<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
Gainsco, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
-------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
-------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-------------------------------------------------------------------------
(5) Total fee paid:
-------------------------------------------------------------------------
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
-------------------------------------------------------------------------
(3) Filing Party:
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(4) Date Filed:
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Notes:
<PAGE>
GAINSCO, INC.
500 Commerce Street
Fort Worth, Texas 76102
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 12, 1997
TO THE SHAREHOLDERS:
The Annual Meeting of the Shareholders of GAINSCO, INC. will be held at the
Company's offices at 500 Commerce Street, Fort Worth, Texas, on May 12, 1997 at
2:00 p.m. (C.D.T.) for the following purposes:
1. To elect a Board of Directors consisting of nine persons.
2. To approve the appointment of KPMG Peat Marwick LLP 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 14, 1997,
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, 1996, 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
Sam Rosen,
Secretary
Fort Worth, Texas
Dated March 31, 1997
<PAGE>
GAINSCO, INC.
500 Commerce Street
Fort Worth, Texas 76102
PROXY STATEMENT
For The
ANNUAL MEETING OF SHAREHOLDERS
To Be Held on May 12, 1997
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 (the "Meeting") to be held
at the Company's offices at 500 Commerce Street, Fort Worth, Texas, on
May 12, 1997, 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
March 31, 1997.
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 approximately
$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 14, 1997, will be entitled to
vote on matters presented at the Meeting. On March 14, 1997, there were
outstanding 21,100,353 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
nine nominees receiving the highest number of affirmative votes shall be elected
as directors provided a quorum is present. All shares represented 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
1
<PAGE>
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 than vote "against" approval of
this matter, it will pass.
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth as of February 28, 1997, the number of
shares of Common Stock beneficially owned (as defined by the Securities and
Exchange Commission) by (i) each director and director nominee, (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.
Amount and Nature of Beneficial Ownership
-----------------------------------------
Number of
Name of Beneficial Owner Shares Percent
- ------------------------ --------- -------
Joseph D. Macchia........................... 2,462,474/(1)/ 11.4%
Joel C. Puckett............................. 429,621/(2)/ 2.0%
Jack L. Johnson............................. 202,351/(3)/ *
Sam Rosen................................... 174,165/(4)/ *
Norman J. E. Roe............................ 147,605/(5)/ *
Daniel J. Coots............................. 99,533/(6)/ *
John H. Williams............................ 28,962/(7)/ *
Harden H. Wiedemann......................... 25,484/(8)/ *
Mark D. Brissman............................ 14,936/(9)/ *
Richard A. Laabs............................ 6,847/(10)/ *
John C. Goff................................ -0- *
Robert J. McGee............................. -0- *
Executive officers as a group (10 persons).. 3,202,909/(11)/ 14.8%
___________________________
*Less than 1%
(1) Includes 29,522 shares of Common Stock held by Mr. Macchia's IRA, 8,001
shares of Common Stock held by an IRA of Mr. Macchia's wife and 305,983
shares of Common Stock held by the Profit Sharing Plan of the Company for
the account of Mr. Macchia as beneficiary. Also includes 26,621 shares of
Common Stock that Mr. Macchia has the right to acquire within 60 days
through the exercise of options granted under the 1995 Stock Option Plan.
2
<PAGE>
(2) Includes 51,927 shares of Common Stock held by the Joel Puckett Self-
Employed Retirement Trust and 126,501 shares of Common Stock that Mr.
Puckett has the right to acquire within 60 days through the exercise of
options granted under the 1990 and 1995 Stock Option Plans.
(3) Includes 45,124 shares of Common Stock held by the Profit Sharing Plan of
the Company for the account of Mr. Johnson as beneficiary and 41,555 shares
of Common Stock that Mr. Johnson has the right to acquire within 60 days
through the exercise of options granted under the 1990 and 1995 Stock
Option Plans.
(4) Includes 3,163 shares held by an IRA of Mr. Rosen's wife. Mr. Rosen
disclaims beneficial ownership of those shares. Also includes 35,065
shares held for the benefit of Mr. Rosen by the Shannon, Gracey, Ratliff &
Miller, L.L.P. Profit Sharing Plan, 3,163 shares of Common Stock held by
Mr. Rosen's IRA and 56,864 shares of Common Stock that Mr. Rosen has the
right to acquire within 60 days through the exercise of options granted
under the 1990 and 1995 Stock Option Plans. 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 36,746 shares of Common Stock that Mr. Roe has the right to
acquire within 60 days through the exercise of options granted under the
1990 and 1995 Stock Option Plans.
