Officer and Chairman of the Board of
Smith Barney Holdings Inc. ("SB Holdings"), the immediate parent company
of Smith Barney. From March 1994 to January 1996 he was Chief Operating
Officer of SB Holdings. 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 a director of the Center on
Addiction and Substance Abuse and the National Association of Securities
Dealers, Inc.
[Picture] LESLIE B. DISHAROON
Mr. Disharoon, 64, 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 Chairman of the Board of The John Hopkins Health System Endowment, a
director of Aegon USA, Inc., GRC International Inc. and M.S.D. & T. Funds,
Inc., and President of the Caves Valley Club Inc.
[Picture] THE HONORABLE GERALD R. FORD
The Honorable Gerald R. Ford, 83, 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 business consultant to several corporations. He is an
advisor and consultant to Texas Commerce Bankshares, Inc. and an advisor
to American Express Company.
[Picture] THOMAS JONES
Mr. Jones, 47, is Vice Chairman, President, Chief Operating Officer
and a director of the Teachers Insurance and Annuity Association--College
Retirement Equities Fund ("TIAA-CREF"). From 1989 to 1993, Mr. Jones was
Executive Vice President and Chief Financial Officer of TIAA-CREF. Mr.
Jones is a director of Thomas & Betts Corporation and director and Deputy
Chairman of the Federal Reserve Bank of New York. Mr. Jones is a trustee
of Cornell University, Brookings Institution and Educational Broadcasting
Corporation (Thirteen/WNET).
</TABLE>
10
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<TABLE>
<C> <S>
[Picture] ANN DIBBLE JORDAN
Ms. Jordan, 62, has been a director of the Company since 1989. She is
a consultant and serves on the Boards of Directors of Johnson & Johnson
Corporation, Hechinger Company, the National Symphony Orchestra, The
Phillips Gallery, Child Welfare League, 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.
[Picture] ROBERT I. LIPP
Mr. Lipp, 58, has been a director of the Company since 1991, and is a
Vice Chairman of the Company. Mr. Lipp has been the Chairman of the Board,
Chief Executive Officer and President of TAP since January 1996. Mr. Lipp
has been the Chairman of the Board and Chief Executive Officer of The
Travelers Insurance Group Inc. since December 1993. 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, the Wadsworth Atheneum and the
Massachusetts Museum of Contemporary Art and Chairman of Dance On Inc., a
private foundation.
[Picture] MICHAEL MASIN
Mr. Masin, 52, is Vice Chairman and President International and a
director of GTE Corporation. From 1977 to 1993, Mr. Masin was a partner in
the law firm of O'Melveny and Myers. Mr. Masin is a Director of Compania
Nacional Telefonos de Venezuela and BC Telecom, Inc. Mr. Masin is a member
of the Board of Trustees of Carnegie Hall, the Keck Foundation and the
China-American Society. He is a member of the Business Committee of the
Board of Trustees of the Museum of Modern Art, a member of the Dean's
Council of Dartmouth College, and a member of the Private Sector Advisory
Council of the Inter-American Development Bank.
[Picture] DUDLEY C. MECUM
Mr. Mecum, 62, has been a director of the Company since 1986. Mr.
Mecum has been a director of TAP since 1996. Since December 1996, Mr.
Mecum has been the Chairman of the Board of Mecum Associates Inc., a firm
specializing in leveraged acquisitions of businesses. From August 1989 to
December 1996, Mr. Mecum was a Partner in the firm of G.L. Ohrstrom & Co.
(a merchant banking firm). 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., the Metris Companies, Inc. and Suburban Propane
Partners, L.M.P.
</TABLE>
11
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<TABLE>
<C> <S>
[Picture] ANDRALL E. PEARSON
Mr. Pearson, 71, 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 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 Alliant Foodservice Inc. and a
director of KINKO's Inc., each of which is owned by Clayton, Dubilier &
Rice, Inc.
[Picture] FRANK J. TASCO
Mr. Tasco, 69, has been a director of the Company since 1992. Mr.
Tasco has been a director of TAP since 1996. Mr. Tasco is the retired
Chairman of the Board and Chief Executive Officer and is currently a
director of Marsh & McLennan Companies, Inc. He is also a director of New
York Telephone Company, New England Telephone and Telegraph Company and
Mid Ocean Reinsurance Company Ltd. Mr. Tasco is Chairman of the Board of
Angram Inc. He was a member of President Bush's Drug Advisory Council and
was founder and is at present Chairman of New York Drugs Don't Work. Mr.
Tasco is a director of Phoenix House Foundation and St. Francis Hospital,
Roslyn, New York. He is Chairman of the Catholic Health Council of the
Archdiocese of Rockville Centre. He is a member of the Council on Foreign
Relations, the Lincoln Center Consolidated Corporate Fund Leadership
Committee, the Foreign Policy Association, a trustee of New York
University and a trustee of the Inner-City Scholarship Fund.
[Picture] LINDA J. WACHNER
Mrs. Wachner, 51, 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 1000 apparel company, and Chairman and
Chief Executive Officer of Authentic Fitness Corporation, an activewear
manufacturer. Mrs. Wachner is also a director of 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, Carnegie Hall and Thirteen/WNET, 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.
</TABLE>
12
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<TABLE>
<C> <S>
[Picture] SANFORD I. WEILL
Mr. Weill, 63, 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. Mr. Weill has been a
director of TAP since 1996. Mr. Weill's son, Marc P. Weill, is a Senior
Vice President and an executive officer of the Company. Mr. Weill 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 Chairman of the Board of Overseers
of Cornell University Medical College. He is on the Board of Overseers of
Memorial Sloan-Kettering Cancer Center. He is a member of Cornell
University's Johnson Graduate School of Management Advisory Board and a
Board of Trustees Fellow. Mr. Weill is Chairman of the National Academy
Foundation whose member programs include the Academy of Finance, the
Academy of Travel and Tourism and the Academy of Public Service.
