FARM FAMILY HOLDINGS, INC.
344 Route 9W
Glenmont, New York 12077
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
Notice is hereby given that the Annual Meeting of Stockholders of Farm
Family Holdings, Inc., a Delaware corporation, will be held at the corporate
headquarters of Farm Family Holdings, Inc., 344 Route 9W, Glenmont, New York on
April 27, 1999 at 9:00 A.M., New York time, for the following purposes:
1. To elect seven directors to serve for three-year terms expiring in
2002;
2. To ratify the appointment of PricewaterhouseCoopers LLP as the
Corporation's independent auditors for the year 1999;
3. To transact any other business that may properly come before the
Annual Meeting and any adjournment(s) thereof.
The close of business on March 1, 1999 has been fixed as the record
date for determination of the stockholders entitled to notice of and to vote at
the Annual Meeting.
By order of the Board of Directors,
Victoria M. Stanton
Secretary
Your vote is important. Please promptly complete, date and sign the
enclosed proxy card and return it in the postage-paid envelope provided, whether
or not you plan to attend the Annual Meeting.
March 17, 1999
Glenmont, New York
<PAGE>
FARM FAMILY HOLDINGS, INC.
344 Route 9W
Glenmont, NY 12077
PROXY STATEMENT
1999 Annual Meeting of Stockholders
To Be Held April 27, 1999
General Information
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Farm Family Holdings, Inc. (the
"Corporation") for use at the 1999 Annual Meeting of Stockholders to be held on
Tuesday, April 27, 1999 at 9:00 A.M. New York time at the corporate headquarters
of Farm Family Holdings, Inc. 344 Route 9W, Glenmont, New York, and at any
adjournment(s) thereof (the "Annual Meeting"). Distribution of this Proxy
Statement and the enclosed proxy card began on or about March 26, 1999.
As of March 1, 1999, 5,253,813 shares of the Corporation's common stock,
par value $.01 per share (the "Common Stock"), were outstanding and entitled to
be voted. Each share entitles the holder to one vote on each matter. The record
date and hour for determining stockholders entitled to vote at the Annual
Meeting has been fixed at the close of business on March 1, 1999 (the
"Record Date").
All proxies, properly executed and returned, will be voted at the Annual
Meeting as directed by the stockholder. Please vote by marking the appropriate
boxes on the enclosed proxy card. If the card is signed and returned without
directions, the shares will be voted "FOR" the election of all directors as
nominated and "FOR" the ratification of PricewaterhouseCoopers LLP as the
independent auditors for the year 1999. If other matters properly come before
the meeting, the shares will be voted in accordance with the best judgment of
the persons named as proxies on the proxy card. Any shares not voted "FOR" a
particular director as a result of a direction to withhold or a broker nonvote
will not be counted in the director's favor.
A quorum represented by one-third of the outstanding shares of the Common
Stock present in person or by proxy, is necessary to conduct the meeting.
Directors shall be elected by a plurality of the votes properly cast at the
Annual Meeting either in person or by proxy. All matters to be acted on at the
Annual Meeting, other than the election of directors, require the affirmative
vote of a majority of the shares present in person or by proxy at the meeting to
constitute the action of the stockholders. In accordance with Delaware Law,
abstentions will, while broker nonvotes will not, be treated as present for this
purpose. A broker nonvote is a proxy submitted by a broker for which
instructions have not been received from the beneficial owners or persons
entitled to vote and with respect to which the broker does not have
discretionary authority to vote on a particular matter. A proxy may be revoked
by a stockholder at any time before its use by giving written notice of
revocation to the Secretary of the Corporation, P.O. Box 656 Albany, New York,
12201-0656, if sent by mail, or 344 Route 9W, Glenmont, New York 12077, if by
hand, express mail or overnight courier, by submitting a subsequent proxy, or by
voting in person at the Annual Meeting.
<PAGE>
ITEM I
ELECTION OF DIRECTORS
The Board of Directors is divided into three approximately equal classes,
with one class elected each year to hold office for a three-year term. Currently
there are eight Class I directors, eight Class II directors, and seven Class III
directors, serving terms expiring in 2000, 2001 and 1999, respectively. The term
of the Class III directors expires with this Annual Meeting.
The Board of Directors proposes the election of Randolph C. Blackmer, Jr.,
Fred G. Butler, Sr., Sandra A. George, Stephen J. George, Arthur D. Keown, Jr.,
W. Bruce Krenning and William M. Stamp, Jr. as Class III directors, to hold
office for a term of three years, expiring on the date of the Annual Meeting of
Stockholders to be held in 2002 and until their successors are duly elected and
qualified. Each nominee, with the exception of Sandra A. George and W. Bruce
Krenning, is currently serving as a member of the Board of Directors of the
Corporation.
If any nominee is unable to serve, or for good cause declines to serve at
the time of the Annual Meeting, the persons named as proxies on the proxy card
will exercise discretionary authority to vote for the person or persons the
Board of Directors recommends, if any. The Board of Directors has no reason to
believe that any of the named nominees is not available or would be unable to
serve if elected.
Set forth below is information about each nominee and continuing director.
Nominees For Election For Term Expiring In 2002
Randolph C. Blackmer, Jr., 57, has been a Director of the Corporation since
February 1996. His term as a Director will expire in 1999. Mr. Blackmer has also
served as a Director of Farm Family Casualty Insurance Company ("FFCIC"), a
wholly-owned subsidiary of the Corporation, since 1984. Mr. Blackmer is
President and a Director of Connecticut Farm Bureau Association, Inc. Mr.
Blackmer has been a self-employed farmer since 1966 and has been the owner of
Blackmer Farm and President of Ag Service, Inc since 1975.
Fred G. Butler, Sr., 70, has been a Director of the Corporation since February
1996. His term as a Director will expire in 1999. Mr. Butler has also served as
a Director of FFCIC since 1981. Mr. Butler is a Director of West Virginia Farm
Bureau, Inc. Mr. Butler has been a self-employed dairy farmer since 1956 and has
been owner and President of Wright Motors, Inc., an automobile dealership, since
1965.
Sandra A. George, 54, has been nominated to the Board of Directors of the
Corporation for election at the Annual Meeting. Ms. George has been a Director
of FFCIC since March 1997. Ms. George is President and a Director of Maine Farm
Bureau Association. Ms. George has been a self-employed farmer since 1967.
Stephen J. George, 59, has been a Director of the Corporation since February
1996. His term as a Director will expire in 1999. Mr. George has also served as
a Director of FFCIC since 1989. Mr. George, now retired, had been a
self-employed farmer in the greenhouse and nursery business since 1965.
Arthur D. Keown, Jr., 53, has been a Director of the Corporation since February
1996. His term as a Director will expire in 1999. Mr. Keown has also served as a
Director of FFCIC since 1993. Mr. Keown is President and a Director of
Massachusetts Farm Bureau Federation, Inc. Mr. Keown has been a self-employed
farmer since 1967.
W. Bruce Krenning, 55, has been nominated to the Board of Directors of the
Corporation for election at the Annual Meeting. Mr. Krenning is a Director of
New York Farm Bureau, Inc. Mr. Krenning has been a self-employed farmer since
1977.
William M. Stamp, Jr., 59, has been Director and Chairman of the Board of
the Corporation since February 1996. His term as a Director will expire in 1999.
Mr. Stamp has also served as Chairman of the Boad of FFCIC since July 1996, as
President of FFCIC from 1987 to July 1996 and as a Director of FFCIC since 1975.
Mr. Stamp is President and a Director of Rhode Island Farm Bureau Federation,
Inc. Mr. Stamp has been a farmer and President of Stamp Farm Enterprises, Inc.,
a greenhouse and sweet corn farming operation, since 1956.
<PAGE>
The Board Of Directors Recommends That You Vote FOR The Election Of the Above
Nominees.
Continuing Directors
Robert L. Baker, 49, has been a Director of the Corporation since February 1996.
His term as a Director will expire in 2000. Mr. Baker has also served as a
Director of FFCIC since 1988. Mr. Baker is President and a Director of Delaware
Farm Bureau, Inc. Mr. Baker has been a farmer and Treasurer of Baker Farms, Inc.
since 1972.
Wayne R. Bissonette, 60, has been a Director of the Corporation since April
1998. His term as a Director will expire in 2001. Mr. Bissonette has also served
as a Director of FFCIC since April 1998. Mr. Bissonette is First Vice President
and a Director of Vermont Farm Bureau, Inc. Mr. Bissonette has been a
self-employed dairy farmer since 1970.
Joseph E. Calhoun, 64, has been a Director of the Corporation since February
1996. His term as a Director will expire in 2001. Mr. Calhoun has also served as
a Director of FFCIC since 1990. Mr. Calhoun has owned and operated Joseph E.
Calhoun Farms since 1953.
James V. Crane, 37, has been a Director of the Corporation since February 1996.
His term as a Director will expire in 2000. Mr. Crane has also served as a
Director of FFCIC since 1994. Mr. Crane is a Director of Maine Farm Bureau
Association. Mr. Crane has been a farmer and manager of Crane Bros., Inc. since
1983.
Gordon H. Gowen, 72, has been a Director of the Corporation since February 1996.
His term as a Director will expire in 2001. Mr. Gowen has also served as a
Director of FFCIC since 1991. Mr. Gowen previously served as a Director of FFCIC
from 1978 to 1980. Mr. Gowen is President and a Director of New Hampshire Farm
Bureau Federation. Mr. Gowen has been a self-employed farmer since 1957.
Jon R. Greenwood, 45, has been a Director of the Corporation since February
1996. His term as a Director will expire in 2001. Mr. Greenwood has also served
as a Director of FFCIC since 1995. Mr. Greenwood is Vice President and a
Director of New York Farm Bureau, Inc. Mr. Greenwood has been a self-employed
farmer since 1978.
Clark W. Hinsdale III, 43, has been a Director of the Corporation since February
1996. His term as a Director will expire in 2000. Mr. Hinsdale has also served
as a Director of FFCIC since 1993. Mr. Hinsdale is President and a Director of
Vermont Farm Bureau, Inc. Mr. Hinsdale owns and operates the Charlotte Berry
Farm. He has been a self-employed farmer, land planner and real estate broker
since 1983.
John W. Lincoln, 60, has been a Director and Vice Chairman of the Board of the
Corporation since February 1996. His term as a Director will expire in 2000. Mr.
Lincoln has also served as Vice Chairman of the Board of FFCIC since July 1996,
as First Vice President of FFCIC from March 1996 to July 1996 and as a Director
of FFCIC since 1984. Mr. Lincoln is President and a Director of New York Farm
Bureau, Inc. Mr. Lincoln has owned and operated Linholm dairy farm since 1961.
