================================================================================
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
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14-a6(e)(2))
[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)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
PAYMENT OF FILING FEE (Check the appropriate box):
[x] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined.):
4) Proposed maximum aggregate value of transaction: $
5) Total fee paid: $
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid: $
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
NY2:\870696\07\76830\0146
<PAGE>
LEUCADIA NATIONAL CORPORATION
315 PARK AVENUE SOUTH
NEW YORK, NEW YORK 10010
----------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 16, 2000
----------
April 20, 2000
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 May 16, 2000, at 10:00 a.m., at Credit Suisse First Boston, 11
Madison Avenue, Level 2B Auditorium, New York, New York:
1. To elect six directors.
2. To ratify the selection of PricewaterhouseCoopers LLP as
independent auditors to audit the Consolidated Financial
Statements of the Company and its subsidiaries for the year
ended December 31, 2000.
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 at the close of
business on April 3, 2000 will be entitled to notice of and to vote at the
Meeting. Please vote your shares, either (i) by signing, dating and mailing the
enclosed proxy card in the accompanying postage prepaid envelope, (ii) by
telephone using the toll-free telephone number printed on the proxy card, or
(iii) by voting on the Internet, using the instructions printed on the proxy
card. This will assure that your shares are represented at the Meeting.
By Order of the Board of Directors.
/s/ LAURA E. ULBRANDT
Secretary
<PAGE>
LEUCADIA NATIONAL CORPORATION
315 PARK AVENUE SOUTH
NEW YORK, NEW YORK 10010
----------
PROXY STATEMENT
----------
ANNUAL MEETING OF SHAREHOLDERS
----------
April 20, 2000
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 May 16, 2000 and at any adjournments thereof.
At the Meeting, Shareholders will be asked:
1. To elect six directors.
2. To ratify the selection of PricewaterhouseCoopers LLP as
independent auditors to audit the Consolidated Financial
Statements of the Company and its subsidiaries for the year
ended December 31, 2000.
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 April 3,
2000 as the record date (the "Record Date") for the determination of the holders
of the Company's 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 by completing the enclosed proxy
card and returning it in the enclosed postage prepaid envelope or, as indicated
on the proxy card, by voting on the Internet or by voting by telephone. At the
close of business on April 3, 2000, there were 55,296,728 Common Shares entitled
to vote.
This Proxy Statement and the accompanying form of proxy are first
being sent to holders of the Common Shares on or about April 20, 2000.
1
<PAGE>
THE MEETING
DATE, TIME AND PLACE
The Meeting will be held on May 16, at 10:00 a.m., local time, at
Credit Suisse First Boston, 11 Madison Avenue, Level 2B Auditorium, New York,
New York.
MATTERS TO BE CONSIDERED
At the Meeting, Shareholders will be asked to consider and vote to
elect six 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
April 3, 2000) are entitled to notice of and to vote at the Meeting. As of the
Record Date, there were 55,296,728 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
PricewaterhouseCoopers LLP 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
9,892,002 or approximately 17.9% of the Common Shares outstanding at the Record
Date, Joseph S. Steinberg, a Director and President, beneficially owns 9,093,489
or approximately 16.4% of the Common Shares outstanding at the Record Date and
two trusts for the benefit of Mr. Steinberg's children (the "Steinberg Children
Trusts") beneficially own 1,107,646 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. The Cumming Foundation
and the Joseph S. and Diane H. Steinberg 1992 Charitable Trust, private
charitable foundations independently established by Messrs. Cumming and
Steinberg, respectively, beneficially own 92,509 or approximately .2% and 30,058
(less than .1%) of the Common Shares outstanding at the Record Date,
respectively. Mr. Cumming and Mr. Steinberg each disclaims beneficial ownership
of the Common Shares held by their respective private charitable foundations.
Messrs. Cumming and Steinberg have advised the Company that they intend to cause
all Common Shares that they beneficially own and all Common Shares beneficially
owned by their charitable foundations to be voted in favor of each nominee named
2
<PAGE>
herein and in favor of ratification of the selection of independent auditors. In
addition to Messrs. Cumming and Steinberg, all other directors and officers of
the Company beneficially own approximately .5% of the Common Shares outstanding
at the Record Date.
VOTING AND REVOCATION OF PROXIES
Shareholders are requested to vote by proxy in one of three ways:
o Use the toll-free telephone number shown on your proxy card;
o Visit the Internet website at www.voteproxy.com and follow the
on-screen instructions; or
o Mail, date, sign and promptly return your proxy card in the
enclosed postage prepaid envelope.
Common Shares represented by properly executed proxies received by
the Company or voted by telephone or via the Internet, which are 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 the selection of
independent auditors.
Voting instructions (including instructions for both telephonic and
Internet voting) are provided on the proxy card. The Internet and telephone
voting procedures are designed to authenticate Shareholder identities, to allow
Shareholders to give voting instructions and to confirm that Shareholders'
instructions have been recorded properly. A Control Number, located on the proxy
card, will identify Shareholders and allow them to vote their shares and confirm
that their voting instructions have been properly recorded. Shareholders voting
via the Internet should understand that there may be costs associated with
electronic access, such as usage charges from Internet access providers and
telephone companies, that must be borne by the Shareholder. If you do vote by
Internet or telephone, it will not be necessary to return your proxy card.
