MOTOR CLUB OF AMERICA
95 ROUTE 17 SOUTH
PARAMUS, NEW JERSEY 07653
=================
MOTOR CLUB OF
[LOGO] AMERICA(R)
=================
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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
June 7, 2000
----------
TO THE HOLDERS OF COMMON STOCK OF MOTOR CLUB OF AMERICA:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of Motor
Club of America (the Company) will be held at the Marriott at Glenpointe Hotel,
100 Frank W. Burr Boulevard, Teaneck, New Jersey, on Wednesday, June 7, 2000, at
10:00 o'clock A.M. (New Jersey Time), for the following purposes:
1. To elect eight (8) directors of the Company to hold office until
the 2001 Annual Meeting of Stockholders and until their successors shall
have been duly elected and qualified; and
2. To transact such other business as may properly come before the
meeting or any adjournment thereof.
The Board of Directors has fixed the close of business on April 27, 2000,
as the record date for the determination of the holders of Common Stock entitled
to notice of and to vote at the meeting.
If you cannot be present in person, your management would greatly
appreciate your filling in, signing and returning the enclosed proxy, in the
envelope provided for the purpose, in time to arrive no later than June 6, 2000.
Any proxy not received by that date may arrive too late to be voted at the
meeting.
By Order of the Board of Directors
Peter K. Barbano
Secretary
Dated: Paramus, New Jersey
May 4, 2000
<PAGE>
MOTOR CLUB OF AMERICA
95 ROUTE 17 SOUTH
PARAMUS, NEW JERSEY 07653
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PROXY STATEMENT
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Annual Meeting of Stockholders
June 7, 2000
----------
This statement is furnished in connection with the solicitation of proxies
by the management of MOTOR CLUB OF AMERICA for use at the 2000 Annual Meeting of
Stockholders to be held on June 7, 2000, and at any and all adjournments
thereof. The Board of Directors has selected the close of business on April 27,
2000 as the record date, for purposes of determining shareholders entitled to
notice of, and entitled to vote at the Annual Meeting, and this proxy statement
is being mailed to such shareholders on or about May 4, 2000. On the record
date, there were 2,124,387 shares of Common Stock of the Company outstanding,
all of the par value of $.50 per share and each entitled to one vote on any
matter to be voted on at the meeting.
Other than the election of directors, which requires a plurality of the
votes cast, each matter to be submitted to the stockholders requires the
affirmative vote of a majority of the votes cast at the meeting. For purposes of
determining the number of votes cast with respect to a particular matter, only
those cast "For" or "Against" are included. Abstentions and broker non-votes are
counted only for purposes of determining whether a quorum is present at the
meeting.
If the enclosed form of proxy is properly executed and returned in time to
be voted at the meeting, the shares represented thereby will be voted. The
attendance at the meeting by any stockholder who has previously given a proxy
will not have the effect of revoking the proxy; however, any such stockholder
may vote in person by delivering written notice of revocation of the proxy to
the Secretary of the Company prior to the exercise of the proxy.
Election of Directors
At the meeting eight directors are to be elected to hold office until the
2001 Annual Meeting of Stockholders, and until their successors have been duly
elected and qualified. It is the intention of the persons named in the enclosed
form of proxy to vote the shares represented thereby for the election of the
following nominees as directors of the Company. Each of the nominees is a member
of the Board of Directors of the Company. The principal occupations of Messrs.
Galatin, Fried, Lobeck, McWhorter, McWhorter, Jr. and Swanner for the last five
years appear below; Messrs. Gilbert and Haveron devote substantially all of
their business time to the affairs of the Company or one or more other companies
in the Motor Club of America Group, and have been active in the business of one
or more companies in the Motor Club of America Group for more than five years.
Should any of these nominees be unable or unwilling to accept nomination or
election for any presently unknown reason, it is the intention of the persons
named in this proxy to vote for such other person or persons as the management
of the Company may nominate.
