<PAGE> 1
SCHEDULE 14A
INFORMATION REQUIRED IN PROXY STATEMENT
(RULE 14A-101)
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to sec. 240.14a-11(c) or sec. 240.14a-12
ACCEPTANCE INSURANCE COMPANIES INC.
- --------------------------------------------------------------------------------
(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)(4) and
0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee
is calculated and state how it was determined):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total fee paid:
- --------------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
- --------------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
- --------------------------------------------------------------------------------
(3) Filing Party:
- --------------------------------------------------------------------------------
(4) Date Filed:
- --------------------------------------------------------------------------------
<PAGE> 2
ACCEPTANCE INSURANCE COMPANIES INC. LOGO
ACCEPTANCE INSURANCE COMPANIES INC.
222 SOUTH 15TH STREET
SUITE 600 NORTH
OMAHA, NE 68102
(402) 344-8800
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 29, 1997
To Shareholders:
Please take notice that the Annual Meeting of Shareholders of Acceptance
Insurance Companies Inc. (the "Company") will be held at the Marriott Hotel,
10220 Regency Circle, Omaha, Nebraska, on May 29, 1997, at 10:00 a.m., local
time. At the meeting, shareholders will be asked to consider and vote upon the
following matters:
(1) The election of nine directors to hold office until the Annual Meeting
in 1998 or until the election and qualification of their successors;
(2) The approval of the 1997 Employee Stock Purchase Plan;
(3) The ratification of the appointment of Deloitte & Touche LLP as the
Company's principal independent accountants; and
(4) Such other matters as may properly come before the Meeting or any
adjournment thereof.
Only shareholders of record at the close of business on April 22, 1997,
will be entitled to vote at the Meeting or any adjournment thereof. A list of
shareholders entitled to notice of and to vote at the Meeting will be available
for inspection at the offices of the Company during the ten days preceding the
Annual Meeting.
By Order of the Board of Directors,
DONN E. DAVIS
Secretary
Omaha, Nebraska
April 29, 1997
YOUR VOTE IS IMPORTANT. PLEASE EXECUTE AND
RETURN THE ENCLOSED PROXY PROMPTLY, IN THE ENCLOSED
ENVELOPE, WHETHER OR NOT YOU INTEND TO BE PRESENT
AT THE MEETING AND VOTE IN PERSON. IN THE EVENT YOU WISH
TO ATTEND THE MEETING, YOU MAY REVOKE
YOUR PRIOR PROXY BY SO VOTING.
<PAGE> 3
ACCEPTANCE INSURANCE COMPANIES INC.
222 SOUTH 15TH STREET
SUITE 600 NORTH
OMAHA, NE 68102
---------------------------
PROXY STATEMENT
---------------------------
MAILING DATE: APRIL 29, 1997
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 29, 1997
I. INTRODUCTION
This Proxy Statement is furnished to the shareholders of Acceptance
Insurance Companies Inc., a Delaware corporation (the "Company"), in connection
with the solicitation of Proxies to be used in voting at the annual meeting of
shareholders of the Company to be held at 10:00 a.m., local time, May 29, 1997,
at the Marriott Hotel, 10220 Regency Circle, Omaha, Nebraska, or at any
adjournments thereof (the "Annual Meeting" or the "Meeting"). The Proxy is being
solicited by the Company on behalf of the Board of Directors, and this Proxy
Statement, together with the accompanying Proxy, is being mailed to shareholders
on or about April 29, 1997.
VOTING AND PROXIES
RECORD DATE; VOTING RIGHTS
Only holders of record of the Company's Common Stock at the close of
business on April 22, 1997 (the "Record Date"), will be entitled to notice of
and to vote at the Annual Meeting or any adjournment thereof. Shareholders of
record on the Record Date are entitled to one vote per share on any matter that
may properly come before the Annual Meeting. As of the Record Date, there were
15,290,608 shares of Common Stock, $.40 par value, outstanding and entitled to
vote. The presence, either in person or by properly executed Proxy, of the
holders of a majority of the outstanding shares of Common Stock is necessary to
constitute a quorum at the Meeting.
MATTERS TO BE VOTED UPON; VOTE REQUIRED
At the Annual Meeting, shareholders will be asked to consider and vote upon
the following:
(1) The election of nine directors to serve until the Annual Meeting
in 1998 or until the election and qualification of their successors.
Nominees receiving a plurality of the votes cast at the Meeting will be
elected as directors of the Company.
(2) The approval of the 1997 Employee Stock Purchase Plan. Approval of
such plan requires the affirmative vote of a majority of the votes cast at
the Meeting.
(3) The ratification of the appointment of Deloitte & Touche LLP as
the Company's principal independent public accountants. Ratification of the
appointment of the accountants requires the affirmative vote of a majority
of the votes cast at the Meeting.
Directors and certain executive officers of the Company and their
affiliates own 4,199,935 shares of Common Stock, approximately 27.5% of the
total outstanding shares, and have advised the Company that they intend to vote
FOR the election of the Director nominees, approval of the 1997 Employee Stock
Purchase Plan, and ratification of the appointment of Deloitte & Touche LLP as
the Company's principal independent public accountants.
1
<PAGE> 4
SOLICITATION OF PROXIES
The Company has borne and will bear all costs of this solicitation.
Following the original mailing of this Proxy Statement and accompanying
materials, directors and officers and other employees of the Company may
solicit, without additional compensation, or may engage others to solicit,
Proxies by any appropriate means, including personal interview, mail, telephone
and facsimile or telegraph. Arrangements also will be made with brokerage houses
and other custodians, nominees and fiduciaries, which are holders of record of
the Company's Common Stock, to forward Proxy soliciting material to the
beneficial owners of such shares, and the Company will reimburse such holders of
record for their reasonable expenses incurred in connection therewith.
Any Proxy given pursuant to this solicitation may be revoked by the person
giving it at any time before it is voted. Proxies may be revoked by (i) filing
with the Secretary of the Company, at or before the Annual Meeting, a written
notice of revocation bearing a later date than the Proxy, (ii) duly executing a
Proxy relating to the same shares, bearing a later date, and delivering it to
the Secretary of the Company at or before the Annual Meeting, or (iii) attending
the Annual Meeting and voting in person (although attendance at the Annual
Meeting will not in and of itself constitute a revocation of the Proxy).
BOARD RECOMMENDATION
Properly executed Proxies will be voted in accordance with shareholders'
directions. If no directions are given, Proxies will be voted FOR the election
of the director nominees, the proposed 1997 Employee Stock Purchase Plan, and
the ratification of the appointment of the Company's principal independent
public accountants. The Board of Directors recommends a vote FOR each of the
matters submitted to shareholders for approval at the Annual Meeting.
SUBMISSION OF SHAREHOLDER PROPOSALS
Any proposal which a holder of Common Stock intends to present at next
year's Annual Meeting of shareholders must have been received by the Secretary
of the Company, at the address appearing on the first page of this Proxy
Statement, no later than January 2, 1998, in order to be included in the Proxy
Statement and the form of a Proxy relating to that meeting.
II. MATTERS TO BE CONSIDERED AT THE ANNUAL MEETING
At the Annual Meeting, the shareholders will consider and vote upon: (1)
the election of directors who will serve until the Annual Meeting of
Shareholders held in 1998 or until the election and qualification of their
successors; (2) the approval of the 1997 Employee Stock Purchase Plan ("ESPP");
and (3) the ratification for Deloitte & Touche LLP as principal independent
public accountants for the Company for 1997.
PROPOSAL 1 -- ELECTION OF DIRECTORS
At the Annual Meeting, shareholders will be asked to elect a board of nine
directors to hold office until the Annual Meeting held in 1998 or until the
election and qualification of their successors. The following table sets forth
information regarding nominees for election to the Company's Board of Directors.
All of the nominees currently serve as directors of the Company. If a nominee is
unable to serve or, for good cause, will not serve, the Proxy confers
discretionary authority to vote with respect to the election of any person to
the board.
2
<PAGE> 5
NOMINEES
<TABLE>
<CAPTION>
POSITION, PRINCIPAL OCCUPATIONS
NAME AND AGE AND OTHER DIRECTORSHIPS
------------ -------------------------------
<S> <C>
Jay A. Bielfield(1), 51................... Mr. Bielfield has been a director of the Company since
December 1992. Mr. Bielfield is an employee of Little
Caesar International, Inc. Mr. Bielfield is a director
of Major Realty Corporation.
Kenneth C. Coon(2), 46.................... Mr. Coon is Chairman and Chief Executive Officer of the
Company and has been a director of the Company since
December 1992. He served as Interim Chief Executive
Officer of the Company beginning in February 1992, and
as Chairman and President from December 1992 until March
1994, whereupon he was elected Chairman and Chief
Executive Officer. Mr. Coon has been President and Chief
Executive Officer, and a director, of Acceptance
Insurance Holdings Inc. since its formation and of each
of its subsidiaries since their formation or
acquisition; and, since August 1993 has served as a
director of The Redland Group, Inc., and each of its
subsidiaries, all of which are subsidiaries of the
Company. Mr. Coon also serves as a director of Major
Realty Corporation.
