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
[ ] Confidential, for Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to (section)240.14a-11(c)
or (section)240.14a-12
Erie Indemnity Company
- -------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- -------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act
Rules 14a-6(i)(1) and 0-11.
1) Title of each class of securities to which transaction applies:
-------------------------------------------
2) Aggregate number of securities to which transaction applies:
-------------------------------------------
3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11
(Set forth the amount on which the filing fee is
calculated and state how it was determined):
-------------------------------------------
4) Proposed maximum aggregate value of transaction:
-------------------------------------------
5) Total fee paid:
-------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for which the
offsetting fee was paid previously. Identify the previous filing by
registration statement number, or the Form or Schedule and the date of
its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
<PAGE>
[LOGO]
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 28, 1998
To the Holders of Class A Common Stock and Class B Common Stock of ERIE
INDEMNITY COMPANY:
The Annual Meeting of Shareholders of Erie Indemnity Company (the
"Company") will be held at 3:00 p.m., local time, on Tuesday, April 28, 1998, at
the Auditorium of the F. W. Hirt--Perry Square Building, 100 Erie Insurance
Place (Sixth and French Streets), Erie, Pennsylvania 16530 for the following
purposes:
1. To elect 12 directors of the Company to serve until the Company's 1999
Annual Meeting of Shareholders and until their successors are elected;
2. To ratify the selection of Brown, Schwab, Bergquist & Co. as independent
public accountants for the Company for 1998;
3. To transact such other business as may properly come before the Annual
Meeting and any adjournment, postponement or continuation thereof.
The Board of Directors has fixed the close of business on Tuesday, March
18, 1998 as the record date for the determination of the holders of the
Company's Class B Common Stock entitled to notice of and to vote at the Annual
Meeting. Holders of the Company's Class A Common Stock do not have the right to
vote on any of the matters to be acted upon at the Annual Meeting.
A copy of the Company's Annual Report for the year ended December 31, 1997
and this Notice are being mailed to holders of the Company's Class A Common
Stock and Class B Common Stock. Holders of the Company's Class B Common Stock
will also receive a Proxy and Proxy Statement in accordance with Securities and
Exchange Commission rules.
Holders of Class B Common Stock are requested to complete, sign and return
the enclosed form of proxy in the envelope provided, whether or not they expect
to attend the Annual Meeting in person.
By Order of the Board of Directors,
/s/ Jan R. Van Gorder
Jan R. Van Gorder,
Senior Executive Vice President,
Secretary and General Counsel
April 1, 1998
Erie, Pennsylvania
<PAGE>
ERIE INDEMNITY COMPANY
100 Erie Insurance Place
Erie, Pennsylvania 16530
PROXY STATEMENT
This Proxy Statement, and the form of proxy enclosed herewith which are
first being mailed to the Class B shareholders of Erie Indemnity Company (the
"Company") on or about April 1, 1998, are furnished in connection with the
solicitation of proxies by the Board of Directors of the Company to be voted at
the Annual Meeting of Shareholders (the "Annual Meeting") to be held at 3:00
p.m., local time, on Tuesday, April 28, 1998, and at any adjournment,
postponement or continuation thereof, at the Auditorium of the F.W. Hirt-Perry
Square Building, 100 Erie Insurance Place (Sixth and French Streets), Erie,
Pennsylvania 16530.
Shares of Class B Common Stock represented by proxies in the accompanying
form, if properly signed and returned, will be voted in accordance with the
specifications made thereon by holders of Class B Common Stock. Any proxy
representing shares of Class B Common Stock not specifying to the contrary will
be voted for the election of the nominees for director named below and for the
ratification of the selection of Brown, Schwab, Bergquist & Co. as independent
public accountants for the Company for 1998. A holder of Class B Common Stock
who signs and returns a proxy in the accompanying form may revoke it at any time
before it is voted by giving written notice of revocation, by furnishing a duly
executed proxy bearing a later date to the Secretary of the Company or by
attending the Annual Meeting and voting in person.
The cost of solicitation of proxies in the accompanying form will be borne
by the Company, including expenses in connection with preparing and mailing this
Proxy Statement. Such solicitation will be made by mail and may also be made on
behalf of the Company in person or by telephone by the Company's regular
officers and employees, none of whom will receive special compensation for such
services. The Company, upon request therefor, will also reimburse brokers,
nominees, fiduciaries and custodians or persons holding shares of Class B Common
Stock in their names or in the names of nominees for their reasonable expenses
in sending proxy material to beneficial owners.
Only holders of Class B Common Stock of record at the close of business on
March 18, 1998 will be entitled to vote at the Annual Meeting. Each share of
Class B Common Stock is entitled to one vote. A majority of the outstanding
shares of Class B Common Stock will constitute a quorum at the Annual Meeting
for the election of directors and ratification of the selection of independent
auditors. Cumulative voting rights do not exist with respect to the election of
directors. The 12 nominees for director receiving the highest number of votes
cast by the holders of Class B Common Stock in person or by proxy at the Annual
Meeting will be elected as directors. Approval of the ratification of the
selection of Brown, Schwab, Bergquist & Co. as independent public accountants
for 1998 will require the affirmative vote of a majority of the Class B votes
cast at the Annual Meeting. Shares of Class B Common Stock held by brokers or
nominees as to which voting instructions have not been received from the
beneficial owner or person otherwise entitled to vote and as to which the broker
or nominee does not have discretionary voting power, i.e., broker nonvotes, will
be treated as not present and not entitled to vote for nominees for election as
directors. Abstentions will be treated as the withholding of authority to vote
for nominees for election as directors. Abstentions from voting and broker
nonvotes will have no effect on the election of directors since they will not
represent votes cast at the Annual Meeting for the purpose of electing
directors.
As of the close of business on March 18, 1998, the Company had outstanding
67,032,000 shares of Class A Common Stock, which are not entitled to vote on any
of the matters to be acted upon at the Annual Meeting, and 3,070 shares of Class
B Common Stock which have the exclusive right to vote on all matters to be acted
upon at the Annual Meeting.
