SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of
1934
(Amendment No. )
----------------
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Check the appropriate box:
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Loews Corporation
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Payment of filing fee (Check the appropriate box):
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[LOGO]
LOEWS
CORPORATION
667 Madison Avenue
New York, New York 10021-8087
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held on May 14, 2002
To the Shareholders:
The Annual Meeting of Shareholders of Loews Corporation (the "Company") will
be held at The Regency Hotel, 540 Park Avenue, New York, New York, on Tuesday,
May 14, 2002, at 11:00 A.M. New York City Time, for the following purposes:
.. To elect thirteen directors;
.. To consider and act upon a proposal to ratify the appointment by the
Board of Directors of Deloitte & Touche LLP as independent certified
public accountants for the Company;
.. To consider and act upon seven shareholder proposals; and
.. To transact such other business as may properly come before the meeting
or any adjournment thereof.
Shareholders of record at the close of business on March 18, 2002 are
entitled to notice of and to vote at the meeting and any adjournment thereof.
By order of the Board of Directors,
BARRY HIRSCH
Secretary
Dated: March 27, 2002
SHAREHOLDERS ARE URGED TO COMPLETE, DATE AND SIGN THE ENCLOSED PROXY AND MAIL
IT PROMPTLY IN THE ACCOMPANYING ENVELOPE WHICH REQUIRES NO POSTAGE IF MAILED
IN THE UNITED STATES.
LOEWS
CORPORATION
PROXY STATEMENT
---------------
This Proxy Statement is furnished in connection with the solicitation by the
Board of Directors of Loews Corporation (the "Company") of proxies to be voted
at the Annual Meeting of Shareholders of the Company to be held May 14, 2002.
All properly executed proxies in the accompanying form received by the Company
prior to the meeting will be voted at the meeting. Any proxy may be revoked at
any time before it is exercised by giving notice in writing to the Secretary
of the Company, by granting a proxy bearing a later date or by voting in
person. The Company expects to mail proxy materials to the shareholders on or
about March 27, 2002. The mailing address of the Company is 667 Madison
Avenue, New York, N.Y. 10021-8087.
The Company has two classes of common stock outstanding and eligible to vote
at the meeting, namely its Common Stock ("Common Stock") and Carolina Group
stock ("Carolina Group stock"). As of March 18, 2002, the record date for
determination of shareholders entitled to notice of and to vote at the
meeting, there were 191,505,000 shares of Common Stock and 40,250,000 shares
of Carolina Group stock outstanding. Each outstanding share of Common Stock is
entitled to one vote and each outstanding share of Carolina Group stock is
entitled to 1/10 of a vote on all matters which may come before the meeting.
In accordance with the Company's by-laws and applicable law, the election of
directors will be determined by a plurality of the votes cast by the holders
of shares present in person or by proxy and entitled to vote. Consequently,
the thirteen nominees who receive the greatest number of votes cast for
election as directors will be elected as directors of the Company. Shares
present which are properly withheld as to voting with respect to any one or
more nominees, and shares present with respect to which a broker indicates
that it does not have authority to vote ("broker non-votes") will not be
counted. The affirmative vote of shares representing a majority of the votes
cast by the holders of shares present and entitled to vote is required to
approve each of the other proposals to be voted on at the Annual Meeting.
Shares which are voted to abstain on these matters will be considered present
at the meeting, but since they are not affirmative votes for a proposal they
will have the same effect as votes against the proposal. Broker non-votes are
not counted as present.
The Board of Directors of the Company has adopted a policy of
confidentiality regarding the voting of shares. Under this policy, all
proxies, ballots and voting tabulations in relation to shareholder meetings
that identify how an individual shareholder has voted will be kept
confidential from the Company and its employees, except where disclosure is
required by applicable law, a shareholder expressly requests disclosure, or in
the case of a contested proxy solicitation. Proxy tabulators and inspectors of
election will be employees of the Company's transfer agent or another third
party, and not employees of the Company.
Principal Shareholders
The following table contains certain information as to all persons who, to
the knowledge of the Company, were the beneficial owners of 5% or more of the
outstanding shares of any class of the Company's voting securities. Except as
otherwise noted this information is as of February 28, 2002, and each person
has sole voting and investment power with respect to the shares set forth.
Amount
Beneficially Percent
Name and Address Title of Class Owned of Class
---------------- -------------- ------------ --------
Laurence A. Tisch (1) ... Common Stock 30,095,756(2) 15.7%
667 Madison Avenue
New York, NY 10021-8087
Preston R. Tisch (1) .... Common Stock 29,983,184(3) 15.7%
667 Madison Avenue
New York, NY 10021-8087
FMR Corp. ("FMR") (4) ... Carolina Group stock 6,346,600 15.8%
82 Devonshire Street
Boston, MA 02109
(1) Laurence A. Tisch and Preston R. Tisch are each Co-Chairman of the
Board of the Company, and are brothers. James S. Tisch, President and Chief
Executive Officer and a director of the Company, and Andrew H. Tisch, Chairman
of the Executive Committee and a director of the Company, are sons of Mr. L.A.
Tisch. Jonathan M. Tisch, Chairman and Chief Executive Officer of Loews Hotels
and a director of the Company, is the son of Mr. P.R. Tisch. Each of Messrs.
J.S. Tisch, A.H. Tisch and J.M. Tisch are members of the Company's Office of
the President.
(2) Includes 4,000,000 shares of Common Stock held of record by the wife of
Mr. L.A. Tisch and 4,000,000 shares of Common Stock held by Mr. L.A. Tisch as
trustee of a trust for the benefit of his wife, as to which he has sole voting
and investment power. Also includes an aggregate of 11,477,760 shares of
Common Stock beneficially owned by Andrew H. Tisch, Daniel R. Tisch, James S.
Tisch and Thomas J. Tisch, each of whom is a son of Mr. L.A. Tisch. Such
shares were reported in a Schedule 13D filed with the Securities and Exchange
Commission by Mr. L.A. Tisch and his sons which stated that the filing persons
were filing jointly solely for information purposes because of their family
relationships. However, they did not affirm that they constituted a "group"
for any purpose, and each such person expressly disclaimed beneficial
ownership of any shares beneficially owned by any other such person.
(3) Includes 440,000 shares of Common Stock held of record by the wife of
Mr. P.R. Tisch and 5,755,188 shares of Common Stock held by Mr. P.R. Tisch as
trustee of a trust for the benefit of his wife, as to which he has sole voting
and investment power.
(4) This information is based on a Schedule 13G report filed by FMR.
According to the report, Fidelity Management & Research Company, a subsidiary
of FMR, acts as an investment advisor to
2
various investment companies and, as such, has sole dispositive power only
with respect to 6,235,000 shares, representing 15.5% of the class outstanding.
Other subsidiaries of FMR have sole dispositive and voting power with respect
to 111,600 shares. The Schedule 13G report was filed jointly by FMR and
certain of its affiliates, including Edward C. Johnson 3d, the Chairman of
FMR, and Abigail P. Johnson, a director of FMR.
Director and Officer Holdings
The following table sets forth certain information as to the shares of the
Company's voting securities beneficially owned by each director and nominee,
each executive officer named in the Summary Compensation Table, below, and by
all executive officers and directors of the Company as a group, at February
28, 2002, based on data furnished by them.
Amount
Beneficially Percent
Name Title of Class Owned (1) of Class
---- -------------- ------------ --------
Joseph L. Bower Common Stock 400 (2) *
John Brademas Common Stock 3,020 (3) *
Paul J. Fribourg Common Stock 13,600 (4) *
Peter W. Keegan Common Stock 11,250 (5) *
Bernard Myerson Common Stock 64,600 (6) *
Edward J. Noha Common Stock 3,800 (7) *
Michael F. Price Common Stock 51,600 (8) *
Arthur L. Rebell Common Stock 12,250 (9) *
Gloria R. Scott Common Stock 800(10) *
Andrew H. Tisch Common Stock 2,784,500(11) 1.5%
James S. Tisch Common Stock 2,940,500(12) 1.5%
Jonathan M. Tisch Common Stock 778,704(13) *
Laurence A. Tisch Common Stock 18,617,996(14) 9.7%
Preston R. Tisch Common Stock 29,983,184(15) 15.7%
Fred Wilpon Common Stock 1,600(16) *
All executive officers and Common Stock 55,857,104(17) 29.1%
directors as a group
(24 persons including
those listed above)
* Represents less than 1% of the outstanding shares.
(1) Except as otherwise indicated the persons listed as beneficial owners
of the shares have sole voting and investment power with respect to those
shares.
(2) Represents 400 shares of Common Stock issuable upon the exercise of
options granted under the Loews Corporation 2000 Stock Option Plan (the "Loews
Stock Option Plan") which are currently exercisable.
(3) Includes 800 shares of Common Stock issuable upon the exercise of
options granted under the Loews Stock Option Plan which are currently
exercisable.
(4) Includes 12,000 shares owned by an affiliate of ContiGroup Companies,
Inc. ("ContiGroup"). Mr. Fribourg is an executive officer of ContiGroup. Mr.
