FOREMOST CORPORATION OF AMERICA
April 10, 1997
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders of
Foremost Corporation of America on Thursday, May 8, 1997 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 10, 1997. The enclosed proxy statement describes
the matters to be presented at the meeting.
Whether or not you plan to attend the meeting, 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.
s/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 8, 1997
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 8,
1997 at 10:30 a.m. for the following purposes:
(1) To elect one (1) Class I Director, one (1) Class II Director and
three (3) Class III Directors;
(2) To ratify the appointment of BDO Seidman, LLP as independent auditors
for the year 1997; 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 21st day of March, 1997 are entitled to notice
of, and to vote at, this Annual Meeting or any adjournment of the 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 10, 1997
YOUR VOTE IS IMPORTANT. EVEN IF YOU PLAN TO ATTEND THE MEETING, PLEASE
SIGN, DATE AND RETURN THE ENCLOSED PROXY PROMPTLY.
<PAGE>
PROXY STATEMENT
---------------
ANNUAL MEETING OF STOCKHOLDERS OF
FOREMOST CORPORATION OF AMERICA
MAY 8, 1997
SOLICITATION OF PROXIES
This proxy statement and the enclosed proxy are being furnished to holders
of Common Stock, $1.00 par value, of Foremost Corporation of America (the
"Company") in connection with the solicitation of proxies by the Company's Board
of Directors 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 8, 1997 at 10:30 a.m. and any adjournment
thereof for the purposes set forth in the attached Notice. 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. If no choice is
specified, the shares represented by the proxy will be voted for the election of
all nominees named in this Proxy Statement and for ratification of BDO Seidman,
LLP as independent auditors for 1997. A proxy may be revoked at any time before
it is exercised by written notice delivered to the Secretary of the Company.
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 10, 1997 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 21, 1997
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 21, 1997, 9,332,043 shares of Common Stock were outstanding with each
share entitled to one vote. There are no cumulative voting rights. For purposes
of determining the presence or absence of a quorum for the transaction of
business at the meeting, all shares for which a proxy or vote is received,
including abstentions and shares represented by a broker vote on any matter,
will be counted as presented and represented at the meeting. 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 Restated 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 Restated 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 eight. On March 21, 1997 the Board of Directors
adopted a resolution increasing the number of directors from eight to nine,
effective May 8, 1997. As a result, the election of one (1) Class I Director,
one (1) Class II Director and three (3) Class III Directors will be voted upon
on May 8, 1997.
It is intended that shares represented by the enclosed proxy will be
voted, unless a contrary choice is indicated, for the election of the nominees
listed below with such terms 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 Directors to serve for terms set forth below:
Class I Director with term expiring in 1998:
Michael de Havenon
Class II Director with term expiring in 1999:
Richard L. Antonini
Class III Directors with terms expiring in 2000:
John C. Canepa
Arthur E. Hall
Richard A. Kayne
YOUR BOARD OF DIRECTORS RECOMMENDS THAT YOU
VOTE FOR ELECTION OF ALL NOMINEES AS DIRECTORS
BOARD OF DIRECTORS
Biographical information as of December 31, 1996, is presented below for
each person who either is nominated for election as a director at the Annual
Meeting of Stockholders or is continuing as an incumbent director. Except as
indicated, all have had the same principal positions and employment for over
five years.
Nominee for Election to Term Expiring in 1998 (Class I)
Michael de Havenon (age 56) is currently President of Kulan Capital Corp.,
a firm engaged primarily in making private investments. Until December 1996, Mr.
de Havenon served as President of Merrill Lynch Capital Corporation and its
predecessor, a wholly owned subsidiary of M L & Co., which structured and
managed leveraged private investments. During 1992, he served as a Managing
2
<PAGE>
Director of Butler Capital Corporation, a privately held management buyout firm.
Mr. de Havenon resides in New York City.
Nominee for Election to Term Expiring in 1999 (Class II)
Richard L. Antonini (age 54) has been a director of the Company since 1973
and has served as Chairman of the Board since 1991. Mr. Antonini has served as
the President and Chief Executive Officer of the Company since July, 1986, and
has been employed by the Company in various other capacities since 1969. Mr.
