<PAGE>
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
The Equitable Companies Incorporated
------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/x/ No fee required
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(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>
[LOGO OF THE EQUITABLE COMPANIES INCORPORATED]
March 24, 1998
Dear Shareholders:
It is a pleasure to invite you to attend our 1998 Annual Meeting of
Shareholders. The meeting will be held in the Auditorium at The Equitable Tower,
787 Seventh Avenue (between 51st and 52nd Streets), New York City, on Wednesday,
May 13, 1998, at 9:00 a.m., local time. The formal notice of the meeting, the
proxy statement, and your proxy card are enclosed in this mailing.
Whether or not you plan to attend the Annual Meeting in person, we ask that you
execute and return your proxy promptly, using the postage-paid envelope we have
provided for your convenience. This year, for the first time, you may submit
your proxy by telephone or the Internet if you wish.
Thank you for your continued support.
Sincerely,
/s/ Edward D. Miller /s/ Claude Bebear
Edward D. Miller Claude Bebear
President and Chairman of the Board
Chief Executive Officer
<PAGE>
THE EQUITABLE COMPANIES INCORPORATED
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
1290 Avenue of the Americas
New York, New York 10104
March 24, 1998
To The Shareholders:
The Annual Meeting of Shareholders of The Equitable Companies Incorporated
will be held in the Auditorium at The Equitable Tower, 787 Seventh Avenue
(between 51st and 52nd Streets), New York City, on Wednesday, May 13, 1998, at
9:00 a.m., local time, to consider and act upon:
1. Election of 19 directors for a term of one year, or until their
successors are elected and qualified;
2. Ratification of the appointment of independent accountants; and
3. Such other business as may properly come before the meeting or any
adjournment thereof.
Shareholders of record as of the close of business on March 18, 1998 are
entitled to notice of, and to vote at, the Annual Meeting and any adjournment
thereof. SHAREHOLDERS ARE REMINDED THAT SHARES CANNOT BE VOTED UNLESS THE SIGNED
PROXY CARD IS RETURNED, THE PROXY IS SUBMITTED BY TELEPHONE OR THE INTERNET, THE
SHARES ARE VOTED IN PERSON, OR OTHER ARRANGEMENTS ARE MADE TO HAVE THE SHARES
REPRESENTED AT THE MEETING.
By Order of the Board of Directors
/s/ Pauline Sherman
Pauline Sherman
Vice President and Secretary
<PAGE>
------------------------
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
MAY 13, 1998
------------------------
INTRODUCTION
SOLICITATION OF PROXIES
This proxy statement is furnished in connection with the solicitation by
the Board of Directors of The Equitable Companies Incorporated (the 'Company')
of proxies to be used at the Annual Meeting of Shareholders of the Company on
Wednesday, May 13, 1998 at 9:00 a.m. in the Auditorium at The Equitable Tower,
787 Seventh Avenue, New York City, and at any adjournment thereof. The Company's
Annual Report for 1997 and this proxy material are being sent to shareholders
beginning on or about April 1, 1998.
Shares represented by valid proxies will be voted at the Annual Meeting or
any adjournment thereof in accordance with each shareholder's directions. Please
vote by marking the appropriate boxes, signing, dating and returning the
enclosed proxy card. If the card is signed and returned without direction, the
shares will be voted as recommended by the Board. Alternatively, a proxy may be
submitted by telephone or the Internet. Please follow the instructions on the
enclosed proxy card if you wish to submit your proxy in this manner. A proxy may
be revoked by a shareholder at any time before its use by giving written notice
of revocation to the Secretary of the Company, by submitting a subsequent proxy
or by voting in person at the meeting.
Any full shares held for you under the Company's Dividend Reinvestment and
Stock Purchase Plan, the Equitable Direct Purchase Plan, the Equitable
Investment Plan, or the Equitable Stock Purchase Plan for Employees and Agents
have been included in the shares shown on the enclosed proxy card.
OUTSTANDING STOCK AND VOTING RIGHTS
The Company's Board of Directors has fixed the close of business on March
18, 1998 as the record date for determining shareholders of record entitled to
notice of, and to vote at, the Annual Meeting. On the record date, the Company
had outstanding 222,447,200 shares of Common Stock. Each shareholder is entitled
to one vote for each share of Common Stock registered in that person's name on
the books of the Company on the record date on all business to come before the
meeting. Participants in the Company's Dividend Reinvestment and Stock Purchase
Plan, in the Equitable Stock Fund under the Equitable Investment Plan, in the
Equitable Direct Purchase Plan, and in the Equitable Stock Purchase Plan for
Employees and Agents are entitled to vote shares held for their accounts on such
record date by the administrator or trustee of such Plans. The presence of a
majority of the Company's outstanding shares in person or by proxy will
constitute a quorum for the transaction of business at the Annual Meeting.
Provided a quorum is present, directors will be elected by a plurality of the
votes validly cast in the election and the vote of a majority of the shares of
Common Stock represented in person or by proxy will be sufficient for the
transaction of any other business properly brought before the Annual Meeting.
Abstentions from voting, including broker non-votes, with respect to shares
present at the Annual Meeting in person or by proxy will have no effect in
determining whether a
1
<PAGE>
quorum is present or on the election of directors, but will have the effect of
votes against any business other than the election of directors.
VOTING BY THE COMPANY'S PRINCIPAL SHAREHOLDER
AXA-UAP ('AXA') is the largest shareholder of the Company, beneficially
owning at March 1, 1998 approximately 59% of the outstanding shares of Common
Stock, par value $0.01 per share, of the Company (the 'Common Stock'). For
insurance regulatory purposes, all shares of Common Stock beneficially owned by
AXA have been deposited into a voting trust (the 'Voting Trust'). AXA remains
the beneficial owner of all capital stock deposited in the Voting Trust, but
during the term of the Voting Trust the trustees thereunder (the 'Voting
Trustees') exercise all voting rights with respect to such capital stock. See
'Security Ownership of Certain Beneficial Owners and Management.'
The Company understands that the Voting Trustees intend to vote all shares
of Common Stock beneficially owned by AXA at the Annual Meeting or any
adjournment thereof in favor of the proposals set forth in this Proxy Statement.
AXA beneficially owns, without acquiring any additional shares of Common Stock,
shares of Common Stock in an amount sufficient to permit the Voting Trustees to
control the outcome of any shareholder vote.
AXA, a French company, is the holding company for an international group of
insurance and related financial services companies. AXA's insurance operations
include activities in life insurance, property and casualty insurance and
reinsurance. The insurance operations are diverse geographically with activities
principally in Western Europe, North America, and the Asia/Pacific area. AXA is
also engaged in asset management, investment banking, securities trading,
brokerage, real estate and other financial services activities principally in
the United States, as well as in Western Europe and the Asia/Pacific area.
2
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the beneficial
ownership of Common Stock as of March 1, 1998 by (i) each person known to own
beneficially more than 5% of the outstanding shares of Common Stock, (ii) each
director and named executive officer of the Company and (iii) all directors and
executive officers of the Company, as a group. Except as noted below, each
holder listed below has sole investment and voting power with respect to the
shares beneficially held by such holder.
AMOUNT AND NATURE OF
NAME AND ADDRESS OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP PERCENT OF CLASS
- ------------------------------------ -------------------- ----------------
AXA (1)............................. 130,545,121 58.7%
Claude Bebear (2)................... 0 *
John S. Chalsty (3)................. 96,000 *
Francoise Colloc'h (2).............. 0 *
Henri de Castries (2)............... 0 *
Joseph L. Dionne.................... 1,044 *
William T. Esrey.................... 0 *
Jean-Rene Fourtou (2)(4)............ 1,150 *
Jacques Friedmann (2)............... 0 *
Donald J. Greene (5)................ 1,209 *
Anthony J. Hamilton (2)............. 5,000 *
John T. Hartley (6)................. 1,019 *
John H.F. Haskell, Jr............... 1,000 *
Michael Hegarty..................... 0 *
Mary R. (Nina) Henderson............ 0 *
W. Edwin Jarmain (7)................ 10,000 *
William T. McCaffrey (8)............ 61,730 *
Joseph J. Melone (9)................ 342,156 *
Edward D. Miller.................... 0 *
Didier Pineau-Valencienne (2)....... 0 *
George J. Sella, Jr................. 0 *
Jose S. Suquet (10)................. 97,399 *
Stanley B. Tulin (11)............... 24,121 *
Dave H. Williams (12)............... 80,000 *
All directors and executive officers
as a group (26 persons)........... 891,332 *
- ------------------
* Number of shares listed represents less than one percent (1%) of the number
of shares of Common Stock outstanding.
(1) Includes 14,000,000 shares of Common Stock beneficially owned by Lor
Finance, S.A. ('Lor Finance'), a subsidiary of AXA, in connection with a
stock compensation plan for key employees of AXA and its affiliates, and
23,297,399 shares of Common Stock beneficially owned by various other
subsidiaries of AXA. For insurance regulatory purposes, the shares of
capital stock of the Company beneficially owned by AXA and its subsidiaries
have been deposited in the Voting Trust, which has an initial term of ten
years, commencing May 12, 1992. The
(Footnotes continued on next page)
3
<PAGE>
(Footnotes continued from previous page)
Voting Trustees are Claude Bebear, Patrice Garnier and Henri de
Clermont-Tonnerre, each of whom serves either on the Executive Board (in
the case of Mr. Bebear) or Supervisory Board (in the case of Messrs.
Garnier and de Clermont-Tonnerre) of AXA. The Voting Trustees have agreed
to exercise their voting rights to protect the legitimate economic
interests of AXA, but with a view to ensuring that certain of its minority
shareholders do not exercise control over the Company or certain of its
insurance subsidiaries. Exhibit A hereto contains additional information,
including addresses, as to AXA and certain direct and indirect shareholders
of AXA, who may be deemed to own beneficially all shares of the Company's
stock beneficially owned by AXA and to have shared power to vote or to
dispose of the shares beneficially owned by AXA.
(2) Excludes shares beneficially owned by AXA. Messrs. Bebear, Fourtou,
Friedmann, Hamilton, and Pineau-Valencienne are members of the Executive
Board (in the case of Mr. Bebear) or Supervisory Board (in the case of the
others) of AXA and, additionally, Messrs. Bebear and de Castries and Ms.
Colloc'h are executive officers of AXA. Also excludes certain options
exercisable presently or within 60 days for, or shares of, Lor Finance held
by Messrs. Bebear and de Castries and Ms. Colloc'h (see Note (1)). The sole
assets of Lor Finance are voting trust certificates representing 14,000,000
shares of the Company's Common Stock. Each share of Lor Finance is intended
to be the economic equivalent of a share of the Company's Common Stock,
although holders of Lor Finance shares are not technically beneficial
owners of the Company's Common Stock.
(3) Includes 80,000 shares subject to options held by Mr. Chalsty, which
options Mr. Chalsty has the right to exercise presently or within 60 days.
