<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)
^--Enter Company Name Here--^
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
-------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
-------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-------------------------------------------------------------------------
(5) Total fee paid:
-------------------------------------------------------------------------
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
-------------------------------------------------------------------------
(3) Filing Party:
-------------------------------------------------------------------------
(4) Date Filed:
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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 18, 1998
TO THE SHAREHOLDERS:
The Annual Meeting of the Shareholders of GAINSCO, INC. will be held in the
Pecos I Room at the Worthington Hotel, 200 Main Street, Fort Worth, Texas, on
May 18, 1998 at 2:00 p.m. (C.D.T.) for the following purposes:
1. To elect a Board of Directors consisting of eight 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 13, 1998,
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, 1997, has previously been mailed to Shareholders
of record at the record date.
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 April 14, 1998
<PAGE>
GAINSCO, INC.
500 Commerce Street
Fort Worth, Texas 76102
PROXY STATEMENT
For The
ANNUAL MEETING OF SHAREHOLDERS
To Be Held on May 18, 1998
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
in the Pecos I Room at the Worthington Hotel, 200 Main Street, Fort Worth,
Texas, on May 18, 1998, 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, 1998.
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 13, 1998, will be entitled to
vote on matters presented at the Meeting. On March 13, 1998, there were
outstanding 20,857,024 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
eight 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 be considered part of the
voting power present with respect to any matter on which such shares abstain and
will, therefore, have the same
1
<PAGE>
practical effect as a vote against any such matter. Approval of the appointment
of the independent auditors for the coming year will require a favorable
majority vote of the shares constituting a quorum.
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth as of February 28, 1998, 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/(13)/
-----------------------------------------
Number of
Name of Beneficial Owner Shares Percent
------------------------ ------ -------
Joseph D. Macchia 2,428,249/(1)/ 11.3%
Joel C. Puckett 446,421/(2)/ 2.1%
Sam Rosen 192,772/(3)/ *
Jack L. Johnson 175,515/(4)/ *
Daniel J. Coots 113,283/(5)/ *
John H. Williams 37,362/(6)/ *
Richard M. Buxton 36,808/(7)/ *
Harden H. Wiedemann 35,564/(8)/ *
Richard A. Laabs 13,854/(9)/ *
John C. Goff 8,400/(10)/ *
Robert J. McGee 8,400/(11)/ *
Executive officers as a group (11 persons) 3,066,506/(12)/ 14.2%
- ---------------------------------
*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 309,196
shares of Common Stock held by the Profit Sharing Plan of the Company for
the account of Mr. Macchia as beneficiary. Also includes 53,242 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) Includes 51,927 shares of Common Stock held by the Joel Puckett
Self-Employed Retirement Trust and 143,301 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 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
2
<PAGE>
& Miller, L.L.P. Profit Sharing Plan, 3,163 shares of Common Stock held by
Mr. Rosen's IRA and 73,664 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.
(4) Includes 59,843 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.
(5) Includes 38,869 shares of Common Stock held by the Profit Sharing Plan of
the Company for the account of Mr. Coots as beneficiary and 65,893 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.
(6) Includes 36,745 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.
(7) Includes 21,808 shares of Common Stock that Mr. Buxton has the right to
acquire within 60 days through the exercise of options granted under the
1995 Stock Option Plan.
(8) Includes 30,317 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 13,694 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.
(10) Includes 8,400 shares of Common Stock that Mr. Goff has the right to
acquire within 60 days through the exercise of options granted under the
1995 Stock Option Plan.
(11) Includes 8,400 shares of Common Stock that Mr. McGee has the right to
acquire within 60 days through the exercise of options granted under the
1995 Stock Option Plan.
(12) Includes 390,939 shares of Common Stock held by the Profit Sharing Plan of
the Company for the account of executive officers and 391,734 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.
(13) 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.
