<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 (S)240.14a-11(c) or (S)240.14a-12
GAINSCO, INC.
- - --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
GAINSCO, INC.
- - -------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[x] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
[_] $500 per each party to the controversy pursuant to Exchange Act Rule 14a-
6(i)(3).
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
---------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
----------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
----------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
---------------------------------------------------------------------------
(5) Total fee paid:
---------------------------------------------------------------------------
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
----------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
---------------------------------------------------------------------------
(3) Filing Party:
---------------------------------------------------------------------------
(4) Date Filed:
---------------------------------------------------------------------------
Notes:
<PAGE>
GAINSCO, INC.
500 Commerce Street
Fort Worth, Texas 76102
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 16, 1995
TO THE SHAREHOLDERS:
The Annual Meeting of the Shareholders of GAINSCO, INC. will be held in the
President's Room of the City Club, 301 Commerce Street, Fort Worth, Texas on May
16, 1995 at 2:00 p.m. (C.D.T.) for the following purposes:
1. To elect a Board of Directors consisting of seven persons.
2. To approve the appointment of KPMG Peat Marwick as independent
auditors for the current fiscal year.
3. To transact such other business as may properly come before the
Meeting or any adjournment(s) thereof.
Only Shareholders of record as of the close of business on March 30, 1995
will be entitled to notice of or to vote at this Meeting or any adjournment or
adjournments thereof. A copy of the Annual Report to Shareholders for the
Fiscal Year Ended December 31, 1994 is enclosed herewith.
WE HOPE YOU WILL BE ABLE TO ATTEND THE MEETING IN PERSON. WHETHER OR NOT
YOU PLAN TO ATTEND, PLEASE DATE AND SIGN THE ENCLOSED PROXY AND RETURN IT
PROMPTLY IN THE ACCOMPANYING ADDRESSED ENVELOPE WHICH REQUIRES NO POSTAGE IF
MAILED IN THE UNITED STATES.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Sam Rosen
Sam Rosen,
Secretary
Fort Worth, Texas
Dated April 14, 1995
<PAGE>
GAINSCO, INC.
500 Commerce Street
Fort Worth, Texas 76102
PROXY STATEMENT
For The
ANNUAL MEETING OF SHAREHOLDERS
To Be Held on May 16, 1995
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of GAINSCO, INC. (the "Company") for use at
the Annual Meeting of the Shareholders of the Company to be held in the
President's Room of the City Club, 301 Commerce Street, Fort Worth, Texas, on
May 16, 1995, at 2:00 p.m. (C.D.T.) and at any adjournment thereof. This Proxy
Statement and the form of proxy were sent to security holders on or about April
14, 1995.
The cost of soliciting proxies is being paid by the Company. In addition
to the mails, the Company's officers, directors and other regular employees,
without additional compensation, may solicit proxies personally or by other
appropriate means. It is also contemplated that, for a fee of $4,500 plus
certain expenses, additional solicitation will be made by personal interview,
telephone or other appropriate means under direction of Morrow & Co., Inc., 909
Third Avenue, New York, NY 10022-4799.
If the enclosed proxy is properly executed and returned, the shares
represented thereby will be voted in the manner specified. If no specification
is made in the proxy, then the shares shall be voted in favor of the
recommendations of the Board of Directors. A proxy may be revoked by a
shareholder at any time prior to the actual exercise thereof by written notice
to the Secretary of the Company, by submission of another proxy bearing a later
date or by attending the Meeting and voting in person.
