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[LOGO]
SAFECO CORPORATION
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 3, 1995
Seattle, March 14, 1995
To Our Shareholders:
Notice is hereby given that the Annual Meeting of Shareholders of SAFECO
Corporation (the "Corporation") will be held on May 3, 1995, at 11:00 A.M. in
the Auditorium, SAFECO Plaza, 4333 Brooklyn Avenue N.E., Seattle, Washington,
for the following purposes, as set forth in the accompanying proxy statement:
1. To elect four (4) nominees to serve as directors for three-year terms to
expire in 1998.
2. To consider and act upon such other matters as may properly come before the
meeting.
The Board of Directors has established the close of business on March 6, 1995,
as the record date for the determination of shareholders entitled to receive
notice of and to vote at the Annual Meeting of Shareholders and any adjournment
thereof.
YOU ARE URGED TO REVIEW CAREFULLY THE ACCOMPANYING PROXY STATEMENT, AND SIGN AND
RETURN THE ENCLOSED PROXY CARD AS PROMPTLY AS POSSIBLE WHETHER OR NOT YOU PLAN
TO ATTEND THE MEETING.
Your proxy may be revoked by you at any time before it has been voted. You may
substitute a representative other than those named in the enclosed proxy if you
desire. The individuals named are the present members of the Executive Committee
of the Board of Directors.
You are cordially invited to attend the Annual Meeting of Shareholders in
person, if it is convenient for you to do so.
[LOGO]
Roger H. Eigsti
Chairman, CEO and
President
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SAFECO CORPORATION
SAFECO Plaza, Seattle, Washington 98185
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS -- MAY 3, 1995
This statement is furnished in connection with the Annual Meeting of
Shareholders of SAFECO Corporation (the "Corporation") to be held on May 3,
1995. Shareholders of record at the close of business on March 6, 1995, are
entitled to vote at the meeting either in person or by proxy.
Your proxy in the enclosed form is solicited by the Board of Directors of the
Corporation. The shares represented by the proxies received will be voted at the
meeting.
The approximate date of the mailing of this proxy statement and the enclosed
form of proxy is March 14, 1995.
OUTSTANDING SHARES AND VOTE REQUIRED
On March 6, 1995, there were 62,974,641 shares of Common Stock of the
Corporation outstanding, all of which will be entitled to vote at the Annual
Meeting of Shareholders to be held on May 3, 1995. Each shareholder is entitled
to one vote for each share of Common Stock held of record in such person's name
on the record date. Under Washington law and the Corporation's Articles of
Incorporation, a quorum consisting of a majority of the shares eligible to vote
must be represented in person or by proxy to elect directors and to transact any
other business that may properly come before the meeting. Action on any matter,
other than the election of directors, is approved if the votes cast in favor of
the action exceed the votes cast against it. Abstention from voting or nonvoting
by brokers will have no effect since such actions do not represent votes cast by
shareholders. In any election of directors, the nominees elected are those
receiving the greatest number of votes cast by the shares entitled to vote, up
to the number of directors to be elected by such shares. Any action other than a
vote for a nominee will have the effect of voting against the nominee.
SOLICITATION OF PROXIES
The persons named as proxies were selected by the Board of Directors and are the
present members of the Executive Committee of the Board. Your proxy may be
revoked by you at any time before it has been voted by notifying the Secretary
to the Board of Directors, SAFECO Corporation, SAFECO Plaza, Seattle, Washington
98185, in writing of such revocation. Georgeson & Company Inc., New York City,
has been retained to solicit proxies personally or by mail, telephone or
telegram through approximately 40 employees at a cost anticipated to be $6,000
plus reasonable out-of-pocket expenses,
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which will be paid by the Corporation. Management does not expect to solicit
proxies except through the mail; however, if proxies are not promptly received,
salaried employees of the Corporation may solicit proxies from some shareholders
personally, by telephone or telegram.
ELECTION OF DIRECTORS
The Board of Directors is divided into three classes. At the 1995 Annual Meeting
of Shareholders, four nominees will be elected to serve three-year terms until
the 1998 Annual Meeting of Shareholders and until their successors are elected
and qualified. Pursuant to the Corporation's retirement policy for directors,
Mr. Graham, if elected, will tender his resignation as director at the 1996
Annual Meeting of Shareholders.
At its August 3, 1994 meeting, the Board of Directors elected as directors
Phyllis J. Campbell, Chief Executive Officer and President of U.S. Bank of
Washington, and William R. Wiley, Senior Vice President for Science and
Technology Policy of Battelle Memorial Institute. Ms. Campbell was elected to
fill the unexpired term created by the retirement of Toni Rembe in June 1994.
Dr. Wiley is nominated for a three-year term ending in 1998.
On May 3, 1995, Harold W. Haynes and Henry T. Segerstrom, both having reached
age 72, will retire as directors in accordance with the Corporation's retirement
policy for directors. The number of directors will be reduced to 14 at the May
1995 Executive Committee meeting, as provided in the Bylaws.
Unless otherwise stated, each individual described below has served for at least
five years in the position indicated. All nominees are presently directors.
NOMINEES FOR DIRECTOR
CLASS III -- TERM EXPIRES AT 1998 ANNUAL SHAREHOLDERS' MEETING
ROGER H. EIGSTI, 52, is Chairman, Chief Executive Officer and President of the
Corporation. Mr. Eigsti has been an executive officer of the Corporation or its
subsidiaries since 1980 and a director of the Corporation since 1988. Mr. Eigsti
is a director of Washington Mutual, Inc. and Washington Mutual Bank.
JOHN W. ELLIS, 66, is Chairman and Chief Executive Officer of The Baseball Club
of Seattle, Inc., the owner of the Seattle Mariners baseball team, Seattle,
Washington. Mr. Ellis is a director of Puget Sound Power & Light Company and was
its Chief Executive Officer from 1976 to 1992 and its Chairman from 1987 to
1993. Mr. Ellis has been a director of the Corporation since 1981 and is a
director of Washington Mutual, Inc. and Washington Mutual Bank, UTILX
Corporation and Associated Electric & Gas Insurance Services, Ltd.
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DONALD G. GRAHAM, JR., 71, is Chairman of the Board of Fisher Companies Inc.,
Seattle, Washington, whose primary subsidiaries are engaged in broadcasting,
flour milling and real estate ownership and development, and was its Chief
Executive Officer from 1974 until his retirement in 1993. Mr. Graham has been a
director of the Corporation since 1979.
WILLIAM R. WILEY, 63, is Senior Vice President for Science and Technology Policy
of Battelle Memorial Institute, an independent science and technology
organization. From 1984 to 1994 he was Director of Pacific Northwest Laboratory,
Richland, Washington, a national laboratory operated by Battelle Memorial
Institute for the U.S. Department of Energy. Dr. Wiley has been a director of
the Corporation since 1994.
DIRECTORS WHOSE TERMS EXPIRE AFTER 1995
CLASS I -- TERM EXPIRES AT 1996 ANNUAL SHAREHOLDERS' MEETING
PHYLLIS J. CAMPBELL, 43, is Chief Executive Officer and President of U.S. Bank
of Washington, N.A., Seattle, Washington, and has been an executive officer of
the bank since 1989. She is also Executive Vice President of U.S. Bancorp. Ms.
