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[logo of UNITRIN]
One East Wacker Drive, Chicago, Illinois 60601
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
<TABLE>
<C> <S>
TIME........................ 10:00 a.m.
Wednesday, May 3, 2000
PLACE....................... Bank One Center
One Bank One Plaza
Dearborn and Madison Streets (Plaza Level)
Chicago, Illinois 60670
ITEMS OF BUSINESS........... (1) To elect a Board of Directors; and
(2) To transact such other business as may
properly come before the meeting and any
adjournment of the meeting.
RECORD DATE................. Holders of Unitrin common stock of record at the
close of business on March 13, 2000 are entitled
to vote at the meeting.
PROXY VOTING................ You may give a proxy to vote your shares by
completing and returning the enclosed proxy card
by mail. Alternatively, if you are a shareholder
of record, you may give a proxy to vote your
shares over the Internet or by telephone.
Instructions for voting over the Internet and by
telephone are printed on the accompanying proxy
card.
</TABLE>
By Order of the Board of Directors
/s/ Scott Renwick
Scott Renwick
Secretary
March 27, 2000
TO ENSURE THAT YOUR SHARES ARE REPRESENTED AND VOTED AT THE MEETING, PLEASE
PROVIDE A PROXY AS REQUESTED, EVEN IF YOU PLAN TO ATTEND THE MEETING. WHEN YOU
COMPLETE YOUR PROXY, PLEASE INDICATE IF YOU PLAN TO ATTEND THE MEETING.
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[LOGO OF UNITRIN]
Corporate Offices: One East Wacker Drive, Chicago, Illinois 60601
PROXY STATEMENT
This proxy statement is furnished in connection with the solicitation of
proxies by and on behalf of the issuer, Unitrin, Inc. ("Company"), for use at
the Annual Meeting of Shareholders of the Company to be held on Wednesday, May
3, 2000, at 10:00 a.m., at Bank One Center, One Bank One Plaza, Dearborn and
Madison Streets (Plaza Level), Chicago, Illinois, 60670, and at any
adjournment of the meeting.
Shares represented by proxies received before the meeting will be voted at
the meeting. Any shareholder giving a proxy has the power to revoke it at any
time before it is voted by filing with the Company's Secretary either an
instrument revoking the proxy or a proxy bearing a later date. Proxies also
may be revoked by any shareholder present at the meeting who expresses a
desire to vote in person. Proxies specifying a choice as to the election of
directors will be voted accordingly. If no specification is made, the shares
represented by the proxy will be voted for election of the nominees specified
on pages 4 and 5. By returning a proxy (either by mail or by electronic means
as described below), each shareholder will further authorize the persons named
in such proxy to vote in their discretion as to such other items of business,
if any, that may properly come before the meeting. Abstentions will be treated
as shares that are present for purposes of determining the presence of a
quorum. Abstentions will have the effect of a vote against proposals brought
before the meeting, but will not have an effect on the election of the
directors. If a broker indicates on a proxy that it does not have
discretionary authority as to certain shares to vote on a particular matter (a
broker non-vote), those shares will be considered as present for quorum
purposes on all matters. Broker non-votes will have no effect on any matter to
be brought before the meeting, including the election of directors.
In addition to returning a proxy card by mail, shareholders of record can
also give proxies by calling a toll-free telephone number or by using the
Internet. The telephone and Internet voting procedures are printed on the
proxy cards being provided to shareholders of record. These procedures are
designed to authenticate shareholders' identities, to allow shareholders to
give their voting instructions, and to confirm that shareholders' instructions
have been recorded properly. Shareholders who wish to vote over the Internet
should be aware that there may be costs associated with electronic access,
such as usage charges from Internet access providers and telephone companies,
and that there may be some risk that a shareholder's vote by either telephone
or the Internet might not be properly recorded or counted because of an
unanticipated electronic malfunction.
The principal solicitation of proxies is being made by mail; however,
additional solicitation may be made through direct communication with certain
shareholders or their representatives by directors, officers and employees of
the Company and its subsidiaries, who will receive no additional compensation
for such solicitation. The Company has retained the services of W.F. Doring &
Co., Inc.
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("Doring") to aid in the solicitation of proxies. Doring estimates that its
fees and expenses will not exceed $10,000. The Company will bear the total
expense of the solicitation which will include, in addition to the amounts
paid to Doring, amounts paid to reimburse banks, brokerage firms and others
for their expenses in forwarding solicitation material. This proxy statement
and the accompanying form of proxy are being mailed to shareholders on or
about March 27, 2000.
VOTING SECURITIES
March 13, 2000 has been fixed as the record date for the determination of
shareholders entitled to notice of, and to vote at, the meeting or any
adjournment of the meeting. On that date, there were 69,341,732 shares of the
Company's common stock ("Common Stock") issued and outstanding and entitled to
vote. The Company has no other voting securities outstanding. Each shareholder
of record is entitled to one vote per share owned on all matters submitted to
a vote of shareholders. A list of record shareholders will be open to
examination by any shareholder at the meeting and for a period of ten days
prior to May 3, 2000 during ordinary business hours at the Unitrin corporate
offices.
OWNERSHIP OF COMMON STOCK
The following table shows the beneficial ownership of Common Stock as of
March 13, 2000 (unless otherwise indicated) by: (i) each director, including
directors who are also executive officers; (ii) each other executive officer
named in the Summary Compensation Table on page 10; (iii) all directors and
executive officers as a group; and (iv) each other person known by the Company
to be the beneficial owner of more than five percent of the Common Stock.
Unless otherwise indicated, to the Company's knowledge, the beneficial owner
has both sole voting and sole dispositive powers with respect to the shares
listed opposite his name.
<TABLE>
<CAPTION>
Amount and Nature of Percent of
Name Beneficial Ownership Class (1)
---- -------------------- ----------
<S> <C> <C>
Directors
James E. Annable 36,000 (2) *
Douglas G. Geoga 0 *
Reuben L. Hedlund 21,000 (2) *
Jerrold V. Jerome 506,365 (2) *
William E. Johnston, Jr. 12,000 (2) *
George A. Roberts 687,810 *
Fayez S. Sarofim 5,793,416 (3) 8.3%
Richard C. Vie--Chairman,
President & CEO 867,270 (2),(4) 1.2%
Named Executive Officers
James W. Burkett 186,910 (2) *
Eric J. Draut 99,711 (2) *
Scott Renwick 68,992 (2) *
Donald G. Southwell 223,400 (2) *
</TABLE>
2
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<TABLE>
<CAPTION>
Amount and Nature of Percent of
Name Beneficial Ownership Class (1)
---- -------------------- ----------
<S> <C> <C>
Directors and All Executive
Officers as a Group (13 persons) 8,565,574 (2) 12.3%
Other 5% Owners
George Kozmetsky
2815 San Gabriel Street
Austin, TX 78705 4,132,920 (5) 5.9%
Caroline Singleton
335 North Maple Drive
Suite 177
Beverly Hills, CA 90210 14,484,520 (6) 20.8%
</TABLE>
- --------
(1) Based on the number of shares outstanding on the record date, March 13,
2000, plus shares deemed outstanding pursuant to rules of the Securities
and Exchange Commission ("SEC"). An asterisk in this column indicates
ownership of less than 1% of the outstanding Common Stock. Each
outstanding share of Common Stock includes an attached right under the
Company's shareholder rights plan adopted August 3, 1994. Among other
provisions of the rights plan, if any person or group beneficially owns
15% or more of the Common Stock without approval of the Board of
Directors, then each shareholder (other than the non-approved acquiror or
its affiliates or transferees) would be entitled to buy Common Stock
having twice the market value of the exercise price of the rights, which
has been set at $62.50.
