<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 by Rule
14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to section 240.14a-11(c) or section
240.14a-12
The Guarantee Life Companies Inc.
------------------------------------------------
(Name of Registrant as Specified in its Charter)
------------------------------------------------
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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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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<PAGE>
(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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<PAGE>
[LOGO APPEARS HERE]
THE GUARANTEE LIFE COMPANIES INC.
Guarantee Centre
8801 Indian Hills Drive
Omaha, Nebraska 68114
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To the Shareholders of The Guarantee Life Companies Inc.:
The Annual Meeting of Shareholders of The Guarantee Life Companies Inc.
(the "Company") will be held at Joslyn Art Museum, 2200 Dodge Street, Omaha,
Nebraska, on Thursday, May 8, 1997, at 10:00 a.m. for the following purposes:
1. To elect three directors, each to serve for a three-year term of office
expiring at the 2000 Annual Meeting of Shareholders;
2. To ratify the appointment of KPMG Peat Marwick LLP, certified public
accountants, as independent auditors for the Company for 1997;
3. To consider a proposal to amend the Company's 1994 Long Term Incentive
Plan to increase the number of shares issuable thereunder; and
4. 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 March 21, 1997,
are entitled to notice of and to vote at the Annual Meeting of Shareholders.
All shareholders are cordially invited to attend the meeting in person.
However, if you are unable to attend in person and wish to have your shares
voted, please sign and date the enclosed proxy and return it in the accompanying
envelope as promptly as possible. YOUR VOTE IS VERY IMPORTANT. Your proxy may be
revoked by appropriate notice to the Secretary of the Company at any time prior
to the voting thereof.
BY ORDER OF THE BOARD OF DIRECTORS
R. A. Spellman
Secretary
Omaha, Nebraska
April 3, 1997
1
<PAGE>
THE GUARANTEE LIFE COMPANIES INC.
Guarantee Centre
8801 Indian Hills Drive
Omaha, Nebraska 68114
PROXY STATEMENT
FOR ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 8, 1997
This Proxy Statement is furnished to shareholders of The Guarantee Life
Companies Inc. (the "Company") in connection with the solicitation on behalf of
the Company's Board of Directors of proxies to be voted at the Annual Meeting of
Shareholders of the Company to be held on Thursday, May 8, 1997, at 10:00 a.m.
at Joslyn Art Museum, 2200 Dodge Street, Omaha, Nebraska. Distribution of this
Proxy Statement and the accompanying form of proxy began on or about April 3,
1997.
Only holders of record of common stock of the Company (the "Common Stock")
at the close of business on March 21, 1997, are entitled to notice of and to
vote at the annual meeting. On that date, the Company had outstanding 9,910,197
shares of Common Stock, each of which is entitled to one vote.
The enclosed proxy may be revoked by the shareholder at any time prior to
the exercise thereof by filing with the Secretary of the Company a written
revocation or duly executed proxy bearing a later date. The proxy will be deemed
revoked if the shareholder is present at the annual meeting and elects to vote
in person.
A majority of the outstanding shares will constitute a quorum at the annual
meeting. Shares entitled to vote and represented by properly executed, returned
and unrevoked proxies will be considered present at the meeting for purposes of
determining a quorum, including shares with respect to which votes are withheld,
abstentions are cast or there are broker nonvotes. Unless otherwise directed in
the accompanying proxy, the persons named therein will vote FOR the proposals
set forth in the Notice of Annual Meeting of Shareholders.
The cost of soliciting proxies in the enclosed form will be borne by the
Company. In addition to the use of the mails, proxies may be solicited
personally or by telephone or telegraph by directors, officers and regular
employees of the Company, without additional compensation therefor. Banks,
brokerage houses and other institutions, nominees and fiduciaries will be
requested to forward the soliciting material to their principals and to obtain
authorization for the execution of proxies. The Company may reimburse banks,
brokerage houses and other institutions, nominees and fiduciaries for their
expenses in forwarding proxy materials to their principals.
Also, ChaseMellon Shareholder Services, L.L.C. may assist the Company in
soliciting proxies for the annual meeting, and if so, will be paid an estimated
fee of up to $25,000 plus out-of-pocket expenses. The Company has agreed to
indemnify ChaseMellon Shareholder Services, L.L.C. against certain liabilities
in connection with soliciting proxies for the annual meeting.
PROPOSAL 1: ELECTION OF DIRECTORS
The Board of Directors is divided into three classes, with one class
elected each year to hold office for a three-year term. John R. Cochran, James
M. McClymond and William F. Welsh II, current members of the Board of Directors,
have been nominated for re-election to serve three-year terms of office expiring
at the 2000 Annual Meeting of Shareholders and until their successors are duly
elected and qualified. Directors are elected by a plurality of votes cast.
Consequently, votes withheld and broker nonvotes with respect to the election of
directors will have no impact on the election of directors. If any nominee is
unable to serve, or for good cause declines to serve at the time of the annual
meeting, the persons named in the enclosed proxy will exercise discretionary
authority to vote for substitutes. The Board of Directors is not aware of any
circumstances that would render any nominee unavailable for election.
2
<PAGE>
The following table sets forth certain information regarding the nominees
for election and the directors continuing in office.
The Board of Directors recommends a vote FOR the nominees listed.
<TABLE>
<CAPTION>
Director Business Experience and
Name Since Principal Occupation Age
<S> <C> <C> <C>
John R. Cochran 1994 President and Chief Executive Officer, 54
FirstMerit Corporation since 1995 and
prior thereto from January 1986,
President and Chief Executive Officer of
Norwest Bank Nebraska, N.A. Mr. Cochran
is a director of FirstMerit Corporation.
James M. McClymond 1994 Consultant to Thermal Technology, Inc. 63
Since October 1994, he has served as
Consultant-International Business
Development for UtiliCorp United, Inc.
Prior thereto, he served as President of
Peoples Natural Gas Company from
February 1985 until his retirement in
October 1994. Mr. McClymond is a
director of Thermal Technology, Inc.
William F. Welsh II 1994 President and Chief Executive Officer, 55
American Information Systems Inc. since
1994. From 1977 until 1993, Mr. Welsh
served in various management positions
at Valmont Industries, Inc., including
President and Chief Executive Officer.
Directors whose terms expire at the 1998 Annual Meeting of Shareholders:
Robert D. Bates 1994 Chairman of the Board, President and 55
Chief Executive Officer of The Guarantee
Life Companies Inc. since May 1995.
Chairman of the Board of Guarantee Life
Insurance Company since November 1990
and President and Chief Executive
Officer of Guarantee Life Insurance
Company since March 1989.
Theodore C. Cooley 1994 Executive Vice President-Individual 55
Division of Guarantee Life Insurance
Company since March 1994, and Senior
Vice President-Individual Division from
March 1993 to March 1994. From 1977
until joining Guarantee Life Insurance
Company in 1993, Mr. Cooley served with
The Paul Revere Insurance Group.
