<PAGE> 1
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))
THE LOEWEN GROUP INC.
(Name of Registrant as Specified in its Charter)
N/A
(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)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is
calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials:
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount previously paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE> 2
LOGO
THE LOEWEN GROUP INC.
NOTICE OF ANNUAL GENERAL MEETING OF SHAREHOLDERS
NOTICE IS HEREBY GIVEN that the Annual General Meeting (the "Meeting") of
the holders of Common shares without par value ("Common Shares") of The Loewen
Group Inc. (the "Company") will be held at the Pan Pacific Hotel, 999 Canada
Place, Vancouver, British Columbia, Canada, at 2:30 p.m. (Pacific Daylight Time)
on Thursday, the 14th day of May, 1998, for the following purposes:
1. to receive the report of the Directors to the shareholders and the
financial statements of the Company for the year ended December 31,
1997, together with the report of the auditors thereon;
2. to elect three Directors for terms of office as more particularly
described in the accompanying Proxy Statement and Information
Circular;
3. to appoint auditors for the ensuing year;
4. to authorize the Directors to fix the remuneration to be paid to the
auditors;
5. to consider and, if thought advisable, to pass an ordinary resolution
to approve an amendment of the Employee Stock Option Plan
(International), formerly known as the Employee Stock Option Plan
(United States), to increase the number of Common Shares issuable
thereunder by 400,000 Common Shares;
6. to consider and, if thought advisable, to pass an ordinary resolution
to approve an amendment of the Employee Stock Option Plan (Canada) to
increase the number of Common Shares issuable thereunder by 700,000
Common Shares; and
7. to consider such other matters as may properly be brought before the
Meeting or any adjournment or postponement thereof.
The share transfer books of the Company will not be closed, but the Board
of Directors has fixed March 26, 1998 as the record date for the determination
of shareholders entitled to notice of and to vote at the Meeting and at any
adjournment or postponement thereof. Each registered holder of Common Shares at
the close of business on that date is entitled to such notice and to vote at the
Meeting in the circumstances set out in the accompanying Proxy Statement and
Information Circular.
A Proxy Statement and Information Circular and form of proxy accompany this
Notice of Meeting.
Shareholders who are registered holders of Common Shares and who are unable
to attend or who are not expecting to be present at the Meeting in person are
requested to date and sign the enclosed form of proxy for holders of Common
Shares and return it in the envelope provided for that purpose. Forms of proxy
must be received by CIBC Mellon Trust Company not later than 10:00 a.m. (Pacific
Daylight Time) on Wednesday, the 13th day of May, 1998, at 200 Queens Quay East,
Unit 6, Toronto, Ontario, Canada, M5A 4K9, or by mail at P.O. Box 12005 Stn. BRM
B, Toronto, Ontario, Canada, M7Y 2K5, or by fax at (416) 368-2502.
<PAGE> 3
Shareholders who are not registered holders receiving the Meeting materials
from their broker or other representative are requested to complete and return
the materials as instructed by such broker or other representative.
DATED at Burnaby, British Columbia, Canada, the 6th day of April, 1998.
BY ORDER OF THE BOARD
/s/ RAYMOND L. LOEWEN
-------------------------------------
Raymond L. Loewen,
Chairman of the Board,
President and Chief Executive Officer
2
<PAGE> 4
LOGO
THE LOEWEN GROUP INC.
4126 NORLAND AVENUE
BURNABY, BRITISH COLUMBIA, CANADA
V5G 3S8
PROXY STATEMENT AND INFORMATION CIRCULAR
IN CONNECTION WITH THE ANNUAL GENERAL MEETING
TO BE HELD ON MAY 14, 1998
DATED AS OF APRIL 6, 1998
SOLICITATION OF PROXIES
THIS PROXY STATEMENT AND INFORMATION CIRCULAR IS FURNISHED IN CONNECTION
WITH THE SOLICITATION BY MANAGEMENT OF THE LOEWEN GROUP INC. (THE "COMPANY") OF
PROXIES TO BE USED AT THE ANNUAL GENERAL MEETING OF SHAREHOLDERS OF THE COMPANY
(THE "MEETING") to be held at the Pan Pacific Hotel, 999 Canada Place,
Vancouver, British Columbia, Canada, at 2:30 p.m. (Pacific Daylight Time) on
Thursday, the 14th day of May, 1998 and at any adjournment or postponement
thereof, for the purposes set forth in the accompanying Notice of Annual General
Meeting of Shareholders ("Notice of Meeting"). References in this Proxy
Statement and Information Circular to "Shareholder" or "Shareholders" are
references to the holder or holders of Common shares without par value of the
Company ("Common Shares"). References in this Proxy Statement and Information
Circular to "Subsidiaries" are references to the direct and indirect
subsidiaries and associated entities of the Company, unless the context
otherwise requires.
This Proxy Statement and Information Circular and the enclosed form of
proxy are first being sent to Shareholders on or about April 9, 1998.
The total cost of solicitation of proxies will be borne by the Company. The
solicitation of proxies is being made initially by mail. Directors, officers and
other employees of the Company may solicit proxies in person, by telephone, by
mail or other means. Brokers, banks and other persons will be reimbursed by the
Company for expenses they incur in forwarding proxy material to obtain voting
instructions from beneficial Shareholders. The Company also intends to use the
services of Morrow & Co., Inc. to assist in the solicitation of proxies. The
cost of such proxy solicitation services to be rendered to the Company is
estimated to be $10,000 plus customary out-of-pocket expenses.
------------------------
All dollar amounts are expressed in United States dollars, unless indicated
otherwise. The following rates of exchange, each of which is a weighted average
of the Bank of Canada noon spot rate of exchange for the relevant year, were
used to translate Canadian dollar amounts to United States dollar amounts for
the respective fiscal years indicated:
<TABLE>
<CAPTION>
FISCAL YEAR RATE
- ----------- ----
<C> <S>
1995 $1 United States = $1.3723 Canadian
1996 $1 United States = $1.3635 Canadian
1997 $1 United States = $1.3847 Canadian
</TABLE>
1
<PAGE> 5
APPOINTMENT AND REVOCATION OF PROXIES
The persons named as proxyholders (the "designated persons") in the
enclosed form of proxy were designated by the Directors of the Company. A
SHAREHOLDER DESIRING TO APPOINT A PERSON (WHICH MAY BE A COMPANY) TO ATTEND AND
ACT FOR AND ON BEHALF OF THAT SHAREHOLDER AT THE MEETING, OTHER THAN THE
DESIGNATED PERSONS IN THE ENCLOSED FORM OF PROXY, MAY DO SO BY STRIKING OUT THE
PRINTED NAMES AND INSERTING THE NAME OF SUCH OTHER PERSON AND, IF DESIRED, AN
ALTERNATE TO SUCH PERSON (NEITHER OF WHOM NEED BE A SHAREHOLDER) IN THE BLANK
SPACE PROVIDED IN THE FORM OF PROXY. The completed form of proxy must be
received by CIBC Mellon Trust Company not later than 10:00 a.m. (Pacific
Daylight Time) on Wednesday, the 13th day of May, 1998, at 200 Queens Quay East,
Unit 6, Toronto, Ontario, Canada, M5A 4K9, or by mail at P.O. Box 12005 Stn. BRM
B, Toronto, Ontario, Canada, M7Y 2K5, or by fax at (416) 368-2502.
A proxy may not be valid unless it is dated and signed by the Shareholder
who is giving it or by that Shareholder's attorney-in-fact duly authorized by
that Shareholder in writing or, in the case of a corporation, dated and executed
under its corporate seal or by any duly authorized officer of, or
attorney-in-fact for, the corporation. If a form of proxy is executed by an
attorney-in-fact for an individual Shareholder or joint Shareholders or by an
officer or attorney-in-fact for a corporate Shareholder not under its corporate
seal, the instrument so empowering the officer or attorney-in-fact, as the case
may be, or a notarial copy thereof, should accompany the form of proxy.
A Shareholder who has given a proxy may revoke it at any time, before it is
exercised, by an instrument in writing (a) executed by that Shareholder or by
that Shareholder's attorney-in-fact authorized in writing or, where that
Shareholder is a corporation, by a duly authorized officer of, or
attorney-in-fact for, the corporation; and (b) delivered either (i) to the
registered office of the Company at Suite 2100-1075 West Georgia Street,
Vancouver, British Columbia, Canada, V6E 3G2 at any time up to and including the
last business day preceding the day of the Meeting or, if adjourned or
postponed, any reconvening thereof, or (ii) to the Chairman of the Meeting prior
to the vote on matters covered by the proxy on the day of the Meeting or, if
adjourned or postponed, any reconvening thereof; or in any other manner provided
by law. Attendance at the Meeting and participation in a poll (ballot) by a
Shareholder will automatically revoke the proxy. A revocation of a proxy does
not affect any matter on which a vote has been taken prior to the revocation.
VOTING OF PROXIES AND EXERCISE OF DISCRETION BY PROXYHOLDERS
If a poll (ballot) is taken and the instructions are certain, the
designated persons in the enclosed form of proxy will vote for or against, or
will withhold or abstain from voting, as the case may be, the shares in respect
of which they are appointed in accordance with the direction of the Shareholders
appointing them. IN THE ABSENCE OF SUCH DIRECTION, IT IS INTENDED THAT SUCH
SHARES WILL BE VOTED ON ANY POLL (BALLOT) FOR THE APPROVAL OF ALL OF THE MATTERS
IN THE ITEMS SET OUT IN THE FORM OF PROXY AND IN FAVOR OF EACH OF THE NOMINEES
NAMED THEREIN FOR ELECTION AS DIRECTORS. The accompanying form of proxy confers
discretionary authority upon the persons named therein with respect to
amendments or variations to any matters identified in the Notice of Meeting and
with respect to other matters which may properly come before the Meeting. At the
date of this Proxy Statement and Information Circular, management of the Company
knew of no such amendments, variations, or other matters to come before the
Meeting.
In the case of abstentions from or withholding of the voting of shares on
any matter, the shares which are the subject of the abstention or withholding
("non-voted shares") will be counted for determination of a quorum, but will not
be counted as affirmative or negative votes on the matter to be voted upon.
Under the rules of the New York Stock Exchange, brokers may not vote Common
Shares held in street name on behalf of customers on a proposed resolution
without specific instructions from their customers. If a customer has not given
any instructions on the proposed resolutions, then the votes attaching to such
customer's Common Shares are not counted for the determination of quorum. If a
customer has given instructions on some but not all of the proposed resolutions,
then the votes attaching to the customer's Common Shares are counted for the
determination of quorum for all purposes. On any given resolution, where no
instructions are received from the customer, the votes attaching to such
2
<PAGE> 6
customer's Common Shares ("broker non-votes") will not be counted as affirmative
or negative votes on the matter to be voted upon.
Participants in the Company's Employee Stock Bonus Plan and the Loewen
Group International, Inc. ("LGII") 401(k) Retirement Plan who receive this Proxy
Statement and Information Circular in such capacity will receive voting
instruction forms instead of a form of proxy.
VOTING SHARES AND PRINCIPAL HOLDERS THEREOF
The authorized capital of the Company consists of 990,000,000 shares
divided into 750,000,000 Common Shares, 40,000,000 Class A shares without par
value (the "Class A shares") and 200,000,000 First Preferred Shares without par
value of which 1,000,000 shares are designated as 7.75% Cumulative Redeemable
Convertible First Preferred Shares, Series A ("Series A Preferred Shares"),
425,000 shares are designated as Convertible First Preferred Shares, Series B
("Series B Preferred Shares") and 8,800,000 shares are designated as 6.00%
Cumulative Redeemable Convertible First Preferred Shares, Series C ("Series C
Preferred Shares"). As of March 26, 1998, there were 8,800,000 Series C
Preferred Shares outstanding. There are no Class A shares, Series A Preferred
Shares or Series B Preferred Shares outstanding. The Company has no current
intention to issue Class A shares or Series A Preferred Shares. All of the
Series B Preferred Shares have been allotted for issuance pursuant to the
Company's 1994 Management Equity Investment Plan. However, absent extraordinary
circumstances, no Series B Preferred Shares will be issued prior to June 1999.
The record date for determining the names of Shareholders entitled to
receive the Notice of Meeting and to vote at the Meeting is the close of
business on March 26, 1998. As at the close of business on March 26, 1998, there
were 73,938,955 Common Shares issued and outstanding, the registered holders of
which are entitled to vote at the Meeting. The holders of the issued and
outstanding Series C Preferred Shares are not entitled to vote at the Meeting.
Each Common Share to be voted at the Meeting will entitle the holder
thereof to one vote on a poll (ballot).
On voting for Directors to be elected at the Meeting, the three nominees
receiving the highest number of votes will be elected.
Any resolution presented to the Meeting which calls for a vote for or
against an ordinary resolution requires, in order to pass, the affirmative vote
of a simple majority of the votes cast at the Meeting. Non-voted shares and
broker non-votes do not constitute votes cast at the Meeting and, accordingly,
will not have any effect on the resolutions presented to the Meeting. All
resolutions expected to be proposed at the Meeting are ordinary resolutions.
The Directors and officers of the Company are not aware of any person or
company that beneficially owns, directly or indirectly, or exercises control or
direction over, shares carrying more than five percent (5%) of the voting rights
attached to the Common Shares of the Company as at the close of business on
March 26, 1998 other than:
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF
NAME AND ADDRESS OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP PERCENT OF CLASS
------------------------------------ -------------------- ----------------
<S> <C> <C>
Raymond L. Loewen........................................... 13,550,041(1) 18.03
The Loewen Group Inc.
4126 Norland Avenue
Burnaby, British Columbia V5G 3S8
</TABLE>
(1) The Common Shares reported by Mr. R. Loewen include 2,254,838 shares owned
by his wife, Anne Loewen. Mrs. Loewen has sole voting and dispositive power
with respect to her shares, and Mr. R. Loewen disclaims beneficial ownership
of such shares. The Common Shares reported by Mr. R. Loewen also include
239,200 shares owned by Loewen Limited Partnership ("LLP"), a limited
partnership in which Mr. R. Loewen is the sole general partner, 5,107,600
shares owned by Loewen Financial Inc. ("LFI"), a corporation of which Mr. R.
Loewen is the sole shareholder, and 3,879,325 shares owned by Loewen
Financial Limited Partnership ("LFLP"), a limited partnership in which LFI
is the sole general partner. LLP, LFI and LFLP have the same address as Mr.
R. Loewen. Certain Common Shares owned by Mr. R. Loewen, LLP, LFI and LFLP
have been pledged to various Canadian banks to secure certain credit
facilities. The number of Common Shares pledged to the Canadian banks varies
from time to time. Certain terms and conditions of the credit facilities are
based upon the market value of the Common Shares. If a default on the credit
facilities were to occur and if the Canadian banks were to foreclose on the
pledged shares, a change of control of the Company could result, under
certain circumstances. The Common Shares reported by Mr. R. Loewen also
include 1,222,335 shares that he has the right to acquire within 60 days of
March 26, 1998 but does not actually own.
3
<PAGE> 7
The following table shows: (i) the number of Common Shares beneficially
owned by each of the Directors, nominees, the Named Executive Officers (as
defined herein) identified in the Summary Compensation Table that appears on
page 13 and all Directors, nominees and executive officers as a group, as of
March 26, 1998 (excluding shares which such persons have the right to acquire
within 60 days of March 26, 1998 but do not actually own), (ii) the number of
Common Shares which each of such persons has the right to acquire within 60 days
of March 26, 1998 but does not actually own, and (iii) the total number of
Common Shares which each of such persons owns as of March 26, 1998 and has the
right to acquire within 60 days of March 26, 1998. Except for Raymond L. Loewen
who beneficially owns approximately 18.03% of the Common Shares outstanding, no
Director, nominee or executive officer beneficially owns 1% or more of the
Common Shares outstanding. All of the Directors, nominees and executive officers
together beneficially own approximately 19.25% of the Common Shares outstanding.
Charles B. Loewen is not related to Raymond L. Loewen or his wife, Anne
Loewen, nor are any other Directors or nominees related to one another.
<TABLE>
<CAPTION>
NUMBER OF SHARES
BENEFICIALLY OWNED, RIGHT TO ACQUIRE TOTAL NUMBER OF
EXCLUDING RIGHT TO SHARES WITHIN SHARES BENEFICIALLY
NAME ACQUIRE SHARES (1) 60 DAYS OWNED
---- ------------------- ---------------- -------------------
<S> <C> <C> <C>
DIRECTORS
Reverend Kenneth S. Bagnell..................... 5,326 1,750 7,076
Dr. Earl A. Grollman............................ 8,718 4,468 13,186
Timothy R. Hogenkamp (2)........................ 40,837 100,600 141,437
Peter S. Hyndman (2)............................ 5 19,117 19,122
Albert S. Lineberry, Sr. (3).................... 7,636 2,468 10,104
Charles B. Loewen............................... 8,000 5,250 13,250
Raymond L. Loewen (2)(4)........................ 12,327,706 1,222,335 13,550,041
Robert B. Lundgren.............................. 9,005 4,250 13,255
Lawrence Miller (2)............................. 111,505 288,313 399,818
Ernest G. Penner................................ 444 4,694 5,138
The Rt. Hon. John N. Turner, P.C., C.C., Q.C.... 4,557 3,524 8,081
Paul Wagler..................................... 245 50,041 50,286
NOMINEES
The Honorable J. Carter Beese, Jr............... 2,872 4,750 7,622
James D. McLennan............................... 6,046 5,679 11,725
Kenneth T. Stevenson (5)........................ 5,465 Nil 5,465
NAMED EXECUTIVE OFFICERS WHO ARE NOT DIRECTORS
OR NOMINEES
William R. Shane (2)............................ 21,005 164,535 185,540
Douglas J. McKinnon............................. 5 33,500 33,505
ALL DIRECTORS, NOMINEES AND EXECUTIVE OFFICERS
AS A GROUP (31 persons) (2)(3)(4)(5)(6)....... 12,582,792 2,044,168 14,626,960
</TABLE>
(1) In some instances voting and dispositive power is shared with the spouse of
the identified person.
(2) Certain executive officers participate in either the LGII 401(k) Retirement
Plan (for United States employees) or the Retirement Savings Plan for the
Employees of The Loewen Group Inc. (for Canadian employees). The foregoing
table does not include interests in funds offered as investment alternatives
under such retirement plans that invest in Common Shares.
(3) Includes 295 shares owned by Mr. Lineberry's wife. Mrs. Lineberry has sole
voting and dispositive power with respect to her shares, and Mr. Lineberry
disclaims beneficial ownership of such shares. Also includes 4,800 shares
beneficially owned by Gaines Corporation, of which Mr. Lineberry is the
controlling shareholder.
(4) Includes 2,254,838 shares owned by Mr. R. Loewen's wife, Anne Loewen. Mrs.
Loewen has sole voting and dispositive power with respect to her shares, and
Mr. R. Loewen disclaims beneficial ownership of such shares. The Common
Shares reported by Mr. R. Loewen also include 239,200 shares owned by LLP,
5,107,600 shares owned by LFI, and 3,879,325 shares owned by LFLP. Certain
Common Shares owned by Mr. R. Loewen, LLP, LFI and LFLP have been pledged to
various Canadian banks to secure certain credit facilities. The number of
Common Shares pledged to the Canadian banks varies from time to time.
