SCHEDULE 14A
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[x] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to 240.14a-11(c) or 240.14a-12
American Annuity Group, Inc.
(Name of Registrant as Specified In Its Charter)
American Annuity Group, Inc.
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-
6(j)(2).
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-
11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11: ftnt. 1
4) Proposed maximum aggregate value of transaction:
[FN]
1. Set forth the amount on which the filing fee is calculated and state how
it was determined.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identity 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>
AMERICAN ANNUITY GROUP, INC.
250 East Fifth Street
Cincinnati, Ohio 45202
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held on May 23, 1995
To Our Stockholders:
You are invited to attend the Annual Meeting of Stockholders of
American Annuity Group, Inc. ("AAG" or the "Company"). The meeting will be
held in the Filson Room of the Cincinnatian Hotel, Sixth and Vine Streets,
Cincinnati, Ohio at 10:00 A.M. (Eastern Time) on Tuesday, May 23, 1995.
The purposes of the meeting are:
1. To elect nine directors;
2. To approve the AAG Employee Stock Purchase Plan;
3. To approve the amendment to the 1993 Stock Appreciation
Rights Plan to increase the maximum number of SARs to be
granted from 1,500,000 to 2,000,000;
4. To transact such other business as may properly be brought
before the meeting or any adjournment thereof.
Carl H. Lindner
Chairman of the Board
Dated: March 24, 1995
PLEASE VOTE, SIGN, DATE AND PROMPTLY RETURN THE ENCLOSED PROXY FORM IN THE
ENVELOPE PROVIDED WHETHER OR NOT YOU INTEND TO ATTEND THE MEETING. YOU MAY
REVOKE YOUR PROXY AT A LATER DATE OR ATTEND THE MEETING AND VOTE IN PERSON.
<PAGE>
PROXY STATEMENT
AMERICAN ANNUITY GROUP, INC.
ANNUAL MEETING OF STOCKHOLDERS
MAY 23, 1995
INTRODUCTION
This Proxy Statement is furnished in connection with the solicitation
of proxies by the Board of Directors of AAG for use at the Annual Meeting of
Stockholders to be held at 10:00 A.M. (Eastern Time) on Tuesday, May 23,
1995, and any adjournment thereof. The Company will pay the cost of
soliciting proxies.
The approximate mailing date of these proxy materials is March 31,
1995.
Outstanding Voting Securities of AAG
Holders of record of AAG Common Stock at the close of business on March
24, 1995 (the "Record Date") will be entitled to notice of and to vote at
the Annual Meeting and at any adjournments thereof. At the Record Date,
39,141,080 shares of Common Stock were issued and outstanding.
Holders of Common Stock are entitled to one vote per share on each
matter to be voted on at the Annual Meeting.
Principal Stockholders
As of the Record Date, the only person known to the Company to own
beneficially more than 5% of AAG's Common Stock was American Financial
Corporation and its subsidiaries (collectively "AFC"), One East Fourth
Street, Cincinnati, Ohio 45202, which beneficially owned 31,319,629 shares,
which represented approximately 80% of the number of shares outstanding as
of the Record Date.
AFC and Carl H. Lindner, the beneficial owner of 40.8% of AFC's common
stock and the Chairman of its Board of Directors and its Chief Executive
Officer, share voting and investment power with respect to the shares of AAG
Common Stock beneficially owned by AFC. AFC and Carl H. Lindner may be
deemed to be controlling persons of AAG.
In December 1994, AFC and American Premier Underwriters, Inc. ("APZ")
entered into an agreement to become subsidiaries of a newly formed
corporation, American Premier Underwriters Group, Inc. ("APZ Group"), which
will own both AFC and APZ. AFC currently beneficially owns approximately
40% of APZ's outstanding common stock. This transaction is subject to a
number of conditions customary for this type of transaction, including
approval of APZ's shareholders. If the transaction is consummated, members
of the Lindner family will own 50% or more of the outstanding stock of APZ
Group and AFC, a wholly owned subsidiary of APZ Group, will continue to own
80% of AAG's Common Stock.
Action to be Taken at the Meeting
All shares represented by a properly executed proxy will, unless
previously revoked, be voted at the Annual Meeting or any adjournments
thereof in accordance with the directions on the proxy. Unless a contrary
direction is indicated, such shares will be voted for the nine nominees for
director named herein and in favor of Proposals 2 and 3.
Management knows of no other matter to be presented at the Annual
Meeting upon which a vote may be taken, but it is intended that as to any
such other matter the proxy holders will vote in accordance with their
judgment as to the best interest of AAG. Should any of the nominees for
election as a director become unable to stand for election, which is not
anticipated, it is intended that the proxy holders will vote for the
election of such other person as the Board of Directors may recommend.
PROPOSAL 1: ELECTION OF DIRECTORS
Nominees for Director
Directors will be elected to hold office until the next annual meeting
and until their successors are elected and qualified.
The number of directors to be elected at the Annual Meeting is nine.
The nine directors so elected will, upon such election, constitute the
entire Board of Directors.
In accordance with AAG's Certificate of Incorporation ("Certificate"),
the only candidates eligible for election at the meeting of stockholders are
candidates nominated by or at the direction of the Board of Directors and
candidates nominated at the meeting by a stockholder who has complied with
the procedures set forth in the Certificate. The Certificate requires that
a stockholder wishing to make a nomination must have first given the
Secretary of AAG at least five and not more than thirty days' written
notice setting forth or accompanied by (a) the name and residence of the
stockholder and each nominee specified in the notice, (b) a representation
that the stockholder was a holder of record of AAG Common Stock and intended
to appear, in person or by proxy, at the meeting to nominate the persons
specified in the notice and (c) the consent of each such nominee to serve as
director if so elected.
The persons nominated by the Board of Directors to serve as directors
for the ensuing year are CARL H. LINDNER, S. CRAIG LINDNER, ROBERT A.
ADAMS, A. LEON FERGENSON, RONALD G. JOSEPH, JOHN T. LAWRENCE III, WILLIAM R.
MARTIN, ALFRED W. MARTINELLI and RONALD F. WALKER. See "MANAGEMENT" for a
description of the background, securities holdings, remuneration and other
information relating to the nominees. The nine nominees receiving the
highest numbers of votes will be elected as directors.
The Board of Directors recommends that stockholders vote FOR the
election of the nine nominees as directors. The Company has been informed
that AFC intends to vote its shares FOR the above nominees.
PROPOSAL 2: APPROVAL OF THE AMERICAN ANNUITY GROUP, INC.
EMPLOYEE STOCK PURCHASE PLAN
On June 13, 1994, the Board of Directors adopted, subject to approval
of AAG stockholders at this Meeting, the American Annuity Group, Inc.,
Employee Stock Purchase Plan (the "Stock Purchase Plan"). The Stock
Purchase Plan provides eligible employees with an opportunity to purchase
shares of AAG Common Stock at a discount to market prices through regular
payroll deductions.
The following description is qualified in its entirety by reference to
the text of the Stock Purchase Plan which is set forth in Annex 1 to this
Proxy Statement.
Purpose of the Plan
The purpose of the Stock Purchase Plan is to enable employees to
acquire or increase ownership interests in AAG on a basis that will
encourage them to perform at increasing levels of effectiveness and to use
their best efforts to promote the growth and profitability of AAG.
Plan Administration and Termination
The Stock Purchase Plan is administered by the Organization and Policy
Committee of the AAG Board of Directors (the "Committee"). No member of the
Committee is eligible to purchase AAG Common Stock under the Stock Purchase
Plan or to receive stock or an option to purchase stock under any other AAG
plan under which such member has been eligible for selection on a
discretionary basis. The Committee has full discretionary authority to
interpret the Stock Purchase Plan, to issue rules for administering the
Stock Purchase Plan, to change, alter, amend or rescind such rules, and to
make all other determinations necessary or appropriate for the
administration of the Stock Purchase Plan.
The Committee has engaged Star Bank, National Association as agent (the
"Agent") to perform certain custodial and record-keeping functions for the
Stock Purchase Plan.
Unless earlier terminated, the Stock Purchase Plan will continue in
effect until the earlier of the purchase of the maximum number of shares
available under the Stock Purchase Plan or ten years from the effective date
of the Stock Purchase Plan.
Eligible Participants
Employees of AAG, and of subsidiaries designated by the Committee, will
be eligible to participate in the Stock Purchase Plan provided that each
such employee (i) has been employed by AAG or such a subsidiary for at least
three months, (ii) is customarily employed by AAG or such a subsidiary for
more than 20 hours per week and more than five months per calendar year, and
(iii) does not beneficially own 5% or more of AAG Common Stock. Eligibility
generally ceases upon termination of employment with AAG or a designated
subsidiary. Approximately 400 employees were eligible to participate as of
March 1, 1995.
