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SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
TRANSAMERICA CORPORATION
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(Name of Registrant as Specified In Its Charter)
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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] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(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.
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(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:
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Transamerica Corporation
LOGO 600 Montgomery Street
San Francisco,
California 94111
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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
Thursday, May 1, 1997
11:00 A.M.
To The Stockholders:
The Annual Meeting of Stockholders of Transamerica Corporation will be held
at The Booth Playhouse in the North Carolina Blumenthal Performing Arts Center
at Founders Hall, 130 North Tryon Street, Charlotte, North Carolina, on
Thursday, May 1, 1997, at 11:00 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 Corporation's financial
statements for the year 1997;
3.Acting upon a stockholder resolution if properly presented at the meeting.
All other matters which may properly come before the meeting and any
adjournment thereof will also be considered.
Stockholders of record at the close of business on March 5, 1997 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 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
Shirley H. Buccieri
Secretary
San Francisco, California
March 18, 1997
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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 May 1, 1997 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, for Proposal 2 and against Proposal 3.
Stockholders of record at the close of business on March 5, 1997 are
entitled to vote at the Annual Meeting. On that date the Corporation had
outstanding 65,963,078 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, present in person or by proxy,
constitutes a quorum. Abstentions and broker non-votes are counted as shares
present in determining whether the quorum requirement is satisfied. If a
quorum is present, the affirmative vote of a plurality of the shares entitled
to vote will be required for the election of directors and the affirmative
vote of a majority of the shares 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 withheld will be excluded
entirely from the vote and will have no effect. Abstentions may be specified
on all other proposals and will have the same effect as negative votes.
All of the items on the proxy card are considered "routine" under the rules
of the New York Stock Exchange. Under such rules, brokers who hold shares in
street name have the authority to vote in their discretion on "routine" items
in the absence of specific instructions from beneficial owners.
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, by mail or by telephone. 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 1996 Annual Report
were first mailed to stockholders on March 18, 1997.
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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 is currently set pursuant to the
Corporation's By-Laws at nine. Of this number, three members of the Board of
Directors have terms expiring, and are nominees for election, at the 1997
Annual Meeting of Stockholders. Three members have terms expiring at the 1998
Annual Meeting of Stockholders and three members have terms expiring at the
1999 Annual Meeting of Stockholders.
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 2000 Annual Meeting
of Stockholders and until their respective successors are elected and
qualified (except Mr. Shumway, whose term will end in April 1999 when he
reaches age 72, as required under the Corporation's mandatory retirement
policy for directors). All of the nominees have been recommended by the Board
of Directors and all have indicated a willingness to serve if elected. Should
any nominee not be a candidate at the 1997 Annual Meeting, all proxies
received by the Corporation will be voted in favor of the other nominees and
for such substitute nominee (if any) as shall be designated by the proxy
holders named in the enclosed form of proxy, or the number of directors may be
reduced by the Board of Directors.
Certain information concerning each of the three nominees, and each current
director in the classes continuing in office, is set forth below.
NOMINEES FOR THREE-YEAR TERMS EXPIRING IN 2000
TONI REMBE Director since 1995 Age 60
Partner at Pillsbury Madison & Sutro LLP, a law firm. She also serves as a
director of APL Limited, Pacific Telesis Group and Potlatch Corporation.
FORREST N. SHUMWAY Director since 1973 Age 69
Retired Vice Chairman of the Board of Allied-Signal Inc., a multi-industry
company. He also serves as a director of Aluminum Company of America, APL
Limited and The Clorox Company.
PETER V. UEBERROTH Director since 1984 Age 59
Managing Director of The Contrarian Group, Inc., a business management
company, since 1989. Since 1995, he has been Co-Chairman of the Board and a
director of Doubletree Corporation, a hotel company. He also serves as a
director of Ambassadors International, Inc., CB Commercial Real Estate
Services Group Inc., Candlewood Hotel Company, Inc. and The Coca-Cola Company.
