<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE
SECURITIES EXCHANGE ACT OF 1934
[X] Filed by the Registrant
[ ] Filed by a Party other than the Registrant
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the
Commission Only (as permitted
[X] Definitive Proxy Statement by Rule 14a-6(e)(2))
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to sec. 240.14a-11(c) or sec. 240.14a-12
SUMMIT HOLDING SOUTHEAST, INC.
(Name of Registrant as Specified in Charter)
(Name of Person(s) Filing Proxy Statement, if other than 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:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
(1) Amount previously paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE> 2
SUMMIT HOLDING SOUTHEAST, INC.
NOTICE OF
1998 ANNUAL MEETING
AND
PROXY STATEMENT
<PAGE> 3
[Summit Holding Southeast Letterhead]
April 24, 1998
Dear Shareholder:
You are cordially invited to attend the 1998 Annual Meeting of
Shareholders of Summit Holding Southeast, Inc. (the "Company") to be held at the
Tampa Airport Marriott Hotel in Tampa, Florida on Wednesday, May 27, 1998 at
9:30 a.m., local time.
The enclosed Notice of Annual Meeting and Proxy Statement describes the
formal business to be transacted at the Annual Meeting. During the meeting, we
also will report on the current operations of the Company, and the directors and
officers of the Company will be present to respond to appropriate questions from
shareholders.
In addition, enclosed for your information is the Company's 1998 Annual
Report to Shareholders.
I hope that you will be able to attend the Annual Meeting. If you plan
to attend, please mark the appropriate box at the bottom of your proxy card so
that we can make appropriate arrangements for the anticipated number of guests.
Whether or not you plan to attend the Annual Meeting, please sign, date and
return your proxy card in the enclosed envelope at your earliest convenience.
This will ensure that your shares will be represented and voted at the Annual
Meeting even if you are unable to attend.
Sincerely,
Greg C. Branch
Chairman of the Board
<PAGE> 4
SUMMIT HOLDING SOUTHEAST, INC.
2310 A-Z PARK ROAD
LAKELAND, FLORIDA 33802
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 27, 1998
NOTICE HEREBY IS GIVEN that the 1998 Annual Meeting of Shareholders of
Summit Holding Southeast, Inc. (the "Company") will be held at the Tampa Airport
Marriott Hotel in Tampa, Florida, on Wednesday, May 27, 1998 at 9:30 a.m., local
time, for the purposes of:
1. Electing two directors to serve until the 2001 Annual Meeting
of Shareholders;
2. Ratifying the appointment of Ernst & Young LLP as independent
auditors of the Company for the fiscal year ending December
31, 1998; and
3. Transacting such other business as properly may come before
the Annual Meeting or any adjournments thereof.
Information relating to the foregoing matters is set forth in the
attached Proxy Statement. Shareholders of record at the close of business on
April 9, 1998 are entitled to receive notice of and to vote at the Annual
Meeting and any adjournments thereof. A list of shareholders of the Company as
of the close of business on April 9, 1998 will be available for inspection at
the Annual Meeting and during normal business hours from May 15, 1998 through
May 26, 1998 at the headquarters of the Company at 2310 A-Z Park Road, Lakeland,
Florida 33802.
By Order of the Board of Directors.
Thomas L. Clarke, Jr.
Secretary
Lakeland, Florida
April 24, 1998
PLEASE READ THE ATTACHED PROXY STATEMENT AND THEN PROMPTLY COMPLETE, EXECUTE AND
RETURN THE ENCLOSED PROXY CARD IN THE ACCOMPANYING POSTAGE-PAID ENVELOPE. YOU
CAN SPARE YOUR COMPANY THE EXPENSE OF FURTHER PROXY SOLICITATION BY RETURNING
YOUR PROXY CARD PROMPTLY. IF YOU ATTEND THE ANNUAL MEETING, YOU MAY REVOKE THE
PROXY AND VOTE IN PERSON IF YOU SO DESIRE.
<PAGE> 5
SUMMIT HOLDING SOUTHEAST, INC.
------------
PROXY STATEMENT
FOR THE ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 27, 1998
-------------
This Proxy Statement is furnished to the shareholders of Summit Holding
Southeast, Inc., a Florida corporation (the "Company"), in connection with the
solicitation of proxies by the Board of Directors of the Company for use at the
1998 Annual Meeting of Shareholders of the Company and at any adjournments
thereof (the "Annual Meeting"). The Annual Meeting will be held on Wednesday,
May 27, 1998 at 9:30 a.m., local time, at the Tampa Airport Marriott Hotel in
Tampa, Florida.
The approximate date on which this Proxy Statement and the accompanying
proxy card are first being sent or given to shareholders is April 24, 1998 .
VOTING
GENERAL
The securities that can be voted at the Annual Meeting consist of
Common Stock of the Company, $.01 par value per share (the "Common Stock"), with
each share entitling its owner to one vote on each matter submitted to the
shareholders. The record date for determining the holders of Common Stock who
are entitled to receive notice of and to vote at the Annual Meeting is April 9,
1998. On the record date, 5,791,600 shares of Common Stock were outstanding and
eligible to be voted at the Annual Meeting.
QUORUM AND VOTE REQUIRED
The presence, in person or by proxy, of a majority of the outstanding
shares of Common Stock is necessary to constitute a quorum at the Annual
Meeting. In counting the votes to determine whether a quorum exists at the
Annual Meeting, the proposal receiving the greatest number of all votes cast
"for" or "against" as well as any abstentions (including instructions to
withhold authority to vote) will be used.
In accordance with Florida law and the Company's Articles of
Incorporation, the election of a director (Proposal 1) is approved if the votes
cast favoring the election of a director exceed the votes cast opposing the
election of a director, provided a quorum is present. As a result, shares that
are withheld from voting on the proposal and any broker non-votes will have no
effect on the outcome of the vote. In accordance with Florida law and the
Company's Bylaws, if a quorum is present and the votes cast at the Annual
Meeting favoring the approval of the proposal to ratify the Board of Directors'
appointment of independent auditors for the Company (Proposal 2) exceed the
votes cast opposing such action, Proposal 2 will be adopted. As a result, shares
that are withheld from voting on the proposal and any broker non-votes will have
no effect on the outcome of the vote.
