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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement
[_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(E)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S) 240.14a-11(c) or (S) 240.14a-12
SCPIE HOLDINGS INC.
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(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
Reg. (S) 240.14a-101.
SEC 1913 (3-99)
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[LOGO OF SCPIE HOLDINGS INC.]
Mitchell S. Karlan, M.D.
Chairman
March 31, 2000
Dear Stockholders:
You are cordially invited to attend the 2000 Annual Meeting of Stockholders
of SCPIE Holdings Inc., which will be held at the Century Plaza Hotel, 2025
Avenue of the Stars, Los Angeles, California 90067, on May 11, 2000, at 3:00
p.m., Pacific time.
The business to be considered and voted upon at the meeting is explained in
the accompanying Notice of Annual Meeting and Proxy Statement.
On behalf of the Board of Directors, we urge you to sign, date and return
the enclosed proxy card as soon as possible, even if you currently plan to
attend the meeting. Your vote is important, regardless of the number of shares
you own. Returning the enclosed proxy will not prevent you from voting in
person but will assure that your vote is counted if you are unable to attend
the meeting.
Thank you for your support of our Company.
Sincerely,
/s/ Mitchell S. Karlan, M.D.
Mitchell S. Karlan, M.D.
Chairman
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SCPIE HOLDINGS INC.
1888 Century Park East
Los Angeles, California 90067
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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 11, 2000
NOTICE IS HEREBY GIVEN that the 2000 Annual Meeting of Stockholders (the
"Annual Meeting") of SCPIE Holdings Inc. (the "Company") will be held at the
Century Plaza Hotel, 2025 Avenue of the Stars, Los Angeles, California 90067,
on May 11, 2000, at 3:00 p.m., Pacific time, for the following purposes:
1. To consider and vote upon the election of five directors to serve until
the Annual Meeting of Stockholders in 2003 and until their successors
are duly elected and qualified;
2. To consider and vote upon a proposal to approve the adoption of The
SCPIE Holdings Inc. Employee Stock Purchase Plan;
3. To ratify the appointment of Ernst & Young LLP as independent auditors
for the Company for the fiscal year ending December 31, 2000; and
4. To transact such other business as may come properly before the Annual
Meeting or any adjournments thereof.
Only stockholders of record at the close of business on March 13, 2000, are
entitled to receive notice of and to vote at the Annual Meeting or any
adjournments thereof. All stockholders, whether or not they expect to attend
the Annual Meeting in person, are requested to complete, date, sign and return
the enclosed proxy in the accompanying envelope. The proxy may be revoked by
the person who executed it by filing with the Secretary of the Company an
instrument of revocation or a duly executed proxy bearing a later date, or by
voting in person at the Annual Meeting.
By order of the Board of Directors
/s/ Joseph P. Henkes
Joseph P. Henkes
Secretary
March 31, 2000
PLEASE COMPLETE, DATE AND SIGN THE ENCLOSED PROXY AND RETURN IT PROMPTLY IN
THE ENVELOPE PROVIDED OR BY FACSIMILE, WHETHER OR NOT YOU PLAN TO ATTEND THE
ANNUAL MEETING. ALTERNATIVELY, YOU MAY VOTE BY TELEPHONE, AS EXPLAINED ON THE
PROXY. IF YOU ATTEND THE MEETING, YOU MAY VOTE YOUR SHARES IN PERSON IF YOU
WISH, EVEN IF YOU PREVIOUSLY RETURNED YOUR PROXY.
<PAGE>
PROXY STATEMENT
FOR
ANNUAL MEETING OF STOCKHOLDERS OF
SCPIE HOLDINGS INC.
To Be Held On May 11, 2000
----------------
INTRODUCTION
This Proxy Statement is being furnished to the stockholders of SCPIE
Holdings Inc., a Delaware corporation (the "Company"), in connection with the
solicitation of proxies by the Company's Board of Directors from holders of
the outstanding shares of $.0001 par value common stock of the company
("Common Stock"), for use at the Annual Meeting of Stockholders of the Company
to be held on May 11, 2000, and any adjournments thereof (the "Annual
Meeting").
The principal executive offices of the Company are located at 1888 Century
Park East, Los Angeles, California 90067. The telephone number is (310) 551-
5900.
This Proxy Statement is first being mailed to the Company's stockholders on
or about March 31, 2000. The costs of preparing, assembling and mailing the
Notice of Annual Meeting, Proxy Statement and proxy will be borne by the
Company. The 1999 Annual Report to Stockholders, including consolidated
financial statements for the year ended December 31, 1999, accompanies this
Proxy Statement.
ABOUT THE MEETING
When and where is the Annual Meeting being held?
The Annual Meeting will be held at the Century Plaza Hotel, 2025 Avenue of
the Stars, Los Angeles, California 90067, on May 11, 2000, at 3:00 p.m.,
Pacific time.
What is the purpose of the Annual Meeting?
The Annual Meeting is being held to consider and vote upon (1) the election
of five directors to serve until the Annual Meeting of Stockholders in 2003
and until their successors are duly elected and qualified, (2) the approval of
the adoption of The SCPIE Holdings Inc. Employee Stock Purchase Plan, and (3)
the ratification of the appointment of Ernst & Young LLP as independent
auditors for the Company for the fiscal year ending December 31, 2000. The
Company's Board of Directors knows of no other business that will be presented
for consideration at the Annual Meeting.
At the conclusion of the meeting, the Company's management will report on
the performance of the Company in 1999 and respond to questions from the
stockholders.
Who is entitled to vote at the Annual Meeting?
Only holders of record of shares of Common Stock as of the close of business
on March 13, 2000, the record date fixed by the Board of Directors (the
"Record Date"), will be entitled to receive notice of and to vote at the
Annual Meeting.
As of the Record Date, there were 9,401,269 shares of Common Stock issued,
outstanding and entitled to be voted at the Annual Meeting. These shares are
held by approximately 6,368 stockholders of record. An additional 500,000
shares of Common Stock have been issued to a wholly owned subsidiary of the
Company. These shares are neither voted nor counted for purposes of a quorum
under applicable provisions of the Delaware General Corporation Law.
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How do I vote?
As a holder of Common Stock, you are entitled to one vote on each matter
considered and voted upon at the Annual Meeting for each share of Common Stock
held of record by you as of the Record Date. If you complete and properly sign
the accompanying proxy card and return it to the Company (or vote by telephone
by following the instructions found on the accompanying proxy card), and if it
is received in time and not revoked, it will be voted at the Annual Meeting in
accordance with the instructions indicated in such proxy. If you are a
registered stockholder and attend the meeting, you may deliver your completed
proxy card at that time or vote in person. If your shares of Common Stock are
held in "street name" and you wish to vote at the meeting, you must obtain a
proxy card from the institution that holds your shares. If no instructions are
indicated, those shares will be voted "FOR" the election, as directors of the
Company, of the five nominees named in the proxy, "FOR" the approval of the
adoption of The SCPIE Holdings Inc. Employee Stock Purchase Plan, and "FOR"
the ratification of the appointment of Ernst & Young LLP as independent
auditors for the Company for the fiscal year ending December 31, 2000.
Can I revoke my vote after I return my proxy card?
Yes. After you have given a proxy, you may revoke it at any time prior to
its exercise at the Annual Meeting by either (1) giving written notice of
revocation to the Secretary of the Company, (2) properly submitting to the
Company a duly executed proxy bearing a later date, or (3) voting in person at
the Annual Meeting. All written notices of revocation or other communications
with respect to revocation of proxies should be addressed as follows: SCPIE
Holdings Inc., 1888 Century Park East, Los Angeles, California 90067,
Attention: Joseph P. Henkes, Secretary.
Can I vote by telephone or electronically?
You may vote by telephone on each matter set forth above. Stockholders with
shares registered directly with ChaseMellon Shareholder Services, LLC, the
Company's transfer agent, may vote by telephone by calling 1-800-840-1208. The
Company has not established electronic voting procedures.
If your shares are held in "street name," you will need to contact your
broker or other nominee to determine whether you will be able to give voting
instructions by telephone or electronically.
What constitutes a quorum?
The presence, in person or by proxy, of the holders of a majority of the
shares of Common Stock entitled to vote at the Annual Meeting will constitute
a quorum to conduct business at the Annual Meeting. Proxies received but
marked as abstentions and "broker non-votes" (which occur when shares held by
brokers or nominees for beneficial owners are voted on some matters but not on
others) will be included in the calculation of the number of shares considered
to be present at the Annual Meeting.
What vote is required to approve each item?
Board of Directors. A plurality of the votes cast by the holders of shares
of Common Stock represented and entitled to vote at the Annual Meeting, at
which a quorum must be present, is required for the election of the directors
identified in this Proxy Statement. With respect to the election of directors,
stockholders may (1) vote "for" all five nominees, (2) "withhold" authority to
vote for all such nominees, or (3) withhold authority to vote for any
individual nominee or nominees but vote for all other nominees. Because
directors are elected by a plurality of the votes cast, votes to withhold
authority with respect to one or more nominees and any broker non-votes will
have no effect on the outcome of the election.
The SCPIE Holdings Inc. Employee Stock Purchase Plan. The affirmative vote
of a majority of the votes cast is required for the approval of The SCPIE
Holdings Inc. Employee Stock Purchase Plan. Abstentions will be considered
shares entitled to vote in the tabulation of votes cast on proposals presented
to the stockholders
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and will have the same effect as negative votes. Broker non-votes are not
counted for any purpose in determining whether a matter has been approved.
Ratification of Independent Auditors. The affirmative vote of a majority of
the votes cast is required for the ratification of Ernst & Young LLP as
independent auditors for the Company for the fiscal year ending December 31,
2000. Abstentions will be considered shares entitled to vote in the tabulation
of votes cast on proposals presented to the stockholders and will have the same
effect as negative votes. Broker non-votes are not counted for any purpose in
determining whether a matter has been approved.
What are the Board's Recommendations?
The Board's recommendations are set forth together with a description of each
proposal in this Proxy Statement. In summary, the Board recommends that you
vote:
. FOR election of the five directors named in this Proxy Statement to
serve until the Annual Meeting of Stockholders in 2003 and until their
successors are duly elected and qualified (see page 5);
. FOR approval of the adoption of The SCPIE Holdings Inc. Employee Stock
Purchase Plan (see page 16); and
. FOR ratification of the appointment of Ernst & Young LLP as independent
auditors for the Company for the fiscal year ending December 31, 2000
(see page 21).
3
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STOCK OWNERSHIP
What is the stock ownership of the Company's directors, executive officers and
largest beneficial owners?
The following table sets forth certain information regarding beneficial
ownership of the Company's Common Stock as of March 12, 2000, by (i) each
stockholder known by the Company to be a beneficial owner of more than 5% of
any class of the Company's voting securities, (ii) each director and nominee
of the Company, (iii) the Chief Executive Officer and each additional
executive officer named in the summary compensation table under "Executive
Compensation," and (iv) all directors, nominees and executive officers of the
Company as a group. The Company believes that, except as otherwise noted, each
individual named has sole investment and voting power with respect to the
shares of Common Stock indicated as beneficially owned by such individual.
<TABLE>
<CAPTION>
Number of Shares Percent
Name Beneficially Owned (1) of Total
- ---- ---------------------- --------
<S> <C> <C>
Tweedy, Browne Company LLC (2)................ 789,421 6.22%
Mitchell S. Karlan, M.D....................... 37,377 *
Donald J. Zuk................................. 114,533 1.12%
Patrick S. Grant.............................. 32,767(3) *
Joseph P. Henkes.............................. 35,933 *
Patrick T. Lo................................. 30,200(4) *
Timothy C. Rivers............................. 2,200 *
Jack E. McCleary, M.D......................... 14,653 *
Wendell L. Moseley, M.D....................... 18,137 *
Allan K. Briney, M.D.......................... 19,638 *
J. Hyatt Brown................................ -- *
Henry Gluck................................... 20,000 *
Willis T. King, Jr............................ 27,967 *
Charles B. McElwee, M.D....................... 16,907 *
Donald P. Newell.............................. 15,367 *
Harriet M. Opfell, M.D........................ 15,112 *
William A. Renert, M.D. ...................... 15,562 *
Henry L. Stoutz, M.D.......................... 10,262 *
Reinhold A. Ullrich, M.D...................... 18,068 *
All directors and executive officers as a
group........................................ 444,680 4.36%
</TABLE>
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*Less than 1%.
(1) As to each person or group in the table, the table includes the following
shares issuable upon exercise of options which are exercisable within 60
days from March 20, 2000: Mitchell S. Karlan, M.D., 3,666.66; Jack E.
McCleary, M.D., 3,666.66; Wendell L. Moseley, M.D., 3,666.66; Allan K.
