UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
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[_] Confidential, For Use of the SS.240.14a-11(c) or SS.240.14a-12
Commission Only (as permitted
by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
London Pacific Group Limited
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
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2) Aggregate number of securities to which transaction applies:
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3) Per unit price or other underlying value of transaction computed pursuant
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[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
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SEC 1913 (3-99)
LONDON PACIFIC GROUP LIMITED
Minden House, 6 Minden Place
St. Helier, Jersey JE2 4WQ
Channel Islands
April 2, 2001
Dear ADR holder:
You are cordially invited to attend the Annual General Meeting of
Shareholders of London Pacific Group Limited to be held at the Grand Hotel,
Esplanade, St. Helier, Jersey, Channel Islands on Thursday, May 31, 2001, at
9:00 a.m. local time.
Details of the business to be conducted at the meeting are given in the
attached Notice of Annual General Meeting of Shareholders and Proxy Statement.
As an ADR holder you are not entitled to vote directly at the meeting,
however, the ADR Depositary, The Bank of New York, is obligated to vote the
shares it holds on your behalf in accordance with your instructions. Whether or
not you plan to attend the meeting, it is important that your interests be
represented and voted at the meeting. Accordingly, please sign, date and return
the enclosed proxy card to The Bank of New York (in the accompanying envelope).
In order for your proxy instructions to be valid, they must be received by The
Bank of New York on or before May 24, 2001. If you wish, you may then revoke or
amend your proxy for any reason provided that such change is received by The
Bank of New York on or before that date.
Thank you for your interest in London Pacific Group Limited.
Sincerely,
Ronald W. Green
Secretary
[COMPANY LOGO]
LONDON PACIFIC GROUP LIMITED
Minden House, 6 Minden Place
St. Helier, Jersey JE2 4WQ
Channel Islands
NOTICE OF ANNUAL GENERAL MEETING OF SHAREHOLDERS
To the ADR holders of London Pacific Group Limited:
NOTICE IS HEREBY GIVEN that the Annual General Meeting of Shareholders of
London Pacific Group Limited (the "Company") will be held at the Grand Hotel,
Esplanade, St. Helier, Jersey, Channel Islands on Thursday, May 31, 2001, at
9:00 a.m. local time, for the following purposes:
Ordinary Business
1. To receive the report of the directors and the financial statements for the
year ended December 31, 2000, together with the report of the independent
auditors thereon.
2. To approve the declaration of a final dividend of 18.0 cents per share
gross on the Ordinary Shares (14.4 cents per ADR).
3. To re-elect a director who is retiring by rotation.
4. To re-appoint PricewaterhouseCoopers as independent auditors of the Company
and to authorize the directors to fix their remuneration.
Other Business
5. To act on any other matters that may properly come before the meeting.
The Board of Directors knows of no other matters which may be presented for
shareholder action at the meeting. To date, no shareholder proposals have
been received by the Company. However, if other matters do properly come
before the meeting, it is intended that the persons named in the proxies
will vote upon such matters in accordance with their best judgement.
Holders of the Company's Ordinary Shares are entitled to twenty-one (21)
clear days notice of, and to vote at, the Annual General Meeting and any
adjournment thereof. Only ADR holders of record at the close of business on
March 26, 2001 are entitled to notice of, to attend and to have their vote
counted at the Annual General Meeting and any adjournment thereof. ADR holders
are not entitled to vote directly at the meeting, however, the ADR Depositary,
The Bank of New York, is obligated to vote the shares it holds on behalf of the
ADR holders in accordance with their instructions. Accordingly, please sign,
date and return the enclosed proxy card to The Bank of New York (in the
accompanying envelope). IN ORDER FOR YOUR PROXY INSTRUCTIONS TO BE VALID, THEY
MUST BE RECEIVED BY THE BANK OF NEW YORK ON OR BEFORE MAY 24, 2001. A copy of
the Company's Annual Report to Shareholders for the year ended December 31,
2000, which contains audited consolidated financial statements and other
information which may be of interest to ADR holders, accompanies this Notice and
the enclosed Proxy Statement. All ADR holders are cordially invited to attend
the meeting.
