FOREMOST CORPORATION OF AMERICA
April 3, 1996
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders of
Foremost Corporation of America on Thursday, May 9, 1996 at 10:30 A.M. The
meeting will be held at the Company's Corporate Headquarters located at 5600
Beech Tree Lane, Caledonia, Michigan 49316.
The proxy statement and enclosed form of proxy are being furnished to
stockholders on or about April 3, 1996. The enclosed proxy statement describes
the matters to be presented at the meeting.
Whether or not you plan to attend the meeting, would you please date, sign
and promptly return your proxy in the envelope provided so that your shares can
be voted at the meeting in accordance with your instructions. Your cooperation
is appreciated. The mailing address of the Company's principal office is P.O.
Box 2450, Grand Rapids, Michigan 49501.
R. L. Antonini
---------------------------
R. L. Antonini
Chairman, CEO and President
IMPORTANT
STOCKHOLDERS ARE URGED TO SPECIFY THEIR CHOICE, SIGN, DATE AND RETURN THE
ENCLOSED PROXY IN THE ENCLOSED POSTAGE PREPAID ENVELOPE. PROMPT RESPONSE IS
HELPFUL, AND YOUR COOPERATION WILL BE APPRECIATED.
<PAGE>
FOREMOST CORPORATION OF AMERICA
-------------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 9, 1996
Notice Is Hereby Given that the Annual Meeting of Stockholders of Foremost
Corporation of America will be held at the Company's Corporate Headquarters
located at 5600 Beech Tree Lane, Caledonia, Michigan 49316, on Thursday, May 9,
1996 at 10:30 A.M. for the following purposes:
(1) To elect two (2) Class II directors;
(2) To ratify the appointment of BDO Seidman, LLP as independent auditors
for the year 1996; and
(3) To transact such other business as may properly come before the
meeting or any adjournment thereof.
Only stockholders of record as shown by the transfer books of the Company
at the close of business on the 22nd day of March, 1996 are entitled to notice
of, and to vote at, this Annual Meeting. A list of stockholders entitled to
receive notice of and vote at the Annual Meeting of Stockholders will be
available for examination by the Company's stockholders at the offices of the
Company set forth above during ordinary business hours for the ten-day period
before the meeting.
By Order of the Board of Directors
FOREMOST CORPORATION OF AMERICA
Paul D. Yared
Secretary
April 3, 1996
<PAGE>
PROXY STATEMENT
---------------
ANNUAL MEETING OF STOCKHOLDERS OF
FOREMOST CORPORATION OF AMERICA
MAY 9, 1996
SOLICITATION OF PROXIES
This proxy statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Foremost Corporation of America (the
"Company") for use at the Annual Meeting of Stockholders which will be held at
the Company's Corporate Headquarters located at 5600 Beech Tree Lane, Caledonia,
Michigan, 49316, on Thursday, May 9, 1996 at 10:30 A.M. and any adjournment
thereof. The shares represented by your proxy will be voted as specified if the
proxy is duly executed and returned to the Company prior to the meeting. You may
revoke your proxy by a signed and dated writing, filed with the Secretary of the
Company at any time before your proxy is exercised. Also, an original Proxy may
be revoked by a subsequent duly executed proxy bearing a later date and received
prior to the exercise of the original proxy. Furthermore, you may revoke your
proxy by attending the Annual Meeting of the Stockholders and voting in person
by ballot. This proxy statement and the form of proxy are being mailed on or
about April 3, 1996 to stockholders as of the record date.
This solicitation of proxies is made by the Board of Directors of the
Company, and the expense thereof will be borne by the Company. Solicitation may
be made personally, or by telephone, telegraph or mail, by one or more employees
of the Company, without additional compensation. The Company will also reimburse
brokers, banks, nominees and other fiduciaries for postage and the reasonable
clerical expense for forwarding the proxy materials to beneficial owners of the
stock.
RECORD DATE AND VOTING RIGHTS
The Board of Directors has fixed the close of business on March 22, 1996 as
the record date for the determination of stockholders entitled to notice of, and
to vote at, the Annual Meeting of Stockholders. There is one class of voting
securities, Common Stock ($1 par value), entitled to be voted at the meeting. As
of March 22, 1996, 10,049,394 shares of Common Stock were outstanding with each
share entitled to one vote. There are no cumulative voting rights. A quorum at
this meeting consists of a majority of the shares of Common Stock outstanding as
of the record date, either present in person or represented by proxy. A
plurality of the shares of Common Stock present in person or represented by
proxy and entitled to vote on the election of directors is required to the elect
Directors. For purposes of counting votes on the elections of directors,
abstentions, broker non-votes and other shares not voted will not be counted as
shares voted, and the number of shares of which a plurality is required will be
reduced by the number of shares not voted.
GENERAL
The Company has no knowledge of any matters, other than those set forth in
this proxy statement or referred to in the accompanying Notice of Annual Meeting
of Stockholders, which will be presented at the meeting. However, if any other
matters should properly come before the meeting, the persons named in the
enclosed proxy will have discretionary authority to vote all proxies in
accordance with their best judgment.
1
<PAGE>
NOMINEES FOR ELECTION AS DIRECTORS
(Proposal Number 1 on the Enclosed Proxy Card)
The Certificate of Incorporation of the Company provides that the number of
Directors shall not be less than five nor more than fifteen and shall be
determined from time to time exclusively by the affirmative vote of a majority
of the Board of Directors. The Certificate of Incorporation also provides that
the Board of Directors shall be divided into three classes with respect to the
time that they severally hold office. The number of directors is currently set
at ten. Mr. Thomas D. Gleason, a Director since 1982, is not standing for
re-election and Mr. John F. Knight, a director of the Company since 1988, is
retiring from the Board on May 9, 1996. On February 21, 1996, the Board of
Directors adopted a resolution decreasing the number of directors from ten to
eight, effective on May 9, 1996. As a result, two (2) Class II Directors will be
elected on May 9, 1996.
It is intended that shares represented by the enclosed proxy will be voted,
unless a contrary choice is indicated, for the election of the two nominees
listed below as Class II Directors with terms expiring in 1999 or until their
successors are elected and qualified. Should any of these nominees for office of
Director be unable or refuse to accept nomination or election, it is intended
and expected that the persons named as attorneys and proxies will vote for the
election of such other person or persons as the Board of Directors may
recommend. The Board of Directors knows of no reason why any of these nominees
will be unable or refuse to accept nomination or election.
The Board of Directors has nominated the following named individuals for
election as Class II Directors to serve for terms expiring in 1999:
Larry J. Orange
Joseph A. Parini
YOUR BOARD OF DIRECTORS RECOMMENDS THAT YOU
VOTE FOR ELECTION OF ALL NOMINEES AS DIRECTORS
DIRECTORS
The following information provided concerning the nominees for election as
Directors is based on information received from the nominees:
Mr. Orange has been employed by Foremost Insurance Company since 1970. Mr.
Orange has served as Executive Vice President of the Company for more than the
past five years.
Mr. Parini is principally employed as President of Elbit Systems, Inc., a
manufacturer of electronic systems for the medical and defense industries and
has been so employed for the past five years. Mr. Parini is also a Director of
Wolverine World Wide, Inc.
