1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the registrant [X]
Filed by a party other than the registrant [ ]
Check the appropriate box:
[ ] Preliminary proxy statement [ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive proxy statement
[ ] Definitive additional materials
[ ] Soliciting material under Rule 14a-12
Reinsurance Group of America, Incorporated
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of filing fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(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):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total fee paid:
- --------------------------------------------------------------------------------
[ ] 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:
- --------------------------------------------------------------------------------
(2) Form, schedule or registration statement no.:
- --------------------------------------------------------------------------------
(3) Filing party:
- --------------------------------------------------------------------------------
(4) Date filed:
- --------------------------------------------------------------------------------
2
[RGA LOGO]
NOTICE OF THE ANNUAL MEETING OF
THE SHAREHOLDERS OF
REINSURANCE GROUP OF AMERICA, INCORPORATED
St. Louis, Missouri
April 6, 2001
TO THE SHAREHOLDERS OF
REINSURANCE GROUP OF AMERICA, INCORPORATED
The Annual Meeting of the Shareholders of Reinsurance Group of America,
Incorporated will be held at the Marriott West Hotel, 660 Maryville Centre
Drive, St. Louis, Missouri on May 23, 2001, commencing at 2:00 p.m., at which
meeting only holders of record of the Company's Common Stock at the close of
business on March 30, 2001 will be entitled to vote, for the following purposes:
1. to elect three directors;
2. to authorize the sale of certain types of securities from time to time
to MetLife, Inc., a significant shareholder of the Company, or its
affiliates; and
3. 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
/S/ James. E. Sherman
Secretary Chairman of the Board
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.
3
[RGA LOGO]
REINSURANCE GROUP OF AMERICA, INCORPORATED
1370 TIMBERLAKE MANOR PARKWAY, CHESTERFIELD, MISSOURI 63017-6039
PROXY STATEMENT
FOR THE
ANNUAL MEETING OF THE SHAREHOLDERS
TO BE HELD MAY 23, 2001
MARRIOTT WEST HOTEL, ST. LOUIS, MISSOURI
This proxy statement is furnished to the holders of 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 Shareholders to be held May 23, 2001, and all adjournments
and postponements thereof, for the purposes set forth in the accompanying Notice
of Annual Meeting of the 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 Shareholders on or about April 6, 2001.
Whether or not you expect to be present in person at the meeting, you are
requested to complete, sign, date, and return the enclosed form of proxy. If you
attend the meeting, you may vote by ballot. If you do not attend the meeting,
your shares of 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 30, 2001 has been fixed as the record date
for the determination of the Shareholders entitled to vote at the Annual Meeting
of the Shareholders. As of the record date, approximately 49,375,609 shares of
Common Stock were outstanding and entitled to be voted at such meeting, with
approximately 116 holders of record. Shareholders will be entitled to cast one
vote on each matter for each share of Common Stock held of record on the record
date.
A copy of the Company's Annual Report to Shareholders for the fiscal year
ended December 31, 2000 accompanies this proxy statement.
The solicitation of this proxy is made by the Board of Directors of the
Company. The solicitation will primarily be by 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.
4
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 2004,
or until their respective successors have been elected and have qualified.
NOMINEES 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 or
her principal occupation for the last five fiscal years, unless otherwise
indicated. One of the Company's directors, Judy E. Weiss, resigned October 26,
2000. The Board named Mary Ann Brown to fill the vacancy created by the
resignation of Ms. Weiss, to complete the term of office ending in 2003. 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 of the nominees are currently directors of the Company. 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
SINCE
---------
TO BE ELECTED AS DIRECTORS FOR TERMS ENDING 2004:
WILLIAM A. PECK, M.D., 67 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 also
serves as a director of Allied Health Care Products,
Inc., Angelica Corporation, Hologic, Inc., and
TIAA-CREF Trust
WILLIAM P. STIRITZ, 66 1993
Chairman, President and Chief Executive Officer of
Agribrands International, Inc., 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, Ralcorp Holdings, Inc. and Energizer Holdings,
Inc., and also serves as a director of Ball
Corporation, GenAmerica Financial Corporation
("GenAmerica"), General American Life Insurance Company
("General American"), The May Department Stores
Company, and Vail Resorts, Inc.
A. GREIG WOODRING, 49 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. He
headed General American's reinsurance business 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
2
5
SERVED AS
DIRECTOR
SINCE
---------
TO CONTINUE IN OFFICE UNTIL 2003:
MARY ANN BROWN, 49 2001
President, New England Products & Services. She serves
as head of Individual Business Product Management for
Metropolitan Life Insurance Company ("MLIC") and a
number of its subsidiaries, and also serves as an
officer and director of various subsidiaries of MLIC.
From 1996 until 1998, she served as Director, Worldwide
Life Reinsurance, Swiss Re New Markets, Swiss
Reinsurance Company. She was a Principal at
Tillinghast/Towers Perrin from 1987 until 1996, and
served as a Consultant with that organization from 1983
until becoming a Principal in 1987. She also serves as
a director of New England Zenith Fund, a registered
investment company, and Exeter Reassurance Company,
Ltd.
STUART I. GREENBAUM, 64 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., St. Louis
Children's Hospital and Noble International, Ltd.
RICHARD A. LIDDY, 65 1993
Chairman of the Board of the Company. He also serves as
Chairman of GenAmerica and General American. In
September 2000, Mr. Liddy retired as President and
Chief Executive Officer of GenAmerica and General
American. He also serves as a director of Ameren
Corporation, Brown Shoe Company, Energizer Holdings,
Inc., and Ralston Purina Company
TERRENCE I. LENNON, 62 2000
Executive Vice President, Government Relations,
Compliance and Public Relations-Metropolitan Life
Insurance Company ("MLIC") since January, 1998. Prior
to his current position, Mr. Lennon was Senior Vice
President, Mergers and Acquisitions for MLIC from
March, 1994 until January, 1997, then Executive Vice
President, Planning and Mergers and Acquisitions until
assuming his current position. He also serves as a
director of Texas Life Insurance Company and SSRM
Holdings, Inc.
TO CONTINUE IN OFFICE UNTIL 2002:
J. CLIFF EASON, 53 1993
Retired President of Southwestern Bell Telephone, SBC
Communications, Inc. ("SBC"), a position he held from
September 2000 through January 2001. He served as
President, Network Services, SBC from October 1999
through September 2000; President, SBC International of
SBC, from March 1998 until October 1999; President and
CEO of Southwestern Bell Telephone Company ("SWBTC")
from February 1996 until March 1998; President and CEO
of Southwestern Bell Communications, Inc. from July
1995 through February 1996; President of Network
Services of SWBTC 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 Southwestern Bell Communications, Inc.
and its subsidiaries prior to 1992, including President
of Metromedia Paging from 1991 to 1992. Mr. Eason was a
director of Williams Communications Group, Inc. until
his retirement in January 2001.
3
6
SERVED AS
DIRECTOR
SINCE
---------
H. EDWIN TRUSHEIM, 73 1993
In 1995, Mr. Trusheim retired as Chairman of the Board
of General American, where he was Chief Executive
Officer until his retirement in 1992. He served as
President of General American from 1979 to 1988 and was
elected Chief Executive Officer in 1981 and Chairman of
the Board in 1986. He also serves as a director of
Angelica Corporation, Laclede Gas Company (until
January 2001), and RehabCare Corporation
JOHN H. TWEEDIE, 55 2000
Senior Executive Vice President of MetLife, Inc. since
September 1999 and Senior Executive Vice President of
Finance and International -- MetLife since March 1999.
