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SCHEDULE 14A
(Rule(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to SectionPROXY STATEMENT PURSUANT TO SECTION 14(a) of the Securities
Exchange Act ofOF THE SECURITIES
EXCHANGE ACT OF 1934 (Amendment No.(AMENDMENT NO. )
Filed by the registrantRegistrant [X]
Filed by a partyParty other than the registrantRegistrant [ ]
Check the appropriate box:
[X] Preliminary proxy statementProxy Statement [ ] Confidential, for useUse of the
Commission onlyOnly (as
permitted by [ ] Definitive proxy statement Rule 14a-6(e)14a-
6(e)(2))
[ ] Definitive additional materialsProxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting material pursuantMaterial Pursuant to Rule 14a-11(c) or Rule 14a-12
Reinsurance Group of America, Incorporated
------------------------------------------------REINSURANCE GROUP OF AMERICA, INCORPORATED
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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 Thanother than the Registrant)
Payment of filing fee (checkFiling 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) Dated Filed:
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Reinsurance
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[RGA logo]LOGO] Group of America,
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Incorporated(SM)
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NOTICE OF THE ANNUAL MEETING OF
THE STOCKHOLDERSSHAREHOLDERS OF
REINSURANCE GROUP OF AMERICA, INCORPORATED
St. Louis, Missouri
April 27, 199823, 1999
TO THE STOCKHOLDERSSHAREHOLDERS OF
REINSURANCE GROUP OF AMERICA, INCORPORATED
The Annual Meeting of the StockholdersShareholders of Reinsurance Group of
America, Incorporated will be held at the Ritz-CarltonMarriott West Hotel, 100 Carondelet Plaza,660
Maryville Centre Drive, St. Louis, Missouri on May 27, 1998,26, 1999, commencing
at 2:00 p.m., at which Meetingmeeting only holders of record of the Company's
Voting Common Stock at the close of business on March 31, 1998April 15, 1999 will be
entitled to vote, for the following purposes:
1. Toto elect three directors;
2. To consider and vote upon an amendment to authorize the Company's
Restated Articlessale of Incorporation to increase the number
of authorized shares ofVoting Common Stock or Non-
voting Common Stock from fifty milliontime to seventy-five million;time to GenAmerica
Corporation, a significant shareholder of the Company,
or its affiliates; and
3. To consider and vote upon an amendment to the Company's
Restated Articles of Incorporation to authorize twenty
million shares of Non-Voting Common Stock; and
4. To transact such other and further business, if any,
as properly may be brought before the meeting.
REINSURANCE GROUP OF AMERICA,
INCORPORATED
By /s/ Richard A. Liddy
Chairman of the Board
/s/ Matthew P. McCauleyJames E. Sherman
Secretary
Even though you may plan to attend the Meeting in person, please mark,
date, and execute the enclosed proxy and mail it promptly.EVEN THOUGH YOU MAY PLAN TO ATTEND THE MEETING IN PERSON, PLEASE
MARK, DATE, AND EXECUTE THE ENCLOSED PROXY AND MAIL IT PROMPTLY. A
postage-paid
return envelope is enclosed for your convenience.POSTAGE-PAID RETURN ENVELOPE IS ENCLOSED FOR YOUR CONVENIENCE.
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Reinsurance
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[RGA logo]LOGO] Group of America,
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Incorporated(SM)
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REINSURANCE GROUP OF AMERICA, INCORPORATED
660 Mason Ridge Center Drive, St. Louis, MissouriMASON RIDGE DRIVE, ST. LOUIS, MISSOURI 63141
PROXY STATEMENT
FOR THE
ANNUAL MEETING OF THE STOCKHOLDERSSHAREHOLDERS
TO BE HELD MAY 27, 1998
RITZ-CARLTON26, 1999
MARRIOTT WEST HOTEL, ST. LOUIS, MISSOURI
This proxy statement is furnished to the holders of Voting and
Non-voting Common Stock of Reinsurance Group of America, Incorporated
(the "Company" or "RGA") in connection with the solicitation of proxies
for use in connection with the Annual Meeting of the StockholdersShareholders to be
held May 27, 1998, at 2:00 p.m. at the Ritz-Carlton
Hotel, 100 Carondelet Plaza, St. Louis, Missouri,26, 1999, and all adjournments and postponements thereof, for
the purposes set forth in the accompanying Notice of Annual Meeting of
the Stockholders.Shareholders. Such holders are hereinafter referred to as the
"Shareholders." The Company is first mailing this proxy statement and
the enclosed form of proxy to stockholdersShareholders on or about April 27, 1998.23, 1999.
Whether or not you expect to be present in person at the Annual
Meeting,meeting,
you are requested to complete, sign, date, and return the enclosed form
of proxy. If you attend the Meeting,meeting, you may vote by ballot. If you do
not attend the Meeting,meeting, your shares of Voting Common Stock can be voted
only when represented by a properly executed proxy.
Any person giving such a proxy has the right to revoke it at any
time before it is voted by giving written notice of revocation to the
Secretary of the Company, by duly executing and delivering a proxy
bearing a later date, or by attending the Annual Meeting and voting in
person.
The close of business on March 31, 1998April 15, 1999 has been fixed as the
record date for the determination of stockholdersthe Shareholders entitled to vote
at the Annual Meeting.Meeting of the Shareholders. As of the record date,
25,228,480approximately _____________ shares of Voting Common Stock were
outstanding and entitled to be voted at such Meeting,meeting, with 142approximately
____ holders of record. StockholdersShareholders will be entitled to cast one vote
on each matter for each share of Voting Common Stock held of record on the
record date. As of such date, ____ shares of Non-voting Common Stock
were outstanding; however, holders of such shares are not entitled to
vote at the meeting.
A copy of the Company's Annual Report to Shareholders for the
fiscal year ended December 31, 1998 accompanies this proxy statement.
The solicitation of this proxy is made by the Board of Directors of
the Company. The solicitation will primarily be principally by mail.mail and the expense
thereof will be paid by the Company. In addition, proxies may be solicited
by telephone or telefax by directors, officers, or regular employees of
the Company, who will not receive any additional compensation
for such services. The expenses of this proxy solicitation will be paid by
the Company.
A copy of the Company's Annual Report to Stockholders for the fiscal
year ended December 31, 1997 accompanies this proxy statement.
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ITEM 1 --- ELECTION OF DIRECTORS
The first item to be acted upon at the Annual Meeting is the
election of three directors of the Company for terms expiring at the
Annual Meeting in 2001,2002, or until their respective successors have been
elected and have qualified.
Nominees and Continuing DirectorsNOMINEES AND CONTINUING DIRECTORS
The Board of Directors is divided into three classes, with the
terms of office of each class ending in successive years. Certain
information with respect to the nominees for election as directors
proposed by the Company and the other directors whose terms of office as
directors will continue after the Annual Meeting is set forth below.
Each of the directors has served in his principal occupation for the
last five fiscal years, unless otherwise indicated. Should any one or
more of the nominees be unable or unwilling to serve (which is not
expected), the proxies (except proxies marked to the contrary) will be
voted for such other person or persons as the Board of Directors of the
Company may recommend. All nominees are currently directors of the
Company andCompany. All of the nominees for director have agreed to serve if
elected. The Company recommends a vote FOR the three nominees for
election to the Board.
Served as
Director
Name, Age, Principal Occupation or Position, Other Directorships SinceSERVED AS
DIRECTOR
NAME, AGE, PRINCIPAL OCCUPATION OR POSITION, OTHER DIRECTORSHIPS SINCE
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TO BE ELECTED AS DIRECTORS FOR TERMS ENDING 2002:
J. CLIFF EASON, 51 1993
President-SBC International Operations of SBC Communications, Inc.
since March 1998. Prior to that, he served as President and CEO of
Southwestern Bell Telephone Company since February 1996. Mr. Eason
was President and CEO of Southwestern Bell Communications, Inc.
("SBC") from July 1995 through January 1996; President of Network
Services of Southwestern Bell Telephone Company from July 1993
through June 1995; President of Southwestern Bell Telephone Company
from July 1993 through July 1995; and President of Southwestern Bell
Telephone Company of the Midwest from 1992 to 1993. He held various
other positions with SBC and its subsidiaries prior to 1992,
including President of SBC Communications, Inc. from 1991 to 1992.
Mr. Eason also is a director for Telefonos de Mexico, S.A.
LEONARD M. RUBENSTEIN, 53 1993
Chairman, President and Chief Executive Officer of Conning
Corporation and its subsidiary, Conning Asset Management Company, a
registered investment advisor. Conning Corporation is a majority-
owned subsidiary of General American Life Insurance Company ("General
American"). He served as Executive Vice President - Investments for
General American from 1991 to January 1997 and as Treasurer from 1991
to 1995. From 1984 to 1991, he served as Vice President of General
American. He also is Treasurer of General American Capital Company,
a registered investment company.
H. EDWIN TRUSHEIM, 71 1993
In 1995, Mr. Trusheim retired as Chairman of the Board of General
American Life Insurance Company, where he was Chief Executive Officer
until his retirement in 1992. He served as President of General
American Life Insurance Company from 1979 to 1988 and was elected
Chief Executive Officer in 1981 and Chairman of the Board in 1986. He
is also a director of Angelica Corporation, GenAmerica Corporation,
General American Life Insurance Company, General American Mutual
Holding Company, Laclede Gas Company, and RehabCare Corporation.
TO CONTINUE IN OFFICE UNTIL 2000:
BERNARD A. EDISON, 71 1993
President of Edison Brothers Stores, Inc. ("Edison Brothers") from
1968 through his retirement in 1987. He also served as a director
and Chairman of the Finance Committee of the Board of Directors of
Edison Brothers until 1989, and director emeritus from 1989 through
1996. Mr. Edison also serves as a director of Anheuser-Busch
Companies, Inc., GenAmerica Corporation, General American Life
Insurance Company, and General American Mutual Holding Company.
SERVED AS
DIRECTOR
NAME, AGE, PRINCIPAL OCCUPATION OR POSITION, OTHER DIRECTORSHIPS SINCE
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STUART I. GREENBAUM, 62 1997
Dean of the John M. Olin School of Business at Washington University
since July 1995. Prior to his current position, he spent 20 years at
the Kellogg Graduate School of Management at Northwestern University
where he was Director of the Banking Research Center and Norman
Strunk Distinguished Professor of Financial Institutions. Mr.
Greenbaum has served on the Federal Savings and Loan Advisory Council
and the Illinois Task Force on Financial Services, and has been a
consultant for the American Bankers Association, the Bank
Administration Institute, the Comptroller of the Currency, the
Federal Reserve System, and the Federal Home Loan Bank System, among
others. He is also a director of Stifel Financial Corp., First Oak
Brook Bancshares, Inc., and St. Louis Children's Hospital.
RICHARD A. LIDDY, 63 1993
Chairman of the Board of the Company. Currently he is Chairman,
President and Chief Executive Officer of GenAmerica Corporation,
General American Life Insurance Company; and General American Mutual
Holding Company ("General American Holding"). He also is Chairman of
the Board of General American Capital Company, a registered
investment company, Cova Corporation, Paragon Life Insurance Company,
Security Equity Life Insurance Company, and Security Mutual Life
Insurance Company of New York and a number of other subsidiaries and
affiliates of General American Holding. Mr. Liddy also serves as a
director of Ameren Corporation, Brown Group, Inc., Conning
Corporation, and Ralston Purina Company.
TO CONTINUE IN OFFICE UNTIL 2001:
WilliamWILLIAM A. Peck,PECK, M.D., 6465 1993
Executive Vice Chancellor for Medical Affairs and Dean of the School
of Medicine of Washington University since 1989. From 1976 to 1989,
he was Physician in Chief of The Jewish Hospital of St. Louis. He is
also a director of Allied Health Care Products, Inc., Angelica
Corporation, Hologic, Inc., and Magna Bancorp, Inc.
WilliamWILLIAM P. Stiritz, 63STIRITZ, 64 1993
Chairman, President and Chief Executive Officer President and Chairman of Agribrands
International, Inc., which is in the animal feeds and agricultural products
business, since the company was spun-off from Ralston
Purina Company ("Ralston") on April 1, 1998. He was CEO and
President of Ralston from 1982 until 1997, and held various other
positions with Ralston since 1963. He is Chairman of the Board of
Ralston and Ralcorp Holdings, Inc. and is a director of Angelica
Corporation, Ball Corporation, GenAmerica Corporation, General
American Life Insurance Company, General American Mutual Holding
Company, The May Department Stores Company, and Vail Resorts, Inc.
A. Greig Woodring, 46GREIG WOODRING, 47 1993
President and Chief Executive Officer of the Company. As President
and CEO of the Company, Mr. Woodring is also an executive officer of
General American Life Insurance Company ("General American"). He
has headed General American's reinsurance business since 1986.from 1986 until the
Company's formation in December, 1992. He also serves as a director and
officer of a number of subsidiaries of the Company and General American.
TO CONTINUE IN OFFICE UNTIL 1999:
J. Cliff Eason, 50 1993
President-SBC International Operations of SBC Communications, Inc. since
March 1998. Prior to that he served as President and CEO of Southwestern
Bell Telephone Company since February 1996. Mr. Eason was President and CEO
of Southwestern Bell Communications, Inc. ("SBC") from July 1995 through
January 1996; President of Network Services of Southwestern Bell Telephone
Company from July 1993 through June 1995; and President of Southwestern Bell
Telephone Company of the Midwest from 1992 to 1993. He held various other
positions with SBC and its subsidiaries prior to 1992, including President of
SBC Communications, Inc. from 1991 to 1992.
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Served as
Director
Name, Age, Principal Occupation or Position, Other Directorships Since
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Leonard M. Rubenstein, 52 1993
Chief Executive Officer and Chairman of Conning Corporation and its
subsidiary, Conning Asset Management Company, a registered investment
advisor. Conning Corporation is a majority-owned subsidiary of General
American Life Insurance Company ("General American"). He served as Executive
Vice President of Investments for General American from 1991 to January 1997
and as Treasurer from 1991 to 1995. From 1984 to 1991, he served as Vice
President of General American. He is Treasurer of General American Capital
Company, a registered investment company.
H. Edwin Trusheim, 70 1993
In 1995, he retired as Chairman of General American Life Insurance
Company, where he was Chief Executive Officer until his retirement in 1992.
He served as President of General American Life Insurance Company from 1979
to 1988 and was elected Chief Executive Officer in 1981 and Chairman of the
Board in 1986. He is also a director of Angelica Corporation, GenAmerica
Corporation, General American Life Insurance Company, General American Mutual
Holding Company, Laclede Gas Company, RehabCare Corporation, and Venture
Stores Inc.
TO CONTINUE IN OFFICE UNTIL 2000:
Bernard A. Edison, 70 1993
President of Edison Brothers Stores, Inc. from 1968 through his
retirement in 1987. He also served as a director
and Chairmanofficer of the Finance
Committeea number of the Boardsubsidiaries of Directors of Edison Brothers Stores, Inc. until
1989, and as director emeritus from 1989 through 1996. Mr. Edison is also a
director of Anheuser-Busch Companies, Inc., GenAmerica Corporation, General
American Life Insurancethe Company and General
American Mutual Holding Company.
Stuart I. Greenbaum, 61 1997
Dean of the John M. Olin School of Business at Washington University
since July 1995. Prior to such time, he spent 20 years at the Kellogg
Graduate School of Management at Northwestern University where he was
Director of the Banking Research Center and the Norman Strunk Distinguished
Professor of Financial Institutions. Mr. Greenbaum has served on the Federal
Savings and Loan Advisory Council and the Illinois Task Force on Financial
Services, and has been a consultant for the American Bankers Association, the
Bank Administration Institute, the Comptroller of the Currency, the Federal
Reserve System, and the Federal Home Loan Bank System, among others. He is
also a director of Stifel Financial Corp.
Richard A. Liddy, 62 1993
Chairman of the Board of the Company. Also President, Chief Executive
Officer and Chairman of the Board of General American Life Insurance Company,
and President and Chairman of GenAmerica Corporation and General American
Mutual Holding Company. From 1982 through 1988, he was Senior Vice President
and Executive Vice President of Continental Corporation and President,
Financial Services Group of Continental Insurance Company. He is also
Chairman of the Board of General American Capital Company and The Walnut
Street Funds, Inc., each a registered investment company; Chairman of Paragon
Life Insurance Company, Security Equity Life Insurance Company, and Security
Mutual Life Insurance Company of New York; and a director of Ameren
Corporation, Brown Group, Inc., Conning Corporation, and Ralston Purina
Company.American.
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Committees and Meetings of the Board of Directors
COMMITTEES AND MEETINGS OF THE BOARD OF DIRECTORS
The Board of Directors met four times during 1997.1998. Each incumbent
director attended at least 75% of the meetings of the Board and committees
on which he served during 1997.1998.
