SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-K/A
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1995, or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Transition Period from to
Commission File Number 0-9341
Security National Financial Corporation
(Exact name of registrant as specified in its Charter)
UTAH 87-0345941
- ---------------------------------- -----------------------
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification Number)
5300 South 360 West, Suite 310 84123
Salt Lake City, Utah (Zip Code)
- ------------------------------------
(Address of principal executive offices)
Registrant's telephone number, including area code: (801) 264-1060
Securities registered pursuant to Section 12(d) of the Act:
Name of each exchange
Title of each Class on which registered
- ------------------- ---------------------
None None
Securities registered pursuant to Section 12(g) of the Act:
Class A Common stock, $2.00 Par Value
(Title of Class)
Class C Common stock, $0.40 Par Value
(Title of Class)
Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of
the Securities Exchange Act of 1934 during the preceding 12
months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes [X] No___
Indicated by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained
herein, and will not be contained, to the best of
registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K. [ ]
The aggregate market value of the voting stock held by non-
affiliates of the registrant as of March 15, 1996 was
$16,799,895.
As of March 15, 1996, registrant had outstanding 3,220,801
shares of Class A Common Stock and 2,362,545 shares of
Class C Stock.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the definitive Proxy Statement for the
registrant's 1996 Annual Meeting of Shareholders are
incorporated by reference into Part III hereof.
Item 10 - Directors and Executive Officers
- ------------------------------------------
The By-laws of the Company provide that the Board of Directors shall consist
of not less than three nor more than eleven members. The term of office of
each director is for a period of one year or until the election and
qualification of his successor. Directors need not be a resident of the State
of Utah but must be a stockholder of the Company.
The size of the Board of Directors of the Company for the coming year is nine
members. Unless authority is withheld by your Proxy, it is intended that the
Common Stock represented by your Proxy will be voted for the respective
nominees listed below. If any nominee should not serve for any reason, the
Proxy will be voted for such person as shall be designated by the Board of
Directors to replace such nominee. The Board of Directors has no reason to
expect that any nominee will be unable to serve. There is no arrangement
between any of the nominees and any other person or persons pursuant to
which he was or is to be selected as a director. There is no family
relationship between or among any of the nominees, except that Scott M.
Quist is the son of George R. Quist.
The Nominees
The nominees to be elected by the holders of Class A Common Stock are as
follows:
Position(s)
Name Age Director Since with the Company
- ------------ ----- ---------------- ----------------------
Scott M. Quist 42 May 1986 First Vice President,
General Counsel, Treasurer
and Director
Charles L. Crittenden 76 October 1979 Director
Sherman B. Lowe 81 October 1979 Director
The nominees for election by the holders of Class A and Class C Common Stock,
voting together, are as follows:
Position(s)
Name Age Director Since with the Company
- ------------ ----- ------------------ ---------------------
George R. Quist 75 October 1979 Chairman of the Board,
President and Chief
Executive Officer
William C. Sargent 67 February 1980 Senior Vice President,
Secretary and Director
H. Craig Moody 42 September 1995 Director
R.A.F. McCormick 82 October 1979 Director
Nathan H. Wagstaff 75 October 1979 Director
W. Lowell Steen 81 October 1979 Director
The following is a description of the business experience of each of the
nominees and directors.
George R. Quist, age 75, has been Chairman of the Board of Directors, President
and Chief Executive Officer of the Company since October 1979. From 1946 to
1960, he was an agent, District Manager and Associate General Agent for various
insurance companies. From 1960 to 1964, he was Treasurer and Executive Vice
President of Pacific Guardian Life Insurance Company. Mr. Quist also served
from 1981 to 1982 as the President of The National Association of Life
Companies, a trade association of 642 life insurance companies, and from 1982
to 1983 as its Chairman of the Board.
William C. Sargent, age 67, has been Senior Vice President of the Company
since 1980, Secretary since October 1993, and a director since February 1980.
Prior to that time, he was employed by Security National as a salesman and
agency superintendent.