Prior to that, Mr. Tweedie was Executive Vice-President
of Life Insurance for Metropolitan Life Insurance
Company from 1994 through May 1998 and became Senior
Executive Vice President of Life Insurance from May
1998 until assuming his current position. Mr. Tweedie
also serves as a director for Seguros Genesis, Texas
Life Insurance Company, Metropolitan Property and
Casualty Insurance Company and Fulcrum Financial
Advisors
COMMITTEES AND MEETINGS OF THE BOARD OF DIRECTORS
The Board of Directors held a total of seven regular and special meetings
during 2000. Each incumbent director attended at least 75% of the meetings of
the Board and committees on which he or she served during 2000, except for Mr.
Tweedie, who attended 67% of all Board and 33% of all committee meetings.
The Board of Directors has an Audit Committee, a Compensation Committee,
and a Nominating Committee. The Audit Committee, of which Messrs. Greenbaum
(Chairman), Eason, and Peck are members, met five times in 2000. 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 Audit Committee
operates under a written charter, a copy of which is attached as Exhibit A to
this Proxy Statement. Each member of the Audit Committee is independent, as
defined under the listing standards of the New York Stock Exchange.
The Compensation Committee establishes and oversees the compensation
policies of the Company's operating subsidiaries and determines executive
compensation. The Committee, which consists of Messrs. Eason (Chairman),
Greenbaum, Peck, Stiritz, and Tweedie, held five meetings in 2000. See
"Compensation Committee Report on Executive Compensation."
The Nominating Committee, of which Messrs. Peck (Chairman), Eason,
Greenbaum, Stiritz, Trusheim, and Tweedie are members, held two meetings during
2000. This Committee nominates directors and will consider recommendations for
nominations as directors from Shareholders. Shareholders wishing to propose
nominees to the Nominating Committee for consideration should notify in writing
the Secretary of the Company. The Secretary will inform the members of the
Nominating Committee of such nominees.
DIRECTOR COMPENSATION
Officers of the Company, MetLife, Inc. ("MetLife"), GenAmerica Financial
Corporation ("GenAmerica"), or any subsidiaries of such companies, do not
receive any additional compensation for serving the Company as members of the
Board of Directors or any of its committees. During 2000, directors (other than
the Chairman) who are not employees of the Company, MetLife, GenAmerica, or any
subsidiaries of such companies ("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). On September 15, 2000, the Chairman of the Board,
Mr. Liddy, retired from his positions as an officer of
4
7
GenAmerica, General American, and MetLife, and became eligible to receive
compensation as a Non-Employee Director. The Board approved compensation to Mr.
Liddy that is generally one-third higher than the amount paid to a Non-Employee
Director. From September 15 though the end of 2000, Mr. Liddy was paid, on a
pro-rata basis, an annual retainer fee of $26,670, $1,335 for each Board meeting
attended in person, and $665 for each telephonic Board meeting in which he
participated. The Company also reimburses directors for out-of-pocket expenses
incurred in connection with attending Board and committee meetings.
Of the $20,000 annual retainer paid to Non-Employee Directors (other than
the Chairman), $8,000 is paid in shares of the Company's Common Stock at the
Annual Meeting. The Chairman's annual retainer consists of $10,670 paid in
shares of the Company's Common Stock at the Annual Meeting, with the balance
paid in cash. Also on the date of each Annual Meeting, each Non-Employee
Director (other than the Chairman) is granted an option to purchase 2,250 shares
of Common Stock with an exercise price equal to the closing price of the Common
Stock on such date. The Chairman is granted an option to purchase 3,000 shares
of Common Stock on the same terms. On May 24, 2000, each of Messrs. Eason,
Greenbaum, Peck, Stiritz, and Trusheim were awarded an option to purchase 2,250
shares of Common Stock at an exercise price of $31.06 per share, the closing
price of the Company's Common Stock on the date of grant. The options become
fully vested on the first anniversary of the grant.
Non-Employee Directors have the option to receive performance shares in
lieu of their annual retainer (including the stock portion) and meeting fees. A
performance share is a hypothetical share of Common Stock of the Company based
upon the fair market value of the Common Stock at the time of the grant.
Performance shares are not transferable and are subject to forfeiture unless
held until the director ceases to be a director by reason of retirement, death,
or disability. Upon such an event, the Company will issue cash or shares of
Common Stock in an amount equal to the value of the performance shares.
All such stock, options and performance shares are issued pursuant to the
Flexible Stock Plan for Directors, which was adopted effective January 1, 1997.
Performance shares granted prior to such time were issued under the Phantom
Stock Plan for Directors.
5
8
COMMON STOCK OWNERSHIP OF MANAGEMENT AND CERTAIN BENEFICIAL OWNERS
The following table sets forth, as of March 1, 2001, certain stock
ownership information with respect to: 1) each person known to the Company to be
the beneficial owner of 5% or more of the Company's outstanding Common Stock,
and 2) certain information with respect to the ownership of Common Stock by (i)
each director and nominee for director of the Company, (ii) each executive
officer of the Company named in the Summary Compensation Table, and (iii) all
directors, nominees, and executive officers as a group.
AMOUNT AND NATURE OF PERCENT
BENEFICIAL OWNER BENEFICIAL OWNERSHIP OF CLASS
- ---------------- -------------------- --------
PRINCIPAL SHAREHOLDER:
MetLife, Inc. 28,915,939(1) 58.6%
One Madison Avenue
New York, New York 10010
Franklin Resources, Inc. 2,930,252(2) 5.9%
777 Mariners Island Boulevard
San Mateo, California 94404
Wellington Management Company, LLP 2,783,035(3) 5.6%
75 State Street
Boston, Massachusetts 02109
DIRECTORS, NOMINEES AND NAMED EXECUTIVE OFFICERS:
A. Greig Woodring, Director, President, and Chief Executive
Officer(1) 256,780(4) *
Mary Ann Brown, Director 0 *
J. Cliff Eason, Director 8,933(5) *
Stuart Greenbaum, Director 8,933(5) *
Terence I. Lennon, Director 500 *
Richard A. Liddy, Chairman(1) 102,581(6) *
William A. Peck, Director 6,683(5) *
William P. Stiritz, Director(1) 74,358(7) *
H. Edwin Trusheim, Director 18,423(5) *
John H. Tweedie, Director(1) 0 *
David B. Atkinson, Executive Vice President and Chief
Operating Officer 179,026(8) *
Jack B. Lay, Executive Vice President and Chief Financial
Officer 55,481(9) *
Andre St-Amour, Executive Vice President and Chief
International Operating Officer 41,943(10) *
Graham Watson, Executive Vice President and Chief Marketing
Officer 38,923(11) *
All directors and executive officers as a group (26 persons) 995,535(12) 2.0%
- -------------------------
* Less than one percent.
(1) On November 23, 1999, Metropolitan Life Insurance Company ("MLIC")
purchased 4,784,689 shares of RGA Common Stock through a private placement.
On January 6, 2000, MLIC indirectly acquired shared voting and investment
power of an additional 24,131,250 shares through its acquisition of
GenAmerica Financial Corporation ("GenAmerica"). Shares beneficially owned
by GenAmerica were 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, which is now a
wholly owned subsidiary of MLIC. On April 7, 2000, MLIC completed a
demutualization and an initial public offering of shares of MetLife, Inc.
("MetLife"), which became the parent of MLIC. As a result, MetLife acquired
shared voting and investment power of all shares of RGA held by MLIC and
GenAmerica and became the beneficial owner of such shares. Messrs. Liddy
and Stiritz are directors of GenAmerica and General American. Mr. Woodring
is an executive officer of GenAmerica and General American. Mr. Tweedie is
an executive officer of MetLife. These individuals disclaim beneficial
ownership of the shares beneficially owned by MetLife and its subsidiaries.
