<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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
Professionals Group, Inc.
- --------------------------------------------------------------------------------
(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.
The filing fee of $____ was calculated on the basis of the information that
follows:
(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:
- --------------------------------------------------------------------------------
(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> 2
[PROFESSIONALS GROUP LOGO]
PROFESSIONALS GROUP, INC.
2600 PROFESSIONALS DRIVE
OKEMOS, MICHIGAN 48864
(800) 292-1036
NOTICE OF 2000 ANNUAL MEETING OF STOCKHOLDERS
NOTICE IS HEREBY GIVEN that the 2000 Annual Meeting of Stockholders of
Professionals Group, Inc. ("Professionals Group") will be held at 2600
Professionals Drive, Okemos, Michigan, at 10:00 a.m., local time, on Wednesday,
May 24, 2000, for the following purposes:
1. To elect four directors of Professionals Group for three year terms
expiring at the annual meeting of stockholders to be held in the year
2003 and upon the election and qualification of their successors or upon
their earlier resignation or removal; to elect one director of
Professionals Group for a two year term expiring at the annual meeting
of stockholders to be held in the year 2002 and upon the election and
qualification of his successor or upon his earlier resignation or
removal; and, to elect one director of Professionals Group for a one
year term expiring at the annual meeting of stockholders to be held in
the year 2001 and upon the election of his successor or upon his earlier
resignation or removal.
2. To transact such other business as may properly come before this meeting
or any adjournments or postponements thereof.
Your Board of Directors is not aware of any other business to come before
this meeting.
The close of business on March 29, 2000 has been fixed as the record date
for the determination of stockholders entitled to notice of and to vote at the
meeting and any adjournments or postponements thereof. Only stockholders of
record at the close of business on that date are entitled to notice of and to
vote at the meeting and any adjournments or postponements thereof.
Professionals Group common stock constitutes the only security of
Professionals Group whose holders are entitled to vote upon the proposals to be
presented at the meeting.
YOUR VOTE IS IMPORTANT TO US. Whether or not you plan to attend the annual
meeting, PLEASE VOTE YOUR SHARES BY TELEPHONE OR THE INTERNET OR BY COMPLETING
THE ENCLOSED PROXY CARD AND PROMPTLY MAILING IT TO US IN THE POSTAGE-PAID
ENVELOPE THAT HAS BEEN PROVIDED TO YOU FOR YOUR CONVENIENCE. The proxy is
revocable and will not affect your right to vote in person if you attend the
meeting.
By Order of the Board of Directors
/s/ Annette E. Flood
Annette E. Flood
Secretary
April 12, 2000
<PAGE> 3
[PROFESSIONALS GROUP LOGO]
PROXY STATEMENT
PROFESSIONALS GROUP, INC.
2000 ANNUAL MEETING OF STOCKHOLDERS
This proxy statement and the accompanying notice were prepared by
management and are being furnished to you in connection with the solicitation of
proxies by your Board of Directors for use at the 2000 Annual Meeting of
Stockholders and any adjournments or postponements thereof. The Annual Meeting
is being held at the time and place and for the purposes listed in the
accompanying Notice of Annual Meeting. This proxy statement was first mailed to
our stockholders on or about April 12, 2000.
GENERAL INFORMATION ABOUT VOTING
WHO CAN VOTE?
You can vote your shares of common stock at the meeting if our records show
that you owned the shares on March 29, 2000. On each matter submitted to a
stockholder vote, you will get one vote for each share of common stock you owned
on that date. A total of 8,924,909 shares of common stock can vote at the
meeting.
HOW DO I VOTE?
You can vote on matters that are properly presented at the meeting in four
ways:
- You can come to the meeting and cast your vote; or
- You can vote by telephone by calling toll-free 1-800-840-1208 on a touch
tone telephone, entering the control number located on the enclosed proxy
card, and following the instructions on the enclosed proxy card; or
- You can vote using the Internet by following the instructions on the
enclosed proxy card; or
- You can vote by signing and returning the enclosed proxy card in the
enclosed envelope.
If you sign and return the enclosed proxy card or vote by telephone or the
Internet, the proxies named on the enclosed proxy card will vote your shares as
you instruct. If you do not vote on a proposal, your proxies will vote for you
on that proposal. Unless you instruct otherwise, the proxies will vote FOR the
election of each director nominee nominated by your Board of Directors, and in
their discretion on every other proposal considered at the meeting.
HOW DO I VOTE IF MY SHARES ARE HELD IN "STREET NAME"?
If your shares are held in the name of your broker, a bank, or other
nominee, then that party should give you instructions for voting your shares.
CAN I REVOKE MY PROXY OR CHANGE MY VOTE AFTER I RETURN MY PROXY CARD?
Yes. You may revoke your proxy at any time prior to its exercise by filing
with the Secretary of Professionals Group a duly executed revocation or a proxy
bearing a later date, including a proxy voted by
<PAGE> 4
telephone or Internet, or by voting in person at the meeting. Your attendance at
the meeting will not in and of itself constitute revocation of your proxy.
WHAT IS THE QUORUM REQUIREMENT?
A quorum of stockholders is necessary to hold a valid meeting. If holders
of at least one-third of the shares of common stock entitled to vote at the
meeting are represented by proxy or in attendance at the meeting, then a quorum
will exist. Abstentions and broker non-votes will be counted as present for
these purposes. A broker non-vote will occur if your nominee votes on some
matters on the proxy card but not on other matters because you did not give your
nominee the authority to vote on those other matters.
WHAT VOTES ARE REQUIRED?
- Directors will be elected by a plurality of the votes present in person
or represented by proxy at the meeting.
- Any other action taken by a vote of our stockholders at the meeting will
be authorized by a majority of the votes cast by the holders of the
shares present in person or represented by proxy at the meeting and
entitled to vote on the action.
The affirmative vote of a majority of the shares of our common stock
present in person or represented by proxy at the meeting may authorize the
adjournment or postponement of the meeting. However, no proxy which was voted
against any proposal will be voted in favor of adjournment or postponement to
solicit further proxies for that proposal.
ELECTION OF DIRECTORS
Our articles of incorporation currently provide that your Board of
Directors will consist of not less than nine directors and not more than 18
directors, with the actual number of directors being determined from time to
time by your Board of Directors. During 1999, there were 15 members of your
Board of Directors. However, after studying corporate governance trends and
examining alternative Board structures, your Board of Directors voted to reduce
the number of directors from 15 to 11 as of this annual meeting of stockholders.
In addition, your Board of Directors determined that after this annual meeting
of stockholders, no person will be nominated for election as a director if he or
she is 72 years of age or older in the calendar year of nomination.
Current members of your Board of Directors who will not be continuing as
directors of Professionals Group will continue as members of the Regional
Advisory Boards of ProNational Insurance Company, ("ProNational") a wholly owned
subsidiary of Professionals Group. This will enable Professionals Group to
retain the experience and expertise of persons who have contributed to its
success.
Your Board of Directors is divided into three classes with each class of
directors elected to a three-year term of office on a rotating basis. At each
annual meeting of stockholders, a class of directors is elected to succeed the
class of directors whose term of office expires at that meeting. In connection
with the meeting and to facilitate its reduction in size from 15 members to 11
members, your Board of Directors has taken the actions that follow:
- nominated Victor T. Adamo, Esq., Eliot H. Berg, M.D., Joseph C. Cauthen,
M.D., and John F. Dodge, Jr., Esq., for election as directors and to hold
office for terms expiring at the annual meeting of stockholders to be
held in the year 2003 and upon the re-election and qualification of their
respective successors or upon their earlier resignation or removal;
- nominated H. Harvey Gass, M.D. for election as a director and to hold
office for a term expiring at the annual meeting of stockholders to be
held in the year 2002 and upon the re-election and qualification of his
successor or upon his earlier resignation or removal; and
2
<PAGE> 5
- nominated Isaac J. Powell, M.D. for election as a director and to hold
office for a term expiring at the annual meeting of stockholders to be
held in the year 2001 and upon the re-election and qualification of his
successor or upon his earlier resignation or removal.
THE PROXIES SOLICITED ON BEHALF OF YOUR BOARD OF DIRECTORS (OTHER THAN
PROXIES IN WHICH THE VOTE IS WITHHELD AS TO ONE OR MORE NOMINEES) WILL BE VOTED
FOR THE ELECTION AS DIRECTORS OF EACH OF THE PERSONS NOMINATED BY YOUR BOARD OF
DIRECTORS FOR THE TERMS OF OFFICE SPECIFIED ABOVE.
