SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
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The Phoenix Companies, Inc.
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[logo]PHOENIX
The Phoenix Companies, Inc.
One American Row
Hartford, CT 06102
March 22, 2004
Dear Shareholder:
You are cordially invited to attend the Annual Meeting of Shareholders to be held on Thursday, April 29,
2004 at 10:00 a.m. at our offices at 10 Krey Boulevard, East Greenbush, New York.
The notice of annual meeting and proxy statement accompanying this letter provide an outline of the business
to be conducted at the meeting. At the meeting, I will also report on the progress of the Company during the
past year and answer shareholders' questions.
It is important that your shares be represented at the Annual Meeting. Whether or not you plan to attend the
Annual Meeting, I urge you to complete, date and sign the enclosed proxy card and promptly return it in the
postage-paid envelope provided or vote by proxy using the telephone or through the Internet as promptly as
possible. Your vote is important.
Thank you.
Yours truly,
/s/Dona D. Young
Dona D. Young
Chairman, President and Chief Executive Officer
THE PHOENIX COMPANIES, INC.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
--------------------------
One American Row
Hartford, Connecticut 06102
March 22, 2004
To the Shareholders of
THE PHOENIX COMPANIES, INC.
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of THE PHOENIX COMPANIES, INC. will be held
at our offices at 10 Krey Boulevard, East Greenbush, New York, on Thursday, April 29, 2004 at 10:00 a.m.
Eastern time for the purpose of considering and acting upon the following matters:
1. election of four directors to serve until the 2007 Annual Meeting of Shareholders and until their
successors are duly elected and qualified;
2. ratification of the appointment of PricewaterhouseCoopers LLP as the Company's independent auditor for
the fiscal year ending December 31, 2004; and
3. consideration of such other business as may properly come before the meeting or any adjournments
thereof.
Shareholders of record as of the close of business on March 5, 2004 are entitled to notice of, and to vote at,
the meeting and any adjournment thereof.
By order of the Board of Directors,
/s/John H. Beers
John H. Beers
Secretary
PROXY STATEMENT
TABLE OF CONTENTS
Page
VOTING PROCEDURES............................................................................................1
• General Information.....................................................................................1
• Voting Rights...........................................................................................1
• Voting of Proxies.......................................................................................1
• Voting by Proxy Card....................................................................................2
• Voting by Telephone or Through the Internet.............................................................2
• Voting Shares Held in Company Plans.....................................................................2
• Electronic Delivery of Future Annual Meeting Materials..................................................2
OWNERSHIP OF COMMON STOCK....................................................................................3
• Directors and Executive Officers........................................................................3
• Five Percent Shareholders...............................................................................5
PROPOSAL 1: ELECTION OF DIRECTORS............................................................................5
• Background..........................................................................................5
• Director Nomination Process.........................................................................6
• Nominees for Election...............................................................................6
• Continuing Directors................................................................................7
THE BOARD OF DIRECTORS.......................................................................................8
• General Information.................................................................................8
• Committees of the Board of Directors................................................................9
• Compensation of Directors..........................................................................11
• Certain Relationships and Related Transactions.....................................................11
AUDIT COMMITTEE CHARTER AND REPORT..........................................................................12
• Audit Committee Charter............................................................................12
• Audit Committee Report.............................................................................12
COMPENSATION OF EXECUTIVE OFFICERS..........................................................................13
• Summary Compensation Table.........................................................................13
• Stock Option Grants Table..........................................................................15
• Stock Option Exercises and December 31, 2003 Stock Option Value Table..............................16
• Long-Term Incentive Plan...........................................................................16
• Retirement Plan....................................................................................17
• Employment-Related Agreements......................................................................17
COMPENSATION COMMITTEE REPORT...............................................................................19
PERFORMANCE GRAPH...........................................................................................22
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE.....................................................22
PROPOSAL 2: RATIFICATION OF THE APPOINTMENT OF INDEPENDENT AUDITOR..........................................23
• Fees Incurred for Services Performed by PwC........................................................23
OTHER MATTERS...............................................................................................24
SHAREHOLDER COMMUNICATIONS..................................................................................24
HOUSEHOLDING OF MATERIALS...................................................................................24
EXHIBIT A - AUDIT COMMITTEE CHARTER.........................................................................A-1
THIS PAGE INTENTIONALLY LEFT BLANK
PROXY STATEMENT
THE PHOENIX COMPANIES, INC.
ANNUAL MEETING OF SHAREHOLDERS
April 29, 2004
VOTING PROCEDURES
General Information
This proxy statement is being furnished to the shareholders of The Phoenix Companies, Inc., a Delaware
corporation (the "Company"), in connection with the Annual Meeting of Shareholders to be held on Thursday,
April 29, 2004, at 10:00 a.m. Eastern time, at our offices at 10 Krey Boulevard, East Greenbush, New York
12144, and at any adjournment thereof (the "Annual Meeting"). The notice of meeting, this proxy statement and
the accompanying proxy are first being sent to shareholders on or about March 22, 2004.
Voting Rights
Only shareholders of record on March 5, 2004 (the "Record Date") are entitled to notice of, and to vote
at, the Annual Meeting. As of the Record Date, there were 94,546,580 shares of the Company's Common Stock (the
"Common Stock") outstanding. Each shareholder is entitled to one vote for each share of Common Stock registered
in that person's name on the books of the Company as of the Record Date.
A plurality of the votes validly cast is required for the election of directors. For each other item, the
affirmative vote of the holders of a majority of the shares represented in person or by proxy and entitled to
vote on the item will be required for approval. No votes may be taken at the meeting, other than a vote to
adjourn, unless a quorum has been constituted consisting of the representation of one-third of the outstanding
shares as of the Record Date. Proxies marked as abstaining and proxies containing broker non-votes on any
matter to be acted upon by shareholders will be treated as present at the meeting for the purpose of
determining a quorum. Broker non-votes and abstentions as to particular matters will not, however, be counted
as shares voting on such matters. Votes will be tabulated under the supervision of persons designated by the
Board of Directors, or Board, as inspectors.
Voting of Proxies
Your proxy in the form enclosed is solicited by the Board of Directors of the Company for use at the
Annual Meeting and all valid proxies will be voted. Except as noted above or to the extent shareholders give
contrary instructions in the places provided in the proxy, it is the intention of the persons named in the
proxy to vote "for" each of the nominees for the Board of Directors and "for" the other proposal set forth in
the notice of meeting. A proxy may be revoked at any time prior to its use. Such revocation may be made in
person at the Annual Meeting, by a notice in writing delivered to the Secretary of the Company or by a proxy
bearing a later date.
Subject to the limitations described below, shareholders may vote by proxy as follows: (i) by using the
accompanying proxy card; (ii) by telephone; or (iii) through the Internet. When voting to elect directors, you
may use any of these methods: (a) vote for all of the director nominees as a group; (b) vote for all of the
director nominees as a group, except those nominees whose names you specify; or (c) withhold your vote from all
nominees as a group. As to the other proposal, you may vote "for" or "against" the item or "abstain" from
voting. If you properly vote by proxy but do not specify any choices, you will thereby confer authority upon
the persons named as proxies to vote your shares at their discretion. A proxy also confers discretionary
authority on these individuals to vote your shares of Common Stock on any matter that was not known on the date
of this proxy statement but is properly presented at the Annual Meeting, including voting on the nomination or
election of any substitute nominees selected by the Board of Directors in the event any nominees are unable or
decline to serve.
The expense of proxy solicitation will be borne by the Company. Depending upon the response to the initial
solicitation, proxies may be solicited in person or by mail, telephone, electronic mail or facsimile by
employees of the Company. Georgeson Shareholder Communications Inc. has been retained by the Company to assist
in solicitation at a total estimated cost of $5,500, plus reimbursement of certain out-of-pocket expenses. The
Company will, upon request, also reimburse banks, brokers and other nominees for providing proxy materials to
beneficial owners.
1
Voting by Proxy Card
Any shareholder holding shares as of the Record Date may vote by proxy by using the accompanying proxy
card. When you return a proxy card that is properly signed and completed, the shares of Common Stock
represented by the proxy will be voted as you specify on the proxy card.
Voting by Telephone or Through the Internet
If you are a registered shareholder (that is, you own Common Stock in your own name and not through a
broker, nominee or in some other "street name" capacity), you may vote by proxy via the telephone or Internet.
Please see the accompanying proxy card for instructions on how to access the telephone and Internet voting
systems. If you hold shares of Common Stock in "street name", your broker or other nominee will advise you
whether you may vote by telephone or through the Internet.
Voting Shares Held in Company Plans
Shares of Common Stock held in The Phoenix Companies, Inc. Savings and Investment Plan, The Phoenix
Companies, Inc. Agent Savings and Investment Plan and The Phoenix Companies, Inc. Agent Pension Plan are held
of record and are voted by the trustee of these plans. Participants in these plans may direct the trustee how
to vote shares allocated to their accounts by voting in the manner specified by such trustee. The trustee of
these plans will vote shares as to which it has not received direction as may be specified by the trustee and
the applicable plan.
Electronic Delivery of Future Annual Meeting Materials
The Company offers its shareholders the opportunity to receive future proxy materials and annual reports
electronically. Simply log on to the Web site www.econsent.com/pnx and follow the instructions. (All URLs
referred to in this proxy statement are intended to be inactive textual references only. They are not intended
to be active hyperlinks to any Web site. The information on any Web site which might be accessible through a
hyperlink resulting from this or any other URL referenced in this proxy statement is not intended to be part of
this proxy statement and is not incorporated herein by reference.) Electronic delivery could save the Company a
significant portion of the costs associated with printing and mailing its annual meeting materials, and the
Company hopes that shareholders find this service convenient and useful. By providing the appropriate
information when you vote by proxy via the Internet, you can consent to receive future proxy materials and/or
annual reports electronically. If you consent and the Company elects to deliver future proxy materials and/or
annual reports to you electronically, then the Company will send you a notice by electronic mail explaining how
to access these materials, but will not send you paper copies of these materials unless you request them. The
Company may also choose to send one or more items to you in paper form despite your consent to receive them
electronically. If you consent to electronic delivery, you will be responsible for your usual Internet charges
(e.g. on-line fees) in connection with the electronic delivery of the proxy materials and annual report. Your
consent will be effective until you revoke it by terminating your registration at the Web site
www.econsent.com/pnx.
* * *
Your vote is important and the Board of Directors urges you to exercise your right to vote. Whether or not
you plan to attend the Annual Meeting, you can assure that your shares are voted properly by returning the
enclosed proxy card or by voting by proxy using the telephone or through the Internet.
2
OWNERSHIP OF COMMON STOCK
Directors and Executive Officers
On June 25, 2001, Phoenix Home Life Mutual Insurance Company ("Phoenix Life") demutualized, becoming a
subsidiary of the Company. Under New York Insurance Law, all officers and directors of the Company, as well as
certain of their family members, were prohibited until June 25, 2003, the second anniversary of Phoenix Life's
demutualization, from acquiring shares of Common Stock, other than any they may have acquired as a result of
the demutualization. Other limitations1 continue to apply until June 25, 2006. To facilitate stock ownership by
its directors and employees, the Company has adopted certain permitted equity-based compensation plans and, in
2003, adopted ownership and retention guidelines for directors and senior officers.
These guidelines call for senior officers to attain ownership of Common Stock in amounts equal to
specified multiples of salary. For purposes of these guidelines and those applicable to directors, restricted
stock units, or RSUs, will be counted as "stock". The multiples range from five times salary at the CEO level
to one times salary for eligible vice presidents. Instead of a fixed time frame for attaining these levels of
ownership, the committee established retention requirements for equity received from stock-based benefit and
compensation plans. The required retention ratios range from 75% at the CEO level to 25% for vice presidents.
When the specific thresholds of ownership are met, the retention ratios for future grants are reduced. Senior
officers are required to retain these awards for six months after retirement or termination from the Company.
These retention ratios apply to all shares and RSUs awarded after June 5, 2003.