6
9
(2) Franklin Resources, Inc. is the parent of several direct and indirect
investment advisory subsidiaries (the "Adviser Subsidiaries") that advise
investment companies and managed accounts. Shares are owned of record by
clients of the Adviser Subsidiaries.
(3) Wellington Management Company, LLP ("WMC") is an investment adviser. Shares
are owned of record by clients of WMC, none of which is known to have
beneficial ownership of more than five percent of the Company's outstanding
shares. WMC has shared voting power of 2,431,923 shares and shared
dispositive power of 2,743,035 shares.
(4) Includes 212,663 shares of Common Stock subject to stock options that are
exercisable within 60 days. Also includes 15,000 shares of restricted
Common Stock that are subject to forfeiture in accordance with the terms of
the specific grant, as to which Mr. Woodring has no investment power.
(5) Includes 6,683 shares of Common Stock subject to stock options that are
exercisable within 60 days.
(6) Includes 76,498 shares of Common Stock subject to stock options that are
exercisable within 60 days. Also includes 26,083 shares of Common Stock
held in a joint account with Mr. Liddy's spouse, an account over which he
has shared voting and investment power.
(7) Includes 6,683 shares of Common Stock subject to stock options that are
exercisable within 60 days. Also includes 21,675 shares owned by his wife
and children over which Mr. Stiritz has no investment or voting power and
of which he disclaims beneficial ownership.
(8) Includes 139,533 shares of Common Stock subject to stock options that are
exercisable within 60 days and 2,250 shares held by Mr. Atkinson's
children. Also includes 6,548 restricted shares of Common Stock that are
subject to forfeiture in accordance with the terms of the specific grant,
as to which Mr. Atkinson has no investment power.
(9) Includes 47,133 shares of Common Stock subject to stock options that are
exercisable within 60 days and 1,800 shares jointly owned with Mr. Lay's
spouse. Also includes 6,548 restricted shares of Common Stock that are
subject to forfeiture in accordance with the terms of the specific grant,
as to which Mr. Lay has no investment power.
(10) Includes 36,693 shares of Common Stock subject to stock options that are
exercisable within 60 days.
(11) Includes 30,956 shares of 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.
(12) Includes a total of 766,801 shares of Common Stock subject to stock options
that are exercisable within 60 days; 28,096 shares of restricted 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.
SECTION 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 persons who
beneficially own more than ten percent of a registered class of the Company's
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%
shareholders 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 its directors, executive officers, and greater than 10%
beneficial owners complied with all filing requirements applicable to them with
respect to transactions during 2000, except Paul Nitsou, Senior Vice President,
who did not file a Form 4 to report a sale of 691 shares on April 17, 2000. Mr.
Nitsou's transaction was reported on a Form 5 filed in February 2001.
7
10
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Company's Compensation Committee, composed of five non-employee
directors, oversees the compensation policies of the Company's operating
subsidiaries (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.
BASE SALARIES
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 determine how the Company's executive
compensation compares to that of other publicly held insurance and reinsurance
companies. In January 1999, the Compensation Committee retained an independent
consultant to undertake an extensive review of executives' total compensation as
compared to their counterparts at comparable companies. That study indicated
that the 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.
In January 2000, based upon an aged analysis of the January 1999 study, the
Committee approved salary increases for the executive group that averaged 6.4%
(excluding promotional increases).
Recognizing the rapid growth of the Company and the level of responsibility
Mr. Woodring has assumed, the Committee adopted the consultant's recommendations
regarding an appropriate salary range for Mr. Woodring. In January 2000, the
Committee approved an 8.7% salary increase for Mr. Woodring, bringing his base
pay to $500,000 for 2000. Increases to the salaries of other executive officers
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 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. 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 on these criteria, the Committee approves a schedule of specific
incentives set for each participant, with a threshold of performance that must
be met before any payment to the individual can be made, a target and a maximum.
The Company's performance must meet a certain 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.
In February 2001, the Committee determined the MIP awards for 2000. The
Company did not meet its threshold for revenue growth in fiscal 2000, but did
meet its threshold operating earnings per share level. Based on these
consolidated results, the average cash payout to executive officers was
approximately 14.6% of salary. Mr. Woodring's MIP award, which is based solely
on Company results for 2000, was $144,038, or approximately 29.2% of his salary
for the year. 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 2000 MIP award totaled $96,026, or approximately 19.4%
of salary.
Executive Performance Share Plan
A portion of the MIP award for RGA executive officers is paid in the form
of performance shares pursuant to the Executive Performance Share Plan. Each
performance share represents the equivalent of one share of Common Stock. In 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 awarded.
Performance shares in the
8
11
Canadian plan vest 100% on December 15 of the third calendar year following the
year in which they awarded. Payment from the U.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 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 will be the current fair
market value of a share of the Company's 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's shares.
The Committee granted performance shares for fiscal 2000 at the same time as MIP
awards were made, in February 2001. The average payment in the form of
performance shares to executive officers was approximately 7.1% of salary in
2000. Mr. Woodring received 1,273 performance shares for 2000, which were valued
at $48,013 based on the market value of the Common Stock on the date of grant in
February 2001.
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 earnings per share. The targets
and thresholds are the same as those established under the MIP. In addition,
participants who contribute up to 4% to the Company's 401(k) plan receive up to
a 2% match, and those participants are eligible to receive a discretionary match
of up to 2% of compensation for 2000. Effective January 1, 2001, the Company
adopted a safe harbor design for the plan that eliminates the discretionary
match portion of the plan and provides for a match of up to 4% of compensation.
All eligible employees also 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 discretionary match or
the profit sharing award can be made. The 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.
The Company did not meet its threshold for revenue growth in fiscal 2000,
but did meet its threshold earnings per share level. Based on these results, the
Board of Directors approved 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 $10,274 for 2000, representing approximately 1.8% 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 has been no less than the market price of the Common Stock on the
date of grant.
In January 2000, in accordance with grant guidelines, the Committee awarded
a total of 456,407 options for Common Stock, including 228,947 to the Company's
salaried executive officers. Mr. Woodring was awarded 49,596 options. The
criteria for determining individual option grants were the same as those used in
1999.
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 shareholders.
9
12
Executive Stock Ownership Guidelines
In order to further align the interests of the Company's management and its
shareholders, the Committee adopted executive stock ownership guidelines in
October 1996. The five tiers of the guidelines provide that the market value of
the Company's shares owned by the executives should be based on a multiple of
the mid-point of the executive's salary range: the CEO (3 times), the COO (2.75
times), the CFO (2.5 times) the Executive Vice Presidents (2 times) and the
Senior Vice Presidents (1 time). 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.
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 shareholders 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 COMMITTEE
J. Cliff Eason, Chairman
Stuart Greenbaum William A. Peck, M.D.
William P. Stiritz John H. Tweedie
COMPENSATION COMMITTEE INTERLOCKS AND
INSIDER PARTICIPATION
From January 1, 2000 to May 24, 2000, the Compensation Committee was
comprised of Messrs. Edison (Chairman), Eason, Greenbaum, Peck, and Stiritz. Mr.
Edison's term as a director ended May 24, 2000. On May 25, 2000 the Compensation
Committee became comprised of its current members, Messrs. Eason (Chairman),
Greenbaum, Peck, Stiritz and Tweedie. None of the members of the Compensation
Committee have been an officer or employee of the Company or any of its
subsidiaries. None of the Company's inside directors or officers serves on the
compensation committee of another company of which a member of the Compensation
Committee is an officer.
10
13
EXECUTIVE COMPENSATION
SUMMARY 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 2000.
