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
[X] Definitive proxy statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
E.W. BLANCH HOLDINGS, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transactions 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>
E.W. BLANCH HOLDINGS, INC.
- --------------------------------------------------------------------------------
500 N. Akard, Suite 4500
Dallas, Texas 75201
March 22, 1999
Dear Shareholder:
You are cordially invited to attend the Annual Meeting of Shareholders of E. W.
Blanch Holdings, Inc. to be held at the Crescent Court Hotel, 400 Crescent
Court, Dallas, Texas 75201, on Thursday, April 22, 1999, at 10:00 A.M. Central
Daylight Time. I encourage you to attend. Whether or not you plan to attend the
meeting, I urge you to vote your proxy. On behalf of your Board of Directors,
thank you for your continued support of and interest in E. W. Blanch Holdings,
Inc.
Sincerely,
/s/ Edgar W. Blanch, Jr.
Edgar W. Blanch, Jr.
Chairman and Chief Executive Officer
<PAGE>
E. W. BLANCH HOLDINGS, INC.
500 N. AKARD, SUITE 4500
DALLAS, TEXAS 75201
------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
APRIL 22, 1999
------------------
Notice is hereby given that the Annual Meeting of Shareholders of E. W.
Blanch Holdings, Inc. (the "Company") will be held at the Crescent Court Hotel,
400 Crescent Court, Dallas, Texas 75201, on Thursday, April 22, 1999, at 10:00
A.M. Central Daylight Time, for the following purposes:
1. To elect three Class III directors to serve until the Annual Meeting
of Shareholders in 2002 and until their respective successors are duly
elected and qualified;
2. To approve the E. W. Blanch Holdings, Inc. Management Incentive Plan;
3. To ratify the appointment of Ernst & Young LLP as the Company's
independent auditors for the 1999 fiscal year; and
4. To act upon any other business that may properly be brought before the
Annual Meeting.
The close of business on March 11, 1999 has been fixed as the record date
for determining the shareholders entitled to notice of and to vote at the Annual
Meeting.
Your attention is directed to the accompanying Proxy Statement.
WHETHER OR NOT YOU PLAN TO BE PRESENT AT THE ANNUAL MEETING, PLEASE
COMPLETE, DATE AND SIGN THE ENCLOSED PROXY AND RETURN IT PROMPTLY IN THE
ENCLOSED ENVELOPE.
Enclosed for your information is the Company's Annual Report for the year
ended December 31, 1998.
By Order of the Board of Directors
/s/ Daniel P. O'Keefe
Daniel P. O'Keefe
SECRETARY
March 22, 1999
<PAGE>
E. W. BLANCH HOLDINGS, INC.
500 N. AKARD, SUITE 4500
DALLAS, TEXAS 75201
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PROXY STATEMENT
-----------------
ANNUAL MEETING OF SHAREHOLDERS
APRIL 22, 1999
INFORMATION CONCERNING SOLICITATION AND VOTING
The enclosed proxy is solicited by the Board of Directors of E. W. Blanch
Holdings, Inc. (the "Company") for use at the Annual Meeting of Shareholders,
which will be held at 10:00 A.M. Central Daylight Time on Thursday, April 22,
1999, at the Crescent Court Hotel, 400 Crescent Court, Dallas, Texas 75201, and
at any adjournment thereof.
The Board of Directors is aware of three items of business to be considered
at the Annual Meeting: (1) the election of three Class III directors to serve
until the Annual Meeting of Shareholders in 2002 and until their respective
successors are duly elected and qualified; (2) approval of the Company's
Management Incentive Plan; and (3) ratification of the appointment of Ernst &
Young LLP as the Company's independent auditors for the 1999 fiscal year. The
Board of Directors knows of no matters to be presented for action at the Annual
Meeting other than those mentioned above. However, if any other matters properly
come before the Annual Meeting, the persons named in the proxy will vote on such
other matters and/or for other nominees in accordance with their best judgment.
The Board of Directors recommends that an affirmative vote be cast in favor of
all of the proposals listed above.
The giving of a proxy does not preclude a shareholder from voting in person
at the Annual Meeting. The proxy is revocable before its exercise by delivering
either written notice of such revocation or a later dated proxy to the Secretary
of the Company at its executive office at any time prior to voting of the shares
represented by the earlier proxy. In addition, shareholders attending the Annual
Meeting may revoke their proxies by voting at the Annual Meeting. All returned
proxies that are properly signed and dated will be voted as the shareholder
directs. If no direction is given, executed proxies will be voted FOR election
of the Class III directors named herein, FOR approval of the Management
Incentive Plan, and FOR ratification of the appointment of Ernst & Young LLP as
the Company's independent auditors for the 1999 fiscal year.
Only shareholders of record at the close of business on March 11, 1999 are
entitled to vote at the Annual Meeting or any adjournment thereof. As of said
date, 12,890,641 shares of the Company's common stock, $.01 par value per share
(the "Common Stock"), were outstanding and entitled to one vote per share on all
matters submitted to shareholders. A list of shareholders will be available for
inspection for at least ten days prior to the Annual Meeting at the principal
executive offices of the Company at 500 North Akard, Suite 4500, Dallas, Texas
75201 and at the Annual Meeting.
This proxy solicitation material is being mailed on or about March 22, 1999
to shareholders as of the record date with a copy of the Company's 1998 Annual
Report to Shareholders, which includes financial statements for the period ended
December 31, 1998.
Proxies will be voted at the Annual Meeting, or at any adjournment thereof,
at which a quorum is present, in accordance with the directions on the proxy
card. The holders of a majority of the Common Stock outstanding and entitled to
vote who are present either in person or represented by proxy will constitute a
quorum for the Annual Meeting.
