SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the Registrant [X]
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 Section 240.14a-11(c) or
Section 240.14a-12
TRANSAMERICA CORPORATION
(Name of Registrant as Specified In Its Charter)
JACLYN L. LARSON
Assistant Corporate Secretary
(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(j)(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.
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4) Proposed maximum aggregate value of transaction.
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[ ] 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 number, or
the Form or Schedule and the date of its filing.
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4) Date Filed:
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LOGO goes here Transamerica Corporation
600 Montgomery Street
San Francisco, California 94111
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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
Thursday, April 28, 1994
10:30 A.M.
TO THE STOCKHOLDERS:
The Annual Meeting of Stockholders of Transamerica Corporation will be
held at the Giannini Auditorium, Concourse Level, Bank of America Center,
555 California Street, San Francisco, California, on Thursday, April 28,
1994, at 10:30 A.M., for the purpose of:
1. Electing two directors of the Corporation to hold office for three-year
terms;
2. Electing independent auditors to audit the financial statements of the
Corporation for the year 1994;
3. Ratifying an amendment to The 1985 Stock Option and Award Plan;
4. Approving the adoption of the Value Added Incentive Plan; and
5. Acting upon a stockholder resolution if presented at the meeting.
All other matters which may properly come before the meeting and any
adjournment thereof will also be considered.
Stockholders of record at the close of business on March 4, 1994 are
entitled to notice of, and to vote at, the meeting and any adjournment
thereof. A list of such stockholders will be available at the time and place of
the meeting and, during the ten days prior to the meeting, at the office of
the Secretary of the Corporation, 600 Montgomery Street, San Francisco,
California.
By Order of the Board of Directors
Christopher McLain
Secretary
San Francisco, California
March 23, 1994
<PAGE>
PROXY STATEMENT
OF
TRANSAMERICA CORPORATION
600 MONTGOMERY STREET
SAN FRANCISCO, CALIFORNIA 94111
INFORMATION CONCERNING THE SOLICITATION
This proxy statement is furnished in connection with the solicitation by
the Board of Directors of Transamerica Corporation of proxies to be voted at
the Annual Meeting of Stockholders to be held on April 28, 1994 and at any
adjournment thereof. Proxies are revocable at any time prior to exercise by
written notice to the Secretary of the Corporation or upon request if the
stockholder is present at the Annual Meeting and chooses to vote in person.
If a proxy is properly signed and not revoked, the shares it represents will
be voted in accordance with the instructions of the stockholder. If no specific
instructions are given, the shares represented by the proxy will be voted for
the election of directors and for Proposals 2, 3 and 4 and against Proposal 5.
Stockholders of record at the close of business on March 4, 1994 are
entitled to vote at the Annual Meeting. On that date the Corporation had
outstanding 75,568,523 shares of common stock, $1 par value, each share
being entitled to one vote and each one-half share being entitled to one-half
vote. A proxy given by any stockholder participating in the Corporation's
Dividend Reinvestment Plan or in the Corporation's Employees Stock
Savings Plan will govern the voting of all full shares held for such
stockholder's account under those Plans.
A majority of the shares entitled to vote, represented in person or by
proxy, constitutes a quorum. If a quorum is present, a plurality vote of the
shares of the common stock of the Corporation present in person or by
proxy at the meeting and entitled to vote is required for the election of
directors and the affirmative vote of the holders of a majority of the shares
of common stock of the Corporation present in person or by proxy and
entitled to vote is required for the election of independent auditors and
approval of Proposals 3, 4 and 5. Abstentions are considered shares present
and entitled to vote and therefore have the same legal effect as a vote
against a matter presented at the meeting. Any shares as to which a broker
or nominee does not have discretionary voting authority under applicable
New York Stock Exchange rules will be considered as shares not entitled to
vote and will therefore not be considered in the tabulation of the votes.
1<PAGE>
The cost of soliciting proxies will be borne by the Corporation. The
Corporation will reimburse brokerage firms, banks and other nominees,
custodians and fiduciaries for their reasonable expenses incurred in sending
proxy material to beneficial owners of shares and obtaining their
instructions. Regular employees of the Corporation may solicit proxies
personally or by mail, telephone or telegraph. In addition, the Corporation
has retained Georgeson & Co., Inc. to assist in the distribution of the
proxies and proxy statements for a fee estimated not to exceed $19,000 plus
out-of-pocket expenses.
The Corporation has a policy that provides for the confidentiality of
stockholder proxies, ballots and vote tabulations, subject to certain
exceptions. The policy also provides for the tabulation of the vote by an
independent third party.
This proxy statement, the proxy and the Corporation's 1993 Annual
Report were first mailed to stockholders on March 23, 1994.
(1) ELECTION OF DIRECTORS
INFORMATION CONCERNING THE NOMINEES AND CURRENT DIRECTORS
The Corporation's Certificate of Incorporation provides that the
members of the Board of Directors shall be divided into three classes with
approximately one-third of the directors to stand for election each year for
three-year terms. The total number of directors comprising the
Corporation's Board of Directors is currently set pursuant to the
Corporation's By-Laws at eleven. Of this number, two members of the
Board of Directors have terms expiring, and are nominees for election, at
the 1994 Annual Meeting of Stockholders. Mr. Glenn A. Cramer, whose
term as a director expires at the 1994 Annual Meeting of Stockholders, will
be retiring from the Board of Directors and will not stand for re-election.
Four members have terms expiring at the 1995 Annual Meeting of
Stockholders and four members have terms expiring at the 1996 Annual
Meeting of Stockholders. The number of directors will be reduced to ten
upon Mr. Cramer's retirement.
Unless instructions to the contrary are given, all proxies received by the
Corporation will be voted for the election of the two nominees named below
as directors of the Corporation to hold office until the 1997 Annual Meeting
of Stockholders and until their respective successors are elected and
qualified. All of the nominees have indicated a willingness to serve as
directors if elected. Should either nominee not be a candidate at the 1994
Annual Meeting, all such proxies so received will be voted in favor of the
other nominee and for such substitute nominee (if any) as shall be designated
by the proxies named in the enclosed form of proxy, or the number of
directors may be reduced by the Board of Directors. Both nominees have
been recommended by the Board of Directors for three-year terms expiring
at the 1997 Annual Meeting of Stockholders.
2<PAGE>
Certain information concerning each of the two nominees for directors,
and each current director in the classes continuing in office, is set forth
below.
NOMINEES FOR DIRECTORS FOR THREE-YEAR TERMS EXPIRING IN 1997
FORREST N. SHUMWAY Director since 1973 Age 67
Retired Vice Chairman of the Board of Allied-Signal Inc., a diversified
multi-industry company. He also serves as a director of Aluminum Company
of America, American President Companies, Ltd., The Clorox Company and
First Interstate Bancorp.
PETER V. UEBERROTH Director since 1984 Age 56
Managing Director of the Contrarian Group, Inc., a business management
company, since 1989. He was Commissioner of Major League Baseball from
1984 to 1989. He also serves as a director of Adia Services, Inc., The Coca
Cola Company and Morrison Knudsen Corporation.
DIRECTORS CONTINUING IN OFFICE UNTIL 1995
JAMES R. HARVEY* Director since 1975 Age 59
Chairman of the Board of the Corporation. He has been Chairman of the
Board since 1983 and was Chief Executive Officer from 1981 to 1991. He
retired as an employee of the Corporation in 1992. He also serves as a
director of Sedgwick Group plc, McKesson Corporation, Pacific Telesis
Group, PacTel Corporation, and The Charles Schwab Corporation.
GORDON E. MOORE* Director since 1981 Age 65
Chairman of the Board and a director of Intel Corporation, a semiconductor
manufacturing company. He also serves as a director of Varian Associates,
Inc.
RAYMOND F. O'BRIEN* Director since 1982 Age 71
Chairman of the Board and a director of Consolidated Freightways, Inc., a
freight transportation company. He was also Chief Executive Officer of that
company from 1979 to 1988 and from 1990 to 1991. He also serves as a
director of Watkins-Johnson Company.
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* Member of the Executive Committee.
3<PAGE>
CONDOLEEZZA RICE* Director since 1991 Age 39
Provost of Stanford University since 1993. She was Associate Professor of
Political Science at Stanford from 1987 to 1989 and from 1991 to 1993. She
was Special Assistant to the President of the United States on the National
Security Council from 1990 to 1991 and Director of Soviet and East
European Affairs on the National Security Council from 1989 to 1990. She
also serves as a director of Chevron Corporation.
DIRECTORS CONTINUING IN OFFICE UNTIL 1996
MYRON DU BAIN* Director since 1984 Age 70
Former Chairman of the Board of SRI International, a research and
consulting organization. He also serves as a director of First Interstate
Bancorp and Scios Nova, Inc.
SAMUEL L. GINN* Director since 1989 Age 56
Chairman of the Board, President, Chief Executive Officer and a director of
Pacific Telesis Group, a diversified telecommunications company, since 1988.
He also serves as a director of PacTel Corporation, Chevron Corporation
and Safeway Inc. Upon the effective date of the proposed spinoff of PacTel
Corporation from Pacific Telesis Group, Mr. Ginn will resign as an officer
and director of that company and continue as Chairman of the Board and
Chief Executive Officer of PacTel Corporation, a wireless
telecommunications company.
FRANK C. HERRINGER* Director since 1986 Age 51
Chief Executive Officer and President of the Corporation. He has been Chief
Executive Officer since 1991 and President since 1986. He also serves as a
director of all major subsidiaries of the Corporation, Pacific Telesis Group,
Sedgwick Group plc and Unocal Corporation.
CHARLES R. SCHWAB* Director since 1989 Age 56
Chairman of the Board, Chief Executive Officer and a director of The
Charles Schwab Corporation, a discount brokerage firm, since 1986. He has
been Chairman of Charles Schwab & Co., Inc. since 1978. He also serves as
a director of The Gap, Inc. and PacTel Corporation.
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* Member of the Executive Committee.
4<PAGE>
DIRECTOR COMPENSATION AND BENEFITS
Directors who are not employees of the Corporation or its subsidiaries
receive an annual retainer of $24,000 and a fee of $1,000 for each Board or
committee meeting attended. Committee chairs also receive an annual
retainer of $2,500, with the exception of the chairs of the Management
Development and Compensation, the Corporate Audit and the Executive
Committees, who each receive annual retainers of $3,500. Fees payable to
Mr. Harvey for service as a director in 1993 were included in the $250,000
per annum paid under his consulting agreement referred to below. Directors
who are employees of the Corporation do not receive fees for their services
as directors.
Directors are eligible to defer receipt of $5,000 or more of their retainers
and meeting fees under the Corporation's deferred compensation policy. In
general, amounts deferred for less than five years are credited with earnings
at a rate equal to the rate paid by ten-year U.S. Treasury Notes adjusted
monthly; amounts deferred for five, six or seven years are credited with
earnings at a rate ranging from 2% to 3% above the Moody's A Rated
Corporate Bond Yield adjusted annually; and amounts deferred for eight
years or more are credited with earnings at a rate ranging from 3% to 4%
above the Moody's A Rated Corporate Bond Yield adjusted annually. The
time and method of payment of deferred compensation and other terms and
conditions are set forth in the deferred compensation elections made prior to
the beginning of each year by each participating director.