The H.O. Hirt Trusts collectively own 2,340 shares of the Company's Class B
Common Stock, which, since such shares represent 76.22% of the outstanding
shares of Class B Common Stock, is sufficient to determine the outcome of any
matter submitted to a vote of the holders of the Class B Common Stock, assuming
all of the shares held by the H.O. Hirt Trusts are voted in the same manner. The
3
<PAGE>
trustees of the H.O. Hirt Trusts are F. William Hirt, Susan Hirt Hagen and
Mellon Bank, N.A. Under the provisions of the H.O. Hirt Trusts, the shares of
the Company's Class B Common Stock held by the H.O. Hirt Trusts are to be voted
as directed by a majority of the three trustees. If at least a majority of the
trustees of both of the H.O. Hirt Trusts agrees to vote for the election of the
12 nominees for director named below and for ratification of the selection of
Brown, Schwab, Bergquist & Co. as independent public accountants for 1998, such
nominees will be elected as directors of the Company and the selection of Brown,
Schwab, Bergquist & Co. as independent public accountants for 1998 will be
ratified even if all shares of Class B Common Stock other than those held by the
H.O. Hirt Trusts, are not voted for such nominees or for such ratification. The
Company has not been advised at this time, however, how the trustees of the H.O.
Hirt Trusts intend to vote at the Annual Meeting.
The Company is a Pennsylvania business corporation formed in 1925 to be the
attorney-in-fact for Erie Insurance Exchange (the "Exchange"), a
Pennsylvania-domiciled reciprocal insurance exchange. The Company's principal
business activity consists of management of the Exchange. The Company is also
engaged in the property/casualty insurance business through its wholly-owned
subsidiaries, Erie Insurance Company ("Erie Insurance Co."), Erie Insurance
Company of New York ("Erie NY") and Erie Insurance Property & Casualty Company
("EI P&C") and through its management of Flagship City Insurance Company
("Flagship"), a subsidiary of the Exchange. In addition, the Company holds
investments in both affiliated and unaffiliated entities, including a 21.6%
common stock interest in Erie Family Life Insurance Company ("EFL"), an
affiliated life insurance company.
BENEFICIAL OWNERSHIP OF COMMON STOCK
The following table sets forth as of February 27, 1998 the amount and
percentage of the Company's outstanding Class A Common Stock and Class B Common
Stock beneficially owned by (i) each person who is known by the Company to own
beneficially more than 5% of its outstanding Class A Common Stock or Class B
Common Stock, (ii) each director and nominee for director, (iii) each current
executive officer named in the Summary Compensation Table and (iv) all named
executive officers and directors of the Company as a group.
<TABLE>
<CAPTION>
Shares of Class A Percent Shares of Class B Percent of
Common Stock of Outstanding Common Stock Outstanding
Name of Individual or Beneficially Class A Beneficially Class B
Identity of Group Owned(1)(2) Common Stock(3) Owned(1)(2) Common Stock(3)
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
5% Holders:
Black Interests Limited Partnership(4) 8,726,250 13.02% 390 12.70%
Erie, Pennsylvania
Samuel P. Black & Associates, Inc.(4) 24,000 -- -- --
Erie, Pennsylvania
Hagen Family Limited Partnership(5)(6) 10,092,900 15.06 1 --
Erie, Pennsylvania
Susan Hirt Hagen(5)(6)(7) 6,658,800 9.93 12 --
Erie, Pennsylvania
H.O. Hirt Trusts(5)(7) -- -- 2,340 76.22
Erie, Pennsylvania
Hirt Family Limited Partnership(8) 11,830,000 17.65 -- --
Erie, Pennsylvania
F. William Hirt(7)(8) 1,878,777 2.80 20 --
Erie, Pennsylvania
Estate of Edward B. Young 3,613,000 5.39 180 5.86
Erie, Pennsylvania
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
Shares of Class A Percent Shares of Class B Percent of
Common Stock of Outstanding Common Stock Outstanding
Name of Individual or Beneficially Class A Beneficially Class B
Identity of Group Owned(1)(2) Common Stock(3) Owned(1)(2) Common Stock(3)
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Directors(9):
Peter B. Bartlett 3,000 -- -- --
Samuel P. Black, III(4) 129,750 -- 20 --
J. Ralph Borneman, Jr. 60,000 -- -- --
Patricia A. Goldman 1,650 -- -- --
Irvin H. Kochel 107,700 -- -- --
Edmund J. Mehl 10,660 -- -- --
Stephen A. Milne 21,839 -- -- --
John M. Petersen (10) 2,561,092 3.82 1 --
Seth E. Schofield 15,332 -- -- --
Jan R. Van Gorder 148,090 -- 1 --
Harry H. Weil 300 -- -- --
Executive Officers(11):
John J. Brinling, Jr. 14,044 -- -- --
Philip A. Garcia 89,865 -- -- --
Dennis M. Geib 23,500 -- -- --
All Directors and Executive Officers
as a Group (17 persons) 42,402,649 63.26% 2,788 90.81%
</TABLE>
(1) Information furnished by the named persons.
(2) Under the rules of the Securities and Exchange Commission (the "SEC"),
a person is deemed to be the beneficial owner of securities if he has,
or shares, "voting power" (which includes the power to vote, or to
direct the voting of, such securities) or "investment power" (which
includes the power to dispose, or to direct the disposition, of such
securities). Under these rules, more than one person may be deemed to
be the beneficial owner of the same securities. Securities beneficially
owned also include securities owned jointly, in whole or in part, or
individually by the person's spouse, minor children or other relatives
who share the same home. The information set forth in the above table
includes all shares of Class A Common Stock and Class B Common Stock of
the Company over which the named individuals, individually or together,
share voting power or investment power, adjusted, however, to eliminate
the reporting of shares more than once in order not to overstate the
aggregate beneficial ownership of such persons and to reflect shares as
to which the named individuals disclaim beneficial ownership. The table
does not reflect shares of Class A Common Stock issuable upon
conversion of shares of Class B Common Stock, each of which is
currently convertible into 2,400 shares of Class A Common Stock.
(3) Less than 1% unless otherwise indicated.
(4) Samuel P. Black, Jr. is the managing general partner, a general partner
and a limited partner and Samuel P. Black, III is a general partner and
a limited partner of Black Interests Limited Partnership. Samuel P.
Black, Jr. has the right to vote these shares. Samuel P. Black, Jr. is
Chairman of the Board of Samuel P. Black and Associates and Samuel P.
Black, III is President of Samuel P. Black and Associates. Samuel P.
Black, III has sole voting power over 129,750 Class A shares and 10
Class B shares he owns directly and Samuel P. Black, III also holds a
durable power of attorney for his father Samuel P.
Black, Jr. and may act in his behalf.
