SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES EXCHANGE
ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, For Use of the Commission
[X] Definitive Proxy Statement Only (as Permitted by Rule 14a-6(e)(2))
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
Franklin Life Variable Annuity Fund A
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(Name of Registrant as Specified in Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the form or schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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FRANKLIN LIFE VARIABLE ANNUITY FUND A
NOTICE OF ANNUAL MEETING
OF
CONTRACT OWNERS
To the Contract Owners:
PLEASE READ THE SPECIAL NOTICE AT THE BOTTOM OF THIS PAGE.
Notice is hereby given that the annual meeting of the Contract Owners of
Franklin Life Variable Annuity Fund A (the "Fund") will be held at the home
office of The Franklin Life Insurance Company ("The Franklin"), #1 Franklin
Square, Springfield, Illinois 62713, at 11:00 a.m., Springfield time, on April
21, 1997, for the purpose of considering and acting upon the following matters:
(1) To elect four members of the Board of Managers of the Fund to serve
until the next annual meeting and until their successors are elected
and qualified;
(2) To ratify the selection of Ernst & Young LLP as the Fund's independent
auditors for the ensuing fiscal year; and
(3) To transact any other matters that may properly come before the
meeting or any adjournment thereof.
Contract Owners of record at the close of business on February 21, 1997
shall be eligible to vote at the meeting or any adjournment thereof. Contract
Owners who do not expect to attend the meeting in person are requested to fill
in and sign the accompanying proxy, which is solicited by the Board of Managers
of the Fund, and to return it to the Fund immediately in the envelope provided
for that purpose. The return of the proxy will not restrict or impair a
Contract Owner's right to revoke it or to attend and vote personally at the
meeting.
SPECIAL NOTICE: In the past, the Fund has experienced difficulty in
obtaining the quorum of votes necessary to conduct business at its
annual meetings. The Board of Managers of the Fund therefore URGENTLY
REQUESTS CONTRACT OWNERS TO SIGN AND RETURN THE ACCOMPANYING PROXY SO
THAT THE NECESSARY QUORUM WILL BE OBTAINED.
By Order of the Board of Managers
Elizabeth E. Arthur, Secretary
Dated: March 17, 1997
FRANKLIN LIFE VARIABLE ANNUITY FUND A
c/o The Franklin Life Insurance Company
#1 Franklin Square
Springfield, Illinois 62713
PROXY STATEMENT
ANNUAL MEETING OF CONTRACT OWNERS
APRIL 21, 1997
This Proxy Statement is submitted to the Contract Owners of Franklin
Life Variable Annuity Fund A (the "Fund") in connection with the solicitation
by the Fund's Board of Managers of their proxies in the form enclosed for the
annual meeting of the Contract Owners to be held at the home office of The
Franklin Life Insurance Company ("The Franklin") #1 Franklin Square,
Springfield, Illinois 62713, at 11:00 a.m., April 21, 1997, and any
adjournments thereof.
Each Contract Owner receiving this Proxy Statement has previously been sent
a copy of the Fund's annual report for the year ended December 31, 1996. The
Fund will furnish, without charge, a copy of the Fund's annual report for the
year ended December 31, 1996 to any Contract Owner upon request. Annual reports
may be requested from The Franklin, Attention: Box 726, #1 Franklin Square,
Springfield, Illinois 62713, or Contract Owners may call (800) 528-2011,
extension 2550. Such report does not constitute any portion of the proxy
soliciting materials.
This Proxy Statement is first being sent to Contract Owners on or about
March 17, 1997.
Any Contract Owner submitting a proxy pursuant to this Proxy Statement may
revoke that proxy at any time prior to the meeting by filing with the Secretary
of the Fund either a duly executed written statement to that effect or a duly
executed proxy bearing a later date. In addition, any such proxy may be revoked
by a Contract Owner by personally attending the meeting and casting his votes in
person. Unless so revoked or unless otherwise directed, the persons designated
in the proxy (the "proxy committee") intend to cast all votes represented by all
the proxies submitted pursuant to this Proxy Statement in favor of the nominees
listed herein for election as members of the Board of Managers, for the
ratification of the selection of Ernst & Young LLP as independent auditors for
the Fund and in the discretion of the proxy committee upon such other matters as
may properly come before the meeting.