Fribourg disclaims beneficial interest in these
3
shares. Also includes 1,600 shares of Common Stock issuable upon the exercise
of options granted under the Loews Stock Option Plan which are currently
exercisable.
(5) Represents 11,250 shares of Common Stock issuable upon the exercise of
options granted under the Loews Stock Option Plan which are currently
exercisable.
(6) Includes 1,600 shares of Common Stock issuable upon the exercise of
options granted under the Loews Stock Option Plan which are currently
exercisable. In addition, Mr. Myerson's wife owns 5,000 shares of Common Stock
as to which he disclaims any beneficial interest.
(7) Includes 800 shares of Common Stock issuable upon the exercise of
options granted under the Loews Stock Option Plan which are currently
exercisable. In addition, Mr. Noha owns beneficially 1,647 shares of the
common stock of CNA Financial Corporation, an 89% owned subsidiary of the
Company ("CNA").
(8) Includes 1,600 shares of Common Stock issuable upon the exercise of
options granted under the Loews Stock Option Plan which are currently
exercisable. In addition, Mr. Price owns beneficially 20,400 shares of the
common stock of Bulova Corporation ("Bulova"), a 97% owned subsidiary of the
Company.
(9) Includes 11,250 shares of Common Stock issuable upon the exercise of
options granted under the Loews Stock Option Plan which are currently
exercisable. In addition, Mr. Rebell owns beneficially 7,034 shares of CNA
common stock, including 2,520 shares with respect to which he has shared
voting and investment power, and 4,000 shares of the common stock of Diamond
Offshore Drilling, Inc., a 53% owned subsidiary of the Company ("Diamond
Offshore"), including 3,500 shares issuable upon the exercise of options which
are currently exercisable.
(10) Represents 800 shares of Common Stock issuable upon the exercise of
options granted under the Loews Stock Option Plan which are currently
exercisable.
(11) Includes 15,000 shares of Common Stock issuable upon the exercise of
options granted under the Loews Stock Option Plan which are currently
exercisable. Also includes 2,765,500 shares of Common Stock held by trusts of
which Mr. A.H. Tisch is the managing trustee and beneficiary. In addition,
40,000 shares of Common Stock are held by a charitable foundation as to which
Mr. A.H. Tisch has shared voting and investment power.
(12) Includes 15,000 shares of Common Stock issuable upon the exercise of
options granted under the Loews Stock Option Plan which are currently
exercisable. Also includes 2,765,500 shares of Common Stock held by trusts of
which Mr. J.S. Tisch is the managing trustee and beneficiary. In addition,
100,000 shares of Common Stock are held by a charitable foundation as to which
Mr. J.S. Tisch has shared voting and investment power. In addition, Mr. J.S.
Tisch owns beneficially 10,000 shares of Diamond Offshore common stock,
including 5,000 shares issuable upon the exercise of options which are
currently exercisable, and 6,100 shares of CNA common stock, held by a trust
of which Mr. J.S. Tisch is the managing trustee and beneficiary.
(13) Includes 15,000 shares of Common Stock issuable upon the exercise of
options granted under the Loews Stock Option Plan which are currently
exercisable. Also includes 618,704 shares of Common Stock held by a trust of
which Mr. J.M. Tisch is the managing trustee and beneficiary. In addition,
110,000 shares of Common Stock are held by a charitable foundation as to which
Mr. J.M. Tisch has shared voting and investment power.
(14) Includes 4,000,000 shares of Common Stock held of record by the wife
of Mr. L.A. Tisch and 4,000,000 shares of Common Stock held by Mr. L.A. Tisch
as trustee of a trust for the benefit of his wife, as to which he has sole
voting and investment power. Does not include 11,477,760 shares of Common
Stock held by the sons of Mr. L.A. Tisch as reported on the Principal
Shareholders table.
4
(15) Includes 440,000 shares of Common Stock held of record by the wife of
Mr. P.R. Tisch and 5,755,188 shares of Common Stock held by Mr. P.R. Tisch as
trustee of a trust for the benefit of his wife, as to which he has sole voting
and investment power.
(16) Represents 1,600 shares of Common Stock issuable upon the exercise of
options granted under the Loews Stock Option Plan which are currently
exercisable.
(17) Includes 108,000 shares of Common Stock issuable upon the exercise of
options granted under the Loews Stock Option Plan which are currently
exercisable.
ELECTION OF DIRECTORS
(Proposal No. 1)
Pursuant to the by-laws of the Company, the number of directors constituting
the full Board of Directors has been fixed by the Board at thirteen.
Accordingly, action will be taken at the meeting to elect a Board of thirteen
directors to serve until the next Annual Meeting of Shareholders and until
their respective successors are duly elected and qualified. It is the
intention of the persons named in the accompanying form of proxy, unless
shareholders otherwise specify by their proxies, to vote for the election of
the nominees named below, each of whom is now a director. The Board of
Directors has no reason to believe that any of the persons named will be
unable or unwilling to serve as a director. Should any of the nominees be
unable or unwilling to serve, it is intended that proxies will be voted for
the election of a substitute nominee or nominees selected by the Board of
Directors. Set forth below is the name, age, principal occupation during the
past five years and other information concerning each nominee.
Joseph L. Bower, 64 - Donald K. David Professor of Business Administration
at Harvard University. Professor Bower is also a director of Anika
Therapeutics, Inc., Brown Shoe Company, Inc., ML Lee Acquisition Funds, New
America High Income Fund, Inc., Sonesta International Hotels Corporation and T
H Lee-Putnam EO Fund. He has been a director of the Company since November
2001.
John Brademas, 75 - President Emeritus of New York University. Mr. Brademas
is also a director of Kos Pharmaceuticals, Inc. Mr. Brademas has been a
director of the Company since 1982 and is a member of the Incentive
Compensation Committee.
Paul J. Fribourg, 48 - Chairman of the Board, President and Chief Executive
Officer of ContiGroup (cattle feeding and pork and poultry production). Mr.
Fribourg is also a director of Wyndham International, Inc. He has been a
director of the Company since 1997 and is a member of the Audit Committee.
Bernard Myerson, 84 - Retired, formerly Chairman Emeritus of Sony Theatre
Management Corporation. Mr. Myerson has been a director of the Company since
1963 and is a member of the Executive Committee.
Edward J. Noha, 74 - Chairman of the Board of CNA. Mr. Noha has been a
director of the Company since 1975.
5
Michael F. Price, 50 - Chairman of the Board of Franklin Mutual Advisers and
Franklin Mutual Series Fund since 1998. Prior thereto, he had been chief
executive officer, president and chairman of these entities. Mr. Price is also
a director of Canary Wharf Group plc. He has been a director of the Company
since 2000 and is a member of the Audit Committee.
Gloria R. Scott, 63 - Former President of Bennett College in Greensboro,
North Carolina. Dr. Scott has been a director of the Company since 1990 and is
a member of the Audit Committee.
Andrew H. Tisch, 52 - Chairman of the Executive Committee and a member of
the Office of the President of the Company since 1999. Prior thereto he had
been chairman of the Management Committee of the Company. Mr. Tisch is
chairman of the board of Bulova and a director of Zale Corporation and Canary
Wharf Group plc. Mr. Tisch has been a director of the Company since 1985.
James S. Tisch, 49 - President and Chief Executive Officer and a member of
the Office of the President of the Company since 1999. Prior thereto he had
been president and chief operating officer of the Company since 1994. He is
also a director of CNA, Vail Resorts, Inc. and Baker, Fentress & Company and
chairman of the board and chief executive officer of Diamond Offshore. Mr.
Tisch has been a director of the Company since 1986 and is a member of the
Finance Committee.
Jonathan M. Tisch, 48 - Chairman and Chief Executive Officer of Loews Hotels
since 2001, and a member of the Office of the President of the Company since
1999. Prior to 2001, Mr. Tisch had been president and chief executive officer
of Loews Hotels. He has been a director of the Company since 1986 and is a
member of the Executive Committee.
Laurence A. Tisch, 79 - Co-Chairman of the Board of the Company. Prior to
1999, Mr. Tisch had also been co-chief executive officer of the Company. Mr.
Tisch is chief executive officer of CNA and a director of CNA and Bulova. Mr.
Tisch also serves as a director of Automatic Data Processing, Inc. He has been
a director of the Company since 1959 and is a member of the Finance Committee.
Preston R. Tisch, 75 - Co-Chairman of the Board of the Company. Prior to
1999, Mr. Tisch had also been co-chief executive officer of the Company. Mr.
Tisch had been a director of the Company from 1960 to 1986, when he resigned
to serve as postmaster general of the United States. He was re-elected a
director of the Company in March 1988. He is a director of Bulova, CNA and
Hasbro, Inc.
Fred Wilpon, 65 - Chairman of the Board of Sterling Equities, Inc. (real
estate investments) and president, chief executive officer and co-owner of
Sterling Doubleday Enterprises, L.P. (New York Mets baseball team). Mr. Wilpon
is also a director of Bear Stearns Companies, Inc. He has been a director of
the Company since 2000 and is a member of the Incentive Compensation
Committee.
