SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the registrant [X]
Filed by a party other than the registrant [ ]
Check the appropriate box:
[ ] Preliminary proxy statement. [ ] Confidential, for use of the
Commission only (as permitted
by Rule 14a-6(e)(2)).
[X] Definitive proxy statement.
[ ] Definitive additional materials.
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12.
UNICO AMERICAN CORPORATION
____________________________________________________________
(Name of Registrant as Specified in Its Charter)
____________________________________________________________
Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of filing fee (check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
________________________________________________________________________________
(2) Aggregate number of securities to which transaction applies:
________________________________________________________________________________
(3) Per unit price or other underlying value of transaction computed pursuant to
Exchange Act Rule 0-11 (set forth the amount on
which the filing fee is calculated and state how it was determined):
________________________________________________________________________________
(4) Proposed maximum aggregate value of transaction:
________________________________________________________________________________
(5) Total fee paid:
________________________________________________________________________________
[ ] Fee paid previously with preliminary materials.
________________________________________________________________________________
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the form or schedule and the
date of its filing.
(1) Amount Previously Paid:
________________________________________________________________________________
(2) Form, Schedule or Registration Statement No.:
________________________________________________________________________________
(3) Filing Party:
________________________________________________________________________________
(4) Date Filed:
________________________________________________________________________________
<PAGE>
UNICO AMERICAN CORPORATION
23251 Mulholland Drive
Woodland Hills, California 91364-2732
_____________________
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held Thursday, June 1, 2000
Dear Shareholder:
You are cordially invited to attend the Annual Meeting of shareholders of Unico
American Corporation (the "Company") to be held at the Warner Center Marriott,
21850 Oxnard Street, Woodland Hills, California 91367, at 2:00 p.m. local time,
to consider and act upon the following matters:
1. The election of seven (7) directors to hold office until the next annual
meeting of shareholders and thereafter until their successors are elected
and qualified; and
2. The transaction of such other business as may properly be brought before
the meeting.
The Board of Directors has fixed the close of business on April 13, 2000, as the
record date for the determination of shareholders who will be entitled to notice
of and to vote at the meeting. The voting rights of the shareholders are
described in the Proxy Statement.
IT IS IMPORTANT THAT ALL SHAREHOLDERS BE REPRESENTED AT THE ANNUAL MEETING.
SHAREHOLDERS WHO DO NOT PLAN TO ATTEND THE MEETING IN PERSON ARE REQUESTED TO
VOTE, DATE, AND RETURN THE ENCLOSED PROXY IN THE ACCOMPANYING POSTAGE-PAID AND
ADDRESSED RETURN ENVELOPE. PROXIES ARE REVOCABLE AT ANY TIME, AND SHAREHOLDERS
WHO ARE PRESENT AT THE MEETING MAY WITHDRAW THEIR PROXIES AND VOTE IN PERSON IF
THEY SO DESIRE.
By Order of the Board of Directors,
\s\ Erwin Cheldin
-----------------
Erwin Cheldin
Chairman of the Board, President, and
Chief Executive Officer
Woodland Hills, California
April 21, 2000
<PAGE>
UNICO AMERICAN CORPORATION
_____________________
PROXY STATEMENT
______________________
ANNUAL MEETING OF SHAREHOLDERS
June 1, 2000
This Proxy Statement is furnished in connection with the solicitation of proxies
by the Board of Directors of Unico American Corporation, a Nevada corporation
(the "Company"), for use at the Annual Meeting of Shareholders of the Company to
be held at the Warner Center Marriott, 21850 Oxnard Street, Woodland Hills,
California 91367 on June 1, 2000, 2:00 p.m. local time. Accompanying this Proxy
Statement is a proxy card, which you may use to indicate your vote as to each of
the proposals described in this Proxy Statement.
All proxies which are properly completed, signed, and returned to the Company
prior to the Annual Meeting, and which have not been revoked, will be voted. A
shareholder may revoke his or her proxy at any time before it is voted either by
filing with the Secretary of the Company at its principal executive offices a
written notice of revocation or a duly executed proxy bearing a later date, or
by appearing in person at the Annual Meeting and expressing a desire to vote his
or her shares in person.