Wayne A. Mann, 65, has been a Director of the Corporation since February 1996.
His term as a Director will expire in 2000. Mr. Mann has also served as a
Director of FFCIC since 1994. Mr. Mann is First Vice President and a Director of
New Hampshire Farm Bureau Federation. Mr. Mann is a retired Air Force Lieutenant
Colonel and pilot and has been a self-employed farmer since 1980.
Frank W. Matheson, 73, has been a Director of the Corporation since April 1998.
His term as Director will expire in 2001. Mr. Matheson has also served as a
Director of FFCIC since 1996. Mr. Matheson is Vice President and a Director of
Massachusetts Farm Bureau Federation, Inc. Mr. Matheson has been a self-employed
farmer since 1951.
John P. Moskos, 47, has been a Director of the Corporation since February 1996.
His term as a Director will expire in 2001. Mr. Moskos has also served as a
Director of FFCIC since March 1997. Mr. Moskos has been Senior Vice President,
Private Clients Group of Fleet Financial Group, Inc. since September 1998.
Previously, Mr. Moskos had been Senior Vice President, Corporate Banking of
Fleet Bank from January 1996 to September 1998 and was previously employed by
Chase Manhattan Bank N.A. in various capacities from 1973 to 1995, including
serving as a Regional President and Senior Lending Officer and a Division
Executive.
Norma R. O'Leary, 65, has been a Director of the Corporation since February
1996. Her term as a Director will expire in 2001. Ms. O'Leary has also served as
a Director of FFCIC since 1983. Ms. O'Leary, now retired, had been a
self-employed farmer since 1952.
John I. Rigolizzo, Jr., 45, has been a Director of the Corporation since
February 1996. His term as a Director will expire in 2001. Mr. Rigolizzo has
also served as a Director of FFCIC since 1995. Mr. Rigolizzo is President and a
Director of New Jersey Farm Bureau. Mr. Rigolizzo has been the sole proprietor
of Five-R-Farms since 1998. Mr. Rigolizzo was previously a farm employee of
Johnny Boy Farms, Inc. from 1975 to 1998.
Howard T. Sprow, 79, has been a Director of the Corporation since February 1996.
His term as a Director will expire in 2000. Mr. Sprow has also served as a
Director of FFCIC since March 1997. Mr. Sprow is an attorney and has been Senior
Counsel to Whiteman Osterman & Hanna, Albany, New York since November 1992 and
was Professor of Law, Albany Law School of Union University from July 1980 until
1990; he is at present Professor of Law Emeritus. Previously, Mr. Sprow was Of
Counsel to the law firm of Crane & MacKrell, Albany, New York from August 1990
to November 1992, Partner at the law firm of Rogers & Wells, New York, New York
from January 1977 to June 1980 and General Counsel, Vice President-Corporate and
Public Affairs and Secretary of Merrill Lynch, Pierce, Fenner & Smith,
Incorporated and Merrill Lynch & Co., Inc., New York from May 1970 to December
1976.
Charles A. Wilfong, 41, has been a Director of the Corporation since February
1996. His term as a Director will expire in 2000. Mr. Wilfong has also served as
a Director of FFCIC since 1991. Mr. Wilfong is President and a Director of West
Virginia Farm Bureau, Inc. Mr. Wilfong has been a farmer and a Partner of
Wilfong Farms since 1976. Mr. Wilfong is a Director of Southern States
Cooperative, Incorporated.
Tyler P. Young, 38, has been a Director of the Corporation since February 1996.
His term as a Director will expire in 2000. Mr. Young has also served as a
Director of FFCIC since 1995. Mr. Young is Vice President and a Director of
Rhode Island Farm Bureau Federation, Inc. Mr. Young has been a farmer and
Manager of Ferolbink Farms, Inc. since 1984 and owner of Young Family Farms, LLC
since 1998.
Board of Directors and Committees
The Board of Directors held eight meetings during 1998. Each director
attended at least 75 percent of the meetings of the Board of Directors and of
the committees on which they served. The Board of Directors has an Audit
Committee, a Compensation Committee, an Executive Committee and a Nominating
Committee.
The Audit Committee is comprised of Mr. Baker, Mr. Blackmer, Mr. Greenwood,
Mr. Mann, Mr. Sprow and Mr. Wilfong, none of whom is an officer or employee of
the Corporation. The Audit Committee recommends to the Board the selection of
independent certified public accountants to audit annually the books and records
of the Corporation, reviews the activities and the reports of the independent
certified public accountants and reports the results of such reviews to the
Board. The Audit Committee also reviews the Corporation's accounting functions,
operations and management and considers the adequacy of the Corporation's
internal controls and internal auditing methods and procedures. The Audit
Committee held five meetings in 1998.
The Compensation Committee is comprised of Mr. Blackmer, Mr. Hinsdale, Mr.
Moskos and Mr. Sprow, none of whom is an officer or employee of the Corporation.
This committee makes recommendations to the Board of Directors with respect to
the administration of the salaries, bonuses and other compensation to be paid to
the Corporation's officers and recommends policies to the Board concerning
director compensation. The Compensation Committee held nine meetings in 1998.
The Executive Committee is comprised of Mr. Stamp, Mr. Lincoln, Mr. George,
Mr. Gowen, and Ms. O'Leary. This committee, to the extent authorized by the
Board of Directors, exercises all the powers and authority of the Board of
Directors in the management of the business and affairs of the Corporation. The
Executive Committee held two meetings in 1998.
The Nominating Committee is comprised of Mr. Stamp, Mr. Lincoln, Mr.
George, Mr. Keown and Ms. O'Leary, none of whom is an employee of the
Corporation. This committee recommends to the Board the names of qualified
individuals to serve as corporate directors and committee members and makes
recommendations to the Board concerning the size and composition of the Board
and its committees. This committee will consider stockholder recommendations for
director sent to the Nominating Committee, c/o Victoria M. Stanton, Secretary,
Farm Family Holdings, Inc., P.O. Box 656, Albany, New York 12201-0656. The
Nominating Committee held five meetings in 1998.
Stockholders who wish to nominate candidates for election to the Board of
Directors may do so by complying with the nomination requirements of the
Corporation's By-Laws described below.
In addition to any other applicable requirements, the Corporation's By-Laws
provide, in general, that if a stockholder intends to make a nomination for the
election of directors at an annual meeting, the Secretary of the Corporation
must receive written notice of such intention not less than 60 days nor more
than 90 days prior to the anniversary date of the immediately preceding annual
meeting. If the date of the annual meeting is advanced or delayed by more than
30 days from the prior anniversary date, notice must be received not later than
the close of business on the 10th day following the day on which such notice of
the annual meeting was mailed or such public disclosure of the date of the
annual meeting was made, whichever first occurs. If a stockholder intends to
make a nomination for the election of directors at a special meeting called for
the purpose of electing directors, written notice must be received by the
Secretary of the Corporation not later than the 10th day following the day on
which notice of the date of the special meeting was mailed or public disclosure
of the date of the special meeting was made, whichever first occurs.
A stockholder's notice to the Secretary shall set forth (a) as to each
nominee for director (i) the name, age, business address and residence address
of the person; (ii) the principal occupation or employment of the person; (iii)
the class or series and number of shares of capital stock of the Corporation
which are owned beneficially or of record by the person; and (iv) any other
information relating to the person that is required to be disclosed in
solicitations of proxies for election of directors pursuant to Section 14 of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the rules
and regulations promulgated thereunder, and (b) as to the stockholder giving the
notice (i) the name and record address of such stockholder, (ii) the class or
series and number of shares of capital stock of the Corporation which are owned
beneficially or of record by the stockholder, (iii) a description of all
arrangements or understandings between such stockholder and each proposed
nominee and any other person or persons (including their names) pursuant to
which the nomination(s) are to be made by such stockholder, (iv) a
representation that such stockholder intends to appear in person or by proxy at
the annual meeting to nominate the persons named in its notice and (v) any other
information relating to such stockholder that would be required to be disclosed
in a proxy statement or other filings required to be made in connection with
solicitations of proxies for election of directors pursuant to Section 14 of the
Exchange Act and the rules and regulations promulgated thereunder. Such notice
must be accompanied by a written consent of each proposed nominee to being named
as a nominee and to serve as a director if elected.
The foregoing is only a summary of the detailed provisions of the By-Laws
and is qualified by reference to the text thereof. Stockholders wishing to
submit a nomination should review the By-Law requirements regarding nominations
by stockholders and should communicate with the Secretary of Farm Family
Holdings, Inc., P.O. Box 656, Albany, New York, 12201-0656, if sent by mail, or
344 Route 9W, Glenmont, New York 12077, if by hand, express mail or overnight
courier, for further information.
The effect of the provisions of the By-Laws described in the foregoing
paragraph is that any stockholder nominations for the 2000 election of directors
must be received by the Secretary of the Corporation not earlier than January
28, 2000 or later than February 27, 2000, provided that the date of the annual
meeting is not advanced or delayed by more than 30 days from the prior
anniversary date.
Compensation Of Directors
Many of the directors of the Corporation are also directors of FFCIC, Farm
Family Life Insurance Company (the "Life Company") and the Life Company's
wholly-owned subsidiary, United Farm Family Insurance Company ("United") (each a
"Company" and collectively, the "Companies"). The director fees and retainers
described below represent the aggregate fees and retainers paid to the director
by the Companies and since April 1998, have been prorated based upon the number
of Company boards on which the director serves (with the exception of the fees
paid to Messrs. Moskos and Sprow). In 1998, the Chairman of the Board (the same
individual for each Company) and the Vice Chairman of the Board (also the same
individual for each Company) received an annual retainer of $20,000 and $10,000
respectively. All other directors received an annual retainer of $5,000.
Directors also received a daily fee of $1,000 for meetings of the boards of
directors of the Companies, $500 per meeting of a board committee and $500 per
day for attendance at other Company functions. Directors may defer their
compensation pursuant to a non-qualified deferred compensation plan. Directors
are reimbursed for reasonable travel and other expenses of attending meetings of
the boards of directors and board committees and other functions. Fees and
expenses paid to directors are allocated among the Corporation, FFCIC, the Life
Company and United pursuant to expense sharing arrangements.
As part of the Companies' support of agribusiness, a contribution in the
amount of $25,000 toward the funding of an endowed faculty chair in New Use
Agriculture named for Stephen J. George, a director of the Corporation, will be
paid to Cook College of Rutgers University over a four-year period. Pursuant to
this arrangement, a contribution in the amount of $6,250 has been paid in each
of 1996, 1997 and 1998.
ITEM II
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors, on the recommendation of its Audit Committee, has
appointed PricewaterhouseCoopers LLP as independent auditors for the year 1999.
