<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [_]
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 (S) 240.14a-11(c) or (S) 240.14a-12
Walshire Assurance Company
................................................................................
(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):
[_] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
...........................................................................
2) Aggregate number of securities to which transaction applies:
...........................................................................
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
...........................................................................
4) Proposed maximum aggregate value of transaction:
...........................................................................
5) Total fee paid:
...........................................................................
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
...........................................................................
2) Form, Schedule or Registration Statement No.:
...........................................................................
3) Filing Party:
...........................................................................
4) Date Filed:
...........................................................................
Notes:
<PAGE>
[LOGO OF WALSHIRE ASSURANCE APPEARS HERE]
WALSHIRE ASSURANCE COMPANY
3350 WHITEFORD ROAD
P.O. BOX 3849
YORK, PENNSYLVANIA 17402
Office of the President
April 15, 1997
Dear Shareholder:
You are cordially invited to attend the 1997 Annual Meeting of Shareholders
of Walshire Assurance Company which will be held on May 21, 1997 at 10:00
A.M., at The OutDoor Country Club, 1157 Detwiler Drive, York, Pennsylvania
17404. The official notice of the meeting together with a proxy statement and
form of proxy are enclosed. Please give this information your careful atten-
tion.
Shareholders of the Company are being asked to elect two directors of the
Company to serve for three-year terms until the 2000 Annual Meeting of Share-
holders. Whether or not you expect to attend the meeting in person, it is im-
portant that your shares be voted at the meeting. I urge you to specify your
choices by marking the enclosed proxy and returning it promptly in the enve-
lope provided.
Sincerely,
Kenneth R. Taylor
President and
Chief Executive Officer
<PAGE>
WALSHIRE ASSURANCE COMPANY
3350 WHITEFORD ROAD
P.O. BOX 3849
YORK, PENNSYLVANIA 17402
---------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
MAY 21, 1997
---------------------
To Our Shareholders:
The 1997 Annual Meeting of Shareholders of Walshire Assurance Company (the
"Company") will be held at The OutDoor Country Club, 1157 Detwiler Drive,
York, Pennsylvania 17404, on May 21, 1997, for the following purposes as more
fully described in the attached Proxy Statement:
1. To elect two directors for a term of three years; and
2. To transact such other business as may properly come before the meet-
ing or any postponement or adjournment of the meeting.
The Board of Directors has fixed April 2, 1997 as the record date for the
determination of shareholders entitled to vote at the meeting. Only sharehold-
ers of record at the close of business on that date will be entitled to notice
of, and to vote at, the meeting.
You are cordially invited to attend the meeting in person. Whether or not
you expect to attend the meeting in person, you are urged to sign and date the
enclosed proxy and return it promptly in the envelope provided.
By Order of the Board of Directors
Richard S. Kahlbaugh
Secretary
April 15, 1997
<PAGE>
WALSHIRE ASSURANCE COMPANY
3350 WHITEFORD ROAD
P.O. BOX 3849
YORK, PENNSYLVANIA 17402
---------------------
PROXY STATEMENT
---------------------
This proxy statement, which together with the accompanying proxy card is
first being mailed to shareholders on or about April 15, 1997, is furnished to
shareholders of the Company in connection with the solicitation of proxies by
the Board of Directors on behalf of the Company for use in voting at the 1997
Annual Meeting of Shareholders, including any adjournment or postponement of
the meeting.
Proxies in the form enclosed, if properly executed and received in time for
voting and not revoked, will be voted as directed in accordance with the in-
structions thereon. Any proxy not so directing to the contrary will be voted
FOR the Company's nominees as directors. Sending in a signed proxy will not
affect a shareholder's right to attend the meeting and vote in person, since
the proxy is revocable. Any shareholder giving a proxy may revoke it at any
time before it is voted at the meeting by giving written notice to the Secre-
tary of the Company.
The cost of this solicitation will be borne by the Company. In addition to
solicitation by mail, proxies may be solicited in person or by telephone, tel-
egraph or facsimile by directors, officers or employees of the Company and its
subsidiaries without additional compensation. The Company will, on request,
reimburse shareholders of record who are brokers, dealers, banks or voting
trustees, or their nominees, for their reasonable expenses in sending proxy
materials and annual reports to the beneficial owners of the shares they hold
of record.
VOTING SECURITIES
At the close of business on April 2, 1997, the record date for the determi-
nation of shareholders entitled to receive notice of and to vote at the meet-
ing, the Company's outstanding voting securities consisted of 4,662,526 shares
of Common Stock. Holders of Common Stock are entitled to one vote per share.
