SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the registrant [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 Rule 14a-11(c) or Rule 14a-12
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
E.W. BLANCH HOLDINGS, INC.
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(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transactions applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11. (Set forth the amount on which the
filing fee is calculated and state how it was determined.)
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
(1) Amount previously paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing party:
(4) Date filed:
<PAGE>
E.W. BLANCH HOLDINGS, INC.
- --------------------------------------------------------------------------------
3500 West 80th Street
Minneapolis, Minnesota 55431
March 20, 1998
Dear Shareholder:
You are cordially invited to attend the Annual Meeting of Shareholders of E. W.
Blanch Holdings, Inc. to be held at LeMeridien, 650 N. Pearl Street, Dallas,
Texas 75201, on Thursday, April 23, 1998, at 10:30 A.M. Central Daylight Time.
I encourage you to attend. Whether or not you plan to attend the meeting, I
urge you to vote your proxy. On behalf of your Board of Directors, thank you
for your continued support of and interest in E. W. Blanch Holdings, Inc.
Sincerely,
/s/ Edgar W. Blanch, Jr.
Edgar W. Blanch, Jr.
Chairman and Chief Executive Officer
<PAGE>
E. W. BLANCH HOLDINGS, INC.
3500 WEST 80TH STREET
MINNEAPOLIS, MINNESOTA 55431
------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
APRIL 23, 1998
------------------
Notice is hereby given that the Annual Meeting of Shareholders of E. W.
Blanch Holdings, Inc. (the "Company") will be held at LeMeridien, 650 N. Pearl
Street, Dallas, Texas 75201, on Thursday, April 23, 1998, at 10:30 A.M. Central
Daylight Time for the following purposes:
1. To elect three Class II directors to serve until the Annual Meeting of
Shareholders in 2001 and until their respective successors are duly
elected and qualified;
2. To approve the E. W. Blanch Holdings, Inc. Management Incentive Plan;
3. To approve an amendment to the E. W. Blanch Holdings, Inc. 1993 Stock
Incentive Plan;
4. To ratify the appointment of Ernst & Young LLP as the Company's
independent auditors for the 1998 fiscal year; and
5. To act upon any other business that may properly be brought before the
Annual Meeting.
The close of business on March 9, 1998 has been fixed as the record date
for determining the shareholders entitled to notice of and to vote at the Annual
Meeting.
Your attention is directed to the accompanying Proxy Statement.
WHETHER OR NOT YOU PLAN TO BE PRESENT AT THE ANNUAL MEETING, PLEASE
COMPLETE, DATE AND SIGN THE ENCLOSED PROXY AND RETURN IT PROMPTLY IN THE
ENCLOSED ENVELOPE.
Enclosed for your information is the Company's Annual Report for the year
ended December 31, 1997.
By Order of the Board of Directors
/s/ Daniel P. O'Keefe
Daniel P. O'Keefe
SECRETARY
March 20, 1998
<PAGE>
E. W. BLANCH HOLDINGS, INC.
3500 WEST 80TH STREET
MINNEAPOLIS, MINNESOTA 55431
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PROXY STATEMENT
------------------
ANNUAL MEETING OF SHAREHOLDERS
APRIL 23, 1998
INFORMATION CONCERNING SOLICITATION AND VOTING
The enclosed proxy is solicited by the Board of Directors of E. W. Blanch
Holdings, Inc. (the "Company") for use at the Annual Meeting of Shareholders,
which will be held at 10:30 A.M. Central Daylight Time on Thursday, April 23,
1998, at LeMeridien, 650 N. Pearl Street, Dallas, Texas 75201, and at any
adjournment thereof.
The Board of Directors is aware of four items of business to be considered
at the Annual Meeting: (1) the election of three Class II directors to serve
until the Annual Meeting of Shareholders in 2001 and until their respective
successors are duly elected and qualified; (2) approval of the Company's
Management Incentive Plan; (3) approval of an amendment to the Company's 1993
Employee Stock Incentive Plan; (4) ratification of the appointment of Ernst &
Young LLP as the Company's independent auditors for the 1998 fiscal year. The
Board of Directors knows of no matters to be presented for action at the Annual
Meeting other than those mentioned above. However, if any other matters properly
come before the Annual Meeting, the persons named in the proxy will vote on such
other matters and/or for other nominees in accordance with their best judgment.
The Board of Directors recommends that an affirmative vote be cast in favor of
all of the proposals listed above.
The giving of a proxy does not preclude a shareholder from voting in person
at the Annual Meeting. The proxy is revocable before its exercise by delivering
either written notice of such revocation or a later dated proxy to the Secretary
of the Company at its executive office at any time prior to voting of the shares
represented by the earlier proxy. In addition, shareholders attending the Annual
Meeting may revoke their proxies by voting at the Annual Meeting. All returned
proxies that are properly signed and dated will be voted as the shareholder
directs. If no direction is given, executed proxies will be voted FOR election
of the Class II directors named herein, FOR approval of the Management Incentive
Plan, FOR approval of the amendment to the 1993 Stock Incentive Plan, and FOR
ratification of the appointment of Ernst & Young LLP as the Company's
independent auditors for the 1998 fiscal year.
Only shareholders of record at the close of business on March 9, 1998 are
entitled to vote at the Annual Meeting or any adjournment thereof. As of said
date, 12,629,555 shares of the Company's common stock, $.01 par value per share
(the "Common Stock"), were outstanding and entitled to one vote per share on all
matters submitted to shareholders. A list of shareholders will be available for
inspection for at least ten days prior to the Annual Meeting at the principal
executive offices of the Company at 3500 West 80th Street, Minneapolis,
Minnesota 55431 and at the Annual Meeting.
This proxy solicitation material is being mailed on or about March 18, 1998
to shareholders as of the record date with a copy of the Company's 1997 Annual
Report to Shareholders, which includes financial statements for the period ended
December 31, 1997.
Proxies will be voted at the Annual Meeting, or at any adjournment thereof,
at which a quorum is present, in accordance with the directions on the proxy
card. The holders of a majority of the Common Stock outstanding and entitled to
vote who are present either in person or represented by proxy will constitute a
quorum for the Annual Meeting.
<PAGE>
Directors are elected by a plurality of the votes cast. "Plurality" means
that the individuals who receive the largest number of votes cast "For" are
elected as directors up to the maximum number of directors to be chosen at the
Annual Meeting. Consequently, any shares not voted "For" a particular director
(whether as a result of a direction to withhold or a broker nonvote) will not be
counted in such director's favor.
All other matters to be acted on at the Annual Meeting require the
affirmative vote of a majority of the shares present at the meeting, in person
or by proxy, to constitute the action of the shareholders. If an executed proxy
card is returned and the shareholder has voted "abstain" on any matter (or
"withhold authority" as to the election of any Director), the shares represented
by such proxy will be considered present at the meeting for purposes of
determining a quorum and for purposes of calculating the vote, but will not be
considered to have been voted in favor of such matter. If an executed proxy is
returned by a broker holding shares in street name which indicates that the
broker does not have discretionary authority as to certain shares to vote on one
or more matters, such shares will be considered present at the meeting for
purposes of determining a quorum, but will not be considered to be represented
at the meeting for purposes of calculating the vote with respect to such
matters.
The expense of preparing, printing and mailing this Proxy Statement will be
paid by the Company.
ELECTION OF DIRECTORS
The Board of Directors is divided into three classes, being divided as
equally as possible and each class having a term of three years. Each year the
term of office of one class expires. This year the term of a class consisting of
three Directors expires. It is the intention of the Board that the shares
represented by proxy, unless otherwise indicated thereon, will be voted for the
reelection of James N. Land, Jr., Chris L. Walker, and Paul B. Ingrey as
Directors to hold office for a term of three years until the Annual Meeting of
Shareholders in 2001 and until their respective successors are duly elected and
qualified.
The persons designated as proxies reserve full discretion to cast votes for
other persons in the event any such nominee is unable to serve. However, the
Board of Directors has no reason to believe that any nominee will be unable to
serve if elected. The election of Directors requires a plurality of the votes
cast at the Annual Meeting, in person or by proxy. The proxies cannot be voted
for a greater number of persons than the three named nominees.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR EACH OF THE
NOMINEES.
The following sets forth information regarding each nominee and the
remaining Directors who will continue in office after the Annual Meeting.
NOMINEES FOR CLASS II DIRECTORS
(TERMS EXPIRING IN 2001)
JAMES N. LAND, JR. (68)--Mr. Land has served as a Director of the Company
since April 1993 and as a corporate financial consultant to a number of
companies since October 1976. Mr. Land currently serves on the Board of
Directors of The Raytheon Company. In addition, Mr. Land served on the
Executive Committee of the Board of Directors of The First Boston Corporation
from 1967 to 1976.
CHRIS L. WALKER (40)--Mr. Walker has served as President and Chief
Operating Officer of the Company since July 1995, as Executive Vice President
from March 1993 to July 1995 and as a Director of the Company since October
1994. Mr. Walker has been associated with predecessors of the Company since
1980. From 1985 to 1990, he served as Vice President, from 1990 to 1993, he
served as Senior Vice President, and from February 1993 to March 1993, he served
as Executive Vice President of those predecessors. He is currently serving as
Chairman of the Board and Chief Executive Officer of the Company's wholly owned
subsidiary, E. W. Blanch Co., Inc.
PAUL B. INGREY (58)--Mr. Ingrey has served as a Director of the Company
since January 1997. Mr. Ingrey retired in January 1997 from F&G Re, which he
helped found and where he served as
<PAGE>
Chairman of the Board and Chief Executive Officer from January 1996 until his
retirement. Prior to 1996, Mr. Ingrey served as President of F&G Re. F&G Re is a
reinsurance company and a division of United States Fidelity and Guaranty
Company.
CLASS I DIRECTORS
(TERMS EXPIRING IN 2000)
JOSEPH D. SARGENT (68)--Mr. Sargent has served as a Director of the
Company since April 1993. Mr. Sargent has served as Chairman of Connecticut
Surety Corporation since January 1993. Mr. Sargent served as the Chief
Executive Officer of Conning & Company from 1970 to 1990 and as Vice Chairman
until 1993. Connecticut Surety Corporation is a surety operation formed in
conjunction with the venture capital operations of Conning & Company. Mr.
Sargent is also the former Chairman of S-K-I Ltd., the largest publicly held
ski resort in the United States. He currently serves as a director of MMI
Companies, Inc., Trenwick Group, Inc., Policy Management Systems Corporation,
Mutual Risk Management Ltd. and Executive Risk, Inc.
FRANK S. WILKINSON, JR. (58)--Mr. Wilkinson has served as Executive Vice
President and a Director of the Company since its formation in March 1993. Mr.
Wilkinson has been associated with predecessors of the Company since 1969. From
1979 to 1993, he served as Executive Vice President of those predecessors. He
is currently serving as Chairman of the Board and Chief Executive Officer of
the Company's wholly owned subsidiaries, Paragon Reinsurance Risk Management
Services, Inc. and E. W. Blanch Capital Risk Solutions, Inc.
CLASS III DIRECTORS
(TERMS EXPIRING IN 1999)
EDGAR W. BLANCH, JR. (61)--Mr. Blanch has served as Chief Executive
Officer and Chairman of the Board of Directors of the Company since its
formation in March 1993. Mr. Blanch has been associated with predecessors of
the Company since 1958. From 1976 to 1993, he served as Chief Executive Officer
of those predecessors.
WILLIAM B. MADDEN (59)--Mr. Madden has served as a Director of the Company
since April 1993 and as the President of Madden Securities Corporation, a
general securities and investment banking firm, since 1986. Mr. Madden
currently is the Chairman of the Board of Directors of Mercantile Bank and
Trust and serves as a director of Pillowtex Corporation.
STEVEN G. ROTHMEIER (51)--Mr. Rothmeier has served as a Director of the
Company since April 1993 and as Chairman of the Board of Directors and Chief
Executive Officer of Great Northern Capital, a private investment management
and merchant banking firm, since March 1993. Mr. Rothmeier served as President
of IAI Capital Group, a venture capital and merchant banking firm, from 1989 to
1993 and as Chairman of the Board of Directors and Chief Executive Officer of
NWA, Inc. and Northwest Airlines Inc. from 1985 to 1989. Mr. Rothmeier
currently is a director of Honeywell Inc., Department 56, Inc., Precision
Castparts Corp., and Waste Management, Inc.
<PAGE>
BOARD OF DIRECTORS AND COMMITTEES
COMPENSATION COMMITTEE
The Compensation Committee of the Board of Directors (the "Compensation
Committee") consists of Messrs. Ingrey, Land, Madden, Rothmeier and Sargent. The
Compensation Committee determines the compensation for executive officers of the
Company and establishes the Company's compensation policies and practices. The
Compensation Committee also grants awards under the Company's employee stock
plans.