Edward W. Elliott, Jr.(2)(4), 53.......... Mr. Elliott has been a director of the Company since
December 1992. Mr. Elliott is Vice-Chairman and Chief
Financial Officer of Franklin Enterprises, Inc., a
private investment management firm located in Deerfield,
Illinois. Mr. Elliott also serves as a director of
Warehouse Club, Inc.
Robert LeBuhn(3), 64...................... Mr. LeBuhn has been a director of the Company since
December 1992. Mr. LeBuhn is a private investor. He was
Chairman of Investor International (U.S.), Inc., an
investment firm in New York, New York, until September
1994. Mr. LeBuhn serves as a director of USAir Group,
Inc., Cambrex Corp., New Jersey Steel, and Enzon, Inc.
Michael R. McCarthy(2)(4), 45............. Mr. McCarthy has been a director of the Company since
December 1992. Mr. McCarthy has been Chairman and a
director of McCarthy & Co., a firm engaged in the
investment banking business in Omaha, Nebraska, since it
was organized in 1986. He is also a director and
Chairman of McCarthy Group, Inc., which is an investment
and merchant banking firm and the parent of McCarthy &
Co. Mr. McCarthy also serves as a director of Major
Realty Corporation.
John P. Nelson(2), 56..................... Mr. Nelson has been President and Chief Operating
Officer of the Company since March 1994, and a director
since August 1993. Mr. Nelson serves as either Chairman
or President and a director of The Redland Group, Inc.,
and its insurance subsidiaries, all of which are
subsidiaries of the Company. Since August 1993 he has
served as a director of Acceptance Insurance Holdings
Inc. and each of its subsidiaries.
</TABLE>
3
<PAGE> 6
<TABLE>
<CAPTION>
POSITION, PRINCIPAL OCCUPATIONS
NAME AND AGE AND OTHER DIRECTORSHIPS
------------ -------------------------------
<S> <C>
R. L. Richards(1), 48..................... Mr. Richards has been a director of the Company since
January 1991. Mr. Richards serves as Managing Director
of RDT Limited, a private investment company located in
Dublin, Ohio. Prior to the organization of RDT Limited
in December 1994, he served as President and director of
its predecessor and has held various positions with that
company since 1978.
David L. Treadwell(3), 42................. Mr. Treadwell has been a director of the Company since
December 1992. Mr. Treadwell has been director, Chairman
and Chief Executive Officer of Major Realty since March
1992. Mr. Treadwell also is President of Heritage
Network, Incorporated, which is responsible for a
portfolio of investments, including operating businesses
in automotive supply, newspaper publishing, real estate
development and residential construction. Mr. Treadwell
has also been Community Bank Director of Old Kent Bank,
SE, since April 1992.
Doug T. Valassis(3), 44................... Mr. Valassis has been a director of the Company since
December 1992. Mr. Valassis is President and Chief
Operating Officer and a director of Franklin
Enterprises, Inc., an investment management firm in
Deerfield, Illinois. Mr. Valassis also serves as a
director of Warehouse Club, Inc., and serves as a
director and officer of Lindner Investments,
Massachusetts Trust, a complex of six investment funds;
Mr. Valassis serves as director for each of the six
funds.
</TABLE>
- -------------------------
(1) Member of the Audit Committee of the Company.
(2) Member of the Executive Committee of the Company.
(3) Member of the Compensation Committee of the Company.
(4) Member of the Nominating Committee of the Company.
PROPOSAL 2 -- APPROVAL OF THE 1997 EMPLOYEE
STOCK PURCHASE PLAN
There will be presented to the shareholders at the Annual Meeting a
proposal to approve the 1997 Employee Stock Purchase Plan. The Plan is set forth
as Annex A hereto.
Approval of the adoption of the ESPP requires the affirmative vote of a
majority of the votes cast at the Meeting.
PROPOSAL 3 -- RATIFY APPOINTMENT OF INDEPENDENT
PUBLIC ACCOUNTANTS
The Board of Directors has appointed Deloitte & Touche LLP as independent
public accountants for the Company for 1997. The appointment of independent
public accountants by the Board of Directors is submitted for ratification by
the shareholders. Although shareholder approval is not required, if the
shareholders do not ratify the appointment, the Board of Directors will
reconsider the matter.
Representatives of Deloitte & Touche LLP will be present at the Annual
Meeting, will have an opportunity to make a statement if they desire to do so
and will be available to respond to appropriate questions presented by
shareholders.
4
<PAGE> 7
III. INFORMATION ABOUT THE COMPANY, DIRECTORS AND
EXECUTIVE OFFICERS
MEETINGS OF THE BOARD OF DIRECTORS AND COMMITTEES THEREOF
The Board of Directors met four times and took action by unanimous consent
on one occasion in 1996. All of the nominees for director served on the Board of
Directors throughout 1996. There are four committees of the Board, an Executive
Committee, an Audit Committee, a Nominating Committee and a Compensation
Committee.
The Executive Committee may exercise certain limited powers of the Board of
Directors. It met once in 1996. The Audit Committee has authority to review
internal audit and financial controls, and to recommend to the Board the
independent public accountants to serve as auditors, review with the independent
auditors the annual audit plan, the financial statements, the auditor's report
and their evaluation and recommendations concerning the Company's internal
controls, and approve the types of professional services for which the Company
may retain the independent auditors. The Audit Committee met once in 1996. The
Compensation Committee reviews the compensation of the executive officers of the
Company, and makes recommendations to the Board of Directors regarding such
compensation and awards under the various compensation plans adopted by the
Company. The Compensation Committee met once in 1996. The Nominating Committee
recommends director nominees to the Board of Directors. The Nominating Committee
did not meet in 1996. The Nominating Committee intends to recommend nominees to
the Board based solely upon the deliberations of the Nominating Committee.
During 1996, each director participated in at least 75% of the meetings or
actions by consent of the Board of Directors and each committee on which he sat.
COMPENSATION OF DIRECTORS
Members of the Board of Directors who are not full-time employees of the
Company receive an annual retainer of $10,000 plus $1,000 for attendance at each
meeting of the Board of Directors, $1,000 for attendance at each meeting of a
Committee on which the director sits occurring other than on a day when the
directors meet, and $500 for each such meeting occurring on a day when the
directors meet. Non-employee directors who serve as Chairman of a Board
Committee, receive an additional $3,000 annual retainer.
Messrs. Bielfield, Coon and McCarthy are directors, and Mr. Treadwell is
Chairman and Chief Executive Officer and a director, of Major Realty Corporation
("Major Realty"). Non-employee directors of Major Realty are paid $2,500 for
each meeting of directors attended in person. Mr. Treadwell is employed on a
month-to-month basis under an Employee Lease Agreement with Mr. Treadwell's
primary employer, Heritage Network, Incorporated ("Heritage"). Under the
Employee Lease Agreement, Mr. Treadwell is required to devote such time to his
duties as Chief Executive Officer of Major Realty as he and the Major Realty
Board determine to be necessary, and through April 1, 1997, Major Realty paid to
Heritage $25,000 annually for Mr. Treadwell's services. Effective April 1, 1997,
the Employee Lease Agreement was extended for one additional year, and
compensation for Mr. Treadwell's services as Chief Executive Officer remained at
$25,000. Major Realty will pay an additional $75,000 success fee if Mr.
Treadwell sells the remaining assets of Major Realty by the scheduled
termination date of the Employee Lease Agreement. Major Realty also has granted
to Mr. Treadwell an option to purchase, during a period ending 10 days after
termination of his employment by Major Realty, termination of the Employee Lease
Agreement, or a change of control of Major Realty, 100,000 shares of Major
Realty common stock for $2.7679 per share.
5
<PAGE> 8
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Mr. Treadwell, a director and member of the Compensation Committee, is
Chairman, Chief Executive Officer and a director of Major Realty Corporation.
Mr. Coon, Chairman, Chief Executive Officer and a director of the Company, is a
director of Major Realty Corporation. See "Compensation of Directors" for
information with respect to compensation paid to or on behalf of Mr. Treadwell
by Major Realty Corporation in 1996. Mr. Coon receives $2,500 per meeting as
director fees from Major Realty Corporation, and received $2,500 in 1996. Major
Realty does not have a compensation committee, and compensation issues are
determined by its Board of Directors.
EXECUTIVE OFFICERS
The individuals identified below are the executive officers of the Company
who have been appointed by the Board of Directors and who served in the
capacities indicated at December 31, 1996. Executive officers normally are
appointed annually by the Board of Directors and serve at the pleasure of the
Board.
Kenneth C. Coon, 46........ Chairman and Chief Executive Officer of the Company
and a director of the Company since December 1992.