If any director nominee is unable to serve, your Board of Directors may
reduce its size or designate a substitute. If a substitute is designated, then
proxies voting FOR the election of the original director nominee will be cast
FOR the election of the substituted nominee. At this time, your Board of
Directors knows of no reason why any of the original director nominees might be
unable to serve, if elected.
The table below sets forth information regarding the composition of your
Board of Directors following the meeting assuming the persons nominated by your
Board of Directors are elected for the terms of office specified above:
<TABLE>
<CAPTION>
POSITIONS HELD IN
PROFESSIONALS GROUP DIRECTOR TERM
CLASS NAME AGE FOLLOWING MEETING SINCE EXPIRES
----- ---- --- ------------------- -------- -------
<S> <C> <C> <C> <C> <C>
I Victor T. Adamo, Esq............. 52 Director, President and 1996 2003
Chief Executive Officer
I Eliot H. Berg, M.D............... 76 Director and Vice Chairman 1998 2003
I Joseph C. Cauthen, M.D........... 63 Director 2000 2003
I John F. Dodge, Jr., Esq.......... 72 Director 1996 2003
II R. Kevin Clinton, FCAS, MAAA..... 45 Director, Vice President 1997 2001
II Isaac J. Powell, M.D............. 59 Director 1996 2001
II Ann F. Putallaz, Ph.D............ 54 Director and Vice Chairman 1996 2001
III H. Harvey Gass, M.D.............. 84 Director 1996 2002
III Richard P. Horsch, M.D........... 64 Director 1999 2002
III William H. Woodhams, M.D......... 62 Director and Chairman 1996 2002
III Donald S. Young, Esq............. 63 Director 1996 2002
</TABLE>
No nominee or any of our directors or executive officers is related to any
other nominee or director or executive officer of Professionals Group (or any of
its subsidiaries) by blood, marriage or adoption. There are no arrangements or
understandings between any nominee or any of our directors or executive officers
and any other person pursuant to which that nominee or director or executive
officer was nominated or elected a director or elected an executive officer of
Professionals Group or any of its subsidiaries.
Victor T. Adamo, Esq., CPCU, has been the Chief Executive Officer,
President and a director of Professionals Group, Inc., since 1996, and a
director of ProNational, where he has held various positions including Chief
Executive Officer, since 1985. He has been Chairman and a director of MEEMIC
Holdings, Inc. since October 1998 and is also Chairman and a director of MEEMIC
Insurance Company. Prior to joining ProNational, Mr. Adamo was in private legal
practice from 1975 to 1985 and represented ProNational in corporate legal
matters. Mr. Adamo is a graduate of The University of Michigan and New York
University School of Law and is a Chartered Property Casualty Underwriter. The
common stock of MEEMIC Holdings, Inc., is listed on the Nasdaq Stock Market(R)
under the symbol "MEMH".
Eliot H. Berg, M.D., became the Vice-Chairman and a director of
Professionals Group on July 1, 1998 when Professionals Group completed its
business combination with Physicians Protective Trust Fund ("PPTF"). He was the
Chairman and a director of ProNational from July 1, 1998 to June 1999. He was a
member and the Chairman of PPTF's Board of Trustees since its inception in 1975
to June 30, 1998. He is board certified in surgery, practices on behalf of Segal
and Berg, P.A. in Hialeah, Florida and serves on the medical staffs of Palmetto
General Hospital, Hialeah Hospital, Parkway Regional Medical Center, and Parkway
West Regional Medical Center. He is a director and an officer of several
corporations which provide surgical assistants to hospitals in the south Florida
area. He was a founder of Palmetto General Hospital and
3
<PAGE> 6
was its Chairman of the Board from 1970 until August 1997. He served as a
director and an officer of Patient Care of America, a health maintenance
organization, from October 1985 until November 1990. He has been a member of the
Board of Overseers for the University of Miami School of Medicine since 1983. He
serves on the Board of Directors of the Dade County Medical Association. Dr.
Berg is a graduate of the State University of New York, Downstate, Medical
College.
Joseph C. Cauthen, M.D., serves on the ProNational Insurance Company
Committee and was a director of ProNational from July 1, 1998 to June 1999. He
was a Trustee of the PPTF Board since PPTF's inception. He is board certified in
Neurosurgery, practices Neurosurgery on behalf of Joseph C. Cauthen, M.D., P.A.
in Gainesville, Florida, and serves on the medical staffs of North Florida
Regional Hospital and Alachua General Hospital. He was Vice-Chairman of the
Board of Trustees of North Florida Regional Medical Center from January, 1988
until January, 1997. During 1992, he served as the chairman of the Professional
Liability Committee of the Florida Medical Association. He was a founding
director of Florida Independent Physicians Association Inc. in 1993 and serves
as its current president. Dr. Cauthen is a graduate of Duke University School of
Medicine.
R. Kevin Clinton, FCAS, MAAA, has been a Vice President of Professionals
Group since 1996 and a director of Professionals Group since September 1997, and
was Chief Financial Officer of Professionals Group from 1996 to March 2000. Mr.
Clinton served as a Vice President, Treasurer and Actuary of ProNational from
1990 through June 1997. Prior to becoming an officer of ProNational, Mr. Clinton
was ProNational's consulting actuary from 1986 to 1990. He has been the
President, Chief Executive Officer and a director of MEEMIC Holdings, Inc. since
October 1998 and is also the President and Chief Executive Officer and a
director of MEEMIC Insurance Company. He formerly served as the Actuary for the
Michigan Insurance Bureau and in the actuarial department of Michigan Mutual
Insurance Company. Mr. Clinton is a Fellow of the Casualty Actuarial Society and
a Member of the American Academy of Actuaries. Mr. Clinton is a graduate of The
University of Michigan where he received a bachelor's degree in business
administration and a master's degree in actuarial science. The common stock of
MEEMIC Holdings, Inc. is listed on the Nasdaq Stock Market(R) under the symbol
"MEMH".
John F. Dodge, Jr., Esq., has been a director and assistant secretary of
Professionals Group since 1996. Mr. Dodge was a director of ProNational from
1980 to July 1, 1998. Mr. Dodge is currently engaged in the private practice of
law in Grosse Pointe, Michigan. Prior to establishing his private practice, Mr.
Dodge was a senior partner in the law firm of Nederlander, Dodge & Rollins,
P.C., Detroit, Michigan. Mr. Dodge has practiced general business and corporate
law since 1961. Mr. Dodge is a graduate of The University of Michigan and The
University of Michigan Law School. Mr. Dodge provides legal services to
Professionals Group and its subsidiaries.
H. Harvey Gass, M.D., has been a director of Professionals Group since
1996. Dr. Gass was a director of ProNational from 1980 to July 1, 1998. Dr. Gass
is board certified in Neurosurgery and has practiced largely at Sinai Hospital,
Detroit, Michigan since 1953. He has also served as Clinical Professor of
Neurosurgery, Department of Neurosurgery, Wayne State University, School of
Medicine, Detroit, Michigan. Dr. Gass is a graduate of The University of
Michigan School of Medicine. Dr. Gass serves as a claims medical consultant to
ProNational.
Richard P. Horsch, M.D., has been a director of Professionals Group since
April 1999. He was a director of ProNational from 1987 until June 1999. Dr.
Horsch is board certified in anesthesiology and is now retired from active
practice. Prior to retirement, Dr. Horsch practiced on the medical staff of St.
Mary's Hospital, Livonia, Michigan. Dr. Horsch is a graduate of Wayne State
University, School of Medicine.
Isaac J. Powell, M.D., has been a director of Professionals Group since
1996. Dr. Powell was a director of ProNational from 1980 to July 1, 1998. He has
been a director of Republic Bancorp, Inc., a publicly held Michigan corporation
and bank holding company, since 1998. He is board certified in Urology and has
practiced medicine since 1969. Dr. Powell has been an Associate Professor in
Urology in the Department of Urology, Wayne State University, School of
Medicine, Detroit, Michigan since 1986. Dr. Powell is also Chief of Urology at
Veterans Hospital of Michigan. Dr. Powell is a graduate of The University of
Michigan and
4
<PAGE> 7
Indiana University Medical School. The common stock of Republic Bancorp, Inc. is
listed on the Nasdaq Stock Market(R) under the symbol "RBNC".
