MOTOR CLUB OF AMERICA
95 Route 17 South
Paramus, NEW JERSEY 07653
[LOGO] Motor Club of America
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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
June 6, 2001
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TO THE HOLDERS OF COMMON STOCK OF MOTOR CLUB OF AMERICA:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of Motor
Club of America (the Company) will be held at the Marriott at Glenpointe Hotel,
100 Frank W. Burr Boulevard, Teaneck, New Jersey, on Wednesday, June 6, 2001, at
10:00 o'clock A.M. (New Jersey Time), for the following purposes:
1. To elect eight (8) directors of the Company to hold office until
the 2002 Annual Meeting of Stockholders and until their successors shall
have been duly elected and qualified;
2. To amend the Restated and Amended Certificate of Incorporation of
the Company to change the name of the Company to Preserver Group, Inc.;
and
3. To transact such other business as may properly come before the
meeting or any adjournment thereof.
The Board of Directors has fixed the close of business on April 26, 2001,
as the record date for the determination of the holders of Common Stock entitled
to notice of and to vote at the meeting.
If you cannot be present in person, your management would greatly
appreciate your filling in, signing and returning the enclosed proxy, in the
envelope provided for the purpose, in time to arrive no later than June 5, 2001.
Any proxy not received by that date may arrive too late to be voted at the
meeting.
By Order of the Board of Directors
PETER K. BARBANO
Secretary
Dated: Paramus, New Jersey
May 3, 2001
MOTOR CLUB OF AMERICA
95 ROUTE 17 South
PARAMUS, NEW JERSEY 07653
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PROXY STATEMENT
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Annual Meeting of Stockholders
June 6, 2001
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This statement is furnished in connection with the solicitation of proxies
by the management of MOTOR CLUB OF AMERICA for use at the 2001 Annual Meeting of
Stockholders to be held on June 6, 2001, and at any and all adjournments
thereof. The Board of Directors has selected the close of business on April 26,
2001 as the record date, for purposes of determining shareholders entitled to
notice of, and entitled to vote at the Annual Meeting, and this proxy statement
is being mailed to such shareholders on or about May 3, 2001. On the record
date, there were 2,124,387 shares of Common Stock of the Company outstanding,
all of the par value of $.50 per share and each entitled to one vote on any
matter to be voted on at the meeting.
Other than the election of directors, which requires a plurality of the
votes cast, each matter to be submitted to the stockholders requires the
affirmative vote of a majority of the votes cast at the meeting. For purposes of
determining the number of votes cast with respect to a particular matter, only
those cast "For" or "Against" are included. Abstentions and broker non-votes are
counted only for purposes of determining whether a quorum is present at the
meeting.
If the enclosed form of proxy is properly executed and returned in time to
be voted at the meeting, the shares represented thereby will be voted. The
attendance at the meeting by any stockholder who has previously given a proxy
will not have the effect of revoking the proxy; however, any such stockholder
may vote in person by delivering written notice of revocation of the proxy to
the Secretary of the Company prior to the exercise of the proxy.
Election of Directors
At the meeting eight directors are to be elected to hold office until the
2002 Annual Meeting of Stockholders, and until their successors have been duly
elected and qualified. It is the intention of the persons named in the enclosed
form of proxy to vote the shares represented thereby for the election of the
following nominees as directors of the Company. Each of the nominees is a member
of the Board of Directors of the Company. The principal occupations of Messrs.
Galatin, Fried, Lobeck, McWhorter, McWhorter, Jr. and Swanner for the last five
years appear below; Messrs. Gilbert and Haveron devote substantially all of
their business time to the affairs of the Company or one or more other companies
in the Motor Club of America Group, and have been active in the business of one
or more companies in the Motor Club of America Group for more than five years.
Should any of these nominees be unable or unwilling to accept nomination or
election for any presently unknown reason, it is the intention of the persons
named in this proxy to vote for such other person or persons as the management
of the Company may nominate.
Common Stock of the
Company Owned
Beneficially at
March 31, 2001
Years in Which -------------------------
Nominee Has Served Number
as Director of This of Percent
Name and Age Principal Occupations Company (Inclusive) (A) Shares(B)(C) of Class (C)
------------- ------------------- ----------------------- --------------------------
Archer McWhorter, 79 (D)......Chairman of the Board of Directors 1986-2001 536,175 23.05
of Companies in the Motor Club of
America Group; from 1995 to March
1997, Director of National Car
Rental Systems, Inc. and affiliated
corporations, a car rental
enterprise ("NCR"); from 1995 to
February 1997, one-third owner of
Santa Ana Holdings, Inc. ("Santa
Ana"), which exchanged its 90%
stock interest in NCR for stock in
Republic Industries, Inc. (now
known as AutoNation, Inc.); from
February 1997 to February 1998,
consultant of NCR
Stephen A. Gilbert, 62 (E)....President and Chief Executive 1984-2001 46,750 2.18
Officer of Companies in the Motor
Club of America Group; Chairman of
the Board and Chief Executive
Officer of North East Insurance
Company
Robert S. Fried, 71 (E).......Retired Senior Vice President of 1956-2001 1,000 .05
Companies in the Motor Club of
America Group
William E. Lobeck, Jr., 61....From March 1997 to August 1999, 1986-2001 512,088 22.09
President and COO of the Automotive
Rental Group of AutoNation, Inc.;
from 1995 to May 1997, CEO,
President and Director of NCR; from
1995 to February 1997, one-third
owner of Santa Ana, which exchanged
its 90% stock interest in NCR for
stock in Republic Industries, Inc.