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<PAGE>
Directors are elected by a plurality of the votes cast. "Plurality" means
that the individuals who receive the largest number of votes cast "For" are
elected as directors up to the maximum number of directors to be chosen at the
Annual Meeting. Consequently, any shares not voted "For" a particular director
(whether as a result of a direction to withhold or a broker non-vote) will not
be counted in such director's favor.
All other matters to be acted on at the Annual Meeting require the
affirmative vote of a majority of the shares present at the meeting, in person
or by proxy, to constitute the action of the shareholders. If an executed proxy
card is returned and the shareholder has voted "abstain" on any matter (or
"withhold authority" as to the election of any Director), the shares represented
by such proxy will be considered present at the meeting for purposes of
determining a quorum and for purposes of calculating the vote, but will not be
considered to have been voted in favor of such matter. If an executed proxy is
returned by a broker holding shares in street name which indicates that the
broker does not have discretionary authority as to certain shares to vote on one
or more matters, such shares will be considered present at the meeting for
purposes of determining a quorum, but will not be considered to be represented
at the meeting for purposes of calculating the vote with respect to such
matters.
The expense of preparing, printing and mailing this Proxy Statement will be
paid by the Company.
ELECTION OF DIRECTORS
The Board of Directors is divided into three classes, being divided as
equally as possible and each class having a term of three years. Each year the
term of office of one class expires. This year the term of a class consisting of
three Directors expires. It is the intention of the Board that the shares
represented by proxy, unless otherwise indicated thereon, will be voted for the
reelection of Edgar W. Blanch, Jr., William B. Madden and Steven G. Rothmeier as
Directors to hold office for a term of three years until the Annual Meeting of
Shareholders in 2002 and until their respective successors are duly elected and
qualified.
The persons designated as proxies reserve full discretion to cast votes for
other persons in the event any such nominee is unable to serve. However, the
Board of Directors has no reason to believe that any nominee will be unable to
serve if elected. The election of Directors requires a plurality of the votes
cast at the Annual Meeting, in person or by proxy. The proxies cannot be voted
for a greater number of persons than the three named nominees.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR EACH OF THE
NOMINEES.
The following sets forth information regarding each nominee and the
remaining Directors who will continue in office after the Annual Meeting.
NOMINEES FOR CLASS III DIRECTORS
(TERMS EXPIRING IN 1999)
EDGAR W. BLANCH, JR. (62) -- Mr. Blanch has served as Chief Executive
Officer and Chairman of the Board of Directors of the Company since its
formation in March 1993. Mr. Blanch has been associated with predecessors of
the Company since 1958. From 1976 to 1993, he served as Chief Executive Officer
of those predecessors.
WILLIAM B. MADDEN (60) -- Mr. Madden has served as a Director of the
Company since April 1993 and as the President of Madden Securities Corporation,
a general securities and investment banking firm, since 1986. Mr. Madden
currently is the Chairman of the Board of Directors of Mercantile Bank and
Trust and serves as a Director of Pillowtex Corporation.
STEVEN G. ROTHMEIER (52) -- Mr. Rothmeier has served as a Director of the
Company since April 1993 and as Chairman of the Board of Directors and Chief
Executive Officer of Great Northern Capital, a private investment management
firm, since March 1993. Mr. Rothmeier served as President of IAI Capital Group,
a venture capital and merchant banking firm, from 1989 to 1993 and as Chairman
of the Board of Directors and Chief Executive Officer of NWA, Inc. and
Northwest Airlines Inc. from 1985 to
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1989. Mr. Rothmeier currently is a Director of Honeywell Inc., Department 56,
Inc., Precision Castparts Corp., and Waste Management, Inc.
CLASS I DIRECTORS
(TERMS EXPIRING IN 2000)
JOSEPH D. SARGENT (69) -- Mr. Sargent has served as a Director of the
Company since April 1993. Mr. Sargent has served as Chairman of Bradley, Foster
and Sargent, an investment advisory firm, since January 1994. Mr. Sargent
served as the Chief Executive Officer of Conning & Company, an investment and
research firm specializing in insurance companies, from 1970 to 1990 and as
Vice Chairman until 1993. Mr. Sargent is Vice Chairman of Connecticut Surety
Corporation, a surety operation formed in conjunction with the venture capital
operations of Conning & Company. Mr. Sargent is also the former Chairman of
S-K-I Ltd., the largest publicly held ski resort in the United States. He
currently serves as a Director for a number of companies, including MMI
Companies, Inc., Trenwick Group, Inc., Policy Management Systems Corporation,
Mutual Risk Management Ltd., Executive Risk, Inc. and Command Systems, Inc.
FRANK S. WILKINSON, JR. (59) -- Mr. Wilkinson has served as Executive Vice
President and a Director of the Company since its formation in March 1993. Mr.
Wilkinson has been associated with predecessors of the Company since 1969. From
1979 to 1993, he served as Executive Vice President of those predecessors. He
is currently serving as Chairman of the Board and Chief Executive Officer of
the Company's wholly owned subsidiaries, Paragon Reinsurance Risk Management
Services, Inc. and E. W. Blanch Capital Risk Solutions, Inc.
CLASS II DIRECTORS
(TERMS EXPIRING IN 2001)
JAMES N. LAND, JR. (69) -- Mr. Land has served as a Director of the
Company since April 1993 and as a corporate financial consultant to a number of
companies since October 1976. Mr. Land currently serves on the Board of
Directors of The Raytheon Company and Riviera Holdings Corporation. In
addition, Mr. Land served on the Executive Committee of the Board of Directors
of The First Boston Corporation from 1967 to 1976.
CHRIS L. WALKER (41) -- Mr. Walker has served as President and Chief
Operating Officer of the Company since July 1995, as Executive Vice President
from March 1993 to July 1995 and as a Director of the Company since October
1994. Mr. Walker has been associated with predecessors of the Company since
1980. From 1985 to 1990, he served as Vice President, from 1990 to 1993, he
served as Senior Vice President, and from February 1993 to March 1993, he served
as Executive Vice President of those predecessors. He is currently serving as
Chairman of the Board and Chief Executive Officer of the Company's wholly owned
subsidiary, E. W. Blanch Co., Inc.