Campbell has been a director of the Corporation since 1994 and is a director of
Puget Sound Power & Light Company.
BOH A. DICKEY, 50, is Executive Vice President and Chief Financial Officer of
the Corporation and Chairman of the Board of Trustees for the 28 SAFECO mutual
funds. Mr. Dickey has been an executive officer of the Corporation since 1982
and a director of the Corporation since 1993. Mr. Dickey is a director of
Capital Guaranty Corporation.
WILLIAM P. GERBERDING, 65, is President of the University of Washington. Dr.
Gerberding has been a director of the Corporation since 1981 and is a director
of Washington Mutual, Inc. and Washington Mutual Bank and a member of the
Washington State Executive Board of U S WEST Communications.
CALVERT KNUDSEN, 71, is a director and the retired Chairman and Chief Executive
Officer of MacMillan Bloedel, Ltd., Vancouver, British Columbia, a forest
products company. Mr. Knudsen has been a director of the Corporation since 1979
and is a director of Cascade Corporation, Penwest Limited, West Fraser Timber
Co., Ltd. and MacDonald Dettwiler & Associates.
PAUL W. SKINNER, 47, is President of Skinner Corporation, Seattle, Washington,
an investment company. Mr. Skinner has been a director of the Corporation since
1988 and is a director of The Seattle Times, Seafirst Corporation and
Seattle-First National Bank.
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CLASS II -- TERM EXPIRES AT 1997 ANNUAL SHAREHOLDERS' MEETING
ROBERT S. CLINE, 57, is Chairman and Chief Executive Officer of Airborne Freight
Corporation, Seattle, Washington, an air freight carrier. Mr. Cline has been a
director of the Corporation since 1992 and is a director of Seafirst Corporation
and Metricom, Inc.
JOSHUA GREEN III, 58, is Chairman and Chief Executive Officer of the Joshua
Green Corporation, Seattle, Washington, a family investment firm, and Chairman
of its wholly-owned subsidiary, Sage Manufacturing Corporation. Mr. Green has
been a director of the Corporation since 1981 and is Chairman of the Board of
U.S. Bank of Washington, N.A., and a director of U.S. Bancorp.
WILLIAM G. REED, JR., 56, is Chairman of the Board and Chief Executive Officer
of Simpson Investment Company, Seattle, Washington, a forest products holding
company. Mr. Reed has been a director of the Corporation since 1974 and is a
director of Microsoft Corporation, Washington Mutual, Inc. and Washington Mutual
Bank.
JUDITH M. RUNSTAD, 50, is a partner of the Seattle law firm of Foster Pepper &
Shefelman. Mrs. Runstad has been a director of the Corporation since 1990 and is
Chair and a director of the Federal Reserve Bank of San Francisco.
GEORGE H. WEYERHAEUSER, 68, is Chairman of the Board and a director of
Weyerhaeuser Company, Tacoma, Washington, a forest products company, and was its
Chief Executive Officer from 1966 until his retirement in 1991. Mr. Weyerhaeuser
has been a director of the Corporation since 1978 and is a director of The
Boeing Company and Chevron Corporation.
OWNERSHIP OF THE CORPORATION'S COMMON STOCK
The table below provides information as of February 7, 1995, with regard to the
ownership of the Corporation's Common Stock by directors, nominees for director,
the Corporation's Chief Executive Officer and other four most highly compensated
executive officers, and by all directors, nominees and officers as a group.
Total beneficial ownership of the Corporation's outstanding Common Stock is less
than one percent in the case of each individual listed below except as follows:
4.97% for Mr. Graham, 2.01% for Mr. Green, and 8.09% for all 21 directors,
nominees and officers as a group (including shares subject to stock options
which may be exercised within 60 days). The holdings shown in the table do not
include 2,357,800 shares held by The SAFECO Employees' Profit Sharing Retirement
Plan, as to which the members of the Investment Committee for the Profit Sharing
Retirement Plan (Messrs. Cline, Ellis, Gerberding, Haynes, Knudsen, Reed and
Skinner) share voting and investment power and certain members of management may
be deemed to share investment power by reason of their positions.
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<TABLE>
<CAPTION>
AMOUNT AND
NATURE ACQUIRABLE
OF BENEFICIAL WITHIN 60
NAME OWNERSHIP DAYS (1)
- ------------------------------------- -------------- -----------
<S> <C> <C>
Phyllis J. Campbell 500
Robert S. Cline 1,500 --
Boh A. Dickey 18,181 18,738
Roger H. Eigsti 40,754 22,443
John W. Ellis 5,012 --
William P. Gerberding 1,000 --
Donald G. Graham, Jr. 3,152,578(2) --
Joshua Green III 1,273,716(3) --
Harold W. Haynes 3,000 --
Richard W. Hubbard 33,291 --
Calvert Knudsen 3,000 --
Dan D. McLean 9,312 1,293
William G. Reed, Jr. 345,898(4) --
Judith M. Runstad 1,000 --
Henry T. Segerstrom 4,000(5) --
Paul W. Skinner 141,060(6) --
George H. Weyerhaeuser 27,800(7) --
William R. Wiley 0 --
Richard E. Zunker 6,969(8) 10,125
All directors, nominees and
officers as a group (21 persons) 5,071,694 62,299
<FN>
- ------------
(1) Shares which may be purchased within 60 days pursuant to the Corporation's
Stock Option Plan or the SAFECO Incentive Plan of 1987.
(2) Includes (i) 2,998,649 shares owned by three corporations of which Mr.
Graham is an officer and/or director, 24,863 shares owned by a charitable
foundation of which he is an officer and trustee, 54,648 shares owned by a
charitable trust of which he is a co-trustee, 11,180 shares owned by a
trust estate of which he is a co-trustee, and thereby in each such case
shares voting power and investment power with respect to such shares; and
(ii) 4,884 shares owned by a decedent's estate of which he is personal
representative, and 9,700 shares owned by two trust estates of which he is
the sole trustee, and thereby in each such case holds the voting power and
investment power with respect to such shares. Mr. Graham disclaims any
beneficial interest in any of the shares referred to in this footnote,
other than such indirect interest he may have as a stockholder of said
three corporations.
(3) Includes 1,273,416 shares owned by the Joshua Green Corporation in which
Mr. Green has a substantial interest with voting control and investment
power, and 300 shares owned by his spouse.
</TABLE>
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<TABLE>
<S> <C>
(4) Includes (i) 260,347 shares owned by two trusts of which Mr. Reed is a
co-trustee and beneficiary, (ii) 3,886 shares owned by Mr. Reed's spouse,
and (iii) 73,343 shares owned by Mr. Reed's children.
(5) Owned by a trust of which Mr. Segerstrom is co-trustee.
(6) Includes 129,060 shares owned by Skinner Corporation in which Mr. Skinner
has a substantial interest and 10,000 shares owned by trusts of which Mr.
Skinner is a trustee. Mr. Skinner disclaims any beneficial interest in the
shares owned by the trusts.
(7) Includes 12,600 shares owned by trusts of which Mr. Weyerhaeuser is
co-trustee and for which he shares voting power and investment power.
(8) Includes 400 shares owned by Mr. Zunker's spouse.
