<PAGE>
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
Mutual Risk Management Ltd.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
N/A
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total fee paid:
- --------------------------------------------------------------------------------
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
(1) Amount previously Paid:
- --------------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
- --------------------------------------------------------------------------------
(3) Filing Party:
- --------------------------------------------------------------------------------
(4) Date Filed:
- --------------------------------------------------------------------------------
<PAGE>
MRM MUTUAL RISK MANAGEMENT LTD.
--------------------
March 31, 2000
Dear Shareholder:
You are cordially invited to attend the Annual General Meeting of
Shareholders of Mutual Risk Management Ltd. (the "Company") to be held on May
16, 2000 at 9:00 A.M. at The Bermuda Cathedral Hall, 29 Church Street,
Hamilton HM 12, Bermuda. Your Board of Directors and management look forward
to greeting those shareholders who are able to attend.
At this Meeting you will be asked to consider and vote upon the following:
(1) the election of directors; (2) the appointment of Ernst & Young as the
Company's independent auditors for the fiscal year ending December 31, 2000;
and (3) such other business as may properly come before the Meeting or any
adjournment thereof. Your Board of Directors unanimously recommends a vote for
these proposals. The Meeting will also receive the Company's audited financial
statements for the fiscal year ended December 31, 1999 as approved by the
Company's Board of Directors.
Only holders of the Company's Common Shares at the close of business on
February 25, 2000, are entitled to notice of, and to vote at, the Annual
General Meeting and any adjournments or postponements thereof. Such
shareholders may vote in person or by proxy. The stock transfer books of the
Company will not be closed. The accompanying form of proxy is solicited by the
Board of Directors of the Company.
Your vote is important. Whether or not you plan to attend the Annual General
Meeting in person and regardless of the number of shares you own, we urge you
to complete, sign, date and return the enclosed proxy card promptly in the
enclosed envelope. You may attend the Annual General Meeting and vote in
person even if you have previously returned your proxy card. We look forward
to meeting with you.
Sincerely,
/s/ Robert A. Mulderig
----------------------
ROBERT A. MULDERIG
Chairman and Chief Executive Officer
<PAGE>
MUTUAL RISK MANAGEMENT LTD.
Notice of 2000 Annual General Meeting of Shareholders
to be held Tuesday, May 16, 2000
The 2000 Annual General Meeting of Shareholders (the "Meeting") of Mutual
Risk Management Ltd. (the "Company") will be held on May 16, 2000 at 9:00 A.M.
at The Bermuda Cathedral Hall, 29 Church Street, Hamilton HM 12, Bermuda. The
Meeting is being held to consider and act upon the following matters:
1. To elect directors;
2. To approve the recommendation by the Board of Directors that Ernst &
Young be appointed as the Company's independent auditors for the fiscal
year ending December 31, 2000.
3. To transact such other business as may properly come before the Meeting
or any adjournment thereof.
The Meeting will also receive the Company's audited financial statements for
the fiscal year ended December 31, 1999 and the report of the auditors
thereon. If you do not expect to be present at the Meeting, please complete,
sign and date the enclosed proxy card and return it by mail in the enclosed
addressed envelope. All instruments appointing proxies to be used at the
Meeting must be deposited at the offices of the Company's transfer agent,
BankBoston, NA, c/o Boston EquiServe, P.O. Box 8040, Boston, MA 02266-8040, or
with the Secretary of the Company at the Company's offices at 44 Church
Street, Hamilton HM 12, Bermuda, not later than 5:00 P.M. Bermuda time on May
11, 2000. Shares represented by instruments appointing proxies that are not so
deposited will not be voted at the Meeting.
By Order of the Board of Directors
/s/ Elizabeth B. Price
----------------------
ELIZABETH B. PRICE
Secretary
Hamilton, Bermuda
March 31, 2000
<PAGE>
MUTUAL RISK MANAGEMENT LTD.
PROXY STATEMENT
ANNUAL GENERAL MEETING OF SHAREHOLDERS
THIS PROXY STATEMENT IS FURNISHED IN CONNECTION WITH THE SOLICITATION BY
MUTUAL RISK MANAGEMENT LTD. (THE "COMPANY") OF PROXIES TO BE VOTED AT THE
ANNUAL GENERAL MEETING OF SHAREHOLDERS (THE "MEETING") TO BE HELD ON MAY 16,
2000 AT 9:00 A.M. AT THE BERMUDA CATHEDRAL HALL, 29 CHURCH STREET, HAMILTON HM
12, BERMUDA.
The close of business on February 25, 2000 has been fixed as the record date
for the determination of shareholders entitled to receive notice of the
Meeting and vote thereat. The Company expects to mail this proxy material to
shareholders on or about March 31, 2000 together with a copy of the Company's
Annual Report to Shareholders for the year ended December 31, 1999.
