<PAGE>
===============================================================================
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] Confidential, for Use of the
Commission Only (as permitted
[X] Definitive Proxy Statement by Rule 14a-6(e)(2))
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S) 240.14a-11(c) or (S) 240.14a-12
ALLMERICA FINANCIAL CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
ALLMERICA FINANCIAL CORPORATION
- --------------------------------------------------------------------------------
(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:
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(2) Aggregate number of securities to which transaction applies:
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(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):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[_] 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:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
<PAGE>
ALLMERICA FINANCIAL CORPORATION
Notice of Annual Meeting
and Proxy Statement
Annual Meeting
of Shareholders
Allmerica Financial Headquarters
440 Lincoln Street
Worcester, Massachusetts
May 16, 2000
<PAGE>
[ALLMERICA FINANCIAL LOGO APPEARS HERE]
ALLMERICA FINANCIAL CORPORATION
440 Lincoln Street
Worcester, Massachusetts 01653
March 31, 2000
TO OUR SHAREHOLDERS:
You are cordially invited to attend the Annual Meeting of Shareholders of
Allmerica Financial Corporation to be held on Tuesday, May 16, 2000, at 9:00
a.m. local time, at the Company's headquarters in Worcester, Massachusetts.
The accompanying Notice and Proxy Statement describe in detail the matters
to be acted on at the meeting. At your earliest convenience, please sign and
return the enclosed proxy card in the envelope provided. Your cooperation will
assure that your shares are voted and will also greatly assist our officers in
preparing for the meeting.
Sincerely,
/s/ John F. O'Brien
John F. O'Brien
President and Chief Executive
Officer
<PAGE>
ALLMERICA FINANCIAL CORPORATION
----------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 16, 2000
----------------
To the Shareholders of
Allmerica Financial Corporation:
The Annual Meeting of Shareholders of Allmerica Financial Corporation ("AFC"
or the "Company") will be held in Bullock Hall on the first floor of AFC's
headquarters, 440 Lincoln Street, Worcester, Massachusetts on Tuesday, May 16,
2000, at 9:00 a.m. local time, for the purpose of considering and voting on:
1. Election of three individuals to the Board of Directors;
2. Ratification of the appointment of PricewaterhouseCoopers LLP as the
independent public accountants of AFC for 2000; and
3. Such other business as may properly come before the Annual Meeting or
any adjournment thereof.
The Board of Directors has fixed March 22, 2000, as the record date for
determining the shareholders of AFC entitled to notice of and to vote at the
Annual Meeting and any adjournment thereof.
The Company's 1999 Annual Report to Shareholders is enclosed with the
mailing of this Notice of Annual Meeting of Shareholders, Proxy Statement and
proxy card.
By Order of the Board of Directors
Charles F. Cronin
Secretary and Counsel
Worcester, Massachusetts
March 31, 2000
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, YOU ARE REQUESTED TO SIGN,
DATE AND MAIL PROMPTLY THE ENCLOSED PROXY. A RETURN ENVELOPE, WHICH REQUIRES
NO POSTAGE IF MAILED IN THE UNITED STATES, IS ENCLOSED FOR THAT PURPOSE. IF
YOU DO ATTEND THE ANNUAL MEETING AND DESIRE TO WITHDRAW YOUR PROXY AND VOTE IN
PERSON, YOU MAY DO SO.
<PAGE>
ALLMERICA FINANCIAL CORPORATION
440 Lincoln Street
Worcester, Massachusetts 01653
PROXY STATEMENT
INTRODUCTION
This Proxy Statement, with the accompanying proxy card, is being mailed to
shareholders on or about March 31, 2000, and is furnished in connection with
the solicitation of proxies by the Board of Directors of Allmerica Financial
Corporation ("AFC" or the "Company") for use at the Annual Meeting of
Shareholders of AFC to be held on May 16, 2000 (the "Annual Meeting").
The record date and hour for determining shareholders entitled to vote at
the Annual Meeting has been fixed at the close of business on March 22, 2000
(the "Record Date"). As of the Record Date, 53,545,299 shares of AFC's common
stock, par value $.01 per share (the "Common Stock"), were outstanding and
entitled to be voted. Each share of Common Stock entitles its holder to one
vote.
The shares of Common Stock represented by the enclosed proxy will be voted
as directed by the shareholder or, in the absence of such direction, in favor
of the election of the nominees for Director designated herein, and in favor
of the ratification of PricewaterhouseCoopers LLP as AFC's independent public
accountants for 2000. The enclosed proxy confers discretionary authority with
respect to any other proposals that may properly be brought before the Annual
Meeting. As of the date hereof, management is not aware of any other matters
to be presented for action at the Annual Meeting. If any other matters
properly come before the Annual Meeting, however, the proxies solicited hereby
will be voted in accordance with the recommendation of the Board of Directors.
As long as a quorum (a majority of issued and outstanding shares of Common
Stock entitled to vote at the Annual Meeting) is present at the Annual Meeting
either in person or by proxy, a plurality of the votes properly cast is
required to elect the Director nominees, and the affirmative vote of a
majority of the votes properly cast is required to ratify the appointment of
PricewaterhouseCoopers LLP. Votes withheld from a Director nominee,
abstentions and broker non-votes will be treated as present at the Annual
Meeting for the purpose of determining a quorum but will not be counted as
votes cast.
Any shareholder giving a proxy may revoke it at any time before it is
exercised by delivering written notice thereof to the Secretary. Any
shareholder attending the Annual Meeting may vote in person whether or not the
shareholder has previously filed a proxy. Presence at the Annual Meeting by a
shareholder who has signed a proxy, however, does not in itself revoke the
proxy.
The enclosed proxy is being solicited by the Board of Directors of AFC. The
cost of soliciting proxies will be borne by AFC, and will consist primarily of
preparing and mailing the proxies and Proxy Statements. AFC will also
reimburse brokerage houses and other custodians, nominees and fiduciaries for
their expenses in sending proxy materials to beneficial owners of the
Company's stock.
1
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AFC's Annual Report to Shareholders for the fiscal year ended December 31,
1999, including financial statements for AFC and its subsidiaries and the
report of PricewaterhouseCoopers LLP thereon, accompanies this Proxy
Statement. The Annual Report to Shareholders is neither a part of this Proxy
Statement nor incorporated herein by reference.
ITEM I
ELECTION OF DIRECTORS
The Board of Directors consists of three classes. At a regularly scheduled
meeting in October 1999, the Board of Directors elected Wendell J. Knox to the
Board for a term to expire at the 2002 Annual Meeting of Shareholders. Of the
class of five Directors whose term will expire at this year's Annual Meeting,
E. Gordon Gee, Gail L. Harrison, and M Howard Jacobson have all been nominated
for re-election to a three-year term ending at the 2003 Annual Meeting of
Shareholders. Robert G. Stachler and John L. Sprague have announced their
retirements from the Board effective as of this year's Annual Meeting. The
remaining eight Directors will continue to serve in accordance with their
previous appointment.