</TABLE>
In addition, INVESCO PLC, 11 Devonshire Square, London EC2M 4YR, England,
reported in a Schedule 13G filed with the Securities and Exchange Commission
("SEC") that its subsidiaries had voting power and investment discretion with
respect to 3,948,865 shares, or 6.3% of the Corporation's Common Stock, at
December 31, 1994. The subsidiaries, investment advisers, hold the shares on
behalf of their clients, none of which holds more than 5% of the Corporation's
shares. The Capital Group Companies, Inc., 333 South Hope Street, Los Angeles,
California, 90071, reported in a Schedule 13G filed with the SEC that at
December 31, 1994, two of its subsidiaries had investment discretion with
respect to 4,774,000 shares, or a combined total of 7.6% of the Corporation's
Common Stock, including 171,000 shares with respect to which they had voting
power. Such subsidiaries are investment advisers and hold the shares on behalf
of their clients, none of which holds more than 5% of the Corporation's shares.
SECTION 16(A) REPORTS
Under Section 16 of the Securities Exchange Act of 1934, as amended, directors
and officers of the Corporation are required to report their holdings of and
transactions in the Corporation's stock to the SEC. To the Corporation's
knowledge, based solely on review of the copies of such reports furnished to the
Corporation and written representations that no other reports were required,
during 1994 all persons subject to the Section 16 filing requirements with
respect to the Corporation filed the required reports on a timely basis.
COMMITTEES OF THE BOARD
The Board of Directors of the Corporation presently has these standing
committees: Executive, Finance, Audit, Compensation and Nominating. Except for
certain fundamental corporate acts reserved to the full Board under Washington
law, the Executive Committee has broad authority, when the Board is not in
session, to exercise all of the powers of the Board in management of the
business of
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the Corporation. The Finance Committee has general supervision over the
investments of and all matters of financing by the Corporation. The Audit
Committee recommends independent auditors for selection by the Board of
Directors, reviews plans for upcoming audits with such auditors, and, after an
audit has been completed, reviews the results of that audit. The Compensation
Committee passes upon all salary increases where the proposed salary is $150,000
per year or more, reviews salary administration policy, administers the
Corporation's stock option program, and approves all material changes in
employee benefit programs. The Nominating Committee reviews qualifications of
candidates for board membership, recommends to the Executive Committee
candidates for membership on the Board and the annual slate of nominees for
director, and recommends to the Board criteria for board membership, composition
of the Board, tenure of directors and fees to be paid to directors. The
Nominating Committee will consider persons for board membership recommended by
shareholders. Recommendations supported by a description of such persons'
background and experience and written consents of such persons to serve should
be addressed to the Secretary to the Board of Directors, SAFECO Corporation,
SAFECO Plaza, Seattle, Washington 98185. This information must be received by
November 14, 1995, for such persons to be considered for nomination by the Board
for election at next year's annual meeting of shareholders.
During 1994 the Board, Compensation, Executive and Finance Committees each held
four meetings, and the Audit and Nominating Committees each held three meetings.
All directors except Dr. Wiley attended at least 75% of the Board and committee
meetings they were eligible to attend. Dr. Wiley was elected a director at the
August 3, 1994 meeting of the Board and was eligible to attend two Board
meetings in 1994, of which he missed one. The present members of each committee
are:
<TABLE>
<CAPTION>
COMMITTEE MEMBERS
<S> <C>
Executive Messrs. Eigsti (Chairman), Ellis, Graham, Green and Weyerhaeuser.
Finance Messrs. Cline, Dickey, Eigsti, Ellis (Chairman), Gerberding, Haynes,
Knudsen, Reed and Skinner.
Compensation Messrs. Cline, Ellis, Haynes, Reed, Weyerhaeuser (Chairman).
Audit Messrs. Gerberding, Graham (Chairman), Green and Mrs. Runstad.
Nominating Messrs. Ellis, Green (Chairman) and Reed.
</TABLE>
COMPENSATION OF DIRECTORS AND OFFICERS
COMPENSATION OF DIRECTORS
Directors of the Corporation, except those who are also employees, receive fees
for their services as directors. The director fees are: an annual retainer of
$20,000, a $1,200 fee for attendance at any Board meeting, and a $1,000 fee for
attendance at any committee meeting. Effective May 3, 1995, those fees will be
$24,000, $1,500 and $1,000, respectively. In addition, the Chairman of the
Finance Committee receives an annual retainer of $5,000 and a $1,000 fee for
attendance at any meeting of the management investment committee. Directors are
also reimbursed for reasonable travel expenses.
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ANNUAL REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE
COMPENSATION
COMPENSATION COMMITTEE
The Compensation Committee of the Board of Directors ("Committee") is comprised
of five directors none of whom has been or is an employee of the Corporation and
all of whom qualify as disinterested persons for purposes of administering the
Corporation's stock option program under Section 16 of the Securities Exchange
Act of 1934. The Committee is responsible for reviewing the Corporation's salary
administration policy, approving salaries of $150,000 or more, administering the
Corporation's stock option program, and approving changes to the Corporation's
employee benefit plans. The members of the Committee, which met four times
during 1994, are George H. Weyerhaeuser, Chairman, Robert S. Cline, John W.
Ellis, Harold W. Haynes and William G. Reed, Jr. Toni Rembe was a member of the
Committee until she resigned as a director of the Corporation effective June 30,
1994.
APPROACH TO COMPENSATION
This report discusses the compensation policies applicable to the Corporation's
executive officers, including the chief executive officer and four other most
highly compensated executives ("Named Executive Officers"). With the exception
of stock options and restricted stock rights, all major compensation and
retirement plans apply equally to all employees of the Corporation's property
and casualty, life, credit and asset management subsidiaries ("Employees"). The
Corporation's compensation policies and plans are intended to:
1. Attract and retain high-caliber personnel on a long-term basis.
2. Encourage the creation of shareholder value.
3. Link compensation to business results and shareholders' returns over
time.
4. Maintain an appropriate balance between base salary and short- and
long-term incentive opportunities.
ELEMENTS OF COMPENSATION
The following are the basic elements of compensation for executive officers of
the Corporation:
SALARY: Salaries are administered on an individual, subjective basis for
all Employees, including executive officers. With respect to compensation
paid to executive officers the Committee regularly reviews information
concerning compensation practices and levels of other companies. Salaries of
executive officers are not, however, targeted for any specific level
relative to salaries paid by other companies.
BONUS: A non-discretionary cash bonus plan applies to all Employees with at
least one year of service. An annual bonus pool is established under a fixed
formula based on the Corporation's
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pre-tax results. Under the formula, the bonus pool consists of 10% of the
sum of the following pre-tax items: the underwriting results for the
property and casualty subsidiaries; the operating results for the life
subsidiaries, SAFECO Credit Company and the Corporation's asset management
subsidiaries; and 20% of the investment income of the property and casualty
subsidiaries. A cash bonus is paid for each year in which the calculation
results in a bonus pool.
In years for which the bonus pool is large enough to pay the maximum bonus
amounts, Employees with three years or more of service receive a bonus equal
to 10% of base salary. In years when the fixed formula does not provide a
sufficient pool to pay the maximum bonus amounts to all eligible Employees,
bonus payments made to all Employees are reduced proportionately.
The percentage of salary paid as a bonus to all Employees with three years
of service, including the Named Executive Officers, in each of 1994, 1993
and 1992 was 9.2%, 10%, and 10%, respectively.
