<PAGE>
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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
THE CENTRIS GROUP, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(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):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[_] 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:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
<PAGE>
[LOGO OF THE CENTRIS GROUP, INC.(TM) APPEARS HERE]
March 31, 1999
Dear Stockholder:
You are cordially invited to attend the 1999 Annual Meeting of Stockholders
of The Centris Group, Inc. to be held on Wednesday, May 12, 1999, at the
offices of the Company, 650 Town Center Drive, 15th Floor, Costa Mesa,
California, at 9:00 a.m., Local Time.
Information concerning the matters to be voted on at this Annual Meeting is
set forth in the attached Notice and Proxy Statement.
It is important that your shares be represented at the Annual Meeting whether
or not you are personally able to attend. All materials needed to vote your
shares by mail are enclosed in this package. Please review them carefully. I
urge you to vote, sign, date and return the accompanying proxy card in the
enclosed envelope as promptly as possible.
Sincerely,
/s/ DAVID L. CARGILE
David L. Cargile
Chairman of the Board, President
and Chief Executive Officer
<PAGE>
[LOGO OF THE CENTRIS GROUP, INC.(TM) APPEARS HERE]
NOTICE OF 1999 ANNUAL MEETING OF STOCKHOLDERS
To Be Held On
May 12, 1999
-----------------------------
To the Stockholders of The Centris Group, Inc.:
Notice is hereby given that the Annual Meeting of Stockholders of The
Centris Group, Inc., a Delaware corporation (the "Company"), will be held on
Wednesday, May 12, 1999, at the offices of the Company, 650 Town Center Drive,
15th Floor, Costa Mesa, California, at 9:00 a.m., Local Time, for the
following purposes:
(1) To elect two of seven directors for the Company's Board of Directors,
to serve until their successors have been duly elected and qualified or
until their earlier death, resignation or removal;
(2) To ratify the selection by the Board of Directors of KPMG LLP as the
Company's independent auditors for the year ending December 31, 1999;
and
(3) To act upon such other matters as may properly come before this Annual
Meeting of Stockholders.
The Board of Directors has fixed the close of business on March 19, 1999 as
the record date for the determination of stockholders entitled to notice of
and to vote at this Annual Meeting of Stockholders and any postponements or
adjournments thereof.
All stockholders are cordially invited to attend the Annual Meeting of
Stockholders. Even if a stockholder expects to attend, it will be appreciated
if the stockholder would promptly vote, sign, date and return the enclosed
proxy card in the envelope provided.
By Order of the Board of Directors,
/s/ JOSE A. VELASCO
-------------------------------------------
Jose A. Velasco
Senior Vice President, Chief Administrative
Officer, Secretary and General Counsel
March 31, 1999
Costa Mesa, California
Please vote, sign, date and return the accompanying proxy card without delay
in the enclosed postage prepaid envelope. The proxy is revocable and will not
affect a stockholder's right to vote in person in the event the stockholder
attends the meeting.
<PAGE>
[LOGO OF THE CENTRIS GROUP, INC.(TM) APPEARS HERE]
-------------------------
PROXY STATEMENT
-------------------------
1999 ANNUAL MEETING OF STOCKHOLDERS
To Be Held On
May 12, 1999
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of The Centris Group, Inc., a Delaware
corporation (the "Company"), for use at the 1999 Annual Meeting of
Stockholders of the Company to be held at the offices of the Company, 650 Town
Center Drive, 15th Floor, Costa Mesa, California, on Wednesday, May 12, 1999,
at 9:00 a.m., Local Time, and any postponements or adjournments thereof (the
"Annual Meeting"). Accompanying this Proxy Statement is a proxy card
(sometimes referred to herein as a "proxy") which may be used to indicate a
stockholder's vote as to each of the matters described in this Proxy Statement
which to management's knowledge will require stockholder action at the Annual
Meeting.
The Company intends to commence the mailing of this Proxy Statement and the
accompanying proxy card on March 31, 1999 to stockholders entitled to notice
of and to vote at the Annual Meeting.
GENERAL INFORMATION
Record Date, Shares Outstanding, Quorum and Voting Procedures
. The close of business on March 19, 1999 has been fixed as the record date
for the determination of stockholders entitled to notice of and to vote
at the Annual Meeting.
. As of that record date, the Company had outstanding 11,597,476 shares of
its $0.01 par value common stock, the only outstanding voting securities
of the Company. For each share owned on the record date, a stockholder is
entitled to one vote on all matters to be considered at the Annual
Meeting.
. Pursuant to the Company's Bylaws, the holders of one-third ( 1/3rd) of
all shares of stock outstanding and entitled to vote who are present in
person or by proxy at a meeting of stockholders shall constitute a
quorum. The Company's Restated Certificate of Incorporation does not
provide for cumulative voting for the election of directors.
Voting Procedures
. All proxy cards which are properly completed, signed and returned to the
Company prior to the Annual Meeting and which have not been revoked will
be voted in accordance with the instructions on the proxy card.
. Where no instructions have been given by a stockholder on the proxy card
with respect to a particular matter presented, the proxy will be voted
for the election as directors of all of the nominees named in the proxy
and for PROPOSAL NO. 2.
. Abstentions are counted for purposes of determining whether there is a
quorum for the transaction of business at the Annual Meeting, but will be
treated as abstentions and not counted for the tabulation of the votes.
1
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. A stockholder may revoke his or her proxy at any time before it is voted
by filing with the Secretary of the Company at its principal executive
offices either a written notice of revocation, or by appearing in person
at the Annual Meeting and voting his or her shares in person, or by
filing a duly executed proxy bearing a later date. The submission by a
stockholder of a properly executed proxy to the Company in connection
with the 1999 Annual Meeting automatically revokes all prior proxies
submitted by such stockholder for this Annual Meeting.
It is the Company's policy to handle proxies and ballots from stockholders
in a manner that protects stockholder privacy. All proxy cards and ballots
that identify votes of stockholders are held confidential, and only the proxy
solicitor, the proxy tabulator and a few other persons necessary to inspect
and process the ballots and proxies have access to them.
PROPOSAL NO. 1
ELECTION OF DIRECTORS
Nominees
The Company's Restated Certificate of Incorporation and Bylaws divide the
Board of Directors into three classes and permit the Board of Directors to
determine its own size. The number of directors established by the Board of
Directors is currently seven, with two directors elected at two annual
meetings of stockholders, and three directors elected at a third annual
meeting. Each director elected serves for a term ending on the date of the
third annual meeting of stockholders following his or her election (and
thereafter until a successor has been duly elected and qualified or until the
director's earlier death, resignation or removal). The dates of each
director's term of office are as set forth below.
The two directors who are elected by stockholders at this 1999 Annual
Meeting will hold office until the 2002 Annual Meeting of Stockholders of the
Company. The two nominees proposed by the Company for election have advised
the Company that they are able and willing to serve as directors. If any
nominee refuses or is unable to serve, the Company's designated proxy holders
will vote for another person nominated by the Board of Directors.
Directors are elected by a plurality of the votes cast in person or by proxy
at the Annual Meeting. The two candidates receiving the highest number of
votes will be elected. The Board of Directors recommends a vote for the
Company's two nominees. All proxies received by the Company will be voted in
favor of the Company's nominees, unless an instruction to the contrary is
indicated on a properly executed proxy card.
