<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section240.14a-11(c) or
Section240.14a-12
SAFECO CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11.
(1) Title of each class of securities to which transaction applies:
-----------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
-----------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-----------------------------------------------------------------------
(5) Total fee paid:
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/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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<PAGE>
NOTICE OF
1998 ANNUAL MEETING
OF SHAREHOLDERS
AND PROXY STATEMENT
[LOGO]
[LOGO]
<PAGE>
SAFECO CORPORATION
----------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 6, 1998
------------------------
Seattle, Washington
March 20, 1998
To Our Shareholders:
Notice is hereby given that the Annual Meeting of Shareholders of SAFECO
Corporation (the "Corporation") will be held on May 6, 1998, at 11:00 a.m. in
the SAFECO 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 nominees to serve as directors for three-year terms to
expire in 2001; and
2. To consider and act upon such other matters as may properly come before
the Annual Meeting.
The Board of Directors has established the close of business on March 2,
1998, as the record date for the determination of shareholders entitled to
receive notice of and to vote at the Annual Meeting and any adjournment or
postponement thereof.
YOU ARE URGED TO REVIEW CAREFULLY THE ACCOMPANYING PROXY STATEMENT AND TO
COMPLETE, SIGN, DATE 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 in the proxy are the present members of the
Executive Committee of the Board of Directors.
You are cordially invited to attend the Annual Meeting in person if it is
convenient for you to do so.
[SIGNATURE]
Roger H. Eigsti
Chairman and Chief Executive Officer
<PAGE>
SAFECO CORPORATION
SAFECO PLAZA, SEATTLE, WASHINGTON 98185
------------------------
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS--MAY 6, 1998
---------------------
This Proxy Statement is furnished in connection with the Annual Meeting of
Shareholders of SAFECO Corporation (the "Corporation") to be held on May 6, 1998
(the "Annual Meeting"). Shareholders of record at the close of business on March
2, 1998, are entitled to vote at the Annual 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 in accordance with your directions.
The approximate date of the mailing of this Proxy Statement and the enclosed
form of proxy is March 20, 1998.
OUTSTANDING SHARES AND VOTE REQUIRED
On March 2, 1998, there were 141,183,387 shares of the Common Stock of the
Corporation ("Common Stock") outstanding, all of which will be entitled to vote
at the Annual Meeting to be held on May 6, 1998. 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 Restated Articles of
Incorporation, a quorum consisting of a majority of the shares entitled to vote
must be represented in person or by proxy for the transaction of business at the
Annual Meeting. Directors are elected by a majority of the votes cast by shares
present, in person or by proxy, and entitled to vote at the Annual Meeting.
Votes withheld with respect to the election of directors will not be counted
either in favor of or against the election of the nominees. Proxies solicited by
the Board of Directors will be voted in favor of each of the director nominees
unless shareholders direct otherwise in their proxies.
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, New
York, has been retained to solicit proxies personally or by mail, telephone or
telegram at a cost anticipated to be $6,000 plus reasonable out-of-pocket
expenses, 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, employees of the Corporation may solicit proxies personally, by
telephone or fax.
1
<PAGE>
ELECTION OF DIRECTORS
The Board of Directors is divided into three classes. At the 1998 Annual Meeting
of Shareholders, four nominees will be elected to serve three-year terms until
the 2001 Annual Meeting of Shareholders and until their successors are elected
and qualified. Unless otherwise stated, each individual described below has
served for at least five years in the position indicated. All nominees are
presently directors of the Corporation.
NOMINEES FOR DIRECTOR
CLASS III-- TERM EXPIRES AT THE 2001 ANNUAL MEETING OF SHAREHOLDERS
ROBERT S. CLINE, 60, is Chairman and Chief Executive Officer of Airborne Freight
Corporation, an air freight carrier. Mr. Cline has been a director of the
Corporation since 1992. He is also an advisory director of Seafirst Corporation
and a director of Metricom, Inc.
ROGER H. EIGSTI, 55, is Chairman and Chief Executive Officer of the Corporation.
Mr. Eigsti has been a director of the Corporation since 1988. He is also a
director of Washington Mutual, Inc. and Washington Mutual Bank.
JOHN W. ELLIS, 69, is Chairman and Chief Executive Officer of the corporate
general partner of The Baseball Club of Seattle, L.P., the owner of the Seattle
Mariners baseball team. Mr. Ellis is a director of Puget Sound Energy, Inc. 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. He is also a
director of Washington Mutual, Inc. and Washington Mutual Bank, UTILX
Corporation and Associated Electric & Gas Insurance Services, Ltd.
WILLIAM W. KRIPPAEHNE, JR., 47, is President and Chief Executive Officer of
Fisher Companies Inc., the primary subsidiaries of which are engaged in
broadcasting, flour milling and real estate ownership and development. Mr.