(4) Mr. Fourtou owns all of these shares jointly with his spouse, Janelly
Fourtou.
(5) Includes 81 shares owned by Mary Greene, Mr. Greene's spouse. Mr. Greene
disclaims beneficial ownership of the shares owned by his spouse.
(6) Represents 1,019 shares for which Mr. Hartley acts as Trustee for the John
T. Hartley Trust.
(7) Represents 10,000 shares owned by Jarmain Group, Inc. Mr. Jarmain controls
Jarmain Group, Inc.
(8) Includes 35,000 shares subject to options held by Mr. McCaffrey, which
options Mr. McCaffrey has the right to exercise presently or within 60
days.
(9) Includes 320,000 shares subject to options held by Mr. Melone, which
options Mr. Melone has the right to exercise presently or within 60 days.
(10) Includes 80,353 shares subject to options held by Mr. Suquet, which options
Mr. Suquet has the right to exercise presently or within 60 days.
(11) Includes 20,000 shares subject to options held by Mr. Tulin, which options
Mr. Tulin has the right to exercise presently or within 60 days, and 4,000
shares owned jointly by Mr. Tulin and his spouse, Riki P. Tulin.
(12) Represents 80,000 shares subject to options held by Mr. Williams, which
options Mr. Williams has the right to exercise presently or within 60 days.
4
<PAGE>
The following tables set forth certain information regarding the beneficial
ownership of common stock of AXA, Finaxa, a shareholder of AXA described in
Exhibit A, and Donaldson, Lufkin & Jenrette, Inc. ('DLJ') and of limited
partnership interests (the 'Alliance Units') in Alliance Capital Management L.P.
('Alliance') as of March 1, 1998 by (i) each director and named executive
officer of the Company who beneficially owns any shares of AXA's, Finaxa's or
DLJ's common stock or Alliance Units and (ii) all directors and executive
officers as a group. Except as otherwise listed below, no director or executive
officer of the Company beneficially owns any shares of common stock of AXA or
Finaxa or any equity interest in any subsidiary of the Company or The Equitable
Life Assurance Society of the United States ('Equitable Life') other than
directors' qualifying shares.
AXA AND FINAXA STOCK
AXA COMMON STOCK
NUMBER PERCENT
NAME OF SHARES OF CLASS
- ---- --------- --------
Claude Bebear (1).......................................... 498,961 *
John S. Chalsty............................................ 1,250 *
Francoise Colloc'h (2)..................................... 61,824 *
Henri de Castries (3)...................................... 46,063 *
Jean-Rene Fourtou.......................................... 1,559 *
Jacques Friedmann (4)...................................... 38,571 *
Anthony J. Hamilton........................................ 1,000 *
John H.F. Haskell, Jr...................................... 500 *
William T. McCaffrey....................................... 2,000 *
Joseph J. Melone........................................... 1,000 *
Didier Pineau-Valencienne.................................. 664 *
Jose S. Suquet............................................. 500 *
Stanley B. Tulin........................................... 1,000 *
All directors and executive officers as a group (26
persons)................................................. 655,392 *
FINAXA COMMON STOCK
NUMBER PERCENT
NAME OF SHARES OF CLASS
- ---- --------- --------
Claude Bebear (5).......................................... 636,065 1.1 %
Francoise Colloc'h (6)..................................... 77,457 *
Henri de Castries (7)...................................... 97,500 *
All directors and executive officers as a group (26
persons)................................................. 811,022 1.4 %
- ------------
* Number of shares listed represents less than one percent (1%) of the
outstanding common stock of AXA or Finaxa respectively. Holdings of AXA
American Depositary Shares are expressed as their equivalent in AXA common
stock.
(1) Includes 23 shares owned by Mr. Bebear's spouse, Catherine Bebear, and
285,568 shares subject to options held by Mr. Bebear, which options Mr.
Bebear has the right to exercise presently or within 60 days.
(2) Includes 59,225 shares subject to options held by Ms. Colloc'h, which
options Ms. Colloc'h has the right to exercise presently or within 60 days.
(3) Includes 45,063 shares subject to options held by Mr. de Castries, which
options Mr. de Castries has the right to exercise presently or within 60
days.
(4) Includes 1,399 shares owned jointly with Mr. Friedmann's spouse, and 36,000
shares subject to options held by Mr. Friedmann, which options Mr. Friedmann
has the right to exercise presently or within 60 days.
(5) Includes 434,445 shares owned by Clauvalor, a French company controlled by
Mr. Bebear, and 201,612 shares subject to options held by Mr. Bebear, which
options Mr. Bebear has the right to exercise presently or within 60 days.
(6) Includes 68,199 shares subject to options held by Ms. Colloc'h, which
options Ms. Colloc'h has the right to exercise presently or within 60 days,
and 150 shares into which certain bonds held by Ms. Colloc'h may be
converted presently or within 60 days.
(7) Represents 97,500 shares subject to options held by Mr. de Castries, which
options Mr. de Castries has the right to exercise presently or within 60
days.
5
<PAGE>
ALLIANCE UNITS
NUMBER PERCENT
NAME OF UNITS OF CLASS
- ---- --------- --------
John S. Chalsty............................................ 9,000 *
John T. Hartley (1)........................................ 730 *
William T. McCaffrey....................................... 1,000 *
Joseph J. Melone........................................... 5,000 *
George J. Sella, Jr........................................ 5,000 *
Dave H. Williams (2)....................................... 944,456 1.1 %
All directors and executive officers as a group (26
persons)................................................. 966,186 1.1 %
- ------------
* Represents less than one percent (1%) of the outstanding Alliance Units.
(1) Represents 730 Alliance Units owned by Martha Hartley, Mr. Hartley's spouse.
Mr. Hartley disclaims beneficial ownership of the Alliance Units owned by
his spouse.
(2) Includes 80,000 Alliance Units owned by Reba W. Williams, Mr. Williams'
spouse.
DLJ COMMON STOCK
NUMBER PERCENT
NAME OF SHARES OF CLASS
- ---- --------- --------
Claude Bebear.............................................. 1,000 *
John S. Chalsty (1)........................................ 931,257 1.6%
Francoise Colloc'h......................................... 1,000 *
Henri de Castries.......................................... 1,000 *
John T. Hartley (2)........................................ 1,024 *
W. Edwin Jarmain (3)....................................... 7,024 *
William T. McCaffrey....................................... 1,024 *
Joseph J. Melone........................................... 1,024 *
George J. Sella, Jr........................................ 523 *
Jose S. Suquet............................................. 200 *
All directors and executive officers as a group (26
persons)................................................. 945,576 1.6%
- ------------
* Represents less than one percent (1%) of the outstanding shares of DLJ
common stock.
(1) Includes 1,000 shares of DLJ common stock owned by Mr. Chalsty's wife;
291,190 vested restricted stock units; and 636,357 shares subject to options
held by Mr. Chalsty, which options Mr. Chalsty has the right to exercise
presently or within 60 days.
(2) Represents 1,024 shares for which Mr. Hartley acts as Trustee for the John
T. Hartley Trust.
(3) Includes 4,000 shares owned by Jarmain Group, Inc. (which is controlled by
Mr. Jarmain), and 2,000 shares subject to options held by Mr. Jarmain, which
options Mr. Jarmain has the right to exercise presently or within 60 days.
6
<PAGE>
PROPOSAL 1. ELECTION OF DIRECTORS
NOMINEES FOR ELECTION
The Board of Directors consists of one class of directors who hold office
until the Annual Meeting of Shareholders next following their election and until
their successors shall have been elected and qualified.
Pursuant to the By-Laws of the Company, the Board has set 19 as the number
of directors to be elected at the Annual Meeting for terms ending in May 1999 or
until their respective successors shall have been elected and qualified. All of
the nominees are at the present time directors of the Company, whose current
terms will expire at the 1998 Annual Meeting. If any nominee should become
unable to serve, the persons named as proxies on the proxy card will vote for
the person or persons the Board recommends, if any. The Board knows of no reason
why any nominee will be unavailable or unable to serve.
Set forth below is information about each nominee, including business
positions held during at least the past five years, age, other directorships
held and periods of service as a director of the Company and Equitable Life.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR THE NOMINEES
NAMED BELOW.
CLAUDE BEBEAR, 62 Director since May 1992
Chairman of the Board of the Company (will retire as Chairman April 1,
1998) and a Director of DLJ (until April 1, 1998) and Alliance Capital
Management Corporation, the general partner of Alliance. Mr. Bebear has been
Chairman of the Executive Board of AXA since January 1997. Prior thereto, he was
Chairman and Chief Executive Officer of AXA from 1989 to January 1997 and Chief
Executive Officer of the AXA Group from 1974 to 1989. Mr. Bebear serves as
Chairman or Director of numerous subsidiaries and affiliated companies of the
AXA Group. He is also a Director of Saint-Gobain and Schneider S.A., and serves
as a member of the Supervisory Board of Compagnie Financiere de Paribas. Mr.
Bebear has been a Director of Equitable Life since July 1991 (will retire as an
Equitable Life Director April 1, 1998).
JOHN S. CHALSTY, 64 Director since February 1996
Chairman of DLJ (since February 1996) and a Senior Executive Vice President
of AXA (since January 1997). He was Chief Executive Officer of DLJ from 1986 to
February 1998, and President of DLJ from 1986 to February 1996. Director of DLJ
since 1971 and Director of IBP, Inc. and Occidental Petroleum Corporation. From
1990 to 1994 Mr. Chalsty served as Vice Chairman of the New York Stock Exchange,
Inc.
FRANCOISE COLLOC'H, 54 Director since December 1996
Senior Executive Vice President in charge of Human Resources and
Communications of AXA. Prior thereto, she was Executive Vice President (1993),
Senior Vice President-Management and Communication (1992), and Vice President
(1984-1992) of AXA. She is also a Director or officer of various subsidiaries
and affiliates of the AXA Group. Director of Equitable Life since July 1992.
7
<PAGE>
HENRI DE CASTRIES, 43 Director since May 1994
Vice Chairman of the Board of the Company since February 1996 (will become
Chairman of the Board on April 1, 1998). Senior Executive Vice President
Financial Services and Life Insurance Activities of AXA since 1996. Prior
thereto, he was Executive Vice President Financial Services and Life Insurance
Activities of AXA from 1993 to 1996, General Secretary of AXA from 1991 to 1993
and Central Director of Finances of AXA from 1989 to 1991. He is also a Director
or officer of various subsidiaries and affiliates of the AXA Group. Mr. de
Castries has been a Director of Equitable Life since September 1993. He is also
a Director of DLJ and Alliance Capital Management Corporation, the general
partner of Alliance.
JOSEPH L. DIONNE, 64 Director since May 1992
Chairman (since April 1988) and Chief Executive Officer (since April 1983)
of The McGraw-Hill Companies (multimedia publishing and informational services).