The share ownership guidelines for directors call for each director to accumulate $150,000 worth of our
Common Stock within five years and to hold such stock until the end of his or her service as a director of the
Company or June 25, 2006 if service ends before that date.
The table on the next page shows with respect, individually, to each director and nominee for director of
the Company, and each of the five executive officers of the Company named in the Summary Compensation Table on
page 13 of this proxy statement (the "named executive officers"), and with respect to a group composed of those
individuals, plus our other executive officers: (i) the total number of shares of Common Stock beneficially
owned; and (ii) the percent of the Common Stock so owned. Unless otherwise indicated in a footnote, each person
listed in the table owns the shares shown below directly with sole voting and investment power.
In addition to the information described in the preceding paragraph, which is required by federal
securities law to be disclosed in the table below, information is provided concerning those RSUs whose
conversion into shares is not contingent upon any performance-based criteria. (For information about RSUs
subject to such criteria, see Long-Term Incentive Plan on page 16 and Employment-Related Agreements, beginning
on page 17). Since neither the directors nor the officers have power to vote the shares underlying their RSUs
or power to sell, transfer or encumber their RSUs (except in some cases, for transfers to immediate family
members or to a trust for those members' benefit), no RSU is counted, for purposes of this table, as a "Share
Beneficially Owned". Each RSU is convertible into one share of our Common Stock, generally on the later of June
26, 2006 or 15 days after the holder ceases to be an officer or director. (For a discussion of RSUs of Mrs.
Young and Mr. Geraci, which have different vesting and conversion terms, see Employment-Related Agreements,
beginning on page 17).
- -------------------------------------
1 Directors, officers and their family members are prohibited until June 25, 2006, the fifth anniversary of
Phoenix Life's demutualization, from acquiring shares of Common Stock except: (a) as consideration to
eligible policyholders pursuant to Phoenix Life's plan of reorganization; (b) through acquisitions on or
after June 25, 2003 from a registered broker or dealer at then quoted prices; or (c) pursuant to a stock
option plan approved by the Superintendent of Insurance for the State of New York.
3
- ---------------------------------------------------------------------------------------------------------------
Shares
Name of Beneficially Percent of Restricted
Beneficial Owner Owned(1) Common Stock Stock Units(2) Total(3)
- ---------------------------------------------------------------------------------------------------------------
Sal H. Alfiero 145,053 * 4,892 149,945
- ---------------------------------------------------------------------------------------------------------------
Jean S. Blackwell -- * -- --
- ---------------------------------------------------------------------------------------------------------------
Peter C. Browning 8,141 * 1,921 10,062
- ---------------------------------------------------------------------------------------------------------------
Arthur P. Byrne 18,029 * 15,210 33,239
- ---------------------------------------------------------------------------------------------------------------
Sanford Cloud Jr. 5,000 * 1,921 6,921
- ---------------------------------------------------------------------------------------------------------------
Richard N. Cooper 71 * 1,921 1,992
- ---------------------------------------------------------------------------------------------------------------
Gordon J. Davis 18 * 1,921 1,939
- ---------------------------------------------------------------------------------------------------------------
Daniel T. Geraci 1,067(4) * 255,004(5) 256,071
- ---------------------------------------------------------------------------------------------------------------
Michael Gilotti 45,217(6) * -- 45,217
- ---------------------------------------------------------------------------------------------------------------
Ann Maynard Gray -- * 3,146 3,146
- ---------------------------------------------------------------------------------------------------------------
John E. Haire 6,519(7) * 8,193 14,712
- ---------------------------------------------------------------------------------------------------------------
Michael E. Haylon 25,349(8) * -- 25,349
- ---------------------------------------------------------------------------------------------------------------
Jerry J. Jasinowski 47 * 10,794 10,841
- ---------------------------------------------------------------------------------------------------------------
Thomas S. Johnson 15,044 * 1,921 16,965
- ---------------------------------------------------------------------------------------------------------------
Marilyn E. LaMarche 130 * -- 130
- ---------------------------------------------------------------------------------------------------------------
Coleman D. Ross 14,204(9) * -- 14,204(9)
- ---------------------------------------------------------------------------------------------------------------
Robert G. Wilson -- * -- --
- ---------------------------------------------------------------------------------------------------------------
Dona D. Young 30,183(10) * 477,058(11) 507,241
- ---------------------------------------------------------------------------------------------------------------
All directors, the
director nominee and 331,202(12) * 783,902 1,115,104
all executive
officers as a group
(21 persons)
- ---------------------------------------------------------------------------------------------------------------
* Less than one percent.
(1) As of March 1, 2004 for all except as provided in Note 9. In the case of the named executive officers,
the figures include share equivalents held in the Common Stock Fund through the Company's Savings and
Investment Plan. All holdings are rounded to the nearest whole numbers.
(2) As of March 1, 2004; rounded to the nearest whole numbers.
(3) The figures in this column represent the sums of the total shares beneficially owned as of March 1, 2004,
plus the shares into which the RSUs will be converted if the applicable conditions for vesting and
issuance are met.
(4) Includes share equivalents held in the Common Stock Fund through the Company's Savings and Investment
Plan that equate to 87 shares.
(5) These RSUs will vest on May 12, 2006 or such earlier time as provided in Mr. Geraci's Change in Control
Agreement, which is discussed beginning on page 18.
(6) Includes share equivalents held in the Common Stock Fund through the Company's Savings and Investment
Plan that equate to 917 shares.
(7) Includes 1,000 shares held by Mr. Haire in custody for his two minor children.
(8) Includes share equivalents held in the Common Stock Fund through the Company's Savings and Investment
Plan that equate to 298 shares.
(9) Share ownership is as of December 31, 2003, Mr. Ross' last day of employment with the Company. On that
date, Shares Beneficially Owned included share equivalents held by Mr. Ross in the Common Stock Fund
through the Company's Savings and Investment Plan, which, upon distribution to Mr. Ross, equated to 4,204
shares.
(10) Includes: (a) 556 shares of Common Stock held by a trust of which Mrs. Young is the sole trustee; (b) 18
shares of Common Stock held by a trust of which Mrs. Young's husband is a trustee and with respect to
which she disclaims beneficial ownership; and (c) share equivalents held in the Common Stock Fund through
the Company's Savings and Investment Plan that equate to 28,356 shares.
(11) 394,737 of these RSUs will vest on January 1, 2006 or such earlier time as provided in Mrs. Young's
Executive Employment Agreement, which is discussed beginning on page 17. While all of her remaining RSUs
(82,321) are vested, until such time as they are converted into Common Stock, Mrs. Young does not have
beneficial ownership of the underlying shares. Mrs. Young elected to receive the latter RSUs instead of a
cash award to which she was entitled under the Company's 1997-1999 Long-Term Incentive Plan, or LTIP.
(The payment of that award had been mandatorily deferred until 2003.) Pursuant to the terms of her
elected deferral, these RSUs will be convertible into the underlying shares, without consideration, on
the later of: (a) the 15th business day after termination of Mrs. Young's employment (or, if such day is
not a business day, the next business day); or (b) June 26, 2006.
4
(12) Includes: (a) 1,593 shares of Common Stock whose ownership is indirect either because the shares are held
in trust or because they are held by or on behalf of family members; (b) 18 shares of Common Stock with
respect to which beneficial ownership is disclaimed; and (c) share equivalents held in the Common Stock
Fund through the Company's Savings and Investment Plan that equate to 45,140 shares.
Five Percent Shareholders
The following table sets forth information regarding the beneficial ownership of our Common Stock as of
December 31, 2003 by the only person known to us to be the beneficial owner of more than 5 percent of our
Common Stock. We have determined beneficial ownership in accordance with the rules of the Securities and
Exchange Commission ("SEC"). Except as otherwise indicated in the footnote to the table, we believe, based on
the information available to us, that the person named in the table has sole voting and investment power with
respect to all shares of Common Stock that it beneficially owns.
Amount and Nature Percent of
of Beneficial Common
Name and Address of Beneficial Owner Ownership Stock
State Farm Mutual Automobile Insurance Company 5,917,663 (1) 6.2%
One State Farm Plaza
Bloomington, IL 61710
- ---------------------------
(1) Includes 5,145,000 shares of Common Stock currently owned by State Farm Mutual Automobile Insurance
Company ("State Farm"), plus 21,573 shares acquired by a variable product separate account for which a
State Farm subsidiary is the investment adviser and 751,090 shares issuable upon early termination of our
Equity Units owned by State Farm. On December 31, 2003, the 5.1 million shares currently owned directly by
State Farm constituted less than 5.4 percent of the total outstanding shares of Common Stock. (The
calculation of the percentage in the table is premised, pursuant to applicable rules, on the assumption
that no purchase contracts underlying the Equity Units are terminated early other than State Farm's. If
purchase contracts underlying all Equity Units had settled on December 31, 2003, the total shares
beneficially owned by State Farm would have represented less than 5.3 percent of the total outstanding
shares of Common Stock.)
PROPOSAL 1: ELECTION OF DIRECTORS
Background
The Board of Directors consists of three classes of directors:
• one class to hold office for a term expiring at the Annual Meeting of Shareholders being held on
April 29, 2004;
• another class to hold office for a term expiring at the Annual Meeting of Shareholders being held
in 2005; and
• another class to hold office for a term expiring at the Annual Meeting of Shareholders being held
in 2006.
The members of each class hold office until their respective successors are duly elected and qualified. At each
Annual Meeting of Shareholders of the Company, the successors to the class of directors whose terms expire at
the meeting are elected to hold office for terms expiring at the Annual Meeting of Shareholders held in the
third year following their election.
It is the Company's policy that all of its directors should attend the Annual Meeting of Shareholders if
reasonably possible. In 2003, all of the Company's directors other than one who was retiring on the date of the
Annual Meeting, or 16 directors, attended that meeting.
5
Director Nomination Process
When a vacancy in the Board of Directors occurs or is anticipated, the Nominating and Corporate Governance
Committee (discussed on page 11) is responsible for proposing qualified candidates to the Board. In fulfilling
its responsibilities to identify potential candidates for election to the Board, the committee looks to its
members and to other directors for recommendations. It may also retain a search firm and will consider
individuals recommended by shareholders. Shareholders can submit their recommendation to the committee in care
of the Company's Secretary either by mail to: Corporate Secretary, The Phoenix Companies, Inc., One American
Row, P.O. Box 5056, Hartford, CT 06102-5056, or by e-mail to: corporate.secretary@phoenixwm.com. Provided a
shareholder's submission complies with the requirements referenced in Shareholder Communications (on page 24),
the Secretary will forward it to the committee for consideration. If a vacancy in the Board exists or is
anticipated, the committee will evaluate all proposed nominees in light of the standards below, as well as
others deemed relevant. Following its evaluation of all proposed nominees and consultation with the Chief
Executive Officer, the committee will recommend to the Board the individual(s) it considers most qualified to
be nominated to run for election to the Board. The Board will make the final determination as to the
individual(s) who will be nominated to run for election to the Board.
In considering candidates for nomination to the Board of Directors, the committee seeks individuals with
strong intellectual ability, breadth of experience, demonstrated professional achievement, diverse backgrounds
and the highest integrity. Such individuals should also be able and willing to devote significant attention to
the Company's needs through regular attendance at meetings, preparation for meetings and availability for
regular consultation between meetings.
In addition to the factors in the preceding paragraph, the committee may consider search-specific criteria
in assessing candidates. For example, the committee may conclude that particular areas of expertise are
important with respect to a given vacancy either because expertise is being lost due to the retirement of a
director or because of new needs of the Company, such as those arising out of changes in business focus or in
the industries or the regulatory environments in which the Company operates. Absent special circumstances, the
committee generally will not recommend a candidate if election of such candidate would require an increase in
the number of authorized directors beyond the current level of thirteen.
