<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the registrant [ ]
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 Rule 14a-11(c) or Rule 14a-12
AON CORPORATION
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(Name of Registrant as Specified in Its Charter)
AON CORPORATION
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of filing fee (Check the appropriate box):
[X] $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2)
or
Item 22(a)(2) of Schedule 14A.
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[ ] 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):
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(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> 2
AON CORPORATION
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Notice of Annual Meeting of Holders of Common Stock
and Series C Preferred Stock . . . April 18, 1997
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To the Stockholders of
AON CORPORATION
NOTICE IS HEREBY GIVEN that the annual meeting of the holders of shares of
Common Stock and Series C Preferred Stock of Aon Corporation will be held on
Friday, April 18, 1997, at 10:00 A.M., at The First Chicago Center, One First
National Plaza, Chicago, Illinois, for the following purposes:
1. To elect directors pursuant to the By-Laws. The Board of Directors
unanimously recommends that stockholders vote 'FOR' the election of all
of the nominees.
2. To approve the adoption of amendments to the Aon Stock Option Plan in
order to increase the number of shares of Common Stock authorized under
such plan by 4,000,000 shares and to reapprove such plan in its entirety
with a limit on the number of shares awardable annually to any one
person in order to qualify such plan for treatment under Section 162(m)
of the Internal Revenue Code. The Board of Directors unanimously
recommends that stockholders vote 'FOR' the adoption of the amendments
and the reapproval.
3. To approve and adopt an amendment to the Aon Stock Award Plan in order
to increase the number of shares of Common Stock authorized under such
plan by 3,575,000 shares. The Board of Directors unanimously recommends
that stockholders vote 'FOR' the adoption of the amendment.
4. To adopt a resolution ratifying the appointment of Ernst & Young LLP as
the Company's independent auditors for the year 1997. The Board of
Directors unanimously recommends that stockholders vote 'FOR' the
adoption of the resolution.
5. To consider a proposal made by a stockholder as set forth beginning on
page 24 of the Proxy Statement. The Board of Directors unanimously
recommends that stockholders vote 'AGAINST' the proposal.
6. To transact such other business as may properly come before the meeting.
The close of business on February 26, 1997, has been fixed as the record
date for the determination of stockholders entitled to vote at the stockholders'
meeting. Only those stockholders of record at the close of business on such date
will be entitled to vote at the meeting.
Aon Corporation
William J. Fasel
William J. Fasel
Corporate Secretary
<PAGE> 3
March 10, 1997
<PAGE> 4
AON CORPORATION
123 NORTH WACKER DRIVE
CHICAGO, ILLINOIS 60606
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PROXY STATEMENT
FOR ANNUAL MEETING OF STOCKHOLDERS ON APRIL 18, 1997
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The annual meeting of the stockholders of Aon Corporation (the "Company")
will be held at The First Chicago Center, One First National Plaza, Chicago,
Illinois, at 10:00 A.M. on April 18, 1997. This Proxy Statement is being sent to
each holder of the issued and outstanding shares of the Company's Common Stock
("Common Shares") and each holder of the issued and outstanding shares of the
Company's Series C Cumulative Preferred Stock ("Preferred Shares" and, together
with the Common Shares, the "Shares") entitled to vote at the meeting in order
to furnish information relating to the business to be transacted at the meeting.
The Company's Annual Report to Stockholders for the fiscal year ended December
31, 1996, including financial statements, is being mailed to stockholders,
together with this Proxy Statement, beginning on or about March 10, 1997. No
part of such Annual Report shall be regarded as proxy-soliciting material or as
a communication by means of which any solicitation is made.
We hope that you will be present at the meeting. If you cannot attend,
please complete, sign and send to us the enclosed proxy in the accompanying
envelope so that your shares will be represented. The envelope is addressed to
the Company and requires no postage if mailed from within the United States. You
may revoke your proxy at any time before it is voted at the meeting. Each proxy
duly executed and received prior to the meeting and not otherwise revoked will
be voted according to its terms. Stockholders who receive more than one proxy
card--due to the existence of multiple Common Share accounts--should sign and
return all proxies received in order to be sure that all shares so owned are
voted.
If no specific direction is marked on a duly executed proxy as to the
manner of voting, the proxy will be voted in accordance with the recommendations
of the Board of Directors set forth herein. Please see page 25 of this Proxy
Statement for more details on voting procedures.
The Company will bear the cost of the preparation and solicitation of
proxies, including the reasonable charges and expenses of brokerage firms or
other nominees for forwarding proxy material to beneficial owners of Common
Shares. In addition to solicitation by mail, proxies may be solicited by
telephone, by facsimile, or personally by certain officers and regular employees
of the Company and its subsidiaries without extra compensation. The Company has
retained Georgeson & Co., 100 Wall Street, New York, New York, to aid in the
solicitation of proxies for a fee estimated at $8,500. The enclosed proxy is
solicited by and on behalf of the Board of Directors.
1
<PAGE> 5
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
At the close of business on February 26, 1997, the record date fixed for
determination of stockholders entitled to vote at the meeting, there were
110,945,346 Common Shares and 1,000,000 Preferred Shares outstanding, each
entitled to one vote.
As of February 26, 1997, the beneficial owners of 5% or more of any class
of the Company's securities entitled to vote at the meeting and which were known
to the Company were:
<TABLE>
<CAPTION>
No. of Common Percent of
Name and Address Shares Class
---------------- ---------------- ----------
<S> <C> <C>
Patrick G. Ryan 13,591,447(1) 12.3%
c/o Aon Corporation
123 N. Wacker Drive
Chicago, IL 60606
Brinson Partners, Inc. 7,641,630(2) 6.9%
209 S. LaSalle Street
Chicago, IL 60604
Delaware Management Company, Inc. 5,856,683(3) 5.3%
2005 Market Street
Philadelphia, PA 19103
<CAPTION>
No. of Preferred Percent of
Name and Address Shares Class
---------------- ---------------- ----------
<S> <C> <C>
Jessie V. Stone 600,000 60%
c/o W. Clement Stone
Enterprises, Inc.
P.O. Box 649
Lake Forest, IL 60045
W. Clement Stone 400,000 40%
c/o W. Clement Stone
Enterprises, Inc.
P.O. Box 649
Lake Forest, IL 60045
</TABLE>
- ------------
(1) Includes 9,939,750 Common Shares owned by Ryan Enterprises Corporation of
Illinois or its wholly-owned subsidiaries ("REC") or by Ryan Holding
Corporation of Illinois or its wholly-owned subsidiaries ("RHC"), 1,377
shares owned by the Company's Employee Stock Ownership Plan and allocated to
Mr. Ryan, and 128,140 shares beneficially owned and attributed to Mr. Ryan
pursuant to his investment in the Aon Common Stock Fund through the Aon
Savings Plan. Mr. Ryan, his wife and his children own all of the outstanding
common stock of REC and RHC, and Mr. and Mrs. Ryan and two of their sons are
the sole directors of REC and RHC. Accordingly, the Common Shares held by
REC and RHC are included in the shares beneficially owned by Mr. Ryan. Also
includes 576,600 Common Shares held of record and beneficially owned by Mrs.
Ryan. Mr. Ryan disclaims any beneficial interest in these shares. Under the
terms of the Employee Stock Ownership Plan and under the terms of the Aon
Common Stock Fund investment through the Aon Savings Plan, Mr. Ryan is
entitled to direct the manner in which the respective trustees will vote the
shares allocated to Mr. Ryan.
(2) Includes to the best knowledge of the Company all shares beneficially owned
by Brinson Partners, Inc., its parent, subsidiaries and affiliates.
(3) Includes to the best knowledge of the Company all shares beneficially owned
by Delaware Management Company, Inc., its subsidiaries and affiliates.
2
<PAGE> 6
ELECTION OF DIRECTORS
Unless a proxy directs to the contrary, it is intended that the proxies
will be voted for the election as Directors of the fifteen nominees named on the
following pages to hold office until the next succeeding annual stockholders'
meeting or until their respective successors are duly elected and qualify. All
the nominees are currently Directors of the Company. While management has no
reason to believe that any of the nominees will not be available to serve as a
Director, if for any reason any of them should become unavailable, the proxies
will be voted for such substitute nominees as may be designated by the Board of
Directors. The Directors shall be elected by the vote of the majority of votes
present in person or represented by proxy at the meeting. Accordingly, since
votes withheld will count as present at the meeting (and will therefore also
count towards the establishment of a quorum) a vote withheld for a nominee will
adversely effect that nominee's ability to secure the necessary majority of the
votes present at the meeting.
Set forth on the following pages is biographical information concerning
each management nominee for election as a Director, the nominee's principal
occupation, the period during which the nominee has served as a Director of the
Company including service as a Director or employee of Combined Insurance
Company of America ("Combined Insurance"), a subsidiary of the Company, or Ryan
Insurance Group, Inc. ("Ryan Group"), which merged with the Company in 1982.
Ages shown for all Directors are as of December 31, 1996. There are no nominees
for the Board other than the management nominees.
- --------------------------------------------------------------------------------
PATRICK G. RYAN Director since 1965
Patrick G. Ryan has been Chairman of the Board of the Company since 1990 and
President and Chief Executive Officer of the Company since the merger of the
Company and Ryan Group in 1982. Prior to the merger, Mr. Ryan served as Chairman
of the Board and Chief Executive Officer of Ryan Group. Mr. Ryan is a director
of First Chicago NBD Corporation, Chairman of the Board of Trustees of
Northwestern University and a Trustee of Rush-Presbyterian-St.Luke's Medical
Center. He serves as Chairman of the Executive Committee.