Although not required, the Board has determined that it is desirable to request
ratification of this appointment by the stockholders of the Corporation. If
ratification is not obtained, the Board will reconsider the appointment.
The Corporation has been advised that representatives of
PricewaterhouseCoopers LLP will be present at the Annual Meeting. They will be
afforded the opportunity to make a statement, should they desire to do so, and
to respond to appropriate stockholder questions.
Coopers & Lybrand, L.L.P., now known as PricewaterhouseCoopers LLP, has
served as the Corporation's independent auditors since 1996 and has served as
FFCIC's independent auditors since 1993.
The Board of Directors Recommends That You Vote FOR this Proposal.
ITEM III
OTHER MATTERS
The Board of Directors knows of no other matters to be brought before the
Annual Meeting. If other matters are properly brought before the Annual Meeting,
it is intended that the persons named as proxies on the proxy card will have
discretionary authority to vote on such matters in accordance with their best
judgment.
<PAGE>
STOCK OWNERSHIP OF MANAGEMENT AND
CERTAIN BENEFICIAL OWNERS
The following table sets forth certain information regarding the beneficial
ownership of the Common Stock of the Corporation as of March 1, 1999 by (i) each
director or nominee for director, (ii) the Chief Executive Officer and each of
the other four most highly compensated executive officers, (iii) all executive
officers and directors of the Corporation as a group, and (iv) each person who
is known by the Corporation to be the beneficial owner of more than 5% of the
Common Stock as of such date. The shareholdings reported for all directors and
executive officers as a group total less than 1% of the outstanding shares of
the Common Stock on March 1, 1999. Except as noted below, each person listed in
the table has sole investment and voting power with respect to the shares held
by such person. Except as otherwise set forth in the footnotes below, the
information set forth in this table does not reflect the proposed issuance of an
estimated 856,021 shares of Common Stock and 163,052 shares of 6 1/8% Preferred
Stock, Series A, par value $.01 per share ("Series A Preferred Stock") of the
Corporation pursuant to the Amended and Restated Option Purchase Agreement, by
and among the Corporation and the stockholders of the Life Company
(collectively, the "Selling Stockholders") and the transactions contemplated
thereby, including the Corporation's acquisition (the "Acquisition") of all of
the outstanding capital stock of the Life Company (see "Certain Relationships
and Related Transactions-Life Company-Option Purchase Agreement"). Except for
the estimated share information, this information has been furnished by the
persons listed in the table.
Number of Shares of
Common Stock
Name Beneficially Owned
William M. Stamp, Jr................................................. 534(1)
John W. Lincoln...................................................... 167(2)
Philip P. Weber...................................................... 1,237(3)
James J. Bettini..................................................... 563(4)
Stuart C. Henderson.................................................. 213(5)
Victoria M. Stanton.................................................. 835(6)
Timothy A. Walsh..................................................... 200(7)
Robert L. Baker...................................................... 963(8)
Wayne R. Bissonette.................................................. 0(9)
Randolph C. Blackmer, Jr............................................. 800(10)
Fred G. Butler, Sr................................................... 587(11)
Joseph E. Calhoun.................................................... 73(12)
James V. Crane....................................................... 350(13)
Sandra A. George..................................................... 0(14)
Stephen J. George.................................................... 100(15)
Gordon H. Gowen...................................................... 1,017(16)
Jon R. Greenwood..................................................... 1,479(17)
Clark W. Hinsdale III................................................ 210(18)
Richard A. Jerome.................................................... 50(19)
Arthur D. Keown, Jr.................................................. 0(20)
W. Bruce Krenning.................................................... 30(21)
Daniel R. LaPointe................................................... 62(22)
Wayne A. Mann........................................................ 67(23)
Frank W. Matheson.................................................... 372(24)
John P. Moskos....................................................... 0
Norma R. O'Leary..................................................... 1,216(25)
John I. Rigolizzo, Jr................................................ 27(26)
Howard T. Sprow...................................................... 0
Charles A. Wilfong................................................... 643(27)
Tyler P. Young....................................................... 227(28)
All directors and executive officers as a group (33 persons)......... 12,543
<PAGE>
<TABLE>
<CAPTION>
Number of Shares % of Common
Holders of Greater Than 5% of Common Stock Stock
of Common Stock (29) Beneficially Owned Outstanding
- -------------------- ------------------ -----------
<S> <C> <C>
FMR Corp............................................................................. 525,300(30) 9.99
82 Devonshire Street
Boston, MA 02109
Gotham Partners, L.P. and Gotham Partners II, L.P.................................... 350,500(31) 6.67
110 E. 42nd Street, 18th Floor
New York, NY 10017
W.R. Berkley Corporation............................................................. 325,900(32) 6.20
165 Mason Street
P.O. Box 2518
Greenwich, CT 06836-2518
Fenimore Asset Management, Inc....................................................... 276,400(33) 5.26
118 N. Grand Street, Box 310
Cobleskill, NY 12043
- -----------
</TABLE>
(1) Includes 297 shares as to which voting and investment power are shared with
Stamp Farm Enterprises, Inc. or Carol Stamp. Excludes 1,090 shares owned by
Rhode Island Farm Bureau Federation, Inc. (a Selling Stockholder) and
excludes 30,854 shares of Common Stock and 5,877 shares of Series A
Preferred Stock estimated to be received by Rhode Island Farm Bureau
Federation, Inc. in the Acquisition. Mr. Stamp is President and a Director
of Rhode Island Farm Bureau Federation, Inc. Mr. Stamp is also Chairman of
the Board and a Director of the Life Company.
(2) Includes 113 shares as to which voting and investment power are shared with
S. Anne Lincoln. Excludes 2,021 shares owned by New York Farm Bureau, Inc.
and excludes 339,250 shares of Common Stock and 64,619 shares of Series A
Preferred Stock estimated to be received by New York Farm Bureau Service
Company, Inc. (a Selling Stockholder) in the Acquisition. Mr. Lincoln is
President and a Director of New York Farm Bureau, Inc. and its affiliate,
New York Farm Bureau Service Company, Inc. Mr. Lincoln is also Vice
Chairman of the Board and a Director of the Life Company.
(3) Represents shares as to which voting and investment power are shared with
Brenda Lee Weber. Mr. Weber is President and Chief Executive Officer of the
Life Company.
(4) Represents shares as to which voting and investment power are shared with
Marie C. Bettini. Mr. Bettini is Executive Vice President-Operations of the
Life Company.
(5) Includes 113 shares as to which voting and investment power are shared with
Melanie S. Henderson.
(6) Includes 685 shares as to which voting and investment power are shared with
Randy M. Sweeney. Ms. Stanton is Executive Vice President, General Counsel
and Secretary of the Life Company.
(7) Mr. Walsh is Executive Vice President-Finance and Treasurer of the Life
Company.
(8) Represents 33 shares as to which voting and investment power are shared
with Pamela M. Baker, 86 shares as to which voting and investment power are
shared with Delaware Produce Growers, Inc., 744 shares as to which voting
and investment power are shared with Baker Farms, Inc. and 100 shares held
by the Robert L. Baker Revocable Trust. Excludes 60 shares owned by
Delaware Farm Bureau, Inc. and excludes 38,542 shares of Common Stock and
7,341 shares of Series A Preferred Stock estimated to be received by
Delaware Farm Bureau Service Company, Inc. (a Selling Stockholder) in the
Acquisition. Mr. Baker is President and a Director of Delaware Farm Bureau,
Inc. and its affiliate, Delaware Farm Bureau Service Company, Inc. Mr.
Baker is also a Director of the Life Company.
(9) Excludes 296 Shares owned by Vermont Farm Bureau, Inc. (a Selling
Stockholder) and its affiliates and excludes 157 shares of Common Stock and
30 shares of Series A Preferred Stock estimated to be received by Vermont
Farm Bureau, Inc. in the Acquisition. Mr. Bissonette is First Vice
President and a Director of Vermont Farm Bureau, Inc. Mr. Bissonette is
also a Director of the Life Company.
(10) Represents shares as to which voting and investment power are shared with
Myrtie I. Blackmer or Ag Services, Inc. Excludes 91 shares owned by
Connecticut Farm Bureau Association, Inc. and excludes 69,382 shares of
Common Stock and 13,216 shares of Series A Preferred Stock estimated to be
received by Connecticut Farm Bureau Service Company (a Selling Stockholder)
in the Acquisition. Mr. Blackmer is President and a Director of Connecticut
Farm Bureau Association, Inc. and its affiliate, Connecticut Farm Bureau
Service Company. Mr. Blackmer is also a Director of the Life Company.
(11) Represents shares as to which voting and investment power are shared with
Norma Gene Butler. Excludes 7,053 shares owned by West Virginia Farm
Bureau, Inc. (a Selling Stockholder) and excludes 30,854 shares of Common
Stock and 5,877 shares of Series A Preferred Stock estimated to be received
by West Virginia Farm Bureau, Inc. in the Acquisition. Mr. Butler is a
Director of West Virginia Farm Bureau, Inc. Mr. Butler is also a Director
of the Life Company.
(12) Represents shares as to which voting and investment power are shared with
Bessie J. Calhoun. Excludes 60 shares owned by Delaware Farm Bureau, Inc.
and excludes 38,542 shares of Common Stock and 7,341 shares of Series A
Preferred Stock estimated to be received by Delaware Farm Bureau Service
Company, Inc. (a Selling Stockholder) in the Acquisition. Mr. Calhoun is a
Director of the Life Company.
(13) Represents shares as to which voting and investment power are shared with
Crane Bros., Inc. Excludes 397 shares owned by Maine Farm Bureau
Association and its affiliates and excludes 15,434 shares of Common Stock
and 2,940 shares of Series A Preferred Stock estimated to be received by
Maine Farm Bureau Service Company (a Selling Stockholder) in the
Acquisition. Mr. Crane is a Director of Maine Farm Bureau Association and
its affiliate, Maine Farm Bureau Service Company.
(14) Excludes 397 shares owned by Maine Farm Bureau Association and its
affiliates and excludes 15,434 shares of Common Stock and 2,940 shares of
Series A Preferred Stock estimated to be received by Maine Farm Bureau
Service Company (a Selling Stockholder) in the Acquisition. Ms. George is
President and a Director of Maine Farm Bureau Association and its
affiliate, Maine Farm Bureau Service Company. Ms. George is also a Director
of the Life Company.
(15) Represents shares as to which voting and investment power are shared with
Susan George. Excludes 996 shares owned by New Jersey Farm Bureau and
excludes 231,298 shares of Common Stock and 44,057 shares of Series A
Preferred Stock estimated to be received by New Jersey Farm Bureau Service
Company (a Selling Stockholder) in the Acquisition. Mr. George is a
Director of New Jersey Farm Bureau Service Company. Mr. George is also a
Director of the Life Company.
