SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14 (a) of the Securities
Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission
Only
(as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
Symons International Group, Inc.
_______________________________________________________________________________
(Name of Registrant as Specified In Its Charter)
_______________________________________________________________________________
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(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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[ ] Check box if any part of the fee is offset as provided by Exchange
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fee was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
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<PAGE>
SYMONS INTERNATIONAL GROUP, INC.
FORM OF PROXY
PROXY SOLICITED BY MANAGEMENT OF THE CORPORATION FOR THE
ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON WEDNESDAY, JUNE 16, 1999
The undersigned shareholder of Symons International Group, Inc. (the
"Corporation") hereby appoints G. Gordon Symons, Chairman of the Board, or Alan
G. Symons, CEO, or each of them, or instead of either G. Gordon Symons or Alan
G. Symons, ____________________ __________________________, as Proxy for the
undersigned, to attend, vote and act for and on behalf of the undersigned at the
Annual Meeting of the Shareholders of the Corporation to be held at the City of
Indianapolis on June 16, 1999, and at any adjournment thereof, in the same
manner, to the same extent and with the same power as if the undersigned were
present at the Meeting or any adjournment thereof, and the undersigned hereby
revokes any former instrument appointing a Proxy for the undersigned at the said
Meeting or at any adjournment thereof.
The Shares represented by this Proxy are to be:
1. Election of Directors
| | VOTED FOR all Nominees listed below | | WITHHOLD AUTHORITY to vote for
(except as marked to the contrary below) all Nominess listed below:
G. Gordon Symons, John K. McKeating, David R. Doyle
INSTRUCTION: To withhold authority to vote for any individual Nominee,
write that Nominee's name on the space provided below:
________________________________________________________________
2. VOTED FOR___ VOTED AGAINST___ ABSTAINED___ in the appointment of the
Auditor and the authorization
of the Directors to fix the
Auditor's remuneration.
DATED this ______ day of _______________, 1999.
..................................................
Signature of Shareholder
Notes:
1. The persons designated in this form of proxy are named by management. A
shareholder entitled to vote at the meeting has the right to appoint
some other person, who need not be a shareholder, to attend and act for
him on his behalf at the meeting other than the persons specified
above. Such right may be exercised by inserting the name of the person
to be appointed in the blank space provided in this form of proxy or by
completing another form of proxy and, in either case, delivering the
completed proxy to the Corporation.
2. If this Form of Proxy is to be utilized, it should be dated and must
be signed by the shareholder or his attorney authorized in writing. If
this Form of Proxy is not dated in the space provided, it will be
deemed to bear the date on which it was mailed to shareholders.
3. If it is desired that the shares represented by this Proxy are
to be withheld from voting in the election of Directors or the
appointment of the auditor, the appropriate box or boxes above must be
marked.
4. Unless otherwise specified the shares represented by this proxy will
be voted. If a choice is specified with respect to any or all of the
matters to be dealt with at the Meeting referred to above, such shares
will be voted in accordance with the specification made. If no choice
is specified, it is intended to vote such shares in favor of the
election of Directors and the reappointment of the Corporation's
Auditor. This proxy confers authority to do so.
5. This Proxy confers discretionary authority upon the person or persons
specified above with respect to amendments or variations to matters
identified in the notice of Annual Meeting accompanying this Proxy and
other matters as may properly come before the Meeting.
6. This Proxy should be voted, dated and signed and returned in the
enclosed envelope to National City Bank, Corporate Trust Operations,
3rd Floor, North Annex, 4100 West 150th Street, Cleveland, Ohio
44135-1385, or presented in person at the Annual Meeting to be held
June 16, 1999 at 4720 Kingsway Drive, Indianapolis, Indiana, at
10:00 a.m.
<PAGE>
SYMONS INTERNATIONAL GROUP, INC.
4720 KINGSWAY DRIVE
INDIANAPOLIS, INDIANA 46205
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held On June 16, 1999
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of
Symons International Group, Inc. ("Company") will be held at the Company's
offices, 4720 Kingsway Drive, Indianapolis, Indiana on Wednesday, June 16, 1999,
at 10:00 a.m., Indianapolis time.
The Annual Meeting will be held for the following purposes:
1. Election of Directors. Election of 3 Directors for terms to expire
in 2002.
2. Selection of Auditors. Ratification of the appointment of
PricewaterhouseCoopers LLP as auditors for the Company for the
year ending December 31, 1999.
3. Other Business. Such other matters as may properly come before the
meeting or any adjournment thereof.
Shareholders of record as of the close of business on April 30, 1999
are entitled to vote at the meeting or any adjournment thereof.
Please read the enclosed Proxy Statement carefully so that you may be
informed about the business to come before the meeting, or any adjournment
thereof. At your earliest convenience, please sign and return the accompanying
Proxy in the postage-paid envelope furnished for that purpose.
A copy of the Company's Annual Report for the year ended December 31,
1998 is enclosed. The Annual Report is not a part of the Proxy soliciting
material enclosed with this letter.
FOR THE BOARD OF DIRECTORS
Alan G. Symons
Chief Executive Officer
Indianapolis, Indiana
April 13, 1999
IT IS IMPORTANT THAT THE PROXIES BE RETURNED PROMPTLY. THEREFORE, WHETHER OR NOT
YOU PLAN TO BE PRESENT IN PERSON AT THE ANNUAL MEETING, PLEASE SIGN, DATE AND
COMPLETE THE ENCLOSED PROXY AND RETURN IT IN THE ENCLOSED ENVELOPE WHICH
REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES.
