UNITED TRUST GROUP, INC.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held on Tuesday, June 11, 2002
To the Shareholders of:
UNITED TRUST GROUP, INC.
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of United Trust
Group Inc., an Illinois corporation (“UTG”), will be held on Tuesday, June 11,
2002 at 10:00 a.m. at the corporate headquarters at 5250 South Sixth Street
Road, Springfield, Illinois 62703 for the following purposes:
1. To elect nine directors of UTG to serve for a term of one (1) year and
until their successors are elected and qualified;
2. To approve and adopt the UTG Employee and Director Stock Purchase
Plan; and
3. To consider and act upon such other business as may properly be
brought before the meeting.
The Board of Directors has fixed the close of business on April 19, 2002 as the
record date for the determination of shareholders entitled to notice of and to
vote at the Annual Meeting. Only shareholders of record as of the close of
business on the record date are entitled to notice of and to vote at the Annual
Meeting.
Whether or not you plan to attend the Annual Meeting, you are urged to mark,
date and sign the enclosed proxy and return it promptly so that your shares can
be represented and voted at the Annual Meeting. A proxy may be revoked at any
time prior to its exercise at the Annual Meeting by following the instructions
in the accompanying proxy statement and will not affect your right to vote in
person in the event that you decide to attend the meeting.
BY ORDER OF THE BOARD OF DIRECTORS
UNITED TRUST GROUP, INC.
Theodore C. Miller, Secretary
Dated: May 13, 2002
Springfield, Illinois
YOUR VOTE IS IMPORTANT!
PLEASE COMPLETE, DATE, SIGN AND PROMPTLY RETURN YOUR PROXY IN THE ENCLOSED
ENVELOPE, WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING IN PERSON.
PROXY STATEMENT FOR ANNUAL MEETING OF
SHAREHOLDERS OF
UNITED TRUST GROUP, INC.
GENERAL INFORMATION REGARDING SOLICITATION
The Annual Meeting of the Shareholders of United Trust Group, Inc., an Illinois
corporation (“UTG”), will be held on on Tuesday, June 11, 2002 at 10:00 a.m. at
the corporate headquarters at 5250 South Sixth Street Road, Springfield,
Illinois 62703. The mailing address of UTG's principal executive office is P.O.
Box 5147, Springfield, Illinois 62705.
This proxy statement is being sent to each holder of record of the issued and
outstanding shares of Common Stock of UTG, no par value (the “Common Stock”), as
of the close of business on April 19, 2002, in order to furnish to each
shareholder information relating to the business to be transacted at the
meeting.
This proxy statement and the enclosed proxy are being mailed on or about May 13,
2002 to the Shareholders of UTG entitled to notice of and to vote at the
meeting. The Annual Report of UTG for the fiscal year ended December 31, 2001
has been mailed to shareholders under separate cover. UTG will bear the cost of
soliciting proxies from its shareholders. UTG may reimburse brokers and other
persons for their reasonable expenses in forwarding proxy materials to the
beneficial owners of Common Stock. Solicitations may be made by telephone,
telegram or by personal calls, and it is anticipated that such solicitations
will consist primarily of requests to brokerage houses, custodians, nominees,
and fiduciaries to forward the soliciting material to the beneficial owners of
shares held of record by such persons. If necessary, officers and regular
employees of UTG may by telephone, telegram or personal interview request the
return of proxies.
VOTING
The enclosed proxy is solicited by and on behalf of the Board of Directors of
UTG. If you are unable to attend the meeting on Tuesday, June 11, 2002, please
complete the enclosed proxy and return it to us in the accompanying envelope so
that your shares will be represented and voted at the meeting.
When the enclosed proxy is duly executed and returned in advance of the meeting,
and is not revoked, the shares represented thereby will be voted in accordance
with the authority contained therein. Any shareholder giving a proxy may revoke
it at any time before it is voted by delivering to the Secretary of UTG a
written notice of revocation or a duly executed proxy bearing a later date, or
by attending the meeting and voting his or her shares in person. If a proxy
fails to specify how it is to be voted, it will be voted “FOR” the election of
the director nominees listed in Proposal One and “FOR” the adoption and approval
of the UTG Employee and Director Stock Purchase Plan (Proposal Two).
Inspectors of election will be appointed to tabulate the number of shares of
Common Stock represented at the meeting in person or by proxy, to determine
whether or not a quorum is present and to count all votes cast at the meeting.
The holders of a majority of the outstanding shares of Common Stock as of the
record date must be represented at the meeting in person or by proxy in order
for a quorum to be present at the meeting with respect to both proposals. The
inspectors of election will treat abstentions and broker non-votes as shares
that are present and entitled to vote for purposes of determining the presence
of a quorum. Abstentions and broker non-votes will have no effect on the
election of directors but will have the effect of a vote against Proposal Two or
any other matter submitted to a vote at the meeting. With respect to the
election of directors, the affirmative vote of a plurality of the votes duly
cast is required for the election of directors (that is, the nominees receiving
the greatest number of votes will be elected). There are no cumulative voting
rights with respect to the election of directors. The holders of Common Stock as
of the record date are entitled to one vote per share of Common Stock with
respect to Proposal Two and any other matter that may be submitted to a vote at
the meeting. The affirmative vote of the holders of a majority of the shares of
Common Stock represented in person or by proxy at the annual meeting is required
to approve Proposal Two or any other matter that may be submitted to a vote at
the meeting, other than the election of directors.
The Correll affiliates hold approximately 60% of the outstanding stock and
intend to vote their shares in favor of both proposals 1 and 2.
SIGNIFICANT MAJORITY-OWNED SUBSIDIARIES
United Trust Group, Inc. was incorporated in 1984, under the laws of the State
of Illinois to serve as an insurance holding company. UTG and its subsidiaries
have only one significant industry segment - insurance. The Company's dominant
business is individual life insurance which includes the servicing of existing
insurance business in force, the solicitation of new individual life insurance,
and the acquisition of other companies in the insurance business.
Significant majority-owned subsidiaries of UTG are as depicted on the following
organizational chart:
Organizational Chart
For purposes of this proxy statement, the term “subsidiary life insurance
companies” shall mean UG, APPL and ABE, and the term “non-insurance subsidiary
companies” shall mean the subsidiary companies other than UG, APPL and ABE.
The companies hereinafter are sometimes collectively referred to as the
“Subsidiary majority owned companies”.
This document at times will refer to the Company's largest shareholder, Mr.
Jesse T. Correll and certain companies controlled by Mr. Correll. Mr. Correll
holds a majority ownership of First Southern Funding LLC, a Kentucky
corporation, (“FSF”) and First Southern Bancorp, Inc. (“FSBI”), a bank holding
company that operates out of 14 locations in central Kentucky. Mr. Correll is
Chairman of the Board of Directors of UTG and is currently UTG's largest
shareholder through his ownership control of FSF, FSBI and affiliates. Mr.
Correll currently owns or controls directly and indirectly approximately 60% of
UTG. (See “SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS”)
VOTING SECURITIES OUTSTANDING
April 19, 2002 has been fixed as the record date for the determination of
shareholders entitled to notice of and to vote at the annual meeting or any
adjournments or postponements thereof. On that date, UTG had outstanding
3,506,745 shares of Common Stock. No other voting securities of UTG are
outstanding.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following tabulation sets forth the name and address of each entity or
individual known to be, or that may be considered to be, the beneficial owner of
more than 5% of UTG's Common Stock and shows: (i) the total number of shares of
Common Stock beneficially owned by such person as of the record date and the
nature of such ownership (each entity or individual listed has sole voting and
dispositive power over the shares listed opposite such entity or individual's
name, except as noted); and (ii) the percent of the issued and outstanding
shares of Common Stock so owned as of the same date.
Title Amount Percent
of Name and Address and Nature of of
Class of Beneficial Owner(2) Beneficial Ownership Class (1)
Common Jesse T. Correll 335,999 (3) 9.6%
Stock, no First Southern Bancorp, Inc. 1,483,791 (3)(4) 42.3%
par value First Southern Funding, LLC 0 (3)(4) 0%
First Southern Holdings, LLC 1,483,791 (3)(4) 42.3%
First Southern Capital Corp., LLC 183,033 (3)(4) 5.2%
First Southern Investments, LLC 18,575 0.5%
Ward F. Correll 98,523 (5) 2.8%
WCorrell, Limited Partnership 72,750 (3) 2.1%
Cumberland Lake Shell, Inc. 98,523 (5) 2.8%
Dyscim, LLC 150,545 (3) 4.3%
Total(6) 2,119,921 60.5%
(1) The percentage of outstanding shares is based on 3,506,745 shares of Common
Stock outstanding.
(2) The address for each of Jesse Correll, First Southern Bancorp, Inc.
