NOTICE OF ANNUAL MEETING
OF
STOCKHOLDERS
NOTICE IS HEREBY GIVEN, that the Annual Meeting of Stockholders of
AmVestors Financial Corporation will be held at 10:00 a.m. on May 16, 1996,
at the Doubletree Hotel, (near Kansas City International Airport) 8801 N.W.
112th Street, Kansas City, Missouri 64153 for the following purposes:
A. To elect four (4) Class III directors to serve until their
terms expire or until their successors shall be
elected and qualify;
B.To approve the AmVestors Financial Corporation 1996 Incentive
Stock Option Plan;
C.To ratify the selection of independent public accountants; and
D.To act upon any other matters that may come before the meeting
or any adjournment thereof.
The Board of Directors has fixed the close of business on April 11,
1996, as the record date for determination of stockholders entitled to notice
of and to vote at the meeting.
You are cordially invited to attend the meeting. Even in the event
that you plan to attend, you are respectfully requested to sign, date and
return the enclosed proxy.
By Order of the Board of Directors
LYNN F. HAMMES, Secretary
Dated: April 11, 1996
Topeka, Kansas
IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THIS MEETING. WHETHER OR
NOT YOU EXPECT TO ATTEND IN PERSON, PLEASE SIGN AND DATE THE ENCLOSED PROXY
CARD AND RETURN IT. NO POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES.
1
AMVESTORS FINANCIAL CORPORATION
415 S.W. EIGHTH AVENUE, TOPEKA, KANSAS 66603
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD
MAY 16, 1996
This proxy statement is furnished in connection with the solicitation
of proxies by and on behalf of the Board of Directors of AmVestors Financial
Corporation (hereinafter referred to as "AmVestors" or the "Company"), the
parent company of American Investors Life Insurance Company, Inc.
(hereinafter referred to as "American" or the "Insurance Company"), American
Investors Sales Group, Inc., AmVestors Investment Group, Inc., AmVestors Acqui
sition Subsidiary, Inc., Financial Benefit Life Insurance Company., Inc
("Financial Benefit") Annuity International Marketing Corporation ("AIMCOR"),
the Insurance Mart, Inc., and Rainbow Card Pack Publications Inc., to be used
in voting at the Annual Meeting of Stockholders of the Company to be held at
10:00 a.m. on May 16, 1996, at the Doubletree Hotel, 8801 N.W. 112th Street,
Kansas City, Missouri 64153. The approximate date on which the proxy
materials for the 1996 Annual Meeting of Stockholders are being mailed to
stockholders of record is April 15, 1996.
A person giving the enclosed proxy has the power to revoke it at any
time before it is voted by notifying the Secretary of the Company in writing,
by submitting a later-dated proxy or by voting in person at the meeting.
Giving the proxy will not in any way affect the stockholder's right to attend
the annual meeting and vote in person. The cost of this solicitation will be
borne by the Company and may be conducted by mail, in person, or by telephone
by employees of the Company. Such employees will receive no additional
compensation for their participation in the solicitation of proxies on behalf
of the Board of Directors. The Company has retained Beacon Hill Partners,
Inc. to assist in the solicitation of proxies on behalf of the Board of
Directors for a fee of approximately $5,000.00 plus out-of-pocket expenses.
Stockholders of record at the close of business on April 11, 1996,
will be entitled to notice of and to vote at the meeting. On the record date,
there were 12,877,721 issued and outstanding shares of AmVestors Common Stock
("Common Stock"), no par value per share. A majority of the total issued and
outstanding shares entitled to vote at the Annual Meeting will constitute a
quorum. Broker non-votes, abstentions and withhold authority votes all count
for the purpose of determining a quorum. Shares as to which a stockholder
abstains are considered shares entitled to vote on the applicable proposal
and are included in determining whether such proposal is approved (i.e., an
abstention would have the effect of a vote against the applicable proposal).
On the other hand, broker non-votes are not considered shares entitled to
vote on the applicable proposal and are not included in determining whether
such proposal is approved (i.e. a broker non-vote would have no effect on the
outcome of a vote on the applicable proposal). Stockholders of record are
entitled to one vote per share upon all matters presented at the meeting,
with the exception of the election of directors. Stockholders have cumulative
voting rights with respect to the election of directors. Each stockholder
shall have the right to cast as many votes in the aggregate as shall equal
the number of shares held by him multiplied by the number of directors to be
elected, and each stockholder may cast the whole number of votes for one
candidate or may divide his votes among the three candidates in any manner
the stockholder may determine. There are no conditions precedent to the
exercise of such rights.
The shares covered by any properly executed proxy received by the
Board of Directors prior to the meeting will be voted as the stockholder
specifies; HOWEVER, IF ANY SUCH PROXY FAILS TO SPECIFY HOW IT WILL BE VOTED
IN THE ELECTION OF DIRECTORS OR ON ANY PROPOSAL, IT WILL BE VOTED FOR THE
ELECTION OF THE NOMINEES; FOR THE APPROVAL OF THE AMVESTORS FINANCIAL
CORPORATION 1996 INCENTIVE STOCK OPTION PLAN AND FOR THE RATIFICATION OF
INDEPENDENT PUBLIC ACCOUNTANTS LISTED THEREON. IN THE DISCRETION OF THE HOLDER
OF THE PROXY, VOTES FOR THE ELECTION OF DIRECTORS MAY BE CUMULATED IN THE
MANNER THAT THE HOLDER OF THE PROXY DETERMINES. As to any other matter of
business which is properly brought before the meeting, a vote may be cast
pursuant to the accompanying proxy in accordance with the judgment of the
holder of the proxy; however, the Board of Directors does not know of any
such other matters of business as of the date of mailing the proxy materials.
Proposals for the 1997 Annual Meeting of the Company must be
submitted in writing by qualified stockholders on or before December 12,
1996.
ALL STOCKHOLDERS ARE URGED TO COMPLETE, DATE, EXECUTE AND RETURN THE
ENCLOSED FORM OF PROXY.
2
PRINCIPAL HOLDERS OF VOTING SECURITIES
The following table sets forth information based upon the records of
the Company and filings with the Securities and Exchange Commission as of
April 9, 1996, with respect to all persons who were known to the Company to
be the beneficial owners of more than five percent (5%) of the Company's
Common Stock (the only class of voting securities outstanding):
AMOUNT AND NATURE OF
NAME AND ADDRESS OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP PERCENT OF CLASS
Heartland Advisors, Inc. 812,900 25.59%
790 North Milwaukee Street
Milwaukee, WI 53202
SECURITIES OWNED BY MANAGEMENT
The following table sets forth, as of April 9, 1996, information with
respect to the beneficial ownership of the Company's Common Stock (the only
class of voting securities outstanding) by each director, each nominee, each
executive officer named in the Summary Compensation Table below, and by all
directors, nominees and officers as a group:
AMOUNT AND NATURE OF
NAME OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP <F1> PERCENT OF CLASS
Janis L. Andersen, Director 24,944 <F2> *
Robert G. Billings, Director 12,024 <F3> *
Jack H. Brier, Director 10,278 <F4> *
Frank T. Crohn, Director 444,897 <F5> 3.06%
Thomas M. Fogt, Executive Vice
President of the Company 53,281 <F6> *
Lynn F. Hammes, Secretary &
Treasurer of the Company 75,590 <F7> *
Mark V. Heitz, President, General
Counsel and Director of the Company 187,296 <F8> 1.29%
Ralph W. Laster, Jr., Chairman, Chief
Executive Officer and
Director of the Company 237,236 <F9> 1.63%
R. Rex Lee, M.D., Director 90,040 <F10> *
Robert R. Lee, II, Director 12,263 <F11> *
Robert T. McElroy, M.D., Director 52,430 <F12> *
Jack R. Manning, Director 2,401 <F13> *
John F.X. Mannion, Director 69,662 <F14> *
James V. O'Donnell, Director 4,500 <F15> *
Timothy S. Reimer, Chief Investment
Officer of the Company 70,006 <F16> *
Donna J. Rubertone 66,888 <F17> *
All officers and directors as a
group (16 persons) 1,413,736 9.72%
*Less than one percent (1%)
<FN><F1> Directors and Officers have sole voting and investment powers of the
shares shown unless held under options or otherwise indicated below.