Bernard W. Reznicek 1994 National Director - Utility Marketing 60
for Central States Indemnity Co. of
Omaha since January 1997. Prior thereto,
starting in July 1994, he was Dean of
the Creighton University College of
Business Administration. Between 1987
and 1994 he served with Boston Edison
Company, Boston, Massachusetts and was
Chairman and Chief Executive Officer at
the time of his retirement in 1994.
Janice D. Stoney 1994 Executive Vice President (Retired), U S 56
WEST Communications from 1990 until her
retirement in 1992. From 1989 until 1990
she was President of the Consumer
Division of U S WEST Communications.
Mrs. Stoney is a director of Premark
International and Whirlpool Corporation.
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
Directors whose terms expire at the 1999 Annual Meeting of Shareholders: Age
<S> <C> <C> <C>
Frederick M. Bekins 1994 Chairman, Bekins Van & Storage Company, with 72
which he has been affiliated since 1949.
C.R. "Bob" Bell 1994 President, Greater Omaha Chamber of Commerce 66
since 1989.
Thomas T. Hacking 1995 Chief Executive Officer, Hacking & Co. since 52
1993. From 1988 until 1993, Mr. Hacking was
Executive Vice President and co-head of
investment banking for Bateman Eichler, Hill
Richards Inc. and its successor, Kemper
Securities, Inc.
A.J. Scribante 1994 Chairman of the Board and Chief Executive 67
Officer, VITAL LEARNING Corporation since 1989.
</TABLE>
PROPOSAL 2: RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors has approved the retention of KPMG Peat Marwick LLP
as independent auditors of the Company and its subsidiaries for the fiscal year
ending December 31, 1997, subject to ratification by shareholders. Ratification
requires the affirmative vote of the holders of a majority of the shares present
in person or represented by proxy at the meeting and entitled to vote.
Abstentions will have the same effect as a vote against ratification. Broker
nonvotes will not be considered shares entitled to vote with respect to
ratification and will not be counted as votes for or against ratification. A
representative of KPMG Peat Marwick LLP is expected to be present at the annual
meeting. The representative will be given an opportunity to make a statement to
shareholders, and he or she is expected to be available to respond to
appropriate questions from shareholders.
The Board of Directors recommends a vote FOR this proposal.
PROPOSAL 3: AMENDMENT OF THE 1994 LONG TERM INCENTIVE PLAN
The 1994 Long Term Incentive Plan (the "Plan"), adopted in December 1994,
provides for the granting of nonqualified stock options, incentive stock
options, restricted stock and performance shares to key employees, directors and
agents.
The Plan is administered by the Company's Compensation Committee (the
"Committee"). Employees eligible to receive awards under the Plan are those key
employees of the Company or any of its affiliates who are in a position to make
a material contribution to the continued profitable growth and long-term success
of the Company. The Committee has the authority to select the recipients of
awards, determine the type and size of the awards, establish certain terms and
conditions of award grants and take certain other actions as permitted under the
Plan.
In 1994, the Plan authorized 745,828 shares of Company Common Stock to be
used for awards under the Plan. As of February 28, 1997, all but 62,950 shares
of Common Stock originally authorized under the Plan have been granted. The
shares and awards authorized under the Plan are subject to certain antidilution
adjustments, and if any awards under the Plan lapse, the number of shares
pertaining to such forfeited awards become available for subsequent grant under
the Plan. The Committee approved a change to the Plan to provide 1,345,828
shares of Common Stock (an increase of 600,000) for issuance under the Plan,
subject to shareholder approval. The Board of Directors requests shareholder
approval to increase the number of shares issuable under the Plan by 600,000.
Approval requires the affirmative vote of the holders of a majority of the
shares present in person or represented by proxy at the meeting and entitled to
vote. Abstentions will have the same effect as a vote against approval. Broker
nonvotes will not be considered shares entitled to vote with respect to approval
and will not be counted as votes for or against approval.
The Board of Directors recommends a vote FOR this proposal.
4
<PAGE>
Executive Officers
Executive officers, in addition to Messrs. Bates and Cooley (see page 2),
are set forth below.
<TABLE>
<CAPTION>
Business Experience and
Name Principal Occupation Age
<S> <C> <C>
Michael G. Allen Senior Vice President of the Company since May 1995 47
and Senior Vice President-Employee Benefits Division
of Guarantee Life since January 1996. Mr. Allen joined
Guarantee Life in September 1993 as Senior Vice President-
Planning, Human Resources and Administration and became
Senior Vice President-Group Operations in 1995. Prior
thereto, from 1986 until joining Guarantee Life, he was
President of Louis Allen Associates.
William L. Bauhard Senior Vice President and Chief Financial Officer 51
of the Company and Guarantee Life since May 1995.
Prior to joining the Company, Mr. Bauhard spent over 23
years with US WEST Communications in a variety of financial
management positions with the most recent position of
Executive Director-Finance.
David L. Bomberger Senior Vice President and Treasurer of the Company since 41
May 1995 and Senior Vice President-Investment Division and
Treasurer of Guarantee Life since November 1990.
Alan D. Brinkman Vice President-Financial Actuarial Services of Guarantee 36
Life since May 1995 and prior thereto Financial Actuarial
Vice President-Individual Division since joining Guarantee
Life in October 1991. From 1982 until joining Guarantee
Life, he served in various supervisory and management
positions with Mutual of Omaha and United of Omaha
Insurance Company.
John E. Burch Vice President and Controller of the Company since April 54
1995 and Vice President and Controller of Guarantee Life
since February 1989.
Richard C. Easton Senior Vice President-Marketing-Employee Benefits Division 59
of Guarantee Life since February 1995. Mr. Easton joined
Guarantee Life in February 1993 as Vice President-Group Sales.
Prior to joining Guarantee Life, Mr. Easton spent over 33
years with Standard of Oregon in a variety of group sales and
operations positions with the most recent position of
Vice President of Group Marketing.
J.D. "Wayne" Gardner Senior Vice President-Marketing-Individual Division of 49
Guarantee Life since September 1994 and prior thereto Vice
President-Marketing and Sales-Individual Division since
joining Guarantee Life in May 1993. From May 1989 until
joining Guarantee Life, Mr. Gardner served as Vice-
President-Career Sales of The Paul Revere Insurance Group.
William R. Lane Vice President-Group Finance of Guarantee Life since July 48
1995. From 1984 to 1995, Mr. Lane served in various
positions with Mutual of Omaha and United of Omaha
Insurance Company with the most recent position of Senior
Vice President-Actuarial, Purchasing Groups.
Donald G. Liedtke Senior Vice President of the Company since May 1995 and 44
Senior Vice President and Chief Information Officer of
Guarantee Life since March 1995. From 1990 to 1995, Mr.
