<PAGE>
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE
SECURITIES EXCHANGE ACT OF 1934
Filed by the registrant [X]
Filed by a party other than the registrant [ ]
Check the appropriate box:
[ ] Preliminary proxy statement
[X] Definitive proxy statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
LAURENTIAN CAPITAL CORPORATION
- - --------------------------------------------------------------------------------
(Name of Registrant as Specified in its Charter)
LAURENTIAN CAPITAL CORPORATION
- - --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (Check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1),
14a-6(i)(2) or item 22(A)(2) of Schedule 14A.
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11
(1) Title of each class of securities to which transaction applies:
- - --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- - --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
- - --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- - --------------------------------------------------------------------------------
(5) Total Fee Paid:
[ ] 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>
640 Lee Road, Suite 303
Wayne, Pennsylvania 19087
[ LOGO ] April 10, 1995
NOTICE OF ANNUAL MEETING
TO STOCKHOLDERS:
Notice is hereby given that the Annual Meeting of the Stockholders of Laurentian
Capital Corporation (the 'Company') will be held at the Four Seasons Hotel, One
Logan Square, Philadelphia, Pennsylvania on Tuesday, May 9, 1995, at 9:00 a.m.
local time, for the following purposes:
1. To elect directors of the Company; and
2. To transact such other business as may properly come before the meeting or
any adjournment thereof.
Information concerning matters to be considered at the meeting is set forth
in the accompanying Proxy Statement.
Stockholders of record of the Company at the close of business on March 17,
1995, are entitled to notice of and to vote at this meeting and any adjournment
thereof.
By Order of the Board of Directors
[ SIG CUT ]
Bernhard M. Koch, Secretary
IMPORTANT
IF YOU DO NOT PLAN TO ATTEND THIS MEETING, PLEASE FILL IN, DATE, SIGN AND RETURN
THE ENCLOSED PROXY USING THE ENCLOSED SELF-ADDRESSED ENVELOPE, WHICH REQUIRES NO
POSTAGE IF MAILED IN THE UNITED STATES.
<PAGE>
640 Lee Road, Suite 303
Wayne, Pennsylvania 19087
[ LOGO ]
- - --------------------------------------------------------------------------------
PROXY STATEMENT MAILED BEGINNING APRIL 10, 1995 FOR
ANNUAL MEETING OF STOCKHOLDERS TO BE HELD MAY 9, 1995
- - --------------------------------------------------------------------------------
This Proxy Statement and the accompanying form of proxy are furnished in
connection with the solicitation of proxies by and on behalf of the Board of
Directors of Laurentian Capital Corporation (the 'Company') for use at the
Annual Meeting of Stockholders to be held on May 9, 1995, or any adjournment
thereof.
The Company's Annual Report to Stockholders for the fiscal year ended
December 31, 1994 accompanies this Proxy Statement. This Proxy Statement and the
accompanying Notice of Annual Meeting of Stockholders, form of proxy and the
Annual Report to the Stockholders have been sent or given to stockholders of the
Company beginning approximately April 10, 1995.
Execution of a proxy by a stockholder of the Company will not affect such
stockholder's right to attend the meeting and to vote in person. Any stockholder
of the Company who executes a proxy has a right to revoke it at any time before
it is voted by advising the Company in writing, by executing a later dated proxy
which is presented to the Company at or prior to the meeting, or by appearing at
the meeting and advising the Secretary of the meeting, in writing, of the
revocation of the proxy at any time prior to the exercise of the proxy. Forms to
be used in making such revocation will be available at the meeting.
On March 17, 1995, the record date for stockholders entitled to vote at the
Annual Meeting ('Record Date'), there were 7,587,398 shares of the Company's
$.05 par value common stock issued and outstanding after taking into account the
effect of Treasury Shares. Each share is entitled to one vote with respect to
every matter submitted to a vote at the meeting. At the annual meeting,
abstentions will be treated as present for purposes of determining a quorum, and
shares held by a broker that the broker fails to vote will not be treated as
present for purposes of a quorum. Abstentions and broker 'non-votes' will not be
counted either for or against any items submitted for a vote.
3
<PAGE>
THE COMPANY
Laurentian Capital Corporation (the 'Company') is an insurance holding
company organized under Delaware law. At December 31, 1994 the Company's
principal insurance subsidiaries were Loyal American Life Insurance Company
('Loyal') and Prairie States Life Insurance Company ('Prairie').
On December 31, 1994, 71.6% of the Company's $.05 par value common stock
('LCC Common Stock') was owned by The Imperial Life Assurance Company of Canada
('Imperial'). Imperial's direct parent, Laurentian Financial, Inc.
('Financial'), owned an additional 9.8% of the Company's outstanding Common
Stock. Financial is a wholly-owned subsidiary of The Laurentian Group
Corporation ('Group'). On January 1, 1994, La Confederation des caisses
popularies et d'economie Desjardins du Quebec, a cooperative association
constituted under the laws of the province of Quebec, Canada (the
'Confederation'), through its subsidiaries, Desjardins Laurentian Financial
Corporation ('DLFC') and La Societe financiere des caisses Desjardins, Inc.
('SFCD'), acquired substantially all of the outstanding voting shares of Group,
thereby becoming beneficial owner of the approximately 81.4% of the outstanding
common stock of the Company owned by Group.
In November 1994, the Company engaged Oppenheimer & Co., Inc.
('Oppenheimer') as financial advisor to evaluate various strategic alternatives
for maximizing shareholder value, including possible business combinations or
other transactions. Oppenheimer is in the process of evaluating a variety of
alternatives and has contacted third parties in that connection. There can be no
assurances that the engagement will result in any transaction.
PROPOSAL 1
ELECTION OF DIRECTORS
The By-laws of the Company provide that members of the Board of Directors
shall be elected until the next Annual Meeting of Stockholders and until their
respective successors are duly elected. Unless 'Withhold Authority' is specified
in the proxy as to all or some of the nominees, the persons named in the
accompanying proxy intend to vote the shares represented by such proxy, if
properly dated and signed, for the election as directors of the eleven (11)
nominees listed herein. All of the nominees are currently directors of the
Company. If elected, each shall serve as a director of the Company until the
1996 Annual Meeting of Stockholders and thereafter until his successor shall
have been elected and shall qualify, except as otherwise provided in the
By-laws.
