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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
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 Pursuant to (S) 240.14a-11(c) or (S) 240.14a-12
Torchmark Corporation
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
Reg. (S) 240.14a-101.
SEC 1913 (3-99)
[LOGO OF TORCHMARK CORPORATION APPEARS HERE]
March 22, 2002
To the Stockholders of
Torchmark Corporation:
Torchmark's 2002 annual meeting of stockholders will be held in the
auditorium at the executive offices of the Company, 2001 Third Avenue South,
Birmingham, Alabama at 10:00 a.m., Central Daylight Time, on Thursday, April
25, 2002. The meeting will be conducted using Robert's Rules of Order and the
Company's Shareholder Rights Policy. This policy is posted on Torchmark's web
site at http://www.torchmarkcorp.com or you may obtain a printed copy by
writing to the Corporate Secretary at the Company's executive offices.
The accompanying notice and proxy statement discuss proposals which will be
submitted to a stockholder vote. If you have any questions or comments about
the matters discussed in the proxy statement or about the operations of your
Company, we will be pleased to hear from you.
It is important that your shares be voted at this meeting. Please mark,
sign, and return your proxy or vote over the telephone or the Internet. If you
attend the meeting, you may withdraw your proxy and vote your stock in person
if you desire to do so.
We hope that you will take this opportunity to meet with us to discuss the
results and operations of the Company during 2001.
Sincerely,
/s/ C.B. Hudson
--------------------------------
C.B. Hudson
Chairman & Chief Executive Officer
---------------------------------
Notice of Annual Meeting of Stockholders
to be held April 25, 2002
---------------------------------
To the Holders of Common Stock of
Torchmark Corporation
The annual meeting of stockholders of Torchmark Corporation will be held at
the executive offices of the Company, 2001 Third Avenue South, Birmingham,
Alabama 35233 on Thursday, April 25, 2002 at 10:00 a.m., Central Daylight
Time. The meeting will be conducted in accordance with Robert's Rules of Order
and the Company's Shareholders Rights Policy. You will be asked to:
(1) Elect the nominees shown in the proxy statement as directors to
serve for their designated terms or until their successors have been duly
elected and qualified.
(2) Consider the appointment of Deloitte & Touche LLP as independent
auditors.
(3) Transact any other business that properly comes before the meeting.
These matters are more fully discussed in the accompanying proxy statement.
The close of business on Friday, March 1, 2002 is the date for determining
stockholders who are entitled to notice of and to vote at the annual meeting.
You are requested to mark, date, sign, and return the enclosed form of proxy
in the accompanying envelope, whether or not you expect to attend the annual
meeting in person. You may also choose to vote your shares over the telephone
or the Internet. You may revoke your proxy at any time before it is voted at
the meeting.
The annual meeting may be adjourned from time to time without further notice
other than by an announcement at the meeting or at any adjournment. Any
business described in this notice may be transacted at any adjourned meeting.
By Order of the Board of Directors
/s/ Carol A. McCoy
Carol A. McCoy
Vice President, Associate Counsel &
Secretary
Birmingham, Alabama
March 22, 2002
PROXY STATEMENT
Solicitation of Proxies
The Board of Directors of Torchmark Corporation solicits your proxy for use
at the 2002 annual meeting of stockholders and at any adjournment of the
meeting. The annual meeting will be held at the executive offices of the
Company, 2001 Third Avenue South, Birmingham, Alabama 35233 at 10:00 a.m.,
Central Daylight Time on Thursday, April 25, 2002. C.B. Hudson and Larry M.
Hutchison are named as proxies on the proxy/direction card. They have been
designated as directors' proxies by the Board of Directors.
If the enclosed proxy/direction card is returned, properly executed, and in
time for the meeting, your shares will be voted at the meeting. All proxies
will be voted in accordance with the instructions set forth on the
proxy/direction card. If proxies are executed and returned which do not
specify a vote on the proposals considered, those proxies will be voted FOR
such proposals. You have the right to revoke your proxy by giving written
notice of revocation addressed to the Secretary of the Company at the address
shown above at any time before the proxy is voted.
The card is considered to be voting instructions furnished to the respective
trustees each of the Torchmark Corporation Savings and Investment Plan, the
Waddell & Reed Financial, Inc. 401-K and Savings and Investment Plan, the
Liberty National Life Insurance Company 401(k) Plan and the Profit-Sharing and
Retirement Plan of Liberty National Life Insurance Company with respect to
shares allocated to individual's accounts under these plans. If the account
information is the same, participants in one or more of the plans who are also
shareholders of record will receive a single card representing all their
shares. If a plan participant does not return a proxy/direction card to the
Company, the trustees of any plan in which shares are allocated to the
participant's individual account will vote those shares in the same proportion
as the total shares in that plan for which directions have been received.
A simple majority vote of the holders of the issued and outstanding common
stock of the Company represented in person or by proxy at the stockholders
meeting is required to elect directors and approve all other matters put to a
vote of stockholders. Abstentions are considered as shares present and
entitled to vote. Abstentions have the same legal effect as a vote against a
matter presented at the meeting. Any shares for which a broker or nominee does
not have discretionary voting authority under applicable New York Stock
Exchange rules will be considered as shares not entitled to vote and will not
be considered in the tabulation of the votes.
Record Date and Voting Stock
Each stockholder of record at the close of business on March 1, 2002 is
entitled to one vote for each share of common stock held on that date upon
each proposal to be voted on by the stockholders at the meeting. At the close
of business on March 1, 2002, there were 122,292,895 shares of common capital
stock of the Company outstanding (not including 5,690,763 shares held by the
Company which are non-voting while so held). There is no cumulative voting of
the common stock.
1
Principal Stockholders
The following table lists all persons known to be the beneficial owner of
more than five percent of the Company's outstanding common stock as of
December 31, 2001, as indicated from Schedule 13G filings with the Securities
and Exchange Commission.
Percent
Number of of
Name and Address Shares Class
---------------- ---------- -------
AXA Conseil Vie Assurance Mutuelle
AXA Assurances I.A.R.D. Mutuelle
AXA Assurances Vie Mutuelle
370, rue Saint Honore
75001 Paris, France
AXA Courtage Assurance Mutuelle
26, rue Louis le Grand
75002 Paris, France
AXA
25, avenue Matignon
75008 Paris, France
AXA Financial, Inc. 11,948,170(1) 9.6%
1290 Avenue of The Americas
New York, NY 10104
Dodge & Cox 8,226,210(2) 6.6%
One Sansome Street, 35th Floor
San Francisco, CA 94104
--------
(1) AXA Conseil Vie Assurance Mutuelle, AXA Assurances I.A.R.D. Mutuelle, AXA
Assurances Vie Mutuelle and AXA Courtage Assurance Mutuelle
(collectively, the "Mutuelles AXA"), acting as a parent holding company,
and AXA, as a parent holding company, hold no shares of Torchmark stock
directly and the Mutuelles AXA and AXA have disclaimed beneficial
ownership of such stock. All stock reported is owned either by AXA
subsidiary, AXA Rosenberg Investment Management LLC, solely for
investment purposes, 53,400 shares (sole power to vote 28,700 shares and
shared power to dispose of 53,400 shares) or by AXA Financial, Inc.
subsidiaries, Alliance Capital Management L.P., solely for investment
purposes on behalf of client discretionary investment advisory accounts,
11,893,870 shares (sole power to vote 5,140,047 shares, shared power to
vote 908,206 shares and sole power to dispose of 11,893,870 shares) or
The Equitable Life Assurance Society of the United States, solely for
investment purposes, 900 shares (sole power to dispose of 900 shares, no
sole or shared power to vote).
(2) Stock reported as owned is beneficially owned by clients of Dodge & Cox,
which clients may include investment companies registered under the
Investment Company Act and/or employee benefit plans, pension funds,
endowment funds or other institutional clients. Dodge & Cox has sole
power to vote 7,741,810 shares, shared power to vote 94,000 shares and
sole power to dispose of 8,226,210 shares.
2
PROPOSAL NUMBER 1
Election of Directors
The Company's By-laws provide that there will be not less than seven nor
more than fifteen directors with the exact number to be fixed by the Board of
Directors. In October, 2001, the number of directors was increased to eleven
persons.
The Board of Directors proposes the election of Mark S. McAndrew, George J.
Records and Lamar C. Smith as directors, to hold office for a term of three
years, expiring at the close of the annual meeting of stockholders to be held
in 2005 or until their successors are elected and qualified. Messrs. McAndrew,
Records and Smith's current terms expire in 2002. The term of office of the
other eight directors continues until the close of the annual meeting of
stockholders in the year shown in the biographical information below.
Non-officer directors, except Joseph W. Morris, for whom the retirement age
requirements have been waived, retire from the Board of Directors at the
annual meeting of stockholders which immediately follows their 78th birthday.
Directors who are employee officers of the Company retire from active service
as directors at the annual stockholders meeting immediately following their
65th birthday, except that these directors may be elected to a series of
additional three year terms not to continue beyond the annual meeting of
stockholders following the director's 78th birthday.
If any of the nominees becomes unavailable for election, the directors'
proxies will vote for the election of any other person recommended by the
Board of Directors unless the Board reduces the number of directors.
The Board recommends that the stockholders vote FOR the nominees.