(16) Includes 929 shares as to which voting and investment power are shared with
Elizabeth R. Gowen. Excludes 207 shares owned by New Hampshire Farm Bureau
Federation and excludes 28 shares of Common Stock and 5 shares of Series A
Preferred Stock estimated to be received by New Hampshire Farm Bureau
Federation (a Selling Stockholder) in the Acquisition. Mr. Gowen is
President and a Director of New Hampshire Farm Bureau Federation. Mr. Gowen
is also a Director of the Life Company.
(17) Represents shares as to which voting and investment power are shared with
Linda R. Greenwood. Excludes 2,021 shares owned by New York Farm Bureau,
Inc. and excludes 339,250 shares of Common Stock and 64,619 shares of
Series A Preferred Stock estimated to be received by New York Farm Bureau
Service Company, Inc. (a Selling Stockholder) in the Acquisition. Mr.
Greenwood is Vice President and a Director of New York Farm Bureau, Inc.
and its affiliate, New York Farm Bureau Service Company, Inc. Mr. Greenwood
is also a Director of the Life Company.
(18) Excludes 296 shares owned by Vermont Farm Bureau, Inc. and its affiliates
and excludes 157 shares of Common Stock and 30 shares of Series A Preferred
Stock estimated to be received by Vermont Farm Bureau, Inc. (a Selling
Stockholder) in the Acquisition. Mr. Hinsdale is President and a Director
of Vermont Farm Bureau, Inc. Mr. Hinsdale is also a Director of the Life
Company.
(19) Represents shares as to which voting and investment power are shared with
Mary Margaret Jerome. Excludes 2,021 shares owned by New York Farm Bureau,
Inc. and excludes 339,250 shares of Common Stock and 64,619 shares of
Series A Preferred Stock estimated to be received by New York Farm Bureau
Service Company, Inc. (a Selling Stockholder) in the Acquisition. Mr.
Jerome is also a Director of the Life Company.
(20) Excludes 637 shares owned by Massachusetts Farm Bureau Federation, Inc. and
its affiliates and excludes 100,222 shares of Common Stock and 19,090
shares of Series A Preferred Stock estimated to be received by
Massachusetts Farm Bureau Service Company, Inc. (a Selling Stockholder) in
the Acquisition. Mr. Keown is President and a Director of Massachusetts
Farm Bureau Federation, Inc., and its affiliate, Massachusetts Farm Bureau
Service Company, Inc. Mr. Keown is also a Director of the Life Company.
(21) Represents shares as to which voting and investment power are shared with
Diane Z. Krenning. Excludes 2,021 shares owned by New York Farm Bureau,
Inc. and excludes 339,250 shares of Common Stock and 64,619 shares of
Series A Preferred Stock estimated to be received by New York Farm Bureau
Service Company, Inc. (a Selling Stockholder) in the Acquisition. Mr.
Krenning is a Director of the New York Farm Bureau, Inc.
(22) Excludes 397 shares owned by Maine Farm Bureau Association and its
affiliates and excludes 15,434 shares of Common Stock and 2,940 shares of
Series A Preferred Stock estimated to be received by Maine Farm Bureau
Service Company (a Selling Stockholder) in the Acquisition. Mr. LaPointe is
Vice President and a Director of Maine Farm Bureau Association and its
affiliate, Maine Farm Bureau Service Company.
(23) Represents shares as to which voting and investment power are shared with
Ruth F. Mann. Excludes 207 shares owned by New Hampshire Farm Bureau
Federation and excludes 28 shares of Common Stock and 5 shares of Series A
Preferred Stock estimated to be received by New Hampshire Farm Bureau
Federation (a Selling Stockholder) in the Acquisition. Mr. Mann is First
Vice President and a Director of New Hampshire Farm Bureau Federation. Mr.
Mann is also a Director of the Life Company.
(24) Includes 69 shares as to which voting and investment power are shared with
Eunice Matheson. Excludes 637 shares owned by Massachusetts Farm Bureau
Federation, Inc. and its affiliates and excludes 100,222 shares of Common
Stock and 19,090 shares of Series A Preferred Stock estimated to be
received by Massachusetts Farm Bureau Service Company, Inc. (a Selling
Stockholder) in the Acquisition. Mr. Matheson is Vice President and a
Director of Massachusetts Farm Bureau Federation, Inc. Massachusetts Farm
Bureau Service Company, Inc. is an affiliate of Massachusetts Farm Bureau
Federation, Inc. Mr. Matheson is also a Director of the Life Company.
(25) Includes 71 shares as to which voting and investment power are shared with
Ernest J. O'Leary. Excludes 91 shares owned by Connecticut Farm Bureau
Association, Inc. and excludes 69,382 shares of Common Stock and 13,216
shares of Series A Preferred Stock estimated to be received by Connecticut
Farm Bureau Service Company (a Selling Stockholder) in the Acquisition. Ms.
O'Leary is a Director of the Life Company.
(26) Represents shares as to which voting and investment power are shared with
Marita Rigolizzo. Excludes 996 shares owned by New Jersey Farm Bureau and
excludes 231,298 shares of Common Stock and 44,057 shares of Series A
Preferred Stock estimated to be received by New Jersey Farm Bureau Service
Company (a Selling Stockholder) in the Acquisition. Mr. Rigolizzo is
President and a Director of New Jersey Farm Bureau, and Vice President and
a Director of its affiliate, New Jersey Farm Bureau Service Company. Mr.
Rigolizzo is also a Director of the Life Company.
(27) Represents shares as to which voting and investment power are shared with
Linda Wilfong. Excludes 7,053 shares owned by West Virginia Farm Bureau,
Inc. and excludes 30,854 shares of Common Stock and 5,877 shares of Series
A Preferred Stock estimated to be received by West Virginia Farm Bureau,
Inc. (a Selling Stockholder) in the Acquisition. Mr. Wilfong is President
and a Director of West Virginia Farm Bureau, Inc. Mr. Wilfong is also a
Director of the Life Company.
(28) Represents shares as to which voting and investment power are shared with
Karla K. Young. Excludes 1,090 shares owned by Rhode Island Farm Bureau
Federation, Inc. and excludes 30,854 shares of Common Stock and 5,877
shares of Series A Preferred Stock estimated to be received by Rhode Island
Farm Bureau Federation, Inc. (a Selling Stockholder) in the Acquisition.
Mr. Young is Vice President and a Director of Rhode Island Farm Bureau
Federation, Inc. Mr. Young is also a Director of the Life Company.
(29) Excludes 339,250 shares of Common Stock estimated to be received by New
York Farm Bureau Service Company, Inc. ("NY Service Co.") (a Selling
Stockholder) in the Acquisition. NY Service Co. is a subsidiary of New York
Farm Bureau, Inc. Also excludes 64,619 shares of Series A Preferred Stock
estimated to be received by NY Service Co. in the Acquisition.
(30) Based on Schedule 13G/A dated February 14, 1998 filed with the Securities
and Exchange Commission (the "SEC") by FMR Corp. which has the sole
dispositive power over 525,300 shares and the sole voting power over 0
shares.
(31) Based on Schedule 13D dated March 7, 1997 filed with the SEC by Gotham
Partners, L.P. and Gotham Partners II, L.P. Gotham Partners, L.P. has the
sole dispositive power over 345,505 shares and the sole voting power over
345,505 shares. Gotham Partners II, L.P. has sole dispositive power over
4,995 shares and the sole voting power over 4,995 shares.
(32) Based on Schedule 13G/A dated February 8, 1999 filed with the SEC by W.R.
Berkley Corporation which has the sole voting and dispositive power over
325,900 shares.
(33) Based on Schedule 13G/A dated February 5, 1999 filed with the SEC by
Fenimore Asset Management, Inc. which has shared dispositive power and
shared voting power over 276,400 shares.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 requires executive
officers and directors, and persons who beneficially own more than 10% of the
Common Stock, to file initial reports of ownership and reports of changes in
ownership with the Securities and Exchange Commission (the "SEC") and the New
York Stock Exchange. Such persons are required by SEC regulations to provide to
the Corporation copies of all their Section 16(a) filings. Based solely on a
review of the forms furnished to the Corporation and written representations
from the Corporation's executive officers and directors, the Corporation
believes that there was full compliance with all Section 16(a) filing
requirements for the year ended December 31, 1998.
EXECUTIVE COMPENSATION
The following table sets forth information regarding the compensation of
the Chief Executive Officer and the other most highly compensated executive
officers of the Corporation. The figures below represent the aggregate
compensation paid to such executive officers by the Corporation, FFCIC, the Life
Company and United (collectively, the "Companies"). Pursuant to expense sharing
arrangements among the Companies, 2.62% of such aggregate compensation expense
in 1998 was charged to the Corporation, 64.03% was charged to FFCIC, 29.38% was
charged to the Life Company and 3.97% was charged to United.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Annual Compensation Awards
---------------------------------------------------- -------
Securities
Name and Other Annual Underlying All Other
Principal Position Year Salary Bonus Compensation Options Compensation
------------------ ---- ------ ----- ------------ ------- ------------
<S> <C> <C> <C> <C> <C> <C>
Philip P. Weber........................... 1998 $325,000 $193,701(1) $-(2) $51,747(3)
President & Chief Executive Officer 1997 300,000 180,000(1) -(2) 75,000 38,815(4)
1996 285,000 114,000(5) -(2) 4,090(6)
Victoria M. Stanton....................... 1998 213,000 84,690(1) -(2) 31,965(7)
Executive Vice President, General Counsel & Secretary 1997 200,000 90,000(1) -(2) 40,000 26,521(8)
1996 150,000 45,000(5) -(2) 4,090(9)
Timothy A. Walsh.......................... 1998 175,000 73,011(1) -(2) 24,829(10)
Executive Vice President-Finance & Treasurer 1997 140,000 63,000(1) -(2) 40,000 19,362(11)
1996 91,308 28,500(5) -(2) 840(12)
James J. Bettini.......................... 1998 168,000 68,443(1) -(2) 25,111(13)
Executive Vice President-Operations 1997 160,000 72,000(1) -(2) 40,000 21,862(14)
1996 131,154 39,900(5) -(2) 4,090(15)
Stuart C. Henderson....................... 1998 132,000 36,003(1) -(2) 18,248(16)
Senior Vice President-Casualty Claims of FFCIC 1997 125,000 37,500(1) -(2) 5,000 17,427(17)
1996 115,154 0 12,976(18) 3,703(19)
</TABLE>
- -----------
(1) Represents bonuses earned in the year reported by the named executive
officer pursuant to the Corporation's Annual Incentive Plan and the Life
Company's Annual Incentive Plan. Under the Annual Incentive Plans, bonus
payments are made during the year subsequent to the year in which the bonus
is earned.