Each member of the Board of Directors who retires from the Board after
serving for at least five years as a nonemployee director is eligible to receive
retirement benefits. The annual benefit amount is equivalent to the
individual's annual retainer fee in effect at the time of his or her retirement
(exclusive of any meeting fees or fees for serving as a committee chair).
Payments will be made to the director or, in the event of the director's
death, his or her spouse, for a period equal to the period of time that the
individual served on the Board as a nonemployee director.
Directors who are not employees of the Corporation receive stock
options pursuant to The 1985 Stock Option and Award Plan (the "1985
Plan"). Under the 1985 Plan as proposed to be amended (as described
beginning on page 7), each nonemployee director automatically is granted a
nonqualified stock option for 1,500 shares each year. All options are granted
at fair market value on the date of grant and generally have a term not
exceeding ten years and one month. Options issued to nonemployee directors
are exercisable beginning six months after grant, provided that options
awarded in 1994 will vest six months following the date upon which
stockholders approve the proposed amendment to the 1985 Plan.
On December 1, 1992, James R. Harvey retired as an executive officer
and employee of, and entered into a consulting agreement with, the
Corporation. That agreement was amended and restated effective February
1, 1994 and its term currently expires April 30, 1995. Under the agreement,
through January 31, 1994, Mr. Harvey agreed to make available
approximately 40% of his business time for consulting and advisory services
or special assignments as determined by the Corporation and to continue to
5<PAGE>
serve on the Board of Directors. As compensation for such services, and in
lieu of fees to be received as a director, Mr. Harvey was paid $250,000 in
1993. In addition, Mr. Harvey was entitled to the use of an automobile and
the reimbursement of certain expenses during 1993. Effective February 1,
1994, Mr. Harvey will make approximately 20% of his business time
available, and will be compensated at the rate of $100,000 per annum, for
such services. In addition, effective February 1, 1994, Mr. Harvey is
entitled to receive annual retainer and meeting fees as a nonemployee
director. He will also remain entitled to the use of an automobile and the
reimbursement of certain expenses.
Glenn A. Cramer is retiring from the Board after 26 years of service. In
1981, Mr. Cramer retired as an employee of Transamerica Airlines, Inc.,
formerly an operating subsidiary of the Corporation, and entered into a
consulting agreement with that company. Under the agreement, Mr. Cramer
agreed to make available 10% of his business time for a fee of $50,000 per
year less the amount he receives each year under the Retirement Plan for
Salaried U.S. Employees of Transamerica Corporation and Affiliates. The
fee paid by Transamerica Airlines for such services was $26,255 in 1993.
Effective January 1, 1994, Mr. Cramer's agreement was amended to provide
for consulting fees of $57,000 per annum less the amount he receives each
year under such Retirement Plan.
See Compensation Committee Interlocks and Insider Participation on
page 5 for a description of certain agreements between a subsidiary of the
Corporation and a subsidiary of Pacific Telesis Group, of which Mr. Ginn is
the Chairman of the Board, President and Chief Executive Officer and of
which Messrs. Ginn, Harvey and Herringer are directors and Mr. Du Bain
was a director during 1993.
Also see Compensation Committee Interlocks and Insider Participation
on page 5 for a description of certain proposed agreements between a
subsidiary of the Corporation and a subsidiary of The Charles Schwab
Corporation, of which Mr. Schwab is the Chairman of the Board and Chief
Executive Officer and of which Mr. Harvey is a director.
COMMITTEES OF THE BOARD OF DIRECTORS AND MEETINGS HELD
Mr. O'Brien (Chairman), Ms. Rice and Messrs. Cramer, Ginn, Moore and
Schwab are members of the Corporate Audit Committee of the Board of
Directors. The committee recommends the engagement of independent
auditors, reviews the plan and results of the audit engagement with the
independent auditors, approves professional services provided by the
independent auditors, reviews the independence of the independent auditors,
considers the fees of the independent auditors, reviews the Corporation's
annual financial statements, reviews the scope and results of the
Corporation's internal auditing activities and the adequacy of internal
accounting controls, and directs special investigations. The Corporate Audit
Committee held three meetings in 1993.
6<PAGE>
Messrs. Shumway (Chairman), Du Bain, Ginn, O'Brien, Schwab and
Ueberroth are members of the Management Development and Compensation
Committee of the Board of Directors. The committee establishes corporate
compensation objectives and reviews comparative studies of compensation
programs to enable the Corporation to offer competitive compensation
programs necessary to attract and retain superior management, reviews and
approves cash compensation arrangements and incentive plans for senior
management, reviews and approves the Corporation's stock option plans,
deferred compensation policy, perquisite programs for corporate officers and
similar programs, and authorizes the granting of options, restricted stock
and other awards under the Corporation's stock option and award plans. The
committee also recommends to the Board nominees as corporate officers and
reviews succession plans for senior corporate and subsidiary officer
positions. The Management Development and Compensation Committee held
seven meetings in 1993.
Mr. Du Bain (Chairman), Ms. Rice and Messrs. Harvey, Herringer,
Schwab, Shumway and Ueberroth are members of the Nominating
Committee of the Board of Directors. The committee recommends to the
Board the Board size and criteria for qualification as a candidate for Board
membership, reviews the qualifications of candidates for Board membership,
directs the search for qualified candidates to fill Board vacancies that may
occur from time to time, recommends to the Board the slate of director
candidates to be proposed for election by the stockholders at the Annual
Meeting and candidates to fill vacancies which occur between Annual
Meetings, and recommends to the Board the establishment of, and charge of
responsibilities to, various committees of the Board. The Nominating
Committee held two meetings in 1993. Subject to the provisions of the
Corporation's By-Laws, the Nominating Committee will consider nominees
for directors recommended by stockholders. Any recommendations should be
submitted in writing to the Secretary of the Corporation, 600 Montgomery
Street, San Francisco, California 94111.
During 1993, the Board of Directors held eight meetings. All of the
current directors, except Mr. Schwab and Mr. Ueberroth, attended 75% or
more of the meetings of the Board and committees of which they were
members.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
There are no "interlocks" (as defined by the Securities and Exchange
Commission) with respect to any member of the Management Development
and Compensation Committee of the Board of Directors of the Corporation
(the "Committee"), and the Committee is comprised of the following
independent, nonemployee directors: Messrs. Shumway (Chairman), Du
Bain, Ginn, O'Brien, Schwab and Ueberroth.
Mr. Ginn is a member of the Committee and is a director of Pacific
Telesis Group, the parent of PacTel Corporation ("PacTel"), as well as the
Chairman of the Board, President and Chief Executive Officer of Pacific
Telesis Group. He is also the Chairman of the Board and Chief Executive
Officer of PacTel. In 1989, the Corporation, through several wholly-owned
subsidiaries, entered into a series of transactions whereby a subsidiary of
7<PAGE>
the Corporation agreed to purchase an interest in a Chicago-based cable
company. The purchase occurred in June 1990. Pursuant to agreements
entered into with PacTel in 1989, PacTel has the option to purchase either
the Corporation's interest in such venture or the stock of the Corporation's
subsidiary based upon varying circumstances, and, if required by the
Corporation, the obligation to purchase such stock. The purchase by PacTel
of either such interest or stock will be at a price sufficient to cover the
Corporation's net investment in such venture together with interest costs.
Two subsidiaries of the Corporation borrowed an aggregate principal amount
of approximately $60 million from a bank to cover the acquisition costs, and
PacTel guaranteed the borrowings. Interest accruing on the loans is added
to the loan amounts, and the maximum outstanding loan amount may not
exceed $136 million. PacTel is paying the Corporation's subsidiaries $400,000
per year for the option to purchase the venture. A majority of the
disinterested members of the Board of Directors of the Corporation
approved the transactions.
Mr. Schwab is also a member of the Committee and is the Chairman of
the Board, Chief Executive Officer and a director of The Charles Schwab
Corporation, a discount brokerage firm. Transamerica Occidental Life
Insurance Company, a subsidiary of the Corporation ("Occidental"), proposes
to enter into certain agreements with Charles Schwab & Co., Inc.
("Schwab"), a subsidiary of The Charles Schwab Corporation, pursuant to
which Occidental will issue variable annuities which are to be marketed,
distributed and administered by Schwab. The compensation payable by
Occidental to Schwab for these services will be based on a percentage of the
value of the assets invested in the annuities, which assets will consist
primarily of mutual funds. Certain regulatory approvals have been obtained
for the program and Occidental is currently seeking approval from the
California Department of Insurance. If that approval is obtained, it is
anticipated that the program will commence approximately April 1, 1994.
8<PAGE>
STOCKHOLDINGS OF DIRECTORS AND EXECUTIVE OFFICERS
The following table indicates, as to each director and each executive
officer named in the Summary Compensation Table on page 18, and as to all
directors and executive officers as a group, the number of shares and
percentage of the Corporation's common stock beneficially owned as of
March 4, 1994.
SHARES OF COMMON STOCK
NAME BENEFICIALLY OWNED(1)
---------- ----------
DIRECTORS
Glenn A. Cramer 179,950 (2)(3)
Myron Du Bain 9,074 (2)(4)
Samuel L. Ginn 6,494 (2)(4)
James R. Harvey 170,088 (2)(4)(5)
Frank C. Herringer 510,534 (5)(6)
Gordon E. Moore 7,041 (2)
Raymond F. O'Brien 5,510 (2)(4)
Condoleezza Rice 4,315 (2)
Charles R. Schwab 9,209 (2)
Forrest N. Shumway 14,515 (2)
Peter V. Ueberroth 8,507 (2)(4)
EXECUTIVE OFFICERS
David R. Carpenter 280,878 (5)
Richard H. Finn 227,359 (4)(5)
Edgar H. Grubb 92,482 (4)(5)
Richard N. Latzer 96,060 (5)
All Directors and Executive Officers 1,887,440 (2)(5)
as a Group (20 persons)
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(1) Represents shares held as of March 4, 1994 directly and with sole voting
and investment power (or with voting and investment power shared with
a spouse) unless otherwise indicated. The number of shares owned by
each director or executive officer represents less than 1%, and as to all
directors and executive officers as a group represents 2.5%, of the
outstanding shares of common stock.
(2) Includes, as to each nonemployee director except Mr. Cramer, 4,000
shares, and as to all directors and executive officers as a group, 39,000
shares, which may be acquired upon the exercise of director stock
options, all of which are currently exercisable. Mr. Cramer currently
holds options to purchase 3,000 of such shares. These shares are
considered outstanding for purposes of calculating each director's
percentage ownership.
