<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)(1) and
0-11.
1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee
is calculated and state how it was determined):
- --------------------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
5) Total fee paid:
- --------------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
- --------------------------------------------------------------------------------
2) Form, Schedule or Registration Statement No.:
- --------------------------------------------------------------------------------
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 28, 1998
To Shareholders:
Please take notice that the Annual Meeting of Shareholders of Acceptance
Insurance Companies Inc. (the "Company") will be held at the Doubletree Hotel,
1616 Dodge Street, Omaha, Nebraska, on May 28, 1998, 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 1999 or until the election and qualification of their successors;
(2) The ratification of the appointment of Deloitte & Touche LLP as the
Company's principal independent accountants; and
(3) 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, 1998,
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 30, 1998
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 30, 1997
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 28, 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 28, 1998,
at the Doubletree Hotel, 1616 Dodge Street, 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 30, 1998.
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, 1998 (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
15,240,346 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 1999 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 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 4,020,992 shares of Common Stock, approximately 26% of the total
outstanding shares, and have advised the Company that they intend to vote FOR
the election of the Director nominees 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, 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 3, 1999, 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 1999 or until the election and qualification of their
successors; and (2) the ratification for Deloitte & Touche LLP as principal
independent public accountants for the Company for 1998.
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 1999 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), 52................... 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), 47.................... 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), 54.......... 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), 65...................... 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., and Enzon, Inc.
Michael R. McCarthy(2)(4), 46............. 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), 57..................... 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), 49..................... 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. Mr. Richards also serves as a
director of United Magazine Company.
David L. Treadwell(3), 43................. 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 Prechter
Holdings, Inc., which is responsible for a portfolio of
investments, including operating businesses in
automotive supply, newspaper publishing, real estate
development and residential construction.
Doug T. Valassis(3), 45................... 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 -- RATIFY APPOINTMENT OF INDEPENDENT
PUBLIC ACCOUNTANTS
The Board of Directors has appointed Deloitte & Touche LLP as independent
public accountants for the Company for 1998. The appointment of independent
pubic 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.
III. INFORMATION ABOUT THE COMPANY, DIRECTORS AND
EXECUTIVE OFFICERS
MEETINGS OF THE BOARD OF DIRECTORS AND COMMITTEES THEREOF
The Board of Directors met five times in 1997. All of the nominees for
director served on the Board of Directors throughout 1997. There are four
committees of the Board, an Executive Committee, an Audit Committee, a
Nominating Committee and a Compensation Committee.
4
<PAGE> 7
The Executive Committee may exercise certain limited powers of the Board of
Directors. It met twice in 1997. 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 1997. 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 did not meet formally in 1997. The
Nominating Committee recommends director nominees to the Board of Directors. The
Nominating Committee did not meet formally in 1997. The Nominating Committee
intends to recommend nominees to the Board based solely upon the deliberations
of the Nominating Committee.
During 1997, 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.
Mr. Treadwell is Chairman and Chief Executive Officer and a director, of
Major Realty Corporation ("Major Realty"). Mr. Treadwell is employed on a
month-to-month basis under an Employee Lease Agreement with Mr. Treadwell's
primary employer, Prechter Holdings, Inc. 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 Prechter Holdings,
Inc., $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 a success fee of .5% with respect to transactions
consummated during the term of the Agreement and for transactions contracted for
which are closed within a specified period of time after termination of the
Agreement up to a maximum of $75,000. 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.
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 1997. Major Realty does not have a compensation
committee, and compensation issues are determined by its Board of Directors.
5
<PAGE> 8
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, 1997. Executive officers normally are
appointed annually by the Board of Directors and serve at the pleasure of the
Board.
Kenneth C. Coon, 47........ 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, 57......... 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, 52....... 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, 44.......... 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, 40...... 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.
Richard C. Gibson, 62...... 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, 56........ 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.
6
<PAGE> 9
Karl Heinz-Lenk, 58........ Vice President, Information Systems, for the
Company since May, 1996. Mr. Heinz-Lenk was
employed by Unisys Corporation for 15 years prior
to joining the Company.
Peter A. Knolla, 51........ 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, 48........ 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, 67......... 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, 39....... 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, 50..... 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, 61..... 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, 43........ 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.
Thomas D. Stamm, 51........ 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, 45........ 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.
7
<PAGE> 10
COMPENSATION OF EXECUTIVE OFFICERS
The following table sets forth for each of the three years ended December
31, 1997, 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................. 1997 $274,374 $414,283 $ -- -- $372,938(4)
Chairman, Chief Executive 1996 275,875 166,163 120,663 280,000 24,602(5)
Officer and Director 1995 270,000 183,163 166,163 70,000 8,696(5)
John P. Nelson.................. 1997 252,088 285,885 -- -- 26,899
President, Chief Operating 1996 253,750 94,160 83,160 220,000 17,396
Officer and Director 1995 247,500 94,160 94,160 30,000 --
Richard C. Gibson............... 1997 209,463 158,601 -- -- 11,521
Chairman and Chief Executive 1996 203,850 87,400 23,400 70,000 --
Officer, American 1995 199,388 23,400 23,400 10,000 --
Agrisurance, Inc.
