THE NATIONAL SECURITY GROUP, INC.
661 EAST DAVIS STREET
ELBA, ALABAMA 36323
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
APRIL 18, 2002
Notice is hereby given of the Annual Meeting of Stockholders of The National
Security Group, Inc., a Delaware corporation (the "Company"), to be held at the
principal executive offices of the Company in Elba, Alabama, on Thursday, April
18, 2002 at 10:00 a.m. (Central Time) for the following purposes:
1. To elect seven (7) members to the Board of Directors, five (5) to serve
for three-year terms, and two (2) to serve for two-year terms, and until
their successors are duly elected and qualified;
2. To transact such other business as may properly come before the Annual
Meeting or any adjournment thereof.
Only Stockholders of record at the close of business on March 18, 2002 shall be
entitled to notice of and to vote at the Annual Meeting. Stockholders are
cordially invited to attend the Annual Meeting in person.
BY ORDER OF THE BOARD OF
DIRECTORS
/s/ Bette Ham
Secretary
Elba, Alabama
March 18, 2002
THE NATIONAL SECURITY GROUP, INC.
661 East Davis Street
Elba, Alabama 36323
PROXY STATEMENT
This document, which constitutes a Proxy Statement for The National
Security Group, Inc., (the "Company") is being furnished to the holders of the
common stock of the Company in connection with the solicitation of proxies by
the Board of Directors of the Company for use at the Annual Meeting of
Stockholders of the Company to be held at 10:00 a.m. (Central Time) on April 18,
2002 at the principal executive offices of the Company (the "Annual Meeting").
At the Annual Meeting, the Company's stockholders will vote to elect seven
directors, five to serve for three-year terms, and two for two-year terms, and
until their successors are duly elected and qualified.
All costs in connection with the solicitation of the enclosed proxy will be
paid by the Company. The date of this Proxy Statement is March 18, 2002.
GENERAL
This Proxy Statement is being mailed to holders of the Company Common Stock
on or about March 18, 2002, in connection with the solicitation by the Board of
Directors of the Company of proxies to be used at the Annual Meeting to be held
at the Company's principal executive offices, 661 East Davis Street, Elba,
Alabama 36323, on Thursday, April 18, 2002, at 10:00 a.m. (Central Time).
At the Annual Meeting, the stockholders of the Company will elect seven
directors, five to serve for three-year terms, and two to serve for two-year
terms. If the enclosed proxy is properly signed and returned, your shares will
be voted on all matters that properly come before the Annual Meeting for a vote.
If instructions are specified in your signed proxy with respect to matters being
voted upon, your shares will be voted in accordance with your instructions. If
no instructions are so specified, your shares will be voted "FOR" the election
of the persons nominated as directors in the proxy statement. So far as is now
known, there is no business to be acted upon at the Annual Meeting other than as
set forth above, and it is not anticipated that other matters will be brought
before the Annual Meeting. If, however, other appropriate matters are duly
brought before the Annual Meeting, the persons appointed as proxy agents will
have discretion to vote or act thereon according to their own judgment. A proxy
may be revoked if written notice of such revocation is received by Mrs. Bette
Ham, Secretary, The National Security Group, Inc., 661 East Davis Street, Elba,
Alabama 36323, at any time before the taking of the vote at the Annual Meeting.
Whether or not you attend the Annual Meeting, your vote is important.
Accordingly, you are asked to sign and return the accompanying proxy, regardless
of the number of shares you own. Shares can be voted at the Annual Meeting only
if the holder is present or represented by proxy. The Board of Directors has
fixed the close of business on March 18, 2002, as the record date for the
determination of stockholders who are entitled to notice of, and to vote at the
Annual Meeting and any adjournments thereof. On the record date, the Company had
outstanding 2,466,600 shares of Company Stock, the holders of which are entitled
to one vote per share. No shares of any other class of Company stock are issued
or outstanding.