Krippaehne has been an executive officer of Fisher Companies since 1982 and a
director of the Corporation since 1996.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" EACH OF THE DIRECTOR
NOMINEES.
CONTINUING DIRECTORS
CLASS I-- TERM EXPIRES AT THE 1999 ANNUAL MEETING OF SHAREHOLDERS
PHYLLIS J. CAMPBELL, 46, is President of U.S. Bank, Washington, a division of
United States National Bank of Oregon. Ms. Campbell has been a director of the
Corporation since 1994. She is also a director of Puget Sound Energy, Inc.
BOH A. DICKEY, 53, is President and Chief Operating Officer of the Corporation.
Mr. Dickey has been an executive officer of the Corporation since 1982 and a
director of the Corporation since 1993. He is also Chairman of the Board of
Trustees for the 25 SAFECO mutual funds.
WILLIAM P. GERBERDING, 68, is President Emeritus of the University of
Washington, where he served as President from 1979 until his retirement in 1995.
Dr. Gerberding has been a director of the Corporation since 1981. He is also a
director of Washington Mutual, Inc. and Washington Mutual Bank.
PAUL W. SKINNER, 50, is President of Skinner Corporation, an investment company.
Mr. Skinner has been a director of the Corporation since 1988. He is also an
advisory director of Seafirst Corporation and Seattle-First National Bank.
2
<PAGE>
CLASS II-- TERM EXPIRES AT THE 2000 ANNUAL MEETING OF SHAREHOLDERS
JOSHUA GREEN III, 61, is Chairman and Chief Executive Officer of the Joshua
Green Corporation, 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. He is also a director of U.S. Bancorp.
WILLIAM G. REED, JR., 59, was the Chairman of Simpson Investment Company, a
forest products holding company, until his retirement in 1996. Mr. Reed has been
a director of the Corporation since 1974. He is also a director of Microsoft
Corporation, The Seattle Times, Washington Mutual, Inc. and Washington Mutual
Bank.
JUDITH M. RUNSTAD, 53, is of counsel to the Seattle law firm Foster Pepper &
Shefelman PLLC. Mrs. Runstad has been a director of the Corporation since 1990.
She is the immediate past Chairman of the Board of the Federal Reserve Bank of
San Francisco.
GEORGE H. WEYERHAEUSER, 71, is Chairman of the Board of Weyerhaeuser Company, 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. He is also a director of The Boeing Company and Chevron Corporation.
Under the terms of the Corporation's retirement policy for directors, Mr.
Weyerhaeuser will retire as a director at the Corporation's 1999 Annual Meeting
of Shareholders.
OWNERSHIP OF THE CORPORATION'S COMMON STOCK
The following table provides information as of February 6, 1998, with regard to
the ownership of the Common Stock by directors, nominees for director, the
Corporation's chief executive officer and four other most highly compensated
executive officers, and all directors and executive officers as a group. Total
beneficial ownership of the outstanding Common Stock is less than 1% in the case
of each individual listed below except as follows: 1.8% for Mr. Green, 2.1% for
Mr. Krippaehne, and 4.7% for all 16 directors and executive 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 4,515,600 shares held by
The SAFECO Employees' Profit Sharing Retirement Plan, as to which the members of
that plan's Investment Committee (Messrs. Cline, Ellis, Gerberding, Krippaehne,
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.
3
<PAGE>
<TABLE>
<CAPTION>
NUMBER OF SHARES
BENEFICIALLY
OWNED AND NATURE NUMBER OF SHARES
OF BENEFICIAL ACQUIRABLE WITHIN
NAME OWNERSHIP 60 DAYS(1)
- ------------------------------------------------------ ----------------- -----------------
<S> <C> <C>
Phyllis J. Campbell................................... 1,000 --
Robert S. Cline....................................... 5,000 --
Boh A. Dickey......................................... 48,944 86,200
Roger H. Eigsti....................................... 112,363 107,176
John W. Ellis......................................... 13,024 --
William P. Gerberding................................. 2,000 --
Joshua Green III...................................... 2,547,432(2) --
William W. Krippaehne, Jr............................. 3,004,837(3) --
William G. Reed, Jr................................... 199,555(4) --
James W. Ruddy........................................ 4,500 22,500
Judith M. Runstad..................................... 3,000 --
Paul W. Skinner....................................... 278,120(5) --
W. Randall Stoddard................................... 3,200 9,750
George H. Weyerhaeuser................................ 55,600(6) --
Richard E. Zunker..................................... 15,938(7) 70,500
All directors and executive officers as a group
(16 persons)........................................ 6,300,012 314,226
</TABLE>
- ------------------------
(1) Shares which may be purchased within 60 days by exercise of options granted
under the SAFECO Long-Term Incentive Plan of 1997 and the SAFECO Incentive
Plan of 1987.
(2) Represents 2,546,832 shares owned by the Joshua Green Corporation in which
Mr. Green has a substantial interest with voting and investment power, and
600 shares owned by his spouse.