(now known as AutoNation, Inc.);
President of The Numbered Car Co.,
a car dealership
Alvin E. Swanner, 72..........From 1995 to March 1997, Chairman of 1986-2001 534,167 22.96
the Board and Director of NCR; from
1995 to February 1997, one-third
owner of Santa Ana which exchanged
its 90% stock interest in NCR for
stock in Republic Industries, Inc.
(now known as AutoNation, Inc.);
from February 1997 to February
1998, consultant of NCR; President
of Swanner & Associates, Inc.,
formerly a car rental company;
President of Chateau, Inc., a golf
and country club, and Chateau
Development Company, Inc., a
development company; President of
135 St. Charles, Inc., a hotel
development company
Malcolm Galatin, 61...........Professor of Economics, The City 1987-2001 -- --
College of The City University of
New York
Patrick J. Haveron, 39 (E)....Executive Vice President, Chief 1994-2001 24,975 1.17
Executive Officer and Chief
Financial Officer of Motor Club of
America; Executive Vice President
and Chief Financial Officer of
Companies in the Motor Club of
America Group; Treasurer of the
Insurance Companies
Archer McWhorter, Jr., 57(D)..Associate Professor, University of 1998-2001 -- --
Houston
2
Following is stock ownership information of officers of the Company who
are listed in the compensation tables that follow, but who are not included in
the Director tabulations above.
Common Stock of the
Company Owned Beneficially
at March 31, 2001
---------------------------
Number of Percent
Name Title Shares (B)(C) of Class (C)
------ ----- -------------- ------------
Myron Rogow, 58 ......... Vice President--
Underwriting and 9,375 .44
Regional Operations
Charles Pelosi, 56 ...... Vice President--
Information Services 12,875 .60
Ronald A. Libby, 57 ..... Vice President--
Regional Operations; -- --
President, North East
Insurance Company
Following is stock ownership information by persons known to the Company
to be a beneficial owner of more than five percent of such stock at March 31,
2001.
Name and Address
----------------
Archer McWhorter ................................... 536,175 23.05
1600 Smith Street
Houston, Texas 77002
William E. Lobeck, Jr. ............................. 512,088 22.09
1132 South Lewis Avenue
Tulsa, Oklahoma 74104
Alvin E. Swanner ................................... 534,167 22.96
28 Chateau Haut Brion Street
Kenner, Louisiana 70065
Heartland Advisors, Inc. ......................... 203,000 9.56
789 North Water Street
Milwaukee, Wisconsin 53202
Following is stock ownership information by all 15 directors and officers
of the Company as a group at March 31, 2001.
Title of Class
-----------
Motor Club of America Common Stock
(par value $.50 per share) ...................... 1,697,100 61.11
- ----------
(A) Includes years during any portion of which the nominee served as director.
(B) As reported to the Company by the named persons. The nature of beneficial
ownership or shares shown in this Proxy Statement is sole voting and
investment power, except the shares of Heartland Advisors, Inc. is based
on a Schedule 13G dated January 15, 2001, which indicates sole dispositive
power as to 203,000 shares but only sole voting power as to 3,000 of such
shares.
(C) Includes (1) stock options for Common Stock which are currently
exercisable or exercisable within 60 days of March 31, 2001; for Mr.
Gilbert 18,750 shares, for Mr. Haveron 15,625 shares, and for Messrs.
Rogow and Pelosi 5,625 shares each; (2) Debentures for Common Stock which
are currently convertible; for Mr. Archer McWhorter 201,736 shares by a
limited partnership of which he is general partner, for Mr. Lobeck 193,688
shares, and for Mr. Swanner 201,735 shares owned by a Louisiana
partnership in commendam of which he is general partner; and (3) for Mr.
Archer McWhorter 301,635 shares which are owned by a family trust of which
he is trustee, 30,804 shares owned by the limited partnership of which he
is general partner and 2,000 shares owned by his wife in which he
disclaims beneficial ownership; for Mr. Lobeck 15,400 shares which are
owned by the William E. Lobeck Revocable Trust of which he is trustee, and
15,399 shares which are owned by the Kathryn L. Taylor Revocable Trust
(Kathryn L. Taylor is Mr. Lobeck's wife, and Mr. Lobeck disclaims
beneficial ownership in the shares owned by his wife's Revocable Trust);
and for Mr. Swanner 30,797 shares which are owned by the Louisiana
partnership in commendam of which he is general partner.
(D) Archer McWhorter is the father of Archer McWhorter, Jr., who presently is
a beneficiary of his father's family trust (25%) and limited partnership
(14.5%); Mr. Archer McWhorter, Jr. disclaims any beneficial ownership in
his father's Debentures and Common Stock.
(E) Member of Finance Committee.
One of the Company's insurance subsidiaries, MCA Insurance Company (MCAIC)
was declared insolvent on October 23, 1992 as a result of claims of Hurricane
Andrew, which struck the South Florida coast on August 24, 1992. The Company
wrote off in 1992 its investment in MCAIC and its subsidiaries,
Property-Casualty Company of MCA and Fairmount Central Urban Renewal
Corporation. The directors and executive officers of the Company, with the
exception of Malcolm Galatin, Archer McWhorter, Jr., and Ronald A. Libby, were
directors and executive officers of MCAIC.