By Order of the Board of Directors,
Ronald W. Green
Secretary
April 2, 2001
LONDON PACIFIC GROUP LIMITED
PROXY STATEMENT
ABOUT THE ANNUAL GENERAL MEETING
General
This Proxy Statement and the accompanying proxy card are being mailed to
ADR holders of London Pacific Group Limited (the "Company") on or about April 2,
2001, in connection with the solicitation of proxies by the Board of Directors
of the Company for use at the Annual General Meeting of Shareholders to be held
on May 31, 2001 (the "Meeting"), or at any adjournments thereof. The Meeting
will be held at 9:00 a.m. local time, at the Grand Hotel, Esplanade, St. Helier,
Jersey, Channel Islands.
The proxy card accompanying this Proxy Statement, which instructs The Bank
of New York as ADR Depositary (the "ADR Depositary"), is solicited by the Board
of Directors of the Company. ADRs represented by properly executed proxies
received by the ADR Depositary in time for the Meeting will be voted in
accordance with the choices specified in the proxies. Unless contrary
instructions are indicated on the proxy, the shares (representing ADRs) will be
voted FOR the election of the nominee named in the proxy statement as director,
and FOR the other proposals described therein. Any ADR holder giving a proxy has
the power to revoke it prior to its exercise by giving notice of revocation to
the ADR Depositary in writing, or by executing and delivering to the ADR
Depositary a later dated proxy. However, such action must be taken in sufficient
time to permit the necessary examination and tabulation of the subsequent proxy
or revocation before the vote is taken. Proxy instructions, amendments or
revocations must therefore be received by the ADR Depositary on or before May
24, 2001.
The cost of preparing, assembling, printing and mailing this Proxy
Statement, the accompanying proxy card and any other related materials used in
the solicitation of proxies will be borne by the Company. In addition to
soliciting by mail, directors, officers and employees of the Company, without
receiving any additional compensation, may solicit proxies personally, by
telephone or facsimile.
Also enclosed herewith is a copy of the Annual Report to Shareholders of
the Company for the year ended December 31, 2000.
Voting at the Annual General Meeting
Holders of ADRs should complete and return the enclosed proxy card in
accordance with the terms provided thereon not later than the close of business
on May 24, 2001. The close of business on March 26, 2001 has been fixed as the
record date for the determination of the holders entitled to give instructions
of voting rights at the Meeting and any adjournment thereof. Under the
depositary agreement between the Company and the ADR Depositary, the ADR
Depositary shall not vote or attempt to exercise the right to vote that attaches
to the Ordinary Shares other than in accordance with such instructions.
Two shareholders present in person or by proxy and entitled to vote shall
be a quorum for all purposes. If a quorum is present, directors are elected and
all other matters are decided upon by a show of hands, unless before or upon the
declaration of the results, a poll is demanded by the Chairman of the Meeting or
by at least three shareholders or by one or more shareholders representing not
less than one-tenth of the total voting rights of shareholders. If a poll is
taken, every shareholder who is present in person by representative or proxy
shall have one vote for every share of which he or she is the holder. Cumulative
voting in the election of directors is not permitted.
1
Proposals 1 to 4 which are described below are ordinary resolutions. Any
other resolutions presented at the Meeting would be special resolutions. The
approval of an ordinary resolution requires the affirmative vote of a majority
of the votes cast at the Meeting. The approval of a special resolution requires
an affirmative vote of at least two-thirds of the votes cast at the Meeting.
Accordingly, abstentions and broker non-votes will have no effect on any
resolution voted on at the Meeting.
As of March 5, 2001, there were 64,433,313 Ordinary Shares outstanding.
Also as of that date, there were 18,467,747 ADRs outstanding, representing
18,467,747 of those Ordinary Shares or 28.7% of the Company's total outstanding
shares. Each Ordinary Share carries one vote in a poll. Each ADR carries one
vote indirectly through the Ordinary Share held by the ADR Depositary on the ADR
holder's behalf.
For the purposes of the remainder of this document, the term "vote" shall
refer to either a vote by a holder of Ordinary Shares or instructions to the ADR
Depositary by a holder of ADRs.
