SECURITY NATIONAL FINANCIAL CORPORATION
5300 South 360 West, Suite 250
Salt Lake City, Utah 84123
August 17, 1998
Dear Stockholder:
On behalf of the Board of Directors, it is my pleasure to invite you to
attend the Annual Meeting of Stockholders of Security National Financial
Corporation (the "Company") to be held on October 1, 1998, at 11:30 a.m.,
Mountain Daylight Time, at 5300 South 360 West, Suite 250, Salt Lake City,
Utah.
The matters to be addressed at the meeting will include the election of
nine directors and the ratification of the appointment of Ernst & Young LLP as
the Company's independent accountants for the fiscal year ending December 31,
1998.
Your vote is very important. We hope you will take a few minutes to
review the Proxy Statement and complete, sign, and return your Proxy Card in
the envelope provided, even if you plan to attend the meeting. Please note
that sending us your Proxy will not prevent you from voting in person at the
meeting, should you wish to do so.
Thank you for your support of Security National Financial Corporation.
We look forward to seeing you at the Annual Stockholders Meeting.
Sincerely yours,
SECURITY NATIONAL
FINANCIAL CORPORATION
George R. Quist,
Chairman of the Board, President,
and Chief Executive Officer
SECURITY NATIONAL FINANCIAL CORPORATION
5300 South 360 West, Suite 250
Salt Lake City, Utah 84123
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders
of Security National Financial Corporation (the "Company"), a Utah corporation,
will be held on October 1, 1998, at 5300 South 360 West, Suite 250, Salt Lake
City, Utah, at 11:30 a.m., Mountain Daylight Time, to consider and act upon the
following:
1. To elect a Board of Directors consisting of nine directors (three
directors to be elected exclusively by the Class A common
stockholders voting separately as a class and the remaining six
directors to be elected by the Class A and Class C common
stockholders voting together) to serve until the next Annual
Meeting of Stockholders or until their successors are elected and
qualified;
2. To ratify the appointment of Ernst & Young LLP as the
Company's independent accountants for the fiscal year ending
December 31, 1998; and
3. To transact such other business as may properly come before
the meeting or any adjournment thereof.
The foregoing items of business are more fully described in the Proxy
Statement accompanying this Notice.
The Board of Directors has fixed the close of business on August 14,
1998, as the record date for the determination of stockholders entitled to
notice of and to vote at the annual meeting.
STOCKHOLDERS ARE CORDIALLY INVITED TO ATTEND THE MEETING.
A PROXY STATEMENT AND PROXY CARD ARE ENCLOSED HEREWITH.
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE SIGN,
DATE AND RETURN THE PROXY CARD IN THE ENCLOSED POSTAGE
PAID ENVELOPE SO THAT YOUR SHARES MAY BE VOTED AT THE
MEETING. THE GIVING OF A PROXY WILL NOT AFFECT YOUR RIGHT TO
VOTE IN PERSON IF YOU ATTEND THE MEETING.
By Order of the Board of Directors,
William C. Sargent
Senior Vice President
and Secretary
Salt Lake City, Utah, August 17, 1998
SECURITY NATIONAL FINANCIAL CORPORATION
5300 South 360 West, Suite 250
Salt Lake City, Utah 84123
PROXY STATEMENT
Annual Meeting of Stockholders
To Be Held on October 1, 1998
GENERAL INFORMATION
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Security National Financial Corporation
(the "Company") for use at the Annual Meeting of Stockholders to be held on
October 1, 1998, at 5300 South 360 West, Suite 250, Salt Lake City, Utah, at
11:30 a.m., Mountain Daylight Time, or at any adjournment or postponements
thereof (the "Annual Meeting"). The shares covered by the enclosed Proxy, if
such is properly executed and received by the Board of Directors prior to the
meeting, will be voted in favor of the proposals to be considered at the Annual
Meeting, and in favor of the election of the nominees to the Board of Directors
(three nominees to be elected by the Class A common stockholders voting
separately as a class and six nominees to be elected by the Class A and Class
C common stockholders voting together) as listed unless such Proxy specifies
otherwise, or the authority to vote in the election of directors is withheld.
