THE MIDLAND COMPANY
7000 MIDLAND BOULEVARD
AMELIA, OHIO 45102
NOTICE OF ANNUAL MEETING
TO THE SHAREHOLDERS OF THE MIDLAND COMPANY:
Notice is hereby given that the Annual Meeting of the Shareholders of
The Midland Company will be held at the Company's offices, 7000 Midland
Boulevard, Amelia, Ohio 45102, on Thursday, April 11, 1996, at 10 a.m., for the
following purposes:
1. To elect 5 members of the Board of Directors to hold office for terms
of three years.
2. To ratify and approve the appointment of Deloitte & Touche LLP as
independent auditors.
3. To consider and vote upon the proposed authorization for the Company
to repurchase Company stock held in or acquired pursuant to all
employee benefit plans and Company stock option plans.
4. To consider and vote upon the proposed resolution to amend the
Articles of Incorporation and the Code of Regulations of the Company
to change the address of the principal office.
5. To transact any other business that may lawfully come before the
meeting.
As of the date of this notice, the foregoing is the only business which
the Board of Directors intends to present or which the Board of Directors has
knowledge that others will present at the meeting.
You are urged to be present. If you do not expect to be present at the
meeting but wish your stock to be voted, please date, fill in and sign the
enclosed form of proxy and mail it in the enclosed return envelope which
requires no postage if mailed in the United States.
Shareholders of record at the close of business on March 8, 1996, will
be entitled to vote at the meeting or any adjournment thereof.
DATED AT AMELIA, OHIO THIS 15th day of March, 1996.
JOHN R. LABAR
Secretary
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THE MIDLAND COMPANY
7000 Midland Boulevard
Amelia, Ohio 45102
The proxy and statement will first be sent to shareholders on or about
March 15, 1996.
PROXY STATEMENT
The enclosed proxy is solicited by the issuer. Each person giving a
proxy may revoke it at any time before it is voted by giving notice to the
Company in writing or in open meeting, or by a later dated proxy received by the
Company. Any written notice of revocation should be addressed to the Company as
indicated above to the attention of the Secretary. Each valid proxy received in
time will be voted at the meeting, and if a choice is specified on the ballot,
it will be voted in accordance with such specification. Holders of stock on the
books of the Company at the close of business on the 8th day of March, 1996, are
entitled to notice of and to vote at the meeting. The Company then had
outstanding voting securities consisting of 3,020,823 shares of common stock,
the holders of which are entitled to one (1) vote per share.
PRINCIPAL HOLDERS OF VOTING SECURITIES
The following table sets forth, as of March 8, 1996, the holdings of
persons (including any "group" as that term is used in Section 13(d)(3) of the
Securities Exchange Act of 1934) known by the Company to be the beneficial owner
of more than 5% of its outstanding common stock. Information has been furnished
by the persons listed. Beneficial ownership has been determined in accordance
with rules and regulations of the Securities and Exchange Commission.
Name and Address of Amount Beneficially
Beneficial Owner Owned Percent of Class
J. P. Hayden, Jr.
7000 Midland Boulevard
Amelia, Ohio 45102 562,675 (1) 18.3%
Robert W. Hayden
7000 Midland Boulevard
Amelia, Ohio 45102 455,894 (2) 15.0%
Burgess L. Doan
5710 Wooster Road
Cincinnati, Ohio 45227 370,283 (3) 12.3%
John R. LaBar
7000 Midland Boulevard
Amelia, Ohio 45102 259,314 (4) 8.5%
Gabelli Fund, Inc.
One Corporate Center
Rye, NY 10580 215,200 7.1%
William McD. Kite
525 Vine Street
Cincinnati, Ohio 45202 191,501 (5) 6.3%
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(1) Includes 423,570 shares over which J. P. Hayden, Jr. has sole voting
and investment power, 82,470 over which he has sole voting power only, 10,735
over which he shares voting and investment power, and 45,900 shares that may be
acquired through exercise of options within 60 days of March 8, 1996.