PAUL B. INGREY (59) -- Mr. Ingrey has served as a Director of the Company
since January 1997. Mr. Ingrey retired in January 1997 from F&G Re, which he
helped found and where he served as Chairman of the Board and Chief Executive
Officer from January 1996 until his retirement. Prior to 1996, Mr. Ingrey served
as President of F&G Re. F&G Re is a reinsurance company and a division of United
States Fidelity and Guaranty Company.
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<PAGE>
BOARD OF DIRECTORS AND COMMITTEES
COMPENSATION COMMITTEE
The Compensation Committee of the Board of Directors (the "Compensation
Committee") consists of Messrs. Ingrey, Land, Madden, Rothmeier and Sargent. The
Compensation Committee determines the compensation for executive officers of the
Company and establishes the Company's compensation policies and practices. The
Compensation Committee also grants awards under the Company's employee stock
plans.
AUDIT COMMITTEE
The Audit Committee of the Board of Directors (the "Audit Committee")
consists of Messrs. Ingrey, Land, Madden, Rothmeier and Sargent. The Audit
Committee submits recommendations to the Board of Directors with respect to the
selection of the Company's independent auditors and with respect to any other
matters it deems appropriate. It reviews the annual financial statements of the
Company with the Company's independent auditors, the practices and procedures
adopted by the Company in the preparation of such statements and the independent
auditor's annual scope of audit.
MEETINGS OF THE BOARD OF DIRECTORS AND COMMITTEES
During the fiscal year ended December 31, 1998, the Board of Directors held
six meetings, the Compensation Committee held four meetings and the Audit
Committee held four meetings. All Directors attended more than 75% of the
meetings of the Board of Directors and committees on which they served.
DIRECTORS' COMPENSATION
Directors of the Company who are not officers or employees of the Company
receive a fee of $9,000 per quarter plus $1,000 per meeting, including committee
meetings, attended. Directors of the Company who are officers or employees of
the Company do not receive additional compensation for their services as a
Director. No Director receives additional compensation for serving on a
committee other than the fee for attendance at committee meetings. Directors of
the Company who are not officers or employees of the Company may elect to
receive their fees in the form of Common Stock of the Company, or to defer
receipt of such fees and have the deferred amounts treated as if invested in
Common Stock, pursuant to the Company's Non-Employee Directors' Stock Plan.
In addition, pursuant to the Company's Directors' Stock Option Plan (the
"Directors' Stock Option Plan") adopted on July 24, 1997, each non-employee
Director automatically receives an initial stock option grant for 5,000 shares
of Common Stock on the date such person first becomes a Director and an
additional annual stock option grant for 2,000 shares of Common Stock on the
date of the Annual Meeting of Shareholders in each year. The initial stock
option grant of 5,000 shares was granted to each non-employee Director in office
on the date the Directors' Stock Option Plan was adopted. The initial stock
option grant vests one-third on the date of grant and one-third on each of the
first and second anniversary dates of the date of grant, provided the
non-employee Director is still a Director of the Company on such date. The
annual option grants vest in full six months following the date of grant,
provided the non-employee Director is still a Director of the Company on such
date. The annual stock option grant is only awarded to non-employee Directors
who have served since the date of the last annual Meeting of Shareholders and
who will continue to serve as Directors after the date of such grant. All
options granted under the Directors' Stock Option Plan are nonqualified stock
options with a term of ten years and are granted at an option price equal to the
fair market value of the Common Stock on the date of grant.
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<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth certain information regarding the beneficial
ownership of Common Stock as of March 11, 1999: (i) by each Director; (ii) by
each of the executive officers included in the Summary Compensation Table set
forth under the caption "Executive Compensation;" (iii) by all Directors and
executive officers of the Company as a group; and (iv) by each person known to
the Company to be the beneficial owner of more than 5% of the outstanding shares
of Common Stock. Except as otherwise indicated, the named beneficial owner has
sole voting and investment power with respect to the shares held by such
beneficial owner.
AMOUNT AND NATURE OF
NAME OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP PERCENT OF CLASS
- ------------------------ -------------------- ----------------
Edgar W. Blanch, Jr. 582,655 4.52%
Rodman R. Fox 83,339 *
Paul B. Ingrey 23,500(1)(2) *
James N. Land, Jr. 6,000 *
William B. Madden 3,000(3) *
Ian D. Packer 7,894 *
Steven G. Rothmeier 5,000 *
Joseph D. Sargent 3,500 *
Chris L. Walker 188,304 1.46%
Frank S. Wilkinson, Jr. 232,068(4)(5) 1.80%
All directors and executive officers
as a group (10 persons) 1,135,260 8.80%
BankAmerica Corporation 768,600(6) 5.96%
555 California Street, Suite 2600
San Francisco, CA 94104
FMR Corp. 1,271,800(7) 9.87%
82 Devonshire Street
Boston, MA 02109
Royce & Associates, Inc. 697,600(8) 5.41%
Royce Management Company 30,200(8) *
Charles M. Royce, Controlling Person
1414 Avenue of the Americas
New York, NY 10019
- -------------------------
* Indicates ownership of less than 1% of the outstanding Common Stock.
(1) Includes 10,000 shares of Common Stock beneficially owned by a family trust
and which, due to Mr. Ingrey's position as trustee of such trust, may be
deemed to be beneficially owned by him.
(2) Includes 2,000 shares of Common Stock owned by Mr. Ingrey's spouse as to
which he disclaims beneficial ownership.
(3) Includes 1,000 shares of Common Stock beneficially owned by Mr. Madden's
spouse as to which he disclaims beneficial ownership.
