<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-------------------
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
-------------
(Amendment No. ___)
[x] Filed by the Registrant
[_] Filed by a Party other than the Registrant
Check the appropriate box:
[_] Preliminary Proxy Statement
[x] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
LEUCADIA NATIONAL CORPORATION
- ---------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
Registrant
- ---------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
PAYMENT OF FILING FEE (Check the appropriate box):
[x] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-
6(i)(2).
[_] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11: *
4) Proposed maximum aggregate value of transaction:
* Set forth the amount on which the filing fee is calculated and state how
it was determined.
[_] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid: $
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
[_] Filing Fee of $__________________ was previously paid on ____________
__, 199_, the date the Preliminary Proxy Statement was filed.
<PAGE>
<PAGE>
LEUCADIA NATIONAL CORPORATION
315 PARK AVENUE SOUTH
NEW YORK, NEW YORK 10010
------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JULY 27, 1994
------------------------
July 1, 1994
To Our Common Shareholders:
You are cordially invited to attend the Annual Meeting of
Shareholders (the "Meeting") of Leucadia National Corporation (the
"Company") to be held on July 27, 1994, at 9:30 a.m., at Chemical
Banking Corporation, 270 Park Avenue, 11th Floor, New York, New York:
1. To elect seven directors.
2. To ratify the selection of Coopers & Lybrand as independent
auditors to audit the Consolidated Financial Statements of the Company
and its subsidiaries for the year ended December 31, 1994.
3. To transact such other business as may properly come before
the Meeting or any adjournments of the Meeting.
Only holders of record of the Company's common shares, par value
$1.00 per share, at the close of business on June 17, 1994 will be
entitled to notice of and to vote at the Meeting. Please sign, date
and mail the enclosed proxy so that your shares may be represented at
the Meeting if you are unable to attend and vote in person.
By Order of the Board of Directors.
RUTH KLINDTWORTH
Secretary
NYFS04...:\30\76830\0001\1980\PXY62794.P70
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<PAGE>
LEUCADIA NATIONAL CORPORATION
315 PARK AVENUE SOUTH
NEW YORK, NEW YORK 10010
--------------------------
PROXY STATEMENT
--------------------------
ANNUAL MEETING OF SHAREHOLDERS
--------------------------
July 1, 1994
This Proxy Statement is being furnished to the Shareholders (the
"Shareholders") of Leucadia National Corporation, a New York
corporation (the "Company"), in connection with the solicitation of
proxies by the Board of Directors for use at the Annual Meeting of
Shareholders (the "Meeting") of the Company to be held on July 27,
1994 and at any adjournments thereof.
At the Meeting, Shareholders will be asked:
1. To elect seven directors.
2. To ratify the selection of Coopers & Lybrand as independent
auditors to audit the Consolidated Financial Statements of the Company
and its subsidiaries for the year ended December 31, 1994.
3. To transact such other business as may properly come before
the Meeting or any adjournments of the Meeting.
The Board of Directors has fixed the close of business on June
17, 1994 as the record date for the determination of the holders of
common shares, par value $1.00 per share (the "Common Shares")
entitled to notice of and to vote at the Meeting. Each such
Shareholder will be entitled to one vote for each Common Share held on
all matters to come before the Meeting and may vote in person or by
proxy authorized in writing. At the close of business on June 17,
1994, there were 27,984,782 Common Shares entitled to vote.
Shareholders are requested to complete, date, sign and promptly
return the accompanying form of proxy in the enclosed envelope.
Common Shares represented by properly executed proxies received by the
Company and not revoked will be voted at the Meeting in accordance
with instructions contained therein. If instructions are not given,
proxies will be voted FOR election of each nominee for director named
herein and FOR each of the other matters to be considered at the
Meeting. The Board of Directors does not expect that any of the
nominees will be unavailable for election as a director. However, if
by reason of an unexpected occurrence one or more of the nominees is
not available for election, the persons named in the form of proxy
have advised that they will vote for such substitute nominees as the
Board of Directors of the Company may propose. A Shareholder who so
desires may revoke his proxy at any time before it is exercised by
giving notice to the Company in writing (attention Corporate
Secretary), by duly executing a proxy bearing a later date or by
attending the Meeting and voting in person. Attendance at the Meeting
will not in and of itself constitute a revocation of a proxy.
All references in this Proxy Statement to the Common Shares and
to prices of the Common Shares reflect a two-for-one stock split
effective on January 8, 1993.
This Proxy Statement and the accompanying form of proxy are first
being sent to holders of the Common Shares on or about July 1, 1994.
NYFS04...:\30\76830\0001\1980\PXY62794.P70
<PAGE>
<PAGE>
THE MEETING
DATE, TIME AND PLACE
The Meeting will be held on July 27, 1994, at 9:30 a.m., local
time, at Chemical Banking Corporation, 270 Park Avenue, 11th Floor,
New York, New York.
MATTERS TO BE CONSIDERED
At the Meeting, Shareholders will be asked to consider and vote
to elect seven directors and to ratify the selection of independent
auditors. See "ELECTION OF DIRECTORS" and "RATIFICATION OF SELECTION
OF INDEPENDENT AUDITORS". The Board of Directors knows of no matters
that are to be brought before the Meeting other than as set forth in
the Notice of Meeting. If any other matters properly come before the
Meeting, the persons named in the enclosed form of proxy or their
substitutes will vote in accordance with their best judgment on such
matters.
RECORD DATE; SHARES OUTSTANDING AND ENTITLED TO VOTE
Shareholders as of the Record Date (i.e., the close of business
on June 17, 1994) are entitled to notice of and to vote at the
Meeting. As of the Record Date, there were 27,984,782 Common Shares
outstanding and entitled to vote, with each share entitled to one
vote.
REQUIRED VOTES
Election of Directors. Under New York law, the affirmative vote
of the holders of a plurality of the Common Shares voted at the
Meeting is required to elect each director. Consequently, only shares
that are voted in favor of a particular nominee will be counted toward
such nominee's achievement of a plurality. Shares present at the
Meeting that are not voted for a particular nominee or shares present
by proxy where the Shareholder properly withheld authority to vote for
such nominee (including broker non-votes) will not be counted toward
such nominee's achievement of a plurality.
Other Matters. The ratification of the selection of Coopers &
Lybrand as independent auditors is being submitted to Shareholders
because the Board of Directors believes that such action follows sound
corporate practice and is in the best interests of the Shareholders.
If the Shareholders do not ratify the selection by the affirmative
vote of the holders of a majority of the Common Shares voted at the
Meeting, the selection of independent auditors will be reconsidered by
the Board. If the Shareholders ratify the selection, the Board, in
its discretion, may still direct the appointment of new independent
auditors at any time during the year if the Board believes that such a
change would be in the best interests of the Company and its
Shareholders. Abstentions and broker non-votes are not counted in
determining the votes cast in connection with the ratification of
auditors, but do have the effect of reducing the number of affirmative
votes required to achieve a majority for such matter by reducing the
total number of shares from which the majority is calculated.
Ian M. Cumming, Chairman of the Board of Directors, beneficially
owns 5,433,678 or approximately 19.4% of the Common Shares outstanding
at the Record Date (excluding 790,000 Common Shares which Mr. Cumming
and his family have the right to acquire upon exercise of currently
exercisable warrants), Joseph S. Steinberg, a Director and President,
beneficially owns 4,899,906 or approximately 17.5% of the Common
Shares outstanding at the Record Date (excluding 796,000 Common Shares
which Mr. Steinberg and his family have the right to acquire upon
exercise of currently exercisable warrants) and two trusts for the
benefit of Mr. Steinberg's minor children (the "Steinberg Children
Trusts") beneficially own 563,700 or approximately 2.0% of the Common
Shares outstanding at the Record Date. Mr. Steinberg disclaims
beneficial ownership of the Common Shares held by the Steinberg
Children Trusts. Messrs. Cumming and Steinberg have advised the
Company that they intend to cause all Common Shares that they
beneficially own (excluding Common Shares
<PAGE>
<PAGE>
acquirable upon the exercise of the warrants) to be voted in favor of
each nominee named herein and in favor of ratification of selection of
independent auditors. In addition to Messrs. Cumming and Steinberg,
all other directors and officers of the Company beneficially own
approximately 5.1% of the Common Shares outstanding at the Record Date
(excluding Common Shares which such directors and officers have the
right to acquire upon exercise of currently exercisable options).