[Picture] JOSEPH R. WRIGHT, JR.
Mr. Wright, 57, has been a director of the Company since 1990. Mr.
Wright is Chairman and Chief Executive Officer of AVIC Group
International, Inc. focusing on developing and financing communications
projects in the People's Republic of China. He also serves as Chairman of
GRC International, Inc., a leading government and private sector research
firm and as Vice Chairman of The Jefferson Group, a consulting firm in
Washington, D.C. From 1989 to 1993, he was Executive Vice President and
Vice Chairman of W.R. Grace & Co., an international specialty chemicals
company and President of Grace Energy Company, an international energy
services company. He currently serves on the Board of Directors of GRC
International, Inc., Baker & Taylor Holdings, Inc., Deswell Industries,
Barington Capital Corporation, Great Lakes Pulp and Fiber Corporation and
is a trustee of Hampton University. He was Deputy Director and Director of
the United States Office of Management and Budget from 1982 to 1989, a
member of President Reagan's Cabinet from 1988 to 1989, and Deputy
Secretary of Commerce from 1981 to 1982. Prior to that, Mr. Wright 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.
[Picture] ARTHUR ZANKEL
Mr. Zankel, 65, has been a director of the Company since 1986. Mr.
Zankel has been a director of TAP since 1996. He has been Co-Managing
Partner of First Manhattan Co. (an investment management firm) 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, New York Foundation and UJA-Federation.
</TABLE>
13
<PAGE>
MEETINGS OF THE BOARD OF DIRECTORS
The Board of Directors met six times during 1996. 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 1996, other than Mrs. Wachner who
attended approximately half of such meetings.
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 Committee are Messrs. Budd
(Chairman), Bialkin, Weill, Wright, and Zankel. The 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 Committee
met once during 1996.
AUDIT COMMITTEE. The members of the Committee are Messrs. Mecum (Chairman),
Armstrong, Califano, Danforth, Disharoon, Tasco and Wright. The primary
functions of the 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 Committee met six times during
1996.
NOMINATIONS, COMPENSATION AND CORPORATE GOVERNANCE 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 1996 Incentive Plan,
the Company's 1986 Option Plan, the Company's CAP Plan and those option plans of
old Travelers assumed by the Company in connection with the Travelers Merger. A
subcommittee of the Committee, comprised of "outside directors" (as such term is
used in Section 162(m) of the Internal Revenue Code of 1986, as amended (the
"Code")) who are also "Non-Employee Directors" (as such term is defined in Rule
16b-3 of the Exchange Act) has the exclusive authority to grant options to
Section 16(a) Persons and Covered Employees (as hereinafter defined) under the
Company's 1986 Option Plan and the 1996 Incentive Plan and to administer certain
other elements of the 1996 Incentive Plan covered by Section 162(m) and to
administer the Travelers Group Executive Performance Compensation Plan (the
"Compensation Plan") approved by stockholders at the 1994 Annual Meeting. The
subcommittee also is responsible for determining whether the performance goals
under the Compensation Plan have been met. The Committee also is responsible for
the periodic assessment of the performance of the Board of Directors and the
evaluation of corporate governance principles applicable to the Board of
Directors. The Committee met seven times during 1996. References herein to the
Committee shall be deemed to be references to the subcommittee in all cases
where Section 162(m) of the Code or Section 16 of the Exchange Act would require
that action be taken by the subcommittee rather than the full Committee.
ETHICS AND PUBLIC AFFAIRS COMMITTEE. The members of the Committee are
Messrs. Bialkin (Chairman), Budd, Califano, Daniell, Ford, Mecum and Wright, and
Ms. Jordan. The Committee reviews and
14
<PAGE>
approves the Company's compliance programs, relationships with external
constituencies and public activities. The Committee met four times during 1996.
FINANCE COMMITTEE. The members of the Committee are Messrs. Dimon
(Chairman), Armstrong, Danforth, Disharoon, Pearson, Tasco and Zankel, and Mrs.
Wachner. 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 four times during
1996.
RECOMMENDATION
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE <*>FOR</*> THE
ELECTION OF EACH OF THE NOMINEES AS A DIRECTOR OF THE COMPANY. 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.
15
<PAGE>
EXECUTIVE COMPENSATION
CERTAIN RESPONSIBILITIES OF THE NOMINATIONS, COMPENSATION AND CORPORATE
GOVERNANCE COMMITTEE OF THE BOARD OF DIRECTORS
The Nominations, Compensation and Corporate Governance Committee (or a
subcommittee thereof), comprised entirely of non-employee directors, establishes
the compensation of the Chief Executive Officer and reviews the compensation of
all other executives. No member of the Committee is a former or current officer
or employee of the Company or any of its subsidiaries. With regard to its
consideration of compensation for certain executive officers, the Committee
utilizes the assistance of an independent compensation consulting firm.
REPORT OF THE NOMINATIONS, COMPENSATION AND CORPORATE GOVERNANCE 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 the performance of the Company as a
whole, or on the performance of a business unit, or using both criteria, as the
nature of an executive's responsibilities may dictate, and by the extent to
which such performance reflects the corporate values integral to the Company's
overall success. The Committee considers and gives weight to both qualitative
and quantitative factors, including such factors as earnings, earnings per
share, return on equity and return on assets and considers a full range of
performance criteria for each of the executive officers covered by the
Compensation Plan including contributions to financial results, productivity,
risk containment, adherence to corporate values and contributions to both
operating unit or divisional strategy and Company-wide strategy. In conducting
such review, the Committee has generally examined changes in the Company's
financial results over time, both overall and on a unit basis, as well as
similar data for comparable companies, to the extent publicly available. The
Committee also gives significant weight to qualitative factors with particular
emphasis on the performance of the Company's executive team.
Compensation of executive officers consists of base salary and
performance-based bonuses, a significant portion of which is restricted stock.
