-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, QB6kH47jWG1BLE10Ox5MMV1cI26+VXP3rJGGbHA6kFykXc0+0S3i8ZRKB6jQdMJ3 sIxzUXm+twAXxgqXpO3ucg== 0000912057-95-001798.txt : 199507120000912057-95-001798.hdr.sgml : 19950711 ACCESSION NUMBER: 0000912057-95-001798 CONFORMED SUBMISSION TYPE: DEF 14A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19950512 FILED AS OF DATE: 19950328 SROS: NYSE SROS: PSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: UNUM CORP CENTRAL INDEX KEY: 0000795581 STANDARD INDUSTRIAL CLASSIFICATION: ACCIDENT & HEALTH INSURANCE [6321] IRS NUMBER: 010405657 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: DEF 14A SEC ACT: 1934 Act SEC FILE NUMBER: 001-09254 FILM NUMBER: 95523927 BUSINESS ADDRESS: STREET 1: 2211 CONGRESS ST P612 CITY: PORTLAND STATE: ME ZIP: 04122 BUSINESS PHONE: 207-770-4367 MAIL ADDRESS: STREET 1: 2211 CONGRESS STREET CITY: PORTLAND STATE: ME ZIP: 04122 DEF 14A 1 DEF 14A SCHEDULE 14A INFORMATION Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934 Filed by the Registrant / / Filed by a Party other than the Registrant /X/ 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 Section 240.14a-11(c) or Section 240.14a-12 UNUM Corporation - -------------------------------------------------------------------------------- (Name of Registrant as Specified In Its Charter) Merrill Corporation - -------------------------------------------------------------------------------- (Name of Person(s) Filing Proxy Statement, if other than the Registrant) Payment of Filing Fee (Check the appropriate box): /X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or Item 22(a)(2) of Schedule 14A. / / $500 per each party to the controversy pursuant to Exchange Act Rule 14a-6(i)(3). / / 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: ------------------------------------------------------------------------ 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: ------------------------------------------------------------------------ UNUM CORPORATION [LOGO] 2211 Congress Street Portland, Maine 04122
March 28, 1995 To Our Stockholders: You are invited to attend the 1995 Annual Meeting of Stockholders of UNUM Corporation. The meeting will be held on May 12, 1995, at 10:30 a.m. at the Portland Marriott, 200 Sable Oaks Drive, South Portland, Maine. The items to be considered at this meeting are detailed in this proxy statement. Also enclosed is a copy of UNUM Corporation's 1994 Annual Report, including consolidated financial statements. WHETHER OR NOT YOU PLAN ON ATTENDING THE ANNUAL MEETING, WE ASK THAT YOU COMPLETE THE ENCLOSED PROXY CARD AND RETURN IT IN THE ENVELOPE PROVIDED. PLEASE TAKE NOTE THAT IF YOU ARE PLANNING TO ATTEND THE ANNUAL MEETING, THERE IS A BOX TO CHECK ON THE PROXY CARD IN ORDER TO REQUEST AN ADMISSION TICKET. Thank you for your interest in and commitment to UNUM Corporation. We look forward to seeing you at the meeting. Sincerely, /S/ JAMES F. ORR III JAMES F. ORR III Chairman and Chief Executive Officer UNUM CORPORATION 2211 CONGRESS STREET NOTICE OF ANNUAL MEETING OF STOCKHOLDERS Notice is hereby given that the Annual Meeting of Stockholders of UNUM Corporation, a Delaware corporation, will be held at the Portland Marriott, 200 Sable Oaks Drive, South Portland, Maine, on May 12, 1995, at 10:30 a.m., local time, for the following purposes: 1. To elect four directors to serve for three-year terms expiring in 1998; 2. To ratify the appointment of Coopers & Lybrand L.L.P. ("Coopers & Lybrand") as the Corporation's independent auditors for the year 1995; and 3. To transact any other business that may properly come before the Annual Meeting. The close of business on March 14, 1995, has been fixed as the record date for determination of the stockholders entitled to notice of and to vote at the Annual Meeting. By order of the Board of Directors, /S/ KEVIN J. TIERNEY KEVIN J. TIERNEY SECRETARY YOUR VOTE IS IMPORTANT TO ENSURE THAT A MAJORITY OF THE STOCK IS REPRESENTED. PLEASE DATE, SIGN AND PROMPTLY RETURN THE ENCLOSED PROXY CARD IN THE ENVELOPE PROVIDED, WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING. March 28, 1995 Portland, Maine UNUM CORPORATION PROXY STATEMENT FOR ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON MAY 12, 1995 GENERAL INFORMATION This proxy statement concerns the Annual Meeting of Stockholders of UNUM Corporation, a Delaware corporation (the "Corporation" or "UNUM") to be held on May 12, 1995 (the "Annual Meeting"). The Board of Directors is soliciting your proxy for use at the meeting and at any adjournment of the meeting by asking you to date, sign and return the enclosed proxy card. For proxy cards properly dated, signed and returned, the shares will be voted at the meeting in accordance with each stockholder's directions. Please vote by marking the appropriate boxes on the enclosed proxy card. If the card is signed and returned without directions, the shares will be voted "FOR" the election of all directors as nominated, and "FOR" the ratification of Coopers & Lybrand L.L.P. ("Coopers & Lybrand") as the Corporation's independent auditors. If other matters properly come before the meeting, the shares will be voted in accordance with the best judgment of the persons named as proxies on the proxy card. Any shares not voted "FOR" a particular director as a result of a direction to withhold or a broker nonvote will not be counted in such director's favor. All matters to be acted on at the Annual Meeting other than the election of directors require the affirmative vote of a majority of the shares present at the meeting to constitute the action of the stockholders. In accordance with Delaware law, abstentions will, while broker nonvotes will not, be treated as present for this purpose. A broker nonvote is a proxy submitted by a broker in which the broker fails to vote on behalf of a client on a particular matter for lack of instruction when such instruction is required by the New York Stock Exchange. A proxy may be revoked by a stockholder at any time before its use by giving written notice of revocation to the Corporate Secretary of the Corporation, 2211 Congress Street, Portland, Maine 04122, by submitting a subsequent proxy, or by voting in person at the Annual Meeting. This proxy statement and the enclosed proxy card are being sent to stockholders beginning on March 28, 1995. The Corporation had 72,533,838 outstanding shares of Common Stock, par value $0.10 per share (the "Common Stock"), as of March 14, 1995. ITEM 1. ELECTION OF DIRECTORS The Board of Directors is divided into three classes. Generally, at each annual meeting, one class of directors, or approximately one-third of the total number of directors, is elected, and the term of that class is three years. As of the close of the Corporation's last Annual Meeting on May 13, 1994, there were four Class III directors, four Class I directors and four Class II directors, serving terms expiring in 1995, 1996 and 1997, respectively. On February 10, 1995, the Board of Directors voted to increase the number of directorships from 12 to 13 by creating a new directorship within Class III and elected George J. Mitchell to fill the vacancy, to serve until the Annual Meeting. The term of the Class III directors expires with this Annual Meeting. One Class III director, Kenneth S. Axelson, will be retiring with this Annual Meeting. In light of Mr. Axelson's retirement, the Board of Directors has voted to reduce the number of directorships to 12, with the reduction occurring with Class III, effective the day of the Annual Meeting. 2 The Board of Directors proposes the election of George J. Mitchell, Lawrence R. Pugh, Lois Dickson Rice and John W. Rowe as Class III directors, to hold office for a term of three years, expiring at the close of the Annual Meeting of Stockholders to be held in 1998 and until their successors are elected and qualify. Each nominee is currently serving as a member of the Board of Directors of the Corporation. If any nominee should become unable to serve, the persons named as proxies on the proxy card will vote for the person or persons the Board of Directors recommends, if any. The Board of Directors has no reason to believe that any of the named nominees is not available or would be unable to serve if elected. Set forth below is information about each nominee and continuing director, including age, position(s) held with the Corporation, principal occupation, business history for at least five years, and other directorships held. The terms of office for each of the remaining eight directors continue until the close of the Annual Meeting of Stockholders in the year shown along with each director's name.