3
Committees of the Board
The Executive Committee serves as a policy-making and supervisory body for
all operations of the Company, has all the eligible powers of the Board of
Directors between meetings of the Board and also acts as the nominating
committee. Shareholders who wish to suggest nominees for director should write
to the Secretary of the Company at 95 Route 17 South, Paramus, New Jersey
07653-0931, stating in detail the qualifications of such persons for
consideration by the Committee.
The Compensation and Evaluation Committee administers executive
compensation and bonus plans; it met one time during 2000.
The Stock Option Plan Committee administers the 1987, 1992 and 1999 Stock
Option Plans and met two times during 2000.
The Executive and Stock Option Plan Committees are comprised of Archer
McWhorter, William E. Lobeck, Jr. and Alvin E. Swanner. The Compensation and
Evaluation Committee is comprised of William E. Lobeck, Jr. and Alvin E.
Swanner.
The Audit Committee, which is comprised of Malcolm Galatin and Robert S.
Fried, assesses the Company's risk of fraudulent financial reporting and
management's program to monitor compliance with the code of corporate conduct,
participates in the recommendation of independent public accountants and reviews
the audit plans of the internal auditor and independent public accountants. The
Audit Committee met five times during 2000.
The Board of Directors of the Company met on four occasions during 2000.
During 2000, none of the incumbent directors attended less than 75% of the
aggregate of (1) the total number of meetings of the Board ( held during the
period for which he has been a director) and (2) the total number of meetings of
all committees of the Board on which he served (during the period that he
served).
Audit Committee
The Audit Committee, which adopted a charter in 1994 and revised it in
2000, presently consists of two members, both of whom satisfy the definition of
independent directors established by both the Nasdaq Stock Market and state
insurance regulatory requirements. A third member financially knowledgeable as
prescribed by the Nasdaq Stock Market will be added as a member by June 13,
2001. The Audit Committee Charter is Appendix A attached hereto.
Audit Committee Report
The Audit Committee has reviewed and discussed the Company's audited
financial statements for the fiscal year ended December 31, 2000 with management
and with the Company's independent accountants, PricewaterhouseCoopers, LLP.
Management is responsible for the Company's internal controls and the financial
reporting process. The independent accountants are responsible for performing an
independent audit of the Company's consolidated financial statements in
accordance with generally accepted auditing standards and for issuing a report
thereon.
The Audit Committee has discussed with PricewaterhouseCoopers, LLP, the
matters required to be discussed by Statement on Auditing Standards No. 61
relating to the conduct of the audit. The Audit Committee has received the
written disclosures and the letter from PricewaterhouseCoopers, LLP, required by
Independence Standards Board Standard No. 1 (Independence Discussions with Audit
Committees), has discussed with PricewaterhouseCoopers, LLP, their independence,
and has considered the compatibility of non-audit services provided by
PricewaterhouseCoopers, LLP, with their independence.
Based on the review and discussions described above, the Audit Committee
recommended to the Board of Directors that the audited financial statements for
the fiscal year ended December 31, 2000, be included in the Company's Annual
Report on Form 10-K for the fiscal year ended December 31, 2000, for filing with
the Securities and Exchange Commission.
Malcolm Galatin, Chairman Robert S. Fried
Audit and Non Audit Fees
The following sets for the aggregate fees billed the Company for the year
ended December 31, 2000 by the Company's independent auditors,
PricewaterhouseCoopers, LLP:
Audit Fees .............................................. $313,000
Financial Information Systems Design
and Implementation Fees .............................. None
All Other Fees .......................................... $182,000
4
The Audit Committee has considered whether the provision of these services
is compatible with maintaining the principal auditors' independence.
Directors' Compensation
Each non-employee director receives $14,500 per year from Companies in the
Motor Club of America Group. Directors who are also employees do not receive any
amount, in addition to their compensation, for being directors. Each member of
the Executive Committee receives $58,000 per year from Companies in the Motor
Club of America Group; and each non-employee member of the Audit and Finance
Committees receives $300 per meeting.
Executive Compensation Tables
The following tables provide information about executive compensation.
SUMMARY COMPENSATION TABLE
The following table sets forth information about the compensation of the
chief executive officers and each of the three most highly compensated executive
officers of the Company for services in all capacities to the Company and its
subsidiaries.
Long Term
Compensation
Annual Compensation Award (2)
----------------------- ------------
(a) (b) (c) (d) (e) (f)
Securities
Underlying All Other
Options/ Compen-
Names and principal Salary Bonus (1) SAR's (3) sation (4)
Position Year ($) ($) (#) ($)
------------------- ---- ------ --------- ----------- -----------
Stephen A. Gilbert ................ 2000 175,000 95,000 7,500 19,659
President and Chief 1999 175,000 45,000 7,500 19,409
Executive Officer 1998 170,962 121,000 7,500 15,010
Patrick J. Haveron ................ 2000 175,000 95,000 7,500 9,400
Executive Vice President, 1999 163,250 45,000 7,500 9,151
Chief Executive Officer 1998 140,192 100,000 5,000 7,515
and Chief Financial Officer
Myron Rogow ....................... 2000 130,000 39,000 2,500 6,248
Vice President-- 1999 130,000 20,000 2,500 6,388
Underwriting and Regional 1998 130,962 42,435 2,500 7,422
Operations
Charles Pelosi .................... 2000 97,135 24,500 2,500 5,127
Vice President-- 1999 97,135 15,250 2,500 4,745
Information Services 1998 96,833 35,362 2,500 5,690
Ronald A. Libby (5) ............... 2000 135,000 20,000 2,500 --
Vice President-- 1999 38,948 -- -- 389
Regional Operations; 1998 -- -- -- --
President, North East
Insurance Company
- ----------
(1) Bonus amounts shown were earned with respect to the year indicated but may
have been paid in the following year.