Scott M. Quist, age 42, has been General Counsel of the Company since 1982, a
Vice President since 1983, Treasurer since October 1993, and a director since
May, 1986. From 1980 to 1982, Mr. Quist was a tax specialist with Peat,
Marwick, Main, & Co., in Dallas, Texas. Since 1986 he has been a director of
The National Association of Life Companies, a trade association of 642
insurance companies and its Treasurer until its merger with the American
Council of Life Companies. Mr. Quist is currently a member of the Board of
Governors of the Forum 500 Section (representing small companies) of the
American Council of Life Insurance. Mr. Quist has also been a director
since November 1993 of Key Bank of Utah.
Charles L. Crittenden, age 76, has been a director of the Company since October
1979. Mr. Crittenden is sole stockholder of Crittenden Paint & Glass Company
since 1958. He is a 50% stockholder of Crittenden Enterprises, a real estate
development company and Chairman of the Board of Linco, Inc.
Sherman B. Lowe, age 81, has been a director of the Company since October 1979.
Mr. Lowe was formerly President and Manager of Lowe's Pharmacy, Salt Lake
City, Utah, for the past 30 years. He is now retired. He is a one-third
owner of Burton-Lowe Ranches, a general partnership.
R.A.F. McCormick, age 82, has been a director of the Company since October
1979. He is the past Vice President of Sales for Cloverclub Foods. He is now
retired.
H. Craig Moody, age 42, was elected a director of the Company on September 25,
1995. Mr. Moody is owner of Moody & Associates, a political consulting and
real estate company. He is a former Speaker and House Majority Leader of the
House of Representatives of the State of Utah.
W. Lowell Steen, age 81, has been a director of the Company since October 1979.
He has been a real estate investment broker for the last 13 years. Prior to
that time, he was a large-scale rancher, food processor, and in related
concerns. Currently, he is President and sole stockholder of Lowell Steen,
Inc., a real estate company.
Nathan H. Wagstaff, age 76, has been a director of the Company since October,
1979. He has served as President and Chairman of the Board of Directors of
Nate Wagstaff Company, Inc., since 1975. He has also served as President
and General Manager of Western States Distribution Company, Highland
Petroleum Company, Inc., and Holiday Oil Company. Mr. Wagstaff is the sole
stockholder of Nate Wagstaff Company, Inc., an oil distribution company.
Executive Officers
- ------------------
The following table sets forth certain information with respect to the
executive officers of the Company (the business biographies for the first
three individuals are set forth above):
Name Age Title
- -------------- -------- ---------------
George R. Quist1 75 Chairman of the Board, President
and Chief Executive Officer
Scott M. Quist1 42 First Vice President, General
Counsel and Treasurer
William C. Sargent 67 Senior Vice President and Secretary
1George R. Quist is the father of Scott M. Quist.
The Board of Directors of the Company has a written procedure which requires
disclosure to the Board of any material interest or any affiliation on the
part of any of its officers, directors or employees which is in conflict or
may be in conflict with the interests of the Company.
No director, officer or 5% stockholder of the Company or its subsidiaries, or
any affiliate thereof has had any transactions with the Company or its
subsidiaries during 1995 or 1994 other than employment arrangements or as
described above.
None of the Directors are board members of any other company having a class of
equity securities registered under the Securities Exchange Act of 1934, as
amended, or any company registered as an investment company under the
Investment Company Act of 1940, as amended, with the exception of Scott M.
Quist, who is a director of Key Bank of Utah. All directors of the Company
hold office until the next annual meeting of stockholders, until their
successors have been elected and qualified, or until their earlier resignation
or removal.
Item 11 - Executive Compensation
- --------------------------------
The following table discloses compensation received by the Company's Chief
Executive Officer and the two other most highly compensated executive
officers who were serving as executive officers at December 31, 1995.