Briney, M.D., 3,666.66; Willis T. King, 3,666.66; Charles B. McElwee,
M.D., 3,666.66; Donald P. Newell, 3,666.66; Harriet M. Opfell, M.D.,
3,666.66; William A. Renert, M.D., 3,666.66; Henry L. Stoutz, M.D.,
3,666.66; Reinhold A. Ullrich, M.D., 3,666.66; Donald J. Zuk, 59,533.33;
Patrick S. Grant, 22,066.66; Joseph P. Henkes, 23,933.33; and Patrick T.
Lo, 17,900.
(2) Based solely upon information contained in a report on Schedule 13D dated
January 14, 2000, filed on behalf of Tweedy, Browne Company LLC ("TBC"),
TBK Partners, L.P. ("TBK") and Vanderbilt Partners, L.P. According to this
filing with the SEC, 707,511 of these shares are held in the accounts of
various customers of TBC, and TBC has sole voting power over 677,559 of
these shares, and shared dispositive power over 707,511 of these shares.
In addition, TBK has sole voting power and sole dispositive power over
81,910 of these shares. These entities' business address is 350 Park
Avenue, 9th Floor, New York, NY 10022.
(3) Includes five hundred (500) shares held jointly with Mr. Grant's spouse.
(4) Includes three hundred (300) shares held by Mr. Lo's spouse.
4
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PROPOSAL 1
ELECTION OF DIRECTORS
General
The Company's Board of Directors is divided into three classes, with the
terms of office of the respective classes ending in successive years. Five
directors are to be elected at the Annual Meeting for full three-year terms
expiring in 2003. The Board's nominees are J. Hyatt Brown, Henry Gluck, Willis
T. King, Jr., Harriet M. Opfell, M.D. and Reinhold A. Ullrich, M.D.
Drs. Opfell and Ullrich and Mr. King are currently directors of the Company
and were elected at the 1997 Annual Meeting of Stockholders for a three-year
term. On August 4, 1999, pursuant to its authority under the Company's Amended
and Restated Certificate of Incorporation and Bylaws, the Board of Directors
increased the number of directors serving on the Board from 12 to 13, and
elected Mr. Gluck to fill this new seat. Dr. Allan K. Briney, age 78, Chairman
of the Company's predecessor and Board member of the Company since its
inception, will retire from the Board at the end of his current term and has
elected not to stand for re-election at the 2000 Annual Meeting. The Board has
nominated J. Hyatt Brown to stand for election to fill this seat expiring in
2003. The terms of the other eight directors continue after the Annual
Meeting. Directors hold office until the Annual Meeting for the year in which
their respective terms expire and until their successors are elected and
qualified unless, prior to that time, they have resigned, retired, or
otherwise left office.
All shares of Common Stock represented by valid proxies received pursuant to
this solicitation, and not revoked before they are exercised, will be voted in
the manner specified. If no specification is made, the proxies will be voted
for the election of the five directors identified below. If any nominee is
unable to serve (which is not anticipated), the persons designated as proxies
will cast votes for the remaining nominees and for such other persons as they
may select.
Set forth below is certain information regarding each nominee or director
continuing in office, including a description of his or her positions and
offices with the Company (other than as a director) and with the Company's
predecessor, Southern California Physicians Insurance Exchange (the
"Exchange"), prior to the merger of the Exchange into the Company in January
1997 (the "Reorganization"); a brief description of his or her principal
occupation and business experience during at least the last five years;
directorships presently held by him or her in certain other companies or
associations; and his or her age. All of the current directors of the Company
other than Mr. Gluck were first elected to their positions during 1996, prior
to the Reorganization.
Nominees for Election as Directors to be Elected for a Term of Three Years
Ending at the Annual Meeting of Stockholders in 2003
J. Hyatt Brown, 62, has been the Chairman, President and Chief Executive
Officer of Brown & Brown, Inc., a national independent insurance agency
headquartered in Daytona Beach, Florida, since 1993. He was a member of the
Florida House of Representatives from 1972 to 1980, and Speaker of the House
from 1978 to 1980. Currently, Mr. Brown is a member of the Board of Trustees
of Stetson University in Florida. Mr. Brown is a director of Rock-Tenn
Company, Bell South Corporation, FPL Group, Inc., SunTrust Banks, Inc., and
International Speedway Corp.
Henry Gluck, 71, Director, has been a member of the Board since August 1999.
He has served as Co-Chairman of Transcontinental Properties, a real estate
investment and development company in Santa Barbara, California, since
December 1995. Prior to that, he was Chairman and Chief Executive Officer of
Caesars World, Inc. from 1983 until June 1995. In addition, Mr. Gluck is a
former member of the board of directors of ITT Corporation. He has served as
Chairman of the Business Institute in Gerontology of the Ethel Percy Andrus
Gerontology Center at the University of Southern California.
5
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Willis T. King, Jr., 55, Director, currently serves as Chairman, President
and Chief Executive Officer of Highlands Insurance Group, a publicly traded
property and casualty insurance holding company headquartered in
Lawrenceville, New Jersey. Previously, he was a director and officer of J&H
Marsh McLennan, insurance brokers, from March 1997 until April 1999. From 1986
to 1997, Mr. King served as Chairman and Chief Executive Officer of Willcox
Incorporated Reinsurance Intermediaries.
Harriet M. Opfell, M.D., 75, Director, was a member of the Board of
Governors of the Exchange from 1981 until the time of the Reorganization. She
has been a board-certified pediatrician in Orange, California, for more than
five years, and is a clinical professor of pediatrics at the University of
California at Irvine. Dr. Opfell is a former President of the Orange County
Medical Association and served as President of the medical staff at Children's
Hospital of Orange County.
Reinhold A. Ullrich, M.D., 72, Director, was a member of the Board of
Governors of the Exchange from 1991 until the time of the Reorganization. He
has been a board-certified obstetrician and gynecologist in Torrance,
California, for more than five years, and has been on the clinical faculty at
the UCLA School of Medicine since 1954. Dr. Ullrich is a former President of
the Los Angeles County Medical Association (LACMA), and is a past Chairman of
its Board of Trustees. He served on the California Medical Association (CMA)
Board of Trustees from 1989 to 1995, and was an alternate delegate to the
American Medical Association (AMA) from 1990 to 1997.
Directors Whose Terms of Office Continue
Terms Expiring at 2001 Annual Meeting of Stockholders
Mitchell S. Karlan, M.D., 72, Chairman of the Board, was a member of the
Board of Governors of the Exchange from 1986 until the time of the
Reorganization. He has been a board-certified general surgeon in Beverly
Hills, California, for more than five years. Dr. Karlan is a past Chairman of
the AMA Council on Scientific Affairs. He is a former President of LACMA, a
former Chairman of LACMA's Board of Trustees and a recent past member of the
CMA Board of Trustees. He currently is a member of the Board of Trustees of
the American Society of General Surgeons, and is Vice Speaker of the Society's
House of Delegates. In addition, Dr. Karlan is Chairman of the Surgical Caucus
of the AMA.
Jack E. McCleary, M.D., 72, Director and Treasurer, was a member of the
Board of Governors of the Exchange from 1982 until the time of the
Reorganization. He was a board-certified dermatologist in Sherman Oaks,
California, for more than five years prior to his retirement in 1997. He is a
former CMA and LACMA President and Speaker of the CMA House of Delegates.
Wendell L. Moseley, M.D., 72, Director, was a member of the Board of
Governors of the Exchange from 1983 until the time of the Reorganization. He
was a board-certified family practitioner in San Bernardino, California, for
more than five years prior to his retirement in 1992, and is on the clinical
faculty of the Loma Linda University School of Medicine. Dr. Moseley is a past
President of the San Bernardino County Medical Society. Dr. Moseley served as
a CMA delegate for 27 years.
Donald P. Newell, 62, Director, has been a member of the Board since 1997.
He has been a partner at the law firm of Latham & Watkins in San Diego,
California, for more than five years. Mr. Newell is also a director of Mercury
General Corporation, an insurance holding company.
Terms Expiring at 2002 Annual Meeting of Stockholders
Charles B. McElwee, M.D., 69, Director, was a member of the Board of
Governors of the Exchange from 1995 until the time of the Reorganization. He
has been a board-certified orthopedic surgeon in Covina, California, for more
than five years, and is also affiliated with the University of Southern
California School of Medicine.
6
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Dr. McElwee is a former President of LACMA, and a former Chairman of its Board
of Trustees. Dr. McElwee is a member of the Board of Trustees of the CMA, and
is President of the California Orthopaedic Association.
William A. Renert, M.D., 60, Director, was a member of the Board of
Governors of the Exchange from 1990 until the time of the Reorganization. He
has been a board-certified radiologist in La Mesa, California, for more than
five years. He is Immediate Past Chairman of the Board of Directors of
Grossmont Hospital. Dr. Renert is a past President of the San Diego County
Medical Society.
Henry L. Stoutz, M.D., 67, Director, was a member of the Board of Governors
of the Exchange from 1976 until the time of the Reorganization. He was a
board-certified urologist in Ventura, California, for more than five years
prior to his retirement in 1997, and is a former clinical instructor,
Department of Urology, at the UCLA School of Medicine. He is Chairman of the
Ventura County Medical Society Professional Liability Committee.
Donald J. Zuk, 63, Director, President and Chief Executive Officer. Mr. Zuk
was the Chief Executive Officer of the Exchange from 1989 until the
Reorganization. Prior to joining the Exchange, he served 22 years with Johnson
& Higgins, insurance brokers. His last position there was Senior Vice
President in charge of its Los Angeles Health Care operations, which included
the operations of the Exchange. Mr. Zuk is a director of BCSI Holdings Inc.
and Homeowners Holding Company, both privately held insurance companies.
The Board of Directors recommends a vote "FOR" the election of each nominee
director named above.
Meetings and Committees of the Board of Directors
There were four meetings of the Company's Board of Directors during the year
ended December 31, 1999. During 1999, no incumbent director attended less than
75% of the aggregate of the total number of meetings of the Board of Directors
and the total number of meetings of committees of the Board of Directors.
The Board of Directors has four standing committees: the Executive
Committee, the Audit Committee, the Compensation Committee, and the Stock
Option and Incentive Bonus Committee. The Board of Directors does not have a
nominating committee. The functions normally performed by a nominating
committee are performed by the Board of Directors.
Executive Committee. The Executive Committee has the authority to exercise
all powers of the Board of Directors between meetings of the Board, except in
cases where action of the entire Board is required by the Company's Amended
and Restated Certificate of Incorporation, the Company's Bylaws or applicable
law. The Executive Committee consists of four members, one of whom is required
to be the Chairman of the Board of Directors. The members of the Executive
Committee are Drs. Karlan (Chairman), McCleary and Moseley and Mr. Zuk. The
Executive Committee held twelve meetings in 1999.
Audit Committee. The Audit Committee makes recommendations concerning the
engagement of independent auditors, reviews the scope of audit engagements,
reviews comment letters of such auditors and management's response thereto,
approves professional services provided by such auditors, reviews the
independence of such auditors, reviews any major accounting changes made or
contemplated, considers the range of audit and non-audit fees and reviews the
adequacy of the Company's internal accounting controls. The Audit Committee
consists of three members, all of whom are independent directors. The members
of the Audit Committee are Drs. Moseley (Chairman), Karlan and McCleary. The
Audit Committee held two meetings in 1999.
Compensation Committee. The Compensation Committee establishes remuneration
levels for the Chief Executive Officer, Chief Financial Officer and Senior
Vice Presidents of the Company, reviews significant employee benefit programs
and establishes, as it deems appropriate, and administers executive
compensation programs, including bonus plans, certain equity-based programs,
deferred compensation plans and any other such cash or stock incentive
programs. The Chief Executive Officer of the Company establishes remuneration
levels
7
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for other employees of the Company. The Compensation Committee consists of
three members. The members of the Compensation Committee are Drs. Karlan
(Chairman) and Moseley and Mr. King. The Compensation Committee held two
meetings in 1999.
Stock Option and Incentive Bonus Committee. The Stock Option and Incentive
Bonus Committee was established by the Board on January 28, 1999, to establish
criteria and standards for incentive compensation awarded to senior executives
of the Company, to administer the stock option program of the Company and to
ensure compliance with Section 162(m) of the Internal Revenue Code. The Stock
Option and Incentive Bonus Committee consists of two members, Drs. Stoutz and
Opfell. The Stock Option and Incentive Bonus Committee held two meetings in
1999.
Summary of Directors' Compensation
Each non-employee Director currently receives an annual retainer of $30,000.
The Chairman of the Board of Directors is paid $1,500 per Board meeting and
each other non-employee Director is paid $1,000 per Board meeting. Fees to
non-employee Directors for participation on committees of the Board of
Directors are $1,000 per meeting. The Chairman of the Executive Committee
receives an additional annual retainer of $24,000. All non-employee Directors
are reimbursed for reasonable travel and other expenses incurred to attend
meetings of the Company and committees thereof.