1
A proxy may be revoked at any time prior to its exercise (i) by filing with
the Secretary of the Company either an instrument revoking the proxy or a duly
executed proxy bearing a later date or (ii) by attending the Annual Meeting and
voting in person. Attendance at the Annual Meeting by itself will not revoke a
proxy. Shares of Common Stock represented by a properly executed and returned
proxy will be treated as present at the Annual Meeting for purposes of
determining a quorum without regard to whether the proxy is marked as casting a
vote for or against or abstaining with respect to a particular matter. In
addition, shares of Common Stock represented by "broker non-votes" (i.e., shares
of Common Stock held in record name by brokers or nominees as to which (i)
instructions have not been received from the beneficial owners or persons
entitled to vote, (ii) the broker or nominee does not have discretionary voting
power or (iii) the record holder has indicated that it does not have authority
to vote such shares on the matter) generally will be treated as present for the
purposes of determining a quorum. The affirmative vote of the holders of a
majority of the outstanding shares of Common Stock of the Company present in
person or represented by proxy at the Annual Meeting and entitled to vote
thereon is required for the election of the nominees to the Board of Directors.
With respect to this matter, an abstention will have the same effect as a
negative vote, but because shares held by brokers will not be considered
entitled to vote on matters as to which brokers would hold authority, a broker
non-vote will have no effect on the vote.
ELECTION OF DIRECTORS
The Bylaws of the Company provide that the Board of Directors shall be
divided into three classes as nearly equal in number as possible. The term of
each director is three years and the terms are staggered to provide for the
election of one class of directors each year. A total of seven Directors will be
elected at the Annual Meeting. Five of the "Nominees" have been nominated by the
Board of Directors for election to serve three-year terms: Winfield Baird, W. L.
Brunson, Jr., Fred Clark, Jr., M. L. Murdock and Paul Wesch. L. Brunson White
and Donald Pittman have been nominated by the Board of Directors to serve for
two-year terms. All of the Nominees are currently serving as Directors or
Advisory Board members of the Company.
The persons named in the enclosed proxy intend to vote "FOR" the election
of the Nominees unless the proxy is marked to indicate that such authorization
is expressly withheld. Should any of the Nominees be unable to accept nomination
or election (which the Board of Directors does not expect) or should any other
vacancy have occurred in the Board, it is the intention of the persons named in
the enclosed proxy to vote for the election of the person or persons whom the
Board of Directors recommends.
The following tables set forth the names and certain information concerning
the Nominees and each other Director who will continue to serve (the "Continuing
Directors") as a Director of the Company after the Annual Meeting:
NOMINEES
Director/
Positions Held Age at Advisory Board
Name with the Company Dec.31, 2001 Since*
Winfield Baird ................ Director/Chairman 69 1964
W. L. Brunson, Jr ............ Director/CEO 43 1999
Fred Clark, Jr ................ Director 41 1996
M. L. Murdock ................ Director/COO 59 1976
Paul Wesch .................... Advisory Board 45 2000**
Donald Pittman ................ Advisory Board 41 2001**
L. Brunson White .............. Advisory Board 45 2000**
**Advisory Board
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR"
THE ELECTION OF THE ABOVE NOMINEES AS DIRECTORS.
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Continuing Directors
Age at Director End of
Name Dec.31,2001 Since* Present Term
Lewis Avinger ....................... 79 1984 2004
Carolyn Brunson ..................... 74 1978 2004
J. E. Brunson ....................... 45 1999 2003
J. R. Brunson ....................... 73 1962 2003
D. M. English ....................... 83 1947 2003
James B. Saxon ...................... 67 1982 2004
Walter Wilkerson .................... 54 1984 2003
*In 1990 National Security Insurance Company was reorganized as a holding
company system pursuant to a plan of exchange whereby The National Security
Group, Inc., (the "Company"), became the holding company for National Security
Insurance Company (the "Life Company"), and its prior subsidiaries, National
Security Fire & Casualty Company (the "Fire Company"), and NATSCO, Inc.,
("NATSCO"). Subsequently Omega One, Inc. ("Omega One") was formed as a wholly
owned subsidiary of the Fire Company. References to tenure with the Company (in
the above table and in the following biographical section) include the
individual's tenure with the Life Company prior to the reorganization.