Profiles of Directors and Nominees(/1/)
David L. Boren (age 61) has been a director of the Company since April,
1996. His term expires in 2003. He is a director of Phillips Petroleum
Corporation, AMR Corporation and Texas Instruments, Inc. Principal occupation:
President of The University of Oklahoma, Norman, Oklahoma since November,
1994.
Joseph M. Farley (age 74) has been a director of the Company since 1980. His
term expires in 2004. Principal occupation: Of Counsel at Balch & Bingham LLP,
Attorneys and Counselors, Birmingham, Alabama since November, 1992.
Louis T. Hagopian (age 76) has been a director of the Company since 1988.
His term expires in 2003. Principal occupation: Owner of Meadowbrook
Enterprises, Darien, Connecticut, an advertising and marketing consultancy,
since January, 1990. Board member, Partnership for a Drug-Free America, New
York, New York.
C. B. Hudson (age 56) has been a director since 1986. His term expires in
2004. Principal occupation: Chairman and Chief Executive Officer of the
Company since March, 1998. (President of the Company, March, 1998-April, 2001;
Chairman of Insurance Operations of the Company January, 1993-March, 1998;
Chairman of Liberty, United American and Globe October, 1991-September, 1999
and Chief Executive Officer of Liberty December, 1989-September, 1999, of
United American November, 1982-September, 1999 and of Globe February, 1986-
September, 1999).
Joseph L. Lanier, Jr. (age 70) has been a director of the Company since
1980. His term expires in 2004. He is a director of Dan River Incorporated,
Flowers Industries, Inc., Dimon Inc. and SunTrust Banks, Inc. Principal
occupation: Chairman of the Board and Chief Executive Officer of Dan River
Incorporated, Danville, Virginia, a textile manufacturer, since November,
1989.
Mark S. McAndrew (age 48) has been a director of the Company since July,
1998. Principal occupation: Chief Executive Officer of United American, Globe
and American Income since September, 1999; President of United American and
Globe since October, 1991 and of American Income since September, 1999;
Executive Vice President of the Company since September, 1999. (Chairman of
United American, Globe and American Income, September 1999-June, 2001; Vice
President of the Company April-September, 1999).
3
Harold T. McCormick (age 73) has been a director since April, 1992. His term
expires in 2003. Principal occupation: Chairman and Chief Executive Officer of
Bay Point Yacht & Country Club, Panama City, Florida, since March, 1988;
Director, First Ireland Spirits Co., Ltd., Abbeyleix, Ireland, since February,
2001 (Chairman, February, 1996-February, 2001).
Joseph W. Morris (age 79) has been a director of the Company since October,
2001. His term expires in 2003. Principal Occupation: Partner of Gable and
Gotwals, Attorneys-at-Law, Tulsa, Oklahoma since February, 1984. He formerly
served as a director of the Company from 1984 to 1996.
George J. Records (age 67) has been a director of the Company since April,
1993. Principal occupation: Chairman of Midland Financial Co., Oklahoma City,
Oklahoma, a bank and financial holding company for retail banking and mortgage
operations, since 1982.
R. K. Richey (age 75) has been a director of the Company since 1980. His
term expires in 2004. He is a Director Emeritus of the United Group of Mutual
Funds, Waddell & Reed Funds, Inc. and Target/United Funds, Inc. Principal
occupation: Chairman of the Executive Committee of the Board of Directors of
the Company since March, 1998. (Chairman of the Company, August, 1986-March,
1998 and Chief Executive Officer of the Company, December, 1984-March, 1998).
Lamar C. Smith (age 54) has been a director of the Company since October,
1999. Principal Occupation: Chairman since 1992 and Chief Executive Officer
since 1990 of First Command Financial Services, Inc., Fort Worth, Texas.
--------
(1) Liberty, Globe, United American, American Income and UILIC as used in this
proxy statement refer to Liberty National Life Insurance Company, Globe
Life And Accident Insurance Company, United American Insurance Company,
American Income Life Insurance Company and United Investors Life Insurance
Company, subsidiaries of the Company.
4
PROPOSAL NUMBER 2
Approval of Auditors
A proposal to approve the appointment of the firm of Deloitte & Touche LLP
as the principal independent accountants of the Company to audit the financial
statements of the Company and its subsidiaries for the year ending December
31, 2002 will be presented to the stockholders at the annual meeting. Deloitte
& Touche served as the principal independent accountants of Torchmark,
auditing the financial statements of the Company and its subsidiaries for the
fiscal year ended December 31, 2001 and has served in such capacity since
1999. The Audit Committee of the Board recommends the appointment of Deloitte
& Touche as the Company's principal accountants for 2002.
A representative of Deloitte & Touche is expected to be present at the
meeting and available to respond to appropriate questions and, although the
firm has indicated that no statement will be made, an opportunity for a
statement will be provided.
If the stockholders do not approve the appointment of Deloitte & Touche LLP,
the selection of independent auditors will be reconsidered by the Board of
Directors.
The Board recommends that stockholders vote FOR the proposal.
OTHER BUSINESS
The directors are not aware of any other matters which may properly be and
are likely to be brought before the meeting. If any other proper matters are
brought before the meeting, the persons named in the proxy, or in the event no
person is named, C.B. Hudson and Larry M. Hutchison will vote in accordance
with their judgment on these matters.
5
INFORMATION REGARDING DIRECTORS, NOMINEES AND EXECUTIVE OFFICERS
Executive Officers
The following table shows certain information concerning each person deemed
to be an executive officer of the Company, except those persons also serving
as directors. Each executive officer is elected by the Board of Directors of
the Company or its subsidiaries annually and serves at the pleasure of that
board. There are no arrangements or understandings between any executive
officer and any other person pursuant to which the officer was selected.
Principal Occupation
and Business Experience
Name Age for the Past Five Years(1)
---- --- --------------------------
Tony G. Brill............... 59 Executive Vice President and Chief
Administrative Officer of Company since
September, 1999. (Vice President of Company,
January, 1997-September, 1999).
Gary L. Coleman............. 49 Executive Vice President and Chief Financial
Officer of Company since September, 1999.
(Vice President and Chief Accounting Officer
of Company, July, 1994-September, 1999).
Larry M. Hutchison.......... 48 Executive Vice President and General Counsel
of Company since September, 1999; Vice
President, Secretary and General Counsel of
United American since May, 1994. (Vice
President and General Counsel of Company,
April, 1997-September, 1999).
Anthony L. McWhorter........ 52 President of Liberty since December, 1994 and
of UILIC since September, 1998; Chief
Executive Officer of Liberty and UILIC since
September, 1999; Executive Vice President of
Company since September, 1999. (Chairman of
Liberty and UILIC, September, 1999-June,
2001).
Rosemary J. Montgomery...... 52 Executive Vice President and Chief Actuary of
Company, United American and Globe since
September, 1999. (Senior Vice President and
Chief Actuary of United American, October,
1991-September, 1999 and of Globe, May, 1992-
September, 1999).
Russell B. Tucker........... 54 Executive Vice President and Chief Investment
Officer of Company since October, 2001; (Vice
President of Company, January, 1997-October,
2001).
6
Stock Ownership
The following table shows certain information about stock ownership of the
directors, director nominees and executive officers of the Company as of
December 31, 2001.
Company Common Stock
or Options Beneficially
Owned as of
December 31, 2001(1)
-------------------------
Name Directly(2) Indirectly(3)
---- ----------- -------------
David L. Boren....................................... 23,347 0
Norman, OK
Joseph M. Farley..................................... 149,383 4,800
Birmingham, AL
Louis T. Hagopian.................................... 174,517 0
Darien, CT
C. B. Hudson......................................... 2,016,672 218,518
Plano, TX
Joseph L. Lanier, Jr. ............................... 168,784 18,912
Lanett, AL
Mark S. McAndrew..................................... 330,597 9,275
McKinney, TX
Harold T. McCormick ................................. 0 91,889
Panama City, FL
Joseph W. Morris..................................... 8,823 0
Tulsa, OK
George J. Records.................................... 89,431 0
Oklahoma City, OK
R. K. Richey......................................... 1,400,060 1,392,013
Plano, TX
Lamar C. Smith....................................... 15,152 0
Fort Worth, TX
Tony G. Brill........................................ 242,852 2,533
Plano, TX
Gary L. Coleman...................................... 262,999 13,713
Richardson, TX
Larry M. Hutchison................................... 144,578 9,098
Duncanville, TX
Anthony L. McWhorter................................. 221,328 10,398
Birmingham, AL
Rosemary J. Montgomery............................... 199,988 539
Frisco, TX
Russell B. Tucker.................................... 53,093 6,300
Arlington, TX
All Directors, Nominees and Executive Officers as a
group:(4)............................................ 5,501,604 1,711,958
--------
(1) No directors, director nominees or executive officers other than R. K.
Richey (2.2%) and C.B. Hudson (1.7%) beneficially own 1% or more of the
common stock of the Company.
(2) Includes: for David L. Boren, 18,467 shares; for Joseph Farley, 70,485
shares; for Louis Hagopian, 110,657 shares; for Joseph Lanier, 103,191
shares; for Mark McAndrew, 219,846 shares; for Lamar Smith, 11,953 shares;
for George Records, 68,781 shares; for R. K. Richey, 456,544 shares; for
C. B. Hudson, 1,009,889 shares; for Tony Brill, 165,763 shares; for
Anthony McWhorter, 153,877 shares; for Gary Coleman, 162,897 shares; for
Larry Hutchison, 113,243 shares; for Rosemary Montgomery, 141,743 shares;
for Russell Tucker, 38,870 shares; for Joseph Morris, 6,000 shares awarded
during his 1984-1996 service as a director and for all directors,
executive officers and nominees as a group, 2,852,206 shares, that are
subject to presently exercisable Company stock options.
