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 Section 240.14a-11(c) or Section 240.14a-12
LAWYERS TITLE CORPORATION
(Name of Registrant as Specified in its Charter)
(Name of Person(s) Filing Proxy Statement, if other than 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)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
( ) Fee paid previously with preliminary materials.
( ) Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule, or Registration Statement No.:
3) Filing Party:
4) Date Filed:
<PAGE>
[LAWYERS TITLE CORPORATION LOGO]
---------------
ANNUAL MEETING OF SHAREHOLDERS
---------------
April 8, 1997
Dear Shareholder:
You are cordially invited to attend the 1997 Annual Meeting of
Shareholders of Lawyers Title Corporation which is to be held in the Company's
Headquarters Building located in the Brookfield office complex at 6630 West
Broad Street, Richmond, Virginia, on Tuesday, May 20, 1997, at 9:00 a.m. At the
Meeting, you will be asked to elect four Directors to serve a three-year term
and to approve the selection of independent public accountants for the Company
for 1997.
Whether or not you plan to attend the Meeting, it is important that
your shares be represented and voted at the Meeting; therefore, you are
requested to complete, sign, date and mail your proxy promptly in the enclosed
postage-paid envelope.
We appreciate your support and look forward to seeing you at the
Meeting.
Sincerely,
/s/ CHARLES H. FOSTER, JR.
--------------------------
Charles H. Foster, Jr.
Chairman and Chief
Executive Officer
<PAGE>
LAWYERS TITLE CORPORATION
6630 WEST BROAD STREET
RICHMOND, VIRGINIA 23230
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
The Annual Meeting (the "Meeting") of Shareholders of Lawyers Title
Corporation (the "Company") will be held in the Company's Headquarters Building
located in the Brookfield office complex at 6630 West Broad Street, Richmond,
Virginia, on Tuesday, May 20, 1997, at 9:00 a.m., for the following purposes:
(1) To elect four Directors, each to serve for a three-year term;
(2) To consider and act upon a proposal to appoint the firm of
Ernst & Young LLP as independent public accountants for the Company for the
fiscal year ending December 31, 1997; and
(3) To act upon such other matters as may properly come before the
Meeting or any adjournments thereof.
Only holders of shares of Common Stock of record at the close of
business on April 1, 1997, shall be entitled to notice of and to vote at the
Meeting.
Please sign and promptly mail the enclosed proxy to insure the
presence of a quorum at the Meeting.
By Order of the Board of Directors,
Russell W. Jordan, III
Secretary
April 8, 1997
IMPORTANT
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE VOTE, SIGN,
DATE AND RETURN THE ENCLOSED PROXY AS PROMPTLY AS POSSIBLE. IF YOU ATTEND THE
MEETING, YOU MAY VOTE YOUR SHARES IN PERSON, EVEN THOUGH YOU HAVE PREVIOUSLY
SIGNED AND RETURNED YOUR PROXY.
<PAGE>
PROXY STATEMENT
The enclosed proxy is solicited by the Board of Directors of the
Company. A shareholder may revoke the proxy at any time prior to its use, but
proxies properly executed and received by the Secretary prior to the Meeting,
and not revoked, will be voted in accordance with the terms thereof.
The Company will pay all of the costs associated with this proxy
solicitation. Proxies are being solicited by mail and may also be solicited in
person or by telephone, telefacsimile or telegraph by Directors, officers and
employees of the Company. The Company will reimburse banks, brokerage firms, and
other custodians, nominees and fiduciaries for their reasonable expenses in
forwarding proxy materials to the beneficial owners of the shares of the
Company's Common Stock.
This Proxy Statement will be mailed to registered holders of the
Common Stock of the Company on or about April 8, 1997.
VOTING RIGHTS
The Company had 8,908,991 shares of Common Stock outstanding as of
April 1, 1997, each having one vote. A majority of the shares entitled to vote,
represented in person or by proxy, will constitute a quorum for the transaction
of business at the Meeting. Only Common Shareholders of record at the close of
business on April 1, 1997, will be entitled to vote.
The Company is not aware of any matters which are to come before the
Meeting other than those described in this Proxy Statement. However, if other
matters do properly come before the Meeting, it is the intention of the persons
named in the enclosed proxy card to vote such proxy in accordance with their
best judgment.
ELECTION OF DIRECTORS
Four Directors are to be elected at the Meeting, each for a term of
three years expiring in 2000. Six other Directors have been elected to terms
that end in either 1998 or 1999, as indicated below. The following pages set
forth certain information concerning the nominees and the Directors whose terms
of office will continue after the Meeting. All of the nominees and incumbent
Directors listed below were previously elected Directors by the shareholders,
except Michael Dinkins and John P. McCann, who are standing for election for the
first time. Wallace L. Chandler and Robert H. Hilb, Directors from 1991 to 1997,
have announced their retirement and will not stand for reelection.
<PAGE>
Proxies, unless otherwise specified, will be voted for the election
of the nominees listed to serve as Directors. The election of each nominee for
Director requires the affirmative vote of the holders of a plurality of the
shares of Common Stock cast in the election of Directors. Votes that are
withheld and shares held in street name ("Broker Shares") that are not voted in
the election of Directors will not be included in determining the number of
votes cast. If, at the time of the Meeting, any nominee should be unavailable to
serve as a Director, it is intended that votes will be cast, pursuant to the
enclosed proxy, for such substitute nominee as may be nominated by the Board of
Directors. Each nominee has consented to being named in the Proxy Statement and
to serve if elected.