Securities to be Utilized
The maximum number of shares of AAG Common Stock which may be purchased
by eligible employees under the Stock Purchase Plan is 1,000,000 (subject to
adjustment in certain events). Shares purchased by participating employees
may be previously acquired treasury shares or authorized but unissued shares
or, if and to the extent authorized by the Committee, shares purchased in
market transactions by the Agent.
Method and Price of Purchase
Each eligible employee may elect to have a specified amount, not to be
more than 25% of base salary or wages, deducted from each regular paycheck,
but no eligible employee may purchase shares with an aggregate fair market
value in excess of $25,000 in any calendar year. The amounts deducted
during any "Deduction Period" (one, two or three calendar months, as
determined by the Committee) will be used to purchase on the last business
day of such Deduction Period or as soon thereafter as practicable (the
"Purchase Date") the maximum number of whole and fractional shares of Common
Stock which such amounts can purchase at the Purchase Price (as defined
below). Dividends received on shares held in an employee's account will,
unless otherwise directed by the participant, be used to purchase additional
shares.
The Purchase Price for each whole or fractional share purchased will be
85% of the fair market value on the Purchase Date, defined as the mean
between the high and low sales prices of AAG Common Stock on the New York
Stock Exchange Composite Tape on the Purchase Date. If AAG Common Stock is
purchased on the open market by the Agent, the other 15% of the cost of
acquiring such shares will be paid by the employing corporation. No
participating employee may sell shares purchased under the Stock Purchase
Plan for one year following the date of purchase of the shares.
Amendment of the Stock Purchase Plan
The AAG Board of Directors may amend the Stock Purchase Plan in any
respect except that, without the approval of AAG's stockholders, no
amendment may (i) cause the Stock Purchase Plan to cease to satisfy any
applicable conditions of Rule 16b-3 of the Securities Exchange Act of 1934,
or (ii) increase the maximum number of shares which may be purchased under
the Stock Purchase Plan (other than in connection with the Stock Purchase
Plan's antidilution provisions).
<PAGE>
Federal Income Tax Consequences
The following is a summary of the principal Federal income tax
consequences of transactions under the Stock Purchase Plan based on current
Federal income tax laws. This summary does not describe state or local tax
consequences.
The Stock Purchase Plan is intended to qualify as an employee stock
purchase plan within the meaning of Section 423 of the Internal Revenue Code
of 1986. Accordingly, income will not result to an employee who elects to
participate when the shares purchased are transferred to him. If an
employee disposes of such shares more than two years from the date on which
he is granted the right to purchase shares under the Stock Purchase Plan and
more than one year after the transfer of the shares to him, the employee
will be required to include in income, as compensation for the year in which
such disposition occurs, an amount equal to the lesser of (i) the excess of
the fair market value of such shares at the time of disposition over the
Purchase Price or (ii) 15% of the fair market value of such shares at the
time of the purchase. The employee's basis in those shares in his hands at
the time of such a disposition will be increased by an amount equal to the
amount so includable in his income as compensation, and any gain or loss
computed with reference to such adjusted basis which is recognized at the
time of the disposition will be short or long-term capital gain or loss
depending upon the holding period for such shares. In such event, AAG will
not be entitled to any deduction from income.
If an employee disposes of the shares purchased under the Stock
Purchase Plan within two years of the date of grant or one year from the
date of transfer, the employee will be required to include in income, as
compensation for the year in which such disposition occurs, an amount equal
to the 15% discount on the date of purchase. The employee's basis in such
shares at the time of disposition will be increased by an amount equal to
the amount includable in his income as compensation, and any gain or loss
computed with reference to such adjusted basis which is recognized at the
time of disposition will be capital gain or loss, either short-term or long-
term, depending on the capital gain holding period for such shares. In the
event of a disposition prior to the expiration of the holding period, AAG
will be entitled to a deduction from income equal to the amount the employee
is required to include in income as compensation as a result of such
disposition. To the extent this compensation is subject to income tax
withholding, Social Security taxes and other employment taxes, AAG will make
such provision as it deems appropriate for the withholding or other payment
of such taxes.
Employees will not be entitled to any deduction from income for payroll
deductions under the Stock Purchase Plan. Dividends paid on shares held
under the Plan will be taxable for income tax purposes, whether paid in cash
or automatically reinvested in additional shares of Common Stock.
The Board of Directors recommends that stockholders vote FOR the
proposal to approve the AAG Employee Stock Purchase Plan. AAG has been
informed that AFC intends to vote its shares FOR approval of the AAG
Employee Stock Purchase Plan.
PROPOSAL 3: APPROVAL OF AMENDMENT TO THE
AAG 1993 STOCK APPRECIATION RIGHTS PLAN
On March 26, 1993, the Board of Directors adopted the 1993 Stock
Appreciation Rights Plan (the "SAR Plan") which stockholders approved at the
1993 Annual Meeting. The SAR Plan currently provides for the grant of
1,500,000 SARs of which approximately 10,000 SARs remain available for
grant. The Board of Directors believes that additional SARs should be made
available for grant under the SAR Plan and desires to increase the number of
available SARs from 1,500,000 to 2,000,000. The following is a brief
description of the material provisions of the SAR Plan.
The purpose of the SAR Plan is to aid AAG and its subsidiaries in
attracting and retaining employees of outstanding competence, dedication and
loyalty.
The SAR Plan provides that SARs may be granted to selected officers and
other key employees of AAG and its subsidiaries. As of March 1, 1995,
approximately 50 persons were eligible to be considered for grants of SARs.
The SAR Plan is administered by a committee (the "SAR Committee") of
the AAG Board of Directors which must be comprised of not less than three
members of the Board of Directors. The Organization and Policy Committee
currently serves as the SAR Committee. The SAR Committee is responsible for
the selection of the eligible persons who receive SARs and the specific
number of SARs granted.
In general, the SARs are designed to compensate recipients based on the
increase in market value of AAG Common Stock over the term of a SAR. SARs
are granted with a specific grant price (the "SAR Grant Price") which is
equal to the average of the means between the high and low sales prices for
shares of AAG Common Stock for the ten consecutive trading days immediately
preceding the date of grant. On March 14, 1995, the closing price of AAG
Common Stock was $9.88 per share.
SARs expire ten years after the date of grant and vest 20% on each
anniversary of the date of grant beginning with the first anniversary. As a
result, SARs become fully vested on the fifth anniversary of grant. The SAR
Plan provides for acceleration of the vesting schedule in the case of (i)
the termination of employment of a holder of an SAR for any reason other
than cause within one year following certain merger or acquisition transac-
tions involving AAG or a change of control of AAG, (ii) upon termination of
the employment of a holder of an SAR because of retirement, death or
disability, (iii) certain merger or acquisition transactions involving AAG
if provision is not made for the assumption of the SARs by the acquiring
corporation and (iv) at the discretion of the committee administering the
SAR Plan.
SARs may be exercised, to the extent vested, during certain window
periods immediately following the release by AAG of quarterly results of
operations, so long as the recipient of the SAR remains an employee of AAG
or one of its subsidiaries. The SAR Plan contains exceptions to the general
rule that SARs may be exercised only while the recipient remains an
employee, including exceptions for termination of employment resulting from
retirement, death or disability. In the case of these exceptions, SARs held
by the former employee will remain exercisable for specified periods of time
following termination of employment.
Upon exercise, the holder of an SAR is entitled to be paid an amount
(the "Spread") equal to (x) the number of SARs being exercised, times (y)
the SAR Exercise Price less the SAR Grant Price. For purposes of
calculating the Spread, the SAR Exercise Price is equal to the average of
the high and low sales prices of AAG Common Stock on the date of exercise.
The SAR Plan provides that 50% of the Spread will be paid in cash to the
holder. The other half of the Spread will be paid to the holder in any
combination of the following, as determined by the committee administering
the SAR Plan: (i) AAG Common Stock (with AAG Common Stock valued at the SAR
Exercise Price) or (ii) cash deferred over 10 years with equal annual
payments of principal plus interest at 10% per annum.
The SAR Plan provides that it may be amended from time to time by the
Board of Directors without the approval of stockholders, except in certain
cases. Stockholder approval is required to (i) increase the number of SARs
which may be granted under the SAR Plan, (ii) change the manner in which the
SAR Grant Price is calculated, (iii) change the class of persons eligible to
be granted SARs or (iv) make any other amendment which would require
stockholder approval in order for the SAR Plan to remain an exempted plan
under Rule 16b-3 under the Securities Exchange Act of 1934.
Persons who receive SARs incur no federal income tax liability at the
time of grant. Persons exercising SARs recognize taxable income, and AAG
receives a tax deduction, equal to the amount of cash received by such
person plus the value of AAG Common Stock received. Such person's basis in
the AAG Common Stock received is equal to the fair market value of the stock
on the date of receipt.