The close of business on April 13, 2000, has been fixed as the record date for
the determination of shareholders entitled to notice of and to vote at the
Annual Meeting or any adjournment thereof. As of the record date, the Company
had outstanding 6,304,965 shares of common stock, the only outstanding voting
securities of the Company. For each share held on the record date, a shareholder
is entitled to one vote on all matters to be considered at the Annual Meeting.
The Company's Articles of Incorporation do not provide for cumulative voting.
Directors are elected by a plurality of the votes cast and abstentions and
broker non-votes are counted for the purposes of determining the existence of a
quorum at the meeting, but not for purposes of determining the results of the
vote.
The Company will bear the cost of the Annual Meeting and the cost of soliciting
proxies, including the cost of preparing, assembling and mailing the proxy
material. In addition to solicitation by mail, officers and other employees of
the Company may solicit proxies by telephone, facsimile, or personal contact
without additional compensation.
The Company's principal executive offices are located at 23251 Mulholland Drive,
Woodland Hills, California 91364-2732. The approximate mailing date of this
Proxy Statement and the Company's proxy card is April 21, 2000.
ELECTION OF DIRECTORS
The Company's By-Laws provide for a range of three to eleven directors and allow
the Board of Directors to set the exact number of authorized directors within
that range. The current number of authorized directors established by the Board
of Directors is eight (8). There is a vacancy on the Board of Directors and the
Board has determined not to nominate any person to fill such vacancy at this
time. Directors are elected at each Annual Meeting of Shareholders to serve
thereafter until their successors have been duly elected and qualified. Each
nominee is currently a director, having served in that capacity since the date
indicated in the following table. All nominees have advised the Company that
they are able and willing to serve as directors. If any nominee refuses or is
unable to serve (an event which is not anticipated), the persons named in the
accompanying proxy card will vote for another person nominated by the Board of
Directors, provided, however, that the proxies cannot be voted for a greater
number of persons than 7. Unless otherwise directed in the accompanying proxy
card, the persons named therein will vote FOR the election of the seven nominees
listed in the following table.
1
<PAGE>
The following table provides certain information as of April 13, 2000, for each
person named for election as a director, which includes all executive officers
of the Company:
First
Present Position with Company or Elected
Name Age Principal Occupation and Prior History Director
- ---- --- -------------------------------------- --------
Erwin Cheldin 68 President, Chief Executive Officer and 1969
Director since 1969. Chairman of the
Board since 1987.
Cary L. Cheldin 43 Executive Vice President since 1991. 1983
Vice President 1986 to 1991 and
Secretary 1987 to 1991.
Lester A. Aaron, CPA 54 Treasurer and Chief Financial Officer 1985
since 1985. Secretary 1991 to 1992.
George C. Gilpatrick 55 Vice President, Management Information 1985
Systems, since 1981. Secretary since
1992.
Roger H. Platten 50 Vice President since 1988 and General 1987
Counsel since 1985.
David A. Lewis, CPCU 78 Director. 1989
Retired incurance executive with over
40 years' insurance experience. The
last 27 years were with the Transamerica
group of insurance companies.
David E. Driscoll 45 Director. 1998
Attorney specializing in property and
casualty insurance defense.
Except for Cary Cheldin, who is the son of Erwin Cheldin, none of the executive
officers or directors of the Company are related to any other officer or
director of the Company. The executive officers of the Company are elected by
the Board of Directors and except for Cary Cheldin and Roger Platten, all serve
at the pleasure of the Board. Cary Cheldin and Roger Platten each serve pursuant
to an employment agreement with the Company having a term expiring December 1,
2001. Mr. Platten's employment agreement provides for annual increases in his
base salary equal to increases in the consumer price index and a mandatory bonus
if the Company's net income before taxes for any calendar year is equal to or
greater than $4,000,000. Mr. Platten's annual salary for calendar year 2000 is
$186,948. The amount of the mandatory bonus is as determined by the Board of
Directors in its discretion but may not be less than the aggregate bonus paid to
him during the immediately preceding calendar year. Cary Cheldin's employment
agreement, as amended, provides for a base salary of $330,000 per year with no
required cost of living adjustments and the same bonus formula as provided in
Mr. Platten's employment agreement except that the Board of Directors may in its
discretion decrease the amount of his mandatory bonus.
