<PAGE>
================================================================================
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 Section 240.14a-11(c) or Section 240.14a-12
AMWEST INSURANCE GROUP, 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.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
<PAGE>
AMWEST INSURANCE GROUP, INC.
6320 CANOGA AVENUE, SUITE 300
WOODLAND HILLS, CALIFORNIA 91367
----------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 30, 1997
----------------
To the Stockholders of
Amwest Insurance Group, Inc.:
The Annual Meeting of Stockholders of Amwest Insurance Group, Inc. (the
"Company") will be held at its new corporate headquarters, 5230 Las Virgenes
Road, Calabasas, California 91302, on Friday, May 30, 1997, at 2:00 P.M., Los
Angeles time. The purpose of the Annual Meeting is to consider and vote upon
the following matters, as more fully described in the accompanying Proxy
Statement:
(1) To elect three directors to serve three-year terms ending in 2000, or
until their successors are elected and qualified; and
(2) To transact such other business as may properly come before the
meeting or any adjournment or postponement thereof.
The Board of Directors has fixed the close of business on April 18, 1997 as
the record date for the determination of stockholders entitled to receive
notice of and to vote at the Annual Meeting and any adjournment or postponement
thereof. In order to constitute a quorum for the conduct of business at the
Annual Meeting, holders of a majority of all outstanding shares of Common Stock
must be present in person or be represented by proxy.
All stockholders are cordially invited to attend the meeting in person.
However, to assure your representation at the meeting, you are requested to
mark, date, sign and return the enclosed proxy card as promptly as possible in
the envelope provided. Stockholders attending the meeting may vote in person
even if they have returned a proxy.
By Order of the Board of Directors
/s/ Richard H. Savage
Richard H. Savage
Chairman of the Board and
Co-Chief Executive Officer
Woodland Hills, California
April 23, 1997
<PAGE>
AMWEST INSURANCE GROUP, INC.
6320 CANOGA AVENUE, SUITE 300
WOODLAND HILLS, CALIFORNIA 91367
----------------
PROXY STATEMENT
FOR ANNUAL MEETING OF STOCKHOLDERS
MAY 30, 1997
----------------
GENERAL INFORMATION ON THE MEETING
This Proxy Statement is being mailed on or about April 23, 1997 in
connection with the solicitation of proxies by and on behalf of the Board of
Directors of Amwest Insurance Group, Inc., a Delaware corporation ("Amwest" or
the "Company"), for use at the Annual Meeting of Stockholders of the Company,
which is to be held on Friday, May 30, 1997 at 2:00 p.m., Los Angeles time, at
its new corporate headquarters, 5230 Las Virgenes Road, Calabasas, California
91302, and any adjournment or postponement thereof.
The entire cost of soliciting proxies will be borne by the Company,
including expenses in connection with preparing and mailing of proxy
solicitation materials. In addition to the use of mails, proxies may be
solicited by certain officers, directors and regular employees of the Company,
without extra compensation, by telephone, telegraph, fax, or personal
interview. Although there is no formal agreement to do so, the Company will
reimburse brokerage houses and other custodians, nominees and fiduciaries for
reasonable expenses incurred in sending proxies and proxy material to the
beneficial owners of the Company's Common Stock.
RECORD DATE AND VOTING
Only stockholders of record at the close of business on April 18, 1997 are
entitled to notice of and to vote at the meeting, or any adjournment or
postponement thereof. As of April 18, 1997, 3,351,752 shares of Common Stock
were outstanding, all of which shares are entitled to be voted at the meeting.
The presence, either in person or by proxy, of persons entitled to vote a
majority of the Company's outstanding Common Stock is necessary to constitute
a quorum for the transaction of business at the Annual Meeting. A stockholder
giving a proxy may revoke it at any time before it is voted by filing written
notice of revocation with the Secretary of the Company at P.O. Box 4500,
Woodland Hills, California 91365-4500, or by appearing at the meeting and
voting in person. A prior proxy is automatically revoked by a stockholder
giving a valid proxy bearing a later date. Shares represented by all valid
proxies will be voted in accordance with the instructions contained in the
proxies. In the absence of instructions, shares represented by valid proxies
will be voted in accordance with recommendations of the Board of Directors as
shown on the proxy.
Each stockholder is entitled to one vote per share on all matters coming
before the 1997 Annual Meeting, except for the election of directors. In the
election of directors, a stockholder in person or by proxy is entitled by the
Company's Restated Certificate of Incorporation to exercise "cumulative"
voting rights; that is, he is entitled to cast as many votes as equals the
number of his shares multiplied by the number of directors to be elected and
may cast all such votes for a single nominee or distribute them among the
nominees in any manner as he may see fit. For convenience sake, the proxy
holders do not presently intend to give notice of their intention to cumulate
their votes, but they may elect to do so in the event of a contested election
or any other presently unexpected circumstances. If any stockholder gives
notice at the meeting of his intention to cumulate votes, then all
stockholders will have the right to elect directors from nominees by
cumulative voting.
Votes withheld from any director are counted for purposes of determining the
presence or absence of a quorum for the transaction of business. The Company
believes that abstentions should be counted for purposes of determining
whether a quorum is present at the Annual Meeting for the transaction of
business. In the absence of controlling precedent to the contrary, the Company
intends to treat abstentions with respect to the election of directors in this
manner. The Company intends to count broker non-votes as present or
represented for purposes of determining the presence or absence of a quorum
for the transaction of business.
<PAGE>
PRINCIPAL STOCKHOLDERS
The following table sets forth certain information as of April 18, 1997 with
respect to the beneficial ownership of the Company's Common Stock by (i) each
stockholder known by the Company to own beneficially more than 5% of the
outstanding shares of Common Stock, (ii) each director of the Company, and
(iii) all directors and officers as a group:
<TABLE>
<CAPTION>
NUMBER OF SHARES PERCENT OF SHARES
NAME OR IDENTITY OF GROUP BENEFICIALLY OWNED(1) OUTSTANDING(19)
------------------------- --------------------- -----------------
<S> <C> <C>
Directors:
Richard H. Savage................ 823,740(2)(3)(4) 24.57%
John E. Savage................... 163,141(5) 4.79%
Guy A. Main...................... 498,417(6)(7) 14.85%
Steven R. Kay.................... 37,225(8) 1.10%
Thomas R. Bennett................ 14,050(9) (20)
Bruce A. Bunner.................. 1,250(10) (20)
Edgar L. Fraser.................. 20,670(11) (20)
Jonathan K. Layne................ 10,100(12) (20)
Arthur F. Melton................. 43,325(13) 1.28%
Charles L. Schultz............... 1,250(14) (20)
All Directors and Officers as a
group (10 persons)............... 1,613,168 46.06%
Other Principal Stockholders:
Savage Family Trust.............. 126,274(3)(4) 3.77%
6320 Canoga Avenue
Suite 300
Woodland Hills, CA 91367
Savage Diversified, Inc.......... 696,841(4) 20.79%
6320 Canoga Avenue
Suite 300
Woodland Hills, CA 91367
Main Family Trust................ 485,492(7) 14.73%
2361 Rosecrans Avenue
El Segundo, CA 90245
Dimensional Fund Advisors Inc.... 191,800(15) 5.72%
1299 Ocean Avenue, 11th Floor
Santa Monica, CA 90401
Franklin Advisory Services, Inc.. 175,800(16) 5.25%
777 Mariners Island Boulevard
San Mateo, CA 94403
Heartland Advisors, Inc.......... 254,000(17) 7.58%
790 North Milwaukee Street
Milwaukee, WI 53202
Markel Corporation............... 216,600(18) 6.46%
4551 Cox Road
Glen Allen, Virginia 23060
</TABLE>
- --------
(1) Based on information furnished by the persons named. The persons in the
table have sole voting and investment power with respect to all shares of
Common Stock shown as beneficially owned by them, except as otherwise
stated.