6
Committees
The Company has an Audit Committee, a Finance Committee, an Incentive
Compensation Committee and an Executive Committee. The Company has no
nominating committee or compensation committee.
Attendance at Meetings
During 2001 there were seven meetings of the Board of Directors, seven
meetings of the Audit Committee and five meetings of the Incentive
Compensation Committee. Each director of the Company attended not less than
75% of the total number of meetings of the Board of Directors and committees
of the Board on which that director serves.
Section 16(a) Beneficial Ownership Reporting Compliance
During 2001 Michael F. Price filed a report disclosing one transaction in
the Company's securities ten days late.
Director Compensation
Each director who is not an employee of the Company may elect to receive,
for one or more calendar quarters each year, either an award of an option to
purchase 400 shares of the Company's Common Stock in accordance with the terms
of the Loews Stock Option Plan, or $6,250, for serving as a director. In
addition, members of the Audit Committee and of the Incentive Compensation
Committee are paid $1,000 for each meeting attended.
AUDIT COMMITTEE REPORT
The primary function of the Audit Committee is to assist the Board of
Directors in fulfilling its responsibility to oversee management's conduct of
the Company's financial reporting process, including review of the financial
reports and other financial information of the Company, the Company's systems
of internal accounting, the Company's financial controls, and the annual
independent audit of the Company's financial statements. The Company's Board
of Directors has adopted a written charter under which the Audit Committee
operates and has determined that all members of the Committee are
"independent" in accordance with the currently applicable rules of The New
York Stock Exchange. The Company's management is responsible for its financial
statements and reporting process, including its system of internal controls.
The Company's independent auditors are responsible for expressing an opinion
on the conformity of the Company's audited financial statements with
accounting principles generally accepted in the United States.
In fulfilling its responsibilities, the Audit Committee has reviewed and
discussed the Company's audited financial statements for the year ended
December 31, 2001 with the Company's management and independent auditors. The
Audit Committee has also discussed with the Company's independent auditors the
matters required to be discussed by Statement on Auditing Standards No. 61,
"Communication with Audit Committees," as amended. In addition, the Audit
Committee has discussed with the independent auditors their independence in
relation to the
7
Company and its management, including the matters in the written disclosures
provided to the Audit Committee as required by Independence Standards Board
Standard No. 1, "Independence Discussions with Audit Committees," and has
considered whether the provision of non-audit services provided by the
auditors is compatible with maintaining the auditors' independence.
The members of the Audit Committee are not experts in the fields of
accounting or auditing, including in respect of auditor independence, and rely
without independent verification on the information provided to them by
management and the independent auditors and on management's representation
that the Company's financial statements have been prepared with integrity and
objectivity. Accordingly, the Audit Committee's oversight does not provide an
independent basis to determine that management has applied appropriate
accounting and financial reporting principles or internal controls and
procedures, that the audit of the Company's financial statements has been
carried out in accordance with generally accepted auditing standards, that the
Company's financial statements are presented in accordance with generally
accepted accounting principles, or that the Company's auditors are in fact
"independent."
Based upon the reviews and discussions referred to above, the Audit
Committee has recommended to the Board of Directors that the audited financial
statements be included in the Company's Annual Report on Form 10-K for the
year ended December 31, 2001 to be filed with the Securities and Exchange
Commission.
By the Audit Committee: Paul J. Fribourg Michael F. Price Gloria R. Scott
EXECUTIVE COMPENSATION
The following table sets forth information for the years indicated regarding
the compensation of the Chief Executive Officer and each of the other four
most highly compensated executive officers of the Company as of December 31,
2001 (the "Named Executive Officers"), for services in all capacities to the
Company and its subsidiaries.
8
SUMMARY COMPENSATION TABLE
Long Term
Annual Compensation Compensation
-------------------------------------- -------------
Securities
Underlying All Other
Name and Position Year Salary(1) Bonus Options Compensation
----------------- ---- -------- ----- ---------- ------------
J.S. Tisch 2001 $1,294,388(2) (3) 20,000 $50,955(4)
Chief Executive 2000 1,284,657(2) $425,000(3) 20,000 56,475(4)
Officer, Office 1999 1,323,146(2) 325,000(3) 53,812(4)
of the President
A.H. Tisch 2001 993,388 20,000 8,652(5)
Chairman of 2000 985,782 425,000(3) 20,000 16,316(5)
the Executive 1999 1,021,146 325,000(3) 14,940(5)
Committee,
Office of the
President
J.M. Tisch 2001 993,388 20,000 8,189(5)
Chairman and 2000 983,657 425,000(3) 20,000 14,245(5)
Chief Executive 1999 1,021,146 325,000(3) 13,016(5)
Officer of
Loews Hotels,
Office of
the President
A.L. Rebell 2001 983,478 1,200,000(6) 15,000 6,513(5)
Senior Vice 2000 983,507 950,000(6) 15,000 6,800(5)
President, Chief 1999 999,242 527,000(6) 6,400(5)
Investment
Officer
P.W. Keegan 2001 997,031 50,000(7) 15,000 6,800(5)
Senior Vice 2000 901,940 15,000 6,800(5)
President, Chief 1999 855,661 200,000(7) 6,400(5)
Financial Officer
(1) Salary includes payments to the named individual based on benefit choices under the
Company's flexible benefits plan.
(2) Includes compensation for services as chief executive officer of Diamond Offshore of
$300,000 for each of 2001, 2000 and 1999.
(3) Represents payouts under the Company's Incentive Compensation Plan for Executive Officers
(the "Incentive Compensation Plan") based upon awards granted in 2000 and 1999. Does not include
any bonus which may be granted to Mr. J.S. Tisch by Diamond Offshore pursuant to its Management
Bonus Program based on service during 2001, the amount of which is not currently calculable.
9
(4) Includes the annual contribution under the Company's Employees Savings
Plan and related allocation under the Company's Benefit Equalization Plan (see
"Pension Plan," below) aggregating $8,192, $14,247 and $13,019 for 2001, 2000
and 1999, respectively. Also includes director's fees paid by CNA amounting to
$35,000 for 2001, and $33,000 for each of 2000 and 1999, and insurance
premiums and retirement plan contributions paid by Diamond Offshore of $7,763
for 2001, $9,228 for 2000 and $7,793 for 1999.
(5) Represents the annual contribution under the Company's Employees
Savings Plan and related allocation under the Benefit Equalization Plan.
(6) Includes, for 2000, a payout under the Incentive Compensation Plan in
the amount of $800,000 based on an award granted in 2000, and, for 2001, 2000
and 1999, supplemental retirement account credits, exclusive of interest and
pay-based credits (see "Employment Agreements," below) of $1,200,000, $150,000
and $527,000, respectively.
(7) Includes, for 2001 and 1999, supplemental retirement account credits,
exclusive of interest credits (see "Employment Agreements," below), of $50,000
and $200,000, respectively.
Stock Option Plan
The following table sets forth information regarding grants of options to
acquire shares of Common Stock under the Loews Stock Option Plan that were
made during the fiscal year ended December 31, 2001 to each of the Named
Executive Officers.
OPTION GRANTS IN LAST FISCAL YEAR
Potential Realizable Value
at Assumed Rates of Stock
Price Appreciation for
Individual Grants(1) Option Term
------------------------------------------------------- --------------------------
Percent of
No. of Total Options
Securities Granted to Exercise
Underlying Employees Price Per Expiration
Name Option Granted in Fiscal Year Share(2) Date 5% 10%
---- -------------- -------------- --------- ---------- -- ---
J.S. Tisch 20,000 7.02% $46.71 1/24/11 $583,522 $1,482,459
A.H. Tisch 20,000 7.02 46.71 1/24/11 583,522 1,482,459
J.M. Tisch 20,000 7.02 46.71 1/24/11 583,522 1,482,459
A.L. Rebell 15,000 5.27 46.71 1/24/11 437,641 1,111,844
P.W. Keegan 15,000 5.27 46.71 1/24/11 437,641 1,111,844
(1) Options granted in 2001 to each of the named individuals become exercisable at a rate of
25% per year beginning on the first anniversary of the grant date.
(2) Represents 100% of the fair market value of the Common Stock on the grant date.
10
The following table sets forth information regarding the exercise of stock
options during the fiscal year ended December 31, 2001 by each of the Named
Executive Officers.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR END OPTION VALUES
Shares Number of Securities Value of Unexercised
Acquired Value Underlying Unexercised In-the-Money Options
Name on Exercise Realized Options at Fiscal Year-End at Fiscal Year-End (1)
---- ----------- -------- -------------------------- --------------------------
Exercisable Unexercisable Exercisable Unexercisable
----------- ------------- ----------- -------------
J.S. Tisch 0 -- 5,000 35,000 $128,425 $567,675
A.H. Tisch 0 -- 5,000 35,000 128,425 567,675
J.M. Tisch 0 -- 5,000 35,000 128,425 567,675
A.L. Rebell 0 -- 3,750 26,250 93,319 425,756
P.W. Keegan 0 -- 3,750 26,250 93,319 425,756
(1) Fair market value of underlying securities as of December 31, 2001, minus the exercise
price.
Employment Agreements
The employment agreements the Company maintains with each of Messrs. A.H.