1
<PAGE>
PRINCIPAL SHAREHOLDERS
The following table sets forth certain information regarding the beneficial
ownership of the Company's Common Stock as of April 2, 1997 by: (i) each per-
son who is known by the Company to own beneficially more than five percent of
the Company's Common Stock; (ii) each of the Company's directors and each nom-
inee for director; (iii) each of the Company's executive officers named in the
Summary Compensation Table; and (iv) all directors and executive officers of
the Company as a group.
<TABLE>
<CAPTION>
SHARES OF PERCENT OF
COMMON STOCK COMMON STOCK
NAME AND ADDRESS(1) BENEFICIALLY OWNED(2) BENEFICIALLY OWNED
- - ------------------- --------------------- ------------------
<S> <C> <C>
Peter D. Bennett (3).................. 2,310 *
John J. Buchan, Jr.(4)................ 44,271 *
Charles W. Hash, Jr.(5)............... 116,806 2.5
Gary J. Orndorff(6)................... 44,457 *
L. Edward Sausman(7).................. 271,555 5.8
Kenneth R. Taylor(8).................. 697,286 14.3
William R. Tierney, Jr.(9)............ 183,055 3.9
Dimensional Fund Advisors Inc.(10).... 270,311 5.8
1299 Ocean Avenue, 11th Floor
Santa Monica, CA 90401
Charles W. Hash, Sr.(5)(11)........... 510,986 11.0
1915 Stonegate Road
York, PA 17404
Kramer Spellman L.P.(12).............. 345,648 7.4
2050 Canter Avenue
Suite 300
Fort Lee, New Jersey 07024
Markel Corporation(13)................ 418,483 8.5
4551 Cox Road
Glen Allen, VA 23060
All directors and officers as a group
(9 persons)(14)...................... 1,395,875 27.2
</TABLE>
- - --------
* Less than one percent
(1) Except as otherwise indicated, the address of all beneficial owners
listed is c/o the Company, 3350 Whiteford Road, P.O. Box 3849, York, PA
17402.
(2) The securities "beneficially owned" by an individual are determined in
accordance with the definition of "beneficial ownership" set forth in the
rules and regulations of the Securities and Exchange Commission and, ac-
cordingly, may include securities owned by or for, among others, the
spouse and/or minor children of the individual and any other relative who
has the same residence as such individual, as well as other securities as
to which the individual has or shares voting or investment power or has
the right to acquire under outstanding stock options within 60 days after
April 2, 1997 (the "Record Date"). Beneficial ownership may be disclaimed
as to certain of the securities. Except as otherwise noted, each person
named in the table has sole voting and investment power with respect to
all shares of Common Stock shown as beneficially owned by him.
2
<PAGE>
(3) The shares shown as beneficially owned by Mr. Bennett include 2,200
shares subject to outstanding options exercisable within 60 days of the
Record Date.
(4) The shares shown as beneficially owned by Mr. Buchan include 39,235
shares subject to outstanding options exercisable within 60 days of the
Record Date.
(5) The shares shown as beneficially owned by Charles W. Hash, Jr., include
19,514 shares owned by Memorial Surgical Associates Retirement Fund,
15,954 shares owned jointly with his wife, 231 shares held by Mr. Hash's
child and 45,904 shares subject to outstanding options exercisable within
60 days of the Record Date. Charles W. Hash, Jr. is the son of Charles W.
Hash, Sr. Charles W. Hash, Sr. disclaims beneficial ownership of the
shares owned by Charles W. Hash, Jr. and Charles W. Hash, Jr. disclaims
beneficial ownership of the shares owned by Charles W. Hash, Sr.
(6) The shares shown as beneficially owned by Mr. Orndorff include 39,747
shares subject to outstanding options exercisable within 60 days of the
Record Date.
(7) The shares shown as beneficially owned by L. Edward Sausman include 309
shares that are owned jointly with his wife, 10,660 shares held by Mr.
Sausman's wife and 36,842 shares subject to outstanding options exercis-
able within 60 days of the Record Date.
(8) The shares shown as beneficially owned by Mr. Taylor include 18,319
shares of the Company's Common Stock held by Taylor & Ochroch, Inc. and
223,120 shares subject to outstanding options exercisable within 60 days
of the Record Date. Mr. Taylor is President and owner of Taylor &
Ochroch, Inc.