NOMINEES FOR ELECTION FOR TERMS EXPIRING IN 2000
JANET A. ALPERT, 50, is President and Chief Operating Officer of the
Company and of Lawyers Title Insurance Corporation ("LTIC"), a subsidiary of the
Company. From October 1991 to December 1992, she was Executive Vice President of
the Company, and from January 1989 to December 1992, she was Executive Vice
President - Eastern Operations of LTIC. Ms. Alpert is a member of the Executive
Committee and has been a Director since 1994.
MICHAEL DINKINS, 43, is President of the Graphic Communications
Group of Cadmus Communications Corporation ("Cadmus") (a printing, marketing and
publishing company). From September 1993 to May 1995, he was Vice President and
Chief Financial Officer of Cadmus, and from 1992 to 1993 he was Manager Finance
(for Marketing in 1993 and for Sales in 1992) for GE Appliances.
JAMES ERMER, 54, retired as Executive Vice President -- Strategic
Planning and Corporate Development of CSX Corporation ("CSX") (a railroad and
transportation company) in December 1996. Prior to April 25, 1995, he was Senior
Vice President -- Finance and Chief Financial Officer of CSX, a position he held
for more than five years. Mr. Ermer is a Director and trustee of Nations Fund
Group of Mutual Funds. He is a member of the Compensation Committee and the
Pension and Portfolio Committee and has been a Director since 1991.
JOHN P. MCCANN, 52, is Chairman, President and Chief Executive
Officer of United Dominion Realty Trust, Inc. (an apartment REIT), a position he
has held for more than five years. He is a Director of United Dominion Realty
Trust, Inc. and Storage USA, Inc.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR THE
NOMINEES SET FORTH ABOVE.
2
<PAGE>
INCUMBENT DIRECTORS WHOSE TERMS EXPIRE IN 1999
J. GARNETT NELSON, 57, is President of Mid-Atlantic Holdings,
L.L.C. (a consulting and business acquisitions company). Prior to February
1995, he was Senior Vice President -- Investments of The Life Insurance Company
of Virginia and Senior Executive Director of Aon Advisors, Inc. (an
investment advisor), positions he held for more than five years. Mr. Nelson is
a Director of Mentor Income Fund, Inc., Aon Asset Management Fund, Inc. and
Life of Virginia Series Fund, Inc. He is Chairman of the Pension and Portfolio
Committee and a member of the Audit Committee and has been a Director since
1991.
ROBERT F. NORFLEET, JR., 56, serves as a consultant in the capacity
of Director of Client Relations for the Trust and Investment Management Group of
Crestar Bank. From 1994 until his retirement on March 1, 1996, he was Corporate
Executive Vice President and Senior Credit Officer of Crestar Bank. Prior to
1994, Mr. Norfleet was President - Capital Region and Executive Vice President -
Corporate Banking of Crestar Bank, positions he held for more than five years.
He is a member of the Audit Committee and the Executive Committee and has been a
Director since 1991.
EUGENE P. TRANI, 57, is President of Virginia Commonwealth
University (an urban, public research university), a position he has held for
more than five years. He is a Director of Crestar Financial Corporation and
Heilig-Meyers Company. Dr. Trani is a member of the Audit Committee and the
Pension and Portfolio Committee and has been a Director since 1993.
INCUMBENT DIRECTORS WHOSE TERMS EXPIRE IN 1998
THEODORE L. CHANDLER, JR., 44, is a member of the law firm of
Williams Mullen Christian & Dobbins in Richmond, Virginia, a position he has
held for more than five years. He is a Director of Hilb, Rogal and Hamilton
Company and Open Plan Systems, Inc. Mr. Chandler is a member of the
Executive Committee and the Compensation Committee and has been a Director since
1991. Williams Mullen Christian & Dobbins acts as counsel to the Company.
CHARLES H. FOSTER, JR., 53, is Chairman and Chief Executive
Officer of the Company and of LTIC, positions he has held for more than five
years. He is a Director of Universal Corporation. Mr. Foster is Chairman of
the Executive Committee and a member of the Pension and Portfolio Committee
and has been a Director since 1991.
MARSHALL B. WISHNACK, 50, is Chairman and Chief Executive Officer of
Wheat First Butcher Singer (an investment banking and securities brokerage
company). Prior to April 1, 1997, he was President and Chief Executive Officer
of Wheat First Butcher Singer, a position he held for more than five years. Mr.
Wishnack is a Director of Best Products, Inc. and S & K Famous Brands. He is a
member of the Audit Committee and the Compensation Committee and has been a
Director since 1991. Wheat First Butcher Singer provides investment management
and securities brokerage services to the Company.
3
<PAGE>
STOCK OWNERSHIP
In a Schedule 13D jointly filed with the Securities and Exchange
Commission (the "Commission") by Focused Capital Partners L.P. ("FCP"), Cadence
Fund, L.P. ("CF"), Brookhaven Capital Management Co., Ltd. ("BCM"), an
investment advisor to FCP and CF, Vincent A. Carrino ("Carrino"), a general
partner of FCP and CF and the sole director and president of BCM, and Daniel R.