(2) Includes 439,894 shares over which Robert W. Hayden has sole voting
and investment power, 3,600 shares over which he has sole voting power, and
12,400 shares that may be acquired through exercise of options within 60 days of
March 8, 1996.
(3) Includes 195,006 shares over which Burgess L. Doan has sole voting
and investment power, including 47,042 shares held in trust for the benefit of
the family of J. P. Hayden, III, 40,242 shares held in trust for the benefit of
the family of John W. Hayden and 50,502 shares held in trust for the benefit of
the family of William T. Hayden. These shares held in trust are not shown as
owned beneficially by J. P. Hayden, III, John W. Hayden or William T. Hayden.
In addition, Mr. Doan shares voting and investment power over 138,000 shares as
co-trustee with William McD. Kite, under agreement with J. Page Hayden,
deceased. J. P. Hayden Jr. is among the beneficiaries of the trust entitled to
receive distribution of income. These trust shares are not shown as
beneficially owned by J. P. Hayden, Jr. Mr. Doan shares voting and investment
power over 33,134 shares held in trust as a co-trustee for the benefit of the
children of Robert W. Hayden. Furthermore, Mr. Doan shares voting and
investment power over 4,143 shares held in trust as co-trustee with William T.
Hayden (2,943 shares) and J. P. Hayden, III (1,200 shares).
(4) Includes 242,614 shares over which John R. LaBar has sole voting and
investment power, 3,600 shares over which he has sole voting power, 100 shares
over which he shares voting and investment power, and 13,000 shares that may be
acquired through exercise of options within 60 days of March 8, 1996.
(5) Includes 185,501 shares over which William McD. Kite shares voting
and investment power, including 138,000 shares over which Mr. Kite is a
co-trustee with Burgess L. Doan under agreement with J. Page Hayden, deceased.
J. P. Hayden, Jr. is among the beneficiaries of the trust entitled to receive
distribution of income. These trust shares are not shown as beneficially owned
by J. P. Hayden, Jr. In addition, it includes 33,134 shares over which Mr. Kite
is a co-trustee for the benefit of children of Robert W. Hayden. Finally it
includes 6,000 shares that may be acquired through exercise of options within 60
days of March 8, 1996. Mr. Kite, a director, is a partner of the law firm of
Cohen, Todd, Kite & Stanford, general counsel for the Company. The Company paid
the firm fees of $410,171 in 1995.
As of March 8, 1996, all Directors and Officers of the Company, as a
group, beneficially owned 1,741,278 shares of the common stock of the Company.
This amount includes 180,300 shares which may be acquired through exercise of
options within 60 days of March 8, 1996. The amount so beneficially owned
represents 54.4% of the aggregate of the shares outstanding on that date plus
the shares which may be so acquired through exercise of options.
ELECTION OF DIRECTORS
It is intended that proxies given to the persons named in the enclosed
form of proxy will be voted for the election of nominees listed below. In case
any nominee is unable or declines to serve, it is intended that proxies will be
voted for the balance of those named and for such person as shall be designated
by the Board of Directors to replace any such nominee. The issuer has no
knowledge or reason to believe that any nominee will be unable or unwilling to
serve. Shareholders have cumulative voting rights in the election of Directors.
If notice in writing is given by any shareholder to the President, a
Vice President, or the Secretary of the Company, not less than forty-eight (48)
hours before the time fixed for holding the meeting, that he desires that the
voting for the election of Directors be cumulative, and if an announcement of
the giving of such notice is made upon convening of the meeting, each
shareholder shall have the right to cumulate his shares in voting for the
Directors. By this procedure a shareholder, instead of registering one vote per
share for each candidate of his choice, may cast the entire total of his votes
(as many votes as the number of Directors to be elected multiplied by the number
of his shares equals) for one candidate or distribute them among the candidates
otherwise as he desires. This proxy does not solicit discretionary authority to
accumulate votes.