Director of Harris Corporation and Ryder System, Inc. Director of Equitable Life
since May 1982.
WILLIAM T. ESREY, 58 Director since May 1992
Chairman (since April 1990), Chief Executive Officer (since 1985) and
President (1985 to February 1996) of Sprint Corporation (a diversified
international telecommunications company). Director of Duke Energy Corporation
(formerly Panhandle Eastern Corporation), General Mills, Inc. and Everen Capital
Corporation. Director of Equitable Life since July 1986.
JEAN-RENE FOURTOU, 58 Director since July 1992
Chairman and Chief Executive Officer of Rhone-Poulenc, S.A. (industrial
conglomerate principally engaged in the manufacture of pharmaceuticals and
specialty chemicals) since 1986. Member of the Supervisory Board of AXA.
Director of Schneider S.A., Societe Generale, Groupe Pernod-Ricard and Air
France. Member of the European Advisory Board of Bankers Trust Company and
Consulting Council of Banque de France. Director of Equitable Life since July
1992.
JACQUES FRIEDMANN, 65 Director since July 1997
Chairman of the Supervisory Board of AXA since January 1997. He is Vice
Chairman of the Board of Directors of Royale Belge (insurance), and Director of
Banque Nationale de Paris, Elf Aquitaine, Compagnie Generale des Eaux, Alcatel
Alsthom, G.B.L. Holding Co., and C.R.A.G. Insurance.
DONALD J. GREENE, 64 Director since May 1992
Partner, LeBoeuf, Lamb, Greene & MacRae, L.L.P. (law firm) since 1965.
Director of Equitable Life since July 1991.
ANTHONY J. HAMILTON, 56 Director since December 1995
Group Chairman and Chief Executive (since February 1994) of Fox-Pitt,
Kelton Group Ltd., the London and New York based investment banking firm, which
Mr. Hamilton joined in 1978. Non-executive Chairman of the Lloyd's Brokers,
Byas, Mosley Group Ltd. Director of various Fox-Pitt, Kelton and Byas, Mosley
Group companies. Member of the Supervisory Board of AXA, and Director of Sun
Life & Provincial Holdings plc. Director of Equitable Life from December 1995 to
June 1996.
8
<PAGE>
JOHN T. HARTLEY, 68 Director since May 1992
Retired as Chairman and Chief Executive Officer of Harris Corporation
(industrial conglomerate principally engaged in the manufacture of electronic,
telephone and copying systems and related equipment) in July 1995; prior
thereto, he held the positions of Chairman of Harris Corporation from 1987,
Chief Executive Officer from 1986 and President from October 1987 to April 1993.
Director of Harris Corporation and The McGraw-Hill Companies. Director of
Equitable Life since August 1987.
JOHN H.F. HASKELL, JR., 66 Director since July 1992
Managing Director of SBC Warburg Dillon Read, Inc. (formerly Dillon, Read &
Co., Inc.) (investment banking firm) since 1975 and member of its Board of
Directors. Director of Dillon, Read Limited, and Kaydon Corporation, Advisory
Director of Pall Corporation, and Chairman of the Supervisory Board of Dillon
Read (France) Gestion. Director of Equitable Life since July 1992.
MICHAEL HEGARTY, 53 Director since February 1998
Senior Executive Vice President of the Company since January 1998 (will
become Vice Chairman on April 1, 1998) and Chief Operating Officer since
February 1998. He has also been a Director and President of Equitable Life since
January 1998 and Chief Operating Officer since February 1998. From 1996 to 1997
he was Vice Chairman of Chase Manhattan Corporation. Prior thereto, he was Vice
Chairman (1995-1996) and Senior Executive Vice President (1991-1995) of Chemical
Bank, which merged with Chase in 1996.
MARY R. (NINA) HENDERSON, 47 Director since December 1996
President of Bestfoods Grocery and Vice President of BESTFOODS (formerly
CPC International, Inc.), both food manufacturing companies, since 1993. Prior
thereto, she was President of CPC Specialty Markets Group. Director of Hunt
Corporation (formerly Hunt Manufacturing Company), a manufacturer of office
products. Director of Equitable Life since December 1996.
W. EDWIN JARMAIN, 59 Director since July 1992
President of Jarmain Group Inc. (private investment holding company) since
1979; also an officer or director of several affiliated companies. Director of
Equitable Life (since July 1992), DLJ (since October 1992), AXA Insurance
(Canada), Anglo Canada General Insurance Company, AXA Pacific Insurance Company
(formerly Boreal Property & Casualty Insurance Company); alternate director of
National Mutual Asia Limited and National Mutual Insurance Company Limited of
Hong Kong. He serves as non-executive Chairman and Director of FCA International
Ltd. (financial collection services) and previously served as President, CEO and
Director during 1992 and 1993.
EDWARD D. MILLER, 57 Director since August 1997
President and Chief Executive Officer of the Company since August 1997. He
was President of Equitable Life from August 1997 to January 1998 and has been
Chairman of Equitable Life since January 1998 and Chief Executive Officer and a
Director of Equitable Life since August 1997. He is also a Senior Executive Vice
President of AXA. From 1995 to 1997, he was Senior Vice Chairman of Chase
Manhattan Corporation. Prior thereto, he was President of Chemical Bank (which
merged with Chase in 1995) from 1994 to 1995 and Vice Chairman from 1991 to
1994. He is also a Director of DLJ; Alliance Capital Management Corporation, the
general partner of Alliance; and KeySpan Energy Corporation, formed as a result
of the merger of Long Island Lighting Company and Brooklyn Union Gas Co.
9
<PAGE>
DIDIER PINEAU-VALENCIENNE, 67 Director since February 1996
Chairman and Chief Executive Officer of Schneider S.A. (industrial
conglomerate principally engaged in the electrical equipment business) since
1981 and of Square D and Chairman or a Director of numerous subsidiaries and
affiliated companies of Schneider. Director of the Company and Equitable Life
from July 1992 to February 1995. Member of the Supervisory Board of AXA.
Director of CGIP, Rhone-Poulenc, S.A., and Sema Group PLC; a member of the
Supervisory Board of Banque Paribas; a member of the European Advisory Board of
Bankers Trust Company and of the Advisory Boards of Banque de France and
Booz-Allen & Hamilton. Director of Equitable Life since February 1996.
GEORGE J. SELLA, JR., 69 Director since May 1992
Retired as Chairman and Chief Executive Officer of American Cyanamid
Company (industrial conglomerate principally engaged in the manufacture of
pharmaceutical products and agricultural herbicides and pesticides) in April
1993; prior thereto, he held the positions of Chairman from 1984, Chief
Executive Officer from 1983 and President from 1979 to 1991. Director of Union
Camp Corporation, Coulter Pharmaceutical, and Bush, Boake, Allen Inc. Director
of Equitable Life since May 1987.
DAVE H. WILLIAMS, 65 Director since May 1992
Chairman and Chief Executive Officer of Alliance Capital Management
Corporation, the general partner of Alliance, since 1977 and Chairman or
Director of numerous subsidiaries and affiliated companies of Alliance Capital
Management Corporation and of mutual funds managed by Alliance. Senior Executive
Vice President of AXA (since January 1997). Director of Equitable Life since
March 1991.
BOARD MEETINGS AND COMMITTEES
The Company's Board of Directors held eight meetings during 1997. Each
Director attended at least 75% of the aggregate meetings of the Board of
Directors and committees to which he or she was assigned during the year except
for Mr. Fourtou, who missed 7 of the 22 meetings that he was eligible to attend;
Mr. Hamilton, who missed 3 of the 11 meetings that he was eligible to attend;
and Mr. Friedmann, who missed 1 of the 3 meetings that he was eligible to
attend.
The Board of Directors has the following four standing committees.
Executive Committee. The function of the Executive Committee is to
exercise the authority of the Board of Directors in the management of the
Company between meetings of the Board with certain exceptions as set forth in
the Company's By-Laws. The members of the Committee are: Joseph J. Melone
(Chairman since August 1997; will retire April 1, 1998), Claude Bebear, Henri de
Castries, Joseph L. Dionne, Donald J. Greene, and Edward D. Miller. The
Committee met once in 1997.
Audit Committee. The Audit Committee is authorized to review and approve
the scope and results of the Company's outside audit, and the fees therefor, and
to make recommendations to the Board of Directors and management of the Company
concerning auditing and accounting matters and the selection of independent
accountants. Its membership is restricted to Directors who are not employees of
the Company or its affiliates. The members of the Committee are: George J.
Sella, Jr. (Chairman), William T. Esrey, Donald J. Greene, John T. Hartley, Mary
R. (Nina) Henderson and W. Edwin Jarmain. The Committee met four times in 1997.
10
<PAGE>
Organization and Compensation Committee. The function of the Organization
and Compensation Committee is to make recommendations to the Board with respect
to nominations of Directors and to review, report and make recommendations to
the Board with respect to officer compensation. The members of the Committee
are: Joseph L. Dionne (Chairman), William T. Esrey, Jean-Rene Fourtou, John T.
Hartley, and W. Edwin Jarmain. The Committee met eight times in 1997.
Stock Option Committee. The function of the Stock Option Committee is to
administer the Company's 1997 Stock Incentive Plan. The members of the Committee
are: Joseph L. Dionne (Chairman), William T. Esrey, Jean-Rene Fourtou, and John
T. Hartley. The Committee met six times in 1997.
COMPENSATION OF DIRECTORS
All directors of the Company are also directors of Equitable Life with the
exception of Messrs. Chalsty, Friedmann, Hamilton and, after April 1, 1998, Mr.
Bebear. In consideration for serving on the Board of Directors of Equitable Life
or the Board of Directors of the Company, each director who is not an employee
of the Company or any affiliate of the Company (including AXA) receives an
annual cash retainer fee of $30,000. Directors who receive a cash retainer for
service on the Board of Directors of Equitable Life do not receive an additional
cash retainer for service on the Board of Directors of the Company. Mr. Hamilton
receives his cash retainer (and meeting fees) for his service as a director of
the Company from the Company.
In addition, each director receives a meeting fee of $1,200 from the
Company and Equitable Life, as appropriate, for each meeting of the Company's
Board or Equitable Life's Board (and any committee of such boards) attended.
Effective January 1998, the chairperson of each standing committee of the
Company's Board or Equitable Life's Board also receives an annual chair retainer
fee of $5,000. During 1997, instead of an annual chair retainer, the chairperson
of each committee received an additional meeting fee of $800 for each committee
meeting attended. For each joint meeting of the Company's and Equitable Life's
Boards (or committees), directors receive only one meeting fee and one annual
chair retainer. The directors may defer all or part of their cash compensation
as directors until retirement from the Board or age 72, whichever is later.