Certain information for each person nominated by the Company for election as
a director, and for all continuing directors of the Company, is set forth
below.
Nominees For Election As Directors
Whose Terms Will Expire At The 2002 Annual Meeting Of Stockholders
Roxani M. Gillespie, age 47, was appointed as a director of the Company in
April 1998 to fill the vacancy created by the retirement of Kenneth C. Tyler.
With over 25 years experience in the insurance industry, Ms. Gillespie was
Insurance Commissioner for the State of California from 1986 until 1991, and
since 1991 has been in the private practice of law in San Francisco,
California, specializing in insurance matters.
Jose A. Velasco, age 44, joined the Company in 1986 as Vice President and
General Counsel. He currently holds the positions of Senior Vice President,
Chief Administrative Officer, General Counsel and Secretary. Prior to joining
the Company, Mr. Velasco was in the private practice of law specializing in
insurance matters. Mr. Velasco is a new nominee who has not previously served
as a director of the Company.
2
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Directors Continuing In Office
Whose Terms Will Expire At The 2001 Annual Meeting Of Stockholders
David L. Cargile, age 53, joined the Company as a Senior Vice President in
December 1991, and was appointed as its President, Chief Operating Officer and
a director in August 1994, and as its Chief Executive Officer in March 1995.
He was elected as Chairman of the Board in April 1995. Prior to joining the
Company Mr. Cargile had served for a number of years as President and Chief
Executive Officer of Reinsurance Facilities Corporation, a reinsurance
intermediary. He has also served on the boards of directors of a number of
companies engaged in the reinsurance business.
Charles L. Schultz, age 71, was elected a director of the Company in May
1995. From 1985 until his retirement in 1993, Mr. Schultz held the position of
Senior Vice President, Finance and Chief Financial Officer of Farmers Group,
Inc., the management and holding company for the Farmers Insurance Group.
Since November 1995 Mr. Schultz has served as a director of Amwest Insurance
Group, a Southern California-based insurance holding company.
Howard S. Singer, age 53, has served as a director of the Company since its
founding in 1980. Prior to joining the Company in December 1991 as its
Executive Vice President--Corporate Finance and Investor Relations, Mr. Singer
had previously served as its independent financial consultant.
Directors Continuing In Office
Whose Terms Will Expire At The 2000 Annual Meeting Of Stockholders
John F. Kooken, age 67, has served as a director of the Company since 1986.
Prior to his retirement in 1992, Mr. Kooken was Vice Chairman and Chief
Financial Officer of Security Pacific Corporation, the parent of Security
Pacific National Bank, Los Angeles. Since June 1992 Mr. Kooken has served as a
director of Golden State Bancorp, and since February 1994 he has served as a
director of Pacific Gulf Properties, Inc., a real estate investment trust.
L. Steven Medgyesy, M.D., age 65, has served as a director of the Company
since 1983. Until March 1996 he served as Medical Director of the Company's
USBenefits Insurance Services, Inc. subsidiary. From 1963 until his retirement
in 1993 as the Director of Laboratories at Lincoln West Medical Center,
Chicago, Dr. Medgyesy practiced in the field of pathology.
Committees of the Board: Function; Membership; Attendance
The Board of Directors of the Company has five standing Committees:
Executive Committee
. Has all of the power and authority in the management of the business and
affairs of the Company to take action on behalf of the Board of Directors
as may be necessary between regular meetings of the Board, when a special
meeting or a telephonic meeting of the full Board is not possible or
practicable.
Audit Committee
. Meets with the Company's independent auditors to review the scope and
results of the independent auditors' activities and to review the results
of their audit when it is completed.
. Reviews the adequacy of internal financial and accounting controls and
the results of the independent auditors' examinations thereof.
3
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. Recommends to the Board of Directors the appointment of the Company's
independent auditors.
. Reports its findings on any of the above to the full Board of Directors,
as appropriate.
. All members of the Audit Committee are non-employee directors.
Investment Committee
. Establishes goals for the Company's investment program as well as
policies to achieve such goals.
. Analyzes current investments and their return and suggests any changes
deemed necessary.
. Selects independent investment advisors, determines the scope of their
duties and responsibilities, approves their fees and monitors and
evaluates their performance.
Compensation Committee
. Establishes criteria and adopts compensation policies applicable to the
Company's Chief Executive Officer and executive officers at the level of
Senior Vice President and above.
. Recommends to the Board of Directors salary, bonus and other forms of
direct and indirect compensation to be paid to the Chief Executive
Officer.
. Evaluates and makes recommendations to the Board of Directors regarding
compensation policies and programs applicable to all Company employees.
. Administers the Company's annual cash bonus plan and its stock option and
other long-term incentive plans.
. All members of the Compensation Committee are non-employee directors.
Nominating Committee
. Reviews and investigates the qualifications of candidates proposed by
management or by others (including candidates proposed by stockholders or
members of the Board) for election by stockholders or election by the
Board itself to fill a vacancy on the Company's Board of Directors.
. Recommendations by stockholders must be supported by a description of
such persons' background and experience, together with the written
consents of such persons to serve on the Board if elected, and should be
addressed to the Nominating Committee, in care of the Secretary, The
Centris Group, Inc., 650 Town Center Drive, Suite 1600, Costa Mesa,
California. As set forth in the Company's By-laws, this information must
be received by February 9, 2000 for such persons to be considered for
nomination by the Board for election at the 2000 Annual Meeting of
Stockholders.
The table below identifies the members of each Committee who were appointed
in May 1998:
<TABLE>
<CAPTION>
Committee Members(/1/)
--------- ------------
<S> <C>
Executive Committee..... Directors Cargile (Chairman), Kooken and Singer
Audit Committee......... Directors Schultz (Chairman), Kooken, Gillespie, Ross
Compensation Committee.. Directors Ross (Chairman), Medgyesy, Gillespie, Schultz
Investment Committee.... Directors Kooken (Chairman), Cargile, Medgyesy, Schultz and Singer
Nominating Committee.... Directors Singer (Chairman), Cargile, Gillespie, Medgyesy and Ross
</TABLE>
- --------
(1) Ms. Gillespie was appointed to fill the vacancy on the Board and the
Committees created by the retirement of Kenneth C. Tyler in April, 1998.
No appointments were made to fill the vacancies created by Bernard H.
Ross's death in November, 1998. However, Dr. Medgyesy was designated as
acting Chairman of the Compensation Committee.
There were 13 meetings of the Board during 1998. The Executive Committee
acted once during the year. Other Committees met during 1998 as follows:
Audit--5 times; Investment--2 times; Compensation--2 times;
4
<PAGE>
and Nominating--1 time. All current directors attended or participated by
telephone in at least 75% of the meetings of the Board and the Committees of
which they were members during 1998. Committee members are appointed each year
at the Board of Directors meeting immediately following the annual meeting of
stockholders.
Compensation of Directors
Directors who are also full-time employees of the Company receive no
additional compensation for their services as directors. Non-employee
directors are paid an annual retainer of $12,500 and a fee of $3,000 for each
meeting of the Board attended ($1,000 for telephonic meetings). Such directors
are also paid a fee of $1,000 for each Committee meeting ($1,500 for Committee
Chairmen). In addition, directors are reimbursed for reasonable out-of-pocket
expenses incurred by them in connection with their attendance at Board and
Committee meetings.