RECORD DATE AND VOTING SECURITIES
Only holders of the Company's $.10 par value common stock ("Common Stock")
of record as of the close of business on March 30, 1995, will be entitled to
vote on matters presented at the Meeting. Holders of shares of Common Stock
issued on April 14, 1995, pursuant to a five percent stock dividend to
shareholders of record on March 31, 1995, will not be entitled to vote such
shares on matters presented at the Meeting. On March 30, 1995, there were
outstanding 19,512,561 shares of Common Stock, which constituted all of the
outstanding voting securities of the Company. Each share of Common Stock will
be entitled to one vote on all matters presented at the Meeting. A majority of
the issued and outstanding shares of Common Stock on the record date shall
constitute a quorum. There will be no cumulative voting for members of the
Board of Directors. Directors are elected by plurality vote and, therefore, the
seven nominees receiving the highest number of affirmative votes shall be
elected as directors provided a quorum is present. All shares represented
1
<PAGE>
at the Meeting in person or by proxy shall be counted in determining the
presence of a quorum. Abstentions and broker non-votes will not be considered
part of the voting power present with respect to any matter on which such shares
abstain or do not vote, which will have the effect of reducing the number of
shares voting affirmatively that will be required to approve a matter requiring
a majority vote. Approval of the appointment of the independent auditors for
the coming year requires only a favorable majority vote, and therefore, assuming
a quorum is present, if more shares vote "for" approval of the appointment of
the independent auditors than vote "against" such approval, the matter will
pass.
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth as of February 28, 1995, the number of
shares of Common Stock beneficially owned (as defined by the Securities and
Exchange Commission) by (i) each director, (ii) each executive officer named in
the Summary Compensation Table and (iii) all of the executive officers of the
Company as a group.
Except as otherwise indicated, each of the persons named below has sole
voting and investment power with respect to the shares of Common Stock
beneficially owned by that person. Each person listed is currently either a
director or an executive officer.
<TABLE>
<CAPTION>
Amount and Nature of Beneficial Ownership
------------------------------------------
Number of
Name of Beneficial Owner Shares Percent
- - ------------------------------------------- ------------------------ ----------------
<S> <C> <C>
Joseph D. Macchia.......................... 2,208,441(1) 11.2%
Joel C. Puckett............................ 368,410(2) 1.9%
Jack L. Johnson............................ 160,988(3) *
Sam Rosen.................................. 157,042(4) *
Norman J. E. Roe........................... 143,998(5) *
Daniel J. Coots............................ 85,937(6) *
Norman Alberigo............................ 57,701(7) *
John H. Williams ......................... 13,036(8) *
Harden H. Widemann......................... 10,663(9) *
J. Landis Graham........................... 4,044(10) *
Executive Officers as a group (7 persons).. 2,614,094(11) 13.2%
- - ---------------------------------------------------------------------------------------
</TABLE>
*Less than 1%
(1) Includes 26,779 shares of Common Stock held by Mr. Macchia's IRA, 7,258
shares of Common Stock held by an IRA of Mr. Macchia's wife, 267,102 shares
of Common Stock held by the Profit Sharing Plan of the Company for the
account of Mr. Macchia, as beneficiary and 6,032 shares of Common Stock
that Mr. Macchia has the right to acquire within 60 days through the
exercise of options granted under the 1990 Stock Option Plan.
2
<PAGE>
(2) Includes 47,100 shares of Common Stock held by The Joel Puckett Self-
Employed Retirement Trust and 93,470 shares of Common Stock that Mr.
Puckett has the right to acquire within 60 days through the exercise of
options granted under the 1990 Stock Option Plan.
(3) Includes 37,058 shares of Common Stock held by the Profit Sharing Plan of
the Company for the account of Mr. Johnson, as beneficiary and 13,567
shares of Common Stock that Mr. Johnson has the right to acquire within 60
days through the exercise of options granted under the 1990 Stock Option
Plan.
(4) Includes 2,870 shares held by an IRA of Mr. Rosen's wife. Mr. Rosen
disclaims beneficial ownership of those shares. Also, includes 31,806
shares held for the benefit of Mr. Rosen by the Shannon, Gracey, Ratliff &
Miller, L.L.P. Profit Sharing Plan, 2,870 shares of Common Stock held by
Mr. Rosen's IRA and 48,447 shares of Common Stock that Mr. Rosen has the
right to acquire within 60 days through the exercise of options granted
under the 1990 Stock Option Plan. Mr. Rosen is a partner in the law firm
of Shannon, Gracey, Ratliff & Miller, L.L.P. That firm, or its
predecessors, has been general counsel to the Company since 1979. The
Company intends to retain that firm as its general counsel during the
current fiscal year.