SUMMARY COMPENSATION TABLE
LONG TERM COMPENSATION
AWARDS
---------------------------
ANNUAL COMPENSATION SECURITIES ALL OTHER
----------------------------- RESTRICTED UNDERLYING COMPENSATION
NAME AND PRINCIPAL POSITION YEAR SALARY($)(1) BONUS($)(2)(3) STOCK($)(4) OPTIONS(#)(5) ($)(6)
- --------------------------- ---- ------------ -------------- ----------- ------------- ------------
A. Greig Woodring 2000 $493,486 $145,314 -- 49,596 $14,483
President and Chief 1999 446,923 265,594 -- 25,261 13,123
Executive Officer 1998 331,308 226,796 $395,000 31,994 10,334
David B. Atkinson 2000 $342,308 $ 67,835 -- 29,111 $16,795
Executive Vice President and 1999 292,308 154,912 $235,728 15,158 14,071
Chief Operating Officer 1998 245,385 106,715 -- 18,798 12,527
Jack B. Lay 2000 $228,462 $ 36,814 -- 18,976 $10,001
Executive Vice President and 1999 215,672 69,247 $235,728 10,340 9,987
Chief Financial Officer 1998 190,493 77,398 -- 14,003 9,395
Andre St-Amour 2000 $228,101 $ 37,333 -- 18,525 $ 4,506
President, RGA Life 1999 208,404 104,190 -- 9,810 5,389
Reinsurance Company of 1998 181,879 130,953 -- 13,285 4,551
Canada
Graham Watson(7) 2000 $200,826 $318,165 -- 17,587 $ 4,506
Executive Vice President and 1999 223,506 344,433 -- 10,616 5,389
Chief Marketing Officer 1998 194,435 405,427 -- 14,355 4,551
- -------------------------
(1) 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.
(2) 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 bonus totaled $96,026 for Mr.
Woodring, $46,592 for Mr. Atkinson, $24,433 for Mr. Lay, $25,667 for Mr.
St-Amour and $22,672 for Mr. Watson for 2000. 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 $1,275
for 2000 and $1,200 each for 1999 and 1998. The amounts shown for Mr. Watson
for 2000, 1999, and 1998 also include (i) a Canadian production bonus of
$273,709, $234,639, and $318,858 respectively (see "Executive
Compensation -- Other Employment Arrangements") and (ii) $11,478, $15,769,
and $8,795, 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
7).
(3) Includes, in 2000, 1999, and 1998, the value of the following number of
performance shares granted in February 2001, January 2000 and January 1999,
respectively, pursuant to the Executive Performance Share Plan based on the
closing price of the Common Stock on the date of award: Mr.
Woodring -- 1,273, 3,801, and 1,275 performance shares; Mr. Atkinson
-- 529, 1,989, and 732 performance shares; Mr. Lay -- 294, 917, and 546
performance shares; Mr. St-Amour -- 309, 1,404, and 864 performance shares;
and Mr. Watson -- 273, 1,267, and 558 performance shares. For information
regarding performance shares, see "Compensation Committee Report on
Executive Compensation" and "Executive Compensation -- Option/Performance
Share Grants in Last Fiscal Year."
(4) As of December 31, 2000, 1999, and 1998, the value of Mr. Woodring's 15,000
shares of restricted Common Stock was $532,500, $416,250, and $700,000,
respectively. Dividends are paid on restricted stock. On January 1, 1999,
Messrs. Atkinson and Lay were each granted 6,750 restricted shares of
non-voting common stock. In September 1999 each share of non-voting common
stock was converted to .97 of voting common stock. Post conversion, Messrs.
Atkinson and Lay each own 6,548 restricted shares, the value of which was
$232,454 as of December 31, 2000.
(5) See "Executive Compensation -- Option/Performance Share Grants in Last
Fiscal Year." Options were granted in 1999 for shares of non-voting common
stock, now discontinued and converted to voting common stock. Option totals
for 1999 have been adjusted for the .97 stock conversion effective in
September 1999.
(6) For Messrs. Woodring, Atkinson and Lay, amounts represent contributions made
by RGA Re in 2000, 1999, and 1998 to the officers' accounts in the RGA Re
Profit Sharing Plan and the RGA Re Augmented Benefit Plan.
11
14
Amounts for Messrs. St-Amour and Watson represent contributions made to their
accounts by RGA Canada under its Retirement Plan.
(7) Mr. Watson is a majority owner and non-executive Chairman of Intercedent
Limited, which until July 1, 2000 received a portion of payments made by the
Company to Insource Limited for certain marketing services. See "Certain
Relationships and Related Transactions."
OPTION/PERFORMANCE SHARE GRANTS IN LAST FISCAL YEAR
The Company has a Flexible Stock Plan, which provides for the award of
various types of benefits, including stock options, stock appreciation rights,
restricted stock, performance shares, and other stock-based awards, as well as
cash awards. The Company also has an Executive Performance Share Plan that
provides for the award of performance shares. The following table sets forth
certain information concerning options granted to the named executive officers
pursuant to the Flexible Stock Plan and the Executive Performance Share Plan
during 2000.
OPTION/PERFORMANCE SHARE GRANTS IN LAST FISCAL YEAR
INDIVIDUAL GRANTS POTENTIAL REALIZABLE VALUE
-------------------------- AT ASSUMED ANNUAL RATES
NUMBER OF SECURITIES % OF TOTAL OF STOCK PRICE APPRECIATION
UNDERLYING GRANTED TO EXERCISE OR FOR OPTION TERM(4)
OPTIONS EMPLOYEES IN BASE PRICE EXPIRATION ----------------------------
NAME GRANTED(#)(1)(2) FISCAL YEAR ($/SH)(3) DATE 5%($) 10%($)
- ---- ------------------------- ------------ ----------- ---------- ----------- -------------
A. Greig Woodring 49,596 options 10.9% $23.19 1/1/2010 $723,233 $1,832,815
1,273 performance shares 17.1% $37.73 N/A $30,206 $76,548
David B. Atkinson 29,111 options 6.4% $23.19 1/1/2010 $424,511 $1,075,794
529 performance shares 7.1% $37.73 N/A $12,552 $31,810
Jack B. Lay 18,976 options 4.2% $23.19 1/1/2010 $276,717 $701,256
294 performance shares 4.0% $37.73 N/A $6,976 $17,679
Andre St-Amour 18,525 options 4.1% $23.19 1/1/2010 $270,141 $684,590
309 performance shares 4.1% $37.73 N/A $7,332 $18,581
Graham Watson 17,587 options 3.9% $23.19 1/1/2010 $256,462 $649,926
273 performance shares 3.7% $37.73 N/A $6,748 $16,416
- -------------------------
(1) The options become exercisable in 20% increments on each of January 1, 2001,
2002, 2003, 2004 and 2005. 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 2000.
(2) Performance share grants shown were approved in February 2001, but are
included as 2000 grants because they comprise a part of the officers' 2000
bonus. See "Compensation Committee Report on Executive Compensation." Each
performance share represents the equivalent of one share of Common Stock.
Payment with respect to vested performance shares is made in the form of
cash or shares of 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 Management Incentive Plan.
Performance shares awarded to Messrs. Woodring, Atkinson and Lay vest in
one-third increments on each of December 31, 2001, 2002, and 2003 and
performance shares awarded to Messrs. St-Amour and Watson, who are Canadian
citizens, vest in full on December 15, 2002.
(3) For stock options, amount represents the exercise price per share of Common
Stock, which is the closing price of the Common Stock on the date of grant
in January 2000. For performance shares, amount represents the closing price
of the Common Stock on the date of grant in February 2001.
(4) 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 VALUES
The table below provides certain information for each of the named
executive officers concerning exercises of options during 2000 and the value of
unexercised options at December 31, 2000.