Tisch, J.S. Tisch and J.M. Tisch expire on December 31, 2002. Each agreement
provides for a basic salary of $900,000 per annum, subject to such increases
as the Board of Directors may from time to time determine in its sole
discretion. These agreements also provide the right to participate in the
Incentive Compensation Plan. In addition, the Company has entered into a
supplemental retirement agreement with each of the Messrs. Tisch supplementing
the retirement benefits to which each is entitled under the Company's
Retirement Plan (see "Pension Plan," below), pursuant to which each executive
will become vested in an unfunded supplemental retirement account. On December
31, 2002 each account will be credited by the Company with $250,000 and the
pay-based credit established under the Retirement Plan. In addition, on the
last day of each calendar year each account will be credited with the interest
credit established under the Retirement Plan. Upon retirement, each of the
Messrs. Tisch will receive the value of his account in the form of an annuity
or, if he so requests and the Company's Board of Directors approves, in a
single lump sum payment.
The Company has entered into a supplemental retirement agreement with Arthur
L. Rebell supplementing the retirement benefits to which he is entitled under
the Retirement Plan, pursuant to which Mr. Rebell has become vested in an
unfunded supplemental retirement account. On the last day of each calendar
year this account will be credited with the interest credit established under
the Retirement Plan. On the last day of each calendar year in which this
account is credited by the Company with additional supplemental retirement
benefits, it will also be credited with the pay-based credit for such year
established under the Retirement Plan. Mr. Rebell will receive, upon his
retirement, the value of the account in a single lump sum payment. The account
has been credited with an aggregate amount of $2,127,000 (exclusive of
interest and pay-based credits), including $1,200,000 credited in 2001.
The Company has entered into a supplemental retirement agreement with Peter
W. Keegan supplementing the retirement benefits to which he is entitled under
the Retirement Plan, pursuant to
11
which Mr. Keegan has become vested in an unfunded supplemental retirement
account. On the last day of each calendar year this account will be credited
with the interest credit established under the Retirement Plan. Mr. Keegan
will receive, upon his retirement, the value of the account in the form of an
annuity or, if he so requests and the Company's Chief Executive Officer
approves, in a single lump sum payment. The account has been credited with an
aggregate amount of $250,000 (exclusive of interest credits), including
$50,000 credited in 2001.
Pension Plan
The Company provides a funded, tax qualified, non-contributory retirement
plan for salaried employees, including executive officers (the "Retirement
Plan") and an unfunded, non-qualified, non-contributory Benefit Equalization
Plan (the "Benefit Equalization Plan") which provides for the accrual and
payment of benefits which are not available under tax qualified plans such as
the Retirement Plan. The following description of the Retirement Plan gives
effect to benefits provided under the Benefit Equalization Plan.
The Retirement Plan is structured as a cash balance plan. A cash balance
plan is a form of non-contributory, defined benefit pension plan in which the
value of each participant's benefit is expressed as a nominal cash balance
account established in the name of the participant. Under the cash balance
plan each participant's account is increased annually by a "pay-based credit"
based on a specified percentage of annual earnings (based on the participant's
age) and an "interest credit" based on a specified interest rate (which is
established annually for all participants), except for accounts of
participants older than 65 years of age, which are increased only by the
greater of those two amounts. At retirement or termination of employment, a
vested participant is entitled to receive the cash balance account in a lump
sum or to convert the account into a monthly annuity. Compensation covered
under the Retirement Plan consists of salary paid by the Company and its
subsidiaries included under the heading "Salary" in the Summary Compensation
Table above. In addition, awards under the Incentive Compensation Plan are
deemed compensation for purposes of the Benefit Equalization Plan. Pension
benefits are not subject to reduction for Social Security benefits or other
amounts.
Participants with at least five years of service whose combined age and
years of service equaled at least 60, or at least 18 years of service whose
combined age and service equaled at least 58 at January 1, 1998 (the year that
the Retirement Plan was converted into a cash balance plan), are entitled to a
minimum retirement benefit ("Minimum Benefit") equal to the benefit they would
have earned under the Retirement Plan before its conversion to a cash balance
plan. This Minimum Benefit is based upon the average final compensation (i.e.,
the highest average annual salary during any period of five consecutive years
of the ten years immediately preceding retirement) and years of credited
service with the Company. The following table shows estimated annual benefits
upon retirement under the Retirement Plan, based on the Minimum Benefit, for
various average compensation and credited service based upon normal retirement
at January 1, 2002 and a straight life annuity form of pension. Each of the
Named Executive Officers qualifies for the Minimum Benefit except for Messrs.
Rebell and Keegan. It is currently estimated that the balance of the account
maintained under the Retirement Plan for Mr. Rebell will be approximately
$4,427,251 when Mr. Rebell reaches the normal retirement age of 65, based on
actual interest credits of 5.72% and 4.65% for 2001 and 2002, respectively,
and assuming annual interest credits of 5.0% for 2003 and later and no
increases in the amount of Mr. Rebell's earnings. It is currently estimated
that the balance of the account maintained under the Retirement Plan for Mr.
Keegan will be approximately
12
$1,959,427 when Mr. Keegan reaches the normal retirement age of 65, based on
actual interest credits of 5.72% and 4.65% for 2001 and 2002, respectively,
and assuming annual interest credits of 5.0% for 2003 and later, and no
increases in the amount of Mr. Keegan's earnings.
PENSION PLAN TABLE
Average Final Estimated Annual Pension for
Compensation Representative Years of Credited Service
------------- ----------------------------------------
20 25 30 35 40 45
-- -- -- -- -- --
$ 400,000 $ 96,000 $128,000 $160,000 $ 192,000 $ 224,000 $ 256,000
600,000 144,000 192,000 240,000 288,000 336,000 384,000
800,000 192,000 256,000 320,000 384,000 448,000 512,000
1,000,000 240,000 320,000 400,000 480,000 560,000 640,000
1,200,000 288,000 384,000 480,000 576,000 672,000 768,000
1,400,000 336,000 448,000 560,000 672,000 784,000 896,000
1,600,000 384,000 512,000 640,000 768,000 896,000 1,024,000
1,800,000 432,000 576,000 720,000 864,000 1,008,000 1,152,000
2,000,000 480,000 640,000 800,000 960,000 1,120,000 1,280,000
2,200,000 528,000 704,000 880,000 1,056,000 1,232,000 1,408,000
2,400,000 576,000 768,000 960,000 1,152,000 1,344,000 1,536,000
The years of credited service of Messrs. A.H. Tisch, J.M. Tisch and J.S.
Tisch are twenty-eight, twenty-two and twenty-four, respectively.
Amounts paid to Mr. J.S. Tisch by Diamond Offshore included in the Summary
Compensation Table are not covered by the Retirement Plan. Diamond Offshore
maintains a tax qualified defined contribution retirement plan which provides
that Diamond Offshore contribute 3.75% of each participant's defined
compensation and match 25% of the first 6% of compensation voluntarily
contributed by each participant. Participants are fully vested immediately
upon enrollment in the plan. Diamond Offshore's 3.75% contribution on behalf
of Mr. J.S. Tisch amounted to $6,375 in 2001.
BOARD OF DIRECTORS REPORT ON EXECUTIVE COMPENSATION
General
The Company's policy regarding executive compensation has been adopted by
the Board of Directors. The Board of Directors has no compensation committee.
The Incentive Compensation Committee of the Board of Directors has been
designated by the Board of Directors to administer and award grants under the
Incentive Compensation Plan and Loews Stock Option Plan.
The overall objective of the Company's executive compensation policy is to
attract and motivate a high level of performance by the Company's executive
officers. To further this objective and provide incentives to motivate
executive officers to achieve long term Company goals, as well as to provide
incentive compensation opportunities to executive officers that are
competitive with those of other companies, the Company has adopted the Loews
Stock Option Plan.
13
The primary component of executive compensation of the Company's executive
officers, however, is cash salary. Salary levels are based upon an evaluation
of the individual's performance and cash salaries paid to executives in
similar positions by companies with comparable revenues. In determining
comparable salaries the Company participates in and analyzes two management
compensation surveys. These surveys have been selected primarily because of
the broad range of companies of various sizes included in them, the manner in
which the information is presented and, with respect to one survey, the
consistency of the data presented. One of these surveys includes four of the
ten companies included in the Standard & Poor's Financial Diversified Index
(see "Stock Price Performance Graph," below). In most cases, the Company seeks
to maintain compensation levels for executive officers (as well as salaried
employees generally) between the 50th and 75th percentiles of cash
compensation paid by companies with comparable revenues. However, as a result
of evaluation of job performance as well as length of service, the
compensation levels of a majority of the Company's executive officers fall
above these parameters.
Chief Executive Officer
The compensation of the Company's Chief Executive Officer for 2001 was
established pursuant to the employment agreement negotiated between the
Company and the Chief Executive Officer. This employment agreement provides
for increases in remuneration as the Board of Directors may from time to time
determine in its sole discretion. In addition, the Chief Executive Officer
will receive a supplemental retirement benefit in 2002 pursuant to a
supplemental retirement agreement negotiated between the Company and the Chief
Executive Officer. Each of the Chief Executive Officer's employment agreement
and supplemental retirement agreement has been reviewed by the Company's
Incentive Compensation Committee and approved by the Board of Directors based
on that committee's recommendation. Consistent with the compensation policy
concerning executive officers generally, compensation to the Company's Chief
Executive Officer also includes awards under the Company's Incentive
Compensation Plan and grants of stock options under the Loews Stock Option
Plan.