<PAGE>
<TABLE>
<CAPTION>
Common Stock of the
Company Owned
Beneficially at
March 31, 2000
Years in Which -----------------------------
Nominee Has Served Number
as Director of This of Percent
Name and Age Principal Occupations Company (Inclusive)(A) Shares(B)(C) of Class(C)
------------ --------------------- ---------------------- ------------ -----------
<S> <C> <C> <C> <C>
Archer McWhorter, 78(D) ........Chairman of the Board of 1986-2000 525,671 19.84
Directors of Companies in the
Motor Club of America Group;
from 1995 to March 1997,
Director of National Car
Rental Systems, Inc. and
affiliated corporations, a car
rental enterprise ("NCR");
from 1995 to February 1997,
one-third owner of Santa Ana
Holdings, Inc. ("Santa Ana"),
which exchanged its 90% stock
interest in NCR for stock in
Republic Industries, Inc. (now
known as AutoNation, Inc.);
from February 1997 to February
1998, consultant of NCR;
President (to January 1996) of
Acceptance, Inc., a finance
company
Stephen A. Gilbert, 61(E) ......President and Chief Executive 1984-2000 38,625 1.79
Officer of Companies in the
Motor Club of America Group;
Chairman of the Board and
Chief Executive Officer of
North East Insurance Company
Robert S. Fried, 70(E) .........Retired Senior Vice President of 1956-2000 1,000 .05
Companies in the Motor Club of
America Group
William E. Lobeck, Jr., 60 .....From March 1997, President and 1986-2000 503,589 19.16
COO of the Automotive Rental
Group of AutoNation, Inc.;
from 1995 to May 1997, CEO,
President and Director of NCR;
from 1995 to February 1997,
one-third owner of Santa Ana,
which exchanged its 90% stock
interest in NCR for stock in
Republic Industries, Inc. (now
known as AutoNation, Inc.);
President of The Numbered Car
Co., a car dealership
Alvin E. Swanner, 71 .......... From 1995 to March 1997, 1986-2000 525,669 19.84
Chairman of the Board and
Director of NCR; from 1995 to
February 1997, one-third owner
of Santa Ana which exchanged
its 90% stock interest in NCR
for stock in Republic
Industries, Inc. (now known as
AutoNation, Inc.); from
February 1997 to February
1998, consultant of NCR;
President of Swanner &
Associates, Inc., formerly a
car rental company; President
of Chateau, Inc., a golf and
country club, and Chateau
Development Company, Inc., a
development company; President
of 135 St. Charles, Inc., a
hotel development company
Malcolm Galatin, 60 ............Professor of Economics, The City 1987-2000 -- --
College of The University of
New York City
Patrick J. Haveron, 38 (E) .....Executive Vice President, Chief 1994-2000 18,100 .84
Executive Officer and Chief
Financial Officer of Motor
Club of America; Executive
Vice President and Chief
Financial Officer of Companies
in the Motor Club of America
Group; Treasurer of Motor Club
of America Insurance Company
and Preserver Insurance
Company
Arche McWhorter, Jr., 56(D) ....Associate Professor, University 1998-2000 -- --
of Houston
</TABLE>
2
<PAGE>
Following is stock ownership information of officers of the Company who
are listed in the compensation tables that follow, but who are not included in
the Director tabulations above.
<TABLE>
<CAPTION>
Common Stock of the
Company Owned Beneficially
at March 31, 2000
-----------------------------
Number of Percent
Name Title Shares (B)(C) of Class (C)
------ ----- -------------- -------------
<S> <C> <C> <C>
Myron Rogow, 57 ........................... Vice President--Underwriting 6,875 .32
Charles Pelosi, 55 ........................ Vice President--Information Services 10,375 .49
G. Bruce Patterson, 56 .................... Vice President--Marketing 10,375 .49
and Administration
</TABLE>
Following is stock ownership information by persons known to the Company
to be a beneficial owner of more than five percent of such stock at March 31,
2000.
Name and Address
----------------
Archer McWhorter...................................... 525,671 19.84
1600 Smith Street
Houston, Texas 77002
William E. Lobeck, Jr................................. 503,589 19.16
1132 South Lewis Avenue
Tulsa, Oklahoma 74104
Alvin E. Swanner...................................... 525,669 19.84
28 Chateau Haut Brion Street
Kenner, Louisiana 70065
Heartland Advisors, Inc............................... 171,500 8.07
790 North Milwaukee Street
Milwaukee, Wisconsin 53202
Following is stock ownership information by all 13 directors and officers
of the Company as a group at March 31, 2000.