Certain terms and conditions of the credit facilities are based upon the
market value of the Common Shares. If a default on the credit facilities
were to occur and if the Canadian banks were to foreclose on the pledged
shares, a change of control of the Company could result, under certain
circumstances.
(5) Includes 5,165 shares owned by Mr. Stevenson's wife. Mrs. Stevenson has sole
voting and dispositive power with respect to her shares, and Mr. Stevenson
disclaims beneficial ownership of such shares.
(6) Includes 300 shares owned by the wife of one executive officer as to which
she has sole voting and dispositive power and as to which such executive
officer disclaims beneficial ownership and five shares owned by the wife of
another executive officer as to which she has sole voting and dispositive
power and as to which such executive officer disclaims beneficial ownership.
4
<PAGE> 8
ELECTION OF DIRECTORS
INFORMATION REGARDING DIRECTORS AND NOMINEES
The Board of Directors of the Company presently consists of 14 members.
Three Directors are to be elected at the Meeting, each for a term expiring at
the fourth annual general meeting of Shareholders after the Meeting (expected to
be held in 2002). Kenneth T. Stevenson was appointed a Director by the Directors
on May 15, 1997 to fill the casual vacancy arising from the passing of the late
Senator Harold E. Hughes. Peter S. Hyndman retired from the Board of Directors
effective April 3, 1998, after 12 years of service, and the Board of Directors
consequently reduced the size of the Board to 14 members (see CORPORATE
GOVERNANCE below).
As required by the Company Act of British Columbia, advance notice of the
Meeting was published in the Vancouver Sun newspaper in Vancouver, British
Columbia, Canada on March 18, 1998.
The following table and the notes thereto state the names of all the
persons continuing as Directors through and after the Meeting and proposed to be
nominated for election as Directors, the municipalities and countries in which
they are presently resident, their ages, all positions and offices with the
Company now held by them, their principal occupations or employment within the
five preceding years and the dates upon which they became Directors of the
Company. Each of the continuing Directors and proposed nominees whose name is
set forth below has consented in writing to act as a Director of the Company.
CONTINUING DIRECTORS
<TABLE>
<CAPTION>
AGE AS AT PRINCIPAL OCCUPATION DATE BECAME DIRECTOR
NAME, MUNICIPALITY AND MARCH 26, IF DIFFERENT FROM OF THE COMPANY/DATE
COUNTRY OF PRESENT RESIDENCE 1998 OFFICE HELD OFFICE HELD (1)(2) of Expiry of Term (3)
---------------------------- --------- ----------- -------------------- ---------------------
<S> <C> <C> <C> <C>
REVEREND KENNETH S. BAGNELL....... 63 Director Author and May 18, 1989/
Toronto, Ontario Clergyperson Annual General
Canada Meeting in 2001
DR. EARL A. GROLLMAN.............. 63 Director Author and Lecturer June 16, 1986/
Belmont, Massachusetts Annual General
U.S.A. Meeting in 2001
TIMOTHY R. HOGENKAMP.............. 52 Director Chairman of the March 30, 1989/
Cincinnati, Ohio Board, Loewen Group Annual General
U.S.A. International, Inc. Meeting in 2000
(wholly owned
subsidiary of the
Company)
ALBERT S. LINEBERRY, SR........... 79 Director Chairman of the May 9, 1991/
Greensboro, North Carolina Board, Gaines Annual General
U.S.A. Corporation Meeting in 1999
(property
development company)
CHARLES B. LOEWEN................. 65 Director President, Corporate May 24, 1990/
Toronto, Ontario Services Annual General
Canada International Inc. Meeting in 2001
(international
investment and
consulting company)
</TABLE>
5
<PAGE> 9
<TABLE>
<CAPTION>
AGE AS AT PRINCIPAL OCCUPATION DATE BECAME DIRECTOR
NAME, MUNICIPALITY AND MARCH 26, IF DIFFERENT FROM OF THE COMPANY/DATE
COUNTRY OF PRESENT RESIDENCE 1998 OFFICE HELD OFFICE HELD (1)(2) of Expiry of Term (3)
---------------------------- --------- ----------- -------------------- ---------------------
<S> <C> <C> <C> <C>
RAYMOND L. LOEWEN................. 57 Chairman of the December 27, 1985/
Burnaby, British Columbia Board, President Annual General
Canada and Chief Meeting in 2000
Executive Officer
and Director
ROBERT B. LUNDGREN................ 53 Director Retired June 16, 1986/
Langley, British Columbia Annual General
Canada Meeting in 2000
LAWRENCE MILLER................... 49 Executive Vice- September 17, 1996/
Ivyland, Pennsylvania President, Annual General
U.S.A. Operations and Meeting in 2001
Director
ERNEST G. PENNER.................. 61 Director President, The February 26, 1987/
Steinbach, Manitoba Penn-Co Group Annual General
Canada (property Meeting in 1999
development company)
THE RIGHT HONOURABLE JOHN N.
TURNER, P.C., C.C., Q.C........... 68 Director Partner, Miller June 1, 1992/
Toronto, Ontario Thomson, Barristers Annual General
Canada and Solicitors Meeting in 1999
PAUL WAGLER....................... 51 Senior Vice- March 29, 1995/
Vancouver, British Columbia President, Finance Annual General
Canada and Chief Meeting in 1999
Financial Officer
and Director
</TABLE>
NOMINEES
<TABLE>
<CAPTION>
AGE AS AT PRINCIPAL OCCUPATION DATE BECAME DIRECTOR
NAME, MUNICIPALITY AND MARCH 26, IF DIFFERENT FROM OF THE COMPANY/DATE
COUNTRY OF PRESENT RESIDENCE 1998 OFFICE HELD OFFICE HELD (1)(2) of Expiry of Term (3)
---------------------------- --------- ----------- -------------------- ---------------------
<S> <C> <C> <C> <C>
THE HONORABLE J. CARTER BEESE, JR.... 41 Director Managing Director, May 17, 1995/
Owings Mills, Maryland BT Alex. Brown Annual General
U.S.A. Incorporated Meeting in 1998
(investment bank)
JAMES D. MCLENNAN.................... 61 Director President, McLennan June 1, 1993/
Park Ridge, Illinois Company (realty Annual General
U.S.A. company) Meeting in 1998
</TABLE>
6
<PAGE> 10
<TABLE>
<CAPTION>
AGE AS AT PRINCIPAL OCCUPATION DATE BECAME DIRECTOR
NAME, MUNICIPALITY AND MARCH 26, IF DIFFERENT FROM OF THE COMPANY/DATE
COUNTRY OF PRESENT RESIDENCE 1998 OFFICE HELD OFFICE HELD (1)(2) of Expiry of Term (3)
---------------------------- --------- ----------- -------------------- ---------------------
<S> <C> <C> <C> <C>
KENNETH T. STEVENSON................. 64 Director Chairman, May 15, 1997/
Vancouver, British Columbia Pennyfarthing Annual General
Canada Development Corp. Meeting in 1998
(property
development company)
</TABLE>
(1) All the continuing Directors of the Company and the proposed nominees have
held their present principal occupations noted opposite their respective
names throughout the last five years with the following exceptions: Timothy
R. Hogenkamp, who prior to November 5, 1997 was President of the Company and
prior to September 15, 1993 was Senior Vice-President, Operations of the
Company; Charles B. Loewen, who prior to September 18, 1995 was
Vice-Chairman, Loewen, Ondaatje, McCutcheon Limited, Toronto, Ontario,
Canada (investment dealer); Raymond L. Loewen, who prior to November 5, 1997
was Chairman and Chief Executive Officer of the Company and prior to
September 15, 1993 was President and Chief Executive Officer of the Company;
Robert B. Lundgren, who prior to September 15, 1993 was Senior
Vice-President, Finance and Corporate Development of the Company; Lawrence
Miller, who prior to July 30, 1996 was President, Cemetery and Combination
Division of the Company and prior to March 17, 1995 was President, Osiris
Holding Corporation, Philadelphia, Pennsylvania (a cemetery holding company
acquired by the Company in March 1995); The Right Honourable John N. Turner,
P.C., C.C., Q.C., who from 1984 to 1993 was the Member of Parliament for
Vancouver Quadra; Paul Wagler, who prior to March 20, 1995 was a Senior
Vice-President, ABN AMRO Bank Canada, Vancouver, British Columbia, Canada;
and The Honorable J. Carter Beese, Jr., who prior to September 1997 was
Chairman of Alex. Brown International, Baltimore, Maryland (investment
bank), prior to November 1996 was Vice-Chairman, Alex. Brown International,
and prior to November 1994 was a Commissioner of the Securities and Exchange
Commission.
(2) Charles B. Loewen also serves as director of Redekop Properties Inc. (a
property development company), Canadian Brokerlink Inc. (an acquiror and
operator of insurance brokerages), Ukraine Enterprise Corp. (a holding
company for financial and resource investments) and MedNet International
Ltd. (an eyecare company). James D. McLennan also serves as a director of
ServiceMaster Limited Partnership (a diversified services company). Lawrence
Miller also serves as a director of Rose Hills Company (a company that
provides funeral and cemetery services). The Right Honourable John N.
Turner, P.C., C.C., Q.C. also serves as a director of Noranda Forest Inc. (a
forestry company), McDermott International, Inc. (an energy service
company), E-L Financial Corporation (a holding company for financial and
insurance companies), Triple Crown Electronics Inc. (an electronics company)
and Iroquois Falls Power Corp. (a power company).
(3) All expiry dates in this column contemplate the holding of an annual general
meeting in the year in question. It is possible that the annual general
meeting date could be extended into a following year and in that case the
terms of office would extend to the date of holding the annual general
meeting.
COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors has established a standing Audit Committee, a
standing Compensation Committee and a standing Corporate Governance Committee
(each, a "Committee"). The Board does not have an Executive Committee or a
Nominating Committee.
The Audit Committee receives and considers the reports of the firm of
independent auditors appointed by the Shareholders and approves the consolidated
financial statements of the Company. This Committee also oversees the Company's
internal auditing and compliance with the Company's environmental policies and
environmental laws. The members of this Committee are Charles B. Loewen
(Chairman), The Honorable J. Carter Beese, Jr., Robert B. Lundgren and The Right
Honourable John N. Turner, P.C., C.C., Q.C., all of whom are non-employee
Directors. The Audit Committee held six meetings during 1997.
The Corporate Governance Committee considers and makes recommendations
concerning the composition and functioning of the Board of Directors and
committees thereof and generally all matters pertaining to the organization and
management of the Company. The Corporate Governance Committee held three
meetings during 1997. For particulars of the functions and composition of the
Corporate Governance Committee, see CORPORATE GOVERNANCE below.
The Compensation Committee reviews and recommends, for approval by the
Board of Directors, specifically the executive compensation of the Chief
Executive Officer and generally the Company's executive compensation policies.
The Compensation Committee held six meetings in 1997. For particulars of the
functions and composition of the Compensation Committee, see EXECUTIVE
COMPENSATION -- Composition of the Compensation Committee and EXECUTIVE
COMPENSATION -- Report on Executive Compensation below.
7
<PAGE> 11
MEETINGS; DIRECTOR COMPENSATION AND OTHER PAYMENTS
The Board of Directors held 19 meetings in 1997. The aggregate average
attendance at meetings of the Board of Directors and its permanent standing
Committees was 92%. With the exception of Mr. Ernest G. Penner, each Director
attended at least 75% of the total number of meetings of the Board of Directors
and the respective Committees on which he served.
Directors who are not officers or employees of the Company or any of its
Subsidiaries ("outside Directors") were each entitled to an annual retainer of
$23,500 for 1997. In addition, each outside Director was entitled to $1,500 for
attendance in person at a meeting (Board or Committee of the Board), $250 for
attendance by telephone at a meeting (Board or Committee of the Board), $5,000
per annum for being a member of a Committee of the Board, and $5,000 per annum
for chairing a Committee of the Board. Fees were pro rated for service periods
of less than a complete year. Directors are reimbursed their reasonable travel
expenses for attending meetings of the Board and its Committees.
Pursuant to the Company's 1994 Outside Director Compensation Plan (the
"Outside Director Plan"), outside Directors may elect to receive all or part of
their retainer and meeting fees in Common Shares. In addition, the Outside
Director Plan provides that on an annual basis each outside Director may receive
options to purchase Common Shares. The specific number of Common Shares
underlying such options will be determined by the full Board of Directors prior
to June 1 of each year. For 1997, each outside Director received an option to
purchase 3,500 Common Shares, and each outside Director who also served on a
Committee of the Board of Directors received an option to purchase an additional
1,000 Common Shares for his service on each such Committee. Also pursuant to the
Outside Director Plan, when an outside Director is first appointed to the Board
of Directors, he or she is granted an option to purchase a number of Common
Shares, as determined by the Board of Directors at the time of his or her
appointment. The exercise price for all options granted pursuant to the Outside
Director Plan is the fair market value of the underlying Common Shares,
specifically the weighted average of the Common Share trading price for the five
trading days preceding the grant date.
A consultant's contract between Albert S. Lineberry, Sr. and a Subsidiary
(the "Lineberry Contract"), which was entered into in connection with the
acquisition of certain funeral homes from a corporation controlled by Mr.
Lineberry, and which was renewed for a term of five years effective November 14,
1995, provides for his nomination as a Director of the Company. No salary is
paid to Mr. Lineberry under the Lineberry Contract. However, the Lineberry
Contract provides for the payment of certain benefits for Mr. Lineberry. During
1997, payments made on behalf of Mr. Lineberry for such benefits totalled
$28,574.
In July 1994, the Company entered into a consulting agreement with Charles
B. Loewen (who is not related to Raymond L. Loewen or his wife, Anne Loewen) and
a corporation of which Mr. C. Loewen is an employee, officer and director (the
"C.B. Loewen Agreement"). Under the terms of the C.B. Loewen Agreement, Mr. C.
Loewen agrees to provide, from time to time as requested, advice on financial
planning, financial presentation, Board of Director and other matters relating
to compensation, corporate governance, audit and general corporate policy, in
exchange for payments to be made for such services, which payments are, in each
case, in lieu of payments to him personally of Directors' retainer and meeting
fees. The 1997 payment was $74,000.
Dr. Earl A. Grollman, through EAG, Inc. (a corporation owned by Dr.
Grollman), was paid $14,500 by a Subsidiary in 1997 by way of honoraria for
presentations to managers and employees of the Company, as well as other
industry groups, made at the request of the Company.
See CERTAIN TRANSACTIONS for a description of certain transactions between
entities related to certain Directors and the Company.
Based on information furnished by the Directors and nominees individually,
Raymond L. Loewen, together with his associates and affiliates, is the only
Director or nominee who beneficially owns, directly or indirectly, or exercises
control or direction over shares of the Company carrying 10% or more of the
voting rights attaching to shares of the Company.
8
<PAGE> 12
CORPORATE GOVERNANCE
The Company's Board of Directors and senior management consider good
corporate governance to be central to the effective and efficient operation of
the Company. Accordingly, in December 1995, a Corporate Governance Committee was
established as a permanent standing committee of the Board. The members of the
Corporate Governance Committee are The Right Honourable John N. Turner, P.C.,
C.C., Q.C. (Chairman), The Honorable J. Carter Beese, Jr., Charles B. Loewen and
James D. McLennan, each of whom is an outside, "unrelated" Director and brings
to the Corporate Governance Committee the benefit of his experience in sitting
on other public company boards. Two members of the Corporate Governance
Committee have additional special expertise in the corporate governance field.
The Honorable J. Carter Beese, Jr. was invited to address The World Economic
Forum in Davos, Switzerland in 1998 on "Corporate Governance: Issues and Trends"
and The Right Honourable John N. Turner, P.C., C.C., Q.C. was invited to address
the University of Toronto -- Rotman School of Management in 1998 on "Current
Trends in Corporate Governance".
In August 1997, the Board of Directors asked the Corporate Governance
Committee to review the present Board status with respect to Board size,
composition and process in light of prevailing corporate governance practices.
Following preliminary research, the Corporate Governance Committee met in two
special sessions. The recommendations of the Corporate Governance Committee,
adopted by the Board on March 5, 1998, include a recommended reduction over time
in size of the Board from 15 to 12 and a reduction in the number of "inside" (or
"management") Directors to one or possibly two at most. As part of this plan,
the Committee also recommended that the Board continue to consider additional
appropriately qualified candidates to serve as outside Directors.
The Toronto Stock Exchange (the "TSE") and The Montreal Exchange (the "ME")
require each listed corporation to disclose in its information circular or
annual report its approach to corporate governance. The following discussion is
provided in compliance with such listing requirements. The TSE and the ME
recommend 14 guidelines with respect to systems of corporate governance
generally, which guidelines were adopted in a policy of the TSE that became
applicable in July 1995 (the "TSE Policy") and were adopted by the ME in a
similar policy on July 7, 1995 (the "ME Policy"). The Company is fully or
substantially aligned with nearly all of these guidelines. The TSE Policy
provides that the guidelines are not requirements, but recommendations. The
Company believes that flexibility in approaches to corporate governance
practices is important in order to most effectively pursue shareholder value.
The following table sets forth the 14 guidelines from the TSE and ME
Policies, together with a summary of the position of the Company with respect to
each guideline.
<TABLE>
<CAPTION>
DOES THE
COMPANY ALIGN
TSE AND ME POLICIES WITH THE
CORPORATE GOVERNANCE GUIDELINES GUIDELINES? COMMENTS
------------------------------- ------------- --------
<S> <C> <C> <C>
1. Board should explicitly assume responsibility
for stewardship of the corporation, and
specifically for:
- adoption of a strategic planning process Yes The Corporate Governance Committee
reviews strategic issues and directs
the Board's attention to specified
issues at meetings through the year.
- identification of principal risks, and Yes The Audit Committee and the Board
implementing risk management systems periodically assess the Company's
principal risks. The Company has an
internal Risk Management Department.
Senior management and the Audit
Committee regularly review the
Company's system of internal
controls.
</TABLE>
9
<PAGE> 13
<TABLE>
<CAPTION>
DOES THE
COMPANY ALIGN
TSE AND ME POLICIES WITH THE
CORPORATE GOVERNANCE GUIDELINES GUIDELINES? COMMENTS
------------------------------- ------------- --------
<S> <C> <C> <C>
- succession planning and monitoring senior Yes As a matter of policy, the Board
management annually reviews the succession plan
for the Company. The Compensation
Committee monitors the performance of
the CEO and senior management. The
compensation of senior management is
largely performance linked.
- communications policy Yes The Company has a Communications
Department, headed by a
Vice-President, Communications, in
addition to a Director of Investor
Relations. The CEO is involved in the
Company's communications policy with
respect to shareholders, lenders,
market analysts, employees, the
industry, governments and the public.
- integrity of internal control and Yes Each of the Audit Committee and
management information systems senior management regularly reviews
the integrity of these systems,
consulting with the Company's
auditors as appropriate.
2. Majority of directors should be "unrelated" Yes Of the 14 Board members, a majority
(independent of management and free from (10) are "unrelated". The remaining
conflicting interest) four are automatically deemed
"related" by being members of senior
management.