(2) Does not include certain compensation in the form of perquisites and other
personal benefits provided to the named executive officer for services to
the Companies during the year reported, the aggregate value of which did
not exceed the lesser of $50,000 or 10% of total annual salary and bonus.
(3) Represents a contribution of $15,200 earned under the Farm Family Profit
Sharing Plan and the Farm Family Money Purchase Plan (collectively, the
"Profit Sharing and Money Purchase Plan"), a credit of $34,239 earned under
the Farm Family Supplemental Money Purchase and Profit Sharing Plan (the
"Supplemental Plan") and a group term life insurance premium of $2,308 paid
by the Companies for the benefit of Mr. Weber, which resulted in $2,531 of
taxable income. Contributions under the Profit Sharing and Money Purchase
Plan and credits under the Supplemental Plan are made during the year
subsequent to the year in which they are earned.
(4) Represents a contribution of $19,150 earned under the Profit Sharing and
Money Purchase Plan, a credit of $18,581 earned under the Supplemental Plan
and a group term life insurance premium of $1,084 paid by the Companies for
the benefit of Mr. Weber, of which $696 was taxable income. Contributions
under the Profit Sharing and Money Purchase Plan and credits under the
Supplemental Plan are made during the year subsequent to the year in which
they are earned.
(5) Represents bonus paid by the Corporation to the named executive officer for
the officer's role in the initial public offering of the Corporation's
Common Stock.
(6) Represents a contribution of $2,940 earned under the Farm Family Employee
"Savings Plus" Plan (the "Savings Plus Plan"), and a group term life
insurance premium of $1,150 paid by the Companies for the benefit of Mr.
Weber, of which $696 was taxable income. Contributions under the Savings
Plus Plan are made during the year subsequent to the year in which they are
earned.
(7) Represents a contribution of $15,200 earned under the Profit Sharing and
Money Purchase Plan, a credit of $14,639 earned under the Supplemental
Plan, a credit of $908 representing the difference between market interest
rates determined pursuant to SEC rules and the "Prime Rate" as published in
the "Money Rates" section of The Wall Street Journal credited by the
Corporation on salary deferred pursuant to the Officers' Deferred
Compensation Plan and a group term life insurance premium of $1,218 paid by
the Companies for the benefit of Ms. Stanton, of which $552 was taxable
income. Contributions under the Profit Sharing and Money Purchase Plan and
credits under the Supplemental Plan are made during the year subsequent to
the year in which they are earned.
(8) Represents a contribution of $19,150 earned under the Profit Sharing and
Money Purchase Plan, a credit of $6,183 earned under the Supplemental Plan,
a credit of $104 representing the difference between market interest rates
determined pursuant to SEC rules and the "Prime Rate" as published in the
"Money Rates" section of The Wall Street Journal credited by the
Corporation on salary deferred pursuant to the Officers' Deferred
Compensation Plan and a group term life insurance premium of $1,084 paid by
the Companies for the benefit of Ms. Stanton, of which $264 was taxable
income. Contributions under the Profit Sharing and Money Purchase Plan and
credits under the Supplemental Plan are made during the year subsequent to
the year in which they are earned.
(9) Represents a contribution of $2,940 earned under the Savings Plus Plan, and
a group term life insurance premium of $1,150 paid by the Companies for the
benefit of Ms. Stanton, of which $264 was taxable income. Contributions
under the Savings Plus Plan are made during the year subsequent to the year
in which they are earned.
(10) Represents a contribution of $15,200 earned under the Profit Sharing and
Money Purchase Plan, a credit of $8,478 earned under the Supplemental Plan
and a group term life insurance premium of $1,151 paid by the Corporation
for the benefit of Mr. Walsh, of which $485 was taxable income.
Contributions under the Profit Sharing and Money Purchase Plan and credits
under the Supplemental Plan are made during the year subsequent to the year
in which they are earned.
(11) Represents a contribution of $18,278 earned under the Profit Sharing and
Money Purchase Plan and a group term life insurance premium of $1,084 paid
by the Corporation for the benefit of Mr. Walsh, of which $264 was taxable
income. Contributions under the Profit Sharing and Money Purchase Plan are
made during the year subsequent to the year in which they are earned.
(12) Represents a group term life insurance premium of $840 paid by the
Corporation for the benefit of Mr. Walsh, of which $185 was taxable income.
(13) Represents a contribution of $15,200 earned under the Profit Sharing and
Money Purchase Plan, a credit of $8,768 earned under the Supplemental Plan
and a group term life insurance premium of $1,143 paid by the Companies for
the benefit of Mr. Bettini, of which $621 was taxable income. Contributions
under the Profit Sharing and Money Purchase Plan and credits under the
Supplemental Plan are made during the year subsequent to the year in which
they are earned.
(14) Represents a contribution of $19,150 earned under the Profit Sharing and
Money Purchase Plan, a credit of $1,628 earned under the Supplemental Plan
and a group term life insurance premium of $1,084 paid by the Companies for
the benefit of Mr. Bettini, of which $408 was taxable income. Contributions
under the Profit Sharing and Money Purchase Plan and credits under the
Supplemental Plan are made during the year subsequent to the year in which
they are earned.
(15) Represents a contribution of $2,940 earned under the Savings Plus Plan, and
a group term life insurance premium of $1,150 paid by the Companies for the
benefit of Mr. Bettini, of which $406 was taxable income. Contributions
under the Savings Plus Plan are made during the year subsequent to the year
in which they are earned.
(16) Represents a contribution of $15,200 earned under the Profit Sharing and
Money Purchase Plan, a credit of $1,949 earned under the Supplemental Plan,
a credit of $142 representing the difference between market interest rates
determined pursuant to SEC rules and the "Prime Rate" as published in the
"Money Rates" section of The Wall Street Journal credited by the
Corporation on salary deferred pursuant to the Officers' Deferred
Compensation Plan and a group term life insurance premium of $957 paid by
the Companies for the benefit of Mr. Henderson, of which $435 was taxable
income. Contributions under the Profit Sharing and Money Purchase Plan and
credits under the Supplemental Plan are made during the year subsequent to
the year in which they are earned.
(17) Represents a contribution of $16,343 earned under the Profit Sharing and
Money Purchase Plan and a group term life insurance premium of $1,084 paid
by the Companies for the benefit of Mr. Henderson, of which $408 was
taxable income. Contributions under the Profit Sharing and Money Purchase
Plan are made during the year subsequent to the year in which they are
earned.
(18) Includes a car allowance of $8,916 paid by the Companies.
(19) Represents a contribution of $2,553 earned under the Savings Plus Plan, and
a group term life insurance premium of $1,150 paid by the Companies for the
benefit of Mr. Henderson, of which $368 was taxable income. Contributions
under the Savings Plus Plan are made during the year subsequent to the year
in which they are earned.
<PAGE>
Options
The following table sets forth the value of options held by the named
executive officers on December 31, 1998.
<TABLE>
<CAPTION>
AGGREGATE OPTION EXERCISES IN FISCAL YEAR 1998
AND 1998 FISCAL YEAR-END OPTION VALUES
Shares Value
Acquired Realized Number of Unexcercised Options Value of Unexercised In-the
Upon Upon at 12/31/98 Money Options at 12/31/98
Exercise Exercise Exercisable Unexercisable Exercisable Unexercisable
Name (#) ($) (#) (#) ($) ($)
- ---- --- --- --- --- --- ---
<S> <C> <C> <C> <C> <C> <C>
Philip P. Weber.............. 0 0 0 75,000 0 858,000
Victoria M. Stanton.......... 0 0 0 40,000 0 457,600
Timothy A. Walsh............. 0 0 0 40,000 0 457,600
James J. Bettini............. 0 0 0 40,000 0 457,600
Stuart C. Henderson.......... 0 0 0 5,000 0 57,200
</TABLE>
- -----------
(1) No options may be exercised before July 26, 1999. All options immediately
vest and become exercisable or satisfiable, as applicable, in the event of
a Change of Control of the Corporation (as defined in the Corporation's
Omnibus Securities Plan).
(2) Stock options are classified as in-the-money if the fair market value of
the underlying common stock exceeds the exercise price of the option. The
value of such in-the-money options shown above is the difference between
the exercise price and the fair market value of the underlying Common Stock
as of December 31, 1998. The fair market value of the Common Stock on
December 31, 1998, based on the December 31, 1998 closing price on the New
York Stock Exchange, was $34.00 per share. The values of unexercised
in-the-money stock options at December 31, 1998 are included pursuant to
SEC rules; there is no assurance that such values will in fact be realized.
Severance Plan
Each of the officers of the Corporation is eligible for severance benefits
under the Corporation's, FFCIC's and the Life Company's joint Officer Severance
Pay Plan, as amended (the "Severance Plan") when such officer's employment is
terminated under defined qualifying conditions, which include, but are not
limited to, a Change in Control (as defined in the Severance Plan) of the
Companies and Good Reason (as defined in the Severance Plan). Under the
Severance Plan, the Companies will pay to a qualifying officer severance
benefits generally equal to the greater of (i) one week's Salary (as defined in
the Severance Plan) for each year of service with the Companies or (ii) 36
months Salary in the case of the Chief Executive Officer, 24 months Salary in
the case of an Executive Vice President, 12 months Salary in the case of a
Senior Vice President and 6 months Salary in the case of any other officer.
Under the Severance Plan, Salary is defined to include the sum of (i) the
highest rate of wages, salaries and fees for professional services and other
amounts received by the officer for personal services actually rendered in the
course of employment with the Companies within the last two years, on an
annualized basis and (ii) the highest Target Award Opportunity established for
the officer under each of the Corporation's and the Life Company's Annual
Incentive Plan within the last two years. In addition, the Severance Plan
provides for (i) payment of unpaid base salary, accrued vacation pay,
unreimbursed business expenses and other items owed through date of termination;
(ii) continuation of medical, dental, group term life and disability insurance
coverages for a specified maximum period, except to the extent that
substantially similar benefits are provided by a subsequent employer; and (iii)
payment for outplacement services for a two-year period (subject to a maximum).
The Severance Plan also provides for a gross-up payment in the event that any
payment, award, benefit or distribution, or any acceleration thereof, by the
Companies (or any of their affiliated entities) or any entity which effectuates
a Change in Control (or any of its affiliated entities) to or for the benefit of
a qualifying officer pursuant to the terms of the Severance Plan or any other
agreement is subject to the excise tax imposed by Section 4999 of the Internal
Revenue Code of 1986, as amended.