AGGREGATED OPTION/PERFORMANCE SHARE EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION/PERFORMANCE SHARE VALUES
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
SHARES ACQUIRED ON VALUE OPTIONS AT DECEMBER 31, 2000(1) AT DECEMBER 31, 2000(2)
NAME EXERCISE (#) REALIZED($) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
- ---- ------------------ ----------- ------------------------------- -------------------------
A. Greig Woodring 0 options $0 159,781/166,504 options $2,554,771/$2,471,815
0 performance shares $0 21,238/2,989 performance shares $753,949/$106,110
David B. Atkinson 0 options $0 109,741/94,806 options $1,731,749/$1,382,424
0 performance shares $0 12,430/1,571 performance shares $441,265/$55,771
Jack B. Lay 0 options $0 32,509/49,307 options $555,616/$579,268
0 performance shares $0 9,165/795 performance shares $325,358/$28,223
Andre St-Amour 0 options $0 31,164/51,133 options $526,474/$639,757
1,526 performance shares $53,696 0/2,734 performance shares $0/$97,057
Graham Watson 0 options $0 18,800/41,983 options $219,089/$406,464
913 performance shares $32,126 0/1,845 performance shares $0/$65,498
- -------------------------
(1) The Company granted stock options to senior management, including each of
the named executive officers, in January 2001. The 2001 options, which are
not currently exercisable, are not reflected in the table. Although
exercisable, performance shares can be paid out only in certain limited
circumstances. See "Executive Compensation -- 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.
(2) In the case of stock options, represents the difference between the December
31, 2000 closing price of the Company's Common Stock ($35.50) and the
exercise price of the option multiplied by the number of shares underlying
the option. In the case of performance shares, value represents the December
31, 2000 closing price multiplied by the number of performance shares.
RETIREMENT PLANS
Certain of the Company's employees participate in the GenAmerica Financial
Corporation Pension Plan and Trust (the "Pension Plan"), a qualified multiple
employer plan 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.
13
16
The following table shows the 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, 2001.
PENSION PLAN AND RGA AUGMENTED PLAN
YEARS OF SERVICE
-----------------------------------------------
REMUNERATION 15 20 25 30 35
- ------------ ------- ------- ------- ------- -------
125,000 28,247 37,662 47,078 56,795 68,401
150,000 34,622 46,162 57,703 70,722 84,650
175,000 40,997 54,662 68,401 84,650 100,898
200,000 47,372 63,162 80,007 98,577 117,147
225,000 53,747 71,662 91,613 112,505 133,396
250,000 60,122 80,162 103,220 126,432 149,645
300,000 72,872 98,577 126,432 154,287 182,142
400,000 98,577 135,717 172,857 209,997 247,137
450,000 111,122 148,162 185,203 222,244 259,284
500,000 123,872 165,162 206,453 247,744 289,034
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, 21 years; Mr. Atkinson, 13 years; and Mr. Lay, 9
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, $539,500; for Mr. Atkinson, $339,749; and for Mr. Lay,
$245,591. 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.
Until January 1, 1994, 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. Remuneration under
the RGA Supplemental Plan was the highest average Benefit Salary for three
consecutive years during the preceding five years. The 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(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.
Retirement benefits under the RGA Supplemental Plan are payable at age 65
in the form of a 15 year certain and life annuity, with no direct or indirect
integration with Social Security benefits.
Payment of the specified retirement benefits is contingent upon
continuation of the plans in their present form until the employee retires.
OTHER EMPLOYMENT ARRANGEMENTS
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
14
17
bonus was originally paid to Intercedent Limited, a consulting firm that
employed Mr. 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 as an advisor to General American's top management and
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 meets or exceeds certain performance targets. 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. Mr.
Woodring received $49,875 (one-third of which was deferred) for the three year
period ending December 31, 2000. All payments under the plan are made by General
American.
15
18
PERFORMANCE GRAPH
Set forth below is a graph for the Company's Common Stock for the period
beginning December 31, 1995 and ending December 31, 2000. The graph compares 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.
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN*
AMONG REINSURANCE GROUP OF AMERICA, INCORPORATED,
THE S&P 500 INDEX AND THE S&P INSURANCE (LIFE/HEALTH) INDEX
[PERFORMANCE GRAPH]
REINURANCE GROUP
OF AMERICA S & P INSURANCE
INCORPORATED S & P 500 (LIFE/HEALTH)
---------------- --------- ---------------
12/95 100.00 100.00 100.00
12/96 129.63 122.96 122.19
12/97 176.62 163.98 152.79
12/98 291.89 210.84 161.30
12/99 174.52 255.22 138.71
12/00 225.20 231.98 157.85
* $100 Invested on 12/31/95 in stock or index -- including reinvestment of
dividends. Fiscal year ending December 31.
12/95 12/96 12/97 12/98 12/99 12/00
----- ----- ----- ----- ----- -----
Reinsurance Group
of America, Inc. $100.00 $129.63 $176.62 $291.89 $174.52 $225.20
S&P 500 $100.00 $122.96 $163.98 $210.84 $255.22 $231.98
S&P Insurance
(Life/Health) $100.00 $122.19 $152.79 $161.30 $138.71 $157.85
16
19
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
General American and its parent, GenAmerica, are the beneficial owners of
approximately 48% of the Company's outstanding stock. Following a private
placement in November 1999, the acquisition of GenAmerica by Metropolitan Life
Insurance Company ("MLIC") on January 6, 2000, and MLIC's demutualization on
April 7, 2000, MetLife, Inc. ("MetLife") is the beneficial owner of
approximately 58% of the Company's outstanding shares.
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 mostly to RGA Re directly, or through General
American to RGA Re pursuant to a retrocession agreement.
Under two administrative services agreements effective 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 2000 was approximately $2.6 million.
Conning Asset Management Company ("Conning"), a wholly owned subsidiary of
Conning Corporation which, in turn, is an indirect wholly owned subsidiary of
MLIC, managed certain investment portfolios of RGA, RGA Re, RGA Canada, RGA
Australian Holdings, Pty, Limited and RGA Reinsurance Company (Barbados) Ltd.
through August 31, 2000. The Company incurred costs of approximately $1.7
million for investment advisory services from Conning in 2000. Conning continues
to service and originate commercial mortgages on behalf of RGA Re under separate
investment advisory agreements. 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 $8.8 million as of December 31,
2000.
The Company has reinsurance agreements with MetLife and certain of its
subsidiaries, and direct policies and reinsurance agreements with General
American and certain of its subsidiaries. The Company reflected earned gross
premiums pursuant to these agreements of approximately $110.4 million from
MetLife, and $33.6 million from General American, in 2000. The earned premiums
reflect the net of business assumed from and ceded to MetLife, General American
and their respective subsidiaries.
Pursuant to a marketing agreement, the Company utilized the services of
Insource Limited and its predecessor ("Insource") to conduct certain
marketing-related services in particular geographic regions until December 1,
1996. The agreement was terminated with respect to new business effective
December 31, 1996, although the Company continues to pay for certain business
generated prior to such date. Graham Watson, an executive officer of the Company
and an officer and director of certain of the Company's subsidiaries, is
non-executive Chairman of and has an approximate 75% equity interest in
Intercedent Limited. Prior to July 1, 2000, Intercedent Limited owned
approximately 50% of the non-voting special shares of Insource, and consequently
was entitled to receive up to 50% of Insource's revenues relating to business
generated on behalf of the Company. The Company paid Insource approximately
$175,000 through July 1, 2000 pursuant to this agreement. Effective July 1,
2000, Intercedent Limited disposed of all of its ownership in Insource and,
accordingly, effective on such date Mr. Watson has no further interest in any of
the payments made by the Company to Insource. In addition, prior to April 1,
1996, the Company paid Intercedent Limited a production bonus based on premiums
generated through its Canadian subsidiaries. Since April 1, 1996, this bonus is
paid directly to Mr. Watson. See "Executive Compensation -- Summary Compensation
Table."