ACCORDINGLY, ASSUMING ALL OF SUCH DIRECTORS AND OFFICERS AND THE
STEINBERG CHILDREN TRUSTS CAUSE ALL COMMON SHARES BENEFICIALLY OWNED
BY THEM (EXCLUDING COMMON SHARES ACQUIRABLE UPON THE EXERCISE OF
OPTIONS) TO BE VOTED IN FAVOR OF EACH NOMINEE NAMED HEREIN AND IN
FAVOR OF RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS, ELECTION
OF EACH NOMINEE AND RATIFICATION OF THE SELECTION OF INDEPENDENT
AUDITORS WILL BE ASSURED UNLESS MORE THAN 88.1% OF THE OUTSTANDING
COMMON SHARES ARE VOTED ON SUCH MATTERS.
VOTING AND REVOCATION OF PROXIES
Shareholders are requested to complete, date, sign and promptly
return the accompanying form of proxy in the enclosed envelope.
Common Shares represented by properly executed proxies received by the
Company and not revoked will be voted at the Meeting in accordance
with the instructions contained therein. If instructions are not
given, proxies will be voted FOR election of each nominee for director
---
named herein and FOR ratification of selection of independent
---
auditors.
Any proxy signed and returned by a Shareholder may be revoked at
any time before it is voted by filing with the Secretary of the
Company, at the address of the Company set forth herein, written
notice of such revocation or a duly executed proxy bearing a later
date or by attending the Meeting and voting in person. Attendance at
the Meeting will not in and of itself constitute revocation of a
proxy.
PROXY SOLICITATION
The Company will bear the costs of solicitation of proxies for
the Meeting. In addition to solicitation by mail, directors, officers
and regular employees of the Company may solicit proxies from Share-
holders by telephone, telegram, personal interview or otherwise. Such
directors, officers and employees will not receive additional
compensation, but may be reimbursed for out-of-pocket expenses in
connection with such solicitation. Brokers, nominees, fiduciaries and
other custodians have been requested to forward soliciting material to
the beneficial owners of Common Shares held of record by them, and
such custodians will be reimbursed for their reasonable expenses.
INDEPENDENT AUDITORS
The Company has been advised that representatives of Coopers &
Lybrand, the Company's independent auditors for 1993, will attend the
Meeting, will have an opportunity to make a statement if they desire
to do so and will be available to respond to appropriate questions.
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ELECTION OF DIRECTORS
At the Meeting, seven directors are to be elected to serve until
the next Meeting or until their successors are elected and qualified.
The persons named in the enclosed form of proxy have advised that,
unless contrary instructions are received, they intend to vote FOR the
---
seven nominees named by the Board of Directors and listed on the
following table. The Board of Directors does not expect that any of
the nominees will be unavailable for election as a director. However,
if by reason of an unexpected occurrence one or more of the nominees
is not available for election, the persons named in the form of proxy
have advised that they will vote for such substitute nominees as the
Board of Directors of the Company may propose. The following
information is as of June 17, 1994.
Age, period served as director, other business
Name and present position experience during the last five years and
if any, with the Company family relationships, if any
------------------------- ----------------------------------------------
Ian M. Cumming,
Chairman of the Board..... Mr. Cumming, 53, has served as a
director and Chairman of the Board
of the Company since June 1978. In
addition, he has served as a
director of Compania Boliviana de
Energia Electrica, S.A.---Bolivian
Power Company Limited ("Bolivian
Power") since March 1987, as
Chairman of the Board of Bolivian
Power since September 1988 and, as
a director of Allcity Insurance
Company ("Allcity") since February
1988. Bolivian Power, which is
approximately 17% owned by the
Company, is a publicly-owned
electric utility that generates,
transmits and distributes electric
power primarily in La Paz, Bolivia.
Allcity, a consolidated subsidiary
of the Company, is a property and
casualty insurer. Mr. Cumming has
also been a director of Skywest,
Inc., a Utah-based regional air
carrier, since June 1986.
Paul M. Dougan........ Mr. Dougan, 56, has served as a
director of the Company since May
1985. He has been President and
Chief Executive Officer of Equity
Oil Company ("Equity Oil"), a
company engaged in oil and gas
exploration and production, since
January 1994. Prior thereto, he
served as corporate secretary and
manager of corporate development of
Equity Oil since May 1968.
Lawrence D. Glaubinger... Mr. Glaubinger, 68, has served as a
director of the Company since May
1979. He has been Chairman of the
Board of Stern & Stern Industries,
Inc., a New York corporation,
primarily engaged in the
manufacture and sale of textiles,
since November 1977. He has also
been President of Lawrence Economic
Consulting Inc., a management
consulting firm, since January
1977.
<PAGE>
Age, period served as director, other business
Name and present position, experience during the last five years and
if any, with the Company family relationships, if any
-------------------------- ----------------------------------------------
James E. Jordan........... Mr. Jordan, 50, has served as a director of
the Company since February 1981. Since
October 1986, he has been President of The
William Penn Corporation ("William Penn"),
one of the Jordan Associated Companies
referred to under "EXECUTIVE COMPENSATION -
Certain Relationships and Related
Transactions" below. William Penn,
approximately 19.7% of the common stock of
which is beneficially owned by Leucadia,
is a holding company for an investment
advisor to The William Penn family of
mutual funds. Mr. Jordan has been a
director of Penn Square Mutual Fund since
May 1987, a director of William Penn
Interest Income Fund since October 1987
and a director of Mezzanine Capital &
Income Trust 2001 PLC, a British
investment trust company, since 1986.
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<PAGE>
<PAGE>
Age, period served as director, other business
Name and present position, experience during the last five years and
if any, with the Company family relationships, if any
-------------------------- -----------------------------------------
John W. Jordan II ........ Mr. Jordan, 46, has served as a director
of the Company since May 1979. Since
February 1982, he has been Managing Partner
of The Jordan Company. He has also been a
director of Carmike Cinemas, Inc., an owner
and operator of movie screens throughout the
Southeast (approximately 10% of the Class A
shares of which are beneficially owned by
the Company) since October 1986, a director
of Jones Plumbing Systems, Inc., a
manufacturer and distributor or plumbing and
hardware related products (approximately 21%
of the common stock of which is beneficially
owned by the Company), since 1989, a director
of American Safety Razor Company, a
manufacturer of consumer products, since
April 1989, and a director of Jordan
Industries, Inc. ("JII"), a public company
controlled by Mr. Jordan (approximately 11%
of the common stock of which is beneficially
owned by the Company) which owns and manages
manufacturing companies, since March 1988.
Jesse Clyde Nichols, III .. Mr. Nichols, 54, has served as a director of
the Company since June 1978. He has been
President, since May 1974, of Nichols
Industries, Inc., a holding company engaged,
through subsidiaries, in manufacturing.
Joseph S. Steinberg,
President................ Mr. Steinberg, 50, has served as a director
of the Company since December 1978 and as
President of the Company since January 1979.
He has also served as a director of Bolivian
Power since March 1987, as a director of
Allcity since February 1988 and as a director
of JII since June 1988.
The Board of Directors recommends a vote FOR the above named nominees.
INFORMATION CONCERNING
THE BOARD OF DIRECTORS AND BOARD COMMITTEES
MEETINGS AND COMMITTEES
During 1993, the Board of Directors held six meetings.
The Board of Directors has a standing Audit Committee, Executive
Committee and Employee Benefits Committee.
The functions of the Audit Committee are to recommend to the
Board independent auditors for the Company, to analyze the reports and
recommendations of such auditors and to review internal audit
procedures and controls. The Audit Committee met twice during 1993
and consists of Messrs. Dougan (Chairman), Nichols and Glaubinger.
The functions of the Executive Committee are to exercise the
authority of the Board of Directors in the management of the business
of the Company at such times as the full Board of Directors is
unavailable. The Executive Committee, which met twice during 1993,
consists of Messrs. Cumming, Steinberg, John W. Jordan II and
Glaubinger.
The functions of the Employee Benefits Committee are to review
compensation of the Chairman of the Board and President, and employee
benefit and incentive plans and to present recommendations thereon to
the
<PAGE>
<PAGE>
Board. The Employee Benefits Committee also functions as the Option
Committee under the Company's 1982 Stock Option Plan, as amended, and
under the Company's 1992 Stock Option Plan. The Employee Benefits
Committee, which met twice during 1993, consists of Messrs. Nichols
(Chairman), Dougan and James E. Jordan.