The Board of Directors has an Audit Committee, a NominatingCompensation
Committee, and a CompensationNominating Committee. The Audit Committee, of which
Messrs. Eason (Chairman), Greenbaum, and Peck are members, met three times
in 1997.1998. This Committee is responsible for overseeing the integrity and
reliability of the Company's accounting and financial reporting practices
and the effectiveness of its system of controls. It also recommends a
public accounting firm to be retained for the coming year and reviews the
work to be done by such firm. The Compensation Committee establishes and
oversees the compensation policies of the Company's operating subsidiaries
and determines executive compensation. ThisThe Committee, which consists of
Messrs. Edison (Chairman), Eason, Greenbaum, Peck, and Stiritz, held four
meetings in 1997.1998. See "Compensation"Executive Compensation -- Compensation Committee
Report on Executive Compensation." The Nominating Committee, of which
Messrs. Peck (Chairman), Eason, Edison, Greenbaum, Stiritz, and Trusheim
are members, met oncedid not meet during 1997.1998. This Committee nominates directors
and will acceptconsider recommendations for nominations as directors from
stockholders. StockholdersShareholders. Shareholders wishing to propose nominees to the Nominating
Committee for consideration should by the first week of January, notify in writing the Secretary of the
Company whoin accordance with the process described in "Shareholder
Proposals". The Secretary will inform the members of the Nominating
Committee of such proposals.
Director Compensationnominees.
DIRECTOR COMPENSATION
Officers of the Company, General American, or its affiliatesany subsidiary of
General American do not receive any additional compensation for serving the
Company as members of the Board of Directors or any of its committees.
Effective January 1, 1997, directorsDirectors who are not employees of the Company, General American, or any of
its affiliatessubsidiaries ("Non-Employee Directors") are paid an annual retainer fee
of $20,000, and are paid $1,000 for each Board meeting attended in person,
$500 for each telephonic Board meeting attended, $750 for each committee
meeting attended in person (except the committee chairman, who is paid
$1,000) and $375 for each telephonic committee meeting attended (except the
committee chairman, who is paid $500). In addition, the Company reimburses
directors for out-of-pocket expenses incurred in connection with attending
Board and committee meetings. Of the $20,000 annual retainer, $8,000 is
paid in shares of the Company's Voting Common Stock at the Annual Meeting. Also
on the date of theeach Annual Meeting, each Non-Employee Director is granted
an option to purchase 1,5002,250 shares of Voting Common Stock with an exercise
price equal to the closing price of the Common Stock on such date. As a result, in 1997,On May
27, 1998, each of Messrs. Eason, Edison, Greenbaum, Peck, Stiritz, and
Trusheim was awarded an option to purchase 1,5002,250 shares of Voting Common
Stock at an exercise price of $36.50$33.00 per share.share, the closing price of the
Company's Voting Common Stock on the date of grant. The options become
fully vested on May 15, 1998. (Sharethe first anniversary of the grant. (The share and price information isdollar
amounts have been adjusted to give effect to the Company's three-for-two
stock split in August
1997.February, 1999.)
Non-Employee Directors have the option to receive phantom stock unitsperformance shares
in lieu of their retainer (including the stock portion) and meeting fees. A
phantom stock unitperformance share is a hypothetical share of Common Stock of the Company.
Phantom stock unitsCompany
based upon the fair market value of the Voting Common Stock at the time of
the grant. Performance shares are not transferable and are subject to
forfeiture unless held until the earlierdirector ceases to be a director by reason
of ten years after grant or the director's retirement, death, or disability. AtUpon such time,an event, the Company will
payissue cash or issue
shares of Voting Common Stock in an amount equal to the value
of the phantom stock.
Phantomperformance shares.
All such stock, unitsoptions and performance shares are forfeited in the event of a director's malfeasance
(as defined inissued pursuant to
the Flexible Stock Plan for Directors). The Company pays
dividends inDirectors, which was adopted effective January 1,
1997. Performance shares granted prior to such time were issued under the
form of additional phantom stock units with respect to
outstanding phantom stock at the same rate as dividends are paid on the
Common Stock.
In January 1997, Richard A. Liddy, Chairman of the Board, was granted
an option to purchase 37,500 shares of CommonPhantom Stock at an exercise price of
$30 5/12, the closing price of the Common Stock on the date of grant (as
adjusted to give effect to the Company's three-for-two stock split). See
"Compensation Committee Report on Executive Compensation." This option vests
annually in 20% increments beginning in January 1998 and will become fully
vested upon Mr. Liddy's death, disability, or retirement and upon a change in
control of the Company.Plan for Directors.
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COMMON STOCK OWNERSHIP OF MANAGEMENT AND CERTAIN BENEFICIAL OWNERS
The following table sets forth, as of March 31, 1999, certain stock
ownership information as
of March 1, 1998, with respect to (i)to: 1) each person known to the Company
to be the beneficial owner of 5% or more of the Company's outstanding
Voting Common Stock, (ii)and 2) certain information with respect to the
ownership of Voting Common Stock and Non-voting Common Stock by (i) each
director and nominee for director of the Company, (iii)(ii) each executive
officer of the Company named in the Summary Compensation Table, and (iv)(iii)
all directors, nominees, and executive officers as a group.
Amount and Nature of Percent
Beneficial Owner Beneficial Ownership of ClassCLASS OF AMOUNT AND NATURE OF PERCENT
BENEFICIAL OWNER COMMON STOCK BENEFICIAL OWNERSHIP OF CLASS
---------------- ------------ -------------------- --------
Principal Stockholders:
PRINCIPAL SHAREHOLDERS:
General American Mutual HoldingLife Insurance Company Voting 24,131,250 63.7%
700 Market Street Non-voting -
St. Louis, Missouri 63101
16,087,500 63.8%
The Prudential Insurance Company of America
Prudential Plaza
Newark, New Jersey 07102-3777 1,317,600 5.2%
Directors and Named Executive Officers:DIRECTORS, NOMINEES AND NAMED EXECUTIVE OFFICERS:
A. Greig Woodring, Director, President, and Chief Voting 83,079Executive Officer 39,766Non-voting -
J. Cliff Eason, Director 3,000Voting 6,750
Non-voting -
Bernard A. Edison, Director Voting 15,750
Non-voting 9,000
Stuart I. Greenbaum, Director 1,637Voting 4,948
Non-voting -
Richard A. Liddy, Chairman 54,750Voting 96,750
Non-voting 5,500
William A. Peck, Director 1,950Voting 5,175
Non-voting -
Leonard M. Rubenstein, Director 26,425 Voting 19,275
Non-voting -
William P. Stiritz, Director 457,800Voting 357,875 1.8%
Non-voting -
H. Edwin Trusheim, Director 6,000Voting 11,250
Non-voting -
David B. Atkinson, Executive Vice President and Chief Voting 50,199Operating Officer 24,795Non-voting 6,750
Jack B. Lay, Executive Vice President and Chief Voting 24,639Financial Officer 11,746Non-voting 6,750
Andre St-Amour, President, RGA Life Reinsurance Voting 28,173Company of Canada 13,793Non-voting -
Graham Watson, Executive Vice President and Chief Voting 16,348Marketing Officer 6,555Non-voting -
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CLASS OF AMOUNT AND NATURE OF PERCENT
BENEFICIAL OWNER COMMON STOCK BENEFICIAL OWNERSHIP OF CLASS
---------------- ------------ -------------------- --------
All directors and executive officers Voting 830,018 2.1%
as a group (20(22 persons) 681,376 2.7%Non-voting 28,111
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Less than one percent.
Shares beneficially owned by General American Mutual Holding Company
("GAMHC") are held by Equity Intermediary Company, a wholly-owned
subsidiary of General American Life Insurance Company ("General
American"). General American is a wholly-owned subsidiary of
GenAmerica Corporation, which is a wholly-owned subsidiary of GAMHC.
Mr. Liddy is also a director and executive officer of GAMHC,
GenAmerica Corporation and General American, and Mr. Woodring is an
executive officer of General American.America. Messrs. Edison, Stiritz, and
Trusheim are directors of GAMHC, GenAmerica Corporation and General
American. These individuals disclaim beneficial ownership of the
shares beneficially owned by GAMHC.
Sole voting and dispositive power over 661,650 shares. Based on
Amendment No. 4 to Schedule 13G filed by the security holder with the
Securities and Exchange Commission on February 10, 1998.
Includes 11,35540,463 shares of Voting Common Stock subject to stock
options that are exercisable within 60 days. Also includes 10,00015,000
shares of restricted stock overVoting Common Stock, that are subject to
forfeiture in accordance with the terms of the specific grant, as to
which Mr. Woodring has voting control, but which
cannot be transferred until the earlierno investment power.
Includes 4,500 shares of January 2008 or Mr.
Woodring's death or disability.
Includes 1,500 shares ofVoting Common Stock subject to stock
options that are exercisable within 60 days.
5
8 Includes 3,000 shares of Non-voting Common Stock held by a general
partnership in which Mr. Edison holds an ownership interest and for
which he has shared voting and investment power. Mr. Edison
disclaims beneficial ownership except to the extent of his pecuniary
interest therein. Included also are 6,000 shares of Non-voting
Common Stock held by his wife and for which Mr. Edison has no voting
or investment power. Mr. Edison disclaims beneficial ownership of
such shares.
Includes 39,75074,250 shares of Voting Common Stock subject to stock
options that are exercisable within 60 daysdays. Also includes 5,550
shares of Non-voting Common Stock and 15,00022,500 shares of Voting Common
Stock held jointlyin a joint account with his
wife.Mr. Liddy's wife, an account over
which he has shared voting and investment power.
Represents shares of Voting Common Stock subject to stock options
that are exercisable within 60 days.
Includes 1,5004,500 shares of Voting Common Stock subject to stock
options that are exercisable within 60 days. Mr. Stiritz disclaims
beneficial ownership of a total of 145,50091,675 shares of Voting Common
Stock held by his wife and children.son.
Includes 6,16522,254 shares of Voting Common Stock subject to stock
options that are exercisable within 60 days and 1,5002,250 shares held by
Mr. Atkinson's children.
Shares of restricted Non-voting Common Stock that are subject to
forfeiture in accordance with the terms of the specific grant, as to
which the holder has no investment power.
Includes 10,54622,839 shares of Common Stock subject to stock options that
are exercisable within 60 days.
Includes 10,293 shares of Common Stock subject to stock options that
are exercisable within 60 days.
Includes 2,430 shares ofVoting Common Stock subject to stock
options that are exercisable within 60 days and 4,1251,800 shares jointly
owned with Mr. Lay's wife.
Includes 22,923 shares of Voting Common Stock subject to stock
options that are exercisable within 60 days.
Includes 10,161 shares of Voting Common Stock subject to stock
options that are exercisable within 60 days and 6,187 shares owned
by Intercedent Limited, a Canadian corporation of which Mr. Watson
has a majority ownership interest.
Includes a total of 130,164312,372 shares of Voting Common Stock subject to
stock options that are exercisable within 60 days.days; 15,000 shares of
restricted Voting Common Stock that are subject to forfeiture in
accordance with the terms of the specific grant, as to which the
individual has no investment power; and shares for which ownership
has been disclaimed as described above.
Includes 13,500 shares of restricted Non-voting Common Stock,
subject to forfeiture in accordance with the terms of the specific
grant, as to which the individuals have no investment power.
SECTION 16(a)16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 ("Exchange
Act") requires the Company's directors, executive officers, and beneficial owners ofpersons
who beneficially own more than ten percent of a registered class of the
Company's Common Stock,equity securities, to file reports of ownership and changes in
ownership on Forms 3, 4 and 5 with the Securities and Exchange Commission
(the "SEC") and the New York Stock Exchange. Directors, executive
officers, and greater than 10% stockholdersshareholders are required by SEC regulation
to furnish the Company with copies of all Forms 3, 4, and 5 they file.
Based solely on the Company's review of the copies of such forms it
has received, or written representations from certain reporting persons,
the Company believes that all of its directors, executive
6
officers, and greater than 10% beneficial owners complied with all Section 16(a) filing
requirements applicable to them with respect to transactions during 1997.
6
91998,
except that Roberto Baron was late filing a Form 3 following his promotion
to Senior Vice President of the Company in November 1998, and Paul
Schuster was late filing a Form 4 to report one transaction in December
1998.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Company's Compensation Committee, composed of five non-employeenon-
employee directors, oversees the compensation policies of the Company's
operating subsidiaries (Reinsurance Group of America, Incorporated ("RGA")(RGA is a holding company with no employees). RGA
Reinsurance Company ("RGA Re"), a wholly-owned subsidiary of the
Company, employs all of the Company's salaried executive officers except
for Andre St-Amour, who is employed by RGA Life Reinsurance Company of
Canada, and Graham Watson and Paul Nitsou, who are employed by RGA
International Ltd. Two of the Company's executive officers (Richard A.
Liddy and Matthew P. McCauley)James E. Sherman) are employed by General American Life
Insurance Company and are not compensated by the Company.
Base Salaries
-------------
The Company has eleventwelve salaried executive officers. In forming its
recommendations on the overall salary program for executive officers, the
Compensation Committee has from time to time engaged an independent
consulting firm to learndetermine how the Company's executive compensation
compares to those paid bythat of other publicly held insurance and reinsurance
companies.
During 1996, the Compensation Committee hired this firm to undertake an
extensive review of executive salaries. Results of the consultant's study,
which were presented in January 1997, showed that the Company's executives
were not competitive with the comparison companies. In light of these
findings the Compensation Committee, in January 1997, approved increases in
officers' 1997 base salaries to make them more competitive. The average
increase in executive officers' base salaries for 1997 was 4.2%. The
percentage increase excludes the CEO and four other executive officers, whose
salary increases ranged from 6.0% to 12.3% to more accurately reflect such
officers' responsibilities. Overall, the established 1997 base salaries for
executives represented approximately 91% of the median level of base pay for
comparable officers based on the survey.
Based primarily on the results of the consultant's survey, in January
1997 the Compensation Committee set Mr. Woodring's 1997 base salary at
$337,000, which represented an increase of 12.3% over his 1996 base salary.
This level was intended to make Mr. Woodring's compensation approximate that
of the second highest paid executive at a comparable public company,
reflecting the level of involvement of General American's management at the
Company. As a result of the increase, Mr. Woodring's base salary for 1997
was 100% of the median for the second highest paid executives in the
comparison group. In October 1997 and January 1998, the Compensation Committee
again
evaluated executive salary levels in accordance with the previously
established guidelines and found them to be generally
competitive. This review took into account 1997/1998encompassed 1997 salary survey data provided by
the independent consulting firm.
As a result, theThe Committee approved salary increases for 1998 that averagedaveraging 4.0% for
all executive officers, excluding the CEO, COO and CFO who received salary
increases ranging from 11.3% to 16.0%. The increase in the COO's salary
was based on his promotion to President and CEO of RGA Re, and theRe. The increase
in the CFO's salary was
intended to bringbrought his compensation more in line with market data
for that position. The Compensation Committee approved an 11.3% increase inincreased Mr. Woodring's
salary to $375,000, which is slightly above the average for the
second highest paid executives in the survey. This increase reflectsreflecting the Committee's consideration of Mr.
Woodring's increasing level of responsibility for the Company's activities.
In January 1999, the Compensation Committee again retained the
independent consultant to undertake an extensive review of executives'
total compensation as compared to their counterparts at comparable
companies. Base salary ranges established for the Company's executive
group were found to be generally competitive, with the exception of the
CEO, COO and CFO. The Committee approved salary increases for the
executive group that averaged 4.0% (excluding promotional increases),
except for the CEO, COO, and CFO who received salary increases ranging
from 14.6% to 22.7%.
Recognizing the rapid growth of the Company vis-a-vis General American's management.and the level of
responsibility Mr. Woodring has assumed, the Committee adopted the
consultant's recommendations regarding an appropriate salary range for Mr.
Woodring. The Committee approved a 22.7% salary increase for Mr.
Woodring, bringing his base pay to $460,000 for 1999. Increases to both
the COO's and CFO's salaries approved by the Committee are intended to
bring compensation to a more appropriate level for those positions, based
on market data.
Management Incentive Plan
-------------------------
All of the Company's salaried executive officers also participate in the
Management Incentive Plan ("MIP"), which provides incentive compensation
based on a participant's individual performance as well as the division's
and the Company's achievements of specified financial thresholds and targets.achievements. Company results are based on consolidated
revenues and operating earnings (net income less realized capital gains
and losses) per share; divisional results are based on the division's
revenues and operating earnings. Based 7
10
on these criteria, the Committee
approves a schedule of specific incentives set for each participant, at the beginning of the year, with
a threshold of performance that must be met before any
7
payment to the individual can be made, a target that is twice the threshold, and a maximum that is twice the
target.maximum. The
Company's performance must meet a certain trigger level before any awards under
the MIP are made. Awards are based on a specified percentage of salary,
which varies for each participant. A portion of each executive officer's
total MIP award is paid in performance shares, rather than cash.
There were over 50In 1998 the Committee broadened participation in the MIP to include middle
management employees, which increased the number of participants in the
MIP in 1997.plan to 125. Determination of MIP awards for 19971998 was made in January
1998.1999. The Company exceeded its target for revenue growth in fiscal 1997,1998,
achieving a 29%37% increase over 1996.1997. However, the Company did not meet its
threshold operating earnings per share level, due primarily due to the
accident and health pool charge taken during the firstfourth quarter of 1997.1998 in
connection with discontinuing that line of business. Based in part on
these consolidated results, the average cash payout to executive officers
was approximately 26.8%28.6% of salary. Mr. Woodring's MIP award, which is
based solely on Company results for 1997,1998, was $165,654,$185,296 or approximately
50% of his salary for the year. This amount
represents one-half of his maximum possible award for 1997 and is
approximately 27% less than his MIP award for 1996. The amount of Mr. Woodring's total MIP
award includes the value of performance shares awarded under the Executive
Performance Share Plan. The cash portion of Mr. Woodring's 19971998 MIP award
totaled $115,958,$129,707, or approximately 35% of salary.