DIRECTORS CONTINUING IN OFFICE UNTIL 1998
ROBERT W. MATSCHULLAT Director since 1996 Age 49
Vice Chairman of the Board, Chief Financial Officer and a director of The
Seagram Company Ltd., a beverage and entertainment/communications company,
since 1995. He was a managing director, and head of worldwide investment
banking, at Morgan Stanley & Co., Inc. from 1991 to 1995.
GORDON E. MOORE Director since 1981 Age 68
Chairman of the Board and a director of Intel Corporation, a semiconductor
manufacturing company. He also serves as a director of Varian Associates, Inc.
and Gilead Sciences, Inc.
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CONDOLEEZZA RICE Director since 1991 Age 42
Vice President and Provost of Stanford University since 1993. She is Professor
of Political Science at Stanford and has been a member of the Stanford faculty
since 1981. She also serves as a director of Chevron Corporation.
DIRECTORS CONTINUING IN OFFICE UNTIL 1999
SAMUEL L. GINN Director since 1989 Age 59
Chairman of the Board, Chief Executive Officer and a director of AirTouch
Communications, Inc., a worldwide wireless telecommunications company, since
1994. 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,
Hewlett-Packard Company and Safeway Inc.
FRANK C. HERRINGER Director since 1986 Age 54
Chairman of the Board, Chief Executive Officer and President of the
Corporation. He has been Chairman since January 1, 1996, Chief Executive
Officer since 1991 and President since 1986. He also serves as a director of
The Charles Schwab Corporation, Pacific Telesis Group and Unocal Corporation.
CHARLES R. SCHWAB Director since 1989 Age 59
Chairman of the Board, Chief Executive Officer and a director of The Charles
Schwab Corporation, a discount brokerage firm. He also serves as a director of
AirTouch Communications, Inc., The Gap, Inc. and Siebel Systems, Inc.
DIRECTOR COMPENSATION AND BENEFITS
Directors who are not employees of the Corporation or its subsidiaries
receive an annual retainer of $30,000 and a fee of $1,000 for each Board or
committee meeting attended. Committee chairs also receive an annual retainer
of $5,000. Directors who are employees of the Corporation do not receive any
compensation for their service 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 plan.
Amounts deferred are credited with interest. The interest rate is adjusted
annually and equals an average of the rate paid by ten-year U.S. Treasury
Notes, plus a premium of 0% to 3%, depending on the length of the term of
deferral. For amounts deferred prior to 1996, the interest rate for deferral
terms of at least five years is indexed to the Moody's A-Rated Corporate Bond
Yield, with a premium of 2% to 4%. 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.
Non-employee directors 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 in full beginning six months after grant.
Beginning on May 1, 1997, and on the date of each succeeding Annual Meeting
of Stockholders, non-employee directors will be granted phantom restricted
shares of the Corporation's common stock. On any grant date, the number of
phantom restricted shares granted will equal 50% of the annual retainer then
in effect divided by the fair market value of a share of the Corporation's
common stock on such date. These phantom restricted shares are in addition to
the regular annual retainer. Phantom restricted shares will be credited with
phantom dividends on the same basis as the Corporation's common stock, and
such dividends will be immediately reinvested in additional phantom restricted
shares at the then fair market value of the Corporation's common
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stock. The value of a phantom restricted share on any date will equal the then
fair market value of a share of the Corporation's common stock. Phantom
restricted shares will be paid in cash upon the earlier of the director's
termination of service as a director or a change of control of the Corporation
(as defined in the plan).
Effective May 1, 1997, the Corporation's retirement plan for non-employee
directors will be terminated and no further benefits will accrue under such
plan. The plan provides that non-employee directors with at least five years
of service are eligible upon retirement from the Board to receive annual
retirement payments equal to the annual retainer in effect at the time of
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
service as a director. Directors may elect to have benefits earned based on
service through that date converted into phantom restricted shares based on
the fair market value of the Corporation's common stock on the conversion
date. If such an election is made, payment of the value of such phantom
restricted shares will be made as described in the paragraph above.