All directors, with the exception of John W. Jordan II, attended
at least 75% of the meetings of the Board and committees of the Board
on which they served.
CERTAIN LITIGATION
On May 11, 1994, a Leucadia stockholder filed a purported
derivative action on behalf of the Company against the Company's
current Board of Directors and one former director, Melvin Hirsch.
The action was filed in the United States District Court for the
Southern District of New York and is entitled Pinnacle Consultants,
---------------------
Ltd. v. Leucadia National Corporation, et al. (Civil Action No. 94
---- -------------------------------------
Civ. 3496). The complaint alleges claims for violations of the
Racketeer Influenced and Corrupt Organizations Act, Section 14(a) of
the Securities Exchange Act of 1934 and state law claims for waste,
breach of fiduciary duty and fraud. Defendants have retained legal
counsel and intend to file a motion to dismiss the complaint on
various grounds.
PRESENT BENEFICIAL OWNERSHIP OF COMMON SHARES
Set forth below is certain information as of June 17, 1994 with
respect to the beneficial ownership of Common Shares by (i) each person
who, to the knowledge of the Company, is the beneficial owner of more
than 5% of the outstanding Common Shares (the Company's only class of
voting securities), (ii) each director and nominee for director and the
Steinberg Children Trusts and (iii) all officers and directors of the
Company as a group.
Number of Shares
Name and Address and Nature of Percent
of Beneficial Owner Beneficial Ownership of Class
------------------- -------------------- --------
First Manhattan Co. (a) . . . 1,419,975 (b) 5.1%
Group consisting of
CMCO, Inc., Robert
Davidoff, Edwin S.
Marks, Nancy A.
Marks, Estate of
Robert S. Boas, Marks
Family Foundation,
Mark Claster and Andrew
Boas (c)(d) . . . . . . . . 1,677,992 6.0%
Ian M. Cumming . . . . . . . . 6,223,678(e)(f) 21.6%
Paul M. Dougan . . . . . . . . 250 (g) *
Lawrence D. Glaubinger . . . . 32,750 (h) .1%
James E. Jordan . . . . . . . 23,750 (i) *
John W. Jordan II . . . . . . 1,216,493 (i)(j) 4.4%
Jesse Clyde Nichols, III . . . 30,512 (k) .1%
Joseph S. Steinberg . . . . . 5,695,906 (f)(l) 19.8%
The Steinberg Children
Trusts . . . . . . . . . . . 563,700 (m) 2.0%
All directors and officers as
a group (15 persons) . . . . 14,001,065 (n) 47.2%
___________________
(footnotes on next page)
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<PAGE>
* Less than .1%.
(a) The business address of this beneficial owner is 437
Madison Avenue, New York, New York 10022.
(b) According to Amendment No. 8 to a Statement on Schedule
13G dated February 11, 1994, filed by First Manhattan
Co., as of February 11, 1994, First Manhattan Co. has
sole voting power with respect to 146,640 of such
Common Shares, shares voting power with respect to
1,089,081 of such Common Shares and sole power to
dispose or to direct the disposition with respect to
146,640 of such Common Shares and shares power to
dispose or to direct the disposition with respect to
1,273,335 of such Common Shares. First Manhattan Co.
disclaims beneficial ownership with respect to 13,650
Common Shares that are held by family members of
general partners of First Manhattan Co.
(c) The business address of this beneficial owner is c/o
CMCO, Inc., 135 East 57th Street, New York, New York
10022.
(d) Based upon Amendment No. 1 to a Statement on Schedule
13D dated December 1, 1992 filed by CMCO, Inc., Robert
Davidoff, Edwin S. Marks, Nancy A. Marks, the Estate of
Robert S. Boas, Marks Family Foundation, Mark Claster
and Andrew Boas and information provided by CMCO, Inc.
(e) Includes (i) 206,556 (.7%) Common Shares beneficially
owned by Mr. Cumming's wife (directly and through
trusts for the benefit of Mr. Cumming's children of
which Mr. Cumming's wife is trustee (the "Trusts")) as
to which Mr. Cumming may be deemed to be the beneficial
owner, (ii) 100,000 (.3%) Common Shares that the Trusts
currently have the right to acquire upon exercise of
warrants to purchase Common Shares and (iii) 690,000
(2.4%) Common Shares which Mr. Cumming and his family
currently have the right to acquire upon exercise of
warrants to purchase Common Shares.
(f) Messrs. Cumming and Steinberg have an oral agreement
pursuant to which they will consult with each other as
to the election of a mutually acceptable Board of
Directors of the Company.
(g) Includes 250 Common Shares that may be acquired upon
the exercise of currently exercisable stock options.
(h) Includes 2,250 Common Shares that may be acquired upon
the exercise of currently exercisable stock options.
(i) Includes 10,750 Common Shares that may be acquired upon
the exercise of currently exercisable stock options.
(j) Excludes 35,000 (.1%) Common Shares owned by a trust
for the benefit of Mr. Jordan's minor children of which
Mr. Jordan is one of three trustees. Mr. Jordan
disclaims beneficial ownership of the 35,000 Common
Shares owned by such trust.
(k) Includes 9,950 Common Shares that may be acquired upon
the exercise of currently exercisable stock options.
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(l) Includes (i) 21,200 (less than .1%) Common Shares bene-
ficially owned by Mr. Steinberg's wife and minor
daughter as to which Mr. Steinberg may be deemed to be
the beneficial owner and (ii) 796,000 (2.8%) Common
Shares which Mr. Steinberg and his family currently
have the right to acquire upon exercise of warrants to
purchase Common Shares.
(m) Mr. Steinberg disclaims beneficial ownership of the
Common Shares held by the Steinberg Children Trusts.
(n) Includes an aggregate of 37,446 Common Shares owned of
record by the spouses or children of various officers
of the Company as to which such officers disclaim
beneficial ownership. In addition, because they may be
acquired within 60 days, (A) 250 Common Shares are
deemed outstanding with respect to Mr. Dougan, 2,250
Common Shares are deemed outstanding with respect to
Mr. Glaubinger, 10,750 Common Shares are deemed
outstanding with respect to each of Messrs. John W.
Jordan II and James E. Jordan, 9,950 Common Shares are
deemed outstanding with respect to Mr. Nichols, 790,000
Common Shares are deemed to be outstanding with respect
to Mr. Cumming and 796,000 Common Shares are deemed to
be outstanding with respect to Mr. Steinberg;
(B) 1,619,950 Common Shares that may be acquired
pursuant to the exercise of stock options and/or
warrants described in (A) above are deemed outstanding
with respect to all directors and officers as a group;
and (C) 53,376 Common Shares that may be acquired by
certain officers upon the exercise of stock options are
deemed outstanding with respect to all directors and
officers as a group.
As of June 17, 1994, Cede & Co. held of record 14,606,377 Common
Shares (approximately 52% of the total number of Common Shares
outstanding). Cede & Co. held such shares as a nominee for broker-
dealer members of The Depository Trust Company, which conducts
clearing and settlement operations for securities transactions
involving its members.
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EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth information in respect of the
compensation of the Chairman of the Board, the President and each of
the other three most highly compensated executive officers of the
Company in 1993 for services in all capacities to the Company and its
subsidiaries in 1993, 1992 and 1991.
<TABLE>
<CAPTION>
Long-Term
Annual Compensation Compensation
-----------------------------------------------------------------------------------------------
Options/
Name and Principal Other Annual Warrants All Other
Position(s) Year Salary Bonus (1) Compensation(2) (# of shares) Compensation (2)
------------------- ---- ------ --------- --------------- ------------- ----------------
<S> <C> <C> <C> <C> <C>
Ian M. Cumming, 1993 $477,365 $2,214,505 $300,345(3) -- $57,313(4)(5)(6)
Chairman of the 1992 464,412 1,614,120 191,129(3) 800,000 58,998(5)(6)(7)
Board 1991 449,614 1,263,750 -- -- --
Joseph S. 1993 $477,365 $2,214,505 $271,603(3) -- $58,083(4)(5)(6)
Steinberg, 1992 464,412 1,614,120 315,642(3) 800,000 55,268(5)(6)(7)
President 1991 449,614 1,263,750 -- -- --
Thomas E. Mara, 1993 $199,923 $ 406,000 -- 10,000 $ 4,497(6)
Executive Vice 1992 194,922 330,850 -- -- 2,182(6)
President and 1991 184,969 305,550 -- 10,000 --
Treasurer
Lawrence S. 1993 $175,653 $ 556,000 -- 15,000 $ 4,497(6)
Hershfield, 1992 139,846 304,200 -- -- 2,182(6)
Executive Vice 1991 119,981 253,600 -- 7,500 --
President
Norman P. Kiken, 1993 $139,923 $ 384,200 -- -- $ 4,497(6)
Vice President and 1992 134,962 279,050 -- -- 2,182(6)
Comptroller(8) 1991 129,981 253,900 -- 7,500 --
</TABLE>
(1) With the exception of 1993 and 1992, performance bonuses for
Messrs. Cumming and Steinberg for services rendered during a
year are considered at the organizational meeting of the
Board of Directors for the following year (which is
generally held during the second fiscal quarter).