STOCK OPTION PROGRAM: A shareholder-approved stock option program has been
an element of compensation since the early 1960s. The purpose of the program
is to induce selected, key employees of the Corporation and its subsidiaries
to remain employed with the Corporation, to participate in the ownership of
the Corporation, to advance the interests of the Corporation and to increase
the value of the Corporation's Common Stock.
Most recently the shareholders approved the SAFECO Incentive Plan of 1987
("Plan"). Under the Plan the Committee in its sole discretion may grant to
selected, key employees of the Corporation and its subsidiaries stock
options and restricted stock rights ("RSRs") in amounts and on terms
consistent with the Plan.
Grants of stock options and RSRs are made on an individual basis. The
Committee makes a subjective judgment in connection with each grant and
considers the individual's responsibilities, potential for advancement,
current salary, previous grants, the current price of the Corporation's
Common Stock, the performance of the Common Stock over time and, for all
individuals other than the chief executive officer, the recommendation of
the chief executive officer. Although the Committee does not establish any
set value to award under the Plan to any individual, the Committee does
consider previous grants made as well as the different nature of stock
options and RSRs in making awards under the Plan.
Stock options are awarded at the closing market price of the Common Stock on
the grant date and typically vest in 25% increments on the second, third,
fourth and fifth anniversary of the grant date. The Committee has never
rescinded an outstanding option and reissued it at a lower exercise price.
RSRs entitle the holder to receive a specified number of shares of Common
Stock or cash equal to the closing market price of such shares on the
vesting date. RSRs typically vest and are settled in
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25% increments on the first, second, third and fourth anniversary of the
grant date. Holders of RSRs are paid amounts equivalent to the dividends
which would be paid on the same number of shares of Common Stock.
Under the stock option program, as of December 31, 1994, there were 148
participants; outstanding options to purchase an aggregate of 934,918 shares
of Common Stock; outstanding RSRs entitling the holders to receive an
aggregate of 43,844 shares of Common Stock; and 1,063,929 shares of Common
Stock available for additional options and RSRs.
RETIREMENT PROGRAM: Three basic tax-qualified plans comprise the
Corporation's retirement program and are available on the same basis to all
Employees: the Savings Plan, the Profit-Sharing Plan and the Cash Balance
Plan. In addition, there are two supplemental retirement plans to provide
for benefits which cannot be included in the tax-qualified plans. These
plans are described in more detail elsewhere in this proxy statement. Since
the Corporation's Common Stock constituted 31% of the assets of the
Profit-Sharing Plan at December 31, 1994, all participants in the Plan have
a significant, indirect ownership in the Corporation and an additional
incentive to advance its interests and to increase the value of its Common
Stock.
OTHER EMPLOYEE BENEFITS: The Corporation offers other benefit plans (E.G.,
vacation; sick leave; medical, disability, life and accident insurance) to
executive officers on the same basis as offered to all Employees. In
addition, certain benefits (E.G., payment for annual medical exams and club
dues) are provided by the Corporation to some executives, including the
Named Executive Officers.
CONSIDERATIONS IN CONNECTION WITH COMPENSATION LEVELS
CORPORATE PERFORMANCE
The directors regularly review the Corporation's performance and the degree to
which investment returns have been generated for shareholders. This includes
review of customary financial measures with respect to the Corporation, E.G.,
compounded annual return to shareholders, the Corporation's Common Stock price
and the common stock prices of comparable companies, the combined ratio of the
Corporation's property and casualty subsidiaries and the combined ratios of
competitors, the revenue and premium growth of the Corporation's operating
subsidiaries, financial strength and asset management, and consideration of the
ratings assigned to the Corporation, its subsidiaries or securities by A.M. Best
Insurance Services, Standard & Poor's Ratings Group ("S&P") and Moody's
Investors Service, Inc.
The directors annually review graphs that compare the cumulative total return to
shareholders of the Corporation with the S&P 500. As stated in the Corporation's
1994 proxy statement, for calendar year 1993 the directors also reviewed graphs
that compared the cumulative total return to shareholders of the Corporation
with the returns of a composite index comprised of the S&P Property-Casualty
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Insurance Index ("P&C Index") and S&P Multi-Line Insurance Index ("Multi-Line
Index"), weighted based on the relative market capitalizations of the companies
within each index (other than the Corporation), on a five- and ten-year basis.
During 1994 S&P reduced the size of its Multi-Line Index from five to three
companies by eliminating CNA Financial Corporation ("CNA") and The Travelers
Corporation. The Continental Corporation ("Continental"), a member of the P&C
Index, is to be acquired by CNA during 1995 and, consequently, will be
unavailable for inclusion in this index in the future. In addition, the General
Re Corporation ("GenRe"), a member of the P&C Index, is a property and casualty
reinsurer. The Corporation's operating subsidiaries are not engaged in the
reinsurance business. Finally, the American International Group, Inc. ("AIG"), a
member of the Multi-Line Index, is one of the largest underwriters of commercial
and industrial insurance coverages and historically has derived approximately
50% of its net income from operations outside the United States. AIG's
operations are quite dissimilar from those of the Corporation's operating
subsidiaries.
Given these circumstances the Compensation Committee decided a more
representative approach would be to use an index comprised of companies in the
same lines of business as the Corporation's major operating subsidiaries. The
ten companies in this self-constructed peer group are listed in the graphs below
and include five of the eight companies in the P&C and Multi-Line Indices. The
three companies not included are Continental, GenRe and AIG.
Set forth below are graphs that compare the cumulative total return to
shareholders of the Corporation with the S&P 500, the composite index comprised
of the S&P P&C and Multi-Line Indices (excluding the Corporation) and a
self-constructed peer group comprised of ten companies in the same lines of
business as the Corporation's major operating subsidiaries ("Peer Index"), with
their returns weighted according to the component companies' respective market
capitalization. The ten-year period graph is included as its time period may
more adequately reflect returns for the long-term shareholder and option holder.
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COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
AMONG SAFECO, S&P 500, COMPOSITE AND PEER INDICES
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
SAFECO S&P 500 COMPOSITE INDEX* PEER INDEX**
<S> <C> <C> <C> <C>
1989 100 100 100 100
1990 88 97 91 86
1991 135 126 116 114
1992 163 136 134 138
1993 161 149 146 153
1994 160 151 155 140
<FN>
*Comprised of the 8 Companies in the S&P Property-Casualty and Multi-Line
Indices (excluding SAFECO) which are as follows:
P&C Companies: Chubb, GenRe, St. Paul, USF&G, and Continental;
Multi-Line Companies: Aetna, CIGNA and AIG
**Comprised of Aetna, Allstate, Chubb, CIGNA, Cincinnati Financial, Ohio
Casualty, Progressive, St. Paul, TIG Holdings and USF&G.
</TABLE>
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<PAGE>
COMPARISON OF TEN YEAR CUMULATIVE TOTAL RETURN
AMONG SAFECO, S&P 500, COMPOSITE AND PEER INDICES
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
SAFECO S&P 500 COMPOSITE INDEX* PEER INDEX**
<S> <C> <C> <C> <C>
1984 100 100 100 100
1985 146 132 154 155
1986 174 156 165 162
1987 186 165 155 144
1988 167 192 167 156
1989 283 253 238 212
1990 248 245 217 183
1991 382 319 275 242
1992 462 344 318 293
1993 457 378 348 324
1994 452 383 370 297
<FN>
*Comprised of the 8 Companies in the S&P Property-Casualty and Multi-Line
Indices (excluding SAFECO) which are as follows:
P&C Companies: Chubb, GenRe, St. Paul, USF&G, and Continental;
Multi-Line Companies: Aetna, CIGNA and AIG
**Comprised of Aetna, Allstate, Chubb, CIGNA, Cincinnati Financial, Ohio
Casualty, Progressive, St. Paul, TIG Holdings and USF&G.