(5) Includes 12,061 shares of Common Stock that Mr. Roe has the right to
acquire within 60 days through the exercise of options granted under the
1990 Stock Option Plan.
(6) Includes 3,188 shares of Common Stock held by Mr. Coots' IRA, 934 shares of
Common Stock held by an IRA of Mr. Coots' wife, 26,771 shares of Common
Stock held by the Profit Sharing Plan of the Company for the account of Mr.
Coots, as beneficiary and 32,786 shares of Common Stock that Mr. Coots has
the right to acquire within 60 days through the exercise of options granted
under the 1990 Stock Option Plan.
(7) Includes 13,198 shares of Common Stock held by the Profit Sharing Plan of
the Company for the account of Mr. Alberigo, as beneficiary and 26,920
shares of Common Stock that Mr. Alberigo has the right to acquire within 60
days through the exercise of options granted under the 1990 Stock Option
Plan.
(8) Includes 12,060 shares of Common Stock that Mr. Williams has the right to
acquire within 60 days through the exercise of options granted under the
1990 Stock Option Plan.
(9) Includes 6,810 shares of Common Stock that Mr. Wiedemann has the right to
acquire within 60 days through the exercise of options granted under the
1990 Stock Option Plan.
(10) Includes 3,769 shares of Common Stock that Mr. Graham has the right to
acquire within 60 days through the exercise of options granted under the
1990 Stock Option Plan.
(11) Includes 114,731 shares of Common Stock that executive officers of the
Company have the right to acquire within 60 days through the exercise of
options granted under the 1990 Stock Option Plan of the
3
<PAGE>
Company, and 354,781 shares of Common Stock held by the Profit Sharing Plan
of the Company for the account of executive officers.
FIVE PERCENT SHAREHOLDERS
Mr. Joseph D. Macchia of 1409 Indian Creek, Fort Worth, Texas 76107, is the
only beneficial owner of over 5% of the Company's outstanding shares of Common
Stock. The information with regard to Mr. Macchia's beneficial ownership is
provided in the preceding table.
BOARD OF DIRECTORS AND COMMITTEES OF THE BOARD
<TABLE>
<CAPTION>
NAME AGE POSITION WITH COMPANY
- - ----------------------------- --- ------------------------------------------
<S> <C> <C>
Joseph D. Macchia(1) 59 Chairman of the Board, President and
Chief Executive Officer
Jack L. Johnson 61 Senior Vice President and Director
Joel C. Puckett(1)(2)(3) 51 Director
Norman J. E. Roe(1)(2)(3) 72 Director
Sam Rosen 59 Secretary and Director
Harden H. Wiedemann(2)(3) 42 Director
John H. Williams(2)(3) 61 Director
- - ------------------------------------------------------------------------------
</TABLE>
(1) Member of the Executive Compensation Committee.
(2) Member of the Audit Committee.
(3) Member of the Stock Option Plan Committee.
The Company has an Audit Committee, an Executive Compensation Committee,
and a Stock Option Plan Committee. The Audit Committee's functions include
recommending to the Board of Directors the engagement of the Company's
independent certified public accountants, reviewing the results of their
auditing engagement, and monitoring on a periodic basis the internal accounting
controls of the Company. This Committee had two formal meetings in 1994. The
Executive Compensation Committee establishes the compensation of officers of the
Company. This Committee had one formal meetings in 1994. The Stock Option Plan
Committee administers the 1990 Stock Option Plan of the Company. This Committee
had no formal meetings in 1994. The Company does not have a nominating
committee.
Directors are elected annually by the shareholders of the Company for one
year and hold office until their successors are elected and have qualified.
During 1994, there were a total of five meetings of the Board of Directors.
Each director of the Company who is not an employee of the Company receives
a quarterly retainer of $2,000 and a meeting fee of $500 per meeting, plus
expenses incurred in attending meetings of the Board of
4
<PAGE>
Directors. Directors who are also employees of the Company are not separately
compensated for their service as director.
Each current director who is not an employee of the Company participates in
the 1990 Stock Option Plan under which he has been awarded 6,030 stock options
(as adjusted for all stock dividends and stock splits in the form of stock
dividends through February 28, 1995) for each year of past service on the board
of directors and for each future year of service through 1995. Those options
relating to subsequent years become exercisable only for directors who are still
serving as such during those years.
