LINCOLN NATIONAL CORP - DEF 14A - 19990408 - STOCKHOLDER_PROPOSALS
SHAREHOLDER PROPOSAL RELATING TO TOBACCO INVESTMENTS
Catholic Healthcare West of 1700 Montgomery Street, Suite 300, San Francisco,
California, is the holder of 39,100 shares of Common Stock and has caused the
following proposal to be included in this Proxy Statement. The Corporation is
not responsible for any of the contents of the language of the shareholder's
proposal which is set out below between the quotation marks. The Board of
Directors unanimously opposes this proposal for the reasons set forth in
Management's Statement in Opposition of the Shareholder Proposal which follows
the shareholder's proposal.
"WHEREAS a July 7-9, 1995 editorial in USA Today declared:
Here's a grubby little health-care new [sic] item: According to a
commentary in the upcoming edition of the British medical journal Lancet,
major U.S. health insurers are large investors in major U.S. tobacco
companies. In other words, the nation's merchants of care are partners
with the nation's merchants of death. . . . These investments grate and
gall. Every year, tobacco use is fatal for thousands of Americans. For
insurers to provide health care for those suffering smokers on the one
hand while investing in the source of their misery on the other is
unconscionable. And hypocritical.
- As shareholders, we are concerned about the ethical
implications of investments in the tobacco industry by companies
that sell life insurance, especially when they
are paying out hundreds of millions of dollars to patients who
are sick and dying as a result of tobacco use. - In 1994, the
Centers of Disease Control and Prevention released an article
entitled, `Medical-Care Expenditures Attributable to Cigarette
Smoking, United States - 1993.' The study found that
smoking-related disease in the U.S.A. has an enormous economic
impact. In 1993, it is estimated that the direct medical costs
associated with smoking totaled $30 billion. Such findings have
led the State of Louisiana to add insurers to its Medicaid
reimbursement litigation against the tobacco industry. - In 1996
the AMA called for mutual funds and health-conscious investors to
refuse to own stock in tobacco companies, and for those same
investors to divest from stocks and bonds in tobacco companies.
-We believe it is inconsistent for an insurance company that
sells life insurance to invest in tobacco equities and yet give
preferential rates to non-smokers. Therefore we believe that the
company should seriously review its stand related to these
apparently contradictory positions on tobacco.
RESOLVED: that shareholders request the Board to initiate a
policy mandating no further purchases of tobacco equities in any
of our portfolios unless it can be proven that tobacco use does
not cause the illnesses and deaths that have been attributed to
it. Furthermore, the company shall divest itself of all tobacco
stocks by January 1, 2000.
Supporting Statement
Our Company exists to help people keep healthy. We support people
not using tobacco, yet have no policy against investing in
companies producing its products. Allstate, Chubb, UNUM, and
other companies that sell life insurance have policies and/or
practices that have resulted in prohibitions or limitations on
their various investments in tobacco companies. Institutions like
Harvard and Johns Hopkins, as well as The Maryland Retirement and
Pension Systems have divested from all tobacco stocks. As the
editorial noted above concludes: `Insurers have a responsibility
to maximize returns. But they have a responsibility to hold down
costs too.' Investing in tobacco while charging premiums based in
part on the cost of treating tobacco-related illness mocks that
obligation. If you agree that our Company should not contribute
to peoples' illness and death by investing in tobacco, please
vote YES for this resolution."
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE "AGAINST" THE
SHAREHOLDER PROPOSAL RELATING TO TOBACCO INVESTMENTS.
MANAGEMENT'S STATEMENT IN OPPOSITION TO THE SHAREHOLDER PROPOSAL
The Corporation's investment operations and policies are fundamental to the
Corporation's business and subject to the supervision of the Board of Directors
of the relevant subsidiary and various investment committees. The Corporation's
investment operations are focused upon providing customers with competitive
products and shareholders with an attractive investment. In managing the
Corporation's investments, management considers many factors that may affect the
current and future values of portfolio investments. Social policy considerations
are one of the many considerations that are taken into account in managing the
portfolios.
The shareholder proposal suggests that certain social policies should be the
principal factors considered in the Corporation's investment policies, limiting
the role that other investment and social factors play in the Corporation's
policies. The Board of Directors believes that such an approach is inconsistent
with sound investment practices. In that regard, the Corporation believes that
the shareholder proposal is inconsistent with the interests of the Corporation's
shareholders and customers.
For these reasons, the Board recommends a vote AGAINST the Proposal and your
proxy will be so voted unless you indicate otherwise on the proxy.