The Board of Directors recommends a vote FOR all nominees. All nominees have
indicated their willingness to serve and unless otherwise directed, it is
intended that proxies received in response to this solicitation will be voted
in favor of the election of the nominees.
In the event that any of the nominees should be unavailable to serve as a
Director, it is intended that the proxies will be voted for the election of
such substitute nominees, if any, as shall be designated by the Board of
Directors. Management has no reason to believe that any nominee will be
unavailable to serve.
Information as to each nominee and as to Directors continuing in office
follows:
Nominees for Director
E. Gordon Gee, 56, has been a Director of AFC since July 1998. Mr. Gee is
Chancellor-elect of Vanderbilt University and will assume the post in August
2000. Mr. Gee was President of Brown University from January 1998 until
January 2000, and was President of Ohio State University from September 1990
to January 1998. Mr. Gee is a member of the Board of Directors of Hasbro,
Inc., Intimate Brands, Inc., and The Limited, Inc.
Mr. Gee is a member of the Committee on Directors of AFC's Board of
Directors.
Gail L. Harrison, 52, has been a Director of AFC since February 1995 and was
a Director of First Allmerica Financial Life Insurance Company ("FAFLIC") from
March 1986 to April 1996, of Allmerica Property & Casualty Companies, Inc.
("Allmerica P&C") from August 1992 to July 1997, and of Hanover from December
1991 through December 1992. Since February 1981, Ms. Harrison has been
affiliated with The Wexler Group (formerly Wexler, Reynolds, Harrison & Shule,
Inc.), a government relations consulting firm, where she is a Founding
Principal.
Ms. Harrison is a member of the Audit Committee of AFC's Board of Directors.
M Howard Jacobson, 67, has been a Director of AFC since July 1997. He has
been a Senior Advisor and Consultant to Bankers Trust Private Bank since 1991.
Mr. Jacobson was for many years President and Treasurer
2
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and a Director of Idle Wild Foods, Inc., a Fortune 500 company, until that
company was sold in 1986. Mr. Jacobson is also a Director of Stonyfield Farm,
Inc., and was a Director of Allmerica P&C from August 1992 to July 1997.
Mr. Jacobson is a member of the Compensation Committee of AFC's Board of
Directors.
Directors Continuing in Office
Michael P. Angelini, 57, has been a Director of AFC since February 1995 and
was a Director of FAFLIC from August 1984 to April 1996, and of Allmerica P&C
from August 1992 to July 1997. He served as a Director of The Hanover
Insurance Company ("Hanover") from December 1991 through December 1992. Mr.
Angelini is a partner at the law firm of Bowditch & Dewey LLP, Worcester,
Massachusetts, with which he has been associated since 1968, and is a Director
of Flagship Bank & Trust Company.
Mr. Angelini is Chairman of the Audit Committee of AFC's Board of Directors.
His term of office as a Director of AFC expires in 2001.
Samuel J. Gerson, 58, has been a Director of AFC since July 1998. Mr. Gerson
has been Chairman and Chief Executive Officer of Filene's Basement
Corporation, a fashion retailer, since 1984. Filene's Basement has been
operating its business as a debtor-in-possession subject to the jurisdiction
of the U.S. Bankruptcy Court for the Eastern District of Massachusetts since
filing a voluntary petition for relief under Chapter 11 of the United States
Bankruptcy Code on August 23, 1999. Effective March 17, 2000, a subsidiary of
Value City Department Stores, Inc. completed the acquisition of substantially
all of the assets and the assumption of certain liabilities of Filene's
Basement. Mr. Gerson is also a director of Bon-Ton Stores, Inc., a fashion
retailer.
Mr. Gerson is a member of the Committee on Directors of AFC's Board of
Directors. His term of office as a Director of AFC expires in 2002.
Robert P. Henderson, 68, has been a Director of AFC since September 1996.
Mr. Henderson has been a general partner of Greylock Management Corporation, a
venture capital firm, since 1983, and served as its Chairman until 1997. Mr.
Henderson is also a Director of Cabot Corporation and Filene's Basement
Corporation. Chairman of the Board of Trustees of the Museum of Fine Arts in
Boston, Massachusetts, and a Member of Corporation of Beth Israel Deaconess
Hospital. Mr. Henderson is a former Chairman of the Federal Reserve Bank of
Boston.
Mr. Henderson is a member of the Compensation Committee of AFC's Board of
Directors.
Wendell J. Knox, 52, has been a Director of AFC since October 1999. Mr. Knox
is President and Chief Executive Officer of ABT Associates, a policy research
and business consulting firm, where he has been employed since 1969. Mr. Knox
is also a Director of Eastern Enterprises, a natural gas distributor.
Mr. Knox is a member of the Audit Committee of AFC's Board of Directors.
Terrence Murray, 60, has been a Director of AFC since February 1995 and was
a Director of FAFLIC from January 1992 to April 1996. Mr. Murray is the
Chairman and Chief Executive Officer of FleetBoston Financial Corporation, a
bank holding company, where he has been employed since July 1962. Mr. Murray
is also a Director of A.T. Cross Co., a writing instrument company, and CVS
Corporation, a drugstore chain.
3
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Mr. Murray is the Chairman of the Committee on Directors of AFC's Board of
Directors. His term of office as a Director of AFC expires in 2001.
Robert J. Murray, 58, has been a Director of AFC since May 1996. He has been
Chairman and Chief Executive Officer of New England Business Service, Inc.
("NEBS"), a business-to-business direct marketing company, since December 1995
and has served on the Board of Directors of NEBS since 1991. Prior to joining
NEBS, Mr. Murray was employed by The Gillette Company, Inc. ("Gillette"),
beginning in 1961. He served as a Corporate Vice President of Gillette
beginning in 1987 and as the Executive Vice President of Gillette's North
Atlantic Group from January 1991 to December 1995. Mr. Murray is also a
Director of Hannaford Bros. Co., multi-regional retail food distributor, and
LoJack Corporation, an automobile security system manufacturer.
Mr. Murray is a member of the Audit Committee of AFC's Board of Directors.
His term of office as a Director of AFC expires in 2002.
John F. O'Brien, 56, has been a Director, Chief Executive Officer and
President of AFC since February 1995. He has also served as a Director, Chief
Executive Officer and President of FAFLIC since August 1989. In addition to
his positions with AFC and FAFLIC, Mr. O'Brien has served as a Director since
1992 and as Chairman of the Board since 1998 of Allmerica P&C, and has been a
Director of Hanover since September 1989, of Citizens Insurance Company of
America ("Citizens Insurance") since March 1992 and Citizens Corporation
("Citizens"), for which he also serves as Chief Executive Officer, from
December 1992 to December 1998. Citizens is a wholly-owned subsidiary of
Hanover, and Citizens Insurance is a wholly-owned subsidiary of Citizens. Mr.
