SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the registrant [X]
Filed by a party other than the registrant [ ]
Check the appropriate box:
[ ] Preliminary proxy statement
[X] Definitive proxy statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
RELIASTAR FINANCIAL CORP.
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(Name of Registrant as Specified in Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transactions applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11. (Set forth the amount on which the
filing fee is calculated and state how it was determined.)
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
(1) Amount previously paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing party:
(4) Date filed:
<PAGE>
RELIASTAR FINANCIAL CORP.
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NOTICE OF ANNUAL MEETING
AND
PROXY STATEMENT
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ANNUAL MEETING OF SHAREHOLDERS
MAY 14, 1998
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 o'clock a.m., Minneapolis time, on May 14, 1998, 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,
John G. Turner
Chairman and Chief Executive Officer
<PAGE>
RELIASTAR FINANCIAL CORP.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 14, 1998
The Annual Meeting of ReliaStar Financial Corp., a Delaware
corporation, will be held on Thursday, May 14, 1998, at 10:00 o'clock a.m.,
Minneapolis time, at the general offices of the Corporation, 20 Washington
Avenue South, Minneapolis, Minnesota 55401, for the following purposes:
1. To elect three directors for terms expiring in 2001.
2. To consider and vote upon a proposal to ratify the appointment
of Deloitte & Touche LLP as the Corporation's independent
public accountants for 1998.
3. 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 17,
1998 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
Richard R. Crowl
Secretary
March 24, 1998
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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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<PAGE>
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 14, 1998, at 10:00 o'clock a.m. Minneapolis time, 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 24, 1998. Shares
of common stock of the Corporation ("Common Stock") 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
Annual 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 Annual 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 17, 1998 are
entitled to receive notice of and to vote at the Annual Meeting and any and all
adjournments. As of March 17, 1998 there were outstanding 90,867,948 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 are entitled
to instruct the trustee on how to vote all shares of the Corporation's Common
Stock allocated to their accounts under such plan and will receive a separate
proxy for voting such shares. The Success Sharing Plan and ESOP provides that
shares for which the trustee receives no voting instructions from participants,
including unallocated shares, 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 proposal 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 Connecticut, 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:
NAME OF AMOUNT AND NATURE OF PERCENT OF
BENEFICIAL OWNER BENEFICIAL OWNERSHIP CLASS(1)
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FMR Corp. 8,409,315 (2) 9.25%
82 Devonshire Street,
Boston MA 02109
Wilmington Trust Company 4,916,464 (3) 5.41%
1100 North Market Street,
Wilmington, DE 19890
<PAGE>
(1) Based upon shares outstanding as of the record date.
(2) As of December 31, 1997. FMR Corp. has sole voting power as to 391,920,
shared voting power as to 0, sole dispositive power as to 8,409,315 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 such person on whose behalf FMR Corp. owns Common Stock has an
interest that exceeds 5% of the shares outstanding. Fidelity Management
& Research Company ("Fidelity"), a wholly-owned subsidiary of FMR
Corp., is the beneficial owner of 7,731,095 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 7,731,095 shares owned
by the Funds. Neither FMR Corp. nor Edward C. Johnson 3d has the sole
power to vote or direct the voting of the shares owned directly by the
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 678,220 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 678,220
shares and sole power to vote or to direct the voting of 391,920
shares, and no power to vote or to direct the voting of 286,300 shares
owned by the institutional account(s). Edward C. Johnson 3d and Abigail
P. Johnson, who own 12.0% and 24.5% respectively of the outstanding
voting stock of FMR Corp., together with trusts for the benefit of
family members, form a controlling group (representing approximately
49% of the voting power of FMR Corp.) with respect to FMR Corp.
(3) As of December 31, 1997. These shares were 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.
Wilmington Trust Corporation and its wholly-owned subsidiary,
Wilmington Trust Company, had shared voting power as to 4,760,800 of
the reported shares due to such companies' role as Trustee of the ESOP
portion of the Corporation's Success Sharing Plan and ESOP. Such
companies also acted as trustee for personal trust accounts holding
155,664 shares. The Trustee had sole dispositive and voting power as to
2,300 of these shares, shared dispositive power as to 153,364 of these
shares, and shared voting power as to 150,214 of these shares.
Effective January 1, 1998, Northern Trust Company succeeded Wilmington
Trust Company as trustee of the Corporation's Success Sharing Plan and
ESOP. Also effective January 1, 1998, the Security-Connecticut
Corporation's Employees' Savings and Profit Sharing Plan merged into
the Corporation's Success Sharing Plan and ESOP as a result of the July
1, 1997 acquisition of Security-Connecticut Corporation by the
Corporation. As of March 17, 1998, there were 5,871,109 shares in the
Corporation's Success Sharing Plan and ESOP. Of these shares, 2,171,088
shares were allocated to participants and 3,700,021 were unallocated.
See the discussion on page 2 under the caption Outstanding Shares and
Voting Rights concerning voting rights under the Corporation's Success
Sharing Plan and ESOP.
<PAGE>
Ownership of equity securities of the Corporation by its directors and
executive officers as of February 28, 1998 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 2.95% of the Corporation's Common Stock.