2
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The Board of Directors will consist of sixteen members divided into
three classes. Five directors are to be elected at the annual meeting to serve
until the annual meeting in 1999 and until their successors have been elected
and qualified. It is intended that the accompanying proxy will be voted for the
election of the following six nominees:
Shares of Common
Principal Occupation Stock of Company Percent
and Other Director Beneficially Owned of
Directors Business Affiliations Since on March 8, 1996 Class
- --------------------------------------------------------------------------------
James H. Carey Corporate Advisor and 1971 3,440 (3) 0.1%
(Age 63) Directorsince September,
1995;Managing Director,
Briarcliff Financial
Associates since June,
1991; formerly CEO,
National Capital Benefits
Corp.; Director, Airborne
Freight Corporation; Cowan
Group of Funds
John W. Hayden (1) Vice President of the 1991 69,366 (6) 2.3%
(Age 38) Company; President of
American Modern Insurance
Group, Inc.; Chairman of CS
Crable Sportswear, Inc. (wholly
owned Subsidiaries of The
Midland Company)
Robert W. Hayden (1) Vice President of the 1968 455,894 (2) 15.0%
(Age 57) Company
John R. Orther Certified Public 1961 4,000 (4) 0.1%
(Age 77) Accountant
William F. Plettner Retired Vice Chairman 1961 58,488 (5) 1.9%
(Age 73) and President of the Company
3
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The following directors have been elected to serve until the annual
meeting in 1997 and until their successors have been elected and qualified:
Shares of Common
Principal Occupation Stock of Company Percent
and Other Director Beneficially Owned of
Directors Business Affiliations Since on March 8, 1996 Class
- --------------------------------------------------------------------------------
George R. Baker Corporate Director/ 1971 8,540 (7) 0.3%
(Age 66) Advisor,since July 1,
1985;Director, Reliance
Group Holdings, Inc.,
RelianceInsurance Co.,
W. W. Grainger,Inc.,
WMS Industries, Inc.
Michael J. Conaton President of the Company; 1969 58,322 (8) 1.9%
(Age 62) Director, Society National
Bank
J. P. Hayden, III (1) Vice President of the 1989 46,622 (9) 1.5%
(Age 43) Company; President of M/G
Transport Services, Inc.
(wholly owned Subsidiary of
The Midland Company)
William J. Keating Formerly Chairman and 1991 4,000 (13) 0.1%
(Age 68) Publisher and Chief Executive
Officer of The Cincinnati
Enquirer; Formerly Chairman
of the Board of Associated
Press; Director, Fifth Third
Bancorp and Fifth Third Bank
John R. LaBar Vice President and 1963 259,314 (2) 8.5%
(Age 64) Secretary of the Company
4
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The following directors have been elected to serve until the annual
meeting in 1998 and until their successors have been elected and qualified:
Shares of Common
Principal Occupation Stock of Company Percent
and Other Director Beneficially Owned of
Directors Business Affiliations Since on March 8, 1996 Class
- --------------------------------------------------------------------------------
J. P. Hayden, Jr. (1) Chairman of the Board of 1961 562,675 (2) 18.3%
(Age 66) the Company; Director,
Star Banc Corporation
William T. Hayden (1) Attorney; Formerly 1994 103,753 (14) 3.4%
(Age 42) Partnerof Firm of Cohen,
Todd, Kite & Stanford
William McD. Kite Attorney, Partner of Firm 1966 191,501 (2) 6.3%
(Age 72) of Cohen, Todd, Kite &
Stanford
John M. O'Mara Financial Consultant; 1983 8,500 (10) 0.3%
(Age 68) Director, Baldwin & Lyons,
Inc., Plantronic, Inc.;
Formerly Chairman of the
Executive Committee, Quality
Care Systems
Glenn E. Schembechler Formerly President, 1981 11,417 (11) 0.4%
(Age 66) Detroit Tigers Baseball Club;
Formerly, Athletic Director
and Head Football Coach,
University of Michigan;
Director, Riddell Sports, Inc.
John I. Von Lehman Vice President, Treasurer 1991 14,613 (12) 0.5%
(Age 43) and Chief Financial Officer
of the Company
Information has been furnished by the persons listed. Beneficial
ownership has been determined in accordance with rules and regulations of the
Securities and Exchange Commission. Periods of service as directors include
service as directors of the Company's predecessor, Midland-Guardian Co.