Nominees for Election
Mr. Wilson, who will have reached age 70 prior to the 2004 Annual Meeting, is retiring as a director
effective on the date of that meeting, as required by the applicable guidelines established by the Board of
Directors. Ms. Blackwell has been chosen by the Board of Directors to run for election to fill the vacancy
created by Mr. Wilson's retirement. She was brought to the attention of the Nominating and Corporate Governance
Committee by a third-party search firm. The committee retained such firm to identify potential candidates and
to help the committee evaluate all candidates, including those independently identified by the committee or by
other directors, through submission of a written report to the committee on all candidates. The committee then
narrowed the list to those they wished to interview and to have the Company's Chairman interview. Following
those interviews, the committee recommended Ms. Blackwell to the Board as its preferred candidate and the Board
accepted that recommendation.
At the Annual Meeting on April 29, 2004, four directors are to be elected to hold office until the 2007
Annual Meeting of Shareholders and until their successors are duly elected and qualified. All of the nominees
except Ms. Blackwell are presently directors of the Company. The affirmative vote of the holders of a plurality
of the shares of Common Stock represented in person or by proxy at the Annual Meeting is required to elect
directors. It is intended that, in the absence of contrary specifications, votes will be cast pursuant to the
enclosed proxy for the election of the nominees named below. Should any of the nominees become unable or
unwilling to accept nomination or election, it is intended, in the absence of contrary specifications, that the
proxies will be voted for the balance of those named and for a substitute nominee or nominees. The Company now
knows of no reason, however, to anticipate such an occurrence. All of the nominees have consented to be named
as nominees and to serve as directors if elected.
6
The following persons are nominees for election as directors of the Company for terms to expire in 2007; the
Board of Directors recommends that shareholders vote FOR each of them:
- ---------------------------------------------------------------------------------------------------------------
Name/Age (1) Service as Director (2) Business Experience/Other Directorships
- ---------------------------------------------------------------------------------------------------------------
Jean S. Blackwell, none Since February 2003, Vice President, Chief Financial
age 49 (new nominee) Officer and Chief of Staff of Cummins Inc., and from 1997
to 2003, Vice President; partner of Bose McKinney & Evans
LLP from 1995 to 1997 and from 1985 to 1991 and associate
from 1989 to 1991; Indiana State Lottery Director from
1991 to January 1, 1993; State of Indiana Budget Director
from 1993 to 1995
- ---------------------------------------------------------------------------------------------------------------
Arthur P. Byrne, since 2000 Since 2002, operating partner of JW Childs Associates, a
age 58 (since 1997 for PLIC) private equity fund based in Boston, Massachusetts;
President, Chief Executive Officer and Chairman of The
Wiremold Company from 1991 to 2002
- ---------------------------------------------------------------------------------------------------------------
Ann Maynard Gray, since 2002 President of the Diversified Publishing Group of Capital
age 58 Cities/ABC, Inc. from 1991 to 1998; currently a director
of Duke Energy Corporation and Elan Corporation PLC and a
trustee for J.P. Morgan Funds
- ---------------------------------------------------------------------------------------------------------------
Dona D. Young, since 2000 Chairman of the Company and PLIC since April 2003, Chief
age 50 (since 1998 for PLIC) Executive Officer since January 2003, President since
2000; Chief Operating Officer of the Company and PLIC from
February 2001 through December 2002; Executive Vice
President, Individual Insurance and General Counsel of
PLIC from 1994 to 2000; current director of Wachovia
Corporation and Foot Locker, Inc.
- ---------------------------------------------------------------------------------------------------------------
Continuing Directors
The following directors, whose terms expire in 2005, will continue to serve as directors:
- ---------------------------------------------------------------------------------------------------------------
Name/Age (1) Service as Director (2) Business Experience/Other Directorships
- ---------------------------------------------------------------------------------------------------------------
Sal H. Alfiero, since 2000 Chairman and Chief Executive Officer of Protective
age 66 (since 1988 for PLIC) Industries, LLC since 2001; Chairman and Chief Executive
Officer of Mark IV Industries, Inc. from 1969 to 2001;
current director of Fresh Del Monte Produce, Inc., HSBC
North America Inc. and HSBC USA, Inc.
- ---------------------------------------------------------------------------------------------------------------
Richard N. Cooper, since 2000 Maurits C. Boas Professor of International Economics for
age 69 (since 1982 for PLIC) Harvard University since 1981; while on leave from
Harvard, Chairman of National Intelligence Council from
1995 to 1997; current director of Circuit City Stores,
Inc.
- ---------------------------------------------------------------------------------------------------------------
John E. Haire, since 2000 Executive Vice President of Time, Inc. since 2001;
age 51 (since 1999 for PLIC) President of The Fortune Group from 1999 until 2001;
publisher of TIME Magazine from 1993 until 1999
- ---------------------------------------------------------------------------------------------------------------
Thomas S. Johnson, since 2000 Chairman and Chief Executive Officer of GreenPoint
age 63 Financial Corporation since 1993; President and
director of Manufacturers Hanover Trust Company and
Manufacturers Hanover Corp. from 1989 to 1991; current
director of R.R. Donnelley & Sons Company, Inc. and
Alleghany Corporation
- ---------------------------------------------------------------------------------------------------------------
Marilyn E. LaMarche, since 2000 Limited Managing Director in the New York investment
age 69 (since 1989 for PLIC) banking firm of Lazard Freres & Co. LLC since 1995,
General Partner from 1987 to 1995, and Senior Vice
President from 1983 to 1987; Trustee of the Phoenix Funds
since 2002 and a member of the Consulting Committee to the
Phoenix-Kayne Funds Board of Trustees since 2002
- ---------------------------------------------------------------------------------------------------------------
(1) All ages are as of March 1, 2004.
(2) Of both the Company and of Phoenix Life Insurance Company ("PLIC"), a subsidiary of the Company, except as
otherwise noted.
7
The following directors, whose terms expire in 2006, will continue to serve as directors:
- ---------------------------------------------------------------------------------------------------------------
Name/Age (1) Service as Director (2) Business Experience/Other Directorships
- ---------------------------------------------------------------------------------------------------------------
Peter C. Browning, since 2000 Dean of the McColl Graduate School of Business at Queens
age 62 (also, for PLIC from University of Charlotte; various positions, including
1989 to 1999) President and Chief Executive Officer, at Sonoco Products
Company from 1993 to 2000; current director of Lowe's
Companies, Inc., Wachovia Corporation, Acuity Brands,
Inc., and EnPro Industries, Inc. and non-executive
Chairman of Nucor Corporation
- ---------------------------------------------------------------------------------------------------------------
Sanford Cloud Jr., since 2001 President and Chief Executive Officer of The National
age 59 Conference for Community and Justice since 1994; partner
at the law firm of Robinson & Cole from 1993 until 1994;
Vice President at Aetna, Inc. from 1986 until 1992;
Connecticut State Senator from 1977 until 1980; current
director of Tenet Healthcare Corp., a trustee of Northeast
Utilities and non-executive Chairman of IronBridge
Mezzanine Fund L.P.
- ---------------------------------------------------------------------------------------------------------------
Gordon J. Davis, Esq., since 2000 Partner at the law firm of LeBoeuf, Lamb, Greene & MacRae,
age 62 (since 1986 for PLIC) L.L.P., since 1994 (except during much of 2001);
President of Lincoln Center for the Performing Arts from
January to November 2001; current director of Consolidated
Edison of New York, Inc. and of approximately 20
registered investment companies within the Dreyfus family
of funds
- ---------------------------------------------------------------------------------------------------------------
Jerry J. Jasinowski, since 2000 President of the National Association of Manufacturers
age 65 (since 1995 for PLIC) since 1990, Executive Vice President and Chief Economist
from 1983 to 1989 and Senior Vice President and Chief
Economist from 1981 to 1983; Assistant Secretary of Policy
at the U.S. Department of Commerce from 1977 to 1980;
current director of Harsco Corporation and webMethods,
Inc.
- ---------------------------------------------------------------------------------------------------------------
(1) All ages are as of March 1, 2004.
(2) Of both the Company and of Phoenix Life Insurance Company ("PLIC"), a subsidiary of the Company, except as
otherwise noted.
THE BOARD OF DIRECTORS
The business and affairs of the Company are managed under the direction of its Board of Directors. The
Board has responsibility for establishing broad corporate policies and for overseeing the overall performance
of the Company. The Board is not involved, however, in day-to-day operating details. Members of the Board are
kept informed of the Company's business by various reports and documents sent to them, as well as by reports
presented at meetings of the Board and its committees. During 2003, the Board of Directors met six times. All
incumbent directors attended at least 75 percent of the total number of meetings of the Board of Directors and
of the committees on which they served. During the times allocated for Board meetings, the independent
directors also meet in executive session, i.e. without any member of management present. Pursuant to our
Corporate Governance Principles, which are available on our Web site at PhoenixWealthManagement.com in the
Investor Relations section, the Chairman of the Executive Committee, who is currently Mr. Sal Alfiero, is the
Chairman of those meetings.
There are currently five committees of the Board of Directors that perform essential functions of the
Board. Three of these are standing committees: the Executive Committee, the Audit Committee and the
Compensation Committee. The Board, in its discretion, may form other committees. Currently, these other
committees include the Nominating and Corporate Governance Committee and the Finance Committee. The
responsibilities of the committees are summarized in the table below. Each committee has authority to retain
advisors to help fulfill its responsibilities. Only directors who are not current or former employees of the
Company or its affiliates may be members of the Audit Committee or the Compensation Committee. Members of these
two committees must also meet certain other independence standards, including those of the New York Stock
Exchange. The Board of Directors has determined that all of its non-employee directors meet the independence
standards of the New York Stock Exchange. This determination was made by the Board pursuant to the categorical
independence standards adopted by the Board at its meeting in February, 2004. These standards may be viewed on
our Web site at PhoenixWealthManagement.com in the Investor Relations section.
8
The current Board committees, their responsibilities, their membership and their number of meetings in
2003 follow. The description of the committee functions are merely summaries; each is subject to overriding
limitations imposed by applicable law, the Company's certificate of incorporation, the committees' respective
charters and resolutions of our Board of Directors. The chair of each committee is listed with an asterisk.
COMMITTEES OF THE BOARD OF DIRECTORS
- ---------------------------------------------------------------------------------------------------------------
Number
of
2003
Committee Responsibilities Members Meetings
- ---------------------------------------------------------------------------------------------------------------
Audit • recommending to the Board the selection of the Thomas S. Johnson * 8
Committee Company's independent auditor Arthur P. Byrne
Richard N. Cooper
• reviewing the scope, plans and results relating John E. Haire
to the Company's internal and external audits Jerry J. Jasinowski
and financial statements Robert G. Wilson
• reviewing the Company's financial condition
• reviewing the quality and integrity of the Company's
financial reporting processes and procedures
• reviewing the Company's significant business and
financial risks and exposures and evaluating the
adequacy of the Company's internal controls in
connection with such risks and exposures
• reviewing the Company's policies on ethical
business conduct and monitoring its compliance with
those policies
These responsibilities are described in the committee's charter, a copy of which appears in Exhibit A to this
proxy statement and also on the Company's Web site (PhoenixWealthManagement.com) in the Investor Relations
section. The Board has determined that none of the Audit Committee members have any relationship to the Company
that may interfere with the exercise of their independence from management and the Company. In particular, the
Board has determined that each is independent under both New York Stock Exchange listing standards and
applicable SEC requirements. Additionally, Mr. Johnson, the committee's chairman, has been determined by the
Board, based on his education and experience, to be an audit committee financial expert, as defined by federal
securities law. (See Audit Committee Charter and Report on page 12 for further information about this
committee).
- ---------------------------------------------------------------------------------------------------------------
9
- ---------------------------------------------------------------------------------------------------------------
Number
of
2003
Committee Responsibilities Members Meetings
- ---------------------------------------------------------------------------------------------------------------
Compensation • evaluating the targeted compensation of the Chief Sanford Cloud Jr. * 7
Committee Executive Officer, "key executives" (officers at Sal H. Alfiero
the level of executive vice president and above and Peter C. Browning
other employees expected to earn as much as the Ann Maynard Gray
lowest paid executive vice president) and senior John E. Haire
vice presidents Thomas S. Johnson
• reviewing and recommending to the independent
members of the Board for approval the compensation
of the Chief Executive Officer
• reviewing and, with respect to senior officers,
approving base salary levels, incentive compensation
opportunities and incentive awards
• reviewing and approving benefits for senior officers
under plans exempt from ERISA
• reviewing and recommending compensation of the members
of the Board
• reviewing and approving the granting of stock options,
restricted stock units and other equity-based
compensation
• reviewing management succession plans.