Internal Revenue Code
Under the Internal Revenue Code, the amount of compensation paid to or
accrued for the Chief Executive Officer and the four other most highly
compensated executive officers which may be deductible by the Company for
federal income tax purposes is limited to $1 million per person per year,
except that compensation which is considered to be "performance-based" under
the Internal Revenue Code and the applicable regulations is excluded for
purposes of calculating the amount of compensation.
To the extent the Company's compensation policy can be implemented in a
manner which maximizes the deductibility of compensation paid by the Company,
the Board of Directors seeks to do so. Accordingly, the Company has adopted
the Incentive Compensation Plan for the purpose of causing the compensation
expense associated with that plan to qualify as performance-based
compensation. Under the Incentive Compensation Plan, the Incentive
Compensation Committee may grant awards to executive officers based on the
attainment of specified performance goals in relation to the after tax net
income of the Company. In addition, compensation resulting from grants of
options under the Loews Stock Option Plan will be considered to be
"performance based" under the applicable provisions of the Internal Revenue
Code.
14
By the Board of Directors: Joseph L. Bower Michael F. Price Jonathan M. Tisch
John Brademas Gloria R. Scott Laurence A. Tisch
Paul J. Fribourg Andrew H. Tisch Preston R. Tisch
Bernard Myerson James S. Tisch Fred Wilpon
Edward J. Noha
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Messrs. A.H. Tisch, J.M. Tisch, J.S. Tisch, L.A. Tisch and P.R. Tisch, each
of whom are directors of the Company, also serve as officers of the Company or
its subsidiaries. In addition, Messrs. B. Myerson and E.J. Noha, each of whom
are directors, have formerly served as officers of the Company or its
subsidiaries.
CERTAIN TRANSACTIONS
Messrs. L.A. Tisch and P.R. Tisch and their affiliates reimbursed to the
Company approximately $5,106,060 in the aggregate for the utilization by them
of the services of certain employees and facilities of the Company during
2001.
During 2001, the Company and its subsidiaries paid brokerage commissions
aggregating approximately $283,243 to a securities firm in which Daniel R.
Tisch, a son of Laurence A. Tisch, is a principal shareholder, officer and
director. Similar transactions with such firm may be expected to occur in the
future.
Joseph L. Bower, a director of the Company and a Professor of Business
Administration at Harvard University, provided consulting services to the
Company during 2001, prior to his election to the Board of Directors in
November 2001. Professor Bower was paid approximately $90,000 in consideration
of these services.
In September 2001, the Company provided a ten year loan to Arthur L. Rebell,
its Chief Investment Officer and Senior Vice President, in the original
principal amount of $550,000, with interest of 4.82% per annum payable
annually. As of February 28, 2002, the outstanding amount of this loan was
$562,519.
In November 2001, Preston R. Tisch and his wife entered into an agreement
with a subsidiary of the Company providing for a lease of an apartment at a
hotel owned by that subsidiary. Mr. Tisch, with his wife, currently occupies
that apartment for the convenience of the Company and such subsidiary at an
incremental cost to the Company of approximately $660,000 in 2001. The lease
will commence at such time as the Company determines that the occupancy of the
apartment by Mr. Tisch is no longer for the benefit or convenience of the
Company, and terminate following the deaths of Mr. and Mrs. Tisch, or at such
earlier time following the third year of its commencement as the tenant may
elect. The lease provides for rental payments in the aggregate amount of
$660,000 per year, subject to increases commencing in 2007 based upon
increases in the applicable consumer price index. The terms of the lease were
reviewed by the Company's Audit Committee together with an appraisal of the
rental value of the apartment performed by an independent consultant, and
approved by the Board of Directors upon that committee's recommendation. None
of Messrs. P.R. Tisch, L.A. Tisch, A.H. Tisch, J.S. Tisch or J.M. Tisch
participated in the Board's deliberation or vote on this matter.
15
In January 2002, an insurance subsidiary of CNA paid $241,314 to ContiGroup,
of which Paul J. Fribourg, a director of the Company, is a shareholder,
director and executive officer, in satisfaction of a claim made under a
charterer's liability insurance policy purchased by ContiGroup in 2000.
See "Compensation Committees Interlocks and Insider Participation" above,
for information with respect to relationships between certain members of the
Board of Directors and the Company.
STOCK PRICE PERFORMANCE GRAPH
The following graph compares the total annual return of the Company's Common
Stock, the Standard & Poor's 500 Composite Stock Index ("S&P 500 Index") and
the Standard & Poor's Financial Diversified Stock Index ("S&P Financial
Diversified") for the five years ended December 31, 2001. The graph assumes
that the value of the investment in the Company's Common Stock and each Index
was $100 on December 31, 1996 and that all dividends were reinvested.
1996 1997 1998 1999 2000 2001
---- ---- ---- ---- ---- ----
Loews Corporation 100 113.70 106.40 66.61 115.47 124.78
S&P 500 Index 100 133.36 171.48 207.56 188.66 166.24
S&P Financial Diversified 100 157.65 206.34 273.11 334.54 301.75
16
RATIFICATION OF THE APPOINTMENT OF
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
(Proposal No. 2)
The Board of Directors of the Company has selected the firm of Deloitte &
Touche LLP, independent certified public accountants, as the principal
independent auditors of the Company for the year ending December 31, 2002,
subject to ratification by the shareholders. Deloitte & Touche LLP served as
the Company's independent auditors during 2001. If the appointment of the firm
of Deloitte & Touche LLP is not approved or if that firm declines to act or
their employment is otherwise discontinued, the Board of Directors will
appoint other independent auditors. Representatives of Deloitte & Touche LLP
are expected to be present at the Annual Meeting, at which time they will be
available to respond to appropriate questions from shareholders and be given
an opportunity to make a statement if they desire to do so.
Audit Fees
The aggregate fees, including expenses reimbursed, billed by Deloitte &
Touche LLP, the member firms of Deloitte Touche Tohmatsu, and their respective
affiliates (collectively, "Deloitte & Touche") for professional services
rendered for the audit of the consolidated financial statements of the Company
and its subsidiaries for 2001 and the reviews of the Company's quarterly
financial statements during 2001 were approximately $6,231,000.
Financial Information Systems Design and Implementation Fees
Deloitte & Touche was not engaged to perform information technology services
relating to financial information systems design and implementation for the
Company or its subsidiaries during 2001.
All Other Fees
The aggregate fees, including expenses reimbursed, billed by Deloitte &
Touche for services rendered to the Company and its subsidiaries, other than
the services described above under "Audit Fees," for 2001 were approximately
$12,483,000, including audit related services of approximately $2,486,000 and
non-audit services of approximately $9,997,000. Audit related services
generally include fees for consents and comfort letters, audits of the
Company's employee benefit plans, accounting consultations, and work on
registration statements filed by the Company with the Securities and Exchange
Commission. The fees billed for non-audit services include approximately
$7,264,000 billed by Deloitte Consulting. Deloitte & Touche has recently
announced its intent to separate Deloitte Consulting from the firm.
The Company's Audit Committee has considered whether the provision of the
non-audit services provided by Deloitte to the Company is compatible with
maintaining Deloitte & Touche's independence.
The Board of Directors recommends a vote FOR Proposal No. 2.
17
SHAREHOLDER PROPOSALS
The Company has been advised that the seven shareholder proposals described
below will be presented at the Annual Meeting. For the reasons set forth
below, the Board of Directors recommends a vote against each proposal.
SHAREHOLDER PROPOSAL RELATING TO
POLITICAL CONTRIBUTIONS
(Proposal No. 3)
Evelyn Y. Davis, 2600 Virginia Avenue, N.W., Washington, D.C. 20037, owner
of 244 shares of Common Stock, has notified the Company in writing that she
intends to present the following resolution at the Annual Meeting for action
by the shareholders:
"RESOLVED: That the stockholders of Loews assembled in Annual Meeting in
person and by proxy, hereby recommend that the Corporation affirm its
political non-partisanship. To this end the following practices are to be
avoided:
(a) The handing of contribution cards of a single political party to an
employee by a supervisor.
(b) Requesting an employee to send a political contribution to an
individual in the Corporation for a subsequent delivery as part of a
group of contributions to a political party or fund raising
committee.
(c) Requesting an employee to issue personal checks blank as to payee for
subsequent forwarding to a political party, committee or candidate.
(d) Using supervisory meetings to announce that contribution cards of one
party are available and that anyone desiring cards of a different
party will be supplied one on request to his supervisor.
(e) Placing a preponderance of contribution cards of one party at mail
station locations.
"REASONS: The Corporation must deal with a great number of governmental
units, commissions and agencies. It should maintain scrupulous political
neutrality to avoid embarrassing entanglements detrimental to its business.
