<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [_]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
Transamerica Corporation
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(Name of Registrant as Specified In Its Charter)
Transamerica Corporation
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
[_] $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:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
<PAGE>
LOGO
LOGO OF TRANSAMERICA APPEARS HERE Transamerica
Corporation
600 Montgomery Street
San Francisco,
California 94111
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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
Thursday, April 27, 1995
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 27, 1995, at
10:30 A.M., for the purpose of:
1. Electing three 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 1995;
3. Approving the adoption of the 1995 Performance Stock Option Plan.
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 3, 1995 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, for any purpose germane to the meeting, during the ten days prior to the
meeting, at the office of the Secretary of the Corporation, 600 Montgomery
Street, San Francisco, California, during ordinary business hours.
By Order of the Board of Directors
Edgar H. Grubb
Secretary
San Francisco, California
March 17, 1995
<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 27, 1995 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 and 3.
Stockholders of record at the close of business on March 3, 1995 are entitled
to vote at the Annual Meeting. On that date the Corporation had outstanding
69,192,903 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. Abstentions and broker non-votes are counted as present
in determining whether the quorum requirement is satisfied. With regard to the
election of directors, if a quorum is present, a plurality vote of the shares
of common stock of the Corporation present in person or by proxy at the Annual
Meeting and entitled to vote will be required for the election of directors. If
a quorum is present, 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 will be required for the election of
independent auditors and approval of Proposal 3. Votes may be cast "For" or
"Withheld" for each director nominee; votes that are withheld will be excluded
entirely from the vote and will have no effect. Abstentions may be specified on
all proposals, except the election of directors. Abstentions on Proposals 2 and
3 will have the same legal effect as negative votes. Under the rules of the New
York Stock Exchange, brokers who hold shares in street name have the authority
to vote in their discretion on "routine" items when they have not received
instructions from beneficial owners. With respect to "non-routine" items, no
broker may vote shares held for customers without specific instructions from
such customers. Under Delaware law, a broker non-vote will have no effect on
the outcome of "non-routine" items requiring the affirmative vote of a majority
of the shares represented at the Annual Meeting and entitled to vote thereon.
The New York Stock Exchange has advised the Corporation that it will treat
Proposal 3 as a "non-routine" item.
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 $16,000 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 1994 Annual Report were
first mailed to stockholders on March 17, 1995.
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(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, three members of the Board of Directors have terms expiring, and
are nominees for election, at the 1995 Annual Meeting of Stockholders. Mr.
Raymond F. O'Brien, whose term as a director expires at the 1995 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 1996 Annual
Meeting of Stockholders and three members have terms expiring at the 1997
Annual Meeting of Stockholders. The number of directors will be reduced to ten
upon Mr. O'Brien's retirement.
Unless instructions to the contrary are given, all proxies received by the
Corporation will be voted for the election of the three nominees named below as
directors of the Corporation to hold office until the 1998 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 any nominee not be a candidate at the 1995 Annual Meeting, all
such proxies so received will be voted in favor of the other nominees 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. All nominees have been recommended by the Board of
Directors for three-year terms expiring at the 1998 Annual Meeting of
Stockholders.
Certain information concerning each of the three 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 1998
JAMES R. HARVEY* Director since 1975 Age 60
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 McKesson
Corporation, AirTouch Communications, Inc., and The Charles Schwab Corporation.
GORDON E. MOORE* Director since 1981 Age 66
Chairman of the Board and a director of Intel Corporation, a semiconductor
manufacturing company. He also serves as a director of Varian Associates, Inc.
CONDOLEEZZA RICE* Director since 1991 Age 40
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 71
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.
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* Member of the Executive Committee.
2
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SAMUEL L. GINN* Director since 1989 Age 57
Chairman of the Board and Chief Executive Officer of AirTouch Communications,
Inc., a worldwide wireless telecommunications company. He was Chairman of the
Board, President, Chief Executive Officer and a director of Pacific Telesis
Group, a diversified telecommunications company, from 1988 to 1994. He also
serves as a director of Chevron Corporation and Safeway Inc.
FRANK C. HERRINGER* Director since 1986 Age 52
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
and Unocal Corporation.
CHARLES R. SCHWAB* Director since 1989 Age 57
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 AirTouch Communications, Inc.
DIRECTORS CONTINUING IN OFFICE UNTIL 1997
TONI REMBE* Director since 1995 Age 58
Partner at Pillsbury, Madison & Sutro, a law firm. She also serves as a
director of American President Companies, Ltd., Pacific Telesis Group and
Potlatch Corporation.
FORREST N. SHUMWAY Director since 1973 Age 68
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 57
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. and The Coca Cola Company.
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. Directors who are employees of the
Corporation do not receive fees for their services as directors.
Directors are eligible annually 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, and amounts deferred for five years or more are credited with
earnings at a rate ranging from 2% 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 deferred
compensation elections made prior to deferral by each participating director.
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* Member of the Executive Committee
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Each member of the Board of Directors who retires from the Board after
serving for at least five years as a non-employee 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 non-employee director.
Directors who are not employees of the Corporation receive stock options
pursuant to The 1985 Stock Option and Award Plan of Transamerica Corporation
(the "1985 Plan"). Under the 1985 Plan, each non-employee director is
automatically granted a nonqualified stock option for 1,500 shares each year.
All options are granted at fair market value on the effective date of the grant
and generally have a term not exceeding ten years and one month. Options issued
to non-employee directors are exercisable beginning six months after grant.
On December 1, 1992, James R. Harvey retired as an executive officer and
employee of, and entered into a consulting agreement with, the Corporation,
which agreement expires April 30, 1995. Under that 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 and to
continue to serve on the Board of Directors. Effective February 1, 1994, Mr.
Harvey agreed to make approximately 20% of his business time available for such
consulting and advisory services or special assignments. As compensation for
such services rendered during 1994, Mr. Harvey was paid a total of $112,500. In
addition, beginning February 1, 1994, Mr. Harvey began receiving the same
retainers and fees as other non-employee directors. He also remains entitled to
the use of an automobile and the reimbursement of certain expenses.
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. Herringer and Ms. Rembe are
directors.
COMMITTEES OF THE BOARD OF DIRECTORS AND MEETINGS HELD
Mr. O'Brien (Chairman), Ms. Rice, Ms. Rembe and Messrs. 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 four meetings in 1994.
Messrs. Ueberroth (Chairman), Du Bain, Ginn, O'Brien, Schwab and Shumway 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 the competitive compensation programs necessary to attract and retain
superior management, reviews and approves cash compensation arrangements and
incentive plans for senior management, reviews, approves and administers the
Corporation's Value Added Incentive Plan, stock option plans, deferred
compensation plan, 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
nominates corporate officers and reviews succession plans for senior corporate
and subsidiary officer positions. The Management Development and Compensation
Committee held three meetings in 1994.
Mr. Du Bain (Chairman), Ms. Rice and Messrs. Harvey, Herringer, Schwab and
Shumway are members of the Nominating Committee of the Board of Directors. The
committee recommends to the Board of Directors the Board size and criteria for
qualification as a candidate for Board membership, reviews the
4
<PAGE>
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 meetings and candidates to fill
vacancies which occur between such annual meetings, and recommends to the Board
the establishment of, and charge of responsibilities to, various committees of
the Board. The Nominating Committee held three meetings in 1994. 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 1994, the Board of Directors held eight meetings. All the directors
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 independent, non-employee
directors.
Mr. Ginn, a member of the Committee, was Chairman of the Board, President and
Chief Executive Officer of Pacific Telesis Group, the parent of PacTel
Corporation ("PacTel"), until 1994. In 1994, Pacific Telesis Group spun-off
PacTel to its shareholders. Mr. Ginn has been and continues to be the Chairman
of the Board and Chief Executive Officer of PacTel, which changed its name to
AirTouch Communications, Inc. in connection with the spin-off. Also, Mr.
Herringer and Ms. Rembe are directors of Pacific Telesis Group. In 1989, the
Corporation, through several wholly-owned subsidiaries, entered into a series
of transactions whereby a subsidiary of 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 was granted 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,
under certain circumstances if required by the Corporation, PacTel had the
obligation to purchase such stock. The purchase by PacTel or its assignee of
either such interest or stock is required to 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 banks 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.
In connection with the spin-off of PacTel by Pacific Telesis Group, all of
PacTel's rights and obligations in connection with the above transactions were
transferred to PacTel Cable, a wholly-owned subsidiary of Pacific Telesis
Group. PacTel Cable pays the Corporation's subsidiaries $400,000 per year plus
certain transaction costs 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 and certain of its subsidiaries
(collectively "Occidental"), have entered into certain agreements with Charles
Schwab & Co., Inc. ("Schwab"), a subsidiary of The Charles Schwab Corporation,
pursuant to which Occidental issues variable annuities which are marketed,
distributed and administered by Schwab. The compensation payable by Occidental
to Schwab for such services is based on a percentage of the value of the assets
invested in the annuities, which assets consist primarily of mutual fund
shares.
5
<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 15, 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 3, 1995.