AUDIT COMMITTEE
The Audit Committee of the Board of Directors (the "Audit Committee")
consists of Messrs. Ingrey, Land, Madden, Rothmeier and Sargent. The Audit
Committee submits recommendations to the Board of Directors with respect to the
selection of the Company's independent auditors and with respect to any other
matters it deems appropriate. It reviews the annual financial statements of the
Company with the Company's independent auditors, the practices and procedures
adopted by the Company in the preparation of such statements and the independent
auditor's annual scope of audit.
MEETINGS OF THE BOARD OF DIRECTORS AND COMMITTEES
During the fiscal year ended December 31, 1997, the Board of Directors held
eight meetings, the Compensation Committee held five meetings and the Audit
Committee held four meetings. All Directors attended more than 75% of the
meetings of the Board of Directors and committees on which they served.
DIRECTORS' COMPENSATION
Directors of the Company who are not officers or employees of the Company
receive a fee of $6,000 per quarter plus $1,000 per meeting, including committee
meetings, attended. Directors of the Company who are officers or employees of
the Company do not receive additional compensation for their services as a
Director. No Director receives additional compensation for serving on a
committee other than the fee for attendance at committee meetings. Directors of
the Company who are not officers or employees of the Company may elect to
receive their fees in the form of Common Stock of the Company, or to defer
receipt of such fees and have the deferred amounts treated as if invested in
Common Stock, pursuant to the Company's Non-Employee Directors' Stock Plan.
In addition, pursuant to the Company's Directors' Stock Option Plan (the
"Directors' Stock Option Plan") adopted on July 24, 1997, each non-employee
Director automatically receives an initial stock option grant for 5,000 shares
of Common Stock on the date such person first becomes a Director and an
additional annual stock option grant for 2,000 shares of Common Stock on the
date of the Annual Meeting of Shareholders in each year. The initial stock
option grant of 5,000 shares was granted to each non-employee Director in office
on the date the Directors' Stock Option Plan was adopted. The initial stock
option grant vests one-third on the date of grant and one-third on each of the
first and second anniversary dates of the date of grant, provided the
non-employee Director is still a Director of the Company on such date. The
annual option grants vest in full six months following the date of grant,
provided the non-employee Director is still a Director of the Company on such
date. The annual stock option grant is only awarded to non-employee Directors
who have served since the date of the last Annual Meeting of Shareholders and
who will continue to serve as Directors after the date of such grant. All
options granted under the Directors' Stock Option Plan are nonqualified stock
options with a term of ten years and are granted at an option price equal to the
fair market value of the Common Stock on the date of grant.
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth certain information regarding the beneficial
ownership of Common Stock as of March 9, 1998: (i) by each Director; (ii) by
each of the executive officers included in the Summary Compensation Table set
forth under the caption "Executive Compensation;" (iii) by all Directors and
executive officers of the Company as a group; and (iv) by each person known to
the Company to be the beneficial owner of more than 5% of the outstanding shares
of Common Stock. Except as otherwise indicated, the named beneficial owner has
sole voting and investment power with respect to the shares held by such
beneficial owner.
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF
NAME OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP PERCENT OF CLASS
------------------------ ---------------------- -----------------
<S> <C> <C>
Edgar W. Blanch, Jr. 648,573(1) 5.14%
Paul B. Ingrey 21,500(2) *
James N. Land, Jr. 6,000 *
William B. Madden 3,000(3) *
Steven G. Rothmeier 5,000 *
Joseph D. Sargent 3,500 *
Chris L. Walker 194,764 1.54%
Frank S. Wilkinson, Jr. 345,393(4) 2.73%
Tom S. Nelson 55,068(5) *
Daniel P. O'Keefe 593(6) *
Ian D. Packer 3,064 *
All directors and executive officers
as a group (10 persons) 1,230,823 9.75%
Royce & Associates, Inc. 697,600(7) 5.52%
Royce Management Company 30,200(7) *
Charles M. Royce, Controlling Person
1414 Avenue of the Americas
New York, NY 10019
FMR Corp. 713,000(8) 5.65%
82 Devonshire Street
Boston, MA 02109
Lazard Freres & Co. LLC 708,541(9) 5.61%
30 Rockefeller Plaza
New York, New York 10020
</TABLE>
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* Indicates ownership of less than 1% of the outstanding Common Stock.
(1) Includes 71,660 shares of Common Stock beneficially owned by the Christina
Sozio Blanch Trust and which, due to Mr. Blanch's position as trustee of
such Trust, may be deemed to be beneficially owned by him.
(2) Includes 10,000 shares of Common Stock beneficially owned by a family trust
and which, due to Mr. Ingrey's position as trustee of such trust, may be
deemed to be beneficially owned by him.
(3) Includes 1,000 shares of Common Stock beneficially owned by Mr. Madden's
spouse as to which he disclaims beneficial ownership.
(4) Includes 10,800 shares of Common Stock beneficially owned by charitable and
minors' trusts and which, due to Mr. Wilkinson's position as trustee of
such trusts, may be deemed to be beneficially owned by him.
(5) Includes 25,000 shares of Common Stock beneficially owned by Mr. Nelson's
spouse as to which he disclaims beneficial ownership.
(6) Common Stock owned by Mr. O'Keefe's spouse as to which he disclaims
beneficial ownership.
(7) Royce & Associates, Inc. ("Royce"), Royce Management Company ("RMC") and
Charles M. Royce reported on an amended Schedule 13G, dated February 4,
1998, filed with the Securities and
<PAGE>
Exchange Commission that Royce had sole voting and dispositive powers with
respect to 697,600 shares and that RMC had sole voting and dispositive
powers with respect to 30,200 shares. Royce and RMC reported that the
filing was made on their behalf as investment advisers. Mr. Royce reported
that he does not own any shares of the Company's Common Stock and he
disclaims beneficial ownership of the shares held by Royce and RMC.
(8) FMR Corp. reported on a Schedule 13G, dated February 14, 1998, filed with
the Securities and Exchange Commission that FMR Corp. and certain of its
affiliates and subsidiaries had sole voting power with respect to 127,300
shares, no shared voting power with respect to the shares and sole
dispositive power with respect to 713,000 shares. FMR Corp. also reported
that various persons have the right to receive or the power to direct the
receipt of dividends from, or the proceeds from the sale of, the shares,
and that none of such persons had an interest relating to more than 5% of
the Company's outstanding Common Stock.
(9) Lazard Freres & Co. LLC. ("Lazard") reported on a Schedule 13G, dated
February 13, 1998, filed with the Securities and Exchange Commission that
it had sole voting power with respect to 635,291 shares, no shared voting
power with respect to the shares and sole dispositive power with respect to
708,541 shares. Lazard also reported that the filing was made in its
capacity as an investment adviser and that clients of Lazard have the right
to receive dividends from, or the proceeds from the sale of, the shares,
and that none of such persons was known to have an interest relating to
more than 5% of the Company's outstanding Common Stock.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
Directors and Executive officers to file reports of ownership and changes in
ownership of the Company's Common Stock with the Securities and Exchange
Commission and the New York Stock Exchange, and the Company is required to
identify any of those individuals who failed to file such reports on a timely
basis. The Company believes that during 1997 all Directors and executive
officers of the Company complied with their Section 16(a) filing requirements,
except that a Form 4 Statement of Changes in Beneficial Ownership was filed late
reporting 500 shares purchased by Mr. Madden's spouse.
<PAGE>
EXECUTIVE COMPENSATION
The following table shows compensation for each of the last three fiscal
years of the Chief Executive Officer, the other four most highly compensated
persons serving as executive officers at the end of the last fiscal year and Tom
S. Nelson, who ceased being an executive officer during the last fiscal year.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION AWARDS
ANNUAL COMPENSATION ----------------------------
----------------------------------------------- RESTRICTED SECURITIES
OTHER ANNUAL STOCK UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS(1) COMPENSATION(2) AWARDS($)(3) OPTIONS (#) COMPENSATION(4)
- ------------------------------ ------ ----------- ---------- ----------------- -------------- ------------- ----------------
<S> <C> <C> <C> <C> <C> <C> <C>
Edgar W. Blanch, Jr. 1997 $823,750 $849,902 $ 25,000 $412,733 500,000 $82,719
Chairman of the Board, 1996 $895,000 -- $ 25,000 -- -- $76,813
Chief Executive Officer 1995 $895,000 -- $ 7,043 -- -- $73,335
and Director
Chris L. Walker 1997 $403,750 $425,895 $189,803 $196,053 115,000 $37,033
President, Chief Operating 1996 $475,000 -- $ 2,000 -- 40,000 $36,498
Officer and Director 1995 $416,667 -- $ 250 -- 30,000 $45,727
Frank S. Wilkinson, Jr. 1997 $371,773 $199,545 $ 20,000 $180,556 75,000 $39,014
Executive Vice President 1996 $437,380 $ 31,250 $ 20,000 -- -- $39,014
and Director 1995 $437,380 $ 31,250 $ 7,116 -- -- $39,014
Ian D. Packer(5) 1997 $255,000 $280,486 $171,356 $123,837 125,000 $23,245
Executive Vice President 1996 $150,000 -- $ 19,919 -- -- $ 311
and Chief Financial Officer
Tom S. Nelson(6) 1997 $219,391 -- $ 1,000 -- -- --
Executive Vice President 1996 $250,000 -- $ 1,200 -- -- $20,158
and Chief Accounting 1995 $250,000 -- $ 250 -- -- $20,012
Officer
Daniel P. O'Keefe(7) 1997 $182,000 $ 70,423 -- $ 90,812 40,000 $16,477
Senior Vice President 1996 $150,000 -- -- -- 5,000 $ 352
and General Counsel
- ------------------
</TABLE>
(1) "Bonus" for 1997 includes shares of Common Stock which will be paid on
April 1, 1998 pursuant to the Executive Restricted Stock Incentive Plan for
1997, as follows: Mr. Blanch (5,993); Mr. Walker (2,847); Mr. Wilkinson
(2,621); Mr. Packer (1,798); and Mr. O'Keefe (1,319). Based on the closing
price of the Common Stock on December 31, 1997 of $34.4375 per share, such
shares are reported in the above table as having the following value: Mr.
Blanch ($206,384); Mr. Walker ($98,044); Mr. Wilkinson ($90,261); Mr.
Packer ($61,919); and Mr. O'Keefe ($45,423). The balance of the bonus for
1997 for Messrs. Blanch ($437,134); Walker ($327,851); Wilkinson
($109,284); and Packer ($218,567) represents payment under the 1997
Management Incentive Plan described below. The balance of the bonus for
1997 for Mr. O'Keefe represents payment under the Broker Incentive Plan
($5,000) and payment of the bonus provided by Mr. O'Keefe's 1996 Employment
Agreement ($20,000).
(2) "Other Annual Compensation" includes: (a) financial planning and tax
preparation fees, with respect to Messrs. Blanch, Walker, Wilkinson, and
Nelson; and reimbursements of taxable income incurred in relocation
expenses for Messrs. Walker ($187,603) and Packer ($171,356) in 1997, and
Mr. Packer ($19,919) in 1996.
(3) Shares of restricted stock awarded pursuant to the Executive Restricted
Stock Incentive Plan for 1997, as follows: Mr. Blanch (11,985); Mr. Walker
(5,693); Mr. Wilkinson ((5,243); Mr. Packer (3,596); and Mr. O'Keefe
(2,637). The value of the shares reported in the above table is based on
the closing price of the Common Stock on December 31, 1997 of $34.4375 per
share. The shares of restricted stock vest 50% on April 1, 1999 and 50% on
April 1, 2000. Dividends are paid on the shares of restricted stock at the
same rate as paid to all stockholders, but the executive officer is not
entitled to receive such dividends unless and until the related shares
vest. As of December 31, 1997, none of the named executive officers held
any shares of restricted stock.
(4) "All Other Compensation" for 1997 includes:
(a) Contribution at 7.5% of salary pursuant to the Company's retirement
plan, subject to the Internal Revenue Code limitation of $12,000, with
the remainder being paid in cash to Mr. Blanch ($61,031), Mr.
Wilkinson ($20,804), Mr. Walker ($23,625), Mr. Packer ($10,500), and
Mr. O'Keefe ($4,125).
(b) Group term life taxable income with regard to Mr. Blanch ($9,688), Mr.
Wilkinson ($6,210), Mr. Walker ($1,408), Mr. Packer ($745), Mr. Nelson
($821) and Mr. O'Keefe ($352).
(5) Mr. Packer was hired on July 1, 1996.
(6) Mr. Nelson left the employ of the Company on July 16, 1997.
(7) Mr. O'Keefe was hired on April 1, 1996.