Antonini also is a director of Old Kent Bank and Trust Company and Chairman of
the Board of the Mackinac Center for Public Policy. Mr. Antonini resides near
Grand Rapids, Michigan.
Nominees for Election to Terms Expiring in 2000 (Class III)
John C. Canepa (age 66) has been a director of the Company since 1994. Mr.
Canepa has been employed as a Consulting Principal for Crowe Chizek, LLP since
November 1995. Mr. Canepa served as Chairman of the Board of Directors of Old
Kent Financial Corporation from 1988 until 1995. Mr. Canepa also is a director
of ThornApple Valley, Inc. Mr. Canepa resides near Grand Rapids, Michigan.
Arthur E. Hall (age 58) has been a director of the Company since 1994. Mr.
Hall is a Chartered Financial Analyst by the Association of Investment
Management and Research and a portfolio manager. Mr. Hall has been the sole
general partner of Valarian Associates, a Nevada limited partnership which
purchases, sells and holds investments securities. Mr. Hall resides in Minden,
Nevada.
Richard A. Kayne (age 51) has been a director of the Company since 1994.
Mr. Kayne serves as President and a director of KA Holdings, Inc. and
administrative manager of KAIM Traditional, LLC, the parent entities of the
investment advisory businesses of the Kayne Anderson Investment Management
Group. Mr. Kayne also serves as President and Chief Executive Officer and
director of K.A. Associates, Inc., a registered broker/dealer. Mr. Kayne is a
director of Glacier Water Services, Inc., a provider of drinking water services,
and The Right Start, Inc., a children's products retailer. Mr. Kayne resides
near Los Angeles, California.
Incumbent Class I Directors - Terms Expiring in 1998
Robert M. Raives (age 70) has been a director of the Company since 1988.
Mr. Raives has been a partner in the New York City law firm of Rosenman & Colin
since 1993. Prior to that time, Mr. Raives was President of the New York City
law firm of Miller, Singer, Raives and Brandes, P.C., and has been a shareholder
of that firm. Mr. Raives also is a member of the United States Advisory Board of
the Zurich Insurance Company and a director of the Zurich Holding Company of
America and the American Guarantee & Liability Insurance Company. Mr. Raives
resides in New York City.
F. Robert Woudstra (age 51) has been a director of the Company since 1988.
Mr. Woudstra has served as Executive Vice President and Treasurer of the Company
since 1987. Mr. Woudstra has been employed by Foremost Insurance Company since
March 1973 and has served in various capacities since that time. Mr. Woudstra
resides near Grand Rapids, Michigan.
Incumbent Class II Directors - Terms Expiring in 1999
Larry J. Orange (age 55) has been a director of the Company since 1993.
Mr. Orange has served as Executive Vice President of the Company since 1987. Mr.
Orange has been employed by Foremost Insurance Company since 1970 and has served
in various capacities since that time. Mr. Orange resides near Grand Rapids,
Michigan.
Joseph A. Parini (age 65) has been a director of the Company since 1981.
Mr. Parini serves as Chairman of the Board of Directors of Elbit Systems, Ltd.,
since 1997. Mr. Parini previously served as President of Elbit Systems, Inc., a
manufacturer of electronic systems for the medical and defense industries, from
1990 through 1996. Mr. Parini has served as President of Olive Tree Enterprises,
a manufacturing consulting firm, since 1996. Mr. Parini also is a director of
Wolverine World Wide, Inc. Mr. Parini resides in Grand Rapids, Michigan.
3
<PAGE>
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
During 1996 the Board of Directors held four meetings. Each of the
directors attended 75 percent or more 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 1996 were:
Audit Committee
- ---------------
Members: Messrs. Canepa, Parini, Raives
Number of Meetings in 1996: 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.
Committee on Executive Management and Compensation
- --------------------------------------------------
Members: Messrs. Canepa, Hall (a), Parini
Number of Meetings in 1996: 2
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, Woudstra
Number of Meetings in 1996: 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 1996: 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 1996: 0
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. (b)
- ----------
(a) Mr. Hall resigned from this Committee during 1996.