<PAGE>
SYMONS INTERNATIONAL GROUP, INC.
4720 Kingsway Drive
Indianapolis, Indiana 46205
PROXY STATEMENT
The accompanying Proxy is solicited by the Board of Directors of Symons
International Group, Inc. (the "Company") for use at the Annual Meeting of
Shareholders to be held June 16, 1999 and any adjournments thereof. When the
Proxy is properly executed and returned, the shares it represents will be voted
at the meeting in accordance with any directions noted on that Proxy. If no
direction is indicated, the Proxy will be voted in favor of the proposals set
forth in the Notice attached to this Proxy Statement.
The election of Directors will be determined by a plurality of the
shares present in person or represented by Proxy. Abstentions, broker non-votes
and instructions on the accompanying Proxy Card to withhold authority to vote
for one or more nominees might result in some nominees receiving fewer votes.
However, the number of votes otherwise received by the nominee will not be
reduced by such action. The holder of each outstanding share of common stock is
entitled to vote for as many persons as there are Directors to be elected. All
other matters to come before the meeting will be approved if the votes cast in
favor exceed the votes cast against. Any abstention or broker non-vote on any
such matter will not change the number of votes cast for or against the matter,
however, such abstaining shares will be counted in determining whether a quorum
is present pursuant to the applicable provisions of the Indiana Business
Corporation Law.
The Board of Directors knows of no matters, other than those reported
herein, which are to be brought before the meeting. However, if other matters
properly come before the meeting, it is the intention of the persons named in
the enclosed Form of Proxy to vote such Proxy in accordance with their judgment
on such matters. Any shareholder giving a Proxy has the power to revoke it at
any time before it is voted by a written notice delivered to the Secretary of
the Company or in person at the meeting. The approximate date of mailing of this
Proxy Statement is May 5, 1999.
3
<PAGE>
VOTING SECURITIES AND BENEFICIAL OWNERS
Only shareholders of record as of the close of business on April 30,
1999 will be entitled to vote at the Annual Meeting. On the Record Date, there
were 10,455,999 shares of Common Stock outstanding, the only class of the
Company's stock which is currently outstanding.
The following table shows, as of April 10, 1999, the number and
percentage of shares of Common Stock held by each person known to the Company
who owned beneficially more than 5% of the issued and outstanding Common Stock
of the Company and Goran Capital Inc. ("Goran") and the ownership interests of
the Company's and Goran's Directors and Named Executive Officers:
<TABLE>
<CAPTION>
Symons International
Group, Inc. Goran Capital Inc.
Amount and Nature Percent Amount and Nature Percent
Name of of Beneficial of of Beneficial of
Beneficial Owner Ownership Class Ownership Class
<S> <C> <C> <C> <C>
G. Gordon Symons1 643,900 5.4% 2,411,645 36.3%
Alan G. Symons2 383,400 3.2% 785,535 11.8%
Douglas H. Symons3 201,300 1.7% 281,105 4.2%
Robert C. Whiting4 24,800 * 20,000 *
James G. Torrance, Q.C.5 14,000 * 8,000 *
David R. Doyle6 15,000 * -0- *
John K. McKeating7 12,000 * 6,000 *
David B. Shapira11+ 4,000 * 107,000 1.6%
J. Ross Schofield12+ 4,000 * 10,800 *
Goran Capital Inc.14 7,000,000 58.8% ------
Symons International
Group Ltd.8 ----- 1,646,413 24.8%
Dennis G. Daggett9 56,500 * 37,000 *
Roger S. Sullivan10 48,000 * 17,000 *
All Executive Officers and
Directors as a Group 13 1,525,850 12.8% 3,748,651 56.4%
</TABLE>
* Less than 1% of class
+ Goran Director that is not a member of the Symons International Group, Inc.
Board
4
<PAGE>
1 With respect to Symons International Group, Inc., 10,000 shares are owned
directly and 633,900 are subject to option. With respect to the shares of
Goran Capital Inc., 479,111 shares are held by trusts of which Mr. Symons
is the beneficiary, 286,121 are subject to option and 1,646,413 of the
shares indicated are owned by Symons International Group Ltd., of which Mr.
Symons is the controlling shareholder. Mr. Symons resides at 2 Paynter's
Road, Tuckerstown, Bermuda HS02.
2 With respect to Symons International Group, Inc., 62,500 shares are owned
directly and 320,900 shares are subject to option. With respect to the
shares of Goran Capital Inc., 557,965 are owned directly and 227,570 are
subject to option.
3 With respect to Symons International Group, Inc., 28,500 shares are owned
directly and 172,800 shares are subject to option. With respect to the
shares of Goran Capital Inc., 251,455 are owned directly and 29,650 are
subject to option.
4 Mr. Whiting owns 14,800 shares of Symons International Group, Inc. directly
and 10,000 shares are subject to option. With respect to Goran Capital
Inc., all shares indicated are owned directly.
5 Mr. Torrance owns 4,000 shares of Symons International Group, Inc. directly
and 10,000 shares are subject to option. With respect to Goran Capital
Inc., 2,000 shares are owned directly and 6,000 shares are subject to
option.