O'Brien is also a trustee or director and executive officer of Allmerica
Investment Trust and Allmerica Securities Trust. Additionally, Mr. O'Brien is
a director and/or holds offices at various other non-public FAFLIC affiliates
including Allmerica Asset Management and Allmerica Financial Life Insurance
and Annuity Company ("AFLIAC"). Mr. O'Brien also currently serves as a
Director of The TJX Companies, Inc., an off-price family apparel retailer,
ABIOMED, Inc., a medical device company, Cabot Corporation, a diversified
specialty chemicals and materials and energy company, and The Life Insurance
Association of Massachusetts. He also currently serves as a member of the
executive committee of the Mass Capital Resource Company, a Massachusetts
investment partnership. Prior to joining FAFLIC, Mr. O'Brien served as an
officer of FMR Corp., the parent company of various financial services
companies in the Fidelity Group, and a director and/or an executive officer at
various other of FMR Corp.'s affiliates.
Mr. O'Brien's term of office as a Director of AFC expires in 2001.
Herbert M. Varnum, 62, has been a Director of AFC since February 1995 and
was a Director of FAFLIC from March 1979 to April 1996, of Allmerica P&C from
August 1992 to July 1997, and of Hanover from December 1991 through December
1992. Mr. Varnum was employed by Quabaug Corporation, a manufacturing company,
beginning in 1960 and served as President and Chief Executive Officer from
1982 to 1989, and as Chairman and Chief Executive Officer from January 1990
until his retirement in June 1995.
Mr. Varnum is Chairman of the Compensation Committee of AFC's Board of
Directors. His term of office as a Director expires in 2001.
4
<PAGE>
Certain Information Regarding Directors
General
During the last fiscal year, the Board of Directors held six regularly
scheduled meetings. All of the incumbent Directors attended at least 75% of
the Board and committee meetings held while they were members during 1999. The
Board of Directors has an Audit Committee, a Compensation Committee and a
Committee on Directors.
Board Committees
The Audit Committee of the Board of Directors is comprised of Mr. Angelini
(Chair), Ms. Harrison, Mr. Knox, Mr. R. Murray and Mr. Sprague. The committee
reviews the professional services to be provided by AFC's independent auditors
and the independence of such auditors from management of AFC. The committee
also reviews the scope of the audit by AFC's independent auditors, the annual
financial statements of AFC, AFC's system of internal accounting controls and
such other matters with respect to the accounting, auditing and financial
reporting practices and procedures of AFC as it may find appropriate or as may
be brought to its attention, and meets from time to time with members of AFC's
internal audit staff. The committee met twice during 1999.
The Compensation Committee of the Board of Directors is comprised of Messrs.
Varnum (Chair), Henderson, Jacobson and Stachler. The Compensation Committee
has oversight responsibility with respect to compensation matters involving
Directors and executive officers of AFC. No member of this committee has any
interlocking or other relationships with AFC and its subsidiaries that would
call into question his independence as a member of the committee. The
committee met twice in 1999.
The Committee on Directors is comprised of Messrs. T. Murray (Chair), Gee
and Gerson. The Committee on Directors advises and makes recommendations to
the Board on all matters concerning directorship and corporate governance
practices and the selection of candidates as nominees for election as
directors. The committee held four meetings in 1999. The committee recommended
this year's candidates and recommended Board member committee assignments to
the full Board of Directors. The committee is authorized to consider nominees
recommended by shareholders. Shareholders who wish to suggest qualified
candidates for consideration by the committee may do so by writing to the
Secretary of the Company, giving the candidate's name, biographical data and
qualifications.
For the period from the 1999 Annual Meeting of Shareholders to this year's
Annual Meeting, Non-employee Directors received an annual retainer consisting
of 1,300 shares of AFC Common Stock issued pursuant to the 1996 Non-Employee
Director Stock Ownership Plan. The Board of Directors has decided that its
total compensation, including the annual stock retainer and meeting fees, will
be assessed each year in comparison to the total compensation paid to
directors of other insurance and financial services companies. Based on this
assessment, the Board of Directors will modify the retainer as necessary to
maintain a total compensation level near the median of the range for the
comparison group. In addition to the annual retainer, Chairpersons of
committees also receive a $4,000 annual retainer, and Non-employee Directors
of AFC receive $1,500 per meeting of the Board of Directors and $1,000 for
each meeting of a committee thereof that they attend. Mr. O'Brien, the only
Director who is also an employee of the Company, is not paid any fees or
additional compensation for service as a member of the Board of Directors or
any of its committees. All Directors are reimbursed for reasonable travel and
other expenses of attending meetings of the Board of Directors and committees
of the Board of Directors.
5
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Directors may defer receipt of their cash and stock compensation until the
earlier of a specified date or the time they leave the Board of Directors.
Deferred cash amounts are accrued in a memorandum account and were credited
with interest at eight percent per annum in 1999.
There are no family relationships among any of the Directors or executive
officers of AFC and its subsidiaries.
ITEM II
RATIFICATION OF INDEPENDENT ACCOUNTANTS
The firm of PricewaterhouseCoopers LLP has been selected by the Board of
Directors, subject to ratification by the shareholders, to be AFC's
independent public accountants for 2000. Representatives of
PricewaterhouseCoopers LLP will be present at the Annual Meeting, will have
the opportunity to make a statement if they desire to do so, and will be
available to respond to appropriate questions from shareholders.
The Board of Directors recommends that you vote FOR the proposal to ratify
the selection of the firm of PricewaterhouseCoopers LLP as independent public
accountants for AFC for 2000. If ratification is not obtained, the Board of
Directors will reconsider the appointment.
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SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN BENEFICIAL OWNERS
The following table sets forth information regarding the number of shares of
AFC's Common Stock owned as of March 15, 2000 by (i) each Director of AFC,
(ii) the named executive officers in the Summary Compensation Table appearing
later in this Proxy Statement, (iii) all executive officers and directors of
AFC as a group and (iv) each person who is known by AFC to be the beneficial
owner of more than five percent of AFC's Common Stock as of such date. This
information has been furnished by the persons listed in the table.