Title of Class
--------------
Motor Club of America Common Stock
(par value $.50 per share) ......................... 1,645,099 59.77
- ----------
(A) Includes years during any portion of which the nominee served as director.
(B) As reported to the Company by the named persons. The nature of beneficial
ownership or shares shown in this Proxy Statement is sole voting and
investment power, except the shares of Heartland Advisors, Inc. is based
on a Schedule 13G dated January 20, 2000, which indicates sole dispositive
power as to 171,500 shares but only sole voting power as to 3,000 of such
shares.
(C) Includes (1) stock options for Common Stock which are currently
exercisable or exercisable within 60 days of March 31, 2000; for Mr.
Gilbert 10,625 shares, for Mr. Haveron 8,750 shares, and for Messrs.
Rogow, Pelosi and Patterson 3,125 shares each; (2) Debentures for Common
Stock which are currently convertible; for Mr. Archer McWhorter 201,736
shares by a limited partnership of which he is general partner, for Mr.
Lobeck 193,688 shares, and for Mr. Swanner 201,735 shares owned by a
Louisiana partnership in commendam of which he is general partner; and (3)
for Mr. Archer McWhorter 323,935 shares which are owned by a family trust
of which he is trustee; for Mr. Lobeck 11,150 shares which are owned by
the William E. Lobeck Revocable Trust of which he is trustee, and 11,150
which are owned by the Kathryn L. Taylor Revocable Trust (Kathryn L.
Taylor is Mr. Lobeck's wife, and Mr. Lobeck disclaims beneficial ownership
in the shares owned by his wife's Revocable Trust); and for Mr. Swanner
22,300 shares which are owned by the Louisiana partnership in commendam of
which he is general partner.
(D) Archer McWhorter is the father of Archer McWhorter, Jr., who presently is
a beneficiary of his father's family trust (25%) and limited partnership
(14.5%); Mr. Archer McWhorter, Jr. disclaims any beneficial ownership in
his father's Debentures and Common Stock.
(E) Member of Finance Committee
3
<PAGE>
One of the Company's insurance subsidiaries, MCA Insurance Company (MCAIC)
was declared insolvent on October 23, 1992 as a result of claims of Hurricane
Andrew, which struck the South of Florida coast on August 24, 1992. The Company
wrote off in 1992 its investment in MCAIC and its subsidiaries,
Property-Casualty Company of MCA and Fairmount Central Urban Renewal
Corporation. The directors and executive officers of the Company, with the
exception of Malcolm Galatin and Archer McWhorter, Jr., were directors and
executive officers of MCAIC.
Committees of the Board
The Executive Committee serves as a policy-making and supervisory body for
all operations of the Company, has all the eligible powers of the Board of
Directors between meetings of the Board and also acts as the nominating
committee. Shareholders who wish to suggest nominees for director should write
to the Secretary of the Company at 95 Route 17 South, Paramus, New Jersey
07653-0931, stating in detail the qualifications of such persons for
consideration by the Committee.
The Compensation and Evaluation Committee administers executive
compensation and bonus plans; it met two times during 1999.
The Stock Option Plan Committee administers the 1987, 1992 and 1999 Stock
Option Plans and met two times during 1999.
The Executive and Stock Option Plan Committees are comprised of Archer
McWhorter, William E. Lobeck, Jr. and Alvin E. Swanner. The Compensation and
Evaluation Committee is comprised of William E. Lobeck, Jr. and Alvin E.
Swanner.
The Audit Committee, which is comprised of Malcolm Galatin and Robert S.
Fried, assesses the Company's risk of fraudulent financial reporting and
management's program to monitor compliance with the code of corporate conduct,
participates in the recommendation of independent public accountants and reviews
the audit plans of the internal auditor and independent public accountants. The
Audit Committee met three times during 1999.
The Board of Directors of the Company met on four occasions during 1999.
During 1999, none of the incumbent directors attended less than 75% of the
aggregate of (1) the total number of meetings of the Board ( held during the
period for which he has been a director) and (2) the total number of meetings of
all committees of the Board on which he served (during the period that he
served).