If your shares are held in the name of a bank or broker, follow the
voting instructions on the form you receive from your record holder. The
availability of Internet and telephone voting will depend on their voting
procedures.
If a Shareholder neither returns a signed proxy card, votes by the
Internet or by telephone, nor attends the Meeting and votes in person, his or
her shares will not be voted.
Any proxy signed and returned by a Shareholder or voted by telephone
or via the Internet may be revoked at any time before it is exercised by giving
written notice of revocation to the Secretary of the Company, at the address of
the Company set forth herein, by executing and delivering a later-dated proxy
(either in writing, by telephone or via the Internet) or by voting in person at
the Meeting. 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 Shareholders 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.
3
<PAGE>
INDEPENDENT AUDITORS
The Company has been advised that representatives of
PricewaterhouseCoopers LLP, the Company's independent auditors for 1999, 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.
ELECTION OF DIRECTORS
At the Meeting, six 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 six 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 April
3, 2000.
<TABLE>
<CAPTION>
Name and present position, Age, period served as director, other business experience
if any, with the Company during the last five years and family relationships, if any
- ------------------------ -----------------------------------------------------------
<S> <C>
Ian M. Cumming,
Chairman of the Board.........Mr. Cumming, 59, has served as a director and Chairman of the Board of the Company since
June 1978. In addition, he is a director of Allcity Insurance Company ("Allcity") and MK
Gold Company ("MK Gold"). Allcity, a consolidated subsidiary of the Company, is a property
and casualty insurer. MK Gold, a consolidated subsidiary of the Company, is an
international mining company. Mr. Cumming is also a director of Skywest, Inc., a Utah-based
regional air carrier, and HomeFed Corporation ("HomeFed"), a publicly held real estate
development company.
Paul M. Dougan...................Mr. Dougan, 62, has served as a director of the Company since May 1985. He has been a
director and 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, 74, 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 industrial textiles, since November 1977. He has
also been President of Lawrence Economic Consulting Inc., a management consulting firm,
since January 1977. Mr. Glaubinger is a director of Marisa Christina Inc., an importer of
women's clothing.
James E. Jordan..................Mr. Jordan, 56, has served as a director of the Company since February 1981. Mr. Jordan is
a private investor. From October 1986 to June 1997, he was President of The William Penn
Corporation ("William Penn"), a holding company for an investment advisor to the William
Penn family of mutual funds. During such period, approximately 19.7% of the common stock of
William Penn was beneficially owned by the Company. Mr. Jordan is a director of First Eagle
SoGen mutual funds and JZ Equity Partners Plc., a British investment trust company.
4
<PAGE>
Name and present position, Age, period served as director, other business experience
if any, with the Company during the last five years and family relationships, if any
- ------------------------ -----------------------------------------------------------
<S> <C>
Jesse Clyde Nichols, III.........Mr. Nichols, 60, has served as a director of the Company since June 1978. He has been
President, since May 1974, of Crimsco, Inc., a company engaged in manufacturing.
Joseph S. Steinberg, President...Mr. Steinberg, 56, has served as a director of the Company since December 1978
and as President of the Company since January 1979. He is also a director of
Allcity, MK Gold and Jordan Industries, Inc., a public company, approximately
10% of the common stock of which is beneficially owned by the Company, which
owns and manages manufacturing companies. In addition, Mr. Steinberg is Chairman
of the Board of HomeFed.
</TABLE>
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 1999, the Board of Directors held eight meetings and took
action on numerous other occasions.
The Board of Directors has a standing Audit Committee, Executive
Committee, Employee Benefits Committee, Option Committee and Nominating
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 once during 1999 and took action on one other occasion. The Audit
Committee consists of Messrs. Dougan (Chairman), Nichols and Glaubinger.
The function of the Executive Committee is 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 took action on two occasions during 1999, consists of Messrs.
Cumming (Chairman), Steinberg, Jordan 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, including the Senior Executive Annual Incentive Bonus Plan
and the Warrant Plan. The Employee Benefits Committee met twice during 1999 and
took action on one other occasion. The Employee Benefits Committee consists of
Messrs. Nichols (Chairman), Dougan and Jordan.
The function of the Option Committee is to administer the terms of
the Company's 1999 Stock Option Plan. The Option Committee took action on one
occasion during 1999 and consists of Messrs. Jordan (Chairman), Glaubinger and
Nichols.
The function of the Nominating Committee is to consider and present
to the Board of Directors its nominations for officers and directors of the
Company. The Nominating Committee took action on one occasion during 1999 and
consists of Messrs. Jordan (Chairman), Dougan and Nichols.