<TABLE>
<CAPTION>
Name of
Beneficial Owner Shares Owned*
---------------- -------------
<S> <C> <C>
Michael P. Angelini..................... 6,744
E. Gordon Gee........................... 2,300
Samuel J. Gerson........................ 2,300
Gail L. Harrison........................ 3,968
Robert P. Henderson..................... 4,700
M Howard Jacobson....................... 3,100
John P. Kavanaugh....................... 27,292(1)
Wendell J. Knox......................... 620
Terrence Murray......................... 3,769
Robert J. Murray........................ 4,700
John F. O'Brien......................... 135,194(2)
Richard M. Reilly....................... 39,089(3)
Robert P. Restrepo, Jr.................. 28,400(4)
Eric A. Simonsen........................ 60,522(5)
Herbert M. Varnum....................... 6,400
Directors and executive officers as a
group (18 persons)..................... 367,380(6)
Holders of Greater Than Five Percent of
Common Stock
FMR Corp................................ 7,001,929(6) 12.9% of shares
82 Devonshire Street of AFC Common
Boston MA 02109 Stock outstanding
Franklin Mutual Advisors, L.L.C......... 2,808,619(7) 5.2% of shares
51 John F. Kennedy Parkway, of AFC Common Stock
Short Hills, NJ 07078 outstanding
</TABLE>
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* With the exception of AFC Common Stock held by FMR Corp. and Franklin
Mutual Advisors, L.L.C., each of the amounts represents less than 1% of the
outstanding shares of Common Stock as of March 15, 2000. As to shares
beneficially owned, each person has sole voting and investment power,
except as indicated in other footnotes to this table. The named executive
officers have deferred receipt of certain shares of restricted stock
underlying awards reported in the Summary Compensation Table. Those shares
are not reported in this table because the named executive officers have
neither voting nor investment power with respect to such shares.
(1) Includes 476 shares held for the benefit of Mr. Kavanaugh by the trustees
of the First Allmerica Financial Life Insurance Company's Employees'
401(k) Matched Savings Plan (the "FAFLIC Plan"), 2,930 shares of
restricted stock over which Mr. Kavanaugh has no investment power and
17,000 shares underlying options exercisable within 60 days.
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(2) Includes 200 shares held for the benefit of Mr. O'Brien by the trustees of
the FAFLIC Plan and 38,000 shares underlying options exercisable within 60
days.
(3) Includes 99 shares held for the benefit of Mr. Reilly by the trustees of
the FAFLIC Plan, 4,395 shares of restricted stock over which Mr. Reilly
has no investment power and 11,700 shares underlying options exercisable
within 60 days.
(4) Includes 16,400 shares underlying options exercisable within 60 days.
(5) Includes 7,589 shares held for the benefit of Mr. Simonsen by the trustees
of the FAFLIC Plan, 4,281 shares held in trust for the benefit of Mr.
Simonsen's immediate family, for which trusts Mr. Simonsen acts as
trustee, 7,326 shares of restricted stock over which Mr. Simonsen has no
investment power and 16,000 shares underlying options exercisable within
60 days.
(6) Includes 10,790 shares held by the trustees of the FAFLIC Plan, 24,906
shares of restricted stock over which the executive officers have no
investment power and 129,300 shares underlying options exercisable within
60 days. See notes 1-4 above.
(7) Based on a Schedule 13G/A dated February 14, 2000, filed by FMR Corp., FMR
Corp. and Edward C. Johnson have sole dispositive power over 6,909,624
shares, but do not have sole voting power for such shares. Edward C.
Johnson and FMR Corp., through its control of Fidelity Management Trust
Company, each has sole dispositive power and sole voting power over 92,305
shares.
(8) Based on a Schedule 13G dated January 13, 2000, filed by Franklin Mutual
Advisors, L.L.C.
As of March 15, 2000, there were no persons other than FMR Corp. and
Franklin Mutual Advisors, L.L.C., known to AFC to be the beneficial owners of
more than 5% of the outstanding shares of Common Stock.
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EXECUTIVE COMPENSATION
Summary Compensation Table
The following table sets forth all plan and non-plan compensation awarded
to, earned by, or paid to the Chief Executive Officer of AFC and the four
other most highly compensated executive officers of AFC (collectively, the
"Named Executive Officers"). Because AFC is a holding company, it does not pay
any compensation to its executive officers. The Named Executive Officers,
unless otherwise indicated, receive compensation in their capacities as
executive officers of FAFLIC, which is then reimbursed, in accordance with
AFC's policy and intercompany service agreements, by its various subsidiaries
for services rendered to such subsidiaries.
<TABLE>
<CAPTION>
Annual Compensation Long Term Compensation
--------------------------------- -----------------------------
Other
Annual Restricted Securities All Other
Compen- Stock Underlying LTIP Compen-
Name and Principal Bonus sation Awards Options Payouts sation
Position Year Salary ($) ($)(1) ($)(2) ($)(3) (#) ($)(4) ($)(5)
- ------------------ ---- ---------- --------- ------- ---------- ---------- ------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
John F. O'Brien............. 1999 900,000 1,518,750 109,422 1,353,625 90,000 -- 120,527
President and Chief 1998 924,231 486,000 140,322 2,975,207 -- -- 124,651
Executive Officer 1997 850,000 700,000 124,422 1,003,662 50,000 800,000 120,477
Robert P. Restrepo, Jr.(6).. 1999 440,346 577,720 -- 104,125 32,000 -- 2,262
Vice President 1998 268,077 462,500 -- 1,024,000 50,000 -- --
Eric A. Simonsen............ 1999 450,461 641,250 -- 312,375 20,000 -- 4,800
Vice President 1998 441,577 169,312 9,888 1,058,236 -- -- 4,800
1997 410,000 176,628 4,800 250,916 30,000 280,000 4,750
Richard M. Reilly........... 1999 401,616 525,200 -- 390,469 18,500 -- 4,800
Vice President 1998 338,885 136,126 6,180 885,574 -- -- 5,553
1997 310,000 148,800 3,000 150,529 20,000 200,000 4,750
John P. Kavanaugh........... 1999 310,808 372,000 -- 52,063 26,000 -- 4,800
Vice President and 1998 282,404 79,750 6,180 581,822 -- -- 4,800
Chief Investment Officer 1997 250,000 90,625 3,000 100,353 17,000 150,000 4,750
</TABLE>
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(1) Amounts represent bonuses earned pursuant to FAFLIC's Incentive
Compensation Plan, except that the amount reported for Mr. Restrepo in
1998 includes payment of $250,000 as a hiring bonus.
(2) The amounts shown reflect the payment of taxes in the amount of $109,422
in 1999, 1998 and 1997 in connection with the payment by FAFLIC of a life
insurance premium on behalf of Mr. O'Brien. All other amounts shown
include interest earned on long-term incentive compensation paid, or
deferred at the election of the Named Executive Officer, in the
respective year.