Non-employee directors are also entitled to receive stock option awards
under the Company's Amended and Restated 1991 Directors Stock Option Plan,
which was approved by stockholders in 1996. Under this Plan, on the third
business day following each annual meeting, each non-employee director is
automatically granted an award of options covering between 6,000 to 9,000
shares of common stock, with the number of options actually granted determined
in accordance with a formula related to the Company's return on equity for the
prior fiscal year. Based on the Plan formula, each of the non-employee
directors will receive an option grant for 6,000 shares following the 1999
Annual Meeting, with an exercise price which will be the closing price of the
Company's stock on the New York Stock Exchange on Monday, May 17, 1999.
Those directors who are also employees of the Company may be entitled to
additional compensation in their capacity as employees to the extent that they
participate in the Company's short-term and long-term incentive compensation
plans, as described elsewhere in this Proxy Statement.
5
<PAGE>
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth as of March 19, 1999, the number of shares of
the Company's common stock deemed to be beneficially owned (including shares
which can be acquired within 60 days) by: (i) each director of the Company;
(ii) the Company's Chief Executive Officer; (iii) the Company's four other
most highly compensated officers; and (iv) all directors and all executive
officers of the Company as a group, and the percentage of such holdings to the
total number of shares in the class, as calculated in accordance with the
rules and regulations of the Securities and Exchange Commission (the "SEC").
The Chief Executive Officer plus the four other most highly compensated
officers are sometimes referred to collectively in this Proxy Statement as the
"Named Executives." Except as otherwise noted, the indicated owners have sole
voting and investment power with respect to the shares specified.
<TABLE>
<CAPTION>
Number and Right to Acquire
Nature of Shares Beneficial Ownership Percent of Class
Name and Address Beneficially Owned Within 60 Days(/1/) Beneficially Owned
- ---------------- ------------------ -------------------- ------------------
<S> <C> <C> <C>
David L. Cargile 47,005 440,000 4.20%
650 Town Center Drive
Costa Mesa, CA 92626
John T. Grush 42,368(/2/) 67,200 *
650 Town Center Drive
Costa Mesa, CA 92626
Craig J. Kelbel 89 44,800 *
650 Town Center Drive
Costa Mesa, CA 92626
John F. Kooken 29,400(/3/) 21,500 *
1170 Lorain Road
San Marino, CA 91108
L. Steven Medgyesy, M.D. 594,568(/4/) 21,500 5.31%
5215 Old Orchard Road,
Suite 300
Skokie, IL 60077
Roxani M. Gillespie -0- 1,623 *
2450 Hyde Street
San Francisco, CA 94109
Charles M. Schultz -0- 21,500 *
325 South Rimpau Boule-
vard
Los Angeles, CA 90020
Howard S. Singer 546,115(/5/) 63,800 5.26%
5215 Old Orchard Road,
Suite 300
Skokie, IL 60077
Jose A. Velasco 38,968(/2/) 65,000 *
650 Town Center Drive
Costa Mesa, CA 92626
All Directors and Execu-
tive Officers of the
Company (12 persons) as
a group** 1,139,419 783,123 16.58%
</TABLE>
- --------
* Indicates ownership of less than 1% of the Company's outstanding stock.
** As described in Notes (4) and (5) below, Dr. Medgyesy holds shares as
trustee of the Singer Family Trust. Accordingly, to avoid duplicate
counting, an aggregate of 172,622 shares which are beneficially owned by
both individuals have been deducted from this total. Neither Kenneth C.
Tyler, who retired in April 1998, nor Bernard H. Ross who passed away in
November 1998, are included in this group.
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(1) This column reflects the number of shares that could be purchased within
60 days of March 19, 1999 by the exercise of vested options under the
Company's stock option plans.
(2) Includes shares held in the employee's 401(k) account. While the employee
votes the shares in his account at any stockholder meetings, on exiting
the account only the cash value of the shares is distributed and share
certificates are not issued.
(3) Includes 1,000 shares held by Mr. Kooken's wife through her separate
individual retirement accounts.
(4) Includes 250,932 shares owned directly by Dr. Medgyesy; 172,622 shares
held by Dr. Medgyesy in his capacity as trustee of the Singer Family
Trust, which trust is for the benefit of Howard S. Singer and members of
the Singer family; 16,120 shares held by Dr. Medgyesy's wife; and 154,894
shares held in various trusts for the benefit of Dr. Medgyesy and members
of his family. Dr. Medgyesy disclaims beneficial ownership in 343,636 of
said shares.
(5) Includes 337,065 shares held directly by Mr. Singer; 172,622 shares held
by Dr. Medgyesy in his capacity as trustee of the Singer Family Trust,
which trust is for the benefit of Mr. Singer and members of the Singer
family; 16,828 shares held by Mr. Singer's wife as trustee for the benefit
of their descendants; 14,000 shares held by a partnership of which Mr.
Singer is the general partner; and 5,600 shares held by Mr. Singer's
individual retirement account. Mr. Singer disclaims beneficial ownership
in 209,050 of said shares.
SECURITY OWNERSHIP OF CERTAIN OTHER STOCKHOLDERS
The following table sets forth information regarding the beneficial
ownership of each person, other than those affiliated with the management,
known to the Company as of March 19, 1999 to be the beneficial owner of more
than 5% of its outstanding common stock. The Company believes that the stock
in the name of the firms listed below is held by money managers, investment
advisors or affiliates on behalf of their respective clients, and that none of
such clients is the beneficial owner of more than 5% of the Company's stock.
<TABLE>
<CAPTION>
Amount of Shares Percent
Name and Address Beneficially Owned of Class
---------------- ------------------ --------
<S> <C> <C>
Kahn Brothers & Co., Inc. 835,784(/1/) 7.21%
555 Madison Avenue, 22nd Floor
New York, New York 10022
Dimensional Fund Advisors Inc. 753,100(/2/) 6.49%
1299 Ocean Avenue, 11th Floor
Santa Monica, California 90401
Hollybank Investments, LP 863,100(/3/) 7.44%
Dorsey R. Gardner, General Partner
One International Place, Suite 2401
Boston, Massachusetts 02110
</TABLE>
- --------
(1) As disclosed in a Schedule 13F filed with the SEC on December 31, 1998.
The Schedule 13F indicates that Kahn Brothers & Co., Inc. is the
beneficial owner of 835,784 shares and has shared dispositive powers with
respect to such 835,784 shares.
(2) As disclosed in a Schedule 13G dated February 11, 1999, filed with the SEC
and furnished to the Company. Dimensional Fund Advisors, Inc.
("Dimensional"), an investment advisor registered under the Investment
Advisors Act of 1940, furnishes investment advice to four investment
companies also registered under that Act, and serves as investment manager
to certain other investment vehicles, including commingled group trusts.
(These investment companies and investment vehicles are referred to herein
as the "Portfolios"). In its role as investment advisor and investment
manager, Dimensional possesses both voting and investment power over the
securities of Centris described in its Schedule 13G that are owned by the
Portfolios. All such securities reported in the Schedule are owned by the
Portfolios, and Dimensional disclaims beneficial ownership of such
securities.
7
<PAGE>
(3) As disclosed in a Schedule 13G filed with the SEC on January 29, 1999 and
furnished to the Company. The Schedule 13G indicates that the limited
partnership is the beneficial owner of 787,600 shares and has sole voting
and dispositive powers with respect to such shares. Except to the extent
of his interest as a limited partner in the shares held by the limited
partnership, Mr. Gardner is the beneficial owner of an additional 75,500
shares and has sole voting and dispositive power over such shares.
