<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
[ ] Confidential, for the Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
DELPHI FINANCIAL GROUP, INC.
(Name of Registrant as Specified in Its Charter)
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE> 2
[DELPHI FINANCIAL LOGO]
March 30, 1998
Dear Stockholder,
It is a pleasure to invite you to Delphi Financial Group, Inc.'s 1998 Annual
Meeting of Stockholders, to be held on May 12, 1998 at the Metropolitan Club,
One East 60th Street, New York, New York, commencing at 10:00 a.m., Eastern
Daylight Time. We hope that you will be able to attend and review the year with
us.
Whether or not you plan to attend the meeting, please exercise your right to
vote as an owner of Delphi Financial Group, Inc. Review the proxy materials and
then mark your votes on the enclosed proxy card and return it in the envelope
provided as soon as possible.
At the meeting the stockholders will be electing directors, as described in the
formal Notice of Annual Meeting of Stockholders and Proxy Statement enclosed
herewith. We will also report on the progress of Delphi Financial Group, Inc.
and respond to questions posed by stockholders.
We look forward to seeing you at the Annual Meeting.
Sincerely,
Robert Rosenkranz
Chairman of the Board
<PAGE> 3
DELPHI FINANCIAL GROUP, INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 12, 1998
To the Stockholders of Delphi Financial Group, Inc.:
Notice is hereby given that the 1998 Annual Meeting of Stockholders of Delphi
Financial Group, Inc. will be held at the Metropolitan Club, One East 60th
Street, New York, New York on May 12, 1998, commencing at 10:00 a.m., Eastern
Daylight Time, for the following purposes:
1. To elect seven directors to serve for a term of one year, one of whom
shall be elected by the holders of the Class A Common Stock, voting as
a separate class.
2. To transact such other business as properly comes before the meeting or
any adjournment thereof.
The Board of Directors has fixed the close of business on March 20, 1998 as the
record date for stockholders entitled to notice of and to vote at the meeting or
any adjournment of the meeting. The list of stockholders entitled to vote at the
meeting shall be available at the offices of Delphi Capital Management, Inc.,
650 Madison Avenue, Suite 2600, New York, New York for a period of ten days
prior to the meeting date.
A copy of Delphi Financial Group, Inc.'s 1997 Annual Report, including its
Annual Report on Form 10-K for the fiscal year ended December 31, 1997, is being
mailed to stockholders together with this notice.
Your attendance at this meeting is very much desired. However, whether or not
you plan to attend the meeting, please sign the enclosed Proxy and return it in
the enclosed envelope. If you attend the meeting, you may revoke the Proxy and
vote in person.
By Order of the Board of Directors,
Robert Rosenkranz
Chairman of the Board
<PAGE> 4
DELPHI FINANCIAL GROUP, INC.
1105 NORTH MARKET STREET, SUITE 1230
WILMINGTON, DE 19899
PROXY STATEMENT
This Proxy Statement is furnished for the solicitation by the Board of Directors
(the "Board of Directors" or the "Board") of Proxies for the Annual Meeting of
Stockholders of Delphi Financial Group, Inc., a Delaware corporation (the
"Company"), scheduled to be held on May 12, 1998 at the Metropolitan Club, One
East 60th Street, New York, New York commencing at 10 a.m., Eastern Daylight
Time. The submission of a signed Proxy will not affect the stockholder's right
to attend the meeting and vote in person. Any person giving a Proxy may revoke
it at any time before it is exercised by the delivery of a later dated signed
Proxy or written revocation sent to the Investor Relations Department of the
Company, or by attending the Annual Meeting and voting in person.
Other than the matters set forth herein, management of the Company is not aware
of any matters that may come before the meeting. If any other business should
properly come before the meeting, the persons named in the enclosed Proxy will
have discretionary authority to vote the shares represented by the effective
Proxies and intend to vote them in accordance with their best judgment in the
interests of the Company.
The Company's 1997 Annual Report, including its Annual Report on Form 10-K for
the fiscal year ended December 31, 1997, is being mailed together with this
Proxy Statement to each stockholder of record as of the close of business on
March 20, 1998.
MAILING AND VOTING OF PROXIES
This Proxy Statement and the enclosed Proxy were first mailed to stockholders on
or about March 30, 1998. Properly executed Proxies, timely returned, will be
voted and, where the person solicited specifies by means of a ballot a choice
with respect to the election of the nominees chosen by the Board, the shares
will be voted as indicated by the stockholder. Each share of the Company's Class
A Common Stock, par value $.01 per share (the "Class A Common Stock"), entitles
the holder thereof to one vote and each share of the Company's Class B Common
Stock, par value $.01 per share (the "Class B Common Stock" and, together with
the Class A Common Stock, the "Common Stock"), entitles the holder thereof to a
number of votes per share equal to the lesser of (1) the number of votes such
that the aggregate of all outstanding shares of Class B Common Stock will be
entitled to cast 49.9% of all of the votes represented by the aggregate of all
outstanding shares of Class A Common Stock and Class B Common Stock or (2) 10
votes. Based on the shares of Common Stock outstanding as of March 20, 1998, the
Class B Common Stock will have the number of votes described in clause (1) of
the preceding sentence. Proposals submitted to a vote of stockholders will be
voted on by holders of Class A Common Stock and Class B Common Stock voting
together as a single class, except that holders of Class A Common Stock will
vote as a separate class to elect one director (the "Class A Director"). If the
person solicited does not specify a choice with respect to the election of any
nominee for director, the shares will be voted "for" such nominee. Proxies
marked as abstaining (including proxies containing broker non-votes) on any
matter to be acted upon by stockholders will be treated as present at the
meeting for purposes of determining a quorum but will not be counted as votes
cast on such matters.
<PAGE> 5
As of March 20, 1998, Mr. Robert Rosenkranz, by means of beneficial ownership of
the corporate general partner of Rosenkranz & Company, an irrevocable proxy and
direct or beneficial ownership, had the power to vote all of the outstanding
shares of Class B Common Stock, which as of such date represented 49.9% of the
voting power of the Common Stock. Mr. Rosenkranz has entered into an agreement
with the Company not to vote or cause to be voted certain shares of Common
Stock, if and to the extent that such shares would cause him and Rosenkranz &
Company, collectively, to have more than 49.9% of the combined voting power of
the Company's stockholders. Rosenkranz & Company and Mr. Rosenkranz have
informed the Company that they intend to vote in favor of the election of all
nominated directors for which they are entitled to vote.
SOLICITATION OF PROXIES
The cost of soliciting Proxies will be borne by the Company. It is expected that
the solicitation of Proxies will be primarily by mail. Proxies may also be
solicited by officers and employees of the Company, at no additional cost to the
Company, in person or by telephone, telegram or other means of communication.