See also the Compensation Committee Report, beginning on page 19. The committee's charter, which may be found
on the Company's Web site (PhoenixWealthManagement.com) in the Investor Relations section, further describes
these and other matters. The Company's Code of Conduct, which applies to all of our directors and employees,
also appears on that Web site, together with a description of the most recent amendments, other than ones that
are technical, administrative or non-substantive.
Executive • exercising the powers and authority of the Board in Sal H. Alfiero * 5
Committee the management of the Company's property, affairs Peter C. Browning
and business during periods between meetings of the Sanford Cloud Jr.
Board Jerry J. Jasinowski
Thomas S. Johnson
Dona D. Young
Finance • exercising the authority of the Board with respect Jerry J. Jasinowski * 5
Committee to the Company's financial and investment policies Arthur P. Byrne
Richard N. Cooper
• establishing and exercising general supervision Gordon J. Davis
over the investment policies and programs of the Marilyn E. LaMarche
Company Robert G. Wilson
• authorizing the issuance of debt and the establishment
of financing arrangements (other than through the
issuance of stock)
• exercising general supervision over disposition of
Company subsidiaries or material assets
• regularly reviewing the Company's and its major
subsidiaries' policies and positions regarding
interest rate risk, liquidity management, counterparty
risk, derivative usage and foreign exchange risk
- ---------------------------------------------------------------------------------------------------------------
10
- ---------------------------------------------------------------------------------------------------------------
Number
of
2003
Committee Responsibilities Members Meetings
- ---------------------------------------------------------------------------------------------------------------
Nominating and • presenting qualified candidates to the Board for Peter C. Browning * 8
Corporate election as directors Sal H. Alfiero
Governance Sanford Cloud Jr.
Committee • reviewing the committee structure of the Board Gordon J. Davis
Ann Maynard Gray
• making recommendations to the Board with respect to Marilyn E. LaMarche
matters of corporate governance
• exercising the authority of the Board with respect
to matters relating to the interests of the Company's
shareholders or to the Company's relationships to the
community at large, including: charitable contributions;
government affairs and public relations; and employee
voluntary participation in community affairs and
philanthropic programs
The committee's charter, which may be found on the Company's Web site (PhoenixWealthManagement.com) in the
Investor Relations section, further describes these and other matters.
- ---------------------------------------------------------------------------------------------------------------
Compensation of Directors
Directors who are employees of the Company or any of its subsidiaries do not receive any compensation for
serving on the Board of Directors of the Company or of Phoenix Life. Directors' fees for 2003 consisted of: an
annual retainer of $35,000 for each director, plus an additional $10,000 for each chair; $4,000 for each Board
meeting attended; plus $1,500 for committee meetings attended that are held separately from scheduled Board
meetings. In calculating these fees, each meeting of the Company's Board of Directors and the Board of
Directors of Phoenix Life is treated as one meeting, as are meetings of their comparable committees. In 2003,
the Company paid $20,000 of the annual retainer in RSUs. Directors could defer the balance, either through RSUs
or through other specified investment alternatives.
The Company also provides $100,000 of whole life insurance to each director. The cost to the Company of
providing this insurance is nominal. All directors may also participate in a matching charitable gift program
to qualified educational and other charitable institutions, subject to an annual maximum match of $2,000 for
each director.
Effective on June 25, 2002, the first anniversary of the Company's demutualization, the Board of Directors
granted options to each non-employee then serving as a director to acquire 13,700 shares of Common Stock. These
options are exercisable on or after June 25, 2003 at $16.20 per share, the shares' fair market value (as
defined in the Directors Stock Plan) on June 25, 2002.
Certain Relationships and Related Transactions
On occasion, we may engage firms affiliated with one or more of our directors to provide services for us.
All such services are performed at competitive prices and on competitive terms after arm's length negotiations.
In 2003 and continuing in 2004, two such firms include LeBoeuf, Lamb, Greene and MacRae, L.L.P., or LeBoeuf,
and Lazard Freres & Co. LLC, or Lazard. Mr. Davis, a director, is a partner at the law firm of LeBoeuf, which
has in the past provided and is currently providing legal advice and services to the Company or its
subsidiaries. Ms. LaMarche, a director, is a limited managing director of Lazard, whose asset management
subsidiary serves as a subadvisor for certain Phoenix mutual funds.
State Farm currently owns of record more than five percent of our outstanding Common Stock. In 2003, the
Company's subsidiaries paid approximately $23.7 million, as compensation for the sale of their insurance and
annuity products, to entities which were either subsidiaries of State Farm or owned by State Farm employees.
The balance earned in 2003, approximately $2.2 million, was paid in 2004.
11
AUDIT COMMITTEE CHARTER AND REPORT
Audit Committee Charter
The Audit Committee reports to the Board of Directors and is responsible for overseeing and monitoring the
Company's financial accounting and reporting process, the system of internal controls established by management
and the audit process of the Company. The Board adopted a written charter for the Audit Committee in 2001.
Since then, the Board has amended the charter to conform to the new requirements under applicable law, SEC
regulations and the New York Stock Exchange listing standards. A copy of this amended charter is attached to
this proxy statement as Exhibit A (the "Charter"). The Charter sets out the responsibilities, authority and
specific duties of the Audit Committee. It also specifies the structure and membership requirements of the
committee, as well as the relationship of the Audit Committee to the independent auditor, the internal auditor
and management of the Company.
Audit Committee Report
The Audit Committee oversees the Company's financial reporting process on behalf of the Board of
Directors. Management has the primary responsibility for the preparation, presentation and integrity of the
Company's financial statements and for the Company's reporting process, including its systems of internal
controls. The Company's independent auditor is responsible for auditing the Company's annual financial
statements and performing quarterly reviews. In fulfilling its responsibilities, the Audit Committee relies,
without independent verification, on the information provided by the Company's management and its independent
auditor.
In fulfilling its oversight responsibilities, the committee has met with management and with
PricewaterhouseCoopers LLP ("PwC"), the Company's independent auditor, and has reviewed and discussed the
Company's audited financial statements for the year ended December 31, 2003 (the "audited statements"). The
committee also discussed with PwC the matters required to be discussed by Statement on Auditing Standards 61,
as amended (Communications with Audit Committee) including:
• PwC's responsibilities under generally accepted auditing standards;
• the Company's significant accounting policies;
• management judgments and accounting estimates;
• any significant audit adjustments;
• any disagreements with management; and
• any difficulties encountered in performing the audit.
Additionally, the committee met throughout the year with PwC, the Company's Chief Financial Officer and
the Company's internal auditors to discuss the results of their examinations and their evaluations of the
Company's internal controls and of the overall quality, not just the acceptability, of the Company's financial
reporting. The meetings with PwC occurred both with and without members of management present; the meetings
with the Chief Financial Officer and the internal auditors occurred both with and without other members of
management present.
The committee has received from PwC a letter providing the disclosures required by Independence Standards
Board Standard No. 1 (Independence Discussions with Audit Committees) with respect to any relationships between
PwC and the Company that in PwC's professional judgment may reasonably be thought to bear on independence. PwC
has discussed its independence with the committee and has confirmed in such letter that, in its professional
judgment, it is independent of the Company within the meaning of the federal securities laws. The committee has
considered whether provision of the non-audit services rendered by PwC during the Company's most recent fiscal
year is compatible with maintaining the independence of such auditors and deemed that it was.
In reliance on these reviews and discussions, the committee recommended to the Board of Directors that the
Company's audited statements be included in the Company's Annual Report on Form 10-K for the year ended
December 31, 2003 and be filed with the SEC. The committee has also approved, subject to shareholder
ratification, the selection of PwC as the Company's independent auditor for the fiscal year 2004.
THE AUDIT COMMITTEE
Thomas S. Johnson, Chairperson
Arthur P. Byrne
Dr. Richard N. Cooper, Ph.D.
John E. Haire
Jerry J. Jasinowski
Robert G. Wilson
12
COMPENSATION OF EXECUTIVE OFFICERS
Summary Compensation Table
The following table describes the compensation of those persons who were, as of December 31, 2003, the
Company's Chief Executive Officer and its four other most highly compensated executive officers during the last
three years. The table shows annual compensation, including salary and bonus earned during the years indicated.
It also shows long-term compensation awarded or paid in the years indicated.
- ---------------------------------------------------------------------------------------------------------------
Annual
Compensation (1) Long-Term Compensation
Shares
Value Underlying Payouts
of RSUs Options Under All Other
Name and Salary Bonus (2) Awarded (3) Awarded (4) LTIP Compensation (5)
Principal Position Year $ $ $ # $ $
- ---------------------------------------------------------------------------------------------------------------
Dona D. Young 2003 926,923 1,181,250 3,000,000(6) -- 854,167(7) 33,865
Chairman, President 2002 753,846 -- -- 262,500 1,832,220(8) 50,263
and Chief Executive Officer 2001 700,000 -- -- -- 1,537,380(8) 35,553
- ---------------------------------------------------------------------------------------------------------------
Daniel T. Geraci 2003 457,692 1,400,000 2,000,000(9) 50,000 -- 712,872
Executive Vice President, 2002 -- -- -- -- -- --
Asset Management(10) 2001 -- -- -- -- -- --
- ---------------------------------------------------------------------------------------------------------------
Michael J. Gilotti 2003 452,308 616,000 -- -- 189,375(7) 17,757
Executive Vice President, 2002 387,692 1,210,860 -- 70,000 -- 21,111
Wholesaling Distribution 2001 380,000 1,002,200 -- -- -- 23,329
and Marketing
- ---------------------------------------------------------------------------------------------------------------
Michael E. Haylon 2003 415,385 886,750 -- -- 140,625(7) 15,000
Executive Vice President and 2002 387,500 226,497 -- 60,000 187,200(8) 1,100,656
Chief Investment Officer(11) 2001 375,000 475,000 -- -- 187,200(8) 2,664,652
- ---------------------------------------------------------------------------------------------------------------
Coleman D. Ross 2003 480,323 394,410 -- -- -- 89,667
Executive Vice President and 2002 328,846 292,500 -- 50,000 -- 70,405
Chief Financial Officer(12) 2001 -- -- -- -- -- --
- ---------------------------------------------------------------------------------------------------------------
(1) In accordance with SEC rules, the value of certain perquisites are not included since they do reach the
required threshold for reporting.
(2) Cash bonuses are paid in the year immediately following the year in which they were earned. Figures do not
include performance-based awards under the LTIP, which is discussed on page 16.
(3) Represents the value on the date of grant of those RSUs awarded in 2003 that are not subject to performance
criteria. The holders of the RSUs for which the underlying shares are reflected in this column will not
have beneficial ownership of those shares until after June 25, 2006 at the earliest. In the interim, they
have no voting rights with respect to those shares and cannot sell, transfer or encumber those RSUs or
those shares.
(4) See the Stock Option Grants Table on page 15 for a discussion of these options. Due to certain legal
restrictions applicable because of Phoenix Life's demutualization in 2001, no options could be granted
prior to the first anniversary of that event.
13
(5) Pursuant to SEC rules, "All Other Compensation" does not include certain group life, health, medical and
other non-cash benefits generally available to all salaried employees. For 2003, the amount reflected in
this column consists of:
Mrs. Mr. Mr. Mr. Mr.