A Proxy may be revoked at any time before it is exercised by giving written
notice to the Secretary of the Company at the above address. Stockholders may
vote their shares in person if they attend the Annual Meeting, even if they
have executed and returned a Proxy. This Proxy Statement and accompanying
Proxy Card were mailed to stockholders on or about August 28, 1998.
Your vote is important. Please complete and return the Proxy Card so
your shares can be represented at the Annual Meeting, even if you plan to
attend in person.
If a shareholder wishes to assign a proxy to someone other than the Directors'
Proxy Committee, all three names appearing on the Proxy Card must be crossed
out and the name(s) of another person or persons (not more than three)
inserted. The signed card must be presented at the meeting by the person(s)
representing the shareholder.
The cost of this solicitation will be borne by the Company. The Company may
reimburse brokerage firms and other persons representing beneficial owners of
shares for their expenses in forwarding solicitation materials to such
beneficial owners. Proxies may also be solicited by certain of the Company's
directors, officers, and regular employees, without additional compensation.
The matters to be brought before the Annual Meeting are (1) to elect directors
to serve for the ensuing year, and (2) to ratify the appointment of Ernst &
Young LLP as the Company's independent accountants for the fiscal year ending
December 31, 1998.
VOTING SECURITIES
Only holders of record of Common Stock at the close of business on August 14,
1998, will be entitled to vote at the Annual Meeting. As of June 30, 1998,
there were issued and outstanding 3,733,470 shares of Class A Common Stock,
$2.00 par value per share, and 5,140,621 shares of Class C Common Stock $.20
par value per share resulting in a total of 8,813,316 shares of both Class A
and Class C Common Stock outstanding. A majority of the outstanding shares
(4,406,659) of Common Stock will constitute a quorum for the transaction of
business at the meeting.
The holders of either class of Common Stock of the Company are entitled to one
vote per share. Cumulative voting is not permitted in the election of
directors.
The Company's Articles of Incorporation provide that the Class A common
stockholders and Class C common stockholders have different voting rights in
the election of directors. The Class A common stockholders voting separately
as a class will be entitled to vote for three of the nine directors to be
elected (the nominees to be voted upon by the Class A stockholders separately
consist of Messrs. R.A.F. McCormick, H. Craig Moody, and Scott M. Quist).
The remaining six directors will be elected by the Class A and Class C common
stockholders voting together (the nominees to be so voted upon consist of
Messrs. Charles L. Crittenden, Robert G. Hunter, Sherman W. Lowe, George R.
Quist, William C. Sargent, and Norman G. Wilbur). For the other business to be
conducted at the Annual Meeting, the Class A and Class C common
stockholders will vote together, one vote per share. Class A common
stockholders will receive a different form of Proxy than the Class C common
stockholders.
ELECTION OF DIRECTORS
There are three committees of the Board of Directors, which meet periodically
during the year: the Audit Committee, the Compensation Committee, and the
Executive Committee. The Board of Directors does not have a Nominating
Committee.
The Compensation Committee is responsible for recommending to the Board of
Directors for approval the annual compensation of each executive officer of the
Company and the executive officers of the Company's subsidiaries, developing
policy in the areas of compensation and fringe benefits, contributions under
the Employee Stock Ownership Plan, contribution under the 401(k) Retirement
Savings Plan, granting of options under the stock option plans, and creating
other employee compensation plans. The Compensation Committee consists
of Messrs. Charles L. Crittenden, Sherman B. Lowe, and George R. Quist.
During 1997, the Compensation Committee met on two occasions.
The Audit Committee directs the auditing activities of the Company's internal
auditors and outside public accounting firm and approves the services of the
outside public accounting firm. The Audit Committee consists of Messrs.
Charles L. Crittenden, Sherman B. Lowe, H. Craig Moody and Nathan H.
Wagstaff. During 1997 the Audit Committee met on one occasion.
The Executive Committee reviews Company policy, major investment activities
and other pertinent transactions of the Company. The Executive Committee
consists of Messrs. George R. Quist, Scott M. Quist, William C. Sargent and H.
Craig Moody. During 1997, the Executive Committee met on four occasions.
During 1997, there were six meetings of the Company's Board of Directors.