Bonuses are discretionary, subject to certain maximum amounts for those
executive officers covered by the Compensation Plan. 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 to a broad range of employees. All members of the Company's
Planning Group have agreed to the Stock Ownership Commitment described under the
caption "Security Ownership of Management."
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 under Section 162(m) of the Code.
EXECUTIVE PERFORMANCE COMPENSATION PLAN. The Compensation Plan, approved by
stockholders in 1994, establishes certain performance criteria for determining
the maximum amount of bonus compensation available for the five executive
officers named in the Summary Compensation Table in the Company's Proxy
Statement (the "Covered Employees"). The Compensation Plan is administered by
the Committee which determines whether the performance goals under the
Compensation Plan have been met.
The creation of any bonus pool for Covered Employees is contingent upon the
Company achieving at least a 10% Return on Equity, as defined in the
Compensation Plan. The amount of the bonus pool is calculated based upon the
extent to which the Return on Equity exceeds the 10% minimum threshold.
The Compensation Plan establishes that up to 25.2% of any bonus pool
established will be available for bonus awards to the chief executive officer
and up to 18.7% will be available to each of the other four eligible
participants. The Committee nevertheless retains discretion to reduce or
eliminate payments under
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<PAGE>
the Compensation Plan to take into account subjective factors, including an
individual's performance or other relevant criteria.
COMPONENTS OF COMPENSATION. Compensation of executive officers consists of
base salary and discretionary bonus awards (a portion of which is payable in
restricted stock) and stock option awards. Examination of competitors' pay
practices in this area is conducted periodically to ensure that the Company's
compensation policies will enable it to attract new talent and retain current
valuable employees.
Discretionary bonus awards are generally a substantial part of total
compensation of Company executives. Because a percentage of executive
compensation is paid in the form of restricted stock, bonus awards are not only
a short-term cash reward but also a long-term incentive related directly to the
enhancement of stockholder value. The restricted period applicable to awards to
executive officers is three years in furtherance of the long-term nature of such
compensation.
Other than grants of stock options that arose by operation of the reload
feature of the Company's stock option plans (approved by stockholders in 1992
and 1996) no grants of stock options have been made to Mr. Weill since the
Company's initial public offering in 1986. The grant of reload options did not
change Mr. Weill's net equity position.
1996 COMPENSATION. The Committee believes that 1996 was a year of
accomplishment for the Company. There was a 37% increase in operating earnings
per share resulting in a high return on stockholders' investments. The Company
completed the acquisition of the property and casualty insurance business of
Aetna which provided the basis for a successful initial public offering of
common stock of TAP. Mr. Weill provided the leadership for these
accomplishments.
Under the Compensation Plan, approved by stockholders in 1994, the maximum
bonus pool for 1996 for the Chief Executive Officer and the four other most
highly compensated executive officers of the Company was approximately $45.5
million. The amounts awarded to such persons is set forth in the Summary
Compensation Table below and total approximately $25.4 million.
THE NOMINATIONS, COMPENSATION
AND CORPORATE GOVERNANCE COMMITTEE:
ARTHUR ZANKEL (Chairman)
KENNETH J. BIALKIN
ROBERT F. DANIELL
THE HONORABLE GERALD R. FORD
ANN DIBBLE JORDAN
ANDRALL E. PEARSON
LINDA A. WACHNER
NOMINATIONS, COMPENSATION AND CORPORATE GOVERNANCE COMMITTEE INTERLOCKS AND
INSIDER PARTICIPATION
The persons named above under the caption "Election of Directors--Committees
of the Board of Directors--Nominations, Compensation and Corporate Governance
Committee" were the only members of such committee during 1996. Mr. Bialkin, a
member of the Committee, is a partner in the law firm of Skadden, Arps, Slate,
Meagher & Flom LLP, which performs legal services for the Company and its
subsidiaries from time to time.
Mr. Bialkin does not serve as a member of the subcommittee of the
Nominations, Compensation and Corporate Governance Committee that administers
the Compensation Plan, grants awards to Section
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16(a) Persons under the CAP Plan, granted options to Section 16(a) Persons under
the 1986 Option Plan and grants options to Section 16(a) Persons under the 1996
Incentive Plan.
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, 1996, 1995 and 1994. 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 1996.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION AWARDS
----------------------------------- ---------------------------------------
SECURITIES
UNDERLYING
OTHER RESTRICTED STOCK
ANNUAL STOCK OPTIONS ALL OTHER
NAME AND PRINCIPAL POSITION SALARY COMPENSATION AWARDS (NUMBER OF COMPENSATION
AT 12/31/96 YEAR ($) BONUS ($) ($)(A) ($)(B) SHARES)(C) ($)(D)
- ------------------------------------ --------- --------- --------- ------------- --------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Sanford I. Weill.................... 1996 $1,025,000 $5,053,786 $ 250,921 $2,594,952 6,963,495 $ 2,404
Chairman of the Board and 1995 1,025,000 4,303,750 277,781 2,261,608 5,508,808 2,448
Chief Executive Officer 1994 1,025,000 2,653,750 224,219 1,528,327 1,051,034 3,416
James Dimon......................... 1996 650,000 3,845,643 5,333 1,872,476 1,208,626 1,204
President and Chief Operating 1995 650,000 2,904,875 4,889 1,460,153 873,400 1,142
Officer 1994 629,167 2,145,208 12,224 750,894 168,062(E) 1,336
Robert I. Lipp(F)(G)................ 1996 600,000 2,685,022 5,333 1,353,301 711,454 1,900
Vice Chairman 1995 600,000 2,160,000 5,333 1,119,997 490,286 1,962
1994 589,167 1,600,208 -- 866,365 193,282 1,982
Steven D. Black..................... 1996 225,000 3,378,785 5,333 1,494,954 279,943 1,000
Vice Chairman and 1995 225,000 2,637,117 5,333 1,150,452 247,852 1,000
Chief Operating Officer 1994 225,000 1,353,750 -- 589,353 203,684 1,000
Smith Barney Inc.