Above all, it must avoid the appearance of coercion in encouraging its
employees to make political contributions against their personal inclination.
The Troy (Ohio) News has condemned partisan solicitation for political
purposes by managers in a local company (not Loews). And if the Company did
not engage in any of the above practices, to disclose this to ALL shareholders
in each quarterly report.
"If you AGREE, please mark your proxy FOR this resolution."
The Board of Directors recommends a vote AGAINST Proposal No. 3.
Many of the practices described in this proposal would be in violation of
both federal and state election laws. Those which are not prohibited are
subject to Federal Election Commission and state regulations. The Board
believes that no benefit to the Company or its shareholders would derive from
imposing an additional set of restrictions. Accordingly, the Board of
Directors recommends a vote against this proposal.
18
SHAREHOLDER PROPOSAL RELATING TO
AN INDEPENDENT BOARD OF DIRECTORS
(Proposal No. 4)
Laborers' District Council of Western Pennsylvania Pension Fund, 1109 Fifth
Avenue, Pittsburgh, Pennsylvania 15219, owner of 12,000 shares of Common
Stock, has notified the Company in writing that it intends to present the
following resolution at the Annual Meeting for action by the shareholders:
"Resolved, that the shareholders of Loews Corporation ("Company") request
that the Company's Board of Directors set a goal of establishing a board of
directors with at least two-thirds of its members being independent directors.
The Board should pursue this goal and transition to an independent Board
through its power to nominate candidates to stand for election by
shareholders. For purposes of this resolution, a director would not be
considered independent if he or she is currently or during the past five years
has been:
Employed by the company or an affiliate in an executive capacity;
Employed by a firm that is one of the Company's paid advisors or
consultants;
Employed by a significant customer or supplier;
Employed by a tax-exempt organization that receives significant
contributions from the Company;
Paid by the Company pursuant to any personal services contract with the
Company;
Serving in an executive capacity or as a director of a corporation on
which the Company's chairman or chief executive officer is a board
member; or
Related to a member of management of the Company.
"Statement of Support: The board of directors plays a critical role in
determining a company's long-term success. A board helps meet the challenge of
maximizing long-term corporate value through those roles attributed to it by
law and regulation. A board serves as management monitor, working to assemble
a well-qualified senior management team. In conjunction with senior
management, a board contributes to the development and implementation of a
corporation's competitive strategies, while also serving as the architect of
an executive compensation plan that provides necessary incentives and rewards
to accomplish long-term corporate success. The board of directors must operate
independently of the corporation's chief executive officer and senior
management if it is to fulfill its duty to hire, oversee, compensate, and if
necessary replace management. Independence has been referred to as 'director's
greatest virtue' (Robert Rock, Chair of National Association of Corporate
Directors, 'Directors and Boards,' Summer edition 1996) and we believe
independent boards are better positioned to remove non-performing senior
executives.
"In order to best fulfill its responsibilities and ensure the corporation's
long-term success, we believe that at least two-thirds of a board's members
should be 'independent' directors. The Company's Board of Directors as
presently composed does not meet the two-thirds independence standard. The
Board is comprised of thirteen directors. According to the Company's proxy
statement, Messrs. A.H. Tisch, J.M. Tisch, J.S. Tisch, L.A. Tisch and P.R.
Tisch, each of whom are directors of the Company, also serve as officers of
the Company or its subsidiaries. In addition, Messrs. D.H. Chookaszian, B.
Myerson and E.J. Noha, each of whom are directors, have formerly served as
officers of the Company or its subsidiaries.
19
"As long-term shareholders, we believe an independent board best represents
shareholders. Adoption of this resolution would encourage our company to work
towards this goal."
The Board of Directors recommends a vote AGAINST proposal No. 4.
Individuals are selected for nomination to serve as directors of the Company
based on their experience, competence and integrity. This proposal seeks to
establish an unduly rigid and restrictive requirement to be met by two-thirds
of the members of the Board -- a requirement which would be in addition to
those imposed by applicable law and regulations and the rules of the New York
Stock Exchange. The Board believes that no benefit to the Company or its
shareholders would derive from imposing such an additional requirement, and
opposes this proposal as not being in the best interest of the Company or its
shareholders. However, the Board recognizes the benefits of having
independent, non-management individuals serving together with members of
management on the Board of Directors. At the present time, eight members of
the Board are not employed by the Company, and six have never been employed by
the Company. In addition, the Audit and Incentive Compensation Committees of
the Board of Directors each consist entirely of non-management directors
meeting the requirements of applicable law and regulations and the rules of
the New York Stock Exchange. Accordingly, the Board of Directors recommends a
vote against this proposal.
SHAREHOLDER PROPOSAL RELATING TO
INDEPENDENT DIRECTORS AND COMMITTEES
(Proposal No. 5)
The Connecticut Retirement Plans & Trust Funds, 55 Elm Street, Hartford,
Connecticut 06106, owner of 132,030 shares of Common Stock, has notified the
Company in writing that it intends to present the following resolution at the
Annual Meeting for action by shareholders:
"A Board of Directors independent from management is of vital importance to
a company and its shareholders. Independence of a Board member is based on a
number of factors, including:
Not being employed by the company or an affiliate in an executive
capacity within the last five years;
Not being a past or current employee of a firm that is one of the
company's paid advisors or consultants;
Having no personal services contract with the company; not having any
family relationships with an executive or director of the company;
Not serving on other corporate boards on which the company's chairman or
chief executive officer is also a board member, or serving with a non-
profit that receives significant contributions from the company.
"We believe that it is in the best long-term interest of any company for a
majority of the members of the Board of Directors to be independent of
management.
"We believe that it is in the best long-term interest of any company that
all members of the Audit, Compensation, and Nominating Committees to be
independent of management.
20
"Of the 13 members of the Loews Board of Directors only 4 are entirely
independent of management. Five of the Board members are employees, three are
former employees, and one director is CEO of a company that has had business
transactions with a subsidiary of Loews.
"Of the two members of the Audit Committee, only one is considered
independent.
"The company has no Compensation Committee, and no Nominating Committee.
"RESOLVED, that the shareholders of Loews Corporation urge the Board of
Directors to take the necessary steps to provide that:
A majority of the members of the Board of Directors is independent of
management, including meeting the criteria outlined above.
Only directors independent of management participate in the process of
nominating candidates for membership on the Board of Directors.
Only directors independent of management participate in the process of
setting compensation policy.
Only directors independent of management be members of the Audit
Committee.
"We urge Loews' shareholders to support this resolution."
The Board of Directors recommends a vote AGAINST proposal No. 5.
This proposal seeks to establish a variety of unduly rigid and restrictive
requirements relating to the composition of the Board of Directors and certain
of its committees -- requirements which would be in addition to and in some
respects appear to be duplicative of those imposed by applicable law and
regulations and the rules of the New York Stock Exchange. The Board believes
that no benefit to the Company or its shareholders would derive from imposing
such additional requirements and opposes this proposal as not being in the
best interest of the Company and its shareholders. For example, this proposal
uses the term "independent" but, in the opinion of the Board, fails to provide
a useful definition of the term. However, the Board is mindful of the benefits
of having independent, non-management individuals serving together with
members of management on the Board of Directors. At the present time, eight of
the members of the Board are not employed by the Company, and six have never
been employed by the Company. In addition, all three members of the Audit
Committee and both members of the Incentive Compensation Committee of the
Board of Directors are non-management directors meeting the independence
requirements of applicable law and regulations and the rules of the New York
Stock Exchange. Accordingly, the Board of Directors recommends a vote against
this proposal.
SHAREHOLDER PROPOSAL RELATING TO
DIRECTORS' STRATEGY DEVELOPMENT ROLE
(Proposal No. 6)
The United Brotherhood of Carpenters Pension Fund, 101 Constitution Avenue,
N.W., Washington, D.C. 20001, owner of 1,400 shares of Common Stock, has
notified the Company in writing that it intends to present the following
resolution at the Annual Meeting for action by the shareholders:
21
"Resolved, that the shareowners of Loews Corporation ('Company') hereby urge
that the Board of Directors prepare a description of the Board's role in the
development and monitoring of the Company's long-term strategic plan.
Specifically, the disclosure should include the following: (1) A description
of the Company's corporate strategy development process, including timelines;
(2) an outline of the specific tasks performed by the Board in the strategy
development and the compliance monitoring processes, and (3) a description of
the mechanisms in place to ensure director access to pertinent information for
informed director participation in the strategy development and monitoring
processes. This disclosure of the Board's role in the strategy development
process should be disseminated to shareowners through appropriate means,
whether it be posted on the Company's website or sent via a written
communication to shareowners.
"Statement of Support: The development of a well-conceived corporate
strategy is critical to the long-term success of a corporation. While senior
management of our Company is primarily responsible for development of the
Company's strategic plans, in today's fast-changing environment it is more
important than ever that the Board engage actively and continuously in
strategic planning and the ongoing assessment of business opportunities and
risks. It is vitally important that the individual members of the Board, and
the Board as an entity, participate directly and meaningfully in the
development and continued assessment of our Company's strategic plan.