Directors' Compensation
Each non-employee director receives $1,000 per month from Companies in the
Motor Club of America Group. Directors who are also employees do not receive any
amount, in addition to their compensation, for being directors. Each member of
the Executive Committee receives $4,000 per month from Companies in the Motor
Club of America Group; and each non-employee member of the Audit and Finance
Committees receives $250 per meeting.
4
<PAGE>
Executive Compensation Tables
The following tables provide information about executive compensation.
SUMMARY COMPENSATION TABLE
The following table sets forth information about the compensation of the
chief executive officer and each of the four most highly compensated executive
officers of the Company for services in all capacities to the Company and its
subsidiaries.
<TABLE>
<CAPTION>
Long Term
Compensation
Annual Compensation Award (2)
----------------------- ------------
(a) (b) (c) (d) (e) (f)
Securities
Underlying All Other
Options/ Compen-
Names and Principal Salary Bonus (1) SAR's (3) sation (4)
Position Year ($) ($) (#) ($)
------------------- ---- ------ -------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Stephen A. Gilbert ................ 1999 175,000 45,000 7,500 19,409
President and Chief 1998 170,962 121,000 7,500 15,010
Executive Officer 1997 165,000 121,000 17,500 14,760
Patrick J. Haveron ................ 1999 163,250 45,000 7,500 9,151
Executive Vice President, 1998 140,192 100,000 5,000 7,515
Chief Executive Officer 1997 135,000 100,000 15,000 6,486
and Chief Financial Officer
Myron Rogow ....................... 1999 130,000 20,000 2,500 6,388
Vice President-- 1998 130,962 42,435 2,500 7,422
Underwriting 1997 125,000 42,951 5,000 6,200
Charles Pelosi .................... 1999 97,135 15,250 2,500 4,745
Vice President-- 1998 96,833 35,362 2,500 5,690
Information Services 1997 92,135 35,792 5,000 5,224
G. Bruce Patterson ................ 1999 85,000 17,500 2,500 4,570
Vice President-- 1998 84,230 38,900 2,500 4,661
Marketing and Administration 1997 74,615 39,372 5,000 3,547
</TABLE>
- ----------
(1) Bonus amounts shown were earned with respect to the year indicated but
were paid in the following year.
(2) The Company does not have a restricted stock award plan or a long term
incentive award plan other than certain stock option plans.
(3) Amounts shown represent the number of stock options granted each year;
there are no stock appreciation rights.
(4) Amounts shown include (a) Company contributions for the account of each
named executive officer under the 401(k) Plan, a tax-qualified defined
contribution plan open to all salaried employees of the Company and
certain subsidiaries upon completion of one year of service, (b) the value
of certain group life insurance premiums; and (c) for Mr. Gilbert and Mr.
Haveron, contributions to a non-qualified deferred compensation plan.
5
<PAGE>
OPTION/SAR GRANTS IN LAST FISCAL YEAR
The following table shows all grants of options to the named executive
officers of the Company in 1999. Pursuant to Securities and Exchange Commission
rules, the table also shows the value of the options granted at the end of the
option terms (five years) if the stock price were to appreciate annually by 5%
and 10%, respectively. There is no assurance that the stock price will
appreciate at the rates shown in the table. The table also indicates that if the
stock price of the option does not appreciate, there will be no increase in the
potential realizable value of the options granted.