<TABLE>
<CAPTION>
SHARES OF COMMON STOCK
NAME BENEFICIALLY OWNED(1)
------------------------- -----------------------
<S> <C> <C>
DIRECTORS
Myron Du Bain............ 9,767 (2)(3)
Samuel L. Ginn........... 7,187 (2)(3)
James R. Harvey.......... 142,422 (2)(3)(4)
Frank C. Herringer....... 654,576 (4)(5)
Gordon E. Moore.......... 8,541 (2)
Raymond F. O'Brien....... 6,203 (2)(3)
Toni Rembe............... 2,000 (2)
Condoleezza Rice......... 5,815 (2)
Charles R. Schwab........ 9,975 (2)
Forrest N. Shumway....... 15,208 (2)(3)
Peter V. Ueberroth....... 10,007 (2)(3)
EXECUTIVE OFFICERS
David R. Carpenter....... 353,270 (4)
Richard H. Finn......... 297,917 (3)(4)
Edgar H. Grubb........... 137,697 (3)(4)
Richard N. Latzer........ 136,104 (4)
All Directors and
Executive Officers
as a Group (19 persons). 2,097,682
</TABLE>
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(1) Represents shares held as of March 3, 1995 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 3%, of the
outstanding shares of common stock.
(2) Includes, as to each non-employee director, except Mr. Harvey, Ms. Rembe
and Ms. Rice, 4,500 shares, as to each of Mr. Harvey and Ms. Rice, 5,500
shares, and as to all directors and executive officers as a group, 42,500
shares, which may be acquired upon the exercise of director stock options,
all of which are currently exercisable. These shares are considered
outstanding for purposes of calculating each director's percentage
ownership.
(3) 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-667 shares; Mr. Ginn-2,687
shares; Mr. Harvey-70,082 shares; Mr. O'Brien-1,703 shares; Mr. Shumway-
10,708 shares; Mr. Ueberroth-4,507 shares; Mr. Finn-32,961 shares; and Mr.
Grubb-3,500 shares; and all directors and executive officers as a group-
149,507 shares.
(4) Includes shares which may be acquired upon the exercise of employee stock
options exercisable on March 3, 1995 or within 60 days thereafter, as
follows: Mr. Carpenter-332,580 shares; Mr. Finn-250,772 shares; Mr. Grubb-
130,800 shares; Mr. Harvey-60,000 shares; Mr. Herringer-624,830 shares; Mr.
Latzer-132,500 shares; and all directors and executive officers as a group-
1,784,716 shares. These shares are considered outstanding for purposes of
calculating each such current (or former, in the case of Mr. Harvey)
executive officer's percentage ownership. The numbers in the table also
include restricted stock awards, which vest in three remaining equal annual
installments commencing April 27, 1995, and as to which the executive
officer has the right to vote and to receive dividends, as follows: Mr.
Grubb-3,000 shares; Mr. Herringer-3,750 shares; Mr. Latzer-750 shares; and
all directors and executive officers as a group-10,500 shares. The numbers
in the table also includes shares held under the Corporation's Employees
Stock Savings Plan on December 31, 1994 and as to which the participant has
sole voting and investment power, as follows: Mr. Carpenter-2,969 shares;
Mr. Finn-14,184 shares; Mr. Grubb-397 shares; Mr. Harvey-6,840 shares; Mr.
Herringer-3,448 shares; Mr. Latzer-604 shares; and all directors and
executive officers as a group-43,119 shares.
(5) Excludes 14,796 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.
6
<PAGE>
SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the
Corporation's directors and executive officers, and persons who own more than
10% of the Corporation's common stock, to file reports of ownership and changes
in ownership with the Securities and Exchange Commission.
Based solely on the Corporation's review of the reporting forms received by
it, and written representations from certain persons that no Form 5 reports
were required to be filed by those persons, the Corporation believes that for
1994, all such filing requirements were satisfied except that Mr. Schwab filed
one late report in 1994 which covered the periodic purchase of shares of common
stock through the Corporation's Dividend Reinvestment Plan.
(2) ELECTION OF INDEPENDENT AUDITORS
Independent auditors are to be elected by the stockholders to audit the
financial statements of the Corporation for 1995. The Board of Directors has
nominated Ernst & Young LLP for re-election. Ernst & Young LLP 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 LLP, the Board of Directors of
the Corporation will consider the selection of other auditors.
Representatives of Ernst & Young LLP will be present at the Annual Meeting
with the opportunity to make a statement and respond to appropriate questions.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE FOR
PROPOSAL 2.
(3) APPROVAL OF ADOPTION OF
THE 1995 PERFORMANCE STOCK OPTION PLAN
The Board of Directors on January 26, 1995, unanimously approved the 1995
Performance Stock Option Plan (the "1995 Plan"), and, under the terms of the
1995 Plan, the Management Development and Compensation Committee (the
"Committee") made three separate, one-time grants of nonqualified stock options
totalling 5,000,000 shares, subject to stockholder approval. Grants under the
1995 Plan were made to the Senior Executive Committee (the "SEC", which
includes the Corporation's Chief Executive Officer -- Frank C. Herringer;
Executive Vice President -- David R. Carpenter; Executive Vice President --
Richard H. Finn; Executive Vice President, Chief Financial Officer, and
Secretary -- Edgar H. Grubb; and Senior Vice President -- Thomas J. Cusack),
who, collectively, have responsibility for the Corporation's strategy,
operations and staff functions. Included in the total were grants made to 14
other senior executives, including business unit presidents and equivalent-
level staff officers.
The 1995 Plan is designed to strongly motivate management to achieve superior
stockholder returns. The Board of Directors believes that the adoption of the
1995 Plan and the corresponding option grants are in the best interest of
stockholders because they further align management interests with those of
stockholders. Under the 1995 Plan, stockholders must realize significant
returns on their investment before management can receive any significant gains
on their options.
The option grants, which are a combination of premium priced options and
performance vesting options, are described below:
. 1,025,000 shares granted with an exercise price of $60 per share, which
vest ratably on the third, fourth and fifth anniversaries of the date of
grant ("$60 Options");
. 1,325,000 shares granted with an exercise price of $82 per share, all of
which will be forfeited if the Corporation's common stock does not reach
$82 per share within five years from the date of grant ("$82 Options");
and
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. 2,650,000 shares granted with an exercise price of $100 per share, all
of which will be forfeited if the Corporation's common stock does not
reach $100 per share within seven years from the date of grant ("$100
Options").
In determining the exercise prices, the Board considered that, to achieve
vesting of the $82 and $100 Options within the required time frames, the
Corporation would have to achieve compound, annual stock price appreciation in
excess of 10% over the Corporation's 1994 year-end stock price of $49.75.
Further, the Board determined that the compound growth rate of the
Corporation's common stock necessary for the $82 and $100 Options to vest in
five and seven years, respectively, would have to have approximated the 75th
percentile (i.e., be in the top quartile) of stock price appreciation
(excluding dividends) of the S&P 500 over the five- and ten-year periods ended
December 31, 1994.
Stock options are the only long-term incentive available to Transamerica
executives. There are no other long-term cash-based, performance unit, or
regular restricted stock awards available to Transamerica management. If the
1995 Plan is approved, the five SEC members will receive no other stock options
pursuant to the 1995 Plan or any other plan, nor will they be eligible for any
other long-term incentive award, for 1995, 1996 and 1997. Further, the 1995
Plan prohibits the repricing of options other than as appropriate following
such actions as stock splits, stock dividends, other extraordinary transactions
or other changes to the capital structure of the Corporation.
Adoption of the Plan is subject to the approval of a majority of the shares
of the Corporation's common stock which are present in person or by proxy and
entitled to vote at the Annual Meeting.
DESCRIPTION OF THE PLAN
The 1995 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.
OPTIONS
Options become exercisable as follows. $60 Options will vest ratably in three
equal, annual installments beginning three years from the date of grant.
$82 Options will vest only if, for a period of ten trading days out of any
thirty consecutive trading days ending on or before the fifth anniversary of
the grant date, the reported closing price of the Corporation's common stock is
at least $82 per share (subject to certain anti-dilution adjustments).
Similarly, the $100 Options will vest only if, for a period of ten trading days
out of any thirty consecutive trading days ending on or before the seventh
anniversary of the grant date, the reported closing price of the Corporation's
common stock is at least $100 per share (subject to certain anti-dilution
adjustments).
In the event that an individual retires on or after his or her normal
retirement date under the Corporation's pension plan, becomes disabled or dies,
and the individual's options would have vested within the following six months,
the optionee will vest in the relevant options as though still employed at the
vesting date. If an individual retires on or after his or her normal retirement
date, becomes disabled or dies, and the options would become vested more than
six months following such event, vesting will occur on a pro rata basis based
on the percentage of the vesting period the individual was employed by the
Corporation.
If a $60 Option expires or is cancelled, without having been fully exercised,
the shares covered thereby are again available for grant under the 1995 Plan.
$82 Options and $100 Options are forfeited if the Corporation's common stock
does not reach the values within the time frames stated above, and the
forfeiture will cause such options to be cancelled and the shares covered by
the options will not again be available for grant. If an $82 Option or a $100
Option expires or is cancelled for another reason, such as due to the
resignation of an optionee, those options will remain available for grant under
the 1995 Plan. While all options proposed under the 1995 Plan have been
initially granted, subject to stockholder approval, if any of such
8
<PAGE>
options subsequently become available for grant under the circumstances
described above, such options may not be regranted to initial optionees in the
absence of a promotion. The terms of any new option grants will be determined
by the Committee, including appropriate premium pricing and performance
vesting.
$60 Options and $82 Options generally have a maximum term of ten years, and
$100 Options generally have a maximum term of 12 years. Vested options may be
exercised for up to three months following termination of employment for a
reason other than retirement, disability or death (but not longer than the
maximum term of the Option). The post-termination of employment period of
exercisability is extended to three years if the termination is on account of
total disability and five years if the termination is on account of early or
normal retirement (but not longer than the maximum term of the Option). If the
optionee dies while the option is exercisable, such option may be exercised by
the individual's estate or beneficiary for up to three years from the date of
death.