PROXIES
The accompanying proxy card is for use at the Annual Meeting if a
shareholder is unable to attend in person or is able to attend but does not wish
to vote in person. Shareholders should specify their choices with regard to the
two proposals on the enclosed proxy card. All properly executed and dated proxy
cards
<PAGE> 6
delivered by shareholders to the Company in time to be voted at the Annual
Meeting and not revoked will be voted at the Annual Meeting in accordance with
the instructions given. If no specific instructions are given, the shares
represented by a signed and dated proxy card will be voted "FOR" the election of
the two director nominees named in Proposal 1 and "FOR" the ratification of the
directors' selection of independent auditors described in Proposal 2. If any
other matters properly come before the Annual Meeting, the persons named as
proxies will vote upon such matters according to their judgment. The Board of
Directors is not aware of any other business to be presented to a vote of the
shareholders at the Annual Meeting.
The giving of a proxy does not affect the right to vote in person
should the shareholder attend the Annual Meeting. Any shareholder who has given
a proxy has the power to revoke it at any time before it is voted by giving
written notice of revocation to Thomas L. Clarke, Jr., the Secretary of the
Company, at 2310 A-Z Park Road, Lakeland, Florida 33802, by executing and
delivering a proxy card bearing a later date to Mr. Clark, or by voting in
person at the Annual Meeting.
In addition to soliciting proxies directly, the Company has requested
brokerage firms, nominees, custodians and fiduciaries to forward proxy materials
to the beneficial owners of shares held of record by them. The Company also may
solicit proxies through its directors, officers and employees in person and by
telephone and facsimile, without payment of additional compensation to such
persons. All expenses incurred in connection with the solicitation of proxies
will be borne by the Company.
STOCK OWNERSHIP
The following table sets forth certain information, as of March 31,
1998, regarding the beneficial ownership of the Company's Common Stock and
Series A Preferred Stock, par value $10 per share (the "Series A Preferred
Stock"), by: (i) each person who is known by the Company to own more than 5% of
the outstanding shares of Common Stock or Series A Preferred Stock, (ii) each
director and nominee for director, (iii) each executive officer named in the
Summary Compensation Table and (iv) all directors and executive officers as a
group. Except as otherwise noted, each shareholder has (i) sole voting and
investment power with respect to such shareholder's shares of stock, except to
the extent that authority is shared by spouses under applicable law, and (ii)
record and beneficial ownership with respect to such shareholder's shares of
stock.
<PAGE> 7
<TABLE>
<CAPTION>
COMMON STOCK SERIES A PREFERRED STOCK
------------------------------- ------------------------------
SHARES SHARES
NAME AND ADDRESS BENEFICIALLY PERCENT BENEFICIALLY PERCENT
OF BENEFICIAL OWNER OWNED(1) OWNED(1) OWNED(1) OWNED(1)
- ------------------- -------- -------- -------- --------
<S> <C> <C> <C> <C>
Gotham Capital III, L.P. 546,085(2) 9.43% 0 0
100 Jericho Quadrangle
Suite 212
Jericho, New York 11753
Greenlight Capital, L.L.C. 529,000(3) 9.13% 0 0
David Einhorn
Jeffrey A. Keswin
120 Broadway, Suite 901
New York, New York 10271
Third Point Management 549,600(4) 9.49% 0 0
Company L.L.C.
Third Point Partners L.P.
Daniel S. Loeb
277 Park Avenue, 26th Floor
New York, New York 10172
FMR Corp. 300,000(5) 5.18% 0 0
Fidelity Low-Priced Stock Fund
Edward C. Johnson 3d
82 Devonshire Street
Boston, Massachusetts 02109
William B. Bull 273,377(6) 4.63% 22 *
Greg C. Branch 269,337(7) 4.56% 287 *
C.C. Dockery 225,420(8) 3.84% 39 *
Russell L. Wall 139,921(9) 2.39% 0 0
Thomas R. Petcoff 55,165(10) * 11 *
John A. Gray 43,405(11) * 0 0
Robert Siegel 38,628(12) * 175 *
Robert L. Noojin, Sr. 37,131(13) * 0 0
All directors and executive 1,082,384(14) 17.20% 534 *
officers as a group (8 persons)
</TABLE>
- -------------------------
* Less than one percent.
(1) Each named person is deemed to be the beneficial owner of securities
which may be acquired within 60 days after March 31, 1998 through the
exercise of options, warrants and rights, if any, and such securities
are deemed to be outstanding for the purpose of computing the
percentage of the class beneficially owned by such person. However,
any such shares are not deemed to be outstanding for the purpose of
computing the percentage of the class beneficially owned by any other
person.
3
<PAGE> 8
(2) Represents aggregate ownership by Gotham Capital III, L.P. and a
wholly owned subsidiary thereof; Gotham Capital VI, LLC; and Joel M.
Greenblatt, the General Partner of Gotham Capital III, L.P. and Gotham
Capital VI, LLC as reported to the Company on February 9, 1998.
(3) Such persons possess shared voting power and investment power with
respect to the shares shown.
(4) Such persons possess shared voting power and investment power with
respect to the shares shown, except for 261,740 shares for which only
Third Point Management Company L.L.C. and Mr. Loeb share voting and
investment power.
(5) Represents ownership by Fidelity Low-Priced Stock Fund, a wholly-owned
subsidiary of FMR Corp. Edward C. Johnson 3d serves as Chairman of FMR
Corp. Such information has been reported by such persons on Schedule
13G, filed with the Securities and Exchange Commission on February 11,
1998.
(6) Includes 109,627 shares issuable upon exercise of currently
exercisable stock options.
(7) Includes 109,627 shares issuable upon exercise of currently
exercisable stock options and 4,545 shares held by trusts for which
Mr. Branch is the trustee.
(8) Includes 85,170 shares issuable upon exercise of currently exercisable
stock options.
(9) Includes 58,438 shares issuable upon exercise of currently exercisable
stock options.
(10) Includes 36,564 shares issuable upon exercise of currently exercisable
stock options.
(11) Includes 34,860 shares issuable upon exercise of currently exercisable
stock options.
(12) Includes 33,128 shares issuable upon exercise of currently exercisable
stock options.
(13) Includes 32,586 shares issuable upon exercise of currently exercisable
stock options.
(14) Includes 500,000 shares issuable upon exercise of currently
exercisable stock options.
PROPOSAL 1 -- ELECTION OF DIRECTORS
NOMINEES
Pursuant to the Company's Articles of Incorporation and Bylaws, the
Board of Directors of the Company consists of seven members who are divided into
three classes as nearly equal in number as possible. The directors in each class
are elected by the shareholders for a term of three years and until their
successors are elected and qualified. The term of office of one of the classes
of directors expires each year at the Annual Meeting of Shareholders, and a new
class of either two or three directors is elected by the shareholders each year
at that time.