POSITION HELD WITH THE COMPANY,
PRINCIPAL OCCUPATION OR FIRST BECAME PROPOSED
NAME EMPLOYMENT, AND ADDRESS A DIRECTOR AGE TERM
- ----------------- --------------------------------- ------------ --- --------
Larry J. Orange.. Director and Executive Vice 1993 54 96-99
President, Grand Rapids, Michigan
Joseph A. Parini. Director; President of Elbit 1981 64 96-99
Systems, Inc., No. Billerica,
Massachusetts
2
<PAGE>
The following information concerning Class I and Class III Directors whose
terms expire in 1998 and 1999, respectively, is based on information received
from these Directors:
POSITION HELD WITH THE COMPANY, FIRST
PRINCIPAL OCCUPATION OR BECAME A
NAME EMPLOYMENT, AND ADDRESS DIRECTOR AGE TERM
- ------------------- ------------------------------------- -------- --- -----
Richard L. Antonini President, Chief Executive Officer 1973 53 94-97
and Chairman, Grand Rapids, Michigan
John C. Canepa..... Director; Consulting Principal, Crowe 1994 65 94-97
Chizek, Grand Rapids, Michigan
Arthur E. Hall..... Director; General Partner of 1994 57 94-97
Valarian Associates, Minden, Nevada
Richard A. Kayne... Director; President, CEO and Director 1994 50 94-97
of K. A. Associates, Inc., Los Angeles,
California
Robert M. Raives... Director; Partner in the law firm of 1988 69 95-98
Rosenman & Colin, New York, New York
F. Robert Woudstra. Director, Executive Vice President and 1988 50 95-98
Treasurer, Grand Rapids, Michigan
Mr. Antonini has been Chairman of the Board since December 17, 1991, has
served as President and Chief Executive Officer of the Company for more than the
past five years, and has been employed by the Company since 1969. Mr. Antonini
is also a Director of Old Kent Bank and Trust Company.
Mr. Canepa is principally employed as a Consulting Principal for Crowe
Chizek since November, 1995. Previously, Mr. Canepa was the Chairman of the
Board of Old Kent Financial Corporation and had held that position from 1988 to
1995. Mr. Canepa is also a director of Old Kent Financial Corporation and
ThornApple Valley, Inc.
Mr. Hall is a Chartered Financial Analyst by the Association of Investment
Management and Research and a portfolio manager. Mr. Hall is the sole general
partner of Valarian Associates, a Nevada limited partnership, which is in the
business of purchasing, selling and holding investment securities. Mr. Hall has
carried on this occupation for more than the past five years.
Mr. Kayne is principally employed as the President, Chief Executive Officer
and Director of K. A. Associates, Inc., a registered broker/dealer, and of
Kayne, Anderson Investment Management, Inc., a registered investment advisor
under the Investment Advisor Act of 1940, and has held these positions for more
than the past five years.
Mr. Raives is a partner of the law firm of Rosenman & Colin of New York
City since 1993. Before that he was President of the law firm of Miller, Singer,
Raives and Brandes, P.C. in New York City and had been a shareholder of said
firm for more than five years. Mr. Raives is also a member of the U.S. Advisory
Board of the Zurich Insurance Company and a director of the Zurich Holding
Company of America and American Guarantee & Liability Insurance Company.
Mr. Woudstra has been employed by Foremost Insurance Company since March,
1973. Mr. Woudstra has served as Executive Vice President and Treasurer of the
Company for more than the past five years.
3
<PAGE>
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
During 1995 the Board of Directors held four meetings. No director attended
fewer than 75 percent of the aggregate of (1) the total number of meetings of
the Board of Directors and (2) the total number of meetings held by all
committees of the board on which each of them served. The Board of Directors
maintains five standing committees. The committees' functions, members and
number of meetings in 1995 were:
Audit Committee
- ---------------
Members: Messrs. Knight, Parini, Raives
Number of Meetings in 1995: 2
Function: The Audit Committee reviews the work of the independent and internal
auditors, and the accounting principles and methods used in
presenting financial results. In addition, it recommends the
independent auditors to be nominated by the Board for stockholder
approval at the annual meeting.
Compensation Committtee
- -----------------------
Members: Messrs. Hall, Knight, Parini
Number of Meetings in 1995: 1
Function: The Committee on Executive Management and Compensation ("Compensation
Committee") makes recommendations to the Board of Directors regarding
management incentives, employee retirement plans and recommends salary
levels for the executive officers. The Compensation Committee also
reviews employee benefit programs for the Company as a whole.
Executive Committee
- -------------------
Members: Messrs. Antonini, Canepa, Kayne, Gleason, Woudstra
Number of Meetings in 1995: 0
Function: The Executive Committee is authorized by the Company's By-laws to act
for the Board between meetings when time is a consideration. All
actions of the Executive Committee are reviewed by the Board at the
next meeting after the action is taken.
Investment Committee
- --------------------
Members: Messrs. Antonini, Canepa, Hall, Kayne, Woudstra
Number of Meetings in 1995: 4
Function: The Investment Committee recommends the Investment Policy of the
Company and reviews management's implementation of the policy.
Nominating Committee
- ---------------------
Members: Messrs. Canepa, Hall, Kayne
Number of Meetings in 1995: 1
Function: The Nominating Committee considers and proposes to the Board of
Directors suggestions as to qualified candidates for nomination to the
Board and also proposes to the Board the slate of directors for
submission to the stockholders at each annual meeting.(a)
- ----------
(a) The Nomination Committee will consider candidates recommended by
stockholder for nomination by the Board. A stockholder wishing to make such
recommendation should submit that suggestion in writing to Mr. Richard L.
Antonini, Chairman of the Board.
4
<PAGE>
The Company's Certificate of Incorporation provides that any stockholder of
record entitled to vote generally in the election of directors may nominate one
or more persons for election as directors at a meeting only if written notice of
such stockholder's intent to make such nomination or nominations has been given,
either by personal delivery or by United States mail, postage prepaid, to the
Secretary of the Corporation not less than 120 days nor more than 135 days prior
to the meeting; provided, that in the event that less than 130 days' notice or
prior public disclosure of the date of the meeting is given or made to
stockholders, notice by the stockholder to be timely must be so received not
later than the close of business on the 10th day following the day on which such
notice of the date of the meeting was mailed or such public disclosure was made,
whichever first occurs. Each such notice to the Secretary shall set forth: (i)
the name and address of record of the stockholder who intends to make the
nomination; (ii) a representation that the stockholder is a holder of record of
shares of the Corporation's capital stock entitled to vote at such meeting and
intends to appear in person or by proxy at the meeting to nominate the person or
persons specified in the notice; (iii) the name, age, business and residence
addresses, and principal occupation or employment of each proposed nominee; (iv)
a description of all arrangements or understandings between the stockholder and
each proposed nominee and any other person or persons (naming such person or
persons) pursuant to which the nomination or nominations are to be made by the
stockholder; (v) such other information regarding each proposed nominee as would
be required to be included in a proxy statement filed pursuant to the proxy
rules of the Securities and Exchange Commission; and (vi) the written consent of
each proposed nominee to serve as a director of the Corporation if so elected.
The Corporation may require any proposed nominee to furnish such other
information as may reasonably be required by the Corporation to determine the
eligibility of such proposed nominee to serve as a director of the Corporation.