(4) Includes 13,800 shares of Common Stock beneficially owned by minors' trusts
and which, due to Mr. Wilkinson's position as trustee of such trusts, may
be deemed to be beneficially owned by him.
(5) Includes 50,000 shares of Common Stock beneficially owned by a charitable
trust and which, due to Mr. Wilkinson's position as trustee of such trust,
may be deemed to be beneficially owned by him.
(6) Based on a Schedule 13G dated February 8, 1999 prepared by BankAmerica
Corporation ("BankAmerica") and filed with the Securities and Exchange
Commission. BankAmerica and certain of its affiliates and subsidiaries had
shared voting power and shared dispositive power with respect to 768,600
shares. BankAmerica also reported that this filing was made in its capacity
as a
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bank holding company, and as the successor to all assets and liabilities
after a merger between NationsBank Corporation and BankAmerica on September
30, 1998.
(7) Based on a Schedule 13G/A dated February 1, 1999 prepared by FMR Corp. and
filed with the Securities and Exchange Commission. FMR Corp. and certain of
its affiliates and subsidiaries had sole voting power with respect to
511,600 shares, no shared voting power with respect to the shares and sole
dispositive power with respect to 1,271,800 shares. FMR Corp. also reported
that various persons have the right to receive or the power to direct the
receipt of dividends from, or the proceeds from the sale of, the shares,
and that none of such persons had an interest relating to more than 5% of
the Company's outstanding Common Stock.
(8) Royce & Associates, Inc. ("Royce"), Royce Management Company ("RMC") and
Charles M. Royce reported on an amended Schedule 13G, dated February 4,
1998, filed with the Securities and Exchange Commission that Royce had sole
voting and dispositive powers with respect to 697,600 shares and that RMC
had sole voting and dispositive powers with respect to 30,200 shares. Royce
and RMC reported that the filing was made on their behalf as investment
advisers. Mr. Royce reported that he does not own any shares of the
Company's Common Stock and he disclaims beneficial ownership of the shares
held by Royce and RMC.
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 to file reports of ownership and changes in
ownership of the Company's Common Stock with the Securities and Exchange
Commission and the New York Stock Exchange, and the Company is required to
identify any of those individuals who failed to file such reports on a timely
basis. The Company believes that during 1998 all Directors and executive
officers of the Company complied with their Section 16(a) filing requirements,
except: a Form 4 Statement of Changes in Beneficial Ownership for April, for
Frank S. Wilkinson, Jr., was filed June 17, 1998; a Form 4 Statement of Changes
in Beneficial Ownership for May, for Frank S. Wilkinson, Jr., was filed June 25,
1998; a December 1998 Form 5 Annual Statement of Changes in Beneficial Ownership
was filed for Ian D. Packer regarding stock granted April 1, 1998, which should
have been reported earlier on Form 4; a December 1998 Form 5 Annual Statement of
Changes in Beneficial Ownership was filed for Chris L. Walker regarding stock
granted April 1, 1998, which should have been reported earlier on Form 4; a
December 1998 Form 5 Annual Statement of Changes in Beneficial Ownership was
filed for Edgar W. Blanch, Jr. regarding stock granted April 1, 1998 and his
resignation as Trustee of a Minor's Trust, which should have been reported
earlier on Form 4; a December 1998 Form 5 Annual Statement of Changes in
Beneficial Ownership was filed for Paul B. Ingrey regarding shares of stock
purchased by his spouse which should have been reported earlier on a Form 4; and
a December 1998 Form 5 Annual Statement of Changes in Beneficial Ownership was
filed for William B. Madden regarding shares of stock purchased by his spouse
which should have been reported earlier on a Form 4.
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EXECUTIVE COMPENSATION
The following table shows compensation for each of the last three fiscal
years of the Chief Executive Officer and the other four most highly compensated
persons serving as executive officers at the end of the last fiscal year.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION AWARDS
ANNUAL COMPENSATION --------------------------
---------------------------------------------- RESTRICTED SECURITIES
OTHER ANNUAL STOCK UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS(1) COMPENSATION(2) AWARDS($)(3) OPTIONS(#) COMPENSATION(4)
- --------------------------- ---- -------- -------- --------------- ------------ ---------- ---------------
<S> <C> <C> <C> <S> <C> <C> <C>
Edgar W. Blanch, Jr. 1998 $800,000 $764,292 -- $328,584 -- $84,688
Chairman of the Board, 1997 $823,750 $849,902 -- $412,733 500,000 $82,719
Chief Executive Officer 1996 $895,000 -- -- -- -- $76,813
and Director
Chris L. Walker 1998 $455,000 $598,575 -- $197,150 15,000 $44,063
President, Chief Operating 1997 $403,750 $425,895 $189,803 $196,053 115,000 $37,033
Officer and Director 1996 $475,000 -- -- -- 40,000 $36,498
Rodman R. Fox(5) 1998 $400,000 $582,146 -- $164,292 12,000 $38,409
1997 $375,000 $298,186 -- $206,372 162,000 $34,495
1996 $287,500 $275,000 -- -- 37,000 $22,308
Frank S. Wilkinson, Jr. 1998 $349,904 $196,852 -- $143,704 -- $39,014
Executive Vice President 1997 $371,773 $199,545 -- $180,556 75,000 $39,014
and Director 1996 $437,380 $ 31,250 -- -- -- $39,014
Ian D. Packer(6) 1998 $240,000 $174,288 $ 35,334 $ 98,575 -- $23,238
Executive Vice President 1997 $255,000 $280,486 $171,356 $123,837 100,000 $23,245
and Chief Financial Officer 1996 $150,000 -- $ 19,919 -- -- $ 311
</TABLE>
- ------------------
(1) "Bonus" for 1998 includes shares of Common Stock which will be paid on
April 1, 1999 pursuant to the Executive Restricted Stock Incentive Plan for
1998, as follows: Mr. Blanch (3,463); Mr. Walker (2,078); Mr. Fox (1,732);
Mr. Wilkinson (1,515); and Mr. Packer (1,039). Based on the closing price
of the Common Stock on December 31, 1998 of $47.4375 per share, such shares
are reported in the above table as having the following value: Mr. Blanch
($164,292); Mr. Walker ($98,575); Mr. Fox ($82,146); Mr. Wilkinson
($71,852); and Mr. Packer ($49,288). The balance of the bonus for 1998 for
Messrs. Blanch ($600,000); Walker ($500,000); Fox ($500,000); Wilkinson
($125,000); and Packer ($125,000); represents payment under the 1998
Management Incentive Plan described below.