Upon written request, the Company will reimburse custodians, nominees and
fiduciaries holding the Company's Common Stock for their reasonable expenses in
sending proxy materials to beneficial owners and obtaining their Proxies.
STOCKHOLDERS ENTITLED TO VOTE AND SHARES OUTSTANDING
Holders of record of Common Stock at the close of business on March 20, 1998
will be eligible to vote at the meeting. The Company's stock transfer books will
not be closed. As of the close of business on March 20, 1998, the Company had
outstanding 12,925,951 shares of Class A Common Stock and 6,156,787 shares of
Class B Common Stock.
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<PAGE> 6
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the beneficial
ownership of shares of Common Stock by each of the Company's directors and
executive officers, each person known by the Company to own beneficially more
than five percent of the Common Stock and all directors and officers of the
Company as a group as of March 20, 1998. The information shown assumes the
exercise by each person (or all directors and officers as a group) of the stock
options owned by such person and the exercise by no other person (or group) of
stock options. Unless otherwise indicated, each beneficial owner listed below is
believed by the Company to own the indicated shares directly and have sole
voting and dispositive power with respect thereto.
<TABLE>
<CAPTION>
Amount and
Nature of Percent
Name of Beneficial Owner Ownership of Class
- ------------------------ --------- --------
<S> <C> <C>
Class B Common Stock:
Five or greater percent owner:
Rosenkranz & Company ........................................ 5,305,669 (1) 81.3%
Directors and Executive Officers:
Robert Rosenkranz ........................................... 6,523,987 (1) 100.0%
Lawrence E. Daurelle ........................................ -- --
Jane R. Dunlap .............................................. -- --
Edward A. Fox ............................................... -- --
Louis C. Lucido ............................................. -- --
Charles P. O'Brien .......................................... -- --
Lewis S. Ranieri ............................................ -- --
Thomas L. Rhodes ............................................ -- --
Robert M. Smith, Jr ......................................... -- --
Thomas A. Sullivan .......................................... -- --
B.K. Werner ................................................. -- --
Directors and officers as a group (12 persons) ........... 6,523,987 100.0%
Class A Common Stock:
Five or greater percent owners ................................. -- --
Directors and Executive Officers:
B.K. Werner ................................................. 712,465 (2) 5.0%
Robert Rosenkranz ........................................... 221,340 (1) 1.6%
Charles P. O'Brien .......................................... 128,446 (3) *
Robert M. Smith, Jr ......................................... 69,869 (4) *
Thomas A. Sullivan .......................................... 48,415 (5) *
Jane R. Dunlap .............................................. 37,166 (3) *
Edward A. Fox ............................................... 28,507 (6) *
Lawrence E. Daurelle ........................................ 11,799 (7) *
Lewis S. Ranieri ............................................ 8,922 (8) *
Thomas L. Rhodes ............................................ 4,945 (8) *
Louis C. Lucido ............................................. -- --
Directors and officers as a group (12 persons) ........... 1,271,874 (9) 9.0%
</TABLE>
* Amount is less than 1% of Class.
(1) Mr. Rosenkranz, as the beneficial owner of the corporate general partner of
Rosenkranz & Company, has the power to vote the shares of Class B Common
Stock held by Rosenkranz & Company. Accordingly, Mr. Rosenkranz may be
deemed to be the beneficial owner of all of the shares of the Company owned
by Rosenkranz & Company. In addition, Mr. Rosenkranz holds an irrevocable
proxy to vote or has direct or beneficial ownership of 851,118 additional
shares of Class B Common Stock and 1,020 shares of Class A Common Stock. The
remaining indicated shares of Class A Common Stock and Class B Common Stock,
respectively, consist of
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<PAGE> 7
220,320 shares of Class A Common Stock and 220,320 shares of Class B Common
Stock which may be acquired pursuant to stock options and 146,880 deferred
shares of Class B Common Stock. The address of Rosenkranz & Company and Mr.
Rosenkranz is 650 Madison Avenue, Suite 2600, New York, NY 10022.
(2) Each of Mr. Werner and The Werner Partnership, LP, of which Mr. Werner is
the general partner, may be deemed to beneficially own the indicated shares
and have shared voting and dispositive power with respect to such shares.
Mr. Werner's address is c/o Safety National Casualty Corporation, 2043
Woodland Parkway, St. Louis, MO 63146.
(3) All of the indicated shares of Class A Common Stock are presently owned. The
address of Mr. O'Brien is c/o Reliance Standard Life Insurance Company, 2501
Parkway, Philadelphia, PA 19130. The address of Ms. Dunlap is 707 Old Eagle
School Road, Wayne, PA 19087.
(4) Of the indicated shares of Class A Common Stock, 2,496 shares are presently
owned by Mr. Smith. The remaining shares indicated may be acquired pursuant
to stock options within 60 days. Mr. Smith's address is c/o Delphi Capital
Management, Inc., 650 Madison Avenue, Suite 2600, New York, NY 10022.
(5) Of the indicated shares of Class A Common Stock, 47,260 shares are presently
owned by Mr. Sullivan. The remaining shares indicated may be acquired
pursuant to stock options within 60 days. The address of Mr. Sullivan is
1100 Park Avenue, New York, NY 10028.
(6) Of the indicated shares of Class A Common Stock, 18,360 shares are presently
owned by Mr. Fox. The remaining shares indicated may be acquired pursuant to
stock options within 60 days. Mr. Fox's address is R.R. 67-15, Harborside,
ME 04642.
(7) Of the indicated shares of Class A Common Stock, 783 shares are presently
owned by Mr. Daurelle. The remaining shares indicated may be acquired
pursuant to stock options within 60 days. Mr. Daurelle's address is c/o
Reliance Standard Life Insurance Company, 2501 Parkway, Philadelphia, PA
19130.
(8) None of the indicated shares of Class A Common Stock are presently owned,
but they may be acquired pursuant to stock options within 60 days. Mr.
Ranieri's address is c/o Ranieri & Co., Inc., 50 Charles Lindbergh Blvd.,
Suite 500, Uniondale, NY 11553. Mr. Rhodes' address is c/o National Review,
Inc., 215 Lexington Avenue, New York, NY 10016.
(9) Includes 323,878 shares of Class A Common Stock which may be acquired
pursuant to stock options within 60 days.
ELECTION OF DIRECTORS
For the term that begins following the 1998 Annual Meeting, the Board of
Directors will consist of seven members. Each director is elected annually to
serve until his successor has been elected and qualified, or he has resigned or
been removed from office. The Company's Restated Certificate of Incorporation
provides that the holders of Class A Common Stock are entitled to vote as a
separate class to elect the Class A Director so long as the outstanding shares
of Class A Common Stock represent at least 10% of the aggregate number of
outstanding shares of the Company's Class A and Class B Common Stock. As of the
date of this Proxy Statement, this condition continues to be satisfied. Mr.