(3) Amounts reflect the market value of the restricted stock awards on the
date of grant. Amounts shown for 1998 include the value of restricted
stock awarded under the Long-Term Stock Incentive Plan upon the
acquisition by the Named Executive Officer of an equal number of shares
of Common Stock. With the exception of Mr. Restrepo, amounts shown for
1998 also include the value of restricted stock granted in exchange for
the surrender of all vested future payments under FAFLIC's Long-Term
Performance Unit Plan. The amount shown for Mr. Restrepo includes the
value of 6,000 shares of restricted stock granted pursuant to his
employment agreement described later in this Proxy Statement. The number
of shares of
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restricted stock and market value of the shares granted to each individual
for the surrender of the vested future payments are: Mr. O'Brien, 21,536
shares/$1,133,332; Mr. Simonson, 8,109 shares/$426,736; Mr. Reilly, 5,828
shares/$306,699; Mr. Kavanaugh, 4,056 shares/$213,447. The receipt of
restricted stock granted to the Named Executive Officers in 1998 is
deferred until it is determined that they may take receipt in accordance
with AFC's objectives for compliance with Internal Revenue Code Section
162(m). The aggregate holdings (including for the purposes of this
footnote, restricted shares that have been deferred) and market value of
restricted stock as of December 31, 1999, for each individual are: Mr.
O'Brien, 111,840 shares/$6,221,100; Mr. Restrepo, 18,000 shares/$1,001,250;
Mr. Simonsen, 33,435 shares/$1,859,822; Mr. Reilly, 28,723
shares/$1,597,717; and Mr. Kavanaugh, 14,986 shares/$833,596. Dividends
will be paid on restricted stock reported in this column to the extent
dividends are paid to other shareholders of AFC. Dividends on deferred
restricted stock will also be deferred.
(4) Amounts shown include installment payments vesting and received by the
Named Executive Officers in the respective year pursuant to awards earned
in 1995, 1996 and 1997 under FAFLIC's Long-Term Performance Unit Plan
(the "Long-Term Performance Plan").
(5) Amounts shown include $4,800 paid to each of the eligible Named Executive
Officers by FAFLIC during 1999 in the form of employer contributions to
each Named Executive Officer's 401(k) and related post-retirement
accounts pursuant to FAFLIC's 401(k) Matched Savings Plan ("Matched
Savings Plan") (in effect beginning in 1995) (except amounts contributed
on behalf of Messrs. O'Brien and Reilly in 1999, which are attributable
to the Executive Non-Qualified Retirement Plan; and except the amount
contributed for Mr. Restrepo, which reflects a pro-rated portion based on
his employment date) as described more fully below. The amount shown for
Mr. O'Brien in 1999 also reflects the payment by FAFLIC of a life
insurance premium of $115,727. The amounts shown for Messrs. O'Brien and
Reilly in 1998 also include $4,124 and $753, respectively, for payroll
tax accounting errors in the prior year.
(6) Mr. Restrepo commenced employment effective May 26, 1998.
10
<PAGE>
Option Grants in Last Fiscal Year
The following table contains information concerning stock options granted to
the Named Executive Officers in 1999. The Company has not granted SARs.
Individual Grants
<TABLE>
<CAPTION>
Grant Date
Number of Percent of Total Exercise Value
Securities Options Granted or Grant Date
Underlying Options to Employees Base Price Expiration Present
Name Granted (#)(1) in 1999 ($ per share) Date Value ($)(2)
- ---- ------------------ ---------------- ------------- ---------- ------------
<S> <C> <C> <C> <C> <C>
John F. O'Brien......... 90,000 7.0 52.06 2/21/09 $1,923,425
Robert P. Restrepo,
Jr..................... 32,000 2.5 52.06 2/21/09 $ 683,885
Eric A. Simonsen........ 20,000 1.6 52.06 2/21/09 $ 427,428
Richard M. Reilly....... 18,500 1.4 52.06 2/21/09 $ 395,371
John P. Kavanaugh....... 26,000 2.0 52.06 2/21/09 $ 555,656
</TABLE>
- --------
(1) The securities underlying the options granted were shares of the Company's
Common Stock. The options granted become exercisable in 20% increments on
the first, second, third, fourth and fifth anniversaries of the date of
grant.
(2) In accordance with Securities and Exchange Commission rules, the Black-
Scholes option pricing model was chosen to estimate the grant date present
value of the options set forth in the table. The Company's use of the
model should not be construed as an endorsement of its accuracy at valuing
options. All stock option valuation models, including the Black-Scholes
model, require a prediction about the future movement of the stock price.
The following assumptions were made for purposes of calculating the Grant
Date Present Value: options exercised from 2.5 to 7 years, stock price
volatility of 40.69%, dividend yield of 0.6%, risk-free interest rate of
5.70% and no adjustment made for forfeitures or transferability. The real
value of the options depends upon the actual performance of the Company's
Common Stock during the applicable period.
Year-End 1999 Option Value Table
The following table sets forth information for the Named Executive Officers
regarding unexercised options to acquire shares of the Company's Common Stock
held as of December 31, 1999. Options were exercised by Mr. Kavanaugh in 1999
and 1998.
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Underlying In-the-Money Options
Unexercised Options at Year-
at Year-End 1999 (#) End 1999 ($)(1)
Shares acquired on Exercisable/ Exercisable/
Name exercise (#) Value realized ($) Unexercisable Unexercisable
- ---- ------------------ ------------------ -------------------- --------------------
<S> <C> <C> <C> <C>
John F. O'Brien......... -- -- 20,000/120,000 405,000/928,125
Robert P. Restrepo,
Jr..................... -- -- 10,000/72,000 0/114,000
Eric A. Simonsen........ -- -- 12,000/38,000 243,000/435,750
Richard M. Reilly....... -- -- 8,000/30,500 162,000/308,906
John P. Kavanaugh....... 4,000 $125,000 11,800/42,200 286,200/467,925
</TABLE>
- --------
(1) Calculated based on the difference between the option exercise price and
$55.625, the closing price per share of the Company's Common Stock on the
New York Stock Exchange Composite Tape on December 31, 1999.
11
<PAGE>
Long-Term Incentive Awards
Neither the Company nor FAFLIC made any awards to Named Executive Officers
under the Long-Term Performance Plan in 1999. All vested future payments to be
made to Named Executive Officers pursuant to awards made in prior years were
converted into restricted stock, which will only vest upon three years of
continuous employment from the date of conversion.