5
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(1) J. P. Hayden, Jr. and Robert W. Hayden, both of whom are executive
officers of the Company and various subsidiaries, are brothers.
J. P. Hayden, III, John W. Hayden and William T. Hayden are sons of
J. P. Hayden, Jr.
(2) With reference to the holdings of J. P. Hayden, Jr., Robert W. Hayden,
John R. LaBar, and William McD. Kite, see footnotes (1) through (5) under
Principal Holders of Voting Securities.
(3) Includes 440 shares over which James H. Carey has sole voting and
investment power, and 3,000 shares that may be acquired through exercise of
options within 60 days of March 8, 1996.
(4) Includes 500 shares over which John R. Orther has sole voting and
investment power, and 3,500 shares that may be acquired through exercise of
options within 60 days of March 8, 1996.
(5) Includes 55,268 shares over which William F. Plettner has sole voting and
investment power, 220 shares over which he shares voting and investment power,
and 3,000 shares that may be acquired through exercise of options within 60 days
of March 8, 1996.
(6) Includes 1,074 shares over which John W. Hayden has sole voting and
investment power, 3,600 over which he has sole voting power, 4,088 shares over
which he shares voting and investment power, 50,104 shares over which he shares
investment power only, and 10,500 shares that may be acquired through exercise
of options within 60 days of March 8, 1996.
(7) Includes 2,640 shares over which George R. Baker has sole voting and
investment power and 5,900 shares that may be acquired through exercise of
options within 60 days of March 8, 1996.
(8) Includes 7,524 shares over which Michael J. Conaton has sole voting power,
29,798 shares over which he shares voting and investment powers, and 21,000
shares that may be acquired through exercise of options within 60 days of March
8, 1996.
(9) Includes 447 shares over which J. P. Hayden, III has sole voting and
investment power, 3,600 shares over which he has sole voting power, 12,172
shares over which he shares voting and investment power, 19,303 shares over
which he shares investment power only, and 11,100 shares that may be acquired
through exercise of options within 60 days of March 8, 1996.
(10) Includes 2,500 shares over which John M. O'Mara has sole voting and
investment power, and 6,000 shares that may be acquired through exercise of
options within 60 days of March 8, 1996.
(11) Includes 5,417 shares over which Glenn E. Schembechler has sole voting and
investment power and 6,000 shares that may be acquired through exercise of
options within 60 days of March 8, 1996.
(12) Includes 602 shares over which John I. Von Lehman has sole voting and
investment power, 3,611 shares over which he has sole voting power, and 10,400
shares that may be acquired through exercise of options within 60 days of March
8, 1996.
(13) Includes 2,000 shares over which William J. Keating shares voting and
investment powers and 2,000 shares that may be acquired through exercise of
options within 60 days of March 8, 1996.
(14) Includes 447 shares over which William T. Hayden has sole voting and
investment power, 54,425 shares over which he shares voting and investment
power, 45,881 shares over which he shares investment power only, and 3,000
shares that may be acquired through exercise of options within 60 days of March
8, 1996. Mr. Hayden was a partner in 1995 of the law firm of Cohen, Todd, Kite
& Stanford, general counsel for the Company. The Company paid the firm fees of
$410,171 in 1995.
6
<PAGE>
The Board of Directors of the Company has an audit committee and a
compensation committee, but has no nominating committee. The audit committee is
composed of James H. Carey, John R. Orther, John M. O'Mara and Glenn E.
Schembechler. The function of the audit committee is to nominate auditors for
the annual audit of the Company and discuss the audit work with the auditors
appointed to perform the audit. The compensation committee is composed of
George R. Baker, James H. Carey and William J. Keating. The function of the
compensation committee is to review and make recommendations as to compensation
of the senior executive officers of the Company. The Board of Directors of the
Company had four meetings, the audit committee had four meetings and the
compensation committee had three meetings in 1995.