5
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth the shares of Common Stock of the Company
held as of December 31, 1995 (except as noted in the footnotes) by each person
who, according to information supplied to the Company, was the "beneficial
owner" (as defined in Rule 13d-3 promulgated under the Securities Exchange Act
of 1934, as amended [the "Act"]) of more than 5% of the outstanding Common Stock
on such date. Unless otherwise indicated, each person named in the table has
sole voting and dispositive power with respect to all shares shown as
beneficially owned by such person.
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF BENEFICIAL OWNERSHIP PERCENT
NAME AND ADDRESS ----------------------------------------- OF
OF BENEFICIAL OWNER DIRECT INDIRECT TOTAL CLASS(a)
- ----------------------------- ------------- ------------ ----------- --------
<S> <C> <C> <C> <C>
Albert O. Nicholas........... 1,106,677(b) -- 1,106,677 11.01
Nicholas Company, Inc.
700 North Water Street
Milwaukee, Wisconsin 53202
Cortland Associates, Inc. ... 943,538(c) 114,943(c) 1,058,481 10.53
800 Maryland Avenue
Suite 730
St. Louis, Missouri 63105
Richard A. Kayne............. 273,528(d) 728,586(d) 1,002,114 9.97
Kayne, Anderson Investment
Management, Inc.
1800 Avenue of the Stars
Suite 200
Los Angeles, CA 90067
Arthur E. Hall............... 189,450(e) 507,000(e) 696,450 6.93
1726 Cedar Wood Drive
Minden, Nevada 89428
First Chicago NBD Corporation 528,588(f) -- 528,588 5.26
One First National Plaza
Chicago, Illinois 60670
<FN>
- ----------
(a) The percent of class is based upon 10,049,418 shares of the Company's
Common Stock outstanding on March 22, 1996.
(b) According to Amendment No. 2 to Schedule 13G dated February 9, 1996, filed
with the SEC by Nicholas Company, Inc., an investment advisor registered
under the Investment Advisors Act of 1940, and Albert O. Nicholas,
president, director and majority shareholder of Nicholas Company, Inc.,
report ownership of 1,106,677 shares. Nicholas Company, Inc. claims sole
dispositive power over these shares. Mr. Nicholas may be deemed to have
beneficial ownership of the 1,106,677 shares, but he owns 15,500 of the
shares for his individual account .
(c) According to Amendment No. 3 to Schedule 13G dated February 14, 1996, filed
with the SEC by Cortland Associates, Inc., an investment advisory firm
registered under the Investment Advisors Act of 1940, Cortland claims
beneficial ownership of 943,538 shares. Cortland claims shared voting power
over 177,225 of such shares with Cortland's clients who beneficially own
the 943,538 such shares. Cortland claims sole voting power over 79,360 of
the shares and sole dispositive power over all 943,538 shares. In addition,
various principals of Cortland (or members of their families) also own
directly or beneficially 114,943 additional shares.
6
<PAGE>
(d) According to information provided to the Company by Richard A. Kayne
("Kayne"), Kayne owns 273,528 shares directly and Kayne, Anderson
Investment Management, Inc. ("Kayne, Anderson"), a registered investment
advisor under the Investment Advisors Act holds 728,586 shares as the
general partner of four investment partnerships. As the president and
majority stockholder of Kayne, Anderson, Kayne and Kayne, Anderson have
shared voting and dispositive power over these 728,586 shares. Mr. Kayne
claims beneficial ownership of the 273,528 shares held directly by Kayne
and of 26,254 shares held by Kayne, Anderson for the investment
partnerships and affiliates which represent his interest in the shares held
by such entities. Mr. Kayne disclaims beneficial ownership as to all other
shares.
(e) According to information provided to the Company by Arthur E. Hall, the
shares are held as follows: Valarian Associates, a Nevada limited
partnership, owns 400,000 shares; Hallco, Inc., a Nevada corporation, owns
124,450 shares; A. E. Hall and Company, Money Purchase Plan, a qualified
retirement plan ("Plan"), owns 65,000 shares; Hall Family Foundation, a
Nevada non-profit corporation, owns 42,500 shares; and Joanne Ginn Hall
Trust, a revocable trust ("Trust"), owns 64,500. Because of his positions
as (i) the sole general partner of Valarian Associates, (ii) the President
and sole stockholder of Hallco, Inc., (iii) the sole trustee and
beneficiary of the Plan, (iv) the President of the Hall Family Foundation
and (v) one of two trustees of the Trust, Mr. Hall may, pursuant to Rule
13D-3 of the Act be deemed to be the beneficial owner of 696,450 shares. In
the above capacities, Mr. Hall claims sole voting and dispositive power
over 631,950 shares and claims shared voting and dispositive power over the
64,500 shares held by the Trust.
(f) According to Schedule 13G, Amendment No. 7 filed with Securities and
Exchange Commission ("SEC") pursuant to the Act dated February 9, 1996,
First Chicago NBD Corporation ("NBD") held in a fiduciary capacity 528,588
shares of the Company's Common Stock as of December 29, 1995. NBD claims
sole voting power over 508,040 shares, sole dispositive power over 131,619
shares and shared dispositive power over 391,730 shares.
</FN>
</TABLE>
7
<PAGE>
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth the shares of Common Stock of the Company
beneficially owned as of March 22, 1996 by each director, and nominee for
director and named executive officer of the Company and by all directors and
executive officers as a group. Unless otherwise indicated, the persons named in
the table have sole voting and dispositive power with respect to all shares
shown as beneficially owned by them.
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF BENEFICIAL OWNERSHIP PERCENT
----------------------------------------- OF
NAME OF BENEFICIAL OWNER DIRECT INDIRECT TOTAL CLASS(e)
- ---------------------------- ------------- ------------ ----------- --------
<S> <C> <C> <C> <C>
Richard L. Antonini 331,790(a) 3,000(b) 334,790 3.16%
John C. Canepa 486 -- 486 *
Thomas D. Gleason 2,886 -- 2,886 *
Arthur E. Hall 189,450(c) 507,000(c) 696,450 6.58%
Jack J. Hannigan 89,326(a) -- 89,326 *
David A. Heatherly 53,995(a) -- 53,995 *
Richard A. Kayne 273,528(c) 728,586(c) 1,002,114 9.47%
John F. Knight 12,000 -- 12,000 *
Larry J. Orange 60,186(a) 25(d) 60,211 *
Joseph A. Parini 3,851 -- 3,851 *
Robert M. Raives -- -- -- --
F. Robert Woudstra 84,483(a) -- 84,483 *
All Directors and Executive 1,132,736(a) 1,238,671 2,371,407 22.41%
Officers as a group (14
persons, including the
above-named)
<FN>
- ----------
* Less than 1%
(a) The above table includes stock options for 533,547 shares granted under the
Company's Non-Qualified Stock Option Plan which can be exercised within
sixty days. R. L. Antonini, J. J. Hannigan, D. A. Heatherly, L. J. Orange
and F. R. Woudstra have been granted options for 234,829, 83,035, 51,510,
55,659 and 81,740 shares which can be exercised within 60 days,
respectively. The exercise price of the stock options range between $18.25
and $38.00 per share.