(2) "Other Annual Compensation" includes: reimbursements of taxable income
incurred in relocation expenses for Mr. Packer ($35,334).
(3) Shares of restricted stock awarded pursuant to the Executive Restricted
Stock Incentive Plan for 1998, as follows: Mr. Blanch (6,927); Mr. Walker
(4,156); Mr. Fox (3,463); Mr. Wilkinson (3,029); and Mr. Packer (2,078).
The value of the shares reported in the above table is based on the closing
price of the Common Stock on December 31, 1998 of $47.4375 per share. The
shares of restricted stock vest 50% on April 1, 2000 and 50% on April 1,
2001. Dividends are paid on the shares of restricted stock at the same rate
as paid to all stockholders, but the executive officer is not entitled to
receive such dividends unless and until the related shares vest. As of
December 31, 1998, each named executive officer held total shares of
restricted stock, as follows: Mr. Blanch (11,986 shares; $568,586); Mr.
Walker (5,694 shares; $270,109); Mr. Fox (5,993 shares; $284,293); Mr.
Wilkinson (5,243 shares; $248,715); and Mr. Packer (3,596 shares;
$170,585). Share values are based on $47.4375 per share, the closing price
of the Common Stock on December 31, 1998.
Shares of restricted stock awarded pursuant to the Executive Restricted
Stock Incentive Plan for 1997, as follows: Mr. Blanch (11,985); Mr. Walker
(5,693); Mr. Wilkinson (5,243); and Mr. Packer (3,596). The value of the
shares reported in the above table is based on the closing price of the
Common Stock on December 31, 1997 of $34.4375 per share. The shares of
restricted stock vest 50% on April 1, 1999 and 50% on April 1, 2000.
Dividends are paid on the shares of restricted stock at the same rate as
paid to all stockholders, but the executive officer is not entitled to
receive such dividends unless and until the related shares vest. As of
December 31, 1997, none of the named executive officers held any shares of
restricted stock.
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(4) "All Other Compensation" for 1998 includes:
(a) Contribution at 7.5% of salary pursuant to the Company's retirement
plan, subject to the Internal Revenue Code limitation of $12,000 with
the remainder being paid in cash, to Mr. Blanch ($63,000); Mr. Walker
($30,656); Mr. Fox ($25,500); Mr. Wilkinson ($20,804); and Mr. Packer
($10,500).
(b) Group term life taxable income with regard to Mr. Blanch ($9,688); Mr.
Walker ($1,407); Mr. Fox ($909); Mr. Wilkinson ($6,210); and Mr.
Packer ($738).
(5) Mr. Fox is President and Chief Operating Officer of E. W. Blanch Co., Inc.,
a wholly-owned subsidiary of the Company.
(6) Mr. Packer was hired on July 1, 1996.
OPTIONS/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS POTENTIAL REALIZABLE
----------------------------------------------------------- VALUE AT ASSUMED
ANNUAL RATES OF
NUMBER OF % OF TOTAL STOCK PRICE
SECURITIES OPTIONS/SARs APPRECIATION
UNDERLYING GRANTED TO EXERCISE OR FOR OPTION TERM
OPTIONS/SARs EMPLOYEES IN BASE PRICE EXPIRATION ---------------------
GRANTED (#) FISCAL YEAR ($/SH) DATE 5% 10%
------------ ------------ ----------- ---------- --------- --------
<S> <C> <C> <C> <C> <C> <C>
Edgar W. Blanch, Jr. ....... -- -- -- -- -- --
Chris L. Walker ............ 15,000 5.18% $ 39.3250 4/25/08 $283,620 $801,019
Rodman R. Fox .............. 12,000 4.15% $ 39.3250 4/25/08 $226,896 $640,816
Frank S. Wilkinson, Jr. .... -- -- -- -- -- --
Ian D. Packer .............. -- -- -- -- -- --
</TABLE>
- ------------------
Options vest one-third after one year from date of grant, and one-third after
the second and third years from date of grant. Vesting of non-vested options
accelerates in the event of a change in control. Options have a ten-year term.
AGGREGATE OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES UNDERLYING VALUE OF UNEXERCISED IN-THE-
UNEXERCISED OPTIONS/SARs AT MONEY OPTIONS/SARs AT FY-END
FY-END (#) ($)(1)
----------------------------- -----------------------------
EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Edgar W. Blanch, Jr. ....... 333,334 166,666 $3,406,277 $6,812,473
Chris L. Walker ............ 166,667 63,333 $2,619,394 $2,118,006
Rodman R. Fox .............. 45,328 193,172 $ 650,724 $3,843,853
Frank S. Wilkinson, Jr. .... 50,000 25,000 $ 401,563 $ 803,125
Ian D. Packer .............. 66,667 33,333 $ 608,350 $1,216,650
</TABLE>
- ------------------
(1) Based on $47.4375 per share, which was the closing price of a share of the
Common Stock on the New York Stock Exchange on December 31, 1998.