(3) Includes 3,002,376 shares owned by two corporations of which Mr. Krippaehne
is an officer and director and for which he thereby has shared voting and
investment power, and 372 shares owned by Mr. Krippaehne's spouse. Mr.
Krippaehne 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 corporations.
(4) Includes 7,772 shares owned by Mr. Reed's spouse and 41,806 shares owned by
Mr. Reed's children.
(5) Includes 258,120 shares owned by Skinner Corporation in which Mr. Skinner
has a substantial interest with voting and investment power and 16,000
shares owned by trusts of which Mr. Skinner is a co-trustee and for which he
thereby has shared voting and investment power. Mr. Skinner disclaims any
beneficial interest in the shares owned by the trusts.
(6) Includes 25,200 shares owned by trusts of which Mr. Weyerhaeuser is
co-trustee and for which he shares voting and investment power.
(7) Includes 800 shares owned by Mr. Zunker's spouse.
In addition, AMVESCAP PLC, 11 Devonshire Square, London EC2M 4YR, England,
reported in a Schedule 13G filed with the Securities and Exchange Commission
("SEC") that in the aggregate its subsidiaries had shared voting power and
investment discretion with respect to 12,211,816 shares, or 8.7%, of the Common
Stock, at December 31, 1997. The subsidiaries, which are investment management
companies and advisers, hold the shares on behalf of their clients, none of
which holds more than 5% of the Common Stock.
4
<PAGE>
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Under Section 16 of the Securities Exchange Act of 1934, as amended ("Exchange
Act"), directors and officers of the Corporation are required to report their
holdings of and transactions in the Corporation's Common Stock to the SEC. To
the Corporation's knowledge, based solely on a review of the copies of such
reports furnished to the Corporation and written representations that no other
reports were required, during 1997 all persons subject to the Section 16
reporting requirements with respect to the Corporation filed the required
reports on a timely basis with one exception. H. Paul Lowber became Controller
of the Corporation in August 1997. Mr. Lowber's Initial Statement of Beneficial
Ownership on Form 3 and his Form 4 for the month of August, which reported two
transactions, were filed late.
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 the powers of the Board in management of the business
of 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 the independent auditors,
reviews the results of completed audits, and regularly reviews the Corporation's
approach to business ethics and compliance with the law. 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-based incentive plan, 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.
During 1997 the Board and Compensation Committee each held six meetings, the
Finance Committee held four meetings, the Executive and Audit Committees each
held three meetings, and the Nominating Committee held one meeting. All
directors and nominees attended at least 75% of the Board and committee meetings
they were eligible to attend. The present members of each committee are:
<TABLE>
<CAPTION>
COMMITTEE MEMBERS
<S> <C>
Audit Messrs. Gerberding, Green, Krippaehne, Skinner and Mrs. Runstad (Chair).
Compensation Messrs. Cline, Ellis, Reed, Weyerhaeuser (Chair) and Ms. Campbell.
Executive Messrs. Eigsti (Chair), Ellis, Green, Weyerhaeuser and Mrs. Runstad.
Finance Messrs. Cline, Dickey, Eigsti, Ellis (Chair), Gerberding, Krippaehne, Reed
and Skinner.
Nominating Messrs. Ellis, Green (Chair) and Reed.
</TABLE>
5
<PAGE>
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 current director fees are an annual
retainer of $24,000 and fees of $1,500 for attendance at any Board meeting and
$1,000 for attendance at any committee meeting. Effective May 6, 1998, the
annual retainer will be increased to $30,000. The Chair of the Finance Committee
receives an annual retainer of $5,000 and a $1,000 fee for attendance at any
meeting of the Corporation's management investment committee. Effective May 6,
1998, the annual retainer paid to the Chair of the Finance Committee will be
reduced to $4,000 and certain other committee chairs will receive an annual
retainer, as follows: Chair of the Compensation Committee--$4,000; Chair of the
Audit Committee--$3,000; and Chair of the Nominating Committee--$1,000.
Directors may elect to defer their annual retainer and meeting fees under the
terms of the SAFECO Corporation Deferred Compensation Plan for Directors.
Amounts deferred under that plan are credited with interest at the applicable
federal long-term rate in effect at January 1 of each year as determined for
purposes of Section 1274 of the Internal Revenue Code of 1986, as amended (the
"Code"). Directors are also reimbursed for reasonable travel expenses.
ANNUAL REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
COMPENSATION COMMITTEE
Five outside directors of the Corporation, 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, comprise the Compensation Committee
of the Board of Directors ("Committee"). The Committee is responsible for
reviewing the Corporation's salary administration policy, approving salaries
which are $150,000 or greater, administering the Corporation's stock-based
incentive plan, and approving changes to the Corporation's employee benefit
plans. The members of the Committee, which met six times during 1997, are George
H. Weyerhaeuser, Chair, Phyllis J. Campbell, Robert S. Cline, John W. Ellis, and
William G. Reed, Jr.