Liedtke served as Corporate Vice President and Chief
Information Officer for Inacom Corporation.
</TABLE>
5
<PAGE>
<TABLE>
<S> <C> <C>
Paul D. Ochsner Senior Vice President of the Company since May 1995 and 45
Senior Vice President-Strategic Development of Guarantee
Life since September 1993. Mr. Ochsner has served in
various positions since joining Guarantee Life in 1973,
including Vice President and Actuary, Vice President-
Planning and Strategic Development and Senior Vice
President-Planning and Strategic Development.
Mary G. Rahal Senior Vice President-Human Resources and Administration 50
of Guarantee Life since August 1996. From 1984 until
joining Guarantee Life, Ms. Rahal served in various
positions with The Paul Revere Insurance Group, most
recently as Sales Vice President, South Central Region.
Gary H. Rittenhouse Senior Vice President of the Company since May 1995 and 50
Senior Vice President-Strategic Initiatives and Group
Special Markets of Guarantee Life since January 1996. Mr.
Rittenhouse has served in various positions since joining
Guarantee Life in 1970, including Senior Vice President-
Group Division, Senior Vice President-Group Marketing and
Vice President-Group Marketing.
Richard A. Spellman Senior Vice President, General Counsel and Secretary of 54
the Company since May 1995 and Senior Vice President,
General Counsel and Secretary of Guarantee Life since July
1990.
</TABLE>
Ownership of Common Stock
The following table sets forth certain information regarding the beneficial
ownership of Common Stock as of February 28, 1997, by (i) each director and each
executive officer named in the Summary Compensation Table and (ii) all directors
and executive officers as a group. Except as noted below, each holder listed
below has sole investment and voting power with respect to the shares
beneficially owned by the holder.
<TABLE>
<CAPTION>
Number of Shares
Name Beneficially Owned*
---- -------------------
<S> <C>
Robert D. Bates 119,542 (1)
Frederick M. Bekins 17,350 (2)
C.R. "Bob" Bell 5,226
John R. Cochran 4,186 (3)
Eugene A. Conley 5,641 (4)
Theodore C. Cooley 18,322 (5)
Thomas T. Hacking 180,400 (6)
James M. McClymond 10,925
Bernard W. Reznicek 4,100
A.J. Scribante 21,490 (7)
Janice D. Stoney 5,343 (8)
William F. Welsh II 13,010
William L. Bauhard 3,685 (9)
Gary H. Rittenhouse 9,169 (10)
Michael G. Allen 14,517 (11)
All directors and executive officers
as a group (25 persons) 479,699 (12)
</TABLE>
*Includes 3,000 shares each for Messrs. Bekins, Bell, Cochran, Conley, Hacking,
McClymond, Reznicek, Scribante and Welsh and Mrs. Stoney that could be obtained
upon exercise of stock options within 60 days. As of February 28, 1997, Common
Stock beneficially owned by directors and executive officers as a group
represents less than 4.9% of the outstanding shares. Except as noted, each
holder listed owns less than 1% of the outstanding shares.
6
<PAGE>
(1) Includes 15,000 shares of restricted stock and 20,000 performance shares
issued pursuant to the 1994 Long Term Incentive Plan as to which Mr.
Bates has voting power but no investment power; 22,085 phantom stock
units pursuant to a Phantom Stock Plan adopted prior to the existence of
a public market for the Company's Common Stock as to which Mr. Bates has
no voting or investment power; 10,037 phantom stock units in a Deferred
Compensation Plan as to which Mr. Bates has no voting or investment
power; 44 shares held by the Robert D. Bates Irrevocable Trust; 10,589
shares as of January 1, 1997, in the Guarantee Life Thrift Savings Plan
as to which Mr. Bates has voting and investment power; and 1,146 shares
of restricted stock issued pursuant to an Incentive Compensation Plan
Bonus Program as to which Mr. Bates has voting but no investment power
and thus Mr. Bates is the beneficial owner of approximately 1.2% of the
outstanding shares.
(2) Includes 2,500 shares held by Mr. Bekins' spouse; 1,500 shares held by
the Frederick H. Bekins Trust; and 250 shares held by Mr. Bekins as
trustee and as to which he has sole voting and investment power.
(3) Includes 69 shares held by the John R. Cochran Trust and 117 phantom
stock units in a Deferred Compensation Plan as to which Mr. Cochran has
no voting or investment power.
(4) Includes 26 shares held by Mr. Conley's spouse and 965 shares held by the
Eugene A. Conley Insurance Trust.
(5) Includes 130 shares held by an irrevocable trust of which Mr. Cooley's
spouse is the co-trustee; 1,834 phantom stock units in a Phantom Stock
Plan adopted prior to the existence of a public market for the Company's
Common Stock as to which Mr. Cooley has no voting or investment power;
3,306 phantom stock units in a Deferred Compensation Plan as to which Mr.
Cooley has no voting or investment power; 2,846 shares as of January 1,
1997, in the Guarantee Life Thrift Savings Plan as to which Mr. Cooley
has voting and investment power; and 152 shares of restricted stock
issued pursuant to an Incentive Compensation Plan Bonus Program as to
which Mr. Cooley has voting but no investment power.
(6) Mr. Hacking is a limited partner in, and Hacking & Co. acts as a
consultant to, a group of partnerships managed by Kayne Anderson
Investment Management, Inc. These partnerships own, in the aggregate,
175,000 shares and thus Mr. Hacking is the beneficial owner of
approximately 1.8% of the outstanding shares.
(7) Includes 341 and 372 shares held by VITAL LEARNING Corporation and Vital
Resources, Inc., respectively. Mr. Scribante is the Chairman of the Board
and Chief Executive Officer of VITAL LEARNING Corporation and Chairman of
the Board of Vital Resources, Inc.
(8) Includes 243 phantom stock units in a Deferred Compensation Plan as to
which Mrs. Stoney has no voting or investment power.
(9) Includes 1,815 phantom stock units in a Deferred Compensation Plan as to
which Mr. Bauhard has no voting or investment power; 115 shares as of
January 1, 1997, in the Guarantee Life Thrift Savings Plan as to which
Mr. Bauhard has voting and investment power; and 130 shares of restricted
stock issued pursuant to an Incentive Compensation Plan Bonus Program as
to which Mr. Bauhard has voting but no investment power.
(10) Includes 4,360 phantom stock units in a Phantom Stock Plan adopted prior
to the existence of a public market for the Company's Common Stock as to
which Mr. Rittenhouse has no voting or investment power; 885 phantom
stock units in a Deferred Compensation Plan as to which Mr. Rittenhouse
has no voting or investment power; 2,145 shares as of January 1, 1997, in
the Guarantee Life Thrift Savings Plan as to which Mr. Rittenhouse has
voting and investment power; 226 shares of restricted stock issued
pursuant to an Incentive Compensation Plan Bonus Program as to which Mr.
