SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
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 Rule 14a-11(c) or Rule 14a-12.
Meridian Insurance 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)(1) and 0-11
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
<PAGE>
(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:
<PAGE>
April 2, 1999
Dear Shareholder:
You are cordially invited to attend our Annual Meeting of Shareholders at
2:00 p.m., Wednesday, May 5, 1999. The meeting will be held in our home office
at 2955 North Meridian Street, Indianapolis, Indiana, in the Pennsylvania Room.
We will report on Meridian's 1998 business results and on other matters of
current interest to our shareholders.
Enclosed with this Proxy Statement are your proxy card and Meridian's 1998
Annual Report. Your vote is important. We encourage you to read this Proxy
Statement and mark, sign and return your proxy card in the enclosed envelope as
soon as possible whether or not you expect to attend the meeting.
All of us look forward to seeing you on May 5.
Sincerely,
Norma J. Oman
President and
Chief Executive Officer
<PAGE>
MERIDIAN INSURANCE GROUP, INC.
Notice of 1999 Annual Meeting of Shareholders
The Annual Meeting of Shareholders of Meridian Insurance Group, Inc., will
be held on May 5, 1999, at 2:00 p.m., Eastern Standard Time, in our
home office at 2955 North Meridian Street, Indianapolis, Indiana, in
the Pennsylvania Room. The purpose of the meeting is to:
1. elect two directors;
2. consider and vote on a proposal to amend MIGI's Restated Articles of
Incorporation to authorize classes of directors without regard to the
total number of directors; and
3. act on any other business properly coming before the meeting.
Shareholders of record at the close of business on March 5, 1999, will be
entitled to notice of and to vote at the Annual Meeting.
This Proxy Statement, proxy card and Meridian's 1998 Annual Report to
Shareholders are being distributed on or about April 2, 1999.
By order of the Board of Directors,
J. Mark McKinzie
Senior Vice President, Corporate Secretary
and General Counsel
April 2, 1999
Indianapolis, Indiana
<PAGE>
MERIDIAN INSURANCE GROUP, INC.
2955 North Meridian Street
P.O. Box 1980
Indianapolis, Indiana 46206
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
May 5, 1999
Meridian Insurance Group, Inc., ("MIGI" or the "Company" or "we") will hold
our Annual Meeting of Shareholders on May 5, 1999, at 2:00 p.m., Eastern
Standard Time. The meeting will be in our home office at 2955 North Meridian
Street, Indianapolis, Indiana, in the Pennsylvania Room.
Our Board of Directors is mailing you this Proxy Statement and the enclosed
proxy card. Our purpose is to solicit your proxy to be voted at the Annual
Meeting and at any adjournment of it. Below is important information about the
Annual Meeting and this Proxy Statement.
What you are voting on:
the election of two directors: James D. Price and Sarah W. Rowland
the proposal to amend MIGI's Restated Articles of Incorporation to
authorize classes of directors without regard to the total number of directors.
Who may vote: Shareholders as of the close of business on March 5, 1999,
(the "Record Date") are entitled to vote at the Annual Meeting. Each shareholder
is entitled to one vote for each Common Share held on the Record Date.
How to vote: MIGI shareholders on the Record Date may vote in person at the
Annual Meeting or by proxy. We recommend you vote by proxy even if you plan to
attend the Annual Meeting. You can always change your vote at the Annual
Meeting.
How proxies work: MIGI's Board of Directors is asking for your proxy.
Giving us your proxy means you authorize us to vote your shares at the Annual
Meeting in the manner you direct. You may vote for all, some or none of our
director nominees. You may abstain or vote for or against the proposal to amend
the articles of incorporation. To vote by proxy, please mark your vote on the
enclosed proxy card, sign and date it, and return it in the prepaid envelope. If
you return your signed proxy but do not specify how to vote, we will vote your
shares in favor of our director nominees and in favor of the proposal to amend
the articles of incorporation.
How to revoke your proxy: You have the right to revoke your proxy any time
before the meeting by notifying MIGI's Corporate Secretary or returning a
later-dated proxy. You may also revoke your proxy by voting in person at the
Annual Meeting.
<PAGE>
If you receive more than one proxy card: It means you hold shares
registered in more than one account. Sign and return all proxies to ensure that
all your Common Shares are voted.
A quorum: In order to carry on the business of the Annual Meeting, we must
have a quorum. This means at least a majority of the outstanding Common Shares
eligible to vote must be represented at the Meeting, either by proxy or in
person. As of the Record Date, 7,259,661 MIGI Common Shares were issued and
outstanding. Any properly executed proxy cards we receive will be considered
part of the quorum, including abstentions and broker non-votes. Broker non-votes
occur when a broker returns a proxy card but does not have authority to vote on
a particular proposal.
Votes needed: The two director nominees receiving the most votes will be
elected to the Board of Directors. Only votes cast for a nominee will be
counted, except that your proxy will be voted for the two management nominees
unless it contains instructions to the contrary. Abstentions, broker non-votes
and instructions on your proxy card to withhold authority to vote for one or
more of the nominees will result in their receiving fewer votes. However, such
action will not reduce the number of votes the nominee receives otherwise. As of
the Record Date, Meridian Mutual Insurance Company ("Meridian Mutual") owned
3,465,000 Common Shares or approximately 47.7 percent of MIGI's outstanding
Common Shares. Meridian Mutual has advised MIGI it will vote its shares in favor
of the election of Mr. Price and Ms. Rowland.
Proposal 2 to amend the Restated Articles of Incorporation will be approved
at the Annual Meeting if:
a quorum is present and
votes cast in favor of the proposal exceed votes cast against it.
Abstentions and broker non-votes will have no effect on whether the proposal is
approved.
Meridian Mutual has advised MIGI it will vote its shares in favor of
Proposal 2.
Attending the Annual Meeting: All shareholders as of the Record Date, their
proxyholders, and MIGI's guests may attend the Annual Meeting.
Shareholder recommendations for directors: Any shareholder may recommend a
person as a candidate for director of MIGI by writing to MIGI's Corporate
Secretary at P. O. Box 1980, Indianapolis, Indiana 46206. The shareholder should
include the candidate's name, qualifications, and employment history. The
candidate must be qualified and expressly interested in serving on the Board.
Shareholder proposals for the 2000 Annual Meeting: Shareholder proposals
for next year's Annual Meeting must be received by us by December 2, 1999. The
proposals must be in writing and addressed to MIGI's Corporate Secretary at P.O.
Box 1980, Indianapolis, Indiana 46206. We will include a proposal in next year's
proxy statement if it:
complies with Securities and Exchange Commission regulations and represents
a proper subject for shareholder action under Indiana law.
<PAGE>
BENEFICIAL OWNERSHIP OF COMMON SHARES
The following table lists, as of March 4, 1999, the number and percentage
of MIGI's outstanding Common Shares beneficially owned by:
each director of MIGI
each Named Executive Officer in the Summary Compensation Table
all directors and executive officers of MIGI as a group, and
each person known by MIGI to own beneficially more than five percent of its
Common Shares.