The Company's Board and Equitable Life's Board have adopted a new Stock
Plan for Directors, effective January 1, 1998. Under this plan, each director of
Equitable Life or of the Company who is not an employee of the Company or any
affiliate of the Company (including AXA) receives a quarterly award of $7,500
payable in common stock of the Company in addition to the cash retainer and per
meeting fees described above. Only one quarterly award is payable to any such
director who serves on both the Company's and Equitable Life's Boards. The
directors may defer all or part of their awards under the Stock Plan for
Directors until retirement from the Board or age 72, whichever is later.
Effective December 31, 1997, Equitable Life terminated the Retired
Directors Consulting Program (the 'Program'). This Program, as in effect on
December 31, 1997, allowed for the provision of advisory and consulting services
to Equitable Life by directors who retired at age 72 after at least 10 years of
Equitable Life Board service and who had not been employees of Equitable Life or
any affiliate of Equitable Life (including AXA). Under the Program, each
eligible director who offered such advisory and consulting services was
compensated annually in an amount equal to the annual cash retainer payable to
directors of Equitable Life at the time that director retired from the Equitable
Life Board. In connection with the termination of the Program, a transition rule
was adopted pursuant to which directors serving on Equitable Life's Board as of
December 31, 1997, who otherwise would have been eligible, but for the Program's
termination, to participate in the Program upon their retirement from the
Equitable Life Board, will remain
11
<PAGE>
eligible to participate in the Program at a reduced rate of compensation, the
formula for which takes into account an eligible director's years of Equitable
Life Board service as of December 31, 1997 and that director's total years of
Equitable Life Board service upon retirement from the Board.
Mr. Bebear, Chairman of the Company's Board of Directors, and Mr. de
Castries, Vice Chairman of the Company's Board of Directors, received $150,000
and $75,000, respectively, from the Company for services provided in addition to
their services as directors of the Company during 1997. Messrs. Bebear and de
Castries will receive $150,000 and $125,000, respectively, from the Company for
such services during 1998. Messrs. Bebear and de Castries are eligible to
participate in both the Company's Short-Term and Long-Term Incentive
Compensation Plans, but did not receive any compensation under these plans for
1997. Ms. Colloc'h received $50,000 from the Company in 1997 for services
provided in addition to her services as a director of the Company and will
receive the same amounts from the Company for such services during 1998. Messrs.
Bebear and de Castries and Ms. Colloc'h received grants of 50,000, 40,000, and
25,000 options, respectively, in February 1998 pursuant to the Company's 1997
Stock Incentive Plan.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors and executive officers, and persons who own more than 10% of a
registered class of the Company's equity securities, to file reports of
ownership and changes in ownership with the Securities and Exchange Commission
and the New York Stock Exchange. Directors, executive officers and greater than
10% shareholders are required by SEC regulations to furnish the Company with
copies of all Section 16(a) forms they file. Based on a review of such forms and
written representations as to the need to file Form 5, the Company believes that
all Section 16(a) filing requirements applicable to its directors, executive
officers and greater than 10% beneficial owners were complied with for the year
ended December 31, 1997, except that, due to administrative oversight, two Forms
4 were not timely filed to report two acquisitions of the Company's Common Stock
by Mr. McCaffrey through the exercise of options held by him and the immediate
sale for his account of some of the shares of Common Stock so acquired. Promptly
upon awareness of such oversight, a Form 4 and Form 5 were filed, as
appropriate, to report these transactions.
EXECUTIVE COMPENSATION
REPORT OF THE COMPENSATION COMMITTEES
Policies governing compensation of the Company's executive officers are
administered by the Organization and Compensation Committees (collectively, the
'Committees') of the Company and of Equitable Life. The Committees' major
responsibilities are to ensure that compensation programs for the Company's
executive officers are effective in attracting and motivating key officers, are
consistent with the Company's business objectives, relate pay to performance,
and are administered in a fair and equitable fashion. All members of the
Company's Organization and Compensation Committee are also members of Equitable
Life's Organization and Compensation Committee, and no member of the Committees
is a current or former officer or employee of the Company, Equitable Life or
their affiliates.
Compensation Philosophy and Strategy. The Company and its subsidiaries
constitute a diversified financial services organization which provides a broad
spectrum of insurance, asset management and investment banking services. The
compensation program for the Company's executive officers is designed to attract
and motivate key individuals by providing compensation based on the Company's
performance in improving its profitability and total
12
<PAGE>
returns to shareholders and on an assessment of each executive officer's
contribution to the success of the Company. The Committees believe that the
Company competes most directly for executive talent with other large diversified
financial services organizations and, accordingly, in determining total
compensation for executive officers seek to provide compensation competitive
with levels of compensation paid by selected large diversified financial
services companies. However, the compensation program for executive officers
contains substantial incentive components which afford executive officers
opportunities to earn compensation which may exceed levels at comparison
companies if warranted by corporate performance. The Committees review and
approve the selection of companies used for compensation comparison purposes and
obtain compensation data from surveys conducted by outside consulting firms.
Because of the broad spectrum of companies with which the Company competes for
executive talent, the companies selected for compensation comparison purposes
are not generally the same companies which comprise the Standard & Poor's Life
Insurance Index selected for company shareholder return comparisons. In 1997,
the companies selected for comparison purposes included large U.S. insurance
companies and large diversified financial services institutions, including
commercial banking corporations and nonbank financial services institutions
located in major U.S. metropolitan areas.
The Committees believe that the compensation arrangements for executive
officers should be aligned with the short- and long-term interests of
shareholders. Accordingly, a high proportion of the total compensation of
executive officers is based on at risk and variable incentive programs,
including stock incentives, which emphasize Company performance and growth in
earnings and return on shareholders' equity. In addition, in 1997, the
Committees approved minimum stock ownership guidelines for the Company's
executive and senior officers.
Total direct compensation includes base salaries and annual and long-term
incentive compensation, including stock incentives. The Committees also consider
other elements of an executive's total compensation package, including
retirement and savings plans, insurance and other benefits. The Organization and
Compensation Committee of Equitable Life approves the compensation of all
executive officers of the Company who are designated for purposes of the New
York Insurance Law as principal officers of Equitable Life. For 1997 such
principal officers included all the named executive officers.
o Base Salaries. Base salaries of executive officers are compared against
the median of comparison companies, except where exceptional conditions
require otherwise. The Company's policy is generally not to increase base
salaries for executive officers annually, except to reflect promotions,
increased levels of responsibility and competitive pay levels.
o Annual Incentive Compensation. Annual incentive bonuses allow the
Company to communicate specific Company goals for the year and motivate
executive officers to achieve these goals. For 1997 the Company's goals
were to increase profitability, sales and return on equity. Annual
incentive bonuses for 1997 were paid in January 1998 in accordance with
the Company's amended and restated Short-Term Incentive Compensation Plan
For Senior Officers (the 'Short-Term Plan') which was approved by the
Company's shareholders at the Annual Meeting of Shareholders held in May
1997. The Committees determined that the levels of earnings established
by the Committees under the Short-Term Plan for 1997 had been met and
determined the aggregate amount of incentive compensation to be paid for
1997 pursuant to the Short-Term Plan and the amount to be paid to each
participant. In general, such amounts reflect the assessment by the
Committees of each executive officer's contribution to achieving the
Company's annual objectives with respect to pre-tax insurance adjusted
earnings, return on equity and total insurance premiums and deposits.
o Long-Term Incentives. Long-term incentives for the Company's executive
officers were provided pursuant to the Company's amended and restated
Long-Term Incentive Compensation Plan for Senior Officers (the 'Long-Term
Plan') and the Company's 1997 Stock Incentive Plan (the 'Stock Option
Plan'), both of which were
13
<PAGE>
approved by the Company's shareholders at the Annual Meeting of
Shareholders held in May 1997. With respect to Performance Periods
beginning after 1996, the Company intends to use primarily stock and
stock option grants to provide long-term incentives to the Company's
executive officers.
Long-Term Incentive Compensation Plan. In March 1996, the
Committees established earnings goals and Company performance criteria
relating to pre-tax insurance adjusted earnings and return on equity for
the Initial Performance Period under the Long-Term Plan. The Initial
Performance Period under the Long-Term Plan commenced January 1, 1996 and
will end on December 31, 1998. Pursuant to the terms of the Long-Term
Plan, interim payments for the first two years of the Initial Performance
Period were made in January 1998, based on the determination by the
Committees that the applicable earnings goals and performance criteria
were satisfied. Payments with respect to the entire Initial Performance
Period may not be made until early 1999.
In March 1997, the Committees established earnings goals and Company
performance criteria under the Long-Term Plan for the three year
Performance Period from January 1, 1997 to December 31, 1999. Pursuant to
the terms of the Long-Term Plan, payments for this Performance Period may
not be made until early 2000 and then only in the event certain goals
with respect to pre-tax insurance adjusted earnings and return on equity
are satisfied. Payments for this Performance Period are expected to be
made in common stock of the Company.
Stock Option Plan. Options granted pursuant to the Company's Stock
Option Plan provide officers of the Company and certain of its
subsidiaries with the opportunity to buy an equity interest in the
Company and to share in the appreciation of its common stock. The
Company's Stock Option Committee (which consists of all the members of
the Committees except Mr. Jarmain) administers the Stock Option Plan and
as part of such administration determines the number and type of options
to be granted to the Company's executive officers. Options are granted
with an exercise price equal to the market price on the date of grant.
Determination of the number of stock options to be granted to each
executive officer takes into account annualized present value comparisons
to long-term compensation awards, including stock incentives, made by
large diversified financial services companies included in the group of
comparison companies described above under 'Compensation Philosophy and
Strategy' and an assessment of each executive officer's potential
contribution to the success of the Company. See 'Options' for information
on options granted in 1997 to the Company's named executive officers and
options held by each named executive officer.
CEO Compensation. Mr. Miller was hired in August 1997 as President and CEO
of the Company and President and CEO of Equitable Life. Pursuant to the terms of
his employment agreement which was approved by the Committees, Mr. Miller
received a sign on bonus of $1,500,000, of which $500,000 was paid upon his
joining the Company and the balance of $1,000,000 was paid in early 1998, and,
in lieu of participating in the Long-Term Plan prior to 1998, a payment of
$250,000 in early 1998. In addition to his base salary of $800,000, the
Committees unanimously determined that for his services in 1997, Mr. Miller
should receive incentive compensation of $1 million pursuant to the Short-Term
Plan. The Committees believe that since being hired as President and CEO, Mr.
Miller has made important contributions to the Company's improved performance in
1997 and to positioning the Company for future growth. For the year ended
December 31, 1997, the Company's after-tax operating earnings from continuing
operations rose 37% to a record $660.6 million, excluding after-tax investment
losses and non-recurring charges, as compared to $483.8 million in 1996. Among
the specific achievements considered in determining the amount of Mr. Miller's
annual bonus were the completion of a strategic review to focus Equitable Life
on those business opportunities with the greatest potential for long-term profit
and growth, the reorganization in October 1997 of the insurance product,
financial and risk management, and sales and distribution areas of Equitable
Life into more functional organizations to increase their effectiveness and
profitablility, the strengthening of the Company's
14
<PAGE>
technology operations, and the identification and recruitment of a new chief
operating officer for the Company and Equitable Life.