(2) Of the shares beneficially owned by Richard H. Savage: (1) 126,274 shares
represent shares owned by the Savage Family Trust for which Mr. Savage
serves as Trustee; and (2) 696,841 shares represent shares owned by Savage
Diversified, Inc., a California corporation, all the voting stock of which
is owned by the Savage Family Trust. Richard H. Savage, as Trustee, has
sole voting power over shares owned by such trust.
(3) The Savage Family Trust owns 126,274 shares of Common Stock. Richard H.
Savage is the Trustee of the Savage Family Trust, and as such, exercises
sole voting and investment power with respect to shares owned by the
Trust. These shares are included in the number of shares beneficially
owned by Richard H. Savage as set forth in Note 2.
2
<PAGE>
(4) Of the shares beneficially owned by Richard H. Savage, 696,841 shares are
owned by Savage Diversified, Inc., a California corporation, all the
voting stock of which is owned by Savage Family Trust. Richard H. Savage,
as Trustee, has sole voting power of such trust. These shares are included
in the number of shares beneficially owned by Richard H. Savage as set
forth in Note 2.
(5) John E. Savage serves as Trustee of the following Trusts: (1) Savage
Family Stock Trust FBO Sandra Lee Savage which owns 19,478 shares of
Common Stock; (2) Savage Family Stock Trust FBO Lorraine Ann Savage which
owns 19,478 shares of Common Stock; and (3) Savage Family Stock Trust FBO
Geraldine K. Thuresson which owns 19,479 shares of Common Stock. John E.
Savage owns 49,106 shares of Common Stock. In addition, 55,600 shares
shown as beneficially owned by John E. Savage represent shares which may
be acquired by John E. Savage within sixty days of April 18, 1997,
pursuant to the exercise of options under the Company's Stock Option Plan.
(6) Of the shares beneficially owned by Guy A. Main: (1) 485,492 shares
represent shares owned by the Main Family Trust for which Mr. Main and his
wife serve as Trustee; and (2) 9,000 shares represent shares held for his
account by the Condor Services, Inc. Profit Sharing Plan. In addition,
3,925 shares represent shares which may be acquired by Guy A. Main within
sixty days of April 18, 1997, pursuant to the exercise of options under
the Company's Stock Option Plan.
(7) The Main Family Trust owns 485,492 shares of Common Stock. Guy A. Main and
his wife share voting and investment power with respect to shares owned by
the Trust. These shares are included in the number of shares beneficially
owned by Guy A. Main as set forth in Note 6.
(8) Of the shares beneficially owned by Steven R. Kay: (1) 4,275 shares
represent shares that are directly owned by Steven R. Kay; (2) 500 shares
represent shares that are indirectly held through his wife; (3) 200 shares
represent shares that are indirectly held through his son; and (4) 32,250
shares represent shares which may be acquired by Steven R. Kay within
sixty days of April 18, 1997, pursuant to the exercise of options under
the Company's Stock Option Plan.
(9) Of the shares beneficially owned by Thomas R. Bennett: (1) 1,500 shares
represent shares that are directly owned by Thomas R. Bennett; (2) 2,250
shares represent shares that are jointly owned by Thomas R. Bennett and
his wife; (3) 300 shares represent shares that are indirectly held through
his wife; and (4) 10,000 shares represent shares which may be acquired by
Thomas R. Bennett within sixty days of April 18, 1997, pursuant to the
exercise of options under the Company's Non-Employee Director Stock Option
Plan.
(10) Of the shares beneficially owned by Bruce A. Bunner, all 1,250 shares
represent shares which may be acquired by Bruce A. Bunner within sixty
days of April 18, 1997 pursuant to the exercise of options under the
Company's Non-Employee Director Stock Option Plan.
(11) Of the shares beneficially owned by Edgar L. Fraser: (1) 10,670 shares
represent shares that are directly owned by Edgar L. Fraser; and (2)
10,000 shares represent shares which may be acquired by Edgar L. Fraser
within sixty days of April 18, 1997, pursuant to the exercise of options
under the Company's Non-Employee Director Stock Option Plan.
(12) Of the shares beneficially owned by Jonathan K. Layne: (1) 100 shares
represent shares that are directly owned by Jonathan K. Layne; and (2)
10,000 shares represent shares which may be acquired by Jonathan K. Layne
within sixty days of April 18, 1997, pursuant to the exercise of options
under the Company's Non-Employee Director Stock Option Plan.
(13) Of the shares beneficially owned by Arthur F. Melton: (1) 2,900 shares
represent shares that are jointly owned by Arthur F. Melton and his wife;
(2) 15,000 shares represent shares that are directly owned by Arthur F.
Melton; and (3) 25,425 shares represent shares which may be acquired by
Arthur F. Melton within sixty days of April 18, 1997, pursuant to the
exercise of options under the Company's Stock Option Plan.
(14) Of the shares beneficially owned by Charles L. Schultz, all 1,250 shares
represent shares which may be acquired by Charles L. Schultz within sixty
days of April 18, 1997 pursuant to the exercise of options under the
Company's Non-Employee Director Stock Option Plan.
(15) Dimensional Fund Advisors Inc. ("Dimensional"), a registered investment
advisor, is deemed to have beneficial ownership of 191,800 shares of
Amwest Common Stock as of December 31, 1996, all of which shares are held
in portfolios of DFA Investment Dimensions Group Inc., a registered open-
end investment company, or in a series of the DFA Investment Trust
Company, a Delaware business trust, or the DFA Group Trust and DFA
Participation Group Trust, investment vehicles for qualified employee
benefit plans, all of which Dimensional Fund Advisors Inc. serves as
investment manager. Dimensional disclaims beneficial ownership of all
such shares.
3
<PAGE>
(16) Based solely upon information contained in a Schedule 13G dated February
12, 1997 received by the Company from Franklin Resources, Inc. The filing
states that Franklin Advisory Services, Inc., an investment advisory
subsidiary of Franklin Resources, Inc. has sole voting power and sole
dispositive power over 175,800 shares.
(17) Based solely upon information contained in Amendment No. 2 to a Schedule
13G dated February 12, 1997 received by the Company from Heartland
Advisors, Inc. ("Heartland"). The filing states that Heartland has sole
voting power over 254,000 shares and sole dispositive power over 254,000
shares.
(18) Based solely upon information contained in Amendment No. 2 to a Schedule
13G dated February 13, 1997 received by the Company from Markel
Corporation ("Markel"). The filing states that Markel has sole voting
power over 185,500 shares, sole dispositive power over 185,500 shares and
shared dispositive power over 31,300 shares.