Each person has sole voting and sole investment power with respect to the Common
Shares they own, unless a footnote states otherwise.
<TABLE>
<CAPTION>
<S> <C> <C>
Percent of
Name of Individual Shares Beneficially Outstanding
or Identity of Group Owned Common Shares
Principal Shareholder:
Meridian Mutual Insurance Co. 3,465,000 47.72%
2955 N. Meridian Street
PO. Box 1980
Indianapolis, Indiana 46206
Gregory M. Shepard 1,094,500 (1) 15.07%
303 E. Washington Street
Bloomington, Illinois 61701
Franklin Resources, Inc. 432,000 (2) 5.95%
Charles B. Johnson
Rupert H. Johnson, Jr.
777 Mariners Island Blvd.
San Mateo, California 94404
Franklin Advisory Services, Inc.
One Parker Plaza, 16th Floor
Ft. Lee, New Jersey 07024
Philo Smith 374,880 (3) 5.16%
Philo Smith & Co., Inc.
PSCO Partners Limited Partnership
PSCO Partners Limited Partnership Two
PSCO Fund Limited
Philo Smith Capital Corporation
2950 Summer Street
Stanford, Connecticut 06905
<PAGE>
Directors and Officers:
Ramon L. Humke 18,005 (4) *
Norma J. Oman 164,298 (5) 2.22%
Sarah W. Rowland 5,098 (4) *
Joseph D. Barnette, Jr. 10,378 (4) (6) *
David M. Kirr 10,378 (4) *
John T. Hackett 7,628 (4) *
James D. Price 19,178 (4) (7) *
Thomas H. Sams 4,878 (8) (9) *
Steven R. Hazelbaker 38,684 (10) *
J. Mark McKinzie 42,809 (11) *
Timothy J. Hanrahan 40,881 (12) *
Carl W. Buedel 40,836 (13) *
All directors and executive 403,051 (14) 5.34%
Officers as a group (12 persons)
<FN>
*The asterisk means this person beneficially owns less than one percent of
MIGI's outstanding Common Shares.
(1) Gregory M. Shepard filed a Schedule 13D with the Securities and Exchange
Commission on October 31, 1998, with regard to 995,000 MIGI Common Shares and
provided MIGI with a copy of it. We have adjusted this number to 1,094,500 to
reflect the ten percent MIGI stock dividend distributed in January 1999.
(2) Franklin Advisory Services, Inc., Franklin Resources, Inc., Charles B.
Johnson, and Rupert H. Johnson, Jr., filed a Schedule 13G with the Securities
and Exchange Commission in February 1997, which was amended on February 1, 1999,
reporting beneficial ownership of 432,000 Common Shares of MIGI. The Schedule
13G states that those Common Shares are beneficially owned by one or more open
or closed-end investment companies or other managed accounts which are advised
by direct and indirect investment advisory subsidiaries ("Adviser Subsidiaries")
of Franklin Resources, Inc. ("FRI"). The advisory contracts give the Adviser
Subsidiaries all voting and investment power over the securities the advisory
clients own. Therefore, such Adviser Subsidiaries may be deemed to be beneficial
owners of the Common Shares covered by the Schedule 13G filing. Charles B.
Johnson and Rupert H. Johnson, Jr. ("Principal Shareholders") each own in excess
of 10 percent of the outstanding common stock of FRI and are the principal
shareholders of FRI. FRI and the Principal Shareholders may be deemed to be the
beneficial owners of securities held by persons and entities advised by FRI or
its subsidiaries. FRI, the Principal Shareholders, and each of the Adviser
Subsidiaries disclaim any economic interest or beneficial ownership in any of
the Common Shares covered by the Schedule 13G filing.
(3) Philo Smith, Philo Smith & Co., Inc., PSCO Partners Limited Partnership,
PSCO Partners Limited Partnership Two, PSCO Fund Limited, and Philo Smith
Capital Corporation filed a Schedule 13D with the Securities and Exchange
Commission on May 8, 1998, with regard to 340,800 MIGI Common Shares. The
Schedule 13D states the purpose of the purchases has been to acquire shares for
investment. We have adjusted the number of shares to 374,880 to reflect the ten
percent MIGI stock dividend distributed in January 1999.
(4) This number includes options to purchase 4,400 Common Shares granted under
MIGI's 1994 Outside Director Stock Option Plan.
(5) This number includes 128,922 Common Shares Ms. Oman has the option to
purchase under MIGI's Incentive Stock Plan.
<PAGE>
(6) This number includes 2,200 Common Shares held by Mr. Barnette's spouse. Mr.
Barnette shares voting and dispositive power for this stock.
(7) This number includes 2,200 Common Shares held by Mr. Price's spouse.
(8) This number includes 1,100 Common Shares owned by Waldemar Industries, Inc.
Mr. Sams is the principal owner of Waldemar Industries, Inc.
(9) This number includes options to purchase 3,300 Common Shares granted under
MIGI's 1994 Outside Director Stock Option Plan.
(10) This number includes 37,584 Common Shares Mr. Hazelbaker has the option to
purchase under MIGI's Incentive Stock Plan.
(11) This number includes 34,559 Common Shares Mr. McKinzie has the option to
purchase under MIGI's Incentive Stock Plan.
(12) This number includes 29,646 Common Shares Mr. Hanrahan has the option to
purchase under MIGI's Incentive Stock Plan.
(13) This number includes 28,965 Common Shares Mr. Buedel has the option to
purchase under MIGI's Incentive Stock Plan.
(14) This number includes 289,376 Common Shares subject to options to purchase
under MIGI's Incentive Stock Plan or MIGI's 1994 Outside Director Stock Option
Plan. Common Shares directly owned by Meridian Mutual are not included in this
number. </TABLE>
ELECTION OF DIRECTORS
The Board of Directors is divided into three classes. The bylaws have
recently been amended to set the number of directors at eight upon the
retirement of Director Harold C. McCarthy in May of this year. If the
shareholders approve the proposed amendment to the Articles of Incorporation,
the Board will continue to be divided into three classes regardless of the
number of directors. Directors generally serve for terms of three years. The
term of one class of directors expires at each Annual Meeting of Shareholders.
According to MIGI policy, at least two members of the Board of Directors will
not otherwise be affiliated with MIGI or Meridian Mutual.
Nominees for election this year are: Mr. James D. Price and Ms. Sarah W.
Rowland for three-year terms. Both of the nominees currently serve as MIGI
directors. The other directors listed in the following table have terms of
office expiring in 2000 or 2001.
Each nominee has consented to serve for an additional term. If a nominee
becomes unavailable before the election, your proxy card authorizes us to vote
for a replacement nominee if the Board names one.