3. Disclosure for each director whether he or Yes In deciding whether a particular
she is related, and how that conclusion was Director is "related" or "unrelated",
reached the Board of Directors examined the
factual circumstances of each
Director and considered them in the
context of a number of relevant
factors. In this regard, the
definitions in the TSE and ME
Policies are broad and, in some
cases, difficult to apply.
4. - Appoint a committee responsible for No An informal consultation process
appointment/assessment of directors involving all Directors is used with
respect to both the appointment and
assessment of Directors. This is
deemed to be more effective than the
use of a formalized committee.
- Composed exclusively of non-management Not Applicable Not applicable by virtue of the
directors, the majority of whom are immediately preceding paragraph.
"unrelated" However, the informal consultation
process described above does involve
not only "unrelated", non-management
Directors but also persons completely
arm's length from the Company.
</TABLE>
10
<PAGE> 14
<TABLE>
<CAPTION>
DOES THE
COMPANY ALIGN
TSE AND ME POLICIES WITH THE
CORPORATE GOVERNANCE GUIDELINES GUIDELINES? COMMENTS
------------------------------- ------------- --------
<S> <C> <C> <C>
5. Implement a process for considering the Yes The process is one of informal review
assessment of the effectiveness of the board, and consultation. As well, Directors
its committees and individual directors periodically discuss the
effectiveness of Board operations as
part of Board or Committee meetings.
6. Provide orientation and education programs Yes Prior to official appointment, new
for new directors Directors are provided considerable
education and orientation about the
Company and the industry.
7. Consider reducing size of board, with a view Yes The Board consists of 14 members.
to improving effectiveness This is already below the range of 20
or more which the TSE Policy feels
can lead to ineffectiveness, and is
within the range of 10-16 which the
TSE Policy suggests is the most
effective range. However, the Board
intends to move to a reduced size
over time.
8. Review compensation of directors in light of Yes The Compensation Committee reviews
risks and responsibilities this item on a periodic basis.
9. - Committees should generally be composed of Yes The Board committees are composed
non-management directors solely of non-management Directors.
- Majority of committee members should be Yes
"unrelated"
10. Appoint a committee responsible for approach Yes The Board has appointed a specific
to corporate governance issues committee to be responsible for the
Company's approach to corporate
governance issues.
11. - Define limits to management's
responsibilities by developing mandates
for:
(i) the board No There can be no specific or narrowed
mandate for the Board since the Board
has an unfettered general mandate and
general legal responsibility to
oversee the management of the Company
and to represent the Shareholders'
interests.
(ii) the CEO Yes The mandate of the CEO is reviewed
each year by the Corporate Governance
Committee.
- Board should approve CEO's corporate Yes The CEO's responsibility is to
objectives implement corporate policies and
objectives as determined by the
Board. The Corporate Governance
Committee periodically reviews these
policies and objectives. Certain
performance objectives relating
specifically to compensation may be
established by the Compensation
Committee.
</TABLE>
11
<PAGE> 15
<TABLE>
<CAPTION>
DOES THE
COMPANY ALIGN
TSE AND ME POLICIES WITH THE
CORPORATE GOVERNANCE GUIDELINES GUIDELINES? COMMENTS
------------------------------- ------------- --------
<S> <C> <C> <C>
12. Establish structures and procedures to enable Yes The Board has three standing
the board to function independently of Committees (Audit, Compensation and
management Corporate Governance), each of which
is composed entirely of Directors who
are "outside" and "unrelated". The
Company believes that the Board and
senior management presently have a
highly effective working relationship
which reflects the entrepreneurial
leadership of the Company and the
unique nature of the Company's
culture in a highly specialized
field.
13. - Establish an audit committee with a Yes The Board has an Audit Committee with
specifically defined mandate a specifically defined mandate. This
mandate has been reviewed by external
counsel to ensure alignment with the
guidelines of the TSE Policy.
- All members should be non-management Yes
directors
14. Implement a system to enable individual Yes Individual Directors can engage
directors to engage outside advisers, at outside advisers with the
corporation's expense authorization of the Corporate
Governance Committee.
</TABLE>
12
<PAGE> 16
EXECUTIVE COMPENSATION
The following table sets forth compensation earned during the last three
fiscal years by the Chief Executive Officer, the Company's four most highly
compensated executive officers other than the Chief Executive Officer who served
as executive officers at the end of 1997 and one individual who served as an
executive officer during 1997, but not at the end of 1997 (collectively, the
"Named Executive Officers"):
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
=============================================================================================================================
Annual Compensation (1)
-------------------------------------------------------------------------
AWARDS
-----------------------
OTHER ANNUAL SECURITIES UNDER ALL OTHER
NAME AND PRINCIPAL SALARY BONUS COMPENSATION OPTIONS GRANTED COMPENSATION
POSITION YEAR ($) ($) (2) ($) (3) (#) ($)
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Raymond L. Loewen 1997 1(4) nil(6) 16,219 600,000(4)(6) 39,095(7)
Chairman of the Board, 1996 1(5) --(6) 16,445 20,771(5)(6) 200,747
President and Chief 1995 546,538 --(6) -- nil 5,283
Executive Officer
- -----------------------------------------------------------------------------------------------------------------------------
Timothy R. Hogenkamp 1997 360,000 nil -- nil(9) 61,531(10)
Chairman of the Board, 1996 325,904 --(9) -- 40,600 63,723
LGII (8) 1995 269,230 --(9) -- nil 59,678
- -----------------------------------------------------------------------------------------------------------------------------
Lawrence Miller 1997 1(12) nil 13,200 351,353(12)(14) 511(15)
Executive Vice- 1996 87,258(13) --(14) 13,200 83,960(13)(14) 1,374
President, 1995 153,952 --(14) -- 180,000 1,106
Operations (11)
- -----------------------------------------------------------------------------------------------------------------------------
William R. Shane 1997 249,038(17) nil -- 9,000(17)(18) 2,318(19)
Senior Vice-President, 1996 101,923 --(18) 13,200 62,535 1,899
Advisor (16) 1995 157,798 --(18) -- 180,000 1,106
----------------------------------------------------------------------------------------------------------------------------
Paul Wagler 1997 247,454 nil -- nil 2,855(21)
Senior Vice-President, 1996 205,777 106,956 -- 26,041 4,967
Finance and Chief 1995 144,223 nil -- 40,000 4,445
Financial Officer (20)
- -----------------------------------------------------------------------------------------------------------------------------
Douglas J. 1997 356,334 nil -- nil(23) 5,386(24)
McKinnon (22) 1996 207,938 --(23) -- 63,500 nil
1995 n/a n/a n/a n/a n/a
=============================================================================================================================
</TABLE>
(1) The Company has not granted any restricted shares or restricted share
units, stock appreciation rights or long-term incentive plan payouts to the
Named Executive Officers.
(2) Bonuses earned in respect of a particular fiscal year are paid in the
following fiscal year but are reported herein as compensation for the
fiscal year for which they were earned. No bonuses of any kind were or will
be paid to Named Executive Officers for 1997.
(3) In accordance with SEC rules, the value of perquisites and other personal
benefits, securities and property for each Named Executive Officer that
does not exceed the lesser of $50,000 and 10% of the total of the annual
salary and bonus is not reported herein. The amounts reported in this
column consist solely of taxable auto benefits.
(4) In lieu of substantially all of his salary for 1997, Mr. R. Loewen was
granted in September 1997 an option to purchase 57,812 Common Shares and in
February 1998 an option to purchase 42,188 Common Shares.
(5) In lieu of substantially all of his salary for 1996, Mr. R. Loewen was
granted in August 1996 an option to purchase 145,600 Common Shares.
(6) In August 1996, Mr. R. Loewen was granted an option to purchase 55,147
Common Shares in lieu of a cash bonus for 1995. In May 1997, Mr. R. Loewen
was granted an option to purchase 101,288 Common Shares in lieu of a cash
bonus for 1996, an option to purchase 240,900 Common Shares as his 1996
long term incentive and an option to purchase 200,000 Common Shares as his
1997 long term incentive. No bonuses of any kind were or will be paid to
Named Executive Officers for 1997.
(7) Consists of tax services ($3,611) and a taxable benefit for the use of the
Company's motor vessel ($35,484).
(Footnotes continue on following page)
13
<PAGE> 17
(8) Mr. Hogenkamp served as President and Chief Operating Officer until
November 5, 1997. On November 5, 1997, Mr. Hogenkamp was appointed Chairman
of the Board of LGII.
(9) In August 1996, Mr. Hogenkamp was granted, in lieu of a cash bonus for
1996, an option to purchase 19,600 Common Shares and, in lieu of a cash
bonus for 1995, an option to purchase 21,000 Common Shares.
(10) Consists of life insurance premiums paid by the Company ($515), a matching
contribution to the LGII 401(k) Retirement Plan ($3,200), reimbursement of
excess contribution to the LGII 401(k) Retirement Plan ($6,408), tax
services ($3,280), forgiveness of indebtedness ($42,500) and imputed
interest on a non-interest-bearing loan ($5,628).
(11) Mr. Miller commenced employment with the Company on March 17, 1995.
(12) In lieu of substantially all of his salary for 1997, Mr. Miller was granted
in September 1997 an option to purchase 42,353 Common Shares.
(13) In lieu of a portion of his salary for 1996, Mr. Miller was granted in
August 1996 an option to purchase 47,660 Common Shares.
(14) In March 1996, Mr. Miller was granted an option to purchase 9,000 Common
Shares for the achievement of certain performance-related objectives
identified in his employment contract. In August 1996, Mr. Miller was
granted, in lieu of a cash bonus for 1996, an option to purchase 18,300
Common Shares and, in lieu of a cash bonus for 1995, an option to purchase
9,000 Common Shares. In May 1997, Mr. Miller was granted an option to
purchase 9,000 Common Shares for the achievement of certain
performance-related objectives identified in his employment contract and an
option to purchase 300,000 Common Shares as part of his annual compensation
package.
(15) Consists solely of reimbursement of excess contribution to the LGII 401(k)
Retirement Plan ($511).
(16) Mr. Shane commenced employment with the Company on March 17, 1995. Mr.
Shane served as Senior Vice-President and Chief Financial Officer, Cemetery
and Combination Division until January 19, 1998, at which time Mr. Shane
became Senior Vice-President, Advisor.
(17) In lieu of a portion of his salary for 1996, Mr. Shane was granted in
August 1996 an option to purchase 34,160 Common Shares.
(18) In March 1996, Mr. Shane was granted an option to purchase 9,000 Common
Shares for the achievement of certain performance-related objectives
identified in his employment contract. In August 1996, Mr. Shane was
granted, in lieu of a cash bonus for 1996, an option to purchase 11,875
Common Shares and, in lieu of a cash bonus for 1995, an option to purchase
7,500 Common Shares.
(19) Consists of a matching contribution to the LGII 401(k) Retirement Plan
($2,000) and reimbursement of excess contribution to the LGII 401(k)
Retirement Plan ($318).
(20) Mr. Wagler commenced employment with the Company on March 20, 1995.
(21) Consists solely of a contribution to the Company's group registered
retirement plan ($2,855).
(22) Mr. McKinnon commenced employment with the Company on April 1, 1996 and
ceased employment with the Company on November 1, 1997.
(23) In May 1996, Mr. McKinnon was granted an option to purchase 50,000 Common
Shares related to the commencement of his employment. In August 1996, Mr.
McKinnon was granted, in lieu of a cash bonus for 1996, an option to
purchase 13,500 Common Shares.
(24) Consists of a taxable benefit for the Employee Stock Bonus Plan ($88), a
contribution to the Company's group registered retirement plan ($4,875) and
tax services ($423).
The following table sets forth individual grants of stock options by the
Company during the last fiscal year to the Named Executive Officers.
OPTION GRANTS DURING THE
YEAR ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
================================================================================================================
NUMBER OF % OF TOTAL MARKET VALUE
SECURITIES OPTIONS OF SECURITIES
UNDERLYING GRANTED TO UNDERLYING
OPTIONS EMPLOYEES EXERCISE OR OPTIONS ON THE
GRANTED IN FISCAL BASE PRICE DATE OF GRANT EXPIRATION
NAME (#) (1) YEAR ($/SECURITY) ($/SECURITY) DATE
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Raymond L. Loewen 542,188(2) 32.96 Cdn. 42.25 Cdn. 42.25 May 15, 2007
57,812(3) 3.51 Cdn. 35.45 Cdn. 35.45 Sept. 17, 2007
- ----------------------------------------------------------------------------------------------------------------
Timothy R. Hogenkamp nil nil nil nil nil
- ----------------------------------------------------------------------------------------------------------------
Lawrence Miller 309,000(4) 18.79 US 30.375 US 30.375 May 15, 2007
42,353(3) 2.57 US 25.25 US 25.25 Sept. 17, 2007
- ----------------------------------------------------------------------------------------------------------------
William R. Shane 9,000(4) 0.55 US 30.375 US 30.375 May 15, 2007
- ----------------------------------------------------------------------------------------------------------------
Paul Wagler nil nil nil nil nil
- ----------------------------------------------------------------------------------------------------------------
Douglas J. McKinnon nil nil nil nil nil
================================================================================================================
<CAPTION>
======================== ===================================
POTENTIAL REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES OF SHARE
PRICE APPRECIATION FOR
OPTION TERM
-----------------------------------
NAME 5% ($) 10% ($)
<S> <C> <C>
Raymond L. Loewen Cdn. 14,406,283 Cdn. 36,508,508
Cdn. 1,288,871 Cdn. 3,266,267
- -------------------------------------------------------------
Timothy R. Hogenkamp nil nil
- -------------------------------------------------------------
Lawrence Miller US 5,902,692 US 14,958,643
US 672,544 US 1,704,366
- -------------------------------------------------------------
William R. Shane US 171,923 US 435,688
- -------------------------------------------------------------
Paul Wagler nil nil
- -------------------------------------------------------------
Douglas J. McKinnon nil nil
=============================================================
</TABLE>
(1) To the extent permitted by applicable securities and tax laws and stock
exchange rules, options granted under the Company's Employee Stock Option
Plans are transferable to a personal holding company of which the optionee
holds all direct and indirect interests.
14
<PAGE> 18
(2) Options granted in lieu of a cash bonus for 1996 (which options vested
immediately), as a 1996 long term incentive (which options vest as to
one-third of the underlying Common Shares on each anniversary of the grant
date, until fully vested) and as a 1997 long term incentive (which options
vest as to one-fifth of the underlying Common Shares on each anniversary of
the grant date, until fully vested).
(3) Options granted in lieu of salary for 1997 (which options vested
immediately), in the cases of Messrs. R. Loewen and Miller. See -- Report on
Executive Compensation.
(4) Options granted for the achievement of certain performance-related
objectives identified in Mr. Miller's employment contract and as part of his
annual compensation package (all of which options vest as to one-fifth of
the underlying Common Shares on each anniversary of the grant date, until
fully vested).
(5) Options granted for the achievement of certain performance-related
objectives identified in Mr. Shane's employment contract (which options vest
as to one-fifth of the underlying Common Shares on each anniversary of the
grant date, until fully vested).
The following table sets forth certain information regarding options
exercised during the year ended December 31, 1997 and options held by the Named
Executive Officers as at December 31, 1997.
AGGREGATED OPTION EXERCISES DURING THE YEAR ENDED DECEMBER 31, 1997
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
==================================================================================================================================
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED
OPTIONS AT VALUE OF UNEXERCISED IN-THE-MONEY
DECEMBER 31, 1997 (#) OPTIONS AT DECEMBER 31, 1997 ($)(1)
SECURITIES -------------------------------------- ------------------------------------
ACQUIRED AGGREGATE
ON VALUE
NAME EXERCISE (#) REALIZED ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
-----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Raymond L. Loewen nil nil 1,140,147 410,600 Cdn 12,288,046 Cdn. 421,250
2,000,000(2) nil nil
- ----------------------------------------------------------------------------------------------------------------------------------
Timothy R. Hogenkamp nil nil 100,600 5,000 US 541,250 US 20,937
300,000(3) nil nil
- ----------------------------------------------------------------------------------------------------------------------------------
Lawrence Miller nil nil 207,313 408,000 US 23,824 nil
- ----------------------------------------------------------------------------------------------------------------------------------
William R. Shane nil nil 143,535 108,000 nil nil
- ----------------------------------------------------------------------------------------------------------------------------------
Paul Wagler nil nil 42,041 24,000 nil nil
- ----------------------------------------------------------------------------------------------------------------------------------
Douglas J. McKinnon nil nil 23,500 10,000 nil nil
==================================================================================================================================
</TABLE>
(1) The closing price of the Common Shares on December 31, 1997 on the TSE was
Cdn $36.80 and on the New York Stock Exchange was US $25.8125. These columns
set forth the market value less the exercise price as at such date.
(2) Comprised of grants under the 1994 Management Equity Investment Plan, which
is described in the Report on Executive Compensation below, to Mr. R. Loewen
of an option to purchase 500,000 Common Shares and of certain purchase
rights in respect of an additional 1,500,000 Common Shares.
(3) Comprised of a grant under the 1994 Management Equity Investment Plan to Mr.
Hogenkamp of an option to purchase 300,000 Common Shares.
PENSION BENEFITS
The Company does not have any defined benefit or actuarial pension plans.
The Company does have a defined contribution pension plan and, in Canada, a
group registered retirement savings plan.
The estimated aggregate cost to the Company for the year ended December 31,
1997 of pension benefits under the Company's group registered retirement savings
plan for senior officers was $42,042.
The estimated aggregate cost to the Company for the year ended December 31,
1997 of pension benefits under the Company's pension plan applicable to United
States-based senior officers of the Company was $69,946. Annual discrimination
testing (that is to say, the testing of the entitlement of more highly
compensated employees against the entitlement of employees with lower
compensation) gave rise to adjustments in respect of twenty United States-based
senior officers for 1997 in the aggregate amount of $24,195. Refunded sums
represent compensation to such officers and were included in the amounts set out
above in the Summary Compensation Table (as to the portions paid to Named
Executive Officers).
15
<PAGE> 19
EMPLOYMENT CONTRACTS
The following Named Executive Officers have written employment agreements
with the Company: Timothy R. Hogenkamp, Lawrence Miller, William R. Shane and
Paul Wagler. The agreements outline duties and responsibilities, initial
compensation and related benefits, including bonuses and initial stock option
grants. The agreements for Messrs. Hogenkamp and Wagler do not specify a term of
years and are terminable by the Company upon six months' notice, in the case of
Mr. Hogenkamp, or upon reasonable notice, in the case of Mr. Wagler. The
agreements for Mr. Miller and Mr. Shane specify a maximum term of five years
commencing in March 1995, but are terminable early by the Company upon 90 days'
notice. Mr. Shane's employment contract was amended effective January 1998 to
provide for part-time employment in his new capacity as Senior Vice-President,
Advisor.
In October 1996, the Company entered into written agreements with each of
Messrs. R. Loewen, Hogenkamp, Miller, Shane and Wagler fully indemnifying them
in their capacities as officers and, if applicable, Directors of the Company.
Also in October 1996, Messrs. Hogenkamp, Miller and Wagler entered into
severance agreements with the Company and Mr. Shane entered into a similar
severance agreement with a Subsidiary of the Company. All of the severance
agreements provide for the payment of certain retention bonuses and severance
benefits in the event of a change in control of the Company.