PROPOSAL 1 - REPORT OF THE DIRECTORS AND FINANCIAL STATEMENTS
To receive the report of the directors and financial statements for the
year ended December 31, 2000, together with the report of the independent
auditors thereon.
The Company's Articles of Association provide that each year the above
shall be presented before a General Meeting of Shareholders. The Board of
Directors recommends a vote FOR the acceptance of the report of the directors
and financial statements for the year ended December 31, 2000, together with the
report of the independent auditors thereon.
PROPOSAL 2 - DECLARATION OF A FINAL DIVIDEND
To approve the declaration of a final dividend of 18.0 cents per share
gross on the Ordinary Shares (14.4 cents per ADR).
The Board of Directors recommends a vote FOR the declaration of a final
dividend of 18.0 cents per share gross on the Ordinary Shares (14.4 cents per
ADR).
PROPOSAL 3 - ELECTION OF DIRECTOR
The Company's Articles of Association provide that at each Annual General
Meeting, one-third (or the number nearest to but not exceeding one-third) of the
directors other than Arthur I. Trueger, who, as he is also the managing director
of the Company, does not retire by rotation nor is counted in calculating the
number of directors to retire by rotation, shall retire from office by rotation.
Under the Company's Articles of Association, there shall be no less than three
directors. The directors (other than Mr. Trueger) are elected to hold office
until they are subject to retirement by rotation. Victor A. Hebert, the
nominated director for 2001, has informed the Company that he is willing to
serve as a director. No person other than a director retiring at the meeting
shall, unless recommended by the Board of Directors, be eligible for election to
the office of director at any Annual General Meeting unless not less than seven,
nor more than twenty-eight (28) days, before the date appointed for the meeting,
a notice in writing signed by a shareholder, and a notice in writing signed by
that person of his willingness to be elected, has been left at the registered
office of the Company in Jersey. The Board of Directors may appoint any person
to be a director, either to fill a casual vacancy or as an additional director.
Any director so appointed shall hold office only until the next Annual General
Meeting and shall then be eligible for re-appointment, but shall not be taken
into account in determining the directors who are to retire by rotation at such
meeting.
2
The following director, already being a member of the Board of Directors
and eligible for re-election, retires by rotation and is nominated for
re-election at this Annual General Meeting. The Board of Directors recommends a
vote FOR the re-election of this nominee as a director.
Victor A. Hebert Mr. Hebert, age 63, has been a non-executive
director since the Company's incorporation in
January 1985 and Deputy Chairman since February
1996. He has been a senior member of the law firm
Heller, Ehrman, White & McAuliffe LLP in San
Francisco, California since 1969, having joined
the firm in 1962. He also serves as a director and
Secretary to California & Washington Co., and as
Secretary to Datron Systems, Incorporated, Nextest
Systems Corporation and Paymap Inc. Mr. Hebert is
a member of the Compensation Committee.
Subject to re-election, Mr. Hebert will be required to retire by rotation
again at the Annual General Meeting in 2006, provided that no additional
directors are appointed, or existing directors resign, before that time.
PROPOSAL 4 - APPOINTMENT OF INDEPENDENT AUDITORS
To re-appoint PricewaterhouseCoopers as independent auditors of the Company
for the year ended December 31, 2001 and to authorize the directors to fix their
remuneration.
The Company expects that representatives of PricewaterhouseCoopers will be
present at the Annual General Meeting and will be given the opportunity to make
a statement if they desire to do so and to respond to appropriate questions.
PricewaterhouseCoopers or its predecessors have examined the financial
statements of the Company each year since 1985.
The Board of Directors recommends a vote FOR the proposal to re-appoint
PricewaterhouseCoopers as independent auditors of the Company.
BOARD OF DIRECTORS AND COMMITTEES
Biographical information about each director continuing in office is
provided below:
Arthur I. Trueger Mr. Trueger, age 52, is the Executive Chairman,
founder of London Pacific Group Limited and a
principal shareholder. He has worked for the
Company for more than 24 years and holds A.B.,
M.A. and J.D. degrees from the University of
California.