Should one or more of such nominees become unavailable or ineligible to
serve, it is intended that the shares represented by the proxy will be voted for
the election of the other nominees and may be voted, unless authorization is
withheld, for any substitute nominee or nominees management may designate.
Management has no reason to believe that any nominee will be unable or unwilling
to serve as a director if elected.
4
<PAGE>
The information with respect to each nominee for election as director has
been furnished to the Company by the respective nominees. No nominee, other than
Mr. Rakich, has any position or office with the Company or any subsidiary of the
Company. No nominee, except as indicated, owns more than 1% of the outstanding
shares of Laurentian Capital Corporation's Common Stock. The following table
shows as of March 17, 1995 the shares beneficially owned by each nominee and
unless otherwise indicated, each nominee is believed to have sole voting and
investment power with respect to such shares.
<TABLE>
<CAPTION>
Served as a Shares
Director Beneficially
Name Age Principal Occupation Since Owned
- - ----------------------------- --------- ---------------------------------------- ------------ -----------
<S> <C> <C> <C> <C>
Thomas E. Beach.............. 54 Limited Partner, Miller, Anderson & 1994 10,000
Sherrerd
Jared M. Billings............ 63 Partner, Billings, Cunningham, Morgan & 1976 6,462
Boatwright
Stephen B. Bonner............ 48 President, McGraw-Hill, Inc., 1994 1,000
Construction Information Group
Claude Castonguay*........... 65 Chairman of the Board of the Company 1984 1,965(2)
Robert J. Ferguson*(1)....... 52 President and Chief Operating Officer of 1994 -0-(2)
The Imperial Life Assurance Company of
Canada
Jack Kinder, Jr.............. 67 President of Kinder Brothers & 1990 -0-
Associates
Robert D. Larrabee........... 60 Funeral Director 1987 3,713(3)
Robert T. Rakich............. 57 President and Chief Executive Officer of 1988 189,867(4)
the Company
Guy Rivard*(1)............... 49 Senior Vice President, Finance and 1994 -0-(2)
Administration of Desjardins
Laurentian Financial Corporation
Humberto Santos*............. 51 Chairman and Chief Executive Officer of 1994 -0-(2)
Desjardins Laurentian Financial
Corporation
Alan J. Zakon................ 59 Vice Chairman of Autotote Corporation 1990 11,000
</TABLE>
- - ------------------
* Citizen of Canada.
5
<PAGE>
(1) Appointed in December 1994 to fill a vacancy created by resignation of a
director.
(2) Messrs. Castonguay, Ferguson, Rakich, Rivard and Santos by virtue of being
directors and/or executive officers of companies affiliated with DLFC may,
within the intendment of Rule 13d-3 under the Securities Exchange Act of
1934 (the 'Exchange Act'), be deemed to be beneficial owners of the shares
of LCC Common Stock beneficially owned by affiliates of DLFC. Messrs.
Castonguay, Ferguson, Rakich, Rivard and Santos have expressly disclaimed
any actual beneficial interest in the shares of LCC Common Stock owned by
affiliates of DLFC except as otherwise indicated. Messrs. Castonguay,
Ferguson, Rakich, Rivard and Santos are the owners of record of the shares
of LCC Common Stock set forth in the table.
(3) Indicate the number of common shares into which 1,350 shares of Series A
Preferred Stock beneficially owned by Mr. Larrabee may be converted. Such
shares are owned by Merchant Funeral Home, Inc., a corporation owned by Mr.
Larrabee.
(4) Includes 56,667 shares subject to stock options granted to Mr. Rakich which
are presently exercisable. Mr. Rakich's beneficial ownership is
approximately 2.5% of total shares outstanding at March 17, 1995.
ABOUT THE BOARD OF DIRECTORS
THOMAS E. BEACH is a Limited Partner of Miller, Anderson & Sherrerd
(investment advisory firm) after serving as General Partner of that firm from
1975 to 1993.
JARED M. BILLINGS is a Partner with Billings, Cunningham, Morgan and
Boatwright, P.A. (law firm) since January 1995. He was formerly a Partner with
Holland & Knight (law firm) from January 1993 to December 1994, and a Partner
with Billings & Cunningham, P.A. (law firm) from 1979 to 1992.
STEPHEN B. BONNER is President of McGraw-Hill's Construction Information
Group since December 1992. He was formerly Vice President of The Prudential
Insurance Company of America from 1988 to December 1992.
CLAUDE CASTONGUAY is Chairman of the Board of the Company. He was a Member
of the Senate of Canada from September 1990 to December 1992; Chairman of the
Board of The Laurentian Group Corporation from 1986 to November 1990; and Chief
Executive Officer of The Laurentian Group Corporation from 1981 to November
1989.
ROBERT J. FERGUSON is President and Chief Operating Officer of The Imperial
Life Assurance Company of Canada since October 1994. He was formerly President
and Chief Executive Officer of Royal Maccabees Life Insurance Company from 1991
to 1994; and President and Chief Executive Officer of Royal Life Insurance
Company of Canada from 1987 to 1991.
JACK KINDER, JR. is President of Kinder Brothers & Associates (sales and
sales management consultants) since 1976.
6
<PAGE>
ROBERT D. LARRABEE is a Funeral Director with the Merchant Funeral Home. He
is also a Director of Sterling Savings and Loan Association of Spokane,
Washington.
ROBERT T. RAKICH has been President and Chief Executive Officer of the
Company since May 1988.
GUY RIVARD is Senior Vice President, Finance and Administration of
Desjardins Laurentian Financial Corporation since 1994. He was formerly Senior
Vice President, Finance of The Laurentian Group Corporation from 1988 to 1993;
and Senior Vice President, Finance and Treasurer of Laurentian General Insurance
Company, Inc. from 1987 to 1988.
