SCHEDULE 14A
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
(Amendment No. ___)
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[ ] 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)
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[X] No fee required.
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11.
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pursuant to Exchange Act Rule 0-11:
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Rule 0-11(a)(2) and identity the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
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AMERICAN ANNUITY GROUP, INC.
250 East Fifth Street
Cincinnati, Ohio 45202
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held on May 22, 1997
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 Thursday, May 22, 1997.
The purposes of the meeting are:
1. To elect eight directors;
2. To approve an amendment to the AAG 1994 Stock Option
Plan to increase the maximum number of options to be
granted from 1,500,000 to 2,000,000;
3. To approve the AAG 1997 Directors' Stock Option Plan;
4. To approve the AAG Directors' Compensation Plan; and
5. To transact such other business as may properly be
brought before the meeting or any adjournment thereof.
Only stockholders of record at the close of business on March 24, 1997
are entitled to receive notice of and to vote at the meeting or any
adjournment thereof.
You are invited to be present at the meeting so that you can vote in
person. Whether or not you plan to attend the meeting, please date, sign
and return the accompanying proxy form in the enclosed, postage-paid
envelope. If you do attend the meeting, you may either vote by proxy or
revoke your proxy and vote in person. You may also revoke your proxy at any
time before the vote is taken at the meeting by written revocation or by
submitting a later-dated proxy form.
Carl H. Lindner
Chairman of the Board
Dated: March 24, 1997
PROXY STATEMENT
AMERICAN ANNUITY GROUP, INC.
ANNUAL MEETING OF STOCKHOLDERS
MAY 22, 1997
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. on Thursday, May 22, 1997, and any
adjournment thereof (the "Annual Meeting"). The Company will pay the cost
of soliciting proxies.
The approximate mailing date of this Proxy Statement and the
accompanying proxy form is March 31, 1997.
Outstanding Voting Securities of AAG
Holders of record of the common stock, $1.00 par value per share, of
AAG (the "Common Stock") at the close of business on March 24, 1997 (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, 43,201,574
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
Group, Inc. and its subsidiaries (collectively "AFG"), One East Fourth
Street, Cincinnati, Ohio 45202, which beneficially owned 35,059,995 shares,
or approximately 81.2% of the shares outstanding as of the Record Date.
Carl H. Lindner, Carl H. Lindner III, S. Craig Lindner, Keith E.
Lindner and trusts for their benefit (collectively the "Lindner Family"),
the beneficial owners of approximately 43% of AFG's voting stock, share
voting and dispositive power with AFG with respect to the shares of AAG
Common Stock owned by AFG. AFG and the Lindner Family may be deemed to be
controlling persons of AAG.
Action to be Taken at the Meeting
All shares represented by a properly executed and unrevoked proxy will
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 eight nominees for director named herein
and for proposals 2, 3 and 4.
Management knows of no other matter to be presented at the Annual
Meeting upon which a vote may be taken, but if any other matter is
presented, 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, 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 eight.
The eight directors so elected will, upon such election, constitute the
entire Board of Directors.
In accordance with AAG's Certificate of Incorporation, the only
candidates eligible for election at the Annual Meeting are candidates
nominated by the Board of Directors and candidates nominated at the meeting
by a stockholder who has complied with the procedures set forth in the
Certificate of Incorporation.
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 and RONALD F. WALKER. See "MANAGEMENT" for information relating to
the nominees. The eight 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 EIGHT NOMINEES LISTED ABOVE. THE COMPANY HAS BEEN INFORMED
THAT AFG INTENDS TO VOTE ITS SHARES FOR THE ABOVE NOMINEES.
PROPOSAL 2: APPROVAL OF AMENDMENT TO THE
AAG 1994 STOCK OPTION PLAN
On March 2, 1994, the Board of Directors adopted, and on June 13, 1994,
stockholders of AAG approved the AAG 1994 Stock Option Plan (the "1994 Stock
Option Plan"). The 1994 Stock Option Plan provides for the issuance of both
incentive stock options ("Incentive Stock Options") and non-qualified stock
options ("Non-qualified Stock Options") to officers and certain key
management personnel ("Key Employees").
On October 23, 1996, the Board of Directors increased the number of
shares of AAG Common Stock obtainable upon exercise of options granted under
the 1994 Stock Option Plan from 1,500,000 to 2,000,000, subject to
stockholder approval. Of such 2,000,000 shares, 366,000 options to purchase
shares remain available for grant. The Board of Directors believes that
options to purchase additional shares of AAG Common Stock should be made
available for grant under the 1994 Stock Option Plan and is seeking
stockholder approval of the increase.
Purpose of the Plan
The purpose of the 1994 Stock Option Plan is to promote the interests
of AAG and its stockholders by providing a means for selected Key Employees
of AAG and its subsidiaries to acquire a proprietary interest in AAG,
thereby strengthening AAG's ability to attract capable management personnel
and provide an inducement for Key Employees to remain employed by AAG or its
subsidiaries and to perform at their maximum levels.
Eligibility
Options under the 1994 Stock Option Plan may be granted to Key
Employees of AAG and its subsidiaries.
Securities to be Utilized
The maximum number of shares of AAG Common Stock for which options may
be granted under the 1994 Stock Option Plan is currently 2,000,000 (subject
to antidilution provisions and stockholder approval). Shares delivered by
AAG pursuant to the exercise of options may be authorized but unissued
shares of Common Stock, previously acquired treasury shares or a combination
thereof. Shares subject to options which expire or are terminated shall
again be available for the granting of other options under the 1994 Stock
Option Plan.
Plan Administration and Termination
The 1994 Stock Option Plan is administered by the Organization and
Policy Committee (the "Committee") which is comprised of not less than two
"outside directors," as such term is defined in the Internal Revenue Code of
1986, as amended (the "Code"), or rules promulgated thereunder. Each member
is also a "Non-Employee Director" as defined in Rule 16b-3(b) promulgated
under the Securities Exchange Act of 1934 (the "Exchange Act"). The Board
of Directors is authorized to amend the 1994 Stock Option Plan at any time
without further stockholder approval unless such amendment would cause the
1994 Stock Option Plan to cease to satisfy any applicable conditions of
either Rule 16b-3 or Section 162(m) of the Code. Unless earlier terminated,
the 1994 Stock Option Plan will continue in effect until March 2, 2004. Any
stock options granted prior to the termination of the plan will remain
outstanding for the term of such option.
Price, Exercise Period and Vesting of Options
The Committee determines the exercise price for options granted under
the 1994 Stock Option Plan. The exercise price for a Non-qualified Stock
Option may be less than the Fair Market Value per Share but must not be less
than the $1.00 par value per share of Common Stock (the "Par Value"). The
exercise price for an Incentive Stock Option must not be less than the
greater of (i) 100% of the Fair Market Value per share of Common Stock on
the date of grant or (ii) the Par Value. Also, for Incentive Stock Options,
if the Optionee owns, directly or indirectly, stock representing more than
10 % of either (i) the total combined voting power of all classes of stock
of the Company or (ii) a corporation that owns 50% or more of the total
combined voting power of all classes of stock of the Company, then the
exercise price must equal at least 110% of the Fair Market Value on the date
of grant and the term of the option cannot exceed five years from the date
of grant. The Fair Market Value of the Common Stock is the closing price of
AAG Common Stock on the New York Stock Exchange Composite Tape for the most
recent day of trading.
Twenty percent of the shares underlying an option will become
exercisable upon the first anniversary of the date of grant, and twenty
percent vest on each anniversary thereafter. On March 14, 1997, the last
reported sales price of the Common Stock on the New York Stock Exchange
Composite Tape was $16.63.
Payment for shares purchased upon exercise of an option will generally
be made in cash. The Committee, however, may permit payment by (i) delivery
of shares of AAG Common Stock already owned by the Optionee having a Fair
Market Value equal to the cash option price of the shares; (ii) a
combination of share delivery and cash payment or (iii) any other method.