GENERAL
RELATIONSHIP WITH INDEPENDENT AUDITORS
Ernst & Young LLP has been selected by the Board to be the independent auditors
to audit the consolidated financial statements of the Corporation for fiscal
year 1999. This firm has been employed by the Corporation in that capacity
continuously since January 17, 1968. Representatives of Ernst & Young LLP will
be present at the annual meeting of shareholders, will be given an opportunity
to make a statement if they so desire, and will be available to respond to
appropriate questions relating to the audit of the Corporation's 1998
consolidated financial statements.
SHAREHOLDER PROPOSALS
To Be Included in the Corporation's Proxy Materials
Any shareholder proposals intended to be considered for inclusion in the proxy
materials for the Corporation's 2000 annual meeting of shareholders must be
received by the Corporation no later than December 11, 1999.
All such proposals should be sent to the Secretary of the Corporation.
To Be Presented In-Person at Shareholder Meetings
Shareholders wishing to propose matters for consideration at a meeting of
shareholders or to propose nominees for election as directors must follow the
procedures contained in the Corporation's Bylaws. Such procedures include giving
notice to the Secretary of the Corporation at least 90 and not more than 120
days prior to the meeting. However, in the event that less than 60 days' notice
of the date of the meeting is given to shareholders, notice by the shareholder
to be timely must be received not later than the close of business on the 10th
day following the day on which notice of the date of the meeting was given. That
notice must include:
o the name and address of the proposing shareholder (as it appears on the
Corporation's stock records)
o a brief description of the business desired to be brought before the
meeting
o the class and number of shares of the Corporation which are
beneficially owned by the proposing shareholder
o a description of any interest of such proposing shareholder in the
business proposed
In the case of a shareholder-proposed nominee for director, the required notice
must also contain as to each person whom the shareholder proposes to nominate
for election or re-election as a director:
o the name, age, business address and residence address of such person
o the principal occupation or employment of such person
o the class and number of shares of the Corporation which are
beneficially owned by such person
o any other information relating to such person that is required to be
disclosed in solicitation of proxies for election of directors, or is
otherwise required, in each case pursuant to Regulation 14A under the
Exchange Act (including without limitation such person's written
consent to being named in the proxy statement as a nominee and to
serving as a director if elected)
o the qualifications of the nominee to serve as a director of the
Corporation
In the event any such matter is not timely received, the individuals identified
on the proxy card may vote the shares represented by proxies in their discretion
in the manner they perceive to be in the best interests of the Corporation. The
person presiding at a meeting of shareholders is authorized by the Bylaws, if
the facts warrant, to determine that the proposed business was not properly
brought before the meeting, or was not lawful or appropriate for consideration
at the meeting or that a nomination for director was not properly made. Upon a
declaration of such determination by the chairman, the proposed business shall
not be transacted or the defective nomination shall be disregarded, as the case
may be.
1999 Shareholder Proposals
Other than the shareholder proposal discussed in this Proxy Statement (see Item
2), no shareholder has raised an issue which is proper for consideration at the
Annual Meeting. To the extent permissible, your proxy will be voted in the
discretion of the proxy holders with respect to each matter properly brought
before the meeting that has not been enumerated in this Proxy Statement or for
which no specific direction was given on the proxy card.
ANNUAL REPORT
The Corporation's Annual Report to Shareholders, together with its Annual Report
on Form 10-K filed with the SEC, for the fiscal year 1998 have previously been
mailed to shareholders of record to the relevant addresses appearing on the
Corporation's stock books. An additional copy of the Annual Report on Form 10-K
will be provided on written request and without charge to each shareholder.
Write to Corporate Secretary, Lincoln National Corporation, 200 East Berry
Street, Fort Wayne, Indiana, 46802-2706.