COMMITTEES OF THE BOARD OF DIRECTORS AND MEETINGS HELD
Mr. Moore (Chairman), Ms. Rembe, Ms. Rice and Messrs. Ginn 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 five meetings in
1996.
Messrs. Ueberroth (Chairman), Ginn, Matschullat and Shumway are members of
the Management Development and Compensation Committee of the Board of
Directors. The Committee establishes corporate compensation objectives,
reviews comparative studies of compensation programs to enable the Corporation
to offer the competitive compensation programs necessary to attract and retain
superior management and reviews and approves cash compensation arrangements
and incentive plans for senior management. The Committee also 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. The Committee also authorizes the granting of
options, restricted stock and other awards under the Corporation's stock
option plans. The Committee also nominates corporate officers and reviews
succession plans for senior corporate and subsidiary officer positions. The
Management Development and Compensation Committee held five meetings in 1996.
Mr. Schwab (Chairman), Ms. Rice and Messrs. Herringer and Shumway are
members of the Nominating Committee of the Board of Directors. The Committee
recommends to the Board of Directors the size of the Board and criteria for
qualification as a candidate for Board membership, reviews the qualifications
of candidates for Board membership and directs the search for qualified
candidates to fill Board vacancies that may occur from time to time. The
Committee also 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. The
Committee also recommends to the Board the establishment of, and charge of
responsibilities to, various committees of the Board. The Nominating Committee
held three meetings in 1996. 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.
In 1996, the Board of Directors held seven meetings. Each director attended
75% or more of the meetings of the Board and committees of which he or she was
a member.
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COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
There are no "interlocks" (as defined by the rules of the Securities and
Exchange Commission) with respect to any member of the Management Development
and Compensation Committee of the Board of Directors, and such Committee
consists entirely of independent, non-employee directors.
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 11, 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 5,
1997.
<TABLE>
<CAPTION>
PERCENTAGE OF
SHARES OF COMMON STOCK
COMMON STOCK BENEFICIALLY
NAME BENEFICIALLY OWNED(1) OWNED(1)
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<S> <C> <C>
DIRECTORS
Samuel L. Ginn 9,247 (2)(3) *
Frank C. Herringer 1,170,008 (3)(4)(5) 1.7%
Robert W. Matschullat 2,024 *
Gordon E. Moore 11,541 (2) *
Toni Rembe 5,068 (2) *
Condoleezza Rice 4,000 (2) *
Charles R. Schwab 12,975 (2) *
Forrest N. Shumway 16,742 (2)(3) *
Peter V. Ueberroth 14,500 (2)(3) *
EXECUTIVE OFFICERS
Thomas J. Cusack 305,464 (3)(4) *
Richard H. Finn 871,439 (3)(4) 1.3%
Richard N. Latzer 218,682 (4) *
Robert A. Watson 187,820 (4) *
All directors and executive officers
as a group (18 persons) 3,197,270 (2)(3)(4)(5) 4.6%
</TABLE>
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(1) Represents shares held as of March 5, 1997 directly and with sole voting
and investment power (or with voting and investment power shared with a
spouse) unless otherwise indicated. An asterisk indicates that the number
of shares owned by the director or executive officer represents less than
1% of the outstanding shares of common stock.
(2) Includes, as to each of Mr. Ginn, Mr. Moore, Mr. Schwab, Mr. Shumway and
Mr. Ueberroth, 5,500 shares, and as to each of Ms. Rembe and Ms. Rice,
3,000 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
directors and executive officers and their respective spouses have shared
voting and investment power: Mr. Ginn, 3,747 shares; Mr. Shumway,
11,242 shares; Mr. Ueberroth, 9,000 shares; Mr. Finn, 49,565 shares; Mr.
Cusack, 3,500 shares; as to which Mr. Herringer has either sole, or he and
his spouse have shared, voting and investment power, 53,594 shares; and
all directors and executive officers as a group, 145,968 shares.