Coleman ("Coleman"), a general partner of FCP and CF, FCP, CF, BCM, Carrino and
Coleman reported ownership as of October 30, 1995, of 527,611 shares of Common
Stock of the Company, representing 5.94% of such shares outstanding on such
date. The Schedule 13D reported that (a) 512,111 of the shares were beneficially
owned by BCM, (b) 206,900 of the shares were beneficially owned by CF, (c)
151,161 of the shares were beneficially owned by FCP, (d) 373,561 of the shares
were beneficially owned by Carrino and (e) 358,061 of the shares were
beneficially owned by Coleman. According to the Schedule 13D, (i) BCM had sole
voting and dispositive power over 9,500 of the shares and shared voting and
dispositive power over 502,611 of the shares, (ii) CF had shared voting and
dispositive power over 206,900 of the shares, (iii) FCP had shared voting and
dispositive power over 151,161 of the shares, (iv) Carrino had sole voting and
dispositive power over 15,500 of the shares and shared voting and dispositive
power over 358,061 of the shares and (v) Coleman had shared voting and
dispositive power over 358,061 of the shares. The reported business address of
FCP, CF, BCM and Carrino was 3000 Sandhill Road, Building 4, Suite 130, Menlo
Park, California 94025, and the reported business address of Coleman was 500
108th Avenue NE, Suite 380, Bellevue, Washington 98004.
In an amended Schedule 13G jointly filed with the Commission by FMR
Corp., Edward C. Johnson 3d, Chairman of FMR Corp., Abigail P. Johnson, a
Director of FMR Corp., Fidelity Management & Research Company ("Fidelity"), a
wholly owned subsidiary of FMR Corp. and an investment advisor to various
investment companies registered under Section 8 of the Investment Company Act of
1940, and Fidelity Low-Priced Stock Fund, FMR Corp., Fidelity, Edward C. Johnson
3d and Abigail R. Johnson reported beneficial ownership as of December 31, 1996,
of 1,124,600 shares of Common Stock of the Company, representing 12.65% of such
shares outstanding on such date. The amended Schedule 13G reported that the
ownership interest of one investment company, Fidelity Low-Priced Stock Fund,
amounted to 617,800 shares or 6.95% of the Common Stock outstanding. According
to the amended Schedule 13G, (i) FMR Corp., Fidelity, Edward C. Johnson 3d and
the Fidelity Funds with an ownership interest in the shares each has sole power
to dispose of all 1,124,600 of the shares, and (ii) the sole power to vote the
shares owned directly by the Fidelity Funds resides with the Funds' Boards of
Trustees. The reported business address of FMR Corp., Fidelity and Fidelity
Low-Priced Stock Fund was 82 Devonshire Street, Boston, Massachusetts 02109.
To the knowledge of the Company, no other person owns beneficially
more than 5% of the outstanding shares of the Company's Common Stock.
4
<PAGE>
The following table sets forth certain information with respect to
the beneficial ownership of shares of the Company's Common Stock, as of December
31, 1996, by (i) each Director and nominee, (ii) each executive officer listed
in the Summary Compensation Table (the "Named Executive Officers") and (iii) all
Directors and executive officers as a group, according to data furnished by such
persons.
NAME NUMBER OF SHARES(1) PERCENT OF CLASS
- ---------------------------------------------------------------------------
Janet A. Alpert 76,829 *
Kenneth Astheimer 39,414 *
Theodore L. Chandler, Jr. 17,500 *
Wallace L. Chandler 32,046 *
Michael Dinkins ** 0 *
James Ermer 10,500 *
G. William Evans 26,631 *
Charles H. Foster, Jr. 165,470 1.86%
Robert H. Hilb 10,500 *
Charles W. Keith 33,263 *
John P. McCann ** 5,000 *
J. Garnett Nelson 13,500 *
Robert F. Norfleet, Jr. 8,250 *
Eugene P. Trani 6,385 *
Marshall B. Wishnack 10,000 *
All Directors and executive 507,828 5.71%
officers as a group (19 persons,
including those named)
- ------------
* Percentage of ownership is less than 1% of the outstanding shares of Common
Stock of the Company.
** Messrs. Dinkins and McCann are standing for election to the Board of
Directors for the first time.
(1) The number of shares of Common Stock shown in the table includes
45,572 shares held for certain Directors and executive officers in the LTIC
Savings and Stock Ownership Plan (the "401(k) Plan") as of December 31, 1996 and
390,651 shares which certain Directors and executive officers have the right to
acquire through the exercise of stock options within 60 days following December
31, 1996. The number of shares also includes 4,000 shares of the Company's
Common Stock held in fiduciary capacities. Such shares may be deemed to be
beneficially owned by the rules of the Commission but inclusion of the shares in
the table does not constitute admission of beneficial ownership.
The 401(k) Plan held 807,765 shares of the Company's Common Stock,
or 9.08% of the total number of such shares outstanding on December 31, 1996.
Each participant in the 401(k) Plan has the right to instruct Merrill Lynch
Trust Company, trustee for the 401(k) Plan, with respect to the voting of shares
allocated to his or her account. The trustee, however, will vote any shares for
which it receives no instructions in the same proportion as those shares for
which it has received instructions.