A Shareholder entitled to vote in the election of directors may
nominate one or more persons for election as directors at a meeting if written
notice of such Shareholder's intent to make such nomination has been given to
the Company, with respect to an election to be held at an annual meeting of
Shareholders, not less than 120 days prior to the first anniversary of the
Company's proxy statement in connection with the last Annual Meeting, and, with
respect to an election to be held at a special meeting of Shareholders, not
later than the tenth day following the date on which notice of such meeting is
5
<PAGE>
first given to Shareholders. Such notice shall set forth the name and address of
the Shareholder and his or her nominees, a representation that the Shareholder
is entitled to vote at such meeting and intends to nominate such person, a
description of all arrangements or understandings between the Shareholder and
each such nominee, such other information as would be required to be included in
a proxy statement soliciting proxies for the election of such Shareholder's
nominees, and the consent of each nominee to serve as a director of the Company
if so elected. The Company may require any proposed nominee to furnish such
other information as may reasonably be required to determine the eligibility of
such proposed nominee to serve as a director of the Company. The Company did not
receive any nominations from Shareholders for election as directors at the
Meeting.
All directors attended at least 75% of the meetings of the Board and
committees of the Board on which they served.
6
<PAGE>
PRESENT BENEFICIAL OWNERSHIP OF COMMON SHARES
Set forth below is certain information as of April 3, 2000 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, (iii) each of the executive officers
named in the Summary Compensation Table under "Executive Compensation," (iv) the
Steinberg Children Trusts and private charitable foundations established by Mr.
Cumming and Mr. Steinberg and (v) all executive officers and directors of the
Company as a group. Unless otherwise stated, the business address of each person
listed is c/o Leucadia National Corporation, 315 Park Avenue South, New York,
New York 10010.
<TABLE>
<CAPTION>
Number of Shares
Name and Address and Nature of Percent
of Beneficial Owner Beneficial Ownership of Class
- ------------------- -------------------- --------
<S> <C> <C>
Group consisting of
Carl Marks & Co., Inc., Robert
Davidoff, Edwin S.
Marks, Nancy A.
Marks, Boas GRAT
No. 1 Trust, Marks
Family Foundation,
Marjorie M. Boas,
Mark Claster and
Andrew Boas (a)(b)........................................... 3,145,284 5.7%
Paul J. Borden................................................. -- --
Ian M. Cumming................................................. 9,892,002 (c)(d) 17.9%
Paul M. Dougan................................................. 100 (e) *
Lawrence D. Glaubinger......................................... 78,000 .1%
James E. Jordan................................................ 30,000 *
Thomas E. Mara................................................. 10,130 *
Jesse Clyde Nichols, III....................................... 58,939 .1%
Joseph A. Orlando.............................................. 2,356 *
Joseph S. Steinberg............................................ 9,093,489 (d)(f) 16.4%
The Steinberg Children Trusts.................................. 1,107,646 (g) 2.0%
Cumming Foundation ............................................ 92,509 (h) .2%
The Joseph S. and Diane H. Steinberg
1992 Charitable Trust...................................... 30,058 (i) *
All directors and executive officers
as a group (12 persons)................................... 19,237,916 34.8%
</TABLE>
- -------------------
* Less than .1%.
(a) The business address of this beneficial owner is c/o Carl Marks & Co.,
Inc., 135 East 57th Street, New York, New York 10022.
(b) Based upon Amendment No. 1 to a Statement on Schedule 13D dated December
1, 1992 filed by Carl Marks & Co., Inc., Robert Davidoff, Edwin S. Marks,
Nancy A. Marks, Boas GRAT No. 1 Trust, Marks Family Foundation, Marjorie
M. Boas, Mark Claster and Andrew Boas and information provided by Carl
Marks & Co., Inc.
(c) Includes 266,712 (.5%) 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) as to which Mr. Cumming
may be deemed to be the beneficial owner.
7
<PAGE>
(d) 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.
(e) Consists of 100 (less than .1%) Common Shares owned by Mr. Dougan's wife
as to which Mr. Dougan disclaims beneficial ownership.
(f) Includes 46,400 (less than .1%) Common Shares beneficially owned by Mr.
Steinberg's wife and minor daughter as to which Mr. Steinberg may be
deemed to be the beneficial owner.
(g) Mr. Steinberg disclaims beneficial ownership of the Common Shares held by
the Steinberg Children Trusts.
(h) Mr. Cumming is a trustee and President of the foundation and disclaims
beneficial ownership of the Common Shares held by the foundation.
(i) Mr. Steinberg and his wife are the trustees of the foundation. Mr.
Steinberg disclaims beneficial ownership of the Common Shares held by the
foundation.
As of April 3, 2000, Cede & Co. held of record 32,103,956 Common
Shares (approximately 58.1% 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.
8
<PAGE>
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 current executive officers of the Company in 1999,
for services in all capacities to the Company and its subsidiaries in 1999, 1998
and 1997.
