PROXY STATEMENT PURSUANT TO SECTION 14(a)
OF THE SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss. 240.14a-11(c) of ss. 240.14a-12
RELIASTAR FINANCIAL CORP.
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(Name of Registrant as Specified In Its Charter)
RELIASTAR FINANCIAL CORP.
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(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
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14a-6(j)(2).
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14a-6)(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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pursuant to Exchange Act Rule 0-11:
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Set forth the amount on which the filing fee is calculated and state
how it was determined.
[ ] 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:
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RELIASTAR FINANCIAL CORP.
[GRAPHIC OMITTED]
NOTICE OF ANNUAL MEETING
AND
PROXY STATEMENT
[GRAPHIC OMITTED]
ANNUAL MEETING OF SHAREHOLDERS
MAY 8, 1997
To Our Shareholders:
On behalf of your board of directors, I cordially invite you to attend the
Annual Meeting of Shareholders of ReliaStar Financial Corp. The meeting will be
held at 10:00 a.m. on May 8, 1997, at the general offices of the Corporation at
20 Washington Avenue South, Minneapolis, Minnesota. The accompanying Notice of
Annual Meeting and Proxy Statement describe the proposals to be considered at
the meeting. I encourage you to read this material, sign and date your proxy,
and return it in the enclosed envelope whether or not you plan to attend the
meeting in person.
Sincerely,
/s/ John G. Turner
------------------------------------
John G. Turner
Chairman and Chief Executive Officer
RELIASTAR FINANCIAL CORP.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 8, 1997
The Annual Meeting of ReliaStar Financial Corp., a Delaware corporation,
will be held on Thursday, May 8, 1997, at 10:00 o'clock a.m., at the general
offices of the Corporation, 20 Washington Avenue South, Minneapolis, Minnesota
55401, for the following purposes:
1. To elect five directors for terms expiring in 2000.
2. To consider and vote upon a proposal to ratify and approve the
ReliaStar 1993 Stock Incentive Plan, as amended.
3. To consider and vote upon a proposal to amend the Corporation's
Certificate of Incorporation to change the Corporation's Capital Stock
from no par value to $.01 par value per share.
4. To consider and vote upon a proposal to ratify the appointment of
Deloitte & Touche LLP as the Corporation's independent public
accountants for 1997.
5. To transact such other business as may properly come before the
meeting and any adjournments thereof.
Holders of record of Common Stock at the close of business on March 10,
1997 are entitled to notice of and to vote at the meeting and any adjournment
thereof.
All shareholders are cordially invited to attend the Annual Meeting.
BY ORDER OF THE BOARD OF DIRECTORS
/s/Richard R. Crowl
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Richard R. Crowl
Secretary
March 25, 1997
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YOUR VOTE IS IMPORTANT
YOU ARE URGED TO SIGN, DATE AND PROMPTLY RETURN YOUR PROXY IN THE ENCLOSED
ENVELOPE WHETHER OR NOT YOU PLAN TO BE PRESENT AT THE ANNUAL MEETING.
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PROXY STATEMENT
The enclosed proxy is solicited by the Board of Directors of ReliaStar
Financial Corp. ("Corporation") for the Annual Meeting of the Corporation to be
held on Thursday, May 8, 1997, at 10:00 o'clock a.m., at the general offices of
the Corporation, 20 Washington Avenue South, Minneapolis, Minnesota 55401, and
for any and all adjournments thereof.
This Proxy Statement will be mailed on or about March 25, 1997. Shares
represented by a proxy in the form solicited will be voted in accordance with
the shareholder's instructions contained therein. In the absence of contrary
instructions, shares represented by these proxies will be voted FOR the
proposals set forth herein and as determined by the Board on any other matter
properly brought before the meeting. A proxy may be revoked at any time before
being voted by filing written notice with the Corporation, by executing and
filing a new proxy with the Corporation, or by voting in person at the meeting.
Notice to the Corporation should be addressed to the Secretary of the
Corporation, 20 Washington Avenue South, Minneapolis, Minnesota 55401.
OUTSTANDING SHARES AND VOTING RIGHTS
Shareholders of record at the close of business on March 10, 1997 are
entitled to receive notice of and to vote at the Annual Meeting and any and all
adjournments. As of March 10, 1997 there were outstanding 40,183,601 shares of
Common Stock of the Corporation. Each share of Common Stock is entitled to one
vote. Participants in the ReliaStar Success Sharing Plan and ESOP ("Plan") are
entitled to instruct the trustee on how to vote all shares of the Corporation's
Common Stock allocated to their accounts under the plan and will receive a
separate proxy for voting such shares. The plan provides that shares for which
the trustee receives no voting instructions from participants, including
unallocated shares held in the ESOP, will be voted by the trustee in the same
proportion as shares for which instructions are received.
Votes cast by proxy or in person at the Annual Meeting will be tabulated by
the election inspectors appointed for the meeting and will determine whether a
quorum is present. The election inspectors will treat abstentions as shares that
are present and entitled to vote for purposes of determining the presence of a
quorum but as unvoted for purposes of determining the approval of any matter
submitted to the shareholders for a vote. If a broker indicates on the proxy
that it does not have discretionary authority to vote certain shares on a
particular matter, those shares will not be considered as present and entitled
to vote with respect to that matter.
BENEFICIAL OWNERS OF VOTING SECURITIES
The Corporation is subject to the insurance holding company laws of the
states in which its insurance subsidiaries are domiciled. Under those laws, no
person or group may acquire "control" of the Corporation without first obtaining
the approval of the insurance commissioner in each such state pursuant to
procedures prescribed by statute which may require notice to interested parties
and a public hearing. "Control" for this purpose is the ownership of 10% or more
of the Corporation's voting securities unless the acquiring party files a
disclaimer of affiliation which shows that control does not exist in fact. The
Corporation's insurance subsidiaries are domiciled in Minnesota, New York,
Virginia, and Washington.
Beneficial owners of more than five percent of the Corporation's
outstanding voting securities, based on information supplied to the Corporation,
are as follows:
<TABLE>
<CAPTION>
TITLE OF NAME OF AMOUNT AND NATURE OF PERCENT OF
CLASS BENEFICIAL OWNER BENEFICIAL OWNERSHIP CLASS(1)
- ----- ---------------- -------------------- --------
<S> <C> <C> <C>
Common Stock FMR Corp. 3,740,449 (2) 9.31%
82 Devonshire Street, Boston MA 02109
Wilmington Trust Company 2,652,257 (3) 6.60%
1100 North Market Street, Wilmington, DE 19890
</TABLE>
(1) Based upon shares outstanding as of the record date.
(2) As of January 31, 1997. FMR Corp. has sole voting power as to 202,160,
shared voting power as to 0, sole dispositive power as to 3,740,449 and
shared dispositive power as to 0 of the reported shares. Various persons
have the right to receive or the power to direct the receipt of dividends
from, or the proceeds from the sale of, the reported shares. No one
person's interest in the reported shares exceeds 5% of the class. Fidelity
Management & Research Company ("Fidelity"), a wholly-owned subsidiary of
FMR Corp., is the beneficial owner of 3,388,789 shares as a result of
acting as investment adviser to several investment companies ("Funds")
registered under Section 8 of the Investment Company Act of 1940. Edward C.
Johnson 3d, FMR Corp., through its control of Fidelity, and the Funds each
has sole power to dispose of the 3,388,789 shares owned by the Funds.
Neither FMR Corp. nor Edward C. Johnson 3d, Chairman of FMR Corp., has the
sole power to vote or direct the voting of the shares owned directly by the
Fidelity Funds, which power resides with the Funds' Boards of Trustees.
Fidelity Management Trust Company, a wholly-owned subsidiary of FMR Corp.
is the beneficial owner of 351,660 of the reported shares as a result of
serving as an investment manager of one or more institutional accounts.
Edward C. Johnson 3d and FMR Corp., through its control of Fidelity
Management Trust Company, each has sole dispositive power over 351,660
shares and sole power to vote or to direct the voting of 202,160 shares,
and no power to vote or to direct the voting of 149,500 shares owned by the
institutional account(s). Edward C. Johnson 3d and Abigail P. Johnson, who
own 12% and 24.5% respectively of the outstanding voting Common Stock of
FMR Corp., together with trusts for the benefit of family members, form a
controlling group with respect to FMR Corp.
(3) As of December 31, 1996. These shares are held in trust either for the
benefit of participants in the ESOP portion of the Corporation's Success
Sharing Plan and ESOP or for personal trust accounts.
As of March 10, 1997, there were 2,408,378 shares in the ESOP portion of
the Corporation's Success Sharing Plan and ESOP. Of these shares, 468,490
shares were allocated to ESOP participants and 1,939,888 were unallocated.
See the discussion on page 2 concerning voting rights under the ESOP. In
addition, as of March 10, 1997, the Trustee, Wilmington Trust Company, was
the record owner of 505,038 shares held in the Success Sharing portion of
the Corporation's Success Sharing Plan and ESOP. These shares are not
listed as beneficially owned by the Trustee on the foregoing beneficial
ownership chart, as the shares are allocated to and voted by Success
Sharing Plan participants, and the Trustee claims no voting or investment
power over these shares.
As of December 31, 1996, the Trustee acted as trustee for personal trust
accounts holding 90,192 shares. The Trustee had sole dispositive and voting
power as to 900 of these shares and shared dispositive and voting power as
to 88,192 of these shares.
Ownership of equity securities of the Corporation by its directors and
executive officers as of February 28, 1997 is shown below. No individual
director or executive officer has beneficial ownership of more than one percent
of the Corporation's equity securities. Directors and executive officers as a
group beneficially own about 2.9% of the Corporation's Common Stock.
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF BENEFICIAL
OWNERSHIP OF COMMON STOCK
----------------------------------------------------------
NAME OWNED OPTIONS (2) TOTAL
- ---- ----- ------------ -----
<S> <C> <C> <C>
Carolyn H. Baldwin 241 (1) 1,083 1,324
F. Caleb Blodgett 17,261 (3) 1,083 18,344
David C. Cox 8,071 (1) 1,083 9,154
Jaye F. Dyer 25,551 (3) 749 26,300
Luella Gross Goldberg 31,040 (1)(3) 1,083 32,123
William A. Hodder 20,606 (1) 1,083 21,689
James J. Howard 3,694 (1) 1,083 4,777
Randy C. James 2,177 (1) 1,083 3,260
Richard L. Knowlton 13,557 (1) 1,083 14,640
David A. Koch 4,765 (1) 1,083 5,848
Richard M. Kovacevich 4,861 1,083 5,944
Glen D. Nelson 24,494 (1)(3) 1,083 25,577
James J. Renier 7,215 (1) 1,083 8,298
John G. Turner 100,288 (3)(4) 161,624 261,912
John H. Flittie 73,921 (3)(4) 100,229 174,150
Steven W. Wishart 46,660 (3)(4) 114,736 161,396
Robert C. Salipante 26,746 (4) 49,197 75,943
Michael J. Dubes 41,003 (3)(4) 67,769 108,772
Directors and Executive
Officers as a group
(22 PERSONS) 551,455 (1)(3)(4) 616,601 1,168,056
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</TABLE>
(1) Includes Common Stock that each of the following individual directors has a
right to receive upon termination as a director and which is beneficially
owned by each such director through a rabbi trust established by the
issuer: Ms. Baldwin, 65 shares; Mr. Cox, 317 shares; Mrs. Goldberg, 15,000
shares; Mr. Hodder, 7,090 shares; Mr. Howard, 2,017 shares; Mr. James,
1,077 shares; Mr. Knowlton, 532 shares; Mr. Koch, 336 shares; Dr. Nelson,
1,238 shares; Dr. Renier, 336 shares. See the discussion on page 19
regarding the voting rights of these directors in the Common Stock held by
the rabbi trust.
(2) Includes options exercisable within 60 days of February 28, 1997.
(3) Includes shares of Common Stock held by family members as follows: Mr.
Blodgett, 2,000 shares; Mr. Dyer, 19,352 shares; Mrs. Goldberg, 442 shares;
Dr. Nelson, 4,327 shares; Mr. Turner, 10,228 shares; Mr. Flittie, 12,252
shares; Mr. Wishart, 14,450 shares; Mr. Dubes, 8,989 shares. Mr. Blodgett,
Dr. Nelson and Mr. Turner each disclaim beneficial ownership of these
shares held by family members.
(4) Includes shares of Common Stock held by the Trustee of the Corporation's
Success Sharing Plan and ESOP on behalf of the named individuals as
follows: Mr. Turner, 9,561 shares; Mr. Flittie, 2,462 shares; Mr. Wishart,
5,354 shares; Mr. Salipante, 762 shares; Mr. Dubes, 4,071 shares; directors
and executive officers as a group, 31,843 shares.
EXPENSES AND METHODS OF SOLICITATION
The Corporation will bear the expenses of the solicitation of proxies which
it will conduct principally by mail. In addition, certain officers and employees
of the Corporation may solicit proxies personally, by telephone or by special
letter, at the Corporation's expense, and the Corporation may also reimburse
brokers, custodians, nominees and fiduciaries for expenses in sending proxies
and proxy material to their principals and beneficial owners.
The Corporation has retained Georgeson & Company Inc. to assist it in the
distribution of proxies for a total estimated fee of $7,000 plus expenses.
SHAREHOLDER PROPOSALS AND MISCELLANEOUS INFORMATION
Shareholder proposals to be presented at the 1998 Annual Meeting of the
Corporation must be received by the Corporation not later than November 25, 1997
if they are to be considered for inclusion in the Corporation's Proxy Statement
and identified in its form of proxy for the 1998 Annual Meeting. So far as the
Board of Directors and the management of the Corporation are aware, no matters
other than those described in the Notice of 1997 Annual Meeting and in this
Proxy Statement will be acted upon at the meeting. However, if other matters
properly come before the meeting, it is the intention of the persons named as
proxies in the enclosed proxy to vote in accordance with direction provided by
the Board of Directors on such other matters.
The annual report of the Corporation for 1996, including financial
statements which are incorporated herein by reference, is enclosed with this
Notice and Proxy Statement.
PROPOSAL 1
ELECTION OF DIRECTORS
The Corporation's Certificate of Incorporation provides that the Board of
Directors shall consist of not less than six nor more than eighteen persons. The
Board is divided into three classes, and directors of one class are elected each
year for a term of three years. Each class shall consist of not less than two
nor more than six directors. The Board has determined that the class of
directors to be elected in 1997 for a term of three years shall be set at five
and has nominated David C. Cox, Luella G. Goldberg, Randy C. James, David A.
Koch and James J. Renier for election to the Board for terms expiring in 2000.
Directors Jaye F. Dyer, whose term expires with the 1997 Annual Meeting, and F.
Caleb Blodgett, whose term would expire with the 1998 Annual Meeting, are
retiring in accordance with the Board's retirement policies. Director Daniel J.
Callahan, III resigned as director effective February 11, 1997. Each nominee is
currently a director of the Corporation. The affirmative vote of the holders of
a majority of the outstanding shares present in person or by proxy at the
meeting and eligible to vote will be required to approve the proposed election
of directors. The Board recommends that shareholders vote FOR the nominees
listed below. Proxies solicited by the Board will be so voted unless
shareholders specify otherwise on their proxies. Each nominee has indicated a
willingness to serve, but in case any nominee is not a candidate at the Annual
Meeting, it is intended that the proxies will vote in favor of the remaining
nominees and such other person as the proxies may determine. Periods of service
as directors and executive officers shown below include service in such
capacities prior to 1989 for ReliaStar Life Insurance Company ("ReliaStar
Life"). The Corporation became a successor to ReliaStar Life, formerly
Northwestern National Life Insurance Company ("Northwestern"), through a 1989
merger by which Northwestern became a wholly owned subsidiary of the
Corporation.
NOMINEES FOR ELECTION FOR TERMS EXPIRING IN 2000
DAVID C. COX, age 59, director since 1988
President and Chief Executive Officer, Cowles Media Company (communications and
publishing) since 1985; Director of Cowles Media Company, National Computer
Systems, Inc. and Tennant Company.