Executive Performance Share Plan
--------------------------------
ApproximatelyAn average of approximately 32% of the MIP award for executive officersRGA executives
is paid in the form of performance shares pursuant to the Company's Executive
Performance Share Plan. Each performance share represents the equivalent
of one share of Voting Common Stock. PerformanceIn the U.S. plan, performance shares
vest in one-third increments on the last day of each of the three calendar
years following the year in which they are granted. (For this purpose,Performance shares in
the dateCanadian plan vest 100% on the last day of grant is the first
day ofthird calendar year
following the year in which they are granted. Payment from the performance objectives are set.) PaymentU.S. plan
with respect to vested performance shares may be made only in certain
circumstances relating to termination of employment or when the
participant exercises stock options or the value of the participant's
vested performance shares exceeds 500% of his or her target bonus for the
year. In the Canadian plan, performance shares must be paid upon vesting.
Payment under both the U.S. and Canadian plans may be made in the form of
cash or shares of Voting Common Stock, as determined by the Committee.
See "Executive Compensation - Option/Performance Share Grants in Last
Fiscal Year."
Normally, the value of each performance share iswill be the current
fair market value of a share of the Company's Voting Common Stock. By
making part of the pay of the Company's top executives take this form
the Committee has sought to give these officers further incentives to
increase the value of the Company. Determination of performance share
awards for fiscal 19971998 was made at the same time as MIP awards were
determined in January 1998.1999. The average payment in the form of
performance shares to executive officers was approximately 12.4%13.4% of
salary in 1997.1998. Mr. Woodring received 1,258850 performance shares for 1997,1998,
which were valued at $49,696$55,589 based on the market value of the Voting
Common Stock on the date of grant.grant in January 1999. Effective February
1999, the RGA Board of Directors approved a three-for-two stock split.
On a post split basis, Mr. Woodring received 1,275 performance shares
for 1998.
Profit Sharing Plan
-------------------
All employees of RGA Re who meet the eligibility requirements
participate in the profit sharing plan. Awards represent a percentage
of cash compensation based on the achievement by the Company of
specified thresholds and targeted levels of growth in consolidated
revenues and
operating earnings per share. The targets and thresholds are the
same as those established under the MIP. In addition to a guaranteed 2%
match, participants in the Company's 401(k) plan are eligible to receive
a discretionary match of up to 2% of compensation. In addition, all
eligible employees are entitled to receive a profit sharing award
ranging from 0% to 6% of compensation depending on whether the Company
meets or exceeds its thresholds and targets, regardless of their 401(k)
participation. A threshold of performance must be met before either the
8
discretionary match or the profit sharing award can be made. The
8
11
thresholds and targets for each year are established at the beginning of
the year. A participant may elect to receive up to one-half of his
profit sharing award in cash.
In 1997,1998, the Company exceeded its target for revenue growth,
achieving a 29%37% increase over 1996.1997. However, the Company did not meet
its threshold earnings per share level, due primarily due to the non-operating accident
and health charge taken during the firstlast quarter of 1997.1998 in connection
with discontinuing that line of business. The failure to achieve the
earnings per share threshold resulted in a discretionary match of 1% and
a profit sharing award of 3%. The discretionary match and profit
sharing awards for executives who participate in the Flexible Stock Plan
and the MIP are reduced by one-half. Mr. Woodring, who participates in
such programs, received a profit sharing award of $6,575$7,663 for 1997,1998,
representing approximately 1.5%1.53% of his salary and cash bonus for the
year.
Flexible Stock Option Plan
---------------------------------------------
The Committee has previously granted stock options pursuant to the
Company's Flexible Stock Plan, which was established in 1993. The exercise
price of each option granted prior to 1999 has been no less than the
market price of the Voting Common Stock on the date of grant. Options to purchase over 500,000 shares were awarded to more
than 40 persons in 1993 in connection with the Company's initial public
offering. AdditionalIn 1999,
options were granted in 1994 and 1995 to approximately
15 persons. In December 1996,at the Committee awarded 158,250 options to four
executive officers in order to facilitate such officers' achievementprice of the Company's stock ownership guidelines.
In October 1996, the Committee for the first time adopted annual stock
option grant guidelines in order to help attract and retain key employees.
Pursuant to these guidelines, in January 1997, the Committee approved the
grant of options to purchase a total of 185,700 shares of Common Stock at an
exercise price of $30 5/12 (the closing price of theNon-voting Common Stock on the
date of grant) to 23 key officers, including the Chairman and all of the Company's
eleven salaried executive officers. The executive officers received options
to purchase a total of 109,050 shares, including an option to purchase 24,600
shares granted to Mr. Woodring. The number of options granted was related to
base compensation as of January 1, 1997, using a multiple ranging from 1.0
times to 2.5 times salary divided by the strike price of the options. The
salary multiples correspond to summary data for 350 public companies obtained
by the independent consulting firm the Company retained in 1996. The
Committee used the range of multiples for CEOs as a benchmark in granting Mr.
Woodring's option. The Committee also approved a three-year block grant of
options to purchase 37,500 shares to the Chairman, Richard A. Liddy, based on
his continuing leadership of the Company. (All share and price information
is adjusted to give effect to the Company's three-for-two stock split in
August 1997.) See "Executive Compensation - Option/Performance Share Grants
in Last Fiscal Year."grant.
In accordance with the annual stock option grant guidelines adopted
in 1996, the Committee granted a total of 138,437207,656 options in January 1998,
including 92,932139,398 options granted to the Company's salaried executive
officers. Mr. Woodring was awarded 21,32931,994 options. The criteria for
determining individual option grants were the same as those used in 1997.
In addition, the Committee approved an award of
10,000granted 15,000 shares of restricted stockVoting
Common Stock to Mr. Woodring.Woodring in 1998. Such shares are not transferable
for a period of ten years and will be forfeited in the event Mr.
Woodring's employment is terminated during that period. This restricted
stock award was intended to reflect Mr. Woodring's increasing level of
responsibility for the Company and to provide an additional long-term
incentive that is tied to the Company's performance. (All totals have been
adjusted to give effect to the three-for-two stock split in February
1999.) See "Executive Compensation - Option/Performance Share Grants in
Last Fiscal Year."
In January 1999, the independent consultant presented results from
its compensation survey that indicated the Company's stock option grant
guidelines for one executive group should be updated. The Committee
adopted the consultant's recommendation to modify the option grant
guidelines for Senior Vice Presidents, increasing the salary multiple
from 1.25 times salary to 1.5 times salary, to bring this group's
compensation up to market levels. In accordance with grant guidelines,
the Committee awarded a total of 180,575 options for Non-voting Common
Stock, including 123,750 to the Company's salaried executive officers.
Mr. Woodring was awarded 26,042 options. The criteria for determining
individual option grants were the same as those used in 1998, with the
exception noted above. The Committee also approved an award of 6,750
shares of restricted Non-voting Common Stock for both the COO and CFO.
Such shares are not transferable for a period of ten years and will be
forfeited in the event employment is terminated during that period.
This restricted stock award was granted in recognition of the increasing
importance of their contributions to the Company and to provide an
additional long term incentive that is tied to the Company's
performance.
Stock options are intended to reflect management's involvement in
the Company's performance and to encourage their continued contribution
to the future of the Company. The Company views stock options as an
important means of aligning the economic interests of management and
stockholders.shareholders.
9
12
Executive Stock Ownership Guidelines
------------------------------------
In order to further align the interests of the Company's
management and its stockholders,shareholders, the Committee adopted executive stock
ownership guidelines in October 1996. Based upon the recommendation of
the independent consulting firm, which obtained stock ownership information for 350 public companies,
the Committee established specific
guidelines for the top three tiers of management --- the CEO (33,750(50,625
shares), Executive Vice Presidents (12,750(19,125 shares), and Senior Vice
Presidents (5,625(8,438 shares) (as adjusted to give effect to the Company's
three-for-two stock splitsplits in August 1997)1997 and in February 1999).
Although the guidelines are not mandatory, they are intended to increase
Company stock ownership by executive officers, which, in addition to
stock options, provides the officers with a direct economic interest in
the Company.
To facilitate the executive stock ownership contemplated by the
guidelines, the Committee in late 1996 approved a one-time program to enable
top executives to convert the value of their vested options that were granted
in 1993 into shares of the Company's Common Stock. The CEO and three other
executives participated in this program during 1996.
Following adoption of the stock ownership guidelines, the number of shares of Common
Stock owned by the Company's executive officers has increased by
approximately 34,50051,811 shares.
Section 162(m)
--------------
The Committee endeavors to maximize the deductibility of compensation
under Section 162(m) of the Internal Revenue Code while maintaining
competitive compensation. In 1996, the Company's Board of Directors and
stockholdersshareholders adopted amendments to the Flexible Stock Plan, Executive
Performance Share Plan and Management Incentive Plan, in each case,
among other things, in order to comply with Section 162(m) with respect
to certain awards.
The Compensation CommitteeTHE COMPENSATION COMMITTEE
Bernard A. Edison, Chairman
J. Cliff Eason Stuart I. Greenbaum (since May 15, 1997)
William A. Peck, M.D. William P. Stiritz
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During 1997,1998, the Compensation Committee was comprised of Messrs.
Edison (Chairman), Eason, Greenbaum, (after May 15, 1997), Peck, and Stiritz, as well
as Dennis F. Hardcastle (until May 15, 1997).Stiritz. None of such
directors has been an officer or employee of the Company or any of its
subsidiaries. Richard A. Liddy, who is Chairman of the Board, serves as
a director (but not on the compensation committee) of Ralston Purina
Company, of which Mr. Stiritz was an executive officer during 1997. Mr. Liddy is also a director
and a member of the General Compensation Committee of Conning Corporation, of
which Mr. Rubenstein is an executive officer. Mr. Rubenstein is a director
of RGA, but does not serve on the Compensation Committee. Although Mr.
Liddy is not paid any compensation by RGA,the Company, he holds options to
purchase shares of RGAthe Company's Voting Common Stock.
Stock option awards made to Mr. Liddy have been determined
by the Company's Compensation Committee.
10
13
EXECUTIVE COMPENSATION
Summary CompensationSUMMARY COMPENSATION TABLE
The following table sets forth certain summary information
concerning the compensation awarded or paid to, or earned by, the Chief
Executive Officer and each of the other four most highly compensated
executive officers of the Company during 1997.1998.
SUMMARY
ANNUAL COMPENSATION TABLE
Long Term
Compensation
Annual Compensation Awards
----------------------- ------
Securities
Other Annual Underlying All Other
Salary Bonus Compen- Options Compensation
Name and Principal Position Year ($LONG TERM COMPENSATION AWARD
----------------------------------------------- ------------------------------------------
SECURITIES ALL OTHER
OTHER ANNUAL RESTRICTED UNDERLYING COMPENSATION
NAME AND PRINCIPAL POSITION YEAR SALARY($) ($BONUS($) sationCOMPENSATION (#)STOCK($) OPTIONS(#)($)
- --------------------------- ---- ------- ------------------------ ---------------- ---------------- ------------ ------------------------ ------------
A. Greig Woodring 1998 $370,593 $226,796 $ -- $395,000 31,994 $10,334
President and Chief 1997 $331,308 $194,407331,308 194,407 -- -- 36,900 11,871
Executive Officer 1996 291,600 229,594 -- -- 86,009 11,054
David B. Atkinson 1998 $245,385 $106,715 $ - 24,600 $11,871-- -- 18,798 $12,527
Executive Vice 1997 216,962 106,311 -- -- 19,800 12,581
President and Chief 1996 291,600 229,594 - 57,339 11,054
Executive Officer 1995 239,538 199,495 - 0 14,419
David B. Atkinson 1997 $216,962 $106,311 $ - 13,200 $12,581
Executive Vice President 1996 194,123 146,888 - 45,870-- -- 68,805 8,744
and Chief Operating Officer 1995 160,392 129,094 - 0 8,548
Jack B. Lay 1997 $163,4661998 $190,493 $ 78,90977,398 $ - 10,200-- -- 14,003 $ 8,8189,395
Executive Vice 1997 163,466 78,909 -- -- 15,300 8,818
President and Chief 1996 151,715 99,486 --- -- 0 7,456
and Chief Financial Officer
1995 132,473 93,927 - 15,464 4,930
Andre St-Amour 1997 $174,935 $125,9501998 $181,879 $130,953 $ - 10,800-- -- 13,285 $ 4,8214,551
President, RGA Life 1997 174,935 125,950 -- -- 16,200 4,821
Reinsurance Company 1996 164,025 126,179 --- -- 0 4,921
Reinsurance Company of Canada
1995 149,139 74,570 - 0 5,650
Graham Watson 1997 $188,334 $278,071Watson(8) 1998 $194,435 $405,239 $ - 12,150-- -- 14,355 $ 4,8214,551
Executive Vice 1997 188,334 278,071 -- -- 18,225 4,821
President and Chief 1996 150,174 303,666 177,842 -- 0 0
Chief Marketing Officer
1995 - - - - -
- ----------------------------------
For Messrs. Woodring, Atkinson and Lay, includes any amounts
deferred at the election of the executive officers under the RGA
Re Executive Deferred Savings Plan. Messrs. St-Amour and Watson,
as non-U.S. citizens, are not eligible to participate in such
plan. Amounts for Mr. St-Amour include amounts deferred under the
Retirement Plan of RGA Life Reinsurance Company of Canada. AmountThe
amount for 1996 for Mr. Watson also includes an adjustment of $11,424
that was paid in 1997 to reflect the cost of living difference
between Australia and Canada.
Includes for all named executive officers, cash bonuses earned for
each year (including any bonuses deferred at the election of the
executive officers) under the Management Incentive Plan, which
deferred bonus totaled $115,958$129,707 for Mr. Woodring, $59,665$73,615 for Mr.
Atkinson, $44,953$52,386 for Mr. Lay, $86,592$90,930 for Mr. St-Amour and
$51,792$53,470 for Mr. Watson for 1997.1998. Also includes amounts paid in
cash or deferred at the officer's election each year under the RGA
Re Profit Sharing Plan for Messrs. Woodring, Atkinson and Lay,
which totaled $1,200 each for 1998 and 1997. AmountsThe amounts shown
for Mr. Watson for 1998, 1997 and 1996 also include (i) a Canadian
production bonus of $318,670, $193,510 and $183,360, respectively
(see "-Other"Other Employment Arrangements") and (ii) $8,795, $9,227 and
$4,681, respectively, paid in lieu of an award under the RGA Re
Profit Sharing Plan, in which Mr. Watson is not eligible to
participate (see Note 6)7). Amounts shown for Messrs. Woodring,
Atkinson and Lay for 1997 also include discretionary bonuses of
$27,553, $18,326 and $12,323, respectively, paid by General
American Life Insurance Company at the time of an initial public
offering of one of its subsidiaries to reflect such persons'
contributions to General American's consolidated operations.
Includes, in 1998, 1997, 1996, and 1995,1996, the value of the following
number of performance shares (as adjusted for the 3 for 2 split)
awarded in January 1999, January 1998 1997 and 1996,January 1997,
respectively, pursuant to the Executive Performance Share Plan
based on the closing price of the Voting Common Stock on the date
of award: Mr. Woodring - 1,258, 2,247,1,275, 1,887, and 4,3113,370 performance
shares; Mr. Atkinson - 687, 1,491732, 1,030, and 2,5972,236 performance shares;
Mr. Lay - 517, 1,004,546, 775, and 1,9891,506 performance shares; Mr. St-Amour
- 996, 1,311,864, 1,494, and 01,966 performance shares; and Mr. Watson -
596, 1,188,558, 894, and 01,782 performance shares. For information regarding
performance shares, see "Compensation Committee Report on
Executive Compensation" and "-Option/"Option/Performance Share Grants in
Last Fiscal Year."
11
14
Amount for 1996 for Mr. Watson represents personal benefits
primarily related to his temporary assignment in Australia during
1996, including approximately $96,000 for housing expenses.
Perquisites for each of the other named executive officers did not
exceed the lesser of $50,000 or 10% of such officer's salary and
bonus for any year reported.
11
As of 12/31/98, the value of Mr. Woodring's 15,000 post-split
shares of restricted Voting Common Stock was $700,000. Dividends
are paid on restricted stock.
See "-Option/"Option/Performance Share Grants in Last Fiscal Year." All
option totals have been adjusted for the 3 for 2 stock split
effective in February, 1999.
For Messrs. Woodring, Atkinson and Lay, amounts represent
contributions made by RGA Re in 1998, 1997, 1996, and 19951996 to the
officers' accounts in the RGA Re Profit Sharing Plan and the RGA
Re Augmented Benefit Plan. Amounts for Messrs. St-Amour and Watson
represent contributions made to their accounts by RGA Canada under
its Retirement Plan.