(b) These shares are held by the director's spouse and the director may be
deemed to have shared voting and dispositive power over such shares.
(c) See footnotes under the section "Security Ownership of Certain Beneficial
Owners."
(d) These shares are held by a child of the director who is presently a member
of the director's household, but the director disclaims beneficial
ownership, voting and dispositive power over these shares.
(e) Percent of Class is based upon the 10,049,394 the Company's Common Stock
outstanding on March 22, 1996 plus the 533,547 represented by options which
may be exercised within 60 days of this date.
</FN>
</TABLE>
8
<PAGE>
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
-----------------------------
AWARDS PAYOUTS
--------------------- -------
ANNUAL SECURITIES ALL
COMPENSATION RESTRICTED UNDERLYING OTHER
---------------- STOCK OPTIONS/ LTIP COMPEN-
NAME AND SALARY BONUS AWARD(S) SARs PAYOUTS SATION
PRINCIPAL POSITION YEAR ($)(1) ($)(1) ($) (#)(2) ($)(3) ($)(4)
- ------------------ ---- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
R. L. Antonini ... 1995 $563,200 $337,920 0 $100,000 $167,640 $ 71,083
President and CEO 1994 563,200 234,742 0 0 134,322 71,083
1993 550,000 319,110 0 0 75,285 71,128
J. J. Hannigan ... 1995 $222,736 $113,595 0 10,000 $ 59,555 $ 31,691
Executive V.P. 1994 222,736 78,911 0 0 48,125 31,691
1993 216,254 106,650 0 0 27,503 32,475
F. R. Woudstra ... 1995 $218,545 $111,458 0 10,000 $ 58,434 $ 32,394
Executive V.P. 1994 218,545 77,426 0 0 47,218 32,394
and Treasurer 1993 212,180 104,641 0 0 26,985 33,191
D. A. Heatherly .. 1995 $219,774 $112,085 0 10,000 $ 58,763 $ 30,816
Executive V.P. 1994 219,774 68,701 0 0 47,198 30,816
1993 213,373 92,849 0 0 26,637 31,609
L. J. Orange ..... 1995 $194,169 $ 99,026 0 10,000 $ 51,754 $ 30,161
Executive V.P. 1994 194,169 60,697 0 0 41,436 30,161
1993 186,701 81,243 0 0 23,307 30,836
<FN>
- ----------
(1) Salary and Bonus disclosed include any amounts the Named Officer may have
deferred under the Company's 401(k) Savings Plan and Non-Qualified Deferred
Compensation Plans.
(2) In 1995, the Company amended its Non-Qualified Stock Option Plan deleting
all provisions relating to SARS. During 1992, the Named Officers and other
participants in the Company's Non-Qualified Stock Option Plan released all
SARs granted to them in tandem with all prior option grants under the Plan.
No additional compensation was paid in return for release of the SARs.
(3) These amounts represent the value of awards made to the named officers
under the Company's Long Term Incentive Plan ("LTIP"). The 1994 and 1995
amounts include the value of Company Common Stock and cash awarded. The
Employment Agreements covering the Named Officers provide for guaranteed
payouts under the LTIP at target levels. For years commencing with 1993,
the Named Officers have agreed to waive the guaranteed award under this
Plan, except in the event of the change-in-control of the Company or
termination of employment.
(4) For 1995, "All Other Compensation" includes Company contributions for: R.L.
Antonini - $3,000 of 401(k) Plan matching, $61,952 to defined contribution
plans, and $6,131 of life insurance premiums on split dollar policies; J.J.
Hannigan - 3,000 of 401(k) Plan matching, $24,501 to defined contribution
plans, and $4,190 of life insurance premiums on split dollar policies; F.R.
Woudstra - $3,000 of 401(k) Plan matching, $24,040 to defined contribution
plans, and $5,354 of life insurance premiums on split dollar policies; D.A.
Heatherly - $3,000 of 401(k) Plan matching, $24,175 to defined contribution
plans, and $3,641 of life insurance premiums on split dollar policies; and
L.J. Orange - 3,000 of 401(k) Plan matching, $21,359 to defined
contribution plans, and $5,802 of life insurance premiums on split dollar
policies.
(5) Perquisites and other personal benefits for the Named Officers were less
than the threshold amount requiring disclosure under the applicable SEC
rule.
</FN>
</TABLE>
9
<PAGE>
OPTION/SAR GRANTS IN LAST FISCAL YEAR
INDIVIDUAL GRANTS
<TABLE>
<CAPTION>
% OF TOTAL
OPTIONS/ OPTIONS/SARs
SARs GRANTED TO EXERCISE
GRANTED EMPLOYEES IN PRICE EXPIRATION GRANT DATE
NAME (#)(1) FISCAL YEAR ($/SH)(2) DATE VALUE (3)
- ---------------- ----------- ------------ ---------- ---------- -----------
<S> <C> <C> <C> <C> <C>
R. L. Antonini.. 100,000 57.6% $ 38.00 05/04/05 $1,264,000
J. J. Hannigan.. 10,000 5.8% 38.00 05/04/05 126,400
F. R. Woudstra.. 10,000 5.8% 38.00 05/04/05 126,400
D. A. Heatherly. 10,000 5.8% 38.00 05/04/05 126,400
L. J. Orange.... 10,000 5.8% 38.00 05/04/95 126,400
<FN>
- ----------
(1) The grants were made on May 5, 1995 and vest ratably over 3 years.
(2) The grants were made at the market price and the price may be reduced under
an antidilution provision in the event of certain recapitalizations.
(3) Black-Scholes Option Pricing Model was used.
</FN>
</TABLE>
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
SHARES OPTIONS/SARs AT FY-END OPTIONS/SARs AT FY-END
ACQUIRED (#)(1) ($)(2)
ON VALUE ---------------------- ----------------------
EXERCISE REALIZED UNEXERCIS- UNEXERCIS-
NAME (#) ($) EXERCISABLE ABLE EXERCISABLE ABLE
- --------------- --------- -------- ----------- ---------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C>
R. L. Antonini. 0 0 190,004 111,825 $4,634,928 $1,626,793
J. J. Hannigan. 0 0 75,110 14,625 1,799,121 265,094
F. R. Woudstra. 0 0 73,915 14,525 1,778,994 262,119
D. A. Heatherly 0 0 70,560 14,375 1,695,684 257,656
L. J. Orange... 0 0 48,859 13,500 1,230,790 231,625
<FN>
- ----------
(1) The Company's Non-Qualified Stock Option Plan authorizes grants for a total
of 1,050,000 shares. As of March 22, 1996, the aggregate number of options
granted and outstanding is 740,396. Exercisable includes all options vested
as of December 31, 1995.
(2) Value of Unexercised In-The-Money Options is based on the closing price of
the Company's Common Stock on December 31, 1995, $50.75 per share.
(3) In the event of a dissolution or liquidation of the Company, the options
will terminate on a date to be fixed by the Compensation Committee which
shall not be less than 30 days following notice to the employees of such
date and the employees shall be entitled to exercise all options (including
unvested options) during such period following the notice. In the event of
a merger or consolidation in which the Company is not the surviving
corporation, a sale of all or substantially all of the assets of the
Company, or a sale, pursuant to an agreement with the Company, of
securities of the Company as a result of which the Company becomes a
wholly-owned subsidiary of another company (a "Reorganization Event"), all
outstanding options shall become immediately exercisable for a period to be
determined by the Compensation Committee which shall not be less than 30
days following notice to employees of such date unless the agreement
respecting such Reorganization Event specifically provides for the
continuation or conversion of such options, in which case such options
shall be exercisable in accordance with the terms of such agreement.
