<PAGE> 1
================================================================================
SCHEDULE 14A
(RULE 14a)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] 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 sec.240.14a-11(c) or sec.240.14a-12
</TABLE>
AMERICAN FINANCIAL GROUP INC.
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
XXXXXXXXXXXXXXXX
(NAME OF PERSON(S) FILING PROXY STATEMENT, IF OTHER THAN THE REGISTRANT)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies: .......
(2) Aggregate number of securities to which 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> 2
AMERICAN FINANCIAL GROUP, INC.
One East Fourth Street
Cincinnati, Ohio 45202
--------------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
--------------------------------
To be Held on May 29, 1997
To our Shareholders:
The Annual Meeting of Shareholders of American Financial Group, Inc.
will be held on Thursday, May 29, 1997, at 10:30 a.m., at The Cincinnatian
Hotel, 601 Vine Street, Cincinnati, Ohio. The purposes of the meeting are:
1. To elect eight directors; and
2. To transact such other business as may properly come before
the meeting or any adjournment thereof.
Only shareholders of record at the close of business on April 18, 1997
are entitled to receive notice of and to vote at the meeting or any adjournment
thereof.
You are invited to be present at the meeting so that you can vote in
person. Whether or not you plan to attend the meeting, please date, sign and
return the accompanying proxy form in the enclosed, postage-paid envelope. If
you do attend the meeting, you may either vote by proxy or revoke your proxy and
vote in person. You may also revoke your proxy at any time before the vote is
taken at the meeting by written revocation or by submitting a later-dated proxy
form.
Sincerely,
Carl H. Lindner
Chairman of the Board and
Chief Executive Officer
Cincinnati, Ohio
April 25, 1997
<PAGE> 3
AMERICAN FINANCIAL GROUP, INC.
PROXY STATEMENT
INTRODUCTION
This Proxy Statement is furnished in connection with the solicitation
of proxies by the Board of Directors of American Financial Group, Inc. ("AFG" or
the "Company") for use at the Annual Meeting of Shareholders (the "Meeting") to
be held on Thursday, May 29, 1997, at 10:30 a.m. and any adjournment thereof.
The approximate mailing date of this Proxy Statement and accompanying proxy form
is April 25, 1997. At the Meeting, shareholders will be asked to elect eight
directors and to transact such other business as may properly come before the
Meeting or any adjournment thereof.
VOTING AT THE MEETING
RECORD DATE; SHARES OUTSTANDING
As of April 18, 1997, the record date for determining shareholders
entitled to notice of and to vote at the Meeting (the "Record Date"), the
Company had outstanding one class of voting securities, its common stock, $1.00
par value ("Common Stock"). At the Record Date, 58,160,445 shares of Common
Stock were outstanding, excluding 18,666,614 shares beneficially owned by
American Financial Corporation ("AFC") and 1,363,203 shares held by American
Premier Underwriters, Inc. ("APU"), each a subsidiary of the Company. Under Ohio
state law, the shares held by subsidiaries are not entitled to vote and are
therefore not considered to be outstanding for purposes of the Meeting. Each
share of outstanding Common Stock is entitled to one vote on each matter to be
presented at the Meeting. Abstentions (including instructions to withhold
authority to vote for one or more nominees) and broker non-votes are counted for
purposes of determining a quorum but will not be cast with respect to any item
voted on at the Meeting. As a result, abstentions and broker non-votes will have
no effect on the outcome of any matter voted on at the Meeting.
CUMULATIVE VOTING
All shareholders have cumulative voting rights in the election of
directors and one vote per share on all other matters. Cumulative voting allows
a shareholder to multiply the number of shares owned on the Record Date by the
number of directors to be elected and to cast the total for one nominee or
distribute the votes among the nominees as the shareholder desires. Nominees who
receive the greatest number of votes will be elected. In order to invoke
cumulative voting, notice of cumulative voting must be given in writing to an
executive officer of the Company not less than 48 hours before the time fixed
for the holding of the Meeting.
PROXIES
If a choice is specified on a properly executed proxy form, the shares
will be voted accordingly. If a proxy form is signed without a preference
indicated, those shares will be voted "FOR" the election of the eight nominees
proposed by the Board of Directors. The authority solicited by this Proxy
Statement includes discretionary authority to cumulate votes in the election of
directors. If any other matters properly come before the Meeting or any
adjournment thereof, each properly executed proxy form will be voted in the
discretion of the proxies named therein.
Shareholders may vote in person or by proxy at the Meeting. Proxies
given may be revoked at any time by filing with the Company either a written
revocation or a duly executed proxy bearing a later date, or shareholders may
appear at the Meeting and vote in person.
Solicitation of proxies is being made by management at the direction of
the Company's Board of Directors, without additional compensation, through the
mail, in person, by facsimile or by telephone. The cost will be borne by the
Company. In addition, the Company will request brokers and other custodians,
nominees and fiduciaries to forward proxy soliciting material to the beneficial
owners of shares held of record by such persons, and the Company will reimburse
them for their expenses in so doing. The
<PAGE> 4
Company has also retained Morrow & Co., Inc. to aid in the solicitation of
proxies for a fee estimated at $4,000 plus out of pocket expenses.
ADJOURNMENT AND OTHER MATTERS
Approval of a motion for adjournment or other matters brought before
the Meeting requires the affirmative vote of a majority of the shares voting at
the Meeting. Management knows of no other matters to be presented at the Meeting
other than those stated in the Notice.