<F2> Includes 7,000 shares which may be acquired upon the exercise of options
which are currently exercisable.
<F3> Includes 7,000 shares which may be acquired upon the exercise of options
which are currently exercisable.
<F4> Includes 1,600 shares owned by Brier Development Company, Inc. Mr. Brier
is the president and sole shareholder of Brier Development Company, Inc. Also
includes 3,500 shares which may be acquired upon the exercise of options
which are currently exercisable.
<F5> Includes 18,724 shares owned by Mr. Crohn's spouse and warrants owned by
Mr. Crohn's spouse to acquire an additional 4,566 shares. Mr. Crohn disclaims
any beneficial interest in these shares. Includes 35,810 shares allocated and
held in trust under the Company's ESOP. Includes 82,661 shares of which may
be acquired upon the exercise of options and warrants which are currently
exercisable, in addition to the warrants held by Mr.Crohn's spouse.
3
<F6> Includes 1,007 shares owned by the Thomas M. Fogt Revocable Trust and
1,007 shares owned by the Janice A. Fogt Revocable Trust. Mr. Fogt serves as
the co-trustee of both trusts. Also includes 1,267 shares allocated and held
in trust under the Company's Employee Stock Ownership Plan (ESOP) and 50,000
shares which may be acquired upon the exercise of options which are currently
exercisable.
<F7> Includes 5,890 shares allocated and held in trust under the Company's
ESOP. Also includes 69,000 shares which may be acquired upon the exercise of
options which are currently exercisable.
<F8> Includes 9,606 shares allocated and held in trust under the Company's
ESOP. Also includes 168,240 shares which may be acquired upon the exercise of
options which are currently exercisable.
<F9> Includes 11,277 shares allocated and held in trust under the Company's
ESOP. Also includes 184,562 shares which may be acquired upon exercise of
options which are currently exercisable.
<F10> Includes 584 shares allocated and held in trust under the Company's
ESOP. Also includes 42,271 shares which may be acquired upon the exercise of
options which are currently exercisable.
<F11> Includes 7,000 shares which may be acquired upon the exercise of options
which are currently exercisable.
<F12> Includes 1,339 shares owned by Dr. McElroy's spouse. Also includes 3,500
shares which may be acquired upon exercise of options which are currently
exercisable.
<F13> Includes 471 shares which may be acquired upon the exercise of warrants
which are currently exercisable.
<F14> Mr. Mannion is Chairman of the Board and Chief Executive Officer of
Unity Mutual Life Insurance Company, which owns 51,910 shares and warrants to
acquire and additional 12,660 shares. Mr. Mannion disclaims any beneficial
interest in these shares. Includes 998 shares which may be acquired upon the
exercise of options and warrants which are currently exercisable.
<F15> Includes 3,500 shares which may be acquired upon the exercise of options
which are currently exercisable.
<F16> Includes 6,849 shares allocated and held in trust under the Company's
ESOP. Also includes 63,157 shares which may be acquired upon the exercise of
options which are currently exercisable.
<F17> Includes 27,579 shares allocated and held in trust under the Company's
ESOP. Includes 13,114 shares which may be acquired upon the exercise of
warrants which are currently exercisable.
PROPOSAL A
ELECTION OF DIRECTORS
The Company's Articles of Incorporation provide that the members of
the AmVestors Financial Corporation Board of Directors (the "Board") shall be
divided into three classes, as nearly equal in number as possible, each of
which is to serve for three years, one class being elected each year. The
terms of the directors in Class III expire with this Annual Meeting.
Unless otherwise directed, the shares represented by properly
executed proxies received prior to the vote on the election of directors will
be cast for the three nominees listed below. If any nominee becomes
unavailable for any reason, or if a vacancy on the Board of Directors should
occur before the election (which events are not anticipated), the shares
represented by proxies may be voted for such other person as may be
determined by the holder of such proxies.
The following information is provided for the nominees for the Class
III directors and for the Class I and Class II directors whose terms in
office are continuing.
NOMINEES FOR ELECTION AS CLASS III DIRECTORS
PRINCIPAL DIRECTOR TERM TO
NAME AGE OCCUPATION SINCE EXPIRE
Ralph W. Laster, Jr. 44 Chairman of the Board and Chief
Executive Officer of AmVestors
Financial Corporation 1986 1996
R. Rex Lee, M.D. 66 Physician and Surgeon 1986 1996
James V. O'Donnell 45 President, Bush-O'Donnell and
Company, Inc. 1994 1996
Frank T. Crohn 71 Chairman of the Board, Financial Benefit
Life Insurance Company, Inc. 1996 1996
4
CONTINUING DIRECTORS WHOSE TERMS ARE NOT EXPIRING
PRINCIPAL DIRECTOR TERM TO
NAME AGE OCCUPATION SINCE EXPIRE
Janis L. Andersen 42 Self-Employed Public Relations
Marketing Consultant 1986 1997
Mark V. Heitz 43 President and General Counsel of
AmVestors Financial Corporation 1986 1997
Robert T. McElroy, M.D. 60 Physician and Surgeon 1994 1997
Jack R. Manning 75 Chairman of the Board Emeritus,
Columbian Mutual Life Insurance
Company 1996 1997
Robert G. Billings 59 President, Alvamar, Inc. 1986 1998
Jack H. Brier 49 President, Brier Development
Company, Inc. 1994 1998
Robert R. Lee, II 38 Attorney, Wilson, Lee & Gurney 1992 1998
John F.X. Mannion 63 Chairman of the Board and Chief
Executive
Officer of Unity Mutual Life
Insurance Company 1996 1998
NOMINEES
Ralph W. Laster, Jr. has served as Chief Executive Officer of
AmVestors since January 1988, and as Chairman of the Board of AmVestors since
May 1988. In addition to his duties as Chairman and Chief Executive Officer
of AmVestors, Mr. Laster has also served as President and Chief Executive
Officer of the Insurance Company since April 1991 and serves as Chairman of
the Board of American Investors Sales Group, Inc; Chairman, President and
Chief Executive Officer of AmVestors Investment Group, Inc. and Chairman and
Chief Executive Officer of AmVestors Acquisition Subsidiary, Inc. He also
serves as Chief Executive Officer and Director of Financial Benefit Life
Insurance Company, Inc. ("FBL"), Annuity International Marketing Corporation
("AIMCOR"), The Insurancemart ("TIM") and Rainbow Card Pack Publications,
Inc. ("Rainbow"). Mr. Laster has served the Company since its inception and
has been affiliated with the Insurance Company since 1981.
R. Rex Lee, M.D. was an incorporator of the Insurance Company and has
served as a director of the Insurance Company since its incorporation in
March 1965. Dr. Lee has also served on the Board of AmVestors since its
inception in 1986. In addition, Dr. Lee served as Senior Medical Director to
the Insurance Company from May 1965 to April 1993. Dr. Lee also serves as a
Director of AmVestors Acquisition Subsidiary, Inc. Dr. Lee is a self-employed
physician and surgeon in Wichita, Kansas.
James V. O'Donnell was appointed to the Board of AmVestors on March
24, 1994. Mr. O'Donnell also serves on the Boards of AmVestors Investment
Group and AmVestors Acquisition Subsidiary, Inc. He currently serves as
President of Bush-O'Donnell and Company, Inc., a funds management and
investment banking firm in St. Louis, Missouri. Prior to his work at
Bush-O'Donnell, Mr. O'Donnell was employed at Goldman, Sachs & Company from
1974 to 1988 where he held the title of Vice President.