Accordingly, bonuses for services rendered in 1991 were
determined and paid in 1992. However, in anticipation of
potential changes in federal tax laws affecting the tax
consequences associated with executive compensation,
performance bonuses for Messrs. Cumming and Steinberg for
services rendered in 1992 were determined and paid in 1992.
Due to tax law changes announced in 1993 for implementation
in 1994, the Company also determined and paid 1993
performance bonuses for Messrs. Cumming and Steinberg in
1993. Absent tax law developments, the Company does not
anticipate accelerating the payment of bonuses in future
years.
(2) In accordance with the transitional provisions applicable to
the rules of the Securities and Exchange Commission with
respect to executive compensation, amounts of "Other Annual
Compensation" and "All Other Compensation" are not required
for the fiscal year ended December 31, 1991.
(3) Non-cash compensation, of which $299,434 and $190,825
relates to the personal use of corporate aircraft by Mr.
Cumming in 1993 and 1992, respectively, and $265,219 and
$310,604 relates to the personal use of corporate aircraft
by Mr. Steinberg in 1993 and 1992, respectively.
(4) Excludes $4,000,000 placed in escrow in 1993 (the "1993 Escrow")
by the Company for the benefit of each of Ian M. Cumming and
Joseph S. Steinberg pursuant to agreements dated as of December
28, 1993 between the Company and each of Messrs. Cumming and
Steinberg (the "1993 Escrow Agreements"). The<PAGE>
<PAGE>
funds vest at the rate of 20% for each full calendar year after
December 31, 1997 during which Messrs. Cumming and Steinberg
continue to be employed by the Company or any of its subsidiaries.
Messrs. Cumming and Steinberg are entitled to be 50% vested upon
death or disability, and 100% vested upon (i) termination without
cause, (ii) the merger of the Company with another corporation
which results in a change of control of the Company, the sale of
all or substantially all of the Company's assets or the acquisition
by a person or group of persons of more than 50% of the Common
Shares, or (iii) the Company becoming subject to bankruptcy,
insolvency or similar proceedings. The vesting and payment
schedule is also subject to acceleration at the sole discretion of
the Board of Directors, excluding Messrs. Cumming and Steinberg,
upon recommendation of the Employee Benefits Committee. Amounts
vested are to be paid to Messrs. Cumming and Steinberg on January
1, 2003, unless payment is accelerated by the Board. Any amount
unvested will be returned to the Company. The amounts in the
escrow accounts are invested at the direction of the Company, which
is entitled to receipt of the investment income.
As required under the agreements, Messrs. Cumming and Steinberg
timely filed a tax election resulting in their 1993 recognition for
tax purposes of the full $4,000,000 placed in escrow. As a result,
for tax purposes Messrs. Cumming and Steinberg will report receipt
of the escrowed funds, and the Company will deduct the escrowed
funds, for 1993. As permitted under the agreements, Messrs.
Cumming and Steinberg directed that the Company's tax withholding
obligation be paid with funds from the escrow accounts, leaving a
reduced amount available for distribution to Messrs. Cumming and
Steinberg from the escrow accounts as bonus compensation. The
application of the escrow funds toward satisfaction of the
Company's withholding obligation had no affect on the vesting
schedule; accordingly, in the event either Mr. Cumming or Mr.
Steinberg does not ultimately become fully vested in the respective
amount placed in escrow, to the extent the funds remaining in
escrow are less than the unvested portion for such person, Mr.
Cumming and/or Mr. Steinberg, as the case may be, will be obligated
to repay such deficiency to the Company.
For additional information with respect to the 1993 Escrows and the
1992 Escrows (as defined in footnote 7 below), see "Report of the
Compensation Committee of the Board of Directors," below.
The funds placed in escrow will be reported in the table in the
appropriate columns for those years in which amounts are released
from the escrow accounts.
(5) Included in this amount is the annual premium on a term life
insurance policy paid by the Company for the benefit of such
person ($1,900 for Mr. Cumming in each of 1993 and 1992, and
$1,420 for Mr. Steinberg in each of 1993 and 1992) and
directors' fees from certain companies in which the Company
has equity interests by virtue of The Jordan Company and
directors' fees from affiliates of the Company ($50,916 and
$54,916 for Mr. Cumming in 1993 and 1992, respectively, and
$52,166 and $51,666 for Mr. Steinberg in 1993 and 1992,
respectively).
(6) Included in this amount are contributions of $4,497 and
$2,182 in 1993 and 1992, respectively, by the Company and
Leucadia, Inc., a wholly owned subsidiary of the Company
("LI"), to a defined contribution 401(K) plan on behalf of
the named person.
(7) Excludes $2,500,000 placed in escrow in 1992 (the "1992
Escrow") by LI for the benefit of each of Messrs. Cumming
and Steinberg pursuant to agreements dated December 28, 1992
between LI and each of Messrs. Cumming and Steinberg (the
"1992 Escrow Agreements"). Such amount was previously
reported as a long term incentive plan award. These
agreements are identical to those described in footnote 4
above, except (i) such funds vest at the rate of 20% for
each full calendar year after December 31, 1992 during which
Messrs. Cumming and Steinberg continue to be employed by the
Company or any of its subsidiaries, (ii) in the event of
death or disability of Mr. Cumming or Mr. Steinberg, the
funds would be 100% vested and (iii) amounts vested are to
be paid to Messrs. Cumming and Steinberg on January 1, 1998,
unless payment is accelerated by the Board. No payments
have been made to Messrs. Cumming or Steinberg<PAGE>
<PAGE>
from the 1992 Escrow. Messrs. Cumming and Steinberg each are
vested with respect to $500,000 of the 1992 Escrow.
The funds placed in escrow will be reported in the table in the
appropriate columns for those years in which amounts are released
from the escrow accounts.
(8) Mr. Kiken retired from all positions with the Company on
March 25, 1994.
NYFS04...:\30\76830\0001\1980\PXY62794.P70
<PAGE>
<PAGE>
OPTION GRANTS IN 1993
The following table shows all grants of options to the named
executive officers of the Company in 1993.
<TABLE>
<CAPTION>
Potential Realizable Value
at Assumed Annual Rates
of Stock Price Appreciation
Individual Grants For Option Term (2)
----------------------------------------------------------------------------------------------------------
Securities
Underlying % of Total Exercise
Options Granted Options Granted to Price Expiration
Name (# of shares)(1) Employees in 1993 ($/Sh) Date 0%($) 5%($) 10%($)
---- ------------------ ------------------ -------- ---------- ----- ----- ------
<S> <C> <C> <C> <C> <C> <C> <C>
Thomas E. Mara 10,000 5.8% $40.875 12/7/99 $0 $112,930 $249,546
Lawrence S.
Hershfield 15,000 8.7% 40.875 12/7/99 0 169,395 374,319
</TABLE>
________________
[FN]
(1) The options were granted pursuant to the Company's 1992 Stock
Option Plan, as amended, at an exercise price equal to the fair
market value of the Common Shares on the date of grant. The
options become exercisable at the rate of 20% per year commencing
one year after date of grant. The grant date of the options is
December 7, 1993.
(2) The potential realizable values represent future opportunity and
have not been reduced to reflect the time value of money. The
amounts shown under these columns are the result of calculations
at 0% and at the 5% and 10% rates required by the Securities and
Exchange Commission, and are not intended to forecast future
appreciation of the Common Shares and are not necessarily
indicative of the values that may be realized by the named
executive officers.
NYFS04...:\30\76830\0001\1980\PXY62794.P70
<PAGE>
<PAGE>
AGGREGATE OPTION/WARRANT EXERCISES IN 1993 AND
OPTION/WARRANT VALUES AT DECEMBER 31, 1993
The following table provides information as to options and
warrants exercised by each of the named executives in 1993 and the
value of options and warrants held by such executives at year end
measured in terms of the last reported sale price for the Common
Shares on December 31, 1993 ($41.00, as reported on the New York Stock
Exchange Composite Tape).