Ann F. Putallaz, Ph.D., has been a director of Professionals Group since
1996 and has been Vice Chairman since June 1999. Since December 1994, she has
been the Vice President and Director of Marketing Information Services of Munder
Capital Management, an investment advisor to The Munder Funds, a Maryland
corporation and an open-end investment company registered under the Investment
Company Act of 1940, as amended. From June 1992 to December 1994, she was the
Director of Client and Marketing Services and Mutual Fund Product Management of
Woodbridge Capital Management, a predecessor-in-interest to Munder Capital
Management. From July 1990 to June 1992, she was the director of Marketing,
Economics and Quantitative Analysis of Comerica Capital Management, a
predecessor-in-interest to Woodbridge Capital Management. Ms. Putallaz has a
B.A. degree in economics from Smith College, and a M.A. degree and a Ph.D.
degree in economics from The University of Michigan.
William H. Woodhams, M.D., has been a director of Professionals Group since
1996 and Chairman since June 1999. Dr. Woodhams was a director of ProNational
from 1980 to July 1, 1998. Dr. Woodhams is board certified in Family Practice
and has been in private practice in Kalamazoo, Michigan since 1964. Dr. Woodhams
serves as an Assistant Clinical Professor in the Department of Family Practice
at Michigan State University, College of Human Medicine. Dr. Woodhams is also a
member of the Michigan Board of Medicine Committee of Licensure and Discipline.
Dr. Woodhams served as a member of the Board of Directors of Physicians
Insurance Company of Indiana from 1982 to 1994. Dr. Woodhams is a graduate of
The University of Michigan School of Medicine.
Donald S. Young, Esq., has been a director of Professionals Group since
1996. He has been a principal in Dykema Gossett PLLC, a law firm headquartered
in Detroit, Michigan since 1972. Mr. Young has a B.A. degree in economics from
The University of Michigan and an LL.B. degree from Harvard University. Mr.
Young serves as a director of Attorneys' Liability Assurance Society (Bermuda)
Ltd. and Attorneys' Liability Assurance Society Inc., which provide professional
liability insurance for large law firms, since 1992. Dykema Gossett PLLC has in
the past provided legal services to Professionals Group and its subsidiaries and
to certain directors of Professionals Group and its subsidiaries.
During 1999, Mr. Victor T. Adamo and Mr. R. Kevin Clinton were the only
directors of Professionals Group who were also employees of Professionals Group
or a subsidiary of Professionals Group.
BOARD COMMITTEES AND MEETINGS
Your Board of Directors conducts its business through its meetings and
through the activities of its committees. Your Board of Directors, which had
four meetings in 1999, has six standing committees. The members of those
committees during 1999 and the functions of those committees are listed below:
<TABLE>
<CAPTION>
NAME OF COMMITTEE MEETINGS
AND MEMBERS FUNCTION OF THE COMMITTEE IN 1999
----------------- ------------------------- --------
<S> <C> <C>
EXECUTIVE
Donald S. Young, Chairman - meets in place of full Board on special 2
Victor T. Adamo issues or when scheduling makes convening
Eliot H. Berg, M.D. entire Board difficult
R. Kevin Clinton - may act on behalf of full Board on all but
John F. Dodge, Jr. major corporate matters
Richard P. Horsch, M.D. - all actions taken by this committee are
Ann F. Putallaz reported at next meeting of full Board
William H. Woodhams, M.D.
</TABLE>
5
<PAGE> 8
<TABLE>
<CAPTION>
NAME OF COMMITTEE MEETINGS
AND MEMBERS FUNCTION OF THE COMMITTEE IN 1999
----------------- ------------------------- --------
<S> <C> <C>
AUDIT
Louis P. Brady, M.D., Chairman - confers with financial officers and 3
Isaac J. Powell, M.D. independent accountants regarding scope of
Donald S. Young examinations
- reviews qualifications and reports of
independent accountants and internal auditors
- reviews recommendations about internal
controls
- recommends selection of independent
accountants to full Board
- monitors compliance with codes of conduct and
applicable laws and regulations
COMPENSATION
Jerry D. Campbell, Chairman - approves standards for setting executive 4
Richard G. Alper, M.D. compensation levels
John F. McCaffrey - administers non-employee directors stock
Edward S. Truppman, M.D. option plan and long term stock incentive plan
William H. Woodhams, M.D. - grants awards under long-term stock incentive
plan
- sets compensation for key employees
- makes executive compensation recommendations
to full Board when full Board approval is
required
NOMINATING
Edward S. Truppman, M.D., - recommends candidates to fill Board vacancies 1
Chairman and for the slate of director nominees to be
Richard G. Alper, M.D. proposed by the full Board at annual meeting
Louis P. Brady, M.D. of stockholders
Jerry D. Campbell - considers director nominees from stockholders
H. Harvey Gass, M.D. for election at annual meeting of stockholders
Isaac J. Powell, M.D. if written stockholder nomination is timely
and properly submitted
INVESTMENT
John F. Dodge, Jr., Chairman - recommends investment policy and guidelines 4
Victor T. Adamo to full Board
R. Kevin Clinton - selects investment managers for investment
Ann F. Putallaz portfolio
- monitors investment activities and
performance of investment managers
PRONATIONAL
Richard P. Horsch, Chairman - reviews activities and finances of 3
Eliot H. Berg, M.D. ProNational
H. Harvey Gass, M.D. - recommends to the full Board any matters
John F. McCaffrey concerning ProNational that require Board
approval
</TABLE>
No incumbent director attended fewer than 75% of the total meetings of your
Board of Directors, or the Board committees on which such director served, that
were held during the portion of 1999 that he or she was a director.
6
<PAGE> 9
DIRECTOR COMPENSATION
GENERAL. We do not pay directors who are also officers of Professionals
Group additional compensation for their service as directors. Compensation for
our non-employee directors includes the following:
- $20,000 annual retainer;
- $10,000 annual stipend as long as a director has attended at least
three-quarters of their assigned board and committee meetings;
- reimbursement for reasonable expenses incurred in connection with
attending a Board meeting or Board committee meeting; and
- an option to acquire 500 shares of common stock at fair market value on
the date the option is issued. Each option is issued pursuant to our 1996
Non-Employee Directors Stock Option Plan.
1996 NON-EMPLOYEE DIRECTORS STOCK OPTION PLAN. The general purposes of this
plan are to:
- encourage non-employee directors to own our common stock, and
- to provide a means for tying a portion of the compensation paid to
non-employee directors for their service on your Board of Directors to
the value of our common stock, thus more closely aligning our directors
interests with your interests.
Although your Board of Directors is the administrator of this plan, neither
it nor any other person or body has any discretion to select the persons who
receive awards under this plan, the times at which awards are granted, or the
terms and conditions of such awards. Instead, all such matters are determined
entirely by the terms of the plan itself. At the adjournment of each
organizational meeting of your Board of Directors following an annual meeting of
stockholders of Professionals Group, each person who is then a non-employee
director of Professionals Group is automatically granted a plan option covering
500 shares of common stock. The per share exercise price of each option granted
under the plan is the "fair market value" of a share of common stock at the date
the option is granted. Pursuant to the plan, in June, 1999 each of the 13 non-
employee directors, including Messrs. Berg, Dodge, Gass, Horsch, Powell,
Woodhams and Young, and Ms. Putallaz, received an option to purchase 500 shares
of common stock at an exercise price of $27.63 per share. The number of shares
that can be purchased pursuant to each option and the exercise price have been
adjusted to reflect the 10% stock dividend paid by Professionals Group in
December 1999.
DIRECTOR STOCK GRANTS. Subject to adjustment and in connection with the
completion of its business combination with PPTF, and pursuant to Consulting,
Confidentiality and Noncompetition Agreements between it and each of Drs. Alper,
Berg, Brady, Cauthen and Truppman, Professionals Group granted and allocated to
them shares of common stock as follows: Richard G. Alper, M.D., 9,687 shares;
Eliot H. Berg, M.D., 14,957 shares; Louis P. Brady, M.D., 10,075 shares; Joseph
C. Cauthen, M.D., 9,687 shares; and Edward S. Truppman, M.D., 9,687 shares. Such
shares are subject to vesting and are to be delivered in five equal installments
beginning July 1, 1998. On July 1, 1999 Professionals Group delivered to each of
Drs. Alper, Berg, Brady, Cauthen and Truppman the second installment of the
aggregate number of shares of common stock allocated to each of them. The
remaining shares of common stock allocated to each of them will be delivered in
three equal and annual installments, subject to the vesting provisions of their
consulting agreements.