Federal Income Tax Consequences
Incentive Stock Options. AAG intends that the majority of the options
granted under the 1994 Stock Option Plan will qualify as incentive stock
options under Section 422 of the Code.
An Optionee does not recognize any taxable income at the time of the
grant of an Incentive Stock Option. If an Optionee acquiring stock pursuant
to an incentive stock option does not dispose of the stock until the later
of one year after the transfer of the stock to the Optionee and at least two
years from the date of grant of the option, then, subject to the alternative
minimum tax rules discussed below, there will be no tax consequences to the
Optionee or AAG when the incentive stock option is exercised. This tax
treatment is not applicable if the Optionee exercises the option more than
three months after his or her employment ends.
If stock acquired upon exercise of an option is sold by the Optionee
and the holding period requirements described in the preceding paragraph
have not been met, the Optionee will be required to report, on his or her
federal income tax return for the year in which the sale occurs, additional
compensation income equal to the difference between the Fair Market Value of
the stock at the time of exercise of the option and the purchase price at
which the stock was acquired. AAG will generally be entitled to a compensa-
tion deduction in an equivalent amount. For purposes of determining gain or
loss upon sale of the stock an amount equal to this compensation income will
be added to the exercise price of the stock and the total will be the
Optionee's adjusted basis of the stock. Gain or loss will be determined
based upon the difference between the Optionee's adjusted basis of the stock
and the net proceeds of the sale, and the Optionee will be required to
report such gain or loss as long-term or short-term (depending on how long
the Optionee held the stock) capital gain or loss on his or her federal
income tax return for the year in which the sale occurs.
The difference between the Fair Market Value of the stock on the date
of exercise and the exercise price results in an adjustment in computing
alternative minimum taxable income for purposes of Sections 55 et. seq. of
the Code, which may trigger alternative minimum tax consequences for
Optionees. Any alternative minimum tax that is payable may ultimately be
credited against taxes owed upon disposition of the stock.
Non-qualified Options. AAG may also grant Non-qualified Options under
the 1994 Stock Option Plan. In general, there will be no tax consequences
to the Optionee or the Company when the option is granted if the option does
not have a readily ascertainable fair market value. Upon exercise of the
option, the Optionee will be required to report, on his or her federal
income tax return for the year in which the exercise occurs, additional
compensation income equal to the difference between the Fair Market Value of
the stock at the time of exercise of the option and the exercise price. AAG
will generally be entitled to a compensation deduction in an equivalent
amount.
The Board of Directors recommends that stockholders vote FOR the
proposal to approve the amendment to the AAG 1994 Stock Option Plan to
increase the number of shares of AAG Common Stock obtainable upon exercise
of options from 1,500,000 to 2,000,000. The Company has been informed that
AFG intends to vote its shares FOR approval of the amendment to the AAG 1994
Stock Option Plan.
PROPOSAL 3: APPROVAL OF THE AAG 1997 DIRECTORS' STOCK OPTION PLAN
On February 13, 1997, the Board of Directors adopted, subject to
approval of the stockholders of AAG at the Annual Meeting, the 1997
Directors' Stock Option Plan (the "Directors' Stock Option Plan"). The
Directors' Stock Option Plan provides for the issuance of stock options to
non-employee directors ("Eligible Directors") of AAG.
The following description is qualified in its entirety by reference to
the text of the Directors' Stock Option Plan which is set forth in Annex 1
to this Proxy Statement.
Purpose of the Plan
The purpose of the Directors' Stock Option Plan is to promote the
interests of AAG and its stockholders by providing a means for attracting
and retaining directors of outstanding competency, dedication and loyalty.
Securities to be Utilized
The maximum number of shares of AAG Common Stock for which options may
be granted under the Directors' Stock Option Plan is 500,000 (subject to
antidilution provisions). Shares delivered by AAG pursuant to the exercise
of options may be authorized but unissued shares of Common Stock, previously
acquired treasury shares or a combination thereof. Shares subject to
options which expire or are terminated shall again be available for the
granting of other options under the Directors' Stock Option Plan.
Plan Administration and Termination
The Directors' Stock Option Plan will be administered by the Committee.
The Board of Directors will have the ability to amend the Directors' Stock
Option Plan at any time without further stockholder approval unless such
amendment would cause the Directors' Stock Option Plan to cease to satisfy
any applicable conditions of Rule 16b-3 promulgated under the Exchange Act.
Unless earlier terminated, the Directors' Stock Option Plan will continue in
effect until February 13, 2007.
Price, Exercise Period and Vesting of Options
Each Eligible Director has, subject to stockholder approval of the
Directors' Stock Option Plan, been granted options to purchase 10,078 shares
of Common Stock at $14.38, which was the closing price on the date of grant.
On each March 1, each then Eligible Director will receive options to
purchase 1,000 shares of Common Stock. Each Eligible Director elected in
the future who was not an Eligible Director on the effective date of the
Directors' Stock Option Plan will receive options to purchase 10,000 shares
of Common Stock upon election.
The price of options granted after the Effective Date shall be the
average of the mean between the high and low sales prices for the Common
Stock on the New York Stock Exchange for the ten trading days immediately
preceding the date of grant. On March 14, 1997, the last reported sales
price of the Common Stock on the New York Stock Exchange Composite Tape was
$16.63.
Twenty percent of the shares underlying an option will become
exercisable upon the first anniversary of the date of grant, and twenty
percent will vest on each anniversary thereafter.
Payment for shares purchased upon exercise of an option may be made in
cash, by surrender of other owned shares of Common Stock or by a combination
of such methods. Payment for shares may also be made by withholding that
number of shares having a fair market value of shares acquired pursuant to
the exercise. The Committee, however, may permit payment by any other
method.
Federal Income Tax Consequences
In general, there will be no tax consequences to the Optionee or AAG
when the option is granted. Upon exercise of the option, the Optionee will
be required to report, on his or her federal income tax return for the year
in which the exercise occurs, income equal to the difference between the
Fair Market Value of the stock at the time of exercise of the option and the
exercise price.
The Board of Directors recommends that stockholders vote FOR the
proposal to approve the AAG 1997 Directors' Stock Option Plan. The Company
has been informed that AFG intends to vote its shares FOR approval of the
AAG 1997 Directors' Stock Option Plan.
PROPOSAL 4: APPROVAL OF THE AAG DIRECTORS' COMPENSATION PLAN
On May 23, 1996, the Board of Directors adopted the AAG Directors'
Compensation Plan (the "Directors' Plan"), subject to approval by
stockholders. The purpose of the Directors' Plan is to align further the
interests of the AAG's non-employee directors with the interests of
stockholders by providing that a minimum of 50% of such directors' annual
retainers are paid through the issuance of shares of Common Stock.
All directors who are not officers or employees of AAG are currently
paid the following fees: an annual retainer of $25,000 ("Board Retainer");
an additional annual retainer of $5,000 for each Board Committee on which
the non-employee director serves as Chairman ("Committee Retainer"); and an
attendance fee of $1,500 and $1,000 for each Board or Committee meeting
attended, respectively ("Meeting Fees"). Non-employee directors who become
directors during the year will receive a pro rata portion of these annual
retainers. The retainers and fees to be paid under the Directors' Plan will
be reviewed by the Board of Directors from time to time and are subject to
change at its discretion without stockholder approval.
The following description is qualified in its entirety by reference to
the text of the Directors' Plan which is set forth in Annex 2 to this Proxy
Statement.
Payment Terms
Annual retainers and fees are paid by AAG quarterly, in arrears. The
quarterly portion of the Board Retainer and Committee Retainer will be paid
50% in cash and 50% in Common Stock. The number of shares of Common Stock
to be issued will be determined by dividing the dollar value of the amount
to be paid in Common Stock by the average of the closing price of such
Common Stock for the ten trading days prior to the end of the prior quarter,
as reported on the New York Stock Exchange Composite Tape. On March 14,
1997, the last reported sales price of the Common Stock on the New York
Stock Exchange Composite Tape was $16.63. The meeting fees accrued
during any quarter, if any, shall be paid by the Company in cash, along with
the cash portion of the applicable quarterly retainers.