The cost of soliciting proxies will be borne by the Company. The Company
will reimburse brokers, custodians, nominees and other fiduciaries for their
reasonable charges and expenses incurred in forwarding proxy material to
beneficial owners of shares. In addition to solicitation by mail, certain
officers and employees of the Company may solicit proxies personally. These
officers and employees will receive no compensation other than their regular
salaries.
No action will be taken at the Meeting with respect to approval or
disapproval of the audited Financial Statements of the Company for the year
ended December 31, 1999.
All properly executed proxies, not theretofore revoked, will be voted on any
poll taken at the Meeting in accordance with the instructions contained
therein. If any other matters are properly presented to the Meeting for
action, the proxy holders will vote the proxies (which confer discretionary
authority to vote on such matters) in accordance with their judgment. If no
instructions are given with respect to any particular matter, the proxy
authorizes a vote in favor of such matter and it will be voted accordingly.
Shareholders whose shares are held of record by a broker or other nominee are
nevertheless encouraged to fill in the boxes of their choice on the proxy, as
brokers and other nominees may not be permitted to vote shares with respect to
certain matters for which they have not received specific instructions from
the beneficial owners of the shares. Any Shareholder giving a proxy has the
power to revoke it prior to its exercise by notice of revocation to the
Secretary of the Company in writing, by voting in person at the Meeting or by
execution of a subsequent proxy, provided that such action is taken in
sufficient time to permit the necessary examination and tabulation of the
subsequent proxy or revocation before the vote is taken. Proxies must be duly
executed and deposited at the office of the Company's transfer agent, Boston
EquiServe Limited Partnership, in Boston, or with the Secretary of the Company
at the Company's office in Bermuda, prior to 5:00 P.M. Bermuda time on May 11,
2000, in order to be voted at the Meeting.
INTEREST OF CERTAIN PERSONS IN MATTERS TO BE ACTED UPON
No person who has been a director or officer of the Company and no person
who is a proposed nominee for election as a director of the Company and no
associate or affiliate of any such director, officer or proposed nominee has
any material interest, direct or indirect, by way of beneficial ownership of
securities or otherwise, in any matter to be acted upon at the Meeting, except
as may hereinafter be disclosed.
<PAGE>
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
As of February 25, 2000, the Company had outstanding 41,209,500 Common
Shares, par value $.01 per share (the "Common Shares"), entitled to be voted
at the Meeting. Each Common Share is entitled to one vote.
The following table sets forth certain information regarding beneficial
ownership of the Company's Common Shares as of February 25, 2000, by each
person who is known by the Company to own beneficially more than 5% of the
Company's Common Shares, by each of the Company's directors and by all
executive officers and directors as a group.
<TABLE>
<CAPTION>
Shares Beneficially Owned (1)
-----------------------------
Number Percent
------ -------
<S> <C> <C>
Franklin Resources, Inc.(2) 5,286,255 12.83%
777 Mariners Island Blvd.
San Mateo, CA 94404
FMR Corporation(3) 3,507,136 8.51%
82 Devonshire Street
Boston, MA 02109
U.S. Trust Company of New York(4) 2,272,148 5.51%
114 West 47th Street
New York, NY 10036
Robert A. Mulderig(5) 1,048,572 2.54%
John Kessock, Jr.(6) 848,004 2.06%
Glenn R. Partridge(7) 295,848 *
Richard G. Turner(8) 287,499 *
James C. Kelly(9) 252,010 *
Roger E. Dailey(10) 83,747 *
David J. Doyle(11) 0 *
Arthur E. Engel(12) 127,018 *
Allan W. Fulkerson(10) 68,149 *
William F. Galtney, Jr.(13) 261,216 *
Jerry S. Rosenbloom(10) 85,679 *
Norman L. Rosenthal(14) 44,670 *
Joseph D. Sargent(10) 72,018 *
All directors and executive offices 4,229,124 10.26%
as a group (15 persons)
</TABLE>
- --------
*Less than 1%.
2
<PAGE>
(1) Includes Common Shares and Common Shares issuable pursuant to presently
exercisable options to acquire Common Shares and on conversion of the
Company's Zero Coupon Convertible Exchangeable Subordinated Debentures due
2015.
(2) Based on Amendment No. 1 to Schedule 13G of Franklin Resources dated
December 9, 1999.
(3) Based on Amendment No. 1 to Schedule 13G of FMR Corp. dated February 11,
2000.
(4) Based on Amendment No. 2 to Schedule 13G of U.S. Trust Company of New York
dated February 4, 2000.
(5) Does not include 94,116 Common Shares which are owned by trusts the
beneficiaries of which are members of Mr. Mulderig's family. Mr. Mulderig
disclaims beneficial ownership of such shares. Includes options to acquire
106,656 Common Shares.
(6) Includes 741,348 Common Shares owned by the Kessock Family Trust. Does not
include 54,040 Common Shares owned by the Kessock Family Irrevocable Trust
as to which Mr. Kessock disclaims beneficial ownership. The beneficiaries
of these trusts include Mr. Kessock and members of his family. Includes
options to acquire 106,656 Common Shares.