Item Young Geraci Gilotti Haylon Ross
--------- ---------- --------- --------- ----------
Company contributions to the Savings
and Investment Plan and
to the Excess Investment Plan......... $33,865 $ 12,628 $16,467 $15,000 $16,335
Value of insurance premium paid for term
life insurance in excess of $50,000....... 0 244 1,290 0 6,732
Vacation buy-out upon termination......... 0 0 0 0 66,600
Sign-on bonus............................. 0 700,000 0 0 0
--------- ---------- --------- --------- ----------
Total All Other Compensation $33,865 $712,872 $17,757 $15,000 $89,667
========= ========== ========= ========= ==========
(6) Represents the grant of 394,737 RSUs when Mrs. Young assumed the role of Chief Executive Officer. These
RSUs will vest on the earlier of January 1, 2006 or the occurrence of certain events specified in Mrs.
Young's Employment Agreement. They are not convertible into shares until the later of June 26, 2006 or
the 15th day following the termination of Mrs. Young's employment with the Company. From January 1, 2003
until that date, Mrs. Young's RSUs will be credited with "dividend equivalents", i.e. amount of the cash
dividend paid per Common Share multiplied by the number of shares underlying her RSUs.
(7) Represents an award earned upon completion of the 2000-2002 cycle of the Company's Long-Term Incentive
Plan.
(8) These payments are awards earned upon completion of the 1997-1999 cycle of the Company's Long-Term
Incentive Plan, which was designed to pay out in three annual installments beginning in 2000 and ending
in 2002.
(9) Represents the grant of 255,004 RSUs in connection with the hiring of Mr. Geraci. These RSUs will vest on
the earlier of May 12, 2006 or the occurrence of certain events specified in Mr. Geraci's Change in
Control Agreement. They are not convertible into shares until the later of June 26, 2006 or the 15th day
following the termination of Mr. Geraci's employment with the Company. From May 12, 2003 until that date,
these RSUs will be credited with dividend equivalents.
(10) Commenced employment May 12, 2003.
(11) Effective January 1, 2004, his position changed to Executive Vice President and Chief Financial Officer.
(12) Commenced employment April 1, 2002; voluntarily terminated employment effective December 31, 2003.
14
Stock Option Grants Table
The following table sets forth information concerning stock options granted by the Company in 2003 to the
named executive officers.
- ---------------------------------------------------------------------------------------------------------------
Percent of
Number of Total Stock
Securities Options Grant
Underlying Granted to Exercise Date
Stock Options Employees Price Per Expiration Present
Name Granted (1) in 2003 Share (2) Date Value (3)
- ---------------------------------------------------------------------------------------------------------------
Dona D. Young -- -- -- -- --
- ---------------------------------------------------------------------------------------------------------------
Daniel T. Geraci 50,000 8.7% $7.93 5/12/13 $183,500
- ---------------------------------------------------------------------------------------------------------------
Michael J. Gilotti -- -- -- -- --
- ---------------------------------------------------------------------------------------------------------------
Michael E. Haylon -- -- -- -- --
- ---------------------------------------------------------------------------------------------------------------
Coleman D. Ross -- -- -- -- --
- ---------------------------------------------------------------------------------------------------------------
(1) The grant vests 33-1/3 percent on May 12 of 2004, 2005 and 2006.
(2) The exercise price of the options granted is equal to the fair market value of a share of Common Stock
on May 12, 2003, the date of grant.
(3) The hypothetical grant date present value of the stock options granted in 2003 is presented pursuant to
SEC rules and calculated under the modified Black-Scholes Model for pricing options. The material
assumptions used for this calculation were: (i) a fair market value exercise price; (ii) a volatility
factor of 45.067 percent; (iii) a risk-free rate of return of 3.854 percent; (iv) a dividend yield of
2.02 percent; (v) a three-year vesting schedule, and (vi) a ten-year option term. No discount to the
calculated value was taken to reflect: (a) the fact that options are not freely tradable; or (b) the
exercise or lapse of the options after vesting but prior to the end of the option period. This grant date
present value is not intended to forecast possible appreciation, if any, of our Common Stock. The
ultimate value of the options will depend on the future market price of the Common Stock, which cannot be
forecast with reasonable accuracy. The actual value, if any, an optionee will realize upon exercise of an
option will depend on the excess of the market value of Common Stock, on the date the option is
exercised, over the exercise price.
15
Stock Option Exercises and December 31, 2003 Stock Option Value Table
The following table sets forth information concerning stock options held by the named executive officers.
- ---------------------------------------------------------------------------------------------------------------
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money Options at
Options at December 31, 2003 December 31, 2003 (1)
--------------------------------- -----------------------------
Shares Values
Acquired Realized
on on
Name Exercise Exercise Exercisable Unexercisable (2) Exercisable Unexercisable
- ---------------------------------------------------------------------------------------------------------------
Dona D. Young -- -- 87,500 175,000 -- --
- ---------------------------------------------------------------------------------------------------------------
Daniel T. Geraci -- -- -- 50,000 -- $205,500
- ---------------------------------------------------------------------------------------------------------------
Michael J. Gilotti -- -- 23,333 46,667 -- --
- ---------------------------------------------------------------------------------------------------------------
Michael E. Haylon -- -- 20,000 40,000 -- --
- ---------------------------------------------------------------------------------------------------------------
Coleman D. Ross -- -- 16,667 (3) 33,333 (3) -- --
- ---------------------------------------------------------------------------------------------------------------
(1) Based on the December 31, 2003 closing stock price of $12.04.
(2) Represents stock options that are not vested.
(3) The options for these shares were all forfeited since none were exercised within 30 days after Mr. Ross'
termination of employment.
Long-Term Incentive Plan
Under the Company's Long-Term Incentive Plan, the Compensation Committee of the Board of Directors
approves awards to designated officers of the Company and establishes three-year performance goals that support
the long-term corporate strategy. At the end of the three-year performance cycle, awards are determined and
paid based on actual results achieved. All five named executive officers participated in the Long-Term
Incentive Plan in 2003.
Long-Term Incentive Plan Awards in Fiscal Year 2003
- ---------------------------------------------------------------------------------------------------------------
Performance or Estimated Future Payouts (1)
Other Period -----------------------------------------------------
Until Maturation Threshold (2) Target Maximum
Name or Payout # # #
- ---------------------------------------------------------------------------------------------------------------
Dona D. Young 2003 - 2005 117,188 234,375 468,750
- ---------------------------------------------------------------------------------------------------------------
Daniel T. Geraci 2003 - 2005 45,573 91,146 182,292
- ---------------------------------------------------------------------------------------------------------------
Michael J. Gilotti 2003 - 2005 17,188 34,375 68,750
- ---------------------------------------------------------------------------------------------------------------
Michael E. Haylon 2003 - 2005 14,323 28,646 57,292
- ---------------------------------------------------------------------------------------------------------------
Coleman D. Ross (3) 2003 - 2005 -- -- --
- ---------------------------------------------------------------------------------------------------------------
(1) These figures, which are rounded to the nearest whole number, represent the number of RSUs which may be
earned. Actual payouts for the 2003-2005 cycle, which will occur in 2006, will be based on a formula that
takes into account the Company's success in improving its return on equity in its core operations. Each
RSU is convertible into one share of our Common Stock. Under the terms of these awards, at least 50
percent of these shares must be held for five years.
(2) This represents the minimum award. If the minimum performance criteria (set at 50% of target
performance) are not met, no RSUs would be issued.
(3) Mr. Ross forfeited his contingent award as a result of his voluntary termination of employment effective
December 31, 2003.
16
Retirement Plan
The following table shows the estimated annual pension benefits payable to a covered participant at normal
retirement age, which is age 62 for participants with ten years of service or otherwise age 65, based on the
final pay formula contained in the Company's pension plan, a qualified defined benefit plan. The benefits also
include any pension amounts provided instead under the Company's non-qualified pension plan due to benefit
limitations imposed by the Internal Revenue Code or to the Company's exclusion of certain types of compensation
from the qualified plan.
Pension Plan Table
Final Years of Plan Participation
Average ------------------------------------------------------------------------------------------
Earnings 10 15 20 25 30 35
- ----------------- ----------- ----------- ------------ ------------ ------------ ------------
$ 500,000 $100,000 $150,000 $200,000 $ 250,000 $ 275,000 $ 300,000
750,000 150,000 225,000 300,000 375,000 412,500 450,000
1,000,000 200,000 300,000 400,000 500,000 550,000 600,000
1,250,000 250,000 375,000 500,000 625,000 687,500 750,000
1,500,000 300,000 450,000 600,000 750,000 825,000 900,000
1,750,000 350,000 525,000 700,000 875,000 962,500 1,050,000
2,000,000 400,000 600,000 800,000 1,000,000 1,100,000 1,200,000
The benefits shown in the above table are payable in the form of a straight life annuity and would be
actuarially adjusted for optional benefit forms available under the pension plan. The annual retirement benefit
under the qualified plan and the non-qualified plan is generally equal to the sum of: (i) an executive's "final
average earnings" multiplied by years of credited service up to 25 years times two percent; and (ii) an
executive's "final average earnings" multiplied by years of credited service in excess of 25 years but up to 35
years times one percent. Benefits payable under the pension plan are reduced by Social Security benefits.
"Final average earnings" taken into account under the pension plan is the average annual salary (as reflected
in the "Salary" column of the Summary Compensation Table) paid to an executive during the consecutive 36-month
period prior to his or her retirement. "Final average earnings" also takes into account the average of the
highest three of the executive's last five years' annual incentive bonuses (excluding long-term incentive
compensation).
At December 31, 2003 (assuming retirement as of such date), the estimated "final average earnings" under
the qualified plan and the non-qualified plan were $1,248,333 for Dona D. Young and $1,043,483 for Michael E.
Haylon. The estimated years of credited service under the qualified plan and the non-qualified plan as of such
date were 23.4 years for Mrs. Young and 13.6 years for Mr. Haylon. Messrs. Geraci and Gilotti, who had 0.7
years and 4.6 years, respectively, of service on December 31, 2003, will not vest under either plan until they
have five years of service. Mr. Ross had not vested under either plan at the time of his departure on December
31, 2003 and thus will be entitled to no payments under either plan.
Employment-Related Agreements
On December 31, 2003, the Company's only employment agreement was with Mrs. Young, although it had change
in control agreements with its named executive officers and other key executives and restricted stock units
agreements with Mr. Geraci. These agreements are all discussed below.
Employment Agreement. The Company entered into an Executive Employment Agreement with Mrs. Dona Young,
dated January 1, 2003, pursuant to which Mrs. Young serves as the Chief Executive Officer of the Company and
pursuant to which the Company will seek to cause Mrs. Young to be re-nominated so that she may continue to
serve as a member of the Board of Directors throughout her employment term. The agreement entitles Mrs. Young
to participate in benefit plans of the Company and other perquisites maintained for its senior executives, set
her initial base salary at $900,000, retroactive to October 1, 2002 (subject to annual review) and provides for
a short-term bonus (at a target of 100 percent of base salary), a long-term incentive bonus (at a target of 200
percent of base salary) and the grant of 394,737 RSUs. Each RSU represents a contractual right to receive one
share of Common Stock, subject to vesting restrictions, following the later of June 25, 2006 or termination of
employment. The RSUs vest on the earlier of: January 1, 2006; a change in control of the Company (as defined in
the agreement); or a termination of her employment by the Company without cause (as defined in the agreement),
by Mrs. Young for good reason (as defined in the agreement) or due to her death or disability. The agreement
further provides that while Mrs. Young holds the RSUs, she will not have any right to vote or to direct the
vote of the related shares of stock or to dispose of the RSUs. The Company will credit each RSU with
17
dividend equivalents and interest thereon, which will be distributed following the later of June 25, 2006 or
termination of Mrs. Young's employment.