</FN>
</TABLE>
10
<PAGE>
LONG-TERM INCENTIVE PLAN-AWARDS
IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
NUMBER OF PERFORMANCE ESTIMATED FUTURE PAYOUTS UNDER
SHARES, OR OTHER NON-STOCK PRICE BASED PLANS (3)
UNITS PERIOD UNTIL ----------------------------------
OR OTHER MATURATION THRESHOLD TARGET MAXIMUM
NAME RIGHTS(1) OR PAYOUT(2) ($) ($) ($)
- ----------------- --------- ------------ ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
R. L. Antonini... 2,312 3 years $ 56,300 $ 112,600 $ 169,000
J. J. Hannigan... 821 3 years 20,000 40,100 60,100
F. R. Woudstra... 806 3 years 19,700 39,300 59,000
D. A. Heatherly.. 811 3 years 19,800 39,600 59,300
L. J. Orange..... 714 3 years 17,500 35,000 52,400
<FN>
- ----------
(1) The Long-Term Incentive Plan ("LTIP") provides for awards based on the
Company's return on shareholders' equity ("ROE") over three-year periods. A
new three-year plan starts each year with an ROE goal set for the next
three-year period. The number in the table represents the number of shares
of Common Stock awarded in January of 1996 for the three-year plan 1993
through 1995. The value of the LTIP awards, including the value of these
shares based on the market value of the Company's common stock at year end
1995 as well as amounts paid in cash are included in the Summary
Compensation Table.
(2) LTIP Awards are determined and paid after the end of each three-year period
and the participant must be employed by the Company at the end of the
applicable three-year period. Awards are fully vested upon issuance,
however, Common Stock issued is restricted for resale during an additional
three-year period after payment. However, in the event of termination, the
resale restriction lapses. The participant is entitled to dividends and may
vote the shares of Common Stock awarded under the LTIP.
(3) Estimated Future Payouts are ranges of annual payments that could be earned
depending on the ROE result over a three-year performance period and the
above estimate is based on 1995 salary level. The actual payout is based on
a percentage of the participant's average annual base salary over the
three-year period. Awards made under the LTIP to the named Executive
Officers are included in the Summary Compensation Table. Except as noted
below, no awards are paid under this Plan unless the ROE equals or exceeds
the Threshold ROE. Starting with the awards for the three-year period
1992-1994, paid early in 1995, the award is paid 70% in Common Stock of the
Company and 30% in cash. The number of shares paid is determined by
multiplying the actual payout by 0.70 (70%) and dividing that product by
the market value of the Common Stock on December 31 of the third year of
the applicable three-year period. However, under their Employment
Agreements, the Named Officers' payments under the LTIP could be greater
than the payment based on the actual ROE in the event of a change in
control of the Company or termination of the executive, in which case he
would be entitled to no less than the Target payout.
</FN>
</TABLE>
MONEY PURCHASE PENSION AND SAVINGS PLANS
The Company has a tax-qualified defined contribution Money Purchase Pension
Plan and a Profit-Sharing Retirement Savings Plan ("Pension Plan") for all
full-time employees after they have completed one year of service. The Pension
Plan serves as a retirement income program for longer service employees. The
contribution to the Pension Plan in 1995 was equal to 11%, less forfeitures, of
the base salary of all eligible employees. The employee becomes 30% vested after
3 years and becomes vested an additional 10% after 4 years and an additional 20%
per year thereafter. All of the Named Officers are 100% vested under this
Pension Plan. Distributions are made only pursuant to the Pension Plan upon the
termination, retirement or death of the employee. Executive Officers participate
on the same basis as other employees.
11
<PAGE>
The Company maintains a 401-K Savings Plan ("Savings Plan") for all
full-time employees after they have completed one year of service and provides
for a Company-paid matching contribution of $.50 for each $1.00 of employee
elective contribution, up to a maximum of 2% of the employees' eligible
compensation. Elective contributions are also limited by the Internal Revenue
Code of 1986, as amended (the "Code"), to an annual limit (indexed), which was
$9,500 for 1995. The funds in the Pension Plan and Savings Plan are invested in
equity (other than the Company's stock) and bond funds at the election of the
participant. The Company-paid matching contributions under the Savings Plan
become 100% vested immediately upon contribution. The Savings Plan balances are
generally paid at termination or retirement. Under the Savings Plan, a
participant may request a loan against his or her Savings Plan balance for
certain defined purposes. The Company-paid contributions for the Named Officers
under the Pension Plan and Savings Plan are reflected in the Summary
Compensation Table and noted at footnote 4 to said table.
RETIREMENT SUPPLEMENT PLAN
The Company's non-qualified Retirement Supplement Plan ("SERP"), provides
the participant with retirement income equal to a percentage of the
participant's Final Average Earnings (defined as the participant's average base
salary for the highest three of his last five years of employment). The
participant is eligible for early retirement at fifty-five years of age provided
he has a minimum of ten years of service with the Company or after twenty years
of service regardless of age at the time of retirement. The annual retirement
income payable under the SERP is a percentage of the participant's Final Average
Earnings determined by reference to the participant's age and length of service
with the Company. The maximum percentage is sixty percent, and is available for
those participants who have at least twenty years of service with the Company
and are at least sixty-five years of age at retirement. For those participants
who have not attained twenty years of service and have not reached the age of
sixty-five at retirement, the sixty percent maximum is reduced by two percentage
points for each year of service less than twenty years and one percentage point
for each year that the retirement age is less than sixty-five. The following
table shows examples of income under the SERP (before taking into account any
offset of amounts paid under the Pension Plan, at the date of the participant's
retirement as described below) assuming an eligible participant retires at age
sixty-five:
RETIREMENT SUPPLEMENT PLAN TABLE
<TABLE>
<CAPTION>
YEARS OF SERVICE
--------------------------------
FINAL AVERAGE EARNINGS 10 15 20 OR MORE
- ------------------------- --------- --------- ----------
<S> <C> <C> <C>
$200,000................................ $ 80,000 $100,000 $120,000
300,000................................ 120,000 150,000 180,000
400,000................................ 160,000 200,000 240,000
500,000 ............................... 200,000 250,000 300,000
600,000 ............................... 240,000 300,000 360,000
700,000 ............................... 280,000 350,000 420,000
</TABLE>
For the individuals named in the above Summary Compensation Table, the
covered compensation is reported in the "Salary" column of the Summary
Compensation Table and estimated credited years of service are as follows: R.L.
Antonini - 26 years; F.R. Woudstra - 23 years; J.J. Hannigan - 12 years; D.A.
Heatherly - 12 years; and L.J. Orange - 26 years.
The Company's obligation under the SERP, however, is offset by the amount
vested in the participant's Pension Plan Account (but excluding any amounts
attributable to the Savings Plan). No deduction is made for Social Security
benefits. In the event that the Participant's Pension Plan Account (excluding
any amounts attributable to the Savings Plan), will not provide the eligible
level of retirement income, the SERP will make up the shortfall.