(5) Susan Hirt Hagen and her husband Thomas B. Hagen are limited partners
of this partnership. Mr. Hagen is the general partner of the
partnership and has the sole right to vote such shares. Under the rules
of the SEC described in footnote (2), the maximum beneficial ownership
of the Company's Class A Common Stock and the Company's Class B Common
Stock which Susan Hirt Hagen and Thomas B. Hagen together could be
deemed beneficially to have is 16,756,800 shares of the Company's Class
A Common Stock, or 25.0% of the outstanding shares of the Company's
Class A Common Stock, and 1,186 shares of the Company's Class B Common
Stock, or 38.6% of the outstanding shares of the Company's Class B
Common Stock. Mr. and Mrs. Hagen together could also be deemed the
beneficial owners of an additional 2,846,400 shares of the Company's
Class A Common Stock issuable upon the conversion of the 1,186 shares
of the Company's Class B Common Stock they together could be deemed
beneficially to own. If all 1,186 shares of the Company's Class B
Common Stock Mr. and Mrs. Hagen together could be deemed beneficially
to own were converted into the Company's Class A Common Stock, the
maximum beneficial ownership of the Company's Class A Common Stock that
Mr. and Mrs. Hagen together could be deemed to have would be 19,603,200
shares of the Company's Class A Common Stock, or 28.05% of the then
outstanding shares of the Company's Class A Common Stock. Thomas B.
Hagen disclaims beneficial ownership of the shares of the Company's
Class A Common Stock and Class B Common Stock owned by Susan Hirt
Hagen.
5
<PAGE>
(6) Excludes 5,100 shares of Class A Common Stock and 3 shares of Class B
Common Stock of the Company owned by Thomas B. Hagen, the husband of
Susan Hirt Hagen. Mrs. Hagen disclaims beneficial ownership of said
shares.
(7) There are two H.O. Hirt Trusts, one for the benefit of F. William Hirt
and one for the benefit of Susan Hirt Hagen. Each of the H.O. Hirt
Trusts is the record owner of 1,170 shares of Class B Common Stock, or
38.11% of the outstanding shares of the Company's Class B Common Stock.
The trustees of the H.O. Hirt Trusts are F. William Hirt, Susan Hirt
Hagen and Mellon Bank, N.A. Mr. Hirt and Mrs. Hagen, who are brother
and sister, are each the beneficial owner of 1,170 shares of Class B
Common Stock held by the H.O. Hirt Trusts.
(8) F. William Hirt is the general partner of this partnership and has the
sole right to vote such shares. Under the rules of the SEC described in
footnote (2), the maximum beneficial ownership of the Company's Class A
Common Stock and the Company's Class B Common Stock which F. William
Hirt could be deemed beneficially to have is 13,708,777 shares of the
Company's Class A Common Stock, or 20.5% of the outstanding shares of
the Company's Class A Common Stock, and 1,190 shares of the Company's
Class B Common Stock, or 38.8% of the outstanding shares of the
Company's Class B Common Stock. F. William Hirt could also be deemed
the beneficial owner of an additional 2,856,000 shares of the Company's
Class A Common Stock issuable upon the conversion of the 1,190 shares
of the Company's Class B Common Stock he is deemed beneficially to own.
If all 1,190 shares of the Company's Class B Common Stock F. William
Hirt could be deemed to own were converted into the Company's Class A
Common Stock, the maximum beneficial ownership of the Company's Class A
Common Stock that F. William Hirt could be deemed beneficially to have
would be 16,564,777 shares of the Company's Class A Common Stock, or
23.7% of the then outstanding shares of the Company's Class A Common
Stock.
(9) Excludes directors listed under "5% Owners."
(10) Mr. Petersen disclaims beneficial ownership of 120,000 shares of Class
A Common Stock owned by his wife, Gertrude E. Petersen, which have not
been included in the total listed herein.
(11) Excludes executive officers listed under "Directors."
Section 16 of the Securities Exchange Act of 1934 (the "Exchange Act")
requires that the officers and directors of a corporation, such as the Company,
which has a class of equity securities registered under Section 12 of the
Exchange Act, as well as persons who own more than 10% of a class of equity
securities of such a corporation, file reports of their ownership of such
securities, as well as monthly statements of changes in such ownership, with the
corporation and the SEC. Based upon written representations received by the
Company from its officers and directors, and the Company's review of the monthly
statements of changes of ownership filed with the Company by its officers and
directors during 1997, the Company believes that all such filings required
during 1997 were made on a timely basis.
ELECTION OF DIRECTORS
Nominees for Election
The Company's bylaws provide that the Board of Directors shall consist of
not less than 7, nor more than 16 directors, with the exact number to be fixed
from time to time by resolution of the Board of Directors. The Board has set, by
resolution, the number of directors at 12.
In 1997, the Company's Board of Directors consisted of 14 persons, each of
whom was elected to serve until the 1998 annual meeting of shareholders and
until his or her successor has been duly elected.
Unless otherwise instructed, the proxy holders will vote the proxies
received by them for the election of the nominees named below, all of whom are
currently directors of the Company. If a nominee becomes unavailable for any
reason, it is intended that the proxies will be voted for a substitute nominee
selected by the Company's Board of Directors. The Company's Board of Directors
has no reason to believe the nominees named will be unable to serve if elected.
Any vacancy occurring on the Company's Board of Directors for any reason may be
filled by a majority vote of the directors then remaining in office until the
next succeeding annual meeting of the Company's shareholders.
The Nominating Committee of the Board of Directors of the Company will
consider written nominations for candidates for nomination for election as
directors from the holders of the Company's Class B Common Stock. Any such
nomination should be sent to the Company at its principal executive offices to
the attention of the corporate secretary, and such nomination must set forth the
name, age, address and principal occupation or employment of each such nominee
and the number of shares of the Company's Class A Common Stock and Class B
Common Stock owned by such nominee.
6
<PAGE>
The names of the nominees for director, together with certain information
regarding them, are as follows:
<TABLE>
<CAPTION>
Age Principal Occupation for Past
As of Five Years and Positions with Director
Name 4/1/98 the Erie Insurance Group Since
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Peter B. Bartlett (3C)(4)(6) 64 Partner, Brown Brothers Harriman 1994
& Co. since 1974; Director, the Company,
EFL, Erie Insurance Co., and Kennametal, Inc.
Samuel P. Black, III (2)(5) 56 President, Treasurer and Secretary, Samuel P. 1997
Black and Associates, Inc., insurance agency;
President and Treasurer, Cutri Sergi Company,
life and employee benefits insurance agency;
Director, the Company, Erie Insurance Co.,
EFL, Flagship, and EI P&C.
J. Ralph Borneman, Jr., 59 President and Chief Executive Officer, Body- 1992
CIC(3)(4) Borneman Associates, Inc., insurance agency;
President, Body-Borneman, Ltd. and Body-
Borneman Inc., insurance agencies; Director,
the Company, EFL, Erie Insurance Co., Erie NY,
and National Penn Bancshares.