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
Name Age Capacity
Nominee for election as director
With term expiring in 2002:
James D. Price 60 Director
Sarah W. Rowland 66 Director
Directors continuing in office
With terms expiring in 2001:
Norma J. Oman 51 President, Chief Executive
Officer and Director
David M. Kirr 61 Director
John T. Hackett 66 Director
Directors continuing in office
With terms expiring in 2000:
Joseph D. Barnette, Jr. 59 Director
Ramon L. Humke 66 Director
Thomas H. Sams 57 Director
</TABLE>
Mr. Barnette has served as a director of the Company since 1988. Mr.
Barnette is the Chief Executive Officer and Chairman of the Board of Bank One,
Indiana, NA and Banc One Indiana Corporation. He also serves as a director of
Indianapolis Power and Light Company and IPALCO Enterprises, Inc.
Mr. Humke has served as a director of MIGI since 1987 and as Chairman since
1992. He is also Chairman of the Board of Directors of Meridian Mutual. Mr.
Humke has been the President, Chief Operating Officer and a director of
Indianapolis Power and Light Company since 1990. Mr. Humke is also a director of
IPALCO Enterprises, Inc.
Mr. Sams has served as a MIGI director since 1994. Mr. Sams has been
President, Chief Executive Officer and a director of Waldemar Industries, Inc.,
an investment holding company in Indianapolis, Indiana, since 1967. He is also a
director of Indianapolis Power and Light Company, IPALCO Enterprises, Inc., and
Mid-America Capital Resource, Inc.
Ms. Oman was elected President and Chief Executive Officer of MIGI in 1991,
having served as an Executive Vice President since 1990. She became President
and Chief Executive Officer of Meridian Mutual and Meridian Security Insurance
Company ("Meridian Security") in 1990. Ms. Oman has served as a director of MIGI
since 1991. She is also a director of Meridian Mutual and Lilly Industries, Inc.
Mr. Kirr has served as a MIGI director since 1992. Mr. Kirr has been the
President of Kirr, Marbach & Company, a Columbus, Indiana, investment advisory
firm, since 1975.
Mr. Hackett has served as a Company director since 1992 and is also a
director of Meridian Mutual. Since 1991, Mr. Hackett has been a Managing General
Partner of CID Equity Partners, L.P., a venture capital firm. Mr. Hackett also
serves as a director of Ball Corporation, Irwin Financial Corporation, Business
Modernization and Technology Corporation and Wabash National Corporation.
<PAGE>
Mr. Price became a MIGI director on March 18, 1998, when the MIGI Board
elected him to fill the vacancy created by Mr. Van Smith's retirement. Mr. Price
is a First Vice President - Investments for Prudential Securities Incorporated.
He has been a director of Meridian Mutual since 1987.
Ms. Rowland has served as a director of the Company since 1994 and is also
a director of Meridian Mutual. Ms. Rowland was elected Chief Executive Officer
and Chairman of the Board of Rowland Design, Inc., an Indianapolis, Indiana,
interior design and space planning firm in 1993. From 1968 to 1993, Ms. Rowland
served as President and Chief Executive Officer of The Rowland Associates, Inc.
She also is a director of Indianapolis Power and Light Company and IPALCO
Enterprises, Inc.
COMMITTEES OF THE BOARD OF DIRECTORS
During 1998 the Board of Directors held six meetings. Each director
attended at least 75 percent of the aggregate of the total number of Board
meetings and the total number of meetings of all Board committees on which the
director served. MIGI's Board of Directors has six committees. They normally
hold joint meetings with similar committees of the Meridian Mutual Board of
Directors.
Audit Committee
Members: Directors Barnette, Hackett, Humke and Price
Number of Meetings in 1998: Four
Functions: o Reviews accounting and financial reporting functions
o Oversees internal controls, audits and compliance program o
Recommends independent auditors and oversees their activities o
Monitors the parties' relationships under the Reinsurance
Pooling Agreement
Compensation Committee
Members: Directors Humke and Sams
Number of Meetings in 1998: Three
Functions: Establishes and administers executive compensation program
and any incentive compensation plans
Reviews salary and employee benefit programs
Administers 1996 Employee Incentive Stock Plan
Finance and Investment Committee
Members: Directors Barnette, Hackett, Humke, Kirr, Oman and Price
Number of Meetings in 1998: Four
Functions: o Establishes investment policy and guidelines
o Reviews and approves Company investment transactions
Nominating Committee
Members: Directors Humke, Oman and Rowland
Number of Meetings in 1998: One
Functions: o Considers and recommends candidates for membership on the
Board of Directors
o Will consider a candidate for director recommended by a
shareholder
<PAGE>
Business Development Committee
Members: Directors Rowland, Humke, Oman, and Price
Number of Meetings in 1998: Two
Functions: o Reviews management proposals for product and service
developments and enhancements
o Assists and guides management with strategic business
initiatives
Pooling Agreement Committee
Members: Directors Barnette, Hackett, Humke, Kirr, and Oman
Number of Meetings in 1998: None
Functions: o At request of Audit Committee and in conjunction with
Meridian Mutual's Pooling Agreement Committee, reviews
relationships among the parties to the Reinsurance Pooling
Agreement and determines whether the percentage
participation of the parties continues to bear an
appropriate relationship
CERTAIN RELATIONSHIPS AND TRANSACTIONS
Meridian Mutual incorporated MIGI in 1986. MIGI remained a wholly-owned
subsidiary of Meridian Mutual until March 1987. At that time, MIGI sold
1,700,000 Common Shares in a public offering. This reduced Meridian Mutual's
ownership of MIGI's outstanding Common Shares from 100 percent to approximately
65 percent. MIGI completed a second public offering of 1,725,000 Common Shares
in 1993. This further reduced Meridian Mutual's ownership of MIGI to
approximately 46.8 percent of its Common Shares. In mid-1996, the Company
acquired Citizens Security Group, Inc., and its property and casualty insurance
subsidiaries, Meridian Citizens Security Insurance Company ("MC Security"),
formerly Citizens Fund Insurance Company, and Insurance Company of Ohio ("ICO")
and became affiliated with Meridian Citizens Mutual Insurance Company ("MC
Mutual"), formerly Citizens Security Mutual Insurance Company. References in
this Proxy Statement to "Meridian Citizens Group" include MC Security, ICO and
MC Mutual.
MIGI markets insurance products and services through its wholly-owned
subsidiaries, Meridian Security and MC Security. Their operations are
interrelated with the operations of MC Mutual and Meridian Mutual, an Indiana
mutual property and casualty company. MIGI believes its various transactions
with Meridian Mutual and MC Mutual are on terms no less favorable to MIGI than
what could be negotiated with an independent third party.
MIGI obtains the majority of its insurance business through a Reinsurance
Pooling Agreement with Meridian Mutual and MC Mutual. In addition, Meridian
Mutual provides the facilities and many services required to conduct MIGI's
business. During 1998 MIGI paid Meridian Mutual $324,000 for administrative and
other services.