DIRECTOR NOMINATIONS
Only persons who are nominated in accordance with the procedures set forth
in our articles of incorporation are eligible for election to your Board of
Directors. Nominations of persons for election to your Board of Directors may be
made at a stockholders meeting by or at the direction of your Board of Directors
or by any stockholder entitled to vote for the election of directors at the
meeting who gives timely written notice to Professionals Group's Secretary. To
be timely, a stockholder's notice, must contain all of the information required
by Professionals Group's articles of incorporation, and, must be delivered to
and received at Professionals Group's principal executive offices not later than
120 days prior to the date one year from the
7
<PAGE> 10
date of the immediately preceding annual meeting of stockholders, and with
respect to an election to be held at a special meeting of stockholders, the
close of business on the 10th day following that date that is the earlier of the
date on which public disclosure of such special meeting is first made and the
date on which formal notice of such special meeting is first given to
stockholders.
In order to be considered at the meeting, stockholder nominations for
director had to be delivered and received at Professionals Group's principal
executive offices at 2600 Professionals Drive, Okemos, Michigan 48864 by
February 2, 2000. Because no such nominations were received by Professionals
Group by that date, only the persons nominated by your Board of Directors may be
elected to your Board of Directors at the meeting.
In order to be considered at Professionals Group's annual meeting of
stockholders to be held in 2001, appropriate stockholder nominations for
director must be received at Professionals Group's principal executive offices
by January 24, 2001.
INFORMATION REGARDING EXECUTIVE OFFICERS
EXECUTIVE OFFICERS
During 1999, your executive officers consisted of the persons named below.
Your executive officers are elected annually and serve at the pleasure of your
Board of Directors.
<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
William H. Woodhams, M.D. ................ 62 Chairman
Victor T. Adamo, Esq., CPCU............... 52 President and Chief Executive Officer
Eliot H. Berg, M.D. ...................... 76 Vice Chairman
Ann F. Putallaz, Ph.D. ................... 54 Vice Chairman
R. Kevin Clinton, FCAS, MAAA.............. 45 Vice President
Annette E. Flood, Esq., R.N. ............. 41 Vice President and Secretary
John F. Lang, CPA......................... 35 Vice President, Treasurer and Chief
Financial Officer
Joseph O. Marker, FCAS, MAAA.............. 51 Chief Actuary
William P. Sabados........................ 50 Chief Information Officer
</TABLE>
For information with respect to Mr. Adamo, Ms. Putallaz, Mr. Clinton and
Drs. Berg and Woodhams, see "Election of Directors" above.
Annette E. Flood, Esq., R.N., has been the Secretary and a Vice President
of Professionals Group since 1996. Ms. Flood has held various positions
including director, Senior Vice President, Corporate Secretary and Legal Counsel
of ProNational since October 1992. She has been the Secretary and a director of
MEEMIC Holdings, Inc. since October 1998 and is also the Secretary and a
director of MEEMIC Insurance Company. Prior to joining ProNational, Ms. Flood
was employed by Lansing General Hospital, Lansing, Michigan, from 1986 to 1992,
most recently in the capacity of Vice President, Legal Services and Quality
Management. Prior to joining the Lansing General Hospital Staff, Ms. Flood was
an attorney in the law firm of Dykema Gossett PLLC, Lansing, Michigan. Ms. Flood
has a B.S.N. degree in nursing from The University of Michigan and a law degree
from Wayne State University Law School. The common stock of MEEMIC Holdings,
Inc. is listed on the Nasdaq Stock Market(R) under the symbol "MEMH".
John F. Lang, CPA, has been the Chief Financial Officer since March 2000
and a Vice President, Treasurer and Chief Accounting Officer of Professionals
Group since July 1998. He is also a director and Senior Vice President of
ProNational. Mr. Lang served as Treasurer of ProNational from August 1996
through June 1998 and as Chief Financial Officer of ProNational from July 1997
through June 1998. Prior to joining ProNational in 1996, Mr. Lang was a senior
manager on the audit staff of Coopers & Lybrand LLP where he was employed since
1986. Mr. Lang is a CPA and has a B.S.B.A. degree in accounting from Central
Michigan University.
8
<PAGE> 11
Joseph O. Marker, FCAS, MAAA, has been the Chief Actuary of Professionals
Group since March 1999. Mr. Marker is also a director and Senior Vice President
and Chief Actuary of ProNational. Prior to joining Professionals Group, Mr.
Marker served in an actuarial capacity for Allmerica Financial Corporation in
Howell, Michigan from 1986 through 1999, most recently as Vice President,
Actuarial. Prior to 1986, Mr. Marker was an actuary for Westfield Companies and
St. Paul Companies. Mr. Marker is a Fellow of the Casualty Actuarial Society and
a member of the American Academy of Actuaries. Mr. Marker is a graduate of The
University of Michigan and received a Masters in mathematics from the University
of Minnesota.
William P. Sabados, has been the Chief Information Officer of Professionals
Group since July 1998. Mr. Sabados is also a director and Chief Information
Officer of ProNational. Mr. Sabados has been a Vice President and Chief
Information Officer of MEEMIC Insurance Company since February 1997. From 1987
to 1997, Mr. Sabados was Vice President of Information Systems for the Investor
Insurance Group. Prior to that, Mr. Sabados served as Director of
Membership/Billing for Blue Cross/Blue Shield North East Ohio in Cleveland, Ohio
since 1984. Mr. Sabados is a graduate of David M. Meyers College.
SUMMARY COMPENSATION TABLE
The following table sets forth information concerning compensation for
services in all capacities awarded to, earned by or paid to each of the five
most highly compensated executive officers of Professionals Group (the "named
executive officers") for the last three completed fiscal years whose salary and
bonus exceeded $100,000 in 1999.
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
--------------------------------
ANNUAL COMPENSATION AWARDS PAYOUT
----------------------------------------------- ---------------------- ------
OTHER RESTRICTED
ANNUAL STOCK OPTIONS/ LTIP ALL OTHER
NAME AND SALARY BONUS COMPENSATION AWARD(S) SARS PAYOUT COMPENSATION
PRINCIPAL POSITION YEAR ($)(A) ($)(A)(B) ($) ($) (#)/(C) ($) ($)
------------------ ---- ------ --------- ------------ ---------- -------- ------ ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Victor T. Adamo...... 1999 300,000 125,000 -- -- 25,000 -- 32,802(d)
President and Chief 1998 300,000 100,000 -- -- -- -- 30,122
Executive Officer 1997 238,526 200,000 -- -- 60,000 -- 30,848
R. Kevin Clinton..... 1999 275,000 231,572 -- -- 60,000 -- 28,722(d)
Vice President 1998 275,000 150,000 -- -- -- -- 29,874
1997 222,021 150,000 -- -- 40,000 -- 30,848
Annette E. Flood..... 1999 140,000 28,840 -- -- 25,000 -- 23,200(d)
Vice President and 1998 140,000 -- -- -- -- -- 26,590
Secretary 1997 124,620 125,000 -- -- 13,000 -- 25,533
John F. Lang......... 1999 120,000 64,720 -- -- 12,500 -- 21,725(d)
Chief Financial 1998 105,000 -- -- -- -- -- 16,379
Officer 1997 91,000 55,000 -- -- 2,500 -- 13,707
William P. Sabados... 1999 130,000 33,053 -- -- 25,000 -- 18,370(d)
Chief Information 1998 113,996 36,000 -- -- -- -- 10,127
Officer 1997 77,001(e) 30,000 15,055(f) -- -- -- --
</TABLE>
- ---------------
(a) Salary and bonus amounts shown for Mr. Clinton and Mr. Sabados primarily
reflect their compensation as executive officers of MEEMIC Insurance
Company.
(b) Amounts shown reflect bonuses granted for the year listed, but were paid
during the following calendar year.