At the Annual Meeting, the terms of Greg C. Branch and Robert L.
Noojin, Sr. will expire, and the Board of Directors has nominated each of these
two individuals to stand for re-election as directors at the Annual Meeting. If
elected by the shareholders, each of the nominees will serve a three-year term
which will expire at the 2001 Annual Meeting of Shareholders. If any of the
nominees should be unavailable to serve for any reason (which is not
anticipated), the Board of Directors may designate a substitute nominee or
nominees (in which case the persons named as proxies on the enclosed proxy card
will vote the shares represented by all valid proxy cards for the election of
such substitute nominee or nominees), allow the vacancy or vacancies to remain
open until a suitable candidate or candidates are located, or by resolution
provide for a lesser number of directors.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE
"FOR" THE PROPOSAL TO RE-ELECT GREG C. BRANCH AND ROBERT L. NOOJIN, SR. AS
DIRECTORS OF THE COMPANY FOR A THREE-YEAR TERM EXPIRING AT THE 2001 ANNUAL
MEETING OF SHAREHOLDERS AND UNTIL THEIR SUCCESSORS HAVE BEEN DULY ELECTED AND
QUALIFIED.
INFORMATION REGARDING NOMINEES AND CONTINUING DIRECTORS
The following table sets forth certain information regarding the two
nominees for director as well as the five incumbent directors whose terms as
directors will continue following the Annual Meeting.
4
<PAGE> 9
Except as otherwise indicated, each of the named persons has been engaged in his
or her present principal occupation for more than five years.
PERSONS NOMINATED FOR ELECTION TO SERVE AS DIRECTORS UNTIL THE 2001 ANNUAL
MEETING OF SHAREHOLDERS
Greg C. Branch Mr. Branch, age 50, has been a director of the
Company since the formation of the Company in
November 1996. Mr. Branch served as Chairman of the
Board of Trustees of Employers Self Insurers Fund
("ESIF"), the predecessor of the Company's wholly
owned subsidiary, Bridgefield Employers Insurance
Company ("Bridgefield"), and its predecessors from
1994 until 1997 and as a Trustee of ESIF and its
predecessors from 1980 until 1997. Mr. Branch has
served as President of Branch Properties, Inc., a
manufacturer, wholesaler and retailer of animal feeds
and fertilizer located in Ocala, Florida, since 1973.
Mr. Branch is Vice Chairman and a founding director
of American Feed Industry Insurance Company, a
property and casualty insurer.
Robert L. Noojin, Sr. Mr. Noojin, age 63, has been a director of the
Company since November 1996 and served as a Trustee
of ESIF and its predecessors from 1979 until 1997.
Prior to his retirement in 1994, Mr. Noojin was
President of Eagle Supply, Inc., a roofing supply
company headquartered in Tampa, Florida, and a
subsidiary of TDA Industries, Inc.
DIRECTORS TO SERVE UNTIL THE 1999 ANNUAL MEETING OF SHAREHOLDERS
C. C. Dockery Mr. Dockery, age 64, has been a director of the
Company since November 1996. Mr. Dockery founded and
remained involved with Summit Consulting, Inc.
("SCI"), a subsidiary of the Company's wholly owned
subsidiary Summit Holding Corporation ("SHC"), from
1977 until 1986. Mr. Dockery served as a Trustee of
ESIF and its predecessors from 1987 until 1997. Since
1982, Mr. Dockery has been the President, Chief
Executive Officer and majority shareholder of
Crossroads Insurance Company, Ltd., a reinsurance
company located in Bermuda. For 21 years, Mr. Dockery
served as a director of Cotton States Mutual
Insurance Company and its affiliate, Cotton States
Life Insurance Company, a publicly traded life
insurance provider located in Atlanta, Georgia.
Robert Siegel Mr. Siegel, age 66, has served as a director of the
Company since November 1996 and served as a Trustee
of ESIF and its predecessors from 1978 until 1997.
Mr. Siegel is Chairman of Siegel Gas & Oil Products,
which was founded in 1934 and which is located in
Miami, Florida.
5
<PAGE> 10
DIRECTORS TO SERVE UNTIL THE 2000 ANNUAL MEETING OF SHAREHOLDERS
William B. Bull Mr. Bull, age 49, has been President, Chief Executive
Officer and a director of the Company since November
1996. Mr. Bull has also served as President and Chief
Executive Officer of SHC, and its predecessors since
1987. Mr. Bull joined SCI in 1984 as special
assistant to the President and subsequently became
Executive Vice President in 1986 with operating
responsibilities for such company. Mr. Bull is a
member of various insurance associations and serves
on numerous boards, including the Florida Association
of Self-Insurance, Florida Retail Federation
Association, Florida Group Risk Administrators
Association and Florida Workers Compensation Guaranty
Association.
John A. Gray Mr. Gray, age 52, has served as a director of the
Company since November 1996. Mr. Gray served as a
Trustee of ESIF and its predecessors from 1979 until
1997. Since 1992, Mr. Gray has served as President of
B.F. Deal, Inc., a yacht brokerage and charter
company, and since 1993 has served as Vice President
of Marine Resources Management, Inc., a supplier of
marine equipment. From 1975 until his retirement in
1992, Mr. Gray was President of Dura-Stress, Inc., a
manufacturer of pre-stressed and precast concrete
products located in Leesburg, Florida.
Thomas S. Petcoff Mr. Petcoff, age 49, has served as a director of the
Company since November 1996. Mr. Petcoff was employed
by and involved with SCI from 1977 until 1986. Mr.
Petcoff served as a Trustee of ESIF and its
predecessors from 1987 until 1997. Mr. Petcoff also
serves as a consultant to the Florida Retail
Federation Self Insurers Fund and the Board of
Directors of the Florida Retail Federation
Association. Since 1984, Mr. Petcoff has served as
President of Centurion Insurance Services, Inc., an
insurance consulting firm and sales agency.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors of the Company conducts its business through
meetings of the full Board and through committees of the Board, including
standing Audit and Compensation Committees. During the fiscal year ended
December 31, 1997, the Board of Directors held 10 meetings, the Compensation
Committee held 1 meeting and the Audit Committee held 1 meeting. Each director
attended at least 75% of all meetings of the full Board of Directors and of each
committee of the Board of which he is a member.