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"). All employees of the
Corporation's property and casualty, life, credit and asset management
subsidiaries, other than a few employees covered by special targeted incentive
plans and employees of the American States insurance subsidiaries (collectively
"Non-Participating Employees") participate in the same compensation and
retirement plans. 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 shareholder 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
6
<PAGE>
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: The Corporation's executive officers participate in a
non-discretionary cash bonus plan which applies to all employees with at
least one year of service (other than Non-Participating Employees). An
annual bonus pool is established under a fixed formula based on weighted
elements of the pre-tax results of the Corporation's major business lines
and the investment income of the property and casualty subsidiaries. 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, was 10% for each of 1997,
1996, and 1995.
STOCK-BASED INCENTIVE PROGRAM: A shareholder-approved stock-based incentive
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 ownership of the Corporation, to advance the interests of the
Corporation's shareholders and to increase the value of the Common Stock.
Under the shareholder-approved SAFECO Long-Term Incentive Plan of 1997
("Plan") the Committee in its sole discretion may grant to selected, key
employees of the Corporation and its subsidiaries stock options, restricted
stock rights ("RSRs") and performance stock rights ("PSRs") in amounts and
on terms consistent with the Plan.
Grants of stock options, RSRs and PSRs 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 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, PSRs 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 first, second,
third and fourth anniversaries of the grant date. The Committee has never
rescinded an outstanding option and reissued it at a lower exercise price.
PSRs entitle the holder to receive a specific number of shares of Common
Stock, or cash equal to the closing market price of such shares on the
settlement date, if specified performance goals for a stated performance
period have been met. In May 1997 PSRs were awarded to the Named Executive
Officers. These PSRs extend over a three-year period and provide for annual
payouts of a portion of the total award based on achievement of performance
goals over the elapsed portion of the performance period. The performance
goals established in the 1997 grants were customized for each Named
Executive Officer and weighted equally. Performance goals include, as
appropriate, the return on equity for the Corporation, its property and
casualty or life and health operations; the change in the price of the
Common Stock compared to the average change in the price of the common stock
of the companies that comprise the peer index ("Stock Price Comparison");
the increase in the Corporation's operating earnings per share; the combined
ratio, the net personal lines expense ratio and the annual growth in
premiums for the property and casualty operations; and the increase in
pretax operating income for the life and health operations. For Mr. Eigsti
the three performance goals for the 1997 grant are the Corporation's return
on equity, increase in operating earnings per share and the Stock Price
Comparison.
7
<PAGE>
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 25% increments on the
first, second, third and fourth anniversaries 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.
RETIREMENT PROGRAM: Three basic tax-qualified plans comprise the
Corporation's retirement program and are available on the same basis to all
employees: The SAFECO Employees' Savings Plan ("Savings Plan"), The SAFECO
Employees' Profit Sharing Retirement Plan ("Profit-Sharing Plan") and The
SAFECO Employees' Cash Balance Plan ("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 Common Stock
constituted 33% of the assets of the Profit-Sharing Plan at December 31,
1997, 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.,the compounded annual return to shareholders, the 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; the Corporation's financial strength and its management of its
assets; and the ratings assigned to the Corporation, its subsidiaries or
securities by A.M. Best Insurance Services, Standard & Poor's Ratings Group
("S&P"), Moody's Investors Service, Inc. and Duff & Phelps Credit Ratings
Company.
The directors annually review graphs that compare the cumulative total return to
shareholders of the Corporation with the S&P 500 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 also included as its time period may more
adequately reflect returns for the long-term shareholder and option holder.
8
<PAGE>
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
AMONG SAFECO, S&P 500 AND PEER INDEX
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
1992 1993 1994 1995 1996 1997
<S> <C> <C> <C> <C> <C> <C>
SAFECO 100 99 98 133 157 199
S&P 500 100 110 111 154 189 252
Peer Index 100 111 101 154 196 276
</TABLE>
Assumes $100 invested on December 31, 1992 in SAFECO Common
Stock, the S&P 500 and the Peer Index.
- Total return assumes reinvestment of dividends.
- Measurement dates are the last trading day of the calendar
year shown.
- Peer Index: Aetna, Allstate, Chubb, CIGNA, Cincinnati
Financial, Ohio Casualty, Progressive, St. Paul, TIG
Holdings and USF&G.
9
<PAGE>
COMPARISON OF TEN YEAR CUMULATIVE TOTAL RETURN
AMONG SAFECO, S&P 500 AND PEER INDEX
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
SAFECO 100 90 152 133 205 249 246 243 330 390 496
S&P 500 100 117 154 149 194 209 230 233 321 394 526
Peer Index 100 108 148 128 168 204 226 207 314 400 565
</TABLE>
Assumes $100 invested on December 31, 1987 in SAFECO Common Stock, the
S&P 500 and the Peer Index.