Mr. Watson was not employed by the Company until April 1, 1996.
Mr. Watson is a principalmajority owner and Chairman of Intercedent
Limited, which receives a portion of payments made by the Company
to InsourceIntercedent Reinsurance Holdings Limited for certain marketing
services. See "Certain Relationships and Related Transactions."
Option/Performance Share Grants in Last Fiscal YearOPTION/PERFORMANCE SHARE GRANTS IN LAST FISCAL YEAR
The Company has a Flexible Stock Plan, which provides for the
award of various types of benefits, including stock options, stock
appreciation rights, restricted stock, performance shares, and other
stock-based awards, as well as cash awards. The Company also has an
Executive Performance Share Plan that provides for the award of
performance shares. The following table sets forth certain information
concerning options and performance shares granted to the named executive
officers pursuant to the Flexible Stock Plan and the Executive
Performance Share Plan during 1997.1998. Option and performance share totals
have been adjusted to give effect to the Company's three-for-two split
in February, 1999.
OPTION/SAR GRANTS
POTENTIAL REALIZABLE VALUE
% OF TOTAL AT ASSUMED ANNUAL RATES
NUMBER OF SECURITIES OPTIONS OF STOCK PRICE APPRECIATION
UNDERLYING GRANTED TO EXERCISE OR FOR OPTION TERM
OPTIONS EMPLOYEES IN LASTBASE PRICE EXPIRATION ---------------------------
NAME GRANTED(#) FISCAL YEAR
Individual Grants
--------------------------------------------- Potential Realizable Value
% of Total at Assumed Annual Rates
Number of Securities Options/SARs of Stock Price Appreciation
Underlying Granted to Exercise or for Option/SAR Term
Options/SARs Employees in Base Price Expiration ---------------------------
Name Granted (#) Fiscal Year ($/Sh) DateDATE 5%($) 10%($)
- ---- -------------------- ------------ ----------- ---------- ----- ------ -------
A. Greig Woodring 24,60031,994 options 13% $30 5/129% $26.33 1/1/2007 $470,570 $1,192,518
1,2582008 $529,849 $1,342,742
1,275 performance shares 12%7% $43.58 N/A N/A $ 81,006 $ 128,988$90,516 $144,131
David B. Atkinson 13,20018,798 options 7% $30 5/125% $26.33 1/1/2007 $252,501 $ 639,888
6872008 $311,312 $788,925
732 performance shares 7%4% $43.58 N/A N/A $ 44,202 $ 70,385$51,967 $82,748
Jack B. Lay 10,20014,003 options 5% $30 5/124% $26.33 1/1/2007 $195,115 $ 494,459
5172008 $231,902 $587,686
546 performance shares 3% $43.58 N/A $38,762 $61,722
Andre St-Amour 13,286 options 4% $26.33 1/1/2008 $220,028 $557,594
864 performance shares 5% $43.58 N/A N/A $ 33,264 $ 52,968
Andre St-Amour 10,800$61,338 $97,670
Graham Watson 14,355 options 6% $30 5/124% $26.33 1/1/2007 $206,592 $ 523,544
9962008 $237,732 $602,459
558 performance shares 10%3% $43.58 N/A N/A $ 64,148 $ 102,145
Graham Watson 12,150 options 7% $30 5/12 1/1/2007 $232,416 $ 588,987
596 performance shares 6% N/A N/A $ 38,347 $ 61,062$39,614 $63,079
- ---------------------------------
The options become exercisable in 20% increments on each of
January 1, 1998, 1999, 2000, 2001, 2002 and 2002.2003. Vesting will be
accelerated upon the officer's death or disability and upon a
change in control of the Company (as such terms are defined in the
Flexible Stock Plan and option agreements). All stock option
grants were approved in January 1997.1998. The Company granted
additional stock options to each of the named executive officers
in January 1998,1999, which options are not reflected in the table.
See "Compensation Committee Report on Executive Compensation."
Performance share grants shown were approved in January 1998,1999, but
are included as 19971998 grants because they comprise a part of the
officers' 19971998 bonus. See "Compensation Committee Report on
Executive Compensation." Each performance share represents the
equivalent of one share of Voting Common Stock. Payment with
respect to vested performance shares is made in the form of cash
or shares of Voting Common Stock, as determined by the
Compensation Committee: (i) 24 months after termination of
employment; (ii) immediately upon termination of employment if
termination is as a result of death, disability, or retirement or
within six months of a change in control (as such terms are
defined in the Executive Performance Share Plan); (iii) when the
participant exercises stock options, at the participant's
election; or (iv) after the last day of any calendar year in which
the value of the participant's vested performance shares exceeds
500% of his target bonus payable with respect to that year under
the MIP. Performance shares awarded to Messrs. Woodring, Atkinson
and Lay vest in one-third increments on each of December 31, 1998, 1999,
2000, and 20002001 and performance shares awarded to Messrs. St-Amour
and Watson, who are Canadian citizens, vest in full on December
31, 2000.2001.
For stock options, amount represents the exercise price per share
of Voting Common Stock which is the closing price of the Voting
Common Stock on the date of grant. For performance shares, amount
represents the closing price of the Voting Common Stock on the
date of award.
12
The dollar amounts under these columns are the result of
calculations at the 5% and 10% rates set by the Securities and
Exchange Commission and therefore are not intended to forecast
possible future appreciation, if any, of the Company's stock
price.
12
15
Aggregated Option/Performance Share Exercises and Fiscal Year-End
Option/Performance Share ValuesAGGREGATED OPTION/PERFORMANCE SHARE EXERCISES AND FISCAL YEAR-END
OPTION/PERFORMANCE SHARE VALUES
The table below provides certain information for each of the named
executive officers concerning exercises of stock options and performance
shares during 19971998 and the
value of unexercised stock options and performance
shares at December 31, 1997.1998.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND
FY-END OPTION/SAR VALUES
Number of Securities Value of Unexercised
Shares Acquired on Value Underlying Unexercised in-the-Money Options/SARs
Name Exercise (#) Realized($NUMBER OF SECURITIES VALUE OF UNEXERCISED
SHARES ACQUIRED ON VALUE UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
EXERCISE(#) REALIZED($) Options/SARs atOPTIONS AT 12/31/9798 atAT 12/31/9798
NAME EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
- ---- ------------ -----------
Exercisable/Unexercisable Exercisable/Unexercisable ------------------------- -------------------------
A. Greig Woodring 0 options $0 3,21740,463 / 143,072210,965 options $77,946$1,184,559 / $2,481,228$6,039,072
0 performance shares $0 8,25216,401 / 2,9633,676 performance shares $351,226$765,380 / $126,113$ 171,547
David B. Atkinson 0 options $0 1,76222,254 / 92,558138,024 options $42,692$649,692 / $1,532,685$3,895,876
0 performance shares $0 4,8719,762 / 1,8772,176 performance shares $207,322$455,560 / $79,890$ 101,547
Jack B. Lay 0 options $0 6,18622,840 / 19,47829,660 options $149,884$697,910 / $348,685$789,599
0 performance shares $0 3,7377,412 / 1,3451,574 performance shares $159,056$345,893 / $57,247$73,453
Andre St-Amour 0 options $0 11,10522,924 / 20,84533,038 options $269,069$699,921 / $374,556$ 909,704
0 performance shares $0 0 / 1,3194,354 performance shares $0 / $56,140$ 203,187
Graham Watson 0 options $0 010,161 / 12,15022,419 options $0$250,755 / $147,568$522,079
0 performance shares $0 0 / 1,1953,258 performance shares $0 / $50,862$152,040
- ----------------------------------
The Company granted stock options and performance shares to senior management, including
each of the named executive officers, in January 1998. These awards,1999. The 1999
options, which are not currently exercisable, are not reflected in
the table. See "Compensation Committee Report on Executive
Compensation." Although "exercisable,"exercisable, performance shares can be
paid out only in certain limited circumstances. See "-Option/"- Option/
Performance Share Grants in Last Fiscal Year." Performance
shares include dividend equivalent rights that are payable in
performance shares and vest in proportion to the performance
shares to which they relate. The number of performance shares has
been rounded to the nearest whole share.
In the case of stock options, amounts representrepresents the difference between
the December 31, 19971998 closing price of the Company's Voting Common
Stock ($42
9/16)46 2/3, adjusted for the 3 for 2 stock split) and the
exercise price of the option timesmultiplied by the number of shares
underlying the option. In the case of performance shares,
amounts
representrepresents the December 31, 19971998 closing price timesmultiplied by the
number of performance shares.
Retirement PlansRETIREMENT PLANS
Certain of the Company's employees participate in the General American
Life Insurance CompanyGenAmerica
Corporation Pension Plan and Trust (the "Pension Plan"), a qualified
defined benefit plan which became a multiple employer plan as of
June 1, 1993.defined benefit plan. Certain of the Company's
employees also participate in the RGA Re Augmented Plan (the "RGA
Augmented Plan"), a non-qualified defined benefit plan under which
eligible employees are entitled to additional retirement benefits not
paid under the Pension Plan due to Internal Revenue Code limits on the
amount of benefits that may be paid under the Pension Plan.
The Company also maintained, until January 1, 1994, an Executive Supplemental
Retirement Plan (the "RGA Supplemental Plan"), a non-qualified defined
benefit plan pursuant to which eligible executive officers are entitled to
receive additional retirement benefits.
The following table shows the maximum annual benefits payable upon
retirement at age 65 for various remuneration and years of service
combinations under the Pension Plan and the RGA Augmented Plan as of
January 1, 1998.1999.
13
16
PENSION PLAN AND RGA AUGMENTED PLAN
Years of ServiceYEARS OF SERVICE
----------------
RemunerationREMUNERATION 5 10 15 20 25 30 35
- ------------ - -- -- -- -- -- --
$100,000 $ 7,488 $14,9777,426 $14,851 $22,277 $ 22,46529,702 $ 29,95337,128 $ 37,44244,553 $ 44,930 $ 53,79953,412
125,000 9,613 19,227 28,840 38,453 48,067 58,442 70,0489,551 19,101 28,652 38,202 47,753 58,055 69,661
150,000 11,738 23,477 35,215 46,953 58,692 72,369 86,29711,676 23,351 35,027 46,702 58,378 71,982 85,910
175,000 13,863 27,727 41,590 55,453 70,048 86,297 102,54513,801 27,601 41,402 55,202 69,661 85,910 102,158
200,000 15,988 31,977 47,965 63,953 81,654 100,224 118,79415,926 31,851 47,777 63,702 81,267 99,837 118,407
225,000 18,113 36,227 54,340 72,453 93,260 114,152 135,04318,051 36,101 54,152 72,202 92,873 113,765 134,656
250,000 20,238 40,477 60,715 81,654 104,867 128,079 151,29220,176 40,351 60,527 81,267 104,480 127,692 150,905
275,000 22,363 44,727 67,090 90,939 116,473 142,007 167,54022,301 44,601 66,902 90,552 116,086 141,620 167,153
300,000 24,488 48,977 73,465 100,224 128,079 155,934 183,78924,426 48,851 73,277 99,837 127,692 155,547 183,402
325,000 26,613 53,227 79,840 109,509 139,685 169,862 200,03826,551 53,101 79,652 109,122 139,298 169,475 199,651
350,000 28,738 57,477 86,297 118,794 151,292 183,789 216,28728,676 57,351 86,027 118,407 150,905 183,402 215,900
375,000 30,863 61,727 93,260 128,079 162,898 197,717 232,53530,801 61,601 92,873 127,692 162,511 197,330 232,148
400,000 32,988 65,977 100,224 137,364 174,504 211,644 248,78432,926 65,851 99,837 136,977 174,117 211,257 248,397
Messrs. Woodring, Atkinson and Lay participate in the Pension Plan
and the RGA Augmented Plan and have been credited with the following
years of service under such plans: Mr. Woodring, 1819 years; Mr. Atkinson,
1011 years; and Mr. Lay, 67 years. Remuneration under the Pension Plan and
the RGA Augmented Plan is the highest average Benefit Salary for five
consecutive years during the preceding 10 years, where "Benefit Salary"
for a given year means an officer's base salary for such year plus the
average bonus awarded such officer under the RGA Management Incentive
Plan for the preceding three years. The current remuneration covered by
the plans for each of the participating named executives is: for Mr.
Woodring, $324,449;$375,797; for Mr. Atkinson, $213,895;$244,438; and for Mr. Lay,
$161,463.$189,750. Messrs. St-Amour and Watson, as non-U.S. citizens, are not
eligible to participate in the Pension Plan or the RGA Augmented Plan.
Mr. St-Amour and Mr. Watson participate in pension plans sponsored by
the governments of Quebec and Canada, respectively.
The following table shows the annual benefits payable upon retirement
at age 65 for various remuneration and years of service combinations under
the RGA Supplemental Plan as ofUntil January 1, 1998.
RGA SUPPLEMENTAL PLAN
Years of Service
----------------
Remuneration 5 10
- ------------ - --
$100,000 $10,000 $20,000
125,000 12,500 25,000
150,000 15,000 30,000
175,000 17,500 35,000
200,000 20,000 40,000
225,000 22,500 45,000
250,000 25,000 50,000
275,000 27,500 55,000
14
171994, the Company also maintained an Executive
Supplemental Retirement Plan (the "RGA Supplemental Plan"), a non-
qualified defined benefit plan pursuant to which eligible executive
officers are entitled to receive additional retirement benefits.
Benefits under the RGA Supplemental Plan were frozen as of January 1,
1994. At such time, the participating named executive officers had been
credited with the following years of service under the plan: Mr.
Woodring, 8 years; and Mr. Atkinson, 3 years. The maximum years of service that may be
accrued under the plan is 10. Remuneration under the RGA
Supplemental Plan was the highest average Benefit Salary for three
consecutive years during the preceding five years. RemunerationThe remuneration
covered by the plan is $229,492 for Mr. Woodring and $145,407 for Mr.
Atkinson.
Combined retirement benefits under the Pension Plan and the RGA
Augmented Plan are payable at age 65 in a single life annuity using an
"excess plan" formula as generally described in Section 401(l)401(1) of the
Internal Revenue Code of 1986. Certain plan participants are eligible
to receive benefits calculated using a minimum benefit formula that
provides for a direct offset of a portion of the applicable Social
Security Primary Insurance Amount.
14
Retirement benefits under the RGA Supplemental Plan are payable at
age 65 in the form of a 15 years certain and life annuity, with no
direct or indirect integration with Social Security benefits.
Payment of the specified retirement benefits under all three plans is contingent upon
continuation of the plans in their present form until the employee
retires.
Other Employment ArrangementsOTHER EMPLOYMENT ARRANGEMENTS
None of the Company's executive officers is subject to a written
employment agreement, except for Mr. St-Amour. Mr. St-Amour is employed
as the President and Chief Operating Officer of RGA Canada pursuant to
an employment agreement dated April 6, 1992. The agreement provides,
among other things, that Mr. St-Amour will receive minimum gross
compensation of $162,500 (Canadian), adjusted annually based on the
Consumer Price Index. If RGA Canada terminates Mr. St-Amour's
employment without cause, he will be entitled to receive severance of
twelve months' gross compensation. Mr. St-Amour is also subject to
certain confidentiality and non-solicitation provisions, which survive
for two years and one year, respectively, following termination of the
agreement.
The Company has agreed to pay Mr. Watson a production bonus equal
to 2.5 cents per $1,000 of new business generated through the Company's
Canadian subsidiaries. Pursuant to a marketing agreement, the bonus was
originally paid to Intercedent Limited, a consulting firm with whichthat employed
Mr. Watson was
employed.Watson. Mr. Watson became an employee of a subsidiary of the
Company on April 1, 1996 and the Canadian production bonus has been paid
directly to Mr. Watson since that time. See "Certain Relationships and
Related Transactions."
Mr. Woodring serves on the General American cabinet as an advisor
to General American's top management and as such,therefore participates in the
General American Long-Term Incentive Plan. Mr. Woodring is eligible to
receive cash incentive awards pursuant to this plan based on General
American's achievement of certain consolidated performance targets over
three-year periods. The amount of incentive payments, if any,
represents a percentage of Mr. Woodring's RGA salary at the beginning of
the relevant period. The percentage varies depending on the extent to
which General American's performance targets are met or exceeded.
Payment of one-third of any awards will be deferred under the General
American Executive Deferred Savings Plan until Mr. Woodring's retirement
at age 65. Amounts deferred are subject to a five-year vesting schedule
and certain other conditions. The first
three-year period ended December 31, 1997, as a result of which Mr. Woodring received an incentive award of $24,339$40,300 (one-third
of which was deferred) duringfor the first quarter ofthree year period ending December 31,
1998. All payments under the plan are made by General American.
15
18
PERFORMANCE GRAPHGRAPHS
Set forth below is a graph for the Company's Voting Common Stock
for the period beginning May 4,December 31, 1993 (the
date the Company's Common Stock began trading on the New York Stock Exchange) and ending December 31, 1997, comparing1998.