If Mrs. Young's employment is terminated by the Company without cause (as defined in the agreement) or if
she terminates her employment for good reason (as defined in the agreement), she will be entitled to: (i) two
times the sum of her base salary and her short-term incentive award, based on the greater of her target and the
average of her short-term bonuses over the last two completed fiscal years prior to her termination; (ii) a
pro-rata portion of the short-term award for the year in which her termination occurs; (iii) a pro-rata portion
of her previously awarded long-term awards for each then open cycle; (iv) pro-rata vesting of any outstanding
equity grants (other than those RSUs described above); (v) continued health coverage for two years; (vi) an
amount equal to the lump sum value of two years of additional service and age credit for pension purposes under
any qualified and non-qualified defined benefit type pension plan or arrangement of the Company; (vii) an
amount equal to two years of maximum Company matching contribution under any type of qualified or non-qualified
deferred compensation plan sponsored by the Company; and (viii) outplacement services and, for six months after
termination, office space and secretarial support. If the Company and Mrs. Young do not enter into a new
employment agreement on or before January 1, 2006, the executive will be deemed to be terminated by the Company
without cause. In addition, Mrs. Young will have good reason to terminate her employment if the Company fails
to renew the Employment Continuation Agreement described below.
Restricted Stock Units Agreements. In May 2003, in connection with its hiring of Mr. Geraci as Executive
Vice President, Asset Management, the Company entered into a Restricted Stock Units Agreement with him.
Pursuant to that agreement, Mr. Geraci was awarded approximately 255,004 RSUs. These vest at the earlier of:
(i) May 12, 2006; or (ii) the occurrence of a change in control of the Company, as defined in the agreement,
followed by a termination of Mr. Geraci's employment by the Company or its successor without cause (as defined
in the agreement) or by him for good reason (as defined in the agreement). If the RSUs vest, the shares
underlying them will be issued on June 26, 2006, subject to Mr. Geraci's right to defer conversion. Each RSU
represents a contractual right to receive one share of Common Stock. During the period from April 14, 2003
until June 26, 2006, the Company will credit each unit with dividend equivalents plus interest on such amount
from the associated dividend payment dates, which sums will be paid to Mr. Geraci on or after June 26, 2006,
subject to his right to defer receipt.
Mr. Geraci also has an agreement with the Company that provides for the issuance to him of up to an
additional 382,507 RSUs, contingent upon meeting specified performance criteria related to improved performance
of our asset management business over a three-year period ending June 30, 2006. These will be vested upon
issuance. All of the RSUs issued or issuable to Mr. Geraci under either agreement are subject to prohibitions
on transfer and encumbrance. In addition, Mr. Geraci has no right to vote or to direct the vote of the shares
underlying his RSUs until such shares are issued.
Change in Control Agreements. The Company has entered into agreements with Messrs. Gilotti, Geraci, Haylon
and our other key executives, which will, in certain circumstances, provide separation benefits upon the
termination of their employment by the Company for reasons other than death, disability, cause (as defined in
the agreements) or retirement, or by the executive for good reason (as defined in the agreements). These
agreements provide this protection only if the termination occurs following (or is effectively connected with)
the occurrence of a change of control, as defined in the agreements. Mrs. Young and the Company entered into a
similar Employment Continuation Agreement, dated January 1, 2003, that becomes operational upon a change in
control of the Company. The initial term of each agreement ends January 1, 2006, subject to automatic renewals
of up to two successive and consecutive additional one-year periods.
The principal operative provisions of these agreements are intended to preserve for the covered executives
the same duties, responsibilities and compensation opportunities as were in effect prior to a change of control
for a period of two years following a change in control. When operative, these agreements establish certain
minimum levels with respect to the covered executive's base salary and incentive compensation opportunities and
also generally assure the covered executive that he or she will not incur a significant change in the other
terms and conditions of his or her employment.
These agreements provide for change in control severance benefits including: (i) vesting of qualified and
non-qualified pension plan benefits and a lump sum payment in an amount equal to one to three years (depending
on the executive's pay grade) of additional service and age credit under such plans; (ii) in lieu of any
severance benefits payable under any other plan, policy or program, a cash amount equal to one to three times
(depending on the executive's pay grade) base salary plus the greater of the average of annual incentive
compensation earned in the last three fiscal years prior to the change in control and the short-term incentive
target for the year in which employment terminates; (iii) one to three years (depending on the executive's pay
grade) of continued medical, dental and long-term disability coverage; (iv) vesting of equity compensation; (v)
an amount equal to a pro rata portion of the short-term award for the year in which
18
termination occurs and a pro-rata portion of long-term awards for each then open cycle at target; (vi) an
amount equal to one to three years (depending on the executive's pay grade) of additional contributions the
Company would have contributed to the Company's Savings and Investment Plan and/or the Excess Investment Plan;
(vii) outplacement services; (viii) vesting of benefits under equity compensation plans; and (ix) in Mrs.
Young's case only, office space and secretarial support for six months after termination. Mrs. Young and
Messrs. Haylon, Geraci and Gilotti will also be entitled to a "gross-up" payment from the Company to cover any
excise tax liability they may incur as a result of payments or benefits contingent on a change of control and
any income tax liability they may incur as a result of the "gross-up" payment.
COMPENSATION COMMITTEE REPORT
This report discusses the executive compensation program for the Company's senior management, including
the named executive officers, with respect to calendar year 2003. The compensation determinations described
below were ratified by the Board of Directors.
The information contained in this report shall not be deemed to be "soliciting material" or to be "filed"
with the Securities and Exchange Commission nor shall such information be incorporated by reference into any
filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, except
to the extent that the Company specifically incorporates it by reference into such filing.
Executive Compensation
The Company's executive compensation program is designed to:
• attract, motivate and retain senior management who can make a significant contribution to the
Company's annual and long-term success;
• align the interests of senior management with those of shareholders;
• emphasize performance-based compensation; and
• provide competitive total compensation while differentiating rewards based upon department and
individual performance.
Executive compensation is comprised of three components: base salary; performance-based annual incentive
awards; and performance-based long-term incentive awards. The target awards for each component of compensation
are based on competitive data for the insurance and investment industries. This data is obtained from
nationally recognized compensation consulting firms. The companies included in the data are ones which compete
in those businesses in which the Company is principally engaged.
Base Salary
Senior management receives base salaries determined by the responsibilities, skills and experience related
to each of their respective positions. Base salaries, which are generally targeted around the median of the
appropriate peer group, are reviewed annually and increased in accordance with individual performance and
market position. Increases are not awarded to those senior managers whose base salaries are deemed to be above
market. Instead, bonuses are awarded if warranted by individual performance. Base salaries for 2003 were
reviewed based upon these criteria and, as appropriate, increases were recommended to the Board for key
executives and approved by the Compensation Committee for other senior management.
Annual Cash Incentives
Under the Company's annual incentive plan, senior management is eligible for annual cash incentive awards
based upon the achievement of pre-determined performance objectives. Each year the committee approves these
objectives. For 2003, the incentive plan was redesigned to focus on improving the Company's financial
performance, on achieving departmental business objectives and on meeting individual performance criteria. The
size of the annual incentive pool is determined by the Company's return on equity in its core operations.
Department results, representing 75 percent of the
19
award, are determined by achievement of pre-determined department objectives. Individual performance determines
the remaining 25 percent of the award.
The Compensation Committee reserves the right to make adjustments to the plan as it deems appropriate in
its sole discretion. Individual awards for key executives must be reviewed and approved by the committee before
being paid. Awards are paid in the first quarter of the year following the plan year. In 2003, the Company's
return on equity in its core operations resulted in funding the plan at 105 percent of target.
Long-Term Incentive Compensation
Long-term incentives for the Company's senior management and other key employees are provided pursuant to
the Company's 2003 Restricted Stock, Restricted Stock Unit and Long-Term Incentive Plan (the "LTIP") and The
Phoenix Companies, Inc. Stock Incentive Plan (the "Stock Incentive Plan").
Long-Term Incentive Plan
In 2003, the shareholders approved the LTIP. The purpose of this plan is to reward participants for the
long term success of the Company, attract and retain an outstanding senior management team and provide for
their acquisition of long-term ownership interest in the Company.
The LTIP was redesigned as a performance share plan. Senior management receives a contingent grant of the
Company's RSUs subject to the Company achieving its corporate performance target. The contingent RSU grant is
equal to an executive's long-term incentive target award based upon the share price of the Company's common
stock (the "Common Stock") at the beginning of the cycle. As part of the annual compensation review process,
the Compensation Committee reviews and approves targeted award opportunities for each executive level.
At the beginning of each three-year performance cycle, corporate performance objectives are established
which may include specific growth objectives for the performance period. At the end of the cycle, results for
performance objectives for the period are measured and the results, which are expressed as a percentage, may
range from 0 percent to 200 percent. If the performance criteria threshold is not met, the contingent grants
are forfeited. Actual grants are determined by multiplying the executive's target RSU award by the corporate
performance percentage results. The value of the actual award will vary depending upon both the achievement of
the performance target and the Common Stock price at the end of the cycle. Each RSU granted is equivalent to
one share of Common Stock. Assuming the performance criteria threshold is met, the RSUs for the 2003-2005 cycle
will convert into shares of Common Stock on June 26, 2006, except for those of any executive who elects to
defer receipt of the shares. For the 2003-2005 cycle, participants are required to retain 50% of the award for
five years.
In 2003, the committee approved the performance goal for the 2003-2005 performance cycle of the LTIP. The
performance goal established was based upon improvement in the Company's return on equity in its core
operations for the performance cycle. In 2004, the committee approved the results of the 2001-2003 performance
cycle of the LTIP. As the Company did not meet the performance objectives established for this cycle, the
Committee did not approve any payout.
Stock Incentive Plan
In 2001, to further align the interests of the Company's executives and other key employees and groups
with those of shareholders, the Compensation Committee adopted the Stock Incentive Plan. This plan provides
that the committee may, from time to time, grant incentive stock options and non-statutory stock options for
the purchase of Common Stock to employees (including officers who are also directors) and insurance agents of
the Company and its subsidiaries.
In 2003, the Company granted 572,504 options as part of annual sales incentives and as retention tools,
including a grant approved by this committee and the Board of 50,000 options to Mr. Geraci upon his hiring.
These options have a three-year vesting period (33-1/3 percent per year) and a ten-year term. Their strike
prices equalled the closing prices of our Common Stock on the options' respective dates of grant.
20
CEO Compensation
The CEO's compensation is determined based on the same factors described above for the senior management
team.
At the end of 2002, the Board approved a three-year employment contract with Mrs. Young, the terms of
which are outlined in Employment-Related Agreements - Employment Agreement beginning on page 17. In February
2004, the committee recommended and the Board approved Mrs. Young's annual incentive award for 2003. It
consisted of two parts: 75 percent was based upon the Company's financial results and 25 percent was based upon
individual performance. The Company's 2003 return on equity in its core operations resulted in an award of 105
percent of target for the first part of the award. Due to Mrs. Young's strong leadership during 2003, the
Committee recommended and the Board approved the maximum individual performance result for the second part.
Deductibility of Compensation
Section 162(m) of the Internal Revenue Code generally disallows a tax deduction to public companies for
compensation over $1 million paid to the Company's Chief Executive Officer or any of the four other most highly
compensated executive officers, unless the compensation is performance-based. Qualifying performance-based
compensation will not be subject to the deduction limit if certain requirements are met. A transition rule
applies for newly public companies that exempts them from the $1,000,000 limit for compensation paid under
plans in effect prior to the public offering and disclosed in the prospectus adequately to comply with
securities laws.
In the future, the committee intends, to the extent feasible, to structure any compensation for executive
officers so that it qualifies for deductibility under Section 162(m). However, to maintain a competitive
position within the Company's peer group of companies, the committee retains the authority to authorize
payments including salary and bonus that may not be deductible.
THE COMPENSATION COMMITTEE
Sanford Cloud Jr., Chairperson
Sal H. Alfiero
Peter C. Browning
Ann Maynard Gray
John E. Haire
Thomas S. Johnson
21
PERFORMANCE GRAPH
The following graph compares the cumulative total return on the Common Stock with the cumulative total
returns of the Standard & Poor's 500 Stock Index and of the Common Stock of a peer group selected by the
Company ("Peer Group Index") for the period June 25, 2001 through December 31, 2003. Within the Peer Group
Index, however, the relevant investment dates for Principal Financial Group, Inc. and Prudential Financial,
Inc., are November 22, 2001 and December 12, 2001, respectively, the dates of their respective Initial Public
Offerings. The cumulative total return, which assumes any dividends paid are reinvested, is equal to: (i) the
difference between the price per share at the beginning and end of a period; divided by (ii) the share price at
the beginning of such period.