(“FSBI”), First Southern Funding, LLC (“FSF”), First Southern Holdings, LLC
(“FSH”), First Southern Capital Corp., LLC (“FSC”), First Southern
Investments, LLC (“FSI”), Dyscim, LLC (“Dyscim”) and WCorrell, Limited
Partnership (“WCorrell LP”), is P.O. Box 328, 99 Lancaster Street,
Stanford, Kentucky 40484. The address for each of Ward Correll and
Cumberland Lake Shell, Inc. (“CLS”) is P.O. Box 430, 150 Railroad Drive,
Somerset, Kentucky 42502.
(3) The share ownership of Jesse Correll listed includes 112,704 shares of
Common Stock owned by him individually, 150,545 shares of Common Stock held
by Dyscim (of which Mr. Correll owns all of the outstanding membership
interests, and therefor has sole voting and dispositive power over the
shares held by it), and 72,750 shares of Common Stock held by WCorrell LP,
a limited partnership in which Mr. Correll serves as managing general
partner and, as such, has sole voting and dispositive power over the shares
held by it.
In addition, by virtue of his ownership of voting securities of FSF and
FSBI, and in turn, their ownership of 100% of the outstanding membership
interests of FSH, Jesse Correll may be deemed to beneficially own the total
number of shares of Common Stock owned by FSH, and may be deemed to share
with FSH the right to vote and to dispose of such shares. Mr. Correll owns
approximately 82% of the outstanding membership interests of FSF; he owns
directly approximately 39%, companies he controls own approximately 23%,
and he has the power to vote but does not own an additional 3% of the
outstanding voting stock of FSBI. FSBI and FSF in turn own 99% and 1%,
respectively, of the outstanding membership interests of FSH. Mr. Correll
is also a manager of FSC and thereby may also be deemed to beneficially own
the total number of shares of Common Stock owned by FSC, and may be deemed
to share with it the right to vote and to dispose of such shares. The
aggregate number of shares of Common Stock held by these other entities, as
shown in the above table, is 1,666,824 shares.
(4) The share ownership of FSBI consists of 1,483,791 shares of Common Stock
held by FSH of which FSBI is a 99% member and FSF is a 1% member, as
further described below. As a result, FSBI may be deemed to share the
voting and dispositive power over the shares held by FSH. On September 4,
2001, FSF and FSBI - and their principals - restructured the manner in
which they hold shares of UTG by forming a new limited liability company
under Kentucky law, FSH. FSBI contributed to FSH shares of Common Stock
held by it and cash in exchange for a 99% membership interest in FSH. FSF
contributed to FSH shares of Common Stock held by it, subject to notes
payable which were assumed by FSH for a 1% membership interest in FSH. As a
result, FSBI and FSF own 99% and 1%, respectively, of the outstanding
membership interests of FSH who is the aforementioned holder of 1,483,791
shares of Common Stock.
(5) Represents the shares of Common Stock held by CLS, all of the outstanding
voting shares of which are owned by Ward F. Correll and his wife. As a
result, Ward F. Correll may be deemed to share the voting and dispositive
power over these shares.
(6) According to the most recent Schedule 13D, as amended, filed jointly by
each of the entities and persons listed above, Jesse Correll, FSBI, FSF,
FSH, FSC, and FSI, have agreed in principle to act together for the purpose
of acquiring or holding equity securities of UTG. In addition, the Schedule
13D indicates that because of their relationships with Mr. Correll and
these other entities, Ward Correll, CLS, Dyscim and WCorrell LP, may also
be deemed to be members of this group. Because the Schedule 13D indicates
that for its purposes, each of these entities and persons may be deemed to
have acquired beneficial ownership of the equity securities of UTG
beneficially owned by the other entities and persons, each has been
identified and listed in the above tabulation.
SECURITY OWNERSHIP OF MANAGEMENT
The following tabulation shows with respect to each of the directors of UTG,
with respect to UTG's chief executive officer and each of UTG's executive
officers whose salary plus bonus exceeded $100,000 for the fiscal year ended
December 31, 2001, and with respect to all executive officers and directors of
UTG as a group: (i) the total number of shares of all classes of stock of UTG or
any of its parents or subsidiaries, beneficially owned as of the record date and
the nature of such ownership; and (ii) the percent of the issued and outstanding
shares of stock so owned. Each of these individuals has sole voting and
dispositive power over the shares owned by him except as otherwise indicated.
Title Directors, Named Executive Amount Percent
of Officers, & All Directors & and Nature of of
Class(1) Executive Officers as a Group Beneficial Ownership Class (2)
UTG's John S. Albin 10,503 (3) *
Common Randall L. Attkisson 0 (4) *
Stock, no John W. Collins 0 *
par value Jesse T. Correll 335,999 (5) 9.6%
Ward F. Correll 98,523 (6) 2.8%
Thomas F. Darden 0 *
Luther C. Miller 0 *
Theodore C. Miller 0 *
Millard V. Oakley 16,471 *
Robert V. O'Keefe 300 (7) *
William W. Perry 0 *
James P. Rousey 0 *
Robert W. Teater 7,380 (8) *
Brad M. Wilson 0 *
All directors and executive officers
as a group (fourteen in number) 469,176 (5) 13.4%
FCC's John S. Albin 0 *
Common Randall L. Attkisson 0 (4) *
Stock, $1.00 John W. Collins 0 *
par value Jesse T. Correll 1,217 (5) 2.2%
Ward F. Correll 0 *
Thomas F. Darden 0 *
Luther C. Miller 0 *
Theodore C. Miller 15 *
Millard V. Oakley 0 *
Robert V. O'Keefe 0 *
William W. Perry 0 *
James P. Rousey 0 *
Robert W. Teater 0 *
Brad M. Wilson 2 *
All directors and executive officers 1,234 (5) 2.3%
as a group (fourteen in number)
(1) Because of First Southern Holdings, LLC's (“FSH”) ownership of shares of
Common Stock of UTG, and First Southern Bancorp, Inc. (“FSBI”) and First
Southern Funding, LLC's (“FSF”) ownership of FSH, as further described
under the heading “Security Ownership of Certain Beneficial Owners”, FSBI
and FSF might be considered to be parents of UTG.
(2) The percentage of outstanding shares for UTG is based on 3,506,745 shares
of UTG Common Stock outstanding. The percentage of outstanding shares for
FCC is based on 54,385 shares of FCC Common Stock outstanding.
(3) Includes 392 shares owned directly by Mr. Albin's spouse.
(4) Randall L. Attkisson is an associate and business partner of Jesse T.
Correll and holds minority ownership positions in certain of the entities
identified herein and under the heading “Security Ownership of Certain
Beneficial Owners” as owning UTG and FCC Common Stock, including FSF and
FSBI, and as further described in (1) above. The ownership of those shares
of UTG and FCC Common Stock by those entities is further described herein
and under the heading “Security Ownership of Certain Beneficial Owners”.
(5) The share ownership of Jesse Correll is described under the heading
“Security Ownership of Certain Beneficial Owners”. As further described
therein, Mr. Correll may also be deemed to beneficially own additional
shares of UTG Common Stock held by certain of the entities listed therein.
These additional shares are not included in the tabulation above.
FSBI owns 1,217 shares of FCC's common stock. Because of his relationship
with FSBI as further described above and under the heading “Security
Ownership of Certain Beneficial Owners”, Mr. Correll may be deemed to
beneficially own the number of shares of FCC Common Stock owned by FSBI and
to share with it the right to vote and dispose of such shares.
(6) The share ownership of Ward Correll is described under the heading
“Security Ownership of Certain Beneficial Owners”.
(7) Includes 300 shares owned directly by Mr. O'Keefe's spouse.
(8) Includes 210 shares owned directly by Mr. Teater's spouse.
* Less than 1%.
THE BOARD OF DIRECTORS
In accordance with the laws of Illinois and the Certificate of Incorporation and
Bylaws of UTG, as amended, UTG is managed by its executive officers under the
direction of the Board of Directors. The Board elects executive officers,
evaluates their performance, works with management in establishing business
objectives and considers other fundamental corporate matters, such as the
issuance of stock or other securities, the purchase or sale of a business and
other significant corporate business transactions. In the fiscal year ended
December 31, 2001, the Board met 5 times. All directors attended at least 75% of
all meetings of the board, except Millard Oakley.
The Board of Directors has an Audit Committee consisting of Messrs. Albin,
Collins, O'Keefe, and Teater. The Audit Committee performs such duties as
outlined in the Company's Audit Committee Charter as approved by the Board of
Directors. The Audit Committee reviews and acts or reports to the Board with
respect to various auditing and accounting matters, the scope of the audit
procedures and the results thereof, internal accounting and control systems of
UTG, the nature of services performed for UTG and the fees to be paid to the
independent auditors, the performance of UTG's independent and internal auditors
and the accounting practices of UTG. The Audit Committee also recommends to the
full Board of Directors the auditors to be appointed by the Board. The Audit
Committee met twice in 2001. The Audit Committee is comprised of independent
directors utilizing NASDAQ standards on independence.