The principal occupations of the directors of the Company, and time served
as such, are described below:
MR. JOSEPH D. MACCHIA is the founder of the Company and has served as
Chairman of the Board, President, and Chief Executive Officer since its
formation in 1978. Mr. Macchia has been engaged in the property and casualty
insurance business since 1961.
MR. JACK L. JOHNSON has served as a director of the Company since 1993.
Mr. Johnson has served as Senior Vice President of the Company since 1984 and as
Executive Vice President of the Company's insurance company subsidiaries since
1987. From 1979 to 1984, Mr. Johnson served as a Vice President of the Company.
Mr. Johnson has been engaged in the property and casualty insurance business
since 1962.
MR. JOEL C. PUCKETT has served as a director of the Company since 1979.
Mr. Puckett is a certified public accountant with offices located in
Minneapolis, Minnesota. Mr. Puckett has been engaged in the private practice of
accounting since 1973.
MR. NORMAN J. E. ROE has served as a director of the Company since 1979.
Mr. Roe was President of Sebrite Corporation before retiring in 1981. Sebrite
Company is engaged in the financing and insuring of mobile homes.
MR. SAM ROSEN has served as the Secretary and a director of the Company
since 1983. Mr. Rosen is a partner with the law firm of Shannon, Gracey,
Ratliff & Miller, L.L.P. He has been a partner in that firm or its predecessors
since 1966.
MR. HARDEN H. WIEDEMANN has served as a director of the Company since 1989.
Mr. Wiedemann is Chairman and Chief Executive Officer of Assurance Medical,
Incorporated, a company providing independent oversight of drug testing. From
1986 to 1988 Mr. Wiedemann served as President of North Texas Commission, a
regional economic development agency.
MR. JOHN H. WILLIAMS has served as a director of the Company since 1990.
Mr. Williams is Senior Vice President, Investments, with Kemper Securities, Inc.
and has been a principal of that firm or its predecessors since May 1987. Prior
to that time, Mr. Williams was associated with Thomson McKinnon Securities, Inc.
and its predecessors since 1967.
5
<PAGE>
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934.
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors and executive officers, and persons who own more than ten percent of a
registered class of the Company's equity securities, to file with the Securities
and Exchange Commission and the American Stock Exchange initial reports of
ownership and reports of changes in ownership of Common Stock and other equity
securities of the Company. Officers, directors and greater than ten-percent
shareholders are required by SEC regulation to furnish the Company with copies
of all Section 16(a) forms they file.
To the Company's knowledge, based solely on review of the copies of such
reports furnished to the Company and written representations that no other
reports were required, all Section 16(a) filing requirements applicable to its
officers, directors and greater than ten-percent beneficial owners were complied
with.
ELECTION OF DIRECTORS
(Proposal No. 1)
The Company's bylaws provide that the Board of Directors shall consist of
up to seven (7) directors. All of the present directors were elected at the
last Annual Meeting of the Shareholders. Management has nominated each of the
persons now serving for election as director to serve for one year until the
next Annual Meeting of the Shareholders. All of the nominees have expressed
their willingness to serve, but if because of circumstances not contemplated,
one or more of the nominees is not available for election, the proxy holders
named in the enclosed proxy form intend to vote for such other person or persons
as management may nominate. No family relationship exists among the directors,
executive officers or nominees. Information with respect to each nominee is set
forth in the section entitled "BOARD OF DIRECTORS AND COMMITTEES OF THE BOARD."
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE "FOR" THE
ELECTION AS DIRECTORS OF THE SEVEN PERSONS NOMINATED BY MANAGEMENT.
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The individuals named below (the "Named Executives") include the
Company's chief executive officer and the other four most highly compensated
executive officers of the Company for the fiscal year ending December 31, 1994.
Information is provided for the fiscal years ending on December 31 of the three
years shown.