The following individuals received option awards on January 26, 1995, under
the 1995 Plan, subject to the approval of stockholders.
1995 PERFORMANCE STOCK OPTION AWARDS
<TABLE>
<CAPTION>
PER NUMBER OF
SHARE OPTION
EXERCISE SHARES
NAME AND POSITION PRICE GRANTED
- --------------------------------------------------------------------- -------- ---------
<S> <C> <C>
Frank C. Herringer (1) $ 60.00 425,000
President and Chief Executive Officer 82.00 425,000
100.00 735,000
David R. Carpenter (1) $ 60.00 200,000
Executive Vice President 82.00 200,000
100.00 375,000
Richard H. Finn (1) $ 60.00 200,000
Executive Vice President 82.00 500,000
Richard N. Latzer
Senior Vice President and Chief Investment Officer $100.00 120,000
Edgar H. Grubb (1) $ 60.00 100,000
Executive Vice President, Chief Financial Officer and Secretary 82.00 100,000
100.00 185,000
Thomas J. Cusack (1) $ 60.00 100,000
Senior Vice President 82.00 100,000
100.00 185,000
All current executive officers as a group $ 60.00 1,025,000
82.00 1,325,000
100.00 1,600,000
All current directors who are not executive officers, as a group N/A (2)
All employees, including current officers who are not executive
officers, as a group $100.00 1,050,000
---------
Total Options Granted 5,000,000
=========
</TABLE>
- --------
(1) SEC member
(2) Non-employee directors are not eligible to receive awards under the 1995
Plan.
9
<PAGE>
CHANGE OF CONTROL
In the event of a "change of control" (as defined in the 1995 Plan) the $60
Options will vest in their entirety. In the event that a change of control
occurs prior to the exercise of either the $82 Options or the $100 Options,
each participant will be entitled to surrender the respective options and
exercise related tandem limited stock appreciation rights ("TLSARs"), which
were granted in tandem with the $82 Options and the $100 Options. In the event
the corresponding option is forfeited because it fails to vest within the
applicable time frames described above, the related TLSAR also will be
forfeited.
The TLSARs become exercisable only in the event of a change of control and,
upon exercise, result in cash payments based on a smaller number of shares
times the spread between $50.75, the market price on the date of grant, and the
highest closing price of the Corporation's common stock during the 60-day
period ending on the date of the change of control (or, if higher, the highest
price per share paid in the transaction which gives rise to the change of
control). Exercise of an option (or portion thereof) granted under the 1995
Plan will result in cancellation of the corresponding TLSAR, and vice versa.
The number of shares subject to TLSARs granted under the 1995 Plan are as
follows: for the $82 Options and $100 Options, respectively -- Mr. Herringer-
98,000 and 137,000 shares; Mr. Carpenter-46,000 and 70,000 shares; Mr. Grubb-
23,000 and 34,000 shares; and Mr. Cusack-23,000 and 34,000 shares; for the $82
Options, Mr. Finn-115,000 shares; and, for the $100 Options, Mr. Latzer-22,000
shares; all current executive officers as a group -- for the $82 Options,
305,000 shares and, for the $100 Options, 297,000 shares; and all employees,
including current officers who are not executive officers, as a group, for the
$100 Options -- 196,000 shares. Thus, a total of 798,000 shares are subject to
TLSARs granted under the 1995 Plan. Directors who are not employees are not
eligible to receive TLSARs.
TRANSFERABILITY OF AWARDS
Options granted under the 1995 Plan generally may not be transferred or
assigned by the optionee. However, in limited circumstances, the optionee may
transfer his or her options pursuant to a court-approved domestic relations
order or bona fide gift to immediate family members or certain non-profit
organizations. Following the death of the optionee, options may be transferred
pursuant to the optionee's will or a valid beneficiary designation.
TAX ASPECTS
The Corporation is advised by its tax counsel that, under existing federal
income tax laws, the general federal income tax consequences of options and
TLSARs under the 1995 Plan are as summarized below.
A recipient of a stock option or TLSAR will not have taxable income upon the
grant of the option or TLSAR. The optionee will recognize ordinary income upon
exercise in an amount equal to the excess of the fair market value of the
shares acquired over the exercise price on the date of exercise. Any gain or
loss recognized upon any later disposition of the shares so acquired generally
will be capital gain or loss.
At the discretion of the Committee, the 1995 Plan allows an optionee to
satisfy tax withholding requirements under federal and state tax laws in
connection with the exercise of an option or TLSAR 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 of withholding to be satisfied.
The Corporation will be entitled to a tax deduction in connection with an
award under the 1995 Plan only in an amount equal to the ordinary income
realized by the participant and at the time the participant recognizes such
income, and if applicable withholding requirements are met. In addition, the
1995 Plan has been designed to satisfy the requirements of Section 162(m) of
the Internal Revenue Code of 1986, as amended (the "Code"), which contains
special 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.
10
<PAGE>
ADMINISTRATION, AMENDMENT AND TERMINATION OF THE PLAN
The Plan will be administered by the Committee. The members of the Committee
must qualify as "disinterested persons" under Rule 16b-3 under the Securities
Exchange Act of 1934, as amended (the "1934 Act") and as "outside directors"
under Section 162(m) of the Code (for purposes of qualifying the 1995 Plan as
performance-based compensation under such Section 162(m)).
Subject to the terms of the 1995 Plan, the Committee has the sole discretion
to determine the employees who shall be granted options or TLSARs, the size of
such awards, and the terms and conditions thereof. Selected senior management
employees of the Corporation and its affiliates (i.e., any corporation or other
entity controlling, controlled by or under common control with the Corporation)
are eligible to be selected to receive options and TLSARs. The actual number of
employees who will receive such awards under the 1995 Plan cannot be precisely
determined because eligibility for participation is in the discretion of the
Committee. However, it currently is expected that no more than approximately 20
individuals will receive awards under the 1995 Plan. The number of shares
covered by each award will be determined by the Committee, but during any
fiscal year of the Corporation no participant may be granted options for more
than 1,700,000 shares or TLSARs for more than 235,000 shares. A total of
5,000,000 shares of the Corporation's common stock are available for grant
under the 1995 Plan. The number of shares available for grant under the 1995
Plan (and outstanding options and TLSARs and the numerical limitation on
individual grants) will be adjusted as appropriate to reflect any stock splits,
stock dividends, other extraordinary transactions or other changes to the
capital structure of the Corporation. The fair market value of the
Corporation's common stock on March 3, 1995, was $54.50.
The Board of Directors and the Committee are authorized to amend the 1995
Plan at any time, but stockholder approval of an amendment is required if
necessary in order to preserve the 1995 Plan's qualification under Rule 16b-3
under the 1934 Act or Section 162(m) of the Code.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE FOR
PROPOSAL 3.
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 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 executive compensation directly to those
aspects of performance that are highly correlated with share price. The
objective is to provide executives an opportunity to achieve total compensation
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 the Corporation's Value Added performance and a long-term opportunity
to participate in increased stockholder value through grants of stock options.
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, non-employee
directors. The Committee reviews and approves incentive plans, executive
benefit programs and perquisites. Annually, the Committee reviews and approves
base salaries, bonuses and any
11
<PAGE>
other cash payments to executive officers and other key employees. The
Committee also grants stock options and restricted stock, approves the terms of
such awards and interprets incentive plans, as required. As administrator of
the Value Added Incentive Plan, the Committee takes certain actions, including
the establishment of target awards prior to the beginning of each plan year,
and certifies in writing that performance goals are achieved prior to approving
payment of awards under that plan.
The Committee annually engages executive compensation consultants to review
competitive levels of total compensation, including base salary and annual and
long-term incentive programs. The consultants conduct comparative studies,
review proposed changes related to the Corporation's compensation program, and
discuss general compensation trends. Included in the comparator group of
companies are a combination of companies in the S&P Financial Index (excluding
banks and savings and loan associations) and a sampling of companies with
shareholders' equity of similar size to that of the Corporation, for which data
is readily available. At least once a year the Committee meets with the
consultants without management present. The Committee also meets without
management present to discuss the Chief Executive Officer's performance and
compensation.
Elements of the Compensation Program
The primary elements of the Corporation's compensation program for the Chief
Executive Officer ("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 the compensation consultants 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. On
average, salaries of executive officers, including the salary of the CEO, were
between the median and 75th percentile of salaries of similar positions in
comparator companies.
Annual Incentive Plan
The Value Added Incentive Plan (the "Value Added Plan"), approved by
stockholders in 1994, covers the CEO and other named executive officers. The
Value Added Plan rewards management for both improving operating results and
efficiently employing the Corporation's capital. Awards under the Value Added
Plan are based on the Corporation's actual Value Added, which is defined as the
Corporation's Adjusted Net Income minus an equity charge, expressed as a
percentage of the Corporation's Average Adjusted Equity, all as defined in the
Value Added Plan. Such awards were the only annual incentive awards the
Corporation's CEO and Chief Financial Officer received for 1994. The
Corporation's Value Added for 1994 generated approximately 89% of target
bonuses for plan participants. In the case of the CEO, his 1994 bonus was down
34% from 1993. While operating results were up from the previous year, the
Corporation's operating results did not increase sufficiently to offset the
Corporation's cost of equity capital, which rose as interest rates increased.