Election by Non-Employee Directors to Receive Cash Portion of Their
Compensation in Additional Common Stock
Each non-employee director may elect to receive all or a portion (in
20% increments) of the quarterly cash portion of their applicable retainers
for Board service in Common Stock. Such election will be irrevocable for
each quarter and shall be made at least six months in advance of the date
the non-employee director is to receive the quarterly payment.
Effective Date; Expiration of Plan; Amendments
If approved at the Annual Meeting, the Directors' Plan will become
effective as of May 23, 1996. Unless earlier terminated by the Board, the
Plan shall terminate on May 23, 2006. Subject to certain conditions, the
Board may suspend or terminate the Directors' Plan or any portion of it at
any time, and may amend it from time to time in such respects as the Board
may deem advisable.
As stated above, the Directors' Plan was adopted by the Board of
Directors on May 23, 1996. Pursuant to the Directors' Plan, AAG issued
6,122 shares of Common Stock, which issuance is subject to stockholder
approval at the 1997 Annual Meeting.
The amount of fees and retainers to be received by non-employee
directors of AAG will not change as a result of the adoption of the
Directors' Plan. However, if the Directors' Plan is approved by
stockholders, non-employee directors of AAG will receive at least 50% of
their retainers in Common Stock.
Tax Consequences
Common Stock received under the Directors' Plan is taxable to the
recipient at the fair market value of the Common Stock as of the date of
receipt.
The Board of Directors recommends that stockholders vote FOR the
proposal to approve the AAG Directors' Compensation Plan. The Company has
been informed that AFG intends to vote its shares FOR approval of the AAG
Directors' Compensation Plan.
MANAGEMENT
The directors and executive officers of AAG are:
Director or
Name Age* Position Officer
Since
Carl H. Lindner 77 Chairman of the Board and 1987
Chief Executive Officer
S. Craig Lindner 41 Director and President 1993
Robert A. Adams 51 Director, Executive Vice 1992
President and Chief Operating
Officer
A. Leon Fergenson 84 Director 1987
Ronald G. Joseph 60 Director 1994
John T. Lawrence III 45 Director 1994
William R. Martin 67 Director 1994
Ronald F. Walker 58 Director 1987
John B. Berding 34 Senior Vice President, 1993
Investments
Keith A. Jensen 45 Senior Vice President 1997
William J. Maney 47 Senior Vice President, 1993
Treasurer and Chief
Financial Officer
Mark F. Muething 37 Senior Vice President, 1993
General Counsel and
Secretary
Jeffrey S. Tate 40 Senior Vice President 1993
Christopher P. Miliano 38 Vice President, Controller 1993
and Assistant Treasurer
Richard L. Magoteaux 36 Vice President 1996
[FN]
* As of March 1, 1997
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 AFG, a
diversified financial services company, and Chairman of the Board of
American Financial Enterprises, Inc. ("AFEI"), a company whose assets
consist primarily of investments in AAG and AFG; and Chiquita Brands
International, Inc., a leading international marketer, producer and
distributor of bananas and other quality fresh and processed food products.
AFG owns a substantial beneficial interest (over 40%) in AFEI and Chiquita.
He also serves as a director of American Financial Corporation ("AFC") and
American Premier Underwriters, Inc. ("APZ"), both of which are wholly-owned
subsidiaries of AFG. Carl H. Lindner is the father of S. Craig Lindner.
S. Craig Lindner was elected President and a director of AAG in March
1993. Mr. Lindner is President and has during the past five years been
Senior Executive Vice President of American Money Management Corporation
("AMM"), a subsidiary of AFG which provides investment services for AFG and
its affiliated companies, including AAG. He is also a director of AFG, AFC
and APZ.
Robert A. Adams was elected a director of AAG in October 1993. Mr.
Adams was elected Executive Vice President and Chief Operating Officer of
the Company in December 1992. For more than five years prior to election as
an officer of the Company, he was Senior Vice President and a director of
Great American Insurance Company ("GAI"), a wholly-owned subsidiary of AFG
engaged in the property and casualty insurance business.
A. Leon Fergenson has been a director of AAG since 1987. For more than
five years, Mr. Fergenson has been a private investor and a director of
various corporations. He is also a director of Sequa Corporation and
several mutual funds managed by Neuberger & Berman, Inc.
Ronald G. Joseph was elected a director of AAG in March 1994. For more
than 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 in March 1994. Mr.
Lawrence has been a Senior Vice President with PaineWebber 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.
William R. Martin was elected a director of AAG in March 1994.
Although currently retired, during the past five years Mr. Martin was
President of both Tominy, Inc. and M.B. Computing, Inc., which are privately
held software development companies. Mr. Martin is also a director of AFG,
AFC, APZ and New Energy Corporation of Indiana, the general partner of a
partnership engaged in the production of ethanol.
Ronald F. Walker has been a director of AAG since 1987. He currently
serves as Vice Chairman of GAI. Until April 1995 and for more than five
years prior thereto, Mr. Walker served as President and Chief Operating
Officer and a director of AFC. He was President and Chief Operating Officer
of American Premier Underwriters, Inc. from March 1987 to February 1992, and
a director of that company from May 1982 to February 1992. In addition, he
served as President and Chief Executive Officer and a director of General
Cable Corporation from July 1, 1992 to June 1994. Mr. Walker is also a
director of AFG, AFEI, Chiquita and Tejas Gas Corporation, a corporation
engaged in the production and distribution of natural gas.
John B. Berding was elected Senior Vice President - Investments of AAG
in March 1993. During the past five years, he has been a Vice President of
AMM.
Keith A. Jensen was elected Senior Vice President of AAG in February
1997. Prior thereto for more than five years he was a partner with Deloitte
& Touche LLP, an independent accounting firm.
William J. Maney was elected Senior Vice President, Treasurer and Chief
Financial Officer of AAG in February 1993. Prior thereto for more than
five years he was Vice President - Accounting of GAI.
Mark F. Muething was elected Senior Vice President, General Counsel and
Secretary of AAG in October 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 LLP, a Cincinnati law firm.
Jeffrey S. Tate was elected Senior Vice President of AAG in February
1993. Prior thereto, he served as Vice President of GAI (from May 1990 to
December 1992).
Christopher P. Miliano was elected Vice President and Controller of AAG
in February 1995 and Assistant Treasurer in February 1997. 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).
Richard L. Magoteaux was elected Vice President of AAG in May 1996.
Prior thereto for more than five years he was a Senior Manager with Ernst &
Young LLP, an independent accounting firm.
In December 1993, Citicasters, Inc. 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.
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, 1997, is shown in the following table:
Amount and Nature of Percent
Beneficial of
Name Ownership(a)(i) Class
Robert A. Adams 121,852 (b) *
A. Leon Fergenson 4,814 *
Ronald G. Joseph 18,841 *
John T. Lawrence III 7,879 *
Carl H. Lindner 35,059,995 (c) 81.2%
S. Craig Lindner 35,148,349 (c)(d) 81.4
William R. Martin 5,835 *
Ronald F. Walker 18,171 *
John B. Berding 20,892 *
Keith A. Jensen --- --
William J. Maney 18,879 (e) *
Mark F. Muething 24,175 (f) *
Jeffrey S. Tate 20,107 (g) *
Christopher P. Miliano 10,935 (h) *
Richard L. Magoteaux 40 *
All Directors and
Executive Officers as
a Group (15 persons) 35,420,769 82.0%
[FN]
* Less than 1%
(a) Unless otherwise indicated, the persons named have sole voting and
dispositive power over the shares listed opposite their names.
(b) Includes 1,935 shares allocated to Mr. Adams' account in the
American Annuity Group, Inc. Employee Stock Ownership
Retirement Plan ("ESORP") and 21,989 share equivalents
allocated to the American Annuity Group, Inc. Deferred
Compensation Plan ("Deferred Compensation Plan").