(19) Based on 3,351,752 shares of Common Stock outstanding as of April 18,
1997. See "Record Date and Voting."
(20) Less than 1% of the shares of Common Stock outstanding.
ELECTION OF DIRECTORS
Under the Restated Certificate of Incorporation and the Bylaws (as amended)
of the Company, which provide for a "classified" Board of Directors, three (3)
directors out of a total of ten (10) are to be elected at the 1997 Annual
Meeting of Stockholders to serve three-year terms expiring at the 2000 Annual
Meeting of Stockholders or until their successors are duly elected and
qualified. Unless authority to vote for a certain nominee is withheld by an
indication thereon, the proxy will be voted to re-elect Richard H. Savage,
Steven R. Kay and Charles L. Schultz to three-year terms, each to serve until
the 2000 Annual Meeting of Stockholders or until their successors are elected.
The Company has no reason to believe that any of those named will not be
available as a candidate. However, if such a situation should arise, the proxy
may be voted for the election of other nominees as directors at the discretion
of the person acting pursuant to the proxy. Certain information regarding the
nominees and each director whose term of office will continue after the 1997
Annual Meeting of Stockholders is set forth below:
NOMINEES FOR ELECTION AT THE 1997 ANNUAL MEETING OF STOCKHOLDERS
<TABLE>
<CAPTION>
CURRENT NEW
POSITION WITH DIRECTOR TERM TERM
NAME AGE COMPANY SINCE EXPIRES EXPIRES
---- --- ------------- -------- ------- -------
<S> <C> <C> <C> <C> <C>
Richard H. Savage.... 77 Chairman of the Board, Co-Chief 1970 1997 2000
Executive Officer and Director
Steven R. Kay........ 43 Senior Vice President, Chief Financial 1992 1997 2000
Officer, Treasurer and Director
Charles L. Schultz... 69 Director 1995 1997 2000
INCUMBENT DIRECTORS WHOSE TERMS OF OFFICE
CONTINUE AFTER THE 1997 ANNUAL MEETING OF STOCKHOLDERS
<CAPTION>
CURRENT
POSITION WITH DIRECTOR TERM
NAME AGE COMPANY SINCE EXPIRES
---- --- ------------- -------- -------
<S> <C> <C> <C> <C>
John E. Savage....... 44 Co-Chief Executive Officer, President, 1976 1999
Chief Operating Officer and Director
Guy A. Main.......... 60 Executive Vice President and Director 1996 1999
Thomas R. Bennett.... 70 Director 1985 1999
Bruce A. Bunner...... 63 Director 1995 1998
Edgar L. Fraser...... 78 Director 1985 1998
Jonathan K. Layne.... 43 Director 1989 1999
Arthur F. Melton..... 42 Director 1986 1998
</TABLE>
4
<PAGE>
PRINCIPAL OCCUPATIONS OF NOMINEES AND CONTINUING DIRECTORS DURING LAST FIVE
YEARS
Richard H. Savage entered the surety business in 1958 by forming a general
agency which specialized in the sale of bail bonds. The business evolved into
the surety insurance business when Amwest Surety was licensed as an insurer in
December, 1976. Mr. Savage has served as Chairman, Director, Chief Executive
Officer (and since 1992 as Co-Chief Executive Officer) of the Company since
its organization in 1970. Richard H. Savage is the father of John E. Savage.
John E. Savage joined the Company in 1975 as Vice-President and became a
Director of the Company in December, 1976. He became Secretary and Assistant
Treasurer of the Company in October, 1985. Mr. Savage managed the Court
Division from 1975 to 1980 and managed the Woodland Hills Branch from 1980 to
1985. He managed the Underwriting Department from 1985 to 1987. He became a
Senior Vice President in September, 1987, President and Chief Operating
Officer in February, 1990 and Co-Chief Executive Officer in November, 1992. He
relinquished his titles of Secretary and Assistant Treasurer in May, 1993.
John E. Savage is the son of Richard H. Savage.
Guy A. Main joined the Company in March 1996 as Executive Vice President and
Director upon consummation of the merger between the Company and Condor
Services, Inc. ("Condor"). Mr. Main also serves as Chairman and President of
Condor Insurance Company. Previously, Mr. Main was Chairman of the Board and
President of Condor's predecessor, Interstate Program Managers, Inc., since
its founding in 1974. He became Chairman of the Board and President of Condor
in November 1988. From 1972 to 1974, he served as Executive Vice President of
Garrett, Bromfield Corporation, insurance managing general agents. From 1957
to 1972, Mr. Main served in various capacities in underwriting and management
of several insurance companies.
Steven R. Kay joined the Company in April, 1992 as Senior Vice President,
Chief Financial Officer, Treasurer and Director. From 1977 he served in
various positions with KPMG Peat Marwick and served as an Audit Partner for
KPMG Peat Marwick from 1987 until April, 1992.
Thomas R. Bennett became a Director of the Company in October, 1985. Mr.
Bennett is presently an independent financial consultant. From May, 1987 to
November, 1987, Mr. Bennett served as Senior Vice President, Treasurer and
Director of Technology Applications, Inc. From 1983 to 1987, Mr. Bennett
served as Vice President and Treasurer of ERC International, Inc.
Bruce A. Bunner became a Director of the Company in November 1995. Since his
retirement in 1994 as Chairman of Centre Reinsurance Company of New York, Mr.
Bunner has accepted the position of President of Financial Structures Ltd., a
financial services firm. Previously, he served with KPMG Peat Marwick for 22
years. In addition, Mr. Bunner served as California State Insurance
Commissioner from 1983 to 1986. Mr. Bunner is also a member of the Board of
Directors of Mercury Insurance Group, Inc., a property and casualty insurer
specializing in automobile coverages and American Progressive Life Insurance
Company.
Edgar L. Fraser became a Director of the Company in October, 1985. Mr.
Fraser is Senior Partner of Wadsworth, Fraser & Dahl, Attorneys at Law, and
has been associated with that firm since 1948. Such firm has rendered, and the
Company expects Wadsworth, Fraser & Dahl to continue to render, legal services
to the Company.
Jonathan K. Layne became a Director of the Company in June, 1989. Mr. Layne
has been a partner in the law firm of Gibson, Dunn & Crutcher LLP since 1987,
and has been associated with that firm since 1979. Such firm has rendered, and
the Company expects Gibson, Dunn & Crutcher LLP to continue to render, legal
services to the Company. Mr. Layne is also a member of the Board of Directors
of K-Swiss Inc., a manufacturer of athletic footwear, The Finish Line, Inc., a
retailer of brand name athletic and leisure footwear, activewear and
accessories and Maxwell Shoe Company Inc., a manufacturer of women's casual
and dress footwear.
5
<PAGE>
Arthur F. Melton became a Director of the Company in August, 1986, became a
Senior Vice President of the Company in November, 1990 and resigned from this
position in November, 1996. Mr. Melton is currently a Director of Fresh
International Corporation, an agribusiness holding company, and its
subsidiaries, including Fresh Express Farms, TransFresh Corporation and Bruce
Church, Inc. Mr. Melton was the Director of Finance and Administration of
Industrial Tools, Inc. from 1985 to November, 1990.