Employment Agreements and Non-Solicitation Agreements
The Company entered into an employment agreement with Mr. Restrepo effective
as of May 26, 1998, pursuant to which Mr. Restrepo's annual base salary was
set at $425,000, subject to salary increase as of January 1, 1999. In
addition, Mr. Restrepo receives an allowance of $25,000 per year for ground
transportation expenses. He received a one-time sign-on bonus of $250,000 on
the date of hire, and a minimum bonus of $212,500 for 1998. Mr. Restrepo
received consideration for the compensation relinquished when joining the
Company, in the form of 6,000 shares of restricted stock with three year cliff
vesting, an additional 10,000 shares of restricted stock with three year cliff
vesting granted upon the purchase of an equal number of shares in the open
market and held for the same three year period, and 50,000 stock options
subject to terms and conditions applicable to all participants in the
Company's Long-Term Stock Incentive Plan. If Mr. O'Brien ceases to be the
President and Chief Executive Office of the Company, for whatever reason,
within three years from the date Mr. Restrepo commences employment, he has the
option, within 90 days of Mr. O'Brien's leaving, to terminate his employment
and be eligible to receive a payment equal to his annualized base salary,
projected average annualized incentive compensation and the premium cost of
his medical benefits for twelve months. In addition, if Mr. Restrepo
terminated his employment, restricted stock granted pursuant to this agreement
would be deemed to have vested monthly at the rate of 1/36 per month, and the
vested amount would be converted to cash at the rate of $65.00 per share.
Also, all stock options would be fully vested concurrent with termination.
Upon termination, Mr. Restrepo would be obligated to execute a severance
agreement with the Company. In the event Mr. Restrepo relocates to the greater
Worcester area within the first five years of employment, he is eligible to
receive reimbursement for any losses equal to one half of his out-of-pocket
losses on the sale of his home. He is also entitled to join a country club or
other club at the Company's expense.
All of the Company's Named Executive Officers are subject to non-
solicitation agreements ("Non-Solicitation Agreements") with the Company. The
Non-Solicitation Agreements provide that, during employment and for a period
of two years after termination, the executive officer will not recruit or
solicit, attempt to induce, or assist or encourage others to recruit or
solicit, any employee, agent or broker of the Company to terminate employment
with the Company. The Non- Solicitation Agreements prohibit the executive
officers from soliciting the business or patronage of any policyholders or
existing or prospective clients, customers or accounts of the Company that
were contacted, solicited or served while the executive officer was employed
by the Company. Finally, the Non-Solicitation Agreements provide that all
proprietary information relating to the Company's business and all software,
works of authorship and other developments created during employment by the
Company are the sole property of the Company.
Employment Continuity Plan
In December 1996 the AFC Board of Directors voted to adopt the Allmerica
Financial Corporation Employment Continuity Plan (the "Employment Continuity
Plan"). The purposes of the Employment Continuity Plan are (i) to secure
senior management's objectivity and ensure focus on behalf of shareholder
interest in the event of actions or occurrences that could lead to a Change of
Control, and (ii) to ensure, in the event of a Change
12
<PAGE>
in Control resulting in payment under the Employment Continuity Plan, that
senior management does not compete in the business of the Company, solicit
Company employees or disclose any confidential or propriety information of the
Company. The Employment Continuity Plan is administered by the AFC Board of
Directors. Each of the Named Executive Officers is a participant.
In the event of a Change in Control (defined below) of the Company and
subsequent involuntary termination of a participant within a two-year period
after the Change in Control, or voluntary termination of an Executive Officer
participant (defined below) in the 13th month after a Change in Control, the
Employment Continuity Plan authorizes the payment of specified benefits to
eligible participants. These include a lump-sum cash payment equal to a
Multiplier (defined below) times a participant's base salary, average bonus
for the preceding three years, and the amount that would be credited under a
cash balance pension plan sponsored by the Company or its affiliates. The
Multiplier is three (3) for the Chief Executive Officer, two (2) for all other
Executive Officers and one (1) for certain other key employees. Additionally,
the Employment Continuity Plan provides for continued coverage under the
health and welfare benefit plans sponsored by the Company and its affiliates,
the lump-sum actuarial equivalent for grandfathered benefits earned under the
retirement plan for "transition group" employees for the number of years
commensurate with the Multiplier, 75% of a participant's maximum bonus
potential pro-rated for service performed in the year of termination, and
outplacement services. The Chief Executive Officer is also entitled to a
gross-up payment when the Change in Control payment or other benefit under the
plan is subject to the excise tax imposed by section 4999 of the Internal
Revenue Code. An Executive Officer is defined as a member of the Operating
Committee of the Company.
For purposes of the Employment Continuity Plan, a Change in Control is
defined as follows: (i) a change in the composition of the Board of Directors
such that the Incumbent Directors (as defined in the Employment Continuity
Plan) at the beginning of any consecutive twenty-four month period cease to
constitute a majority of the Board; (ii) any person or group is or becomes the
beneficial owner of 35% or more of the Company's voting stock outstanding;
(iii) a merger or consolidation of the Company or any affiliate that requires
shareholder approval, unless the shareholders immediately prior to the merger
or consolidation own more than 50% of the total voting stock of the successor
corporation or a majority of the board of directors of the successor
corporation were Incumbent Directors immediately prior to the merger or
consolidation; or (iv) the approval by shareholders of a plan of liquidation
or dissolution of the Company or the sale of all or substantially all of the
Company's assets.
In the event of a Change of Control, for all stock awards and stock options
granted to a participant pursuant to the Company's Long-Term Stock Incentive
Plan that do not otherwise vest immediately after the Change of Control, the
participant will be paid a lump sum amount equal to (i) the fair market value
of all stock awards as of the date of the Change of Control (excluding stock
options) and (ii) with respect to stock options, the excess of the fair market
value of the Company's common stock as of the date of the Change of Control
over the stock option exercise price.
The payment of benefits under the Employment Continuity Plan is contingent
upon the Company's receipt of a signed waiver and release from the participant
that release certain claims the participant may have and precludes the
participant from competing with the Company for a period of two years.
13
<PAGE>
Pension Benefits
FAFLIC maintains a tax-qualified, non-contributory defined benefit pension
plan (the "Pension Plan") for the benefit of eligible employees.
Prior to January 1, 1995, the Pension Plan benefit formula (the "Prior Plan
Formula") was based upon a percentage of the participant's final average
compensation multiplied by years of credited service, to a maximum of 35
years. Final average compensation was defined as the average of the highest
consecutive five years of eligible compensation or last 60 months, if greater.
Benefits under this formula were frozen for all employees as of December 31,
1994, with the exception of a certain grandfathered group (the "Transition
Group"). This Transition Group continues to accrue benefits under the Prior
Plan Formula. None of the Named Executive Officers is a member of the
Transition Group.
Effective January 1, 1995, FAFLIC adopted a cash balance plan formula (the
"Cash Balance Formula"). Each year, FAFLIC allocates a percentage of a
participant's eligible compensation to a separate memorandum account
established for the participant. At the end of the year the Company sets the
allocation percentage based on Company performance, with a minimum of 0.5% of
eligible compensation. Participants may elect hypothetical investment options
from choices provided by the Company. Upon termination of employment,
participants may elect to receive a monthly annuity payment or an immediate
lump sum payment.