He served as Interim Chief Executive Officer of the
Company beginning in February 1992, and as Chairman
and President from December 1992 until March 1994,
whereupon he was elected Chairman and Chief
Executive Officer. Mr. Coon has been President and
Chief Executive Officer and a director of
Acceptance Insurance Holdings Inc. since its
formation and of each of its subsidiaries since
their formation or acquisition; and, since August
1993 has served as a director of The Redland Group,
Inc. and each of its subsidiaries, all of which are
subsidiaries of the Company. Mr. Coon also serves
as a director of Major Realty Corporation.
John P. Nelson, 56......... President and Chief Operating Officer of the
Company since March 1994, and a director since
August 1993. Mr. Nelson serves as either Chairman
or President and a director of The Redland Group,
Inc., and its insurance subsidiaries, all of which
are subsidiaries of the Company. Since August 1993
he has served as a director of Acceptance Insurance
Holdings Inc. and each of its subsidiaries.
G. Thomas Bolton, 51....... Senior Vice President, Claims since January 1996.
Mr. Bolton came to Acceptance from Arthur Andersen
LLP, where he was a Property and Casualty Claims
Consultant. Prior to that time he was employed for
16 years by, and was the Eastern Territorial Claim
Executive and Assistant Vice President for, the
Home Insurance Group.
Greg D. Ewald, 43.......... Senior Vice President of Underwriting of the
Company since October 1993. Mr. Ewald has been Vice
President of Underwriting for Acceptance Insurance
Company and Acceptance Indemnity Insurance Company
since April 1990. Prior thereto, Mr. Ewald was Vice
President, Treaty Underwriting, at Underwriters
Reinsurance Company.
William J. Gerber, 39...... Vice President, Investments and Investor Relations
of the Company since December 1992, and of
Acceptance Insurance Holdings Inc. since July 1,
1991. Beginning in August 1987, he was Director of
Financial Reporting and Acquisitions for the
Company. Prior thereto, he was a certified public
accountant with Coopers & Lybrand.
6
<PAGE> 9
Richard C. Gibson, 61...... Executive Vice President of The Redland Group,
Inc., since August 1993, and effective January
1996, President of American Growers and Chairman
and Chief Executive Officer of American
Agrisurance, Inc., a wholly-owned marketing
subsidiary of the Company. Mr. Gibson served as
President of American Agrisurance, Inc., from its
formation in November 1976 until January 1996. From
1973 through 1976, Mr. Gibson was Vice President
and Marketing Manager of Blakley Crop Hail and
prior to that time, from 1964 through 1973 Branch
Manager of the Crop Division of the Insurance
Company of North America.
Robert W. Haney, 55........ Senior Vice President of Claims of the Company
since July 1993. For the prior 11 years, Mr. Haney
was Assistant Vice President of Claims for Empire
Fire & Marine Insurance Company.
Peter A. Knolla, 50........ Assistant Secretary of the Company since December
of 1992. He has been Secretary of the majority of
the Acceptance subsidiaries since July of 1991.
Prior to that time he was associated with the
Central National Insurance Group and Empire Fire
and Marine Insurance Company for 15 years.
Georgia M. Mace, 47........ Treasurer and Chief Financial Officer of the
Company since May 1992. Ms. Mace has been Treasurer
and Chief Financial Officer of Acceptance Insurance
Company since its formation and of each of the
Acceptance subsidiaries since their formation or
acquisition. She also has served as a director of
Acceptance Insurance Company and Phoenix Indemnity
Insurance Company since their formation. Ms. Mace
formerly was Treasurer of Cornhusker Casualty, a
division of Berkshire Hathaway.
George P. Mang, 66......... Senior Vice President and Chief Operating Officer
of Phoenix Indemnity since April 1994. Mr. Mang
served as Secretary of Phoenix Indemnity from its
organization in 1988 until 1994. Prior to that
time, Mr. Mang was Executive Vice President of
Statewide Insurance for 25 years.
Mark R. Shapland, 38....... Vice President and Chief Actuary since August 1996.
During the preceding six years, Mr. Shapland was an
actuary with Zurich Insurance Company, and Vice
President and Chief Actuary with Empire Fire &
Marine Insurance Company.
Raymond N. Siebert, 49..... Vice President of Administration for the Company
since May 1995. Prior to that, Mr. Siebert was an
Assistant Vice President for Systems and Operations
for the Home Insurance Company. Mr. Siebert held
various administrative and operations support
positions at Home Insurance for 13 years. He also
has held positions in a similar capacity for the
IL. FAIR Plan, Chubb and Son, and Allstate
Insurance Co., dating back to 1975.
Bruce W. Slaughter, 60..... Senior Vice President of Redland Insurance Company
since October of 1995. Prior to coming with
Acceptance Insurance Companies in October of 1994,
Mr. Slaughter was Executive Vice President of Home
Insurance Company. Prior to that time he was Vice
President with Chubb Insurance Group, having been
with them for a period of 24 years.
Joseph G. Smith, 42........ Vice President of Budget, Audit and Strategic
Planning since August 1993. Mr. Smith served as
Vice President and Treasurer of Redland Insurance
Company from September 1982 to October 1994. Prior
to joining Redland, Mr. Smith worked as a certified
public accountant with Ernst & Whinney for six
years.
7
<PAGE> 10
Thomas D. Stamm, 50........ Senior Vice President of Acceptance Insurance
Company since October 1993. Prior to that time, Mr.
Stamm was a founding officer and Senior Vice
President of Underwriting for the Scottsdale
Insurance Company. Prior to that time, Mr. Stamm
was a Vice President of Underwriting for Great
Southwest Fire Insurance Company for 10 years.
John R. Svoboda, 44........ Vice President of Regulatory Affairs for the
Company since July 1991. He has been with the
Company since 1987. For the prior 13 years Mr.
Svoboda was a Senior Examiner with the Nebraska
Department of Insurance.
8
<PAGE> 11
COMPENSATION OF EXECUTIVE OFFICERS
The following table sets forth for each of the three years ended December
31, 1996, the compensation paid by the Company to its Chief Executive Officer
and the four most highly compensated executive officers receiving total
compensation in excess of $100,000 annually.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
ANNUAL COMPENSATION COMPENSATION
-------------------------------- --------------------
DEFERRED
NAME AND CASH BONUS OPTION OTHER
PRINCIPAL POSITION YEAR SALARY BONUS(1) PAYABLE(2) (#) COMPENSATION(3)
------------------ ---- ------ -------- ---------- ------ ---------------
<S> <C> <C> <C> <C> <C> <C>
Kenneth C. Coon................. 1996 $275,875 $166,163 $120,663 280,000 $24,602(4)
Chairman, Chief Executive 1995 270,000 183,163 166,163 70,000 8,696(4)
Officer and Director 1994 259,375 45,500 62,500 50,000 7,310(4)
John P. Nelson.................. 1996 253,750 94,160 83,160 220,000 17,396
President, Chief Operating 1995 247,500 94,160 94,160 30,000 --
Officer and Director 1994 228,982 11,000 11,000 -- --
Richard C. Gibson............... 1996 203,850 87,400 23,400 70,000 --
Chairman and Chief Executive 1995 199,388 23,400 23,400 -- --
Officer, American 1994 195,239 -- -- -- --
Agrisurance, Inc.
Bruce W. Slaughter.............. 1996 168,550 21,000 -- 75,000 9,478
Senior Vice President, 1995 163,400 -- -- -- --
Redland Insurance Company 1994 33,458(5) -- -- -- --
Thomas D. Stamm................. 1996 154,705 40,078 22,078 55,000 9,739
Senior Vice President, 1995 146,466 22,078 22,078 10,000 3,371
Acceptance Insurance 1994 131,000 25,000 -- 10,000 --
Company
</TABLE>
- -------------------------
(1) Reflects amounts paid under the Management Incentive Compensation Plan
adopted by the Company pursuant to which cash bonuses may be awarded to
executives and key employees of the Company and its subsidiaries measured
principally on Company earnings and individual performance.
(2) The amounts reflect cash bonuses earned by the named executive officers and
payable in the next year. Bonuses earned in 1995 and prior years are payable
in three annual installments.
(3) Except where indicated, these amounts reflect the Company's contribution on
behalf of such persons to Defined Contribution Plans maintained by the
Company.
(4) Includes $2,500 paid to Mr. Coon in 1996, and $5,000 in each of 1995 and
1994, as director fees by Major Realty Corporation, the 33.1% subsidiary of
the Company.
(5) Mr. Slaughter became employed by the Company in October 1994.