The Audit Committee is responsible for reviewing with the Company's
independent auditors their audit plan, the scope and results of their audit
engagement and the accompanying management letter, if any, reviewing the scope
and results of the Company's internal auditing procedures, consulting with the
independent auditors and management with regard to the Company's accounting
methods and the adequacy of its internal accounting controls, approving
professional services provided by the independent auditors, reviewing the
independence of the independent auditors, and reviewing the range of the
independent auditors' audit and non-audit fees. The Audit Committee is comprised
of John A. Gray, Robert L. Noojin, Sr. and Robert Siegel.
The Compensation Committee is responsible for making relevant
compensation decisions of the Company and for administering and interpreting the
Company's 1996 Long-Term Incentive Plan (the "Incentive Plan") which includes,
among other things, determining which directors, officers and employees
6
<PAGE> 11
will receive awards under the Incentive Plan, when the awards will be granted,
the type of awards to be granted, the number of shares or cash involved in each
award, the time or times when any options granted will become exercisable and,
subject to certain conditions, the price and duration of such options. The
Compensation Committee is comprised of Greg C. Branch and Thomas S. Petcoff.
The Board of Directors as a whole functions as a nominating committee
to select management's nominees for election as directors of the Company. The
Board of Directors will consider nominees recommended by shareholders if
submitted to the Company in accordance with the procedures set forth in Section
2.11 of the Bylaws of the Company. See "Shareholders' Proposals for 1999 Annual
Meeting" below.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The members of the Compensation Committee are Greg C. Branch and Thomas
S. Petcoff, each of whom was elected to such position upon the formation of the
Compensation Committee on November 20, 1996. No member of the Compensation
Committee is an employee of the Company.
Mr. Branch served as a Trustee of ESIF and its predecessors from 1980
until 1997 and Chairman of the Board of ESIF from 1994 until 1997, and has
served as Chairman of the Board and a director of the Company since November 15,
1996. Mr. Petcoff was an employee of, and involved with, SCI from 1977 to 1987,
was a Trustee of ESIF and its predecessors from 1987 until 1997, and has been a
director of the Company since November 15, 1996.
Messrs. Petcoff and Dockery own 80,000 square feet of office space in
Lakeland, Florida and lease such space to SCI. The property is currently rented
by SCI for approximately $90,000 per month under a lease which runs through
March 2000. During the fiscal years ended March 31, 1996 and 1997 and the
transition period from April 1, 1997 to December 31, 1997, SCI made rental
payments of approximately $1.1 million, $1.1 million and $0.9 million,
respectively, for such property.
Mr. Petcoff is President of Centurion Insurance Services, Inc.
("Centurion"). Pursuant to an agreement between SCI and Centurion dated November
1995, and in connection with Centurion's involvement in the formation of KRF,
SCI pays Centurion an annual fee equal to 1% of KRF's premiums earned in each
year. During the fiscal years ended March 31, 1996 and 1997 and the nine-month
transition period from April 1, 1997 to December 31, 1997, SCI paid fees of
approximately $13,000, $31,000 and $25,000, respectively, to Centurion.
In addition, for reinsurance policies placed by SCI on behalf of KRF,
which are brokered by Centurion, Centurion is entitled to brokerage commissions.
Through the end of the fiscal years ended March 31, 1996, March 31, 1997 and the
nine-month transition period from April 1, 1997 to December 31, 1997, the
Company paid approximately $13,000, $13,000 and $4,000, respectively, to
Centurion for brokerage commissions. SCI also pays Centurion agency commissions
for policies placed with the Non-affiliated Entities, and through the end of the
fiscal years ended March 31, 1996, 1997 and the nine-month transition period
from April 1, 1997 to December 31, 1997, the Company paid approximately $2,000,
$3,000 and $600, respectively to Centurion for such agency commissions.
Mr. Petcoff is a consultant to one of the Funds, Florida Retail
Federation Self Insurers Fund ("FRF"), and is on the Board of Directors of the
Florida Retail Federation (the "Association"). Pursuant to a written arrangement
between SCI and the Association, the Association, as the sponsoring party of
FRF, is entitled to 1% of such Fund's premiums earned in each year. During the
fiscal years ended March 31,
7
<PAGE> 12
1996, 1997 and the nine-month transition period from April 1, 1997 to December
31, 1997, the Company paid approximately $0.9 million, $0.8 million and $0.5
million, respectively, to the Association for such fees. In addition, during the
fiscal years ended March 31, 1996, 1997 and the nine-month transition period
from April 1, 1997 to December 31, 1997, FRF paid SCI fees for administrative
services of approximately $27.7 million, $24.5 million and $15.5 million,
respectively.
DIRECTOR COMPENSATION
Each non-employee member of the Board of Directors of the Company
receives a fee of $10,000 per year and an additional $2,500 for attendance at
each meeting of the Board of Directors of the Company. In addition, non-employee
members of committees of the Board of Directors receive a fee of $2,500 for
attendance at each committee meeting. Directors who are employees of the Company
receive no directors' fees. All meetings of the Board of Directors of the
Company's insurance subsidiaries and the Company's administrative subsidiaries
are held in conjunction with meetings of the Board of Directors of the Company,
and no additional compensation is received for being a member of the Board of
Directors of any such subsidiaries.
Additionally, the Company's Incentive Plan provides for the issuance of
up to a total of 500,000 shares of Common Stock of the Company to the directors,
officers and employees of the Company. For information regarding stock options
granted to the directors of the Company on May 28, 1997, see "Executive
Compensation -- Stock Options."
ADDITIONAL INFORMATION
For additional information that should be considered with regard to the
election of directors, see "Executive Compensation," "Certain Transactions" and
"Section 16(a) Beneficial Ownership Reporting Compliance" below.
EXECUTIVE COMPENSATION
SUMMARY OF COMPENSATION
The following table summarizes by various categories the total
compensation earned by the Company's two executive officers for services
rendered by them to the Company, ESIF and their subsidiaries during the fiscal
year ended March 31, 1997 and the fiscal year ended December 31, 1997. On August
20, 1997, the Company changed its fiscal year-end from March 31 to December 31.
The table below reflects amounts received by the executive offices during the
twelve-month periods ending on March 31, 1997 and December 31, 1997. As a
result, the amounts received by the officers from January 1, 1997 to March 31,
1997 are included in both lines.