For the Board of Directors,
C. Suzanne Womack
Secretary
April 8, 1999
TABLE A
SECURITY OWNERSHIP OF
DIRECTORS, NOMINEES AND EXECUTIVE OFFICERS
NAME AMOUNT OF LNC LNC STOCK TOTAL OF LNC
COMMON STOCK UNITS COMMON
AND NATURE OF STOCK AND
BENEFICIAL STOCK UNITS
OWNERSHIP1,2
============================= ======================= =============================================
J. Patrick Barrett 6,798 4,742 11,540
Thomas D. Bell, Jr. 1,798 1,473 3,271
Jon A. Boscia 171,417 14,585 186,002
Daniel R. Efroymson 272,177 3,596 275,773
Jack D. Hunter 124,457 1,261 125,718
Eric G. Johnson 515 104 619
Harry L. Kavetas 2,336 3,879 6,215
M. Leanne Lachman 2,736 5,822 8,558
Jeffrey J. Nick 24,090 28,441 52,531
Roel Pieper 1,147 305 5,510
John M. Pietruski 3,918 4,363 8,281
Ian M. Rolland 270,179 0 270,179
Jill S. Ruckelshaus 3,736 153 3,889
Gabriel L. Shaheen 60,433 7,125 67,558
Richard C. Vaughan 72,801 14,257 87,058
Gilbert R. Whitaker, Jr. 3,918 5,892 9,810
Directors and Executive 1,231,787 118,483 1,350,270
Officers as a group - 22
persons
1. Each of these amounts represents less than 1% of the outstanding shares of
the Corporation's Common Stock as of March 1, 1999. As to shares beneficially
owned, each person has sole voting and investment power except that the
following persons each share voting and investment power with another person as
to the number of shares indicated: Mr. Boscia, 14,651 shares, Mr. Efroymson,
270,379 shares (held in trust), Mr. Rolland, 55,329 shares (55,150 of which are
held in trust); Ms. Ruckelshaus, 200 shares; Mr. Shaheen, 18,240 shares; and Mr.
Vaughan, 6,600 shares (held in trust). In addition, the following persons have
sole voting power (and no investment power) as to the number of shares
indicated: Mr. Barrett, 1,798 shares; Mr. Bell, 1,798 shares; Mr. Boscia, 50,000
shares; Mr. Efroymson, 1,798 shares; Mr. Hunter, 12,500 shares; Mr. Kavetas,
1,736 shares; Mr. Johnson, 515 shares; Ms. Lachman, 1,736 shares; Mr. Nick,
22,586 shares; Mr. Pieper, 1,147 shares; Mr. Pietruski, 1,918 shares; Ms.
Ruckelshaus, 1,736 shares; Mr. Shaheen, 25,000 shares; Mr. Vaughan, 23,045
shares; and Dr. Whitaker, 1,918 shares. Mr. Efroymson disclaims beneficial
ownership of all but 136,541 of the shares reported for him. Mr. Efroymson no
longer acts as trustee for certain of the various trusts, or in the positions
with Moriah Fund, Inc., reflected in last year's proxy statement; therefore, the
amounts set forth above do not reflect shares held by those trusts or Moriah
Fund, Inc. for which he may not properly be considered a beneficial owner.
2. This table includes the following shares which are subject to acquisition
within 60 days of March 1, 1999 by the exercise of outstanding stock options:
Mr. Boscia, 85,649 shares; Mr. Hunter, 54,750 shares; Mr. Rolland, 212,675
shares; Mr. Shaheen, 10,813 shares; and Mr. Vaughan, 42,500 shares.
TABLE B
SECURITY OWNERSHIP
OF CERTAIN BENEFICIAL OWNERS
TITLE OF CLASS Name and Address of Beneficial Amount and Nature of Percent
Owner Beneficial Ownership of Class
Common Capital Research and Management 7,925,000 shares 7.8%
Company [sole dispositive power - 7,925,000 shares;
333 South Hope Street sole voting power - 0 shares]
Los Angeles, California 90071
Common The Dai-ichi Mutual Life Insurance 6,754,311 shares 6.7%
Company [sole voting and sole dispositive power of all
1-13-1-Yuraku-Cho shares]
Chiyoda-ku
Tokyo, Japan 100-84-11
Common Massachusetts Financial Services 5,136,732 shares 5.1%
Company [sole dispositive power - 5,136,732 shares;
500 Boylston Street sole voting power - 5,114,812 shares]
Boston, MA 02116
The information set forth in this Table is based solely on a review by the
Corporation of the filings of Schedules 13G and D filed with the Securities and
Exchange Commission and provided to the Corporation by the above named
beneficial owners. Information regarding the amount and nature of beneficial
ownership is to the best of the Corporation's knowledge as of December 31, 1998;
the percentages, however, have been calculated by the Corporation as of the
record date, March 19, 1999.