<PAGE>
OPTIONS/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
INDIVIDUAL GRANTS VALUE AT ASSUMED
------------------------------------------------------------ ANNUAL RATES OF
NUMBER OF % OF TOTAL STOCK PRICE
SECURITIES OPTIONS/SARS APPRECIATION
UNDERLYING GRANTED TO EXERCISE OR FOR OPTION TERM
OPTIONS/SARS EMPLOYEES IN BASE PRICE EXPIRATION -----------------------------
GRANTED (#) FISCAL YEAR ($/SH) DATE 5% 10%
-------------- -------------- ------------ ----------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Edgar W. Blanch, Jr. ............ 250,000 19.28% $ 22.63 4/24/07 $3,557,185 $ 9,014,606
250,000 19.28% $ 31.38 10/23/07 $4,932,892 $12,500,917
Chris L. Walker ................. 15,000 1.16% $ 24.89 4/25/07 $ 179,456 $ 506,901
100,000 7.71% $ 31.38 10/23/07 $1,973,157 $ 5,000,367
Frank S. Wilkinson, Jr. ......... 75,000 5.78% $ 31.38 10/23/07 $1,479,868 $ 3,750,275
Ian D. Packer ................... 25,000 1.93% $ 22.63 4/24/07 $ 355,719 $ 901,461
75,000 5.78% $ 31.38 10/23/07 $1,479,868 $ 3,750,275
Tom S. Nelson ................... -- -- -- -- -- --
Daniel P. O'Keefe ............... 15,000 1.16% $ 22.63 4/24/07 $ 213,431 $ 540,876
25,000 1.92% $ 31.38 10/23/07 $ 493,289 $ 1,250,092
</TABLE>
- ------------------
Options vest one-third after three years from date of grant, and one-third after
the fourth and fifth years from date of grant. Vesting of non-vested options
accelerates in the event of a change in control. Options have a ten-year term.
AGGREGATE OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES UNDERLYING VALUE OF UNEXERCISED IN-THE-
UNEXERCISED OPTIONS/SARS AT FY-END (#) MONEY OPTIONS/SARS AT FY-END ($)(1)
------------------------------- ------------------------------
EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
------------- --------------- ------------- --------------
<S> <C> <C> <C> <C>
Edgar W. Blanch, Jr. ............ -- 500,000 -- $3,718,750
Chris L. Walker ................. 20,010 194,990 $318,909 $1,501,803
Frank S. Wilkinson, Jr. ......... -- 75,000 -- $ 229,688
Ian D. Packer ................... -- 100,000 -- $ 525,000
Tom S. Nelson ................... 25,000 -- $378,813 --
Daniel P. O'Keefe ............... 45,000 $ 325,938
- ------------------
</TABLE>
(1) Based on $34.4375 per share, which was the closing price of a share of the
Common Stock on the New York Stock Exchange on December 31, 1997.
EMPLOYMENT AGREEMENTS
On May 6, 1993, at the time of the Company's initial public offering, the
Company entered into employment agreements with Messrs. Blanch, Wilkinson,
Walker and Nelson. These agreements provide for an initial term of three years
renewable thereafter on a month-to-month basis, and a minimum annual salary as
follows: Mr. Blanch ($895,000); Mr. Wilkinson ($437,380); Mr. Walker ($275,000);
and Mr. Nelson ($175,000). On January 1, 1997, the Company entered into a new
employment agreement with Mr. Blanch. This agreement provides for a term of five
years and a minimum annual salary of $1,000,000. On February 25, 1998, the
Company entered into an employment agreement with Mr. O'Keefe. This agreement
provides for an initial term of three years, renewable thereafter on an annual
basis, and a minimum annual salary of $265,000, to be effective April 1, 1998.
Pursuant to the terms of the employment agreements, each executive is
prohibited from competing against the Company for a period ending two years
after the termination of the executive's employment with the Company.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board has the overall responsibility for
compensation actions affecting the Company's executive officers. The
Compensation Committee's responsibilities include approving base and incentive
compensation. The Compensation Committee is comprised entirely of Directors who
are neither current nor former employees of the Company. There are no
compensation
<PAGE>
committee interlocks, i.e., no executive officer of the Company serves as a
member of the board of directors or compensation committee of another entity
that has an executive officer serving on the Board or the Compensation
Committee.
The goal of the Company's executive compensation program is to encourage
performance, as well as to attract and retain the management talent required to
operate the Company successfully. The program has also been designed to create a
strong and direct link between the compensation of the Company's executive
officers, on the one hand, and the Company's long range success and shareholder
value, on the other hand.
BASE COMPENSATION
The Committee reviews and approves annually all salary increases for
executive officers. As discussed above, minimum annual base salaries were
established pursuant to employment agreements with certain executive officers.
Base salaries are adjusted in the discretion of the Committee based on the level
of responsibility and the individual performance of each officer. Determinations
with respect to base salaries are primarily subjective and are not targeted to
any specific criteria.
During 1997, the Company paid base compensation to each of the executive
officers as follows: Mr. Blanch, $823,750; Mr. Walker, $403,750; Mr. Wilkinson,
$371,773; Mr. Nelson, $208,333; Mr. Packer, $255,000 and Mr. O'Keefe, $182,000.
An increase of $150,000 in base compensation for Mr. Walker has been approved
for 1998. Increases in base compensation for Messrs. Blanch and O'Keefe will
also go into effect in 1998 pursuant to the terms of their respective
employment agreements, discussed above. No other increases for executive
officers have been approved or are presently contemplated for 1998.
INCENTIVE COMPENSATION
The incentive compensation for executive officers of the Company is
principally derived from the Company's Management Incentive Plan. The Management
Incentive Plan is a shareholder-approved cash bonus plan designed to reward the
executive officers for exceptional performance based on the achievement of
annual Company performance goals. In order for participants to earn an award,
the Company's growth in revenues and net income must exceed predefined amounts.
Revenues for the year ended December 31, 1997 were $166.8 million, representing
a 53.0% increase over 1996 revenues. Net income for the year ended December 31,
1997 was $25.7 million, representing a 309.0% increase over 1996 net income.
This financial performance by the Company resulted in an aggregate Management
Incentive Plan bonus pool of $1,293,000.
The Chairman of the Board and Chief Executive Officer, after consulting
with the other members of the executive officer group, makes a recommendation to
the Compensation Committee regarding the allocation of the bonus pool among the
executive officers. The Compensation Committee approves the actual allocation of
bonuses under the Plan. For 1997, the Chairman of the Board and Chief Executive
Officer recommended that $1,093,000 be distributed pursuant to the Management
Incentive Plan. Amounts distributed under the Management Incentive Plan are
reported in the Summary Compensation Table.
STOCK BASED COMPENSATION
The Committee believes that ownership of the Company's Common Stock by
management can effectively motivate the building of shareholder wealth by
aligning the interests of management with those of the Company's shareholders.
Stock based compensation for executive officers of the Company has historically
taken the form of stock options.
The Committee's determinations with regard to stock option grants to
executive officers are based primarily on the officer's level of stock
ownership, level of responsibility and individual performance. In 1997, the
Committee granted stock options for 855,000 shares to executive officers of the
Company based on the foregoing criteria.
EXECUTIVE RESTRICTED STOCK INCENTIVE PLAN
In 1997, the Committee adopted and the shareholders approved the Company's
Executive Restricted Stock Incentive Plan (the "Restricted Stock Incentive
Plan"). The purpose of the Restricted Stock
<PAGE>
Incentive Plan is to provide at risk, equity-based compensation for a select
group of management or highly compensated employees, in order to further
incentivize those key employees to contribute to the financial success and
growth of the Company, to the benefit of the Company's shareholders.
Under the Restricted Stock Incentive Plan, each eligible participant may
make an irrevocable election to forego a specified percent of his or her base
compensation in exchange for the right to receive a restricted stock grant. If
the target performance goals set by the Committee for the performance period are
achieved, the participant is awarded restricted stock equal in value to two
times the amount of base compensation the participant elected to forego, which
restricted stock vests one-third on the April 1 following the end of that
performance period and one-third on each subsequent April 1. If those target
performance goals are not achieved, the participant is awarded restricted stock
equal in value to 50% of the amount of base compensation the participant elected
to forego, which restricted stock fully vests on the April 1 following the end
of that performance period. Messrs. Blanch, Walker, Wilkinson, Packer and
O'Keefe elected to participate in the Restricted Stock Incentive Plan in 1997.
The performance target established by the Committee for the 1997 performance
period was achieved, resulting in the award of shares as reported in the Summary
Compensation Table.
RETIREMENT BENEFITS
Executive officers also participate in the Company's retirement plan which
provides that 7.5% of the first $160,000 of compensation (which is the Internal
Revenue Code compensation limit for retirement plans) be contributed to the
Company's retirement plan, and that 7.5% of the compensation in excess of the
$160,000 Internal Revenue Code limit be paid by the Company as a cash award.
CEO COMPENSATION
Mr. Blanch has served as CEO of the Company since its formation in March
1993. Based on the Stock Performance Graph below, the Company's shareholders
have received a total return (consisting of appreciation in the price of the
Common Stock and assuming the reinvestment of all dividends) of 100.5% from May
6, 1993 through December 31, 1997. Effective January 1, 1998, the base salary
for Mr. Blanch has been increased from $895,000 to $1,000,000 pursuant to the
employment agreement discussed above. Mr. Blanch is eligible to receive
incentive compensation under the Company's Management Incentive Plan, is
eligible to participate in the Executive Restricted Stock Incentive Plan and
receives benefits pursuant to the Company's retirement plan. The Compensation
Committee approved a bonus for Mr. Blanch under the 1997 Management Incentive
Plan of $437,134. In 1997, the Compensation Committee also granted stock options
to Mr. Blanch for 500,000 shares of Common Stock. Compensation decisions with
regard to Mr. Blanch were based primarily on his level of responsibility,
individual performance, Company performance and, in the case of stock options,
level of stock ownership.
COMPLIANCE WITH INTERNAL REVENUE CODE SECTION 162(m)
Section 162(m) of the Code, enacted in 1993, generally disallows a tax
deduction to public companies for compensation over $1 million paid to the
Company's Chief Executive Officer and four other most highly compensated
executive officers. Qualifying "performance-based compensation" and compensation
paid pursuant to plans adopted prior to a company's initial public offering of
securities will not be subject to the deduction limit if certain requirements
are met. The Company currently intends to structure the compensation of its
executive officers in a manner that avoids the deduction limits of Section
162(m). Accordingly, in order to comply with the shareholder approval
requirements for "performance-based compensation", the Company is submitting for
shareholder approval its Management Incentive Plan and the amendment to its 1993
Stock Incentive Plan.
Compensation Committee
Steven G. Rothmeier, Chairman
Paul B. Ingrey, Member
James N. Land, Jr., Member
William B. Madden, Member
Joseph D. Sargent, Member
<PAGE>
STOCK PERFORMANCE GRAPH
The graph below compares the cumulative total shareholder return* (assuming
dividends reinvested) on the Common Stock since May 6, 1993 (the effective date
of the Company's registration statement for the initial public offering of
Common Stock) to the cumulative total shareholder return over such period of (i)
the S&P 500 Index and (ii) the S&P Insurance Broker Index.
[GRAPH]
E W Blanch Holdings S&P 500 S&P Insurance Brokers
5/93 100 100 100
6/93 99 103 99
9/93 122 106 97
12/93 98 108 90
3/94 91 104 92
6/94 116 104 92
9/94 126 110 89
12/94 114 110 91
3/95 103 120 98
6/95 104 132 97
9/95 106 142 105
12/95 132 151 104
3/96 113 159 109
6/96 113 166 109
9/96 110 171 111
12/96 116 185 123
3/97 129 190 129
6/97 155 223 164
9/97 180 240 174
12/97 201 247 180
- ------------------
* $100 invested on May 6, 1993 in Common Stock or on April 30, 1993 in the
relevant index--including reinvestment of dividends.
APPROVAL OF THE E. W. BLANCH HOLDINGS, INC.
MANAGEMENT INCENTIVE PLAN
The Compensation Committee has adopted a Management Incentive Plan which is
summarized below. The Plan is being submitted for shareholder approval in order
to comply with the shareholder approval requirement for qualifying
"performance-based compensation" under Section 162(m) of the Code which would
generally preserve the tax-deductible status of the incentive compensation
payments.
SUMMARY OF MANAGEMENT INCENTIVE PLAN
The participants in the Management Incentive Plan are certain executive
officers of the Company, currently Messrs. Blanch, Walker, Wilkinson, and
Packer. Under the Management Incentive Plan, participants will be allocated
awards from a bonus pool equal to 20% of the Company's Income before Taxes for
each year (excluding the Management Incentive Plan expense) in excess of 120% of
the Company's Income before Taxes for the prior year (excluding the Management
Incentive Plan expense and excluding other extraordinary events, such as
restructuring charges, as determined by the Compensation Committee) plus 37.5%
of the aggregate bonus amount awarded to the operating subsidiaries under their
Incentive Plans. The amount awarded to the operating subsidiaries under their
Incentive Plans is based upon the achievement of revenue growth in excess of a
predefined goal and profit margin improvement.