Joseph J. Plumeri, II............... 1996 950,000 1,932,518 5,333 1,156,642 350,531 1,000
Vice Chairman 1995 950,000 1,701,250 5,333 1,064,983 97,054 74,757
1994 655,833 1,304,542 5,333 764,600 200,000 293,350
</TABLE>
- ------------------------
(A) Except as set forth in this column, none of the executive officers received
other annual compensation during 1996 required to be set forth in this
column. The aggregate amount set forth for Mr. Weill for 1996 includes
$50,971 for use of Company transportation.
(B) Restricted stock awards are made under the Company's CAP Plan, other than
those made to Mr. Lipp for 1996, which were made under the TAP Capital
Accumulation Plan ("TAP CAP"). The CAP Plan provides for payment, mandatory
as to senior executives and certain others within the Company and certain of
its subsidiaries, of a portion of compensation in the form of awards of
restricted stock discounted (currently 25%) from market value in order to
reflect the impact of the restrictions on the value of the restricted stock
as well as the possibility of forfeiture of restricted stock. Under the
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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:
<TABLE>
<CAPTION>
ANNUAL COMPENSATION % IN RESTRICTED STOCK
-----------------------
<S> <C>
Up to $200,000.......................................................... 10%
$200,001 to $400,000.................................................... 15%
$400,001 to $600,000.................................................... 20%
Amounts over $600,000................................................... 25%
</TABLE>
Annual compensation generally consists of salary and incentive awards. 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 three years from the date of award (or (i) for such other period as may
be determined to be applicable to various classes of participants in the
sole discretion of the Nominations, Compensation and Corporate Governance
Committee or (ii) for additional one year periods if the participant elected
to defer vesting and thereby extend the restricted period). Upon expiration
of the applicable restricted period, and assuming the recipient's continued
employment with the Company, the shares of restricted stock become fully
vested and freely transferable, subject to the Stock Ownership Commitment.
From the date of award, 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, 1996, and including the awards made in January
1997 in respect of 1996, the total holdings of restricted stock under the
CAP Plan 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:
213,265 shares ($9,676,899.38); Mr. Dimon: 128,111 shares ($5,813,036.63);
Mr. Lipp: 86,166 shares ($3,909,782.25); Mr. Black: 158,284 shares
($7,182,136.50) and Mr. Plumeri: 101,794 shares ($4,618,908.75). The
year-end market price was $45.375 per share.
(C) All options granted to Mr. Weill since the Company's initial public offering
were reload options. The grant of reload options did not change Mr. Weill's
net equity position.
(D) Includes the Company matching grant for 1996 pursuant to the Company's
Savings Plan (in the form of Common Stock having a market value of $1,000 at
December 31, 1996) for Messrs. Weill, Dimon, Lipp, Black and Plumeri and
supplemental life insurance paid by the Company.
(E) Includes 64,594 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. Lipp is a Covered Employee under the Compensation Plan. The bonus
compensation Mr. Lipp received pursuant to the Compensation Plan is
inclusive of bonus compensation paid to him for services rendered to each of
the Company and TAP; however, the portion of his bonus payable in restricted
stock was awarded in shares of Class A Common Stock, $.01 par value per
share, of TAP ("TAP Common Stock"), under TAP CAP rather than in shares of
Common Stock under the CAP Plan. The terms and provisions of TAP CAP are
substantially identical to those of the CAP Plan. As of December 31, 1996,
and including the awards made in January 1997 in respect of 1996, the total
holdings of TAP Common Stock under TAP CAP and the market value at such date
of such shares for Mr. Lipp were 36,016 shares ($1,274,066). The year-end
market price of TAP Common Stock was $35.375 per share.
(G) It is estimated that approximately 80% of such amounts payable to Mr. Lipp
reflect compensation for services provided to TAP and approximately 20% of
such amounts reflect compensation for services rendered to the Company and
its affiliates (other than TAP and its subsidiaries).
19
<PAGE>
STOCK OPTIONS GRANTED
The following table sets forth information with respect to stock options
granted during 1996 to each of the executives named in the Summary Compensation
Table. All options granted to Mr. Weill arose under the reload feature of the
1986 Option Plan or the 1996 Incentive Plan (which does not increase the net
equity position of the participant). The reload feature is described in footnote
(B) under "Option Grants in 1996" below. Of the options granted to the Covered
Employees in 1996, 85% were reload options automatically granted under the
provisions of the 1986 Option Plan or the 1996 Incentive Plan while only 15%
were new non-reload options. Mr. Weill's reload options arose upon the exercise
of 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 the predecessor'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 weekly 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 the date of grant on a Treasury bill with a term identical
to the subject option life, as reported by the Federal Reserve;
- the dividend yield (based upon the actual annual dividend rate during
1996) was assumed to be constant over the life of the option;
- exercise of the option was deemed to occur approximately nine months after
the date of grant with respect to options that vest six months after the
date of grant and approximately three years after the date of grant with
respect to options that vest at a rate of 20% per year, as appropriate,
based upon each individual's historical experience of the average period
between the grant date and exercise date for those options that have
vested; and
- the value arrived at through the use of the Black-Scholes model was
discounted by 25% to reflect the reduction in value (as measured by the
estimated cost of protection) of the options due to the agreement of
executives who are members of the Company's Planning Group to abide by the
Stock Ownership Commitment. For purposes of calculating the discount, a
five year holding period was assumed even though each of the individuals
may be a member of the Planning Group for more than five years.
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.