Charles L. Schultz became a Director of the Company in November 1995. Mr.
Schultz is currently a director of U.S. Facilities Corporation, an insurance
company specializing in reinsurance. Mr. Schultz retired in 1993 as Senior
Vice President, Finance and Chief Financial Officer of Farmers Group, Inc.
where he had served for 19 years in various capacities. Previously, Mr.
Schultz had been with Great American Insurance Company in senior management
positions from 1950 to 1974.
CERTAIN INFORMATION CONCERNING THE BOARD
OF DIRECTORS AND CERTAIN OF ITS COMMITTEES
The Board of Directors has the following standing committees: Compensation
and Stock Option Committee, Audit Committee and Investment Committee. The
Company does not have a nominating committee of its Board of Directors.
MEETING OF THE BOARD OF DIRECTORS AND COMMITTEES
The Board of Directors met 6 times during fiscal 1996 and each incumbent
director who was a director during 1996 and whose term of office will continue
after the Annual Meeting of Stockholders attended at least 75% of the meetings
of the Board and Board Committees of which he was a member.
For fiscal 1996, the Compensation and Stock Option Committee was composed of
Messrs. Thomas R. Bennett (Chairman), Edgar L. Fraser and Jonathan K. Layne.
This Committee met 2 times during fiscal 1996 and each committee member
attended each meeting held during the time that such director was a member of
the Committee. Effective February 1997, the composition of the Compensation
and Stock Option Committee changed and is now composed of Messrs. Thomas R.
Bennett (Chairman), Edgar L. Fraser, Jonathan K. Layne and Charles L. Schultz.
The Audit Committee is composed of Messrs. Edgar L. Fraser (Chairman), Bruce
A. Bunner, Jonathan K. Layne and Charles L. Schultz. This Committee met 2
times during fiscal 1996 and each committee member attended each meeting held
during the time that such director was a member of the Committee.
The Investment Committee is composed of Messrs. Steven R. Kay (Chairman),
Richard H. Savage, John E. Savage, Guy A. Main, Thomas R. Bennett, Bruce A.
Bunner and Charles L. Schultz. This Committee met 4 times during fiscal 1996
and each committee member attended each meeting held during the time that such
director was a member of the Committee.
REMUNERATION OF DIRECTORS
All directors are paid $12,000 annually, plus normal and necessary expenses
for attending all regular or special meetings of the Board of Directors,
irrespective of the number of such regular or special meetings attended by
such Board members. During 1996, each director who was not an officer of the
Company was also paid $750 per in-person Board meeting attended plus $500 per
committee meeting attended, plus normal and necessary expenses for attending
such meetings. In addition, each director is eligible to receive reimbursement
in an annual amount up to $1,500 for expenses relating to annual physical
examinations. Non-employee directors are also eligible to receive stock
options under the Company's Non-Employee Director Stock Option Plan.
6
<PAGE>
EXECUTIVE OFFICERS OF THE COMPANY
The executive officers of the Company are as follows:
<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
Richard H. Savage.............................. 77 Chairman of the Board and
Co-Chief Executive Officer
John E. Savage................................. 44 Co-Chief Executive Officer,
President, Chief Operating
Officer
Guy A. Main.................................... 60 Executive Vice President
Steven R. Kay.................................. 43 Senior Vice President,
Chief Financial Officer and
Treasurer
</TABLE>
See "Principal Occupations of Nominees and Continuing Directors During Last
Five Years" for information regarding the Company's executive officers.
EXECUTIVE COMPENSATION AND OTHER INFORMATION
The Company believes that shareholders should be provided information about
executive compensation that is easier to understand, more relevant and
consistent with the proxy rules of the Securities and Exchange Commission. The
following table sets forth the compensation paid by the Company and its
subsidiaries to each of the executive officers of the Company ("Named
Officers") for services rendered in all capacities to the Company and its
subsidiaries for the three fiscal years ended December 31, 1994, 1995 and
1996. The table does not include compensation paid by Condor to Mr. Main who
became an executive officer of the Company in March 1996. In addition, the
table includes compensation paid to Mr. Neil F. Pont who relinquished his
positions as Senior Vice President and Director of the Company effective
February, 1997. Mr. Pont is currently a Senior Vice President of Condor
Insurance Company.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
ANNUAL COMPENSATION COMPENSATION
------------------------------------- ------------
SECURITIES
NAME OTHER UNDERLYING ALL
AND ANNUAL OPTIONS/ OTHER
PRINCIPAL SALARY (1) BONUS (2) COMPENSATION (3) SARS COMPENSATION (4)
POSITION YEAR ($) ($) ($) (#) ($)
--------- ---- ---------- --------- ---------------- ------------ ----------------
<S> <C> <C> <C> <C> <C> <C>
Richard H. Savage....... 1996 343,779 -- -- 2,500 4,471
Chairman of the Board 1995 338,000 110,454 -- -- 4,533
and Co-Chief Executive 1994 334,534 227,146 -- -- 4,533
Officer
John E. Savage.......... 1996 263,587 -- -- 10,000 44,442(5)
Co-Chief Executive Offi- 1995 225,394 74,425 -- 10,000 3,655
cer, President and Chief 1994 214,849 147,174 -- 10,800 2,045
Operating Officer
Guy A. Main............. 1996 203,620 -- -- 2,500 35,518(6)
Executive Vice President 1995 -- -- -- -- --
1994 -- -- -- -- --
Steven R. Kay........... 1996 198,074 -- -- 7,500 13,700(7)
Senior Vice President, 1995 189,000 49,995 -- 17,500 4,618
Chief Financial Officer 1994 187,116 102,316 -- 7,500 13,204(8)
and Treasurer
Neil F. Pont............ 1996 198,074 -- -- 7,500 10,636(9)
Senior Vice President 1995 185,733 49,995 -- 17,500 10,983(10)
1994 172,117 89,594 -- 7,500 14,950(11)
Arthur F. Melton........ 1996 199,182 -- -- 7,500 4,750
Former Senior Vice Pres- 1995 189,000 49,995 -- 17,500 4,618
ident 1994 185,447 102,316 -- 8,400 4,618
</TABLE>
7
<PAGE>
- --------
(1) Includes directors' fees of $12,000 for each of the years indicated.
(2) Includes incentive compensation earned and accrued during the fiscal
years indicated and paid subsequent to the end of each fiscal year.
(3) Except where indicated, all Named Officers receive certain perquisites
such as paid premiums on additional life insurance, automobile allowances
and the expense associated with the use of these automobiles. Such
perquisites do not exceed the lesser of $50,000 or 10% of such officer's
salary and bonus.
(4) The matching contributions made by the Company under the provisions of
its 401(k) Plan are included in this column.
(5) In addition to the matching contribution made by the Company under the
provisions of its 401(k) Plan, the amount also includes $39,692 relating
to cash received in-lieu of vacation benefits.
(6) In addition to the matching contribution made by the Company under the
provisions of its 401(k) Plan, the amount also includes $31,626 relating
to cash received in-lieu of vacation benefits.
(7) In addition to the matching contribution made by the Company under the
provisions of its 401(k) Plan, the amount also includes $8,950 relating
to cash received in-lieu of vacation benefits.