17
20
ITEM 2 -- SALE OF SECURITIES TO METLIFE OR ITS AFFILIATES
The second item to be acted upon at the Annual Meeting is a proposal to
authorize future sales of the Company's equity securities, including Common
Stock, preferred stock, depository shares, warrants, convertible debt, or other
securities convertible into or exercisable for Common Stock or preferred stock
("Equity Securities"), from time to time to MetLife, Inc. or its affiliates
(collectively "MetLife") upon the terms and conditions described below.
BACKGROUND
MetLife is the principal beneficial shareholder of the Company. See "Item
1 -- Election of Directors -- Common Stock Ownership of Management and Certain
Beneficial Owners." The Company desires to have the flexibility to allow MetLife
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,
MetLife 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 MetLife, due to the current level of beneficial ownership of
MetLife (approximately 58.6% of the total Common Stock).
The Company may decide to raise equity capital at various times in the
future in order to enhance the Company's capital structure, to fund growth
opportunities or for other corporate purposes. As part of any capital raising
plan, the Company may undertake either to privately place Equity Securities to
MetLife and other investors, or sell Equity Securities to MetLife and other
investors pursuant to a public offering. The terms of any potential sale to
MetLife 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 Board of Directors will determine the terms of any such
sale and the securities offered therein at the time of the transaction. Any
private sales would not be registered under the Securities Act of 1933 and such
shares could not be offered or sold in the United States absent registration or
an applicable exemption from registration requirements. Any public offering
would only be made by means of a prospectus. Although the Company does not
currently have any definite capital-raising plans or commitments, it has filed a
registration statement covering a variety of debt and equity securities up to
$400 million which has not yet become effective. These securities may not be
sold nor may offers to buy be accepted before the registration statement becomes
effective. This proxy statement shall not constitute an offer to sell or the
solicitation of any offer to buy nor shall there be any sale of these securities
in any state in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities law of any such state.
As of March 1, 2001, the Company's authorized capital stock consists of
75,000,000 shares of Common Stock and 10,000,000 shares of preferred stock. The
Board of Directors has the authority to issue authorized shares of the preferred
stock in series and to fix the number, designation, preferences, limitations and
relative rights of the shares of each series, subject to applicable law and the
provisions of any outstanding series of preferred stock. Depositary shares would
represent an interest in shares of a series of preferred stock deposited under a
deposit agreement by the Company with a bank or trust company. Subject to the
terms of the deposit agreement, each owner of a depositary share would be
entitled, proportionately, to all the rights, preferences and privileges of the
preferred stock represented by such depositary share. Similarly, the terms of
any convertible debt securities or warrants or other securities, whether
convertible into or exercisable for debt securities, Common Stock or preferred
stock, would be determined by the Board of Directors.
REASONS FOR THE PROPOSAL
The Board of Directors of the Company believes it is in the Company's best
interest to maintain the flexibility to facilitate possible further investments
in the Company by MetLife or its affiliates for the reasons described below.
Though the Board of Directors has not committed to issue any Equity Securities,
whether to MetLife or otherwise, it believes it is desirable to have the
flexibility to do so from time to time without 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.
18
21
Since the Board of Directors has not determined at this time to issue any
Equity Securities to MetLife, it has not fully assessed all aspects of any such
transaction. Any decision to issue shares to MetLife 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 MetLife 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 MetLife, MetLife 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 MetLife were no longer to maintain control.
KEY EMPLOYEES. Maintenance of control by MetLife 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 MetLife 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 MetLife 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 MetLife, 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 MetLife.
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 MetLife. 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 MetLife 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 MetLife 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 MetLife to maintain its then current
ownership percentage of the Company's securities having voting power, currently
its Common Stock. Any such sale would be on substantially the same terms as a
sale to unaffiliated parties.
While the terms of a sale to MetLife would be substantially the same as a
sale to unaffiliated parties, it may be appropriate in certain situations to
reduce the sales 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 may 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 Equity Securities issuable to MetLife under the
proposal will be appropriately adjusted by the Company in the event of any
increase or decrease in the number of shares outstanding as a
19
22
result of a reorganization, merger, recapitalization, reclassification, stock
dividend, stock split, combination of shares or other similar transaction.
The amount of Equity Securities and the sale price, conversion price or
exercise price per share, as applicable, for such shares sold to MetLife
pursuant to any sale authorized by this Item 2 will be determined by the Board
of Directors or a committee of the Board of Directors specifically authorized to
make such determination, within the parameters of the proposal contained in this
Item 2. Such a committee will include directors who are not affiliated with
MetLife.
Shareholders should note that the pricing of preferred stock, depository
shares, warrants, convertible debt or other securities convertible or
exercisable for Common Stock is typically dependent on the other terms and
provisions of the securities, including, without limitation, dividend rate,
redemption price, liquidation rights, sinking fund provisions, conversion rights
and voting rights, and other terms and restrictions, and any corresponding
effect on other shareholders, in the case of preferred stock or any related
depositary share; interest rates, redemption price, conversion rights, sinking
fund procedures, term and covenants or other restrictions, in the case of debt
securities; and exercise price, term and covenants or other restrictions, in the
case of other securities, such as warrants. Such terms and effects could include
restrictions on dividends on the Common Stock if dividends on the preferred
stock or any related depositary share, or interest payments on any debt
securities, are in arrears, dilution of the voting power of other shareholders
to the extent a series of the preferred stock or any related depository share
has voting rights, and reduction of amounts available on liquidation as a result
of any obligations created by any debt securities or liquidation preference
granted to any series of preferred stock or any related depositary share.
Accordingly, shareholders will have to rely on the Board of Directors of the
Company, if such a transaction is ultimately approved, to ensure that the
overall terms and conditions of the securities are in the best interests of the
Company.
In the event any proposed sale of Equity Securities to MetLife 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 MetLife. 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.
Any issuance of preferred stock, depositary shares, warrants, convertible
debt or other convertible securities may have the result of making it more
difficult for any persons or group of persons, other than the current principal
shareholders and management, to acquire control of the Company by expanding the
ability of the Company to issue shares and thereby dilute the voting power of
any person or group that might accumulate shares in order to attempt to effect a
change in control. The Company is not aware of any present effort to accumulate
shares of Common Stock or to attempt to change control of the Company.
The Company's articles of incorporation and bylaws provide, among other
things, for a classified board of directors; limit the right of shareholders to
remove directors or change the size of the board of directors; limit the right
of shareholders to fill vacancies on the board of directors; limit the right of
shareholders to act by written consent and to call a special meeting of
shareholders or propose other actions; require a higher percentage of
shareholders than would otherwise be required to amend, alter, change or repeal
the provisions of the articles of incorporation or bylaws; and provide that the
bylaws may be amended only by the majority of the board of directors. These
provisions may have an anti-takeover effect. The Company also has a right plan
that may have the effect of discouraging a change in control of the Company.
INTERESTS OF CERTAIN PERSONS IN THE PROPOSAL
Certain officers and directors of the Company are also officers and
directors of MetLife. 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 MetLife, may be deemed to have an interest in
the proposal that
20
23
differs from those of other shareholders. For more information regarding the
relationships between the Company and MetLife, see "Certain Relationships and
Related Transactions."
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 MetLife currently has voting control over the
Company, implementation of the proposal would allow the Board of Directors to
permit MetLife 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 MetLife
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 METLIFE
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 MetLife 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 MetLife to maintain its then current
beneficial ownership percentage of the Company's securities having voting power,
currently its 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 Common Stock
entitled to vote represented in person or by proxy at the Annual Meeting. As a
beneficial holder of common stock, MetLife, through its wholly owned
subsidiaries, is entitled to vote on this proposal. MetLife, through its
subsidiaries, has shared voting power and beneficial ownership with respect to
approximately 58% of the Company's Common Stock. MetLife has informed the
Company that it intends to direct its subsidiaries to vote the shares
beneficially held by MetLife "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
Equity Securities from time to time to MetLife and recommends that shareholders
vote FOR the proposal.