<TABLE>
<CAPTION>
Long-Term
Annual Compensation Compensation
------------------------------------------------------------ ---------------- ----------------
Options All Other
Name and Principal Other Annual ------- ---------
Position(s) Year Salary Bonus Compensation (# of shares) Compensation
--------------------- ---- ------ ----- ------------ ------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Ian M. Cumming, 1999 $ 557,059 $ 16,888(1) $ 206,559(4) -- $ 91,998(6)
Chairman of the Board 1998 546,178 16,556(2) 198,154(4) -- 98,097
1997 532,816 6,566,231(3) 308,246(4) -- 61,366
Joseph S. Steinberg, 1999 $ 557,059 $ 16,888(1) $ 415,203(4) -- $ 80,325(6)
President 1998 546,178 16,556(2) 324,542(4) -- 91,147
1997 532,816 6,566,231(3) 344,819(4) -- 56,608
Thomas E. Mara, 1999 $ 265,000 $2,994,413 $ 549,585 (5) -- $ 11,672(6)
Executive Vice 1998 260,000 767,800 -- -- 27,654
President and Treasurer 1997 255,000 907,650 52,275(4) -- 35,363
Joseph A. Orlando, 1999 $ 200,000 $ 613,167 $ 304,647 (5) -- $ 18,000(6)
Vice President and 1998 170,000 675,100 -- -- 12,500
Chief Financial Officer 1997 165,000 704,950 -- -- 7,000
Paul J. Borden, 1999 $ 140,000 $ 437,433 $ 62,659(5) -- $ 4,000(6)
Vice President 1998 135,000 454,050 -- -- 4,000
1997 130,000 453,900 -- -- 4,000
</TABLE>
- ----------------------
(1) Represents annual year-end bonus (based on a percentage of salary)
paid to all employees. The Employee Benefits Committee of the Board
of Directors intends to consider the payment of a 1999 performance
bonus to each of Messrs. Cumming and Steinberg at the Board of
Directors meeting to be held following the 2000 Annual Meeting. See
"Report of the Compensation Committee of the Board of
Directors--Compensation of Messrs. Cumming and Steinberg."
(2) Represents annual year-end bonus (based on a percentage of salary)
paid to all employees. The Employee Benefits Committee of the Board
of Directors determined not to award any additional bonus for
services rendered in 1998.
(3) As previously described in the Company's 1999 Proxy Statement, an
aggregate of $6,500,000 had been placed in escrow for the benefit of
each of Messrs. Cumming and Steinberg (the "Escrows") by the Company
and a wholly owned subsidiary. Of the total 1997 bonus paid to
Messrs. Cumming and Steinberg, an aggregate of $5,051,929 for Mr.
Cumming and $5,120,413 for Mr. Steinberg was funded out of the
Escrows. The balance of the Escrows had been paid to Messrs. Cumming
and Steinberg in prior years.
Also includes annual year-end bonus (based on a percentage of salary)
paid to all employees.
(4) Includes non-cash compensation valued in accordance with the
disclosure rules of the Securities and Exchange Commission, as
follows: personal use of corporate aircraft (Mr. Cumming: $206,559,
$198,154 and $308,246 in 1999, 1998 and 1997, respectively, and Mr.
Steinberg: $415,203, $324,542 and $343,473 in 1999, 1998 and 1997,
respectively) and an automobile transferred by the Company to Mr.
Mara for 1997 ($43,650). The value of such non-cash compensation may
9
<PAGE>
differ for federal tax purposes. Pursuant to the terms of a 1998
deferred compensation agreement between the Company and Mr.
Steinberg, Mr. Steinberg reimbursed the Company for the federal tax
value of his 1999 non-cash compensation ($239,041). For information
concerning Mr. Steinberg's deferred compensation agreement and
certain additional compensation paid to him, see "Report of the
Compensation Committee of the Board of Directors" below.
(5) Represents amounts paid in respect of cancellation of options held
by such person as described under "Certain Relationships and Related
Transactions" and includes amounts in respect of taxes attributable
to such payments as follows: Mr. Mara, $144,585; Mr. Orlando,
$80,147; and Mr. Borden, $16,484.
(6) Includes the annual premium on a term life insurance policy paid by
the Company for the benefit of such person ($6,410 for Mr. Cumming
and $2,665 for Mr. Steinberg), directors' fees from affiliates of
the Company ($81,588 for Mr. Cumming, $77,660 for Mr. Steinberg,
$7,672 for Mr. Mara and $14,000 for Mr. Orlando) and a $4,000
contribution made by the Company to a defined contribution 401(k)
plan on behalf of each named person other than Mr. Steinberg.
RETIREMENT PLAN
The Company and certain of its affiliated companies maintain a
retirement plan, as amended and restated effective December 31, 1995 (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"). Participants are not required to make any contributions under the
Retirement Plan. Benefit accruals under the Retirement Plan were frozen
effective December 31, 1998. Employees who were not participants in the
Retirement Plan on December 31, 1998 are not eligible to participate in the
Retirement Plan.
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.
Generally, a participant employed by the Company 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................ $31,311*
Joseph S. Steinberg........... 31,311*
Thomas E. Mara................ 31,311*
Joseph A. Orlando............. 27,451*
Paul J. Borden................ 27,570*
- ------------------------
* The benefits shown take into account limitations on plan benefits that exist
because of distributions received from a prior plan terminated as of December
31, 1988.
10
<PAGE>
The Company and certain of its affiliated companies maintain a
401(k)/Profit Sharing Plan (the "Savings and Retirement Plan") for certain of
their employees. The Savings and Retirement Plan is entitled to qualify under
the provisions of the Code. Participants may make pre-tax and/or after-tax
contributions to the plan and the Company will match a portion of an eligible
participant's pre-tax contributions. The Savings and Retirement Plan also
provides a quarterly contribution for eligible participants equal to a
percentage of eligible compensation determined on the basis of age and service.
