KENTUCKY INVESTORS, INC.
200 CAPITAL AVENUE
FRANKFORT, KENTUCKY 40601
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 13, 1999
TO THE SHAREHOLDERS OF
KENTUCKY INVESTORS, INC.
Notice is hereby given that the annual meeting of shareholders of Kentucky
Investors, Inc., a Kentucky corporation, (the "Company") will be held at the
Investors Heritage Life Insurance Company auditorium, Second and Shelby Streets,
Frankfort, Kentucky 40601, on Thursday, May 13, 1999, at 11:00 A.M. (Eastern
Daylight Time), for the following purposes:
(1) To elect three Directors to hold office for a term of three years each
or until their successors are duly elected and qualified; and
(2) To transact such other business as may properly come before the
meeting, or any adjournment thereof.
The Board of Directors, in accordance with the By-laws, has fixed the close
of business on March 26, 1999, as the record date for determining the
shareholders entitled to notice of and to vote at the meeting and any
adjournment thereof. The stock transfer books will not be closed.
It is hoped that you will attend the meeting, but if it is not your
intention to be present, you are respectfully requested to sign, date and return
the enclosed proxy immediately in the accompanying postage-prepaid envelope.
The proxy is being solicited by and on behalf of the Board of Directors of the
Company.
Your attention is directed to the Company's 1998 annual report and to the
proxy statement, both of which accompany this notice.
By Order of the Board of Directors
/s/
Wilma Yeary, FLMI/CPS, Secretary
P.O. Box 717
Frankfort, Kentucky 40602
April 16, 1999
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS, MAY 13, 1999
The following information is furnished in connection with the solicitation
of the enclosed proxy by and on behalf of the Board of Directors of Kentucky
Investors, Inc. (the "Company" or "KII"), for use at the annual meeting of
shareholders of the Company to be held at the Investors Heritage Life Insurance
Company auditorium, Second and Shelby Streets, Frankfort, Kentucky 40601, on
Thursday, May 13, 1999, at 11:00 A.M. (Eastern Daylight Time), and at any
adjournment thereof, for the purposes set forth in the Notice of Annual Meeting.
PROXY MAY BE REVOKED
A shareholder executing and returning the enclosed proxy may revoke such
proxy at any time prior to exercise of the authority thereby given by giving
written notice to the Secretary of the Company as provided by Kentucky Revised
Statutes 271B.7-220(6).
COST AND METHOD OF SOLICITATION
The Board of Directors intends to solicit proxies by use of the mails, and
all costs of soliciting proxies for this annual meeting will be borne by the
Company. The proxy statement and form of proxy will be mailed to the
shareholders on April 16, 1999.
VOTING SECURITIES
The Company has issued one class of capital stock. There are 1,158,700
shares outstanding of which 848,116 are entitled to one vote each, except that
in election of Directors, cumulative voting rights apply as provided by Kentucky
Revised Statutes 271B.7-280. Each shareholder shall have the right to cast as
many votes in the aggregate as he is entitled to vote, multiplied by the number
of Directors to be elected, and may cast the whole number for one candidate or
distribute such votes among two or more candidates. Investors Heritage Life
Insurance Company ("IHLIC"), 200 Capital Avenue, Frankfort, Kentucky 40601 holds
directly 216,399 shares or 19% of the stock of the Company. Investors
Underwriters, Inc. ("IUI"), 200 Capital Avenue, Frankfort, Kentucky 40601 owns
94,185 shares or 8% of the stock of the Company. IHLIC owns 603 shares or 96%
of the stock of Investors Underwriters, Inc. HLW Investment Corp., 200 Capital
Avenue, Frankfort, Kentucky 40601 owns 130,824 shares or 11% of the Company. No
other person is known by the Company to own of record, or beneficially, more
than 5% of the Company's capital stock except as shown on the table below. The
Board of Directors has fixed March 26, 1999, as the record date for determining
those eligible to vote, and only such persons as are shareholders of record at
the close of business on that day will be entitled to vote at such meeting, and
at any adjournment thereof.
THE PURPOSE OF THE MEETING SHALL BE:
(1) To elect three Directors to hold office for a term of three years each
or until their successors are duly elected and qualified; and
(2) To transact such other business as may properly come before the
meeting, or any adjournment thereof.
ELECTION OF DIRECTORS
The Articles of Incorporation provide that three Directors shall be elected
at each annual meeting for a term of three years.
The persons named in the proxy shall vote the shares represented by the
proxies returned and duly executed in favor of the election of the three
Directors named below, unless the authority is withheld, to hold office for
terms of three years each or until their successors are duly elected and
qualified. All nominees have consented to serve. In the event any of the
persons named below shall not be available, proxies will be voted for such
substitute nominee, or nominees, as the persons named in the proxy shall
designate.