HUMBERTO SANTOS is President and Chief Executive Officer of Desjardins
Laurentian Financial Corporation since January 1, 1994. He was formerly
President and Chief Executive Officer of La Caisse centrale du Desjardins from
October 1990 to December 1994. Prior to October 1990, he held various senior
executive officer positions at the National Bank of Canada from 1976 to 1990.
ALAN J. ZAKON is Vice Chairman of Autotote Corporation since April 1995. He
was formerly Managing Director with Bankers Trust Corporation from 1989 to 1995;
Chairman of the Strategic Policy Committee with Bankers Trust from 1989 to 1990;
Chairman of the Board of Boston Consulting Group from 1986 to 1989, and
President from 1980 to 1986. He holds Directorships at the following: Arkansas
- - -- Best Freight Corporation (shipping); Augat Corporation (electronic
components); Autotote Corporation (gaming equipment); Boyle Leasing
Technologies, Inc. (leasing); and Hechinger Corporation (specialty retailing).
To assist in carrying out its duties and responsibilities, the Board of
Directors has an Executive Committee, an Audit Committee, a Human Resources
Committee, a Stock Option Committee, an Investment Committee, and a Related
Party Transactions Review Committee, each composed of members of the Board.
The Executive Committee of the Board of Directors consists of Messrs.
Castonguay, Rakich and Santos. The Executive Committee may exercise the power of
the Board of Directors in certain matters between the meetings of the Board. The
Executive Committee met once during 1994.
The Audit Committee of the Board of Directors consists of Messrs. Beach,
Billings, Bonner and Zakon. The Audit Committee annually recommends to the Board
of Directors independent accountants for appointment by the Board of Directors
as auditors for the Company and its subsidiaries. The Audit Committee reviews
the services to be performed by the independent accountants and takes such
action with respect to such reports as it deems appropriate. In addition, the
Audit Committee reviews the duties and responsibilities of the internal auditing
staff; reviews the annual program for the internal audit of the operational
procedures of the Company; receives and reviews reports submitted by the
internal auditing staff; and takes such action as it deems appropriate to assure
that the interests of the Company are adequately
7
<PAGE>
protected, including the maintenance of accounting controls and standards. The
Audit Committee met five times during 1994.
The Human Resources Committee of the Board of Directors consists of Messrs.
Billings, Castonguay, Kinder, Rakich and Santos. The Human Resources Committee
annually reviews the performance contributions of the Officers of the Company
and makes recommendations to the Board of Directors for adjustments to base
salaries of those officers. The Human Resources Committee also has general
oversight responsibility for other compensation and benefit programs of the
Company and reviews the structure, cost effectiveness, and competitive position
of the Company's compensation program within the life insurance industry. The
Human Resources Committee met five times during 1994.
The Stock Option Committee of the Board of Directors consists of Messrs.
Billings, Kinder, Larrabee and Santos. The Stock Option Committee is responsible
for the administration of the Company's Executive Stock Option Plan. The Stock
Option Committee met three times during 1994.
The Investment Committee of the Board of Directors consists of Messrs.
Castonguay, Larrabee, Rakich, Santos and Zakon. The Investment Committee has
general oversight responsibilities for the Company's investment policies. The
Investment Committee receives and reviews reports submitted by the Chief
Investment Officer and takes action as it deems appropriate to ensure that the
Company maintains an appropriate investment strategy. The Investment Committee
met three times during 1994.
The Related Party Transactions Review Committee for the Board of Directors
consists of directors who were not directors or officers of any company
affiliated with the Company. Members of the Related Party Transactions Review
Committee are Messrs. Billings, Kinder and Larrabee. The Related Party
Transactions Review Committee reviews and makes recommendations to the Board of
Directors with respect to all material and significant transactions or contracts
between the Company and any person or company affiliated with the Company. The
Related Party Transactions Review Committee met once during 1994.
Each of the Committees reports and makes recommendations to the Board of
Directors.
The Board of Directors does not have a nominating committee, as nominations
for directors are made by the entire Board of Directors. The Human Resources
Committee has from time to time reviewed and recommended to the Board candidates
to fill vacancies on the Board. Stockholders may submit written recommendations
for director nominees to the Board of Directors for its consideration.
The Board of Directors met seven times during 1994. During 1994, no
incumbent director attended fewer than 75% of the total number of meetings of
the Board and of the Committees of which he was a member.
8
<PAGE>
During the fiscal year ended December 31, 1994 each Director received an
annual fee of $10,000, paid quarterly, a fee of $1,000 for each Board of
Directors meeting attended, and a fee of $500 for each telephonic Board of
Directors meeting in which he participated. Beginning in November 1994,
concurrent with the Company's engagement of Oppenheimer to evaluate various
strategic alternatives, each director (with the exception of Mr. Rakich)
received an additional retainer of $2,000 per month, as well as an additional
fee of $500 for each Board of Directors meeting attended. The additional
compensation paid to these directors will cease at the conclusion of the
engagement of Oppenheimer. Directors who are members of the Audit Committee also
received $1,000 for each committee meeting attended. Directors who are members
of the Executive, Human Resources, Stock Option, Related Party Transactions
Review and Investment Committees also receive $1,000 for each committee meeting
attended; however, should these committees meet on the same day as a Board of
Directors meeting, members of the Committee receive $500 per committee meeting
attended. Directors were reimbursed for expenses incurred as a result of
attendance at Board or committee meetings.
The Board of Directors unanimously recommends a vote 'FOR' the election of
the nominees as directors as set forth in this Proxy Statement. The Company is
informed that Imperial and Financial, which hold approximately 72% and 10%,
respectively, of the outstanding LCC Common Stock, intend to vote their shares
in favor of the election of these nominees, in which event election of the
nominees as directors would be assured.