(2) The Company does not have a restricted stock award plan or a long term
incentive award plan other than certain stock option plans.
(3) Amounts shown represent the number of stock options granted each year;
there are no stock appreciation rights.
(4) Amounts shown include (a) Company contributions for the account of each
named executive officer under the 401(k) Plan, a tax-qualified defined
contribution plan open to all salaried employees of the Company and
certain subsidiaries upon completion of one year of service, (b) the value
of certain group life insurance premiums; and (c) for Mr. Gilbert and Mr.
Haveron, contributions to a non-qualified deferred compensation plan.
(5) Amounts shown were from September 24, 1999, the date North East Insurance
Company was acquired by the Company.
5
OPTION/SAR GRANTS IN LAST FISCAL YEAR
The following table shows all grants of options to the named executive
officers of the Company in 2000. Pursuant to Securities and Exchange Commission
rules, the table also shows the value of the options granted at the end of the
option terms (five years) if the stock price were to appreciate annually by 5%
and 10%, respectively. There is no assurance that the stock price will
appreciate at the rates shown in the table. The table also indicates that if the
stock price of the option does not appreciate, there will be no increase in the
potential realizable value of the options granted.
Potential Realizable Value at
Assumed Annual Rates of Stock
Price Appreciation for
Individual Grants Option Term
- -------------------------------------------------------------------------------------- -----------------------------
(a) (b) (c) (d) (e) (f) (g)
Number of
Securities
Underlying % of Total
Options/ Options/SAR's Exercise
SAR's Granted to or Base
Granted (1) Employees in Price Expiration
Name (#) Fiscal Year ($/Share) Date 5% 10%
------ ---------- ----------- ---------- ----------- ------ -------
Stephen A. Gilbert ................ 7,500 20.8 8.125 6/5/05 16,836 37,203
Patrick J. Haveron ................ 7,500 20.8 8.125 6/5/05 16,836 37,203
Myron Rogow ....................... 2,500 6.9 8.125 6/5/05 5,612 12,401
Charles Pelosi .................... 2,500 6.9 8.125 6/5/05 5,612 12,401
Ronald A. Libby ................... 2,500 6.9 8.125 6/5/05 5,612 12,401
- ----------
(1) Amounts shown represent the number of stock options granted in 2000; no
stock appreciation rights ("SAR's) have ever been issued. Options may not
be exercised for at least one year after grant and may then be exercised
in installments of 25% of the grant amount each year until they are 100%
vested. Payment must be made in full upon exercise in cash or such other
consideration as is acceptable to the Stock Option Plan Committee.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION SAR VALUES
The following table provides information as to options exercised by each
of the named executive officers of the Company during 2000 and the value of
options held by such officers at year end measured in terms of the closing price
of the Company Common Stock on December 31, 2000.
(a) (b) (c) (d) (e)
Number of Securities
Shares Underlying Unexercised Value of Unexercised
Acquired Value Options/SAR's at Fiscal In-the-Money Option/SAR's
on Exercise Realized Year-End (1)(#) at Fiscal Year-End (1),(2)($)
Name (#) ($) Exercisable Unexercisable Exercisable Unexercisable
---- ----------- -------- ----------- ------------- ----------- -------------
Stephen A. Gilbert ............. 0 0 18,750 21,250 0 4,688
Patrick J. Haveron ............. 0 0 15,625 19,375 0 4,688
Myron Rogow .................... 0 0 5,625 6,875 0 1,563
Charles Pelosi ................. 0 0 5,625 6,875 0 1,563
Ronald A. Libby ................ 0 0 5,625 2,500 0 1,563
- ----------
(1) No SAR's have ever been issued.
(2) Options are in-the-money if the fair market value of the Common Stock
exceeds the exercise price of the option.
LONG TERM INCENTIVE PLANS--AWARDS IN LAST FISCAL YEAR
The Company does not maintain any Long Term Incentive Plans other than
stock option plans previously disclosed.
STOCKHOLDER RETURN PERFORMANCE GRAPH
Set forth on the following page is a line graph comparing the cumulative
total stockholder return on the Company's Common Stock against the cumulative
total return of the SNL Securities LC (SNL) Index for NASDAQ Stock Market
(United States Companies), the SNL Index for NASDAQ Fire, Marine & Casualty
Insurance and the SNL All Property & Casualty Insurance Index for the period of
five years commencing December 31, 1995 and ending December 31, 2000. The graph
and table assume that $100 was invested on December 31, 1995 in each of the
Company's Common Stock, the SNL Index for the NASDAQ Stock Market (United States
Companies), the SNL Index for the NASDAQ Fire, Marine & Casualty Insurance and
the SNL All Property & Casualty Insurance Index. This data was furnished by SNL.