The Company's Bylaws 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. A director is not required to 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:
Name Age Director Since Position(s) with
the Company
- ---------------- ------ --------------- -------------------
R.A.F. McCormick 84 October 1979 Director
H. Craig Moody 46 September 1995 Director
Scott M. Quist 44 May 1986 First Vice President,
General Counsel,
Treasurer and
Director
The nominees for election by the holders of Class A and Class C Common
Stock, voting together, are as follows:
Name Age Director Since Position(s) with the
Company
- ---------------- ----- -------------- ---------------------
Charles L. Crittenden 77 October 1979 Director
Robert G. Hunter 39 Candidate
Sherman B. Lowe 83 October 1979 Director
George R. Quist 77 October 1979 Chairman of the
Board, President,
and Chief Executive
Officer
William C. Sargent 69 February 1980 Senior Vice President,
Secretary and
Director
Norman G. Wilbur 59 Candidate
The following is a description of the business experience of each of the
nominees and directors.
George R. Quist, age 77, 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. Mr. Quist also
served on the Board of Directors of the National Alliance of Life Companies
from 1992 to 1996.
William C. Sargent, age 69, 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 Life as a salesman
and agency superintendent.
Scott M. Quist, age 44, has been the Company's General Counsel since 1982,
a Vice President since 1983, the Treasurer since October 1993, and a director
since May 1986. From 1980 to 1982, Mr. Quist was a tax specialist with Peat,
Marwick, Mitchell, & 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 in 1991. Mr. Quist is a past member of the Board of
Governors of the Forum 500 Section (representing small companies) of the
American Council of Life Insurance. Mr. Quist is the past President of the Utah
Life Convention and past General Council of the Utah Funeral Directors'
Association. Mr. Quist has also been a director since November 1993 of Key
Bank of Utah, and is currently director of the National Alliance of Life
Companies, an industry trade association.
Charles L. Crittenden, age 77, 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 Linco, Inc.
Robert G. Hunter, M.D., age 39, is a candidate to be elected to the Board of
Directors. Dr. Hunter is currently a practicing physician in private
practice. He received his B.S. Degree from the University of Utah in 1982,
his MD from the University of Utah in 1987, and served his Internship in
General Surgery at the University of Texas Health Science Center at San
Antonio. Dr. Hunter created the State Wide E.N.T. Organization (Rocky
Mountain E.N.T., Inc.) where he is currently a member of the Executive
Committee. He is Chairman of Surgery at Cottonwood Hospital, a delegate to
the Utah Medical Association and a delegate representing Utah to the
American Medical Association, and a member of several medical advisory
boards.
Sherman B. Lowe, age 83, has been a director of the Company since October
1979. Mr. Lowe was formerly President and Manager of Lowe's Pharmacy
located in Salt Lake City, Utah, for 30 years. He is now retired. He is a
one-third owner of Burton-Lowe Ranches, a general partnership.
R.A.F. McCormick, age 84, has been a director of the Company since October
1979. He is the past Vice President of Sales of Clover Club Foods, a food
processing company. He is now retired.
H. Craig Moody, age 46, was elected a director of the Company on September
25, 1995. Mr. Moody is owner of Moody & Associates, a company involved in
political consulting and real estate. He is a former Speaker and Majority
Leader of the House of Representatives of the State of Utah.
Norman G. Wilbur, age 59, is a candidate to be elected to the Board of
Directors. Mr. Wilbur worked for J.C. Penney's regional offices in budget and
analysis. His final position was Manager of Planning and Reporting for J.C.
Penny's stores. After 36 years with J.C. Penny's he took an option of an early
retirement in 1997. Mr. Wilbur is a past board member of a homeless
organization in Plano, Texas.
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 77 Chairman of the Board, President and Chief
Executive Officer
Scott M. Quist1 44 First Vice President, General Counsel and
Treasurer
William C. Sargent 69 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 1997 or 1996 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 regional director of Key Bank of Utah. All directors of the
Company hold office until the next annual meeting of stockholders, or until
their successors have been elected and qualified, or until their earlier
resignation or removal.
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 June 30, 1998, (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 Class C
Common Stock Common Stock
Amount Amount
Name and Address of Beneficially Percent Beneficially Percent
Beneficial Owner Owned of Class Owned of Class
- -------------------- ------------- ----------- ------------ ---------
George R. Quist (1) (2)
4491 Wander Lane
Salt Lake City, Utah 84124 119,492 3.2 199,567 3.9
George R. and Shirley C.