Amounts awarded to other executive officers, including the other three named
executives in the Summary Compensation Table, were based substantially on Value
Added as described above for the CEO. Additionally, they were awarded amounts
based on the performance of individual business units reporting to them and/or
accomplishment of certain strategic goals.
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.
12
<PAGE>
The Committee made awards in 1994 based on information supplied by the
compensation consultants and taking into consideration a number of factors,
including the competitive level of long-term incentive awards, the prospective
level of total compensation, and the individual's responsibilities and ability
to influence stockholder value, but not the amount or terms of outstanding
previous awards.
Based on these considerations, at the discretion of the Committee, Mr.
Herringer was granted an option in 1994 with an exercise price equal to 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.
Proposed 1995 Performance Stock Option Plan
The Committee recommended adoption of the 1995 Performance Stock Option Plan
(the "1995 Plan"), as described beginning on page 7. Under the 1995 Plan,
stockholders must realize significant returns on their investment before
management can receive any significant gains on their options.
The 1995 Plan, together with the Value Added Incentive Plan approved by
stockholders in 1994, strongly focus the Corporation's senior management on
delivering significant stockholder value.
Policy Regarding Deductibility of Compensation
Section 162(m) of the Internal Revenue Code limits 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
generally may deduct compensation paid to such an officer only if the
compensation does not exceed $1 million during any fiscal year or is
"performance-based" as defined in Section 162(m). The Committee considers the
net cost to the Corporation in making compensation decisions. Accordingly, upon
the Committee's recommendation, the Board in 1994 adopted the Value Added
Incentive Plan (the "Value Added Plan") and amended the Corporation's 1985
Stock Option and Award Plan (the "1985 Plan") to, among other things, permit
those plans to qualify as performance-based, such that compensation
attributable to the Value Added Plan and compensation from options granted
under the 1985 Plan may be deducted by the Corporation for federal income tax
purposes. The proposed 1995 Plan also is intended to permit compensation paid
thereunder to qualify as performance-based compensation.
Compensation Committee Members
Peter V. Ueberroth, Chairman
Myron Du Bain
Samuel L. Ginn
Raymond F. O'Brien
Charles R. Schwab
Forrest N. Shumway
13
<PAGE>
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* over
the years 1990 through 1994, inclusive:
[GRAPH]
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------
CUMULATIVE TOTAL RETURN AS OF DECEMBER 31ST OF EACH YEAR
(ASSUMES $100 WAS INVESTED ON DECEMBER 31, 1989)
- --------------------------------------------------------------------------------------
COMPANY/INDEX 1990 1991 1992 1993 1994
- --------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Transamerica Corporation 78.14 100.87 127.08 155.76 142.02
- --------------------------------------------------------------------------------------
S&P 500 Index 96.89 126.42 136.05 149.76 151.74
- --------------------------------------------------------------------------------------
S&P Financial Index* 84.89 122.65 144.64 163.49 162.16
- --------------------------------------------------------------------------------------
</TABLE>
All data for the performance graph was provided by Standard & Poor's Compustat
Services.
- --------
* 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, weighted by
market capitalization.
14
<PAGE>
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, 1994.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL LONG-TERM
COMPENSATION COMPENSATION AWARDS
----------------- ---------------------
RESTRICTED SECURITIES
NAME AND PRINCIPAL STOCK UNDERLYING ALL OTHER
POSITION YEAR SALARY BONUS AWARDS(1) OPTIONS COMPENSATION(2)
- ------------------------ ---- -------- -------- ---------- ---------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Frank C. Herringer, 1994 $975,000 $561,566 150,000 $73,581
President and Chief 1993 930,000 850,000 $243,150 175,000 99,695
Executive Officer 1992 885,000 623,000 100,000 71,282
David R. Carpenter, 1994 $733,500 $410,000 80,000 $52,270
Executive Vice 1993 667,330 460,000 100,000 65,268
President, and 1992 575,000 350,000 60,000 62,941
Chairman and Chief
Executive Officer of
Transamerica Occidental
Life Insurance Company
Richard H. Finn, 1994 $602,000 $400,167 80,000 $53,049
Executive Vice 1993 562,339 400,000 100,000 53,842
President, and 1992 520,000 290,000 50,000 49,610
President and Chief
Executive Officer of
Transamerica Finance
Group
Richard N. Latzer, 1994 $410,000 $215,825 45,000 $31,525
Senior Vice President 1993 390,000 260,000 $ 48,630 50,000 39,032
and Chief Investment 1992 370,000 225,000 35,000 33,605
Officer, and President
and Chief Executive
Officer of Transamerica
Investment Services
Edgar H. Grubb, 1994 $411,000 $182,094 40,000 $50,960
Executive Vice 1993 385,404 295,000 $194,520 60,000 50,612
President, Chief 1992 335,000 155,000 50,000 34,896
Financial Officer and
Secretary
</TABLE>
- --------
(1) Shares represented by restricted stock awards 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-5,000 shares, Latzer-1,000 shares, and Grubb-4,000
shares, as part of a special bonus for the successful completion of the
initial public offering of the Corporation's former property and casualty
insurance operations. The number of restricted shares remaining unvested as
of December 31, 1994, which constitutes the entire restricted stock
holdings of the five named executive officers, 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 such date) was as
follows: Mr. Herringer-3,750 shares, $186,563; Mr. Latzer-750 shares,
$37,313; and Mr. Grubb-3,000 shares, $149,250.
(2) For 1994, includes (i) employer contributions under the Stock Savings Plan,
a 401(k) plan: $1,125 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-$47,604; Mr. Carpenter-
$35,595; Mr. Finn-$29,855; Mr. Latzer-$18,450; and Mr. Grubb-$19,979; (iii)
employer contributions for additional group term life, accidental death and
dismemberment, and disability insurance: Mr. Herringer-$20,670; Mr.
Carpenter-$15,550; Mr. Finn-$12,762; Mr. Latzer-$8,692; and Mr. Grubb-
$8,713; (iv) above market interest on deferred compensation for Mr.
Herringer-$4,182; Mr. Latzer-$3,258; and Mr. Grubb-$21,143; and (v)
reimbursement in connection with his relocation to San Francisco for Mr.
Finn-$9,307.
15
<PAGE>
STOCK OPTION GRANTS IN 1994
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES OF STOCK
PRICE APPRECIATION
FOR OPTION TERM
-----------------------------
PERCENT
OF TOTAL
NUMBER OF OPTIONS
SECURITIES GRANTED TO
UNDERLYING EMPLOYEES EXERCISE
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 150,000 9.76% $50.94 March 1, 2004 $ 4,806,000 $ 12,179,000
David R. Carpenter 80,000 5.21 50.94 March 1, 2004 2,563,000 6,495,000
Richard H. Finn 80,000 5.21 50.94 March 1, 2004 2,563,000 6,495,000
Richard N. Latzer 45,000 2.93 50.94 March 1, 2004 1,442,000 3,654,000
Edgar H. Grubb 40,000 2.60 50.94 March 1, 2004 1,282,000 3,248,000
All common
stockholders (3) NA NA NA NA $2,424,491,983 $6,143,711,115
Potential realizable value of the CEO's options as a percentage
of potential value to all common stock outstanding................. 0.20% 0.20%
Potential realizable value of the five named executive officers'
options as a percentage of potential value to all common stock
outstanding........................................................ 0.52% 0.52%
</TABLE>
- --------
(1) Options become exercisable in four annual installments commencing one year
from the date of grant. No stock appreciation rights were granted in 1994.
(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 potential gains for all common stockholders have been calculated for
the same period as the option term, i.e. between March 1, 1994 and March 1,
2004. The Corporation's stock price on March 1, 2004, would be $82.98 or
$132.13 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. There were 75,670,786 shares outstanding at the close of
business on March 1, 1994.
The average annual appreciation rate of the Corporation's common stock over
the ten years previous to the 1994 stock option grant, i.e. March 1, 1984
through March 1, 1994, was 8.25%. 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 1, 1984 was $23.06.
The total number of options outstanding (vested and unvested, including the
grants proposed for stockholder approval under the 1995 Performance Stock
Option Plan) as of March 3, 1995 for the five named executive officers as a
group and for all employees as a group represents approximately 8.2% and 11.1%,
respectively, of the Corporation's outstanding common stock as of that date.
16
<PAGE>
AGGREGATED OPTION EXERCISES IN 1994; OPTIONS OUTSTANDING AND VALUES AT DECEMBER
31, 1994
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES UNDERLYING VALUE OF UNEXERCISED IN THE
UNEXERCISED OPTIONS AT MONEY OPTIONS AT
NUMBER DECEMBER 31, 1994 DECEMBER 31, 1994(2)
OF SHARES ----------------------- ----------------------------
ACQUIRED VALUE NOT NOT
NAME ON EXERCISE REALIZED(1) EXERCISABLE EXERCISABLE EXERCISABLE EXERCISABLE
- ------------------ ----------- ----------- ----------- ----------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Frank G. Herringer 9,025 $233,239 487,330 375,000 $6,255,000 $1,278,000
David R. Carpenter 0 0 260,080 197,500 3,252,000 538,000
Richard H. Finn 0 0 180,772 192,500 2,115,000 498,000
Richard N. Latzer 0 0 92,500 107,500 980,000 308,000
Edgar H. Grubb 0 0 85,800 117,500 689,000 380,000
</TABLE>
- --------
(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 closing price of the Corporation's
common stock for New York Stock Exchange Composite Transactions on December
30, 1994, $49.75, 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.