The Board of Directors does not have a compensation committee or a nominating
committee. The compensation of UTG's executive officers is determined by the
full Board of Directors (see report on Executive Compensation).
Under UTG's Certificate of Incorporation, the Board of Directors should be
comprised of from six to eleven directors. At December 31, 2001, the Board
consisted of eleven directors. Shareholders elect Directors to serve for a
period of one year at UTG's Annual Shareholders' meeting.
Section 16(a) of the Securities Exchange Act of 1934 requires that UTG's
directors, executive officers and persons who beneficially owned more than 10%
of its Common Stock file certain reports with the Securities and Exchange
Commission with regard to their beneficial ownership of the Common Stock. UTG is
required to disclose in this proxy statement any failure to file or late filings
of such reports. Based solely upon its review of reports furnished to UTG of
ownership on Form 3 and changes in ownership on Forms 4 and 5 filed with the
Securities and Exchange Commission by UTG's officers, directors and certain
beneficial owners, or written representations furnished to the Company by such
persons, the Company believes that all filing requirements applicable to its
directors, executive officers and 10% beneficial owners were satisfied.
AUDIT COMMITTEE REPORT TO SHAREHOLDERS
In connection with the December 31, 2001 financial statements, the audit
committee: (1) reviewed and discussed the audited financial statements with
management; (2) discussed with the auditors the matters required by Statement on
Auditing Standards No. 61; and (3) received and discussed with the auditors the
matters required by Independence Standards Board Statement No.1 as well as the
auditor's independence. Based upon these reviews and discussions, the audit
committee recommended to the Board of Directors that the audited financial
statements be included in the Annual Report for the fiscal year ended December
31, 2001 on Form 10-K filed with the Securities and Exchange Commission.
John S. Albin - Committee Chairman
John W. Collins
Robert V. O'Keefe
Robert W. Teater
PROPOSAL ONE
ELECTION OF DIRECTORS
At the annual meeting of shareholders of UTG, nine directors are to be elected,
each director to hold office until the next annual meeting and until his
successor is elected and qualified. Each nominee will be elected director by a
majority of votes cast for such nominee. The persons named in the proxy intend
to vote the proxies as instructed in the proxies. If no instructions are given
in a particular proxy, the persons named in the proxy intend to vote the proxy
for the nominees listed below. Should any of the nominees listed below become
unable or unwilling to accept nomination or election, it is intended, in the
absence of contrary specifications, that the proxies will be voted for the
balance of those named and for a substituted nominee or nominees; however, the
management of UTG currently knows of no reason to anticipate such an occurrence.
All of the nominees have consented to be named as nominees and to serve as
directors if elected. Information with respect to business experience of the
Board of Directors has been furnished by the respective directors or obtained
from the records of UTG. The following individuals are nominees for the election
of directors:
Name, Age
Position with the Company, Business Experience and Other Directorships
John S. Albin, 73
Director of UTG since 1984 and FCC since 1992; farmer in Douglas and Edgar
counties, Illinois, since 1951; Chairman of the Board of Longview State Bank
since 1978; President of the Longview Capitol Corporation, a bank holding
company, since 1978; Chairman of First National Bank of Ogden, Illinois, since
1987; Chairman of the State Bank of Chrisman since 1988; Director and Secretary
of Illini Community Development Corporation since 1990; Commissioner of Illinois
Student Assistance Commission since 1996.
Randall L. Attkisson 56
Director of UTG and FCC since 1999; President and Chief Operating Officer of UTG
and FCC since 2001; Chief Financial Officer, Treasurer, Director of First
Southern Bancorp, Inc., a bank holding company, since 1986; Treasurer, Director
of First Southern Funding, LLC (formerly First Southern Funding Inc.) since
1992; Director of The River Foundation, Inc. since 1990; President of Randall L.
Attkisson & Associates from 1982 to 1986; Commissioner of Kentucky Department of
Banking & Securities from 1980 to 1982; Self-employed Banking Consultant in
Miami, FL from 1978 to 1980.
Jesse T. Correll 45
Chairman and CEO of UTG and FCC since 2000; Director of UTG and FCC since 1999;
Chairman, President, Director of First Southern Bancorp, Inc. since 1983;
President, Director or Manager of First Southern Funding since 1992; President,
Director of The River Foundation since 1990; President, Director and sole member
manager of Dyscim LLC (formerly Dyscim Holdings Company, Inc.) since 1990;
Director of Thomas Nelson, Inc. since 2001; Director of Computer Services, Inc.
since 2001; Director of Global Focus since 2001; Young Life Dominican Republic
Committee Member since 2000. Jesse Correll is the son of Ward Correll.
Ward F. Correll 73
Director of UTG since 2000 and FCC since 1999; President, Director of Tradeway,
Inc. of Somerset, KY since 1973; President, Director of Cumberland Lake Shell,
Inc. of Somerset, KY since 1971; President, Director of Tradewind Shopping
Center, Inc. of Somerset, KY since 1966; Director of First Southern Bancorp
since 1988; Director or Manager of First Southern Funding since 1991; Director
of The River Foundation of Stanford, KY since 1990; and Director First Southern
Insurance Agency of Stanford, KY since 1987. Ward Correll is the father of Jesse
Correll.
Thomas F. Darden 47
Director of UTG and FCC since 2001; Managing Partner of Cherokee Investment
Partners LLC, a real estate investment firm, and President and CEO of Cherokee
Sanford Group, Inc. an affiliated predecessor since 1983; Director of BTI
Telecom, Inc. since 1998; Director of Waste Industries, Inc. since 1997;
Director of Winston Hotels, Inc. since 1994; Trustee of Shaw University since
1993; Member of the Board of Governors of Research, Triangle Institute since
1998; Former Chairman of the Triangle Transit Authority, serving from 1993 to
1998 and Chairman from 1996 to 1997; Prior to 1996, twice appointed to the North
Carolina Board of Transportation.
Millard V. Oakley 71
Director of UTG and FCC since 1999; Presently serves on Board of Directors and
Executive Committee of Thomas Nelson, a publicly held publishing company based
in Nashville, TN; Director of First National Bank of the Cumberlands,
Livingston-Cooksville, TN; Lawyer with limited law practice since 1980; State
Insurance Commissioner for State of Tennessee from 1975 to 1979; General
Counsel, United States House of Representatives, Washington, D.C., Congressional
Committee on Small Business from 1971-1973; four elective terms as County
Attorney for Overton County, TN; delegate to National Democratic Convention in
1964; four elective terms in the Tennessee General Assembly from 1956 to 1964;
Lawyer in Livingston, TN from 1953 to 1971; Elected to the Tennessee
Constitutional Convention in 1952.
William W. Perry 45
Director of UTG and FCC since 2001; Owner of SES Investments, Ltd., an oil and
gas investments company since 1991; President of EGL Resources, Inc., an oil and
gas operations company based in Texas and New Mexico since 1992; President of
Midland Yucca Realty, a Texas real estate investment company since 1993;
Chairman of Perry & Perry, Inc., a Texas oil and gas consulting company since
1977; Member of the Board of Managers of Tall City Equity Fund since 2001;
President of Champion Title Group, a Florida based consulting business since
1999; involved with, Young Life, youth organization as a leader, Chairman of the
international Committee and National Board since 1977.
James P. Rousey 43
Executive Vice President and Chief Administrative Officer since September 2001;
Regional CEO and Director of First Southern National Bank from 1988 to 2001.
Board Member with the Illinois Fellowship of Christian Athletes since 2001.
Robert W. Teater 75
Director of UTG since 1987 and FCC since 1992; member of Columbus School Board
1991-2001; Former Director, Ohio Department of Natural Resources; Founder,
Teater-Gebhardt and Associates, Inc., a comprehensive consulting firm in natural
resources development; Combat veteran and retired Major General, Ohio Army
National Guard.
The following current directors term of office will expire at the annual meeting
and they are not seeking another term:
John W. Collins 75
Director of UTG since 2000; Director of FCC and certain affiliate companies
since 1982. Consultant and past President of Collins-Winston Group, an executive
search firm, since 1976.
Luther C. Miller 71
Director of UTG since 2000 and FCC since 1984; Executive Vice President and
Secretary of FCC from 1984 until 1992; officer and director of certain affiliate
companies until 1992.
Robert V. O'Keefe 80
Director of UTG since 2000 and FCC since 1993; Director and Treasurer of UTG
from 1988 to 1992; Director of Cilcorp, Inc. from 1982 to 1994; Director of
Cilcorp Ventures, Inc. from 1985 to 1994; Director of Environmental Science and
Engineering Co. from 1990 to 1994.
The Board of Directors recommends that shareholders vote “FOR” the election of
the director nominees listed above.
EXECUTIVE OFFICERS OF UTG
More detailed information on the following officers of UTG appears under
“Election of Directors”:
Jesse T. Correll Chairman of the Board and Chief Executive Officer
Randall L. Attkisson President and Chief Operating Officer
Other officers of UTG are set forth below:
Name, Age Position with UTG and, Business Experience
James P. Rousey 43
Executive Vice President and Chief Administrative Officer since September 2001;
Regional CEO and Director of First Southern National Bank from 1988 to 2001.