Rittenhouse has voting but no investment power; and 60 shares held by
Mr. Rittenhouse's family members.
(11) Includes 1,034 phantom stock units in a Phantom Stock Plan adopted prior
to the existence of a public market for the Company's Common Stock as to
which Mr. Allen has no voting or investment power; 153 phantom stock
units in a Deferred Compensation Plan as to which Mr. Allen has no voting
or investment power; 1,694 shares as of January 1, 1997, in the Guarantee
Life Thrift Savings Plan as to which Mr. Allen has voting and investment
power; and 280 shares of restricted stock issued pursuant to an Incentive
Compensation Plan Bonus Program as to which Mr. Allen has voting but no
investment power.
(12) Includes shares held by spouses and immediate family members of other
executive officers, as well as phantom stock units for executive
officers.
7
<PAGE>
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934, as amended,
requires the Company's officers, directors and persons who beneficially own more
than ten percent of the Company's Common Stock ("reporting persons"), to file
reports of ownership and changes in ownership with the Securities and Exchange
Commission. Based solely on review of the copies of such reports furnished to
the Company or written representations that no other reports were required, the
Company believes that during 1996 all reporting persons were in compliance with
all applicable filing requirements except that Form 3, Initial Statement of
Beneficial Ownership, was filed late on behalf of Mary G. Rahal and one report
covering one transaction was inadvertently filed late on behalf of each of
William L. Bauhard and James M. McClymond.
Meetings of Board of Directors and Committees
The Board of Directors held six meetings in 1996. All directors
attended at least 75% of the meetings of the Board and its committees on which
they served.
The Board of Directors has standing Audit and Compensation Committees.
In 1996, the Audit Committee was composed of Directors Bekins, Bell and
Reznicek, with Mr. Reznicek serving as Chair. The functions performed by the
Audit Committee include exercising the powers and authority of the directors of
the Company to oversee and monitor the internal accounting and operating systems
of the Company and related matters. The Audit Committee held three meetings in
1996. In 1996, the Compensation Committee was composed of Directors Cochran,
McClymond, Scribante, Stoney and Welsh, with Mr. Scribante serving as Chair. The
duties of the Compensation Committee include exercising the powers and authority
of the directors of the Company with regard to compensation philosophy and
guidelines for the executive and management groups of the Company and related
matters. The Compensation Committee held six meetings in 1996.
Compensation of Directors
During 1996, each non-employee director of the Company received a
$12,600 annual retainer, $900 for each board meeting attended and $650 for each
committee meeting attended. Non-employee directors of the Company who also serve
on the Board of Directors of Guarantee Life Insurance Company received only one
annual retainer fee for their board memberships and only one meeting fee for
each joint meeting of both boards attended. In addition, directors are
reimbursed for travel expenses incurred in attending meetings. In 1996, the
Company's Board of Directors received cash compensation from Guarantee Life
Insurance Company and stock options from the Company under the Directors Stock
Incentive Plan and the 1994 Long Term Incentive Plan.
In May 1996, the Board of Directors adopted the Directors Stock
Incentive Plan in order to attract, retain and motivate the best qualified
directors and to enhance mutuality of interest between the directors and
shareholders of the Company. The Directors Stock Incentive Plan provides a one-
time grant of options to each non-employee director in office on May 9, 1996,
and each individual who first becomes a director after May 9, 1996, to purchase
3,000 shares of the Company's Common Stock. These options became exercisable
November 9, 1996, at an exercise price of $17.125 per share. None of these
options have been exercised as of March 17, 1997.
The Directors Stock Incentive Plan is administered by the Board of
Directors. The maximum number of shares that may be issued under this plan is
90,000. If there is a stock split, stock dividend, recapitalization or other
relevant change affecting the Common Stock, appropriate adjustments will be made
in the number of shares available under this plan in the future and in the
exercise prices under outstanding grants made before the event.
Also, pursuant to the Company's 1994 Long Term Incentive Plan, on
December 31, 1996, each non-employee director was granted nonqualified stock
options for shares having an aggregate fair market value of $5,000 on that date.
These options become exercisable in 25% annual installments with the first
annual installment exercisable on December 31, 1998.
8
<PAGE>
Summary Compensation Table
The following table summarizes the compensation paid by Guarantee Life
to the chief executive officer and the four most highly compensated executive
officers, other than the chief executive officer, of Guarantee Life and the
Company.
<TABLE>
<CAPTION>
Long Term Compensation
Annual Compensation Awards
-----------------------------------------------------------
(a) (b) (c) (d) (e) (f) (g) (i)
Other
Annual Restricted Securities All Other
Name and Compen- Stock Underlying Compen-
Principal sation Award(s) Options/ sation
Position Year Salary ($) Bonus ($) ($)* ($)** SARs (#) ($)
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Robert D. Bates 1996 453,333 196,075(2) 6,248 24,509 0 6,421 (11)
Chairman, President and Chief 1995 415,700 200,000 6,874 0 159,110 5,730 (12)
Executive Officer 1994 391,070 258,690 8,803 0 0 426,949 (13)
Theodore C. Cooley 1996 199,600 46,481(3) 2,299 3,254 0 5,609 (14)
Executive Vice President 1995 191,267 66,861 831 0 19,889 5,712 (15)
1994 183,000 97,728 72,201(8) 0 0 24,830 (16)
Michael G. Allen 1996 180,700 47,933(4) 676 5,992 0 4,028 (17)
Senior Vice President 1995 154,367 40,000 14,192(8) 0 19,889 5,625 (18)
1994 146,417 45,000 128,021(8,9) 0 0 1,879 (19)
Gary H. Rittenhouse 1996 162,750 64,416(5) 692 4,831 0 5,243 (20)
Senior Vice President 1995 156,250 20,000 1,576 0 19,889 5,252 (21)
1994 146,400 48,632 2,925 0 0 7,565 (22)
William L. Bauhard 1996 173,760 22,250(6) 3 2,781 0 4,235 (23)
Senior Vice President 1995 110,069 84,500(7) 53,751(10) 0 19,889 768 (24)
1994 (1) (1) (1) (1) (1) (1)
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Mr. Bauhard joined the company in May 1995, therefore, no information is
provided for 1994.
(2) Includes 5,503 shares of Common Stock received in lieu of cash
compensation, which shares had a fair market value of $117,645 when
payable.
(3) Includes 978 shares of Common Stock received in lieu of cash compensation,
which shares had a fair market value of $20,916 when payable.
(4) Includes 1,345 shares of Common Stock received in lieu of cash
compensation, which shares had a fair market value of $28,759 when
payable.
(5) Includes 1,205 shares of Common Stock received in lieu of cash
compensation, which shares had a fair market value of $25,766 when
payable.