(8) In addition to the matching contribution made by the Company under the
provisions of its 401(k) Plan, the amount also includes $8,586 relating
to cash received in-lieu of vacation benefits.
(9) In addition to the matching contribution made by the Company under the
provisions of its 401(k) Plan, the amount also includes $6,310 relating
to cash received in-lieu of vacation benefits.
(10) In addition to the matching contribution made by the Company under the
provisions of its 401(k) Plan, the amount also includes $6,365 relating
to cash received in-lieu of vacation benefits.
(11) In addition to the matching contribution made by the Company under the
provisions of its 401(k) Plan, the amount also includes $10,332 relating
to cash received in-lieu of vacation benefits.
EMPLOYMENT AGREEMENT
The Company and Mr. Main entered into an employment agreement commencing on
March 14, 1996 and continuing for a period of four years providing Mr. Main to
be employed as Executive Vice President of the Company and Chairman and
President of Condor Insurance Company. Mr. Main is receiving a base salary of
$253,000, subject to annual review, and will be eligible for bonuses under the
Company's Annual Executive Incentive Plan and entitled to other benefits
available to other Company officers generally, including an automobile
allowance.
SEPARATION AGREEMENT
The Company and Mr. Melton entered into a separation agreement on December
31, 1996 whereby Mr. Melton voluntarily resigned as an executive officer of
the Company and all of their respective affiliates effective November 22,
1996. The agreement provides Mr. Melton with severance pay in an amount equal
to an aggregate gross amount of $200,567, less payroll taxes, payable every
two weeks in twenty-six equal installments each in the gross amount of
$7,714.12, less payroll taxes, commencing December 10, 1996. Mr. Melton will
retain his options to purchase 47,500 shares of Amwest's common stock, 25,425
of which are vested, and 15,475 of which are unvested, at various exercise
prices ranging from $10.75 to $14.25 per share. The unvested options will
continue to vest and will be unaffected by Mr. Melton's resignation. The
Company has also agreed to use its best efforts to provide Mr. Melton and his
presently designated dependents with insurance coverages for
health/life/disability protection as are in effect for other Company executive
officers. Mr. Melton has agreed not to compete with the Company or any of its
insurance subsidiaries through December 10, 1997; however, Mr. Melton shall
not be prohibited from being employed by a business entity whose revenues
derived from surety insurance premiums were at least $10,000, but were less
than 10% of such entity's total revenues for its last fiscal year. The
agreement, which contains certain mutual releases, terminated Mr. Melton's
previously executed Severance Agreement, but his officer's and director's
Indemnity Agreement remains in full force and effect.
8
<PAGE>
SEVERANCE AGREEMENTS
The Company has entered into a severance agreement ("Severance Agreement")
with each of Messrs. Richard H. Savage, John E. Savage and Steven R. Kay to
provide an incentive for such officers to continue their employment following
any "Change in Control" of the Company, thereby helping ensure continuity of
the Company's business by mitigating concerns about job security that could
affect management objectivity under such circumstances. The Employment
Agreement described above between the Company and Mr. Guy A. Main also
contains a severance provision.
Each Severance Agreement generally provides that if, after a "Change in
Control" of the Company, the officer terminates his employment with the
Company for "Good Reason" (as defined in the Severance Agreement) or the
Company terminates the officer's employment for any reason other than "Cause"
(as defined in the Severance Agreement) or the death, disability or retirement
(in accordance with retirement policies in effect before such Change in
Control) of the officer, the Company shall (1) pay the officer severance
compensation equal to 2.99 times his average annual compensation (including
bonuses) over the five most recent years ending before the Change in Control,
and (2) provide the officer, for three years thereafter, insurance benefits
substantially similar to those he received immediately prior to his
termination. In the event that such payments, alone or together with other
payments to be received by the officer from the Company, would not be
deductible in whole or in part by the Company, then such payments shall be
reduced to the largest amount that would be deductible by the Company. If the
officer is required to pay the excise taxes imposed by Section 4999 of the
Internal Revenue Code (or a similar provision of state law) then the Company
is obligated to pay to the officer an additional amount equal to the sum of
such excise taxes and an amount equal to all taxes, interest and penalties
that become payable by the officer as a result of the payment by the Company
of such excise taxes.
Change in Control is defined in the Severance Agreement to include (i) the
acquisition by a third party of beneficial ownership of 30% or more of the
Company's outstanding voting equity securities (but not including any person
who had such beneficial ownership as of May 25, 1989), (ii) the approval by
the stockholders of the Company of a liquidation or dissolution of the
Company, (iii) a consolidation or merger of the Company if the Company is not
the surviving entity or shares of the Company's Common Stock would be
converted into cash, securities or other property (but not including a merger
in which the holders of the Company's Common Stock immediately prior to the
merger have the same proportionate ownership of the surviving corporation
immediately after the merger), (iv) any sale, lease, exchange or transfer of
all or substantially all of the Company's assets, or (v) a change in the
membership of the Company's Board of Directors such that during any two
consecutive years, individuals who at the beginning of such period constituted
the entire Board of Directors shall cease to constitute a majority thereof
(unless the election or nomination for election of each new director was
approved by a vote of at least two-thirds of the directors then still in
office who were directors at the beginning of the period). Each Severance
Agreement has an initial term of two years and is automatically renewed for
successive two year terms unless determined otherwise by the Board of
Directors prior to a Change in Control. Each Severance Agreement terminates
five years after a Change in Control.
STOCK OPTION PLAN
The Company's Stock Option Plan (the "Plan") currently provides for the
reservation of 676,000 shares of Common Stock, subject to adjustment for
reorganizations, recapitalizations, stock splits or similar events, for
issuance upon the exercise of options to be granted under the Plan. Shares of
Common Stock subject to the unexercised portions of any options granted under
the Plan which expire, terminate or are cancelled may again be subject to
options under the Plan. Salaried employees, including directors who are
employees, and consultants are currently eligible to receive options under the
Plan.
The Plan was amended and ratified by stockholders of the Company at the
1987, 1988, 1990 and 1994 Annual Meetings of Stockholders and the 1996 Special
Meeting of Stockholders and was adopted and ratified in its currently amended
form by the Board of Directors on February 1, 1996. These amendments brought
the Plan into compliance with Rule 16b-3 (promulgated by the Securities and
Exchange Commission under the Securities Act of 1934), increased the number of
shares subject to the Plan, and modified the exercise prices of non-incentive
options granted under the Plan.
9
<PAGE>
The Plan is administered by a committee (the "Compensation and Stock Option
Committee") of directors who are appointed by the Board of Directors of the
Company. The Compensation and Stock Option Committee has the full power to
construe the Plan, to determine which persons are eligible to receive options
under the Plan, the vesting of such options and which of the eligible persons,
if any, shall be granted options under the Plan.