- Total return assumes reinvestment of dividends.
- Measurement dates are the last trading day of the calendar year shown.
- Peer Index: Aetna, Allstate, Chubb, CIGNA, Cincinnati Financial, Ohio
Casualty, Progressive, St. Paul, TIG Holdings and USF&G.
10
<PAGE>
INDIVIDUAL PERFORMANCE
In connection with compensation for individual executive officers, the Committee
consulted with the chief executive officer and exercised 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, PSR or RSR, the Committee considered the amount and
terms of any previous awards, the current price of the 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 Peer Index) 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 Human Resources
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 1997 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 an increase in Mr.
Eigsti's compensation and awards of stock options, RSRs and PSRs to him. In
connection with those awards, the Committee took into account the cumulative
total return to the Corporation's shareholders and the other financial measures
listed above under "Corporate Performance." Mr. Eigsti's leadership, strategic
thinking 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 Code, 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
$1 million per employee. The Corporation may pay compensation that exceeds this
limit and did so with respect to Mr. Eigsti's compensation for 1997.
This report shall not be deemed incorporated by reference by any general
statement incorporating by reference this proxy statement into any filing under
the Securities Act of 1933 or under the Securities Exchange Act of 1934, except
to the extent that the Corporation specifically incorporates this information by
reference, and shall not otherwise be deemed filed under such Acts.
11
<PAGE>
This report is submitted over the names of the members of the Compensation
Committee:
GEORGE H. WEYERHAEUSER, CHAIR
PHYLLIS J. CAMPBELL
ROBERT S. CLINE
JOHN W. ELLIS
WILLIAM G. REED, JR.
COMPENSATION OF NAMED EXECUTIVE OFFICERS
SUMMARY COMPENSATION TABLE
The amount of all compensation paid to the Named Executive Officers for services
in all capacities to the Corporation and its subsidiaries during the past three
years is stated below:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION AWARDS
-------------------------
SECURITIES
ANNUAL COMPENSATION UNDERLYING
---------------------- RESTRICTED OPTIONS/ ALL OTHER
SALARY BONUS (3) STOCK AWARDS SARS COMPENSATION
NAME AND PRINCIPAL POSITION YEAR ($) ($) (4)($) (#) ($)
- ------------------------------------------------- --------- ---------- ---------- ------------ ----------- --------------
<S> <C> <C> <C> <C> <C> <C>
R.H. Eigsti 1997 $ 763,333 $ 138,497 $ 475,000 50,000 $ 103,186(5)
Chairman and 1996 666,667 66,667 414,719 50,000 102,036
Chief Executive Officer 1995 650,000 65,000 310,300 50,000 93,265
B.A. Dickey (1) 1997 512,500 92,710 300,200 30,000 69,279(6)
President and 1996 455,833 45,583 234,406 30,000 69,717
Chief Operating Officer 1995 390,000 39,000 192,600 30,000 55,775
W.R. Stoddard (2) 1997 241,667 56,071 76,000 6,500 32,669(7)
President of the Corporation's
Property & Casualty Subsidiaries
R.E. Zunker 1997 285,417 28,542 125,400 13,000 38,583(8)
President of the Corporation's 1996 272,917 27,292 126,219 15,000 41,679
Life & Health Subsidiaries 1995 250,000 25,000 107,000 16,000 35,588
J.W. Ruddy 1997 240,417 42,691 91,200 7,000 32,500(9)
Senior Vice President 1996 212,500 21,250 79,338 12,000 32,417
and General Counsel 1995 195,000 19,500 66,875 0 24,525
</TABLE>
- ------------------------
(1) Mr. Dickey became President and Chief Operating Officer of the Corporation
on August 7, 1996.
(2) Mr. Stoddard became President of the Corporation's property and casualty
subsidiaries on July 1, 1997.
(3) The dollar amounts in this column include (i) a cash bonus and (ii) in the
case of 1997 only, payments in settlement of PSRs awarded in 1997. 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 was 10% for each of 1997,
1996 and 1995.
PSRs are three-year grants pursuant to which annual payments of a portion of
the total award may be made based on achievement of specified performance
goals. Performance goals are established at the time of grant. The amounts
included for 1997 with respect to PSR settlements were $62,164 for
12
<PAGE>
Mr. Eigsti, $41,460 for Mr. Dickey, $31,904 for Mr. Stoddard, $0 for Mr.
Zunker, and $18,649 for Mr. Ruddy.
(4) RSRs are awarded under the Corporation's stock-based incentive 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 1997 the Corporation awarded RSRs to the Named Executive Officers in the
following amounts: 12,500 shares for Mr. Eigsti, 7,900 for Mr. Dickey, 2,000
for Mr. Stoddard, 3,300 for Mr. Zunker, and 2,400 for Mr. Ruddy. Each award
was made on February 5 and will vest and be settled in 25% installments on
the Wednesday closest to the first, second, third and fourth anniversary
dates of the award.