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 10% of a
registered class of the Company's equity securities, to file with the
Securities and Exchange Commission reports of ownership and changes in
ownership of common stock and other equity securities of the Company and to
furnish the Company with copies of all such Section 16(a) reports that they
file.
Based solely on review of the copies of such reports furnished to the
Company and written representations that no other reports were required, the
Company believes that during the 1998 fiscal year all filing requirements
applicable to its officers and directors were complied with.
8
<PAGE>
THE CENTRIS GROUP, INC.
Compensation Committee Of The Board Of Directors
Report On Executive Compensation
General
The Compensation Program of The Centris Group, Inc. for the 1998 fiscal year
consisted of three components: annual cash salaries, discretionary cash
bonuses under its Incentive Compensation Program and discretionary long-term
awards (a Stock Option Plan and a Long-Term Incentive Plan).
Base salaries of all employees, except for the Chief Executive Officer, are
generally set in accordance with the Company's Salary Administration Program
which provides a framework for determining an employee's salary level. This
determination is based upon a variety of factors that include job function,
expertise, experience and the competitive placement of each position relative
to other companies whose business operations are similar. Management of the
Company establishes the base salaries for those employees who are below the
level of the senior officers, while the salaries of the senior officers are
established by the Compensation Committee on the recommendation of the Chief
Executive Officer. The Company's Salary Administration Program was prepared
with input from an independent, nationally known compensation consultant and
is periodically updated with information on salary levels for companies of a
generally similar size from various sources, including salary surveys and
analyses presented by the independent compensation consultant.
The cash bonus amount which an eligible participant can receive under the
Incentive Compensation Program depends on the component of the Incentive
Compensation Program in which each person participates, the extent to which
the Company meets a predetermined net income target for the respective year,
and the participant's job performance for that year as determined by each
participant's supervisor. Payments of bonuses below the level of senior
officers are made at the discretion of the Chief Executive Officer. The
Compensation Committee is required to approve the total amount of all bonus
payments (excluding the Chief Executive Officer) under the Incentive
Compensation Program.
The Compensation Committee specifically approves the bonus payments and
awards under the Company's employee Stock Option Plan and Long-Term Incentive
Plan for each of the senior officers, based upon recommendations from the
Chief Executive Officer. The salary, bonus payments, Stock Options and Long-
Term Incentive Plan awards for the Chief Executive Officer are determined by
the Compensation Committee and recommended to the full Board, which may adopt,
modify or reject such recommendations. Directors who are also employees do not
participate in the discussions or vote on matters affecting any aspect of
their own compensation.
Compensation Policies for Executives
The goals of the Company's Compensation Program have been to further the
Company's business objectives, and at the same time to attract and retain high
quality executives and to equitably reward individuals who contribute to the
Company's success. This approach seeks to link executive compensation with
achievement of profitability goals and the strategic goal of enhancing
stockholder value by tying the value of some part of the senior executives'
compensation to the Company's long-term performance.
Base Salaries. The Company provides executive officers with salaries which
are generally in the third highest quartile of the range of competitive
salaries paid to executives of companies in similar sectors of the insurance
industry. The Company periodically updates information on executive salary
levels for companies of a generally similar size presented by the Company's
independent compensation consultant. Executive officers are evaluated on March
1 of each year, and any adjustments to their salaries are effective as of that
date.
Annual Bonuses. Generally awards under the Incentive Compensation Program
are contingent on achievement of a Company net after-tax income target, which
is established in advance each year by the
9
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Compensation Committee. Bonuses are awarded following the end of each year,
after the Company's year-end results have been determined. Under the Incentive
Compensation Program, the Compensation Committee has full discretionary
authority with respect to bonus awards. Therefore, if the Company's net income
target is reached, the bonus award may be less than the target amount for any
executive; if the Company's net income target is not met, the Compensation
Committee has the authority to grant bonuses to executives.
While the Company did not meet its net income target for 1998, bonuses
ranging between 4% to 14% of their annual salaries were paid to certain senior
executives. The Committee concluded that payment of a limited amount of
bonuses was appropriate in light of significant efforts by senior executives
to reposition the Company, including the successful completion of the
acquisition of the VASA Group of companies. The Committee's decisions were
based upon recommendations from the Chief Executive Officer as a result of his
evaluation of each executive's overall performance and the results of the
operations under the executive's direction as compared to the Company's
business plan for 1998.
Long-term Incentive Plans. The Company has adopted a Long-Term Incentive-
Performance Unit Plan ("LTI-Plan") and a Non-Qualified Deferred Compensation
Plan. The LTI-Plan was approved by the Company's stockholders at the 1997
Annual Meeting, and both of these Plans were first implemented for fiscal year
1997. The LTI-Plan provides for cash payment awards which qualify as
performance based compensation under Section 162(m) of the Internal Revenue
Code. Under the LTI-Plan, a target number of performance units are assigned to
key employees at the beginning of a three-year performance period, but the
actual number of performance units awarded to the participant is determined
after the close of the performance period. The first performance period began
on January 1, 1997 and ends on December 31, 1999. New three-year performance
periods begin annually, each January 1. Each performance unit assigned in the
three-year performance periods beginning in 1997 and 1998 had a value of $10.
Awards are based upon the Company meeting pre-determined annual return on
equity (ROE) targets, and for purposes of the Plan ROE is calculated as the
average return on equity over the three-year performance period. The Company
must meet a minimum level of ROE over the three year period before actual
awards, which require Committee approval, will be made to the participants.
Payouts of awards under the Plan are automatically deferred into the Non-
Qualified Deferred Compensation Plan and vest over a two year period. The
Chief Executive Officer has the authority, subject to approval by the
Committee and the Board and in conformity with the non-discretionary
requirements of Section 162(m) of the Internal Revenue Code, to adjust a
participant's payout to take into account strategic and financial events or
conditions, including, but not limited to, recognizing a participant's
business unit's results for the performance period.
In addition, in 1997 the Compensation Committee adopted stock option grant
guidelines which are also aimed at more closely tying executive compensation
and incentives to long-term performance. Under these guidelines, senior
executives may be awarded options at predetermined target levels which are
generally based upon their position in the Company. The number of options
awarded is determined by the Compensation Committee after receiving
recommendations from the Chief Executive Officer, based on his evaluation of
the Company's and the executive's performance during the prior fiscal year.
While option grants are considered by the Committee in March of each year
based on the prior year's results, no options were granted to the senior
executives in March 1999 applicable to their performance in the 1998 fiscal
year.
Compensation of Chief Executive Officer
David L. Cargile, the Company's Chairman, President and Chief Executive
Officer, serves under an employment agreement entered into in November 1996,
the terms of which are described in "Employment Agreements With Named
Executives" elsewhere in this Proxy Statement. This agreement provides for an
annual base salary that can be increased and supplemented at the discretion of
the Board of Directors. Mr. Cargile's compensation, based on 1998 results, was
reviewed by the Committee in March 1999.