Board Member with the Illinois Fellowship of Christian Athletes since 2001.
Theodore C. Miller 39
Corporate Secretary since December 2000, Senior Vice President and Chief
Financial Officer since July 1997; Vice President and Treasurer since October
1992; Vice President and Controller of certain Affiliate Companies from 1984 to
1992.
Brad M. Wilson 50
Senior Vice President and Chief Information Officer since 1992; Chief
Administrative Officer from December 2000 to September 2001.
EXECUTIVE COMPENSATION
The following table sets forth certain information regarding compensation paid
to or earned by UTG's Chief Executive Officer and each of the Executive Officers
of UTG whose salary plus bonus exceeded $100,000 during UTG's last fiscal year:
Compensation for services provided by the named executive officers to UTG and
its affiliates is paid by FCC (See also Employment Contracts for Messrs.
Melville and Ryherd)
SUMMARY COMPENSATION TABLE
Name and Annual Compensation Other Annual (1) All Other (1)
Principal Position Year Salary ($) Bonus ($) Compensation ($) Compensation ($) ($)
Jesse T. Correll (2) 2001 56,250 - - -
Chairman of the Board 2000 - - - -
Chief Executive Officer 1999 - - - -
Brad M. Wilson 2001 160,000 3,000 - 3,150
Senior Vice President 2000 157,500 3,227 - 3,150
Chief Information Officer 1999 147,700 3,000 3,665 3,150
Theodore C. Miller 2001 100,000 5,000 - 3,000
Corporate Secretary 2000 91,749 - - 2,752
Senior Vice President 1999 86,783 - 3,179 2,603
Chief Financial Officer
(1) Other Annual Compensation consists of interest paid on previously deferred
compensation amounts. All Other Compensation consists of UTG's matching
contribution to the First Commonwealth Corporation Employee Savings Trust
401(k) Plan.
(2) On March 27, 2000, Mr. Jesse T. Correll assumed the position as Chairman of
the Board and Chief Executive Officer of UTG and each of its affiliates.
Mr. Correll did not receive a salary, bonus or other compensation for his
duties with UTG and each of its affiliates in the year 2000. In March 2001,
the Board of Directors approved an annual salary for Mr. Correll of
$75,000, with payments to begin on April 1, 2001.
Option/SAR Grants/Aggregated Option/SAR Exercises in Last Fiscal Year and FY-End
Option/SAR Values
At December 31, 2001 there were no shares of Common Stock subject to unexercised
options held by the named executive officers. There were no options or stock
appreciation rights granted to the named executive officers for the past three
fiscal years.
Compensation of Directors
UTG's standard arrangement for the compensation of directors provides that each
director shall receive an annual retainer of $2,400, plus $300 for each meeting
attended and reimbursement for reasonable travel expenses. UTG's director
compensation policy also provides that directors who are employees of UTG or
directors or officers of FSF and its affiliates do not receive any compensation
for their services as directors except for reimbursement for reasonable travel
expenses for attending each meeting.
Employment Contracts
FCC entered into an employment agreement dated July 31, 1997 with Larry E.
Ryherd. Formerly, Mr. Ryherd had served as Chairman of the Board and Chief
Executive Officer of UTG and its affiliates, until his resignation on March 27,
2000. Pursuant to the agreement, Mr. Ryherd agreed to serve as Chairman of the
Board and Chief Executive Officer of UTG and in addition, to serve in other
positions of the affiliated companies if appointed or elected. The agreement
provides for an annual salary of $400,000 as determined by the Board of
Directors. The term of the agreement is for a period of five years. Mr. Ryherd
has deferred portions of his income under a plan entitling him to a deferred
compensation payment, which was paid to him on January 2, 2000, in the amount of
$240,000, which included interest at the rate of approximately 8.5% annually.
Additionally, Mr. Ryherd was granted an option to purchase up to 13,800 of the
Common Stock of UTG at $17.50 per share. The option was immediately exercisable
and transferable. At December 31, 2000, all previously granted options expired.
In accordance with the employment agreement, Mr. Ryherd continues to receive his
annual Salary of $400,000 until the agreement expiration date of July 31, 2002.
The entire $933,333 payable to Mr. Ryherd, from the date of his resignation
until the end of his employment agreement was accrued, and thus expensed, by FCC
in the first quarter of 2000.
FCC entered into an employment agreement dated July 31, 1997 with James E.
Melville pursuant to which Mr. Melville is employed as President and Chief
Operating Officer and in addition, to serve in other positions of the affiliated
companies if appointed or elected at an annual salary of $238,200. The term of
the agreement expires July 31, 2002. Mr. Melville has deferred portions of his
income under a plan entitling him to a deferred compensation payment which was
paid to him on January 2, 2000 of $400,000 which includes interest at the rate
of approximately 8.5% annually. Additionally, Mr. Melville was granted an option
to purchase up to 30,000 shares of the Common Stock of UTG at $17.50 per share.
The option was immediately exercisable and transferable. At December 31, 2000,
all previously granted options expired. In accordance with the employment
agreement, Mr. Melville continues to receive his annual Salary of $238,200 until
the agreement expiration date of July 31, 2002. An accrual of $562,000 was
established through a charge to general expenses at year-end 2000 for the
remaining payments required pursuant to the terms of Mr. Melville's employment
contract and other settlement costs.
There are no other employment agreements in effect with any executive officers
or employees of the Company.
REPORT ON EXECUTIVE COMPENSATION
Introduction
The compensation of UTG's executive officers is determined by the full Board of
Directors. The Board of Directors strongly believes that UTG's executive
officers directly impact the short-term and long-term performance of UTG. With
this belief and the corresponding objective of making decisions that are in the
best interest of UTG's shareholders, the Board of Directors places significant
emphasis on the design and administration of UTG's executive compensation plans.
Executive Compensation Plan Elements
Base Salary. The Board of Directors establishes base salaries at a level
intended to be within the competitive market range of comparable companies. In
addition to the competitive market range, many factors are considered in
determining base salaries, including the responsibilities assumed by the
executive, the scope of the executive's position, experience, length of service,
individual performance and internal equity considerations. In addition to a base
salary, increased compensation of current and future executive officers of the
Company will be determined using a “performance based” philosophy. UTG's
financial results are analyzed and future increases to compensation will be
proportionately based on the profitability of the Company.
Stock Options and Compensation. Stock options are granted at the discretion of
the Board of Directors. There were no options granted to the named executive
officers during the last three fiscal years. Proposal 2, relating to the
adoption and approval of the UTG Employee and Director Stock Purchase Plan, if
approved at the annual meeting, will become an important part of the executive
compensation plan as a way to motivate UTG's officers and employees and align
their interests with those of the shareholders of the UTG.
Deferred Compensation. There are currently no deferred compensation arrangements
with any executive officers or employees of the Company.
Chief Executive Officer
On March 27, 2000, Mr. Jesse T. Correll assumed the position of Chairman of the
Board and Chief Executive Officer of UTG and each of its affiliates. Under Mr.
Correll's leadership, he declined to receive a salary, bonus or other forms of
compensation for his duties with UTG and each of its affiliates in the year
2000. In March 2001, the Board of Directors approved an annual salary for Mr.
Correll of $75,000, with payments to begin on April 1, 2001. As a reflection of
Mr. Correll's leadership, the compensation of current and future executive
officers of the Company will be determined by the Board of Directors using a
“performance based” philosophy. The Board of Directors will consider UTG's
financial results and future compensation decisions will be proportionately
based on the profitability of the Company.
Conclusion
The Board of Directors believes this executive compensation plan provides a
competitive and motivational compensation package to the executive officer team
necessary to produce the results UTG strives to achieve.
BOARD OF DIRECTORS
John S. Albin Luther C. Miller
Randall L. Attkisson Millard V. Oakley
John W. Collins Robert V. O'Keefe
Jesse T. Correll William W. Perry
Ward F. Correll Robert W. Teater
Thomas F. Darden
PROPOSAL TWO
ADOPTING AND APPROVING THE UTG EMPLOYEE AND DIRECTOR STOCK PURCHASE PLAN
On March 26, 2002, the Board of Directors adopted the United Trust Group, Inc.
Employee and Director Stock Purchase Plan. A summary of the plan is set forth
below. The summary is qualified in its entirety by reference to the complete
text of the plan without attachments, which is attached to this proxy statement
as Appendix A.
The plan's purpose is to provide employees and directors of UTG and its
subsidiaries an opportunity to invests in shares of our common stock. The plan
will be administered by the Board of Directors of UTG. The Board has authority
to interpret and construe the provisions of the plan and to adopt rules and
regulations to carry out the plan. Decisions by the Board in the administration
of the plan are final and binding absent manifest error. The Board may arrange
for individuals or organizations to assist in the administration of the plan.