The Plan provides that the Chief Executive Officer shall be paid 50% of the
Management Incentive Plan bonus pool. The Committee may not increase this
percentage allocation, but may, in its discretion, reduce it. Bonuses will be
allocated to the other participating executive officers from the remaining
<PAGE>
funds in the pool based upon the Committee's judgment of their performance
during the year. In addition, individual bonuses paid to the participants may
not exceed 100% of their respective base salaries for the year. Bonuses
available for distribution will be paid by March 15 of the following year. In
order to be eligible to receive a bonus, a participant must be an employee of
the Company on the date such bonus is to be paid.
The design of the Management Incentive Plan is the same as the 1997
Management Incentive Plan, previously approved by shareholders. The Management
Incentive Plan in effect during 1997 resulted in a pool of $1,293,000, of which
an aggregate amount of $1,093,000 was awarded, as reported in the Summary
Compensation Table.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR THE
APPROVAL OF THE MANAGEMENT INCENTIVE PLAN.
APPROVAL OF THE AMENDMENT TO THE
1993 STOCK INCENTIVE PLAN
In 1993, the Company's Board of Directors adopted, and the shareholders
approved, the 1993 Stock Incentive Plan (the "Stock Incentive Plan"). The
purpose of the Stock Incentive Plan is to provide a means through which the
Company may attract and retain key employees and provide those key employees
with incentives to contribute to the profitable growth of the Company. This plan
is the vehicle for, among other things, awarding stock options or stock
appreciation rights ("SARs") to eligible employees.
On January 22, 1998, the Board of Directors approved an amendment to the
Stock Incentive Plan, subject to shareholder approval, to increase the number of
shares of Common Stock available for awards by an additional 2,000,000 shares,
thereby increasing the total number of shares available for awards under the
Stock Incentive Plan to 4,400,000. The Company had reserved 800,000 shares to be
issued under the Stock Incentive Plan when it was approved in 1993; an amendment
to the Stock Incentive Plan was approved by the shareholders in 1996 which
increased the shares available for awards of stock by 1,600,000, for a total of
2,400,000 shares; however 1,823,500 of those shares had been awarded as of March
9, 1998. In addition, the Company had reserved 396,000 additional shares for
future grant, resulting in only 180,500 shares available for future awards. The
Board adopted this amendment to ensure that the Company will continue to have
sufficient shares available to attract and retain key employees.
At the Annual Meeting, the shareholders are being requested to consider and
approve the foregoing amendment to the Stock Incentive Plan. The essential
features of the Stock Incentive Plan are outlined below.
STOCK INCENTIVE PLAN. The Stock Incentive Plan is administered by the
Compensation Committee and no Compensation Committee member is eligible to
participate in the Stock Incentive Plan. Officers and key employees are eligible
to receive a variety of different types of awards under the Stock Incentive
Plan.
Options granted under the Stock Incentive Plan may be "incentive stock
options" ("ISOs"), within the meaning of Section 422 of the Internal Revenue
Code of 1986, as amended (the "Code"), or nonqualified stock options ("NQSOs").
The exercise price of the options will be determined by the Compensation
Committee when the options are granted, subject to a minimum price in the case
of ISOs of the Fair Market Value (as defined in the Stock Incentive Plan) of the
Common Stock on the date of grant (110% of Fair Market Value in the case of
greater than 5% shareholders) and a minimum price in the case of NQSOs of the
par value of the Common Stock. In the discretion of the Compensation Committee,
the option exercise price may be paid in cash or in shares of Common Stock or
other property having a Fair Market Value on the date of exercise equal to the
option exercise price, or by delivering to the Company a copy of irrevocable
instructions to a stockbroker to deliver promptly to the Company an amount of
sale or loan proceeds sufficient to pay the exercise price.
The Stock Incentive Plan permits the Compensation Committee to grant stock
appreciation rights ("SARs"). An SAR granted as an alternative or a supplement
to a related stock option will entitle its
<PAGE>
holder to be paid an amount equal to the Fair Market Value of the Common Stock
subject to the SAR on the date of exercise of the SAR less the exercise price of
the related stock option or such other price as the Compensation Committee may
determine at the time of the grant of the SAR (which may not be less than the
lowest price which the Compensation Committee may determine under the Stock
Incentive Plan for such stock option.)
Shares of Common Stock covered by a restricted stock award will be issued
to the recipient at the time the award is granted but will be subject to
forfeiture in the event continued employment and/or other restrictions and
conditions established by the Compensation Committee at the time the award is
granted are not satisfied.
A performance share unit or phantom stock award will provide for the future
payment of cash or the issuance of shares of Common Stock to the recipient if
continued employment or other performance objectives established by the
Compensation Committee at the time of grant are attained.
Stock bonus awards, restricted stock awards and performance unit awards
may, in the discretion of the Compensation Committee, be settled in cash, on
each date on which shares of Common Stock covered by the awards would otherwise
have been delivered or become unrestricted, in an amount equal to the Fair
Market Value of such shares on such date.
As of March 9, 1998, NQSOs covering 685,000 shares of Common Stock had been
granted to the Company's executive officers as a group under the Incentive Plan,
of which 250,000 were granted to Mr. Blanch, 215,000 of which were granted to
Mr. Walker, 75,000 of which were granted to Mr. Wilkinson, 100,000 of which were
granted to Mr. Packer, and 45,000 of which were granted to Mr. O'Keefe. Options
covering 888,500 shares of Common Stock had been granted to employees other than
executive officers, as a group. The term of all such options is ten years. The
options become exercisable over the first five years of the term. As of March 9,
1998, 237,420 of the options granted were exercisable. As of March 9, 1998,
10,668 options had been exercised. All of the options were granted at a price
equal to the market price on the date of the grant, and such option prices range
from $17.50 to $34.94.
Shares of restricted Common Stock earned under the Restricted Stock
Incentive Plan are issued under the Stock Incentive Plan. On April 1, 1998,
43,732 shares of Common Stock will be issued to the Company's executive officers
as a group under the Stock Incentive Plan for the 1997 performance period under
the Restricted Stock Incentive Plan, of which 17,978 will be issued to Mr.
Blanch; 8,540 to Mr. Walker; 7,864 to Mr. Wilkinson; 5,394 to Mr.
Packer; and 3,956 to Mr. O'Keefe.
On March 9, 1998, the closing sale price of a share of Common Stock on the
New York Stock Exchange was $36.9375.
The Board of Directors may terminate or amend the Stock Incentive Plan,
provided that shareholder approval must be obtained in certain events.
FEDERAL TAX CONSEQUENCES. Set forth below is a brief description of the
federal income tax consequences applicable to ISOs and NQSOs granted under the
Stock Incentive Plan.
ISOS
No taxable income is realized by the optionee upon the grant or exercise of
an ISO. If Common Stock is issued to an optionee pursuant to the exercise of an
ISO, and if no disqualifying disposition of such shares is made by such optionee
within two years after the date of grant or within one year after the transfer
of such shares to such optionee, then (1) upon sale of such shares, any amount
realized in excess of the option price will be taxed to such optionee as a
long-term capital gain and any loss sustained will be a long-term capital loss,
and (2) no deduction will be allowed to the Company for federal income tax
purposes.
If the Common Stock acquired upon the exercise of an ISO is disposed of
prior to the expiration of either holding period described above, generally (1)
the optionee will realize ordinary income in the year of disposition in an
amount equal to the excess (if any) of the fair market value of such shares at
exercise (or, if less, the amount realized on the disposition of such shares)
over the option price paid for such shares, and (2) the Company will be entitled
to deduct such amount for federal income tax purposes if the amount represents
an ordinary and necessary business expense. Any further gain (or
<PAGE>
loss) realized by the optionee will be taxed as short-term or long-term capital
gain (or loss), as the case may be, and will not result in any deduction by the
employer.
Subject to certain exceptions for disability or death, if an ISO is
exercised more than three months following termination of employment, the
exercise of the option will generally be taxed as the exercise of a NQSO.
The exercise of an ISO will give rise to an item of tax preference that may
result in alternative minimum tax liability for the optionee.
NQSOS
With respect to NQSOs: (1) no income is realized by the optionee at the
time the option is granted; (2) generally, at exercise, ordinary income is
realized by the optionee in an amount equal to the difference between the option
price paid for the shares and the fair market value of the shares, if
unrestricted, on the date of exercise, and the Company is generally entitled to
a tax deduction in the same amount subject to applicable tax withholding
requirements; and (3) at sale, appreciation (or depreciation) after the date of
exercise is treated as either short-term or long-term capital gain (or loss)
depending on how long the shares have been held.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR THE
AMENDMENT TO THE STOCK INCENTIVE PLAN.
RATIFICATION AND APPROVAL OF THE
APPOINTMENT OF INDEPENDENT AUDITORS
On January 22, 1998, the Board of Directors selected the accounting firm of
Ernst & Young LLP to serve as its independent auditor for the fiscal year ending
December 31, 1998. A proposal to ratify that appointment will be presented at
the Meeting. Representatives of Ernst & Young LLP are expected to be present at
the Meeting. They will have an opportunity to make a statement if they desire to
do so and will be available to respond to appropriate questions from
shareholders.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR THE
APPOINTMENT OF ERNST & YOUNG LLP AS INDEPENDENT AUDITORS.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On February 14, 1997, the Company purchased 750,000 shares of Common Stock
from Edgar W. Blanch, Jr., the Company's Chairman and Chief Executive Officer.
This purchase was negotiated between Mr. Blanch and a Select Committee of the
Board of Directors made up of the Board's outside directors. The shares were
purchased at a negotiated price of $19.40 per share or $14,550,000. The purchase
price represented a 14.7% discount from the trading price of the Company's
Common Stock at the time of the purchase. The purchase agreement also included a
commitment by Mr. Blanch not to sell his remaining shares for at least a
two-year period, except with the approval of the Select Committee.
In December 1993, the Company invested in Conning Insurance Capital Limited
Partnership III (the "Fund"), a private equity fund which invests in the
insurance industry. One of the Company's directors, Joseph D. Sargent, was Vice
Chairman of Conning & Company at the time, whose affiliate is the general
partner of the Fund. The Company's Chairman and Chief Executive Officer is a
member of the Advisory Board of the Fund. At December 31, 1996, a total
commitment of $4,000,000 had been paid to the Fund.
<PAGE>
ADDITIONAL INFORMATION
GENERAL
As of the date of this Proxy Statement, management knows of no matters that
will be presented for determination at the Annual Meeting other than those
referred to herein. However, since matters of which management is not now aware
may come before the Annual Meeting or any adjournment, the proxies intend to
vote, act and consent in accordance with their best judgment with respect
thereto. Upon receipt of such proxies (in the form enclosed and properly signed)
in time for voting, the shares represented thereby will be voted as indicated
thereon and in this Proxy Statement.
SHAREHOLDER PROPOSALS FOR THE NEXT ANNUAL MEETING
It is anticipated that the next Annual Meeting, after the one scheduled for
April 23, 1998, will be held on or about April 22, 1999. All shareholder
proposals relating to a proper subject for action at the Annual Meeting in 1999,
to be included in the Company's Proxy Statement and form of proxy relating to
that meeting, must be received by the Company for its consideration at its
principal executive offices no later than November 23, 1998. Any such proposal
should be submitted by certified mail, return receipt requested.
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K IS AVAILABLE WITHOUT
CHARGE TO ANY SHAREHOLDER OF THE COMPANY WHO REQUESTS A COPY IN WRITING.
REQUESTS FOR COPIES OF THIS REPORT SHOULD BE DIRECTED TO THE INVESTOR RELATIONS
DEPARTMENT, E.W. BLANCH HOLDINGS, INC., 500 NO. AKARD, SUITE 300, DALLAS, TX
75201.
By Order of the Board of Directors
/s/ Daniel P. O'Keefe
Daniel P. O'Keefe
SECRETARY
March 20, 1998
<PAGE>
1993 STOCK INCENTIVE PLAN OF
E. W. BLANCH HOLDINGS, INC.
1. PURPOSE
The purpose of the 1993 Stock Incentive Plan ("Plan") of E. W. Blanch
Holdings, Inc. ("Company") is to provide a means through which the Company and
its Subsidiaries may attract able persons to enter and remain in the employ of
the Company and to provide a means whereby those key employees upon whom the
responsibilities of the successful administration and management of the Company
rest, and whose present and potential contributions to the welfare of the
Company are of importance, can acquire and maintain stock ownership, thereby
strengthening their commitment to the welfare of the Company and promoting an
identity of interest between stockholders and these key employees.