PRINCIPAL SHAREHOLDERS
The following shareholders are the only persons known by the Company to
own beneficially 5% or more of its outstanding Common Stock as of March 31,
1997:
<TABLE>
<CAPTION>
Amount and Nature of Beneficial Ownership
---------------------------------------------------
Name and Address Obtainable
of Common Stock upon Exercise of Percent of Class
Beneficial Owner Held (a) Options (b) Total (c)
<S> <C> <C> <C> <C>
Carl H. Lindner
One East Fourth Street 5,515,202 (d) 41,818 5,557,020 9.6%
Cincinnati, Ohio 45202
Carl H. Lindner III
One East Fourth Street 4,719,929 (e) 400,000 5,119,929 8.7%
Cincinnati, Ohio 45202
S. Craig Lindner
One East Fourth Street 4,720,180 (f) 167,091 4,887,271 8.4%
Cincinnati, Ohio 45202
Keith E. Lindner
250 East Fifth Street 4,720,231 (g) 160,000 4,880,231 8.4%
Cincinnati, Ohio 45202
Lou Ann Flint, Trustee
49 East Fourth Street 3,549,169 (h) - - - 3,549,169 6.1%
Cincinnati, Ohio 45202
FMR Corp.
82 Devonshire Street 3,178,600 (i) - - - 3,178,600 5.5%
Boston, Massachusetts 02109
</TABLE>
(a) Unless otherwise noted, the holder has sole voting and dispositive
power with respect to the shares listed.
(b) Represents shares of Common Stock which may be acquired within 60 days
of March 31, 1997 through the exercise of options granted under the
Company's Stock Option Plan. The Lindner family members listed above
hold options (both vested and unvested) to purchase the following
numbers of shares of Common Stock:
<TABLE>
<CAPTION>
<S> <C>
Carl H. Lindner .......... 51,818
Keith E. Lindner ......... 450,000
Carl H. Lindner III ...... 450,000
S. Craig Lindner ......... 450,000
</TABLE>
(c) The percentages of outstanding shares of Common Stock beneficially
owned (within the meaning of Rule 13d-3 under the Securities Exchange
Act of 1934) by Carl H. Lindner III, S. Craig Lindner and Keith E.
Lindner are 7.6%, 7.1% and 10.8%, respectively, after attributing the
shares held in various trusts for the benefit of the minor children of
S. Craig Lindner and Carl H. Lindner III (for which Keith E. Lindner
acts as trustee with voting and dispositive power) to Keith E. Lindner.
-2-
<PAGE> 5
(d) Includes 2,119,455 shares held by his spouse, but excludes 6,191,875
shares held in two trusts for the benefit of his family for which third
parties (including Lou Ann Flint) act as trustees with voting and
dispositive power.
(e) Includes 587 shares held by his spouse, 17,941 shares held by a trust
over which his spouse has voting and dispositive power and 646,264
shares which are held in various trusts for the benefit of his minor
children for which Keith E. Lindner acts as trustee with voting and
dispositive power.
(f) Includes 68,574 shares held by his spouse as custodian for their minor
children or in a trust over which his spouse has voting and dispositive
power and 775,714 shares which are held in various trusts for the
benefit of their minor children for which Keith E. Lindner acts as
trustee with voting and dispositive power.
(g) Excludes 1,421,978 shares (described in footnotes (e) and (f) above)
which are held in various trusts for the benefit of the minor children
of his brothers, Carl H. Lindner III and S. Craig Lindner, over which
Keith E. Lindner has sole voting and dispositive power but no pecuniary
interest.
(h) Includes 3,548,343 shares (described in footnote (d) above) which are
held in a trust for the benefit of the family of Carl H. Lindner over
which Lou Ann Flint has sole voting and dispositive power as trustee
but no pecuniary interest. Also includes 200 shares held by Ms. Flint
as custodian for her minor children.
(i) Of this amount, 2,725,200 shares were held by various funds managed by
Fidelity Management & Research Company, a Massachusetts corporation
("Fidelity"), a portfolio of an investment company registered under
Section 8 of the Investment Company Act of 1940, as amended. Fidelity
is an investment adviser registered under Section 203 of the Investment
Advisers Act of 1940 and provides investment advisory services to
various funds which hold shares of Common Stock. Additionally, 453,400
shares were held in various institutional accounts for which Fidelity
Management Trust Company, a bank as defined in Section 3(a)(6) of the
Securities Exchange Act of 1934, serves as investment manager. Fidelity
and Fidelity Management Trust Company are wholly-owned subsidiaries of
FMR Corp., a Massachusetts corporation.
Carl H. Lindner, S. Craig Lindner, Carl H. Lindner III, Keith E.
Lindner and trusts for their benefit (collectively, the "Lindner Family") are
the beneficial owners of approximately 45% of the Company's Common Stock. The
Lindner Family may be deemed to be controlling persons of the Company.
PROPOSAL - ELECTION OF DIRECTORS
The Board of Directors has nominated eight directors to hold office
until the next Annual Meeting of Shareholders and until their successors are
elected and qualified. If any of the nominees should become unable to serve as a
director, the proxies will be voted for any substitute nominee designated by the
Board of Directors but, in any event, no proxy may be voted for more than eight
nominees. The eight nominees who receive the greatest number of votes will be
elected.
The nominees for election to the Board of Directors are CARL H.
LINDNER, KEITH E. LINDNER, CARL H. LINDNER III, S. CRAIG LINDNER, THEODORE H.
EMMERICH, JAMES E. EVANS, THOMAS M. HUNT and WILLIAM R. MARTIN. All of these
nominees were elected directors at the Company's last Annual Meeting of
Shareholders held on June 4, 1996. See "Management" below for information
concerning the background, securities holdings, remuneration and certain other
matters relating to the nominees.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR THE
ELECTION OF THESE EIGHT NOMINEES AS DIRECTORS.