6
<PAGE>
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long Term Compensation
-----------------------------------
Annual Compensation Awards Payouts
------------------------------------------------------------------- 1
Other Restricted
Name and Annual Stock LTIP All Other
Principal Salary Bonus Compen- Award(s) Options/ Payouts Compen-
Position Year ($) ($) sation ($) ($) SARs (#) ($) sation ($)
- - ------------------------ ---- ------- ------- --------- ---------- -------- ------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
JOSEPH D. MACCHIA 1994 192,000 775,862 - - - - 21,557
Chairman, President 1993 182,760 609,243 - - - - 29,187
and Chief Executive 1992 171,060 577,566 - - - - 28,443
Officer
JACK L. JOHNSON 1994 115,008 209,134 - - 2,734 - 20,760
Senior Vice President 1993 108,444 162,677 - - - - 29,187
1992 103,280 167,348 - - - - 27,778
DANIEL J. COOTS 1994 100,008 156,650 - - - - 20,760
Senior Vice President, 1993 94,260 120,976 - - - - 25,469
Treasurer and Chief 1992 88,502 111,536 - - - - 22,062
Financial Officer
NORMAN ALBERIGO 1994 88,584 89,491 - - - - 20,760
Vice President 1993 83,568 69,645 - - - - 19,347
1992 79,768 71,806 - - - - 17,929
J. LANDIS GRAHAM 1994 86,700 87,588 - - - - 1,355
Vice President 1993 28,333 23,613 - - 6,836 - -
1992 - - - - - - -
- - --------------------------------------------------------------------------------------------------------------
</TABLE>
1 Amounts included under All Other Compensation represent amounts contributed
to or accrued for the named executive officers under the Company's Profit
Sharing Plan.
AGGREGATE OPTION EXERCISES IN THE LAST FISCAL YEAR AND FISCAL YEAR END OPTION
VALUES
The following table summarizes for each of the Named Executives the number of
stock options exercised during the fiscal year ended December 31, 1994, the
aggregate dollar value realized upon exercise, the total number of unexercised
stock options held at December 31, 1994 and the aggregate dollar value of the
unexercised options held at December 31, 1994. Value realized upon exercise is
the difference between the fair market value of the underlying stock on the
exercise date and the exercise price of the option. Value of unexercised
options at fiscal year-end is the difference between the exercise price of the
stock options and the fair market value of the underlying stock at December 31,
1994, which was $8.25 per share. These values, unlike the amounts set forth in
the column headed "Value Realized," have not been, and may never be, realized.
The underlying options have not been, and may not be, exercised. Actual gains,
if any, on exercise will depend on the value of the Company's stock on the date
of exercise. There can be no assurance that the values shown will be realized.
7
<PAGE>
AGGREGATED OPTION EXERCISES IN THE
LAST FISCAL YEAR AND FY-END OPTION VALUES
<TABLE>
<CAPTION>
Shares
Acquired
on Value
Exercise Realized Number of Unexercised Value of Unexercised Options
Name (#)/(1)/ ($) Options at FY-End/(1)/ at FY-End ($)
- - ---------------------------------- -------- -------- -------------------------- ----------------------------
Exercisable Unexercisable Exercisable Unexercisable
----------- ------------- ------------ --------------
<S> <C> <C> <C> <C> <C> <C>
JOSEPH D. MACCHIA 90,454 577,854 6,032 6,030 34,082 34,071
Chairman, President and
Chief Executive Officer
JACK L. JOHNSON - - 13,567 7,538 65,408 36,341
Senior Vice President
DANIEL J. COOTS 748 4,656 32,786 4,525 185,459 25,596
Senior Vice President, Treasurer
and Chief Financial Officer
NORMAN ALBERIGO 2,859 18,134 26,920 3,770 158,475 22,194
Vice President
J. LANDIS GRAHAM - - 3,769 3,768 - -
Vice President
- - -----------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Adjusted for all stock dividends and stock splits in the form of stock
dividends effected through December 31, 1994.
CHANGE IN CONTROL AGREEMENTS
The Named Executives each have Severance Agreements which are automatically
extended for one additional year from each December 31st unless sooner
terminated by the Company. The Severance Agreements provide for the payment of
benefits if the Named Executive is actually or "constructively" terminated
following a change in control of the Company. A "change in control of the
Company" is generally deemed to occur if: (A) any person becomes the beneficial
owner of 25% or more of the Company's voting securities; (B) during a two-year
period the majority of the Board of Directors of the Company changes without
approval by two-thirds of the directors who either were directors at the
beginning of the period, or whose election was previously approved; (C) the
shareholders of the Company approve a merger or consolidation with another
company in which the Company's voting securities do not continue to represent at
least 75% of the surviving entity; or (D) the shareholders approve a
liquidation, sale or disposition of all or substantially all of the Company's
assets.