The Company pays outside Directors an annual fee of $12,000 plus an
attendance fee of $750 for each regularly held meeting. In addition, the
Company pays outside Directors who serve on the audit committee, the
compensation committee or the advisory committee an annual fee of $2,000 for
services on such committee. The net value realized from exercise of options
in 1995 by non-employee directors was $3,256.
EXECUTIVE COMPENSATION
The following Summary Compensation Table provides an overview of
compensation paid, earned or awarded to the CEO and the four other most highly
paid executive officers of the Company as to whom total annual salary and bonus
exceeded $100,000 for 1995.
SUMMARY COMPENSATION TABLE
Long Term Compensation All Other
Annual Compensation Awards Compensations
Restricted
Name and Stock Options/ (2) (3)
Principle Position Year Salary Bonus Awards(1) SAR'S 401(k) Insurance
- --------------------------------------------------------------------------------
J.P. Hayden, Jr. 1995 $550,000 $112,641 $540,625 $ 0 $ 4,620 $ 14,031
Chairman of the 1994 525,000 106,984 0 0 4,620 4,440
Board and Chief 1993 475,000 162,396 229,375 0 4,497 2,208
Executive Officer
Michael J. Conaton 1995 298,000 56,321 216,250 0 4,620 0
President and 1994 285,000 53,496 0 0 4,620 2,208
Chief Operating 1993 260,000 81,198 114,688 0 4,497 2,208
Officer
Thomas J. Rohs 1995 240,000 78,731 90,825 0 4,620 1,094
Vice President 1994 205,000 34,164 0 0 4,620 552
1993 185,000 67,312 68,813 0 4,497 552
John W. Hayden 1995 210,000 81,984 90,825 0 4,620 211
Vice President 1994 180,000 40,143 0 0 4,620 0
1993 160,000 58,806 68,813 0 4,497 0
J. P. Hayden, III 1995 225,000 33,643 90,825 0 4,620 357
Vice President 1994 195,000 28,740 0 0 4,620 0
1993 175,000 5,318 68,813 0 4,497 0
(1) Dividends will be paid on stock reported in this column. The aggregate
number of restricted stock holdings and valuations at 12/31/95 are as follows:
J. P. Hayden, Jr., 17,500 shares valued at $859,687; Michael J. Conaton, 7,500
shares valued at $368,437; Thomas J. Rohs, John W. Hayden and J. P. Hayden, III,
each 3,600 shares valued at $176,850.
(2) Total 401(k) Company matching contributions earned during year.
(3) The Company has instituted a split-dollar life insurance program for Mr. J.
P. Hayden, Jr., a director and an executive officer of the Company. Under this
program, the Company has purchased life insurance policies on the lives of J. P.
Hayden, Jr. and his wife. J. P. Hayden, Jr. is responsible for a portion of
the premiums and
7
<PAGE>
the Company pays the remainder of the premiums on the life insurance policies.
The amount of premium advanced by the Company in 1995 was $427,155. No interest
is charged on the amount advanced but repayment of such amount is secured by
collateral assignment of the policies. Upon the death of J. P. Hayden, Jr. and
his wife, the Company will be entitled to receive that portion of the benefits
paid under the life insurance policy as is equal to the premiums paid by the
Company on that policy. In the event of surrender of a policy prior to death of
an insured, the Company would recover the premiums it has paid from the cash
surrender value of the policy or from the insureds. The life insurance trust
established by the decedent will receive the remainder of the death benefits.
The economic value of the benefit for the period the funds were advanced during
1995, using the Demand Loan Approach and the Company's commercial paper rate of
5.55%, is $3,951 for J. P. Hayden, Jr. Such amount is reflected in the Summary
Compensation Table. The remaining amounts represent total group term life
insurance premium paid by the Company during the year. Similar programs have
been instituted for Robert W. Hayden and John R. LaBar, both directors and
executive officers of the Company. The amount of premium advanced by the
Company in 1995 was $179,735 for Robert W. Hayden and $282,279 for John R.
