ACAP CORPORATION
10555 Richmond Avenue, 2nd Floor
Houston, Texas 77042
NOTICE OF
ANNUAL MEETING OF STOCKHOLDERS
To Be Held On May 8, 2000
To Our Stockholders:
The Annual Meeting of Stockholders of Acap Corporation (the
"Company") will be held Monday, May 8, 2000, at 8:00 a.m.,
local time, at the offices of the Company, 10555 Richmond
Avenue, 2nd Floor, Houston, Texas.
The purposes of the meeting are:
1. To elect a Board of Directors to serve for the ensuing
year;
2. To consider and act upon such other matters as may
properly come before the meeting or any adjournment
thereof.
Holders of the Company's Common Stock of record at the close
of business on March 28, 2000, are entitled to receive
notice of and to vote at the meeting.
The accompanying Information Statement is furnished on
behalf of the Board of Directors of the Company to provide
notice of the Company's Annual Meeting of Stockholders.
WE ARE NOT ASKING YOU FOR A PROXY AND YOU ARE REQUESTED NOT
TO SEND US A PROXY.
For the Board of Directors
H. Kathleen Musselwhite
Secretary
Houston, Texas
April 10, 2000
TABLE OF CONTENTS
General Information 1
Voting 1
Election of Directors 1
Meetings and Committees 2
Security Ownership of Certain Owners 3
Executive Officers 3
Security Ownership of Management 4
Beneficial Ownership Reporting 5
Executive Compensation 5
Certain Relationships and Related Transactions 7
Independent Auditors 7
Quorum for Meeting 8
Submission of Stockholder Proposals 8
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ACAP CORPORATION
10555 Richmond Avenue, 2nd Floor
Houston, Texas 77042
INFORMATION STATEMENT
WE ARE NOT ASKING YOU FOR A PROXY AND
YOU ARE REQUESTED NOT TO SEND US A PROXY
GENERAL INFORMATION
This Information Statement is furnished on behalf of the
Board of Directors of Acap Corporation (the "Company") to
provide notice of the Company's Annual Meeting of
Stockholders to be held Monday, May 8, 2000, at 8:00 a.m.,
local time, at the offices of the Company, 10555 Richmond
Avenue, 2nd Floor, Houston, Texas. This Information
Statement is first being sent or given to stockholders of
the Company on or about April 10, 2000.
VOTING
The common stock, $.10 par value (the "Common Stock"), of
the Company is the only outstanding class of voting
securities of the Company. Only stockholders of record at
the close of business on March 28, 2000, the record date,
are entitled to vote at the Annual Meeting. As of the
record date, there were 7,224 shares of Common Stock
outstanding (excluding shares held by the Company's
subsidiary, which are not voted) and approximately 666
holders of the Common Stock. Each share of the Company's
Common Stock is entitled to one vote.
The shares owned by InsCap Corporation, the controlling
stockholder of the Company, will be voted for the election
of directors recommended by the Board of Directors.
ELECTION OF DIRECTORS
A Board of Directors consisting of three members will be
elected at the Annual Meeting, each member to serve until
the next Annual Meeting and until a successor shall be
elected and shall qualify. If, for any reason not known at
present, any nominee is not available for election, InsCap
Corporation will vote for such substitute persons, if any,
as shall be designated by the Board of Directors.
The affirmative vote of a majority of the shares of Common
Stock represented at the Annual Meeting is required to elect
a director.
Brief statements setting forth the age (at March 28, 2000),
the business experience during the past five years, the year
in which first elected a director, which includes any period
during which such nominee served as a director of American
Capitol Insurance Company ("American Capitol") prior to the
Company's formation, and other information concerning each
nominee appear below. All such nominees are members of the
present Board of Directors.
R. Wellington Daniels (85): Mr. Daniels has served as a
director since 1987 and is a member of the Audit Committee.
Before his retirement in 1979, Mr. Daniels served as
Director of National Accounts, American Cyanamid
Corporation. Mr. Daniels has also served as a director of
InsCap since 1990.
William F. Guest (68): Mr. Guest has served as a director
since 1984 and is Chairman of the Board. Mr. Guest has
served as Chairman of the Board and President of the Company
since 1985. Mr. Guest is the Chairman of the Board and
Chief Executive Officer of each of the Company's life
insurance subsidiaries and is a director and the President
of InsCap. Mr. Guest is an attorney and prior to joining
the Company and its affiliates was engaged in the private
practice of law in Houston, Texas for many years.