Age: 59
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DANIEL T. CARROLL Director since 1980
Mr. Carroll is Chairman of The Carroll Group, Inc. From early 1980 until early
1982, he was President and Chief Executive Officer and a Director of Hoover
Universal, Inc. From 1975 until early 1980, he was President of Gould Inc. He is
director of A.M. Castle Co.; American Woodmark Corporation; Comshare, Inc.;
Diebold, Inc.; Holmes Protection Group, Inc.; Oshkosh Truck Corporation;
Recombinant BioCatalysis Inc.; Wolverine World Wide, Inc.; and Woodhead
Industries, Inc. He serves as a member of the Organization and Compensation and
the Nominating Committees.
Age: 70
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3
<PAGE> 7
FRANKLIN A. COLE Director since 1984
Mr. Cole, since 1984, has been Chairman of Croesus Corporation, a personal
investment company. From 1971 to 1984, he was Chairman and Chief Executive
Officer of Walter E. Heller International Corporation (renamed Amerifin
Corporation in January 1984), a worldwide diversified financial services
company. Mr. Cole is also a director of American National Bank and Trust Company
of Chicago; CNA Income Shares, Inc.; Duff & Phelps Utilities Income Inc.; GATX
Corporation; and Local Initiatives Support Corporation. He is Vice Chairman of
the Board of Trustees of Northwestern University and Chairman of The Chicago
Human Relations Foundation. He serves as a member of the Investment and Audit
Committees.
Age: 70
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EDGAR D. JANNOTTA Director since 1995
On January 2, 1996, William Blair & Company, L.L.C. converted from a partnership
at which time Mr. Jannotta was named Senior Director. Prior to this conversion,
Mr. Jannotta joined William Blair & Company in May 1959 as an Associate, became
a Partner in January 1965, Assistant Managing Partner in June 1973, Managing
Partner in September 1977, and Senior Partner in January 1995. He is a director
of AAR Corp.; Bandag, Incorporated; Molex Incorporated; New York Stock Exchange,
Inc.; Oil-Dri Corporation of America; Safety-Kleen Corp.; and Unicom
Corporation. He serves as a member of the Investment and the Organization and
Compensation Committees.
Age: 65
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PERRY J. LEWIS Director since 1972
Mr. Lewis is a Managing Director of Morgan Lewis Githens & Ahn, Inc., a New York
investment banking firm. Until October 1, 1979, Mr. Lewis was Senior Vice
President and a director of Smith Barney, Harris Upham & Co., Inc. He is a
director of Evergreen Media Corporation; Gradall Industries, Inc.; ITI
Technologies, Inc.; Quaker Fabric Corporation; and Stuart Entertainment, Inc. He
serves as a member of the Investment and Executive Committees.
Age: 58
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4
<PAGE> 8
JOAN D. MANLEY Director since 1984
From 1960 to 1984, Mrs. Manley was with Time Incorporated, serving as a Group
Vice-President from 1975 onwards and as a director from 1978 to 1984. She is
also a director of Big Flower Press Holdings, Inc.; Sara Lee Corporation; and
Viking Office Products, Inc. She sits on the boards of the Keystone Center and
The Summit Foundation. She serves as Chairman of the Nominating Committee and as
a member of the Audit Committee.
Age: 64
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ANDREW J. MCKENNA Director since 1970
Mr. McKenna served as a Director of Ryan Group from 1970 until 1982 when he was
elected to the Board of Directors of the Company. He is Chairman and Chief
Executive Officer of Schwarz Paper Company, a printer, converter, producer and
distributor of packaging and promotional materials; and a director of Dean Foods
Company, The First National Bank of Chicago, McDonald's Corporation, Skyline
Corporation, and the Tribune Company. He is Chairman of the Board of Trustees of
the University of Notre Dame and Chairman of the Board of Trustees of the Museum
of Science and Industry. Mr. McKenna is also a director of Children's Memorial
Hospital and the Lyric Opera. He serves as a member of the Investment and the
Organization and Compensation Committees.
Age: 67
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NEWTON N. MINOW Director since 1990
Mr. Minow is Counsel to the Chicago law firm of Sidley & Austin where he served
as Partner from 1965 to 1991. He served as Chairman of the Federal
Communications Commission from 1961 to 1963. He is a director of Big Flower
Press Holdings Inc.; Manpower, Inc.; Sara Lee Corporation; and True North
Communications, Inc. Mr. Minow is former Chairman of the Carnegie Corporation of
New York, a Trustee and former Chairman of the Board of Trustees of The RAND
Corporation, and former Chairman of the Board of Governors of the Public
Broadcasting Service. He is a Life Trustee of Northwestern University, a Life
Trustee of the University of Notre Dame and is the Annenberg Professor of
Communications and Law at Northwestern University. He serves as a member of the
Audit and Investment Committees.
Age: 70
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5
<PAGE> 9
PEER PEDERSEN Director since 1974
Mr. Pedersen is an attorney at law and is Chairman and Managing Partner of the
Chicago law firm of Pedersen & Houpt, P.C. He is a director of Boston Chicken,
Inc.; Extended Stay America, Inc.; H(2)O Plus, Inc.; Latin America Growth Fund,
Inc.; Spraying Systems Co.; Tempel Steel Company; Tennis Corporation of America;
WMX Technologies, Inc.; and the Western Golf Association. He also serves on the
Boards of Children's Memorial Hospital, St. Joseph Carondelet Child Care,
Rehabilitation Institute of Chicago, Lyric Opera of Chicago and the Boys and
Girls Clubs of Chicago and is President of the Robert R. McCormick Boys and
Girls Club of Chicago. He serves as Chairman of the Audit Committee and as a
member of the Organization and Compensation Committee.
Age: 71
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DONALD S. PERKINS Director since 1983
Mr. Perkins retired from Jewel Companies Inc. in 1983. He had been with Jewel
since 1953, serving as President from 1965 to 1970, as Chairman of the Board of
Directors from 1970 to 1980, and as Chairman of the Executive Committee until
his retirement. He is a director of Cummins Engine Company, Inc.; Current
Assets; Illinova Corporation; Inland Steel Industries, Inc.; LaSalle Street
Fund, Inc.; LaSalle U.S. Realty Income & Growth Fund, Inc.; Lucent Technologies;
The Putnam Funds; Ryerson Tull, Inc.; Springs Industries, Inc.; and Time Warner,
Inc. He is Vice Chairman of the Board of Trustees of Northwestern University. He
serves as Chairman of the Organization and Compensation Committee and as a
member of the Investment Committee.
Age: 69
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JOHN W. ROGERS, JR. Director since 1993
Mr. Rogers is President and founder of Ariel Capital Management, Inc., an
institutional money management firm. Mr. Rogers is a director of American
National Bank and Trust Company of Chicago; Burrell Communications Group Inc.;
and PEB Financial Group, Inc. In addition to serving as President of the Board
of Commissioners of the Chicago Park District, Mr. Rogers serves as a director
of the Chicago Urban League, The Chicago Symphony Orchestra, as a Trustee of
Lake Forest College and as a Trustee of Rush-Presbyterian-St. Luke's Medical
Center. He serves as a member of the Audit and Investment Committees.
Age: 38
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6
<PAGE> 10
GEORGE A. SCHAEFER Director since 1991
Mr. Schaefer served as Chairman and Chief Executive Officer of Caterpillar Inc.
from 1985 until his retirement in July, 1990. Mr. Schaefer is a director of
Caterpillar Inc.; Helmerich & Payne, Inc.; McDonnell Douglas Corporation; and
Morton International, Inc. He is a member of The Business Council. He serves as
a member of the Audit and the Organization and Compensation Committees.
Age: 68
- --------------------------------------------------------------------------------
RAYMOND I. SKILLING Director since 1977
Mr. Skilling is an attorney at law and a Solicitor of the English Supreme Court.
He serves as Executive Vice President and Chief Counsel of the Company. He has
been employed by the Company since 1976, prior to which he was a partner in the
international law firm now called Clifford Chance, headquartered in London,
England. Mr. Skilling has been a legal advisor to the Company since 1967. He
serves as a member of the Executive Committee.
Age: 57
- --------------------------------------------------------------------------------
FRED L. TURNER Director since 1991
Mr. Turner is Senior Chairman, Chairman of the Executive Committee and a
Director of McDonald's Corporation. Mr. Turner joined McDonald's Corporation in
1956 and assumed his current position in 1990, after serving that company as
Chairman of the Board and Chief Executive Officer. Mr. Turner is also a director
of Baxter International, Inc.; W.W. Grainger, Inc.; and Ronald McDonald House
Charities. He serves as a member of the Audit Committee and is Chairman of the
Investment Committee.
Age: 63
- --------------------------------------------------------------------------------
ARNOLD R. WEBER Director since 1991
Dr. Weber served as President of Northwestern University from 1985 until 1994.
On January 1, 1995 he became Chancellor of Northwestern University. From 1980 to
1985, Dr. Weber was President of the University of Colorado. Dr. Weber has also
held various senior government positions including Executive Director of the
Cost of Living Council and Associate Director of the Office of Management and
Budget. He is a director of Burlington Northern Santa Fe Corporation; Inland
Steel Industries, Inc.; PepsiCo, Inc.; Deere & Company; and the Tribune Company.
He is a trustee of the University of Notre Dame, is president of the Civic
Committee of the Commercial Club of Chicago and president of the Commercial Club
of Chicago. He serves as a member of the Investment and the Organization and
Compensation Committees.