(9) The shares shown as beneficially owned by William R. Tierney, Jr. include
44,179 shares subject to outstanding options exercisable within 60 days
of the Record Date, 105,351 shares held by the Deed of Trust, dated Janu-
ary 27, 1988, for the benefit of William R. Tierney, Sr. and Emily Tier-
ney, the parents of Mr. Tierney (the "Tierney Trust"), 7,510 shares held
by the children of Mr. Tierney, 1,547 shares owned jointly with his wife
and 20,663 shares held by Mr. Tierney's wife. Mr. Tierney disclaims bene-
ficial ownership of the shares beneficially owned by the Tierney Trust.
(10) The shares shown as beneficially owned by Dimensional Fund Advisors Inc.
include 52,897 shares held by The DFA Investment Trust Company and 36,963
shares held by the DFA Investment Dimensions Group Inc.
(11) The shares shown as beneficially owned by Mr. Hash, Sr. include 73,370
shares that are owned individually by his wife.
(12) The shares shown as beneficially owned by Kramer Spellman L.P. include
22,685 shares of the Company's Common Stock that may be acquired upon
conversion of the Company's 6 1/2 Cumulative Convertible Preferred Stock.
(13) The shares shown as beneficially owned by Markel Corporation include
272,220 shares of the Company's Common Stock that may be acquired upon
conversion of the Company's 6 1/2% Cumulative Convertible Preferred Stock
and 31,077 shares as to which Markel Corporation has been given discre-
tionary trading authority.
(14) The shares shown as beneficially owned by all directors and officers as a
group include an aggregate of 465,987 shares subject to options that are
exercisable within 60 days of the Record Date.
3
<PAGE>
ELECTION OF DIRECTORS
INFORMATION CONCERNING NOMINEES
Two directors are to be elected at the meeting to serve for three-year terms
until the 2000 Annual Meeting of Shareholders and until their respective suc-
cessors are elected and qualified.
The Board of Directors has designated Kenneth R. Taylor and Charles W. Hash,
Jr. to be nominees for election as directors, each of whom is currently serv-
ing as a director of the Company. Each nominee has consented to being named in
this Proxy Statement and to serve if elected. The Company has no reason to be-
lieve that any nominee will be unavailable for election, but should any nomi-
nee become unavailable for any reason, the Board of Directors may designate a
substitute nominee.
The following information regarding the Company's nominees for election as
directors is based, in part, on information furnished by these individuals.
<TABLE>
<CAPTION>
DIRECTOR
NAME SINCE AGE POSITIONS WITH THE COMPANY
- - ---- -------- --- --------------------------
<S> <C> <C> <C>
For a three year term expiring in 2000
Kenneth R. Taylor(1)(2)................ 1977 60 President, Chief Executive
Officer and Director
Charles W. Hash, Jr.(3)................ 1989 50 Director
</TABLE>
- - --------
(1) Member of Executive Committee
(2) Member of Nominating Committee
(3) Member of Compensation Committee
Mr. Taylor has been President and Chief Executive Officer of the Company
since June 1987. Mr. Taylor has been the President of Taylor & Ochroch, Inc.,
an insurance agency located in King of Prussia, Pennsylvania, since 1964. Mr.
Taylor was a director of Seneca Insurance Company, Inc. from 1988 until 1992
and was Chairman of the Board of Directors of Seneca Insurance Company, Inc.
from 1989 until 1992. Mr. Taylor has also been an officer and the majority
stockholder since 1990 of Benefit Allocation Systems, Inc., a company that
provides services for flexible benefit plans.
Mr. Hash, Jr. is a doctor of osteopathic medicine. He has been President of
East York Surgical Associates since 1977 and has been President of Columbia
Surgical Associates since 1983.
The proxy agents intend (unless authority has been withheld) to vote FOR the
election of both nominees. The election of directors will be determined by a
plurality vote so that the two nominees who receive the most FOR votes will be
elected. Under the Pennsylvania Business Corporation Law of 1988, an absten-
tion, broker nonvote or withholding authority to vote will not have the same
legal effect as a vote "against" a matter and will not be counted in determin-
ing whether the nominee has received the required vote.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR THE ELECTION
OF ALL NOMINEES.
4
<PAGE>
INFORMATION CONCERNING CONTINUING DIRECTORS
The following tables set forth certain information concerning those direc-
tors whose terms will expire at the 1998 and 1999 Annual Meeting of Sharehold-
ers.