(c) Messrs. Carl H. Lindner and S. Craig Lindner may be deemed to own
beneficially the shares set forth under "Principal Stockholders" for
AFG, of which Mr. Carl Lindner is Chairman of the Board and Chief
Executive Officer and a principal shareholder and Mr. S. Craig
Lindner is a director, officer and principal shareholder.
(d) Includes 44,100 shares held by his spouse as custodian or as trustee
for their minor children and 8,000 shares which are held in a trust
for the benefit of their minor children for which Keith E. Lindner
acts as trustee with voting and dispositive power. Also includes
19,046 shares allocated to Mr. Lindner's account in the Deferred
Compensation Plan.
(e) Includes 1,935 shares allocated to Mr. Maney's account in the
ESORP.
(f) Includes 917 shares allocated to Mr. Muething's account in
the ESORP and 3,693 share equivalents allocated to Mr.
Muething's account in the Deferred Compensation Plan.
(g) Includes 1,842 shares allocated to Mr. Tate's account in the
ESORP.
(h) Includes 1,477 shares allocated to Mr. Miliano's account in
the ESORP.
(i) Messrs. Adams, Joseph, Lawrence, Carl H. Lindner, S. Craig Lindner,
Martin, Walker, Berding, Tate and Miliano also beneficially own 634,
16,000, 4,000, 6,793,701, 4,803,585, 6,000, 44,524, 7,919, 200 and 10
shares, respectively, of common stock of AFG. Mr. Martin also
beneficially owns 38,508 shares of AFC preferred stock.
Committees and Meetings of the Board of Directors
AAG's Board of Directors held seven meetings and took action in writing on
five occasions in 1996.
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 four meetings in 1996.
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 1996 but did take action
in writing on one occasion.
Organization and Policy Committee. The Organization and Policy Committee
consists of two members: Ronald G. Joseph and John T. Lawrence III, neither
of whom is an officer or employee of AAG or any of its subsidiaries. Ronald
F. Walker serves as Chairman Emeritus for the Committee and does not
participate in decisions of the Committee. 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 Organization and Policy Committee held four
meetings in 1996.
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 retainer of $25,000 for Board
membership and an annual retainer of $5,000 for serving as Chairman of a
Board Committee. If the Directors' Plan is approved by stockholders, non-
employee directors will receive at least 50% of their retainers in Common
Stock. In addition, directors who are not employees of AAG are paid a fee
of $1,500 for attendance at each Board meeting, and $1,000 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 received 1,000 stock appreciation rights. The exercise
price of the stock appreciation rights was equal to the average market price
of AAG Common Stock for the ten trading days preceding the grant date. In
February 1997, the Board of Directors terminated the 1994 Directors' Stock
Appreciation Rights Plan and replaced it with the Directors' Stock Option
Plan. In connection with the termination of the 1994 Directors' Stock
Appreciation Rights Plan, each non-employee director was granted an option
to purchase 10,078 shares of Common Stock at $14.38 per share. Pursuant to
the Directors' Stock Option Plan, each March 1, each non-employee director
will receive a stock option to purchase 1,000 shares of AAG Common Stock,
with an exercise price based on 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, 1996 paid to the chief executive
officer and the other four most highly compensated executive officers of
AAG.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Long-Term
Annual Compensation Compensation
Other Securities
Name and Annual Underlying All Other
Principal Compen- Options/ Compen-
Position Year Salary Bonus sation(b) SARs (c) sation (d)
<S> <C> <C> <C> <C> <C> <C>
Carl H. Lindner 1996 $101,923 -- $5,685 -- --
Chairman of the 1995 $101,923 -- $3,956 -- --
Board and Chief 1994 $101,923 -- -- -- --
Executive
Officer (a)
S. Craig Lindner 1996 $330,231 $407,000 $735 -- --
President 1995 $318,000 $414,000 $1,915 -- --
1994 $296,157 $422,400 -- 175,000 --
Robert A. Adams 1996 $499,423 $445,500 $49,799 476,004 $29,965
Executive Vice 1995 $479,039 $448,500 $34,527 75,000 $30,000
President and 1994 $454,808 $450,000 $30,394 175,000 $30,000
Chief Operating
Officer
William J. Maney 1996 $184,481 $115,500 $3,284 127,145 $11,069
Senior Vice 1995 $176,327 $115,000 $11,769 20,000 $17,480
President, 1994 $166,252 $120,000 $1,602 20,000 $17,175
Treasurer and
Chief Financial
Officer
Jeffrey S. Tate 1996 $184,481 $115,500 $7,853 127,145 $11,069
Senior Vice 1995 $171,231 $115,000 $4,720 20,000 $17,174
President 1994 $159,233 $108,000 $3,154 20,000 $16,034
<FN>
(a) In his capacity as Chief Executive Officer of AAG, Mr. Lindner is
paid a base annual salary of $100,000. Mr. Lindner did not
participate in any other compensation plans of AAG.
(b) The amounts listed under "Other Annual Compensation" for 1996 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 - $15,110 and $5,357, Mr.
Maney - $565 and $1,086, and Mr. Tate - $2,092 and $412. The amounts
for 1996 also include spousal travel reimbursement of $13,364 for Mr.
Adams and $2,899 for Mr. Tate. The amount for Mr. Adams also
includes an auto allowance of $14,400. The amounts for Messrs. Carl
Lindner and S. Craig Lindner reflect premiums paid for group life
coverage in excess of $50,000.
(c) Amounts for 1996 include options which were granted in connection
with a program whereby holders of SARs were given the opportunity to
exercise their SARs and were granted a stock option to purchase that
number of shares of AAG Common Stock as was equal to the number of
SARs exercised by such person less the number of shares of AAG Common
Stock issued to such person upon exercise of the SARs. The number of
options issued to each person pursuant to this program are as
follows: Mr. Adams - 366,004, Mr. Maney - 82,145 and Mr. Tate -
82,145.
(d) Amounts listed under "All Other Compensation" for each of the named
persons reflect amounts contributed to the AAG ESORP and AAG
Auxiliary ESORP.
</TABLE>
Stock Appreciation Rights ("SAR") grants for the year ended December 31,
1996 for the Executive Officers named in the Summary Compensation Table are
as follows:
<TABLE>
<CAPTION>
SAR GRANTS IN 1996
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 -- -- -- -- -- -- --
Robert A.
Adams 50,000 15.5% $11.25 2/7/2006 $37,500 $414,837 $993,745
William J.
Maney 20,000 6.2% $11.25 2/7/2006 $15,000 $165,935 $397,498
Jeffrey S.
Tate 20,000 6.2% $11.25 2/7/2006 $15,000 $165,935 $397,498
<FN>
(a) The Potential Realizable Value is calculated based on a market price
for the AAG Common Stock on February 7, 1996, the date of grant of
the SARs, of $12.00 per share.
(b) The closing price for AAG Common Stock on February 7, 1996, the date
of grant of the SARs, was $12.00 per share.
</TABLE>
SARs exercised during the year ended December 31, 1996 by the Executive
Officers named in the Summary Compensation Table are as follows:
AGGREGATED SAR EXERCISES IN 1996
AND SAR VALUES AT DECEMBER 31, 1996
Number of
Securities Value of
Underlying Unexercised
Unexercised In-the-Money
SARs at Fiscal SARs at Fiscal
Year End Year End
SARs
Exercised Value Exercisable/ Exercisable/
Name (a) Realized Unexercisable Unexercisable
Carl H.
Lindner -- -- -- --
S. Craig
Lindner -- -- -- --
Robert A.
Adams 425,000 $1,563,375 -- --
William J.
Maney 95,000 $340,650 -- --
Jeffrey S.
Tate 95,000 $340,650 -- --
[FN]
(a) The SARs were exercised on November 29, 1996 in
connection with a program whereby holders were
given the opportunity to exercise their SARs and
were granted a stock option to purchase that number
of shares of AAG Common Stock as was equal to the
number of SARs exercised by such person less the
number of shares of AAG Common Stock issued to such
person upon exercise of the SARs.