Rhodes was elected by the holders of the Class A Common Stock in 1997 as the
Class A Director, and the Board of Directors has unanimously recommended Mr.
Rhodes for reelection as the Class A Director.
It is intended that the shares of Common Stock represented by Proxies will be
voted "for" the election of all such nominees unless a contrary direction is
indicated on the Proxy. While it is not expected that any of the nominees will
be unable to qualify for or accept office, if for any reason any nominee shall
be unable to do so, Proxies that would otherwise have been voted "for" such
nominee will instead be voted "for" a substitute nominee selected by the Board.
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<PAGE> 8
Nominees for Director
The following sets forth information as to each nominee for election at the 1998
Annual Meeting, including his age, positions with the Company, length of service
as a director of the Company, other directorships currently held, if any,
principal occupations and employment during the past five years and other
business experience.
ROBERT ROSENKRANZ, 55, has served as the President and Chief Executive Officer
of the Company since May 1987 and has served as Chairman of the Board of
Directors of the Company since April 1989. He is also Chairman of the Board of
Reliance Standard Life Insurance Company ("RSLIC"), First Reliance Standard Life
Insurance Company ("FRSLIC") and Reliance Standard Life Insurance Company of
Texas ("RSLIC-Texas") and serves on the Board of Directors of Safety National
Casualty Corporation ("SNCC"). Mr. Rosenkranz has served since October 1978 as
either sole or managing general partner of Rosenkranz & Company or as beneficial
owner of its corporate general partner and since September 1997 as a director of
Delphi International Ltd. ("Delphi International") and Oracle Reinsurance
Company Ltd. ("Oracle Re").
ROBERT M. SMITH, JR., 46, commenced employment with the Company in March 1994
and has served as Vice President of the Company since July 1994 and as a
director of the Company since January 1995. Mr. Smith has also served as Vice
President of Delphi Capital Management, Inc. ("DCM") and as a director of RSLIC,
FRSLIC and RSLIC-Texas since July 1994 and as a director of SNCC since March
1996. In addition, Mr. Smith has served as a director of Delphi International
and Oracle Re since September 1997. Prior to March 1994, Mr. Smith was Director,
Investment Banking for Merrill Lynch & Company in New York, NY.
EDWARD A. FOX, 61, has served as a director of the Company since March 1990. He
has served as Chairman of the Board of SLM Holding Corp. since August 1997 and
is currently a director of New England Life Insurance Company, Greenwich Capital
Management and Commerce Security Bancorp. In addition, Mr. Fox has served as a
director of Delphi International and Oracle Re since September 1997. From May
1990 until September 1994, Mr. Fox was the Dean of the Amos Tuck School of
Business Administration at Dartmouth College, and from April 1973 until May
1990, he was President and Chief Executive Officer of the Student Loan Marketing
Association.
CHARLES P. O'BRIEN, 61, has served as a director of the Company since November
1987. Since August 1976, Mr. O'Brien has served as President, Chief Executive
Officer and a director of RSLIC. Mr. O'Brien also serves as President and Chief
Executive Officer and a director of FRSLIC and RSLIC-Texas and as a director of
SNCC. In addition, Mr. O'Brien has served as a director of Delphi International
and Oracle Re since September 1997.
LEWIS S. RANIERI, 51, has served as a director of the Company since July 1992.
Mr. Ranieri is currently Chairman and Chief Executive Officer of Ranieri & Co.,
Inc. and oversees Hyperion Partners L.P. and Hyperion Partners II L.P.
(collectively "Hyperion"), funds created to invest in the financial services,
housing and real estate industries. As part of his responsibilities with
Hyperion, Mr. Ranieri serves as Chairman of Hyperion Capital Management, Inc., a
New York-based money management firm specializing in mortgage-backed securities,
as Chairman, Director and/or Trustee of several closed-end investment companies
advised by Hyperion Capital Management, Inc., and as Chairman and a director of
Bank United Corp. and a
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<PAGE> 9
director of Bank United, a Houston-based savings and loan institution. Mr.
Ranieri also serves on the compensation committee for both Bank United entities.
In addition, Mr. Ranieri has served as a director of Delphi International since
September 1997.
B.K. WERNER, 64, was elected as a director of the Company upon the merger with
SIG Holdings, Inc. in March 1996. He has served as Chairman of the Board of SNCC
since June 1987 and as Chief Executive Officer of SNCC since June 1990. Mr.
Werner has served as a director of and has been employed in various capacities
by SNCC since 1959.
Nominee for Class A Director
THOMAS L. RHODES, 58, has served as a director of the Company since May 1995. He
has been President of National Review, Inc. since November 30, 1992, where he
has also served as a director since 1988. From 1987 to November 27, 1992, Mr.
Rhodes was a Partner of Goldman, Sachs & Co. Mr. Rhodes is Co-Chairman, Co-Chief
Executive Officer and Director of Asset Investors Corporation and Co-Chairman,
Co- chief Executive Officer and Director of Commercial Assets, Inc. Mr. Rhodes
also serves as a director of Apartment Investment and Management Company, a
director of The Lynde and Harry Bradley Foundation, a trustee of The Heritage
Foundation and a trustee of The Manhattan Institute. In addition, Mr. Rhodes has
served as a director of Delphi International and Oracle Re since September 1997.
COMMITTEES OF THE BOARD OF DIRECTORS
The Audit Committee is responsible for reviewing the activities of the Company's
independent accountants and internal audit department. The committee, whose
membership consists of Messrs. Fox, Ranieri and Rhodes, held four meetings
during 1997. The Board of Directors does not have a nominating committee.
The Stock Option and Compensation Committee (the "Committee") is responsible for
reviewing and approving all grants of stock options to employees and reviewing
and approving compensation arrangements for certain employees of the Company and
its subsidiaries. The Committee's membership consists of Messrs.
Fox and Rhodes.
DIRECTORS' ATTENDANCE
The Board of Directors held five meetings during 1997. Each incumbent director
attended at least 75% of the aggregate of (i) the total number of meetings held
during the period for which such incumbent was a director, and (ii) the total
number of meetings held by all committees of the Board of Directors on which
such incumbent served.
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<PAGE> 10
DIRECTORS' COMPENSATION
The Company pays its directors who are not officers or employees of Rosenkranz &
Company, the Company, or any of the Company's affiliates (each, an "outside
director") annual compensation consisting of an option to purchase Class A
Common Stock, as further described below, or cash in the amount of $20,000 (the
"Annual Retainer") and a fee of $750 plus expenses for each Board of Directors
or committee meeting attended.