(4) Includes shares which may be acquired upon the exercise of stock options
exercisable on March 5, 1997, or within 60 days thereafter, as follows:
Mr. Cusack, 300,550 shares; Mr. Finn, 806,700 shares; Mr. Herringer,
1,107,200 shares; Mr. Latzer, 215,000 shares; Mr. Watson, 187,500 shares;
all directors and executive officers as a group, 2,993,600 shares. These
shares are considered outstanding for purposes of calculating each such
executive officer's percentage ownership. The table also includes
restricted stock awards, as to which the executive officer has the right
to vote and to receive dividends and which remain to be vested on April
27, 1997, as follows: Mr. Cusack, 1,000 shares;
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Mr. Herringer, 1,250 shares; Mr. Latzer, 250 shares; all directors and
executive officers as a group, 3,500 shares. Also includes shares held under
the Corporation's Employees Stock Savings Plan on January 31, 1997 and as to
which the participant has sole voting and investment power, as follows: Mr.
Cusack, 414 shares; Mr. Finn, 15,174 shares; Mr. Herringer, 3,720 shares;
Mr. Latzer, 682 shares; Mr. Watson, 320 shares; all directors and executive
officers as a group, 28,600 shares.
(5) Excludes 14,796 shares held by Mr. Herringer's spouse, as to which he has
no voting or investment power and as to which he disclaims beneficial
ownership.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
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
1996 all such filing requirements were satisfied.
(2) ELECTION OF INDEPENDENT AUDITORS
The Board of Directors has selected Ernst & Young LLP to audit the financial
statements of the Corporation for 1997, subject to the election of such firm
by the stockholders at the 1997 Annual Meeting of Stockholders. Ernst & Young
LLP has audited the financial statements of the Corporation annually since the
formation of the Corporation in 1928. If the stockholders do not elect Ernst &
Young LLP, the Board of Directors 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) STOCKHOLDER PROPOSAL
The Corporation has been advised that Emil Rossi, a stockholder of the
Corporation, proposes to introduce the following proposal and statement in
support thereof at the 1997 Annual Meeting of Stockholders. (Mr. Rossi's
address and number of shares held can be obtained upon request from the office
of the Secretary of the Corporation):
"The shareholders of TransAmerica Corporation request the Board of
Directors take the necessary steps to amend the company's governing
instruments to adopt the following: Beginning on the 1998 TransAmerica
Corporation fiscal year all members of the Board of Director's total
compensation will be solely in shares of TransAmerica Corporation common
stock each year. No other compensation of any kind will be paid. Including,
the elimination of retirement benefits to directors, excluding existing
contracts with directors."
STATEMENT OF STOCKHOLDER IN SUPPORT OF THE PROPOSAL
"For many years the Rossi family have been submitting for shareholder
vote, at this corporation as well as other corporations, proposals aimed at
putting management on the same playing field as the shareholders. This
proposal would do just that.
"A few corporations have seen the wisdom in paying directors solely in
stock. Most notably, Scott Paper (now Kimberly Clark) and Travelers.
Ownership in the company is the American way. We feel that this method of
compensation should be welcomed by anyone who feels they have the ability
to direct a major corporation's fortunes.
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"The directors would receive shares each year. If the corporation does
well, the directors will make more money in the value of the stock they
receive and the dividend that usually rise with more profits. If things go
bad, they will be much more inclined to correct things, because it will be
coming directly out of their pockets. Instead of the way it is done now,
where directors receive the same compensation for good or bad performance."
STATEMENT BY THE BOARD OF DIRECTORS AGAINST THE PROPOSAL
The Corporation agrees that directors should have a stake in the performance
of the Corporation. The Corporation encourages directors to hold shares of the
Corporation's common stock and each of the directors is, in fact, a
stockholder. Furthermore, the Corporation has had in place since 1990 a stock
option program providing for annual grants of options to non-employee
directors in order to encourage further stock ownership by directors. In
addition, at its December 1996 meeting, the Board of Directors discontinued
its existing retirement program for directors effective May 1, 1997 and
substituted a program that is based 100% on annual grants of phantom
restricted stock, the value of which exactly corresponds to the value of the
Corporation's common stock. See Director Compensation and Benefits on page 3.