Age: 67
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7
<PAGE> 11
OWNERSHIP OF COMMON SHARES
The following table sets forth the number of Common Shares beneficially
owned as of February 26, 1997 by each Director including Patrick G. Ryan and
Raymond I. Skilling, by all Directors and all Named Executives (as defined on
page 12) combined, and by all Directors and members of the Executive Group (as
defined on page 12) combined. As used in this Proxy Statement, "beneficially
owned" means the sole or shared power to vote or direct the voting of a security
and/or the sole or shared investment power with respect to a security (i.e., the
power to dispose or direct the disposition of a security). The table therefore
does not include the "phantom stock" shares held under the Outside Director
Deferred Compensation and Stock Award Plans (see "Compensation of the Board of
Directors"), the Aon Deferred Compensation Plan (see "Executive Compensation"),
or the Aon Stock Award Plan (see "Organization and Compensation Committee
Report--Long Term Incentive Compensation--Aon Stock Award Plan").
<TABLE>
<CAPTION>
No. of Shares Percent of
Directors Beneficially Owned(1) Class(2)
- --------- --------------------- ----------
<S> <C> <C>
Patrick G. Ryan(3)(4)....................................... 13,591,447 12.3
Daniel T. Carroll........................................... 1,650 *
Franklin A. Cole............................................ 1,800 *
Edgar D. Jannotta........................................... 24,900 *
Perry J. Lewis.............................................. 3,000 *
Joan D. Manley.............................................. 4,050 *
Andrew J. McKenna........................................... 6,900 *
Newton N. Minow(3).......................................... 60,000 *
Peer Pedersen............................................... 14,478 *
Donald S. Perkins(5)........................................ 4,650 *
John W. Rogers, Jr.(6)...................................... 2,375 *
George A. Schaefer.......................................... 3,900 *
Raymond I. Skilling(3)(4)(7)................................ 277,338 *
Fred L. Turner.............................................. 2,137 *
Arnold R. Weber............................................. 1,050 *
Executives
- ----------
Michael A. Conway(4)(7)(8).................................. 13,232 *
Daniel T. Cox(4)(7)......................................... 41,533 *
Harvey N. Medvin(3)(4)(7)................................... 336,016 *
All Directors and Named Executives combined (18 persons).... 14,390,456 13.0
Michael D. O'Halleran(3)(4)(7).............................. 48,630 *
All Directors and Executive Group combined (19 persons)..... 14,439,086 13.0
</TABLE>
- ------------
(1) The Directors and the members of the Executive Group, all Directors and the
Named Executives combined, and all Directors and the members of the
Executive Group of the Company combined, have sole voting power and sole
investment power over the Common Shares listed, except as indicated in note
(3) and in the table below:
<TABLE>
<CAPTION>
Number of
Common Voting Investment
Shares Power Power
---------- ------ ----------
<S> <C> <C> <C>
Patrick G. Ryan..................................... 9,939,750 Shared Shared
Franklin A. Cole.................................... 1,800 Shared Shared
Arnold R. Weber..................................... 900 Shared Shared
Michael A. Conway................................... 11,850 Shared Shared
Daniel T. Cox....................................... 40,338 Shared Shared
All Directors and Named Executives combined
(other than as indicated in note (3))............. 9,994,638
Michael D. O'Halleran............................... 31,942 Shared Shared
All Directors and Executive Group combined.......... 10,026,580
</TABLE>
(2) An asterisk indicates that the percentage of shares beneficially owned by
the named individual does not exceed one percent (1%) of the Company's
Shares.
8
<PAGE> 12
(3) Includes the following Common Shares beneficially owned by immediate family
of the nominees: 576,000 by Mrs. Ryan; 2,250 by Mrs. Medvin; 22,500 by Mrs.
Minow; 12,068 by Mrs. O'Halleran; and 166,593 by Mrs. Skilling (Mrs.
Skilling and Mrs. Ryan are sisters). As to the Common Shares so held, the
nominees disclaim beneficial ownership.
(4) Includes beneficial interest in the allocated shares of the Aon Employee
Stock Ownership Plan ("ESOP"), and includes beneficial interest in
attributable shares of the Aon Common Stock Fund held pursuant to investment
through the Aon Savings Plan, but excludes the unallocated shares of the
ESOP. Unallocated Common Shares owned by the ESOP, which are owned for the
benefit of all participating employees, totaled 962,056. The allocated and
unallocated shares owned by the ESOP, and the attributed Common Shares owned
by the Aon Common Stock Fund through investment in the Aon Savings Plan are
voted by the trustees as directed by their respective participants.
(5) Excludes 5,244,724 Common Shares held in trust for which Mr. Perkins is a
trustee and has shared voting and investment power. As to the Common Shares
so held, Mr. Perkins disclaims beneficial ownership.
(6) Ariel Capital Management, Inc., of which Mr. Rogers is President and
founder, does not beneficially own any Common Shares nor has it beneficially
owned any Common Shares during Mr. Rogers' tenure on the Board of the
Company.
(7) Does not include shares awarded under the Aon Stock Award Plan which are not
yet vested. See "Summary Compensation Table."
(8) Excludes 569,100 Common Shares currently held by Aon Pension Plan for which
Mr. Conway is a trustee and has shared voting and investment power.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Based on the Company's review of copies of Forms 3, 4, and 5, and
amendments thereto furnished to the Company since January 1, 1996, pursuant to
the rules promulgated under the Securities Exchange Act of 1934, as amended,
(the "Act"), the Company believes that since January 1, 1996, all Directors and
officers of the Company have timely reported all transactions to the Securities
and Exchange Commission, subject only to one exception. The Form 4 concerning
the purchase of 500 Common Shares by Mr. John W. Rogers in July 1996 was not
timely filed, and in accordance with the Act the transaction was reported as a
late transaction on Mr. Rogers' Form 5.
COMPENSATION OF THE BOARD OF DIRECTORS
Each Director who is not a salaried employee of the Company or any of its
subsidiaries receives a $20,000 yearly retainer for services to the Board of
Directors. In addition, the Chairman of the Nominating, the Organization and
Compensation, the Audit, and the Investment Committees, respectively, receives
an additional $2,500 annually for services in such capacities. In addition to
the above retainers, Directors who are not salaried employees of the Company or
any of its subsidiaries ("outside Directors") receive $750 for each Board and
Board Committee meeting attended. Under the Aon Outside Director Stock Award
Plan (as amended and restated in 1994) (the "Award Plan"), outside Directors are
granted 450 shares of Common Stock each year following their election at the
annual meeting of stockholders (any outside Director elected to the Board other
than at the annual stockholders' meetings receives a pro rata number of shares
of Common Stock). Officers of the Company or its subsidiaries do not receive any
additional compensation for membership on the Board of Directors or any of its
Committees.
Outside Directors may elect to defer cash compensation earned pursuant to
the Outside Director Deferred Compensation Plan (the "Deferred Plan"). Under the
Deferred Plan, outside Directors elect that portion of the annual retainer and
fees (collectively referred to as "Fees") which
9
<PAGE> 13
will be credited to either a cash account, the earnings of which are based on
one-year Treasury bills, or a stock account whose value is based upon the
performance of the Common Shares on a dividend reinvested basis. The cash
account is a bookkeeping device only and no funds are actually invested or set
aside for the outside Directors' benefit. The outside Directors' stock accounts
are credited with the number of phantom shares that could have been purchased at
the average of the high and low price of the Common Shares on the date the Fees
are earned. The phantom stock account does not consist of actual shares, but is
maintained for bookkeeping purposes only. As dividends are declared on the
Common Shares, each outside Director's phantom stock account, for bookkeeping
purposes, is credited with the dividends which would have been earned if shares
of Common Stock had been purchased and the funds so credited are treated as if
reinvested in shares of Common Stock. Each participating outside Director
specifies a payout schedule, including a commencement date, pursuant to which
the Company will distribute to the outside Director the amount in the outside
Director's cash account and either the cash equivalent of the amount in the
outside Director's phantom stock account, or shares of Common Stock equal to the
number of shares of phantom stock.
Outside Directors may also elect to defer receipt of the 450 shares of
Common Stock and instead maintain a phantom stock account. "Dividends" earned on
the share equivalent balance in the phantom stock account are treated as though
reinvested, and outside Directors may choose a time and schedule for pay-out of
the phantom stock account in shares of Common Stock plus the cash equivalent of
any fractional shares.
Under the Award Plan, outside Directors are also entitled to certain
benefits when they retire from the Board. The Award Plan provides for an amount
to be credited to an account on behalf of each outside Director, as follows:
(i) $10,000 for each annual period of Board service prior to 1994, but
not more than $100,000 in the aggregate; and
(ii) $20,000 per annum for each annual period of service commencing
with April 15, 1994.
The pre-1994 amount will accrue pro rata over the number of years between 1994
and the year the outside Director attains the normal retirement date. The
benefit for the years of service commencing in 1994 will accrue in full on each
service anniversary date. The aggregate amount will vest at a rate of 10% for
each annual period of service. Upon retirement from the Board, or upon death or
disability, the vested value accumulated in the account as to a particular
outside Director (the "Accrued Vested Retirement Amount") will be distributed in
ten substantially equal installments consisting of shares of Common Stock. The
aggregate amount of shares of Common Stock to be delivered will be calculated by
dividing the Accrued Vested Retirement Amount by the average of the high and low
market price of Common Shares on the normal retirement date for each outside
Director.