10
<PAGE>
The Committee's compensation decisions for Mr. Cargile reflect its view of
his contribution in revitalizing the Company after he assumed responsibilities
for its operations in August 1994. Under his leadership and initiative since
that date, the Company has demonstrated meaningful growth and improvement in
its financial results--including its revenues, income, its total assets,
return on equity, stockholders' equity, book value, stockholder dividends and
its stock price. Furthermore, under Mr. Cargile's direction and pursuant to
his plan, during 1998 the Company completed the acquisition of the VASA Group
of companies, including its medical stop-loss operations and insurance
subsidiaries. This transaction permitted the Company to re-allocate its assets
by discontinuing its property/casualty reinsurance operations and transferring
the reinsurance of the medical stop-loss business to the newly acquired
insurance subsidiaries. The Committee believes that these actions will
strengthen the Company's capital base and stabilize earnings going forward by
increasing the Company's non-risk fee income and reducing its exposure to
losses from natural catastrophes.
The Committee reviewed all the foregoing factors in determining the
compensation of the Company's Chief Executive Officer. The factors were not
assigned specific weight by members of the Committee, but rather were weighed
subjectively by each member. In light of the foregoing, the Compensation
Committee concluded that an increase in Mr. Cargile's compensation as the
Company's Chief Executive Officer was appropriate considering his level of
responsibility, his leadership abilities, his contributions to the continued
growth of the Company and the focus and direction which he provided. The
Committee then explained to the Board the basis for its decisions, and the
Board concurred in the Committee's recommendations. Accordingly, Mr. Cargile
was given a 5% salary increase and assigned 15,785 performance units as his
target under the Company's LTI-Plan for the 1998-2000 performance period.
However, at Mr. Cargile's specific request, no bonus award or option grant was
made to Mr. Cargile applicable to fiscal year 1998.
Deductibility of Executive Compensation
The 1993 Omnibus Budget Reconciliation Act ("OBRA") provides that the income
tax deductions of publicly traded companies in tax years beginning on or after
January 1, 1994 may be limited to the extent total compensation (including
base salary, annual bonus, stock option exercises and nonqualified benefits)
for certain executive officers exceeds $1,000,000 in any one year. Under OBRA,
the deduction limit does not apply to payments which meet certain requirements
to qualify as "performance-based" compensation.
The Compensation Committee intends to consider various alternatives to
preserve the deductibility of compensation payments to the extent it is
reasonably practicable and consistent with its other objectives. In
this connection, the Company has obtained stockholder approval of the
Company's 1997 Long-Term Incentive-Performance Unit Plan, and intends to
operate the Plan within the requirements of Section 162(m) of the Internal
Revenue Code to preserve the corporate deductibility of executive
compensation. The Company may, however, pay compensation which is not
deductible in limited circumstances when sound management of the Company so
requires. The Committee believes that if any loss of deductibility occurs it
would not be materially adverse to the Company. For fiscal year 1998, no
executive officer's taxable compensation exceeded the $1,000,000 limit on
deductibility.
Compensation Committee
L. Steven Medgyesy, M.D. (Chairman)(/1/)
Charles L. Schultz Roxani M. Gillespie
- --------
(1) Bernard H. Ross was Chairman of the Compensation Committee until his death
in November, 1998.
The above Report of the Compensation Committee will not be deemed to be
incorporated by reference into any filing by the Company under the Securities
Act of 1933 or the Securities Exchange Act of 1934, except to the extent that
the Company specifically incorporates the same by reference.
11
<PAGE>
Compensation Committee Interlocks
And Insider Participation
The members of the Compensation Committee during 1998 were Bernard H. Ross
(Chairman until his death in November, 1998), Dr. L. Steven Medgyesy, Charles
L. Schultz and Roxani M. Gillespie. Ms. Gillespie was appointed to replace
Kenneth C. Tyler, who resigned as a director in April 1998. All of the
directors who served on the Compensation Committee during 1998 were non-
employee directors.
COMPENSATION OF EXECUTIVE OFFICERS
Summary Compensation Table*
The following table provides information concerning all compensation paid or
credited by the Company to the Named Executives for services rendered to the
Company and its subsidiaries in all capacities attributable to the fiscal
years ended December 31, 1998, 1997 and 1996.
<TABLE>
<CAPTION>
(a) (b) (c) (d) (e) (g) (i)
-----------------------------------------------------
Long-Term
Annual Compensation Compensation
- --------------------------------------------------------------------------------------------------------
Number of
Securities
Underlying
Fiscal Other Annual Options All Other
Name and Principal Position Year Salary Bonus(/1/) Compensation Granted(/2/) Compensation(/3/)
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
David L. Cargile** 1998 $449,435 -0- (/4/) -0- $258,813(/5/)
President, and Chief 1997 $437,601 $300,000 (/4/) 60,000 $260,165(/5/)
Executive Officer 1996 $411,825 $280,000 (/4/) 45,000 $187,400(/5/)
- --------------------------------------------------------------------------------------------------------
Howard S. Singer** 1998 $237,989 -0- (/4/) -0- $ 17,553
Executive Vice President-- 1997 $233,054 $ 47,500 (/4/) 27,200 $ 17,376
Corporate Finance 1996 $225,914 $ 56,818 (/4/) 24,000 $ 9,000
and Investor Relations
- --------------------------------------------------------------------------------------------------------
John T. Grush 1998 $293,973 -0- (/4/) -0- $ 21,576
Senior Vice President and 1997 $291,646 $ 65,000 (/4/) 28,800 $ 20,885
President of USF RE 1996 $291,646 $ 58,309 (/4/) 24,000 $ 20,213
- --------------------------------------------------------------------------------------------------------
Craig J. Kelbel** 1998 $244,804 $ 10,000 (/4/) -0- $ 17,253
Senior Vice President and 1997 $239,349 $ 25,000 (/4/) 27,200 $ 18,251
President of USBenefits 1996 $229,793 $ 69,459 (/4/) 24,000 $ 12,562
Insurance Services, Inc.
- --------------------------------------------------------------------------------------------------------
Jose A. Velasco 1998 $218,750 $ 20,000 (/4/) -0- $ 15,921
Senior Vice President, Chief 1997 $202,312 $ 61,000 (/4/) 32,000 $ 15,490
Administrative Officer, 1996 $175,380 $ 53,165 (/4/) 24,000 $ 15,816
Secretary and General Counsel
- --------------------------------------------------------------------------------------------------------
</TABLE>
* The Company has excluded from the Summary Compensation Table the columns
relating to awards of Restricted Stock (column "f") and Long-Term Incentive
Plan Payouts (column "h") because no such awards or compensation were
earned by or paid to the Named Executives in the fiscal years covered by
the table.
** The compensation paid to Messrs. Cargile, Singer and Kelbel during 1998
was pursuant to employment agreements described under "Employment
Agreements With Named Executives" elsewhere in this Proxy Statement.
12
<PAGE>
(1) Cash bonus awards under the Company's Incentive Compensation Program (the
"Incentive Program") are paid in the first quarter of the year and
represent payment for services performed in the prior fiscal year.
Accordingly, the table shows the bonus amounts in the year to which they
are applicable. The gross amounts paid to all participants under the
Incentive Program applicable to fiscal years 1998, 1997 and 1996 were
$308,127, $1,085,500 and $1,240,000, respectively.
(2) Similar to cash bonus payments described in note (1) above, options
granted in the first quarter of each year were for services performed by
the executive during the prior fiscal year, and the table indicates the
years to which such option grants are applicable.