6 Mr. Doyle owns 5,000 shares of Symons International Group, Inc. directly
and 10,000 shares are subject to option.
7 Mr. McKeating owns 2,000 shares of Symons International Group, Inc.
directly and 10,000 shares are subject to option. With respect to Goran
Capital Inc., 2,000 shares are owned directly and 4,000 shares are subject
to option.
8 Mr. G. Gordon Symons is the controlling shareholder of Symons International
Group Ltd., a private company.
9 Mr. Daggett owns 0 shares of Symons International Group, Inc. directly and
56,500 shares are subject to option. With respect to Goran Capital Inc.,
37,000 shares are subject to option.
10 Mr. Sullivan owns 0 shares of Symons International Group directly and
48,000 shares are subject to option. Mr.Sullivan also owns 0 shares of
Goran Capital Inc. directly and 17,000 shares are subject to option.
11 Mr. Shapira owns 1,000 shares of Symons International Group, Inc. directly
and 3,000 shares are subject to option. With respect to Goran Capital Inc.,
100,000 shares are held directly and 7,000 shares are subject to option.
12 Mr. Schofield owns 1,000 shares of Symons International Group, Inc.
directly and 3,000 shares are subject to option. With respect to Goran
Capital Inc., 3,800 shares are owned directly and 7,000 shares are subject
to option.
13 Totals and percentage numbers are calculated on a fully diluted basis.
14 Goran's office address is 181 University Avenue, Box 11, Suite 1101,
Toronto, Ontario Canada M5H 3M7.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's Officers and Directors, as well as persons who own more than 10% of
the outstanding common shares of the Company, to file reports of ownership with
the Securities and Exchange Commission. Officers, Directors and greater than 10%
shareholders are required to furnish the Company with copies of all Section
16(a) forms they file. Based solely on its review of copies of such forms
received by it, or written representations from certain reporting persons that
no reports were required for those persons, the Company believes that during
1998, all filing requirements applicable to its Officers, Directors and greater
than 10% shareholders were met with the exception of one report with respect to
Robert C. Whiting due August 10, 1998 and filed on October 26, 1998.
PROPOSALS
PROPOSAL NO. 1: ELECTION OF DIRECTORS
The Directors of the Company are divided into three classes and are
elected to hold office for a three year term or until their successors are
elected and qualified. The election of each class of Directors is staggered over
each three-year period. All Directors of the Company were initially elected by
Goran as the sole shareholder of the Company prior to the initial public
offering ("IPO") of the Company which occurred on November 5, 1996.
5
<PAGE>
<TABLE>
<CAPTION>
Director Term to
Name Age Present Principal Occupation Since Expire
<S> <C> <C> <C>
G. Gordon Symons 77 Chairman of the Board of 1987 1999
Directors of the Company and
Goran Capital Inc.
James G. Torrance, 70 Partner Emeritus, Smith, Lyons 1996 2001
Q.C.
Alan G. Symons 52 CEO and President of the Company 1995 2000
and CEO of Goran Capital Inc.
John K. McKeating 63 Former Owner, Vision 2120 1996 1999
Robert C. Whiting 66 President, Prime Advisors Ltd. 1996 2000
Douglas H. Symons 46 President and COO of the Company 1987 2001
and COO of Goran Capital Inc.
David R. Doyle 52 Director, Vice President, Secretary 1996 1999
and Treasurer of ONEX, Inc.
</TABLE>
G. Gordon Symons has been Chairman of the Board of Directors of the
Company since its formation in 1987. He founded the predecessor to
Goran the 67% Shareholder of the Company, in 1964 and has served as the
Chairman of the Board of Goran since its formation in 1986. Mr. Symons
also served as the President of Goran until 1992 and the Chief
Executive Officer of Goran until 1994. Mr. Symons currently serves as a
Director of Symons International Group Ltd. ("SIGL"), a
federally-chartered Canadian corporation controlled by him which,
together with members of the Symons family, controls Goran. Mr. Symons
also serves as Chairman of the Board of Directors of all of the
subsidiaries of Goran. Mr. Symons is the father of Alan G. Symons and
Douglas H. Symons.
Alan G. Symons has served as a Director of the Company since 1995 and
was named its Chief Executive Officer in 1996. Mr. Symons has been a
Director of Goran since 1986, and has served as Goran's President and
Chief Executive Officer since 1994. Prior to becoming the President
and Chief Executive Officer of Goran, Mr. Symons held other executive
positions within Goran since its inception in 1986. Mr. Symons is the
son of G. Gordon Symons and the brother of Douglas H. Symons.
Douglas H. Symons has served as a Director and as President of the
Company since its formation in 1987 and as it Chief Operating Officer
since July 1996. Mr. Symons served as Chief Executive Officer of the
Company from 1989 until July 1996. Mr. Symons has been a Director of
Goran since 1989, and has served as Goran's Chief Operating Officer and
Vice President since 1989. Mr. Symons is the son of G. Gordon Symons
and the brother of Alan G. Symons.
Mr. McKeating has served as a Director of the Company since 1996 and as
a Director of Goran since 1995. Mr. McKeating retired in January 1996
after serving as President and owner of Vision 2120 Optometric Clinics
("Vision 2120") for 36 years. Vision 2120, located in Montreal, Quebec,
is a chain of Canadian full-service retail clinics offering all aspects
of professional eye care.