DIRECTOR TERM NAME AGE SINCE POSITION(S) HELD EXPIRES - ------------------------------------------ ----- ------------- ---------------------------- ----------- James F. Orr III.......................... 52 1986 Chairman and Chief Executive 1996 Officer Gayle O. Averyt........................... 61 1993 Director 1997 Robert E. Dillon, Jr...................... 63 1990 Director 1996 Gwain H. Gillespie........................ 63 1991 Director 1997 Ronald E. Goldsberry...................... 52 1993 Director 1996 Donald W. Harward......................... 55 1990 Director 1996 George J. Mitchell........................ 61 1995 Director 1995 Cynthia A. Montgomery..................... 42 1990 Director 1997 James L. Moody, Jr........................ 63 1988 Director 1997 Lawrence R. Pugh.......................... 62 1988 Director 1995 Lois Dickson Rice......................... 62 1993 Director 1995 John W. Rowe.............................. 49 1988 Director 1995
3 NOMINEES FOR ELECTION FOR TERM EXPIRING IN 1998: GEORGE J. MITCHELL Special Counsel Verner, Liipfert, Bernhard, McPherson & Hand (Picture) Washington, D.C. George J. Mitchell joined the firm of Verner, Liipfert, Bernhard, McPherson & Hand as special counsel in January 1995. In addition, he serves as a special advisor to the President of the United States relative to economic initiatives in Ireland and serves as an advisor to James I. Wolfensohn, Inc., an investment banking firm. Previously, he served as a United States senator from Maine from 1980 to 1994 and additionally as Senate Majority Leader from 1989 to 1994. Senator Mitchell also serves as a director of The Walt Disney Company and Federal Express Corporation. LAWRENCE R. PUGH Chairman and Chief Executive Officer VF Corporation (Picture) Reading, Pennsylvania Lawrence R. Pugh is Chairman and Chief Executive Officer of VF Corporation, an apparel company in Pennsylvania, a post he has held since 1983. Mr. Pugh joined VF Corporation in 1980. He is also a director of The Black & Decker Corporation and Meridian Bancorp, Inc. LOIS DICKSON RICE Guest Scholar The Brookings Institution (Picture) Washington, D.C. Lois Dickson Rice is a guest scholar at The Brookings Institution, a post she has held since October 1991. From 1981 to 1991, Ms. Rice served as Senior Vice President of Government Affairs and a director of Control Data Corp. She also serves as a director of McGraw-Hill, Inc., International Multifoods Corporation, Shawmut National Corporation, Hartford Steam Boiler Inspection & Insurance Co. and Bell Atlantic--Washington.
4 JOHN W. ROWE President and Chief Executive Officer New England Electric System (Picture) Westborough, Massachusetts John W. Rowe is President, Chief Executive Officer and a director of New England Electric System ("NEES"), a post he has held since joining NEES in February 1989, and a director of certain subsidiaries of NEES including Massachusetts Electric Company, The Narragansett Electric Company and New England Power Company. Mr. Rowe is also a director of Bank of Boston Corporation and First National Bank of Boston. CONTINUING DIRECTORS: GAYLE O. AVERYT Retired Executive (Picture) Columbia, South Carolina Gayle O. Averyt served as Chairman of Colonial Companies, Inc. from August 1989 to December 1993, and additionally, served as Chairman of Colonial Life & Accident Insurance Company from 1970 to December 1993. Mr. Averyt also serves as a director of NationsBank, National Association (Carolinas), a wholly-owned subsidiary of NationsBank Corporation. ROBERT E. DILLON, JR. Executive Vice President Sony Electronics Inc. (Picture) Park Ridge, New Jersey Robert E. Dillon, Jr. is Executive Vice President of Sony Electronics Inc. ("Sony"), a New Jersey-based electronics firm, a post he has held since 1981. Mr. Dillon joined Sony in 1973.
5 GWAIN H. GILLESPIE Retired Executive (Picture) Sunapee, New Hampshire Gwain H. Gillespie served as Vice Chairman of the Corporation from May 1991 to October 1992. He served as Executive Vice President, Finance and Administration upon joining UNUM in September 1988 until May 1991. RONALD E. GOLDSBERRY Vice President and General Manager Customer Service Division Ford Motor Company (Picture) Detroit, Michigan Ronald E. Goldsberry is Vice President and General Manager of the Customer Service Division at Ford Motor Company ("Ford Motor"), a post he has held since February 1994. Previously, Dr. Goldsberry served as General Sales and Marketing Manager for the Parts and Service Division at Ford Motor from October 1991 to February 1994, Executive Director for Sales and Service Strategies of Sales Operations at Ford Motor from May 1990 to October 1991, and General Manager for the Plastics, Paint and Vinyl Division, and President of Parker Chemical Company, a subsidiary of Ford Motor, from January 1987 to May 1990. He is also Chairman of UNC Ventures, Inc., a venture capital firm. DONALD W. HARWARD President Bates College (Picture) Lewiston, Maine Donald W. Harward is President of Bates College in Maine, a post he has held since October 1989.