Description of Pooling Agreement
Meridian Mutual, Meridian Security, MC Mutual, MC Security and ICO are
parties to a Reinsurance Pooling Agreement. It covers all the property and
casualty insurance written by the parties. Thus, premiums, losses, loss
adjustment expenses and the underwriting and administrative expenses of the
parties are shared according to established percentages. Currently, the
participation percentages are 74 percent for MIGI's insurance subsidiaries, 22
percent for Meridian Mutual, and four percent for MC Mutual. These participation
percentages were fixed with reference to the relative surplus positions of the
companies.
<PAGE>
The MIGI and Meridian Mutual Audit Committees have the responsibility of
monitoring the parties' relationships under the Reinsurance Pooling Agreement.
The Committees have established the procedures they deem necessary and
appropriate for this process. Their guidelines provide for:
o reviewing the participation percentages at least annually and
o referring any decision to change the participation percentages to the
Pooling Agreement Committees of MIGI and Meridian Mutual.
MIGI's business and operations are integrated with and dependent upon
Meridian Mutual's business and operations. Management of Meridian Mutual and
MIGI will decide:
o which expenses relate to underwriting, meaning they will be shared by
the parties under the pooling agreement; and
o which assets and liabilities will be transferred among the parties to
the pooling agreement and what their values are.
The pooling agreement does not have established procedures for making these
decisions.
MIGI and Meridian Mutual do not always have the same interests. Their
interests conflict when it comes to:
o establishing participation ratios under the pooling agreement;
o allocating expenses unrelated to insurance underwriting; and
o MIGI's dividend policy.
Their interests may or may not be in conflict regarding:
o business and investment philosophies;
o profit objectives;
o cash management; and
o possibly other matters.
The wording of the pooling agreement itself eliminates some potential
conflicts. For instance, it doesn't matter which company insures a particular
pooled risk because the operating results of all the participants depend on the
results of the total business covered by the pooling agreement. Therefore, the
parties will have identical loss and loss adjustment expense ratios and
virtually identical expense ratios.
When the interests of MIGI and Meridian Mutual conflict, MIGI directors
make decisions based on their fiduciary duties to the Company and its
shareholders. However, individuals who are directors of both the Company and
Meridian Mutual also owe fiduciary duties to the policyholders of Meridian
Mutual. There are no procedures for having only disinterested directors make
those decisions.
<PAGE>
Future events that could affect the participation percentages among the
parties include:
o Meridian Mutual's receipt of dividends on MIGI Common Shares it owns;
o changes in the capital structure or asset values of any of the
parties to the pooling agreement;
o different effective rates of income taxation; or
o other factors which disproportionately affect the surplus of the
companies.
The pooling agreement has no fixed term. It will stay in effect with regard
to any one party until both Meridian Mutual and that party decide to end the
agreement. A vote by MIGI shareholders is not necessary to amend or terminate
the pooling agreement. If the pooling agreement were terminated:
o the terminating party would transfer back to Meridian Mutual the
liabilities ceded by Meridian Mutual plus an equal amount of assets,
and
o Meridian Mutual would transfer back to the terminating party the
liabilities ceded by the terminating party plus an equal amount of
assets.
Terminating the pooling agreement would not affect MIGI's ownership of all
the outstanding common shares of Meridian Security, MC Security and ICO.
The pooling agreement cannot be terminated or the participation percentages
changed unless the Insurance Commissioners of Indiana, Minnesota and Ohio give
their approval. This requirement is for the protection of policyholders of
Meridian Security, MC Security, ICO, MC Mutual and Meridian Mutual, and not for
the protection of MIGI shareholders. MIGI intends for its insurance subsidiaries
to remain in the pooling agreement, absent unforeseen changes in circumstances.
MIGI Audit Committee: Directors Barnette, Hackett, Humke and Price
Meridian Mutual Audit Committee: Directors Hackett, Humke and Price
MIGI Pooling Agreement Committee: Directors Barnette, Hackett, Humke, Kirr and
Oman
Meridian Mutual Pooling Agreement Committee: Directors Hackett, Humke and Oman
EXECUTIVE COMPENSATION
The following table shows the compensation paid for the last three years to
MIGI's Chief Executive Officer and the four other most highly compensated
executives serving as MIGI executive officers as of December 31, 1998. Annual
compensation includes amounts deferred at the officer's election. All of MIGI's
officers also serve as officers of Meridian Mutual. Meridian Mutual reimburses
MIGI for the services these "Named Executive Officers" perform solely on behalf
of Meridian Mutual.
<PAGE>
<TABLE>
<CAPTION>
Summary Compensation Table
<S> <C> <C> <C> <C> <C> <C> <C>
Long-Term
Compensation
Annual Compensation Awards Payouts
Other Securities
Annual Underlying All Other
Name and Compen- Options/ LTIP Compen-
Principal Salary Bonus Sation SARS Payouts Sation
Position Year ($) ($) ($) (1) (#) (2) ($) ($) (3)
Norma J. Oman 1998 $340,192 -0- -0- -0- -0- $32,853
President and 1997 292,116 -0- -0- 74,173 -0- 46,920
Chief
Executive Officer 1996 268,846 -0- $97,566 -0- -0- 110,319
Steven R. 1998 163,762 -0- -0- -0- -0- 4,312
Hazelbaker
Vice President 1997 138,669 -0- -0- 17,575 -0- 4,160
Chief Financial 1996 129,423 -0- -0- -0- -0- 3,883
Officer and
Treasurer
J. Mark McKinzie 1998 148,577 -0- -0- -0- -0- 4,286
Sr. Vice 1997 130,654 -0- -0- 16,217 -0- 3,920
President
Corporate 1996 119,423 -0- 64,871 -0- -0- 3,583
Secretary
And General
Counsel
Timothy J. 1998 140,962 -0- -0- -0- -0- 6,192
Hanrahan
Sr. Vice 1997 113,054 -0- -0- 14,055 -0- 3,392
President
1996 103,538 -0- 66,723 -0- -0- 14,124
Carl W. Buedel 1998 140,962 -0- -0- -0- -0- 6,082
Sr. Vice 1997 110,958 -0- -0- 13,124 -0- 3,329
President
1996 99,169 -0- 60,377 -0- -0- 12,395
<FN>
(1) The 1996 Other Annual Compensation includes a) the pay-out termination
of executive car allowance program: Ms. Oman, $45,000; Mr. McKinzie, $35,000;
Mr. Hanrahan, $35,000; and Mr. Buedel, $35,000; and b) tax reimbursement
payments of $44,434, $29,419, $28,478, and $25,377 for Ms. Oman, Mr. McKinzie,
Mr. Hanrahan, and Mr. Buedel, respectively.
(2) Options to acquire Common Shares granted pursuant to the 1996 Employee
Incentive Stock Plan, as adjusted for ten percent stock dividend distributed in
January 1999.