A further purpose of the Plan is to provide such key employees with
additional incentive and reward opportunities designed to enhance the profitable
growth of the Company. So that the appropriate incentive can be provided, the
Plan provides for granting Incentive Stock Options, Nonqualified Stock Options,
Stock Appreciation Rights, Restricted Stock Awards, Phantom Stock Unit Awards
and Performance Share Units, or any combination of the foregoing.
2. DEFINITIONS
The following definitions shall be applicable throughout the Plan.
(a) "Appreciation Date" means the date designated by a Holder of Stock
Appreciation Rights for measurement of the appreciation in the value of rights
awarded to him, which date shall be the date notice of such designation is
received by the Committee, or its designee.
(b) "Award" means, individually or collectively, any Incentive Stock
Option, Nonqualified Stock Option, Stock Appreciation Right, Restricted Stock
Award, Phantom Stock Unit Award or Performance Share Unit Award.
(c) "Award Period" means a period of time within which performance is
measured for the purpose of determining whether an Award of Performance Share
Units has been earned.
(d) "Board" means the Board of Directors of the Company, except those
members who are employees.
(e) "Change in Control" shall, unless the Board otherwise directs by
resolution adopted prior thereto, be deemed to occur if (i) any "person" (as
that term is used in Sections 13 and 14(d)(2) of the Securities and Exchange Act
of 1934 ["Exchange Act"]) is or becomes the beneficial owner (as that term is
used in Section 13(d) of the Exchange Act), directly or indirectly, of 25% or
more of the voting Stock or (ii) during any period of two consecutive years,
individuals who at the beginning of such period constitute the Board cease for
any reason to
<PAGE>
constitute at least a majority thereof, unless the election or the nomination
for election by the Company's shareholders of each new director was approved by
a vote of at least three-quarters of the directors then still in office who were
directors at the beginning of the period. Any merger, consolidation or corporate
reorganization in which the owners of the Company's capital stock entitled to
vote in the election of directors ("Voting Stock") prior to said combination,
own 50% or more of the resulting entity's Voting Stock shall not, by itself, be
considered a change in control for the purposes of this Plan.
(f) "Code" means the Internal Revenue Code of 1986, as amended.
Reference in the Plan to any section of the Code shall be deemed to include any
amendments or successor provisions to such section and any regulations under
such section.
(g) "Committee" means the Compensation Committee of the Board or such
other committee as the Board may appoint to administer the Plan.
(h) "Common Stock" means the common stock par value $.01 per share, of
the Company.
(i) "Company" means E. W. Blanch Holdings, Inc.
(j) "Date of Grant" means the date on which the granting of an Award is
authorized or such other date as may be specified in such authorization.
(k) "Disability" means the complete and permanent inability by reason of
illness or accident to perform the duties of the occupation at which a
Participant was employed when such disability commenced or, if the Participant
was retired when such disability commenced, the inability to engage in any
substantial gainful activity, as determined by the Committee based upon medical
evidence acceptable to it.
(l) "Disinterested Person" means a person who is a "disinterested
person" within the meaning of Rule 16b-3 of the Exchange Act, or any successor
rule or regulation.
(m) "Eligible Employee" means any person regularly employed by the
Company or a Subsidiary on a full-time salaried basis who satisfies all of the
requirements of Section 6.
(n) "Fair Market Value" on a given date means (a) the last reported sale
price for the Stock on that date (or, if there were no such sales on that date,
on the next most recent date on which there were such sales) as reported on the
Composite Tape if the Stock is listed on the New York Stock Exchange ("NYSE") or
on the National Association of Securities Dealers National Market System ("NMS")
or (b) if the Stock is not then issued on the NYSE or the NMS, the average
between the closing bid and asked price quotations for the Stock on that date
(or if none on that date, on the next most recent date) as reported by the
National Association of Securities Dealers Automatic Quotation System or any
successor thereto.
<PAGE>
(o) "Holder" means a Participant who has been granted an Option, a Stock
Application Right, a Restricted Stock Award, Phantom Stock Unit Award or a
Performance Share Unit Award.
(p) "Incentive Stock Option" means an Option granted by the Committee to
a Participant under the Plan which is designated by the Committee as an
Incentive Stock Option pursuant to Section 422 of the Code.
(q) "Nonqualified Stock Option" means an Option granted by the Committee
to a Participant under the Plan which is not designated by the Committee as an
Incentive Stock Option.
(r) "Normal Termination" means termination:
(i) At retirement (excluding early retirement) pursuant to the
Company retirement plan then in effect;
(ii) Disability; or
(iii) With the written approval of the Committee.
(s) "Option" means an Award granted under Section 7 of the Plan.
(t) "Participant" means an Eligible Employee who has been selected to
participate in the Plan and to receive an Award pursuant to Section 6.
(u) "Performance Goals" means the performance objectives of the Company
during an Award Period established for the purpose of determining whether, and
to what extent, Awards will be earned for the Award Period.
(v) "Performance Share Unit" means a hypothetical investment equivalent
equal to one share of Stock granted in connection with an Award made under
Section 9 of the Plan.
(w) "Phantom Stock Unit" means a hypothetical investment equivalent
equal to one share of Stock granted in connection with an Award made under
Section 10 of the Plan, or credited with respect to Awards of Performance Share
Units which have been deferred under Section 9.
(x) "Plan" means the 1993 Stock Incentive Plan of E. W. Blanch Holdings,
Inc.
(y) "Restricted Period" means, with respect to any share of Restricted
Stock, the period of time determined by the Committee during which such share of
Restricted Stock is subject to the restrictions set forth in Section 10.
(z) "Restricted Stock" means shares of Common Stock issued or
transferred to a Participant subject to the restrictions set forth in Section 10
and any new, additional or different
<PAGE>
securities a Participant may become entitled to receive as a result of
adjustments made pursuant to Section 12.
(aa) "Restricted Stock Award" means an Award granted under Section 10 of
the Plan.
(bb) "Stock" means the Common Stock or such other authorized shares of
stock the Company as the Committee may from time to time authorize for use under
the Plan.
(cc) "Stock Appreciation Right" or "SAR" means an Award granted under
Section 8 of the Plan.
(dd) "Subsidiary" means any corporation of which a majority of the
outstanding voting stock or voting power is beneficially owned directly or
indirectly by the Company.
(ee) "Valuation Date" means the last day of an Award Period or the date
of death of a Participant, as applicable.
3. EFFECTIVE DATE, DURATION AND SHAREHOLDER APPROVAL
Subject to the approval of this Plan by the shareholders of the Company
at a duly convened meeting of shareholders, the Plan shall become effective on
April 14, 1993, and no further Awards may be made after the expiration of 10
years therefrom.
The Plan shall continue in effect until all matters relating to the
payment of Awards and administration of the Plan have been settled.
4. ADMINISTRATION
The Committee shall administer the Plan. Each member of the Committee
shall, at the time he takes any action with respect to an Award under the Plan,
be a Disinterested Person. Three members of the Committee shall constitute a
quorum. The acts of a majority of the members present at any meeting at which a
quorum is present or acts approved in writing by a majority of the Committee
shall be deemed the acts of the Committee.
No member of the Committee, while serving as such, shall be eligible to
receive an Award under the Plan. Subject to the provisions of the Plan, the
Committee shall have exclusive power to:
(a) Select the Eligible Employees to participate in the Plan;
(b) Determine the nature and extent of the Awards to be made to each
Participant;
(c) Determine the time or times when Awards will be made;
(d) Determine the duration of each Award Period;
<PAGE>
(e) Determine the conditions to which the payment of Awards may be
subject;
(f) Establish the Performance Goals for each Award Period;
(g) Prescribe the form or forms evidencing Awards; and
(h) Cause records to be established in which there shall be entered,
from time to time as Awards are made to Participants, the date of each Award,
the number of Incentive Stock Options, Nonqualified Stock Options, SARs, Phantom
Stock Units, Performance Share Units and shares of Restricted Stock awarded by
the Committee to each Participant, the expiration date, the Award Period and the
duration of any applicable Restricted Period.
The Committee shall have the authority, subject to the provisions of the
Plan, to establish, adopt, or revise such rules and regulations and to make all
such determinations relating to the Plan as it may deem necessary or advisable
for the administration of the Plan. The Committee's interpretation of the Plan
or any Awards granted pursuant thereto and all decisions and determinations by
the Committee with respect to the Plan shall be final, binding, and conclusive
on all parties unless otherwise determined by the Board.
5. GRANT OF OPTIONS, STOCK APPRECIATION RIGHTS, RESTRICTED
STOCK AWARDS, PHANTOM STOCK AWARDS AND PERFORMANCE SHARE
UNITS; SHARES SUBJECT TO THE PLAN
The Committee may, from time to time, grant Awards of Options, Stock
Appreciation Rights, Restricted Stock, Phantom Stock Units and/or Performance
Share Units to one or more Participants; provided, however, that:
(a) Subject to Section 12, the aggregate number of shares of Stock made
subject to Awards may not exceed 800,000;
(b) Such shares shall be deemed to have been used in payment of Awards
whether they are actually delivered or the Fair Market Value equivalent of such
shares is paid in cash. In the event any Option, SAR not attached to an Option,
Restricted Stock, Phantom Stock Unit or Performance Share Unit, shall be
surrendered, terminate, expire, or be forfeited, the number of shares of Stock
no longer subject thereto shall thereupon be released and shall thereafter be
available for new Awards under the Plan; and
(c) Stock delivered by the Company in settlement of Awards under the
Plan may be authorized and unissued Stock or Stock held in the treasury of the
Company or may be purchased on the open market or by private purchase at prices
no higher than the Fair Market Value at the time of purchase.
<PAGE>
6. ELIGIBILITY
Participants shall be limited to officers and key employees of the
Company and its Subsidiaries who have received written notification from the
Committee or from a person designated by the Committee, that they have been
selected to participate in the Plan.
7. STOCK OPTIONS
One or more Options can be granted to any Participant. As determined by
the Committee, they may be Incentive Stock Options or Non-Qualified Stock
Options. Each Option so granted shall be subject to the following conditions.
(a) OPTION PRICE. The Option price ("Option Price") per share of Stock
shall be set by the Committee at the time of grant but shall not be less than
(i) in the case of an Incentive Stock Option, the Fair Market Value of a share
of Stock at the Date of Grant, and (ii) in the case of a Non-Qualified Stock
Option, the par value per share of Stock.
(b) MANNER OF EXERCISE AND FORM OF PAYMENT. Options which have become
exercisable may be exercised by delivery of written notice of exercise to the
Committee accompanied by payment of the Option Price. The Option Price shall be
payable in cash and/or shares of Stock valued at the Fair Market Value at the
time the Option is exercised, or, in the discretion of the Committee, either (i)
in other property having a fair market value on the date of exercise equal to
the Option Price, or (ii) by delivering to the Company a copy of irrevocable
instructions to a stockbroker to deliver promptly to the Company an amount of
sale or loan proceeds sufficient to pay the Option Price.
(c) OTHER TERMS AND CONDITIONS. If the Holder has not died or
terminated, the Option shall become exercisable in such manner and within such
period or periods ("Option Period"), not to exceed 10 years from its Date of
Grant, as set forth in the Stock Option Agreement to be entered into in
connection therewith.
(i) Each Option shall lapse in the following situations:
* Ten years after it is granted;
* Three years after Normal Termination, except as
otherwise provided by the Committee, or
* Any earlier time set forth in the Stock Option
Agreement.
(ii) If the Holder terminates otherwise than by Normal
Termination or death, the Option shall lapse at the time of termination.
(iii) If the Holder dies within the Option Period or within 3
years after Normal Termination (or such other period as may have been
established by the Committee), the Option shall lapse unless it is
exercised within the Option Period and in no event later
<PAGE>
than 12 months after the date of Holder's death by the Holder's legal
representative or representatives or by the person or persons entitled
to do so under the Holder's last will and testament or, if the Holder
shall fail to make testamentary disposition of such Option or shall die
intestate, by the person entitled to receive said Option under the
applicable laws of descent and distribution.
(d) STOCK OPTION AGREEMENT. Each Option granted under the Plan shall be
evidenced by a "Stock Option Agreement" between the Company and the Holder of
the Option containing such provisions as may be determined by the Committee, but
shall be subject to the following terms and conditions.
(i) Each Option or portion thereof that is exercisable shall be
exercisable for the full amount or for any part thereof, except as
otherwise determined by the terms of the Stock Option Agreement.
(ii) Each share of Stock purchased through the exercise of an
Option shall be paid for in full at the time of the exercise. Each
Option shall cease to be exercisable, as to any share of Stock, when the
Holder purchases the share or exercises a related SAR or when the Option
lapses.
(iii) Options shall not be transferable by the Holder except by
will or the laws of descent and distribution and shall be exercisable
during the Holder's lifetime only by him.