12
<PAGE>
The SERP also provides certain benefits payable in the event of death,
disability, involuntary termination without cause (after 20 years of service or
10 years of service and at least three years as a SERP participant) or
termination of employment within 12 months following a "change in control." A
"change in control" is defined in the SERP as: For purposes of the foregoing, a
"Change in Control" of the Company shall mean a change in control of a nature
that would be required to be reported in response to Item 6(e) of Schedule 14A
of Regulation 14A promulgated under the Securities Exchange Act of 1934, as
amended ("Exchange Act"), whether or not the Company is then subject to such
reporting requirement, other than an acquisition of control by the Company or
any employee benefit plan maintained by the Company; provided that, without
limitation, such a Change in Control shall be deemed to have occurred if (I) any
"person" (as such term is used in Sections 13(d) and 14(d)(2) of the Exchange
Act), other than the Company or an employee benefit plan maintained by the
Company, becomes the "beneficial owner" (as defined in Rule 13d-3 of the General
Rules and Regulations under the Exchange Act), directly or indirectly, of
securities of the Company representing twenty percent (20%) or more of the
combined voting power of the Company's then outstanding securities entitled to
vote in the election of directors of the Company (whether or not such person is
a member of a group that is deemed to be a single person under Section 13(d)(3)
of the Exchange Act and whether or not other members of such group previously
had been the beneficial owner of some or all of such securities), (ii) during
any period of two (2) consecutive years, individuals who at the beginning of
such period constitute the Board of Directors of the Company cease for any
reason to constitute at least a majority thereof (unless the election or
nomination for election by the Company's stockholders of each new director was
approved by a vote of at least two-thirds (2/3) of the directors then still in
office who were directors at the beginning of the period) or (iii) all or
substantially all of the assets of the Company are liquidated, sold or
distributed.
A "change in control" benefit is calculated in the same manner as a normal
retirement benefit under the SERP, except that no reduction is made for years of
service less than twenty nor age less than sixty-five. No payment can be made
under the SERP upon a "change in control" which would constitute an "excess
parachute payment" in accordance with Section 280G of the Code. Notwithstanding
the above, the benefits due under the SERP may be supplemented for certain
executive officers pursuant to the terms of the Employment Agreements described
below.
The benefits under the SERP, if any, are paid in the form of an annuity,
except that the SERP provides for cash lump sum payments in the event of death,
retirement, involuntary termination without cause, or termination of employment
within 12 months following a "change in control".
EMPLOYMENT AGREEMENTS
Effective January 1, 1990, the Company entered into employment agreements
("Employment Agreements") with the five Named Officers. The Employment
Agreements provide for a period of employment continuing until the third
anniversary of any "change in control." The definition of change in control used
in the Employment Agreements is the same as is contained in the SERP. The
Employment Agreements specify that the then current base salary (set forth in
the Summary Compensation Table) plus increases in base salary comparable to
those awarded in the ordinary course of business to other key executives will be
maintained through the term. The Employment Agreements provide that the
executives continue to receive benefits at current levels and bonuses under the
Company's Plans, with bonus payouts guaranteed at the Target level in the event
of a "change in control" or the termination of the executive.
13
<PAGE>
If any of the Named Officers, other than Mr. Antonini, is terminated
without "cause" (as defined in the Employment Agreements) or resigns as a
consequence of the Company's "substantial breach" (generally, a failure to pay
compensation due, a relocation of the executive or a failure to secure
assumption of the agreement by a successor), then the executive will be entitled
to, among other things, continuation of salary, bonus and benefits through the
end of the term (not in excess of three years), and payment of all amounts due
under benefit plans (including the SERP) without regard to any limit intended to
avoid "excess parachute payments" within the meaning of Section 280G of the
Code. Further, in the event any payments under the Employment Agreements or any
other benefit plan constitute excess parachute payments, the executives will be
reimbursed for any excise taxes payable under the Code. The Named Officers,
other than Mr. Antonini, are obligated to make reasonable efforts to mitigate
damages by seeking comparable employment, and amounts received from a successor
employer will reduce the salary and benefits owed to the executive by the
Company.
The consequences of termination under Mr. Antonini's Employment Agreement
are generally the same as above, except that, among other things, upon a
termination for any reason, Mr. Antonini will receive benefits under the SERP
and other plans in accordance with their terms without regard to any Code
Section 280G cap, and Mr. Antonini is entitled to receive full severance in the
event of a resignation for "good reason" (defined as a diminution of Mr.
Antonini's status or duties or a good faith dispute with the Board of Directors
over the Company's business plan or policies).
EXECUTIVE STOCK PURCHASE PLAN
On January 8, 1980, Mr. Antonini purchased from the Company 30,000 shares
of its Common Stock. The purchase was made pursuant to requirements established
by the Board of Directors upon the recommendation of the Compensation Committee.
The fair market value of the stock on the date of purchase was $15.50 per share,
for an aggregate of $465,000. The purchase price was $1.00 per share, for an
aggregate of $30,000, and a bargain element of $14.50 a share, for an aggregate
of $435,000, which must be paid by Mr. Antonini to the Company when he sells the
stock, terminates employment or reaches age 60. The stock is restricted as to
its transferability, and the Company has retained a right of first refusal to
purchase the stock. On June 17, 1983 the Company exercised its right of first
refusal and purchased 8,000 shares from Mr. Antonini at the then current market
price of $52.00 for an aggregate purchase price of $416,000. Mr. Antonini paid
the Company $116,000 of that amount for the bargain element. Adjusting the above
for the 1983 three-for-two stock split, 33,000 shares are subject to the plan
for Mr. Antonini. The adjusted bargain element is $9.67 per share, for an
aggregate amount of $319,000 remaining to be paid.
COMPENSATION OF DIRECTORS
Non-employee directors received a base retainer fee of $15,500 per year,
plus $800 for each Board or Committee meeting attended. If more than one meeting
was held on the same day, the director received $800 for the first meeting and
$400 for each subsequent meeting held that day. The Company also reimbursed its
directors for travel, lodging and related expenses they incurred in attending
Board and Committee meetings. In 1988, the Company adopted a pension plan for
non-employee directors who have served a minimum of five (5) years. Under the
plan, a retired director is paid an amount equal to 50% of the current annual
directors retainer fee for a period of years equal to the number of years served
as a director, subject to a maximum of ten (10) years. On December 8, 1994, the
Board adopted a resolution to terminate the pension plan, but accrued benefits
will be preserved for eligible directors even though no additional years of
eligibility will accrue after May, 1995.
14
<PAGE>
REPORT OF THE COMPENSATION COMMITTEE (1)
The Compensation Committee of the Board of Directors makes recommendations
to the Board regarding compensation of the Company's executive officers. The
philosophy of the Compensation Committee is that the Company maintains an
executive compensation program to help the Company attract, retain and motivate
the executive resources it needs to maintain its industry leadership and
maximize returns to stockholders. Key to the program are initiatives which vary
rewards with performance and build a foundation for stock ownership commitments
by executives. Variable compensation programs are an important component of
reward systems throughout the Company and compensation for all employees will
vary, to some degree, based on Company performance.