5
<PAGE>
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the 1934 Act requires the Company's Directors and
executive officers and persons who own more than 10% of the Company's Common
Stock to file initial reports of ownership and reports of changes in ownership
of Common Stock with the Commission. Such persons are required by Commission
regulation to furnish the Company with copies of all Section 16(a) forms they
file.
To the Company's knowledge, based solely on a review of the copies
of such reports furnished to the Company and written representations that no
other reports were required, the Company believes that applicable Section 16(a)
filing requirements were satisfied for transactions that occurred in 1996.
COMMITTEES
The standing committees of the Board of Directors are the Executive
Committee, the Audit Committee, the Compensation Committee and the Pension and
Portfolio Committee. There is no nominating committee. The Executive Committee
has the authority to act for the Board of Directors on most matters during the
intervals between Board meetings. The Audit Committee reviews the scope and the
results of the work of the independent public accountants and internal auditors,
reviews the adequacy of internal accounting controls, and recommends the
selection of the independent public accountants to the Board of Directors. The
responsibilities of the Compensation Committee are discussed below under
"Compensation Committee Report on Executive Compensation." The Pension and
Portfolio Committee establishes the investment policy and monitors the
performance of pension and portfolio investments of the Company and of LTIC and
its subsidiaries.
During the fiscal year ended December 31, 1996, there were six
meetings of the Board of Directors. All Directors attended 75% or more of the
total aggregate number of meetings of the Board of Directors and of the
committees on which they served.
DIRECTORS' COMPENSATION
Each Director who is not an officer of the Company receives a
quarterly retainer of $2,500, a fee of $1,500 for attendance at each Board
meeting, and a fee of $750 for attendance at each meeting of a Board committee
of which he is a member. A Director who is also an officer of the Company
receives no compensation for his or her services as a Director.
Effective January 1, 1995, the Outside Directors Deferral Plan
permits a non-employee Director to defer all or a portion of his or her
compensation. Interest is paid on the amounts deferred at a rate determined by
the Compensation Committee. Subject to certain restrictions, the Director may
elect at the time of deferral to take cash distributions, in whole or in part,
from his or her account either prior to or following termination of service.
6
<PAGE>
In each of the five years during the term of the 1992 Stock Option
Plan for Non-Employee Directors (the "Directors' Option Plan") which by its
terms expired in 1996, each non-employee Director received, and in 1997 pursuant
to grants under the 1991 Stock Incentive Plan, as amended (the "Option Plan")
each non-employee Director will receive, an option to purchase 1,500 shares of
Common Stock of the Company on the first business day following the annual
meeting of shareholders. The exercise price of all options granted to
non-employee Directors is the fair market value of the Company's Common Stock on
the date of grant. All of the options are exercisable six months after the date
of grant and expire ten years from the date of grant. Shorter expiration periods
may apply in the event an optionee dies, becomes disabled or resigns from or
does not stand for reelection to the Board. The options will be adjusted for
stock dividends, stock splits and certain other corporate events that may occur
in the future.
COMPENSATION COMMITTEE REPORT
ON EXECUTIVE COMPENSATION
Decisions on compensation of the Company's executive officers as
well as those officers of LTIC who are members of executive management
(collectively "senior management") are made by the four-member Compensation
Committee of the Board. Each member of the Compensation Committee is a
non-employee Director. The Committee determines the salaries of the Company's
senior management and reviews and approves annual management incentive programs
and executive benefits for senior management. It also administers the 1991 Stock
Incentive Plan (the "Option Plan"), the Directors' Option Plan and the Outside
Directors Deferral Plan. The Committee reviews any significant changes in the
tax qualified employee pension benefit plans and the Regional Management
Incentive Programs. All decisions by the Compensation Committee relating to the
compensation of the Company's senior management are reported to the full Board.
Under rules established by the Commission, the Company is required
to provide certain information with respect to the compensation and benefits
provided to the Company's Chairman and Chief Executive Officer, Charles H.
Foster, Jr., and the other Named Executive Officers. The report of the
Compensation Committee set forth below addresses the Company's compensation
policies in effect for 1996.
EXECUTIVE COMPENSATION POLICIES
The Compensation Committee's executive compensation policies are
designed to provide competitive levels of compensation that integrate pay with
the Company's annual and long-term performance goals, recognize individual
initiative and achievements, and assist the Company in attracting and retaining
highly qualified executives. They provide for competitive base salaries which
reflect individual performance and level of responsibility; annual variable
performance opportunities payable in cash and shares of the Company's Common
Stock on the basis of merit and for the achievement of financial and operating
performance goals established by the Committee; and long-term, stock-based
incentive opportunities which strengthen the mutuality of interests between
senior management and the Company's shareholders.
7
<PAGE>
In furtherance of its responsibility to determine executive
compensation, the Compensation Committee annually, or more frequently, reviews
the Company's executive compensation program. The Compensation Committee
evaluates compensation structures and the financial performance of other
publicly held companies in the title insurance industry and in certain other
insurance sectors as well as the compensation of executive officers in those
companies in order to establish general parameters within which it may fix
competitive compensation for its executive officers. This insurance industry
peer group used for compensation analysis is included within, but is narrower
than, the peer group index in the performance graph included in this proxy
statement due to the small number of title companies on which compensation data
is publicly available. The Compensation Committee believes that compensation
comparisons are most appropriately made to executives within the insurance
industry peer group, with particular emphasis on comparable title insurance
companies. This group may change as the Company or its competitors change their
focus, merge or consolidate or as new competitors emerge.