As of March 1, 1995, the Organization and Policy Committee had granted
SARs to approximately 25 persons.
The Board of Directors recommends that stockholders vote FOR the
proposal to amend the AAG 1993 Stock Appreciation Rights Plan. AAG has been
informed that AFC intends to vote its shares FOR approval of the amendment
of the AAG 1993 Stock Appreciation Rights Plan.
<PAGE>
MANAGEMENT
The directors and executive officers of AAG are:
Director or
Name Age* Position Officer Since
Carl H. Lindner 75 Chairman of the Board and 1987
Chief Executive Officer
S. Craig Lindner 39 Director and President 1993
Robert A. Adams 49 Director, Executive Vice 1992
President and Chief Operating
Officer
A. Leon Fergenson 82 Director 1987
Ronald G. Joseph 58 Director 1994
John T. Lawrence III 43 Director 1994
William R. Martin 65 Director 1994
Alfred W. Martinelli 67 Director 1987
Ronald F. Walker 56 Director 1987
John B. Berding 32 Senior Vice President - 1993
Investments
William J. Maney 45 Senior Vice President - 1993
Treasurer and Chief
Financial Officer
Mark F. Muething 35 Senior Vice President, 1993
General Counsel and
Secretary
Jeffrey S. Tate 38 Senior Vice President 1993
Christopher P. Miliano 36 Vice President and Controller 1993
[FN]
* As of March 1, 1995
Carl H. Lindner has been Chairman of the Board since 1987. Mr. Lindner
also serves as Chairman of the Board and Chief Executive Officer of AFC, a
diversified financial services company, and Chairman of the Board of the
following public companies: American Premier Underwriters, Inc. ("APZ")
(formerly The Penn Central Corporation); American Financial Enterprises,
Inc. ("AFEI"); Chiquita Brands International, Inc. ("Chiquita"); and
Citicasters, Inc. ("Citicasters"). He also serves as Chief Executive
Officer or in a similar capacity with the following companies: APZ, a
company engaged primarily in specialty, property and casualty insurance
businesses; AFEI, a company whose assets consist primarily of investments in
AAG, APZ and Citicasters; and Chiquita, a leading international marketer,
processor and producer of quality fresh and processed food products. AFC
owns a substantial beneficial interest (over 20%) in all of these companies.
Mr. Lindner is the father of S. Craig Lindner.
S. Craig Lindner was elected President and a director of AAG on March
26, 1993. During the past five years, Mr. Lindner has been Senior Executive
Vice President of American Money Management Corporation ("AMM"), a
subsidiary of AFC which provides investment services for AFC and its
affiliated companies, including AAG, and he continues to serve in that posi-
tion. He is also a director of APZ, Chiquita, and Citicasters, a company
engaged in the ownership and operation of television and radio stations.
Robert A. Adams was elected a director of AAG on October 28, 1993. Mr.
Adams was elected Executive Vice President and Chief Operating Officer of
the Company on December 31, 1992. For more than five years prior to elec-
tion as an officer of the Company, he was Senior Vice President and a
director of Great American Insurance Company ("GAI"), a wholly-owned subsid-
iary of AFC engaged in the property and casualty insurance business. He
also served as Treasurer of GAI until October 1991.
A. Leon Fergenson has been a director of AAG since 1987. During the
past five years, Mr. Fergenson has been a private investor and a director of
various corporations. He is also a director of Buckeye Management Company,
an APZ subsidiary which is the sole general partner of Buckeye Partners,
L.P., a limited partnership engaged principally in pipeline transportation
of petroleum products, Sequa Corporation and several mutual funds managed by
Neuberger & Berman, Inc.
Ronald G. Joseph was elected a director of AAG on March 2, 1994.
During the past five years, Mr. Joseph has been Chief Executive Officer and
attorney of various Cincinnati-based automobile dealerships and real estate
holdings.
John T. Lawrence III was elected a director of AAG on March 2, 1994.
Mr. Lawrence has been a Senior Vice President with Paine Webber Incorporated
(formerly Kidder Peabody & Co.), a national investment banking firm, since
January 1993. Prior thereto for more than five years he was a Senior Vice
President with Prudential Securities Inc. He is also a director of Spelling
Entertainment Group, Inc. ("Spelling").
William R. Martin was elected a director of AAG on March 2, 1994.
Although currently retired, during the past five years Mr. Martin was
President of both Tominy, Inc. and M.B. Computing, Inc., which are each
privately held software development companies. Mr. Martin is also a
director of APZ.
Alfred W. Martinelli has been a director of AAG since 1987. During the
past five years, Mr. Martinelli has been Vice Chairman of the Board of
Directors of APZ and Chairman of the Board and Chief Executive Officer of
Buckeye Management Company.
Ronald F. Walker has been a director of AAG since 1987. During the
past five years, Mr. Walker has been President and Chief Operating Officer
and a director of AFC. He was President and Chief Operating Officer of APZ
from March 1987 to February 1992, and a director of APZ from May 1982 to
February 1992. In addition, he served as President and Chief Executive
Officer and a director of General Cable from July 1, 1992 to June 1994. Mr.
Walker is also a director of AFEI, Chiquita and Tejas Gas Corporation.
John B. Berding was elected an officer of AAG on March 26, 1993.
During the past five years, he has been an investment analyst and, since
February 1992, a Vice President of AMM, and he continues to serve in that
position.
William J. Maney was elected an officer of AAG effective on February
15, 1993. Prior thereto for more than five years he was Vice President -
Accounting of GAI.
Mark F. Muething was elected an officer of AAG on October 28, 1993.
Prior thereto, he was a partner (from October 1991 to October 1993) and an
associate (from August 1984 to October 1991) with Keating, Muething &
Klekamp, a Cincinnati law firm.
Jeffrey S. Tate was elected an officer of AAG effective on February 15,
1993. Prior thereto, he served as Vice President (from May 1990 to December
1992) and Assistant Vice President (from February 1988 to May 1990) of GAI.
Christopher P. Miliano was elected Vice President and Controller of AAG
on February 14, 1995. Prior thereto, he served as an Assistant Vice
President of AAG (since June 1993) and as a Director of Accounting and
Corporate Reporting of AFC (from October 1989 to June 1993).
In December 1993, Citicasters completed a comprehensive financial
restructuring that included a prepackaged plan of reorganization filed in
November of that year under Chapter 11 of the Bankruptcy Code. Although not
a director or officer of Citicasters during 1993, Carl H. Lindner had been
Chairman of the Board and Chief Executive Officer of Citicasters prior to
1993 and was again elected Chairman of the Board of Citicasters in January
1994.
<PAGE>
Holdings of Management
Information concerning AAG's Common Stock beneficially owned by each
director and executive officer and all directors and executive officers as a
group as of March 1, 1995, is shown in the following table:
Amount and Nature of
Beneficial Percent
Name Ownership(a) of Class
Robert A. Adams 12,297 *
A. Leon Fergenson 3,111 *
Ronald G. Joseph 3,000 *
John T. Lawrence III 2,000 *
Carl H. Lindner 31,319,629 (b) 80%
S. Craig Lindner -- --
William R. Martin -- --
Alfred W. Martinelli 4 *
Ronald F. Walker 15,000 *
John B. Berding 4,700 *
William J. Maney 1,200 *
Mark F. Muething 3,279 *
Jeffrey S. Tate 1,093 *
Christopher P. Miliano 1,033 *
All Directors and
Executive Officers as
a Group (14 persons) 31,366,346 80.1%
[FN]
* Less than 1%
(a) Unless otherwise indicated, the persons named have sole voting and
investment power over the shares listed opposite their names.
(b) Mr. Lindner may be deemed to own beneficially the shares set forth
under "Principal Stockholders" for AFC, of which Mr. Lindner is
Chairman of the Board and Chief Executive Officer and a principal
shareholder.
Committees and Meetings of the Board of Directors
AAG's Board of Directors held four meetings in 1994 and took action in
writing on one occasion.
Audit Committee. The Audit Committee consists of three members: William
R. Martin (Chairman), A. Leon Fergenson and John T. Lawrence III, none of
whom is an officer or employee of AAG or any of its subsidiaries. The
Committee's functions include: recommending to the Board of Directors the
firm to be appointed as independent accountants to audit the financial
statements of AAG and its subsidiaries and to provide other audit-related
services and recommending the terms of such firm's engagement; reviewing the
scope and results of the audit with the independent accountants; reviewing
with management and the independent accountants AAG's interim and year-end
operating results; reviewing the adequacy and implementation of the internal
accounting and auditing procedures of AAG; and reviewing the non-audit
services to be performed by the independent accountants and considering the
effect of such performance on the accountants' independence. The Audit
Committee held two meetings in 1994.