Summary Compensation Table
Annual Compensation
-----------------------
Other
Annual
Name and Compen-
Principal Position Year Salary Bonus sation(2)
- ------------------ ------- -------- ------- -----------
George R. Quist(1)
Chairman of the
Board, President 1995 $104,469 $15,303 $2,400
and Chief 1994 102,245 15,303 2,400
Executive Office 1993 101,223 15,303 2,400
William C. Sargent
Senior Vice
President, 1995 77,538 11,725 4,500
Director and 1994 82,777 10,725 4,500
Secretary 1993 90,842 7,725 4,500
Scott M. Quist(1)
First Vice
President, General 1995 84,871 13,000 7,200
Counsel, Director 1994 82,502 12,000 7,200
and Treasurer 1993 73,518 9,246 7,200
Long-Term
Compensation
Awards Payouts
-------- ------- All
Stock Other
Name and Options Incentive Compen-
Principal Position Year (Shares) Payouts sation(3)
- -------------------- ------- -------- --------- -----------
George R. Quist(1) 1995 2,625 0 5,937
Chairman of the 1994 2,500 0 8,263
Board, President 1993 50,000 0 14,600
and Chief
Executive Officer
William C. Sargent 1995 2,100 0 2,100
Senior Vice 1994 2,000 0 4,020
President, 1993 40,000 0 8,608
Director and
Secretary
Scott M. Quist(1) 1995 3,149 0 2,206
First Vice 1994 3,000 0 3,924
President, 1993 2,856 0 7,422
General Counsel
Director and
Treasurer
_____________________________
(1) George R. Quist is the father of Scott M. Quist.
(2) The amounts indicated under "Other Annual Compensation" for 1995
consist of payments related to the operation of automobiles by the
named executive officers. However such payments do not include the
furnishing of an automobile by the Company to George R. Quist,
William C. Sargent and Scott M. Quist nor the payment of insurance
and property taxes with respect to the automobiles operated by the
named executive officers.
(3) The amounts indicated under "All Other Compensation" for 1995 consist
of (a) amounts contributed by the Company into a trust for the benefit
of the named executive officers under the Employee Stock Ownership Plan
(George R. Quist, $1,200; William C. Sargent, $893; and Scott M. Quist,
$991); (b) insurance premiums paid by the Company with respect to a
group life insurance plan for the benefit of the named executive
officers ($2,522 for all named executive officers as a group, or $92
for George R. Quist, $1,215 for William C. Sargent and Scott M.
Quist, and $1,215 for each individual officer); and (c) life
insurance premiums paid by the Company for the benefit of the family
of Mr. George R. Quist ($4,645).
Retirement Plans
George R. Quist, who has been Chairman, President and Chief Executive Officer
of the Company since 1979, has a Deferred Compensation Agreement, dated
December 8, 1988, with the Company (the "Compensation Agreement"). This
Compensation Agreement provides (i) upon Mr. Quist's retirement at the age of 70
or an earlier age as may be specified by the Board of Directors, the Company
shall pay him $50,000 per year as an annual retirement benefit for a period of
10 years from the date of retirement; and (ii) upon his death, the remainder
of such annual payments shall be payable to his wife, if she survives him.
The Compensation Agreement further provides that the Board of Directors may
elect to pay the entire amount of deferred compensation in the form of a single
lump-sum payment or other installment payments, so long as the term of such
payments do not exceed 10 years. However, in the event Mr. Quist's employment
with the Company is terminated for any reason other than retirement, death or
disability, the entire deferred compensation shall be forfeited by him.
Director's Fees
Directors of the Company (but not including directors who are employees) are
paid a director's fee of $7,200 per year by the Company and are reimbursed
for any travel expenses incurred in attending Board meetings. No additional
amounts are paid by the Company for committee participation or special
assignments.
Employee Stock Ownership Plan
Effective January 1, 1980, the Company adopted an employee stock ownership plan
(the "Ownership Plan") for the benefit of career employees and certain
commissioned salespersons of the Company and its subsidiaries. The following is
a description of the Ownership Plan, and is qualified in its entirety by the
Ownership Plan, a copy of which is available for inspection at the Company's
offices.