VOTING
The affirmative vote of the holders of a majority of the shares of the
Company's Common Stock entitled to vote which are present in person or
represented by proxy at the 2001 Annual Meeting is required to elect directors,
to authorize the sale of Equity Securities from time to time to MetLife, a
significant shareholder of the Company, or its affiliates, and to act on any
other matters properly brought before the meeting. Shares represented by proxies
which are marked "withhold authority" with respect to the election of any one or
more nominees for election as directors and proxies which are marked to deny
discretionary authority on other
21
24
matters will be counted for the purpose of determining the number of shares
represented by proxy at the meeting. Such proxies will thus have the same effect
as if the shares represented thereby were voted against such nominee or nominees
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 the proposed authorization to sell
Equity Securities from time to time to MetLife, and in the discretion of the
persons named as proxies on such other business as may properly come before the
meeting.
As of March 1, 2001, MetLife beneficially owned approximately 58% of the
shares of RGA Common Stock entitled to vote at the meeting. MetLife has
indicated its intention to vote its shares FOR the election of directors
nominated by the Board of Directors and FOR the proposed authorization to sell
Equity Securities from time to time to MetLife. The vote of MetLife will be
sufficient to approve each of the proposals to be voted upon at the meeting.
The Company knows of no other matters to come before the meeting. If any
other matters properly come before the 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 LLP was previously the principal independent accounting firm for the
Company. Effective March 30, 2000, that firm's appointment as principal
independent accounting firm was terminated and the client-auditor relationship
between the Company and KPMG LLP ceased upon completion of the separate company
audits of the financial statements of some of the Company's subsidiaries as of
and for the year ended December 31, 1999, and the issuance of their reports
thereon. Deloitte & Touche LLP now serves as the Company's principal independent
accounting firm. On January 6, 2000, Metropolitan Life Insurance Company
("MLIC") became the beneficial owner of approximately 58% of the outstanding
shares of the Company. The replacement of KPMG LLP by Deloitte & Touche LLP as
principal independent accounting firm to the Company is intended to allow the
Company and MLIC benefit from efficiencies resulting from the use of Deloitte &
Touche LLP as principal independent accounting firm to both the Company and
MLIC.
The audit reports of KPMG LLP on the consolidated financial statements of
the Company as of and for the years ended December 31, 1999 and 1998 did not
contain any adverse opinion or a disclaimer of opinion, nor were they qualified
or modified as to uncertainty, audit scope, or accounting principles.
The decision to change accounting firms was approved by the Company's Audit
Committee, which authorized the Company's management to negotiate the engagement
of Deloitte & Touche LLP to perform the examination of the Company's financial
statements for fiscal year 2000.
In connection with the audits of the two fiscal years ended December 31,
1999, and the subsequent interim period through March 30, 2000, there were no
disagreements with KPMG LLP on any matter of accounting principles or practices,
financial statement disclosure, or auditing scope or procedures, which
disagreements if not resolved to the satisfaction of KPMG LLP would have caused
KPMG LLP to make reference in connection with their opinion to the subject
matter of the disagreement.
Deloitte & Touche LLP was the Company's independent auditing firm for the
fiscal year ended December 31, 2000, and the Company expects to select this firm
again for the year ending December 31, 2001. A representative of Deloitte &
Touche LLP is expected to be present at the 2001 Annual Meeting to respond to
appropriate questions and to make a statement if he or she so desires.
22
25
PRINCIPAL ACCOUNTING FIRM FEES
The aggregate fees billed to the Company for the fiscal year ending
December 31, 2000 by the Company's principal accounting firm, Deloitte & Touche
LLP and its affiliates (collectively "Deloitte") are as follows:
Audit Fees $556,337
Financial Information Systems Design and Implementation
Fees 0
All Other Fees $226,000
REPORT OF THE AUDIT COMMITTEE
OF THE BOARD OF DIRECTORS
The Audit Committee hereby reports as follows:
1. The Audit Committee has reviewed and discussed the audited financial
statements with the Company's management.
2. The Audit Committee has discussed with the independent accountants the
matters required to be discussed by SAS 61 (Codification of Statements on
Auditing Standard, AU 380).
3. The Audit Committee has received the written disclosures and the letter
from the independent accountants required by Independence Standards Board
Standard No. 1, and has discussed with those accountants their independence.
4. Based on the review and discussion referred to in paragraphs (1) through
(3) above, the Audit Committee recommended to the Board of Directors of the
Company that the audited financial statements be included in the Company's
Annual Report on Form 10-K for the fiscal year ended December 31, 2000, for
filing with the Securities and Exchange Commission.
THE AUDIT COMMITTEE
Stuart Greenbaum, Chairman
J. Cliff Eason
William A. Peck, M.D.
SHAREHOLDER PROPOSALS
Shareholder proposals submitted under the process prescribed by the
Securities and Exchange Commission (in Rule 14a-8 of the Securities Exchange
Act) for presentation at the 2002 Annual Meeting must be received by the Company
at its principal executive offices by December 7, 2001 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 Shareholder 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 Shareholder 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 Shareholder
filing the notice of 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 Shareholder to bring other business before a Shareholder
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 therefore, and other matters specified in the Company's
Restated Articles of Incorporation. The Board or the presiding officer at the
Annual Meeting may reject any such proposals that
23
26
are not made in accordance with these procedures or that are not a proper
subject for Shareholder 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 Shareholder 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 1370 Timberlake Manor Parkway, Chesterfield, Missouri
63017-6039. Any Shareholder 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.
24
27
EXHIBIT A
CHARTER OF THE AUDIT COMMITTEE
OF THE BOARD OF DIRECTORS
REINSURANCE GROUP OF AMERICA, INCORPORATED
I. AUTHORITY
Primary responsibility for the Company's financial reporting and internal
operating controls is vested in senior operating management as overseen by
the Board of Directors (the "Board"). The Audit Committee (Committee) is a
standing committee of the Board established to assist it in fulfilling its
statutory and fiduciary responsibilities.
The Audit Committee shall have unrestricted access to Company personnel,
documents, and independent public accountants and shall be given the
resources necessary to discharge its responsibilities. The independent
public accountants are ultimately accountable to the Board and the Audit
Committee. The Audit Committee shall meet on a regular basis and call
special meetings, as required.
II. ORGANIZATION AND STRUCTURE
The Audit Committee shall fulfill its oversight responsibilities without
unnecessary or inappropriate intervention with the prerogatives of
corporate management. To carry out its responsibility, the Audit Committee
shall:
A. Operate pursuant to a written charter, approved by the Board. This
Charter shall be annually reviewed, and changes, if any, recommended and
approved by the Board. Once every three years, a copy of the charter
shall be included as an appendix to the Company's proxy statement.
B. Consist of at least three independent Directors appointed by the Board,
each of whom shall be "independent" (as defined by the New York Stock
Exchange Rules) and free from any relationship that, in the opinion of
the Board, would interfere with the exercise of independent judgment as
a Committee member. All Committee members shall be financially literate,
or attain such status within a reasonable period after appointment, with
at least one member having accounting or financial management expertise.
The Committee shall designate one of the members as Chairman. A majority
of the members shall constitute a quorum for the conduct of business.
C. Meet on a regular basis (at least 3-4 meetings per year). The Committee
shall keep minutes to document Committee activities and the Committee
shall report its activities to the full Board at the Board meeting
following a Committee meeting.