FAFLIC also maintains several unfunded, non-qualified retirement
arrangements. The Excess Benefit Plan provides eligible individuals with the
difference between the benefits calculated under the Pension Plan formula
without regard to Federal limitations and the maximum amount that may be paid
from the Pension Plan under Federal tax laws. The Non-Qualified Executive
Deferred Compensation Plan allows certain employees to defer up to 12.5% of
their base salary.
FAFLIC has also adopted the unfunded Non-Qualified Executive Retirement
Plan, designed to mirror FAFLIC's qualified plan formulas, under which Messrs.
O'Brien and Reilly participate. Effective January 1, 1995, participants
irrevocably forfeited future participation in FAFLIC's qualified Pension Plan
and 401(k) Matched Savings Plan. Under the Non-Qualified Executive Retirement
Plan, participants may (i) elect to defer compensation equal to the maximum
401(k) Matched Savings Plan annual contribution, (ii) receive and defer an
amount equal to the Company's matching contribution, (iii) receive and defer
an amount equal to the Pension Plan annual Cash Balance Formula allocation
without regard to Federal limitations and (iv) defer up to 12.5% of base
salary.
The estimated annual retirement benefits payable at the normal retirement
age of 65 for the Named Executive Officers is as follows: Mr. O'Brien,
$407,506; Mr. Restrepo, $167,241; Mr. Simonsen, $191,455; Mr. Reilly, $71,597;
and Mr. Kavanaugh, $260,363.
These include amounts calculated under the Prior Plan Formula and the Cash
Balance Formula, including Excess Plan benefits. Amounts in the Cash Balance
memorandum accounts and the Cash Balance accounts calculated for Messrs.
O'Brien and Reilly under the Non-Qualified Executive Retirement Plan, were
projected to age 65 assuming: (i) each individual's eligible compensation
until retirement equals base salary plus bonus as shown in the Executive
Compensation Table for 1999, (ii) an annual allocation of 7% of eligible
compensation and (iii) investment income of 6% per year.
14
<PAGE>
Compensation Committee Report
The Compensation Committee ("Committee") of the Board of Directors is
comprised of the Directors whose names appear at the end of this report, none
of whom is an employee of AFC or of any affiliate or subsidiary of AFC. Among
other duties, the Committee has oversight responsibility with respect to
compensation matters involving Directors and executive officers of AFC. As a
holding company, AFC has no employees of its own and does not pay any
compensation to its executive officers. The Company's executive officers are
employees of FAFLIC and are compensated directly by FAFLIC.
Compensation Philosophy.
The objectives of the executive compensation program are to attract and
retain individuals key to the future success of AFC and its subsidiaries, to
motivate executives to achieve the business objectives of AFC, and to align
the long-term interests of executives with those of shareholders.
The principal components of the executive compensation program are base
salary, performance-based annual incentive compensation and long-term
incentive compensation. Annual base salaries of the Named Executive Officers
and other key executives are set at levels considered to be competitive with
amounts paid to executive officers with comparable qualifications, experience
and responsibilities at competing companies, based on published surveys and
proxy information. Annual incentive compensation in 1999 was tied to the
achievement of significant financial performance goals. During 1999, FAFLIC,
maintained an incentive plan which provides supplementary cash compensation as
an incentive to key employees who, through exceptional performance, contribute
materially to the success of the companies. The incentive plan had two
components: (a) corporate earnings per share, and (b) business unit
performance modified by the individual's contribution. Grants under AFC's
Long-Term Stock Incentive Plan (the "Plan") are intended to promote superior
future performance. The Plan is intended to attract and retain executives and
to satisfy the objectives of linking executives' long-term interests with
those of the shareholders and to encourage stock ownership in the Corporation.
Factors considered in determining the grant of awards under the Plan include
the contribution of each executive to the long-term performance of AFC and the
importance of such executive's responsibilities within the organization. The
Committee recognizes the Plan's flexibility is necessary to satisfy these
objectives.
Compensation of the Chief Executive Officer.
In approving the 1999 compensation package for Mr. O'Brien, the Committee
compared Mr. O'Brien's compensation against the comparative base salaries,
annual and long-term incentives and other compensation of chief executives of
a peer group of life and property and casualty insurance companies of similar
size offering similar products and services. The Committee engaged an outside
compensation consultant to assist with the peer group comparisons. The
Committee's review also included, but was not limited to, an assessment of the
performance of the Company and its subsidiaries in terms of profitability and
growth in the various business lines, an evaluation of the capital positions
of the companies and the implementation of significant cost controls and
recent corporate restructurings. In comparison to the peer group of companies,
Mr. O'Brien's base salary and his potential for incentive compensation as a
percentage of base salary was within the median market range.
Mr. O'Brien's 1999 incentive compensation performance measures included a
corporate goal based upon earnings per share and individual performance goals,
such as the achievement of certain financial targets including revenue,
expenses and the appreciation of AFC's stock price. Achievement of individual
performance goals and other initiatives undertaken by Mr. O'Brien in 1999
resulted in performance that exceeded expectations.
15
<PAGE>
The Committee believes that the executive compensation policies of AFC and
its subsidiaries are appropriate both to attract and retain corporate officers
and other key employees with outstanding abilities and to motivate them to
perform to the full extent of their abilities.
Compliance with Internal Revenue Code Section 162(m).
Section 162(m) of the Internal Revenue Code, enacted in 1993, generally
disallows a tax deduction to public companies for compensation over $1 million
paid to the corporation's Chief Executive Officer and its four other most
highly compensated executive officers. Qualifying performance-based
compensation will not be subject to the deduction limit if certain
requirements are met. Shareholders have previously approved a Long-Term
Incentive Compensation Plan (the "Plan") in recognition that payment of
qualifying performance-based compensation will benefit AFC's efforts to manage
its compensation philosophy under the Section 162(m) deduction limitations.
The Committee currently intends to structure performance-based executive
compensation, including performance-based executive compensation under the
Plan, in a manner that satisfies the requirements of Section 162(m). Because
of ambiguities and uncertainties as to the application and interpretation of
Section 162(m) and the regulations issued thereunder, however, no assurance
can be given, notwithstanding the Company's efforts, that compensation
intended by the Company to satisfy the requirements for deductibility under
Section 162(m) does in fact do so.
Members of the Compensation Committee:
Herbert M. Varnum, Chair
Robert P. Henderson
M Howard Jacobson
Robert G. Stachler
16
<PAGE>
COMMON STOCK PERFORMANCE CHART
The following graph compares the performance of the Company's Common Stock
since its initial public offering on October 11, 1995, with the performance of
the S&P 500 Index and with the performance of an industry peer group comprised
of a composite of two published indices--the S&P Property-Casualty Insurance
Index and the S&P Life/Health Insurance Index. Returns of the latter two
indices have been weighted according to their respective aggregate market
capitalization at the beginning of each period shown on the graph. The graph
plots the changes in the value of an initial $100 investment over the
indicated time periods, assuming reinvestment of all dividends.