BIOGRAPHICAL INFORMATION
The business experience of each of the Nominees and Continuing Directors
is set forth below.
Nominees
WINFIELD BAIRD is currently a financial advisor with UBS-Paine Webber, Inc. in
Birmingham, Alabama. He previously served as President of Investment Counselors
of Alabama, Inc. He was formerly a partner and manager at the Birmingham office
of J. C. Bradford & Company.
W. L. BRUNSON, JR. is President and Chief Executive Officer and Director of the
Company effective January 1, 2000. He previously held the position of President
of the Life Company. He joined the Company in 1983. Mr. Brunson is also a
Director of the Fire Company, NATSCO, the Life Company and Omega One.
FRED CLARK, JR. is currently President of the Clark Company, LLC in Montgomery,
Alabama, and serves as Executive Director of the Electric Cities of Alabama. He
was formerly Executive Director of the Alabama Farmers Federation, President of
Alabama Rural Electric Association of Cooperatives, Montgomery, Alabama, State
Director for U. S. Senator Richard Shelby, Legislative Representative for
National Rural Electric Cooperative Association, and Legislative Assistant to U.
S. Senator Howell Heflin.
M. L. MURDOCK currently serves as Chief Operating Officer and Director of the
Company. He has served as Senior Vice President, Chief Financial Officer and
Treasurer of the Company since 1982. Prior to that time, he served as Vice
President and Controller of the Company. He joined the Company in 1970. Mr.
Murdock is also a Director of the Life Company, the Fire Company, Omega One, and
NATSCO.
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PAUL WESCH currently serves on the Board of Directors and is General Counsel and
Executive Vice President for Operations of The Mitchell Company, Inc., a
southeastern real estate development firm in Mobile, Alabama. Other affiliations
include Chairman for Alabamians for Fair Courts, member of Alabama Fannie Mae
Partnership Board of Directors, and member of the Mobile County, State of
Alabama and American Bar Associations.
DONALD PITTMAN has been in the private practice of law since June of 1988 in
Enterprise, Alabama. He is a member of the Coffee County, State of Alabama and
American Bar Associations.
L. BRUNSON WHITE is Vice President and Chief Information Officer of Energen
Corporation, a diversified energy company, and its subsidiary, Alabama Gas
Corporation (Alagasco), both of which are based in Birmingham, Alabama. Mr.
White has worked for Energen Corporation for 22 years in the areas of planning,
development and technology.
Continuing Directors
LEWIS AVINGER is a retired Savings and Loan executive from Montgomery, Alabama.
CAROLYN BRUNSON presently serves as the Managing Partner of Brunson Properties
(formerly the W. L. Brunson Estate), a family partnership engaged in
investments.
J. E. BRUNSON has served as President of the Fire Company since 1997. He also
serves on the Boards of Directors of the Fire Company, the Life Company and
Omega One.
J. R. BRUNSON served as President and Chief Executive Officer of the Company
from 1978 through 1999. He previously held the position of Senior Vice
President. He joined the Company in 1953.
D. M. ENGLISH is a retired urban renewal administrator. He became a Director of
the Company upon its founding in 1947 and served as Chairman of the Board from
1987 to 1998.
JAMES B. SAXON is a retired executive of Anderson Products, Square D Company,
Leeds, Alabama.
WALTER WILKERSON is a certified public accountant and partner in the firm of
Barr, Brunson, Wilkerson, and Bowden in Enterprise, Alabama.
BOARD COMMITTEES AND MEETINGS
During the last full fiscal year the Board of Directors of the Company held
four regularly scheduled and special meetings. All directors, except D. M.
English, attended at least 75% of the meetings of the Board of Directors and the
committees on which they served during fiscal year 2001.
Compensation Committee. The Compensation Committee, whose members have been
appointed annually by the Board of Directors, is currently composed of James B.