(c) Amount shown for 1999 for Mr. Lang was issued by Professionals Group
pursuant to its 1996 Long Term Incentive Plan. Amounts shown for 1999 for
Messrs. Adamo, Clinton, Sabados and Ms. Flood were issued by MEEMIC
Holdings, Inc., a subsidiary of Professionals Group, pursuant to the MEEMIC
Holdings, Inc. Stock Compensation Plan. All amounts shown for 1997 were
issued by Professionals Group, pursuant to its 1996 Long Term Incentive
Plan.
9
<PAGE> 12
(d) Amounts shown for 1999 consist of the following: (i) Mr. Adamo: matching
contribution to purchases of common stock under the Professionals Group
Stock Purchase Plan of $5,000 and contributions under the ProNational
Insurance Company Employee Stock Ownership Plan and the ProNational
Insurance Company Employees' Savings and Retirement Plan (the "ProNational
retirement plans") for the benefit of Mr. Adamo of $27,802; (ii) Mr.
Clinton: matching contribution to purchases of common stock under the
Professionals Group Stock Purchase Plan of $5,000 and contributions under
the ProNational retirement plans for the benefit of Mr. Clinton of $23,722;
(iii) Ms. Flood: matching contribution to purchases of common stock under
the Professionals Group Stock Purchase Plan of $5,000 and contributions
under the ProNational retirement plans for the benefit of Ms. Flood of
$18,200; (iv) Mr. Lang: matching contribution to purchases of common stock
under the Professionals Group Stock Purchase Plan of $5,000 and
contributions under the ProNational retirement plans for the benefit of Mr.
Lang of $16,725; and (v) Mr. Sabados: matching contribution to purchases of
common stock under the Professionals Group Stock Purchase Plan of $3,250
and contributions under the ProNational retirement plans for the benefit of
Mr. Sabados of $15,120.
(e) The 1997 amount shown reflects annualized salary of $110,000 and reflects
salary from date of employment with ProNational.
(f) Amount shown reflects relocation expenses paid.
The following tables set forth information for each of the five individuals
named in the Summary Compensation Table as to (1) grants of options to purchase
Professionals Group common stock under the Professionals Group 1996 Long Term
Incentive Plan during 1999, (2) grants of options to purchase MEEMIC Holdings,
Inc. common stock under the MEEMIC Holdings, Inc. Stock Compensation Plan during
1999, (3) option values as of December 31, 1999 with respect to options to
purchase Professionals Group common stock granted under the Professionals Group
1996 Long Term Incentive Plan, and (4) option values as of December 31, 1999
with respect to options to purchase MEEMIC Holdings, Inc. common stock granted
under the MEEMIC Holdings, Inc. Stock Compensation Plan.
AGGREGATE OPTION/SAR GRANTS IN THE LAST FISCAL YEAR TABLES
The following table sets forth certain information concerning stock
options/SARs granted by Professionals Group to the named executive officers
under the Professionals Group 1996 Long Term Incentive Plan.
<TABLE>
<CAPTION>
% OF
NUMBER OF TOTAL
SECURITIES OPTIONS GRANT
UNDERLYING GRANTED TO EXERCISE DATE
GRANT OPTIONS EMPLOYEES OR BASE EXPIRATION PRESENT
NAME DATE GRANTED* IN 1999* PRICE($/SH)* DATE VALUE($)
---- ----- ---------- ---------- ------------ ---------- --------
<S> <C> <C> <C> <C> <C> <C>
Victor T. Adamo................ -- -- -- -- -- --
R. Kevin Clinton............... -- -- -- -- -- --
Annette E. Flood............... -- -- -- -- -- --
John F. Lang................... 03/09/99 8,250 10.9 30.58 03/09/09 97,433**
12/10/99 5,000 6.5 23.50 12/10/09 71,250**
William P. Sabados............. -- -- -- -- -- --
</TABLE>
- ---------------
* A total of 75,800 options were issued in 1999 under the Professionals Group
1996 Long Term Incentive Plan. The number of options granted and exercise
price per share have been adjusted for the 10% stock dividend declared and
paid in 1999.
** Based on the Black-Scholes Option Pricing Model adopted for use in valuing
executive stock options. The actual value, if any, an executive may realize
will depend upon the excess of the stock price over the exercise price on the
date the option is exercised, so there is no assurance that the value
realized by an executive will be at or near the value estimated by the
Black-Scholes Model. The assumptions used in
10
<PAGE> 13
calculating the value of the options were expected volatility of .354,
risk-free return of 5.90% and a dividend value of 0%, and ten years before
exercise.
The following table sets forth certain information concerning stock
options/SARs granted by MEEMIC Holdings, Inc. to the named executive officers
under the MEEMIC Holdings, Inc. Stock Compensation Plan.
<TABLE>
<CAPTION>
% OF
NUMBER OF TOTAL
SECURITIES OPTIONS GRANT
UNDERLYING GRANTED TO EXERCISE DATE
GRANT OPTIONS EMPLOYEES OR BASE EXPIRATION PRESENT
NAME DATE GRANTED IN 1999* PRICE($/SH) DATE VALUE($)
---- ----- ---------- ---------- ----------- ---------- --------
<S> <C> <C> <C> <C> <C> <C>
Victor T. Adamo............... 07/01/99 25,000 8.9 10.00 07/01/09 128,500**
R. Kevin Clinton.............. 07/01/99 60,000 21.4 10.00 07/01/09 308,400**
Annette E. Flood.............. 07/01/99 25,000 8.9 10.00 07/01/09 128,500**
John F. Lang.................. -- -- -- -- -- --
William P. Sabados............ 07/01/99 25,000 8.9 10.00 07/01/09 128,500**
</TABLE>
- ---------------
* A total of 280,000 options were issued in 1999 under the MEEMIC Holdings,
Inc. Stock Compensation Plan.
** Based on the Black-Scholes Option Pricing Model adopted for use in valuing
executive stock options. The actual value, if any, an executive may realize
will depend upon the excess of the stock price over the exercise price on the
date the option is exercised, so there is no assurance that the value
realized by an executive will be at or near the value estimated by the
Black-Scholes Model. The assumptions used in calculating the value of the
options were expected volatility of .512, risk-free return of 5.84% and a
dividend value of 0%, and 5 years before exercise.
AGGREGATE OPTION/SAR EXERCISES AND FISCAL YEAR-END OPTION/SAR VALUE TABLES
The following table sets forth certain information concerning stock
options/SARs granted to the named executive officers under the Professionals
Group 1996 Long Term Incentive Plan.
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
SHARES OPTIONS/SARS AT OPTIONS/SARS AT
ACQUIRED VALUE FISCAL YEAR-END(#) FISCAL YEAR-END($)
ON REALIZED EXERCISABLE/ EXERCISABLE/
NAME EXERCISE(#) ($) UNEXERCISABLE UNEXERCISABLE
---- ----------- -------- ---------------------- --------------------
<S> <C> <C> <C> <C>
Victor T. Adamo..................... -- -- 29,040/43,560* 0/0
R. Kevin Clinton.................... -- -- 19,360/29,040* 0/0
Annette E. Flood.................... -- -- 6,292/ 9,438* 0/0
John F. Lang........................ -- -- 1,210/15,065** 0/0
William P. Sabados.................. -- -- 0/0 0/0
</TABLE>
- ---------------
* All of these options are non-qualified stock options, are subject to vesting
in annual increments of 20% commencing February 12, 1998 and expire at 5:00
p.m. on February 12, 2007.
** All of these options are non-qualified stock options. Of such options: (1)
3,025 options are subject to vesting in annual increments of 20% commencing
February 12, 1998 and expire at 5:00 p.m. on February 12, 2007; (2) 8,250
options are subject to vesting in annual increments of 20% commencing March
9, 2000 and expire at 5:00 p.m. on March 9, 2009; and (3) 5,000 options are
subject to vesting in annual increments of 20% commencing December 10, 2000
and expire at 5:00 p.m. on December 10, 2009.
11
<PAGE> 14
The following table sets forth certain information concerning stock
options/SARs granted to the named executive officers under the MEEMIC Holdings,
Inc. Stock Compensation Plan.