D. Meet regularly with and have unrestricted access to the Company
president, chief financial officer, general legal counsel, internal
auditor, valuation actuary, and independent public accountants.
E. Stagger replacement of members so that members are replaced in different
years.
III. RESPONSIBILITIES
A. FINANCIAL REPORTING
The responsibility of the Audit Committee in the area of financial
reporting is to provide reasonable assurance that financial disclosures
made by management fairly present the Company's financial
28
condition, results of operations, and plans and long-term commitments. To
accomplish this, the Audit Committee shall:
1. Oversee the external audit function, including:
- selection, evaluation, and where appropriate, replacement of the
independent public accountants;
- annually obtaining from the independent public accountants a written
statement delineating all relationships between the accountants and the
Company, and reviewing any matters that might reasonably be expected to
impact their objectivity and independence, and recommending that the
board take appropriate action in response to the independent public
accountants' report to satisfy itself of their independence;
- beginning in 2001, annually prepare a report for inclusion in the
Company's proxy statement addressing whether the Audit Committee
received disclosure from and discussed with the independent public
accountants matters required by Standard No. 1 of the Independence
Standards Board;
- review and approval of audit plans and fees;
- monitoring of audit results; and
- review of non-audit services.
2. Request information on the results of the most recent peer review of
external auditors and the nature of any needed corrective measures.
3. Review and discuss with the independent public accountants significant
accounting policies and policy decisions, including the matters
discussed by Statement on Auditing Standards No. 61.
4. Review annual and interim financial statements.
5. Review audit reports, management letters, insurance department
examination reports, and the recommendations therein for improvements in
accounting practices and internal control, and the extent to which such
recommendations have been implemented.
6. Inquire about the existence and substance of any significant accounting
accruals, reserves, or estimates made by management that had or may have
a material impact on the financial statements.
7. Determine the open years on federal income tax returns and whether there
are any significant items that have been or might be disputed by the
Internal Revenue Service and inquire about the status of related tax
reserves.
8. Arrange for periodic reports from financial management, and the
independent public accountants explaining proposed or adopted changes in
accounting standards or rules promulgated by the Financial Accounting
Standards Board, Securities and Exchange Commission, Insurance
Departments, or other regulatory bodies, that may have an affect on the
financial statements.
9. Review with management the management's discussion and analysis (MD&A)
section of the annual report. The Committee shall inquire of the
independent public accountants if the other sections of the annual
report to stockholders and SEC filings, other than the financial
statements, are consistent with the information reflected in the
financial statements.
10. Ask management and the independent public accountants whether there
were any significant reporting or operational issues affecting the
financial statements that were discussed during the accounting period,
and if so, how they were resolved. Specifically discuss with the
independent public accountants their judgments about the quality of the
Company's financial statements.
11. Review the nature and resolution of any disagreements between the
independent public accountants and management (whether or not resolved
to their mutual satisfaction) about matters that could be significant
to the financial statements or the auditors' report.
29
12. Obtain from management a notification of issues and responses whenever
a second opinion is sought from an independent public accountant.
13. Review with management and the independent public accountants the
substance of any significant issues raised by in-house and outside
counsel concerning litigation, contingencies, claims, or assessments
and understand how such matters are reflected in the Company's
financial statements.
14. Beginning in 2001, prepare an annual disclosure in the Company's proxy
statement that the Audit Committee reviewed and discussed the financial
statements with management and the independent public accountants and
whether they recommended to the Board that the audited financial
statements be included in the Form 10-K.
B. INTERNAL CONTROL
The responsibility of the Audit Committee in the area of internal control
is to provide reasonable assurance that controls are designed to assure
that assets are safeguarded and transactions are authorized and properly
recorded. Such controls permit the preparation of sound financial reports
and help fulfill the responsibility for stewardship of corporate assets. To
accomplish this the Audit Committee shall:
1. Review and approve the internal audit charter that explains the
functional and organization framework for providing services to
management and to the Audit Committee including the purpose,
responsibility, authority, and reporting relationships of the Internal
Auditing function.
2. Review plans and budgets to determine that internal audit objectives and
goals, staffing plans, financial budgets, and audit schedules provide
for adequate support of the Audit Committee's goals and objectives.
3. Require the internal auditor to report in writing annually on the scope
of reviews of corporate governance and any significant findings.
4. Provide for periodic quality assurance reviews to ensure that the
internal auditing function is operating in accordance with the Standards
for the Professional Practice of Internal Auditing.
5. Review different aspects of the Company on a planned basis to ensure a
general understanding of the operations and functional areas of the
organization.
6. Determine the extent to which the planned audit scope of Internal
Auditing and the independent public accountant can be relied on to
detect fraud or weaknesses in internal controls, and review management's
plans to monitor compliance with these internal controls.
7. Discuss with the internal auditor and the independent public accountant
the review of the Company's electronic data processing procedures and
controls, including disaster recovery planning and inquire about
specific security programs to protect against computer fraud or misuse
both within and outside the Company.
8. Meet privately with and have unrestricted access to the internal auditor
and the independent public accountants.
C. CORPORATE GOVERNANCE
The responsibility of the Audit Committee in the area of corporate
governance is to provide reasonable assurance that the corporation is in
reasonable compliance with pertinent laws and regulations, is conducting
its affairs ethically, and is maintaining effective controls against
employee conflict of interest and fraud. To accomplish this, the Audit
Committee shall:
1. Review corporate policies relating to compliance with laws and
regulations, ethics, conflict of interest, and the investigation of
misconduct or fraud.
2. Review in-house policies and procedures for regular review of officers'
expenses and perquisites, including use of corporate assets.
30
3. Review current and pending litigation or regulatory proceedings bearing
on corporate governance in which the corporation is a party.
4. Review cases of employee conflict of interest, misconduct, or fraud.
31
PLEASE MARK [X]
YOUR VOTES AS
INDICATED IN
THIS EXAMPLE
MANAGEMENT RECOMMENDS A VOTE FOR THE FOLLOWING:
1. Election of Directors 2. Authorize the sale of equity securities from
time to time to MetLife, Inc. or its affiliates.
FOR all nominees WITHHOLD (INSTRUCTION: to withhold
listed at right AUTHORITY authority to vote for any
(except as marked to vote for all nominees individual nominee, strike a
to the contrary) listed at right line through the nominee's name
on the list below.)
FOR AGAINST ABSTAIN
[ ] [ ] William A. Peck, M.D., William P. Stiritz, [ ] [ ] [ ]
A. Greig Woodring
The undersigned hereby acknowledges receipt of the
Notice of the 2001 Annual Meeting of Stockholders and
the accompanying Proxy Statement.
This proxy will be voted as specified. If no specification
is made, the proxy will be voted FOR Items 1 and 2.
Dated this day of , 2001
-------------------------
----------------------------------------------------------
Signature
----------------------------------------------------------
(Signature if held jointly)
If Stock is owned in joint names, both owners must
Please sign as registered and return promptly to: sign. If address at left is incorrect, please write in the
Reinsurance Group of America, Incorporated, Midtown Station, correct information.
PO Box 870, New York, NY 10130
- --------------------------------------------------------------------------------
/\ FOLD AND DETACH HERE /\
APRIL 8, 2001
Dear Shareholder:
We invite you to attend the 2001 Annual Meeting of Stockholders of
Reinsurance Group of America, Incorporated, to be held on May 23, 2001 in the
Marriott-West, 660 Maryville Centre Drive, 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.
32
REINSURANCE GROUP OF AMERICA, INCORPORATED
THIS 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 23,
2001, commencing at 2:00 p.m., St. Louis time, at the 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
- --------------------------------------------------------------------------------
/\ FOLD AND DETACH HERE /\