The Compensation Committee then determines the appropriate salary
and management incentive using a number of factors, including the executive
officer's individual duties and responsibilities in the Company, tenure,
relative importance to the overall success of the Company's short- and long-term
goals and attainment of individual performance goals, if appropriate. With
respect to Mr. Foster, the Committee specifically evaluates the overall
performance of the Company, including revenues, earnings, development of the
organization and return on shareholder equity. With respect to the other Named
Executive Officers, the committee sets performance criteria, such as
profitability, growth and productivity, for the area or areas of Company
operations for which the executive is personally responsible and accountable.
Combining subjective and objective policies and practices, this
assessment process is undertaken annually, or more frequently, by the
Compensation Committee in order to implement the Company's pay-for-performance
policy, which focuses on an executive officer's total compensation, including
cash and non-cash compensation, from all sources.
BASE SALARIES AND ANNUAL INCENTIVES
Because the Company's executive compensation program stresses
incentive opportunities linked to financial and operating performance, base
salaries for senior management are generally set below the median for comparable
positions at comparable companies. Adjustments made to executive base salaries
normally take effect on April 1 of a given year. Effective April 1, 1996, Mr.
Foster's base salary was increased by $20,000 to $250,000 after a thorough
review and evaluation by the Committee of Mr. Foster's personal performance in
light of his management responsibilities, the Company's improved profitability
in 1995, and the substantial progress made by the Company in achieving its
strategic goal of raising the levels of accountability of all employees based on
performance measured against specific goals.
8
<PAGE>
The Named Executive Officers were eligible for incentive
compensation for their 1996 performance. In February of 1997, bonus awards were
made to each of these individuals based on a review of several factors which
related to the Company's performance in 1996. Additionally, a portion of annual
incentive compensation was paid in Company Common Stock out of the Option Plan
as a way to more closely align the interests of senior management with those of
the shareholders. The Compensation Committee review included an assessment of
the performance of selected individuals in achieving quarterly and annual
revenue, expense ratio, productivity and preventable claims goals in his or her
respective area of responsibility. Based on these factors, Mr. Foster's annual
incentive award for 1996 was $244,938, compared to $127,120 in 1995, with
$60,413 of the award paid in shares of the Company's Common Stock.
LONG-TERM INCENTIVES
The Committee administers the Option Plan under which it has granted
to key executives options to purchase shares of the Company's Common Stock based
upon a determination of competitive aggregate compensation levels. The primary
objective of issuing stock options is to encourage significant investment in
stock ownership by management and to provide long-term financial rewards linked
directly to market performance of the Company's stock. The Committee believes
that significant ownership of stock by senior management is the best way to
align the interests of management and the shareholders, and the Company's stock
incentive program is effectively designed to further this objective.
Effective January 3, 1996, the Compensation Committee granted stock
options (the "1996 Options") to various executives, including the Named
Executive Officers. The Committee granted Mr. Foster a 1996 Option to acquire
50,000 shares of Common Stock. In determining the number of shares to be subject
to the options granted to Mr. Foster, the Committee evaluated Mr. Foster's
overall compensation package relative to that of other chief executives in the
insurance industry peer group. With respect to the allocation of available
options among the Named Executive Officers and other executives, the Committee
is of the view that, as a person's level of responsibility increases, greater
portions of his or her total compensation should be linked to the long-term
performance of the Company's Common Stock and return to its shareholders.
The exercise price of the 1996 Options is based on the average of
the high and low trading prices of the Common Stock on the day prior to the date
of grant. The 1996 Options cannot be exercised until six months after the date
of grant, vest at a rate of 25% each year for the first four years and expire
seven years from such date. An earlier expiration date may apply in the event of
an optionee's termination of employment, retirement, death or disability.
The tables which follow this report, and the accompanying narrative
and footnotes, reflect the decisions covered by the above discussion.
9
<PAGE>
TAX CONSIDERATIONS
The Omnibus Budget Reconciliation Act of 1993 ("OBRA") established
certain criteria for the tax deductibility of compensation in excess of $1
million paid to the Company's executive officers. The Company is not in danger
of losing deductions under OBRA. The Committee will carefully consider any plan
or compensation arrangement that would result in the disallowance of
compensation deductions. The Committee will use its best judgment in such cases,
taking all factors into account, including the materiality of any deductions
that may be lost. To date, the Committee has not adopted a policy that dictates
its decision in such a situation.
SUBMITTED BY THE COMPENSATION COMMITTEE
OF THE COMPANY'S BOARD OF DIRECTORS:
ROBERT H. HILB, CHAIRMAN
JAMES ERMER
THEODORE L. CHANDLER, JR.
MARSHALL B. WISHNACK
COMPENSATION COMMITTEE INTERLOCKS
AND INSIDER PARTICIPATION
Theodore L. Chandler, Jr., a member of the Compensation Committee,
is a member of the law firm of Williams Mullen Christian & Dobbins, which acts
as counsel to the Company. Marshall B. Wishnack, a member of the Compensation
Committee, is Chairman and Chief Executive Officer of Wheat First Butcher
Singer, which provides investment management and securities brokerage services
to the Company.