20
<PAGE>
OPTION GRANTS IN 1996
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS(B)
---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
NUMBER OF % OF
SECURITIES TOTAL OPTIONS GRANT DATE
UNDERLYING OPTIONS GRANTED TO ALL EXERCISE OR PRESENT
GRANTED EMPLOYEES BASE PRICE EXPIRATION VALUE
NAME (NUMBER OF SHARES) IN 1996 ($ PER SHARE) DATE ($)(A)
- -------------------------------- ------------------------ -------------------------- ------------- ----------- -----------
<CAPTION>
RELOAD NON-RELOAD RELOAD NON-RELOAD
----------- ----------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Sanford I. Weill................ 28,864.00 .14% $ 30.5625 2/18/03 $ 57,384
51,884.00 .26 34.5000 2/18/03 118,747
476,332.00 2.33 33.0000 4/30/03 1,027,965
707,416.00 3.46 33.0000 10/30/02 1,526,664
749,666.00 3.67 31.0000 10/30/02 1,575,150
928,920.00 4.54 32.4375 4/30/03 2,158,846
661,980.00 3.24 35.9063 10/30/02 1,741,794
719,588.00 3.52 36.6563 10/30/02 1,941,297
26,377.33 .13 36.8438 2/18/03 70,146
434,981.33 2.13 36.8438 4/30/03 1,253,035
646,004.00 3.16 39.8438 10/30/02 1,860,921
668,369.33 3.27 39.4688 10/30/02 1,910,131
47,444.00 .24 41.5313 2/18/03 142,191
815,669.00 3.99 42.7500 4/30/03 2,519,194
------------------------ ----- ----- -----------
Total........................... 6,963,494.99 34.08 0 17,903,465
James Dimon..................... 17,602.00 .09 30.5625 2/19/03 34,727
9,866.00 .05 32.9375 1/25/05 21,331
16,186.00 .08 32.9375 2/19/03 34,994
31,492.00 .15 33.0000 10/30/02 67,449
37,402.00 .18 33.0000 4/30/03 80,108
145,990.00 .71 33.0000 8/28/03 312,681
16,524.00 .08 31.0000 2/19/03 34,456
61,104.00 .30 31.0000 10/30/02 127,414
36,986.67 .18 32.4375 10/30/02 86,096
72,938.67 .36 32.4375 4/30/03 169,785
59,298.67 .29 35.9063 10/30/02 155,446
71,690.67 .35 35.9063 8/28/03 187,930
64,461.33 .32 36.6563 10/30/02 172,059
16,084.00 .08 36.8438 2/19/03 42,456
9,001.33 .04 39.8438 1/25/05 25,737
14,766.67 .07 39.8438 2/19/03 42,222
28,758.67 .14 39.8438 10/30/02 82,229
34,154.67 .17 39.8438 4/30/03 97,658
133,316.00 .65 39.8438 8/28/03 381,190
14,732.00 .07 39.4688 2/19/03 41,790
54,477.33 .27 39.4688 10/30/02 154,533
133,333.33 2.35 40.6875 11/1/06 948,730
31,938.67 .16 44.9063 12/14/05 102,962
32,476.00 .16 42.7500 10/30/02 100,376
64,045.00 .31 42.7500 4/30/03 197,949
----------- ----- ----- -----------
Sub-Total..................... 1,075,292.35 133,333.33
----------- -----------
Total........................... 1,208,625.68 5.26 2.35 3,702,309
</TABLE>
21
<PAGE>
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS(B)
---------------------------------------------------------------------------------------------
NUMBER OF % OF
SECURITIES TOTAL OPTIONS GRANT DATE
UNDERLYING OPTIONS GRANTED TO ALL EXERCISE OR PRESENT
GRANTED EMPLOYEES BASE PRICE EXPIRATION VALUE
NAME (NUMBER OF SHARES) IN 1996 ($ PER SHARE) DATE ($)(A)
- -------------------------------- ------------------------ -------------------------- ------------- ----------- -----------
RELOAD NON-RELOAD RELOAD NON-RELOAD
----------- ----------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Robert I. Lipp.................. 19,066.00 .09 30.8125 2/22/03 41,016
26,054.00 .13 30.8125 5/2/03 56,049
52,706.00` .26 30.8125 11/2/02 113,384
14,470.67 .07 32.8215 11/26/04 34,640
34,888.00 .17 32.8125 2/22/03 83,516
104,716.00 .51 32.8125 11/2/02 250,673
49,174.67 .24 32.8125 5/2/03 117,716
51,826.67 .25 37.4063 11/2/02 143,565
13,720.00 .07 40.7813 11/26/04 41,603
16,593.33 .08 40.7813 2/22/03 50,316
22,677.33 .11 40.7813 5/2/03 68,764
45,876.00 .22 40.7813 11/2/02 139,109
66,666.67 1.18 40.6875 11/1/06 419,941
15,772.00 .08 44.9063 12/14/05 52,577
12,619.00 .06 43.2500 11/26/04 40,224
30,423.00 .14 43.2500 2/22/03 96,976
91,321.00 .45 43.2500 11/2/02 291,094
42,884.00 .21 43.2500 5/2/03 136,696
----------- ----------- ----- -----------
Sub-Total..................... 644,787.67 66,666.67
Total........................... 711,454.34 3.14 1.18 2,177,859
Steven D. Black................. 10,850.00 .06 31.1250 2/27/03 25,730
12,352.00 .06 31.1250 4/27/01 29,292
12,360.00 .06 31.1250 11/25/99 29,311
8,528.00 .04 31.1250 8/24/01 20,224
24,754.00 .12 31.1250 4/23/04 58,703
7,112.00 .03 32.9375 4/27/01 19,109
16,822.00 .08 32.9375 8/24/01 45,199
24,534.00 .12 32.9375 4/23/04 65,920
9,480.00 .05 33.6563 8/24/01 27,812
4,986.67 .02 35.2500 2/27/03 15,574
11,405.34 .06 35.2500 4/27/01 35,620
7,065.33 .03 35.2500 8/24/01 22,066
15,341.33 .08 35.2500 11/25/99 47,912
9,593.34 .04 39.8438 2/27/03 32,863
10,910.66 .06 39.8438 4/27/01 37,376
10,914.67 .06 39.8438 11/25/99 37,390
7,532.00 .04 39.8438 8/24/01 25,802
21,877.33 .11 39.8438 4/23/04 74,944
6,465.33 .03 39.7500 4/27/01 22,135
15,292.00 .08 39.7500 8/24/01 52,355
22,304.00 .11 39.7500 4/23/04 76,362
9,462.67 .05 44.9063 12/14/05 36,357
------------------------ ----- ------------- -----------
Total........................... 279,942.67 1.39 0 838,054
</TABLE>
22
<PAGE>
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS(B)
---------------------------------------------------------------------------------------------
NUMBER OF % OF
SECURITIES TOTAL OPTIONS GRANT DATE
UNDERLYING OPTIONS GRANTED TO ALL EXERCISE OR PRESENT
GRANTED EMPLOYEES BASE PRICE EXPIRATION VALUE
NAME (NUMBER OF SHARES) IN 1996 ($ PER SHARE) DATE ($)(A)
- -------------------------------- ------------------------ -------------------------- ------------- ----------- -----------
RELOAD NON-RELOAD RELOAD NON-RELOAD
----------- ----------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Joseph J. Plumeri, II........... 30,038.00 .15 30.5000 10/28/04 63,324
82,160.00 .40 30.5000 7/23/03 173,204
100,525.33 .49 30.7500 7/23/03 243,072