</TABLE>
-- 14 --
<PAGE>
The financial integrity and stability of the Corporation and its subsidiaries
are of critical importance. One measure of these are the following claims-paying
ratings given by independent rating services.
INSURANCE RATINGS: CLAIMS-PAYING ABILITY
<TABLE>
<CAPTION>
S&P MOODY'S A. M. BEST
--------- --------- ----------
<S> <C> <C> <C>
Property/Casualty Subsidiaries AAA Aa1 A++
Life Subsidiaries AA Aa2 A+
</TABLE>
INDIVIDUAL PERFORMANCE
In connection with compensation for individual executive officers, the Committee
consults with the chief executive officer and exercises its subjective judgment
in evaluating each individual's leadership and managerial abilities, achievement
of business unit and corporate objectives, potential for advancement or
promotion and the relative value of the individual's performance in the overall
achievement of the Corporation's objectives. In addition, in connection with the
award of a stock option or RSR, the Committee considers the amount and terms of
any previous award, the current price of the Corporation's Common Stock and the
performance of the Common Stock over time.
In connection with the Committee's consideration of compensation for the
Corporation's executive officers, including Mr. Eigsti, the Committee reviewed
information regarding compensation practices and levels of competitors of the
Corporation and its operating subsidiaries (including the companies that
comprise the S&P P&C and Multi-Line Indices and the Peer Index, other than The
Progressive Corporation) as well as non-competing companies of a similar size to
the Corporation or its operating subsidiaries. Detailed compensation information
was obtained from the proxy statements of publicly-held companies. In addition,
the Committee reviewed compensation information compiled by two independent
consulting firms as well as that collected by the Corporation's Personnel
Department.
The purpose of this review was to confirm that the Committee's approach to
compensation continues to be appropriate given the Corporation's lines of
business, size and culture and the geographic location of the Corporation's
executive officers. For 1994 the Committee confirmed that its approach to
compensation was suitable to the achievement of the general purposes of the
Corporation's compensation policies and plans. The Committee did not engage in
this review for the purpose of targeting any element of compensation, including
salaries, paid to the Corporation's executive officers at, below or above the
median paid by any other company or group of companies.
CONSIDERATIONS IN CONNECTION WITH MR. EIGSTI'S COMPENSATION.
The Committee made subjective judgments with respect to awards of stock options
and RSRs to Mr. Eigsti. In connection with those awards, the Committee took into
account the cumulative total
-- 15 --
<PAGE>
return to the Corporation's shareholders and the other financial measures listed
above under "Corporate Performance." Mr. Eigsti's leadership and managerial
abilities, as well as both historical and competitive compensation levels for
his responsibilities, are considered in setting his salary and total
compensation.
The calculations of the annual bonus and contributions or accruals with respect
to the Corporation's retirement plans are made pursuant to the terms of those
plans which apply to all Employees. Consequently, the Committee does not
separately determine the amount or the payment of any such bonus, contribution
or accrual for Mr. Eigsti or any other executive officer.
ADDITIONAL INFORMATION
The tables under "Compensation of Named Executive Officers" accompany this
report and reflect the decisions covered by the foregoing discussion.
Under Section 162(m) of the Internal Revenue Code of 1986, as amended, the
federal income tax deduction for certain types of compensation paid to the chief
executive officer and four other most highly-paid officers of publicly-held
companies is subject to an annual limit of $1 million per employee. The
Corporation may pay compensation that exceeds this limit.
This report shall not be deemed incorporated by reference by any general
statement incorporating by reference this proxy statement into any filing under
the Securities Act of 1933 or under the Securities Exchange Act of 1934, except
to the extent that the Corporation specifically incorporates this information by
reference, and shall not otherwise be deemed filed under such Acts.
This report is submitted over the names of the members of the Compensation
Committee:
GEORGE H. WEYERHAEUSER, CHAIRMAN
ROBERT S. CLINE
JOHN W. ELLIS
HAROLD W. HAYNES
WILLIAM G. REED, JR.
-- 16 --
<PAGE>
COMPENSATION OF NAMED EXECUTIVE OFFICERS
SUMMARY COMPENSATION TABLE
The amount of all compensation paid to the Named Executive Officers for services
in all capacities to the Corporation and its subsidiaries during the past three
years is stated below:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION AWARDS
------------------------------
ANNUAL COMPENSATION RESTRICTED SECURITIES
-------------------- STOCK UNDERLYING ALL OTHER
SALARY BONUS (5) AWARDS (6) OPTIONS/SARS COMPENSATION
NAME AND PRINCIPAL POSITION YEAR ($) ($) ($) (#) ($)
- ---------------------------- ---- -------- ---------- ----------- ---------------- ------------
<S> <C> <C> <C> <C> <C> <C>
R. H. Eigsti 1994 $550,000 $50,743 $292,500 17,500 $63,918(7)
Chairman, Chief 1993 516,667 51,667 228,600 15,000 90,427
Executive Officer & 1992 450,000 45,000 186,500 15,000 62,737
President (1)
B. A. Dickey 1994 352,500 32,521 187,200 12,000 40,776(8)
Executive V.P. & Chief 1993 326,667 32,667 152,400 10,000 56,923
Financial Officer (2) 1992 300,000 30,000 125,888 10,000 41,864
R. W. Hubbard 1994 250,000 23,819 0 0 79,878(9)
Senior V.P. & 1993 233,333 23,333 25,400 0 40,463
Treasurer (3) 1992 216,667 21,667 48,956 0 29,827
D. D. McLean 1994 243,750 22,488 117,000 7,500 28,033(10)
President of the 1993 225,000 22,500 88,900 5,000 38,995
Corporation's Property & 1992 180,000 18,000 41,963 5,000 24,645
Casualty Subsidiaries (4)
R. E. Zunker 1994 231,250 21,335 105,300 6,000 26,568(11)
President of the 1993 214,583 21,458 88,900 5,000 37,157
Corporation's Life 1992 200,000 20,000 83,925 4,500 27,383
Subsidiaries
<FN>
- ------------
(1) Mr. Eigsti became Chief Executive Officer of the Corporation on January 1,
1992, and Chairman of the Board of Directors of the Corporation on May 5,
1993.
(2) Mr. Dickey became Executive Vice President of the Corporation on January 1,
1992, and a director of the Corporation on August 4, 1993.
(3) Mr. Hubbard having reached normal retirement age retired as an officer and
employee of the Corporation on December 31, 1994.
</TABLE>
-- 17 --
<PAGE>
<TABLE>
<S> <C>
(4) Mr. McLean became President of the Corporation's property & casualty
insurance subsidiaries on January 1, 1993.
(5) A cash bonus of up to 10% of annual salary is paid to each employee of the
insurance, credit and asset management operations who has at least three
years of service when the pre-tax results from such operations support such
a bonus. The percent of salary paid as a bonus for 1994, 1993 and 1992 was
9.2%, 10% and 10%, respectively.