(3) Indirect beneficial ownership includes shares (a) owned by the director,
executive officer or spouse as trustee of a trust or executor of an
estate, (b) held in a trust in which the director, executive officer or a
family
7
member living in his home has a beneficial interest, (c) owned by the
spouse or a family member living in the director's, executive officer's or
nominee's home or (d) owned by the director or executive officer in a
personal corporation or limited partnership. Indirect beneficial ownership
also includes approximately 18,534 shares, 9,275 shares, 1,928 shares,
8,592 shares, 13,713 shares, 6,300 shares, 9,098 shares and 539 shares
calculated based upon conversion of stock unit balances held in the
accounts of Messrs. Hudson, McAndrew, Brill, McWhorter, Coleman, Tucker and
Hutchison and Ms. Montgomery, respectively, in the Company Savings and
Investment Plan to shares. Additionally, indirect beneficial ownership
includes for Mr. Richey 461,346 shares subject to stock options held by
Richey Capital Partners, Ltd., a family limited partnership and for Mr.
McCormick 72,757 shares subject to stock options transferred to his spouse.
Indirect ownership for Mr. McWhorter also includes approximately 1,806
shares calculated based upon conversion of stock unit balance in the Profit
Sharing & Retirement Plan of Liberty (PS&R Plan) to shares.
Mr. Lanier disclaims beneficial ownership of 16,512 shares owned by his
spouse and 2,400 shares owned by his children. Mr. Farley disclaims 4,800
shares held as trustee of a church endowment fund.
(4) All directors, nominees and executive officers as a group, beneficially
own 5.6% of the common stock of the Company.
During 2001, the Board of Directors met four times. In 2001, all of the
directors attended more than 75% of the meetings of the Board and the
committees on which they served.
Committees of the Board of Directors
The Board of Directors has the following standing committees: Audit-Messrs.
Farley, Hagopian, and McCormick; Compensation -- Messrs. Farley, Lanier and
Hagopian; Executive -- Messrs. Boren, Farley, Hagopian, Hudson, Lanier,
McCormick, Records, Richey and Smith; Finance -- Messrs. Farley, Lanier,
McCormick, Records and Smith; and Nominating -- Messrs. Boren, Farley,
Hagopian, Lanier, McCormick, Records, Richey and Smith.
The audit committee recommends the independent auditors to be selected by
the Board; discusses the scope of the proposed audit with the independent
auditors and considers the audit reports; discusses the implementation of the
auditors' recommendations with management; reviews the fees of the independent
auditors for audit and non-audit services; reviews the adequacy of the
Company's system of internal accounting controls; reviews, before publication
or issuance, the annual financial statement and any annual reports to be filed
with the Securities and Exchange Commission and periodically reviews pending
litigation. Additionally, the audit committee meets with the Company's
independent accountants and internal auditors both with and without management
being present. The audit committee met five times in 2001.
The compensation committee determines the compensation of senior management
of the Company and its subsidiaries and affiliates. Additionally, the
compensation committee administers the stock incentive plans of the Company.
The compensation committee met three times and executed two unanimous consent
actions in 2001.
The executive committee exercises all the powers of the Board of Directors
in the interim between Board meetings. The executive committee did not meet in
2001.
The finance committee serves as the pricing committee in connection with
capital financing by the Company. The finance committee did not meet but
executed three unanimous consent actions in 2001.
The nominating committee reviews the qualifications of potential candidates
for the Board of Directors from whatever source received, reports its findings
to the Board and proposes nominations for Board membership for approval by the
Board of Directors and for submission to the stockholders for approval.
Recommendations of potential Board candidates may be directed to the
nominating committee in care of the Corporate Secretary of the Company at the
address stated herein. The nominating committee did not meet but executed one
unanimous consent action in 2001.
8
COMPENSATION AND OTHER TRANSACTIONS WITH
EXECUTIVE OFFICERS AND DIRECTORS
Summary Compensation Table
------------------------------------------------------------------------------------------------
Annual Compensation Long Term Compensation
----------------------- -----------------------------
Awards
-----------------------------
(g)
(f) Securities (i)
(a) (d) Restricted Stock underlying All other
Name and (b) (c) Bonus Award(s) Options/SARs Compensation
Principal Position Year Salary ($) ($)(1) ($)(2) (#)(3) ($)(4)
------------------ ---- ---------- ------- ---------------- ------------ ------------
C.B. Hudson 2001 800,000 0 0 657,182 5,381
Chairman and CEO 2000 800,000 0 0 379,849 6,393
1999 800,000 0 0 151,734 5,910
Mark S. McAndrew 2001 680,000 250,000 0 185,398 5,100
President and CEO of 2000 600,000 210,000 0 90,000 5,100
United American, Globe and 1999 575,000 150,000 0 153,198 4,800
American Income
Tony G. Brill 2001 549,000 126,000 0 130,124 5,100
Executive Vice President and 2000 525,000 121,000 0 68,000 5,100
Chief Administrative Officer 1999 500,016 100,000 0 115,813 4,800
Anthony L. McWhorter 2001 399,048 136,000 0 133,252 5,100
President and Chief 2000 375,024 136,000 0 68,000 5,100
Executive Officer of Liberty 1999 350,120 120,000 0 108,374 4,800
and UILIC
Gary L. Coleman 2001 344,000 110,000 0 156,376 5,100
Executive Vice President 2000 320,000 96,000 0 54,000 5,100
and Chief Financial Officer 1999 300,000 30,000 0 89,303 4,800
--------
(1) Mr. Hudson elected to defer $400,000 and $400,000 of his 2001 and 2000
bonuses and received for them Company stock options under the provisions
of the Torchmark Corporation 1998 Stock Incentive Plan (1998 Incentive
Plan). Messrs. Hudson and Coleman elected to defer $400,000 and $50,000,
respectively, of their 1999 bonuses and received for them Company stock
options under the provisions of 1998 Incentive Plan.
(2) At year end 2001, Messrs. McAndrew, McWhorter and Brill held 22,000,
13,750 and 22,000 restricted shares, respectively, valued at $865,480,
$540,925 and $865,480 (based on a year-end closing price of $39.34 per
share). Restricted stock (40,000 shares) awarded on January 1, 1998 at
$42.1875 per share to each of Messrs. McAndrew and Brill vests as follows:
1-1-99 6,400 shares; 1-1-00 6,000 shares; 1-1-01 5,600 shares; 1-1-02
5,200 shares; 1-1-03 4,800 shares; 1-1-04 4,400 shares; 1-1-05 4,000
shares; and 1-1-06 3,600 shares. Restricted stock (25,000 shares) awarded
on January 1, 1998 at $42.1875 per share to Mr. McWhorter vests as
follows: 1-1-99 4,000 shares; 1-1-00 3,750 shares; 1-1-01 3,500 shares; 1-
1-02 3,250 shares; 1-1-03 3,000 shares; 1-1-04 2,750 shares; 1-1-05 2,500
shares; and 1-1-06 2,250 shares. Cash dividends on all restricted stock
are paid directly to the stockholder at the same rate as on unrestricted
stock. Messrs. McAndrew, McWhorter and Brill agreed as a condition of
their restricted stock awards to waive receipt of any shares of Waddell &
Reed Financial, Inc. (WDR) stock distributed by Torchmark to its common
shareholders in the WDR spin-off on November 6, 1998.
(3) In August 2001, Messrs. Hudson, McAndrew, Brill, McWhorter and Coleman
elected to participate in a program under the 1998 Incentive Plan whereby
they exercised existing Torchmark stock options and received restoration
options for 519,515, 85,398, 60,124, 63,252 and 96,376 Torchmark shares,
respectively. On December 13, 2001, Messrs. Hudson, McAndrew, Brill,
McWhorter and Coleman received stock option grants pursuant to the 1998
Incentive Plan on 100,000, 100,000, 70,000 70,000 and 60,000 Torchmark
shares, respectively. Also, on that same date, Mr. Hudson elected to
receive his 2001 bonus of $400,000 in the form of Torchmark stock options
on 37,667 shares.
On December 20, 2000, Mr. Hudson elected to participate in a restoration
program under the 1998 Incentive Plan, comparable to a November 1999
program for other eligible Company officers, directors and employees in
which Mr. Hudson could not participate because of Securities and Exchange
Commission rules, whereby he exercised existing Torchmark stock options and
received restoration options on 251,351 Torchmark shares.
9
Also, on that same date, Mr. Hudson elected to receive his 2000 bonus of
$400,000 in the form of Torchmark stock options on 38,498 shares. Messrs.
Hudson, McAndrew, Brill, McWhorter and Coleman received stock option
grants pursuant to the 1998 Incentive Plan on 90,000, 90,000, 68,000,
68,000 and 54,000 Torchmark shares, respectively, on December 20, 2000.
In November 1999, Messrs. McAndrew, Brill, McWhorter and Coleman elected
to participate in a program under the 1998 Incentive Plan whereby they
exercised existing Torchmark stock options and received restoration
options for 53,198, 40,813, 33,374 and 22,836 Torchmark shares,
respectively. On December 21, 1999, Messrs. Hudson, McAndrew, Brill,
McWhorter and Coleman received stock option grants pursuant to the 1998
Incentive Plan on 100,000, 100,000, 75,000, 75,000 and 60,000 Torchmark
shares, respectively. Also, on that same date, Messrs. Hudson and Coleman
elected to receive 1999 bonus amounts of $400,000 and $50,000,
respectively, in the form of Torchmark stock options on 51,734 shares and
6,467 shares, respectively.