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
OPTIONS/SARS AT OPTIONS/SARS AT
SHARES VALUE FISCAL YEAR-END(#) FISCAL YEAR-END($)
ACQUIRED ON REALIZED EXERCISABLE/ EXERCISABLE/
NAME EXERCISE(#) ($) UNEXERCISABLE UNEXERCISABLE
---- ----------- -------- ---------------------- --------------------
<S> <C> <C> <C> <C>
Victor T. Adamo..................... -- -- 0/25,000* 0/132,813
R. Kevin Clinton.................... -- -- 0/60,000* 0/318,750
Annette E. Flood.................... -- -- 0/25,000* 0/132,813
John F. Lang........................ -- -- 0/0 0/0
William P. Sabados.................. -- -- 0/25,000* 0/132,813
</TABLE>
- ---------------
* All of these options are non-qualified stock options, are subject to vesting
in annual increments of 20% commencing July 1, 2000 and expire at 5:00 p.m. on
July 1, 2009.
KEY EMPLOYEE RETENTION PLAN
We have a Key Employee Retention Plan that provides our executives and "key
employees" with a severance payment and certain insurance and other benefits in
the event that there is a change in control of Professionals Group, as defined
in the plan, that is coupled with the actual involuntary or constructive
termination of such executive within two years after such change in control. The
amount of the severance payment is equal to two times the executive's base
salary plus bonus (average of last three years).
STOCK PURCHASE PLAN
We have implemented a stock purchase plan which permits employees and
directors of Professionals Group and its subsidiaries to purchase common stock
by means of payroll deduction. Under this plan, we may elect to match
participant purchases. During 1999 we matched participant purchases at the rate
of $1.00 for each $1.00 of participant purchases up to $4,000 and $.50 for each
$1.00 of participant purchases after that, up to a maximum participant purchase
of $6,000. In the event that Professionals Group was not the direct employer of
a participant, the match amount was charged to the subsidiary that was the
employer of the participant. Participants in this plan exercise all rights of
ownership with respect to shares of common stock purchased for their respective
accounts. For 2000, we will continue to match participant purchases at the rate
of $1.00 for each $1.00 of participant purchases up to $4,000 and $0.50 for each
$1.00 of participant purchases after that, up to a maximum participant purchase
of $6,000.
COMPENSATION COMMITTEE REPORT
The Compensation Committee has responsibility for our executive
compensation policies and practices. The Compensation Committee approves all
elements of compensation for corporate officers and administers the 1996
Professionals Insurance Company Management Group Long-Term Stock Incentive Plan,
which was approved by Professionals Group's stockholders in 1996 and provides
for certain incentive awards to officers, other executives and selected key
employees.
The Compensation Committee regularly reports on its activities to your
Board of Directors. The Compensation Committee also obtains ratification by the
non-employee members of your Board of Directors of all items of compensation for
the five highest-paid executives including the CEO.
The Compensation Committee is comprised entirely of outside directors who
are not officers or employees of Professionals Group or its subsidiaries and who
are not eligible to participate in any of the plans
12
<PAGE> 15
or programs that the Compensation Committee administers. The Compensation
Committee's report on executive compensation follows:
The officers of Professionals Group and its subsidiaries,
including the Chief Executive Officer, are compensated through a
combination of salary and incentive compensation. The primary purposes
of Professionals Group's compensation program are to attract and
retain qualified individuals and to motivate and reward individuals
based on performance. Salary and annual incentive compensation awards
reward senior executives for their current performance and
contributions. Awards under Professionals Group's 1996 Long-Term Stock
Incentive Plan are provided to reward senior executives for taking
action that contributes to Professionals Group's long-term growth and
success, and to link the interests of such senior executives to those
of Professionals Group's stockholders. We believe that making portions
of executive compensation subject to short-term and long-term
corporate interests will provide an incentive for increasing
stockholder value over the long term and will more closely align the
interest of senior executives with those of stockholders.
It is our goal to establish salaries that are competitive in
comparison to market practices and reflect a senior executive's scope
of responsibilities, level of experience, individual performance and
contribution to the business. In establishing salaries, we review
executive compensation survey data for insurance companies and
publicly traded insurance groups of similar size and product lines. We
also consider, among other factors, job responsibilities and job
performance, education, training and market opportunities.
We award annual incentive compensation to the senior executives
based upon our assessment of Professionals Group's performance
against:
- certain pre-established corporate goals during the prior year
(including growth and financial results),
- the market performance of Professionals Group common stock as
compared with a pre-selected insurance industry benchmark index, and
- the contribution made by each senior executive to Professionals
Group's current and future performance.
We encourage stock ownership by senior executives. All executive
officers participate in the stock purchase plan. In prior years and in
1999, options to purchase shares of common stock were awarded under
the 1996 Long Term Stock Incentive Plan to executive officers.
Professionals Group's executive officers are also eligible to
participate in compensation and benefit programs generally available
to other employees, such as the stock purchase plan, the ProNational
Insurance Company Pension and 401(k) Plans, healthcare and
supplemental life, and disability insurance programs.
For 1999, Professionals Group's chief executive officer was
Victor T. Adamo, President and Chief Executive Officer. The Summary
Compensation Table shows the amounts and type of compensation paid to
Mr. Adamo for 1999. Mr. Adamo's base salary was determined based upon
survey data of peer executives and the success of Mr. Adamo's
leadership at Professionals Group. For 1999, Mr. Adamo was awarded a
bonus as a result of the successful completion of the transactions
with MEEMIC as well as the Committee's evaluation of Mr. Adamo's
strategic leadership of Professionals Group and the achievement of
corporate goals. Evidence of Mr. Adamo's leadership can be found in:
Professionals Group's larger balance sheet which exceeded $1 billion
in 1999; increased revenues and net income; excellent
claims-paying-ability ratings which were reaffirmed by the rating
agencies in 1999; and, increased product diversification. We also
focused on the performance of Professionals Group common stock that
was substantially better than the performance of that of the property
and casualty insurance industry as a whole. As in prior years, the key
judgment we made in determining Mr. Adamo's 1999 compensation was our
assessment of his ability and dedication to enhancing the long-term
value of Professionals Group for its stockholders
13
<PAGE> 16
by continuing to provide the leadership and vision that he has provided
throughout his tenure at Professionals Group. For these reasons, we deem
Mr. Adamo's compensation package to be appropriate.
Under Section 162 (m) of the Internal Revenue Code of 1986, as
amended, and subject to certain exceptions (including exceptions
relating to stock options and for "performance-based" compensation if
certain conditions are met), Professionals Group may not deduct
compensation in excess of $1 million paid to any executive named in
its corporation's Summary Compensation Table for that year. For 1999,
the compensation paid to each of the executive officers named in the
Summary Compensation Table was well below $1 million, and we expect
the same will be true for the current year. Consequently, for the
present we have decided to defer consideration of any compensation
policies relating to Section 162(m) of the Internal Revenue Code of
1986.
<TABLE>
<S> <C>
Jerry D. Campbell, Chairman John F. McCaffrey
Richard G. Alper, M.D. William H. Woodhams, M.D.
Edward S. Truppman, M.D.
</TABLE>
The Compensation Committee Report does not constitute soliciting material.
It is not considered filed by us, and shall not be incorporated by reference
into any of our other filings, under the Securities Act or the Exchange Act,
unless we state otherwise.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The members of our Compensation Committee in 1999 were Jerry D. Campbell,
Chairman, Richard G. Alper, M.D., John F. McCaffrey, Edward S. Truppman, M.D.
and William H. Woodhams, M.D.
No executive officer of Professionals Group served as a member of the
compensation committee (or other board committee performing equivalent functions
or, in the absence of any such committee, the entire board of directors) of
another entity, one of whose executive officers served on the compensation
committee of Professionals Group. No executive officer of Professionals Group
served as a director of another entity, one of whose executive officers served
on the compensation committee of Professionals Group.
Victor T. Adamo, a director and the President and Chief Executive Officer
of Professionals Group, also serves as a director of MEEMIC Holdings, Inc., a
subsidiary of Professionals Group, and sits on the compensation committee of its
board of directors. R. Kevin Clinton, a director and the President and Chief
Executive Officer of MEEMIC Holdings, Inc. and a Vice President of Professionals
Group, also serves as a director of Professionals Group.