8
<PAGE> 13
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Annual Compensation(1) Long Term Compensation
---------------------- ----------------------
Name and Other Annual Securities All Other
Principal Position Year Salary Compensation(2) Underlying Options Compensation
- ------------------ ---- ------ --------------- ------------------ ------------
<S> <C> <C> <C> <C> <C>
William B. Bull 1997 $250,000 $12,000 109,627 $187,876(3)
President and 1996 250,000 12,000 -- 8,256(3)
Chief Executive Officer
Russell L. Wall 1997 239,200 12,000 58,438 $31,188(4)
Vice President and 1996 230,000 12,000 -- 8,816(4)
Chief Financial Officer
</TABLE>
- ----------------------------------
(1) On August 20, 1997, the Company changed its fiscal year end from March 31
to December 31. The table reflects amounts received by the executive
officers during the twelve month periods ending on March 31, 1997 and the
December 31, 1997. As a result, the amounts received by such officers from
January 1, 1997 to March 31, 1997 are included in both lines. During such
three-month period, Mr. Bull and Mr. Wall received $62,500 and $57,500,
respectively, in "Salary", $3,000 and $3,000, respectively, in "Other
Annual Compensation", and $3,095 and $3,033, respectively, in "All Other
Compensation."
(2) Represents automobile allowance.
(3) Includes $1,131 for life insurance premiums paid by the Company in each of
1996 and 1997, $7,125 contributed by the Company to Mr. Bull's 401(k) plan
account in each of 1996 and 1997 and $179,620 for bonus earned in 1997.
(4) Includes $1,779 and $1,691 for life insurance premiums paid by the Company
in 1996 and 1997, respectively, $7,125 contributed by the Company to Mr.
Wall's 401(k) plan account in each of 1996 and 1997 and $22,284 for bonus
earned in 1997.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
Individual Grants
-------------------------------- Potential Realizable Value at
Number of Assumed Annual Rates of Stock
Securities Percent of Price Appreciation
Underlying Total Options for Option Term (2)
Options Granted in Exercise or Expiration ---------------
Name Granted(1) Fiscal Year Base Price Date 5% 10%
---- ---------- --------------- ---------- ---- -- ---
<S> <C> <C> <C> <C> <C> <C>
William B. Bull 109,627 21.9% $11.00 5/28/2007 $758,382 $1,921,889
Russell L. Wall 58,438 11.7% $11.00 5/28/2007 $404,265 $1,024,486
</TABLE>
- ---------------
(1) Such options vested as to 50% of the total grant on each of 180 days after
the date of grant and May 28, 1998.
(2) Amounts reported represent hypothetical values that may be realized upon
exercise of the options immediately prior to the expiration of their term,
assuming that the stock price on the date of grant appreciates at the
specified annual rates of appreciation, compounded annually over the term
of the option.
9
<PAGE> 14
FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
Number of Securities Underlying Value of Unexercised
Unexercised Options In-the-Money Options
Name at Fiscal Year-End(1) at Fiscal Year-End (2)
---- ------------------------------ ------------------------------
Exercisable Unexercisable Exercisable Unexercisable
----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
William B. Bull 54,814 54,813 $623,509 $623,498
Russell L. Wall 27,219 27,219 309,616 309,616
</TABLE>
- -------------
(1) No options were exercised by the Named Executive Officers in 1997.
(2) Values calculated using the fair market value of the underlying securities
(the closing price of the Company's Common Stock on the Nasdaq National
Market) on December 31, 1997 of $22.375
EMPLOYMENT AGREEMENTS
Effective as of May 28, 1997, the effective date on which ESIF
converted from a Florida group self-insurance fund to a Florida stock insurance
company and became a wholly owned subsidiary of the Company (the "Conversion"),
the Company entered into an employment agreement with Mr. Bull pursuant to which
he is employed full-time as the Company's President and Chief Executive Officer.
The agreement, which expires on May 28, 2002, provides for an annual base salary
of $250,000 and grants Mr. Bull the right to receive a bonus in each year of the
agreement equal to 5% of the amount, if any, by which the Company's consolidated
net income after taxes exceeds $6.0 million. In addition to his cash
compensation, Mr. Bull receives additional benefits, including those generally
provided to other employees of the Company. The agreement also provides, in the
event of its expiration or termination, that: (i) Mr. Bull is to be subject to a
two-year confidentiality period and limitation on the use of trade secrets and
(ii) Mr. Bull is subject to up to a one-year non-competition and
non-solicitation arrangement with the Company for which he would receive
$8,333.33 per month as consideration for such non-competition and
non-solicitation arrangement.
The Company also entered into an employment agreement with Russell L.
Wall effective as of May 28, 1997, pursuant to which he is employed full-time as
the Company's Vice President and Chief Financial Officer. The agreement, which
expires on May 28, 2000, provides for an annual base salary of $230,000 and
grants Mr. Wall the right to receive a bonus in each year of the agreement equal
to 1.67% of the amount, if any, by which the Company's consolidated net income
after taxes exceeds $8.25 million in calendar year 1997 and $12.16 million in
each of calendar years 1998 and 1999. In addition to his cash compensation, Mr.
Wall receives additional benefits, including those generally provided to other
employees of the Company. The agreement also provides, in the event of its
expiration or termination, that: (i) Mr. Wall is to be subject to a two-year
confidentiality period and limitation on the use of trade secrets, as such term
is defined therein, and (ii) Mr. Wall is subject to up to a one year
non-competition and non-solicitation arrangement with the Company. The agreement
further provides for a payment of $8,333.33 per month as consideration for such
non-competition and non-solicitation arrangement.
STOCK OPTIONS
The Board of Directors and shareholders of the Company have adopted the
Incentive Plan, pursuant to which certain directors, officers and other
employees of the Company and its subsidiaries can
10
<PAGE> 15
be granted a variety of long-term incentives, including incentive stock options,
non-qualified stock options, grants of restricted and unrestricted stock,
performance share awards, stock appreciation rights, dividend equivalents and
other stock-based awards. The purpose of the Incentive Plan is to promote the
success, and enhance the value, of the Company and its subsidiaries by linking
the personal interests of the directors, officers and key employees to those of
the Company's shareholders and by providing the directors, officers and key
employees with an incentive for outstanding performance.
The Incentive Plan is administered by the Compensation Committee of the
Board of Directors. A total of 500,000 shares of Common Stock have been reserved
for issuance under the Incentive Plan. The Board of Directors or the
Compensation Committee has the right at any time to amend or discontinue the
Incentive Plan without the consent of the Company's shareholders or optionees,
provided that no such action may adversely affect awards previously granted
without the recipient's consent.