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF BENEFICIAL
OWNERSHIP OF COMMON STOCK
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NAME OWNED OPTIONS (2) TOTAL
- ---- ----- ------------ -----
<S> <C> <C> <C>
Carolyn H. Baldwin 698 (1) 4,499 5,197
David C. Cox 12,337 (1) 4,499 16,836
Luella Gross Goldberg 60,351 (1)(3) 4,499 64,850
William A. Hodder 43,412 (1) 4,499 47,911
James J. Howard 8,060 (1) 4,499 12,559
Randy C. James 5,582 (1) 4,499 10,081
Richard L. Knowlton 25,041 (1) 4,499 29,540
David A. Koch 10,793 (1) 4,499 15,292
Richard M. Kovacevich 9,931 4,499 14,430
Glen D. Nelson 50,297 (1)(3) 4,499 54,796
James J. Renier 15,732 (1) 4,499 20,231
John G. Turner 205,765 (3)(4) 351,710 557,475
John H. Flittie 167,786 (3)(4) 200,822 368,608
Steven W. Wishart 126,560 (3)(4) 192,259 318,819
Ronald D. Jarvis 77,255 (3)(4) 103,344 180,599
Michael J. Dubes 85,472 (3)(4) 108,651 194,123
Directors and Executive
Officers as a group
(22 persons) 1,234,677 (1)(3)(4) 1,446,780 2,681,457
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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 Corporation: Ms. Baldwin, 341 shares; Mr. Cox, 1,781
shares; Mrs. Goldberg, 31,956 shares; Mr. Hodder, 15,898 shares; Mr.
Howard, 4,683 shares; Mr. James, 3,384 shares; Mr. Knowlton, 1,901
shares; Mr. Koch, 1,935 shares; Dr. Nelson, 3,654 shares; Dr. Renier,
1,942 shares. See the discussion on page 2 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, 1998.
(3) Includes shares of Common Stock held by family members as follows: Mrs.
Goldberg, 884 shares; Dr. Nelson, 8,698 shares; Mr. Turner, 20,456
shares; Mr. Flittie, 24,250 shares; Mr. Wishart, 29,085 shares; Mr.
Jarvis, 12,236 Mr. Dubes, 17,978 shares. 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, 19,622 shares; Mr. Flittie, 5,199 shares; Mr.
Wishart, 11,074 shares; Mr. Jarvis, 63 shares; Mr. Dubes, 8,472 shares;
directors and executive officers as a group, 74,499 shares.
<PAGE>
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 1999 Annual Meeting of the
Corporation must be received by the Corporation not later than November 26, 1998
if they are to be considered for inclusion in the Corporation's Proxy Statement
and identified in its form of proxy for the 1999 Annual Meeting. See also
procedures of Board Affairs Committee for Director nominations as noted on page
8.
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 1998 Annual
Meeting and in this Proxy Statement will be acted upon at the meeting. However,
if other matters properly come before the 1998 Annual 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 1997, including financial
statements which are incorporated herein by reference, is enclosed with this
Notice and Proxy Statement. Additional copies of the Annual Report and copies of
the Form 10K may be obtained from the Secretary of the Corporation, 20
Washington Avenue South, Minneapolis, Minnesota 55401.
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 1998 for a term of three years shall be set at three
and has nominated William A. Hodder, Richard L. Knowlton and John G. Turner for
election to the Board for terms expiring in 2001. 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 Annual 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, through a 1989
merger by which ReliaStar Life became a wholly-owned subsidiary of the
Corporation.
<PAGE>
NOMINEES FOR ELECTION FOR TERMS EXPIRING IN 2001
WILLIAM A. HODDER, age 66, 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 Musicland Stores Corporation,
Norwest Corporation, Supervalu Inc. and Tennant Company.
RICHARD L. KNOWLTON, age 65, 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 U. S. Bancorp., Mayo Foundation, Perth Corp. and Supervalu
Inc.
JOHN G. TURNER, age 58, 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.
DIRECTORS WHOSE CURRENT TERMS EXPIRE IN 2000
DAVID C. COX, age 60, director since 1988
Former President and Chief Executive Officer, Cowles Media Company
(communications and publishing) since March 19, 1998, President and Chief
Executive Officer from 1985 to 1998; Director of National Computer Systems, Inc.
and Tennant Company.
LUELLA GROSS GOLDBERG, age 61, director since 1976
Chair, Board of Trustees, University of Minnesota Foundation since 1996, Trustee
since 1976; Trustee Emerita 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,
Hormel Foods Corporation, Communication Systems, Inc. and Piper Funds.
RANDY C. JAMES, age 50, 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; Vice Chairman, Seafirst Bank prior to 1991; Director Charter Bank
(founder) and P.P.F. Financial.
<PAGE>
DAVID A. KOCH, age 67, director since 1981
Chairman, Graco Inc. (manufacturer of fluid handling equipment) since 1996,
Chairman and Chief Executive Officer from 1985 to 1995; Director of Graco Inc.,
Federal Reserve Bank of Minneapolis and SurModics, Inc.
JAMES J. RENIER, age 68, 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 and KLM Royal Dutch Airlines.