Stock option grants for the year ended December 31, 1996, for the
Executive Officers named in the Summary Compensation Table are as follows:
<TABLE>
<CAPTION>
STOCK OPTION GRANTS IN 1996
Potential Realizable Value at
Assumed Annual Rates of Stock Price
Individual Grants Appreciation for Stock Option Term(a)
% of Total
Stock Options
Stock Granted to
Options Employees in Exercise Expiration
Name Granted Fiscal Year Price(b) Date(c) 0% 5% 10%
<S> <C> <C> <C> <C> <C> <C> <C>
Carl H.
Lindner -- -- -- -- -- -- --
S. Craig
Lindner -- -- -- -- -- -- --
Robert A.
Adams 366,004(d) 23.6% $13.25 11/29/2006 0 $3,049,858 $7,728,939
60,000 3.9% $13.75 12/19/2006 0 $518,838 $1,314,838
William
J. Maney 82,145(d) 5.3% $13.25 11/29/2006 0 $684,502 $1,734,663
25,000 1.6% $13.75 12/19/2006 0 $216,183 $547,849
Jeffrey
S. Tate 82,145(d) 5.3% $13.25 11/29/2006 0 $684,502 $1,734,663
25,000 1.6% $13.75 12/19/2006 0 $216,183 $547,849
<FN>
(a) The Potential Realizable Value is calculated based on a market price
for AAG Common Stock of $13.25 for stock options granted on November
29, 1996 and $13.75 for stock options granted on December 19, 1996.
(b) The closing price for AAG Common Stock on November 29, 1996 was
$13.25 and on December 19, 1996 was $13.75.
(c) The stock options become exercisable to the extent of 20% on each of
the first five anniversaries of the date of grant.
(d) These options were granted in connection with a program whereby
holders of SARs were given the opportunity to exercise their SARs and
were granted a stock option to purchase that number of shares of AAG
Common Stock as was equal to the number of SARs exercised by such
person less the number of shares of AAG Common Stock issued to such
person upon exercise of the SARs.
</TABLE>
The following table contains information on the value of unexercised
options as of December 31, 1996:
AGGREGATED OPTION EXERCISES IN 1996
AND OPTION VALUES AT DECEMBER 31, 1996
Number of Value of
Securities Unexercised
Underlying In-the-Money
Unexercised Options At
Options at Fiscal Year
Fiscal Year End End (a)
Options Value Exercisable/ Exercisable/
Name Exercised Realized Unexercisable Unexercisable
Carl H.
Lindner -- -- -- --
S. Craig
Lindner -- -- -- --
Robert A.
Adams -- -- 0/426,004 0/$344,884
William J.
Maney -- -- 0/107,145 0/$81,788
Jeffrey S.
Tate -- -- 0/107,145 0/$81,788
[FN]
(a) The Value of Unexercised In-the-Money Options at Fiscal Year End
is calculated based on a market price for AAG Common Stock on
December 31, 1996, of $14.13 per share.
There were no stock options exercised during the year ended December 31,
1996.
Organization and Policy Committee Report
The Organization and Policy Committee of AAG's Board of Directors consists
of two directors, neither 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.
AAG's cash compensation for executive officers in 1996 was comprised
principally of annual base salaries and payments pursuant to the 1996
Corporate Bonus Plan. The grant of stock appreciation rights and stock
options 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.
1996 Corporate Bonus Plan. Each of the named executive officers, other
than Carl H. Lindner, was eligible to participate in the 1996 Corporate
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 1996 are amounts awarded to participating executive officers in
December 1996. In some cases, bonuses were not paid until January 1997. In
most cases, bonuses were paid at the rate of 110% 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 improvements in
the Company's capital structure.
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 AFG and its affiliates. In
establishing Mr. Lindner's salary, the Committee gave consideration to the
Company's long-term performance. During 1996, Mr. Lindner did not
participate in any other compensation plans or arrangements of AAG.
Stock Appreciation Rights and Stock Options . SARs and stock options
represent a performance-based portion of the Company's compensation system.
The Committee believes that stockholders' interests are well served by
aligning the interests of the Company's executive officers with those of
stockholders by the grant of SARs and stock options. In November 1996, the
Company began issuing stock options rather than SARs and terminated the SAR
plan. As of December 31, 1996, there were no SARs outstanding. SARs were
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 became
exercisable at the rate of 20% per year. Incentive stock options are
granted with an exercise price equal to the fair market value of AAG Common
Stock on the date of grant and also 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. 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 1996
compensation.
Members of the Organization and Policy Committee:
Ronald G. Joseph
John T. Lawrence III
Organization and Policy Committee Interlocks and Insider Participation.
The members of the Organization and Policy Committee are Ronald G. Joseph
and John T. Lawrence III, neither of whom was during 1996 or prior years an
officer or employee of AAG or any of its subsidiaries. Ronald F. Walker
serves as Chairman Emeritus of the Committee and does not participate in
decisions of the Committee. Until April 1995, Mr. Walker was 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. AFG beneficially owns 81.2% of the outstanding shares of AAG Common
Stock. See "Certain Transactions" for additional information concerning
relationships between AAG and AFG 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 AFG.
The Compensation Committee of AFG's Board of Directors sets the compensation
which Mr. Walker receives from AFG.
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 1991 to the end
of 1996. The graph assumes $100 invested on December 31, 1991 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
1991 1992 1993 1994 1995 1996
American Annuity Group, Inc. 100 91 146 142 178 211
S&P LIFE 100 134 136 113 162 198
S&P 500 100 108 118 120 165 203
Certain Transactions
AAG and AMM, a wholly-owned subsidiary of AFG, are parties to an
Investment Services Agreement pursuant to which AMM provides investment and
custodial services to AAG's insurance subsidiaries in accordance with
guidelines approved by AAG's directors who are not affiliated with AFG.
AAG and its subsidiaries pay AMM an annual fee of .10% of total invested
assets (as defined), provided that such fee does not exceed the actual cost
to AMM of providing such services, and AMM is reimbursed for certain
expenses. Investment expenses charged by AMM to AAG and its subsidiaries
were $4.7 million in 1996. In connection with the purchase of GALIC by AAG,
GAI agreed to neutralize the financial impact on GALIC of the adoption of an
actuarial guideline that was under consideration at the time of the
transaction. This actuarial guideline was subsequently adopted with an
effective date of December 31, 1995. In fulfillment of its commitment, on
December 28, 1995, GAI agreed that until December 31, 1997, it would
purchase shares of Series B Preferred Stock of AAG in amounts necessary to
neutralize the estimated impact of the adoption of this actuarial guideline.
In addition, AMM agreed to reduce the fees owed by AAG and its subsidiaries
under certain circumstances. In December 1996 and 1995, GAI purchased $21.7
million and $17 million, respectively, of Series B Preferred Stock. AFC
bought an additional $10.3 million of Series B Preferred Stock from AAG on
December 31, 1996 in connection with this obligation. The balance of the
Series B Preferred Stock, if any, necessary to neutralize the impact of this
actuarial guideline may be purchased prior to December 31, 1997.
AAG, GALIC and certain of their subsidiaries 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, these 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 indentures, 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 1996, AAG and its subsidiaries which are included in the AFC
consolidated tax group incurred income tax expense of $8.3 million. In
1996, AAG paid AFC $22.7 million in tax allocation payments, which included
amounts related to 1995.
GAI leases office space in a building owned by GALIC in Cincinnati, Ohio,
under a lease which expires in March 2009. GALIC recorded rental income of
approximately $1 million from GAI in 1996. In 1996, AAG made net payments
of approximately $600,000 to Chiquita for the sublease of certain office
space and other facilities in Cincinnati, Ohio. The payments to Chiquita
are net of approximately $100,000 received by AAG from Chiquita for the
early cancellation of a sublease.
It was determined in 1992 that the agreements governing the Company's 1987
spin-off from American Premier Underwriters, Inc. ("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 Company paid approximately $350,000 to APZ with respect to
this liability during 1996.