(3) Includes 176,950 shares held by the Glenn A. Cramer Trust as to which
Mr. Cramer has sole voting and investment power. Excludes 1,420
shares held by Mr. Cramer's wife, as to which he has no voting or
investment power and as to which he disclaims beneficial ownership.
(Footnotes continued on next page)
9<PAGE>
(Footnotes continued from previous page)
(4) Includes shares held by family trusts as to which each of the following
named directors and executive officers and their respective spouses have
shared voting and investment power: Mr. Du Bain-474 shares;
Mr. Ginn-2,494 shares; Mr. Harvey-99,507 shares; Mr. O'Brien-1,510
shares; Mr. Ueberroth-3,507 shares; Mr. Finn-32,961 shares; and Mr.
Grubb-2,500 shares.
(5) Includes shares which may be acquired upon the exercise of employee
stock options exercisable on March 4, 1994 or within 60 days thereafter,
as follows: Mr. Carpenter-260,080; Mr. Finn-180,772; Mr. Grubb-85,800;
Mr. Harvey-60,000; Mr. Herringer-483,855; Mr. Latzer-92,500; and all
directors and executive officers as a group-1,418,599. These shares are
considered outstanding for purposes of calculating their percentage
ownerships. This number also includes restricted stock awards, which
vest in four equal annual installments commencing April 27, 1994, and as
to which the executive officer has the right to vote and to receive
dividends, as follows: Mr. Grubb-4,000; Mr. Herringer-5,000; Mr.
Latzer-1,000; and all directors and executive officers as a group-16,000.
This number also includes shares held under the Corporation's
Employees Stock Savings Plan on December 31, 1993 and as to which
the participant has sole voting and investment power, as follows: Mr.
Carpenter-2,836; Mr. Finn-13,626; Mr. Grubb-182; Mr. Harvey-6,581;
Mr. Herringer-3,297; Mr. Latzer-560; and all directors and executive
officers as a group-41,238.
(6) Excludes 14,795 shares held by Mr. Herringer's wife, as to which he has
no voting or investment power and as to which he disclaims beneficial
ownership.
(2) ELECTION OF INDEPENDENT AUDITORS
Independent auditors are to be elected by the stockholders to audit the
financial statements of the Corporation for 1994. The Board of Directors has
nominated Ernst & Young for re-election. Ernst & Young has audited the
financial statements of the Corporation annually since the inception of the
Corporation in 1928. This proposal is presented to the stockholders in order
to permit them to participate in the selection of the Corporation's auditors.
If the stockholders do not re-elect Ernst & Young, the Board of Directors of
the Corporation will consider the selection of other auditors.
Representatives of Ernst & Young will be present at the Annual
Meeting with the opportunity to make a statement and to respond to questions.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS
VOTE FOR PROPOSAL 2.
10<PAGE>
(3) RATIFICATION OF AMENDMENT TO
THE 1985 STOCK OPTION AND AWARD PLAN
On January 27, 1994, the Board of Directors unanimously approved an
amendment to The 1985 Stock Option and Award Plan (the "1985 Plan"),
which is the Corporation's only long-term incentive plan. The primary
changes to the plan are to (i) establish 500,000 as the maximum number of
shares with respect to which options may be granted to any one employee
during any one year, (ii) modify the formula and terms relating to options
granted to nonemployee directors, and (iii) extend the time during which
incentive stock options may be granted under the 1985 Plan.
Beginning in 1994, the Internal Revenue Code contains new rules
regarding the federal income tax deductibility of compensation paid to the
Corporation's Chief Executive Officer and to each of the other four most
highly compensated executive officers. The general rule is that annual
compensation paid to any of these specified executives will be deductible
only to the extent that it does not exceed $1,000,000. However, the
Corporation can preserve the deductibility of certain compensation in excess
of $1,000,000 if it complies with conditions imposed by the new rules,
including the establishment of a maximum number of shares with respect to
which options may be granted to any one employee during one year
(currently the 1985 Plan does not contain such maximum number of shares).
The Board proposes setting such maximum number of shares at 500,000.
Additionally, to more closely align option awards to nonemployee directors
with those awarded to key employees, it is desirable to modify the formula
and terms relating to options granted to nonemployee directors. The Board
proposes to automatically grant to each nonemployee director on an annual
basis options covering 1,500 shares of the Corporation's common stock for a
term of ten years and one month. In addition, since tax laws limit the period
during which incentive stock options may be granted following stockholder
approval of the 1985 Plan, the Board proposes to extend the term to the
maximum allowable, which is January 26, 2004.
The Board of Directors recommends that stockholders vote in favor of
the above proposal to amend the 1985 Plan in order to continue to provide
important long-term incentives to key employees and nonemployee directors.
This amendment is subject to ratification and approval by the affirmative
vote of the holders of a majority of the shares of common stock of the
Corporation present in person or by proxy at the Annual Meeting and
entitled to vote thereon.
DESCRIPTION OF THE 1985 PLAN
While the amendment to the 1985 Plan is described above, a complete
description of such plan is set forth below as required by applicable law.
BACKGROUND
The 1985 Plan was approved by the stockholders of the Corporation on
May 1, 1985. At that time, the 1985 Plan provided for the issuance of a total
of 3,000,000 shares of the Corporation's common stock. In 1988 and 1991, the
Board of Directors and the stockholders approved increases in the number of
shares reserved for issuance under the 1985 Plan, so that a total of
11<PAGE>
14,000,000 shares have been reserved for issuance. If an option or award
expires or is canceled, without having been fully exercised (in the case of an
option) or vested (in the case of another award), the shares covered thereby
are again available for grant. As of March 4, 1994, 4,223,912 shares of the
Corporation's common stock remained available for grant under the 1985
Plan. This amendment does not propose to increase the number of shares
available for grant under the 1985 Plan.
ELIGIBILITY TO RECEIVE OPTIONS AND AWARDS
Key employees of the Corporation and its affiliates (i.e. any corporation
in which the Corporation owns, directly or indirectly, 25% or more of the
voting securities) are eligible to be granted options and awards under the
1985 Plan. At present, the Corporation and its affiliates have approximately
10,900 employees. The actual number of employees who will receive options
and awards is not determinable because the determination of which
employees are key employees who actually will receive options and awards is
made by the Management Development and Compensation Committee of the
Board of Directors (the "Committee"), which is responsible for administering
the 1985 Plan. In 1993 approximately 250 persons received stock options.
The 1985 Plan also provides for the automatic grant of nonqualified stock
options to each nonemployee director.
EMPLOYEE OPTIONS
Option agreements provide that an optionee who is an employee must
agree to remain in the employ of the Corporation (or an affiliate) for at least
one year after receiving an option, and generally must continue such
employment in order for additional installments of the option to become
exercisable. However, option agreements do not restrict the Corporation's
right to terminate such employment at any time. Options granted in 1993 to
the five named executive officers appear in the Stock Option Grants table on
page 19. Options were granted in 1993 to all current executive officers for
579,200 shares, and to all employees (other than executive officers) for
1,077,500 shares. Under the proposed amendment, no individual employee
may receive options for more than 500,000 shares in any one year.
In the case of employees, the price of the shares subject to each option is
set by the Committee but may not be less than the fair market value of the
shares on the date of grant. The fair market value of the Corporation's
common stock on March 4, 1994, was $51.31. Generally, an option may not
be exercised during the first year after its grant. Thereafter, options will
become exercisable in such installments, if any, as the Committee may
determine. The Committee may accelerate the exercisability of any
installments and may provide that some or all installments shall become
immediately exercisable in the case of a change in control of the
12<PAGE>
Corporation. An outstanding option generally has a term of ten years. An
option may be exercised for up to three months following termination of
employment. The post-termination of employment period of exercisability is
extended to three years if the termination is on account of retirement or
total disability (but generally not beyond the original maximum term of the
option) and to one year if the termination is on account of death.
NONEMPLOYEE DIRECTOR OPTIONS
Prior to the proposed amendment to the 1985 Plan, each nonemployee
director automatically received an initial option for 5,000 shares, and
additional automatic grants of options for 1,000 shares during each year the
nonemployee director remained on the Board of Directors. Such options
generally have a term of five years and one month from the date of grant.
The number of shares as to which options were granted in 1993 to
nonemployee directors was 14,000. Under the 1985 Plan as amended (subject
to stockholder approval), each nonemployee director automatically was
granted a nonqualified stock option for 1,500 shares on March 1, 1994. Such
options will vest six months following the date upon which stockholders
approve the proposed amendment. In each year beginning in 1995, each
nonemployee director who is then in office automatically will be granted a
nonqualified stock option for 1,500 shares on a date during the
ten-business-day period following the release of the Corporation's earnings
for the prior year. Such options will vest six months after grant. All options
granted to nonemployee directors in 1994 and future years generally have a
term of ten years and one month from the date of grant. If a director
terminates service on the Board prior to an option's normal expiration date,
the post-termination of service period of exercisability parallels that of
employee options.
INCENTIVE STOCK OPTIONS
The Committee determines whether or not options granted are to be
Incentive Stock Options which are entitled to certain federal income tax
benefits. Incentive Stock Options may be granted only to employees of the
Corporation and its subsidiaries who do not own more than 10% of the
outstanding voting securities of the Corporation. Nonemployee directors are
not eligible to receive Incentive Stock Options. Federal income tax law also
imposes certain limits as to the term of the option and the value of stock
covered by an Incentive Stock Option. While no Incentive Stock Options
have been granted under the 1985 Plan, the proposed amendment to the
1985 Plan extends the period during which Incentive Stock Options may be
granted from March 1, 1995, to January 26, 2004.
EXERCISE AND OPTIONAL PAYMENT OF APPRECIATION VALUE
The option price must be paid in full at the time of exercise unless
otherwise determined by the Committee. Payment must be made in cash or,
at the discretion of the Committee, shares of the Corporation's stock or
other consideration. Payment in shares might permit an option holder to
start with a relatively small number of shares of common stock and, through
a series of substantially simultaneous exercises, exercise all of such
optionee's then-exercisable stock options with no cash and no more
investment than the cost of the original shares of common stock.
13<PAGE>
The Committee may (in lieu of delivering shares upon option exercise)
elect to pay the optionee an amount equal to the "appreciation value" (i.e.,
the difference between the option price and the fair market value of such
shares). Payments of the appreciation value may, at the Committee's
discretion, be made in cash or in shares. The Committee may, in lieu of
paying the appreciation value, elect to contribute the appreciation value to a
trust for the benefit of the optionee or to credit the appreciation value to the
optionee's account on the Corporation's books and invest the trust assets, or
credit the account as if it had been invested, as determined by the
Committee. Nonemployee directors are not eligible to receive the
"appreciation value".