VOTING PROCEDURES
As used in this Proxy Statement, the term "Contract" means any variable
annuity contract, that depends in whole or in part on the investment performance
of the Fund. Except in cases where the Contract is issued to a trustee of a
qualified employees' trust or pursuant to a qualified annuity plan, the Contract
Owner is the individual variable annuitant to whom a Contract is issued. In
cases where a Contract is issued to a trustee of a qualified employees' trust,
or pursuant to a qualified annuity plan, the Contract Owner will be respectively
the trustee or the employer establishing such trust or plan.
SPECIAL NOTICE: In the past, the Fund has experienced difficulty
in obtaining the quorum of votes necessary to conduct business at its
annual meetings. The Board of Managers of the Fund therefore URGENTLY
REQUESTS YOU TO SIGN AND RETURN THE ACCOMPANYING PROXY SO THAT THE
NECESSARY QUORUM WILL BE OBTAINED.
Only Contract Owners of record at the close of business on February 21,
1997 shall be eligible to vote at the meeting. As of that date, there were an
aggregate of 137,185.990 votes entitled to be cast by Contract Owners. As of
that date, there was no person entitled to cast as much as 5% of the total
voting power of the Fund.
At the meeting, a quorum will exist if there is represented, either in
person or by proxy, 35% of all votes available to Contract Owners as of the
record date. The election of members of the Board of Managers and the
ratification of the
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selection of Ernst & Young LLP will require a majority vote of the votes
available to the Contract Owners present or represented at the meeting, assuming
the presence of a quorum. Abstentions and withholding authority to vote will be
counted as votes present or represented at the meeting but will not be counted
as votes for ratification of the selection of Ernst & Young LLP or for the
election of any member.
The number of votes which a Contract Owner may cast as to any Contract,
prior to the commencement of variable annuity payments measured by annuity
units, is equal to the number of accumulation units credited to such Contract.
After commencement of such payments, a Contract Owner may cast a number of votes
equal to (i) the amount of the assets in the Fund to meet the variable annuity
obligations related to such Contract, divided by (ii) the value of an
accumulation unit. Fractional votes will be counted.
An employee covered by a so-called "H.R. 10" plan, if not the Contract
Owner, will have the right to instruct the Contract Owner with respect to all
votes attributable to his Contract. An employee covered by a Contract issued in
connection with a pension or profit-sharing plan described in Section 401 of the
Internal Revenue Code will have the right to instruct the Contract Owner with
respect to votes attributable to his payments to the plan, if any, and, to the
extent authorized by the terms of the plan, with respect to any additional votes
under the Contract. If during the annuity period, payments are being made under
an annuity to a person who is not a Contract Owner, that person will have the
right to instruct the Contract Owner with respect to votes attributable to the
amount of the assets in the Fund to meet the variable annuity obligations
related to his Contract.
Each Contract Owner is required to send copies of this Proxy Statement to
each person who is entitled to instruct the Contract Owner as to the manner in
which its votes are to be cast, and each Contract Owner is further required to
cast its votes in accordance with any such instructions which it receives. The
Fund will furnish each Contract Owner with such additional copies of this Proxy
Statement as it may reasonably request for the purpose of furnishing those
copies to persons entitled to instruct it as to the casting of its votes. If
employees, variable annuitants or other persons to whom payments are being made
are entitled to instruct the Contract Owner, and by April 14, 1997, it has
received instructions from some but not all of those persons, the Contract Owner
may cast the votes as to which it has received no instructions for or against
each proposal to be voted on in the same proportion as votes for which
instructions have been received. If no one is entitled to instruct the Contract
Owner, or if the Contract Owner receives no instructions, all votes which the
Contract Owner is entitled to cast may be cast at its sole discretion.
Neither the Fund nor The Franklin has any duty to inquire as to the
instructions received or the authority of the Contract Owner to cast such votes;
and, except to the extent that the Fund or The Franklin has actual knowledge to
the contrary, the votes cast by Contract Owners will be considered valid and
effective as between the Fund, The Franklin and other persons having voting
rights with respect to the Fund.
ITEM 1: ELECTION OF THE BOARD OF MANAGERS OF THE FUND
Four members of the Board of Managers are to be elected to serve until the
next annual meeting of Contract Owners and until the election and qualification
of their successors. The proxy committee intends to vote all proxies submitted
pursuant to this Proxy Statement for the election of the nominees named below,
except those nominees as to which authority to vote is withheld by the person
executing the proxy. If any of the nominees shall be unable to serve, the votes
represented by the proxies submitted pursuant to this Proxy Statement will be
cast in the discretion of the proxy committee for such substitute nominee or
nominees as shall be designated by the current Board of Managers.