During the year ended December 31, 1999, the Company's Board of Directors held
two meetings at which all directors were present. Non-management directors
receive $1,000 for each board meeting they attend. The Board of Directors has
established an Audit Committee presently consisting of Messieurs Lewis, Driscoll
and Aaron. The Audit Committee of the Board of Directors is responsible for
coordinating matters with the outside independent auditors and reviewing
internal and external accounting controls. The Audit Committee held one meeting
subsequent to the year ended December 31, 1999, to discuss accounting and
financial statement matters related to the year ended December 31, 1999. The
Board of Directors has also established a Compensation Committee presently
consisting of Messieurs Cary Cheldin, Aaron and Driscoll. This Committee
considers and recommends to the Board of Directors compensation for executive
officers. The Compensation Committee held one meeting during the year ended
December 31, 1999.
2
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of April 13, 2000, the names and holdings of
all persons who are known by the Company to own beneficially more than 5% of its
outstanding common stock, its only class of outstanding voting securities, and
the beneficial ownership of such securities held by each Director and all
Executive Officers and Directors as a group. Unless otherwise indicated, the
Company believes that each of the persons and entities set forth below has the
sole power to vote and dispose of the shares listed opposite his or its name.
Amount Beneficially Owned
-------------------------
(1) (1)
Options Percent
Without Currently Of
Name of Beneficial Owners Options Exercisable Total Class
- ------------------------ ------- ----------- ----- -----
Certain Beneficial Owners
- -------------------------
Erwin Cheldin 2,293,969 0 2,293,969 36.4%
23251 Mulholland Drive
Woodland Hills, CA 91364
General Re Corporation 432,092 (2) 0 432,092 6.9%
695 East Main Street
Stamford, CT 06904
Dimensional Fund Advisors, Inc. 467,900 (3) 0 467,900 7.4%
1299 Ocean Avenue
Santa Monica, CA 90401
Wellington Management Co., LLP 422,200 (4) 0 422,200 6.7%
75 State Street
Boston, MA 02109
Executive Officers and Directors
- --------------------------------
Erwin Cheldin 2,293,969 0 2,293,969 36.4%
Cary L. Cheldin 202,760 0 202,760 3.2%
Lester A. Aaron 128,504 45,000 173,504 2.7%
George C. Gilpatrick 122,850 45,000 167,850 2.6%
Roger H. Platten 65,000 0 65,000 1.0%
David A. Lewis 2,400 0 2,400 0.0%
David E. Driscoll 0 0 0 0.0%
All executive officers &
directors as a group (7 persons) 2,815,483 90,000 2,905,483 45.4%
(1) Includes for each person or group, shares issuable upon exercise of
presently exercisable options or options exercisable within 60 days, held
by such person or group.
(2) Per Schedule 13G dated April 25, 1997.
(3) Per Schedule 13G dated February 11, 1999.
(4) Per Schedule 13G dated February 9, 2000. Of the 422,200 shares beneficially
owned, Wellington Management Company, LLP has no sole voting power over the
shares, shared voting power over 375,500 shares, and shared dispositive
power over 422,200 shares.
3
<PAGE>
EXECUTIVE COMPENSATION AND OTHER INFORMATION
Summary of Executive Compensation
- ---------------------------------
The following table sets forth information for year ended December 31, 1999,
1998, and 1997 as to executive compensation paid to the chief executive officer
and the other four most highly-compensated executive officers of the Company for
the year ended December 31, 1999.