DIRECTORS WHOSE CURRENT TERMS EXPIRE IN 1999
CAROLYN H. BALDWIN, age 49, director since 1993
Vice President of The Coca-Cola Company (manufacturer, distributor and marketer
of non-alcoholic beverages) and President of Coca-Cola Financial Corporation
(provides loans and leases to bottlers) since 1997, Vice President and Chief of
Internal Audits Worldwide from 1993 to 1997, President of Coca-Cola Financial
Corporation from 1991 to 1993.
JOHN H. FLITTIE, age 61, 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 Life Insurance Company of
New York since 1996; Director of Community First Bankshares, Inc. and
subsidiaries of the Corporation.
JAMES J. HOWARD, age 62, 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 54, 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 60, 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.
<PAGE>
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 two meetings
in 1997. Current members are Directors Turner (Chair), Flittie, Goldberg,
Hodder, Knowlton, Kovacevich and Renier.
FINANCE COMMITTEE. The Finance Committee considers investment policy,
shareholder dividends and matters of corporate finance, including capitalization
and financing policies. Seven Finance Committee meetings were held during 1997.
Current members are Directors Turner (Chair), Flittie, Goldberg, Hodder,
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
two times during 1997. 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 1997. 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, Hodder, Knowlton, 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 1997. Current members are
Directors Hodder (Chair), Cox, Goldberg, Howard, James, Kovacevich and Renier.
The Board held eight regular meetings during 1997. 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 1997.
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 1997. 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: Mr. Chris Schreier filed a late report on Form 3 upon becoming
the Corporation's Chief Accounting Officer and Controller and Mr. Steven Wishart
and Mr. Craig Rodby, former executive officers, each filed one late report on
Form 4 due to a mailing delay in the Corporation's internal mail department.
<PAGE>
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 executive officers of
the Corporation named in the Summary Compensation Table 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 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 1997 is consistent
with the Corporation's practices for the past several years. 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. There are currently 21 companies in the peer group,
including the Corporation and all five 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.
BASE SALARY. In July, 1997 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 the previous twelve months and his salary relative to the
percentile target of the peer group along with the recommendation of external
consultants.
In February, 1997, 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 1996 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 executive officer 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 1997 to the CEO
and other named executive officers were paid pursuant to the Annual Incentive
Bonus Plan for Designated Executive Officers ("Annual Bonus Plan"). This Annual
Bonus Plan complies with the requirements of Section 162(m) of the Internal
Revenue Code and compensation paid pursuant to the Annual Bonus Plan is fully
tax-deductible to the Corporation. Under the Annual Bonus Plan, the Corporation
must achieve an after-tax operating income return on common equity ("ROE") for
the Annual Bonus 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 1997. If the ROE goal is achieved, a maximum bonus pool
is created which equals two percent of income from continuing operations for the
Annual Bonus 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 1997 payments was $6,693,000. The Annual Bonus 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 Annual Bonus Plan
year, and that the maximum bonus to any of six other executive officers covered
under the Annual Bonus Plan may not exceed 10.5% of the bonus pool amount. For
1997, the maximum bonuses that could be paid to the CEO and COO were $1,339,000
and $1,138,000 respectively, and the maximum bonus payable to each of the other
named executive officers was $702,667.
<PAGE>
Although the Annual Bonus Plan specifies the maximum annual bonuses
which may be paid to any covered executive for a Annual Bonus Plan year, the
Committee exercised discretion, as permitted under the Annual Bonus Plan and
Section 162(m), to pay lesser annual incentive bonuses for 1997 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 1997 compared to planned goals
for these measures. Operating earnings of the Corporation for 1997 were affected
by a charge to earnings for restructuring and other nonrecurring expenses of
approximately $14 million (after tax) during the fourth quarter of 1997.
Management recommended and the Committee determined that the effect of the
charge should be reflected in the computation of the Enterprise Performance
Factor thereby reducing the payouts under the Annual Bonus Plan. 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 1997, as a percentage of base
annualized salary, for achievement of the threshold, par and maximum goals,
respectively, was 37.5%, 75%, and 112.5% for the CEO, 30%, 60%, and 90% for the
COO, and 25%, 50%, and 75% for the other named executive officers. The
Corporation's 1997 performance relative to the Enterprise Performance Factor was
approximately two-thirds of the way between the threshold and par goals. This
resulted in awards on the Enterprise Performance Factor approximately two-thirds
of the way between the threshold and par 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 group
used for compensation and financial performance comparison purposes. The
Committee believes that the 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 each member of 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, 1997 produced awards at the maximum level,
reflecting the Corporation's rank within the peer group. The Corporation's
independent public accountants 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 1997, the Committee awarded options to purchase 341,426 shares of
the Corporation's Common Stock to the named executive officers, including
150,000 options awarded to the CEO. The exercise price for each grant was the
fair market value as of the date of grant. Of these options, 222,200 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.