(iv) In consideration for the granting of each Option, the
Holder shall agree to remain in the employment of the Company or one or
more of its Subsidiaries at the pleasure of the Company or such
Subsidiary for a continuous period of at least 1 year after the Date of
Grant. At the discretion of the Committee, this requirement may be
waived. The Holder agrees that during such employment, he will devote
his time, energy and skills to the service and interests of the Company
or such Subsidiary subject to vacations, sick leave, and other absences
in accordance with the regular policies of the Company and its
Subsidiaries.
(v) Each Option shall become exercisable by the Holder in
accordance with the vesting schedule established by the Committee for
the Award.
(vi) Each Stock Option Agreement may contain an agreement that,
upon demand by the Committee for such a representation, the Holder shall
deliver to the Committee at the time of any exercise of an Option a
written representation that the shares to be acquired upon such exercise
are to be acquired for investment and not for resale or with a view to
the distribution thereof. Upon such demand, delivery of such
representation prior to the delivery of any shares issued upon exercise
of an Option shall be a condition precedent to the right of the Holder
or such other person to purchase any shares. In the event certificates
for Stock are delivered under the Plan with respect to which such
investment representation has been obtained, the Committee may cause a
legend or legends to be placed on such certificates to make appropriate
reference to such representation and to
<PAGE>
restrict transfer in the absence of compliance with applicable federal
or state securities laws.
(e) GRANTS TO 10% HOLDERS OF COMPANY VOTING STOCK. Notwithstanding
Section 7(a), if an Incentive Stock Option is granted to a Holder who owns stock
representing more than ten percent of the voting power of all classes of stock
of the Company or of the Company and its Subsidiaries, the period specified in
the Stock Option Agreement for which the Option thereunder is granted and at the
end of which such Option shall expire shall not exceed five years from the Date
of Grant of such Option and the Option Price shall be at least 110 percent of
the Fair Market Value (on the Date of Grant) of the Stock subject to the Option.
(f) LIMITATION. The aggregate Fair Market Value (as determined as of the
Date of Grant) of Stock for which Incentive Stock Options are exercisable for
the first time by any Participant during any calendar year (under all plans of
the Company and its Subsidiaries) shall not exceed $100,000.
(g) VOLUNTARY SURRENDER. The Committee may permit the voluntary
surrender of all or any portion of any Nonqualified Stock Option and its
corresponding SAR, if any, granted under the Plan to be conditioned upon the
granting to the Holder of a new Option for the same or a different number of
shares as the Option surrendered or require such voluntary surrender as a
condition precedent to a grant of a new Option to such Participant. Such new
Option shall be exercisable at the Option Price, during the exercise period, and
in accordance with any other terms or conditions specified by the Committee at
the time the new Option is granted, all determined in accordance with the
provisions of the Plan without regard to the Option Price, exercise period, or
any other terms and conditions of the Nonqualified Stock Option surrendered.
(h) ORDER OF EXERCISE. Options granted under the Plan may be exercised
in any order, regardless of the Date of Grant or the existence of any other
outstanding Option.
(i) NOTICE OF DISPOSITION. Participants shall give prompt notice to the
Company of any disposition of Stock acquired upon exercise of an Incentive Stock
Option if such disposition occurs within either two years after the Date of
Grant of such Option and/or one year after the receipt of such Stock by the
Holder.
8. STOCK APPRECIATION RIGHTS
Any Option granted under the Plan may include a SAR, either at the time of grant
or by amendment except that in the case of an Incentive Stock Option, such SAR
shall be granted only at the time of grant of the related Option. The Committee
may also award to Participants SARs independent of any Option. A SAR shall be
subject to such terms and conditions not inconsistent with the Plan as the
Committee shall impose, including, but not limited to, the following:
(a) VESTING. A SAR granted in connection with an Option shall become
exercisable, be transferable and shall lapse according to the same vesting
schedule, transferability and lapse rules that are established for the Option. A
SAR granted independent of an Option shall become
<PAGE>
exercisable, be transferable and shall lapse in accordance with a vesting
schedule, transferability and lapse rules established by the Committee.
(b) FAILURE TO EXERCISE. If on the last day of the Option Period, (or in
the case of a SAR independent of an Option, the SAR period established by the
Committee) the Fair Market Value of the Stock exceeds the Option Price, the
Holder has not exercised the Option or SAR, and neither the Option nor the SAR
has lapsed, such right shall be deemed to have been exercised by the Holder on
such last day and the Company shall make the appropriate payment therefor.
(c) PAYMENT. The amount of additional compensation which may be received
pursuant to the award of one SAR is the excess, if any, of the Fair Market Value
of one share of Stock on the Appreciation Date over the Option Price, in the
case of a SAR granted in connection with an Option, or the Fair Market Value of
one share of Stock on the Date of Grant, in the case of a SAR granted
independent of an Option. The Company shall issue or transfer to the Participant
shares of Stock with a Fair Market Value at such time equal to 10O percent of
any such excess. Fractional shares shall be settled in cash.
(d) DESIGNATION OF APPRECIATION DATE. A Participant may designate an
Appreciation Date at such time or times as may be determined by the Committee at
the time of grant by filing an irrevocable written notice with the Committee or
its designee, specifying the number of SARs to which the Appreciation Date
relates, and the date on which such SARs were awarded.
(e) EXPIRATION. Except as otherwise provided in the case of SARs granted
in connection with Options, the SARs shall expire on a date designated by the
Committee which is not later than ten years after the date on which the SAR was
awarded.
9. PERFORMANCE SHARES
(a) AWARD GRANTS. The Committee is authorized to establish Performance
Share programs to be effective over designated Award Periods of not less than
three years nor more than five years. At the beginning of each Award Period, the
Committee will establish Performance Goals based upon financial objectives for
the Company for such Award Period and a schedule relating the accomplishment of
the Performance Goals to the Awards to be earned by Participants. Performance
Goals may include absolute or relative growth in earnings per share or rate of
return on stockholders' equity or other measurement of corporate performance and
may be determined on an individual basis or by categories of Participants. The
Committee may adjust Performance Goals or performance measurement standards as
it deems equitable in recognition of extraordinary or non-recurring events
experienced during an Award Period by the Company or by any other corporation
whose performance is relevant to the determination of whether Performance Goals
have been attained. The Committee shall determine the number of Performance
Share Units to be awarded, if any, to each Participant who is selected to
receive an Award. The Committee may add new Participants to a Performance Share
program after its commencement by making pro rata grants.
<PAGE>
(b) DETERMINATION OF AWARD. At the completion of a Performance Share
program, or at other times as specified by the Committee, the Committee shall
calculate the amount earned with respect to each Participant's award by
multiplying the Fair Market Value on the Valuation Date by the number of
Performance Share Units granted to the Participant and multiplying the amount so
determined by a performance factor representing the degree of attainment of the
Performance Goals.
(c) PARTIAL AWARDS. A Participant for less than a full Award Period,
whether by reason of commencement or termination of employment or otherwise,
shall receive such portion of an Award, if any, for that Award Period as the
Committee shall determine.
(d) PAYMENT OF NON-DEFERRED AWARDS. The amount earned with respect to an
Award shall be payable 100% in shares of Stock based on the Fair Market Value on
the Valuation Date; provided, however, that, at its discretion, the Committee
may vary such form of payment as to any Participant upon the specific request of
such Participant. The amount of any payment made in cash shall be based upon the
Fair Market Value on the seventh business day prior to payment. Except as
provided in subparagraph 9(e), payments of Awards shall be made as soon as
practicable after the completion of an Award Period.
(e) DEFERRAL OF PAYMENT. A Participant may file a written election with
the Committee to defer the payment of any amount otherwise payable pursuant to
subparagraph 9(d) on account of an Award to a period commencing at such future
date as specified in the election. Such election must be filed with the
Committee no later than the last day of the month which is two-thirds of the way
through the Award Period during which the Award is earned, unless the Committee
specifies an earlier filing date.
(f) SEPARATE ACCOUNTS. At the conclusion of each Award Period, the
Committee shall cause a separate account to be maintained in the name of each
Participant with respect to whom all or a portion of an Award of Performance
Share Units earned under the Plan has been deferred. All amounts credited to
such account shall be fully vested at all times.
(g) ELECTION OF FORM OF INVESTMENT. Within 60 days from the end of each
Award Period, and at such time or times, if any, as the Committee may permit, a
Participant may file a written election with the Committee of the percentage of
the deferred portion of any Award of Performance Share Units which is to be
credited with interest, the percentage of such Award which is to be credited
with Phantom Stock Units and the percentage of such Award which is to be deemed
invested in any other hypothetical investment equivalent from time to time made
available under the Plan by the Committee. In the event a Participant fails to
file an election within the time prescribed, one hundred percent (100%) of the
deferred portion of such Participant's Award shall be credited with Phantom
Stock Units.
(h) INTEREST PORTION. The amount of interest credited with respect to
the portion of an Award credited to the Participant's account which is deferred
and credited with interest (the "Interest Portion") shall be equal to the amount
such portion would have earned had it been credited with interest from the last
day of the Award Period with respect to which the Award was made until the
seventh business day preceding the date as of which payment is made,
<PAGE>
compounded annually, at the Company's rate of return on stockholders' equity for
each fiscal year that payment is deferred, or at such other rate as the
Committee may from time to time determine. The Committee may, in its sole
discretion, credit interest on amounts payable prior to the date on which the
Company's rate of return on stockholders' equity becomes ascertainable at the
rate applicable to deferred amounts during the year immediately preceding the
year of payment.
(i) PHANTOM STOCK UNIT PORTION. With respect to the portion of an Award
credited to the Participant's account which is deferred and credited with
Phantom Stock Units (the "Phantom Stock Unit Portion"), the number of Phantom
Stock Units so credited shall be equal to the result of dividing (i) the Phantom
Stock Unit Portion by (ii) the Fair Market Value on the date the Award Period
ended.
(j) DIVIDEND EQUIVALENTS. Within thirty (30) days from the payment of a
dividend by the Company on its Stock, the Phantom Stock Unit Portion of each
Participant's account shall be credited with additional Phantom Stock Units the
number of which shall be determined by (i) multiplying the dividend per share
paid on the Company's Stock by the number of Phantom Stock Units credited to his
account at the time such dividend was declared, then (ii) dividing such amount
by the Fair Market Value on the payment date for such dividend.
(k) PAYMENT OF DEFERRED AWARDS. Payment with respect to amounts
credited to the account of a Participant shall be made in a series of annual
installments over a period of ten (10) years. Except as otherwise provided by
the Committee, each installment shall be withdrawn proportionately from the
Interest Portion and from the Phantom Stock Unit Portion of a Participant's
account based on the percentage of the Participant's account which he originally
elected to be credited with interest and with Phantom Stock Units, or, if a
later election has been permitted by the Committee and is then in effect, based
on the percentage specified in such later election. Payments shall commence on
the date specified by the Participant in his deferral election, unless the
Committee in its sole discretion determines that payment shall be made over a
shorter period or in more frequent installments, or commence on an earlier date,
or any or all of the above. If a Participant dies prior to the date on which
payment with respect to all amounts credited to his account shall have been
completed, payment with respect to such amounts shall be made to the
Participant's beneficiary in a series of annual installments over a period of
five (5) years, unless the Committee in its sole discretion determines that
payment shall be made over a shorter period or in more frequent installments, or
both. To the extent practicable, each installment payable hereunder shall
approximate that part of the amount then credited to the Participant's or
beneficiary's account which, if multiplied by the number of installments
remaining to be paid would be equal to the entire amount then credited to the
Participant's account.
(l) COMPOSITION OF PAYMENT. The Committee shall cause all payments with
respect to deferred Awards to be made in a manner such that not more than
one-half of the value of each installment shall consist of Stock. To that end,
payment with respect to the Interest Portion and the Phantom Stock Unit Portion
of a Participant's account shall be paid in cash and Stock as the Committee
shall determine in its sole discretion. The determination of any amount to be
paid in
<PAGE>
cash for Phantom Stock Units shall be made by multiplying (i) the Fair Market
Value of one share of Stock on the seventh business day prior to the date as of
which payment is made, by (ii) the number of Phantom Stock Units for which
payment is being made. The determination of the number of shares of Stock, if
any, to be distributed with respect to the Interest Portion of a Participant's
account shall be made by dividing (i) one-half of the value of such portion on
the seventh business day prior to the date as of which payment is made, by (ii)
the Fair Market Value of one share of Stock on such date. Fractional shares
shall be paid in cash.
(m) ALTERNATIVE INVESTMENT EQUIVALENTS. If the Committee shall have
permitted Participants to elect to have deferred Awards of Performance Share
Units invested in one or more hypothetical investment equivalents other than
interest or Phantom Stock Units, such deferred Awards shall be credited with
hypothetical investment earnings at such rate, manner and time as the Committee
shall determine. At the end of the deferral period, payment shall be made in
respect of such hypothetical investment equivalents in such manner and at such
time as the Committee shall determine.