9
<PAGE>
EXECUTIVE OFFICERS
In addition to Mr. Rakich, who is President and Chief Executive Officer,
the executive officers of the Company and the shares beneficially owned by them
as of March 17, 1995 are as follows:
<TABLE>
<CAPTION>
Shares
Beneficially
Name Age Principal Occupation Owned*
- - ---------------------------- --------- ----------------------------------------------------------- -----------
<S> <C> <C> <C>
Bernhard M. Koch**.......... 40 Senior Vice President, Chief Financial Officer and 47,712(1)
Treasurer since 1988; and Secretary since December 31,
1993.
David L. Wilson, Jr......... 50 Senior Vice President and Chief Investment Officer since 25,333(2)
October 1992. He was formerly a Vice President of the
Investment Department with Penn Mutual Life Insurance
Company from July 1989 to September 1992; and Senior Vice
President of the Investment Department with Meritor Savings
Bank from August 1979 to January 1989.
Thomas W. Alesi............. 36 Assistant Vice President and Chief Accounting Officer since 1,000
May 3, 1994. Assistant Vice President and Controller from
January 3, 1994 to May 3, 1994. He was formerly a
Consultant, specializing in life insurance matters from
November 1992 to December 1993; and Vice President,
Treasurer and Chief Financial Officer of Corporate Life
Insurance Company from March 1989 to November 1992.
</TABLE>
- - ------------------
* No named executive officer with the exception of Mr. Rakich owns
more than 1% of the Company's outstanding stock.
** Citizen of Canada
(1) All shares beneficially owned are shares subject to stock options
granted to Mr. Koch that are exercisable within sixty days.
(2) Includes 19,333 shares subject to stock options granted to Mr.
Wilson that are exercisable within sixty days.
All executive officers are elected annually and serve at the pleasure of
the Board of Directors.
10
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information as of March 17, 1995 with
respect to each person known to management to be the beneficial owner of more
than five per cent (5%) of the Company's outstanding common stock and all
directors and executive officers of the Company as a group.
<TABLE>
<CAPTION>
Amount and Nature of Percent of
Name and Address of Beneficial Owner Beneficial Ownership Class
- - ------------------------------------------------- -------------------- -----------
<S> <C> <C>
The Imperial Life Assurance Company of Canada;... 5,432,109 71.6%
95 St. Clair Avenue West
Toronto, Canada M4V 1N7
Laurentian Financial, Inc.;...................... 6,177,093(1) 81.4%
1100 Rene Levesque Blvd., West
Montreal, Canada H3B 4N4
The Laurentian Group Corporation;................ 6,177,093(2) 81.4%
1100 Rene Levesque Blvd., West
Montreal, Canada H3B 4N4
Desjardins Laurentian Financial Corporation,
Inc.;.......................................... 6,177,093(3) 81.4%
1 Complexe Desjardins -- 40th Fl.
P. O. Box 10500 -- Desjardins Station
Montreal, Canada H5B 1J1
La Societe Financiere
des caisses Desjardins, Inc.;.................. 6,177,093(4) 81.4%
1 Complexe Desjardins -- 40th Fl.
P.O. Box 10500 -- Desjardins Station
Montreal, Canada H5B 1J1
La Confederation
des caisses popularies et
d'economie Desjardins du Quebec;............... 6,177,093(5) 81.4%
100 Commandeurs Avenue
Levis, Canada G6Y 7N5
All directors and executive officers of the
Company as a group, consisting of
14 persons..................................... 294,719(6) 3.7%
</TABLE>
- - ------------------
11
<PAGE>
(1) Laurentian Financial, Inc. ('Financial') owns 744,984 shares of LCC Common
Stock. Financial also owns 99.9% of the outstanding capital stock of The
Imperial Life Assurance Company of Canada ('Imperial'). Under the applicable
provisions of the Securities and Exchange Act of 1934, Financial may be
deemed to be a joint beneficial owner of the 5,432,109 shares of LCC Common
Stock owned by Imperial.
(2) The Laurentian Group Corporation ('Group') owns all of the outstanding
capital stock of Financial. Under the applicable provisions of the
Securities Exchange Act of 1934, Group may be deemed to be a joint
beneficial owner of the 5,432,109 shares of LCC Common Stock owned by
Imperial an the 744,984 shares owned by Financial.
(3) Desjardins Laurentian Financial Corporation ('DLFC') owns 98.6% of Group.
Under the applicable provisions of the Securities Exchange Act of 1934, DLFC
may be deemed to be a joint beneficial owner of the 5,432,109 shares of LCC
Common Stock owned by Imperial and the 744,984 shares owned by Financial.
(4) La Societe Financiere des caisses Desjardins ('SFCD') owns directly and
indirectly 81.6% of DLFC. Under the applicable provisions of the Securities
Exchange Act of 1934, SFCD may be deemed to be a joint beneficial owner of
the 5,432,109 shares of LCC Common Stock owned by Imperial and the 744,984
shares owned by Financial.
(5) La Confederation des caisses popularies et d'economie Desjardins du Quebec
('Confederation') owns 99.9% of SFCD. Under the applicable provisions of the
Securities Exchange Act of 1934, Confederation may be deemed to be a joint
beneficial owner of the 5,432,109 shares of LCC Common Stock owned by
Imperial and the 744,984 shares owned by Financial.
(6) See Notes 2 through 4 on page 6 and Notes 1 and 2 under Executive Officers
on page 10.
Section 16(a) of the Exchange Act requires the Company's officers and
directors, and persons who own more than ten percent of LCC's Common Stock, to
file reports of ownership and changes in ownership with the Securities and
Exchange Commission and the American Stock Exchange. Based on its review of the
copies of such forms received by it or written representations from reporting
persons, the Company believes that filing requirements for the fiscal year ended
December 31, 1994 applicable to its officers, directors and greater than ten
percent beneficial owners were complied with, except that Messrs. Ferguson and
Rivard each filed late an initial report on Form 3, and Messrs. Koch, Rakich and
Wilson each filed a late report on Form 4 with respect to one grant of options
in 1994.