(b) The Nominating Committee will consider nominees for election to the
Board of Directors submitted by stockholders. 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 Restated 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 Company 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 Company'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 Company if so elected. The Company may require any proposed
nominee to furnish such other information as may reasonably be required by the
Company to determine the eligibility of such proposed nominee to serve as a
director of the Company.
5
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth information as to each person or entity
known to the Company to have been the beneficial owner of more than 5% of the
Company's outstanding shares of Common Stock as of December 31, 1996 (except as
noted in the footnotes):
<TABLE>
<CAPTION>
SHARES PERCENT
NAME AND ADDRESS BENEFICIALLY OF
OF BENEFICIAL OWNER OWNED CLASS(a)
- --------------------------------------- --------------- -----------
<S> <C> <C>
Cortland Associates, Inc. ............. 1,101,532(b) 11.80%
800 Maryland Avenue
Suite 730
St. Louis, Missouri 63105
Albert O. Nicholas ..................... 1,080,277(c) 11.58%
Nicholas Company, Inc.
700 North Water Street
Milwaukee, Wisconsin 53202
Richard A. Kayne ....................... 1,050,854(d) 11.26%
Kayne, Anderson Investment
Management, Inc.
1800 Avenue of the Stars
Suite 200
Los Angeles, California 90067
Arthur E. Hall .......................... 696,450(e) 7.46%
1726 Cedar Wood Drive
Minden, Nevada 89428
First Chicago NBD Corporation ........... 523,258(f) 5.61%
One First National Plaza
Chicago, Illinois 60670
<FN>
- ----------
(a) The percent of class is based upon 9,332,043 shares of the Company's
Common Stock outstanding on March 21, 1997.
(b) According to Amendment No. 5 to Schedule 13G dated February 10, 1997, of
Cortland Associates, Inc. ("Cortland"), an investment advisory firm
registered under the Investment Advisers Act of 1940, Cortland claims sole
dispositive power over 1,004,642 shares and sole voting power over 61,160
of such shares. Cortland claims shared voting power over 283,580 of such
shares with Cortland's clients who beneficially own the 1,004,642 such
shares. In addition, various principals of Cortland (or members of their
families) also own directly or beneficially 96,890 additional shares.
(c) According to Amendment No. 3 to Schedule 13G dated February 6, 1997, of
Nicholas Company, Inc., an investment adviser registered under the
Investment Advisers Act of 1940, it claims sole dispositive power over the
1,080,277 shares. Nicholas Fund, Inc., an open-end management investment
company registered under the Investment Company Act of 1940, claims sole
voting power over 888,777 of such shares and Albert O. Nicholas,
President, Director and majority shareholder of Nicholas Company, Inc.,
claims sole voting and dispositive power over 15,500 of such shares. Mr.
Nicholas disclaims beneficial ownership of the other reported shares.
6
<PAGE>
(d) According to information provided to the Company by Richard A. Kayne, Mr.
Kayne beneficially owns 275,978 shares over which he claims sole voting
and dispositive power. KAIM Non-Traditional, L.P., a registered investment
adviser under the Investment Advisers Act of 1940, beneficially owns
774,876 shares, including 20,200 shares held directly, 727,026 shares held
as the general partner of and adviser to four investment partnerships,
13,500 shares held as investment adviser to individually managed accounts
and 8,300 shares held as co-manager of an offshore corporation. Mr. Kayne
is the president and majority stockholder of KA Holdings, Inc. the sole
stockholder of Kayne, Anderson Investment Management, Inc., the general
partner and majority owner of KAIM Non-Traditional, L.P. As a result, Mr.
Kayne and KAIM Non- Traditional, L.P. have shared voting and dispositive
power over the 774,876 shares. Kayne, Anderson Investment Management,
L.P., a registered investment adviser under the Investment Advisers Act of
1940, beneficially owns 5,850 shares as the adviser to individually
managed accounts. As administrative manager and majority member of KAIM
Traditional, LLC, the general partner and majority owner of Kayne,
Anderson Investment Management, L.P., Mr. Kayne has shared voting and
dispositive power over the 5,850 shares. Mr. Kayne claims beneficial
ownership of the shares held by him directly and 28,619 of the shares held
by KAIM Non-Traditional, L.P. for the investment partnerships, which
shares represent his direct investment interest in such investment
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 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 Amendment No. 9 to Schedule 13G, dated March 14, 1997, First
Chicago NBD Corporation ("NBD") beneficially owns, in a fiduciary
capacity, 523,258 shares. NBD claims sole voting power over 502,710
shares, sole dispositive power over 128,819 shares and shared dispositive
power over 391,730 shares.