Quist Family Partnership, Ltd. (6)
4491 Wander Lane
Salt Lake City, Utah 84124 297,629 8.0 2,384,800 46.4
Employee Stock Ownership Plan (4)
5300 S. 360 W., Suite 250
Salt Lake City, Utah 84123 573,729 15.6 1,103,717 21.5
William C. Sargent (1) (2) (3)
4974 Holladay Blvd.
Salt Lake City, Utah 84117 78,148 2.1 272,365 5.3
Scott M. Quist (3)
7 Wanderwood Way
Sandy, Utah 84092 80,958 2.2 54,227 1.1
Charles L. Crittenden
248 - 24th Street
Ogden, Utah 84404 -0- * 170,296 3.3
Sherman B. Lowe (3)
2197 South 2100 East
Salt Lake City, Utah 84109 20,243 * 186,110 3.6
R.A.F. McCormick (1)
400 East Crestwood Road
Kaysville, Utah 84037 9,708 * 97,098 1.9
H. Craig Moody
1782 East Faunsdale Dr.
Sandy, Utah 84092 117 * -0- *
Associated Investors (5)
5300 S. 360 W. Suite 250
Salt Lake City, Utah 84123 73,959 2.0 465,930 9.1
All directors and executive
officers (8 persons) 569,768 15.5 3,547,057 69.0
* Less than one percent
Class A
and Class C
Common Stock
Amount
Name and Address of Beneficially Percent
Beneficial Owner Owned of Class
- --------------------- ------------- ------------
George R. Quist (1) (2)
4491 Wander Lane
Salt Lake City, Utah 84124 319,059 3.6
George R. and Shirley C.
Quist Family Partnership, Ltd. (6)
4491 Wander Lane
Salt Lake City, Utah 84124 2,682,429 30.2
Employee Stock Ownership Plan (4)
5300 S. 360 W., Suite 250
Salt Lake City, Utah 84123 1,677,446 19.0
William C. Sargent (1) (2) (3)
4974 Holladay Blvd.
Salt Lake City, Utah 84117 350,513 4.0
Scott M. Quist (3)
7 Wanderwood Way
Sandy, Utah 84092 135,185 1.5
Charles L. Crittenden
248 - 24th Street
Ogden, Utah 84404 170,296 1.9
Sherman B. Lowe (3)
2197 South 2100 East
Salt Lake City, Utah 84109 206,353 2.3
R.A.F. McCormick (1)
400 East Crestwood Road
Kaysville, Utah 84037 106,806 1.2
H. Craig Moody
1782 East Faunsdale Dr.
Sandy, Utah 84092 117 *
Associated Investors (5)
5300 S. 360 W. Suite 250
Salt Lake City, Utah 84123 539,889 6.1
All directors and executive
officers (8 persons) 4,116,825 46.7
* Less than one percent
(1) Does not include 573,729 shares of Class A Common Stock and
1,103,717 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) Does not include 73,959 shares of Class A Common Stock and
465,930 shares of Class C Common Stock owned by Associated
Investors, a Utah general partnership, George R. Quist and
William C. Sargent of which these individuals are the managing
partners and, accordingly, exercise shared voting and
investment powers with respect to such shares.
(3) Does not include 29,399 shares of Class A Common Stock
owned by the Company's 401(k) Retirement Savings Plan, which
William C. Sargent, Scott M. Quist and Sherman B. Lowe are
the trustees and accordingly, exercise shared voting and
investment powers with respect to such shares.
(4) 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.
(5) The managing partners of Associated Investors are George R.
Quist and William C. Sargent, who exercise shared voting and
investment powers.
(6) This includes 297,629 shares of Class A Common Stock and
2,384,800 shares of Class C Common Stock owned by the
George R. and Shirley C. Quist Family Partnership, Ltd., of
which Mr. Quist is the general partner.
The Company's officers and directors, as a group, own beneficially
approximately 41.1% of the outstanding shares of the Company's Class A and
Class C Common Stock.