12
<PAGE>
HUMAN RESOURCES COMMITTEE REPORT ON EXECUTIVE COMPENSATION
OVERVIEW AND PHILOSOPHY
The Company intends that its executive compensation program provides an
overall level of compensation opportunity that is competitive within the life
insurance industry. The Company's compensation policies have been cast within
the larger framework of managing the Company towards overall enhanced
profitability and increased shareholder value. The Company's overall
compensation philosophy is as follows:
- Attract and retain quality talent, which is critical to both
the short-term and long-term success of the Company;
- Reinforce strategic performance objectives through the use of
incentive compensation programs; and
- Create a mutuality of interest between the executive officers
and shareholders through compensation structures that share
the rewards and risks of strategic decision making.
The executive compensation program of the Company is comprised of base
salary, annual cash incentive opportunities, long-term incentive opportunities
in the form of stock options and benefits typically offered to executives by
major corporations.
The Human Resources Committee of the Board of Directors (the 'Committee')
is responsible for developing and making recommendations to the Board with
respect to the Company's executive compensation policies. The Committee advises
and assists management in formulating and in implementing policies designed to
assure the selection, development and retention of key personnel.
SUMMARY OF COMPENSATION ELEMENTS
BASE SALARY
At the senior executive level, base salaries are compared to life insurance
industry compensation information. The Committee reviews the base salary of the
executive officers on an annual basis. Adjustments to base salaries result from
an assessment of the performance contributions of each executive in relationship
to that executive's scope of responsibility. The Committee also examines the
overall competitive position of the base salaries of its executive officers in
relation to life insurance industry salary data, without attempting to achieve a
specific level of salary relative to other companies. Salary decisions as to
executives other than the Chief Executive Officer of the Company are determined
in a structured annual review by the Committee with input from the Chief
Executive Officer. On the basis of review of comparative compensation data, and
considering the significant improvement in financial performance during
13
<PAGE>
the past three years, the base salaries of the Chief Executive Officer and each
of the other named executive officers were increased effective January 1, 1994.
INCENTIVE COMPENSATION
SHORT-TERM INCENTIVE COMPENSATION
The Committee receives and approves recommendations from management
regarding an incentive compensation program at the beginning of each year to
provide for a basis for annual bonus awards. Awards under the Bonus Plan are
determined based on overall corporate performance and individual contributions
toward the Company's goals of improving earnings and financial strength. The
1994 Bonus Plan included financial performance objectives based on the Company's
earnings with goals that required improvement over prior years' results.
Achievement of the financial objectives determines the amount of a bonus pool
available for distribution to senior executives with the size of the pool
ranging from zero if minimum target earnings levels are not met, and increasing
to a predetermined maximum pool amount as various levels of earnings above the
minimum target level are reached. Individual executives are grouped into salary
classifications to which portions of the total potential bonus pool are
allocated. Individual performance, measured against established Company goals
and objectives, is reviewed by the Committee in determining the percentage of
bonus pool which is payable to a specific executive.
Messrs. Koch, Rakich and Wilson were awarded a cash bonus in February 1995
based upon the achievement of 1994 financial performance objectives established
by the Committee and approved by the Board of Directors at the beginning of
1994. During 1994, the financial performance produced a bonus pool in the upper
range of possible bonus pool amounts, and specific awards are noted in the
Summary Compensation Table.
LONG-TERM INCENTIVE COMPENSATION
The stockholders of the Company approved an Amended and Restated Executive
Stock Option Plan (the 'Stock Option Plan') at the 1992 Annual Meeting. The
Stock Option Plan is designed to align a significant portion of the Company's
executive compensation program with stockholder interests. The Stock Option
Committee (the 'Option Committee') of the Board of Directors of the Company has
the responsibility for awarding stock options and stock appreciation rights
(SARs), and takes into account each executive's level of responsibility and past
contributions to the Company in making such awards. The grants made by the
Option Committee in 1994, as set forth in the following tables, reflect such
considerations.
14
<PAGE>
REVIEW OF CEO COMPENSATION
As described above, the Company's executive compensation program is based
on corporate and individual performance and places a significant portion of an
executive's compensation at risk if these goals are not attained. In addition,
the program rewards long-term strategic management by using compensation
vehicles which promote equity ownership and emphasize attention to shareholder
value.
The Chief Executive Officer's compensation is determined in the same
manner, with up to a specified percentage of base salary being potentially
available as bonus compensation to the Chief Executive Officer if individual and
Company goals are met, and long-term incentive compensation being awarded in the
form of stock options or SARs.
The Company has experienced improved earnings during the past three years
following the initiation of strategic initiatives that has focused the Company
on its core markets and strengthened the financial condition of the Company.
Consideration by the Committee of these general objectives included evaluation
of Mr. Rakich's contributions to the Company in meeting certain financial goals
(including targets for earnings, return on equity, debt to equity, investment
yield, and operating expenses); other financial objectives; marketing
objectives; improvements in organizational structure; and human resources
management.
The Committee, in the absence of and without participation by Mr. Rakich,
reviewed the 1994 performance and compensation of the Chief Executive Officer.
The foregoing factors were all taken into account in the aggregate in
determining the increase in Mr. Rakich's 1994 compensation, which is reflected
in the Summary Compensation Table. Because all but a few of the performance
objectives were met and many were exceeded, the bonus compensation awarded was
in the upper range of potential bonus compensation for the Chief Executive
Officer.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During 1994, the Committee was composed of four non-management directors,
Messrs. Billings, Castonguay, Kinder, and Santos and Mr. Rakich, Chief Executive
Officer of the Company.
Human Resources Committee
Jared M. Billings, Chairman
Claude Castonguay
Jack Kinder, Jr.