The Omnibus Budget Reconciliation Act of 1993 provides a limitation,
starting January 1, 1994, on the ability of a publicly held to receive a
Federal Income Tax deduction on compensation in excess of $1,000,000 paid in any
year to the CEO or any one of the other four highest compensated executive
officers of the Company, subject to certain exceptions. The Compensation
Committee will consider ways to maintain the tax deductibility of executive
compensation while retaining the discretion the Compensation Committee needs to
compensate executive officers in a manner commensurate with performance and to
provide the incentives and motivations which it believes should be in place for
the benefit of the Company in the competitive environment for executive talent.
EXECUTIVE COMPENSATION PROGRAM POLICIES
To achieve its stated goal, the Company has developed a series of executive
compensation policies.
The Company will provide levels of executive compensation that are
competitive with those provided by our competitors (as defined below).
The Company will provide incentive compensation for executives that
varies in a consistent and predictable manner with the financial
performance of the Company.
The Company will provide programs which enable executives to achieve
significant ownership positions to reinforce the link between executive
and stockholder interests.
COMPETITIVE EXECUTIVE COMPENSATION
The Company wants to provide levels of executive compensation that are
competitive at expected levels of performance. Competitiveness is defined as in
keeping with the compensation of executives in comparable positions or who have
similar qualifications. The comparison group for these executives is companies,
including some of those in the Value Line Property and Casualty Insurance Group,
who are similar to the Company in industry and size (in revenues or assets).
Competitiveness is measured using data from a number of sources, including
published information, proxies and surveys by consulting firms. The last
competitive study performed for the Company's executive officers was done in
December of 1992. At that time, base salary levels of the executive officers
ranged between the median and the 75th percentile, while bonus levels were
generally at the 75th percentile of those paid by comparable companies. With
1994 increases ranging from 2-4% for the executive officers and the decision to
freeze the salaries of the top five executive officers at 1994 levels until 1998
and the Company's 18-month review cycle (changed from annual reviews in 1992 for
executives and higher level managers), the Committee believes that the total
compensation packages of the executive officers is competitive as compared to
competitive companies, but this has not been measured by a compensation study
since 1992.
- ----------
(1) The Report of the Compensation Committee is not incorporated by reference
in the Company's Annual Report on Form 10-K or any other Exchange Act
filings.
15
<PAGE>
INCENTIVE COMPENSATION
The Company incentive plans are designed to ensure that incentive
compensation varies in a consistent and predictable manner with the Company's
financial performance.
The Long-Term Incentive Plan ("LTIP") provides awards based on achievement
of performance goals measuring return on stockholders equity over a three-year
period. For the three-year period 1993-1995, the Company's ROE exceeded the
Maximum goal and the awards were paid accordingly. In December, 1994, in order
to more closely link executive compensation with stockholder interests, the
Board amended the LTIP and awards are paid 70% in Company Common Stock. This
change took effect starting with the LTIP award paid in 1995 for the 3 year
period 1992-1994.
The Annual Incentive Plan bases its payout on performance against objective
annual performance goals, including the combined loss and expense ratio of the
Company's property and casualty insurance group, the Company's earnings per
share, and other objective criteria. The Compensation Committee approves the
objective performance goals each year before the commencement of the calendar
year to which they relate. For the CEO and the four other highest paid Named
Officers, awards under the Annual Incentive Plan for 1995 were weighted against
actual Company performance with 50% based on combined loss and expense ratio and
50% based on earnings per share. For 1995, the Company exceeded the Maximum
goals for both the combined loss and expense ratio and earnings per share and
therefore the payouts under the Annual Incentive Plan were made accordingly.
The Non-Qualified Stock Option Plan rewards direct increases in the value
of the Company's Common Stock and provides ownership opportunities to
executives.
CEO COMPENSATION
In May, 1995, the Compensation Committee decided to freeze Mr. Antonini's
base salary at the 1994 level of $563,200 until 1998. In conjunction with the
salary freeze, the Compensation Committee recommended the award of 100,000 stock
options to Mr. Antonini under the Company's Non-Qualified Stock Option Plan on
May 5, 1995 with an exercise price equal to the market price on that date. Mr.
Antonini and the other executives covered by Employment Agreements voluntarily
waived annual salary increase guarantees under the Agreements, unless a
change-in-control or termination occurs which would reinstate the guarantee.
His cash bonus of $337,920 for 1995 was consistent with measurement of the
Company's performance on combined ratio and earnings per share under the terms
of the Annual Incentive Plan. Mr. Antonini and the other executives covered by
Employment Agreements had, prior to 1992, agreed to voluntarily waive provisions
guaranteeing awards under the Annual Incentive Plan for 1992 and future years,
unless a change-in-control or termination occurs which would reinstate the
guarantee. Mr. Antonini received an award of $167,640 under the LTIP consistent
with the Plan. This award was paid 70% in the Company's Common Stock and 30% in
cash. Mr. Antonini and the other executives covered by Employment Agreements
have voluntarily waived provisions guaranteeing LTIP awards for 1993 and future
years, unless a change-in-control or termination's occurs which would reinstate
the guarantee. The waiver of guarantees enhances the relationship between the
performance of the Company and future earnings of the executives, and provides
linkage with the incentive programs for all employees.
16
<PAGE>
COMPENSATION OF FOUR HIGHEST PAID OFFICERS (EXCLUDING CEO)
Salaries for the four Named Officers, other than the CEO, were increased by
3-4% in 1994 in line with the Company's conversion from annual to 18-month
salary reviews in 1992. On May 4, 1995, the Committee decided to grant each of
these other four Named Officers options at the then current market price for
10,000 shares under the Company's Non-Qualified Stock Option Plan in
consideration for their base salaries being frozen at their 1994 levels until
1998. Cash bonus awards under the Annual Incentive Plan were paid consistent
with measurement of performance on combined ratio and earnings per share. LTIP
awards were paid consistent with the provisions of the Plan. As described in the
discussion of CEO Compensation, all Named Officers have voluntarily waived
certain Employment Agreement provisions applicable to their compensation unless
a change-in-control or termination of employment occurs.
Respectfully submitted,
Compensation Committee
Arthur E. Hall
John F. Knight
Joseph A. Parini
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During the last completed fiscal year Mr. Arthur E. Hall, Mr. John F.
Knight and Mr. Joseph A. Parini served on the Company's Compensation Committee.
None of these individuals have ever served as an officer or employee of the
Company or any of its subsidiaries.
TRANSACTIONS WITH MANAGEMENT AND OTHERS
Mr. Richard L. Antonini is a Director of Old Kent Bank and Trust Company.
Mr. Canepa, a Director, was, until November 1995, the Chairman of the Board and
remains a Director of Old Kent Financial Corporation, the sole stockholder of
Old Kent Bank. Old Kent Bank has various banking relationships with the Company
including depository and lending accounts, all in the regular course of
business.
Mr. Robert M. Raives is a partner in the law firm of Rosenman & Colin. The
Company has retained this law firm and plans to continue to do so in the future
for certain legal matters.
Kayne, Anderson Investment Management, L.P. and KAIM Non-Traditional, L.P.