COMPENSATION OF EXECUTIVE OFFICERS AND DIRECTORS
Executive Officer Compensation
The following table sets forth, for each of the last three fiscal years, the
compensation received by George R. Quist, the Company's President and Chief
Executive Officer, and all other executive officers (collectively, the "Named
Executive Officers") at December 31, 1997 whose salary and bonus for all
services in all capacities exceed $100,000 for the fiscal year ended December
31, 1997.
Summary Compensation Table
Annual Compensation
Other
Annual
Compen-
Name and Principal Position Year Salary($) Bonus($) sation($) (2)
- --------------------------- ---- ---------- --------- --------------
George R. Quist (1)
Chairman of the Board, 1997 $118,508 16,833 2,400
President and Chief 1996 109,127 15,303 2,400
Executive Officer 1995 104,469 15,303 2,400
William C. Sargent
Senior Vice President, 1997 108,685 16,500 4,500
Secretary and 1996 103,915 15,000 4,500
Director 1995 77,538 11,725 4,500
Scott M. Quist (1)
First Vice President, 1997 103,215 17,875 7,200
General Counsel 1996 96,192 16,250 7,200
Treasurer and Director 1995 84,871 13,000 7,200
(1) George R. Quist is the father of Scott M. Quist.
Summary Compensation Table
Long-Term Compensation
Awards Payouts
All
Restricted Securities Long-Term Other
Stock Underlying Incentive Compensa-
Name and Principal Position Year Awards($) Options/SARs(#) Payout($)tion(3)
- --------------------------- ----- --------- -------------- -----------------
George R. Quist (1)
Chairman of the Board, 1997 0 50,000 0 11,094
President and Chief 1996 0 0 0 8,218
Executive Officer 1995 0 0 0 5,937
William C. Sargent
Senior Vice President, 1997 0 45,000 0 5,224
Secretary and 1996 0 0 0 4,320
Director 1995 0 0 0 2,100
Scott M. Quist (1)
First Vice President, 1997 0 35,000 0 6,490
General Counsel 1996 0 0 0 4,497
Treasurer and Director 1995 0 0 0 2,206
(1) George R. Quist is the father of Scott M. Quist.
(2) The amounts indicated under "Other Annual Compensation" for
1997 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 1997
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 (for fiscal 1997, such amounts
were George R. Quist, $3,412; William C. Sargent, $3,756; and
Scott M. Quist, $3,633); (b) matching contributions made by the
Company pursuant to the 401(k) Retirement Savings Plan in
which all matching contributions are invested in the Company's
Class A Common Stock (for fiscal 1997, such amounts were
George R. Quist, $2,400; William C. Sargent, $831; and Scott M.
Quist, $2,220); (c) insurance premiums paid by the Company
with respect to a group life insurance plan for the benefit of the
Named Executive Officers (for fiscal 1997, $1,911 was paid for
all Named Executive Officers as a group, or $637 each for
William C. Sargent and Scott M. Quist); and (d) life insurance
premiums paid by the Company for the benefit of the family of
Mr. George R. Quist ($4,645).
The following table sets forth information concerning the exercise of options to
acquire shares of the Company's Common Stock by the Named Executive
Officers during the fiscal year ended December 31, 1997, as well as the
aggregate number and value of unexercised options held by the Named
Executive Officers on December 31, 1997.
Aggregated Option/SAR Exercises in Last Fiscal Year and Fiscal Year-End
Option/SAR Values
Shares Exerc- Unexerc- Exerc- Unexerc-
Acquired Value isable isable isable isable
Name on Exercise(#) Realized($)
George R. Quist 0 0 205,885 0 $116,381 0
William C. Sargent 0 0 123,306 0 $109,258 0
Scott M. Quist 0 0 36,750 0 $ 984 0
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 upon Mr. Quist's retirement 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 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.
William C. Sargent, who has been Senior Vice President of the Company since
1980, has a Deferred Compensation Agreement with the Company (the "Compensation
Agreement"). This Compensation Agreement provides upon Mr. Sargent's
retirement 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 upon his
death, the remainder of such annual payments shall be payable to his wife, if
she survives him, otherwise the children born of the marriage.
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. Sargent'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.