(3) Each of the Named Executives was credited with $10,000 for 1998, $9,500
for 1997 and $9,000 for 1996 as the Company's matching contribution to
such executive's participation in the Company's 401(k) Employees Savings
Plan. The balance of the amount shown for each year in column (i) for
these executives was the Company's matching payment to the executive's
voluntary contribution to the Company's Non-Qualified Deferred
Compensation Plan, plus interest paid by the Company on the funds in the
executive's account under the Non-Qualified Deferred Compensation Plan,
except for Mr. Cargile who also received the additional compensation
described in Note (5) below.
(4) The Company also provides its executive officers health and group term-
life insurance and other benefits generally available to all salaried
employees, and certain additional noncash benefits, including club
memberships and the use and maintenance of automobiles, which benefits in
no individual case have an aggregate incremental cost to the Company which
exceeds the lesser of $50,000 or 10% of that individual's total salary and
bonus as reported in the "Summary Compensation Table." See also
"Employment Agreement With Named Executives" elsewhere in this Proxy
Statement for compensation payments to Mr. Cargile, Mr. Singer and Mr.
Kelbel (or their named beneficiaries) in the event of their disability or
death during the term of their employment agreements.
(5) As a result of the loan forgiveness arrangement and the additional income
taxes incurred as a part of Mr. Cargile's relocation in 1995 from Atlanta,
Georgia, to Southern California, as required by the Company (see
"Employment Agreements With Named Executives" elsewhere in this Proxy
Statement), Mr. Cargile received additional compensation of $248,813
attributable to 1998, $213,357 attributable to 1997 and $178,400
attributable to 1996.
13
<PAGE>
Option Grants in Last Fiscal Year
The upper table provides information on stock option grants made in March
1998 to the Named Executives under the Company's 1991 Employee Stock Option
Plan based upon the performance of the Named Executives during the 1997 fiscal
year. No option grants were made to the Named Executives in March 1999
applicable to their 1998 performance. The lower table also illustrates the
comparable potential appreciation in value over a 5-year period of stock held
by the Company's stockholders as a group, and by a unit of 1,000 shares, from
the value of the Company's common stock of $9.75 per share, which was the
closing price of the stock on the New York Stock Exchange on December 31,
1998.
<TABLE>
<CAPTION>
Potential Realizable
Value at Assumed
Annual Rates of Stock
Price Appreciation
Individual Grants for Option Term
(Adjusted to reflect 100% stock split) (5-year Period)(/2/)
- ------------------------------------------------------------------------------------------------
(a) (b) (c) (d) (e) (f) (g)
Number of % of Total
Securities Options Granted
Underlying to All Employees Exercise
Options in Last or Base Expiration
Name Granted(/1/) Fiscal Year(/1/) Price(/1/) Date 5% 10%
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
David L. Cargile 60,000 12.11% $12.38 03/24/08 $ 466,944 $ 1,183.354
- ------------------------------------------------------------------------------------------------
Howard S. Singer 27,200 5.49% $12.38 03/24/08 $ 211,686 $ 536,454
- ------------------------------------------------------------------------------------------------
John T. Grush 28,800 5.81% $12.38 03/24/08 $ 224,138 $ 568,010
- ------------------------------------------------------------------------------------------------
Craig J. Kelbel 27,200 5.49% $12.38 03/24/08 $ 211,686 $ 536,454
- ------------------------------------------------------------------------------------------------
Jose A. Velasco 32,000 6.46% $12.38 03/24/08 $ 249,042 $ 631,122
- ------------------------------------------------------------------------------------------------
<CAPTION>
Potential Gain for
Stockholders at Rate of
5% 10%
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
All Stockholders N/A N/A N/A N/A $90,168,636 $219,816,827
- ------------------------------------------------------------------------------------------------
Per 1,000 Shares N/A N/A N/A N/A $ 90,168 $ 219,816
- ------------------------------------------------------------------------------------------------
</TABLE>
(1) All options granted to the Named Executives on March 25, 1998 were
applicable to services performed by them during fiscal year 1997. The
exercise price of the options, $12.38, was the closing price of the
Company's common stock on March 25, 1998, on the New York Stock Exchange.
(2) The information set forth in columns (f) and (g) is at an assumed annual
rate of appreciation over the 5-year period, commencing at the option
grant date. The appreciation figures set forth are net of the option
exercise price, but before taxes associated with the option exercise.
These figures should not be viewed in any way as a forecast of actual
results of the future performance of the Company's stock, which will be
determined by unknown future events and factors, including market
conditions as well as the option holders' continued employment throughout
the option vesting period.
14
<PAGE>
Option Exercises And Year-End Value Table
The following table provides information with respect to stock options
assigned to the Named Executives in prior years under the Company's 1988
Employee Stock Plan and its 1991 Employee Stock Option Plan, specifically
showing: (i) the number and value of shares acquired by the Named Executives
upon exercise of options during the 1998 fiscal year; and (ii) the number and
value of exercisable and unexercisable options held at December 31, 1998.
<TABLE>
<CAPTION>
(a) (b) (c) (d) (e)
Number of Securities Value of Unexercised
Number of Underlying Unexercised In-the-Money Options(/1/)
Shares Value Options Held at 12/31/98 Held at 12/31/98
Acquired on Realized ------------------------- -------------------------
Name Exercise on Exercise Exercisable Unexercisable Exercisable Unexercisable
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
David L. Cargile -0- -0- 402,500 82,500 $957,000 -0-
- -----------------------------------------------------------------------------------------------
Howard S. Singer -0- -0- 45,000 39,200 $ 71,500 -0-
- -----------------------------------------------------------------------------------------------
John T. Grush -0- -0- 48,000 40,800 $ 82,500 -0-
- -----------------------------------------------------------------------------------------------
Craig J. Kelbel -0- -0- 26,000 39,200 -0- -0-
- -----------------------------------------------------------------------------------------------
Jose A. Velasco -0- -0- 45,000 44,000 $ 71,500 -0-
</TABLE>
(1) Based on the closing price of the common stock of $9.75 at December 31,
1998 on the New York Stock Exchange, minus the exercise price of the
option.
Long-Term Incentive Plan--Awards for the Three-Year Performance Period
Commencing January 1, 1998
As approved by stockholders at the 1997 Annual Meeting, the Company's Long-
Term Incentive--Performance Unit Plan ("LTI-Plan") provides for cash payment
awards intended to qualify as performance-based compensation to satisfy the
requirements of Section 162(m) of the Internal Revenue Code. Under the LTI-
Plan performance units are assigned to each participant at the beginning of a
three-year performance period. The number of performance units actually
awarded to a participant is determined at the close of the three-year period,
based upon: (i) the Company meeting a certain pre-determined average return on
equity over the three-year performance period; and (ii) the participant's
performance over the performance period relative to the target performance.
New three-year performance periods begin annually each January 1 until the
LTI-Plan is terminated. The Board of Directors has discretion to make certain
awards under the LTI-Plan if the return on equity target thresholds are not
met.
All payments earned by participants under the LTI-Plan will automatically be
deferred into the Company's Non-Qualified Deferred Compensation Plan, which
provides for a vesting of the payouts over a two-year period.
The following table sets forth the number of units assigned to each of the
Named Executives under the LTI-Plan for the three-year performance period of
1998-2000. Each performance unit has a value of $10. As noted above, no awards
are made under the LTI-Plan until the end of the performance period, and such
awards are dependent upon the achievement of pre-determined performance target
levels.