Pension Benefits
The Corporation and FFCIC are participating employers under the Farm Family
Employee Retirement Plan (the "Retirement Plan"). Substantially all salaried
employees of the Corporation who were participants in the Plan on December 31,
1996, including executive officers, are eligible to receive pension benefits
under the Retirement Plan. Effective January 1, 1997, the Corporation and the
Life Company froze benefits available through the Retirement Plan. The
Retirement Plan is a tax-qualified defined benefit retirement plan which is
subject to the Employee Retirement Income Security Act of 1974, as amended.
Federal law limits the amount of pension benefits that can be accrued and
compensation that can be recognized under a tax-qualified retirement plan such
as the Retirement Plan. FFCIC has adopted a non-qualified unfunded retirement
plan, the Farm Family Supplemental Employee Retirement Plan (the "SERP"), for
the payment of those benefits at retirement that cannot be accrued under the
Retirement Plan on account of the Federal law limits on the amount of pension
benefits that can be accrued and compensation that can be recognized under the
Retirement Plan. The practical effect of the SERP is to provide for the
calculation of retirement benefits on a uniform basis for all employees. Benefit
payments under the Retirement Plan and the SERP are allocated among the
Corporation, FFCIC, the Life Company and United pursuant to expense sharing
arrangements. New benefit accruals under the Retirement Plan were discontinued
as of December 31, 1996.
The table below illustrates the approximate annual retirement benefits
which would be payable at age 65 under the Retirement Plan and, if applicable,
under the SERP.
<TABLE>
<CAPTION>
Years of Service
-------------------------------------------------------------
Average Annual
Compensation 15 20 25 30 35
-------------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
$100,000 $30,000 $40,000 $50,000 $60,000 $60,000
150,000 45,000 60,000 75,000 90,000 90,000
200,000 60,000 80,000 100,000 120,000 120,000
250,000 75,000 100,000 125,000 150,000 150,000
300,000 90,000 120,000 150,000 180,000 180,000
350,000 105,000 140,000 175,000 210,000 210,000
400,000 120,000 160,000 200,000 240,000 240,000
</TABLE>
For purposes of calculating retirement benefits, a participant's average
annual compensation ("Average Annual Compensation") shall be equal to a
participant's compensation during the five calendar years (out of the last ten
calendar years of employment) for which the participant's compensation was
highest, divided by five. Compensation, as used to calculate retirement
benefits, means the aggregate of the amounts listed in the Summary Compensation
Table under the captions "Salary," "Bonus" and "Other Annual Compensation" and
the portion of the amount listed under the caption "All Other Compensation"
which corresponds to the part of the group term life insurance premium, if any,
paid by the Corporation which is taxable as income to the participant in the
Retirement Plan.
The credited years of service as of December 31, 1998 for Mr. Weber, Mr.
Bettini, Ms. Stanton, Mr. Walsh and Mr. Henderson were 17, 18, 6, 2, 11,
respectively.
The annual pension benefit under the Retirement Plan and, when applicable,
the SERP, equals 2.0% of Average Annual Compensation multiplied by years of
service (not to exceed 30 years). Benefits under the Retirement Plan and the
SERP are not subject to Social Security or other offset amounts.
Change In Control Arrangements
In addition to the Severance Plan discussed above, certain other of the
Corporation's compensation plans applicable to the named executive officers
appearing in the Summary Compensation Table include provisions regarding
payments pursuant to such plans in the event of the change of control of the
Corporation. Plans containing such provisions are described below. These
provisions are generally applicable to all participants in such plans.
Annual Incentive Plan
In 1996, the Board of Directors of the Corporation adopted the Farm Family
Holdings, Inc. Annual Incentive Plan which was amended and restated as of
October 27, 1998 (as amended and restated, the "Annual Incentive Plan") to
provide incentives and financial rewards to officers and other key employees of
the Corporation selected for participation by the Board of Directors. The Annual
Incentive Plan authorizes the payment of cash awards calculated as a percentage
of base salary with the applicable percentage determined based on the
performance of the participant assessed according to the achievement of
predefined goals derived from the Corporation's and its affiliates' strategic
plans and budgets. Except in the event of a Change of Control (as defined in the
Annual Incentive Plan), achievement of a target performance level is a
prerequisite to the receipt of an award pursuant to the Annual Incentive Plan.
In the event of a Change of Control, each participant will receive payment of an
amount equal to the greater of the participant's actual Earned Award or Target
Award Opportunity (both as defined in the Annual Incentive Plan) for the plan
year in which the Change of Control occurs, regardless of whether the
participant achieved the target performance level.
Officers' Deferred Compensation Plan
In 1996, the Board of Directors of the Corporation adopted a non-qualified,
unfunded Officers' Deferred Compensation Plan which was amended by Amendment No.
1 dated as of October 27, 1998 (as amended, the "Deferred Compensation Plan")
pursuant to which officers of the Corporation and its affiliates selected by the
Board of Directors as eligible to participate in the Deferred Compensation Plan
may elect to defer compensation payable by the Corporation or its affiliates.
Participants may elect to receive their Accrued Benefit (as defined in the
Deferred Compensation Plan) in a single lump sum or in five (5), ten (10) or
fifteen (15) equal annual installments commencing upon the date of termination
of service with the Corporation. In the event of a Change of Control (as defined
in the Deferred Compensation Plan), each participant shall receive that
participant's entire Accrued Benefit, in a single sum, as soon as
administratively practicable following the date of the Change of Control.
Omnibus Securities Plan
In 1996, the Board of Directors of the Corporation adopted the Farm Family
Holdings, Inc. Omnibus Securities Plan, which was amended by Amendment No. 1
dated as of February 13, 1997 and Amendment No. 2 dated as of October 27, 1998
(as amended, the "Omnibus Securities Plan"). The Corporation's stockholders
approved the Omnibus Securities Plan (in effect prior to Amendment No. 2) at
their Annual Meeting held on April 22, 1997. The purpose of the Omnibus
Securities Plan is to enable the Corporation and its Affiliates to attract,
retain and motivate employees designated as key management employees by
providing for or increasing the proprietary interest of such employees in the
Corporation and by aligning the interests of such employees with those of the
Corporation's stockholders. The Omnibus Securities Plan authorizes the granting
of Incentive Stock Options, Non- Qualified Stock Options, Stock Appreciation
Rights, Restricted Stock Awards or any combination of the foregoing
(collectively, the "Awards"). In the event of a Change of Control, all
outstanding Awards will immediately vest and become exercisable or satisfiable,
as applicable. The Committee may, in its discretion, determine that upon the
occurrence of a Change of Control, each Award outstanding shall terminate within
a specified number of days after notice to the Holder, and such Holder shall
receive, with respect to each share of Common Stock subject to such Award, cash
in an amount equal to the excess of (i) the higher of (x) the Fair Market Value
of such share of Common Stock immediately prior to the occurrence of such Change
of Control or (y) the value of the consideration to be received in connection
with such Change of Control for one share of Common Stock, over (ii) the
exercise price per share, if applicable, of one share of Common Stock. Unless
otherwise indicated, capitalized terms shall have the meaning set forth in the
Omnibus Securities Plan.
Compensation Committee Interlocks and Insider Participation
In 1998, the Corporation's Compensation Committee was comprised of Randolph
C. Blackmer, Jr., Clark W. Hinsdale III, John P. Moskos and Howard T. Sprow. Mr.
Blackmer is President and a Director of Connecticut Farm Bureau Association,
Inc. For the year ended December 31, 1998 FFCIC paid approximately $33,200 to
the Connecticut Farm Bureau Association, Inc. under the Membership List Purchase
Agreement. Mr. Hinsdale is President and a Director of Vermont Farm Bureau, Inc.
For the year ended December 31, 1998, FFCIC paid approximately $31,000 to the
Vermont Farm Bureau, Inc. under the Membership List Purchase Agreement. See
"Certain Relationships and Related Transactions-Farm Bureaus-Membership List
Purchase Agreement."
Report of the Compensation Committee of Farm Family Holdings, Inc.
Overview
The Compensation Committee is responsible for establishing compensation
objectives for the Corporation, recommending policies and plans to the Board of
Directors of the Corporation concerning salaries, bonuses and other forms of
compensation of the Corporation's executive officers, reviewing policies
regarding management perquisites and granting stock options, restricted stock
and other awards under long-term incentive plans. In addition, the Compensation
Committee recommends policies and plans to the Board of Directors of the
Corporation concerning director compensation. In carrying out its duties, the
Compensation Committee has direct access to independent compensation consultants
and outside survey data.
The objectives of the Corporation's executive compensation program are to
attract and retain the highest caliber of executive talent and to align
executive reward programs with the interests of shareholders in growing the
Corporation, maximizing economic value and enhancing products and services.
In order to further these objectives, target base salary and annual
incentive opportunities are established such that a substantial portion of the
executive officers' total compensation is placed at-risk in the form of
performance- related incentives. Base salaries are set to be at or near the
median of the labor market for similar positions at similar companies in like
markets.
This report reflects the compensation philosophy of the Corporation as
endorsed by the Compensation Committee and approved by the Board of Directors of
the Corporation. All cash compensation is paid by FFCIC and allocated among the
Corporation, FFCIC, the Life Company and United (collectively the "Companies")
pursuant to expense sharing arrangements among the Companies. All members of the
Corporation's Compensation Committee are also members of FFCIC's Compensation
Committee.
<PAGE>
Components of Executive Compensation
The components of the 1998 compensation for executive officers of the
Corporation, including the Chief Executive Officer, consist of base salary and
annual incentive compensation.
Base Salary. Base salary for each executive officer is set based on a
subjective evaluation of the recommendations of the Chief Executive Officer,
salary levels in effect for comparable positions in the marketplace, personal
performance and potential future contributions to the Companies. The 1998 base
salaries for the executive officers were recommended by the Compensation
Committee and approved by the Corporation's Board of Directors.
Annual Incentive Compensation. In 1996, the Compensation Committee
recommended, and the Board approved, the Corporation's Annual Incentive Plan to
provide incentives and financial rewards to officers and other key employees of
the Corporation and its subsidiaries who are responsible for, or contribute to,
the management, growth or profitability of the business of the Corporation, or
its subsidiaries. The Annual Incentive Plan became effective January 1, 1997 and
is designed to tie annual incentive compensation to performance goals.
Annual bonuses paid to executive officers under the Annual Incentive Plan
are a significant element of the Corporation's executive compensation program.