Prior to Mr. Miller's joining the Company as President and CEO in August
1997, Mr. Melone served as the President and CEO of the Company and Chairman of
the Board of Equitable Life. In addition to his base salary of $700,000, the
Committees unamimously determined that for his services in 1997, Mr. Melone
should receive incentive compensation of $2.97 million pursuant to the
Short-Term Plan and a payment of $800,000 for the first two years of the Initial
Performance Period under the Long-Term Plan. The amount of the payments under
the Short- and Long-Term Plans reflected the assessment by the Committees of Mr.
Melone's contribution to achieving the Company's annual objectives and the
satisfaction of Company goals with respect to pre-tax insurance adjusted
earnings, return on equity and total insurance premium and deposits. Among the
specific achievements for which Mr. Melone was recognized were the expansion of
the distribution channels for Equitable Life's products and improvements in the
productivity of Equitable Life's sales force. Total premiums and deposits
received by Equitable Life's insurance operations for the year ended December
31, 1997 rose 20% to a record $7.703 billion as compared to $6.443 billion in
1996 and first year individual insurance and annuity premiums for the year ended
December 31, 1997 increased 47% to $3.714 billion as compared to $2.524 billion
in 1996.
Deductibility of Certain Executive Compensation. Section 162(m) of the
Internal Revenue Code of 1986, as amended (the 'Code') denies publicly held
corporations a deduction for compensation in excess of $1 million per year paid
or accrued with respect to certain executives in taxable years beginning on or
after January 1, 1994, except to the extent that such compensation qualifies for
an exemption from that limitation. Exempt compensation includes only the
following: (a) performance-based compensation (provided that certain outside
director, shareholder approval, and certification requirements are met); (b)
commissions; (c) payments from certain tax-qualified retirement plans; (d)
health and other fringe benefits that are reasonably believed to be excludable
from gross income; and (e) compensation payable under a binding written contract
in effect on February 17, 1993. The Committees have determined that the
Company's policy is to design its short-term and long-term compensation plans to
qualify for the exemption from the deduction limitations of Section 162(m) of
the Code consistent with designing plans providing appropriate compensation to
executives. In the case of Mr. Miller, a portion of the sign on and other
bonuses guaranteed under his employment contract will not be tax deductible by
virtue of the limitations of Section 162(m). The Committees and the Company's
Stock Option Committee consist solely of directors who are 'outside directors'
for purposes of Section 162(m).
Respectfully submitted,
J.L. Dionne,
Chairman
W.T. Esrey J.T. Hartley
J-R. Fourtou W.E. Jarmain
15
<PAGE>
SUMMARY COMPENSATION TABLE
The table below summarizes for Mr. Melone, who served as the Company's
Chief Executive Officer until August 4, 1997, and as Chairman of the Executive
Committee of the Company's Board of Directors for the remainder of 1997; Mr.
Miller, who served as the Company's Chief Executive Officer for the remainder of
1997; and the other three individuals serving as executive officers of the
Company on December 31, 1997 who had the highest aggregate annual compensation
for 1997 (the 'named executive officers') all compensation required to be
reported for the years 1995, 1996 and 1997.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
---------------------------
AWARDS
ANNUAL COMPENSATION ---------- PAYOUTS
- ------------------------------------------------------------------------------- SECURITIES -------------
NAME AND OTHER ANNUAL UNDERLYING LTIP ALL OTHER
PRINCIPAL POSITION YEAR SALARY(2) BONUS(2) COMPENSATION(3) OPTIONS PAYOUTS(4) COMPENSATION(5)
------------------ ---- --------- ---------- --------------- ---------- ------------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
Joseph J. Melone (1) 1997 $ 698,121 $2,970,000 $ 101,524(6) 105,000 $ 800,000 $ 13,521
Former President and Chief 1996 $ 682,777 $2,300,000 $ 92,118(6) 50,000 -- $ 8,604
Executive Officer 1995 $ 600,000 $2,000,000 $ 86,282(6) -- $ 600,000 $ 8,254
Edward D. Miller (7) 1997 $ 306,866 $1,250,000 -- 340,000 -- $ 1,500,000(8)
President and
Chief Executive Officer
William T. McCaffrey (9) 1997 $ 448,792 $1,620,000 -- 56,250 $ 500,000 $ 13,521
Former Executive Vice President 1996 $ 429,613 $1,200,000 -- 50,000 -- $ 8,604
and
Chief Administrative Officer 1995 $ 325,000 $ 750,000 -- -- $ 350,000 $ 8,254
Stanley B. Tulin (10) 1997 $ 349,060 $1,620,000 -- 18,750 $ 483,000 $ 12,150
Executive Vice President 1996 $ 225,547 $ 850,000 -- 100,000 -- $ 250,000(11)
and Chief Financial Officer
Jose S. Suquet 1997 $ 349,060 $1,026,000 -- 12,150 $ 267,000 $ 13,521
Executive Vice President 1996 $ 349,060 $ 725,000 -- -- -- $ 8,604
</TABLE>
- ------------
(1) Mr. Melone was the Company's President and Chief Executive Officer until
August 4, 1997 and Chairman of the Executive Committee of the Company's
Board of Directors since August 1997, and is scheduled to retire on April
1, 1998.
(2) Includes all amounts deferred under qualified and non-qualified deferred
compensation plans.
(3) The amounts in this column do not include certain incidental non-cash
compensation provided to the named executive officers which does not exceed
$50,000.
(4) Represents (i) interim payouts in 1998 for the first two years of the
Initial Performance Period ending December 31, 1998 under the Long-Term
Plan; and (ii) payouts in 1996 under the former long-term incentive
compensation plan in effect for years prior to 1996 following the final
year of a three year performance period ended December 31, 1995.
(5) Amounts in this column consist of employer contributions to defined
contribution plans unless otherwise indicated.
(6) These amounts include $84,000 in 1995, $90,000 in 1996, and $99,000 in 1997
for rent paid by Equitable Life for an apartment provided to Mr. Melone.
(7) Mr. Miller joined the Company on August 4, 1997.
(8) Represents a one-time non-recurring payment made to Mr. Miller in
connection with the commencement of his employment.
(9) Mr. McCaffrey retired on March 1, 1998.
(10) Mr. Tulin joined the Company in May 1996.
(11) Represents a one-time non-recurring payment made to Mr. Tulin upon the
commencement of his employment.
16
<PAGE>
OPTIONS
The following tables set forth information concerning the grant of options
to each of the named executive officers during 1997 and the value of options
held by the named executive officers on December 31, 1997.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL
INDIVIDUAL GRANTS REALIZABLE VALUE AT
------------------------------------------------------------- ASSUMED ANNUAL
NUMBER OF % OF RATES OF STOCK PRICE
SECURITIES TOTAL OPTIONS APPRECIATION
UNDERLYING GRANTED TO EXERCISE FOR OPTION TERM
OPTIONS EMPLOYEES IN PRICE -------------------------
NAME GRANTED(1) FISCAL YEAR ($/SH) EXPIRATION DATE 5% 10%
- ------------------------ ---------- ------------- -------- ------------------ ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
Joseph J. Melone........ 105,000 3.3% $42.5625 September 17, 2007 $2,810,569 $ 7,122,535
Edward D. Miller........ 300,000 9.5% $38.6250 August 4, 2007 $7,287,316 $18,467,491
40,000 1.3% $42.5625 September 17, 2007 $1,070,693 $ 2,713,347
William T. McCaffrey.... 56,250 1.8% $42.5625 September 17, 2007 $1,505,662 $ 3,815,644
Stanley B. Tulin........ 18,750 0.6% $42.5625 September 17, 2007 $ 501,887 $ 1,271,881
Jose S. Suquet.......... 12,150 0.4% $42.5625 September 17, 2007 $ 325,223 $ 824,179
</TABLE>
- ------------
(1) Options under the 1997 Stock Incentive Plan vest (become exercisable) at the
rate of 33 1/3% per year subject to acceleration in the event of death.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
SHARES OPTIONS AT FY-END OPTIONS AT FY-END(1)
ACQUIRED ON VALUE ------------------------- -------------------------
NAME EXERCISE REALIZED EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
---- ----------- -------- ------------------------- -------------------------
<S> <C> <C> <C> <C>
Joseph J. Melone........ 20,000 $593,750 310,000/ 225,000 $9,170,000/ $4,114,688
Edward D. Miller........ 0 0 0/ 340,000 $0/ $3,625,000
William T. McCaffrey.... 65,000 $744,219 25,000/ 116,250 $691,250/ $1,979,297
Stanley B. Tulin........ 0 0 20,000/ 98,750 $512,500/ $2,184,766
Jose S. Suquet.......... 0 0 80,353/ 57,240 $2,338,002/ $1,393,756
</TABLE>
- ------------
(1) Based on $49.75 per share, the closing price of the Common Stock on the New
York Stock Exchange on December 31, 1997.
17
<PAGE>
LONG-TERM INCENTIVE PLAN AWARDS
The following table sets forth information concerning certain awards made
in 1997 under the Company's Long-Term Plan with respect to the 1997-99
Performance Period, based on the assumptions set forth below. Such Plan provides
for awards to be made to those persons who are the Company's Chief Executive
Officer and the other four individuals who have the highest amount of salary and
bonus for 1999, the year in which the related payments under the Plan will be
deductible for Federal income tax purposes. Such persons cannot be identified at
this time and will not be the same individuals who are the Company's named
executive officers for 1997. Likewise, the dollar amounts which may be paid
pursuant to such awards under the formula contained in such Plan (which formula
is based on pre-tax insurance adjusted earnings, subject to negative discretion
by the Committees administering the Plan, as is more fully set forth in the
Plan) are dependent upon the Company's performance in 1997, 1998 and 1999 and
are accordingly not determinable at this time. However, for purposes of this
table only, it is assumed that the persons named in the Summary Compensation
Table with respect to 1997 (other than Mr. McCaffrey, who retired from the
Company on March 1, 1998, and Mr. Melone, who is scheduled to retire from the
Company on April 1, 1998) will be among the persons receiving payments for the
1997-99 Performance Period, and that the Company's performance in 1998 and 1999
will be the same as in 1997.