Director continuing in office for a term expiring in 2002:
Harold E. Hughes, Jr. Mr. Hughes, age 55, has been a non-executive
director since January 1987. Prior to his
retirement, he was Chairman of Pandesic Company,
an eCommerce software supplier owned jointly by
Intel Corporation and SAP, from 1997 to 2000. For
23 years he was employed by Intel Corporation,
during which time he held a number of positions in
financial and operational management. Mr. Hughes
is a member of the Audit and Litigation
Committees.
3
Directors continuing in office for terms expiring between 2003 - 2005:
John Clennett Mr. Clennett, age 77, has been a non-executive
director since the Company's incorporation in
January 1985. He is a director of Ashburton
Replica Portfolio Limited and was a director of
Ansbacher (Jersey) Limited until 2000. He is a
member of the Institute of Chartered Accountants
in England and Wales and of the Chartered
Institute of Management Accountants. Prior to his
retirement in 1983, he was Treasurer of the States
of Jersey. Mr. Clennett is a member of the Audit
Committee.
The Viscount Trenchard Lord Trenchard, age 50, has been a non-
executive director since August 1999. He was a
director of Robert Fleming and Co. Limited from
1996 to 2000, where he was also head of Japanese
Investment Banking. Previously, he was a director
of Kleinwort Benson Limited from 1980 to 1996,
where he managed the Tokyo office for many years.
He is joint Chairman of the Japan Society and a
Trustee of The Royal Air Force Benevolent Fund.
Gary L. Wilcox Dr. Wilcox, age 54, has been a non-executive
director since the Company's incorporation in
January 1985. He has been executive Vice President
of Operations at ICOS Corporation, a Washington
based biotechnology company, since 1993.
Previously, he was Professor of Microbiology at
the University of California, Los Angeles, from
1974 to 1988. Dr. Wilcox is a member of the Audit,
Compensation and Litigation Committees.
One of the above directors is required to retire in each of the years 2003,
2004 and 2005. These retirement dates also assume that no additional directors
are appointed, or existing directors resign, during the period.
Meetings of the Board
The Board of Directors held four meetings during 2000. The Board has
established three committees: Audit, Compensation and Litigation. With the
exception of the Litigation Committee, each of the Committees also met during
2000. Director attendance at these meetings averaged 81% during 2000. Each
director attended 75% or more of the total number of Board and committee
meetings on which he served, except the Marquess of Tavistock who retired on
December 31, 2000 and is not being replaced at this time.
Committees of the Board
Audit Committee
Members: Gary L. Wilcox (Chairman)
John Clennett
Harold E. Hughes, Jr.
Number of Meetings in 2000: One
The Board of Directors has adopted a written charter for the Audit
Committee, which is attached to this Proxy Statement as Appendix A. The Audit
Committee has responsibility for the selection of the independent auditors, and
for reviewing the adequacy of the financial reporting process, the audit process
and the internal financial
4
controls. The Audit Committee also reviews the audited financial statements
and recommends that they be included in the Company's Annual Report on Form
10-K. The Committee is comprised of three independent directors in accordance
with New York Stock Exchange rules.
Compensation Committee
Members: Victor A. Hebert
Gary L. Wilcox
Marquess of Tavistock (retired as of
December 31, 2000)
Number of Meetings in 2000: Four
The Compensation Committee approves all elements of compensation for the
Executive Chairman, including bonuses, other than option grants as described
below. The Committee recommends all grants of share options for the Executive
Chairman, executive officers and other employees to the Trustees of The London
Pacific Group 1990 Employee Share Option Trust.
Litigation Committee
Members: Harold E. Hughes, Jr.
Gary L. Wilcox
Number of Meetings in 2000: None
The Litigation Committee was established in 1995 for the purpose of dealing
generally with all aspects of litigation arising from time to time that may
affect the Group.
DIRECTORS' COMPENSATION
Annual Compensation
Each director receives an annual fee of $7,500 and the Deputy Chairman
receives an additional annual fee of $10,000. Directors on the Audit and
Compensation Committees receive an annual fee of $7,500 and directors on the
Litigation Committee receive an annual fee of $10,000. John Clennett receives an
annual fee of $12,500 for administrative duties performed for the Company in
Jersey.