8
<PAGE>
No benefits are payable if a Named Executive quits or is terminated for
cause and no benefits beyond those otherwise provided by the Company are
provided if a Named Executive is terminated by reason of death, disability or
retirement.
If, within two years following a change in control, a Named Executive is
terminated by the Company for reasons other than cause, or if the Named
Executive terminates employment for "good reason," the Named Executive will be
paid a lump sum cash payment in an amount equal to two times the Named
Executive's base salary; provided, however, such payment shall not be less than
1.25 times the amount reported on the Named Executive's Form W-2 issued by the
Company with respect to the year preceding the date of actual or constructive
termination. In the event such payment would not be deductible, in whole or in
part, by the Company as a result of Section 280G of the Internal Revenue Code,
such payment shall be reduced to the extent necessary to make the entire payment
deductible.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The members of the Company's Executive Compensation Committee are Messrs.
Joel C. Puckett and Norman J. E. Roe, independent directors of the Company and
Mr. Joseph D. Macchia, President, Chief Executive Officer and Chairman of the
Board of the Company.
No executive officer of the Company served as a member of the compensation
committee or as a director of another entity, one of whose executive officers
served on the Compensation Committee or the Board of Directors of the Company.
REPORT OF THE EXECUTIVE COMPENSATION COMMITTEE
The Executive Compensation Committee establishes the general compensation
policies of the Company, the specific salary levels for executive officers of
the Company and compensation plans designed to provide special incentives to key
personnel. The Executive Compensation Committee is composed of two independent
directors, Joel C. Puckett and Norman J. E. Roe and the Company's CEO, Joseph D.
Macchia.
The overall philosophy of the Executive Compensation Committee is to reward
executives based on the quality of their performance and to provide other
significant compensation potential in a form which will create incentive for
maximizing the efforts of executive management on behalf of the Company. It is
the policy of the committee to balance executive compensation among salary,
short-term incentive rewards and long-term incentive rewards.
The Executive Compensation Committee establishes the salary of the CEO and
other executives based in part upon historical and current profitability of the
Company as measured by standard performance criteria for the insurance industry
such as premiums written, loss and expense ratios, return on shareholders'
equity and earnings per share of Common Stock. The CEO's salary is significantly
affected by these criteria. The increase in the salary of the CEO to $192,000
for fiscal 1994 from $182,760 for fiscal 1993 was based in part on the Company's
performance in fiscal 1993, and also on the Company's progress at the direction
of its CEO since its formation in 1978, including the achievement of over a 22%
return on beginning shareholder equity
9
<PAGE>
for each of its nine years through 1993 and the achievement of claim and
combined ratios significantly superior to industry averages over the same
period.
Salary of executive officers other than the CEO is significantly affected
by their success in the particular area of management to which they are assigned
and by the CEO's evaluation of their overall contribution to the Company's
success. A significant portion of executive compensation of the CEO and the
other Name Executives is, however, derived not from salary but from the
Company's incentive compensation plans which are of both a short-term and long-
term nature.
The Company's primary short-term incentive compensation is derived through
its Executive Incentive Compensation Plan. Under that plan, in which all
executive officers as well as other key officers participate, a formula
determined portion of each participating officer's salary for the current year
is, to the extent earned, divided among the participating officers. Since bonus
awards are paid only out of earnings which are in excess of ten percent (10%) of
beginning shareholders' equity (and do not exceed ten percent (10%) of Company
net earnings for that year), this plan provides the Company's executives with
incentive to maximize current year profits. The plan distributes funds
available under it to executives and other participating officers pro rata up to
a set percent of their base salary as established by the CEO. If funds are
available in excess of the amount required to pay all participants their entire
prescribed percent of base salary, the excess of the funds available under the
plan is distributed at the discretion of the CEO, who applies the same criteria
in making this distribution that the Executive Compensation Committee applies in
determining salaries. These awards are made at the end of each year based on
that year's performance.