On May 28, 1997, the Company granted stock options to the following
directors and executive officers of the Company to purchase the following number
of shares of Common Stock at the initial public offering price of $11.00 per
share: Greg C. Branch - 109,627; William B. Bull - 109,627; C.C. Dockery -
85,170; Russell L. Wall - 58,438; Thomas S. Petcoff - 36,564; John A. Gray -
34,860; Robert Siegel - 33,128: and Robert L. Noojin, Sr. - 32,586. The options
granted to Mr. Bull and Mr. Wall are incentive stock options, and 50% of such
options vested 180 days after the date of the grant and the remaining 50% of
such options will vest on May 28, 1998, provided that such officer remains
employed by the Company. The options granted to the other named persons are
non-qualified stock options which vested on May 28, 1997.
The Incentive Plan provides that in the event of a "change of control"
(as defined in the Incentive Plan) of the Company, all awards granted under the
Incentive Plan that are in the nature of rights that may be exercised shall
automatically become fully exercisable. In addition, at any time prior to or
after a change of control, the Compensation Committee may accelerate awards and
waive conditions and restrictions on any other awards under the Incentive Plan
to the extent it may determine appropriate.
11
<PAGE> 16
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
This report by the Compensation Committee of the Board of Directors
(the "Committee") discusses the Committee's compensation objectives and policies
applicable generally to the Company's executive officers, as well as the
compensation specifically established for the Company's two executive officers,
William B. Bull and Russell L. Wall, for the fiscal year ended December 31, 1997
as reported in the Summary Compensation Table. The Committee is composed
entirely of non-employee directors of the Company.
The Company's compensation policies for its executive officers are
intended to create a direct relationship between the level of compensation paid
to executives and the Company's current and long-term level of performance. The
Committee believes that this relationship is best implemented by providing a
compensation package consisting of separate components, including base salary,
annual bonus compensation and, effective as of the Company's initial public
offering of Common Stock in May 1997, long-term incentive compensation in the
form of stock options.
The base salaries for the Company's two executive officers for 1997
were established subjectively by the trustees of ESIF prior to its conversion to
a stock insurance company in May 1997. The salaries of Messrs. Bull and Wall
were established during 1996 based on the trustees' evaluation of how well these
two executive officers fulfilled their responsibilities during the fiscal year
ended March 31, 1996 ("fiscal 1996"). Based mainly on ESIF's fiscal 1996
performance in view of the difficult competitive, industry and regulatory
environment and upon the trustees' general understanding of the salary levels
paid to executive officers performing equivalent functions at similar companies
in the insurance industry, the trustees determined that the base salaries of
these two executive officers should be $250,000 for Mr. Bull and $230,000 for
Mr. Wall.
Bonuses established for the executive officers are intended to provide
an incentive for improved performance in the coming year. Target bonus levels
for each executive officer are based on targeted levels of income for the
Company.
In anticipation of the Company's initial public offering in May 1997,
the Board of Directors established the Committee, approved the employment
agreements with Messrs. Bull and Wall, and approved the Incentive Plan. The base
salaries established in the employment agreements with Messrs. Bull and Wall
maintain their base salaries for the next five years in the case of Mr. Bull and
the next three years in the case of Mr. Wall, effective in each case as of May
28, 1997 (the date of the closing of the Company's initial public offering),
subject to such increases in base salary as may be approved from time to time by
the Committee.
To directly tie the potential for significant increases in annual
compensation to significant improvement in the Company's financial performance,
the employment agreements provide for the payment of a bonus each year in an
amount equal, in the case of Mr. Bull, to 5% of the amount by which the
Company's consolidated net income after taxes exceeds $6.0 million and, in the
case of Mr. Wall, to 1.67% of the amount by which the Company's consolidated net
income after taxes exceeds $8.25 million in calendar 1997 and $12.16 million in
each of calendar years 1998 and 1999.
To further establish a direct link between employee performance and
shareholder value, the Committee established the Incentive Plan. The Incentive
Plan is designed to provide incentive for extraordinary performance through the
award of stock options, restricted stock and other forms of equity-based
compensation to employees of the Company selected by the Committee. Through
grants of stock
12
<PAGE> 17
options and other forms of equity-based compensation, opportunities for
significant compensation by the Company's executive officers and other key
employees are tied directly to increases in the price of the Company's Common
Stock, thereby directly linking a significant component of their compensation
package to increases in shareholder value. On May 28, 1997, options were granted
under the Incentive Plan to Messrs. Bull and Wall having an exercise price equal
to the fair market value of the Company's Common Stock on the date of grant and,
to encourage a long-term perspective by the employee, having an exercise period
of ten years. The number of options granted to the respective executive officers
was based on the Committee's subjective determination of each officer's
potential ability to positively impact the Company's performance and the price
of its Common Stock. For information regarding the stock options granted to
Messrs. Bull and Wall, see "-- Stock Ownership."
It is also the responsibility of the Committee to address the issues
raised by Section 162(m) of the Internal Revenue Code which made certain
non-performance-based compensation in excess of $1,000,000 to executives of
public companies non-deductible to these companies beginning in 1994. The
Committee has reviewed the issues applicable to the Company and has determined
that it is not necessary for the Company to take any action at this time with
regard to this limit.
COMPENSATION COMMITTEE
Greg C. Branch
Thomas S. Petcoff
13
<PAGE> 18
SHAREHOLDER RETURN PERFORMANCE GRAPH
The following line graph compares the percentage change in the
cumulative total shareholder return on the Company's Common Stock against the
cumulative total return of the S&P 500 Total Return Index (the "S&P Index") and
a composite index for insurance corporations with an asset size between $500.0
million and $1,000.0 million (the "Peer Index") for the period commencing May
28, 1997 (the date the Company's Common Stock commenced trading on the Nasdaq
National Market) and ending December 31, 1997. The Peer Index was comprised by
SNL Securities, a research and publishing company that focuses on, among other
areas, insurance companies and specialized financial services. The graph assumes
that the value of the investment in the Company's Common Stock and each index
was $100 on May 28, 1997. The change in cumulative total return is measured by
dividing (i) the sum of (a) the cumulative amount of dividends for the period,
assuming dividend reinvestment, and (b) the change in share price between the
beginning and end of the period, by (ii) the share price at the beginning of the
period. The Company has not paid any dividends during the period covered by the
graph.