(7) Includes options to acquire 81,198 Common Shares.
(8) Does not include 27,666 Common Shares held in the Children's Trust of the
Turner Family Trust as to which Mr. Turner disclaims beneficial ownership.
Includes options to acquire 82,698 Common Shares.
(9) Includes options to acquire 68,707 Common Shares.
(10) Includes options to acquire 50,000 Common Shares.
(11) Mr. Doyle acts as a co-trustee of certain trusts which beneficially own
94,116 Common Shares.
(12) Includes options to acquire 50,000 Common Shares. Mr. Engel may be deemed
the beneficial owner of 622,700 Common Shares owned by Mutual Indemnity
Ltd.
(13) Includes options to acquire 50,000 Common Shares. Also includes 129,198
Common Shares which are owned by Galtney Family Investors, Ltd. of which
Mr. Galtney is the General Partner.
(14) Includes options to acquire 30,000 Common Shares.
3
<PAGE>
ELECTION OF DIRECTORS
(Item 1 of Notice of Meeting)
The shareholders will be asked to elect five persons to the Board of
Directors to serve for a term of three years subject to the provisions of the
Company's Bye-Laws. The terms as directors of Messrs. Dailey, Doyle, Engel,
Rosenthal and Sargent will expire at the Meeting and it is proposed that they
be re-elected as directors. It is the intention of the persons named in the
accompanying form of proxy to vote at the Meeting for the election as
directors of these persons. If such nominee should be unable to serve, an
event not currently anticipated, proxies will be voted for such person as
shall be designated by the Board of Directors of the Company to replace such
nominee.
The following table shows certain information with respect to each person
nominated for election as a director and each person whose term of office as
director will continue after the Meeting.
<TABLE>
<CAPTION>
Director Term Principal Occupation
Name Age Since Expires & Business Experience
---- --- -------- ------- -----------------------------------
<C> <C> <C> <C> <S>
Robert A. Mulderig 47 1982 2002 Chief Executive Officer of the
Company since 1982; Chairman of
Legion Insurance Co., ("Legion");
Director of Professional Risk
Management Services, Inc., The
Galtney Group, Inc. and The Bank of
N.T. Butterfield & Sons Ltd. Also
serves as a director or officer of
a number of unaffiliated captive
insurance companies to which the
Company provides management
services.
John Kessock, Jr. 51 1985 2002 President of the Company, Mutual
Group Ltd. and Legion; primarily
responsible for marketing the
Company's programs since 1979;
Chairman of Commonwealth Risk
Services L.P. ("CRS") and the IPC
Companies. Director, Ward North
America, Inc.
Richard G. Turner 49 1985 2001 Executive Vice President of the
Company; President of CRS since
1984; Vice President of Marketpac
International, a subsidiary of
American International Group from
1979 to 1984. Director of Colonial
Penn Insurance Company.
Glenn R. Partridge 46 1990 2002 Executive Vice President of the
Company; Executive Vice President
of Legion; primarily responsible
for Legion's underwriting function
since 1987; Vice President of CRS
1983 to 1987.
Roger E. Dailey 66 1985 2000 Vice President of Equifax, Inc.,
Atlanta, Georgia for more than five
years until retirement in 1993.
Currently a self employed
consultant.
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
Director Term Principal Occupation
Name Age Since Expires & Business Experience
---- --- -------- ------- -----------------------------------
<C> <C> <C> <C> <S>
David J. Doyle 46 1977 2000 Partner in the law firm of Appleby,
Spurling & Kempe from 1978 to 1996.
Specializes in international
corporate matters with particular
emphasis on insurance law; Director
of Bermuda subsidiaries of the
Company. In March 1996, Mr. Doyle
joined the law firm of Conyers Dill
& Pearman, Hamilton, Bermuda.
Arthur E. Engel 53 1985 2000 Principal of The Marine Group, LLC.
Director of Mutual Indemnity Ltd.
since 1981.
Allan W. Fulkerson 66 1988 2001 President of Century Capital
Management, Inc., Chairman of
Century Shares Trust, Director of
HCC Insurance Holdings, Inc.,
Wellington Underwriting PLC.,
International Financial Group,
Inc., The Galtney Group Inc.,
Massachusetts Fiduciary Advisors,
Inc. and LUA Segueros La Portena
SA.
William F. Galtney, 47 1988 2001 Chairman, Chief Executive Officer
Jr. and Director of The Galtney Group
Inc., Houston, Texas; Director of
Everest Re (Holdings) Ltd.
Jerry S. Rosenbloom 60 1991 2001 Frederick H. Ecker Professor of
Insurance and Risk Management and
Academic Director, Certified
Employee Benefit Specialist
Program, Wharton School, University
of Pennsylvania. Director of
Annuity and Life Re (Holdings)
Ltd., Harleysville Insurance
Company, Terra Nova Group and
Trustee of Century Shares Trust.