<TABLE>
<CAPTION>
DIRECTOR
NAME SINCE AGE POSITIONS WITH THE COMPANY
- - ---- -------- --- ---------------------------
<S> <C> <C> <C>
The terms of the following directors
will expire in 1998:
L. Edward Sausman(1)(2)(3)........... 1977 54 Director
William R. Tierney, Jr.(1)(2)(3)..... 1987 45 Director
The terms of the following directors
will expire in 1999:
John J. Buchan, Jr.(3)(4)............ 1987 40 Director
Peter D. Bennett(2)(4)............... 1995 64 Director
Gary J. Orndorff..................... 1996 39 Vice President-Treasurer,
Chief Financial Officer and
Director
</TABLE>
- - --------
(1) Member of Executive Committee
(2) Member of Compensation Committee
(3) Member of Audit Committee
(4) Member of Nominating Committee
Mr. Sausman has been President of Sausman Insurance Agency, Inc.,
Thompsontown, Pennsylvania since 1987.
Mr. Tierney has been President of Insurance Markets, Inc., an insurance
agency located in Clarks Summit, Pennsylvania, since 1984. In 1989, Mr. Tier-
ney became President and a director of TAB Glass Corp. of St. Petersburg,
Florida and in 1990 was named Vice-President of Northeast Premium Finance Co.,
Clarks Summit, Pennsylvania.
Mr. Buchan, Jr. has been the Managing Director of Interstate Insurance Man-
agement, Inc. since March 1989 and has been a partner with the law firm of
Gvozdich, Buchan & Svirsko, Ebensburg, Pennsylvania, since 1989.
Mr. Bennett has been the Senior Associate Dean and a Professor of Marketing
at Pennsylvania State University, State College, Pennsylvania since 1989.
Mr. Orndorff has been the Vice President-Treasurer and Chief Financial Offi-
cer of the Company since 1989.
BOARD MEETINGS AND COMMITTEES OF THE BOARD
The Board of Directors held four meetings during the 1996 fiscal year.
5
<PAGE>
The Compensation Committee held one meeting during the 1996 fiscal year. The
Compensation Committee reviews the compensation of executive officers and
makes recommendations to the Board regarding executive compensation.
The Executive Committee did not meet during the 1996 fiscal year. The Execu-
tive Committee has and may exercise the authority of the Board in the manage-
ment of the business of the Company between meetings of the Board.
The Audit Committee held one meeting during the 1996 fiscal year. The Audit
Committee is responsible for reviewing the Company's accounting and financial
practices and policies and the scope and results of the Company's audit. The
Committee is also responsible for recommending the selection of the Company's
independent public accountants.
The Nominating Committee did not meet during the 1996 fiscal year. The Nomi-
nating Committee is responsible for submitting to the Board of Directors the
names of potential nominees for director. The Nominating Committee will con-
sider nominees for directorships recommended by shareholders if such recommen-
dations are submitted in writing to the Nominating Committee a reasonable time
prior to the Annual Meeting.
Each director of the Company attended no fewer than 75% of the meetings of
the Board and committees of which they were members during the 1996 fiscal
year. Each director of the Company who is not also an employee of the Company
receives an annual fee of $7,000 and fees of $500 for each meeting of the
Board and of a committee thereof attended, except the Executive Committee, for
which a fee of $1,000 is received for each meeting thereof attended.
EXECUTIVE COMPENSATION
COMPENSATION COMMITTEE REPORT
The members of the Compensation Committee of the Board of Directors are Pe-
ter D. Bennett, Charles W. Hash, Jr., L. Edward Sausman and William R. Tier-
ney, Jr., none of whom were officers or employees of the Company during the
1996 fiscal year. The Committee reviews the compensation of executive officers
and makes recommendations to the Board regarding executive compensation.
The Company's compensation policies and practices are designed and imple-
mented to motivate and retain senior executives. In determining compensation
levels, the Committee considers compensation packages offered by similarly
sized companies within the insurance industry.
The Company has an employment agreement with Kenneth R. Taylor as President
and Chief Executive Officer that expires in June 1997. Pursuant to this agree-
ment, total compensation is divided into three primary components: base sala-
ry, bonus and stock options. The awards of bonuses and stock options serve as
an incentive to Mr. Taylor for superior performance and are based upon both
his performance and the performance of the Company.
Pursuant to the terms of Mr. Taylor's employment agreement, Mr. Taylor is
entitled to receive (a) an annual salary of at least $260,000, (b) incentive
compensation equal to three percent of the
6
<PAGE>
amount by which the Company's net income before income taxes exceeds $2.0 mil-
lion in any fiscal year, and (c) other benefits equivalent to those provided
to the Company's other officers.
With respect to the compensation of Mr. Taylor as Chief Executive Officer,
the Company follows the compensation policies and practices discussed above.