(3) For 1998, consists of MIGI's matching contributions of $4,800, $4,312,
$4,286, $4,229, and $4,229 to the Section 401(k) deferred compensation accounts
of Ms. Oman, Mr. Hazelbaker, Mr. McKinzie, Mr. Hanrahan, and Mr. Buedel,
respectively; and accruals under the Supplemental Retirement Income Plan of
$28,053, $1,963, and $1,853 for the accounts of Ms. Oman, Mr. Hanrahan, and Mr.
Buedel, respectively. For 1997, consists of MIGI's matching contributions of
$4,750, $4,160, $3,920, $3,392, and $3,329 to the Section 401(k) deferred
compensation accounts of Ms. Oman, Mr. Hazelbaker, Mr. McKinzie, Mr. Hanrahan,
and Mr. Buedel, respectively; and an accrual under the Supplemental Retirement
Income Plan of $42,170 for the account of Ms. Oman. For 1996, consists of
Meridian Mutual's matching contributions of $4,500, $3,883, $3,583, $3,106, and
$2,975 to the Section 401(k) deferred compensation accounts of Ms. Oman, Mr.
Hazelbaker, Mr. McKinzie, Mr. Hanrahan, and Mr. Buedel, respectively; and
accruals under the Supplemental Retirement Income Plan of $105,819, $11,018, and
$9,420 for the accounts of Ms. Oman, Mr. Hanrahan, and Mr. Buedel, respectively.
</TABLE>
<PAGE>
The Board elects officers of MIGI for one-year terms. The officers serve at
the discretion of the Board of Directors. There is no family relationship
between any of the officers of the Company.
Mr. McKinzie, age 45, has been an attorney for MIGI, Meridian Mutual, and
Meridian Security since 1989. He has served as General Counsel and Secretary of
all three companies since 1992. He was elected a Vice President of the Company,
Meridian Mutual and Meridian Security in 1993 and Senior Vice President in 1997.
Mr. Hanrahan, age 53, was elected a Vice President of MIGI in 1994 and a
Senior Vice President in 1997. He has been a Vice President of Meridian Mutual
and Meridian Security for more than the past five years and a Meridian employee
since 1981.
Mr. Buedel, age 52, was elected a Vice President of MIGI in 1994 and Senior
Vice President in 1997. He has been a Vice President of Meridian Mutual and
Meridian Security since 1990. Mr. Buedel has been a Meridian employee since
1981.
Mr. Hazelbaker, age 43, was elected Chief Financial Officer and Treasurer
of MIGI, Meridian Mutual and Meridian Security in 1994 and a Vice President of
all three companies in 1995. From 1987 until joining the Company in 1994, he was
a partner with Coopers & Lybrand L.L.P.
AGGREGATED OPTION/SAR EXERCISES IN 1998 AND
1998 YEAR-END OPTION/SAR VALUES
The following table shows unexercised options held at December 31, 1998, by
the Named Executive Officers. They did not exercise any options during 1998. The
Company does not have any outstanding stock appreciation rights.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Value of Unexercised
Number of Securities In-the-Money
Underlying Unexercised Options/SARs
Options/SARs at Fiscal Year End
at Fiscal Year End (#) ($) (1)
Exercisable (E)/ Exercisable (E)/
Unexercisable (U) Unexercisable (U)
Name Shares
Acquired
on Exercise (#) Value Realized ($)
Norma J. ---0--- ---0--- 156,711 E $ 1,220,391 E
Oman
Steven R. ---0--- ---0--- 37,584 E 293,440 E
Hazelbaker
J. Mark ---0--- ---0--- 34,559 E 269,623 E
McKinzie
Timothy J. ---0--- ---0--- 29,646 E 230,787 E
Hanrahan
Carl W. ---0--- ---0--- 28,965 E 227,628 E
Buedel
<FN>
(1) Amounts reflecting gains on outstanding options are based on the December
30, 1998, closing stock price of $20.25.
</TABLE>
<PAGE>
Pension Plan
The Company maintains a defined benefit pension plan for eligible
employees. All MIGI employees completing more than 1,000 hours of employment
during a plan year become eligible to participate in the plan. The following
table shows the range of estimated annual benefits payable upon retirement for
graduated levels of average annual earnings and years of service, based on
retirement at age 65 in 1999. The annual earnings cannot exceed the $160,000
maximum compensation limit for purposes of pension calculations.
<TABLE>
<CAPTION>
PENSION PLAN TABLE
<S> <C> <C> <C> <C> <C>
Years of Service
Remuneration 15 20 25 30 35
$120,000 $28,428 $37,904 $47,379 $56,855 $66,331
200,000 38,927 51,902 64,878 77,853 90,829
300,000 38,927 51,902 64,878 77,853 90,829
400,000 38,927 51,902 64,878 77,853 90,829
500,000 38,927 51,902 64,878 77,853 90,829
600,000 38,927 51,902 64,878 77,853 90,829
700,000 38,927 51,902 64,878 77,853 90,829
</TABLE>
The plan provides a pension annuity beginning at age 65 of 1.125 percent of
the employee's final monthly earnings for each year of credited service plus
.625 percent of the employee's final monthly earnings in excess of the monthly
Social Security covered compensation, if any, for each year of credited service
to a maximum of 35 years. "Final monthly earnings" mean the employee's average
monthly pay during his or her five highest consecutive salary years out of the
last ten. "Credited service" means calendar years during which the employee
completes at least 1,000 hours of employment. The plan also provides benefits
for delayed retirement, early retirement, and death and disability. Early
retirement benefits are available at age 55. The plan has provisions for
optional methods of benefit payment, payments to an employee leaving after a
certain number of years of service, and payments to the employee's surviving
spouse. Benefits listed in the table are computed based on a straight life
annuity and are not subject to any deduction for Social Security or other offset
amounts. Section 415 of the Internal Revenue Code allows an individual maximum
annual benefit of $130,000 for 1999. The Plan covers compensation of salary and
cash bonus. For 1998, covered compensation for the Named Executive Officers was:
Ms. Oman, $340,192; Mr. Hazelbaker, $163,762; Mr. McKinzie, $148,577; Mr.
Hanrahan, $140,962; Mr. Buedel, $140,962.
<PAGE>
The estimated credited years of service for the Named Executive Officers as
of January 1999 are listed below:
<TABLE>
<CAPTION>
<S> <C>
Estimated Years of
Credited Service
Norma J. Oman 25
Steven R. Hazelbaker 5
J. Mark McKinzie 10
Carl W. Buedel 17
Timothy J. Hanrahan 18
</TABLE>
Supplemental Retirement Income Plan
The Supplemental Retirement Income Plan covers certain MIGI employees with
more than ten years of credited service. These employees also participate in the
MIGI Pension Plan. The supplemental plan provides benefits in excess of the
limitations imposed by Section 401(a)(17) and Section 415 of the Internal
Revenue Code. The Supplemental Retirement Benefit is payable to an eligible
participant as a straight life annuity over the lifetime of the participant
beginning on the participant's normal retirement date. Early retirement benefits
are available at age 55. The Plan also has provisions for optional joint and
survivor methods of benefit payment. The Benefit will be a monthly amount equal
to the difference between (a) the monthly amount of the MIGI Pension Plan
retirement benefit to which the participant would have been entitled if computed
without the limitations under the Internal Revenue Code and (b) the monthly
amount of the benefit actually payable to the participant under the MIGI Pension
Plan.