<TABLE>
<CAPTION>
Value of Unexercised
Number of Unexercised In-the-Money Options/
Options/Warrants Warrants at December 31,
at December 31, 1993 1993
-------------------- ------------------------
Number of Shares
Underlying Options/ Exercisable/ Exercisable/
Name Warrants Exercised Value Realized Unexercisable Unexercisable
---- ------------------- -------------- ------------- -------------
<S> <C> <C> <C> <C>
Ian M. Cumming -- -- 790,000/0 $16,441,875/$0
Joseph S. Steinberg -- -- 796,000/0 $16,566,750/$0
Thomas E. Mara -- -- 12,288/32,576 $379,390/$684,280
Lawrence S. Hershfield 4,500 $126,938 0/25,500 $0/$311,250
Norman P. Kiken -- -- 7,500/13,500 $233,063/$409,313
</TABLE>
RETIREMENT PLAN
The Company and certain of its affiliated companies maintain a
retirement plan, as amended January 1, 1992 (the "Retirement Plan"),
for certain of its employees and employees of these affiliated
companies. The Retirement Plan is intended to qualify under the
provisions of Section 401 of the Internal Revenue Code of 1986, as
amended (the "Code"). Benefits under the Retirement Plan are provided
by an insurance company separate account which receives and invests
company contributions. Participants are not required to make any
contributions under the Retirement Plan.
An employee is eligible for participation in the Retirement Plan
after he is at least age 21 and has completed one year of service.
For a participant retiring at normal retirement (age 65 with at
least five years of service), the Retirement Plan provides a
retirement benefit payable for life, equal to 1.25% of his final
average pay up to the Covered Compensation level plus 1.75% of his
final average pay in excess of the Covered Compensation level (subject
to the limitations of Section 415 of the Code), times his years of
credited service. The Covered Compensation level is the average of
the maximum Social Security taxable wage base in the 35 years
preceding retirement or termination. Final average pay is the average
of the five highest consecutive years of compensation in the last ten
years before retirement or termination. Years of credited service
include all calendar years during which an employee has at least 1,000
hours of service while employed by the Company or an affiliate
participating in the plan, but not before January 1, 1989.
The Retirement Plan contains provisions for optional forms of
payment and provides that the normal form of benefit in the case of a
married participant is a benefit actuarially equivalent to an annuity
for the life of the participant payable in the form of a 50% joint and
survivor annuity for the participant and his spouse.
<PAGE>
<PAGE>
A participant becomes 100% vested in his accrued benefit under
the Retirement Plan after he has five years of service. If he
terminates employment with less than five years of service, he will
forfeit any benefits under the Retirement Plan.
A participant with 10 or more years of service, who is age 55 or
over, but less than age 65, and who has retired from the Company or a
participating affiliate, may elect to receive an early retirement
benefit. A participant with less than 10 years of service or who is
under age 55, who has terminated employment with the Company or a
participating affiliate may elect to receive an early deferred vested
benefit. The amount of such benefits are actuarially reduced to
reflect payment before age 65.
The projected annual retirement benefits under the Retirement
Plan of the executive officers named in the Summary Compensation
Table, expressed in the form of a straight life annuity with no
reduction for early commencement, and assuming continuous employment
until age 65, are estimated as follows:
Ian M. Cumming . . . . . $16,431*
Joseph S. Steinberg . . . 21,589*
Thomas E. Mara . . . . . 10,569*
Lawrence S. Hershfield . 85,780*
Norman P. Kiken . . . . . 43,769*
____________________
[FN]
* The benefits shown take into account limitations contained in Section
415 of the Code, and other limits on plan benefits that exist because
of distributions received from a prior plan terminated as of December
31, 1988.
EMPLOYMENT AGREEMENTS
LI has employment agreements with Messrs. Cumming and Steinberg
that provide for Mr. Cumming's employment as Chairman of the Board and
Chief Executive Officer of the Company and LI and for Mr. Steinberg's
employment as President and Chief Operating Officer of the Company and
the LI through June 30, 1994 at annual salaries of $364,835 (which
amount reflects an increase effective March 26, 1987) (subject to cost
of living adjustments), plus such additional compensation as may be
voted by the Board of Directors of the Company. Messrs. Cumming and
Steinberg are entitled to participate in all incentive plans of LI, LI
and other subsidiary and affiliated companies, and LI has agreed to
carry at its expense term life insurance policies on their lives in
the amount of $1,000,000 each, payable to such beneficiaries as each
of Messrs. Cumming and Steinberg shall designate. Under the
agreements, if there is a change in control of the Company or LI and
if either the employment of Messrs. Cumming or Steinberg is terminated
by LI without cause or Messrs. Cumming or Steinberg terminates his
employment within one year of certain occurrences (such as the
appointment or election of another person to his offices, the
occurrence of the aggregate compensation and other benefits to be
received by him for any twelve full calendar months falling below 115%
of that received by him during the comparable preceding period, or a
change in the location of his principal place of employment), Messrs.
Cumming or Steinberg will be entitled to receive a severance allowance
equal to the remainder of the aggregate annual salary (as adjusted for
increases in the cost of living) that he would have received under his
employment agreement. In addition, the Company or its successors will
continue to carry through the scheduled termination of the employment
agreements the life insurance payable to the beneficiaries of Messrs.
Cumming and Steinberg.
The Company has entered into new employment agreements with
Messrs. Cumming and Steinberg that provide for Mr. Cumming's
employment as Chairman of the Board and Chief Executive Officer of the
Company and LI and for Mr. Steinberg's employment as President and
Chief Operating Officer of the Company and LI from July 1, 1994
through June 30, 2003 at annual salaries of $500,000 (subject to cost
of living
<PAGE>
<PAGE>
adjustments), plus such additional compensation as may be voted by the
Board of Directors of the Company. All other terms of these
employment agreements are substantially similar to the employment
agreements with LI that expire on June 30, 1994.
For information concerning certain compensation awards placed in
escrow for the benefit of Messrs. Cumming and Steinberg, see footnotes
4 and 7 to the Summary Compensation Table, above.
COMPENSATION OF DIRECTORS
Directors who are also employees of the Company receive no
remuneration for services as a member of the Board or any committee of
the Board. In 1993, each director who was not an employee of the
Company received a retainer of $18,000 plus $500 for each meeting of
the Board and $300 for each meeting of a committee of the Board
($400 if a committee chairman) that he attended. In addition, under
the terms of the 1992 Stock Option Plan, each non-employee director is
automatically granted options to purchase 1,000 Common Shares on the
date on which the annual meeting of the Company's shareholders is held
each year. The purchase price of the Common Shares covered by such
options is the fair market value of such Common Shares on the date of
grant. These options become exercisable at the rate of 25% per year
commencing one year after the date of grant. As a result of this
provision, options to purchase 1,000 Common Shares at an exercise
price of $43.00 per Common Share were awarded to each of Messrs. Paul
M. Dougan, Lawrence D. Glaubinger, James E. Jordan, John W. Jordan II
and Jesse Clyde Nichols, III on July 14, 1993.
For additional information, see "Certain Relationship and Related
Transactions" and "Compensation Committee Interlocks and Insider
Participation" below.
INDEMNIFICATION
Pursuant to a contract of insurance dated December 4, 1993 with
National Union Fire Insurance Company of Pittsburgh, Pennsylvania, 70
Pine Street, New York, New York 10270, the Company maintains a
$10,000,000 indemnification insurance policy covering all directors
and officers of the Company and its named subsidiaries. The annual
premium for such insurance is $815,000. During 1993, no payments were
received under the Company's indemnification insurance.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Pursuant to an agreement dated as of August 1, 1988 among the
Company, Ian M. Cumming and Joseph S. Steinberg, upon the death of
either Mr. Cumming or Mr. Steinberg, the Company has agreed to
purchase from the respective estate up to 55% of his direct and/or
indirect interest in the Company, subject to reduction in certain
circumstances, not to exceed $50,000,000 in value. The agreement
provides that Mr. Cumming's and Mr. Steinberg's interests in the
Company will be valued at the higher of the average closing price of
the Common Shares on the NYSE for the 40 trading days preceding the
date of death or the net book value of the Common Shares at the end of
the fiscal quarter preceding the date of death. The Company has
agreed to fund the purchase of Common Shares pursuant to this
Agreement by purchasing and maintaining insurance on the life of each
of Messrs. Cumming and Steinberg in the aggregate face amount of
$50,000,000 per individual. This agreement will expire in December
1997 (subject to earlier termination in certain circumstances). The
Company has purchased the life insurance contemplated by this
agreement, the premiums for which aggregated approximately $300,000 in
1993. These amounts are not included in the Summary Compensation
Table appearing elsewhere in this Proxy Statement.