George T. Bolton................ 1997 190,478 46,800 -- -- 11,864
Sr. Vice President 1996 142,695 -- -- 25,000 7,135
Claims, Acceptance 1995 -- -- -- -- --
Insurance Company
Kim Gibson...................... 1997 139,750 98,467 -- -- 9,020
President and Chief 1996 130,000 52,667 12,667 70,000 9,133
Operating Officer, American 1995 100,000 12,667 12,667 -- --
Agrisurance, Inc.
</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 $300,957 paid to Mr. Coon for the income tax benefit received by
the Company for its recognition of compensation to him in connection with
the exercise of non-qualified stock options.
(5) Includes $2,500 paid to Mr. Coon in 1996, and $5,000 in 1995, as director
fees by Major Realty Corporation, the 33.1% subsidiary of the Company.
8
<PAGE> 11
STOCK OPTIONS AND STOCK APPRECIATION RIGHTS
The Company did not grant any stock options or stock appreciation rights to
key employees in the year ended December 31, 1997.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
SHARES
ACQUIRED NUMBER OF SECURITIES VALUE OF UNEXERCISED*
ON VALUE UNDERLYING UNEXERCISED IN-THE-MONEY
EXERCISE REALIZED OPTIONS AT FY-END (#) OPTIONS AT FY-END ($)
NAME (#) ($) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
---- -------- -------- ------------------------- -------------------------
<S> <C> <C> <C> <C>
Kenneth C. Coon.................... 56,646 809,273 153,500 Exercisable Options $1,457,105
Chairman, Chief Executive Officer 271,500 Unexercisable Options 585,431
John P. Nelson..................... None N/A 59,000 Exercisable Options 343,027
President, Chief Operating
Officer 191,000 Unexercisable Options 213,051
Richard C. Gibson.................. None N/A 14,000 Exercisable Options 62,909
Executive Vice President, 56,000 Unexercisable Options 21,553
The Redland Group, Inc.
Kim Gibson......................... None N/A 19,000 Exercisable Options 111,347
President and 61,000 Unexercisable Options 69,991
Chief Operating Officer,
American Agrisurance Company
George T. Bolton................... None N/A 5,000 Exercisable Options 22,468
Senior Vice President -- 20,000 Unexercisable Options 7,698
Claims, 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, 1997.
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.
9
<PAGE> 12
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 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 (70% for the Chief Executive Officer), while
individual goals are weighted more heavily for executives and key
employees at the staff and division levels.
(c) 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.
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.
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.
10
<PAGE> 13
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, 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 1997, based upon the foregoing
criteria applied to the 1996 year, the Board of Directors awarded the Chief
Executive Officer a cash bonus in the amount of $414,283 and did not increase
his salary.
Members of the Compensation Committee are:
Robert LeBuhn, Chairman
David L. Treadwell
Doug T. Valassis
11
<PAGE> 14
STOCK PERFORMANCE GRAPHS
The following graph compares the performance of the Company's Common Stock
over the last five years to the Value Line Property and Casualty Insurance Group
and the Russell 2000 Index.
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, 1997)
<TABLE>
<CAPTION>
Russell 2000 Insurance: Prop-
Acceptance Insurance Companies Index erty/Casualty
<S> <C> <C>
100.00
125.97 118.91 102.18
155.84 116.55 101.16
154.55 149.70 142.15
205.19 174.30 181.74
251.30 213.00 280.29
</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.
12
<PAGE> 15
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 1997 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 1997 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, 1997, the Company employed
McCarthy Group Asset Management, a wholly-owned subsidiary of McCarthy Group,
Inc., to furnish investment advisory services to the Company and paid
approximately $364,329 for such services. Michael R. McCarthy, a director of the
Company, is Chairman and the controlling shareholder 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., to administer health
insurance benefits for its employees and to place property and casualty coverage
on behalf of the Company whereby Redland & Associates, Inc., receives
commissions from the insurance providers, which totalled $321,000 in 1997. In
addition, the Company pays commissions and fees to Redland & Associates, Inc.,
in connection with insurance written and loss control activities, which totalled
$181,000 in 1997. Redland & Associates, Inc., reimburses the Company for an
allocable share of certain office occupancy expenses in the sum of $36,000 in
1997. 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, Inc.
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.
13
<PAGE> 16
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
PRINCIPLE SHAREHOLDERS
The following table provides information as of April 22, 1998, with respect
to beneficial ownership of the Company's 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% 1,985,620 13.0%
George F. Valassis
Valassis Enterprises, L.P.
Franklin Enterprises, Inc.