COMPARISON OF 50 MONTH CUMULATIVE TOTAL RETURN *
AMONG ALLMERICA FINANCIAL CORPORATION,
THE S&P 500 INDEX AND A PEER GROUP
Cumulative Total Return
------------------------------------------------------
10/11/1995 12/95 12/96 12/97 12/98 12/99
ALLMERICA FINANCIAL
CORPORATION 100.00 111.34 139.14 208.46 242.47 234.06
PEER GROUP 100.00 107.16 137.44 208.82 211.43 171.21
S&P 500 100.00 106.78 131.29 175.10 225.13 272.51
- --------
* $100 invested on 10/11/95 in stock or index--including reinvestment of
dividends. Fiscal year ending December 31.
17
<PAGE>
The insurance composite is a market value weighted composite of the S&P
Property-Casualty Insurance and the S&P Life/Health Insurance indices. The
components of the insurance composite have been weighted in accordance with
the respective aggregate market capitalization of the companies in each index
as of the date of Allmerica Financial Corporation's public offering and at the
beginning of each period shown on the graph, as indicated below:
<TABLE>
<CAPTION>
10/11/95 12/95 12/96 12/97 12/98 12/99
-------- ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
S&P Property-Casualty.......... 62.39% 63.18% 62.61% 63.19% 54.93% 49.46%
S&P Life-Health................ 37.61% 36.82% 37.59% 36.81% 45.07% 50.54%
------ ------ ------ ------ ------ ------
Total........................ 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
====== ====== ====== ====== ====== ======
</TABLE>
The Compensation Committee Report and Stock Price Performance Graph above
shall not be deemed incorporated by reference by any general statement
incorporating by reference this Proxy Statement into any filing under the
Securities Act of 1933 or the Securities Exchange Act of 1934, except to the
extent that AFC specifically incorporates this information by reference, and
shall not otherwise be deemed filed under such Acts.
18
<PAGE>
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires executive
officers and Directors, and persons who beneficially own more than ten percent
(10%) of the Common Stock, to file initial reports of ownership and reports of
changes in ownership with the Securities and Exchange Commission (the "SEC")
and the New York Stock Exchange (the "NYSE"). Such persons are required by SEC
regulations to provide to AFC copies of all their Section 16(a) filings. Based
solely on a review of the forms furnished to AFC and written representations
from AFC's executive officers and Directors, AFC believes that during 1999
there was full compliance with all Section 16(a) filing requirements, except
that an open market purchase of 1,000 of shares of AFC Common Stock by Mr.
Angelini was reported timely to the Company but inadvertantly not reported
timely to the SEC. A corrective form has been filed with the SEC and the NYSE.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company's subsidiaries or affiliates have, from time to time, retained
the services of Bowditch & Dewey LLP, a law firm in which Mr. Angelini is a
partner.
ANNUAL REPORT ON FORM 10-K
Shareholders may obtain without charge a copy of AFC's Annual Report on Form
10-K, including financial statements and financial statement schedules,
required to be filed with the Securities and Exchange Commission pursuant to
the Securities Exchange Act of 1934 for the fiscal year ended December 31,
1999, by calling (800) 407-5222 or by writing to AFC at 440 Lincoln Street,
Worcester, Massachusetts 01653 (attention: Secretary).
OTHER MATTERS
Management knows of no business that will be presented for consideration at
the Annual Meeting other than as stated in the Notice of Meeting. If, however,
other matters are properly brought before the Annual Meeting, it is the
intention of the proxy holders to vote the shares represented thereby on such
matters in accordance with the recommendation of the Board of Directors and
authority to do so is included in the proxy.
SHAREHOLDER PROPOSALS
Proposals submitted by shareholders of AFC must be received at Allmerica
Financial Corporation, 440 Lincoln Street, Worcester, Massachusetts 01653 on
or before December 1, 2000, to be considered for inclusion in the proxy
materials relating to the 2001 Annual Meeting of Shareholders.
DATED at Worcester, Massachusetts this 31st day of March 2000.
By Order of the Board of Directors,
Charles F. Cronin
Secretary and Counsel
19
<PAGE>
[ALLMERICA FINANCIAL LOGO APPEARS HERE]
09668 (Rev.3/00)
<PAGE>
ALLMERICA FINANCIAL CORPORATION
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 16, 2000
The undersigned, having received the Notice of Annual Meeting of
Shareholders and the Board of Directors' Proxy Statement (the "Proxy
Statement"), hereby appoint(s) John F. O'Brien and Edward J. Parry III, and each
of them, Proxies of the undersigned (with full power of substitution) to attend
the Annual Meeting of Shareholders of Allmerica Financial Corporation to be held
May 16, 2000, and all adjournments thereof (the "Meeting"), and there to vote
all shares of Common Stock of Allmerica Financial Corporation that the
undersigned would be entitled to vote, if personally present, in regard to all
matters that may come before the Meeting.
The undersigned hereby confer(s) upon the Proxies, and each of them,
discretionary authority (i) to consider and act upon such business, matters or
proposals other than the business set forth below as may properly come before
the Meeting and (ii) with respect to the election of Directors in the event that
any of the nominees is unwilling to serve. THE PROXY WHEN PROPERLY EXECUTED
WILL BE VOTED IN THE MANNER SPECIFIED HEREIN. IF NO SPECIFICATION IS MADE, THE
PROXIES INTEND TO VOTE FOR EACH PROPOSAL AND FOR ALL NOMINEES FOR DIRECTOR.
Please mark vote as in this example. / X /
---
1. For the election of all nominees listed below (except as otherwise
indicated).
NOMINEES: E. Gordon Gee, Gail L. Harrison and M Howard Jacobson
/__/ FOR all nominees /__/ WITHHOLD from all nominees
___________________________________________________________________
FOR all nominees, except those listed on the line above
2. Ratification of the appointment of PricewaterhouseCoopers LLP as the
independent public accountants of Allmerica Financial Corporation.
/__/ FOR /__/ AGAINST /__/ ABSTAIN
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS,
WHICH RECOMMENDS APPROVAL OF THE FOREGOING PROPOSALS
(Form of Proxy continued)
<PAGE>
Mark here for address change and note below. /__/
_______________________________________
Signature Date
_______________________________________
Signature Date
In signing, please write name(s) exactly as appearing in the imprint on this
card. For shares held jointly, each joint owner should sign. If signing as
executor, or in any other representative capacity, or as an officer of a
corporation, please indicate your full title as such.
[End of Proxy]