Dr. Robert C. Spencer has served on the Board of Managers of the Fund since
its organization in 1969. Mr. Voth has served since 1981. Mr. Greenwalt and
Mr. Robert G. Spencer have served since April of 1995. Dr. Robert C. Spencer
and Mr. Robert G. Spencer are not related. All of the nominees were elected by
the Contract Owners at their annual meeting in 1996.
None of the nominees named below was a Contract Owner as of March 17, 1997.
The Board of Managers does not have a nominating, compensation or audit
committee or any other committee serving a similar function.
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The following table sets forth the names of the nominees, their ages, the
positions now held by them with the Fund, the positions held by them with The
Franklin and with Franklin Financial Services Corporation ("Franklin
Financial"), the principal underwriter for the Contracts, their principal
occupations during the past five years and certain directorships held by them.
Where no commencement date for an individual's principal occupation is indicated
in the following table, that individual has been engaged in the stated principal
occupation for at least the past five years. Each of the nominees has consented
to be named as such in this Proxy Statement and to serve on the Board of
Managers if elected.
NOMINEE AGE POSITION WITH PRINCIPAL OCCUPATIONS DURING PAST 5 YEARS
THE FUND
Robert G. Spencer* 59 Chairman, Board Officer of The Franklin; currently Vice President of The
of Managers Franklin. Prior to 1996, Mr. Robert G. Spencer also served
as Treasurer of The Franklin and Treasurer and Assistant
Secretary of Franklin Financial.
Dr. Robert C. Spencer 76 Member, Board of Visiting Professor of Government, Montana State University,
Managers since 1992; Professor of Government and Public Affairs,
Sangamon State University prior thereto.
James W. Voth 66 Member, Board of Chairman, Resource International Corp., South Bend, Indiana
Managers (marketing, manufacturing and engineering services to
industry); prior to 1993, also President of Resource
International Corp.
Clifford L. Greenwalt 64 Member, Board of Director, President and Chief Executive Officer, CIPSCO
Managers Incorporated (utility holding company); Director, President
and Chief Executive Officer, Central Illinois Public Service
Company, Springfield, Illinois (a subsidiary of CIPSCO
Incorporated); Director, Electric Energy, Inc., Joppa,
Illinois; Director, First of America Bank, Kalamazoo,
Michigan; Director, First of America Bank - Illinois, N.A.
(a subsidiary of First of America Bank).
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*Denotes the nominees who are "interested persons" (as defined in the
Investment Company Act of 1940 (the "1940 Act")) of the Fund, The Franklin or
Franklin Financial by reason of the current positions held by them as set forth
in the above table.
During 1996, there were four meetings of the Board of Managers of the Fund.
The nominees named above also serve as members of the Board of Managers of
Franklin Life Variable Annuity Fund B ("Fund B"), a separate account of The
Franklin having similar investment objectives as the Fund but the assets of
which are held with respect to variable annuity contracts not accorded special
tax treatment, and of Franklin Life Money Market Variable Annuity Fund C ("Fund
C"), a separate account of The Franklin having investments in money market
securities.
Elizabeth E. Arthur is the Secretary to the Board of Managers of the Fund
and has served since 1996. She has been a Vice President, Associate General
Counsel and Assistant Secretary of The Franklin since 1986. She also serves as
Secretary to the Board of Managers of Fund B and Fund C. Ms. Arthur is 42
years old.
The following table sets forth a summary of compensation paid for services
to the Fund and certain other entities that are deemed to be part of the same
"fund complex" in accordance with the proxy rules of the Securities and Exchange
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Commission (the "Commission") to all members of the Board of Managers for the
year ended December 31, 1996. Pursuant to the terms of its agreement to assume
certain of the Fund's administrative expenses, The Franklin pays all
compensation received by the members of the Board of Managers and the officers
of the Fund. Members of the Board of Managers or officers of the Fund who are
also officers, directors or employees of The Franklin do not receive any
remuneration for their services as members of the Board of Managers or officers
of the Fund. Other members of the Board of Managers received a fee of $1,400
for the year and, thus, the aggregate direct remuneration of all such members of
the Board of Managers was $4,200 during 1996. It is currently anticipated that
the annual aggregate remuneration of such members of the Board of Managers to be
paid during 1997 will not exceed $4,200.