6 CYNTHIA A. MONTGOMERY Professor of Competition and Strategy Harvard University Graduate School of Business Administration (Picture) Boston, Massachusetts Cynthia A. Montgomery is a professor of Competition and Strategy at Harvard University Graduate School of Business Administration, a post she has held since 1989. She also serves as a director of certain Merrill Lynch funds. JAMES L. MOODY, JR. Chairman Hannaford Bros. Co. (Picture) Scarborough, Maine James L. Moody, Jr. is the Chairman and former Chief Executive Officer of Hannaford Bros. Co., a Maine-based food retailing company. Mr. Moody joined Hannaford Bros. Co. in 1959. He is also a director of the Penobscot Shoe Company, IDEXX Laboratories, Inc., Sobeys Inc., Hills Stores Company and several funds of the Colonial Group of Mutual Funds. JAMES F. ORR III Chairman and Chief Executive Officer UNUM Corporation (Picture) Portland, Maine James F. Orr III was elected Chairman of the Corporation in February 1988. Additionally, he has served as President and Chief Executive Officer since September 1987. Mr. Orr joined the Corporation in 1986. Mr. Orr also serves as a director of Nashua Corporation.
7 SECURITY OWNERSHIP (1) The following table sets forth information regarding the beneficial ownership of the Common Stock of the Corporation, as of March 10, 1995, by each director, nominee and named executive officer, and by all directors, nominees and executive officers of the Corporation as a group. The total share holdings reported for all directors, nominees and executive officers as a group total 2.0 percent of the outstanding shares on March 10, 1995, as calculated pursuant to the Commission's rules. All other amounts reported total less than 1 percent of the outstanding shares on such date.
NUMBER OF SHARES BENEFICIALLY OWNED SUBJECT TO OPTIONS SHARES EXERCISABLE TOTAL SHARES DIRECTORS, NOMINEES AND BENEFICIALLY AS OF MAY 31, BENEFICIALLY NAMED EXECUTIVE OFFICERS OWNED 1995 OWNED - ------------------------------------------------------------- ------------ ----------------- ----------------- James F. Orr III............................................. 135,062(2) 199,600 334,662(2) Gayle O. Averyt.............................................. 539,036(3) 0 539,036(3) Kenneth S. Axelson........................................... 20,058 6,000 26,058 Robert E. Dillon, Jr......................................... 2,408 6,000 8,408 Gwain H. Gillespie........................................... 27,327(4) 88,000 115,327(4) Ronald E. Goldsberry......................................... 900 3,000 3,900 Donald W. Harward............................................ 1,069(5) 4,700 5,769(5) George J. Mitchell........................................... 200 0 200 Cynthia A. Montgomery........................................ 1,000(6) 5,000 6,000(6) James L. Moody, Jr........................................... 4,000 6,000 10,000 Lawrence R. Pugh............................................. 2,000 6,000 8,000 Lois Dickson Rice............................................ 300 3,000 3,300 John W. Rowe................................................. 1,000 3,000 4,000 W. Francis Brennan........................................... 21,863 33,500 55,363 Stephen B. Center............................................ 50,608 38,350 88,958 Kevin P. O'Connell*.......................................... 15,533 20,600 36,133 Robert E. Staton*............................................ 11,702 26,900 38,602 All directors, nominees and executive officers as a group (22 persons including the above named)*........................ 910,979(7) 543,800 1,454,779(7) - ------------ (1) The number of shares reflected which, under applicable regulations of the Securities and Exchange Commission (the "Commission"), are deemed to be beneficially owned. Unless otherwise indicated, the person indicated holds sole voting and dispositive power. (2) Includes 10,276 shares held by Mr. Orr's spouse and children. (3) Includes 403,450 shares held in trust for the benefit of family members under several trusts pursuant to which Mr. Averyt, as trustee, has sole or shared voting or dispositive power. Mr. Averyt disclaims beneficial ownership of 312,785 of these shares held in trust. (4) Includes 22,237 shares held jointly with or by Mr. Gillespie's spouse.
8 (5) Includes 1,069 shares held jointly with Dr. Harward's spouse. (6) Includes 1,000 shares held jointly with Ms. Montgomery's spouse. (7) Includes 393,455 shares held in the name of a spouse, children or certain other relatives sharing the same home as the director or executive officer, or held by the director or executive officer, or the spouse of the director or executive officer, as a trustee or as a custodian for family members. * Denotes or includes officers of a subsidiary who are not officers of the Corporation but are considered "executive officers" of the Corporation under rules of the Commission.