As such, Mr. Taylor's compensation and incentive bonus for the 1996 fiscal
year were based upon the employment agreement and were commensurate with the
Company's performance and Mr. Taylor's contribution to that performance. As
with the Company's other executive officers, Mr. Taylor's total compensation
involves certain subjective judgments and is not based solely upon specific
objective criteria.
The Compensation Committee and the Company have each considered the impact
on executive compensation, and whether changes are needed as a result, of Sec-
tion 162(m) of the Internal Revenue Code of 1986, as amended (the "Code"),
which became effective on January 1, 1994. This section generally prohibits a
company from deducting, against its federal income tax, compensation to its
most highly paid executive officers which exceeds $1 million. There is no lim-
itation, however, for compensation that is based on an executive officer's
performance and that is paid under employment contracts that began prior to
February 1993. The Committee believes that Section 162(m) of the Code will
have no effect on the Company in 1997.
Peter D. Bennett Charles W. Hash, Jr. L. Edward Sausman William R. Tierney, Jr.
SUMMARY COMPENSATION TABLE
The following table sets forth certain information regarding the compensa-
tion paid to the Chief Executive Officer and the other most highly compensated
executive officer of the Company for services rendered in all capacities in
1994, 1995 and 1996.
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG TERM COMPENSATION
------------------- ---------------------- ALL
NAME AND FISCAL SECURITIES UNDERLYING OTHER
PRINCIPAL POSITION YEAR SALARY BONUS OPTIONS COMPENSATION (1)
------------------ ------ ------------------- ---------------------- ----------------
<S> <C> <C> <C> <C> <C>
Kenneth R. Taylor....... 1996 $ 289,680 $ -- 54,999 $16,420
President and Chief 1995 280,835 137,005 15,123 12,889
Executive Officer 1994 278,143 64,266 12,703 15,745
Gary J. Orndorff........ 1996 $ 98,461 $ -- 5,500 $11,003
Vice President-- 1995 92,308 22,834 6,050 8,028
Treasurer and Chief 1994 89,432 -- 5,082 8,127
Financial Officer
</TABLE>
- - --------
(1) Represent Company contributions to the 401(k) Plan (as described below),
premiums paid by the Company with respect to term life insurance and any
personal use of Company cars.
EMPLOYMENT AGREEMENT
Effective June 1992, the Company entered into an employment agreement with
Kenneth R. Taylor, President and Chief Executive Officer of the Company, for a
term of five years. In addition to the terms discussed in the Compensation
Committee Report above, under the employment agreement, Mr. Taylor's employ-
ment may be terminated by the Company in the event of death, disability or
cause, or voluntarily by Mr. Taylor after one year. Cause is defined to in-
clude, among
7
<PAGE>
other things, Mr. Taylor's material breach of the employment agreement or his
willful misconduct or gross negligence. In the event of termination due to
death, disability or voluntary termination, Mr. Taylor will be entitled, under
certain circumstances, to receive his unpaid salary plus a proportionate
amount of any incentive compensation. In the event of termination for cause,
Mr. Taylor will be entitled to receive any unpaid salary but no incentive com-
pensation. In the event of termination other than due to death, disability,
cause or voluntary termination, Mr. Taylor will be entitled to receive the re-
maining salary payable under his employment agreement and any incentive com-
pensation that would have been payable to him under his employment agreement
had such termination not occurred.
401(K) PROFIT SHARING PLAN
Effective January 1, 1990, the Company adopted a defined contribution cash
or deferred profit sharing plan (the "401(k) Plan") intended to qualify under
Section 401(a) and 401(k) of the Code. All Company employees are eligible to
participate in the 401(k) Plan upon completion of one year of service and the
attainment of age 21.
Subject to certain limitations, a participant is permitted to make elective
salary reduction contributions ("Savings Contributions") to the 401(k) Plan
(in which he is always fully vested) up to 20% of the participant's compensa-
tion in the year made, not to exceed $9,500 (as adjusted annually for infla-
tion). Upon request, Savings Contributions may be withdrawn to satisfy certain
immediate and heavy financial hardships. Generally, benefits under the 401(k)
Plan become payable (subject to certain participant and spousal consent, if
applicable) upon the separation from service, retirement, death or disability
of the participant.
The Company makes matching contributions to the 401(k) Plan equal to 100% of
Savings Contributions made for the plan year, to a maximum of five percent of
the participant's annual compensation. In addition, the Company may make dis-
cretionary profit sharing contributions to the 401(k) Plan. Profit sharing
contributions are allocated to the accounts of participants according to the
relationship that each participant's compensation for the year bears to the
compensation of all such participants. Certain minimum percentages of non-key
employees' compensation must be contributed by the Company with respect to any
year in which the 401(k) Plan is a "top-heavy plan" (as defined in the Code).