(6) Includes 37,498 shares of Common Stock held by the Profit Sharing Plan of
the Company for the account of Mr. Coots as beneficiary and 53,514 shares
of Common Stock that Mr. Coots has the right to acquire within 60 days
through the exercise of options granted under the 1990 and 1995 Stock
Option Plans.
(7) Includes 28,345 shares of Common Stock that Mr. Williams has the right to
acquire within 60 days through the exercise of options granted under the
1990 and 1995 Stock Option Plans.
(8) Includes 20,237 shares of Common Stock that Mr. Wiedemann has the right to
acquire within 60 days through the exercise of options granted under the
1990 and 1995 Stock Option Plans.
(9) Includes 2,032 shares of Common Stock held by the Profit Sharing Plan of
the Company for the account of Mr. Brissman as beneficiary and 12,904
shares of Common Stock that Mr. Brissman has the right to acquire within 60
days through the exercise of options granted under the 1990 and 1995 Stock
Option Plans.
(10) Includes 6,847 shares of Common Stock that Mr. Laabs has the right to
acquire within 60 days through the exercise of options granted under the
1995 Stock Option Plan.
(11) Includes 430,389 shares of Common Stock held by the Profit Sharing Plan of
the Company for the account of executive officers and 316,275 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 and 1995 Stock Option Plans.
3
<PAGE>
(12) Participants in the Profit Sharing Plan of the Company have no voting power
with regard to shares held for their benefit but have sole disposition
power.
FIVE PERCENT SHAREHOLDERS
The following table sets forth, as of December 31, 1996, information with
respect to each person known by the Company to own beneficially more than 5% of
the Common Stock of the Company:
Amount and Nature Percent
Name and Address of Beneficial Ownership of Class
---------------- ----------------------- --------
(1) Joseph D. Macchia 2,462,474 11.41
1409 Indian Creek
Fort Worth, Texas 76109
(2) FMR Corp. 1,784,800 8.27
82 Devonshire Street
Boston, MA 02109
- -----------------------------------
(1) Information with regard to Mr. Macchia's beneficial ownership is provided
in the preceding table. He has sole voting and disposition power of all of
such shares other than (i) the shares held by his wife as to which he has
no voting or disposition powers, (ii) the shares held by the Company's
profit Sharing Plan over which he has no voting power but sole disposition
power, and (iii) shares underlying options.
(2) This information was provided to the SEC and to the Company by FMR Corp
("FMR"), Edward C. Johnson 3d (Johnson), Abigail P. Johnson, Fidelity
Management & Research Company ("Fidelity") and Fidelity Low-Priced Stock
Fund ("FLPSF"). It was reported that (i) Fidelity, a wholly-owned
subsidiary of FMR is a beneficial owner of 1,784,800 shares or 8.27% of
the Common Stock as a result of acting as investment adviser to FLPSF, (ii)
all shares were owned by FLPSF, (iii) Johnson, FMR through its control of
Fidelity, and the Funds each has sole power to dispose of the 1,784,800
shares owned by the Funds, and (iv) power to vote the shares resides with
the Funds' Boards of Trustees which vote the shares under written
guidelines. Reference is made to the Schedule 13G filed with the
Securities Exchange Commission by FMR, Johnson, Abigail P. Johnson,
Fidelity and FLPSF for more detailed information on the matter summarized
in this footnote.
4
<PAGE>
BOARD OF DIRECTORS AND COMMITTEES OF THE BOARD
The bylaws of the Company were amended on February 17, 1997 to provide that
the Board of Directors shall consist of up to nine members. The Board of
Directors has set the number of Directors at nine and has nominated the nine
persons named below for election to the Board. As a result of the request of
Mr. Norman J. E. Roe, who is a current member of the Board of Directors, that
his name not be included as a nominee, there are three nominees for director who
are not current members of the Board, Messrs. John C. Goff, Robert McGee and
Daniel J. Coots.