The following are the total number of RSRs held by the Named Executive
Officers and the total value of such holding at December 31, 1997: for Mr.
Eigsti, 29,425 RSRs with a value of $1,434,469; for Mr. Dickey, 17,975 RSRs
with a value of $876,281; for Mr. Stoddard, 3,950 RSRs with a value of
$192,563; for Mr. Zunker, 8,825 RSRs with a value of $430,219; and for Mr.
Ruddy, 5,850 RSRs with a value of $285,188.
(5) Includes net contributions to the Corporation's Profit-Sharing Plan of
$13,278, net contributions to the Corporation's Savings Plan of $6,400, and
allocations to non-qualified plans of $59,375 with respect to the
Profit-Sharing Plan and $24,133 with respect to the Savings Plan for amounts
which may not be contributed to the qualified plans because of limitations
imposed by the Code ("Non-Qualified Allocations").
(6) Includes net contributions to the Corporation's Profit-Sharing Plan of
$13,278 and to the Savings Plan of $6,400, and Non-Qualified Allocations of
$35,501 with respect to the Profit-Sharing Plan and $14,100 with respect to
the Savings Plan.
(7) Includes net contributions to the Corporation's Profit-Sharing Plan of
$13,278 and to the Savings Plan of $6,400, and Non-Qualified Allocations of
$9,724 with respect to the Profit-Sharing Plan and $3,267 with respect to
the Savings Plan.
(8) Includes net contributions to the Corporation's Profit-Sharing Plan of
$13,278 and to the Savings Plan of $6,400, and Non-Qualified Allocations of
$13,888 with respect to the Profit-Sharing Plan and $5,017 with respect to
the Savings Plan.
(9) Includes net contributions to the Corporation's Profit-Sharing Plan of
$13,278 and to the Savings Plan of $6,400, and Non-Qualified Allocations of
$9,605 with respect to the Profit-Sharing Plan and $3,217 with respect to
the Savings Plan.
STOCK OPTION AWARDS
Information concerning grants of stock options to the Named Executive Officers
during 1997 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 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.
13
<PAGE>
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 $5.0 billion to $8.2
billion at the 5% rate and to $13.0 billion at the 10% rate. In addition, a
shareholder, unlike an option holder, would receive dividends paid by the
Corporation during that ten-year period.
OPTION GRANTS IN 1997
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
---------------------------------------------------- POTENTIAL REALIZABLE VALUE
NUMBER OF AT ASSUMED ANNUAL RATES OF
SECURITIES PERCENT OF STOCK PRICE APPRECIATION
UNDERLYING TOTAL OPTIONS FOR OPTION TERM
OPTIONS GRANTED TO EXERCISE --------------------------
GRANTED(1) EMPLOYEES IN PRICE(2) EXPIRATION 5%(3) 10%(4)
NAME (#) FISCAL YEAR ($/SH) DATE ($) ($)
- ----------------------------------- ----------- --------------- --------- ----------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
R.H. Eigsti........................ 50,000 15.4% $ 39.625 4/28/07 $ 1,245,997 $ 3,157,602
B.A. Dickey........................ 30,000 9.2% 39.625 4/28/07 747,598 1,894,561
W.R. Stoddard...................... 6,500 2.0% 39.625 4/28/07 161,980 410,488
R.E. Zunker........................ 13,000 4.0% 39.625 11/30/98 41,534 84,566
J.W. Ruddy......................... 7,000 2.2% 39.625 4/28/07 174,440 442,064
</TABLE>
- ------------------------
(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
April 28, 1997. For each option granted, 25% of the shares subject to the
option become exercisable on the first, second, third and fourth anniversary
dates of the option grant.
(2) The exercise price may be paid to the Corporation in cash, in shares of
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 Code.
(3) This rate of appreciation produces an ending market price of $64.54 per
share on April 28, 2007, and $42.82 per share on November 30, 1998.
(4) This rate of appreciation produces an ending market price of $102.78 per
share on April 28, 2007, and $46.13 per share on November 30, 1998.
14
<PAGE>
STOCK OPTION EXERCISES
Information concerning exercises of stock options during 1997 by the Named
Executive Officers and the value of their unexercised options and stock
appreciation rights at December 31, 1997 is stated below:
AGGREGATED OPTION EXERCISES IN 1997
AND OPTION/SAR VALUES AT DECEMBER 31, 1997
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS AT
AT DECEMBER 31, 1997 DECEMBER 31, 1997(1)
SHARES (#) ($)
ACQUIRED ON VALUE -------------------- ------------------------
EXERCISE REALIZED EXERCISABLE/ EXERCISABLE/
NAME (#) ($) UNEXERCISABLE UNEXERCISABLE
- ----------------------------------------- ----------- --------- -------------------- ------------------------
<S> <C> <C> <C> <C> <C> <C>
R.H. Eigsti.............................. 4,176 $ 121,757 107,176 150,000 $ 2,419,615 $ 2,335,000
B.A. Dickey.............................. 10,000 279,375 86,200 92,000 2,017,506 1,443,594
W.R. Stoddard............................ 2,750 69,672 11,300 16,750 288,050 248,672
R.E. Zunker.............................. 0 NA 70,500 0 1,261,406 0
J.W. Ruddy............................... 1,000 21,000 23,500 21,500 558,688 327,625
</TABLE>
- --------------------------
(1) Based on $48.75, the last sale price of the Corporation's Common Stock on
December 31, 1997.