LUELLA GROSS GOLDBERG, age 60, director since 1976
Chair, Board of Trustees, University of Minnesota Foundation since 1996, Trustee
since 1976; Trustee Emeritus of the Board of Trustees of Wellesley College since
1996, Trustee from 1978 to 1996, Acting President during 1993, Chairman of the
Board of Trustees from 1985 to 1993; Director of TCF Financial Corporation, TCF
Bank Minnesota, Hormel Foods Corporation, Piper Funds Inc., Piper Global Funds
Inc., Piper Institutional Funds Inc. and a number of related closed-end
investment companies.
RANDY C. JAMES, age 49, director since 1994
Management Consultant since 1993; Group Executive Vice President, Bank of
America (banking and financial services) from 1992 to 1993; Chairman and Chief
Executive Officer, Bank of America, Oregon (banking and financial services) from
1991 to 1992.
DAVID A. KOCH, age 66, director since 1981
Chairman, Graco Inc. (manufacturer of fluid handling equipment) since 1996,
Chairman and Chief Executive Officer from 1985 through 1995; Director of Graco
Inc. and Federal Reserve Bank of Minneapolis.
JAMES J. RENIER, age 67, director since 1985
Retired Chairman and Chief Executive Officer, Honeywell Inc. (global controls
company) since 1994, Chairman of the Executive Committee from 1993 to 1994,
Chairman and Chief Executive Officer from 1988 to 1993; Director of Deluxe
Corporation, First Bank System, Inc. and KLM Royal Dutch Airlines.
DIRECTORS WHOSE CURRENT TERMS EXPIRE IN 1999
CAROLYN H. BALDWIN, age 48, director since 1993
Vice President, Chief of Internal Audits and Director, Corporate Auditing
Department of The Coca-Cola Company (manufacturer, distributor and marketer of
non-alcoholic beverages) since 1993, President of Coca-Cola Financial
Corporation from 1991 to 1993.
JOHN H. FLITTIE, age 60, director since 1993
President and Chief Operating Officer of the Corporation and ReliaStar Life
since 1993, Senior Executive Vice President and Chief Operating Officer from
1992 to 1993, Senior Executive Vice President from 1991 to 1992, Executive Vice
President and Chief Financial Officer from 1989 to 1991; President of ReliaStar
United Services Life Insurance Company and ReliaStar Bankers Security Life
Insurance Company since 1996; Director of Community First Bankshares, Inc. and
subsidiaries of the Corporation.
JAMES J. HOWARD, age 61, director since 1993
Chairman of the Board, President and Chief Executive Officer, Northern States
Power Company (electric and gas utility company) since 1994, Chairman and Chief
Executive Officer from 1988 to 1994; Director of Northern States Power Company,
Ecolab, Inc., Federal Reserve Bank of Minneapolis, Honeywell Inc. and Walgreen
Company.
RICHARD M. KOVACEVICH, age 53, director since 1988
Chairman and Chief Executive Officer, Norwest Corporation (bank holding company)
since 1997, Chairman, President and Chief Executive Officer from 1995 to 1997,
President and Chief Executive Officer from 1993 to 1995, President and Chief
Operating Officer from 1989 to 1993; Director of Norwest Corporation, Northern
States Power Company, Dayton Hudson Corporation and PETsMART, Inc.
GLEN D. NELSON, age 59, director since 1979
Vice Chairman, Medtronic, Inc. (manufacturer of implantable medical devices)
since 1988; Director of Medtronic, Inc., The St. Paul Companies, Inc. and
Carlson Holdings, Inc.
DIRECTORS WHOSE CURRENT TERMS EXPIRE IN 1998
WILLIAM A. HODDER, age 65, director since 1979
Retired Chairman and Chief Executive Officer, Donaldson Company, Inc.
(manufacturer of filters and noise abatement equipment) since 1996, Chairman and
Chief Executive Officer from 1994 to 1996, Chairman, President and Chief
Executive Officer from 1985 to 1994; Director of Cowles Media Company, Musicland
Stores Corporation, Norwest Corporation, Supervalu Inc. and Tennant Company.
RICHARD L. KNOWLTON, age 64, director since 1988
Chairman of the Board of The Hormel Foundation (charitable foundation that
controls 41.7% of Hormel Foods Corporation) since 1995; Chairman of the Board,
Hormel Foods Corporation from 1993 to 1995, Chairman and Chief Executive Officer
from 1992 to 1993, Chairman, President and Chief Executive Officer from 1981 to
1992; Director of First Bank System, Inc., Mayo Foundation and Supervalu Inc.
JOHN G. TURNER, age 57, director since 1983
Chairman and Chief Executive Officer of the Corporation and ReliaStar Life since
1993, Chairman, President and Chief Executive Officer in 1993, President and
Chief Executive Officer from 1991 to 1993, President and Chief Operating Officer
from 1986 to 1991; Director of subsidiaries of the Corporation.
COMMITTEES OF THE BOARD OF DIRECTORS
The Corporation's Board has established the following standing committees:
EXECUTIVE COMMITTEE. When the Board is not in session, the Executive
Committee has the powers of the Board. The Executive Committee held no meetings
in 1996. Current members are Directors Turner (Chair), Blodgett, Dyer, Flittie,
Goldberg, Knowlton, Kovacevich and Renier.
FINANCE COMMITTEE. The Finance Committee considers investment policy,
shareholder dividends and matters of corporate finance, including capitalization
and financing policies. Five Finance Committee meetings were held during 1996.
Current members are Directors Turner (Chair), Blodgett, Dyer, Flittie, Goldberg,
Knowlton, Kovacevich and Renier.
AUDIT COMMITTEE. The Audit Committee reviews annual financial statements of
the Corporation prior to release to the public, examines and reviews the
internal and external audits of the Corporation's accounts and advises in the
selection of the Corporation's auditor. The Audit Committee met three times
during 1996. Current members are Directors Koch (Chair), Baldwin, Cox, Howard,
James and Nelson.
BOARD AFFAIRS COMMITTEE. The Board Affairs Committee advises the Board
concerning selection of the Chief Executive Officer, recommends candidates for
election to the Board, advises the Board regarding its committee structure and
compensation, and approves guidelines for the Corporation's charitable
contributions programs. The Committee held three meetings during 1996. The
Committee will consider candidates for election to the Board recommended by
shareholders if any such recommendation is submitted in writing to the Secretary
of the Corporation no later than December 31 preceding the annual meeting,
together with information which will enable the Committee to evaluate the
qualifications of the recommended nominee. Current members are Directors
Goldberg (Chair), Baldwin, Blodgett, Dyer, Hodder, Koch and Nelson.
PERSONNEL AND COMPENSATION POLICY COMMITTEE. The Personnel and Compensation
Policy Committee reviews and approves, or, where appropriate, recommends to the
Board for approval, compensation and benefit plans for employees and retirees of
the Corporation and its subsidiaries, assists the Board in the evaluation of the
Chief Executive Officer's performance, makes recommendations concerning the
Chief Executive Officer's compensation, evaluates succession plans and provides
oversight concerning equal employment opportunity programs. The Committee met
three times during 1996. Current members are Directors Hodder (Chair), Blodgett,
Cox, Dyer, Howard, James, Kovacevich and Renier.
The Board held eight regular meetings during 1996. Each director attended
at least 75 percent of the combined total number of meetings of the Board and
committees of the Board on which each director served during 1996.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Under federal securities laws, the Corporation's directors, executive
officers and holders of more than 10% of a registered class of the Corporation's
equity securities are required to file reports of their ownership of the
Corporation's equity securities with the Securities and Exchange Commission and
the New York Stock Exchange. Specific due dates for these reports have been
established, and the Corporation is required to disclose in this proxy statement
any failures to file required reports or late filings during 1996. Based on the
written representations of the Corporation's insiders, all of these filing
requirements were satisfied, except that the following individuals each filed
one late report to report the redemption of the Corporation's Depository shares,
each representing one-quarter share of 10% Senior Cumulative Preferred Stock:
John H. Flittie, executive officer and director; Kenneth U. Kuk, executive
officer, and William A. Hodder, director.
EXECUTIVE COMPENSATION
PERSONNEL AND COMPENSATION POLICY COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Personnel and Compensation Policy Committee of the Board of Directors
("Committee") is responsible for developing the Corporation's executive
compensation policies and making recommendations to the Board with respect
thereto. In addition, the Committee makes annual recommendations to the Board
concerning the compensation to be paid to the Chief Executive Officer ("CEO")
and determines the compensation to be paid to the other named executive officers
of the Corporation as a group. The Committee also administers all aspects of the
Corporation's executive compensation program including its stock incentive
plans. The Committee is composed entirely of outside directors.
COMPENSATION PHILOSOPHY. The Committee's philosophy with regard to the
executive compensation programs of the Corporation is to (i) emphasize the
correlation between executive pay and the Corporation's performance relative to
plan and to peer companies; (ii) reward long-term performance; and (iii)
strengthen the link between management's and shareholders' interests by
encouraging management's ownership of the Corporation's stock.
The executive compensation program in effect for 1995 continued in 1996.
This pay strategy is to provide aggregate salary and incentive compensation
based on market compensation percentile targets linked to the Corporation's
performance. The objective of the program is to pay well below the market median
for threshold levels of performance, at or slightly above the median for par
performance, and significantly above the median for superior performance. With
the involvement of external consultants, market percentiles are determined for
the Corporation's peer group and other diversified insurance companies for each
component of pay (base salary, annual cash compensation, and total compensation)
based on survey data and proxy statement information. The "peer group" is a
group of publicly traded companies approved by the Committee which compete in
the Corporation's primary lines of business. In 1996, as has been the case since
1993, there were 25 companies in the peer group, including the Corporation and
all eight of the companies included in the S&P Life Insurance Index depicted in
the performance graph on page 14. The peer group is subject to occasional change
as the Corporation or its competitors change their focus, as members of the peer
group merge or are acquired, or as new competitors emerge. Commencing in 1997,
there will be 21 companies in the peer group, including the Corporation.
BASE SALARY. In July, 1996 the Committee approved an increase in the CEO's
base salary. The Committee based this recommendation on the Board's subjective
evaluation of Mr. Turner's performance relative to pre-established factors
relating to corporate performance, leadership, strategy, financial results,
talent management, board relations and communication/external relations. These
criteria were not assigned specific weights for purposes of this evaluation. In
reaching its decision to recommend an increase in the CEO's base salary, the
Committee considered the Board's evaluation of Mr. Turner's performance during
1995 and 1996 and his salary relative to the percentile target of the peer group
along with the recommendation of external consultants.
In February, 1996, the Committee considered and approved salary increases
for each of the other named executive officers based on the CEO's evaluation of
each executive's 1995 performance and consideration of each executive's salary
relative to the percentile targets established for each position. These
performance evaluations were conducted in accordance with a process used
throughout the Corporation. This process based the performance rating for each
individual on the accomplishment of specific objectives. These objectives varied
for each executive officer and related to factors such as sales, earnings,
investment quality and expense management.
ANNUAL BONUSES. The annual incentive bonuses paid for 1996 to the CEO and
other named executive officers of the Corporation were paid pursuant to the
Corporation's Annual Incentive Bonus Plan for Designated Executive Officers.
This Plan complies with the requirements of Section 162(m) of the Internal
Revenue Code and compensation paid pursuant to the Plan is fully tax-deductible
to the Corporation. Under the Plan, the Corporation must achieve an after-tax
operating income return on common equity ("ROE") for the Plan year of at least
10.7% in order for any annual incentive bonuses to be paid to the eight covered
executive officers. The Corporation surpassed this goal for 1996. If the ROE
goal is achieved, a maximum bonus pool is created which equals two percent of
the Corporation's income from continuing operations for the Plan year before
income taxes, realized investment gains and losses, extraordinary items and the
cumulative effect of accounting changes. The total bonus pool amount for 1996
payments was $5,763,000. The Plan provides that the maximum bonuses that can be
paid to the CEO and to the COO are 20% and 17%, respectively, of the bonus pool
amount for the Plan year, and that the maximum bonus to any of six other
executive officers covered under the Plan may not exceed 10.5% of the bonus pool
amount. For 1996, the maximum bonuses that could be paid to the CEO and COO were
$1,153,000 and $980,000, respectively, and the maximum bonus payable to each of
the other named executive officers was $605,115.
Although the Plan specifies the maximum annual bonuses which may be paid to
any covered executive for a Plan year, the Committee exercised discretion, as
permitted under the Plan and Section 162(m), to pay lesser annual incentive
bonuses for 1996 to the covered executive officers. The Committee determined
these actual bonuses based on the Enterprise Performance Factor, a factor based
on operating ROE, operating earnings per share, and capital gains/losses for
1996 compared to planned goals for these measures. In some cases, performance
compared to business unit goals and the attainment of individual performance
goals approved by the Committee are considered in the bonus computation. The
portion of the annual incentive attributable to the Enterprise Performance
Factor is 100 percent for the CEO, 80 percent for the COO, and 50 percent for
the other named executive officers. In addition, the Committee established a
threshold increase in per share operating income over the previous year below
which no bonus based on the Enterprise Performance Factor would be payable. The
award level opportunity for 1996, as a percentage of base annualized salary, for
achievement of the threshold, par and maximum goals, respectively, was 32.5%,
65%, and 97.5% for the CEO, 30%, 60%, and 90% for the COO, and 25%, 50%, and 75%
for the other named executive officers. The Corporation's 1996 performance
relative to the Enterprise Performance Factor was approximately one-third of the
way between the par and maximum goals. This resulted in awards on the Enterprise
Performance Factor approximately one-third of the way between the par and
maximum levels for the named executive officers.
LONG-TERM INCENTIVE COMPENSATION. The Corporation's executive long-term
incentive compensation program ("Program") has performance goals based on the
Corporation's total shareholder return ("TSR") relative to the same peer company
group used for compensation and financial performance comparison purposes. The
Committee believes that this Program links the long-term incentive reward system
to long-term corporate performance and the creation of shareholder value.
Awards are calculated based on the Corporation's quarterly average TSR for
each three-year performance cycle compared to the quarterly average TSR achieved
by the peer group. Threshold, par and maximum performance levels are defined as
percentile rankings relative to the peer group, with the par level representing
performance at the 60th percentile of the peer group. The Program has
overlapping three-year performance cycles such that one performance cycle ends
each year. The award level opportunity for each three-year performance cycle
under this Program, as a percentage of base annualized salary, is 16.25%, 65%
and 130% for achievement of threshold, par and maximum TSR goals, respectively,
for the CEO; 15%, 60% and 120%, respectively, for the COO; and 12.5%, 50% and
100%, respectively, for the other named executive officers. Performance relative
to the peer group for the three-year performance cycle ended December 31, 1996
produced awards three-fourths of the way between par and maximum, reflecting the
Corporation's rank of seventh out of the 25 companies in the peer group for the
three-year TSR. The Committee's policy is to require that the Corporation's
independent auditors perform certain agreed-upon procedures relative to the
calculation of performance-based compensation before awards are paid.
STOCK-BASED COMPENSATION. The Board of Directors and the Committee believe
that stock ownership by management is a major incentive in building shareholder
value and aligning the interests of employees and shareholders. To encourage
increased ownership of the Corporation's stock by management, the Committee in
1993 established stock ownership targets, expressed as a multiple of base
salary, for each member of the Corporation's senior management. These target
ownership levels are to be achieved over a seven-year period. To offer
opportunities to executives to accomplish these stock ownership objectives, the
Corporation's 1993 Stock Incentive Plan ("Stock Plan") authorizes the Committee
to make awards of stock options and restricted and unrestricted shares of Common
Stock to key employees. The Stock Plan also provides for grants of replacement
stock options and features a deposit share program which provides executives
with an opportunity to attain their stock ownership objectives.
In 1996 the Committee awarded options to purchase 146,227 shares of the
Corporation's Common Stock to the named executive officers. The exercise price
for each grant was the fair market value as of the date of grant. Of these
options, 73,017 were awarded in connection with the Committee's philosophy to
make annual stock option grants in amounts determined by reference to the
executives' base salaries. The multiples of salary are determined annually by
the Committee based on each executive's position and responsibility and based on
total compensation percentile targets. The option multiple may be adjusted based
on the executive's most recent performance and a subjective evaluation of the
executive's future contribution to the Corporation.