(2) Shares shown for the named executive officers and Messrs. Annable,
Hedlund, Jerome and Johnston include shares which they have the right to
acquire presently or within 60 days of the date of this Proxy Statement
through exercise of stock options. The number of such acquirable shares
for each of such persons is as follows: Annable (20,000); Hedlund
(20,000); Jerome (176,997); Johnston (12,000); Vie (630,492); Burkett
(155,571); Draut (77,548); Renwick (58,792); and Southwell (202,682).
(3) Based upon information as of December 31, 1999 contained in an amendment
to a Schedule 13G filed by Mr. Sarofim with the SEC, Mr. Sarofim may be
deemed to be the beneficial owner of 5,793,416 shares of Common Stock. Of
such shares, Mr. Sarofim reported sole voting and dispositive powers as
to 2,024,670 shares, shared voting power as to 3,355,854 shares and
shared dispositive power as to 3,766,746 shares. Substantially all of the
shares which are not subject to sole voting and dispositive powers are
held in accounts managed by Fayez Sarofim & Co. (of which Mr. Sarofim is
the majority shareholder) or by its wholly-owned subsidiaries, Sarofim
Trust Co. and Sarofim International Management Company, or are owned
directly by such companies for their own accounts. Fayez Sarofim & Co.
maintains policies which preclude Mr. Sarofim from exercising voting and
dispositive powers with respect to Common Stock held in accounts managed
by Fayez Sarofim & Co. and its subsidiaries. Shares shown include 2,000
shares owned by members of Mr. Sarofim's family with respect to which he
disclaims beneficial ownership. Mr. Sarofim's mailing address is 2907 Two
Houston Center, Houston, Texas 77010.
(4) Shares shown for Mr. Vie include 15,834 shares held by a trust, the
trustee of which is his wife. Mr. Vie disclaims beneficial ownership of
such shares.
3
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(5) Based upon information as of December 31, 1999 contained in an amendment
to a Schedule 13G filed by Dr. Kozmetsky with the SEC, Dr. Kozmetsky may
be deemed to be the beneficial owner of 4,132,920 shares of Common Stock.
Of such shares, Dr. Kozmetsky reported sole voting and dispositive powers
as to 4,072,000 shares. Dr. Kozmetsky disclaims beneficial ownership of
60,920 shares owned by his wife which are included as part of his
holdings in this table.
(6) Based upon information as of January 6, 2000 contained in an amendment to
a Schedule 13D filed by Mrs. Singleton with the SEC, Mrs. Singleton may be
deemed to be the beneficial owner of 14,484,520 shares of Common Stock
which are held by The Singleton Family Trust, a revocable trust. As the
sole trustee of The Singleton Family Trust, Mrs. Singleton has sole voting
and dispositive powers over the shares of Common Stock in The Singleton
Family Trust.
ELECTION OF DIRECTORS
Seven directors are to be elected at the meeting to serve for a term of one
year or until the election of their successors. If any of the persons named
below refuses or is unable to serve as a director (which is not anticipated),
the persons named in the accompanying proxy reserve full discretion to vote
for any or all other persons as may be nominated. The vote of the holders of a
majority of the Common Stock having voting power present, in person or by
proxy, is required for the election of any nominee as a director.
Special Note: A current member of the Board of Directors, George A. Roberts,
has chosen not to stand for re-election and will retire from the Company's
Board, effective May 3, 2000. Dr. Roberts has faithfully served the Company as
a director since the Company's inception in February 1990. The Board of
Directors commends Dr. Roberts for his leadership and outstanding
contributions to the Company over the years and wishes him well in his future
endeavors. With the retirement of Dr. Roberts, the number of directors serving
on the Board of Directors will be reduced to seven. Accordingly, proxies will
be voted at the 2000 annual meeting only with respect to seven nominees.
Business Experience of Nominees
Following is a summary of the business experience during the last five years
of each person nominated to be a director of the Company.
James E. Annable, 56, has been a director of the Company since November
1993. He has been Senior Vice President and Director of Economics of Bank One
Corporation since July 1999 and prior thereto was a Senior Vice President and
Chief Economist of Bank One Corporation and its predecessors for more than the
last five years.
Douglas G. Geoga, 44, was designated as a director by the Company's Board of
Directors on February 2, 2000 to fill the vacancy created when Henry E.
Singleton passed away in 1999. Since January 1, 2000, Mr. Geoga has been
President of the newly-formed Hospitality Investment Fund, L.L.C., an
affiliate of The Pritzker Organization engaged in making investments in
lodging and hospitality companies and projects. Prior to that, Mr. Geoga held
a variety of positions with Hyatt Hotels & Resorts, including most recently,
serving as its President from 1994 until January 1, 2000. Mr. Geoga is also a
director of U.S. Franchise Systems, Inc.
4
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Reuben L. Hedlund, 63, has been a director of the Company since November
1993. He has been a partner of the Chicago law firm of Hedlund Hanley & John
for more than the last five years.
Jerrold V. Jerome, 70, is a retired executive of the Company and has been a
director of the Company since February 1990. He was Chairman of the Board of
Directors from February 1994 through December 1998 and is currently a director
of Argonaut Group, Inc.
William E. Johnston, Jr., 59, has been a director of the Company since
October 1997. Mr. Johnston has been President and Chief Operating Officer of
Morton International, Inc., a manufacturer and marketer of specialty chemicals
and salt, since October 1995. Prior thereto, he was Executive Vice President
for Administration of Morton. Mr. Johnston is currently a director of Morton
International and, since June 1999, has been a Senior Vice President of Rohm &
Haas Company, a Philadelphia-based specialty chemical company that is the
parent company of Morton.
Fayez S. Sarofim, 71, has been a director of the Company since March 1990.
He has been Chairman of the Board and President of Fayez Sarofim & Co., a
registered investment advisor, for more than five years. He is also a director
of Argonaut Group, Inc. and Kinder Morgan, Inc.