</FN>
</TABLE>
7
<PAGE>
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth the number of shares of Common Stock of the
Company beneficially owned as of March 21, 1997, by each of the Company's
directors and nominees for director, each named executive officer and by all
directors and executive officers as a group:
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF BENEFICIAL OWNERSHIP(a)
--------------------------------------------- PERCENT
NAME AND ADDRESS SOLE VOTING AND SHARED VOTING OR OF
OF BENEFICIAL OWNER DISPOSITIVE POWER DISPOSITIVE POWER(b) TOTAL(c) CLASS(d)
- ------------------- ----------------- ------------------ -------- --------
<S> <C> <C> <C> <C>
Richard L. Antonini 366,170 3,000 369,170 3.74%
John C. Canepa 727 -- 727 *
Michael de Havenon 500 -- 500 *
Arthur E. Hall 631,950 64,500 696,450 7.05%
Jack J. Hannigan 93,398 -- 93,398 *
David A. Heatherly 58,057 -- 58,057 *
Richard A. Kayne 275,978 774,876 1,050,854 10.64%
Larry J. Orange 61,247 -- 61,247 *
Joseph A. Parini 4,122 -- 4,122 *
Robert M. Raives -- -- -- --
F. Robert Woudstra 49,141 -- 49,141 *
All directors and
executive officers
as a group 1,574,688 842,436 2,417,124 24.48%
<FN>
- ----------
* Less than 1%
(a) The number of shares stated are based on information provided by each
person listed and include shares personally owned of record by the person
and shares which, under applicable regulations, may be considered to be
otherwise beneficially owned by the person.
(b) These numbers include shares over which the listed person is legally
entitled to share voting or dispositive power by reason of joint
ownership, trust or other contract or propriety right and shares held by
spouses, children or other relatives over whom the listed person may have
substantial influence by reason of relationship. For a description of the
beneficial ownership of shares claimed by Messrs. Hall and Kayne, see
footnotes (e) and (d) under "Security Ownership of Certain Beneficial
Owners."
(c) These numbers include shares that may be acquired through the exercise of
stock options granted under the Company's Non- Qualified Stock Option Plan
within sixty days after March 21, 1997. The number of shares subject to
stock options for each person is shown below:
R. L. Antonini ................................... 286,496
J. J. Hannigan ................................... 86,402
D. A. Heatherly .................................. 54,877
L. J. Orange ..................................... 59,026
F. R. Woudstra ................................... 45,707
All directors and executive oficers as a group ... 541,532
(d) Percent of Class is based upon the 9,332,043 the Company's Common Stock
outstanding on March 21, 1997 plus the 541,532 shares represented by
options which may be exercised within 60 days of that 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 ... 1996 $563,196 $ 74,342 $0 $ 0 $168,960 $ 71,083
President and CEO 1995 563,200 337,920 0 100,000 167,640 71,083
1994 563,200 234,742 0 0 134,322 71,083
J. J. Hannigan ... 1996 $222,732 $ 24,991 0 0 $ 60,138 $ 31,691
Executive V.P. 1995 222,736 113,595 0 10,000 59,555 31,691
1994 222,736 78,911 0 0 48,125 31,691
F. R. Woudstra ... 1996 $218,544 $ 24,521 0 0 $ 59,007 $ 32,394
Executive V.P. 1995 218,545 111,458 0 10,000 58,434 32,394
and Treasurer 1994 218,545 77,426 0 0 47,218 32,394
D. A. Heatherly .. 1996 $219,780 $ 24,659 0 0 $ 59,340 $ 30,817
Executive V.P. 1995 219,774 112,085 0 10,000 58,763 30,816
1994 219,774 68,701 0 0 47,198 30,816
L. J. Orange ..... 1996 $194,172 $ 21,786 0 0 $ 52,426 $ 30,161
Executive V.P. 1995 194,169 99,026 0 10,000 51,754 30,161
1994 194,169 60,697 0 0 41,436 30,161
<FN>
- ----------
(1) Salary and Bonus disclosed include any amounts the Named Executive 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 Executive 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 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 1996, "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,
$24,176 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 $5,802 of life
insurance premiums on split dollar policies.