6
<PAGE>
Mr. Whiting has served as a Director of the Company since 1996. Since
July 1994, Mr. Whiting has served as President of Prime Advisors, Ltd.,
a Bermuda-based insurance consulting firm. From its inception until
June 1994 Mr. Whiting served as President and Chairman of the Board of
Jardine Pinehurst Management Co., Ltd., a Bermuda-based insurance
management and brokerage firm.
Mr. Torrance has served as a Director of the Company since 1996.
Mr. Torrance was a founding partner in the Canadian law firm of Smith
Lyons in 1962 and in April 1993, was named a Partner Emeritus in that
firm. Mr. Torrance was re-elected as a Director of Goran in 1995 after
having left the Board of Directors of Goran in 1991. He also serves
as a Director of Mitsui & Co. (Canada) Ltd., Sakura Bank (Canada),
Toyota Canada Inc. and Wintershall Canada Ltd.
Mr. Doyle helped form ONEX, Inc., a full service human resource firm
which specializes in permanent placement, contract consulting and
business consulting for business clients, in April 1997. Mr. Doyle
currently serves on the ONEX, Inc. Board of Directors and is the Vice
President, Secretary and Treasurer of that firm. From January 1996
until the formation of ONEX, Inc., Mr. Doyle was the Vice
President-Finance and Administration, and a Director of Avantec, Inc.,
a Carmel, Indiana-based company which provides data management services
for the pharmaceutical industry. From May 1994 to January 1996, Mr.
Doyle served as Vice President-Financial Consultant for Raffensberger,
Hughes & Co., a firm which provides brokerage services and financial
consulting.
Unless otherwise directed, each proxy executed and returned by a
shareholder will be voted for the election of the nominees listed below. If any
person named as a nominee shall be unable or unwilling to stand for election at
the time of the Annual Meeting, the proxy holders will nominate and vote for a
replacement nominee recommended by the Board. At this time, the Board knows of
no reason why the nominees listed below may not be able to serve as Directors if
elected.
The Board of Directors unanimously recommends the election of the
following nominees for a three (3) year term to expire in the year 2002. Goran
owns sufficient shares of the Corporation to ensure their election and Goran
presently intends to vote for the nominees listed below.
<TABLE>
<CAPTION>
Name Age Present Principal Occupation Director Since
<S> <C> <C> <C>
G. Gordon Symons 77 Chairman of the Board of Directors 1987
of the Company and Goran Capital
Inc.
John K. McKeating 63 Former owner, Vision 2120 1996
David R. Doyle 52 Director, Vice President, Secretary 1996
and Treasurer of ONEX, Inc.
</TABLE>
7
<PAGE>
Meetings And Committees Of The Board
During the year ended December 31, 1998, the Board of Directors of the
Company met five (5) times, including teleconferences, in addition to taking a
number of actions by unanimous written consent. During 1998, each Director
attended all meetings (including Committee Meetings) of the Board on which such
Directors served.
The Board of Directors of the Company has an Audit Committee, a
Compensation Committee and an Executive Committee.
The Company's Audit Committee is responsible for recommending the
appointment of the Company's independent auditors, meeting with the independent
auditors to outline the scope, and review the results of, the annual audit and
reviewing with the auditor the systems of internal control and audit reports.
The current members of this Committee are Messrs. James G. Torrance, David R.
Doyle and Alan G. Symons. The Audit Committee met four (4) times during 1998.
During 1998, the Compensation Committee of the Company was comprised of
Messrs. John K. McKeating, Robert C. Whiting and Douglas H. Symons. The
Committee makes recommendations concerning executive compensation and benefit
levels to the Board of Directors and has the authority to approve all specific
transactions pursuant to the Symons International Group, Inc. 1996 Stock Option
Plan (the "Plan").
The Executive Committee is comprised of Messrs. G. Gordon Symons, Alan
G. Symons and Douglas H. Symons. The Executive Committee is empowered by the
board to take action on behalf of the board when the need arises.
Directors of the Company who are not employees of the Company or its
affiliates receive an annual retainer of $10,000. In addition, the Company
reimburses its Directors for reasonable travel expenses incurred in attending
Board and Board Committee meetings. Each Director of the Company who is not also
an employee of the Company receives a meeting fee of $1,000 for each board or
committee meeting attended, with committee chairs receiving an additional $1,000
per quarter.
Compensation Committee Report
The Compensation Committee met four (4) times during 1998,and during
one meeting reviewed and recommended awards of stock options pursuant to the
Company's Stock Option Plan. The objectives of the Plan are to align executive
and shareholder long-term interests by creating a strong and direct link between
executive compensation and shareholder return and to enable executive officers
and other key employees to develop and maintain a long-term ownership position
in the Company's common stock. A total of 1,500,000 shares of the Company's
common stock have been reserved for issuance under the Plan. As of March 1,
1999, 65,336 shares were available for grant of options pursuant to the Plan.