Indicated below are the number of shares beneficially owned as of December 31, 1994, by holders of more than five percent of the Common Stock as reported to the Commission by such holders on Form 13G, and the percentage of the total shares of the Common Stock outstanding which such holdings represented on such date. Janus Capital Corporation, 100 Fillmore Street, Suite 300, Denver, Colorado 80206, reported beneficial ownership of 4,262,050 shares (5.9 percent), including shared dispositive and voting power over all such shares. BOARD OF DIRECTORS AND COMMITTEES The Board of Directors held 11 meetings during 1994. Average attendance at Corporation board and committee meetings in 1994 was 97 percent. Each director attended more than 75 percent of the board and committee meetings of which he or she was a member. The Board of Directors has four standing committees, responsible for assisting the full Corporation board in the discharge of its responsibilities. Each committee member is appointed annually and serves until a successor is named. All committees report their deliberations and recommendations to the full Corporation board. The membership and principal responsibilities of each committee are described below. The Audit Committee, which held six meetings in 1994, consists of four directors: Mr. Rowe, who is Chairperson, Mr. Axelson, Mr. Moody and Ms. Rice. This committee is responsible for reviewing the activities of the Corporation's independent auditors and the internal audit department, with particular attention to corporate accounting, reporting practices of the Corporation, the quality and integrity of its financial statements and the independence of the outside auditors. Each year it is responsible for recommending to the full Corporation board the appointment of independent auditors. The Compensation Committee, which held six meetings in 1994, consists of three directors: Mr. Pugh, who is Chairperson, Mr. Dillon and Dr. Harward. This committee is responsible for monitoring compensation practices to ensure that compensation is being designed and administered in a manner that is consistent with the Corporation's compensation principles, objectives and strategy. The Board Governance Committee, which held three meetings in 1994, consists of three directors: Mr. Moody, who is Chairperson, Mr. Axelson and Mr. Orr. This committee is responsible for recommending Corporation board membership candidates and compensation for Corporation board and committee membership to the full Corporation board. The committee is also responsible for determining committee composition and conducting periodic evaluations of the Corporation board's performance and of the contribution of individual Corporation board members. The Investment Committee, which held three meetings in 1994, consists of four directors: Ms. Montgomery, who is Chairperson, Mr. Averyt, Mr. Gillespie and Dr. Goldsberry. This committee is 9 responsible for reviewing investment policy and related investment strategy, and for monitoring the performance of the investment results of the Corporation and its subsidiaries. In particular, the committee is responsible for reviewing risk management practices, non-performing assets and related reserving policy. The By-Laws of the Corporation establish an advance notice procedure with regard to the nomination, other than by or at the direction of the Corporation board, of candidates for election as directors. To be timely, a stockholder's notice must be delivered to, or mailed and received at, the principal executive offices of the Corporation not less than 60 nor more than 90 days prior to the meeting at which directors are to be elected, unless less than 75 days' notice of the date of the meeting is given or made to stockholders, in which case notice by the stockholder must be received not later than the close of business on the 15th day following the day on which such notice of the date of the meeting was mailed. A stockholder's notice to the Secretary shall set forth (a) as to each nominee for director (i) the name, age, business address and residence address of the person; (ii) the principal occupation or employment of the person; (iii) the class and number of shares of the Corporation that are beneficially owned by the person; and (iv) any other information relating to the person that is required to be disclosed in solicitations of proxies for election of directors pursuant to Rule 14(a) under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and any other applicable laws or rules or regulations of any governmental authority or of any national securities exchange or similar body overseeing any trading market on which shares of the Corporation are traded, and (b) as to the stockholder giving the notice (i) the name and record address of the stockholder and (ii) the class and number of shares of the Corporation which are beneficially owned by the stockholder. COMPENSATION OF DIRECTORS Non-officer directors are paid an annual retainer of $27,500 by the Corporation. Directors who chair a committee of the UNUM board are paid an additional annual retainer of $4,000. Directors are also paid an attendance fee of $1,000 for each board meeting attended, and an additional $1,000 for each committee meeting attended. Directors may defer their compensation pursuant to a nonqualified Deferred Compensation Plan. Directors are also reimbursed for out-of-pocket expenses relating to attendance at meetings. In addition, pursuant to the Corporation's 1990 Long-Term Stock Incentive Plan, each continuing non-employee director receives an annual automatic grant of an option to purchase 1,000 shares of Common Stock, and each newly elected non-employee director receives an automatic grant of an option to purchase 2,000 shares of Common Stock. Upon termination of service as a director, each non-officer director who has served for at least one full three-year term will receive an annual consulting fee equal to the director's final year retainer for as many years as the director has served, or until his or her earlier death or association with a competitor of the Corporation. Mr. Averyt served as an employee of Colonial Life & Accident Insurance Company during 1994, for which he was paid a salary of $15,000 and fringe benefits of $22,169. He will continue as a salaried employee during 1995. THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR ELECTION OF THE ABOVE NOMINEES. 10 ITEM 2. RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS The Board of Directors, on the recommendation of its Audit Committee, has appointed Coopers & Lybrand as independent auditors for the year 1995. Although not required, the board has determined that it is desirable to request ratification of this appointment by the stockholders of the Corporation. If ratification is not obtained, the board will reconsider the appointment. The Corporation has been advised that representatives of Coopers & Lybrand will be present at the Annual Meeting. They will be afforded the opportunity to make a statement, should they desire to do so, and to respond to appropriate questions. Coopers & Lybrand served as the Corporation's independent auditors for 1993 and 1994, following the Corporation's decision on August 2, 1993, not to reappoint Ernst & Young L.L.P. ("Ernst & Young"). In connection with the audit of the fiscal year ended December 31, 1992, and for the interim period dating from January 1, 1993 until August 2, 1993, there were no disagreements between Ernst & Young and the Corporation on any matter of accounting principles or practices, financial statements disclosure, or auditing scope or procedure, that, if not resolved to the satisfaction of Ernst & Young, would have resulted in reference or disclosure in Ernst & Young's reports. Ernst & Young's report for the fiscal year ended December 31, 1992 contained no adverse opinions, no disclaimers of opinion and no qualifications or modifications of opinion as to uncertainty, audit scope, or accounting principles. The change of independent auditors for 1993 was recommended by the Corporation's Audit Committee and approved by the board. THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR THIS PROPOSAL. ITEM 3. OTHER MATTERS The Board of Directors knows of no other matters to be brought before the meeting. If other matters are presented, it is intended that the persons named as proxies on the proxy card will have discretionary authority to vote on such matters in accordance with their best judgment. 