Frank T. Crohn was appointed to the Board of AmVestors on April 8,
1996. Mr. Crohn is Chairman of the Board of FBL, AIMCOR, TIM and Rainbow. He
previously served as FBG's Chairman of the Board, Chief Executive Officer and
Director as well as Chairman of FBL, AIMCOR and TIM, Inc. A Chartered Life
Underwriter, he was President and Chief Executive Officer of National Benefit
Life Insurance Company, New York from 1962 until June 1982. From 1982 until
February, 1983, he was Deputy Chairman of National Benefit. Mr. Crohn also
serves as a Director of Unity Mutual Life Insurance Company, Syracuse, New
York and Franklin Managed Trust, San Mateo, California, Mr. Crohn has served
as President of the Life Insurance Council of New York and the Florida
Association of Domestic Insurance Companies.
5
CONTINUING DIRECTORS
Janis L. Andersen has served on the Board of AmVestors since its
inception in 1986. She also serves as a director of the Insurance Company and
AmVestors Acquisition Subsidiary, Inc. Ms. Andersen is a self-employed public
relations and marketing consultant.
Mark V. Heitz currently serves as President and General Counsel of
AmVestors; Chairman and General Counsel of the Insurance Company; President
and Chief Executive Officer of American Investors Sales Group, Inc. and
President and General Counsel of AmVestors Acquisition Subsidiary, Inc. He
has served as a director of the Company and American Investors Sales Group,
Inc. since 1986. He is also currently a member of the Boards of AmVestors
Investment Group, Inc., AmVestors Acquisition Subsidiary, Inc., FBL, AIMCOR,
TIM and Rainbow.
Robert T. McElroy, M.D. was appointed to the Board of AmVestors on
March 24, 1994. He also serves as a director of the Insurance Company and
AmVestors Acquisition Subsidiary, Inc. Dr. McElroy is a self-employed
physician and surgeon in Topeka, Kansas.
Jack Manning was appointed to the Board of AmVestors on April 8,
1996. Mr. Manning was formerly on the Board of FBG from 1993 to 1996. He is
currently Chairman of the Board Emeritus of Columbian Mutual Life Insurance
Company.
From 1988 to 1991, he was Chairman of the Board and a Director; from
1982 to 1988 he was Chairman of the Board, President, Chief Executive Officer
and Director; and from 1970 to 1982, he was President, Chief Executive
Officer and Director of Columbian Mutual. Mr. Manning started his career as
an agent in 1946 and has worked in the insurance industry since that time,
including serving as a Director of the Insurance Federation of New York, Life
Insurance Council of New York and the New York Life Insurance Guaranty
Corporation.
Robert G. Billings is President of Alvamar, Inc., a real estate
development company. He has served on AmVestors' Board since 1986 and has
been a director of the Insurance Company since 1982. Mr. Billings also serves
on the Board of AmVestors Investment Group, Inc. and AmVestors Acquisition
Subsidiary, Inc.
Jack H. Brier was appointed to the Board of AmVestors on March 24,
1994. He also serves on the Boards of AmVestors Investment Group and
AmVestors Acquisition Subsidiary, Inc. Mr. Brier served as a member of the
Board of Trustees of the Kansas Public Employees Retirement System from 1990
to 1992. He is also a member of the Board of Columbian National Title
Insurance Company. Mr. Brier is currently the President of Brier Development
Company, Inc. in Topeka, Kansas.
Robert R. Lee, II has been engaged in the private practice of law in
Wichita, Kansas, since 1984. He is currently a partner in the law firm of
Wilson, Lee & Gurney. Mr. Lee has served on the Board of AmVestors since 1992
and the Insurance Company since 1989. He also serves on the Board of
AmVestors Acquisition Subsidiary, Inc. Mr. Lee is the son of Dr. R. Rex Lee,
a fellow member of the AmVestors' Board.
John F.X. Mannion was appointed to the Board of AmVestors on April 8,
1996. He served as a Director of FBG from 1983 to 1996. Mr. Mannion has
served as Chairman of the Board and Chief Executive Officer of Unity Mutual
Life Insurance Company since 1980. He first joined Unity in 1974 as its
President. Since 1974 he has been a member of its Board of Directors. He is
also on the Board of Directors of Germantown Life Insurance Company in
Radonor, Pennsylvania; NYNEX Telecommunications and Onondaga Venture Capital
Fund. Mr. Mannion is the immediate past Chairman of the Medical Information
Bureau and the current Chairman of the Life Insurance Council of New York.
The favorable vote of a plurality of the Common Stock of the Company
in attendance or represented by proxy and entitled to vote at the Annual
Meeting is needed for the election of directors.
The Board of Directors recommends a vote FOR the election of each of
the nominees to the Board.
6
BOARD OF DIRECTORS
BOARD AND COMMITTEES OF THE BOARD
The full Board met 9 times in 1995. All directors attended more than
75% of the total number of meetings of the Board and Committees to which they
belong.
The Company has standing audit, nominating and compensation
committees.
The Company's Audit Committee consists of Messrs. Brier, Robert R.
Lee, II and Dr. McElroy. The committee met once during the year. Its function
is to recommend to the Board of Directors the independent public accounting
firm that will conduct the annual audit of the Company's accounts, to review
the nature and scope of the audit, to review the accounting practices and
control systems of the Company, and to review the qualifications and
performance of the proposed auditing firm. The selection of such firm is
subject to ratification by the stockholders at each Annual Meeting.
The Nominating Committee consists of Ms. Andersen, Mr. Laster and Dr.
R. Rex Lee. The committee met once during the year to nominate directors for
election. They will consider stockholder nominations submitted in writing.
The Compensation Committee consists of Dr. R. Rex Lee, Ms. Andersen
and Messrs, O'Donnell, and Billings. Dr. Lee serves as chairman of the
committee. The committee met two times to review and recommend to the Board
of Directors the levels, amounts and types of compensation and remuneration
paid to officers and directors of the Company. See Executive Compensation.
COMPENSATION OF DIRECTORS
Outside directors were compensated for their service on the Board of
AmVestors Financial Corporation at the rate of $250 per month plus $1,500 for
each meeting attended. For committee meetings held on days other than the
regular Board Meeting, each outside Board member in attendance is compensated
$500 for such attendance in service. Directors who are employees of the
Company are not compensated for service as members of the Board or any
Committee of the Board. In addition, the Chairman of the Compensation
Committee is paid $1,000 per month.
On May 19, 1994 the stockholders approved the 1994 Stock Deferral
Plan for Non-Employee Directors ("Director Deferral Plan"). Under the
Director Deferral Plan, each non-employee director may elect to defer the
receipt of fees for services to the
Board and its Committees, which are then credited in stock units
payable in an equal number of shares of AmVestors' Common Stock and held by
the Company in an account for the benefit of such director. In the event of
such an election, the Company will apply the amount of director fees
specified by the director to determine the number of shares of the Company's
Common Stock that are payable to such director based on a price equal to the
average closing price of the Company's Common Stock for the quarter in which
such election applies.
On March 28, 1996, the Board adopted a plan whereby all outside
directors are granted options to acquire 1,000 shares of AmVestors Common
Stock annually at the meeting of the Board of Directors immediately following
the Annual Stockholders Meeting.
On March 26, 1992, the Company adopted the AmVestors Financial
Corporation Directors Retirement Plan ("Plan"). The Plan provides a monthly
retirement benefit to eligible retired directors in the amount of $750. In
addition, the Company will continue to pay premiums for life insurance
coverage for each eligible director for the amount of coverage provided while
they were a director of the Company. Directors who attain age 60 and have
completed five years of service for the Company are eligible to receive
benefits under the Plan.
7
EXECUTIVE OFFICERS
The following is a list of current executive officers of the Company.
Officers serve at the pleasure of the Board of Directors.