TABLE C
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION LONG-TERM COMPENSATION
AWARDS PAYOUT
(a) (b) (c) (d) (e) (f) (g) (h) (i)
OTHER SECURITIES ALL
ANNUAL RESTRICTED UNDERLYING OTHER
NAME AND COMPEN- STOCK OPTIONS/ LTIP COMPEN-
PRINCIPAL YEAR SALARY BONUS1 SATION2 AWARDS3 SARs PAYOUT(S) SATION7
POSITION ($) ($) ($) ($) (#) ($) ($)
JON A. BOSCIA 1998 655,769 3,624,000 -0- -0- 110,000 -0-4 69,427
President and CEO of 1997 434,094 -0- -0- -0- 26,000 787,0535 50,0608
LNC 1996 384,768 -0- -0- 257,019 18,000 796,4306 63,576
IAN M. ROLLAND 1998 537,308 907,000 -0- -0- -0- -0-4 3,966,0899
Former Chairman and 1997 1,062,308 -0- -0- -0- 88,425 1,750,3285 187,7738
CEO of LNC 1996 1,003,077 -0- -0- -0- 75,000 1,739,0786 148,597
GABRIEL L.
SHAHEEN 1998 448,116 1,150,000 -0- -0- 37,781 25,4434 30,070
President and CEO of 1997 350,192 -0- 411,243 -0- 26,000 660,9885 46,3218
The Lincoln National 1996 338,019 -0- -0- -0- 17,250 680,1276 28,787
Life Insurance Co.
RICHARD C. 1998 430,000 1,040,000 -0- -0- 26,000 -0-4 22,185
VAUGHAN 1997 394,076 -0- -0- -0- 26,074 594,4095 47,8228
Executive Vice 1996 343,653 -0- -0- 275,053 14,500 550,053 6 59,303
President and CFO of
LNC
JEFFREY J. NICK
CEO of Lincoln 1998 400,000 1,125,000 -0- -0- 26,000 -0-4 19,023
National Investment 1997 341,038 -0- -0- -0- 26,000 480,0005 38,088
Companies, Inc. and 1996 282,308 -0- 36,307 -0- 15,000 500,000 6 34,624
Delaware Management
Holdings, Inc.
JACK D. HUNTER 1998 387,000 880,000 -0- -0- 28,920 28,3374 19,139
Executive Vice 1997 367,692 -0- -0- -0- 28,464 624,3135 45,6238
President and General 1996 351,443 -0- -0- -0- 14,500 591,3016 36,953
Counsel of LNC
1. Includes annual incentive awards for 1998 awarded under the 1997 Incentive
Compensation Plan ("ICP"), as follows: Mr. Boscia, $3,500,000; Mr.Shaheen,
$1,150,000; Mr. Vaughan, $1,015,000, Mr. Nick, $1,125,000; and Mr. Hunter,
$865,000. The remaining amounts reflect discretionary bonuses awarded for 1998
as follows: Mr. Boscia, $124,000; Mr. Rolland, $907,000; Mr. Vaughan, $25,000;
and Mr. Hunter, $15,000.
2. Perquisites and other personal benefits of the Named Executive Officers,
other than Mr. Shaheen (in 1997) and Mr. Nick (in 1996), did not exceed the
lesser of $50,000 or 10% of the total of base salary and annual bonus for the
Named Executive Officers during the years reported in the table and, therefore,
are not included in the table. Amounts in this column for Mr. Shaheen for 1997
represent compensation related to Mr. Shaheen's overseas assignment, including
United Kingdom taxes ($238,750) and tax "gross-ups" ($117,058); the remaining
$55,436 is attributable to related matters, including automobile reimbursement,
tuition and a one-time general expense allowance relating to overseas service.
Amounts in this column for Mr. Nick for 1996 represent moving expenses paid to
Mr. Nick in connection with completion of overseas service.
3. During 1998, the Compensation Committee awarded to the Named Executive
Officers shares of restricted stock under the ICP, which shares are subject to
performance-based conditions to vesting, in addition to lapse of time and/or
continued service with the Corporation. Accordingly, those awards are reflected
in Table D (Long-Term Incentive Plans -- Awards in Last Fiscal Year). If the
performance criteria related to those awards are satisfied and the shares vest,
the amounts paid thereunder will be reflected in the LTIP Payout(s) column
(column h). The amounts shown for 1996 represent the Fair Market Value on the
date of grant of the award of restricted shares of Common Stock awarded under
the Executive Value Sharing Plan ("EVSP") for the period ending in 1996. No
dividends are payable on the restricted shares; however, when the restrictions
lapse, a "dividend equivalency" bonus is paid and reported in the "LTIP
Payout(s)" column. The restrictions on the shares awarded under both the ICP and
the EVSP lapse on the third anniversary of January 1 of the year next succeeding
the applicable performance cycle. The number and aggregate value of restricted
stock holdings, including restricted stock units, of the Named Executive
Officers as of December 31, 1998, are as follows: Mr. Boscia, 55,065 shares
($4,505,005); Mr. Rolland, 13,166 shares ($1,077,143); Mr. Shaheen, 35,892
shares ($2,936,414); Mr. Vaughan, 27,097 shares ($2,216,873); Mr. Nick, 46,287
shares ($3,786,855);
and Mr. Hunter, 16,252 shares ($1,329,617). As of December
31, 1998, the number and value of the aggregate restricted stock holdings
(including restricted stock units) of all employees of the Corporation were
653,015 shares representing a total value of $53,424,790.