Cumulative Total Return
[grahic omitted]
PNX S&P 500 Peer Index
------ ------- ----------
25-Jun-01 100.00 100.00 100.00
30-Sep-01 80.95 85.74 87.72
31-Dec-01 103.64 94.90 102.32
31-Mar-02 107.56 95.16 98.53
30-Jun-02 103.73 82.42 91.14
30-Sep-02 76.99 68.18 72.39
31-Dec-02 42.96 73.93 88.37
31-Mar-03 40.93 71.60 77.89
30-Jun-03 52.01 82.62 97.06
30-Sep-03 66.52 84.81 94.45
31-Dec-03 69.34 95.14 105.10
Except as noted above, all indices assume $100 was invested on June 25, 2001 in the Common Stock, the
Standard & Poor's 500 Stock Index and the Common Stock of the Peer Group Index members, with dividends being
reinvested. Peer Group Index members are AmerUs Group Co., Franklin Resources, Inc., Janus Capital Group, Inc.
(formerly Stilwell Financial Inc.), Jefferson-Pilot Corporation, John Hancock Financial Services, Inc., Lincoln
National Corporation, MetLife, Inc., Nationwide Financial Services, Inc., Neuberger Berman Inc., Principal
Financial Group, Inc., Prudential Financial, Inc., T. Rowe Price Group, Inc., The MONY Group Inc., and Waddell
& Reed Financial, Inc. The Peer Group Index is capitalization-weighted.
The foregoing table shall not be deemed to be "soliciting material" or to be "filed" with the SEC nor
shall such table be incorporated by reference into any filing of the Company under the Securities Act of 1933,
as amended, or the Securities Exchange Act of 1934, as amended, except to the extent that the Company
specifically incorporates it by reference into such filing.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's directors and executive
officers, and persons who own more than 10 percent of a registered class of the Company's equity securities, to
file with the SEC reports of ownership and changes in ownership of Common Stock of the Company. Based on its
records and on information provided by such individuals, the Company believes that during its fiscal year
ending December 31, 2003, all of its executive officers timely met such filing requirements. The Company has no
greater than 10 percent beneficial owners.
22
PROPOSAL 2: RATIFICATION OF THE APPOINTMENT OF INDEPENDENT AUDITOR
On December 12, 2003, the Audit Committee, subject to ratification by the shareholders, appointed
PricewaterhouseCoopers LLP ("PwC") as its independent auditor to audit and report on the consolidated financial
statements of the Company for the fiscal year ending December 31, 2004. The Company has been advised that
representatives of PwC will be present at the Annual Meeting. They will be afforded the opportunity to make a
statement, should they desire to do so, and to respond to appropriate questions.
Fees Incurred for Services Performed by PwC
Pursuant to a policy adopted by the Board of Directors, prior to each fiscal year, the Audit Committee
receives a written report from its independent auditor describing the elements expected to be performed in the
course of its audit of the Company's financial statements for the coming year. This policy provides that the
committee may approve the scope and fees not only for the proposed audit, but also for various recurring
audit-related services. For services of the independent auditor that are either not audit-related or, if
audit-related are not recurring, the policy permits a Company Vice President to submit a written request to the
Company's internal auditor, accompanied by a written sign-off by the Company Chief Financial Officer or Chief
Accounting Officer. The policy authorizes the Audit Committee to pre-approve the requested service as long as
the requested service is not a prohibited non-audit service and the independent auditor's performance of such
service would be consistent with all applicable rules on auditor independence. The policy also authorizes the
committee to delegate to one or more of its members pre-approval authority with respect to permitted services.
All services performed by PwC for the Company in 2003 were pre-approved by the Audit Committee pursuant to
the policy described above except for one service in the "Tax Fees" category, which was performed by PwC in
2003 for $1000, or 0.04% of total fees paid by the Company to PwC for services performed that year. This
service was approved by the committee pursuant to the applicable de minimus exception.
The services performed by PwC in 2003 and 2002 are described below. PwC does not provide any services to
the Company prohibited under applicable laws and regulations, such as financial information systems design and
implementation. From time to time, PwC may perform permissible consulting services for the Company, provided
they have been pre-approved in accordance with the policy described above. To the extent consulting services
are provided by PwC, they are closely monitored and controlled by both management and the committee to ensure
that their nature and extent do not interfere with PwC's independence. The independence of PwC also is
considered annually by the Company's full Board of Directors.
2003 2002
-----------------------------------
(in 000s)
Audit Fees (1) $2,633 $2,666
Audit-Related Fees (2) 225 577
Tax Fees (3) 92 226
All Other Fees (4) 51 264
--------------- ---------------
Total Fees $3,001 $3,733
=============== ===============
- -------------------------------------
(1) Amounts represent fees for the annual audits of the Company for the years ended December 31, 2003 and
2002, reviews of the Company's financial statements for interim periods in 2003 and 2002, and audits of
statutory and other regulatory filings in 2003 and 2002. In addition, these amounts include fees for
consents for other assistance related to documents filed with the SEC and, for 2002 only, for comfort
letter procedures.
(2) Amounts represent fees for employee benefit plans audits, performance of agreed upon procedures for
regulatory purposes, and, for 2002 only, accounting consultations and due diligence support.
(3) Amounts represent fees for consultations on tax matters and tax compliance services and provision of
executive tax services.
(4) Amounts represent fees for non-financial information system consulting services in 2002 and for assistance
to management concerning regulatory filing requirements in 2003.
23
As reflected in the table on page 23, the Company incurred fees of $3,001,000 and $3,733,000 in 2003 and
2002, respectively, for services performed by PwC. Of these sums, $2,858,000 in 2003 and $3,243,000 in 2002
were for audit and audit-related services.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE APPROVAL OF PwC AS THE COMPANY'S INDEPENDENT AUDITOR FOR THE
FISCAL YEAR ENDING DECEMBER 31, 2004.
OTHER MATTERS
The Company is not aware of any matters, other than those referred to in this proxy statement, which will
be presented at the meeting. If any other appropriate business should properly be presented at the meeting, the
proxies named in the accompanying form of proxy will vote the proxies in accordance with their best judgment in
the interests of the Company.
SHAREHOLDER COMMUNICATIONS
In order for nominations of persons for election to the Board of Directors and shareholder proposals for
the 2005 annual meeting of shareholders to be eligible for inclusion in the Company's proxy statement, they
must be received by the Company at its principal executive offices in Hartford, Connecticut no later than
November 22, 2004. These proposals should be addressed either by mail to: Corporate Secretary, The Phoenix
Companies, Inc., One American Row, P.O. Box 5056, Hartford, Connecticut 06102-5056 or by e-mail to:
corporate.secretary@phoenixwm.com. Proposals for inclusion in the proxy statement must comply with all
applicable requirements under the Securities Exchange Act of 1934, including Rule 14a-8, as well as with the
requirements of the Company's bylaws. A copy of the bylaws may be obtained from the Company's Secretary, at the
addresses above.
A shareholder who wishes to present a matter for action at the Company's 2005 Annual Meeting, but chooses
not to do so under SEC Rule 14a-8, must deliver to the Company's Secretary on or before February 3, 2005, but
no earlier than December 30, 2004, a notice containing the information required by the Company's bylaws. A copy
of the bylaws may be obtained from the Company's Secretary, at the addresses above.
To facilitate other shareholder communications, the Board of Directors has approved the following
procedures. A shareholder wishing to communicate about any matters with any director(s), committee(s) or the
entire Board, may do so by sending their communications in care of the Company's Secretary at the addresses
above. The Secretary will promptly forward all such communications to the director(s) designated by the
shareholder.
HOUSEHOLDING OF MATERIALS
Pursuant to notices sent by the Company to its eligible shareholders, the Company sent only one copy of
this proxy statement and the annual report to those households in which multiple shareholders shared the same
address unless the Company received instructions from a shareholder in such a household requesting separate
copies of these materials. If you are a shareholder who shares the same address as other shareholders of the
Company and would like to receive a separate copy of this proxy statement, the annual report or future proxy
statements, information statements and annual reports, please contact Phoenix Shareholder Services by calling
(800) 490-4258, writing to Phoenix Shareholder Services, P.O. Box 43076, Providence, Rhode Island, 02940-3076,
or e-mailing to Phoenix@equiserve.com. If you share the same address as multiple shareholders and would like
the Company to send only one copy of future proxy statements, information statements and annual reports, please
contact Phoenix Shareholder Services at the above phone number, post office address or e-mail address.
24
EXHIBIT A
THE PHOENIX COMPANIES, INC.
AUDIT COMMITTEE CHARTER
(as adopted October 20, 2002 and
amended and restated February 5, 2004)
The Bylaws of The Phoenix Companies, Inc. (the "Company") provide for an Audit Committee (the "Committee") of
the Board of Directors (the "Board"). This charter (the "Charter") sets forth the purposes, composition and
responsibilities of, and the processes to be followed by, the Committee. At least annually, the Committee shall
review the adequacy of this Charter and seek its re-approval by the Board.
A. PURPOSES
The primary purposes of the Committee are to: (i) exercise sole responsibility for the appointment,
compensation, retention, oversight and, if applicable, termination of the Company's independent auditor
(together with such auditor's affiliates, the "Independent Auditor") including a review of the
Independent Auditor's qualifications and independence; and (ii) assist the Board in fulfilling its
oversight responsibilities, by reviewing the quality and integrity of:
• the Company's financial statements and financial reporting process;
• the Company's systems of internal accounting and financial controls;
• the annual independent audit of the consolidated financial statements of the Company and its
subsidiaries;
• the Company's internal auditing and accounting processes; and
• the Company's legal and regulatory compliance and ethics programs as established by management and
the Board.
In conducting such review, the Committee shall be empowered to investigate any matter brought to its
attention, with full access to all books, records, facilities and personnel of the Company, and to
retain outside legal, accounting or other experts for this purpose. The Committee shall seek to maintain
free and open communication among the Committee, the Board, the Independent Auditor, the Company's
internal audit personnel and the Company's management and shall be responsible for resolving any
disagreements between management and the Independent Auditor.
In addition, the Committee shall pre-approve the provision of audit services performed by other
independent auditors for those of the Company's subsidiaries whose financials are consolidated with the
Company's. The discussion below concerning pre-approval of services performed by the Independent Auditor
shall apply as well to services to be performed by such other auditors.
The Committee shall have such additional responsibilities as may from time to time be required by
applicable laws or regulations (together with the rules of the New York Stock Exchange, or NYSE,
"Applicable Law").
B. COMPOSITION
The Committee shall consist of at least three members of the Board. All members of the Committee shall
be independent of the Company, its subsidiaries and their management and none shall be a current or
former officer or employee of the Company or any of its subsidiaries. The Committee's composition shall
satisfy the requirements for Audit Committee membership set forth in all Applicable Law. In addition, at
least one member of the Committee shall have accounting or related financial management expertise (as
such qualification may be interpreted by the Board) and at least one member shall qualify as a
"financial expert" as such term is defined by the United States Securities and Exchange Commission (the
"SEC"). The Committee and the Board, by resolution, may from time to time establish such additional
standards for Committee members as they deem appropriate.
A-1
C. RESPONSIBILITIES AND PROCESSES
The Committee's role is one of oversight, in reliance, without further independent verification, on the
information provided by the Company's management and its Independent Auditor. The Committee recognizes
that management is responsible for preparing the Company's financial statements and that the Independent
Auditor is responsible for auditing those financial statements. Consequently, in carrying out its
responsibilities and duties, the Committee shall not provide any expert or special assurances as to the
Company's financial statements or any professional certification as to the work of the Independent
Auditor.
The following shall be the recurring processes of the Committee in carrying out its purposes. The
Committee may supplement or diverge from these processes or perform any other activities consistent with
this Charter, the Company's Bylaws and Applicable Law, as the Committee or the Board may deem necessary
or appropriate. The Committee shall meet four times per year, or more frequently as circumstances
require. The Committee shall report to the Board regularly on its deliberations and actions, and may ask
members of management or others to attend any meeting of the Committee and to provide such information
as the Committee may deem pertinent.