<TABLE>
<CAPTION>
Potential Realizable Value at
Assumed Annual Rates of Stock
Price Appreciation for
Individual Grants Option Term
- -------------------------------------------------------------------------------------- -------------------------------
(a) (b) (c) (d) (e) (f) (g)
Number of
Securities
Underlying % of Total
Options/ Options/SAR's Exercise
SAR's Granted to or Base
Granted(1) Employees in Price Expiration
Name (#) Fiscal Year ($/Share) Date 5% 10%
------ ---------- ----------- ---------- ----------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Stephen A. Gilbert ............... 7,500 24.2 12.875 6/7/04 26,700 58,950
Patrick J. Haveron ............... 7,500 24.2 12.875 6/7/04 26,700 58,950
Myron Rogow ...................... 2,500 8.1 12.875 6/7/04 8,900 19,650
Charles Pelosi ................... 2,500 8.1 12.875 6/7/04 8,900 19,650
G. Bruce Patterson ............... 2,500 8.1 12.875 6/7/04 8,900 19,650
</TABLE>
- ----------
(1) Amounts shown represent the number of stock options granted in 1999; no
stock appreciation rights ("SAR's) have ever been issued. Options may not
be exercised for at least one year after grant and may then be exercised
in installments of 25% of the grant amount each year until they are 100%
vested. Payment must be made in full upon exercise in cash or such other
consideration as is acceptable to the Stock Option Plan Committee.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION SAR VALUES
The following table provides information as to options exercised by each
of the named executive officers of the Company during 1999 and the value of
options held by such officers at year end measured in terms of the closing price
of the Company Common Stock on December 31, 1999.
<TABLE>
<CAPTION>
(a) (b) (c) (d) (e)
Number of Securities
Underlying Unexercised Value of Unexercised
Shares Options/SAR's at Fiscal In-the-money Option/SAR's
Acquired Value Year-End (1)(#) at Fiscal Year-End (1),(2)($)
on Exercise Realized -------------------------- -----------------------------
Name (#) ($) Exercisable Unexercisable Exercisable Unexercisable
------ ----------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Stephen A. Gilbert ............... 0 0 10,625 21,875 0 0
Patrick J. Haveron ............... 0 0 8,750 18,750 0 0
Myron Rogow ...................... 0 0 4,375 5,625 0 0
Charles Pelosi ................... 0 0 4,375 5,625 0 0
G. Bruce Patterson ............... 0 0 4,375 5,625 0 0
</TABLE>
- ----------
(1) No SAR's have ever been issued.
(2) At December 31, 1999, there were no unexercised in-the-money options.
Options are in-the-money if the fair market value of the Common Stock
exceeds the exercise price of the option.
LONG TERM INCENTIVE PLANS--AWARDS IN LAST FISCAL YEAR
The Company does not maintain any Long Term Incentive Plans other than
stock option plans previously disclosed.
STOCKHOLDER RETURN PERFORMANCE GRAPH
Set forth on the following page is a line graph comparing the cumulative
total stockholder return on the Company's Common Stock against the cumulative
total return of the Center for Research in Security Prices at The University of
Chicago Graduate School of Business (CRSP) Index for NASDAQ Stock Market (United
States Companies) and the CRSP Index for NASDAQ Fire, Marine & Casualty
Insurance for the period of five years commencing December 30, 1994 and ending
December 31, 1999. The graph and table assume that $100 was invested on December
30, 1994 in each of the Company's Common Stock, the CRSP Index for the NASDAQ
Stock Market (United States Companies) and the CRSP Index for the NASDAQ Fire,
Marine & Casualty Insurance. This data was furnished by CRSP.
6
<PAGE>
Comparison of Five Year-Cumulative Total Years Returns
Performance Graph for
MOTOR CLUB OF AMERICA
[The following table is depicted in the printed material as a line graph.]
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
Legend
CRSP TOTAL RETURNS INDEX FOR: 12/30/94 12/29/95 12/31/96 12/31/97 12/31/98 12/31/99
- ----------------------------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
MOTOR CLUB OF AMERICA 100.0 236.4 345.5 490.9 520.5 304.5
Nasdaq Stock Market (US Companies) 100.0 141.3 173.9 213.1 300.2 542.4
NASDAQ Stocks (SIC 6330-6339 US Companies) 100.0 140.2 152.0 230.9 197.0 148.2
Fire, Marine, and Casualty Insurance
Notes:
A. The lines represent monthly index levels derived from compounded
daily returns that include all dividends.
B. The indexes are reweighted daily, using the market capitalization on
the previous trading day.
C. If the monthly interval, based on the fiscal year-end, is not a
trading day, the preceding trading day is used.