NAME AGE POSITION WITH COMPANY
---- --- ---------------------
Joseph D. Macchia/(1)/ 61 Chairman of the Board, President
and Chief Executive Officer
Jack L. Johnson 63 Senior Vice President and Director
Joel C. Puckett/(1)(2)(3)/ 53 Director
Norman J. E. Roe/(1)(2)(3)/ 74 Director
Sam Rosen 61 Secretary and Director
Harden H. Wiedemann/(2)(3)/ 43 Director
John H. Williams/(2)(3)/ 63 Director
John C. Goff 41 Nominee for Director
Robert J. McGee 42 Nominee for Director
Daniel J. Coots 45 Senior Vice President,
Chief Financial Officer and
Nominee for Director
- ----------------------
(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 1996. The
Executive Compensation Committee establishes the compensation of officers of the
Company. This Committee had one formal meeting in 1996. The Stock Option Plan
Committee administers the 1990 Stock Option Plan and the 1995 Stock Option Plan
of the Company and prepares recommendations to the Board of Directors on the
adoption of stock option plans and the grant of stock options. This Committee
had two formal meetings in 1996. The Company does not have a nominating
committee.
5
<PAGE>
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 1996, 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 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 1995 Stock Option Plan under which he has been awarded options to purchase
8,400 shares of stock for each year of past service as a director as of May 15,
1995, such options to become exercisable over a period ending on May 15, 1999,
conditioned upon continued service as a director.
The principal occupations of the directors and director nominees 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 has been Chairman and Chief Executive Officer of Assurance
Medical, Incorporated, a company providing independent oversight of drug
testing, since 1991.
MR. JOHN H. WILLIAMS has served as a director of the Company since 1990.
Mr. Williams is Senior Vice President, Investments, with Everen Securities, Inc.
and has been a principal of that firm or its
6
<PAGE>
predecessors since May 1987. Prior to that time, Mr. Williams was associated
with Thomson McKinnon Securities, Inc. and its predecessors from 1967.
MR. JOHN C. GOFF has not previously served as a director of the Company.
Since 1987 Mr. Goff has served as a senior investment advisor to and investor
with Mr. Richard Rainwater. From April 1994 through late 1996 he served as
Chief Executive Officer of Crescent Real Estate Equities, Inc. ("Crescent") and
since late 1996 he has served as Vice Chairman of Crescent, which is a real
estate investment company.
MR. ROBERT J. MCGEE has not previously served as a director of the Company.
Since 1992 Mr. McGee has served as Chairman and Chief Executive Officer of KBK
Capital Corporation, a 35-year old commercial finance company. From 1989 to
1992 Mr. McGee served as Chairman of the Board and Chief Executive Officer of
Texas Commerce Bank-Tarrant County and Vice Chairman, Texas Commerce Bank, N.A.
MR. DANIEL J. COOTS has not previously served as a director of the Company.
From 1987 to 1991 Mr. Coots served as Vice President, Treasurer and Chief
Financial Officer of the Company. Since 1991, he has served as Senior Vice
President, Treasurer and Chief Financial Officer of the Company. Mr. Coots has
been engaged in the property and casualty insurance business since 1983.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE.
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
the Company's Common Stock to file with the Securities and Exchange Commission
and the New York Stock Exchange initial reports of ownership and reports of
changes in ownership of Common Stock. 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)
All of the present directors were elected at the last Annual Meeting of the
Shareholders. Management has nominated each of the persons now serving, other
than Mr. Norman J. E. Roe who has requested that he not be nominated, for
election as director to serve for one year until the next annual meeting of the
shareholders. Additionally, management has nominated Messrs. Goff, McGee and
Coots for election as director. 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."
7
<PAGE>
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE "FOR" THE
ELECTION AS DIRECTORS OF THE NINE 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, 1996.