(4) Includes Company contributions to Torchmark Corporation Savings and
Investment Plan, a funded, qualified defined contribution plan, for each
of Messrs. Hudson, McAndrew, Brill, McWhorter and Coleman of $5,100 in
2001 and 2000 and $4,800 in 1999; interest only on prior contributions to
the Torchmark Corporation Supplemental Savings and Investment Plan, an
unfunded, non-qualified defined contribution plan, for Mr. Hudson of
$1,280.52, $1,293.07 and $1,110.31, respectively, in 2001, 2000 and 1999.
10
OPTION GRANTS IN LAST FISCAL YEAR
-----------------------------------------------------------------------------------------------------
Potential realizable
value at assumed annual rates
of stock price appreciation
Individual Grants for option term
--------------------------------------------- ---------------------------------
% of
Number of total options Exercise
Securities granted to or
underlying employees base
options in price Expiration
Name granted(#) fiscal year ($/share) Date 5% ($) 10% ($)
(a) (b)(1) (c) (d) (e) 0% ($) (f) (g)
---- ---------- ------------- --------- ---------- -------------------- ------------
C.B. Hudson 519,515 17.2 41.26 8-11-11 0 13,480,483 34,162,160
100,000 3.3 38.20 12-15-11 0 2,402,379 6,088,094
37,667 1.3 38.20 12-13-12 0 1,022,092 2,666,412
Mark S. McAndrew 85,398 2.8 41.26 8-11-11 0 2,215,925 5,615,584
100,000 3.3 38.20 12-15-11 2,402,379 6,088,094
Tony G. Brill 60,124 2.0 41.26 8-11-11 0 1,560,110 3,953,622
70,000 2.3 38.20 12-15-11 1,681,665 4,261,666
Anthony L. McWhorter 63,252 2.1 41.26 8-11-11 0 1,641,276 4,159,312
70,000 2.3 38.20 12-15-11 1,681,665 4,261,666
Gary L. Coleman 96,376 3.2 41.26 8-11-11 0 2,500,784 6,337,473
60,000 2.0 38.20 12-15-11 1,441,427 3,652,857
--------
(1) Options expiring on 8-11-11 and on 12-15-11 are non-qualified stock
options granted in Torchmark common stock pursuant to the 1998 Incentive
Plan with a ten year and two day term at an exercise price equal to the
closing price of the Company's common stock on the grant date. Options
expiring on 12-15-11 granted to Messrs. McAndrew, Brill, McWhorter and
Coleman and to Mr. Hudson for 100,000 shares are not exercisable during
the first two years after the grant date and vest on 50% of the shares two
years after the grant date and on the remaining 50% of the shares three
years after the grant date. Options expiring on 8-11-11 granted to Messrs.
Hudson, McAndrew, Brill, McWhorter and Coleman are first exercisable six
months from the grant date.
Options expiring on 12-13-12 are non-qualified stock options granted in
Torchmark stock with an eleven year term, an exercise price equal to the
closing price of the Company's common stock on the grant date and are
fully vested upon issuance, but only first exercisable as to 1/10 per year
commencing on the first anniversary of the grant date.
11
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
(d) (e)
(b) (c) Number of Securities Value of unexercised
(a) Shares acquired Value underlying unexercised in-the-money options
Name on exercise (#)(1) Realized ($) options at FY-end (#) at FY-end ($)
----- ------------------ ------------ ------------------------- -------------------------
Exercisable Unexercisable Exercisable Unexercisable
----------- ------------- ----------- -------------
C.B. Hudson............. 642,967 6,368,518 481,386 957,269 $1,834,765 $2,560,256
Mark S. McAndrew........ 107,550 1,142,771 134,448 325,398 $1,018,306 $ 867,225
Tony G. Brill........... 86,814 1,376,880 105,639 243,154 $ 791,107 $ 690,147
Anthony L. McWhorter.... 77,528 775,240 90,625 245,755 $ 710,392 $ 687,036
Gary L. Coleman......... 116,912 1,059,423 66,521 249,314 $ 540,769 $ 602,190
--------
(1) Of the shares shown as acquired on exercise, Messrs. Hudson, McAndrew,
Brill, McWhorter and Coleman retained 91,740,14,671,19,834, 10,653, and
15,261 shares, respectively, after cashless option exercises.
Pension Plans
Torchmark Corporation Pension Plan; Liberty National Life Insurance Company
Pension Plan for Non-Commissioned Employees. These plans are non-contributory
pension plans which cover all eligible employees who are 21 years of age or
older and have one or more years of credited service. The benefits at age 65
under the TMK Pension Plan are determined by multiplying the average of the
participant's earnings in the five consecutive years in which they were
highest during the ten years before the participant's retirement by a
percentage equal to 1% for each of the participant's first 40 years of
credited service plus 2% for each year of credited service up to 20 years
after the participant's 45th birthday and then reducing that result by a
Social Security offset and by other benefits from certain other plans of
affiliates. Benefits at age 65 under the LNL Pension Plan are determined by
multiplying the average of the participant's earnings in the five consecutive
years in which they were highest during the ten years before the participant's
retirement by a percentage equal to 2% for each of the participant's first 30
years of credited service plus 1% for each year of credited service in excess
of 30 years (up to a maximum of 10 years) and then reducing that result by a
Social Security offset and by other benefits from certain other plans of
affiliates. Earnings for purposes of both pension plans include compensation
paid by subsidiaries and affiliates, and do not include commissions,
directors' fees, expense reimbursements, employer contributions to retirement
plans, deferred compensation, or any amounts in excess of $170,000 (as
adjusted). Benefits under both pension plans vest 100% at five years. Upon the
participant's retirement, benefits under the plan are payable as an annuity or
in a lump sum. In 2001, covered compensation was $170,000 for Messrs. Hudson,
McAndrew, Brill and Coleman under the TMK Pension Plan and for Mr. McWhorter
under the LNL Pension Plan.
Vested benefits under the non-qualified Torchmark Supplemental Retirement
Plan, in which Messrs. Hudson, McAndrew, McWhorter and Coleman have
participated, were frozen as of December 31, 1994 and no additional benefits
accrue after that date pursuant to the supplementary retirement plan. Messrs.
Hudson, McAndrew, McWhorter and Coleman participate in the Torchmark
Supplemental Retirement Plan. Mr. Brill does not participate in any
supplementary pension plan.
Messrs. Hudson, McAndrew, Brill and Coleman have 27 years, 22 years, five
years and 20 years of credited service under the TMK Pension Plan,
respectively. Mr. McWhorter has 27 years of credited service under the LNL
Pension Plan.
The following tables show the estimated annual benefits payable under the
TMK Pension Plan or LNL Pension Plan along with the TMK Supplemental
Retirement Plan (which was frozen in 1994) upon retirement of participants
with varying final average earnings and years of service. Primarily because of
the termination of the Supplemental Retirement Plan, the benefits shown below
as payable pursuant to the TMK Pension or LNL Pension Plans and the TMK
Supplemental Retirement Plan may in most cases exceed the actual amounts paid.
The benefits shown are offset as described above and the amounts are
calculated on the basis of payments for the life of a participant who is 65
years of age.
12
Torchmark Pension and Supplemental Retirement Plans*
Final Years of Credited Service
Average ---------------------------------------------------------------
Earnings 15 20 25 30 35
---------- ------- ------- --------- --------- ---------
$1,000,000 450,000 600,000 650,000 700,000 750,000
1,200,000 540,000 720,000 780,000 840,000 900,000
1,400,000 630,000 840,000 910,000 980,000 1,050,000
1,600,000 720,000 960,000 1,040,000 1,120,000 1,200,000
--------
* Benefits paid under a qualified defined benefit plan are limited by law in
2001 to $140,000 per year. The balance of the benefit payments shown above
thus comes from the Supplemental Retirement Plan. Because benefit accruals
under the Supplemental Retirement Plan ceased as of December 31, 1994,
Messrs. Hudson, McAndrew and Coleman have seven years less of credited
service under the Supplemental Retirement Plan than under the TMK Pension
Plan.
LNL Pension and TMK Supplemental Retirement Plans*
Final Years of Credited Service
Average ---------------------------------------------------------------------------
Earnings 15 20 25 30 35
-------- ------- ------- ------- ------- -------
$100,000 30,000 40,000 50,000 60,000 65,000
200,000 60,000 80,000 100,000 120,000 130,000
300,000 90,000 120,000 150,000 180,000 195,000
400,000 120,000 160,000 200,000 240,000 260,000
500,000 150,000 200,000 250,000 300,000 325,000
--------
* Benefits paid under a qualified defined benefit plan are limited by law in
2001 to $140,000 per year. The balance of the benefit payments shown above
thus comes from the Supplemental Retirement Plan. Because benefit accruals
under the Supplemental Retirement Plan ceased as of December 31, 1994, Mr.
McWhorter has seven years less of credited service under the Supplemental
Retirement Plan than under the LNL Pension Plan.