-3-
<PAGE> 6
MANAGEMENT
The directors, nominees and executive officers of the Company are:
<TABLE>
<CAPTION>
DIRECTOR OR
AGE* POSITION OFFICER SINCE
--- ------------------------------------------------- -------------
<S> <C> <C> <C>
Carl H. Lindner 77 Chairman of the Board and Chief Executive Officer 1982
S. Craig Lindner 42 Co-President and a Director 1985
Keith E. Lindner 37 Co-President and a Director 1995
Carl H. Lindner III 43 Co-President and a Director 1991
Theodore H. Emmerich 70 Director 1988
James E. Evans 51 Senior Vice President and General Counsel
and a Director 1985
Thomas M. Hunt 73 Director 1982
William R. Martin 68 Director 1994
Thomas E. Mischell 49 Senior Vice President - Taxes 1995
Fred J. Runk 54 Senior Vice President and Treasurer 1995
</TABLE>
- ----------
*As of March 31, 1997
CARL H. LINDNER (Chairman of the Executive Committee) Mr. Lindner has
been Chairman of the Board and Chief Executive Officer of the Company for more
than five years. During the past five years, Mr. Lindner has also been Chairman
of the Board and Chief Executive Officer of AFC and APU, diversified financial
services companies which became subsidiaries of the Company as a result of
Mergers occurring in April 1995. He is Chairman of the Board of Directors of
American Annuity Group, Inc. ("AAG"), American Financial Enterprises, Inc.
("AFEI") and Chiquita Brands International, Inc. ("Chiquita"). Mr. Lindner is
the father of Carl H. Lindner III, S. Craig Lindner and Keith E. Lindner.
S. CRAIG LINDNER (Member of the Executive Committee) Since March 1993,
Mr. Lindner has been President of AAG, an 81%-owned subsidiary of AFC that
markets tax-deferred annuities principally to employees of educational
institutions. Mr. Lindner is also President of American Money Management
Corporation ("AMMC"), a subsidiary of AFC which provides investment services for
the Company and its affiliated companies. For over five years prior thereto, he
had served as Senior Executive Vice President of AMMC. Mr. Lindner is also a
director of AAG, AFC and APU.
KEITH E. LINDNER (Member of the Executive Committee) In March 1997, Mr.
Lindner was named Vice Chairman of the Board of Directors of Chiquita, a
worldwide marketer and producer of bananas and other food products in which the
Company has a 43% ownership interest. For more than five years prior to that
time, Mr. Lindner had been President and Chief Operating Officer and a director
of Chiquita. Mr. Lindner is also a director of AFC and APU.
CARL H. LINDNER III (Member of the Executive Committee) Mr. Lindner was
President of the Company from February 1992 until he became Co-President in
March 1996. For more than five years, Mr. Lindner has been President of Great
American Insurance Company ("Great American") and has been principally
responsible for the Company's property and casualty insurance operations.
Mr. Lindner is also a director of AFC and APU.
THEODORE H. EMMERICH (Chairman of the Audit Committee; Member of the
Compensation Committee) Until his retirement in 1986, Mr. Emmerich was managing
partner of the Cincinnati office of the independent accounting firm of Ernst &
Whinney. He is also a director of AFC, APU, Carillon Fund, Inc., Carillon
Investment Trust, Gradison Custodial Trust, Gradison-McDonald Municipal
Custodial Trust, Gradison-McDonald Cash Reserve Trust and Summit Investment
Trust.
-4-
<PAGE> 7
JAMES E. EVANS is Senior Vice President and General Counsel of the
Company. He has served as a Vice President and General Counsel of AFC for more
than five years. Mr. Evans is also a director of AFC, AFEI and APU.
THOMAS M. HUNT (Member of the Compensation Committee) During the past
five years, Mr. Hunt has been Chairman of the Board of Hunt Petroleum
Corporation, an oil and gas production company. He is also a director of AFC and
APU.
WILLIAM R. MARTIN (Chairman of the Compensation Committee; Member of
the Audit Committee) During the past five years, Mr. Martin has been Chairman of
the Board (since 1993) and President and Chief Executive Officer (until 1993) of
MB Computing, Inc., a computer software and services company. Mr. Martin is also
a director of AAG, AFC and APU.
THOMAS E. MISCHELL is Senior Vice President - Taxes of the Company. He
has served as a Vice President of AFC for over five years.
FRED J. RUNK is Senior Vice President and Treasurer of the Company. He
has served as Vice President and Treasurer of AFC for more than five years.
In December 1993, Great American Communications Company, which
subsequently changed its name to Citicasters Inc., completed a comprehensive
financial restructuring that included a prepackaged plan of reorganization filed
in November of that year under Chapter 11 of the Bankruptcy Code. Messrs. Carl
H. Lindner, Mischell and Runk had been executive officers of that company within
two years before its bankruptcy reorganization.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires AFG's officers, directors
and persons who own more than ten percent of AFG's Common Stock to file reports
of ownership with the Securities and Exchange Commission and to furnish AFG with
copies of these reports. The Company believes that during fiscal 1996, all
filing requirements were met, except for one filing by Thomas E. Mischell
reporting the purchase of 50 shares of AFG Common Stock by a minor child which
was filed after the due date.