6
Comparison of Five Year-Cumulative Total Years Returns
Performance Graph for
MOTOR CLUB OF AMERICA
[The following table was depicted as a line chart in the printed material.]
Legend
Period Ending
------------------------------------------------------
Index 12/30/95 12/29/96 12/31/97 12/31/98 12/31/99 12/31/00
------------------------------------------------------------------------------------------------------------
Motor Club of America 100.00 146.15 207.69 220.19 130.77 134.62
NASDAQ - Total US 100.00 123.04 150.69 212.51 394.94 237.68
SNL All Property & Casualty Insurance Index 100.00 122.80 177.20 171.24 130.32 188.51
NASDAQ Stocks (SIC 6330-6339 US Companies) 100.00 108.42 164.70 140.51 105.71 143.73
7
Executive Compensation
Report of the Compensation and Evaluation Committee and
Stock Option Plan Committee on Executive Compensation
The Compensation and Evaluation Committee was charged by the Board of
Directors with administering salaries and other compensation for executive
officers. The Stock Option Plan Committee administers the Company's incentive
stock option programs. For the purposes of insuring continuity in the
application of the Company's compensation philosophy, both Committees
(hereinafter referred to as the Committee) have identical membership, with Mr.
Archer McWhorter also being a member of the Stock Option Plan Committee.
COMPENSATION PHILOSOPHY
There are several guiding principles of the Committee in performing its
functions. The compensation philosophy of the Company and its subsidiaries is to
provide a competitive salary and other remuneration tied to Company performance
against operating goals in order to attract and retain quality insurance
executives. Stock options are provided to executives to offer additional
incentive compensation commensurate with Company performance.
The Committee believes this compensation philosophy properly balances its
executives incentives to provide short-term operating performance.
The Company's continuing financial improvement is the preeminent concern
of the Committee, and all compensation decisions derive from this concern.
COMPONENTS OF EXECUTIVE COMPENSATION
The Company's executive compensation program consists of: (i) an annual
salary, (ii) a short-term incentive in the form of bonuses and (iii) a long-term
incentive in the form of stock options.
Salary
The Committee believes the Company has attracted executive officers with
talent and expertise which exceed the Company's current operating environment
and market scope. Accordingly, these executive officers are paid an annual
salary which is commensurate with their industry expertise, functional expertise
and value in the insurance marketplace.
During recent years, the Company has limited increases in the base
salaries of executives to periodic reviews, which may or may not be conducted
annually. The Committee believes that total compensation for executives and key
officers should primarily be determined by Company performance and that bonuses
should be the featured additional remuneration component for these individuals,
as opposed to salary. This strategy assists in controlling expenses while
employing a philosophy that is performance oriented. The Committee believes that
its approach to salary in the context of its overall compensation is not
detrimental to the Company's long-term prospects.
Historically, many factors have been used to determine annual salary
increases. Such factors include Company performance, the Company's operating
plan and objectives thereunder, individual performance, Company performance in
relation to the industry, and the regulatory environment in which the Company
operates. In addition, exceptional performance by an individual, whether or not
it has a direct impact on Company performance, is taken into account in setting
salary increases.
Stock Options
Stock options are granted as a means of providing executive officers and
key employees long term benefits and incentives from an improvement in Company
share performance. The options are granted at the market value of the stock on
the date of grant. Thus, the options gain value only to the extent the stock
price exceeds the option price during the life of the option. Options are
awarded in a manner which maintains the executive's focus on long-term share
performance.
Many of the principal competitors of the Company have adopted and now have
in operation stock option plans. The plans are used as incentive devices by
corporations which wish to attract new management, to convert their officers
into "partners" by giving them a stake in the business, to retain the services
of executives
8
who might otherwise leave and to give their employees generally a more direct
interest in the success of the corporation.
Bonuses--Annual Incentive Program
The Company also pays bonuses for special performance and offers an Annual
Incentive Plan (AIP) which provides incentive compensation tied to the
profitability of the Company against a performance factor which is derived from
the Company's calendar year Budget and Profit Plan. The Compensation Committee
selected participants in the 2000 AIP who perform functions which directly
affect the ability of the Company to meet its business and performance
objectives.
Under the 2000 AIP, because income before Federal income taxes for the
year was within a specific range as compared to the performance factor, bonuses,
adjusted to reflect individual performance, have been paid to participants,
including executive officers, during 2001.
The Committee reserves the right to withdraw the AIP in total or an
executive's participation in the AIP at any time. The Committee has established
an AIP for 2001 and its terms and performance factor are effective only for
2001.
The 2001 AIP will offer incentive compensation tied to the profitability
of the Company and its subsidiaries against performance factors which are
derived from the Company's calendar year Budget and Profit Plan. The
Compensation Committee will select participants in the 2001 AIP who perform
functions which directly affect the ability of the Company and its subsidiaries
to meet their business and performance objectives.
Under the 2001 AIP, if income for the year is within a specific range as
compared to the performance factor, bonuses, adjusted to reflect individual
performance, will be paid during 2002. The executive officers named in the
Summary Compensation Table are participating in the AIP in 2001.