(n) ADJUSTMENT OF PERFORMANCE GOALS. The Committee may, during the Award
Period, make such adjustments to Performance Goals as it may deem appropriate,
to compensate for, or reflect, any significant changes that may have occurred
during such Award Period in (i) applicable accounting rules or principles or
changes in the Company's method of accounting or in that of any other
corporation whose performance is relevant to the determination of whether an
Award has been earned or (ii) tax laws or other laws or regulations that alter
or affect the computation of the measures of Performance Goals used for the
calculation of Awards.
10. RESTRICTED STOCK AWARDS AND PHANTOM STOCK UNITS
(a) AWARD OF RESTRICTED STOCK AND PHANTOM STOCK UNITS.
(i) The Committee shall have the authority (1) to grant
Restricted Stock and Phantom Stock Unit Awards, (2) to issue or transfer
Restricted Stock to Participants, and (3) to establish terms, conditions
and restrictions applicable to such Restricted Stock and Phantom Stock
Units, including the Restricted Period, which may differ with respect to
each grantee, the time or times at which Restricted Stock or Phantom
Stock Units shall be granted or become vested and the number of shares
or units to be covered by each grant.
(ii) The Holder of a Restricted Stock Award shall execute and
deliver to the Secretary of the Company an agreement with respect to
Restricted Stock and escrow agreement satisfactory to the Committee and
the appropriate blank stock powers with respect to the Restricted Stock
covered by such agreements and shall pay to the Company, as the purchase
price of the shares of Stock subject to such Award, the aggregate par
value of such shares of Stock within 60 days following the making of
such Award. If a Participant shall fail to execute the agreement, escrow
agreement and stock powers or shall fail to pay such purchase price
within such period, the Award shall be null and void. Subject to the
restrictions set forth in Section 10(b), the Holder shall generally have
the rights and privileges of a stockholder as to such Restricted Stock,
including the right to
<PAGE>
vote such Restricted Stock. At the discretion of the Committee, cash and
stock dividends with respect to the Restricted Stock may be either
currently paid or withheld by the Company for the Holder's account, and
interest may be paid on the amount of cash dividends withheld at a rate
and subject to such terms as determined by the Committee. Cash or stock
dividends so withheld by the Committee shall not be subject to
forfeiture.
(iii) In the case of a Restricted Stock Award, the Committee
shall then cause stock certificates registered in the name of the Holder
to be issued and deposited together with the stock powers with an escrow
agent to be designated by the Committee. The Committee shall cause the
escrow agent to issue to the Holder a receipt evidencing any stock
certificate held by it registered in the name of the Holder.
(iv) In the case of a Phantom Stock Units Award, no shares of
Common Stock shall be issued at the time the Award is made, and the
Company will not be required to set aside a fund for the payment of any
such Award. The Committee shall, in its sole discretion, determine
whether to credit to the account of, or to currently pay to, each Holder
of an Award of Phantom Stock Units an amount equal to the cash dividends
paid by the Company upon one share of Stock for each Phantom Stock Unit
then credited to such Holder's account ("Dividend Equivalents").
Dividend Equivalents credited to Holder's account shall be subject to
forfeiture and may bear interest at a rate and subject to such terms as
determined by the Committee.
(b) RESTRICTIONS.
(i) Restricted Stock awarded to a Participant shall be subject
to the following restrictions until the expiration of the Restricted
Period: (1) the Holder shall not be entitled to delivery of the stock
certificate; (2) the shares shall be subject to the restrictions on
transferability set forth in the Grant; (3) the shares shall be subject
to forfeiture to the extent provided in subparagraph (d) and, to the
extent such shares are forfeited, the stock certificates shall be
returned to the Company, and all rights of the Holder to such shares and
as a shareholder shall terminate without further obligation on the part
of the Company.
(ii) Phantom Stock Units awarded to any Participant shall be
subject to the following restrictions until the expiration of the
Restricted Period: (1) the units shall be subject to forfeiture to the
extend provided in subparagraph (d), and to the extent such units are
forfeited, all rights of the Holder to such units shall terminate
without further obligation on the part of the Company and (2) any other
restrictions which the Committee may determine in advance are necessary
or appropriate.
(iii) The Committee shall have the authority to remove any or
all of the restrictions on the Restricted Stock and Phantom Stock Units
whenever it may determine that, by reason of changes in applicable laws
or other changes in circumstances arising after the date of the
Restricted Stock Award or Phantom Stock Award, such action is
appropriate.
<PAGE>
(c) RESTRICTED PERIOD.
The Restricted Period of Restricted Stock and Phantom Stock
Units shall commence on the Date of Grant and unless otherwise
established by the Committee in the Incentive Plan Agreement, shall
expire from time to time as to that part of the Restricted Stock and
Phantom Stock Units in accordance with the following schedule:
Percentage of Shares or Units
Covered by Each Restricted
Stock Award or Phantom
Stock Units Award for
Completed Years Which Restricted Period
From Date of Grant Expired
---------------------- -----------------------------
Less than 3 years Zero Percent
3 Years Thirty-Three Percent
4 Years Thirty-Three Percent
5 Years Thirty-Three Percent
(d) FORFEITURE PROVISIONS. In the event a Holder terminates employment
during a Restricted Period, that portion of the Award with respect to which
restrictions have not expired ("Non-Vested Portion") shall be treated as
follows.
(i) Resignation or discharge:
* The Non-Vested Portion of the Award would be completed
forfeited.
(ii) Retirement, excluding early retirement, pursuant to the
Company retirement plan then in effect:
* The Non-Vested Portion of the Award would be prorated for
service during the Restricted Period and would be received as soon as
practicable following retirement.
(iii) Early retirement:
* If at the Holder's request, the Non-Vested Portion of Award
would be completed forfeited.
* If at the Company's request, the Non-Vested Portion of the
Award would be prorated for service during the Restricted Period and
paid at the end of the Restricted Period.
(iv) Death or Disability:
<PAGE>
* The Non-Vested Portion of the Award would be prorated for
service during the Restricted Period and paid to the Participant or his
beneficiary as soon as practicable following death or disability.
(e) DELIVERY OF RESTRICTED STOCK AND SETTLEMENT OF PHANTOM STOCK UNITS.
Upon the expiration of the Restricted Period with respect to any shares of Stock
covered by a Restricted Stock Award, a stock certificate evidencing the shares
of Restricted Stock which have not then been forfeited and with respect to which
the Restricted Period has expired (to the nearest full share) shall be delivered
without charge to the Holder, or his beneficiary, free of all restrictions under
the Plan.
Upon the expiration of the Restricted Period with respect to any Phantom
Stock Units covered by a Phantom Stock Unit Award, the Company shall deliver to
the Holder or his beneficiary without any charge one share of Stock for each
Phantom Stock Unit which has not then been forfeited and with respect to which
the Restricted Period has expired ("vested unit") and cash equal to any Dividend
Equivalents credited with respect to each such vested unit and the interest
thereon, if any; provided, however, that the Committee may, in its sole
discretion, elect to pay cash or part cash and part Stock in lieu of delivering
only Stock for vested units. If cash payment is made in lieu of delivering
Stock, the amount of such payment shall be equal to the Fair Market Value for
the date on which the Restricted Period lapsed with respect to such vested unit.
(f) PAYMENT FOR RESTRICTED STOCK. Except as provided in subparagraph
10(a)(ii), a Holder shall not be required to make any payment for Stock received
pursuant to a Restricted Stock Award.
(g) SEC RESTRICTIONS. Each certificate representing Restricted Stock
awarded under the Plan shall bear the following legend:
"The shares of Stock represented by this certificate were issued
pursuant to the Stock Incentive Plan of E. W. Blanch Holdings, Inc. Such shares
have not been registered under the Securities Act of 1933 and may not be sold or
transferred except in compliance therewith."
Stop transfer orders shall be entered with the Company's transfer agent and
registrar against the transfer of legend securities except in compliance with
the Securities Act of 1933, as amended ("Act").
11. GENERAL
(a) ADDITIONAL PROVISIONS OF AN AWARD. The award of any benefit under
the Plan may also be subject to such other provisions (whether or not applicable
to the benefit awarded to any other Participant) as the Committee determines
appropriate including, without limitation, provisions to assist the Participant
in financing the purchase of Common Stock through the exercise of Options,
provisions for the forfeiture of or restrictions on resale or other disposition
of shares acquired under any form of benefit, provisions giving the Company the
right to
<PAGE>
repurchase shares acquired under any form of benefit in the event the
Participant elects to dispose of such shares, and provisions to comply with
federal and state securities laws and federal and state income tax withholding
requirements.
(b) PRIVILEGES OF STOCK OWNERSHIP. Except as otherwise specifically
provided in the Plan, no person shall be entitled to the privileges of stock
ownership in respect of shares of Stock which are subject to Options or
Restricted Stock Awards, Performance Share Unit Awards or Phantom Stock Unit
Awards hereunder until such shares have been issued to that person upon exercise
of an Option according to its terms or upon sale or grant of those shares in
accordance with a Restricted Stock Award, Performance Share Unit Award or
Phantom Stock Unit Award.
(c) GOVERNMENT AND OTHER REGULATIONS. The obligation of the Company to
make payment of Awards in Stock or otherwise shall be subject to all applicable
laws, rules, and regulations, and to such approvals by governmental agencies as
may be required. The Company shall be under no obligation to register under the
Act any of the shares of Stock paid under the Plan. If the shares paid under the
Plan may in certain circumstances be exempt from registration under the Act, the
Company may restrict the transfer of such shares in such manner as it deems
advisable to ensure the availability of any such exemption.
(d) TAX WITHHOLDING. Notwithstanding any other provision of the Plan,
the Company or a Subsidiary, as appropriate, shall have the right to deduct from
all Awards, to the extent paid in cash, all federal, state or local taxes as
required by law to be withheld with respect to such Awards and, in the case of
Awards paid in Stock, the Holder or other person receiving such Stock may be
required to pay to the Company or a Subsidiary, as appropriate prior to delivery
of such Stock, the amount of any such taxes which the Company or Subsidiary is
required to withhold, if any, with respect to such Stock. Subject in particular
cases to the disapproval of the Committee, the Company may accept shares of
Stock of equivalent Fair Market Value in payment of such withholding tax
obligations if the Holder of the Award elects to make payment in such manner at
least six months prior to the date such tax obligation is determined.
(e) CLAIM TO AWARDS AND EMPLOYMENT RIGHTS. No employee or other person
shall have any claim or right to be granted an Award under the Plan nor, having
been selected for the grant of an Award, to be selected for a grant of any other
Award. Neither this Plan nor any action taken hereunder shall be construed as
giving any Participant any right to be retained in the employ of the Company or
a Subsidiary.
(f) CONDITIONS. Each Participant to whom Awards are granted under the
Plan shall be required to enter into an Incentive Plan Agreement in a form
authorized by the Committee, including provisions that the Participant shall not
disclose any trade or secret data or any other confidential information of the
Company or any of its Subsidiaries acquired during the course of such
Participant's employment.
(g) DESIGNATION AND CHANGE OF BENEFICIARY. Each Participant shall file
with the Committee a written designation of one or more persons as the
beneficiary who shall be entitled to receive the amounts payable with respect to
an Award of Performance Share Units, Phantom
<PAGE>
Share Units or Restricted Stock, if any, due under the Plan upon his death. A
Participant may, from time to time, revoke or change his beneficiary designation
without the consent of any prior beneficiary by filing a new designation with
the Committee. The last such designation received by the Committee shall be
controlling; provided, however, that no designation, or change or revocation
thereof, shall be effective unless received by the Committee prior to the
Participant's death, and in no event shall it be effective as of a date prior to
such receipt.
(h) PAYMENTS TO PERSONS OTHER THAN PARTICIPANTS. If the Committee shall
find that any person to whom any amount is payable under the Plan is unable to
care for his affairs because of illness or accident, or is a minor, or has died,
then any payment due to such person or his estate (unless a prior claim therefor
has been made by a duly appointed legal representative), may, if the Committee
so directs the Company, be paid to his spouse, child, relative, an institution
maintaining or having custody of such person, or any other person deemed by the
Committee to be a proper recipient on behalf of such person otherwise entitled
to payment. Any such payment shall be a complete discharge of the liability of
the Committee and the Company therefor.
(i) NO LIABILITY OF COMMITTEE MEMBERS. No member of the Committee shall
be personally liable by reason of any contract or other instrument executed by
such member or on his behalf in his capacity as a member of the Committee nor
for any mistake of judgment made in good faith, and the Company shall indemnify
and hold harmless each member of the Committee and each other employee, officer
or director of the Company to whom any duty or power relating to the
administration or interpretation of the Plan may be allocated or delegated,
against any cost or expense (including counsel fees) or liability (including any
sum paid in settlement of a claim) arising out of any act or omission to act in
connection with the Plan unless arising out of such person's own fraud or bad
faith; provided, however, that approval of the Board shall be required for the
payment of any amount in settlement of a claim against any such person. The
foregoing right of indemnification shall not be exclusive of any other rights of
indemnification to which such persons may be entitled under the Company's
Articles of Incorporation or By-Laws, as a matter of law, or otherwise, or any
power that the Company may have to indemnify them, or hold them harmless.