40,000.00 .71 40.6875 11/1/06 231,913
30,860.00 .15 46.8750 10/28/04 111,919
66,948.00 .33 46.8750 7/23/03 242,798
----- ----- -----------
Sub-Total..................... 310,531.33 40,000.00
----------- -----------
Total........................... 350,531.33 1.52 .71 1,066,230
</TABLE>
- ------------------------
(A) Except as indicated in the table above, all options granted in 1996 were
reload options. Rather than enhance his or her holdings, reload options are
intended to enable an employee who exercises an option by tendering
previously owned shares to remain in the same economic position (the "Equity
Position") with respect to potential appreciation in the Company's Common
Stock as if he or she had continued to hold the original option unexercised.
As such, reload options meet the Company's objective of fostering continued
stock ownership in the Company by its employees, but the receipt thereof by
any such employee does not result in a net increase in his or her Equity
Position.
The table below sets forth the Equity Position of each of the above named
executives with respect to options exercised and reload options granted in 1996.
The Equity Position of each of such executives has remained constant.
NET CHANGES IN EQUITY POSITION
RESULTING FROM EXERCISES OF RELOAD OPTIONS(1)
<TABLE>
<CAPTION>
ENDING NET EQUITY POSITION
-----------------------------------------------------------
<S> <C> <C> <C> <C>
NET
CHANGE
NEW IN EQUITY
NET RELOAD POSITION FROM
OPTIONS SHARES OPTIONS EXERCISES OF RELOAD
NAME EXERCISED RECEIVED GRANTED OPTIONS
- ------------------------------------------------------- ---------- ---------- ---------- -----------------------
Sanford I. Weill....................................... 8,151,716 1,188,221 6,963,495 0
James Dimon............................................ 1,254,223 178,931 1,075,292 0
Robert I. Lipp......................................... 769,243 124,455 644,788 0
Steven D. Black........................................ 333,940 53,997 279,943 0
Joseph J. Plumeri, II.................................. 393,900 83,369 310,531 0
</TABLE>
- ------------------------
(1) The "Options Exercised" column sets forth the number of options exercised by
such executive. The "Net Shares Received" sets forth the number of shares
such executive actually received upon exercise of the option after
subtracting the number of previously owned shares tendered to pay the
exercise price and/or withheld to pay taxes on the exercise. The "New Reload
Options" column sets forth the number of reload options granted to the
executive which is in an amount equal to the number of shares tendered
and/or withheld. The "Net Change in Equity Position" is the difference
between the number of options exercised less the sum of the net shares
received and the number of reload options granted.
(B) The option price of each option granted under the 1986 Option Plan or the
1996 Incentive Plan is not less than the fair market value of the Common
Stock subject to the option, determined in good faith by the Nominations,
Compensation and Corporate Governance 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.
23
<PAGE>
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 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 1986 Option Plan and the 1996
Incentive 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). During the term of the 1996 Incentive Plan, the aggregate
number of shares of Common Stock for which option awards may be granted to
any one employee under the 1996 Incentive Plan (including reload options)
will not exceed twenty four million shares.
Under the reload feature of the 1986 Option Plan and the 1996 Incentive 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. Under the 1986 Option Plan and the 1996 Option Plan, such
participant may choose to receive either (i) Incremental Shares subject to
restrictions on transferability for a period of one year, or such other
shorter or longer period as determined by the Committee and no reload option
or (ii) Incremental Shares subject to restrictions on transferability for a
period of two years, or such other shorter or longer period as determined by
the Committee and a reload option. "Incremental Shares" are those shares of
Common Stock actually issued to a participant upon the exercise of an
option. If a participant exercises an option by paying the exercise price
and the withholding taxes entirely in cash, the number of Incremental Shares
will equal the number of shares exercised. If, however, a participant
exercises an option by surrendering previously owned shares of Common Stock
or restricted Common Stock ("Surrendered Shares") to pay the exercise price,
or the participant authorizes the Company to sell shares of Common Stock to
cover the exercise price and/or requests that the Company withhold shares to
cover the withholding tax liability ("Withheld Shares"), the number of
Incremental Shares will equal the number of options exercised minus the sum
of the number of Surrendered Shares or the number of shares sold by the
Company on behalf of the participant, and the Withheld Shares. Participants
are permitted to transfer their Incremental Shares during the restricted
period only by will or the laws of descent and distribution. If the exercise
price of an option is paid by delivery of a number of shares of restricted
stock, then the participant will receive, in connection with the exercise,
an equal number of identically restricted shares of Common Stock. Further,
in order for a participant 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 will 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.