AAG purchased various property and casualty insurance from GAI and paid
$67,000 in premiums in 1996.
AAG and subsidiaries purchased airline tickets and travel related services
through a travel agency subsidiary of AFG in 1996 for $1.3 million. This
amount includes the portion ultimately paid to the airlines or other service
provider.
GALIC is a participating lender in a credit facility made available to New
Energy Company of Indiana Limited Partnership, the general partner of which
is 28% owned by Chiquita Brands International. New Energy Company is
engaged in the production of ethanol. Outstanding loans bear interest at
the prime rate plus 3%. The highest outstanding balance owed to GALIC
during 1996 was $900,000 and the balance owed to GALIC at year-end 1996 was
$600,000.
GALIC is a participating lender under a credit agreement with American
Heritage Holding Corporation, a Florida-based home builder which is 49%
owned by AFG. Outstanding loans bear interest at 13% per annum. The
highest outstanding balance owed to GALIC during 1996 and the balance at
year-end 1996 was $2.1 million.
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. GAI reimbursed GALIC $1.2 million in 1996
for certain of the assessments.
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
Company's principal offices 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, 3 and 4.
If 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 eight nominees receiving the highest number of votes will be elected
as directors.
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 1994 Stock Option Plan),
Proposal 3 (relating to the 1997 Directors' Stock Option Plan) and Proposal
4 (relating to the Directors' Compensation Plan). If Proposals 2, 3 or 4
are not approved, any stock options or shares issued pursuant to those plans
will be cancelled.
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, 1996. Ernst & Young also
serves as independent auditors for AFG 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 AFG
and its subsidiaries not to select independent auditors prior to the annual
stockholders meeting.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act requires AAG's officers, directors and
persons who own more than ten percent of AAG's Common Stock to file reports
of ownership with the Securities and Exchange Commission and to furnish AAG
with copies of these reports. Based solely upon its review of reports
received by it, or upon written representation from certain reporting
persons that no reports were required, AAG believes that during fiscal 1996
all filing requirements were met, except for one filing by Robert A. Adams
reporting the purchase of 3,000 shares of AAG Common Stock which was filed
three days after the due date.
Nominations and Stockholder Proposals for 1998 Annual Meeting
The Organization and Policy 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 for nomination at the next
Annual Meeting of Stockholders. Stockholders may also make nominations for
director by complying with the procedures described above under the caption
"Nominees for Director."
Proposals of stockholders intended to be presented at the 1998 Annual
Meeting of Stockholders must be received by AAG not later than December 1,
1997 in order to be considered for inclusion in AAG's proxy statement for
that meeting. Any such proposal should be communicated in writing to the
Secretary of AAG at the Company's principal offices.
Annual Report and Form 10-K Report
An annual report for the year ended December 31, 1996, 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 1996 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, 1997
Annex 1
AMERICAN ANNUITY GROUP, INC.
1997 DIRECTORS' STOCK OPTION PLAN
1. PURPOSE
The purpose of the American Annuity Group 1997 Directors Stock Option Plan
(the "Plan") is to aid American Annuity Group (the "Company") in attracting
and retaining directors of outstanding competence, dedication and loyalty.
Consistent with this objective, the Plan provides for the grant to non-
employee directors of options to purchase ("Options") shares of the Common
Stock, $1.00 par value per share, of the Company (the "Common Stock") pu-
rsuant to the terms and conditions hereinafter set forth. No Options
granted under the Plan shall be qualified under Section 422 of the Internal
Revenue Code of 1986, as amended (the "Code") and the regulations
promulgated thereunder. As used herein, the term "Subsidiary" means any
domestic or foreign corporation, at least 50% of the outstanding voting
stock or voting power of which is beneficially owned, directly or
indirectly, by the Company.
2. EFFECTIVE DATE
The Plan was approved by the Board of Directors of the Company (the "Board
of Directors") and became effective on February 13, 1997 (the "Effective
Date").
3. ADMINISTRATION
The Plan shall be administered by the Organization and Policy Committee of
the Board of Directors or such other committee appointed by the Board of
Directors (the "Committee"). The Committee will consist of three or more
directors who may also be eligible to participate in the Plan. The
Committee has the authority to (I) interpret the provisions of the Plan and
decide all questions of fact arising in its application and (ii) prescribe
such rules and procedures for Plan administration as from time to time it
may deem advisable.
4. ELIGIBILITY
Options under the Plan shall be granted only to persons who are directors
of the Company and who are not employees of the Company or a Subsidiary. No
Options under the Plan shall be granted to any person who is an employee of
the Company or a Subsidiary.
5. GRANT OF OPTIONS
Options shall automatically be granted pursuant to the terms of this
Section without further action by the Board of Directors. The date on which
Options are granted hereunder shall be referred to herein as the "Date of
Grant."
5.1 On the Effective Date, each person serving as a director of the
Company who is not an employee of the Company or a Subsidiary shall be
granted Options for 10,078 shares of Common Stock.
5.2 On each March 1 following the Effective Date during the term of the
Plan, each person serving as a director of the Company on such date who is
not an employee of the Company or a Subsidiary shall be granted Options for
1,000 shares of Common Stock.
5.3 Each person who is elected as a director of the Company, who (i) was
not a director of the Company on the Effective Date, and (ii) is not an
employee of the Company or a Subsidiary on the date of election as a
director, shall be granted Options for 10,000 shares of Common Stock on the
date such person is elected a director.
5.4 All Options granted pursuant to the Plan shall have a Grant Price
determined pursuant to Section 7.1 hereof.
6. AVAILABLE OPTIONS
Except as otherwise required or permitted by Paragraph 6.2, the aggregate
number of shares obtainable upon exercise of Options which may be granted
under the Plan shall not exceed 500,000. If an Option expires, terminates,
is forfeited or is otherwise surrendered, in whole or in part, the shares
allocable to such Option shall again become available for grant under the
Plan.
7. TERMS AND CONDITIONS OF OPTIONS
7.1 Stock Option Agreement. Each Option granted pursuant to the Plan
shall be evidenced by a written agreement (the "Agreement") between the
Company and the person to whom the Option is granted (the "Grantee") in such
form or forms as the Committee, from time to time, shall prescribe, which
shall comply with and be subject to the terms and conditions of this Para-
graph 7. In addition, the Committee may, in its absolute discretion,
include in any such Grant other terms, conditions and provisions that are
not inconsistent with the express provisions of the Plan.
7.2 Option Price. The initial price at which each Option may be granted
on the Effective Date shall be $14.38. Thereafter, the price at which each
Option is granted under the Plan shall be the average of the means between
the high and low sales prices for shares of the Common Stock for the ten
consecutive trading days immediately preceding the Date of Grant as reported
on the New York Stock Exchange Composite Tape (or the principal market on
which the Common Stock is traded, if the Common Stock is not listed on that
exchange at any time during such ten day period). The price at which an
Option is granted is the "Option Price." Notwithstanding the foregoing, if
the number of shares of Common Stock subject to any Option is adjusted
pursuant to Paragraph 6.2 hereof, a corresponding adjustment shall be made
to the Option Price.
7.3 Duration of Options. Each Option granted under the Plan shall expire
and all rights pursuant thereto shall cease on the date which shall be the
tenth anniversary of the Date of Grant (the "Expiration Date").
7.4 Vesting of Options. Each Option granted hereunder may be exercised
to the extent that the Grantee is vested in such Option. The Options will
vest according to the following schedule:
Shares
Rep-
resented
Number of Years the Grantee has remained a by an
director Option in
of the Company following the Date of Grant which a
Grantee is
Vested
Under one . . . . . . . . . . . . . . . . . . . 0%
At least one but less than two . . . . . . . . 20%
At least two but less than three . . . . . . . 40%
At least three but less than four . . . . . . . 60%
At least four but less than five . . . . . . . 80%
Five or more . . . . . . . . . . . . . . . . . 100%
Anything contained in this Paragraph 7.3 to the contrary notwithstanding,
a Grantee shall become fully (100%) vested in each of his or her Options
under the following circumstances: (i) upon termination of the Grantee's
service as a director of the Company for reasons of death, Disability or
Retirement (as such terms are defined in Paragraphs 7.7.4 and 7.7.5); (ii)
if the Committee, in its sole discretion, determines that acceleration of
the Option vesting schedule would be desirable for the Company; or (iii) if
such Options vest pursuant to Paragraph 7.4.