The Committee shall have responsibility for:
1. The appointment, compensation, retention, oversight and termination of the Independent Auditor,
including a review of the Independent Auditor's qualifications and independence
• annually select and, subject to ratification by the shareholders, appoint the Independent
Auditor;
• at least annually evaluate the performance of the Independent Auditor, who shall report
directly to the Committee, and the performance of the lead audit partner;
• pre-approve all audit and permitted non-audit services to be performed by the Independent
Auditor (subject to applicable regulations on waiver of pre-approval);
• at least annually, assess the independence of the Independent Auditor based upon, among other
information, a written statement from such auditor identifying all relationships between it and
the Company and upon dialogue with such auditor concerning the impact of those relationships on
the auditor's objectivity and independence;
• at least annually, obtain and review a report of the Independent Auditor describing: the firm's
internal quality control procedures; and any material issues raised by the most recent internal
quality control review, or peer review, of the firm, or by any inquiry or investigation by
governmental or professional authorities, within the preceding five years, respecting one or
more independent audits carried out by the firm, and any steps taken to deal with any such
issues;
• as needed, review the compensation of the Independent Auditor; and
• as needed, based upon the Committee's evaluation of the relevant facts and circumstances,
terminate the engagement of the Independent Auditor and select its replacement or, if the
Independent Auditor should resign at any time, then evaluate the circumstances and determine an
appropriate response, including either the re-engagement of such auditor or the engagement of
another.
2. Reviewing the quality and integrity of:
a. the Company's financial statements and financial reporting process
• review and discuss with management and the Independent Auditor the Company's annual audited
financial statements, including: the Company's disclosures under "Management's Discussion and
Analysis of Financial Condition and Results of Operations"; and significant issues regarding
accounting, auditing and financial reporting principles and practices, and the adequacy and
effectiveness of the Company's internal accounting and financial controls;
• review and discuss with management and the Independent Auditor any analysis or report
prepared by management, internal audit staff or the Independent Auditor relating to
significant financial reporting
A-2
issues, including the quality and appropriateness of the Company's accounting principles as
applied and significant judgments affecting the Company's financial reporting;
• in consultation with the Independent Auditor and internal audit staff, review the integrity
and quality of the Company's financial reporting processes, both internal and external;
• review and discuss quarterly interim financial statements with management and the Independent
Auditor prior to the filing of the quarterly financial statements to be included in the
Company's quarterly reports filed with the SEC including the Company's disclosures under
"Management's Discussion and Analysis of Financial Condition and Results of Operations";
• discuss earnings press releases, as well as financial information and earnings guidance
provided to analysts and rating agencies;
• prepare and submit any report required of the Audit Committee by the rules of the SEC; and
• review information included in the Company's annual proxy and other required filings with the
SEC as it relates to accounting, auditing and financial reporting matters or the Company's
relationship with the Independent Auditor.
b. the Company's systems of internal accounting and financial control
• meet periodically with management to (i) discuss policies with respect to risk assessment and
risk management and (ii) review the Company's major financial risk exposures and the steps
management has taken to monitor and control such exposures;
• review major changes to the Company's financial reporting, auditing and accounting principles
and practices as suggested by the Independent Auditor, internal audit staff or management;
and
• meet at least four times annually with each of the chief financial officer, the senior
internal auditing executive and the Independent Auditor in separate executive sessions to
discuss any matters regarding the quality and adequacy of the Company's internal accounting
and financial controls that the Committee, management or the Independent Auditor believe
should be discussed confidentially.
c. the annual independent audit of the consolidated financial statements of the Company and its
subsidiaries
• meet with the Independent Auditor prior to the annual audit to review the scope, planning and
timing thereof;
• review and discuss with the Independent Auditor any reports required under generally accepted
auditing standards to be provided by it to the Committee;
• periodically review and discuss with the Independent Auditor, out of the presence of
management: the Company's internal controls; the Independent Auditor's recommendations, if
any, for improvements in such controls and the implementation of those recommendations; the
completeness and accuracy of the Company's financial statements; and any other matters
required to be discussed with the Audit Committee by any applicable Statement of Audit
Standards;
• review and discuss with the Independent Auditor the Company's compliance with applicable
standards established by the Financial Accounting Standard Board, the SEC, the NYSE and any
other entity with jurisdiction over the Company or its subsidiaries;
• review with the Independent Auditor any management letter provided by it to the Company, the
Company's response thereto and any problems or difficulties encountered during the audit; and
• set clear hiring policies for employees and former employees of the Independent Auditor.
A-3
d. the Company's internal auditing and accounting processes
• review and approve the charter for the Company's internal audit department;
• review with the Company's senior internal audit executive the scope and results of the
Company's internal audit activity and periodic summaries of significant audit findings, and
receive such officer's status updates relative to the annual audit plan;
• discuss annually with the Company's senior internal audit executive the annual audit plan,
internal audit costs, adequacy of staffing and coordination with the Independent Auditor; and
• review the appointment and performance of the Company's senior internal audit executive.
e. the Company's legal and regulatory compliance and ethics programs as established by management
and the Board
• receive reports from management, the Company's senior compliance officer, the Company's
senior internal audit executive and the Independent Auditor concerning compliance by the
Company and its subsidiaries with applicable laws and regulations and the Company's Code of
Conduct;
• establish procedures for the receipt, retention and treatment of complaints received by the
Company regarding accounting, internal accounting controls or auditing matters;
• establish procedures for the confidential and anonymous submission by employees of concerns
regarding questionable accounting or auditing matters; and
• review with the Company's general counsel such legal and regulatory matters as may have a
material impact on the Company's financial statements or the Company's compliance policies.
D. PERFORMANCE EVALUATION
The Committee shall annually review its own performance.
A-4
Toll-Free Information Line:
If you would like to talk to a customer service representative, please call Phoenix Shareholder Services
toll-free for shareholders in the United States, Puerto Rico, Canada and the Virgin Islands at 1-800-490-4258,
Monday through Friday, 9:00 a.m. through 5:00 p.m., Eastern time.
Written Correspondence:
Mail to:
Phoenix Shareholder Services
P.O. Box 43076
Providence, Rhode Island 02940-3076
E-mail: phoenix@equiserve.com
Web site: PhoenixWealthManagement.com
(All URLs referred to in this proxy statement are intended to be inactive textual references only. They are not
intended to be active hyperlinks to any Web site. The information on any Web site which might be accessible
through a hyperlink resulting from this or any other URL referenced in this proxy statement, is not intended to
be part of this proxy statement and is not incorporated herein by reference.)
The Phoenix Companies, Inc.
One American Row, P.O. Box 5056
Hartford, Connecticut 06102-5056 U.S.A.
CC6B
ADMISSION TICKET
The Phoenix Companies, Inc.
2004 Annual Meeting of Shareholders
Thursday, April 29, 2004
10:00 a.m. at
10 Krey Boulevard
East Greenbush, New York
Please retain this portion of the Proxy Card if you wish to
attend the Annual Meeting of Shareholders in person.
You must present this portion of the Proxy Card at the door for admission.
Seating will be on a first-come, first-served basis
and you may be asked to present valid picture identification
before being admitted. Cameras, recording equipment and other
electronic devices will not be permitted at the meeting.
ADMISSION TICKET
DETACH HERE
- ---------------------------------------------------------------------------------------------------------------
PROXY
THE PHOENIX COMPANIES, INC.
Proxy for Annual Meeting of Shareholders on April 29, 2004
P This proxy is solicited on behalf of the Board of Directors
R
O The undersigned hereby appoints John H. Beers, Carole A. Masters and Tracy L. Rich, or any of them,
X each with full powers of substitution, as proxies of the undersigned, to attend the Annual Meeting of
Y Shareholders of The Phoenix Companies, Inc. to be held on April 29, 2004, at 10:00 a.m. Eastern time,
and at any adjournment or postponement thereof, and to vote, on the items set forth on the reverse
side, the number of shares the undersigned would be entitled to vote if personally present.
If shares of The Phoenix Companies, Inc. common stock are issued to or held for the account of the
undersigned under any employee plan and voting rights attach to such shares (any of such plans, a
"Voting Plan"), then the undersigned hereby directs the respective fiduciary of each applicable Voting
Plan to vote all shares of The Phoenix Companies, Inc. common stock in the undersigned's name and/or
account under such Voting Plan in accordance with the instructions given herein, at the Annual Meeting
and at any adjournment or postponement thereof, on all matters properly coming before the Annual
Meeting, including but not limited to the matters set forth on the reverse side.
THIS PROXY WILL BE VOTED AS SPECIFIED ON THE REVERSE SIDE. IF NO SPECIFICATION IS MADE, THIS PROXY WILL
BE VOTED "FOR" EACH OF THE NOMINEES FOR DIRECTOR AND "FOR" PROPOSAL 2. THIS PROXY WILL ALSO BE VOTED IN
THE DISCRETION OF THE PROXIES ON SUCH OTHER MATTERS (OR, IN THE CASE OF A VOTING PLAN, WILL BE VOTED IN
THE DISCRETION OF THE PLAN TRUSTEE OR ADMINISTRATOR) AS MAY PROPERLY COME BEFORE THE MEETING OR ANY
ADJOURNMENT OR POSTPONEMENT THEREOF.
PLEASE MARK, SIGN AND DATE THIS PROXY CARD AND RETURN IT PROMPTLY USING THE ENCLOSED POSTAGE-PAID
ENVELOPE OR VOTE BY TELEPHONE OR THROUGH THE INTERNET.
(Continued and to be signed on the reverse side)
[LOGO OMITTED]
THE PHOENIX COMPANIES, INC.
C/O EQUISERVE TRUST COMPANY N.A.
P.O. BOX 8635
EDISON, NJ 08818-9226
THE PHOENIX COMPANIES, INC.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS — APRIL 29, 2004
The Phoenix Companies, Inc. Annual Meeting of Shareholders will be held on Thursday, April 29, 2004 at 10:00
a.m. at our offices at 10 Krey Boulevard, East Greenbush, New York 12144. Only shareholders of record at the
close of business on March 5, 2004 will be entitled to vote at the meeting.
By Order of the Board of Directors
/s/ John H. Beers
John H. Beers, Secretary
[____________________________________]
Your vote is important. Please vote immediately
by returning the proxy card below, or:
___________________________________________________ ___________________________________________________
Vote-by-Internet Vote-by-Telephone
Log on to the Internet and go to [COMPUTER] OR Call toll-free [TELEPHONE]
http://www.eproxyvote.com/pnx 1-877-PRX-VOTE (1-877-779-8683)
___________________________________________________ ___________________________________________________
If you vote over the Internet or by telephone, please do not mail your proxy card.
DETACH HERE IF YOU ARE RETURNING YOUR PROXY CARD BY MAIL
- ---------------------------------------------------------------------------------------------------------------
- ----- Please mark | 9849
X votes as in |____
- ----- this example.
- ---------------------------------
THE PHOENIX COMPANIES, INC.
- ---------------------------------
1. Election of Director Nominees: 2. Ratification of the FOR AGAINST ABSTAIN
Directors. ------------------ appointment of [_] [_] [_]
PricewaterhouseCoopers
[_] FOR [_] WITHHELD 01. Jean S. Blackwell LLP as independent auditor.
ALL FROM ALL 02. Arthur P. Byrne
NOMINEES NOMINEES 03. Ann Maynard Gray
04. Dona D. Young
[_] ________________________________________
For all nominees except as written above
If you plan to attend the Annual Meeting, please check this box. [_]
If an address change or comment has been noted on the [_]
reverse side of this card, please check this box.
Please sign this proxy exactly as name appears to the left. When
shares are held by joint tenants, both should sign. When signing as
attorney, administrator, trustee or guardian, please give full title
as such.
Please see reverse side.
Signature: _________________________ Date: __________ Signature: _________________________ Date: __________