Norman L. Rosenthal 48 1997 2000 President of Norman L. Rosenthal &
Associates, Inc. since August,
1996; Managing Director of Morgan
Stanley & Co., Inc, from January
1992 until July, 1996; Director of
Plymouth Rock Assurance Company
since July 1998.
Joseph D. Sargent 70 1988 2000 Chairman, Bradley, Foster &
Sargent, Inc; Director, Trenwick
Group, Inc., Policy Management
Systems Corp., MMI Companies Inc.,
and Command Systems, Inc.
</TABLE>
The Company's Board of Directors met 6 times during 1999. The Board of
Directors has an Executive Committee, an Investment Committee, an Audit
Committee, a Nominating Committee, a Compensation Committee and a Reinsurance
Security Committee. The Executive Committee is responsible for setting the
agenda of the Board and is comprised of Messrs. Mulderig, Kessock, Dailey,
Fulkerson, Rosenbloom and Sargent. The Audit Committee is responsible for
overseeing the
5
<PAGE>
production of the Company's financial statements and is comprised of Messrs.
Sargent, Rosenbloom and Rosenthal. The Audit Committee met 4 times in 1999.
The Compensation Committee is responsible for setting the remuneration of
certain executive officers and the directors of the Company and is comprised
of Messrs. Engel, Rosenbloom and Sargent. The Compensation Committee met 5
times in 1999. The Nominating Committee is responsible for the nomination of
directors for election to office and is comprised of Messrs. Kessock,
Fulkerson and Rosenbloom. The Nominating Committee met 1 time in 1999. The
Nominating Committee will consider nominees for vacant or expiring
directorships recommended by the Company's members. Such recommendations
should be submitted in writing to the Secretary of the Company with a
description of the proposed nominee's qualifications, other relevant
biographical information and the nominee's consent to serve as a director.
Each of the directors who served on the Company's Board of Directors during
1999 attended at least 75% of the meetings of the Board and the Committees on
which they served which were convened in 1999, except for Mr. Galtney who
attended only 50% of such meetings. In 2000, Mrs. Beverly Patrick retired as a
director of the Company's Board of Directors.
In 1999, outside directors received an annual fee of $25,000, plus $1,000
for each board meeting attended. In addition, in 1999 the chairmen of the
following committees received the following additional fees: Compensation
Committee, $5,000; Investment Committee, $3,000; Nominating Committee, $500;
Reinsurance Security Committee, $2,000; and Audit Committee, $2,000. Members
of the Compensation Committee, other than the chairman, received an attendance
fee of $500 per meeting. $10,000 of the annual fees are paid to each director
in restricted Common Shares valued at ninety percent of the market value on
the date of issuance. In addition, the Company has a deferred compensation
plan pursuant to which directors may choose to defer receipt of all or a
portion of their annual compensation until retirement. Amounts deferred will
be invested in Common Shares at ninety percent of market value or maintained
in an interest bearing account. The restricted stock and deferred compensation
will be paid to a director upon his or her retirement from the Board pursuant
to the Company's retirement policy, on death or disability or in the event of
a change in control of the Company. Non-executive directors also receive an
annual award of options to purchase 7,500 Common Shares. The exercise price of
such options is equal to the market price of the Common Shares on the date of
the award. The options have a term of five years and are exercisable
commencing six months after the grant date.
6
<PAGE>
EXECUTIVE COMPENSATION
Compensation
The following table sets forth the compensation, including bonuses, paid or
accrued during the Company's last three fiscal years to the Chief Executive
Officer and each of the four highest paid executive officers of the Company
(the "Named Executive Officers").
Summary Compensation Table
<TABLE>
<CAPTION>
Annual Compensation Long Term Compensation
------------------- ----------------------
Securities
Underlying
Name and Salary Options Granted All Other
Principal Position Year ($) Bonus ($) (#)(/2/) Compensation(/1/)($)
------------------ ---- ------------------- --------------- --------------------
<S> <C> <C> <C> <C> <C>
Robert A. Mulderig 1999 525,000 232,775 95,444 13,125
Chairman and 1998 500,000 614,485 60,000 12,500
Chief Executive Officer 1997 452,350 486,842 64,000 11,309
John Kessock, Jr. 1999 525,000 232,775 95,444 4,000
President 1998 500,000 614,485 60,000 4,000
1997 452,350 486,842 64,000 4,000
Richard G. Turner 1999 325,500 145,474 70,000 4,000
Executive Vice 1998 310,000 409,656 40,000 4,000
President 1997 277,000 298,121 48,000 4,000
Glenn R. Partridge 1999 325,500 145,474 70,000 4,000
Executive 1998 310,000 380,395 40,000 4,000
Vice President 1997 242,000 260,452 45,000 4,000
James C. Kelly 1999 262,500 117,318 58,000 6,562
Senior Vice President
and 1998 250,000 307,242 33,333 6,250
Chief Financial Officer 1997 200,000 215,250 55,000 5,000
</TABLE>
- --------
(1) Options have been restated to reflect the September 1997 two-for-one stock
split.