EMPLOYMENT AGREEMENTS
The Company 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 for Mr. Steinberg's employment as
President and Chief Operating Officer of the Company through June 30, 2005 at
annual salaries of $500,000 (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 the Company and other subsidiary and affiliated companies,
and the Company 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 and if either the employment of
Messrs. Cumming or Steinberg is terminated by the Company 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 office, 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.
For information concerning deferred compensation agreements between
the Company and Mr. Steinberg, see "Report of the Compensation Committee of the
Board of Directors" below.
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 1999, 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 1999 Stock Option Plan, commencing
with the Meeting, 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.
For additional information, see "Certain Relationship and Related
Transactions" and "Compensation Committee Interlocks and Insider Participation"
below.
INDEMNIFICATION
Pursuant to contracts of insurance dated October 1, 1998 with
National Union Fire Insurance Company of Pittsburgh, Pennsylvania, 80 Pine
Street, New York, New York 10005, and Reliance Insurance Company, 77 Water
Street, New York, New York 10005, the Company maintains a combined $20,000,000
indemnification insurance policy covering all directors and officers of the
Company and its named subsidiaries. The annual premium for such insurance is
approximately $495,000. During 1999, no payments were received under the
Company's indemnification insurance.
11
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Pursuant to an agreement dated as of August 1, 1988 and restated as
of December 16, 1997, 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 Messrs. Cumming's and
Steinberg's interests in the Company will be valued at the higher of the average
closing price of the Common Shares on the New York Stock Exchange 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, originally scheduled to expire in December 1997, was extended to June
2003 (subject to earlier termination in certain circumstances). The Company has
purchased the life insurance contemplated by this agreement, the premiums for
which aggregated approximately $372,000 in 1999. These amounts are not included
in the Summary Compensation Table appearing elsewhere in this Proxy Statement.
On April 1, 1999, the Company declared a cash dividend on the Common
Shares in the amount of $12.00 per share (the "Dividend"). In connection with
the Dividend, and in order to comply with the terms of a ruling from the
Internal Revenue Service related to the Dividend, the Company offered to pay to
each holder of outstanding options in cancellation of all options held an amount
equal to the spread between the exercise price of such holder's options and
$32.875 (the higher of (1) $32.875 and (2) the average closing price of a Common
Share on the New York Stock Exchange for the five trading days following the
public announcement of the Dividend), multiplied by the number of Common Shares
subject to options held by such holder. Additional amounts were paid to option
holders (other than non-employee directors) to reimburse them for certain tax
costs attributable to the option cancellation. Holders of all outstanding
options accepted the Company's offer. Upon declaration of the Dividend, all
options were cancelled. Payments in respect of the cancellation of the options
were made to directors on April 12, 1999 and to all other employees on April 14,
1999. Directors and executive officers held options to purchase an aggregate of
113,750 Common Shares and received payments in cancellation of such options as
follows:
<TABLE>
<CAPTION>
Number of Shares
Name Underlying Options Amount Paid
---- ------------------ -----------
<S> <C> <C>
Paul J. Borden.......................... 6,200 $ 62,659
Paul M. Dougan.......................... 4,250 23,000
Lawrence D. Glaubinger.................. 3,000 8,876
Mark Hornstein.......................... 5,800 55,908
Barbara L. Lowenthal.................... 7,500 63,609
James E. Jordan......................... 7,000 56,500
Thomas E. Mara.......................... 45,000 549,585
Jesse Clyde Nichols, III................ 7,000 56,500
Joseph A. Orlando....................... 28,000 304,647
</TABLE>
For additional information regarding related transactions, see
"Compensation Committee Interlocks and Insider Participation," below.
12
<PAGE>
REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS*
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. Jordan,
each of whom is a non-employee director, recommends to the Board of Directors
the compensation of Messrs. Cumming and Steinberg, Chairman of the Board and
President of the Company, respectively. The Option Committee of the Board of
Directors awards stock options upon the recommendation 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 1999 Stock Option Plan (the "Stock Option Plan"); and (4) retirement
benefits pursuant to the Company's Savings and Retirement Plan and, with respect
to eligible employees, the Retirement Plan. Other elements of compensation
include medical and life insurance benefits available to employees generally.
Each element of compensation has a different purpose. Salary and
bonus payments are designed mainly 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.
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, the Company's performance and each individual's contribution
thereto. Bonus compensation is not based on any specific formula.
The Company, by means of its 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 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 disclosure contained in this section of this Proxy Statement is not
incorporated by reference into any filings by the Company under the Securities
Act of 1933 or the Securities Exchange Act of 1934 that incorporate filings or
portions thereof (including this Proxy Statement or the "Executive Compensation"
section of this Proxy Statement) without specific reference to the incorporation
of this section of this Proxy Statement.
13
<PAGE>
In connection with the special cash dividend declared by the Company
on April 1, 1999, and in order to comply with the terms of a ruling from the
Internal Revenue Service related to that dividend, the Company cancelled all
outstanding options under its 1992 Stock Option Plan and made cash payments to
the holders of those options. See "Certain Relationships and Related
Transactions" above.