14
<PAGE> 17
STOCK PERFORMANCE GRAPH
The following line graph compares the yearly percentage change in the
cumulative total stockholder return on our common stock for the last five fiscal
years with the cumulative total return on:
- The Russell 2000 Index, which is comprised of the common shares of the
2,000 smallest of the 3,000 largest United States companies based on
total market capitalization; and
- The Nasdaq Insurance Stocks Index, which is comprised of common shares of
insurance companies traded on the Nasdaq Stock Market(R).
The following graph assumes the investment of $100 in our common stock, the
Russell 2000 Index and the Nasdaq Insurance Stocks Index on December 31, 1994
and the reinvestment of all dividends. The returns shown on the graph are not
necessarily indicative of future performance.
TOTAL RETURN PERFORMANCE
[PERFORMANCE GRAPH]
The dollar values for total stockholder return plotted in the graph above
are shown in the table below.
TOTAL RETURN ANALYSIS
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
PERIOD ENDING
- -------------------------------------------------------------------------------------------------------------
INDEX 12/31/94 12/31/95 12/31/96 12/31/97 12/31/98 12/31/99
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Professionals Group Inc. 100.00 197.67 219.93 429.87 340.90 283.51
- -------------------------------------------------------------------------------------------------------------
Russell 2000 100.00 128.45 149.64 183.10 178.44 216.37
- -------------------------------------------------------------------------------------------------------------
Nasdaq Insurance Stocks 100.00 142.05 161.92 237.52 211.58 164.28
- -------------------------------------------------------------------------------------------------------------
</TABLE>
The Stock Performance Graph does not constitute soliciting material. It is
not considered filed by us, and shall not be incorporated by reference into any
of our other filings, under the Securities Act or the Exchange Act, unless we
state otherwise.
15
<PAGE> 18
RELATED PARTY TRANSACTIONS
Except as otherwise disclosed in this Proxy Statement, we did not have any
material related party transactions in 1999 except as follows:
- John F. Dodge, Jr., Esq. performed certain legal services for
Professionals Group and its subsidiaries. He was paid $12,014 in 1999 for
legal services and expenses in connection with his representation of
Professionals Group and ProNational.
- Dr. H. Harvey Gass serves as ProNational's Claims Medical Consultant. Dr.
Gass was paid $55,818 in 1999 with respect to consulting services
rendered to ProNational.
STOCK OWNERSHIP
The following table shows the number of shares of Professionals Group
common stock beneficially owned, as of March 1, 2000, by:
- each person who owns more than 5% of the outstanding shares of
Professionals Group common stock;
- each person who was a director or executive officer of Professionals
Group on March 1, 2000;
- each person who has been nominated to become a director or executive
officer of Professionals Group; and
- all such directors, executive officers and nominees as a group.
<TABLE>
<CAPTION>
NAME OF NUMBER OF RIGHT TO RESTRICTED PERCENTAGE OF
BENEFICIAL OWNER (1) SHARES OWNED(2) ACQUIRE(3) STOCK(4) OUTSTANDING SHARES(5)
-------------------- --------------- ---------- ---------- ---------------------
<S> <C> <C> <C> <C>
Franklin Advisory Services............. 768,350 -- -- 8.5%
Victor T. Adamo........................ 59,003 43,560 -- 1.0%
Richard G. Alper, M.D. ................ 5,474 -- 6,393 *
Eliot H. Berg, M.D. ................... 11,278 -- 9,873 *
Louis P. Brady, M.D. .................. 6,084 -- 6,651 *
Jerry D. Campbell...................... 6,307 1,876 -- *
Joseph C. Cauthen...................... 13,101 -- 6,393 *
R. Kevin Clinton....................... 35,248 29,040 -- *
John F. Dodge, Jr. .................... 10,006 1,876 -- *
Annette E. Flood....................... 7,589 9,438 -- *
H. Harvey Gass, M.D. .................. 11,934 1,876 -- *
Richard P. Horsch, M.D. ............... 14,140 -- -- *
John F. Lang........................... 1,829 3,465 -- *
John F. McCaffrey...................... 1,725 1,876 -- *
Isaac J. Powell, M.D. ................. 3,575 1,876 -- *
Ann F. Putallaz........................ 2,777 1,876 -- *
William P. Sabados..................... 467 -- -- *
Edward S. Truppman, M.D. .............. 9,353 -- 6,393 *
William H. Woodhams, M.D. ............. 10,780 1,876 -- *
Donald S. Young........................ 5,830 1,876 -- *
All directors and executive officers as
a group (19 persons)................. 216,500 100,511 35,703 4.0%
</TABLE>
- ---------------
(1) The information contained in this table with respect to each person named in
the table was provided to us by that person. The address of Franklin
Advisory Services is 777 Mariners Island Blvd., P.O. Box 7777, San Mateo,
California 94403-7777. The address of each named individual is 2600
Professionals Drive, Okemos, Michigan 48864.
(2) The number of shares owned stated for each named person includes shares for
which the named person has sole voting and investment power or has shared
voting and investment power with a spouse. It also includes shares held in a
401(k) plan or in an individual retirement account over which the named
person
16
<PAGE> 19
has control, shares held by any corporation of which the named person is a
director, executive officer or controlling stockholder, shares held by a
trust of which the named person, or his or her spouse, is a trustee or
custodian, shares held by a partnership which the named person is a general
partner, and shares held by a spouse or minor children. The number of shares
owned stated for each named person excludes shares that are restricted stock
holdings, or may be acquired through stock option exercises.
(3) Number of shares that can be acquired through stock options exercised within
sixty days of March 1, 2000.
(4) Number of shares subject to a vesting schedule, forfeiture risk and other
restrictions.
(5) * indicates less than one percent of the outstanding shares.
SOLICITATION OF PROXIES
Professionals Group is paying for this proxy solicitation. In addition to
sending you these materials, some of our employees may contact you in person, by
mail, or by telecommunications equipment (including telephone, telegrams and
datagrams), to solicit your proxy. None of these employees will receive any
extra compensation for doing this. We have also retained Morrow & Company to
assist us in soliciting your proxy for a fee of $4,500 plus reasonable
out-of-pocket expenses. We will reimburse brokerage firms and other custodians,
nominees and fiduciaries for reasonable expenses incurred by them in soliciting
your proxy.
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
PricewaterhouseCoopers LLP, independent certified public accountants for
fiscal 1999, have been reappointed by your Board of Directors for fiscal 2000.
Representatives of PricewaterhouseCoopers LLP will be present at this meeting to
respond to appropriate questions by stockholders and to make a statement if they
so desire.
At a meeting of the Audit Committee of your Board of Directors held on
August 27, 1999, the accounting firm of PricewaterhouseCoopers LLP was engaged
by Professionals Group to perform future independent audits of it.
PricewaterhouseCoopers LLP thereby replaced KPMG LLP as Professionals Group's
independent accountants. The change in accountants did not result from any
dissatisfaction or disagreement with KPMG LLP. Instead, the change resulted from
Professionals Group's putting its audit work out to bid as part of the
consolidation, under one accounting firm, of all audits of the registrant and
its subsidiaries. KPMG LLP participated in the bidding process. In connection
with the audits of the two years ended December 31, 1998, and the subsequent
interim period through August 27, 1999, there were no disagreements with KPMG
LLP on any matter of accounting principles or practices, financial statement
disclosure, or auditing scope or procedures, which disagreements if not resolved
to their satisfaction would have caused them to make reference in connection
with their opinion to the subject matter of the disagreement.
During 1998 and 1997, Professionals Group did not engage any independent
accountants other than KPMG LLP to audit the financial statements of either it
or any significant subsidiary of it. KPMG LLP's reports on Professionals Group's
financial statements for 1998 and 1997 did not contain an adverse opinion or a
disclaimer of opinion, nor were they qualified or modified as to uncertainty,
audit scope or accounting principles.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires our directors and executive
officers, and persons who own more than 10 percent of a registered class of our
equity securities, to file with the SEC initial reports of ownership and reports
of changes in ownership of the common stock and other equity securities of
Professionals Group. Officers, directors and greater than 10 percent
stockholders are required by the SEC regulation to furnish us with copies of all
Section 16(a) forms they file.
17
<PAGE> 20
To our knowledge, based solely on a review of the copies of such reports
furnished to us and written representations that no other reports are required,
all Section 16(a) filing requirements applicable to its officers, directors and
greater than 10 percent beneficial owners were complied with during the year
ended December 31, 1999.