Robert T. Rakich
Humberto Santos
15
<PAGE>
EXECUTIVE COMPENSATION
The following table and notes set forth the compensation paid or accrued by
the Company during the three fiscal years ended December 31, 1994 to the Chief
Executive Officer and each other named executive officer whose total annual
salary and bonus for the last fiscal year exceeded $100,000.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long-term
Compensation
Awards
-------------
Annual Compensation Securities
-------------------------------------- Underlying
Name and Other Annual Options/ SARs All Other
Position Year Salary Bonus Compensation(1) (#) Compensation(3)
- - ------------------------------- --------- ---------- ---------- -------------- ------------- --------------
<S> <C> <C> <C> <C> <C> <C>
Robert T. Rakich............... 1994 $ 364,000 $ 164,000 $ 34,500 40,000 $ 99,776
President and Chief 1993 352,000 143,000 32,500 45,000 86,693
Executive Officer 1992 339,596 115,000 38,500 16,667 81,625
Bernhard M. Koch............... 1994 140,600 48,600 -0- 15,000 41,106
Senior Vice President, 1993 134,500 36,000 -0- 25,000 30,176
Chief Financial Officer, 1992 126,479 31,000 -0- 15,000 10,673
Treasurer and Secretary
David L. Wilson, Jr............ 1994 130,000 35,000 -0- 8,000 12,866
Senior Vice President 1993 125,000 29,000 -0- 10,000 2,876
and Chief Investment 1992 21,635(2) -0- -0- 15,000 -0-
Officer
</TABLE>
- - ------------------
(1) Board of Directors fees from the Company and its insurance subsidiaries.
(2) Mr. Wilson commenced employment with the Company on October 19, 1992.
(3) All other compensation includes the following for the named executive
officers:
<TABLE>
<CAPTION>
Company Company Contribution
Contribution Surrender of in Lieu of
to Savings Stock Retirement Plan Group Life
Plan Options Contribution Insurance
------------- ------------ -------------------- -----------
<S> <C> <C> <C> <C>
Robert T. Rakich.................. $ 4,500 $ 86,276 $ 9,000
Bernhard M. Koch.................. 12,597 $ 27,750 759
David L. Wilson, Jr............... 11,683 1,183
</TABLE>
16
<PAGE>
The following table and notes provide information on option grants to the
executive officers named in the Summary Compensation Table to whom grants were
made in fiscal year 1994.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
Individual Grants Potential Realizable
--------------------------------------------------------- Value at Assumed
Number of Annual Rates of Stock
Securities % of Total Exercise Price Appreciation for
Underlying Options Granted or Base Option Term (1)
Options to Employees in Price Per Expiration ----------------------
Name and Position Granted(2) Fiscal Year(3) Share Date(2) 5% 10%
- - ------------------------------ ----------- ----------------- ----------- ------------ ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Robert T. Rakich.............. 40,000 31.7% $ 8.50 2/11/2004 $ 213,825 $ 541,875
President and Chief
Executive Officer
Bernhard M. Koch.............. 15,000 11.9% 8.50 2/11/2004 80,184 203,201
Senior Vice President,
Chief Financial Officer,
Treasurer and Secretary
David L. Wilson, Jr........... 8,000 6.3% 8.50 2/11/2004 42,765 108,374
Senior Vice President
and Chief Investment Officer
</TABLE>
- - ------------------
(1) The dollar amounts under these columns are the result of calculations at the
5% and 10% rates specified by the Securities and Exchange Commission when
the 'Potential Realizable Value' alternative is used and are not intended to
be a forecast of the Company's stock price.
(2) Options are granted at market value on the date of the grant and are
exercisable in equal increments at the end of each of the three years
following the date of grant, except that the options granted to Mr. Rakich
are immediately exercisable, subject to the condition that no option may be
exercised earlier than six months, nor later than ten years, after the date
of the grant. All options granted to Messrs. Rakich, Koch and Wilson during
1994 include provisions pursuant to which options granted to them which are
not otherwise exercisable shall immediately vest and become exercisable
under certain conditions if, within the eighteen-month period subsequent to
a change of control of the Company, such officer's employment by the Company
is terminated by the Company (other than for cause), or by the officer for
good reason.
(3) The Company granted options representing 126,000 shares to employees during
1994.
17
<PAGE>
The following table and notes provide information on the stock options and
stock appreciation rights (SARs) exercised during 1994 and present the value of
unexercised options and SARs at December 31, 1994, for the named executive
officers. See discussion at Note 2 in the table of Option Grants in Last Fiscal
Year above with respect to vesting and exercisability following a change of
control of the Company.
AGGREGATE OPTLON/SARS EXERCISES IN
LAST FISCAL YEAR AND 1994 YEAR-END
OPTLON/SARS VALUES
<TABLE>
<CAPTION>
Number of Number of Value of Value of
Securities Securities Unexercised Unexercised
Underlying Underlying in-the-Money in-the-Money
Unexercised Unexercised SARs at Options at
SARs at Options at 12/31/94 12/31/94
Shares 12/31/94 (#) 12/31/94 (#) ($)(3) ($)(3)
Acquired on Value ------------- --------------- ------------- -------------
Exercise Realized Exercisable(E)/ Exercisable(E)/ Exercisable(E)/ Exercisable(E)/
Name and Position (#) ($)(2) Unexercisable(U) Unexercisable(U) Unexercisable(U) Unexercisable(U)
- - ------------------------------ ----------- ------------- ------------- --------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Robert T. Rakich.............. 45,000 $ 90,000 349,044E 51,111E $ 3,257,393E $ 216,944E
President and Chief 0U 5,556U 0U 40,976U
Executive Officer
Bernhard M. Koch.............. 29,379E 199,326E
Senior Vice President, 36,667U 181,252U
Chief Financial Officer,
Treasurer and Secretary (1)
David L. Wilson, Jr........... 13,333E 85,415E
Senior Vice President 19,667U 94,710U
and Chief Investment Officer
</TABLE>
- - ------------------
(1) In consideration of his surrender to the Company of unexercised options with
respect to 3,000 shares of LCC Common Stock, the Company paid to Mr. Koch
$27,750 in 1994, which amount is included under the heading 'All Other
Compensation' in the Summary Compensation Table.
(2) Value is calculated by subtracting the exercise price from the fair market
value of the stock as of the exercise date.
(3) The ultimate realization of value on the exercise of such SARs and options
is dependent upon the market price of LCC Common Stock at the time of
exercise. Calculations are based on the $11 7/8 closing price of LCC Common
Stock on the last day of the fiscal year.