<TABLE>
<CAPTION>
Estimated Future Payouts
Under Non-Stock Price-Based
Plans
---------------------------
(a) (b) (c) (d) (e) (f)
Performance or
Other Period
Number Until
of Maturation
Name Units or Payout Threshold Target Maximum
- ---------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
David L. Cargile 15,785 3 years $78,925 $157,800 $236,775
- ---------------------------------------------------------------------
Howard S. Singer 5,969 3 years $29,845 $ 59,690 $ 89,535
- ---------------------------------------------------------------------
John T. Grush 7,361 3 years $36,810 $ 73,620 $110,430
- ---------------------------------------------------------------------
Craig J. Kelbel 6,140 3 years $30,700 $ 61,400 $ 92,100
- ---------------------------------------------------------------------
Jose A. Velasco 5,513 3 years $27,565 $ 55,130 $ 82,695
- ---------------------------------------------------------------------
</TABLE>
15
<PAGE>
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN AMONG
THE CENTRIS GROUP, INC., ITS CUSTOM PEER GROUP, AND THE S&P
INSURANCE PROPERTY-CASUALTY INDEX
[PERFORMANCE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
The Centris Group Custom Peer Group S&P Insurance
<S> <C> <C> <C>
12/31/93 100 100 100
12/31/94 86 98 104
12/31/95 186 129 142
12/31/96 172 163 172
12/31/97 198 214 251
12/31/98 175 182 233
</TABLE>
The graph above shows a five year comparison of cumulative total stockholder
returns for (i) The Centris Group common stock, (ii) the Company's custom peer
group, and (iii) the S&P Insurance-Property-Casualty Index. The Company's stock
began trading on the New York Stock Exchange ("NYSE") in September 1996; prior
to that time it traded on NASDAQ. The custom peer group index is comprised of
the following companies: Acceptance Insurance Companies, Inc.; Amwest Insurance
Group, Inc.; Baldwin & Lyons, Inc.; Chandler Insurance Company, Ltd.; Chartwell
Re Corporation; Executive Risk Inc.; Farm Family Holdings Inc.; HCC Insurance
Holdings, Inc.; Intercargo Corporation; National Insurance Group; Orion Capital
Corporation; PXRE Corporation; RLI Corporation; Sphere Drake Holdings Ltd.;
Terra Nova Holdings Ltd.; and Trenwick Group Inc. The returns of the companies
in the peer indices are weighted based on their stock market capitalization as
of the beginning of the period. Cumulative stockholder return (on an assumed
investment of $100 as of December 31, 1993), as determined at the end of each
year, reflects the change in stock price, assuming the reinvestment of
dividends.
Notwithstanding anything to the contrary set forth in any of the Company's
previous filings with the SEC 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 performance graph set
forth above in this Proxy Statement shall not be incorporated by reference into
any such filings.
16
<PAGE>
Employment Agreements With Named Executives
David L. Cargile. Mr. Cargile serves as the Company's President and Chief
Executive Officer pursuant to a four-year employment agreement entered into in
November 1996. This agreement provides for a base annual salary which was
$449,435 for the 1998 calendar year, a discretionary cash bonus, and certain
other benefits. The Company can terminate Mr. Cargile's employment at any time
without cause by paying him 150% of the salary due to him under the remaining
term of his employment agreement. In the event of his death or disability Mr.
Cargile (or his beneficiary) will be paid the greater of the amount of his
then current compensation remaining due for the term of the employment
agreement or one (1) year's salary.
In connection with his employment and the Company's requirement that he move
from Atlanta, Georgia to Southern California, in July 1995 the Company granted
to Mr. Cargile a $649,000 interest-bearing loan for the purchase of a
residence, secured by a trust deed on that residence. Of that principal
amount, $414,765 is being forgiven by a credit on the loan by the Company over
a 60-month period. Additionally, the full amount of the loan will be forgiven
if Mr. Cargile's employment terminates for any reason. As of February 28,
1999, $363,262 of the principal amount of the above-noted loan was
outstanding. In addition, the Company agreed to pay to Mr. Cargile such
additional amount as is required to compensate him for the additional state
and federal taxes due which will arise as a result of the credit he will
receive against the loan balance, and for the increase in state taxes Mr.
Cargile will experience as a California resident as contrasted with the state
taxes he would have otherwise paid as a resident of Georgia. (See Note (5) to
"Summary Compensation Table" elsewhere in this Proxy Statement.)
Howard S. Singer. Pursuant to a four-year employment agreement entered into
in December 1996, Mr. Singer serves as the Executive Vice President of the
Company at a base annual salary which was $238,091 for the 1998 calendar year,
a bonus as may be granted by the Board, and certain other benefits. He is also
entitled to a one-time "piggyback" registration right at no cost to him with
respect to Company stock owned by Mr. Singer. The Company can terminate Mr.
Singer's employment at any time without cause by paying him 150% of the salary
due to him under the remaining term of his employment agreement. In the event
of his death or disability Mr. Singer (or his beneficiary) will be paid the
greater of the amount of his then current compensation remaining due for the
term of the employment agreement or one (1) year's salary.
Craig J. Kelbel. Mr. Kelbel entered into a three-year employment agreement
with the Company in November 1996 to serve in the positions of President and
Chief Operating Officer of USBenefits and as a Senior Vice President of the
Company at a base annual salary which was $244,804 for the 1998 calendar year,
and certain other benefits. The Company can terminate Mr. Kelbel's employment
at any time without cause by paying him 100% of the salary due to him under
the remaining term of his employment agreement. In the event of his death or
disability Mr. Kelbel (or his beneficiary) will be paid the amount of his then
current compensation for a period of one (1) year.
Change in Control Agreements. The Company has entered into severance
agreements with the Named Executives. Under these agreements, if their
employment is terminated by the Company (other than for cause) or is
terminated by the executive "for good reason" within two years after a "change
in control" of the Company, as those terms are defined in the severance
agreements, each of these executives (other than Mr. Cargile) would be
entitled to receive a payment of two years annual salary plus an amount equal
to the largest annual cash bonuses received during their employment as well as
a continuation for two years of life and medical insurance benefits. Mr.
Cargile would receive three years annual salary plus one-and-one-half times
his largest annual cash bonus, as well as the other benefits noted above. All
of these agreements further state that if any executive has an employment
agreement which also provides for payments upon termination, the executive
will receive payments either under the severance agreement or the employment
agreement, whichever payment is greater, but may not receive payments under
both agreements. As defined in the severance agreements, a "change in control"
includes, under specific circumstances, a merger of the Company with another
company which results in a 50% change of the combined voting power of the
Company's securities or the sale of more than 50% of the Company's assets or,
under certain circumstances, the beneficial ownership by any person of more
than 10% of the Company's equity securities.
17
<PAGE>
RELATED TRANSACTIONS
As described above under "Employment Agreements With Named Executives," in
July 1995 the Company made a loan to Mr. Cargile in the amount of $649,000 in
connection with the purchase of his principal residence in Southern
California, a portion of which loan is being forgiven over a 60-month period.
As of February 28, 1999, a principal amount of $363,262 of this loan was
outstanding.