The following information is given with respect to the nominees for
election as Directors and for each of the other Directors whose terms will
continue after the meeting except as noted. Each Director was elected to his
present term of office by vote of the shareholders at an annual meeting. Each
of the Directors has had the business experience indicated for more than five
years except for Gordon Duke. In 1992 Mr. Duke became President of Court Key,
Inc. In February 1994 Mr. Duke became Executive Vice President, Asset
Management Division for Webb Companies, Lexington, Kentucky. On March 8, 1999
Mr. Duke was employed by the Commonwealth of Kentucky, Department of Financial
Incentives, Cabinet for Economic Development.
Number of Shares of Capital Stock of the Company and Its Subsidiaries
Beneficially Owned, Directly or Indirectly, by Nominees and Other Directors as
of December 31, 1998
Name, Position Kentucky IHLIC Percentage
With the Company Director Investors, (74% Owned of Stock
& Business Experience Since Inc. (1) Subsidiary) Owned
===========================================================================
NOMINEES:
+Gordon Duke 1991 110 55 (-)
Director. Commonwealth of
Kentucky, Department of
Financial Incentives, Cabinet
for Economic Development.
Companies. Age 53.
*+Robert M. Hardy, Jr. 1988 14,285(2) 29(3) 1%
aDirector & General Counsel. Director,
Vice President, General Counsel,
IHLIC. Age 41.
*+Harry Lee Waterfield II 1963 776,680(4) 755,379(5) 67%
aChairman of the Board & (6)(7) (8)(9)
President. Chairman (10)(11) (12)(13)
of the Board, President & (14)(15) (16)
Chief Executive (17)(18) (19)(20)
Officer, IHLIC. Age 55.
Other Directors Whose Terms Will Continue After Meeting:
+H. Glenn Doran 1963 20,000 78 2%
*Director. Chairman of the Board, Peoples
Bank of Murray. Director, IHLIC. Age 73.
aJerry F. Howell 1963 6,000 567 (-)
Director. Independent Investor. (21) (22)
Director, IHLIC. Age 84.
*Dr. Jerry F. Howell, Jr. 1983 33,500 1,124 3%
Director. Professor Emeritus,
Dept. of Biological and
Environmental Sciences,
Morehead State University.
Director, IHLIC. Age 57.
aDavid W. Reed 1982 25,950 1,214 2%
Director. Independent Businessman. Age 44.
Helen S. Wagner 1986 30,000(23) 2,500(24) 3%
Director. Real Estate Broker, Secretary/
Treasurer, Wagner-Shuck Builders,
Inc. Director, IHLIC. Age 62.
All Directors and Officers as a Group: 932,566
*Member of Executive Committee aMember of Nominating Committee
+Member of Finance Committee (-)Indicates less than 1%
- - ------------------------------------------------------------------------------
(1) At December 31, 1998, 848,116 shares were outstanding and entitled to vote.
(2) Includes 6,087 shares of KII held in Trust by Farmers Bank and Capital Trust
Company, Frankfort, Kentucky ("Farmers Bank") under Kentucky Investors, Inc. and
Affiliated companies 401(k) Savings Plan and Trust Agreement ("401(k) Plan").
(3) Includes 18 shares of IHLIC held in trust by Farmers Bank under the 401(k)
Plan.
(4) Mr. Waterfield II is part of a group which includes HLW Investment Corp.,
HLW Corporation, RoseGayle Waterfield Hardy, Nancy Waterfield Walton, Harry Lee
Waterfield II Irrevocable Trust Funds 1, 2, 3 and 4, RoseGayle Waterfield Hardy,
Nancy Waterfield Walton and Harry Lee Waterfield II Trust dated 12/22/76, IHLIC,
IUI, TAP & CO. and KII Employee Retirement Plan.
(5) Includes 7,900 shares of IHLIC owned by HLW Investment Corp. of which Mr.
Waterfield II is an officer.
(6) Includes 130,824 shares of KII owned by HLW Investment Corp. of which Mr.
Waterfield II is an officer.
(7) Includes 41,836 shares of KII owned by HLW Corporation of which Mr.
Waterfield II is an officer.
(8) Includes 642 shares of IHLIC owned by HLW Corporation of which Mr.
Waterfield II is an officer.
(9) Includes 3,038 shares of IHLIC held in the name of CEDE & Co., nominee for
the four separate Irrevocable Trusts for Harry Lee Waterfield II, RoseGayle
Waterfield Hardy and Nancy Waterfield Walton.
(10) Includes 15,222 shares of KII held in trust for the benefit of the
children of Harry Lee Waterfield.