Douglas J. McKinnon also had a written employment agreement with the
Company, which was terminable by the Company upon six months' notice, and had
entered into agreements substantially the same as the indemnification and
severance agreements entered into by the other Named Executive Officers. Mr.
McKinnon ceased employment with the Company on November 1, 1997. By agreement
between Mr. McKinnon and the Company, Mr. McKinnon will continue to receive
payments equal to his salary prior to the cessation of his employment, as well
as certain fringe benefits, through July 31, 1998.
Each of the participants in the 1994 Management Equity Investment Plan,
including Messrs. R. Loewen and Hogenkamp, has entered into an Executive
Agreement with the Company or a Subsidiary (the "Executive Agreement"). The
Executive Agreement includes certain obligations of a participant with respect
to his conduct during the term of employment, and includes a confidentiality
agreement and a covenant not to compete that is effective for two years
immediately following the date of termination of employment. The Executive
Agreement does not include any compensatory provisions.
COMPOSITION OF THE COMPENSATION COMMITTEE
The Chairman of the Compensation Committee is Charles B. Loewen, an outside
Director of the Company. Charles B. Loewen is not related to Raymond L. Loewen
or his wife, Anne Loewen. The other members of the Compensation Committee for
the fiscal year ended December 31, 1997 were Robert B. Lundgren (appointed as
Committee member on May 16, 1997), James D. McLennan, Ernest G. Penner (ceased
as Committee member on May 16, 1997) and The Right Honourable John N. Turner,
P.C., C.C., Q.C. The Compensation Committee met six times in 1997. All members
are outside Directors of the Company.
REPORT ON EXECUTIVE COMPENSATION
The Company's executive compensation program is administered by the
Compensation Committee. The Compensation Committee reviews and recommends, for
approval by the Board of Directors, specifically the executive compensation of
the Chief Executive Officer and generally the Company's executive compensation
policies. With respect to the Company's stock plans, awards made to executive
officers are generally made by the Compensation Committee (and approval of the
full Board of Directors will not be sought) in order to qualify such awards for
an exemption from certain "short-swing" profits liability rules under the United
States securities laws and to provide for the deductibility of stock-based
compensation under United States income tax laws. See "Policy with Respect to
Deductibility of Compensation" below.
Compensation Philosophy
The Company's executive compensation program is designed to provide
incentives for executives to enhance shareholder value, to successfully
implement the Company's business plan and to improve corporate and individual
performance.
The program, which is based on a pay-for-performance philosophy, normally
consists of three components: base salary, an annual incentive (bonus) typically
paid in cash and long-term equity-based incentives.
16
<PAGE> 20
The program's overall objectives are:
- To align the interests of management with those of Shareholders;
- To integrate compensation with the Company's business objectives;
- To attract and retain qualified executives critical to the success of
the Company;
- To provide fair and competitive compensation packages; and
- To reward both corporate and individual performance.
The Compensation Committee also considers the relationship between
aggregate executive remuneration for executives as a group and revenues. The
Compensation Committee accordingly expects that, as the Company continues to
grow, aggregate remuneration for executives as a group will increase. However,
the Compensation Committee believes that it is appropriate to set levels of
executive remuneration such that aggregate executive remuneration, as a
percentage of revenues and assets, is stable or decreases as the Company grows.
Base Salary
In general, an executive's base salary is determined by a subjective
assessment of his or her responsibilities and sustained performance.
In 1995, the Compensation Committee obtained research data from Frederic W.
Cook & Co., Inc. ("Frederic W. Cook") and Smith Barney Inc. with respect to
compensation levels for the chief executive officers and for the top five
executives in relation to the compensation of the chief executive officers,
based on surveys of approximately 68 reasonably comparable companies. The
studies provided analyses of compensation based on a series of different
factors, including growth in equity, revenue and income. The Compensation
Committee determined that 1995 base salaries generally would be set in
approximate relation to a benchmark percentile of salaries paid by the surveyed
companies.
In January 1996, the Compensation Committee determined that the 75th
percentile of salaries paid by the companies surveyed by Frederic W. Cook would
be an appropriate benchmark to establish 1996 base salaries.
In the spring of 1996, the Compensation Committee commissioned KPMG, the
Company's auditors, to provide a report on a wide range of executive and
director compensation issues (the "KPMG Report"). The KPMG Report also provided
research on base salaries paid to the chief executive officer of 27 publicly
traded high-growth companies that had sales or revenues equal to or up to three
times the revenues of the Company, and made recommendations relating to the
Chief Executive Officer's base salary.
In early 1997, the Compensation Committee hired Capital West Partners to
provide updated research and analysis on a series of executive compensation
issues. Capital West Partners reviewed the compensation arrangements of 62
comparable publicly traded companies in North America with five year earnings
per share growth rates and market capitalizations similar to those of the
Company (including peer group analysis). Based on this review, Capital West
Partners made recommendations relating to the Chief Executive Officer's
compensation package. In March 1997, after reviewing such recommendations and
meeting with Capital West Partners, the Compensation Committee set the Chief
Executive Officer's Compensation. See "Chief Executive Officer's Compensation".
Annual Bonuses
The Company's executive officers normally are eligible for annual cash
bonuses under a program that awards bonuses based on attainment of specified
performance levels related to the Company's achievement of targeted net earnings
per share (the "EPS Bonus Program"). Executive officers who have direct
responsibility for operations in a specified region also are eligible for annual
cash bonuses based on the performance of their region (the "Performance Bonus
Program"), which is administered by senior management. None of the Company's
Named Executive Officers participate in the Performance Bonus Program.
During 1997, the Compensation Committee considered and discussed whether
the EPS Bonus Program should be revised. At its September 17, 1997 meeting (the
"September 1997 Committee Meeting"), the Compensation Committee determined that
in light of the restructuring and other charges announced by the Company on
September 15, 1997, further consideration of the bonus program should be
deferred. Subsequently, the Committee recommended that no bonuses be paid to,
and therefore no bonuses were or will be paid to, executive officers under
17
<PAGE> 21
the EPS Bonus Program in respect of 1997. Furthermore, no bonuses of any kind
were or will be paid to Named Executive Officers in respect of 1997.
Long-Term Incentives
Certain executive officers participate in the 1994 Management Equity
Investment Plan (the "MEIP"), which was approved by the Shareholders at the
annual general meeting of the Company held on May 16, 1994. The purpose of the
MEIP is two-fold: first, to provide a cost-effective financing program for the
Company's U.S. Subsidiaries and, second, to provide an opportunity for
designated key employees to participate in the long-term growth of the Company.
As part of the MEIP, the present participants (including executive officers)
paid an aggregate of approximately $5.5 million to a U.S. Subsidiary of the
Company in exchange for the right (in either the form of an option or a purchase
agreement) to ultimately acquire, upon a further aggregate payment of
approximately $105.2 million, an aggregate of 3,685,200 Common Shares beginning
in 1999. (This includes 1,500,000 Common Shares that the Chief Executive Officer
has the option to ultimately acquire upon exercise of a convertible debenture
that he is required to purchase.) These rights are exercisable as to 50% in
1999, 25% in 2000 and 25% in 2001. The effective purchase price for the Common
Shares was set at $30.040, which is 25% higher than the weighted average trading
price of the Common Shares for the five consecutive trading days ended April 8,
1994. If a participant does not exercise his right to acquire the Common Shares,
then the amount previously paid by him for such rights is refundable to him
without interest.
Executive officers also are eligible to receive grants of options under the
Company's Employee Stock Option Plans.
In March 1997, the Compensation Committee determined it would be
appropriate to provide a long term incentive award in the form of stock options
to the Chief Executive Officer. See "Chief Executive Officer's Compensation".
Chief Executive Officer's Compensation
In March 1997, the Compensation Committee recommended a base salary of
$850,000 for the Chief Executive Officer for 1997 and a bonus for 1997 of up to
$850,000 to be paid in accordance with the bonus program described above.
Subsequently, the Compensation Committee determined that no bonus of any kind
would be payable to the Chief Executive Officer in respect of 1997. See "Annual
Bonuses" above.
The Chief Executive Officer and one other executive officer proposed that
they forego their 1997 base cash salaries and in lieu thereof receive options.
The Committee determined that such a proposal was in concept favorable to the
Company and its Shareholders based in part on the fact that a similar proposal
in 1996 by the Chief Executive Officer and two executive officers had been well
received, and that it demonstrated continuing commitment to the Company and its
Shareholders.
In determining the value to assign to the options that were granted in 1996
in lieu of salary, the Compensation Committee had turned to the KPMG Report,
which stated that based in part on the methodology of option valuation known as
the Black-Scholes model, options granted typically might be valued at one-third
of the then current stock price. The options granted in lieu of 1996 salary were
valued at one-third of the then current stock price. At the September 1997
Committee Meeting, the Compensation Committee accepted the proposal to exchange
1997 base salary for options, and elected to use the same valuation formula that
was applied in 1996. Accordingly, each option was valued at $8.50 (approximately
one-third of the then current stock price). The Compensation Committee agreed to
grant the Chief Executive Officer options to acquire 100,000 Common Shares at
Cdn $35.45, exercisable immediately. However, options in respect of only 57,812
Common Shares could be granted at that time because of a limitation in the
Employee Stock Option Plan (Canada) that restricts option grants to any
individual in a calendar year to options in respect of 600,000 Common Shares.
Accordingly, the Compensation Committee determined that the balance of the
options granted in lieu of the Chief Executive Officer's 1997 salary would be
issued in 1998. The number of options to be issued in the future would be based
on the following formula:
The greater of (i) 42,188 or (ii) 42,188 + [(FV - PV) X 42,188]
--------------------
Option Valuation
where FV is the market price of the stock on the date of issue; PV is the market
price of the stock at September 17, 1997 and the Option Valuation will be
determined by the Company's advisers as of the issue date of the options.
18
<PAGE> 22
Based on the foregoing formula, options to acquire 42,188 Common Shares at Cdn
$32.00 were granted on February 2, 1998, exercisable immediately.
The Chief Executive Officer participates in the MEIP, pursuant to which, in
June 1994, he received options to ultimately acquire 500,000 Common Shares and
purchase agreement rights by which he is required to purchase a debenture that
is ultimately convertible, at the Chief Executive Officer's option, into
1,500,000 Common Shares.
The KPMG Report recommended that the annual long term incentive for the
Chief Executive Officer should be valued at approximately the aggregate of his
salary and potential bonus for the year. In March 1997, the Compensation
Committee granted as a long term incentive to the Chief Executive Officer
200,000 options to vest as to one-fifth per year beginning May 1998, subject to
Shareholder approval of an increase in certain limits set forth in the Employee
Stock Option Plan (Canada). Shareholders provided such approval in May 1997.
Policy with Respect to Deductibility of Compensation
Section 162(m) of the United States Internal Revenue Code of 1986, as
amended ("Section 162(m)"), governs the deductibility of discretionary,
incentive-based compensation in excess of $1 million paid annually to the Chief
Executive Officer and certain other highly paid executive officers.
The Company believes that the MEIP and the Company's employee stock option
plans qualify for an exception from the $1 million limitation. The Company's
incentive cash bonus program currently does not so qualify, but the Company does
not anticipate that this will result in any significant cost. The Compensation
Committee will continue to monitor the impact of Section 162(m) and will
recommend modification to the Company's compensation program in the future if
appropriate.
Submitted by the Compensation Committee:
<TABLE>
<S> <C>
Charles B. Loewen, Chairman
Robert B. Lundgren
James D. McLennan
The Right Honourable John N. Turner, P.C., C.C., Q.C.
</TABLE>
19
<PAGE> 23
PERFORMANCE GRAPH
The following graph compares the cumulative total Shareholder return on the
Common Shares with the cumulative return on the Peer Group Total Return Index,
TSE 300 Total Return Index and Standard & Poor's 500 Total Return Index for a
five year period. Such cumulative Shareholder return and the Total Return
Indices reflect the cumulative return, including dividend reinvestment. The Peer
Group Total Return Index is comprised of the cumulative shareholder return on
the common stock of Service Corporation International (listed on the New York
Stock Exchange) and Stewart Enterprises, Inc. (quoted on the Nasdaq National
Market) and the Class A and Class B Shares of Arbor Memorial Services, Inc.
(listed on the TSE). On November 17, 1997, the Company completed the disposition
of its interest in Arbor Memorial Services Inc., being approximately 28% of the
aggregate outstanding Class A and Class B Shares of Arbor Memorial Services,
Inc.
COMPARISON OF CUMULATIVE TOTAL RETURN
(VALUE OF CDN. $100 INVESTED)
<TABLE>
<CAPTION> 1992 1993 1994 1995 1996 1997
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
The Loewen Group Inc. ........... 100 170 188 176 276 191
Peer Group Total Return Index ... 100 154 168 258 335 418
S&P 500 Total Return Index ...... 100 111 116 152 183 249
TSE 300 Total Return Index ...... 100 129 126 141 177 200
</TABLE>
OTHER COMPENSATION INFORMATION
(The information set forth under the two following subheadings is stipulated for
disclosure pursuant to the Company Act of British Columbia. This includes
disclosure with respect to "senior officers", which term generally includes any
vice-president, the secretary, the treasurer, the general manager and any
individual who performs functions similar to those normally performed by an
individual occupying any of these offices, as well as the Named Executive
Officers.)
DIRECTORS' AND OFFICERS' REMUNERATION
The aggregate compensation paid or payable directly to the Company's
Directors and senior officers as a group (including the Named Executive
Officers) by the Company and its Subsidiaries for the year ended December 31,
1997 was $9,462,491. These amounts include salaries, fees (including Directors'
retainer and meeting fees), commissions and bonuses; cash bonuses to be paid for
services rendered in 1997 (unless such amounts have not been allocated); cash
bonuses paid in 1997 for services rendered in previous years; the cash
equivalent of Common Shares issued to Directors under the 1994 Outside Director
Compensation Plan; and all deferred compensation earned in 1997; but excludes
compensation paid in 1997 in respect of another year that was described in a
previous information circular and excludes the value of options granted in
partial compensation for salary or bonus. The Directors and senior officers as a
group earned taxable benefits in 1997 aggregating $308,523 including, among
other benefits, taxable auto benefits, medical insurance, life insurance
(taxable benefits portion only), spousal travel, forgiveness of indebtedness,
relocation expenses and imputed interest on non-interest-bearing loans.
20
<PAGE> 24
OPTIONS
The following table sets forth certain information with respect to options
to purchase Common Shares that were granted to Directors and senior officers as
a group during the fiscal year 1997:
<TABLE>
<CAPTION>
================================================================================================================
NUMBER
OF SHARES MARKET VALUE
OPTIONED DATE EXERCISE ON DATE EXPIRATION
GROUP IN 1997 OF GRANT PRICE OF GRANT DATE
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Directors 25,500 Jan. 9 Cdn $50.1547 Cdn $ 49.75 Jan. 9, 2007
and Senior 18,000 Jan. 9 US $37.0991 US $ 36.75 Jan. 9, 2007
Officers 10,000 Mar. 4 Cdn $ 44.00 Cdn $ 44.00 Mar. 4, 2007
5,000 Apr. 15 US $ 28.50 US $ 28.50 Apr. 15, 2007
10,000 Apr. 17 US $ 28.875 US $ 28.875 Apr. 17, 2007
542,188 May 15 Cdn $ 42.25 Cdn $ 42.25 May 15, 2007
368,000 May 15 US $ 30.375 US $ 30.375 May 15, 2007
16,000 May 23 US $ 31.25 US $ 31.25 May 23, 2007
29,000 June 1 Cdn $44.9810 Cdn $ 45.60 June 1, 2007
18,000 June 1 US $32.8541 US $ 33.125 June 1, 2007
2,000 June 2 Cdn $44.9810 Cdn $ 45.60 June 2, 2007
1,000 June 3 Cdn $ 46.00 Cdn $ 46.00 June 3, 2007
10,000 July 18 US $ 35.188 US $ 35.188 July 18, 2007
1,107 Sept. 15 Cdn $ 41.80 Cdn $ 41.80 Sept. 15, 2007
20,000 Sept. 16 US $ 27.625 US $ 27.625 Sept. 16, 2007
57,812 Sept. 17 Cdn $ 35.45 Cdn $ 35.45 Sept. 17, 2007
42,353 Sept. 17 US $ 25.25 US $ 25.25 Sept. 17, 2007
3,000 Sept. 25 US $ 27.375 US $ 27.375 Sept. 25, 2007
================================================================================================================
<CAPTION>
===================== ===============================
MARKET VALUE
(LOW-HIGH RANGE)
IN 30 DAY PERIOD
GROUP PRECEDING GRANT
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Directors Cdn $ 49.75-$ 56.00
and Senior US $ 36.75-$40.875
Officers Cdn $ 44.00-$ 50.35
US $ 28.50-$33.375
US $ 28.50-$ 33.75
Cdn $ 38.70-$ 43.40
US $ 27.50-$ 30.50
US $27.875-$ 31.50
Cdn $ 40.15-$ 45.60
US $ 29.00-$33.125
Cdn $ 40.15-$ 45.60
Cdn $ 40.15-$ 46.00
US $33.125-$ 35.50
Cdn $ 41.80-$ 44.80
US $27.625-$32.125
Cdn $ 35.45-$ 44.80
US $ 25.25-$32.125
US $ 25.25-$ 32.15
================================================================================================================
</TABLE>
No monetary consideration was received by the Company for the granting of
the foregoing.
The following table sets forth the options to purchase Common Shares
exercised by Directors and senior officers as a group during the fiscal year
1997 (all amounts are expressed to take account of the subdivision of the Common
Shares on a 2:1 basis in June 1991):
<TABLE>
<CAPTION>
=======================================================================================================
MARKET
NUMBER OF VALUE LESS
COMMON PURCHASE PRICE
DATE OF SHARES PURCHASE ON THE DATE
GROUP EXERCISE PURCHASED PRICE OF PURCHASE
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Directors January 3 2,000 US $ 25.375 US $ 30,250
and Senior January 28 1,000 Cdn$ 32.875 Cdn$ 15,625
Officers June 5 2,975 US $26.8125 US $ 23,986
June 25 6,800 US $ 18.625 US $102,000
September 5 4,000 US $ 9.57 US $ 84,972
September 29 2,000 Cdn$ 16.88 Cdn$ 42,240
October 7 1,000 Cdn$ 16.88 Cdn$ 21,120
=======================================================================================================
<CAPTION>
===================== =======================
MARKET VALUE
(LOW-HIGH RANGE)
IN 30 DAY PERIOD
GROUP PRECEDING PURCHASE
- -------------------------------------------------------------------------------------------------------
<S> <C>
Directors US $ 37.75-$ 40.50
and Senior Cdn $ 48.28-$ 56.00
Officers US $ 29.00-$34.875
US $ 31.00-$34.875
US $30.4375-$ 34.75
Cdn $ 35.45-$ 44.00
Cdn $ 35.45-$ 42.50
=======================================================================================================
</TABLE>
OTHER
Eligible employees of the Company also are entitled to participate in the
Company's Employee Share Purchase Plans, which provide an opportunity to acquire
Common Shares via payroll deduction. In addition, certain senior employees of
LGII and its Subsidiaries participate in an Amended and Restated Executive
Deferred Compensation Plan, which allows participants to defer compensation and
to direct the investment of the deferred amounts.