In addition, under the Company's Amended and Restated Directors Stock Option
Plan (the "Directors Option Plan"), on the business day following the Company's
Annual Meeting of Stockholders, each outside director then in office is granted
an option to purchase a number of shares of Class A Common Stock determined
pursuant to the following formula: number of option shares equal to 2,448
multiplied by [1 + (.125 multiplied by the number of calendar years of
continuous service of such outside director to that point, including any portion
of a calendar year of service as a full year)]. The price per share upon the
exercise of an option is 100% of the fair market value of the Class A Common
Stock on the date of the grant. For this purpose, the fair market value on any
such date is the closing price per share of the Class A Common Stock, as
reported on the New York Stock Exchange for such date. Options granted become
exercisable in five equal annual installments, commencing on the first
anniversary of the date of the grant, and expire ten years from the date of
grant.
The Directors Option Plan also provides for the Annual Retainer to be paid
through the grant of an option to purchase Class A Common Stock to each outside
director, unless a director makes an election in advance to receive the Annual
Retainer in cash. Options are granted on the first business day following the
date on which each outside director is elected, reelected or appointed. The
number of shares of Class A Common Stock to which each option relates is equal
to (a) three times the amount of the director's Annual Retainer that would
otherwise be payable in cash for the applicable period divided by (b) the fair
market value of a share of Class A Common Stock of the Company on the date of
grant, and the exercise price is 100% of such fair market value on the date of
grant. For this purpose, the fair market value on any such date is the closing
price per share of the Class A Common Stock, as reported on the New York Stock
Exchange for such date. Options granted become exercisable in four equal 90-day
installments and expire ten years from the date of grant.
Pursuant to the Directors Option Plan, options to purchase 18,826 shares of
Class A Common Stock, in the aggregate, were granted to outside directors during
1997 at exercise prices ranging from $37.99 to $38.9375 per share. The shares to
which such options relate are included in the "Security Ownership of Certain
Beneficial Owners and Management" table.
EXECUTIVE COMPENSATION
The following table sets forth aggregate compensation paid by the Company and
its subsidiaries for services rendered in all capacities to the Company and its
subsidiaries during the fiscal years ended December 31, 1997, 1996 and 1995 to
or for the benefit of each of the five most highly compensated executive
officers of the Company and its subsidiaries.
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<PAGE> 11
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long-Term
Annual Compensation Compensation
------------------------------------------- ---------------------------
Securities All Other
Other Annual Restricted Underlying Compen-
Name and Principal Compensation Stock Options sation
Position Year Salary ($) Bonus ($) ($) (1) Award ($) (#)(2) ($) (3)
-------- ---- ---------- --------- --------- --------- ------ -------
<S> <C> <C> <C> <C> <C> <C> <C>
Robert Rosenkranz, 1997 $549,978 $550,000 $ -- $3,110,874 220,320 $ --
President & Chief Executive 1996 549,978 550,000 -- 2,174,177 220,320 --
Officer of the Company 1995 400,006 400,000 -- -- -- --
Lawrence E. Daurelle 1997 147,950 70,721 -- -- -- 3,800(4)
Vice President and 1996 139,000 56,336 -- -- -- 1,376(4)
Treasurer of RSLIC 1995 87,500 21,568 -- -- -- --
Louis C. Lucido, 1997 121,636 200,000 -- -- 20,000 1,523(4)
Vice President, Investments 1996 -- -- -- -- -- --
of the Company 1995 -- -- -- -- -- --
Charles P. O'Brien, 1997 279,994 230,790 -- -- -- 4,750(4)
President & Chief Executive 1996 279,994 202,226 -- -- -- 4,750(4)
Officer of RSLIC 1995 279,994 148,260 -- -- -- 4,620(4)
Robert M. Smith, Jr., 1997 274,976 200,000 -- -- -- 4,750(4)
Vice President of the 1996 264,992 200,000 -- -- 35,700 3,000(4)
Company 1995 250,000 150,000 -- -- 36,720 2,500(4)
Jane R. Dunlap, 1997 147,623(6) 97,343 -- -- -- 4,565(4)
Former Vice President and 1996 147,623 85,297 -- -- -- 4,319(4)
Treasurer of the Company 1995 145,142 60,712 -- -- -- 4,028(4)
Thomas A. Sullivan, 1997 322,036(7) -- -- -- -- --
Former President 1996 425,022 150,000 -- -- -- --
of DCM 1995 425,022 75,000 -- -- -- 3,000(4)
</TABLE>
(1) Personal benefits, which are non-cash compensation, were not disclosed in
the "Other Annual Compensation" column since they did not exceed the lesser
of either $50,000 or 10% of the total of annual salary and bonus for any
named executive officer.
(2) Other than the granting of stock options listed below, no other long-term
compensation was provided to the named executive officers.
(3) The Company and its subsidiaries paid certain amounts in 1997, 1996 and
1995 to Rosenkranz, Inc., a wholly-owned subsidiary of Rosenkranz &
Company, pursuant to two investment consulting agreements. Portions of
these amounts were in turn earned by Mr. Rosenkranz in addition to the
amounts set forth above. See "Certain Relationships and Related
Transactions."
(4) These amounts represent the Company's annual contribution on behalf of the
employee to the Reliance Standard Life Insurance Company Retirement Savings
Plan and the Reliance Standard Life Insurance Company Nonqualified Deferred
Compensation Plan.
(5) Represents compensation for the period July 21, 1997, the date Mr. Lucido
commenced employment, to December 31, 1997.
(6) Ms. Dunlap retired as an employee of the Company on January 2, 1998.
(7) Represents compensation for the period from January 1, 1997 to July 31,
1997, the date Mr. Sullivan retired as an employee of the Company.
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<PAGE> 12
Incentive Plan. At the 1997 Annual Meeting, the Company's stockholders approved
the Long-Term Performance-Based Incentive Plan (the "Incentive Plan") for Robert
Rosenkranz, the Chairman, President and Chief Executive Officer of the Company.
The purpose of the Incentive Plan is to provide Mr. Rosenkranz with a
compensation arrangement that rewards him for significant gains in shareholders'
wealth as measured by the annual performance of the Company's Class A Common
Stock, so long as such performance surpasses that of the Standard & Poor's
Corporation Insurance Composite Index Total Return to Shareholders (the "S&P
Insurance Index Total Return").