9
<PAGE> 12
The following table sets forth information concerning options granted by
the Company to its Chief Executive Officer and the named executive officers
during the fiscal year ended December 31, 1996. The Company did not grant any
stock appreciation rights in 1996.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS POTENTIAL
- ------------------------------------------------------------------------------------- REALIZED VALUE AT
% OF TOTAL ASSUMED ANNUAL
NUMBER OF OPTIONS RATES OF STOCK PRICE
SECURITIES GRANTED TO EXERCISE APPRECIATION
UNDERLYING EMPLOYEES OR BASE FOR OPTION TERM
OPTIONS IN FISCAL PRICE EXPIRATION ----------------------
NAME GRANTED(#)(1) YEAR ($/SH) DATE 5%($) 10%($)
---- ------------- ---------- -------- ---------- ----- ------
<S> <C> <C> <C> <C> <C> <C>
Kenneth C. Coon............ 280,000 Shares 32.1% (2) 7/1/2006 $856,658 $5,001,091
John P. Nelson............. 220,000 Shares 25.2 (2) 7/1/2006 673,088 3,929,429
Richard C. Gibson.......... 70,000 Shares 8.0 (2) 7/1/2006 214,164 1,250,273
Bruce W. Slaughter......... 75,000 Shares 8.6 (2) 7/1/2006 229,462 1,339,578
Thomas D. Stamm............ 55,000 Shares 6.3 (2) 7/1/2006 168,272 982,357
</TABLE>
- -------------------------
(1) These options vest in five equal tranches on the later of (a) each five
annual anniversary date from the date of grant, or (b) the date on which the
Targeted Trading Price described below has been met for the required period
of time prior to the date of vesting. Additionally, the option holder must
remain employed by the Company at the date of vesting. The exercise price
for each tranche increases at a rate equal to a 15% annual compound growth
in the trading price of the Common Stock from date of grant.
(2) Exercise price for each vesting period as follows:
<TABLE>
<CAPTION>
MINIMUM YEARS EXERCISE PRICE
OF SERVICE FROM PER SHARE
DATE OF GRANT (TARGETED TRADING PRICE)
- --------------- ------------------------
<S> <C> <C>
1 Year...................... $19.694
2 Years..................... $22.648
3 Years..................... $26.045
4 Years..................... $29.952
5 Years..................... $34.445
</TABLE>
10
<PAGE> 13
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
SHARES NUMBER OF SECURITIES VALUE OF UNEXERCISED*
ACQUIRED UNDERLYING UNEXERCISED IN-THE-MONEY
ON VALUE OPTIONS AT OPTIONS AT
EXERCISE REALIZED FY-END(#) FY-END($)
NAME (#) ($) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
---- -------- -------- ------------------------- -------------------------
<S> <C> <C> <C> <C>
Kenneth C. Coon.................... None N/A 118,146 Exercisable Options $1,055,446
Chairman, Chief Executive Officer 363,500 Unexercisable Options 538,386
John P. Nelson..................... None N/A 7,500 Exercisable Options 39,375
President, Chief Operating
Officer 242,500 Unexercisable Options 120,589
Richard C. Gibson.................. None N/A No Exercisable Options 0
Executive Vice President, 70,000 Unexercisable Options 784
The Redland Group, Inc.
Bruce W. Slaughter................. None N/A No Exercisable Options 0
Senior Vice President 75,000 Unexercisable Options 840
Redland Insurance Company
Thomas D. Stamm.................... None N/A 7,500 Exercisable Options 55,000
Senior Vice President 67,500 Unexercisable Options 81,866
Acceptance Insurance Company
</TABLE>
- -------------------------
* Calculated as the difference between the option exercise price and the closing
price per share on the New York Stock Exchange on December 31, 1996.
EMPLOYMENT AGREEMENTS
Kenneth C. Coon, Chairman and Chief Executive Officer of the Company, is
employed under an employment agreement. Under this agreement, upon termination
of his employment without cause or in certain circumstances by him, the Company
is obligated to pay him the amount of his base salary remaining payable over the
balance of his employment term (currently ending December 31, 1998, subject to
annual automatic one year extensions unless terminated by either party upon one
year's notice prior to each January 1), the amount of his highest annual cash
bonus earned multiplied by the number of full and partial years remaining in his
employment term, and the amount of any incentive, profit-sharing bonus, stock
option or other plan accrued on his behalf. Similar payments are due upon the
death or disability of Mr. Coon.
John P. Nelson and Richard C. Gibson, respectively the President and Chief
Operating Officer of the Company, and Chairman and Chief Executive Officer of
American Agrisurance, Inc., one of the Company's subsidiaries, are each employed
pursuant to identical employment agreements for a term currently ending December
31, 1998, but subject to annual automatic one-year extensions, unless terminated
by either party upon 45 days notice prior to each January 1.
REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
In 1993, the Committee developed the current compensation program covering
the Company's Chief Executive Officer, and other executive officers and key
employees. Compensation is composed of a combination of salary, incentive cash
bonuses and stock option grants. The Committee believes that, when operating
goals established for the Company are met, it is in the Company's best interest
to maintain the level of experienced executives and key employees who delivered
such results by allowing such persons to participate in the Company's profits.
The Company intends that the salary portion of executive compensation,
while intended to be competitive in the market place for comparable positions,
is not intended as the principal vehicle for rewarding
11
<PAGE> 14
high-level performance by such executives. Rather, over time, the compensation
policy will limit salary increases largely to reflect inflation and increased
responsibility. The Management Incentive Compensation Plan, calling for the
payment of cash bonuses in accordance with the provisions of the Plan, will be
the vehicle for rewarding superior performance.
The Management Incentive Compensation Plan includes the following:
(a) Early each year, the Committee, working with the Chief Executive
Officer and other key executives, will establish overall Company
performance goals, as a target net earnings per share for the year.
The senior executive of each staff and operating division, working
with the Chief Executive Officer and the Committee, will set
individual performance goals for key employees within their
division, which are tied to the Company's strategic plan for such
division for that year. These individual performance goals are
intended to be objective and identifiable in order to measure the
degree of performance by the executives and key employees.
(b) The maximum bonus payable is established as a percentage of base
salary which ranges from 200% for the Chief Executive Officer down
to 20% for lower level key employees. There also is established, as
a percentage of bonus payable, the extent to which the amount of
bonus will be based upon meeting Company goals, and the extent to
which the bonus will be based upon meeting individual goals. Not
more than 20% of the maximum bonus payable may be granted at the
discretion of the Committee. Attainment of Company goals is weighted
more heavily for senior executives (100% for the Chief Executive
Officer), while individual goals are weighted more heavily for
executives and key employees at the staff and division levels.
(c) For example, with regard to the Company performance goal, the Plan
ties the amount of bonus payable, as a percentage of the total
maximum, to an analysis of the degree to which goals are met,
exceeded or not met. This formula calls for payment of 75% of the
maximum bonus where 100% of the goals are achieved; an additional 1%
of maximum bonus for each 1% that the goals are exceeded (up to the
maximum amount of bonus); a reduction of 2% of maximum bonus for
each 1% below 100% attainment of goals; with no bonus payable if
less than 75% of goals are obtained. The Committee, working with the
Chief Executive Officer, establishes similar goals for executives
and key employees of the staff and division levels with respect to
the percentage of bonus payable at different levels of individual
goal achievement.
For 1995 and prior years, incentive bonuses earned were payable over a
three year period, with the first such payment to be made within 120 days
following the end of the applicable year as to which the incentive bonus is
earned, and on a like day each year thereafter. In 1996 the Plan was amended to
provide that bonuses earned in one year are payable in full in the following
year. The Committee may establish an aggregate maximum amount of bonuses which
may be granted in any year. Historically, this has been established at 10% or
less of the Company's pre-bonus net income.
Effective June 1, 1996, the Company has adopted an Executive Deferred
Compensation Plan. The Plan is a non-qualified deferred compensation arrangement
pursuant to which eligible employees may defer compensation by having the
Company pay over to the Plan and defer income tax liability on the deferred
amounts until the compensation is received by them. Only highly compensated (in
excess of $80,000 annually) or key management employees selected by the
Committee and who elect to participate in the Plan are eligible under the Plan.
The Company matches 100% of the first 5% of income deferred by participants in
the Plan.
The Committee believes that incentive stock options remain an important
aspect of executive compensation, particularly for the Chief Executive Officer,
Chief Operating Officer and senior executives. At present, the award of
incentive stock options is made at the discretion of the Committee, although the
Chief Executive Officer is consulted with respect to the grant of stock options
to the other senior executives.
The Committee has not yet adopted a policy with respect to qualifying
compensation paid to executive officers under Section 162(m) of the Internal
Revenue Code. The Committee deems it unnecessary at this time to adopt such a
policy, as it does not consider it eminent that annual compensation to any
executive officer will exceed $1 million. The Committee does, however, intend to
monitor executive compensation,
12
<PAGE> 15
including the value of compensation which may ultimately be received by
executive officers, including the Chief Executive Officer, comprised of salary,
cash bonuses and receipt of values under stock option grants, and will address a
policy to qualify compensation paid to executive officers under Section 162(m)
at the time it deems it necessary to do so.
In all respects, the action of the Compensation Committee is subject to
approval by the Board of Directors. During 1996, based upon the foregoing
criteria applied to the 1995 year, the Board of Directors awarded the Chief
Executive Officer a 2% salary increase and did not award a cash bonus. The Board
also exercised its discretion to award the Chief Executive Officer an option to
purchase 280,000 shares of Common Stock pursuant to the 1996 Incentive Stock
Option Plan (see table captioned "Option Grants in Last Fiscal Year").