11 BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION The three-member Compensation Committee of the Board of Directors (the "Committee") generally makes decisions on compensation for the Corporation's executives. Each member of the Committee is a non-employee director. The full board reviews the Committee's decisions relating to the compensation of the Corporation's Chief Executive Officer, except in the case of decisions about awards under stock-based compensation plans, which the Committee must solely make in order for grants or awards under such plans to satisfy Exchange Act Rule 16b-3. The Corporation has designed its compensation philosophy, "Pay for Results," in order to reward all UNUM employees, including executive officers, for making progress towards and attaining the Corporation's goals. In the case of executive officers, this philosophy aims to provide compensation which heavily depends on performance and properly balances long- and short-term objectives. During 1995, the Committee will conduct a reassessment of the Corporation's executive compensation programs in light of the evolution of the Corporation's businesses and competitive environment, as well as changes in the market for executive talent. Effective in 1994, Congress enacted a limitation on the deductibility for federal income tax purposes of compensation in excess of one million dollars payable to the chief executive officer and the next four most highly compensated officers of the Corporation. Although the Committee will attempt to maximize the deductibility of executive compensation paid by the Corporation under this legislation, the Committee intends to make compensation determinations which it believes to be in the best interests of the shareholders, whether or not such compensation is fully deductible. There are three components of executive compensation: base salary, contingent yearly cash payments under annual incentive plans, and long-term incentives (awards of stock options and shares of performance-based restricted stock). In the first quarter of each year, the Committee: 1) sets an annual base salary for each executive; 2) sets threshold, target and maximum payment amounts under the annual incentive plans for the current year; 3) approves, if appropriate, annual incentive plan payments for the prior year and performance-based restricted stock payouts for the three-year cycle ending in the prior year; and 4) approves awards of stock options and performance-based restricted stock. By making all of these determinations at the same time of the year, the Committee is able to consider, in light of the audited financial results from the prior year which become available at that time, all elements of compensation as a whole and to communicate a consistent message to all employees. While the performance graph which appears immediately after this report compares the Corporation's financial performance to that of the companies included in the Dow Jones Life Insurance Industry Index, the Committee looks more broadly when making compensation determinations, since the Corporation's market for executive managers is not limited to the life insurance industry. The Corporation sets salaries which are within ranges, the mid-points of which are at or below the median salaries of a representative group of 76 companies, consisting of major insurance, financial services and industrial firms. The 1994 salary shown for the Chief Executive Officer in the Summary Compensation Table reflects a 3.3 percent rate increase over 1993. The Committee made this determination based on the Corporation having exceeded its earnings per share target for 1993, and the performance by the Chief Executive Officer under the personal leadership measures of his individual 1993 performance plan. Annual incentive plans and long-term compensation are designed so that over time, the total compensation paid to executive officers will be above median compensation for companies in the 12 Corporation's chosen representative group in the event that the Corporation attains its internal financial targets, and considerably above the median in the event that the Corporation attains the maximum financial measures under its compensation plans. Conversely, total compensation for the Corporation's executive officers will be lower than that of companies in the representative group in the event that the Corporation does not meet its goals. The annual incentive component of compensation consists of a percentage of base salary which is a function of the officer's level within the organization. The remaining targeted compensation is paid in awards of stock options and performance-based restricted stock, the value of which is estimated using a Black-Scholes model. It is intended that the targeted value of stock-based compensation be paid 40 percent in restricted stock and 60 percent in stock options. Annual incentive plan awards for the Chief Executive Officer and Executive Vice Presidents are based entirely on overall corporate performance, giving the greatest weight to attainment of annual earnings per share targets, but also considering progress against the Corporation's long-term strategic goals. For other executive officers, both the financial and strategic component of the determination include specific goals of the executive's affiliate or business unit. During 1993, the Corporation adopted stock ownership guidelines which provide that over time the Chief Executive Officer, each Executive Vice President, and each Senior Vice President-level officer should aim to accumulate UNUM stock valued at five-, three-, and two-times salary, respectively. The Committee does not take into consideration the level of an executive's stock ownership or accumulated stock options in making determinations concerning the size of stock-based awards. The Corporation grants non-qualified stock options at fair market value. These options are market focused, and both company performance and external factors including the economy, interest rates, and industry cycles affect their value. Stock options basically reflect increased shareholder value, however, and have no value to optionees unless the Corporation's stock price increases. The value to executives of the Corporation's other form of long-term incentives, shares of performance-based restricted stock, also reflects stock price. However, executives only receive ownership rights to restricted stock upon the Corporation's attainment of specific financial targets over a three-year period. The financial target for restricted stock grants in 1994 (with the exception of a single grant to Mr. Center, which does not include performance criteria) is based on a 3-year average return-on-equity, based on the Corporation's internally-calculated benchmarks for achieving its long-term Shareholder Value Goal. The Committee determined not to award any 1994 annual incentive payout for the Chief Executive Officer and the other named officers, with the exception of Mr. Staton, because the earnings per share achieved in 1994 by the Corporation and its principal subsidiary, UNUM Life Insurance Company of America, were below the thresholds for a payout. Mr. Staton received a payout on the portion of his incentive plan relating to the performance of Colonial Life & Accident Insurance Company based on that company's having achieved its business plan for 1994. For the three years ending in 1994, however, the Corporation did exceed the return-on-equity target allowing for a full restricted stock payout for this performance period. Therefore, all shares of the 1992-94 restricted stock grant were paid out to the named executives, including 9,500 shares in the case of the Chief Executive Officer. For