LONG-TERM INCENTIVE PLAN--AWARDS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
PERFORMANCE OR ESTIMATED FUTURE PAYOUTS UNDER
NUMBER OF OTHER PERIOD NON-STOCK PRICE-BASED PLANS
SHARES, UNITS, OR UNTIL MATURATION ------------------------------------------------
NAME(1) OTHER RIGHTS(1) OR PAYOUT THRESHOLD($)(2) TARGET($)(3) MAXIMUM($)(4)
- ------------------------ ----------------- ---------------- --------------- ------------ -------------
<S> <C> <C> <C> <C> <C>
Joseph J. Melone........ -- -- -- -- --
Edward D. Miller........ 16% 1/1/97-12/31/99 -- 1,246,320 --
William T. McCaffrey.... -- -- -- -- --
Stanley B. Tulin........ 14% 1/1/97-12/31/99 -- 1,090,530 --
Jose S. Suquet.......... 12% 1/1/97-12/31/99 -- 934,740 --
</TABLE>
- ------------
(1) The table assumes that the Company's current Chief Executive Officer will be
the Chief Executive Officer, and that Messrs. Tulin and Suquet will be among
the other four individuals who have the highest amount of salary and bonus
for 1999. The percentages shown represent the maximum percentages of the
compensation pool which the Committees have determined may be payable to the
Chief Executive Officer and the other two individuals who have the highest
amount of salary and bonus for 1999. The Plan permits the participation for
the 1997-99 Performance Period of individuals who will be named executive
officers at any time during such Performance Period. The allocation of the
maximum percentages of the compensation pool payable to particular
individuals cannot be determined until the end of the Performance Period. At
the end of the 1997-99 Performance Period, Plan participants are expected to
receive their payments in shares of common stock of the Company.
(2) Since the Committees administering the Plan may exercise their discretion to
pay less than the maximum amounts permitted by the Plan, it is not possible
to determine the minimum amount that would be payable to particular
individuals if threshold earnings levels are met for the 1997-1999
Performance Period.
(3) Represents the amount payable from the compensation pool for the 1997-1999
Performance Period based on the assumptions listed above and assuming that
the Committees administering the plan determine to pay the maximum
percentages shown above. The amounts set forth should not be taken as
indicative of the amounts that will ultimately be paid.
(4) The size of the compensation pool for the 1997-1999 Performance Period
cannot be calculated at this time since it is determined by a formula based
on earnings for such Performance Period.
18
<PAGE>
PERFORMANCE GRAPH
The graph set forth below shows the cumulative total return to holders of
the Company's Common Stock from December 31, 1992 to December 31, 1997, computed
by dividing (X) the sum of (a) dividends for such period assuming reinvestment
of dividends and (b) the difference between the price per share at the beginning
and end of such period by (Y) the share price at the beginning of such period,
and compares such return to the performance at the beginning and end of such
period of the Standard & Poor's 500 Index and the Standard & Poor's Life
Insurance Index. The graph assumes $100 invested on December 31, 1992 in the
Company's Common Stock (at $14.00 per share), the Standard & Poor's 500 Index
and the Standard & Poor's Life Insurance Index.
CUMULATIVE TOTAL RETURN
Based on reinvestment of $100 beginning December 31, 1992
[LINE GRAPH]
12/31/92 12/31/93 12/31/94 12/31/95 12/31/96 12/31/97
-------- -------- -------- -------- -------- --------
Equitable 100 194.57 131.86 176.11 182.15 369.95
S&P 500 100 110.03 111.53 153.28 188.46 251.41
S&P Life Ins. 100 101.29 84.08 119.76 146.28 185.43
TOTAL RETURN DATA PROVIDED BY S&P'S COMPUSTAT SERVICES INC.
Source: The Carson Group
19
<PAGE>
RETIREMENT PLANS AND SEPARATION BENEFITS
Equitable Life maintains a qualified defined benefit retirement plan (the
'Retirement Plan') and an unfunded, nonqualified excess benefit plan (the
'Excess Plan') which pays benefits in excess of the benefit limits provided by
the Employee Retirement Income Security Act of 1974, as amended ('ERISA'), and
the Code, as well as benefits in excess of the compensation limits under the
Code, and a supplemental benefit plan pursuant to which the chief executive
officer of Equitable Life may authorize that an officer receive a supplemental
retirement benefit based on additional years of service in excess of actual
years of service (the 'Supplemental Executive Retirement Plan').
The table below indicates the estimated maximum annual retirement benefits
that a hypothetical participant would be entitled to receive under the
Retirement Plan (without regard to the maximum benefit limitations imposed by
ERISA and the Code and including payments under the Supplemental Executive
Retirement Plan) computed on a straight-life annuity basis, before any deduction
for social security benefits, if retirement occurred at age 65 and the number of
credited years of service and average annual recognized earnings equaled the
amounts indicated.
PENSION PLAN TABLE
<TABLE>
<CAPTION>
CREDITED YEARS OF SERVICE
----------------------------------------------------------------
RECOGNIZED EARNINGS 10 YEARS 15 YEARS 20 YEARS 25 YEARS 30 YEARS
- ------------------- -------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
$ 100,000....... $ 20,000 $ 30,000 $ 40,000 $ 50,000 $ 60,000
200,000....... 40,000 60,000 80,000 100,000 120,000
400,000....... 80,000 120,000 160,000 200,000 240,000
600,000....... 120,000 180,000 240,000 300,000 360,000
800,000....... 160,000 240,000 320,000 400,000 480,000
1,000,000....... 200,000 300,000 400,000 500,000 600,000
1,500,000....... 300,000 450,000 600,000 750,000 900,000
2,000,000....... 400,000 600,000 800,000 1,000,000 1,200,000
2,500,000....... 500,000 750,000 1,000,000 1,250,000 1,300,000
3,000,000....... 600,000 900,000 1,200,000 1,500,000 1,600,000
3,500,000....... 700,000 1,050,000 1,400,000 1,750,000 1,900,000
4,000,000....... 800,000 1,200,000 1,600,000 2,000,000 2,200,000
</TABLE>
The Retirement Plan will provide pension benefits for Messrs. Melone,
Miller, McCaffrey, Tulin and Suquet. For purposes of the Retirement Plan,
covered compensation for pension benefits calculation purposes is salary and
short-term incentive compensation allocated to Equitable Life and those of its
affiliates who are co-sponsors of the Retirement Plan. As of December 31, 1997,
the number of credited years of service under the Retirement Plan (including any
service supplement authorized pursuant to the Supplemental Executive Retirement
Plan) for Messrs. Melone, McCaffrey, Tulin and Suquet was 10.42, 36.42, 0.67 and
16.58, respectively. Mr. Miller did not receive any credited service under the
Retirement Plan in 1997 due to a one-year waiting period before becoming
eligible to participate.
Messrs. Melone and McCaffrey will have their benefits determined on the
basis of the greater of (i) the sum of their frozen accrued benefit, based on
actual and deemed service prior to January 1, 1989 under the final average pay
formula (the 'Pre-89 Formula'), if any, and their accrued account balance, under
the Cash Balance Formula, accrued
20
<PAGE>
subsequent to December 31, 1988, and (ii) the Pre-89 Formula applied to total
years of actual and deemed service and final average pay at retirement. Mr.
Suquet's benefits will be computed solely according to (i) above. Mr. Miller's
and Mr. Tulin's benefits will be computed solely according to the Cash Balance
Formula. The Cash Balance Formula credits each named executive's account during
each year of such executive's participation in the Retirement Plan, subsequent
to December 31, 1988, with an amount equal to the sum of 5% of such individual's
annual covered compensation not in excess of the social security wage base and
10% in excess of such wage base. These accounts are credited monthly with
interest based on the average yield of one-year U.S. Treasury bills for the
twelve month period ending on the last business day of November in the preceding
calendar year. The Pre-89 Formula recognizes that participants in the Retirement
Plan will receive social security benefits and reduces the benefit by a portion
of the social security benefits. The benefits to the executives will be paid as
a life annuity or a joint and survivor annuity depending on the executive's
marital status at the time of retirement. The executive also has the opportunity
to receive the cash balance account portion of the benefit in a lump sum.
Pursuant to an arrangement approved by the Board of Directors of Equitable
Life in February 1998, Mr. Melone will receive under the Supplemental Executive
Retirement Plan an additional annual retirement benefit of $50,867, expressed as
a straight-life annuity, or its equivalent as a joint and survivor annuity. The
Company will also continue to make available an apartment to Mr. Melone during a
transitional period after his retirement. In addition, the retirement provisions
of the 1997 Stock Incentive Plan will apply to the vesting and exercise of all
options held by Messrs. Melone and McCaffrey.
EMPLOYMENT CONTRACTS
In connection with joining the Company in 1997, Mr. Miller entered into an
employment agreement providing generally for a sign on bonus of $1,500,000, of
which $500,000 was paid upon his joining the Company and the balance of
$1,000,000 was paid in early 1998; a payment of $250,000 in early 1998 in lieu
of his participation in the Company's Long-Term Plan prior to 1998; a base
salary of $800,000 per annum for 1997, 1998 and 1999; the payment of a
$2,700,000 bonus in February 1999; and grants, pursuant to the Company's 1997
Stock Incentive Plan, of 300,000 options upon Mr. Miller's joining the Company,
and of an additional 100,000 options in both September 1998 and 1999. The
agreement also provides that Mr. Miller will participate in the Company's
Short-Term Plan, with the amount of bonuses referred to above to be taken into
account in determining amounts to be paid under such plan for 1997 and 1998.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The members of the Organization and Compensation Committee of the Company's
Board of Directors are Joseph L. Dionne (Chairman), William T. Esrey, Jean-Rene
Fourtou, John T. Hartley and W. Edwin Jarmain. No member of the Committee was an
officer or employee of the Company or any of its subsidiaries. See 'Compensation
of Directors' and 'Certain Relationships and Related Transactions' (for
information on Mr. Jarmain's commitment to invest in WSW Multi Manager Fund,
L.P.).
21
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Equitable Life has agreements with GIE AXA Universite and GIE Informatique
AXA, affiliates of AXA, relating to services provided by AXA and its affiliates
to Equitable Life and its subsidiaries for management training seminars and for
ongoing maintenance and technical support for computer software and technology
licensed by AXA for use by the Company and its subsidiaries. Equitable Life
incurred approximately $2,769,504 in fees for services provided by AXA's
affiliates pursuant to these agreements during 1997 and anticipates that it will
continue to incur fees in 1998 under these agreements.
Equitable Life has entered into an agreement with AXA (the 'AXA Services
Agreement') covering management, communications, advertising, rating agency and
various other services to be provided by AXA and its affiliates. To the extent
that Equitable Life provides similar services to AXA and its affiliates, amounts
payable under this agreement will be offset by the amounts attributable to such
services. Equitable Life incurred approximately $6,500,000 in fees for services
provided by AXA and its affiliates pursuant to the AXA Services Agreement during
1997, and received approximately $1,739,800 for its services to AXA under the
offset described above. Equitable Life anticipates that it will continue to
incur fees in 1998 under the AXA Services Agreement.
Equitable Life has entered into an agreement with AXA Canada Tech Inc.