Richard C. Vie, 62, has been a director of the Company since March 1990,
Chairman of the Board of Directors since January 1999 and President and Chief
Executive Officer for more than the last five years.
The Board of Directors recommends a vote "FOR" election of the nominees
listed above as directors.
Committees and Meetings of the Board of Directors
The committees of the Board of Directors are the Executive Committee, Audit
Committee, Compensation Committee and Stock Option Committee. The Company does
not have a nominating committee.
The Executive Committee, which met five times in 1999, consists of Messrs.
Annable, Jerome and Vie. The Executive Committee may exercise all powers and
authority of the Board of Directors in the management of the business of the
Company except for certain powers which, under Delaware law, may be exercised
only by the full Board of Directors.
The Audit Committee, which met five times in 1999, consists of Messrs.
Geoga, Hedlund and Johnston. The Audit Committee's responsibilities include
review of: management's recommendation with respect to selection of the
independent auditors and the independence of such auditors; the scope of the
audit and non-audit assignments of, and fees paid to, such auditors; the
accounting principles applied by the Company in financial reporting; certain
filings by the Company with the SEC; the plans, budget and staffing of the
Company's internal audit department; and the scope of internal auditing
procedures and the adequacy of internal controls. The Audit Committee meets
periodically with management, the independent auditors and the Company's
internal auditors.
5
<PAGE>
The Compensation Committee, which met one time in 1999, consists of Messrs.
Annable, Geoga, Hedlund and Johnston. The Compensation Committee sets the cash
compensation of the Company's executives, including its executive officers.
The Stock Option Committee, which met four times in 1999, consists of
Messrs. Annable, Hedlund and Johnston. The Stock Option Committee selects
executives and other key employees of the Company and its subsidiaries to
receive stock options pursuant to the Company's 1990 and 1997 Stock Option
Plans and otherwise generally administers such plans.
In 1999, the Company's Board of Directors met five times and each director
attended more than 75% of the meetings of the Board of Directors and
committees of the Board on which he served.
Director Compensation
Each director who is not an employee of the Company receives an annual fee
of $30,000 for service on the Board and a fee of $1,500 for each Board Meeting
attended. Each member of the Board's Executive Committee who is not an
employee of the Company receives a quarterly fee of $2,000 for each calendar
quarter (or portion thereof) during which such director serves on the
Executive Committee. Each member of the Board's Audit Committee who is not an
employee of the Company receives a quarterly fee of $3,000 for each calendar
quarter (or portion thereof) during which such director serves on the Audit
Committee. The Chairman of the Executive Committee and the Chairman of the
Audit Committee each receives a quarterly fee of $2,000 for each calendar
quarter (or portion thereof) during which such director serves as Chairman in
addition to the other fees paid for serving on either of such Committees. All
directors are reimbursed for travel expenses incurred in attending Board and
committee meetings.
EXECUTIVE OFFICERS
The following summarizes the business experience over the last five years of
the Company's executive officers, other than Mr. Vie whose business experience
is described on page 5. The executive officers serve at the pleasure of the
Board of Directors.
David F. Bengston, 51, has been a Vice President of the Company for more
than the last five years.
James W. Burkett, 70, has been a Senior Vice President of the Company since
May, 1999, was a Vice President between February 1994 and May, 1999, and has
been President of the Unitrin Property and Casualty Insurance Group for more
than the last five years.
Eric J. Draut, 42, has been a Senior Vice President of the Company since
February 1999, Chief Financial Officer since February 1997, Treasurer since
April 1992 and was a Vice President between October 1997 and February 1999 and
Controller from February 1990 to February 1997.
Scott Renwick, 48, has been General Counsel of the Company since February
1999, Secretary since May 1996 and was Counsel between January 1991 and
February 1999.
6
<PAGE>
Donald G. Southwell, 48, has been a Senior Vice President of the Company
since February 1999, and was a Vice President between May 1998 and February
1999. Mr. Southwell has been the Group Executive of the Unitrin Property and
Casualty Insurance Group since October 1999 and the Unitrin Life and Health
Insurance Group since March 1996. Prior to March 1996, Mr. Southwell served as
President of Prudential Insurance and Financial Services, an affiliate of
Prudential Insurance Company of America.
COMPENSATION OF EXECUTIVE OFFICERS
The following report on the compensation of executive officers for 1999 is
submitted jointly by the Compensation Committee and the Stock Option
Committee. Notwithstanding any general statement to the contrary set forth in
any of the Company's previous or future filings under the Securities Act of
1933 or the Securities Exchange Act of 1934 that might incorporate this proxy
statement into such filings, neither this Report nor the performance graph
which follows on page 9 shall be incorporated by reference into any such
filings, nor shall they be deemed to be soliciting material or deemed filed
under such Acts.
Joint Report Of Compensation Committee and Stock Option Committee
The Company compensates its executive officers with two principal forms of
compensation: cash compensation and stock options. Cash compensation consists
of base salary, performance-based bonuses and may include discretionary
bonuses. Executive officers are eligible to receive stock options under the
Unitrin, Inc. 1990 Stock Option Plan and the Unitrin, Inc. 1997 Stock Option
Plan. Although the type and terms of options granted under these Plans may
vary, the Stock Option Committee's current practice generally is to grant non-
qualified options with exercise prices equal to the fair market value of the
Common Stock on the date of grant, terms of between five and seven years, and
which become exercisable in four, equal annual installments beginning six
months to one year after the date of grant.
Base salaries of the Company's executive officers depend on the Compensation
Committee's subjective assessment of the individual officer's work performance
with respect to such officer's normal job responsibilities. In its
compensation deliberations in 1999, the Compensation Committee had available
to it data which summarized the salary compensation of the chief executive
officers and certain other senior officers of a group of insurance and
diversified financial services companies, some of which are competitors of the
Company. While the Compensation Committee noted these data in establishing the
base salary compensation of the Company's Chief Executive Officer for 1999,
such data were not determinative of his compensation and the Compensation
Committee did not target a specific level within the range of such data for
his 1999 compensation. Such data were not referenced in establishing the
compensation of any of the Company's other executive officers, but it was
noted that the salaries of the Company's executive officers were below those
of the data presented.
The Company's executive officers are eligible to receive cash bonuses under
the terms of the Company's 1998 Bonus Plan for Senior Executives (the "1998
Bonus Plan") based on attainment of
7
<PAGE>
designated corporate performance criteria. For 1999, the Company's executive
officers were eligible for cash bonuses of up to 35% of their base salaries
(or 46.7%, in the case of the Chief Executive Officer) based on formulas
adopted by the Compensation Committee at its February 1999 meeting. The
formulas for participants with "line" responsibilities were based on growth in
operating earnings of the business units they oversee. Formulas for
participants with "staff" responsibilities were based on growth in earnings
per share from operations. The formula for the Chief Executive Officer took
each of the foregoing factors into account. With the following exception, the
bonuses paid for 1999 to the executive officers named in the Summary
Compensation Table were derived by application of the foregoing formulas using
actual 1999 financial results. In addition to such formula bonuses,
Messrs. Vie, Burkett, Draut, Renwick and Southwell received discretionary
bonuses of $50,000, $25,000, $15,000, $10,000 and $20,000 respectively, based
on the Compensation Committee's subjective evaluation of such officers' work
performance during 1999.