Members of the Compensation Committee are:
Robert LeBuhn, Chairman
David L. Treadwell
Doug T. Valassis
13
<PAGE> 16
STOCK PERFORMANCE GRAPHS
The Company has undergone a substantial reorganization, changing its
business from the citrus and real estate business activities in which it had
been engaged, to the specialty property and casualty insurance business in which
it currently is engaged. By mid-1992, with the Company's move of its
headquarters from Bloomfield Hills, Michigan, to Omaha, Nebraska, the
headquarters of its insurance operations, the reorganization was effectively
complete. The Company believes that any comparison of its stock performance to
that of comparable companies would require a comparison to property and casualty
insurance companies commencing the last half of 1992, and to small
capitalization food processor companies for the one-half year period prior
thereto. Thus, stock performance is presented in two graphs, one covering the
period of time from July 1, 1992 to December 31, 1996, comparing the performance
of the Company's Common Stock to the Value Line Property and Casualty Insurance
Group and the Russell 2000. The second graph, covering the period December 31,
1991 through June 30, 1992, compares the performance of the Company's Common
Stock with the Value Line Food Processors Small Capitalization Group and the
Russell 2000.
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN*
Acceptance Insurance Companies, Russell 2000 Index and Value Line Insurance:
Property/Casualty Index
(Performance Results Through December 31, 1996)
<TABLE>
<CAPTION>
MEASUREMENT PERIOD ACCEPTANCE RUSSELL 2000 INSURANCE:
(FISCAL YEAR COVERED) INSURANCE INDEX PROPERTY/CASUALTY
COMPANIES
<S> <C> <C> <C>
7/1/92 100.00
1992 106.94 118.21 124.25
1993 134.72 140.57 122.92
1994 166.66 137.78 123.70
1995 165.27 176.96 164.05
1996 219.43 204.96 182.38
</TABLE>
Assumes $100 invested at the close of trading July 1, 1992 in Acceptance
Insurance Companies common stock, Russell 2000 Index, and Insurance:
Property/Casualty
* Cumulative total return assumes reinvestment of dividends.
Source: Value Line, Inc.
Factual material is obtained from sources believed to be reliable, but the
publisher is not responsible for any errors or omissions contained herein.
14
<PAGE> 17
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN*
Acceptance Insurance Companies, Russell 2000 Index
and Value Line Food Processors: Small Cap. Index
(Performance Results Through June 30, 1992)
<TABLE>
<CAPTION>
MEASUREMENT PERIOD ACCEPTANCE RUSSELL 2000 FOOD
(FISCAL YEAR COVERED) INSURANCE INDEX PROCESSORS:
COMPANIES SMALL CAP .
<S> <C> <C> <C>
1991 100.00 100.00 100.00
6/30/92 106.93 100.17 87.47
</TABLE>
Assumes $100 invested at the close of trading December 31, 1991 in Acceptance
Insurance Companies common stock, Russell 2000 Index, and Food Processors: Small
Cap.
* Cumulative total return assumes reinvestment of dividends.
Source: Value Line, Inc.
Factual material is obtained from sources believed to be reliable, but the
publisher is not responsible for any errors or omissions contained herein.
15
<PAGE> 18
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Based upon the Company's review of Forms 3, 4 and 5, and amendments
thereto, furnished during or with respect to the Company's 1996 fiscal year, and
separate written representations, no persons subject to Section 16 of the
Securities Exchange Act of 1934, as amended, ("Exchange Act") with respect to
the Company, failed to file on a timely basis reports required by Section 16(a)
of the Exchange Act during the Company's 1996 fiscal year or prior fiscal years.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Doug T. Valassis, a director of the Company, is the son of George F.
Valassis, a principal shareholder of the Company, and is President and Chief
Operating Officer and a director of Franklin Enterprises, Inc. ("Franklin").
Franklin is a general partner of Valassis Enterprises, L.P., another principal
shareholder of the Company. Edward W. Elliott, Jr., a director of the Company,
is Vice Chairman and Chief Financial Officer and a director of Franklin. Messrs.
Doug T. Valassis and Edward W. Elliott, Jr., are co-trustees of an irrevocable
family trust ("Valassis Children's Trust") established by George F. Valassis.
Under the terms of the governing trust instrument, at any time while Mr. Elliott
is co-trustee, he may acquire any and all assets held in the trust by
substituting other assets of equivalent value. Doug T. Valassis also is a
one-third beneficiaries of the Valassis Children's Trust, and beneficiary of
another family trust established by George F. Valassis.
During the fiscal year ended December 31, 1996, the Company employed
McCarthy & Co., d/b/a/ Long View Capital Management, a wholly-owned subsidiary
of McCarthy Group, Inc., to furnish investment advisory services to the Company
and paid McCarthy & Co., approximately $298,000 for such services. Michael R.
McCarthy, a director of the Company, is Chairman and the controlling shareholder
of McCarthy Group, Inc. Effective March 15, 1996, McCarthy Group, Inc., acquired
an aggregate of 726,301 shares of the Company's Common Stock from a group of
unrelated shareholders in an exchange offer for shares of common stock of
McCarthy Group, Inc.
The Company beneficially owns 33.1% of the common stock of Major Realty
Corporation ("Major Realty"). Messrs. Bielfield, Coon, McCarthy & Treadwell are
directors of both the Company and Major Realty. George F. Valassis, beneficial
owner of approximately 13% of the Company's common stock, owns beneficially
approximately 9.8% of the Major Realty common stock. Mr. Valassis is the father
of Doug T. Valassis, a director of the Company. In October 1995, the Company
loaned $5,100,000 to Major Realty, collateralized by real estate, and bearing
interest at prime plus 1.5%. In April 1997, the Company and Major Realty agreed
to restate the loan into a new note, bearing interest at prime plus 2.5%; added
to principal in the new note was accrued and unpaid interest of $386,584,
bringing the new note amount to $5,450,728.
The Company contracts with Redland & Associates, Inc. and its affiliates to
administer health insurance benefits for its employees and to place property and
casualty coverage on behalf of the Company whereby Redland & Associates receives
commissions from the insurance providers, which totalled $237,000 in 1996. In
addition, the Company pays commissions and fees to Redland & Associates in
connection with insurance written and loss control activities, which totalled
$186,000 in 1996. Redland & Associates reimburses the Company for an allocable
share of certain office occupancy expenses, in the sum of $174,000 in 1996. John
P. Nelson, President and Chief Operating Officer, and a Director of the Company,
is Chairman of the Board and a principal shareholder of Redland & Associates.
By virtue of the foregoing positions, relationships and interests, the
persons named above may have an indirect material interest in transactions and
business relationships between the Company and its subsidiaries and such persons
or their affiliates.
16
<PAGE> 19
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
PRINCIPAL SHAREHOLDERS
The following table provides information as of April 22, 1997, with respect
to beneficial ownership of the Common Stock by each person known by the Company
to be the beneficial owner of more than 5% of the outstanding Common Stock.
<TABLE>
<CAPTION>
SOLE OWNERSHIP SHARED OWNERSHIP TOTAL OWNERSHIP
-------------------------- -------------------------- -----------------------
NAME OF NUMBER OF PERCENT NUMBER OF PERCENT NUMBER OF PERCENT
BENEFICIAL OWNER SHARES(1) OF CLASS(2) SHARES(1) OF CLASS(2) SHARES(1) OF CLASS(2)
---------------- --------- ----------- --------- ----------- --------- -----------
<S> <C> <C> <C> <C> <C> <C>
Doug T. Valassis(3)................. 10,545(4) * 1,974,875(5) 12.9% 1,985,420 13.0%
George F. Valassis
Valassis Enterprises, L.P.
Franklin Enterprises, Inc.
1400 N. Woodward Avenue
Suite 270
Bloomfield Hills, MI 48304
Oak Value Capital................... 1,540,218 10.1% -- * 1,540,218 10.1%
Management, Inc.(6)
3100 Tower Blvd., Suite 800
Durham, NC 27707
Alliance Capital Management
L.P.(7)........................... -- * 1,242,549 8.1% 1,242,549 8.1%
The Equitable Companies Incorporated
787 Seventh Avenue
New York, New York 10019
FMR Corp.(8)........................ 1,014,000 6.6% -- * 1,014,000 6.6%
82 Devonshire Street
Boston, MA 02109-3614
John P. Nelson...................... 318,358(9) 2.0% 550,368(10) 3.6% 868,726 5.7%
Acceptance Insurance Companies Inc.
Suite 600 North
222 South 15th Street
Omaha, NE 68102
Neumeier Investment Counsel(11)..... 832,300 5.4% -- * 832,300 5.4%
26435 Carmel Rancho Blvd.
Carmel, CA 93923
McCarthy Group, Inc. ............... 742,628 4.9% 82,018(12) * 824,646 5.4%
Suite 450, One Pacific Place
1125 South 103rd Street
Omaha, NE 68124
</TABLE>
- -------------------------
* Less than one percent.