Saxon, Walter Wilkerson, and L. Brunson White. The Committee is responsible for
recommending officers, the salaries of officers, directors fees and officer
bonuses to the Board of Directors for full consideration. The Compensation
Committee met twice in fiscal year 2001.
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Audit Committee. The Audit Committee is comprised of Lewis Avinger,
Winfield Baird, Fred Clark, Jr. and Walter Wilkerson. The principal functions of
the Audit Committee include making recommendations to the Board of Directors
concerning the selection of independent auditors, approval of proposed
independent audit fees, review of internal, independent, and regulatory audit
results, review of proposed corrective actions and results thereof with senior
management, review and approval of internal audit functions and controls and
obtaining assurances of regulatory compliance from independent auditors. The
Audit Committee met four times in fiscal year 2001.
Nominating Committee. The Nominating Committee is comprised of Carolyn
Brunson, M. L. Murdock, and James Saxon. This committee is responsible for the
nomination of directors. No procedure has been established by the committee for
considering nominations by the stockholders. The Nominating Committee met once
in fiscal year 2001.
DIRECTORS' REMUNERATION
Remuneration of directors is usually adjusted annually. Directors are
currently paid an annual fee of $3,960 ($5,548 for the Chairman), plus $990 per
meeting attended and mileage reimbursement of $.34 1/2 per mile. In addition,
effective January 1, 2002 the following committee fees will be paid for each
Board Committee on which he/she serves: (1) telephonic meetings - $125, (2)
meetings held before/after a regular Board meeting - $250, (3) meetings other
than (1) and (2) above, requiring travel and physical presence - $500. The
Investment Committee is excluded from compensation.
The Company has established an "Unfunded Plan of Deferred Compensation"
which allows Directors to defer fees otherwise payable to them for attending
Board meetings or serving on committees. If a Director elects to defer the fees;
such deferred amounts are treated as if they had been invested in shares of the
Company's common stock. Stock accounts may only be distributed in their
equivalent value in cash. All accounts under the plan are unfunded and do not
represent claims against specific assets of the Company.
STOCK OWNERSHIP OF DIRECTORS, NOMINEES AND EXECUTIVE OFFICERS
The following table sets forth information as of December 31, 2001, as to
the number of shares of Company Common Stock beneficially owned by (a) each of
the Company's directors, (b) the nominees for director and (c) the directors and
executive officers of the Company as a group.
SHARES OF
COMMON STOCK
BENEFICIALLY PERCENT OF
NAMES OWNED (1) COMMON STOCK
Lewis Avinger .......................... 1,200 .05%
Winfield Baird ......................... 117,909 4.78%
Carolyn E. Brunson ..................... 389,175(2) 15.78%
J. E. Brunson .......................... 11,9201 .48%
J. R. Brunson .......................... 135,266 5.48%
W. L. Brunson, Jr ...................... 80,789(3) 3.28%
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Fred Clark, Jr ......................... 106,903(4) 4.33%
D. M. English .......................... 108,794 4.41%
M. L. Murdock .......................... 1,442 .06%
Donald Pittman ......................... 34,662 1.41%
James B. Saxon ......................... 23,112 .94%
Paul C. Wesch .......................... 1,320 .05%
L. Brunson White ....................... 14,400 .58%
Walter P. Wilkerson .................... 6,834 .28%
Directors and Officers
(as a group, 16 persons
including persons named 1,043,336 42.30%
above)
Other closely held stock (as a group,
numbering 25 including immediate
family members of some directors, and
affiliated entities.) 421,919 17.11%
1 For purposes of this table, an individual is considered to "beneficially
own" any shares of the Company if he or she directly or indirectly has or shares
(I) voting power, which includes power to vote or direct voting of the shares;
or (ii) investment power, which includes the power to dispose or direct the
disposition of the shares. All amounts include stock held in a spouse's name.
2 Includes stock held in Brunson Properties, a partnership (W.L. Brunson
Estate), Carolyn E. Brunson and William L. Brunson, Jr., Managing Partners.
3 Includes 73,490 shares held by Estate of Jerry B. Brunson, W. L. Brunson,
Jr. and Sara Brunson, co- executors.