(6) Restricted stock rights (RSRs) are awarded under the Corporation's stock
option program and entitle an employee who remains continuously employed by
the Corporation or its subsidiaries for a stated number of years to receive
a specified number of shares of Common Stock or cash equal to the fair
market value of such shares on the settlement date. Holders of RSRs are
entitled to receive an amount equivalent to the dividends which would be
paid on an equivalent number of shares of Common Stock. The dollar amounts
in this column are determined by multiplying the number of shares covered
by an RSR by the closing market price of the Common Stock on the grant
date.
In 1994 the Corporation awarded RSRs to the named executives in the
following amounts: 5,000 for Mr. Eigsti, 3,200 for Mr. Dickey, 2,000 for
Mr. McLean, 1,800 for Mr. Zunker and none for Mr. Hubbard. Each award was
made on February 2 and, with the exception of Mr. McLean's award will vest
and be settled in 25% installments on the first, second, third and fourth
anniversary dates of the award. In Mr. McLean's case the award will vest
and be settled in 33 1/3% installments on the first, second and third
anniversary dates of the award.
The following are the total number of RSRs held by the named executives and
the total value of such holding at December 31, 1994: for Mr. Eigsti,
10,550 RSRs with a value of $548,600; for Mr. Dickey, 7,000 RSRs with a
value of $364,000; for Mr. McLean, 3,725 RSRs with a value of $193,700; for
Mr. Zunker, 4,300 RSRs with a value of $223,600, and none for Mr. Hubbard.
(7) Includes net contributions to the Corporation's Profit-Sharing Plan of
$10,070; net contributions to the Corporation's Savings Plan of $6,000; and
allocations to non-qualified plans of $31,848 with respect to the
Profit-Sharing Plan and $16,000 with respect to the Savings Plan for
amounts which may not be contributed to the qualified plans because of
limitations imposed by the Internal Revenue Code of 1986, as amended
("Non-Qualified Allocations").
(8) Includes net contributions to the Corporation's Profit-Sharing Plan of
$10,070 and Savings Plan of $6,000; and Non-Qualified Allocations of
$16,606 with respect to the Profit-Sharing Plan and $8,100 with respect to
the Savings Plan.
(9) Includes net contributions to the Corporation's Profit-Sharing Plan of
$10,070 and Savings Plan of $6,000; Non-Qualified Allocations of $9,326
with respect to the Profit-Sharing Plan and $4,000 with respect to the
Savings Plan; and payment on retirement for accrued vacation and sick leave
units in the amounts of $8,174 and $42,308, respectively.
</TABLE>
-- 18 --
<PAGE>
<TABLE>
<S> <C>
(10) Includes net contributions to the Corporation's Profit-Sharing Plan of
$10,070 and Savings Plan of $6,000; and Non-Qualified Allocations of $8,213
with respect to the Profit-Sharing Plan and $3,750 with respect to the
Savings Plan.
(11) Includes net contributions to the Corporation's Profit-Sharing Plan of
$10,070 and Savings Plan of $6,000; and Non-Qualified Allocations of $7,248
with respect to the Profit-Sharing Plan and $3,250 with respect to the
Savings Plan.
</TABLE>
STOCK OPTION AWARDS
Information concerning grants of stock options to the Named Executive Officers
during 1994 is stated below. Under regulations of the Securities and Exchange
Commission the assumed rates of appreciation of 5% and 10% are required to be
used. These assumed appreciation rates are not based on the historic performance
of the Corporation's Common Stock or any other stock or stock index. Any
appreciation in the value of the stated stock options will occur only if the
Common Stock increases in value. Changes in the market price of the Common Stock
are dependent on the future performance of the Corporation as well as overall
stock market performance. There can be no assurance that the amounts or rates of
appreciation stated in the following table will be achieved.
Were one to apply the assumed rates of appreciation to the Common Stock of the
Corporation for the same ten-year period as required for options in the
following table, market capitalization would increase from $3.4 billion to $5.6
billion at the 5% rate and to $8.9 billion at the 10% rate. In addition, a
shareholder, unlike an option holder, would receive dividends paid by the
Corporation during that ten-year period.
-- 19 --
<PAGE>
OPTION GRANTS IN 1994
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES OF
NUMBER OF PERCENT OF STOCK PRICE
SECURITIES TOTAL APPRECIATION
UNDERLYING OPTIONS FOR OPTION TERM
OPTIONS GRANTED TO EXERCISE --------------------
GRANTED (1) EMPLOYEES IN PRICE (2) EXPIRATION 5% (3) 10% (4)
NAME (#) FISCAL YEAR ($/SH) DATE ($) ($)
- ------------- ----------- ------------ ---------- ---------- -------- ----------
<S> <C> <C> <C> <C> <C> <C>
R. H. Eigsti 17,500 11.77% $54.375 05/04/04 $598,640 $1,517,190
B. A. Dickey 12,000 8.07% 54.375 05/04/04 410,496 1,040,359
R. W. Hubbard 0 N/A N/A N/A N/A N/A
D. D. McLean 7,500 5.04% 54.375 12/31/00 156,590 361,580
R. E. Zunker 6,000 4.03% 54.375 05/04/04 205,248 520,179
<FN>
- ------------
(1) Options to purchase SAFECO Common Stock. No stock appreciation rights were
granted to any person named in this table. The grant date for each option
is May 4, 1994. For each option granted, 25% of the shares subject to the
option become exercisable on the second, third, fourth and fifth
anniversary dates of the option grant, except that Mr. McLean's option
becomes exercisable in 25% installments on the first, second and third
anniversary dates and December 31, 1997.
(2) The exercise price may be paid to the Corporation in cash, in shares of the
Corporation's Common Stock valued at fair market value on the date of
exercise, or in part cash and part stock. In addition, optionees may
finance the exercise price of an option through a subsidiary of the
Corporation. The interest rate on such loans fluctuates quarterly and is
equal to the most recently published applicable federal rate determined
pursuant to Section 1274(d) of the Internal Revenue Code of 1986, as
amended.
(3) This rate of appreciation produces an ending market price of $88.58 per
share on May 4, 2004, and $75.26 on December 31, 2000.
(4) This rate of appreciation produces an ending market price of $141.08 per
share on May 4, 2004, and $102.59 on December 31, 2000.
</TABLE>
-- 20 --
<PAGE>
STOCK OPTION EXERCISES
Information concerning exercises of stock options during 1994 by the Named
Executive Officers and the value of their unexercised options and stock
appreciation rights at December 31, 1994 is stated below:
AGGREGATED OPTION EXERCISES IN 1994
AND OPTION/SAR VALUES AT DECEMBER 31, 1994
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES VALUE OF
UNDERLYING UNEXERCISED
SHARES UNEXERCISED IN-THE-MONEY
ACQUIRED VALUE OPTIONS/SARS AT OPTIONS/SARS AT
ON EXERCISE REALIZED DECEMBER 31, 1994 DECEMBER 31, 1994 (1)
NAME (#) ($) (#) ($)
- --------------- ----------- -------- --------------------------- ---------------------------
EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
<S> <C> <C> <C> <C> <C> <C>
R. H. Eigsti 6,900 $174,475 23,943 50,962 $427,902 $154,650
B. A. Dickey 2,500 100,156 23,738 35,362 461,956 121,969
R. W. Hubbard 5,000 130,685 3,150 0 57,488 0
D. D. McLean 2,457 35,777 1,293 16,250 177 32,282
R. E. Zunker 0 0 10,125 18,425 175,734 75,459
<FN>
- ------------
(1) Based on $52.00, the last sale price of the Corporation's Common Stock on
December 31, 1994.