Objective performance measures and target performance levels are established
annually by the Compensation Committee for each executive officer. Performance
measures for each executive officer are based on the executive officer's
responsibilities. Relative weights are assigned to each of the performance
measures to determine the portion of the annual bonuses to be represented by
each variable. In addition, "threshold," "target" and "outstanding" performance
levels are set for each of the performance measures, and bonus payments, as a
percentage of base salary, are established for each performance level.
Under the Annual Incentive Plan, 1998 target bonuses for the Chief
Executive Officer, Executive Vice Presidents and Senior Vice Presidents were
established at 50%, 35% and 25% of base salary, respectively. Actual bonuses
paid pursuant to the Annual Incentive Plan may range from 0% to 150% of the
target bonus. The 1998 target bonus percentages were recommended by the
Compensation Committee and approved by the Corporation's Board of Directors.
The performance measures for 1998 were tied to quantifiable financial
objectives, such as the achievement of operating income and premium growth
targets, thereby establishing a direct link between executive pay and corporate
profitability. In addition to objective performance measures, the Chief
Executive Officer's evaluation of each executive officer's overall performance
accounted for up to 20% of the officer's overall performance measure to
determine the final incentive amount for each executive officer, other than the
Chief Executive Officer. The Compensation Committee's evaluation of the Chief
Executive Officer's overall performance, as approved by the Corporation's Board
of Directors, accounted for 20% of the Chief Executive Officer's overall
performance measure. The Compensation Committee approved the 1998 performance
measures and performance levels in December 1997 and certified attainment of the
performance levels following the end of 1998. Under the Annual Incentive Plan,
payment is made during the year subsequent to the year in which the bonus is
earned, after attainment of the performance levels is certified by the
Compensation Committee. Awards paid in 1999 for the 1998 bonus year were based
on company profitability at between the "threshold" and "target" levels and
premium growth at between the "target" and "outstanding" levels.
CEO Compensation
For 1998, Mr. Weber's base salary was established at $325,000. Mr. Weber's
1998 base salary was set based on a subjective evaluation of salary levels in
effect for comparable positions in the marketplace, personal performance and
potential future contributions to the Companies. Pursuant to the Annual
Incentive Plan, the Compensation Committee recommended, and the Board approved a
1998 bonus of $84,013 for Mr. Weber. Mr. Weber also earned a 1998 bonus of
$109,688 under the Life Company's Annual Incentive Plan. Eighty percent of Mr.
Weber's 1998 bonus was based on achievement of between the "threshold" and
"target" performance levels of company profitability as measured by operating
income targets. The remaining 20% of Mr. Weber's 1998 bonus was based on the
Compensation Committee's evaluation of Mr. Weber's performance, as approved by
the Corporation's Board of Directors.
<PAGE>
Compliance with Internal Revenue Code Section 162(m)
Section 162(m) of the Internal Revenue Code, enacted in 1993, generally
disallows a tax deduction to public companies for compensation over $1 million
paid to the Chief Executive Officer and four other most highly compensated
executive officers. Qualifying performance-based compensation will not be
subject to the deduction limit if certain requirements are met. The Corporation
has not paid any compensation to any executive officers that was not deductible
by reason of the prohibition in Section 162(m). The Compensation Committee
believes that tax deductibility is a important factor, but not the sole factor
to be considered in setting executive compensation policy. Accordingly, the
Compensation Committee generally intends to take such reasonable steps as are
required to avoid the loss of a tax deduction due to Section 162(m), but
reserves the right, in appropriate circumstances, to pay amounts which are not
deductible.
Compensation Committee of Farm Family Holdings, Inc.
Randolph C. Blackmer, Jr.
Clark W. Hinsdale III
John P. Moskos
Howard T. Sprow
<PAGE>
Common Stock Performance Graph
The graph below compares the cumulative total stockholder return on the
Common Stock for the twenty-nine month period July 23, 1996 through December 31,
1998 with the cumulative total return on the S&P 500 Index and the S&P Insurance
(Property-Casualty) Index over the same period.
COMPARISON OF 29 MONTH CUMULATIVE TOTAL RETURN*
AMONG FARM FAMILY HOLDINGS, INC., THE S&P 500 INDEX
AND THE S&P INSURANCE (PROPERTY-CASUALTY) INDEX
<TABLE>
<CAPTION>
S&P 500
Insurance
S&P 500 (Property-Casualty)
Measurement Period Corporation Index Index
<S> <C> <C> <C>
6/30/96 -- 100 100
7/23/96 100 -- --
12/31/96 122 112 116
12/31/97 204 149 169
12/31/98 213 192 158
</TABLE>
<TABLE>
<CAPTION>
Value on Value on Value on
December 31, 1996 December 31, 1997 December 31, 1998
----------------- ----------------- -----------------
<S> <C> <C> <C>
Farm Family Holdings, Inc. .......................... $122 $204 $213
S&P 500 Index ....................................... $112 $149 $192
S&P 500 Insurance
(Property-Casualty) Index............................ $116 $169 $158
</TABLE>
* $100 INVESTED ON 7/23/96 IN STOCK OR ON 6/30/96
IN INDEX-INCLUDING REIVESTMENT OF DIVIDENDS.
FISCAL YEAR ENDING DECEMBER 31.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Life Company
The Life Company is an affiliate of the Corporation owned by Connecticut
Farm Bureau Service Company, Delaware Farm Bureau Service Company, Inc., Maine
Farm Bureau Service Company, Massachusetts Farm Bureau Service Company, Inc.,
New Hampshire Farm Bureau Federation, New Jersey Farm Bureau Service Company,
New York Farm Bureau Service Company, Inc., Rhode Island Farm Bureau Federation,
Inc., Vermont Farm Bureau, Inc. and West Virginia Farm Bureau, Inc.
(collectively, the "Selling Stockholders"). Substantially all of the directors
and executive officers of the Corporation are also directors and executive
officers of the Life Company.
Option Purchase Agreement
The Corporation entered into an Option Purchase Agreement dated as of
February 14, 1996 which was amended and restated as the Amended and Restated
Option Purchase Agreement, dated February 26, 1998, as amended by Amendment No.
1, dated April 28, 1998 and Amendment No. 2, dated as of January 14, 1999
("Amendment No. 2") with the Selling Stockholders (as amended, the "Option
Purchase Agreement") pursuant to which the Corporation had, for a two-year
period commencing on July 26, 1996, the option to acquire all of the outstanding
capital stock of the Life Company subject to certain conditions. On February 26,
1998, the Board of Directors of the Corporation approved the exercise of the
option to acquire the Life Company. The Option Purchase Agreement (in effect
prior to Amendment No. 2) and the consummation of the transactions contemplated
therein were originally approved by the Corporation's shareholders on December
2, 1998. The closing of the Acquisition was scheduled to occur on December 7,
1998, but was delayed when it was determined that in order for certain Selling
Stockholders to provide unqualified opinions of counsel required by the Option
Purchase Agreement as a condition to closing, such Selling Stockholders or their
respective parent entities would need to obtain approval of the Acquisition from
their members. As a result of this delay, the Option Purchase Agreement was
amended by Amendment No. 2 to, among other things, fix the price used to
determine the number of shares of Common Stock and Series A Preferred Stock to
be issued in the Acquisition as if the closing had occurred on December 7, 1998,
subject to a collar mechanism described below. The exercise price to be paid by
the Corporation for the Life Company Shares will be $37.5 million (less certain
expenses, currently estimated to be approximately $1.1 million, to be paid by
the Life Company in the transaction on behalf of the Selling Stockholders). Upon
the closing of the Acquisition (the "Closing"), the Corporation will pay the
exercise price to the Selling Stockholders in (i) a number of shares of Common
Stock equal to $31.5 million (less certain expenses currently estimated to be
approximately $0.92 million) divided by the Optionee Common Stock Price (as
defined below) and (ii) a number of shares of Series A Preferred Stock equal to
$6 million (less certain expenses currently estimated to be approximately $0.18
million) divided by the Optionee Common Stock Price. The "Optionee Common Stock
Price" will be equal to $35.72 (which was the price that would have been used if
the Closing had occurred on December 7, 1998), unless the closing price per
share of Common Stock as reported on the New York Stock Exchange, Inc. on the
last trading day prior to the date of the Closing of the Acquisition (the
"Closing Price") is greater than $42.86 or equal to or less than $25.00. If the
Closing Price is greater than $42.86 or equal to or less than $25.00, the
Optionee Common Stock Price will equal $35.72 divided by a factor. The factor
will be equal to 1.2 (if the Closing Price is greater than $42.86) or 0.7 (if
the Closing Price is equal to or less than $25.00) multiplied by $35.72 divided
by the Closing Price. If the Closing Price is $25.00 or less, the Corporation
will also have the option to terminate the Option Purchase Agreement. In
addition, Amendment No. 2 extended the date on which the Corporation or the
Selling Stockholders may terminate the Option Purchase Agreement, if the Closing
has not occurred, to April 30, 1999.
The Option Purchase Agreement is subject to the approval of the members of
certain Selling Stockholders or their respective parent entities and the
shareholders of the Corporation. On February 23, 1999, the Corporation filed
with the Securities and Exchange Commission pursuant to the Exchange Act a Proxy
Statement dated February 17, 1999 for a Special Meeting of Shareholders to be
held March 25, 1999 to consider and vote upon the Option Purchase Agreement and
the consummation of the transactions contemplated therein. Under the terms of
Amendment No. 2, the shareholders of the Life Company have agreed to reimburse
the Corporation for half of the expenses of resolicitation, up to $200,000. The
acquisition of the Life Company is also subject to certain closing conditions,
including the receipt of all required government approvals. The Acquisition is
expected to close in April 1999.
Expense Sharing Agreement
The Corporation, FFCIC, and the Life Company are parties to an Amended and
Restated Expense Sharing Agreement, effective February 14, 1996 (the "Expense
Sharing Agreement") pursuant to which shared expenses for goods, services and
facilities are allocated among the parties in accordance with applicable
provisions of the New York Insurance Law and regulations promulgated thereunder.
For the year ended December 31, 1998, shared operating expenses totaled $29
million of which 68% or $20 million were allocated to the Corporation and FFCIC.
Lease Agreement
FFCIC and the Life Company were parties to a Lease Agreement, dated July 1,
1988, as amended by Amendment to Lease Agreement, effective January 1, 1994 (as
so amended, the "Lease Agreement"), pursuant to which FFCIC leased home office
space in Glenmont, New York from the Life Company. Annual rent under the Lease
Agreement for the year ended December 31, 1998 was approximately $781,000. This
Lease Agreement expired December 31, 1998 and the parties entered into a new
lease agreement effective January 1, 1999.
United
Substantially all of the directors and executive officers of United are
also directors and executive officers of the Corporation.