The following table shows, as of February 26, 1997, the total number of
shares credited to the outside Directors' respective phantom stock accounts
under the Deferred Plan and under the Award
10
<PAGE> 14
Plan, and the number of phantom shares representing the Accrued Vested
Retirement Value ("Phantom Retirement Shares") under the Award Plan, in each
case as described above:
<TABLE>
<CAPTION>
Number of
Number of Phantom
Phantom Retirement
Director Shares Shares
- -------- --------- ----------
<S> <C> <C>
Daniel T. Carroll.............................. 16,912 2,080
Franklin A. Cole............................... 21,693 1,850
Edgar D. Jannotta.............................. 2,128 120
Perry J. Lewis................................. 3,610 1,220
Joan D. Manley................................. 10,029 1,350
Andrew J. McKenna.............................. 16,978 1,510
Newton N. Minow................................ 4,044 970
Peer Pedersen.................................. 20,044 2,470
Donald S. Perkins.............................. 9,702 1,850
John W. Rogers, Jr. ........................... 3,487 380
George A. Schaefer............................. 867 680
Fred L. Turner................................. 6,386 630
Arnold R. Weber................................ 8,295 660
Total................................... 124,175 15,770
</TABLE>
In 1994, the Company established an Outside Director Bequest Plan (the
"Bequest Plan"). The purpose of the Bequest Plan is to acknowledge the service
of outside Directors, to recognize the mutual interest of the Company and its
outside Directors in supporting worthy charitable institutions and to assist the
Company in attracting and retaining outside Directors of the highest caliber.
The Company is funding the Bequest Plan generally through the maintenance of
life insurance policies on its outside Directors. The charitable donations by
the Company will be directed to charitable institutions designated by the
outside Directors. The Bequest Plan is designed so that upon the deaths of
specified outside Directors, it will then donate a total of $100,000 per outside
Director each year for ten years in the name of the outside Director to tax
qualified institutions designated by the outside Director. Individual outside
Directors derive no financial benefit from the Bequest Plan since any and all
insurance proceeds and tax deductible charitable donations accrue solely to the
Company. An outside Director is not eligible to participate in the Bequest Plan
until he or she has completed one full year of service on the Board. The Board
retains at all times the right to terminate the Bequest Plan and to decline to
make any requested bequest if, in the Board's judgment, doing so is in the best
interests of the Company and its stockholders.
COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors of the Company has appointed standing committees,
including Executive, Audit, Investment, Organization and Compensation, and
Nominating Committees. Membership on the committees since the last annual
meeting of the Board in 1996 has been as follows:
<TABLE>
<CAPTION>
Organization and
Executive Audit Investment Compensation Nominating
--------- ----- ---------- ---------------- ----------
<S> <C> <C> <C> <C>
Patrick G. Ryan(1) Peer Pedersen(1) Fred L. Turner(1) Donald S. Perkins(1) Joan D. Manley(1)
Perry J. Lewis Franklin A. Cole Franklin A. Cole Daniel T. Carroll Daniel T. Carroll
Raymond I. Skilling Joan D. Manley Edgar D. Jannotta Edgar D. Jannotta
Newton N. Minow Perry J. Lewis Andrew J. McKenna
John W. Rogers, Jr. Andrew J. McKenna Peer Pedersen
George A. Schaefer Newton N. Minow George A. Schaefer
Fred L. Turner Donald S. Perkins Arnold R. Weber
John W. Rogers,
Jr.
Arnold R. Weber
</TABLE>
- ------------
(1) Chairman.
11
<PAGE> 15
When the Board of Directors is not in session, the Executive Committee is
empowered to exercise such powers and authority in the management of the
business and affairs of the Company as would be exercised by the Board of
Directors, subject to certain exceptions. The Executive Committee did not meet
during 1996, but it did act by unanimous written consent on one occasion.
The Audit Committee provides assistance to the Board of Directors in
discharging its responsibilities in connection with the financial and accounting
practices of the Company and the internal controls related thereto, and
represents the Board of Directors in connection with the services rendered by
the Company's independent auditors. The Audit Committee met three times during
1996.
The Investment Committee is responsible for the formation of broad
investment policy applicable to the operating subsidiaries of the Company. This
policy is implemented by all subsidiaries based on the specific financial
requirements of the individual units. The Investment Committee met five times
during 1996.
The Nominating Committee recommends nominees to the Board to fill vacancies
or as additions to the Board of Directors. Although the Committee does not
specifically solicit suggestions from stockholders as to possible candidates,
the Committee will consider stockholders' recommendations. Suggestions, together
with a description of the proposed nominee's qualifications, stock holdings in
the Company, other relevant biographical information, and an indication of the
willingness of the proposed nominee to serve, should be sent to the Corporate
Secretary of the Company. Suggestions may be submitted at any time of year but
should be received by November 15 of each year in order to be considered in
connection with the annual meeting of the Company's stockholders in the spring
of the following year. The Nominating Committee did not meet during 1996.
The Organization and Compensation Committee annually reviews and determines
the compensation of the Chairman, President and Chief Executive Officer of the
Company. The Organization and Compensation Committee also reviews, advises and
consults with the Chairman, President and Chief Executive Officer on the
compensation of other officers and key employees and as to the Company's policy
on compensation. The Organization and Compensation Committee also administers
the Aon Stock Option Plan, the Aon Stock Award Plan and the Aon Deferred
Compensation Plan, including granting stock options and stock awards and
interpreting the plans, and has general oversight responsibility with respect to
the Company's other employee benefit programs. In addition, the Organization and
Compensation Committee also renders advice and counsel to the Chairman,
President and Chief Executive Officer on the selection of senior officers of the
Company and key executives of the Company's major subsidiaries. The Organization
and Compensation Committee met four times during 1996.
The Board of Directors met eight times during 1996. All incumbent Directors
attended at least 75% of the meetings of the Board and all committees of the
Board on which the respective Directors served.
EXECUTIVE COMPENSATION
The following table discloses compensation received by the Company's Chief
Executive Officer and the four most highly paid executive officers of the
Company (collectively, the "Named Executives") for the three fiscal years ended
December 31, 1996. On February 21, 1997, which was the date of the completion of
the Company's acquisition of Alexander & Alexander Services Inc., Michael D.
O'Halleran became an executive officer of the Company and will be reported as
such for fiscal year 1997. Compensation information for Mr. O'Halleran for
fiscal year 1996 is also set forth in the following table and elsewhere in this
Proxy Statement. Collectively, the Named Executives and Mr. O'Halleran are
referred to herein as the "Executive Group."
12
<PAGE> 16
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Other Long- All
Annual Restrictive Term Other
Compen- Stock Incentive Options/ Compen-
Name and Principal sation Award(s) Payouts SARs sation
Position Year Salary $ Bonus $ ($) ($)(1) ($) (#) ($)(2)
------------------ ---- -------- --------- ------- ----------- --------- -------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Patrick G. Ryan.................... 1996 957,692 1,620,000 178,659(3) 100,000 184,513
Chairman, President, Chief 1995 886,968 742,500 163,697 50,000 53,396
Executive Officer & Director 1994 832,233 495,000 56,991 90,000 23,250
Michael A. Conway.................. 1996 365,385 210,000 515,000 50,905
Senior Vice President & Senior 1995 339,512 120,000 19,562
Investment Officer 1994 297,267 168,000 15,000 14,315
Daniel T. Cox...................... 1996 415,385 528,000 515,000 72,244
Executive Vice President 1995 401,305 365,500 29,650
1994 401,447 205,400 15,000 16,543
Harvey N. Medvin................... 1996 463,462 637,500(4) 772,500 15,000 86,142
Executive Vice President, Chief 1995 428,600 361,250 375,500 30,332
Financial Officer & Treasurer 1994 432,201 255,000 30,000 17,741
Michael D. O'Halleran.............. 1996 750,000 850,000 302,630(5) 1,490,625 525,611(6)
President & Chief Operating
Officer, Aon Group, Inc.
Raymond I. Skilling................ 1996 463,462 637,500 87,550
Executive Vice President, Chief 1995 428,600 361,250 375,500 30,332
Counsel & Director 1994 430,904 255,000 15,000 17,741
</TABLE>
- ------------
(1) As of December 31, 1996, the members of the Executive Group held the
following number of unvested shares of restricted stock granted pursuant to
the Aon Stock Award Plan, the vesting schedule for which and the market
value (the average high and low price on the relevant date) of which on the
dates of grant and as of year-end 1996, respectively are set forth below:
<TABLE>
<CAPTION>
Date of Last
No. Shares Grant December 31, 1996 Vesting
Unvested Value ($) Value Date
---------- ---------- ----------------- ----------
<S> <C> <C> <C> <C>
Michael A. Conway..................... 21,250 754,531 1,332,109 03-14-2006
Daniel T. Cox......................... 39,250 1,190,750 2,460,484 03-14-2006
Harvey N. Medvin...................... 47,500 1,545,769 2,977,656 03-14-2006
Michael D. O'Halleran................. 137,583 4,527,282 8,624,732 01-02-2006
Raymond I. Skilling................... 21,250 565,156 1,332,109 03-16-2005
</TABLE>
No dividends are paid on shares of unvested restricted stock.
(2) Except for additional amounts footnoted elsewhere in this table, the amounts
disclosed in this column include:
(a) Company contributions of $4,500 in fiscal year 1996 under the Aon
Savings Plan, a defined contribution plan, on behalf of each of the
members of the Executive Group except Mr. Ryan who has waived further
participation in the Plan.
(b) Company contributions of $6,690 in fiscal year 1996 under the ESOP, on
behalf of each of the members of the Executive Group.
(c) Company contributions of the following amounts in fiscal year 1996
under the Aon Supplemental ESOP on behalf of Mr. Ryan, $112,008; Mr.
Conway, $19,626; Mr. Cox, $36,605; Mr. Medvin, $43,875; Mr. O'Halleran,
$98,633; and Mr. Skilling, $43,875.
(d) Company contributions of the following amounts for fiscal 1996 under
the Aon Executive Life Insurance Plan, a split-dollar arrangement, on
behalf of Mr. Ryan, $65,815; Mr. Conway, $20,089; Mr. Cox, $24,449; Mr.
Medvin, $31,077; Mr. O'Halleran, $30,623; and Mr. Skilling, $32,485.