STOCKHOLDER PROPOSALS
Any stockholder who wishes to submit a security holder proposal for
possible inclusion in the proxy statement and proxy for our 2001 annual meeting
of stockholders pursuant to Rule 14a-8 of the SEC must do so on or before
December 13, 2000. The proposal must comply with the rules and regulations of
the SEC then in effect and must be transmitted by registered or certified mail
to Annette E. Flood, Esq., Secretary, Professionals Group, Inc., 2600
Professionals Drive, Okemos, Michigan 48864.
Any stockholder who wishes to submit a security holder proposal for
possible inclusion in the proxy statement and proxy for our 2001 annual meeting
of stockholders, other than a director nomination and other than pursuant to
Rule 14a-8 of the SEC, must do so on or before January 24, 2001. The proposal
must comply with the requirements of our articles of incorporation and bylaws,
and with the rules and regulations of the SEC then in effect. The proposal must
be transmitted by registered or certified mail to Annette E. Flood, Esq.,
Secretary, Professionals Group, Inc., 2600 Professionals Drive, Okemos, Michigan
48864.
Pursuant to Rule 14a-5(e) of the SEC, if we do not have notice of a
proposal to be considered at our 2001 annual meeting of stockholders before
January 24, 2001, then management proxies will be allowed to use their
discretionary voting authority when that proposal is raised at that meeting.
OTHER MATTERS
Due to the reduction in its size, your Board of Directors has the power to
appoint Drs. Cauthen, Gass and Powell as directors for the terms of office for
which they have been nominated. Indeed, your Board of Directors was not required
to seek stockholder approval for these three nominated individuals. However, in
the interest of promoting stockholder participation in corporate governance,
your Board of Directors elected to seek stockholder approval as to Drs. Cauthen,
Gass and Powell. In order to ensure that there are no vacancies on your Board of
Directors due to the reduction in its size, promptly after the meeting, your
Board of Directors intends to appoint Drs. Cauthen, Gass and Powell as directors
of Professionals Group for the terms of office for which they have been
nominated.
We are not aware of any business to come before this meeting other than the
matters described in this proxy statement. However, if any other matters should
properly come before this meeting, it is intended that holders of the proxies
will act in accordance with their best judgment.
A copy of our Annual Report on Form 10-K for the fiscal year ended December
31, 1999, is enclosed with this Proxy Statement. Copies of our Form 10-K and
other filings we have made with the SEC may be obtained through our web site at
www.ProfessionalsGroup.com. We will provide you, upon your written request,
without charge, a copy of our Annual Report on Form 10-K for the fiscal year
ended December 31, 1999. Your request should be directed to John F. Lang, Chief
Financial Officer, Professionals Group, Inc., 2600 Professionals Drive, Okemos,
Michigan 48864.
No person is authorized to give any information or to make any
representation other than that contained in this proxy statement, and if given
or made, such information may not be relied upon as having been authorized.
18
<PAGE> 21
- --------------------------------------------------------------------------------
PROXY PROFESSIONALS GROUP, INC. PROXY
PROXY SOLICITED ON BEHALF OF YOUR BOARD OF DIRECTORS
FOR THE 2000 ANNUAL MEETING OF STOCKHOLDERS TO BE HELD AT 10:00 A.M.
WEDNESDAY, MAY 24, 2000
The Stockholder executing this Proxy appoints Victor T. Adamo, William H.
Woodhams, M.D., Eliot H. Berg, M.D. and Ann F. Putallaz, and each of them, each
with full power to appoint his or her substitute, attorneys and proxies to
represent the Stockholder and to vote and act with respect to all shares of
common stock, no par value per share, of Professionals Group, Inc.
("Professionals Group") that the Stockholder would be entitled to vote on all
matters which come before the 2000 Annual Meeting of Stockholders of
Professionals Group referred to on the reverse side (the "Professionals Group
Annual Meeting") and at any adjournment(s) or postponement(s) of the
Professionals Group Annual Meeting. The affirmative vote of a majority of
the shares represented at the Professionals Group Annual Meeting may authorize
the adjournment or postponement of the meeting; provided, however, that no
proxy which is voted against any proposal will be voted in favor of adjournment
or postponement to solicit further proxies for such proposal.
THIS PROXY IS SOLICITED ON BEHALF OF YOUR BOARD OF DIRECTORS OF
PROFESSIONALS GROUP. IF THIS PROXY IS PROPERLY EXECUTED, THE SHARES OF
PROFESSIONALS GROUP COMMON STOCK REPRESENTED BY THIS PROXY WILL BE VOTED AS
SPECIFIED. IF NO SPECIFICATION IS MADE, SUCH SHARES WILL BE VOTED FOR THE
ELECTION OF ALL OF THE NOMINEES FOR DIRECTOR LISTED ON THE REVERSE SIDE. THE
SHARES OF PROFESSIONALS GROUP COMMON STOCK REPRESENTED BY THIS PROXY WILL BE
VOTED IN THE DISCRETION OF THE PROXIES ON ANY OTHER MATTERS WHICH MAY COME
BEFORE THE PROFESSIONALS GROUP ANNUAL MEETING.
(CONTINUED AND TO BE SIGNED ON REVERSE SIDE.)
- --------------------------------------------------------------------------------
/\ FOLD AND DETACH HERE/\
<PAGE> 22
<TABLE>
<S><C>
The undersigned Stockholder hereby (i) revokes any and all proxies previously Please mark
executed with respect to the Professionals Group Annual Meeting, and (ii) your vote as
acknowledges receipt of the Notice and Proxy Statement for the Professionals indicated in
Group Annual Meeting. this example [X]
1. The election of four directors to the Board of Directors of Professionals Vote for all nominees Withhold authority to
Group for three year terms expiring at the Annual Meeting of Stockholders to listed at left vote for all nominees
be held in the year 2003 and upon the election and qualification of their listed at left
successors or upon their earlier resignation or removal, namely: (01) Victor
T. Adamo, (02) Eliot H. Berg. M.D., (03) Joseph C. Cauthen, M.D. and (04) John F. [ ] [ ]
Dodge, Jr.; the election of one director to the Board of Directors of
Professionals Group for a two year term expiring at the Annual Meeting of
Stockholders to be held in the year 2002 and upon the election and
qualification of his successor or removal, namely: (05) H. Harvey Gass,
M.D.; and the election of one director to the Board of Directors of
Professionals Group for a one year term expiring at the Annual Meeting of
Stockholders to be held in the year 2001 and upon the election and qualification
of his successor or upon his earlier resignation or removal, namely: (06)
Isaac J. Powell, M.D.
YOUR BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR ALL DIRECTOR NOMINEES LISTED
ABOVE.
Instruction: To withhold authority for any nominee(s) listed above, list name(s)
of nominee(s) in the space provided below:
- --------------------------------------------------------------------------------
------
|
|
Signature Signature Date
-------------------------------------------------- ------------------------------------------ -----------------
Please sign exactly as name appears on this proxy. When shares are held by joint tenants, both should sign. When signing as
attorney, executor, administrator, trustee or guardian, please give full title as such. If a corporation, please sign in full
corporate name by an authorized officer. If a partnership, please sign in partnership name by authorized person.
....................................................................................................................................
/\ FOLD AND DETACH HERE /\
YOUR VOTE IS IMPORTANT!
YOU CAN VOTE IN ONE OF THREE WAYS:
====================================================================================================================================
VOTE BY INTERNET
24 HOURS A DAY, 7 DAYS A WEEK
Follow the instructions at our Internet Address: http://www.eproxy.com/picm
====================================================================================================================================
OR
====================================================================================================================================
VOTE BY PHONE
HAVE YOUR PROXY CARD IN HAND.
Call toll-free 1-800-840-1208 on a touch tone telephone 24 hours a day, 7 days a week
There is NO CHARGE to you for this call.
You will be asked to enter your 11-digit Control Number, which is located in the box in the lower right hand corner of this
form. Follow the recorded instructions
====================================================================================================================================
OR
====================================================================================================================================
VOTE BY PROXY CARD
Mark, sign and date your proxy card and return promptly in the enclosed envelope.
====================================================================================================================================
NOTE: IF YOU VOTED BY INTERNET OR TELEPHONE, DO NOT MAIL BACK YOUR PROXY CARD UNLESS YOU DESIRE TO
CHANGE YOUR VOTE.
THANK YOU FOR VOTING.
</TABLE>