4. Under the ICP, the Compensation Committee has the authority to make awards
based on satisfaction of certain performance criteria during specified
"Performance Cycles," typically one or three years. The awards made under the
ICP for the one-year Performance Cycle that ended in 1998 are reflected in the
"Bonus" column (column b). See Note 3 for a discussion of awards made in 1998
under the ICP for the 1998-2000 Performance Cycle that are subject to the
satisfaction of performance-based criteria. The amounts shown in this column for
Mr. Hunter and Mr. Shaheen for 1998 include dividend equivalencies paid in cash
(or credited to the Corporation's deferred compensation plan) during 1998 with
respect to restricted stock or restricted stock units which vested in 1998.
5. The amounts reported for 1997 were awarded by the Board at its May 1998
meeting and were not available for inclusion in last year's proxy statement.
Such amounts include awards made under the ICP for 1997 as follows: Mr. Boscia,
$726,000; Mr. Rolland, $1,593,000; Mr. Shaheen, $650,000; Mr. Vaughan, $575,000;
Mr. Nick, $480,000; and Mr. Hunter, $575,000. The remaining amounts represent
the dividend equivalencies paid in cash (or credited to the Corporation's
deferred compensation plan) during 1997 with respect to restricted stock or
restricted stock units which vested in 1997.
6. Includes the cash portion of the 1996 EVSP: Mr. Boscia, $725,000; Mr.
Rolland, $1,450,000; Mr. Shaheen, $337,500; Mr. Vaughan, $275,000; Mr. Nick,
$250,000; and Mr. Hunter, $550,000. An additional $337,533 of the amount
reported for Mr. Shaheen and $250,000 of the amount reported for Mr. Nick is
comprised of the portion of his EVSP that was made in restricted stock units.
The remaining amounts are attributable to dividend equivalencies paid in cash
during 1996 with respect to restricted stock or restricted stock units that
vested in 1996.
7. Amounts included in the All Other Compensation column are amounts
contributed or accrued for the Named Executive Officers under the Corporation's
Employees' Savings and Profit-Sharing Plan, the related supplemental savings
plans and the dollar value of insurance premiums paid by the Corporation.
The amounts contributed to the Profit-Sharing Plan and accrued supplements for
fiscal 1998 are as follows: Mr. Boscia, $4,594; Mr. Rolland, $4,594; Mr. Vaughan
$4,817; Mr. Hunter, $4,594; Mr. Nick, $4,594; and Mr. Shaheen, $4,594.
The amounts of insurance premiums for fiscal 1998 are as follows: Mr. Boscia,
$63,244; Mr. Rolland, $110,650; Mr. Shaheen, $23,969; Mr. Vaughan, $15,779;
Mr. Nick, $12,922; and Mr. Hunter, $12,815. Amounts for Mr. Nick for 1997 and
1996 include insurance premiums of $11,411 for each year.
8. The additional profit-sharing amounts for 1997 which were not available for
last year's proxy statement and which were awarded by the Board at its May 1998
meeting were as follows: Mr. Boscia, $28,018; Mr. Rolland, $97,250; Mr. Shaheen,
$10,414; Mr. Vaughan, $14,132; and Mr. Hunter, $12,528.
9. Includes a one-time payment of $3,750,000 made in connection with Mr.
Rolland's retirement during 1998, representing payment of a pro rata portion of
the amounts to which the Compensation Committee estimated Mr. Rolland would have
been entitled under the various EVSP/ICP Performance Cycles commenced, but not
completed, prior to his retirement had he continued in his role as Chief
Executive Officer; also includes $100,000 paid to Mr. Rolland during 1998 for
his service as Chairman of the Board and for serving as the Corporation's
representative on the Board of the American Council of Life Insurance.