3
<PAGE>
FIVE PERCENT SHAREHOLDERS
The following table sets forth, as of December 31, 1997, information with
respect to each person known by the Company to own beneficially more than 5% of
the Common Stock of the Company:
<TABLE>
<CAPTION>
Amount and Nature Percent
Name and Address of Beneficial Ownership of Class
---------------- ----------------------- ---------
<S> <C> <C> <C>
(1) Joseph D. Macchia 2,428,249 11.3%
1409 Indian Creek
Fort Worth, TX 76109
(2) Ryback Management Corporation 1,222,200 5.86%
7711 Carondelet Ave.
Box 16900
St. Louis, MO 63105
(3) FMR Corp. 1,149,100 5.50%
82 Devonshire Street
Boston, MA 02109
- ----------------------------
</TABLE>
(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 reported to the SEC and to the Company by Ryback
Management Corporation. It was reported that Lindner Growth Fund had the
sole power to vote or direct the vote of and sole power to dispose of or
direct disposition of 1,222,200 shares of Common Stock. Reference is made
to the Schedule 13G filed with the SEC by Ryback Management Corporation for
more detailed information on the matter summarized in this footnote.
(3) 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 1,149,100 shares 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 FLPSF, each has sole power to dispose of the 1,149,100 shares owned by
FLPSF, and (iv) power to vote the shares resides with the Board of Trustees
of FLPSF which votes the shares under written guidelines. Reference is
made to the Schedule 13G filed with the SEC 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 provide that the Board of Directors shall consist
of nine directors until the 1998 meeting of the shareholders at which time the
number of directors shall be reduced to eight directors. The Board of Directors
has nominated the following eight candidates for election as directors for a
term ending at the 1999 Annual Meeting of the Shareholders. Each candidate has
previously been elected by the shareholders, is currently serving as a Director
and is currently serving on the Board committees indicated in the following
list.
NAME AGE POSITION WITH COMPANY
---- --- ---------------------
Joseph D. Macchia/(1)/ 62 Chairman of the Board, President and
Chief Executive Officer
Joel C. Puckett/(1)(2)(3)/ 54 Director
Sam Rosen 62 Secretary and Director
Harden H. Wiedemann/(1)(2)(3)/ 44 Director
John H. Williams/(1)(2)(3)/ 64 Director
John C. Goff/(1)(2)(3)/ 42 Director
Robert J. McGee/(1)(2)(3)/ 43 Director
Daniel J. Coots 46 Senior Vice President, Chief Financial
Officer and Director
- ----------------------
(1) Member of the Executive Committee.
(2) Member of the Audit Committee.
(3) Member of the Compensation Committee
During 1997, the Company had an Executive Committee, an Audit Committee, an
Executive Compensation Committee and a Stock Option Plan Committee. The
function of the Executive Committee is to act in an emergency or on routine
matters when it is impractical to assemble the entire Board for a meeting. The
Executive Committee, during intervals between meetings of the Board, has the
authority to exercise all the powers of the full Board other than matters coming
specifically within the purview of other committees of the Board and certain
extraordinary corporate matters. 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. The Executive Compensation Committee establishes the
compensation of officers of the Company. 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 grants stock options.
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 1997, there were a total of four meetings of the Board of Directors. The
only incumbent director who during the last fiscal year attended fewer than 75
percent of the
5
<PAGE>
aggregate of: (1) the total number of meetings of the Board of Directors and (2)
the total number of meetings held by all committees of the Board on which he
served, was Jack L. Johnson who was unable to attend two Board of Directors
meetings due to illness. During 1997, there were no meetings of the Executive
Committee, two meetings of the Audit Committee, two meetings of the Executive
Compensation Committee and no meetings of the Stock Option Plan Committee.
After the close of the 1997 year, the functions of the Executive Compensation
Committee and the Stock Option Plan Committee were combined into a single
committee known as the Compensation Committee. The Company does not have a
nominating committee.
Each director of the Company who is not a full time 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 full time employees of the Company are not separately
compensated for their service as director.
Each current director who is not a full time employee of the Company
participated in the 1995 Stock Option Plan (the "Plan") on a formula basis.
Each such current director was awarded options to purchase a minimum of 42,000
shares, plus 8,400 shares for each year of service in excess of five years up to
a maximum of an additional 42,000 shares of Common Stock at the closing market
price ($8.3125 - $10.625) on the date of grant. One-fifth of those options
become exercisable immediately and a like number become exercisable on each
anniversary of the grant date, if the optionee continues to be a director on
those dates. The Plan was approved by the Shareholders on May 10, 1996.
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 served as Senior Vice President of the Company from 1984 until his
retirement in January, 1998.