Per Risk Reinsurance Contract
FFCIC and United were parties to an Underlying Multi-Line Per Risk
Reinsurance Contract, effective January 1, 1995, as amended by Addendum No. 1,
effective January 1, 1996, Addendum No. 2, effective January 1, 1996, Addendum
No. 3, effective July 26, 1996, and Addendum No. 4, effective January 1, 1997
(as so amended, the "Per Risk Reinsurance Contract"). For the year ended
December 31, 1997, net earned premiums ceded by FFCIC to United under the Per
Risk Reinsurance Contract were $8.7 million. The Per Risk Reinsurance Contract
was terminated effective December 31, 1997.
Umbrella Reinsurance Contract
United had assumed 5% of FFCIC's net liability retained under an Umbrella
Quota Share Reinsurance Contract, effective January 1, 1995, as amended by
Addendum No. 1, effective January 1, 1995, Addendum No. 2, effective July 26,
1996 and Addendum No. 3, effective retroactively to January 1, 1995 as to
Article IV and effective January 1, 1997 as to all other changes (as so amended,
the "Umbrella Reinsurance Contract"). For the year ended December 31, 1997, net
written premiums ceded by FFCIC to United under the Umbrella Reinsurance
Contract were $0.2 million. The Umbrella Reinsurance Contract was terminated
December 31, 1997.
Catastrophe Reinsurance Contract
United had assumed 16.67% of the 1st layer and 2% of the 3rd and 4th layers
of FFCIC's per occurrence losses under an Excess Catastrophe Reinsurance
Contract, effective January 1, 1997 (the "Catastrophe Reinsurance Contract").
For the year ended December 31, 1997, net earned premiums ceded by FFCIC to
United under the Catastrophe Reinsurance Contract were $0.1 million. The
Catastrophe Reinsurance Contract expired on December 31, 1997.
Although FFCIC terminated all reinsurance agreements with United effective
December 31, 1997, United retains liability for covered losses arising from
occurrences prior to the termination date. Effective January 1, 1998, all
reinsurance agreements for FFCIC will be provided solely by nonaffiliated
reinsurers.
Service Agreement
FFCIC and United are parties to a Service Agreement, dated July 25, 1988
(the "Service Agreement"), pursuant to which FFCIC provides United with certain
services, property, equipment and facilities necessary for its operations. For
the year ended December 31, 1998, United incurred approximately $1 million in
direct and allocated expenses and overhead under the Service Agreement.
Farm Bureaus
Many of the directors of the Corporation are also directors or executive
officers of state Farm Bureau(R) organizations in the ten states in which FFCIC
operates (collectively, the "Farm Bureaus").
Membership List Purchase Agreement
FFCIC has entered into a Membership List Purchase Agreement, commencing on
January 1, 1996, with the Farm Bureau in each of the ten states in which it
operates. Pursuant to each Membership List Purchase Agreement, Farm Bureau
membership lists are provided to FFCIC on an exclusive basis for the purpose of
marketing its insurance products. For the year ended December 31, 1998, FFCIC
paid approximately $660,000 to the Farm Bureaus, in the aggregate, under the
Membership List Purchase Agreements.
PROPOSALS OF STOCKHOLDERS
Proposals submitted by stockholders of the Corporation must be received at
the principal executive offices of the Corporation, 344 Route 9W, Glenmont, New
York 12077 (mail to: Farm Family Holdings, Inc., P.O. Box 656, Albany, New York
12201-0656), Attention: Corporate Secretary, on or before November 18, 1999 in
order to be considered for inclusion in the proxy materials relating to the 2000
Annual Meeting of Stockholders.
In addition to any other applicable requirements, if a stockholder desires
to bring business before an annual meeting which is not the subject of a
proposal timely submitted for consideration for inclusion in the proxy materials
relating to the annual meeting, the stockholder must follow the advance notice
procedures outlined in the Corporation's By-Laws. The Corporation's By-Laws
provide, in general, that a proposal for action to be presented by a stockholder
at an annual meeting shall be out of order unless the proposal is specified in
the notice of meeting given by or at the direction of the Board of Directors or
unless the proposal shall have been submitted in writing (in the form specified
in the By-Laws) to the Secretary of the Corporation and received at the
principal executive offices of the Corporation not less than 60 days nor more
than 90 days prior to the anniversary date of the immediately preceding annual
meeting. If the date of the annual meeting has been advanced or delayed by more
than 30 days from the prior anniversary date, notice must be received not later
than the close of business on the 10th day following the day on which such
notice of the annual meeting was mailed or such public disclosure of the date of
such annual meeting was made, whichever first occurs.
Rule 14a-4 of the Securities and Exchange Commission's proxy rules allows
the Corporation to use discretionary voting authority to vote on matters coming
before an annual meeting of stockholders, if the Corporation does not have
notice of the matter at least 45 days before the anniversary of the date on
which the Corporation first mailed its proxy materials for the prior year's
annual meeting of stockholders or the date specified by an advance notice
provision in the Corporation's By-Laws. The Corporation's By-Laws contain such
an advance notice provision as described above. For the Corporation's 2000
Annual Meeting of Stockholders expected to be held April 25, 2000, stockholders
must submit such written notice to the Secretary of the Corporation not earlier
than January 28, 2000 or later than February 27, 2000.
The foregoing is only a summary of the detailed provisions of the By-Laws
and is qualified by reference to the text thereof. Stockholders wishing to
submit a proposal should review the By-Law requirements regarding proposals by
stockholders and should communicate with the Secretary of Farm Family Holdings,
Inc., P.O. Box 656, Albany, New York, 12201-0656, if sent by mail, or 344 Route
9W, Glenmont, New York 12077, if by hand, express mail or overnight courier, for
further information.
<PAGE>
ADDITIONAL INFORMATION
The Corporation will bear the cost of soliciting proxies from its
stockholders and will enlist the help of banks and brokerage houses in
soliciting proxies from their customers. In addition to the use of the mails,
proxies may be solicited personally or by telephone by the directors, officers,
agents and employees of the Corporation or its subsidiaries. The Corporation has
engaged Georgeson & Company Inc. to assist in soliciting proxies for a fee of
approximately $6,000 plus reasonable out-of-pocket expenses.
FORM 10-K
The Corporation will, upon written request of any stockholder, furnish
without charge a copy of its Annual Report on Form 10-K for the year ended
December 31, 1998, as filed with the Securities and Exchange Commission, without
exhibits. Please address all such requests to Farm Family Holdings, Inc., P.O.
Box 656, Albany, New York 12201-0656, Attention: Executive Vice
President-Finance. Exhibits will be provided upon written request and payment of
an appropriate processing fee.
Victoria M. Stanton
Secretary
March 17, 1999
Glenmont, New York
<PAGE>
March 26, 1999
Dear Stockholder:
You are invited to attend the 1999 Annual Meeting of Stockholders of Farm Family
Holdings, Inc. The meeting will be held on April 27, 1999, at 9:00 A.M. New York
time at the corporate headquarters of Farm Family Holdings, Inc., 344 Route 9W,
Glenmont, New York.
The items to be considered at this meeting are detailed in the enclosed proxy
statement. Also enclosed is a copy of Farm Family Holdings, Inc.'s 1998 Annual
Report, including consolidated financial statements.
WHETHER OR NOT YOU PLAN ON ATTENDING THE ANNUAL MEETING, WE URGE YOU TO
COMPLETE, DATE AND SIGN THE ATTACHED PROXY CARD AND RETURN IT IN THE
POSTAGE-PAID ENVELOPE PROVIDED AS SOON AS POSSIBLE. IF YOU PLAN ON ATTENDING THE
ANNUAL MEETING, PLEASE CHECK THE APPROPRIATE BOX ON THE ATTACHED PROXY CARD.
Thank you for your continued interest in and commitment to Farm Family Holdings,
Inc. We look forward to seeing you at the meeting.
Sincerely,
/s/ William M. Stamp, Jr.
William M. Stamp, Jr.
Chairman of the Board
<PAGE>
The Board of Directors recommends a vote FOR Proposals I and II.
Proposal I: Election of Directors
FOR all nominees [ ] WITHHOLD AUTHORITY to vote [ ] *Exceptions [ ]
listed below for all nominees listed below
Nominees for a three-year term: Randolph C. Blackmer, Jr., Fred G. Butler, Sr.,
Sandra A. George, Stephen J. George, Arthur D. Keown, Jr., W. Bruce Krenning and
William M. Stamp, Jr.
*Exceptions
- --------------------------------------------------------------------------------
(INSTRUCTIONS: To withhold authority to vote for any individual nominee, mark
"Exceptions" box and write that nominee's name in the space provided.)
Proposal II: Ratification of the appointment of PricewaterhouseCoopers LLP as
the Corporation's independent auditors for the year 1999.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
In their discretion, the proxies are authorized to vote upon such other business
as may properly come before the Annual Meeting or any adjournment(s) thereof.
I plan to attend [ ]
the Annual Meeting
Change of Address and [ ]
or Comments Mark Here
Please sign exactly as your name(s)
appear(s) to the left. (Joint owners
should each sign.) When signing as an
attorney, executor, administrator,
trustee, guardian or corporate officer,
please give your full title as such.
Dated: ____________________________, 1999
-----------------------------------------
Signature
-----------------------------------------
(Additional signature(s) if held jointly)
Votes MUST be indicated (X) in Black or
Blue ink.
Please mark, sign and date on this side of this Proxy Card and return it in the
postage-paid envelope provided.
<PAGE>
FARM FAMILY HOLDINGS, INC.
344 Route 9W
Glenmont, New York 12077
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
FARM FAMILY HOLDINGS, INC.
PROXY CARD
The person(s) signing the front of this Proxy Card hereby appoint(s)
William M. Stamp, Jr., John W. Lincoln and Victoria M. Stanton, or any of them,
lawful attorneys-in-fact and proxies with full power of substitution in each of
them and hereby authorize(s) them to represent and vote, as designated on the
reverse side hereof, all shares of Common Stock of Farm Family Holdings, Inc.
standing in the name of said person(s) with all powers said person(s) would
possess if present at the Annual Meeting of Stockholders of Farm Family Holdings
Inc. to be held April 27, 1999, or any adjournment(s) thereof. In their
discretion, the proxies are authorized to vote upon such other business as may
properly come before the Annual Meeting or any adjournment(s) thereof.
This proxy, properly executed and returned, will be voted as directed on
this card by the persons designated as proxies above. If no specific directions
are given, this proxy will be voted "FOR" each listed Proposal.
(Continued, and to be dated and signed on reverse side.)
FARM FAMILY HOLDINGS, INC.
P.O. BOX 11098
NEW YORK, NY 10203-0098