SUMMARY COMPENSATION TABLE
Annual Compensation
------------------- All Other
Salary Bonus Compensation (1)
Name and Principal Position Year ($) ($) ($)
- --------------------------- ---- ----- ----- -----
Erwin Cheldin 1999 431,375 50,000 30,000
President, Chief Executive 1998 431,375 50,000 24,000
Officer and Chairman of the 1997 431,375 50,000 23,625
Board
Cary L. Cheldin 1999 330,000 65,000 30,000
Executive Vice President 1998 330,000 65,000 24,000
1997 205,000 65,000 23,625
Lester A. Aaron 1999 160,000 45,000 30,000
Treasurer and Chief 1998 160,000 33,000 24,000
Financial Officer 1997 160,313 30,000 23,625
George C. Gilpatrick 1999 159,355 45,000 30,000
Vice President and 1998 159,355 45,000 24,000
Secretary 1997 159,355 45,000 23,625
Roger H. Platten 1999 191,633 (2) 60,000 30,000
Vice President 1998 175,000 60,000 24,000
1997 175,000 60,000 23,625
(1) Represents amounts contributed or accrued to the person's account under the
Company's Profit Sharing Plan, and for 1999, the Company's Money Purchase
Plan, all of which is vested. During 1999, the amount contributed to each
executive officer's account under the Profit Sharing Plan and Money
Purchase Plan was $24,000 and $6,000, respectively. The Company's Profit
Sharing Plan and Money Purchase Plan have a March 31 fiscal year end. See
"Retirement Plans."
(2) Includes cost of living increases for 1997 and 1998 paid in 1999.
Option / SAR Grants in Last Fiscal Year
- ---------------------------------------
No stock options or stock appreciation rights were granted to any executive
officer during the year ended December 31, 1999.
Stock Plans
- -----------
Incentive Stock Option Plan
---------------------------
On March 29, 1985, the Board of Directors unanimously adopted the Unico American
Employee Incentive Stock Option Plan (the "1985 Plan"), which was approved by
the shareholders of the Company in January 1986. The 1985 Plan provides for the
grant of "incentive stock options" as defined in Section 422 of the Internal
Revenue Code of 1986 to key employees of the Company (including officers,
whether or not they are directors of the Company) and its subsidiaries.
Directors who are not also employees of the Company are not eligible to
participate in the 1985 Plan. The 1985 Plan includes an aggregate of 1,500,000
of the Company's Common Stock. The 1985 Plan expired in March 1995, and as of
December 31, 1997, there were no options available for future grant. Under the
terms of the Plan, options were required to be granted at exercise prices of not
less than 100% of the fair market value of the Common Stock on the date the
option was granted. In the case of grants of options to employees owning over
10% of the voting stock of the Company, the exercise price was required to be
not less than 110% of the fair market value of the Common Stock on the date of
grant. The 1985 Plan is administered by the Board of Directors or a committee
thereof, which had the authority to determine the optionees, the number of
shares to be covered by each option, the time during which each option is
exercisable and certain
4
<PAGE>
other terms of the options. An option may not be exercised later than 10 years
from the date of grant and may sooner expire upon, among other things, the
death, disability or other termination of the employment of the optionee by the
Company. Options granted to employees owning over 10% of the voting stock of the
Company could not be exercised later than five years from the date of grant.
1999 Omnibus Stock Plan
-----------------------
The Company's 1999 Omnibus Stock Plan (the "1999 Plan") that covers 500,000
shares of the Company's common stock (subject to adjustment in the case of stock
splits, reverse stock splits, stock dividends, etc.) was adopted by the Board of
Directors in March 1999 and approved by shareholders on June 4, 1999. The 1999
Plan is divided into a Stock Option Program under which eligible persons may be
granted options to purchase shares of common stock, a Stock Appreciation Program
under which eligible persons may be granted the right to receive a payment in
the form of cash, stock or a combination of the foregoing and a Restricted Stock
Program under which eligible persons may be issued shares of common stock
directly either through an immediate purchase or as a bonus. The 1999 Plan and
each Program is administered by the Board of Directors or a committee authorized
by the Board and consisting of at least two directors each of whom is not an
officer or employee of the Company and meets the qualifications set forth in
Rule 16b-3 promulgated under the Securities Exchange Act of 1934, as amended.
Presently, the 1999 Plan is being administered by the Board of Directors.