(1) The column sets forth shares of Common Stock which are deemed to be
"beneficially owned" pursuant to Rule 13d-3 under the Securities Exchange
Act of 1934, as amended.
(2) For purposes of calculating the percentage of Common Stock beneficially
owned by any beneficial owner, but only as to such owner, the shares of
Common Stock issuable to such person under stock options or warrants
exercisable within 60 days are considered outstanding and added to the
shares of Common Stock actually outstanding.
(3) Based upon a Schedule 13D dated April 5, 1997 filed with the Securities and
Exchange Commission jointly by George F. Valassis, Doug T. Valassis,
Valassis Enterprise, L.P. and Franklin Enterprises, Inc.
17
<PAGE> 20
(4) Doug T. Valassis directly owns 4,545 shares of Common Stock, and
immediately exercisable options to purchase 6,000 shares of Common Stock.
(5) Includes 1,325,327 shares of Common Stock held by Valassis Enterprises,
L.P., of which the general partners are George F. Valassis, individually,
and Franklin Enterprises, Inc., of which George F. Valassis is the sole
shareholder and Chairman of the Board and Doug T. Valassis is the President
and Chief Operating Officer; 649,548 shares of Common Stock held pursuant
to three trusts for which Doug T. Valassis acts as beneficiary and
co-trustee. Excludes 55,957 shares of Common Stock held by George F.
Valassis' spouse, over which he has no voting or dispositive power and as
to which he disclaims beneficial ownership.
(6) Based on a Schedule 13G dated February 7, 1997, filed with the Securities
and Exchange Commission on behalf of Oak Value Capital Management, Inc. Oak
Value Capital Management, Inc. is an investment advisor registered under
Section 203 of the Investment Advisors Act of 1940.
(7) Based on a Schedule 13G dated February 12, 1997, filed with the Securities
and Exchange Commission on behalf of a "group" (as that term is used in
Section 13(d)(3) of the Securities Exchange Act of 1934) comprised of: (i)
Alpha Assurances I.A.R.D. Mutuelle, Alpha Assurances Vie Mutuelle, AXA
Assurances Vie Mutuelle, and AXA Courtage Assurance Mutuelle, (the
"Mutuelle Group"); (ii) AXA, a majority interest of which is owned by the
Mutuelle Group; and (iii) The Equitables Companies Incorporated, a majority
interest of which is owned by AXA. Alliance Capital Management L.P, an
investment advisor registered under Section 203 of the Investment Advisors
Act of 1940, is a subsidiary of the Equitable Companies Incorporated.
(8) Based on a Schedule 13G dated February 14, 1997, filed with the Securities
and Exchange Commission on behalf of FMR Corp. FMR Corp. is an investment
advisor registered under Section 203 of the Investment Advisors Act of 1940
and, because of a voting agreement may be considered to be controlled by
Edward C. Johnson 3d, Chairman of FMR Corp. and members of his family.
(9) John P. Nelson directly owns 303,358 shares of Common Stock, and
immediately exercisable options to purchase 15,000 shares of Common Stock.
(10) Includes 117,540 shares of Common Stock held by a family corporation
controlled by Mr. Nelson, 4,500 shares of Common Stock held by Mr. Nelson's
wife, 109,000 shares of Common Stock held by Mr. Nelson's children and two
corporations controlled by Mr. Nelson and his children, and 319,328 shares
controlled by Mr. Nelson through revocable proxies.
(11) Based on a Schedule 13G dated January 30, 1997, filed with the Securities
and Exchange Commission on behalf of Neumeier Investment Counsel. Neumeier
Investment Counsel is an investment advisor registered under Section 203 of
the Investment Advisors Act of 1940.
(12) Based on a Schedule 13D dated March 15, 1996, filed with the Securities and
Exchange Commission by McCarthy Group, Inc. Includes 77,138 shares of
Common Stock owned by McCarthy & Co., 4,080 share of Common Stock owned by
McCarthy & Co.'s 401(k) Plan, and 800 shares of Common Stock managed by
McCarthy & Co. d/b/a Long View Capital Management, an investment advisor
registered under Section 203 of the Investment Advisors Act of 1940.
McCarthy & Co. is a wholly owned subsidiary of McCarthy Group, Inc. Michael
R. McCarthy, the Chairman, Chief Executive Officer and a director of
McCarthy Group, Inc., also currently is a director of the Company and a
nominee for director.
18
<PAGE> 21
MANAGEMENT
The following table provides information as of April 22, 1995, with respect
to beneficial ownership of the Common Stock by each director and named executive
officer of the Company, individually, and by all directors and executive
officers of the Company as a group.
<TABLE>
<CAPTION>
COMMON STOCK
-----------------------------------
NUMBER OF SHARES PERCENT OF
BENEFICIALLY OWNED(1) CLASS(2)
--------------------- ----------
<S> <C> <C>
Jay A. Bielfield(3)......................................... 17,750 *
Kenneth C. Coon(4).......................................... 276,927 1.8%
Edward W. Elliott, Jr.(5)................................... 657,548 4.3%
Richard C. Gibson........................................... 289,927 1.9%
Robert LeBuhn(6)............................................ 8,000 *
Michael R. McCarthy(7)...................................... 6,000 *
John P. Nelson(8)........................................... 868,726 5.7%
R. L. Richards(9)........................................... 58,734 *
Bruce Slaughter............................................. -- *
Thomas D. Stamm(10)......................................... 15,804 *
David L. Treadwell(11)...................................... 6,200 *
Doug T. Valassis(12)........................................ 1,985,420 13.0%
--------- ----
All directors and officers as a group (25 persons).......... 3,712,935 23.7%
========= ====
</TABLE>
- -------------------------
* Less than one percent.
(1) The column sets forth shares of Common Stock which are deemed to be
"beneficially owned" pursuant to Rule 13d-3 under the Securities Exchange
Act of 1934, as amended. Each of the persons in the table has sole voting
and investment power with respect to all shares beneficially owned by him
or her, except as described in the following footnotes.
(2) For purposes of calculating the percentage of Common Stock beneficially
owned by any beneficial owner, but only as to such owner, the shares of
Common Stock issuable to such person under stock options or warrants
exercisable within 60 days are considered outstanding and added to the
shares of Common Stock actually outstanding.
(3) Includes 2,500 shares owned by Mr. Bielfield's spouse and immediately
exercisable options to purchase 6,000 shares of Common Stock.
(4) Includes 1,216 shares of Common Stock owned by Mr. Coon's spouse, 9,631
shares of Common Stock held for Mr. Coon's account by the trustee of the
Employee Stock Ownership and Tax Deferred Savings Plan ("KSOP"), 1,717
shares of Common Stock held for Mrs. Coon's account by the trustee of the
KSOP, and immediately exercisable options to purchase 154,146 shares of
Common Stock.
(5) Includes 649,548 shares of Common Stock held in various trusts for which
the shareholder acts as a beneficiary, co-trustee or both, and immediately
exercisable options to purchase 6,000 shares of Common Stock.
(6) Includes immediately exercisable options to purchase 6,000 shares of Common
Stock.
(7) Includes immediately exercisable options to purchase 6,000 shares of Common
Stock. See also Note (12) under "Security Ownership of Certain Beneficial
Owners and Management -- Principal Shareholders."
(8) See Notes (9) and (10) under "Security Ownership of Certain Beneficial
Owners and Management -- Principal Shareholders."
(9) Includes immediately exercisable options to purchase 6,000 shares of Common
Stock.
(10) Includes immediately exercisable options to purchase 2,500 shares of Common
Stock.
19
<PAGE> 22
(11) Includes immediately exercisable options to purchase 6,000 shares of Common
Stock.
(12) See Notes (4) and (5) under "Security Ownership of Certain Beneficial
Owners and Management -- Principal Shareholders."
IV. APPROVAL OF 1997 EMPLOYEE STOCK PURCHASE PLAN
At the Annual Meeting, shareholders will be asked to approve the 1997
Employee Stock Purchase Plan ("ESPP"). The ESPP was originally adopted by
shareholders in 1992, and, except for the following information, the terms of
the Plan have not been materially changed. The Plan is designed to encourage
employees of the Company at all levels to become shareholders of the Company to
provide them added incentive to remain employed by the Company and to contribute
to the Company's success. A copy of the ESPP is attached as Annex A.
The ESPP provides for purchase of shares of Common Stock by employees in
phases of six month duration, during which they may subscribe for the purchase
of Common Stock for 85% of its fair market value. The number of shares available
under the ESPP remains at 500,000, less those that have already been subscribed
for under the Plan since 1992. Employees are permitted to purchase not more than
$25,000 in value annually of the Common Stock offered under the ESPP and payment
may be made at the time that the shares are subscribed, at the end of the
subscription period, or, at the employee's option, through payroll deductions.
Employees may cancel subscriptions prior to the end of each six month phase and
receive a refund of any money paid in under the Plan.
The ESPP is designed to qualify for favorable tax treatment to participants
under Section 423 and related Sections of the Internal Revenue Code. Under the
Code employees are not taxed when they receive the Common Stock, only when they
sell the Common Stock, in the amount of any gain realized.