C. Stratton Hill, Jr., M.D. (71): Dr. Hill has served as a
director since 1984 and is a member and the Chairman of the
Audit Committee. Dr. Hill is also the Medical Director of
the Company's life insurance subsidiaries. Dr. Hill is a
physician and has been engaged in the practice of medicine
in Houston, Texas for many years.
MEETINGS AND COMMITTEES OF THE BOARD
During 1999 the Board of Directors of the Company held four
meetings. In addition, there is one standing committee of
the Board of Directors which has the authority and
responsibilities and which met during 1999 as described
below. Each incumbent director attended at least 75% of the
total number of meetings of the Board of Directors and the
committee of the Board of Directors on which he served.
Audit Committee. The Audit Committee has the authority and
responsibility to oversee the work of the independent public
accountants for the Company and to meet with such
accountants from time to time to determine the adequacy of
the Company's accounting systems and controls and audit
procedures. Two meetings of the Audit Committee were held
in 1999.
Other Functions. There is no standing nominating committee
or compensation committee of the Board of Directors, nor is
there any committee of the Board of Directors performing
similar functions. American Capitol maintains a standing
compensation committee which has the responsibility of
recommending the amount and form of compensation and
benefits for officers and other key employees of American
Capitol. The Company does not provide separate or
additional compensation for its officers, all of whom are
also officers of American Capitol, but is obligated to
reimburse American Capitol for services provided to the
Company by such persons in accordance with the terms of an
intercompany service agreement.
Director Compensation. Directors who are also officers of
the Company do not receive directors' fees or other amounts
in compensation for participation on the Board of Directors
or a committee of the Board of Directors. All other
directors are each paid a fee of $500 plus travel expenses
for each meeting of the Board of Directors attended. In
addition, each director who serves as a member of the Audit
Committee of the Board of Directors is paid a fee of $500
plus travel expenses for each meeting of such committee
attended, unless such meeting is held in conjunction with a
meeting of the Board of Directors held on the same day. Dr.
Hill receives $100 per month in his capacity as Medical
Director of the Company's insurance subsidiaries.
SECURITY OWNERSHIP OF CERTAIN OWNERS
Set forth below is information with respect to each person,
entity or group known to have been the beneficial owner of
more than 5% of the Company's Common Stock, its sole voting
class of securities, as of March 28,2000.
Shares Percent
Name and Address of Beneficially of
Beneficial Owner Owned (1) Class
InsCap Corporation
10555 Richmond Avenue, 2nd Floor
Houston, Texas 77042 3,317 45.92%
William F. Guest
10555 Richmond Avenue, 2nd Floor
Houston, Texas 77042 3,570 (2) 49.42%
(1) Except as otherwise indicated, the beneficial owner of
the shares exercises sole voting and investment powers.
(2) Mr. Guest owns directly and indirectly 455,514 shares,
or 51.75%, of InsCap's issued and outstanding Common Stock,
the sole voting class of securities of InsCap, and as the
controlling stockholder of InsCap is deemed to be the
beneficial owner of the shares of the Company owned by
InsCap. In addition to the shares of Company Common Stock
owned indirectly through InsCap, Mr. Guest directly owns 126
shares of Company Common Stock and is the beneficial owner
of 127 shares of Company Common Stock through a trust for
which he acts as trustee.
EXECUTIVE OFFICERS
The Bylaws of the Company provide for the election of
executive officers annually at the meeting of the Board of
Directors following the annual meeting of stockholders.
Executive officers serve until their successors are chosen
and qualified or until their death, resignation or removal.
Brief statements setting forth the age (at March 28, 2000),
the offices held and the business experience during the past
five years of each executive officer appear below.
William F. Guest (68): Chairman of the Board and President.
For the biography of Mr. Guest see "Election of Directors."
John D. Cornett (41): Mr. Cornett has served as Executive
Vice President of the Company since 1989 and as Treasurer of
the Company since 1985. Mr. Cornett is a director and the
Secretary of InsCap and the President and Chief Operating
Officer and a director of each of the Company's life
insurance subsidiaries. Mr. Cornett is a certified public
accountant and, prior to joining the Company and its
affiliates in 1984, Mr. Cornett held positions with American
General Life Insurance Company and Prudential Insurance
Company of America.