Therefore, under the Corporation's current programs, stock performance
substantially impacts overall director compensation.
However, the Corporation does not believe that it is appropriate to
compensate directors solely in stock. Accordingly, the Corporation's
compensation program also includes cash and other benefits. In order to
provide incentives for individuals of exceptional caliber and experience to
serve as directors, the Corporation must offer compensation competitive with
other companies with which the Corporation competes for the services of
directors.
The Corporation believes that its current director compensation is
competitive and appropriate in light of the responsibilities placed on
corporate directors. Moreover, the Corporation has determined that the
combination of direct stock ownership, annual stock option grants and grants
of phantom restricted stock align the interests of directors with those of the
stockholders, while maintaining the flexibility necessary to retain and
attract qualified persons to serve as members of the Board of Directors.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE AGAINST
PROPOSAL 3.
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EXECUTIVE COMPENSATION AND OTHER INFORMATION
REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
The Compensation Program
The Corporation's compensation program is designed to enhance stockholder
value by linking a large part of the executives' compensation directly to
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 (see below) 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 consisted 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 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.
As needed, the Committee engages an executive compensation consultant to
review competitive levels of total compensation, including base salary and
annual and long-term incentive programs. Additionally, the consultant provides
information on the value of individual option awards. The consultant conducts
comparative studies, reviews proposed changes related to the Corporation's
compensation program, and provides information on 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 stockholders' equity of similar size to that
of the Corporation, for which data is readily available. The Committee meets
without management present to discuss the Chief Executive Officer's
performance, base salary and target incentive 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 consultant and considering
industry and national trends. Individual salaries are adjusted based on this
information and the executive's performance for the preceding year and current
responsibilities. On average, salaries of executive officers, including the
salary of the CEO, were between the median and 75th percentile of salaries of
like positions in comparator companies. The CEO did not receive a base salary
increase in 1996 or 1995.
Annual Incentive Plan. The Value Added Incentive Plan (the "Value Added
---------------------
Plan"), approved by stockholders in 1994, covers the CEO and the 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. The only annual incentive
award that the Corporation's CEO received in 1996 was an award pursuant to the
Value Added Plan.
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The Corporation's Value Added for 1996 generated approximately 97% of target
bonuses for plan participants, due to a combination of a slight decrease in
net income related to the operating loss at the consumer lending business and
a slightly higher cost of capital as compared to the previous year, which were
offset by improved operating results at other businesses. The Corporation
continues to conscientiously manage the capital utilized in its business. The
total amount awarded to other executive officers named in the Summary
Compensation Table on page 11 was based substantially on Value Added as
described above for the CEO. Additionally, the other executive officers were
awarded amounts based on the performance of business units reporting to them
and/or the 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
have received.
In 1995, stockholders approved adoption of The 1995 Performance Stock Option
Plan (the "1995 Plan") and the grants made pursuant to the 1995 Plan. Under
the 1995 Plan, which is designed to strongly motivate management to achieve
superior stockholder returns, 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, strongly
focuses the Corporation's senior management on delivering significant
stockholder value.
As approved by the Corporation's stockholders in 1995, the CEO received
premium priced options and performance vesting options in 1995. The number of
such options that were awarded to the CEO were determined in part based on his
not receiving any additional option awards for the three-year period 1995
through 1997. In 1996, no grants were made under the 1995 plan. Certain of the
other executive officers received grants in 1996 under the 1985 plan.
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 to the extent
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, the
Value Added Incentive Plan, the 1985 Plan, and the 1995 Plan each have been
designed or amended to permit the Committee to make payments under those plans
that will qualify as performance-based compensation under Section 162(m).
Thus, the Corporation will continue to receive a federal income tax deduction
for such compensation.