</FN>
</TABLE>
9
<PAGE>
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
SHARES OPTIONS/SARs AT FY-END OPTIONS/SARs AT FY-END
ACQUIRED (#)(1) ($)(2)
ON VALUE ---------------------- ----------------------
EXERCISE REALIZED UNEXERCIS- UNEXERCIS-
NAME (#) ($) EXERCISABLE ABLE EXERCISABLE ABLE
- --------------- --------- -------- ----------- ---------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C>
R. L. Antonini. 0 $ 0 235,162 66,667 $7,586,966 $1,466,674
J. J. Hannigan. 0 0 83,068 6,667 2,747,589 146,674
F. R. Woudstra. 39,400 1,325,285 42,373 6,667 1,117,333 146,674
D. A. Heatherly 26,725 1,072,200 51,543 6,667 1,493,389 146,674
L. J. Orange... 0 0 55,692 6,667 1,892,562 146,674
<FN>
- ----------
(1) The Company's Non-Qualified Stock Option Plan authorizes grants for a
total of 1,050,000 shares. As of March 21, 1997, the aggregate number of
options granted and outstanding was 738,171. Exercisable includes all
options vested as of December 31, 1996.
(2) Value of Unexercised In-The-Money Options is based on the closing price of
the Company's Common Stock on December 31, 1996, $60.00 per share.
(3) In the event of a dissolution or liquidation of the Company, the options
will terminate on a date to be fixed by the Compensation Committee which
shall not be less than 30 days following notice to the employees of such
date and the employees shall be entitled to exercise all options
(including unvested options) during such period following the notice. In
the event of a merger or consolidation in which the Company is not the
surviving corporation, a sale of all or substantially all of the assets of
the Company, or a sale, pursuant to an agreement with the Company, of
securities of the Company as a result of which the Company becomes a
wholly-owned subsidiary of another company (a "Reorganization Event"), all
outstanding options shall become immediately exercisable for a period to
be determined by the Compensation Committee which shall not be less than
30 days following notice to employees of such date unless the agreement
respecting such Reorganization Event specifically provides for the
continuation or conversion of such options, in which case such options
shall be exercisable in accordance with the terms of such agreement.
</FN>
</TABLE>
10
<PAGE>
LONG-TERM INCENTIVE PLAN-AWARDS
IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
NUMBER OF PERFORMANCE ESTIMATED FUTURE PAYOUTS UNDER
SHARES, OR OTHER NON-STOCK PRICE-BASED PLANS (3)
UNITS PERIOD UNTIL ----------------------------------
OR OTHER MATURATION THRESHOLD TARGET MAXIMUM
NAME RIGHTS(1) OR PAYOUT(2) ($) ($) ($)
- ----------------- --------- ------------ ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
R. L. Antonini... 1979 3 years $ 140,800 $ 281,600 $ 422,400
J. J. Hannigan... 705 3 years 44,500 89,100 133,600
F. R. Woudstra... 691 3 years 43,700 87,400 131,100
D. A. Heatherly.. 695 3 years 44,000 87,900 131,900
L. J. Orange..... 614 3 years 38,800 77,700 116,500
<FN>
- ----------
(1) The Long-Term Incentive Plan ("LTIP") provides for awards based on the
Company's return on stockholders' 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 1997 for the three-year plan 1994
through 1996. 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
1996 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 1996 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. 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 Executive 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 1996 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 Executive 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. Named
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 1996. 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 Named Executive Officers, 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 - 27 years; F.R. Woudstra - 24
years; J.J. Hannigan - 13 years; D.A. Heatherly - 13 years; and L.J. Orange - 27
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 Executive 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 as
described above. 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 Named Executive Officers 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 Executive 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 Section
280G cap contained in the Code, 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 corporation 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 1996. At that time, base salary levels of the executive officers
were, on average, slightly below the median, while cash bonus levels for 1996
were uniformly below the median level of those paid by comparable companies. As
a result of this study, the Committee decided to increase the potential
opportunity levels under the Company's Long Term Incentive Plan starting with
the payout for the 1995-1997 three-year plan. With this change, the Committee
believes that the total compensation packages of the executive officers reflect
both corporate and individual results and is competitive as compared to
competitive companies.