LaBar. No interest is charged on the amounts advanced. The economic value of
the benefits for the period the funds were advanced during 1995, using the
Demand Loan Approach and the Company's commercial paper rate of 5.55%, are
$1,663 for Robert W. Hayden, Jr. and $2,611 for John R. LaBar.
A 401(k) Savings Plan has been adopted by the Board of Directors and
approved by the Internal Revenue Service. The plan provides an additional
retirement benefit for salaried employees. An employee may make basic pre-tax
contributions to his plan account up to 6% of his base salary. The Company will
contribute $.50 for each dollar of the employee's basic contribution. An
employee may also make supplemental contributions up to an additional 10% of his
base salary. However, an employee's total contributions under the Plan may not
exceed $9,240 in 1995. The Company will not match supplemental contributions.
Cash compensation paid pursuant to this plan is included in the Summary
Compensation Table as All Other Compensation.
A Pension Plan has been adopted by the Board of Directors and approved
by the Internal Revenue Service. The plan provides for payment of annual
benefits to salaried employees of the Company upon retirement. The monthly
benefits equal the years of service (up to a maximum of 35 years) multiplied by
the sum of 1% of that portion of average monthly salary constituting Social
Security covered compensation, plus 1.75% of that portion of average monthly
salary not constituting Social Security covered compensation. Average monthly
salary is based on the highest average salary for 5 consecutive years.
8
<PAGE>
Proposed compensation in the form of payments from this non-contributory
defined benefit pension plan are not included in the Summary Compensation Table.
The 1995 estimated annual benefits (after deduction for social security
benefits) payable upon retirement is a straight line annuity paid from the plan
and may be individually estimated by reference to the following table:
Average Years of Service
Annual
Salaries 15 20 25 30 35
----------- --------- -------- -------- -------- --------
$200,000 $ 49,398 $ 65,864 $ 82,330 $ 98,795 $115,261
250,000 62,523 83,364 104,205 125,045 * 145,886 *
300,000 75,648 100,864 126,080 * 151,295 * 176,511 *
350,000 88,773 118,364 147,955 * 177,545 * 207,136 *
400,000 101,898 135,864 * 169,830 * 203,795 * 237,761 *
450,000 115,023 153,364 * 191,705 * 230,045 * 268,386 *
500,000 128,148 * 170,864 * 213,580 * 256,295 * 299,011 *
550,000 141,273 * 188,364 * 235,455 * 282,545 * 329,636 *
600,000 154,398 * 205,864 * 257,330 * 308,795 * 360,261 *
650,000 167,523 * 223,364 * 279,205 * 335,045 * 390,886 *
* Under the Internal Revenue Code, the maximum allowable annual benefit payable
by the qualified pension plan in 1996 is $120,000. In addition, the maximum
pay that can be used to determine the benefit is $150,000. The Board of
Directors has approved the payment to participants directly by the Company of
any reduction in benefits occasioned by limitations on benefits contained in the
Internal Revenue Code.
The compensation currently covered by the plan includes only basic
salary. However, the Board of Director's recently amended the Pension Plan,
effective April 1, 1995, to include overtime and bonus as covered plan
compensation. The credited years of service through 1995 covered by the plan
(not to exceed 35 years) for each of the five most highly compensated executive
officers of the Company is: J. P. Hayden, Jr. (35), Michael J. Conaton (34.8),
Thomas J. Rohs (28.4), John W. Hayden (14.6), and J. P. Hayden, III (20.3).
The following table sets forth the aggregated option exercises during
1995 and the option value as of December 31, 1995 for the CEO and the four other
most highly paid executive officers of the Company under the 1992 Employee
Incentive Stock Option Plan adopted by the Board of Directors and approved by
the shareholders.