The grants to senior executives of the Company and its subsidiaries are as
follows:
8
<PAGE>
<TABLE>
<CAPTION>
Name Total Options Options Granted in
Granted 1998
<S> <C> <C>
G. Gordon Symons 633,900 199,000
Alan G. Symons 320,900 56,000
Douglas H. Symons 172,800 35,000
Dennis G. Daggett (President 56,500 30,000
of IGF Insurance Company)
Roger C. Sullivan (Executive Vice 48,000 30,000
President of Superior Insurance
Company)
</TABLE>
The Company's total compensation program for Officers includes base
salaries, bonuses and the grant of stock options pursuant to the Plan. The
Company's primary objective is to achieve above-average performance by providing
the opportunity to earn above-average total compensation (base salary, bonus and
value derived from stock options) for above-average performance. Each element of
total compensation is designed to work in concert. The total program is designed
to attract, motivate, reward and retain the management talent required to serve
shareholder, customer and employee interests. The Company believes that this
program also motivates the Company's officers to acquire and retain appropriate
levels of stock ownership. It is the opinion of the Compensation Committee that
the total compensation earned by Company officers during 1998 achieves these
objectives and is fair and reasonable.
Consistent with that philosophy, certain of the Company's Officers have
entered into employment contracts with the Company or one of its subsidiaries.
Alan G. Symons, Chief Executive Officer of the Company and Douglas H.
Symons, President and Chief Operating Officer of the Company, are subject to
employment agreements, with such agreements calling for a base salary of not
less than $300,000 per year for Alan G. Symons and $200,000 for Douglas H.
Symons. These agreements became effective on April 30, 1996 and continue in
effect for an initial period of five (5) years. Upon the expiration of the
initial five (5) year period, the term of each agreement is automatically
extended from year to year thereafter and are cancelable (after the expiration
of the initial five (5) year term) upon six (6) months' notice. The base salary
of Alan Symons pursuant to this agreement was increased to $300,000 during 1997.
These two agreements contain customary restrictive covenants respecting
confidentiality and non-competition during the term of their employment and for
a period of two (2) years after the termination of the agreement. In addition to
annual salary, the agreements with Alan G. Symons and Douglas H. Symons
stipulate that Alan G. Symons may earn a bonus in an amount ranging from 25% to
100% of base salary and that Douglas H. Symons may earn a bonus in an amount
ranging from 25% to 50% of base salary. At the discretion of the Board, bonus
awards may be greater than the amounts indicated if agreed upon financial
targets are exceeded.
The Company has entered into an employment agreement with Dennis G.
Daggett pursuant to which Mr. Daggett has agreed to serve as the President of
IGF Insurance Company. Pursuant to the terms of the agreement, Mr. Daggett is
entitled to a base salary of not less than $180,000 per year and may earn a
bonus in an amount ranging from 0 to 150% of his base salary, or a greater
amount as may be approved by the Board.
9
<PAGE>
The Company has entered into an employment agreement with Thomas F.
Gowdy pursuant to which Mr. Gowdy has agreed to serve as the Executive Vice
President of IGF Insurance Company. Pursuant to the terms of this agreement, Mr.
Gowdy is entitled to a base salary of not less than $140,000 per year and may
earn a bonus ranging in an amount from 0 to 150% of his base salary, or a
greater amount as may be approved by the Board.
The Company has entered into an employment agreement with Roger C.
Sullivan pursuant to which Mr. Sullivan has agreed to serve as the Executive
Vice President of Superior Insurance Company. Pursuant to the terms of this
agreement, Mr. Sullivan is entitled to a base salary of not less than $180,000
per year and may earn a bonus in an amount ranging from 0 to 50% of his base
salary or a greater amount as may be approved by the Board.
On October 14, 1998, the Company's Board of Directors, approved
repricing of all of the Company's outstanding stock options issued pursuant to
the Plan to a uniform exercise price of 6.3125 per share. Given the decline in
the Company's stock price during early October, 1998, the directors, upon advice
of the Compensation Committee, felt the re-pricing necessary to properly
incentivize management.
In 1993, Congress enacted Section 162(m) of the Internal Revenue Code
that disallows corporate deductibility for "compensation" paid in excess of $1
million, unless such compensation is payable solely on account of achievement of
an objective performance goal. The Compensation Committee does not anticipate
that the compensation paid to any executive officer in the form of base
salaries, bonus and stock options will exceed $1 million in the near future.
However, as part of its on-going responsibilities with respect to executive
compensation, the Compensation Committee will monitor this issue to determine
what actions, if any, should be taken as a result of the limitation on
deductibility.
COMPENSATION COMMITTEE
John K. McKeating, Chair
Robert C. Whiting
Douglas H. Symons
Compensation Committee Interlocks And Insider Participation
During 1998 the Company's Compensation Committee consisted of Messrs.
John K. McKeating, Robert C. Whiting and Douglas H. Symons. Neither Messrs.
Whiting nor Mr. McKeating have any interlocks reportable under Item 402(j)(3)
and (4) of Regulation S-K. Douglas H. Symons has served as a Director and
Executive Officer of the Company since its formation in 1987 and as a Director
and Chief Operating Officer of Goran since 1989. Douglas H. Symons is also an
Executive Officer of each of the Company's subsidiaries. Since Alan G. Symons,
the Chief Executive Officer of the Company, is a Director of each of the
Company's subsidiaries and is empowered to determine the compensation of the
managers of the Company's subsidiaries, Douglas H. Symons and Alan G. Symons
have reportable interests under Item 402(j)(3) (i)-(iii) of Regulation S-K.
Remuneration Of Executive Officers
The following table sets forth the compensation awarded to, earned by
or paid to the Chief Executive Officer and the four most highly compensated
executive officers of the Company other than the Chief Executive Officer
(collectively, the "Named Executive Officers") during the last three (3) years.