[GRAPH]
<TABLE>
<CAPTION>
TOTAL RETURNS FOR PERIOD ENDING
-------------------------------
5/28/97 6/30/97 9/30/97 12/31/97
<S> <C> <C> <C> <C>
SUMMIT HOLDING SOUTHEAST $ 100.00 $114.76 $135.86 $151.05
S&P INDEX $ 100.00 $104.63 $112.47 $115.70
PEER INDEX $ 100.00 $108.01 $127.94 $131.49
</TABLE>
14
<PAGE> 19
CERTAIN TRANSACTIONS
Aeromech, Inc. ("Aeromech"), an entity in which Mr. Bull currently owns
approximately 10% of the outstanding shares, has provided services to SCI in the
form of airplane maintenance, hangar leasing and office space for the crew since
October 1994. During the fiscal years ended March 31, 1996, 1997 and the
nine-month transition period from April 1, 1997 to December 31, 1997, SCI paid
Aeromech approximately $420,000, $17,000 and $1,000, respectively, for such
services.
SCI had an arrangement with BJ Limo Services, Inc. ("BJ"), a Company in
which Mr. Bull owns 100% of the outstanding stock, pursuant to which BJ provided
the employees of the Company limousine services and, on occasion, the use of a
private airplane and charter boat. During the fiscal years ended March 31, 1996,
1997 and the nine-month transition period from April 1, 1997 to December 31,
1997, the Company paid approximately $9,000, $700 and $92,000, respectively, for
such services.
Mr. Bull is on the Board of Directors of the Florida Retail Federation
(the "Association"), which is the sponsoring trade association for FRF, one of
the Funds administered by SCI. Pursuant to a written arrangement between SCI and
the Association, the Association, as the Fund sponsor, is entitled to a fee
equal to 1% of such Fund's premiums earned in each year, and SCI is obligated to
pay such fee out of the administrative fee it receives from FRF. During the
fiscal years ended March 31, 1996, 1997 and the nine-month transition period
from April 1, 1997 to December 31, 1997, the Company paid approximately $0.9
million, $0.08 million and $0.05 million to the Association for such fees.
During the years ended March 31, 1996, 1997 and the nine-month transition period
from April 1, 1997 to December 31, 1997, FRF paid SCI fees for administrative
services of approximately $27.7 million, $24.5 million and $15.5 million,
respectively.
Mr. Dockery founded SCI in 1977, served as a Trustee of ESIF and its
predecessors from 1987 until 1997 and was first elected as a director of the
Company on November 15, 1996.
In connection with ESIF'S acquisition of SCI, SHC and all of their
affiliates on January 16, 1996 (the "Acquisition"), the Department of Insurance
of the State of Florida (the "Florida DOI") issued a consent order requiring
that Mr. Bull, who at that time was a principal shareholder as well as President
and Chief Executive Officer of SHC, personally indemnify ESIF up to a maximum of
$5.0 million for certain loss, injury or damage to ESIF that may result from the
Acquisition. Pursuant to an order issued by the Florida DOI in connection with
the Conversion, Mr. Bull was relieved of such personal indemnification
obligations when the Conversion became effective.
Messrs. Dockery and Petcoff own 80,000 square feet of office space in
Lakeland, Florida and lease such space to SCI. The property is currently rented
by SCI for approximately $90,000 per month under a lease which runs through
March 2000. During the fiscal years ended March 31, 1996 and 1997 and the
transition period from April 1, 1997 to December 31, 1997, SCI made rental
payments of approximately $1.1 million, $1.1 million and $0.9 million,
respectively, for such property.
Mr. Dockery is also the President, Chief Executive Officer and majority
shareholder of Crossroads Insurance Company, Ltd. ("Crossroads"), which provides
excess reinsurance to ESIF, the three self-insurance funds to which the Company
provides administrative services (the "Funds"), consisting of the FRF, the
Louisiana Retailers Association Self Insurers Fund and the Kentucky Retail
Federation Self Insurers Fund ("KRF"), and the Louisiana Employers Mutual
Insurance Company ("LEMIC" and together with the funds the "Non-affiliated
Entities"), a mutual insurance company formerly known as the Louisiana Employers
Safety Association Self Insurers Fund ("LESA"), a self-insurance fund. During
the fiscal years
15
<PAGE> 20
ended March 31, 1996 and 1997 and the transition period from April 1, 1997 to
December 31, 1997, the Company paid Crossroads approximately $9.6 million, $3.9
million and $1.2 million, respectively, in premiums for reinsurance relating to
ESIF and the Non-affiliated Entities.
Mr. Bull has been elected to the Board of Directors of LEMIC. In
addition, Mr. Bull and Mr. Wall currently serve as the Chief Executive Officer
and Chief Financial Officer, respectively, of LEMIC. Neither Mr. Bull nor Mr.
Wall are compensated for their service to LEMIC in such capacities.
Mr. Dockery is the Chairman of the Board of Dockery Management
Corporation, which subleases approximately 2,600 square feet of office space
from the Company pursuant to a sublease agreement which expires in March 2000
and provides for rent of approximately $2,800 per month. During the fiscal years
ended March 31, 1996 and 1997 and the transition period from April 1, 1997 to
December 31, 1997, the Company received approximately $36,000, $36,000 and
$27,000, respectively in rental payments from such entity.
Mr. Dockery is the President and owner of Dockery Leasing Corporation
("Dockery Leasing") which provides aviation services for the Company. During the
fiscal years ended March 31, 1996, 1997 and the transition period from April 1,
1997 to December 31, 1997, the Company paid Dockery Leasing approximately
$32,000, $28,000 and $11,000, respectively, for such services.
Mr. Dockery was an underwriting member of Lloyds of London from 1984 to
1996. Greg C. Branch has been an underwriting member of Lloyds of London since
1986. Bridgefield and the four Non-affiliated Entities have excess reinsurance
agreements with Lloyds of London from time to time.
Any future transactions between the Company and any director, officer
or principal shareholder of the Company, or any affiliate of such a person, will
be on terms no less favorable to the Company than can be obtained from
unaffiliated third parties.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange of 1934, as amended, and
regulations of the Securities and Exchange Commission thereunder require the
Company's directors and executive officers and any persons who beneficially own
more than 10% of the Company's Common Stock, as well as certain affiliates of
such persons, to file initial reports of their ownership of the Company's Common
Stock and subsequent reports of changes in such ownership with the Securities
and Exchange Commission and the National Association of Securities Dealers, Inc.
Directors, executive officers and persons beneficially owning more than 10% of
the Company's Common Stock are required by applicable regulations to furnish the
Company with copies of all Section 16(a) reports they file. Based solely on its
review of the copies of such reports received by it and written representations
that no other reports were required of those persons, the Company believes that
during the nine months ended December 31, 1997, all of its directors, executive
officers and beneficial owners of more than 10% of its Common Stock complied
with applicable Section 16(a) filing requirements.