Share Option Plan
Under The London Pacific Group 1990 Employee Share Option Trust, a director
may be granted options to purchase the Company's Ordinary Shares at an option
exercise price equal to the market value of the Ordinary Shares as of the date
of the grant. Options expire seven or ten years from the date of grant. Under
this plan, each non-executive director, other than Marquess of Tavistock, was
granted 20,000 options on September 5, 2000 to purchase the Company's Ordinary
Shares at an exercise price of $21.00 per share. These options were fully vested
at the date of grant. No other options were granted to directors during 2000.
The Executive Chairman makes recommendations to the Trustees of The London
Pacific Group 1990 Employee Share Option Trust in relation to such grants.
5
INFORMATION REGARDING BENEFICIAL OWNERSHIP OF PRINCIPAL
SHAREHOLDERS, DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth certain information with respect to
beneficial ownership of Ordinary Shares as of March 5, 2001 for each person who
is known by the Company to own beneficially more than 5% of the Ordinary Shares
(including Ordinary Shares underlying ADRs), for directors and executive
officers named in the Summary Compensation Table on page 7 of this Proxy
Statement, and for all directors and executive officers as a group.
Amount and Nature of Ownership (1)
---------------------------------------------------------------------------------
Number of Options Exercisable Total Shares Percent of
Ordinary Within 60 Days Beneficially Outstanding
Name Shares Owned of March 5, 2001 (2) Owned Ordinary Shares
- ------------------------------------------------------------------------------------------------------------
Arthur I. Trueger 19,260,693 4,000,000 23,260,693 36.1%
650 California Street
Suite 2800, San Francisco
California 94108
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The London Pacific Group
1990 Employee Share
Option Trust (2) (3) 12,350,681 - 12,350,681 19.2%
Whiteley Chambers
Don Street, St. Helier
Jersey, JE4 9WG
Channel Islands
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Victor A. Hebert (4) 45,000 40,000 85,000 *
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John Clennett 5,450 20,000 25,450 *
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Harold E. Hughes, Jr. - 60,000 60,000 *
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The Viscount Trenchard - 40,000 40,000 *
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Gary L. Wilcox (5) 29,020 40,000 69,020 *
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Ian K. Whitehead 400 1,663,000 1,663,400 2.6%
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All directors and
executive officers
as a group (4)(5) 19,340,563 5,863,000 25,203,563 39.1%
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* Amounts represent less than one percent.
(1) Except as described in footnotes (4) and (5) below, each director and
executive officer has sole voting and investment power with respect to their
shares.
(2) The shares underlying the 5,863,000 options exercisable are also included in
the 12,350,681 shares held by The London Pacific Group 1990 Employee Share
Option Trust.
(3) The Trustees of The London Pacific Group 1990 Employee Share Option Trust
are entitled to notice of, and to vote at the Meeting, with each share
entitling them to one vote. The Trust has waived its entitlement to
dividends on any shares held. Victor A. Hebert, Deputy Chairman and a
non-executive director, is one of the four trustees of the Trust.
(4) Share amounts include 40,000 shares held in a pension and profit sharing
trust for the benefit of Mr. Hebert over which he has shared voting and
investment power. Except for options covering 40,000 shares, share amounts
do not include any shares owned by The London Pacific Group 1990 Employee
Share Option Trust, of which Mr. Hebert is one of the four trustees, and as
to which shares Mr. Hebert disclaims any beneficial interest.
(5) Share amounts include certain shares over which Mr. Wilcox has shared voting
and investment power. Mr. Wilcox beneficially owns 20,000 Ordinary Shares,
4,000 ADRs and 40,000 share options. He also owns 2,520 ADRs for the benefit
of Mr. John Wilcox and 2,500 ADRs as custodian for a minor.
6
EXECUTIVE COMPENSATION
The executive officers of the Company receive annual base salaries and are
also eligible for an annual bonus. Mr. Trueger and Mr. Whitehead currently
receive base salaries of $1,000,000 and GBP500,000 (approximately $735,000),
respectively. The amount of any annual bonus award to the Executive Chairman is
determined by the Compensation Committee of the Board of Directors based on the
performance of the Company and its subsidiaries (the "Group"). The amount of any
annual bonus award to the Chief Financial Officer is determined by the Executive
Chairman.