</TABLE>
RETIREMENT PROGRAM
The Corporation's retirement program is comprised of three plans which qualify
for favorable tax treatment under the Internal Revenue Code of 1986, as amended
("Code"), and two non-qualified supplemental plans. The three qualified plans
are: The SAFECO Employees' Cash Balance Plan ("Cash Balance Plan"), The SAFECO
Employees' Profit Sharing Retirement Plan ("Profit-Sharing Plan") and The SAFECO
Employees' Savings Plan ("Savings Plan"). The two non-qualified plans are the
SAFECO Employees' Supplemental Retirement Plan A and the SAFECO Employees'
Supplemental Retirement Plan B ("Supplemental Plan A" and "Supplemental Plan B,"
respectively). The two non-qualified plans are designed to allocate to employees
amounts not eligible for contribution under the qualified plans because of
limitations imposed by the Code. All Employees are eligible to participate in
the plans.
The Profit-Sharing Plan and the Savings Plan are defined contribution plans
while the Cash Balance Plan is a defined benefit plan. With respect to the Cash
Balance and Profit-Sharing Plans, annually 5% of the Corporation's net profits,
as defined in those plans, is set aside and credited or contributed as follows:
The Cash Balance Plan is credited with an amount equal to 3% of the annual
compensation of
-- 21 --
<PAGE>
participating employees plus 5% interest on the cumulative amount credited for
prior years (together, the "Accrued Benefit"). The portion of the Accrued
Benefit in excess of limitations imposed under Section 401(a)(17) of the Code is
accrued in Supplemental Plan B.
The estimated annual benefits payable upon normal retirement to the Named
Executive Officers from the Cash Balance Plan and corresponding portion of
Supplemental Plan B are as follows: $37,793 for Mr. Eigsti, $29,030 for Mr.
Dickey, $8,408 for Mr. McLean, and $9,731 for Mr. Zunker. Mr. Hubbard, who
retired December 31, 1994, elected to receive benefits under the Cash Balance
Plan and corresponding portion of Supplemental Plan B in the form of a single
sum payment of $88,058.
The balance of the 5% of net profits remaining (after crediting the Cash Balance
Plan with 3% of the participating employees' annual compensation) is contributed
to the Profit-Sharing Plan, up to a maximum of 12% of participants'
compensation, and allocated among participants based on their relative
compensation for the year. The portions of the Profit-Sharing contribution in
excess of limitations imposed under Sections 415 and 401(a)(17) of the Code are
credited to participants' accounts in Supplemental Plan A and Supplemental Plan
B, respectively.
The Savings Plan is funded by voluntary employee contributions not to exceed 6%
of compensation and contributions by the Corporation of 66 2/3% of the employee
contributions. The portion of the employer contributions to the Savings Plan in
excess of limitations imposed under Section 401(a)(17) of the Code is credited
to the participants' accounts in Supplemental Plan B.
CHANGE IN CONTROL AGREEMENTS
Messrs. Eigsti, Dickey and Zunker are among several officers of the Corporation
or its subsidiaries who have agreements which provide for payments to them under
certain circumstances following a change in control of the Corporation (as
defined in the agreements). Under the agreements for Messrs. Eigsti and Dickey,
should the officer in question be discharged without cause, or be demoted or
given other good reason to resign following a change in control, the agreements
call for a lump sum payment of up to three times annual salary and three years'
continuation of life and health insurance in addition to payment for accrued
vacation and sick leave, amounts allocated but not yet paid under the
Corporation's bonus plan, and payment of certain retirement benefits. In Mr.
Zunker's case, the amount of the lump sum payment is the lesser of three times
annual salary or 2.99 times his average annual compensation (salary and bonus)
during the five years immediately preceding the change in control.
In addition, the stock options awarded to Messrs. Eigsti, Dickey, McLean and
certain other key employees of the Corporation under the Corporation's stock
option program provide that following a change in control of the Corporation (as
defined in the stock option plan), there will be 100% vesting of options and
stock appreciation rights which have been held for at least one year.
-- 22 --
<PAGE>
CERTAIN TRANSACTIONS
The Corporation and its subsidiaries have transactions in the ordinary course of
business with other business entities of which certain of the Corporation's
directors and nominees for director are executive officers, partners or
shareholders. During the period January 1, 1994 to December 31, 1994 ("Covered
Period") the following directors and nominees for director of the Corporation
were executive officers or ten percent or more shareholders of the following
companies which (directly or through affiliates) engaged in insurance
transactions with subsidiaries of the Corporation in which the amount involved
exceeded $60,000: Fisher Companies Inc. and Fisher Broadcasting Inc. -- Mr.
Graham, Joshua Green Corporation -- Mr. Green, and Graysmarsh Farm, Inc. -- Mr.
Reed. All such transactions were in the ordinary course of business of the
Corporation's subsidiaries.
Mrs. Runstad, a director of the Corporation, is a partner of the Seattle law
firm of Foster Pepper & Shefelman, which received fees for legal services
provided to the Corporation and its subsidiaries during the Covered Period.
During the Covered Period, a subsidiary of the Corporation had seven leases with
Foster Pepper & Shefelman. A total of $78,480 in lease payments were received by
the subsidiary during the Covered Period. The aggregate lease balance at
February 7, 1995 was $475,319.
Ms. Campbell, a director of the Corporation, is Chief Executive Officer and
President of U.S. Bank of Washington, and Mr. Green, a director of the
Corporation, is Chairman of the Board of U.S. Bank of Washington. During the
Covered Period a direct subsidiary of the Corporation had a line of credit with
U. S. Bank of Washington in the amount of $20,000,000. The subsidiary did not
borrow under such line during the Covered Period, nor did it pay any loan fees
or interest. The balance due under such line at February 7, 1995 was zero.
Ms. Campbell is also Executive Vice President of U. S. Bancorp, which owns U.S.
Bank of Oregon. During the Covered Period, an indirect subsidiary of the
Corporation had a line of credit with U. S. Bank of Oregon in the amount of
$25,000,000 against which $20,000,000 was borrowed and for which loan fees and
interest of $1,013,255 were paid. The outstanding balance on such line at
February 7, 1995 was $20,000,000.
During the Covered Period, a subsidiary of the Corporation had an equipment
lease with Daily Caffe Ltd., a corporation in which a member of Mr. Knudsen's
family had a material interest. The lease, now with The Coffee Station, Inc., is
guaranteed by the family member and by Mr. Knudsen, a director of the
Corporation. A total of $11,650 in lease payments were received by the
subsidiary during the Covered Period. The lease balance at February 7, 1995 was
$55,620.
In addition, affiliates of Mr. Ellis and Mr. Cline, directors of the
Corporation, entered into certain transactions with the Corporation during the
Covered Period. See "Compensation Committee Interlocks and Insider
Participation" below.
-- 23 --
<PAGE>
The terms of all such transactions were as fair to the Corporation and its
subsidiaries as could have been obtained from other sources.