(2) Consists of Company contributions to pension plans.
Stock Options
Stock options to directors and employees are currently awarded only under
the provisions of the Company's 1998 Long Term Incentive Plan ("LTIP").
Options are awarded to employees at the market price at the time of issuance
for five-year terms with 25% becoming exercisable each year. During 1999,
477,200 options were issued to seven executive officers of the Company.
The following table provides certain information on options granted in 1999
to the Named Executive Officers. The last two columns of the table present
possible values of these grants assuming certain rates of growth in the price
of the Company's Common Shares.
7
<PAGE>
Option Grants In 1999
<TABLE>
<CAPTION>
Potential Realizable
Value at Assumed
Annual Rates of
Stock Price
Appreciation for
Individual Grants Option Term
----------------------------- ---------------------
Number of
Securities
underlying % of Total
Options Options Granted Exercise or
Granted to Employees in Base Price Expiration
Name (#) Fiscal Year ($/Sh) Date 5% ($) 10% ($)
---- ---------- --------------- ----------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Robert A. Mulderig 95,444 6.29% 14.5625 12/16/04 384,005 848,550
John Kessock, Jr. 95,444 6.29% 14.5625 12/16/04 384,005 848,550
Richard G. Turner 70,000 4.61% 14.5625 12/16/04 281,635 622,339
Glenn R. Partridge 70,000 4.61% 14.5625 12/16/04 281,635 622,339
James C. Kelly 58,000 3.82% 14.5625 12/16/04 233,354 515,652
</TABLE>
The following table presents certain information with respect to the value
of options at December 31, 1999 held by the named Executive Officers. The
table presents information with respect to both exercisable and unexercisable
options.
Aggregated Option Exercises In 1999 and Year-End Option Values
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Shares Value Underlying Unexercised In-the-Money Options
Acquired on Realized Options at FY-End (#) At FY-End ($)(/2/)
Name Exercise (#) ($)(/1/) (Exercisable/Unexercisable) (Exercisable/Unexercisable)
---- ------------ -------- --------------------------- ---------------------------
<S> <C> <C> <C> <C>
Robert A. Mulderig 26,668 379,394 106,656/292,288 103,627/431,966
John Kessock, Jr. 26,668 440,897 106,656/292,288 103,627/431,966
Richard G. Turner 26,668 876,451 82,698/219,468 84,515/330,536
Glenn R. Partridge 6,668 208,427 81,198/217,968 84,515/330,536
James C. Kelly 26,668 390,395 68,707/183,626 57,334/263,041
</TABLE>
- --------
(1) Represents difference between stock price and market price on date of
exercise.
(2) Based on the closing price of the Company's Common Shares on December 31,
1999 of $16.8125.
Pension Plans
In 1990, the Company instituted two defined contribution pension plans which
are available to most of the Company's employees. In order to comply with the
National Pension Scheme Act of 1998, the Company offered two new pension plans
for its Bermuda employees beginning in 2000. Pursuant to these plans, the
Company contributes up to 2.5% of an employee's salary. In 1998, the Company
adopted a deferred compensation plan for senior executives. The deferred
compensation plan allows eligible employees to defer receipt of any percentage
of his or her compensation by filing the appropriate election with the
Company. The deferred compensation plan is not funded by the Company although
a rabbi trust has been established to hold funds relating to the plan.
8
<PAGE>
Report of the Compensation Committee.
The Compensation Committee of the Board of Directors is composed of four
independent directors who are not employed by the Company and who qualify as
non-employee directors for the purposes of Rule 16b-3 adopted under the
Securities Exchange Act of 1934. The Compensation Committee is responsible for
the Company's executive compensation programs, which seek to relate the
compensation level of executives to the performance of the Company while
insuring the Company's ability to attract and retain the highest caliber
executives by providing appropriate incentives to deliver significant long-
term financial results for the benefit of shareholders. The Compensation
Committee determines the salary level of each of the top seven officers of the
Company, implements the Company's "Executive Bonus Plan" and determines all
awards made under the LTIP. The Compensation Committee also approves the
salary levels of all other employees of the Company who earn in excess of
$50,000 per annum.
In 1999, the Compensation Committee retained an independent executive
compensation consulting firm to evaluate the appropriateness of the executive
compensation program. This firm carried out market research on the levels of
compensation of similarly situated executives and determined that the
Company's cash compensation package was appropriately structured, rewarding
both profitability and growth in shareholder value and delivering competitive
levels of compensation when compared to similarly situated executives. Base
salaries of the top executives generally approximated the midpoint of the
range of comparable salaries identified in this benchmarking survey. Total
compensation, including bonuses, generally exceeded the average total
compensation packages identified in the survey by approximately 10% on a
combined basis, which is a reflection of the better than average performance
of the Company in recent years.
In order to meet the objectives described above, the Compensation Committee
has designed the Company's compensation program as follows:
(1) Base salaries, the fixed regular components of pay, are set in relation to
the average level of base salaries identified in the market survey carried
out by the independent compensation consulting firm for similarly situated
executives.