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. 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. Rosen is a director of Aztec Manufacturing Co.
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 predecessors
6
<PAGE>
since May 1987. Prior to that time, Mr. Williams was associated with Thomson
McKinnon Securities, Inc. and its predecessors from 1967. Mr. Williams is a
director of Clear Channel Communications, Inc.
MR. JOHN C. GOFF has served as a director of the Company since 1997. Since
1987 to April 1994, Mr. Goff 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 the Board of
Crescent, which is a real estate investment company (CEI on the NYSE). Mr. Goff
is also Vice Chairman of the Board of Crescent Operating, Inc., an investment
company (COPI on the NASDAQ) and Chairman of the Board of Charter Behavioral
Health Systems.
MR. ROBERT J. MCGEE has served as a director of the Company since 1997.
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 served as a director of the Company since 1997.
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 beneficial owners 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 bylaws of the Company provide that the Board of Directors shall consist
of nine directors until the 1998 meeting of shareholders at which time the
number of directors shall be reduced to eight directors. All of the present
directors were elected at the last Annual Meeting of the Shareholders. The
Board of Directors has nominated each of the persons now serving, other than Mr.
Jack L. Johnson 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. 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 the Board of Directors 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 EIGHT 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, 1997.
Information is provided for the fiscal years ending on December 31 of the three
years shown in the table below.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
-------------------------------
ANNUAL COMPENSATION Awards Payouts
NAME AND ------------------------------------ -------------------------------
PRINCIPAL
POSITION
--------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Other Restricted All Other
Annual Stock LTIP Compen-
Salary Bonus Compen- Award(s) Options/ Payouts sation
Year ($) ($) sation ($) ($) SARs (#) ($) ($)/(1)/
---- ------- ------- ---------- ---------- -------- -------- -------
JOSEPH D. MACCHIA 1997 220,500 131,514 - - - - 13,893
Chairman, President and 1996 210,000 751,891 - - - - 20,668
Chief Executive Officer 1995 200,640 871,435 - - 133,107 - 24,103
JACK L. JOHNSON 1997 114,285 35,359 - - - - 13,893
Senior Vice President 1996 125,468 156,461 - - - - 20,668
1995 120,180 234,889 - - 91,439 - 24,000
DANIEL J. COOTS 1997 122,400 25,551 - - - - 13,893
Senior Vice President, 1996 110,475 152,696 - - - - 20,668
Treasurer and Chief 1995 105,516 178,038 - - 61,895 - 24,103
Financial Officer
RICHARD M. BUXTON 1997 149,519 47,366 - - 54,521 - -
Vice President 1996 - - - - - - -
1995 - - - - - - -
RICHARD A. LAABS 1997 104,500 15,582 - - - - 13,633
Vice President 1996 97,125 76,777 - - - - 6,756
1995 33,750 25,363 - - 34,238 - -
</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,
1997, the aggregate dollar value, if any, realized upon exercise, the total
number of unexercised stock options held at December 31, 1997 and the aggregate
dollar value of the unexercised options held at December 31, 1997. 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, 1997, the latter of which was $8.50 per share. These
values, unlike the amounts set forth in the column headed "Value Realized," have
not been, and may never be, realized. The underlying options have not been, and
may not be, exercised. Actual gains, if any, on exercise will depend on the
value of the Company's stock on the date of exercise. There can be no assurance
that the values shown will be realized.
AGGREGATED OPTION EXERCISES IN THE LAST
---------------------------------------
FISCAL YEAR AND FY-END OPTION VALUES
------------------------------------
<TABLE>
<CAPTION>
SHARES
ACQUIRED
ON VALUE VALUE OF UNEXERCISED
EXERCISE REALIZED NUMBER OF UNEXERCISED IN-THE-MONEY
NAME (#) ($) OPTIONS AT FY-END OPTIONS AT FY-END ($)
---- -------- -------- ----------------- ---------------------
EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
JOSEPH D. MACCHIA - - 53,242 79,865 - -
Chairman, President
and Chief Executive
Officer
JACK L. JOHNSON - - 59,843/(1)/ 54,864 $126,782 -
Senior Vice President
DANIEL J. COOTS - - 65,893/(2)/ 37,137 $252,890 -
Senior Vice President,
Treasurer and Chief
Financial Officer
RICHARD M. BUXTON - - 21,808 32,713 - -
Vice President
RICHARD A. LAABS - - 13,694 20,544 - -
Vice President
</TABLE>
- --------------------
(1) Options to purchase 19,945 shares are exercisable at approximately $2.14
per share.