Under the provisions of Section 162(m) of the Code, the Company would
not be able to deduct compensation to its executive officers whose compensation
is required to be disclosed in the Company's proxy statement for such year in
excess of $1 million per year unless such compensation was within the definition
of "performance-based compensation" or meets certain other criteria. To qualify
as "performance-based compensation," in addition to certain other requirements,
compensation generally must be based on achieving certain pre-established
objective performance criteria. The Committee believes that ordinarily it is in
the best interest of the Company to retain maximum flexibility in its
compensation programs to enable it to appropriately reward, retain and attract
the executive talent necessary to the Company's success. To the extent such
goals can be met with compensation that is designed to be deductible under
Section 162(m), such as the Stock Option Plan and the Senior Executive Annual
Incentive Bonus Plan (described below), such compensation plans will be used.
However, the Committee recognizes that, in appropriate circumstances,
compensation that is not deductible under Section 162(m) may be paid in the
Committee's discretion.
The Company believes that 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 also 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 the Company and each of Messrs.
Cumming and Steinberg entered into as of December 28, 1993, that initially
covered the period from July 1, 1994 through June 30, 2003. As described below
under "--Warrant Plan," in consideration of the Board's consideration of the
Company's Senior Executive Warrant Plan (the "Warrant Plan"), the agreements
were extended to June 30, 2005. See "Employment Agreements." The base salaries
of Messrs. Cumming and Steinberg provided for in the current employment
agreements were determined by the Committee, which presented its recommendation
to the entire Board of Directors (with Messrs. Cumming and Steinberg abstaining)
and represents 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.
Warrant Plan. On March 26, 1999, the Committee met to consider the
Warrant Plan, which provides for the issuance of warrants as an incentive for
future services to the Company from Messrs. Cumming and Steinberg, subject to
Shareholder approval. In determining whether to recommend approval of the
Warrant Plan to the Board of Directors, the Committee considered the specific
terms of the Warrant Plan, together with a variety of factors, including the
fact that (i) each of Messrs. Cumming and Steinberg is party to an employment
agreement with the Company, which provides for certain base salary and such
other compensation as may be granted by the Board of Directors; (ii) warrants
have been a part of the total compensation to Messrs. Cumming and Steinberg in
the past, first having been granted in 1979, together with the specific
characteristics of the prior warrants; (iii) warrants granted pursuant to the
Warrant Plan would have an exercise price above the market price of the
underlying Common Shares on the date of issuance of the warrants, thereby
linking any appreciation in the value of the warrants to an increase in the
market price of the underlying Common Shares and would contain such restrictions
on vesting as determined by the Committee; and (iv) certain tax considerations,
including that warrants granted pursuant to the Warrant Plan would be designed
to conform with the provisions of Section 162(m) to qualify as deductible
14
<PAGE>
compensation. The Committee noted that the existing employment agreements of
Messrs. Cumming and Steinberg would expire on June 30, 2003, almost one year
before the earliest expiration date for the warrants issuable under the Warrant
Plan. The Committee also noted that Messrs. Cumming and Steinberg would agree to
extend the term of their respective employment agreements through June 30, 2005
in consideration for the Board's consideration of the Warrant Plan. The
Committee believed that warrants issuable under the Warrant Plan would be
structured to be an incentive to future services to the Company while providing
Messrs. Cumming and Steinberg with the opportunity to share in any future
increases in the market value of the Company. In order to comply with the
provisions of the IRS ruling received in connection with the Dividend, the
Warrant Plan did not permit the grant of any warrants prior to the payment date
of the Dividend. Based upon the foregoing, the Committee unanimously recommended
to the Board of Directors that the Warrant Plan be approved, subject to
Shareholder approval.
Thereafter, on April 1, 1999, based upon the Committee's
recommendation and the factors considered by the Committee, the Board of
Directors approved (with Messrs. Cumming and Steinberg abstaining) the Warrant
Plan, subject to Shareholder approval. The Warrant Plan was approved by the
Shareholders at the 1999 Annual Meeting. No warrants have been granted under the
Warrant Plan.
Deferred Compensation Agreements. In December 1998, pursuant to Board
approval, the Company and Mr. Steinberg entered into a Deferred Compensation
Agreement that deferred all compensation payable by the Company to Mr. Steinberg
for the calendar year ending December 31, 1999 (the "1999 Compensation"). Mr.
Steinberg's 1999 Compensation accrued interest at a rate equal to the one year
treasury bill rate in effect, resettable quarterly and was paid to Mr. Steinberg
in March 2000 in accordance with the terms of the agreement.
The agreement also provided that Mr. Steinberg would reimburse the
Company for the dollar value of any benefit provided by the Company to Mr.
Steinberg during 1999, which in the absence of this reimbursement obligation
would have been taxable as compensation to Mr. Steinberg (the "Benefits").
During 1999, Mr. Steinberg reimbursed the Company $239,041 for these Benefits.