4 Includes 105,703 shares held in Trust for Fred Clark, Sr. Estate
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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The family relationships, not more remote than first cousin, which exist
among the directors and nominees are as follows:
Mrs. Carolyn Brunson is the widow of the deceased brother of J.R. Brunson,
and mother of William L. Brunson, Jr., President and Chief Executive Officer of
the Company, and President of the Life Company. Mr. J.R. Brunson, Mr. D. M.
English and Mr. James B. Saxon are first cousins. William L. Brunson, Jr.,
Donald Pittman and J. E. Brunson are first cousins. Mr. J. R. Brunson is the
father of Jack E. Brunson, President of the Fire Company. Mr. J. R. Brunson is
the uncle of Donald Pittman. James Saxon is the uncle of L. Brunson White. See
also the discussion under the heading "Compensation Committee Interlocks and
Insider Participation."
INDEPENDENT ACCOUNTANTS
The board of directors selected the firm of Barfield, Murphy, Shank &
Smith, PC, as independent auditors of The National Security Group for 2001.
Barfield, Murphy, Shank & Smith has served as independent auditors of The
National Security Group since 2000. The independent accountant is appointed by
the Board of Directors upon recommendation of the Audit Committee. Such
appointment is customarily made in July of each year. Consequently, the
independent accountant for the fiscal year ending December 31, 2002 has not yet
been appointed. Arrangements have been made for a representative of Barfield,
Murphy, Shank & Smith to attend the Annual Meeting. The representative will have
an opportunity to make a statement if he or she desires to do so, and will be
available to respond to appropriate stockholder questions.
DISCLOSURE OF AUDIT FEES
The following is a description of the fees billed to The National Security
Group by Barfield, Murphy, Shank & Smith during the year ended December 31,
2001:
Audit Fees: Audit fees paid by The Company to Barfield, Murphy, Shank &
Smith in connection with the review and audit of The Company's annual financial
statements for the year ended December 31, 2001 and the review of The Company's
interim financial statements included in Quarterly Reports on Form 10Q during
the year ended December 31, 2001 totaled approximately $82,924.
.
Financial Information Systems Design and Implementation fees: The Company
did not engage Barfield, Murphy, Shank and Smith to provide advice regarding
financial information systems design and implementation during the year ended
December 31, 2001.
All Other Fees: The only other fees billed to The Company by Barfield,
Murphy, Shank & Smith during the year ended December 31, 2001 were for tax
related services and totaled approximately $10,000.
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EXECUTIVE COMPENSATION
The following table sets forth the remuneration paid by the Company and its
subsidiaries during the fiscal year ended December 31, 2001, to each of its
executive officers whose annual compensation exceeds $100,000.
SUMMARY COMPENSATION TABLE
Name Other Restricted
and Principal Position Base Annual Stock Options All Other
Year Salary Bonus Comp. Award (s) SARs LTIP Payouts Comp.*
($) ($)
- ------------------------- ------ ------------ ---------------- ----------- ----------- --------- ---------------- ----------------
- ------------------------- ------ ------------ ---------------- ----------- ----------- --------- ---------------- ----------------
W.L.Brunson,Jr.
President & CEO
The National 2001 $118,941 25,578 -0- -0- -0- -0- $14,987
Security Group 2000 $114,637 17,166 - 0 - - 0 - - 0 - - 0 - $12,494
M.L. Murdock,
Senior Vice President 2001 $114,767 24,664 -0- -0- -0- -0- $16,124
The National Security 2000 $110,584 24,324 -0- -0- -0- -0- $14,615
Group 1999 $109,226 $0 -0- -0- -0- -0- $14,742
J. E. Brunson
President, National
Security Fire and 2001 $92,947 19,983 -0- -0- -0- -0- $13,568
Casualty Company 2000 $89,579 18,763 -0- -0- -0- -0- $10,979
*"All Other Compensation" includes the following for W. L. Brunson, Jr. for
the years 2001and 2000 Contributions to the 401 (K) Retirement Plan of $7,175
and $6,690, Directors' Fees of $6,960 and $5,515, and other employee benefits of
$852 and $389; Mr. Murdock totals for the years 2001, 2000, and 1999 for 401(K)
Retirement Plan contributions $7,057, $6,745, and $7,822, Deferred Directors'
Fees of $6,960, $6,340, and $6,725, and other employee benefits of $2,107,
$1,530, and $195. For Mr. J. E. Brunson for the years 2001and 2000 for the
401(K) Retirement Plan contributions of $5,661and $5,417, Directors' Fees of
$7,210 and $5,265 and other employee benefits of $697 and $297.