In addition, pursuant to The 1997 Equity Participation Plan of the Company,
each person who, as of the date of the 1998 Annual Meeting of Stockholders,
was a non-employee director, was granted an option to purchase 5,000 shares of
Common Stock at the fair market value on the date of grant. Any person who,
during the term of the Equity Plan is initially elected to the Board of
Directors of the Company or a subsidiary and is a non-employee director at the
time of such initial election, automatically will similarly be granted an
option to purchase 5,000 shares of Common Stock. During the term of the Plan,
each non-employee director will automatically be granted an option to purchase
1,000 shares of Common Stock on the date of each subsequent Annual Meeting of
Stockholders at the fair market value on such date. Directors who are
employees of the Company or a subsidiary who subsequently terminate employment
with the Company or such subsidiary and remain a director will not receive an
initial option grant as a non-employee director, but to the extent they are
otherwise eligible, will receive options as described in the preceding
sentence after such termination of employment.
8
<PAGE>
EXECUTIVE COMPENSATION
The following Summary Compensation Table sets forth information concerning
the compensation of (i) the Company's President and Chief Executive Officer
and (ii) the four other most highly compensated executive officers of the
Company (collectively, the "Named Executive Officers"), for the years ended
December 31, 1997, 1998 and 1999. During such time periods, the Named
Executive Officers were compensated by SCPIE Management Company, which is a
subsidiary of the Company and currently employs all executives of the Company
and its subsidiaries.
Summary Compensation Table
<TABLE>
<CAPTION>
Annual Compensation
------------------------------------------------------------
Bonus Other Annual All Other
Name and Principal Position(s) Year (4) Salary (1) Compensation (2) Compensation (3)
- ------------------------------ -------- -------- -------- ---------------- ----------------
<S> <C> <C> <C> <C> <C>
Donald J. Zuk.................... 1999 $508,014 $480,510 $16,523 $48,141
President and Chief Executive
Officer 1998 482,834 473,706 6,985 34,613
1997 435,122 476,453 4,331 34,713
Joseph P. Henkes................. 1999 $255,000 $192,869 -- $15,300
Senior Vice President,
Operations and 1998 240,000 188,706 -- 14,400
Actuarial Services and Secretary 1997 217,861 190,931 -- 13,072
Patrick S. Grant................. 1999 $240,000 $180,489 -- $14,400
Senior Vice President, Marketing 1998 225,000 176,037 -- 13,500
1997 199,846 175,166 -- 11,991
Patrick T. Lo.................... 1999 $215,000 $156,687 -- $12,900
Senior Vice President and 1998 185,000 142,685 -- 11,100
Chief Financial Officer 1997 163,538 140,233 -- 8,813
Timothy C. Rivers (5)............ 1999 $ 97,917 $137,562 -- --
Senior Vice President, Ceded and
Assumed Reinsurance
</TABLE>
- --------
(1) The Company did not issue any equity incentives to its executive officers
during 1997. In lieu of such equity incentives, the Company made a special
one-time cash award to its key executive officers. The award vests in
three equal installments on December 31, 1997, 1998 and 1999, provided
that the key executive officer to whom such award was made is still
employed by the Company on such dates. The initial installment paid in
1997, the second installment paid in 1998 and the third installment paid
in 1999 are included in the "Bonus" column and are each $108,800, $43,600,
$40,000 and $30,833 for Messrs. Zuk, Henkes, Grant and Lo, respectively.
(2) Other Annual Compensation for Mr. Zuk consists of payments for medical
expenses that are in addition to those covered by the Company's medical
benefit plans.
(3) All Other Compensation consists of Company contributions to the SMC Cash
Accumulation Plan of SCPIE (the "401(k) Plan") for each Named Executive
Officer and expenses related to a vehicle provided to Mr. Zuk by the
Company.
(4) 1997 compensation amounts include compensation paid by SCPIE Management
Company on behalf of Southern California Physicians Insurance Exchange,
the Company's predecessor, prior to the Reorganization on January 29,
1997.
(5) Mr. Rivers joined the Company on August 1, 1999. The Salary amount
represents the salary actually earned by Mr. Rivers during 1999, based on
an annual rate of $235,000.
9
<PAGE>
Option Grants In Last Fiscal Year
The following table provides information with respect to stock options
granted to each of the Named Executive Officers during 1999.
<TABLE>
<CAPTION>
Individual Grants
--------------------------------------------------
Potential Realizable Value
Number of Percent of At Assumed Annual Rates of
Securities Total Stock Price Appreciation
Underlying Options Granted Exercise of for Option Term (2)
Option To Employees Base Price Expiration ---------------------------
Name Granted (1) In Fiscal Year ($/SH) Date 0% 5% 10%
---- ----------- --------------- ----------- ---------- ------- -------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Donald J. Zuk........... 52,200 26.1% $29.125 2/16/09 -- $956,124 $2,423,007
Joseph P. Henkes........ 21,000 10.5% 29.125 2/16/09 -- 384,648 974,773
Patrick S. Grant........ 19,800 9.9% 29.125 2/16/09 -- 362,668 919,071
Patrick T. Lo........... 17,700 8.8% 29.125 2/16/09 -- 324,203 821,594
Timothy C. Rivers....... 20,000 10.0% 29.125 8/2/00 $42,500 366,331 928,355
</TABLE>
- --------
(1) These options become exercisable in one-third increments on the first,
second and third anniversaries of the date of grant.
(2) The assigned rates of growth were selected by the Securities and Exchange
Commission for illustrative purposes only and are not intended to predict
or forecast future stock prices.
Aggregated Option Exercises In Last Fiscal Year and FY-End Option Values
The following table sets forth information with respect to the exercisable
and unexercisable options held by Named Executive Officers as of December 31,
1999.
<TABLE>
<CAPTION>
Number of Securities
Underlying Unexercised Value of Unexercised
Options At Fiscal Year- In-The-Money Options
Shares End At Fiscal Year-End (2)
Acquired on Value ------------------------- -------------------------
Name Exercise (1) Realized Exercisable Unexercisable Exercisable Unexercisable
---- ----------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Donald J. Zuk........... -- -- 59,533 55,867 $175,967 $166,283
Joseph P. Henkes........ -- -- 23,933 22,467 70,742 66,871
Patrick S. Grant........ -- -- 22,067 20,933 65,233 62,317
Patrick T. Lo........... -- -- 17,900 17,800 52,950 53,025
Timothy C. Rivers....... -- -- -- 20,000 -- 60,000
</TABLE>
- --------
(1) None of the Named Executive Officers exercised options during 1999.
(2) The "Value of Unexercised In-the-Money Options at Fiscal Year-End" is
based on a value of $32.125 per share, the last reported sale price of the
Company's common stock as reported on the New York Stock Exchange
Composite Tape as of December 31, 1999, less the per-share exercise price,
multiplied by the number of shares issuable upon exercise of the options.
Senior Executive Incentive Bonus Plan
The Company's Board of Directors adopted a Senior Executive Incentive Bonus
Plan ("Senior Plan") on February 24, 1999, which was approved by the Company's
stockholders at the Annual Meeting of Stockholders held on May 13, 1999,
pursuant to which designated executive officers of the Company are eligible to
receive bonus payments. The Senior Plan provides an incentive for senior
executives to perform superior work, ties the goals and interests of such
executives to those of the Company and its shareholders, and enables the
Company to attract and retain highly qualified senior executives. The Company
believes that the bonuses payable by the Company under the Senior Plan to its
senior executives will be fully deductible for federal income tax purposes. As
discussed under "Report of the Compensation Committee" below, Donald J. Zuk is
the only participant for 2000.
10
<PAGE>
Employment Agreement
SCPIE Management Company has in effect an employment agreement (the
"Employment Agreement") with Mr. Zuk, which is guaranteed by the Company. The
Employment Agreement provides for a term expiring on December 31, 2004, at a
current salary of $562,650 per annum, with annual increases indexed to
increases in the Consumer Price Index for the preceding calendar year. The
Employment Agreement also provides for payment of bonuses at the discretion of
the Board of Directors of SCPIE Management Company, subject to the approval of
the Company. In the event of termination of the Employment Agreement by SCPIE
Management Company, severance pay of up to two years' salary is due under
certain circumstances. Mr. Zuk may also terminate the Employment Agreement at
any time, with or without cause, upon 90 days' written notice to SCPIE
Management Company. No other employment agreements currently exist.
COMPENSATION COMMITTEE
REPORT ON EXECUTIVE COMPENSATION
The Company's executive compensation program is principally administered by
the Compensation Committee of the Board of Directors (the "Committee"). The
Committee consists of three non-employee Directors, who are appointed by the
Board.
Compensation Philosophy
The general philosophy of the Committee is to provide executive compensation
programs, including salary, bonus and equity incentive programs, that will
enhance the profitability of the Company and its stockholder value by aligning
the financial interests of the Company's executives with those of its
stockholders. The Committee is responsible for the formulation of appropriate
compensation plans and incentives for executives of the Company, the
recommendation of such plans and incentives to the Board of Directors for its
consideration and adoption, specific responsibility for the compensation of
the Chief Executive Officer, Chief Financial Officer and Senior Vice
Presidents, the award of equity incentives and the ongoing administration of
various compensation programs as may be authorized or directed by the Board.
The Chief Executive Officer establishes compensation levels for executives
other than the aforementioned senior officers in accordance with the policies
established by the Committee.
The overall goal of the Committee is to ensure that compensation policies
are consistent with the Company's strategic business objectives and provide
incentives for the attainment of these objectives. The compensation program
includes three components:
. Base salary, which is intended to provide a stable annual salary at a
level consistent with individual contributions.
. Variable pay, which links bonus and other short-term incentives to the
performance of the Company and the individual executive.
. Stock ownership and similar long-term incentives, which encourage
actions to maximize stockholder value.
Another goal of the Committee is to ensure that the Chief Executive Officer
and other executives are compensated in a manner that is consistent with the
Company's compensation strategy, that is competitive with other companies in
the industry, and that is equitable within the Company. The Committee believes
that compensation programs must be structured to attract and retain talented
executives.
Base Salary
It is the Committee's policy to position base executive salaries annually at
levels that are competitive within the industry, with consideration for
industry standards, individual performance and scope of responsibility in
relation to other officers and key executives within the Company. These
factors are considered subjectively in
11
<PAGE>
the aggregate and none of the factors is accorded a specific weight. In
selected cases, other factors may also be considered. For 1999, the Committee
and the Chief Executive Officer established salaries for the executives
consistent with this policy.
In November 1999, the Committee approved 2000 salary increases, averaging
approximately 8.1%, for the Chief Executive Officer, the Chief Financial
Officer and the three other Senior Vice Presidents. The Chief Executive
Officer increased the annual base salaries for the other executives. These
increases averaged 5.6%. All salary increases were effective January 1, 2000.
Annual Incentive (Bonus) Plan
The Company has adopted an Annual Incentive Plan for the payment of cash
bonuses based on a combination of Company performance in relation to
predetermined objectives and individual executive performance during the year.
During the early months of each year, the Committee, together with the Chief
Executive Officer, establishes target objectives for operating income and
revenue for the year and individual bonus opportunities based on industry
comparisons. Plan payouts in relation to targeted amounts are adjusted upward
or downward based on the Company's performance in relation to targeted
operating income and premium revenues. The greater weight is placed on actual
operating income. Individual awards are then subject to increase or decrease
by 50% based on the individual performance of the executive during the year.
Individual targeted bonus opportunities (before adjustment for Company and
individual performance) ranged from approximately 15% to 50% of base salary
during 1999.
At year end, both Company and individual performance are assessed. During
1999, the Company slightly exceeded targeted operating income, while its
premium revenues were less than the targeted amount. The Committee also
modified the bonus formula to reflect adjustments for the "dutch auction"
stock repurchase in November 1999. Incentive awards were decreased by
approximately 2.4% based on the performance of the Company in relation to the
targeted objectives. The Committee then increased the individual awards for
the Chief Executive Officer, Chief Financial Officer and two other Senior Vice
Presidents by 50%, based on their extremely high level of performance during
1999. The Chief Executive Officer determined the personal performance levels
of the other key executives of the Company. The Committee separately
established the bonus levels for two executives who joined the Company in
August 1999.
Long-Term Incentives
The Committee is committed to a long-term incentive program for executives,
which will encourage participants to promote the long-term growth of the
Company. The Committee believes that the management employees should be
rewarded with a proprietary interest in the Company for continued outstanding
long-term performance and to attract, motivate and retain qualified and
capable executives.