LONG-TERM INCENTIVE PLAN AWARDS IN 1997
Information concerning awards of performance stock rights during 1997 to the
Named Executive Officers is stated below:
LONG-TERM INCENTIVE PLAN AWARDS IN 1997
<TABLE>
<CAPTION>
ESTIMATED FUTURE PAYOUTS UNDER
NUMBER OF NON-STOCK-PRICE-BASED PLANS (1)
SHARES, UNITS PERFORMANCE OR OTHER
OR OTHER RIGHTS PERIOD UNTIL ------------------------------------
NAME (#) MATURATION OR PAYOUT THRESHOLD (#) MAXIMUM (#)
- -------------------------------------------- --------------- -------------------- ------------------- ---------------
<S> <C> <C> <C> <C>
R.H. Eigsti................................. 12,500 1997-1999 0 12,500
B.A. Dickey................................. 8,333 1997-1999 0 8,333
W.R. Stoddard............................... 3,500 1997-1999 0 3,500
R.E. Zunker................................. 4,583 1997-1999 0 4,583
J.W. Ruddy.................................. 3,750 1997-1999 0 3,750
</TABLE>
- --------------------------
(1) The performance stock rights will vest and shares will become payable only
to the extent that specified performance goals (E.G., return on equity;
increases in operating earnings, income and stock price; expense levels; and
premium growth) are achieved. The awards cover a three-year performance
period, within which there are three Performance Cycles. Only the shares
relating to the second and third Performance Cycles (1997-1998 and
1997-1999, respectively) are included in this table. The payment made for
the first Performance Cycle is reported under the Bonus column of the
Summary Compensation Table.
15
<PAGE>
RETIREMENT PROGRAM
The Corporation's retirement program is comprised of three plans which qualify
for favorable tax treatment under the Code and two non-qualified supplemental
plans. The three qualified plans are the Cash Balance Plan, the Profit-Sharing
Plan and the 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 (except Non-Participating 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 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: $39,050 for Mr. Eigsti, $32,655 for Mr.
Dickey, $21,663 for Mr. Stoddard, $5,961 for Mr. Zunker and $25,504 for Mr.
Ruddy.
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 AND RETIREMENT AGREEMENTS
Messrs. Eigsti, Dickey, Stoddard, Zunker and Ruddy 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, if the
officer in question is discharged without cause, demoted or given other good
reason to resign following a change in control of the Corporation or, in the
case of the agreements with Messrs. Stoddard, Zunker and Ruddy, decides one year
following a change in control to resign, then the agreements call for a lump-sum
cash payment of up to three times annual salary, continuation of life and health
benefits for three years, payment for accrued vacation and sick leave, payment
of amounts allocated under the Corporation's bonus plan, payment of amounts
payable under any incentive plan, and payment of certain retirement benefits. In
addition, the agreements with Messrs. Stoddard, Zunker and Ruddy provide that
vesting of awards under the Corporation's incentive plans will occur, and if any
excise tax is levied on payments made under the agreements, then an additional
payment will be made so that the net payments received by the officer under the
agreement will equal the amount that would have been paid had the excise tax not
been levied.
16
<PAGE>
The stock options awarded to the Named Executive Officers, as well as to other
key employees, under the SAFECO Long-Term Incentive Plan of 1997 ("Plan") and
the predecessor incentive plan provide for accelerated vesting in the event of a
change in control of the Corporation. Moreover, under the terms of the Plan, in
such event all outstanding restricted stock right awards immediately will become
vested and payable in cash and, to the extent deemed earned under the formula
set forth in the Plan, all outstanding performance stock rights will become
immediately payable in cash.
In connection with Mr. Zunker's planned retirement at age 60 in August 1998, he
was named Vice Chairman of SAFECO Life Insurance Company in February 1998. Mr.
Zunker and SAFECO Life entered into an agreement with respect to his retirement
which confirms the amounts due to him under the Corporation's employee welfare
and benefit plans upon retirement, contemplates the acceleration of vesting of
his outstanding stock options (which has since occurred), provides for payment
of his current salary through August 1998 and certain special payments not
material in amount to the Corporation, and confirms the expiration pursuant to
their terms of his stock options, performance stock rights and restricted stock
rights.