In July 1996, the Committee granted the CEO an option to purchase 39,229
shares. Based on its review of the CEO's compensation as described above, the
Committee determined to make this additional grant of stock options to the CEO
in order to bring the CEO's total compensation up to the targeted percentile.
The Committee also determined that, in the future, consideration for the annual
option grant to the CEO will occur in July in conjunction with the review of
performance and base salary rather than in February as has been the case in the
past. The other named executive officers will continue to be eligible for annual
option grants in February.
The Committee does not specifically consider the number of options already
held by the executive in determining the size of the annual stock option grants.
Generally, one-third of the stock options granted to each officer vests and
becomes exercisable on each of the first three anniversaries of the date of
grant. To encourage early exercise of stock options during their ten-year term,
the stock options awarded by the Committee in 1996 to the named executive
officers include a replacement stock option feature. When these options are
exercised, the executive will be awarded replacement stock options to purchase,
at the fair market value on the date of exercise of the underlying options, the
number of shares used by the executive to pay the purchase price (or which would
have been used if the shares had been tendered instead of cash) and the number
of shares withheld by the Corporation or remitted by the executive in payment
for withholding taxes. The replacement stock options have a term equal to the
remaining term of the underlying options. They vest and become exercisable six
months after they are granted. The annual and replacement stock option awards
granted to the named executive officers in 1996 by the Committee include both
incentive and nonqualified stock options.
The Stock Plan also authorizes the Committee to make restricted stock
awards to eligible participants pursuant to the terms of a deposit share
program. This program allows eligible participants who deposit unrestricted
shares of the Corporation's common stock with the Corporation to receive an
award of restricted stock. This program is designed to encourage eligible
executives to take payment of specified portions of their awards under the
Corporation's annual incentive compensation program in the form of shares, as
opposed to cash, and to agree to hold these shares for an extended period.
Eligible participants, the number of shares permitted to be deposited with the
Corporation, and the number of matching restricted shares to be awarded are
determined annually by the Committee in consideration of total compensation
percentile targets and the progress of the named executive officers as a group
in attaining their share ownership objectives. For 1996 incentive awards payable
in February, 1997, the Committee determined that the named executive officers
and about 60 other key employees would be eligible to elect to deposit shares
with fair market value of up to one-fourth of the executive's annual incentive
compensation award for 1996. To receive a restricted stock award, the named
executive had to elect, in advance of the bonus payment date, to receive payment
of a specified percentage of incentive awards for 1996 in unrestricted shares
deposited with the Corporation. The Committee determined to match each share
deposited with one-half of a restricted share and provided that fifty percent of
the restricted shares granted would vest three years and fifty percent would
vest five years after the date of deposit. The restricted shares may not be
sold, exchanged, transferred or otherwise disposed of until they are vested, but
the executives are entitled to vote and receive dividends on them until the
restricted period ends. If the shares deposited by the executives are withdrawn
prior to the vesting of the matching restricted shares, the executive forfeits a
proportional amount of the nonvested restricted shares. Except in the event of a
disability, retirement as defined in the plan, or death, the executive will
forfeit any nonvested restricted shares upon his/her termination of employment.
POLICY WITH REGARD TO TAX DEDUCTIBILITY OF EXECUTIVE COMPENSATION. The
Securities and Exchange Commission requires this Report of the Committee on
Executive Compensation to address the Corporation's policy with respect to
eligibility for deductibility under Section 162(m) of the Internal Revenue Code
of 1986, as amended ("Code"), of compensation paid to its executive officers.
The Corporation has adopted the Annual Incentive Bonus Plan for Designated
Executive Officers, as previously described in this report, which is designed to
preserve the Corporation's federal income tax deduction for annual incentive
bonuses paid to executive officers of the Corporation. In addition, the
Committee adopted amendments to the long-term incentive compensation program
which were approved by shareholders in 1996 that preserve the Corporation's
federal income tax deduction for awards made under the program to the named
executive officers. The Committee has adopted an amendment to the 1993 ReliaStar
Stock Incentive Plan, which if approved by shareholders will preserve the
Corporation's tax deduction for stock option exercise gains under Section
162(m). The Committee intends to take the steps it deems advisable to allow the
Corporation to deduct future compensation amounts paid to the named executive
officers to the extent it is possible to do so without compromising the ability
of the plans to motivate and reward excellent performance.
The Members of the Committee:
WILLIAM A. HODDER (CHAIR)
F. CALEB BLODGETT
DAVID C. COX
JAYE F. DYER
JAMES J. HOWARD
RANDY C. JAMES
RICHARD M. KOVACEVICH
JAMES J. RENIER
SUMMARY COMPENSATION TABLE
The following table sets forth the cash and noncash compensation for each
of the last three fiscal years awarded to or earned by the CEO of the
Corporation and the four other highest paid executive officers of the
Corporation:
<TABLE>
<CAPTION>
LONG TERM COMPENSATION(1)
-------------------------
AWARDS PAYOUTS
ANNUAL ------ -------
COMPENSATION
------------
RESTRICTED SECURITIES
OTHER ANNUAL STOCK UNDERLYING LTIP ALL OTHER
SALARY BONUS COMPENSATION AWARDS OPTIONS PAYOUTS COMPENSATION
NAME AND PRINCIPAL POSITION YEAR ($)(1) ($)(2) ($) ($)(3) (#)(4) ($)(5) ($)
- --------------------------- ---- ------ ------ ------------- ------ ------ ------ --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
John G. Turner, Chairman and
Chief Executive Officer 1996 623,654 506,923 0 60,009 65,000 739,375 93,492(6)
1995 586,269 499,216 0 119,635 32,058 764,400 81,452(7)
1994 543,185 370,723 0 202,027 30,510 713,700 53,917(8)
John H. Flittie, President
and Chief Operating 1996 451,923 309,860 0 36,544 38,704 483,000 53,732(6)
Officer 1995 425,100 306,239 0 263,656 21,040 505,680 53,802(7)
1994 407,546 305,848 0 138,836 40,739 494,160 40,006(8)
Steven W. Wishart, Senior Vice
President and Chief Investment 1996 296,846 203,852 0 0 11,571 261,625 34,693(6)
Officer 1995 288,173 181,075 0 0 17,615 285,180 36,058(7)
1994 279,019 191,052 0 87,545 33,393 280,500 26,810(8)
Robert C. Salipante, Senior Vice
President 1996 272,538 185,608 0 20,869 15,065 249,375 32,124(6)
1995 245,019 175,020 0 129,362 18,989 245,000 30,177(7)
1994 223,980 161,586 0 75,645 10,661 231,500 19,576(8)
Michael J. Dubes, Senior Vice
President 1996 288,269 142,431 0 17,252 15,887 258,125 59,985(6)
1995 N/A N/A N/A N/A N/A N/A N/A
1994 231,711 111,947 119,154(9) 61,039 18,007 250,500 41,786(8)
- ----------------
</TABLE>
(1) Includes base salary paid, amounts deferred under salary reduction
agreements and amounts applied to purchase certain fringe benefits under
the Corporation's cafeteria plan.
(2) Amounts shown for each year include the annual incentive bonuses paid in
cash and in Common Stock. Cash bonus amounts are converted to shares by
dividing the dollar amount by the fair market value of the stock on the
bonus determination date. Amounts shown for each year also include cash
awards, paid in the following year, pursuant to the Corporation's
broad-based Success Sharing Plan covering all eligible employees of the
Corporation.
(3) The total number of restricted shares held, and their value as of December
31, 1996, based on the closing price, by each of the named executives is as
follows: Mr. Turner, 22,901 shares ($1,322,533); Mr. Flittie, 19,635 shares
($1,133,921); Mr. Wishart, 10,183 shares ($588,068); Mr. Salipante, 11,687
shares ($674,924); Mr. Dubes, 11,074 ($639,524). Dividends are paid on
these restricted shares at the same rate as those paid on the Corporation's
Common Stock.
(4) The Corporation has not issued any free-standing stock appreciation rights.
(5) Payout amounts shown for each year are for performance cycles ending in
that year. Such amounts are determined and paid in cash in the first
quarter of the following year.
(6) Includes (a) combined contributions to the Corporation's tax-qualified
Success Sharing Plan and ESOP and a nonqualified supplemental plan for the
1996 plan year as follows: Mr. Turner, $50,469; Mr. Flittie, $36,573; Mr.
Wishart, $24,022; Mr. Salipante, $22,055; Mr. Dubes, $23,328; (b) 1996
premiums paid for term life insurance coverage and the actuarially
projected current dollar value of the benefit to the executive of the
remainder of premiums for split dollar life insurance coverage paid by the
Corporation on behalf of the named executives as follows: Mr. Turner,
$15,638; Mr. Flittie, $13,866; Mr. Wishart, $10,671, Mr. Salipante, $6,117;
Mr. Dubes, $9,415; (c) interest accrued during 1996 on long-term incentive
program payout amounts deferred at the executive's election as follows: Mr.
Turner, $27,385; Mr. Flittie, $3,293; Mr. Salipante, $3,952; Mr. Dubes,
$6,473; (d) lump-sum cash payment of $20,769 in accrued vacation pay as of
December 31, 1995 made to Mr. Dubes pursuant to a change in a subsidiary's
vacation carry-over policy.
(7) Includes (a) combined contributions to the Corporation's tax-qualified
Success Sharing Plan and ESOP and a nonqualified supplemental plan for the
1995 plan year as follows: Mr. Turner, $51,137; Mr. Flittie, $37,079; Mr.
Wishart, $25,136; Mr. Salipante, $21,372; (b) 1995 premiums paid for term
life insurance coverage and the actuarially projected current dollar value
of the benefit to the executive of the remainder of premiums for split
dollar life insurance coverage paid by the Corporation on behalf of the
named executives as follows: Mr. Turner, $16,434; Mr. Flittie, $13,562; Mr.
Wishart, $10,922; Mr. Salipante, $5,579; (c) interest accrued during 1995
on long-term incentive program payout amounts deferred at the executive's
election as follows: Mr. Turner, $13,881; Mr. Flittie, $3,161; Mr.
Salipante, $3,226. Mr. Dubes was not in an Executive Officer position with
the Corporation in 1995.
(8) Includes (a) combined contributions to the Corporation's tax-qualified
Success Sharing Plan and ESOP and a nonqualified supplemental plan for the
1994 plan year as follows: Mr. Turner, $35,198; Mr. Flittie, $26,409; Mr.
Wishart, $18,080; Mr. Salipante, $14,514; Mr. Dubes, $15,015; (b) 1994
premiums paid for term life insurance coverage and the actuarially
projected current dollar value of the benefit to the executive of the
remainder of premiums for split dollar life insurance coverage paid by the
Corporation on behalf of the named executives as follows: Mr. Turner,
$15,473; Mr. Flittie, $11,089; Mr. Wishart, $8,730; Mr. Salipante, $5,062;
Mr. Dubes, $5,833; (c) interest accrued during 1994 on long-term incentive
program payout amounts deferred at the executive's election as follows: Mr.
Turner, $3,246; Mr. Flittie, $2,508; Mr. Dubes, $2,002; (d) $18,658 paid to
Mr. Dubes in pay-out of accrued vacation.
(9) Includes $53,141 in reimbursement of moving expenses, club initiation and
dues of $61,735, other perquisites and personal benefits totaling $4,278.
<TABLE>
<CAPTION>
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN*
------------------------------------------------
THE FOLLOWING ARE DATA POINTS WHICH REPRESENT RELIASTAR'S FIVE YEAR CUMULTIVE
TOTAL RETURN COMARED TO THE S&P LIFE INS. INDEX AND S&P 500 INDEX.
[GRAPHIC OMITTED]
-----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
ReliaStar 100.00 170.05 219.49 204.49 321.31 428.14
S&P Life Ins. Index 100.00 134.18 135.93 112.74 161.88 197.80
S&P 500 Index 100.00 107.62 118.46 120.03 165.13 203.05
-----------------------------------------------------------------------------------------------------------
</TABLE>
*Assumes $100 invested on December 31, 1991 in ReliaStar Financial Corp. Common
Stock, the S&P 500 Index and the S&P Life Insurance Index. Total return assumes
reinvestment of dividends.
STOCK OPTIONS
The following tables summarize stock option grants and exercises during
1996 with respect to the CEO and the other executive officers named in the
Summary Compensation Table and the value of the options held by such persons at
the end of 1996.
<TABLE>
<CAPTION>
STOCK OPTION GRANTS IN 1996
NUMBER OF
SECURITIES PERCENTAGE OF
UNDERLYING TOTAL OPTIONS GRANT DATE
OPTIONS GRANTED EXERCISE OR EXPIRATION PRESENT
GRANTED IN 1996 BASE PRICE DATE VALUE
NAME (#)(1) (%) ($) ($)(2)
- ------------------ ---------------- --------------- ------------- --------------- --------
<S> <C> <C> <C> <C> <C>
John G. Turner 6,441 (3) .89 46.5625 02/06/06 100,995
19,330 (3) 2.66 46.5625 02/07/06 303,094
39,229 (3) 5.41 43.6875 07/10/06 571,959
John H. Flittie 16,161 (3) 2.23 46.5625 02/07/06 253,404
5,767 (4) .79 52.0625 02/10/03 84,890
6,209 (4) .86 52.0625 02/11/03 91,396
10,567 (4) 1.46 52.0625 02/10/04 165,691
Steven W. Wishart 6,441 (3) .89 46.5625 02/06/06 100,995
2,933 (3) .40 46.5625 02/07/06 45,989
2,197 (4) .30 45.3125 02/10/03 28,825
Robert C. Salipante 6,441 (3) .89 46.5625 02/06/06 100,995
4,833 (3) .67 46.5625 02/07/06 75,781
3,791 (4) .52 48.25 02/11/03 50,686
Michael J. Dubes 6,441 (3) .89 46.5625 02/06/06 100,995
3,996 (3) .55 46.5625 02/07/06 62,657
5,450 (4) .75 42.9375 02/10/03 66,926
- --------------
</TABLE>
(1) All options granted may be exercised with cash or already owned shares of
Common Stock valued at the time of exercise and include a right to have the
Corporation withhold shares upon exercise to satisfy the executive's tax
liability incurred as a result of the exercise.
(2) Present values have been estimated using a variation of the Black-Scholes
valuation method, assuming a dividend yield of 2.56%, a 36-month volatility
factor of .2374, a risk-free rate of return equal to the zero coupon bond
interest rate for bonds of the same term issued in the month of each option
grant, and exercise at the end of the option term.
(3) Options granted are exercisable with respect to one-third of the underlying
shares on each of the first three one-year anniversaries of the date of
grant. The options have a term of ten years, subject to earlier termination
in certain events related to termination of employment. The options have a
replacement (reload) feature which results in the grant of a new option
upon the executive's exercise of the option using previously owned shares
or cash equivalent. The replacement option's exercise price is the fair
market value of the Common Stock on the replacement option grant date, and
its term is equal to the remaining term of the option exercised.
(4) Replacement (reload) option awarded on exercise of option with payment made
with previously owned Common Stock or cash equivalent. The replacement
option has a term equal to the remaining term of the option exercised, has
an exercise price equal to the fair market value of Common Stock on the
replacement option grant date and may be exercised six months after the
date of grant.