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 1997 to the named executive
officers include a replacement stock option feature. When these options are
exercised, the executive will be awarded replacement
<PAGE>
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
1997 by the Committee were 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 programs 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 1997 incentive awards payable
in February 1998, the Committee determined that the named executive officers and
about 60 other key employees would be eligible to elect to deposit shares with a
fair market value of up to one-fourth of a participant's annual incentive
compensation award for 1997. To receive a restricted stock award, the
participant had to elect to receive payment of a specified percentage of
incentive awards for 1997 in 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 participants are entitled
to vote and receive dividends on them until the restricted period ends. If the
shares deposited by the participants are withdrawn prior to the vesting of the
matching restricted shares, the participant forfeits a proportional amount of
the nonvested restricted shares. Except in the event of a disability, retirement
as defined in the Stock Plan, or death, the participant 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 compensation paid to its executive officers. The Corporation has adopted the
Annual Bonus Plan, 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 Program
and the Stock Plan are both structured in a manner to preserve the Corporation's
ability to deduct award payments and to realize a 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 Corporation's compensation plans to
motivate and reward excellent performance.
The Members of the Committee:
WILLIAM A. HODDER (CHAIR)
DAVID C. COX
LUELLA G. GOLDBERG
JAMES J. HOWARD
RANDY C. JAMES
RICHARD M. KOVACEVICH
JAMES J. RENIER
<PAGE>
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 and the four
other highest paid executive officers of the Corporation:
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
-------------------------------
ANNUAL AWARDS PAYOUTS
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 1997 673,077 441,249 0 61,219 150,000 910,000 87,069(6)
Chief Executive Officer 1996 623,654 506,923 0 60,009 65,000 739,375 93,492(7)
1995 586,269 499,216 0 119,635 32,058 764,400 81,452(8)
John H. Flittie, President 1997 503,846 258,361 0 37,179 67,832 624,000 35,488(6)
and Chief Operating 1996 451,923 309,860 0 36,544 38,704 483,000 53,732(7)
Officer 1995 425,100 306,239 0 263,656 21,040 505,680 53,802(8)
Steven W. Wishart, Senior Vice 1997 307,769 182,348 0 0 58,474 311,000 23,019(6)
President and Chief Investment 1996 296,846 203,852 0 0 11,571 261,625 34,693(7)
Officer (9) 1995 288,173 181,075 0 0 17,615 285,180 36,058(8)
Ronald D. Jarvis, Senior Vice 1997 407,692 70,950 77,164(11) 0 42,050(12) 143,423(14) 60,508(6)
President (10) 1996 363,000 270,494 0 0 28,370(13) 297,750(15) 64,698(7)
1995 331,000 0 0 0 23,890(13) 0 4,965(8)
Michael J. Dubes, Senior Vice 1997 305,962 140,665 0 16,811 22,970 310,000 29,086(6)
President (16) 1996 288,269 142,431 0 17,252 15,887 258,125 59,985(7)
1995 N/A N/A N/A N/A N/A N/A N/A
- ----------------
</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. Bonus amounts shown in cash that are paid
in Common Stock are converted to shares by dividing the dollar amount
by the fair market value of the Common 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 and ESOP covering all eligible employees of the
Corporation.
(3) Amounts shown for each year are based on the closing price of the
Common Stock on the date of grant. The total number of restricted
shares held, and their value based on the closing price on December 31,
1997, by each of the named executives is as follows: Mr. Turner, 18,278
shares ($752,825); Mr. Flittie, 22,783 shares ($938,375); Mr. Wishart,
2,847 shares ($117,261); Mr. Dubes, 10,269 shares ($422,954). 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 1997 plan year as follows: Mr. Turner, $33,822; Mr. Flittie,
$25,318; Mr. Wishart, $15,465; Mr. Dubes, $15,375; (b) 1997 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 and the imputed income on the term portion of split dollar
life insurance coverage paid by the Corporation on behalf of the named
executives as follows: Mr. Turner, $9,815; Mr. Flittie, $7,063; Mr.
Wishart, $7,553, Mr. Jarvis, $3,081; Mr. Dubes, $6,359; (c) interest
accrued during 1997 on long-term incentive program payout amounts
deferred at the executive's election as follows: Mr. Turner, $43,431;
Mr. Flittie, $3,107; Mr. Dubes, $7,352. For Mr. Jarvis, includes
$43,973 in above-market earnings accrued with respect to deferred
compensation accounts during 1997 and not reported as "other annual
compensation" (see footnote 11 below) and combined contributions of
$13,454 to
<PAGE>
the Security-Connecticut Corporation ("SCC") Employees' Savings and
Profit Sharing Plan, which plan has been merged into the Corporation's
Success Sharing Plan and ESOP as of January 1, 1998 and to nonqualified
supplemental plans for the 1997 plan year which have been discontinued
as to future participation and accruals as of December 31, 1997.
Obligations accrued under these supplemental plans at the time of
discontinuation have been assumed by the Corporation.
(7) 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. 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. 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. 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. For Mr. Jarvis, includes $9,000 in contributions made or
accrued under the SCC Employees' Savings and Profit Sharing Plan which
plan has been merged into the Corporation's Success Sharing Plan and
ESOP and $55,698 in contributions made or accrued under SCC
non-qualified supplemental plans.
(8) 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; (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; (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. For Mr. Jarvis,
includes contributions made or accrued for fiscal year 1995 under the
SCC Employees Savings and Profit Sharing Plan which plan has been
merged into the Corporation's Success Sharing Plan and ESOP and under
related supplemental plans of SCC.
(9) Mr. Wishart resigned as an executive officer effective January 1, 1998
and will retire effective October 31, 1998.