INDEBTEDNESS OF DIRECTORS AND SENIOR OFFICERS
(The information set forth in this section is stipulated for disclosure pursuant
to the Securities Act of British Columbia.)
INDEBTEDNESS UNDER SECURITIES PURCHASE PROGRAMS
As at March 31, 1998, the aggregate indebtedness
(i) to the Company or any of its Subsidiaries, or
21
<PAGE> 25
(ii) to another entity which is the subject of a guarantee, support
agreement, letter of credit or similar arrangement or understanding
provided by the Company or any of its Subsidiaries
of all officers, Directors, employees and former officers, Directors and
employees of the Company or any of its Subsidiaries in connection with the
purchase of securities of the Company or any of its Subsidiaries was $3,560,695.
The following table sets forth guaranteed indebtedness of senior officers
pursuant to the 1994 Management Equity Investment Plan approved by the
Shareholders at the annual general meeting of the Company held on May 16, 1994.
All dollar amounts are expressed in United States dollars.
TABLE OF INDEBTEDNESS OF DIRECTORS, EXECUTIVE OFFICERS
AND SENIOR OFFICERS UNDER SECURITIES PURCHASE PROGRAMS
<TABLE>
<CAPTION>
=================================================================================================================================
INVOLVEMENT OF LARGEST AMOUNT AMOUNT OUTSTANDING FINANCIALLY ASSISTED
NAME AND PRINCIPAL POSITION ISSUER OR OUTSTANDING AS AT SECURITIES PURCHASED
(IN ALPHABETICAL ORDER) SUBSIDIARY DURING 1997 ($)(1) MARCH 31, 1998 ($)(1) During 1997 (2)
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
George M. Amato LGII is guarantor 253,238 258,546 n/a
Regional President,
Operations
North East Region
- ---------------------------------------------------------------------------------------------------------------------------------
Timothy A. Birch (3) LGII is guarantor 196,850 181,342 n/a
- ---------------------------------------------------------------------------------------------------------------------------------
J.C. Carothers, Jr. (4) LGII is guarantor 121,525 124,072 n/a
Regional Partner
- ---------------------------------------------------------------------------------------------------------------------------------
David FitzSimmons LGII is guarantor 250,675 255,929 n/a
Vice-President, Operations
- ---------------------------------------------------------------------------------------------------------------------------------
Dwight K. Hawes LGII is guarantor 103,420 105,205 n/a
Vice-President, Finance
- ---------------------------------------------------------------------------------------------------------------------------------
William V. Hocker LGII is guarantor 121,525 124,072 n/a
Corporate Development and
Industry Relations Associate
(5)
- ---------------------------------------------------------------------------------------------------------------------------------
Timothy R. Hogenkamp LGII is guarantor 607,625 620,360 n/a
Chairman of the Board, LGII
- ---------------------------------------------------------------------------------------------------------------------------------
Peter S. Hyndman LGII is guarantor 52,101 53,000 n/a
Corporate Secretary
- ---------------------------------------------------------------------------------------------------------------------------------
Kenneth E. Lee, Jr. LGII is guarantor 101,270 103,393 n/a
Vice-President,
Combination Operations
and Alternative Funerals
- ---------------------------------------------------------------------------------------------------------------------------------
Albert S. Lineberry, Jr. LGII is guarantor 121,525 124,072 n/a
Regional Partner (6)
- ---------------------------------------------------------------------------------------------------------------------------------
John E. Malletta, Sr. LGII is guarantor 101,271 103,393 n/a
Regional Partner (7)
- ---------------------------------------------------------------------------------------------------------------------------------
Peter W. Roberts (8) LGII is guarantor 158,196 181,342 n/a
- ---------------------------------------------------------------------------------------------------------------------------------
F. Duane Schaefer LGII is guarantor 121,525 124,072 n/a
Regional President,
Operations,
South Central Region
- ---------------------------------------------------------------------------------------------------------------------------------
Michael L. Schweer LGII is guarantor 120,324 122,846 n/a
Vice-President, Funeral Home
Operations, North Central
Region
- ---------------------------------------------------------------------------------------------------------------------------------
Dillis E.R. Ward (9) LGII is guarantor 121,525 124,072 n/a
=================================================================================================================================
</TABLE>
Notes:
(1) In each case, indebtedness is to a third party lender and is guaranteed by
LGII. Capitalized interest has been added to the principal amount to the
relevant date. The amount of each guarantee is limited to twice the
principal amount of the original indebtedness in order to cover capitalized
interest. Interest is charged on such indebtedness at the prime rate of the
Wachovia Bank of Georgia, N.A. for U.S.-based officers and at the U.S. base
rate of a Canadian chartered bank plus 0.25 percent for Canadian-based
officers. Security has not been provided for such indebtedness.
(2) The indebtedness represents a 5% down payment on an option to acquire
exchangeable debentures issued by LGII. Payment of the remaining 95% of the
exercise price entitles the optionholder to acquire debentures exchangeable
for Series B Preferred Shares of the Company. The Series B Preferred Shares
are immediately convertible to Common Shares. Further particulars appear in
the Report on Executive Compensation above.
22
<PAGE> 26
(3) Mr. Birch ceased employment with the Company on September 1, 1997, prior to
which time he served as Vice-President, Corporate Development & Law.
(4) Mr. Carothers served as Vice-President, Operations, Mid-South Division until
May 15, 1997, after which time he continued his employment with the Company
in the capacity of Regional Partner.
(5) Mr. Hocker served as Vice-President, Operations, Mid-Central Division until
May 15, 1997, after which time he continued his employment with the Company
in the capacity of Corporate Development and Industry Relations Associate.
(6) Mr. Lineberry, Jr. served as Vice-President, Operations, East Central
Division until May 15, 1997, after which time he continued his employment
with the Company in the capacity of Regional Partner.
(7) Mr. Malleta served as Vice-President, Operations, Mountain Division until
May 15, 1997, after which time he continued his employment with the Company
in the capacity of Regional Partner.
(8) Mr. Roberts ceased employment with the Company on June 14, 1997, prior to
which time he served as Vice-President, Financial Information Systems and
Corporate Controller.
(9) Mr. Ward ceased employment with the Company on October 1, 1997, prior to
which time he served as Regional President, West Region.
23
<PAGE> 27
INDEBTEDNESS OTHER THAN UNDER SECURITIES PURCHASE PROGRAMS
As at March 31, 1998, the aggregate indebtedness
(i) to the Company or any of its Subsidiaries, or
(ii) to another entity which is the subject of a guarantee, support
agreement, letter of credit or similar arrangement or undertaking
provided by the Company or any of its Subsidiaries
of all officers, Directors, employees and former officers, Directors and
employees of the Company or any of its Subsidiaries not entered into in
connection with Securities Purchase Programs of the Company or any of its
Subsidiaries was $10,332,681.
TABLE OF INDEBTEDNESS OF DIRECTORS, EXECUTIVE OFFICERS
AND SENIOR OFFICERS OTHER THAN UNDER SECURITIES PURCHASE PROGRAMS
<TABLE>
<CAPTION>
=======================================================================================================================
INVOLVEMENT OF LARGEST AMOUNT OUTSTANDING
THE COMPANY AMOUNT OUTSTANDING AS AT
NAME AND PRINCIPAL POSITION OR SUBSIDIARY DURING 1997 ($) MARCH 31, 1998 ($)
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
George M. Amato LGII is lender US 215,000 US 723,854
Regional President, Operations,
North East Region (1)
- -----------------------------------------------------------------------------------------------------------------------
Jeffrey L. Cashner Company is lender US 333,072 US 262,105
Regional President, Operations,
South East Region (2)
- -----------------------------------------------------------------------------------------------------------------------
Peter Gray LGII is lender US 35,011 US 35,613
Vice-President, Accounting, Cemeteries (3)
- -----------------------------------------------------------------------------------------------------------------------
Timothy R. Hogenkamp Company is lender US 219,635 US 295,185
Chairman of the Board, LGII (4)
- -----------------------------------------------------------------------------------------------------------------------
Kenneth E. Lee, Jr. LGII is lender US 52,666 US 50,875
Vice-President, Combination Operations
and Alternative Funerals (5)
- -----------------------------------------------------------------------------------------------------------------------
Loewen Development Corporation (6) Company is lender US 192,075 US 192,075
- -----------------------------------------------------------------------------------------------------------------------
Donald W. Matthews LGII is lender US 44,521 US 42,735
Vice-President, Cemetery Operations, West Region (7)
- -----------------------------------------------------------------------------------------------------------------------
Lawrence Miller LGII is lender US 2,952,500 US 2,952,500
Executive Vice-President, Operations
William R. Shane
Senior Vice-President, Advisor
Osiris Investments, L.L.C. (8)
- -----------------------------------------------------------------------------------------------------------------------
Frank Milles LGII is lender US 75,051 US 76,313
Vice-President, Administration, Cemeteries (9)
- -----------------------------------------------------------------------------------------------------------------------
Robert P. Pence (10) LGII is lender US 65,842 US 66,138
- -----------------------------------------------------------------------------------------------------------------------
Ronald P. Robertson LGII is lender US 50,431 US 25,438
Vice-President, Sales (11)
- -----------------------------------------------------------------------------------------------------------------------
Roger Ryan LGII is lender US 386,745 nil
Vice-President, Taxation (12)
- -----------------------------------------------------------------------------------------------------------------------
Michael L. Schweer Company is lender US 330,200 US 396,400
Vice-President, Funeral Home Operations,
North Central Region (13)
- -----------------------------------------------------------------------------------------------------------------------
Michael G. Weedon Company is lender n/a nil
Executive Vice-President and Chief Administrative Officer
(14)
=======================================================================================================================
</TABLE>
Notes:
(1) George M. Amato, of New York, New York, is indebted to LGII for a personal
advance in the amount of $215,000, which was used for investment purposes.
The advance is non-interest-bearing. Mr. Amato is also indebted to LGII for
an unsecured loan in the amount of $508,854, the funds of which were used
for a housing loan. The loan is non-interest-bearing. Agreement has been
reached to amend the terms of the advance and loan by April 30, 1998 to
provide that they shall become secured and interest-bearing.
(2) Jeffrey L. Cashner, of Montgomery, Texas, is indebted to the Company for a
secured promissory note in the amount of $320,000. The note bears interest
at 7% per annum from February 18, 1997 and is due and payable on February
18, 1999. Mr. Cashner repaid $80,000 of his principal indebtedness in
September 1997.
24
<PAGE> 28
(3) Peter Gray, of Yardley, Pennsylvania, is indebted to LGII for a secured
promissory note in the amount of $35,000 given in connection with the
purchase of a home relating to his employment at the Philadelphia office of
LGII. The note bears interest at 7% per annum from October 1, 1995 and is
due and payable on May 1, 2000.
(4) Timothy R. Hogenkamp, of Cincinnati, Ohio, is indebted to the Company for
two unsecured demand loans, the funds of which were used for investment
purposes. No interest is charged on Mr. Hogenkamp's loans. One of such
loans, in the original principal amount of $170,000, is forgivable in four
annual instalments of $42,500 each, commencing in 1994. Mr. Hogenkamp is
also indebted to the Company for unsecured personal advances, which were
used for investment purposes and are non-interest-bearing. Agreement has
been reached to have these loans and advances repaid by April 30, 1998. As
part of this agreement, the Company has agreed, if necessary, to guarantee
the refinancing by third parties of the loans and advances.
(5) Kenneth E. Lee, Jr. of Doylestown, Pennsylvania, is indebted to LGII for a
promissory note in the amount of $50,000 given in connection with the
purchase of a home relating to his employment at the Philadelphia office of
LGII. The note bears interest at 7% per annum from June 2, 1995 and is due
and payable on June 2, 2000.
(6) Loewen Development Corporation of Burnaby, British Columbia, Canada, a
wholly-owned subsidiary of Loewen Capital Corporation, is an associate of
Raymond L. Loewen and Anne Loewen (the sole shareholders of Loewen Capital
Corporation). Loewen Development Corporation is indebted to the Company in
connection with the consolidation of funeral home operations as part of the
initial organization of the Company. The amounts receivable from Loewen
Development Corporation were previously non-interest-bearing with no set
terms of repayment. However, Loewen Development Corporation has agreed to
provide security for and interest on these amounts at 7% per annum from
April 1, 1998 and to repay these amounts by April 1, 2003.
(7) Donald W. Matthews, of Reno, Nevada, is indebted to LGII for a promissory
note in the amount of $42,000 given in connection with the purchase of a
home relating to his employment at the Philadelphia office of LGII. The
note bears interest at 7% per annum from February 21, 1997 and is due and
payable on February 21, 2002.
(8) Lawrence Miller, of Ivyland, Pennsylvania, William R. Shane, of Cherry
Hill, New Jersey and Osiris Investments, L.L.C., a Delaware limited
liability company of which Messrs. Miller and Shane are the sole members,
are indebted to LGII for a promissory note in the amount of $2,952,500, the
proceeds of which were used to repay an obligation to and purchase an
obligation from Montefiore Cemetery Company Perpetual Care Fund. Messrs.
Miller and Shane and Osiris Investments, L.L.C. are jointly and severally
liable under the promissory note, which is secured by contingent payments
to be made to them by LGII in connection with LGII's acquisition of Osiris
Holding Corporation, a Delaware corporation of which Messrs. Miller and
Shane were the majority shareholders prior to such acquisition. The note is
non-interest-bearing.
(9) Frank Milles, of Langhorne, Pennsylvania, is indebted to LGII for a
promissory note in the amount of $75,000 given in connection with the
purchase of a home relating to his employment at the Philadelphia office of
LGII. The note bears interest at 7% per annum from October 19, 1995 and is
due and payable on July 19, 2000.
(10) Robert P. Pence, of Philadelphia, Pennsylvania, ceased employment with the
Company on October 21, 1997, prior to which time he served as
Vice-President, Cemetery Operations. Mr. Pence is indebted to LGII for a
promissory note in the amount of $65,000 given in connection with the
purchase of a home relating to his employment at the Philadelphia office of
LGII. The note bears interest at 7% per annum from May 5, 1995 and is due
and payable on May 5, 2000.
(11) Ronald P. Robertson of Jamison, Pennsylvania, is indebted to LGII for a
promissory note in the amount of $75,000 given in connection with the
purchase of a home relating to his employment at the Philadelphia office of
LGII. The note bears interest at 7% per annum from August 15, 1995 and is
due and payable on August 15, 2000. Mr. Robertson repaid $25,000 of his
principal indebtedness in October 1996 and an additional $25,000 of his
principal indebtedness in December 1997.
(12) Roger Ryan, of Bellevue, Washington, was indebted to LGII for a promissory
note in the amount of $386,745 given in connection with the construction of
his home. The note bore interest at 8% per annum. Mr. Ryan repaid the full
amount of his indebtedness in January 1998.
(13) Michael L. Schweer, of Cincinnati, Ohio, is indebted to the Company for
unsecured personal advances, which were used for investment purposes. The
advances are non-interest-bearing. Agreement has been reached to have these
advances repaid by April 30, 1998. As part of this agreement, the Company
has agreed, if necessary, to guarantee the refinancing by third parties of
these advances.
(14) Michael G. Weedon, of West Vancouver, British Columbia, Canada, was
indebted to the Company for an unsecured promissory note in the amount of
Cdn $35,000, the funds of which were used for a housing loan. The note was
non-interest-bearing. Mr. Weedon repaid the full amount of his indebtedness
in March 1998.
CERTAIN TRANSACTIONS
Albert S. Lineberry, Sr. is the controlling shareholder of Gaines
Corporation of Greensboro, North Carolina. Gaines Corporation received $108,166
from Lineberry Group, Inc., a Subsidiary, in 1997 for the lease of its North Elm
Chapel premises in Greensboro, North Carolina.
The Honorable J. Carter Beese, Jr. has been a Managing Director of BT Alex.
Brown Incorporated, an investment bank, since September 1997. Prior to that
time, Mr. Beese was the Chairman of Alex. Brown International, an affiliate of
BT Alex. Brown Incorporated. BT Alex. Brown Incorporated has itself, and through
its affiliates including Alex. Brown International, provided underwriting
services to the Company. In May and June 1997, BT Alex. Brown Incorporated (then
known as Alex. Brown & Sons Incorporated) served as a co-representative of the
underwriters in a public offering of an aggregate of 13,900,000 Common Shares.
25
<PAGE> 29
In March 1995 the Company purchased all of the outstanding shares of Osiris
Holding Corporation ("Osiris") of Philadelphia, Pennsylvania. The total
consideration for the transaction was $103.8 million plus additional
consideration of up to approximately $42 million payable ($24.7 million of which
has been paid) to former shareholders of Osiris (including Lawrence Miller and
William R. Shane, who are now part of the Company's senior management), if
certain performance-related criteria are achieved over a period of up to six
years from the closing of the acquisition. The full amount of any unpaid
contingent consideration will be immediately payable in certain events,
including the death, permanent disability, or termination of employment without
cause, of either of Lawrence Miller or William R. Shane. Messrs. Miller and
Shane also each were granted 90,000 options which vest in increments of 18,000
annually if certain performance-related criteria are met.
Reference is made to page 8 for a description of certain arrangements
between the Company or LGII and Directors Albert S. Lineberry, Sr., Charles B.
Loewen and Dr. Earl A. Grollman.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's Directors, executive officers and beneficial owners of more than
10% of the outstanding Common Shares (collectively, "reporting persons") to file
with the U.S. Securities and Exchange Commission reports of ownership and
changes in ownership of equity securities of the Company. Based solely upon its
review of such reports and written representations from the reporting persons
that Forms 5 were either filed or not required to be filed by such reporting
persons, the Company believes that all of the reporting persons (33 persons
total) complied with the Section 16(a) filing requirements during the year ended
1997, except as follows. Each of the following persons failed to timely file an
Initial Statement of Beneficial Ownership on Form 3 within 10 days after
becoming a reporting person: Thomas C. Hardy, President and Chief Executive
Officer of The Loewen Life Insurance Group; Loewen Financial Inc., a corporation
of which Raymond L. Loewen is the sole shareholder; Kenneth T. Stevenson,
Director; and Gregg A. Strom, Vice-President, Cemeteries. Mr. Hardy also failed
to timely file a Form 4 with respect to one open market purchase of Common
Shares. Lawrence Miller, Executive Vice-President, Operations, and William R.
Shane, Senior Vice-President, Advisor, each failed to timely file a Form 4 in
connection with the vesting of performance options, because the determination
that the relevant performance targets had been met was not made until after the
date by which the Form 4 was due.
APPOINTMENT OF AUDITORS
The Board of Directors recommends, and unless otherwise directed the
designated persons named in the enclosed form of proxy will vote for, the
appointment of KPMG, 777 Dunsmuir Street, Vancouver, British Columbia, Canada,
V7Y 1K3, as auditors of the Company to hold office until the next annual general
meeting of Shareholders and to authorize the Directors to fix the remuneration
of the auditors so appointed. KPMG (or predecessor firms thereof) has been the
Company's auditors since 1986.
Representatives of KPMG are expected to be present at the Meeting and will
have the opportunity to make a statement if they desire to do so and will be
available to respond to appropriate questions.