<TABLE>
<CAPTION>
AGGREGATED STOCK OPTION EXERCISES IN 1996 AND YEAR-END STOCK OPTION VALUES
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
SHARES ACQUIRED VALUE OPTIONS AT END OF 1996 AT END OF 1996
ON EXERCISE REALIZED (EXERCISABLE/UNEXERCISABLE) (EXERCISABLE/UNEXERCISABLE)
NAME (#) ($) (#) ($)
- ---------------- ------------------- ------------- -------------------------- ---------------------------
<S> <C> <C> <C> <C>
John G. Turner 9,628 316,854 135,603/96,542 4,787,492/1,652,057
John H. Flittie 32,850 716,923 80,629/59,930 3,027,417/855,354
Steven W. Wishart 3,322 50,557 102,971/22,108 3,622,070/429,209
Robert C. Salipante 6,000 108,938 37,605/23,388 1,077,926/432,328
Michael J. Dubes 18,922 434,536 61,399/27,728 2,247,726/498,633
</TABLE>
LONG-TERM INCENTIVE PROGRAM AWARDS
The Corporation's long-term incentive program provides for payment of
awards at the conclusion of three-year performance cycles. Awards are based on
the Corporation's quarterly average total shareholder return ("TSR"), for each
three-year performance cycle, compared to the quarterly average TSR achieved by
a peer group of companies. The peer group is a group of publicly traded
companies approved by the Personnel and Compensation Policy Committee which
compete in the Corporation's primary lines of business. There are 25 companies
in the peer group, including the Corporation and all eight of the companies
included in the S&P Life Insurance Index depicted in the performance graph on
page 14. At the commencement of each performance cycle, threshold, par and
maximum performance level goals are defined as percentile rankings relative to
the peer group.
Awards are determined as a specified percentage of each executive's
annualized base salary in effect for the last year of the performance cycle for
the Corporation's attainment of the threshold, par or maximum TSR goals for the
cycle. Awards for the performance cycle which ended December 31, 1996, are
reported as long-term incentive plan payouts in the Summary Compensation Table
on page 12. The following table reflects estimates for awards that may become
payable to the CEO and other named executive officers for the performance cycles
which were in progress during 1996 but which did not end in 1996, if threshold,
par or maximum performance is achieved. The amounts shown for each performance
level are based on estimates of the executive's annualized base salary for the
final year of the performance cycle using an assumed annual salary increase of
five percent. Actual base salary amounts may vary from these estimates. Awards
under the program made to any participant for a performance cycle may not exceed
$2 million. The award for any performance cycle is not earned until the
conclusion of the cycle, and the Committee has the right to amend or discontinue
the program as to cycles in progress at any time.
<TABLE>
<CAPTION>
PERFORMANCE OR OTHER PERIOD ESTIMATED FUTURE PAY-OUTS UNDER NON-STOCK-PRICE-BASED PLANS
NAME UNTIL MATURATION OR PAY-OUT THRESHOLD ($) TARGET ($) MAXIMUM ($)
- ------------------ ------------------------------ --------------------------------------------------------
<S> <C> <C> <C> <C>
John G. Turner 1995-1997 110,906 443,625 887,250
1996-1998 116,452 465,806 931,612
John H. Flittie 1995-1997 72,450 289,800 579,600
1996-1998 76,073 304,290 608,580
Steven W. Wishart 1995-1997 39,244 156,975 313,950
1996-1998 41,206 164,824 329,648
Robert C. Salipante 1995-1997 37,406 149,625 299,250
1996-1998 39,277 157,106 314,213
Michael J. Dubes 1995-1997 38,719 154,875 309,750
1996-1998 40,655 162,619 325,238
</TABLE>
Commencing with the 1997-1999 performance cycle, there will be 21 companies in
the peer group, including the Corporation.
DEFINED BENEFIT RETIREMENT PLAN
QUALIFIED DEFINED BENEFIT RETIREMENT PLAN. The following table illustrates
the estimated monthly defined benefit retirement benefit payable under the
Corporation's defined benefit retirement plan covering the named executive
officers together with amounts that may be payable under supplemental retirement
agreements ("SRAs") the Corporation has adopted to replace any qualified defined
benefit plan benefits which are limited by operation of certain federal income
tax limitations. The Corporation's qualified defined benefit retirement plan
provides benefits at normal retirement age 65 for eligible employees who have
attained age 21. The plan's normal benefit is a five-year certain and life
monthly benefit generally equal to two percent of the last five years' average
annual regular salary for each of the first 25 years of credited service plus .6
percent of such salary for each of the next ten years of credited service with
an overall maximum of 35 years of service counted, minus two percent of the
primary Social Security benefit for each year of credited service not in excess
of 25. Final average salary includes regular cash compensation, including any
amounts deferred under salary reduction agreements and contributed to the
Corporation's 401(k) plan and amounts elected to be applied to purchase certain
fringe benefits pursuant to the Corporation's cafeteria plan through salary
reduction agreements, but does not include incentive compensation. The Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), imposes a maximum
limit on the annual retirement benefits payable under qualified retirement
plans. For 1996, that annual limit was $120,000. In addition, the Internal
Revenue Code limits the amount of annual compensation that may be considered
under qualified retirement plans. In 1996, that annual limit was $150,000. The
table shown below does not take into consideration either of these limitations.
The Corporation has adopted SRAs that are designed to replace any pension plan
benefits to which a participant would otherwise be entitled but for these
limitations. Executive officers of the Corporation, including the named
executive officers, are covered under these SRAs. Current compensation covered
by a combination of the defined benefit retirement plan and the SRA for each of
the named executive officers is as follows: Mr. Turner, $650,000; Mr. Flittie,
$460,000; Mr. Wishart, $299,000; Mr. Salipante, $285,000; and Mr. Dubes,
$295,000. Years of credited service for the named executive officers are as
follows: Mr. Turner, 29 years; Mr. Flittie, 11 years; Mr. Wishart, 26 years; Mr.
Salipante, 4 years; and Mr. Dubes, 29 years. Mr. Flittie has an unfunded
agreement which will provide him with a supplemental retirement benefit, payable
outside of the plan, based on 25 years of credited service at age 65, less the
amount of his actual retirement benefit payable under the plan. The table below
shows the estimated monthly retirement benefit from the plan for the salary and
length of service shown net of the Social Security offset. The Social Security
offset reflected in the table is the maximum primary Social Security benefit for
a fully insured retiree at December 31, 1996.
<TABLE>
<CAPTION>
ESTIMATED FIVE-YEAR CERTAIN AND LIFE MONTHLY ANNUITY AT AGE 65
YEARS OF CREDITED SERVICE
----------------------------------------------------------------
FINAL AVERAGE ANNUAL REGULAR SALARY($) 15 20 25 30 35
- -------------------------------------- -- -- -- -- --
<S> <C> <C> <C> <C> <C>
200,000.............................................. 4,602 6,136 7,670 8,170 8,670
250,000.............................................. 5,852 7,803 9,754 10,379 11,004
300,000.............................................. 7,102 9,470 11,837 12,587 13,337
350,000.............................................. 8,352 11,136 13,920 14,795 15,670
400,000.............................................. 9,602 12,803 16,004 17,004 18,004
450,000.............................................. 10,852 14,470 18,087 19,212 20,337
500,000.............................................. 12,102 16,136 20,170 21,420 22,670
550,000.............................................. 13,352 17,803 22,254 23,629 25,004
600,000.............................................. 14,602 19,470 24,337 25,837 27,337
650,000.............................................. 15,852 21,136 26,420 28,045 29,670
700,000.............................................. 17,102 22,803 28,504 30,254 32,004
750,000.............................................. 18,352 24,470 30,587 32,462 34,337
800,000.............................................. 19,602 26,136 32,670 34,670 36,670
</TABLE>
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
The Corporation has established a Supplemental Executive Retirement Plan
("SERP") for executive officers selected by the Personnel and Compensation
Policy Committee, including all of the officers named in the Summary
Compensation Table. Under the SERP, participants whose termination of employment
occurs after age 55 and 10 or more years of vesting service, or after age 65 and
5 or more years of vesting service are entitled to a monthly pension beginning
at or after age 65, determined as follows: If the participant has completed 10
or more years of credited service, the supplemental benefit is the amount by
which 55% of the participant's last five years average annual compensation
(salary plus annual bonus) exceeds the SERP offset amount. The SERP offset
amount is the sum of the following: (i) the amount payable under the
Corporation's qualified defined benefit retirement plan described above, (ii)
the participant's monthly primary Social Security benefit offset determined
under the retirement plan as described above, (iii) an amount which approximates
the monthly benefit payable to the participant which is attributable to employer
contributions under the Corporation's qualified and supplemental defined
contribution plans, (iv) the amount of any vested pension earned by the
participant under a prior employer's defined benefit plan or under a prior
employer's defined contribution plan if that plan was the prior employer's
primary retirement plan, and (v) the amount payable under any other supplemental
retirement plan or agreement covering the participant. If the participant has
less than ten years of credited service, the SERP amount is 10% of the SERP
amount determined as described above for each year of the participant's credited
service up to 10. The SERP is unfunded. The following table shows selected
estimated annual benefits payable under the SERP, calculated as a five years
certain and life monthly benefit, assuming retirement at age 65 in 1997, to
persons having at least ten years of service and the indicated average annual
compensation after reduction for the primary Social Security benefit offset but
before reductions for any of the other offsets listed above. For purposes of the
SERP, the years of service as of December 31, 1996 for the named executive
officers is as follows: Mr. Turner, 29 years; Mr. Flittie, 11 years; Mr.
Wishart, 26 years; Mr. Salipante, 4 years; and Mr. Dubes, 29 years. Current
compensation covered by the SERP for the named executive officers is as follows:
Mr. Turner, $1,113,754; Mr. Flittie, $749,592; Mr. Wishart, $492,690; Mr.
Salipante, $450,795; and Mr. Dubes, $422,924.
SALARY + ANNUAL INCENTIVE($) ESTIMATED ANNUAL BENEFIT ($)
- ---------------------------- ----------------------------
350,000 176,588
400,000 204,088
450,000 231,588
500,000 259,088
550,000 286,588
600,000 314,088
650,000 341,588
700,000 369,088
750,000 396,588
800,000 424,088
850,000 451,588
900,000 479,088
950,000 506,588
1,000,000 534,088
1,050,000 561,588
1,100,000 589,088
1,150,000 616,588
1,200,000 644,088
1,250,000 671,588
1,300,000 699,088
1,350,000 726,588
1,400,000 754,088
1,450,000 781,588
1,500,000 809,088
CHANGE IN CONTROL AND TERMINATION ARRANGEMENTS
The Corporation has management agreements with each of its executive
officers. If, following a change in control of the Corporation, an executive's
employment is involuntarily terminated as defined in the agreements, the
executive may, depending upon the timing and subject to certain limitations, be
entitled to receive lump-sum cash severance compensation equal to three times
the sum of (i) the executive's base annual salary in effect at the time of
termination of employment plus (ii) the average annual bonus payable to the
executive for the shorter of the most recent completed three years or the actual
period of the executive's employment with the Corporation or its subsidiaries.
The executive is also entitled to continuation of certain insurance benefits and
to receive a lump-sum cash payment of the present value of the additional
qualified and nonqualified supplemental defined benefit pension benefits which
the executive would have earned had employment continued to the earlier of three
years following termination of employment or to age 65. In addition, all stock
options granted to the executive vest and become exercisable upon a change of
control, and all restrictions on any restricted shares of Common Stock granted
to the executive lapse upon such change of control. The Corporation will also
reimburse an executive for legal expenses incurred to resolve disputes under the
agreements.
The Corporation has established grantor trusts under which the Corporation
may set aside funds to satisfy the obligations of the Corporation and its
subsidiaries under their incentive compensation plans, deferred compensation
programs and supplemental profit sharing plans. The Chief Executive Officer of
the Corporation, subject to approval of the Personnel and Compensation Policy
Committee, may cause the Corporation to set aside funds pursuant to the trust
instruments, except that in the event of a change of control of the Corporation,
the trusts provide that such funds shall automatically be irrevocably
contributed to the trusts.
Under the terms of the stock options granted to directors, officers and key
employees, if there is a change in control of the Corporation, as defined in the
Corporation's stock option plans, the portion of any outstanding options in
which the grantee is not vested shall immediately vest and become exercisable.
The Board of Directors has adopted a policy providing that the
Corporation's health, welfare and severance plans and policies shall not be
changed, except as legally required, for three years following a change in
control of the Corporation and has approved amendments to the Corporation's
qualified retirement plans which provide full vesting of accrued benefits for
participants whose employment terminates under certain circumstances within
three years following a change of control of the Corporation.
DIRECTORS' COMPENSATION
ANNUAL RETAINER AND MEETING FEES. Directors of the Corporation, except
directors who also serve as officers, are currently paid an annual retainer of
$22,500. The Board of Directors has voted to increase this retainer to $24,000
for the board year which commences on the date of the Corporation's 1997 Annual
Meeting The annual retainer for directors who also serve as Chair of a Committee
of the Board of Directors is currently $24,500 and will increase to $28,000
following the Corporation's 1997 Annual Meeting. Directors, except those who
also serve as officers, also receive a meeting fee of $1,000 for each Board or
Committee meeting attended.
Pursuant to amendments to the ReliaStar Stock Ownership Plan for
Nonemployee Directors ("Directors' Stock Plan") approved by shareholders at the
Corporation's 1996 Annual Meeting, directors are required to receive payment of
30% of their annual retainer in shares of the Corporation's Common Stock
("Shares"). Directors also may elect to receive Shares in payment of all or a
portion of the balance of their annual retainer and meeting fees. Directors may
elect to have any annual retainer or meeting fees otherwise payable in Shares
credited to a Deferred Share Account pursuant to the terms of the Directors'
Stock Plan. Directors may also elect to defer fees otherwise payable in cash
pursuant to the terms of the ReliaStar Deferred Compensation Plan for
Nonemployee Directors ("Directors' Deferred Compensation Plan").
DEFERRED SHARE ACCOUNT. Pursuant to the director's written election in
advance of any board year, any annual retainer or meeting fee amounts otherwise
payable to the director in Shares shall be credited to a Deferred Share Account
on the date payable with the number of Deferred Share Account units equal to the
number of such Shares. The Deferred Share Account is an unsecured bookkeeping
account in which the Corporation's liability is measured by and is payable in
Shares. On any date that cash dividends are payable on the Shares, additional
units shall be credited to the Deferred Share Account in a dollar amount equal
to the dividends which would be paid if the units credited to such account on
the dividend record date were Shares. The Corporation has designated, as a
funding vehicle for its liability under the Deferred Share Accounts, a rabbi
trust with an independent trustee. The trust is funded with Shares held by the
trustee in its name, on a commingled basis, and all assets of the trust are
subject to the claims of the general creditors of the Corporation. The Shares
held in the trust are voted by the trustee in its discretion, provided that each
director having units in the Deferred Share Account may instruct the trustee
with respect to the voting of a fraction of the Shares held by the trust on the
applicable record date, the numerator of which is the number of units credited
to the director's Deferred Share Account as of the record date and the
denominator of which is the total number of Share units credited to all Deferred
Share Accounts on that date.
DIRECTORS' DEFERRED COMPENSATION PLAN. Under the terms of the Directors'
Deferred Compensation Plan, directors may elect to defer all or a portion of the
annual retainer not required to be paid in stock and meeting fees which are
payable in cash in an unfunded, unsecured deferred cash account. In 1996, the
Board Affairs Committee amended the Directors' Deferred Compensation Plan to
permit directors a one time irrevocable election to convert all or a portion of
their existing deferred cash accounts credited for previous Board service under
the Directors' Deferred Compensation Plan to Deferred Share Account units at the
closing price of the Shares on the date of conversion. These Deferred Share
Accounts are the same in all material respects as described above. The
Corporation designated the rabbi trust described above as a funding vehicle for
Deferred Share Accounts under the Directors' Deferred Compensation Plan. The
Corporation transferred treasury shares to the rabbi trust equal to the number
of Deferred Share Account units resulting from the conversion.
DIRECTORS' STOCK OPTIONS. The Directors' Stock Plan also provides for
annual nondiscretionary grants of options to purchase 1,250 Shares to be made on
the date of each Annual Meeting to each nonemployee director whose term
continues past the Annual Meeting. Pursuant to the Directors' Stock Plan,
options to purchase 1,250 Shares at $43.875 per share were granted to each such
nonemployee Director on May 9, 1996. The exercise price of the options is the
fair market value, as defined in the Directors' Stock Plan, of the Shares as of
the date of grant, and each option is for a term of ten years. The options are
nonqualified stock options which are intended not to qualify as incentive stock
options under the provisions of Section 422 of the Code. Options may be
exercised by payment of cash or transfer of Shares already owned by the director
with a market value equal to the exercise price. The exercise price also may be
paid by delivering instructions to the Corporation to withhold from the Shares
that would otherwise be issued upon exercise that number of Shares having a fair
market value equal to the exercise price.