9
<PAGE>
Aggregate Option/SAR Exercises in Last Fiscal Year
and FY-End Option/SAR Values
Number of
Securities Value of
Underlying Unexercised
Unexercised In-the-Money
Options/SARs Options/SARs
at FY End 1995 at Year End
Shares
Acquired Value Exercisable/ Exercisable/
Name On Exercise Realized Unexercisable Unexercisable
- -------------------------------------------------------------------------------
J.P. Hayden, Jr. -- -- 45,900 $1,190,488
0 0
Michael J. Conaton -- -- 21,000 544,125
0 0
Thomas J. Rohs -- -- 12,900 331,300
0 0
John W. Hayden -- -- 10,500 268,188
0 0
J. P. Hayden, III -- -- 11,100 283,575
0 0
Report of the Compensation Committee
The Compensation Committee's compensation policies are to attract and
retain qualified executive officers, to reward them for profitable corporate
performance and to provide incentives for them to create long-term corporate
stability and growth. Therefore, the Company's compensation package for its
executive officers consists of base salary, annual performance based bonus and
incentive awards. The level of these amounts is determined by this Committee.
The Committee sets base salaries at levels believed by the Committee to
be sufficient to attract and retain qualified executives, including the Chief
Executive Officer, considering other compensation components offered by the
Company and salaries offered by other companies. The Chief Executive Officer's
1995 salary of $550,000 was an 4.7% increase over 1994. Salaries of executive
officers are listed in the Summary Compensation Table.
The Committee believes that a significant portion of total compensation
should be subject to specific annual performance criteria. Consequently, the
annual bonus potential is set at a significant percentage of salary. The target
bonus is based on the annual profit performance of the Company and the
individual officer's percentage of participation in the Profit Sharing Plan.
The Board of Directors of the Company has continued its policy of adopting a
Profit Sharing Plan first initiated in 1968 under which the Board is authorized
to pay to certain of the executive officers of the Company as additional
compensation during each year an aggregate sum not to exceed 3% of the
consolidated earnings (before taxes) of the Company during such year. The
Compensation Committee determines each respective executive officer's, including
the Chief Executive Officer's, percentage of participation in the Plan based on
specific job responsibilities. Total executive bonuses are generally less than
50 percent of the executive's base salary. The Chief Executive Officer's annual
bonus for 1995 was $112,641 which represents 30% of the bonus pool created under
the Profit Sharing Plan. This amount is greater than prior years and reflects
the Company's profit performance for 1995. Cash compensation paid pursuant to
the Plan is included in the Summary Compensation Table.
10
<PAGE>
Long-term incentive awards are made under the Company's 1992 Employee
Incentive Stock Plan which authorizes restricted stock awards, stock option
grants and stock appreciation rights. The Plan was adopted to provide
incentives to encourage employee contribution to the Company's stability and
growth. The Plan is administered by the members of the Compensation Committee.
Restricted stock was awarded to the Chief Executive Officer and other executive
officers in 1993 and 1995 as set forth in the Summary Compensation Table, but no
stock was awarded in 1994.
The Compensation Committee is composed of three independent nonemployee
directors, whose names are:
George R. Baker
James H. Carey
William J. Keating
FIVE YEAR TOTAL RETURN
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN *
AMONG MIDLAND CO., AMERICAN STOCK EXCHANGE COMPOSITE AND THE S&P PROPERTY AND
CASUALTY GROUP
1990 1991 1992 1993 1994 1995
------ ------ ------ ------ ------ ------
MIDLAND 100 121.4 149.3 149.1 147.1 169.2
S&P PROPERTY & CASUALTY 100 125.2 146.6 144.0 151.1 204.5
AMEX COMPOSITE 100 138.5 145.5 171.0 159.7 206.1
ASSUMES $100 INVESTED ON DECEMBER 31, 1990 IN MIDLAND COMMON STOCK, AMEX
COMPOSITE AND THE S&P PROPERTY AND CASUALTY GROUP.
* TOTAL RETURN ASSUMES REINVESTMENT OF DIVIDENDS.
11
<PAGE>
RATIFICATION OF SELECTION OF AUDITORS
The Board of Directors has selected the firm of Deloitte & Touche LLP as
auditors to make an examination of the accounts of the Company for the year
1996. This firm of independent certified public accountants has made the annual
audits of the accounts of the Company and its predecessor, Midland-Guardian Co.,
since 1952. Such selection of auditors is submitted to the shareholders for
ratification and approval or rejection. If rejected, the audit committee of the
Board of Directors will select other auditors. Representatives of such auditors
are expected to be present at the meeting and will have an opportunity to make
a statement and be available to respond to appropriate questions.