An award under the Incentive Plan is made for a Performance Period (as defined
below) if and only if the Ending Stock Value (as defined therein) of the
Company's Class A Common Stock exceeds the Beginning Stock Price (as defined
therein) by an amount greater than the S&P Insurance Index Total Return over the
comparable period. The award is then determined as 2.5% of the amount by which
the Ending Market Value (as defined therein) exceeds the Beginning Market Value
(as defined therein). Expressed as a formula, the "Award Amount" = (Ending
Market Value minus Beginning Market Value) multiplied by .025. The "Performance
Period" is the calendar year, except that if an award is not made under the plan
for any calendar year, the next Performance Period will include all calendar
years following the last calendar year for which an award was so made.
The Incentive Plan provides that 50% of the Award Amount, if earned, will be
paid in the form of restricted or deferred shares of Class B Common Stock, with
the number of such shares determined by dividing 50% of the Award Amount by the
average closing price of the Class A Common Stock during the twenty trading days
commencing nine trading days prior to the last trading day of the relevant
period (the "Ending Stock Price"). The remainder of the award will be paid in
options to purchase shares of Class B Common Stock (Class A Common Stock in the
case of the 1996 award) having an exercise price equal to 100% of the fair
market value (as defined in the plan) of a share of such stock on the date of
grant. Such options become exercisable in full thirty days following the date of
the grant and have a ten-year term. The number of shares subject to such options
is determined by dividing 50% of the Award Amount by the Ending Stock Price and
multiplying that amount by three. This formula reflects a general standard of
valuation indicating that, across a broad number of companies, stock options
with a ten-year term are worth approximately one-third of the market value of
the underlying stock on the date of grant. However, regardless of the Award
Amount for any Performance Period, the Incentive Plan limits, as to any calendar
year, the number of restricted or deferred shares of Common Stock which may be
awarded to 73,440, and limits the number of shares of Common Stock as to which
options may be granted to 220,320, plus the "Carryover Amount." The "Carryover
Amount" consists of the cumulative amounts of such restricted or deferred shares
and options which, in each year since the inception of the Incentive Plan, would
have been eligible for award in conformity with such limits, but were not
awarded. Any Award Amounts which do not result in awards of restricted or
deferred shares or options due to the aforementioned limits may be applied to
increase the Award Amount in any subsequent Performance Period in which the
Ending Stock Value exceeds the Beginning Stock Price by an amount greater than
the S&P Insurance Index Total Return for such Performance Period (subject, in
all events, to the per-year share and option award limits referenced above).
-9-
<PAGE> 13
If Mr. Rosenkranz's employment terminates during a Performance Period, he will
be entitled to an award under the Incentive Plan based on the performance of the
Company's Class A Common Stock if it surpasses the S&P Insurance Index Total
Return through such date, unless his employment was terminated by the Company
for "Cause" or by Mr. Rosenkranz without "Good Reason," as such terms are
defined in the Incentive Plan.
Restricted or deferred shares of Class B Common Stock awarded under the
Incentive Plan vest upon the termination of Mr. Rosenkranz's employment due to
death, disability or normal retirement or by the Company other than for Cause or
upon a "Change in Ownership," as such term is defined in the Incentive Plan. If
Mr. Rosenkranz's employment is terminated by himself for other than Good Reason
or by the Company for Cause, such restricted or deferred shares are forfeited to
the Company.
Because the Incentive Plan provides for accelerated vesting of restricted or
deferred shares of Class B Common Stock awarded under the Plan upon a Change in
Ownership, it is possible that a twenty percent "golden parachute" excise tax
could be imposed upon Mr. Rosenkranz under the Internal Revenue Code (the
"Code") if such vesting were to occur in such an event. In order to preserve the
benefits intended to be provided under the Incentive Plan, the plan contains a
provision under which payments would be made by the Company to Mr. Rosenkranz in
order to adjust, on an after-tax basis, for the amount of any such tax.
Employee Stock Option Plan. The Company's Second Amended and Restated Employee
Option Plan (the "Employee Option Plan") provides for a total of 2,019,600
shares of Class A Common Stock which may be issued upon exercise of options
granted thereunder. Through March 20, 1998, options for 1,447,067 shares of
Class A Common Stock have been granted to a total of 24 optionees. As of March
20, 1998, options covering 1,152,961 shares of Class A Common Stock have been
exercised by a total of 13 optionees. These exercises reduced the total number
of outstanding options exercisable for Class A Common Stock to 294,106 shares,
of which options for 120,246 shares of Class A Common Stock were vested as of
March 20, 1998. Options currently outstanding under the Employee Option Plan
expire between 2002 and 2008. Options granted under the Employee Option Plan
have a maximum term of ten years and become exercisable at such times and in
such amounts as are determined by the Committee at the time of grant. The price
per share upon the exercise of an option is 100% of the fair market value of the
Class A Common Stock on the date of the grant, which, under the plan, is equal
to the closing price per share of the Class A Common Stock, as reported on the
New York Stock Exchange for such date.
-10-
<PAGE> 14
OPTION GRANTS IN LAST FISCAL YEAR
Summarized below in tabular format are options granted to the named executive
officers under the Employee Option Plan or, in the case of Mr. Rosenkranz, the
Incentive Plan during 1997.
<TABLE>
<CAPTION>
% of Total Potential Realizable Value
Number of Options at Assumed Annual Rates of
Securities Granted to Stock Price Appreciation for
Underlying Employees Exercise ----------------------------
Options in Last Price Expiration Option Term
Name Granted Fiscal Year ($/Sh) Date 5% 10%
- -------------------- ----------- ----------- --------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Robert Rosenkranz 220,320(1) 86% $41.4375 01/14/08 $5,741,500 $14,550,088
Lawrence E. Daurelle -- -- -- -- -- --
Louis C. Lucido 20,000(2) 8% 43.7500 07/23/07 550,283 1,394,525
Charles P. O'Brien -- -- -- -- -- --
Robert M. Smith, Jr -- -- -- -- -- --
Jane R. Dunlap -- -- -- -- -- --
Thomas A. Sullivan -- -- -- -- -- --
</TABLE>
(1) The options indicated are currently exercisable. All are non-qualified
options and become exercisable for Class B Common Stock.
(2) The options indicated become exercisable in five equal annual installments
beginning with the first such installment occurring on July 23, 1998. All
are non-qualified options and become exercisable for Class A Common Stock.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
Summarized below in tabular format are options exercised by the named executive
officers during the fiscal year ended December 31, 1997 and options outstanding
under the Employee Option Plan or Incentive Plan, as applicable, at December 31,
1997.