(6) Includes 624 shares of Common Stock received in lieu of cash compensation,
which shares had a fair market value of $13,350 when payable.
(7) Includes a $35,000 employment bonus.
(8) Includes income tax allowance on non-deductible moving/relocation expense
reimbursements.
(9) Includes $23,350 for the purchase of a country club membership and
corresponding income tax allowance.
(10) Includes $24,250 for the purchase of a country club membership and
corresponding income tax allowance.
(11) Consists of $4,621 employer matching contribution to the Guarantee Life
Thrift Savings Plan and $1,800 of premiums paid for group term life
insurance.
(12) Consists of $4,578 employer matching contribution to the Guarantee Life
Thrift Savings Plan and $1,152 of premiums paid for group term life
insurance.
(13) Consists of $360,189 as a final payment under an agreement to compensate
Mr. Bates for loss of his long-term benefits with his former employer upon
joining Guarantee Life, a $58,487 deposit to an annuity to supplement Mr.
Bates' retirement plan benefit, $7,133 employer matching contribution to
the Guarantee Life Thrift Savings Plan and $1,140 of premiums paid for
group term life insurance.
9
<PAGE>
(14) Consists of $3,809 employer matching contribution to the Guarantee Life
Thrift Savings Plan and $1,800 of premiums paid for group term life
insurance.
(15) Consists of $4,560 employer matching contribution to the Guarantee Life
Thrift Savings Plan and $1,152 of premiums paid for group term life
insurance.
(16) Consists of a $10,000 one-time employer contribution to the Guarantee
Life Deferred Compensation Plan, a $7,500 relocation allowance, a $6,190
employer matching contribution to the Guarantee Life Thrift Savings Plan
and $1,140 of premiums paid for group term life insurance.
(17) Consists of $3,332 employer matching contribution to the Guarantee Life
Thrift Savings Plan and $696 of premiums paid for group term life
insurance.
(18) Consists of $4,929 employer matching contribution to the Guarantee Life
Thrift Savings Plan and $696 of premiums paid for group term life
insurance.
(19) Consists of $739 employer matching contribution to the Guarantee Life
Thrift Savings Plan and $1,140 of premiums paid for group term life
insurance.
(20) Consists of $4,547 employer matching contribution to the Guarantee Life
Thrift Savings Plan and $696 of premiums paid for group term life
insurance.
(21) Consists of $4,556 employer matching contribution to the Guarantee Life
Thrift Savings Plan and $696 of premiums paid for group term life
insurance.
(22) Consists of $6,425 employer matching contribution to the Guarantee Life
Thrift Savings Plan and $1,140 of premiums paid for group term life
insurance.
(23) Consists of $3,083 employer matching contribution to the Guarantee Life
Thrift Savings Plan and $1,152 of premiums paid for group term life
insurance.
(24) Consists of $768 of premiums paid for group term life insurance.
* In 1996, includes amounts reimbursed for the payment of taxes by Messrs.
Bates, Cooley and Bauhard, and amounts reimbursed from a nonqualified
medical plan for Messrs. Cooley, Allen and Rittenhouse.
** Awards were made after December 31, 1996, and therefore no value is
reported for that date.
Option Grants Table
No stock options were granted to the named executive officers during
1996 and no stock options were exercisable or exercised by any of them in 1996.
Incentive Plan
The 1994 Long Term Incentive Plan was adopted in December 1994 and
amended April 6, 1995, December 8, 1995, and November 14, 1996, in order to
retain and attract qualified key employees, directors and agents of the Company
and its subsidiaries and to align the interests of such persons with those of
the Company and its shareholders by providing for the grant of options to
purchase the Company's Common Stock which may be either incentive stock options
or nonqualified stock options, as well as for restricted stock and performance
shares. No award may be granted under the Incentive Plan after December 26,
2000.
The Company's Board of Directors has designated the Compensation
Committee of the Board of Directors as the Plan Committee. The Plan Committee
has authority to administer the Incentive Plan, including the authority to
determine who will receive awards and for what number of shares and to establish
the terms and conditions of the awards.
The maximum number of shares of Common Stock that may be issued under
the Incentive Plan is 745,828, which is 7.5% of the total number of shares of
Common Stock issued and outstanding immediately following the initial public
offering of the Company's Common Stock. If there is a stock split, stock
dividend, recapitalization or other relevant change affecting the Common Stock,
appropriate adjustments will be made in the number and class of shares that may
be awarded under the Incentive Plan in the future and in the number and class of
shares and price under all outstanding grants made before the event. A proposal
to amend the Incentive Plan to increase the number of shares that may be issued
thereunder is subject to shareholder approval at the annual meeting. See
Proposal 3: Amendment of the 1994 Long Term Incentive Plan.
In 1996, the Plan Committee made awards of 52,670 stock options to key
employees and directors at prices varying from $16.50 per share to $18.50 per
share.
10
<PAGE>
Retirement Plan
Each of the named executive officers participates in the Retirement
Plan for Home Office Employees of Guarantee Life Insurance Company and in the
Guarantee Life Insurance Company Supplemental Retirement Plan.
The following table sets forth the benefits payable, assuming
retirement at age 65, to participants in the Retirement Plan and the
Supplemental Retirement Plan at the levels of compensation and for the periods
of service contained therein.
<TABLE>
<CAPTION>
Assumed
Annual Annual Pension Plan Benefits
Earnings Years of Service at Normal Retirement
15 20 25 30 35
--------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$120,000 33,802 45,070 51,837 58,604 65,372
150,000 42,802 57,070 65,712 74,354 82,997
175,000 50,302 67,070 77,275 87,479 97,684
200,000 57,802 77,070 88,837 100,604 112,372
225,000 65,302 87,070 100,400 113,729 127,059
250,000 72,802 97,070 111,962 126,854 141,747
300,000 87,802 117,070 135,087 153,104 171,122
350,000 102,802 137,070 158,212 179,354 200,497
400,000 117,802 157,070 181,337 205,604 229,872
450,000 132,802 177,070 204,462 231,854 259,247
500,000 147,802 197,070 227,587 258,104 288,622
</TABLE>
The benefits shown in the preceding table are payable in the form of a
straight life annuity. Benefits are not subject to offset for Social Security
benefits. Compensation taken into account under the pension plans is the average
monthly compensation paid to a participant during the consecutive 60-month
period that produces the highest average compensation. For this purpose,
compensation includes the total of base salary and bonus. The annual
compensation shown in the Summary Compensation Table will be taken into account
in computing the average monthly compensation used to determine the amount of
each executive officer's retirement benefits, but generally will constitute only
20% of the compensation used for this purpose. Accordingly, the compensation
used to determine the amount of such benefits differs by more than 10% from the
compensation shown in the Summary Compensation Table for all the named executive
officers. As of December 31, 1996, the aggregate amount of compensation and
credited years of service taken into account for retirement benefits were as
follows: Mr. Bates, $3,356,490 and seven years; Mr. Cooley, $1,024,289 and three
years; Mr. Allen, $629,040 and three years; Mr. Rittenhouse, $953,641 and 26
years; and Mr. Bauhard, $368,329 and one year.