Payments to Directors
Directors of the Company are currently compensated on the following basis:
(1) Directors who are not officers or employees of the Company or a
subsidiary of the Company (Outside Directors) receive a fee of $1,000 for
each attended Board meeting, a fee of $500 for each attended Board
committee meeting, and an annual retainer of $40,000, payable each January
for the entire year. They do not receive fees for the execution of written
consents in lieu of Board meetings and Board committee meetings. They
receive an allowance for their travel and lodging expenses if they do not
live in the area where the meeting is held.
Each Outside Director, except Joseph Morris, who has elected to waive the
receipt of all such stock options, is automatically awarded annually non-
qualified stock options on 6,000 shares of Company common stock on the
first day of each calendar year in which stock is traded on the New York
Stock Exchange. The entire Board may, for calendar years commencing with
1996, award non-qualified stock options on a non-formula basis to all or
such individual Outside Directors as it shall select. Such options may be
awarded at such times and for such number of shares as the Board in its
discretion determines. The price of such options may be fixed by the Board
at a discount not to exceed 25% of the fair market value on the grant date
or at the fair market value of the stock on the grant date.
Commencing with 1997 retainer and meeting and committee fees (assuming
attendance at all scheduled meetings), Outside Directors may annually elect
to make deferrals of such compensation for the following year into the
interest-bearing account of the Torchmark Corporation 1996 Non-Employee
Director Stock Option Plan (for amounts earned prior to 1999) and pursuant
to the deferred compensation stock option provisions of the 1998 Incentive
Plan (for amounts earned in 1999 and in subsequent years). They may
subsequently elect to convert such balances to stock options with either
fair market value or discounted exercise prices. In December 2000,
Messrs. Hagopian, Lanier, McCormick, Records, Richey and Smith chose to
make such deferrals of 2001 compensation, which were converted in 2001 into
options on 5,025, 4,617, 4,740, 4,210, 30,701 and 4,633 shares,
respectively, with fair market value exercise prices.
13
(2) Beginning in January, 1993, directors who are officers or employees
of the Company or a subsidiary of the Company waived receipt of all fees
for attending Board meetings. They do not receive fees for the execution of
written consents in lieu of Board meetings or Board committee meetings.
They also do not receive a fee for attending Board committee meetings or an
annual retainer. They are reimbursed their travel and lodging expenses, if
any.
(3) Compensation paid to the director serving as Chairman of the
Executive Committee is determined annually by the Compensation Committee in
their discretion. Pursuant to the terms of a Consultation Agreement, the
Compensation Committee determined to pay R.K. Richey $250,000 for service
in 2001 as Chairman of the Executive Committee. Mr. Richey elected to defer
this compensation and received it in the form of Torchmark stock options
which are included in the options reported on page 13, paragraph 3 of this
section.
Each person who served as a director on or prior to February 29, 2000 is
eligible to receive upon retirement from the Board a retirement benefit
payable annually, in an amount equal to $200 a year for each year of service
as a director or advisory director up to 25 years, but not less than $1,200 a
year. In determining this benefit, the number of years of service may include
years as a director of a subsidiary of the Company if the payment for such
years by the Company is in place of a payment which would otherwise be made by
the subsidiary. Directors who retired prior to the termination of this
retirement benefit program effective February 29, 2000, including Joseph
Morris, have been and will continue to receive their retirement benefit
payments in cash. Directors with accrued but unpaid retirement benefits under
this program on the date of termination were offered the opportunity to
convert the present value of such retirement benefits on that date to options
in Company common stock. Accordingly, Messrs. Boren, Farley, Hagopian, Lanier,
McCormick, Records, Richey and Smith received stock options reflecting the
present value of their respective retirement benefits on February 29, 2000.
Other Transactions
Robert Richey, son of R.K. Richey, formerly a Vice President of a Company
subsidiary, received compensation and fringe benefits from that Company
subsidiary in 2001 of $138,116.
In 2001, the Company paid MidFirst Bank $108,832 in fees as the servicing
agent for portions of the Company subsidiaries' commercial real estate
portfolios. George J. Records is an officer, director and 38.33% beneficial
owner of Midland Financial Co., the parent corporation of MidFirst Bank.
Lamar C. Smith is an officer, director and 15.4% owner of First Command
Financial Services, Inc. (First Command). First Command sells certain
insurance products offered by Torchmark subsidiaries pursuant to agency
agreements. In 2001, that company received commission payments of $48,236,000
for sales of life insurance on behalf of Torchmark subsidiaries, which
comprised approximately 29% of First Command's 2001 revenues.
Liberty, a Torchmark subsidiary, is also party to a coinsurance agreement
with First Command Life Insurance Company, a First Command subsidiary, whereby
Liberty cedes back to First Command Life on an annual basis approximately 5%
of the life insurance business sold by First Command Life on behalf of Liberty
and First Command Life annually pays Liberty certain designated percentages of
renewal and first year premiums. Additionally, under this agreement, Liberty
and other Torchmark subsidiaries provide First Command Life with certain
administrative, accounting and investment management services. In 2001,
Liberty's payment to First Command Life was $108,123 and First Command paid
Liberty $7,082 as the designated percentages of renewal and first year
premium.
Torchmark subsidiaries, United American and Liberty, entered into a
$27,000,000 original principal amount 7% collateral loan agreement with IRA in
1998 and a 7.55% construction loan agreement in an amount not to exceed
$22,500,000 with First Command in 2001, respectively. UA made a $7,000,000
loan in 1998 and a $15,000,000 loan to IRA under the collateral loan
agreement. The largest aggregate amount of indebtedness outstanding from IRA
to United American under the collateral loan during 2001 was $22,883,246 and
as of February 21, 2002, the outstanding balance of the collateral loan was
$22,905,490. The construction loan, which will result in a permanent fifteen
year mortgage financing at a rate of 2.25% over the ten year treasury rate at
14
inception but not less than 7%, had an outstanding principal balance of
$7,217,015 at January 31, 2002. The largest aggregate indebtedness to Liberty
from First Command under the construction loan during 2001 was $6,168,953.
R.K. Richey is a 25% owner of Stonegate Realty Co., LLC, the parent company
of Elgin Development Company, LLC (Elgin Development). In 2001, pursuant to
contractual agreements, Torchmark subsidiaries paid $756,878 to an Elgin
Development subsidiary for building management and maintenance services on
Liberty, Globe, and United American real estate and $260,716 for leased rental
property. Elgin Development in 1999 purchased certain investment real estate
from Torchmark and its subsidiaries and as a part of the consideration for the
purchase issued its 8% Promissory Note (Note) due September 30, 2009 to
Torchmark. The largest aggregate principal amount of indebtedness outstanding
to Torchmark on such Note during 2001 was $12,400,000. As of February 28,
2002, the outstanding principal balance of this indebtedness was $10,666,584.
Section 16(a) Beneficial Ownership Reporting Compliance
Under the securities laws of the United States, the Company's directors, its
executive officers, and any persons holding more than ten percent of the
Company's common stock are required to report their initial ownership of the
Company's common stock and other equity securities and any subsequent changes
in that ownership to the Securities and Exchange Commission and the New York
Stock Exchange and to submit copies of these reports to the Company. To the
Company's knowledge, based solely on review of the copies of such reports
furnished to the Company and written representations that no other reports
were required, during the fiscal year ended December 31, 2000, all required
Section 16(a) filings applicable to its executive officers, directors, and
greater than ten percent beneficial owners were timely and correctly made
except that Joseph W. Morris filed a late Form 3, R.K. Richey filed a late
Form 5 to report a gift of shares to charity and C.B. Hudson amended his Form
5 to report the acquisition of Torchmark Capital Trust Preferred Securities.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
Compensation of senior executives of Torchmark and its subsidiaries and
affiliates is determined by the Compensation Committee of the Board of
Directors. The Compensation Committee, comprised entirely of outside
directors, meets to fix annual salaries in advance and bonuses for the current
year of executives earning more than $150,000, to review annual goals and
reward outstanding annual performance of executives, to grant stock options
pursuant to the 1998 Stock Incentive Plan and to determine senior executives
eligible to participate in the executive deferred compensation stock option
program under the 1998 Incentive Plan.
In 1993, the Compensation Committee employed an unaffiliated executive
compensation consulting firm, Towers Perrin, to assist it in reviewing
executive compensation policies and the payment of bonuses to executives. In
1997, the Compensation Committee utilized an unaffiliated executive
compensation consultant from KPMG Peat Marwick LLP to review certain of its
executive compensation policies and practices. In 2001, the Compensation
Committee reviewed compensation of the Chief Executive Officer and the four
most highly compensated executives of each of Torchmark's peer group companies
relative to the compensation of comparable Company executives. The
Compensation Committee met in 2001 with the Chairman and Chief Executive
Officer to discuss the salaries and bonuses of the five most highly
compensated executives, including the Chairman. Also, the Compensation
Committee received written materials discussing compensation of the Chairman,
the four other most highly compensated executives and persons reporting to
these five most highly compensated executives.
Compensation Principles
The business philosophy of the Company focuses on maintenance and
improvement of insurance operating margins and other operating margins through
the efficient management of assets and control of costs. The Company's
executive compensation program is based on principles which align compensation
with this business philosophy, company values and management initiative. The
program also takes into consideration competitive remuneration practices in
the insurance and financial services sectors. Torchmark's executive
compensation program seeks to attract and retain key executives necessary to
the long-term success of the Company, to mesh compensation with both annual
and long-term strategic plans and goals and to reward executives for their
efforts
15
in the continued growth and success of the Company. Annual goals for executive
compensation focus on a number of factors, including but not limited to,
growth in earnings per share, return on equity and pre-tax operating income
for holding company executives and on insurance operating income, underwriting
income and premium growth for the executives of the Company's insurance
subsidiaries.