In December 1999, upon the recommendation of the Committee, the Board of
Directors awarded additional compensation to Mr. Steinberg of $239,041. This
award was made in recognition of the fact that Mr. Steinberg's reimbursement of
the value for tax purposes of the 1999 Benefits created a circumstance in which
Mr. Steinberg's 1999 Compensation for tax purposes would not be comparable to
his compensation for tax purposes for years prior to 1999, where Mr. Steinberg
did not pay for Benefits, and would not be on par with the compensation for tax
purposes paid to Mr. Cumming in 1999 (or in prior years). To alleviate this
inequality in compensation, the Committee recommended that Mr. Steinberg be paid
the additional compensation for 1999 as described above. This amount is not
reflected in the Summary Compensation Table included above. Instead, the table
reflects the higher valuation for these Benefits valued in accordance with the
disclosure rules of the Securities and Exchange Commission.
In December 1999, Mr. Steinberg and the Company entered into another
Deferred Compensation Agreement containing the same terms with respect to
compensation payable to Mr. Steinberg by the Company for the calendar year
ending December 31, 2000.
1999 Performance Bonus. The Committee and the Board of Directors
intend to consider the 1999 performance bonus for each of Messrs. Cumming and
Steinberg at the 2000 organizational meeting of the Board following the Meeting.
In so doing, the Committee intends to consider any awards to be made under the
Senior Executive Annual Incentive Bonus Plan (the "Incentive Bonus Plan"),
adopted by the Committee and the Board of Directors in August 1997 and approved
by the Shareholders at the 1997 Annual Meeting.
The Incentive Bonus Plan provides for annual incentive cash bonuses
to be paid to Messrs. Cumming and Steinberg, provided certain performance goals
are attained. The Incentive Bonus Plan directly links the annual incentive bonus
of Messrs. Cumming and Steinberg with the performance of the Company, while
providing the Committee the flexibility to reduce the amounts to be paid
thereunder.
The Incentive Bonus Plan is designed so that the cash bonuses awarded
thereunder will qualify as "performance-based compensation" under Section 162(m)
of the Code, which limits to $1 million per employee per year the deductibility
of non-performance based compensation payable to each of the Company's five most
highly compensated executive officers. To qualify as "performance-based
15
<PAGE>
compensation," compensation generally must be paid pursuant to a pre-established
objective performance criterion or standard that precludes the exercise of
discretion to increase the amount of compensation payable upon the attainment of
the performance goal. The Incentive Bonus Plan is designed to comply with such
standard.
The Incentive Bonus Plan provides for annual incentive bonuses to be
paid to each of Messrs. Cumming and Steinberg in an amount equal to 1% of the
audited pre-tax earnings of the Company and its consolidated subsidiaries for
each of the five fiscal years commencing 1998. The amount of the annual
incentive bonus awarded to each participant in any given year is subject to
reduction by the Committee, in its sole discretion. No amounts were awarded to
Messrs. Cumming or Steinberg for 1998. Payments under the Incentive Bonus Plan
will be made in cash following written certification by the Committee as to the
amount of the annual incentive bonus for any given year.
The Committee has discretion, where appropriate, to pay additional
bonuses to Messrs. Cumming and Steinberg outside the Incentive Bonus Plan. In
such event, the Committee will consider amounts paid to Messrs. Cumming and
Steinberg under the Incentive Bonus Plan. To the extent that the Committee
determines to award performance bonuses for a given year outside the Incentive
Bonus Plan, such compensation may not be deemed to be performance-based
compensation.
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.
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
has agreed to match Equity Oil's contributions to SEI for SEI's projects through
the initial five-year term of the agreement. In 1999, the Company contributed
$190,000 to this investment.
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.
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, 1999, all persons subject to the reporting requirements
of Section 16(a) filed the required reports on a timely basis.
16
<PAGE>
SHAREHOLDER RETURN PERFORMANCE GRAPH**
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, 1994 (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,
1994 in each of the Common Shares, the S&P 500 Index and the S&P Insurance Index
and that all dividends were reinvested.
INDEXED RETURNS
Base Years Ending
Period
Company/Index Dec94 Dec95 Dec96 Dec97 Dec98 Dec99
- ---------------------------------------------------------------------------
(THE COMPANY) 100 113.48 122.56 159.22 145.37 179.55
S&P 500 INDEX 100 137.58 169.17 225.60 290.08 351.12
S&P INSURANCE INDEX 100 147.00 186.39 284.31 313.21 399.06
** 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).
17
<PAGE>
RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
The Board of Directors recommends that the Shareholders ratify the
selection of PricewaterhouseCoopers LLP, certified public accountants, as
independent auditors to audit the accounts of the Company and its subsidiaries
for 2000. The selection of PricewaterhouseCoopers LLP was recommended to the
Board of Directors by its Audit Committee. PricewaterhouseCoopers LLP are
currently independent auditors for the Company.
The Board of Directors recommends a vote FOR this proposal.
ANNUAL REPORT
A copy of the Company's 1999 Annual Report to Shareholders is being
furnished to Shareholders concurrently herewith.