Options granted to the director vest and become exercisable in three equal
annual installments on each of the first three anniversaries of the date of
grant. A director whose service as a director terminates before the award is
vested will forfeit any nonvested options upon termination of service unless
such termination is a qualified termination. A qualified termination is
termination of service due to the director's death or disability or retirement
from the Board in accordance with the Board's policy on retirement of
nonemployee directors then in effect. In the event of a director's qualified
termination, any nonvested stock options granted to the director immediately
shall vest and become exercisable. Options granted under the Directors' Stock
Plan are exercisable only by the director or by his or her beneficiary in the
event of the director's death during the option term. In no event shall any
option granted be exercisable at any time after ten years plus one day after the
date the option is granted.
OTHER COMPENSATION. The Corporation also has a retirement plan for its
nonemployee directors. Under this plan, retiring directors who have served on
the Board as nonemployee directors for at least five years are eligible to
receive an annual benefit equal to the annual retainer in effect on the
director's last day of service on the Board. This benefit is payable in cash for
a period equal to the shorter of term of service as a nonemployee director or
fifteen years. In addition, Mr. James also received $13,000 in fees for his
service as Chairman of the Northern Life Advisory Board, an advisory board of a
subsidiary of the Corporation, and will receive an annual retainer of $6,000 for
his services in this capacity during 1997, plus $1,000 for each Northern Life
Advisory Board meeting attended during 1997.
PROPOSAL 2
PROPOSAL TO APPROVE THE RELIASTAR 1993 STOCK INCENTIVE PLAN
AS AMENDED
At the Annual Meeting of the Corporation, the shareholders will consider
and vote upon a proposal, recommended by the Board of Directors, to approve the
ReliaStar 1993 Stock Incentive Plan ("Plan"), as amended. On November 14, 1996,
the Personnel and Compensation Policy Committee ("Committee") adopted the Plan,
as amended, subject to shareholder approval. The Plan, which was approved by
shareholders in 1993, is designed to attract, retain and motivate management and
key employees and assist in aligning their interests with those of the
Corporation's shareholders by increasing and expanding stock ownership by
management and key employees. The Plan provides for the award of restricted and
unrestricted shares of Common Stock directly and pursuant to the Corporation's
annual and long-term incentive compensation programs. In addition, the Plan
provides for the grant of stock options. The amendments to the Plan do not
materially change the basic terms of the Plan or increase the number of shares
authorized to be granted as previously approved by the shareholders. The
amendments to the Plan, as adopted by the Committee, are as follows: (i) an
amendment required under Section 162(m) of the Internal Revenue Code of 1986, as
amended (the "Code"), which is necessary to assure that gains from stock option
exercises by executive officers named in the proxy statement will continue to be
excluded from the $1 million annual limit on the Corporation's tax deduction for
executive compensation paid to certain executives; and (ii) an amendment to
delete language currently in the Plan which requires shareholder approval of
certain Plan amendments.
SECTION 162(m) AMENDMENT. Section 162(m) of the Code prohibits a publicly
traded corporation from deducting compensation in excess of $1 million per
taxable year paid to any person who, on the last day of the taxable year, is the
CEO or one of the four most highly compensated executive officers other than the
CEO. Under Code Section 162(m), compensation that qualifies as
"performance-based compensation" is not counted for purposes of the $1 million
limit. In addition to other requirements, compensation will be considered
"performance-based" if it is paid pursuant to a plan the material terms of which
are disclosed to and approved by shareholders prior to the payment of such
compensation. In addition, Section 162(m) requires plans which allow grants of
stock options to state a limit on the number of stock options that can be
granted to any one individual in any one plan year. The amended Plan sets at
750,000 the maximum number of shares with respect to which stock options may be
awarded to any individual participant in any Plan year. The Board of Directors
deems it to be in the best interests of the Corporation and its shareholders to
preserve, insofar as possible, the Corporation's tax deduction for compensation
in excess of $1 million paid to its executive officers. Shareholder approval of
the Plan, as amended, is required to ensure that certain awards granted under
the Plan will continue to be fully tax deductible pursuant to Code Section
162(m).
PLAN AMENDMENT PROVISION. The amended and restated Plan also deletes
language currently in the Plan which requires shareholder approval of any
amendment which materially increases benefits accruing to participants under the
Plan, which materially increases the number of securities which may be issued
under the Plan, or which materially modifies the requirements as to eligibility
for participation in the Plan. The Plan provision being deleted was originally
set forth in the Plan in order to comply with rules promulgated under Section 16
of the Securities Exchange Act of 1934 related to short-swing profit insider
trading liability. Recent amendments to the Section 16 rules have made it
unnecessary for the Plan document to recite these restrictions. By deleting this
provision, it will be possible for the Committee to consider and adopt certain
kinds of Plan amendments in the future without submitting the amendments to a
vote of shareholders. The amendments which could be so adopted by the Committee
include amendments which could increase the cost of the Plan to the Corporation
and amendments which may alter the allocation of the benefits under the Plan as
between the persons and groups specified in the table of Plan benefits shown
below. Specific amendments have not been determined, but could include
amendments which expand the group of employees who are eligible to participate
in the Plan. Under federal tax law, however, shareholder approval will continue
to be required for any amendments which would increase the number of shares
available under the Plan for the grant of incentive stock options, or which
would expand the class of employees eligible to receive incentive stock options,
or which would increase the number of stock options that could be granted to any
Plan participant. In addition, current New York Stock Exchange Rules to which
the Corporation is subject also require shareholder approval of any amendment
which would increase the number of shares reserved for issuance under the Plan.
Notwithstanding the deletion of this provision from the Plan document, it is the
Corporation's intention to continue to seek shareholder approval of amendments
for which such approval is required, in the opinion of its counsel, as a matter
of tax law or New York Stock Exchange Rules, or which is otherwise legally
required.
The Board of Directors believes it is in the Corporation's best interests
for shareholders to approve these amendments to the Plan and therefore
recommends that shareholders vote FOR the proposal to approve the Plan, as
amended.
SUMMARY OF PLAN
The following description of the primary features of the Plan, as amended,
is qualified in all respects by reference to the full text of the Plan, a copy
of which is available from the Corporation.
ADMINISTRATION: The Plan is administered by the Committee. The Committee has
full authority to designate plan participants, to determine the timing and
amount of participants' awards, to interpret the Plan and to make all other
determinations necessary or advisable for the administration of the Plan.
ELIGIBLE EMPLOYEES: All key employees of the Corporation or any subsidiary of
the Corporation in which the Corporation has a 50% or more interest are eligible
to participate in the Plan. Based on the Corporation's present employment, the
number of key employees currently eligible to participate in the Plan is
approximately 300 employees.
SHARES SUBJECT TO THE PLAN: Prior to January 1, 1997, the total number of shares
that could be delivered or purchased under the Plan was limited to 2,400,000
shares. Pursuant to the Plan's "evergreen" provision as originally approved by
shareholders in 1993, on January 1, 1997, all shares then available for delivery
or purchase under the Plan plus two percent (2%) of the Corporation's total
issued and outstanding shares as of January 1, 1997 became available for
delivery or purchase under the Plan, such that as of January 1, 1997, a
cumulative total of 3,200,334 shares were available for delivery or purchase
under the Plan. On January 1 of each subsequent year the Plan is in effect, all
shares then available for delivery or purchase under the Plan plus two percent
of the Corporation's total issued and outstanding shares as of that date shall
become available for delivery or purchase under the Plan. The amount of shares
available for delivery or purchase in any one calendar year includes any shares
available in the previous year or years but not issued in such year or years.
Notwithstanding any adjustment in the number of shares subject to the Plan made
pursuant to this provision, the Plan provides that no more than 2,400,000 shares
shall be cumulatively available for grant of incentive stock options. The Plan
permits the use of either authorized and unissued shares or shares reacquired by
the Corporation, including treasury shares. As amended, the Plan limits the
number of shares which may be granted to any single participant in any one Plan
year to 750,000. Shares issued under the Plan may be either restricted or
unrestricted. Shareholders of the Corporation have no preemptive rights with
respect to the shares issued pursuant to the Plan.
PLAN TERM: The Plan will remain in effect until January 13, 2003, unless
terminated earlier by the Committee.
VESTING: Stock options and shares awarded under the Plan are either 100% vested
as of the date of grant or may be subject to a vesting schedule determined by
the Committee which may, at the Committee's discretion, provide for accelerated
vesting in the event of a change of control of the Corporation.
RIGHTS AS A SHAREHOLDER: A Plan participant has no rights as a shareholder with
respect to any unrestricted shares issued or shares covered by any stock options
granted under the Plan until the date a stock certificate is issued. With
respect to restricted shares, a participant may be entitled to receive dividends
and to vote such shares, but may not otherwise be entitled to dispose of or
otherwise assign the shares during the restricted period.
DEPOSIT SHARE PROGRAM: The Plan's deposit share program allows eligible
participants to elect to deposit certain shares with the Corporation and to
receive a restricted stock award for each share deposited. The eligible
participants and the number of shares permitted to be deposited with the
Corporation are determined annually by the Committee. Based on current
employment, approximately 65 employees are currently eligible to participate in
this program. The Committee has established for each such participant a share
ownership target (a multiple of base salary) to be achieved over a seven-year
period. To receive a restricted share award under this program, a participant
must elect at least 30 days prior to the payment date of an award under an
executive compensation program to deposit shares with the Corporation. Once the
shares are deposited with the Corporation, the Corporation shall match the
shares deposited with up to one restricted share for each share deposited by the
participants, as determined by the Committee. The restricted shares deposited by
the Corporation shall vest in accordance with vesting provisions determined by
the Committee. With respect to all grants made to date under the Plan, the
Committee has provided that one-half of the restricted shares shall vest after
three years and one-half shall vest after five years from the date of the
deposit. The shares deposited by the participant may be withdrawn prior to the
vesting of the restricted matching shares, at which time the participant's right
to a proportional amount of nonvested restricted shares shall terminate. Except
in the event of a disability or retirement, as defined in the Plan, and death,
upon a participant's termination of employment with the Corporation, the
nonvested shares shall be forfeited unless the Committee determines otherwise.
TERMINATION AND AMENDMENT OF THE PLAN: The Committee has the authority, without
further action on the part of shareholders, to suspend, amend, or terminate the
Plan. However, shareholder approval may be required as a matter of law as to
certain kinds of amendments, such as amendments which increase the number of
shares subject to the Plan, amendments which materially increase the number of
shares which may be issued pursuant to incentive stock options granted under the
Plan, amendments which materially expand the class of employees eligible to
receive incentive stock options, or amendments which would increase the number
of options that could be granted to any participant. The Plan permits the
Committee to amend an outstanding option or restricted share agreement,
including an amendment which accelerated the vesting date of the option.
FEDERAL INCOME TAX CONSEQUENCES OF OPTIONS: Under current federal tax law, a
participant who is granted an incentive stock option does not realize any
taxable income at the time of grant or at the time of exercise. However, the
excess of the fair market value of the shares on the date of exercise over the
option price is a preference item for purposes of the alternative minimum tax.
The Corporation is not entitled to any deduction at the time of grant or at the
time of exercise of an incentive stock option. A participant who is granted a
nonqualified stock option does not have taxable income at the time of grant, but
generally does have taxable income at the time of exercise equal to the excess
of the market value of the shares on the exercise date over the option price.
The Corporation is entitled to a deduction at the time the optionee has income
in an amount equal to such income. Upon disposition of shares acquired through
exercise of an option, the participant will recognize gain or loss measured by
the difference between the amount received and the participant's adjusted basis
for the shares. Shares acquired pursuant to an incentive stock option will
generally have an adjusted basis equal to the option price, whereas shares
acquired pursuant to a nonqualified stock option will generally have an adjusted
basis equal to the fair market value of the shares on the date of exercise. The
Corporation is generally not entitled to a deduction at the time a participant
disposes of the shares.
STOCK OPTION PROVISIONS: Stock options granted under the Plan are subject to the
following additional terms and conditions:
OPTION PRICE. The exercise price of options will equal the fair market
value of Common Stock on the date of grant which is the average of the highest
and lowest market prices for Common Stock as reported on the consolidated
transaction reporting system for the New York Stock Exchange. The fair market
value of incentive stock options first exercisable in one year may not exceed
$100,000 as of the date of grant. The fair market value of Common Stock as of
March 10, 1997 was $64.4375.
OPTION TERM. The period within which options may be exercised will be
determined by the Committee. In no event are incentive stock options exercisable
later than ten years after the date of grant, and nonqualified stock options may
not be exercised later than ten years and one day after the date of grant.
Participants forfeit any options not exercised within the applicable option
term.
REPLACEMENT STOCK OPTIONS. An option may, at the Committee's discretion,
include the right to acquire a replacement stock option ("RSO"). The Committee
may also grant separate options ("Separate Options") which include an RSO
feature with respect to options issued under the Plan not containing an RSO
feature. Upon exercise of an option with an RSO feature or a related Separate
Option using stock held at least six months or using cash, the employee is
granted an RSO to purchase, at the fair market value as of the date of the
option exercise, such number of shares as determined by the Committee, but not
in excess of the number of whole shares used by the employee in payment of the
purchase price (or would have been used if shares had been tendered instead of
cash) and the number of whole shares, if any, withheld by the Corporation or
remitted by the employee as payment for withholding taxes. An RSO may be
exercised between the date six months after the date of grant and the date of
expiration which will be the same as the date of expiration of the option to
which the RSO is related. An RSO shall not contain an RSO feature and a Separate
Option shall not be granted with respect to an RSO. The RSO features of an
option and Separate Options are subject to cancellation by the Committee at any
time in the Committee's sole discretion.
TERMINATION OF EMPLOYMENT OR DEATH. Incentive stock options must generally
be exercised within three months of a participant's termination of employment.
If termination is due to disability or death, the time period within which a
participant or beneficiary may exercise incentive stock options is increased to
one year in the case of disability and five years in the event of the
participant's death. The Plan also permits the Committee to grant to certain
participants incentive stock options which, if not exercised within the time
periods applicable to incentive stock options following the participant's
termination of employment, shall thereupon become nonqualified stock options
exercisable during the time periods applicable to such nonqualified stock
options. In no event, however, are incentive stock options exercisable more than
ten years after the date of grant. For nonqualified stock options, if a
termination qualifies as a retirement under a qualified plan of the Corporation
or termination is due to disability, the participant has five years (or the
remaining term of the option, if earlier) within which to exercise any
outstanding nonqualified stock options, and the participant will immediately
vest in all previously granted nonqualified stock options. To the extent a
participant's termination of employment is due to his death, or his death occurs
after a termination, the participant's beneficiary has the time period remaining
to the participant, had the participant lived, in which to exercise the option.
Any nonqualified option that is not vested prior to the termination caused by
the participant's death shall immediately vest on the date of death. Upon a
participant's termination of employment for any reason other than retirement,
disability or death, the participant or, if applicable, his beneficiary will
have 60 days (or such longer period as determined by the Committee) from the
date of such termination to exercise an option in which the participant is
vested, and such participant will forfeit all nonvested options.
PAYMENT FOR STOCK OPTIONS. Upon exercise of an option, participants must
pay for shares in full, by certified check, cashier's check or money order. In
lieu of paying for shares in this manner, the participant may pay all or part of
the exercise price by delivering to the Corporation owned and unencumbered
shares of common stock of the Corporation having a fair market value as of the
date of exercise equal to or less than the exercise price of the option
exercised, with cash for the remainder, if any, of the exercise price.