purposes of this determination, the Committee exercised its discretion to adjust the calculation of the return earned by the Corporation to exclude unusual items which were not, in the Committee's view, representative of long-term performance. In particular, the charges recognized in 1994 in relation to the Corporation's non-cancellable individual disability business were not included in the return-on-equity calculation for that year. The Corporation's restricted stock program is designed to encourage the creation of long-term shareholder 13 value. Therefore, the Committee determined that it would be inequitable and counter to the Corporation's compensation philosophy to reduce compensation under this program due to an action which subordinated short-term results to the long-term strategic positioning of the Corporation's business. As illustrated on the chart below, despite the recent decline in stock price, the Corporation's shareholders have benefited from management's actions through a total return over the past five years which exceeds that of the Corporation's peers. Robert E. Dillon, Jr. Donald W. Harward Lawrence R. Pugh PERFORMANCE GRAPH The graph below compares the cumulative total stockholder return on the Common Stock of the Corporation for the last five fiscal years with the cumulative total return on the S&P 500 and the Dow Jones Life Insurance Industry Index over the same period (assuming the investment of $100 in the Corporation's Common Stock, the S&P 500 and the Dow Jones Life Insurance Industry Index on December 31, 1989, and the reinvestment of all dividends). COMPARISION OF CUMULATIVE TOTAL RETURN UNUM, the S&P 500, and the Dow Jones Life Insurance Industry Index ("Peer Index") (assumes $100 invested at 12/31/89) EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
UNUM S&P 500 PEER INDEX 1989 100 100 100 1990 99 97 85 1991 174 126 127 1992 232 136 166 1993 233 150 165 1994 171 152 148
14 EXECUTIVE COMPENSATION The following Summary Compensation Table shows compensation paid for the fiscal years 1994, 1993 and 1992 by the Corporation, UNUM Life Insurance Company of America ("UNUM America") Colonial Companies, Inc. or Colonial Life & Accident Insurance Company ("Colonial"), wholly- owned subsidiaries of the Corporation, to the Chief Executive Officer and the other four most highly compensated executive officers of the Corporation. SUMMARY COMPENSATION TABLE
LONG TERM COMPENSATION AWARDS(2) -------------------------- ANNUAL COMPENSATION NUMBER OF OTHER -------------------- RESTRICTED SECURITIES --------------- NAME AND INCENTIVE STOCK UNDERLYING ALL OTHER PRINCIPAL POSITION YEAR SALARY PAYMENT(1) AWARD(3) OPTIONS COMPENSATION(4) - ------------------------------ ---- -------- ---------- ------------- ---------- --------------- James F. Orr III.............. 1994 $626,154 $ 0 $388,125 31,500 $24,238 Chairman and CEO 1993 $606,154 $454,600 $390,500 30,000 $27,439 1992 $603,462 $543,100 $350,911 38,100 $27,276 Stephen B. Center............. 1994 $353,308 $ 0 $596,150 11,650 $ 6,000 Executive Vice President 1993 $341,692 $212,300 $151,250 11,500 $ 8,994 1992 $338,077 $202,800 $140,364 15,200 $ 8,728 W. Francis Brennan............ 1994 $297,500 $ 0 $129,375 10,500 $ 6,000 Executive Vice President 1993 $286,077 $178,200 $129,250 9,900 $ 8,994 1992 $283,731 $170,200 $121,895 13,100 $ 8,728 Kevin P. O'Connell............ 1994 $257,596 $ 0 $ 75,038 6,000 $ 6,000 Senior Vice President 1993 $249,558 $120,600 $ 77,000 5,900 $ 8,994 UNUM America 1992 $243,693 $127,900 $ 81,264 8,700 $ 8,728 Robert E. Staton.............. 1994 $210,012 $ 33,077 $ 59,513 4,700 $17,537 Chairman 1993 $190,008 $ 73,153 $ 82,294 6,000 $17,414 Colonial - ------------ (1) Cash incentive payments for 1994, 1993 and 1992 performance have been listed in year earned, but were actually paid in the following fiscal year. (2) Awards listed were granted pursuant to the Corporation's 1990 Long-Term Stock Incentive Plan. (3) Except as noted below, the restrictions may lapse on from 50 percent to 100 percent of the shares represented by the Restricted Stock Awards shown for each named executive, provided that the Corporation attains targeted three-year financial goals and that the executive remains in the Corpora- tion's employ as provided in the 1990 Long-Term Stock Incentive Plan. No shares will be paid out if the Corporation fails to attain the threshold financial measure established by the Compensation Committee. In the case of Mr. Center, restrictions on awards totaling $451,250 of the total awards shown will lapse on January 6, 1998 provided that Mr. Center remains in the Corporation's employ. In the case of Mr. Brennan, the 1994 award shown was cancelled upon his December 31, 1994 retirement as an employee. The aggregate number and market value of shares of restricted stock held by the five named
15 executives as of December 31, 1994 were as follows: Mr. Orr (24,100, $914,294), Mr. Center (19,350, $734,091), Mr. Brennan (5,650, $214,347), Mr. O'Connell (5,050, $191,584) and Mr. Staton (2,575, $97,689). (4) The stated amounts are the Corporation's matching contributions to the UNUM Employees Retirement Savings Plan and Trust or the Colonial Company's, Inc. Security Saver Plan and, in the case of Mr. Orr, insurance premiums paid by the Corporation with respect to term life insurance in the amounts of $18,238, $18,445 and $18,548 during 1994, 1993 and 1992, respectively; and in the case of Mr. Staton, insurance premiums paid by Colonial with respect to term life insurance in the amount of $12,917 during each year.
STOCK OPTION GRANTS IN FISCAL 1994
NUMBER OF SECURITIES % OF TOTAL OPTIONS POTENTIAL REALIZED VALUE UNDERLYING GRANTED TO AT EXPIRATION(2) OPTIONS EMPLOYEES IN EXERCISE EXPIRATION --------------------------------- NAME GRANTED(1) FISCAL YEAR PRICE DATE 0%($) 5%($) 10%($) - ------------------------- ---------- ------------------- ---------- ---------- ------ ---------- ---------- James F. Orr III......... 31,500 3.56% $ 51.31 2/11/04 $0 $1,016,519 $2,575,967 Stephen B. Center........ 11,650 1.32% $ 51.31 2/11/04 $0 $ 375,951 $ 952,699 W. Francis Brennan....... 10,500 1.19% $ 51.31 2/11/04 $0 $ 338,840 $ 858,656 Kevin P. O'Connell....... 6,000 0.68% $ 51.31 2/11/04 $0 $ 193,623 $ 490,660 Robert E. Staton......... 4,700 0.53% $ 51.31 2/11/04 $0 $ 151,671 $ 384,351 - ------------ (1) Options were granted on February 11, 1994, based on the fair market value on that date and became fully exercisable on February 11, 1995. Each optioned share was granted in tandem with a limited stock appreciation right entitling the optionee to receive the cash value of the option in the event of a change of control of the Corporation. (2) Potential realizable value is based on an assumption that the stock price of the Common Stock appreciates at the annual rate shown (compounded annually) from the date of grant until the end of the 10-year term. These numbers are calculated based on the requirements promulgated by the Commission and do not reflect the Corporation's estimate of future stock price growth.
16 AGGREGATED OPTION EXERCISES IN FISCAL 1994 AND FISCAL YEAR-END VALUES
NUMBER OF SECURITIES VALUES OF UNEXERCISED SHARES UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS ACQUIRED OPTIONS AT FISCAL YEAR-END AT FISCAL YEAR-END(1) ON EXERCISE VALUE -------------------------- ------------------------------- NAME OF OPTIONS REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE - ---------------------------------- ------------- ------------- ----------- ------------- ------------ ----------------- James F. Orr III.................. 0 $ 0 168,100 31,500 $ 1,469,616 $ 0 Stephen B. Center................. 0 $ 0 26,700 11,650 $ 18,050 $ 0 W. Francis Brennan................ 0 $ 0 23,000 10,500 $ 15,556 $ 0 Kevin P. O'Connell................ 0 $ 0 14,600 6,000 $ 10,331 $ 0 Robert E. Staton.................. 0 $ 0 22,200 4,700 $ 193,534 $ 0 - ------------ (1) Potential unrealized value is (i) the fair market value at December 31, 1994 ($37.9375 per share) less the option exercise price times (ii) the number of shares acquired on exercise of options.