10
<PAGE>
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Securities
Name and Principal Underlying All Other
Position Year Salary Bonus Options Compensation
<S> <C> <C> <C> <C> <C>
G. Gordon Symons, 1998 $0 $0 633,900 $32,000(1)
Chairman 1997 $0 $0 434,900 $26,000(1)
1996 $0 $0 375,000 $27,999(1)
Alan G. Symons, 1998 $300,000 $0 320,900
Chief Executive 1997 $278,230 $200,000 264,900
Officer 1996 $142,746 $200,000 200,000
Douglas H. Symons, 1998 $300,000 $0 172,800
President and Chief 1997 $200,000 $82,971 137,800
Operating Officer 1996 $195,973 $200,000 120,000
Dennis G. Daggett, 1998 $186,923 $0 56,500
President, IGF 1997(1) $180,000 $270,000 26,500
Insurance Company 1996 $174,077 $150,000 20,000
Roger C. Sullivan, 1998 $204,451 $0 48,000
Executive Vice 1997 $169,612 $90,176 18,000
President, Superior 1996 $118,851 $27,217 10,000
Insurance Company
</TABLE>
1 Consulting fees paid to companies owned by Mr. G. Gordon Symons.
STOCK OPTION GRANTS
The following table provides details regarding stock options granted
to the Company's Named Executive Officers in 1998. In addition there are shown
the hypothetical gains or "option spreads" that would exist for the respective
options. These gains are based on assumed rates of annual compound stock price
appreciation of 5% and 10% from the date the options were granted over the full
option term. These amounts represent certain assumed rates of appreciation only.
Actual gains, if any, on stock option exercises and common stock holdings are
dependent on the future performance of the Company's common stock and the
overall stock market conditions. There can be no assurance that the amounts
reflected on this table will be achieved.
11
<PAGE>
<TABLE>
<CAPTION>
Percentage
of Total
Options Potential Realized
Granted Exercise Value At Assumed
to Employ- Price Annual Rates of
Options ees During Per Expiration Stock Appreciation
Name Granted 1998 Share Date For Option Term
<S> <C> <C> <C> <C> <C> <C>
5% 10%
G. Gordon
Symons 199,000 42.98 $6.3125* 6-15-2008 $790,010.04 $2,002,040.04
Alan G.
Symons 56,000 12.09 $6.3125* 6-15-2008 $222,314.38 $563,388.15
Douglas H.
Symons 35,000 7.56 $6.3125* 6-15-2008 $138,946.49 $352,117.59
Dennis G.
Daggett 30,000 6.48 $6.3125* 6-15-2008 $119,096.99 $301,815.08
Roger C.
Sullivan 30,000 6.48 $6.3125* 6-15-2008 $119,096.99 $301,815.08
</TABLE>
* The original exercise price was $16.625 per share, which was the closing
price on June 15, 1998, the date of the grant. The options were later
repriced to $6.3125 per share on October 14, 1998.
OPTION EXERCISES AND YEAR-END VALUES
The following table shows stock options held by the Company's Named
Executive Officers during 1998. In addition, this table includes the number of
shares covered by both exercisable and non-exercisable stock options. Also
reported are the value of unexercised in-the-money options as of December 31,
1998.
12
<PAGE>
<TABLE>
<CAPTION>
STOCK OPTIONS
OUTSTANDING GRANTS AND VALUE AS OF DECEMBER 31, 1998
Value
Shares Realized Number of Shares Value of
Acquired at Underlying In-the-Money
on Exercise Unexercised Options Options
Name Exercise Date at 12-31-98 at 12-31-98 (1)
Exercisable Unexercisable Exercisable Unexercisable
<S> <C> <C> <C> <C> <C> <C>
G. Gordon
Symons 0 $0.00 434,900 199,000 $407,718.75 $186,562.50
Alan G.
Symons 0 $0.00 154,964 165,936 $145,278.75 $155,565.00
Douglas H.
Symons 0 $0.00 85,930 86,870 $80,559.38 $81,440.63
Dennis G.
Daggett 0 $0.00 13,333 43,167 $12,449.69 $40,469.06
Roger C.
Sullivan 0 $0.00 6,667 41,333 $6,250.31 $38,749.69
</TABLE>
1 Amount reflecting gains on outstanding options are based on the December 31,
1998 closing NASDAQ stock price which was $7.25 per share.
OPTION REPRICING
The following table provides details concerning the repricing of options to
purchase shares of the Corporations stock. This repricing occurred on October
14, 1998.