AUTHORIZATION TO PURCHASE SHARES OF STOCK OF THE COMPANY
The Board of Directors have recommended that the shareholders adopt the
attached resolution to make meaningful the grant and/or acquisition of stock of
the Company pursuant to employee benefit plans and stock option plans by
providing the participants in such plans with a buyer for the stock so acquired.
Any stock so repurchased by the Company shall become treasury stock available
for reissuance to participants of such plans. The proposed resolution must be
approved by the affirmative vote of the holders entitling them to exercise a
majority of the voting power of the Company.
The proposal to approve and adopt the plan is contained in the
resolution attached to this Proxy Statement as Annex 1.
AMENDMENT TO THE ARTICLES OF INCORPORATION AND CODE OF REGULATIONS
The proposed amendments to the Company's Articles of Incorporation and
Code of Regulations as set forth in Annex 2 are to reflect the change in the
place of the Company's principal office. In 1995, the Company moved its
principal office to 7000 Midland Boulevard, Amelia, Ohio. The proposed
amendments must be approved by the affirmative vote of the holders entitling
them to exercise a majority of the voting power of the Company. The Board of
Directors recommends adoption of the amendments.
SHAREHOLDER PROPOSALS
Proposals of shareholders intended to be presented at the 1997 annual
meeting must be received at the Company's executive offices on or before
November 15, 1996, in order to be included in the proxy statement and form of
proxy relating to that meeting.
COST OF SOLICITATION
The cost of preparing and mailing this statement and the accompanying
notice of meeting and proxy, and any additional material relating to the
meeting, and the cost of soliciting proxies, will be borne by the Company.
OTHER MATTERS
The Board of Directors knows of no other matters which are likely to be
brought before the meeting. However, if any other matters not now known
properly come before the meeting, the persons named in the enclosed proxy or
their substitute, will vote said proxy in accordance with their judgment of
such matters.
The above notice and proxy statement are sent by order of the Board of
Directors.
JOHN R. LABAR
Secretary
Dated: March 15, 1996
Shareholders may obtain without charge a copy of the Company's 1995 report to
the Securities and Exchange Commission on Form 10-K by sending a request to:
Office of the Secretary - 10K Report, The Midland Company, 7000 Midland
Boulevard, Amelia, Ohio 45102.
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ANNEX 1.
The Company is authorized to purchase any shares of stock which may have been
issued by the Company upon the exercise of any option from the Optionee or, in
the event that an Optionee may have transferred such stock to a Bank, Stock
Broker or other financial institution as may have been approved by the Company,
from such transferee within two (2) business days from such transfer. Also, the
Company is authorized to purchase any shares of stock which may have been issued
to any account of employees participating in the Qualified 401(k) and
Non-Qualified Savings Plans from such account and any shares of stock which may
have been issued pursuant to any Restricted Stock Award from any person to whom
such stock was awarded on and after the date upon which the restrictions are
satisfied. The purchase price shall be an amount equal to the Fair Market Value
of the Stock on the day purchased by the Company as such is defined in paragraph
14 of the Employee Incentive Stock Option Plan adopted by shareholders of the
Company at the meeting held on April 9, 1992 and as defined in paragraph 11 of
the Stock Option Plan for Non-employee Directors adopted by shareholders of the
Company at such aforesaid meeting. Other terms and conditions of such purchases
including the time of purchase and number of shares to be purchased shall be as
determined by the Board of Directors of the Company.
ANNEX 2.
RESOLVED, that Article II of the Articles of Incorporation and Article 1,
Section 1 of the Code of Regulations of the Company be amended to state that the
principal office of the Company is 7000 Midland Boulevard, Amelia, Ohio 45102,
and that any officer or officers of the Company are hereby authorized and
directed to do all things necessary to effect such amendment.
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