The following table lists the Supplemental Retirement Benefit payable upon
retirement for graduated levels of average annual earnings and years of service
for participants under the Plan, based on retirement at age 65 in 1999. The
benefits are not subject to any deduction for Social Security or other offset
amounts. The 1998 compensation covered by the Plan for the Named Executive
Officers is found under the caption, "Pension Plan." Their estimated years of
credited service are also listed under "Pension Plan."
<TABLE>
<CAPTION>
Supplemental Retirement Income Plan Table
<S> <C> <C> <C> <C> <C>
Years of Service
Remuneration 15 20 25 30 35
$170,000 $ 2,625 $ 3,500 $ 4,375 $ 5,250 $ 6,125
200,000 10,500 14,000 17,500 21,000 24,500
250,000 23,625 31,500 39,375 47,250 55,125
350,000 49,875 66,500 83,125 99,750 116,375
450,000 76,125 101,500 126,875 152,250 177,625
550,000 102,375 136,500 170,625 204,750 238,875
650,000 128,625 171,500 214,375 257,250 300,125
750,000 154,876 206,500 258,125 309,750 361,375
</TABLE>
<PAGE>
Executive Bonus Compensation Plan
MIGI maintains a bonus compensation plan for key executive employees ("the
Plan"). The President selects Plan participants each year, subject to approval
of the Compensation Committees of the MIGI and Meridian Mutual Boards of
Directors. The purpose of the Plan is to establish compensation commensurate
with corporate performance compared to goal. Criteria for determining bonus
payments are established prior to the beginning of each year. The performance
measure for 1998 was the combined pre-tax net income of Meridian Mutual,
Meridian Security and the Meridian Citizens Group. Graduated amounts of cash
bonuses become payable if the combined financial performance of these companies
meets the threshold level of 80 percent of goal or exceeds it up to a maximum of
120 percent of goal. After the close of the year, performance is evaluated
relative to the predetermined goals. Actual bonus awards are determined on the
basis of this evaluation. The participant may elect to receive the bonus in cash
or MIGI stock or a combination of the two. The same performance measure has been
established for 1999.
COMPENSATION COMMITTEE REPORT
ON EXECUTIVE COMPENSATION
The Compensation Committee of our Board of Directors, together with the
Compensation Committee of Meridian Mutual, is responsible for establishing and
administering the executive compensation program for MIGI executives. Both
Compensation Committees are composed entirely of directors who are not employees
of the Company or Meridian Mutual.
Compensation Policy
The goal of our executive compensation policy is to attract, motivate and
retain competent personnel. At the same time, we want to ensure an appropriate
relationship exists between executive pay and MIGI's performance. Executive
compensation consists of base salary, a bonus compensation plan and stock-based
incentives. In establishing the base salary portion of executive compensation,
the Committee gives significant consideration to such factors as:
o maintaining MIGI's competitiveness
o establishing efficient and effective use of MIGI's resources
o preserving MIGI's good standing with regulatory and rating
agencies
o managing daily operations and
o developing and achieving long-term and strategic objectives.
The Committee has not assigned relative weights to these factors. Through a
bonus compensation plan, the Committee seeks to reward the attainment of
targeted income goals. The Compensation Committee's philosophy is to slow the
growth in base salary and put a greater portion of total compensation at risk
through the bonus plan. In addition, the Committee seeks to provide equity-based
incentives to further motivate executives over the long term to respond to
MIGI's business challenges and opportunities as owners rather than just as
employees. The Compensation Committee intends for executive annual compensation
to continue to be tax-deductible to the Company.
The Compensation Committee annually evaluates salary surveys produced by
independent compensation consulting firms. This information helps the Committee
determine appropriate levels of executive compensation. For the positions of
Chief Executive Officer and Chief Financial Officer, the survey data compares
the Company with other insurance companies and with all other industries based
on:
o comparable asset levels
o direct written premiums
o net written premiums and
o other relevant indices.
<PAGE>
For other executive positions, the Committee considers salary surveys
comparing MIGI with other insurance companies of similar asset and premium
levels. Some of the insurance companies participating in the salary surveys are
included in the Total Return Industry Index for NASDAQ Insurance Stocks. The
Total Return Industry Index is shown in the Stock Performance Graph of this
Proxy Statement.
The "Executive Bonus Compensation Plan" is described on the preceding page
of this Proxy Statement. The Plan allows executives to earn additional
compensation if Meridian Mutual, Meridian Security and the Meridian Citizens
Group attain certain levels of annual pre-tax income. Within the Plan, a cash
bonus is calculated as a percentage of base salary and is benchmarked annually
against the salary surveys and other information from the independent
compensation consulting firms. If a bonus is earned under the Plan, executives
may elect to take it in cash or MIGI stock or a combination of the two.
MIGI's long-term incentive program, designed by an outside consultant,
consists of grants under the Employee Incentive Stock Plan. Under this Plan, key
employees may receive grants of incentive stock options, non-qualified stock
options, appreciation rights and restricted stock awards. In 1997, each
executive received vested options with a ten-year term. The size of the option
grant was a percentage of the individual's base salary. Different percentages
applied to the Chief Executive Officer, Senior Vice Presidents, and all other
executive officers, commensurate with the amount of responsibility for their
positions. When the Committee established the size of the grants, it considered
outstanding options granted in 1994 and market practices for similar positions
in stock insurance companies. Some of these companies are included in the Total
Return Industry Index for NASDAQ Insurance Stocks.
Bases for CEO Compensation
MIGI's net income for 1998 was $12.2 million, or $1.65 diluted earnings per
common share. This compares to $6.9 million, or $0.93 per common share, in 1997.
MIGI's stock price rose approximately 33 percent during 1998, from $15.22 per
share at the close of 1997 to $20.25 per share at year-end 1998. These results
were achieved despite the negative impact on earnings from a large volume of
property damage claims associated with severe weather in our operating
territory. Weather-related catastrophe losses were about $14.7 million, or $1.30
per share after tax, in 1998 and $7.3 million, or $.64 per share after tax, in
1997.
Ms. Oman's base salary was increased during 1998 to reward her individual
accomplishments during 1997 in:
o implementation of additional underwriting profitability programs
o continued integration of specific Meridian Citizens functions into
Meridian operations
o development of new methods of distribution, i.e. direct writing
o development of new product, non-standard automobile insurance
o continued operational efficiencies and expense reduction, i.e.
personal lines automated underwriting system, and
o achieving other long-range business and operating objectives.