Patricia A. Goldman (2)(4) 56 Retired; Senior Vice President for 1994
Communications, USAir, Inc. from 1988
to 1994; Director, the Company, EFL,
Erie Insurance Co. and Crown Central
Petroleum Company.
Susan Hirt Hagen (1)(5C) 62 Managing Partner, Hagen, Herr & Peppin, 1980
Group Relations Consultants, since 1990;
Associate, Center for Practice of Conflict
Management 1972-1990; Director, the Company,
EFL and Erie Insurance Co. since 1980; Director,
EI P&C, Flagship, and Erie NY since 1995.
F. William Hirt, CPCU (1C) 72 Chairman of the Board of the Company, EFL, 1965
Erie Insurance Co., EI P&C, and Flagship since
September 1993; Chairman of the Board of Erie
NY since April 1994; Chairman of the Executive
Committee of the Company and EFL since
November 1990; Interim President and Chief
Executive Officer of the Company, EFL, Erie
Insurance Co., EI P&C, Flagship, and Erie NY
from January 1, 1996 to February 12, 1996;
Chairman of the Board, Chief Executive Officer
and Chairman of the Executive Committee of the
Company, EFL and Erie Insurance Co. for more
than five years prior thereto; Director, the
Company, EFL, Erie Insurance Co., EI P&C,
and Flagship.
</TABLE>
7
<PAGE>
<TABLE>
<CAPTION>
Age Principal Occupation for Past
As of Five Years and Positions with Director
Name 4/1/98 the Erie Insurance Group Since
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Edmund J. Mehl (1)(2C)(4) 74 Retired Chairman and Chief Executive Officer, 1969
Dispatch Printing, Inc.; Director, the Company,
EFL, EI P&C, Flagship, Erie Insurance Co. and
Erie NY.
Stephen A. Milne (1) (6) 49 President, Chief Executive Officer and a Director 1996
of the Company, EFL, and Erie Insurance Co.
since February 12, 1996 and President and Chief
Executive Officer of Flagship, EI P&C, and Erie
NY since March 11, 1996; Executive Vice President
Insurance Operations of the Company, Erie
Insurance Co., Flagship, EI P&C, and Erie NY
January 11, 1994-February 12, 1996. Owner,
Bennett-Damascus Insurance Agency March 1991-
December 31, 1993; Senior Vice President-Agency
Division, the Company, EFL, and Erie Insurance
Co. 1988-1991; Director Flagship, and EI P&C,
since 1996; and Director, Erie NY since 1994.
John M. Petersen (1)(6) 69 Retired President and Chief Executive Officer of 1979
the Company, EFL, Erie Insurance Co., Flagship,
EI P&C 1993-1995, and Erie NY 1994-1995;
President, Treasurer and Chief Financial Officer
of the Company, Erie Insurance Co. and EFL from
November 1990, and of Flagship and EI P&C from
1992 and 1993, respectively, to September 1993;
President, Treasurer and Chief Financial Officer
of EFL and Executive Vice President, Treasurer
and Chief Financial Officer of the Company and
Erie Insurance Co. for more than five years prior
thereto; Director, the Company, EFL, Erie
Insurance Co., Flagship, EI P&C, Erie NY, and
Spectrum Control.
Seth E. Schofield (3)(4C) 58 Retired; Chairman of the Board and Chief 1991
Executive Officer, USAir, Inc. July 1992 to
January 1996; President and Chief Executive
Officer, USAir, Inc. from June 1991 to July 1992;
President and Chief Operating Officer, USAir, Inc.
from 1990 to June 1991; Executive Vice President,
USAir, Inc. from 1989 to June 1990; Director, the
Company, EFL, Erie Insurance Co., PNC Bank,
N.A., USX Corporation, Calgon Carbon
Corporation, and Desai Capital Management.
</TABLE>
8
<PAGE>
<TABLE>
<CAPTION>
Age Principal Occupation for Past
As of Five Years and Positions with Director
Name 4/1/98 the Erie Insurance Group Since
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Jan R. Van Gorder, Esq.(1) 50 Senior Executive Vice President, Secretary and 1990
General Counsel of the Company, EFL and Erie
Insurance Co. since 1990, and of Flagship and
EI P&C since 1992 and 1993, respectively and of
Erie NY since April 1994; Senior Vice President,
Secretary and General Counsel of the Company,
EFL and Erie Insurance Co. for more than five
years prior thereto; Director, the Company, EFL,
Erie Insurance Co., Flagship, EI P&C and Erie NY.
Harry H. Weil (2)(3)(6C) 64 Counsel, Reed Smith Shaw & McClay, Attorneys, 1994
since 1998, Partner 1969 to 1997, Associate 1964
to 1969; Director, the Company, Erie Insurance
Company, EFL, and Calgon Carbon Corporation.
<FN>
(1) Member of the Executive Committee of the Company's Board of Directors.
(2) Member of the Audit Committee of the Company's Board of Directors.
(3) Member of the Executive Compensation Committee of the Company's Board of Directors.
(4) Member of the Nominating Committee of the Company's Board of Directors.
(5) Member of the Charitable Giving Committee of the Company's Board of Directors.
(6) Member of Investment Committee.
C Designates Committee chairperson.
</FN>
</TABLE>
The Board of Directors met 5 times in 1997. The standing committees of the
Company's Board of Directors are the Executive Committee, the Audit Committee,
the Executive Compensation Committee, the Nominating Committee, Charitable
Giving Committee and the Investment Committee. The Executive Committee, which
met 7 times during 1997, has the authority, subject to certain limitations, to
exercise the power of the Board of Directors between regular meetings. The Audit
Committee, which met 4 times during 1997, has responsibility for recommending to
the Board of Directors the selection of independent public accountants,
reviewing the scope and results of the audit and reviewing the adequacy of the
Company's accounting, financial, internal and operating controls. The Executive
Compensation Committee, which met 4 times during 1997, has responsibility for
recommending to the Board of Directors, at least annually, the compensation of
the three highest paid officers of the Company and such other officers as the
Board of Directors may designate, recommending all forms of direct compensation,
including any incentive programs, that would be appropriate for management and
employees of the Company and such other responsibilities as the Board of
Directors may designate. See "Executive Compensation--Compensation Committee
Interlocks and Insider Participation." The Nominating Committee, which met once
during 1997, has responsibility in accordance with the requirements of the
Pennsylvania Insurance Company Law and the Company's By-laws, for conducting
searches for and the nomination of a slate of candidates to stand for election
to the Board of Directors at the Company's Annual Meeting of Shareholders and to
nominate candidates to fill vacancies on the Board of Directors between annual
meetings of shareholders. The Charitable Giving Committee, which met 4 times
during 1997, has responsibility for recommending to the Chief Executive Officer
charitable gifts by the Company within a budgetary limit established by the
Board of Directors. The Investment Committee, which met 4 times in 1997, has
responsibility to assist the Company's Board of Directors in its general
oversight of the investments of the Company.