Compensation Committee Members
Peter V. Ueberroth, Chairman
Samuel L. Ginn
Robert W. Matschullat
Forrest N. Shumway
9
<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*
(adjusted to eliminate banks and savings and loan institutions) over the years
1992 through 1996, inclusive:
LOGO
PERFORMANCE GRAPH APPEARS HERE
COMPARISON OF 5-YEAR CUMULATIVE TOTAL RETURN
AMONG TRANSAMERICA CORPORATION AND
S&P 500 INDEX AND S&P FINANCIAL INDEX
<TABLE>
<CAPTION>
S&P
Measurement Period TRANSAMERICA S&P FINANCIAL
(Fiscal Year Covered) CORPORATION 500 INDEX INDEX
- --------------------- --------------- --------- ----------
<S> <C> <C> <C>
Measurement Pt-12/31/1992 $125.99 $107.62 $117.93
FYE 12/31/1993 $154.42 $118.46 $133.30
FYE 12/30/1994 $140.80 $120.03 $132.22
FYE 12/29/1995 $212.85 $165.13 $196.73
FYE 12/31/1996 $236.97 $203.05 $249.92
</TABLE>
<TABLE>
<CAPTION>
CUMULATIVE TOTAL RETURN AS OF
DECEMBER 31ST OF EACH YEAR
(ASSUMES $100 WAS INVESTED ON
DECEMBER 31, 1991)
COMPANY/INDEX
---------------------------------
1992 1993 1994 1995 1996
- --------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Transamerica Corporation 125.99 154.42 140.80 212.85 236.97
- --------------------------------------------------------------
S&P 500 Index 107.62 118.46 120.03 165.13 203.05
- --------------------------------------------------------------
S&P Financial Index* 117.93 133.30 132.22 196.73 249.92
</TABLE>
All data for the performance graph was provided by Standard & Poor's
Compustat Services.
- --------
* 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.
10
<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 at December 31, 1996.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
------------
AWARDS
------------
ANNUAL
COMPENSATION SECURITIES
NAME AND PRINCIPAL ----------------- UNDERLYING ALL OTHER
POSITION YEAR SALARY BONUS OPTIONS COMPENSATION(1)
- ------------------ ---- -------- -------- ------------ ---------------
<S> <C> <C> <C> <C> <C>
Frank C. Herringer 1996 $975,000 $756,132 0 $125,513
Chairman, President and 1995 975,000 708,776 1,585,000 103,657
Chief Executive Office 1994 975,000 561,566 150,000 73,116
Richard H. Finn 1996 $670,000 $300,000 0 $260,363
Executive Vice President 1995 640,000 375,000 700,000 202,314
1994 602,000 400,167 80,000 52,584
Robert A. Watson 1996 $640,000 $300,000 50,000 $ 68,466
Executive Vice President 1995 306,923 200,000 500,000 22,282
Thomas J. Cusack 1996 $500,000 $300,000 0 $128,797
Executive Vice President 1995 389,298 296,250 500,000 47,475
1994 301,500 167,000 35,000 22,240
Richard N. Latzer 1996 $450,000 $350,000 35,000 $ 80,132
Senior Vice President and 1995 430,000 300,000 155,000 48,992
Chief Investment Officer 1994 410,000 215,825 45,000 31,060
</TABLE>
- --------
(1) For 1996, includes (i) employer matching contributions under the Stock
Savings Plan, a 401(k) plan: $1,125 for each of the named executive
officers; (ii) employer matching contributions under the Stock Savings
Plan Plus, a plan designed to supplement the 401(k) plan: Mr. Herringer,
$74,649; Mr. Finn, $45,900; Mr. Watson, $34,377; Mr. Cusack, $33,084; Mr.
Latzer, $32,634; (iii) employer contributions for additional life,
accidental death and dismemberment, and disability insurance: Mr.