The maximum amount of annual compensation for determining contributions under
the qualified retirement plans is $150,000.
Each participant has a nonforfeitable interest in 20% of the matching and
profit sharing contributions made to his account after three years of service,
and for each additional year of service thereafter, an additional 20% of his
account becomes nonforfeitable so that upon the completion of seven years of
service the participant is fully vested. Furthermore, an accelerated vesting
schedule becomes effective (pursuant to which a participant is fully vested
after the completion of six years of service) in any year in which the 401(k)
Plan is a "top-heavy plan".
STOCK OPTION PLANS
Director Plan. On February 7, 1990, the Company's Board of Directors adopt-
ed, and on May 9, 1990, the Company's shareholders approved, the 1990 Stock
Option Plan for Non-Employee Directors (the "Director Plan"). Under the Direc-
tor Plan, members of the Board of Directors of the
8
<PAGE>
Company who are not also employees of the Company are entitled to receive op-
tions to purchase the Company's Common Stock. The number of shares of Common
Stock issuable under the Director Plan is 260,452 and no optionee may possess
at any one time options to acquire more than 50,000 shares of the Company's
Common Stock.
The purpose of the Director Plan is to attract and retain non-employee di-
rectors and to provide additional incentive to them by encouraging them to in-
vest in the Company's Common Stock and thereby acquire a further proprietary
interest in the Company and an increased personal stake in the Company's con-
tinued success and progress. The Board of Directors believes that stock op-
tions are an important aid in attracting, retaining and compensating, non-em-
ployee directors of the Company's Board.
The following table sets forth information concerning options issued to date
under the Director Plan, including options which have been exercised.
<TABLE>
<CAPTION>
EXERCISED(1) EXERCISABLE(1)
---------------------- ----------------------
WEIGHTED WEIGHTED
OPTIONS AVERAGE OPTIONS AVERAGE
NAME GRANTED EXERCISE PRICE GRANTED EXERCISE PRICE
- - ---- ------- -------------- ------- --------------
<S> <C> <C> <C> <C>
Peter D. Bennett................. -- -- 2,200 $15.46
John J. Buchan, Jr............... 16,005 $7.78 39,235 $10.80
Charles W. Hash, Jr.............. 9,337 $8.11 45,904 $10.30
L. Edward Sausman................ 26,678 $7.45 36,842 $ 7.91
William R. Tierney, Jr........... 13,338 $7.45 44,179 $ 9.03
All non-employee directors as a
group........................... 65,357 $7.63 168,360 $ 9.62
</TABLE>
- - --------
(1) Options exercised and exercisable and the weighted average exercise price
have been adjusted for stock dividends declared by the Board of Directors.
On April 2, 1997, the last sale price of the Company's Common Stock was
$10.75 per share.
1987 Employee Stock Option Plan. On June 22, 1987, the Company adopted and
the shareholders approved the Company's 1987 Employee Stock Option Plan (the
"Employee Plan"). The purpose of the Employee Plan is to provide options to
acquire shares of Common Stock to officers and key employees of the Company.
The Board of Directors believes that the Company and its shareholders signifi-
cantly benefit from having the Company's key management employees receive op-
tions to purchase shares of Common Stock. The Board of Directors also believes
that stock options are a valuable tool in attracting and retaining highly
qualified management personnel and in providing additional motivation to man-
agement to use their best efforts on behalf of the Company and its sharehold-
ers.
Pursuant to the Employee Plan, which is administered by the Board of Direc-
tors, stock options may be granted which are intended to qualify as incentive
stock options under Section 422 of the Code, as well as stock options not in-
tended to qualify. All officers and key employees of the Company or any cur-
rent or future subsidiary are eligible to receive options under the Employee
Plan.