TABLE D
Set forth below are awards of restricted stock of the Corporation made to the
Named Executive Officers in 1998 for a long-term 1998-2000 Performance Cycle
under the 1997 Incentive Compensation Plan (the "ICP"). Executives who received
restricted stock awards will also be credited with restricted stock units
representing amounts equivalent to dividends on the restricted stock. These
restricted stock and restricted stock unit awards are subject to a substantial
risk of forfeiture. They will vest, and executives will become entitled to
unrestricted shares, only if both certain "Corporate Performance" criteria are
satisfied during 1998 through 20001 and the executive continues in employment
(subject to limited exceptions) with the Corporation through 2003.
LONG-TERM INCENTIVE PLANS--AWARDS IN LAST FISCAL YEAR
Performance Estimated future payouts under
Number of or other non-stock price-based plans
shares, period until
units or other maturation or
Name rights1# payout Threshold2 Target2 Maximum2
Jon A. Boscia 50,000 1998-2000 0 25,000 50,000
Ian M. Rolland 0 1998-2000 0 0 0
Gabriel L. Shaheen 25,000 1998-2000 0 12,500 25,000
Richard C. Vaughan 18,000 1998-2000 0 9,000 18,000
Jeffrey J. Nick 18,000 1998-2000 0 9,000 18,000
Jack D. Hunter 12,500 1998-2000 0 6,250 12,500
1. The Compensation Committee generally contemplates that (i) a 15 percent
average for annual increases in the Corporation's income during 1998 through
2000 will be required for 50 percent vesting in these awards, (ii) a 17 percent
average increase in this amount will be required for 100% vesting of these
awards, and (iii) vesting of these awards would also require that average
adjusted return on equity during this period at least equal 13.6 percent. The
Committee has the discretion to pay less, and to some extent to adjust these
targets for unforeseen circumstances. In no event, however, will the restricted
shares (or the associated restricted stock units representing dividend
equivalent amounts) vest unless the arithmetic average of increases in Income
From Operations Per Share (diluted and after the exclusion of any restructuring
charges) as reported by the Corporation for the years 1998, 1999 and 2000 equals
or exceeds 10 percent per year, measured from a 1997 base number of $4.17 per
share.
2. Estimated future payouts are expressed in terms of the number of shares of
restricted stock that in fact become vested. They do not include any shares that
may become payable with respect to restricted stock units representing dividend
equivalents, since the number of such shares depends on dividend levels and
stock price at the time the dividend equivalents are credited. The Compensation
Committee in all cases retains the discretion to require forfeiture of all
awards as of December 31, 2000, and the "Threshold" award is thus zero. The
"Target" award column assumes vesting based on Corporate Performance at the 50
percent level as well as satisfaction of the continued service requirements. The
"Maximum" award column assumes Corporate Performance warranting 100% vesting as
well as satisfaction of the continued service requirements, as discussed in note
1 above.
TABLE E
OPTION/SAR GRANTS IN LAST FISCAL YEAR
POTENTIAL REALIZABLE VALUE
AT ASSUMED ANNUAL RATES OF
INDIVIDUAL GRANTS STOCK PRICE APPRECIATION
FOR OPTION TERM
(a) (b) (c) (d) (e) (f) (g)
NUMBER OF % OF TOTAL
SECURITIES OPTIONS/SARS
UNDERLYING GRANTED TO
OPTIONS/SARS EMPLOYEES IN EXERCISE OR
GRANTED 1,2 FISCAL YEAR 3 BASE PRICE 4 EXPIRATION
NAME (#) ($/SHARES) DATE 5 5%($) 10%($)
Jon A. 110,000 4.1756 89.85 05/13/08 6,214,560.18 15,749,970.41
Boscia
Ian M. 0 0 0 0 0 0
Rolland
Gabriel L. 30,000 1.1388 89.85 05/13/08 1,694,880.05 4,295,446.47
Shaheen 943 0.0357 94.07 05/11/04 28,895.36 65,182.54
4,758 0.1806 94.07 05/10/05 175,296.84 406,086.03
2,080 0.0789 94.07 05/08/06 90,170.98 214,628.57
------- ------ ------------- -------------
total 37,781 total 1.4340 1,989,243.23 4,981,343.61
Richard C. 26,000 0.9869 89.85 05/13/08 1,468,896.04 3,722,720.28
Vaughan
Jeffrey J. 26,000 0.9869 89.85 05/13/08 1,468,896.04 3,722,720.28
Nick
Jack D. 2,920 0.1108 85.60 05/08/01 40,812.08 85,939.44
Hunter 26,000 0.9869 89.85 05/13/08 1,468,896.04 3,722,720.28
--------- --------- ------------- -------------
total 28,920 1.0977 1,509,708.12 3,808,659.72
1. Options granted on May 13, 1998 are exercisable starting 12 months after the
grant date with respect to 25% of the shares granted and with an additional 25%
of the option shares granted becoming exercisable on each successive
anniversary, with full vesting occurring on the date of the first to occur of
death, disability, retirement or a change of control of the Corporation.