D. The index level for all series was set to $100.0 on 12/30/94.
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
7
<PAGE>
Executive Compensation
Report of the Compensation and Evaluation Committee and
Stock Option Plan Committee on Executive Compensation
The Compensation and Evaluation Committee was charged by the Board of
Directors with administering salaries and other compensation for executive
officers. The Stock Option Plan Committee administers the Company's incentive
stock option programs. For the purposes of insuring continuity in the
application of the Company's compensation philosophy, both Committees
(hereinafter referred to as the Committee) have identical membership, with Mr.
Archer McWhorter also being a member of the Stock Option Plan Committee.
COMPENSATION PHILOSOPHY
There are several guiding principles of the Committee in performing its
functions. The compensation philosophy of the Company and its subsidiaries is to
provide a competitive salary and other remuneration tied to Company performance
against operating goals in order to attract and retain quality insurance
executives. Stock options are provided to executives to offer additional
incentive compensation commensurate with Company performance.
The Committee believes this compensation philosophy properly balances its
executives incentives to provide short-term operating performance.
The Company's continuing financial improvement is the preeminent concern
of the Committee, and all compensation decisions derive from this concern.
COMPONENTS OF EXECUTIVE COMPENSATION
The Company's executive compensation program consists of: (i) an annual
salary, (ii) a short-term incentive in the form of bonuses and (iii) a long-term
incentive in the form of stock options.
Salary
The Committee believes the Company has attracted executive officers with
talent and expertise which exceed the Company's current operating environment
and market scope. Accordingly, these executive officers are paid an annual
salary which is commensurate with their industry expertise, functional expertise
and value in the insurance marketplace.
Historically, many factors have been used to determine annual salary
increases. Such factors include Company performance, the Company's operating
plan and objectives thereunder, individual performance, Company performance in
relation to the industry, and the regulatory environment in which the Company
operates. In addition, exceptional performance by an individual, whether or not
it has a direct impact on Company performance, is taken into account in setting
salary increases.
During recent years, the Company has in general employed a cap on the
maximum increase any employee, including executive officers, may receive over
the previous year's salary. The Company has utilized this strategy in order to
control its expenses.
In order to control expenses further and assist with the Company's
financial recovery, the Committee eliminated all salary increases for calendar
year 1993, including executive officers' salaries; for calendar years since
1994, the Committee eliminated or substantially limited salary increases for key
and executive officers. The Committee does not believe these salary actions will
be detrimental to the Company's long-term prospects. The Committee further
believes that total compensation for executives and key officers should
primarily be determined by Company performance and that bonuses should be the
featured additional remuneration component for these individuals, as opposed to
salary.
Stock Options
Stock options are granted as a means of providing executive officers and
key employees long term benefits and incentives from an improvement in Company
share performance. The options are granted at the market value of the stock on
the date of grant. Thus, the options gain value only to the extent the stock
price exceeds the option price during the life of the option. Options are
awarded in a manner which maintains the executive's focus on long-term share
performance.
8
<PAGE>
Many of the principal competitors of the Company have adopted and now have
in operation stock option plans. The plans are used as incentive devices by
corporations which wish to attract new management, to convert their officers
into "partners" by giving them a stake in the business, to retain the services
of executives who might otherwise leave and to give their employees generally a
more direct interest in the success of the corporation.
Bonuses--Annual Incentive Program
The Company also pays bonuses for special performance and offers an AIP
which provides incentive compensation tied to the profitability of the Company
against a performance factor which is derived from the Company's calendar year
Budget and Profit Plan. The Compensation Committee selected participants in the
1999 AIP who perform functions which directly affect the ability of the Company
to meet its business and performance objectives.
Under the 1999 AIP, income before Federal income taxes for the year was
not within a specific range as compared to the performance factor. However,
since the Company met or exceeded all its 1999 goals except for the Motor Club
of America Insurance Company Accident Year 1999 Personal Injury Protection No
Fault losses, AIP bonuses, adjusted to reflect individual performance, have been
paid to participants, including executive officers, during 2000.
The Committee reserves the right to withdraw the AIP in total or an
executive's participation in the AIP at any time. The Committee has established
an AIP for 2000 and its terms and performance factor are effective only for
2000.