Chief Executive Officer Compensation
The Committee evaluated the base compensation of Messrs. Gilbert and
Haveron, the rewards of the AIP, and the long term incentive plan. It was
determined that total compensation received by the Chief Executive Officers were
commensurate with similar officers within the insurance industry peer group as
well their personal and Company performance on both a qualitative and
quantitative basis.
William E. Lobeck, Jr. Alvin E. Swanner
Compensation and Evaluation Committee Interlocks and Insider Participation
William E. Lobeck, Jr. and Alvin E. Swanner, who are members of the
Compensation and Evaluation Committee and the Stock Option Plan Committee, each
was paid director's fees of $64,167 during 2000. There are no Compensation and
Evaluation Committee interlocks.
Retirement Plan and Certain Transactions
In 1954, the Company established an Employees' Retirement Plan (Pension
Plan), which as amended covers employees with one year's service and provides
annual retirement benefits based on salary and length of service to companies in
the Motor Club of America Group. The Pension Plan was amended as of January 1992
to suspend benefit accruals. The trustees of the Pension Plan, which is
non-contributory, are Robert S. Fried, Stephen A. Gilbert and Patrick J.
Haveron.
In order to fund Plan benefits, the trustees have purchased United States
Government obligations, and have placed funds with money managers who are
investing these monies in a balanced relationship between equity and
fixed-income securities.
The annual Pension Plan benefits payable upon retirement at or after the
normal retirement age of 65 consist of an amount equal to the sum as of January
1992 of:
(a) 1 1/2% of the first $12,000 of an employee's average annual
compensation plus 2 1/4% in excess of $12,000, multiplied by the employee's
years of plan participation prior to January 15, 1983; and
9
(b) For each plan year after January 15, 1983, 1 3/4% of the first $13,200
of the employee's annual compensation plus 2 3/4% in excess of $13,200.
Early retirement is available at age 55 with 15 years of service. A
participant's Pension Plan benefits become 100% vested after five years of
service. Pension Plan amounts are not subject to deductions for Social Security
benefits or other offset amounts.
The following table sets forth certain information relating to the Pension
Plan with respect to the five most highly compensated executive officers of the
Company who are participants in the Pension Plan:
Estimated Annual Latest Remuneration Credited Years
Name Benefit at Age 65 Covered by the Plan (1) of Service (1)
----- --------------- -------------------- --------------
Stephen A. Gilbert ........ $52,650 $175,000 24
Patrick J. Haveron ........ 4,950 79,500 4
Myron Rogow ............... 9,500 113,950 4
Charles Pelosi ............ 21,250 86,920 18
Ronald A. Libby (2) ....... -- -- --
- ----------
(1) As of January 1992 when Pension Plan accruals were suspended.
(2) Not a participant in the Pension Plan.
Proposal Relating to Amendment of Certificate of Incorporation
The Board of Directors has approved, subject to the approval of the common
stockholders, an amendment to the Restated and Amended Certificate of
Incorporation of the Company, to change the name of the Company from Motor Club
of America to Preserver Group, Inc.
The Board of Directors is of the opinion that the corporate name,
Preserver Group, Inc., defines the Company's culture and is a corporate identity
that more accurately reflects its operations. The Company no longer owns a motor
club, personal automobile insurance business continues to decline rapidly as a
percentage of its business and the Company is becoming a small and mid-sized
commercial lines insurance operation.
The affirmative vote of the holders of a majority of the Common Stock
present in person or by proxy is required for approval of this proposal. It is
intended that the proxies solicited hereby will be voted for such approval
unless the stockholder specifies otherwise. Management believes that approval of
the change of name to Preserver Group, Inc. is in the best interest of the
stockholders and recommends a vote FOR this proposal.
Other Business
The management of the Company knows of no other matters which may be
presented at the meeting. However, if any matter not now known should come
before the meeting, it is intended that the persons named in the enclosed form
of proxy, or their substitutes, will vote the shares represented by them in
accordance with their judgment on such matter.
Financial Statements Available
A copy of the Annual Report of the Company for 2000, which contains
financial statements audited by the Company's independent public accountants, is
being sent to all stockholders with this proxy statement.
A copy of the Company's 2000 Annual Report on Form 10-K filed with the
Securities and Exchange Commission is available without charge upon written
request to the Chief Financial Officer of the Company, 95 Route 17 South,
Paramus, New Jersey 07653-0931.
Relationship with Independent Public Accountants
The Board of Directors has selected the firm of PricewaterhouseCoopers LLP
as the Company's principal independent public accountant for the year of 2001.
One or more members of this firm will attend the Annual Meeting, will have the
opportunity to make a statement if they so desire and will be available to
answer questions that may be asked by stockholders.
10
Proposals of Stockholders
In order for proposals of stockholders to be included in the proxy
materials for the 2002 Annual Meeting of Stockholders, such proposals must be
received by the Secretary of the Company no later than January 4, 2002.
A proposal of stockholders not included in the proxy material for the 2002
Annual Meeting of Stockholders can be presented to that Annual Meeting by other
means. However, if notice of a proposal is not given to the Secretary of the
Company on or before March 19, 2002, the persons authorized under management
proxies will have discretionary authority to vote and act according to their
best judgment on the matter, without any specific or further instructions of the
stockholders whose proxies they hold.