9
<PAGE>
The following table sets forth certain information concerning stock options
granted under the Employee Plan during 1996 to the persons named in the Sum-
mary Compensation Table:
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
INDIVIDUAL GRANTS VALUES AT ASSUMED
-------------------------------------------------- ANNUAL RATES OF STOCK
NUMBER OF PERCENT OF TOTAL PRICE APPRECIATION
SECURITIES OPTIONS GRANTED EXERCISE OR FOR OPTION TERM
UNDERLYING TO EMPLOYEES IN BASE PRICE EXPIRATION ----------------------
NAME OPTIONS FISCAL YEAR PER SHARE DATE 5% 10%
- - ---- ---------- ---------------- ----------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
Kenneth R. Taylor....... 7,142(1) 72.2% $14.00 7/30/01 $ 15,998 $ 55,443
47,857(2) 12.727 8/04/06 $383,047 $970,731
Gary J. Orndorff........ 5,500(1) 7.2% $12.727 7/30/06 $ 44,022 $ 111,562
</TABLE>
- - --------
(1) Represents Incentive Stock Options
(2) Represents Non-Qualified Stock Options
The following table sets forth certain information concerning the shares ac-
quired upon exercise of options, the number of unexercised options and the
value of unexercised options at the end of 1996 held by the persons named in
the Summary Compensation Table.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR END OPTION
VALUES
<TABLE>
<CAPTION>
NAME, SHARES ACQUIRED AND VALUE NUMBER OF UNEXERCISED VALUE OF UNEXERCISED,
- - --------------------------------------------- OPTIONS AT FISCAL IN-THE-MONEY OPTIONS
SHARES YEAR END AT FISCAL YEAR END
ACQUIRED ON VALUE ------------------------- -------------------------
NAME EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- - ---- ----------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Kenneth R. Taylor....... 16,595 $120,909 223,120 7,142 $1,474,051 $ 4,464
Gary J. Orndorff........ -- $ -- 39,747 5,500 $ 274,098 $10,439
</TABLE>
CERTAIN TRANSACTIONS AND COMPENSATION COMMITTEE
INTERLOCKS AND INSIDER PARTICIPATION
Messrs. Taylor, Sausman, Tierney and Buchan, directors of the Company, are
officers, directors and/or principal shareholders of corporations that act as
insurance agents of the Company. In addition, Messrs. Sausman and Tierney are
members of the Compensation Committee of the Company's Board of Directors.
During 1996, the Company paid (i) $34,825 to the corporation with which Mr.
Taylor is affiliated; (ii) $228,067 to the corporation with which Mr. Sausman
is affiliated; (iii) $88,292 to the corporation with which Mr. Tierney is af-
filiated; and (iv) $1,510,494 to the corporation with which Mr. Buchan is af-
filiated.
The Company has loaned Mr. Orndorff, Vice President--Treasurer of the Com-
pany the principal amount of $90,000, for the purchase of a personal resi-
dence. The loan, which is secured by the residence, bears interest at the rate
of 7.5% per year, and is payable in full in July 2004. The balance due on the
loan at December 31, 1996 was $58,904. In the event that Mr. Orndorff's em-
ployment with the Company is terminated, the loan is due within nine months of
the date of termination.
10
<PAGE>
STOCK PERFORMANCE GRAPH
The following graph shows a comparison of the five year cumulative total re-
turn for the Company's common stock, the Standard's and Poor's 500 Index and
the NASDAQ Insurance Index. The graph assumes an investment of $100 in each on
December 31, 1991 and the reinvestment of all dividends.
[LINE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
1991 1992 1993 1994 1995 1996
------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
WALSHIRE $100.00 $116.18 $142.46 $130.57 $233.33 $233.11
S&P 500 $100.00 $107.62 $118.46 $120.03 $165.13 $203.05
NASDAQ $100.00 $135.34 $144.76 $136.23 $193.56 $220.56
INSURANCE
INDEX
</TABLE>
11
<PAGE>
SECTION 16(a) BENEFICIAL OWNERSHIP
REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors and executive officers, and persons who own more than ten percent of
the Company's Common Stock, to file with the Securities and Exchange Commis-
sion reports about their beneficial ownership of the Company's Common Stock.
All such persons are required by the Commission to furnish the Company with
copies of all reports that they file.
Based solely upon a review of the copies of such reports furnished to the
Company and written representations that no other reports were required, dur-
ing the fiscal year ended December 31, 1996, three individuals failed to file
Section 16(a) reports on a timely basis. L. Edward Sausman sold 4,000 shares
of the Company's Common Stock on June 11, 1996 and filed a Form 4 on January
8, 1997. John J. Buchan, Jr. sold 1,000 shares of the Company's Common Stock
on December 13, 1996 and filed a Form 4 on January 13, 1997. Peter D. Bennett
purchased 100 shares of the Company's Common Stock on May 7, 1996 and filed a
Form 4 on January 10, 1997.
INDEPENDENT PUBLIC ACCOUNTANTS
The accounting firm of KPMG Peat Marwick LLP acted as the Company's indepen-
dent public accountants for the fiscal year ended December 31, 1996 and has
been selected by the Board of Directors to serve as the Company's independent
public accountant for the fiscal year ending December 31, 1997. The selection
of independent public accountants is not being submitted to shareholders for
approval because there is no legal requirement to do so. A representative of
KPMG Peat Marwick LLP is expected to be present at the shareholders' meeting
and to have the opportunity to make a statement, if he desires to do so, and
is expected to be available to respond to appropriate questions.