REPORT OF COMPENSATION COMMITTEE
The Compensation Committee of the Board of Directors is currently comprised
of James B. Saxon, Walter P. Wilkerson, and L. Brunson White all of whom are
outside directors of the Company. (Mr. White is currently a member of the
Company's Advisory Board and is nominated for election to the Board in
connection with the upcoming Meeting of the Shareholders). The Committee has
oversight of the compensation paid to officers and employees of the Company and
its subsidiaries, whether by salary or under the Company's bonus plan. This
Committee also is responsible for recommending officers to the Board of
Directors for full consideration and recommending directors' fees. The committee
members receive director fees as described in this Proxy Statement and do not
receive any other compensation from the Company. The Compensation Committee has
provided the following report:
It is the policy of the Compensation Committee to establish base salaries
and award bonuses to executive officers as well as establish the total annual
corporate compensation. This policy should be designed to attract, motivate, and
retain talented executives responsible for the success of the Company. The
compensation program should be developed and implemented within a competitive
framework and should take into account the achievement of overall financial
results and individual contributions. The Committee believes that base salaries
should be competitive as determined by geographic region, salaries within
insurance companies of similar size or lines of business, and the type
8
skills that a position requires. The Committee and management review formal
surveys of regional compensation levels as well as conducting informal surveys
of surrounding business and industry. It is an objective of the policy that base
salaries should be kept on the low to medium range of the scale, with
compensation supplemented by cash bonuses when financial results warrant. The
bonus plan for management and supervisory level employees is based on profits
and growth, and requires as a precondition that Company results for a given year
reach a threshold level of return on shareholders' equity. The threshold is
determined by the Compensation Committee and takes into consideration a number
of factors including current financial markets and historic patterns of Company
operations.
The Committee is aware of the provisions of the Internal Revenue Code which
restrict deductibility of executive compensation and can confirm that
compensation has been and will continue to be tax-deductible as no executive
officer will earn in excess of the dollar limitations imposed by such applicable
provisions.
Bonuses awarded in a given year are based on the previous year's results.
Bonuses awarded in 2001 were based on results for 2000. With results for 2001
improved over the previous year, it is anticipated that bonuses of a higher
amount will be awarded in 2002.
Contributions to executive officers under the Company's 401(K) Retirement
Plan are made on the same basis as are contributions to all other participants
in the Plan.
The Committee continues to review the Company's Compensation Policy in an
effort to ensure that it continues to accomplish the intended objectives. While
the Company has not and does not currently integrate long-term incentives in its
structure, certain forms of long-term incentives are being considered and may be
implemented in the future to continue to provide appropriate incentives for
management to maximize the Company's long-term financial results for the benefit
of the stockholders. The Committee believes that the Company's salary and
incentive compensation programs are competitive and appropriate for National
Security. - James B. Saxon, Walter P. Wilkerson, and L. Brunson White.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee of the Board of Directors is currently comprised
of James B. Saxon, Walter Wilkerson, L. Brunson White, all of whom are outside
directors or members of the Advisory Board. The Committee members receive
director fees as described in this Proxy Statement and do not receive any other
compensation from the Company. During 2001, Mr. Saxon's Director compensation
was $6,960, Mr. Wilkerson's Director compensation was deferred in the amount of
$7,210, Mr. White received Advisory Board compensation of $1,838.