The Stock Option Committee endorses the concept that the interests of the
executive officers are more closely aligned with those of the shareholders
through the award of stock options. The number of stock options granted to
executive officers, including the Chief Executive Officer, is determined by
the Stock Option Committee's subjective evaluation of the particular officer's
ability to influence the long-term growth and profitability of the Company,
given his particular job responsibilities. In light of the Chief Executive
Officer's overall, day-to-day responsibility for the Company's operations and
financial results, he would ordinarily be deemed to have the greatest ability
to influence the long-term growth and profitability of the Company and would
therefore generally receive a greater number of options than the other
executive officers. In determining the number of stock options to grant a
particular officer, the Stock Option Committee also takes into account the
number of options already held by such officer. The Stock Option Committee has
no predetermined goal for a particular level of stock ownership by its
executive officers.
Section 162(m) of the Internal Revenue Code of 1986, as amended, generally
disallows a tax deduction to a public company for compensation in excess of $1
million paid to its chief executive officer and any of its four other most
highly compensated executive officers. Certain performance-based compensation
is specifically exempt from the deduction limit. All stock options that have
been granted to the Company's executive officers through the end of 1999
either are not subject to Section 162(m) (because they were granted prior to
the effective date of such section) or qualify as performance-based
compensation under Section 162(m), as interpreted by final regulations
promulgated by the Internal Revenue Service thereunder, and therefore are not
subject to the deduction limit under such section. The 1998 Bonus Plan is
designed to qualify as a performance-based compensation program under Section
162(m) in order to preserve the Company's federal income tax deduction for
bonuses paid thereunder.
Compensation Stock Option
Committee of the Board of Committee of the Board of
Directors of Unitrin, Inc. Directors of Unitrin, Inc.
James E. Annable James E. Annable
Douglas G. Geoga Reuben L. Hedlund
Reuben L. Hedlund William E. Johnston, Jr.
William E. Johnston, Jr.
8
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Comparison of Cumulative Total Return
Among Unitrin, Inc., S&P MidCap 400 Index,
S&P MidCap 400 Insurance (Property/Casualty)
industry group, and Dow Jones Full Line Insurance Group
A B C D
Unitrin 400 INDEX S&P GROUP DOW GROUP
------- --------- --------- ---------
1 12/31/94 100 100 100 100
2 12/31/95 116.37 130.94 133.55 155.19
3 12/31/96 141.22 156.08 166.82 191.38
4 12/31/97 170.64 206.43 233.94 265.37
5 12/31/98 197.04 245.87 245.96 296.47
6 12/31/99 215.01 282.06 175.69 352.53
Graph assumes $100 invested on December 31, 1994 in the Company's Common
Stock, the S&P MidCap 400 Index, the Insurance (Property/Casualty) industry
group of the S&P MidCap 400 Index, and the Dow Jones Full Line Insurance
Group, in each case with dividends reinvested. The Company has selected the
S&P MidCap 400 Insurance (Property/Casualty) industry group as a published
industry index in lieu of the Dow Jones Full Line Insurance Group because the
market capitalizations of the stocks in the S&P MidCap 400 Insurance
(Property/Casualty) industry group more closely approximate the market
capitalization of the Company. In addition, the Company is a member of such
Index.
9
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Summary Compensation Table
<TABLE>
<CAPTION>
Long Term
Compensation
Annual Compensation Awards
-------------------- ------------
Salary Options All Other
Name and Principal Position Year ($) Bonus ($)(1) (#)(2) Compensation ($)(3)
- --------------------------- ----- ------- ------------ ------------ -------------------
<S> <C> <C> <C> <C> <C>
Richard C. Vie.......... 1999 775,000 189,933 537,994 4,800
Chairman, President and 1998 693,750 205,299 555,232 300
Chief Executive 1997 668,750 213,555 991,052 300
Officer
James W. Burkett........ 1999 397,500 25,000 94,883 5,000
Senior Vice President 1998 368,750 94,545 162,838 300
1997 338,750 119,680 199,354 300
Eric J. Draut........... 1999 231,250 46,927 68,025 4,800
Senior Vice President, 1998 168,750 41,306 78,610 300
Chief Financial 1997 145,000 64,389 112,246 300
Officer and Treasurer
Scott Renwick........... 1999 192,875 30,747 15,000 4,800
General Counsel and 1998 167,750 15,980 21,416 300
Secretary 1997 152,625 41,096 48,900 300
Donald G. Southwell..... 1999 443,750 108,835 53,573 4,800
Senior Vice President 1998 425,000 110,615 75,832 300
</TABLE>
- --------
(1) Cash bonuses are listed for the year earned, but are paid in the following
year. Messrs. Vie and Draut received discretionary bonuses of $25,000 each
for 1997, and Messrs. Vie and Draut received discretionary bonuses of
$50,000 and $25,000, respectively, for 1998. Messrs. Vie, Burkett, Draut,
Renwick and Southwell received discretionary bonuses of $50,000, $25,000,
$15,000, $10,000 and $20,000, respectively, for 1999. Such discretionary
bonuses are included in the bonus totals in this table. All other bonus
amounts reflected for 1997, 1998 and 1999 were formula-based bonuses under
the 1997 and 1998 Bonus Plans for Senior Executives (See "Joint Report of
Compensation Committee and Stock Option Committee" on pages 7 and 8.)
(2) All options listed were granted pursuant to the Unitrin, Inc. 1990 and
1997 Stock Option Plans and include automatic grants of restorative
options. The amount of options issued have been adjusted to reflect the 2-
for-1 stock split in the form of a stock dividend paid on March 26, 1999.
(See also footnote (1) to the option grant table on page 12.)
(3) The amounts shown in this column represent Company matching contributions
to the named officers' accounts under the Company's 401(k) Savings Plan.
(4) Mr. Southwell first became an executive officer of the Company when he was
elected as a Vice President in May 1998. Data shown for Mr. Southwell for
1998 is for the entire year.