(11) Includes 16,627 shares of KII held in Trust by Farmers Bank under the
401(k) Plan.
(12) Includes 200 shares of IHLIC held by Nancy Waterfield Walton - see Footnote
(4).
(13) Includes 241 shares of IHLIC held by RoseGayle Waterfield Hardy - see
Footnote (4).
(14) Includes 12,063 shares of KII held by Nancy Waterfield Walton - see
Footnote (4).
(15) Includes 9,502 shares of KII held by RoseGayle Waterfield Hardy - see
Footnote (4).
(16) Includes 70,272 or 7% of the shares of IHLIC held in the name of TAP & CO.
for the benefit of employees who participate in the 401(k) Plan. Mr. Waterfield
II is a member of the Administrative Committee, which directs the voting of
these shares.
(17) Includes 216,399 shares of KII held by IHLIC and 94,185 shares of KII held
by IUI. Mr. Waterfield II is Chairman of both companies. The corporations have
the power to dispose of these shares.
(18) Includes 155,756 or 18% of the shares of KII, held in the name of TAP & CO
for the benefit of employees who participate in the 401(k) Plan. Mr. Waterfield
II is a member of the Administrative Committee, which directs the voting of
these shares.
(19) Includes 32,559 shares of KII held in the name of CEDE & Co., nominee for
the twelve separate Irrevocable Trusts, three each (Funds 1, 2, 3 and 4) for
Harry Lee Waterfield II, RoseGayle Waterfield Hardy and Nancy Waterfield Walton,
respectively.
(20) Includes 31,000 shares of KII owned by the Kentucky Investors, Inc.,
Employee Retirement Plan of which Mr. Waterfield II is a member of the
Retirement Plan Committee.
(21) Held under Jerry F. Howell, Sr. revocable living trust agreement dated 3-7-
96.
(22) Held under Jerry F. Howell, Sr. revocable living trust agreement dated 3-7-
96.
(23) Includes 11,397 shares of KII held in an irrevocable trust for the benefit
of the children of Helen S. Wagner.
(24) Includes 1,538 shares of IHLIC held in an irrevocable trust for the benefit
of the children of Helen S. Wagner.
Meetings of the Board of Directors are held on call and there is an
organizational meeting following the annual meeting of shareholders. The Board
had 8 meetings in 1998.
The Board has an Executive Committee that exercises the power of the Board
of Directors in management of the business affairs during intervals between
meetings of the Board. The Board considers the action of the Executive
Committee and has approval and veto power over its actions. The Executive
Committee met 3 times in 1998.
The Board of Directors has provided for a Finance Committee that meets on
call and reviews and makes recommendations concerning investments to the Board
of Directors. The Finance Committee met six times in 1998.
The Board of Directors has provided for a Nominating Committee that meets
on call and submits recommendations to the Board of Directors for members of the
Board to be submitted to the shareholders for election. The Nominating
Committee met one time in 1998.
No one except David Reed attended fewer than 75% of the aggregate of the
total number of Board and Committee meetings. The Directors were paid $100 for
each Board Meeting.
SHAREHOLDER PROPOSALS FOR THE 2000 MEETING
Shareholders who wish to suggest nominees or offer proposals intended to be
presented at the 2000 annual meeting must forward this information to the
Secretary of the Company no later than December 17, 1999.
COMPENSATION OF EXECUTIVE OFFICERS PAID BY THE CORPORATION AND ITS SUBSIDIARIES
The Company does not pay any of its executive officers a regular salary;
therefore, the Company does not have a Compensation Committee. The expense of
the retirement plan to Kentucky Investors, Inc., for its executive officers is
none. Seven executive officers of the Company, who also serve as Directors
and/or officers of IHLIC were compensated by IHLIC. The following SUMMARY
COMPENSATION TABLE sets forth each executive officer of the Company whose
aggregate direct compensation received from IHLIC exceeded $100,000.
NAME AND PRINCIPAL
POSITION YEAR SALARY($) BONUS
- - ---------------------------------------------------------------
Harry Lee Waterfield II 1998 $163,780(1) $20,597
President, Chairman of 1997 $158,684(1) $20,177
the Board, & 1996 $153,293(1) $18,686
Chief Executive Officer
Howard L. Graham 1998 $121,460(1) $10,542
Vice President - 1997 $117,694(2) $10,181
Corporate Services 1996 $113,064(2) $ 9,825
Robert M. Hardy, Jr. 1998 $ 92,398(1) $10,414
Vice President, General
Counsel & Director
(1) Amounts reported consist of director's fees from IHLIC and of contributions
made by IHLIC under the 401(k) Plan. The Plan is available to all employees of
IHLIC.