<TABLE>
<CAPTION>
Number of Length of
Securities Market Price Original Option
Underlying of Stock at Term Remaining
Options/ Time of New at Date of
Repriced or Repricing or Exercise Repricing or
Name Date Amended Amendment Price Amendment
<S> <C> <C> <C> <C> <C>
G. Gordon Oct. 14, 1998 375,000 6.3125 6.3125 96 Months
Symons, Oct. 14, 1998 50,000 6.3125 6.3215 102 Months
Chairman Oct. 14, 1998 5,000 6.3125 6.3125 106 Months
Oct. 14, 1998 4,900 6.3125 6.3125 108 Months
Oct. 14, 1998 199,000 6.3125 6.3125 116 Months
</TABLE>
13
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Alan G. Oct. 14, 1998 200,000 6.3125 6.3125 96 Months
Symons, Oct. 14, 1998 50,000 6.3125 6.3215 102 Months
Chief Oct. 14, 1998 10,000 6.3125 6.3125 106 Months
Executive Oct. 14, 1998 4,900 6.3125 6.3125 108 Months
Officer Oct. 14, 1998 56,000 6.3125 6.3125 116 Months
Douglas H. Oct. 14, 1998 120,000 6.3125 6.3125 96 Months
Symons, Oct. 14, 1998 5,000 6.3125 6.3215 102 Months
President, Oct. 14, 1998 10,000 6.3125 6.3125 106 Months
Chief Oct. 14, 1998 2,800 6.3125 6.3125 108 Months
Operation Oct. 14, 1998 35,000 6.3125 6.3125 116 Months
Officer
Dennis G. Oct. 14, 1998 20,000 6.3125 6.3125 96 Months
Daggett, Oct. 14, 1998 3,000 6.3125 6.3215 102 Months
President, Oct. 14, 1998 2,500 6.3125 6.3125 106 Months
IGF Oct. 14, 1998 1,000 6.3125 6.3125 108 Months
Insurance Oct. 14, 1998 30,000 6.3125 6.3125 116 Months
Co.
Roger C. Oct. 14, 1998 10,000 6.3125 6.3125 96 Months
Sullivan, Oct. 14, 1998 5,000 6.3125 6.3215 102 Months
Executive Oct. 14, 1998 2,000 6.3125 6.3125 106 Months
Vice Oct. 14, 1998 1,000 6.3125 6.3125 108 Months
President, Oct. 14, 1998 30,000 6.3125 6.3125 116 Months
Superior
Ins. Co.
</TABLE>
INDEBTEDNESS OF MANAGEMENT
The following Directors and Executive Officers of the Company were indebted
to the Company, or its parent or subsidiaries, in amounts exceeding $60,000
during 1998.
<TABLE>
<CAPTION>
Largest Loan
Name Date of Loan Balance During 1998 Present Balance
<S> <C> <C> <C>
G. Gordon Symons June 27, 1986 $115,807 $115,807
June 30, 1986 $156,495 $156,495
</TABLE>
14
<PAGE>
<TABLE>
<CAPTION>
Largest Loan
Name Date of Loan Balance During 1998 Present Balance
<S> <C> <C> <C>
Alan G. Symons June 30, 1986 $19,772 $6,617
February 24, 1988 $27,309 $27,309
March 19, 1998 $887,444 $0
October 15, 1998 $562,413 $0
Throughout 1998 $102,051 $0
Douglas H. Symons June 30, 1986 $15,000 $9,798
February 24, 1988 $2,219 $2,219
November 1, 1990 $68,050 $0
April 20, 1998 $260,358 $0
October 15, 1998 $594,517 $0
Throughout 1998 $22,533 $0
October, 1998 $600,000 $0
</TABLE>
The foregoing loans to Mr. G. Gordon Symons are on account of loans to
purchase common stock of Goran. Such loans are collateralized by pledges of the
common shares of Goran acquired and are payable on demand and are interest free.
Loans made to Alan G. Symons in 1986 and 1988 were made to facilitate the
purchase of common stock of Goran. These loans are payable upon demand and are
interest free. The loan to Alan G. Symons dated March 19, 1998, bears interest
at the rate of 5.85% and is secured by his options to purchase stock in GGS
Management, Inc. This loan was repaid in April, 1999. The loan to Alan G. Symons
dated October 15, 1998, bears interest at the rate of 7.25% and the proceeds
were used to facilitate the exercise of options to purchase common stock of
Goran. This loan was repaid in April, 1999. The Company made various advances to
Alan G. Symons throughout 1998, primarily to facilitate the payment of interest
on a loan from an unrelated third party relating to the purchase of Company
stock at the time of the Company's Initial Public Offering ("IPO") in 1996. This
loan was repaid in April, 1999.
The loans to Mr. Douglas H. Symons in 1986 and 1988 were to facilitate the
purchase of common stock of Goran. Such loans are collateralized by pledges of
the common stock of Goran and are payable upon demand and are interest free. The
loans to Mr. Douglas H. Symons in November, 1990 bears interest at the rate of
prime plus 1%, the proceeds being used to facilitate the purchase of a primary
residence. This loan was repaid in April, 1999. The loan to Mr. Douglas H.
Symons dated April 20, 1998, bears interest at the rate of 5.85% and is secured
by the options of Mr. Douglas H. Symons to purchase shares in GGS Management,
Inc. The proceeds of this loan were used to help facilitate the exercise of
options to purchase stock in the Company. This loan was repaid in April, 1999.
The loan to Mr. Douglas H. Symons dated October 15, 1998, bears interest at the
rate of 7.25%. The proceeds of this loan were used to help facilitate the
exercise of options to purchase stock of Goran. This loan was repaid in April,
1999. There were certain advances totaling $22,533.00 made to Mr. Douglas H.
Symons throughout 1998 with such funds primarily used to pay interest on a loan
from an unrelated third party which was undertaken to enable Mr. Douglas H.
Symons to acquire stock of the Company at the time of the Company's IPO. This
loan was repaid in April, 1999.
15
<PAGE>
In October, 1998, an affiliate of Goran advanced $600,000 to Douglas H.