The Company had no equity incentive plan in place when it completed its
initial public offering of Common Stock in January 1997. The senior executives
and other employees, therefore, received no stock options or similar equity
incentives in connection with the initial public offering. The Committee
believes that the absence of an incentive equity program placed the Company's
executives at somewhat of a disadvantage in relation to executives at many
other newly public companies, for which such options are frequently granted.
In lieu of stock options, the Committee recommended, and the Board adopted, a
special one-time deferred cash compensation award for executives in the
aggregate amount of approximately $960,000. Of the total awards, each key
executive received one-third of his or her award in December 1997, 1998 and
1999.
In November 1997, the Board of Directors adopted The 1997 Equity
Participation Plan of the Company, which was approved by stockholders at the
1998 Annual Meeting. Under this Plan, the governing committee of the Board of
Directors may grant, at its discretion, awards to participants in the form of
non-qualified stock options, incentive stock options, a combination thereof or
other equity incentives. The maximum number of shares subject to the Plan are
1,250,000 shares. This Plan was administered by the Committee during 1999.
12
<PAGE>
In January 1999, the Board of Directors formed a committee, the Stock Option
and Incentive Bonus Committee of the Board of Directors (the "Bonus
Committee") to administer, among other things, the grant of options under the
Plan. The Bonus Committee is composed of two outside directors. In 1999, the
Bonus Committee granted options to the executives of the Company to purchase
an aggregate of 200,200 shares of Common Stock. These options were granted at
the exercise price equal to the fair market value of the Common Stock on the
date of grant, and become exercisable in three cumulative annual installments
commencing one year after the date of grant. In 2000, the Bonus Committee
granted options to the executives of the Company to purchase an aggregate of
163,400 shares of Common Stock on the same terms as the prior grants.
Compensation of Chief Executive Officer
Mr. Zuk's base salary is set by the terms of his Employment Agreement with
the Company, which has been in effect for a number of years and renewed
annually by the directors to adjust his then-current salary and to extend the
term for an additional year. During 1999, the base annual salary was $508,014,
which the Committee and the Board of Directors of the Company have increased
to $550,000 for 2000. The base salary is also subject to an annual increase
based on increases in the cost of living index during the five-year term of
the Agreement.
Mr. Zuk is eligible to participate in all of the Company's annual and long-
term incentive programs. The Committee authorized a bonus payment to Mr. Zuk
in 1999 based on its evaluation of his 1998 performance. A bonus for 1999 was
accrued for Mr. Zuk under the Senior Executive Incentive Bonus Plan (the
"Senior Plan") approved by the stockholders of the Company at the 1999 Annual
Meeting. The bonus was accrued pursuant to a formula adopted by the Bonus
Committee and will be paid in 2000. The Bonus Committee has established the
bonus formula for Mr. Zuk under the Senior Plan for a bonus to be accrued in
2000 and paid after calculation in 2001. The Bonus Committee granted Mr. Zuk
options covering 52,200 shares in 1999, and an additional 43,400 shares in
2000.
Internal Revenue Code 162(m)
The Committee has considered the potential impact of Section 162(m)
("Section 162(m)") of the Internal Revenue Code adopted under the federal
Revenue Reconciliation Act of 1993. Section 162(m) disallows a tax deduction
for any publicly held corporation for individual compensation exceeding $1
million in any taxable year for the Chief Executive Officer and the other
senior executive officers, other than compensation that is performance-based
under a plan that is approved by the stockholders of the corporation and that
meets certain other technical requirements. To appropriately recognize the
contribution of the Company's executive officers to the Company and its
stockholders and to exempt bonuses paid to such officers from the $1 million
limit of Section 162(m), in 1999, the Committee adopted the Senior Plan, a
performance-based incentive bonus plan, which was approved by the stockholders
at the 1999 Annual Meeting of the Company. The Senior Plan applies in lieu of
the annual incentive bonuses discussed above for executive officers covered by
the Plan. The only officer covered by the Senior Plan in 1999 and 2000 is Mr.
Zuk. The Committee believes that the 1997 Equity Participation Plan, as
administered by the Bonus Committee, qualifies as "performance based" under
Section 162(m).
February 10, 2000
COMPENSATION COMMITTEE
Mitchell S. Karlan, M.D. (Chairman)
Wendell L. Moseley, M.D.
Willis T. King, Jr.
13
<PAGE>
Certain Relationships and Related Transactions
The Company has employed in the past, and intends to employ in the future,
the law firm of Latham & Watkins to perform legal services. Donald P. Newell,
a director of the Company, is a partner of Latham & Watkins.
The Company has entered into certain contracts with Brown & Brown, Inc.,
under which Brown & Brown acts as an insurance producer for the Company and
received commissions for these services of $3,332,432 in 1999. J. Hyatt Brown,
a nominee for election as a director of the Company, serves as Chairman of the
Board, President and Chief Executive Officer and principal shareholder of
Brown & Brown.
On May 13, 1999, the Board of Directors adopted a stock purchase plan for
directors and senior executives, under which the Company offered to sell to
each director and senior executive up to 10,000 shares of the Common Stock at
a price of $27.94 per share, which was the closing price on the New York Stock
Exchange on that date. Under the plan, the Company offered to extend loans, up
to a maximum of $280,000 for each participant, to enable the participants to
purchase the shares. Each loan is for a term of 10 years, and bears interest
at the applicable federal rate for May 1999 for a 10-year loan (5.85%).
Interest is payable annually. Each of the directors and senior executives
participated in the plan. Amounts originally loaned, which are the principal
amounts outstanding as of December 31, 1999, are as follows: $279,375 to
Messrs. Zuk, Lo, Grant, Henkes, Newell and King and Drs. Karlan, Briney,
Opfell, Ullrich, Renert, McElwee, McCleary and Moseley; and $139,688 to Dr.
Stoutz. A total of 145,000 shares was purchased under this plan. The purpose
of the plan was to encourage greater stock ownership in the Company by the
directors and senior management.
14
<PAGE>
Stock Performance Graph
The graph below compares the cumulative total stockholder return on the
shares of Common Stock of the Company for the period from January 30, 1997,
through December 31, 1999, with the cumulative total return on the Standard and
Poor's 500 Index (the "S&P 500 Index") and the SNL All Property & Casualty
Insurance Index (the "SNL Index") over the same period (assuming the investment
of $100 in the Company's Common Stock, the S&P 500 Index and the SNL Index on
January 30, 1997, and the reinvestment of all dividends).
[PERFORMANCE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
1/30/1997 6/30/1997 12/31/1997 6/30/1998 12/31/1998 6/30/1999 12/31/1999
--------- --------- ---------- --------- ---------- --------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
SCPIE Holdings Inc. 100.00 134.63 140.58 165.17 148.39 160.59 158.91
S&P 500 100.00 113.80 125.85 148.14 161.77 181.80 195.66
SNL All Property &
Casualty Insurance
Index 100.00 117.72 139.93 150.66 135.22 127.04 102.91
</TABLE>
15
<PAGE>
PROPOSAL 2
APPROVAL OF THE ADOPTION OF THE
COMPANY'S EMPLOYEE STOCK PURCHASE PLAN
General
On October 19, 1999, the Board of Directors of the Company (the "Board")
unanimously adopted the SCPIE Holdings Inc. Employee Stock Purchase Plan (the
"Purchase Plan").
The following is a summary of the Purchase Plan, as adopted by the Board.
This summary is not intended to be complete, and reference should be made to
The SCPIE Holdings Inc. Employee Stock Purchase Plan (a copy of which is
attached as Annex A to this Proxy Statement) for a complete statement of the
Purchase Plan's terms. Copies of the Purchase Plan can also be obtained by
making written request to the Company's Secretary.
Purpose of the Purchase Plan
The purpose of the Purchase Plan is to assist eligible employees of the
Company and its designated subsidiary corporations in acquiring stock
ownership in the Company pursuant to a plan that is intended to qualify as an
"employee stock purchase plan," within the meaning of Section 423(b) of the
Internal Revenue Code of 1986, as amended (the "Code"). Under the Purchase
Plan, an eligible employee will be granted options to purchase shares of
Common Stock, through payroll deductions, at a discount from the then-current
market price, without payment of commissions or other charges. Offering
employees the opportunity to become owners of Common Stock is intended to help
to further identify the employees' interests with those of the Company's
stockholders generally. The Purchase Plan is also intended to help employees
provide for their future security and to encourage them to remain in the
employment of the Company and its subsidiary corporations. The proceeds
received by the Company from the sale of shares of Common Stock pursuant to
the Purchase Plan will be used for general corporate purposes.
The Purchase Plan became effective on January 1, 2000, subject to
stockholder approval of the adoption of the Purchase Plan. At March 13, 2000,
95 employees had chosen to participate in the Purchase Plan. The Purchase Plan
will terminate as to future option grants on December 31, 2009. The Purchase
Plan is not subject to the provisions of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), and is not a qualified plan under
Section 401(a) of the Code.
Description of the Purchase Plan
Securities Subject to the Purchase Plan
The total number of shares of Common Stock that may be sold under the
Purchase Plan will not exceed 600,000 shares. The shares of Common Stock sold
may be unissued or treasury shares or shares purchased on the open market. The
Purchase Plan provides for appropriate adjustment in the number and kind of
shares of stock for which options may be granted, and the number and kind of
shares of stock that may be sold pursuant to the Purchase Plan, in the event
of a stock split, stock dividend, reorganization or other specified changes in
the capitalization of the Company.
Eligible Persons
Employees of the Company and the subsidiary corporations of the Company
designated by the Board generally will be eligible to participate in the
Purchase Plan and will receive options to purchase shares of Common Stock
under the Purchase Plan.
An employee will not be eligible to participate in the Purchase Plan if such
employee: (i) immediately after an option is granted under the Purchase Plan,
owns (or is treated as owning) shares of Common Stock or other stock
possessing 5% or more of the total voting power or value of all classes of
stock of the Company (and any
16
<PAGE>
parent corporation and subsidiary corporation of the Company), (ii) has been
employed by the Company (or any parent corporation or any subsidiary
corporation of the Company) for less than six months, (iii) whose customary
employment is for 20 hours or less per week, or (iv) whose customary
employment is for five months or less in any calendar year.
Directors of the Company (or any parent corporation or subsidiary
corporation of the Company) who are not employees will not be eligible to
participate in the Purchase Plan.
Grant of Options
Commencing with January 1, 2000, the Company will grant options under the
Purchase Plan to all eligible employees in successive six-month offering
periods. The offering periods will be: (i) January 1 through and including the
following June 30, and (ii) July 1 through and including the following
December 31, of each year. The Company will grant an option to each eligible
employee on the first day of an offering period. The Company will grant
options under the Purchase Plan until the number of shares of Common Stock
available under the Purchase Plan have been sold, or the Purchase Plan
terminates on December 31, 2009.
As required under Section 423(b)(8) of the Code, no eligible employee may be
granted an option under the Purchase Plan that permits his or her rights to
purchase shares of Common Stock or other stock under the Purchase Plan (and
under all other employee stock purchase plans of the Company, any parent
corporation and any subsidiary corporation of the Company) to accrue at a rate
which exceeds $25,000 of the fair market value (determined as of the date of
grant of the option) of such Common Stock or other stock for any calendar
year.
Election to Participate; Payroll Deductions
Each eligible employee will participate in the Purchase Plan by means of
payroll deductions. An eligible employee will be required to deliver a
completed and executed written payroll deduction authorization to the Company
no later than the tenth day of the month before the commencement of the
offering period. The payroll deduction authorization will be the employee's
election to participate in the offering period and subsequent offering
periods.
The payroll deduction authorization will designate the percentage of the
eligible employee's base compensation to be deducted for purposes of the
Purchase Plan, and will authorize payroll deductions by his or her employer.
The payroll deductions will occur on each payday during the offering period
and may be in any whole percentage of base compensation not exceeding 10%.
Base compensation will exclude bonuses, overtime, commissions, shift
differential, extended work week premiums or other special payments, fees or
allowances.
An eligible employee may change his or her payroll deduction authorization
during an offering period to any whole percentage of base compensation not
exceeding 10%. An eligible employee may also withdraw from participation
during an offering period. See "Withdrawal from the Purchase Plan."
An eligible employee's payroll deduction authorization will remain in effect
for subsequent offering periods, unless the employee delivers a new
authorization to the Company no later than the tenth day of the month before
the commencement of the subsequent offering period, withdraws from
participation during a prior offering period, or is not an eligible employee
on the first day of the subsequent offering period.
Exercise of Options
Each eligible employee in the Purchase Plan, automatically and without any
act on such employee's part, will be deemed to have exercised his or her
option on the last day of the offering period for which the option was
granted. An eligible employee's option will be exercised to the extent that
the employee's cumulative payroll deductions for the offering period are
sufficient to purchase, at the applicable option price, shares of Common Stock
(including fractional shares). An eligible employee may not purchase more than
500 shares of Common Stock upon the exercise of the option with respect to any
offering period.