(2) The Executive Bonus Plan operates to reward the executive only for better
than average financial performance by the Company. The Executive Bonus
Plan considers the following factors: (a) growth of operating income per
Common Share; (b) growth of Shareholders' equity plus dividends; (c)
operating income per Common Share compared to a budget adopted by the
Board of Directors; (d) operating expenses compared to budget; (e) the
average market price of the Company's Common Shares compared to its peer
group; and (f) a subjective appraisal of the executive's performance by
the Compensation Committee. More relative weight is given to the first two
factors which are formula driven and these two factors are measured on a
cumulative basis over the previous five years.
(3) The awards made to date pursuant to the LTIP have consisted of stock
options. Stock options generally have a five-year life and vest in four
equal annual amounts beginning one year after the grant. The option
exercise price has been set at the market value of the shares on the date
of the grant. These stock options are designed to reward executives and
other employees for the long-term increase in shareholder value.
Aggregate awards under the Executive Bonus Plan in respect of 1999 earned by
the Company's seven executive officers were $1,108,450. The corresponding
awards in respect of 1998 were $2,926,118. After review in March 2000, the
base salary of Mr. Mulderig, the Company's Chief
9
<PAGE>
Executive Officer, remained at $525,000 and he was awarded a bonus of $232,775
in respect of 1999. The base salary and bonus paid to Mr. Mulderig reflect the
same considerations applicable to all executive officers. This report has been
submitted by the Compensation Committee:
Arthur E. Engel Jerry S. Rosenbloom Joseph D. Sargent
Compensation Committee Interlocks and Insider Participation
Mr. Mulderig, the Company's Chief Executive Officer, is a director and a
member of the compensation committee of The Galtney Group, Inc. of which Mr.
Galtney is a director and executive officer.
10
<PAGE>
Performance Graph
The following line graph compares the cumulative total shareholder return on
the Company's Common Shares (assuming dividends are reinvested) since December
1994 with its peer group. Also indicated on the graph is the performance of the
S&P 500 index for comparison with the Company's performance.
[GRAPH APPEARS HERE]
INDEXED RETURNS
Years Ending
Base
Period
Company Name/Index Dec 94(1) Dec 95 Dec 96 Dec 97 Dec 98 Dec 99
MUTUAL RISK MGT LTD 100 175.99 191.66 312.79 411.36 178.54
S&P 500 INDEX 100 137.58 169.17 225.60 290.08 351.12
PEER GROUP (2) 100 138.69 163.55 242.72 293.27 385.44
(/1/) The total return on investment (change in the Common Share price plus
reinvested dividends) for each of the periods for Mutual Risk Management Ltd,
the peer group and the S&P 500 index is based on the share price or index at
December 31, 1994.
(/2/) Companies in the peer group are as follows: American International
Group Inc., AON Corp., Chandler Insurance Co. Ltd., Chubb Corp., Crawford &
Co., XL Capital Limited, First Health Group Corp., Frontier Insurance Group
Inc., Arthur J. Gallagher & Co., Hilb Rogal & Hamilton Co., Marsh & McLennan
Companies Inc., Old Republic International Corp., Risk Capital Holdings, Inc.,
and Zenith National Insurance Corp.
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
a registered class of the Company's equity securities, to file with the United
States Securities and Exchange Commission ("SEC") initial reports of ownership
and reports of changes in ownership of Common Stock and other equity securities
of the Company. Officers, directors and greater than ten-percent shareholders
are required by SEC regulation to furnish the Company with copies of all
Section 16(a) forms they file.
To the Company's knowledge, based solely on review of the copies of such
reports furnished to the Company and written representations that no other
reports were required, during the year ended December 31, 1999, all Section
16(a) filing requirements applicable to the Company's officers, directors and
greater than ten-percent beneficial owners were complied with, except Mrs.
Patrick who filed a Form 4 late with respect to the sale of Common Stock and
Mr. Galtney who filed a Form 4 late with respect to the purchase of Common
Stock.
11
<PAGE>
CERTAIN TRANSACTIONS
The Company and its subsidiaries provide administrative and accounting
services to a number of unaffiliated insurance and reinsurance companies.
Certain officers, directors and employees of the Company serve as officers and
directors of these companies, generally without remuneration.
Mutual Finance Ltd, a subsidiary of the Company, has an investment of
approximately $3 million in Century Capital Partners L.P. ("Century Capital").
This investment is made by the Mutual Finance pool which is principally
comprised of assets being invested for the benefit of participants in the
Company's IPC Programs. Century Capital is a limited partnership which will
invest in insurance and other financial services companies. The general
partner of Century Capital is CCP Capital, Inc. and the investment advisor is
Century Capital Management, Inc. Mr. Allan Fulkerson, a director of the
Company, is President and a director of CCP Capital Inc. and Century Capital
Management, Inc.