Executive Committee. The Executive Committee consists of three members:
S. Craig Lindner (Chairman), Carl H. Lindner and Robert A. Adams. The
Committee is generally authorized to exercise the powers of the Board of
Directors between meetings of the Board of Directors, except that the
Committee's authority does not extend to certain fundamental matters, such
as amending the By-laws of AAG, filling vacancies in the Board of Directors,
declaring a dividend, electing or removing the Company's principal officers,
adopting or approving a plan of merger, consolidation or sale of a
substantial portion of the Company's assets, dissolution or reorganization
of AAG or establishing or designating any class or series of AAG stock (or
fixing or determining the relative rights and preferences thereof). The
Executive Committee did not meet in 1994 but did take action in writing on
two occasions.
Organization and Policy Committee. The Organization and Policy Committee
consists of three members: Ronald F. Walker (Chairman), Ronald G. Joseph
and Alfred W. Martinelli, none of whom is an officer or employee of AAG or
any of its subsidiaries. The Committee's functions include: reviewing the
duties and responsibilities of the Company's principal officers; reviewing
and making recommendations to the Board of Directors with respect to the
compensation of the Company's principal officers; reviewing the Company's
compensation and personnel policies; administering bonus and stock option
plans; reviewing and making recommendations to the Board of Directors with
respect to employee retirement policies; and supervising, reviewing and
reporting to the Board of Directors on the performance of the management
committee responsible for the administration and investment management of
the Company's pension and savings plans. The Committee also reviews and
advises the Board of Directors with respect to the nomination of candidates
for election to the Board of Directors. The Committee will consider
stockholder suggestions for nominees for director. Suggestions for director
consideration may be submitted to the Secretary of AAG at its principal
executive offices. Suggestions received by the Secretary's office by
December 31 will be considered by the Committee. Stockholders may also make
nominations for director by complying with the procedures described above
under the caption "Nominees for Director". The Organization and Policy
Committee held two meetings in 1994.
Compensation of Directors
Officers of AAG do not receive any additional compensation for serving as
members of the Board of Directors or any of its committees. Directors who
are not employees of AAG receive an annual fee of $20,000 for Board
membership and an annual fee of $5,000 for serving as Chairman of a Board
Committee. In addition, directors who are not employees of AAG are paid a
fee of $1,500 for attendance at each Board meeting, and $750 for attendance
at each committee meeting. All directors are reimbursed for expenses
incurred in attending board and committee meetings.
Pursuant to the 1994 Directors Stock Appreciation Rights Plan, each non-
employee director was granted 10,000 stock appreciation rights on March 2,
1994 at an exercise price of $9.62. On each March 1 thereafter, each non-
employee director will receive an additional 1,000 stock appreciation
rights. The exercise price of the Stock appreciation rights is equal to the
average market price of AAG Common Stock for the ten trading days preceding
the grant date.
Compensation of Executive Officers
The following table sets forth information concerning the annual and long-
term compensation for services in all capacities to AAG and its subsidiaries
for the three years ended December 31, 1994 paid to those persons who were,
at December 31, 1994, (i) the chief executive officer, and (ii) the other
four most highly compensated executive officers of AAG.
<PAGE>
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long-Term
Annual Compensation Compensation
Other
Name and Annual Securities All Other
Principal Compen- Underlying Compen-
Position Year Salary Bonus sation(f) Options/SARs sation(g)
<S> <C> <C> <C> <C> <C> <C>
Carl H. Lindner 1994 $101,923 -- -- -- --
Chairman of 1993 $100,000 -- -- -- --
the Board and 1992 $70,556 -- -- -- --
Chief Executive
Officer (a)
S. Craig Lindner 1994 $296,157 $422,400 -- 175,000 --
President (b) 1993 $193,282 $304,808 $53 125,000 --
1992 -- -- -- -- --
Robert A. Adams 1994 $454,808 $450,000 $30,394 175,000 $30,000
Executive Vice 1993 $425,000 $428,123 $4,160 125,000 $30,000
President and 1992 -- -- -- -- --
Chief Operating
Officer (c)
William J. Maney 1994 $166,252 $120,000 $1,602 20,000 $17,175
Senior Vice 1993 $125,202 $122,981 $4,464 35,000 $14,150
President, 1992 -- -- -- -- --
Treasurer and
Chief Financial
Officer (d)
Jeffrey S. Tate 1994 $159,233 $108,000 $3,154 20,000 $16,034
Senior Vice 1993 $113,085 $98,693 $1,937 35,000 $13,030
President (e) 1992 -- -- -- -- --
<FN>
(a) Carl H. Lindner was elected Chief Executive Officer of AAG on April
19, 1992, and in such capacity he is paid a base annual salary of
$100,000. Mr. Lindner did not participate in any other compensation
plans of AAG.
(b) S. Craig Lindner was elected President of AAG on March 26, 1993.
(c) Mr. Adams was elected Executive Vice President and Chief Operating
Officer of AAG effective on December 31, 1992 in connection with the
acquisition of Great American Life Insurance Company from GAI.
(d) Mr. Maney was elected Senior Vice President, Treasurer and Chief
Financial Officer of AAG effective on February 15, 1993.
(e) Mr. Tate was elected Senior Vice President of AAG effective on
February 15, 1993.
(f) The amounts listed under "Other Annual Compensation" for 1994 include
the value of automobile and homeowners insurance coverage provided
pursuant to the Executive Insurance Program and the premiums paid for
group life coverage in excess of $50,000 per individual, respective-
ly, for each person as follows: Mr. Adams - $9,355 and $1,249, Mr.
Maney - $392 and $961, and Mr. Tate -$1,239 and $346. The amount for
1994 for Mr. Adams also includes an auto allowance of $14,400. The
amount for Mr. Lindner reflects premiums paid for group life coverage
in excess of $50,000.
(g) Amounts listed under "All Other Compensation" for each of the named
persons for 1994 reflect amounts contributed to the AAG ESORP. For
prior years, the amounts reflect contributions by AAG to the AFC
ESORP.
</TABLE>
<PAGE>
SAR grants for the year ended December 31, 1994 for the Executive Officers
named in the Summary Compensation Table are as follows:
SAR GRANTS IN 1994
<TABLE>
<CAPTION>
Potential Realizable Value at
Assumed Annual Rates of Stock Price
Individual Grants Appreciation for SAR Term(a)
% of Total
SARs
Granted to
Employees Exercise
SARs in Fiscal or Base Expiration
Name Granted Year Price(b) Date(c) 0% 5% 10%
<S> <C> <C> <C> <C> <C> <C> <C>
Carl H.
Lindner -- -- -- -- -- -- --
S. Craig
Lindner 175,000 31.0% $9.62 3/2/2004 0 $987,472 $2,569,585
Robert A.
Adams 175,000 31.0% $9.62 3/2/2004 0 $987,472 $2,569,585
William
J. Maney 20,000 3.5% $9.62 3/2/2004 0 $112,854 $293,667
Jeffrey
S. Tate 20,000 3.5% $9.62 3/2/2004 0 $112,854 $293,667
<FN>
(a) The Potential Realizable Value is calculated based on a market price
for the AAG Common Stock on March 2, 1994, the date of grant of the
SARs, of $9.37 per share.
(b) The closing price for AAG Common Stock on March 2, 1994, the date of
grant of the SARs, was $9.37 per share.
(c) For each of the named individuals, 20% of the SARs became exercisable
on March 2, 1995 and 20% become exercisable on each anniversary of
the date of grant thereafter.
</TABLE>
SARs exercised during the year ended December 31, 1994 from the Executive
Officers named in the Summary Compensation Table are as follows:
AGGREGATED SAR EXERCISES IN 1994
AND SAR VALUES AT DECEMBER 31, 1994
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money SARs at
SARs at Fiscal Year End Fiscal Year End (a)
SARs Value Exercisable/ Exercisable/
Name Exercised Realized Unexercisable Unexercisable
<S> <C> <C> <C> <C>
Carl H. Lindner -- -- -- --
S. Craig Lindner 0 0 25,000/275,000 $15,500/$62,000
Robert A. Adams 0 0 25,000/275,000 $15,500/$62,000
William J. Maney 0 0 7,000/48,000 $4,340/$17,360
Jeffrey S. Tate 0 0 7,000/48,000 $4,340/$17,360
<FN>
(a) The Value of Unexercised In-the-Money SARs at Fiscal Year End is
calculated based on a market price for AAG Common Stock on
December 31, 1994 of $9.62 per share.
</TABLE>
Organization and Policy Committee Report
The Organization and Policy Committee of AAG's Board of Directors consists
of three directors, none of whom is an employee of AAG or any of its
subsidiaries. The Committee's functions include reviewing and making
recommendations to the Board of Directors with respect to the compensation
of each officer of the Company whose annual base salary exceeds $200,000.