('AXA Canada Tech'), a Canadian subsidiary of AXA which provides data processing
services to certain of its affiliated Canadian companies (the 'AXA Canada
Companies'). Under the terms of the agreement, Equitable Life provides data
processing resources and services to AXA Canada Tech to process data of the AXA
Canada Companies. The agreement will continue in effect until December 31, 2000
and provides for reimbursement of Equitable Life's start-up costs (approximately
U.S. $1.14 million, all of which has been paid) and an annual fee of $2,700,000
(Canadian) (but not less than approximately U.S. $2,050,000) to be paid by AXA
Canada Tech for a defined level of services with usage above such level to be
paid for based on Equitable Life's cost of providing the incremental usage.
Equitable Life received payments of $2,477,964 (Canadian) from AXA Canada Tech
pursuant to this agreement during 1997 and anticipates that services will
continue to be provided under this agreement in 1998.
Equitable Life has entered into a reinsurance agreement with INTEC. INTEC
(now known as AXA Space) is an underwriting manager for space insurance which is
80% owned by AXA America, an affiliate of AXA. In 1997, Equitable Life earned
$3,310,125 in premiums from INTEC and paid claims and commissions of $1,464,507
to INTEC under this agreement.
An affiliate of AXA, AXA Asset Management Partenaires ('AXA Asset
Management'), provides investment management services to the Winthrop
Opportunity Funds (the 'Funds'), a series of mutual funds sponsored by Wood,
Struthers & Winthrop ('WSW'), a subsidiary of DLJ, pursuant to a sub-advisory
agreement between WSW and AXA Asset Management. Advisory fees of $600,000 were
paid by the Funds to AXA Asset Management during 1997. In addition, WSW pays for
various direct fund expenses on behalf of the Funds and AXA Asset Management
reimburses WSW for 50% of such expenses. The total amount of expenses reimbursed
during 1997 was approximately $115,000.
Alliance and its subsidiaries provide investment management services to AXA
Reinsurance Company, a subsidiary of AXA, and its affiliates, pursuant to
discretionary investment advisory agreements. AXA Reinsurance Company paid
Alliance approximately $817,000 during 1997 for such services. Alliance also
provides investment management services to Abeille Reassurances, a subsidiary of
AXA, for which it did not receive any fees in 1997.
22
<PAGE>
In April 1996, Alliance acquired the United States investing activities and
business of National Mutual Funds Management ('NMFM'), a subsidiary of AXA, for
$4.6 million cash. In connection therewith, Alliance entered into investment
management agreements with National Mutual Holdings Limited, the parent of NMFM
and a subsidiary of AXA, and various of its subsidiaries (collectively, the 'NMH
Group'). The NMH Group paid approximately $3.1 million in advisory fees to
Alliance in 1997.
Neuville Company, Inc. ('Neuville'), an indirect subsidiary of National
Mutual, has loan participations and joint ventures with Equitable Life
substantially all of which were initially entered into with Integrity Life
Insurance Company ('Integrity') prior to National Mutual's 1989 purchase of
Integrity from Equitable Life. Equitable Real Estate Investment Management, Inc.
('Equitable Real Estate') and its affiliate, Equitable Agri-Business, Inc.,
provided asset management services to Neuville for portfolios Neuville obtained
from Integrity. On June 10, 1997, Equitable Life sold Equitable Real Estate and
Equitable Agri-Business, Inc. to an unaffiliated third party. In 1997, Neuville
paid Equitable Real Estate and Equitable Agri-Business, Inc. a total of $110,000
for such services. Of that amount, $2,300 was paid prior to June 10, 1997. Of
the balance paid after that date, approximately $100,000 represents a settlement
of disputed claims, most of which relate to services rendered over a number of
years prior to June 10, 1997.
Equitable Life, either directly or indirectly through its subsidiary The
Equitable of Colorado, Inc., has entered into six life reinsurance agreements
with AXA Re Life Insurance Company ('AXA Re Life'), an indirect subsidiary of
AXA. In 1997, Equitable incurred premium expenses of $478,493 and accrued
$526,000 in claims due from AXA Re Life in the aggregate under these six
agreements.
Donaldson, Lufkin & Jenrette Securities Corporation ('DLJSC'), a subsidiary
of DLJ, from time to time provides investment banking, brokerage, research and
other services to AXA. Such services were provided on an arm's-length basis in
the ordinary course of business at rates comparable to those paid at the time by
unaffiliated third parties.
Selected employees of DLJ are offered the opportunity to become members of
the DLJ First ESC L.P. (the 'ESC'), an investment vehicle which qualifies as an
'employees' securities company' for purposes of the Investment Company Act of
1940, as amended. The ESC invests in DLJ's merchant banking portfolio companies,
typically acquiring between 30% and 40% of DLJ's investment in such companies.
The amounts invested by members are augmented in the ratio of 4:1 by a
combination of recourse loans from DLJ and preferred contributions to the ESC by
DLJ which have a capped return equal to the prime rate plus 1 3/4%, each of
which is repaid to DLJ upon realization of the applicable portfolio investment.
The amount invested in the ESC by Mr. Chalsty in 1997 was $405,000. The loan
made to Mr. Chalsty and preferred contributions made to the ESC by DLJ on behalf
of Mr. Chalsty in 1997 were $1,497,096. As of December 31, 1997 the outstanding
loan and preferred contributions with respect to Mr. Chalsty amounted to
$2,223,634.
Selected employees of DLJ are limited partners of DLJ Fund Investment
Partners, L.P. ('FIP'), an investment vehicle organized to allow these employees
to invest on a leveraged basis in funds and other investment vehicles sponsored
by certain of DLJ's clients and potential clients and on a co-investment basis
in transactions in which DLJ's clients also invest. Amounts invested by the
limited partners are augmented in the ratio of 2:1 by preferred contributions to
FIP by DLJ which have a capped return equal to the prime rate plus 1 3/4%. The
amount committed to FIP by Mr. Chalsty is $2,000,000 and the outstanding
preferred contributions made to FIP by DLJ on behalf of Mr. Chalsty at December
31, 1997 were $1,467,477.
23
<PAGE>
DLJ has purchased split-dollar life insurance policies on the lives of
certain of its officers, including Mr. Chalsty, from Equitable Life at rates
comparable to those paid at the time by unaffiliated third parties. The
aggregate amount of premiums borne by DLJ in 1997 for the policy on Mr.
Chalsty's life was approximately $173,000. In addition, DLJ from time to time
purchases life insurance policies from Equitable Life on the lives of several
hundred employees, including Mr. Chalsty, who participate in deferred
compensation plans maintained by DLJ. Such purchases are believed by DLJ to be
at rates comparable to those that could be obtained from unaffiliated third
parties. During 1997, the aggregate premiums paid under such policies for all
participants were approximately $17.4 million.
Certain directors and executive officers of the Company have made
commitments to invest in various funds sponsored by subsidiaries of DLJ. Such
commitments were made on the same basis as those made by investors not
affiliated with DLJ or the Company. Since January 1, 1997, the following
commitments were made: Mr. Bebear committed to invest $1,000,000 in the
aggregate in DLJ Merchant Banking Partners II, L.P. ('DLJ MB II') and DLJMB
Overseas Partners II, C.V., and $250,000 in DLJ Millennium Partners, L.P.
('Millennium'); Mr. Chalsty committed to invest $5,000,000 (and The Chalsty
Family LLC committed to invest $2,000,000) in The Ocelot Fund, L.P.; Mr. Chalsty
committed to invest $2,000,000 in WSW International Private Equity Fund, L.P.;
Mr. Jarmain (acting through Jarmain Group, Inc.) committed to invest $1,000,000
in WSW Multi Manager Fund, L.P.; Mr. Melone committed to invest $500,000 in WSW
International Private Equity Fund, L.P. and $250,000 in Millennium; and Mr.
Miller committed to invest $1,000,000 in AEP Fund, L.P. Mr. Melone also made an
additional investment in 1997 of $250,000 (beyond his original commitment of
$250,000) in DLJ Global Diversified Investors, L.P. (formerly named WSW Hedge
Fund, L.P.). Each of The Ocelot Fund, L.P. and AEP Fund, L.P. is a limited
partnership whose general partner is WSW Capital, Inc., a wholly-owned
subsidiary of Wood, Struthers & Winthrop Management Corp., a wholly-owned
subsidiary of DLJ. Each of WSW International Private Equity Fund, L.P., WSW
Multi Manager Fund, L.P. and DLJ Global Diversified Investors, L.P. is a limited
partnership whose general partner is WSW Capital, Inc., and is a 'fund of funds'
which invests in other investment funds, including other funds sponsored by
subsidiaries of DLJ. Millennium, a limited partnership of which DLJ Merchant
Banking II, Inc., a wholly-owned subsidiary of DLJ, acts as general partner,
invests on a side-by-side basis with DLJ MB II and with DLJMB Overseas Partners
II, C.V. DLJ MB II is managed by subsidiaries of DLJ. DLJMB Overseas Partners
II, C.V. is an entity formed by DLJ and the partners in DLJ MB II in order to
facilitate investments in foreign entities. None of the investments or
commitments referred to above to any fund exceeds 2.1% of the total investments
or commitments to such fund.
Certain directors, officers and employees of the Company, AXA and certain
of their subsidiaries maintain margin accounts with DLJSC. Margin account
transactions for such directors, officers and employees are conducted by DLJSC
in the ordinary course of business and are substantially on the same terms,
including interest rates and collateral, as those prevailing at the time for
comparable transactions with unaffiliated persons and do not involve more than
the normal risk of collectibility or present other unfavorable features. DLJSC
also, from time to time and in the ordinary course of business, enters into
transactions involving the purchase or sale of securities from or to such
directors, officers and employees and members of their immediate families, as
principal. Such transactions on a principal basis are effected on substantially
the same terms as similar transactions with unaffiliated third parties except
that in some instances directors, officers and employees are not charged
placement fees. DLJSC offers its employees reduced commission rates.
24
<PAGE>
LeBoeuf, Lamb, Greene & MacRae, L.L.P. (of which Mr. Greene is a partner)
has rendered legal services to the Company or its subsidiaries during 1997 and
is expected to continue rendering such services to the Company or its
subsidiaries in 1998.
PROPOSAL 2. RATIFICATION OF THE APPOINTMENT OF INDEPENDENT ACCOUNTANTS
On November 20, 1997 the Board of Directors, on the recommendation of its
Audit Committee, appointed Price Waterhouse LLP ('Price Waterhouse') independent
accountants to audit and report on the consolidated financial statements of the
Company for 1997. Price Waterhouse has audited and reported on the consolidated
financial statements of the Company for 1995, 1996 and 1997.
Although ratification of the appointment of Price Waterhouse by the
shareholders is not required, the Board of Directors has determined that it is
desirable to request ratification of such appointment. If ratification is not
obtained, the Board of Directors will reconsider the appointment.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR THIS PROPOSAL.