Name Age Position(s) Held with the Company
Ralph W. Laster, Jr. 44 Mr. Laster has served as Chief
Executive Officer of AmVestors
Financial Corporation since
January 1988 and as Chairman of
the Board of AmVestors since May
1988. Mr. Laster has also served
as President and Chief Executive
Officer of the Insurance Company
since April 1991 and serves as
Chairman of the Board of American
Investors Sales Group, Inc;
Chairman, President and Chief
Executive Officer of
AmVestors Investment Group, Inc.;
and Chairman and Chief Executive
Officer of AmVestors Acquisition
Subsidiary, Inc.; Chief Executive
Officer and a Director of FBL,
AIMCOR, TIM and Rainbow.
Mark V. Heitz 43 Mr. Heitz currently serves as
President and General Counsel of
AmVestors; Chairman and General
Counsel of the Insurance Company;
President and Chief Executive
Officer of American Investors
Sales Group, Inc.; and President
and General Counsel of AmVestors
Acquisition Subsidiary, Inc. He
has served as a director of the
Company since its inception in
1986 and as a director of the
Insurance Company
since 1986. Mr. Heitz has also
served as a director of American
Investors Sales Group, Inc. since
1986, and he is a member of the
Boards of AmVestors Investment
Group, Inc. AmVestors
Acquisition Subsidiary, Inc.,
FBL, AIMCOR, TIM and Rainbow.
Thomas M. Fogt 50 Mr. Fogt currently serves as
Executive Vice President
Corporate Development of
AmVestors and AmVestors
Acquisition Subsidiary,
Inc. Mr. Fogt also serves as a
Director of FBL, AIMCOR, TIM and
Rainbow. Mr. Fogt has been
employed by the Company since
July 1994.
Timothy S. Reimer 37 Mr. Reimer has served as
Executive Vice President and
Chief Investment Officer of the
Company since 1993. In addition,
Mr. Reimer serves as Vice
President of AmVestors Investment
Group, Inc. and Chief Investment
Officer of American, AmVestors
Investment Group, Inc. and
AmVestors Acquisition Subsidiary,
Inc. He is also a member of
the Board of AmVestors Investment
Group, Inc. to which he was
elected in 1988. Mr. Reimer has
been employed by the Company
since 1988.
Lynn F. Hammes 44 Mr. Hammes has served as
Secretary and Treasurer of the
Company since 1990. In addition,
Mr. Hammes also serves as Senior
Vice President and Chief
Financial Officer of American and
Secretary and Treasurer of
American, American Investors
Sales Group, Inc. and
AmVestors Investment Group, Inc.
and Secretary and Treasurer of
AmVestors Acquisition Subsidiary,
Inc. He is also a member of the
Board of AmVestors Investment
Group, Inc. to which he was
elected in 1993. Mr. Hammes has
been employed by the Company
since 1987.
Frank T. Crohn 71 Mr. Crohn currently serves as
Chairman of the Board of FBL,
AIMCOR, TIM and Rainbow. Mr.
Crohn formerly held the titles of
Chairman and Chief Executive
Officer of Financial Benefit
Group. He was appointed
to the Board of AmVestors on
April 11, 1996 in connection with
the Merger of Financial Benefit
Group into AmVestors Acquisition
Subsidiary, Inc.
Donna J. Rubertone 38 Ms. Rubertone currently serves as
President and director of FBL,
AIMCOR, TIM and Rainbow. Ms.
Rubertone formerly held
the titles of Executive Vice
President, Chief Operating
Officer and
Secretary of Financial Benefit
Group. She became associated with
AmVestors on April 11, 1996 in
connection with the Merger of
Financial Benefit Group into
AmVestors Acquisition Subsidiary,
Inc.
8
EXECUTIVE COMPENSATION
In accordance with rules pertaining to executive compensation
disclosure adopted by the Securities and Exchange Commission ("SEC"), the
Company is required to provide certain data and information with regard to
the compensation and benefits provided the Company's Chief Executive Officer
and certain of the most highly compensated executive officers. The disclosure
requirements include the use of various tables and graphs, and a report from
the Compensation Committee explaining the rationale that led to the
fundamental executive compensation decisions discussed herein.
The following table sets forth summary compensation information for
the last three fiscal years on Mr. Laster, the Company's Chief Executive
Officer and Messrs. Heitz, Fogt, Reimer and Hammes, the four executive
officers, for services rendered in all capacities to the Company and its
subsidiaries for the years ended December 31, 1995, 1994 and 1993:
SUMMARY COMPENSATION TABLE
LONG TERM
COMPENSATION
AWARDS
ALL OTHER
NAME AND ANNUAL COMPENSATION <F1> SECURITIES UNDERLYING COMPEN-
PRINCIPAL POSITION YEAR SALARY ($) BONUS ($) OPTION/SAR'S (#) SATION ($) <F2>
Mr. Ralph W. Laster, Jr. 1995 400,000 288,917 15,000 shrs 26,136
Chairman and CEO of the 1994 370,000 370,000 - 26,134
Company 1993 370,000 162,500 95,000 shrs 28,710
Mr. Mark V. Heitz 1995 260,000 185,504 10,000 shrs 26,136
President and General 1994 235,000 236,788 - 26,134
Counsel of the Company 1993 235,000 105,000 81,000 shrs 28,710
Mr. Thomas M. Fogt 1995 175,000 13,125 - 29,886
Executive Vice President 1994 87,500 - 50,000 shrs -
Corporate Development
Mr. Timothy S. Reimer 1995 175,000 39,659 5,000 shrs 22,386
Executive Vice President and 1994 141,010 70,144 - 22,051
Chief Investment Officer 1993 173,813 50,000 24,500 shrs 28,498
of the Company
Mr. Lynn F. Hammes 1995 142,500 26,719 5,000 shrs 25,573
Senior Vice President, 1994 142,500 50,000 - 25,688
Secretary and Treasurer 1993 123,632 25,000 37,500 shrs 22,556
of the Company
<FN><F1> Excludes perquisites which did not exceed the lesser of $50,000 or
10% of
the combined salary and bonus of any executive officer for the year.
<F2> Amounts reported in this column consist of contributions allocated by the
Company to each officer under the Company's tax qualified ESOP and the
AmVestors Financial Corporation Money Purchase Pension Plan. These
allocations are held in trust pending the officer's termination or
retirement. All full-time employees with more than one year of service
participate in these plans.
9
STOCK OPTIONS AND STOCK APPRECIATION RIGHTS
The following table contains information concerning the grant of stock
options under the Company's 1989 Non-Qualified Stock Option Plan to the five
executive officers of the Company named above during 1995. The table provides
the number of options granted, the exercise price, and the present dollar
value of the options.
OPTION GRANTS IN 1995
NUMBER OF
SECURITIES % TOTAL
UNDERLYING OPTIONS GRANTED EXERCISE GRANT DATE
OPTIONS GRANTED TO EMPLOYEES OR BASE PRICE EXPIRATION PRESENT
VALUE
NAME (#)<F1> IN FISCAL YEAR ($/SH)<F2> DATE ($)<F3>
Mr. Laster 15,000 25.0% $10.63 03/30/2005 76,065
Mr. Heitz 10,000 16.7 10.63 03/30/2005 50,710
Mr. Fogt - - - - -
Mr. Reimer 5,000 8.3 10.63 03/30/2005 25,355
Mr. Hammes 5,000 8.3 10.63 03/30/2005 25,355
<FN><F1> All options granted to buy Common Stock of the Company. All options
are exercisable 12 months following the date of grant and
have a term of 10 years, unless terminated earlier by reason of the executive
officer's termination of employment as described herein. All options shall
terminate upon the earlier of (i) the date of termination of the executive
officer's employment if such termination occurs within 12 months of the date
of the option grant; (ii) three months following the date of termination of
the executive officer if such termination occurs more than 12 months
following the option grant; or (iii) 12 months following the date of the
executive officer's termination if such termination is by reason of death or
disability.
<F2> The exercise price of all option grants was the closing market price of
the Common Stock of the date of grant.