OTHER MATTERS
As of the date of this Proxy Statement, the Company knows of no other busi-
ness that will be presented for consideration at the Annual Meeting. However,
the enclosed proxy confers discretionary authority to vote with respect to any
and all of the following matters that may come before the meeting: (i) matters
that the Company's Board of Directors does not know, a reasonable time before
proxy solicitation, are to be presented for approval at the meeting; (ii) ap-
proval of the minutes of a prior meeting of shareholders, if such approval
does not constitute ratification of the action at the meeting; (iii) the elec-
tion of any person to any office for which a bona fide nominee is unable to
serve or for good cause will not serve; (iv) any proposal omitted from this
Proxy Statement and the form of proxy pursuant to Rule 14a-8 under the Securi-
ties Exchange Act of 1934, as amended; and (v) matters incidental to the con-
duct of the meeting. If any such matters come before the meeting, the proxy
agents named in the accompanying proxy card will vote in accordance with their
judgment.
Shareholder proposals intended to be presented at the 1998 Annual Meeting
must be submitted by December 16, 1997 to receive consideration for inclusion
in the Company's 1998 proxy materials.
12
<PAGE>
EACH PERSON SOLICITED HEREUNDER CAN OBTAIN A COPY (WITHOUT EXHIBITS) OF THE
COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 1996, AS
FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, WITHOUT CHARGE, BY SENDING
A WRITTEN REQUEST TO THE CORPORATE SECRETARY, AT THE COMPANY'S CORPORATE OF-
FICES.
By Order of the Board of Directors
Richard S. Kahlbaugh
Secretary
13
<PAGE>
WALSHIRE ASSURANCE COMPANY
1997 ANNUAL MEETING OF SHAREHOLDERS -- MAY 21, 1997
SOLICITED ON BEHALF OF THE COMPANY AND APPROVED
BY THE BOARD OF DIRECTORS
The undersigned hereby appoints L. Edward Sausman and William R. Tierney, Jr.
to act as attorneys and proxies for the undersigned, with full powers of
substitution, to appear at the Annual Meeting of Shareholders of Walshire
Assurance Company (the "Company") to be held on the 21st day of May, 1997 at
The OutDoor Country Club, 1157 Detwiler Drive, York, Pennsylvania 17404 and at
any postponement or adjournment thereof, and to vote all of the shares of the
Company that the undersigned is entitled to vote, with all the powers and
authority the undersigned would possess if personally present. The undersigned
hereby directs this proxy be voted as follows:
[_] FOR the election of Charles W. Hash, Jr. and Kenneth R. Taylor as
directors for a term of three years.
To withhold authority to vote for both directors, please check this box [_].
To withhold authority to vote for any individual nominee, write that
nominee's name on the space provided below.
--------------------------------------------------
(Please date and sign on reverse side)
This proxy will be voted as directed, but if no instructions are specified,
this proxy will be voted FOR the election of the aforementioned nominees as
directors.
A majority of the proxy agents present and acting in person or by their
substitutes (or if only one is present and acting, then that one) may exercise
all the powers conferred hereby. DISCRETIONARY AUTHORITY IS CONFERRED HEREBY AS
TO CERTAIN MATTERS DESCRIBED IN THE COMPANY'S PROXY STATEMENT.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF THE NOMINEES
LISTED ABOVE.
<PAGE>
Should the undersigned be present and choose to vote at the Meeting or at any
adjournments or postponements thereof, and after notification to the Secretary
of the Company at the Meeting of the shareholder's decision to terminate this
proxy, then the power of such attorneys or proxies shall be deemed terminated
and of no further force and effect. This proxy may also be revoked by filing a
written notice of revocation with the Secretary of the Company or by duly
executing a proxy bearing a later date.
Receipt of the Company's 1996 Annual Report to Shareholders and the Notice of
the 1997 Annual Meeting and Proxy Statement relating thereto is hereby
acknowledged.
Please complete, date, sign and mail this proxy promptly in the enclosed
postage-paid envelope.
Date: ____________________, 1997
(Please date this Proxy)
--------------------------------
--------------------------------
(Signature(s) of Shareholder(s))
Please sign exactly as your
name(s) appear(s) to the
left. When signing as
attorney, executor,
administrator, trustee or
guardian, please give your
full title. If shares are
held jointly, each holder
should sign.