Cost of Solicitation
The costs of the meeting, including the solicitation of proxies, will be
borne by the Company. Proxies will be solicited by mail, and may also be
solicited, without extra compensation, by certain directors, officers and
regular employees of the Company, by mail, telephone, telegraph, telecopy or
personally. Arrangement will be made with brokerage houses and other custodians,
nominees and fiduciaries to forward proxy soliciting material to the beneficial
owners of stock held of record by such persons, and the Company may reimburse
them for reasonable out-of-pocket expenses incurred by them in doing so.
If you cannot be present in person, your management would greatly
appreciate your filling in, signing and returning the enclosed proxy, in the
envelope provided for the purpose, in time to arrive not later than June 6,
2001. Any proxy not received by that date may arrive too late to be voted at the
meeting.
By Order of the Board of Directors
PETER K. BARBANO,
Secretary
Dated: Paramus, New Jersey
May 3, 2001
11
APPENDIX A
MOTOR CLUB OF AMERICA AUDIT COMMITTEE CHARTER
The Audit Committee ("the Committee"), of the Board of Directors ("the
Board") of Motor Club of America ("the Company"), will have the oversight
responsibility, authority and specific duties as described below.
COMPOSITION
The Committee will be comprised of directors as determined by the Board.
The members of the Committee will meet the independence and experience
requirements of the Nasdaq Stock Market (NASDAQ). The members of the Committee
will be elected annually at the organizational meeting of the full Board held in
June and will be listed in the annual report to shareholders. The Board will
elect one of the members of the Committee to be the Committee Chair.
RESPONSIBILITY
The Committee is a part of the Board. Its primary function is to assist
the Board in fulfilling its oversight responsibilities with respect to (i) the
annual financial information to be provided to shareholders and the Securities
and Exchange Commission (SEC); (ii) the system of internal controls that
management has established; and (iii) the internal and external audit process.
In addition, the Committee provides an avenue for communication between internal
audit, the independent accountants, financial management and the Board. The
Committee should have a clear understanding with the independent accountants
that they must maintain an open and transparent relationship with the Committee,
and that the ultimate accountability of the independent accountants is to the
Board and the Committee. The Committee will make regular reports to the Board
concerning its activities.
While the Audit Committee has the responsibilities and powers set forth in
this Charter, it is not the duty of the Audit Committee to plan or conduct
audits or to determine that the Company's financial statements are complete and
accurate and are in accordance with generally accepted accounting principles.
This is the responsibility of management and the independent auditor. Nor is it
the duty of the Audit Committee to conduct investigations, to resolve
disagreements, if any, between management and the independent auditor or to
assure compliance with laws and regulations and the Company's business conduct
guidelines.
AUTHORITY
Subject to the prior approval of the Board, the Committee is granted the
authority to investigate any matter or activity involving financial accounting
and financial reporting, as well as the internal controls of the Company. In
that regard, the Committee will have the authority to approve the retention of
external professionals to render advice and counsel in such matters. All
employees will be directed to cooperate with respect thereto as requested by
members of the Committee.
MEETINGS
The Committee is to meet as many times as the Committee deems necessary.
The Committee is to meet in separate executive sessions with the independent
accountants and internal audit at least once each year and at other times,
including with the chief financial officer, when considered appropriate.
ATTENDANCE
Committee members will strive to be present at all meetings. As necessary
or desirable, the Committee Chair may request that members of management and
representatives of the independent accountants and internal audit be present at
Committee meetings.
SPECIFIC DUTIES
In carrying out its oversight responsibilities, the Committee will:
1. Review and reassess the adequacy of this charter annually and recommend
any proposed changes to the Board for approval. This should be done in
compliance with applicable NASDAQ Audit Committee Requirements.
1
2. Review with the Company's management, internal audit and independent
accountants the Company's accounting and financial reporting controls.
Obtain annually in writing from the independent accountants their letter
as to the adequacy of such controls.
3. Review with the Company's management, internal audit and independent
accountant's significant accounting and reporting principles, practices
and procedures applied by the Company in preparing its financial
statements. Discuss with the independent accountants their judgments about
the quality, not just the acceptability, of the Company's accounting
principles used in financial reporting.
4. Review the scope of internal audit's work plan for the year and receive a
summary report of major findings by internal auditors and how management
is addressing the conditions reported.
5. Review the scope and general extent of the independent accountants' annual
audit. The Committee's review should include an explanation from the
independent accountants of the factors considered by the accountants in
determining the audit scope, including the major risk factors. The
independent accountants should confirm to the Committee that no
limitations have been placed on the scope or nature of their audit
procedures. The Committee will review annually with management the fee
arrangement with the independent accountants.
6. Inquire as to the independence of the independent accountants and obtain
from the independent accountants, at least annually, a formal written
statement delineating all relationships between the independent
accountants and the Company as contemplated by Independence Standards
Board Standard No. 1, lndependence Discussions with Audit Committees.
7. Have a predetermined arrangement with the independent accountants that
they will advise the Committee through its Chair and management of the
Company of any matters identified through procedures followed for interim
quarterly financial statements, and that such notification is to be made
prior to the related press release or, if not practicable, prior to filing
Form 10-Q. Also receive a written confirmation provided by the independent
accountants at the end of each of the first three quarters of the year
that they have nothing to report to the Committee, if that is the case, or
the written enumeration of required reporting issues.