The Board is seeking the shareholders' approval of the plan because each of the
individuals serving as directors of UTG will be eligible to be selected by the
full Board of Directors to participate in and purchase shares in offerings under
the plan. Unless the shareholders of UTG approve the plan, directors of UTG will
not be eligible to participate in the plan or any offerings under the plan
unless they are otherwise entitled to participate as eligible employees of UTG
or its subsidiaries, as described in the summary below.
A total of 400,000 shares of common stock may be purchased under the plan,
subject to appropriate adjustment for stock dividends, stock splits or similar
recapitalizations resulting in a change in shares of UTG.
The plan is not intended to qualify as an “employee stock purchase plan” under
Section 423 of the Internal Revenue Code.
Eligibility Requirements for Plan Participants
Only individual employees of UTG or its subsidiaries who either (1) serve as
directors of UTG or its subsidiaries, or (2) have been employed full-time by UTG
or its subsidiaries for at least one year at the time of an offering, are
eligible to be selected by the Board of Directors to participate under the plan.
Any person serving as a director of UTG or its subsidiaries at the time of an
offering under the plan is eligible to participate in that offering under the
plan. The employment relationship will be treated as continuing intact while an
employee is on sick leave or other bona fide leave of absence for a period not
to exceed 90 days. The employment relationship will be deemed terminated on the
91st day of such leave. The Board may refuse to issue shares to any person if it
determines in good faith that the eligibility requirements were not met either
during the annual offering period or at the time of the closing of the offering.
Independent contractors and other individuals who are not employees or directors
are not eligible to participate in the plan.
As of April 19, 2002, there were approximately 55 employees and 9 directors of
UTG and its subsidiaries who would be eligible to participate in the plan.
How the Plan Operates
Under the plan, the Board has discretion to select eligible employees and
directors of UTG and its subsidiaries to purchase shares of UTG's common stock
in an annual offering. The Board may decide if and when annual offerings of
shares under the plan will be made and may determine the number of shares to be
offered in an annual offering and the number of shares, if any, to be offered to
a selected eligible participant. No fractional shares will be issued, and any
fractional shares will be rounded down to the next whole number.
Each annual offering, if made, will remain open for a 30-day period, during
which the selected participants may elect to purchase shares. An election will
not be valid unless the selected participant meets the eligibility requirements
and, prior to the end of the offering period, (1) delivers to UTG a signed,
completed subscription agreement in the form attached as Exhibit A to the plan,
together with full payment for the purchase price of the shares, and (2) signs
and delivers to UTG a stock restriction agreement (see “Transfer Restrictions”
below). The closing of an annual offering will occur within five business days
following the end of the annual offering period. At that time, certificates
representing the shares purchased by a participant in the annual offering will
be issued. If there has been an oversubscription of the annual offering, any
excess funds received will be returned, without interest, by check to the
participants.
The purchase price at which shares will be offered under the plan will be fixed
by the Board at the time it authorizes each annual offering. The price at which
shares will be offered is not based on market price, which as of April 29, 2002
was $7.25. However, in any case, the plan provides that the price at which
shares will be offered will not be less than 100% of the fair market value of
the shares of common stock of UTG at the time the offering is authorized by the
Board. The purchase price for shares to be offered in the first annual offering
has been arbitrarily set at $12.00 per share.
Participants' rights to purchase shares under the plan are personal and may not
be assigned, transferred, pledged or otherwise disposed of by the participant.
The right to purchase shares under the plan may be exercised only during a
participant's lifetime.
The Board may amend or terminate the plan at any time.
Transfer Restrictions
Shares issued under the plan will be subject to applicable restrictions under
federal and state securities laws. It is a condition of offers of shares under
the plan that the offer and sale of the shares are either exempt from
registration under the Securities Act of 1933 and applicable state securities
laws, or are duly registered in compliance with such laws.
Shares acquired under the plan will also be subject to restrictions contained in
the stock restriction agreement that each participant must enter into before
being permitted to purchase shares under the plan. The following is a brief
summary of the stock restriction agreement.
The stock restriction agreement will restrict the ability of plan participants
to sell, transfer, or otherwise dispose of the shares they acquire under the
plan. Participants may transfer their shares by gift for their benefit or to
their spouses or children, but the transferred shares remain subject to the
stock restriction agreement. Participants may also pledge, mortgage or otherwise
encumber their shares, and the pledgee will be bound by the stock restriction
agreement. However, if the pledge is made for the purpose of securing a loan on
behalf of UTG or any entity that is controlled by UTG or Jesse Correll, either
individually or collectively, the pledgee will receive the shares free of the
restrictions imposed by the stock restriction agreement. Participants also may
sell, donate or transfer their shares with the prior approval of the Board, but
the Board may condition its approval on such terms and conditions as it deems
appropriate.
Participants may offer UTG an opportunity to purchase their shares at any time,
so long as they will sell not less than the lesser of (1) all of the shares they
then own, or (2) shares whose fair value is at least $1,000. If UTG does not
purchase all or any part of the share offered for sale, the remaining plan
participants who are parties to the stock restriction agreement will have a ten
day option to purchase a pro rata portion of the shares based upon their
percentage ownership of the total number of shares of common stock owned by all
of the participant shareholders who exercised their option to purchase under the
stock restriction agreement. If neither UTG nor the remaining participant
shareholders purchase all or any part of the shares, the selling participant
shareholder will be free (subject to applicable state and federal securities
laws) to sell all, but not less than all, of the unpurchased shares for a period
of 90 days from the expiration of the remaining participant shareholders'
option. If the shares are not sold within the 90 day period, the stock
restriction agreement once again will apply to the shares.
If a participant dies or his or her employment with or service as a director of
UTG or any of its subsidiaries is terminated for any reason (including
retirement and disability), UTG will purchase all of the shares then held by the
participant, his or her personal representative, spouse or children, as the case
may be (including any shares transferred to a participant's spouse under a
divorce decree) within 90 days of such death or termination of employment. If a
participant has transferred shares to his or her non-employee spouse, upon a
divorce, UTG will purchase all of the shares then held by the non-employee
spouse (or that were transferred by him or her to the children of the
non-employee spouse) within 90 days of the date of entry of the divorce decree.
The purchase price will be paid in cash within 60 days from the date of
purchase, subject to the receipt of any required regulatory approvals. If any
regulatory approvals are required in connection with the purchase of the shares,
the shares and the purchase price will be escrowed pending receipt of such
approvals, and interest on the purchase price will accrue to the seller's
benefit regardless of whether the sale ultimately takes place. Even if
regulatory approval is required, the sale of shares must close, if at all,
within 150 days from the date the shares were first offered for sale or the date
of death, termination of employment or divorce, whichever is applicable.
If Jesse Correll and his affiliates sell, in one or a series of related
transactions, more than 50% of the then outstanding shares of common stock of
UTG to any third party not affiliated with Mr. Correll, all of the participant
shareholders who are parties to the stock restriction agreement will be given
the opportunity to sell their shares either to the third party or to UTG on the
same terms and conditions as Mr. Correll and his affiliates.
Federal Income Tax consequences
Because the plan provides that the purchase price for shares purchased under the
plan will be not less than 100% of the fair market value of the shares, the
Company believes that purchasers of shares under the plan should not recognize
any compensation or ordinary income when they purchase shares. However, if the
purchase price is determined to be less than the actual fair market value of the
common stock, participants may recognize compensation or ordinary income in an
amount equal to the excess, if any, of the fair market value of the shares of
the common stock received over the purchase price. If the purchased shares are
later sold, purchasers will recognize short-term or long-term capital gain or
loss, depending upon their holding period for the shares. Their gain will be
equal to the difference between the net sale proceeds and their tax basis in the
shares. Generally, their tax basis will be equal to the purchase price plus the
compensation income, if any, recognized at the time the participant purchased
the shares.
Generally, the purchase and/or subsequent sale of shares acquired under the plan
has state income tax consequences similar to the federal income tax consequences
described above. However, these tax effects will depend on the jurisdictions
involved, such as where a participant is employed and where he or she resides.
Vote Required
The affirmative vote of a majority of the votes of the shares represented at the
Annual Meeting and entitled to vote is required to approve the proposal to adopt
the United Trust Group, Inc. Employee and Director Stock Purchase Plan. If the
plan is not adopted, directors of UTG will not be entitled to participate in or
purchase shares under the plan unless they are otherwise entitled to participate
as eligible employees of UTG and its subsidiaries.
The Board of Directors recommends that shareholders vote “FOR” the adoption of
the Plan.
PERFORMANCE GRAPH
The following graph compares the cumulative total shareholder return on UTG's
Common Stock during the five fiscal years ended December 31, 2001 with the
cumulative total return on the NASDAQ Composite Index Performance and the NASDAQ
Insurance Stock Index (1). The graph assumes that $100 was invested on December
31, 1996 in each of the Company's common stock, the NASDAQ Composite Index, and
the NASDAQ Insurance Stock Index, and that any dividends were reinvested.