The Plan provides for options which qualify as incentive stock options
("Incentive Options") under Section 422 of the Internal Revenue Code (the
"Code") as well as options which do not so qualify ("Non-Qualified Stock
Options") and for the grant of stock appreciation rights ("Stock Appreciation
Rights") to be associated with stock options. The Stock Appreciation Rights
permit the optionee to elect to receive, in lieu of exercising the related
option, an amount equal to the difference between the value of the shares
subject to the option and the exercise price of the option. The per share
exercise price of Incentive Options under the Plan may not be less than 100%
of the fair market value of the underlying Common Stock on the date of grant
of the option (110% of such fair market value with respect to Incentive
Options granted to an individual who owns more than 10% of the total combined
voting power of all classes of stock of the Company or any subsidiary
corporation). On April 18, 1997 the closing sales price of the Company's
Common Stock as reported on the American Stock Exchange was $12 1/4.
The Plan provides that the aggregate fair market value of the stock with
respect to which Incentive Options are exercisable for the first time by each
employee during any calendar year (under the Plan or similar plans) shall not
exceed $100,000. No Incentive Option granted under the Plan may be exercised
more than ten years after its date of grant, except that an Incentive Option
granted to an individual owning more than 10% of the total combined voting
power of all classes of stock of the Company or any subsidiary or parent
corporation shall expire no later than five (5) years from the date the option
was granted. No Non-Incentive Option granted under the Plan may be exercised
more than eleven (11) years after its date of grant.
SECTION 16(B) OF THE EXCHANGE ACT
The acquisition and disposition of shares of Common Stock by officers,
directors and more than 10% stockholders of the Company ("Insiders") pursuant
to awards granted to them under the Plan may be subject to the provisions of
Section 16(b) of the Securities Exchange Act of 1934 (the "Exchange Act"),
under which a purchase of shares of Common Stock within six months before or
after a sale of Common Stock could result in recovery by the Company of all or
a portion of any amount by which the sale proceeds exceed the purchase price.
Insiders are required to file reports of changes in beneficial ownership under
Section 16(a) of the Exchange Act upon acquisitions and dispositions of
shares. Rule 16b-3 provides an exemption from Section 16(b) liability for
certain transactions pursuant to employee benefit plans.
NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN
The Non-Employee Director Stock Option Plan (the "Director Plan") provides
for the reservation of 75,000 shares of Common Stock, subject to adjustment
for reorganizations, recapitalizations, stock splits or similar events, for
issuance upon the exercise of options to be granted under the Director Plan.
Shares of Common Stock subject to the unexercised portions of any options
granted under the Director Plan which expire, terminate or are canceled may
again be subject to options under the Director Plan. Directors, who are not
employees of the Company or a subsidiary of the Company, are currently
eligible to receive options under the Director Plan. A person shall not be
considered an employee solely by serving as Chairman of the Board. As of April
19, 1996, five persons were eligible to receive said grants.
The Director Plan is self-governing. Questions of interpretation, if any,
will be resolved by the Board of Directors.
Each non-employee director will be granted upon his initial election to the
Board a Non-Qualified Stock Option ("NQO") to purchase 5,000 shares of the
Company's Common Stock. After the initial grant of the NQO to purchase 5,000
shares of the Company's Common Stock, each non-employee director will receive
annual grants of
10
<PAGE>
NQO's to purchase 2,500 shares of the Company's Common Stock on the date of
each subsequent Annual Meeting of Stockholders. The per share exercise price
of the options will be the fair market value of a share of the Company's
Common Stock on the date of grant. Each option will have a term of ten years
and shall become exercisable at the rate of 25% per year over a period of four
years of Board service. Optionees will receive credit for service, if any, on
the Board prior to the date of the option grant in satisfying these vesting
requirements.
EMPLOYEE STOCK PURCHASE PLAN
The Employee Stock Purchase Plan (the "Purchase Plan") provides for the
reservation of 200,000 shares of Common Stock, subject to adjustment for
reorganizations, recapitalizations, stock splits or similar events, for
issuance to eligible participants. The Purchase Plan is intended to qualify as
an "employee stock purchase plan" under Section 423 of the Internal Revenue
Code of 1986, as amended.
Although the Purchase Plan was approved by stockholders on May 31, 1996, the
Purchase Plan has not yet been implemented.
OPTION GRANTS
Shown below is further information on grants of stock options pursuant to
the Plan during the fiscal year ended December 31, 1996, to the Named
Officers. No stock appreciation rights have been granted in connection with
options. The table includes Mr. Neil F. Pont who relinquished his positions as
Senior Vice President and Director of the Company effective February, 1997.
Mr. Pont is currently a Senior Vice President of Condor Insurance Company.
OPTION/SAR GRANTS TABLE
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL
REALIZABLE
VALUE AT
ASSUMED ANNUAL
RATES OF STOCK
PRICE
APPRECIATION
FOR OPTION
INDIVIDUAL GRANTS TERM (1)
----------------------------------------------- --------------
NUMBER OF
SECURITIES
UNDERLYING % OF TOTAL
OPTIONS/ OPTIONS/SARS EXERCISE
SARS GRANTED TO OR BASE
GRANTED EMPLOYEES IN PRICE EXPIRATION
NAME (2) FISCAL YEAR ($/SH) DATE 5%($) 10%($)
---- ---------- ------------ -------- -------------- ------ -------
<S> <C> <C> <C> <C> <C> <C>
Richard H. Savage....... 2,500 2.5% 13.375 April 10, 2006 21,029 53,291
Chairman of the Board
and Co-Chief Executive
Officer
John E. Savage.......... 10,000 9.9% 13.375 April 10, 2006 84,115 213,163
Co-Chief Executive
Officer, President and
Chief Operating Officer
Guy A. Main............. 2,500 2.5% 13.375 April 10, 2006 21,029 53,291
Executive Vice President
Steven R. Kay........... 7,500 7.4% 13.375 April 10, 2006 63,086 159,872
Senior Vice President,
Chief Financial Officer
and Treasurer
Neil F. Pont............ 7,500 7.4% 13.375 April 10, 2006 63,086 159,872
Senior Vice President
Arthur F. Melton........ 7,500 7.4% 13.375 April 10, 2006 63,086 159,872
Former Senior Vice
President
</TABLE>
11
<PAGE>
- --------
(1) Potential realizable value is based on an assumption that the stock price
of the Common Stock appreciates at the annual rate shown above (compounded
annually) from the date of grant until the end of the ten year option
term. These numbers are calculated based on the requirements promulgated
by the Securities and Exchange Commission and do not reflect the Company's
estimate of future stock price growth.
(2) The Plan is administered by the Compensation and Stock Option Committee of
the Board of Directors. The committee determines the eligibility of
employees, the number of shares to be granted and the terms of such
grants.
(3) Options were granted on April 10, 1996 at fair market value and become
exercisable at the rate of 25% on the first, second, third and fourth
anniversary of the grant date, and have a term of 10 years.
OPTION EXERCISES AND FISCAL YEAR-END VALUES
Shown below is information with respect to exercised and unexercised options
to purchase the Company's Common Stock under the Plan. The table includes Mr.
Neil F. Pont who relinquished his positions as Senior Vice President and
Director of the Company effective February, 1997. Mr. Pont is currently a
Senior Vice President of Condor Insurance Company.