EXECUTIVE COMPENSATION AND OTHER INFORMATION
SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION
The following table shows, for the fiscal years ended December 31,
1994, 1995 and 1996, the cash compensation paid by the Company and by LTIC and
its subsidiaries, as well as certain other compensation paid or accrued for
those years, to each of the Named Executive Officers in all capacities in which
they served:
10
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SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long-Term
Compensation
Awards
Annual Compensation
-----------------------------------------------------------------------
Other Annual Securities All Other
Name and Principal Compensation Underlying Compensation
Position Year Salary ($) Bonus($)(1) ($)(2) Options (#) ($)(3)
- ---------------------------------------------------------------------------------------------------------------------
<S> <C>
Charles H. Foster, Jr. 1996 $245,006 $244,938 -- 50,000 $26,307
Chairman and Chief 1995 218,502 127,120 -- 27,000 27,580
Executive Officer 1994 220,587 32,419 -- 32,500 21,423
Janet A. Alpert 1996 186,249 163,292 -- 30,000 21,922
President and Chief 1995 166,260 79,450 -- 15,000 21,888
Operating Officer 1994 167,298 21,613 -- 16,000 15,975
Kenneth Astheimer 1996 147,501 172,375 -- 15,000 19,247
Executive Vice 1995 133,002 57,545 -- 10,000 18,971
President 1994 136,338 17,674 -- 9,000 14,578
Charles W. Keith 1996 147,501 157,445 -- 15,000 17,570
Executive Vice 1995 133,002 57,665 -- 10,000 17,975
President 1994 135,087 21,199 -- 9,000 13,417
G. William Evans 1996 137,505 60,646 -- 9,000 10,751
Vice President and 1995 123,510 27,013 -- 4,000 9,198
Treasurer 1994 121,425 10,597 -- 4,000 6,818
</TABLE>
- --------------
(1) The bonuses to the Named Executive Officers for 1996 were
partially paid in shares of the Company's Common Stock. The value of the
stock portion of those bonuses, based upon a price of $22.375 per share, was
$60,413, $40,275, $38,038, $33,563 and $13,425 for Mr. Foster, Ms. Alpert,
Mr. Astheimer, Mr. Keith, and Mr. Evans, respectively.
(2) The dollar value of perquisites and other personal benefits
received by each of the Named Executive Officers during each of the fiscal years
ended December 31, 1994, 1995 and 1996 did not exceed the lesser of $50,000 or
10% of the total amount of salary and bonus reported for each in such years.
11
<PAGE>
(3) "All Other Compensation" includes the following for the fiscal
year ended December 31, 1996: (a) $4,698, $5,195, $5,186, $4,843 and $5,831 for
Mr. Foster, Ms. Alpert, Mr. Astheimer, Mr. Keith and Mr. Evans, respectively,
representing total contributions of $25,754 to the Company's 401(k) Plan on
behalf of each of the Named Executive Officers to match 1996 pre-tax elective
deferral contributions (included under Salary) made by each to such plan; (b)
$3,973, $3,622 and $2,627 of accrued interest on income deferred in 1986,
1987, 1988 or 1989 by Mr. Foster, Ms. Alpert and Mr. Astheimer respectively,
under the LTIC Deferred Income Plan (computed assuming that each of the
participating Named Executive Officers satisfies all conditions necessary to
earn the highest interest rate payable under such plan), to the extent the
total interest accrued with respect to such income amounts during 1995 exceeded
120% of the applicable federal long term rate provided under Section 1274(d) of
the Internal Revenue Code; and (c) $17,636, $13,105, $11,434, $12,727 and
$4,920 for Mr. Foster, Ms. Alpert, Mr. Astheimer, Mr. Keith and Mr. Evans,
respectively, representing compensation attributable to life insurance premiums
paid by the Company in 1996 pursuant to the Company's split-dollar life
insurance plan.
STOCK OPTIONS
The following table contains information concerning grants of stock
options under the Company's Option Plan to each of the Named Executive Officers
in the fiscal year ended December 31, 1996:
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
Individual Grants
Number of
Securities % of Total
Underlying Options Granted Exercise or Grant Date
Name Options to Employees in Base Price Expiration Present
Granted (#)(1) Fiscal Year ($/SH)(2) Date (3) Value ($) (4)
- --------------------------------------------------------------------------------------------------------
<S> <C>
Charles H. Foster, Jr. 50,000 30.1% $18.75 1/3/03 $385,000
Janet A. Alpert 30,000 18.0 18.75 1/3/03 231,000
Kenneth Astheimer 15,000 9.0 18.75 1/3/03 115,500
Charles W. Keith 15,000 9.0 18.75 1/3/03 115,500
G. William Evans 9,000 5.4 18.75 1/3/03 69,300
</TABLE>
(1) The options become exercisable for 25% of the shares of Common
Stock of the Company covered by such options on each of the first four
successive anniversary dates of the date of grant. The options listed in the
table were granted on January 3, 1996.
12
<PAGE>
(2) The exercise price for the options listed in the table was the
average of the high and low trading prices on the day prior to the date of
grant. The exercise price may be paid in cash, in shares of Common Stock of the
Company valued at fair market value on the date of exercise, or pursuant to a
cashless exercise procedure under which the optionee provides irrevocable
instructions to a brokerage firm to sell the purchased shares and to remit to
the Company, out of the sale proceeds, an amount equal to the exercise price
plus all required withholding and other deductions.