<F3> The values shown were calculated using the Black-Scholes option pricing
model and are presented solely for purposes of comparative disclosure in
accordance with certain regulations of the SEC. The Black-Scholes model is a
mathematical formula widely used to value traded stock options, which
calculates present value based on assumptions about future interest rates,
stock price volatility and dividend yield. There is no assurance that the
value realized by an executive officer, if any, will be at or near the value
estimated by the Black-Scholes model. In calculating the grant date present
values set forth in the table, the Company used the following assumptions:
(a) expected volatility of 28.7%; (b) risk free rate of return of 5.097%; (c)
payment of dividends equal to $.075 per year; and (d) exercise at the end of
the ten year period from the date of grant. No adjustments have been made for
non-transferability or risk of forfeiture.
AGGREGATED OPTION/SAR EXERCISES IN 1995,
AND 1995 YEAR END OPTION/SAR VALUE
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS/SARS AT 1995 IN-THE-MONEY OPTIONS/SARS
YEAR END (#) AT 1995 YEAR END ($) <F1>
SHARES ACQUIRED VALUE
NAME ON EXERCISE (#) REALIZED ($) EXERCISABLE UNEXERCISABLE
EXERCISABLE UNEXERCISABLE
Mr. Laster - - 169,562 15,000 489,539 16,875
Mr. Heitz - - 158,240 10,000 488,176 11,250
Mr. Fogt - - 50,000 - 100,000 -
Mr. Reimer - - 58,157 5,000 207,167 5,625
Mr. Hammes - - 64,000 5,000 183,171 5,625
<F1> Value of unexercised In-The-Money Options is calculated by subtracting
the exercise price from the market value of the underlying stock at 1995 year
end and multiplying the result times the number of shares subject to
exercise. Year end market value of Common Stock was $11.75.
10
EMPLOYMENT CONTRACTS AND TERMINATION
OF EMPLOYMENT ARRANGEMENTS
Pursuant to an employment agreement by and between AmVestors,
American, AmVestors Investment Group, Inc. and American Investors Sales
Group, Inc. ("Companies") and Mr. Laster, the Companies have agreed to
provide Mr. Laster a base salary, health benefits, insurance benefits and
other perquisites through May 31, 1997. Mr. Laster's salary is reviewed
annually based upon certain subjective and objective performance factors
discussed in the Compensation Committee Report on Executive Compensation. The
agreement also provides that if Mr. Laster is discharged without cause prior
to the end of the contract term, he is entitled to receive contract
compensation throughout the remaining term of the contract.
Pursuant to an employment agreement by and between AmVestors,
American and Mr. Heitz, AmVestors and American have agreed to provide Mr.
Heitz a base salary, health benefits, insurance benefits and other
perquisites through December 31, 1996. In 1995, Mr. Heitz's contract was
extended through December 31, 1998. Mr. Heitz's salary is reviewed annually
based upon certain subjective and objective performance factors. The
agreement also provides that AmVestors and American will pay Mr. Heitz
severance pay, if he is discharged without cause, in an amount equal to the
salary and other compensation and benefits due for the remainder of the
calendar year in which such termination of employment occurs. Mr. Heitz is
also entitled to receive a continuation of his monthly base salary for a
period not to exceed the difference between 12 months and the number of
months after such termination in which salary and benefits were payable in
the calendar year in which such discharge occurred.
Pursuant to an Employment Agreement dated April 8, 1996 Mr. Crohn has
agreed to serve, for a period of two years, as Chairman of the Board of
Financial Benefit Life, AIMCOR and The Insurance Mart. Mr. Crohn is required
to devote no more than 500 hours per calendar year to his duties thereunder
and is entitled to (i) a salary of $200,000 per year; (ii) at the inception
of the Employment Agreement, 75,000 non-qualified options to purchase
AmVestors Common Stock under the AmVestors Non-Qualified Stock Option Plan at
an exercise price equal to the market price of the AmVestors Common Stock on
the date of issue; (iii) participate in all fringe benefit, stock option and
retirement plans available to employees of Financial Benefit Life generally;
(iv) reimbursement of business expenses; and (v) continued salary payments
for up to six months after any disability (as defined therein) of Mr. Crohn.
Mr. Crohn's employment may be terminated prior to its expiration only for
cause, which includes conviction of certain crimes, gross negligence or
willful misconduct in the performance of his duties or a material breach of
his Employment Agreement which is unremedied for more than 30 days. Mr. Crohn
has also agreed that during his employment and for a period of one year
thereafter, he will not compete directly or indirectly with AmVestors or
attempt to entice away or employ any employee of AmVestors or its
subsidiaries.
Pursuant to an Employment Agreement dated April 8, 1996 Ms. Rubertone
has agreed to serve for a period of three years, as President of Financial
Benefit Life, AIMCOR and The Insurance Mart. Pursuant to her Employment
Agreement, Ms.Rubertone is required to devote her full working time to the
business of such subsidiaries and is entitled to, among other things (i) a
salary of $175,000 per year, (ii) participate in the Incentive Compensation
Plan and Bonus Compensation Agreements as the Board of Directors of AmVestors
shall, in its discretion, determine; (iii) at the inception of the Employment
Agreement, 50,000 non-qualified options to purchase AmVestors Common Stock
under the AmVestors Non-Qualified Stock Option Plan at an exercise price
equal to the market price of the Common Stock on the date of issue; (iv)
participate in all fringe benefit, stock option and retirement plans
available to employees of Financial Benefit Life generally; (v) reimbursement
of business expenses; and (vi) continued salary payments for up to six months
after any disability (as defined therein) of Ms. Rubertone. Ms. Rubertone'
employment may be terminated prior to its expiration either (i) for cause,
which includes conviction of certain crimes, gross negligence or willful misco
nduct in the performance of her duties or a material breach of her Employment
Agreement which is unremedied for more than 30 days; or (ii) without cause
upon payment of a severance amount equal to a full year's salary plus a sum
equal to any bonus payments received by Ms.Rubertone in the previous twelve
months. Ms. Rubertone has also agreed that during her employment, she will
not compete directly or indirectly with AmVestors and that she will at no
time disclose any confidential information regarding AmVestors or its
subsidiaries.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Recommendations on executive compensation are made to the Board by
the three-member Compensation Committee of the Board ("Committee"). The
Committee is composed of Ms.Andersen, Mr. O'Donnell, Dr. Lee and Mr.
Billings. Each member of the Committee is a non-employee director of the
Company.
Set forth below is a report submitted by the Committee addressing the
Company's compensation policies and philosophies for 1995 as they affected
Mr. Laster and the other executive officers.
11
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee Report on executive compensation below
shall not be deemed to be filed under or incorporated by reference into any
filing under the Securities Act of 1933 or the Securities Exchange Act of
1934, except to the extent that the Company specifically incorporates this
report by reference.
In 1995, the Committee contracted William M. Mercer, Inc. ("Mercer"),
an independent compensation consultant to perform a comprehensive review of
the Company's compensation practices. Mercer conducted a full assessment of
the design and effectiveness of the Company's compensation strategies and
compared the executive compensation and corporate performance to comparable
corporations that define its competitive marketplace for executive talent.
Mercer reported its findings directly to the Committee without the prior
review of the executive officers. The Committee will consider Mercer's report
in its compensation decisions for 1996.
EXECUTIVE COMPENSATION POLICIES
This report outlines the Company's general compensation policy, as
endorsed by the full Board of Directors, and explains the Committee's actions
with regard to executive compensation for the year ended December 31, 1995.
Compensation decisions are made by the whole Board based upon the review and
recommendations of the Committee. It is anticipated that criteria similar to
that discussed herein, in addition to the criteria set forth in the Incentive
Plans and the Bonus Arrangement described above, will be employed for
compensation decisions in 1996.
The focus of the executive compensation program is to attract,
motivate and retain quality executives by providing a well rounded
compensation plan based on both Company and individual performance. In
addition to salary and bonus awards, the Committee may utilize both annual
and long-term stock incentive plans which are intended to reward executive
officers and other key employees upon achieving specific goals. The board
believes that the adoption of incentive compensation plans which tie
incentive and bonus compensation to specific corporate performance objectives
operate to motivate its executive officers to achieve the maximum corporate
performance and overall profitability. In addition, the Board believes that
performance based compensation which places a meaningful portion of the
executive's compensation at risk with the other shareholders should be an
integral part of the total compensation package.