7.5 Exercise of Options. A person entitled to exercise an Option may
exercise it to the extent vested by providing written notice of exercise to
the Secretary of the Company. Such written notice shall specify the number
of shares of Common Stock with respect to which the Option is being
exercised and shall be accompanied by payment in full of the Option Price
for such shares. The date of exercise of an Option or portion thereof shall
be the date of receipt by the Company of such written notice provided,
however, that for purposes of an issuance of shares upon exercise, the date
of issuance shall be as soon as practicable after exercise but shall be no
earlier than a date which is at least ten (10) business days after receipt
of notice of exercise. Until shares are actually issued, those shares shall
not be deemed outstanding for any purpose.
7.5.1 Payment of Option Price. Payment for shares purchased upon
exercise of an Option may be made
(i) in cash (including a check, bank draft or money order),
(ii) by the tender of Common Stock held by the Grantee, which Common
Stock tendered shall be valued at the last sale price reported on the
New York Stock Exchange Composite Tape (or the principal market on
which the Common Stock is traded, if the Common Stock is not then
listed on that exchange);
(iii)a combination of (I) and (ii) above;
(iv) instructions by the Grantee to the Company to withhold from
Common Stock issuable upon exercise that number of shares which are
valued on the date of exercise equal to the exercise price for the
Option or portion thereof being exercised, which Common Stock shall
be valued as set forth in (ii) above; or
(v) with the approval of the Committee, by any other method or in
any other form authorized by the Committee and reflected in the
related Stock Option Agreement or in any written notice relative
thereto as may be from time to time delivered by the Committee to the
Grantee.
7.6 Nontransferability. Options shall not be transferable other than by
will, the laws of descent and distribution or pursuant to a qualified
domestic relations order as defined by the Code or Title I of the Employee
Retirement Income Security Act of 1974, as amended, ("ERISA") and may be
exercised, during the lifetime of the Grantee, only by the Grantee.
7.7 Termination of Service as a Director. Unless otherwise determined by
the Committee, the following rules shall apply in the event of Grantee's
termination of service as a director of the Company.
7.7.1 Except as provided in Paragraph 7.7.4 or 7.7.5, in the event of
a Grantee's termination of service as a director of the Company either (1)
as a result of his removal as a director for cause or (2) as a result of
resignation of the director, his or her Option shall immediately
terminate.
7.7.2 In the event of the Grantee's termination of service as a
director under circumstances other than those specified in Paragraph 7.7.1
hereof and for reasons other than death, Disability (as defined in
Paragraph 7.7.4) or Retirement (as defined in Paragraph 7.7.5), his or her
Options shall terminate on the date which is 90 days from the date of such
termination of service as a director or on its Expiration Date, whichever
shall first occur.
7.7.3 In the event of the death of a Grantee while he or she is
serving as a director of the Company, such Option shall terminate on the
first anniversary of the Grantee's death or on its Expiration Date,
whichever shall first occur.
7.7.4 In the event of the Grantee's termination of service as a
director due to mental or physical infirmity of the Company
("Disability"), his or her Options shall terminate on first anniversary of
such Disability, or on its Expiration Date, whichever shall first occur.
7.7.5 In the event that the Grantee's service as a director terminates
after five or more years of service as a director ("Retirement"), his or
her Options shall terminate on the second anniversary of the date of such
Retirement or on its Expiration Date, whichever shall first occur.
7.7.6 Anything contained in this Paragraph 7.7 to the contrary
notwithstanding, an Option may only be exercised following the Grantee's
termination of service as a director for reasons other than death,
Disability or Retirement if, and to the extent that, such Option was
exercisable immediately prior to such termination service as a director.
7.8 No Rights as Stockholder or to Continue as a Director. No Grantee
shall have any rights as a stockholder of the Company with respect to any
shares of Common Stock prior to the date of issuance to him or her of a
certificate representing such shares issued pursuant to Paragraph 7.5.2, and
neither the Plan nor any Option granted under the Plan shall confer upon a
Grantee any right to continue to serve as a director.
8. ADJUSTMENTS TO SHARES AND OPTION PRICE
The total number and character of shares available for Options under the
Plan, the number and character of shares subject to outstanding Options and
the Option Price shall be appropriately adjusted by the Committee in the
event of any change in the number or character of outstanding shares of
Common Stock resulting from a stock dividend, subdivision or combination of
shares or reclassification. In the event of a merger or consolidation of
the Company or a tender offer for shares of Common Stock, the Committee may
make such adjustments with respect to Options under the Plan and take such
other actions as it deems necessary or appropriate to reflect, or in
anticipation of, such merger, consolidation or tender offer, including,
without limitation, the substitution of new Options, the termination or
adjustment of outstanding Options, the acceleration of Options, or the
removal of limitations or restrictions on outstanding Options.
9. ISSUANCE OF SHARES; RESTRICTIONS
9.1 Unless any shares of Common Stock to be issued by the Company under
the Plan have been registered under the Securities Act of 1933 (the
"Securities Act"), and, in the case of any Grantee who may be deemed an
"affiliate" of the Company as defined in Rule 405 under the Securities Act,
such shares have been registered under the Securities Act for resale by such
Grantee, or unless the Company has determined that an exemption from
registration is available, the Company may require prior to and as a
condition of the issuance of any shares of Common Stock that the person
receiving such shares hereunder furnish the Company with a written
representation in a form prescribed by the Committee to the effect that such
person is acquiring such shares solely with a view to investment for his or
her own account and not with a view to the resale or distribution of all or
any part thereof, and that such person will not dispose of any of such
shares otherwise than in accordance with the provisions of Rule 144 under
the Securities Act unless and until either the shares are registered under
the Securities Act or the Company is satisfied that an exemption from such
registration is available.
9.2 Anything contained herein to the contrary notwithstanding, the
Company shall not be able to issue any shares of Common Stock under the Plan
unless and until the Company is satisfied that such sale or issuance
complies with (i) all applicable requirements of the New York Stock Exchange
(or the governing body of the principal market in which the Common Stock is
traded, if the Common Stock is not then listed on that exchange), (ii) all
applicable provisions of the Securities Act and (iii) all other laws or
regulations by which the Company is bound or to which the Company is
subject.
10. TERM OF THE PLAN
Unless the Plan has been sooner terminated pursuant to Paragraph 10
hereof, the Plan shall terminate on, and no Options shall be granted after
the tenth anniversary of the Effective Date. The provisions of the Plan,
however, shall continue thereafter to govern all Options theretofore
granted, until the exercise, expiration or cancellation of the Options.
11. AMENDMENT AND TERMINATION OF PLAN
The Board of Directors at any time may terminate or suspend the Plan or
amend it from time to time in such respects as it deems desirable; provided
that, without the further approval of the stockholders no amendment shall
cause the Plan to fail to satisfy the conditions of an exempted plan under
Rule 16b-3, and provided further that, subject to the provisions of
Paragraph 8 hereof, no termination of or amendment to the Plan shall
adversely affect the rights of any participant without the consent of such
participant, as the case may be. In addition, the provisions of the Plan
shall not be amended more than once every six months, other than to comport
with changes to the Code, ERISA, or the rules thereunder.
12. STOCKHOLDER APPROVAL
This Plan and any Grants made hereunder are conditioned upon approval of
the Plan at the 1997 Annual Meeting of Stockholders of the Company. If such
approval is not obtained, the Plan and any Grants made hereunder shall
automatically terminate and be of no further force or effect and a Grantee
shall have no rights under the Plan or any Grant.
Annex 2
AMERICAN ANNUITY GROUP, INC.