1400 N. Woodward Avenue
Suite 270
Bloomfield Hills, MI 48304
Alliance Capital Management
L.P.(6)........................... 1,037,826 6.8% 742,570 4.9% 1,037,826 6.8%
The Equitable Companies Incorporated
787 Seventh Avenue
New York, New York 10019
FMR Corp.(7)........................ 854,000 5.6% -- * 854,000 5.6%
82 Devonshire Street
Boston, MA 02109-3614
McCarthy Group, Inc. ............... 7,500 * 824,461 5.5% 836,226(8) 5.5%
Suite 450, One Pacific Place
1125 South 103rd Street
Omaha, NE 68124
John P. Nelson...................... 290,658 1.5% 677,146(9) 4.4% 967,800 5.9%
Acceptance Insurance Companies Inc.
Suite 600 North
222 South 15th Street
Omaha, NE 68102
Neumeier Investment Counsel(10)..... 1,074,400 7.0% -- * 1,074,400 7.0%
26435 Carmel Rancho Blvd.
Carmel, CA 93923
Wanger Asset Management, L.P.(11)... -- * 1,254,400 8.2% 1,254,400 8.2%
227 West Monroe Street
Suite 3000
Chicago, IL 60606
</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.
(4) Doug T. Valassis directly owns 4,545 shares of Common Stock, and
immediately exercisable options to purchase 7,500 shares of Common Stock.
14
<PAGE> 17
(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 10, 1998, 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-UAP, a majority interest of which is owned by
the Mutuelle Group; and (iii) The Equitable Companies Incorporated, a
majority interest of which is owned by AXA-UAP. 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. This group has sole voting power over 152,280 shares of the
Common Stock, sole dispositive power over 885,546 shares of the Common
Stock, shared voting power over 732,735 shares of the Common Stock and
shared dispositive power over 9,535 shares of the Common Stock.
(7) Based on a Schedule 13G dated February 14, 1998, 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.
(8) 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. Includes
immediately exercisable options to purchase 7,500 shares of Common Stock by
Mr. McCarthy.
(9) Includes 117,540 shares of Common Stock held by a family corporation
controlled by Mr. Nelson, 3,700 shares of Common Stock held by Mr. Nelson's
wife, 102,200 shares of Common Stock held by Mr. Nelson's children and two
corporations controlled by Mr. Nelson and his children, 373,705 shares
controlled by Mr. Nelson through revocable proxies, 80,000 shares held by a
family limited partnership, and one share held by the company's Employee
Stock Ownership Plan and immediately exercisable options to purchase 66,500
shares of Common Stock.
(10) Based on a Schedule 13G dated January 30, 1998, 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.
(11) Based on a Schedule 13G dated February 6, 1998, filed with the Securities
and Exchange Commission on behalf of Wanger Asset Management, L.P., an
investment advisor registered under Section 203 of the Investment Advisors
Act of 1940.
15
<PAGE> 18
MANAGEMENT
The following table provides information as of April 22, 1998, 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)......................................... 19,250 *
G. Thomas Bolton(4)......................................... 5,709 *
Kenneth C. Coon(5).......................................... 346,252 2.3%
Edward W. Elliott, Jr.(6)................................... 659,048 4.3%
Kim Gibson(7)............................................... 21,500 *
Richard C. Gibson(8)........................................ 288,635 1.9%
Robert LeBuhn(9)............................................ 9,500 *
Michael R. McCarthy(10)..................................... 836,226 5.5%
John P. Nelson(11).......................................... 967,804 5.9%
R. L. Richards(12).......................................... 60,234 *
David L. Treadwell(13)...................................... 7,700 *
Doug T. Valassis(14)........................................ 1,985,620 13.0%
--------- ----
All directors and officers as a group (21 persons).......... 4,486,662 30.0%
========= ====
</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 7,500 shares of Common Stock.
(4) Includes immediately exercisable option to purchase 5,000 shares of Common
Stock.
(5) Includes 1,216 shares of Common Stock owned by Mr. Coon's spouse, 9,792
shares of Common Stock held for Mr. Coon's account by the trustee of
Company defined benefit plans, 1,224 shares of Common Stock held for Mrs.
Coon's account by the trustee of Company defined benefit plans, and
immediately exercisable options to purchase 158,500 shares of Common Stock.
(6) 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 7,500 shares of Common Stock.
(7) Consists of immediately exercisable options to purchase 21,500 shares of
Common Stock.
(8) Includes immediately exercisable options to purchase 14,000 shares of
Common Stock.
(9) Includes immediately exercisable options to purchase 7,500 shares of Common
Stock.
(10) Includes immediately exercisable options to purchase 7,500 shares of
Common Stock. See also Note (11) under "Security Ownership of Certain
Beneficial Owners and Management -- Principal Shareholders."
16
<PAGE> 19
(11) Includes immediately exercisable options to purchase 66,500 shares of
Common Stock. See Note (9) under "Security Ownership of Certain Beneficial
Owners and Management -- Principal Shareholders."
(12) Includes immediately exercisable options to purchase 7,500 shares of
Common Stock.
(13) Includes immediately exercisable options to purchase 7,500 shares of
Common Stock.
(14) Includes immediately exercisable options to purchase 7,500 shares of
Common Stock. Also see Notes (3), (4) and (5) under "Security Ownership of
Certain Beneficial Owners and Management -- Principal Shareholders."
IV. 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 30, 1998
17