SECURITIES OWNERSHIP
The following table sets forth information, as of March 31, 1997,
concerning the beneficial ownership of equity securities of the Company and its
subsidiaries by each director, nominee for director, the executive officers
named in the Summary Compensation Table (see "Compensation" below) and by all
directors and executive officers as a group. Such information is based on data
furnished by the persons named. Except as set forth in the following table, no
director or executive officer beneficially owned 1% or more of any class of
equity security of the Company or any of its subsidiaries outstanding at March
31, 1997.
<TABLE>
<CAPTION>
Amount and Nature of Beneficial Ownership (a) (b)
-----------------------------------------------------------------------
Shares of Common Stock
Name of Shares of Common Obtainable on Exercise
Beneficial Owner Stock Held of Options (c)
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C>
Carl H. Lindner (d) 5,515,202 (e) 41,818
Carl H. Lindner III (d) 4,719,929 (f) 400,000
S. Craig Lindner (d) 4,720,180 (g) 167,091
Keith E. Lindner (d) 4,720,231 (h) 160,000
Theodore H. Emmerich 4,080 13,819
James E. Evans 47,507 31,000
Thomas M. Hunt 3,552 13,819
William R. Martin 34,280 7,000
All directors and executive
officers as a group (d) 19,909,850 866,547
</TABLE>
-5-
<PAGE> 8
(a) Unless otherwise indicated, the persons named have sole voting and
dispositive power over the shares reported.
(b) Does not include the following ownership interests in subsidiaries of
the Company: Messrs. Emmerich, Evans, Hunt, S.C. Lindner and Martin,
and all directors and executive officers as a group beneficially own
1,561, 19,638, 382, 69,308, 15,063 and 118,219 shares, respectively, of
the common stock of AAG; Mr. Evans and all directors and executive
officers as a group beneficially own 116,000 and 279,194 shares,
respectively, of the common stock of AFEI; and Mr. Martin and all
directors and executive officers as a group beneficially own 40,483 and
60,810 shares, respectively, of the preferred stock of AFC. Also
excludes the following ownership of Chiquita common stock: Messrs.
Emmerich, C.H. Lindner and K.E. Lindner, and all directors and
executive officers as a group beneficially own 1,000, 43,134, 11,887
and 241,800 shares, respectively.
(c) Consists of shares of Common Stock purchasable within 60 days of March
31, 1997 through the exercise of the vested portion of stock options
granted under the Company's Stock Option Plan.
(d) The shares set forth for Carl H. Lindner, Carl H. Lindner III, S.C.
Lindner and Keith E. Lindner and all directors and officers as a group
constituted 9.6%, 8.7%, 8.4%, 8.4% and 35.2%, respectively, of the
Common Stock outstanding at March 31, 1997. For information as to the
percentage of outstanding shares beneficially owned (within the meaning
of Rule 14d-3 under the Securities Exchange Act of 1934) by such
Lindner family members, see "Principal Shareholders."
(e) Includes 2,119,455 shares held by his spouse. Excludes 6,191,875 shares
held in trusts for the benefit of his family for which third parties
serve as trustee.
(f) Includes 587 shares held by his spouse, 17,941 shares held by a trust
over which his spouse has voting and dispositive power and 646,264
shares which are held in various trusts for the benefit of his minor
children for which Keith E. Lindner acts as trustee with voting and
dispositive power.
(g) Includes 68,574 shares held by his spouse as custodian for their minor
children or in a trust over which his spouse has voting and dispositive
power and 775,714 shares which are held in various trusts for the
benefit of their minor children for which Keith E. Lindner acts as
trustee with voting and dispositive power.
(h) Excludes 1,421,978 shares (described in footnotes (f) and (g)), which
are held in various trusts for the benefit of the minor children of his
brothers, Carl H. Lindner III and S. Craig Lindner, over which Keith E.
Lindner has sole voting and dispositive power but no pecuniary
interest.
-6-
<PAGE> 9
COMPENSATION
The following table summarizes the aggregate cash compensation for
1996, 1995 and 1994 of the Company's Chairman of the Board and Chief Executive
Officer and its four other most highly compensated executive officers during
1996 (such five executive officers being herein referred to as the "Named
Executive Officers"). Such compensation includes amounts paid by AFC, APU and
their subsidiaries and certain affiliates during 1996.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Long-Term
Annual Compensation Compensation
-------------------------------------------- --------------------
Name Other Annual Securities Underlying All Other
and Compensation Options Granted Compensation
Principal Position (a) Year Salary (b) Bonus (c) (d) (# of Shares) (e)
<S> <C> <C> <C> <C> <C> <C>
Carl H. Lindner 1996 $ 913,000 $ 900,000 $ 156,000 -- $ 70,900
Chairman of the Board and 1995 1,364,000 900,000 254,000 -- 169,000
Chief Executive Officer 1994 981,000 800,000 -- -- 87,000
Keith E. Lindner (a) 1996 $ 917,000 $ 900,000 $ 28,000 -- $ 31,000
Co-President 1995 935,000 900,000 -- 400,000 30,000
Carl H. Lindner III 1996 $ 917,000 $ 900,000 $ 174,000 -- $ 39,500
Co-President 1995 1,076,000 900,000 223,000 -- 103,000
1994 1,011,000 800,000 -- -- 53,000
S. Craig Lindner (a) 1996 $ 917,000 $ 900,000 $ 137,000 -- $ 31,000
Co-President 1995 1,121,000 900,000 142,000 388,181 83,000
James E. Evans (a) 1996 $ 917,000 $ 639,000 $ 14,000 -- $ 49,500
Senior Vice President and 1995 948,000 850,000 10,000 150,000 58,000
General Counsel
----------
</TABLE>
(a) S. Craig Lindner, Keith E. Lindner and James E. Evans became executive
officers of the Company in April 1995.