Employees, consultants, advisors and directors of the Company are eligible to
participate in the 1999 Plan. However, only employees are entitled to receive
"incentive stock options" (as provided in Section 422 of the Internal Revenue
Code of 1986, as amended) under the Stock Option Program. Under the Stock Option
Program, both incentive stock options and options which do not qualify as
incentive stock options may be granted. The term of an option may not exceed ten
years (or five years in the case of the grant of an incentive stock option to a
holder of more than ten percent (10%) of the outstanding common stock). The
exercise price per share of common stock under an option may not be less than
the fair market value of the common stock on the date of the option grant. In
the case of the grant of an incentive stock option to a holder of more than 10%
of the outstanding common stock, the exercise price may not be less than 110% of
the fair market value of the common stock on the date of the option grant. Under
the Stock Appreciation Program, stock appreciation rights may be granted
separately or in tandem with a stock option. Stock appreciation rights entitle
the holder thereof to receive upon exercise of such right without payment to the
Company an amount which is not greater than the fair market value of a share of
common stock on the date of exercise of the stock appreciation right over the
fair market value of a share of common stock on the date of grant of the stock
appreciation right. Under the Restricted Stock Program, the Company may issue
shares of its common stock directly to eligible persons for consideration
consisting of cash, notes or past services rendered by the recipient. The
purchase price of the shares may not be less than the fair market value of the
Company's common stock on the date of issue. If a recipient terminates his or
her employment or other arrangements with the Company before the shares are
fully vested, then the recipient is required to surrender to the Company for
cancellation all unvested shares and the Company must repay the recipient cash
or cash equivalent consideration paid by him or her for those unvested shares
and cancel the unpaid principal balance, if any, on any promissory notes
attributable to surrender the shares.
In the event of a Change of Control Event as defined in the 1999 Plan, all
unvested options, stock appreciation rights and restricted stock issuances will
immediately become exercisable or vest, as the case may be. The 1999 Plan
administrator may override the acceleration of these rights either in the
agreement setting forth those rights or prior to the Change of Control Event. A
Change of Control Event occurs if (1) more than twenty percent (20%) of the
Company's common stock or combined voting power is acquired by a person or
entity other than Mr. Erwin Cheldin, the Company or an Employee Benefit Plan of
the Company, but not including any acquisition directly from the Company; (b) a
majority of the Company's Board of Directors ceases to consist of the present
directors or persons whose election or nomination was approved by a majority of
the then incumbent Board of Directors (excluding any director who assumes his or
her position as a result of an actual or threatened proxy contest); (c) the
Company is reorganized, merged or consolidated into another entity; or (d) the
shareholders approve the liquidation or dissolution of the Company or the sale
of all or substantially all of its assets; unless with respect to (c) or (d),
after the event more than eighty percent (80%) of the common stock or the
outstanding voting securities of the Company, the surviving company or the
company that purchases the Company's assets is still held by persons who were
formerly the shareholders of the Company, and no person or entity other than Mr.
Erwin Cheldin, the Company, any employee benefit plan of the Company or the
resulting company or a twenty percent (20%) shareholder prior to the transaction
holds more then twenty percent (20%) of such company's common stock or combined
voting power.
5
<PAGE>
All outstanding options, stock appreciation rights and/or unvested stock
issuances under the 1999 Plan will terminate upon consummation of (a) a
dissolution of the Company, or (b) in case no provision has been made for the
survival, substitution, exchange or other settlement of any outstanding option,
stock appreciation rights and/or unvested stock issuances, a merger or
consolidation of the Company with another corporation in which the shareholders
of the Company immediately prior to the merger will own less than a majority of
the outstanding voting securities of the surviving corporation after the merger,
or a sale of all or substantially all of the assets and business of the Company
to another corporation.