NYFS04...:\30\76830\0001\1980\PXY62794.P70
<PAGE>
<PAGE>
Pursuant to an agreement dated as of May 3, 1985, Lawrence
Economic Consulting Inc. (a management consulting firm, 49% of the
outstanding common stock of which is owned by Lawrence D. Glaubinger
and his wife) performs certain financial and advisory services for the
Company at the rate of $200,000 per annum payable monthly. The
agreement is scheduled to terminate on April 30, 1995.
During 1993, Thomas E. Mara held commercial paper of the Company.
At March 31, 1994, Mr. Mara held approximately $830,000 of such
commercial paper bearing interest at the rate of approximately 3.7%
per annum. Interest earned by Mr. Mara on such commercial paper since
the beginning of 1993 was approximately $34,000. The maximum
principal amount of commercial paper held by Mr. Mara since the
beginning of 1993 was approximately $1,280,000.
For information concerning certain compensation awards placed in
escrow for the benefit of Messrs. Cumming and Steinberg, see footnotes
4 and 7 to the Summary Compensation Table above.
For additional information, see "Compensation Committee
Interlocks and Insider Participation", below.
REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS <F1>
COMPENSATION POLICIES FOR EXECUTIVE OFFICERS (OTHER THAN IAN M.
CUMMING AND JOSEPH S. STEINBERG)
The Employee Benefits Committee of the Board of Directors (the
"Committee"), consisting of Mr. Nichols (Chairman), Mr. Dougan and Mr.
James E. Jordan, each of whom is a non-employee director, awards stock
options upon the recommendation of Messrs. Cumming and Steinberg,
Chairman of the Board and President of the Company, respectively and
recommends to the Board of Directors the compensation of Messrs.
Cumming and Steinberg. Salary and bonus compensation of executive
officers of the Company are determined by Messrs. Cumming and
Steinberg under authority of the Board of Directors.
The Company's compensation package for executive officers
consists of four basic elements: (1) base salary; (2) annual bonus
compensation; (3) long-term incentives in the form of stock options
granted pursuant to the Company's 1992 Stock Option Plan; and (4)
retirement benefits pursuant to the Company's Retirement Plan. Other
elements of compensation include a defined contribution 401(K) plan
and medical and life insurance benefits available to employees,
generally.
Each element of compensation has a different purpose. Salary and
bonus payments are mainly designed to reward current and past
performance. Stock options are primarily designed to provide strong
incentive for superior long-term future performance and are directly
linked to shareholders' interests because the value of the awards will
increase or decrease based upon the future price of the Common Shares.
Retirement benefits generally are designed to reward prior service.
Base compensation of executive officers is determined by Messrs.
Cumming and Steinberg consistent with the executive's office and level
of responsibility, with annual salary increases, which generally
amount to a small percentage of the executive's prior base salary,
primarily reflecting cost of living increases. However, where
appropriate to reflect an executive's increase in office and/or
responsibility, annual salary increases may be significant.
-------------------
<F1>
The disclosure contained in this section of the Proxy
Statement is not incorporated by reference into any prior filings
by the Company under the Securities Act of 1933 or the Securities
Exchange Act of 1934 that incorporated future filings or portions
thereof (including this Proxy Statement or the "Executive
Compensation" section of this Proxy Statement).
NYFS04...:\30\76830\0001\1980\PXY62794.P70
<PAGE>
<PAGE>
The Company's executive compensation policy emphasizes
performance based compensation. Accordingly, a large percentage of
annual compensation consists of bonus compensation. This ensures that
compensation paid to an executive reflects the individual's specific
contributions to the success of the Company, as well as the level and
degree of complexity involved in his contributions to the Company
(which historically often have involved restructuring newly acquired
enterprises, the success of which may not be evident for several
years). Bonus compensation is determined on the basis of Messrs.
Cumming's and Steinberg's subjective assessment of an executive's
performance and contribution to the Company and is heavily dependent
upon the Company's performance and each individual's contribution
thereto. Bonus compensation is not based on any specific formula.
The Company, by means of the 1992 Stock Option Plan, seeks to
retain the services of persons now holding key positions and to secure
the services of persons capable of filling such positions. From time
to time, stock options may be awarded which, under the terms of the
1992 Stock Option Plan, permit the executive officer or other employee
to purchase Common Shares at not less than the fair market value of
the Common Shares on the date of grant. The extent to which the
employee realizes any gain is, therefore, directly related to
increases in the price of the Common Shares and hence, shareholder
value, during the period of the option. Options granted to executive
officers generally become exercisable at the rate of 20% per year,
commencing one year after the date of grant. As with base salary and
bonuses, the amount of stock options awarded to an executive officer
is not based on any specific formula, but rather on a subjective
assessment of the executive's performance and the Company's
performance.
The Company believes the executive compensation program has
enabled it to attract, motivate and retain senior management by
providing a competitive total compensation opportunity based on
performance. Base salaries, combined with annual variable performance
based bonus awards that reflect the individual's level of
responsibility, performance and contribution to the Company are
important elements of the Company's cash compensation philosophy.
Together with the Company's executive stock ownership, the Company's
total executive compensation program not only aligns the interest of
executive officers and shareholders, but permits the Company to
attract talented senior management. Messrs. Cumming and Steinberg and
the Board believe the program strikes an appropriate balance between
short- and long-term performance objectives.
COMPENSATION OF MESSRS. CUMMING AND STEINBERG
The base compensation of Messrs. Ian M. Cumming and Joseph S.
Steinberg, Chairman of the Board and President of the Company,
respectively, is set pursuant to employment agreements between LI and
each of Messrs. Cumming and Steinberg entered into in 1984, as
modified by the Committee. These agreements expire on June 30, 1994.
New employment agreements between the Company and each of Messrs.
Cumming and Steinberg were entered into as of December 28, 1993 and
commence on July 1, 1994. See "Employment Agreements." The base
salary of Messrs. Cumming and Steinberg provided for in the new
agreements was determined by the Committee, which presented its
recommendation to the entire Board of Directors (with Messrs. Cumming
and Steinberg abstaining). The new base salaries for Messrs. Cumming
and Steinberg represent an increase over their prior base salaries,
primarily reflecting cost of living increases. The Committee reviews
other compensation for each of Messrs. Cumming and Steinberg and
presents its recommendations thereon to the entire Board of Directors.
In response to tax law changes enacted in August 1993 affecting
the tax consequences to employers and employees associated with the
timing of the payment and receipt of compensation, the Committee met
in mid-November 1993 to discuss 1993 year end bonuses for Messrs.
Cumming and Steinberg. Among other things, the new tax law (A)
effective for tax years beginning after 1993 (i) disallows the
deductibility by employers of certain compensation in excess of
$1,000,000 per year and (ii) increases the cost of compensation to
both employers and employees by removing the $135,000 annual ceiling
to which the "medicare tax" applies, thereby increasing the tax paid
by both the employer and employee by 1.45% (an aggregate of 2.9%) of
all compensa-<PAGE>
<PAGE>
tion in excess of $135,000 per individual, and (B) effective for the
1993 tax year, permits a two-year interest free deferral to the
employee for the payment of a portion of the taxes for 1993 to the
extent of certain increases attributable to the new law.
The Committee noted that, in general, under the new tax law,
beginning in 1994 the Company will not be able to deduct compensation
to its five most highly compensated employees in excess of $1,000,000
per year, unless such compensation is within the definition of
"performance-based compensation" or meets certain other criteria. To
qualify as "performance-based compensation," compensation generally
must be paid pursuant to a pre-established objective performance
criteria or standard that precludes the exercise of discretion. In
general, this would mean that a third party having knowledge of the
appropriate performance results could calculate the amount payable to
the executive. The Committee agreed that the lack of flexibility in
determining executive compensation under these requirements would not
be in the best interests of the Company. The Committee also believes
that a discretionary approach to compensation would give the Company
the flexibility to compensate its executives based upon a variety of
factors, certain of which may be more relevant in some years than in
others. Additionally, the Committee agreed that limiting compensation
to a fixed formula could discourage long-term planning and instead
encourage short-term planning not in the best interests of the Company
or its shareholders.