Section 162(m) of the Internal Revenue Code, enacted in 1993 and
effective for taxable years beginning after January 1, 1994, generally limits
to $1 million per individual per year the federal income tax deduction for
compensation paid by a publicly-held company to certain executive officers.
Compensation that qualifies as performance-based compensation for purposes of
section 162(m) is not subject to the $1 million deduction limitation. Section
162(m) did not affect the deductibility of compensation payments in 1995;
however, the Committee will consider Section 162(m) in its compensation
decisions on any ongoing basis.
EXECUTIVE OFFICER COMPENSATION AND PERFORMANCE
Compensation paid to the executive officers in 1995 consisted of base
salary, bonus, stock option awards and contributions to the Company's
Employee Stock Ownership Plan and Money Purchase Pension Plan. A portion of
the bonus compensation paid to executive officers in 1995 was paid in the
form of a salary bonus throughout the year. A portion of the bonus
compensation paid to executive officers was based on the attainment of
specific financial objectives under the Incentive Plans described below. A
portion of the bonus paid to Messrs. Laster and Heitz was derived from the
performance of the company stock under the Bonus Arrangement as described
below.
BASE SALARY AND ANNUAL BONUS
The salary and bonus of the Company's executive officers is reviewed
and approved annually by the Board. The Board's decisions concerning base
salary and bonus levels are based upon recommendations from the Committee,
which reviews corporate and individual performance in making its
recommendations to the Board. The Chief Executive Officer's recommendation
for remuneration for executive officers for 1995 were concurred with by the
Committee and approved by the Board. To assist the Committee in its compensati
on decisions for executive officers other than himself, the Chief Executive
Officer reviews the performance of each executive officer and recommends to
the Committee proposed remuneration for each respective officer. The
Committee considers both objective and subjective criteria in its evaluation
of each executive officer, including the Chief Executive Officer.
In 1994, the Board adopted an Incentive Compensation Plan and Bonus
Compensation Agreements ("Plans") to provide certain executive officers and
key employees with the opportunity to earn incentive compensation based upon
the financial performance of the Company. Under the Plans executive officers
are generally entitled to additional bonus compensation if one or more of the
following goals is met for the calendar year: (i) AmVestors achieves a return
on equity equal to or greater than 13%; (ii) AmVestors achieves asset growth
equal to or greater than 15%; (iii) AmVestors realizes a total return on its
own common stock equal to or greater than the total return reported in the
Standard & Poor (S&P) Life Index for the life's
12
insurance industry that year; (iv) AmVestors' core operating earnings are
equal to or greater than the reported expectations of market analysts as of
April 1st of the calendar year; (v) AILICO receives premiums and annuity
consideration before reinsurance equal to or greater than $300 million; (vi)
AmVestors realizes and/or maintains a gross margin equal to or greater than
200 basis points; and (vi) AmVestors incurs total expenses equal to or less
than 100 basis points stated as a percentage of average invested assets. The
Plans award points to executive officers and key employees when the specified
objectives are attained. Executive Officers are awarded more points for
categories in which their position affords them the greatest opportunity to
affect performance in that category. Incentive compensation is calculated by
multiplying the percentage of base salary specified for each officer times
the ratio of performance objective points earned divided by total
performance objective points possible. The number of performance objective
points possible and the percentage of base salary specified for each
executive officer is set by the whole Board based upon the recommendations of
the Compensation Committee and is intended to reflect each officer's potential
to influence the profitability of the Company's operations. For 1995
compensation, the maximum incentive bonus potential for executive officers
under the Plans ranged from 35% to 100% of salary.
In 1994, the Company's return on equity was13.39%. Total asset growth
increased 6.85% to $1.9 billion. The Company realized a total return on its
Common Stock that exceeded the total return in the S&P Life Index. Core
Operating Earnings were $1.26 per share, $.09 less than market analysts
predictions. Premiums in 1994 were $269 million, $21 million less than the
objective. The Company's margin was 1.94% of average invested assets and
total expenses were .93% of average invested assets.
In addition, in 1995 the Compensation Committee adopted the 1995
Special Incentive Bonus Arrangement ("Incentive Arrangement") to provide Mr.
Laster and Mr. Heitz with the opportunity to earn additional incentive
compensation based upon the Company's 1995 Common Stock performance. The
Incentive Arrangement is intended to reward Mr. Laster and Mr. Heitz for
valuable past services to the Company and its subsidiaries. The Board further
intends that the Incentive Arrangement will induce the executive officers to
remain in the service of the Company and continue their valuable and
substantial efforts on its behalf.
The cash bonus to be paid under the Incentive Arrangement is equal to
the difference between the Company per share Common Stock price at the close
of trading on December 30, 1994, and the average of the Company per share
price at the close of trading for the last ten trading days of 1995. The per
share price difference will then be multiplied by 75,000 for Mr. Laster and
45,500 for Mr. Heitz. It is the intent of the Arrangement to pay a cash bonus
which approximates the growth performance of 75,000 shares and 45,500 of the
Company Common Stock for the 1995 calendar year.
The Committee also considers subjective factors in its review of each
executive officer. Such factors include business planning skills, leadership
abilities, creativity, experience, assumption of additional duties in
connection with promotions or changes, and individual performance in any
special projects or situations.
STOCK INCENTIVE PLANS
The Committee recognizes that stock ownership and stock-based
performance arrangements are beneficial and operate to increase executive
officers' incentive to enhance stockholder value. The Company currently has
three separate stock incentive plans: (1) 1989 Non-Qualified Stock Option
Plan, (2) 1989 Stock Appreciation Rights Plan, and (3) 1989 Restricted Stock
Plan ("Stock Incentive Plans"). The purpose of the Stock Incentive Plans is
to provide executive officers with a meaningful equity internet in the
Company. These plans are intended to retain key executives and align their
financial interests with those of stockholders.
In 1995 the Committee granted stock options to the executive officers
in amounts set forth on page 8 in the table on Option Grants in 1995. Stock
options may be granted from time to time by the Committee to executive
officers or other employees with such frequency and, subject to certain terms
and limitations set forth in the 1989 Non-Qualified Stock Option Plan and as
approved by the whole Board. Stock options are granted for terms not
exceeding 10 years, with an exercise price equal to the closing price of the
Common Stock on the date of the grant. Although the Company also has a Stock
Appreciation Rights Plan and a Restricted Stock Plan, the Committee did not
recommend awards under these Plans as part of the total 1995 compensation
package.did not make any award to the executive officers named in the Summary
Compensation
CEO COMPENSATION
The Chief Executive Officer's primary responsibilities are to direct
and oversee the day-to-day operations of the Company and its wholly-owned
subsidiaries, including, but not limited to, the investment of the Company's
assets.
In 1995, Mr. Laster's base salary was $400,000 per annum. His base
salary is established pursuant to his employment contract and is subject to
increase annually at the sole discretion of the Board. Mr. Laster's base
salary may not be diminished prior to May 31, 1997.
In determining the base salary paid to Mr. Laster, the Committee
considers a number of variables including financial performance, individual
performance, special assignments or tasks and achievement of particular
goals. In recommending base salary, the Committee exercises broad discretion
and considers all of the above criteria. No single criteria is assigned
specific weight in the determination.