INFORMATION AS TO EMPLOYEES
The total remuneration paid in 1997 to full-time and part-time employees of
the Company and its Subsidiaries (not including benefits) was approximately $328
million. The total remuneration paid in 1996 to full-time and part-time
employees of the Company and its Subsidiaries (not including benefits) was
approximately $260 million. This increase in employee remuneration resulted in
part from the growth of the Company in 1996, the full annual costs of which are
reflected for the first time in 1997. The total number of full-time and
part-time employees of the Company and its Subsidiaries as at December 31, 1997
was 16,382 (compared to 13,709 as at December 31, 1996).
26
<PAGE> 30
PARTICULARS OF OTHER MATTERS TO BE VOTED ON
APPROVAL OF AMENDMENTS TO EMPLOYEE STOCK OPTION PLANS
BACKGROUND
The Board of Directors has unanimously approved and recommends that the
Shareholders approve (i) an amendment to the Employee Stock Option Plan
(International) (the "International Plan") to increase the number of Common
Shares issuable pursuant to options granted under the International Plan by
400,000 and (ii) an amendment to the Employee Stock Option Plan (Canada) (the
"Canadian Plan" and, together with the International Plan, the "Plans") to
increase the number of Common Shares issuable pursuant to options granted under
the Canadian Plan by 700,000.
The International Plan was formerly known as the Employee Stock Option Plan
(United States). To accommodate the Company's expansion into the United Kingdom
in 1997 and to ensure that all employees of the Company and its Subsidiaries are
eligible to participate in the Company's stock option plans, the Employee Stock
Option Plan (United States) was renamed and amended to provide that employees of
the Company or any of its direct or indirect Subsidiaries other than employees
who are resident in Canada are eligible to participate in the International
Plan. The renaming and amendments referred to in this paragraph were approved by
the Board of Directors on March 5, 1998. Employees of the Company or any of its
direct or indirect Subsidiaries who are residents of Canada continue to be
eligible to participate in the Canadian Plan.
Historically, the Company has granted options under the Plans for two
important purposes: (i) to provide certain new employees (who typically join the
Company in connection with an acquisition) with an immediate incentive to
develop and promote the business and financial success of the Company and (ii)
to give selected employees long term incentives as a component of their
compensation.
The Company continued its growth and expansion in North America in 1997,
acquiring 105 funeral homes, 171 cemeteries and one insurance company in the
United States and 23 funeral homes in Canada through 164 separate acquisition
transactions. The Company also acquired in 1997 ten funeral homes in the United
Kingdom with 58 employees.
In addition, in 1997, the Company compensated the Chief Executive Officer
through the grant of options in lieu of 1996 bonus and 1997 salary and
compensated the Executive Vice-President, Operations through the grant of
options in lieu of 1997 salary. Such bonus and salaries would otherwise have
been paid in cash. These executive officers demonstrated their commitment to the
Company by foregoing cash payments in return for the opportunity to participate
in the future growth of the Company. More importantly, the Shareholders
benefited from enhanced earnings per share performance because of the reduction
of compensation paid in cash. Reference is made to EXECUTIVE COMPENSATION --
Report on Executive Compensation, for further information concerning options
granted to executive officers in lieu of bonus and salary.
During 1997, the Company granted an aggregate of 1,546,908 options to
approximately 200 employees. Due primarily to the rapid acquisition pace in 1997
and the grants of options in lieu of salary and bonus, the Company anticipated
that the number of options to be granted under the Canadian Plan would exceed
the number of shares available for grant under the Canadian Plan by early 1998.
Therefore, the Company proposed, and the TSE and ME conditionally accepted
notice of, on December 12, 1997 and January 21, 1998 respectively, an interim
increase in the number of Common Shares available under the Canadian Plan in the
amount of 350,000. The TSE and the ME conditionally accepted notice of, on
February 26, 1998 and March 11, 1998 respectively, a further proposed increase
in the number of Common Shares available under the Canadian Plan in the amount
of 350,000 (for an aggregate increase of 700,000 in the number of Common Shares
available under the Canadian Plan) and an increase of 400,000 in the number of
Common Shares available under the International Plan. The Board of Directors
approved the interim and aggregate increases in the number of Common Shares
issuable under the Plans on February 19, 1998, subject to disinterested
shareholder approval. As of March 26, 1998, 169,132 options had been granted
pursuant to the increased limitation under the Canadian Plan. The options
granted pursuant to the increased limitation under the Canadian Plan were
granted subject to approval by disinterested Shareholders at the Meeting of the
proposed aggregate increase to the maximum number of Common Shares issuable
pursuant to options under the Canadian Plan.
If the proposals to increase the number of Common Shares to be issued under
the International Plan by 400,000 and Canadian Plan by 700,000 are approved by
the Shareholders, the aggregate Common Shares
27
<PAGE> 31
underlying options outstanding and available for grant under the Plans will
represent 9.8% of the outstanding Common Shares as at March 26, 1998.
<TABLE>
<CAPTION>
AGGREGATE COMMON SHARES
UNDERLYING OPTIONS
OUTSTANDING AND AVAILABLE FOR
COMMON SHARES UNDERLYING GRANT UNDER PLANS,
OPTIONS OUTSTANDING AS PROPOSED
-------------------------- -----------------------------
NUMBER (1) PERCENT (2) NUMBER Percent (2)
---------- ----------- ----------- -------------
<S> <C> <C> <C> <C>
Canadian Plan................................ 2,594,488 3.5% 3,125,356 4.3%
International Plan........................... 3,302,126 4.5% 4,094,983 5.5%
--------- ---- --------- ----
Total........................................ 5,896,614 8.0% 7,220,339 9.8%
========= ==== ========= ====
</TABLE>
(1) The numbers in this column do not reflect Common Shares issued under the
Plans pursuant to options that have been exercised.
(2) Percent of Common Shares outstanding as at March 26, 1998.
APPROVAL
The approval of a simple majority of the votes cast by disinterested
Shareholders is required to approve the proposed amendments to each of the Plans
to increase the number of Common Shares issuable thereunder. Shareholders may
vote on each of the two proposed amendments separately. To the best of the
Company's knowledge, the number of votes attaching to the Common Shares that
will not be counted for the purposes of determining whether the required level
of Shareholder approval of the amendments to the International Plan has been
obtained is 239,264, and the number of votes attaching to the Common Shares that
will not be counted for the purposes of determining whether the required level
of shareholder approval of the amendments to the Canadian Plan has been obtained
is 12,330,051.
Approval by the disinterested Shareholders of the increase of 700,000
Common Shares available for issuance under the Canadian Plan will serve as
ratification by such Shareholders of the options granted pursuant to the
increased share limitation set forth in the Canadian Plan.
The Board of Directors believes that the Plans are a key component of
incentive-based compensation for eligible employees and are an important feature
of the Company's acquisition program.
THE BOARD OF DIRECTORS HAS UNANIMOUSLY APPROVED, AND RECOMMENDS THAT THE
SHAREHOLDERS VOTE FOR APPROVAL OF, AN AMENDMENT TO INCREASE THE NUMBER OF COMMON
SHARES ISSUABLE UNDER THE INTERNATIONAL PLAN BY 400,000 SHARES.
THE BOARD OF DIRECTORS HAS UNANIMOUSLY APPROVED, AND RECOMMENDS THAT THE
SHAREHOLDERS VOTE FOR APPROVAL OF, AN AMENDMENT TO INCREASE THE NUMBER OF COMMON
SHARES ISSUABLE UNDER THE CANADIAN PLAN BY 700,000 SHARES.
The full text of the Plans can be obtained from the Corporate Secretary of
the Company at the Company's principal executive office at 4126 Norland Avenue,
Burnaby, British Columbia, Canada, V5G 3S8.
CERTAIN ADDITIONAL INFORMATION REGARDING THE PLANS
General
Under the Plans, employees of the Company are eligible to be granted
options to purchase Common Shares. As of December 31, 1997, approximately 14,847
persons were eligible to participate in the International Plan (employees other
than employees who are residents of Canada) and approximately 1,535 persons were
eligible to participate in the Canadian Plan (employees who are residents of
Canada).
The Plans are administered by the Compensation Committee of the Board of
Directors. The number of options granted to selected employees is determined by
the Compensation Committee. The Compensation Committee also determines certain
terms and conditions of options granted.
Options granted under the Plans generally are non-transferable, except that
an optionee may transfer options granted under the Plans to a personal holding
company of which the optionee holds all direct and indirect interests,
28
<PAGE> 32
to the extent permitted by (a) applicable securities laws of the United States,
Canada, the states and territories of the United States, the provinces and
territories of Canada, the securities laws of the jurisdiction of residence of
any optionee, and any laws, rules and regulations promulgated thereunder, (b)
Section 162(m) of the Internal Revenue Code of 1986, as amended, and the rules
and regulations thereunder and (c) the rules and regulations of the New York
Stock Exchange (or, if the Common Shares are not then traded on the New York
Stock Exchange, any United States national securities exchange or quotation
system on which the Common Shares are then traded) and any securities exchange
outside of the United States on which the Common Shares are then traded.
Option Agreement
Each optionee under the Plans is required to enter into a separate option
agreement, which sets forth, among other things, the number of options granted,
the specific exercise price and the vesting conditions, within the following
parameters: (i) the exercise price of an option may not be less than the closing
price of the Common Shares on the trading day immediately prior to the grant
date, as quoted on the New York Stock Exchange (for options granted under the
International Plan) or on the TSE (for options granted under the Canadian Plan);
and (ii) in no event may an option terminate later than 10 years after the grant
date.
Exercise of Option
An optionee may exercise an option by delivering to the Company a duly
completed notice of exercise together with full payment, by cash or check, for
the Common Shares being purchased under the option and any taxes required to be
withheld and collected from the optionee.
Allocation of Options
The potential benefit to be received by an optionee is dependent on
increases in the price of the Common Shares prior to the exercise of the option.
Accordingly, the ultimate dollar value of options is not currently
ascertainable. At April 1, 1998, the closing price of the Common Shares on the
New York Stock Exchange was US $25.00 and on the TSE was Cdn $35.40.
The following table sets forth certain information with respect to options
granted in 1997 under each of the Plans to the current executive officers of the
Company as a group and to all employees of the Company as a group, including
officers who are not executive officers of the Company. Directors who are not
employees are not eligible to receive options under the Plans. For a discussion
of options granted in 1997 to the Named Executive Officers, see EXECUTIVE
COMPENSATION.
EMPLOYEE STOCK OPTION PLANS
<TABLE>
<CAPTION>
COMMON SHARES
GROUP RANGE OF EXERCISE PRICES UNDERLYING OPTIONS
----- ------------------------ ------------------
<S> <C> <C>
Employee Stock Option Plan (International)
Executive Group.................................... US $25.25 -- US $30.375 410,353
Non-Executive Officer Employee Group............... US $23.625 -- US $36.25 368,798
Employee Stock Option Plan (Canada)
Executive Group.................................... Cdn $35.45 -- Cdn $42.25 600,000
Non-Executive Officer Employee Group............... Cdn $33.30 -- Cdn $53.50 167,757
</TABLE>
United States Federal Income Tax Consequences
The following is a summary of the principal anticipated United States
federal income tax consequences of the grant and exercise of an option to and by
an optionee who is a resident or citizen of the United States. It is based on
the current provisions of the U.S. Internal Revenue Code of 1986, as amended
(the "Code"), and the rules and regulations thereunder. This discussion is
general only and is not a substitute for independent advice from an individual's
own tax adviser.
29
<PAGE> 33
Options granted under the Plans are intended to be "non-qualified options"
that do not meet the criteria of "incentive stock options" within the meaning of
Section 422 of the Code. An optionee will not recognize any taxable income at
the time an option is granted. Upon exercise of an option, an optionee generally
will recognize ordinary income, for United States income tax purposes, equal to
the excess, if any, of the then fair market value of the Common Shares acquired
over the exercise price of the option. Any taxable income recognized in
connection with the exercise of an option will be subject to tax withholding by
the optionee's employer.
The employer of the optionee generally will be entitled to United States
income tax deductions to the extent and in the year that ordinary income is
recognized by the optionee in the circumstances described above.
Dividends payable on Common Shares out of earnings and profits are ordinary
income taxable at ordinary income rates. When an optionee sells Common Shares
acquired pursuant to the exercise of an option, any difference between the sale
price and the optionee's tax basis in the Common Shares will be treated as
capital gain or loss. If an optionee holds such Common Shares for 18 months
before selling them, the long-term capital gains rate will be 10% (for
individuals in the 15% tax bracket) or 20% (for other individuals). A capital
gains rate of 28% will apply if the optionee holds his or her Common Shares for
one year, but not more than 18 months, before selling.
Under certain circumstances, United States citizens who are resident
outside the United States may be entitled to certain foreign tax credits against
United States income tax liability incurred in the circumstances described
above.
INTEREST OF CERTAIN PERSONS IN MATTERS TO BE ACTED UPON
The Shareholders will be asked to approve at the Meeting an amendment to
the Employee Stock Option Plan (International) (previously defined herein as the
"International Plan") to increase the number of Common Shares issuable
thereunder by 400,000 and an amendment to the Employee Stock Option Plan
(Canada) (previously defined herein as the "Canadian Plan") to increase the
number of Common Shares issuable thereunder by 700,000. The United States-based
senior officers of the Company (being officers of the rank of vice-president and
higher, including executive officers) and their associates have an interest in
the International Plan because such senior officers are entitled to participate
in International Plan. Accordingly, such persons are precluded from voting their
Common Shares with respect to this matter. The Canadian-based senior officers of
the Company (being officers of the rank of vice-president and higher, including
executive officers) and their associates have an interest in the Canadian Plan
because such senior officers are entitled to participate in the Canadian Plan.
Accordingly, such persons are precluded from voting their Common Shares with
respect to this matter. Reference is made to PARTICULARS OF OTHER MATTERS TO BE
VOTED ON -- APPROVAL OF AMENDMENTS TO EMPLOYEE STOCK OPTION PLANS.
OTHER MATTERS
To the best of the knowledge, information and belief of the Directors,
there are no other matters which are to be acted upon at the Meeting. If such
matters arise, the form of proxy provides that discretionary authority is
conferred on the designated persons in the enclosed form of proxy to vote with
respect to such matters; and the voting instructions for participants in the
Employee Stock Bonus Plan and in the LGII 401(k) Retirement Plan provide that
CIBC Mellon Trust Company may act and vote as management of the Company may
recommend.
SHAREHOLDERS' PROPOSALS
To be considered for inclusion in the Proxy Statement and Information
Circular for the 1999 annual general meeting, proposals of Shareholders must be
received by the Company no later than December 7, 1998. Such proposals should be
directed to the Corporate Secretary of the Company.
30
<PAGE> 34
AVAILABLE DOCUMENTS
A COPY OF THE FOLLOWING DOCUMENTS IS AVAILABLE ON REQUEST FROM THE
CORPORATE SECRETARY OF THE COMPANY AT THE COMPANY'S PRINCIPAL EXECUTIVE OFFICE
AT 4126 NORLAND AVENUE, BURNABY, BRITISH COLUMBIA, CANADA, V5G 3S8, TELEPHONE
(604) 299-9321:
(1) THE COMPANY'S LATEST ANNUAL REPORT ON FORM 10-K REQUIRED UNDER THE
UNITED STATES SECURITIES EXCHANGE ACT OF 1934 WHICH REPORT IS ALSO
FILED WITH CANADIAN SECURITIES COMMISSIONS IN SATISFACTION OF THE
REQUIREMENT TO FILE AN ANNUAL INFORMATION FORM PURSUANT TO CANADIAN
SECURITIES LAWS AND POLICIES;
(2) THE COMPARATIVE FINANCIAL STATEMENTS OF THE COMPANY FOR THE COMPANY'S
MOST RECENTLY COMPLETED FISCAL YEAR IN RESPECT OF WHICH SUCH FINANCIAL
STATEMENTS HAVE BEEN ISSUED TOGETHER WITH THE ACCOMPANYING REPORT OF
THE AUDITORS AND ANY INTERIM FINANCIAL STATEMENTS OF THE COMPANY
REQUIRED BY LAW AND ISSUED SUBSEQUENT TO SUCH COMPARATIVE FINANCIAL
STATEMENTS; AND
(3) THE PROXY STATEMENT AND INFORMATION CIRCULAR OF THE COMPANY DATED AS
OF APRIL 8, 1997 IN CONNECTION WITH THE ANNUAL GENERAL MEETING OF
SHAREHOLDERS HELD ON MAY 15, 1997;
SUBJECT TO (i) IN THE CASE OF PERSONS WHO ARE NOT SECURITIES HOLDERS OF THE
COMPANY, THE PAYMENT OF A REASONABLE CHARGE AND (ii) IN ANY EVENT, THAT THE
COMPANY MAY REQUIRE PAYMENT OF A REASONABLE CHARGE FOR EXHIBITS TO THE ANNUAL
REPORT ON FORM 10-K.
APPROVAL OF THE BOARD OF DIRECTORS
The contents of this Proxy Statement and Information Circular have been
approved and the mailing thereof to the Shareholders of the Company has been
authorized by the Board of Directors of the Company.
DATED at Burnaby, British Columbia, Canada, the 6th day of April, 1998.
By Order of the Board of Directors
/s/ RAYMOND L. LOEWEN
------------------------------------
Raymond L. Loewen,
Chairman of the Board, President and
Chief Executive Officer
31
<PAGE> 35
THE LOEWEN GROUP INC.
FORM OF PROXY
FOR THE ANNUAL GENERAL MEETING OF SHAREHOLDERS
OF THE LOEWEN GROUP INC.
TO BE HELD ON MAY 14, 1998
THIS PROXY IS SOLICITED BY AND ON BEHALF OF MANAGEMENT
The undersigned, being a holder of Common shares without par value ("Common
Shares") in the capital of The Loewen Group Inc. (the "Company") and hereby
revoking any proxy previously given, hereby appoints RAYMOND L. LOEWEN, or
failing him, PAUL WAGLER, or instead of either of them,
______________________________________________________ as proxyholder of the
undersigned, to attend and vote for the undersigned and otherwise act for and on
behalf of and in the name of the undersigned at the Annual General Meeting (the
"Meeting") of shareholders of the Company, to be held on the 14th day of May,
1998, and at any adjournment or postponement thereof. The undersigned hereby
instructs the proxyholder to vote for or vote against, or withhold or abstain
from voting, as the case may be, all of the Common Shares in the capital of the
Company or such number of shares as may be noted hereon registered in the name
of the undersigned on any poll (ballot) in respect of the following matters,
details of which are provided in the Proxy Statement and Information Circular,
as indicated below.
THE UNDERSIGNED HEREBY AUTHORIZES THE PROXYHOLDER TO VOTE FOR ALL OF THE
NOMINEES FOR DIRECTOR LISTED IN ITEM 1 BELOW AND FOR ALL MATTERS IN ITEMS 2
THROUGH 5 BELOW, UNLESS AN INSTRUCTION TO THE CONTRARY IS INDICATED.
<TABLE>
<CAPTION>
<S> <C> <C>
1. The election of The Honorable J. Carter Beese, Jr. as a FOR [ ] or WITHHOLD [ ]
Director of the Company for a term ending at the fourth
annual general meeting after the Meeting.