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money Options at
Shares Options at Fiscal Year-End Fiscal Year-End (1)
Acquired Value ---------------------------- ----------------------------
Name On Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
- --------------------- ----------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Robert Rosenkranz -- $ -- 440,640 -- $3,976,225 $ --
Lawrence E. Daurelle -- -- 11,016 7,344 344,977 229,985
Louis C. Lucido -- -- -- 20,000 -- 25,000
Charles P. O'Brien 270,998 10,665,912 -- -- -- --
Robert M. Smith, Jr -- -- 67,373 61,977 1,993,047 1,511,175
Jane R. Dunlap 67,756 2,412,680 -- -- -- --
Thomas A. Sullivan -- -- -- -- -- --
</TABLE>
(1) Based on a closing price of $45.00 for the Company's Class A Common Stock on
December 31, 1997.
-11-
<PAGE> 15
Pension Plans. The Reliance Standard Life Insurance Company Pension Plan (the
"Pension Plan") is a noncontributory, qualified defined benefit pension plan
that provides retirement and, in certain instances, death benefits to employees
of RSLIC, FRSLIC, DCM and other subsidiaries of the Company. Benefits under the
Pension Plan at the employee's normal retirement age, which is 65, are
calculated as the sum of (i) 0.85% of the employee's average compensation for
the five consecutive calendar years in the last ten years of participation prior
to retirement during which the employee was most highly paid ("Average
Compensation") up to and including their Social Security covered compensation
level plus (ii) 1.5% of the employee's Average Compensation in excess of their
Social Security covered compensation level, multiplied by the employee's years
of service up to 35 years; plus 1% of the employee's Average Compensation
multiplied by the employee's years of service in excess of 35. Average
Compensation is subject to the statutory limitation pursuant to the Code of
$160,000 for 1998 (or any limits as set down by the Code in the future).
Benefits payable under the Pension Plan are offset by any benefits payable under
the Dresser Industries Inc. Pension Plan, which covered RSLIC and FRSLIC
employees prior to November 6, 1987 (the "Dresser Pension Plan Offset").
Employees are eligible to participate in the Pension Plan following the
completion of one year of service and the attainment of age 21 and continue to
accrue benefits generally until termination of employment, death or retirement.
Benefits vest after five years of service with RSLIC, FRSLIC and/or DCM.
Supplemental Executive Retirement Plan. Effective January 1, 1994, the Company
established the Reliance Standard Life Insurance Company Supplemental Executive
Retirement Plan (the "RSL SERP"). The plan provides certain key employees
(excluding Mr. Rosenkranz) with the opportunity for additional postemployment
income which would otherwise have been limited under the Pension Plan due to the
reduction of the statutory limit on employee's compensation as calculated under
the Pension Plan pursuant to the Code. The RSL SERP is a nonqualified deferred
retirement plan and is unfunded. Retirement benefits under the RSL SERP are
calculated in a similar manner as those under the Pension Plan, except that
Average Compensation is limited under the plan to $267,332 for 1998 (adjusted
annually by the Social Security Cost of Living Adjustment). Any benefits payable
under the Pension Plan are deducted from the benefit calculated under the RSL
SERP. All other terms and conditions of the RSL SERP are substantially identical
to those contained in the Pension Plan.
DCM Pension Plan. The Delphi Capital Management, Inc. Pension Plan for Robert
Rosenkranz (the "DCM Pension Plan") is a nonqualified, noncontributory defined
benefit pension plan that provides retirement benefits to Robert Rosenkranz and,
in certain instances, death benefits to his beneficiary. Benefits under the DCM
Pension Plan at Mr. Rosenkranz's normal retirement age, which is 65, are
calculated in the same manner as benefits under the Pension Plan. Benefits are
reduced should Mr. Rosenkranz elect an early retirement date. The DCM Pension
Plan is unfunded and assets held by DCM shall not be deemed to be held in trust
for the payment of the pension obligation. The payment is, however,
unconditionally guaranteed by the Company under a guarantee agreement between
the Company and Robert Rosenkranz, and should DCM default, the Company will
discharge the obligation. Mr. Rosenkranz does not participate in either the
Pension Plan or the RSL SERP.
The estimated annual benefits payable at the normal retirement age of 65 are set
forth in the table below for the indicated compensation and years of service
classifications in the form of a straight life annuity. The benefits
calculations show estimated annual payments excluding the effect of any Dresser
Pension Plan Offset and are based upon the Social Security Act in effect for an
employee retiring in 1998.
-12-
<PAGE> 16
<TABLE>
<CAPTION>
Years of Service as
Retirement Plan Participant and Estimated Amount of Benefits
Average ---------------------------------------------------------------------------
Compensation 10 15 20 25 30 35
------------ --------- -------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
$ 100,000...... $ 12,977 $ 19,465 $ 25,953 $ 32,442 $ 38,930 $ 45,418
125,000...... 16,727 25,090 33,453 41,817 50,180 58,543
150,000...... 20,477 30,715 40,953 51,192 61,430 71,668
175,000...... 24,227 36,340 48,453 60,567 72,680 84,793
200,000...... 27,977 41,965 55,953 69,942 83,930 97,918
225,000...... 31,727 47,590 63,453 79,317 95,180 111,043
250,000...... 35,477 53,215 70,953 88,692 106,430 124,168
275,000...... 39,227 58,840 78,453 98,067 117,680 137,293
300,000...... 42,977 64,465 85,953 107,442 128,930 150,418
350,000...... 50,477 75,715 100,953 126,192 151,430 176,668
</TABLE>
The following executives named in the Summary Compensation Table shown under
"Executive Compensation" are covered by the Pension Plan, the RSL SERP and/or
the DCM Pension Plan:
<TABLE>
<CAPTION>
Years of Credited Service
Name As of December 31, 1997
------------------- -----------------------
<S> <C>
Robert Rosenkranz....................................... 20.0
Lawrence E. Daurelle.................................... 3.0
Louis C. Lucido......................................... 1.0
Charles P. O'Brien...................................... 21.4
Robert M. Smith, Jr..................................... 4.0
Jane R. Dunlap.......................................... 22.4
Thomas A. Sullivan...................................... 11.0
</TABLE>
Employment Contract. The Company has entered into an agreement with Mr. Smith
which provides that if he is terminated without good and reasonable cause he
will be entitled to a severance payment up to a maximum of twelve months of base
salary, plus health benefits.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Messrs. Fox and Rhodes, the members of the Stock Option and Compensation
Committee during 1997, are not "insiders" within the meaning of the Securities
Act and there were no "interlocks" within the meaning of the Securities Act.
PERFORMANCE GRAPH
In order to further assist stockholders in analyzing disclosure on compensation,
a graph comparing the total return on the Company's Class A Common Stock to the
total return on the common stock of the companies included in the Standard &
Poor's 500 Index ("S&P 500 Index") and the Standard & Poor's Insurance Composite
Index ("S&P Insurance Index") has been provided. The performance graph should be
analyzed
-13-
<PAGE> 17
in connection with the tables on the preceding pages detailing the payment of
compensation and the granting of employee stock options. The graph assumes $100
was invested in the Company's Class A Common Stock and the indices reflected
therein on December 31, 1992, and reflects the value of that investment on
various dates through December 31, 1997.