Until March 1994, the Committee's authority extended to the compensation of
AAG's principal officers and every other officer whose annual base salary
exceeded $125,000. AAG's cash compensation for executive officers in 1994
was comprised principally of annual base salaries and payments pursuant to
the 1994 Corporate Bonus Plan. The grant of stock appreciation rights to
executive officers provided long-term incentive based compensation. In
determining compensation for executive officers, the Committee does not make
comparisons with other companies.
Annual Base Salaries. The Committee approves annual base salaries and
salary increases for executive officers that are appropriate for their
positions and levels of responsibilities. The Committee takes into
consideration the Company's long-term performance in establishing annual
base salaries for executive officers.
1994 Corporate Bonus Plan. Each of the named executive officers, other
than Carl H. Lindner, was eligible to participate in the 1994 Corporate
Bonus Plan (the "Bonus Plan"). The Bonus Plan compensates participants
based on the financial and operational performance of the Company. Under
the Bonus Plan, the Organization and Policy Committee established a target
bonus for each participant based on such person's duties and
responsibilities with the Company and expected contributions during the
year. The Committee also established financial and operational goals for
the Company, with the financial goals accounting for 75% of the bonus
potential and the operational goals accounting for the other 25%. Based on
the attainment of these goals, participants in the Bonus Plan could earn up
to 125% of the target bonus amounts. The bonuses reported in the Summary
Compensation Table for 1994 are amounts awarded to participating executive
officers in December 1994. Bonuses were paid at the rate of 120% of the
target bonus amounts and were based on assessments of the achievement of the
financial and operational goals established by the Committee. The principal
factor in evaluating the Company's operational goals was significant
progress in the areas of service and market expansion.
Compensation of the Chief Executive Officer. In April 1992, the
Organization and Policy Committee approved an annual base salary of $100,000
for Carl H. Lindner, Chief Executive Officer of the Company. In
establishing this salary, the Committee considered the fact Mr. Lindner
would not be working full-time on AAG related matters as a result of his
numerous management responsibilities with AFC and its affiliates. In
establishing Mr. Lindner's salary, the Committee gave consideration to the
Company's long-term performance. During 1994, Mr. Lindner did not
participate in any other compensation plans or arrangements of AAG.
Stock Appreciation Rights. SARs represent a performance-based portion of
the Company's compensation system. The Committee believes that the
Company's stockholders' interests are well served by aligning the interests
of the Company's executive officers with those of stockholders by the grant
of SARs. SARs are granted at exercise prices equal to the average of the
market price for AAG Common Stock for the ten trading days preceding the
date of grant and become exercisable at the rate of 20% per year. The
Committee believes that these features provide executive officers with
substantial incentives to maximize AAG's long-term success.
Internal Revenue Code Section 162. Newly enacted provisions of the
Internal Revenue Code provide that compensation in excess of $1 million per
year paid to the Chief Executive Officer as well as other executive officers
listed in the compensation table will not be deductible unless the
compensation is "performance based" and the related compensation is
approved by stockholders. It was not considered by the Committee in
determining 1994 compensation.
Members of the Organization and Policy Committee:
Ronald F. Walker (Chairman)
Ronald G. Joseph
Alfred W. Martinelli
<PAGE>
Performance Graphs. The following graph compares the cumulative total
stockholder return on AAG Common Stock with the cumulative total return of
the Standard & Poor's 500 Stock Index ("S&P 500") and the Standard & Poor's
Life Insurance Industry Index ("S&P Life") from the end of 1989 to the end
of 1994. The graph assumes $100 invested on December 31, 1989 in AAG Common
Stock, the S&P 500 and the S&P Life, including reinvestment of dividends.
(The table below contains the data points used in the Performance Graph
which appears in the printed Proxy Statement.)
PERFORMANCE GRAPH INDEX
DECEMBER 31
1989 1990 1991 1992 1993 1994
American Annuity Group, Inc. 100 56 97 88 141 137
S&P LIFE 100 82 118 158 160 133
S&P 500 100 97 126 136 150 152
The following graph compares the cumulative total stockholder return on
AAG Common Stock with the cumulative total return of the S&P 500 and the S&P
Life from December 31, 1992, the date American Annuity Group acquired GALIC,
to the end of 1994. The graph assumes $100 invested on December 31, 1992 in
AAG Common Stock, the S&P 500 and the S&P Life, including reinvestment of
dividends.
(The table below contains the data points used in the Performance Graph
which appears in the printed Proxy Statement.)
PERFORMANCE GRAPH INDEX
DECEMBER 31
1992 1993 1994
American Annuity Group, Inc. 100 160 156
S&P LIFE 100 101 84
S&P 500 100 110 112
Organization and Policy Committee Interlocks and Insider Participation.
The members of the Organization and Policy Committee are Ronald F. Walker
(Chairman), Ronald G. Joseph and Alfred W. Martinelli, none of whom was
during 1994 or prior years an officer or employee of AAG or any of its
subsidiaries. Mr. Walker is President and Chief Operating Officer of AFC
which owned all of the outstanding capital stock of GALIC prior to the
acquisition of GALIC by AAG on December 31, 1992. As a result of
transactions relating to AAG's acquisition of GALIC, AFC beneficially owns
80.02% of the outstanding shares of AAG Common Stock. See "Certain Transac-
tions" for additional information concerning relationships between AAG and
AFC and their respective subsidiaries.
In addition, Carl H. Lindner, Chairman of the Board and Chief Executive
Officer of AAG, is Chairman of the Board and Chief Executive Officer of AFC.
AFC's Board of Directors sets the compensation which Mr. Walker receives
from AFC.
Certain Transactions
GALIC, a wholly-owned subsidiary of the Company, and AMM, a wholly-owned
subsidiary of AFC, are parties to an Investment Services Agreement pursuant
to which AMM provides investment and custodial services to GALIC with
respect to GALIC's investments in accordance with guidelines approved by
AAG's directors who are not affiliated with AFC. GALIC pays AMM an annual
fee of .10% of total invested assets, provided that such fee shall not
exceed the actual cost to AMM of providing such services, and GALIC
reimburses AMM for certain expenses. Payments made by GALIC to AMM for 1994
totalled $4.4 million.
AAG and GALIC are members of AFC's consolidated tax group. AAG and GALIC
have separate tax allocation agreements with AFC which designate how tax
payments are shared by members of the tax group. In general, both companies
compute taxes on a separate return basis. GALIC is obligated to make
payments to (or receive benefits from) AFC based on taxable income without
regard to temporary differences. In accordance with terms of AAG's inden-
tures, AAG receives GALIC's tax allocation payments for the benefit of AAG's
deductions arising from current operations. If GALIC's taxable income
(computed on a statutory accounting basis) exceeds a current period net
operating loss of AAG, the taxes payable by GALIC associated with the excess
are payable to AFC. If the AFC tax group utilizes any of AAG's net
operating losses or deductions that originated prior to 1993, AFC will pay
to AAG an amount equal to the benefit received.
During 1994, AAG incurred consolidated income tax expense of $19.8
million, which amount is recorded as a liability to AFC on AAG's year end
balance sheet. Pursuant to the tax allocation agreement, GALIC paid AAG
$26.6 million in tax allocation payments in 1994 (including $300,000 for
1993).
GAI leases office space in a building owned by GALIC in Cincinnati, Ohio
under a lease which expires in March 2009. GAI paid rent of $1.0 million to
GALIC in 1994. In 1994, AAG made rental payments of $700,000 and $900,000
to GAI and Chiquita, respectively, for the sublease of certain office space
in Cincinnati, Ohio.
In 1993, GALIC entered into a coinsurance agreement with Carillon Life
Insurance Company, a subsidiary of GAI, whereby GALIC ceded $2.6 million in
annuity reserves and transferred an equal amount of cash to Carillon. On
November 29, 1994, AAG purchased all of the outstanding stock of Carillon
from GAI for $9 million.
It was determined in 1992 that the agreements governing the Company's 1987
spin-off from APZ obligate the Company to reimburse APZ for workers'
compensation claim payments which continue to be required with respect to
the Company's operations from 1978 to 1987. The largest such amount
outstanding at any one time since January 1, 1994 was $1.6 million. The
Company paid $2.2 million to APZ with respect to this liability during 1994.
<PAGE>
In connection with the GALIC purchase, GALIC's costs for state guarantee
funds are set at $1 million per year for a five-year period with respect to
insurance companies in receivership, rehabilitation, liquidation or similar
situation at December 31, 1992. For any year from 1993 through 1997 in
which GALIC pays more than $1 million to the various states, GAI will
reimburse GALIC for the excess assessments. For any year in which GALIC
pays less than $1 million, AAG will pay GAI the difference between $1
million and the assessed amounts. GALIC paid $2.0 million in assessments in
1994 and, accordingly, has recorded a receivable from GAI at December 31,
1994 of $1.0 million.