"A recent report by PricewaterhouseCoopers entitled 'Corporate Governance
and the Board - What Works Best' examined the issue of director involvement in
corporate strategy development. The Corporate Governance Report found that
chief executives consistently rank strategy as one of their top issues, while
a poll of directors showed that board contributions to the strategic planning
process are lacking. It states: 'Indeed, it is the area most needing
improvement. Effective boards play a critical role in the development process,
by both ensuring a sound strategic planning process and scrutinizing the plan
itself with the rigor required to determine whether it deserves endorsement.'
"The Company's proxy statement provides biographical background information
on each director, indicating his or her compensation, term of office, and
board committee responsibilities. While this information is helpful in
assessing the general capabilities of individual directors, it provides
shareholders no insight into how the directors, individually and as a team,
participate in the critically important task of developing the Company's
operating strategy. And while there is no one best process for board
involvement in the strategy development and monitoring processes, shareholder
disclosure on the Board's role in strategy development would provide
shareholders information with which to better assess the performance of the
board in formulating corporate strategy. Further, it would help to promote
'best practices' in the area of meaningful board of director involvement in
strategy development.
"We urge your support for this important corporate governance reform."
The Board of Directors recommends a vote AGAINST proposal No. 6.
The duties and responsibilities of the Company's directors are well
established under the laws of Delaware, the state of the Company's
incorporation, and the many judicial decisions interpreting that law. Delaware
law provides that the business and affairs of a corporation be managed by or
under the direction of the corporation's board of directors. The Board of
Directors believes that no useful purpose would be served by the preparation
of the document which this
22
proposal seeks. In fact, in the opinion of the Board, the document sought by
this proposal, which would include descriptions of "mechanisms," "specific
tasks," and "timelines," among other things, could have the effect of impeding
the full flow of information and dialogue necessary for the Board to perform
its duties. Accordingly, the Board of Directors recommends a vote against this
proposal.
SHAREHOLDER PROPOSAL RELATING TO
A NOMINATING COMMITTEE
(Proposal No. 7)
The Central Pension Fund of the International Union of Operating Engineers,
4115 Chesapeake Street, N.W., Washington, D.C. 20016, owner of 28,900 shares
of Common Stock, has notified the Company in writing that it intends to
present the following resolution at the Annual Meeting for action by the
shareholders:
"RESOLVED, that the shareholders of Loews Corporation ('Company') hereby
request that the Company's Board of Directors adopt an Independent Board
Nominating Committee Policy that provides for a transition to a Nominating
Committee composed entirely of independent directors as Nominating Committee
openings occur. For purposes of this resolution, a director would not be
considered independent if he or she is currently or during the past five years
has been:
Employed by the company or an affiliate in an executive capacity;
Employed by a firm that is one of the Company's paid advisors or
consultants;
Employed by a significant customer or supplier;
Employed by a tax-exempt organization that receives significant
contributions from the Company;
Paid by the Company pursuant to any personal services contract with the
company;
Serving in an executive capacity or as a director of a corporation on
which the Company's chairman or chief executive officer is a board
member; or
Related to a member of management of the company.
"SUPPORTING STATEMENT. A board of director's nominating committee is
charged with the role of selecting candidates for the corporation's board. The
board of director's fulfills the vital function of hiring, monitoring,
compensating, and when necessary, replacing senior management. It participates
with and oversees management as it first develops and then executes the
corporation's strategic plans.
"The nominating committee performs the important task of seeking out,
interviewing and ultimately recommending new board nominees that will stand
for election by the shareholders. The board nominating committee should be
composed entirely of directors independent of management who can take the
necessary actions to seek, nominate, and present new director candidates to
the shareholders. The definition of 'independent' director advanced in the
resolution will ensure that those members of our Company's Nominating
Committee will be totally independent of management and best able to undertake
their responsibilities in developing an independent Board focused on the
Company's long-term success.
"Implementation of this resolution would strengthen the process by which
director nominees are selected at our Company. The Board currently has no
Nominating Committee to advise it on nominees to the Board. The Board is
comprised of thirteen directors. According to the Company's
23
proxy statement, Messrs. A.H. Tisch, J.M. Tisch, L.A. Tisch and P.R. Tisch,
each of whom are directors of the Company, also serve as officers of the
Company or its subsidiaries. In addition, Messrs. D.H. Chookaszian, B. Myerson
and E.J. Noha, each of whom are directors, have formerly served as officers of
the Company or its subsidiaries.
"As long-term shareholder, we urge your support of this important corporate
governance reform that we believe will contribute to the Company's long-term
success."
The Board of Directors recommends a vote AGAINST proposal No. 7.
This proposal seeks to establish a nominating committee of the Board of
Directors consisting entirely of members who satisfy a variety of unduly rigid
and restrictive requirements. The Board believes that the directors, acting
through the entire Board, are capable of fulfilling the role of selecting
individuals to serve as directors, and that establishing a committee to
perform that function would be unnecessary. In addition, in the opinion of the
Board, arbitrarily excluding from the nominating process members of the Board
who serve in management of the Company does not aid this process. The Board is
mindful of the benefits of having independent, non-management individuals
participating together with members of management. At the present time, eight
of the members of the Board are not employed by the Company, and six have
never been employed by the Company. Accordingly, the Board of Directors
recommends a vote against this proposal.
SHAREHOLDER PROPOSAL RELATING TO
INSERTS IN CIGARETTE PACKAGING
(Proposal No. 8)
The following shareholders have indicated in writing that they intend to
present the resolution set forth below at the Annual Meeting for action by the
shareholders: The Charitable Trust of the Sisters of Mercy Regional Community
of Detroit, 29000 Eleven Mile Road, Farmington Hills, Michigan 48336, owner of
1,100 shares of Common Stock; Sinsinawa Dominicans, Inc., 585 County Road Z,
Sinsinawa, Wisconsin 53824, owner of 80 shares of Common Stock; Trinity
Health, 29000 Eleven Mile Road, Farmington Hills, Michigan 48336, owner of
2,100 shares of Common Stock; the Minnesota State Board of Investment, Capitol
Professional Office Building, 590 Park Street, St. Paul, Minnesota 55103,
owner of 182,338 shares of Common Stock; and Catholic Health Initiatives, 1999
Broadway, Denver, Colorado 80202, owner of 100 shares of Common Stock.
"WHEREAS, in Lorillard Tobacco Co. et al. V. Reilly, Attorney General of
Massachusetts, et al, the U.S. Supreme Court ruled that Massachusetts law
regarding the sale of tobacco products constituted 'nearly a complete ban on
the communication of truthful information.' Partially because of this
restriction, it ruled against the Commonwealth. The Court ruled that 'a speech
regulation cannot unduly impinge on the speaker's ability to propose a
commercial transaction and the adult listeners opportunity to obtain
information about products.'
"Published reports about this ruling stressed the fact that 'free speech'
regarding the promotion and/or sale of tobacco at the point-of-purchase
involved 'the communication of truthful information' regarding the product.
"Our company supported the position of the Court.
24
"In arguing against damages related to use of our Company's products the
Company has argued that consumers were fully informed as to the health-hazards
connected to their use. However juries here and abroad have not agreed with
such attestations, in part, because of the kinds of promotion - including
those at point-of-purchase - used by our Company.
"In the Master Settlement Agreement reached with 46 States Attorneys General
our company agreed to tell the truth about dangers arising from the use of our
products.
"It would seem to the proponents of this resolution that, if the companies
support the fact that consumers should be fully appraised of 'truthful
information' regarding our products, that such can only be conveyed by a
package insert detailing information regarding the product.
"RESOLVED: shareholders recommend that, in addition to making information
known regarding 'cigarette price, brand availability and average tar and
nicotine yields,' every package of our tobacco products include full and
truthful information regarding ingredients that may be harmful to the
consumer's health, the toxicity of the specific brand, and what detriment to
life-expectancy the consumer may expect to incur from regular use of the
product, as well as the health hazards for others, especially children,
connected with environmental tobacco smoke.
"Supporting Statement: Given the fact that our Company recognizes the health
hazards involved in use of the product, we recommend that this insert shall be
included with the sale of all of our tobacco products. Cigarettes are a drug-
delivery device. With other drugs the FDA has determined that consumers be
fully informed as to the effects, counter-effects and adverse warnings of the
product. It seems to the filers of this resolution that such information would
be another way our company might make sure those using our tobacco products
are fully informed as to the consequences of using them."
The Board of Directors recommends a vote AGAINST proposal No. 8.
Since 1965 federal law has required uniform warning notices on cigarette
packaging. The Company's subsidiary, Lorillard Tobacco Company ("Lorillard")
believes, as a policy matter, that it should continue to defer to the judgment
of governmental and public health authorities in connection with health
warnings on or in cigarette packaging that will best serve the public
interest. This proposal, which would require a vague health warning notice
with respect only to Lorillard's products, would be confusing to the public
and could expose Lorillard to additional risk of litigation. Accordingly, the
Board of Directors believes that this proposal would not be in the best
interest of the Company, and recommends a vote against this proposal.