OPTION/SAR EXERCISES AND YEAR-END VALUE TABLE
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION/SAR
VALUES
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES
UNDERLYING IN-THE-MONEY
UNEXERCISED OPTIONS/SARS
OPTIONS/SARS AT FY-END
AT FY-END (#) ($)(1)
------------- -------------
SHARES ACQUIRED VALUE
ON EXERCISE REALIZED EXERCISABLE/ EXERCISABLE/
NAME (#) ($) UNEXERCISABLE UNEXERCISABLE
---- --------------- -------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Richard H. Savage........ -- -- -- 2,500 -- 313
Chairman of the Board
and Co-Chief Executive
Officer
John E. Savage........... -- -- 53,900 25,400 137,752 5,438
Co-Chief Executive
Officer, President and
Chief Operating Officer
Guy A. Main.............. 3,300 17,375 3,300 2,500 3,218 313
Executive Vice President
Steven R. Kay............ -- -- 24,625 22,875 76,875 938
Senior Vice President,
Chief Financial Officer
and Treasurer
Neil F. Pont............. -- -- 13,375 24,750 14,766 6,094
Senior Vice President
Arthur F. Melton......... -- -- 23,200 25,200 53,906 6,094
Former Senior Vice
President
</TABLE>
- --------
(1) Represents the difference between the closing price of the Company's
Common Stock on the AMEX on December 31, 1996 and the exercise price of
the options.
REPORT OF THE COMPENSATION AND STOCK OPTION COMMITTEE OF THE BOARD OF
DIRECTORS
The Report of the Compensation and Stock Option Committee shall not be
deemed incorporated by reference by any general statement incorporating by
reference this proxy statement into any filing under the Securities Act of
1933 or under the Securities Exchange Act of 1934, except to the extent that
the Company specifically incorporates this information by reference, and shall
not otherwise be deemed filed under such Acts.
12
<PAGE>
The Compensation and Stock Option Committee of the Board of Directors (the
"Committee") establishes the general compensation policies of the Company,
establishes the compensation plans and specific compensation levels for
executive officers and administers the Stock Option Plan and the Annual
Executive Incentive Plan (the "Incentive Plan"). The Committee is comprised of
four non-employee members of the Board of Directors.
The cash compensation of the executive officers of the Company is comprised
of two elements: base salary and cash bonuses awarded under the operation of
the Incentive Plan. The potential cash bonus awards are intended to comprise a
significant portion of each executive's compensation.
DESCRIPTION OF THE ANNUAL EXECUTIVE INCENTIVE PLAN
Annual incentives for the Co-CEO's are intended to reward them for
increasing earnings while maintaining the quality of those earnings. In 1996,
the annual cash bonus awards paid to the Co-CEO's was based on (1) the 1995
underwriting performance of the Company as measured by the combined ratio,
i.e., the ratio of total underwriting expenses to net premiums earned, and (2)
the average earnings per share ("EPS") for the two years, 1994 and 1995, as
compared to an average EPS benchmark previously established for those years.
The Committee believes that the Incentive Plan aligns annual executive
compensation with stockholder interests, by tying the major part of the annual
executive bonus payments to growth in earnings per share.
Annual cash bonus provisions for executive officers below the level of CEO
use the same benchmarks as established for the Co-CEO's, but limit their bonus
opportunities to a smaller percentage of their base salaries.
During 1996, due to the Company's performance no cash bonus awards were
earned under the Incentive Plan by executive officers of the Company.
SALARY ADMINISTRATION
The Committee's general policy is to establish base salaries for the
executive officers at levels consistent with those being paid by organizations
with which the Company is competing for executive talent. The Committee has
used a combination of factors in setting and adjusting the base salaries of
the executive officers. These factors include available salary data from other
insurance companies, relative responsibility and compensation within the
Company, the individual's past performance and future potential. Included in
the salary data reviewed by the Committee is information obtained from
publicly available salary surveys for Insurance Industry executives.
LONG-TERM INCENTIVES
It is the Committee's policy to provide long-term incentives to the
executives of the Company through annual grants of stock options. This
component of the compensation program is intended primarily to motivate
executives to improve the long-term market performance of the Company's stock.
Since the value of an option bears a direct relationship to the Company's
stock price it is considered to be an effective incentive for managers to
create value for all stockholders. The Committee therefore views stock options
as an important component of its long-term performance-based compensation
philosophy.
On April 10, 1996, Richard H. Savage was granted 2,500 options, the same
amount granted to non-employee directors of the Company.
Other executives receive Incentive Stock Options ("ISO's") granted at the
current market value, except for John E. Savage who can elect to receive
either ISO's granted at 110% of market value pursuant to Section 422 of the
Internal Revenue Code or Non-Qualified Stock Options ("NQO's") granted at
market price. Generally, options vest 25% per year over four years and expire
after 10 years. The options will only have value to the extent that the
Company's stock price increases during that period.
13
<PAGE>
In recent years, the Committee has operated under a guideline of making
annual grants of options in the range of 2.5% to 3.0% of the outstanding stock
of the Company. This equates to approximately 85,000 to 100,000 annual grants
currently. Within this framework, the Committee determines the allocation of
options to be granted each year based on the executive's position in the
Company; i.e., the number of options granted is intended to be proportional to
an executive's perceived ability to influence the Company's long-term growth
and profitability.
During 1996, the Committee authorized the grant of 101,000 employee stock
options, as compared to 98,500 grants in 1995 and 71,700 grants in 1994.
Included in the 1996 grants were 37,500 options granted to executive officers
of the Company, as detailed in the Option/SAR Grants Table of this Proxy
Statement. All of these options were granted at a per share exercise price of
$13.375.
Under current law, income tax deductions for compensation paid by publicly-
traded companies may be limited to the extent total compensation (including
base salary, annual bonus, restricted stock awards, stock option exercises,
and non-qualified benefits) for certain executive officers exceeds $1 million
in any one year. Under such law, the deduction limit does not apply to
payments which qualify as "performance based." To qualify as "performance
based," compensation payments must be made from a plan that is administered by
a compensation committee of the Board of Directors which is comprised solely
of two or more outside directors. In addition, the material terms of the plan
must be disclosed to and approved by stockholders, and the Committee must
certify that the performance goals were achieved before payments can be
awarded.
To the extent readily determinable, and as one of the factors in its
consideration of compensation matters, the Committee also considers the
anticipated tax treatment of the Company and to the executives of various
payments and benefits. However, since some types of compensation payments and
their deductibility depend upon the timing of an executive's exercise of stock
options (e.g., the spread on exercise of non-incentive stock options), and
because interpretations and changes in the tax laws and other factors beyond
the Committee's control may also affect the deductibility of compensation, the
Committee will not necessarily limit executive compensation to that which is
deductible under applicable provisions of the Internal Revenue Code. The
Committee will consider various alternatives to preserving the deductibility
of compensation payments and benefits to the extent reasonably practicable and
to the extent consistent with its other compensation objectives.
Dated: April 19, 1997 Compensation and Stock Option
Committee
Thomas R. Bennett (Chairman)
Edgar L. Fraser
Jonathan K. Layne
Charles L. Schultz
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Directors Bennett, Fraser, Layne and Schultz comprise the Compensation and
Stock Option Committee.
Mr. Fraser is a partner of the law firm Wadsworth, Fraser and Dahl which has
provided legal services to the Company. The Company expects that such law firm
will continue to render legal services to the Company.