In connection with the Company's acquisition of The Hemisphere Group Limited
("Hemisphere") in July 1996, the Company acquired a 40% interest in the
Hemisphere Trust Company Limited ("Hemisphere Trust"), a Bermuda "local" trust
company, which had formerly been a wholly owned subsidiary of Hemisphere. As a
"local" Bermuda company, at least 60% of the shares of Hemisphere Trust must
be owned by Bermudians. In compliance with this requirement, Mr. Robert A.
Mulderig, Chairman and Chief Executive Officer of the Company, acquired 60% of
Hemisphere Trust for $.2 million at the time of the Company's acquisition of
Hemisphere. The amount of the purchase price was equal to 60% of the book
value of Hemisphere Trust on the date of acquisition.
The Company and Mr. Mulderig have entered into a Shareholders' Agreement
relating to Hemisphere Trust which provides, amongst other things, that (i)
the Company has the option, subject to regulatory approval, to acquire Mr.
Mulderig's interest in Hemisphere Trust at Mr. Mulderig's cost, plus interest
at 6% per annum; (ii) the Company has a pre-emptive right, also subject to
regulatory approval, over the shares held by Mr. Mulderig; and (iii) no
dividends or other distributions can be made by Hemisphere Trust without the
prior consent of the Company. The Company provides management services to
Hemisphere Trust for an annual fee of $.3 million.
Certain significant shareholders and directors of the Company represent or
are employed by entities which have purchased IPC Programs or other services
from the Company and its subsidiaries. These services are provided by the
Company based on arms-length negotiations.
APPOINTMENT OF AUDITORS
(Item 2 of Notice of Meeting)
The Board of Directors recommends that Ernst & Young be appointed as
auditors of the Company to hold office until the next Annual General Meeting
of shareholders. Representatives of Ernst & Young are expected to be present
at the Meeting and will be available to answer appropriate questions. Such
representatives of Ernst & Young will also be given an opportunity to make a
statement to the shareholders if they so wish.
It is intended that the Common Shares represented by proxies solicited by or
on behalf of the Company will be voted in favor of the appointment of Ernst &
Young as auditors of the Company and authorizing the Directors to fix their
remuneration, unless otherwise indicated.
12
<PAGE>
OTHER BUSINESS
Management knows of no other matters that will be presented at the Annual
Meeting. However, if any other matter properly comes before the meeting, or
any adjournment or postponement thereof, it is intended that proxies in the
accompanying form will be voted in accordance with the judgment of the
proxyholders named there.
ANNUAL REPORT
A copy of the Company's 1999 Annual Report to Shareholders accompanies this
Proxy Statement.
SHAREHOLDER PROPOSALS
Pursuant to the Company's Bye-Laws, resolutions intended to be presented by
shareholders for action at the 2001 Annual General Meeting must comply with
the provisions of the Bermuda Companies Act, 1981 (the "Companies Act") and
the Bye-Laws and be deposited at the Company's principal office not later than
six weeks prior to the 2001 Annual General Meeting. In the event that the
Company receives notice of a shareholder proposal within the time frame set
forth above, then so long as the Company includes in its proxy statement for
the Annual General Meeting of Shareholders to be held in 2001 advice on the
nature of the matter and how the named proxyholders intend to vote the shares
for which they have received discretionary authority, such proxyholders may
exercise discretionary authority with respect to such proposal, except to the
extent limited by the SEC's rules governing shareholder proposals.
Pursuant to United States securities law regulations, proposals intended to
be presented by shareholders for action at the 2001 Annual Meeting must comply
with such regulations and be received by the Secretary of the Company not
later than December 1, 2000 in order to be considered for inclusion in the
Company's proxy statement relating to such meeting. In addition, the execution
of a proxy solicited by the Company in connection with the 2001 Annual Meeting
of Shareholders shall confer on the designated proxyholder discretionary
voting authority to vote on any shareholder proposal which is not included in
the Company's proxy materials for such meeting and for which the Company has
not received notice before February 14, 2001.
COMPANY'S ANNUAL REPORT TO SEC
The Company is required to file with the SEC an annual report on Form 10-K
containing certain information with respect to the Company and its business
and properties, including financial statements and related schedules. The Form
10-K also contains a list of exhibits filed as part of the report and the
number of pages contained in each exhibit.
Upon the written request of any beneficial owner of the Company's Common
Shares, the Company will mail to such owner, without charge, a copy of its
Form 10-K for the fiscal year ended December 31, 1999. In addition, upon
payment to the Company of $0.25 per page, the Company will mail to such owner
a copy of any or all of the exhibits listed in the report. Requests for copies
of the Form 10-K and/or exhibits should be addressed to: The Secretary, Mutual
Risk Management Ltd., 44 Church Street, Hamilton HM 12, Bermuda.