Employment Agreement
The Company maintains an employment agreement with Scott M. Quist. The
agreement, which has a five- year term, was entered into in 1996, and renewed
in 1997. Under the terms of the agreement, Mr. Quist is to devote his full
time to the Company serving as its Treasurer, First Vice President, and General
Counsel at not less than his current salary and benefits, and to include
$500,000 of life insurance protection. In the event of disability, Mr.
Quist's salary would be continued for up to 5 years at 50% of its
current level. In the event of a sale or merger of the Company, and Mr.
Quist were not retained in his current position, the Company would be obligated
to continue Mr. Quist's current compensation and benefits for seven years
following the merger or sale.
Director Compensation
Directors of the Company (but not including directors who are employees) are
paid a director's fee of $8,400 per year by the Company for their services and
are reimbursed for their expenses in attending board and committee meetings.
No additional fees are paid by the Company for committee participation or
special assignments.
Employee 401(k) Retirement Savings Plan
In 1995, the Company's Board of Directors adopted a 401(k) Retirement Savings
Plan. Under the terms of the 401(k) plan, effective as of January 1, 1995,
the Company may make discretionary employer matching contributions to its
employees who choose to participate in the plan. The plan allows the board
to determine the amount of the contribution at the end of each year. For
the years 1997 and 1996 the board adopted a contribution formula specifying
that such discretionary employer matching contributions would equal 50% of
the participating employee's contribution to the plan up to a maximum
discretionary employee contribution of 5% of a participating employee's
compensation, as defined by the plan.
All persons who have completed at least one years' service with the Company and
satisfy other plan requirements are eligible to participate in the 401(k) plan.
All Company matching contributions are invested in the Company's Class A Common
Stock. The Company's matching contributions for 1997 and 1996 were
approximately $50,000 and $21,000, respectively. The trustees under the 401(k)
plan are Messrs. Sherman B. Lowe, Scott M. Quist and William C. Sargent.
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 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 98
participants and had contributions payable to the Plan in 1997 of $45,616.
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.
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 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 under the 1993 Plan 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 Common Stock shall be
subdivided or combined into a greater or smaller number of shares or if the
Company shall issue any shares of Common Stock as a stock dividend on its
outstanding Common Stock, the number of shares of 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. On November 7, 1996 the Company amended
the Articles of Incorporation as follows: (i) to increase the number of
shares of Class A Common Stock reserved for issuance under the Plan from
300,000 Class A shares to 600,000 Class A shares; and (ii) to provide that the
stock subject to options, awards and purchases may include Class C common
stock.
OTHER MATTERS
The Company knows of no other matters to be brought before the Annual Meeting;
but if other matters properly come before the meeting, it is the intention of
the persons named in the enclosed form of Proxy to vote the shares they
represent in accordance with their judgment.
ANNUAL REPORT AND FINANCIAL STATEMENTS
You are referred to the Company's annual report, including financial statements,
for the fiscal year ended December 31, 1997. The annual report is incorporated
in this Proxy Statement and is not to be considered part of the soliciting
material. The Company will provide, without charge to each stockholder upon
written request, a copy of the Company's Annual Report Form 10-K as filed with
the Securities and Exchange Commission for the fiscal year ended December 31,
1997. Such requests should be directed to Mr. William C. Sargent, Senior Vice
President and Secretary, at P.O. Box 57250, Salt Lake City, Utah 84157-0250.
DEADLINE FOR RECEIPT OF STOCKHOLDER'S PROPOSALS FOR ANNUAL MEETING TO BE HELD
IN JUNE, 1999
Any proposal by a stockholder to be presented at the Company's next Annual
Meeting of Stockholders expected to be held in June, 1999, must be received at
the offices of the Company, P.O. Box 57250, Salt Lake City, Utah 84157-0250, no
later than March 31, 1999.
PROXY - SECURITY NATIONAL FINANCIAL CORPORATION -
PROXY THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
CLASS C COMMON STOCK
The undersigned Class C common stockholder of Security National Financial
Corporation (the "Company") acknowledges receipt of the Notice of Annual
Meeting of the Stockholders to be held on October 1, 1998, at 5300 South 360
West, Suite 250, Salt Lake City, Utah, at 11:30 a.m. Mountain Daylight Time,
and hereby appoints Messrs. George R. Quist, William C. Sargent and Scott M.