17
<PAGE>
As soon as practicable after the exercise of an eligible employee's option,
the Company will issue the shares of Common Stock to the employee, and such
shares will be held in an account established for the benefit of the eligible
employee by ChaseMellon Shareholder Services, L.L.C., which has been appointed
by the Board and retained by the Company to act as the agent of the Company
with regard to the Purchase Plan (the "Agent"). An employee may receive a
certificate or certificates for all or a portion of the shares of Common Stock
purchased under the Purchase Plan by submitting a written request to the
Company. However, no certificate will be issued to an employee with respect to
Common Stock purchased under the Purchase Plan until the expiration of 18
months from the date of exercise of his or her option.
Following the end of an offering period, each eligible employee will be
provided with a report showing the amount of his or her cumulative payroll
deductions and the number of shares of Common Stock purchased upon exercise of
the option for the offering period.
Option Price; Discount to Fair Market Value
The option price for a share of Common Stock purchased under the Purchase
Plan for an offering period will be 85% of the lesser of: (i) the fair market
value of a share of the Common Stock on the date of option exercise (i.e., the
last day of the offering period with respect to which the option was granted),
and (ii) the fair market value of a share of the Common Stock on the date of
option grant (i.e., the first day of the offering period). The fair market
value of a share of Common Stock as of a given date will be: (i) the closing
price of a share of Common Stock on the principal exchange on which the Common
Stock is then trading on such date (or the next preceding trading day, if the
Common Stock is not traded on that date); (ii) if the Common Stock is not
traded on an exchange, but is quoted on the Nasdaq or a successor quotation
system, the last sale price for a share of Common Stock, as reported by the
Nasdaq National Market (if listed as a National Market Issue), or the average
of the mean between the closing representative bid and asked prices for a
share of Common Stock, as reported by Nasdaq or such successor quotation
system (if not listed as a National Market Issue), on such date (or the next
preceding trading day, if the Common Stock is not traded on that date); (iii)
if the Common Stock is not publicly traded on an exchange, Nasdaq or a
successor quotation system, the average of the mean between the closing bid
and asked prices for a share of Common Stock on such date (or the next
preceding trading day, if the Common Stock is not traded on that date), as
determined by the Committee (as defined below) acting in good faith; or (iv)
if the Common Stock is not publicly traded, the fair market value of a share
of Common Stock established by the Committee acting in good faith.
Withdrawal from the Purchase Plan
An eligible employee may withdraw from participation under the Purchase Plan
during an offering period at any time other than the last 10 days of the
offering period. Upon withdrawal, the employee's cumulative payroll deductions
will be refunded to the employee without interest and, subject to the 18-month
restriction described above, within 30 days the Company shall (or shall cause
the Agent to) deliver to the employee certificates for any whole shares of
Common Stock previously purchased (the value of any fractional share to be
returned to such employee by check). An eligible employee who withdraws from
the Purchase Plan and is eligible for a subsequent offering period may
participate in such offering period by delivering a payroll deduction
authorization to the Company not later than the tenth day of the month before
the commencement of such subsequent offering period.
Expiration of Options
Each option granted for an offering period will expire on the last day of
the offering period, immediately after the automatic exercise of the option
pursuant to the terms of the Purchase Plan. Except in the case of death, an
employee's participation in the Purchase Plan will automatically terminate on
the date of termination of employment with the Company and its subsidiary
corporations. Upon such termination, the employee's cumulative payroll
deductions will be refunded to the employee without interest and, subject to
the 18-month restriction described above, within 30 days the Company shall (or
shall cause the Agent to) deliver to the
18
<PAGE>
employee certificates for any whole shares of Common Stock previously
purchased (the value of any fractional share to be returned to such employee
by check).
In the case of death, the employee (or the employee's estate) may notify the
Company of such employee's (or employee's estate's) desire to have the
cumulative payroll deductions refunded. Upon receipt of such notice, the
employee's cumulative payroll deductions will be refunded to the employee
without interest and, subject to the 18-month restriction described above,
within 30 days the Company shall (or shall cause the Agent to) deliver to the
employee certificates for any whole shares of Common Stock previously
purchased (the value of any fractional share to be returned to such employee
by check). If the Company does not receive such notice prior to the next date
of exercise under the Purchase Plan, the employee's option will be exercised
on such date.
Dividends
Cash dividends or other cash distributions received by the Agent with
respect to Common Stock in the Agent's custody will be credited to each
employee in accordance with each such employee's interests in such Common
Stock, and shall be used to purchase whole shares of Common Stock in the open
market at prevailing market prices on behalf of such employee. Dividends paid
in the form of Common Stock will be allocated to each employee in accordance
with his or her interests in the Common Stock with respect to which such
dividends are payable. Property other than cash or Common Stock received by
the Agent as a distribution on Common Stock held in its custody shall be sold
by the Agent and the proceeds of such sale treated in the same manner as cash
dividends described above.
Non-Transferability of Options
An eligible employee's option under the Purchase Plan will not be
transferable, other than by will or the laws of descent and distribution, and
will be exercisable during a employee's lifetime only by the employee.
Rights as Stockholders
An eligible employee will not be deemed to be a stockholder of the Company
solely as a result of participation in the Purchase Plan. The eligible
employee will not have any of the rights or privileges of a stockholder with
respect to shares of Common Stock offered under the Purchase Plan until the
employee's option is exercised. After an option is extended, the eligible
employee will have the full right to vote the shares and to sell or transfer
the shares by instructing the Agent.
Administration
The Purchase Plan will be administered by a Committee appointed by the
Company's Board of Directors (the "Committee"). The Committee will be composed
of certain members of the Board. The Committee will have full power to
interpret the Purchase Plan and to establish and amend rules for the
administration of the Purchase Plan. Action by the Committee will be taken by
a majority vote or written consent of a majority of its members. The Board of
Directors has appointed the Compensation Committee to administer the Purchase
Plan.
Amendment and Termination of the Purchase Plan
The Board may amend, suspend or terminate the Purchase Plan at any time and
from time to time, provided that the approval by a vote of the holders of more
than 50% of the outstanding shares of the Company's capital stock entitled to
vote will be required to amend the Purchase Plan to: (i) change the number of
shares of the Common Stock reserved for issuance under the Purchase Plan, (ii)
in any manner change the eligibility requirements of the Purchase Plan (other
than change the designation of the subsidiary corporations participating in
the Purchase Plan), or (iii) in any manner cause the Purchase Plan to no
longer be an "employee stock purchase plan" within the meaning of Section
923(b) of the Code.
19
<PAGE>
Federal Income Tax Consequences
The following summarizes the Federal income tax consequences of an
employee's participation in the Purchase Plan and is not intended to be a
complete description of the tax consequences. This summary does not address
Federal employment taxes, state and local income taxes and other taxes that
may be applicable.
Grant of Option; Exercise of Option
An eligible employee will not recognize taxable income on the date the
employee is granted an option under the Purchase Plan (i.e., the first day of
the offering period). In addition, the employee will not recognize taxable
income on the date the option is exercised (i.e., the last day of the offering
period).
Sale of Common Stock after the Holding Period
If an employee does not sell or otherwise dispose of the shares of Common
Stock purchased upon exercise of his or her option under the Purchase Plan
within two years after the date on which the option is granted or within one
year after the date on which the shares of Common Stock are purchased (the
"Holding Period"), or if the employee dies while owning the shares of Common
Stock, the employee will be taxed in the year in which he or she sells or
disposes of the shares of Common Stock, or the year closing with his or her
death, whichever applies, as follows:
The employee will recognize ordinary income in an amount equal to the lesser
of:
. the excess, if any, of the fair market value of the shares of Common
Stock on the date on which such shares are sold or otherwise disposed,
or the date on which the employee died, over the amount paid for the
shares of Common Stock,
or
. the excess of the fair market value of the shares of Common Stock on the
date the option was granted, over the option price (determined assuming
that the option was exercised on the date granted) for such shares of
Common Stock;
and the employee will recognize as capital gain any further gain realized
(after increasing the tax basis in the shares of Common Stock by the amount
of ordinary income recognized as described above).
Sale of Common Stock during the Holding Period
If the employee sells or otherwise disposes of the shares of the Common
Stock purchased upon exercise of his or her option under the Purchase Plan
before the Holding Period expires, and the amount realized is greater than or
equal to the fair market value of the shares of Common Stock on the date of
exercise, the employee will be taxed in the year in which he or she sells or
disposes of the shares of Common Stock as follows:
. The employee will recognize ordinary income to the extent of the excess
of the fair market value of the shares of Common Stock on the date on
which the option was exercised, over the option price for such shares of
Common Stock; and
. The employee will recognize as capital gain any further gain realized
(after increasing the tax basis in the shares of Common Stock by the
amount of ordinary income recognized as described above).
If the employee sells or otherwise disposes of the shares of Common Stock
before the Holding Period expires, and the amount realized is less than the
fair market value of the shares of Common Stock on the date of exercise, the
employee will be taxed in the year in which he or she sells or disposes of the
shares of Common Stock as follows:
. The employee will recognize ordinary income to the extent of the excess
of the fair market value of the shares of Common Stock on the date on
which the option was exercised, over the option price for such shares of
Common Stock; and
20
<PAGE>
. The employee will recognize capital loss to the extent the fair market
value of the shares of Common Stock on the exercise date exceeds the
amount realized on the sale or other disposition.
The Company's Deduction
The Company (or the subsidiary corporation that employs the employee) is
entitled to a tax deduction only to the extent that the employee recognizes
ordinary income because the employee sells or otherwise disposes of the shares
of Common Stock before the Holding Period expires.
The Purchase Plan is subject to the approval of the Company's stockholders.
If the Purchase Plan is not approved, the Plan will terminate and all options
granted under the Plan will terminate without being exercised. The Company's
Board of Directors unanimously recommends that the Company's stockholders vote
"FOR" approval of this Proposal 2: Approval of the Adoption of The SCPIE
Holdings Inc. Stock Purchase Plan.
PROPOSAL 3
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors, upon the recommendation of the Audit Committee, has
appointed Ernst & Young LLP as independent auditors for the Company and its
subsidiaries for the current fiscal year ending December 31, 2000.
A representative of Ernst & Young LLP is expected to attend the Annual
Meeting and will have the opportunity to make a statement on behalf of the
firm if he or she desires to do so. The representative is also expected to be
available to respond to appropriate questions from stockholders.
The Company's Board of Directors unanimously recommends a vote "FOR"
ratification of the appointment of Ernst & Young LLP as independent auditors
for the Company for the fiscal year ending December 31, 2000.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act generally requires the Company's executive
officers and directors, and persons who own more than ten percent of the
Common Stock, to file reports of beneficial ownership and changes in
beneficial ownership with the Securities and Exchange Commission ("SEC"). The
Company became subject to the requirements of Section 16(a) on January 29,
1997. Regulations promulgated by the SEC require the Company to disclose in
this Proxy Statement any reporting violations with respect to the 1999 fiscal
year, which came to the Company's attention based on a review of the
applicable filings required by the SEC to report such status as an officer or
director or such changes in beneficial ownership as submitted to the Company.
Based solely on a review of such forms received by it, no reporting person has
made a late filing under Section 16(a). This statement is based solely on a
review of the copies of such reports furnished to the Company by its officers,
directors and security holders and their written representations that such
reports accurately reflect all reportable transactions and holdings.
STOCKHOLDER PROPOSALS AND NOMINATIONS
Proposals which stockholders intend to present at the next Annual Meeting of
Stockholders pursuant to Rule 14a-8 of the Proxy Rules of the SEC must be
received by December 1, 2000, to be eligible for inclusion in the proxy
material of that meeting. Proposals and nominations submitted outside the
processes of Rule 14a-8 must be received by January 11, 2001, to be timely.
21
<PAGE>
OTHER INFORMATION
Proxy Solicitation
Officers and other employees of the Company and its subsidiaries may solicit
proxies by personal interview, telephone and telegram, in addition to the use
of the mails. None of these individuals will receive special compensation for
these services that will be performed in addition to their regular duties. The
Company has also made arrangements with brokerage firms, banks, nominees and
other fiduciaries to forward proxy solicitation materials for shares held of
record by them to the beneficial owners of such shares. The Company will
reimburse them for reasonable out-of-pocket expenses. The Company will pay the
cost of all proxy solicitation.
Miscellaneous
The Company's management knows of no other matters that are to be brought
before the Annual Meeting. If any other matters come properly before the
Annual Meeting, the persons designated as proxies will vote on such matters in
accordance with their best judgment.