The election of James D. McLennan as a Director of the FOR [ ] or WITHHOLD [ ]
Company for a term ending at the fourth annual general
meeting after the Meeting.
The election of Kenneth T. Stevenson as a Director of the FOR [ ] or WITHHOLD [ ]
Company for a term ending at the fourth annual general
meeting after the Meeting.
2. The appointment of KPMG as auditors of the Company for the FOR [ ] or WITHHOLD [ ]
ensuing year.
3. To authorize the Directors to fix the remuneration to be FOR [ ] or AGAINST [ ] or
paid to the auditors. ABSTAIN [ ]
4. To approve an amendment of the Employee Stock Option Plan FOR [ ] or AGAINST [ ] or
(International), formerly known as the Employee Stock ABSTAIN [ ]
Option Plan (United States), to increase the number of
Common Shares issuable thereunder by 400,000 Common Shares.
5. To approve an amendment of the Employee Stock Option Plan FOR [ ] or AGAINST [ ] or
(Canada) to increase the number of Common Shares issuable ABSTAIN [ ]
thereunder by 700,000 Common Shares.
</TABLE>
The Notes to Proxy on the reverse are incorporated in and form part of this form
of proxy.
If this form of proxy is returned undated, the undersigned hereby authorizes the
Chairman of the Meeting or the Chairman's delegate to fill in the date May 13,
1998.
<TABLE>
<CAPTION>
<S> <C>
- ------------------------------------------------------------
Signature of Shareholder (a proxy may not be valid unless
signed)
- ------------------------------------------------------------
Please Print Name Here
- ------------------------------------------------------------
Date (a proxy may not be valid unless dated)
_ _
| |
| |
- -
</TABLE>
<PAGE> 36
NOTES TO PROXY
1. Shareholders who are unable to attend the Meeting are requested to complete
and deposit this proxy with CIBC Mellon Trust Company no later than 10:00
a.m. (Pacific Daylight Time), May 13, 1998, at 200 Queens Quay East, Unit
6, Toronto, Ontario, Canada, M5A 4K9, or by mail at P.O. Box 12005 Stn. BRM
B, Toronto, Ontario, Canada, M5A 4K9, or by fax at (416) 368-2502.
2. THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED FOR OR AGAINST, OR THE
VOTING OF SUCH SHARES WILL BE WITHHELD OR ABSTAINED FROM, AS THE CASE MAY
BE, ON ANY POLL (BALLOT) IN RESPECT OF THE ITEMS SET FORTH IN THE FORM OF
PROXY AS THE SHAREHOLDER MAY HAVE SPECIFIED BY MARKING AN "X" IN THE PLACE
PROVIDED FOR THAT PURPOSE. IF NO CHOICE IS SPECIFIED, THE SHARES WILL BE
VOTED ON ANY POLL (BALLOT) AS IF THE SHAREHOLDER HAD SPECIFIED VOTING FOR
(I.E. IN FAVOR OF) THE ITEMS, AND THE SHAREHOLDER HEREBY CONFERS AUTHORITY
ON THE PROXYHOLDER OR PROXYHOLDERS HEREBY APPOINTED TO VOTE THE SHARES
ACCORDINGLY.
3. EACH SHAREHOLDER HAS THE RIGHT TO APPOINT A PERSON (WHICH MAY BE A COMPANY)
TO ATTEND AND ACT ON THE SHAREHOLDER'S BEHALF AT THE MEETING OTHER THAN THE
PERSONS DESIGNATED IN THIS FORM OF PROXY. IF THE SHAREHOLDER DOES NOT WANT
TO APPOINT THE PERSONS DESIGNATED IN THE FORM OF PROXY, THE SHAREHOLDER
SHOULD STRIKE OUT THEIR NAMES AND INSERT IN THE BLANK SPACE PROVIDED THE
NAME OF THE PERSON THE SHAREHOLDER WISHES TO ACT AS THE SHAREHOLDER'S
PROXYHOLDER AND, IF DESIRED, AN ALTERNATE PROXYHOLDER. A PROXYHOLDER OR
ALTERNATE PROXYHOLDER NEED NOT BE A SHAREHOLDER OF THE COMPANY.
4. IN THE CASE OF ANY AMENDMENTS OR VARIATIONS TO THE PROPOSED RESOLUTIONS, AND
IN THE CASE OF ANY OTHER MATTERS WHICH MAY PROPERLY COME BEFORE THE MEETING,
THE SHAREHOLDER HEREBY CONFERS DISCRETIONARY AUTHORITY ON THE PROXYHOLDER
HEREBY APPOINTED TO ACT AND VOTE ON THE SHAREHOLDER'S BEHALF ON ANY POLL
(BALLOT), AS THE PROXYHOLDER IN THE PROXYHOLDER'S SOLE DISCRETION MAY SEE
FIT, ALL IN THE SAME MANNER AND TO THE SAME EXTENT AND WITH THE SAME POWER
AS THE SHAREHOLDER COULD, IF THE SHAREHOLDER WERE PERSONALLY PRESENT AT SUCH
MEETING. NO SUCH AMENDMENTS, VARIATIONS, OR OTHER MATTERS WERE KNOWN TO
MANAGEMENT AT THE TIME THIS PROXY WAS SOLICITED.
5. This proxy may not be valid unless it is dated and signed by the
shareholder or by the shareholder's attorney-in-fact duly authorized by the
shareholder in writing or, in the case of a corporation, is executed under
its corporate seal or by an officer or officers or attorney-in-fact for the
corporation duly authorized. If this proxy is executed by an
attorney-in-fact for an individual shareholder or joint shareholders or by
an officer or officers or attorney-in-fact of a corporate shareholder not
under its corporate seal, the instrument so empowering the officer or
officers or the attorney-in-fact, as the case may be, or a notarial copy
thereof, should accompany the Form of Proxy.
6. This proxy is revocable in the manner described under the heading
"Appointment and Revocation of Proxies" in the accompanying Proxy Statement
and Information Circular.
<PAGE> 37
TO NON-REGISTERED HOLDERS (BENEFICIAL HOLDERS)
In accordance with National Policy Statement No. 41/Shareholder Communication,
beneficial shareholders may elect annually to have their name added to an
issuer's supplemental mailing list in order to receive interim financial
statements. If you are interested in receiving such statements please complete
and return this form.
NAME OF CORPORATION: THE LOEWEN GROUP INC.
------------------------------------------------------------
NAME OF SHAREHOLDER:
------------------------------------------------------------
ADDRESS:
-----------------------------------------------------------------------
---------------------------------------------------------------- Postal
or Zip Code:
---------------------------
I certify that I am a beneficial shareholder.
SIGNATURE:
----------------------------------------------------------------------
FIRST CLASS MAIL
ATTN: CORPORATE TRUST
DEPARTMENT
TO: CIBC MELLON TRUST COMPANY
FIFTH FLOOR
393 UNIVERSITY AVENUE
TORONTO, ONTARIO
CANADA
M5G 2M7
<PAGE> 38
VOTING INSTRUCTIONS
TO CIBC MELLON TRUST COMPANY
AS PLAN AGENT UNDER THE EMPLOYEE STOCK BONUS PLAN
ANNUAL GENERAL MEETING OF THE LOEWEN GROUP INC.
TO BE HELD ON MAY 14, 1998
AND AT ANY ADJOURNMENT OR POSTPONEMENT THEREOF
INSTRUCTIONS:
1. PLEASE INSTRUCT CIBC MELLON TRUST COMPANY, BY CHECKING THE APPROPRIATE
BOXES, HOW TO VOTE YOUR FIVE COMMON SHARES WITHOUT PAR VALUE ("COMMON SHARES")
IN THE CAPITAL OF THE LOEWEN GROUP INC. (THE "COMPANY") FOR EACH OF THE ITEMS
SET FORTH BELOW.
2. DATE, SIGN AND MAIL IN THE ATTACHED ENVELOPE TO CIBC MELLON TRUST COMPANY.
The undersigned participant in the Employee Stock Bonus Plan (hereinafter
referred to as the "Plan") of the Company hereby instructs CIBC Mellon Trust
Company as Plan Agent to exercise at the above meeting the voting rights
pertaining to THE UNDERSIGNED'S FIVE COMMON SHARES OF THE COMPANY UNDER THE PLAN
AS FOLLOWS:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
VOTING CHOICE FOR THE ELECTION AS A DIRECTOR OF: FOR WITHHOLD
The Honorable J. Carter Beese, Jr. [ ] [ ]
James D. McLennan [ ] [ ]
Kenneth T. Stevenson [ ] [ ]
VOTING CHOICE ON THE:
Appointment of KPMG as auditors of the Company for [ ] [ ]
the ensuing year.
VOTING CHOICE ON THE: FOR AGAINST ABSTAIN
Resolution authorizing the Directors to fix the [ ] [ ] [ ]
remuneration to be paid to the auditors.
VOTING CHOICE ON THE: FOR AGAINST ABSTAIN
Resolution to approve an amendment of the Employee [ ] [ ] [ ]
Stock Option Plan (International), formerly
known as the Employee Stock Option Plan (United
States), to increase the number of Common Shares
issuable thereunder by 400,000 Common Shares.
VOTING CHOICE ON THE: FOR AGAINST ABSTAIN
Resolution to approve an amendment of the Employee [ ] [ ] [ ]
Stock Option Plan (Canada) to increase the
number of Common Shares issuable thereunder by
700,000 Common Shares.
</TABLE>
NOTE: IF YOU DATE, SIGN AND MAIL THESE VOTING
INSTRUCTIONS TO CIBC MELLON TRUST
COMPANY BUT DO NOT INSTRUCT CIBC MELLON
TRUST COMPANY HOW TO VOTE YOUR FIVE
COMMON SHARES WITH RESPECT TO ANY OF
THE ITEMS ABOVE, CIBC MELLON TRUST
COMPANY, AS PLAN AGENT, WILL VOTE YOUR
FIVE COMMON SHARES FOR EACH UNMARKED
ITEM. IN THE CASE OF ANY AMENDMENTS OR
VARIATIONS TO THE PROPOSED RESOLUTIONS,
AND IN THE CASE OF ANY OTHER MATTERS
WHICH MAY PROPERLY COME BEFORE THE
MEETING, YOU HEREBY CONFER
DISCRETIONARY AUTHORITY ON CIBC MELLON
TRUST COMPANY, AS PLAN AGENT, TO ACT
AND VOTE ON YOUR BEHALF ON ANY POLL
(BALLOT) AS MANAGEMENT OF THE COMPANY
MAY RECOMMEND.
<TABLE>
<CAPTION>
<S> <C>
DATE: ________________________________
---------------------------------------------------------------------------
Signature:
---------------------------------------------------------------------------
Print Name:
[ ]
[ ]
</TABLE>
<PAGE> 39
VOTING INSTRUCTIONS
TO CIBC MELLON TRUST COMPANY
UNDER THE 401(k) PLAN
ANNUAL GENERAL MEETING OF THE LOEWEN GROUP INC.
TO BE HELD ON MAY 14, 1998
AND AT ANY ADJOURNMENT OR POSTPONEMENT THEREOF
INSTRUCTIONS:
1. PLEASE INSTRUCT CIBC MELLON TRUST COMPANY, BY CHECKING THE APPROPRIATE
BOXES, HOW TO VOTE THE COMMON SHARES WITHOUT PAR VALUE ("COMMON SHARES") IN
THE CAPITAL OF THE LOEWEN GROUP INC. (THE "COMPANY") ALLOCATED TO YOU UNDER
THE 401(k) RETIREMENT PLAN FOR EACH OF THE ITEMS SET FORTH BELOW.
2. DATE, SIGN AND MAIL IN THE ATTACHED ENVELOPE TO CIBC MELLON TRUST COMPANY.
The undersigned participant in the 401(k) Plan (hereinafter referred to as the
"Plan") of Loewen Group International, Inc. hereby instructs CIBC Mellon Trust
Company as Trustee's Agent to exercise at the above meeting the voting rights
pertaining to THE COMMON SHARES OF THE COMPANY UNDER THE PLAN AS FOLLOWS:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
VOTING CHOICE FOR THE ELECTION AS A DIRECTOR OF: FOR WITHHOLD
The Honorable J. Carter Beese, Jr. [ ] [ ]
James D. McLennan [ ] [ ]
Kenneth T. Stevenson [ ] [ ]
VOTING CHOICE ON THE:
Appointment of KPMG as auditors of the Company for [ ] [ ]
the ensuing year.
VOTING CHOICE ON THE: FOR AGAINST ABSTAIN
Resolution authorizing the Directors to fix the [ ] [ ] [ ]
remuneration to be paid to the auditors.
VOTING CHOICE ON THE: FOR AGAINST ABSTAIN
Resolution to approve an amendment of the Employee [ ] [ ] [ ]
Stock Option Plan (International), formerly
known as the Employee Stock Bonus Plan (United
States), to increase the number of Common Shares
issuable thereunder by 400,000 Common Shares.
VOTING CHOICE ON THE: FOR AGAINST ABSTAIN
Resolution to approve an amendment of the Employee [ ] [ ] [ ]
Stock Option Plan (Canada) to increase the
number of Common Shares issuable thereunder by
700,000 Common Shares.
NOTE: IF YOU DATE, SIGN AND MAIL THESE VOTING INSTRUCTIONS TO CIBC MELLON TRUST COMPANY
BUT DO NOT INSTRUCT CIBC MELLON TRUST COMPANY HOW TO VOTE YOUR COMMON SHARES WITH
RESPECT TO ANY OF THE ITEMS ABOVE, CIBC MELLON TRUST COMPANY, AS THE TRUSTEE'S
AGENT, WILL VOTE THE COMMON SHARES ALLOCATED TO YOU UNDER THE PLAN FOR EACH
UNMARKED ITEM. IN THE CASE OF ANY AMENDMENTS OR VARIATIONS TO THE PROPOSED
RESOLUTIONS, AND IN THE CASE OF ANY OTHER MATTERS WHICH MAY PROPERLY COME BEFORE
THE MEETING, YOU HEREBY CONFER DISCRETIONARY AUTHORITY ON CIBC MELLON TRUST
COMPANY, AS THE TRUSTEE'S AGENT, TO ACT AND VOTE ON YOUR BEHALF ON ANY POLL
(BALLOT) AS MANAGEMENT OF THE COMPANY MAY RECOMMEND.
</TABLE>
DATE: ________________________________
- ---------------------------------------
Signature:
- ---------------------------------------
Print Name:
[ ]
[ ]
<PAGE> 40
THE LOEWEN GROUP INC.
EMPLOYEE STOCK OPTION PLAN (INTERNATIONAL)
(RESTATED AND AMENDED AS AT APRIL 7, 1994 AND FURTHER AMENDED AS AT
APRIL 7, 1995, SEPTEMBER 19, 1995, APRIL 2, 1996, NOVEMBER 20, 1996,
APRIL 2, 1997, APRIL 8, 1997, AUGUST 15, 1997 AND MARCH 11, 1998)
Section 1 - General
(a) The purpose of the Employee Stock Option Plan (International) (the "Plan")
is to promote the interests of The Loewen Group Inc. (the "Company") by:
(i) furnishing Eligible Employees (as defined below) with greater
incentive to develop and promote the business and financial success of
the Company; and
(ii) further associate the interests of Eligible Employees with those of
the shareholders of the Company by encouraging such employees to acquire
share ownership in the Company.
(b) The Plan is not qualified under Section 401(a) of the Internal Revenue Code
of 1986, as amended (the "Code"), and is not subject to any of the provisions of
the Employment Retirement Income Security Act of 1974.
(c) Any questions concerning the Plan should be directed to the Corporate
Secretary of the Company, at the Company's principal executive office located at
4126 Norland Avenue, Burnaby, British Columbia, Canada V5G 3S8, telephone number
(604) 299-9321.
(d) The Plan shall be governed by, and construed in accordance with, the laws of
the province of British Columbia.
Section 2 - Eligibility
(a) Under the Plan, employees of the Company or any of its direct or indirect
subsidiaries ("Subsidiaries") who are residents of the United States or its
territories (the "Eligible Employees") are eligible to be granted options
("Options") to purchase Common shares without par value of the Company
("Shares").
(b) The Compensation Committee of the Company (the "Committee") or such officer
as the Committee may designate shall determine from time to time those Eligible
Employees to be granted Options under the Plan, and the number of Shares subject
to each such Option. Each grant of an Option pursuant to the Plan shall be
evidenced by a stock option agreement ("Option Agreement") executed by the
employee to whom the Option is granted (the "Optionee") and the
<PAGE> 41
Company. Each Option Agreement shall incorporate such terms and conditions as
the Committee, in its discretion, deems consistent with the terms of the Plan.
(c) Each Option Agreement shall specify the dates upon which all or any
installment of the Option will be exercisable. An Option may be exercised when
installments vest at any time and from time to time thereafter with respect to
all or a portion of the Shares covered by such vested installments. In addition,
if an Offer (as hereinafter defined) is made, the Board of Directors, or
Committee, may while the Offer remains outstanding:
(i) determine that each Option granted by the Company to purchase Shares
shall, notwithstanding any vesting period or deferral of the right to
exercise otherwise applicable, be immediately exercisable effective on
and after a date declared by the Board of Directors, or Committee, to be
an advanced exercise date ("Advanced Exercise Date"); and
(ii) rescind any declaration of an Advanced Exercise Date but no such
rescission shall affect the validity of the exercise of such Option if
validly exercised on or after a particular Advanced Exercise Date and
before the date of rescission of the declaration of the particular
Advanced Exercise Date.
For the purposes hereof, "Offer" means an offer to acquire the Shares made to
the holders of the Company's Shares where the Shares which are the subject of
the offer to purchase, together with the offeror's then presently owned Shares,
will in the aggregate exceed twenty percent (20%) of the outstanding Shares of
the Company and where two or more persons or companies make offers jointly or in
concert or intending to exercise jointly or in concert any voting rights
attaching to the Shares to be acquired, then the Shares owned by each of them
shall be included in the calculation of the percentage of the Shares of the
Company owned by each of them. Paragraphs (i) and (ii) shall apply to each
Option granted or to be granted by the Company, which is outstanding at the time
of any such declaration regardless of the date of grant thereof, provided that
all other terms and conditions of the Option shall continue to apply and nothing
herein shall operate to extend, enlarge or revise any Option which has expired,
has been exercised, has been cancelled or otherwise has ceased to exist.
Section 3 - Number of Shares Subject to Plan
(a) The number of Shares issuable pursuant to the exercise of Options after the
effective date of the restatement and amendment of the Plan is limited as
follows:
(i) subject to adjustment pursuant to Section 9, the aggregate number of
Shares issuable pursuant to Options under the Plan shall not exceed
4,800,000 Shares (including 1,178,457 Shares under Options previously
granted but not exercised as of April 7, 1994); and
2
<PAGE> 42
(ii) the number of Shares reserved for issuance to any one person
pursuant to options (whether granted under this Plan or otherwise) shall
not exceed 5% of the total issued and outstanding Shares on a
non-diluted basis.
(b) The maximum number of Shares for which Options are granted after the
effective date of restatement and amendment of the Plan in any one calendar year
under the Plan to any one Eligible Employee shall not exceed 600,000 Shares,
subject to adjustment pursuant to Section 9.