RESTRICTED STOCK AND UNIT AWARDS
The 1985 Plan also permits the grant of restricted stock awards and
restricted unit awards, which are payable in cash or common stock or a
combination thereof. Restricted stock awards and restricted unit awards
vest at the times and on the terms established by the Committee. However,
vesting generally may not occur earlier than 12 months after the date of
award and may occur only if the recipient has continuously been an
employee of the Corporation (or an affiliate) from the date of the award to
the date of vesting. The Committee in its discretion may accelerate the
vesting of shares and units, and may provide that some or all unvested
shares and units shall immediately vest and be payable in the event of a
change in control of the Corporation. The proposed amendments do not
contemplate any changes to the 1985 Plan with respect to restricted stock or
unit awards.
TAX ASPECTS OF OPTIONS
The Corporation is advised by its tax counsel that under existing federal
income tax laws, the consequences of options and awards to recipients and
the Corporation under the 1985 Plan are as summarized below.
A recipient of a stock option will not have taxable income upon the grant
of the option. For options other than Incentive Stock Options, the optionee
will recognize ordinary income upon exercise in an amount equal to
the excess of the fair market value of the shares over the option price (the
"appreciation value") on the date of exercise. Any gain or loss recognized
upon any later disposition of the shares generally will be capital gain or loss.
Purchase of shares upon exercise of an Incentive Stock Option will not
result in any taxable income to the optionee, except for purposes of the
alternative minimum tax. Gain or loss recognized by the optionee on a later
sale or other disposition will either be long-term capital gain or loss or
ordinary income depending upon whether the optionee holds the shares
transferred upon the exercise for a specified period. Any ordinary income
recognized will be in the amount, if any, by which the lesser of the fair
market value of such shares on the date of exercise or the amount realized
from the sale exceeds the option price.
14<PAGE>
The Corporation will be entitled to a tax deduction in connection with
the exercise of options only for the year and to the extent that the optionee
recognizes ordinary income, and only if applicable withholding requirements
are met.
Unless the employee elects to be taxed at the time of receipt of
restricted stock, an employee receiving a restricted stock or unit award will
not have taxable income upon the receipt of the restricted stock or unit, but
upon vesting will recognize ordinary income equal to the fair market value of
the shares and/or cash at the time of vesting. The Corporation generally will
be entitled to a deduction for the year and to the extent the employee
recognizes ordinary income.
At the discretion of the Committee, the 1985 Plan allows an optionee or
recipient of an award to satisfy tax withholding requirements under federal
and state tax laws in connection with the exercise or receipt of options by
electing to have shares of common stock withheld, or by delivering to the
Corporation already-owned shares, having a value equal to the amount
required to be withheld.
ADMINISTRATION, AMENDMENT AND TERMINATION
Committee members are not eligible to receive options or awards under
the 1985 Plan, except for the options automatically granted to nonemployee
directors as described above. The Committee has the sole discretion to
determine the key employees to whom options and awards are to be granted
and, subject to the terms of the 1985 Plan, the number of shares to be
subject to such options and awards, the terms, conditions and any
performance criteria for the options and awards, and any appropriate
adjustments to the outstanding options, awards and numerical limits in the
1985 Plan in the event of a corporate transaction effecting the number of
shares outstanding, such as a stock split.
The Board of Directors and the Committee are authorized to amend the
1985 Plan at any time, but stockholder approval of an amendment is
required if necessary in order to preserve the 1985 Plan's qualification under
Rule 16b-3 under the Securities Exchange Act of 1934.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS
VOTE FOR PROPOSAL 3.
15<PAGE>
(4) APPROVAL OF THE ADOPTION OF
THE VALUE ADDED INCENTIVE PLAN
The Corporation has had a performance-based annual incentive plan
which rewarded management for achieving earnings results versus targeted
results and for the accomplishment of certain strategic objectives and
personal performance. Based upon the recommendation of the Management
Development and Compensation Committee (the "Committee"), the Board
approved adoption of a new value added incentive plan, to be effective
January 1, 1994, subject to approval by the affirmative vote of the holders of
a majority of the shares of common stock of the Corporation present in
person or by proxy at the Annual Meeting and entitled to vote thereon.
The Board of Directors believes that the adoption of the Value Added
Incentive Plan (the "Value Added Plan") is in the best interest of
stockholders because it better links the compensation of management with
the long-term interests of stockholders. The Value Added Plan is also
designed to preserve the tax deductibility of executive compensation paid
thereunder (See Certain Tax Aspects on page 12 below). It can be
demonstrated that value added, the difference between adjusted net income
(estimated economic earnings) and an imputed capital charge, is linked over
time to the market premium or discount to book value at which a company's
common stock trades. Therefore, by basing management's annual incentive
compensation on value added, the Board is striving to strengthen the
relationship between management's compensation and stockholder return.
The Board of Directors recommends that stockholders vote in favor of this
proposal.
DESCRIPTION OF THE VALUE ADDED PLAN
The Value Added Plan is set forth in its entirety as Exhibit A to this
Proxy Statement and the following description is qualified in its entirety by
reference to Exhibit A.
PURPOSE
The Value Added Plan is intended to motivate participants to increase
shareholder value by improving operating results and efficiently employing
the Corporation's capital. Furthermore, such plan is intended to attract and
retain the services of key executives who are in a position to influence the
success of the Company.
ELIGIBILITY TO RECEIVE AWARDS
Key executives of the Company and its affiliates who are likely to have a
significant impact on the value added performance of the Company are
eligible to participate in the Value Added Plan only if approved by the
Committee prior to the start of the applicable calendar year (the "Plan
Year"). For 1994, the participants in the Value Added Plan are the five
individuals named in the Summary Compensation Table on page 18 as well
as the Senior Vice President responsible for corporate development and
certain business operations.
16<PAGE>
AWARDS
Prior to the start of each Plan Year, the Committee establishes each
participant's target award under the Value Added Plan. Target awards are
expressed as a percent of an individual's base salary for the Plan Year,
which is approved by the Committee prior to the beginning of such year.
Actual awards are based on the level of the Corporation's "value added"
during the Plan Year.
Under the Value Added Plan, value added is defined as the
Corporation's adjusted net income for the Plan Year minus a capital charge.
For this purpose, adjusted net income is the Corporation's net income
available to common stockholders determined in accordance with generally
accepted accounting principles, as adjusted (a) for the cumulative effect of any
changes in accounting standards, (b) by substituting level economic costs of
interest and depreciation on equipment held for lease in lieu of accounting
charges, (c) by amortizing portfolio gains and losses over a period of years,
and (d) by excluding the amortization of goodwill. The capital charge to be
subtracted from adjusted net income is calculated by multiplying the
Corporation's average adjusted equity (as defined in the Value Added Plan) by
the Corporation's cost of equity. The Corporation's cost of equity is to be
based on a formula adopted by the Committee prior to the start of the applicable
Plan Year. For 1994 the cost of equity will be determined by adding (a) the
Corporation's risk premium (the long-term market growth in equity securities
over the risk-free rate multiplied by the Corporation's beta) and (b) the trend
risk-free rate.
The Committee has adopted a payout table, which includes the level of
value added for which participants will receive their target awards, as well
as the level of awards payable to participants for value added results that
are greater or less than the predetermined target level. The Committee may
modify the table prior to the start of any future Plan Year. The Committee
may also prospectively amend or terminate the Value Added Plan at any
time and for any reason. Before any award is paid, the Committee will
certify the level of value added achieved and the resulting awards earned.
No participant's annual award under the Value Added Plan may exceed
three times his or her target award and in no event may any participant's
award exceed $3,000,000 for any Plan Year. Also, the Committee retains
discretion to reduce the award for any participant below the award that
would otherwise be payable in accordance with the Value Added Plan.
Awards under the Value Added Plan generally will be payable in cash on
or before the March 20 next following the end of the Plan Year during which
the award was earned. However, the Committee reserves the right to
declare any award, in whole or in part, payable in restricted stock issued
under the Corporation's 1985 Stock Option and Award Plan or its successor.
Restricted stock so granted would have a value equal to the cash amount
foregone, based on the fair market value on the date that the cash payment
would otherwise have been made.
17<PAGE>
The following table sets forth the target awards that would be payable to
the persons named in the Summary Compensation Table on page 18 and to
all current executive officers as a group if the Corporation's value added
equals a predetermined amount in excess of $75 million in 1994. There is no
assurance that the Corporation will achieve sufficient value added to result
in the payment of the target awards or any awards under the Value Added
Plan.
VALUE ADDED INCENTIVE PLAN
NAME AND POSITION 1994 TARGET AWARDS(1)
------------------ ---------------------
Frank C. Herringer $ 633,750
President and Chief Executive
Officer
David R. Carpenter 256,725
Executive Vice President
Richard H. Finn 210,700
Executive Vice President
Richard N. Latzer 102,500
Senior Vice President and Chief
Investment Officer
Edgar H. Grubb 205,500
Executive Vice President and
Chief Financial Officer
All current executive officers as a group $1,499,625
- ----------
(1) The maximum award payable is three times each individual's target
award. Nonemployee directors and employees who are not current executive
officers are not eligible to participate in the Value Added Plan in 1994.
18<PAGE>
The award paid (if any) under the Value Added Plan generally will be
the only annual incentive the Corporation's Chief Executive Officer and
Chief Financial Officer will receive. All other participants in the Value
Added Plan, who have responsibility for a major subsidiary or business unit,
will also be eligible for an annual award under the Corporation's regular
bonus plan based on the performance of their individual subsidiary or
business unit. The Committee reserves the right to make discretionary
awards related to the accomplishment of strategic goals outside the context
of the Value Added Plan to any executive officer, which awards may be
subject to the limitation as to deductibility for federal income tax purposes
as described below.
CERTAIN TAX ASPECTS
Under new rules contained in the Internal Revenue Code, the
Corporation may be limited as to federal income tax deductions for 1994 and
later years to the extent that total compensation paid to the Corporation's
Chief Executive Officer and to each of the other four most highly
compensated executive officers exceeds $1,000,000 in any one year.
However, the Corporation can preserve the deductibility of certain
compensation in excess of $1,000,000, provided that it complies with
conditions imposed by the new rules, including the payment of
performance-based compensation pursuant to a plan approved by
stockholders. The Value Added Plan is intended to comply with Section
162(m) of the Internal Revenue Code by qualifying payments under the
Value Added Plan as performance-based compensation.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS
VOTE FOR PROPOSAL 4.
(5) STOCKHOLDER PROPOSAL ON DIRECTORS COMPENSATION
The Corporation has been advised that a stockholder of the Corporation
proposes to introduce the following proposal and statement in support
thereof at the 1994 Annual Meeting of Stockholders. (The name and address
of, and the number of shares held by, the proponent can be obtained upon
request from the Office of the Secretary of the Corporation.)
"The shareholders of TransAmerica Corporation request the Board of
Directors take the necessary steps to amend the company's governing
instruments to adopt the following: Beginning on the 1995 TransAmerica
Corporation's fiscal year all members of the Board of Director's total
compensation will be in the form of TransAmerica Corporation common
stock.
"The price of the stock paid to the board members shall be the
closing price on the New York Stock Exchange of the preceding year.