13
Bonus Compensation paid to Mr. Laster in 1995 was derived solely from
the Bonus Compensation Agreement ("Bonus Agreement") and the 1995 Special
Incentive Bonus Arrangement ("Incentive Arrangement") described above. Under
the Bonus Agreement, Mr. Laster had the opportunity to earn a bonus equal to
100% of his 1994 base salary of $370,000 if the Company achieved the
performance objectives listed below. Mr. Laster's bonus under the Bonus
Agreement was calculated by multiplying his 1994 base salary times the ratio
of performance objective points earned divided by total performance objective
points possible. For purposes of this formula, performance objectives were
assigned the following point values:
OBJECTIVE POINTS POINTS EARNED
1. AmVestors Return on Equity > 13% 1 1
2. AmVestors Asset Growth > 15%... 1 -
3. Total Return on AmVestors Stock >
Total Return on S&P Life Index 1 -
4. AmVestors Core Operating Earnings >
Analyst Expectations........ 1 -
5. American Premiums & Annuity
Consideration > $300 Million........ 1 -
6. AmVestors Gross Margin > 200 BP 0.5 -
7. AmVestors Total Expenses < 100 BP 0.5 0.5
A total of 6.0 performance objective points are possible each year in
which such criteria are utilized. In determining
the multiplication ratio as a fractional amount, the total objective points
earned serves as the numerator and the total objective points possible serves
as the denominator.
In 1994 the Company achieved objective numbers 1, 3 and 7 performance
objectives. Therefore, 2.5 objective points were earned out of 6 yielding a
ratio of .4167. Mr. Laster's bonus under the Agreement is calculated by
multiplying his 1994 base salary by the ratio ($370,000 x .4167) yielding a
bonus of $154,167. One-half of the bonus under the Agreement was paid in a
single lump sum and the balance was paid as a salary bonus in equal
bi-monthly installments from April 15 through December 31, 1995.
The remainder of Mr. Laster's bonus was earned under the Incentive
Arrangement based on the performance of the Company's stock from December 30,
1994 to December 31, 1995. The Incentive Arrangement is intended to pay a
cash bonus which approximates the growth performance of 75,000 shares of the
Company's Common Stock for the calendar year 1995. The closing price of the
Common Stock on December 30, 1994 was $9.50 per share. The average closing
price of the Common Stock for the last 10 trading days of 1995 was $11.296
per share. The difference in the closing price on December 30, 1994 and the
average closing price for the last 10 trading days of 1995 was $1.796 per
share. The difference is multiplied times 75,000 to yield a bonus under the
Arrangement equal to $134,750.00.
The total bonus paid to Mr. Laster under the Bonus Agreement and the
Incentive Arrangement was $288,917. Mr. Laster received other compensation in
the form of contributions under the Company's ESOP, Money Purchase Pension
Plan and other perquisites.
The compensation paid to Mr. Laster in 1995 reflects the Committee's
assessment of his personal performance and leadership, as well as his
relative value to the Company, and ability to impact the Company's
performance.
Dr. R. Rex Lee, Chairman
Ms. Andersen
Mr. Billings
Mr. O'Donnell
COMPLIANCE WITH THE SECURITIES EXCHANGE ACT OF 1934
The Company's directors and executive officers are required under the
Securities Exchange Act of 1934 to file reports of ownership and changes of
ownership with the Securities and Exchange Commission. Based solely on a
review of the copies of the reports furnished to the Company and written
representations from directors, the Company believes that during 1995 all
filing requirements applicable to directors and executive officers have been
complied with, except that Dr. R. Rex Lee made late filings on two Form 4
reports relating to five transactions.
14
PERFORMANCE GRAPH
The following graph compares the Company's cumulative total
stockholder return (assuming reinvestment of dividends) with the S&P 500
Index and the S&P Life Insurance Index.
The Stock Performance Graph shall not be deemed to be filed under, or
incorporated by reference into, any filing under the Securities Act of 1933
or the Securities Exchange Act of 1934, except to the extent that the Company
specifically incorporates this graph by reference.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
AMVESTORS, S&P 500 INDEX, AND THE S&P LIFE INSURANCE INDEX
AMVESTORS FINANCIAL CORPORATION
1990 1991 1992 1993 1994 1995
AmVestors Financial Corporation $100 $220 $350 $352 $304 $378
S&P 500 Index 100 130 140 154 156 213
S&P 500 Life Insurance Index..... 100 143 191 194 161 230
Assumes $100 invested on December 29, 1989, in AmVestors Financial
Corporation Common Stock, the S&P 500 Index and the S&P Life Insurance Index.
15
PROPOSAL B
APPROVAL OF THE 1996
INCENTIVE STOCK OPTION PLAN
On March 28, 1996, the Board of Directors unanimously adopted,
subject to stockholder approval, the 1996 Incentive Stock Option Plan (the
"Plan").The purpose of this Plan is to encourage ownership in the Common
Stock of the Company by key personnel of the Company and its subsidiaries and
to provide additional incentive for them to continue in the employ of the
Company and its subsidiaries and to promote the success of the Company's
business. At the Annual Meeting, stockholders will be requested to approve
the Plan. The Plan covers a maximum of 950,000 shares of the Company's Common
Stock.
SUMMARY DESCRIPTION OF THE PLAN.
ADMINISTRATION OF THE PLAN. The Plan shall be administered under the
general direction and control of the Board of Directors of the Company which
may from time to time issue orders or adopt resolutions not inconsistent with
the provisions of the Plan, to interpret the provisions and supervise the
administration of the Plan. The Board shall appoint a committee of not fewer
than three directors, none of whom shall be officers of the Company or
eligible to participate in the Plan while members of the committee, and who
shall serve at the pleasure of the Board. No person shall be eligible to
serve on the committee if such person has at any time during the immediately
preceding one year period been granted or awarded equity securities under the
terms of this Plan, or any other plan of the Company, except grants or awards
pursuant to a formula. The Board of Directors may delegate to the committee
full power and authority to take any action required or permitted to be taken
by the Board of Directors under the Plan, except that the committee shall not
have the power to terminate, suspend, alter, or amend the Plan. Subject to
the provisions of the Plan, the committee shall have the plenary authority,
in its discretion, to determine the time or times at which, and the employees
of the Company and its subsidiaries to whom, options shall be granted, the
purchase price, and the number of shares of Common Stock to be covered by
each option, when each option may be exercised, and the expiration date
thereof.
ELIGIBLE PARTICIPANTS. Options may be granted only to regular
employees (including officers) of the Company or of any subsidiary of the
Company. A director or officer of the Company or of a subsidiary who shall
not at the time also be an employee of the Company or of a subsidiary thereof
shall not be eligible to receive an option under the Plan. The Plan does not
provide for a maximum number of shares of Common Stock which may be granted
to any particular person under the Plan. However, no options may be granted
to any employee who beneficially owns more than ten percent of the total
combined voting power of the Company.
TYPE OF OPTIONS. Options granted under the Plan are intended to
qualify as incentive stock options as defined in Section 422 of the Internal
Revenue Code of 1986, as amended.
GRANT OF OPTIONS. Options shall be granted only upon the execution,
by both the optionee and the Company, of an Incentive Stock Option
Agreement. The terms and conditions of the form of the Incentive Stock
OptionAgreement may be changed by the Board of Directors or the committee
from time to time, but these changes shall not affect any Incentive Stock
Option Agreement in force at the time the changes are made.
OPTION PRICES. The purchase price of the Common Stock covered by each
incentive stock option shall be determined by the Board of Directors or the
committee, but shall not be less than 100% of the fair market value of the
Common Stock at the time of the grant of the incentive stock option. The
market value of the Company's Common Stock on March 28, 1996 was $12.875.
TERM OF OPTIONS. The term of each option shall not be more than ten
years from the date of granting such option and may be less than ten years.
Each option shall be subject to earlier termination as discussed below. No
option may be transferred, assigned or pledged by the optionee.
PURCHASE PRICE. An option may only be exercised by written notice to
the Company specifying the number of shares of Common Stock with respect to
which such option is then being exercised, accompanied by the purchase price
for such shares of Common Stock. The purchase price of the shares purchased
upon exercise of an option shall be paid in full in cash at the
time of the exercise, but the Board of Directors may (but shall not
be required to) determine that shares may be purchased in whole or in part
upon the exercise of options with Common Stock of the Company.