All directors hold office until their respective successors are elected, or
until death, resignation or removal. Officers serve at the discretion of the
Board of Directors. There are no family relationships between any directors or
executive officers of the Company, except that F. William Hirt, Chairman of the
Board, Chairman of the Executive Committee and a director, is the brother of
Susan Hirt Hagen, a director.
The Board recommends a vote FOR all nominees.
9
<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth the compensation paid by the Company during
each of the three fiscal years ended December 31, 1995, 1996, and 1997 to the
Chief Executive Officer of the Company and the four other most highly
compensated executive officers of the Company during 1997 for services rendered
in all capacities to the Company, EFL, Erie Insurance Exchange (the "Exchange")
and their subsidiaries and affiliates.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Annual Compensation
- ------------------------------------------------------------------------------------------------------------------------------
Name and Principal Other Annual All Other
Position Year Salary ($) Bonus ($) (1) Compensation ($) Compensation ($) (2)
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Milne, Stephen A. 1997 539,462 174,697 1,014 66,219
President and Chief 1996 467,305 39,351 1,014 26,020
Executive Officer 1995 245,611 26,623 927 39,993
Van Gorder, Jan R. 1997 321,032 103,469 2,268 26,263
Senior Executive Vice 1996 312,555 25,433 1,014 26,431
President, Secretary 1995 296,095 26,725 1,029 29,625
and General Counsel
Brinling Jr., John J. 1997 214,395 68,733 2,268 27,209
Executive Vice 1996 202,126 34,652 946 24,098
President 1995 184,104 20,853 877 28,837
Garcia, Philip A., 1997 160,703 58,744 383 4,470
Executive Vice 1996 142,255 9,039 332 3,966
President and Chief 1995 132,617 7,905 201 3,114
Financial Officer
Geib, Dennis M. 1997 166,533 52,127 1,943 4,094
Senior Vice President 1996 158,261 10,157 1,900 4,072
1995 148,365 8,868 1,841 3,300
- -----------------------------------------------------------------------------------------------------------------------------
<FN>
(1) The amounts indicated in the bonus column above represent amounts
earned by the named executives during 1997 under the Company's annual
incentive plan. The purpose of the annual incentive plan is to promote
the best interests of the Erie Insurance Exchange while enhancing
shareholder value of the Company by basing a portion of selected
employees' compensation on the performance of such employee and the
Company. Performance measures are established by the Executive
Compensation Committee based on the attainment of individual
performance goals and the Company's financial goals compared to a
selected peer group.
(2) Amounts shown include matching contributions made by the Company
pursuant to the Company's Employee Savings Plan, premiums paid by the
Company on behalf of the named individuals on the split dollar life
insurance policies and miscellaneous expense reimbursements. For the
year 1997, contributions made to the Employee Savings Plan amounted to
$12,194, $8,676, $6,432, $4,470, and $4,094 on behalf of Messrs. Milne,
Van Gorder, Brinling, Garcia, and Geib, respectively. For the year
1996, contributions to the Employee Savings Plan amounted to $11,729,
$8,689, $6,026, $3,966, and $4,072 on behalf of Messrs. Milne, Van
Gorder, Brinling, Garcia and Geib, respectively. For the year 1995,
contributions made to the Employee Savings Plan amounted to $5,424,
$6,849, $4,910, $3,114, and $3,300 on behalf of Messrs. Milne, Van
Gorder, Brinling, Garcia and Geib, respectively. Premiums paid during
1997 for split dollar life insurance policies for Messrs. Milne, Van
Gorder, Brinling, Garcia and Geib, respectively, were: $51,531,
$17,587, $17,700, $0, and $0. Premiums paid during 1996 for split
dollar life insurance policies for Messrs. Milne, Van Gorder, Brinling,
Garcia and Geib, respectively, were: $14,291, $17,742, $18,072, $0, and
$0. Premiums paid during 1995 for split dollar life insurance policies
for Messrs. Milne, Van Gorder, Brinling, Garcia and Geib, respectively,
were: $28,786, $17,420, $18,144, $0, and $0. The Company is entitled to
recover the premiums from any proceeds paid on such split dollar life
insurance policies and has retained a collateral interest in each
policy to the extent of the premiums paid with respect to such
policies. For the year 1997, miscellaneous expense reimbursements
amounted to $2,494, $0, $3,077, $0, and $0 for Messrs. Milne, Van
Gorder, Brinling, Garcia and Geib, respectively. For the year 1996, no
miscellaneous expenses were incurred for Messrs. Milne, Van Gorder,
Brinling, Garcia and Geib. For the year 1995, miscellaneous expense
reimbursements amounted to $5,783, $5,356, $5,783, $0, and $0 for
Messrs. Milne, Van Gorder, Brinling, Garcia and Geib, respectively.
</FN>
</TABLE>
10
<PAGE>
Agreements with Executive Officers
Upon the recommendation of the Executive Compensation Committee of the
Company's Board of Directors, the Company entered into employment agreements in
December 1997 with the following four senior executive officers of the Company:
John J. Brinling, Jr., Executive Vice President of EFL; Stephen A. Milne,
President and Chief Executive Officer; Philip A. Garcia, Executive Vice
President and Chief Financial Officer of the Company, and Jan R. Van Gorder,
Senior Executive Vice President, Secretary and General Counsel of the Company.