19<PAGE>
"In addition, each director must sign an agreement to hold onto a
minimum of 80% of the shares paid as compensation at least one year
after his or her term expires. Should any director fail to comply with this
agreement, such director shall have sixty (60) days from the date of
non-compliance to again comply. Failure to again comply shall result in
disqualification and such director's position shall be declared vacant."
STATEMENT BY STOCKHOLDER IN SUPPORT OF THE PROPOSAL
"In this proponent's opinion this is the most important issue before the
American public today, 'Accountability'. In our government, our schools, our
law system and our corporations we've lost accountability. Everyone wants
to be under the umbrella of tenure, seniority, guaranteed contracts and
Golden Parachutes. These people want to be handsomely paid whether they
do good or bad, completely against the principals of our country. What
created this great nation and what gave us stockholders the standard of
living we enjoy. That this management would object to being paid solely in
company stock shows just how far it has gone.
"Management in this country has created a monopoly. It doesn't matter
if a director knows whether we make widgets or digets, just as long as he
has a degree from a prestigious college and is one of the good old boy club.
Next to the Soviet politburo, management has created one of the largest
pork barrels ever known. After fifty years a great light shone in the west
and the Russians suddenly realized that, "We aint got nuttin" so now they
reason! Let's follow those guys over there who got something while our
great crop of M.B.A.s have decided to emulate their failed system.
"The Rossi family has investigated about 40 Fortune 500 companies.
Which we believe represents most industries and presents a good cross
section of corporate America. Our study found that all the members of the
board of directors all have advanced degrees from prestigious universities.
They are virtually all white and male. Even though women represent at
least half of our population, we found an occasional sole women, at best two
women on these boards. In addition, BLACKS, ASIANS and HISPANICS
are seldom seen on these boards.
"We came to the conclusion that only ten percent of our population is
currently eligible to serve as a board member on an American corporation.
To be included in this exclusive ten percent, you must be male, educated
(Ivy League or equivalent) and well connected.
"We feel that this is a national tragedy of Himalayan proportions. An
enormous waste of one of our most precious resources. People who have the
innate ability to be innovative, to lead this country's heartbeat--business.
But unfortunately, 90% of our population is excluded, regardless of their
ability.
20<PAGE>
"If this board has so little confidence in their ability to run this
corporation successfully, that they are not willing to take their pay as we
the shareholders do, I suggest they seek another type of employment.
Perhaps tennis. I urge stockholders to pass this proposal for the well being
of this corporation and America!
" `A beginning to accountability'."
STATEMENT BY THE BOARD OF DIRECTORS AGAINST THE PROPOSAL
The Corporation agrees with the proponent that members of the Board
of Directors should have some stake in the performance of the Corporation.
Each director of the Corporation does, in fact, hold shares of the
Corporation's common stock. The Corporation has had in place since 1990 a
stock option program for nonemployee directors (described above under
Nonemployee Director Options on page 8) providing for annual grants of options
to nonemployee directors in order to encourage further stock ownership by
directors. In January 1994, the Board of Directors approved an amendment to the
stock option program, subject to the approval of the Corporation's stockholders,
to increase to 1,500 the number of shares as to which options are granted to
each nonemployee director annually. Options granted in 1994 and future years
generally will be exercisable for ten years and one month. (See Ratification of
Amendment to The 1985 Stock Option and Award Plan on page 7 for a discussion of
the amendment.)
The compensation program for the Corporation's directors is based on
the principle that, in order to help motivate individuals of exceptional
caliber and experience to serve on the Board of Directors of the Corporation,
director compensation must be competitive with other companies with which the
Corporation competes for the services of board members. The Corporation's
compensation program, designed to meet those competitive needs, includes cash,
stock options and benefits. The Corporation believes that the compensation of
members of the Corporation's Board of Directors in its current form is
appropriate and competitive.
The Corporation believes that the proposal is not in the best interest of
the stockholders, is vague and is technically not feasible. For example, an
attempt by the Corporation to force directors to hold shares after leaving
the Board would create substantial administrative and legal difficulties. The
Corporation believes that the proposal is not only poorly conceived and
impractical to administer but would also hinder the Corporation's ability to
attract exceptional individuals to serve on its Board of Directors.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS
VOTE AGAINST PROPOSAL 5.
21<PAGE>
Notwithstanding anything to the contrary set forth in any of the
Corporation's previous filings under the Securities Act of 1933, as amended,
or the Securities Exchange Act of 1934, as amended, that may incorporate
future filings (including this Proxy Statement, in whole or in part), the
following Report of the Compensation Committee on Executive
Compensation and the Stock Price Performance graph on page 17 shall not
be incorporated by reference into any such filings.
EXECUTIVE COMPENSATION AND OTHER INFORMATION
REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
THE COMPENSATION PROGRAM
The Corporation's compensation program is designed to enhance
stockholder value by linking a large part of the executives' compensation
directly to performance. The objective is to provide base salary for
executives at approximately the median level for executives at similar
companies, while providing an opportunity to achieve total compensation
(including base salary, annual bonus and long-term incentives) at the 75th
percentile or above for exceptional performance. The primary components of
the compensation program are base salary, an annual cash bonus driven by
performance against pre-established financial objectives and a long-term
opportunity to participate in increased stockholder value through regular
grants of stock options at fair market value on the date of grant.
RESPONSIBILITIES OF THE MANAGEMENT DEVELOPMENT AND COMPENSATION COMMITTEE
The Management Development and Compensation Committee of the
Board of Directors of the Corporation (the "Committee") was established in
1961 and since that time has been comprised solely of independent,
nonemployee directors. The Committee reviews and approves annual and
long-term incentive compensation plans, executive benefit programs and
perquisites. Annually, the Committee reviews and approves salaries,
bonuses and any other cash compensation payments to executive officers and
other key employees. The Committee also grants stock options, restricted
stock or other awards provided under the stock option plans and approves
the terms of such awards. As administrator of the proposed Value Added
Incentive Plan (described on page 10), the Committee will take certain
actions, including the establishment of target awards, prior to the beginning
of each plan year (commencing with 1994) and will certify in writing that
performance goals are achieved prior to approving payment of awards under
that plan.
The Committee engages executive compensation consultants to conduct
comparative studies, to review proposed changes related to the
Corporation's compensation program, and to discuss general compensation
trends. Included in the comparator group of companies are a combination of
more than 40 companies where data is available who are either in the S&P
Financial Index (excluding banks and savings and loan associations) or have
shareholders' equity similar to that of the Corporation. At least once a year
the Committee meets with the consultants without management present to
discuss the Corporation's compensation program. The Committee also meets
without management present to discuss the performance and compensation
of the Chief Executive Officer ("CEO").
22<PAGE>
ELEMENTS OF THE COMPENSATION PROGRAM
The primary elements of the Corporation's compensation program for the
CEO and other executive officers of the Corporation are described below.
BASE SALARY
Base salaries are reviewed annually by the Committee using competitive
data provided by a compensation consultant and considering industry and
national trends. Individual salaries are adjusted based on this information
and the executive's performance for the preceding year and current
responsibilities.
ANNUAL INCENTIVE PLAN
The 1993 Corporate Bonus Plan covered certain executives of the
Corporation and its subsidiaries, including the CEO and other named
executive officers. At the beginning of 1993 the Committee reviewed
financial objectives and other strategic goals and established target awards
for each participant at alternative performance levels. The target bonus for
each executive was established by the Committee taking into account the
individual's responsibilities, ability to influence the performance of the
Corporation or its subsidiaries, and competitive levels of cash compensation
(salary plus bonus) for similar positions outside the Corporation.
Financial objectives for 1993 for corporate executives, including the
CEO, were based on consolidated earnings per share before investment
gains or losses and, for individuals who also serve as chief executive officers
of subsidiary companies, also included operating earnings for the applicable
subsidiary or subsidiaries.
The bonus earned by Mr. Herringer for 1993 was based on a comparison
of actual financial results to the financial objectives established at the
beginning of 1993, his contributions toward accomplishment of strategic
goals for the Corporation, including the successful initial public offering of
the Corporation's former property and casualty insurance subsidiary, and an
assessment of his personal performance during the year. The Committee
considered that consolidated earnings per share, after taking into account
results from discontinued operations, significantly exceeded 1992 results and
the financial objectives for 1993. In further recognition of the initial public
offering, the Committee also awarded Mr. Herringer and certain other
executive officers shares of restricted stock, as reflected in the Summary
Compensation Table on page 18.
23<PAGE>
STOCK OPTION AWARDS
The Committee believes that stock options are a superior incentive to
motivate key employees to act in the best interests of stockholders. While
many publicly held companies have multiple long-term incentive plans,
frequently including cash, stock options, and restricted stock, or
combinations thereof, stock options are the only continuing long-term
incentive that the Corporation's CEO and other named executive officers
receive and are generally granted annually. The Committee may in unusual
circumstances elect to award restricted stock in recognition of special
performance or to provide further incentives for executives to act in the best
interests of stockholders.
Award levels are based on competitive data relating to long-term
incentive awards provided to the Committee by the executive compensation
consultant, the prospective level of total compensation, and the individual's
responsibilities and ability to influence stockholder value.
Based on these considerations, at the discretion of the Committee, Mr.
Herringer received an option in 1993 at the fair market value on the date of
grant. The option vests over a four-year employment period and generally
expires no later than ten years after grant. Stock options awarded to other
named executive officers were determined in a similar fashion.
POLICY REGARDING DEDUCTIBILITY OF COMPENSATION
Beginning in 1994, the Internal Revenue Code contains new rules
regarding the federal income tax deductibility of compensation paid to the
Corporation's CEO and to each of the other four most highly compensated
executive officers. The Corporation may deduct compensation paid to such
an executive only to the extent that it does not exceed $1,000,000 during any
fiscal year, or complies with certain conditions, including payment pursuant
to a performance-based plan approved by stockholders. The Committee has
taken action to mitigate the possibility that compensation payable to the
executive officers of the Corporation will not be deductible to the
Corporation. The Committee considers the net cost to the Corporation in
making compensation decisions and intends to comply to the extent
practicable with the conditions imposed by the Internal Revenue Code for
the deductibility of executive compensation. Upon the Committee's
recommendation, the Board of Directors has adopted a new annual incentive
plan, the Value Added Incentive Plan (the "Value Added Plan")(described
on page 10), subject to stockholder approval. In addition, based upon the
Committee's recommendation, the Board has approved an amendment to the
Corporation's 1985 Stock Option and Award Plan (the "1985 Plan")(described
on page 7), subject to the approval of stockholders, to, among other things,
establish 500,000 shares as the maximum number of shares with respect to
which options may be awarded to any individual employee during any one
year. Adoption of the Value Added Plan and the amendment to the 1985
Plan should permit those plans to qualify as performance-based, with the
result that compensation paid under the Value Added Plan and compensation
from options granted under the 1985 Plan should be deductible by the
Corporation for federal income tax purposes.