To the extent readily determinable and as one of the factors in its
consideration of compensation matters, the Compensation Committee considers
the anticipated tax treatment to the Company and to the executives of various
payments and benefits. Some types of compensation payments and their
deductibility depend upon the timing of an executive's vesting or exercise of
previously granted rights. Further, interpretations of and changes in the tax
laws and other factors beyond the Compensation Committee's control also affect
the deductibility of compensation. For these and other reasons, the
Compensation Committee will not necessarily and in all circumstances limit
executive compensation to that deductible under Section 162(m) of the Internal
Revenue Code. The Compensation Committee will consider various alternatives to
preserving the deductibility of compensation payments and benefits to the
extent reasonably practicable and to the extent consistent with its other
compensation objectives.
Salary and Bonus System
For some time the Company has used a system of salaries and bonuses to
reward executives of the Company and its subsidiaries for performance relative
to annual goals. These goals vary by operating company based upon that
particular company's current position. Annually, the Company's Chairman and
Chief Executive Officer calculates a proposed pool to fund current year
bonuses and subsequent year salaries for all executives whose combined cash
compensation exceeds $150,000 per year. The proposed salary/bonus pool is
determined based upon a formula within a range of approximately 5% that takes
into account prior year salaries and bonuses paid, estimated and adjusted
earnings per share and estimated return on equity, adjusted for certain
minimum tax-effected earnings per share and minimum return on equity. The
amount of the proposed pool is submitted to the Compensation Committee for its
review and approval.
The Compensation Committee, in consultation with the Company's Chairman and
Chief Executive Officer, then reviews each subsidiary's performance relative
to the goals and fixes salaries and bonuses for that operating subsidiary's
executives. The degree to which these executives have met their particular
subsidiary's goals in turn determines the amount of the bonus, if any, and
whether senior executive officers of the Company receive salary increases.
Such executives do not receive any cost of living salary adjustments.
Stock Option Program
The Company began awarding stock options to executives and key employees in
1984. The option plan under which options in Company common stock were awarded
in 2001 was adopted in April 1998. It has as its stated purpose attracting and
retaining employees who contribute to the Company's success and enabling those
persons to participate in that long-term success and growth through an equity
interest in the Company. To this end, the Compensation Committee, as
administrator of the 1998 Incentive Plan, grants non-qualified stock options
to officers and key employees at the market value of the Company's common
stock on the date of the grant, the size of the grant being based generally on
the current compensation of such officers or key employees. The five most
highly compensated executive officers are paid salaries and bonuses
commensurate with the level of their responsibilities and therefore they
typically are awarded a larger number of option shares than other employees
with lesser levels of compensation and responsibility. In 2001, for the most
highly compensated executive officers shown in the Summary Compensation Table
on page 9, the options granted were in proportion to current compensation
adjusted by a subjective factor ranging from .1250 to .1754.
Decisions regarding stock option grants are made annually and the number of
options previously awarded to an individual executive officer is not a
substantial consideration in determining the amount of options granted to that
officer in the future. Once an officer has been awarded options and becomes a
part of the stock option program, he or she will typically continue to be
eligible from year to year for consideration for stock option awards related
to salary.
16
Stock options may be exercised using cash or previously-owned stock for
payment or through a simultaneous exercise and sale program. Such stock
options generally become first exercisable to the extent of 50% of the shares
on the second anniversary of the option grant date and on the remaining 50% of
the shares on the third anniversary of the option grant date.
Deferred Compensation Option Program
The Company's 1998 Incentive Plan, adopted in April, 1998, contains
provisions permitting designated executives to receive deferred compensation
stock options. The plan permits eligible executives to defer salary and/or
bonus on an annual basis into an interest-bearing account and subsequently on
a one time basis within a limited time period to elect to convert all or a
portion of their deferred compensation into Company stock options granted at
market value or at a discount not to exceed 25%. The Compensation Committee
did not designate any Company executives to participate in this program in
2001. However, Mr. Hudson elected to receive all of his 2001 bonus in the form
of stock options under the regular provisions of the 1998 Incentive Plan.
Compensation of Chief Executive Officer
C. B. Hudson joined the Company subsidiary Globe in 1974 as its Chief
Actuary and subsequently has served as a senior executive officer and director
of the Company's principal insurance subsidiaries since that time. During the
period 1982 to 1991, he was elected as Chairman and Chief Executive Officer of
United American, Globe and Liberty, all principal insurance subsidiaries of
the Company. Mr. Hudson was elected to the Torchmark Board of Directors in
1986 and was named Chairman of Insurance Operations of the Company in January
1993. He assumed the responsibilities of Chairman, President and Chief
Executive Officer of the Company on March 10, 1998. Effective as of April
2001, he serves as Chairman and Chief Executive Officer of the Company.
Mr. Hudson's base salary is determined by the Compensation Committee
considering his tenure of service with the Company and its subsidiaries and
affiliates, his current job responsibilities and positions he has assumed in
the Company over the course of his career and a comparison of salaries paid at
peer companies.
Mr. Hudson's bonus and stock options, which are also determined by the
Compensation Committee, were based upon his leadership and ability to enhance
the long term value of the Company. Mr. Hudson was awarded a 2001
discretionary bonus of $400,000 from the pool by the Compensation Committee,
all of which he chose to receive in the form of Company stock options granted
at market value. The Compensation Committee granted Mr. Hudson market value
stock options on 100,000 shares in December 2001.
Mr. Hudson's base salary, bonus and any stock options awarded to him are not
directly tied to any one or a group of specific measures of corporate
performance.
In the three-year period 1999-2001, which is covered by the Summary
Compensation Table on page 9, Torchmark's diluted operating earnings per share
grew from $2.29 per share in 1998 to $3.12 per share in 2001. Return on equity
increased to 16.1% in 2001 from 15.1% in 1998. Torchmark repurchased 15.5
million shares in the 1999-2001 period under its share repurchase program,
11.3% of the outstanding shares at the beginning of that period.
Compensation of Other Executives
The other executive officers listed in the Summary Compensation Table in the
Proxy Statement are compensated by salary and a discretionary bonus which may
be impacted by a number of factors, including but not limited to, growth in
earnings per share and return on equity at the Company and growth in insurance
operating income, underwriting income and premium of the various Company
subsidiaries, affiliates or areas of operation for which each is responsible.
The pool of funds available for determining their salaries and bonuses is
calculated based upon the formula described in the discussion of the salary
and bonus system. Determination of any salary increase or bonus award to such
an executive is then recommended by the Chairman and Chief
17
Executive Officer in his discretion based upon an evaluation of a number of
factors, including those listed above, to the Compensation Committee for its
decision.
Mr. McAndrew serves as an Executive Vice President of the Company and as
President and Chief Executive Officer of United American, Globe and American
Income. He is responsible for the Company's direct response insurance
marketing. Mr. McAndrew was awarded a $250,000 discretionary bonus by the
Compensation Committee for 2001, which he chose to receive in cash.
Mr. Brill is the Executive Vice President and Chief Administrative Officer
in charge of insurance administration for Torchmark and all its insurance
subsidiaries. The Compensation Committee awarded Mr. Brill a $126,000
discretionary bonus for 2001, which he elected to take in cash.
Mr. McWhorter is an Executive Vice President of the Company and the
President and Chief Executive Officer of Liberty and UILIC. Mr. McWhorter was
awarded a $136,000 discretionary bonus by the Compensation Committee for 2001,
which he elected to be paid in cash.
Mr. Coleman serves as Executive Vice President and Chief Financial Officer
of the Company. He has been responsible for the Company's accounting
operations since 1994 and is also in charge of all financial areas. The
Compensation Committee awarded Mr. Coleman a $110,000 discretionary bonus for
2001, which he chose to be paid in cash.
Compensation and Company Performance
As indicated above, the annual aspect of executive compensation for holding
company executives of Torchmark centers on growth in the earnings per share
and return on equity as well as increases in pre-tax operating income and for
executives of the insurance subsidiaries on growth in underwriting income and
premium income. Excluding amortization of goodwill in both years, pre-tax
operating income was $609 million in 2001, an increase of 8% over 2000.
Diluted operating earnings per share grew from $2.85 per share in 2000 to
$3.12 per share in 2001, a 9% change. Return on equity was 16.1% in 2001
compared to 16.3% in 2000. Premium income, which made up 82% of the Company's
total revenues, rose to $2.22 billion in 2001 from $2.05 billion in 2000.
Underwriting income comprised 60% of the Company's pre-tax operating income
for 2001. Underwriting income increased from $356 million to $368 million in
2001 over 2000.
The above performance resulted in compensation increases to certain of the
Company's executives as a group shown in the Summary Compensation Table on
page 9. Cash compensation paid persons who are listed in that table increased
6.6% in 2001 over 2000.
The long-term portion of the executive compensation program centers on stock
value through the granting of stock options. Over the last three fiscal years
diluted earnings per share from continuing operations excluding realized
investment gains have increased 36% and rose from $2.29 in 1998 to $3.12 in
2001.
Joseph M. Farley, Chairman
Louis T. Hagopian
Joseph L. Lanier, Jr.