- ----------
(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 1994-1996, 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 Executive Officers, awards under the Annual Incentive Plan for 1996
were weighted against actual Company performance with 20% based on written
premium, 30% based on combined loss and expense ratio and 50% based on earnings
per share. For 1996, the Company failed to meet the minimum goal for written
premium and for the combined loss and expense ratio, while the earnings per
share was between minimum and target 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.
Mr. Antonini's cash bonus of $74,342 for 1996 was consistent with
measurement of the Company's performance on written premium, 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 $168,960 under the LTIP. 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.
Respectfully submitted,
Compensation Committee
Arthur E. Hall
John C. Canepa
Joseph A. Parini
16
<PAGE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During the last completed fiscal year Mr. Arthur E. Hall, Mr. John C.
Canepa 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.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Mr. Richard L. Antonini is a Director of Old Kent Bank and Trust Company.
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 1996, Kayne, Anderson earned $691,080 of fees under these
agreements. Mr. Richard A. Kayne, a director of the Company, is the majority
stockholder (through KA Holdings, Inc.), President, CEO and a Director of Kayne,
Anderson Investment Management, Inc., the General Partner and majority owner of
KAIM Non-Traditional, L.P. He is also administrative manager and majority member
of KAIM Traditional, LLC, the general partner and majority owner of Kayne,
Anderson Investment Management, L.P. Mr. Kayne is also the majority stockholder,
President, CEO and a Director of K.A. Associates, Inc., a registered broker
dealer. During 1996, the Company paid K.A. Associates, Inc. approximately
$54,162 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 1996, Mr. Hall was paid $227,624 by Kayne, Anderson for such
investment advisory services Mr. Hall provided to Kayne, Anderson with respect
to the investments managed by Kayne, Anderson for the Company.
17
<PAGE>
STOCK PERFORMANCE GRAPH(2)
The graph below summarizes the cumulative total stockholder 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, 1992 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-12/31/91. $100.00 $100.00 $100.00
FYE 12/31/92............... $176.15 $107.62 $128.68
FYE 12/31/93............... $188.65 $118.46 $125.46
FYE 12/31/94............... $202.01 $120.03 $119.72
FYE 12/31/95............... $294.28 $165.13 $171.47
FYE 12/31/96............... $354.64 $203.05 $210.01
<FN>
- ----------
(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.
</FN>
</TABLE>
18
<PAGE>
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 1997. 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 1997 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, 1998.
YOUR BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE
FOR RATIFICATION OF THE REAPPOINTMENT OF BDO SEIDMAN, LLP
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
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, 1996, all Section 16(a) filing requirements
applicable to its officers, directors and greater than ten percent beneficial
owners were complied with.
STOCKHOLDER PROPOSALS
Any stockholder proposal to be considered for inclusion in proxy material
for the Company's Annual Stockholders Meeting to be held on May 7, 1998 must be
received by the Secretary of the Company (P.O. Box 2450, Grand Rapids, Michigan
49501) no later than December 3, 1997.
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 1996 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 10, 1997
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
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the Appropriate Box:
[ ] Preliminary Proxy Statement
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or
Rule 14a-12
[ ] Confidential, For Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
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] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) 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.:
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(3) Filing party:
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(4) Date filed:
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<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 8, 1997
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 8, 1997, 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.
Election of one (1) Class I Director Nominee:
Michael de Havenon {Change of address)
Election of one (1) Class II Director ---------------------------
Nominee:
Richard L. Antonini ---------------------------
Election of three (3) Class III Directors ---------------------------
Nominees:
John C. Canepa, Arthur E. Hall ---------------------------
Richard A. Kayne (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 1997.
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.