The employment agreements have the following principal terms:
(a) A four-year term for Mr. Milne, expiring in December 2001, and for the
other executives a two-year term expiring in December 1999, unless the
agreement is theretofore terminated in accordance with its terms, with
or without cause, or due to the disability or death of the officer or
notice of nonrenewal is given by the Company or the executive 30 days
before any anniversary date;
(b) A minimum annual base salary at least equal to the executive's annual
base salary at the time the agreement was executed, subject to periodic
review to reflect the executive's performance and responsibilities,
competitive compensation levels and the impact of inflation;
(c) The eligibility of the executive under the Company's incentive
compensation programs and employee benefit plans;
(d) The establishment of the terms and conditions upon which the
executive's employment may be terminated by the Company and the
compensation of the executive in such circumstances. The agreements
provide generally, among other things, that if the employment of an
executive is terminated without Cause (as defined in the agreement) by
the Company or by the executive for Good Reason (as defined in the
agreement) then the executive shall be entitled to receive: (i) an
amount equal to the sum of three times the executive's highest annual
base salary during the preceding three years plus an amount equal to
three times the total of the executive's highest award during the
preceding three years under the Company's Annual Incentive Plan;
(ii) any award or other compensation to which the executive is entitled
under the Company's Long-Term Incentive Plan; (iii) continuing
participation in any employee benefit plans for a period of three
years following termination to the extent the executive
and his dependents were eligible to participate in such programs
immediately prior to the executive's termination; and (iv) immediate
vesting and nonforfeitability of accrued benefits under the Company's
Supplemental Executive Retirement Plan.
.
(e) Provisions relating to confidentiality and nondisclosure following
an executive's termination; and
(f) An agreement by the executive not to compete with the Company for a
period of one year following his termination, unless his termination
was without Cause.
Stock Options and Stock Appreciation Rights
The Company does not have a stock option plan, nor has it ever granted any
stock option or stock appreciation right to any of the persons named in the
Summary Compensation Table.
Long-Term Incentive Plan
The Company has established a Long-Term Incentive Plan that is designed to
enhance the growth and profitability of the Company by providing the incentive
of long-term rewards to key employees who are capable of having a significant
impact on the performance of the Company; to attract and retain employees of
outstanding competence and ability; and to further align the interest of such
employees with those of shareholders of the Company. Each of the named
executives has been granted awards of phantom share units under the Company's
Long-Term Incentive Plan based upon a target award calculated as a percentage of
the executives' base salary. The total value of any phantom share units will be
determined at the end of the performance period based upon the growth in the
Company's retained earnings. Each executive will then be entitled to receive
shares of restricted Class A Common Stock of the Company equal to the dollar
value of the phantom share units at the end of the performance period. The
vesting period for the restricted Class A
11
<PAGE>
common shares issued to each executive is three years after the end of the
performance period. If an executive ceases to be an employee prior to the
end of the performance period, the executive forfeits all phantom
share units awarded. If an executive ceases to be an employee prior to the
end of the vesting period, the executive forfeits all unvested restricted
shares previously granted. The following table sets forth target awards
granted to the Company's five highest paid executive officers in 1997 for the
three year performance period of 1997 through 1999.
AWARDS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
Performance
Number of Shares, or Other Period Estimated Future Payouts
Units or Until Maturation Under Non-Stock
Name Other Rights (#) or Payout Price Based Plans
- --------------------------------------------------------------------------------------------------------------------------------
Phantom Share Units Threshold Target Maximum (1)
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Milne, Stephen A. 45,839 1997-1999 0 $188,812
Van Gorder, Jan R. 27,279 1997-1999 0 $112,361
Brinling Jr., John J. 18,218 1997-1999 0 $ 75,038 NONE
Garcia, Philip A. 12,719 1997-1999 0 $ 52,390
Geib, Dennis M. 14,120 1997-1999 0 $ 58,160
- --------------------------------------------------------------------------------------------------------------------------------
<FN>
(1) There is no maximum payout limitation for a specific performance period.
However, the maximum value of phantom share units that may be earned by
any named executive in any year shall not exceed $500,000.
</FN>
</TABLE>
Pension Plan
The following table sets forth the estimated total annual benefits payable
upon retirement at age 65 under the Erie Insurance Group Retirement Plan for
Employees and Supplemental Employee Retirement Plan.
PENSION PLAN TABLE
<TABLE>
<CAPTION>
Years of Service
- --------------------------------------------------------------------------------------------------------------------------------
Remuneration 15 20 25 30 35
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$ 150,000 $ 45,000 $ 60,000 $ 75,000 $ 90,000 $ 90,000
200,000 60,000 80,000 100,000 120,000 120,000
250,000 75,000 100,000 125,000 150,000 150,000
300,000 90,000 120,000 150,000 180,000 180,000
350,000 105,000 140,000 175,000 210,000 210,000
400,000 120,000 160,000 200,000 240,000 240,000
450,000 135,000 180,000 225,000 270,000 270,000
500,000 150,000 200,000 250,000 300,000 300,000
550,000 165,000 220,000 275,000 330,000 330,000
600,000 180,000 240,000 300,000 360,000 360,000
650,000 195,000 260,000 325,000 390,000 390,000
700,000 210,000 280,000 350,000 420,000 420,000
750,000 225,000 300,000 375,000 450,000 450,000
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
The compensation covered by such plan is the base salary reported in the
Summary Compensation Table.
Under the pension plan, credited years of service is capped at 30 years.
Credited years of service for each of the individuals named in the Summary
Compensation Table is as follows: Stephen A. Milne--21 years, Jan R. Van
Gorder--17 years, John J. Brinling, Jr.--30 years, Philip A. Garcia 17 years and
Dennis Geib--17 years.
12
<PAGE>
The benefits under such plan are computed on the basis of straight life
annuity amounts and a life annuity with a ten-year certain benefit. The benefits
listed in the Pension Plan Table are not subject to deduction for Social
Security or other offset amounts. The information in the foregoing table does
not reflect certain limitations imposed by the Internal Revenue Code of 1986, as
amended (the "Code"). Beginning in 1994, the Code prohibits the inclusion of
earnings in excess of $150,000 per year (adjusted periodically for cost of
living increases) in the average earnings used to calculate benefits. The Code
also limits the maximum annual pension (currently $130,000, but adjusted
periodically for cost of living increases) that can be paid to each eligible
employee. A Supplemental Employee Retirement Plan for senior management is in
effect which provides benefits in excess of the earnings limitations imposed by
the Code similar to those provided to all other full time employees as if the
IRS limitations were not in effect. Those benefits are incorporated into the
Pension Plan Table.
Director Compensation
The annual retainer for directors, including the registrant, is $25,000,
plus $1,500 for each meeting attended and $1,500 for each committee meeting
attended plus an additional $2,000 per year for each committee chairperson. In
addition, all directors are reimbursed for their expenses incurred in attending
meetings. Officers of the Company who serve as directors are not compensated for
attendance at meetings of the Board of Directors and its committees.