(10) On July 1, 1997, SCC merged with and into the Corporation (hereinafter
the "Acquisition"). Mr. Jarvis served as Chairman, President and Chief
Executive Officer of SCC prior to the Acquisition, including January 1
to July 1, 1997, 1996 and 1995, with respect to which compensation for
Mr. Jarvis from SCC is included in the Summary Compensation Table.
(11) Includes $1,314 in above-market earnings on 1997 contributions to
deferred compensation accounts, earnings of $41,074 paid in 1997 on
long-term incentive compensation, car allowance of $10,592, taxable
travel expenses paid by SCC of $9,916 and other perquisites and
personal benefits totaling $14,268.
(12) Represents securities underlying options granted in 1997 by SCC prior
to the Acquisition and converted to options to acquire 28,370 shares of
Common Stock of the Corporation pursuant to the terms of the
Acquisition, (see note 5, page 16), and options to acquire 13,680
shares of Common Stock granted by the Corporation after the
Acquisition.
(13) Represents securities underlying options granted in 1995 and 1996 and
converted to options to acquire shares of Common Stock of the
Corporation pursuant to the terms of the Acquisition, (see note 5, page
16).
(14) Mr. Jarvis participated in six months of the three-year performance
cycle ending December 31, 1997 under the Corporation's Long-Term
Incentive Plan and his 1997 award of $66,667 is based on his six months
of participation. In addition, Mr. Jarvis received a prorated award of
$76,756 in 1997 for the 1996-1998 performance cycle under SCC's
Long-Term Incentive Plan which plan was terminated at the time of the
Acquisition. Payments under the SCC Long-Term Incentive Plan were made
at the time of the Acquisition, and the Corporation has no further
obligations with respect to this plan.
(15) Represents amounts paid for the 1994-1996 performance cycle under the
SCC Long-Term Incentive Plan.
(16) Mr. Dubes was not in an executive officer position with the Corporation
in 1995.
<PAGE>
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN*
- -------------------------------------------------------------------------------
[LINE GRAPH]
1992 1993 1994 1995 1996 1997
- --------------------- ------- ------- ------- ------- ------- -------
ReliaStar 100.00 129.07 120.25 188.93 251.76 365.75
S&P Life Ins. Index 100.00 101.30 84.02 120.64 147.41 184.33
S&P 500 Index 100.00 110.08 111.53 153.45 188.68 251.63
- --------------------- ------- ------- ------- ------- ------- -------
*Assumes $100 invested on December 31, 1991 in ReliaStar Financial Corp. Common
Stock, the S&P 500 Index and the S&P Life Insurance Index. Total return assumes
reinvestment of dividends.
<PAGE>
STOCK OPTIONS
The following tables summarize stock option grants and exercises during
1997 with respect to the CEO and the other executive officers named in the
Summary Compensation Table and the estimated value of the options held by such
persons at the end of 1997.
STOCK OPTION GRANTS IN 1997
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES PERCENTAGE OF
UNDERLYING TOTAL OPTIONS GRANT DATE
OPTIONS GRANTED EXERCISE OR PRESENT
GRANTED IN 1997 BASE PRICE EXPIRATION VALUE
NAME (#)(1) (%) ($) DATE ($)(2)
- ------------------ ----------- ------------- ----------- ---------- ---------
<S> <C> <C> <C> <C> <C>
John G. Turner 150,000(3) 5.64 38.9219 7/10/07 1,815,079
John H. Flittie 38,060(3) 1.43 28.6875 2/12/07 331,911
9,714(4) .36 31.8125 2/10/04 83,732
20,058(4) .75 31.8125 2/08/05 184,420
Steven W. Wishart 15,632(3) .59 28.6875 2/12/07 136,322
3,318(4) .12 29.7813 2/06/06 30,028
19,880(4) .75 32.3750 2/10/04 168,778
5,444(4) .20 32.3750 2/11/03 42,308
1,698(4) .06 32.3750 2/07/06 16,465
12,502(4) .47 32.3750 2/08/05 114,127
Ronald D. Jarvis (5) 28,370(6) 1.07 24.4450 2/20/07 439,618
13,680(3) .51 34.8750 11/13/07 151,416
Michael J. Dubes 18,508(3) .70 28.6875 2/12/07 161,403
1,761(4) .07 36.8750 2/10/03 15,479
2,701(4) .10 36.8750 2/06/06 30,552
</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
holder'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 calculated
over the most recent 12-month period as of the end of the month prior
to the grant date (ranges from 1.79% to 2.32%); a volatility factor
calculated over the 36-month period as of the end of the month prior to
the grant date (ranges from 16.1% to 19.61%); a risk-free rate of
return equal to the most recent 52-week average of the 10-year T-Bond
rate as of the end of the month prior to the grant date (ranges from
6.38% to 6.61%); 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 holder'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) options awarded on exercise of options 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,
<PAGE>
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.
(5) As a result of the Acquisition, the Corporation assumed all outstanding
options to purchase SCC common stock, including outstanding options
held by Mr. Jarvis. These options are exercisable upon the same terms
and conditions as under the SCC option plan under which they were
granted, except that each option is exercisable for the number of
shares of Common Stock of the Corporation as would have been received
pursuant to the Acquisition for the shares of SCC common stock subject
to the option had the option been exercisable and exercised immediately
prior to the Acquisition, and the exercise price per share is the
option price per share in effect immediately prior to the Acquisition
divided by the exchange ratio used in the Acquisition. Except as
otherwise noted with respect to SCC options awarded to Mr. Jarvis in
1997, the options issued in substitution for previously issued SCC
options are not included in the table.