H. Kathleen Musselwhite (43): Ms. Musselwhite has served as
Assistant Treasurer of the Company since 1995 and as
Secretary of the Company since March 1997. Ms. Musselwhite
is also the Treasurer and Controller, the Secretary and a
director of each of the Company's life insurance
subsidiaries. Ms. Musselwhite is a certified public
accountant and, prior to joining the Company and its
affiliates in 1995, Ms. Musselwhite served as Assistant
Controller of American General Corporation.
SECURITY OWNERSHIP OF MANAGEMENT
Set forth below is information with respect to shares of
each class of voting equity security of the Company and
InsCap beneficially owned by directors of the Company,
naming them, and by all directors and officers of the
Company as a group, as of March 28, 2000.
Name of Amount and Nature
Beneficial of Beneficial Percent
Owner(1) Ownership (2) of Class (3)
The Company
Common Stock
William F. Guest 3,570 (4) 49.42%
John D. Cornett 198 2.74%
C. Stratton Hill, Jr. 6 (5) *
All Officers and Directors 3,774 52.24%
InsCap
Common Stock
William F. Guest 455,514 (4) 51.75%
R. Wellington Daniels 37,000 4.20
John D. Cornett 11,000 1.25%
All Officers and Directors 503,514 57.20%
(1) The address of each of the officers and directors is
c/o Acap Corporation, 10555 Richmond Avenue, 2nd Floor,
Houston, Texas 77042.
(2) Except as otherwise indicated, the beneficial owner of
the shares exercises sole voting and investment powers.
(3) Percentages are calculated on the basis of the amount
of outstanding securities plus, for each person or group,
any securities that person or group has the right to acquire
within 60 days pursuant to option, conversion privileges or
other rights. An asterisk signifies less than 1%.
(4) The Company Common Stock shown as owned by Mr. Guest
includes 126 shares he owns directly, 127 shares owned
indirectly by him through a trust for which he acts as
trustee, and 3,317 shares owned indirectly by him through
InsCap, the Company's parent, of which company Mr. Guest is
the controlling stockholder. Mr. Guest has pledged certain
of his InsCap shares as security for loans which, in the
event of default, could result in a change of control in
InsCap, and therefore the Company.
(5) All such shares of Company Common Stock are owned by
Dr. Hill's children.
BENEFICIAL OWNERSHIP REPORTING
Section 16(a) of the Securities Exchange Act of 1934
requires the Company's officers and directors and beneficial
owners of more than 10% of a registered class of the
Company's equity securities to file reports of ownership and
changes in ownership with the Securities and Exchange
Commission ("SEC") and the National Association of
Securities Dealers, Inc. Officers, directors and greater
than 10% stockholders are required by SEC regulation to
furnish the Company with copies of all Section 16(a) forms
they file.
Based solely upon a review of such forms furnished to the
Company during or with respect to its fiscal year ended
December 31, 1999 by the persons and entities filing same,
the Company believes that during its fiscal year ended
December 31, 1999 all beneficial ownership reports required
to be filed pursuant to Section 16(a) by directors and
officers of the Company and by beneficial owners of more
than 10% of the Company's outstanding Common Stock have been
filed on a timely basis.
EXECUTIVE COMPENSATION
The compensation paid by the Company and its affiliates for
each of the last three completed fiscal years to (i) the
Chief Executive Officer ("CEO") and (ii) each of the four
most highly compensated executive officers, other than the
CEO, whose total annual salary and bonus exceeded $100,000,
(the "Named Executive Officers") was as follows:
Name and Shares All
Principal Salary Bonus Underlying Others
Position Year ($) ($) Options (#) ($)
William F. Guest, 1999 230,000 -- -- 17,051*
CEO 1998 230,000 -- -- 14,936*
1997 230,000 -- 100 --
John D. Cornett, 1999 135,000 -- -- 17,588**
Treasurer 1998 120,000 -- -- 17,612**
1997 120,000 -- 100 17,628**
* A split dollar agreement was signed between Mr. Guest and
American Capitol Insurance Company ("American Capitol") on
August 28, 1998 with an effective date of December 8, 1997.