A subsidiary of the Corporation extends credit to optionees under the
Corporation's stock option program at a rate, adjusted quarterly, equal to the
applicable federal rate determined pursuant to Section 1274(d) of the Code.
During the Covered Period the greatest amounts outstanding on such loans were
$144,198 for Mr. McLean, and a total of $261,483 for all executive officers as a
group. On February 7, 1995, the outstanding amounts were $142,226 for Mr. McLean
and $258,484 for all executive officers as a group.
COMPENSATION COMMITTEE INTERLOCKS
AND INSIDER PARTICIPATION
The members of the Compensation Committee of the Board of Directors during 1994
were George H. Weyerhaeuser, Chairman, Robert S. Cline, John W. Ellis, Harold W.
Haynes, and William G. Reed, Jr. Prior to her retirement from the Board in June
1994, Toni Rembe also served on the Compensation Committee.
Mr. Ellis is Chairman of The Baseball Club of Seattle, Inc., the owner of the
Seattle Mariners baseball team. During 1994, subsidiaries of the Corporation
sponsored a baseball night for employees and purchased advertising and Mariners
season tickets at an aggregate cost of $165,500. Similar sponsorship and the
purchase of advertising and season tickets is planned for 1995.
Mr. Cline is Chairman and Chief Executive Officer of Airborne Freight
Corporation, to which subsidiaries of the Corporation paid fees totaling
$448,000 for air freight delivery services in 1994.
The terms of all such transactions were as fair to the Corporation and its
subsidiaries as could have been obtained from other sources.
AUDITING
Ernst & Young LLP, the Corporation's independent auditors since 1987, has been
selected by the Audit Committee to be the auditors for the current year, subject
to the approval of the Board at its meeting on May 3, 1995. A representative of
Ernst & Young LLP is expected to be present at the Annual Meeting of
Shareholders and will have the opportunity to make a statement if he desires to
do so and to respond to appropriate questions.
-- 24 --
<PAGE>
SHAREHOLDER NOMINATIONS AND PROPOSALS
The Corporation's Bylaws require that shareholder nominations of persons for
election to the Board of Directors be received by the Secretary of the Board of
Directors of the Corporation at SAFECO Plaza, Seattle, Washington 98185, not
later than 10 days after the day public disclosure of the meeting date is made
or notice of the meeting is mailed to shareholders, whichever first occurs.
Therefore, notices of persons to be considered for election at the 1995 meeting
will be timely if received by March 24, 1995. The notice must contain the name,
address, telephone number, and number of shares of the Corporation's Common
Stock owned by the nominating shareholder and the information relating to each
nominee required with respect to nominees for director under the federal proxy
solicitation rules. The notice of nomination must be accompanied by each
nominee's written consent to being a nominee and statement of intention to serve
as a director if elected.
The Corporation's Bylaws further provide that for business to be properly
brought before the annual meeting by a shareholder, the shareholder must file a
written notice of intention to bring such business with the Secretary of the
Corporation at SAFECO Plaza, Seattle, Washington 98185, within the time frame
described above. Therefore, notices of business to be brought at the 1995
meeting must be received by March 24, 1995. The notice must contain the name,
address, telephone number and number of shares of the Corporation's Common Stock
owned by the shareholder intending to bring such business before the meeting, a
description of the business and reasons for conducting it at the annual meeting,
and any material interest of the shareholder in such business.
Under the federal proxy solicitation rules, in connection with preparation of
proxy material for the 1996 annual meeting of shareholders, any proposal
submitted by a shareholder for such meeting must be received by the Corporation
by November 14, 1995.
-- 25 --
<PAGE>
OTHER MATTERS
THE CORPORATION FILES AN ANNUAL REPORT ON FORM 10-K WITH THE SECURITIES AND
EXCHANGE COMMISSION. A COPY OF THE CORPORATION'S MOST RECENT FORM 10-K REPORT
WILL BE FURNISHED WITHOUT CHARGE TO ANY SHAREHOLDER WHO MAKES WRITTEN REQUEST TO
ROD A. PIERSON, SENIOR VICE PRESIDENT AND SECRETARY, SAFECO CORPORATION, SAFECO
PLAZA, SEATTLE, WASHINGTON 98185.
The Board is not aware of any other matters to be presented for action at the
meeting. If any other matters come before the meeting, the persons named in the
enclosed proxy form will vote all proxies in accordance with their best
judgment.
All shares represented by the enclosed proxy, if returned prior to the meeting,
will be voted in the manner specified by the shareholder. If neither a specific
instruction is given nor authority withheld, the proxy will be voted for the
nominees set forth in this Proxy Statement.
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY AND THAT YOUR SHARES BE
REPRESENTED. SHAREHOLDERS ARE URGED TO VOTE, SIGN AND PROMPTLY RETURN THE
ACCOMPANYING FORM OF PROXY IN THE ENCLOSED ENVELOPE.
<TABLE>
<S> <C>
[LOGO]
Dated: March 14, 1995 Roger H. Eigsti
Seattle, Washington Chairman, CEO & President
</TABLE>
-- 26 --
<PAGE>
SAFECO CORPORATION
Proxy Solicited on Behalf of the Board of Directors of the Corporation
for the Annual Meeting of Shareholders
May 3, 1995
PROXY
The undersigned hereby appoints Roger H. Eigsti, John W. Ellis, Donald G.
Graham, Jr., Joshua Green III and George Weyerhaeuser, each with full power of
substitution, as the true and lawful attorneys, agents and proxies for the
undersigned, to attend the annual meeting of shareholders of SAFECO Corporation
to be held at the SAFECO Auditorium, SAFECO Plaza, Seattle, Washington, at 11:00
a.m. on May 3, 1995, or any adjournment thereof, and to represent and vote all
of the shares the undersigned would be entitled to vote if personally present in
the transaction of such business as may properly come before the meeting.
CHANGE OF ADDRESS
______________________________________________________
______________________________________________________
_______________________________________________________
(If you have written in the above space, please mark the corresponding box on
the reverse side of this card.)
You are encouraged to specify your choices by marking the appropriate boxes, SEE
REVERSE SIDE, but you need not mark any boxes if you wish to vote in accordance
with the Board of Directors' recommendations. The proxies named above cannot
vote your shares unless you sign and return this card.
SEE REVERSE
SIDE
<PAGE>
Please mark your
/ X / votes as in this
example
FOR WITHHELD Nominees:
1. Election of Roger H. Eigsti
Directors. / / / / John W. Ellis
Donald G. Graham, Jr.
William R. Wiley
For, except vote withheld from the following nominee(s):
________________________________________________________
Change of Address
on Reverse Side
This proxy when properly executed will be voted in the manner directed herein.
In the event that no designation (i.e., "For," "Withheld," "Against," "Abstain")
is made, the proxies named on the reverse side hereof intend to vote the shares
to which this proxy relates "For" Item 1. The proxies will vote in their
discretion on any other matters properly coming before the meeting. The signer
hereby revokes all proxies heretofore given by the signer to vote at said
meeting or any adjournment thereof.
SIGNATURE(S)____________________________________DATE____________________________
NOTE: Please sign exactly as name appears hereon. Joint owners should each sign.
When signing as attorney, executor, administrator, trustee or guardian, please
give full title as such.