(b) This column includes with respect to Carl H. Lindner and Keith E.
Lindner, $200,000 during 1996 and $269,000 during 1995, and $900,000
during 1996 and $935,000 during 1995, respectively, representing salary
paid to these individuals by Chiquita.
(c) Approximately one quarter of the 1996 bonus for each individual was
paid in shares of AFG Common Stock.
(d) This column includes amounts for personal homeowners and automobile
insurance coverage, and the use of corporate aircraft and value of
automobiles.
<TABLE>
<CAPTION>
Name Year Insurance Aircraft & Automobile
----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Carl H. Lindner 1996 $16,000 $140,000
1995 18,000 236,000
Keith E. Lindner 1996 12,000 16,000
1995 -- --
Carl H. Lindner III 1996 19,000 155,000
1995 17,000 206,000
S. Craig Lindner 1996 23,000 114,000
1995 20,000 122,000
James E. Evans 1996 -- 14,000
1995 -- 10,000
</TABLE>
-7-
<PAGE> 10
(e) Consists of Company or subsidiary contributions or allocations under
the (i) defined contribution retirement plans and (ii) employee savings
plan in which the following Named Executive Officers participate (and
related accruals for their benefit under the Company's benefit
equalization plan which generally makes up certain reductions caused by
Internal Revenue Code limitations in the Company's contributions to
certain of the Company's retirement plans) and Company paid group life
insurance, as follows:
<TABLE>
<CAPTION>
AFC
Auxiliary Retirement Savings Directors'
Name Year ESORP Plan Plan Fees Term Life
--------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Carl H. Lindner 1996 $21,400 $7,500 $4,500 $14,500 $23,000
1995 30,000 56,000 18,000 25,000 40,000
1994 -- 49,000 -- -- 38,000
Keith E. Lindner 1996 30,000 -- -- -- 1,000
1995 30,000 -- -- -- --
Carl H. Lindner III 1996 30,000 7,500 -- -- 2,000
1995 30,000 67,000 -- -- 6,000
1994 -- 51,000 -- -- 2,000
S. Craig Lindner 1996 30,000 -- -- -- 2,000
1995 30,000 -- -- 51,000 2,000
James E. Evans 1996 30,000 -- -- $14,500 5,000
1995 30,000 -- -- 25,000 3,000
</TABLE>
STOCK OPTIONS
The table set forth below discloses the number and value of unexercised
stock options held by the Named Executive Officers at December 31, 1996. No
stock options were granted to, or exercised by, the Named Executive Officers
during 1996.
<TABLE>
<CAPTION>
AGGREGATED OPTION EXERCISES IN 1996 AND 1996 YEAR-END OPTION VALUES
Shares
Acquired on Value of Unexercised
Exercise Number of Shares Underlying In-the-Money Options
Unexercised Options at Year End (a)
Name Company (# of Value --------------------------------------------------------
Shares) Realized Exercisable Unexercisable Exercisable Unexercisable
<S> <C> <C> <C> <C> <C> <C>
Carl H. Lindner AFG -- -- 31,818 20,000 $ 500,429 $ 191,200
S. Craig Lindner AFG -- -- 89,455 310,545 $1,246,981 $4,279,310
Keith E. Lindner AFG -- -- 80,000 320,000 $1,102,400 $4,409,600
Carl H. Lindner III AFG -- -- 400,000 0 $5,511,883 $ 0
James E. Evans AFG -- -- 31,000 120,000 $ 237,070 $ 922,800
AFEI (b) -- -- 115,000 -- $ 812,500 --
</TABLE>
(a) The value of unexercised in-the-money options is calculated based on
the closing market price on December 31, 1996 for the Company's Common
Stock on the New York Stock Exchange of $37.75 per share and AFEI's
common stock on the Pacific Stock Exchange of $28.25 per share.
(b) American Financial Enterprises, Inc., an 83%-owned subsidiary of the
Company.
-8-
<PAGE> 11
COMPENSATION COMMITTEE REPORT
The Compensation Committee of the Board of Directors consists of three
directors, none of whom is an employee of the Company or any of its
subsidiaries. The Committee's functions include reviewing and making
recommendations to the Board of Directors with respect to the compensation of
the Company's senior executive officers, as defined from time to time by the
Board. The term senior executive officers includes the Chairman of the Board and
Chief Executive Officer (the "CEO"), the Co-Presidents and each other executive
officer whose annual base salary exceeds $500,000. The Compensation Committee
has the exclusive authority to grant stock options under the Company's Stock
Option Plan to employees of the Company and its subsidiaries, including senior
executive officers.
COMPENSATION OF EXECUTIVE OFFICERS. The Company's compensation policy
for all executive officers of the Company has three principal components: annual
base salary, annual incentive bonuses and stock option grants.
Before decisions were made regarding 1996 compensation for senior
executives, the Committee first had discussions with senior executives to
solicit their thoughts regarding compensation. Based in part on such discussions
as well as the Company's financial results for the preceding year, the Committee
deliberated and formed its recommendations, and presented its determinations
regarding salary and bonus to the full Board for its review and approval. The
compensation decisions discussed in this report conformed with recommendations
made by the Committee, the CEO and the Co-Presidents.
Annual Base Salaries. The Committee approved annual base salaries and
salary increases for senior executive officers that were appropriate, in the
Committee's subjective judgment, for their respective positions and levels of
responsibilities. In December 1995, the Committee approved the 1996 salaries of
the CEO, the Co-Presidents and certain other senior executive officers, noting
that such salaries would be virtually the same in 1996 as in 1995.