Total Compensation
Relating to Fund and Fund
Name of Person, Aggregate Compensation Complex Paid to
Position Relating to Fund Each Member
Each member of the
Board of Managers (except
Robert G. Spencer) $1,400(1) $4,200 (1)(2)
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(1) Paid by The Franklin pursuant to an agreement to assume certain Fund
administrative expenses.
(2) Includes amounts paid by The Franklin to members of the Boards of Managers
of Fund B and Fund C who are not officers, directors or employees of The
Franklin for service on such Boards of Managers.
THE BOARD OF MANAGERS RECOMMENDS THAT CONTRACT OWNERS VOTE FOR THE ELECTION
OF MESSRS. GREENWALT, ROBERT G. SPENCER AND VOTH AND DR. ROBERT C. SPENCER.
ITEM 2: RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
Subject to ratification by the Contract Owners, the Board of Managers has
selected the firm of Ernst & Young LLP as the independent auditors for the Fund
to serve for the ensuing year. That firm also serves as the independent
auditors for The Franklin and its parents and subsidiaries, for Fund B and Fund
C, described above, and for three separate accounts of The American Franklin
Life Insurance Company, a wholly-owned subsidiary of The Franklin. Ernst &
Young LLP has no direct or indirect interest in the Fund or in The Franklin or
its subsidiaries.
On February 22, 1995, the Fund terminated the engagement of Coopers &
Lybrand L.L.P. as the independent accountants for the Fund for periods beginning
on or after January 1, 1995. On February 22, 1995, Ernst & Young LLP was
selected to audit the financial statements of The Franklin and the Board of
Managers decided to retain Ernst & Young LLP as a matter of efficiency for the
fiscal year ended December 31, 1995. The selection of Ernst & Young LLP as
independent auditors of the Fund was ratified by the Contract Owners at their
annual meeting in 1995.
During the audit of the Fund's financial statements for the year ended
December 31, 1994, there was no disagreement between the Fund and Coopers &
Lybrand L.L.P. on any matter of accounting principles or practices, financial
statement disclosure or auditing scope or procedure which disagreement, if not
resolved to the satisfaction of Coopers & Lybrand L.L.P., would have caused
Coopers & Lybrand L.L.P. to make reference in connection with its report to the
subject matter of the disagreement.
The report of Coopers & Lybrand L.L.P. on the financial statements of the
Fund for the year ended December 31, 1994 did not contain an adverse opinion or
a disclaimer of opinion nor was such report qualified as to uncertainty, audit
scope or accounting principles.
It is not contemplated that a representative of Ernst & Young LLP will be
present at the annual meeting of Contract Owners.
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THE BOARD OF MANAGERS RECOMMENDS THAT CONTRACT OWNERS VOTE FOR THE
RATIFICATION OF ERNST & YOUNG LLP AS THE FUND'S INDEPENDENT AUDITORS.
INFORMATION CONCERNING THE FRANKLIN
The Franklin acts as investment manager to the Fund pursuant to an
Investment Management Agreement between the Fund and The Franklin executed on
January 31, 1995. That agreement was approved by the Contract Owners of the
Fund at the annual meeting of the Fund held April 17, 1995, having been
submitted for approval in accordance with the 1940 Act as a result of the
termination, by its terms and by operation of law, of a prior Investment
Management Agreement upon the transfer to American General Corporation
("American General") of all of the issued and outstanding shares of common stock
of The Franklin. This agreement was continued to January 31, 1998 by the Board
of Managers at its meeting on January 20, 1997.
The Franklin is a wholly-owned subsidiary of AGC Life Insurance Company,
which in turn is a wholly-owned subsidiary of American General. The address of
AGC Life Insurance Company is The American General Center, Nashville, Tennessee
37250. The address of American General is 2929 Allen Parkway, Houston, Texas
77019. American General has advised the Fund that there was no person who was
known to it to be the beneficial owner of 10% or more of the voting power of
American General as of January 29, 1997.
PRINCIPAL UNDERWRITER FOR THE CONTRACTS
Franklin Financial serves as the "principal underwriter" (as that term is
defined in the 1940 Act) for the Contracts, pursuant to a Sales Agreement with
the Fund. Franklin Financial is a wholly-owned subsidiary of The Franklin, and
all of Franklin Financial's directors and a majority of its executive officers
are also directors or officers of The Franklin. The address of Franklin
Financial is #1 Franklin Square, Springfield, Illinois 62713.