On March 31, 1994, AAG issued approximately 3.2 million shares of its
Common Stock to GAI in exchange for all 450,000 shares of AAG's Series A
Preferred Stock. The Preferred Stock redeemed by AAG had a liquidation
value of $45 million and the Common Stock issued in exchange had a fair
market value on March 31, 1994 of approximately $29 million. AAG
stockholders ratified this transaction at the 1994 Annual Meeting of
Stockholders.
Proxies
Solicitation. Solicitation of proxies is being made by management at the
direction of AAG's Board of Directors, without additional compensation,
through the mail, in person and otherwise. The cost will be borne by AAG.
In addition, AAG will request brokers and other custodians, nominees and
fiduciaries to forward proxy soliciting material to the beneficial owners of
shares held of record by such persons, and AAG will reimburse them for their
expenses in so doing.
Revocation. The execution of a proxy does not affect the right to vote in
person at the meeting, and a proxy may be revoked by the person giving it
prior to the exercise of the powers conferred by it. A stockholder may
revoke a proxy by communicating in writing to the Secretary of AAG at the
address indicated above or by duly executing and delivering a proxy bearing
a later date. In addition, persons attending the meeting in person may
withdraw their proxies. Unless a proxy is revoked or withdrawn, the shares
represented thereby will be voted or the votes withheld at the Annual
Meeting or any adjournments thereof in the manner described in this Proxy
Statement.
Quorum and Vote Required for Approval
The presence at the Annual Meeting, in person or by proxy, of the holders
of at least a majority of the shares of AAG Common Stock outstanding at the
Record Date shall constitute a quorum to consider Proposals 1, 2 and 3. In
the event a quorum does not attend the Annual Meeting, those stockholders
who attend in person or by proxy may adjourn the meeting to such time and
place as they may determine.
The nine nominees receiving the highest number of votes will be elected as
directors.
<PAGE>
The affirmative vote of the holders of at least a majority of the total
number of shares of AAG Common Stock represented at the Annual Meeting will
be required to adopt Proposal 2 (relating to the AAG Employee Stock Purchase
Plan) and Proposal 3 (relating to the amendment to the 1993 Stock
Appreciation Rights Plan).
With the exception of the election of directors, abstentions and broker
non-votes will have the same effect as a vote against any of the foregoing
proposals.
Independent Auditors
The accounting firm of Ernst & Young served as the Company's independent
auditors for the fiscal year ended December 31, 1994. Ernst & Young also
serves as independent auditors for AFC and many of its subsidiaries.
Representatives of that firm will attend the annual meeting and will be
given the opportunity to comment, if they so desire, and to respond to
appropriate questions that may be asked by stockholders. No auditor has yet
been selected for the current year since it is generally the practice of AFC
and its subsidiaries not to select independent auditors prior to the annual
stockholders meeting.
On February 11, 1993, pursuant to a recommendation by management and
approval by the Audit Committee of the Board of Directors, the Company
engaged Ernst & Young as its new auditors, replacing Deloitte & Touche.
Ernst & Young has served as the auditors of GALIC and AFC for more than 10
years, and this change gives continuity to the audit of AAG's only
significant subsidiary and enables AAG to better coordinate financial
reporting matters with AFC.
Neither Deloitte & Touche's report dated March 24, 1992 on the Company's
financial statements for the year ended December 31, 1991 nor its report
dated February 8, 1991 for the year ended December 31, 1990 contained an
adverse opinion or a disclaimer of opinion, and neither report was qualified
or modified as to uncertainty, audit scope or accounting principles.
During the Company's fiscal years ended December 31, 1991 and December 31,
1990, and the subsequent interim period, there were no disagreements with
Deloitte & Touche on any matter of accounting principles or practices,
financial statement disclosure or auditing scope or procedure which if not
resolved to Deloitte & Touche's satisfaction would have caused it to make
reference to the subject matter of the disagreement in connection with its
report.
During the Company's fiscal year ended December 31, 1991 and December 31,
1990, and the subsequent interim period: (a) Deloitte & Touche did not
advise the Company that there did not exist the internal controls necessary
for the Company to develop reliable financial statements; (b) Deloitte &
Touche did not advise the Company that information had come to Deloitte &
Touche's attention that led it to no longer be able to rely on management's
representations, or that made Deloitte & Touche unwilling to be associated
with the financial statements prepared by management; (c) Deloitte & Touche
did not advise the Company that Deloitte & Touche needed to expand
significantly the scope of its audit, or that information had come to
Deloitte & Touche's attention during such time period that if further
investigated may have (i) materially impacted the fairness or reliability of
either a previously issued audit report or the underlying financial
statements, or the financial statements issued or to be issued covering the
fiscal periods subsequent to the date of the most recent financial
statements covered by an audit report or (ii) cause Deloitte & Touche to be
unwilling to rely on management's representations or be associated with the
Company's financial statements; and (d) Deloitte & Touche did not advise the
Company that information had come to Deloitte & Touche's attention of the
type described in subparagraph (c) above, the issue not being resolved to
Deloitte & Touche's satisfaction prior to its replacement.
The Company did not, during its fiscal years ended December 31, 1991 and
December 31, 1990, and the subsequent interim period, consult with Ernst &
Young regarding the application of accounting principles to a specified
transaction or the type of audit opinion that might be rendered on the
Company's financial statements.
Stockholder Proposals for 1996 Annual Meeting
Proposals of stockholders intended to be presented at the 1996 Annual
Meeting of Stockholders must be received by AAG not later than December 1,
1995 in order to be considered for inclusion in AAG's proxy statement and
form of proxy to that meeting. Any such proposal should be communicated in
writing to the Secretary of AAG at the address indicated above.
Annual Report and Form 10-K Report
An annual report for the year ended December 31, 1994, containing
financial and other information about the Company has previously been
provided or is being concurrently provided to all stockholders.
THE COMPANY WILL SEND, WITHOUT CHARGE, A COPY OF ITS 1994 ANNUAL REPORT ON
FORM 10-K (EXCLUDING EXHIBITS), AS FILED WITH THE SECURITIES AND EXCHANGE
COMMISSION, TO ANY STOCKHOLDER UPON WRITTEN REQUEST. REQUESTS SHOULD BE
SENT TO MARK F. MUETHING, SENIOR VICE PRESIDENT, GENERAL COUNSEL AND
SECRETARY, P. O. BOX 120, CINCINNATI, OHIO 45201-0120.
Cincinnati, Ohio
March 24, 1995
<PAGE>
ANNEX 1
AMERICAN ANNUITY GROUP, INC.
EMPLOYEE STOCK PURCHASE PLAN
(Adopted June 13, 1994)
(1) PURPOSE
The purpose of American Annuity Group, Inc. Employee Stock Purchase Plan
(the "Plan") is to enable employees of American Annuity Group, Inc. (the
"Company") and its Subsidiaries to acquire or increase ownership interests
in the Company on a basis that will encourage them to perform at increasing
levels of effectiveness and use their best efforts to promote the growth and
profitability of the Company and its Subsidiaries. This is to be done by
providing employees a continued opportunity to purchase shares of the
Company's Common Stock, One Dollar ($1.00) par value ("Shares"), from the
Company through periodic offerings commencing June 1, 1994 or as soon as
practicable thereafter (the "Effective Date"). For this purpose, except as
otherwise provided in Section (18), the maximum aggregate number of Shares
which Participating Employees (defined in Section (4) below) may purchase
under the Plan is One Million (1,000,000).
The Plan is intended to comply with the provisions of Section 423 of the
Internal Revenue Code of 1986, as amended (the "Code"), and the Plan shall
be administered, interpreted and construed accordingly.
(2) ADMINISTRATION
(a) The Plan shall be administered by a committee of the Board of
Directors designated by the Board of Directors (the "Committee"), consisting
of at least Three (3) members, each of whom shall not have been eligible,
during the One (1) year period prior to the later of the Effective Date or
such member's appointment to the Committee, to receive a right to purchase
Shares under this Plan, or to receive stock or an option to purchase stock
of the Company or a Subsidiary under any other plan maintained by the
Company or a Subsidiary under which such member has been eligible for
selection on a discretionary basis. Any member of the Committee who does
not satisfy the foregoing requirement shall not serve in his or her capacity
as a Committee member for purposes of administration of the Plan until One
(1) year has elapsed from the date he or she was last eligible to receive
such stock or such an option under the Plan or such other plan. If, at any
time, there are fewer than Three (3) members of the Committee eligible to
serve in such capacity for purposes of administration of the Plan as a
result of the preceding sentence or otherwise, the Board of Directors shall
appoint One (1) or more members of the Board of Directors, who shall qualify
hereunder, to serve as members of the Committee solely for purposes of
administration of the Plan. All committee members shall serve, and may be
removed, at the pleasure of the Board of Directors.