Upon the written request of any person whose proxy is solicited by this
proxy statement, the Company will furnish to such person without charge (other
than for exhibits) a copy of the Company's annual report on form 10-K for the
year ended December 31, 1999, including financial statements and schedules
thereto, as filed with the Securities and Exchange Commission. Requests may be
made to SCPIE Holdings Inc., 1888 Century Park East, Los Angeles, California
90067, Attention: Patrick Lo.
By order of the Board of Directors.
/s/ Joseph P. Henkes
Joseph P. Henkes
Secretary
1888 Century Park East
Los Angeles, California 90067
March 31, 2000
22
<PAGE>
ANNEX A
THE SCPIE HOLDINGS INC.
EMPLOYEE STOCK PURCHASE PLAN
<PAGE>
THE SCPIE HOLDINGS INC.
EMPLOYEE STOCK PURCHASE PLAN
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<C> <S> <C>
1. Definitions......................................................... A-1
2. Stock Subject to the Plan........................................... A-2
3. Grant of Options.................................................... A-2
4. Exercise of Options; Option Price................................... A-3
5. Withdrawal from the Plan............................................ A-4
6. Termination of Employment........................................... A-5
7. Restriction upon Assignment......................................... A-5
8. No Rights of Stockholders until Shares Issued....................... A-5
9. Changes in the Stock and Corporate Events; Adjustment of Options.... A-6
10. Use of Funds; No Interest Paid...................................... A-7
11. Dividends........................................................... A-7
12. Amendment, Suspension or Termination of the Plan.................... A-7
13. Administration by Committee; Rules and Regulations.................. A-7
14. Designation of Subsidiary Corporations.............................. A-8
15. No Rights as an Employee............................................ A-8
16. Term; Approval by Stockholders...................................... A-8
17. Effect upon Other Plans............................................. A-8
18. Conditions to Issuance of Stock Certificates........................ A-9
19. Notification of Disposition......................................... A-9
20. Notices............................................................. A-9
21. Headings............................................................ A-9
</TABLE>
<PAGE>
THE SCPIE HOLDINGS INC.
EMPLOYEE STOCK PURCHASE PLAN
SCPIE Holdings Inc., a Delaware corporation (the "Company"), hereby adopts
The SCPIE Holdings Inc. Employee Stock Purchase Plan (the "Plan"), effective
as of January 1, 2000.
The purposes of the Plan are as follows:
(1) To assist eligible employees of the Company and its Designated
Subsidiary Corporations (as defined below) in acquiring stock ownership in
the Company pursuant to a plan which is intended to qualify as an "employee
stock purchase plan", within the meaning of Section 423(b) of the Code (as
defined below).
(2) To help such employees provide for their future security and to
encourage them to remain in the employment of the Company and its
Subsidiary Corporations.
1. Definitions. Whenever any of the following terms is used in the Plan with
the first letter or letters capitalized, it shall have the following meaning
unless context clearly indicates to the contrary (such definitions to be
equally applicable to both the singular and the plural forms of the terms
defined):
(a) "Account" shall mean the account established for an Eligible Employee
under the Plan with respect to an Offering Period.
(b) "Agent" shall mean the brokerage firm, bank or other financial
institution, entity or person(s) engaged, retained, appointed or authorized to
act as the agent of the Company or an Employee with regard to the Plan.
(c) "Authorization" shall mean an Eligible Employee's payroll deduction
authorization with respect to an Offering Period provided by such Eligible
Employee in accordance with Section 3(b).
(d) "Base Compensation" of an Eligible Employee shall mean the gross base
compensation received by such Eligible Employee on each Payday as compensation
for services to the Company or any Designated Subsidiary Corporation,
excluding overtime payments, sales commissions, incentive compensation,
bonuses, expense reimbursements, fringe benefits and other special-payments.
(e) "Board" means the Board of Directors of the Company.
(f) "Code" means the Internal Revenue Code of 1986, as amended.
(g) "Committee" means the committee of the Board appointed to administer the
Plan pursuant to Section 12.
(h) "Company" means SCPIE Holdings Inc., a Delaware corporation.
(i) "Date of Exercise" of any Option means the date on which such Option is
exercised, which shall be the last day of the Offering Period with respect to
which the Option was granted, in accordance with Section 4(a) (except as
provided in Section 9).
(j) "Date of Grant" of any Option means the date on which such Option is
granted, which shall be the first day of the Offering Period with respect to
which the Option was granted, in accordance with Section 3(a).
(k) "Designated Subsidiary Corporation" means any Subsidiary Corporation
designated by the Board in accordance with Section 14.
(l) "Eligible Employee" means an Employee of the Company or any Designated
Subsidiary Corporation: (i) who does not, immediately after the Option is
granted, own (directly or through attribution) stock possessing five percent
(5%) or more of the total combined voting power or value of all classes of
Stock or other stock of
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the Company, a Parent Corporation or a Subsidiary Corporation (as determined
under Section 423(b)(3) of the Code); (ii) whose customary employment is for
more than twenty (20) hours per week; (iii) whose customary employment is for
more than five (5) months in any calendar year; and (iv) who has been employed
by the Company, any Parent Corporation and any Subsidiary Corporation for not
less than six (6) months. For purposes of paragraph (i) above, the rules of
Section 424(d) of the Code with regard to the attribution of stock ownership
shall apply in determining the stock ownership of an individual, and stock
which an Employee may purchase under outstanding options shall be treated as
stock owned by the Employee. During a leave of absence meeting the
requirements of Treasury Regulation Section 1.421-7(h)(2), an individual shall
be treated as an Employee of the Company or Subsidiary Corporation employing
such individual immediately prior to such leave.
(m) "Employee" shall mean an individual who renders services to the Company
or a Subsidiary Corporation in the status of an "employee", within the meaning
of Code Section 3401(c). "Employee" shall not include any director of the
Company or a Subsidiary Corporation who does not render services to the
Company or a Subsidiary Corporation in the status of an "employee", within the
meaning of Code Section 3401(c).
(n) "Offering Period" shall mean each six-month period commencing on any
January 1 and July 1 on or after January 1, 2000. Options shall be granted on
the Date of Grant and exercised on the Date of Exercise, as provided in
Sections 3(a) and 4(a), respectively.
(o) "Option" means an option to purchase shares of Stock granted under the
Plan to an Eligible Employee in accordance with Section 3(a).
(p) "Option Price" means the option price per share of Stock determined in
accordance with Section 4(b).
(q) "Parent Corporation" means any corporation, other than the Company, in
an unbroken chain of corporations ending with the Company if, at the time of
the granting of the Option, each of the corporations other than the Company
owns stock possessing 50% or more of the total combined voting power of all
classes of stock in one of the other corporations in such chain.
(r) "Payday" means the regular and recurring established day for payment of
Base Compensation to an Employee of the Company or any Subsidiary Corporation.
(s) "Plan" means The SCPIE Holdings Inc. Employee Stock Purchase Plan.
(t) "Stock" means the shares of the Company's Common Stock, $.0001 par
value.
(u) "Subsidiary Corporation" means any corporation, other than the Company,
in an unbroken chain of corporations beginning with the Company if, at the
time of the granting of the Option, each of the corporations other than the
last corporation in an unbroken chain owns stock possessing 50% or more of the
total combined voting power of all classes of stock in one of the other
corporations in such chain.
2. Stock Subject to the Plan. Subject to the provisions of Section 9 hereof
(relating to adjustments upon changes in the Stock) and Section 12 hereof
(relating to amendments of the Plan), the Stock that may be sold pursuant to
Options granted under the Plan shall not exceed in the aggregate Six Hundred
Thousand (600,000) shares of Stock. The shares of Stock sold pursuant to
Options granted under the Plan may be unissued shares or treasury shares of
Stock, or shares of Stock bought on the New York Stock Exchange or other
nationally-recognized exchange, or other market, for purposes of the Plan.
3. Grant of Options.
(a) Option Grants. The Company shall grant Options under the Plan to all
Eligible Employees in successive Offering Periods until the earlier of: (i)
the date on which the number of shares of Stock available under the Plan have
been sold, or (ii) the date on which the Plan is suspended or terminates. Each
Employee who is an Eligible Employee on the first day of an Offering Period
shall be granted an Option with respect to such Offering Period. The Date of
Grant of such an Option shall be the first day of the Offering Period with
A-2
<PAGE>
respect to which such Option was granted. Each Option shall expire on the Date
of Exercise immediately after the automatic exercise of the Option in
accordance with Section 4(a), unless such Option terminates earlier in
accordance with Section 5, 6 or 9. The number of shares of Stock subject to an
Eligible Employee's Option shall equal the cumulative payroll deductions
authorized by such Eligible Employee in accordance with subsection (b) for the
Option Period (if any), divided by the Option Price; provided, however, that
the number of shares of Stock subject to such Option shall not exceed Five
Hundred (500) shares; and, provided, further, that the number of shares of
Stock subject to such Option shall not exceed the number determined in
accordance with subsection (c). The Company shall not grant an Option with
respect to an Offering Period to any individual who is not an Eligible
Employee on the first day of such Offering Period.
(b) Election to Participate; Payroll Deduction Authorization. Except as
provided in subsection (d), an Eligible Employee shall participate in the Plan
only by means of payroll deduction. Each Eligible Employee who elects to
participate in the Plan with respect to an Offering Period shall deliver to
the Company, not later than ten (10) days before the first day of the Offering
Period, a completed and executed written payroll deduction authorization in a
form prepared by the Committee (the "Authorization"). An Eligible Employee's
Authorization shall give notice of such Eligible Employee's election to
participate in the Plan for the next following Offering Period (and subsequent
Offering Periods) and shall designate a whole percentage of such Eligible
Employee's Base Compensation to be withheld by the Company or the Designated
Subsidiary Corporation employing such Eligible Employee on each Payday during
the Offering Period. An Eligible Employee may designate any whole percentage
of Base Compensation which is not be less than one percent (1%) and not more
than ten percent (10%). An Eligible Employee's Base Compensation payable
during an Offering Period shall be reduced each Payday through payroll
deduction in an amount equal to the percentage specified in the Authorization,
and such amount shall be credited to such Eligible Employee's Account under
the Plan. An Eligible Employee may change the percentage of Base Compensation
designated in the Authorization, subject to the limits of this subsection (b),
or may suspend the Authorization, at any time during the Offering Period,
provided, that any such change or suspension shall become effective not later
than ten (10) days after receipt by the Company. Any Authorization shall
remain in effect for each subsequent Offering Period, unless the Eligible
Employee submits a new Authorization pursuant to this subsection (b),
withdraws from the Plan pursuant to Section 5, ceases to be an Eligible
Employee as defined in Section 1(l) or terminates employment as provided in
Section 6.
(c) $25,000 Limitation. No Eligible Employee shall be granted an Option
under the Plan which permits his rights to purchase shares of Stock under the
Plan, together with other options to purchase shares of Stock or other stock
under all other employee stock purchase plans of the Company, any Parent
Corporation or any Subsidiary Corporation subject to the Section 423, to
accrue at a rate which exceeds $25,000 of fair market value of such shares of
Stock or other stock (determined at the time the Option or other option is
granted) for each calendar year in which the Option is outstanding at any
time. For purpose of the limitation imposed by this subsection, (i) the right
to purchase shares of Stock or other stock under an Option or other option
accrues when the Option or other option (or any portion thereof) first becomes
exercisable during the calendar year, (ii) the right to purchase shares of
Stock or other stock under an Option or other option accrues at the rate
provided in the Option or other option, but in no case may such rate exceed
$25,000 of the fair market value of such Stock or other stock (determined at
the time such Option or other option is granted) for any one calendar year,
and (iii) a right to purchase Stock or other stock which has accrued under an
Option or other option may not be carried over to any Option or other option.
This limitation shall be applied in accordance with Section 423(b)(8) of the
Code and the Treasury Regulations thereunder.
(d) Leaves of Absence. During a leave of absence meeting the requirements of
Treasury Regulation Section 1.421-7(h)(2), an Employee may continue to
participate in the Plan by making cash payments to the Company on each Payday
equal to the amount of the Employee's payroll deduction under the Plan for the
Payday immediately preceding the first day of such Employee's leave of
absence.
4. Exercise of Options; Option Price.
(a) Option Exercise. Each Employee automatically and without any act on such
Employee's part shall be deemed to have exercised such Employee's Option on
the Date of Exercise to the extent that the balance then in
A-3
<PAGE>
the Employee's Account is sufficient to purchase, at the Option Price, shares
of the Stock subject to the Option (including fractional shares).