CERTAIN TRANSACTIONS
In the ordinary course of business, the Corporation and its subsidiaries enter
into transactions with other business entities of which certain of the
Corporation's directors and nominees for director are executive officers,
partners or shareholders. The terms of all such transactions were as fair to the
Corporation and its subsidiaries as could have been obtained from third parties.
Mrs. Runstad, a director of the Corporation, is of counsel to the Seattle law
firm of Foster Pepper & Shefelman PLLC, which received fees for legal services
provided to the Corporation and its subsidiaries during 1997.
COMPENSATION COMMITTEE INTERLOCKS
AND INSIDER PARTICIPATION
The members of the Compensation Committee during 1997 were George H.
Weyerhaeuser, Chair, Phyllis J. Campbell, Robert S. Cline, John W. Ellis, and
William G. Reed, Jr.
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 of Directors at its meeting on May 6, 1998. A
representative of Ernst & Young LLP is expected to be present at the Annual
Meeting and will have the opportunity to make a statement if he desires to do so
and to respond to appropriate questions.
SHAREHOLDER PROPOSALS FOR THE 1999 ANNUAL MEETING
The Corporation's 1999 Annual Meeting of Shareholders will be held on May 5,
1999. Under the federal proxy solicitation rules, in connection with the
preparation of proxy materials for the 1999 Annual Meeting of Shareholders, any
proposal submitted by a shareholder for such meeting must be received by the
Corporation by November 20, 1998.
NOTICE REQUIREMENTS FOR SHAREHOLDERS TO BRING BUSINESS
AT AN ANNUAL MEETING
The Corporation's Bylaws provide that shareholders may nominate persons for
election to the Board of Directors only if a written notice of intention to
nominate has been received by the secretary to the Board of Directors at SAFECO
Plaza, Seattle, Washington 98185, not less than 60 days nor more than 90 days
17
<PAGE>
before the scheduled date of the Annual Meeting of Shareholders. The notice must
contain the name, address, telephone number, and number of shares of 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 a shareholder to bring other
business before an Annual Meeting of Shareholders, 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. The notice must contain the name, address, telephone number and
number of shares of 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 meeting, and any material interest of the shareholder in
such business.
OTHER MATTERS
THE CORPORATION FILES AN ANNUAL REPORT ON FORM 10-K WITH THE SEC. 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 CHIEF FINANCIAL OFFICER, SAFECO CORPORATION, SAFECO PLAZA,
SEATTLE, WASHINGTON 98185.
The Board is not aware of any other matters to be presented for action at the
Annual Meeting. If any other matters come before the Annual Meeting, the persons
named in the enclosed proxy will vote all proxies in accordance with their best
judgment.
All shares represented by the enclosed proxy, if returned prior to the Annual
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 each of the director nominees.
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY AND THAT YOUR SHARES BE
REPRESENTED. SHAREHOLDERS ARE URGED TO COMPLETE, SIGN, DATE AND PROMPTLY RETURN
THE ACCOMPANYING PROXY IN THE ENCLOSED ENVELOPE.
[SIGNATURE]
Seattle, Washington Roger H. Eigsti
March 20, 1998 Chairman and Chief Executive Officer
18
<PAGE>
SAFECO CORPORATION
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
OF THE CORPORATION FOR THE ANNUAL MEETING OF SHAREHOLDERS
MAY 6, 1998
The undersigned hereby appoints Roger H. Eigsti, John W. Ellis, Joshua Green
III, Judith M. Runstad and George H. Weyerhaeuser, each with full power of
substitution, as the true and lawful attorneys and proxies for the
undersigned, to represent and vote the undersigned's shares at 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 6, 1998,
or any adjournment or postponement 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.
P
R
O
X
Y
SEE REVERSE
SIDE
- ------------------------------------------------------------------------------
FOLD AND DETACH HERE
<PAGE>
X PLEASE MARK YOUR
VOTES AS IN THIS
EXAMPLE.
(The Board of Directors recommends a vote "FOR" all nominees.)
<TABLE>
<CAPTION>
Change of Address
FOR WITHHELD NOMINEES: on Reverse Side
<S> <C> <C> <C> <C>
1. Election of / / / / Robert S. Cline / /
Directors Roger H. Eigsti
John W. Ellis
William W. Krippaehne, Jr.
</TABLE>
For, except vote withheld from the following nominee(s):
- ---------------------------------------------------------
This proxy when properly executed will be voted as directed herein. IF NO
DIRECTION IS GIVEN, THE PROXIES NAMED ON THE REVERSE SIDE 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 undersigned hereby revokes all prior proxies given by the undersigned to
vote at the meeting or any adjournment or postponement thereof.
SIGNATURE(S) DATE
-------------------------- --------------------------
Please sign exactly as name appears hereon. If the stock is registered in
the names of two or more persons, each should sign. When signing as
attorney, executor, administrator, trustee or guardian, please give full
title as such.
- ------------------------------------------------------------------------------
FOLD AND DETACH HERE