The 2000 AIP will offer incentive compensation tied to the profitability
of the Company and its subsidiaries against performance factors which are
derived from the Company's calendar year Budget and Profit Plan. The
Compensation Committee will select participants in the 2000 AIP who perform
functions which directly affect the ability of the Company and its subsidiaries
to meet their business and performance objectives.
Under the 2000 AIP, if income for the year is within a specific range as
compared to the performance factor, bonuses, adjusted to reflect individual
performance, will be paid during 2001. The executive officers named in the
Summary Compensation Table are participating in the AIP in 2000.
Chief Executive Officer Compensation
The Committee evaluated the base compensation of Messrs. Gilbert and
Haveron, the rewards of the AIP, and the long term incentive plan. It was
determined that total compensation received by the Chief Executive Officers were
commensurate with similar officers within the insurance industry peer group as
well their personal and Company performance on both a qualitative and
quantitative basis.
William E. Lobeck, Jr. Alvin E. Swanner
Compensation and Evaluation Committee Interlocks and Insider Participation
William E. Lobeck, Jr. and Alvin E. Swanner, who are members of the
Compensation and Evaluation Committee and the Stock Option Plan Committee, each
was paid director's fees of $60,000 during 1999. There are no Compensation and
Evaluation Committee interlocks.
Retirement Plan and Certain Transactions
In 1954, the Company established an Employees' Retirement Plan (Pension
Plan), which as amended covers employees with one year's service and provides
annual retirement benefits based on salary and length of service to companies in
the Motor Club of America Group. The Pension Plan was amended as of January 1992
to suspend benefit accruals. The trustees of the Pension Plan, which is
non-contributory, are Robert S. Fried, Stephen A. Gilbert and Patrick J.
Haveron.
In order to fund Plan benefits, the trustees have purchased United States
Government obligations, and have placed funds with money managers who are
investing these monies in a balanced relationship between equity and
fixed-income securities.
9
<PAGE>
The annual Pension Plan benefits payable upon retirement at or after the
normal retirement age of 65 consist of an amount equal to the sum as of January
1992 of:
(a) 1 1/2% of the first $12,000 of an employee's average annual
compensation plus 2 1/4% in excess of $12,000, multiplied by the employee's
years of plan participation prior to January 15, 1983; and
(b) for each plan year after January 15, 1983, 1 3/4% of the first $13,200
of the employee's annual compensation plus 2 3/4% in excess of $13,200.
Early retirement is available at age 55 with 15 years of service. A
participant's Pension Plan benefits become 100% vested after five years of
service. Pension Plan amounts are not subject to deductions for Social Security
benefits or other offset amounts.
The following table sets forth certain information relating to the Pension
Plan with respect to the five most highly compensated executive officers of the
Company who are participants in the Pension Plan:
<TABLE>
<CAPTION>
Estimated Annual Latest Remuneration Credited Years
Name Benefit at Age 65 Covered by the Plan(1) of Service (1)
----- ----------------- --------------------- --------------
<S> <C> <C> <C>
Stephen A. Gilbert ...................... $52,650 $175,000 24
Patrick J. Haveron ...................... 4,950 79,500 4
Myron Rogow ............................. 9,500 113,950 4
Charles Pelosi .......................... 21,250 86,920 18
G. Bruce Patterson ...................... 5,125 76,766 4
</TABLE>
- ----------
(1) As of January 1992 when Pension Plan accruals were suspended.
Other Business
The management of the Company knows of no other matters which may be
presented at the meeting. However, if any matter not now known should come
before the meeting, it is intended that the persons named in the enclosed form
of proxy, or their substitutes, will vote the shares represented by them in
accordance with their judgment on such matter.
Financial Statements Available
A copy of the Annual Report of the Company for 1999, which contains
financial statements audited by the Company's independent public accountants, is
being sent to all stockholders with this proxy statement.
A copy of the Company's 1999 Annual Report on Form 10-K filed with the
Securities and Exchange Commission is available without charge upon written
request to the Chief Financial Officer of the Company, 95 Route 17 South,
Paramus, New Jersey 07653-0931.
Relationship with Independent Public Accountants
The Board of Directors has selected the firm of PricewaterhouseCoopers
L.L.P. as the Company's principal independent public accountant for the year of
2000. One or more members of this firm will attend the Annual Meeting, will have
the opportunity to make a statement if they so desire and will be available to
answer questions that may be asked by stockholders.