OTHER AGREEMENTS AND TRANSACTIONS The Corporation has entered into severance agreements (the "UNUM Severance Agreements") with certain officers including Messrs. Orr, Center, Brennan and O'Connell, providing for payments and other benefits to the officer if, within two years after a Change in Control of the Corporation, as defined in the UNUM Severance Agreements, his or her employment is terminated (a) involuntarily other than for willful and continued failure by the officer to substantially perform his or her duties or willful conduct which is demonstrably and materially injurious to the employer; or (b) voluntarily by the officer, if for Good Reason as defined in the UNUM Severance Agreements. Under the UNUM Severance Agreements, an officer whose employment so terminates will receive, in addition to accrued salary and pro-rated incentive compensation, (1) a lump sum payment equal to three times the sum of his or her salary in effect at termination or immediately prior to the Change in Control, whichever is greater, plus three times the average of the annual incentive compensation awards received by the officer during the preceding three years; (2) a lump sum payment equal to the present value of the reduction in retirement payments resulting from the termination, assuming employment had continued for three additional years; and (3) continuation of life, disability, and accident and health insurance benefits for a maximum of three years, except to the extent that equivalent benefits are provided by a subsequent employer. In the event of a Potential Change in Control, as defined in the UNUM Severance Agreements, the Corporation is obligated to fund a trust in an amount sufficient to provide for all cash payments under such agreements. Colonial Companies, Inc. has entered into a severance agreement with Mr. Staton (the "Colonial Severance Agreement") providing for payments and other benefits to such officer if, within two years of a Change in Control of Colonial Companies, Inc., as defined in the Colonial Severance Agreement, his employment is terminated as a result of actual or constructive discharge for any reason or no reason (other than for Cause as defined in the Colonial Severance Agreement). Under the Colonial Severance Agreement, if Mr. Staton's employment were so terminated, he would receive a payment equal to the sum of (1) the amounts paid to him (in base salary and short-term incentive compensation) during the two full calendar years prior to the Change in Control and (2) the excise tax assessed against him under Section 4999 of the Internal Revenue Code of 1986, as amended (the "Code"). 17 During 1994, UNUM America paid $282,826 in fees for reinsurance pool management services to ERG Management Corporation, a corporation of which a majority stockholder is Thomas G. Brown, an executive officer of the Corporation. PENSION PLAN The following table illustrates the combined estimated annual benefits payable under the UNUM Employees Pension Plan and Trust (the "UNUM Pension Plan"), the Supplemental Retirement Plan (the "UNUM Supplemental Plan") and the Supplemental Executive Retirement Plan (the "UNUM SERP") upon normal retirement of participants with varying Final Average Earnings and years of credited service. The amounts are calculated on the basis of payments for the life of a participant who is 65 years of age. As of December 31, 1994, Messrs. Orr, Center and O'Connell had 8, 32 and 26 whole years of credited service. If each of the above were to continue their employment until age 65, their respective years of credited service would be 22, 41 and 43 for purposes of computing benefits. Mr. Brennan retired as an employee of the Corporation on December 31, 1994 at the age of 58. Under an agreement entered into in connection with his retirement, Mr. Brennan will receive an additional retirement benefit equating to the additional amount to which he would have been entitled had he attained the age of 60 at the time of his retirement.
ESTIMATED ANNUAL BENEFITS BY YEARS OF CREDITED SERVICE FINAL AVERAGE ---------------------------------------------------------------------------------------------- EARNINGS 10 15 20 25 30 35 40 45 ---------------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- $ 200,000 .................. $ 37,100 $ 60,700 $ 85,700 $ 92,800 $ 102,800 $ 112,800 $ 122,800 $ 132,800 300,000 .................. 60,700 98,200 135,700 142,800 157,800 172,800 187,800 202,800 400,000 .................. 85,700 135,700 185,700 192,800 212,800 232,800 252,800 272,800 500,000 .................. 110,700 173,200 235,700 242,800 267,800 292,800 317,800 342,800 600,000 .................. 135,700 210,700 285,700 292,800 322,800 352,800 382,800 412,800 700,000 .................. 160,700 248,200 335,700 342,800 377,800 412,800 447,800 482,800 800,000 .................. 185,700 285,700 385,700 392,800 432,800 472,800 512,800 552,800 900,000 .................. 210,700 323,200 435,700 442,800 487,800 532,800 577,800 622,800 1,000,000 .................. 235,700 360,700 485,700 492,800 542,800 592,800 642,800 692,800 1,100,000 .................. 260,700 398,200 535,700 542,800 597,800 652,800 707,800 762,800 1,200,000 .................. 285,700 435,700 585,700 592,800 652,800 712,800 772,800 832,800
Under the UNUM Pension Plan, retirement benefits are determined according to a formula based upon the number of years of credited service and the Final Average Earnings, minus 50 percent of the participant's Primary Social Security Amount. Final Average Earnings are defined as the average of basic earnings plus incentives for the five consecutive years in which earnings were the highest within the last 10 years of credited service. The Primary Social Security Amount is defined as the monthly benefit amount available to the participant as of the normal retirement date under the provisions of Title II of the Social Security Act in effect at the time of termination of employment. Accrued benefits are 100 percent vested after five years of service. The UNUM Supplemental Plan provides benefits equal to the difference between what the UNUM Pension Plan can pay per the maximums imposed by Sections 401(a)(17) and 415 of the Code, and what the UNUM Pension Plan would otherwise have paid pursuant to the benefit formula had these maximums not existed. All participants in the UNUM Pension Plan who retire or terminate after January 1, 1983 and are affected by the maximums are eligible to participate in the UNUM Supplemental Plan, including Messrs. Orr, Brennan, Center and O'Connell. 18 The UNUM SERP provides benefits for certain executives, including Messrs. Orr, Brennan, Center and O'Connell, who have been designated to participate by the Corporation's board. The benefits equal 2.5 percent of the participant's Final Average Earnings for all years of credited service, up to a maximum of 20 years, less the sum of the participant's Primary Social Security Amount, benefits payable from the UNUM Supplemental Plan, and benefits payable from the UNUM Pension Plan. The following table illustrates the combined estimated annual benefits payable under the Colonial Life Pension Plan (the "Colonial Pension Plan") and the Colonial Life Supplemental Executive Retirement Plan (the "Colonial Supplemental Plan") for Mr. Staton with final average earnings as described below upon normal retirement under the plans. Amounts shown are straight life annuity amounts and are not reduced for Social Security benefits to be paid to Mr. Staton. As of December 31, 1994, Mr. Staton had 10 whole years of credited service. If he were to continue his employment until normal retirement, his years of credited service would be 27 for purposes of computing benefits.