The foregoing Compensation Committee Report on Executive Compensation shall
not be deemed "filed" with the Securities and Exchange Commission or subject
to the liabilities of Section 18 of the Securities Exchange Act of 1934.
AUDIT COMMITTEE REPORT
The Audit Committee of the Board of Directors is comprised of three
directors: Louis T. Hagopian, who currently serves as Committee Chairman;
Harold T. McCormick and Joseph M. Farley. All of the Audit Committee members
are independent as that term is defined in the rules of the New York Stock
Exchange ("NYSE"). In April 2000, the Board of Directors reviewed and made a
determination under NYSE listing standards Section 393.01(B)(3)(b) that in
their business judgment, Mr. McCormick was independent and that his former
business relationship with the Company which terminated in July 1998 does not
interfere with his
18
exercise of independent judgment. During 2001, the Board of Directors,
exercising their business judgment and with Mr. Farley abstaining, designated
Joseph M. Farley as the member of the Audit-Committee possessing "accounting
or related financial management expertise" under the NYSE rules.
The Audit Committee assists the Board of Directors in fulfilling its
oversight responsibilities by reviewing the Company's consolidated financial
reports, its internal financial and accounting controls, and its auditing,
accounting and financial reporting processes generally. In June 2000, the
Board of Directors approved and adopted a written Audit Committee Charter,
which was amended in February 2002. A copy of the Audit Committee Charter, as
amended, is attached to this Proxy Statement as Exhibit A.
In discharging its oversight responsibilities regarding the audit process,
the Audit Committee reviewed and discussed the audited consolidated financial
statements of Torchmark as of and for the year ended December 31, 2001 with
Company management and Deloitte & Touche LLP ("Deloitte"), the independent
auditors. The Audit Committee received the written disclosures and the letter
from Deloitte required by Independence Standards Board Standard No. 1,
Independence Discussions with Audit Committees, discussed with Deloitte any
relationships which might impair that firm's independence from management and
the Company and satisfied itself as to the auditors' independence. The Audit
Committee reviewed and discussed with Deloitte all communications required by
generally accepted auditing standards, including Statement on Auditing
Standards No. 61, Communications with Audit Committees, as amended.
Based upon these reviews and discussions, the Audit Committee recommended to
the Board of Directors that the Company's audited consolidated financial
statements be included in Torchmark's Annual Report on Form 10-K for the
fiscal year ended December 31, 2001 for filing with the Securities and
Exchange Commission.
Louis T. Hagopian, Chairman
Harold T. McCormick
Joseph M. Farley
The foregoing Audit Committee Report shall not be deemed "filed" with the
Securities and Exchange Commission or subject to the liabilities of Section 18
of the Securities Exchange Act of 1934.
PRINCIPAL ACCOUNTING FIRM FEES
The following table sets forth the aggregate fees, including out-of-pocket
expenses, billed to Torchmark for the fiscal year ended December 31, 2001 by
the Company's principal accountants, Deloitte & Touche LLP.
Audit Fees............................................ $ 886,436(a)
Financial Information Systems Design and
Implementation Fees.................................. 0
All Other Fees:
Tax Services......................................... 789,350
Actuarial Services................................... 21,850
Audit Related:
Audits of Employee Benefit Plans.................... 85,000
Preparation of Registration Statements and Comfort
Letters............................................ 132,000
Other Services:
Regulatory Services for Market Conduct Examinations. 51,978
Assistance with Insurance Department Examinations... 16,785
1,096,963(b)
----------
$1,983,399
--------
(a) Includes those fees for professional services and out-of-pocket expenses
in connection with the audits of the separate statutory financial
statements of Torchmark's insurance company subsidiaries.
(b) The Audit Committee has considered whether the provision of these services
is compatible with maintaining the principal accountants' independence.
19
[Performance Graph]
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN
AMONG TORCHMARK CORPORATION, THE S & P 500 INDEX
AND THE S & P INSURANCE (LIFE/HEALTH) INDEX
Cumulative Total Return
----------------------------------------------------
12/96 12/97 12/98 12/99 12/00 12/01
------- ------- ------- ------- ------- -------
TORCHMARK CORPORATION $100.00 $169.86 $166.79 $138.82 $186.15 $192.28
S & P 500 $100.00 $133.36 $171.47 $207.56 $188.66 $166.24
S & P INSURANCE
(LIFE/HEALTH) $100.00 $125.05 $132.01 $113.52 $129.19 $119.18
The line graph shown above compares the yearly percentage change in
Torchmark's cumulative total return on its common stock with the cumulative
total returns of the Standard and Poor's 500 Stock Index (S&P 500) and the
Standard and Poor's Insurance (Life/Health) Index (S&P Insurance
(Life/Health)). Torchmark is one of the companies whose stock is included
within both the S&P 500 and the S&P Insurance (Life/Health).
Information for graph produced by Research Data Group, Inc.
20
MISCELLANEOUS INFORMATION
Proposals of Stockholders
In order for a proposal by a stockholder of the Company to be eligible to be
included in the proxy statement and proxy form for the annual meeting of
stockholders in 2003, the proposal must be received by the Company at its home
office, 2001 Third Avenue South, Birmingham, Alabama 35233, on or before
November 26, 2002. If a stockholder proposal is submitted outside the proposal
process mandated by Securities and Exchange Commission rules, it will be
considered untimely if received after February 8, 2003.
General
The cost of this solicitation of proxies will be paid by the Company. The
Company is requesting that certain banking institutions, brokerage firms,
custodians, trustees, nominees, and fiduciaries forward solicitation material
to the underlying beneficial owners of the shares of the Company they hold of
record. The Company will reimburse all reasonable forwarding expenses.
The Annual Report of the Company for 2001, which accompanies this proxy
statement, includes a copy of the Company's Annual Report to the Securities
and Exchange Commission on Form 10-K for the fiscal year ended December 31,
2001 and the financial statements and schedules thereto. Upon request and
payment of copying cost, the exhibits to the Form 10-K will be furnished.
These written requests should be directed to Investor Relations Department,
Torchmark Corporation at its address stated above.
By Order of the Board of Directors
/s/ Carol A. McCoy
Carol A. McCoy
Vice President, Associate Counsel &
Secretary
March 22, 2002
21
EXHIBIT A
AUDIT COMMITTEE CHARTER
I. Purpose and Role
The primary function of the Audit Committee is to assist the Board of
Directors in fulfilling its oversight responsibilities by reviewing: (i) the
GAAP financial reports and other GAAP financial information provided by
Torchmark Corporation (the "Corporation") to any governmental body,
shareholders or the public; (ii) the Corporation's systems of internal
controls regarding finance and accounting that management and the Board have
established; and (iii) the Corporation's auditing, accounting and financial
reporting processes generally.
All requirements in this Charter are qualified by the understanding that the
role of the Audit Committee is to act in an oversight capacity and is not
intended to require a detailed review of the work performed by the independent
auditors, internal auditors or financial management unless specific
circumstances are brought to its attention warranting such a review.
The Audit Committee has the authority to conduct any investigation
appropriate to fulfilling its responsibilities, and it has direct access to
the independent auditors as well as anyone in the organization. The Audit
Committee has the ability to retain, at the Corporation's expense, special
legal, accounting, or other consultants or experts it deems necessary in the
performance of its duties. While the Audit Committee has the responsibilities
and powers set forth in this Charter, it is not the duty of the Audit
Committee to plan or conduct audits or to determine that the Company's
financial statements are complete and accurate and are in accordance with
generally accepted accounting principles. This is the responsibility of
management and the independent auditor. It is not the duty of the Audit
Committee to conduct investigations or to resolve disagreements, if any,
between management and the independent auditor. However, the Committee will
use its best efforts to oversee that the parties resolve such disagreements in
accordance with the laws, regulations and the Company's Code of Business
Conduct. Should this effort fail to achieve satisfactory resolution, the
Committee shall refer the matter to the full Board of Directors.
II. Composition
The Audit Committee shall be comprised of three or more directors as
determined by the Board. All of the members of the Audit Committee must (i) be
free of any relationship to the Corporation that may interfere with the
exercise of their independence from management and the Corporation, and (ii)
not be subject to any of the other restrictions on independence set forth in
Rule 303.01(B)(3) of the New York Stock Exchange ("NYSE").
All members of the Committee shall possess a basic understanding of
financial statements, including Corporation's balance sheet, income statement
and cash flow statement or be able to do so within a reasonable period of time
after his or her appointment to the Committee. At least one member of the
Committee shall have accounting or related financial management expertise, as
the Board of Directors, in its business judgment, interprets such
qualification.
The members of the Committee shall be elected by the Board of Directors at
the annual or at any regular meeting of the Board of Directors. The members of
the Committee shall serve until their successors shall be duly elected and
qualified or their earlier resignation or removal. If a Chair is not elected
by the full Board or is not present at a particular meeting, the members of
the Committee may designate a Chair by majority vote of the Committee
membership in attendance.
III. Meetings
The Committee shall meet at least two times annually, or more frequently as
circumstances dictate. The Committee should meet at least annually with
management, the manager of the internal auditing department, the manager of
the information technology auditing department, the independent auditors, and
as a Committee, in separate executive sessions, to discuss any matters that
the Committee or each of these groups believe should be discussed privately.
In addition, the Committee, or at least its Chair, should meet with the
independent auditors
22
and financial management quarterly either in person or telephonically, to
review the Corporation's interim financial statements consistent with Section
IV.4 below. The Committee Chair shall prepare and/or approve an agenda in
advance of each meeting. The Committee shall maintain minutes of its meeting
and report to the Board of Directors.