24<PAGE>
COMPENSATION COMMITTEE MEMBERS
Forrest N. Shumway, Chairman
Myron Du Bain
Samuel L. Ginn
Raymond F. O'Brien
Charles R. Schwab
Peter V. Ueberroth
<TABLE>
STOCK PRICE PERFORMANCE
The following graph shows the cumulative total return (with dividends
reinvested) of the Corporation, the S&P 500, and the S&P Financial Index*
(adjusted to eliminate banks and savings and loan institutions) over the
years 1989 through 1993, inclusive:
<CAPTIONS>
CUMULATIVE TOTAL RETURN AS OF DECEMBER 31ST OF EACH YEAR
(ASSUMES $100 WAS INVESTED ON DECEMBER 31, 1988)
COMPANY/INDEX 1989 1990 1991 1992 1993
------------- ----- ----- ------ ------ -----
<S> <C> <C> <C> <C> <C>
Transamerica Corporation 137.00 107.05 138.19 174.10 213.39
S&P 500 Index 131.69 127.60 166.47 179.15 197.21
S&P Financial Index* 141.34 119.98 173.35 204.42 231.06
- ----------
* The S&P Financial Index, adjusted to exclude banks and savings and loan
institutions. The adjusted index consists of the S&P Financial
Miscellaneous Index, the S&P Life Insurance Index, the S&P Multi-Line
Insurance Index, the S&P Property & Casualty Index and the S&P
Personal Loan Index.
All data for the performance graph was provided by Standard & Poor's.
</TABLE>
25<PAGE>
<TABLE>
The following tables contain specific compensation information for the
Chief Executive Officer and the next four most highly compensated
individuals serving as executive officers of the Corporation as of December
31, 1993.
SUMMARY COMPENSATION TABLE
<CAPTIONS>
LONG-TERM
COMPENSATION AWARDS
----------------------------
ANNUAL COMPENSATION RESTRICTED SECURITIES
--------------------- STOCK UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS AWARDS(1) OPTIONS COMPENSATION(2)
--------------------------- ---- ------ ----- ---------- ----------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Frank C. Herringer, 1993 $930,000 $850,000 $243,150 175,000 $99,695
President and Chief Executive 1992 885,000 623,000 100,000 71,282
Officer 1991 818,205 276,000 175,000 70,127
David R. Carpenter, 1993 $667,330 $460,000 100,000 $65,268
Executive Vice President, and 1992 575,000 350,000 60,000 62,941
Chairman, President and Chief 1991 575,000 290,000 50,000 51,747
Executive Officer of Transamerica
Occidental Life Insurance Company
Richard H. Finn, 1993 $562,339 $400,000 100,000 $53,842
Executive Vice President, and 1992 520,000 290,000 50,000 49,610
President and Chief Executive Officer 1991 500,000 100,000 50,000 40,000
of Transamerica Finance Group
Richard N. Latzer, 1993 $390,000 $260,000 $ 48,630 50,000 $39,032
Senior Vice President and 1992 370,000 225,000 35,000 33,605
Chief Investment Officer, and 1991 350,000 200,000 30,000 32,275
President and Chief Executive Officer
of Transamerica Investment Services
Edgar H. Grubb, 1993 $385,404 $295,000 $194,520 60,000 $50,612
Executive Vice President and 1992 335,000 155,000 50,000 34,896
Chief Financial Officer 1991 315,000 75,000 30,000 30,439
- ----------
(1) Shares represented by restricted stock awards (valued at the closing
price of the Corporation's common stock for New York Stock Exchange
Composite Transactions on the date of grant) vest in four equal annual
installments commencing one year from the date of grant provided that
the executive continues to be employed by the Corporation. Dividends on
restricted shares are paid currently. Restricted stock awards were made
to Messrs. Herringer, Latzer and Grubb in connection with the initial
public offering of the Corporation's former property and casualty
26<PAGE>
insurance subsidiary. The number of restricted shares so awarded, which
constitutes the entire restricted stock holdings of the five named
executive officers at December 31, 1993, and the value of such holdings
(valued at the closing price of the Corporation's common stock for New
York Stock Exchange Composite Transactions on December 31, 1993)
was as follows: Mr. Herringer--5,000 shares, $283,750; Mr. Latzer--1,000
shares, $56,750; and Mr. Grubb--4,000 shares, $227,000.
(2) For 1993, includes (i) employer contributions under the Stock Savings
Plan, a 401(k) plan: $1,769 for each of the named executive officers; (ii)
employer contributions under the Stock Savings Plan Plus, a plan
designed to supplement the 401(k) plan: Mr. Herringer--$78,210; Mr.
Carpenter--$49,366; Mr. Finn--$40,166; Mr. Latzer--$28,995; and Mr.
Grubb--$25,540; (iii) employer contributions for additional group term life,
accidental death and dismemberment, and disability insurance: Mr.
Herringer--$19,716; Mr. Carpenter--$14,133; Mr. Finn--$11,907; Mr.
Latzer--$8,268; and Mr. Grubb--$8,162; and (iv) above market interest on
deferred compensation for Mr. Grubb--$15,141.
</TABLE>
27<PAGE>
<TABLE>
STOCK OPTIONS GRANTS IN 1993
<CAPTIONS>
PERCENT POTENTIAL REALIZABLE
OF TOTAL VALUE AT ASSUMED
NUMBER OF OPTIONS ANNUAL RATES OF STOCK
SECURITIES GRANTED TO PRICE APPRECIATION
UNDERLYING EMPLOYEES EXERCISE FOR OPTION TERM(3)
OPTIONS IN FISCAL OR BASE EXPIRATION ----------------------------
NAME GRANTED(1) YEAR PRICE(2) DATE 5% 10%
---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Frank C. Herringer 175,000 10.56% $ 48.25 March 3, 2003 $ 5,310,000 $ 13,458,000
David R. Carpenter 100,000 6.04 48.25 March 3, 2003 3,034,000 7,690,000
Richard H. Finn 100,000 6.04 48.25 March 3, 2003 3,034,000 7,690,000
Richard N. Latzer 50,000 3.02 48.25 March 3, 2003 1,517,000 3,845,000
Edgar H. Grubb 60,000 3.62 48.25 March 3, 2003 1,820,000 4,614,000
All common stockholders(4) NA NA NA NA 2,400,000,000 6,100,000,000
Potential realizable value of the CEO's options as a percentage of
potential value to all common stockholders 0.22% 0.22%
Potential realizable value of the five named executive officers' options
as a percentage of potential value to all common stockholders 0.61% 0.61%
- ----------
(1) Options become exercisable in four annual installments commencing one
year from the date of grant. No stock appreciation rights have been granted.
(2) Subject to the discretion of the Management Development and
Compensation Committee, the exercise price and tax withholding
obligations may be paid in stock.
(3) The Corporation's stock price on March 3, 2003, the end of the option
term, would be $78.59 or $125.15 at appreciation rates of 5% or 10%,
respectively. There can be no assurance that such increase, or any
increase, in the price of the stock will be achieved or that any of the
named individuals will hold the option for its entire term. The average
annual appreciation rate over the ten years previous to the 1993 stock
option grant (i.e. March 3, 1983 through March 3, 1993) was 6.7%. The
market price (the mean of the high and low prices for New York Stock
Exchange Composite Transactions) of the Corporation's common stock on
March 3, 1983) was $25.13.
(4) The potential gains for all common stockholders have been calculated for
the same period as the option term (i.e. between March 3, 1993 and
March 3, 2003). There were 79,453,327 shares outstanding at the close of
business on March 5, 1993.
</TABLE>
28<PAGE>
The total number of options outstanding (vested and unvested) as of
March 4, 1994 for the five named executive officers as a group and for all
employees as a group represents approximately 2.8% and 9.2%, respectively,
of the Corporation's outstanding common stock as of that date.
<TABLE>
AGGREGATED OPTION EXERCISES IN 1993; OPTIONS OUTSTANDING AND VALUES AT
DECEMBER 31, 1993
NUMBER OF
SECURITIES UNDERLYING VALUE OF UNEXERCISED IN THE
UNEXERCISED OPTIONS AT MONEY OPTIONS AT
NUMBER DECEMBER 31, 1993 DECEMBER 31, 1993(2)
OF SHARES ----------------------------- -----------------------------
ACQUIRED VALUE NOT NOT
NAME ON EXERCISE REALIZED(1) EXERCISABLE EXERCISABLE EXERCISABLE EXERCISABLE
---- ------------ ----------- ----------- ----------- ------------ -----------
<S> <C> <C> <C> <C> <C> <C>
Frank C. Herringer 5,220 $138,291 363,855 357,500 $8,009,000 $5,059,000
David R. Carpenter 16,704 544,968 197,580 180,000 4,267,000 2,307,000
Richard H. Finn 12,528 425,169 123,272 170,000 2,628,000 2,147,000
Richard N. Latzer 0 0 58,750 96,250 1,164,000 1,266,000
Edgar H. Grubb 0 0 48,300 115,000 767,000 1,486,000
- ----------
(1) The value realized is the difference between (a) the mean of the high and
low prices of the Corporation's common stock for New York Stock
Exchange Composite Transactions on the date of exercise and (b) the
exercise price of the option multiplied by the number of shares
exercised.
(2) The value of unexercised options is the mean of the high and low prices
of the Corporation's common stock for New York Stock Exchange
Composite Transactions on December 31, 1993, $57.13, less the exercise
price of the option multiplied by the number of options outstanding.
PENSION PLAN AND SUPPLEMENTAL PENSION PLANS
The Corporation has had a retirement plan for eligible employees since
1935. Substantially all of the Corporation's subsidiaries participate in the
plan. Since applicable federal laws and the pension plan limit certain
participants' retirement plan benefits to an amount less than the amount
otherwise provided by the formula and prohibit certain compensation from
being counted for pension purposes, the Corporation, in accordance with the
terms of its Supplemental Pension Plan and SSP+ Supplemental Pension
Plan, will make supplemental payments to make up those differences.
29<PAGE>
YEARS OF SERVICE
REMUNERATION 10 15 20 25 OR MORE
- ------------ ---------- ---------- ---------- ----------
$ 200,000 $ 39,000 $ 59,000 $ 78,000 $ 98,000
400,000 79,000 119,000 158,000 198,000
600,000 119,000 179,000 238,000 298,000
800,000 159,000 239,000 318,000 398,000
1,000,000 199,000 299,000 398,000 498,000
1,200,000 239,000 359,000 478,000 598,000
1,400,000 279,000 419,000 558,000 698,000
1,800,000 359,000 539,000 718,000 898,000
2,200,000 439,000 659,000 878,000 1,098,000
As of December 31, 1993, the named executive officers had the following
years of benefit service: Mr. Herringer--15 years; Mr. Carpenter--18 years;
Mr. Finn--15 years; Mr. Latzer--5 years; and Mr. Grubb--4 years.