(b) Option Price Defined. The option price per share of Stock (the "Option
Price") to be paid by an Employee upon the exercise of the Employee's Option
shall be equal to 85% of the lesser of: (i) the Fair Market Value of a share
of Stock on the Date of Exercise and (ii) the Fair Market Value of a share of
Stock on the Date of Grant. The Fair Market Value of a share of Stock as of a
given date shall be: (A) the closing price of a share of Stock on the
principal exchange on which the Stock is then trading, if any, on such date
(or, if shares of Stock were not traded on such date, then on the next
preceding trading day during which a sale occurred); (B) if the Stock is not
traded on an exchange, but is quoted on Nasdaq or a successor quotation
system, (I) the last sales price (if the Stock is then listed as a National
Market Issue under the NASD National Market System), or (II) the mean between
the closing representative bid and asked prices (in all other cases) for a
share of Stock on such date (or, if shares of Stock were not traded on such
date, then on the next preceding trading day during which a sale occurred) as
reported by Nasdaq or such successor quotation system; (iii) if the Stock is
not publicly traded on an exchange and not quoted on Nasdaq or a successor
quotation system, the mean between the closing bid and asked prices for a
share of Stock on such date (or, if shares of Stock were not traded on such
date, then on the next preceding trading day during which a sale occurred), as
determined in good faith by the Committee; or (iv) if the Stock is not
publicly traded, the fair market value of a share of Stock established by the
Committee acting in good faith.
(c) Book Entry/Share Certificates. As soon as practicable after the purchase
of shares of Stock upon the exercise of an Option by an Employee, the Company
shall issue the shares of Stock to such Employee and such shares shall be held
in the custody of the Agent for the benefit of the Employee. The Company or
the Agent shall make an entry on its books and records indicating that the
shares of Stock purchased in connection with such exercise (including any
partial share) have been duly issued as of that date to such Employee. An
Employee shall have the right at any time to request in writing a certificate
or certificates for all or a portion of the whole shares of Stock purchased
hereunder. Upon receipt of an Employee's written request for any such
certificate, the Company shall (or shall cause the Agent to), within ten (10)
days after the date of such receipt, deliver any such certificate to the
Employee; provided, however, that no certificate shall be issued to an
Employee with respect to Stock purchased hereunder until the expiration of
eighteen (18) months from the date of exercise of the Option to purchase such
Stock. Nothing in this subsection (c) shall prohibit the sale or other
disposition by an Employee of shares of Stock purchased hereunder. In the
event the Company is required to obtain authority from any commission or
agency to issue any certificate or certificates for all or a portion of the
whole shares of Stock purchased hereunder, the Company shall seek to obtain
such authority as soon as reasonably practicable.
(d) Pro Rata Allocations. If the total number of shares of Stock for which
Options are to be exercised on any date exceeds the number of shares of Stock
remaining unsold under the Plan (after deduction for all shares of Stock for
which Options have theretofore been exercised), the Committee shall make a pro
rata allocation of the available remaining shares of Stock in as nearly a
uniform manner as shall be practicable and the balance of the amount credited
to the Account of each Employee which has not been applied to the purchase of
shares of Stock shall be paid to such Employee in one lump sum in cash within
thirty (30) days after the Date of Exercise, without any interest thereon.
(e) Information Statement. The Company shall provide each Employee whose
Option is exercised with an information statement in accordance with Section
6039(a) of the Code and the Treasury Regulations thereunder. The Company shall
maintain a procedure for identifying certificates of shares of Stock sold upon
the exercise of Options in accordance with Section 6039(b) of the Code.
5. Withdrawal from the Plan.
(a) Withdrawal Election. An Employee may withdraw from participation under
the Plan at any time, except that an Employee may not withdraw during the last
ten (10) days of any Option Period. An Employee electing to withdraw from the
Plan must deliver to the Company a notice of withdrawal in a form prepared by
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<PAGE>
the Committee (the "Withdrawal Election"), not later than ten (10) days prior
to the Date of Exercise for such Option Period. Upon receipt of an Employee's
Withdrawal Election, the Company or Subsidiary Corporation employing the
Employee shall pay to the Employee the amount credited to the Employee's
Account in one lump sum payment in cash, without any interest thereon, and
subject to Section 4(c), the Company shall (or shall cause the Agent to)
deliver to the Employee certificates for any whole shares of Stock previously
purchased by the Employee (the value of any fractional share to be returned to
such Employee by check), in either case within thirty (30) days of receipt of
the Employee's Withdrawal Election. Upon receipt of an Employee's Withdrawal
Election by the Company, the Employee shall cease to participate in the Plan
and the Employee's Option for such Option Period shall terminate.
(b) Eligibility following Withdrawal. An Employee who withdraws from the
Plan with respect to an Option Period, and who is still an Eligible Employee,
may elect to participate again in the Plan for any subsequent Offering Period
by delivering to the Company an Authorization pursuant to Section 3(b).
6. Termination of Employment.
(a) Termination of Employment Other than by Death. If the employment of an
Employee with the Company and the Subsidiary Corporation terminates other than
by death, the Employee's participation in the Plan automatically and without
any act on the Employee's part shall terminate as of the date of the
termination of the Employee's employment. As soon as practicable after such a
termination of employment, the Company or Subsidiary Corporation employing the
Employee shall pay to the Employee the amount credited to the Employee's
Account in one lump sum payment in cash, without any interest thereon, and
subject to Section 4(c), the Company shall (or shall cause the Agent to)
deliver to the Employee certificates for any whole shares of Stock previously
purchased by the Employee (the value of any fractional share to be returned to
such Employee by check). Upon an Employee's termination of employment covered
by this subsection, the Employee's Authorization and Option under the Plan
shall terminate.
(b) Termination by Death. If the employment of an Employee is terminated by
the Employee's death, the executor of the Employee's will or the administrator
of the Employee's estate, by written notice to the Company, may request
payment of the balance in the Employee's Account, in which event the Company
or Subsidiary Corporation employing the Employee shall pay the amount credited
to the Employee's Account in one lump sum payment in cash, without any
interest thereon, and subject to Section 4(c), the Company shall (or shall
cause the Agent to) deliver to the Employee certificates for any whole shares
of Stock previously purchased by the Employee (the value of any fractional
share to be returned to such Employee by check) as soon as practicable after
receiving such notice. Upon receipt of such notice, the Employee's
Authorization and Option under the Plan shall terminate. If the Company does
not receive such notice prior to the next Date of Exercise, the Employee's
Option shall be deemed to have been exercised on such Date of Exercise.
7. Restriction upon Assignment. An Option granted under the Plan shall not
be transferable other than by will or the laws of descent and distribution,
and is exercisable during the Employee's lifetime only by the Employee. Except
as provided in Section 6(b) hereof, an Option may not be exercised to any
extent except by the Employee. The Company shall not recognize and shall be
under no duty to recognize any assignment or alienation of the Employee's
interest in the Plan, the Employee's Option or any rights under the Employee's
Option.
8. No Rights of Stockholders until Shares Issued. With respect to shares of
Stock subject to an Option, an Employee shall not be deemed to be a
stockholder of the Company, and the Employee shall not have any of the rights
or privileges of a stockholder, until such shares have been issued to the
Employee or his or her nominee following exercise of the Employee's Option. No
adjustments shall be made for dividends (ordinary or extraordinary, whether in
cash securities, or other property) or distribution or other rights for which
the record date occurs prior to the date of such issuance, except as otherwise
expressly provided herein.
A-5
<PAGE>
9. Changes in the Stock and Corporate Events; Adjustment of Options.
(a) Subject to Section 9(c), in the event that the Committee, in its sole
discretion, determines that any dividend or other distribution (whether in the
form of cash, Stock, other securities, or other property), recapitalization,
reclassification, stock split, reverse stock split, reorganization, merger,
consolidation, split-up, spin-off, combination, repurchase, liquidation,
dissolution, or sale, transfer, exchange or other disposition of all or
substantially all of the assets of the Company, or exchange of Stock or other
securities of the Company, issuance of warrants or other rights to purchase
Stock or other securities of the Company, or other similar corporate
transaction or event, affects the Stock such that an adjustment is appropriate
in order to prevent dilution or enlargement of the benefits or potential
benefits intended to be made available under the Plan or with respect to an
Option, then the Committee shall, in such manner as it may deem equitable,
adjust any or all of:
(i) the number and kind of shares of Stock (or other securities or
property) with respect to which Options may be granted (including, but not
limited to, adjustments of the limitation in Section 3(a) on the maximum
number of shares of Stock which may be purchased),
(ii) the number and kind of shares of Stock (or other securities or
property) subject to outstanding Options, and
(iii) the exercise price with respect to any Option.
(b) Subject to Section 9(c), in the event of any transaction or event
described in Section 9(a) or any unusual or nonrecurring transactions or
events affecting the Company, any affiliate of the Company, or the financial
statements of the Company or any affiliate, or of changes in applicable laws,
regulations, or accounting principles, the Committee, in its sole discretion,
and on such terms and conditions as it deems appropriate, either by the terms
of the Option or by action taken prior to the occurrence of such transaction
or event and either automatically or upon the Employee's request, is hereby
authorized to take any one or more of the following actions whenever the
Committee determines that such action is appropriate in order to prevent
dilution or enlargement of the benefits or potential benefits intended to be
made available under the Plan or with respect to any Option under the Plan, to
facilitate such transactions or events or to give effect to such changes in
laws, regulations or principles:
(i) To provide that all Options outstanding shall terminate without being
exercised on such date as the Committee determines in its sole discretion;
(ii) To provide that all Options outstanding shall be exercised prior to
the Date of Exercise of such Options on such date as the Committee
determines in its sole discretion and such Options shall terminate
immediately after such exercises.
(iii) To provide for either the purchase of any Option outstanding for an
amount of cash equal to the amount that could have been obtained upon the
exercise of such Option had such Option been currently exercisable, or the
replacement of such Option with other rights or property selected by the
Committee in its sole discretion;
(iv) To provide that such Option be assumed by the successor or survivor
corporation, or a parent or subsidiary thereof, or shall be substituted for
by similar options, covering the stock of the successor or survivor
corporation, or a parent or subsidiary thereof, with appropriate
adjustments as to the number and kind of shares and prices; and
(v) To make adjustments in the number and type of shares of Stock (or
other securities or property) subject to outstanding Options, or in the
terms and conditions of (outstanding Options, or Options which may be
granted in the future.
(c) No adjustment or action described in this Section 9 or in any other
provision of the Plan shall be authorized to the extent that such adjustment
or action would cause the Plan to fail to satisfy the requirements of Section
423 of the Code. Furthermore, no such adjustment or action shall be authorized
to the extent such adjustment or action would result in short-swing profits
liability under Section 16 of the Securities and Exchange
A-6
<PAGE>
Act of 1934, as amended, or violate the exemptive conditions of Rule 16b-3
unless the Committee determines that the Option is not to comply with such
exemptive conditions. The number of shares of Common Stock subject to any
Option shall always be rounded to the next whole number.
(d) The existence of the Plan and the Options granted hereunder shall not
affect or restrict in any way the right or power of the Company or the
stockholders of the Company to make or authorize any adjustment,
recapitalization, reorganization or other change in the Company's capital
structure or its business, any merger or consolidation of the Company, any
issue of stock or of options, warrants or rights to purchase stock or of
bonds, debentures, preferred or prior preference stocks whose rights are
superior to or affect the Stock or the rights thereof of which are convertible
into or exchangeable for Stock, or the dissolution or liquidation of the
company, or any sale or transfer of all or any part of its assets or business,
or any other corporate act or proceeding, whether of a similar character or
otherwise.
10. Use of Funds; No Interest Paid. All funds received or held by the
Company under the Plan shall be included in the general funds of the Company
free of any trust or other restriction and may be used for any corporate
purpose. No interest will be paid to any Employee or credited to any
Employee's Account with respect to such funds.
11. Dividends.
(a) Cash dividends and other cash distributions received by the Agent with
respect to Stock held in its custody hereunder will be credited to each
Employee's Account in accordance with such Employee's interests in such Stock,
and shall be applied, as soon as practicable after the receipt thereof by the
Agent, to the purchase in the open market at prevailing market prices of the
number of whole shares of Stock that may be purchased with such funds (after
deductions of any bank service fees, brokerage charges, transfer taxes, and
any other transaction fee, expense or cost payable in connection with the
purchase of such shares of Stock and not otherwise paid by the Employer.)
(b) All purchases of shares of Stock made pursuant to this Section 11 will
be made in the name of the Agent or its nominee, and shall be transferred and
credited to the Account(s) of the Employees to which such dividends or other
distributions were credited. Dividends paid in the form of shares of Stock
will be allocated by the Agent, as and when received, with respect to Stock
held in its custody hereunder to the Account of each Employee in accordance
with such Employee's interests in such Stock. Property, other than Stock or
cash, received by the Agent as a distribution on Stock held in its custody
hereunder, shall be sold by the Agent for the accounts of Employees, and the
Agent shall treat the proceeds of such sale in the same manner as cash
dividends received by the Agent on Stock held in its custody hereunder.