Annual Bonuses. In 1996 the Committee developed an annual bonus system
for the CEO, the Co-Presidents and the senior executive officers that would make
a substantial portion of their total compensation dependent on the Company's
performance, including achievement of pre-established earnings per share
targets.
The annual bonus system for 1996 made 60% of each participant's annual
bonus dependent on the Company attaining certain earnings per share targets and
40% on the Company's overall performance, as determined by the Committee. A
significant aspect of the 1996 annual bonus system is that it required that 25%
of any bonuses be paid in Common Stock. As in the grant of stock options
discussed below, the Committee believes that payment of a substantial portion of
annual bonuses in Common Stock align further the interests of the Company's
senior executives with those of its shareholders. The Committee also selected
the executives whose 1996 bonus would be subject to this system, including the
CEO, the Co-Presidents and the Senior Vice Presidents. The Committee recommended
to the Board the earnings per share targets that were the measure for the
greater part of such bonus payments.
The Board adopted all of the Committee's recommendations with respect
to the annual bonus system for 1996. Under the 1996 annual bonus system, the
bonus target amount for the CEO and each of the Co-Presidents was $925,000, with
0% to 150% of $555,000 (60% of $925,000) to be paid depending on the Company's
earnings per share for 1996 (as determined pursuant to the Committee's annual
bonus system guidelines) and 0% to 150% of $370,000 (40% of $925,000) to be paid
based on the Company's performance, as determined by the Committee. The
Company's earnings per share target was adjusted pursuant to the annual bonus
system to negate the effects of certain extraordinary and non-recurring items
including the loss on repayment of subsidiary debt, strengthening of asbestos
and other environmental reserves, and Chiquita losses on repayment of debt and
non-recurring items. The Committee determined that under the 1996 annual bonus
system the CEO and the Co-Presidents would receive $520,000 attributable to the
earnings per share component.
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<PAGE> 12
The Committee then evaluated the Company's relative overall performance
for 1996. The factors considered by the Committee, with no relative weight being
given to any specific performance factor, were the Company's return on equity of
14.3%, the increase in per share price of the Company's Common Stock relative to
comparable companies, the upgrade of the debt ratings of certain Company
subsidiaries to investment grade, improvement in the debt-to-total capital ratio
from 33.5% to 20.2%, investment portfolio performance including realized gains
and losses, and other operating criteria. The Committee concluded that the CEO
and the Co-Presidents should receive $389,000 each under the Company performance
component of the 1996 annual bonus payment. The Board adopted all of the
Committee's recommendations with respect to the determination of amounts paid
under the annual bonus system for 1996.
The annual base salary and bonuses received by the CEO and the
Co-Presidents from the Company and its affiliates are virtually identical
because the Committee views them as working as a management team whose skills
and areas of expertise complement each other. In 1993, Congress enacted a $1
million ceiling on tax-deductible remuneration paid after January 1, 1994 to the
five most highly compensated executive officers of a publicly held corporation.
The limitation does not apply to remuneration payable solely on account of the
attainment of one or more performance goals pursuant to a plan approved by the
compensation committee of outside directors and by shareholders. The Company
does not anticipate that this limitation will apply to the compensation paid to
any of its employees in 1996.
Stock Option Grants. Stock options represent an important part of the
company's performance-based compensation system. The Committee believes that
Company shareholders' interests are well served by aligning the Company's senior
executives' interests with those of its shareholders through the grant of stock
options. Options under the Company's Stock Option Plan are granted at exercise
prices equal to the fair market value of Common Stock on the date of grant and
vest at the rate of 20% per year. The Committee believes that these features
provide an optionee with substantial incentive to maximize the Company's
long-term success. No options were granted to the CEO, the Co-Presidents or any
senior executives of the Company in 1996.
Other Information. In March 1997, the Committee discussed the 1997
salaries, bonuses and stock option grants of the CEO, the Co-Presidents and
certain other senior executives. The Committee approved the 1997 salaries for
such persons which included an increase of $50,000 for the CEO and each of the
Co-Presidents and the same bonus target amounts for them for 1997 as 1996. At
the same time, the Committee granted each of the Co-Presidents options to
purchase 50,000 shares.
Members of the Compensation Committee: William R. Martin, Chairman
Theodore H. Emmerich
Thomas H. Hunt
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<PAGE> 13
PERFORMANCE GRAPH
The following graph compares the cumulative total shareholder return on
the Company's Common Stock with the cumulative total return of the Standard &
Poor's ("S&P") 500 Stock Index and the S&P Property-Casualty Insurance Index.
(Assumes $100 invested on December 31, 1991 in APU Common Stock (as the
predecessor to AFG) and the two indexes, including reinvestment of dividends.)
<TABLE>
<CAPTION>
12/31/91 12/31/92 12/31/93 12/31/94 12/31/95 12/31/96
<S> <C> <C> <C> <C> <C> <C>
AFG Common Stock $ 100.00 $ 106.66 $ 142.72 $ 118.16 $ 143.85 $ 182.91
S&P 500 Stock Index $ 100.00 $ 107.62 $ 118.47 $ 120.03 $ 165.14 $ 203.06
S&P Property-Casualty Insurance Index $ 100.00 $ 117.11 $ 115.04 $ 120.68 $ 163.40 $ 198.53
</TABLE>
CERTAIN TRANSACTIONS
AFG and its subsidiaries have had and expect to continue to have
transactions with AFG's directors, officers, principal shareholders, their
affiliates and members of their families. AFG believes that the financial terms
of these transactions are comparable to those that would apply to unrelated
parties and are fair to AFG.