<PAGE>
The Committee did not assign relative weights to these factors. Her new
base salary was below the average for chief executive officers of insurance
companies with direct and net written premiums over $200 million. It was also
below the average salary for chief executive officers of similarly-sized
companies across all industries.
As mentioned above, bonus compensation under the Plan is tied to the
attainment of corporate performance goals. The 1998 combined pre-tax net income
of the Meridian and Meridian Citizens companies did not meet the 80 percent
threshold level established under the Plan. As a result, Ms. Oman did not
receive a bonus under the Plan for 1998 results. Ms. Oman's total compensation
package was lower than the average paid to chief executive officers of the
comparison companies.
Compensation of Other Executive Officers
During 1998, the Compensation Committee adjusted the other executives' base
salaries based on:
o the assignment of internal responsibility
o their individual contributions to MIGI's performance
o the results of the latest salary surveys and
o other relevant information.
The Committee did not assign relative weights to these factors.
These salaries are below the competitive range of people with comparably
responsible positions at similarly-sized insurance companies, both regionally
and nationally. On the other hand, the bonus opportunities for MIGI executives
are greater than what our competitors offer. The Compensation Committee's
philosophy is to put the bonus award at risk and to compensate for that risk
with a slightly-higher-than-average total compensation package when the bonus is
earned.
The 1998 combined pre-tax net income of Meridian Mutual, Meridian Security
and Meridian Citizens Group was below the 80 percent threshold level so the
executives did not receive a bonus under the Plan. The other executives' total
compensation listed in the Summary Compensation Table was lower than the
comparison companies surveyed.
MIGI Compensation Committee Meridian Mutual Compensation Committee
Ramon L. Humke and Thomas H. Sams Martha D. Lamkin, Chairperson, and
Ramon L. Humke
Stock Performance Graph
The following performance graph compares the cumulative total shareholder
return on the Company's Common Shares with:
o the Center for Research in Securities Prices (CRSP) Total Return
Index for NASDAQ Stock Market (U.S. Companies) and
o the CRSP Total Return Industry Index for NASDAQ Insurance Stocks for
the years 1994 through 1998. The comparison assumes $100 was invested
on December 31, 1993, in MIGI's Common
<PAGE>
Shares and in the CRSP indices. It also assumes reinvestment of dividends.
The CRSP Total Return Industry Index for NASDAQ Insurance Stocks includes all
insurance companies quoted on the NASDAQ stock market within the SIC codes 631
and 633. Upon a written request to MIGI's Corporate Secretary, we will undertake
to provide the names of the companies listed on the NASDAQ insurance stock
index.
The following information is contained in graph form in the Proxy Statement:
<TABLE>
<CAPTION>
<S> <C>
YEAR NASDAQ US (broad market)
1993 100.000
1994 97.752
1995 138.256
1996 170.015
1997 208.580
1998 293.209
YEAR NASDAQ Insurance (Industry)
1993 100.000
1994 94.131
1995 133.711
1996 152.418
1997 223.582
1998 198.781
YEAR MIGI Results
1993 100.000
1994 95.306
1995 140.925
1996 142.817
1997 165.392
1998 245.390
</TABLE>
Compensation Committee Interlocks and Insider Participation
MIGI's Compensation Committee consists of Thomas H. Sams and Ramon L.
Humke, Chairman of the MIGI Board of Directors. The bylaws of the Company
provide that the Chairman of the Board is an officer of the Company, but Mr.
Humke is not an employee of the Company. Mr. Humke also serves on the
Compensation Committee of Meridian Mutual.
Change-in-Control Agreements
MIGI has executed change-in-control severance pay arrangements with the
executives of MIGI and Meridian Mutual. The Termination Benefits Agreement
("Agreement") would provide severance payments and benefits to the executives if
their employment is terminated under certain circumstances within one-year
following a change in control. A "change in control" would occur if 50 percent
or more of MIGI's outstanding Common Shares were acquired by an entity other
than the Company, Meridian Mutual or an employee benefit plan of the Company.
There are additional conditions that could result in a change-in-control event.
MIGI may not waive or modify provisions of the Agreement, either before or after
a change in control, without the written consent of the participant. However,
either MIGI or the participant may elect not to extend the Agreement for the
next calendar year by giving written notice.
<PAGE>
The Agreement terminated and replaced the Change in Control Agreements
previously executed by Meridian Mutual and Ms. Oman, Mr. Hazelbaker and Mr.
McKinzie. Under the Agreement, termination for other than "cause" would entitle
Ms. Oman, Mr. Hazelbaker, Mr. McKinzie, Mr. Hanrahan and Mr. Buedel to any
earned and unpaid bonus and to a lump sum payment equal to 2.99 times their
average annual cash compensation received over the past five years. All other
eligible executives would receive any earned and unpaid bonus and a lump sum
payment equal to two times their average annual cash compensation received over
the past five years.
Compensation of Directors
MIGI directors who are also salaried employees of the Company receive no
fees for services as directors. MIGI Board members who are not salaried Company
employees and who do not serve on the Board of any affiliates receive an annual
retainer of $15,000. Of that, $10,000 is payable in cash and $5,000 in MIGI
Common Shares. The Common Shares are valued at their fair market value two days
after MIGI's annual results are released to the public. Nonemployee MIGI Board
members serving on the Board of an affiliate receive a $1,000 annual retainer
from MIGI. The Chairman of the MIGI Board earns a total stipend of $30,000, of
which $10,000 is payable in MIGI stock. The chairmen of one or more affiliated
Boards or one or more Board committees receive an additional $1,600 per year for
services in those capacities.
All directors, aside from salaried employees, currently receive per diem
meeting fees of $600 for each Board or Committee meeting they attend. Their per
diem fees will not exceed a total of $850 for attending two or more Board or
Committee meetings on a single day. It is anticipated that the MIGI Board will
increase the per diem meeting fee to $1,000 for each Board or Committee meeting
a Board member attends effective April 1, 1999.
MIGI has a defined benefit pension plan for the benefit of eligible
nonemployee directors of MIGI or Meridian Mutual. They become eligible to
participate in the plan after completing five years of credited service. This
means all calendar years the nonemployee director has attended at least 50
percent of the regular quarterly meetings. The plan provides a monthly
retirement allowance equal to 1.75 percent of the final earnings for each year
of credited service. Final earnings mean the five consecutive years with the
highest average annual total fees paid during the period of directorship. The
monthly retirement allowance begins on the director's retirement date and
continues monthly for his or her lifetime. The plan also provides benefits for
delayed retirement, early retirement or death. Early retirement benefits are
available at age 55. The directors may select an optional method of benefit
payment.