(b) For purposes of administration of the Plan, a majority of the members
of the Committee (but not less than Two (2)) eligible to serve as such shall
constitute a quorum, and any action taken by a majority of such members of
the Committee present at any meeting at which a quorum is present, or acts
approved in writing by a majority of such members of the Committee, shall be
the acts of the Committee.
(c) Subject to the express provisions of the Plan, the Committee shall
have full discretionary authority to interpret the Plan, to issue rules for
administering the Plan, to change, alter, amend or rescind such rules, and
to make all other determinations necessary or appropriate for the
administration of the Plan. All determinations, interpretations and
constructions made by the Committee pursuant to this Section shall be final
and conclusive. No member of the Board of Directors or the Committee shall
be liable for any action, determination or omission taken or made in good
faith with respect to the Plan or any right granted hereunder.
(d) The Committee will engage a bank trust department or other financial
institution as agent (the "Agent") to perform custodial and record-keeping
functions for the Plan, such as holding record title to the participating
employees Share certificates, maintaining an individual investment account
for each such employee and providing periodic account status reports to such
employees.
(e) The Committee shall have full discretionary authority to delegate
ministerial functions to management of the Company.
(3) ELIGIBLE EMPLOYEES
All employees of the Company, and of such of its Subsidiaries as may be
designated for such purpose from time to time by the Committee, shall be
eligible to participate in the Plan, provided each of such employees:
(a) has been employed by the Company or any of its Subsidiaries for at
least Three (3) months;
(b) is customarily employed for more than Twenty (20) hours per week;
(c) is customarily employed for more than Five (5) months per calendar
year; and
(d) does not own, immediately after the right to purchase Shares under
the Plan is granted, stock possessing Five Percent (5%) or more of the total
combined voting power or value of all classes of stock of the Company, a
Subsidiary or a parent. In determining stock ownership for purposes of the
preceding sentence, the rules of Section 425(d) of the Code shall apply and
stock which the employee may purchase under outstanding options shall be
treated as stock owned by the employee.
The term "Subsidiary" as used in the Plan shall mean any corporation in an
unbroken chain of corporations beginning with the Company if each of the
corporations other than the last corporation in the unbroken chain owns
stock possessing Fifty Percent (50%) or more of the total combined voting
power of all classes of stock in one of the other corporations in such
chain. The term "Parent" as used in the Plan shall mean any corporation
(other than the Company) in any unbroken chain of corporations ending with
the Company if each of the corporations other than the Company owns stock
possessing Fifty Percent (50%) or more of the total combined voting power of
all classes of stock of one of the other corporations in such chain.
For purposes of this Section, "employment" shall be defined in accordance
with the provisions of Section 1.421-7(h) of the Treasury Regulations (or
any successor regulations). Employees eligible to participate in the Plan
pursuant to the provisions of this Section are hereinafter referred to as
"Eligible Employees".
(4) ELECTION TO PARTICIPATE
Each Eligible Employee may participate in the Plan by filing with the
Company an election to purchase form (the "Form") authorizing specified
regular payroll deductions. Eligible Employees who so elect to participate
in the Plan are hereinafter referred to as "Participating Employees". The
Form must specify the date on which such deduction is to commence, which may
not be retroactive. Payroll deductions may be in any amount, but not less
than Ten Dollars ($10.00) per payroll period, specified by the Participating
Employee up to Twenty-Five Percent (25%) (or such lower percentage as may be
specified by the Committee and made applicable to all Participating
employees on a uniform basis) of the Participating Employee's annual rate of
base compensation (as defined by the Committee) in effect at the time of his
filing of the Form. All regular payroll deductions shall be recorded in a
non-interest bearing account which the Company (or the Subsidiary which
employs the Participating Employee) shall establish for Participating
Employees (the "Payroll Deduction Account").
All funds recorded in Payroll Deduction Accounts may be used by the
Company and its Subsidiaries for any corporate purpose, subject to the right
of a Participating Employee to withdraw at any time an amount equal to the
balance accumulated in his or her Payroll Deduction Account upon withdrawal
from participation in the Plan as described in Section (7) below. Funds
recorded in Payroll Deduction Accounts shall not be required to be
segregated from any funds of the Company or any of its Subsidiaries.
(5) DEDUCTION CHANGES
A Participating Employee may at any time increase or decrease his or her
payroll deduction by filing a new Form. The change may not become effective
sooner than the next pay period after receipt of the Form. A payroll
deduction change (which shall include any increase or decrease) may not be
made more than twice during any calendar year.
(6) LIMITATION ON PURCHASE OF SHARES
No employee may be granted a right to purchase Shares under this Plan, and
any other stock purchase plan of the Company and its Subsidiaries and Parent
under Section 423 of the Code, at a rate which exceeds Twenty-Five Thousand
Dollars ($25,000) of the fair market value of such Shares (determined on the
date of purchase of the Shares) for each calendar year in which such right
is outstanding at any time.
The foregoing limitation shall be interpreted by the Committee in
accordance with applicable rules and regulations issued under the Code.
(7) WITHDRAWAL OF FUNDS
A Participating Employee may at any time prior to a Purchase Date (defined
in Section (8) below) and for any reason withdraw from participation in the
Plan, in which case the entire balance in his or her Payroll Deduction
Account shall be paid to him or her as soon as practicable thereafter.
Partial withdrawals will not be permitted.
(8) METHOD OF PURCHASE AND INVESTMENT ACCOUNTS
The term "Payroll Deduction Period" shall mean a period of One (1), Two
(2) or Three (3) calendar months, as determined by the Committee. The term
"Purchase Date" as used in the Plan shall mean the last business day of each
Payroll Deduction Period (or as soon as practicable thereafter) commencing
after the Effective Date. Each Participating Employee having funds in his
or her Payroll Deduction Account on a Purchase Date shall be deemed, without
any further action, to have been granted on such Purchase Date, and to have
exercised on such Purchase Date, the option to purchase from the Company the
number of whole and fractional Shares which the funds in his or her Payroll
Deduction Account would purchase at the Purchase Price (as hereinafter
defined) on such Purchase Date, subject to the Share limitation in Section
(1) and the restrictions set forth in Section (6). Such option will be
deemed exercised if the Participating Employee does not withdraw such funds
prior to the Purchase Date. All Shares so purchased (including fractional
Shares) shall be credited to a separate Investment Account established by
the Agent for each Participating Employee. The Agent shall hold in its name
or the name of its nominee all certificates for Shares purchased until
Shares are withdrawn by a Participating Employee pursuant to Section (10)
below.
All cash dividends paid with respect to the whole and fractional Shares in
a Participating Employee's Investment Account shall, unless otherwise
directed by the Committee, be credited to his or her Investment Account and
used, in the same manner as payroll deductions, to purchase additional
Shares under the Plan on the next Purchase Date, subject to the Share
limitation in Section (1) and the restrictions set forth in Section (6).
Shares so purchased shall be added to the Shares held for the Participating
Employee in his or her Investment Account.
(9) PURCHASE PRICE
The Purchase Price for each whole or fractional Share shall be Eighty-Five
Percent (85%) of the fair market value of such whole or fractional Share on
the Purchase Date, provided that the Purchase Price shall in no event be
less than the par value of such Share.
Fair market value shall be the mean of the high and low sales prices of
such Shares on the Purchase Date on the New York Stock Exchange Composite
Tape (or the principal market in which the Shares are traded, if the Shares
are not listed on the New York Stock Exchange on such Date), or, if the
Shares shall not have been traded on such Date, the mean of the high and low
sales prices of such Shares on the next preceding day on which sales were
made.
(10) WITHDRAWAL OF CERTIFICATES
Subject to Sections (13) and (21) below, a Participating Employee shall
have the right at any time to withdraw a certificate or certificates for all
or a portion of the Shares credited to his or her Investment Account by
giving written notice to the Agent, provided, however, that (a) no
Participating Employee shall be entitled to receive a certificate for any
Share prior to one calendar year after the date that Share was purchased
under the Plan, (b) no such request may be made more frequently than once
per calendar year and (c) no Participating Employee shall be entitled to
receive a certificate for any fractional Share. The Company will pay any
stamp taxes imposed in connection with the issuance of any certificate under
the Plan.
(11) REGISTRATION OF CERTIFICATES
Each certificate withdrawn by a Participating Employee may be registered
only in the name of the Participating Employee, or, if the Participating
Employee so indicated on the Participating Employee's Form, in the
Participating Employee's name jointly with another person, with right of
survivorship. A Participating Employee who is a resident of a jurisdiction
which does not recognize such a joint tenancy may have certificates
registered in the Participating Employee's name as tenant in common or as
community property with another person, without right of survivorship.