Notwithstanding the foregoing sentence, a participant shall be entitled to
pay the purchase price by executing a promissory note, if such a right is
expressly granted to a participant in the Incentive Stock Option Agreement
entered into between a participant and the Company.
16
TERMINATION OF OPTIONS. All rights of an employee in an option
granted under this Plan, to the extent it has not been exercised, shall
generally terminate upon the employee's termination of employment as follows:
(i) In the event of the death of the holder of an option prior to
termination of employment, the unexercised portion of
such option may be exercised at any time within twelve months from
the date of the holder's death, by his or her
executor, administrator, personal representative, or other person
who has acquired the right to exercise the option by
bequest or inheritance.
(ii) In the event a holder of an option terminates employment due to
disability, the unexercised portion of such option
may be exercised at any time within twelve months from the date
such employee terminated employment.
(iii) In the event a holder of an option terminates employment for
reasons other than death or disability, the unexercised
portion of any option may be exercised at any time within three
months from the date such employee terminated
employment.
(iv) No option may be exercised, under any circumstance, more than
10 years after the date it is granted.
ADJUSTMENTS UPON CHANGES IN CAPITALIZATION. In the event of any
change in the outstanding Common Stock of the Company by reason of the stock
dividend, stock split, merger, consolidation, split-up, combination or change
of shares, reorganization, liquidation, or the life, the aggregate number and
class of shares of Common Stock available under the Plan and the number and
class of shares subject to each outstanding option and the option prices
shall be appropriately adjusted by the Board of Directors or the committee
whose determination shall be conclusive. In the event of a change of control,
all options outstanding shall immediately become fully vested.
TERMINATION AND AMENDMENT OF THE PLAN. Unless the plan shall be
previously terminated as described below, no option shall be granted under
the plan after ten years from the date the Plan is adopted by the Board of
Directors. The Board of Directors may at any time suspend or terminate the
Plan and shall have the right to alter or amend the Plan or any part thereof
at any time and from time to time as it may deem proper and in the best
interest of the Company and to alter or amend the plan in order that options
granted under the plan qualify as Incentive Stock Options under Section 422
of the Internal Revenue Code of 1986, as amended. Any termination,
suspension, alteration, or amendment of the Plan may be made by the Board of
Directors without further action on the part of the stockholders of the
Company; PROvided, that, no such termination, suspension, alteration, or
amendment shall: (a) impair, without the consent of the optionee, any option
theretofore granted to such optionee under the Plan or deprive such optionee
of any Common Stock that such optionee has acquired under the Plan; or (b)
unless approved by the stockholders of the Company, (i) increase the total
number of shares of Common Stock which may be purchased under the Plan
(except upon an adjustment in connection with a change in capitalization or
merger of the Company) (ii) extend the time during which options may be
granted under the Plan, (iii) change the class of employees eligible to
receive options under the Plan, or (iv) change the manner of determining the
option price except to change the manner of determining the fair market value
of the Common Stock. Any option outstanding at the time of termination of the
Plan shall remain in effect subject to the provisions of this Plan until the
option shall have been exercised or shall have expired. Any option
outstanding at the time of termination of the Plan shall remain in effect
subject to the provisions of this Plan until the option shall have been
exercised or shall have expired.
Subject to shareholder approval, on March 28, 1996 executive officers
were granted options under The Plan as follows: Mr. Laster, 140,000 options;
Mr. Heitz, 109,000 options; Mr. Fogt, 50,000 options; Mr. Reimer, 71,500
options and Mr. Hammes, 30,000 options.
FEDERAL INCOME TAX EFFECTS OF PLAN PARTICIPATION
It is intended that the Plan shall qualify as an "incentive stock
option plan" under Section 422 of the Internal Revenue Code of 1986, as
amended (the "Code"), and the Plan and all agreements entered into under the
Plan shall be interpreted in a manner consistent with the requirements of
Section 422.
As "incentive stock options" under Section 422 of the Code, no tax
consequences will result (except in the case of an optionee who is subject to
the alternative minimum tax) to the optionee or the Company from the grant of
an option to, or the exercise of an option by, the optionee. Shares acquired
under the Plan may not be sold, assigned, pledged, encumbered, transferred or
otherwise hypothecated within two years from the date of the grant of the
option or until one year after the acquisition of the shares ("Required
Holding Period"). After the Required Holding Period, the optionee will
recognize gain or loss for tax purposes when he sells or disposes of the
shares acquired by him upon exercise of an option. For purposes of
determining such gain or loss, the optionee's basis in such shares will be
the option price paid to acquire the shares under the Plan, and the optionee
will be entitled to long-term capital gain treatment upon their sale or
disposition. Under present law, there is no distinction in tax rates between
long-term capital gain and short-term capital gain and ordinary income.
However, capital losses may be offset only against capital gains and may be
deducted against ordinary income only to the extent of $3,000.00 per year.
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The Company generally will not be allowed a deduction with respect to
an option.
The amount, if any, by which the fair market value of the shares
transferred to the optionee upon the exercise of an option exceeds the option
price will constitute an adjustment in determining the amount of alternative
minimum taxable income.
To the extent the aggregate fair market value (determined as of the
time the options are granted) of the Common Stock for which an employee is
granted options which are exercisable for the first time during any calendar
year under the Plan and any other "incentive stock option plan" (within the
meaning of Section 422 of the Code) of the Company and its parent and
subsidiary corporations exceeds $100,000, such options shall be treated as
options which are not incentive stock options. In such event, the participant
will be required to recognize compensation income upon the exercise of such
options in an amount equal to the difference between the fair market value of
the stock on the date of exercise and the amount paid for such shares.
The foregoing is only a general summary of the currently effective
federal income tax laws and an employee should consult with a qualified
income tax advisor for specific advice as to his or her individual situation.
The Board of Directors recommends a vote "For" this Proposal.
PROPOSAL C
RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors of the Company has selected Deloitte & Touche
LLP as its independent public accountants for the fiscal year 1996. At the
meeting, the stockholders will be asked to ratify the Board of Director's
selection of Deloitte & Touche, LLP as the independent public accountants for
the fiscal year 1996. During the fiscal year 1995, Deloitte & Touche , LLP
provided the professional services related to the examination of the
financial statement of the Company and related entities, including annual
reports to stockholders and the Securities and Exchange Commission and have
certified the same and provided advice with regard to preparation of federal
income tax returns and other tax and accounting matters. The Audit Committee
of the Board of Directors approved such services taking into consideration
the possible effects which the rendering of such services would have on the
independence of the accountants. It is expected that representatives of
Deloitte & Touche, LLP will be present at the stockholders' meeting to make a
statement or to answer questions.
The favorable vote of a majority of the Common Stock of the Company
in attendance or represented by proxy and entitled to vote at the Annual
Meeting is needed to ratify the Board of Director's selection of independent
public accountants.
The Board of Directors recommends a vote FOR ratification of the
independent public accountants.
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DISCRETIONARY AUTHORITY
While the Notice of Annual Meeting calls for the transaction of any
other business as may properly come before the meeting, the Board of
Directors has no present intention of presenting any matters for action by
the stockholders at the meeting, other than as set forth herein. The enclosed
proxy gives discretionary authority to vote all shares subject to such proxy
in the event that any additional matters should be presented by a
stockholder.
AMVESTORS FINANCIAL CORPORATION WILL UNDERTAKE TO PROVIDE TO EACH
PERSON SOLICITED (INCLUDING BENEFICIAL OWNERS), UPON REQUEST, ADDITIONAL
COPIES OF THE FORM 10-K REPORT FOR THE YEAR ENDED DECEMBER 31, 1995,
INCLUDING FINANCIAL STATEMENTS, SCHEDULES AND EXHIBITS. AMVESTORS RESERVES
THE RIGHT TO EXACT A FEE NOT IN EXCESS OF REASONABLE EXPENSES FOR SO DOING.
By Order of the Board of Directors
LYNN F. HAMMES, Secretary
Dated: April 11, 1996
Topeka, Kansas
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