The benefits that will be received by or allocated to the following
individuals or groups under the Plan, as amended, for the Plan year ending
December 31, 1997 are not yet determinable because such awards are granted by
the Committee, in its discretion, based in part on performance for the 1997 Plan
year. If the Plan, as amended, had been in effect during 1996, however, the
awards made thereunder would have been identical to the awards actually made for
the 1996 Plan year under the Plan prior to the amendment. These awards are shown
in the Summary Compensation Table on page 12 and in the following table:
<TABLE>
<CAPTION>
STOCK OPTIONS RESTRICTED STOCK
NAME AND POSITION NUMBER OF UNITS (#) DOLLAR VALUE ($)
- ----------------- ------------------- ----------------
<S> <C> <C>
John G. Turner, Chairman and Chief 65,000 60,009
Executive Officer
John H. Flittie, President and Chief Operating Officer 38,704 36,544
Steven W. Wishart, Senior Vice President 11,571 0
Robert C. Salipante, Senior Vice President 15,065 20,869
Michael J. Dubes, Senior Vice President 15,887 17,252
Executive Group 185,609 169,919
Non-executive Director Group 0 0
Non-executive Officer Employee Group 436,672 217,312
</TABLE>
SHAREHOLDER APPROVAL OF THE PLAN
The affirmative vote of a majority of the outstanding shares of stock of
the Corporation present or represented and entitled to vote at the meeting is
required to approve the Plan, as amended. The Board of Directors recommends that
shareholders vote FOR the proposal to approve the Plan, as amended.
PROPOSAL 3
PROPOSAL TO AMEND THE CERTIFICATE OF INCORPORATION TO CHANGE
THE CORPORATION'S CAPITAL STOCK FROM NO PAR VALUE TO $.01 PAR
VALUE PER SHARE
The shareholders of the Corporation at the 1996 Annual Meeting approved an
amendment to the Certificate of Incorporation to increase the number of shares
of Common Stock of the Corporation authorized for issuance from 100 million to
200 million. With this amendment, the total number of shares of all classes of
capital stock which the Corporation is authorized to issue is 207 million
shares, consisting of 7 million shares of Preferred Stock and 200 million shares
of Common Stock. In the period since the 1996 Annual Meeting, the Corporation
has not had a need to issue shares of Common Stock authorized for issuance by
this amendment. Accordingly, the Corporation has refrained from filing the
amendment, and the amendment is not yet effective.
The Board of Directors now proposes that the shareholders modify the
amendment prior to its filing to provide that all shares of the capital stock of
the Corporation have a nominal par value of $.01 per share. At present, the
capital stock has no par value per share.
The reason for the proposed modification of the amendment is to enable the
Corporation to reduce substantially the filing fee payable to the Delaware
Secretary of State in connection with the increase in the number of authorized
shares of Common Stock. The Board of Directors believes that, except for the
different filing fee treatment, there is no functional difference under Delaware
law, under the accounting principles used by the Corporation or otherwise,
between capital stock with no par value per share and capital stock with a
nominal par value per share.
If the shareholders do not approve the proposed modification of the
amendment at the 1997 Annual Meeting, the Corporation will proceed to file the
amendment as originally approved in 1996. In such event, the number of
authorized shares of Common Stock would increase, but there would not be a
change in the par value of the capital stock.
Because the proposed modification of the amendment will enable the
Corporation to realize a significant filing fee savings, the Board of Directors
believes that approval of the proposal is in the best interests of the
Corporation and its shareholders.
If the proposed modification of the amendment is approved, the first
sentence of Article Fourth of the Corporation's Certificate of Incorporation
would be amended to read as follows:
"The total number of shares of all classes of capital stock
which the Corporation shall have the authority to issue is
207,000,000 shares, consisting of 7,000,000 shares of
Preferred Stock, par value $.01 per share, and 200,000,000
shares of Common Stock, par value $.01 per share."
The affirmative vote of the holders of a majority of the outstanding shares
present in person or by proxy at the meeting and eligible to vote will be
required to approve the proposed modification of the amendment to the
Corporation's Certificate of Incorporation. The Board of Directors recommends
that the shareholders vote FOR the proposed modification to the amendment to the
Corporation's Certificate of Incorporation.
PROPOSAL 4
PROPOSAL TO RATIFY THE APPOINTMENT OF
INDEPENDENT PUBLIC ACCOUNTANTS
At the Annual Meeting shareholders will consider a proposal to ratify the
appointment of Deloitte & Touche LLP as independent public accountants for the
Corporation for 1997. Deloitte & Touche LLP served as independent public
accountants for the Corporation for 1996. A representative of Deloitte & Touche
LLP is expected to be present at the Annual Meeting, will have an opportunity to
make a statement and will be available to respond to appropriate questions.
The Board of Directors recommends that shareholders vote FOR ratification
of the appointment of Deloitte & Touche LLP as independent public accountants
for the Corporation for 1997. Proxies solicited by the Board will be so voted
unless shareholders specify otherwise on their proxies.
Dated March 25, 1997
RELIASTAR 1993
STOCK INCENTIVE PLAN
(AS AMENDED AND RESTATED EFFECTIVE MAY 8, 1997)
ARTICLE I.
GENERAL
Sec. 1.1 NAME OF PLAN. The name of the plan set forth herein is "ReliaStar
1993 Stock Incentive Plan" (the "Plan").
Sec. 1.2 PURPOSES. The purposes of the Plan are to provide long-term
incentives and rewards to those employees largely responsible for the success
and growth of ReliaStar Financial Corp. ("Corporation") and its Subsidiaries, to
assist the Corporation in attracting and retaining executives with experience
and ability on a basis competitive with industry practices, and to associate the
interests of such employees with those of the Corporation's shareholders.
Sec. 1.3 EFFECTIVE DATE. The effective date of the Plan is January 14,
1993, the date on which it was approved by the Board of Directors of the
Corporation; provided, however, that all Awards hereunder shall be subject to
approval of the Plan by the holders of a majority of the outstanding shares of
the Corporation's stock present or represented and entitled to vote on it at a
duly held meeting of shareholders. The effective date of the Plan as amended and
restated is the date on which it is approved by the holders of a majority of the
outstanding shares of the Corporation's stock present or represented and
entitled to vote on it at a duly held meeting of shareholders.
Sec. 1.4 NUMBER OF SHARES. Subject to adjustments contemplated by Sec. 5.2
hereof, the Shares that may be delivered or purchased under the Plan prior to
January 1, 1997 shall not exceed the sum of two million four hundred thousand
(2,400,000) Shares. Commencing on January 1, 1997, all Shares not previously
delivered or purchased under the Plan plus two percent (2%) of the total issued
and outstanding Shares as of January 1, 1997 and each subsequent year the Plan
is in effect shall be available for delivery or purchase under the Plan. The
amount of Shares available for delivery or purchase in any one calendar year
shall include any such Shares available in the previous year or years but not
delivered or purchased in such year or years, provided that no more than two
million four hundred thousand (2,400,000) Shares shall be cumulatively available
for the grant of Incentive Stock Options. Shares to be delivered or purchased
under the Plan may be authorized and unissued shares or issued shares reacquired
by the Corporation including treasury Shares. Subject to the adjustments
contemplated by Sec. 5.2 hereof, and only to the extent required in order for
Stock Options under the Plan to qualify for the performance-based compensation
exception described in Sec. 162(m) of the Code, the maximum number of Shares
with respect to which Stock Options may be awarded to any individual Participant
in any calendar year shall be 750,000.
ARTICLE II.
DEFINITIONS
Sec. 2.1 AWARD. "Award" means a grant of Stock Options, Stock Awards, or
Restricted Stock Awards, or a combination thereof, under the Plan.
Sec. 2.2 BENEFICIARY. "Beneficiary" means the person or persons designated
as such by a Participant's will or pursuant to the laws of decent and
distribution.
Sec. 2.3 BOARD OF DIRECTORS. "Board of Directors" or "Board" means the
Board of Directors of the Corporation.
Sec. 2.4 BONUS DETERMINATION DATE. "Bonus Determination Date" means the
date as of which the dollar amount of a Qualified Bonus has been determined and
approved by the Committee, and the Committee has determined that all or a
portion thereof shall be paid in the form of a Stock Award.
Sec. 2.5 CHIEF EXECUTIVE OFFICER. "Chief Executive Officer" means the chief
executive officer of the Corporation.
Sec. 2.6 CODE. "Code" means the Internal Revenue Code as amended from time
to time.
Sec. 2.7 COMMITTEE. "Committee" means the members of the Personnel and
Compensation Policy Committee of the Board of Directors exclusive of any member
who is not "disinterested" within the meaning of Regulation ss.240.16b-3 under
the Exchange Act, as applicable to the Corporation at the time in question.
Sec. 2.8 CORPORATION. "Corporation" means ReliaStar Financial Corp.
Sec. 2.9 DATE OF GRANT. "Date of Grant" means the date designated in a
resolution by the Committee as the date for granting Stock Options. If the
Committee does not designate a Date of Grant in its resolution, the Date of
Grant shall be the date of the Committee's resolution.
Sec. 2.10 FAIR MARKET VALUE. "Fair Market Value" as applied to a specific
date means the average of the highest and lowest market price of Shares, as
reported on the consolidated transaction reporting system for New York Stock
Exchange issues on such date or, if Shares were not traded on such date, on the
next preceding day on which the Shares were traded.
Sec. 2.11 INCENTIVE STOCK OPTIONS. "Incentive Stock Options" means Stock
Options that are intended to qualify under Section 422 of the Code.
Sec. 2.12 NONQUALIFIED OPTIONS. "Nonqualified Options" means Stock Options
that are not intended to qualify under Section 422 of the Code.
Sec. 2.13 PARTICIPANT. A "Participant" means a person designated as such by
the Committee for participation in the Plan.
Sec. 2.14 PLAN YEAR. "Plan Year" means a one-year period commencing on
January 1 of a calendar year and ending on December 31 of such calendar year.
Sec. 2.15 QUALIFIED BONUS. "Qualified Bonus" means a bonus to which a
Participant is entitled under the terms of a bonus plan or program of the
Corporation or a Subsidiary which permits, subject to the Committee's approval,
payment of all or a portion of such bonus in the form of a Stock Award pursuant
to the terms of this Plan.
Sec. 2.16 RESTRICTED STOCK AWARD. "Restricted Stock Award" means Shares
awarded to a Participant by the Committee pursuant to Article VIII hereof, which
shares are subject to certain terms, conditions and restrictions.
Sec. 2.17 EXCHANGE ACT. "Exchange Act" means the Securities Exchange Act of
1934, as amended.
Sec. 2.18 SHARES. "Shares" means shares of common stock of the Corporation.
Sec. 2.19 STOCK AWARD. "Stock Award" means Shares awarded to a Participant
by the Committee pursuant to the terms of Article VII hereof.
Sec. 2.20 STOCK OPTION. "Stock Option" or "Stock Options" means an option
or options granted to a Participant to purchase Shares from the Corporation. As
to Participants who are subject to Section 16 of the Exchange Act, Stock Options
may be either Nonqualified Stock Options or Incentive Stock Options. Stock
Options are subject to the terms of Article VI hereof.
Sec. 2.21 SUBSIDIARY. "Subsidiary" means a subsidiary of the Corporation in
which the Corporation has a fifty percent (50%) or more interest.
Sec. 2.22 TEN PERCENT SHAREHOLDER. "Ten Percent Shareholder" means any
individual owning more than ten percent (10%) of the total combined voting power
of all classes of stock of the Corporation. An individual shall be considered to
own any voting stock owned (directly or indirectly) by or for his brothers,
sisters, spouse, ancestors, or lineal descendants and shall be considered to own
proportionately any voting stock owned (directly or indirectly) by or for a
corporation, partnership, estate, or trust of which said individual is a
shareholder, partner or beneficiary.
ARTICLE III.
ADMINISTRATION OF PLAN
Sec. 3.1 ELIGIBILITY. Any key employee of the Corporation or a Subsidiary
who has been designated as a Participant by the Committee is eligible to
participate in the Plan. No member of the Committee is eligible to participate
in the Plan. The Committee may designate one or more classes of Participants
under the Plan.
Sec. 3.2 COMMITTEE. The Plan shall be administered by the Committee.
Members of the Committee shall serve at the pleasure of the Board.
Sec. 3.3 POWERS OF COMMITTEE. The Committee shall have all the powers
vested in it by the terms of the Plan, such powers to include exclusive
authority (within the limitations described herein) to select the employees to
be granted Awards under the Plan, to determine the type, size and terms of
Awards to be made to each employee selected, to determine the time when Awards
will be granted, and to establish objectives and conditions for earning Awards.
The Committee shall have full power and authority to administer and interpret
the Plan and to adopt such rules, regulations, agreements, guidelines and
instruments for the administration of the Plan and for the conduct of its
business as the Committee deems necessary or advisable. The Committee's
interpretation of the Plan, and all actions taken and determinations made by the
Committee pursuant to the powers vested in it, shall be conclusive and binding
on all parties concerned, including the Corporation, its Subsidiaries, its
shareholders, Plan Participants and any employee of the Corporation or its
Subsidiaries. The Committee may delegate duties to any person or persons;
provided, no delegation of duties is permitted which would cause the Plan not to
satisfy the disinterested administration requirement of Exchange Act Rule 16b-3.
Sec. 3.4 DECISIONS OF THE COMMITTEE. Any action required or permitted to be
taken by the Committee under the Plan shall require the affirmative vote of a
majority of those members present and voting at a properly convened meeting of
the Committee. Members of the Committee may participate in a meeting of the
Committee by means of conference telephone or similar communications equipment
whereby all meeting participants can hear each other and such participation will
constitute presence in person at the meeting. A majority of all members of the
Committee shall constitute a "quorum" for Committee business. The Committee may
act by written determination instead of by affirmative vote at a meeting,
provided that any written determination shall be signed by all members of the
Committee, and any such written determination shall be as fully effective as a
majority vote of members constituting a quorum at a meeting. Any decision made
or action taken by the Committee in connection with the Plan shall be final and
conclusive as to all parties involved.
ARTICLE IV.
AWARDS
Sec. 4.1 TYPES. Awards under the Plan may include Stock Awards, Stock
Options, Restricted Stock Awards or a combination thereof as the Committee shall
determine. Stock Options shall be subject to the provisions of Article VI
hereof, Stock Awards shall be subject to the provisions of Article VII hereof,
and Restricted Stock Awards shall be subject to the provisions of Article VIII
hereof.
Sec. 4.2 PERFORMANCE GOALS. The Committee may establish meaningful
performance goals to be achieved within such performance periods as may be
selected by it in its sole discretion, using such measures of the performance of
the Corporation and its Subsidiaries as it may select.
Sec. 4.3 GUIDELINES. The Committee may from time to time adopt written
policies for its implementation of the Plan. Such policies may include, but need
not be limited to, the type, size and term of Awards to be made to Participants
and the conditions for payment of such Awards.
Sec. 4.4 VESTING. The Committee may determine that all or a portion of a
payment to a Participant under the Plan, whether it is to be made as a Stock
Award, Restricted Stock Award or Stock Options or a combination thereof, shall
be vested at such times and upon such terms as may be selected by it in its sole
discretion.
Sec. 4.5 ASSIGNMENT OR TRANSFER. No Awards under the Plan or rights or
interests in the Plan shall be assignable or transferable by a Participant,
voluntarily or involuntarily, except by the will or the laws of descent and
distribution. For the purposes of this Sec. 4.5, and original deposit, as
defined in Sec. 8.6(a), is not considered an Award under, or right or interest
in Plan. During the lifetime of a Participant, Awards are exercisable only by,
and payable only to, the Participant.
Sec. 4.6 AGREEMENTS. All Awards granted under the Plan shall be evidenced
by agreements in such form and containing such terms and conditions (not
inconsistent with the Plan) as the Committee shall adopt.
ARTICLE V.
MISCELLANEOUS PROVISIONS
Sec. 5.1 RIGHTS AS SHAREHOLDER. A Participant under the Plan shall have no
rights as a shareholder with respect to Awards under the Plan unless and until
certificates for such Shares are issued to the Participant. The issuance by the
Corporation of shares of stock of any class, or securities convertible into
shares of stock of any class, for cash or property or for labor or services,
either upon direct sale or upon the exercise of rights or warrants to subscribe
therefor, or upon conversion of shares or obligations of the Corporation
convertible into such shares or other securities, shall not affect, and no
adjustment by reason thereof shall be made with respect to Awards under the
Plan.