The Committee determines the exercise price for the reload option at the time
such reload option is granted, provided that the exercise price may not be
less than the fair market value of a share of Common Stock on the date of
exercise of the underlying option, and such reload 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,
unless the Committee determines otherwise.
Reload options are intended 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 participate in
future stock price appreciation.
24
<PAGE>
STOCK OPTIONS EXERCISED
The following table sets forth, in the aggregate, the number of shares
underlying options exercised during 1996 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 reflect
what the executive might receive, should he or she 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.
AGGREGATED OPTION EXERCISES IN 1996
AND
1996 YEAR-END OPTION VALUE
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED
OPTIONS AT VALUE OF UNEXERCISED
SHARES 1996 YEAR-END IN THE MONEY OPTIONS
ACQUIRED VALUE (NUMBER OF SHARES) AT 1996 YEAR-END($)
ON EXERCISE REALIZED -------------------------- ---------------------------
NAME (A) ($) (B) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---------------------------------------- ----------- ------------- ----------- ------------- ----------- --------------
<S> <C> <C> <C> <C> <C> <C>
Sanford I. Weill(C)..................... 8,151,716 $ 85,232,745 0 6,472,429 $ 0 $ 101,546,799
James Dimon............................. 1,254,223 12,885,031 0 1,406,868 0 21,354,092
Robert I. Lipp.......................... 769,243 8,775,309 0 756,836 0 11,346,657
Steven D. Black......................... 333,940 3,558,466 0 322,631 0 5,074,666
Joseph J. Plumeri, II................... 393,900 5,741,934 24,154 518,333 359,291 9,675,183
</TABLE>
- ------------------------
(A) This column reflects the number of shares underlying options exercised in
1996 by the named executive officers. The actual number of shares received
by each of these individuals from options exercised in 1996 (net of shares
surrendered to cover the exercise price and/or surrendered or withheld to
cover the exercise price and tax liabilities) was: Mr. Weill, 1,188,221
shares; Mr. Dimon, 178,931 shares; Mr. Lipp, 124,542 shares, Mr. Black,
53,997 shares, and Mr. Plumeri, 83,369 shares.
(B) "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. All of the
above executives have made the Stock Ownership Commitment pursuant to which
such executives generally commit not to dispose of their shares of Common
Stock while they continue to be executives of the Company. Other than shares
of Common Stock used in connection with employee compensation plans,
charitable contributions or certain limited estate planning transactions
with family members, at December 31, 1996, none of the above executives had
ever disposed of any Common Stock.
(C) All of the stock options exercised by Mr. Weill in 1996 were reload options
arising from Control Data Option exercises.
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, "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
25
<PAGE>
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.
TRAVELERS GROUP INC.
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN
[PERFORMANCE GRAPH]
<TABLE>
<CAPTION>
1991 1992 1993 1994 1995 1996
--------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Travelers Group Inc. 100.0 124.91 203.55 172.35 340.66 500.22
S&P 100.0 107.61 118.43 120.00 165.03 202.90
Peer Index 100.0 123.04 135.22 130.53 197.65 269.30
</TABLE>
--------------------------------
ASSUMES $100 INVESTED AT THE CLOSING PRICE ON DECEMBER 31, 1991, 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.
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 shares of 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 of the Company
currently consists of an annual retainer
26
<PAGE>
of $100,000, payable in shares of Common Stock, receipt of which may be deferred
at the election of a Director. Directors who have not made such election receive
fees partly in shares of Common Stock and partly in cash equal to the current
tax liability incurred by receipt of such 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 1996. Directors who are
employees of the Company or its subsidiaries do not receive any compensation for
their services as directors.
RETIREMENT PLANS
Executive officers and employees are eligible to participate in the
Travelers Group Pension Plan (the "Retirement Plan") 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, with respect to certain participants, 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 1996 (subject to
adjustment by the Service) 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 calculated annually
pursuant to a formula set forth in the Plan.
The statutory maximum retirement benefit that may be paid to any one
individual by a tax qualified defined benefit pension plan in 1996 is $120,000
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, 10 years; Mr. Dimon, 10 years; Mr. Lipp, 10 years; Mr. Plumeri, 24 years;
and Mr. Black, 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
Nominations, Compensation and
27
<PAGE>
Corporate Governance 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 1996 under any of the RBEPs for the account of any 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, 25 individuals were SERP participants, including
each of the individuals named in the Summary Compensation Table. 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,
$618,421; Mr. Dimon, $241,318; Mr. Lipp, $290,939; Mr. Plumeri, $83,472; and Mr.
Black, $74,665. Mr. Plumeri's annuity under the Retirement Plan includes his
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, 6% for 1992 through 1993, 5.5% for 1994,
7% for 1995 and 5.5% thereafter until the participant retires at the age of 65,
and that the current salary of the participant, the 1996 dollar ceiling on
qualifying compensation (which was set by legislation adopted in 1993 at
$150,000 annually), the 1996 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). In the event of termination of his
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. Plumeri is a party to an employment agreement with Smith Barney, which
replaced an agreement entered into at the time of the acquisition by Smith
Barney of certain assets and liabilities of Shearson Lehman Brothers in 1993.
Under the agreement, Mr. Plumeri was entitled, until July 30, 1996, to a
specified annual base salary and consideration for an annual discretionary bonus
under the Compensation Plan. The agreement currently provides for certain
deferred compensation payments, for reimbursement of the cost of certain life
insurance and for participation in employee benefit plans and receipt of
employee benefits available to senior executives of the Company. The agreement
also contains a prohibition on hiring Company employees and agents following
termination of employment.
28
<PAGE>
CERTAIN INDEBTEDNESS
Certain executive officers have from time to time, including periods during
1996, 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.