12. Amendment, Suspension or Termination of the Plan. The Board may amend,
suspend, or terminate the Plan at any time and from time to time, provided
that approval by a vote of the holders of the outstanding shares of the
Company's capital stock entitled to vote shall be required to amend the Plan
to: (a) change the number of shares of Stock that may be sold pursuant to
Options under the Plan, (b) alter the requirements for eligibility to
participate in the Plan, or (c) in any manner that would cause the Plan to no
longer be an "employee stock purchase plan" within the meaning of Section
423(b) of the Code.
13. Administration by Committee; Rules and Regulations.
(a) Appointment of Committee. The Plan shall be administered by the
Committee, which shall be composed of not less than two members of the Board,
each of whom shall be a "non-employee director" within the meaning of Rule
16b-3 which has been adopted by the Securities and Exchange Commission under
the Securities Exchange Act of 1934, as amended. Each member of the Committee
shall serve for a term commencing on a date specified by the Board and
continuing until the member dies, resigns or is removed from office by the
Board. The Committee at its option may utilize the services of an agent to
assist in the administration of the Plan, including establishing and
maintaining an individual securities account under the Plan for each Employee.
A-7
<PAGE>
(b) Duties and Powers of Committee. It shall be the duty of the Committee to
conduct the general administration of the Plan in accordance with the
provisions of the Plan. The Committee shall have the power to interpret the
Plan and the terms of the Options and to adopt such rules for the
administration, interpretation, and application of the Plan as are consistent
therewith and to interpret, amend or revoke any such rules. In its absolute
discretion, the Board may at any time and from time to time exercise any and
all rights and duties of the Committee under the Plan.
(c) Majority Rule. The Committee shall act by a majority of its members in
office. The Committee may act either by vote at a meeting or by a memorandum
or other written instrument signed by a majority of the Committee.
(d) Compensation; Professional Assistance; Good Faith Actions. All expenses
and liabilities incurred by members of the Committee in connection with the
administration of the Plan shall be borne by the Company. The Committee may,
with the approval of the Board, employ attorneys, consultants, accountants,
appraisers, brokers or other persons. The Committee, the Company and its
officers and directors shall be entitled to rely upon the advice, opinions or
valuations of any such persons. All actions taken and all interpretations and
determinations made by the Committee in good faith shall be final and binding
upon all Employees, the Company and all other interested persons. No member of
the Committee shall be personally liable for any action, determination or
interpretation made in good faith with respect to the Plan or the Options, and
all members of the Committee shall be fully protected by the Company in
respect to any such action, determination, or interpretation.
14. Designation of Subsidiary Corporations. The Board shall designate from
among the Subsidiary Corporations, as determined from time to time, the
Subsidiary Corporation or Subsidiary Corporations whose Employees shall be
eligible to be granted Options under the Plan. The Board may designate a
Subsidiary Corporation, or terminate the designation of a Subsidiary
Corporation, without the approval of the stockholders of the Company.
15. No Rights as an Employee. Nothing in the Plan shall be construed to give
any person (including any Eligible Employee) the right to remain in the employ
of the Company, a Parent Corporation or a Subsidiary Corporation or to affect
the right of the Company, any Parent Corporation or any Subsidiary Corporation
to terminate the employment of any person (including any Eligible Employee) at
any time, with or without cause.
16. Term; Approval by Stockholders. Subject to approval by the stockholders
of the Company in accordance with this Section, the Plan shall be in effect
until December 31, 2009, unless sooner terminated in accordance with Section
12. No Option may be granted during any period of suspension of the Plan or
after termination of the Plan. The Plan shall be submitted for the approval of
the Company's stockholders within twelve (12) months after the date of the
adoption of the Plan by the Board. Options may be granted prior to such
stockholder approval; provided, however, that such Options shall not be
exercisable prior to the time when the Plan is approved by the Company's
stockholders; and, provided, further, that if such approval has not been
obtained by the end of said 12-month period, all Options previously granted
under the Plan shall thereupon terminate without being exercised.
17. Effect upon Other Plans. The adoption of the Plan shall not affect any
other compensation or incentive plans in effect for the Company, any Parent
Corporation or any Subsidiary Corporation. Nothing in this Plan shall be
construed to limit the right of the Company, any Parent Corporation or any
Subsidiary Corporation to: (a) establish any other forms of incentives or
compensation for employees of the Company, any Parent Corporation or any
Subsidiary Corporation or (b) grant or assume options otherwise than under the
Plan in connection with any proper corporate purpose, including, but not by
way of limitation, the grant or assumption of options in connection with the
acquisition, by purchase, lease, merger, consolidation or otherwise, of the
business, stock or assets of any corporation, firm or association.
A-8
<PAGE>
18. Conditions to Issuance of Stock Certificates. The Company shall not be
required to issue or deliver any certificate or certificates for shares of
Stock purchased upon the exercise of Options prior to fulfillment of all the
following conditions:
(a) The admission of such shares to listing on all stock exchanges, if any,
on which is then listed; and
(b) The completion of any registration or other qualification of such shares
under any state or federal law or under the rulings or regulations of the
Securities and Exchange Commission or any other governmental regulatory body,
which the Committee shall, in its absolute discretion, deem necessary or
advisable; and
(c) The obtaining of any approval or other clearance from any state or
federal governmental agency which the Committee shall, in its absolute
discretion, determine to be necessary or advisable; and
(d) The payment to the Company of all amounts which it is required to
withhold under federal, state or local law upon exercise of the Option; and
(e) The lapse of such reasonable period of time following the exercise of
the Option as the Committee may from time to time establish for reasons of
administrative convenience.
19. Notification of Disposition. Each Employee shall give prompt notice to
the Company of any disposition or other transfer of any shares of Stock
purchased upon exercise of an Option if such disposition or transfer is made:
(a) within two (2) years from the Date of Grant of the Option, or (b) within
one (1) year after the transfer of such shares of Stock to such Employee upon
exercise of such Option. Such notice shall specify the date of such
disposition or other transfer and the amount realized, in cash, other
property, assumption of indebtedness or other consideration, by the Employee
in such disposition or other transfer.
20. Notices. Any notice to be given under the terms of the Plan to the
Company shall be addressed to the Company in care of its Secretary and any
notice to be given to any Employee shall be addressed to such Employee at such
Employee's last address as reflected in the Company's records. By a notice
given pursuant to this Section, either party may designate a different address
for notices to be given to it, him or her. Any notice which is required to be
given to an Employee shall, if the Employee is then deceased, be given to the
Employee's personal representative if such representative has previously
informed the Company of his status and address by written notice under this
Section. Any notice shall have been deemed duly given if enclosed in a
properly sealed envelope or wrapper addressed as aforesaid at the time it is
deposited (with postage prepaid) in a post office or branch post office
regularly maintained by the United States Postal Service.
21. Headings. Headings are provided herein for convenience only and are not
to serve as a basis for interpretation or construction of the Plan.
* * * * * * *
A-9
<PAGE>
I hereby certify that The SCPIE Holdings Inc. Employee Stock Purchase Plan
was adopted by the Board of Directors of SCPIE Holdings Inc. on October 19,
1999.
Executed at Los Angeles, California on this 18th day of November, 1999.
/s/ Joseph P. Henkes
-------------------------------------
Joseph P. Henkes
Secretary
* * * * * * *
I hereby certify that The SCPIE Holdings Inc. Employee Stock Purchase Plan
was approved by the stockholders of SCPIE Holdings Inc. on May , 2000.
Executed at , California on this th day of , 2000.
_____________________________________
_____________________________________
Secretary
A-10
<PAGE>
<TABLE>
<CAPTION>
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The Board of Directors of SCPIE Holdings Inc. recommends that you vote FOR Proposals 1, 2 and 3. Please mark
your votes as [ X ]
indicated in
this example
<S> <C>
PROPOSAL 1: ELECTION OF DIRECTORS Nominees: 01 J. Hyatt Brown
02 Henry Gluck
FOR at nominees WITHHOLD EXCEPTIONS 03 Willis T. King, Jr.
listed to the right AUTHORITY 04 Harriet M. Opfell, M.D.
(except as marked to vote for all nominees 05 Reinhold A. Ullrich, M.D.
to the contrary) listed to the right* *INSTRUCTION: To withhold authority to vote for any individual
[ ] [ ] [ ] nominee, mark the "Exceptions" box and write that nominee's name in
the space provided below.
___________________________________________________________________
PROPOSAL 2: To approve the adoption PROPOSAL 3: To ratify the appointment of Ernst & In their discretion, the proxies are
of the SCPIE Holdings Inc. Employee Young LLP as independent auditors for the Company authorized to vote upon such other
Stock Purchase Plan. for the fiscal year ending December 31, 2000. business as may properly come before
the meeting.
FOR AGAINST ABSTAIN FOR AGAINST ABSTAIN
[ ] [ ] [ ] [ ] [ ] [ ]
Important: Please sign exactly as your
name appears to the left. If a
corporation, please sign in full
______ corporate name by the president or other
| authorized officer. If a partnership,
| please sign in partnership name, by an
authorized person. Each joint tenant
should sign.
Dated: _________________________, 2000
______________________________________
Signature of stockholder
______________________________________
Signature if held jointly
Please mark, date, sign and mail this
proxy card promptly, using the enclosed
envelope.
- -----------------------------------------------------------------------------------------------------------------------------------
. FOLD AND DETACH HERE .
-----------------------------------------------------------
VOTE BY TELEPHONE
QUICK *** EASY *** IMMEDIATE
-----------------------------------------------------------
YOUR VOTE IS IMPORTANT! - YOU CAN VOTE IN ONE OF TWO WAYS:
1. TO VOTE BY PHONE: Call toll-free 1-800-840-1208 on a touch-tone telephone 24 hours a day-7 days a week
There is NO CHARGE to you for this call. -- Have your proxy card in hand.
You will be asked to enter a Control Number, which is located in the box in the lower right hand corner
of this form
----------------------------------------------------------------------------------------------------------
OPTION 1: To vote as the Board of Directors recommends on ALL proposals, press 1
----------------------------------------------------------------------------------------------------------
When asked, please confirm by Pressing 1.
----------------------------------------------------------------------------------------------------------
OPTION 2: If you choose to vote on each proposal separately, press 0. You will hear these
instructions.
----------------------------------------------------------------------------------------------------------
Proposal 1 - To vote FOR ALL nominees, press 1: to WITHHOLD FOR ALL nominees, press 9
To WITHHOLD FOR AN INDIVIDUAL nominee, Press 0 and listen to the instructions
Proposal 2 - To vote FOR, press 1; AGAINST, press 9; ABSTAIN, press 0.
When asked, please confirm by Pressing 1.
The instructions are the same for all remaining proposals.
or
--
2. VOTE BY PROXY: Mark, date and sign your proxy card and return promptly in the enclosed envelope, or
fax to (201) 296-4142.
NOTE: If you vote by telephone, THERE IS NO NEED TO MAIL, OR FAX BACK your Proxy Card.
THANK YOU FOR VOTING.
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</TABLE>
<PAGE>
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SCPIE HOLDINGS INC.
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS, MAY 11, 2000
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
SCPIE HOLDINGS INC.
The undersigned Stockholder(s) of SCPIE HOLDINGS INC. (the "Company")
hereby constitutes and appoints Mitchell S. Karlan, M.D., Wendell L. Moseley,
M.D., and Donald J. Zuk, and each of them, attorneys and proxies of the
undersigned, each with full power of substitution, to attend, vote and act for
the undersigned at the Annual Meeting of Stockholders of the Company to be held
at the Century Plaza Hotel, 2025 Avenue of the Stars, Los Angeles, California
90067, on May 11, 2000, at 3:00 p.m., Pacific time, and at any adjournment or
postponement thereof, according to the number of shares of Common Stock of the
Company which the undersigned may be entitled to vote, and with all the powers
which the undersigned would possess if personally present, as indicated on the
reverse side.
The proxies are directed to vote as specified on the reverse side. Except
as specified to the contrary on the reverse side, the shares represented by this
proxy will be voted FOR all nominees listed, FOR Proposal 2 and FOR Proposal 3.
The undersigned revokes any prior proxy for such meeting and ratifies all
said attorneys and proxies, or any of them, may lawfully do by virtue hereof.
Receipt of the Notice of Annual Meeting of Stockholders and Proxy Statement is
hereby acknowledged.
(Please sign and date on reverse side)
- --------------------------------------------------------------------------------
.FOLD AND DETACH HERE.
YOUR VOTE IS IMPORTANT
You can vote in one of two ways:
1. Call toll-free 1-800-840-1208 on a touch-tone telephone and
follow the instructions on the reverse side. There is NO
CHARGE to you for this call.
or
--
2. Mark, date, sign and mail back in enclosed envelope, or fax
to (201) 296-4142.
PLEASE VOTE
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