(3) Represents non-cash perquisites related to the use of company-owed
automobiles and aircraft, and miscellaneous other perquisites provided for
business purposes considered to be reasonable and necessary business
expenses of the Company which, in the case of Mr. Ryan for
13
<PAGE> 17
1996, was in the total amount of $178,659, consisting of $139,204 for the
use of Company aircraft and $39,455 for the use of a Company car and driver.
(4) Mr. Medvin deferred receipt of $159,375 of this amount pursuant to the
Company's Deferred Compensation Plan.
(5) Represents the amount reimbursed in 1996 for the payment of taxes incurred
as a result of the forgiveness of a loan to Mr O'Halleran (see footnote 6).
(6) Mr. O'Halleran had a loan outstanding with the Company in the amount of
$300,000, with accrued interest thereon of $85,165. Under the terms of the
loan, Mr. O'Halleran assumed certain obligations and certain conditions were
imposed which, if fulfilled, would result in the forgiveness of the loan and
accrued interest. Mr. O'Halleran satisfied all such conditions and
obligations in 1996 and the amounts were forgiven.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES(1)
The following table provides information on stock option exercises in
fiscal 1996 by the members of the Executive Group:
<TABLE>
<CAPTION>
Shares Subject Value of Unexercised
to Options In-the-Money Options/SAR's
Shares Value Fiscal Year-End at Fiscal Year End($)(2)
Acquired Realized ---------------------------- ----------------------------
Name on Exercise ($)(1) Exercisable Unexercisable Exercisable Unexercisable
---- ----------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Patrick G. Ryan......... -- -0- -- 240,000 -- 5,051,253
Michael A. Conway....... -- -0- -- 15,000 -- 430,938
Daniel T. Cox........... -- -0- -- 15,000 -- 430,938
Harvey N. Medvin........ -- -0- -- 45,000 -- 1,029,688
Michael D. O'Halleran... -- -0- -- -0- -- -0-
Raymond I. Skilling..... -- -0- -- 15,000 -- 430,938
</TABLE>
- ------------
(1) Based upon the average high and low price of the Common Shares as of the
date exercised.
(2) Based upon the average high and low price of the Common Shares as of
December 31, 1996.
OPTION GRANTS IN 1996 FISCAL YEAR
During 1996, Patrick G. Ryan and Harvey N. Medvin were granted options to
purchase shares of Common Stock. Subject to the terms of the Aon Stock Option
Plan(1), additional information regarding these options is set forth in the
table below:
<TABLE>
<CAPTION>
Individual Grants Grant Date Value
- ---------------------------------------------------------------------------------------- -------------------
Number of Percent of
securities total options
underlying granted to Exercise or
option employees base price Expiration Grant Date
Name granted in fiscal year ($/Sh) Date Present Value(2)($)
---- ---------- -------------- ----------- ---------- -------------------
<S> <C> <C> <C> <C> <C>
Patrick G. Ryan............ 100,000 10.0% 51.500 03-14-2003 1,187,800
Harvey N. Medvin........... 15,000 1.5% 51.500 03-14-2003 178,170
</TABLE>
- ------------
(1) The total amount of shares disclosed in this table will vest in accordance
with the normal vesting schedule, as follows:
<TABLE>
<CAPTION>
Date Percent Vested
- ---- --------------
<S> <C>
03-14-1999................................................ 30%
03-14-2000................................................ 50%
03-14-2001................................................ 70%
03-14-2002................................................ 100%
</TABLE>
14
<PAGE> 18
Optionees have no right to receive dividends on, or vote, any shares until
such shares have been delivered.
(2) Based upon the Black-Scholes Option Pricing Model assuming a volatility rate
of 0.1987, a risk free interest rate of 6.0%, a dividend yield of 2.5% and
that 383 days on average elapse between vesting and exercise.
PENSION PLAN TABLE
The following table shows the estimated annual pension benefits payable to
a covered participant at normal retirement age (65 years) under the Company's
qualified defined benefit pension plan (the "Aon Pension Plan"), as well as
under the non-qualified supplemental pension plan (the "Excess Benefit Plan").
The Excess Benefit Plan provides benefits that would otherwise be denied
participants by reason of certain Internal Revenue Code limitations on qualified
plan benefits, based on remuneration that is covered under the plans and years
of service with the Company and its subsidiaries:
<TABLE>
<CAPTION>
Years of Service
--------------------------------------------------------------------------------
Remuneration($) 10 15 20 25 30 35 40
- --------------- -------- -------- -------- -------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
$ 400,000............... $ 64,000 $ 84,000 $104,000 $124,000 $ 144,000 $ 164,000 $ 184,000
600,000................. 96,000 126,000 156,000 186,000 216,000 246,000 276,000
800,000................. 128,000 168,000 208,000 248,000 288,000 328,000 368,000
1,000,000................ 160,000 210,000 260,000 310,000 360,000 410,000 460,000
1,200,000................ 192,000 252,000 312,000 372,000 432,000 492,000 552,000
1,400,000................ 224,000 294,000 364,000 434,000 504,000 574,000 644,000
1,600,000................ 256,000 336,000 416,000 496,000 576,000 656,000 736,000
1,800,000................ 288,000 378,000 468,000 558,000 648,000 738,000 828,000
2,000,000................ 320,000 420,000 520,000 620,000 720,000 820,000 920,000
2,200,000................ 352,000 462,000 572,000 682,000 792,000 902,000 1,012,000
2,400,000................ 384,000 504,000 624,000 744,000 864,000 984,000 1,104,000
2,600,000................ 416,000 546,000 676,000 806,000 936,000 1,066,000 1,196,000
2,800,000................ 448,000 588,000 728,000 868,000 1,008,000 1,148,000 1,288,000
3,000,000................ 480,000 630,000 780,000 930,000 1,080,000 1,230,000 1,380,000
3,200,000................ 512,000 672,000 832,000 992,000 1,152,000 1,312,000 1,472,000
</TABLE>
A participant's remuneration covered by the Aon Pension Plan and the Excess
Benefit Plan is the average of his or her base salary for each fiscal year prior
to 1993, and the aggregate of base salary and certain eligible bonus payments
for the 1993 fiscal year and each fiscal year thereafter, for the five
consecutive calendar plan years during the last ten years of the participant's
career for which such average is the highest or, in the case of a participant
who has been employed for less than five full calendar years, the period of his
or her employment with the Company and its subsidiaries. Covered compensation
and the estimated years of service for each of the members of the Executive
Group as of December 31, 1996 is: Mr. Ryan $2,577,692 and 18 years; Mr. Conway
$575,385 and 22 years; Mr. Cox $943,385 and 10 years; Mr. Medvin $1,100,962 and
18 years; Mr. O'Halleran $1,600,000 and 8 years; and Mr. Skilling $1,100,962 and
20 years. The annual pension amounts included in the table above are based upon
the following assumptions: (1) amounts are before integration of Social Security
benefits which, based upon maximum coverage in effect on December 31, 1996,
would reduce the annual amounts shown by: 10 years--$1,379; 15 years--$2,068; 20
years--$2,758; 25 years--$3,447; 30 years--$4,136; 35 years--$4,826; and 40
years--$4,826, (2) retiring participants have attained age 65 and are fully
vested, and (3) retiring participants have chosen to have benefits payable as
straight life annuities.
15
<PAGE> 19
ORGANIZATION AND COMPENSATION COMMITTEE REPORT
The Company's executive compensation programs are administered by the
Organization and Compensation Committee of the Board (the "Compensation
Committee"). In this capacity the Compensation Committee determines the
compensation for the Company's Chief Executive Officer, Patrick G. Ryan, and
determines the compensation of the other members of the Executive Group in
consultation with Mr. Ryan. In addition, the Compensation Committee advises and
consults with the Chief Executive Officer regarding the compensation of other
officers and key employees.
The Compensation Committee regards the evaluation of the Chief Executive
Officer, Mr. Ryan, as a critical responsibility of the Board of Directors. As
such, Mr. Ryan's compensation is determined following an annual review of his
and the Company's performance conducted collectively, without Mr. Ryan, by all
outside Directors of the Company, which includes each member of the Compensation
Committee. During this review, the outside Directors discuss in detail the
extent to which during the most recent fiscal year the Company achieved certain
goals agreed to by Mr. Ryan and the outside Directors at the beginning of such
fiscal year.
The Compensation Committee has consistently promoted, over the last several
years, the belief that the compensation of the Company's executives should be
materially linked with the interests of stockholders. To this end, various
programs have been either formally adopted or utilized to a greater extent.
Specifically, the total compensation program is comprised of three distinct
components: Base Salary, Short Term Incentive Compensation, and Long Term
Incentive Compensation.
In order to ensure that the compensation program is competitive and
appropriate, the Compensation Committee annually retains a nationally recognized
compensation consultant unaffiliated with the Company. The compensation
consultant assists the Compensation Committee by providing an in-depth analysis
of the compensation policies and practices of the Peer Group companies and a
comparison thereof to the Company's. The Peer Group consists of the companies
used to prepare the Performance Graph following this report.
BASE SALARY
Base salaries for the members of the Executive Group are established at
levels considered appropriate in light of each executive's responsibilities and
performance.
The compensation consultant found that base salaries for the members of the
Executive Group were competitive with those of comparable Peer Group executives,
and, in the aggregate, slightly below the median for the Peer Group. As a result
of these findings, the Committee decided to adjust base salaries where
performance or the executive's compensation relative to that of comparably
situated executives dictated an appropriate adjustment. While base salaries
increased in the aggregate 6% over 1995 levels, the greatest portion of total
compensation for the members of the Executive Group is in the form of variable
performance based compensation, namely Short Term and Long Term Incentives.