18
<PAGE>
STOCKHOLDER RETURN PERFORMANCE
Set forth below is a line graph comparing the five year cumulative total
return of the Company's common stock with that of the S&P 500 Life Insurance
Company index and the Russell 2000 index. The Russell 2000 represents the
smallest two-thirds of the 3,000 largest U.S. companies. The index is meant to
be representative of the performance of small capitalization companies, similar
to the Company, with a significant emphasis upon the financial services business
sector.
[ INSERT PERFORMANCE GRAPH ]
<TABLE>
<CAPTION>
1989 1990 1991 1992 1993 1994
<S> <C> <C> <C> <C> <C> <C>
LAURENTIAN CAPITAL 100 57 60 117 155 226
S&P 500 LIFE 100 81 116 154 156 127
RUSSELL 2000 100 81 118 140 166 161
</TABLE>
19
<PAGE>
OTHER COMPENSATION
Retirement Programs. Except as described below, all employees, including
officers, of the Company and its wholly-owned subsidiaries, after completion of
one year of service and attainment of age 21, were previously covered by the
Laurentian Capital Corporation Retirement Plan (the 'Former Retirement Plan').
Effective January 1, 1993, the Company instituted a defined contribution
plan, the Laurentian Capital Savings Plan (the 'Savings Plan'), which provides
for contributions by the Company ranging from 2-6% of the annual salary of
eligible employees, with all amounts contributed to the Savings Plan being fully
vested. Under the Savings Plan, officers of the Company and other employees may
also contribute through payroll deduction up to 15% of their base salary on a
pre-tax basis, subject to certain maximum amounts established by the Internal
Revenue Service, pursuant to Section 401(k) of the Internal Revenue Code, into a
selection of investment mutual funds. The Company makes matching contributions
of 25% of the first six percent (6%) of pre-tax contributions and such amounts
become fully vested immediately. In addition, based upon the attained earnings
of the Company, an additional amount of up to 25% of the first six percent (6%)
of pre-tax contributions may be contributed by the Company.
In 1990, the Company entered into a Deferred Compensation Agreement (the
'Agreement') with Robert T. Rakich, which provided him deferred benefits in lieu
of his participation in the Former Retirement Plan, which Agreement was amended
effective December 31, 1992 in order to continue benefit accrual in accordance
with the Former Retirement Plan. Under the Agreement, deferred amounts are
credited to a special account (the 'Special Account'), which is a general
liability of the Company, rather than a separate fund. Amounts credited to the
Special Account vest, thereby becoming non-forfeitable, in accordance with a
schedule contained in the Agreement. In the event of voluntary termination of
employment with the Company, Mr. Rakich would be entitled to the portion of the
Special Account then vested; in the event of involuntary termination, all
amounts credited to the Special Account would immediately vest. The Agreement
also provides for vesting and payment of the amount credited to the Special
Account in the event of disability or death. Each year that Mr. Rakich is
employed by the Company, there is credited to the Special Account an amount
equal to that which the Company would have contributed to the Former Retirement
Plan if Mr. Rakich had been a participant therein, based on certain assumptions.
The Special Account is credited with interest at the prime rate.
Amounts paid or credited for the benefit of Messrs. Koch, Rakich and Wilson
are set forth in Note 3 to the Summary Compensation Table.
Stock Option Plan. Under the Stock Option Plan, options or SARs may be
granted, at the discretion of the Stock Option Committee, to key management
employees of the Company and its subsidiaries, a group which includes
approximately 15 persons. Information with respect to grants made to and values
of unexercised in-the-money awards held by certain executive owners under the
Stock Option Plan is set forth in the tables above.
20
<PAGE>
Change of Control Arrangements. The Company has entered into Change of
Control Agreements with each of Messrs. Koch, Rakich and Wilson which provide
for certain benefits in the event the employment of such executive is terminated
in connection with a Change of Control of the Company, as defined in such
Agreements. Pursuant to each agreement, if the executive's employment by the
Company is terminated within the twenty-four month period subsequent to a Change
of Control, either by the Company (other than for cause or for Retirement, as
defined therein) or by the executive for good reason as defined therein, the
executive will be paid an amount equal to two times (one and one-half times in
the case of Mr. Wilson) the sum of: (1) the annual base salary paid to such
executive by the Company as of the time of termination of employment; and (2) an
amount equal to such annual base salary multiplied by the executive's average
percentage annual bonus paid during the preceding three years. The Agreement
also provides for continuing participation at the executive's election in the
Company's health and hospital plan for a period of two years (eighteen months in
the case of Mr. Wilson). Each Agreement also provides that the Company will pay
legal fees and expenses incurred by the executive as a result of termination,
seeking to enforce the Agreement, or a tax audit or proceeding attributable to
application of certain provisions of the Internal Revenue Code to payments for
benefits under the Agreement, and that payments under the Agreement are not
reduced by any compensation earned by the executive as a result of other
employment after the date of termination.
As discussed in Note 2 to the table of Option Grants in Last Fiscal Year,
stock options granted to certain officers of the Company include provisions by
which such options become immediately exercisable under certain conditions in
the event of termination of employment within eighteen months after a Change of
Control.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Mr. Larrabee is currently obligated to Prairie under a mortgage loan made
by Sentinel Life Insurance Company ('Sentinel'), a former wholly-owned
subsidiary of Prairie, on March 27, 1979, in the original principal amount of
$547,000. The loan, which was entered into eight years prior to the Company's
acquisition of Sentinel, is for a term of 25 years and bears interest at the
rate of 10% per annum. The highest indebtedness on the loan during 1994 was
approximately $285,000; the current outstanding balance is approximately
$270,000.
During 1994, the Company entered into a Management Services Agreement with
Desjardins Laurentian Financial Corporation ('DLFC'). During 1993, a similar
agreement had been in place with The Laurentian Group Corporation ('Group'). The
Management Services Agreement provides for DLFC's provision of certain
management services to the Company, and for payment to DLFC for such services
and for reimbursement of certain expenditures made by DLFC on behalf of the
Company. Costs incurred associated with the Management Services Agreement
21
<PAGE>
during 1994 totaled approximately $144,000, and the Company estimates similar
costs to be incurred in 1995 under a similar agreement for the fiscal year 1995.