(2) Amounts reported consist of contributions made by the Company under the
401k) Plan which is available to all employees of the company and contributions
made by the Company to the Company's Deferred Compensation Plan whish is
available to eligible executive officers of the Company.
STOCK PERFORMANCE GRAPH
The following graph sets forth the cumulative total shareholder return
(assuming reinvestment of dividends) to the Company's shareholders during the
five year period ended December 31, 1998, as well as an overall stock market
index (Russell 2000) and the Company's peer group index selected on an industry
basis. The component companies utilized in the peer group include The Liberty
Corp., Realiastar Financial Corp., Provident Companies, Inc., Torchmark Corp.,
UNUM Corp., and Washington National Corp. The peer group utilized this year is
identical to last year's peer group with the exception of Washington National
Corp. This company was deleted due to the fact that it was acquired by or
merged with another company and historical returns are not maintained on
companies that have been acquired or merged. Therefore, no financial data was
available. The market capitalization of the peer group company is weighted in
the performance graph presented on the next page.
Comparison of Five-Year Cumulative Total Return*
Kentucky Investors, Inc., Russell 2000 Index, Peer Group
(Performance results through 12/31/98
The Performance Graph Appears Here.
1993 1994 1995 1996 1997 1998
KINV $100.00 $102.96 $108.21 $113.45 $146.23 $165.39
RUSSELL 2000 $100.00 $ 98.02 $125.89 $146.59 $179.13 $174.23
PEER GROUP $100.00 $ 79.58 $116.29 $149.58 $232.93 $240.56
Assumes $100.00 invested at the close of trading 12/93 in Investors Heritage
Life Insurance Company common stock, Russell 2000 Index, and Peer Group.
* Cumulative total return assumes reinvestment of dividends.
Source: Value Line, Inc.
Factual material is obtained from sources believed to be reliable, but the
publisher is not responsible for any errors or omissions contained herein.
AUDITORS
Ernst & Young, LLP, Louisville, Kentucky, is the independent auditing firm
for the Company and has been since 1981, including the most recent year of 1998.
A representative is expected to be present at the shareholders' meeting with the
opportunity to make a statement and will respond to appropriate questions. The
services provided by Ernst & Young, LLP during 1998 consisted of the audit of
the Company's financial statements and audit of the Company's employee benefit
plans. No member of the firm of Ernst & Young, LLP has any relationship with
the Company other than the usual relationship that exists between independent
auditors and clients.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
There were no other transactions to which the Company was or is to be a
party, in which any officer or Director or nominee for election as Director had
any direct or indirect material interest.
At the date of this proxy statement, management knows of no other matters
to come before the meeting. However, if any other matter properly comes before
the meeting, it is the intention of the persons named in the proxy statement to
vote on such matters in accordance with their best judgment.
By Order of the Board of Directors
KENTUCKY INVESTORS, INC.
/s/
Wilma Yeary, FLMI/CPS, Secretary
Frankfort, Kentucky
April 16, 1999
_ Proxy_ KENTUCKY INVESTORS, INC. _ Proxy_
200 CAPITAL AVENUE, FRANKFORT, KENTUCKY 40601
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Harry Lee Waterfield II and Jerry F. Howell, or
either of them, attorneys with full power of substitution to vote as proxies for
the undersigned at the annual meeting of shareholders of Kentucky Investors,
Inc. to be held on May 13, 1999, or at any adjournment thereof, and vote as
designated below with all powers the undersigned would possess, if present, upon
matters described in the notice of annual meeting and proxy statement dated
April 16, 1999 as follows:
(1) Election of Directors
- - --------------- FOR all nominees listed below (except as marked to the
contrary below)
- - --------------- WITHHOLD AUTHORITY to vote for all nominees below
INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, STRIKE A
LINE THROUGH THE NOMINEE'S NAME IN THE LIST BELOW:
Gordon Duke Robert M. Hardy, Jr. Harry Lee Waterfield II
(2) On any other matter which may come before the meeting in accordance with
their best judgement.
PLEASE SIGN, DATE AND MAIL PROMPTLY IN THE ENCLOSED ENVELOPE
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ALL PROPOSALS.
To be counted this proxy must be signed, dated and received by the Corporate
Secretary of Kentucky Investors, Inc., 200 Capital Avenue, P. O. Box 717,
Frankfort, Kentucky 40602, on or before May 13, 1999.
This proxy when properly executed will be voted in accordance with instructions
specified but in the absence of any instructions will be voted "FOR".
Please sign exactly as name appears on address. If shares of stock are held
jointly, all joint owners should sign. If signing as attorney, administrator,
executor, guardian, trustee or corporate officer, please add your title as such.
- - --------------------------------------------
Shareholder's signature
Date ______________,1999