(2) Options to purchase 37,398 shares are exercisable at approximately $2.14
per share
and options to purchase 3,737 shares are exercisable at approximately $4.44
per share.
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 until May of
1997 were 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. In May of 1997, Mr. Roe retired from the
Board and was replaced on the Committee by Mr. John C. Goff.
No executive officer of the Company served as a member of the compensation
committee of 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
For the 1997 year, the Executive Compensation Committee (the "Committee")
of the Board of Directors established the compensation policies applicable to
the Company's executive officers, including its Named Executives. Those
policies were 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.
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The Committee consisted of two independent directors, Joel C. Puckett and
Norman J. E. Roe (who retired from the Board in May of 1997) and the Company's
President and Chief Executive Officer, Joseph D. Macchia. It was the policy of
the Committee to tie current salary to each executive officer'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 the Company operates. In making
their determinations with regard to executive officers other than the CEO, the
Committee gave considerable deference to the CEO's evaluation of the
contributions made by each other executive officer during the prior year.
Additional short term incentives to maximize earnings were provided 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, was
established by the CEO. Under the plan, 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 provided the Company's executive officers with
incentives to maximize current year profits.
The long-term financial rewards to executive officers were closely linked
to long-term corporate performance and growth in shareholder value. This was
accomplished through executive officer participation in the Company's 1990 Stock
Option Plan and the 1995 Stock Option Plan. Although stock options were granted
to executive officers by the Company's Stock Plan Committee, the Executive
Compensation Committee took 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 was participation in the
Executive Incentive Compensation Plan, which uses of funds coming out of
earnings in excess of ten percent of beginning shareholders equity and because
each executive officer's long-term financial rewards from their stock options
are tied directly to the creation of shareholder value, overall executive
compensation was largely risk based with the financial rewards of the executive
officers tied directly to the success of the Company.
The Committee established the 1997 salary of the CEO based in part upon
historical 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 $220,500 for
fiscal 1997 from $210,000 for fiscal 1996 was based in part on his leadership
over many years, as well as claims and expense ratios significantly superior to
industry averages. 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 determined his participation in the bonus fund)
which has been established by contract at one-hundred percent. The CEO also is
a participant in 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 compensated 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
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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 1997 was affected by Section 162(m), none of it was deferred.
EXECUTIVE COMPENSATION COMMITTEE
Joseph D. Macchia Joel C. Puckett Norman J. E. Roe
(Mr. Roe retired from the
Board in May 1997)
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 12/31/92
For Fiscal Years Ended December 31
[PERFORMANCE GRAPH APPEARS HERE]
GAINSCO, INC. S & P P&C INDEX S & P 500 INDEX
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1992 100 100 100
1993 71 98 110
1994 72 103 112
1995 109 140 153
1996 93 170 189
1997 83 247 252
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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 or she 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 eight (8)
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. The Board of Directors
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 1999
Annual Meeting of Shareholders must be received at the principal executive
offices of the Company on or before December 15, 1998.
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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,
1997, 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 30, 1998. Requests for copies of
such report should be directed to Investor Relations, 500 Commerce Street, Fort
Worth, Texas 76102, (817)336-2500.
1997 ANNUAL REPORT TO SHAREHOLDERS
The Annual Report to Shareholders of the Company for the fiscal year ended
December 31, 1997 has been mailed to Shareholders of record at the record date.
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.
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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 13, 1998, at the Annual Meeting of Shareholders to be held on May 18,
1998, or any adjournment thereof.
1. ELECTION OF DIRECTORS [_] FOR all nominees listed [_] WITHHOLD AUTHORITY
below (except as marked to to vote for all
the contrary below, see nominees listed
instruction) below
Joseph D. Macchia, 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:
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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.
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| PLEASE MARK, SIGN, DATE, AND RETURN THE PROXY CARD |
| PROMPTLY USING THE ENCLOSED ENVELOPE |
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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: ____________________, 1998
_________________________________
(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.
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