The ESPP was amended at the Annual Meeting of Shareholders in 1994 because
of the adoption of then new regulations under Section 16 of the Securities and
Exchange Act of 1934, as amended. The 1994 amendments tended to limit the
participation in the ESPP by those employees of the Company who are subject to
the Section 16 reporting requirements. The Securities and Exchange Commission
has again amended the Section 16 regulations, essentially to remove from the
application of Section 16 transactions between an employee and the Company, for
the reason that such transactions do not involve trading with the public.
Because of the new Section 16 regulations, the Board of Directors has
recommended to shareholders an amendment to the Plan eliminating certain
provisions added to the Plan in 1994. These amendments remove from the ESPP
provisions which require Section 16 reporting employees to not participate in
the Plan for a six month period if such employee has enrolled in the Plan but
has canceled his or her subscription, and other provisions which limit
participation by Section 16 reporting persons. The Board of Directors believes
that the ESPP should be available for all eligible employees of the Company and
recommends adoption of the 1997 ESPP, amended as described above.
20
<PAGE> 23
V. OTHER MATTERS
As of the date of this Proxy Statement, the Board of Directors of the
Company does not know of any matters to be presented at the Annual Meeting other
than those specifically set forth herein. However, if other proper matters
should come before the Annual Meeting, or any adjournment thereof, the persons
named in the enclosed Proxy intend to vote the shares represented by all Proxies
held by them in accordance with their best judgment with respect to any such
matters.
------------------------------
Shareholders are urged to complete, sign and date the enclosed Proxy and
return it as promptly as possible in the envelope enclosed for that purpose. The
Proxy does not affect the right to vote in person at the Annual Meeting.
By Order of the Board of Directors
DONN E. DAVIS Secretary
April 29, 1997
21
<PAGE> 24
ANNEX A
ACCEPTANCE INSURANCE COMPANIES INC.
1997 EMPLOYEE STOCK PURCHASE PLAN
Statement of Employee Stock Purchase Plan, dated December 22, 1992, as
amended May 24, 1994, and May 29, 1997, for Acceptance Insurance Companies Inc.
(the "Company").
Whereas the Board of Director of the Company (the "Board"), deems it in the
best interests of the Company to provide eligible employees who wish to become
shareholders in the Company a convenient method of doing so, and
Whereas the Board believes the Company can best obtain this benefit by
establishing a plan whereby employees may acquire the Company's authorized but
unissued Common Stock directly from the Company and on a payroll deduction
basis, if desired, pursuant to Section 423 and related sections of the Internal
Revenue Code,
Now, therefore, the Board has adopted this Employee Stock Purchase Plan,
effective upon approval by the affirmative vote of the holders of a majority of
all classes of shares of the Company entitled to vote:
1. PURPOSE OF THE PLAN. The purpose of this Plan is to provide
eligible employees who wish to become shareholders in the Company a
convenient method of doing so. The Company wishes to establish a plan
whereby employees may acquire the Company's authorized but unissued Common
Stock directly from the Company and on a payroll deduction basis, if
desired, making it easier for them to acquire such shares. It is felt that
employee participation in the ownership of the business will be to the
mutual benefit of both the employees and to the Company.
2. EMPLOYEES ELIGIBLE TO PARTICIPATE. Any employee of the Company or
any of its subsidiaries who is in the employment of the Company at the
offering date is eligible to participate in the Plan, except (a) employees
who have been employed less than one year, (b) employees whose customary
employment is 20 hours or less per week and (c) employees whose customary
employment is not for more than five months in any calendar year. The work
"employee" shall include officers, but not persons who are solely
directors. Any other employee is eligible to the extent necessary to comply
with Rule 16b-3(d)(2)(i)(A) promulgated under Section 16 of the Securities
and Exchange Act (the "Exchange Act"), which requires that the plan have
broad-based participation and not discriminate in favor of highly
compensated employees.
3. OFFERING DATES. From time to time, the Board of Directors of the
Company may fix a date (hereinafter called the "Offering Date"), on which
the Company will make an offer (hereinafter called an "Offering"), to all
employees then eligible to participate, of an opportunity to purchase
shares. Offerings will be made in one or more phases of six months each,
each phase to start on an Offering Date as the Board of Directors shall
fix, provided that no two phases shall run concurrently. The Board of
Directors may, at its discretion, limit the number of shares available for
purchase during a phase. No phase may be started after termination of the
Plan, but any phase started prior to the Plan's termination may be
completed, even though it runs beyond the Plan's termination date.
Generally, phases commence on January 1, and July 1 of each year. In order
to purchase the shares, an eligible employee must sign a Subscription
Agreement and any other necessary papers between the Offering Date and the
30th day following each Offering Date (or if such 30th day is a Saturday,
Sunday, or legal holiday, then the next succeeding business day).
4. PRICE. The purchase price for stock for participants enrolling in a
phase will be the lower of the amounts determined under the following
paragraphs (a) and (b):
(a) The purchase price shall be equal to 85% of the closing sale
price of the shares on the New York Stock Exchange on the termination
date of the phase, or when the subscription agreement is
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<PAGE> 25
paid in full, whichever first occurs. If there is no sale of the shares
on such date, then the last reported bid price on the Exchange on such
date; or
(b) The purchase price shall be equal to 85% of the mean of the
closing sale price of the shares on the New York Stock Exchange on the
commencement date of a phase, and the closing sale price of the shares
of the New York Stock Exchange on the termination date of the phase, or
when the subscription agreement is paid in full, whichever first occurs.
If there s no sale of the shares of such dates, then the last reported
bid price on the Exchange on such dates.
Notwithstanding the foregoing, in no event may the purchase price be
less than the estimated book value of the Company's common stock as of the
termination date of the phase, as determined in good faith by the Board of
Directors.
5. NUMBER OF SHARES TO BE OFFERED. Shares under this Plan shall
pertain to authorized and unissued Common Stock of the Company, par value
$.40 par value per Share. The total number of Shares available for purchase
under this Plan shall not exceed 500,000 in the aggregate. Appropriate
adjustments in the above figure, in the subscription rate and in the
minimum and maximum number of shares which an employee may purchase shall
be made to give effect to any mergers, consolidations, acquisitions, stock
splits, stock dividends, or other relevant changes in the capitalization
occurring after the effective date of the Plan, provided that no fractional
shares shall be issued under the Plan.
6. LIMITATION ON PARTICIPATION. An eligible employee may not elect to
contribute to the Plan, whether by payroll deduction or by special
purchase, more than 10% of such eligible employee's compensation for the
calendar year. In addition, an eligible employee may not elect to make such
contributions to the Plan with would permit more than $25,000.00 of common
stock to be purchased for his or her account in any calendar year. For this
purpose, the fair market value of the Company's Common Stock shall be
determined at the time of the Offering Date.
7. METHOD OF PAYMENT. Payment may be made in cash at the time the
shares are subscribed for, or, at the employee's option, through payroll
deductions over a period of not more than 50 weeks at a rate of not less
than 2% nor more than 15% of compensation before deductions.
8. TRUSTEE'S CONTROL OVER EMPLOYEE'S FUNDS AND SHARE ISSUANCE. The
Board of Directors of the Company shall select a financial institution as
Trustee under the Plan, both to handle all money paid in by employees and
to obtain and deliver the shares. Stock certificates will be issued, under
the Trustee's direction, as soon as practicable after the total purchase
price has been paid by the employee, whether in cash or through payroll
deduction.
9. CANCELLATION OF PARTICIPATION IN PLAN. Each participating employee
shall have the right to cancel his or her subscription at any time prior to
payment in full for the shares for which he or she has subscribed by giving
the Company written notice thereof, whereupon he or she will be refunded
all money he or she has paid in. Should any installment be due and unpaid
for 15 days without satisfactory arrangement for the payment thereof being
made within such 15-day period, the Subscription Agreement shall thereby be
automatically canceled and the money previously paid refunded to the
employee.
10. EMPLOYEES RIGHTS AS SHAREHOLDERS. No participating employee shall
have any rights as a shareholder until full payment has been made for the
shares he or she has subscribed for and a stock certificate actually
issued.
11. INTEREST. Interest shall accrue on funds held by the Trustee
through payroll deductions at a rate to be determined by the Trustee, which
shall be the same rate paid by the Trustee for other similar accounts held
by it in trust.
12. RIGHTS NOT TRANSFERABLE. Except as hereinafter set forth and
unless otherwise provided by law, no participating employee shall have the
right to sell, assign, transfer, pledge, or otherwise dispose of or
otherwise encumber his or her right to participate in the Plan or his or
her interest in the fund accumulated for his or her benefit, and such right
and interest shall not be liable for or subject to the debts, contracts, or
liabilities of such employee. If any such action is taken by the employee
or any claim
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<PAGE> 26
asserted by another party in respect to such right and interest, such
action or claim will be treated as notice of cancellation, and except as
may otherwise be required by law, refund will be made to such employee as
provided in paragraph 9. Upon the death of a participating employee, his or
her estate shall have the right, for a period of 60 days from the date of
his or her death, to pay the entire balance due and receive the shares
subscribed for.