Employment Agreement
Guarantee Life has entered into an employment agreement with Mr. Bates,
effective as of April 1, 1995, under which he will serve as the Chairman of the
Board of Directors, President and Chief Executive Officer of Guarantee Life and
of the Company. The initial term of the employment agreement ends on March 31,
1998, and will automatically be extended for one year on each April 1, beginning
April 1, 1996.
Under the employment agreement, Mr. Bates will receive an annual base
salary of $400,000 per annum (subject to increase at the discretion of the Board
of Directors or reduction as part of an overall reduction in salaries payable to
senior management personnel) and participate in employee and executive benefit
and perquisite programs at levels appropriate for his position. Mr. Bates is
also eligible to receive an annual cash bonus and long term incentive awards.
In the event Mr. Bates' employment is terminated without cause or he
ceases to be Chairman of the Board, Chief Executive Officer or President, his
severance benefits will be an amount equal to twice his highest annual base
salary and bonus payment amount. In the event Mr. Bates' employment is
terminated in contemplation of a change of control or within two years following
a change of control, his severance benefits will be three times his highest base
salary and bonus payment amount. Upon involuntary termination, Mr. Bates would
also receive a prorated bonus for the year of termination, all accrued
compensation, the cash value of all of his previously awarded vested long term
incentive grants, the present value of the additional retirement benefits which
he would have accrued under the Supplemental Retirement Plan had he been
employed for an additional two years and be fully vested in his accrued benefits
under Guarantee Life's Supplemental Retirement Plan.
11
<PAGE>
Upon Mr. Bates' termination due to death or disability, he will receive
an amount equal to his bonus payment amount, his accrued compensation, the cash
value of his vested long term incentive awards and 50% of his unvested long term
incentive awards.
Guarantee Life provides Mr. Bates additional deferred compensation
which is payable upon his death, retirement or termination of employment
pursuant to a written agreement under which he is credited with a fixed
percentage (a minimum of 9% and a maximum of 12%) of his base salary and annual
incentive compensation.
Executive Severance Plan
The Company has established the Executive Severance Plan under which
certain executive officers and other designated key employees of the Company and
its subsidiaries are eligible to receive certain severance benefits upon the
occurrence of a change of control and other events. The Company's Board of
Directors has designated 13 executive positions for participation in the
Executive Severance Plan.
Under the Executive Severance Plan, if a participant is involuntarily
terminated other than for cause or voluntarily terminates employment for good
reason, prior to the second anniversary of a change of control, except as
provided below, such participant will receive the following severance benefits:
(1) a lump-sum amount equal to either one, two or three times the participant's
base salary, (2) outstanding incentive awards or deferred compensation accounts
shall become fully vested and earned, determined, in the case of any award based
on attaining levels of performance, on performance as of the end of the fiscal
year preceding the date of termination or the end of the month in which the
termination occurs, whichever is more favorable to the participant and (3)
outplacement services for one year.
The Executive Severance Plan is renewable at three-year intervals
unless terminated by the Board of Directors, provided that, if a change of
control occurs during its term, it will continue in effect until all obligations
thereunder are satisfied. In no event, however, will severance benefits payable
under the Executive Severance Plan exceed the amount allowable to the Company as
a deduction for federal income tax purposes under applicable law.
Severance Agreement
Guarantee Life has an agreement with Theodore C. Cooley to make
severance payments to him in the event that his employment is involuntarily
terminated prior to March 1, 1998, other than by reason of malfeasance or after
a change of control. Under the agreement, Mr. Cooley's base salary would be
continued for that number of months which is equal to his then-effective base
salary divided by $10,000.
Compensation Committee Interlocks and Insider Participation
In 1996, the Company's Compensation Committee was composed of A.J.
Scribante, Chair, John R. Cochran, James M. McClymond, Janice D. Stoney and
William F. Welsh II. Robert D. Bates, Chairman of the Board, President and Chief
Executive Officer of the Company and Guarantee Life, served on the Board of
Directors of VITAL LEARNING Corporation and as a member of its Compensation
Committee in 1996. A. J. Scribante, Chief Executive Officer of VITAL LEARNING
Corporation, was a member of the Company's and Guarantee Life's Boards of
Directors and was a member of the Company's Compensation Committee in 1996.
Report of the Compensation Committee on Executive Compensation
The Company's Compensation Committee is composed of independent,
non-employee members of the Board of Directors. The duties of the Committee
include exercising the powers and authority of the directors of the Company with
regard to compensation arrangements for Company executives and related matters.
The Company became a publicly-held entity in December 1995, upon the conversion
of its subsidiary, Guarantee Life Insurance Company, from a mutual life
insurance company to a stock life insurance company.
Prior to the conversion of Guarantee Life in December 1995, the
Committee retained an independent compensation consulting firm to assist in
developing specific executive compensation plans and policies. Working with the
consulting firm, the Committee adopted and revised plans of compensation
intended to both continue the compensation philosophy and provide incentives
that encourage and reward the creation of additional shareholder value.
12
<PAGE>
Compensation Philosophy
As a public company since December 1995, the Company's compensation
philosophy is to maintain a competitive compensation program that ties total
compensation opportunities for executives to the creation of shareholder value.
This philosophy is implemented through the combination of the following
elements:
(1) base salaries that are at or somewhat above the 50th percentile of
salaries at a broad group of life insurance companies of similar and somewhat
larger size, in order to enable the Company to attract and retain qualified
executives in a competitive marketplace;
(2) an annual incentive plan that provides opportunities for
executives to receive cash incentives based on improvement in growth and
profitability; and
(3) equity-based awards that align the interests of executives with
those of shareholders by tying economic rewards directly to increases in
shareholder value and encouraging stock ownership by key executives.
Section 162(m) of the Internal Revenue Code prohibits the Company from
deducting any compensation in excess of $1 million paid to certain of its
executive officers, except to the extent that such compensation is paid pursuant
to a shareholder approved plan upon the attainment of specified performance
objectives. The Company has not paid any compensation to any executive officers
that was not deductible by reason of the prohibition in Section 162(m). By
reason of having only recently become a public company, the Company qualifies
for certain transition rules that will simplify compliance with Section 162(m)
in the immediate future. The Committee believes that tax deductibility is an
important factor, but not the sole factor, to be considered in setting executive
compensation policy. Accordingly, the Committee generally intends to take such
reasonable steps as are required to avoid the loss of a tax deduction due to
Section 162(m), but reserves the right, in appropriate circumstances, to pay
amounts which are not deductible.