Long-term incentive compensation was provided during 1994 primarily through
the Company's 1990 Stock Option Plan. Stock options have been granted under
these plans exercisable at the market value of the Common Stock on the date of
grant as adjusted for stock dividends or other capital changes. The Company's
Stock Option Plan Committee, composed entirely of independent directors,
recommends to the Board of Directors the adoption of stock option plans and
administers those plans. The Company has never reduced the exercise price of
outstanding stock options. Because the value of an option increases only when
market value of the Common Stock increases, stock options provide an effective
incentive to the executive officers to create value for the shareholders. Also,
stock options can provide an affordable method for the Company's executives to
obtain a substantial ownership interest in the Company, which ownership also
provides an effective incentive to such officers to build the Company and its
profitability. The Executive Compensation Committee and the CEO take into
consideration awards in Company stock option plans in establishing the salary of
each executive officer and his or her participation level in the Incentive
Compensation Plan.
The Executive Compensation Committee has considered the deduction
limitation under the Omnibus Budget Reconciliation Act of 1993. Since the
requirements of the Act have not yet been definitively established by final
regulations and since compliance with all of its requirements could restrict the
ability of the Committee to accomplish its goals, it has decided for the present
not to take any action with regard to this issue. The Committee will, however,
continue to review and evaluate the question of whether or not action should be
taken.
10
<PAGE>
EXECUTIVE COMPENSATION COMMITTEE
Joseph D. Macchia Joel C. Puckett Norman J. E. Roe
Notwithstanding anything to the contrary set forth in any of the Company's
previous filings under the Securities Act of 1933 or the Securities Exchange Act
of 1934 that might incorporate future filings, including this Proxy Statement,
in whole or in part, the preceding report and the performance Graph on p. 11
shall not be incorporated by reference into any such filing.
SHARE INVESTMENT PERFORMANCE
The following graph shows changes over the past five-year period in
the value of $100.00 invested in: (1) the Company's Common Stock; (2) the
Standard & Poor's 500 Index; and (3) the Standard & Poor's Property-Casualty
Insurance Index. The year-end value of each one of the hypothetical investments
is based on share price appreciation plus stock dividends plus cash dividends,
with the cash dividends reinvested on the date they were paid. The calculations
exclude trading commission and taxes. Total shareholder returns for each
investment, whether measured in dollars or percent, can be calculated from the
year-end investment values shown beneath the graph.
FIVE-YEAR CUMULATIVE TOTAL RETURN
Value of $100 Invested 12/31/89
For Fiscal Years Ended December 31
Gainsco, Inc. P&C Index S&P 500 Index
------------- --------- -------------
1989 100 100 100
1990 108 97 98
1991 299 126 122
1992 477 136 143
1993 341 150 141
1994 341 152 148
11
<PAGE>
APPROVAL OF APPOINTMENT OF INDEPENDENT AUDITORS
(Proposal No. 2)
Action is to be taken by the shareholders at the Meeting with respect to
the approval of the selection, by the Company's Board of Directors, of KPMG Peat
Marwick to be the independent auditors of the Company for the current fiscal
year. KPMG Peat Marwick, or its predecessor, has served as the Company's
independent auditors since 1984. The Company has been advised that KPMG Peat
Marwick has no relationship with the Company or its subsidiaries other than that
arising from the firm's employment as auditors. Neither the Company, nor any
officer, director, or associate of the Company, has any interest in KPMG Peat
Marwick.
A representative of KPMG Peat Marwick will be present at the Meeting and
will have the opportunity to make a statement if he so desires and will be
available to respond to appropriate questions.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" THE APPROVAL
OF SUCH APPOINTMENT.