Symons on an interest free basis. The outstanding balance of this advance was
$300,000 at December 31, 1998 and was entirely repaid in January, 1999.
On October 24, 1997, the Company guaranteed a loan from an unrelated third
party to Mr. Dennis G. Daggett. The $290,000 loan is due February 10, 2001 and
carries a 7.75% interest rate.
PROPOSAL NO. 2 - RATIFICATION OF APPOINTMENT OF AUDITORS
The Board of Directors proposes the ratification by the Shareholders at the
Annual Meeting of the appointment of the accounting firm of
PricewaterhouseCoopers L.L.P. ("PWC") as independent auditors for the Company's
year ending December 31, 1999. PWC has served as auditors for the Company for
the year 1998 and worked with the Company in effecting its Initial Public
Offering. A representative of PWC is expected to be present at the Annual
Meeting with the opportunity to make a statement if he or she so desires. This
individual will also be available to respond to any appropriate questions the
shareholders may have.
CERTAIN RELATIONSHIPS/RELATED TRANSACTIONS
Three (3) of the Company's subsidiaries, Superior, IGF and Pafco, have
entered into reinsurance agreements with Granite Reinsurance Company Ltd.,
("Granite Re"), an affiliate of Goran.
Granite Re has a quota share reinsurance treaty with Pafco for nonstandard
automobile premiums written in the fourth quarter of 1998.
Granite Re reinsures all Pafco insurance policies which were previously
issued through Symons International Group, Inc. - Florida, ("SIGF"), a former
subsidiary of the Company and now a subsidiary of Goran. This agreement is in
respect of business other than nonstandard automobile insurance. Granite Re
reinsures 100% of this SIGF business on a quota share basis. Such business was
discontinued effective January 1, 1999.
IGF reinsures a portion of its crop insurance with Granite Re. For year 1998,
Granite Re reinsured 20% of IGF's multi-peril crop insurance stop loss
protection ("MPCI") underwriting losses to the extent that aggregate losses
nationwide exceed 100% of MPCI Retention up to 125% of MPCI Retention and 95% of
IGF's MPCI underwriting losses to the extent that aggregate losses nationwide
exceed 125% of MPCI Retention up to 150% of MPCI Retention. Further, for 1998,
Granite Re had a 10% participation in 95% of IGF's crop-hail losses in excess of
an 80% pure loss ratio up to a 100% pure loss ratio and a 10% participation in
95% of IGF crop-hail losses in excess of 100% pure loss ratio up to a 130% pure
loss ratio.
The Company paid $2,832,000, $1,034,000 and $692,000 in 1998, 1997 and
1996, respectively, for consulting and other services relative to the conversion
of the Company's new non-standard automobile operating system. The Company has
capitalized these costs as part of its new non-standard automobile operating
system. Approximately 90% of these payments are for services provided by
consultants and vendors unrelated to the Company. Stargate Solutions
("Stargate") manages the work for such unrelated consultants and vendors and, as
compensation for such work, has retained approximately 10% of the payments
referred to above in return for management services provided. During 1998,
Stargate was owned beneficially by certain Directors of the Company and a
relative of these Directors.
16
<PAGE>
During 1998, the Company paid $270,000 to Onex, Inc., primarily for
employee-search services. David R. Doyle is an officer and director of Onex. The
Company paid Onex $86,000 in 1997 for similar services.
SHAREHOLDER PROPOSALS AND NOMINATIONS
Any shareholder of the Company wishing to have a proposal considered for
inclusion in the Company's 2000 proxy solicitation materials must set forth such
proposal in writing and file it with the Secretary of the Company on or before
December 11, 1999. In order to be considered in the 2000 Annual Meeting,
shareholder proposals not included in the Company 2000 Proxy Solicitation
materials, as well as shareholder nominations for Directors, must be submitted
in writing to the Secretary of the Company at least sixty (60) days before the
date of the 2000 Annual Meeting, or, if the 2000 Annual Meeting is held prior to
March 31, 2000, within ten (10) days after notice of the Annual Meeting as
mailed to shareholders. The Board of Directors of the Company will review any
shareholder proposals that are filed as required, and will determine whether
such proposals meet applicable criteria for inclusion in its 2000 Proxy
Solicitation materials or consideration at the 2000 Annual Meeting.
OTHER MATTERS
Management is not aware of any business to come before the Annual Meeting
other than those matters described in the Proxy Statement. However, if any other
matters should properly come before the Annual Meeting, it is intended that the
proxies solicited hereby will be voted with respect to those matters in
accordance with the judgment of the persons voting the proxies. The cost of
solicitation of proxies will be borne by the Company. The Company will reimburse
brokerage firms and other custodians, nominees and fiduciaries for reasonable
expenses incurred by them in sending proxy material to the beneficial owners of
common stock of the Company. In addition to solicitation by mail, Directors,
Officers and employees of the Company may solicit proxies personally or by
telephone without additional compensation.
Each Shareholder is urged to complete, date and sign the proxy and return it
promptly in the enclosed return envelope. Insofar as any of the information in
this Proxy Statement may rest peculiarly within the knowledge of persons other
than the Company, the Company relies upon information furnished by others for
the accuracy and completeness thereof.
Signed by Order of the Board of Directors
Alan G. Symons
Chief Executive Officer
17
<PAGE>