13
<PAGE>
VOTING
Each Common Share is entitled to one vote and, except where a greater
majority is required by the Companies Act or the Company's Bye-Laws, any
question proposed for consideration at any general meeting will be decided
upon by a simple majority of votes cast. The election of directors will be by
the simple majority of votes cast. At the Meeting, a resolution put to the
vote of the Meeting will be decided on by a show of hands, unless a poll has
been demanded pursuant to the terms of the Company's Bye-Laws. If a poll has
not been demanded, a declaration by the Chairman that a resolution has passed
will be final. If a poll has been demanded, then the result of such poll shall
be final.
Abstentions are counted in determining the quorum of the Meeting. As a
result, on those proposals which require an affirmative vote of the majority
of those shareholders present at the Meeting or of the outstanding Common
Shares, an abstention has the effect of a vote against the proposal.
Similarly, where brokers report a non-vote, the shares are counted in
determining the quorum of the Meeting but they are not counted as having voted
on the proposal. A non-vote, therefore, has the effect of a vote against the
proposal.
The shares represented by the enclosed form of proxy, duly executed and
deposited at the office of the Company's transfer agent, Boston EquiServe
Limited Partnership, in Boston, or with the Secretary of the Company at the
Company's office in Bermuda, prior to 5:00 P.M. Bermuda time on May 11, 2000,
will be voted at the Meeting. All properly executed proxies, not theretofore
revoked, will be voted on any poll taken at the Meeting in accordance with the
instructions contained therein. If no instructions are given with respect to
any particular matter, the proxy authorizes a vote in favor of such matter and
it will be voted accordingly.
The enclosed proxy confers discretionary authority with respect to
amendments and variations with respect to the matters identified in the Notice
of Meeting and other matters which may properly come before the Meeting.
Each shareholder has the right to appoint a person, who need not be a
shareholder, other than the persons specified in the enclosed form of proxy to
attend and act for him and on his behalf at the Meeting. Such right may be
exercised by striking out the names of management's nominees in the enclosed
form of proxy and inserting the name of the person to be appointed in the
blank space provided in the form of proxy, signing the form of proxy and
returning it in the reply envelope provided.
By Order of the Board of Directors
/S/ Elizabeth B. Price
----------------------
ELIZABETH B. PRICE
Secretary
Dated: March 31, 2000
14
<PAGE>
1067-PS-00
<PAGE>
[1067 - MUTUAL RISK MANAGEMENT LTD.] [FILE NAME: MRM57B.EL.X] [VERSION - 2]
[02/22/00] [orig. 02/01/00]
DETACH HERE
PROXY
MUTUAL RISK MANAGEMENT LTD.
44 CHURCH STREET
HAMILTON HM 12 BERMUDA
This Proxy is Solicited on behalf of the Board of Directors:
The Undersigned hereby appoints R.A. Mulderig, James C. Kelly, and R.E.
O'Brien as Proxies, each with the power to appoint his substitute, and hereby
authorizes them to represent and to vote, as designated on the reverse side, all
the shares of common stock of Mutual Risk Management Ltd. held of record by the
undersigned on February 25, 2000, at the Annual General Meeting of shareholders
to be held on May 16, 2000 or any adjournment or postponement thereof. This
proxy also delegates discretionary authority with respect to any other business
which may properly come before the Meeting or any adjournment or postponement
thereof.
************* *************
*SEE REVERSE* CONTINUED AND TO BE SIGNED ON REVERSE SIDE *SEE REVERSE*
* SIDE * * SIDE *
************* *************
<PAGE>
[1067 - MUTUAL RISK MANAGEMENT LTD.] [FILE NAME: MRM57A.EL.X] [VERSION - 3]
[02/22/00] [orig. 02/01/00]
MRM57A DETACH HERE
[X] Please mark
votes as in
this example.
This proxy when properly executed will be voted in the manner directed herein
by the undersigned stockholder. If no direction is made, this proxy will be
voted "For" Proposals 1 and 2.
1. ELECTION OF DIRECTORS.
Nominees: (01) Roger E. Dailey, (02) David J. Doyle, (03) Arthur E. Engel,
(04) Norman Rosenthal and (05) Joseph D. Sargent
FOR WITHHELD
ALL [_] [_] FROM ALL
NOMINEES NOMINEES
[_]
---------------------------------------
For all nominees except as noted above
2. PROPOSAL TO APPROVE the FOR AGAINST ABSTAIN
recommendations by the Board of [_] [_] [_]
Directors that Ernst & Young be
appointed as the Company's
independent auditors for the fiscal year
ending December 31, 2000.
3. In their discretion, the Proxies are authorized to vote upon such
other business as may properly come before the Meeting or any
adjournment or postponement thereof.
MARK HERE FOR ADDRESS CHANGE AND NOTE AT LEFT [_]
PLEASE MARK, SIGN, DATE AND RETURN PROMPTLY USING THE
ENCLOSED ENVELOPE.
Please sign exactly as name appears hereon.
When signing as attorney, as executor, administrator, trustee or guardian,
please sign in full corporate name by President or other authorized officer,
if a partnership please sign in partnership name by authorized person.
Signature Date Signature Date
------------------ --------- ------------------ ---------