Proposals of Stockholders
In order for proposals of stockholders to be included in the proxy
materials for the 2001 Annual Meeting of Stockholders, such proposals must be
received by the Secretary of the Company no later than January 5, 2001.
A proposal of stockholders not included in the proxy material for the 2001
Annual Meeting of Stockholders can be presented to that Annual Meeting by other
means. However, if notice of a proposal is not given to the Secretary of the
Company on or before March 20, 2001, the persons authorized under management
proxies will have discretionary authority to vote and act according to their
best judgment on the matter, without any specific or further instructions of the
stockholders whose proxies they hold.
10
<PAGE>
Cost of Solicitation
The costs of the meeting, including the solicitation of proxies, will be
borne by the Company. Proxies will be solicited by mail, and may also be
solicited, without extra compensation, by certain directors, officers and
regular employees of the Company, by mail, telephone, telegraph, telecopy or
personally. Arrangement will be made with brokerage houses and other custodians,
nominees and fiduciaries to forward proxy soliciting material to the beneficial
owners of stock held of record by such persons, and the Company may reimburse
them for reasonable out-of-pocket expenses incurred by them in doing so.
If you cannot be present in person, your management would greatly
appreciate your filling in, signing and returning the enclosed proxy, in the
envelope provided for the purpose, in time to arrive not later than June 7,
2000. Any proxy not received by that date may arrive too late to be voted at the
meeting.
By Order of the Board of Directors
Peter K. Barbano,
Secretary
Dated: Paramus, New Jersey
May 4, 2000
11
<PAGE>
=================
MOTOR CLUB OF
[LOGO] AMERICA(R)
=================
Annual Meeting of Stockholders
Marriott at Glenpointe Hotel
100 Frank W. Burr Boulevard
Teaneck, New Jersey
June 7, 2000
10:00 A. M.
\/ Fold and detach here \/
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Motor Club of America
Proxy Solicited on Behalf of the Board of Directors
for the Annual Meeting of Stockholders to be Held June 7, 2000
PROXY: ARCHER McWHORTER, ALVIN E. SWANNER, WILLIAM E. LOBECK, JR. AND STEPHEN A.
GILBERT, and each of them are hereby appointed as attorneys and proxies, with
full power of substitution, to represent and to vote all stock of MOTOR CLUB OF
AMERICA (the Company) in the name of the undersigned, as fully and effectively
as the undersigned could do if personally present, at the Annual Meeting of
Stockholders of the Company, to be held at the Marriott at Glenpointe Hotel, 100
Frank W. Burr Boulevard, Teaneck, New Jersey 07666, on June 7, 2000 at 10
o'clock A.M. (New Jersey Time), and at any adjournment thereof, upon the matters
set forth in the Proxy Statement, which has been received by the undersigned,
and in their discretion in the transaction of such other business as may
properly come before the meeting or any adjournment thereof.
<PAGE>
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(Please mark, sign and date this proxy and return promptly in the
envelope provided)
Motor Club of America
Proxy Solicited on Behalf of the Board of Directors
1. Election of directors (Mark Only One Box).
Nominees: A. McWhorter, S.A. Gilbert, R.S. Fried, M. Galatin,
W.E. Lobeck, Jr., A.E. Swanner, P.J. Haveron, A. McWhorter, Jr.
|_| Vote FOR all nominees listed above and recommended by the Board of
Directors, EXCEPT vote withheld from the following nominees (if any):
|_| Vote WITHHELD from all nominees.
If no indication is made, the proxies shall vote FOR the election of the
director nominees.
(INSTRUCTION: To withhold authority to vote for any individual nominee, write
that nominee name on the line provided below.)
- --------------------------------------------------------------------------------
2. In their discretion, the proxies are authorized to vote upon any other
business that may come before the meeting or any adjournment thereof.
Please sign here personally, exactly as your name appears
hereon. Joint owners must both sign.
DATED 2000
--------------------------------------
SIGNED
-----------------------------------------
SIGNED
-----------------------------------------
Please mark, sign and date this proxy and return promptly in
the envelope provided