Following is a graph of the Company's Non-voting Common Stock for the
period beginning June 5, 1998 and ending December 31, 1998. Both graphs
compare the cumulative total return on the Company's Common Stock, based
on the market price of the Common Stock and assuming reinvestment of
dividends, with the cumulative total return of companies in the Standard
& Poor's 500 Stock Index and the Standard & Poor's Insurance
(Life/Health) Index. The indices are included for comparative purposes
only. They do not necessarily reflect management's opinion that such
indices are an appropriate measure of the relative performance of the
Company's Common Stock, and are not intended to forecast or be
indicative of future performance of the Common Stock. All information
regarding the Company's Common Stock has been adjusted to give effect to
the Company's three-for-two stock splitsplits in August 1997.
COMPARISON OF 56 MONTH1997 and February
1999.
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN
AMONG REINSURANCE GROUP OF AMERICA, INCORPORATED (VOTING),
THE S & P 500 INDEX
AND THE S & P INSURANCE (LIFE/HEALTH) INDEX
[GRAPH]
5/4/93CUMULATIVE TOTAL RETURN
-------------------------------------------------------------------
12/93 12/94 12/95 12/96 12/97 ---------------------------------------------------------------------------------------12/98
Reinsurance Group of America, Incorporated $100 $107 $ 96 $144 $187 $255
- ------------------------------------------------------------------------------------------------------------------------------REINSURANCE GROUP OF AMERICA,
INCORPORATED (VOTING) 100 90 135 175 239 395
S & P 500 $100 $108 $110 $151 $185 $247
- ------------------------------------------------------------------------------------------------------------------------------100 101 139 171 229 294
S & P Insurance (Life/Health) $100 $ 96 $ 79 $114 $139 $174INSURANCE (LIFE/HEALTH) 100 83 119 146 182 192
$100$100 INVESTED ON 5/04/93DECEMBER 31, 1993 IN STOCK OR ON 4/30/93
IN INDEX -
INCLUDING REINVESTMENT OF DIVIDENDS. FISCAL YEAR ENDING DECEMBER 31.
16
19
COMPARISON OF 7 YEAR CUMULATIVE TOTAL RETURN
AMONG REINSURANCE GROUP OF AMERICA, INCORPORATED
(NON-VOTING),
THE S & P 500 INDEX
AND THE S & P INSURANCE (LIFE/HEALTH) INDEX
[GRAPH]
CUMULATIVE TOTAL RETURN
-------------------------------------------
6/4/98 6/98 9/98 12/98
REINSURANCE GROUP OF AMERICA,
INCORPORATED (NON VOTING) 100 164 165 194
S & P 500 100 104 94 114
S & P INSURANCE (LIFE/HEALTH) 100 101 84 99
$100 INVESTED ON JUNE 4, 1998 IN STOCK OR ON MAY 31, 1998
IN INDEX - INCLUDING REINVESTMENT OF DIVIDENDS.
FISCAL YEAR ENDING DECEMBER 31.
17
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company was incorporated in December 1992, at which time it
was owned 100% by General American.American Life Insurance Company ("General
American"). In May 1993, the Company completed an initial public
offering of its Common Stock (the "IPO"). General American retains
beneficial ownership of approximately 63.8%64% of the Company's Voting Common
Stock.Stock, and approximately 52% of all outstanding stock.
RGA was organized as a Missouri corporation in 1992 to serve as a
holding company for reinsurance operations formerly conducted by General
American through its reinsurance division. RGA Re and its predecessor,
the reinsurance division of General American, have been engaged in the
business of life reinsurance since 1973. Initially, all reinsurance
agreements were with General American, which retroceded to RGA Re in
1993 all of its U.S. life reinsurance pursuant to a written agreement
(the "General American Retrocession Agreement"). Since the IPO,
the majority ofsubstantially all reinsurance agreements between General American and
the underlying ceding companies have been transferred to RGA Re.
Additionally, RGA Re has established its own client base and assumes
reinsurance directly.
The Company beneficially owns 100% of RGA Life Reinsurance Company
of Canada ("RGA Canada"). RGA Canada directly reinsures or administers
all of the Company's Canadian reinsurance business. Amounts in excess of
RGA Canada's retention limit are retroceded to General American pursuant
to a retrocession agreement and then retroceded by General American to
RGA Re.
General American and RGA Re entered into a marketing agreement
effective January 1, 1993 whereby General American agreed to amend and
terminate its assumed and retrocession reinsurance agreements only at
RGA Re's direction, thus giving RGA Re the contractual right to direct
future changes to existing reinsurance agreements. Under the terms of
the marketing agreement, General American further agreed to enter into
additional reinsurance agreements as a reinsurer only at RGA Re's
direction. In consideration of its services under the marketing
agreement and in recognition of its continuing liability under the
reinsurance agreements retroceded to RGA Re pursuant to the General
American Retrocession Agreement, General American charges RGA Re an
annual amount, payable in quarterly installments, equal to 0.25% of
specified policy-related liabilities that are associated with existing
and future treaties written by General American for the benefit of RGA
Re. The specified policy-related liabilities on which the marketing fee
is based consist of gross reserves for reinsurance assumed by General
American plus gross policy and contract claim liabilities related
thereto, less (i) reserve credits taken for reinsurance retroceded, (ii)
the reinsurance-retroceded component of policy and contract claims, and
(iii) total policy loans outstanding for reinsurance assumed by General
American, as such items are reflected on the statutory financial
statements. The marketing agreement expires on January 1, 2000. RGA Re
may, at its sole option, terminate the marketing agreement at any time.
The Company paid General American approximately $157,000$95,000 for its services
under the marketing agreement in 1997.1998.
General American entered into a tax allocation agreement with RGA
Re in October 1992, a tax allocation agreement with RGA in January 1993,
and a tax sharing agreement with RGA and RGA Re in January 1993. The tax
allocation agreements, among other things, generally provide that the
tax liability of the General American federal consolidated tax return
group, during the period that RGA or RGA Re were members of that group,
will be allocated among the members of the group in proportion to their
separately calculated tax liability. The agreements also provide that
any savings resulting from the tax benefits of a particular member will
be paid to that member, rather than accruing to the benefit of the other
members. The tax sharing agreement, among other things, requires that
certain payments be made between RGA or RGA Re and General American in
the event there is a change in pre-IPO tax liabilities of RGA or RGA Re
and provides that General American may settle any number of individual
proposed adjustments in an amount less than or equal to $50,000 without
the consent of the other party. In addition, under the tax sharing
agreement, General American indemnifies RGA and RGA Re against any tax
liabilities of the 17
20
General American federal
18
consolidated tax return group that are not attributable to either RGA or
RGA Re; and RGA Re and RGA Re will indemnify General American against any
tax liabilities of RGA or RGA Re.
Under two administrative services agreements datedentered into as of
January 1, 1993, General American has agreed to provide RGA and RGA Re,
at their request, certain management and administrative services, such
as legal, treasury, employee benefit, payroll and personnel services.
RGA and RGA Re pay General American a monthly fee based on General
American's actual cost, computed in accordance with General American's
current cost accounting system. Each agreement is terminable by either
party on 90 days' written notice. General American has agreed to provide
similar services to RGA Canada pursuant to a management agreement
effective January 1, 1993. The cost of services provided by General
American under these agreements in 19971998 was approximately $1,837,000.$2,717,000.
Under separate investment advisory agreements, Conning Asset
Management Company ("Conning"), a majority-owned subsidiary of General
American, manages certain investment portfolios of RGA, RGA Re, RGA
Canada, RGA Australian Holdings, PTY, Limited and RGA Reinsurance
Company (Barbados) Ltd. and services commercial mortgages on behalf of
RGA Re. Each of the investment
advisory agreements is terminable by either party on 90 days' written notice.
For its services, Conning receives an annual fee of 0.09% of the average
quarterly book value of the portfolios managed and 0.22% of mortgage loans
serviced. This fee is payable quarterly in arrears. The Company made payments to Conning of approximately $1,701,000$2,873,000
for such investment advisory services in 1997.1998. As part of its investment
advisory services, Conning also originates commercial mortgages on
behalf of RGA Re. Conning generally receives a fee associated with the
origination of such loans in the amount of 1% of the loan balance, which
is paid by the borrower. During 1997, Conning
originated approximately $78,013,000 of mortgage loans on behalf of RGA Re.
Separate from the investment advisory
agreements, Conning also manages a series of private investment funds in
which RGA has invested from time to time. Conning receives a management
fee and a specified percentage of the funds' net gains, which are paid
by the funds. RGA's investments in such funds totaled approximately
$1,402,000$2,954,000 as of December 31, 1997.1998.
The Company conducts its business primarily from premises leased
by RGA Re from General American. RGA Re made rental payments to General
American principally for office space and equipment of approximately
$1,599,000$1,628,000 in 1997.1998.
The Company has direct policies and reinsurance agreements with
General American and certain of its subsidiaries. These agreements are
terminable by either party on 90 days' written notice with respect to
new business only. The Company receivedreflected earned gross premiums pursuant
to these agreements of approximately $32,146,000($1,690,000) in 1997.1998. The earned
premiums reflect the net of business assumed from and ceded to General
American and its subsidiaries. The stable value products reinsured by
the Company are also General American products. Deposits from stable
value products totaled approximately $483,000,000$700,400,000 in 1997.1998. In addition,
the Company entered into annuity reinsurance transactions during 19971998
with Cova Financial Services Life InsuranceInsurnace Company, a subsidiary of
General American. Deposits related to this business were approximately
$124,000,000$112,700,000 as of December 31, 1997.1998.
Pursuant to a marketing agreement, the Company utilizesutilized the
services of the consulting firm Insource Limited and its predecessor ("Insource") to conduct
certain marketing-related services in particular geographic regions.regions
until December 1, 1996. Graham Watson, an executive officer of the
Company and an officer and director of certain Canadianof the Company's
subsidiaries, is a principalnon-executive Chairman of and has an approximate 75%
equity interest in Intercedent Limited which prior to April 1, 1996, ownedowns approximately 50% of
the common stocknon-voting special shares of Insource. Effective April 1, 1996, Intercedent Limited
no longer owned any common stock of Insource, but is
entitled to receive up to 50% of Insource's revenues relating to
business generated on behalf of RGA, among others.the Company. The Company paid Insource
approximately $234,000$422,100 during 19971998 pursuant to this agreement. The
agreement was terminated with respect to new business effective December
31, 1996, although the Company continues to pay Insource for certain business
generated prior to such date. In addition, prior to April 1, 1996, the
Company paid 18
21
Intercedent Limited a production bonus based on businesspremiums
generated through its Canadian subsidiaries. Since April 1, 1996, this
bonus has beenis paid directly to Mr. Watson. See "Executive Compensation.Compensation -
Summary Compensation Table."
General American, RGA and RGA Re arewere parties to a stockholders'shareholders'
agreement with the minority stockholdersshareholders of Fairfield Management Group,
Inc. ("Fairfield"), formerly a subsidiary of RGA Re. The
stockholders'19
shareholders' agreement provides,provided, among other things, that the minority
stockholdersshareholders (who collectively ownowned 4,900 shares of Fairfield) havehad the
right, at any time after December 31, 1997, to put all of their shares
in Fairfield to RGA at the greater of $504.40 per share or the then
current adjusted book value per share of Fairfield (the "Modified Book
Value Price"), or to convert all of their shares into Voting Common
Stock of RGA at a conversion ratio based on the aforementioned price and
the then-current value of RGA Common Stock, provided that such
conversion shallwould not reduce General American's ownership interest in RGA
below 51%. The minority stockholders notified the Company of the
exercise ofshareholders exercised their put options
effective January 1, 1998. As a result, in
December 1997, the Company established a reserve of approximately $3,000,000
against the intangible asset that will arise related to the excess of
purchase price over the fair value of assets acquired1998, for this put option.
In January 1998,which the Company paid the minority holders $2,471,560 and
anticipates making an additional payment during the second quartera total of
1998
when the Modified Book Value Price is determined.
19
22$4,356,873.
ITEM 2 AND ITEM 3 - AMENDMENTSSALE OF RESTATED ARTICLES OF INCORPORATIONSTOCK TO INCREASE THE NUMBER OF AUTHORIZED SHARES OF COMMON STOCK FROM FIFTY MILLION
TO SEVENTY-FIVE MILLION
AND TO AUTHORIZE TWENTY MILLION SHARES
OF NON-VOTING COMMON STOCKGENAMERICA OR ITS AFFILIATES
The second and third itemsitem to be acted upon at the Annual Meeting are
amendments (the "Amendments")is a
proposal to Article Three of the Restated Articles of
Incorporation of the Company. Approval of each of these Items requires the
affirmative vote of a majority of the outstanding sharesauthorize future sales of the Company's Common Stock. A vote against either proposal gives rise to no rights on the
part of the stockholder casting such vote.
GENERAL
The Board of Directors has determined that it is advisable to amend
Article Three of the Company's Restated Articles of Incorporation. The first
Amendment (Item 2) would increase the number of authorized shares ofequity securities,
including Voting Common Stock, from 50,000,000 to 75,000,000. The second Amendment (Item 3) would
authorize a new class of non-voting common stock to be designated "Non-Voting
Common Stock" (the "Non-Voting Common Stock") consisting of 20,000,000 shares
having a par value of $0.01 per share and having no voting rights except on
certain limited matters required by law. The Board, at a meeting held April
22, 1998, voted to recommend that the stockholders adopt the Amendments. The Non-Voting Common Stock will have dividendor other
securities convertible into or exercisable for Voting Common Stock or
Non-Voting Common Stock ("Equity Securities"), from time to time to
GenAmerica Corporation ("GenAmerica") or its affiliates, upon the terms
and distribution rights and rights
on dissolutionconditions described below.
BACKGROUND
The principal beneficial shareholder of the Company that are identicalis GenAmerica,
which is a wholly-owned subsidiary of GAMHC. See "Item 1 - Election of
Directors - Common Stock Ownership of Management and Certain Beneficial
Owners." The Company desires to thosehave the flexibility to allow
GenAmerica to participate in equity capital fund raising activities
which the Company may undertake from time to time in the future. By
participating in such activities, GenAmerica would be able to maintain
its relative ownership percentage in the Company if it so desired. New
York Stock Exchange ("NYSE") rules generally require approval by the
Company's shareholders of any issuance of Equity Securities to
GenAmerica or its affiliates, due to the current level of beneficial
ownership of GenAmerica (approximately 52% of the Company's
Common Stock.
The Board of Directors believes that the Amendments are in the best
interests of the Company and its stockholders. Before voting on the
proposals to approve the Amendments, however, stockholders are urged to read
carefully the following sections of this Proxy Statement, which further
describe the Amendments and their purposes.
If the Amendments are approved by the stockholders of the Company, the
Board of Directors intends to prepare and file Articles of Amendment to the
Restated Articles of Incorporation of the Company in accordance with the
Amendments, which will become effective immediately upon acceptance of the
filing by the Secretary of State of Missouri.
The full text of Article Three as proposed to be amended by both Item 2 and
Item 3 is set forth as Exhibit A to this Proxy Statement and is incorporated
herein by reference. The following summary should be read in conjunction
with, and is qualified in its entirety by reference to, such Exhibit A.
REASONS FOR THE AMENDMENTS
The Board of Directors believes that the authorization of additional
shares oftotal Voting Common
Stock and Non-Voting Common Stock will provide flexibility
in meeting future capital needsand approximately 64% of the Voting
Common Stock).
The Company whether as a result of
internally generated growth ofmay decide to raise equity capital at various times in
the Company and its present subsidiaries, or
as a result of external growth through mergers and acquisitions. The
issuance of Non-Voting Common Stock for any such purpose would not dilute the
voting power offuture in order to enhance the Company's existing stockholders, including its principal
beneficial stockholder, General American. The newly authorized shares of
Common Stock and Non-Voting Common Stock will be available for possible use
in connection with future financings, investmentcapital structure, to fund
growth opportunities mergers and
acquisitions, employee benefit or dividend reinvestment plan distributions,
other distributions such as stock dividends or stock splits, or for other corporate purposes. General American, which currently beneficially owns approximately 63.8%As part of any
capital raising plan, the outstanding Common Stock, has an interestCompany may undertake either to privately
place Equity Securities to GenAmerica and other investors, or sell
Equity Securities to GenAmerica and other investors pursuant to a public
offering. The terms of any potential sale to GenAmerica have not been
determined, but in any event would be expected to approximate the
current market value of such securities at the time of sale, as
described below. The terms of any such sale and the securities offered
therein, will be determined by the Board of Directors at that time. Any
private sales would not be registered under the Securities Act of 1933
and such shares could not be offered or sold in the adoption of the
Amendments because the issuance of Non-Voting Common Stock instead of Common
Stock would preserve its voting control over the Company.
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The Company does not currently have any definite plansUnited States absent
registration or commitments
that would require the issuance of any of the additional shares of Common
Stock to be authorized by the Amendments, but desires to place itself in a
position to do so if and when future opportunities arise and market
conditions warrant. The Company does presently intend, however, to file aan applicable exemption from registration statement in the near future with the U.S. Securities and
Exchange Commission to facilitate an underwrittenrequirements.