ESTIMATED ANNUAL BENEFITS BY YEARS OF CREDITED SERVICE FINAL AVERAGE -------------------------------------------------------- EARNINGS 10 15 20 25 30 - --------------------------------------------- --------- --------- ---------- ---------- ---------- $200,000..................................... $ 31,700 $ 47,600 $ 86,100 $ 104,000 $ 114,200 300,000..................................... 31,700 47,600 131,100 156,000 174,200
Under the Colonial Pension Plan, retirement benefits payable are determined according to a formula based upon the number of years of credited service and the final average earnings over the last 10 consecutive years of employment. Included in earnings is salary, certain bonuses and the amount of the employee's contribution to Colonial's 401(k) plan (the sum of which may not exceed $150,000 for 1994) under limitations of Section 401 of the Code. Accrued benefits are 100 percent vested after five years of service. The Colonial Supplemental Plan benefits are determined according to a formula based upon the number of years of credited service and the final average earnings over the last five consecutive years of employment. The benefit is reduced by any benefit payable from the Colonial Pension Plan. The Colonial Supplemental Plan provides benefits for executives as designated by the Colonial Board of Directors, including Mr. Staton. The Colonial Supplemental Plan is 100 percent vested to participants who meet certain requirements. If Mr. Staton were to continue his employment until normal retirement age, he will have met such requirements. OFFICER AND DIRECTOR SECURITIES REPORTS Rule 14a-101 under the Exchange Act requires that late filings of beneficial statements be disclosed within a company's proxy statement. Based solely on its review of the copies of beneficial ownership statements received by it, or written representations from certain reporting persons that no beneficial ownership statements were required for those persons, the Corporation believes that all applicable beneficial ownership statements under Section 16(a) of the Exchange Act that were required to be filed by executive officers and directors of the Corporation in their personal capacities were filed in a timely manner, except with regard to the following exempt transactions. Rodney N. Hook, an executive officer of the Corporation, omitted disclosure of a 1994 grant of restricted stock and employee stock options under the Corporation's 1990 Long-Term Stock Incentive Plan. Mr. Averyt, a director, omitted disclosure in 1993 in 19 two instances of automatic distributions of shares (as to which he disclaims beneficial ownership) from family trusts of which he was a trustee and omitted disclosure of an inter-family gift of shares in 1994. Both reporting persons have since reported these exempt transactions. PROPOSALS OF STOCKHOLDERS In order for proposals of stockholders to be included in the proxy materials for presentation at the 1996 Annual Meeting of Stockholders, such proposals must be received by the Corporate Secretary no later than November 28, 1995. ADDITIONAL INFORMATION The Corporation will bear the cost of soliciting proxies from its stockholders and will enlist the help of banks and brokerage houses in soliciting proxies from their customers. The Corporation will reimburse these institutions for out-of-pocket expenses. In addition to the use of the mails, proxies may be solicited personally or by telephone by the directors, officers and employees of the Corporation or its subsidiaries. The Corporation has engaged Georgeson & Company Inc. to assist in soliciting proxies for a fee of approximately $7,500 plus reasonable out-of-pocket expenses. /S/ KEVIN J. TIERNEY KEVIN J. TIERNEY SECRETARY 20 /X/ PLEASE MARK YOUR VOTES AS IN THIS EXAMPLE. 0606 THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR PROPOSALS 1 AND 2. IF OTHER MATTERS PROPERLY COME BEFORE THE MEETING, THE PROXIES WILL VOTE IN ACCORDANCE WITH THEIR BEST JUDGMENT. 1. Election of Directors. FOR WITHHELD (mark only one) / / / / 2. Proposal to ratify the appointment of FOR WITHHELD ABSTAIN Coopers & Lybrand as the independent / / / / / / auditors of the Corporation. / / I would like to attend UNUM Corporation's Annual Meeting of Stockholders on May 12, 1995. Please provide an admission ticket. - -------------------- (INSTRUCTION: To withhold authority to vote for any individual nominee write that nominee's name on the space provided to the left.) PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED ENVELOPE. PLEASE SIGN EXACTLY AS NAME APPEARS HEREON. WHEN SHARES ARE HELD BY JOINT TENANTS, EACH SHOULD SIGN. WHEN SIGNING AS ATTORNEY, AS EXECUTOR, ADMINISTRATOR, TRUSTEE OR GUARDIAN, PLEASE GIVE FULL TITLE AS SUCH. IF A CORPORATION, PLEASE SIGN IN FULL CORPORATE NAME BY PRESIDENT OR OTHER AUTHORIZED OFFICER. 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[Graphic - Telephone] 1-800-UNM-FACT (1-800-866-3228) Shareholder Direct[REGISTERED TRADEMARK] is a service of Direct Report Corporation UNUM CORPORATION P THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS FOR THE ANNUAL MEETING OF STOCKHOLDERS ON MAY 12, 1995 R The undersigned hereby appoints as Proxies, James F. Orr III, Kevin J. O Tierney, and Stephen B. Center, each with the power to appoint his substitute, and hereby authorizes them to represent and to vote, as X designated below, all the shares of Common Stock of UNUM Corporation held of record by the undersigned on March 14, 1995, at the Annual Meeting of Y Stockholders to be held on May 12, 1995, or any adjournment thereof. Election of Directors, Nominees: George J. Mitchell, Lawrence R. Pugh, Lois Dickson Rice and John W. Rowe. 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 SHARE UNLESS YOU SIGN AND RETURN THIS CARD. SEE REVERSE SIDE - -------------------------------------------------------------------------------- /\ FOLD AND DETACH HERE /\ -----END PRIVACY-ENHANCED MESSAGE-----