<TABLE>
<CAPTION>
YEARS OF SERVICE
-------------------------------------------------------------------------
REMUNERATION 10 15 20 25 OR MORE
- ------------ -- -- -- ----------
<S> <C> <C> <C> <C>
$ 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
</TABLE>
As of December 31, 1994, the named executive officers had the following years
of benefit service: Mr. Herringer-16 years; Mr. Carpenter-19 years; Mr. Finn-16
years; Mr. Latzer-6 years; and Mr. Grubb-5 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, 1995, 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
17
<PAGE>
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 benefit service (up to a
maximum of 25 years). Compensation, as defined in the plans, includes salary
(as disclosed in the Summary Compensation Table on page 15) and the executive's
target bonus under the bonus plan applicable to the executive. Benefits earned
under the pension 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 pension plan after five years of
service.
SEVERANCE AGREEMENTS
The Company has entered into severance agreements with each of the executive
officers named in the Summary Compensation Table on page 15. The agreements
provide that, if the executive is terminated other than for cause, retirement
or disability within three years after a change of control of the Corporation
or if the executive terminates his employment for good reason within such
three-year period or voluntarily during the 30-day period following the first
anniversary of the change of control, the executive is entitled to receive a
lump sum severance payment equal to three times the sum of his highest target
annual compensation during the three years immediately preceding the change in
control, together with certain other payments and benefits, including
continuation of employee welfare benefits. An additional payment is required to
compensate the executive for income and excise taxes imposed with respect to
payments or benefits received due to a change of control.
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 loan is
interest-free and is being forgiven ratably over its three-year term provided
that Mr. Finn remains an employee of the Corporation at each successive
anniversary date of the loan. On March 4, 1995, the principal amount of
$142,000 was forgiven and the current balance of the loan is $283,000. Also,
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). In addition, 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.
In 1994, the Corporation and its subsidiaries obtained legal services from
the law firm of Pillsbury, Madison & Sutro, of which Ms. Rembe is a member, on
terms which the Corporation believes were as favorable as would have been
obtained from unaffiliated third parties. It is anticipated that such law firm
will perform additional legal services for the Corporation and its subsidiaries
in 1995.
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, 1994,
10,396,634 shares or 14.80% 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 10,396,634 shares.
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The Corporation does not know of any other person who is the beneficial owner
of more than 5% of the Corporation's outstanding common stock.
OTHER MATTERS
Management does not know of any matters to be brought before the Annual
Meeting except as specified in the Notice of the Annual Meeting. However, as to
any other matters which may properly come before the Annual 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 1996 Annual Meeting
of Stockholders of the Corporation must be received by the Corporation no later
than November 17, 1995, for inclusion in the Corporation's Proxy Statement and
form of proxy relating to such meeting.
San Francisco, California
March 17, 1995
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EXHIBIT A
TRANSAMERICA CORPORATION
1995 PERFORMANCE STOCK OPTION PLAN
TRANSAMERICA CORPORATION, hereby adopts the Transamerica Corporation 1995
Performance Stock Option Plan, effective as of January 26, 1995, as follows:
SECTION 1. BACKGROUND AND PURPOSE
1.1 Background and Effective Date. The Plan permits the grant of Options and
Tandem Limited Stock Appreciation Rights. The Plan is effective as of January
26, 1995, subject to ratification by an affirmative vote of the holders of a
majority of the Shares which are present in person or by proxy and entitled to
vote at the 1995 Annual Meeting of Stockholders. Awards may be granted prior to
the receipt of such vote, but such grants shall be null and void if such vote
is not in fact received.
1.2 Purpose of the Plan. The Plan is intended to attract, motivate, and
retain key executives of the Corporation and its Affiliates. The Plan is
intended to motivate Participants to manage the Corporation to provide a
superior return to stockholders. The Plan is further intended to align
Participants' interests with those of the Corporation's stockholders.
SECTION 2. DEFINITIONS
The following words and phrases shall have the following meanings unless a
different meaning is plainly required by the context:
2.1 "1934 Act" means the Securities Exchange Act of 1934, as amended.
Reference to a specific section of the 1934 Act or regulation thereunder shall
include such section or regulation, any valid regulation promulgated under such
section, and any comparable provision of any future legislation or regulation
amending, supplementing or superseding such section or regulation.
2.2 "Affiliate" means any corporation or any other entity (including, but not
limited to, partnerships and joint ventures) controlling, controlled by, or
under common control with the Corporation.
2.3 "Award" means, individually or collectively, a grant under the Plan of
Options and/or TLSARs.
2.4 "Award Agreement" means the written agreement setting forth the terms and
provisions applicable to each Award.
2.5 "Board" means the Board of Directors of the Corporation.
2.6 "Change of Control" means the occurrence of any of the following:
(a) The acquisition by any individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the 1934 Act) (a "Person") of
beneficial ownership (within the meaning of Rule 13d-3 promulgated under
the 1934 Act) of 20% or more of either (1) the then-outstanding shares of
common stock of the Corporation (the "Outstanding Corporation Common
Stock") or (2) the combined voting power of the then-outstanding voting
securities of the Corporation entitled to vote generally in the election of
directors (the "Outstanding Corporation Voting Securities"); provided,
however, that for purposes of this paragraph (a) the following acquisitions
shall not constitute, or be deemed to cause, a Change of Control: (i) any
acquisition directly from the Corporation, (ii) any acquisition by the
Corporation, (iii) any acquisition by any employee benefit plan (or related
trust) sponsored or maintained by the Corporation or any corporation
controlled by the Corporation or (iv) any acquisition by any corporation
pursuant to a transaction which complies with clauses (1), (2) and (3) of
paragraph (c) below; or
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(b) individuals who, as of the date hereof, constitute the Board (the
"Incumbent Board") cease for any reason to constitute at least a majority
of the Board; provided, however, that any individual becoming a director
subsequent to the date hereof whose election, or nomination for election by
the Corporation's stockholders, was approved by a vote of at least a
majority of the directors then comprising the Incumbent Board shall be
considered as though such individual were a member of the Incumbent Board,
but excluding, for this purpose, any such individual whose initial
assumption of office occurs as a result of an actual or threatened election
contest with respect to the election or removal of directors or other
actual or threatened solicitation of proxies or consents by or on behalf of
a Person other than the Board; or
(c) consummation of a reorganization, merger or consolidation or sale or
other disposition of all or substantially all of the assets of the
Corporation (a "Business Combination"), in each case, unless, following
such Business Combination, (1) all or substantially all of the individuals
and entities who were the beneficial owners, respectively, of the then
outstanding Corporation Common Stock and Outstanding Corporation Voting
Securities immediately prior to such Business Combination beneficially own,
directly or indirectly, more than 50% of, respectively, the then-
outstanding shares of common stock and the combined voting power of the
then-outstanding voting securities entitled to vote generally in the
election of directors, as the case may be, of the corporation resulting
from such Business Combination (including, without limitation, a
corporation which as a result of such transaction owns the Corporation or
all or substantially all of the Corporation's assets either directly or
through one or more subsidiaries) in substantially the same proportions as
their ownership, immediately prior to such Business Combination of the
outstanding Corporation Common Stock and Outstanding Corporation Voting
Securities, as the case may be, (2) no Person (excluding any corporation
resulting from such Business Combination or any employee benefit plan (or
related trust) of the Corporation or of such corporation resulting from
such Business Combination) beneficially owns, directly or indirectly, 20%
or more of, respectively, the then-outstanding shares of common stock of
the corporation resulting from such Business Combination or the combined
voting power of the then-outstanding voting securities of such corporation
except to the extent that such ownership existed prior to the Business
Combination and (3) at least a majority of the members of the board of
directors of the corporation resulting from such Business Combination were
members of the Incumbent Board at the time of the execution of the initial
agreement, or of the action of the Board, providing for such Business
Combination; or
(d) approval by the stockholders of the Corporation of a complete
liquidation or dissolution of the Corporation.
2.7 "Change of Control Value" means the greater of (a) the highest Fair
Market Value of a Share during the period of 60 consecutive days which ends on
the date of a Change of Control, or (b) the highest price per Share paid in the
transaction which gives rise to the Change of Control.
2.8 "Code" means the Internal Revenue Code of 1986, as amended. Reference to
a specific section of the Code or regulation thereunder shall include such
section or regulation, any valid regulation promulgated under such section, and
any comparable provision of any future legislation or regulation amending,
supplementing or superseding such section or regulation.
2.9 "Committee" means the Management Development and Compensation Committee
of the Board, or any other committee appointed by the Board (pursuant to
Section 3.1) to administer the Plan.
2.10 "Corporation" means Transamerica Corporation, a Delaware corporation, or
any successor thereto.
2.11 "Director" means any individual who is a member of the Board.
2.12 "Disability" means a Termination of Employment by reason of the
Executive's becoming permanently and totally disabled. An Executive shall be
deemed to have become permanently and totally disabled for purposes of the Plan
if (and only if) he or she has become permanently and totally disabled under
the long-term disability plan sponsored by his or her employer.
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2.13 "Early Retirement" means a Termination of Employment by reason of the
Executive's early retirement at or after his or her "Early Retirement Date"
under the Retirement Plan for Salaried U.S. Employees of Transamerica
Corporation and Affiliates (or any successor thereto).