EMPLOYMENT AGREEMENTS AND SEVERANCE AGREEMENTS
On May 6, 1993, at the time of the Company's initial public offering, the
Company entered into employment agreements with Messrs. Blanch, Walker, Fox and
Wilkinson. These agreements provide for an initial term of three years and are
renewable thereafter on a month-to-month basis at a minimum annual salary as
follows: Mr. Blanch ($895,000); Mr. Wilkinson ($437,380); Mr. Walker
($275,000); and Mr. Fox ($135,000). On January 1, 1997, the Company entered
into a new employment agreement with Mr. Blanch. This agreement provides for a
term of five years and a minimum annual salary of $1,000,000. Pursuant to the
terms of the employment agreements, each executive is prohibited from competing
against the Company for a period ending two years after the termination of the
executive's employment with the Company.
On July 24, 1997, the Company entered into change of control Severance
Agreements (the "Agreements") with Mr. Blanch, Mr. Walker, Mr. Fox, Mr.
Wilkinson and Mr. Packer (the "Executives"). The Agreements provide for certain
payments and other benefits from the Company to the Executives if, following a
Change in Control, the Company terminates the Executive's employment without
Cause or the Executive terminates his employment for Good Reason. Such payments
and benefits include:
8
<PAGE>
(i) severance pay equal to three times the Executive's salary, bonus and
incentive payments (at the highest annual rate in effect during the three years
prior to the termination); (ii) a lump-sum payment equal to the benefit the
Executive would have received under the Company's retirement plan if he had
remained employed by the Company at the compensation level provided by the
Agreement for three years following the date of termination; (iii) payment for
[a] any earned bonus for the preceding fiscal year not already paid; and [b] any
vacation earned or accrued but not taken; (iv) the payment of legal fees and
expenses relating to the termination; (v) the termination of any noncompetition
arrangement between the Company and the Executive; and (vi) a gross-up payment
for any excise tax imposed on such payments or benefits and for any tax imposed
on such gross-up. Under the Agreements, "Cause" is defined as willful and
continued failure to perform duties and obligations or willful misconduct
materially injurious to the Company; "Good Reason" is defined to include a
change in the Executive's responsibility or status which is not comparable with
those prior to a Change in Control, a reduction in salary or benefits, or a
mandatory relocation; and "Change in Control" is defined to include a change in
the control of the type required to be disclosed under Securities and Exchange
Commission proxy rules, acquisition by a person or group of 20% of the
outstanding voting stock of the Company, a proxy fight or contested election
which results in Continuing Directors (as defined in the Agreements) not
constituting a majority of the Company's Board of Directors, or another event
the majority of the Continuing Directors determines to be a Change in Control.
The Agreements cover an initial period from July 24, 1997 to April 1, 2001 and
may be extended on an annual basis thereafter.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board has the overall responsibility for
compensation actions affecting the Company's executive officers. The
Compensation Committee's responsibilities include approving base and incentive
compensation. The Compensation Committee is comprised entirely of Directors who
are neither current nor former employees of the Company. There are no
compensation committee interlocks, i.e., no executive officer of the Company
serves as a member of the board of directors or compensation committee of
another entity that has an executive officer serving on the Board or the
Compensation Committee at the Company.
The goal of the Company's executive compensation program is to encourage
performance, as well as to attract and retain the management talent required to
operate the Company successfully. The program has also been designed to create a
strong and direct link between the compensation of the Company's executive
officers, on the one hand, and the Company's long range success and shareholder
value, on the other hand.
BASE COMPENSATION
The Compensation Committee reviews and approves annually all salary
increases for executive officers. As discussed above, minimum annual base
salaries were established pursuant to the employment agreements with certain
executive officers. Base salaries are adjusted in the discretion of the
Compensation Committee based on the level of responsibility and the individual
performance of each officer. Determinations with respect to base salaries are
primarily subjective and are not targeted to any specific criteria.
During 1998, the Company paid base compensation to each of the executive
officers as follows: Mr. Blanch, $800,000; Mr. Walker $455,000; Mr. Fox,
$400,000; Mr. Wilkinson, $349,904; and Mr. Packer, $240,000.
INCENTIVE COMPENSATION
The incentive compensation for executive officers of the Company is
principally derived from the Company's Management Incentive Plan. The Management
Incentive Plan is a shareholder-approved cash bonus plan designed to reward the
executive officers for exceptional performance based on the achievement of
annual Company performance goals. In order for participants to earn an award,
the Company's growth in revenues and net income must exceed predefined amounts.
Revenues for the year ended December 31, 1998 were $212.7 million, representing
a 27.5% increase over 1997 revenues. Net
9
<PAGE>
income for the year ended December 31, 1998 was $31.8 million, representing a
23.6% increase over 1997 net income. This financial performance by the Company
resulted in an aggregate Management Incentive Plan bonus pool of $2,100,000.
The Chairman of the Board and Chief Executive Officer, after consulting
with the other members of the executive officer group, makes a recommendation to
the Compensation Committee regarding the allocation of the bonus pool among the
executive officers. The Compensation Committee approves the actual allocation of
bonuses under the Plan. For 1998, the Chairman of the Board and Chief Executive
Officer recommended that $1,850,000 be distributed pursuant to the Management
Incentive Plan. Amounts distributed under the Management Incentive Plan are
reported in the Summary Compensation Table.
STOCK BASED COMPENSATION
The Compensation Committee believes that ownership of the Company's Common
Stock by management can effectively motivate the building of shareholder wealth
by aligning the interests of management with those of the Company's
shareholders. Stock based compensation for executive officers of the Company has
historically taken the form of stock options.
The Compensation Committee's determinations with regard to stock option
grants to executive officers are based primarily on the officer's level of stock
ownership, level of responsibility and individual performance. In 1998, the
Compensation Committee granted stock options for 27,000 shares to executive
officers of the Company based on the foregoing criteria.
EXECUTIVE RESTRICTED STOCK INCENTIVE PLAN
In 1997, the Compensation Committee adopted and the shareholders approved
the Company's Executive Restricted Stock Incentive Plan (the "Restricted Stock
Incentive Plan"). The purpose of the Restricted Stock Incentive Plan is to
provide at-risk, equity-based compensation for officer-level employees, in order
to further incentivize those key employees to contribute to the financial
success and growth of the Company, to the benefit of the Company's shareholders.