Mr. Plumeri, a Covered Person, was indebted to a subsidiary of the Company
during 1996 under a loan program assumed by a subsidiary of the Company from a
former employer of Mr. Plumeri. The loan program provided for loans to key
executives of the former employer to purchase shares of stock of such former
employer. The maximum amount of Mr. Plumeri's indebtedness during 1996 was
$368,108. The loan bore interest at the prime rate minus 2 percent and was
secured by 14,629 shares of Common Stock, which Mr. Plumeri received in exchange
for his shares of the former employer. The principal of the loan was paid on
December 31, 1996 and, in accordance with the terms of the program, conditioned
upon Mr. Plumeri's continued employment through such date, all interest thereon
was forgiven.
Mr. Peter Dawkins, a member of the Planning Group, is indebted to the
Company pursuant to a loan made to him by the Company in an original principal
amount of $500,000 which was the maximum amount of Mr. Dawkins' indebtedness to
the Company during 1996. Repayment of principal is required upon termination of
Mr. Dawkins' employment or with the proceeds of any sale of Common Stock by Mr.
Dawkins. The loan bears interest, payable quarterly, at 5% per annum.
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 1997. 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.
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
1997. 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 nonvotes 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 Morrow & Co. Inc., a proxy soliciting
firm, to assist in the solicitation of proxies, for an estimated fee of $12,500,
plus reimbursement of certain out-of-pocket expenses.
29
<PAGE>
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 November [26], 1997.
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.
30
<PAGE>
ANNEX A
PROPOSED AMENDMENT TO ARTICLE SEVENTH
OF THE RESTATED CERTIFICATE OF INCORPORATION
OF TRAVELERS GROUP INC.
------------------------
Article SEVENTH is hereby amended to read in its entirety as follows:
The business and affairs of the Corporation shall be managed by or
under the direction of a Board of Directors, the exact number of
directors to be determined from time to time by resolution adopted
by affirmative vote of a majority of the entire Board of
Directors. At each annual meeting, each director shall be elected
for a one-year term. A director shall hold office until the annual
meeting held the year in which his or her term expires and until
his or her successor shall be elected and shall qualify, subject,
however, to prior death, resignation, retirement, disqualification
or removal from office. Any vacancy on the Board of Directors that
results from an increase in the number of directors may be filled
by a majority of the Board of Directors then in office, provided
that a quorum is present, and any other vacancy occurring in the
Board of Directors may be filled by a majority of the directors
then in office, even if less than a quorum, or a sole remaining
director. Any director elected to fill a vacancy not resulting
from an increase in the number of directors shall have the same
remaining term as that of his or her predecessor. Notwithstanding
the foregoing, whenever the holders of any one or more classes or
series of Preferred Stock issued by the Corporation shall have the
right, voting separately by class or series, to elect directors at
an annual or special meeting of stockholders, the election, term
of office, filling of vacancies and other features of such
directorships shall be governed by the terms of this Restated
Certificate of Incorporation applicable thereto.
------------------------
<PAGE>
TRAVELERS GROUP INC.
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
OF TRAVELERS GROUP INC. FOR THE ANNUAL MEETING
APRIL 23, 1997
The undersigned hereby constitutes and appoints Sanford I. Weill,
P James Dimon and Charles O. Prince, III, and each of them his or her true and
R lawful agents and proxies with full power of substitution in each, to
O represent the undersigned at the Annual Meeting of Stockholders of
X Travelers Group Inc. (the "Company") to be held at Carnegie Hall, 881
Y Seventh Avenue, New York, New York on Wednesday, April 23, 1997 at 9:00
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 matters set forth on the reverse side.
If shares of Travelers Group 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 Travelers Group 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 set forth on the reverse
side.
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.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
HEREIN. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR ALL OF THE
PROPOSALS 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.
SEE REVERSE
CONTINUED AND TO BE SIGNED ON REVERSE SIDE SIDE
<PAGE>
| X |Please mark
votes as in
this example.
<TABLE>
<S> <C>
- -----------------------------------------------------------------------------------------------------------------------
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR EACH OF THE PROPOSALS
- -----------------------------------------------------------------------------------------------------------------------
FOR AGAINST ABSTAIN
1. Proposal to amend the Restated | | | | | | 3. Proposal to ratify the selection | | | | | |
Certificate of Incorporation | | | | | | of KPMG Peat Marwick LLP as the | | | | | |
to declassify the Board of | | | | | | Company's independent auditors | | | | | |
Directors ---- ---- ---- for 1997. ---- ---- ----
2. Proposal to elect twenty-one directors to a
one-year term.
Nominees: Judith Arron, C. Michael Armstrong,
Kenneth J. Bialkin, Edward H. Budd, Joseph A. Califano, Jr.,
Douglas D. Danforth, Robert F. Daniell, James Dimon,
Leslie B. Disharoon, The Hon. Gerald R. Ford, Thomas Jones,
Ann Dibble Jordon, Robert I. Lipp, Michael Masin,
Dudley C. Mecum, Andrall E. Pearson, Frank J. Tasco,
Linda J. Wachner, Sanford I. Weill, Joseph R. Wright, Jr.
and Arthur Zankel.
| | FOR | | WITHHELD
| | ALL | | FROM ALL
| |NOMINEES | | NOMINEES
----- -----
| | MARK HERE | |
| | FOR ADDRESS | |
| | CHANGE AND | |
- ------__________________________________ NOTE BELOW -----
For, except authority to vote WITHHELD
from the above nominee(s) [write names(s)
on line]
- -----------------------------------------------------------------------------------------------------------------------
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 Annual Meeting and any adjournments or
postponements thereof.
IF NO BOXES ARE MARKED, THIS PROXY WILL BE VOTED IN THE MANNER DESCRIBED
ON THE REVERSE SIDE.
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: ______________ Signature:__________________________ Date: ______________
</TABLE>