2.14 "Executive" means an employee of the Corporation or of an Affiliate who
is a member of the SEC and/or the SMC, whether such employee is a member at the
time the Plan is adopted or becomes a member subsequent to the adoption of the
Plan.
2.15 "Exercise Price" means the price at which a Share may be purchased by a
Participant pursuant to the exercise of an Option or TLSAR.
2.16 "Fair Market Value" means the last quoted per Share selling price for
Shares on the relevant date, as quoted in the New York Stock Exchange Composite
Transactions Index published in The Wall Street Journal, or if there were no
sales on such date, the last quoted selling price on the nearest day after the
relevant date, as determined by the Committee.
2.17 "Grant Date" means, with respect to an Award, the date that the Award
was granted.
2.18 "Normal Retirement" means a Termination of Employment by reason of the
Executive's retirement at or after his or her "Normal Retirement Date" under
the Retirement Plan for Salaried U.S. Employees of Transamerica Corporation and
Affiliates (or any successor thereto).
2.19 "Option" means an option to purchase Shares which is granted under
Section 5 and which is not intended to be an Incentive Stock Option under
Section 422 of the Code.
2.20 "Participant" means an Executive who has an outstanding Award.
2.21 "Plan" means the Transamerica Corporation 1995 Performance Stock Option
Plan, as set forth in this instrument and as hereafter amended from time to
time.
2.22 "Rule 16b-3" means Rule 16b-3 promulgated under the 1934 Act.
2.23 "SEC" means the Corporation's Senior Executive Committee (or any
successor thereto).
2.24 "SMC" means the Corporation's Senior Management Council (or any
successor thereto).
2.25 "Section 16 Person" means a person who, with respect to the Shares, is
subject to Section 16 of the 1934 Act.
2.26 "Shares" means the shares of common stock of the Corporation.
2.27 "Tandem Limited Stock Appreciation Right" or "TLSAR" means an Award
granted under Section 6 in connection with a related Option, the exercise of
which shall require forfeiture of the related Option or portion thereof (and
when the Option is exercised, the TLSAR shall be similarly cancelled).
2.28 "Termination of Employment" means a cessation of the employee-employer
relationship between an Executive and the Corporation or an Affiliate for any
reason, including, but not by way of limitation, a termination by resignation,
discharge, death, Disability, Early Retirement, Normal Retirement, or the
disaffiliation of an Affiliate, but excluding any such termination where there
is a simultaneous reemployment by the Corporation or an Affiliate.
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SECTION 3. ADMINISTRATION
3.1 The Committee. The Plan shall be administered by the Committee. The
Committee shall consist of not less than two Directors. The members of the
Committee shall be appointed from time to time by, and shall serve at the
pleasure of, the Board. The Committee shall be comprised solely of Directors
who both are (a) "disinterested persons" under Rule 16b-3, and (b) "outside
directors" under section 162(m) of the Code.
3.2 Authority of the Committee. It shall be the duty of the Committee to
administer the Plan in accordance with the Plan's provisions. The Committee
shall have all powers and discretion necessary or appropriate to administer the
Plan and to control its operation, including, but not limited to, the power to
(a) determine which Executives shall be granted Awards, (b) prescribe the terms
and conditions of the Awards, (c) interpret the Plan and the Awards, (d) adopt
such procedures and subplans as are necessary or appropriate to permit
participation in the Plan by Executives who are foreign nationals or employed
outside of the United States, (e) adopt rules for the administration,
interpretation and application of the Plan as are consistent therewith, and (f)
interpret, amend or revoke any such rules. Except as provided in Section 4.3,
after an Award has been granted, the Committee shall not reduce the Exercise
Price of the Award (or cancel the Award and grant a substitute Award having a
lower Exercise Price).
3.3 Delegation by the Committee. The Committee, in its sole discretion and on
such terms and conditions as it may provide, may delegate all or any part of
its authority and powers under the Plan to one or more directors or officers of
the Corporation; provided, however, that the Committee may not delegate its
authority and powers (a) with respect to Section 16 Persons, or (b) in any way
which would jeopardize the Plan's qualification under section 162(m) of the
Code or Rule 16b-3.
3.4 Decisions Binding. All determinations and decisions made by the
Committee, the Board, and any delegate of the Committee pursuant to the
provisions of the Plan shall be final, conclusive, and binding on all persons,
and shall be given the maximum deference permitted by law.
SECTION 4. SHARES SUBJECT TO THE PLAN
4.1 Number of Shares. Subject to adjustment as provided in Section 4.3, the
total number of Shares available for grant under the Plan shall not exceed
5,000,000. Shares granted under the Plan may be either authorized but unissued
Shares or treasury Shares.
4.2 Lapsed Awards. If an Award (or portion thereof) is cancelled, terminates,
expires, or lapses for any reason other than failure of an Option to become
exercisable due to the price of the Shares not reaching the Fair Market Value
specified in the Award Agreement for the required time during the specified
period, any Shares subject to such Award again shall be available to be the
subject of an Award. If an Option (or portion thereof) is cancelled,
terminates, expires, or lapses due to failure of the Option to become
exercisable on account of the price of the Shares not reaching the Fair Market
Value specified in the Award Agreement for the required time during the
specified period, any Shares subject to such Option shall not be available to
be the subject of another Award.
4.3 Adjustments in Awards and Authorized Shares. In the event of any merger,
reorganization, consolidation, recapitalization, separation, liquidation, stock
dividend, split-up, Share combination, distribution or other change in the
corporate structure of the Corporation affecting the Shares, the Committee
shall adjust the number and class of securities which may be delivered under
the Plan, the number, class, and price of the securities subject to outstanding
Awards, the prices set forth in Sections 5.4.1 and 5.4.2 (and if applicable, of
Options granted pursuant to Section 5.4.6) and the numerical limit of Section
5.1, in such manner as the Committee (in its sole discretion) shall determine
to be appropriate to prevent the dilution or diminution of Awards.
Notwithstanding the preceding sentence, the number of Shares subject to any
Award shall always be a whole number.
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SECTION 5. OPTIONS
5.1 Grant of Options. Subject to the terms and provisions of the Plan,
Options may be granted to Executives at any time and from time to time as
determined by the Committee in its sole discretion. The Committee, in its sole
discretion, shall determine the number of Shares subject to each Option,
provided that during any calendar year, no Participant shall be granted Options
covering more than 1,700,000 Shares.
5.2 Option Agreement. Each Option shall be evidenced by an Award Agreement.
The Award Agreement shall specify the Exercise Price, the expiration date of
the Option, the number of Shares to which the Option pertains, any conditions
to exercise of the Option, and such other terms and conditions as the
Committee, in its sole discretion, shall determine.
5.3 Exercise Price. The Exercise Price for each Option shall be determined by
the Committee in accordance with the provisions of this Section 5.3.
5.3.1 Options Granted to SEC Members. The Exercise Price of Options that
are granted on January 26, 1995, to members of the SEC shall be determined
as follows. (The Fair Market Value of a Share on January 26,1995, was
$50.75 per Share.)
(a) The Exercise Price for one of the Options granted to each such
Executive shall be $60 per Share. The Option shall cover not more than 30%
of the total Shares covered by all Options granted to the Executive on
January 26, 1995.
(b) The Exercise Price for one of the Options granted to each such
Executive shall be $82 per Share. The Option shall cover not more than 30%
of the total Shares covered by all Options granted to the Executive on
January 26, 1995.
(c) The Exercise Price for one of the Options granted to each such
Executive shall be $100 per Share. The Option shall cover not less than 40%
of the total Shares covered by all Options granted to the Executive on
January 26, 1995.
(d) Notwithstanding the preceding, in the case of a member of the SEC who
is expected to be eligible for Normal Retirement prior to January 1, 2002,
(1) one of the Options granted to the Executive shall have an Exercise
Price of $60 per Share and shall cover not more than 30% of the Shares
covered by all Options granted to the Executive on January 26, 1995, and
(2) the other Option granted to the Executive shall have an Exercise Price
of $82 per Share and shall cover the remaining balance of the Shares
covered by all Options granted to the Executive on January 26, 1995.
5.3.2 Options Granted to Other SMC Members. In the case of each Option
that is granted on January 26, 1995, to a member of the SMC (but not of the
SEC), the Exercise Price for 100% of the Shares covered by the Option shall
be $100 per Share. (The Fair Market Value of a Share on January 26, 1995,
was $50.75 per Share.)
5.3.3 Options Granted After January 26, 1995. In the case of each Option
that is granted after January 26, 1995, the Exercise Price(s) of the Option
shall be determined by the Committee in its discretion, provided that any
such Exercise Prices shall represent an appropriate premium over the then
Fair Market Value of a Share, as determined by the Committee.
5.4 Exercisability of Options. Each Option shall become exercisable in
accordance with the provisions of this Section 5.4.
5.4.1 Options Granted to SEC Members. Each Option that is granted on
January 26, 1995, to an Executive who is a member of the SEC shall become
exercisable in accordance with the provisions of this Section 5.4.1, but
subject to the special rules of Sections 5.4.3, 5.4.4, and 5.4.5.
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(a) With respect to an Option that has an Exercise Price of $60 per
share, the right to exercise 33-1/3% of the Shares covered by the Option
shall accrue on the third anniversary of the Grant Date, the right to
exercise an additional 33-1/3% of such Shares shall accrue on the fourth
anniversary of the Grant Date, and the right to exercise the remaining
Shares shall accrue on the fifth anniversary of the Grant Date, provided in
each case that the Participant remains an Executive on the applicable
anniversary date.