13. TERMINATION OF EMPLOYMENT. Upon termination of employment for any
reason whatsoever, including, but not limited to, death or retirement, the
participating employee or his or her estate may elect within 60 days after
the happening of such event to pay the entire balance due and receive the
shares subscribed for. The failure to make such election within such period
will be treated as a notice of cancellation and, except as may otherwise be
required by law, refund will be made to such employee or his or her estate
as provided in paragraph 9.
14. AMENDMENT OR DISCONTINUANCE OF THE PLAN. The Board of Directors of
the Company shall have the right to amend, modify or terminate the Plan at
any time without notice, provided that no employee's existing rights are
adversely affected thereby, and provided further than no such amendment of
the Plan, shall, except as provided in paragraph 5, (a) increase the above
500,000 total number of shares available to be offered; (b) change the
formula by which the price at which the share shall be sold shall be
determined; and (c) increase the maximum number of shares which an eligible
employee can purchase.
15. SHARE OWNERSHIP. Notwithstanding anything herein to the contrary,
no employee shall be permitted to subscribe for any shares under the Plan
if such employee, immediately after such subscription owns shares
(including all shares which may be purchased under outstanding
subscriptions under the Plan) possessing 5% or more of the total combined
voting power or value of all classes of shares of the Company or of its
parent or subsidiary corporations. For the foregoing purposes the rules of
the Company or of its parent or subsidiary corporations. For the foregoing
purposes the rules of Section 423(b)(3) of the Internal Revenue Code of
1986 shall apply in determining share ownership.
16. EXERCISE OF SUBSCRIPTION AGREEMENT. An employee continues as a
participant during an entire phase, and at the end of a phase, the employee
may choose among three alternatives:
(a) Exercise his or her subscription to buy all the shares of
Common Stock for which the employee has subscribed and for which he or
she has sufficient accumulated deductions, and receive any balance in
the employee's account in cash; or
(b) exercise part of his or her subscription to buy shares of
Common Stock, and receive the balance of the employee's account in cash;
or
(c) not exercise any part of his or her subscription to buy shares
of Common Stock, and receive all of the employee's account in cash.
In the even that the employee as a participant takes no action to
notify the Company of his or her intention not to exercise the employee's
Subscription Agreement or to exercise only part of it, the participant's
subscription to purchase shares will be exercised in its entirety for the
employee on the termination date of the phase. Any cash balance in his or
her account after such exercise will be refunded to the employee.
17. ADMINISTRATION. The Plan is administered by the Board, or, if the
Board so directs, by the Compensation Committee of the Company's Board,
which shall be composed entirely of persons who are not eligible to
participate in the Plan. The Board or the Compensation Committee, as the
case may be, has the power to interpret and administer the Plan and to make
all decisions on questions which may arise concerning the Plan. The Board's
or the Compensation Committee's determinations shall be made in accordance
with its judgment as to the best interests of the Company and its
shareholders, and in accordance with the purposes of the Plan.
Determinations of the Board or Compensation Committee shall be binding and
conclusive with respect to the Company and participants. The Company does
not intend to charge any participant a service or other fee in connection
with the administration of the Plan,
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<PAGE> 27
regardless of whether the participant withdraws from a phase or exercises
all or a portion of the subscription agreed to by the participant for a
phase.
18. SECURITIES LAWS. Anything to the contrary herein notwithstanding,
the Company's obligation to deliver stock pursuant to Subscription
Agreement is subject to compliance with federal and state securities laws,
rules and regulations applying to the authorization, issuance or sale of
securities, and applicable stock exchange requirements, as the Company
deems necessary or advisable. The company shall not be required to sell or
deliver stock pursuant hereto unless and until it receives satisfactory
assurance that the issuance or transfer of such shares will not violate any
of the provisions of the Securities Act of 1933 or the Exchange Act or the
rules and regulations of the Securities and Exchange Commission promulgated
thereunder, or the rules and regulations of any stock exchange on which the
securities are traded, or the provision of any state securities law, or
that there has been compliance with the provisions of such act, rules,
regulations and state laws.
With respect to persons subject to Section 16 of the Exchange Act,
transactions under this Plan are intended to comply with all applicable
conditions of Rule 16b-3 or its successors under the Exchange Act. To the
extent any provision of the Plan or action by the plan administrators fails
to comply, it shall be deemed null and void, to the extent permitted by law
and deemed advisable by the Plan administrators.
IN WITNESS WHEREOF, this Employee Stock Purchase Plan has been approved by
the Board of Directors of Acceptance Insurance Companies Inc., and is hereby
made effective as of the 29th day of May, 1997.
ACCEPTANCE INSURANCE COMPANIES INC.
By
--------------------------------------
KENNETH C. COON,
Chairman and Chief Executive Officer
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<PAGE> 28
PROXY
ACCEPTANCE INSURANCE COMPANIES INC.
ANNUAL MEETING OF SHAREHOLDERS
MAY 29, 1997
The undersigned, a shareholder of Acceptance Insurance Companies Inc. (the
"Company"), hereby appoints Kenneth C. Coon and Donn E. Davis, and each of
them, attorneys, agents and proxies, with full power of substitutions to each,
for and in the name of the undersigned to vote, as designated below, all shares
of Common Stock of the Company which the undersigned would be entitled to vote
at the Annual Meeting of Shareholders of the Company to be held at the Marriott
Hotel, 10220 Regency Circle, Omaha, Nebraska, on May 29, 1997, at 10:00 a.m.,
Local Time, and at any adjournments thereof.
<TABLE>
<S><C>
ELECTION OF DIRECTORS, Nominees: (change of address)
--------------------------------------------------------
Jay A. Bielfield, Kenneth C. Coon, Edward W. Elliott, Jr.,
--------------------------------------------------------
Robert LeBuhn, Michael R. McCarthy, John P. Nelson,
--------------------------------------------------------
R.L. Richards, David L. Treadwell, Doug T. Valassis
--------------------------------------------------------
(if you have written in the above space, please mark the
corresponding box on the reverse side of this card.)
</TABLE>
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. NONE OF THE MATTERS INTENDED TO
BE ACTED UPON BY THIS PROXY ARE RELATED TO OR CONDITIONED UPON APPROVAL OF OTHER
MATTERS.
THE PROXIES CANNOT VOTE YOUR SHARES UNLESS YOU SIGN AND RETURN THIS CARD.
____________________
/ See Reverse Side /
____________________
<PAGE> 29
<TABLE>
<S><C>
/X/ PLEASE MARK YOUR VOTES AS IN THIS EXAMPLE. SHARES IN YOUR NAME
FOR WITHHELD FOR WITHHELD ABSTAIN
1. Elections of / / / / 2. Approval of 1997 / / / / / /
Directors Employee Stock
(see reverse) Purchase Plan
For, except vote withheld from the following nominee(s): 3. Ratification of / / / / / /
- ------------------------------------------------------- appointment of
Deloitte & Touche
LLP as the Company's
Principal Independent
Public Accountants
CHANGE OF ADDRESS / /
</TABLE>
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS AND, WHEN
PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY THE
UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR
THE ELECTION OF THE NOMINEES FOR DIRECTORS NAMED HEREIN AND FOR ALL OTHER
PROPOSALS SUBMITTED TO THE SHAREHOLDERS IN THIS PROXY. THE BOARD OF DIRECTORS
UNANIMOUSLY RECOMMENDS A VOTE FOR THE ELECTION OF ALL NOMINEES FOR DIRECTOR AND
FOR ALL OTHER PROPOSALS SUBMITTED TO THE SHAREHOLDERS IN THIS PROXY. IN THEIR
DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH OTHER BUSINESS AS MAY
PROPERLY COME BEFORE THE MEETING, INCLUDING THE ELECTION OF ANY PERSON TO THE
BOARD OF DIRECTORS WHERE A NOMINEE NAMED IN THE PROXY STATEMENT IS UNABLE TO
SERVE, OR, FOR GOOD CAUSE, WILL NOT SERVE.
The undersigned acknowledges receipt of the Notice of Annual Meeting of
Shareholders and the Proxy Statement dated April 29, 1997 and ratifies all that
the proxies or any of them or their substitutes may lawfully do or cause to be
done by virtue hereof and revokes all former proxies.
PLEASE MARK, SIGN, DATE AND
RETURN THIS PROXY CARD PROMPTLY
USING THE ENCLOSED ENVELOPE.
SHAREHOLDERS SHOULD NOT SEND
ANY STOCK CERTIFICATES WITH
THEIR PROXY CARDS.
SIGNATURES(S)________________________________________ DATE ____________________
SIGNATURES(S)________________________________________ DATE ____________________
Joint Owner, if any
NOTE: Please sign exactly as the name appears hereon. Joint owners
should each sign. When signing as attorney, executor, administrator,
trustee or guardian, please give full title as such.