FINANCIAL STATEMENTS OF THE COMPANY
The Company's Annual Report to Stockholders for 1994 accompanies this Proxy
Statement. The Annual Report contains the Company's audited financial statements
and such financial statements are incorporated herein by reference.
STOCKHOLDER PROPOSALS
Proposals of stockholders intended to be presented at the 1996 Annual
Meeting of Stockholders must be received by the Company, for possible inclusion
in the Company's proxy statement and form of proxy relating to that meeting, not
later than December 11, 1995. Any stockholder proposals should be made in
compliance with applicable legal requirements and be furnished to the Secretary
of the Company by certified mail, return receipt requested.
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The firm of Coopers & Lybrand L.L.P., Certified Public Accountants, has
been selected to audit the financial statements of the Company and its
subsidiaries for the current fiscal year ending December 31, 1995. In addition
to serving as the Company's independent auditors for the current fiscal year,
Coopers & Lybrand L.L.P. served as independent auditors of the Company for the
Company's most recently completed fiscal year.
Representatives of Coopers & Lybrand L.L.P. are expected to be present at
the Annual Meeting of Stockholders and will have an opportunity to make a
statement if they desire to do so and to respond to appropriate questions.
COST OF SOLICITATION
The Company will bear all costs and expenses incurred in connection with
this solicitation of proxies. The costs of solicitation will include
reimbursement paid to brokerage firms and others for their expenses in
forwarding solicitation materials to their principals.
OTHER MATTERS
Management knows of no business which will be presented for action at the
meeting other than as set forth in this Proxy Statement, but if any other
matters properly come before the meeting, the persons named in the accompanying
proxy will vote such proxy on such matters in accordance with their best
judgment.
22
<PAGE>
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY; THEREFORE, STOCKHOLDERS WHO
DO NOT EXPECT TO ATTEND THE 1995 ANNUAL MEETING IN PERSON ARE REQUESTED TO FILL
IN, SIGN AND RETURN THE PROXY FORM AS SOON AS POSSIBLE.
By Order of the Board of Directors
[ SIG CUT ]
Bernhard M. Koch, Secretary
Wayne, Pennsylvania
April 10, 1995
23
<PAGE>
LAURENTIAN CAPITAL CORPORATION
PROXY SOLICITED BY THE BOARD OF DIRECTORS FOR
ANNUAL MEETING OF STOCKHOLDERS, MAY 9, 1995
The undersigned stockholder of Laurentian Capital Corporation (the
"Company"), revoking previous proxies, acknowledges receipt of the Notice of
Annual Meeting of Stockholders dated April 10, 1995, and the accompanying Proxy
Statement, and hereby appoints Robert T. Rakich and Bernhard M. Koch and each of
them, the true and lawful attorneys and proxies of the undersigned, with full
power of substitution and revocation, to attend the Annual Meeting of
Stockholders of the Company to be held at the Four Seasons Hotel, 1 Logan
Square, Philadelphia, Pennsylvania 19103 on Tuesday, May 9, 1995 at 9:00 A.M.,
local time, and at any adjournment or adjournments thereof, with all powers the
undersigned would possess if personally present. The undersigned authorizes and
instructs said proxies to vote all of the shares of stock of the Company which
the undersigned would be entitled to vote if personally present as follows:
(Continued and to be SIGNED on the OTHER SIDE)
<PAGE>
- - ------------------------------
- - ------------------------------
THIS PROXY WILL BE VOTED AS DIRECTED. IF NO CONTRARY INSTRUCTION IS INDICATED,
THE VOTE OF THE UNDERSIGNED WILL BE CAST "FOR" THE ELECTION OF THE NOMINEES FOR
DIRECTORS NAMED HEREIN.
I. ELECTION OF DIRECTORS: Nominees: Thomas E. Beach, Jared M. Billings,
Stephen B. Bonner, Claude Castonguay, Robert J. Ferguson, Jack Kinder, Jr.,
Robert D. Larrabee, Robert T. Rakich, Guy Rivard, Humberto Santos,
Alan J. Zakon.
FOR WITHHOLD AUTHORITY (INSTRUCTION: To withhold authority
to vote for any individual nominee, write
[ ] [ ] that nominee's name in the space
provided below.)
-----------------------------------------
II. In their discretion, said proxies are authorized
to vote upon any other business which may
properly come before the Meeting.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
NOTE: Your signature should appear as your name appears hereon. When shares
are held by joint tenants, both should sign. When signing as attorney, executor,
administrator, trustee or guardian, please give full title as such. If a
corporation, please sign in full corporate name by the President or other
authorized officer. If a partnership, please sign in partnership name by
authorized person.
The Board of Directors requests that you fill in, sign, date and return the
proxy card promptly using the enclosed envelope.
Signature(s) _________________________________________________ Date ____________
<PAGE>
LAURENTIAN CAPITAL CORPORATION
April 11, 1995
Securities and Exchange Commission
Attn: Document Control -- EDGAR
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: Laurential Capital Corporation
Definitive Proxy Materials with respect to Annual Meeting
of Stockholders
SEC Filing Fees Account Number 9108739
-------------------------------------------------------------
Ladies and Gentlemen:
Pursuant to Rule 14a-6(b), transmitted herewith is the definitive copy
of the proxy statement, form of proxy and notice of Annual Meeting of
Stockholders of Laurentian Capital Corporation to be held May 9, 1995. The
filing fee in the amount of $125.00 has been previously transmitted by wire
transfer to Mellon Bank on April 7, 1995. The definitive proxy materials
are intended to be mailed to stockholders on or about April 12, 1995.
Please acknowledge receipt and acceptance of these definitive proxy
materials using the contact information as denoted in the submission header.
Very truly yours,
/s/ Bernhard M. Koch
--------------------
Bernhard M. Koch
Secretary