Sec. 5.2 DILUTION AND OTHER ADJUSTMENTS. In the event of any change in the
outstanding Shares by reason of any split, stock dividend, recapitalization,
merger, consolidation, combination or exchange of shares or other similar
corporate change, such equitable adjustments shall be made in the Plan and the
Awards under it as the Committee determines are necessary and appropriate,
including, if necessary, any adjustment in the maximum number or kind of shares
subject to the Plan or which may be or have been awarded to any Participant.
Such adjustment shall be conclusive and binding for all purposes of the Plan.
Sec. 5.3 COMPLIANCE WITH LAW AND APPROVAL BY REGULATORY BODIES. No Stock
Option shall be exercisable, no Shares shall be issued, no certificates for
Shares shall be delivered, and no payment shall be made except in compliance
with all applicable federal and state laws and regulations and rules of all
domestic stock exchanges on which the Shares are listed. The Corporation shall
have the right to rely on the opinion of its counsel as to such compliance. If,
in the opinion of the Corporation's counsel, the transfer, issuance or sale of
any Shares under the Plan shall not be lawful for any reason, including the
inability of the Corporation to obtain from any regulatory body having
jurisdiction the authority deemed by such counsel to be necessary for such
transfer, issuance or sale, the Corporation shall not be obligated to transfer,
issue or sell such Shares. Any share certificate issued may bear such legends
and statements as the Committee may deem advisable or desirable. Further, in
connection with any sale, issuance or transfer hereunder, the Participant
acquiring the Shares shall, if requested by the Corporation, give satisfactory
assurances to the Corporation's counsel that the Shares are being acquired for
investment and not with a view to resale or distribution thereof and provide any
other assurance as the Corporation may deem desirable.
Sec. 5.4 AMENDMENT OF PLAN. The Committee may at any time terminate or from
time to time amend the Plan in whole or in part, but no such action shall
adversely affect any rights or obligations with respect to any Awards previously
made under the Plan. With the consent of the affected Participant, the Committee
may amend outstanding agreements evidencing Awards under the Plan in a manner
not inconsistent with the terms of the Plan.
Sec. 5.5 DURATION OF PLAN. Unless the Plan is terminated earlier by the
Committee, the Plan shall remain in full force and effect until the close of
business on January 13, 2003, at which time the right to grant Awards under the
Plan shall terminate unless the Corporation's shareholders approve an extension
or renewal. Any awards granted under the Plan on or before January 13, 2003,
shall continue to be governed thereafter by the terms of the Plan and of the
Awards; provided if the Corporation terminates the Plan, Stock Options not
vested on the date of the Plan termination are, unless otherwise determined by
the Committee, forfeited.
Sec. 5.6 WITHHOLDING OF TAXES. There shall be deducted from all
distributions under the Plan the amount of any taxes which the Corporation or
Subsidiary may be required to withhold by any federal, state, or local
government. In addition, there shall be deducted any other amount required by
law or by order of a court or government agency to be withheld from payments to
any Participant. With respect to Stock Awards and Restricted Stock Awards, the
Corporation shall have the right to require payment of any such taxes through
withholding from the Participant's salary or otherwise. Participants and their
personal representatives shall be responsible for payment of any and all
federal, state, local, foreign, or other taxes imposed on amounts paid under the
Plan. The Corporation and its Subsidiaries assume no responsibility for the tax
consequences to the Participant for his/her participation in the Plan. Subject
to rules established by the Committee, withholding required by this Sec. 5.6 may
be satisfied by (i) the Company withholding shares issued on exercise or award
or (ii) the Participant delivering Shares owned by Participant, having a Fair
Market Value as of the date of delivery equal to or less than the amount
required to be withheld pursuant to this Sec. 5.6.
Sec. 5.7 NOT AN EMPLOYMENT CONTRACT. Neither the Plan nor participation in
the Plan shall be construed as creating any agreement as to continued employment
with the Corporation or any of its affiliates.
Sec. 5.8 TRANSFER OF EMPLOYMENT. For purposes of the Plan, transfer of
employment between the Corporation, its Subsidiaries or affiliates (affiliates
shall not apply for Incentive Stock Options) shall not be deemed a termination
of employment.
Sec. 5.9 UNFUNDED PLAN. The Plan shall be unfunded, and the Corporation
shall not be required to segregate any assets that may represent Awards under
the Plan. Any liability of the Corporation to any person with respect to any
Award under the Plan shall be based solely upon the contractual obligations
created pursuant to the Plan and evidenced by Agreements pursuant to Sec. 4.6
hereof. No such obligation of the Corporation shall be deemed to be secured by
any pledge of, or other encumbrance on, any property of the Corporation.
Sec. 5.10 NO RIGHTS AS SHAREHOLDER. Awards under the Plan shall not entitle
a Participant or any other person succeeding to his/her rights, to any dividend,
voting or other right as a shareholder of the Corporation unless and until the
issuance of a stock certificate to the Participant or such other person pursuant
to the provisions of the Plan and then only subsequent to the date of issuance
thereof.
Sec. 5.11 GOVERNING LAW. This Plan is governed in all respects by the laws
of the State of Delaware.
Sec. 5.12 SEVERABILITY. In the event that any provision in this Plan would
invalidate the Plan, the provision shall be null and void, and the Plan shall be
construed as if it did not contain that provision.
Sec. 5.13 RULES OF CONSTRUCTION. Headings are given to the articles and
sections of the Plan solely as a convenience to facilitate reference. Reference
to any statute, regulation, or other provision of law shall be construed to
refer to any amendment to or successor of such provision of law.
Sec. 5.14 REFERENCES ARE TO PLAN. References herein to sections or articles
are to sections or articles of the Plan unless the context clearly indicates to
the contrary.
Sec. 5.15 COMPLIANCE WITH SECTION 16. With respect to persons subject to
Section 16 of the Exchange Act, transactions under the Plan are intended to
comply with all applicable conditions of Rule 16b-3 or its successors under the
Exchange Act. The old Section 16 rules shall apply until the Corporation
expressly elects the new Section 16 rules to apply or such rules apply by
operation of law. To the extent any provision of the Plan or action by the
Committee fails to so comply, it shall be deemed null and void, to the extent
permitted by law and deemed advisable by the Committee.
ARTICLE VI.
AWARD OF STOCK OPTIONS
Sec. 6.1 GRANT OF STOCK OPTIONS. Contemporaneously with or at any time
after the Committee has designated an eligible employee as a Participant, the
Committee may award a Participant Stock Options at Fair Market Value as of the
Date of Grant, provided however, that an award of Stock Options to a Ten Percent
Shareholder shall be at one hundred ten percent (110%) of such Fair Market
Value. At the time of grant, the Committee shall send written notification to
each Participant indicating (i) the Date of Grant, (ii) the number of Stock
Options granted to the Participant, (iii) the time period in which to exercise
such Stock Options, and (iv) a stock option agreement providing for the purchase
of one Share for each Stock Option granted.
Sec. 6.2 CALCULATION OF AWARDS. The number of Stock Options granted to a
Participant in a Plan Year shall be determined by the Committee.
Sec. 6.3 EXERCISE OF STOCK OPTIONS. An individual entitled to exercise a
Stock Option may, subject to the terms and conditions of the Plan, exercise it
in whole or in part at any time, by delivery to the Corporate Secretary at the
Company's principal office written notice of exercise. Such notice of exercise
shall specify the number of whole Shares with respect to which the option is
being exercised, the Fair Market Value of the Shares on the Date of Grant, and
must be accompanied by payment in full by certified check, cashier's check,
money order or other form of cash payment as approved by the Committee in the
amount of the exercise price for the Shares to be purchased, plus any amount
required for withholding as provided in Sec. 5.6; provided, however, in lieu of
paying the exercise price by certified check, cashier's check, or money order as
described above, the individual may pay all or part of such exercise price by
delivering to the Company owned and unencumbered Shares having a Fair Market
Value as of the date of exercise equal to or less than the exercise price of the
options exercised, with cash for the remainder, if any, of the exercise price.
Sec. 6.4 INCENTIVE STOCK OPTIONS. Incentive Stock Options granted under the
Plan are intended to be incentive stock options under Section 422 of the Code
and shall be administered as such by the Committee. An Incentive Stock Option
shall be subject to the following:
(a) OPTION PERIOD. Each Incentive Stock Option granted shall expire,
and all rights to purchase shares shall cease ten (10) years
after the Date of Grant of the Incentive Stock Option or on such
earlier date as may be fixed by the Committee, or on such date as
is provided by this Plan in the event of termination of
employment or a reorganization of the Corporation, provided
however, that any Incentive Stock Option granted to a Ten Percent
Shareholder shall expire five (5) years after the Date of Grant,
or on such earlier date as otherwise may be fixed by the
Committee or provided by this Plan.
(b) EXERCISE AT TERMINATION OF EMPLOYMENT. The right to exercise an
Incentive Stock Option upon a termination of employment shall be
as follows:
1. Upon a termination of employment due to the Participant's
death, any outstanding Incentive Stock Options must be
exercised by a Beneficiary within the earlier of five (5)
years from the Participant's date of death or the time
period remaining to the Participant to exercise his Award
had the Participant lived.
2. Upon a termination of employment due to a Participant's
disability, as that term is used in Code Section 22(e)(3),
any outstanding Incentive Stock Options must be exercised
within the earlier of one year after the onset of such
disability or the time period remaining to the Participant
to exercise his Award.
3. Upon a termination of employment for any other reason,
except dishonesty or any other illegal act, a Participant
must exercise any outstanding Incentive Stock Options within
the earlier of three (3) months of such termination or the
time period remaining to the Participant to exercise his
Award. In the event of dishonesty or any other illegal act,
any Incentive Stock Options unexercised at termination shall
be forfeited by the Participant.
4. Notwithstanding the foregoing, the Committee may grant Stock
Options with exercise periods longer than provided in
paragraphs 1, 2, and 3 of this subsection (b) which are
intended to qualify as Incentive Stock Options and which, if
not exercised in the time periods provided in paragraphs 1,
2, and 3 of this subsection (b) shall thereafter become
Nonqualified Stock Options subject to the provisions of Sec.
6.5 hereof; provided, however, that this paragraph 4 of
subsection (b) shall apply only to Participants who are not
subject to Section 16 of the Exchange Act.
(c) TRANSFERABILITY OF STOCK OPTIONS. No Incentive Stock Option shall
be assignable or transferable by the individual to whom it is
granted except that it may be transferred by will or the laws of
descent and distribution, in accordance with the provisions of
the Plan. If a Participant dies within the exercise period
specified in either paragraph (2) or (3) of subsection (b)
hereof, the Beneficiary shall have the time period remaining to
the Participant in which to exercise the Incentive Stock Option.
(d) The Committee shall determine the vesting schedule applicable to
Incentive Stock Options.
Sec. 6.5 NONQUALIFIED STOCK OPTIONS. Nonqualified Stock Options are Stock
Options that are not intended to qualify under Code Section 422. Nonqualified
Stock Options shall be subject to the following:
(a) OPTION PERIOD. Except as provided below, each option granted
shall expire and all rights to purchase shares shall cease ten
years and one day after the Date of Grant of the Nonqualified
Stock Option or on such date prior thereto as may be fixed by the
Committee. In the event of a plan termination or Company
reorganization, Nonqualified Stock Options shall be exercisable
pursuant to the rules set forth in Sec. 5.5 and Sec. 6.6.
(b) VESTING OF NONQUALIFIED STOCK OPTIONS. The Committee shall
determine the vesting schedule applicable to Nonqualified Stock
Options.
(c) EXERCISE AT TERMINATION OF EMPLOYMENT. The right to exercise
Nonqualified Stock Options upon a termination of employment shall
be as follows:
1. Upon the Participant's termination of employment that
qualifies as a retirement under the qualified retirement
plan of the Corporation or Subsidiary under which the
Participant is covered, or a termination of employment due
to the onset of a Participant's disability as that term is
used in Sec. 8.6 (i), the Participant shall have until the
earlier of the expiration of the option period provided to
the Participant in subsection (a) above or the date five (5)
years from the date of such termination of employment to
exercise such options. Any nonvested options previously
granted to the Participant shall immediately vest on the
date of such termination of employment and shall no longer
be subject to any vesting schedule.
2. To the extent a Participant's termination of employment is
due to his death, or his death occurs subsequent to a
termination of employment, the Participant's Beneficiary
shall have the time period remaining to the Participant had
the Participant lived in which to exercise such options. Any
nonvested options previously granted to the Participant
shall immediately vest on the date of such termination of
employment due to the death of the Participant.
3. Upon the Participant's termination of employment for any
other reason except dishonesty or any illegal act, the
Participant shall have until the earlier of the expiration
of the option period provided to the Participant in
subsection (a) above or unless a longer period is provided
by the Committee, the date sixty (60) days from the date of
such termination of employment to exercise options in which
the Participant is vested on the date of such termination of
employment. Any options in which the Participant is not
vested on the date of such termination shall be forfeited.
In the event of dishonesty or other illegal act, all Stock
Options unexercised at termination of employment shall be
forfeited by the Participant.
Sec. 6.6 MERGER, DISSOLUTION, OR TRANSFER OF SUBSTANTIALLY ALL OF THE
PROPERTY OF THE CORPORATION. Stock Options granted but unexercised under the
Plan shall terminate upon the effective date of the dissolution or liquidation
of the Corporation; or upon reorganization, merger, or consolidation of the
Corporation with one or more Corporations, if the Corporation is not the
surviving corporation; or upon a transfer of substantially all of the property
of the Corporation.
Notwithstanding the above, Stock Options shall not terminate to the extent
that written provision is made for their continuance, assumption, or
substitution by a successor employer or its parent or subsidiary in connection
with a transaction described in the preceding sentence.
Sec. 6.7 UNEXERCISED STOCK OPTIONS. Any Stock Option not exercised within
the applicable time period set forth in Article VI shall be forfeited.
Sec. 6.8 REPLACEMENT STOCK OPTIONS. A Stock Option granted at any time
under the Plan may, at the Committee's discretion, include the right to acquire
a Replacement Stock Option ("RSO"). The Committee may also grant separate
options ("Separate Options") which include an RSO feature with respect to Stock
Options issued under the Plan not containing an RSO feature. If a Stock Option
either contains the RSO feature or a Separate Option has been granted with
respect thereto and if a Participant pays all or part of the purchase price of
the Stock Option with Shares held by the Participant for at least six (6) months
or with cash, then upon exercise of the Stock Option the Participant is granted
an RSO to purchase, at the Fair Market Value as of the date of the Stock Option
exercise, such number of Shares as determined by the Committee at the time of
granting the Stock Option, but not in excess of the number of whole Shares used
by the Participant in payment of the purchase price (or would have been used if
Shares had been tendered instead of cash) and the number of whole shares, if
any, withheld by the Corporation or remitted by Participant as payment for
withholding taxes. An RSO may be exercised between the date six (6) months after
the Date of Grant of the RSO and the date of expiration, which will be the same
as the date of expiration of the Stock Option to which the RSO is related. An
RSO shall not contain an RSO feature and a Separate Option shall not be granted
with respect to an RSO. The RSO feature of a Stock Option and a Separate Option
are subject to cancellation by the Committee without notice at any time in the
Committee's sole discretion.
ARTICLE VII.
STOCK AWARDS
Sec. 7.1 BONUS PAYABLE IN THE FORM OF STOCK AWARDS. The Committee, in its
sole discretion, may determine that all or part of any Qualified Bonus shall be
paid in the form of a Stock Award. Stock Awards shall be subject to such
guidelines and rules as the Committee may establish pursuant to Sec. 3.3. hereof
and to the specific provisions of this Article VII.
Sec. 7.2 DETERMINATION BY NUMBER OF SHARES. The portion of any Qualified
Bonus payable as a Stock Award shall be converted to a whole number of Shares by
dividing the dollar amount of such Qualified Bonus, or portion thereof by the
Fair Market Value of one Share as of the Bonus Determination Date as determined
in good faith by the Committee. Any fractional Shares shall be paid to the
Participant in cash.