SHORT TERM INCENTIVE COMPENSATION
During 1995, the stockholders approved the 1995 Senior Officer Incentive
Compensation Plan (the "Incentive Plan"). The Incentive Plan is designed to
permit amounts to be paid thereunder during fiscal year 1996 and thereafter to
qualify as performance based compensation as that term is defined in Section
162(m) of the Internal Revenue Code of 1986, thereby enhancing the ability of
the Company to deduct the full amount paid to a member of the Executive Group
even though any such individual's total compensation may exceed $1,000,000.
Under the terms of the Incentive Plan each member of the Executive Group
was eligible to receive a maximum award of 180% of the prior year's Base Salary.
However, in no event could an award exceed $3,000,000. Payment of awards is
further conditional on the Company's achievement
16
<PAGE> 20
of annually established performance thresholds. The Compensation Committee does,
however, have discretion to grant awards which are less than the amounts called
for on an aggregate or individual basis, based upon objective and subjective
performance criteria tailored to each individual as discussed below.
Objective criteria included, but were not limited to, achievement of profit
objectives, actual versus target annual operating budget performance and actual
versus target revenue growth, either as to the Company as a whole, or in part as
to those executives responsible for a specific operating unit.
Subjective performance criteria encompassed evaluation of the initiative of
each member of the Executive Group and the contribution to overall corporate
performance and any special projects that each member of the Executive Group may
have undertaken or was assigned.
Early in 1996, the Compensation Committee reviewed the 1995 performance of
each member of the Executive Group in light of both the objective and subjective
criteria described above, and in certain circumstances exercised their
discretion to reduce the maximum awards.
With respect to the Chief Executive Officer in 1995, the Compensation
Committee also utilized both objective and subjective performance criteria with
the greatest weight being placed on certain agreed upon goals relating to both
short-term and long-term financial performance of the Company which directly
related to the interests of stockholders.
The Compensation Committee also considered the Chief Executive Officer's
performance as it related to certain subjective performance goals that
collectively, the Board of Directors including the Compensation Committee and
the Chief Executive Officer, believed could contribute to the Company's long
term performance.
Accordingly, it is believed that the annual incentive awards paid in 1996
to Mr. Ryan, and the other members of the Executive Group, are consistent with
the Peer Group considering both the Company's outstanding financial performance
and each individual's respective performance. Furthermore, the strategy of the
Company for the sale of two of its insurance subsidiaries and another business
unit was particularly noteworthy, as was the process of consideration of
alternative strategies for redeployment of the funds received from the sale of
the insurance subsidiaries.
LONG TERM INCENTIVE COMPENSATION
Both the Aon Stock Award Plan and the Aon Stock Option Plan reward
executives for long term strategic management and subsequent enhancement of
stockholder value by providing the executive with an opportunity to acquire an
appropriate ownership interest in the Company.
Aon Stock Award Plan
The Compensation Committee and the Chief Executive Officer believe that the
attraction and retention of key individuals is vital to the long term
performance of the Company. The Aon Stock Award Plan has become a critical
factor in attaining this result. For example, awards are subject to a ten year
vesting schedule which is designed to provide award recipients with a
significant incentive to continue their service with the Company.
Awards under the Aon Stock Award Plan are made based on the Compensation
Committee's and the Chief Executive Officer's assessment of an executive's past
performance, the Compensation Committee's appraisal of the executive's skills
and other strengths, and the long term contribution the executive can make to
the Company's performance. In addition, in making awards the Compensation
Committee takes into consideration awards previously made to an executive, and
the number of awards outstanding in the aggregate to all award recipients.
17
<PAGE> 21
During fiscal year 1996, awards under the Aon Stock Award Plan were made to
four members of the Executive Group as detailed in the Summary Compensation
Table, while the following shares became vested pursuant to awards made in years
prior to 1996.
<TABLE>
<CAPTION>
Vesting Date
Shares(1) Values($)
--------- ------------
<S> <C> <C>
Patrick G. Ryan............................................. -0- -0-
Michael A. Conway........................................... 2,250 135,563
Daniel T. Cox............................................... 6,750 362,204
Harvey N. Medvin............................................ 5,250 267,422
Michael D. O'Halleran....................................... 18,070 931,366
Raymond I. Skilling......................................... 3,750 205,547
</TABLE>
- ------------
(1) Includes shares which vested, but receipt of which was deferred pursuant to
the Aon Stock Award Plan. During 1996, Mr. Cox deferred receipt of 6,750
shares and Mr. Medvin deferred receipt of 1,500 shares. Such shares are
credited to a bookkeeping account on a dividend reinvested basis. Mr. Cox's
and Mr. Medvin's accumulated balances as of December 31, 1996 were 13,979
shares and 3,309 shares, respectively.
Aon Stock Option Plan
In general, options under the Aon Stock Option Plan are granted on similar
criteria to, and for similar purposes as, those for the granting of awards under
the Aon Stock Award Plan. For 1996, the Compensation Committee continued its
recently established practice of providing a portion of total compensation in
the form of Long Term Incentive Compensation such as grants under the Aon Stock
Option Plan. As a result, in 1996, Mr. Ryan was granted options to purchase
100,000 shares of Common Stock with an exercise price equal to the market value
of Common Shares on the grant date. For more detailed information regarding the
options granted to Mr. Ryan and other members of the Executive Group refer to
the table "Executive Compensation--Option Grants in 1996 Fiscal Year."
SUBMITTED BY THE ORGANIZATION AND COMPENSATION COMMITTEE OF THE COMPANY'S
BOARD OF DIRECTORS:
<TABLE>
<S> <C> <C>
Donald S. Perkins Daniel T. Carroll Edgar D. Jannotta
(Chairman) Andrew J. McKenna Peer Pedersen
George A. Schaefer Arnold R. Weber
</TABLE>
18
<PAGE> 22
PERFORMANCE GRAPH
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN(1)
AON CORPORATION AND PEER GROUP INDICES
FISCAL YEARS ENDED DECEMBER 31
<TABLE>
<CAPTION>
MEASUREMENT PERIOD
(FISCAL YEAR COVERED) AON CORP. S & P 500 PEER GROUP
<S> <C> <C> <C>
1991 100.00 100.00 100.00
1992 141.34 107.62 122.33
1993 130.98 118.46 130.43
1994 135.15 120.03 132.45
1995 218.25 165.13 189.56
1996 279.24 203.05 229.90
</TABLE>
(1) The Peer Group consists of: Alexander & Alexander Services Inc.; American
International Group, Inc.; American General Corporation; The Chubb
Corporation; General Re Corporation; Marsh & McLennan Companies, Inc.;
Travelers, Inc.; Torchmark; Transamerica Corporation; and UNUM Corporation.
Assumes that the value of the investment in Aon Common Shares and the Peer
Group Index was $100 on December 31, 1991, that the $100 invested in the
Peer Group Index was allocated pro rata among the Peer Group companies
according to their respective market capitalizations, that the value of the
Peer Group Index was determined by weighting the contribution of the
constituent companies according to their respective market capitalization as
of the beginning of each annual period, and that all dividends were
reinvested.
19
<PAGE> 23
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Mr. McKenna, a Director of the Company and a member of the Organization and
Compensation Committee of the Company, and Mr. Medvin, the Company's executive
vice president, chief financial officer and treasurer, serve on the board of
directors of a private company, Schwarz Paper Company. Mr. McKenna is also the
chairman, president, chief executive officer and principal stockholder of
Schwarz Paper Company.
TRANSACTIONS WITH MANAGEMENT
The Company and one or more of its subsidiaries retained Sidley & Austin, a
law firm to which Newton N. Minow is Counsel, and Pedersen & Houpt, P.C., a law
firm of which Peer Pedersen is Chairman and Managing Partner, to perform certain
legal services during the year 1996 and anticipates that such firms may be
retained to perform legal services in 1997. Mr. Ryan had an ownership interest
in an automobile dealership during 1996, which received commissions of $97,333
from the sale of credit life and credit accident and health insurance written by
Company subsidiaries and paid premiums of $89,689 for automobile mechanical
repair insurance to Virginia Surety Company, Inc., a subsidiary of the Company.
The commissions received and premiums paid by the dealership were on terms no
more favorable than those generally offered to unrelated dealerships. Early in
1997 Mr. Ryan divested himself of his ownership interest in the dealership.
During 1996, corporations and other entities with which Directors are or were
associated had insurance or other transactions with the Company and certain of
its subsidiaries and affiliates in the ordinary course of business. All of these
transactions were on substantially the same terms as those prevailing at the
time for comparable transactions with unrelated parties. None of such insurance
or other transactions involved during 1996, or is expected to involve in 1997,
payments from or to the Company and its subsidiaries and affiliates for property
and services in excess of 5% of the Company's or the other entity's consolidated
gross revenues during 1996.
APPROVAL OF AMENDMENTS TO THE AON STOCK OPTION PLAN AND REAPPROVAL
The Aon Stock Option Plan (as amended and restated) (the "Option Plan") was
put in place to provide an incentive to officers and other key employees who are
in a position to contribute materially to the successful operation of the
business of the Company and its subsidiaries. At the time the stockholders first
approved the Option Plan in 1980, it was the belief of the Board of Directors
that the long-term success of the Company would be dependent to a great degree
on the ability of the Company to attract and retain employees of outstanding
abilities and to motivate their best efforts on behalf of the Company. At that
time, the Board also decided that the Option Plan constituted an important part
of the Company's overall compensation of its officers and key employees; the
Option Plan was purposefully designed to align the interests of such officers
and key employees with the interests of the Company's stockholders. Today,
looking back on the results of the implementation of those decisions and beliefs
over the last seventeen years, the Board regards the successful use and
administration of the Option Plan as an integral part of the growth and success
of the Company over that time period, and the Board looks forward to the
continued use and success of the program as part of the strategy for the
continued success of the Company.