2. On July 31, 1998, Mr. Shaheen received a reload grant of 943 options in
connection with his exercise of 2,250 options granted on May 11, 1994, a reload
grant of 4,758 options in connection with his exercise of 10,500 options granted
on May 10, 1995, and a reload grant of 2,080 options in connection with his
exercise of 4,313 options granted on May 8, 1996. Mr. Hunter received a reload
grant of 2,920 options on April 1, 1998, in connection with his exercise of
10,000 options granted on May 8, 1991. Reload options are exercisable two years
from the date of grant of the reload option if the fair market value of LNC
stock is 125% or more of the reload option price, with earlier exercise
permitted on the date of the first to occur of death, disability, retirement,
one month prior to the end of the ten-year term of the initial option or a
change of control of the Corporation.
3. The Corporation granted options representing 2,634,300 shares to employees
in fiscal year 1998.
4. The exercise price and tax withholding obligations related to exercise may
be paid by delivery of mature shares or by offset of the underlying shares,
subject to certain conditions.
5. The options granted May 13,1998 were granted for a term of 10 years, subject
to earlier forfeiture in certain events related to termination of employment.
The reload options discussed in footnote 2 above were granted for the term of
the initial options, subject to earlier forfeiture in certain events related to
termination of employment.
TABLE F
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION/SAR VALUES
(a) (b) (c) (d) (e)
AND FISCAL YEAR-END OPTION VALUES
NUMBER OF UNEXERCISED VALUE OF UNEXERCISED IN-THE-
OPTIONS HELD AT DECEMBER 31, MONEY OPTIONS HELD AT
1998 DECEMBER 31, 1998 1
SHARES
NAME ACQUIRED VALUE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
ON ($)
EXERCISE
Jon A. 0 0 88,500 142,500 3,946,866.25 930,636.25
Boscia
Ian M. 60,000 3,845,700.00 212,675 105,750 8,475,923.19 3,086,289.38
Rolland
Gabriel L. 23,913 1,235,028.87 10,813 69,405 305,804.62 897,346.38
Shaheen
Richard C. 5,200 270,581 42,500 56,074 1,643,201.25 820,844.85
Vaughan
Jeffrey J. 26,500 1,297,171.25 0 54,500 0 778,031.25
Nick
Jack D. 10,000 605,937.50 54,750 61,134 2,242,426.88 849,875.06
Hunter
1. Based on the closing price on the New York Stock Exchange Composite
Transactions ("NYSE") of the Corporation's Common Stock on December 31, 1998
($81.8125).
1. Amounts shown reflect estimated annual retirement benefits payable on a
straight life annuity basis to participating employees, including the Named
Executive Officers, under the Corporation's retirement plans, which cover most
officers and other employees on a non-contributory basis. Such benefits reflect
a reduction to recognize in part the Corporation's cost of Social Security
Benefits related to service for the Corporation. This table assumes retirement
at age 65 (current normal retirement date), and at age 65, the following
individuals will have the number of years credited service indicated: Mr.
Boscia, 34; Mr. Rolland, 42; Mr. Vaughan, 24; Mr. Hunter, 40; Mr. Nick, 27; and
Mr. Shaheen, 41.
2. Final average salary is the average of an employee's base salary paid in any
consecutive 60-month period during an employee's last ten years of active
employment which produces the highest average salary. The base salary for the
Named Executive Officers is reflected in Column (c) of the Summary Compensation
Table on page 29.
3. As a result of limitations under the Internal Revenue Code, a portion of
these amounts will be paid under supplemental benefit plans established by the
Corporation to provide benefits (included in this table) which would exceed
these limits.
[Front of Proxy Card]
LINCOLN NATIONAL CORPORATION
FORT WAYNE, INDIANA
The undersigned shareholder in LINCOLN NATIONAL CORPORATION (the
"Corporation"), an Indiana corporation, hereby constitutes and appoints JON A.