IV. Responsibilities and Duties
To fulfill its responsibilities and duties, the Audit Committee shall
perform the following:
Documents/Reports Review
1. The Committee has adopted this Charter following its approval by the Board
of Directors based upon the recommendation of the Committee. The Committee
shall review, and reassess the adequacy of, this Charter at least annually.
The Charter shall be included as an appendix to Corporation's proxy
statement for its annual meeting of stockholders at least once every three
years.
2. Review and discuss with management and the independent auditors the
Corporation's annual audited financial statements prior to filing or
distribution. This review and discussion should encompass the results of
the audit, including significant issues regarding accounting principles,
practices and judgments.
3. Review and discuss with management the Corporation's audited financial
statements and management's discussion and analysis ("MD&A").
4. Review with financial management and independent auditors the quarterly
financial results prior to the earlier of the release of earnings or the
filing of the Quarterly Report on Form 10-Q. The Chair of the Audit
Committee may represent the entire Committee for purposes of this review.
In connection with such review, the Audit Committee should ensure that the
communications and discussions with the independent auditors contemplated
by Statement of Auditing Standards No. 61 (as may be modified or amended)
have been received and held.
Independent Auditors
5. Recommend to the Board of Directors the selection of the independent
auditors, considering independence and effectiveness and approve the fees
and other compensation to be paid to the independent auditors.
6. Emphasize that the independent auditors for the Corporation are ultimately
accountable to the Committee and the Board of Directors, that the Committee
and Board of Directors have the ultimate authority and responsibility to
select, evaluate and, when appropriate, replace the independent accountants
or to nominate the independent auditor to be proposed for shareholder
approval in any proxy statement.
7. Require the independent auditors to submit on a periodic basis (but at
least annually) to the Audit Committee a formal written statement in
accordance with Independence Standards Board Statement No. 1 (as may be
modified or amended) delineating all relationships between them and the
Corporation, actively engage in a dialogue with them with respect to any
disclosed relationships or services that may impact their objectivity and
independence, and recommend that the Board of Directors take appropriate
action in response to the report of the independent auditors to satisfy
itself of the outside auditors' independence.
8. Review the performance of the independent auditors and approve any proposed
discharge of the independent auditors when circumstances warrant.
9. Periodically review the independent auditors' audit plan.
Financial Reporting Processes
10. In consultation with the management, the independent auditors, and the
manager of the internal auditing department, consider the integrity of the
Corporation's financial reporting processes and controls. Discuss
significant financial risk exposures and the steps management has taken to
monitor, control, and report such exposures. Review significant findings
prepared by the independent auditors and the internal auditing department
together with management's responses.
23
11. Discuss with the Corporation's independent auditor and management,
information relating to such auditor's judgments about the quality, not
just the acceptability, of the Corporation's accounting principles and
matters identified by the auditor during its interim review. Also, the
Committee shall discuss the results of the annual audit and any other
matters that may be required to be communicated to the Committee by such
auditor under generally accepted auditing standards.
12. Review with the Corporation's independent auditor, the manager of the
internal audit department and management the adequacy and effectiveness of
the Corporation's internal auditing, accounting and financial controls,
and elicit any recommendations for improvement.
13. Prior to release of the year-end earnings, discuss the results of the
audit with the independent auditors.
14. Discuss with the independent auditors the matters contemplated by
Statement of Auditing Standards No. 61 (as may be modified or amended),
including, without limitation, the independent auditor's judgments about
the quality, not just the acceptability, of the Corporation's accounting
principles as applied in its financial reporting.
15. Based on, among other things, the review and discussions referred to in
subsections 2, 6 and 11 of this Section IV, recommend to the Board of
Directors that the audited financial statements be included in the
Corporations' Annual Report on Form 10-K.
16. Review with the Corporation's legal counsel any legal matters that could
have a significant impact on the Corporation's financial statements.
17. Review with management and the independent auditor any correspondence from
government regulators and/or agencies as well as any employee complaints
or published reports which raise material issues regarding the
Corporation's financial statements or accounting policies.
18. Prepare a report of the Committee to be included in the Corporation's
proxy statement for its Annual Meeting of Stockholders satisfying the
requirements of the rules of the Securities and Exchange Commission as
promulgated from time to time.
Internal Auditors
19. Review of internal audit function, budgeting and staffing, including
appointment or replacement of the manager of the internal auditing
department and the proposed internal audit scope for the year.
20. Receive from internal audit a summary of findings from completed audits
and a progress report on the proposed internal audit plan with
explanations for any deviations from the original plan.
21. Review significant internal audit findings and management's response.
22. Review periodically reports from the manager of the internal audit
department and advise the Board regarding compliance with the
Corporation's Code of Business Conduct.
24
TORCHMARK Three Ways to Vote Your Proxy
CORPORATION VOTE BY TELEPHONE OR INTERNET
24 Hours a Day - 7 Days a Week
Save Your Company Money - It's Fast and Convenient
TELEPHONE INTERNET MAIL
-------------- -------------------------------- ----
1-866-361-3802 https://www.proxyvotenow.com/tmk
.. Use any touch-tone telephone. . Go to the website address listed above. . Mark, sign and date your Proxy Card.
.. Have your Proxy Form in hand. . Have your Proxy Form in hand. . Detach card from Proxy Form.
.. Enter the Control Number located . Enter the Control Number located in . Return the card in the postage-paid
in the box below. the box below. envelope provided.
.. Follow the simple recorded . Follow the simple instructions.
instructions.
Your telephone or internet vote authorizes the named proxies to vote your shares
in the same manner as if you marked, signed and returned the proxy card. If you
have submitted your proxy by telephone or the internet there is no need for you
to mail back your proxy.
CONTROL NUMBER FOR
TELEPHONE OR INTERNET VOTING
1-866-361-3802
CALL TOLL-FREE TO VOTE
DETACH PROXY CARD HERE IF YOU ARE NOT VOTING BY TELEPHONE OR INTERNET
--------------------------------------------------------------------------------
[x]
[ ] Votes must be indicated
(x) in Black or Blue ink.
This proxy when properly executed will be voted in the manner directed herein.
If no direction is made, this proxy will be voted FOR election of directors and
FOR Proposal 2.
1. Election of Directors FOR AGAINST ABSTAIN
FOR WITHHOLD
ALL [ ] FOR ALL [ ] *EXCEPTIONS [ ] 2. Approval of Auditors [ ] [ ] [ ]
Nominees: (01) Mark S. McAndrew, (02) George J. Records,
(03) Lamar C. Smith To change your address, please mark this box. [ ]
(INSTRUCTIONS: To withhold authority to vote for any individual nominee,
mark the "Exceptions" box and write that nominee's name in the space
provided below.)
*Exceptions ___________________________________________________________
S C A N L I N E
Please sign exactly as name appears hereon.
Joint owners should each sign. When signing as
attorney, executor, administrator, trustee or
guardian, please give full title as such.
Date Share Owner sign here Co-Owner sign here
---- --------------------- ------------------
Dividend Reinvestment: Torchmark maintains a Dividend Reinvestment Plan for all
holders of its common stock. Under the plan, shareholders may reinvest all or
part of their dividends in additional shares of common stock and may also make
periodic additional cash payments of up to $3,000 toward the purchase of
Torchmark stock. Participation is entirely voluntary. More information on the
plan can be obtained by calling 1-866-557-8699.
Direct Deposit of Dividends: Torchmark is now making direct deposit of cash
dividends available to its shareholders. To obtain information and materials for
participation in this service, please call 1-866-557-8699.
www.torchmarkcorp.com: Torchmark's web site, http://www.torchmarkcorp.com,
contains financial information about the company and information regarding our
insurance subsidiaries. The Company's Shareholder Rights Policy is also posted
on the web site.
TORCHMARK CORPORATION
Proxy/Direction Card for Annual Meeting on April 25, 2002
PROXY
This Proxy/Direction is solicited by the Board of Directors of The Company.
The undersigned hereby appoints C. B. Hudson and Larry M. Hutchison, jointly and
severally with full power of substitution, to vote all shares of common stock
which the undersigned holds of record and is entitled to vote at the Annual
Meeting of Shareholders to be held at the offices of the Company, 2001 Third
Avenue South, Birmingham, Alabama on the 25th day of April 2002 at 10:00 a.m.
(CDT), or any adjournment thereof. All shares votable by the undersigned
including shares held of record by agents or trustees for the undersigned as a
participant in the Dividend Reinvestment Plan (DRP), Torchmark Corporation
Savings and Investment Plan (TTP), Waddell & Reed Financial, Inc. 401-K and
Savings and Investment Plan (WR 401K), Liberty National Life Insurance Company
401K Plan (LNL 401K) and the Profit Sharing and Retirement Plan of Liberty
National Life Insurance Company (LNL PS&R) will be voted in the manner specified
and in the discretion of the persons named above or such agents or trustees on
such other matters as may properly come before the meeting.
(change of address/comments)
____________________________
____________________________ TORCHMARK CORPORATION
____________________________ P.O. BOX 11100
____________________________ NEW YORK, N.Y. 10203-00100
You are encouraged to specify your choices by marking the appropriate boxes, SEE
REVERSE SIDE, but you need not mark any boxes if you wish to vote in accordance
with the Board of Directors' recommendations. The Proxy Committee cannot vote
your shares unless you sign and return this card.