Under the Ownership Plan, the Company has discretionary power to make
contributions on behalf of all eligible employees into a trust created under
the Ownership Plan. Employees become eligible to participate in the Ownership
Plan when they have attained the age of 19 and have completed one year of
service (a twelve-month period in which the Employee completes at least 1,040
hours of service). The Company's contributions under the Ownership Plan are
allocated to eligible employees on the same ratio that each eligible
employee's compensation bears to total compensation for all eligible
employees during each year. To date, the Ownership Plan has approximately
95 participants and had contributions payable to the Plan in 1995 of $21,914.
Benefits under the Ownership Plan vest as follows: 20% after the third year of
eligible service by an employee, an additional 20% in the fourth, fifth, sixth
and seventh years of eligible service by an employee. Benefits under the
Ownership Plan will be paid out in one lump sum or in installments in the
event the employee becomes disabled, reaches the age of 65, or is terminated
by the Company and demonstrates financial hardship. The Ownership Plan
Committee, however, retains discretion to determine the final method of
payment. Finally, the Company reserves the right to amend or terminate the
Ownership Plan at any time. The trustees of the trust fund under the
Ownership Plan are Messrs. R.A.F. McCormick, George R. Quist, and William C.
Sargent, all directors of the Company.
1987 Incentive Stock Option Plan
In 1987, the Company adopted the 1987 Incentive Stock Option Plan (the 1987
Plan). The 1987 Plan provides that shares of the Class A Common Stock of the
Company may be optioned to certain officers and key employees of the Company.
The Plan establishes a Stock Option Plan Committee which selects the employees
to whom the options will be granted and determines the price of the stock. The
Plan establishes the minimum purchase price of the stock at an amount which is
not less than 100% of the fair market value of the stock (110% for employees
owning more than 10% of the total combined voting power of all classes of
stock). The Plan provides that if additional shares of Class A Common Stock
are issued pursuant to a stock split or a stock dividend, the number of
shares of Class A Common Stock then covered by each outstanding option
granted hereunder shall be increased proportionately with no increase in the
total purchase price of the shares then so covered, and the number of shares
of Class A Common Stock reserved for the purpose of the Plan shall be
increased by the same proportion. In the event that the shares of Class A
Common Stock of the Company from time to time issued and outstanding are
reduced by a combination of shares, the number of shares of Class A Common
Stock then covered by each outstanding option granted hereunder shall be
reduced proportionately with no reduction in the total price of the shares
then so covered, and the number of shares of Class A Common Stock reserved
for the purposes of the Plan shall be reduced by the same proportion.
The Plan terminates ten years from its effective date and options granted
are non-transferable. The Plan also includes a Stock Appreciation Right
which permits the holder of the option to elect to receive cash, amounting
to the difference between the option price and the fair market value of the
stock at the time of the exercise, or a lesser amount of stock without
payment, upon exercise of the option.
YEAR-END VALUES OF STOCK OPTIONS
Number of Securities Value of Unexercised
Underlying Unexercised Options In-The-Money Options
at Fiscal Year-End at Fiscal Year-End(1)
------------------------------- ---------------------
Name Exercisable Unexercisable Exercisable Unexercisable
- ----------- -------------- ------------- ----------- -------------
Scott M. Quist 66,134 0 $191,606 0
All executive
officers and
key employee
option recipients
as a group (4
persons) 119,603 0 $354,810 0
(1) The value of options equals the market valule of Security National
Financial Corporation common stock at December 31, 1995 ($5.38 per
share), minus the exercise price of options, and includes only those
options the exercise price of which was less than market value at
year-end.
1993 Stock Option Plan
On June 21, 1993, the Company adopted the Security National Financial
Corporation 1993 Stock Incentive Plan (the "1993 Plan"), which reserves 300,000
shares of Class A Common Stock for issuance thereunder. The 1993 Plan was
approved at the annual meeting of the stockholders held on June 21, 1993. The
1993 Plan allows the Company to grant options and issue shares as a means of
providing equity incentives to key personnel, giving them a proprietary
interest in the Company and its success and progress.