Mr. Layne is a partner of the law firm Gibson, Dunn and Crutcher LLP which
has provided legal services to the Company. The Company expects that such law
firm will continue to render legal services to the Company.
14
<PAGE>
STOCK PRICE PERFORMANCE GRAPH
The Stock Price Performance Graph below shall not be deemed incorporated by
reference by any general statement incorporating by reference this proxy
statement into any filing under the Securities Act of 1933 or under the
Securities Exchange Act of 1934, except to the extent that the Company
specifically incorporates this information by reference, and shall not
otherwise be deemed filed under such Acts.
The Stock Price Performance Graph below compares the yearly percentage
change in the cumulative total stockholder return on the Company's Common
Stock (assuming reinvestment of dividends) against the cumulative total return
of the S&P 500 Stock Index and the Property Casualty Insurance Industry
Composite Index (in each case also assuming reinvestment of dividends) for the
five fiscal years commencing January 1, 1992 and ending December 31, 1996.
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN
AMONG AMWEST INSURANCE GROUP, S&P 500 INDEX AND PROPERTY CASUALTY
PERFORMANCE GRAPH APPEARS HERE
<TABLE>
<CAPTION>
Measurement Period AMWEST S&P PROPERTY
(Fiscal Year Covered) INSURANCE 500 INDEX CASUALTY
- --------------------- ---------- --------- ----------
<S> <C> <C> <C>
Measurement Pt-1991 $100 $100 $100
FYE 1992 $100.51 $117.92 $107.64
FYE 1993 $129.85 $120.77 $118.50
FYE 1994 $128.07 $119.61 $120.06
FYE 1995 $172.64 $171.54 $165.18
FYE 1996 $158.21 $206.09 $203.11
</TABLE>
ASSUMES $100 INVESTED ON JANUARY 1, 1992
ASSUMES DIVIDENDS REINVESTED
TRANSACTIONS WITH MANAGEMENT
In connection with the relocation of the Company's headquarters from
Woodland Hills, California to Calabasas, California, the Company has listed
for sale its two corporate-owned condominiums in Woodland Hills used primarily
for temporarily housing employees visiting the home office. The Company is
proposing to sell one of these units to Richard H. Savage, Chairman of the
Board and Co-Chief Executive Officer, for a sales price of $184,250. The
proposed sales price, which has been approved by the Audit Committee of the
Board of Directors was based on comparable sales data, an independent
appraisal and the current estimated selling price of the other unit in the
same complex, with a similar floor plan and square footage. The transaction is
scheduled to close in April or May of 1997.
15
<PAGE>
RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS
KPMG Peat Marwick was the Company's independent auditor for fiscal 1996.
During fiscal 1996, the Company also engaged KPMG Peat Marwick to render
certain non-audit professional services involving assistance on tax planning
matters, actuarial services and general consultations.
The appointment of auditors is approved annually by the Board of Directors
which is based in part on the recommendation of the Audit Committee. In making
its recommendation, the Audit Committee reviews both the audit scope and
estimated audit fees for the coming year. KPMG Peat Marwick has been selected
by the Audit Committee for the current year and the Board of Directors is
expected to act upon its recommendation at its next meeting. Stockholder
approval is not sought in connection with this election.
KPMG Peat Marwick has served as the Company's independent auditor since 1984.
Representatives of KPMG Peat Marwick will be present at the Annual Meeting of
Stockholders and will be given an opportunity to make a statement if they
desire to do so and will respond to questions from stockholders.
STOCKHOLDER PROPOSALS FOR 1998 ANNUAL MEETING
Stockholders who wish to present proposals for action at the 1998 Annual
Meeting of Stockholders should submit their proposals in writing to the
Secretary of the Company at the address set forth on the first page of this
Proxy Statement. Proposals must be received by the Secretary no later than
December 26, 1997, for inclusion in next year's proxy statement and proxy card.
MISCELLANEOUS
The Company knows of no matters other than the foregoing to be brought before
the Annual Meeting but if any other such matter properly comes before the
meeting, or any adjournment or postponement thereof, it is the intention of the
persons named in the accompanying form of Proxy to vote the proxies in
accordance with their best judgement.
The Annual Report of the Company for the fiscal year ended December 31, 1996,
including financial statements, is being mailed under the same cover to each
person who was a stockholder of record on April 18, 1997.
The Company will furnish without charge a copy of its Annual Report on Form
10-K for the fiscal year ended December 31, 1996, as filed with the Securities
and Exchange Commission, to any stockholder desiring a copy. Stockholders may
write to Amwest Insurance Group, Inc., P.O. Box 4500, Woodland Hills, CA 91365-
4500, Attention: Steven R. Kay, Senior Vice President.
EACH STOCKHOLDER WHO DOES NOT EXPECT TO ATTEND THE ANNUAL MEETING IN PERSON
IS URGED TO EXECUTE THE PROXY AND RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE.
By Order of the Board of Directors
/s/ Richard H. Savage
Richard H. Savage
Chairman of the Board and Co-Chief
Executive Officer
Woodland Hills, California
April 23, 1997
16
<PAGE>
- -------------------------------------------------------------------------------
PROXY AMWEST INSURANCE GROUP, INC. PROXY
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS, MAY 30, 1997
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS for the Annual
Meeting of Stockholders to be held on May 30, 1997 at 2:00 P.M., Los Angeles
time, at its new corporate headquarters, 5230 Las Virgenes Road, Calabasas,
California 91302.
The undersigned hereby acknowledges receipt of the Notice of Annual Meeting
of Stockholders and the accompanying Proxy Statement for the 1997 Annual
Meeting and, revoking all prior Proxies, appoints Richard H. Savage, John E.
Savage, Guy A. Main and Steven R. Kay, and each or any of them, with full power
of substitution in each, the proxies of the undersigned to represent the
undersigned and vote all shares of Common Stock of the undersigned in Amwest
Insurance Group, Inc., at the Annual Meeting of Stockholders to be held on May
30, 1997 and any adjournments or postponements thereof upon the following
matters and in the manner designated below:
THIS PROXY WILL BE VOTED FOR ITEM 1 UNLESS OTHERWISE SPECIFIED
1. ELECTION OF DIRECTORS FOR THE TERMS EXPIRING AS SET FORTH BELOW AND AS
DESCRIBED IN THE PROXY STATEMENT:
[_] FOR all nominees listed below [_] WITHHOLD AUTHORITY
(except as marked) to vote for all nominees listed
Richard H. Savage (2000), Steven R. Kay (2000), Charles L. Schultz (2000)
INSTRUCTION: To withhold authority to vote for any individual nominee, write
that nominee's name on the space provided below:
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(CONTINUED ON REVERSE SIDE)
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(CONTINUED FROM OTHER SIDE)
2. To transact such other business as may properly come before the meeting or
any adjournment or postponement thereof and as to which the undersigned
hereby confers discretionary authority.
Please sign as name(s) appears.
Executors, administrators,
guardians, officers of cor-
porations, and others signing in a
fiduciary capacity should state
their full titles as such.
Date: , 1997
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PLEASE MARK, DATE, SIGN AND MAIL THIS PROXY CARD PROMPTLY
IN THE ENCLOSED ENVELOPE.
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