ACTION TO BE TAKEN UNDER THE PROXY
The accompanying proxy will be voted "FOR" the election of the seven (7)
persons recommended by the Board of Directors and named under "BOARD OF
DIRECTORS AND COMMITTEES OF THE BOARD" as nominees for director of the Company
and "FOR" approval of the appointment of KPMG Peat Marwick as the Company's
independent auditors unless the proxy is marked in such a manner as to withhold
authority to so vote. The accompanying proxy will also be voted in connection
with the transaction of such other business as may properly come before the
Meeting or any adjournment or adjournments thereof. Management knows of no
matters, other than the election of directors and the approval of the
appointment of KPMG Peat Marwick to be considered at the Meeting. If, however,
any other matters properly come before the Meeting or any adjournment or
adjournments thereof, the persons named in the accompanying proxy will vote such
proxy in accordance with their best judgment on any such matter. The persons
named in the accompanying proxy will also, if in their judgment it is deemed to
be advisable, vote to adjourn the Meeting from time to time.
DATE OF RECEIPT OF SHAREHOLDER PROPOSALS
Shareholder proposals for inclusion in the Proxy Statement for the 1996
Annual Meeting of Shareholders must be received at the principal executive
offices of the Company on or before December 18, 1995.
ANNUAL REPORTS
FORM 10-K
The Company will furnish to each person whose proxy is being solicited,
upon written request of any such person, and without charge, a copy of the
Annual Report of the Company on Form 10-K for the fiscal year ended December 31,
1994, as filed with the Securities and Exchange Commission, including the
financial statements and schedules thereto. Such report was mailed to the
Securities and Exchange Commission on
12
<PAGE>
March 30, 1995. Requests for copies of such report should be directed to
Investor Relations, 500 Commerce Street, Fort Worth, Texas 76102, (817)336-2500.
1994 ANNUAL REPORT TO SHAREHOLDERS
The Annual Report to Shareholders of the Company for the fiscal year ended
December 31, 1994 is enclosed herewith. The Annual Report, which includes
audited financial statements, does not form any part of the material for the
solicitation of proxies.
PLEASE DATE, SIGN AND RETURN THE ENCLOSED PROXY AT YOUR EARLIEST
CONVENIENCE IN THE ENCLOSED ENVELOPE. NO POSTAGE IS REQUIRED FOR MAILING IN THE
UNITED STATES. A PROMPT RETURN OF YOUR PROXY WILL BE APPRECIATED, AS IT WILL
SAVE THE EXPENSE OF FURTHER MAILING.
13
<PAGE>
GAINSCO, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Joseph D. Macchia and Daniel J. Coots, and
each of them, as Proxies, each with the power to appoint his substitute, and
hereby authorizes them to represent and to vote, as designated below, all the
shares of common stock of GAINSCO, INC. held of record by the undersigned on
March 30, 1995, at the Annual Meeting of Shareholders to be held on May 16,
1995, or any adjournment thereof.
1. ELECTION OF DIRECTORS [_] FOR all nominees listed [_] WITHHOLD
below (except as marked to AUTHORITY to vote
the contrary below, see for all nominees
instructions) listed below
Joseph D. Macchia, Jack L. Johnson, Joel C. Puckett, Norman J. E. Roe, Sam
Rosen, Harden H. Wiedemann, John H. Williams
Instructions: To withhold authority to vote for any individual nominee,
write that nominee's name in the space provided below:
-----------------------------------------------------------------------------
2. [_] FOR [_] AGAINST [_] ABSTAIN on approval of appointment of KPMG Peat
Marwick as the Company's independent auditors.
THE PROXIES ARE AUTHORIZED TO VOTE IN THEIR DISCRETION UPON SUCH OTHER BUSINESS
AS MAY PROPERLY COME BEFORE THE MEETING.
PLEASE MARK, SIGN, DATE, AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR PROPOSALS 1
AND 2. THIS PROXY WILL BE VOTED IN ACCORDANCE WITH THE INSTRUCTIONS GIVEN. IN
THE ABSENCE OF INSTRUCTIONS, THIS PROXY WILL BE VOTED FOR PROPOSALS 1 AND 2.
Dated: __________________, 1995.
________________________________
(Signature of shareholder)
________________________________
(Signature if held jointly)
Receipt of Notice of the Annual
Meeting of Shareholders and the
accompanying Proxy Statement is
hereby acknowledged. Please
sign exactly as name appears
below. When shares are held by
joint tenants, both should
sign. When signing as attorney,
as executor, administrator,
trustee, or guardian, please
give full title as such. If a
corporation, please sign in
full corporate name.