(1) UTG selected the NASDAQ Composite Index Performance as an appropriate
comparison since during the time period reflected, UTG's Common Stock was
traded on the NASDAQ Small Cap exchange under the sign “UTGI”. Furthermore,
UTG selected the NASDAQ Insurance Stock Index as the second comparison
because there is no similar single “peer company” in the NASDAQ system with
which to compare stock performance and the closest additional
line-of-business index which could be found was the NASDAQ Insurance Stock
Index. Trading activity in UTG's Common Stock is limited, which may be due
in part as a result of UTG's low profile, and its reported operating
losses. The Return Chart is not intended to forecast or be indicative of
possible future performance of UTG's stock.
The foregoing graph shall not be deemed to be incorporated by reference into any
filing of UTG under the Securities Act of 1933 or the Securities Exchange Act of
1934, except to the extent that UTG specifically incorporates such information
by reference.
Compensation Committee Interlocks and Insider Participation and Related Party
Transactions
UTG does not have a compensation committee and decisions regarding executive
officer compensation are made by the full Board of Directors of UTG. The
following persons served as directors of UTG during 2001 and were officers or
employees of UTG or its affiliates during 2001: Jesse T. Correll and Randall L.
Attkisson. Accordingly, these individuals have participated in decisions related
to compensation of executive officers of UTG and its subsidiaries.
During 2001, Jesse T. Correll and Randall L. Attkisson, executive officers of
UTG, FCC and their insurance subsidiaries, were also members of the Board of
Directors of FCC and the insurance subsidiaries.
Other Related Party Transactions
At a December 17, 2001 joint meeting of the board of directors of UTG, FCC and
their insurance subsidiaries, the boards of directors of the insurance
subsidiaries discussed and decided to further explore and pursue a possible sale
of the insurance charters of each of APPL and ABE. In the alternative to a sale
of the APPL charter, the boards also discussed and decided to further explore a
possible merger of APPL into UG. Regardless of whether a merger is ultimately
pursued or the charters of each subsidiary are sold, UG would likely assume and
reinsure the existing insurance policies of those subsidiaries in any such
transaction.
On June 5, 2001, UTG and FCC jointly announced their respective Boards of
Directors approved a definitive agreement whereby UTG would acquire the
remaining common shares (approximately 18%) of FCC which UTG does not currently
own. Under the terms of the agreement, FCC will be merged with and into UTG,
with UTG continuing as the surviving entity in the merger. Pursuant to the
merger agreement, UTG will pay $250 in cash for each share of FCC common stock
not held by United Trust Group. The transaction is subject to various conditions
precedent set forth in the merger agreement, including the approval of the
transaction by the shareholders of FCC. FCC plans to submit the transaction to
the vote of the FCC shareholders to be held at a special meeting to be called
for that purpose. Shareholders of FCC are urged to read the Proxy Statement when
it becomes available. During the fourth quarter of 2001, UG purchased real
estate from an outside third party through the formation of an LLC in which UG
is a two-thirds owner. The other one-third partner is Millard V. Oakley, who is
a Director of both UTG and FCC. Hampshire Plaza, LLC consists of a twenty story,
254,000 square foot office tower, an attached 72,000 square foot retail plaza,
and an attached parking garage with approximately 350 parking spaces located in
Manchester, New Hampshire for $6,333,336. At December 31, 2001, the property was
carried at $6,491,734.
On November 15, 2001, UTG was extended a $3,300,000 line of credit from the
First National Bank of the Cumberlands located in Livingston, Tennessee. The
First National Bank of the Cumberlands is owned by Millard V. Oakley, who is a
Director of both UTG and FCC. The line of credit will expire one year from the
date of issue, and all funds advanced under this line of credit are to be used
for the repurchase of stock. The interest rate provided for in the agreement is
variable and indexed to be the lowest of the U.S. prime rates as published in
the money section of the Wall Street Journal, with any interest rate adjustments
to be made monthly. To date, the Company has no borrowings or obligations
attributable to this line of credit.
On October 26, 2001, APPL effected a reverse stock split, as a result of which
(i) it became a wholly-owned subsidiary of UG, and an indirect wholly-owned
subsidiary of FCC and UTG, and (ii) its minority shareholders received an
aggregate of $1,055,294.50 in respect of their shares. Prior to the reverse
stock split, UG owned 88% of the outstanding shares of APPL.
On September 4, 2001, FSF and FSBI (and their principals) restructured the
manner in which they hold shares of UTG by forming a new limited liability
company under Kentucky law, First Southern Holdings, LLC (“FSH”). FSBI
contributed to FSH shares of UTG common stock held by it and cash in exchange
for a 99% membership interest in FSH. FSF contributed to FSH shares of UTG
common stock held by it, subject to notes payable which were assumed by FSH in
exchange for a 1% membership interest in FSH.
On April 12, 2001, UTG completed the purchase of 22,500 shares of UTG common
stock and 544 shares of FCC common stock from James E. Melville and family
pursuant to a stock purchase agreement in exchange for five year promissory
notes of UTG in the aggregate principal amount of $288,800. On April 12, 2001,
UTG also completed the purchase from another family member of Mr. Melville of an
additional 100 shares of UTG for a total cash payment of $800. The purchase for
cash by UTG of an additional 39 shares of FCC common stock owned by Mr. Melville
at a purchase price of $200.00 per share was consummated on June 27, 2001. Mr.
Melville was a former director of UTG, FCC and the three insurance subsidiaries
of UTG; he resigned from those boards on February 13, 2001.
On April 12, 2001, UTG also completed the purchase of 559,440 shares of UTG
common stock from Larry E. Ryherd and family pursuant to a stock purchase
agreement for cash payments totaling $948,026 and a five year promissory note of
UTG in the principal amount of $3,527,494. The purchase by UTG of the remaining
3,775 shares of UTG common stock to be purchased for cash at $8.00 per share
pursuant to the stock purchase agreement along with an additional 570 shares
from certain parties to the stock purchase agreement was completed on June 20,
2001. The promissory notes of UTG received by certain of the sellers pursuant to
the Melville purchase agreement and the Ryherd purchase agreement bear interest
at a rate of 7% per annum (paid quarterly) with payments of principal to be made
in five equal annual installments, the first such payment of principal to be due
on the first anniversary of the closing. The Melville and Ryherd stock purchase
agreements were originally between the sellers of the shares and First Southern
Bancorp. First Southern Bancorp's rights and obligations under those purchase
agreements were assigned to, and assumed by, UTG prior to the completion of the
stock purchases contemplated thereby. The sellers of those shares consented to
those assignments and assumptions pursuant to separate consent and novation
agreements.
On April 12, 2001, UTG also purchased in a separate transaction 10,891 shares of
UTG common stock from Robert E. Cook at a price of $8.00 per share. At the
closing, Mr. Cook received $17,426 in cash and a five year promissory note of
UTG (substantially similar to the promissory notes issued pursuant to the
Melville and Ryherd Purchase Agreements described above) in the principal amount
of $69,702. Mr. Cook was a director of UTG and FCC who resigned his position on
January 8, 2001. Mr. Cook proposed the stock purchase to Jesse T. Correll who
agreed to purchase Mr. Cook's stock on substantially the same terms as the
purchases of the stock held by Messrs. Melville and Ryherd as described above.
Mr. Correll is Chairman of the Board of Directors of UTG and currently UTG's
largest shareholder through his ownership control of FSF, FSBI and affiliates.
Mr. Correll is the majority shareholder of FSF and FSBI, a bank holding company
that operates out of 14 locations in central Kentucky. At December 31, 2001, Mr.
Correll owns or controls directly and indirectly approximately 60% of UTG.
Under the current structure, FCC pays a majority of the general operating
expenses of the affiliated group. FCC then receives management, service fees and
reimbursements from the various affiliates.
UTG paid FCC $550,000, $750,000 and $600,000 in 2001, 2000 and 1999,
respectively for reimbursement of costs attributed to UTG.
On January 1, 1993, FCC entered an agreement with UG pursuant to which FCC
provides management services necessary for UG to carry on its business. UG paid
$6,156,903, $6,061,515 and $6,251,340 to FCC in 2001, 2000 and 1999,
respectively.
ABE pays fees to FCC pursuant to a cost sharing and management fee agreement.
FCC provides management services for ABE to carry on its business. The agreement
requires ABE to pay a percentage of the actual expenses incurred by FCC based on
certain activity indicators of ABE business to the business of all the insurance
company subsidiaries plus a management fee based on a percentage of the actual
expenses allocated to ABE. ABE paid fees of $332,673, $371,211 and $392,005 in
2001, 2000 and 1999, respectively under this agreement.
APPL has a management fee agreement with FCC whereby FCC provides certain
administrative duties, primarily data processing and investment advice. APPL
paid fees of $444,000, $444,000 and $300,000 in 2001, 2000 and 1999,
respectively under this agreement.