MIGI has an Outside Director Stock Option Plan. An "outside director" is a
director of either MIGI or Meridian Mutual who is not a Meridian employee on the
date of grant. Each Outside Director was granted an option to purchase 1,000
Common Shares in May 1994, 1995, 1996, 1997, and 1998. Each Outside Director
will be granted an option to purchase 1,000 Common Shares on the date of each
Annual Meeting of Shareholders in the years 1999 through 2003, unless the plan
is terminated earlier. The directors will pay the Company no consideration for
being granted the option. The exercise price per share will equal the fair
market value of a Common Share on the date of grant. Each option will be
exercisable beginning one year after the date of grant. Each option will expire
no later than ten years after the date of grant.
<PAGE>
PROPOSAL TO AMEND THE ARTICLES OF INCORPORATION
OF THE COMPANY
The Board of Directors has unanimously approved amending Article VI,
Section 6.0l (the "Amendment") of the Company's Restated Articles of
Incorporation. The amendment clarifies that a minimum number of directors is not
required for the directors to be divided into classes. The text of the Amendment
is set out in Exhibit A to this Proxy Statement. If shareholders approve the
proposal, the Amendment will become effective when we file Articles of Amendment
with the Indiana Secretary of State.
The Articles of Incorporation allow the bylaws to specify the number of
directors. Consequently, the bylaws have recently been amended to set the number
of directors of MIGI at eight upon the retirement of Director Harold C. McCarthy
in May of this year. However, currently our Articles of Incorporation say "if
the number of directors shall be nine or more: (a) the total number of directors
shall be divided into three groups..." The proposed amendment deletes the
requirement that the number of directors shall be nine or more in order for the
Board to be divided into classes. Under the proposed amendment, the Board will
continue to be divided into classes regardless of the number of directors.
The Board of Directors recommends that the shareholders vote FOR approval
of the Amendment to the Company's Articles of Incorporation.
OTHER MATTERS
Appointment of Auditor
The firm of PricewaterhouseCoopers served as MIGI's independent auditor for
the fiscal year ended December 31, 1998. The Board of Directors has not selected
an independent auditor for the current fiscal year ending December 31, 1999. We
anticipate the Audit Committee, at its meeting on April 26, 1999, will recommend
that the Board select PricewaterhouseCoopers as the Company's independent
auditor for 1999. Representatives of PricewaterhouseCoopers will attend the
Annual Meeting. They will respond to appropriate questions and make a statement
if they wish.
Compliance with Section 16(a) of the Securities Exchange Act of 1934
Section 16(a) of the Securities Exchange Act of 1934 requires MIGI's
directors and executive officers, and persons owning more than ten percent of a
registered class of MIGI's equity securities, to file initial reports of their
ownership of MIGI Common Shares and reports of changes in their ownership with
the Securities and Exchange Commission. Based solely on review of the copies of
forms furnished to MIGI, or written representations that no annual forms (SEC
Form 5) were required, MIGI believes its officers, directors, and greater than
ten-percent beneficial owners have complied with all Section 16(a) filing
requirements applicable to them.
<PAGE>
Other Business
We do not expect any business to come up for shareholder vote at the Annual
Meeting other than the items described in the Notice of Meeting and in this
Proxy Statement. If other business is properly raised at the Meeting or any
adjournment of it, your proxy card authorizes the people named as proxies to
vote according to their best judgment.
Expenses of Proxy Solicitation
We will pay all expenses of proxy solicitation. We will pay brokers,
nominees, fiduciaries or other custodians their reasonable expenses for
forwarding proxy and solicitation material to persons for whom they hold MIGI
Common Shares. We will solicit proxies primarily by mail. However, MIGI officers
and employees may also solicit in person or by telephone.
We mailed the 1998 Annual Report to Shareholders along with this Proxy
Statement.
By Order of the Board of Directors,
Norma J. Oman
President and Chief Executive Officer
April 2, 1999
<PAGE>
PROXY CARD
MERIDIAN INSURANCE GROUP, INC.
This proxy is solicited on behalf of the Board of Directors
for the Annual Meeting of Shareholders to be held on May 5, 1999
The undersigned appoints Norma J. Oman, David M. Kirr, and John T.
Hackett, or any of them, proxies for the undersigned, each with full power of
substitution, to attend the Annual Meeting of Shareholders of Meridian Insurance
Group, Inc., to be held on May 5, 1999, at 2:00 p.m., EST, and at any
adjournments or postponements of the Annual Meeting, and to vote as specified in
this Proxy all the Common Shares of the Company which the undersigned would be
entitled to vote if personally present. This Proxy when properly executed will
be voted in accordance with your indicated directions. If no direction is made,
this Proxy will be voted FOR the election of Directors and FOR Proposal 2. In
their discretion the proxies are authorized to vote upon such other business as
may properly come before the meeting.
The Board of Directors recommends a vote FOR the election of Directors
and FOR Proposal 2.
YOUR VOTE IS IMPORTANT! PLEASE MARK, SIGN AND DATE THIS PROXY ON THE
REVERSE SIDE AND RETURN IT PROMPTLY IN THE ACCOMPANYING ENVELOPE.
(Continued and to be signed on reverse side.)
<PAGE>
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY.
1. Election of Directors-
Nominees: James D. Price and
Sarah W. Rowland
___ For All
___ Withheld
___ For All
Except
- ---------------------------------------------
(Except nominee(s) written above.)
2. Approval of amendment to Articles of Incorporation to authorize classes of
directors Without regard to total number of directors.
___ For
___ Against
___ Abstain
The undersigned acknowledges receipt of the Notice Of Annual Meeting of
Shareholders and of the Proxy Statement.
Dated: ___________________________, 1999
Signature(s) ______________________________________
Please sign exactly as your name appears. Joint owners should each sign
personally. When applicable, indicate your official position or representation
capacity.
EXHIBIT A
MERIDIAN INSURANCE GROUP, INC.
Current Wording of Article VI, Section 6.01 of the Company's
Restated Articles of Incorporation
Section 6.01. Number; Terms of Office. The total number of directors shall
be that specified in or fixed in accordance with the by-laws. In the absence of
a provision in the by-laws specifying the number of directors or setting forth
the manner in which such number shall be fixed, the number of directors shall be
nine. If the number of directors shall be nine or more: (a) the total number of
directors shall be divided into three groups, with each group containing
one-third of the total number of directors, or such number as shall most closely
approximate one-third of the directors; (b) the term of office of one of the
groups shall expire in each year; and (c) at each annual shareholders' meeting
directors shall be chosen for a term of three years to succeed those directors
whose terms expire.
Proposed Wording of Article VI, Section 6.01 of the Company's
Restated Articles of Incorporation
Section 6.01. Number; Terms of Office. The total number of directors shall
be that specified in or fixed in accordance with the by-laws. In the absence of
a provision in the by-laws specifying the number of directors or setting forth
the manner in which such number shall be fixed, the number of directors shall be
nine. The total number of directors shall be divided into three groups, with
each group containing one-third of the total number of directors, or such number
as shall most closely approximate one-third of the directors. The term of office
of one of the groups shall expire in each year, and at each annual shareholders'
meeting directors shall be chosen for a term of three years to succeed those
directors whose terms expire.