AGGREGATED OPTION / SAR EXERCISED IN LAST FISCAL YEAR AND
FY-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Underlying Unexercised in-the-Money
Options/SARs Options/SARs
Shares At Fiscal Year End (#) At Fiscal Year End ($)(1)
Acquired Value ---------------------- -------------------------
on Exercise Realized Exercisable/ Exercisable/
Name (#) ($) Unexercisable Unexercisable
- ---- ----- ----- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Erwin Cheldin 0 0 0 0 0 0
Cary L. Cheldin 25,164 173,003 0 0 0 0
Lester A. Aaron 33,334 193,754 45,000 0 157,500 0
George C. Gilpatrick 33,333 193,748 45,000 0 157,500 0
Roger H. Platten 0 0 0 0 0 0
(1) Difference between fair market value of $7.00 per share, the closing price
of the Company's common stock on the National Market System of the NASDAQ
Stock Market on December 31, 1999, and the exercise price of the options.
The exercise price of all outstanding options is equal to the fair market
value of the common stock as of the date of grant of each option.
</TABLE>
Retirement Plans
- ----------------
Profit Sharing Plan
-------------------
During the fiscal year ended March 31, 1986, the Company adopted the Unico
American Corporation Profit Sharing Plan. Company employees who are at least 21
years of age and have been employed by the Company for at least two years are
participants in such Plan. Pursuant to the terms of such Plan, the Company
annually contributes for the account of each participant an amount equal to a
percentage of the participant's eligible compensation as determined by the Board
of Directors. Participants are entitled to receive distribution of benefits
under the Plan upon retirement, termination of employment, death or disability.
Money Purchase Plan
-------------------
During the year ended December 31, 1999, the Company adopted the Unico American
Corporation Money Purchase Plan. This plan covers the present executive officers
of the Company; namely Lester A. Aaron, Cary L. Cheldin, Erwin Cheldin, George
C. Gilpatrick, and Roger H. Platten. Pursuant to the terms of such Plan, the
Company annually contributes for the account of each participant an amount equal
to a percentage of the participant's eligible compensation as determined by the
Board of Directors. However, amounts contributed to the Unico American
Corporation Profit Sharing Plan will be considered first in determining the
actual amount available under the Internal Revenue Service maximum contribution
limits. Participants are entitled to receive distribution of benefits under the
Plan upon retirement, termination of employment, death or disability.
Compensation Committee Interlocks and Insider
Participation in Compensation Decisions
- -----------------------------------------------
The Compensation Committee consists of the following Company directors: Cary L.
Cheldin, Lester A. Aaron and David E. Driscoll. Cary Cheldin is the son of Erwin
Cheldin, the President, Chief Executive Officer and Chairman of the Board.
During the year ended December 31, 1999, Cary Cheldin was the Executive Vice
President of the Company and Mr. Aaron was Treasurer and Chief Financial Officer
of the Company. Mr. Driscoll is a partner in the law firm of Driscoll &
Reynolds, which has rendered legal services to the Company during the year ended
December 31, 1999, and has been retained to render legal services in the current
year.
6
<PAGE>
Executive Compensation Committee Report
- ---------------------------------------
The Company's compensation package for executive officers primarily consists of
a base salary, an annual incentive bonus, long-term incentive or non-cash awards
in the form of stock options, and contributions under the Profit Sharing and
Money Purchase Plans. The executive compensation program is designed to retain
and reward individuals who are capable of leading the Company in achieving its
business objectives. The Compensation Committee submits its recommendation to
the entire Board of Directors. The philosophy of the Compensation Committee is
to maintain a competitive base salary for executive officers and to provide an
incentive program that rewards executive officers for achieving certain
financial results. Base compensation is determined on a calendar year basis and
other incentives are determined when deemed appropriate.
When determining base compensation for the executive officers, the Committee
takes into account competitive pay levels in the industry with its emphasis on
the median of the survey data. The Committee recommends adjustments to base
compensation when it determines that an executive officer's base compensation is
not competitive.
When determining bonuses for the executive officers, the Committee first
evaluates, and gives primary weight to, the operational and financial
performance of the executive management team, including the chief executive
officer, as a group. After the team results are determined, individual
effectiveness in contributing to the achievement of those results is considered.
The financial results, which are reviewed by the Committee, include the
Company's net income, revenues and expenses.