Information is provided for the fiscal years ending on December 31 of the three
years shown.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
----------------------
ANNUAL COMPENSATION Awards Payouts
------------------- ------------------------
Other Restricted
NAME AND Annual Stock LTIP All Other
PRINCIPAL Salary Bonus Compen- Award(s) Options/ Payouts Compensation
POSITION Year ($) ($) sation ($) ($) SARs (#) ($) ($)/(1)
---------- ---- ------- ------- --------- ---------- -------- ------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
JOSEPH D. MACCHIA 1996 210,000 751,891 - - - - 20,668
Chairman, President and 1995 200,640 871,435 - - 133,107 - 24,103
Chief Executive Officer 1994 192,000 775,862 - - - - 21,557
JACK L. JOHNSON 1996 125,468 156,461 - - - - 20,668
Senior Vice President 1995 120,180 234,889 - - 91,439 - 24,000
1994 115,008 209,134 - - - - 20,760
DANIEL J. COOTS 1996 110,475 152,696 - - - - 20,668
Senior Vice President, 1995 105,516 178,038 - - 61,895 - 24,103
Treasurer and Chief 1994 100,008 156,650 - - - - 20,760
Financial Officer
MARK D. BRISSMAN 1996 120,000 60,000 - - - - 20,668
Vice President 1995 115,000 124,869 - - 43,749 - -
1994 19,167 19,363 - - 3,769 - -
RICHARD A. LAABS 1996 97,125 76,777 - - - - 6,756
Vice President 1995 33,750 25,363 - - 34,238 - -
1994 - - - - - - -
</TABLE>
________________
/(1)/ Amounts contributed to or accrued for the Named Executives under the
Profit Sharing Plan of the Company.
8
<PAGE>
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, if any, exercised during the fiscal year ended December 31,
1996, the aggregate dollar value, if any, realized upon exercise, the total
number of unexercised stock options held at December 31, 1996 and the aggregate
dollar value of the unexercised options held at December 31, 1996. 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, 1996, which was $9.625 per share. These values, unlike
the amounts set forth in the column headed "Value Realized," have not been, and
may never be, realized. The underlying options have not been, and may not be,
exercised. Actual gains, if any, on exercise will depend on the value of the
Company's stock on the date of exercise. There can be no assurance that the
values shown will be realized.
AGGREGATED OPTION EXERCISES IN THE LAST
FISCAL YEAR AND FY-END OPTION VALUES
<TABLE>
<CAPTION>
SHARES
ACQUIRED
ON VALUE
EXERCISE REALIZED NUMBER OF UNEXERCISED VALUE OF UNEXERCISED
NAME (#) ($) OPTIONS AT FY-END ($) OPTIONS AT FY-END ($)
- ---- --------- -------- --------------------- ---------------------
<S> <C> <C> <C> <C>
EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
----------- ------------- ----------- -------------
JOSEPH D. MACCHIA - - 26,621 106,486 - -
Chairman, President
and Chief Executive Officer
JACK L. JOHNSON - - 41,555 73,152 151,588 -
Senior Vice President
DANIEL J. COOTS - - 53,514 49,516 299,166 -
Senior Vice President,
Treasurer and Chief
Financial Officer
MARK D. BRISSMAN - - 12,904 35,000 6,545 -
Vice President
RICHARD A. LAABS - - 6,847 27,391 - -
Vice President
</TABLE>
9
<PAGE>
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.
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.
10
<PAGE>
REPORT OF THE EXECUTIVE COMPENSATION COMMITTEE
The Executive Compensation Committee (the "Committee") of the Board of
Directors establishes the compensation policies applicable to the Company's
executive officers, including its Named Executives. These policies are designed
to attract and retain highly qualified executive officers and to motivate them
to meet the goals established in the Company's current year and long term
business plans.
The Committee consists of two independent directors, Joel C. Puckett and
Norman J. E. Roe and the Company's President and Chief Executive Officer, Joseph
D. Macchia. It is the policy of the Committee to tie current salary to the
individual's overall performance and the Company's success in meeting the goals
of its business plans while taking into consideration the operation of
competitive factors and the general business climate in the area in which it
operates. In making their determinations with regard to executive officers
other than the CEO, the Committee gives considerable deference to the CEO's
evaluation of the contributions made by each other executive officer during the
prior year.
The Committee provides additional short term incentives to maximize
earnings through the Company's Executive Incentive Compensation Plan. Under
that plan, in which all executive officers participate, a formula determined
fund is divided among plan participants pro rata up to a set percent (the "base
share") of their base salaries. The base share for all executive officers,
other than the CEO, is established by the CEO. If funds are available in excess
of the amount required to pay all participants their base share, the excess
funds available under the plan are distributed at the discretion of the CEO.