10
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Stock Option Grants in 1999 Fiscal Year
<TABLE>
<CAPTION>
Individual Grants Grant Date Value
- ----------------------------------------------------------------------- ----------------
Percent
Number of of total
securities options
underlying granted
options to Grant Date
granted employees Exercise price Expiration Present Value
Name (#)(1) in 1999 ($/sh)(2) date ($)(3)
---- ---------- --------- -------------- ---------- ----------------
<S> <C> <C> <C> <C> <C>
Richard C. Vie.......... 20,866 0.97% 36.37500 02/03/03 60,098
15,814 0.73% 36.37500 04/30/00 45,547
200,000* 9.29% 35.50000 05/05/04 864,600
24,475 1.14% 36.00000 04/30/00 70,446
28,514 1.32% 37.00000 02/01/05 85,214
6,458 0.30% 38.25000 01/28/02 19,953
16,815 0.78% 38.25000 05/04/04 51,948
19,379 0.90% 39.81250 04/30/00 62,314
12,508 0.58% 39.81250 01/28/02 40,222
34,380 1.60% 39.81250 05/04/04 110,552
53,135 2.47% 37.25000 02/03/03 162,684
29,050 1.35% 38.37500 05/14/02 92,620
4,903 0.23% 37.62500 05/14/02 15,451
4,446 0.21% 37.62500 02/03/02 14,013
6,526 0.30% 37.62500 01/28/02 20,567
15,952 0.74% 37.62500 02/01/05 50,268
25,973 1.21% 37.62500 02/01/05 81,848
18,800 0.87% 37.62500 02/01/05 59,243
James W. Burkett........ 40,000* 1.86% 35.50000 05/05/04 172,920
12,738 0.59% 35.75000 05/04/04 36,779
6,240 0.29% 35.75000 05/06/03 18,019
6,110 0.28% 35.75000 02/01/05 17,643
933 0.04% 35.75000 05/14/02 2,694
7,967 0.37% 37.75000 05/14/02 25,189
20,895 0.97% 37.75000 12/19/01 66,066
Eric J. Draut........... 1,913 0.09% 36.37500 02/01/05 5,510
2,699 0.13% 36.37500 05/06/03 7,773
40,000* 1.86% 35.50000 05/05/04 172,920
13,182 0.61% 35.75000 04/30/00 38,063
1,741 0.08% 35.75000 01/28/02 5,029
3,987 0.19% 38.37500 05/14/02 12,712
1,433 0.07% 38.37500 01/28/02 4,569
2,218 0.10% 38.15625 01/28/02 1,769
852 0.04% 38.15625 05/14/02 2,723
Scott Renwick........... 15,000* 0.70% 35.50000 05/05/04 64,845
Donald G. Southwell..... 14,328 0.67% 34.62500 05/01/06 39,662
20,000* 0.93% 35.50000 05/05/04 86,460
19,245 0.89% 38.18750 05/01/06 61,061
</TABLE>
11
<PAGE>
- --------
(1) All options granted to the named executive officers were granted under the
Unitrin, Inc. 1990 and 1997 Stock Option Plans and include restorative
options. Restorative options are granted when an option holder exercises a
stock option and makes payment of the exercise price and/or the resulting
tax obligations using shares of previously-owned Common Stock. In such a
case, the option holder is granted a restorative option for the total
number of shares used to make such payment. A restorative option becomes
exercisable in full six months after the date of grant and expires on the
same date as the original option. All option grants reflected in the table
above are restorative options except for those marked with an asterisk.
All options granted in 1999 were non-qualified options for federal income
tax purposes.
A restorative option is intended to enable an option holder to remain in
essentially the same economic position with respect to potential
appreciation of the Common Stock as if he or she had continued to hold the
original option unexercised. As the following table illustrates, the grant
of a restorative option does not result in an increase in the total number
of options and shares held by the option holder.
Net Change in Shares and Options Held by Named Executive Officers
Resulting From Grants of Restorative Options
<TABLE>
<CAPTION>
Net Change
in Total
Total Restorative Shares and
Options Net Shares Options Options
Name Exercised Received (A) Granted (B) (C)
---- --------- ------------ ----------- ----------
<S> <C> <C> <C> <C>
Richard C. Vie.............. 379,002 41,008 337,994 0
James W. Burkett............ 60,954 6,071 54,883 0
Eric J. Draut............... 43,827 3,183 28,025 (12,619)(D)
Scott Renwick............... 0 0 0 0
Donald G. Southwell......... 43,509 9,936 33,573 0
</TABLE>
--------
(A) Represents shares received in option exercises after subtracting shares
surrendered to pay the exercise prices and/or related tax withholding
obligations.
(B) Represents options granted to replace shares surrendered in connection
with option exercises.
(C) Represents the difference between (i) the total options exercised, and
(ii) the sum of net shares received and the number of restorative
options granted.
(D) One of the exercises by Mr. Draut involved an option for 13,182 shares
with less than six months remaining before its expiration. In
connection with such exercise, Mr. Draut received 563 shares. In this
case, the resulting restorative option for 12,619 shares would have
expired prior to the completion of the six-month vesting period.
Accordingly, this exercise is treated as if no restorative option were
issued, effectively resulting in a net reduction in the total of Mr.
Draut's options and shares.
(2) Exercise prices were set in all cases at the fair market value of the
Company's Common Stock on the date of grant.
(3) Grant date present values are based on the Black-Scholes option pricing
model, which was applied using the following assumptions: (i) a weighted
average expected volatility of 20%; (ii) a
12
<PAGE>
risk free rate of return equal to the yield on U.S. Treasury obligations
with a maturity comparable to the term of the particular option; (iii) an
expected life for restorative options of one year and 2.5 years for all
other options; and (iv) a dividend yield of 4.293%, representing the
average, annualized dividend yield on the Common Stock for the period from
January 1, 1995 through December 31, 1999. No adjustments were made for the
non-transferability of the options or the risk of their forfeiture. The
Company's use of the Black-Scholes model should not be viewed as a forecast
of the future performance of the Common Stock.
Aggregated Option Exercises in 1999 Fiscal Year, and Fiscal Year-End Option
Values
<TABLE>
<CAPTION>
Value of unexercised
Number of securities in-the-money options
Shares Acquired underlying unexercised at FY-end ($)
on Value options at FY-end (#) exercisable/unexercisable
Name Exercise (#)(1) Realized ($)(2) exercisable/unexercisable (3)
---- --------------- --------------- ------------------------- -------------------------
<S> <C> <C> <C> <C>
Richard C. Vie.......... 379,002 2,308,364 548,307 / 421,285 1,044,938 / 891,801
James W. Burkett........ 60,954 319,140 155,571 / 88,862 524,813 / 198,750
Eric J. Draut........... 43,827 175,964 72,128 / 63,490 187,473 / 145,000
Scott Renwick........... 0 0 58,792 / 20,250 338,225 / 64,406
Donald G. Southwell..... 43,509 542,403 183,437 / 49,245 1,231,027 / 99,375
</TABLE>
- --------
(1) Substantially all option exercises by the named executive officers in 1999
were exercises in which the officers surrendered previously acquired
shares of Common Stock as payment for the exercises. (See footnote (1) to
the option grant table on page 12.) The shares reflected in this column
are the gross shares issued in the exercise transactions, without
deduction of the shares surrendered as payment. The actual net increase in
the number of shares held by these officers as a result of such
transactions was as follows: Vie (41,008); Burkett (6,071); Draut (3,183);
and Southwell (9,936).