(collectively "Kayne, Anderson"), holders of more than five percent of the
Company's outstanding common stock, have investment advisory agreements with the
Company. During 1995, Kayne, Anderson earned $353,930 of fees under these
agreements. Mr. Richard A. Kayne, a director of the Company, is the majority
stockholder, President, CEO and a Director of Kayne, Anderson Investment
Management, Inc., the General Partner of Kayne, Anderson Investment Management,
L.P. and KAIM Non-Traditional, L.P. Mr. Kayne is also the majority stockholder,
President, CEO and a Director of K.A. Associates, Inc., a registered broker
dealer. During 1995, the Company has paid K.A. Associates, Inc. approximately
$70,435 as commissions for executing certain securities transactions for the
Company.
Mr. Arthur E. Hall is a financial analyst and investment manager. In the
course of his business, Mr. Hall provides investment advice to Kayne, Anderson
in connection with Kayne, Andersons' management of certain investments for the
Company. During 1995, Mr. Hall was paid $76,201 by Kayne, Anderson for
investment advisory services Mr. Hall provided to Kayne, Anderson with respect
to the investments management by Kayne, Anderson for the Company.
17
<PAGE>
STOCK PERFORMANCE GRAPH(2)
The graph below summarizes the cumulative total shareholder return on the
Company's Common Stock compared to the Standard & Poor's 500 Index and the Value
Line P&C Insurance Group as of December 31st of the applicable year. The graph
assumes $100 invested on January 1, 1991 at the market close on the last prior
trading day in the Foremost stock, S&P 500 Index and Value Line P&C Insurance
Group (dividends reinvested).
<TABLE>
<CAPTION>
Measurement Period Foremost S&P Value Line
(Fiscal Year Covered) Corporation 500 Index P&C Group
- --------------------------- ----------- --------- ----------
<S> <C> <C> <C>
Measurement Point-12/31/90. $100.00 $100.00 $100.00
FYE 12/31/91............... $132.95 $130.47 $126.53
FYE 12/31/92............... $234.18 $140.41 $160.59
FYE 12/31/93............... $250.80 $154.56 $157.94
FYE 12/31/94............... $268.57 $156.60 $149.93
FYE 12/31/95............... $391.24 $215.45 $213.92
</TABLE>
- ----------
(2) The section under the heading "Stock Performance Graph" is not incorporated
by reference in the Company's Annual Report on Form 10-K or any other
Exchange Act filings.
RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS
(Proposal Number 2 on the Enclosed Proxy Card)
While stockholder approval is not required, the Board of Directors has
undertaken to submit to stockholders for their approval the appointment of BDO
Seidman, LLP as independent auditors of the Company for the year 1996. BDO
Seidman, LLP have been auditors of the Company since 1967. It is anticipated
that representatives of BDO Seidman, LLP will be present at the Annual Meeting
of Stockholders, and the Company has informed BDO Seidman, LLP that it will have
the opportunity to make a statement if it desires to do so and to answer
appropriate questions. In the event of a negative vote on this proposal, the
Board of Directors may let their resolution appointing BDO Seidman, LLP as
independent auditors of the Company for 1996 stand unless the Board finds other
compelling reasons for making a change. Disapproval of this resolution will be
considered as advice to the Board to select other independent auditors for the
following year, 1997.
YOUR BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE
FOR APPROVAL OF INDEPENDENT AUDITORS
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
Section 16(a) of the Exchange Act requires the Company's directors and
executive officers, and persons who own more than ten percent of the Company's
Common Stock, to file with the SEC initial reports of ownership and reports of
changes in ownership of Common Stock of the Company. Officers, directors and
greater than ten percent holders are required by SEC regulation to furnish the
Company with copies of all Section 16(a) forms they file. To the Company's
knowledge, based solely on review of the copies of such reports furnished to the
Company and written representations that no other reports were required during
the fiscal year ended December 31, 1995, all Section 16(a) filing requirements
applicable to its officers, directors and greater than ten percent beneficial
owners were complied with.
STOCKHOLDERS PROPOSALS
Any Stockholder proposal to be considered for inclusion in proxy material
for the Company's Annual Stockholders Meeting to be held on May 8, 1997 must be
received by the Secretary of the Company (P.O. Box 2450, Grand Rapids, Michigan
49501) no later than December 4, 1996.
18
<PAGE>
AVAILABILITY OF FORM 10-K
The Company will furnish without charge to each stockholder receiving a
proxy statement, upon the written request of such person, a copy of the
Company's Annual Report for 1995 on Form 10-K, including the financial
statements and schedules thereto required to be filed with the Securities and
Exchange Commission. Written requests for such copies should be directed to Ms.
Cathy O'Brien, Corporate Legal Assistant, Foremost Corporation of America, P.O.
Box 2450, Grand Rapids, Michigan 49501.
FOREMOST CORPORATION OF AMERICA
Paul D. Yared
Secretary
April 3, 1996
19
<PAGE>
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the registrant [X]
Filed by a party other than the registrant [ ]
Check the appropriate box:
[ ] Preliminary proxy statement
[X] Definitive proxy statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
_____________________FOREMOST CORPORATION OF AMERICA____________________
(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] $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2).
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[ ] 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 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:_________________________________________________________
20
<PAGE>
PROXY CARD
- ----------
FOREMOST CORPORATION OF AMERICA
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS FOR ANNUAL MEETING
OF STOCKHOLDERS TO BE HELD MAY 9, 1996
P
The undersigned acknowledges receipt of the Notice of Annual Meeting and
R Proxy Statement for the Annual Meeting of Stockholders of Foremost
Corporation of America to be held on May 9, 1996, and hereby appoints
O Richard L. Antonini and F. Robert Woudstra, or any one of them, attorneys
and proxies of the undersigned, each with full power of substitution, to
X vote all shares of the undersigned in Foremost Corporation of America at
such Annual Meeting, and at any adjournment thereof, for the purpose of
Y acting upon the proposals referred to below, and of acting in their
discretion upon such other matters as may properly come before the meeting.
(Change of address)
Election of Two Class II Directors, ____________________________
Nominees: ____________________________
Larry J. Orange, Joseph A. Parini ____________________________
____________________________
____________________________
(If you have written in the
above space, please mark the
corresponding box on the
reverse side of this card)
You are encouraged to specify your choices by marking the appropriate boxes, SEE
REVERSE SIDE, but you need not mark any boxes if you wish to vote in accordance
with the Board of Directors' recommendations. The Proxy cannot vote your shares
unless you sign and return this card.
SEE REVERSE SIDE
<PAGE>
SHARES IN YOUR NAME
[X] Please mark your votes
as in this example.
FOR WITHHELD FOR WITHHELD ABSTAIN
1. Election of [ ] [ ] 2. Ratification of [ ] [ ] [ ]
Directors BDO Seidman, LLP
(see reverse) as independent
auditors for 1996.
For, except vote withheld from the
following nominees(s):
__________________________________
Change of Address [ ]
Attend Meeting [ ]
SIGNATURE(S)___________________________________ DATE__________________________
SIGNATURE(S)___________________________________ DATE__________________________
Note: Please sign exactly as name appears hereon. Joint owners should each
sign. When signing as attorney, executor, administrator, trustee, or
guardian, please give full title as such. If a corporation, please sign
full corporation name by its president or other authorized officer. If
a partnership, please sign in partnership name by authorized person.