Compensation Committee Interlocks and Insider Participation
The Executive Compensation Committee (the "Committee") of the Company
presently consists of Peter B. Bartlett, Chairman, J. Ralph Borneman, Jr., Seth
E. Schofield and Harry H. Weil. No member of the Committee is a former or
current officer or employee of the Company, the Exchange, EFL or any of their
respective subsidiaries or affiliates. Furthermore, no executive officer of the
Company serves as a member of a compensation committee of another entity one of
whose executive officers serves on the Committee or as a director of the
Company, nor does any executive officer of the Company serve as a director of
another entity, one of whose executive officers serves on the Committee. Mr.
Borneman is the President and a principal shareholder of Body-Borneman
Associates, Inc., Body-Borneman, Inc. and Body-Borneman, Ltd., all of which are
independent insurance agencies representing a number of insurers, including the
insurance subsidiaries of the Company, EFL and the Exchange and its insurance
subsidiary.
Report of the Executive Compensation Committee of the Company
The Committee is charged with the duty of recommending to the Board of
Directors the compensation of the three highest paid officers of the Company and
such other officers as are determined by the Board of Directors, recommending to
the Board of Directors all forms of bonus compensation, including incentive
programs, that would be appropriate for the Company, and to undertake such other
responsibilities as may be delegated to it by the Board of Directors. The Board
has authorized the Committee to consider the compensation of the four highest
paid officers, including the CEO. The Committee is composed of four directors
who are not officers or employees of the Company, the Exchange or EFL or any of
their affiliates or subsidiaries. The purpose of the Committee is to determine
the level and composition of compensation that is sufficient to attract and
retain top quality executives for the Company.
The objectives of the Company's executive compensation practices are to (1)
attract, reward and retain key executive talent and (2) to motivate executive
officers to perform to the best of their abilities and to achieve short-term and
long-term corporate objectives that will contribute to the overall goal of
enhancing shareholder and policyholder value. To that end, compensation
comparisons are made to benchmark positions at other insurers in terms of
compensation levels and composition of the total compensation mix.
Under federal tax laws, the Company is not allowed a federal income tax
deduction for compensation, under certain circumstances, paid to certain
executive officers to the extent that compensation exceeds $1 million per
officer in any fiscal year. No officer of the Company has received compensation
in excess of $1 million in any fiscal year to date. The Compensation Committee
may consider adopting policies with respect to this limitation on deductibility
when appropriate.
13
<PAGE>
The Committee reviewed the salary ranges and base salaries of the four
highest paid executives, including the Chief Executive Officer, in 1997. The
Committee has position descriptions for the four highest paid executives of the
Company, including the Chief Executive Officer, which define the
responsibilities and duties of each position. The position descriptions also
delineate the functional areas of accountability and the qualifications and
skills required to perform such responsibilities and duties. The Committee then
reviews the salary ranges for the Chief Executive Officer and the other three
highest paid senior executives, comparing the ranges to third party data
compiled for similar positions with other property and casualty insurers. In
reviewing the salary ranges for the four highest paid executives, including the
Chief Executive Officer, the Committee references Sibson's Management
Compensation Survey published annually by Sibson & Company, Inc., which
summarizes compensation data for more than 100 insurance companies. The data is
reported by position and by company asset size and by premium volume. The unique
aspects of each position, its duties and responsibilities, the effect on the
performance of the Company, the number of employees supervised directly and
other criteria are also considered in setting the base salaries. The Committee
also secured the services of Towers Perrin, a nationally recognized consulting
firm with specific expertise in the insurance industry, to make recommendations
regarding executive compensation.
The level of compensation for each executive reflects his or her skills,
experience and job performance. Normally, base salary will not be less than the
minimum for the salary range established for each position. Executives with a
broader range of skills, experience and consistently high performance with the
Company may receive compensation above the midpoint for the established salary
range.
Compensation for the Chief Executive Officer consists primarily of salary,
annual incentive and long-term incentive payments, and minor perquisites which
amount to less than 10% of the Chief Executive Officer's salary and bonus. The
Board of Directors approved adoption of an annual incentive plan and long-term
incentive plan for senior executives of the Company as recommended by the
Executive Committee at its meeting of March 11, 1997. The purpose of the annual
incentive plan is to promote the best interests of the Exchange while enhancing
shareholder value of the Company and to promote the attainment of significant
business objectives for the Company, its subsidiaries and affiliates by basing a
portion of the executives' compensation on the attainment of both premium growth
and underwriting profitability goals. The annual incentive awards will be paid
in cash only.
Annual Incentive Plan target award levels, expressed as a percent of base
salary, are established annually by the Executive Compensation Committee and
approved by the Board of Directors. Payments under the Annual Incentive Plan are
based on a combination of individual executive performance and company
performance.
The Long-Term Incentive Plan, which was approved by shareholders on April
29, 1997, is designed to maximize returns to shareholders by linking executive
compensation to the overall profitability of the Company. Target award amounts,
expressed as a percentage of base salary, are determined by comparisons to peer
companies and approved by the Executive Compensation Committee and the Board of
Directors.
Performance factors applicable to the Company, such as property and
casualty insurance loss ratios, investment portfolio returns, overall Company
profitability, as well as other factors are considered in evaluating the Chief
Executive Officer's performance. Such performance factors were considered in
approving Mr. Milne's 1997 compensation.
Compensation of the next three most highly compensated individuals is
determined by the Committee and is based upon the factors and processes
enumerated, i.e., a determination of a salary range based upon market data and
evaluation of the executive with respect to the executive's job description and
his or her position within the salary range.
Compensation of the next highest paid executives (other than the four
highest paid executives) is based upon the Company's established standard
compensation policies and is not determined by the Committee.
Erie Indemnity Company Executive Compensation Committee:
Peter B. Bartlett, Chairman
J. Ralph Borneman, Jr.
Seth E. Schofield
Harry H. Weil
14
<PAGE>
Comparison of Cumulative Total Shareholder Return on the Company's Class A
Common Stock With Certain Averages
The following graph depicts the cumulative total shareholder return for the
periods indicated for the Company's Class A nonvoting Common Stock compared to
the Standard & Poor's 500 Stock Index and the Standard & Poor's Multi-Line
Insurance Index.
Assumes Dividends Reinvested
[GRAPHIC]
In the printed version there appears a line graph depicting the following
plot point:
<TABLE>
<CAPTION>
1992 1993 1994 1995 1996 1997
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Erie Indemnity Company $100 $193 $250 $394 $612 $590
Standard & Poor's 500 Index $100 $110 $111 $153 $189 $251
S & P Multi-Line Insurance Index $100 $112 $118 $173 $209 $328
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Indexed Cumulative Total Shareholder Return
- -----------------------------------------------------------------------------------------------------------------------
1992 1993 1994 1995 1996 1997
$ $ $ $ $ $
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Erie Indemnity Company 100 193 250 394 612 590
Standard & Poor's 500 Index 100 110 111 153 189 251
S & P Multi-Line Insurance Index 100 112 118 173 209 328
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
Assumes $100.00 invested at the close of trading on the last trading day
preceding the first day of the fifth preceding fiscal year in Erie Indemnity
Company Class A Common Stock, Standard & Poor's Multiline Insurance Index and
Standard & Poor's 500 Stock Index.