Any public offering of shares
of Non-Voting Common Stock to raise gross proceeds of approximately
$-------------. If the Company files such registration statement and
completes such a public offering, the Company's intention is to use the net
proceeds from such sale of Non-Voting Common Stock for general corporate
purposes. Any such offering of the Non-Voting Common Stock would only be made
only by means of a prospectus and
would be subject to the registration statement becoming effective, compliance with applicable state securities
laws and favorable market conditions. This Proxy Statement does not
constitute an offereffective.
REASONS FOR THE PROPOSAL
The Board of Directors of the Company believes it is in the
Company's best interest to sell,maintain the flexibility to facilitate
possible further investments in the Company by GenAmerica or a solicitation of an offer to buy, any shares
of Non-Voting Common Stock.
The newly authorized shares of Common Stock, which will be identical toits
affiliates for the shares of Common Stock currently authorized, and the Non-Voting Common
Stock, a description of which is set forth below, may be issued for such
consideration asreasons described below. Though the Board of
Directors may authorizehas not committed to issue any Equity Securities, whether to
GenAmerica or otherwise, it believes it is desirable to have the
flexibility to do so from time to time subjectwithout having to first seek
shareholder approval for each particular transaction if and when the
Board of Directors determines the issuance would be in the best
interests of shareholders.
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Since the Board of Directors has not determined at this time to
issue any required regulatory approvals, but without further action by
the stockholders unless specifically required by applicable lawEquity Securities to GenAmerica or New York
Stock Exchange rules. In connection with any issue and saleits affiliates, it has not
fully assessed all aspects of any such transaction. Any decision to
issue shares to GenAmerica or otherwise will be based on the facts and
circumstances at that time. In general, the Board of Directors believes
it may be desirable to issue Equity Securities to GenAmerica in order to
maintain a strong relationship for the following reasons:
CONTINUITY. In the event the Board of Directors decides the
Company should issue Equity Securities to GenAmerica or its affiliates,
GenAmerica may avoid dilution to its voting control. Such an issuance
may therefore reduce the risk of a disruption in the continuity of the
Company's long-term plans and objectives that might otherwise result if
GenAmerica were no longer to maintain control.
KEY EMPLOYEES. Maintenance of control by General American may
allow employees to continue to concentrate on their responsibilities
without undue concern that the future of the Company might be affected
by an unwanted takeover that could otherwise be triggered. As a result,
the Company may be better able to preserve its ability to attract and
retain qualified key employees.
BUSINESS RELATIONSHIPS. The issuance of Equity Securities to
GenAmerica may enhance existing and potential business relationships of
the Company with parties who may in the future have concern about
changes in control of the Company in the event the holdings of
GenAmerica are ever diluted. The Company may be better able to attract
joint venture and marketing partners if the Company is perceived to not
be vulnerable to a takeover or disruption due to uncertainty concerning
the Company's ownership.
FINANCING FLEXIBILITY. The Board of Directors believes that
GenAmerica, as the principal shareholder of the Company, may be willing
to invest under circumstances when public investors might not. Although
the Company believes it currently has reasonable access to public and
private capital markets, the Board of Directors believes it is in the
best interests of shareholders that the Company have ready access to all
sources of capital, including GenAmerica and its affiliates.
NEW YORK STOCK EXCHANGE RULES
Under the applicable rules of the NYSE, the shareholders of the
Company generally must approve any significant issuance of common
equity, or securities convertible into or exercisable for common equity,
by the Company to a substantial shareholder, such as GenAmerica. In
order to comply with such rules, the NYSE requires that the
Company's shareholders approve the various terms of the proposed sales,
such as the identity of the substantial shareholder, the price for the
shares, the amount of shares to be sold, the length of time during which
sales would be made, the use of proceeds from the sales and the reasons
for the sales.
TERMS OF SALES
Because the exact terms of any sale of Equity Securities to
GenAmerica are not known at this time, the Company proposes that the
shareholders vote in favor of Item 2 to approve the sale of shares
subject to certain specific terms and conditions. Under the proposal,
the Board of Directors would be authorized to approve, during the next
three years, any sale of Equity Securities by the Company to GenAmerica
or its affiliates in which the number of such shares, including shares
into which such Equity Securities are convertible or exercisable, would
not exceed the number of shares that would enable GenAmerica to be issued and sold and the terms upon which
they may be issued and sold will necessarily be determined by conditions
existing at the time of such issue and sale. Stockholders of the Company do
not have the preemptive right to subscribe on a pro-rata basis to any future
issuance of shares of any class.
As of March 31, 1998, there were 25,228,480 shares of Common Stock
issued and outstanding, 960,714 shares of Common Stock were granted under
stock option plans and employee benefit plans, and ----- shares of Common
Stock were available for issuance under such plans.
DESCRIPTION OF THE NON-VOTING COMMON STOCK
Under the Amendment submitted to stockholders as Item 3, a new class of
common stock to be designated as Non-Voting Common Stock will be created.
The rights, powers and limitations of the Common Stock and the Non-Voting
Common Stock are set forth in full in Article Threemaintain
its then current ownership percentage of the Company's Restated
ArticlesVoting Common
Stock. Any such sale would be on substantially the same terms as a sale
to unaffiliated parties.
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While the terms of Incorporation,a sale to GenAmerica would be substantially the
same as proposeda sale to unaffiliated parties, it may be amended.
VOTING
On matters brought beforeappropriate in certain
situations to reduce the stockholderssales price, based on expected expenses of the
sale and the availability of other sources of capital. For example, in
connection with a private placement of Equity Securities, the Company
each holdermay pay a reduced sales commission. Based on current costs associated with
capital raising transactions, the Company does not expect any reduction in
sales price to exceed 3%.
The number and kind of Common Stock will continueEquity Securities issuable to be entitled to one vote for each share of
Common Stock held. The Non-Voting Common Stock will not entitle the holder
thereof to any votes except as otherwise required by law. The Non-Voting
Common Stock is, however, convertible into voting Common Stock under certain
circumstances described below. Subject to such possible conversionGenAmerica
under the circumstances described below, the Amendment will not affect the relative
voting power of the holders of the Common Stock. Under the General and
Business Corporation Law of Missouri, as currently in effect, holders of
Non-Voting Common Stockproposal will be entitled to vote as a class upon a proposed
amendment toappropriately adjusted by the Company's Restated ArticlesCompany in the
event of Incorporation if the
amendment would, among other things: (i)any increase or decrease the aggregate
number of authorized shares of the Non-Voting Common Stock; (ii) increase or
decrease the par value of the Non-Voting Common Stock; (iii) create a new
class of shares having rights and preferences prior or superior to the
Non-Voting Common Stock; (iv) increase the rights and preferences orin the number of authorized shares of any class having rights and preferences prior
or superior to the Non-Voting Common Stock; or (v) alter or change the
powers, preferences, or special rights of the Non-Voting Common Stock so as
to affect the Non-Voting Common Stock adversely. A merger or consolidation
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involving the Company, in and of itself, is not deemed to involve a
proposed amendment to the Restated Articles of Incorporation for these
purposes.
DIVIDENDS AND OTHER DISTRIBUTIONS
Each share of Common Stock and Non-Voting Common Stock will be equal in
respect to dividends and other distributions in cash, property, or shares of
stock of the Company (including distributions in connection with any
recapitalization and upon liquidation, dissolution or winding up of the
Company), except as described below. The declaration of any payment of cash
dividends is solely within the discretion of the Board of Directors, and
there can be no assurance that such dividends will be declared and paid with
any regularity. Dividends or other distributions payable in shares of the
Company shall be made to all holders of Common Stock and Non-Voting Common
Stock and shall be made only (i) in shares of Non-Voting Common Stock to the
holders of Common Stock and to the holders of Non-Voting Common Stock, (ii)
in shares of Common Stock to the holders of Common Stock and in shares of
Non-Voting Common Stock to the holders of Non-Voting Common Stock, or (iii)
in any other authorized class or series of capital stock to the holders of
both classes of common stock, regardless of the fair market value of such
shares received in payment of such dividend or other distribution. In
addition, dividends or other distributions payable on the Common Stock and
Non-Voting Common Stock in convertible securities or securities giving the
holder a right to acquire shares of Common Stock or Non-Voting Common Stock
("Options"), other than rights issued pursuant to shareholder rights plans of
the type entitling holders of rights other than an "acquiring person" to
purchase shares or other securities at a below-market price if certain events
occur (which rights may be distributed as a dividend pursuant to such a plan
upon shares of either class of Common Stock or Non-Voting Common Stock
without a corresponding dividend distribution upon shares of the other),
shall be made to all holders of Common Stock and Non-Voting Common Stock and
may be made (1) in securities convertible into Common Stock or Options to
acquire Common Stock to the record holders of Common Stock and to record
holders of Non-Voting Common Stock, or (2) in securities convertible into
Common Stock or Options to acquire Common Stock to the record holders of
Common Stock and in securities convertible into Non-Voting Common Stock and
Options to acquire Common Stock to the record holders of the Non-Voting
Common Stock. In no event will either Common Stock or Non-Voting Common
Stock be split, subdivided or combined unless the other is proportionately
split, subdivided or combined.
CONVERSION OF NON-VOTING COMMON STOCK
Except as described below, the Non-Voting Common Stock will not be
convertible into Common Stock or any other security of the Company.
The Non-Voting Common Stock will be automatically converted into Common
Stock on a share-for-share basis if,outstanding as
a result of the existence of the
Non-Voting Common Stock, the Common Stock or the Non-Voting Common Stock or
both becomes excluded from trading on all principal national securities
exchanges and also is excluded from quotation on The Nasdaq Stock Market's
National Market or any other comparable national quotation system then in
use. In addition, if at any time the number of outstanding shares of Common
Stock as reflected on thea reorganization, merger, recapitalization,
reclassification, stock transfer books of the Company falls below 10%
of the aggregate number of outstanding shares of Common Stock and Non-Voting
Common Stock, then all the outstanding shares of Non-Voting Common Stock will
be automatically converted into shares of Common Stock, on a share-for-share
basis. For purposes of the immediately preceding sentence, any shares of
Common Stock or Non-Voting Common Stock repurchased by the Company shall no
longer be deemed "outstanding" from and after the date of repurchase.
In the event of any such conversion of the Non-Voting Common Stock,
certificates that formerly represented outstanding shares of Non-Voting
Common Stock will thereafter be deemed to represent a
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like numberdividend, stock split, combination of shares or
other similar transaction.
The amount of Common Stock,Equity Securities and allthe sale price, conversion
price or exercise price per share, as applicable, for such shares of Common Stock
and Non-Voting Common Stocksold
to GenAmerica or its affiliates pursuant to any sale authorized by the Company's Restated Articles of
Incorporation, as proposed to be amended, will be deemed to be shares of
Common Stock.
BUSINESS COMBINATIONS; DISSOLUTION
In the event of a merger, consolidation, combination or similar
transactions of the Company with another entity (whether or not the Company
is the surviving entity) or in the event of a liquidation, dissolution or
winding up of the Company, the holders of Non-Voting Common Stock will be
entitled to receive the same per share consideration as the per share
consideration, if any, received by holders of Common Stock in that
transaction. Any common stock, however, that holders of Non-Voting Common
Stock become entitled to receive in the transaction may have terms
substantially similar to the terms of the Non-Voting Common Stock itself.
Thus the surviving entity in any such transaction could have a dual-class
capital structure like that of the Company under the Amendments and could
upon the consummation of the merger or consolidation give voting shares to
the holders of Common Stock and non-voting shares to the holders of
Non-Voting Common Stock.
NON-VOTING COMMON STOCK PROTECTION
The terms of the Non-Voting Common Stock have been designed with the
intention of reducing the possibility that the holders of Non-Voting Common
Stock could be treated unfairly in the event that a person attempts to
acquire control of or to take over the Company. The Amendment authorizing
the creation of the Non-Voting Common Stock (Item 3) accordingly includes a
two-pronged "Non-Voting Common Stock Protection" provision, which provision
may also have an anti-takeover effect.
The first prong of the Non-Voting Common Stock Protection provision
seeks to prevent a person who has crossed a certain ownership threshold from
gaining control of the Company by acquiring Common Stock without buying
Non-Voting Common Stock. Anyone who acquires more than 15% of the
outstanding Common Stock after May 27, 1998 (the "Effective Date") and does
not acquire a percentage of the Non-Voting Common Stock outstanding at least
equal to the percentage of Common Stock that the person acquired above the
15% threshold will not be allowed to vote the Common Stock acquired in excess
of the 15% level. For example, if a person acquires 20% of the outstanding
Common Stock after the Effective Date but acquires no Non-Voting Common
Stock, that person would be unable to vote the 5% of the Common Stock
acquired in excess of the 15% threshold. The inability of the person to vote
the excess Common Stock will continue under the Company's Restated Articles
of Incorporation until such time as a sufficient number of shares of
Non-Voting Common Stock have been acquired by the person that the
requirements of the Non-Voting Common Stock Protection provision have been
satisfied.
The second prong of the Non-Voting Common Stock Protection provision is
an "Equitable Price" requirement. It is intended to prevent a person seeking
to acquire control of the Company from paying a discounted price for the
Non-Voting Common Stock required to be purchased by the acquiring person
under the first prong of the Non-Voting Common Stock Protection provision.
The Amendment authorizing the Non-Voting Common Stock provides that an
equitable price has been paid for shares of Non-Voting Common Stock only when
they have been acquired at a price at least equal to the greater of (i) the
highest per share price paid by the acquiring person, in cash or in non-cash
consideration, for any Common Stock acquired within the 60-day periods
preceding and following the acquisition of the Non-Voting Common Stock, or
(ii) the highest closing market sale price of a share of Common Stock during
the 30-day period preceding the acquisition of the Non-Voting Common Stock.
The value of any non-cash considerationthis
Item 2 will be determined by the Board of Directors or a committee of
the Company actingBoard of Directors specifically authorized to make such
determination, within the parameters of the proposal contained in good faith. The highest closing market
sale pricethis
Item 2. Such a committee will include directors who are not affiliated
with GenAmerica.
Shareholders should note that the pricing of a share of Common Stock will be the highest closing sale price
on the Composite Tapesecurities
convertible or exercisable for the New York Stock Exchange-Listed Stocks or such
other securities
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exchange or other quotation system then constituting the principal
trading market for either theVoting Common Stock or the Non-Voting Common
Stock.
InStock is typically dependent on the event that no quotations are available,other terms and provisions of the
highest closing market
sale pricesecurities, including, without limitation, interest rates, term and
covenants or other restrictions, in the case of debt securities, and
term and covenants or other restrictions, in the case of other
securities, such as warrants. Accordingly, shareholders will be the fair market value of a share of Common Stock during
such 30-day period as determined byhave to
rely on the Board of Directors of the Company, acting in good faith. Asif such a practical matter, a person seeking to acquire
control of the Company would have to buy the Common Stock and Non-Voting
Common Stock at virtually the same time and at the same price, as might occur
in a tender offer, in ordertransaction is
ultimately approved, to ensure that the acquiring person would be able
to vote the Common Stock acquired in excessoverall terms and conditions of
the 15% threshold.
The Non-Voting Common Stock Protection provision does not prevent any
person or group from acquiring a significant or controlling interest in the
Company, provided such person or group complies with the Non-Voting Common
Stock Protection provisions or incurs suspension of the voting rights of
excess shares of Common Stock acquired as provided by the Non-Voting Common
Stock Protection feature. The Non-Voting Common Stock Protection provision
could make an acquisition of a significant or controlling interest in the
Company more expensive than if such requirement did not exist. Consequently,
a person or group might be deterred from acquiring a significant or
controlling interest in the Company as a result of such requirement.
Under the Non-Voting Common Stock Protection provision, an acquisition
of Common Stock would be deemed to include any shares that a person acquires
directly or indirectly, in one transaction or a series of transactions, or
with respect to which that person acts or agrees to act in concert with any
other person. Unless theresecurities are affirmative attributes of concerted action,
however, "acting or agreeing to act in concert with any other person" will
not include actions taken or agreed to be taken by persons acting in their
official capacities as directors or officers of the Company or actions by
persons merely because they are related by blood or marriage. Also, an
acquisition of Common Stock will not be deemed to include acquisitions made
pursuant to contracts existing prior to the Effective Date, acquisitions by
bequest or inheritance, by operation of law upon the death of any individual,
or by any other transfer without valuable consideration, including a gift
that is made in good faith and not for purposes of circumventing the
Non-Voting Common Stock Protection provision or acquisitions pursuant to a
stock dividend, stock split, reclassification or other distribution of Common
Stock by the Company. Thus, for example, the exercise of options that were
granted under any stock option plan of the Company prior to the Effective
Date would not be considered acquisitions for purposes of the Non-Voting
Common Stock Protection provision because the exercise would be pursuant to a
preexisting contract. The Non-Voting Common Stock Protection provision also
does not apply to transfers of Common Stock by General American or its
successors and assigns to any of their respective affiliates.
The Non-Voting Common Stock Protection provision will not apply to any
increase in a holder's percentage ownership of Common Stock resulting solely
from a change in the total number of shares of Common Stock outstanding as
the result of a repurchase of Common Stock by the Company since the last date
on which that holder acquired Common Stock. The Non-Voting Common Stock
Protection provision also provides that to the extent that the voting power
of any shares of Common Stock cannot be exercised pursuant to the provision,
those shares of Common Stock will not be included in the determination of the
voting power of the Company for any purposes under the Company's Restated
Articles of Incorporation, as proposed to be amended, or under the Missouri
General and Business Corporation Law.