In the case of periodic stipulated payment variable annuity contracts, a
deduction equal to 6% of each periodic payment, and in the case of single
stipulated payment variable annuity contracts, a deduction equal to 5% of the
single payment, is made for sales expenses. During 1996, the amounts received
by Franklin Financial under the Fund's Sales Agreement in respect of these
deductions aggregated $14,574.97.
In the case of periodic stipulated payment variable annuity contracts, a
deduction equal to 3% of each periodic payment, and in the case of single
stipulated payment variable annuity contracts, a deduction equal to 4% (with a
maximum of $100) of the single payment, is made for administrative expenses.
During 1996, these deductions aggregated $8,566.
PROPOSALS BY CONTRACT OWNERS
Proposals by Contract Owners intended to be presented at the next annual
meeting of Contract Owners to be held in 1998 must be received by the Secretary
to the Board of Managers of the Fund at the home office of The Franklin, #1
Franklin Square, Springfield, Illinois 62713 on or before November 17, 1997, in
order to be included in the proxy statement and form of proxy relating to such
meeting. Contract Owners intending to present any such proposal should refer to
the requirements of Rule 14a-8 under the Securities Exchange Act of 1934.
GENERAL
The Board of Managers is not aware of any matter which is to be presented
for action at the meeting except the matters set forth herein. Should any other
matter be presented for action at the meeting, the enclosed proxy confers upon
the proxy committee authority to cast the votes represented by that proxy in
accordance with its best judgment in the interest of the Fund.
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The accompanying proxy is solicited by and on behalf of the Board of
Managers of the Fund. Solicitation of proxies will be made by the use of the
mails, except that officers and regular employees of The Franklin may make
solicitations of proxies by telephone or telegram and by personal calls. The
entire cost of such solicitation is to be borne by The Franklin pursuant to its
agreement to bear the administrative expenses of the Fund.
By Order of the Board of Managers
Elizabeth E. Arthur, Secretary
Dated: March 17, 1997
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APPENDIX
PROXY OF CONTRACT OWNER OF
FRANKLIN LIFE VARIABLE ANNUITY FUND A
PROXY SOLICITED BY BOARD OF MANAGERS
The undersigned Contract Owner of Franklin Life Variable Annuity Fund A
(the "Fund"), having received Notice of the Annual Meeting of Contract Owners of
the Fund and the Proxy Statement accompanying such notice, each dated March 17,
1997, hereby constitutes and appoints Robert G. Spencer and Elizabeth E. Arthur,
and each of them, true and lawful attorneys or attorney of the undersigned, with
power of substitution, to attend and to cast all votes entitled to be cast by
the undersigned, for and in the name, place and stead of the undersigned, at the
annual meeting of Contract Owners of the Fund to be held at the home office of
The Franklin Life Insurance Company, #1 Franklin Square, Springfield, Illinois,
on April 21, 1997, at 11:00 a.m., and at any and all adjournments thereof, with
all powers the undersigned would possess if personally present.
The undersigned hereby revokes any and all proxies with respect to all
votes entitled to be cast by the undersigned previously given by the
undersigned. The proxies will vote in the manner directed herein. The Board of
Managers of the Fund recommends that this proxy be marked FOR the election of
all the nominees listed below, and FOR ratification of the selection of Ernst &
Young LLP as the independent auditors for the Fund. IF NO CONTRARY INDICATION
IS MADE, THE PROXIES WILL VOTE PURSUANT TO THE RECOMMENDATION OF THE BOARD OF
MANAGERS. This proxy may be revoked (i) at any time prior to the annual meeting
by executing a subsequent proxy or by notifying the Secretary of the Fund in
writing, or (ii) by voting in person at the meeting.
(A) Election of the Board of Managers of the Fund for the ensuing year:
/ / for all nominees listed below / / authority withheld to vote
(except as indicated in the for all nominees listed below
space below)
Clifford L. Greenwalt; Dr. Robert C. Spencer; Robert G. Spencer;
James W. Voth
(Instruction: To withhold authority to vote for any individual
nominee, write that nominee's name in the space provided below.)
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(B) Ratification of the selection of Ernst & Young LLP as the independent
auditors for the Fund for the ensuing year:
/ / for / / against / / abstain
(C) In the discretion of the proxies, upon such other matters as may
properly come before the meeting or any adjournment thereof.
Dated: , 1997
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Signature of Contract Owner