The following table sets forth the cash and non-cash compensation paid to
the Executive Chairman and the Chief Financial Officer of the Company for the
last three fiscal years. The Company has no executive officers other than Mr.
Trueger and Mr. Whitehead.
Summary Compensation Table
Long-Term
Annual Compensation Compensation
-------------------------------------------------- ------------
Securities
Other Annual Underlying All Other
Name and Principal Salary Bonus Compensation(1) Options Compensation(2)
Position Year $ $ $ # $
- -------------------------------------------------------------------------- ------------ -------------
Arthur I. Trueger 2000 1,000,000 2,250,000 22,255 0 0
Executive Chairman 1999 1,000,000 20,000,000 (3) 23,285 1,000,000 0
1998 991,667 0 21,815 0 0
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Ian K. Whitehead 2000 615,121 298,000 186,807 0 67,460
Chief Financial 1999 545,833 200,000 25,000 0 64,868
Officer 1998 495,833 150,000 25,962 684,000 1,200
- --------------------------------------------------------------------------------------------------------
(1) Amounts include directors fees, life insurance, vacation payouts and
relocation costs.
(2) Amounts represent realized appreciation in the Group's deferred compensation
plan and pension plan contributions.
(3) Approximately 73% of this bonus was paid by a distribution, at market value,
of certain listed equity securities owned by the Group.
Employment Agreement with the Chief Financial Officer
Mr. Whitehead joined the Company in September 1990 as Chief Financial
Officer. His employment is terminable either by the Company on twelve (12)
months written notice or by Mr. Whitehead on six months written notice.
The base salary of the Chief Financial Officer is reviewed annually by the
Executive Chairman who takes into account the performance of the Group and the
contribution made by the Chief Financial Officer to the Group during the
previous twelve months. Bonus awards are also determined by the Executive
Chairman.
7
The number of share options held by the Chief Financial Officer is reviewed
annually by the Executive Chairman. Additional share option grants to the Chief
Financial Officer are recommended by the Executive Chairman, at his discretion,
to the Compensation Committee, which makes recommendations to the Trustees of
The London Pacific Group 1990 Employee Share Option Trust.
Pension Plan
The Group has a defined contribution plan for the Chief Financial Officer.
This plan was established in 2000, with $17,340 contributed during the year
ended December 31, 2000.
Share Option Grants and Exercises
Share options may be granted to the Executive Chairman under The London
Pacific Group 1990 Employee Share Option Trust. The Compensation Committee of
the Board of Directors considers the responsibilities and performance of the
Executive Chairman and the performance of the Group when determining the number
of options to be recommended to the Trustees of The London Pacific Group 1990
Employee Share Option Trust. The Trust may grant share options to other officers
and employees, following recommendations from the Executive Chairman to the
Compensation Committee, which, if concurring, makes recommendations to the
trustees of the Trust. The objectives of this plan include retaining the best
personnel and providing for additional performance incentives.
Grants to the Executive Chairman are fully vested on the date of grant and
expire seven or ten years from the date of the grant.
Grants to the Chief Financial Officer and other employees are generally
exercisable in four equal installments beginning one year from the date of the
grant, subject to employment continuation, and expire seven or ten years from
the date of the grant.
There were no share option grants made in 2000 to the executive officers
named in the Summary Compensation Table. During the year ended December 31,
2000, 100,000 share options expired in respect of the Chief Financial Officer.
In February 2001, 1,000,000 share options expired in respect of the Executive
Chairman and an additional 100,000 share options expired in respect of the Chief
Financial Officer. The following table summarizes option exercises during 2000
under The London Pacific Group 1990 Employee Share Option Trust by these named
executive officers and the value of share options held by them as of December
31, 2000.
8
Aggregated Option Exercises in 2000 and
December 31, 2000 Option Values
Number of Value of
Securities Underlying Unexercised In-the-
Unexercised Options as Money Options as
of December 31, 2000 of December 31, 2000 (2)
Shares Acquired Exercisable/ Exercisable/
Name On Exercise Value Realized (1) Unexercisable Unexercisable
# $ # $
- ---------------------------------------------------------------------------------------------------------------
Arthur I. Trueger 2,000,000 15,197,140 5,000,000/nil 19,114,185/nil
- ---------------------------------------------------------------------------------------------------------------
Ian K. Whitehead 0 0 1,592,000/342,000 8,173,780/1,655,280
- ---------------------------------------------------------------------------------------------------------------
(1) Based on the closing price of the Company's Ordinary Shares as shown on the
London Stock Exchange on the date of exercise.