BOSCIA, JILL S. RUCKELSHAUS and C. SUZANNE WOMACK or any one or more of them,
the true and lawful attorney in fact and proxy of the undersigned, with full
power of substitution to all or any one or more of them, to vote as proxy for
and in the name, place and stead of the undersigned at the Four Seasons Hotel,
One Logan Square, Philadelphia, PA, 10:00 a.m., local time, Thursday, May 13,
1999, or at any adjournment thereof, all the shares of stock in the corporation
shown on the other side (whether Common Stock or $3.00 Cumulative Convertible
Preferred Stock, Series A) which the undersigned would be entitled to vote if
then personally present, hereby revoking any proxy heretofore given.
A majority of such attorneys and proxies who shall be present and shall act
as such at the meeting or any adjournment thereof, or if only one such attorney
and proxy be present and act, then that one, shall have and may exercise all the
powers hereby conferred.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY
WILL BE VOTED FOR ALL NOMINEES LISTED IN ITEM 1 AND AUTHORIZATION WILL BE
GIVEN TO THE NAMED PROXIES, OR ANY ONE OR MORE OF THEM, IN THEIR DISCRETION TO
ACT OR VOTE UPON OTHER MATTERS WHICH MAY PROPERLY COME BEFORE THE MEETING OR ANY
ADJOURNMENT THEREOF.
[SEE REVERSE
(Continued, and to be Signed, on reverse side) SIDE]
FOLD AND DETACH HERE
LINCOLN NATIONAL CORPORATION
Company Highlights During 1998
o Income from operations for 1998 was a record $530.4 million or $5.22 per
diluted share, with all business segments achieving record income for the
year.
o The quarterly dividend on LNC's Common Stock was increased 5.8 percent to
$.55 cents, representing the 14th consecutive year of increased dividends.
o Lincoln completed its two largest acquisitions ever - purchasing the
individual life and annuity business from CIGNA for $1.4 billion and the
domestic individual life insurance business from Aetna for $1 billion.
[Back of Proxy Card]
[X] Please mark your
votes as in this
example.
The Board of Directors recommends a vote FOR the following:
FOR WITHHELD
1. To elect directors [ ] [ ] Nominees for three year terms
expiring 2002:
For all nominees except 1. J. Patrick Barret,
as noted below: 2. Thomas D. Bell, Jr.
3. Daniel R. Efroymson and
------------------------ 4. Roel Pieper
The Board of Directors recommends a vote AGAINST proposal 2.
2. Shareholder proposal. FOR AGAINST ABSTAIN
[ ] [ ] [ ]
3. In their discretion, to act or vote upon other matters which may properly
come before the meeting or any adjournment thereof.
MARK HERE MARK HERE
FOR ADDRESS [ ] IF YOU PLAN [ ]
CHANGE AND TO ATTEND
NOTE AT LEFT ANNUAL MEETING
All of the above in accordance with the Notice of
Annual Meeting of Shareholders and Proxy Statement
for the meeting, receipt of which is hereby
acknowledged.
Signature must be that of the shareholder. If shares
are held jointly, each shareholder named should sign.
If the signer is a corporation, please sign full
corporate name by duly authorized officer. If the
signer is a partnership, please sign partnership name
by authorized person. Executors, administrators,
trustees, guardians, attorneys in fact, etc. should
so indicate when signing.
SIGNATURE DATE
FOLD AND DETACH HERE
LINCOLN NATIONAL CORPORATION
Now Offering Telephone or Internet Voting Services - Fast and Convenient!
VOTE BY TELEPHONE (1-800-652-8683)
o Shareholders from the United States, Canada, Puerto Rico, and the U.S.
Virgin Islands may call toll-free 1-800-652-8683 (1-800-OK2-VOTE).
o Shareholders from other locations may dial 201-324-0377; these
shareholders must bear the normal cost of international telephone
charges to use the telephone voting service.
o Follow the simple recorded instructions.
o When prompted for your "Voter Control Number," enter the series of
numbers printed in the box above using your touch-tone telephone.
VOTE BY INTERNET (www.vote-by-net.com)
o Shareholders with Internet access may got to http://www.vote-by-net.com.
o Follow the simple on-line instructions.
o When prompted for your "Voter Control Number," enter the series of
numbers printed in the box above using your touch-tone telephone.
[Telephone or Internet voting authorizes the named proxies to represent you at
the meeting in the same manner as if you completed, signed, dated and mailed
your proxy card. IF YOU VOTE BY TELEPH0NE OR INTERNET, DO NOT MAIL YOUR PROXY
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