Over the years, the stockholders have periodically approved increases in
the number of shares of Common Stock authorized to be issued under the Option
Plan. The Option Plan currently authorizes an aggregate of 11,550,000 shares of
Common Stock (as adjusted for the Company's 1987 two-for-one stock split, and
the Company's 1994 three-for-two stock split) to be issued through the exercise
of options granted pursuant to the Option Plan. As of February 26, 1997, 1,190
employees held options under the Option Plan. As of February 26, 1997 there
remained only 876,207 shares of Common Stock available to grant under the Option
Plan. The market value of a share of
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Common Stock based on the closing price on the New York Stock Exchange as of
February 26, 1997 was $64.25.
The Board of Directors is authorized, among other things, to amend the
Option Plan; however, the Board is not authorized to increase the number of
shares of Common Stock available for grants. The Board recommends that the
stockholders approve an additional 4,000,000 shares to be authorized for
issuance under the Option Plan.
The Option Plan is administered by the Organization and Compensation
Committee (the "Compensation Committee") of the Board of Directors which
consists solely of outside Directors. As and to the extent authorized by the
Board of Directors, the Compensation Committee may exercise the powers and
authority vested in the Board of Directors under the Option Plan. The
Compensation Committee is charged with the duty of selecting those employees who
will receive options under the Plan. Accordingly, it is not possible to identify
those employees who will participate in the Option Plan, nor the number of
shares of Common Stock that may be granted to any one employee for purchase
under the Option Plan; however, the Board does not anticipate any significant
change in the policies or standards for considering an employee or the number of
shares granted thereunder.
The Option Plan requires that the optionee complete three continuous years
of service after the date of grant before the grant begins to vest in increments
through a six year period of continuous employment. Optionees have no right to
receive dividends on, or vote, any shares until such shares have been delivered.
Termination of employment shall cause an optionee's unvested grant to be
forfeited, except upon disability or death. In the event of disability or death,
all grants continue to vest in accordance with the vesting schedule. No
amendment, suspension or termination of outstanding options may, except with the
consent of the optionee, adversely affect the rights under an option previously
granted.
The Compensation Committee may grant incentive stock options ("ISO's") or
regular (non-qualified) stock options ("RSO's"). The principal difference
between ISO's and RSO's is the favorable tax treatment accorded to recipients of
ISO's as authorized under the Internal Revenue Code, more fully discussed below
under "U.S. Tax Consequences."
U.S. TAX CONSEQUENCES
An optionee recognizes no taxable income on the grant of an RSO and the
Company is not entitled to a deduction by reason of such grant. Upon the
exercise of an RSO, the optionee will recognize taxable compensation income in
an amount equal to the difference between the option price and the fair market
value of the shares of Common Stock on the date of exercise. The Company may be
entitled to a deduction in computing its taxable income for the year in an
amount equal to the taxable compensation income to the optionee.
An optionee recognizes no taxable income on the grant of an ISO. If an
optionee disposes of shares of Common Stock received upon the exercise of an ISO
more than one year after the exercise of the option and more than two years
after the grant, the excess of the sale price over the option price constitutes
long-term capital gain for the optionee; however, the Company is not entitled to
any deduction by reason of such grant or disposition. On the other hand, if an
optionee disposes of shares of Common Stock received upon the exercise of an ISO
within one year after exercise of the option or within two years after the date
of the grant of the option, the difference between the option price of such
shares and the lesser of (i) the fair market value of such shares on the date of
exercise, or (ii) the price at which the optionee disposed of such shares
constitutes compensation taxable to the optionee as ordinary income in the year
of disposition, and correspondingly, the Company may be entitled to a deduction
for the year in which the disposition occurs in an amount equal to the amount of
ordinary income recognized by the optionee. If the sale price
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realized by the optionee exceeds the fair market value of the shares being sold
on the date of exercise of the ISO, such excess is taxable as a capital gain.
Under Internal Revenue Code Section 162(m), in order for the Company to
qualify to take the appropriate tax deductions upon the exercise of any options
as discussed above, the stockholders must specifically approve an amendment to
the Option Plan which limits the number of shares which can be granted to any
one individual in any one year to 300,000 shares, and reapprove the Option Plan
in its entirety. The adoption of the language required by Section 162(m) does
not affect the tax consequences of the optionee; only the tax treatment by the
Company is affected. The Board believes that the proper tax treatment for the
Company under the Option Plan is a necessary part of the Option Plan. As
discussed above, the Board does not anticipate any significant change in the
policies or standards for considering any grant or the number of shares granted
thereunder.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE 'FOR' APPROVAL OF THE
PROPOSED AMENDMENTS TO, AND THE REAPPROVAL OF, THE AON STOCK OPTION PLAN.
APPROVAL OF AMENDMENT TO THE AON STOCK AWARD PLAN
In 1988 the stockholders approved the Aon Stock Award Plan (the "Stock
Award Plan") which authorized the Company to award shares of Common Stock to
selected officers and key employees of subsidiaries and affiliates of the
Company ("award recipients"). At the time it was approved, the Board of
Directors believed that the continued success of the Company would be dependent
upon the quality and continuity of management and its ability to attract,
motivate and retain valuable and capable personnel to the Company. Since that
time, the Board has implemented and administered the Stock Award Plan to help
the Company put in place a management team which has greatly contributed to the
success of the Company, and the Board believes that the continued use of the
Stock Award Plan should be an integral part of the strategy for the continued
success of the Company.
Over the years, the stockholders have periodically approved increases in
the amount of shares of Common Stock authorized to be issued under the Stock
Award Plan. The Award Plan currently authorizes up to 5,025,000 shares (as
adjusted for the Company's 1994 three-for-two stock split) to be used as awards.
Since the inception of the Stock Award Plan and as of February 26, 1997, 349 key
employees of the Company have been granted awards under the Stock Award Plan. As
of February 26, 1997 there remained only 574,641 shares available to award under
the Stock Award Plan. The market value of a Common Share based on the closing
price on February 26, 1997 on the New York Stock Exchange was $64.25.
The Board of Directors has the authority, among other things, to amend the
Stock Award Plan to increase the number of shares of Common Stock available for
awards; nevertheless, it continues to be the policy of the Board to consider and
submit significant changes for stockholder approval and to be guided by the
outcome of the stockholder vote. The Board recommends that an additional
3,575,000 shares of Common Stock be authorized to be issued under the Stock
Award Plan.
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The Stock Award Plan requires that the award recipient complete three
continuous years of service after the date of grant before the award begins to
vest in increments through a ten year period of continuous employment. Award
recipients have no right to receive dividends on any shares until such shares
have been vested, and there is no right to vote until such shares have been
delivered. Termination of employment normally causes an award recipient's
unvested award to be forfeited, except upon disability or death. In the event of
disability or death, all awards continue to vest in accordance with the vesting
schedule. The Compensation Committee has the discretion to deliver shares of
Common Stock representing all or a portion of any remaining unvested award if,
after reviewing all of the facts and circumstances surrounding such termination,
the Compensation Committee determines that such delivery is appropriate and
equitable. No award made prior to any amendment or termination of the Stock
Award Plan shall be affected or limited without the award recipient's consent.
The Stock Award Plan is administered by the Organization and Compensation
Committee (the "Compensation Committee") of the Board of Directors of the
Company which consists solely of outside Directors who are not eligible to
participate in the Stock Award Plan. Awards are made at the discretion of the
Compensation Committee and may be made in such amounts as the Compensation
Committee may determine. See "Organization and Compensation Committee
Report--Long Term Incentive Compensation" for a discussion of the compensation
policies underlying the Stock Award Plan. Because the selection of award
recipients is discretionary, the Stock Award Plan does not define the term "key
employee." Accordingly, it is not possible to identify those employees who will
participate in the Stock Award Plan, nor the number of shares of Common Stock
that may be granted to any one employee; however, the Board does not anticipate
any significant change in the policies or standards used for considering an
employee for an award.
U.S. TAX CONSEQUENCES
The recipient of an award under the Stock Award Plan must include in
taxable income the fair market of the stock as of the date of vesting, unless
the recipient elects to defer receipt of the stock prior to vesting, in which
case such amount must be included in the recipient's taxable income as of the
date of receipt. This taxable income is subject to withholding taxes and FICA.
The Company requires payment of such tax withholdings prior to delivery of
shares. The Company is correspondingly entitled to deduct as an expense the
amount the recipient includes in taxable income in the year it is included.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE 'FOR' APPROVAL FOR THE
PROPOSED AMENDMENT TO THE AON STOCK AWARD PLAN.
INDEPENDENT AUDITORS
The Board of Directors of the Company, following the recommendation of the
Audit Committee, has appointed Ernst & Young LLP as the Company's independent
auditors for the year 1997. Ernst & Young LLP was first retained as the
Company's independent auditors in February 1986. No relationship exists between
the Company and the firm other than the usual relationship between independent
auditors and their clients.
Although this appointment is not required to be submitted to a vote of the
stockholders, the Board of Directors believes it appropriate as a matter of
policy to request that the stockholders ratify the appointment of the
independent auditors for the year 1997. In the event a majority of the votes
cast at the meeting are not voted in favor of the following resolution, the
adverse vote will be considered as a direction to the Board of Directors of the
Company to select another auditor for the year 1998. Because of the difficulty
and expense of making any substitution of auditors for 1997 following the 1997
annual meeting, it is contemplated that the appointment for the year 1997 will
be permitted to stand unless the Board finds other good reason for making a
change.
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<PAGE> 27
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE 'FOR'
THE FOLLOWING RESOLUTION:
RESOLVED, that the appointment of Ernst & Young LLP by the Board of
Directors as the Company's independent auditors for the year 1997 is
hereby ratified.