(2) The "value realized" represents the difference between the exercise price
of the shares acquired and the market price of such shares on the date or
dates of exercise, without regard to any related tax obligations.
(3) The value of unexercised in-the-money options is calculated by subtracting
the applicable exercise price from $37.625 (the closing price of the
Common Stock on December 31, 1999) and multiplying the resulting
difference by the number of shares covered by the options in question.
Pension Plans
The following table shows, for specified levels of average final
compensation and years of credited service, the estimated annual benefits
payable under the Company's tax-qualified retirement plan (the "Retirement
Plan") and a related, non-qualified, supplemental executive retirement plan.
Average final compensation represents the average annual covered compensation
paid for the highest 60 consecutive months in the 120-month period ending
three months prior to retirement. These benefit estimates assume retirement in
2000 at age 65 or older.
13
<PAGE>
Unitrin, Inc. Retirement Plan For Salaried Employees 2000 Estimates
<TABLE>
<CAPTION>
Years of Credited Service
Average Final -------------------------------------------
Annual Compensation 5 10 15 20 30+
- ------------------- ------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
$ 200,000.......................... $15,359 $ 30,718 $ 46,077 $ 61,436 $ 92,154
$ 250,000.......................... 19,484 38,968 58,452 77,936 116,904
$ 300,000.......................... 23,609 47,218 70,827 94,436 141,654
$ 350,000.......................... 27,734 55,468 83,202 110,936 166,404
$ 400,000.......................... 31,859 63,718 95,577 127,436 191,154
$ 450,000.......................... 35,984 71,968 107,952 143,936 215,904
$ 500,000.......................... 40,109 80,218 120,327 160,436 240,654
$ 550,000.......................... 44,234 88,468 132,702 176,936 265,404
$ 600,000.......................... 48,359 96,718 145,077 193,436 290,154
$ 650,000.......................... 52,484 104,968 157,452 209,936 314,904
$ 700,000.......................... 56,609 113,218 169,827 226,436 339,654
$ 750,000.......................... 60,734 121,468 182,202 242,936 364,404
$ 800,000.......................... 64,859 129,718 194,577 259,436 389,154
$ 850,000.......................... 68,984 137,968 206,952 275,936 413,904
$ 900,000.......................... 73,109 146,218 219,327 292,436 438,654
$ 950,000.......................... 77,234 154,468 231,702 308,936 463,404
$1,000,000.......................... 81,359 162,718 244,077 325,436 488,154
$1,050,000.......................... 85,484 170,968 256,452 341,936 512,904
$1,100,000.......................... 89,609 179,218 268,827 358,436 537,654
$1,150,000.......................... 93,734 187,468 281,202 374,936 562,404
$1,200,000.......................... 97,859 195,718 293,577 391,436 587,154
</TABLE>
The foregoing benefits are illustrated as straight-life annuities and are
not subject to reduction for Social Security or other offset amounts.
The years of credited service in the Retirement Plan as of December 31, 1999
for each of the Company's executive officers named in the Summary Compensation
Table is as follows: Vie (8), Burkett (8), Draut (8), Renwick (7) and
Southwell (3). Compensation covered by the Retirement Plan is the
participant's base salary and bonuses as defined in the Retirement Plan, but
does not include compensation attributable to the exercise of stock options.
The covered compensation for the executive officers named in the Summary
Compensation Table on page 10 is the total of their salary and bonus amounts,
excluding the discretionary bonuses for 1997 specified in footnote (1) to such
table.
Mr. Vie formerly participated in a defined benefit retirement plan sponsored
by a subsidiary of the Company. His participation in that plan was suspended
on January 1, 1992 and no further contributions will be made on his behalf;
however, he will be entitled to benefits under the plan upon retirement based
on contributions made through the end of 1991. Assuming retirement at age 65,
Mr. Vie would receive annual benefits of $20,971.
14
<PAGE>
Change of Control Arrangements
The Company has entered into individual severance agreements with each of
the Company's executive officers (the "Agreements"). The Agreements provide
various severance benefits to such officers in the event their employment is
involuntarily terminated (other than for cause, disability or death) or
voluntarily terminated, in either case within one year after a change of
control. Such benefits are also payable to such officers in the event their
employment is involuntarily terminated (other than for cause, disability or
death) or voluntarily terminated for certain specified reasons, in either case
in anticipation of a change of control. A change of control is deemed to occur
if, on or before December 31, 2000, any person acquires a majority of the
voting power of the Common Stock, or the individuals who comprised the
Company's Board of Directors on January 19, 1995, or any of the individuals
they nominate, cease to comprise a majority of the Board. Each executive
officer would be entitled under the Agreements to: (i) a lump sum severance
payment based on a multiple (specified below) of his annualized salary; (ii)
continuation for up to two years of the life and health insurance benefits
that were being provided by the Company to such officer and his family
immediately prior to termination; and (iii) outplacement services at the
Company's expense, up to a maximum of $12,500. The Agreements contain
identical terms and conditions, except that the severance compensation
multiple is 2.99 for Mr. Vie and 2.0 for the other executive officers. The
Agreements are not employment contracts. Severance benefits payable under the
Agreements are to be grossed-up to the extent that a recipient would be
subject to an excise tax under Section 4999 of the Internal Revenue Code
(including any interest or penalties imposed with respect to such tax) due to
the receipt of such benefits or any other benefits that constitute "excess
parachute payments" for purposes of Section 280G of the Code. If severance
benefits had become payable on December 31, 1999 as a result of a change of
control on that date, no executive officers would have received such gross-ups
except for Messrs. Vie and Draut, who would have received gross-up payments of
approximately $976,622 and $205,259, respectively.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
None of the members of the Compensation Committee (Messrs. Annable, Geoga,
Hedlund and Johnston) or the Stock Option Committee (Messrs. Annable, Hedlund
and Johnston) is a current or former officer or employee of the Company or any
of its subsidiaries.
INDEPENDENT AUDITORS
KPMG LLP has been selected as the Company's independent auditor for the year
2000. It is expected that a representative of KPMG LLP will be present at the
meeting. Such representative may make a statement if he or she desires to do
so and will be available to respond to appropriate questions.
OTHER MATTERS THAT MAY COME BEFORE THE MEETING
The management of the Company knows of no other matters that may come before
the meeting. However, if any matters should properly come before the meeting,
it is the intention of the persons named in the enclosed proxy to vote all
proxies in accordance with their best judgment.