(b) With respect to an Option that has an Exercise Price of $82 per
share, the right to exercise 100% of the Shares covered by the Option shall
accrue on the tenth trading day (occurring within a period of 30
consecutive trading days) on which the Fair Market Value of a Share is at
least $82, provided that such tenth trading day occurs not later than five
years after the Grant Date.
(c) With respect to an Option that has an Exercise Price of $100 per
share, the right to exercise 100% of the Shares covered by the Option shall
accrue on the tenth trading day (occurring within a period of 30
consecutive trading days) on which the Fair Market Value of a Share is at
least $100, provided that such tenth trading day occurs not later than
seven years after the Grant Date.
5.4.2 Options Granted to Other SMC Members. Each Option that is granted
on January 26, 1995, to an Executive who is a member of the SMC (but not of
the SEC) shall become exercisable as to 100% of the Shares covered by the
Option on the tenth trading day (occurring within a period of 30
consecutive trading days) on which the Fair Market Value of a Share is at
least $100, provided that such tenth trading day occurs within seven years
of the Grant Date.
5.4.3 Special Rule for Normal Retirement. If a Participant incurs a
Termination of Employment on account of Normal Retirement, the following
special rules shall apply (subject to Section 5.5). If within six months
after the Participant's Normal Retirement, the right to exercise any
particular Shares would have accrued (had the Participant not incurred a
Termination of Employment), by virtue of additional service, changes in the
Fair Market Value of the Shares or the occurrence of a Change of Control
the right to exercise such Shares shall accrue on the date that such right
otherwise would have accrued. If more than six months following the
Participant's Normal Retirement, the right to exercise any particular
Shares would have accrued (had the Participant not incurred a Termination
of Employment), by virtue of additional service, changes in the Fair Market
Value of the Shares or the occurrence of Change of Control the right to
exercise a portion of such Shares shall accrue on the date that such right
otherwise would have accrued. The Committee shall determine such portion on
a pro-rata basis, based on the time elapsed from the Grant Date to the date
of Normal Retirement and the vesting date.
5.4.4 Special Rule for Disability or Death. If a Participant incurs a
Termination of Employment on account of Disability or death, the following
special rules shall apply (subject to Section 5.5). If the date of the
Participant's Disability or death is within six months of the date when the
right to exercise any Shares would have accrued (had the Participant not
incurred a Termination of Employment), by virtue of additional service,
changes in the Fair Market Value of the Shares or the occurrence of a
Change of Control the right to exercise such Shares shall accrue on the
date that such right otherwise would have accrued. If the date of the
Participant's Disability or death is more than six months prior to the date
when the right to exercise any particular Shares would have accrued (had
the Participant not incurred a Termination of Employment), by virtue of
additional service, changes in the Fair Market Value of the Shares or the
occurrence of a Change of Control the right to exercise a portion of such
Shares shall accrue on the date that such right otherwise would have
accrued. The Committee shall determine such portion on a pro-rata basis,
based on the time elapsed from the Grant Date to the date of Disability or
death and the vesting date.
5.4.5 Special Rule for Change of Control. With respect to each Option
with an Exercise Price of $60 per share, if a Change of Control occurs
prior to the Participant's Termination of Employment, the
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right to exercise 100% of the Shares subject to such Option shall accrue on
the date that the Change of Control occurs.
5.4.6 Options Granted After January 26, 1995. The periods of
exercisability of each Option that is granted after January 26, 1995, shall
be determined by the Committee in its sole discretion.
5.5 Expiration of Options. The expiration date for each Option shall be
determined in accordance with the provisions of this Section 5.5.
5.5.1 Options Granted to SEC and SMC Members. Each Option (or portion
thereof) that is granted on January 26, 1995, to a Participant who is a
member of the SEC or SMC shall terminate upon the first to occur of the
following events:
(a) The expiration of ten years from the Grant Date (12 years in the case
of Options with an Exercise Price of $100 per share); or
(b) The expiration of three months from the date of the Optionee's
Termination of Employment for a reason other than Early Retirement, Normal
Retirement, Disability or death; or
(c) The expiration of three years from the date of the Optionee's
Termination of Employment by reason of Disability; or
(d) The expiration of five years from the date of the Optionee's
Termination of Employment by reason of Early or Normal Retirement; or
(e) In the case of an Option referred to in Sections 5.4.1(b), 5.4.1(c)
or 5.4.2 (or, if applicable, 5.4.6) which has not been exercised, the date
on which the Option no longer may become exercisable (due to the failure of
the Shares to reach the specified Fair Market Value for the required time
during the specified period).
In addition, an Option (or applicable portion thereof) with respect to which
a related TLSAR has been granted shall terminate upon exercise of the related
TLSAR.
5.5.2 Special Rule for Death. Notwithstanding any contrary provision of
Section 5.5.1, if the Optionee dies prior to the expiration of his or her
Option in accordance with Section 5.5.1, the Option shall terminate three
years after his or her death.
5.5.3 Options Granted After January 26, 1995. The provisions for
expiration of each Option that is granted after January 26, 1995, shall be
determined by the Committee in its sole discretion.
5.6 Payment. Options shall be exercised by the Participant's delivery of a
written notice of exercise to the Secretary of the Corporation (or his or her
designee), setting forth the number of Shares with respect to which the Option
is to be exercised, and accompanied by full payment for the Shares. Upon the
exercise of any Option, the Exercise Price shall be payable to the Corporation
in full in cash. The Committee, in its sole discretion, also may permit
exercise (a) by tendering previously acquired Shares having an aggregate Fair
Market Value at the time of exercise equal to the total Exercise Price, or (b)
by any other means which the Committee, in its sole discretion, determines to
both provide legal consideration for the Shares, and to be consistent with the
purposes of the Plan. As soon as practicable after receipt of a written
notification of exercise and full payment for the Shares purchased, the
Corporation shall deliver to the Participant (or the Participant's designated
broker), Share certificates (which may be in book entry form) representing such
Shares.
5.7 Restrictions on Share Transferability. The Committee may impose such
restrictions on any Shares acquired pursuant to the exercise of an Option as
needed to comply with applicable federal securities laws, the requirements of
any national securities exchange or system upon which Shares are then listed or
traded, or any blue sky or state securities laws.
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SECTION 6. TANDEM LIMITED STOCK APPRECIATION RIGHTS
6.1 Grant of TLSARs. Subject to the terms and provisions of the Plan, TLSARs
may be granted to Executives at any time and from time to time as determined by
the Committee in its sole discretion, provided that such grants shall be only
in conjunction with all or any part of any Option, and may be granted either at
or after the Grant Date of the Option. A TLSAR (or applicable portion thereof)
granted with respect to a given Option shall terminate upon the termination or
exercise of the related Option. The Committee, in its sole discretion, shall
determine the number of Shares subject to each TLSAR, provided that during any
calendar year, no Participant shall be granted TLSARs covering more than
235,000 Shares.
6.2 TLSAR Agreement. Each TLSAR shall be evidenced by an Award Agreement that
shall specify the Exercise Price, the expiration date of the TLSAR, the number
of Shares to which the TLSAR pertains, any conditions to exercise of the TLSAR,
and such other terms and conditions as the Committee, in its sole discretion,
shall determine.
6.3 Exercise Price. The Committee, subject to the provisions of the Plan,
shall have sole discretion to determine the Exercise Price of each TLSAR,
provided that such Exercise Price shall be not less than 100% of the Fair
Market Value of a Share on the Grant Date.
6.4 Exercisability. Each TLSAR which has not otherwise expired shall become
exercisable immediately upon the occurrence of a Change of Control, provided
that in no event may a TLSAR granted to a Section 16 Person become exercisable
until at least six months after the Grant Date (or such shorter period as may
be permissible while maintaining compliance with Rule 16b-3).
6.5 Expiration of TLSARs. The Committee, in its sole discretion, shall
determine when each TLSAR shall expire, provided that (a) no TLSAR may have a
term longer than would be permitted by applying the rules of Section 5.5
(regarding the expiration of Options), and (b) each TLSAR shall terminate no
later than the last day of the period of 60 consecutive days which begins on
the date of the Change of Control.
6.6 Payment of TLSAR Amount. Upon exercise of a TLSAR, the Participant shall
be entitled to receive payment from the Corporation in an amount determined by
multiplying:
(a) The amount by which the Change of Control Value of a Share on the date
of exercise exceeds the Exercise Price; times
(b) The number of Shares with respect to which the TLSAR is exercised.
Each TLSAR shall be paid in cash, provided that if the Committee determines
that any such payment would cause a Change of Control transaction to be
ineligible for pooling of interests accounting under APB No. 16, which
transaction (but for such payment) otherwise would have been eligible for such
accounting treatment, the Committee, in its sole discretion, may determine that
any TLSAR shall be paid in Shares having a Fair Market Value equal to the cash
amount foregone.
SECTION 7. MISCELLANEOUS
7.1 No Effect on Employment. Nothing in the Plan shall interfere with or
limit in any way the right of the Corporation to terminate any Participant's
employment at any time, with or without cause. For purposes of the Plan,
transfer of employment of a Participant between the Corporation and any one of
its Affiliates (or between Affiliates) shall not be deemed a Termination of
Employment.
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<PAGE>
7.2 Participation. No Executive shall have the right to be selected to
receive an Option, or, having been so selected, to be selected to receive a
future Option.