Base Salaries
The base salaries of the chief executive officer, executive vice
president and senior vice presidents have been, and will continue to be,
reviewed periodically by the Committee. The Company seeks to pay its executives
at competitive levels, based on the scope of responsibilities applicable to each
position and the Committee's subjective assessment of the individual's
performance and expected contribution to the Company's success. Competitive base
salary levels are defined as the median (50th percentile) to somewhat above
median level among similar-sized and somewhat larger companies in the life
insurance industry. The Committee has adopted a specific peer group of
companies, selected on the basis of size, performance and line of business
comparability, for comparison purposes in establishing base salaries. The
Committee expects to moderate salary growth in the future, basing more of the
total compensation package on corporate performance.
In March 1996, Mr. Bates' base salary was increased 9.52% from
$420,000 to $460,000, based on market data and the Committee's subjective
assessment of Mr. Bates' accomplishment of individual performance objectives,
including achievement of financial results above plan, management development
and accomplishment of corporate strategic initiatives. Based on market data, the
Committee is satisfied that Mr. Bates' salary is competitive with companies with
which Guarantee Life competes for talent.
Annual Incentives
Currently, the annual incentive plan is based primarily on return on
equity targets; goals are set each year for Guarantee Life and its principal
divisions. Annual incentive rewards are tied to specific financial objectives
identified by management and approved by the Committee as supporting continued
growth, profitability and increased shareholder value. The plan provides for
market median levels of compensation for performance that meets budgeted plan
projections set at the beginning of the year and approved by the Committee. The
plan provides approximately 75th percentile rewards for superior performance
against these annual budgeted financial measures.
13
<PAGE>
The performance targets are approved by the Committee at the beginning
of each fiscal year and the Committee annually certifies that the awards under
the plan correspond to actual results versus the targets established. Mr. Bates'
annual incentive target award for 1996 was 50% of base salary, which was tied to
Guarantee Life's performance against corporate return on equity targets.
In addition to awards under the annual incentive plan, the Committee
will, under appropriate circumstances, grant discretionary bonuses to executives
to acknowledge exceptional performance in the attainment of specific goals. In
consideration of Mr. Bates' success in managing and restructuring the operations
of Guarantee Life in 1994 and 1995, he received discretionary bonuses of $50,000
and $200,000, respectively.
Long Term Incentives
The purpose of the Company's 1994 Long Term Incentive Plan is to reward
top management for increasing shareholder value, to develop stock ownership
among key executives and to help retain key executives. The Incentive Plan that
provides for grants of stock options to the chief executive officer, executive
vice president, senior vice presidents and other key employees. Pursuant to the
terms of the Incentive Plan, no stock options were awarded in 1996 to executives
who received option grants in 1995. Options granted in 1995 included both
incentive stock options and nonqualified stock options, with a maximum term of
10 years. Options are not exercisable until two years after grant, and then
begin vesting at the rate of 25% per year. All options are granted at fair
market value on the date of the grant.
Prior to the adoption of the Incentive Plan and the existence of a
public market for the Company's Common Stock, Guarantee Life maintained a
phantom stock appreciation program that provided participating executives with
an economic incentive to increase statutory surplus. This program, which was
implemented in 1991, generally required the completion of five years of service
following any award to receive any amounts otherwise earned under the applicable
formula. With the anticipated public market for the Company's Common Stock, no
further awards were made under this program after 1994.
The value of the appreciation inherent in each award made under this
program, as determined by the Committee taking into account appropriate
adjustments to negate the effect of the demutualization process, was converted,
effective as of the time of the Company's initial public offering, into an
economic interest in a number of shares of the Company's Common Stock, based on
the offering price in the initial public offering. The other terms and
conditions of awards made under this program, including the original vesting
schedule, remain unchanged, except that payment of such awards may be made in
stock. Under this program, in 1996 Mr. Bates had an interest in the economic
equivalent of approximately 22,085 shares of the Company's Common Stock.
Other Chief Executive Officer Compensation
In 1995, to assure itself of his continued services following its
demutualization and in recognition of Mr. Bates' past contributions to Guarantee
Life and his expected contribution to its future performance, Guarantee Life
entered into an employment agreement with Mr. Bates. The agreement has a
three-year term and it is renewed annually. Among other things, that agreement
provides for the payment to Mr. Bates of two times his annual cash compensation
if his employment is involuntarily or constructively terminated without cause,
and three times such annual compensation if his termination is a result of a
change of control. In addition, upon such an involuntary or constructive
termination, vesting will be automatically accelerated for his long term
incentives and other benefits.
The Compensation Committee: A. J. Scribante, Chair, John R. Cochran,
James M. McClymond, Janice D. Stoney and William F. Welsh II.
14
<PAGE>
Performance Graph
The following graph sets out the cumulative total shareholder return on
the Company's Common Stock since its initial public offering on December 19,
1995, assuming the investment of $100 on December 19, 1995, and reinvestment of
all dividends since that date to December 31, 1996, compared with the S&P 500
and the SNL Life & Health Insurance Index for the same period.
[GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
Period Ending
----------------------------------------------------------------------------------------------------------------------
Index 12/19/95 12/31/95 3/31/96 6/30/96 9/30/96 12/31/96
----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
The Guarentee Life Companies Inc 100.00 121.15 118.27 135.97 153.78 143.58
----------------------------------------------------------------------------------------------------------------------
S&P 500 100.00 100.72 106.13 110.88 114.31 123.75
----------------------------------------------------------------------------------------------------------------------
SNL Life & Health Insurance Index 100.00 102.24 107.93 111.13 117.25 133.29
----------------------------------------------------------------------------------------------------------------------
</TABLE>
Future Proposals
Any proposal by any shareholder to transact any corporate business or
to nominate a director at the Annual Meeting of Shareholders on May 8, 1997,
shall be made by notice in writing and mailed by certified mail to the Secretary
of the Company and must be received no later than April 10, 1997. A notice of
nominations by a shareholder shall set forth as to each proposed nominee who is
not an incumbent director(i) the name, age, business address and, if known,
residence address of each nominee proposed in such notice, (ii) the principal
occupation or employment of each such nominee, (iii) the number of shares of
Common Stock of the Company which are beneficially owned by each such nominee
and the nominating shareholder and (iv) any other information concerning the
nominee that must be disclosed regarding nominees in proxy solicitations
pursuant to Section 14(a) of the Securities Exchange Act of 1934, as amended,
and the rules under such section. Only shareholders of record at the close of
business on March 21, 1997, are entitled to bring business before the annual
meeting or to make nominations for directors.
Any proposal that a shareholder intends to present at the 1998 annual
meeting must be received by the Company no later than December 4, 1997, for
inclusion in the 1998 notice of annual meeting, proxy statement and form of
proxy. The inclusion of any such proposal in the proxy material shall be subject
to the requirements of the proxy rules adopted under the Securities Exchange Act
of 1934, as amended.