8. At the completion of the annual audit, review with management, internal
audit and the independent accountants the following:
o The annual financial statements and related footnotes and financial
information to be included in the Company's annual report to shareholders
and on Form 10-K.
o Results of the audit of the financial statements and the related report
thereon and, if applicable, a report on changes during the year in
accounting principles and their application.
o Significant changes to the audit plan, if any, and any serious disputes or
difficulties with management encountered during the audit. Inquire about
the cooperation received by the independent accountants during their
audit, including access to all requested records, data and information.
Inquire of the independent accountants whether there have been any
disagreements with management that, if not satisfactorily resolved, would
have caused them to issue a nonstandard report on the Company's financial
statements.
o Other communications as required to be communicated by the independent
accountants by Statement of Auditing Standards (SAS) 61 as amended by SAS
90 relating to the conduct of the audit. Further, receive a written
communication provided by the independent accountants concerning their
judgment about the quality of the Company's accounting principles, as
outlined in SAS 61 as amended by SAS 90, and that they concur with
management's representation concerning audit adjustments.
If deemed appropriate after such review and discussion, recommend to the
Board that the financial statements be included in the Company's annual report
on Form 10-K.
9. After preparation by management and review by internal audit and
independent accountants, approve the report required under SEC rules to be
included in the Company's annual proxy statement. The charter is to be
published as an appendix to the proxy statement every three years.
10. Discuss with the independent accountants the quality of the Company's
financial and accounting personnel. Also, elicit the comments of
management regarding the responsiveness of the independent accountants to
the Company's needs.
2
11. Meet with management, internal audit and the independent accountants to
discuss any relevant significant recommendations that the independent
accountants may have, particularly those characterized as 'material' or
'serious'. Typically, such recommendations will be presented by the
independent accountants in the form of a Letter of Comments and
Recommendations to the Committee. The Committee should review responses of
management to the Letter of Comments and Recommendations from the
independent accountants and receive follow-up reports on action taken
concerning the aforementioned recommendations.
12. Recommend to the Board the selection, retention or termination of the
Company's independent accountants.
13. Review the appointment and replacement of the senior internal audit
executive.
14. Review with management, internal audit and the independent accountants the
methods used to establish and monitor the Company's policies with respect
to unethical or illegal activities by Company employees that may have a
material impact on the financial statements.
15. Generally as part of the review of the annual financial statements,
receive an oral report(s), at least annually, from the Company's general
counsel concerning legal and regulatory matters that may have a material
impact on the financial statements.
16. As the Committee may deem appropriate, obtain, weigh and consider expert
advice as to Audit Committee related rules of the NASDAQ, Statements on
Auditing Standards and other accounting, legal and regulatory provisions.
3
[LOGO] Motor Club of America
Annual Meeting of Stockholders
Marriott at Glenpointe Hotel
100 Frank W. Burr Boulevard
Teaneck, New Jersey
June 6, 2001
10:00 A. M.
* Fold and detach here *
- --------------------------------------------------------------------------------
Motor Club of America
Proxy Solicited on Behalf of the Board of Directors
for the Annual Meeting of Stockholders to be Held June 6, 2001
PROXY: ARCHER McWHORTER, ALVIN E. SWANNER, WILLIAM E. LOBECK, JR. AND STEPHEN A.
GILBERT, and each of them are hereby appointed as attorneys and proxies, with
full power of substitution, to represent and to vote all stock of MOTOR CLUB OF
AMERICA (the Company) in the name of the undersigned, as fully and effectively
as the undersigned could do if personally present, at the Annual Meeting of
Stockholders of the Company, to be held at the Marriott at Glenpointe Hotel, 100
Frank W. Burr Boulevard, Teaneck, New Jersey 07666, on June 6, 2001 at 10
o'clock A.M. (New Jersey Time), and at any adjournment thereof, upon the matters
set forth in the Proxy Statement, which has been received by the undersigned,
and in their discretion in the transaction of such other business as may
properly come before the meeting or any adjournment thereof.
- --------------------------------------------------------------------------------
(Please mark, sign and date and return promptly in the envelope provided)
Motor Club of America
Proxy Solicited on Behalf of the Board of Directors
1. Election of directors (Mark Only One Box).
Nominees: A. McWhorter, S.A. Gilbert, R.S. Fried, M. Galatin, W.E. Lobeck,
Jr., A.E. Swanner, P.J. Haveron, A. McWhorter, Jr.
|_| Vote FOR all nominees listed above and recommended by the Board of
Directors, EXCEPT vote withheld from the following nominees (if any): |_|
Vote WITHHELD from all nominees.
If no indication is made, the proxies shall vote FOR the election of the
director nominees.
(INSTRUCTION: To withhold authority to vote for any individual nominee, write
that nominee name on the line provided below.)
- --------------------------------------------------------------------------------
2. Approval of Amendment of Certificate of Incorporation
|_| FOR |_| AGAINST |_| ABSTAIN
3. In their discretion, the proxies are authorized to vote upon any other
business that may come before the meeting or any adjournment thereof.
Please sign here personally, exactly as your
name appears hereon. Joint owners must both
sign.
DATED______________________________________2001
SIGNED_________________________________________
SIGNED_________________________________________
Please mark, sign and date this proxy and
return promptly in the envelope provided