PROPOSALS BY SHAREHOLDERS
Proposals that Shareholders wish to include in the Company's Proxy
Statement and form of proxy for presentation at the Company's 2001 Annual
Meeting of Shareholders must be received by the Company at 315 Park Avenue
South, New York, New York 10010, Attention of Laura E. Ulbrandt, Secretary, no
later than December 22, 2000. Any such proposal must be in accordance with the
rules and regulations of the Securities and Exchange Commission. With respect to
proposals submitted by a Shareholder other than for inclusion in the Company's
2001 Proxy Statement and related form of proxy, timely notice of any such
proposal must be received by the Company in accordance with the By-Laws and the
rules and regulations of the Company no later than December 22, 2000. Any
proxies solicited by the Board of Directors for the 2001 Annual Meeting may
confer discretionary authority to vote on any proposals notice of which is not
timely received.
IT IS IMPORTANT THAT YOUR PROXY BE RETURNED PROMPTLY, WHETHER BY
MAIL, BY THE INTERNET OR BY TELEPHONE. THE PROXY MAY BE REVOKED AT ANY TIME BY
YOU BEFORE IT IS EXERCISED. IF YOU ATTEND THE MEETING IN PERSON, YOU MAY
WITHDRAW ANY PROXY (INCLUDING AN INTERNET OR TELEPHONIC PROXY) AND VOTE YOUR OWN
SHARES.
By Order of the Board of Directors
/s/ Laura E. Ulbrandt
Secretary
18
<PAGE>
ANNUAL MEETING OF SHAREHOLDERS OF
LEUCADIA NATIONAL CORPORATION
MAY 16, 2000
PROXY VOTING INSTRUCTIONS
TO VOTE BY MAIL
- ---------------
PLEASE DATE, SIGN AND MAIL YOUR PROXY CARD IN THE ENVELOPE PROVIDED AS SOON AS
POSSIBLE.
TO VOTE BY TELEPHONE (TOUCH-TONE PHONE ONLY)
- --------------------------------------------
PLEASE CALL TOLL-FREE 1-800-PROXIES AND FOLLOW THE INSTRUCTIONS. HAVE YOUR
CONTROL NUMBER AND THE PROXY CARD AVAILABLE WHEN YOU CALL.
TO VOTE BY INTERNET.
- --------------------
PLEASE ACCESS THE WEB PAGE AT www.voteproxy.com AND FOLLOW THE ON-SCREEN
INSTRUCTIONS. HAVE YOUR CONTROL NUMBER AVAILABLE WHEN YOU ACCESS THE WEB PAGE.
---------------------------
| |
YOUR CONTROL NUMBER IS [graphic] | |
| |
---------------------------
PLEASE DETACH AND MAIL IN THE ENVELOPE PROVIDED
- --------------------------------------------------------------------------------
PROXY
LEUCADIA NATIONAL CORPORATION
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS FOR ANNUAL
MEETING OF SHAREHOLDERS, MAY 16, 2000 AT 10:00 A.M.
The undersigned shareholder of Leucadia National Corporation (the
"Company") hereby appoints Ian M. Cumming, Joseph S. Steinberg and Laura E.
Ulbrandt 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 Credit Suisse
First Boston, 11 Madison Avenue, Level 2B Auditorium, New York, New York on May
16, 2000 at 10:00 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 April
20, 2000, the Proxy Statement furnished herewith, and a copy of the Annual
Report to Shareholders for the year ended December 31, 1999 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)
NY2:\424002\01\935%01!.DOC\76830.0146
<PAGE>
PLEASE DATE, SIGN AND MAIL YOUR
PROXY CARD BACK AS SOON AS POSSIBLE!
ANNUAL MEETING OF SHAREHOLDERS
LEUCADIA NATIONAL CORPORATION
MAY 16, 2000
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
[Graphic] PLEASE DETACH AND MAIL IN THE ENVELOPE PROVIDED [Graphic]
- --------------------------------------------------------------------------------
[X] Please mark your vote as in this example
Item 1. Election of Directors. THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE
NOMINEES LISTED BELOW AND FOR PROPOSAL 2 AND PURSUANT TO ITEM 3.
FOR all nominees listed on the right WITHHOLD AUTHORITY to vote for all NOMINEES: IAN M. CUMMING, PAUL M. DOUGAN, LAWRENCE D.
(except as marked to the contrary nominees listed to the right. GLAUBINGER, JAMES E. JORDAN, JESSE CLYDE NICHOLS, III
hereon). 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 PricewaterhouseCoopers LLP as
independent auditors of Leucadia for 2000.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
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 of the
Meeting.
(Signature) (Signature if held jointly) Dated: , 2000
------------------------------ ----------------------- -------------
</TABLE>
NOTE: THE SIGNATURE SHOULD AGREE WITH THE NAME ON YOUR STOCK CERTIFICATE. IF
ACTING AS NOTE ATTORNEY, EXECUTOR, ADMINISTRATOR, TRUSTEE, GUARDIAN, ETC., YOU
SHOULD SO INDICATE WHEN SIGNING. IF THE SIGNER IS A CORPORATION, PLEASE SIGN THE
FULL CORPORATE NAME BY DULY AUTHORIZED OFFICER. IF SHARES ARE HELD JOINTLY, EACH
SHAREHOLDER SHOULD SIGN.
2