(2) Based on the closing price of the Company's Ordinary Shares on December 31,
2000 (GBP5.525 at an exchange rate of 1.49).
REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS
The Company's Compensation Committee of the Board of Directors (the
"Committee") is comprised of two non-executive directors, Victor A. Hebert and
Gary L. Wilcox, and is responsible for approving and reporting to the Board of
Directors the compensation of the Executive Chairman of the Company, including
base salary and bonus. The Compensation Committee is also responsible for
recommending share option grants for the Executive Chairman, the Chief Financial
Officer and for certain other employees of the Company or its subsidiaries to
the Trustees of The London Pacific Group 1990 Employee Share Option Trust and
for reviewing the Company's general compensation strategy.
Compensation Philosophy and Objectives
It is the philosophy of the Committee and the Company that in order to meet
the Company's goal of increasing long-term shareholder value, the Company must
develop and maintain a compensation program that attracts, motivates and retains
qualified executives and that aligns the financial rewards of the Company's
management with those of the Company's shareholders.
Compensation for the Company's executive officers includes salary and
generally an annual bonus award. All executive officers hold share options, but
share options are not necessarily granted every year. In establishing the level
of compensation for each executive officer, the Committee (in the case of the
Executive Chairman) and/or the Executive Chairman (in the case of the Chief
Financial Officer) consider many factors, with the primary factor being the
Company's operating performance and financial position. Other factors include
the executive officer's contribution to the advancement of the Company's
operating performance and financial position, strategic accomplishments such as
the development of new customers or new services and products, the development
of the Company's senior management team and the executive officer's seniority.
The Committee takes note of the compensation levels of senior executives of
publicly held, diversified financial services companies.
9
The Committee believes that the best interests of shareholders and
executives will be clearly aligned by providing executives and employees an
opportunity to increase their ownership in the Company. The Committee reviews
the recommendations of management for the award of share option grants to
employees. The Committee recommends and approves all grants of share options for
executive officers and other employees to the Trustees of the London Pacific
Group 1990 Employee Share Option Trust.
Compensation for the Executive Chairman
The base salary for the Executive Chairman is reviewed annually. The
Executive Chairman is also eligible for an annual bonus award, which may be paid
in either cash or shares of listed equity securities held by the Group.
As set forth under the "Summary Compensation Table" above, the Executive
Chairman received total compensation of $3,272,255 in fiscal 2000, including
base salary of $1,000,000 and a bonus of $2,250,000. This compensation is based
upon the Committee's qualitative analysis of the criteria set forth above in the
second paragraph under the heading "Compensation Philosophy and Objectives." In
addition, the Committee considered the Executive Chairman's contributions in
developing and implementing the strategic focus of the Company and successful
investment in high technology ventures.
COMPENSATION COMMITTEE
Victor A. Hebert
Gary L. Wilcox
REPORT OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
The Audit Committee of the Board of Directors has reviewed and discussed
the Company's audited financial statements for the year ended December 31, 2000
with the Company's management. The Audit Committee has discussed with
PricewaterhouseCoopers, the Company's independent auditors for the year ended
December 31, 2000, the matters required to be discussed by Statement of Auditing
Standards No. 61, "Communication with Audit Committee." The Audit Committee has
received the written disclosures and the letter from PricewaterhouseCoopers
required by Independence Standards Board Standard No. 1 and has discussed with
PricewaterhouseCoopers its independence.
Based on the Audit Committee's review and discussions above, the Audit
Committee recommends to the Board of Directors that the Company's audited
financial statements be included in the Company's Annual Report on Form 10-K for
the year ended December 31, 2000, for filing with the Securities and Exchange
Commission.
AUDIT COMMITTEE
Gary L. Wilcox (Chairman)
John Clennett
Harold E. Hughes, Jr.