SHAREHOLDER PROPOSAL RELATING TO
ENVIRONMENTAL TOBACCO SMOKE
(Proposal No. 9)
The Congregation of the Sisters of Charity of the Incarnate Word, P.O. Box
230969, 6510 Lawndale, Houston, Texas 77223, owner of 100 shares of Common
Stock, has notified the Company in writing that it intends to present the
following resolution at the Annual Meeting for action by the shareholders:
25
"WHEREAS, a 2001 Canadian Study published in the International Journal of
Cancer conclusively showed that the more people smoke in the workplace, the
greater the risks for non-smokers. As was reported in the Globe and Mail
(07/12/01), people routinely exposed to a lot of environmental tobacco smoke
(ETS), such as workers in bars and restaurants, face a three-times greater
risk for lung cancer. -- In May, 2000 the U.S. National Institute of
Environmental Health Sciences formally added to its list of 'known human
carcinogens directly inhaled tobacco smoke (ie, environmental tobacco
smoke/ETS); The Arthur D. Little report financed by Philip Morris called
'Public Finance Balance of Smoking in the Czech Republic' stated that health
care expenditures include the effects of passive smoking (ETS). It stated
that, 'based on review of recent studies in the field of respiratory diseases,
that ETS causes lung cancer, chronic airways obstruction, aggravation of
asthma in asthmatic children and other respiratory diseases.' In a most
rigorous study researchers discovered breathing other people's cigarette smoke
makes nonsmokers 82% more likely to suffer a stroke. It also increases the
risk of heart disease, heart attack, lung and breast cancer, and breathing-
related diseases (Tobacco Control, August,. 1999; The Milwaukee Journal
Sentinel, August 18, 1999). The Journal of the American Medical Association
reported in 2001 (436-41): 'Before exposure to environmental tobacco smoke,
coronary flow velocity reserve was significantly higher in nonsmokers than in
smokers. After exposure. . .[it] decreased and was not significantly different
from that of smokers.' An editorial in JAMA stated of the study: 'The
investigators demonstrated that, in healthy young volunteers, just 30 minutes
of exposure to secondhand smoke compromised the endothelial function in
coronary arteries of nonsmokers in a way that made the endothelial response of
nonsmokers indistinguishable from that of habitual smokers.' Restaurant and
bar workers have some of the highest rates of lung cancer among all
occupations. In a parallel situation our Company was sued by a class of flight
attendants who claimed their exposure to ETS increased their risk of
contracting lung cancer from ETS. We paid millions of dollars to settle that
lawsuit. Our Company has funded numerous restaurant and hospitality
associations in its effort to oppose laws prohibiting smoking in restaurants
and bars. We also sponsor events in bars wherein we provide cigarettes for
patrons to smoke. Our Company has yet to accept the scientific evidence that
involuntary exposure to ETS causes lung cancer, yet we admit cigarette smoking
is a cause of lung cancer. This failure to warn may increase our liability to
incur future litigation. RESOLVED: shareholders request the Company fund
appropriate mechanisms to develop and implement a continuing program to warn
persons who smoke the company's products, who are exposed to ETS (such as
restaurant and bar workers) or who are responsible for minors who are exposed
to ETS from the Company's products, that tobacco smoke is hazardous to
nonsmokers and to specify the nature of the hazards."
The Board of Directors recommends a vote AGAINST proposal No. 9.
For many years public health agencies have issued well publicized reports
concerning asserted health risks to non-smokers from environmental tobacco
smoke. In addition, many federal, state and local governmental bodies have
adopted laws and regulations intended to prohibit or restrict smoking in
public places, stores and restaurants and the workplace. The Company's
subsidiary, Lorillard, believes that any additional health warning initiatives
with respect to environmental tobacco smoke should be established in a uniform
manner by applicable governmental bodies and public health agencies. This
proposal that Lorillard establish its own warning program would, in the
opinion of Lorillard, be confusing, could conflict with various governmental
laws and regulations and could expose Lorillard to further risk of litigation.
Accordingly, the Board of Directors believes that this proposal would not be
in the best interest of the Company, and recommends a vote against this
proposal.
26
OTHER MATTERS
The Company knows of no other matters to be brought before the meeting. If
other matters should properly come before the meeting, proxies will be voted
on such matters in accordance with the best judgment of the persons appointed
by the proxies.
The Company will bear all costs in connection with the solicitation of
proxies for the meeting. The Company intends to request brokerage houses,
custodians, nominees and others who hold stock in their names to solicit
proxies from the persons who own stock, and such brokerage houses, custodians,
nominees and others, will be reimbursed for their out-of-pocket expenses and
reasonable clerical expense. The Company has engaged Innisfree M&A
Incorporated ("Innisfree") to solicit proxies on its behalf, at an anticipated
cost of approximately $10,000. In addition to the use of the mails,
solicitation may be made by Innisfree or employees of the Company personally
or by mail, telephone, facsimile or electronic transmission.
Shareholder Proposals for the 2003 Annual Meeting
Shareholder proposals for the Annual Meeting to be held in 2003 must be
received by the Company at its principal executive offices not later than
November 27, 2002 in order to be included in the Company's proxy materials.
Proxies solicited by the Company for the 2003 Annual Meeting may confer
discretionary authority to vote on any proposals submitted after February 10,
2003 without a description of them in the proxy materials for that meeting.
Shareholder proposals should be addressed to Loews Corporation, 667 Madison
Avenue, New York, New York 10021-8087, Attention: Corporate Secretary.
By order of the Board of Directors,
BARRY HIRSCH
Secretary
Dated: March 27, 2002
PLEASE COMPLETE, DATE, SIGN AND
RETURN YOUR PROXY PROMPTLY
27
LOEWS CORPORATION Proxy
------------------------------------------------------------------------------
This Proxy is Solicited on Behalf of the Board of Directors
The undersigned hereby constitutes and appoints Bernard Myerson, Barry
Hirsch and Gary W. Garson and each of them, each with full power of
substitution, true and lawful attorneys, agents and proxies with all the
powers the undersigned would possess if personally present, to vote all shares
of Common Stock and Carolina Group stock of the undersigned in Loews
Corporation at the Annual Meeting of Shareholders to be held at The Regency
Hotel, 540 Park Avenue, New York, New York, on May 14, 2002, at 11:00 A.M.,
New York City Time, and at any adjournments thereof, upon the matters set
forth in the Notice of Meeting and accompanying Proxy Statement and, in their
judgment and discretion, upon such other business as may properly come before
the meeting.
This Proxy when properly executed will be voted in the manner directed by
the undersigned shareholder. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
"FOR" THE ELECTION OF DIRECTORS, "FOR" PROPOSAL 2, AND "AGAINST" PROPOSALS 3,
4, 5, 6, 7, 8 AND 9.
THIS PROXY IS CONTINUED ON THE REVERSE SIDE
PLEASE SIGN ON THE REVERSE SIDE AND RETURN PROMPTLY
Please mark
your votes
like this [ X ]
The Board of Directors recommends a vote The Board of Directors recommends a vote AGAINST
FOR Items 1 and 2 Items 3, 4, 5, 6, 7, 8 and 9
Item 1-ELECTION OF DIRECTORS WITHHELD
Nominees: FOR FOR ALL FOR AGAINST ABSTAIN FOR AGAINST ABSTAIN
ITEM 3-SHAREHOLDER [ ] [ ] [ ] ITEM 7-SHAREHOLDER [ ] [ ] [ ]
01) J.L. Bower PROPOSAL-POLITICAL PROPOSAL-NOMINATING
02) J. Brademas CONRIBUTIONS COMMITTEE
03) P.J. Fribourg
04) B. Myerson ITEM 4-SHAREHOLDER [ ] [ ] [ ] ITEM 8-SHAREHOLDER [ ] [ ] [ ]
05) E.J. Noha PROPOSAL-INDEPENDENT PROPOSAL-INSERTS IN
06) M.F. Price BOARD OF DIRECTORS CIGARETTE PACKAGING
07) G.R. Scott [ ] [ ]
08) A.H. Tisch
09) J.S. Tisch ITEM 5-SHAREHOLDER [ ] [ ] [ ] ITEM 9-SHAREHOLDER [ ] [ ] [ ]
10) J.M. Tisch PROPOSAL-INDEPENDENT PROPOSAL-
11) L.A. Tisch DIRECTORS AND ENVIRONMENTAL
12) P.R. Tisch COMMITTEES TOBACCO SMOKE
13) F. Wilpon
ITEM 6-SHAREHOLDER [ ] [ ] [ ]
PROPOSAL-DIRECTORS'
STRATEGY DEVELOPMENT
ROLE
WITHHELD FOR: (Write that Nominee's name
in the space provided.)
---------------------------------------------
ITEM 2-RATIFY DELOITTE FOR AGAINST ABSTAIN
& TOUCHE LLP AS
INDEPENDENT [ ] [ ] [ ]
ACCOUNTANTS
----------
| Please sign EXACTLY as name appears on this
| Proxy. When shares are held by joint tenants,
| both should sign. When signing as attorney,
| executor, administrator, trustee or guardian,
| please give full title as such. Corporate and
| partnership proxies should be signed by an
| authorized person indicating the person's title.
Signature(s) Date:
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