16
<PAGE> 21
PROPOSAL 2 -- RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors of the Company has appointed the firm of Ernst &
Young LLP to serve as independent auditors of the Company for the year ending
December 31, 1998. The Board has directed that such appointment be submitted to
the shareholders of the Company for ratification at the Annual Meeting. Ernst &
Young LLP has served as independent auditors of certain predecessors of the
Company since 1992 and is considered by management of the Company to be well
qualified. If the shareholders do not ratify the appointment of Ernst & Young
LLP, the Board of Directors will reconsider the appointment.
Representatives of Ernst & Young LLP will be present at the Annual
Meeting. They will have an opportunity to make a statement if they desire to do
so and will be available to respond to appropriate questions from shareholders.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE
"FOR" THE PROPOSAL TO RATIFY THE APPOINTMENT OF ERNST & YOUNG LLP AS INDEPENDENT
AUDITORS OF THE COMPANY FOR THE YEAR ENDING DECEMBER 31, 1998.
SHAREHOLDERS' PROPOSALS FOR 1999 ANNUAL MEETING
Director nominations and other proposals of shareholders intended to be
presented at the 1999 Annual Meeting Of Shareholders must be submitted to the
Company in accordance with the procedures set forth in Section 2.11 of the
Bylaws of the Company and in accordance with applicable rules of the Securities
and Exchange Commission. The effect of these provisions is that shareholders
must submit such nominations and proposals, together with certain related
information specified in the above-referenced section of the Bylaws, in writing
to the Company on or before December 25, 1998 in order for such matters to be
included in the Company's proxy materials for, and voted upon at, the 1999
Annual Meeting. All such proposals, nominations and related information should
be submitted on or before such date by certified mail, return receipt requested,
to the Secretary of the Company, 2310 A-Z Park Road, Lakeland, Florida 33802. A
copy of the above-referenced section of the Bylaws will be provided upon request
in writing to the Secretary of the Company at such address.
17
<PAGE> 22
OTHER MATTERS THAT MAY COME BEFORE THE ANNUAL MEETING
The Board of Directors of the Company knows of no matters other than
those referred to in the accompanying Notice of Annual Meeting of Shareholders
which may properly come before the Annual Meeting. However, if any other matter
should be properly presented for consideration and voting at the Annual Meeting
or any adjournments thereof, it is the intention of the persons named as proxies
on the enclosed form of proxy card to vote the shares represented by all valid
proxy cards in accordance with their judgment of what is in the best interest of
the Company.
By Order of the Board of Directors.
Thomas L. Clarke, Jr.
Secretary
Lakeland, Florida
April 24, 1998
-----------------
The Company's 1998 Annual Report, which includes audited financial
statements, has been mailed to shareholders of the Company with these proxy
materials. The Annual Report does not form any part of the material for the
solicitation of proxies.
18
<PAGE> 23
APPENDIX
REVOCABLE PROXY
COMMON STOCK
SUMMIT HOLDING SOUTHEAST, INC.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS FOR THE 1998 ANNUAL MEETING OF
SHAREHOLDERS.
The undersigned hereby appoints William B. Bull and Russell L. Wall,
and each of them, proxies, with full power of substitution, to act for and in
the name of the undersigned to vote all shares of Common Stock of Summit Holding
Southeast, Inc. (the "Company") which the undersigned is entitled to vote at the
1998 Annual Meeting of Shareholders of the Company, to be held at the Tampa
Airport Marriott, Tampa, Florida, on Wednesday, May 27, 1998 at 9:30 a.m., local
time, and at any and all adjournments thereof, as indicated below.
THIS PROXY CARD WILL BE VOTED AS DIRECTED. IF NO INSTRUCTIONS ARE
SPECIFIED, THIS PROXY CARD WILL BE VOTED IN THE DISCRETION OF THE PROXIES "FOR"
THE ELECTION OF THE TWO NOMINEES NAMED IN PROPOSAL 1 AND "FOR" PROPOSAL 2. If
any other business is presented to a vote of the shareholders at the Annual
Meeting, this proxy card will be voted by the proxies in their best judgment. At
the present time, the Board of Directors knows of no other business to be
presented to a vote of the shareholders at the Annual Meeting.
If the undersigned elects to withdraw this proxy card on or before the
time of the Annual Meeting or any adjournments thereof and notifies the
Secretary of the Company at or prior to the Annual Meeting of the decision of
the undersigned to withdraw this proxy card, then the power of said proxies
shall be deemed terminated and of no further force and effect. If the
undersigned withdraws this proxy card in the manner described above and prior to
the Annual Meeting does not submit a duly executed and subsequently dated proxy
card to the Company, the undersigned may vote in person at the Annual Meeting
all shares of Common Stock of the Company owned by the undersigned as of the
record date, April 9, 1998.
(Continued, and to be signed and dated, on the reverse side)
<PAGE> 24
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" EACH OF THE LISTED PROPOSALS.
1. The election of Greg C. Branch and Robert L. Noojin, Sr. as directors
to serve until the 2001 Annual Meeting of Shareholders and until their
successors are elected and qualified.
<TABLE>
<S> <C> <C> <C>
[ ] FOR ALL NOMINEES LISTED [ ] WITHHOLD AUTHORITY TO
(EXCEPT AS MARKED VOTE FOR ALL NOMINEES LISTED AT RIGHT.
TO THE CONTRARY).
</TABLE>
INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE,
STRIKE A LINE THROUGH THE NOMINEE'S NAME IN THE LIST BELOW.
GREG C. BRANCH AND ROBERT L. NOOJIN, SR.
2. The ratification of the appointment of Ernst & Young LLP as independent
auditors for the fiscal year ending December 31, 1998.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
In their discretion, the proxies are authorized to vote upon such other
business as properly may come before the Annual Meeting and any adjournments
thereof.
Do you plan to attend the Annual Meeting? YES [ ] NO [ ]
Please mark, date and sign exactly as your name appears on
this proxy card. When shares are held jointly, both holders
should sign. When signing as attorney, executor,
administrator, trustee or guardian, please give your full
title. If the holder is a corporation or a partnership, the
full corporate or partnership name should be signed by a duly
authorized officer.
Date: , 1998
--------------------------------------------------
-------------------------------------------------------
Signature
-------------------------------------------------------
Signature, if shares held jointly
PLEASE COMPLETE, DATE, SIGN AND MAIL THIS PROXY CARD IN THE
ENCLOSED PREPAID ENVELOPE.