[GRAPHIC OMITTED]
<TABLE>
<CAPTION>
1992 1993 1994 1995 1996 1997
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Delphi 100 171 128 147 244 380
S&P 500 Index 100 110 112 153 189 252
S&P Insurance Index 100 106 106 151 187 273
</TABLE>
REPORT ON EXECUTIVE COMPENSATION
Compensation of the Company's executive officers (including the named executive
officers) is supervised by the Stock Option and Compensation Committee of the
Board of Directors. The objective of the Company's compensation program is to
provide a total compensation package that will enable the Company to attract,
motivate and retain outstanding individuals and to reward such individuals for
increasing levels of profit and stockholder value.
-14-
<PAGE> 18
In conformance with the above compensation philosophy, the total annual
compensation for senior officers of the Company and its subsidiaries is
determined by one base element, salary, and two incentive elements, annual bonus
and grants of stock options under the Employee Option Plan or, in the case of
Mr. Rosenkranz, the Incentive Plan.
Salary for executive officers of the Company and its subsidiaries is determined
by analysis of three factors, consisting of (1) salary levels for executive
officers at other companies with comparable responsibilities; (2) evaluation of
the individual executive officer's performance; and (3) the Company's ability to
pay. While the three factors are not formally weighted, the Company's ability to
pay is a threshold consideration.
The level of base salary paid to an executive officer is determined on the basis
of the individual's overall performance and compensation level at the Company
during the prior year and such other factors as may be appropriately considered
by the Stock Option and Compensation Committee and by management in making its
proposals to such Committee. The level of the annual bonus for the executive
officers of the Company, other than those employed in the insurance operations
at RSLIC, is established by the Stock Option and Compensation Committee
according to the operating performance of the Company and the individual
performance of the executive officer during the year, and such other factors as
are deemed appropriate by the Committee and by management in making its
proposals to such Committee. The primary factor which determines the level of
Mr. Rosenkranz's annual bonus is the extent to which the Company attains a
specified return on equity goal.
For executive officers employed in the insurance operations at RSLIC, the level
of cash bonus paid is determined under the Senior Management Incentive Plan
administered by the Compensation Committee of RSLIC's Board of Directors. The
performance criteria used to determine the level of bonus under this plan
include, among others, earnings per share, underwriting results, production of
insurance premiums, deposits on sales of annuities and the maintenance of
expenses of the insurance subsidiaries relative to pre-determined targets. Bonus
as a percentage of base salary generally increases with the level of
responsibility of the executive officer; for example, RSLIC's Chief Executive
Officer's potential bonus is 43% of total compensation, with other executives'
respective potential bonuses reduced as their level of responsibility decreases.
Total cash compensation for such executive officers is reviewed for
comparability with the compensation levels of similarly situated officers of
insurance companies of similar size, including certain of those companies
included in the S&P Insurance Index.
The principal method for long-term incentive compensation for executive officers
other than Mr. Rosenkranz is the Employee Option Plan described above under
"Executive Compensation - Employee Stock Option Plan" and compensation
thereunder takes the form of nonqualified stock option grants. Those grants are
designed to promote the identity of long-term interests between key employees of
the Company and its subsidiaries and the Company's stockholders, since the value
of options granted will increase or decrease with the value of the Company's
common stock. In this manner, key individuals are rewarded in a manner that is
commensurate with increases in stockholder value. The size of a particular
option grant is determined based on the individual's position with and
contributions to the Company (or, in the case of new hires, the individual's
current position and anticipated contributions). These grants also typically
include five year vesting periods to encourage continued employment.
-15-
<PAGE> 19
Under the Incentive Plan, as described above under "Executive Compensation -
Incentive Plan," Mr. Rosenkranz is rewarded for the Company's achieving gains in
stockholder wealth that surpass the S&P Insurance Index Total Return, which the
Committee believes to be a representative index reflecting the stock performance
of the Company's peer group. The ultimate value of awards under the Incentive
Plan will depend on the Company's stockholder returns, since a portion of such
awards will consist of restricted or deferred shares, the value of which will be
subject to market risk so long as Mr. Rosenkranz remains employed with the
Company (and which are forfeitable if such employment terminates under certain
circumstances). In addition, the options will have value to Mr. Rosenkranz only
to the extent that the Company's stock price appreciates following the grant
date.
Section 162(m) of the Code limits deductibility of certain compensation for the
Chief Executive Officer and the additional four highest paid executive officers
in excess of $1 million per year. The Committee intends to establish and
maintain executive compensation levels and programs that will be competitive
within the industry and will attract and retain highly talented individuals.
Executive compensation will be structured to avoid limitations on deductibility
where this result can be achieved consistent with the Company's compensation
goals.
STOCK OPTION AND COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS
Edward A. Fox Thomas A. Rhodes
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Pursuant to two investment consulting agreements, RSLIC and the Company pay to
Rosenkranz, Inc., a wholly owned subsidiary of Rosenkranz & Company, certain
fees associated with the formulation of the business and investment strategies
of the Company and its subsidiaries. These fees amounted to $2.5 million for the
year ended December 31, 1997. These fees generally increase at an annual rate of
10.0% and are expected to be $2.8 million for calendar year 1998. Of the
aggregate amounts paid to Rosenkranz, Inc. for services rendered during the year
ended December 31, 1997 pursuant to these investment consulting agreements,
$605,388 was earned by Mr. Rosenkranz due to his indirect and direct financial
interests in Rosenkranz & Company. Management believes that the fees charged by
Rosenkranz, Inc. are comparable to fees charged by unaffiliated third parties
for investment consulting services of considerably narrower scope than the
services provided by Rosenkranz, Inc.
Pursuant to a cost-sharing arrangement, a subsidiary of the Company received
reimbursements from Rosenkranz, Inc. and Acorn Partners, a limited partnership
in which Mr. Rosenkranz has an indirect beneficial interest, for expenses
associated with the sharing of office space and office personnel. The total
amount of these reimbursements during 1997 was $1.0 million.
-16-
<PAGE> 20
Pursuant to an investment advisory agreement, a subsidiary of the Company paid
fees to an investment advisor, Hyperion Capital Management, Inc., of which Mr.
Ranieri is the Chairman. Management believes that the fees charged by the
investment advisor under the agreement are comparable to the fees charged by
other unaffiliated investment advisors for investment advisory services. In
addition, at the time that such investment advisory agreement was entered into,
Mr. Ranieri was not a member of the Company's Board of Directors, nor was the
agreement entered into in contemplation of his becoming a Board member. The
Company's subsidiary paid $288,000 under such agreement during 1997.