Herringer, $32,756; Mr. Finn, $71,173; Mr. Watson, $16,460; Mr. Cusack,
$7,277; Mr. Latzer, $31,979; (iv) above market interest on deferred
compensation: Mr. Herringer, $16,983; Mr. Finn, $165; Mr. Watson, $16,504;
Mr. Cusack, $2,311; Mr. Latzer, $14,394; (v) forgiveness of a portion of
the principal amount of a loan in connection with relocation and purchase
of a new home (see Certain Transactions on page 14): Mr. Finn, $142,000;
Mr. Cusack, $85,000.
(2) Mr. Watson became an executive officer in June 1995.
11
<PAGE>
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
PERCENT OF
TOTAL POTENTIAL REALIZABLE VALUE AT
NUMBER OF OPTIONS ASSUMED ANNUAL RATES OF STOCK
SECURITIES GRANTED TO PRICE APPRECIATION
UNDERLYING EMPLOYEES EXERCISE OR FOR OPTION TERM(4)
OPTIONS IN FISCAL BASE PRICE ------------------------------
NAME GRANTED(1) YEAR ($/SHARE)(2) EXPIRATION DATE(3) 5% 10%
- ---- ---------- ---------- ------------ ------------------ -------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Frank C. Herringer 0
Richard H. Finn 0
Robert A. Watson 50,000 3.08% $76.31 February 22, 2006 $ 2,400,000 $ 6,081,000
Thomas J. Cusack 0
Richard N. Latzer 35,000 2.15% $76.31 February 22, 2006 $ 1,680,000 $ 4,257,000
</TABLE>
- --------
(1) Options granted with an exercise price of $76.31 become exercisable in
four annual installments commencing one year from the date of grant. Mr.
Watson's options, although granted in 1996, related to the commencement of
his employment in June 1995. No stock appreciation rights were granted in
1996.
(2) Subject to the discretion of the Management Development and Compensation
Committee, the exercise price and tax withholding obligations may be paid
in stock.
(3) The Corporation's stock price on February 22, 2006, the end of the option
term, would be $124.30 or $197.93 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.
The total number of options outstanding as of March 5, 1997 for the five
named executive officers as a group and for all employees as a group
represents approximately 7.7% and 19.7%, respectively, of the Corporation's
outstanding common stock as of that date.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES UNDERLYING VALUE OF UNEXERCISED IN
UNEXERCISED OPTIONS AT THE MONEY OPTIONS AT
SHARES DECEMBER 31, 1996 DECEMBER 31, 1996(2)
ACQUIRED VALUE ------------------------- -------------------------
NAME ON EXERCISE REALIZED(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ----------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Frank C. Herringer 46,387 $1,890,154 680,950 1,703,750 $26,416,000 $11,525,000
Richard H. Finn 13,000 501,780 281,700 765,000 10,370,000 5,691,000
Robert A. Watson 0 0 25,000 525,000 494,000 1,616,000
Thomas J. Cusack 0 0 129,300 530,000 4,517,000 2,775,000
Richard N. Latzer 0 0 173,750 216,250 6,282,000 1,753,000
</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 31, 1996, $79.00, less the exercise price of the option,
multiplied by the number of options outstanding.
12
<PAGE>
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, 1996, the named executive officers had the following
years of benefit service: Mr. Herringer, 18 years; Mr. Finn, 18 years; Mr.
Watson, 4 years, Mr. Cusack, 7 years; Mr. Latzer, 8 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, 1997 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 pension plans currently provide for a benefit for each participant,
including the named executive officers, (payable as a single life annuity) of
2% of his or her final average compensation (average compensation during the
highest 60 consecutive months of his or her final 120 months of employment)
less 0.4% of his or her age 65 monthly Social Security-covered compensation,
with the result multiplied by years of benefit service (up to a maximum of 25
years). Under the pension plans, an executive's pensionable remuneration or
covered compensation means his or her salary and target bonus under the bonus
plan(s) applicable to the executive. For each named executive officer, covered
compensation for 1996 was within 10% of the total Annual Compensation shown in
the Summary Compensation Table on page 11, except that Mr. Latzer's covered
compensation of $675,000 was 84% of the total shown in such table. Benefits
earned under the pension plans' prior benefit formulas are protected to the
extent they exceed benefits earned under the current formula. A participant is
fully vested in his or her retirement benefit 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 11. 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 excise taxes imposed with respect to payments
or benefits received due to a change of control (and for any income taxes
imposed with respect to such additional payment).