In view of these changes in federal tax laws, the Committee
determined that it would be in the Company's best interests to
accelerate the payment of 1993 bonuses for Messrs. Cumming and
Steinberg to payment in calendar 1993 (rather than 1994). The
Committee noted that, consistent with these considerations, all other
employees were being given the opportunity to select a 1993 (rather
than 1994) payment date for their 1993 bonus, if such bonus
subsequently was earned. Similar action was taken last year in
anticipation of expected changes to the federal tax laws.
The Committee then considered the 1993 bonus compensation for
Messrs. Cumming and Steinberg. The Committee reviewed certain
financial information concerning the historical relationship between
the Company's audited pre-tax annual operating income and annual
bonuses paid to Messrs. Cumming and Steinberg, which reflected bonuses
as an average percentage of pre-tax operating income of approximately
1.28% for the period between 1981 and 1991 and approximately 1.26% for
the period between 1981 and 1992. Based upon such information, the
Committee noted that the respective 1992 and 1991 bonuses paid to
Messrs. Cumming and Steinberg were approximately 1.11% of 1992 audited
pre-tax operating income and approximately 1.32% of 1991 audited pre-
tax operating income. The Committee noted that financial projections
for 1993 pre-tax operating income from continuing operations
("Estimated 1993 Pre-Tax Operating Income") were approximately one-
third higher than the Company's 1992 audited pre-tax income.
The Committee also reviewed its action in determining accelerated
1992 bonuses for Messrs. Cumming and Steinberg. After extensive
discussion, the Committee determined that a performance bonus of
$2,200,000 (representing approximately 1.12% of Estimated 1993 Pre-Tax
Operating Income for each of Messrs. Cumming and Steinberg) was
appropriate for 1993. Thereafter, the Committee unanimously
recommended to the Board of Directors that such annual bonuses be
awarded to Messrs. Cumming and Steinberg.
The Committee then reviewed the terms of the 1992 Escrows
(described in footnote 7 to the Summary Compensation Table, above,
which discussion is incorporated herein by reference), which permit
the acceleration by the Committee of both vesting and payment of
escrowed funds for the purpose of paying bonus compensation to Messrs.
Cumming and Steinberg. In view of the 1993 the tax law changes
described above, the Committee determined that it was in the best
interests of the Company and its shareholders to maximize deductions
available to the Company in 1993 applicable to executive compensation
by not using amounts available under the 1992 Escrows for the payment
of 1993 compensation to Messrs. Cumming and Steinberg, instead
deferring the use of such funds to future years.<PAGE>
<PAGE>
The Committee then discussed the fact that compensation paid to
Messrs. Cumming and Steinberg had exceeded $1 million in recent years
and, barring unforeseen developments, such compensation was likely to
exceed $1 million per year in future years. As a result of the recent
tax law changes discussed above, especially the denial of deductions
to the Company for individual compensation above $1 million per year,
the Committee determined that it would be in the best interests of the
Company and its shareholders that taxation and deductibility of $4
million otherwise expected to be paid to Messrs. Cumming and Steinberg
as compensation within the next 10 years be accelerated through the
establishment of the 1993 Escrows (described in footnote 4 to the
Summary Compensation Table, above, which discussion is incorporated
herein by reference). Thereafter, the Committee unanimously
recommended to the Board of Directors that the 1993 Escrows be
established.
The Committee intends to consider amounts held in escrow under
the 1992 Escrow Agreements and the 1993 Escrow Agreements for each of
Messrs. Cumming and Steinberg pursuant to such agreements when
determining bonuses to Messrs. Cumming and Steinberg for future years.
Awards pursuant to these agreements are intended to be applied as part
of bonus compensation that would otherwise be paid to Messrs. Cumming
and Steinberg; these awards are not intended as compensation in
addition to salaries and bonuses customarily awarded to Messrs.
Cumming and Steinberg. As provided in the agreements, given the
underlying objective of the arrangements, in deciding upon early
vesting and payment, the Board and the Committee can consider tax law
changes, if any, actually enacted and the costs and benefits to the
Company of initiating and maintaining the arrangements and of
accelerating payments and vesting thereunder.
Following the Committee's meeting, the Board considered the
favorable recommendations of the Committee, and the factors considered
by the Committee, including the tax factors described above. The
Board voted unanimously (with Messrs. Cumming and Steinberg
abstaining) to award the recommended bonuses to Messrs. Cumming and
Steinberg and to authorize the 1993 Escrows. Messrs. Cumming and
Steinberg did not participate in the deliberations or vote in respect
of either bonus or the creation of the 1993 Escrows.
The Committee consists of Jesse Clyde Nichols, III, Chairman,
Paul M. Dougan and James E. Jordan.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Committee consists of Jesse Clyde Nichols, III, Chairman,
Paul M. Dougan and James E. Jordan.
Joseph S. Steinberg, President and a director of the Company, is
a member of the Compensation Committee of the Board of Directors of
JII. Mr. John W. Jordan II, a director of the Company, is Chairman of
the Board of JII.
In connection with the formation of JII, on June 1, 1988, John W.
Jordan II acquired from Leucadia Investors, Inc. ("LII"), a subsidiary
of LI that currently owns approximately 11% of the outstanding common
stock of JII, 71.4% of LII's interest in JII in exchange for a zero
coupon note with an initial principal value of approximately
$7,132,000 and an accredited value at maturity on May 31, 1993 of
approximately $11,618,000 (the "Zero Coupon Note"). After giving
effect to prepayments in respect of the Zero Coupon Note made by Mr.
Jordan, the accredited value at maturity of the Zero Coupon Note was
approximately $8,294,000. Pursuant to an agreement dated May 25, 1993
between Mr. Jordan and LII, on June 1, 1993 Mr. Jordan delivered to
LII 224,175 Common Shares valued at $8,294,000 as payment in full of
the Zero Coupon Note. The Common Shares were valued at $37.00 per
share, the closing price of a Common Share on the New York Stock
Exchange Composite Tape on May 24, 1993, the last full trading day
prior to the authorization by the Board of Directors of the agreement.
NYFS04...:\30\76830\0001\1980\PXY62794.P70
<PAGE>
<PAGE>
In January 1994, the Company acquired 50% of Symskaya
Exploration, Inc. ("SEI"), a company engaged in the exploration and
development of oil and gas in the Krasnoyarsk region of eastern
Siberia. Equity Oil (of which Paul Dougan, a director of the Company,
is President and Chief Executive Officer) owns the remaining 50% of
SEI. In connection with such acquisition, the Company entered into a
shareholders' agreement with Equity Oil, pursuant to which the Company
has agreed to match Equity Oil's contributions to SEI, up to $6
million, for SEI's projects through the initial five year term of the
agreement.
The Jordan Company. Pursuant to an agreement effective as of
------------------
February 1, 1982, as amended and restated, LI, John W. Jordan II and
David W. Zalaznick formed The Jordan Company, a New York general part-
nership ("TJC"). TJC's business is to seek out, for clients,
businesses (other than those in the financial services area) that are
attractive candidates for leveraged buy-outs ("Buy-outs"), to arrange
the terms of Buy-outs and the financing thereof. TJC's business is
managed by its Managing Partner (The John W. Jordan II Revocable
Trust, the sole trustee of which is Mr. Jordan). To the extent that
TJC becomes aware of opportunities to invest in clients in connection
with Buy-outs, TJC is required to make available to LI, but LI is not
required to accept, a 25% participation in each of such opportunities.
The term of TJC extends through December 31, 1996 (subject to earlier
termination in certain circumstances). If TJC is dissolved because of
the occurrence of certain events, LI will be entitled to receive
certain percentages of net fees thereafter collected from clients of
TJC and certain affiliated entities. LI is entitled to receive from
TJC 25% of TJC's net fees earned. LI's quarterly capital
contributions to TJC were $750,000 in 1992, 1993 and 1994. The amount
that the Managing Partner has the right to disburse in each quarter to
pay compensation to Messrs. Jordan and Zalaznick and certain other
expenses of TJC (the "Management Fee") was $750,000 in 1992, 1993 and
1994.