The Committee's base compensation review determined that the base salary for the
chief executive officer was competitive with that of others in the industry. The
Committee recommended that the chief executive officer receive no change in base
compensation for the calendar years 1999 and 1998.
The Committee's bonus review considered and evaluated the decrease in earnings
and revenues since December 31, 1998, and determined, nonetheless, that the
chief executive officer contributed to maintaining profitable business for the
Company in an intensely competitive marketplace. Taking this into consideration,
the Committee recommended that the chief executive officer's bonus for the year
ended December 31, 1999, should be equal to the amount that was paid to him for
the year ended December 31, 1998. The committee also recommended that the
aggregate bonuses paid for the year ended December 31, 1999, to all other
executive officers remain approximately the same as the prior years'.
Section 162(m) of the Internal Revenue Code, enacted as part of the Omnibus
Budget Reconciliation Act of 1993 ("OBRA"), limits to $1,000,000 the
deductibility for any year beginning after December 31, 1993, of compensation
paid by a public corporation to the chief executive officer and the next four
most highly compensated executive officers unless such compensation is
performance-based within the meaning of Section 162(m) and the regulations
thereunder. For the year ended December 31, 1999, the Company does not
contemplate that there will be nondeductible compensation for the five Company
positions in question.
THE COMPENSATION COMMITTEE
OF THE BOARD OF DIRECTORS
Cary L. Cheldin
Lester A. Aaron
David E. Driscoll
Performance Graph
- -----------------
The following graph compares the cumulative total shareholder return on the
Company's Common Stock with the cumulative total return of equity securities
traded on the National Association of Securities Dealers Automated Quotation
System (NASDAQ) and a peer group consisting of all NASDAQ property and casualty
companies. The comparison assumes $100.00 was invested on March 31, 1995, in the
Company's Common Stock and in each of the comparison groups, and assumes
reinvestment of dividends. It should be noted that this graph represents
historical stock price performance and is not necessarily indicative of any
future stock price performance.
7
<PAGE>
3/31/95 3/31/96 12/31/96 12/31/97 12/31/98 12/31/99
------- ------- -------- -------- -------- --------
Unico American Corp. $100.0 $139.1 $222.2 $258.3 $237.5 $148.1
NASDAQ Market Index $100.0 $135.8 $159.6 $195.6 $275.7 $510.3
Peer Group Index $100.0 $128.2 $142.3 $216.1 $184.3 $138.8
CERTAIN TRANSACTIONS
--------------------
The Company presently occupies a 46,000 square foot building located at 23251
Mulholland Drive, Woodland Hills, California, under a master lease expiring
March 31, 2007. The lease provides for an annual gross rental of $1,025,952.
Erwin Cheldin, the Company's president, chairman and principal shareholder, is
the owner of the building. On February 22, 1995, the Company signed an extension
to the lease with no increase in rent to March 31, 2007. The Company believes
that the terms of the lease at inception and at the time the lease extension was
signed were at least as favorable to the Company as could have been obtained
from unaffiliated third parties.
David E. Driscoll, a director of the Company, is an attorney with the law firm
of Driscoll & Reynolds which has provided and continues to provide certain legal
services to the Company.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors and executive officers, and persons who own more than 10% of a
registered class of the Company's equity securities, to file with the Securities
and Exchange Commission (SEC) initial reports of ownership and reports of
changes in ownership of Common Stock and other equity securities of the Company.
Executive officers, directors and greater than 10% shareholders are required by
regulation of the SEC to furnish the Company with copies of all Section 16(a)
forms they file. To the Company's knowledge, based solely on review of copies of
such reports furnished to the Company and written representations that no other
reports were required during the year ended December 31, 1999, all Section 16(a)
filing requirements applicable to its executive officers, directors and greater
than 10% beneficial owners were complied with.
8
<PAGE>
APPOINTMENT OF AUDITORS
The Company has selected KPMG LLP, independent accountants, to continue as the
Company's auditors and to audit the books and other records of the Company for
the year ending December 31, 2000. A representative of KPMG LLP, is expected to
attend the Annual Meeting of Shareholders. Such representative will have the
opportunity to make a statement and will be available to respond to appropriate
questions.