(3) The options listed in the table expire seven years from the date
of grant. An earlier expiration date may apply in the event of the optionee's
termination of employment, retirement, death or disability.
(4) The Black-Scholes option pricing model was used to determine the
"Grant Date Present Value" of the options listed in the table. The model used
assumed a risk free interest rate of 5.54%, a dividend yield of 1.311% and a
volatility measure of .346, which is the variance on the rate of return on the
Common Stock of the Company over the most recent 250 trading day period prior to
the grant of the option. Because the magnitude of any nontransferability
discount is extremely difficult to determine, none was applied in determining
the value of the listed options.
OPTION EXERCISES AND HOLDINGS
None of the Named Executive Officers exercised options during the
fiscal year ended December 31, 1996. The following table sets forth information
with respect to unexercised options held by such officers as of the end of the
fiscal year:
FISCAL YEAR END OPTION VALUES
<TABLE>
<CAPTION>
Number of Securities Underlying
Unexercised Options at Fiscal Value of Unexercised In-the-Money
Year End (#) Options at FY-End ($) (1)
------------------------------------------------------------------------------------------------------------
Shares Acquired on Value Realized ($) Exercisable/ Exercisable/
Name Exercise (#) Unexercisable Unexercisable
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C>
Charles H. Foster, Jr. 0 0 110,312/86,500 $1,246,984/$243,125
------------------------------------------------------------------------------------------------------------
Janet A. Alpert 0 0 50,164/49,250 565,330/134,937
------------------------------------------------------------------------------------------------------------
Kenneth Astheimer 0 0 22,750/27,000 209,885/84,750
------------------------------------------------------------------------------------------------------------
Charles W. Keith 0 0 14,125/27,000 110,195/84,750
------------------------------------------------------------------------------------------------------------
G. William Evans 0 0 9,675/14,000 88,384/36,500
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) The value of in-the-money options at fiscal year end was
calculated by determining the difference between the fair market value of the
Common Stock of the Company underlying the options on December 30, 1996 and the
exercise price of the options.
13
<PAGE>
RETIREMENT BENEFITS
All of the Named Executive Officers participate in the LTIC
Retirement Plan, a qualified defined benefit retirement plan. The Internal
Revenue Code limits (a) the annual retirement benefit that may be paid under the
LTIC Retirement Plan and (b) the compensation that may be used in computing a
benefit. The maximum benefit limitation is adjusted each year to reflect the
cost of living. For 1996, the maximum benefit limitation was $120,000 (based on
a life annuity) and the earnings limitation was $150,000.
The Named Executive Officers are also covered by the LTIC 1995
Benefit Restoration Plan, an unfunded plan designed to restore to selected
participants the benefits that cannot be paid under the LTIC Retirement Plan due
to the Internal Revenue Code maximum benefit limitation, the earnings
limitation, or both. The benefit payable under the LTIC 1995 Benefit Restoration
Plan is the difference between the benefit that would be payable under the LTIC
Retirement Plan, but for either or both of the Internal Revenue Code
limitations, and the amount actually payable under the LTIC Retirement Plan.
PENSION PLAN TABLE
(ESTIMATED ANNUAL BENEFITS PAYABLE AT RETIREMENT) (1),(2)
Average
Compensation (3) Years of Service (4)
- ---------------------------------------------------------------------------
20 25 30 35 40
-- -- -- -- --
$100,000 $28,250 $35,313 $ 37,529 $ 39,746 $ 41,962
150,000 44,209 55,261 58,586 61,911 65,236
200,000 60,168 75,210 79,643 84,076 88,509
250,000 76,127 95,158 100,700 106,241 111,782
(1) The estimated benefits assume retirement at age 65 and are
calculated on the basis of a 50% joint and survivor benefit, assuming that at
retirement the age of the executive's spouse is 62. The social security benefit
will be payable in addition to the amounts shown.
(2) The estimated benefits set forth in the table were determined
without regard to the Internal Revenue Code maximum benefit limitation or its
limitation on compensation that may be used in computing a benefit. The LTIC
1995 Benefit Restoration Plan will provide participants in the plan with the
benefit that is "lost" under the LTIC Retirement Plan due to the Internal
Revenue Code limitation on the earnings that may be used in computing a benefit.
The benefits under the LTIC 1995 Benefit Restoration Plan are payable for a
period of 15 years.
14
<PAGE>
(3) Average Compensation is the average of the salary and bonus (as
reported in the Summary Compensation Table) for the 5 years during the past 10
years of an executive's career for which such average is the highest or, in the
case of an executive who has been employed for less than 5 calendar years, the
period of his or her employment with the Company and LTIC and its subsidiaries.
The following sets forth the average compensation for each of the Named
Executive Officers covered under the LTIC Retirement Plan and the LTIC 1995
Benefit Restoration Plan: Charles H. Foster, Jr., $294,539; Janet A. Alpert,
$205,381; Kenneth Astheimer, $168,566; Charles W. Keith, $176,968; and G.
William Evans, $134,864.
(4) The years of pension benefit service for each of the Named
Executive Officers are: Charles H. Foster, Jr., 23; Janet A. Alpert, 28;
Kenneth Astheimer, 23; Charles W. Keith, 15; and G. William Evans, 21.