The Company anticipates that a representative of Ernst & Young LLP will be
present at the annual meeting. Such representative will be given the opportunity
to make a statement if he or she desires to do so, and is expected to be
available to respond to any questions which may be submitted at the meeting.
PROPOSAL BY STOCKHOLDER
The Domestic and Foreign Missionary Society of the Protestant Episcopal Church
in the United States of America of 815 Second Avenue, New York, New York,
10017-4594, is the holder of 9,600 Common Shares and has caused the following
proposal to be incorporated in this Proxy Statement. The Company believes that
it may be the intent of the stockholder to present the proposal at the annual
meeting of the Company. The Company is not responsible for any of the contents
of the language set out below in italic type and between quotation marks.
Because of certain limitations contained in Rule 14a-8(e) of the Securities
Exchange Act of 1934, the Board of Directors is not permitted to incorporate
reasons for opposition to the proposed resolution.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE 'AGAINST'
THE RESOLUTION.
"Aon Corporation Insurance Companies' Ties to Tobacco"
"WHEREAS a July 7-9, 1995 editorial in USA Today declared: Here's a
little health-care news item: according to a commentary in the
upcoming edition of the British medical journal Lancet, major U.S.
health insurers are large investors in major U.S. tobacco companies.
In other words, the nation's merchants of care are partners with the
nation's merchants of death.... these investments grate and gall.
Every year, tobacco use is fatal for thousands of Americans. For
insurers to provide health care for those suffering smokers on the one
hand while investing it in the source of their misery on the other is
unconscionable. And hypocritical."
"As shareholders, we are deeply concerned about the ethical
implications of insurance company investments in the tobacco industry,
especially when the insurance industry -- so critically affected by
the negative health effects of smoking -- is paying out hundreds of
millions of dollars to sick and dying patients; In 1994, the Centers
for Disease Control and Prevention released an article entitled
"Medical-Care Expenditures Attributable to Cigarette Smoking, United
States -1993." The study found that smoking related disease in the
United States has an enormous economic impact. In 1993, it is
estimated that the direct medical costs associated with smoking
totaled $30 billion; In 1996 the AMA called for mutual funds and
health-conscious investors to refuse to own stock in tobacco
companies, and for those same investors to divest from stocks and
bonds in tobacco companies; We believe it is inconsistent for an
insurance company to invest in tobacco equities and yet give
preferential rates to non-smokers. This seems to be sending mixed
messages about smoking. We believe that the company should seriously
review its stand related to these apparently contradictory positions
on tobacco and determine future options."
"RESOLVED: that the shareholders request the Board to initiate a
policy mandating no further purchases of tobacco equities in any of
our portfolios unless it can be proven that
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<PAGE> 28
cigarette smoking does not cause the illnesses and deaths attributed
to it. Furthermore, the company shall divest itself of all tobacco
stocks by January 1, 1998."
"Supporting statement: Our company exists to insure life. We reward
people for not using cigarettes; yet we invest in companies which
produce them. Allstate, Chubb, UNUM, and other insurance companies
have policies and/or practices that have resulted in prohibitions or
limitations on their various investments in tobacco companies.
Institutions like Harvard and Johns Hopkins have sold all of their
tobacco stocks. We believe the proposed policy will put our company's
money where its mouth is. As the USA Today editorial noted above
concludes: Insurers have a responsibility to maximize returns. But
they have a responsibility to hold down costs, too. Investing in
tobacco while charging premiums based in part on the cost of treating
tobacco-related illness mocks that obligation."
"If you agree that our company should insure peoples' health, not
contribute to their illness and death, please vote YES for this
resolution."
VOTING PROCEDURES
A quorum for the transaction of business at any meeting of the stockholders
of the Company shall consist of the holders of at least a majority of the issued
and outstanding Shares entitled to vote, present in person or by proxy. At all
meetings at which a quorum is present, all matters, except as otherwise provided
by law or in the Second Restated Certificate of Incorporation of the Company,
shall be decided by the vote of the holders of a majority of the Shares
representing the quorum. All matters set forth in this Proxy Statement shall be
decided by the vote of the holders of a majority of the Shares representing the
quorum. Abstentions and broker non-votes are counted for purposes of determining
the presence or absence of a quorum at the annual meeting for the transaction of
business. If a duly executed proxy is marked to indicate that all or a portion
of the Shares represented by such proxy are not being voted with respect to a
particular matter, such non-voted Shares will not be considered present and
entitled to vote on such matter.
You may revoke your proxy at any time before it is voted at the meeting.
Each proxy duly executed and received prior to the meeting and not otherwise
revoked will be voted according to its terms. If no specific direction is marked
on a duly executed proxy as to the manner of voting, the proxy will be voted in
accordance with the recommendations of the Board of Directors set forth herein.
Stockholders who receive more than one proxy card -- due to the existence of
multiple Common Share accounts -- should sign and return all proxies received in
order to be sure that all shares so owned are voted. A proxy may be revoked by
(a) delivering to the Company a duly executed written notice of revocation dated
later than the date of the proxy which is being revoked; (b) delivering to the
Company a duly executed replacement proxy relating to the same shares as the
proxy it is meant to replace; or (c) by attending the annual meeting of
stockholders and voting in person. Written revocations should be sent to the
Office of the Corporate Secretary of the Company at the address listed on page
one of this Proxy Statement.
1998 PROPOSALS OF STOCKHOLDERS
In order to be considered for inclusion in the proxy statement for the
regular annual meeting of the stockholders of the Company in the year 1998,
stockholder proposals conforming to applicable rules and regulations must be
received by the Company not later than November 15, 1997. Such proposals should
be sent to the Office of the Corporate Secretary of the Company at the address
listed on page 1 of this Proxy Statement with an additional copy to be sent to
the Office of the Chief Counsel of the Company at that same address.
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<PAGE> 29
AON CORPORATION PROXY/VOTING INSTRUCTION CARD
CHICAGO, ILLINOIS
This proxy is solicited on behalf of the Board of Directors for the Annual
Meeting in April 18, 1997. The undersigned hereby appoints P.G. Ryan or
R.I. Skilling, each with powers of substitution, as proxies for the undersigned
to vote all the Common Shares and/or Preferred Shares the undersigned may be
entitled to vote at the Annual Meeting of Stockholders of Aon Corporation
called to be held at 10:00 A.M., Friday, April 18, 1997, or any adjournment
thereof in the manner indicated on the reverse side of this proxy, and upon
such other business as may lawfully come before the meeting. IF NO DIRECTION AS
TO THE MANNER OF VOTING THE PROXY IS MADE, THE PROXY WILL BE VOTED FOR THE
ELECTION OF DIRECTORS AND FOR ITEMS 2, 3 AND 4 AS INDICATED ON THE REVERSE SIDE
HEREOF. This card also constitutes voting instructions by the undersigned to
the trustees of the Aon Employee Stock Ownership Plan ("ESOP"), and the trustee
of the Aon Stock Fund as manager of the Aon Savings Plan, respectively, for all
shares votable, by the undersigned and held of record by such trustees, if any.
If there are any shares for which instructions are not timely received, and as
respects the unallocated shares held under the ESOP, the trustees of each plan
will cause all such shares to be voted in the same manner and proportion as the
shares for which timely instructions have been received. All voting instruction
for shares held of record by the plans shall be confidential. Election of
Directors
Nominees: Patrick G. Ryan, Daniel T. Carroll, Franklin A. Cole,
Edgar D. Jannotta, Joan D. Manley, Andrew J. McKenna,
Newton N. Minow, Perry J. Lewis, Peer Pedersen, Donald
S. Perkins, John W. Rogers, Jr., George A. Schaefer,
Raymond I. Skilling, Fred L. Turner, Arnold R. Weber.
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.
CODE 1997 COMMON SEE REVERSE
SIDE
AON CORPORATION
123 NORTH WACKER DRIVE
CHICAGO, ILLINOIS 60606
-------------------------
PLEASE SIGN AND RETURN YOUR PROXY CARD PROMPTLY
IMPORTANT
THIS IS YOUR
PROXY CARD
CAREFULLY FOLD AND TEAR
ALONG PERFORATION
PLEASE RETURN THIS PROXY CARD PROMPTLY IN THE ENCLOSED ENVELOPE PROVIDED
4909
[X] PLEASE MARK YOUR
VOTES AS IN THIS
EXAMPLE.
1. Election of FOR WITHHELD
Directors. / / / /
TO WITHHOLD AUTHORITY TO VOTE FOR ANY
NOMINEE(S), MARK THE "FOR" BOX AND WRITE
THE NAME OF SUCH NOMINEE ON THE LINE
PROVIDED BELOW
--------------------------------------
FOR AGAINST ABSTAIN
2. Approval of amendments to / / / / / /
and reapproval of Aon Stock Option
Plan.
FOR AGAINST ABSTAIN
3. Approval of amendment to / / / / / /
amendment to Aon Stock Award Plan.
FOR AGAINST ABSTAIN
4. Appointment of Ernst & Young as Company's / / / / / /
independent auditors.
FOR AGAINST ABSTAIN
5. Proposal by one stockholder / / / / / /
set forth on Proxy Statement page 24.
FOR AGAINST ABSTAIN
6. In their discretion, the Proxies are / / / / / /
authorized to vote upon such other
business as may properly come before
the meeting.
PLEASE SIGN EXACTLY AS NAME APPEARS
HEREON. JOINT OWNERS SHOULD EACH
SIGN. WHEN SIGNING AS ATTORNEY,
EXECUTOR, ADMINISTRATOR, TRUSTEE OR
GUARDIAN, PLEASE GIVE FULL TITLE AS
SUCH.
_____________________________________
SIGNATURE DATE
_____________________________________
SIGNATURE (IF JOINTLY HELD) DATE