(6) These options were issued to Mr. Jarvis in 1997 prior to the
Acquisition pursuant to the SCC option plan and are shown in the table
as converted into options of the Corporation as described in note (5)
above.
AGGREGATED STOCK OPTION EXERCISES IN 1997 AND YEAR-END STOCK OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
SHARES ACQUIRED VALUE OPTIONS AT END OF 1997 AT END OF 1997
ON EXERCISE REALIZED (EXERCISABLE/UNEXERCISABLE) (EXERCISABLE/UNEXERCISABLE)
NAME (#) ($) (#) ($)
- ---------------- --------------- --------- -------------------------- ---------------------------
<S> <C> <C> <C> <C>
John G. Turner 28,512 720,876 327,739/258,039 9,037,424/2,505,373
John H. Flittie 49,378 822,630 225,938/73,634 5,591,517/1,206,000
Steven W. Wishart 70,158 1,182,167 202,156/36,318 5,230,235/619,622
Ronald D. Jarvis 0 0 141,897/44,041 3,666,695/615,301
Michael J. Dubes 29,138 633,724 126,911/45,175 3,591,937/703,467
</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 currently 21
companies in the peer group, including the Corporation and all five 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, 1997 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 1997 but which did not end in 1997, 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 annualized base salary amounts may vary from these
estimates. Awards under the program made to any participant for a performance
cycle may not exceed $2 million. The award for any performance cycle is not
earned until the conclusion of the cycle, and the Committee has the right to
amend or discontinue the program as to cycles in progress at any time.
<PAGE>
<TABLE>
<CAPTION>
PERFORMANCE OR OTHER PERIOD ESTIMATED FUTURE PAY-OUTS UNDER NON-STOCK-PRICE-BASED PLANS
NAME UNTIL MATURATION OR PAY-OUT THRESHOLD ($) TARGET ($) MAXIMUM ($)
- ------------------ --------------------------- -----------------------------------------------------------
<S> <C> <C> <C> <C>
John G. Turner 1996-1998 119,438 477,750 955,500
1997-1999 125,409 501,638 1,003,275
John H. Flittie 1996-1998 81,900 327,600 655,200
1997-1999 85,995 343,980 687,960
Steven W. Wishart 1996-1998 27,213 108,850 217,700
1997-1999 N/A N/A N/A
Ronald D. Jarvis 1996-1998 26,250 105,000 210,000
1997-1999 45,938 183,750 367,500
Michael J. Dubes 1996-1998 40,688 162,750 325,500
1997-1999 42,722 170,888 341,775
</TABLE>
DEFINED BENEFIT RETIREMENT PLAN
QUALIFIED DEFINED BENEFIT RETIREMENT PLAN. The following table
illustrates the estimated monthly 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. This
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 1997, that annual limit
was $125,000. In addition, the Internal Revenue Code limits the amount of annual
compensation that may be considered under qualified retirement plans. In 1997,
that annual limit was $160,000. 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, $700,000; Mr. Flittie, $520,000; Mr. Wishart, $311,000; and
Mr. Dubes, $310,000. Years of credited service for the named executive officers
are as follows: Mr. Turner, 30 years; Mr. Flittie, 12 years; Mr. Wishart, 27
years; and Mr. Dubes, 30 years. Mr. Flittie has an unfunded agreement which will
provide him with a supplemental retirement benefit, payable outside of the
Corporation's qualified defined benefit retirement plan, based on 25 years of
credited service at age 65, less the amount of his actual retirement benefit
payable under such plan. The table below shows the estimated monthly retirement
benefit from the Corporation's qualified defined benefit retirement plan for the
salary and length of service shown net of the Social Security offset. The Social
Security offset reflected in the table is the maximum primary Social Security
benefit for a fully insured retiree at December 31, 1997.
<PAGE>
<TABLE>
<CAPTION>
ESTIMATED FIVE-YEAR CERTAIN AND LIFE MONTHLY ANNUITY AT AGE 65
YEARS OF CREDITED SERVICE
--------------------------------------------------------------
FINAL AVERAGE ANNUAL REGULAR SALARY($) 15 20 25 30 35
- -------------------------------------- -- -- -- -- --
<S> <C> <C> <C> <C> <C>
200,000....................................... 4,597 6,130 7,662 8,162 8,662
250,000....................................... 5,847 7,797 9,746 10,371 10,996
300,000....................................... 7,097 9,463 11,829 12,579 13,329
350,000....................................... 8,347 11,130 13,912 14,787 15,662
400,000....................................... 9,597 12,797 15,996 16,996 17,996
450,000....................................... 10,847 14,463 18,079 19,204 20,329
500,000....................................... 12,097 16,130 20,162 21,412 22,662
550,000....................................... 13,347 17,797 22,246 23,621 24,996
600,000....................................... 14,597 19,463 24,329 25,829 27,329
650,000....................................... 15,847 21,130 26,412 28,037 29,662
700,000....................................... 17,097 22,797 28,496 30,246 31,996
750,000....................................... 18,347 24,463 30,579 32,454 34,329
800,000....................................... 19,597 26,130 32,662 34,662 36,662
850,000....................................... 20,847 27,797 34,746 36,871 38,996
900,000....................................... 22,097 29,463 36,829 39,079 41,329
950,000....................................... 23,347 31,130 38,912 41,287 43,662
</TABLE>
In connection with the Acquisition, the SCC Employees' Retirement Plan and
nonqualified supplemental plan, in which Mr. Jarvis was a participant, was
merged effective January 1, 1998 into the Corporation's qualified defined
benefit retirement plan, and the SCC plan was frozen as to prospective
eligibility and benefit accruals. As of December 31, 1997, Mr. Jarvis' combined
monthly vested accrued benefit under the SCC plan and nonqualified supplemental
plan was $14,893. Future qualified defined benefit plan benefit accruals for Mr.