Since the bonus awards are paid only out of earnings which are in excess of ten
percent of beginning shareholders' equity (and do not exceed ten percent of net
earnings for the year), the plan provides the Company's executive officers with
incentives to maximize current year profits.
The long-term financial rewards to executive officers are closely linked to
long-term corporate performance and growth in shareholder value. This is
accomplished through executive officer participation in the Company's 1990 Stock
Option Plan and the 1995 Stock Option Plan. Although stock options are granted
to executive officers by the Company's Stock Plan Committee, the Executive
Compensation Committee takes into consideration awards of Company stock options
as well as his or her participation level in the Executive Incentive
Compensation Plan and the Company's Profit Sharing Plan in establishing the
salary of each executive officer.
Because a key element of short-term compensation is participation in the
Executive Incentive Compensation Plan which is made up of funds coming out of
earnings in excess of ten percent of shareholders equity and because each
executive officer's long-term financial rewards are tied directly to the
creation of shareholder value, overall executive compensation is largely risk
based with the financial rewards of the executive officers tied directly to the
success of the Company.
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The Executive Compensation Committee establishes the salary of the CEO
based in part upon historical and current profitability of the Company as
measured by standard performance criteria used in the insurance industry. Some
of the key measures are premiums written, claims and expense ratios, return on
shareholders' equity and per share earnings of the Company. The increase in the
salary of the CEO to $210,000 for fiscal 1996 from $200,640 for fiscal 1995 was
based in part on his leadership over many years which has resulted in the
achievement of over a 20% return on beginning shareholders' equity for each of
the ten years through 1995, as well as claims and expense ratios significantly
superior to industry averages over the same period. The CEO participates,
together with the other executive officers, in the Executive Incentive
Compensation Plan, with a base ratio (the percent of his base salary which
determines his participation in the bonus fund) which has been established by
contract at one-hundred percent. The CEO also is a participant in the 1990
Stock Option Plan and the 1995 Stock Option Plan.
The Committee considered Section 162(m) of the Internal Revenue Code of
1986, as amended, which limits the amount of compensation a corporation may
deduct as a business expense paid to its chief Executive Officer or any of its
four other most highly compensation officers, to $1,000,000 in any year except
to the extent that such compensation qualifies as "performance-based
compensation" or meets other exceptions not here relevant. During 1995 the
Committee obtained the agreement of the Company's CEO to accept as deferred
compensation any portion of his compensation which, because of the provisions of
Section 162(m) would not be deductible for federal income tax purposes.
However, since none of the CEO's compensation for 1996 was affected by Section
162(m), none of it was deferred.
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 following performance Graph
shall not be incorporated by reference into any such filing.
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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 12/31/91
For Fiscal Years Ended December 31
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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 LLP to be the independent auditors of the Company for the current fiscal
year. KPMG Peat Marwick LLP, or its predecessor, has served as the Company's
independent auditors since 1984. The Company has been advised that KPMG Peat
Marwick LLP 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 LLP.
A representative of KPMG Peat Marwick LLP 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 nine (9)
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 LLP 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 LLP 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 1998
Annual Meeting of Shareholders must be received at the principal executive
offices of the Company on or before December 1, 1997.
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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,
1996, as filed with the Securities and Exchange Commission, including the
financial statements and schedules thereto. Such report was filed with the
Securities and Exchange Commission on March 31, 1997. Requests for copies of
such report should be directed to Investor Relations, 500 Commerce Street, Fort
Worth, Texas 76102, (817)336-2500.
1996 ANNUAL REPORT TO SHAREHOLDERS
The Annual Report to Shareholders of the Company for the fiscal year ended
December 31, 1996 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.
15
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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 14, 1997, at the Annual Meeting of Shareholders to be held on May 12,
1997, or any adjournment thereof.
1.ELECTION OF DIRECTORS
[_FOR]all nominees listed [_WITHHOLD]AUTHORITY to
below (except asmarked to vote for all nominees
the contrary below, see listed below
instructions)
Joseph D. Macchia, Jack L. Johnson, Joel C. Puckett, Sam Rosen, Harden H.
Wiedemann, John H. Williams, John C. Goff, Robert McGee, Daniel J. Coots
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 LLP 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: ____________________, 1997
_________________________________
(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 on this
card. 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.