The Company's Stock Option Loan Program permits officers, employees and
directors who are participants in the Stock Option Plan to borrow from the
Company up to 95% of the purchase price for the Company shares acquired upon
exercise of an option (plus any applicable withholding taxes). Under the
Program, the interest rate of such loans is the applicable federal rate for
loans compounded semiannually in effect under Section 7872 of the Internal
Revenue Code as of the date of the loan. Since January 1, 1996, the only
outstanding loans under this Program to an executive officer of the Company were
to Neil M. Hahl, formerly a Senior Vice President. The largest aggregate amount
outstanding since January 1, 1996 was approximately $916,000, at interest rates
ranging from 3.65% to 8.25%. All of these loans were repaid by Mr. Hahl upon his
resignation in May 1996.
In March 1996, Alfred W. Martinelli (formerly a director of the
Company) repaid approximately $8.9 million in secured notes payable to the
Company. These notes were delivered in 1985 and 1986 by Mr. Martinelli in
payment of the purchase price for convertible Preference Stock of APU issued to
him under the Company's now-terminated Career Share Purchase Plan.
Also in March 1996, the Company sold the stock of its subsidiary,
Buckeye Management Company ("Buckeye"), to an investment group consisting of
members of Buckeye's management (including Mr. Martinelli) and Buckeye's
employees, for approximately $60 million in cash, net of transaction costs. Mr.
Martinelli is the Chairman of the Board and Chief Executive Officer of Buckeye.
AFC provides security guard and surveillance services at the main
office of Provident Bancorp, Inc. ("Provident") for which Provident paid
$100,000 in 1996. Members of the Lindner family are the majority owners of
Provident. Provident leases its main banking and corporate office from AFC.
Provident paid rent under the leases of $2,131,000 in 1996.
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<PAGE> 14
DIRECTORS' COMPENSATION
Pursuant to the Non-Employee Directors' Compensation Plan (the
"Directors' Plan") implemented in 1996, all directors who are not officers or
employees of the Company are paid the following fees: an annual retainer of
$40,000; an additional annual retainer of $12,000 for each Board Committee on
which the non-employee director serves; and an attendance fee of $1,000 for each
Board or Committee meeting attended. Non-employee directors who become directors
during the year receive a pro rata portion of these annual retainers. The
retainers and fees to be paid under the Directors' Plan are reviewed by the
Board of Directors from time to time and are subject to change at its
discretion.
In order to align further the interests of the Company's non-employee
directors with the interests of shareholders, the Directors' Plan provides that
a minimum of 50% of such directors' annual retainers are paid through the
issuance of shares of AFG Common Stock.
The Board of Directors has a program under which a retiring Company
director (other than an officer or employee of the Company or any of its
subsidiaries) will, if he has met certain eligibility requirements, receive upon
his retirement (in a lump sum or, at his election, in deferred payments) an
amount equal to five times the then current annual director's fee. For purposes
of this program, retirement means resignation as a Company director or not being
nominated for reelection by shareholders as a Company director. To be eligible
for the retirement benefit, a person must have served as a Company director for
at least four years while not an officer or employee of the Company or any of
its subsidiaries. In addition, a Company director will not become eligible for
the retirement benefit until reaching age 55. A director who receives a
retirement benefit must provide consulting services to the Company on request
for five years following retirement without further compensation (except
reimbursement for expenses). Under the program, a death benefit equal to the
retirement benefit will be paid (in lieu of any retirement benefit under the
program) to the designated beneficiary or legal representative of any person who
dies while serving as a Company director, whether or not eligible for a
retirement benefit at time of death. This death benefit will not be available to
a director who at any time during the two years immediately preceding death was
an officer or employee of the Company or any of its subsidiaries.
In addition to providing for the grant of stock options to key
employees, the Stock Option Plan provides for automatic annual grants of options
to each non-employee director of the Company. During 1996, each non-employee
director was granted an option under the foregoing provisions of the Stock
Option Plan to purchase 1,000 shares at an exercise price of $30.31 per share on
June 1, 1996, the exercise price being the fair market value of the Company's
Common Stock on the date of grant.
COMMITTEES AND MEETINGS OF THE BOARD OF DIRECTORS
The Company's Board of Directors held six meetings and took action in
writing five times in 1996. The Company's Board of Directors has an Executive
Committee, an Audit Committee and a Compensation Committee. There is no
Nominating Committee.
Executive Committee: The Executive Committee consists of Carl H.
Lindner (Chairman), Carl H. Lindner III, S. Craig Lindner and Keith E. Lindner.
The Committee's functions include analyzing the future development of the
business affairs and operations of the Company, including further expansion of
businesses in which the Company is engaged and acquisitions and dispositions of
businesses. With certain exceptions, the Executive Committee is generally
authorized to exercise the powers of the Board of Directors between meetings of
the Board of Directors. The Executive Committee consulted among themselves
informally many times throughout the year and took action in writing on eight
occasions in 1996.
Audit Committee. The Audit Committee consists of Theodore H. Emmerich
(Chairman) and William R. Martin. Neither is an officer or employee of the
Company or any of its subsidiaries. The Committee's functions include
recommending to the Board of Directors the engagement of independent accounting
firms to audit the financial statements of the Company and its subsidiaries and
to provide other audit-related services and recommending the terms of such
firms' engagements; reviewing the engagement of independent accounting firms to
provide non-audit services, including the terms of their engagements; reviewing
the adequacy and implementation of the Company's internal audit function;
reviewing the policies,
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<PAGE> 15
procedures and principles of the management of the Company for purposes of
conformity to the standards required by the Foreign Corrupt Practices Act;
establishing procedures designed to provide and encourage timely access to the
Committee by the independent accounting firms engaged by the Company, its
internal audit department and its principal financial officers; and conducting
such investigations relating to the Company's financial affairs as the Committee
or the Board of Directors deems desirable. The Committee's functions also
include supervising, reviewing and reporting to the Board of Directors on the
performance of management committees of the Company responsible for the
administration of the employee benefit plans of the Company and its
subsidiaries. The Audit Committee met six times in 1996.