Respective domiciliary insurance departments have approved the agreements of the
insurance companies and it is Management's opinion that where applicable, costs
have been allocated fairly and such allocations are based upon accounting
principles generally accepted in the United States of America.
Since the Company's affiliation with FSF, UG has acquired mortgage loans through
participation agreements with First Southern National Bank, with which certain
directors and executive officers are affiliated as described under the section
entitled “Election of Directors”. FSNB services the loans covered by these
participation agreements. UG pays a .25% servicing fee on these loans and a
one-time fee at loan origination of .50% of the original loan amount to cover
costs incurred by FSNB relating to the processing and establishment of the loan.
UG paid $79,730, $34,721 and $11,578 in servicing fees and $22,626, $91,392 and
$0 in origination fees to FSNB during 2001, 2000 and 1999, respectively.
The Company reimbursed expenses incurred by Mr. Correll and Mr. Attkisson
relating to travel and other costs incurred on behalf of or relating to the
Company. The Company paid $145,407, $96,599 and $39,336 in 2001, 2000 and
1999,respectively to First Southern Bancorp, Inc. in reimbursement of such
costs. In addition, beginning in 2001, the Company began reimbursing FSBI a
portion of salaries for Mr. Correll and Mr. Attkisson. The reimbursement was
approved by the UTG board of directors and totaled $128,411 in 2001 which
included salaries and other benefits.
See also the discussion under “Proposal 2 - Adopting and Approving the UTG
Employee and Director Stock Purchase Plan”.
RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS
Kerber, Eck and Braeckel LLP (“KEB”) served as UTG's independent certified
public accounting firm for the fiscal year ended December 31, 2001 and for
fiscal year ended December 31, 2000. In serving its primary function as outside
auditor for UTG, KEB performed the following audit services: examination of
annual consolidated financial statements; assistance and consultation on reports
filed with the Securities and Exchange Commission and; assistance and
consultation on separate financial reports filed with the State insurance
regulatory authorities pursuant to certain statutory requirements.
Audit Fees. Audit Fees billed for these audit services in the fiscal year ended
December 31, 2001 totaled $165,000, and audit fees billed for quarterly reviews
of the Company's financial statements totaled $16,979.
Financial Information Systems Design and Implementation Fees. KEB did not render
any services related to financial information systems design and implementation
for the fiscal year ended December 31, 2001.
All Other Fees. No other services besides the audit services described above
were performed by, and therefore no other fees were billed by, KEB for services
in the fiscal year ended December 31, 2001.
UTG does not expect that a representative of KEB will be present at the Annual
Meeting of Shareholders of UTG. No accountants have been selected for fiscal
year 2002 because UTG generally chooses accountants shortly before the
commencement of the annual audit work.
SUBMISSION OF SHAREHOLDER PROPOSALS FOR 2003 ANNUAL MEETING
In order for a proposal by a shareholder to be included in UTG's proxy statement
and form of proxy for the 2003 Annual Meeting of Shareholders, the proposal must
be received by UTG at its principal office on or before January 31, 2003.
Shareholder proposals submitted after March 31, 2003, will be considered
untimely, and the proxy solicited by UTG for next year's annual meeting may
confer discretionary authority to vote on any such matters without a description
of them in the proxy statement for that meeting.
OTHER MATTERS TO COME BEFORE THE MEETING
The management does not intend to bring any other business before the meeting of
UTG's shareholders and has no reason to believe that any will be presented to
the meeting. If, however, any other business should properly be presented to the
meeting, the proxies named in the enclosed form of proxy will vote the proxies
in accordance with their best judgement.
MULTIPLE STOCKHOLDERS SHARING THE SAME ADDRESS
In late 2000, the Securities and Exchange Commission adopted new rules that
permit companies and intermediaries (e.g., brokers) to satisfy the delivery
requirements for proxy statements with respect to two or more stockholders
sharing the same address by delivering a single proxy statement addressed to
those stockholders. This process allows for extra convenience for stockholders
and potential costs savings for companies.
This year, one or more brokers with accountholders who are UTG shareholders may
send a single proxy statement addressed to two or more shareholders sharing the
same address. In those cases, a single proxy statement and Annual Report will be
delivered to multiple stockholders sharing an address unless contrary
instructions have been received from the affected stockholder. Once you have
received notice from your broker that they will be sending communications to
your address in this way, they will continue this practice until you are
notified otherwise or until you revoke your consent. If, at any time, you no
longer wish to receive proxy materials and communications in this way and would
prefer to receive a separate proxy statement, please notify your broker, direct
your written request to United Trust Group, Inc., Theodore C. Miller, Secretary,
5250 South Sixth Street Road, P.O. Box 5147, Springfield, Illinois, 62705-5147,
or contact Mr. Miller at 217-241-6300. UTG will deliver promptly, upon written
or oral request in the manner provided above, a separate copy of the proxy
statement and Annual Report for the fiscal year ended December 31, 2001 to a
shareholder at a shared address to which a single copy was delivered. If your
broker is not currently delivering a single proxy statement addressed to two or
more shareholders sharing the same address (i.e., you received multiple copies
of this proxy statement), and you would like to request delivery of a single
copy, you should contact your broker.
AVAILABILITY OF ANNUAL REPORT ON FORM 10-K
UTG has filed its Annual Report for the year ended December 31, 2001 on Form
10-K with the Securities and Exchange Commission. A copy of the report,
including any financial statements and financial statement schedules, may be
obtained without charge by any shareholder. Requests for copies of the report
should be sent to Theodore C. Miller, Secretary, United Trust Group, Inc., 5250
South 6th Street Road, P.O. Box 5147, Springfield, Illinois, 62705-5147.
BY ORDER OF THE BOARD OF DIRECTORS
UNITED TRUST GROUP, INC.
Theodore C. Miller, Secretary
Dated: May 13, 2002
Appendix A
EXHIBIT A
United Trust Group, Inc. Employee and Director Stock Purchase Plan
COMMON STOCK
(no par value)
Background
United Trust Group, Inc. is an Illinois corporation and an insurance holding
company.
We desire to offer employees and directors of United Trust Group, Inc. and its
subsidiaries the opportunity to invest in shares of our common stock. This
document describes the plan we have established under which employees and
directors may purchase shares of United Trust Group, Inc. common stock.
Investing in shares under the plan is not without risks. The price at which
shares are being offered under this plan is not based on market price, and
employees and directors investing in shares under the plan will be required to
execute a stock restriction agreement. The stock restriction agreement imposes
significant restrictions on the transferability of shares, and fixes the price
at which a participant in the plan may be required to sell shares back to United
Trust Group, Inc. based on the change in the book value of the shares, not
market value.
A note about United Trust Group, Inc.
United Trust Group, Inc. is a publicly-held company that files reports with the
Securities and Exchange Commission pursuant to the Securities Exchange Act of
1934. Until recently, our common stock was traded on the Nasdaq Small Cap Stock
Market. Effective December 31, 2001, we voluntarily de-listed our shares from
Nasdaq, and our shares are now traded sporadically in the over-the-counter
market.
Jesse Correll, and his affiliates and associates own a majority of our
outstanding shares of common stock.
How many shares may be issued under the plan
The board of directors has authorized the issuance of a total of 400,000 shares
of common stock pursuant to this plan. The number of shares authorized to be
issued under the plan will be subject to adjustment proportionately if there is
a stock dividend, stock split or similar recapitalization event resulting in a
change in shares of United Trust Group, Inc.
How the plan operates
Annual offering of shares. Eligible employees and directors of United Trust
Group, Inc. and its subsidiaries may be offered the opportunity to purchase a
limited amount of shares of United Trust Group under the plan annually. Each
annual offering, if made, will remain open for a period of 30 days, during which
directors and eligible employees selected by our board of directors may elect to
purchase shares of United Trust Group, Inc. under the plan. An election to
purchase shares will not be valid unless the employee/director meets the
eligibility requirements to participate in the plan and, prior to the end of the
offering period,
(1) the employee/director delivers to United Trust Group, Inc. a signed,
completed subscription agreement, in the form attached as Exhibit A,
together with payment in full of the purchase price of the shares, and
(2) the employee/director signs and delivers to United Trust Group, Inc. a
stock restriction agreement, in the form attached as Exhibit B.
Limit on number of shares that may be purchased annually. The board of
directors of United Trust Group, Inc. shall have discretion to determine the
number of shares to be offered in any annual offering subject to the limitations
in this plan and to determine the number of shares, if any, to be offered to
each director or eligible employee in an annual offering under the plan. No
fractional shares will be issued, and any fractions will be rounded down to the
next whole number.
Closing of annual offering. The closing of an annual offering will occur
within [5] business days following the end of the annual offering period. At
that time, certificates representing the shares purchased by a participating
employee in an annual offering will be issued, in the name of the participating
employee, and, if there has been an oversubscription, any excess funds received
will be returned, by check, to participating employees (without interest).