Quist, or any of them, each with full power of substitution, as attorneys
and proxies to vote all the shares of the undersigned at said Annual Meeting
of Stockholders and at all adjournments or postponements thereof, hereby ratify
and confirm all that said attorneys and proxies may do or cause to be done by
virtue hereof. The above-named attorneys and proxies are instructed to vote
all of the undersigned's shares as follows:
1. To elect six of the nine directors to be voted upon by Class A and
Class C common stockholders together:
[ ] FOR all nominees listed below (except as marked to the contrary
below)
[ ] WITHHOLD AUTHORITY to vote for all nominees listed below.
(INSTRUCTION: to withhold authority to vote for any individual nominee, strike
a line through that nominee's name in the list below.)
Charles L. Crittenden, Robert G. Hunter, Sherman B. Lowe,
George R. Quist, William C. Sargent, and Norman G. Wilbur
2. To ratify the appointment of Ernst & Young LLP as the Company's independent
accountants for the fiscal year ending December 31, 1998.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
3. To transact such other business as may properly come before the meeting
or any adjournment thereof.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED AS DIRECTED HEREIN BY THE
UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
FOR THE NOMINEES LISTED IN PROPOSAL 1.
Dated ________________________________________, 1998
Signature of Stockholder
Signature of Stockholder
Please sign your name exactly as it appears on your share certificate. If
shares are held jointly, each holder should sign. Executors, trustees, and
other fiduciaries should so indicate when signing. Please sign, date, and
return this Proxy Card immediately.
NOTE: Securities dealers or other representatives please state the number of
shares voted by this Proxy.
PROXY - SECURITY NATIONAL FINANCIAL CORPORATION -
PROXY THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS CLASS A COMMON STOCK
The undersigned Class A common stockholder of Security National Financial
Corporation (the "Company") acknowledges receipt of the Notice of Annual Meeting
of the Stockholders to be held on October 1, 1998, at 5300 South 360 West, Suite
250, Salt Lake City, Utah, at 11:30 a.m., Mountain Daylight Time, and hereby
appoints Messrs. George R. Quist, William C. Sargent and Scott M. Quist, or any
of them, each with full power of substitution, as attorneys and proxies to
vote all the shares of the undersigned at said Annual Meeting of Stockholders
and at all adjournments or postponements thereof, hereby ratify and
confirming all that said attorneys and proxies may do or cause to be done by
virtue hereof. The above-named attorneys and proxies are instructed to vote
all of the undersigned's shares as follows:
1. To elect three directors to be voted upon by Class A common stockholders
voting separately as a class:
[ ] FOR all nominees listed below (except as marked to the contrary below)
[ ] WITHHOLD AUTHORITY to vote for all nominees listed below
(INSTRUCTION: to withhold authority to vote for any individual nominee, strike
a line through that nominee's name in the list below.)
R.A.F. McCormick, H. Craig Moody and Scott M. Quist
2. To elect the remaining five directors to be voted upon by Class A and
Class C common stockholders together:
[ ] FOR all nominees listed below (except as marked to the contrary below)
[ ] WITHHOLD AUTHORITY to vote for all nominees listed below
(INSTRUCTION: to withhold authority to vote for any individual nominee, strike
a line through that nominee's name in the list below.)
Charles L. Crittenden, Robert G. Hunter, Sherman B. Lowe,
George R. Quist, William C. Sargent, and Norman G. Wilbur
3. To ratify the appointment of Ernst & Young LLP as the Company's independent
accountants for the fiscal year ending December 31, 1998.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
4. To transact such other business as may properly come before the meeting
or any adjournment thereof.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED AS DIRECTED HEREIN BY THE
UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
FOR THE NOMINEES LISTED IN PROPOSAL 1 and 2 ABOVE.
Dated ______________________________, 1998
Signature of Stockholder
Signature of Stockholder
Please sign your name exactly as it appears on your share certificate. If
shares are held jointly, each holder should sign. Executors, trustees, and
other fiduciaries should so indicate when signing. Please sign, date, and
return this Proxy Card immediately.
NOTE: Securities dealers or other representatives please state the number of
shares voted by this Proxy.