(j) GOVERNING LAW. The Plan shall be governed by and construed in
accordance with the internal laws of the State of Minnesota without reference to
the principles of conflicts of law thereof.
(k) FUNDING. Except as provided under Section 10, no provision of the
Plan shall require the Company for the purpose of satisfying any obligations
under the Plan, to purchase assets or place any assets in a trust or other
entity to which contributions are made or otherwise to segregate any assets, nor
shall the Company maintain separate bank accounts, books, records or other
evidence of the existence of a segregated or separately maintained or
administered fund for such purposes. Holders shall have no rights under the Plan
other than as unsecured general creditors of the Company, except that insofar as
they may have become entitled to payment of additional compensation by
performance of services, they shall have the same rights as other employees
under general law.
<PAGE>
(l) NONTRANSFERABILITY. A person's rights and interest under the Plan,
including amounts payable, may not be sold, assigned, donated, or transferred or
otherwise disposed of, mortgaged, pledged or encumbered except, in the event of
a Holder's death, to a designated beneficiary to the extent permitted by the
Plan, or in the absence of such designation, by will or the laws of descent and
distribution.
(m) RELIANCE ON REPORTS. Each member of the Committee and each member of
the Board shall be fully justified in relying, acting or failing to act, and
shall not be liable for having so relied, acted or failed to act in good faith,
upon any report made by the independent public accountant of the Company and its
Subsidiaries and upon any other information furnished in connection with the
Plan by any person or persons other than himself.
(n) RELATIONSHIP TO OTHER BENEFITS. No payment under the Plan shall be
taken into account in determining any benefits under any pension, retirement,
profit sharing, group insurance or other benefit plan of the Company or any
Subsidiary except as otherwise specifically provided.
(o) EXPENSES. The expenses of administering the Plan shall be borne by
the Company and its Subsidiaries.
(p) PRONOUNS. Masculine pronouns and other words of masculine gender
shall refer to both men and women.
(q) TITLES AND HEADINGS. The titles and headings of the sections in the
Plan are for convenience of reference only, and in the event of any conflict,
the text of the Plan, rather than such titles or headings shall control.
12. CHANGES IN CAPITAL STRUCTURE
Options, SARs, Restricted Stock Awards, Phantom Stock Unit Awards,
Performance Share Unit Awards, and any agreements evidencing such Awards, and
Performance Goals shall be subject to adjustment or substitution, as determined
by the Committee in its sole discretion, as to the number, price or kind of a
share of Stock or other consideration subject to such Awards or as otherwise
determined by the Committee to be equitable (i) in the event of changes in the
outstanding Stock or in the capital structure of the Company, or of any other
corporation whose performance is relevant to the attainment of Performance Goals
hereunder, by reason of stock dividends, stock splits, recapitalizations,
reorganizations, mergers, consolidations, combinations, exchanges, or other
relevant changes in capitalization occurring after the Date of Grant of any such
Award or (ii) in the event of any change in applicable laws or any change in
circumstances which results in or would result in any substantial dilution or
enlargement of the rights granted to, or available for, Participants in the
Plan, or which otherwise warrants equitable adjustment because it interferes
with the intended operation of the Plan. In addition, in the event of any such
adjustments or substitution, the aggregate number of shares of Stock available
under the Plan shall be appropriately adjusted by the Committee, whose
determination shall be conclusive. Any adjustment in Incentive Stock Options
under this Section 12 shall be made only to the extent not
<PAGE>
constituting a "modification within the meaning of Section 424(h)(3) of the
Code. The Company shall give each Participant notice of an adjustment hereunder
and, upon notice, such adjustment shall be conclusive and binding for all
purposes.
13. EFFECT OF CHANGE IN CONTROL
(a) In the event of a Change in Control, notwithstanding any vesting
schedule provided for hereunder or by the Committee with respect to an Award of
Options, SARs, Phantom Stock Units or Restricted Stock, such Option or SAR shall
become immediately exercisable with respect to 100 percent of the shares subject
to such Option or SAR, and the Restricted Period shall expire immediately with
respect to 100 percent of the Phantom Stock Units or shares of Restricted Stock
subject to Restrictions; provided, however, that to the extent that so
accelerating the time an Incentive Stock Option may first be exercised would
cause the limitation provided in Section 7(f) to be exceeded, such Options shall
instead first become exercisable in so many of the next following years as is
necessary to comply with such limitation.
(b) In the event of a Change in Control, all incomplete Award Periods in
effect on the date the Change in Control occurs shall end on the date of such
change, and the Committee shall, (i) determine the extent to which Performance
Goals with respect to each such Award Period have been met based upon such
audited or unaudited financial information then available as it deems relevant,
(ii) cause to be paid to each Participant partial or full Awards with respect to
Performance Goals for each such Award Period based upon the Committee's
determination of the degree of attainment of Performance Goals, and (iii) cause
all previously deferred Awards to be settled in full as soon as Possible.
(c) The obligations of the Company under the Plan shall be binding upon
any successor corporation or organization resulting from the merger,
consolidation or other reorganization of the Company, or upon any successor
corporation or organization succeeding to substantially all of the assets and
business of the Company. The Company agrees that it will make appropriate
provisions for the preservation of Participant's rights under the Plan in any
agreement or plan which it may enter into or adopt to effect any such merger,
consolidation, reorganization or transfer of assets.
14. NONEXCLUSIVITY OF THE PLAN
Neither the adoption of this Plan by the Board nor the submission of
this Plan to the stockholders of the Company for approval shall be construed as
creating any limitations on the power of the Board to adopt such other incentive
arrangements as it may deem desirable, including, without limitation, the
granting of stock options otherwise than under this Plan, and such arrangements
may be either applicable generally or only in specific cases.
15. AMENDMENTS AND TERMINATION
The Board may at any time terminate the Plan. With the express written
consent of an individual Participant, the Board may cancel or reduce or
otherwise alter the outstanding Awards
<PAGE>
thereunder if, in its judgment, the tax, accounting, or other effects of the
Plan or potential payouts thereunder would not be in the best interest of the
Company. The Board may, at any time, or from time to time, amend or suspend and,
if suspended, reinstate, the Plan in whole or in part, provided, however, that
without further stockholder approval the Board shall not:
(a) Increase the maximum number of shares of Stock which may be issued
on exercise of Options, SARs, or pursuant to Restricted Stock Awards, Phantom
Stock Unit Awards, or Performance Share Unit Awards, except as provided in
Section 12;
(b) Change the maximum Option Price;
(c) Extend the maximum Option term;
(d) Extend the termination date of the Plan; or
(e) Change the class of persons eligible to receive Awards under the
Plan.
<PAGE>
First Amendment
to the
1993 Stock Incentive Plan of
E. W. Blanch Holdings, Inc.
This First Amendment to the 1993 Stock Incentive Plan of E. W. Blanch
Holdings, Inc. has been made by E. W. Blanch Holdings, Inc. ("the Company"):
WHEREAS, the Company has previously established the 1993 Stock Incentive
Plan to provide a means to attract able persons to enter and remain in the
employ of the Company; and
WHEREAS, the Company has reserved the right to amend the Plan under the
terms hereof;
NOW, THEREFORE, the Company hereby amends the Agreement as follows:
1. Subsection "n" of Section 2 has been amended to read as follows:
"n. 'Fair Market Value' on a given date means (a) the last reported sale
price for the Stock on the current business day (or, if there were no
such sales on the current business day, on the next most recent date on
which there were sales) as reported on the Composite Tape if the Stock
is listed on the New York Stock Exchange (`NYSE') or on the National
Association of Securities Dealers National Market System (`NMS') or (b)
if the Stock is not then issued on the NYSE or the NMS, the average
between the closing bid and asked price quotations for the Stock on the
prior business day (or if none on the current business day, on the next
most recent date) as reported on the National Association of Securities
Dealers Automatic Quotation System or any successor thereto."
2. Subsection "a" of Section 5 has been amended to read as follows:
"(a) Subject to Section 12, the aggregate number of shares of Stock made
subject to Awards may not exceed 2,400,000;"
3. Subsection (ii) of Section 7(c) has been amended to read as follows:
"(ii) If the Holder terminates otherwise than by Normal Termination or
death, the Option shall lapse three months after cessation of
employment."
The provisions of the 1993 Stock Incentive Plan shall remain otherwise
unchanged.
<PAGE>
Second Amendment
to the
1993 Stock Incentive Plan of
E. W. Blanch Holdings, Inc.
This Second Amendment to the 1993 Stock Incentive Plan of E. W. Blanch
Holdings, Inc. has been made by E. W. Blanch Holdings, Inc. ("the Company"):
WHEREAS, the Company has previously established the 1993 Stock Incentive
Plan to provide a means to attract able persons to enter and remain in the
employ of the Company; and
WHEREAS, the Company has reserved the right to amend the Plan under the
terms hereof;
NOW, THEREFORE, the Company hereby amends the Agreement as follows:
Section 7 shall be amended by adding the following subsection j:
"(j) AWARD LIMITATIONS UNDER THE PLAN. No Eligible
Person may be granted any Award or Awards, the value of which
Awards are based solely on an increase in the Value of the
shares after the date of such Awards, for more than 250,000
shares in the aggregate in any calendar-year period. The
foregoing annual limitation specifically includes the grant of
any 'performance-based' awards within the meaning of Section
162(m) of the Code."
The provisions of the 1993 Stock Incentive Plan shall remain otherwise
unchanged.
<PAGE>
Third Amendment
to the
1993 Stock Incentive Plan of
E. W. Blanch Holdings, Inc.
This Third Amendment to the 1993 Stock Incentive Plan of E. W. Blanch
Holdings, Inc. has been made by E. W. Blanch Holdings, Inc. ("the Company"):
WHEREAS, the Company has previously established the 1993 Stock Incentive
Plan to provide a means to attract able persons to enter and remain in the
employ of the Company; and
WHEREAS, the Company has reserved the right to amend the Plan under the
terms hereof;
NOW, THEREFORE, the Company hereby amends the Agreement as follows:
Subsection "a" of Section 5 has been amended to read as follows:
"(a) Subject to Section 12, the aggregate number of shares of Stock made
subject to Awards may not exceed 4,400,000;"
The provisions of the 1993 Stock Incentive Plan shall remain otherwise
unchanged.
<PAGE>
E. W. BLANCH HOLDINGS, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Edgar W. Blanch, Jr. and Chris L. Walker as
Proxies, each with the power to appoint his substitute, and hereby authorizes
them to represent and to vote, as designated below, all the shares of Common
Stock of E. W. Blanch Holdings, Inc. held of record by the undersigned on March
9, 1998, at the Annual Meeting of Shareholders to be held on April 23, 1998 or
any adjournment thereof.
1. ELECTION OF DIRECTORS.
[ ] FOR all nominees listed below [ ] WITHHOLD AUTHORITY
(EXCEPT AS MARKED TO THE CONTRARY TO VOTE FOR ALL NOMINEES
BELOW): LISTED BELOW:
(INSTRUCTION: to withhold authority to vote for any individual nominee write
that nominee's name on the space provided below.)
- --------------------------------------------------------------------------------
James N. Land, Jr., Chris L. Walker, Paul B. Ingrey.
2. APPROVAL OF THE E. W. BLANCH HOLDINGS, INC. MANAGEMENT INCENTIVE PLAN.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. APPROVAL OF THE AMENDMENT TO THE E.W. BLANCH HOLDINGS, INC. 1993 STOCK
INCENTIVE PLAN.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. RATIFICATION OF APPOINTMENT OF ERNST & YOUNG LLP AS INDEPENDENT AUDITORS.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
5. In their discretion the Proxies are authorized to vote upon such other
business as may properly come before the Meeting.
(CONTINUED, AND TO BE SIGNED, ON REVERSE SIDE)
<PAGE>
(CONTINUED FROM OTHER SIDE)
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE UNDERSIGNED STOCKHOLDER. IN THE ABSENCE OF SPECIFIC DIRECTIONS, THE PROXY
WILL BE VOTED FOR THE ELECTION OF DIRECTORS AND FOR ITEMS 2-4.
Please sign exactly as name appears below. When shares are held by joint
tenants, both should sign. When signing as attorney, as executor, administrator,
trustee or guardian, please give full title as such. If a corporation, please
sign in full corporate name by President or other authorized officer. If a
partnership, please sign in partnership name by authorized person.
Dated: ________________________________, 1998
_____________________________________________
Signature
_____________________________________________
Signature if held jointly
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY
CARD PROMPTLY USING THE ENCLOSED ENVELOPE