Jarvis will be determined under the Corporation's qualified defined benefit
retirement plan and SRAs as described above with Mr. Jarvis receiving 32 years
of credited service under such plans.
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 those named in the Summary Compensation Table,
except Mr. Jarvis. 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
five 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-year
certain and life monthly benefit, assuming retirement at age 65 in 1998, 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, 1997 for the named executive
officers is as follows: Mr. Turner, 30 years; Mr. Flittie, 12 years; Mr.
Wishart, 27 years; and Mr. Dubes, 30 years. Current compensation covered by the
SERP for the named executive officers is as follows: Mr. Turner, $1,103,052; Mr.
Flittie, $753,768; Mr. Wishart, $484,962; and Mr. Dubes, $441,502.
<PAGE>
SALARY + ANNUAL INCENTIVE($) ESTIMATED ANNUAL BENEFIT ($)
- ---------------------------- ----------------------------
350,000 176,396
400,000 203,896
450,000 231,396
500,000 258,896
550,000 286,396
600,000 313,896
650,000 341,396
700,000 368,896
750,000 396,396
800,000 423,896
850,000 451,396
900,000 478,896
950,000 506,396
1,000,000 533,896
1,050,000 561,396
1,100,000 588,896
1,150,000 616,396
1,200,000 643,896
1,250,000 671,396
1,300,000 698,896
1,350,000 726,396
1,400,000 753,896
1,450,000 781,396
1,500,000 808,896
1,550,000 836,396
Mr. Jarvis does not participate in the Corporation's SERP. Mr. Jarvis
is a participant in the SCC Executive Salary Continuation Plan for which the
Corporation assumed obligations existing as of December 31, 1997. The amount of
the salary continuation benefit is 2% of Mr. Jarvis' final monthly salary
multiplied by the total number of years of participation in the plan, up to a
maximum of 10% of his final monthly salary. This benefit is contingent upon Mr.
Jarvis refraining from competing with the Corporation while receiving the
benefit. In the event of Mr. Jarvis' death before retirement and the attainment
of age 65, Mr. Jarvis' surviving spouse shall receive annual payments during the
spouse's lifetime equal to 25% of Mr. Jarvis' final annual rate of pay until the
later of the date on which Mr. Jarvis would have attained age 65 or 10 years.
Mr. Jarvis' current salary covered under this plan is $407,692.
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, a named
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.
Mr. Jarvis had an employment agreement with SCC at the time of the
Acquisition. Under the terms of the employment agreement a change in control of
SCC occurred at the time of the Acquisition on July 1, 1997 and the Corporation
assumed SCC's obligations under the employment agreement. Pursuant to the terms
of his employment
<PAGE>
agreement, upon a change in control of SCC, if Mr. Jarvis is terminated for any
reason other than "for cause," or resigns for "good reason" within two years of
a change in control of the SCC, the Corporation is obligated to pay Mr. Jarvis
an amount equal to three years' base salary in effect at the date of termination
plus an average bonus for the previous three fiscal years. In addition, the
agreement provides for other benefits, such as outplacement services, medical
benefits for three years after the termination date, credit for three additional
years of service after the date of termination under retirement plans and other
fringe benefits. A voluntary termination within one year of a change of control
will be considered a resignation for "good reason." If Mr. Jarvis resigns for
"good reason" after two years have elapsed following a change in control of SCC,
the Corporation is obligated to pay Mr. Jarvis an amount equal to one year's
base salary plus average bonus.
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 CEO, with the
approval of the Personnel and Compensation Policy Committee, has caused the
Corporation to partially fund one of these trusts. In the event of a change of
control of the Corporation, the trusts provide that funds shall automatically be
irrevocably contributed to the trusts. In connection with the Acquisition, a
grantor trust established by SCC for similar purposes was funded.
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, 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
$24,000. The annual retainer for directors who also serve as Chair of a
committee of the Board of Directors is currently $28,000. 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 1997 Annual Meeting, directors are required to receive payment of
30% of their annual retainer in shares of the Corporation's Common Stock.
Directors also may elect to receive Common Stock 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 Common Stock
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 Common Stock 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 of Common Stock. The Deferred Share Account
is an unsecured bookkeeping account in which the Corporation's liability is
measured by and is payable in Common Stock. On any date that cash dividends are
payable on the Common Stock, additional units are 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 Common Stock
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 Common Stock 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 Common Stock 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 Common Stock 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 Common Stock and
meeting fees which are payable in cash in an unfunded, unsecured deferred cash
account.