EMPLOYEE BENEFITS
401 (K) Plan
The Company usually contributes, if profits warrant, an amount equal to
twice the employees' salary deferral amounts, not exceeding 5% of total
compensation of an individual employee or 5% of all eligible employees, to a
Retirement Savings Plan established under 401(K) of the Internal Revenue Service
Code of 1986 (the "Company 401 (K) Plan"). All full - time employees who have
completed 1,000 hours of service on either January 1, April 1, July 1 or October
1 are eligible to participate. The Company contributions are annually allocated
among the participants' plan accounts based on compensation received during the
year for which contribution is made. Amounts allocated vest as scheduled in the
Company 401 (K) Plan. Benefits are generally payable only upon termination,
retirement, disability or death.
9
COMPANY PERFORMANCE
The following graph shows a five-year comparison of cumulative returns for
the Company, the NASDAQ STOCK MARKET INDEX (U.S.), Standard & Poor's 500 Index
and the NASDAQ Insurance Stocks Index. The cumulative total return is based on
change in the year - end stock price plus reinvested dividends for each of the
periods shown.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
NASDAQ NASDAQ
Measurement period NATIONAL STOCK MARKET INSURANCE
(Fiscal year Covered) SECURITY (U.S.) INDEX STOCK INDEX S&P 500
1996 100.00 100.00 100.00 100.00
1997 144.95 122.48 146.73 133.45
1998 116.65 172.68 130.73 172.19
1999 98.76 320.83 101.41 208.54
2000 178.77 192.98 127.35 189.97
2001 175.88 153.12 136.51 167.58
STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth those persons who beneficially owned, as of
December 31, 2001, five percent or more of the Company Common Stock. Unless
otherwise noted, each beneficial owner has sole voting and investment powers.
Amount and Nature
of Beneficial Percentage
Ownership of of
Name and Address Company Common Stock Class
Brunson Properties, a partnership 366,445 14.86%
(W.L. Brunson Estate)
Elba, Alabama 36323
SunTrust Bank as Trustee, 227,349 9.22%
National Security Retirement Savings Plan,
Chattanooga, Tennessee 37402
J.R. Brunson 135,266 5.48%
1192 Pine Circle
Elba, Alabama 36323
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DIRECTOR AND OFFICER SECURITIES REPORTS
The Federal Securities laws require the Company's directors and executive
officers to file with the Securities and Exchange Commission initial reports of
ownership and reports of changes in ownership of the Company's common stock. To
the best of the Company's knowledge, all persons subject to these reporting
requirements filed the required reports on a timely basis.
STOCKHOLDERS' PROPOSALS
In order for a proposal by a stockholder of the Company to be eligible to
be included in the proxy statement and proxy form for the Annual Stockholders'
Meeting to be held in 2003, the proposal must be received by the Company at its
headquarters, 661 E. Davis Street, Elba, Alabama 36323, on or before January 12,
2003. The Board of Directors will review any stockholder proposals that are
filed to determine whether such proposals meet applicable criteria for inclusion
in the 2003 Proxy Statement for consideration at the 2003 Annual Meeting.
TRANSFER AGENT AND REGISTRAR
The Company is the Transfer Agent and Registrar for the Company Common
Stock.
ANNUAL REPORTS AND FINANCIAL STATEMENT
A copy of the Company's Annual Report to Stockholders for the fiscal year
ended December 31, 2001 accompanies this Proxy Statement. Additional copies of
the Company's Annual Report to Stockholders, and/or a copy of the Company's
annual report on Form 10-K filed with the Securities and Exchange Commission may
be obtained by written request to the Chief Financial Officer of the Company at
the address indicated above.
OTHER MATTERS
The Board of Directors of the Company does not know any other matters to be
brought before the meeting. If any other matters, not now known, properly come
before the Meeting or any adjournments thereof, the persons named in the
enclosed proxy, or their substitutes, will vote the proxy in accordance with
their judgment in such matters.
Date: March 18, 2002
/s/ W.L. Brunson, Jr.
THE NATIONAL SECURITY GROUP, INC.
W L. Brunson, Jr.
President
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