15
<PAGE>
SHAREHOLDER PROPOSALS IN CONNECTION WITH THE 2001 ANNUAL MEETING OF
SHAREHOLDERS
Pursuant to regulations of the Securities and Exchange Commission,
shareholders who intend to submit proposals for inclusion in the Company's
proxy materials for the 2001 annual meeting must do so no later than November
27, 2000. This requirement is independent of certain other notice requirements
of the Company's Amended and Restated By-Laws described below in this
paragraph. Shareholder nominations of persons for selection to the Board of
Directors are not eligible for inclusion in the Company's proxy materials and
may only be made in accordance with the procedure described hereafter. Pursuant
to the Company's Amended and Restated By-Laws, nominations of persons for
selection to the Board of Directors and the proposal of business to be
considered by shareholders may in each case be made at the 2001 annual meeting
by any shareholder of record who gives written notice to the Company of such
nominations or proposals not less than 60 days nor more than 90 days prior to
the first anniversary of the 2000 annual meeting. In the event that the date of
the 2001 annual meeting is advanced by more than 30 days or delayed by more
than 60 days from such anniversary date, then such nominations and proposals
must be delivered to the Company no earlier than 90 days prior to the 2001
annual meeting and no later than the close of business on the later of (i) the
60th day prior to the 2001 annual meeting, or (ii) the 10th day following the
day on which public announcement of the date of the 2001 annual meeting is
first made. All such shareholder proposals and notices should be submitted to
Scott Renwick, Secretary, Unitrin, Inc., One East Wacker Drive, Chicago,
Illinois 60601.
FORM 10-K
Shareholders entitled to vote at the Annual Meeting may obtain for no charge
a copy of the Company's Annual Report on Form 10-K, without exhibits, for the
year ended December 31, 1999, upon written request to Scott Renwick, Secretary,
Unitrin, Inc., One East Wacker Drive, Chicago, Illinois 60601.
By Order of the Board of Directors
/s/ Scott Renwick
Scott Renwick
Secretary
March 27, 2000
16
<PAGE>
- --------------------------------------------------------------------------------
[Logo of UNITRIN] PROXY
One East Wacker Drive Annual Meeting of Shareholders
Chicago, Illinois 60601
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned appoints Richard C. Vie and Eric J. Draut as Proxies, each
with power of substitution, to vote all shares of Unitrin, Inc. common stock of
the undersigned held as of March 13, 2000, at the Annual Meeting of Sharehold-
ers of Unitrin, Inc., to be held at Bank One Center, One Bank One Plaza, Dear-
born and Madison Streets (Plaza Level), Chicago, Illinois 60670, at 10:00 a.m.
on May 3, 2000, and at any adjournment thereof, upon the following matters.
This card also constitutes voting instructions for all shares, if any, credited
to the account of the undersigned in the Unitrin 401(k) Savings Plan.
(1) ELECTION OF DIRECTORS. Nominees for director are:
1) James E. Annable 5) William E. Johnston, Jr.
2) Douglas G. Geoga 6) Fayez S. Sarofim
3) Reuben L. Hedlund 7) Richard C. Vie
4) Jerrold V. Jerome
(2) In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting.
Please sign and date this card on the reverse side and return promptly in the
envelope provided.
-------------
SEE REVERSE
SIDE
-------------
- --------------------------------------------------------------------------------
. FOLD AND DETACH HERE .
<PAGE>
- --------------------------------------------------------------------------------
[X] Please mark your votes as in this example. 0599
This Proxy, when properly executed, will be voted as directed herein by the
undersigned shareholder. If no direction is made, this proxy will be voted FOR
Proposal (1).
- --------------------------------------------------------------------------------
The Board of Directors recommends a vote FOR Proposal (1).
- --------------------------------------------------------------------------------
1. Election of Directors
FOR WITHHELD
[_] [_]
For, except vote withheld from the following nominee(s):
- --------------------------------------------------------------------------------
2. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting.
Please check this box if you plan to attend the meeting. Please sign exactly as
your name(s) appears hereon. All joint tenants should sign. When signing as
attorney, executor, administrator, trustee or guardian, give full title as such.
If a corporation, sign the full corporate name by an authorized officer. If a
partnership, sign in partnership name by authorized person.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SIGNATURE(S) DATE
- --------------------------------------------------------------------------------
Dear Shareholder:
Unitrin, Inc. encourages you to take advantage of a convenient way by which you
can vote your shares. You can vote your shares electronically through the
Internet or by telephone. This eliminates the need to return the proxy card.
To vote your shares electronically you must use the control number printed in
the box above, just below the perforation. The series of numbers that appears
in the box above must be used to access the system.
To vote over the Internet:
. Log on to the Internet and go to the Web site
http://www.proxyvote.com/unit
To vote over the telephone:
. On a touch-tone telephone, call 1-877-PRX-VOTE (1-877-779-8683) 24
hours a day, 7 days a week
Your electronic vote authorizes the named Proxies in the same manner as if you
marked, signed, dated and returned the proxy card.
If you choose to vote your shares electronically, there is no need for you to
mail back your proxy card.
Your vote is important. Thank you for voting.
<PAGE>
UNITRIN, INC.
2000 Telephone Voting Script
- --------------------------------------------------------------------------------
Toll Free: 1-877-PRX-VOTE or 1-877-779-8683
- --------------------------------------------------------------------------------
1. Welcome to the electronic voting system. Please have your proxy card or
voting instruction sheet or ballot available before voting.
2. Enter the Voter Control Number as it appears on the card followed by the
pound sign.
3. One moment please while we verify your information.
4. Enter the last four digits of the U.S. Social Security Number or the U.S.
taxpayer identification number for this account followed by the pound sign.
5. The company that you are voting is Unitrin, Inc.
6. Your vote is subject to the same terms and authorizations as indicated on
the proxy card. It also authorizes the named proxies to vote according to
the instructions at the meeting of the stockholders.
7. Item # 1. To vote for all director nominees in accordance with the
recommendations of the Board of Directors, press 1. To withhold from all
nominees, press 2. To withhold from individual nominees, press 3.
If 1, go to 8.
If 2, go to 8.
If 3, go to Director Exception.
-------------------
<PAGE>
- --------------------------------------------------------------------------------
Director Exception
- ------------------
Enter the number next to the nominee from whom you would like to withhold your
vote followed by the pound key. Or if you have completed voting on directors,
press the pound key again.
If pound key entered twice, go to the next item.
If valid nominee number, go to Next Nominee.
Next Nominee
- ------------
To withhold your vote from another nominee, enter the number next to the nominee
followed by the pound key, or if you have completed voting on directors press
the pound key again.
If pound key entered twice, go to the next item.
If valid nominee number, go to Next Nominee.
Invalid Nominee Number
- ----------------------
You have entered an invalid nominee number.
{Go to Next Nominee.}
- --------------------------------------------------------------------------------
8. If you would like to attend the annual meeting, press 1. If not, press 2.
If 1, go to 9.