(c) If an Option granted under the Plan expires for any reason without being
exercised in full, the number of Shares that would have been issuable upon the
exercise of such Option shall continue to be available under the Plan.
(d) Subject to the maximum limits described in subsections (a) and (b) above,
the Board of Directors of the Company (the "Board") shall reserve the number of
Shares required to honor Options granted from time to time to Optionees pursuant
to the Plan, and shall reserve from time to time additional Shares, if any, to
ensure that a sufficient number of Shares are available for purchase under
Options granted in the future.
Section 4 - Administration of the Plan
(a) The Plan shall be administered by the Committee which shall be comprised of
two or more members of the Board who are "outside directors" within the meaning
of Section 162(m) of the United States Internal Revenue Code of 1986, as
amended; provided, however, that, with respect to Options that may be granted to
Eligible Employees who are not subject to Section 16 of the United States
Securities Exchange Act of 1934, as amended (the "Exchange Act"), the Committee
may delegate its responsibilities to a subcommittee consisting of one or more
executive officers of the Company. The address of the Committee is care of the
Company's principal executive office at 4126 Norland Avenue, Burnaby, British
Columbia, Canada, V5G 3S8.
(b) The Committee shall have all powers and discretion necessary or appropriate
to administer the Plan, consistent with and subject to the parameters set forth
in the Plan, including but not limited to the power (1) to determine from time
to time the Eligible Employees to be granted Options under the Plan, (2) to
determine the number of Shares subject to each Option granted under the Plan,
(3) to set or amend the terms of each Option Agreement, (4) to interpret the
Plan, (5) to adopt such rules or guidelines as it deems appropriate to
administer the Plan, and (6) to make all other decisions, and take or cause to
be taken all other actions, relating to the operation of the Plan. The
Committee's determinations under the Plan shall be final and binding on all
persons. No member of the Committee shall be liable to any person for any action
or decision made in good faith in connection with the performance of the
Committee's duties or the exercise of its powers under the Plan.
3
<PAGE> 43
Section 5 - Option Price and Exercisability
(a) The exercise price of an Option shall not be less than the closing price of
a Share on the trading day immediately prior to the date of grant, as quoted on
The Toronto Stock Exchange (with respect to Options denominated in Canadian
currency) and on the Nasdaq National Market or a United States national
securities exchange or quotation system on which the Shares are then traded
(with respect to Options denominated in United States currency).
(b) Except as otherwise provided in an Option Agreement, no Options shall be
exercised by an Optionee until at least 6 months after the date of the grant. An
Optionee may exercise an Option by delivering to the Company a duly completed
form of notice of such exercise together with full payment for the Shares being
purchased under the Option. The form of notice must identify the Option being
exercised, state the exercise price, be signed by the Optionee and be dated the
date of exercise. The Company shall promptly notify the Optionee as to any taxes
required to be withheld and collected from the Optionee. Unless otherwise
provided in the Option Agreement or consented to by the Company, payment for the
Shares must be made in the currency in which the Option is denominated.
(c) The sale of the Shares to the Optionee shall be deemed to have occurred, and
the Optionee shall be deemed to be the holder of such Shares, on the date that
both the form of notice and the payment in a manner acceptable to the Company of
the exercise price and any applicable taxes have been received by the Company. A
certificate representing the Shares acquired by the Optionee shall be issued and
delivered to the Optionee by the Company as soon is reasonably possible after
the sale.
Section 6 - Termination of Options
(a) Any Option granted pursuant to the Plan shall terminate upon the earlier of:
(i) ten years after the date of grant; and (ii) such event(s) of termination as
are provided in the Option Agreement or as are determined from time to time by
the Committee.
(b) A change in the duties or position of the Optionee, or the transfer of the
Optionee from one position with the Company to another, or the transfer of an
Optionee from one employer to another employer shall not trigger the termination
of such Optionee's Option so long as such Optionee remains a bona fide employee
of the Company or any Subsidiary.
Section 7 - Non-transferability of Options
(a) Except as hereafter provided, an Option granted under the Plan may not be
transferred, pledged or assigned otherwise than by will or the laws of descent
and distribution and may be exercised only by the Optionee during his or her
lifetime.
4
<PAGE> 44
(b) Options that are exercisable at the date of an Optionee's death may be
exercised by the Optionee's heirs entitled thereto or by the administrator or
the executor or trustee of his or her last will and testament. Any such exercise
may not take place after the earlier of: (i) the expiration of the Option in
accordance with Section 6(a)(i) above; and (ii) two years after the date of the
Optionee's death without the prior written consent of the Company.
(c) To the extent permitted by applicable Laws, an Optionee shall be permitted
to transfer Options to a personal holding company of which the Optionee holds
all direct and indirect interests. For purposes of this paragraph, "Laws" means
(i) the securities laws of the United States, Canada, the states and territories
of the United States, the provinces and territories of Canada, the securities
laws of the jurisdiction of residence of any Optionee, and applicable laws,
rules and regulations promulgated thereunder, (ii) Section 162(m) of the
Internal Revenue Code of 1986, as amended, and the rules and regulations
thereunder and (iii) the rules and regulations of the New York Stock Exchange
(or, if the Shares are not traded on the New York Stock Exchange, any United
States national securities exchange or quotation system on which the Shares are
traded) and any securities exchange outside of the United States on which the
Shares are traded.
Section 8 - Termination or Amendment
Subject to regulatory approval and, where required, approval of the
shareholders of the Company, the Committee may, at any time and for any reason,
amend or terminate the Plan, subject to ratification by the Board. The Plan
shall remain in effect until it is terminated by the Committee, subject to
ratification by the Board. No Options may be granted under the Plan after its
termination, but no termination or amendment of the Plan shall affect any
previously granted Option.
Section 9 - Protection Against Dilution
The Committee shall adjust the number of Shares covered by the Plan and
any Option in a manner it considers equitable to reflect any change in the
capitalization of the Company including, but not limited to, such changes as
stock dividends, consolidations and subdivisions of shares or changes resulting
from an amalgamation of the Company with one or more corporations. No fractional
shares or rights to acquire a fractional share will be created as a result of an
adjustment made pursuant to this section. The Committee shall also adjust the
exercise price under any Option in a manner it considers equitable if the number
of Shares covered by the Option is adjusted pursuant to this section.
5
<PAGE> 45
Section 10 - Rights as Shareholders
An Optionee shall have no rights as a shareholder (including the right
to vote and to receive dividends) of the Company with respect to Shares covered
by Options until such participant becomes the holder of record of such Shares.
Section 11 - Compliance with Certain U.S. Securities Laws
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. If 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.
Section 12 - Restrictions on Resale
Under United States federal law, Shares purchased pursuant to Options
granted under the Plan by Optionees who are not "affiliates" of the Company
within the meaning of the Securities Act of 1933, as amended (the "Act"),
generally may be resold without registration or other restriction under the Act.
Generally, Shares purchased by "affiliates" pursuant to Options granted under
the Plan may not be resold to the public in the United States without
registration under the Act, except pursuant to an exemption from such
registration. One such exemption from registration is Rule 144 under the Act,
which permits resales by affiliates so long as certain volume, manner of sale
and other requirements have been satisfied. An "affiliate" is a person who
directly or indirectly controls, or is controlled by, or is under common control
with, the Company.
Section 13 - General Limitations
Neither the Plan nor any Option granted hereunder is to be interpreted
as giving any person a right to remain an employee of the Company or any of its
Subsidiaries. The Company and its Subsidiaries reserve the right to terminate
anyone's service at any time, with or without cause, and neither the Plan nor
any Option granted hereunder affects that right. THE EMPLOYEE ASSUMES THE RISK
OF ANY MARKET FLUCTUATIONS IN THE PRICE OF THE SHARES.
6
<PAGE> 46
THE LOEWEN GROUP INC.
EMPLOYEE STOCK OPTION PLAN (CANADA)
(RESTATED AND AMENDED AS AT APRIL 7, 1994 AND FURTHER AMENDED AS AT
APRIL 7, 1995, SEPTEMBER 19, 1995, APRIL 2, 1996, NOVEMBER 20, 1996,
APRIL 2, 1997, APRIL 8, 1997, AUGUST 15, 1997 AND MARCH 11, 1998)
Section 1 - General
(a) The purpose of the Employee Stock Option Plan (Canada) (the "Plan") is to
promote the interests of The Loewen Group Inc. (the "Company") by:
(i) furnishing Eligible Employees (as defined below) with greater
incentive to develop and promote the business and financial success of
the Company; and
(ii) further associate the interests of Eligible Employees with those of
the shareholders of the Company by encouraging such employees to acquire
share ownership in the Company.
(b) Any questions concerning the Plan should be directed to the Corporate
Secretary of the Company, at the Company's principal executive office located at
4126 Norland Avenue, Burnaby, British Columbia, Canada, V5G 3S8, telephone
number (604) 299-9321.
(c) The Plan shall be governed by, and construed in accordance with, the laws of
the province of British Columbia.
Section 2 - Eligibility
(a) Under the Plan, employees of the Company or any of its direct or indirect
subsidiaries ("Subsidiaries") who are residents of Canada ("Eligible Employees")
are eligible to be granted options ("Options") to purchase Common shares without
par value of the Company ("Shares").
(b) The Compensation Committee of the Company (the "Committee") or such officer
as the Committee may designate shall determine from time to time those Eligible
Employees to be granted Options under the Plan, and the number of Shares subject
to each such Option. Each grant of an Option pursuant to the Plan shall be
evidenced by a stock option agreement ("Option Agreement") executed by the
employee to whom the Option is granted (the "Optionee") and the Company. Each
Option Agreement shall incorporate such terms and conditions as the Committee,
in its discretion, deems consistent with the terms of the Plan.
(c) Each Option Agreement shall specify the dates upon which all or any
instalment of the Option will be exercisable. An Option may be exercised when
instalments vest at any time
<PAGE> 47
and from time to time thereafter with respect to all or a portion of the Shares
covered by such vested installments. In addition, if an Offer (as hereinafter
defined) is made, the Board of Directors, or Committee, may while the Offer
remains outstanding:
(i) determine that each Option granted by the Company to purchase Shares
shall, notwithstanding any vesting period or deferral of the right to
exercise otherwise applicable, be immediately exercisable effective on
and after a date declared by the Board of Directors, or Committee, to be
an advanced exercise date ("Advanced Exercise Date"); and
(ii) rescind any declaration of an Advanced Exercise Date but no such
rescission shall affect the validity of the exercise of such Option if
validly exercised on or after a particular Advanced Exercise Date and
before the date of rescission of the declaration of the particular
Advanced Exercise Date.
For the purposes hereof, "Offer" means an offer to acquire the Shares made to
the holders of the Company's Shares where the Shares which are the subject of
the offer to purchase, together with the offeror's then presently owned Shares,
will in the aggregate exceed twenty percent (20%) of the outstanding Shares of
the Company and where two or more persons or companies make offers jointly or in
concert or intending to exercise jointly or in concert any voting rights
attaching to the Shares to be acquired, then the Shares owned by each of them
shall be included in the calculation of the percentage of the Shares of the
Company owned by each of them. Paragraphs (i) and (ii) shall apply to each
Option granted or to be granted by the Company, which is outstanding at the time
of any such declaration regardless of the date of grant thereof, provided that
all other terms and conditions of the Option shall continue to apply and nothing
herein shall operate to extend, enlarge or revise any Option which has expired,
has been exercised, has been cancelled or otherwise has ceased to exist.
Section 3 - Number of Shares Subject to Plan
(a) The number of Shares issuable pursuant to the exercise of Options after the
effective date of restatement and amendment of the Plan is limited as follows:
(i) subject to adjustment pursuant to Section 9, the aggregate number of
Shares issuable pursuant to Options under the Plan shall not exceed
3,400,000 Shares (including 1,051,025 Shares under Options previously
granted but not exercised as of April 7, 1994); and
(ii) the number of Shares reserved for issuance to any one person
pursuant to options (whether granted under this Plan or otherwise) shall
not exceed 5% of the total issued and outstanding Shares on a
non-diluted basis.
(b) The maximum number of Shares for which Options are granted after the
effective date of restatement and amendment of the Plan in any one calendar year
under the Plan to any
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one Eligible Employee shall not exceed 600,000 Shares, subject to adjustment
pursuant to Section 9.
(c) If an Option granted under the Plan expires for any reason without being
exercised in full, the number of Shares that would have been issuable upon the
exercise of such Option shall continue to be available under the Plan.
(d) Subject to the maximum limits described in subsections (a) and (b) above,
the Board of Directors of the Company (the "Board") shall reserve the number of
Shares required to honour Options granted from time to time to Optionees
pursuant to the Plan, and shall reserve from time to time additional Shares, if
any, to ensure that a sufficient number of Shares are available for purchase
under Options granted in the future.
Section 4 - Administration of the Plan
(a) The Plan shall be administered by the Committee which shall be comprised of
two or more members of the Board who are "outside directors" within the meaning
of Section 162(m) of the United States Internal Revenue Code of 1986, as
amended; provided, however, that, with respect to Options that may be granted to
Eligible Employees who are not subject to Section 16 of the United States
Securities Exchange Act of 1934, as amended, the Committee may delegate its
responsibilities to a subcommittee consisting of one or more executive officers
of the Company. The address of the Committee is care of the Company's principal
executive office at 4126 Norland Avenue, Burnaby, British Columbia, Canada, V5G
3S8.
(b) The Committee shall have all powers and discretion necessary or appropriate
to administer the Plan, consistent with and subject to the parameters set forth
in the Plan, including but not limited to the power (1) to determine from time
to time the Eligible Employees to be granted Options under the Plan, (2) to
determine the number of Shares subject to each Option granted under the Plan,
(3) to set or amend the terms of each Option Agreement, (4) to interpret the
Plan, (5) to adopt such rules or guidelines as it deems appropriate to
administer the Plan, and (6) to make all other decisions, and take or cause to
be taken all other actions, relating to the operation of the Plan. The
Committee's determinations under the Plan shall be final and binding on all
persons. No member of the Committee shall be liable to any person for any action
or decision made in good faith in connection with the performance of the
Committee's duties or the exercise of its powers under the Plan.
Section 5 - Option Price and Exercisability
(a) The exercise price of an Option shall not be less than the closing price of
the Shares as quoted on The Toronto Stock Exchange on the trading day
immediately prior to the date of the grant.
(b) Except as otherwise provided in an Option Agreement, no Options shall be
exercised by an Optionee for at least 6 months after the date of the grant. An
Optionee may exercise an Option by delivering to the Company a duly completed
form of notice of such
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exercise together with full payment for the Shares being purchased under the
Option. The form of notice must identify the Option being exercised, state the
exercise price, be signed by the Optionee and be dated the date of exercise. The
Company shall promptly notify the Optionee as to any taxes required to be
collected from the Optionee. Unless otherwise provided in the Option Agreement
or consented to by the Company, payment for the Shares must be made in the
currency in which the Option is denominated.
(c) The sale of the Shares to the Optionee shall be deemed to have occurred, and
the Optionee shall be deemed to be the holder of such Shares, on the date that
both the form of notice and the payment in a manner acceptable to the Company of
the exercise price and any applicable taxes have been received by the Company. A
certificate representing the Shares acquired by the Optionee shall be issued and
delivered to the Optionee by the Company as soon as is reasonably possible after
the sale.
Section 6 - Termination of Options
(a) Any Option granted pursuant to the Plan shall terminate upon the earlier of:
(i) ten years after the date of grant; and (ii) such event(s) of termination as
are provided in the Option Agreement or as are determined from time to time by
the Committee.
(b) A change in the duties or position of the Optionee, or the transfer of the
Optionee from one position with the Company to another, or the transfer of an
Optionee from one employer to another employer shall not trigger the termination
of such Optionee's Option so long as such Optionee remains a bona fide employee
of the Company or any Subsidiary.
Section 7 - Non-transferability of Options
(a) Except as hereafter provided, an Option granted under the Plan may not be
transferred, pledged or assigned otherwise than by will or the laws of descent
and distribution and may be exercised only by the Optionee during the Optionee's
lifetime.
(b) Options that are exercisable at the date of an Optionee's death may be
exercised by the Optionee's heirs entitled thereto or by the administrator or
the executor or trustee of his or her last will and testament. Any such exercise
may not take place after the earlier of: (i) the expiration of the Option in
accordance with Section 6(a)(i) above; and (ii) two years after the date of the
Optionee's death without the prior written consent of the Company.
(c) To the extent permitted by applicable Laws, an Optionee shall be permitted
to transfer Options to a personal holding company of which the Optionee holds
all direct and indirect interests. For purposes of this paragraph, "Laws" means
(i) the securities laws of the United States, Canada, the states and territories
of the United States, the provinces and territories of Canada, the securities
laws of the jurisdiction of residence of any Optionee, and applicable laws,
rules and regulations promulgated thereunder, (ii) Section 162(m) of the
Internal Revenue Code of 1986, as amended, and the rules and regulations
thereunder and (iii) the rules and regulations of the New York Stock Exchange
(or, if the Shares are not traded on the New York
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Stock Exchange, any United States national securities exchange or quotation
system on which the Shares are traded) and any securities exchange outside of
the United States on which the Shares are traded.
Section 8 - Termination or Amendment
Subject to regulatory approval and, where required, approval of the
shareholders of the Company, the Committee may, at any time and for any reason,
amend or terminate the Plan, subject to ratification by the Board. The Plan
shall remain in effect until it is terminated by the Committee, subject to
ratification by the Board. No Options may be granted under the Plan after its
termination, but no termination or amendment of the Plan shall affect any
previously granted Option.
Section 9 - Protection Against Dilution
The Committee shall adjust the number of Shares covered by the Plan and
any Option in a manner which it considers equitable to reflect any change in the
capitalization of the Company including, but not limited to, such changes as
stock dividends, consolidations and subdivisions of shares or changes resulting
from an amalgamation of the Company with one or more corporations. No fractional
shares or rights to acquire a fractional share will be created as a result of an
adjustment made pursuant to this section. The Committee shall also adjust the
exercise price under any Option in a manner it considers equitable if the number
of Shares covered by the Option is adjusted pursuant to this section.
Section 10 - Rights as Shareholders
An Optionee shall have no rights as a shareholder (including the right
to vote and to receive dividends) of the Company with respect to Shares covered
by Options until such participant becomes the holder of record of such Shares.
Section 11 - Securities Regulation
Where necessary to effect an exemption from the registration or
distribution requirements applicable to the Options or the Shares under
applicable securities laws or policies, the Committee may take such action or
require such action or agreement by any Optionee as may from time to time be
necessary to comply with such applicable securities laws and policies. The
directors may decline to grant some or all of the Options or to issue some or
all of the Shares pursuant to the Plan unless the grant of such Options or the
issuance of such Shares is exempt from such requirements, upon the advice of
counsel to the Company.
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Section 12 - General Limitations
Neither the Plan nor any Option granted hereunder is to be interpreted
as giving any person a right to remain an employee of the Company or any of its
Subsidiaries. The Company and its Subsidiaries reserve the right to terminate
anyone's service at any time, with or without cause, and neither the Plan nor
any Option granted hereunder affects that right.
THE EMPLOYEE ASSUMES THE RISK OF ANY MARKET FLUCTUATIONS IN THE PRICE OF
THE SHARES.
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