The 1993 Plan provides for the grant of options and the award or sale of stock
to officers, directors, and employees of the Company. Both "incentive stock
options," as defined under Section 422A of the Internal Revenue Code of 1986
(the "Code"), and "non-qualified options" may be granted pursuant to the 1993
Plan. The exercise prices for the options granted are equal to or greater
than the fair market value of the stock subject to such options as of the
date of grant, as determined by the Company's Board of Directors.
The options granted on April 29, 1993 were to reward certain officers and key
employees who have been employed by the Company for a number of years and
to help the Company retain these officers by providing them with an additional
incentive to contribute to the success of the Company.
The 1993 Plan is to be administered by the Board of Directors or by a committee
designated by the Board. The terms of options granted or stock awards or sales
effected under the 1993 Plan are to be determined by the Board of Directors or
its committee. The Plan provides that if the shares of Class A Common Stock
shall be subdivided or combined into a greater or smaller number of shares or
if the Company shall issue any shares of Class A Common Stock as a stock
dividend on its outstanding Class A Common Stock the number of shares of
Class A Common Stock deliverable upon the exercise of Options shall be
increased or decreased proportionately, and appropriate adjustments shall be
made in the purchase price per share to reflect such subdivision,
combination or stock dividend. No options may be exercised for a term of
more than ten years from the date of grant. Options intended as incentive
stock options may be issued only to employees, and must meet certain
conditions imposed by the code, including a requirement that the option
exercise price be no less than the fair market value of the option shares on
the date of grant. The 1993 Plan provides that the exercise price for non-
qualified options will be not less than at least 50% of the fair market
value of the stock subject to such option as of the date of grant of such
options, as determined by the Company's Board of Directors.
The 1993 Plan has a term of ten years. The Board of Directors may amend or
terminate the 1993 Plan at any time, subject to approval of certain
modifications to the 1993 Plan by the shareholders of the Company as may be
required by law or the 1993 Plan.
YEAR-END VALUES OF STOCK OPTIONS
Number of Securities Value of Unexercised
Underlying Unexercised Options In-The-Money Options
at Fiscal Year-End at Fiscal Year-End(1)
Name Exercisable Unexercisable Exercisable Unexercisable
- --------- ------------- -------------- ------------- --------------
George R. Quist 139,125 0 $224,542 0
William C.
Sargent 68,985 0 $151,083 0
(1) The value of options equals the market valule of Security National
Financial Corporation common stock at December 31, 1995 ($5.38 per
share), minus the exercise price of options, and includes only those
options the exercise price of which was less than market value at
year-end.
Item 12 - Security Ownership of Certain Beneficial Owners and Management
- ------------------------------------------------------------------------
The following table sets forth security ownership information of the Company's
Class A and Class C Common Stock as of April 20, 1996, (i) for persons who
own beneficially more than 5% of the Company's outstanding Class A or Class C
Common Stock, (ii) each director of the Company, and (iii) for all executive
officers and directors of the Company as a group.
Class A and
Class A Class C Class C
Common Stock Common Stock Common Stock
--------------- -------------- ------------
Name and
Address of Amount Amount Amount
Beneficial Beneficially Percent Beneficially Percent Beneficially Percent
Owner Owned of Class Owned of Class Owned of Class
- ---------- ----------- ---------- ------------ --------- ------------ -------
George R. Quist
4491 Wander Lane
Salt Lake City,
Utah 84117 233,590 7.2 1,168,682 49.5 1,402,272 24.9
William C. Sargent
4974 Holladay Blvd.
Salt Lake City,
Utah 84117 63,903 2.0 139,252 5.9 203,155 3.6
Employee Stock
Ownership Plan(3)