TRANSFERABILITY; TRADING MARKET
Like the existing Common Stock, the Non-Voting Common Stock will be
freely transferable, and except for federal and state securities law
restrictions on directors, officers and other affiliates of the Company and
on persons holding "restricted" stock, Company stockholders will not be
restricted in their
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ability to sell or transfer shares of Non-Voting Common Stock. In the
event that shares of Non-Voting Common Stock are issued in the future, it is
expected that such shares, like the shares of Common Stock, would be listed
for trading on the New York Stock Exchange, if eligible therefor.
POSSIBLE DILUTION
It is possible that the Common Stock would trade at a premium compared
to the Non-Voting Common Stock. The Board of Directors has included certain
Non-Voting Stock Protection features in the Amendments which may help to
reduce or eliminate the economic reasons for the Common Stock to trade at a
premium compared to the Non-Voting Common Stock, although no assurance can be
given in this regard. If the Common Stock were to trade at a premium to the
Non-Voting Common Stock, subsequent issuances of Non-Voting Common Stock,
instead of Common Stock, in connection with a public or private offering, an
acquisition or other transaction could have a greater dilutive effect on
stockholders because such an acquisition or transaction would require more
shares to deliver the same aggregate value. To minimize dilution of voting
power to existing stockholders, the Company may be more likely to issue
shares of Non-Voting Common Stock than Common Stock in the future to raise
equity, finance acquisitions or fund employee benefit plans.
ISSUANCES AND REPURCHASES OF STOCK
The Amendments expressly permit the Board of Directors to authorize the
Company to issue and sell all or any part of any class of stock herein or
hereafter authorized, from time to time, and at such time or times, in such
amounts and manner to such persons, firms, associations or corporations, and
for such consideration, whether in cash, property or otherwise, as the Board
of Directors from time to time, in its discretion, determines whether or not
greater consideration could be received upon the issue or sale of the same
number of shares of another class, and as otherwise permitted by law.
The Amendments also expressly permit the Board of Directors to
authorize the Company to purchase from time to time shares of any one class
or any combination of classes without regard to differences among them in
price and other terms under which such shares may be purchased. The Board of
Directors, therefore, could authorize the Company to purchase Common Stock
even if the consideration which would be paid by purchasing Non-Voting Common
Stock would be less.
PREEMPTIVE RIGHTS
Neither the Common Stock nor the Non-Voting Common Stock will carry any
preemptive rights enabling a holder to subscribe for or receive shares of any
class of the Company's stock or any other securities convertible into shares
of any class of the Company's stock.
POSSIBLE ANTI-TAKEOVER EFFECT OF AMENDMENTS
The Amendments are being proposed by the Board of Directors for reasons
other than as an "anti-takeover" device, and, especially in light of the fact
that a majority (presently 63.8%) of the shares of the outstanding Common
Stock are beneficially owned by General American, the Amendments are not part
of a plan by the Company's Board of Directors to propose a series of new
anti-takeover measures. Item 3 is, however, designed to facilitate the
raising of equity capital without diluting the voting power of existing
stockholders, including General American.
Under present circumstances, General American has the ability to
disapprove and the ability to substantially influence any acquisition of the
Company in a transaction involving a merger, consolidation or sale of assets
because of the voting power of the shares of Common Stock held by it.
Virtually all corporate acquisitions take one of these three forms except
acquisitions in the form of a tender offer to
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buy shares directly from the stockholders, a transaction that would not
be likely in the case of the Company because, unless General American would
tender its shares, the acquiror could not obtain voting control through the
tender offer. The Amendments will neither change the fact that General
American has sufficient voting power to disapprove or substantially influence
the approval of a merger, consolidation or sale of assets of the Company, nor
will the Amendments immediately give General American any greater voting
control. By allowing the Company to issue a substantial number of shares of
Non-Voting Common Stock without causing a loss of the voting rights of the
holders of Common Stock, the Amendments may, however, continue to make the
Company a less attractive target for a takeover bid than it otherwise may
have been, or continue to render more difficult or discourage a merger
proposal, an unfriendly tender offer, a proxy contest or the removal of
incumbent directors or management, even if such actions were favored by the
stockholders of the Company other than General American.
The Company currently has in place certain provisions that may have an
anti-takeover effect. The Company's Restated Articles of Incorporation
include provisions which provide, among other things, (i) for a classified
board of directors, (ii) for the denial of cumulative voting rights, (iii)
that directors may be removed by stockholders only for cause and only by the
affirmative vote of the holders of at least 85% of all of the then
outstanding shares of the Company's stock then entitled to vote generally in
the election of directors, and (iv) that special meetings of stockholders may
be called only by the Board of Directors, the Chairman of the Board of
Directors or the President of the Company. The Company has also adopted a
stockholder Rights Plan that operates to discourage takeover efforts that are
not negotiated with the Board of Directors.
PREFERRED STOCK
The authorized preferred stock of Company is available for issuance
from time to time at the discretion of the Board of Directors of Company
without stockholder approval. The Board of Directors has the authority to
prescribe for each series of preferred stock it establishes the number of
shares in that series, the dividend rate, and the voting rights, conversion
privileges, redemption and liquidation rights, if any, and any other rights,
preferences, and limitations of the particular series. Depending upon the
rights of such preferred stock, the issuance of preferred stock could have an
adverse effect on holders of Common Stock and Non-Voting Common Stock by
delaying or preventing a change of control of Company, making removal of the
present management of Company more difficult, or resulting in restrictions
upon the payment of dividends and other distributions to the holders of
Common Stock. Except as otherwise contemplated by the Rights Plan described
above, Company presently has no intention to issue any shares of preferred
stock.
STOCKHOLDER INFORMATION
The Company will deliver to the holders of Non-Voting Common Stock the
same proxy statements, annual reports, and other information and reports that
it delivers to the holders of Common Stock.
BOARD RECOMMENDATION
The Board of Directors believes the Amendments will be in the best interests of the stockholdersCompany.
In the event any proposed sale of Equity Securities to GenAmerica
or its affiliates materially differs from the terms described above, the
Company would expect to seek shareholder approval of such proposed sale
to the extent required under applicable NYSE rules.
Because the Company has not made a decision at this time to sell
any Equity Securities, it cannot identify the uses of any proceeds from
any sale of such shares to GenAmerica or its affiliates. The Company,
however, may use any such proceeds, among other things, to fund the
Company's continuing growth, to enhance the Company's capital structure,
to finance acquisitions, for general working capital purposes or for
other corporate purposes.
INTERESTS OF CERTAIN PERSONS IN THE PROPOSAL
Certain officers and accordingly,directors of the Company are also officers
and directors of GenAmerica or its affiliates. See "Item 1 - Election
of Directors - Common Stock Ownership of Management and Certain
Beneficial Owners." As a result, such officers and directors, as well
as GenAmerica, may be deemed to have an interest in the proposal that
differs from those of other shareholders. For more information
regarding the relationships between the Company and GenAmerica and its
affiliates, see "Certain Relationships and Related Transactions."
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CERTAIN POTENTIAL DISADVANTAGES OF THE PROPOSAL
While the Board of Directors has determined that adoption of the
proposal is in the best interests of the Company and its shareholders,
the Board recognizes that the implementation of the proposal may result
in certain disadvantages. For example, since GenAmerica currently has
voting control over the Company, implementation of the proposal would
allow the Board of Directors to permit GenAmerica to maintain its voting
control of the Company. Consequently, the proposal might prevent
shareholders of the Company from selling their shares at a premium over
prevailing market prices in response to a takeover proposal and make it
more difficult to replace the current Board of Directors and management
of the Company. The Company is not aware of any such takeover proposal
at this time.
Under NYSE rules, the Company is required to submit certain
proposals to sell stock to substantial shareholders to a vote at a
meeting of all shareholders. Under the proposal, future decisions to
sell stock to GenAmerica or its affiliates would be made by the Board of
Directors without a further vote of shareholders, including, among other
things, with respect to the pricing and terms of any such sale.
Accordingly, shareholders will not have an opportunity to consider or
vote upon any such sales, to the extent the terms are consistent with
those described herein.
PROPOSAL TO APPROVE SALES TO GENAMERICA
The Company's Board of Directors has approved, and recommends that
the shareholders of the Company approve, the authorization of the Board
of Directors to approve any future sales of Equity Securities to
GenAmerica or its affiliates during the next three years, commencing on
the date of the Annual Meeting, in which the number of shares, including
shares into which such Equity Securities are convertible or exercisable,
will not exceed such number of shares (subject to adjustment, as
described above) which would enable GenAmerica to maintain its then
current ownership percentage of the Company's Voting Common Stock. Any
such sale would be made on substantially the same terms as a sale to
unaffiliated parties. The number of shares and price per share for such
a sale will be determined by the Board of Directors or a committee
thereof in accordance with the terms of this proposal.
VOTE REQUIRED
The vote required to approve this Item 2 is a majority of the
Voting Common Stock represented in person or by proxy at the Annual
Meeting. As a holder of Voting Common Stock, GenAmerica is entitled to
vote on this proposal. GenAmerica has sole voting power and beneficial
ownership with respect to approximately 64% of the Voting Common Stock.
GenAmerica has informed the Company that it intends to vote for this
Item 2; therefore approval of this Item 2 by the shareholders is
assured.
RECOMMENDATION OF THE BOARD
The Board of Directors has approved the proposal regarding future
sales of Voting Common Stock or Non-Voting Common Stock from time to
time to GenAmerica or its affiliates and recommends that shareholders
vote FOR the Amendments, which are Item 2 and Item 3 on the proxy.
26proposal.
23
29
VOTING MATTERS
The affirmative vote of the holders of a majority of the shares of
the Company's Voting Common Stock entitled to vote which are present in
person or represented by proxy at the 19981999 Annual Meeting is required to
elect eachdirectors, to authorize the sale of the three nominees for director (Item 1)shares of capital stock to
GenAmerica or its affiliates, and to act on any other matters properly
brought before the Meeting. The affirmative vote of the holders of
a majority of the shares of the Company's Common Stock entitled to vote is
required to amend the Company's Restated Articles of Incorporation to
increase the number of authorized shares of Common Stock from 50,000,000 to
75,000,000 (Item 2) and to authorize 20,000,000 shares of Non-Voting Common
Stock (Item 3).meeting. Shares represented by proxies thatwhich are
marked "withhold authority" with respect to the election of any one or
more nominees for election as directors proxies that are marked "abstain" on Item 2 or Item 3,
and proxies thatwhich are marked to
deny discretionary authority on other matters will be counted for the
purpose of determining the number of shares represented by proxy at the
Meeting.meeting. Such proxies will thus have the same effect as if the shares
represented thereby were voted against such nominee or nominees against Item 2 or Item 3, and
against such other matters, respectively. If a broker indicates on the
proxy that it does not have discretionary authority as to certain shares
to vote on a particular matter, those shares will not be considered as
present and entitled to vote with respect to that matter. If no
specification is made on a duly executed proxy, the proxy will be voted
FOR the election of the directors nominated by the Board of Directors,
FOR Item 2, FOR Item 3,the proposed authorization of sales of shares to GenAmerica and its
affiliates and in the discretion of the persons named as proxies on such
other business as may properly come before the Meeting.meeting.
As of March 31, 1998,1999, General American beneficially owned
approximately 63.8%_____% of the shares of Voting Common Stock entitled to
vote at the Meeting.meeting. General American has indicated its intention to
vote its shares FOR the election of directors nominated by the Board of
Directors FOR Item 2, and FOR Item 3.
These votesthe proposed authorization of sales of shares to
GenAmerica and its affiliates. General American's vote would be
sufficient to elect allapprove each of the nominees andproposals to approvebe voted upon at the
Amendments to the Company's Restated Articles of Incorporation (Items 2 and
3).meeting.
The Company knows of no other matters to come before the Meeting.meeting.
If any other matters properly come before the Meeting,meeting, the proxies
solicited hereby will be voted on such matters in accordance with the
judgment of the persons voting such proxies.
INDEPENDENT AUDITORS
KPMG Peat Marwick LLP wasSHAREHOLDER PROPOSALS
Shareholder proposals submitted under the Company's independent auditing firmprocess prescribed by
the Securities and Exchange Commission (in Rule 14a-8 of the Securities
Exchange Act) for the fiscal year ended December 31, 1997, and the Company has selected this
firm again for the year ending December 31, 1998. A representative of KPMG
Peat Marwick LLP is expected to be presentpresentation at the 1998 Annual Meeting to
respond to appropriate questions and to make a statement if he or she so
desires.
STOCKHOLDER PROPOSALS AND DIRECTOR NOMINATIONS
Stockholder proposals intended to be presented at the 19992000 Annual Meeting must be
received by the Company by December 16, 19981999 for inclusion in the
Company's proxy statement and proxy relating to that meeting. Upon
receipt of any such proposal, the Company will determine whether or not
to include such proposal in the proxy statement and proxy in accordance
with regulations governing the solicitation of proxies.
In order for a stockholderShareholder to nominate a candidate for director,
under the Company's Restated Articles of Incorporation, timely notice of
the nomination must be given to the Company in advance of the meeting.
Ordinarily, such notice must be given not less than 60 nor more than 90
days before the meeting (but if the Company gives less than 70 days'
notice of the meeting, or prior public disclosure of the date of the
meeting, then the stockholderShareholder must give such notice within 10 days after
notice of the meeting is mailed or other public disclosure of the
meeting is made, whichever occurs first). The stockholderShareholder filing the
notice of
27
30 nomination must describe various matters as specified in the
Company's Restated Articles of Incorporation, including such information
as name, address, occupation, and number of shares held.
In order for a stockholderShareholder to bring other business before a
stockholderShareholder meeting, timely notice must be given to the Company within
the time limits described above. Such notice must include a description
of the proposed business, the reasons therefor, and other matters
specified in the Company's Restated Articles of Incorporation. The Board
or the presiding officer at the meetingAnnual Meeting may reject any such
proposals that are not made in accordance with these procedures or that
are not a proper subject for stockholderShareholder action in accordance with
applicable law. The foregoing time limits also apply in determining
whether notice is timely for purposes of rules adopted by the Securities
and Exchange Commission relating to the exercise of discretionary voting
authority. These requirements are separate from and in addition to the
requirements a stockholderShareholder must meet to have a proposal included in the
Company's proxy statement.
In each case the notice must be given to the Secretary of the
Company, whose address is 700 Market Street, St. Louis, Missouri 63101.
Any stockholderShareholder desiring a copy of the Company's Restated Articles of
Incorporation or Bylaws will be furnished a copy without charge upon
written request to the Secretary.
2824
31
EXHIBIT
Please mark / X /
your vote as
indicated in
this example
MANAGEMENT RECOMMENDS A FORM OF PROPOSED AMENDMENTS TO ARTICLE THREE OFVOTE FOR THE RESTATED
ARTICLES OF INCORPORATION
-----------------------
ARTICLE THREE
CAPITAL STOCK
A. Class and NumberFOLLOWING:
1. Election of Shares. The aggregate number, class and par value,
--------------------------
if any, of shares which the Corporation shall haveDirectors
FOR all nominees WITHHOLD (INSTRUCTION: to withhold
listed at right AUTHORITY authority to issue is 105,000,000 shares, consisting of 75,000,000 shares of
Common Stock, par value $.01 per share, 20,000,000 shares of
Non-Voting Common Stock, par value $.01 per share, and 10,000,000
shares of Preferred Stock, par value $.01 per share ($1,050,000.00
aggregate total), subject to adjustment pursuant to subdivision
B.4.(c) hereof.
B. Rights of the Common Stock and the Non-Voting Common Stock.
----------------------------------------------------------
1. General. The powers, preferences and rights of the Common Stock
-------
and the Non-Voting Common Stock, and the qualifications,
limitations or restrictions thereof, shall be in all respects
identical, exceptvote for any
(except as otherwise required by law or expressly
provided in this Article Three.
2. Voting. Each holder of the Common Stock shall be entitled to one
------
vote per share of Common Stock on all matters to be voted on by
the shareholders. Except as otherwise required by law, no
holder of the Non-Voting Common Stock (by virtue of ownership
of such shares) shall be entitledmarked to vote such shares of
Non-Voting Common Stock on any matters to be voted on by the
shareholders of the Corporation.
3. Dividends; Splits or Combinations. Dividends may be declared and
---------------------------------
paidfor all nominees individual nominee, strike a
to the holders ofcontrary) listed at right line through the Common Stock and the holders of the
Non-Voting Common Stock in cash, property, or other securities
of the Corporation out of any funds or other assets of the
Corporation legally available therefor. If and when dividendsnominees's
name on the Common Stock andlist below.)