The Company understands that the Voting Trustees intend to vote all shares
of Common Stock held in the Voting Trust in favor of this proposal. Therefore,
it is expected that this proposal will be approved.
The Company has been advised that representatives of Price Waterhouse will
be present at the Annual Meeting. They will be afforded the opportunity to make
a statement, should they desire to do so, and to respond to appropriate
questions.
OTHER MATTERS
The Board of Directors knows of no other matters to be brought before the
Annual Meeting. If any other matters are presented for action and come before
the meeting, it is intended that the persons named as proxies on the proxy card
will vote on such matters in accordance with their best judgment.
EXPENSES OF SOLICITATION
The Company will bear the cost of soliciting proxies from its shareholders
and will enlist the help of banks and brokerage houses in soliciting proxies
from their customers. The Company will reimburse these institutions for out-of-
pocket expenses. In addition to being solicited through the mails, proxies may
also be solicited personally or by telephone by the directors, officers and
employees of the Company or its subsidiaries. The Company has engaged Georgeson
& Company, Inc. to assist in soliciting proxies for a fee of approximately
$8,500 plus reasonable out-of-pocket expenses.
25
<PAGE>
1999 ANNUAL MEETING OF SHAREHOLDERS
The 1999 Annual Meeting of Shareholders is scheduled to be held on
Wednesday, May 19, 1999. The Board is empowered by the By-Laws of the Company to
change the time of the meeting.
Proposals of shareholders must be received by the Company no later than
December 4, 1998 to be eligible for inclusion under the rules of the SEC in the
Company's proxy materials for the 1999 Annual Meeting of Shareholders and must
comply with such rules.
Under the Company's By-Laws, proposals of shareholders not included in the
proxy materials may be presented at the 1999 Annual Meeting of Shareholders only
if the Company's Secretary has been notified of the nature of the proposal and
is provided certain additional information at least sixty days but not more than
ninety days prior to May 13, 1999, the first anniversary of the 1998 Annual
Meeting of Shareholders (subject to exceptions if the 1999 Annual Meeting is
advanced by more than 30 days or delayed by more than 60 days from such
anniversary date), and the proposal is a proper one for shareholder action.
These provisions do not affect the right of shareholders to make shareholder
proposals for inclusion in proxy statements for the Company's Annual Meetings
pursuant to the rules of the SEC.
Shareholders wishing to suggest candidates to the Company's Organization
and Compensation Committee for consideration as possible nominees as directors
may submit names and biographical data to the Secretary of the Company.
The Company's By-Laws also require that notice of nominations of persons
for election to the Board of Directors, other than those made by or at the
direction of the Board of Directors, must be received by the Secretary at least
sixty days but not more than ninety days prior to May 13, 1999, the first
anniversary of the 1998 Annual Meeting of Shareholders (subject to exceptions if
the 1999 Annual Meeting of Shareholders is advanced by more than 30 days or
delayed by more than 60 days from such anniversary date). The notice must
present certain information concerning the nominees and the shareholders making
the nominations. The Secretary must receive a statement of any nominee's consent
to serve as a Director if elected.
The provisions of the By-Laws described in the preceding paragraphs do not
apply to any shareholder that beneficially owns shares representing at least 25%
of the voting power of the Company's outstanding voting shares. Accordingly, AXA
is not subject to such provisions.
By Order of the Board of Directors
/s/ Pauline Sherman
Pauline Sherman, Vice President and
Secretary
March 24, 1998
26
<PAGE>
EXHIBIT A
BENEFICIAL OWNERSHIP OF COMMON STOCK BY THE AXA GROUP
AXA, a French company, is the holding company for an international group of
insurance and related financial services companies. AXA's insurance operations
include activities in life insurance, property and casualty insurance and
reinsurance. The insurance operations are diverse geographically with activities
principally in Western Europe, North America, and the Asia/Pacific area. AXA is
also engaged in asset management, investment banking, securities trading,
brokerage, real estate and other financial services activities principally in
the United States, as well as in Western Europe and the Asia/Pacific area.
Based on information provided by AXA, on March 1, 1998, approximately 21.4%
of the issued ordinary shares (representing 30.2% of the voting power) of AXA
were controlled directly and indirectly by Finaxa, a French holding company. As
of March 1, 1998, 62.0% of the shares (representing 74.0% of the voting power)
of Finaxa were owned by four French mutual insurance companies (the 'Mutuelles
AXA') (one of which, AXA Assurances I.A.R.D. Mutuelle, owned 35.5% of the
shares, representing 42.2% of the voting power), and 23.1% of the shares of
Finaxa (representing 14.4% of the voting power) were owned by Banque Paribas, a
French bank ('Paribas'). Including the ordinary shares owned by Finaxa, on March
1, 1998, the Mutuelles AXA directly or indirectly controlled approximately 24.7%
of the issued ordinary shares (representing 34.8% of the voting power) of AXA.
Acting as a group, the Mutuelles AXA control AXA and Finaxa.
The Voting Trustees may be deemed to be beneficial owners of all shares of
Common Stock beneficially owned by AXA and its subsidiaries. In addition, the
Mutuelles AXA, as a group, and Finaxa may be deemed to be beneficial owners of
all shares of Common Stock beneficially owned by AXA and its subsidiaries. By
virtue of the provisions of the Voting Trust Agreement, AXA may be deemed to
have shared voting power with respect to the shares of Common Stock in the
Voting Trust and have the power to dispose or direct the disposition of all the
shares of Common Stock deposited in the Voting Trust. By reason of their
relationship with AXA, the Mutuelles AXA, as a group, and Finaxa may be deemed
to share the power to vote or to direct the vote and to dispose or to direct the
disposition of all the shares of Common Stock beneficially owned by AXA and its
subsidiaries.
The address of each of AXA and the Voting Trustees is 9 Place Vendome,
75001 Paris, France. The address of Finaxa is 23 avenue Matignon, 75008 Paris,
France. The addresses of the Mutuelles AXA are as follows: The address of each
of AXA Assurances I.A.R.D. Mutuelle and AXA Assurances Vie Mutuelle is 21 rue de
Chateaudun, 75009 Paris, France; the address of Alpha Assurances Vie Mutuelle is
Tour Franklin, 100/101 Terrasse Boieldieu, Cedex 11, 92042 Paris La Defense,
France; and the address of AXA Courtage Assurance Mutuelle is 26 rue Louis le
Grand, 75002 Paris, France. The address of Paribas is 3 rue d'Antin, Paris,
France.
A-1
<PAGE>
THE EQUITABLE'S SHAREHOLDER INFORMATION CENTER IS AVAILABLE
TO SERVE YOU WEEKDAYS FROM 8:00 A.M. TO 10:00 P.M.,
AND SATURDAYS FROM 8:00 A.M. TO 3:30 P.M. EASTERN TIME.
CALL (TOLL FREE) 1-800-437-8736.
<PAGE>
[LOGO OF THE EQUITABLE COMPANIES INCORPORATED]
- ----------------------
c/o First Chicago Trust Company
PO Box 8636
Edison, NJ 08818-9051
- -------------------------------------------------------------------------------
Proxy Solicited by the Board of Directors for the Annual Meeting of
Shareholders May 13, 1998
Pauline Sherman, Linda Galasso and Janet Hannon, or any of them individually
and each of them with the power of substitution, are hereby appointed Proxies
of the undersigned to vote all stock of The Equitable Companies Incorporated
owned on the record date by the undersigned at the Annual Meeting of
Shareholders to be held in the Auditorium at The Equitable Tower, 787 Seventh
Avenue, New York City, at 9:00 a.m., local time, on Wednesday, May 13, 1998,
or any adjournment thereof, upon such business as may properly come before
the meeting, including the items on the reverse side of this form as set
forth in the Notice of Annual Meeting of Shareholders and Proxy Statement.
<TABLE>
<CAPTION>
ELECTION OF DIRECTORS: NOMINEES:
<S> <C> <C> <C> <C>
1. Claude Bebear 2. John S. Chalsty 3. Francoise Colloc'h 4. Henri de Castries 5. Joseph L. Dionne
6. William T. Esrey 7. Jean-Rene Fourtou 8. Jacques Friedmann 9. Donald J. Greene 10. Anthony J. Hamilton
11. John T. Hartley 12. John H.F. Haskell, Jr. 13. Michael Hegarty 14. Mary R. (Nina) Henderson 15. W. Edwin Jarmain
16. Edward D. Miller 17. Didier Pineau-Valencienne 18. George J. Sella, Jr. 19. Dave H. Williams
</TABLE>
(Shares cannot be voted unless this proxy form is signed and returned, the
proxy is submitted by telephone or the Internet, the shares are voted in
person, or other arrangements are made to have the shares represented at the
meeting.)
COMMENTS/CHANGE OF ADDRESS (Please mark the box on the reverse side.)
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
FOLD AND DETACH HERE
The Equitable Companies Incorporated
Annual Meeting of Shareholders
Wednesday, May 13, 1998
9:00 a.m.
787 Seventh Ave.
New York, NY 10019
<PAGE>
7210
\x\ Please mark your
votes as in this
example.
The Board of Directors recommends a vote FOR proposals 1 and 2. SHARES WILL BE
SO VOTED UNLESS OTHERWISE INDICATED.
FOR WITHHELD
1. Election of Directors [ ] [ ]
(see reverse)
For, except vote withheld from the following nominee(s):
__________________________________________________________________________
FOR AGAINST ABSTAIN
2. Ratification of the appointment [ ] [ ] [ ]
of Price Waterhouse LLP as
independent accountants.
PLEASE CALL 1-800-437-8736 IF YOU HAVE ANY QUESTIONS.
Please use the reverse side
for change of address or
comments. Put an X in this box [ ]
if you have written on the
reverse side.
________________________________________________________________________________
SIGNATURE: Please sign exactly as your name or names appear above. DATE
If more than one owner, all shareholders must sign.
When signing as an attorney, executor, trustee, or guardian,
please give your full title as such.
- --------------------------------------------------------------------------------
FOLD AND DETACH HERE
Dear Shareholder:
The Equitable Companies Incorporated encourages you to take advantage of new
and convenient ways by which you can submit your proxy. You can submit your
proxy electronically over the Internet or the telephone. This eliminates the
need to return the proxy card.
To submit your proxy electronically, you must use the control number (printed in
the box above, just below the perforation) as well as your social security
number for this account.
To submit your proxy over the Internet:
* Log on to the Internet and go to the web site HTTP://WWW.VOTE-BY-NET.COM
To submit your proxy by telephone:
* Using a touch-tone telephone U.S. and Canadian shareholders may dial
1-800-OK2-VOTE (1-800-652-8683) 24 hours a day, 7 days a week. From outside
the U.S. or Canada, shareholders may dial 1-201-324-0377.
If you choose to submit your proxy electronically, there is no need for you
to mail back your proxy card.
YOUR VOTE IS IMPORTANT. THANK YOU FOR VOTING.