7.3 Indemnification. Each person who is or shall have been a member of the
Committee, or of the Board, shall be indemnified and held harmless by the
Corporation against and from (a) any loss, cost, liability, or expense that may
be imposed upon or reasonably incurred by him or her in connection with or
resulting from any claim, action, suit, or proceeding to which he or she may be
a party or in which he or she may be involved by reason of any action taken or
failure to act under the Plan or any Award Agreement, and (b) from any and all
amounts paid by him or her in settlement thereof, with the Corporation's
approval, or paid by him or her in satisfaction of any judgment in any such
claim, action, suit, or proceeding against him or her, provided he or she shall
give the Corporation an opportunity, at its own expense, to handle and defend
the same before he or she undertakes to handle and defend it on his or her own
behalf. The foregoing right of indemnification shall not be exclusive of any
other rights of indemnification to which such persons may be entitled under the
Corporation's Certificate of Incorporation or By-laws, by contract, as a matter
of law, or otherwise, or under any power that the Corporation may have to
indemnify them or hold them harmless.
7.4 Successors. All obligations of the Corporation under the Plan, with
respect to Awards granted hereunder, shall be binding on any successor to the
Corporation, whether the existence of such successor is the result of a direct
or indirect purchase, merger, consolidation, or other acquisition, of all or
substantially all of the business or assets of the Corporation.
7.5 Beneficiary Designations. If permitted by the Committee, a Participant
may name a beneficiary or beneficiaries to whom any vested but unpaid Award
shall be transferred in the event of the Participant's death. Each such
designation shall revoke all prior designations by the Participant and shall be
effective only if given in a form and manner acceptable to the Committee. In
the absence of any such designation, and subject to the terms of the Plan and
of the applicable Award Agreement, any unexercised vested Option may be
exercised by the administrator or executor of the Participant's estate. This
Section 7.5 shall not be effective until specifically authorized by the
Committee.
7.6 Domestic Relations Orders. If permitted by the Committee, and under such
procedures as the Committee may adopt from time to time, an Award may be
transferred to a Participant's spouse, former spouse or dependent pursuant to a
court-approved domestic relations order which relates to the provision of child
support, alimony payments or marital property rights. This Section 7.6 shall
not be effective until specifically authorized by the Committee.
7.7 Bona Fide Gifts. If permitted by the Committee, and under such procedures
as the Committee may adopt from time to time, an Award may be transferred, by
bona fide gift and not for any consideration, to a member of the Participant's
immediate family or tax-qualified, not-for-profit organization. This Section
7.7 shall not be effective until specifically authorized by the Committee.
7.8 Nontransferability of Awards. No Award granted under the Plan may be
sold, transferred, pledged, assigned, or otherwise alienated or hypothecated,
other than (a) by will, (b) by the laws of descent and distribution, or (c) to
the limited extent provided in Sections 7.5, 7.6, and 7.7. Except as provided
in Sections 7.6 and 7.7, all rights with respect to an Award granted to a
Participant shall be available during his or her lifetime only to the
Participant.
7.9 No Rights as Stockholder. No Participant (nor any beneficiary) shall have
any of the rights or privileges of a stockholder of the Corporation with
respect to any Shares issuable pursuant to an Award (or exercise thereof),
unless and until certificates representing such Shares shall have been issued,
recorded on the records of the Corporation or its transfer agents or
registrars, and delivered to the Participant (or beneficiary).
A-9
<PAGE>
SECTION 8. AMENDMENT, TERMINATION, AND DURATION
8.1 Amendment, Suspension, or Termination. The Board, in its sole discretion,
may amend or terminate the Plan, or any part thereof, at any time and for any
reason. However, (a) if and to the extent required to maintain the Plan's
qualification under Rule 16b-3 and/or Section 162(m) of the Code, any such
amendment shall be subject to stockholder approval, and (b) the amendment or
termination of the Plan shall not, without the consent of the Participant,
alter or impair any rights or obligations under any Award theretofore granted
to any Participant.
8.2 Duration of the Plan. The Plan shall commence on the date specified
herein, and subject to Section 8.1 (regarding the Board's right to amend or
terminate the Plan), shall remain in effect thereafter.
SECTION 9. TAX WITHHOLDING
9.1 Withholding Requirements. Prior to the delivery of any Shares or cash
pursuant to an Award (or exercise thereof), the Corporation shall have the
power and the right to deduct or withhold, or require a Participant to remit to
the Corporation, an amount sufficient to satisfy federal, state, and local
taxes (including the Participant's FICA obligation) required to be withheld
with respect to such Award (or exercise thereof).
9.2 Withholding Arrangements. The Committee, in its sole discretion and
pursuant to such procedures as it may specify from time to time, may permit a
Participant to satisfy such tax withholding obligation, in whole or in part by
(a) electing to have the Corporation withhold otherwise deliverable Shares, or
(b) delivering to the Corporation already-owned Shares having a Fair Market
Value equal to the amount required to be withheld. The amount of the
withholding requirement shall be deemed to include any amount which the
Committee agrees may be withheld at the time the election is made, not to
exceed the amount determined by using the maximum federal, state or local
marginal income tax rates applicable to the Participant with respect to the
Award on the date that the amount of tax to be withheld is to be determined.
The Fair Market Value of the Shares to be withheld or delivered shall be
determined as of the date that the taxes are required to be withheld.
SECTION 10. LEGAL CONSTRUCTION
10.1 Gender and Number. Except where otherwise indicated by the context, any
masculine term used herein also shall include the feminine; the plural shall
include the singular and the singular shall include the plural.
10.2 Severability. In the event any provision of the Plan shall be held
illegal or invalid for any reason, the illegality or invalidity shall not
affect the remaining parts of the Plan, and the Plan shall be construed and
enforced as if the illegal or invalid provision had not been included.
10.3 Requirements of Law. The granting of Awards and the issuance of Shares
under the Plan shall be subject to all applicable laws, rules, and regulations,
and to such approvals by any governmental agencies or national securities
exchanges as may be required.
10.4 Securities Law Compliance. With respect to Section 16 Persons and unless
otherwise specifically determined by the Committee, transactions under this
Plan are intended to comply with all applicable conditions of Rule 16b-3. To
the extent any provision of the Plan, Award Agreement or action by the
Committee fails to so comply, it shall be deemed null and void, to the extent
permitted by law and deemed advisable by the Committee.
10.5 Governing Law. The Plan and all Award Agreements shall be construed in
accordance with and governed by the laws of the State of California.
10.6 Captions. Captions are provided herein for convenience only, and shall
not serve as a basis for interpretation or construction of the Plan.
A-10
<PAGE>
(FRONT OF PROXY)
THIS PROXY IS BEING SOLICITED ON BEHALF OF
THE BOARD OF DIRECTORS OF THE
CORPORATION
The undersigned hereby appoints James R. PROXY
Harvey, Frank C. Herringer or Myron Du Bain,
each with power of substitution, as proxies TRANSAMERICA
of the undersigned, to attend the Annual CORPORATION
Meeting of Stockholders of Transamerica
Corporation, to be held at the Giannini ANNUAL
Auditorium, Concourse Level, Bank of America MEETING OF
Center, 555 California Street, San Francisco, STOCKHOLDERS
California on April 27, 1995 at 10:30 A.M.,
and any adjournment thereof, and to vote the APRIL 27, 1995
number of shares the undersigned would be
entitled to vote if personally present in (logo)
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,
AND 3. YOUR SHARES CANNOT BE VOTED UNLESS YOU SIGN
AND RETURN THIS CARD OR ATTEND THE MEETING AND VOTE IN PERSON.
<PAGE>
(BACK OF PROXY)
THIS PROXY WILL BE VOTED AS DIRECTED, BUT IF
NOT OTHERWISE DIRECTED, WILL BE
VOTED FOR PROPOSALS 1, 2 AND 3.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSALS 1, 2 AND 3.
1. Election of Directors.
[_] FOR [_] WITHHELD NOMINEES:
J.R. Harvey
G.E. Moore
C. Rice
For, except vote withheld from the following nominee(s):
-------------------------------------------
2. Election of Ernst & Young LLP, Certified Public Accountants,
as independent auditors.
[_] FOR [_] AGAINST [_] ABSTAIN
3. Approval of the adoption of the 1995 Performance Stock
Option Plan.
[_] FOR [_] AGAINST [_] ABSTAIN
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.
-----------------------------------------------
-----------------------------------------------
Signature(s) Date
<PAGE>
TRANSAMERICA CORPORATION
Additional Proxy Soliciting Material
The following, which is set forth in the 1994 Annual Report to Stockholders
of Transamerica Corporation (the "Company"), constitutes additional soliciting
material in connection with solicitation of proxies for the Company's 1995
Annual Meeting of Stockholders, as more fully described in the Company's Proxy
Statement, dated March 17, 1995:
Q. HAVE YOU ALIGNED COMPENSATION WITH YOUR
FOCUS ON VALUE ADDED? [HERRINGER] Last year our
shareholders approved a "Value Added Incentive
Plan," which tied senior management's annual
bonuses to shareholder value added. The "1995
Performance Stock Option Plan" being proposed
for shareholder approval this year and described
in the proxy is designed to significantly reward
senior management only after the achievement of
superior stockholder returns.
<PAGE>
Transamerica Transamerica Corporation
600 Montgomery Street
(LOGO) San Francisco, California 94111
Office of the Secretary
- --------------------------------------------------------------------------------
April 10, 1995
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 27,
1995. 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,
Edgar H. Grubb
Secretary