DIRECTORS COMPENSATION PLAN
PREAMBLE
This Directors Compensation Plan ("Plan") has been adopted by the Board of
Directors of American Annuity Group, Inc. (the "Company") in order to align
further the interests of the Company's non-employee directors with the
interests of stockholders by providing that a minimum of 50% of such
directors' annual retainers are paid through the issuance of shares of
common stock of the Company.
Directors who are not officers or employees of the Company are paid an
annual retainer ("Board Retainer"), an additional annual Board Committee
Chairmanship retainer ("Committee Retainer") and an attendance fee for each
Board or Committee meeting attended ("Meeting Fees"), in amounts which shall
be set by the Board of Directors. The initial amounts established by the
Board of Directors for the retainers and fees are set forth on the attached
Schedule 1. These amounts may be changed by the Board of Directors from
time to time without shareholder approval.
1. PAYMENT OF COMPENSATION TO NON-EMPLOYEE DIRECTORS.
The Board Retainer and Committee Retainer shall be paid by the Company
quarterly, in arrears, as soon as practicable following the end of each
quarter. The quarterly portion of the Board Retainer and Committee Retainer
(if applicable) shall be paid 50% in cash and 50%, or in such percentage as
an eligible director may elect pursuant to Section 2 below, in the form of
shares of the Company's common stock, par value $1.00 per share ("Common
Stock").
The number of shares of Common Stock to be issued pursuant to this Plan
shall be determined by dividing the amount of the retainers payable in
Common Stock by the average of the per share Fair Market Value of the Common
Stock (as defined in Section 3 below) for the ten trading days immediately
prior to the end of each quarter; the resulting number shall then be rounded
up to the nearest share.
The Meeting Fees accrued during any quarter, if any, shall be paid by the
Company at the end of such quarter in cash, along with the cash portion of
the applicable quarterly retainers.
2. ELECTION BY NON-EMPLOYEE DIRECTORS TO RECEIVE CASH PORTION OF THEIR
COMPENSATION IN ADDITIONAL COMPANY COMMON STOCK.
Each non-employee director may elect to receive all or a portion (in 20%
increments) of the quarterly cash portion of their applicable retainers for
Board services in shares of Common Stock. Such election shall be
irrevocable for each quarter and shall be made at least six months in
advance of the date the non-employee director is to receive the quarterly
payment.
3. FAIR MARKET VALUE OF COMPANY COMMON STOCK.
"Fair Market Value" means the last sale price reported on any stock
exchange or over-the-counter trading system on which the Common Stock is
trading on the last trading day prior to a specified date or, if no last
sales price is reported, the average of the closing bid and asked prices for
a share of Common Stock on a specified date. If no sale has been made on
any date, then prices on the last preceding day on which any such sale shall
have been made will be used in determining Fair Market Value under either
method prescribed in the previous sentence.
4. RESTRICTIVE LEGEND; HOLDING PERIOD FOR SHARES OF COMMON STOCK.
In order to comply with certain provisions of the Federal securities
laws, all certificates representing shares of Common Stock issued pursuant
to this Plan shall bear the following restrictive legend which will prevent
the recipient from disposing of such shares for six months from the date of
issuance:
THE SHARES OF COMMON STOCK REPRESENTED BY THIS CERTIFICATE MAY NOT BE
OFFERED, SOLD, TRANSFERRED, PLEDGED, HYPOTHECATED OR OTHERWISE ASSIGNED
UNTIL THE EXPIRATION OF THE SIX MONTH PERIOD BEGINNING ON THE DATE OF
ORIGINAL ISSUANCE OF THIS CERTIFICATE BY AMERICAN ANNUITY GROUP, INC. (THE
"COMPANY") AS PROVIDED BY SECTION 4 OF THE COMPANY'S DIRECTORS'
COMPENSATION PLAN EFFECTIVE AS OF MAY 23, 1996. A COMPLETE AND CORRECT
COPY OF THE FORM OF WHICH WILL BE FURNISHED BY THE COMPANY TO THE HOLDER
HEREOF UPON REQUEST.
When the legend requirement imposed by this Section shall terminate, the
holder of shares of Common Stock for which such legend requirements have
terminated may request that the Company (at its expense) promptly issue
replacement certificates representing such shares without such legend.
5. NO RIGHT TO CONTINUANCE AS A DIRECTOR.
Neither the action of the company in establishing this Plan, nor the
issuance of Common Stock shall be deemed to create any obligation on the
part of the Board to nominate any non-employee director for re-election by
the Company's stockholders or to be evidence of any agreement or
understanding, express or implied, that the non-employee director has a
right to continue as a director for any period of time or at any particular
rate of compensation.
6. SHARES SUBJECT TO THE PLAN.
One Hundred Thousand shares of Common Stock are authorized for issuance
under this Plan in accordance with the provisions hereof. The Company shall
at all times during the term of the Plan retain as authorized and unissued
Common Stock at least the number of shares from time to time required under
the provisions of the Plan, or otherwise assure itself of its ability to
perform its obligations hereunder through the acquisition of outstanding
shares.
7. EFFECTIVE DATE AND EXPIRATION OF PLAN.
This Plan shall be effective as of the date of adoption by the Board of
Directors ("Effective Date"). The Plan is subject to approval by the
affirmative vote of the holders of a majority of the shares of Common Stock
present, or represented, and entitled to vote at the next Annual Meeting of
Stockholders held after the Effective Date. Any issuance of shares pursuant
to this Plan is conditioned upon stockholder approval at such meeting. Any
shares issued pursuant to this Plan prior to stockholder approval may not be
sold or transferred prior to receipt of such approval. If the Plan is not
approved at such meeting, the Plan shall terminate immediately as of such
date and any shares issued shall be cancelled as of that date and the
directors as to whom such shares were issued shall be paid in cash, without
interest, the amount of Board Retainer and Committee Retainer which was
originally paid in Common Stock. Unless earlier terminated by the Board
pursuant to Section 9, this Plan shall terminate on the tenth anniversary of
the Effective Date. No shares of Common Stock shall be issued pursuant to
this Plan after its termination date.
8. PAYMENT IN EVENT OF DEATH.
If a non-employee director dies (before or after his or her retirement),
any portion of his or her compensation pursuant to this Plan (whether or not
deferred) then unpaid shall be paid to the beneficiaries named in the most
recent beneficiary designation filed with the Secretary of the Company. In
the absence of such a designation, such compensation shall be paid to, or as
directed by, his or her personal representative.
9. AMENDMENT, SUSPENSION, AND TERMINATION OF PLAN.
The amount, pricing and timing of Company Common Stock issuances pursuant
to this Plan shall not be amended more than once every six months, other
than to comport with changes in the Internal Revenue Code, the Employee
Retirement Income Security Act of 1974, as amended, or the rules thereunder.
The Board may suspend or terminate this Plan or any portion of it at any
time, and may amend it, subject only to the preceding paragraph, from time
to time in such respects as the Board may deem advisable in order that any
awards hereunder shall conform to any change in applicable laws or
regulations or in any other respect the Board may deem to be in the best
interests of the Company; provided, however, that no such amendment shall,
without stockholder approval, increase the number of shares of Common Stock
which may be issued under the Plan, materially modify the requirements as to
eligibility for participating in the Plan, or extend the termination date of
the Plan.
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 22, 1997 at 10:00 a.m., Eastern 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 III William R. Martin
A. Leon Fergenson Carl H. Lindner Ronald F. Walker
Ronald G. Joseph S. Craig Lindner
2. Approval of an amendment to the AAG 1994 Stock Option Plan to
increase the maximum number of options to be granted from 1,500,000
to 2,000,000.
/ / FOR / / AGAINST / / ABSTAIN
3. Approval for the AAG 1997 Directors' Stock Option Plan.
/ / FOR / / AGAINST / / ABSTAIN
4. Approval of the AAG Directors' Compensation Plan.
/ / FOR / / AGAINST / / ABSTAIN
DATE: ___________________, 1997 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.