CONTRACTUAL OBLIGATIONS
The Board of Directors has determined that it is in the best interests of
the Company and its shareholders to assure that the Company will have the
continued dedication of its executive officers, notwithstanding the possibility,
threat or occurrence of a change of control of the Company. Therefore, on
November 15, 1994, agreements were entered into with the Named Executive
Officers which relate to the officer's employment following a change of control.
The agreements replaced agreements entered into in 1991 with LTIC. Each
agreement provides for the officer's continued employment for a period of three
years following a change of control event (the "Employment Period"). During the
Employment Period, the officers will be entitled to a minimum annual salary and
bonus in an amount equal to the annualized highest monthly salary during the 12
months immediately preceding the change of control event and the average
annualized bonus paid during the three years immediately preceding the change of
control event. The officer also will be entitled to participate in incentive,
savings and other benefit programs on terms at least as favorable as those in
effect at any time during the 90 days preceding the change of control event.
The agreements generally provide certain benefits if, following a change of
control, an officer's employment is terminated by the Company or its successor
other than for cause, or if the officer resigns for "good reason" such as a
reduction in responsibilities. In such event, the Company will be obligated to
pay to the executive through the date of termination the executive's annual base
salary, a pro rata portion of the executive's annual bonus, the amount that
would be payable to the executive by applying the severance formula set forth in
the LTIC Severance Benefits Plan, all amounts of previously deferred
compensation not yet paid by the Company, any accrued vacation pay and a
severance payment equal to the maximum amount deductible by the Company under
Section 280G of the Internal Revenue Code. To be deductible under Section 280G,
the aggregate payments received by an executive which are contingent on a change
of control must be less than three times the executive's "base amount" (the
average annual taxable compensation of the executive for the five years
preceding the year on which the change of control occurs).
15
<PAGE>
STOCK PERFORMANCE GRAPH
The following graph compares the cumulative total return to the
shareholders of the Company for the last five fiscal years with the total return
on the Standard & Poors 500 Index and the Nasdaq Insurance Index, assuming the
investment of $100 in the Company's Common Stock on December 31, 1991, and the
reinvestment of all dividends.
LAWYERS TITLE CORPORATION
[GRAPH]
Cumulative Total Return on $100 invested on December 31, 1991
<PAGE>
============================================================
LAWYERS TITLE CORPORATION
STOCK RETURN
============================================================
NASDAQ
LTC S&P 500 INSURANCE
============================================================
12/31/91 $100.00 $100.00 $100.00
- ------------------------------------------------------------
12/31/92 148.79 107.62 135.34
- ------------------------------------------------------------
12/31/93 266.12 118.46 144.76
- ------------------------------------------------------------
12/31/94 155.63 120.03 136.26
- ------------------------------------------------------------
12/31/95 296.91 165.13 193.56
- ------------------------------------------------------------
12/31/96 297.58 203.05 220.57
============================================================
APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors has recommended, subject to shareholder
approval, the appointment of Ernst & Young LLP as independent public accountants
to audit the consolidated financial statements of the Company for the fiscal
year ending December 31, 1997.
Representatives of Ernst & Young LLP are expected to be present at
the Annual Meeting and will have an opportunity to make a statement if they
desire to do so and will be available to respond to appropriate questions.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR THE
APPOINTMENT OF ERNST & YOUNG LLP AS THE INDEPENDENT PUBLIC ACCOUNTANTS FOR THE
FISCAL YEAR ENDING DECEMBER 31, 1997.
PROPOSALS FOR 1998 ANNUAL MEETING
Under the regulations of the Commission, any shareholder desiring to
make a proposal to be acted upon at the 1998 Annual Meeting of Shareholders must
cause such proposal to be delivered, in proper form, to the Secretary of the
Company, whose address is 6630 West Broad Street, Richmond, Virginia 23230, no
later than December 9, 1997, in order for the proposal to be considered for
inclusion in the Company's Proxy Statement and form of proxy for that meeting.
The Company anticipates holding the 1998 Annual Meeting of Shareholders on May
19, 1998.
17
<PAGE>
The Company's Bylaws also prescribe the procedure a shareholder must
follow to nominate Directors or to bring other business before shareholders'
meetings. For a shareholder to nominate a candidate for Director at the 1998
Annual Meeting of Shareholders, notice of nomination must be received by the
Secretary of the Company not less than 60 days and not more than 90 days prior
to the meeting. The notice must describe various matters regarding the nominee
and the shareholder giving notice. For a shareholder to bring other business
before the 1998 Annual Meeting of Shareholders, notice must be received by the
Secretary of the Company not less than 60 days and not more than 90 days prior
to the meeting. The notice must include a description of the proposed business,
the reasons therefor, and other specified matters. Any shareholder may obtain a
copy of the Company's Bylaws, without charge, upon written request to the
Secretary of the Company.
OTHER MATTERS
THE COMPANY'S ANNUAL REPORT FOR THE FISCAL YEAR ENDED DECEMBER 31,
1996, INCLUDING FINANCIAL STATEMENTS, IS BEING MAILED TO SHAREHOLDERS WITH THIS
PROXY STATEMENT. A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR 1996
FILED WITH THE COMMISSION, EXCLUDING EXHIBITS, MAY BE OBTAINED WITHOUT CHARGE BY
WRITING TO THE SECRETARY OF THE COMPANY, WHOSE ADDRESS IS 6630 WEST BROAD
STREET, RICHMOND, VIRGINIA 23230.
18