In January 1998, the Company entered into various reinsurance agreements with
Oracle Re, a wholly-owned subsidiary of Delphi International, a newly formed,
independent Bermuda insurance holding company of which Mr. Rosenkranz is the
Chairman of the Board and beneficially owns approximately 32.7% of the common
stock, and of which Messrs Fox, O'Brien, Ranieri, Rhodes and Smith also serve as
directors. Under these agreements, approximately $100 million of group employee
benefit reserves ($35 million of long-term disability insurance reserves and $65
million of excess workers' compensation and casualty reserves) were ceded to
Oracle Re. Also in January 1998, the Company and certain of its subsidiaries
purchased a subordinated note from Delphi International with a principal amount
of $30 million. Such note bears interest at the rate of 9% per annum (which,
during any five years, may be paid in additional notes bearing the same terms in
lieu of cash) and matures in full in January 2028. Finally, the Company in
January 1998 provided five year loans to Robert M. Smith, Jr., Vice President of
the Company, and Louis C. Lucido, Vice President, Investments of the Company, in
the amounts of $131,160 and $149,758, respectively, to finance a portion of the
costs of their purchases of common stock of Delphi International. Such loans
bear interest at the rate charged to the Company under its senior bank revolving
credit facility (currently LIBOR plus 0.45%). In both cases, the shares of
Delphi International common stock purchased are pledged to the Company to secure
the loans, and the Company will have recourse only against such common shares.
INDEPENDENT AUDITORS
The firm of Ernst & Young LLP served as the Company's independent auditors for
1997 and is expected to so serve in 1998. A representative of Ernst & Young LLP
is expected to be present at the Annual Meeting to respond to appropriate
questions and to make a statement if such representative desires.
FINANCIAL STATEMENTS AVAILABLE
Consolidated financial statements for Delphi Financial Group, Inc. are included
in the Company's 1997 Annual Report on Form 10-K for the year ended December 31,
1997, which is being mailed together with this Proxy Statement. Additional
copies of the Form 10-K and the Annual Report to Stockholders may be obtained
without charge by submitting a written request to the Investor Relations
Department, Delphi Financial Group, Inc., 1105 North Market Street, Suite 1230,
Wilmington, Delaware 19899.
-17-
<PAGE> 21
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
To the Company's knowledge, based solely on its review of Forms 3, 4 and 5 and
amendments thereto furnished to the Company pursuant to Section 16 of the
Securities Exchange Act of 1934 and written representations that no other
reports were required for such persons, all persons subject to these reporting
requirements filed the required reports on a timely basis, except that Mr.
Sullivan was late in filing one report.
SUBMISSION OF 1999 STOCKHOLDER PROPOSALS
Proposals of stockholders intended to be presented at the 1999 Annual Meeting of
Stockholders must be received by the Company at 1105 North Market Street, Suite
1230, Wilmington, Delaware 19899, by December 1, 1998.
By Order of the Board of Directors,
Robert Rosenkranz
Chairman of the Board
-18-
<PAGE> 22
[ X ] PLEASE MARK VOTES AS IN THIS EXAMPLE
PROXY SOLICITED FOR THE
ANNUAL MEETING OF STOCKHOLDERS ON MAY 12, 1998
DELPHI FINANCIAL GROUP, INC.
1. Election of Directors.
Class A Director:
Thomas L. Rhodes
Directors:
Robert Rosenkranz Robert M. Smith, Jr. Edward A. Fox
Charles P. O'Brien Lewis S. Ranieri B.K. Werner
For All Nominees [ ] Withhold [ ] For All Except [ ]
Note: If you do not wish your shares voted "For" a particular nominee, mark the
"For All Except" box and strike a line through the name(s) of the nominee(s).
Your shares will be voted for the remaining nominee(s).
2. To transact such other business as properly comes before the meeting or any
adjournment thereof.
For [ ] Against [ ] Abstain [ ]
Mark box at right if an address change or comment has been noted on the
reverse side of this card. [ ]
Record Date Shares:
Please be sure to sign and date this Proxy. Date _____________
__________________________________ _____________________________
Stockholder sign here Co-owner sign here
DETACH CARD DETACH CARD
<PAGE> 23
DELPHI FINANCIAL GROUP, INC.
This Proxy is Solicited on Behalf of the Board of Directors of Delphi
Financial Group, Inc.
The undersigned stockholder hereby appoints Robert Rosenkranz and Robert M.
Smith, Jr., or either of them, as attorneys or proxies, each with full power of
substitution, and hereby authorizes each of them to represent and vote in the
manner designated on the reverse side of this card (or, if no designation is
made, as provided below), all of the shares of Common Stock of Delphi Financial
Group, Inc. (the "Company") held of record by the undersigned at the close of
business on March 20, 1998 at the Company's 1998 Annual Meeting of Stockholders
scheduled to be held on May 12, 1998 at 10:00 a.m., EDT, or any adjournments or
postponements thereof.
The undersigned acknowledges receipt of the Company's Annual Report on Form 10-K
for the fiscal year ended December 31, 1997, Notice of Annual Meeting of
Stockholders and Proxy Statement dated March 30, 1998, and grants authority to
each of said proxies or their substitutes, and ratifies and confirms all that
said proxies may lawfully do in the undersigned's name, place and stead.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED "FOR" PROPOSAL 1 AND PROPOSAL 2.
PLEASE VOTE, DATE AND SIGN ON THE REVERSE SIDE AND RETURN PROMPTLY IN THE
ENCLOSED ENVELOPE.
Please sign exactly as your name(s) appear(s) on the reverse side of this card.
Joint owners should each sign personally. Trustees and other fiduciaries should
indicate the capacity in which they sign, and where more than one name appears,
a majority must sign. If a corporation or partnership, this signature should be
that of an authorized officer who should state his or her title.
HAS YOUR ADDRESS CHANGED? DO YOU HAVE ANY COMMENTS?
________________________ _________________________
________________________ _________________________
________________________ _________________________
<PAGE> 24
DELPHI FINANCIAL GROUP, INC.
Dear Stockholder,
Please take note of the important information enclosed with this Proxy. Your
vote counts, and you are strongly encouraged to exercise your right to vote your
shares.
Please mark the boxes on this proxy card to indicate how your shares will be
voted. Then sign the card, detach it and return your proxy vote in the enclosed
postage paid envelope.
Your vote must be received prior to the 1998 Annual Meeting of Stockholders,
scheduled to be held on May 12, 1998.
Thank you in advance for your prompt consideration of these matters.
Sincerely,
Delphi Financial Group, Inc.