PROPOSAL NO. 2
RATIFICATION OF SELECTION OF AUDITORS
The Board of Directors has selected KPMG LLP, independent certified public
accountants (formerly known as KPMG Peat Marwick LLP), to continue as the
Company's auditors for the fiscal year ending December 31, 1999, unless in the
opinion of the Board KPMG LLP is not in a position to continue providing its
services to the Company or the continuation of such audit relationship is
inappropriate. In such situations the Board of Directors retains the ability
to designate a successor auditing firm, subject to ratification by the
stockholders at the next regularly scheduled annual meeting of stockholders.
KPMG LLP, or a predecessor, has audited the Company's financial statements
since 1982. Representatives of KPMG LLP will be present at the Annual Meeting
to respond to appropriate questions from stockholders.
Vote Required
The affirmative vote of a majority of the shares present in person or by
proxy and entitled to vote at the Annual Meeting is required to ratify the
selection of KPMG LLP as the Company's auditors for the fiscal year ending
December 31, 1999.
Board Recommendation
The Board recommends a vote FOR such ratification. All proxies received by
the Company will be voted to ratify the KPMG LLP selection, unless a contrary
vote is indicated on the proxy card.
OTHER MATTERS
The Board of Directors is not aware of any business to be presented at this
Annual Meeting except the matters set forth in the Notice and described in
this Proxy Statement. Unless otherwise directed on the proxy card, all shares
represented by the proxy holders appointed by the Company will be voted in
favor of the Company's nominees for election as directors and in favor of
PROPOSAL NO. 2. The proxy holders will use their best judgment in voting on
any other matters that properly come before the Annual Meeting.
STOCKHOLDER PROPOSALS
Stockholders desiring to exercise their rights under the Proxy Rules of the
SEC to submit proposals for consideration by other stockholders at the 2000
Annual Meeting are advised that under Rule 14A-8(a)(3)(i) of Regulation 14A
under the Securities Act of 1934, as amended, such proposals must be received
by the Company no later than November 30, 1999, in order to be eligible for
inclusion in the Company's Proxy Statement and proxy card relating to the 2000
Annual Meeting of Stockholders. Under current plans, the Company's 2000 Annual
Meeting of Stockholders is scheduled to be held on May 10, 2000.
18
<PAGE>
EXPENSES
The Company will bear the entire cost of preparing, assembling, printing and
mailing this Proxy Statement and the enclosed proxy card, and of soliciting
proxies. The Company will request banks and brokers to solicit their customers
who beneficially own shares listed on the Company's records in the names of
such nominees, and will reimburse those banks and brokers for their reasonable
out-of-pocket expenses in connection with such solicitation.
For this 1999 Annual Meeting the Company has retained the services of D.F.
King & Co., Inc. ("King"), a proxy solicitation firm. While King's primary
activities will involve contacting all intermediaries believed to be holding
stock of the Company on behalf of others and will assist in the delivery of
proxy materials to such persons and in collecting executed proxies, King may
also contact and assist persons who hold stock directly. The original
solicitation of proxies by mail may be supplemented by telephone solicitation
by employees of King. In addition to the use of the mails and King, proxies
may be solicited by the directors, officers and employees of the Company
without additional compensation, by personal interview, by telephone or by
telegram. The Company has also engaged Corporate Election Services, Inc. to
assist in the tabulation of votes. It is anticipated that the total expense
for the services of D.F. King and Corporate Election Services will not exceed
$8,000, plus mailing and other out-of-pocket costs.
ANNUAL REPORT TO STOCKHOLDERS
The Company's Annual Report to Stockholders on SEC Form 10-K for the fiscal
year ended December 31, 1998, which includes financial information for fiscal
periods ending December 31, 1998, 1997 and 1996, is being mailed to the
stockholders along with this Proxy Statement. The Annual Report to
Stockholders on SEC Form 10-K is not to be considered part of the proxy
soliciting material.
By Order of the Board of Directors,
/s/ JOSE A. VELASCO
Jose A. Velasco
Senior Vice President, Chief Administrative
Officer, Secretary and General Counsel
March 31, 1999
Costa Mesa, California
Additional copies of the Company's 1998 Annual Report on SEC Form 10-K and
proxy soliciting materials can be obtained without charge from Howard S.
Singer, Executive Vice President, The Centris Group, Inc., 5215 Old Orchard
Road, Suite 300, Skokie, Illinois 60077, or by calling (800) 550-3285, or by
contacting the Company at its website at www.thecentrisgroup.com.
19
<PAGE>
REVOCABLE PROXY REVOCABLE PROXY
THE CENTRIS GROUP, INC.
650 Town Center Drive, Suite 1600
Costa Mesa, California 92626
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints LINTON R. GROKE, BARBARA FOX STONER AND
RODNEY W. LOEB, and each of them, with full power of substitution, as the
attorneys and proxies of the undersigned to attend the Annual Meeting of
Stockholders of The Centris Group, Inc., to be held on May 12, 1999, at
9:00 a.m., Local Time, at the offices of the Company, 650 Town Center Drive,
15th Floor, Costa Mesa, California, and any postponements or adjournments
thereof, with full authority to vote as directed on the reverse side of this
card all shares which the undersigned would be entitled to vote if the
undersigned were personally present at the Annual Meeting.
Receipt of the Notice and Proxy Statement for the 1999 Annual Meeting of
Stockholders, as well as the Company's Annual Report to Stockholders on SEC
Form 10-K for the year ended December 31, 1998, is acknowledged.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED BY THE APPOINTED PROXY HOLDERS
IN THE MANNER DIRECTED HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS
MADE, THIS PROXY WILL BE VOTED FOR PROPOSALS 1 AND 2. THE SUBMISSION OF THIS
PROXY TO THE COMPANY IN CONNECTION WITH THE 1999 ANNUAL MEETING OF STOCKHOLDERS,
IF PROPERLY EXECUTED, REVOKES ALL PRIOR PROXIES WHICH MAY HAVE PREVIOUSLY BEEN
SUBMITTED TO THE COMPANY FOR THE 1999 ANNUAL MEETING.
(Continued and to be signed on reverse side)
<PAGE>
Please mark your
A [X] votes as in this
example.
(Please vote, sign, date and return the Proxy
Card promptly using the enclosed envelope.)
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Vote is FOR all nominees Vote is withheld from
listed at right, except vote all nominees listed
may be withheld from any at right for election FOR AGAINST ABSTAIN
nominee listed below as directors 2. Ratification of KPMG LLP as the independent
auditors of the Company for the year ended [_] [_] [_]
December 31, 1999.
[_] [_]
1. Election of Nominees:
two directors Roxani M. Gillespie The proxy holders are authorized to vote in their
Jose A. Velasco discretion upon such other business as may properly
come before the Annual Meeting or any postponements
or adjournments thereof.
(To withhold authority to vote for any Please check
nominee, write the nominee's name on the this box if you
lines below.) plan to attend
the Annual
__________________________________________ Meeting on
May 12, 1999
__________________________________________ [_]
SIGNATURE______________________ DATE___________________ _______________________________________________ DATE________________________
SIGNATURE IF HELD JOINTLY
</TABLE>
Note: Please sign exactly as your name appears hereon. When shares are held by
joint tenants, both should sign. When signing as attorney, executor,
administrator, trustee or guardian, please give the full title as such. If a
corporation, please sign in full corporate name by a duly authorized officer.
If a partnership, please sign in partnership name by authorized person.