The agreement allows Mr. Guest one-third of a key-man policy
on his life owned by American Capitol in exchange for
$328,000, one-third of the cash value of the policy on
December 8, 1997. Mr. Guest is required to pay to American
Capitol each year on or before August 28th an amount equal
to the one-year term cost of the insurance protection until
the $328,000 is paid for. As of December 31, 1999 the
remaining balance owed by Mr. Guest was $314,255.
** The Company advanced Mr. Cornett $17,588, $17,612, and
$17,628 during 1999, 1998 and 1997, respectively, toward the
payment of the premium on life insurance on Mr. Cornett's
life and for which the Company is not the beneficiary. The
advance will be repaid to the Company out of the cash value
of such policy or the death proceeds from such policy. The
advance is not compensation to Mr. Cornett to the extent
that it is subject to repayment to the Company.
The preceding table excludes club memberships and certain
other benefits in an aggregate amount of less than 10% of
the officer's annual salary.
In August 1997, American Capitol entered into a disability
income agreement with Mr. Guest which provides for cash
payments to Mr. Guest or for his benefit in the event that
he becomes disabled while employed by American Capitol. In
such event, Mr. Guest's salary will be continued at 100% of
his salary at the time of disability up to one year and will
be continued at 80% of his salary at the time of disability
for up to five years. In addition to the foregoing time
limitations, the disability payments stop upon Mr. Guest's
recovery or upon Mr. Guest's reaching the age of 75.
In April 1997, American Capitol renewed for a period of
three years an employment agreement with Mr. Cornett
pursuant to which Mr. Cornett serves as President and Chief
Operating Officer of American Capitol. The agreement
provides for an annual compensation of not less than
$120,000. In the event Mr. Cornett's employment is
terminated during the term of the agreement other than for
cause, the salary payable thereunder, under specified
conditions and subject to certain limitations, will continue
for up to 18 months, less any amounts earned by Mr. Cornett
from other employment during such period. In addition, in
April 1997, American Capitol renewed a stock purchase
agreement with Mr. Cornett which provides that in the event
of a change of control of American Capitol, Mr. Cornett
shall have the right to sell certain shares of Company
Common Stock owned by him to American Capitol at a price per
share determined by reference to the consideration involved
in the change of control.
The following table reflects certain information with
respect to the Named Executive Officers regarding stock
options exercised during fiscal year 1999 and the number of
unexercised options and the value of unexercised options
outstanding at December 31, 1999. None of the unexercised
options were exercisable at December 31, 1999.
Number of
Securities Value of
Shares Underlying Unexercised
Acquired Value Unexercised In-the-Money
on Realized Options at Options at
Name Exercise(#) ($) 12/31/99(#) 12/31/99($)
William F. Guest -- -- 100 24,700
John D. Cornett -- -- 100 27,100
The value of unexercised in-the-money options shown in the
table above equals the difference between the closing bid
price of the Company Common Stock at December 31, 1999 and
the exercise price of the options multiplied by the number
of options.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
InsCap is the immediate parent of the Company. See
"Security Ownership of Certain Owners" for the basis of
control and the percentage of voting securities owned.
INDEPENDENT AUDITORS
Financial statements of the Company and its consolidated
subsidiaries are included in the Company's Annual Report to
Stockholders for 1999. KPMG has served as the independent
auditors for the Company for the fiscal year ended December
31, 1999. The Company anticipates that KPMG will be
selected to serve in such capacity for the fiscal year
ending December 31, 2000, subject to formal approval of such
engagement by the Company's Audit Committee.
Representatives of KPMG are expected to be present at the
Annual Meeting and will have the opportunity to make a
statement if they desire to do so and are also expected to
be available to respond to appropriate questions.
QUORUM FOR MEETING
The Bylaws of the Company require, for a quorum, the
presence at the meeting, in person or by proxy, of the
holders of a majority of the shares of capital stock of the
Company entitled to vote.
SUBMISSION OF STOCKHOLDER PROPOSALS
Any proposal intended to be presented by a stockholder at
the Company's 2001 Annual Meeting of Stockholders must be
received in writing at the Company's principal executive
offices by December 11, 2000 so that it may be considered by
the Company for inclusion in the proxy statement and form of
proxy or in the information statement relating to that
meeting.
By Order of the Board of Directors
H. Kathleen Musselwhite
Secretary
April 10, 2000
Acap Corporation
10555 Richmond Avenue, 2nd Floor
Houston, Texas 77042