Other Business
Management does not know of any other business that will be presented
for consideration at the annual meeting other than a shareholder proposal, which
may or may not be presented, that has been omitted from this Proxy Statement in
accordance with the rules of the Securities and Exchange Commission. If this
proposal or any other business should properly come before the annual meeting,
the shares represented by the proxies and voting instructions solicited hereby
may be discretionarily voted on such business in accordance with the judgment of
the proxy holders.
<TABLE>
<CAPTION>
COMPARISON OF CUMULATIVE RETURN
AMONG THE GUARANTEE LIFE COMPANIES INC., S&P 500 INDEX AND SNL LIFE & HEALTH INSURANCE INDEX
Measurement Period The Guarantee Life Companies Inc. S&P 500 SNL Life & Health Insurance
(Period Covered) Index Index Index
<S> <C> <C> <C>
Measurement PT - 12/31/96 $ 143.58 $ 123.75 $ 133.29
------------ ------------ ------------
Period Ending 9/30/96 $ 153.78 $ 114.31 $ 117.25
------------ ------------ ------------
Period Ending 6/30/96 $ 135.97 $ 110.88 $ 111.13
------------ ------------ ------------
Period Ending 3/31/96 $ 118.27 $ 106.13 $ 107.93
------------ ------------ ------------
Period Ending 10/31/95 $ 121.15 $ 100.72 $ 102.24
------------ ------------ ------------
Period Ending 12/19/95 $ 100.00 $ 100.00 $ 100.00
------------ ------------ ------------
</TABLE>
15
<PAGE>
AMENDMENT NO. 3 TO
THE GUARANTEE LIFE COMPANIES INC.
1994 LONG TERM INCENTIVE PLAN
Reference is made to The Guarantee Life Companies Inc. 1994 Long Term
Incentive Plan (the "Plan") adopted on December 15, 1994 by the Board of
Directors of The Guarantee Life Companies Inc. (the "Company"), adopted on
December 15, 1994 by Guarantee Mutual Life Company, as the sole shareholder of
the Company, and amended on April 6, 1995, December 8, 1995, and November 14,
1996, by the Board of Directors of the Company. Capitalized terms used herein
but not otherwise defined have the meanings assigned to them in the Plan.
At a meeting duly called and held on February 20, 1997, this Amendment No.
3 to the Plan has been adopted by the Board of Directors of the Company subject
to approval by shareholders at the Annual Meeting to be held May 8, 1997:
1. Section 4.1 is amended to delete the first sentence thereof in its
entirety and a new first sentence is inserted in lieu thereof to read as
follows:
Subject to the adjustment as provided in Section 4.3 herein, the
total number of Shares available for grant under the Plan may not
exceed 1,345,828.
2. This Amendment No. 3 shall be effective upon its approval by
shareholders on May 8, 1997.
<PAGE>
<TABLE>
<S> <C> <C> <C> <C>
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSALS 1, 2 AND 3. Please mark
your votes as
indicated in
this example
PROPOSAL 1- FOR WITHHOLD PROPOSAL 2-
ELECTION OF DIRECTORS- FOR ALL RATIFICATION OF APPOINTMENT FOR AGAINST ABSTAIN
NOMINEES: OF KPMG PEAT MARWICK LLP AS
01) John R. Cochran INDEPENDENT AUDITORS FOR 1997
02) James M. McClymond
03) William F. Welsh II
WITHHOLD: (Write that nominee's name in the space provided below.) PROPOSAL 3- FOR AGAINST ABSTAIN
APPROVAL OF AN AMENDMENT TO THE
1994 LONG TERM INCENTIVE PLAN
IF YOU WISH TO VOTE BY TELEPHONE, PLEASE READ THE INSTRUCTIONS BELOW
Signature(s) Signature(s) Date
NOTE: Please sign as name appears hereon. Joint owners should each sign. When signing as attorney, executor, administrator, trustee
or guardian, please give full title as such.
</TABLE>
PLEASE FOLD AND DETACH HERE AND READ THE REVERSE SIDE
HELP US SAVE MONEY - VOTE BY TELEPHONE
Your telephone vote authorizes the named proxies to vote your shares in the same
manner as if you marked, signed and returned your proxy card.
. On a Touch Tone Telephone call toll free 1-888-776-5659 24 hours per day - 7
days a week.
. You will be asked to enter a Control Number.
OPTION #1: To vote as the Board of Directors recommends on ALL proposals:
Press 1 now. If you wish to vote on each proposal separately,
press 0 now.
When you press 1, your vote will be confirmed and cast as you directed. END
OF CALL.
OPTION #2: If you choose to vote on each proposal separately, press 0 now and
you will hear these instructions.
Proposal 1: To vote FOR ALL nominees, press 1; to WITHHOLD FOR ALL
nominees, press 9; To WITHHOLD FOR AN INDIVIDUAL nominee, press 0. If you
press 0, enter the two digit number that precedes the nominee(s) for whom
you withhold your vote; then press 0.
Proposal 2: To vote FOR, press 1; AGAINST, press 9; ABSTAIN, press 0.
Proposal 3: To vote FOR, press 1; AGAINST, press 9; ABSTAIN, press 0.
Your vote will be confirmed and cast as you directed. END OF CALL.
If you vote by telephone, there is no need to mail back your proxy card.
THANK YOU FOR VOTING.
<PAGE>
THE GUARANTEE LIFE COMPANIES INC.
Guarantee Centre
8801 Indian Hills Drive
Omaha, Nebraska 68114
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
OF
THE GUARANTEE LIFE COMPANIES INC.
PROXY CARD
The person signing on the reverse side of this Proxy Card hereby appoints
R. D. Bates, W. L. Bauhard and R. A. Spellman proxies, with power to act without
the other and with power of substitution, and hereby authorizes them to
represent and vote, as designated on the reverse side, all shares of Common
Stock of the Guarantee Life Companies Inc. standing in the name of said person
with all powers said person would possess if present at the Annual Meeting of
Shareholders of The Guarantee Life Companies Inc. to be held May 8, 1997, or any
adjournment thereof.
Please mark, sign and date the reverse side of this Proxy Card and return
it in the enclosed envelope.
FOLD AND DETACH HERE
YOUR VOTE IS IMPORTANT!
You can vote in one of two ways:
1. Mark, sign and date your proxy card and return it promptly in the enclosed
envelope.
or
--
2. Call toll free 1-888-776-5659 on a Touch Tone telephone and follow the
instructions found on the reverse side.
A majority of shareholders must vote in order for the Annual Meeting to
be held as scheduled on May 8, 1997. Your vote is vital - your shares cannot be
voted unless you sign and return your proxy card or vote by telephone.
--
PLEASE VOTE