The table above shows the total estimated annual retirement benefits
payable under all pension plans to employees, including executive officers,
upon normal retirement on January 1, 1994 after selected periods of benefit
service assuming such employees and their spouses elect a single life annuity
rather than a form of joint and survivor or other form of annuity. If another
form of annuity was selected, the benefits would generally be lower than
those shown in the table.
The plan currently provides for a benefit for each participant, including
the named executive officers, (payable as a single life annuity) of 2% of his
or her final average compensation (average compensation during
the highest 60 consecutive months of his or her final 120 months of employment)
less 0.4% of his or her age 65 monthly Social Security-covered compensation,
with the result multiplied by years of service (up to a maximum of 25 years).
Compensation, as defined in the plans, includes salary and bonus as disclosed in
the Summary Compensation Table on page 18 for the named executive officers.
Benefits earned under the plan's prior benefit formula are protected to the
extent they exceed benefits earned under the current formula. A participant is
fully vested in his or her retirement benefit under the plan after five years of
service.
SEVERANCE AGREEMENTS
The Corporation has entered into severance agreements with each of the
executive officers named in the Summary Compensation Table on page 18 in
order to reinforce and encourage the continued dedication and attention of
such persons to their assigned duties without the distractions arising from a
potential change in control. As described more fully below, after the
severance agreements become operative, a covered executive will be entitled
to payment under his or her agreement only if the executive's employment is
terminated involuntarily other than for cause or if the executive resigns
voluntarily other than for good reason. The agreements become operative
upon the occurrence of a "change in control" of the Corporation, which would
be deemed to occur if (i) any person is or becomes the beneficial owner,
directly or indirectly, of securities of the Corporation representing 35% or
more of the combined voting power of the Corporation's then-outstanding
30<PAGE>
securities; (ii) individuals who at the beginning of the term of the agreement
constituted the Board of Directors of the Corporation (including any new
director whose election or nomination for election by the Corporation's
stockholders was approved by a vote of at least two-thirds of the directors
still in office who were directors at the beginning of such term) cease, for
any reason, to constitute a majority thereof; or (iii) more than 50% of the
assets of the Corporation, including the business for which such executive's
services are principally performed, are disposed of by the Corporation
pursuant to a partial or complete liquidation of the Corporation, a sale of
assets or otherwise. As part of the severance agreement, each executive has
agreed that, subject to the terms of the severance agreement, in the event
of a "potential change in control" of the Corporation, the executive will
remain in the employ of the Corporation or its subsidiaries during the
pendency of any such "potential change in control" and for a period of one
year after the occurrence of an actual "change in control." A "potential
change in control" would be deemed to occur if (i) the Corporation enters
into an agreement, the consummation of which would result in a "change in
control" of the Corporation; (ii) any person (including the Corporation)
publicly announces an intention to take or to consider taking actions which if
consummated would constitute a "change in control;" or (iii) the Board of
Directors adopts a resolution to the effect that a "potential change in
control" has occurred. If an executive's employment is terminated within
three years of a change in control (i) by the Corporation other than for
cause, normal retirement or disability or (ii) by the executive for "good
reason," the executive will be entitled to a lump sum payment equal to 2.99
times his average compensation (salary, including amounts deferred, and
bonus) from the Corporation during the five years immediately preceding
the change in control, as well as amounts allocated or awarded but not yet
paid under the Corporation's bonus plan, settlement of outstanding stock
options, a lump sum payment of certain retirement benefits and continuing
life, disability, accident and health insurance coverage for a three-year
period after such termination. "Good reason" is broadly defined in the
agreements to include any change in duties or responsibilities, reduction in
compensation or benefits, or relocation. In addition, if an executive becomes
subject to an excise tax under the Code as a result of any payments or
benefits received on a change in control, the Corporation will make an
additional payment to make the executive whole after payment of the excise
tax and any income taxes on the additional payment.
31<PAGE>
CERTAIN TRANSACTIONS
In July 1993, Mr. Finn entered into an agreement with the Corporation
in connection with his relocation to San Francisco pursuant to which the
Corporation agreed to loan Mr. Finn $425,000 to assist him with the
purchase of a home in the San Francisco Bay Area. The loan, which was
made on March 4, 1994, is secured by a deed of trust on Mr. Finn's
residence. The full $425,000 in principal remains outstanding. The loan is
interest-free and will be forgiven ratably over the three-year term of the
loan if Mr. Finn remains an employee of the Corporation at each successive
anniversary date of the loan. Further, the loan will be forgiven in full if he
dies or is permanently disabled, if he terminates his employment for good
reason (as defined in the note), or if the Corporation terminates his
employment other than for cause (as defined in the note). If Mr. Finn dies or
becomes permanently disabled during the term of the loan, the Corporation
has agreed to reimburse him or his estate for taxes paid by him or his estate
as a result of the forgiveness of the loan. If, during the term of the loan, Mr.
Finn voluntarily terminates his employment with the Corporation (other
than for good reason) or the Corporation terminates his employment for
cause, the principal amount of the loan then outstanding plus interest at 12%
per annum from the date of such termination will become due. Mr.
Carpenter will be offered a similar agreement when he relocates his
residence to the San Francisco Bay Area.
PRINCIPAL STOCKHOLDERS
Oppenheimer Group, Inc., Oppenheimer Tower, World Financial Center,
New York, New York 10281 has filed a statement on Schedule 13G with the
Securities and Exchange Commission in which it reported owning as of
December 31, 1993, 10,839,743 shares or 14.01% of the Corporation's
outstanding common stock. Oppenheimer Group, Inc. reported that it had
shared voting power and shared dispositive power with respect to all
10,839,743 shares.
The Corporation does not know of any other person who is the beneficial
owner of more than 5% of the Corporation's common stock.
OTHER MATTERS
Management does not know of any matters to be brought before the
meeting except as specified in the notice of the meeting. However, as to any
other matters which may properly come before the meeting, it is intended
that proxies, in the form enclosed, will be voted in accordance with the
judgment of the designated proxy holders.
STOCKHOLDER PROPOSALS FOR NEXT ANNUAL MEETING
Any stockholder proposal intended to be presented at the 1995 Annual
Meeting of Stockholders of the Corporation must be received by the
Corporation no later than November 16, 1994 for inclusion in the
Corporation's Proxy Statement and form of proxy relating to the meeting.
Dated: March 23, 1994
San Francisco, California
32<PAGE>
EXHIBIT A
TRANSAMERICA CORPORATION
VALUE ADDED INCENTIVE PLAN
(EFFECTIVE JANUARY 1, 1994)
SECTION 1. ESTABLISHMENT AND PURPOSE
1.1 Purpose. Transamerica Corporation (the "Company") hereby
establishes the Transamerica Corporation Value Added Incentive Plan (the
"Plan"), effective as of January 1, 1994. The Plan is intended to attract and
retain the services of executives who are in a position to influence the
success of the Company by providing an award based on the financial
performance of the total Company. Further, this Plan is designed to
motivate key executives to increase shareholder value by improving
operating results and efficiently employing the Company's capital.
1.2 Effective Date. The Plan is effective as of January 1, 1994, subject
to the approval by an affirmative vote, at the 1994 Annual Meeting of
Stockholders, or any adjournment thereof, of the holders of a majority of the
outstanding shares of the common stock of the Company, present in person
or by proxy and entitled to vote at such meeting.
SECTION 2. DEFINITIONS
2.1 Defined Terms. When used in the Plan, the following terms shall
have the meanings specified below:
2.1.1 "Adjusted Net Income" means the Company's net income, in
accordance with Generally Accepted Accounting Principles, as reported for the
Plan Year, adjusted for (i) cumulative effects of changes in accounting
standards, (ii) the economic amount of interest and depreciation (levelized
over the life of the equipment) and any economic gains and losses on the
disposition of equipment held for lease in the Plan Year in lieu of reported
interest, depreciation and gains and losses, (iii) amortized bond, equity and
other portfolio gains and losses in lieu of realized gains and losses as
reported, and (iv) the exclusion of goodwill amortized during the Plan Year.
2.1.2 "Adjusted Equity" means the Company's reported shareholders' equity
for the Plan Year, adjusted to exclude (i) preferred stock and (ii) net
unrealized gains and losses on marketable equity and debt securities and
foreign currency translation adjustments, and to include accumulated goodwill
amortization related to assets still owned by the Company.
A-1<PAGE>
2.1.3 "Average Adjusted Equity" means the "five-point" quarterly average
of the Adjusted Equity for the Plan Year, the first point being the preceding
year end.
2.1.4 "Base Salary" means as to any Plan Year a Participant's actual
salary rate approved by the Committee prior to the start of the Plan Year.
Such Base Salary shall be before (i) deductions for taxes or benefits and
(ii) deferrals of compensation pursuant to established plans.
2.1.5 "Board" means the Company's Board of Directors.
2.1.6 "Committee" means the Management Development and Compensation
Committee of the Board of Directors of Transamerica Corporation.
2.1.7 "Cost of Equity" means the Company's imputed equity cost
based on a formula approved by the Committee prior to the start of the
Plan Year.
2.1.8 "Disability" has the meaning assigned to that term in the
Transamerica Disability Income Plan in effect from time to time.
2.1.9 "Maximum Award" means the maximum award pursuant to this Plan to
any individual Participant for any one Plan Year, which shall be $3.0
million.
2.1.10 "Normal Retirement" or "Early Retirement" means any
termination of employment (other than by death or disability) after a
Participant's normal or early retirement date (as defined in the
Company's Retirement Plan).
2.1.11 "Participant" means as to any Plan Year a key executive of
the Company who is likely to have a significant impact on the value
added performance of the Company. An employee must be approved as a
Participant by the Committee before the beginning of each Plan Year.
2.1.12 "Plan Year" means the 1994 calendar year and each
succeeding calendar year.
2.1.13 "Target Award" means the target incentive opportunity for an
individual, expressed as a percentage of his or her Base Salary for a
specific Plan Year. The schedule of individual Target Awards shall be
determined by the Committee in accordance with Section 3.1.
2.1.14 "Value Added" means Adjusted Net Income minus a capital
charge, expressed as a percentage of the Company's Average Adjusted
Equity. The capital charge is determined by multiplying the Company's
Average Adjusted Equity by the Cost of Equity.
A-2<PAGE>
SECTION 3. AWARDS AND COMMITTEE DETERMINATIONS
3.1 Opportunity. The Committee shall approve participation in the
Plan and establish a Target Award for each Participant, based on his or her
role and responsibilities, prior to the beginning of each Plan Year.
3.2 Awards. Payment under this Plan will be based on a payout table
adopted by the Committee in writing prior to the start of the Plan Year.
Such table will generally remain unchanged for a period of years; however,
the Committee reserves the right (in its sole discretion) to modify the table,
provided that such modification is done prior to the start of the applicable
Plan Year. The payout table will provide 100% of a Participant's Target
Award if a certain level of Value Added is achieved and greater or lesser
awards for Value Added that exceeds or is less than, respectively, the level
at which 100% of Target Awards are paid. No Participant's award under this
Plan may exceed three times his or her Target Award, and in no event may
a Participant's award under this Plan exceed his or her Maximum Award.