If 2, go to 9.
9. If you would like to discontinue mailing an annual report to this account,
press 1. If not, press 2.
If 1, go to 10.
If 2, go to 10.
10. You have cast your vote as follows:
<PAGE>
- --------------------------------------------------------------------------------
Playback {Playback the appropriate vote for this proxy card.}
- --------------------------------------------------------------------------------
Default Playback
- ----------------
You have voted in the manner recommended by the Board of Directors.
Director proposal Playback
- --------------------------
Voted for all nominees: Item #. You have voted for all nominees.
- -----------------------
Withhold from all nominees: Item #. You have voted to withhold your vote from
- ---------------------------
all nominees.
Withhold from individual nominees: Item #. You have voted for all nominees
- ----------------------------------
except for the following nominee numbers.
- --------------------------------------------------------------------------------
11. To confirm your vote, press 1. To cancel your vote, press 2.
If 1, go to 13.
If 2, go to 12.
12. Your vote has been cancelled. If you wish to vote another card, press 1.
Otherwise, please hang up and mark, sign, and return your card in the
envelope provided. Thank you for calling.
13. Your vote has been successfully recorded. It is not necessary for you to
mail your card. If you wish to vote another card or change your vote, press
1. Otherwise, please hang up. Thank you for voting.
- --------------------------------------------------------------------------------
Invalid Control Numbers
- -----------------------
We are unable to authenticate the information that you entered.
No Key Pressed
- --------------
Go to the same item (repeat three times); otherwise, go to Error.
-----
Invalid Number
- --------------
Go to the same item (repeat three times); otherwise, go to Error.
-----
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
Error
- -----
We are unable to process your request at this time. Thank you for calling.
{Call ends.}
- --------------------------------------------------------------------------------
<PAGE>
UNITRIN, INC.
2000 Internet Voting Script
[Screen No. 1]
VOTE
BY NET If you have more than one proxy card, please vote only one card
at a time.
1 Enter the Voter Control Number that appears in the box on
your proxy card.
-----------------------------------------------------------------
-----------------------------------------------------------------
2 Enter the last 4 digits of your U.S. Taxpayer Identification
(Social Security) for this account.
-----------------------------------------------------------------
-----------------------------------------------------------------
If you do not have a U.S. Taxpayer Identification Number for
this account, please leave this box blank.
Important: For your vote to be cast, the Voter Control
Number and the last four digits of the U.S. Taxpayer
Identification (Social Security) Number for this account
must match the numbers on our records.
------------------------------------------------------------
3 Enter your e-mail address to receive an e-mail confirmation
of your vote.
-----------------------------------------------------------------
-----------------------------------------------------------------
Enter your e-mail address again for validation.
-----------------------------------------------------------------
-----------------------------------------------------------------
-------
Proceed
-------
[If clicked, will go to Screen No. 2]
1
<PAGE>
[Screen No. 2]
[Unitrin, Inc. Logo]
VOTE
BY NET Welcome!
Name Line
Address Line
City, State Zip Line
-------
Proceed
-------
[If clicked, will go to Screen No. 3]
2
<PAGE>
[Screen No. 3]
[Unitrin, Inc. Logo]
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF SHAREHOLDERS
The undersigned appoints Richard C. Vie and Eric J. Draut as Proxies, each with
power of substitution, to vote all shares of Unitrin, Inc. common stock of the
undersigned held as of March 13, 2000, at the Annual Meeting of Shareholders of
Unitrin, Inc. to be held at Bank One Center, One Bank One Plaza, Dearborn and
Madison Streets (Plaza Level), Chicago, Illinois 60670, at 10:00 a.m. on May 3,
2000, and at any adjournment thereof, upon the following matters. Such
appointment also constitutes voting instructions for all shares, if any,
credited to the account of the undersigned in the Unitrin 401(k) Savings Plan.
(1) Election of Directors.
(2) In their discretion, the Proxies are authorized to vote upon such
other business as may properly come before the meeting.
The Board of Directors Recommends a Vote
"FOR" election of all Nominees for Directors.
- --------------------------------------------------------------------------------
Check this box to cast your vote in accordance with the recommendations of the
Board of Directors [_]
[_] For all Nominees
Except as Noted
Below
[_] Withhold
As To All
Nominees
[_] James E. Annable
[_] Douglas G. Geoga
[_] Reuben L. Hedlund
[_] Jerrold V. Jerome
[_] William E. Johnston, Jr.
[_] Fayez S. Sarofim
[_] Richard C. Vie
- --------------------------------------------------------------------------------
Check the box below, if the option applies to you.
[_] Discontinue Annual Report Mailing for this account
[_] Will Attend Annual Meeting
To submit your vote, please click the button below.
(Your vote will not be counted until the Submit Your Vote button is clicked.)
[_] Submit Your Vote [If clicked, will go to Screen No. 4]
3
<PAGE>
[Screen No. 4]
[Unitrin, Inc. Logo]
VOTE
BY NET Your proxy vote has been recorded as follows:
----------------------------------------------------------------------
----------------------------------------------------------------------
Please review your vote. If this is incorrect, please use the
back Button on your browser, change your vote and resubmit. If
this is correct, please click the Proceed button.
-------
Proceed
-------
[If clicked, will go to Screen No. 5]
4
<PAGE>
[Screen No. 5]
[Unitrin, Inc. Logo]
VOTE
BY NET Thank you for using EquiServe's Vote-By-Net Facility. Your vote
will be applied within 24 hours.
If you wish to provide a comment, click the button below.
---------------
Submit Comments
---------------
[If clicked, will go to Screen No. 6]
If you wish to provide an address change request for this
account, click the button below.
-------
Proceed
-------
[If clicked, will go to Screen No. 6]
If you wish to vote another proxy card, or go to Unitrin's
homepage [hypertext link] or the EquiServe homepage
[hypertext link].
------------------
Vote Another Proxy
------------------
[If clicked, will return to Screen No. 1]
5
<PAGE>
[Screen No. 6]
[Unitrin, Inc. Logo]
VOTE
BY NET Please select an appropriate subject, identify yourself and enter
your comments in the box below. Press the Submit button to send
your comments.
_________________________
Your Name: _________________________
_________________________
E-mail address: _________________________
_________________________
Daytime Phone: _________________________
_________________________
Subject: _________________________
Your Comments:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
---------------
Submit Comments
---------------
[If clicked, will go to Screen No. 7]
6
<PAGE>
[Screen No. 7]
[Unitrin, Inc. Logo]
VOTE
BY NET Thank you for your comment!
You can now vote another proxy card, or go to Unitrin's homepage
[hypertext link] or the EquiServe homepage [hypertext link].
------------------
Vote Another Proxy
------------------
[If clicked, will return to Screen No. 1]
