UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C.
SCHEDULE 14A INFORMATION
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Financial Industries Corporation
(Name of Registrant as Specified In Its Charter)
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The Registrant issued the following press release today:
(BW) (Financial Industries Corporation)
(FNIN) Financial Industries Corporation Reacts to ISS Report
AUSTIN, Texas - (BUSINESS WIRE) - July 18, 2003 - Financial Industries
Corporation (FIC) today expressed its disappointment at the decision of
Institutional Shareholder Services (ISS) to hinge its proxy recommendation on
the Board's approval of a legal settlement with former CEO, Roy F. Mitte. ISS is
an advisory panel for large institutional investors.
The company strongly disagrees with ISS when it states "Whether Mr. Mitte would
have damaged the company and whether it would have been more costly to
shareholders if he continued the litigation and/or proxy fight is not the
critical issue."
"The best interest of our shareholders is exactly the critical issue when you
are operating a business in the real world," said Eugene E. Payne, CEO,
President and Chairman of FIC. "Ivory tower idealism was not the prism though
which the decision to settle this litigation was made."
In its analysis ISS acknowledged that FIC concluded to settle the litigation
with Mitte by paying a small fraction of the amount that Mitte sought in the
litigation. FIC maintains that by entering into the Mitte settlement, the
company avoided a possible ruinous financial judgment; the incurrence of
substantial legal fees; and the ongoing disruption to the business caused by
Mitte's lawsuit.
The ISS report recognizes that "the company did not directly purchase the Mitte
proxy..." when it settled the case, saying simply that the pay-out to Mitte
"gives the appearance" that the Mitte Foundation proxy is not completely
independent of the settlement. ISS included in its report management's assertion
that the proxy was the subject of discussions that took place long after
discussions regarding settlement of Mitte's monetary claims had commenced.
Payne was pleased to point out that there were a number of positive notes in the
ISS evaluation. According to ISS, FIC has outperformed its peer group and the
Nasdaq Stock Market with regard to corporate governance. The company's
performance is ranked in the top 16% of all companies evaluated by the Russell
3000 Corporate Governance Quotient.
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Also, regarding the strategic direction taken by FIC, the ISS report determined
that FIC's Board had exercised its fiduciary duty in evaluating a potential sale
of the company, and the interest of The Pillar Group.
According to ISS, it did not find any compelling evidence to suggest that
management's six point business plan, overall, is not the best course of action
for the company and for shareholders." The report states "...it is difficult to
dispute the company's potential for growth resulting from these [recent]
acquisitions as it would transform the company from offering a limited number of
life insurance and fixed annuity products to an organization offering a wide
range of products." ISS also recognized that "the company has put in place
policies and procedures specifically designed to prevent deceptive practices and
to protect itself in its relationships" with any new marketing partners.
Payne mentioned that FIC would be offering one important correction to ISS
regarding information contained in its report. The FIC slate of directors
collectively owns 0.57% of stock in the company. One of the nominees, Ken
Shifrin, is the Chairman and CEO of American Physicians Service Group, which
owns 3.37% of FIC's outstanding stock. These holdings are comparable to Otter
Creek's reported ownership in the company.
FIC, through its various subsidiaries, owns real estate, an actuarial consulting
firm, and markets and underwrites individual life insurance and annuity
products. For more information on FIC, go to http://www.ficgroup.com
This release may be considered proxy solicitation material. Information about
the participants in such solicitation may be found in a filing on Schedule 14A
made with the Securities and Exchange Commission (SEC) on June 26, 2003, or by
contacting the Company at 512/404-5000. Shareholders are urged to read the
Company's proxy statement carefully because it contains important information.
The proxy statement and other relevant documents are available for free at the
SEC's website at www.sec.gov, or by contacting the Company at 512/404-5000.
This release may contain "forward-looking statements" within the meaning of the
United States Private Securities Litigation Reform Act of 1995. These statements
are based on management's current expectations and are subject to risks,
uncertainty and changes in circumstances, which may cause actual results,
performance or achievements to differ materially from anticipated results,
performance or achievements. Investors are reminded that these forward-looking
statements must be considered in conjunction with the cautionary warnings and
risk-factors which are detailed in the Company's most recent Annual Report on
Form 10-K , Quarterly Report on Form 10-Q, and its other filings with the
Securities and Exchange Commission. FIC is under no obligation to (and expressly
disclaims any such obligation to) update or alter its forward-looking statements
whether as a result of new information, future events or otherwise.
Contact: Bob Bender, Corporate Relations Officer, 512-404-5080,
bbender@ficgroup.com
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