Pursuant to an agreement effective as of April 15, 1985, LI, John
W. Jordan II and David W. Zalaznick formed a partnership, the
Jordan/Zalaznick Capital Company ("JZCC"), for the purpose of
arranging the acquisition of and investment in companies of a smaller
size than those previously acquired through TJC. JZCC was capitalized
with $10,000,000, $3,000,000 of which was furnished by LI and
$7,000,000 of which was furnished by Messrs. Jordan and Zalaznick.
Profits, if any, will be divided pro rata (subject to certain
exceptions) and certain management fees will be paid to Messrs. Jordan
and Zalaznick in such amounts as would be paid, under the
circumstances, to an unaffiliated party. Members of the committee
which manages JZCC's business (composed of Messrs. Jordan, Zalaznick,
Cumming and Steinberg) receive annual compensation of $10,000 for
their services to JZCC. The partnership agreement is terminable by
each of the partners after $10,000,000 has been invested by the
partnership and under certain other circumstances.
Through its partnership interests in TJC and JZCC, LI acquired
equity interests in certain private companies (the "Jordan Associated
Companies"). At December 31, 1993, LI had equity interests in a total
of 15 companies by virtue of TJC, JZCC and JII. LI has designated one
or both of Ian M. Cumming and Joseph S. Steinberg to serve as a
director of certain of the Jordan Associated Companies.
TJC and JZCC are presently negotiating additional leveraged Buy-
out opportunities. However, there can be no assurance any such Buy-
outs will be completed.
During 1993, in addition to the capital contribution described
above, the Company expended approximately $232,000 and received
approximately $4,919,000 in fees (including amounts from the Jordan
Associated Companies), distributions and sales proceeds related to the
Company's investments in partnerships of which Mr. Jordan is a general
partner.
During 1993, an aggregate of $30,000 was paid to Mr. Jordan for
financial and advisory services provided to the Company.
<PAGE>
<PAGE>
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's executive officers and directors, and persons who
beneficially own more than ten percent of a registered class of the
Company's equity securities, to file reports of ownership and changes
in ownership with the Securities and Exchange Commission, the New York
Stock Exchange and the Pacific Stock Exchange. Executive officers,
directors and greater than 10% beneficial shareholders are required by
Commission regulations to furnish the Company with copies of all
Section 16(a) forms they file.
Based solely upon a review of the copies of such forms furnished
to the Company and written representations from the Company's
executive officers, directors and greater than 10% beneficial
shareholders, the Company believes that during the year ended December
31, 1993, all persons subject to the reporting requirements of Section
16(a) filed the required reports on a timely basis, except that one
transaction was not timely reported by each of James E. Jordan, John
W. Jordan II and Paul J. Borden. Each person subsequently filed a
Form 4 to report the transactions.
NYFS04...:\30\76830\0001\1980\PXY62794.P70
<PAGE>
<PAGE>
SHAREHOLDER RETURN PERFORMANCE GRAPH <F2>
Set forth below is a graph comparing the cumulative total
shareholder return on Common Shares against cumulative total return of
the Standard & Poor's 500 Stock Index (the "S&P 500 Index") and the
Standard & Poor's Financial (Multi-Line Insurance Companies) Index
(the "S&P Insurance Index") for the five year period commencing
December 31, 1988 (as required by the Securities and Exchange
Commission). The data was furnished by Standard & Poor's Compustat
Services, Inc.
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN OF THE COMPANY, S&P
500 INDEX AND S&P INSURANCE INDEX
The following graph assumes that $100 was invested on December
31, 1988 in each of the Common Shares, the S&P 500 Index and the S&P
Insurance Index and that all dividends were reinvested.
<TABLE>
<CAPTION>
Value at Year End
------------------------------------------------------
1988 1989 1990 1991 1992 1993
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
The Company $100 $148.70 $158.27 $256.53 $552.39 $576.99
S&P 500 Index 100 131.69 127.60 166.47 179.15 197.21
S&P Insurance Index 100 137.81 113.42 151.37 172.80 193.25
</TABLE>
---------------
<F2>
The disclosure contained in this section of the Proxy
Statement is not incorporated by reference into any prior filings
by the Company under the Securities Act of 1933 or the Securities
Exchange Act of 1934 that incorporated future filings or portions
thereof (including this Proxy Statement or the "Executive
Compensation" section of this Proxy Statement).
NYFS04...:\30\76830\0001\1980\PXY62794.P70
<PAGE>
<PAGE>
RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
The Board of Directors recommends that the Shareholders ratify
the selection of Coopers & Lybrand, certified public accountants, as
independent auditors to audit the accounts of Leucadia and its
subsidiaries for 1994. The selection of Coopers & Lybrand was
recommended to the Board of Directors by its Audit Committee. Coopers
& Lybrand are currently independent auditors for Leucadia.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THIS PROPOSAL.
ANNUAL REPORT
A copy of Leucadia's 1993 Annual Report to Shareholders has been
previously furnished to Shareholders.
PROPOSALS BY SHAREHOLDERS
Proposals that Shareholders wish to include in Leucadia's Proxy
Statement and form of proxy for presentation at Leucadia's 1995 Annual
Meeting of Shareholders must be received by Leucadia at 315 Park
Avenue South, New York, New York 10010, Attention of Ruth Klindtworth,
Secretary, no later than March 3, 1995.
By Order of the Board of Directors
RUTH KLINDTWORTH
Secretary
<PAGE>
<PAGE>
PROXY
LEUCADIA NATIONAL CORPORATION
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS FOR
ANNUAL MEETING OF SHAREHOLDERS, JULY 27, 1994 AT 9:30 A.M..
The undersigned shareholder of Leucadia National Corporation
(the "Company") hereby appoints Ian M. Cumming, Joseph S. Steinberg
and Ruth Klindtworth and each of them, as attorneys and proxies, each
with power of substitution and revocation, to represent the
undersigned at the Annual Meeting of Shareholders of Leucadia National
Corporation to be held at Chemical Banking Corporation, 270 Park
Avenue (11th Floor), New York, New York on July 27, 1994 at 9:30 a.m.,
and at any adjournment or postponement thereof, with authority to vote
all shares held or owned by the undersigned in accordance with the
directions indicated herein.
Receipt of the Notice of Annual Meeting of Shareholders
dated July 1, 1994, the Proxy Statement furnished herewith, and a copy
of the Annual Report to Shareholders for the year ended December 31,
1993 is hereby acknowledged.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE
MANNER DIRECTED BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS
MADE, THIS PROXY WILL BE VOTED FOR ITEMS 1 AND 2 AND PURSUANT TO ITEM 3.
---
(CONTINUED AND TO BE SIGNED ON THE REVERSE SIDE)
NYFS04...:\30\76830\0001\1980\PXY62794.N60
<PAGE>
<PAGE>
ITEM 1. Election of Directors. THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR
THE NOMINEES LISTED BELOW.
<TABLE>
<CAPTION>
<S> <S> <S>
FOR all nominees listed on the right WITHHOLD AUTHORITY to vote NOMINEES: IAN M. CUMMING, PAUL M. DOUGAN, LAWRENCE
(except as marked to the contrary for all nominees listed to D. GLAUBINGER, JAMES E. JORDAN, JOHN W. JORDAN II,
hereon). the right. JESSE CLYDE NICHOLS, III AND JOSEPH S. STEINBERG.
(Instructions: To withhold authority to vote for
[_] [_] any individual nominee write that nominee's name
in the space provided below.)
------------------------------------------
ITEM 2. Ratification of the selection of Coopers & Lybrand as independent
auditors of Leucadia for 1994.
FOR AGAINST ABSTAIN
[_] [_] [_]
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR SUCH RATIFICATION.
---
ITEM 3. In their discretion, the Proxies are authorized to vote upon such
other business as may properly be presented to the meeting or any
adjournment thereof.
P DATED: _____________, 1994
R
------------------------------------------
O (SIGNATURE)
X
------------------------------------------
Y (SIGNATURE IF HELD JOINTLY)
THE SIGNATURE SHOULD AGREE WITH THE NAME ON YOUR
STOCK CERTIFICATE. IF ACTING AS ATTORNEY,
EXECUTOR, ADMINISTRATOR, TRUSTEE, GUARDIAN, ETC.,
YOU SHOULD SO INDICATE WHEN SIGNING. IF THE
SIGNER IS A CORPORATION, PLEASE SIGN THE FULL COR-
PORATE NAME BY DULY AUTHORIZED OFFICER. IF SHARES
ARE HELD JOINTLY, EACH SHAREHOLDER SHOULD SIGN.
</TABLE>