5300 South 360 West
Suite 310
Salt Lake City,
Utah 84123 623,358 19.1 496,300 21.0 1,119,658 19.9
Charles L. Crittenden
248 - 24th Street
Ogden, Utah 84404 -0- -0- 77,232 3.3 77,232 1.4
Sherman B. Lowe
2197 So. 2100 E.
Salt Lake City,
Utah 84109 18,361 0.6 84,404 3.6 102,765 1.8
R.A.F. McCormick
400 East Crestwood
Road
Kaysville,
Utah 84037 8,806 0.3 44,035 1.9 52,841 0.9
Class A
Class A Class C and Class C
Common Stock Common Stock Common Stock
------------- ------------- --------------
Name and
Address of Amount Amount Amount
Beneficial Beneficially Percent Beneficially Percent Beneficially Percent
Owner Owned of Class Owned of Class Owned of Class
- ---------- ----------- -------- ------------ -------- ------------ -------
H. Craig Moody
1782 East
Faunsdale
Drive
Sandy,
Utah 84092 -0- -0- -0- -0- -0- -0-
Scott M. Quist
7 Wanderwood Way
Sandy, Utah 84094 36,426 1.1 23,349 1.0 59,775 1.1
W. Lowell Steen
12705 SE River
Rd. Apt. 402S
Portland,
Oregon 97222 210 0.0 767 0.0 977 0.0
Nathan H. Wagstaff
2131 King Street
Salt Lake City,
Utah 84109 21,992 0.7 82,809 3.5 104,801 1.9
Associated
Investors(4)
5300 So. 360 W.
Suite 310
Salt Lake City,
Utah 84123 64,875 2.0 211,306 8.9 276,181 4.9
- ---------------------------
All directors and executive
officers (9 persons)
* Less than one percent
(1) Does not include 593,675 shares of Class A Common Stock and 472,665
shares of Class C Common Stock owned by the Company's Employee Stock
Ownership Plan (ESOP), of which George R. Quist, William C. Sargent, and
R.A.F. McCormick are the trustees and accordingly, exercise shared
voting and investment powers with respect to such shares.
(2) The number of shares shown in the table for George R. Quist and William
C. Sargent does not include 64,875 shares of Class A Common Stock and
211,306 shares of Class C Common Stock owned by Associated Investors,
a Utah general partnership, of which these individuals are the managing
partners and, accordingly, exercise shared voting and investment powers
with respect to such shares.
(3) The trustees of the Employee Stock Ownership Plan (ESOP) are George R.
Quist, William C. Sargent, and R.A.F. McCormick, who exercise shared
voting and investment powers.
(4) The managing partners of Associated Investors are George R. Quist and
William C. Sargent, who exercise shared voting and investment powers.
The Company's officers and directors, as a group, own beneficially
approximately 35.6% of the outstanding shares of the Company's Class A and
Class C Common Stock.
Item 13 - Certain Relationships and Related Transactions
- --------------------------------------------------------
The Company's Board of Directors has a written procedure which requires
disclosure to the Board of any material interest or any affiliation on the part
of any of its officers, directors or employees which is in conflict or may
be in conflict with the interests of the Company.
No director, officer or 5% stockholder of the Company or its subsidiaries, or
any affiliate thereof, has engaged in any business transactions with the
Company or its subsidiaries during 1994 or 1995 other than as described
herein.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Company has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
SECURITY NATIONAL FINANCIAL CORPORATION
Dated: By: George R. Quist,
Chairman of the Board, President
and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed by the following persons in counterpart on behalf of
the Company on the dates indicated:
SIGNATURE TITLE DATE
- --------------- -------------------- -----------
George R. Quist Chairman of the
Board, President and
Chief Executive Officer April 29, 1996
Scott M. Quist (Principal Executive
Officer) First Vice
President, General Counsel,
Treasurer and Director
(Principal Accounting Officer) April 29, 1996
William C. Sargent Senior Vice President,
Secretary and Director April 29, 1996
Charles L. Crittenden Director April 29, 1996
Sherman B. Lowe Director April 29, 1996
R.A.F. McCormick Director April 29, 1996
H. Craig Moody Director April 29, 1996
W. Lowell Steen Director April 29, 1996
Nathan H. Wagstaff Director April 29, 1996