/ / / /
J. Cliff Eason, Leonard M.
Rubenstein, H. Edwin Trusheim
2. Authorize the Non-Voting Common Stock are
declared payable from time to time by the Boardsale of Directors,
whether payable in cash, in property or in shares of stock of
the Corporation, the holders shall be entitled to share
equally, on a per share basis, in such dividends, except that
(a) dividends or other distributions payable in shares of the
Corporation shall be made to all holders of Common Stock and
Non-Voting Common Stock and shall be made only (i) in shares of
Non-Voting Common Stock to the record holders of Common Stock
and to the record holders of Non-Voting Common Stock, (ii) in
shares of Common Stock to the record holders of Common Stock
and in shares of Non-Voting Common Stock to the record holders
of Non-Voting Common Stock, or (iii) in any other authorized
class or series of capital stock to the record holders of both
classes of Common
A-1
32
Stock and Non-Voting Common Stock, regardless of the fair
market value of such shares received in payment of such
dividend or other distribution, and (b)(i) dividends or other
distributions payable on the Common Stock and Non-Voting Common
Stock in convertible securities or securities giving the holder
a right to acquire shares ofVoting Common Stock or Non-Voting
Common Stock ("Options"), other than rights issued pursuant to
shareholder rights plans of the type entitling holders of
rights other than an "acquiring person" to purchase shares or
other securities at a below-market price if certain events
occur (which rights may be distributed as a dividend pursuant
to such a plan upon shares of either class of Common Stock or
Non-Voting Common Stock without a corresponding dividend
distribution upon shares of the other), shall be made to all
holders of Common Stock and Non-Voting Common Stock and may be
made (1) in securities convertible into Common Stock or Options
to acquire Common Stock to the record holders of Common Stock
and to record holders of Non-Voting Common Stock, or (2) in
securities convertible into Common Stock or Options to acquire
Common Stock to the record holders of Common Stock and in
securities convertible into Non-Voting Common Stock and Options
to acquire Common Stock to the record holders of the Non-Voting
Common Stock. If the Corporation shall in any manner split,
subdivide or combine the outstanding shares of Common Stock or
Non-Voting Common Stock, the outstanding shares of the other
such class shall be proportionally split, subdivided or
combined in the same manner and on the same basis as the
outstanding shares of the other class have been split,
subdivided or combined.
4. Conversion.
----------
(a) All outstanding shares of Non-Voting Common Stock shall be
automatically converted into shares of Common Stock on
a share-for-share basis if, as a result of the
existence of the Non-Voting Common Stock, either the
Common Stock or the Non-Voting Common Stock is (or
both are) excluded from or ineligible for trading on
the New York Stock Exchange, the American Stock
Exchange and all other principal national securities
exchanges then in use and is also excluded from
quotation on The Nasdaq Stock Market's National Market
("NASDAQ") and any other comparable national quotation
system then in use.
(b) All outstanding shares of Non-Voting Common Stock shall be
automatically converted into shares of Common Stock on
a share-for-share basis if at any time the number of
outstanding shares of Common Stock as reflected on the
stock transfer records of the Corporation falls below
10% of the aggregate number of outstanding shares of
Common Stock and Non-Voting Common Stock reflected on
the stock transfer records. For purposes of the
immediately preceding sentence, any shares of Common
Stock or Non-Voting Common Stock repurchased by the
Corporation shall no longer be deemed "outstanding"
from and after the date of repurchase.
A-2
33
(c) In the event of any conversion of the Non-Voting Stock
pursuant to subdivision B.4.(a) or B.4.(b),
certificates which formerly represented outstanding
shares of Non-Voting Common Stock shall thereafter be
deemed to represent a like number of shares of Common
Stock and all authorized shares of Common Stock and
Non-Voting Common Stock shall consist of only Common
Stock.
5. Business Combinations; Dissolution. In the event of merger,
----------------------------------
consolidation, combination or similar transactions of the
Corporation with another entity (whether or not the
Corporation is the surviving entity) or in the event of
liquidation, dissolution or winding up of the Corporation,
holders of Non-Voting Common Stock shall be entitled to
receive in respect of each share of Non-Voting Common Stock
the same kind, and at the same ratio, of shares, evidences of
indebtedness, other securities, cash, rights, or any other
property, or any combination of shares, evidence of
indebtedness, securities, cash, rights, or any other property
as holders of Common Stock shall be entitled to receive in
respect of each share, except that in any merger,
consolidation, combination or similar transaction any common
stock that holders of Non-Voting Common Stock shall be
entitled to receive in any such event may have terms
substantially similar to those of the Non-Voting Common Stock
set forth in this Article Three.
6. Non-Voting Common Stock Protections.
-----------------------------------
(a) A "Person," as defined in subdivision B.6.(f) hereof, who
after May 27, 1998, acquires beneficial ownership
of any shares of Common Stock may not exercise the
voting power of that number of the shares of Common
Stock so acquired that are deemed to be excess
shares of Common Stock for purposes of this
subdivision B.6.(a). An acquisition of shares of
Common Stock hereunder by any Person shall be
deemed to include any shares of Common Stock that a
Person acquires beneficial ownership of, directly
or indirectly, in one transaction or in a series of
transactions, or with respect to which the Person
acts or agrees to act in concert with any other
Person or any shares which are deemed to be
beneficially owned by any "group," as defined in
subdivision B.6.(f), of which a Person is a member.
The number of shares of Common Stock deemed
hereunder to be excess shares of Common Stock shall
be equal to the amount determined by application of
the following formula:
(I) the percentage which the number of shares of Common
Stock acquired or deemed to be acquired by the
Person after May 27, 1998, bears to the
aggregate number of outstanding shares of Common
Stock;
(II) minus 15%;
A-3
34
(III) minus the percentage which the number of shares of
Non-Voting Common Stock acquired or deemed to be
acquired at an "equitable price" (as defined in
subdivision B.6(b)) by that Person bears to the
aggregate number of outstanding shares of
Non-Voting Common Stock;
(IV) times the aggregate number of outstanding shares of
Common Stock.
For purposes of this determination, any shares of Common
Stock or Non-Voting Common Stock repurchased by the
Corporation since the last date on which a Person acquired
any shares of Common Stock or Non-Voting Common Stock
(whether in treasury or retired) shall be deemed still to
be outstanding. Determinations of excess shares of Common
Stock shall be made as of the date that a Person, directly
or indirectly, alone or with others, otherwise would seek
to exercise or direct the exercise of voting power with
respect to those shares of Common Stock.
(b) Shares of Non-Voting Common Stock shall have been acquired
at an equitable price for purposes of this subdivision B.6
only if they were acquired at a price at least equal to
the higher of:
(I) the highest per share price (including any brokerage
commissions, transfer taxes and soliciting
dealers' fees) paid by the acquiring Person for
any shares of Common Stock acquired by that Person
within either 60 days before or 60 days after the
shares of Non-Voting Common Stock were acquired;
or
(II) the highest closing sale price during the 30-day
period immediately before the shares of
Non-Voting Common Stock were acquired of a share
of Common Stock on the Composite Tape for New
York Stock Exchange-Listed Stocks, or, if the
shares of Common Stock are not quoted on the
Composite Tape, on the New York Stock Exchange,
or, if the shares of Common Stock are not listed
on the New York Stock Exchange, on the principal
United States national securities exchange on
which the shares of Common Stock are listed, or,
if the shares of Common Stock are not listed on
any United States national securities exchange,
the highest closing bid quotation for a share of
Common Stock during the 30-day period on NASDAQ
or any system in use, or, if no quotations are
available, the fair market value during the
30-day period of a share of Common Stock as
determined in good faith by the Board of
Directors of the Corporation.
If any of the consideration given by the Person for
any shares of Common Stock under subclause (I)
of this subdivision B.6.(b) was
A-4
35
other than cash, the value of such non-cash
consideration shall be as determined in good
faith by the Board of Directors of the
Corporation.
(c) An acquisition of a share of Common Stock shall not include
for the purposes of clause (a) of this subdivision B.6 an
acquisition:
(I) of shares made pursuant to a contract existing on or
before May 27, 1998; or
(II) of shares by bequest or inheritance, by operation of
law upon the death of any individual, or by any
other transfer without valuable consideration,
including a gift that is made in good faith and not
for the purpose of circumventing this subdivision
B.6; or
(III) of shares acquired upon issuance or sale by the
Corporation; or
(IV) of shares acquired by operation of law (including a
merger or consolidation effected for the purpose
of recapitalizing such Person or reincorporating
such Person in another jurisdiction but excluding
a merger or consolidation effected for the
purpose of acquiring another Person); or
(V) of shares acquired by a plan of the Corporation
qualified under Section 401(a) of the Internal
Revenue Code of 1986, as amended, or any successor
provision thereto, or acquired by reason of a
distribution from such a plan.
(d) Unless there are affirmative attributes of concerted
action, acting or agreeing to act in concert with any other
Person shall not include for purposes of clause (a) of this
subdivision B.6 actions taken or agreed to be taken by
Persons acting in their official capacities as directors or
officers of the Corporation or actions by Persons related by
blood or marriage.
(e) To the extent that the voting power of any share of Common
Stock cannot be exercised pursuant to this subdivision B.6,
that share of Common Stock shall not be included in the
determination of the voting power of the Corporation for
any purpose under these Restated Articles of Incorporation
or the General and Business Corporation Law of Missouri.
(f) The term "Person", as used in this subdivision B.6 shall
mean any natural person, company, government, or political
subdivision, agency or instrumentality of a government or
other entity, and the term "group" shall mean a group as
described in Rule 13d-5 promulgated under the Securities
Exchange Act of 1934, as amended (the "'34 Act"), or any
successor regulation, and the formation of a group
hereunder shall have the effect described in paragraph (b)
of said Rule 13d-5 or any successor regulation.
A-5
36
For purposes of this subdivision B.6, "beneficial
ownership" shall be determined in accordance with Rule
13d-3 promulgated under the 1934 Act or any successor
regulation.
(g) Anything in this subdivision B.6 to the contrary
notwithstanding, in no event shall the provisions of this
subdivision B.6 apply to transfers of Common Stock from
General American Mutual Holding Company ("GAMHC") or any
direct or indirect subsidiary of GAMHC to GAMHC or any
direct or indirect subsidiary of GAMHC.
7. Repurchases. The Board of Directors shall have the power to
-----------
authorize the Corporation to purchase or otherwise acquire
from time to time to GenAmerica Corporation
or its affiliates.
FOR AGAINST ABSTAIN
/ / / / / /
The undersigned hereby acknowledges receipt of the Notice of
the 1999 Annual Meeting of Stockholders and the accompanying
Proxy Statement.
This proxy will be voted as specified. If no specification is
made, this proxy will be voted FOR Items 1 and 2.
Dated this day of ____________________________, 1999
_____________________________________________________________
_____________________________________________________________
(If Stock is owned in joint names, both owners must sign.) If
address at left is incorrect, please write in the correct
information.
Please sign as registered and return promptly to:
Reinsurance Group of America, Incorporated, Midtown Station,
PO Box 870, New York, NY 10138
- -------------------------------------------------------------------------------
^ FOLD AND DETACH HERE ^
April 23, 1999
Dear Shareholder:
We invite you to attend the 1999 Annual Meeting of Shareholders of
Reinsurance Group of America, Incorporated, to be held on May 26, 1999 in the
Marriott-West, 660 Maryville Centre Drive, St. Louis, Missouri at 2:00 p.m.
It is important that your shares of any class of stock herein or
hereafter authorized from such persons, firms, associations or
corporations, in such manner and on such terms and for such
consideration asare represented at the Board of Directors shall from time to
time, in its discretion, determine, whethermeeting. Whether
or not less
consideration could be paid uponyou plan to attend the purchase ofmeeting, please review the same
number of shares of another class,enclosed proxy
materials, complete the proxy form above, detach it, and as otherwise permitted
by law.
8. Issuances. The Board of Directors shall have the power to
---------
authorize the Corporation to issue and sell all or any part of
any class of stock herein or hereafter authorized, from time to
time, and at such time or times, in such amounts and manner to
such persons, firms, associations or corporations, and for such
consideration, whether in cash, property or otherwise, as the
Board of Directors shall from time to time, in its discretion,
determine, whether or not greater consideration could be
received upon the issue or sale of the same number of shares of
another class, and as otherwise permitted by law.
C. Issuance of Preferred Stock, Rights and Preferences Thereof.
-----------------------------------------------------------
1. The Preferred Stock may be issued from time to time in one or
more series, with such voting powers, full or limited, or no
voting powers, and such designations, preferences and
relative, participating, optional or other special rights,
and qualifications, limitations or restrictions thereof, as
shall be statedreturn it promptly in
the resolution or resolutions providing
for the issuance of such stock adopted from time to time by
the Board of Directors. Without limiting the generality of
the foregoing, in the resolution or resolutions providing for
the issuance of such shares of each particular series of
Preferred Stock, subject to the requirements of the laws of
the State of Missouri, the Board of Directors is also
expressly authorized:
(a) To fix the distinctive serial designation of the shares of
the series;
(b) To fix the consideration for which the shares of the series
are to be issued;
(c) To fix the rate or amount per annum, if any, at which the
holders of the shares of the series shall be entitled to
receive dividends, the dates on which and the conditions
under which dividends shall be payable, whether
A-6envelope provided.
37
dividends shall be cumulative or noncumulative, and if
cumulative, the date or dates from which dividends shall
be cumulative;
(d) To fix the price or prices at which, the times during
which, and the other terms, if any, upon which the shares
of the series may be redeemed;
(e) To fix the rights, if any, which the holders of shares of
the series have in the event of dissolution or upon
distribution of the assets of the Corporation;
(f) From time to time to include additional shares of Preferred
Stock which the Corporation is authorized to issue in the
series;
(g) To determine whether or not the shares of the series shall
be made convertible into or exchangeable for other
securities of the Corporation, including shares of the
Common Stock of the Corporation or shares of any other
series of the Preferred Stock of the Corporation, now or
hereafter authorized, or any new class of Preferred Stock
of the Corporation hereafter authorized, the price or
prices or the rate or rates at which conversion or exchange
may be made, and the terms and conditions upon which the
conversion or exchange right shall be exercised;
(h) To determine if a sinking fund shall be provided for the
purchase or redemption of shares of the series and, if so,
to fix the terms and the amount or amounts of the sinking
fund; and
(i) To fix the other preferences and rights, privileges and
restrictions applicable to the series as may be permitted
by law.
A-7
38
REINSURANCE GROUP OF AMERICA, INCORPORATED
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORSThis Proxy is Solicited on Behalf of the Board of Directors
The undersigned does hereby appoint Jack B. Lay and James E. Sherman, or
either of them, the true and lawful attorneys-in-fact, agents and proxies of
the undersigned to represent the undersigned at the Annual Meeting of the
Stockholders of REINSURANCE GROUP OF AMERICA, INCORPORATED to be held May 27,
1998,26,
1999, commencing at 2:00 p.m., St. Louis time, at the Ritz-Carlton Hotel,
100 Carondelet Plaza,Marriott-West, 660
Maryville Centre Drive, St. Louis, Missouri, and at any and all adjournments
and postponements of said meeting, and to vote all the shares of Common Stock
of the Company standing on the books of the Company in the name of the
undersigned as specified and in their discretion on such other business as may
properly come before the meeting.
PLEASE COMPLETE, SIGN AND DATE OTHER SIDE AND RETURN PROMPTLY.Please complete, sign and date other side and return promptly.
- -------------------------------------------------------------------------------
^ FOLD AND DETACH HERE ^
39
MANAGEMENT RECOMMENDS A VOTE FOR THE FOLLOWING:
1. Election of Directors
FOR all nominees WITHHOLD
listed below (except AUTHORITY
as marked to the to vote for all
contrary below) nominees listed below
[ ] [ ]
(INSTRUCTION: To withhold authority to vote for any individual nominee,
strike a line through the nominee's name on the list below.)
William A. Peck, M.D., William P. Stiritz, A. Greig Woodring
2. Amendment of Restated Articles of Incorporation to increase the
number of authorized shares of Common Stock
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
3. Amendment of Restated Articles of Incorporation to authorize
Non-Voting Common Stock
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
The undersigned hereby acknowledges receipt of the Notice of
the 1998 Annual Meeting of Stockholders
APPENDIX
Pages 16 and the accompanying
Proxy Statement.
This proxy will be voted as specified. If no specification is
made, this proxy will be voted FOR Items 1, 2 and 3.
Dated this day of ____________________, 1998
____________________________________________________________
____________________________________________________________
(If Stock is owned in joint names, both owners must sign.)
If address at left is incorrect, please write in the
correct information.
Please sign as registered and return promptly to:
Reinsurance Group of America, Incorporated, Midtown Station,
PO Box 870, New York, NY 10138
^ FOLD AND DETACH HERE ^
[RGA logo]
April 27, 1998
Dear Stockholder:
We invite you to attend the 1998 Annual Meeting of Stockholders of
Reinsurance Group of America, Incorporated, to be held on May 27, 1998 in
the Ritz-Carlton Hotel, 100 Carondelet Plaza, St. Louis, Missouri at 2:00 p.m.
It is important that your shares are represented at the meeting.
Whether or not you plan to attend the meeting, please review the enclosed
proxy materials, complete the proxy form above, detach it, and return it
promptly in the envelope provided.
40
Appendix
Page 1617 of the printed Proxy Statement contains a Comparison of 56
Month Cumulative Total Return Graph.contain Performance Graphs. The
information contained in the graph has been presentedgraphs appear in a format that may be processed by EDGAR.the tables immediately following
the graphs.