Compensation Committee The Compensation Committee consists of William
R. Martin (Chairman), Theodore H. Emmerich and Thomas M. Hunt. The functions of
the Compensation Committee are discussed under "Compensation - Compensation
Committee Report." The Compensation Committee met two times and took action in
writing on three occasions in 1996.
INDEPENDENT AUDITORS
The accounting firm of Ernst & Young LLP served as the Company's
independent auditors for the fiscal year ended December 31, 1996.
Representatives of that firm will attend the Meeting and will be given the
opportunity to comment, if they so desire, and to respond to appropriate
questions that may be asked by shareholders. No auditor has yet been selected
for the current year because it is generally the practice of the Company not to
select independent auditors prior to the annual shareholders meeting.
NOMINATIONS AND SHAREHOLDER PROPOSALS
In accordance with the Company's Code of Regulations (the
"Regulations"), the only candidates eligible for election at a meeting of
shareholders are candidates nominated by or at the direction of the Board of
Directors and candidates nominated at the meeting by a shareholder who has
complied with the procedures set forth in the Regulations. Shareholders will be
afforded a reasonable opportunity at the 1997 Annual Meeting to nominate
candidates for the office of director. However, the Regulations require that a
shareholder wishing to nominate a director candidate must have first given the
Secretary of the Company at least five and not more than thirty days prior
written notice setting forth or accompanied by (a) the name and residence of the
shareholder and of each nominee specified in the notice, (b) a representation
that the shareholder was a holder of record of the Company's voting stock and
intended to appear, in person or by proxy, at the meeting to nominate the
persons specified in the notice and (c) the consent of each such nominee to
serve as director if so elected.
If a shareholder desires to have a proposal included in the proxy
statement for the 1998 annual shareholders meeting, such proposal must be
received by the Company's Secretary at his office by December 31, 1997 in order
to be considered for inclusion.
REQUESTS FOR FORM 10-K
The Company will send, upon written request, without charge, a copy of
the Company's most current Annual Report on Form 10-K to any shareholder who
writes to Fred J. Runk, Senior Vice President and Treasurer, American Financial
Group, Inc., One East Fourth Street, Cincinnati, Ohio 45202.
By order of the Board of Directors,
James C. Kennedy
Secretary
Cincinnati, Ohio
April 25, 1997
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<PAGE> 16
AMERICAN FINANCIAL GROUP, INC.
COMMON STOCK
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS FOR ANNUAL
MEETING ON MAY 29, 1997
Registration Name and Address
The undersigned hereby appoints James C. Kennedy and Karl J. Grafe, and either
of them, attorneys and proxies, with the power of substitution to each, to vote
all shares of Common Stock of American Financial Group, Inc. (the "Company")
that the undersigned may be entitled to vote at the Annual Meeting of
Shareholders of the Company to be held on May 29, 1997, at 10:30 A.M., at The
Cincinnatian Hotel, 601 Vine Street, Cincinnati, Ohio, and (if cumulative
voting is invoked by a shareholder through proper notice to the Company) at
their discretion to cumulate votes in the election of directors and on such
other matters as may properly come before the meeting or any adjournment
thereof.
The proxy holders will vote the shares represented by this proxy in the manner
indicated below. Unless a contrary direction is indicated, the proxy holders
will, except to the extent they exercise their discretion to cumulate votes in
the election of directors, vote such shares "FOR" the proposal set forth below.
If cumulative voting is invoked by a shareholder through proper notice to
Company, unless a contrary direction is indicated, this proxy will give the
proxy holders named above authority. In their discretion, to cumulate all
votes to which the undersigned is entitled in respect of the shares represented
by this proxy and allocate them in favor of any one or more of the nominees for
director, if any situation arises which, in the opinion of the proxy
holders, makes such action necessary or desirable. If any further matters
properly come before the meeting, such shares shall be voted on such matters in
accordance with the best judgment of the proxy holders named above.
The Board of Directors recommends a vote FOR the following Proposal:
Election of directors:
<TABLE>
<CAPTION>
[ ] FOR AUTHORITY to elect the [ ] WITHHOLD AUTHORITY to vote for
nominees listed below (except every nominee listed below
those whose names have been
crossed out)
<S> <C> <C>
THEODORE H. EMMERICH CARL M. LINDNER S. CRAIG LINDNER
JAMES E. EVANS CARL H. LINDNER III WILLIAM R. MARTIN
THOMAS M. HUNT KEITH E. LINDNER
___________________________________________________________________________________________________________
Date:_______________________, 1997 Signature_________________________________________________
Signature_________________________________________________
(if held jointly) IMPORTANT PLEASE SIGN AS NAME
APPEARS HEREON INDICATING, WHERE
PROPER, OFFICIAL POSITION OR
REPRESENTATIVE CAPACITY. EXECUTORS,
ADMINISTRATORS, TRUSTEES, GUARDIANS,
ATTORNEYS AND CORPORATE OFFICERS
SHOULD GIVE THEIR FULL TITLES AS SUCH.
IN CASE OF JOINT HOLDERS, ALL SHOULD SIGN.
</TABLE>
To vote your shares, please mark, sign, date and return this proxy form using
the enclosed envelope.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