Under the Restricted Stock Incentive Plan, each eligible participant may
make an irrevocable election to forego a specified percent of his or her base
compensation in exchange for the right to receive a restricted stock grant. If
the target performance goals set by the Committee for the performance period are
achieved, the participant is awarded restricted stock equal in value to two
times the amount of base compensation the participant elected to forego, which
restricted stock vests one-third on the April 1 following the end of that
performance period and one-third on each subsequent April 1. If those target
performance goals are not achieved, the participant is awarded restricted stock
equal in value to 50% of the amount of base compensation the participant elected
to forego, which restricted stock fully vests on the April 1 following the end
of that performance period. Messrs. Blanch, Walker, Fox, Wilkinson and Packer.
elected to participate in the Restricted Stock Incentive Plan in 1998. The
performance target established by the Compensation Committee for the 1998
performance period was achieved, resulting in the award of shares as reported in
the Summary Compensation Table.
RETIREMENT BENEFITS
Executive officers also participate in the Company's retirement plan which
provides that 7.5% of the first $160,000 of compensation (which is the Internal
Revenue Code compensation limit for retirement plans) be contributed to the
Company's retirement plan, and that 7.5% of the compensation in excess of the
$160,000 Internal Revenue Code limit be paid by the Company as a cash award.
CEO COMPENSATION
Mr. Blanch has served as CEO of the Company since its formation in March
1993. Based on the Stock Performance Graph below, the Company's shareholders
have received a total return (consisting of appreciation in the price of the
Common Stock and assuming the reinvestment of all dividends) of 186.6% from
December 31, 1993 through December 31, 1998. Effective January 1, 1998, the base
salary for Mr. Blanch increased to $1,000,000 pursuant to the employment
agreement discussed above. Mr. Blanch is eligible to receive incentive
compensation under the Company's Management Incentive
10
<PAGE>
Plan, is eligible to participate in the Executive Restricted Stock Incentive
Plan and receives benefits pursuant to the Company's retirement plan. The
Compensation Committee approved a bonus for Mr. Blanch under the 1998 Management
Incentive Plan of $600,000. Compensation decisions with regard to Mr. Blanch
were based primarily on his level of responsibility, individual performance and
Company performance.
COMPLIANCE WITH INTERNAL REVENUE CODE SECTION 162(m)
Section 162(m) of the Code, enacted in 1993, generally disallows a tax
deduction to public companies for compensation over $1 million paid to the
Company's Chief Executive Officer and four other most highly compensated
executive officers. Qualifying "performance-based compensation" and compensation
paid pursuant to plans adopted prior to a Company's initial public offering of
securities will not be subject to the deduction limit if certain requirements
are met. The Company currently intends to structure the compensation of its
executive officers in a manner that avoids the deduction limits of Section
162(m). Accordingly, in order to comply with the shareholder approval
requirements for "performance-based compensation", the Company is submitting for
shareholder approval its Management Incentive Plan.
Compensation Committee
Steven G. Rothmeier, Chairman
Paul B. Ingrey, Member
James N. Land, Jr., Member
William B. Madden, Member
Joseph D. Sargent, Member
11
<PAGE>
STOCK PERFORMANCE GRAPH
The graph below compares the cumulative total shareholder return* (assuming
dividends reinvested) on the Common Stock since December 31, 1993 to the
cumulative total shareholder return over such period of (i) the S&P 500 Index
and (ii) the S&P Insurance Broker Index.
[PLOT POINTS CHART]
CUMULATIVE TOTAL RETURN
E. W. Blanch Holdings, Inc. EWB 100 116 135 118 205 287
S&P 500 I500 100 101 139 171 229 294
S&P INSURANCE BROKERS 100 101 115 137 199 219
- ------------------
* $100 invested on December 31, 1993 in Common Stock -- including reinvestment
of dividends.
APPROVAL OF THE E. W. BLANCH HOLDINGS, INC.
MANAGEMENT INCENTIVE PLAN
The Compensation Committee has adopted a Management Incentive Plan which is
summarized below. The Plan is being submitted for shareholder approval in order
to comply with the shareholder approval requirement for qualifying
"performance-based compensation" under Section 162(m) of the Code which would
generally preserve the tax-deductible status of the incentive compensation
payments.
SUMMARY OF MANAGEMENT INCENTIVE PLAN
The participants in the Management Incentive Plan are certain executive
officers of the Company, currently Messrs. Blanch, Walker, Fox, Wilkinson and
Packer. Under the Management Incentive Plan, participants will be allocated
awards from a bonus pool equal to 20% of the Company's Income before Taxes for
each year (excluding the Management Incentive Plan expense) in excess of 120% of
the Company's Income before Taxes for the prior year (excluding the Management
Incentive Plan expense and excluding other extraordinary events, such as
restructuring charges, as determined by the Compensation Committee) plus 37.5%
of the aggregate bonus amount awarded to all employees under the Company's
Employee Incentive Plan. The amount awarded to all employees under the Employee
Incentive Plan is based on the achievement of earnings growth in excess of a
predefined goal.
The plan provides that the Chief Executive Officer shall be paid 50% of the
Management Incentive Plan bonus pool. The Compensation Committee may not
increase this percentage allocation, but may, in
12
<PAGE>
its discretion, reduce it. Bonuses will be allocated to the other participating
executive officers from the remaining funds in the pool based upon the
Committee's judgment of their performance during the year. In addition,
individual bonuses paid to the participants may not exceed 100% of their
respective base salaries for the year. Bonuses available for distribution will
be paid by March 15 of the following year. In order to be eligible to receive a
bonus, a participant must be an employee of the Company on the date such bonus
is to be paid.