(12) VOTING
The Agent shall vote all Shares held in an Investment Account in
accordance with the Participating Employee's instructions. To the extent
the Agent does not receive instructions with respect to the voting of any
Shares held in the Investment Account such Shares shall be voted in the same
proportion as the Shares as to which the Agent has received instructions.
(13) LIMITATION ON RESALE
Notwithstanding anything in the Plan to the contrary, no Participating
Employee shall be entitled to sell any Share purchased under the Plan (or
withdraw any certificate representing any such Share) during the first year
following the date of purchase of such Share.
(14) RIGHTS ON RETIREMENT, DEATH OR OTHER TERMINATION OF EMPLOYMENT
In the event of a Participating Employee's retirement, death or other
termination of employment, or in the event that a Participating Employee
otherwise ceases to be an Eligible Employee, (a) no payroll deduction shall
be taken from any pay due and owing to the Participating Employee
thereafter, and the balance in the Participating Employee's Payroll
Deduction Account shall be paid to the Participating Employee, or in the
event of the Participating Employee's death, to his or her designated
beneficiary under the Plan (and, if none, then to his or her estate), and
(b) a certificate for the full Shares credit to the Participating Employee's
Investment Account will be forwarded to the Participating Employee (or, in
the case of his or her death, such beneficiary or estate) and any fractional
Share interest held in such Investment Account will be disposed of and the
proceeds, less any selling expenses, will be remitted to the Participating
Employee (or, in the case of his or her death, such beneficiary or estate).
(15) RIGHTS NOT TRANSFERABLE
Rights under the Plan are not transferable by a Participating Employee
other than by will or the laws of descent and distribution, and are
exercisable during the employee's lifetime only by the employee.
<PAGE>
(16) NO RIGHT TO CONTINUED EMPLOYMENT
Neither the Plan nor any right granted under the Plan shall confer upon
any Participating Employee any right to continuance of employment with the
Company or any Subsidiary, or interfere in any way with the right of the
Company or Subsidiary to terminate the employment of such Participating
Employee.
(17) APPLICATION OF FUNDS
All funds received or held by the Company under this Plan may be used for
any corporate purpose.
(18) ADJUSTMENT IN CASE OF CHANGES AFFECTING SHARES
In the event of a subdivision of outstanding Shares, or the payment of a
stock dividend, the Share limitation set forth in Section (1) shall be
adjusted proportionately, and such other adjustments shall be made as may be
deemed equitable by the Committee. In the event of any other change
affecting Shares (including any event described in Section 424(a) of the
Code), such adjustment shall be made as may be deemed equitable by the
Committee to give proper effect to such event, subject to the limitations of
Section 424 of the Code.
(19) AMENDMENT OF THE PLAN
The Board of Directors may at any time, or from time to time, amend this
Plan in any respect, except that, without approval by the shareholders of
the Company entitled to cast at least the majority of the total number of
votes represented (a quorum being present), no amendment shall be made (i)
increasing the maximum aggregate number of Shares which may be purchased by
Participating Employees under this Plan other than as provided in Section
(18) or (ii) changing the designation of employees eligible to participate
in the Plan.
(20) TERMINATION OF THE PLAN
The Plan and, except as provided below, all rights of employees under any
offering hereunder shall terminate on the earliest of:
(a) The date that Participating Employees become entitled to purchase a
number of Shares greater than the number of Shares remaining available for
purchase in accordance with Section (1), as adjusted by Section (18), in
which case if the number of Shares so purchasable is greater than the Shares
remaining available, the available Shares shall be allocated by the
Committee among such Participating Employees on a pro rata basis;
(b) Any date selected by the Board of Directors in its discretion; or
(c) The date set forth in Section 25(b) of this Plan.
Upon termination of this Plan (i) all amounts in the Payroll Deduction
Accounts of Participating Employees shall be carried forward into the
Participating Employee's Payroll Deduction Account under a successor plan,
if any, or promptly refunded, (ii) all certificates for the full Shares
credited to a Participating Employee's Investment Account shall be forwarded
to him or her and (iii) any fractional Share interest held in a
Participating Employee's Investment Account shall be disposed of and the
proceeds, less any selling expenses, shall be remitted to him or her.
The Board of Directors shall have the right to suspend the Plan at any
time.
(21) GOVERNMENTAL REGULATIONS
(a) Anything contained in this Plan to the contrary notwithstanding, the
Company shall not be obligated to sell or deliver any Shares or certificates
under this Plan unless and until the Company is satisfied that such sale or
delivery complies with (i) all applicable requirements of the New York Stock
Exchange (or the governing body of the principal market in which such Shares
are traded, if such Shares are not then listed on that Exchange), (ii) all
applicable provisions of the Securities Act of 1933 and (iii) all other laws
or regulations by which the Company is bound or to which the Company is
subject.
(b) The Company (or a Subsidiary) may make such provisions as it may deem
appropriate for the withholding of any taxes or payment of any taxes which
it determines it may be required to withhold or pay in connection with any
Shares. The obligation of the Company to deliver certificates under this
Plan is conditioned upon the satisfaction of the provisions set forth in the
preceding sentence.
(22) SOURCE OF SHARES
Shares to be purchased from the Company under the Plan shall be (a)
previously acquired treasury Shares or (b) authorized but unissued Shares.
Notwithstanding anything to the contrary in this Plan, if and to the extent
authorized by the Committee, the Agent may make purchases of Shares on
behalf of Participating Employees under the Plan through market transactions
rather than purchases from the Company.
(23) REPURCHASE OF SHARES
The Company shall not be required to repurchase from any Participating
Employee any Shares which such Participating Employee acquires under the
Plan.
(24) EXPENSES OF MAINTAINING PLAN
Except as provided in this Section, the Company shall be responsible for
all expenses of operating the Plan. If Shares are purchased through market
transactions as permitted by Section 22, all commissions and other expenses
of purchasing such shares shall be paid by Participating Employees and
included in the Calculation of fair market value of the Shares so purchased.
All commissions and other expenses of selling any Shares acquired pursuant
to the Plan shall be paid by the Participating Employee whose shares are
sold.
(25) EFFECTIVE DATE; DURATION
(a) Effective Date. The Plan shall become effective upon the date of its
adoption by the Board provided that the Plan is approved and adopted by the
holders of a majority of the outstanding shares of stock of the Company
entitles to vote hereon at the next annual meeting of stockholders held
after the date the Plan is adopted by the Board. If the Plan shall not be
subsequently approved and adopted by the shareholders of the Company as
specified herein, the Plan shall be null and void and any obligation
pursuant to the subsequent attempted purchase of Shares shall not be binding
upon the Company. In such event, all funds in any Payroll Deduction Account
shall be returned to the Participating Employees. To the extent a
Participating Employee has already purchased and paid for any Shares
received under the Plan, the Shares may retain the ownership of said Shares.
(b) Duration. Unless earlier terminated by the Board or the Committee
pursuant to the provisions of the Plan, the Plan shall terminate on the
tenth anniversary of its effective date as hereinbefore specified. No
Shares shall be purchased under the Plan after such termination date.
<PAGE>
AMERICAN ANNUITY GROUP, INC.
Proxy for Annual Meeting
Registration Name and Address
The undersigned hereby appoints William J. Maney and Mark F. Muething and
each of them, proxies of the undersigned, each with the power of
substitution, to vote all shares of Common Stock which the undersigned would
be entitled to vote at the Annual Meeting of Shareholders of American
Annuity Group, Inc. to be held on May 23, 1995 at 10:00 a.m., Eastern
Daylight Savings Time, and any adjournment of such meeting.
The Board of Directors recommends a vote FOR each of the following
Proposals:
1. Election of Directors
/ / FOR AUTHORITY to elect the / / WITHHOLD AUTHORITY to
nominees listed below (except vote for every nominee
those whose names have been listed below
crossed out)
Robert A. Adams John T. Lawrence William R. Martin
A. Leon Fergenson Carl H. Lindner Alfred W. Martinelli
Ronald G. Joseph S. Craig Lindner Ronald F. Walker
2. Approval of the AAG Employee Stock Purchase Plan.
/ / FOR / / AGAINST / / ABSTAIN
3. Approval of an amendment to the 1993 Stock Appreciation Rights
Plan to increase the maximum number of SARs to be granted from
1,500,000 to 2,000,000.
/ / FOR / / AGAINST / / ABSTAIN
DATE: ___________________, 1995 SIGNATURE:_____________________________
SIGNATURE:_______________________________
(if held jointly) Important: Please
sign exactly as name appears hereon
indicating, where proper, official
position or representative capacity. In
case of joint holders, all should sign.
This proxy when properly executed will be voted in the manner dictated
herein by the above signed shareholder. If no direction is made, this proxy
will be voted FOR each Proposal. To vote your shares, please mark, sign,
date and return this proxy form using the enclosed envelope.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