Sec. 7.3 ISSUANCE OF STOCK CERTIFICATE. The Corporation shall issue and
deliver a certificate for the Shares granted as a Stock Award as soon as
administratively and legally possible after the Bonus Determination Date. Any
delay in issuance of such certificate for such Shares after the Bonus
Determination Date shall be subject to the following:
(a) If, during the period of such delay, the Corporation declares and
pays a cash dividend and the circumstances are such that, if the
certificate for such Shares had been issued on the Bonus
Determination Date, the cash dividend would have been paid on
such Shares, then there shall be paid in cash to Participants to
whom Shares have been awarded but not issued on the dividend
payable date an amount equivalent to the dividends which would
have been payable with respect to such Shares if they had been
issued and outstanding on or after the Bonus Determination Date.
Such dividend equivalents shall be paid in cash on the date or
dates as of which dividends on the Corporation's issued and
outstanding Shares are payable.
(b) If, during the period of such delay, there is an increase or
decrease in the number of issued and outstanding Shares through
the declaration of a stock dividend or through recapitalization
resulting in a stock split-up, change in par value, combination
or exchange of Shares, or the like ("Stock Adjustment"), and the
circumstances are such that if the certificate for each Share had
been issued on the Bonus Determination Date such Shares would
have been adjusted to give effect to such Stock Adjustment, then
the number of Shares in such Stock Award shall be adjusted to
reflect such Stock Adjustment.
(c) If such Shares have not been issued 90 days following the Bonus
Determination Date, then the net dollar amount of such Stock
Award shall, in lieu of issuance of Shares, be paid in cash.
ARTICLE VIII.
RESTRICTED STOCK AWARDS
Sec. 8.1 RESTRICTED STOCK AWARDS. The Committee may make Restricted Stock
Awards to Participants which shall be subject to the provisions of this Article
VIII.
Sec. 8.2 RESTRICTED STOCK AGREEMENTS. Restricted Stock Awards shall be
evidenced by Restricted Stock Agreements which shall conform to the requirements
of the Plan and may contain such other provisions (such as provisions for the
protection of Restricted Stock in the event of mergers, consolidations,
dissolutions, and liquidations affecting either the Restricted Stock Agreement
or the stock issued thereunder) as the Committee shall deem advisable.
Sec. 8.3 PAYMENT OF RESTRICTED STOCK AWARDS. Restricted Stock Awards shall
be paid by delivering to the Participant, or custodian or escrow designated by
the Committee and the Participant, a certificate or certificates for such
restricted shares of common stock of the Corporation ("Restricted Shares")
registered in the name of such Participant. The Participant shall have all of
the rights of a common stock shareholder with respect to such Restricted Shares
except as to such restriction as appear on the face of the certificate. The
Committee shall designate the Corporation or one or more of its employees to act
as custodian or escrow for the certificates ("Escrow Agent").
Sec. 8.4 TERMS, CONDITIONS AND RESTRICTIONS. Restricted Shares shall be
subject to such terms and conditions, including vesting and forfeiture
provisions, if any, and to such restrictions against resale, transfer or other
disposition as may be determined by the Committee at such time as it grants a
Restricted Stock Award to a Participant. Any new or different Shares or other
securities resulting from any adjustment of such Restricted Shares pursuant to
Section 8.2 hereof shall be subject to the same terms, conditions and
restrictions as the Restricted Shares prior to such adjustment. The Committee
may in its discretion, remove, modify or accelerate the release of restrictions
on any Restricted Shares as it deems appropriate. In the event of the
Participant's death following the transfer of Restricted Shares to him or her,
the Participant's legal representative or person receiving such Restricted
Shares under the Participant's will or under the laws of descent and
distribution shall take such Restricted Shares subject to the same terms and
conditions and provisions in effect at the time of the Participant's death, to
the extent applicable.
Sec. 8.5 DIVIDENDS AND VOTING RIGHTS. During the restricted period the
Participant shall have the right to receive dividends from and to vote his or
her Restricted Shares.
Sec. 8.6 DEPOSIT SHARE PROVISIONS. Subject to the provisions set forth
below ("Deposit Share Provisions") and subject to rules established by the
Committee, eligible Participants who deposit with the Corporation Shares which
such Participants elect to receive in the form of Shares, rather than cash under
the Corporation's incentive compensation programs designated by the Committee,
are eligible to receive a Restricted Stock Award:
(a) The Committee shall notify each Participant selected to
participate in the Deposit Share Provisions ("Deposit Share
Participants") of the maximum number (and any lesser number) of
Shares they are permitted to deposit with the Escrow Agent, and
Deposit Share Participants may choose to deposit any number of
Shares they are permitted to deposit under the Committee rules
(the "Original Deposit").
(b) Deposit Share Participants must make their irrevocable election
on or before the date designated by the Committee or if no date
is designated, then at least 30 days prior to the date payment of
awards is made ("Award Date"). Deposit Share Participants who are
subject to the provisions of Section 16 of the Exchange Act must
make their irrevocable election on or before the date designated
by the Committee or if no such date is designated, then before
August 1, of the applicable year, but in any event at least six
(6) months prior to the Award Date.
(c) All elections shall be in writing and filed with the Committee or
its designee. Such elections may, if permitted by the Committee,
also specify one of the following alternatives regarding the
manner in which dividends are paid on all deposited stock
(including shares in the Original Deposit, Shares purchased with
dividends, if any, and matching Restricted Shares :
(1) Dividends shall be used for the purchase of additional
Shares for the Deposit Share Participant's account; or
(2) Dividends shall be paid currently to the Deposit Share
Participant.
(d) As soon as practicable following an Original Deposit, the
Corporation shall match these Shares and deposit with the Escrow
Agent for the Deposit Share Participant's account up to one
Restricted Share for each Share of the Original Deposit, as
determined by the Committee. The Restricted Shares deposited by
the Corporation shall vest in accordance with the schedule
determined by the Committee. Restricted Shares shall be
distributed promptly as they vest.
(e) Shares purchased with dividends paid on deposited stock (Original
Deposit, Restricted Stock or any shares purchased with dividends)
may be withdrawn from a Deposit Share Participant's account at
any time.
(f) A Deposit Share Participant may temporarily withdraw all or a
portion of the Shares on deposit (other than non-vested
Restricted Stock) in order to exercise Stock Options, subject to
an equal number of Shares being promptly redeposited with the
Escrow Agent after such exercise.
(g) A Deposit Share Participant's interests in the Original Deposit
or the Restricted Stock may not be sold, pledged, assigned or
transferred in any manner, other than by will or the laws of
descent and distribution, so long as such shares are held by the
Escrow Agent, and any such sale, pledge, assignment or other
transfer shall be null and void, provided, however, a pledge of
the Deposit Share Participant's interest in the Original Deposit
may be permitted in accordance with rules which the Committee may
establish.
(h) Any or all of the Original Deposit may be withdrawn at any time.
Withdrawal shall cause a forfeiture of any non-vested Restricted
Shares attributable to the Shares of the Original Deposit being
withdrawn. Any Shares withdrawn shall be deemed to be made under
paragraph (e) to the extent there are any such shares, and then
under this paragraph (h).
(i) In the event the Deposit Share Participant's employment with the
Corporation and its subsidiaries is terminated during the vesting
period by the reason of the Deposit Share Participant's death,
"Disability" or "Retirement", the vesting requirement shall be
deemed fulfilled upon the date of such termination of employment.
For purposes of this Sec. 8.6(i), "Disability" shall mean the
cessation of employment of the Deposit Share Participant under
circumstances where the Deposit Share Participant is eligible to
receive a monthly disability benefit pursuant to the group
long-term disability insurance program sponsored by the
Corporation or subsidiary which employs the Participant or would
be eligible to receive if he/she were a participant in the
applicable program. Unless otherwise provided by the Committee,
for purposes of this Sec. 8.6(i), "Retirement" shall mean the
Deposit Share Participant's termination of employment that
qualifies as Normal Retirement under the qualified retirement
plan of the Corporation or subsidiary of the Corporation under
which the Deposit Share Participant is covered.
(j) In the event of Deposit Share Participant's termination of
employment with the Corporation and its subsidiaries during the
vesting period for any reason other than those set forth in Sec.
8.6(i) hereof, the Shares, to the extent not otherwise vested,
shall automatically be forfeited and returned to the Corporation
unless the Committee shall, in its sole discretion, otherwise
provide.
pln\pln2119j
RELIASTAR FINANCIAL CORP.
MINNEAPOLIS, MINNESOTA
SHAREHOLDER'S PROXY - ANNUAL MEETING - MAY 8, 1997
(SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS)
The undersigned hereby appoints John G. Turner, John H. Flittie and Richard R.
Crowl, and each of them, attorneys and proxies, with power of substitution and
revocation to each, to vote all shares of the Corporation which the undersigned
would be entitled to vote if personally present at the Annual Meeting of the
Corporation to be held on Thursday, May 8, 1997, at 10 o'clock a.m., at the
general offices of the Corporation at 20 Washington Avenue South, Minneapolis,
Minnesota, and at any adjournments thereof, upon any and all business that may
properly come before said meeting.
THIS PROXY SHALL BE VOTED AS FOLLOWS:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
1. ELECTION OF DIRECTORS
<S> <C>
[ ]FOR ALL NOMINEES LISTED BELOW [ ]WITHHOLD AUTHORITY
(except as marked to the contrary below) to vote for all nominees listed below
DAVID C. COX, LUELLA GROSS GOLDBERG, RANDY C. JAMES, DAVID A. KOCH AND JAMES J. RENIER
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, WRITE THAT NOMINEE'S NAME IN THE SPACE BELOW)
__________________________________________________________________________________________________________________________
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
2. PROPOSAL TO RATIFY AND APPROVE THE RELIASTAR 1993 STOCK INCENTIVE PLAN AS AMENDED
[ ]FOR [ ]AGAINST [ ]ABSTAIN
3. PROPOSAL TO AMEND THE CERTIFICATE OF INCORPORATION TO CHANGE THE CORPORATION'S CAPITAL STOCK FROM NO PAR VALUE TO $.01
PAR VALUE PER SHARE
[ ]FOR [ ]AGAINST [ ]ABSTAIN
(OVER)
(CONTINUED FROM OTHER SIDE)
4. PROPOSAL TO RATIFY APPOINTMENT OF DELOITTE & TOUCHE AS INDEPENDENT PUBLIC ACCOUNTANTS
[ ]FOR [ ]AGAINST [ ]ABSTAIN
</TABLE>
THE SHARES TO WHICH THIS PROXY RELATES WILL BE VOTED AS SPECIFIED ON THIS PROXY,
BUT IF NO SPECIFICATION IS MADE, THEY WILL BE VOTED FOR PROPOSALS 1, 2, 3 AND 4.
DISCRETIONARY AUTHORITY IS HEREBY CONFERRED AS TO ALL OTHER MATTERS WHICH MAY
PROPERLY COME BEFORE THE MEETING.
Dated -------------------------------------- 1997
------------------------------------------------
(Signature)
------------------------------------------------
(Signature)
Please sign exactly as addressed, but if executed by a
corporation, fiduciary, etc., sign that name and add
signature and capacity of authorized signer.
------------------------------------------------------------
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY
USING THE ENCLOSED ENVELOPE.
------------------------------------------------------------
March 27, 1997
TO: Participants in the ReliaStar Success Sharing Plan and ESOP
The Annual Meeting of Shareholders of ReliaStar Financial Corp. ("ReliaStar")
will be held in the auditorium of 20 Washington Avenue, South, Minneapolis,
Minnesota, on Thursday, May 8, 1997 at 10:00 a.m. ReliaStar shareholders of
record as of March 10, 1996 may vote the Shares they held of record on that
date.
Although you are not a shareholder of record under the ReliaStar Success Sharing
Plan and ESOP ("ESOP") and as such are not entitled to vote at the meeting, you
do have an interest in the ReliaStar Common Stock ("Shares") held by the Plan.
For this reason, you may instruct Wilmington Trust Company, the Trustee for the
Plan, how to vote the Shares allocated to your accounts as of the record date.
Enclosed are several documents that are important for both the Annual Meeting
and proxy voting.
1. The Notice of Annual Meeting and Proxy Statement explains the proposals to
be voted upon at the Annual Meeting.
2. The enclosed Voting Instruction Card is to be used to record your voting
instructions for the Shares allocated to your accounts.
3. An annual report is enclosed for former employees who are participating in
the ReliaStar Success Sharing Plan and ESOP. (Please note that an annual
report has been sent to all active employees of ReliaStar under separate
cover.)
The number of Shares allocated to your accounts on the record date is shown on
the Voting Instruction Card. The Shares get one vote each.
TO VOTE ALL OF YOUR SHARES, SIMPLY COMPLETE AND RETURN THE VOTING INSTRUCTION
CARD, USING THE ENCLOSED ENVELOPE, TO NORWEST BANK ON BEHALF OF WILMINGTON TRUST
COMPANY. YOUR CARD MUST BE RECEIVED BEFORE MAY 1, 1997.
The Trustee will vote those Shares for which no voting instructions are received
as well as the Shares that are held in trust for allocation to participants'
accounts in future years in the same proportion as Shares for which voting
instructions are received.
If you have any questions about any of this material, please call me at (612)
372-5771.
Lance Johnson
Director, Employee Benefits
Encl.
RELIASTAR COMMON STOCK VOTING INSTRUCTION FORM
RELIASTAR SUCCESS SHARING PLAN AND ESOP
MUST BE RECEIVED BY NORWEST BANK
NO LATER THAN MAY 1, 1997
I hereby instruct Wilmington Trust Company, the Trustee of the ReliaStar Success
Sharing Plan and ESOP ("Plan"), to vote my interest in the shares of ReliaStar
Common Stock held in the Plan by the Trustee at the close of business on March
10, 1997, at the Annual Meeting of ReliaStar Financial Corp., to be held on May
8, 1997, and at any adjournment thereof, in the manner directed below with
respect to the matters described in the accompanying Notice of Annual Meeting
and Proxy Statement for said meeting:
<TABLE>
<CAPTION>
THIS PROXY SHALL BE VOTED AS FOLLOWS:
- -------------------------------------------------------------------------------------------------------------------------------
1. ELECTION OF DIRECTORS
<S> <C> <C> <C>
[ ] FOR ALL NOMINEES LISTED BELOW [ ]WITHHOLD AUTHORITY
except as marked to the contrary below) to vote for all nominees
DAVID C. COX, LUELLA GROSS GOLDBERG, RANDY C. JAMES, DAVID A. KOCH AND JAMES J. RENIER
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, WRITE THAT NOMINEE'S NAME IN THE SPACE BELOW)
- -------------------------------------------------------------------------------------------------------------------------------
2. PROPOSAL TO RATIFY AND APPROVE THE RELIASTAR 1993 STOCK INCENTIVE PLAN AS AMENDED
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. PROPOSAL TO AMEND THE CERTIFICATE OF INCORPORATION TO CHANGE THE CORPORATION'S CAPITAL STOCK FROM NO PAR VALUE TO $.01 PAR
VALUE PER SHARE
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(OVER)
(CONTINUED FROM OTHER SIDE)
4. PROPOSAL TO RATIFY APPOINTMENT OF DELOITTE & TOUCHE LLP AS INDEPENDENT PUBLIC ACCOUNTANTS
[ ] FOR [ ] AGAINST [ ] ABSTAIN
</TABLE>
I understand that this instruction form must be received by the Trustee by May
1, 1997. I also acknowledge receipt of the proxy materials for the 1997 Annual
Meeting.
If no instruction is indicated above, the Trustee is instructed to vote my
interest in the ReliaStar Common Stock held by the Trust on the proposals shown
proportionately in accordance with instructions received from other Plan
Participants with respect to shares of ReliaStar Common Stock ("ReliaStar
Shares"). I understand that ReliaStar Shares for which the Trustee does not
receive voting instructions, including unallocated ESOP Common shares, will be
voted by the Trustee in the same proportion as all ReliaStar Shares for which
the Trustee receives voting instructions. If no instructions are received from
any Participants, the Trustee will vote "FOR" the above proposals. On any other
matters that may properly come before the meeting, the Trustee shall vote in
accordance with its best judgment.
Dated _____________________________________ 1997
_______________________________________________
Signature of Participant
(Please date and sign exactly as shown.)