13
<PAGE>
CERTAIN TRANSACTIONS
In July 1993, Mr. Finn entered into an agreement with the Corporation in
connection with his relocation to San Francisco pursuant to which the
Corporation agreed to loan Mr. Finn $425,000 to assist him with the purchase
of a home in the San Francisco Bay Area. The loan, which was made on March 4,
1994, was secured by a deed of trust on Mr. Finn's residence. The loan was
interest-free and was forgiven ratably over its three-year term.
In August 1995, Mr. Cusack entered into an agreement with the Corporation in
connection with his relocation to Los Angeles pursuant to which the
Corporation agreed to loan Mr. Cusack $425,000 to assist him with the purchase
of a home in the Southern California area. The loan, which was made on August
15, 1995, is secured by a deed of trust on Mr. Cusack's residence. The loan is
interest-free and is being forgiven ratably over its five-year term provided
that Mr. Cusack remains an employee of the Corporation at each successive
anniversary date of the loan. In 1996, the principal amount of $85,000 was
forgiven, and the current balance of the loan is $340,000. The loan will be
forgiven in full if Mr. Cusack dies or becomes permanently disabled, if he
terminates his employment for good reason (as defined in the agreement), if
the Corporation terminates his employment other than for cause (as defined in
the agreement) or if, at the Corporation's request, he sells his home in the
Southern California area and relocates in connection with his continued
employment by the Corporation. If Mr. Cusack 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. Cusack
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 1996, the Corporation and its subsidiaries obtained legal services from
the law firm of Pillsbury Madison & Sutro LLP, 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 1997.
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, 1996, 9,410,663 shares, or 14.2%, 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 9,410,663 shares.
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 1998 Annual Meeting
of Stockholders of the Corporation must be received by the Corporation no
later than November 18, 1997, for inclusion in the Corporation's Proxy
Statement and form of proxy relating to such meeting.
San Francisco, California
March 18, 1997
14
<PAGE>
LOGO
Printed on Recycled Paper
<PAGE>
(FRONT OF PROXY)
<TABLE>
<CAPTION>
THIS PROXY IS BEING SOLICITED ON BEHALF OF
THE BOARD OF DIRECTORS OF
TRANSAMERICA CORPORATION
<S> <C>
The undersigned hereby appoints Shirley H. Buccieri, Edgar H. Grubb PROXY
and Frank C. Herringer, each with power of substitution, as proxies of
the undersigned, to attend the Annual Meeting of Stockholders of TRANSAMERICA
Transamerica Corporation, to be held at The Booth Playhouse in the North CORPORATION
Carolina Blumenthal Performing Arts Center at Founders Hall, 130 North
Tryon Street, Charlotte, North Carolina on May 1, 1997 at 11:00 a.m.,
and any adjournment thereof, and to vote the number of shares the
undersigned would be entitled to vote if personally present in the manner ANNUAL
indicated on this form and in their discretion on any other matter MEETING OF
which may properly come before the Meeting. STOCKHOLDERS
MAY 1, 1997
(LOGO)
</TABLE>
THIS PROXY WILL BE VOTED AS DIRECTED, BUT IF NOT OTHERWISE DIRECTED,
WILL BE VOTED FOR PROPOSALS 1 AND 2 AND AGAINST PROPOSAL 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 AND 2 AND AGAINST PROPOSAL 3.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSALS 1 AND 2 AND AGAINST
PROPOSAL 3.
-----
1. Election of Directors.
[ ] FOR [ ] WITHHELD NOMINEES:
T. Rembe
F.N. Shumway
P.V. Ueberroth
For, except vote withheld from the following Nominee(s):
_________________________________________________________
2. Election of Ernst & Young LLP as independent auditors.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. Stockholder proposal concerning director compensation.
[ ] 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