Timing of annual offerings. The board of directors of United Trust Group,
Inc. will determine if and when annual offerings of shares under the plan will
be made.
Price of shares in an annual offering. The price at which shares will be
offered in the first annual offering has been arbitrarily set at $12.00 per
share. At each annual offering thereafter, the board of directors of United
Trust Group, Inc. will fix the price at which shares will be offered under the
plan at the time it authorizes the annual offering. In any case, the price at
which shares will be offered under the plan will not be less than 100% of the
fair market value of shares of United Trust Group, Inc. at the time the offering
is authorized by the United Trust Group, Inc. board of directors.
Eligibility requirements for participants
The board of directors of United Trust Group, Inc. shall have discretion to
select the directors and eligible employees who will be extended the opportunity
to purchase shares in any annual offering under the plan. Only individual
employees of United Trust Group, Inc. or its subsidiaries who either (1) serve
as directors of United Trust Group, Inc. or its subsidiaries or (2) have been
employed full-time by United Trust Group, Inc. or its subsidiaries for at least
1 year at the time of an offering of shares under the plan are eligible to
participate and purchase shares in that offering under the plan. Any person
serving as a director of United Trust Group, Inc. or any of its subsidiaries at
the time of an offering of shares under the plan is eligible to participate and
purchase shares in that offering under the plan.
The board of directors of United Trust Group, Inc. may refuse to issue any
shares to a person if it determines, in good faith, that the foregoing
eligibility requirement was not met either during the annual offering period and
at the time of the closing of the offering. Independent contractors and other
individuals who are not employees or directors are not eligible to participate
in the plan.
The employment relationship will be treated as continuing intact while an
employee is on sick leave or other bona fide leave of absence for a period not
to exceed 90 days. Where the period of leave exceeds 90 days, the employment
relationship will be deemed terminated on the 91st day of such leave.
The opportunity to participate in the plan is personal to eligible employees and
directors selected by the board of directors. No right with regard to
participation in the plan or right to purchase and receive shares of United
Trust Group, Inc. under the plan may be assigned, transferred, pledged or
otherwise disposed of in any way by a participating employee or director. Any
such attempted assignment, transfer, pledge, or other disposition will be
without effect. An eligible employee's or director's right to purchase shares
under the plan may be exercised only during the employee's or director's
lifetime.
A participating employee or director will have no interest in, or rights to, any
shares under the plan until the certificate represented shares purchased by that
participating employee has been issued.
Who administers the plan
The plan is administered by the board of directors of United Trust Group, Inc.
The board of directors of United Trust Group, Inc. has full power and authority
to construe, interpret and administer the plan and may adopt rules and
regulations for carrying out the plan. The board of directors may make
arrangements for individuals or organizations to assist in the administration of
the plan. Decisions made by the board of directors of United Trust Group, Inc.
in the administration of the plan are final and binding absent manifest error.
Conditions of the plan
It is a condition of any offer of shares under this plan that the offer and sale
of the shares are either exempt from the registration requirements imposed under
the Securities Act of 1933 and applicable state securities laws or are duly
registered in compliance with such registration requirements, and will be
administered accordingly. United Trust Group, Inc. will not be obligated to
offer or issue any shares under this plan if it determines, in good faith, that
the offering or issuance of such sale violates any law.
Until the shareholders of United Trust Group, Inc. approve the participation of
directors in the plan, directors of United Trust Group, Inc. will not be
entitled to participate in the plan, or in any offering under the plan, unless
they are otherwise entitled to participate in the plan as eligible employees of
United Trust Group, Inc. and its subsidiaries.
Transfer restrictions
Shares issued under the Plan shall be subject to the restrictions on
transferability contained in the stock restriction agreement and applicable
restrictions under federal and state securities laws.
Amendment and termination of the plan
The plan may be amended or terminated by the board of directors of United Trust
Group, Inc. at any time.
Construction of plan
This plan shall be governed by the laws of Illinois.
No provision of this plan shall be construed as giving any person any right he
would not otherwise have to become or remain an employee of United Trust Group,
Inc. or any of its subsidiaries or any other right not expressly created by such
provision.
No provision of this plan shall be construed as requiring Jesse Correll or any
of his associates or affiliates to acquire or retain ownership of shares of
United Trust Group, Inc., or restrict in any way the issuance of shares of
United Trust Group, Inc. or the transfer of ownership or control of shares of
any of United Trust Group, Inc. or any of its subsidiaries.
This plan is not intended to qualify as an “employee stock purchase plan” under
Section 423 of the Internal Revenue Code.
Date approved by the board of directors of United Trust Group, Inc. : March 26,
2002
Date approved by the shareholders of United Trust Group, Inc.:__________________
UNITED TRUST GROUP, INC.
_____________________________
Theodore C. Miller, Secretary
Appendix B
May 13, 2002
[Letterhead of United Trust Group, Inc]
Dear Shareholders:
The 2002 Annual Meeting of Shareholders of United Trust Group, Inc. will be held
at the corporate headquarters, 5250 South Sixth Street, Springfield, Illinois
62703, on June 11, 2002, at 10:00a.m. At the meeting, shareholders will act to
elect nine directors, to consider and vote upon approving the United Trust
Group, Inc. Employee and Director Stock Purchase Plan, and to vote upon such
other business as may properly come before the meeting.
Your vote is important. Whether or not you plan to attend the meeting, please
review the enclosed proxy statement, complete the proxy form below and return it
promptly in the envelope provided.
It is important to keep your stock portfolio current. Registrations should be
kept up-to-date. Remember to notify the Company of a change in address. Our
stock transfer department is available to assist you with these and other
shareholder questions.
Sincerely,
Theodore C. Miller
Corporate Secretary
APPENDIX TO PROXY STATEMENT
PROXY CARD
Fold and Tear Here Fold and Tear Here
- --------------------------------------------------------------------------------
PROXY FORM PROXY Form
UNITED TRUST GROUP, INC.
Annual Meeting of Shareholders - To be Held June 11, 2002
THE BOARD OF DIRECTORS SOLICITES THIS PROXY
The undersigned hereby appoints Jesse T. Correll and Randall L. Attkisson, or
either of them, the attorneys and proxies with full power of substitution and
revocation to represent and to vote, as designated below, all the shares of
common stock of the Company held of record by the undersigned on April 19, 2002,
at the annual meeting of shareholders to be held at the corporate headquarters,
5250 South Sixth Street, Springfield, Illinois 62703, on June 11, 2002 at 10:00
a.m., or any adjournment thereof.
This proxy when properly executed will be voted in the manner directed herein by
the undersigned shareholder. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
FOR ALL PROPOSALS PRESENTED.
Please sign exactly as your name appears on the form and date and mail the proxy
promptly. When signing as an attorney, executor, administrator, trustee or
guardian, please give your full title a such. If shares are held jointly, both
owners must sign. If a corporation, please sign in full corporate name by
President and other authorized officer. If a partnership, please sign in
partnership name by authorized person.
Continued and to be voted and signed on the reverse
Our Stock Transfer Department is available to assist you with changes or
questions concerning your account.
Lost Certificate - Notification of a lost stock certificate must be made in
writing.
Address Changes - Notification of shareholder address changes must be made in
writing. If your address has changed or should change in the future, please
give us your new address below.
Your name ____________________________________________________________________
(Old Address) - Street _______________________________________________________
City _____________________________ State ___________________ Zip ____________
(New Address)- Street ________________________________________________________
City _____________________________ State ___________________ Zip ____________
Date new address in effect ________________ Signature ________________________
Registration Changes - A change in certification registration is needed because
of:
__ Marriage __ Divorce
__ Death of a tenant __ Establishment of a trust
__ Remove custodian __ Other - Explain ______________________
For instructions about your specific situation, contact our Stock Transfer
Department by phone at (217)241-6410 or by writing to United Trust Group, Inc.,
Attn: Stock Transfer Department, P.O. Box 5147, Springfield, IL 62705-5147
Signature _________________________________
Date _______________________
1. To elect all Director Nominees to serve on the Board of Directors. The
nominees are:
John S. Albin, Randall L. Attkisson, Jesse T. Correll, Ward F. Correll,
Thomas F. Darden II, Millard V. Oakley, William W. Perry, James P. Rousey,
and Robert W. Teater Withhold For All
For Authority Except*
___ ___ ___
*Exceptions: To vote for all directors nominees, mark the “For” box. To
withhold voting for all nominees, mark the “Withhold Authority” box. To
withhold voting for a particular nominee, mark the “For All Except” box and
enter name(s) of the exception(s) in the space provided. Your shares will
be voted for the remaining nominees.
___________________________________________________________________________
2. Proposal to approve and adopt the United Trust Group, Inc. Employee and
Director Stock Purchase Plan.
___ FOR ___ AGAINST ___ ABSTAIN
3. In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the meeting or any adjournment
thereof.
UTG
Signature _____________________________ Date ______________________
Signature _____________________________ Date ______________________