<PAGE>
DIRECTORS' STOCK OPTIONS. The Directors' Stock Plan also provides for
annual nondiscretionary grants of options to purchase 2,500 shares of Common
Stock to be made on the date of each Annual Meeting to each nonemployee director
whose term continues past the Annual Meeting. The Board of Directors has voted
to amend the Directors' Stock Plan to provide for annual nondiscretionary grants
of options to purchase 3,500 shares of Common Stock, commencing with the Board
year following the 1998 Annual Meeting. Pursuant to the Directors' Stock Plan,
options to purchase 2,500 shares of Common Stock at $30.5625 per share were
granted to each such nonemployee director on May 8, 1997. The exercise price of
the options is the fair market value of the Common Stock shares as of the date
of grant, and each option is for a term of ten years. The options are
nonqualified stock options. Options may be exercised by payment of cash or
transfer of shares of Common Stock 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 of Common
Stock that would otherwise be issued upon exercise that number of Common Stock
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 $6,000 in meeting fees and a
$6,000 retainer for his service as Chairman of the Northern Life Advisory Board,
an advisory board of Northern Life Insurance Company, a subsidiary of the
Corporation. Mr. James will receive an annual retainer of $6,500 for his
services in this capacity during 1998, plus $1,000 for each Northern Life
Advisory Board meeting attended during 1998 and for each Northern Life Insurance
Company Board meeting attended during 1998 in his capacity as Chairman of the
Northern Life Advisory Board. In addition, Mr. James has a consulting agreement
with the Corporation, effective January 1, 1998, in which Mr. James will be paid
$200 per hour on an as-needed basis with regard to the Corporation's subsidiary,
ReliaStar Bank.
PROPOSAL 2
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 1998. Deloitte & Touche LLP served as independent public
accountants for the Corporation for 1997. 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 1998. Proxies solicited by the Board will be
so voted unless shareholders specify otherwise on their proxies.
Dated March 24, 1998
<PAGE>
RELIASTAR FINANCIAL CORP.
MINNEAPOLIS, MINNESOTA
SHAREHOLDER'S PROXY -- ANNUAL MEETING -- MAY 14, 1998
(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 14, 1998, at 10 o'clock a.m.,
Minneapolis time, 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:
- --------------------------------------------------------------------------------
1. ELECTION OF DIRECTORS
[ ] FOR ALL NOMINEES LISTED BELOW [ ] WITHHOLD AUTHORITY
(EXCEPT AS MARKED TO THE CONTRARY BELOW) TO VOTE FOR ALL NOMINEES
WILLIAM A. HODDER, RICHARD L. KNOWLTON AND JOHN G. TURNER
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, WRITE
THAT NOMINEE'S NAME IN THE SPACE BELOW)
----------------------------------------------------------------------------
2. PROPOSAL TO RATIFY APPOINTMENT OF DELOITTE & TOUCHE LLP AS INDEPENDENT
PUBLIC ACCOUNTANTS FOR 1998
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(OVER)
<PAGE>
[LOGO] RELIASTAR
(CONTINUED FROM OTHER SIDE)
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 AND 2.
DISCRETIONARY AUTHORITY IS HEREBY CONFERRED AS TO ALL OTHER MATTERS WHICH MAY
PROPERLY COME BEFORE THE MAY 14, 1998 ANNUAL MEETING OR ANY ADJOURNMENT THEREOF.
Dated ____________________________, 1998
________________________________________
(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.
<PAGE>
RELIASTAR COMMON STOCK VOTING INSTRUCTION FORM
RELIASTAR SUCCESS SHARING PLAN AND ESOP
MUST BE RECEIVED BY NORWEST BANK
NO LATER THAN MAY 5, 1998
I hereby instruct The Northern 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 17, 1998, at the Annual Meeting of ReliaStar Financial Corp., to be
held on May 14, 1998, 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.
This proxy shall be voted as follows:
- --------------------------------------------------------------------------------
1. ELECTION OF DIRECTORS
[ ] FOR ALL NOMINEES LISTED BELOW [ ] WITHHOLD AUTHORITY
(EXCEPT AS MARKED TO THE CONTRARY BELOW) TO VOTE FOR ALL NOMINEES
WILLIAM A. HODDER, RICHARD L. KNOWLTON AND JOHN G. TURNER
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, WRITE
THAT NOMINEE'S NAME IN THE SPACE BELOW)
----------------------------------------------------------------------------
2. PROPOSAL TO RATIFY APPOINTMENT OF DELOITTE & TOUCHE LLP AS INDEPENDENT
PUBLIC ACCOUNTANTS FOR 1998
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(OVER)
<PAGE>
[LOGO] RELIASTAR
(CONTINUED FROM OTHER SIDE)
I UNDERSTAND THAT THIS INSTRUCTION FORM MUST BE RECEIVED BY THE TRUSTEE BY MAY
5, 1998. I ALSO ACKNOWLEDGE RECEIPT OF THE PROXY MATERIALS FOR THE 1998 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 ____________________________, 1998
________________________________________
Signature of Participant
(Please date and sign exactly as shown.)