OTHER MATTERS
The Board of Directors is not aware of any business to be presented at the
Annual Meeting except for the matters set forth in the Notice of Annual Meeting
and described in this Proxy Statement. Unless otherwise directed, all shares
represented by proxy holders will be voted in favor of the proposals described
in this Proxy Statement. If any other matters come before the Annual Meeting,
the proxy holders will vote on those matters using their best judgment.
SHAREHOLDERS' PROPOSALS
Shareholders desiring to exercise their right under the proxy rules of the
Securities and Exchange Commission to submit proposals for consideration by the
shareholders at the Year 2001 Annual Meeting are advised that their proposals
must be received by the Company no later than December 23, 2000, for inclusion
in the Company's Proxy Statement and form of proxy relating to that meeting. If
a shareholder intends to present a proposal at the year 2001 Annual Meeting but
does not seek inclusion of that proposal in the Proxy Statement for that
meeting, the holders of proxies for that meeting will be entitled to exercise
their discretionary authority on that proposal if the Company does not have
notice of the proposal by March 7, 2001.
ANNUAL REPORT TO SHAREHOLDERS
The Company's 1999 Annual Report on Form 10-K includes financial statements for
the year ended December 31, 1999, the year ended December 31, 1998, and the year
ended December 31, 1997, and is being mailed to the shareholders along with this
Proxy Statement. The Form 10-K is not to be considered a part of the soliciting
material.
By Order of the Board of Directors,
\s\ Erwin Cheldin
-----------------
Erwin Cheldin
Chairman of the Board, President
and Chief Executive Officer
Woodland Hills, California
April 21, 2000
9
<PAGE>
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
OF UNICO AMERICAN CORPORATION
The undersigned hereby constitutes and appoints LESTER A. AARON and ROGER H.
PLATTEN, and each of them, with full power of substitution, the proxies of the
undersigned to represent the undersigned and vote all shares of common stock of
UNICO AMERICAN CORPORATION (the "Company"), which the undersigned would be
entitled to vote if personally present at the Annual Meeting of Shareholders to
be held at the Warner Center Marriott, 21850 Oxnard Street, Woodland Hills,
California 91367, on June 1, 2000, at 2:00 p.m. local time and at any
adjournments thereof, with respect to the matters described in the accompanying
Notice of Annual Meeting of Shareholders and Proxy Statement, receipt of which
is hereby acknowledged, in the following manner.
1. ELECTION OF DIRECTORS [ ] FOR all nominees listed [ ] WITHHOLD AUTHORITY
(except as marked to the to vote all nominees
contrary below) listed below
ERWIN CHELDIN, CARY L. CHELDIN, LESTER A. AARON, GEORGE C. GILPATRICK,
ROGER H. PLATTEN, DAVID E. DRISCOLL, DAVID A. LEWIS
INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE,
STRIKE A LINE THROUGH THE NOMINEE'S NAME ON THE LIST ABOVE.
2. IN ACCORDANCE WITH THEIR BEST JUDGMENT, with respect to any other matters
which may properly come before the meeting and any adjournment or
adjournments thereof.
Please sign and date on reverse side.
<PAGE>
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS AND WILL BE VOTED AS
DIRECTED HEREIN. When this proxy is properly executed and returned, the shares
it represents will be voted at the Annual Meeting in accordance with the choices
specified herein. IF NO CHOICE IS SPECIFIED, THIS PROXY WILL BE VOTED FOR
PROPOSAL 1.
DATED:__________________________________________, 2000.
________________________________________________________
(Signature)
________________________________________________________
(Signature if jointly held)
Please date and sign exactly as your name or names
appear herein. If more than one owner, all should sign.
When signing as attorney, executor, administrator,
trustee or guardian, give your full title as such. If
the signatory is a corporation or partnership, sign the
full corporate or partnership name by its duly
authorized officer or partner.
PLEASE COMPLETE, SIGN, AND RETURN THIS
PROXY PROMPTLY USING THE ENCLOSED ENVELOPE.