Cumulative Total Return assumes reinvestment of dividends.
Certain Transactions
Directors Borneman and Black are officers and principal shareholders of
insurance agencies which receive insurance commissions in the ordinary course of
business from the insurance companies managed by the Company in accordance with
such companies' standard commission schedules and agents' contracts. Such
payments to the agencies for commissions written on insurance policies from the
property and casualty insurers and EFL amounted to $2,540,612 and $626,760 for
the Borneman and the Black insurance agencies, respectively.
Director Mehl is the retired Chairman and Chief Executive Officer of
Dispatch Printing, Inc., a company owned by his family members. Payments for
printing services provided to the Company by Dispatch Printing, Inc. amounted to
$65,507 in 1997.
John M. Petersen, a director and former President and Chief Executive
Officer, and previous Chief Investment Officer of the Erie Insurance Group of
Companies, who retired as an executive officer of the Company on December 31,
1995, entered into a consulting arrangement with the Company effective January
2, 1996. Under the terms of the arrangement, the Company engaged Mr. Petersen as
a consultant to furnish the Company and its pension trust, the Erie Insurance
Exchange, and Erie Family Life Insurance Company, with investment services with
respect to their investments in common stocks. As compensation
15
<PAGE>
for services rendered by Mr. Petersen, a fee of .15 of 1 percent, on an
annualized basis, of the total fair market value of the common stock under
management, is paid to Mr. Petersen. The Company also pays for all necessary
and reasonable expenses related to Mr. Petersen's consulting services
performed under this arrangement. The compensation paid to Mr. Petersen, under
this arrangement, was $2,836,883 in 1997.
Director Weil is Counsel to the law firm of Reed, Smith, Shaw & McClay
which the Company retained in 1997 for legal advice in the Company's ordinary
course of business and paid the firm the amount of $6,122.18 for such work.
RATIFICATION OF INDEPENDENT PUBLIC ACCOUNTANTS
Unless instructed to the contrary, it is intended that votes will be cast
pursuant to the proxies for the ratification of the selection of Brown, Schwab,
Bergquist & Co. as the Company's independent public accountants for 1998. The
Company has been advised by Brown, Schwab, Bergquist & Co. that none of its
members has any financial interest in the Company.
A representative of Brown, Schwab, Bergquist & Co. will attend the Annual
Meeting, will have the opportunity to make a statement, if he desires to do so,
and will be available to respond to any appropriate questions presented by
shareholders at the Annual Meeting.
The Board of Directors recommends a vote FOR the ratification of the
selection of Brown, Schwab, Bergquist & Co. as the Company's independent public
accountants for 1998.
ANNUAL REPORT
A copy of the Company's Annual Report for 1997 is being mailed to the
holders of the Company's Class A Common Stock and Class B Common Stock with
Notice of the Annual Meeting.
SHAREHOLDER PROPOSALS
Any holder of the Company's Class B Common Stock who, in accordance with
and subject to the provisions of the proxy rules of the SEC, wishes to submit a
proposal for inclusion in the Company's proxy statement for its 1999 Annual
Meeting of Shareholders must deliver such proposal in writing to the Company's
Secretary at the Company's principal executive offices at 100 Erie Insurance
Place, Erie, Pennsylvania 16530. Shareholder proposals are required to be filed
with the Company in the time and manner prescribed by Rule 14a-8 under the
Exchange Act.
OTHER PROPOSALS
The Board of Directors does not know of any matters to be presented for
consideration other than the matters described in the Notice of Annual Meeting,
but if any matters are properly presented, it is the intention of the persons
named in the accompanying proxy to vote on such matters in accordance with their
judgment.
By Order of the Board of Directors,
/s/ Jan R. Van Gorder
Jan R. Van Gorder,
Senior Executive Vice President,
Secretary and General Counsel
April 1, 1998
Erie, Pennsylvania
<PAGE>
ERIE INDEMNITY COMPANY
CLASS B COMMON STOCK
PROXY
ANNUAL MEETING OF SHAREHOLDERS TO BE HELD APRIL 28, 1998
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby constitutes and appoints F. William Hirt, Stephen A.
Milne and Jan R. Van Gorder, and each or any of them, proxies of the
undersigned, with full power of substitution, to vote all of the shares of Class
B Common Stock of Erie Indemnity Company (the "Company") which the undersigned
may be entitled to vote at the Annual Meeting of Shareholders of the Company to
be held at the Auditorium of the F. W. Hirt - Perry Square Building, 100 Erie
Insurance Place (Sixth and French Streets), Erie, Pennsylvania 16530 on April
28, 1998 at 3:00 p.m., and at any adjournment, postponement or continuation
thereof, as follows:
1. ELECTION OF DIRECTORS
[ ] FOR all nominees listed below [ ] WITHHOLD AUTHORITY to vote
for the nominees listed below
INSTRUCTION: To withhold authority to vote for any individual nominee, strike
a line through the nominee's name in the list below.
Peter B. Bartlett, Samuel P. Black, III, J. Ralph Borneman, Jr., Patricia A.
Goldman, Susan Hirt Hagen, F. William Hirt, Edmund J. Mehl, Stephen A. Milne,
John M. Petersen, Seth E. Schofield, Jan R. Van Gorder, Harry H. Weil.
2. PROPOSAL TO RATIFY THE SELECTION OF BROWN, SCHWAB, BERGQUIST & CO. AS
THE INDEPENDENT PUBLIC ACCOUNTANTS FOR THE COMPANY FOR 1998.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
In their discretion, the proxies are authorized to vote upon such other business
as may properly come before the Annual Meeting and any adjournment, postponement
or continuation thereof.
This proxy will be voted as specified. If a choice is not specified, the proxy
will be voted FOR the nominees for Director, and FOR the ratification of Brown,
Schwab, Bergquist & Co. as independent public accountants for the Company for
1998.
This proxy should be dated, signed by the shareholder(s) and returned promptly
to the Company in the enclosed envelope. Persons signing in a fiduciary capacity
should so indicate.
<PAGE>
_________________________________(SEAL)
_________________________________(SEAL)
---------------------------------------
Date:__________________, 1998