The design of the Management Incentive Plan is the same as the 1998
Management Incentive Plan, previously approved by shareholders. The Management
Incentive Plan in effect during 1998 resulted in a pool of $2,100,000, of which
an aggregate amount of $1,850,000 was awarded as reported in the Summary
Compensation Table.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR THE
APPROVAL OF THE MANAGEMENT INCENTIVE PLAN.
RATIFICATION AND APPROVAL OF THE
APPOINTMENT OF INDEPENDENT AUDITORS
On January 28, 1999, the Board of Directors selected the accounting firm of
Ernst & Young LLP to serve as its independent auditor for the fiscal year ending
December 31, 1999. A proposal to ratify that appointment will be presented at
the Meeting. Representatives of Ernst & Young LLP are expected to be present at
the meeting. They will have an opportunity to make a statement if they desire to
do so and will be available to respond to appropriate questions from
shareholders.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR THE
APPOINTMENT OF ERNST & YOUNG LLP AS INDEPENDENT AUDITORS.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On December 21, 1998, the Company loaned $500,000 to Rodman R. Fox, the
President and Chief Operating Officer of E. W. Blanch Co., Inc., a wholly-owned
subsidiary of the Company. The interest rate on the loan is one-half of the
prime rate, adjusted annually. The term of the loan is for five years, to be
fully paid on December 31, 2003.
ADDITIONAL INFORMATION
GENERAL
As of the date of this Proxy Statement, management knows of no matters that
will be presented for determination at the Annual Meeting other than those
referred to herein. However, since matters of which Management is not now aware
may come before the Annual Meeting or any adjournment, the proxies intend to
vote, act and consent in accordance with their best judgment with respect
thereto. Upon receipt of such proxies (in the form enclosed and properly signed)
in time for voting, the shares represented thereby will be voted as indicated
thereon and in this Proxy Statement.
13
<PAGE>
SHAREHOLDER PROPOSALS FOR THE NEXT ANNUAL MEETING
It is anticipated that the next Annual Meeting, after the one scheduled for
April 22, 1999, will be held on or about April 27, 2000. All shareholder
proposals relating to a proper subject for action at the Annual Meeting in 2000,
to be included in the Company's Proxy Statement and form of proxy relating to
that meeting, must be received by the Company for its consideration at its
principal executive offices no later than November 22, 1999. Any such proposal
should be submitted by certified mail, return receipt requested.
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K IS AVAILABLE WITHOUT
CHARGE TO ANY SHAREHOLDER OF THE COMPANY WHO REQUESTS A COPY IN WRITING.
REQUESTS FOR COPIES OF THIS REPORT SHOULD BE DIRECTED TO THE INVESTOR RELATIONS
DEPARTMENT, E.W. BLANCH HOLDINGS, INC., 500 N. AKARD, SUITE 4500, DALLAS, TX
75201.
By Order of the Board of Directors
/s/ Daniel P. O'Keefe
Daniel P. O'Keefe
SECRETARY
March 22, 1999
14
<PAGE>
E.W. BLANCH HOLDINGS, INC.
ANNUAL MEETING OF SHAREHOLDERS
THURSDAY, APRIL 22, 1999
10:00 A.M.
CRESCENT COURT HOTEL
400 CRESCENT COURT
DALLAS, TX 75201
E.W. BLANCH HOLDINGS, INC.
500 NORTH AKARD, SUITE 4500
DALLAS, TX 75201 PROXY
- --------------------------------------------------------------------------------
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS FOR USE AT THE ANNUAL MEETING
ON APRIL 22, 1999.
THIS PROXY WHEN PROPERTLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED OR, IF
NO DIRECTION IS GIVEN, WILL BE VOTED FOR EACH PROPOSAL.
By signature on this proxy, signer hereby appoints Frank S. Wilkinson, Jr.
and Chris L. Walker as Proxies, each with the power to appoint his
substitute, and hereby authorizes them to represent and to vote, as
designated below, all the shares of Common Stock of E.W. Blanch Holdings,
Inc. held of record by the undersigned on March 11, 1999, at the Annual
Meeting of Shareholders to be held on April 22, 1999 or any adjournment
thereof.
SEE REVERSE FOR VOTING INSTRUCTIONS.
<PAGE>
VOTE BY MAIL
Mark, sign and date your proxy card and return it in the postage-paid
envelope we've provided or return it to E.W. Blanch Holdings, Inc., c/o
Shareowner Services|PS, P.O. Box 64873, St. Paul, MN 55164-0873.
[ARROW] PLEASE DETACH HERE [ARROW]
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ITEMS 1, 2 AND 3.
<TABLE>
<S> <C>
1. Election of directors: 01 Edgar W. Blanch, Jr. [ ] Vote FOR [ ] Vote WITHHELD
02 William B. Madden all nominees from all nominees
03 Steven G. Rothmeier
__________________________________
(INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY | |
INDICATED NOMINEE, WRITE THE NUMBER(S) OF THE NOMINEE(S) |__________________________________|
IN THE BOX PROVIDED TO THE RIGHT.)
2. Approval of the E.W. Blanch Holdings, Inc. Management
Incentive Plan [ ] For [ ] Against [ ] Abstain
3. Ratification of appointment of Ernst & Young LLP as
independent auditors. [ ] For [ ] Against [ ] Abstain
4. In their discretion the Proxies are authorized to vote upon such other business as may
properly come before the Meeting.
Address Change? Mark Box [ ] Date __________________________
Indicate changes below:
__________________________________
| |
|__________________________________|
Signature(s) in Box
Please sign exactly as your name(s) appear
on this Proxy. If held in joint tenancy,
all persons must sign. When signing as
attorney, executor, administrator,
trustee, guardian, etc., please give full
title as such. Corporations should provide
full name of corporation and title of
authorized officer signing the proxy. If a
partnership, please sign in partnership
name by authorized person.
</TABLE>