3.3 Determination. Prior to the start of any Plan Year, the
Committee shall determine for such Plan Year whether any significant
nonrecurring item (e.g. an acquisition, or the gain or loss on a divestiture, of
a business) will be excluded from the calculation of Value Added for the Plan
Year. Such determination shall apply only to events that have occurred since
the adoption of this Plan or that may occur in the Plan Year. Once included,
nonrecurring items may not be excluded in subsequent Plan Years.
3.4 Adjustments Prior to Payment. The Committee, in its sole
discretion, may reduce the award for any Participant below the award that
would otherwise be payable in accordance with the Plan.
3.5 Certification. The Committee shall certify in writing the level of
Value Added achieved and the respective percent of Target Awards earned
for the Plan Year prior to payment of awards.
SECTION 4. PAYMENT OF AWARDS
4.1 Right to Receive Payment. Any award that may become due
under this Plan shall be made solely from the general assets of the
Company, normally on or before the March 20th next following the end of
the Plan Year during which the award was earned. Nothing in this Plan
shall be construed to create a trust or to establish or evidence any
Participant's claim of any right other than as an unsecured general creditor
with respect to any payment to which he or she may be entitled.
A-3<PAGE>
4.1.1 Employment for Plan Year. If a Participant's employment
with the Company continues for the entire Plan Year, the Participant
shall be entitled to receive full payment of the award amount determined
under Section 3 for the Plan Year in accordance with the terms of the
Plan.
4.1.2 Retirement, Disability or Death. In the event of death,
Disability or Normal or Early Retirement of a Participant during a Plan
Year, the Committee (in its sole discretion) will determine on a pro rata
basis the amount of the partial award (if any) to be paid to such
Participant (or to his or her personal representative) for such Plan Year.
Payments will be made in cash at the same time as other awards to
Participants are made for the same Plan Year.
4.1.3 Resignation or Discharge. If during a Plan Year, a
Participant's employment with the Company terminates by reason of
resignation or discharge, then the Participant will not be eligible for and
shall forfeit any award under this Plan for the Plan Year.
4.2 Payment Options. Generally, awards under this Plan will be made
in cash. However, the Committee reserves the right to declare any award,
in whole or in part, payable in restricted stock, awarded under the terms of
the 1985 Stock Option and Award Plan (the "1985 Plan") in an amount
equivalent to the cash amount foregone with the restricted stock valued at
fair market value on the date that the cash payment otherwise would have
been made. Any restricted stock so awarded shall vest ratably over a period
of not more than four years, subject to acceleration for termination of
employment due to death, Disability, Normal or Early Retirement and
change in control.
4.3 Beneficiaries. Each Participant may designate, in writing and on
such form as the Company may prescribe, one or more beneficiaries to
receive any amount that is payable after the individual's death. In the event
of a Participant's death, any award (whether cash or restricted stock) that is
payable to such Participant shall be paid to his or her beneficiary or, in the
event that no beneficiary has been designated, to his or her estate.
SECTION 5. ADMINISTRATION
5.1 Committee. The Plan shall be administered by the Committee.
5.2 Rules and Interpretation. The Committee shall be vested with all
discretion and authority as it deems necessary or appropriate to administer
the Plan and to interpret the provisions of the Plan. Any determination,
decision or action of the Committee in connection with the construction,
interpretation, administration or application of the Plan shall be final,
conclusive and binding upon all persons.
5.3 Records. The records of the Committee with respect to the Plan
shall be conclusive on all Participants and their beneficiaries and on all other
persons.
5.4 Tax Withholding. The Company shall withhold all applicable taxes
required by law from any payment, including any federal, FICA, state and
local taxes.
A-4<PAGE>
SECTION 6. GENERAL PROVISIONS
6.1 Nonassignability. Prior to the time of any payment under the
Plan, a Participant shall have no right by way of anticipation or otherwise to
assign or transfer any interest under this Plan.
6.2 Employment Rights/Participation. The establishment and
subsequent operation of the Plan, including eligibility as a Participant, shall
not be construed as conferring any legal or other rights upon any Participant
or any other individual for the continuation of his or her employment for any
Plan Year or any other period. The Company expressly reserves the right,
which may be exercised at any time and without regard to when during a
Plan Year or other accounting period such exercise occurs, to discharge any
individual and/or treat him or her without regard to the effect which such
treatment might have upon him or her as a Participant in this Plan. Being a
Participant in any one Plan Year does not confer any right to be named as a
Participant for any succeeding Plan Year.
6.3 No Individual Liability. No member of the Committee or the
Board, or any officer of the Company, shall be liable for any determination,
decision or action made in good faith with respect to the Plan or any award
made under the Plan.
6.4 Severability; Governing Law. If any particular provision of this
Plan is found to be invalid or unenforceable, such provision shall not affect
the other provisions of the Plan, but the Plan shall be construed in all
respects as if such invalid provision had been omitted. The provisions of the
Plan shall be governed by and construed in accordance with the laws of the
State of California.
6.5 Affiliates of the Company. Requirements referring to employment
with the Company or payment of awards can be performed through the
Company or any affiliate of the Company.
6.6 1994 Plan Year. For Plan Year 1994, all actions that would
otherwise be required to be taken prior to the beginning of a Plan Year shall
be taken prior to April 1, 1994.
SECTION 7. AMENDMENT AND TERMINATION
7.1 Amendment and Termination. The Committee may prospectively
amend or terminate the Plan at any time and for any reason; provided,
however, that such amendment shall not relieve the Company of its
obligations under Section 7.2.
A-5<PAGE>
7.2 Change in Control of the Company. In the event of a change in
control of the Company (as defined in the severance agreements in effect at
the time of adoption of this Plan between the Company and certain
executive officers, including Plan Participants, the "Agreements"), not later
than the 20th business day following the date of such event, the Company
shall pay each Participant an award that is the greater of (i) an award
calculated in accordance with Section 3 above, but using the period ending
on the day immediately prior to the day a change in control occurred as the
last day of the fiscal year for purposes of determining Value Added, or (ii) a
pro rata amount of each Participant's Target Award for the Plan Year,
based upon the portion of the fiscal year that has elapsed as of the date of
the change in control. Payments made under this Section 7.2 shall not
constitute "good reason" for purposes of terminating employment under any
of the Agreements; however, the failure of the Company or its successor to
continue this Plan or substitute a comparable plan immediately thereafter
shall constitute "good reason" for such purposes.
A-6
</TABLE>
P R O X Y
[LOGO GOES HERE] TRANSAMERICA CORPORATION
ANNUAL MEETING OF STOCKHOLDERS
April 28, 1994
THIS PROXY IS BEING SOLICITED ON BEHALF OF
THE BOARD OF DIRECTORS OF THE CORPORATION
The undersigned hereby appoints James R. Harvey, Frank C. Herringer or Myron Du
Bain, each with power of substitution, as proxies of the undersigned, to attend
the Annual Meeting of Stockholders of Transamerica Corporation, to be held at
the Giannini Auditorium, Concourse Level, Bank of America Center, 555 California
Street, San Francisco, California on April 28, 1994 at 10:30 A.M., and any
adjournment thereof, and to vote the number of shares the
undersigned would be entitled to vote if personally present in the manner
indicated on this form and in their discretion on any other matter which may
properly come before the Meeting.
THIS PROXY WILL BE VOTED AS DIRECTED, BUT IF NOT OTHERWISE DIRECTED, WILL BE
VOTED FOR PROPOSALS 1, 2, 3 AND 4 AND AGAINST PROPOSAL 5. YOUR SHARES CANNOT BE
VOTED UNLESS YOU SIGN AND RETURN THIS CARD OR ATTEND THE MEETING AND VOTE IN
PERSON.
- ----------------------------------------------------------------------------
|
|
(Continued and to be signed on other side)
/ X / PLEASE MARK YOUR
VOTES AS IN THIS
EXAMPLE.
THIS PROXY WILL BE VOTED AS DIRECTED, BUT IF NOT OTHERWISE DIRECTED, WILL BE
VOTED FOR PROPOSALS 1, 2, 3 AND 4 AND AGAINST PROPOSAL 5.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSALS 1, 2, 3 AND 4.
1. Election of Directors.
NOMINEES:
F.N. Shumway
P.V. Ueberroth
For, except vote withheld from the following nominee(s):
--------------------------------------------------------
FOR WITHHELD
/ / / /
2. Election of Ernst & Young, Certified Public Accountants, as independent
auditors.
FOR AGAINST ABSTAIN
/ / / / / /
3. Ratification of an Amendment to The 1985 Stock Option and Award Plan.
FOR AGAINST ABSTAIN
/ / / / / /
4. Approval of the adoption of the Value Added Incentive Plan.
FOR AGAINST ABSTAIN
/ / / / / /
THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST PROPOSAL 5.
5. Stockholder proposal on Directors Compensation.
FOR AGAINST ABSTAIN
/ / / / / /
SIGNATURE(S) DATE
------------------------------------- ---------------
NOTE: PLEASE SIGN EXACTLY AS NAME(S) APPEAR HEREON. JOINT OWNERS SHOULD EACH
SIGN. WHEN SIGNING AS ATTORNEY, EXECUTOR, ADMINISTRATOR, TRUSTEE OR
GUARDIAN, PLEASE GIVE FULL TITLE AS SUCH.
Transamerica Corporation
600 Montgomery Street
San Francisco, California 94111
LOGO goes here Office of the Secretary
April 8, 1994
Dear Transamerica Stockholder:
Our latest records indicate that as yet we have not received your
proxy in connection with the Annual Meeting of Stockholders to be
held on April 28, 1994. It is possible that your proxy and this
letter may have crossed in the mail and, if that is the case,
please disregard this communication.
However, because of your considerable interest in the
Corporation, we are sure you will want your shares represented at
the meeting. If you have mislaid the proxy previously sent to
you or have overlooked returning it, we are enclosing another for
your convenience. If you will sign and return it in the enclosed
envelope promptly, it will give both you and the Corporation the
satisfaction of knowing you have exercised your important right
as a stockholder by having your shares represented at the
meeting.
Our thanks to you, in advance, for your cooperation.
Sincerely,
SIGNATURE
Christopher McLain
Secretary
APPENDIX OF GRAPHIC AND IMAGE DIFFERENCES
The following description of graphic and image differences is provided
pursuant to Rule 304 of Regulation S-T under the Securities Exchange
Act of 1934:
The graph depicting the Five-Year Performance Comparison
appearing on page 17 of the document in paper format
is being filed under cover of Form SE in accordance with
Rule 304(d)(1) of Regulation S-T. Information derived from the graph
is given in the chart in the electronic format document comprising lines
1368 through 1376, which chart also appears in the paper format document
on page 17.