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SHARE PERFORMANCE
The graph presented below compares the yearly change in the Company's
cumulative total return on ADRs for the five years ended December 31, 2000, with
the cumulative total returns of the S&P 500 Index and the S&P Insurance Index.
The comparison assumes $100 was invested on December 31, 1995 in each of the
Company ADRs, the stocks included in the S&P 500 Index, and the stocks included
in the S&P Insurance Index. It also assumes reinvestment of all dividends.
Comparison of Five-Year Cumulative Total Return
[graph]
1995 1996 1997 1998 1999 2000
- ----------------------------------------------------------------------------------------------------
London Pacific Group Limited $ 100.00 $ 104.50 $ 95.61 $ 107.52 $ 324.89 $ 275.89
- ----------------------------------------------------------------------------------------------------
S&P 500 Index $ 100.00 $ 122.94 $ 163.95 $ 210.80 $ 255.16 $ 231.93
- ----------------------------------------------------------------------------------------------------
S&P Insurance Index $ 100.00 $ 123.76 $ 180.79 $ 186.78 $ 193.54 $ 268.50
- ----------------------------------------------------------------------------------------------------
OTHER INFORMATION ABOUT DIRECTORS AND EXECUTIVE OFFICERS
Related Transactions
The Company paid legal fees of $418,000 during 2000 to a law firm of which
one of its directors, Victor A. Hebert, is a member.
As of December 31, 1999, Ian K. Whitehead, the Company's Chief Financial
Officer, had a housing loan from a Group company amounting to $728,000, which
was repaid during 2000. The loan had been provided at an interest rate of 7.25%.
Compensation Committee Interlocks and Insider Participation
The members of the Compensation Committee for 2000 were Victor A. Hebert,
Marquess of Tavistock and Gary L. Wilcox, none of whom have ever been an
executive officer or employee of the Company.
Victor A. Hebert is a senior member of the law firm Heller, Ehrman, White &
McAuliffe LLP in San Francisco, California. The Company retains this law firm as
legal counsel on various matters.
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Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 and related
regulations require the Company's directors, executive officers, and anyone
holding more than 10% of the Company's Ordinary Shares to report their initial
ownership of the Company's Ordinary Shares and any changes in that ownership to
the Securities and Exchange Commission and the New York Stock Exchange. The
Company is required to disclose in this Proxy Statement the failure of any
reporting person to file these reports when due. To the Company's knowledge,
based solely on its review of copies of such reports received by the Company,
the Company believes that during the year 2000, all reporting persons of the
Company satisfied these filing requirements.
OTHER MATTERS
The Company knows of no other matters to be presented at the Annual General
Meeting other than those described in this Proxy Statement. In the event that
other business properly comes before the Meeting, the persons named as proxies
will have discretionary authority to vote the shares underlying the ADRs
represented by the accompanying proxy in accordance with their own judgement.
ADDITIONAL INFORMATION
Shareholder Proposals for 2002 Annual General Meeting
ADR holders are entitled to present proposals for action at a forthcoming
meeting of shareholders if they comply with the requirements of the Securities
and Exchange Commission's proxy rules. Any proposals intended to be presented at
the Annual General Meeting of Shareholders of London Pacific Group Limited in
2002 must be received at the Company's registered office in Jersey, Channel
Islands on or before December 3, 2001 in order to be considered for inclusion in
the Company's proxy materials relating to such meeting.
Availability of Annual Report on Form 10-K
A copy of the Company's Annual Report on Form 10-K for the year ended
December 31, 2000, as filed with the Securities and Exchange Commission, will be
furnished without charge to ADR holders upon receipt by the Company of a request
addressed to:
Ronald W. Green
Secretary
London Pacific Group Limited
Minden House, 6 Minden Place
St. Helier
Jersey JE2 4WQ
Channel Islands
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The enclosed form of proxy has been prepared at the direction of the
Company, of which you are an ADR holder, and is sent to you at the request of
the Board of Directors.
LONDON PACIFIC GROUP LIMITED
By Order of the Board of Directors,
Ronald W. Green
Secretary
St. Helier
Jersey, Channel Islands
April 2, 2001
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APPENDIX A
AUDIT COMMITTEE CHARTER
Adopted by the Board of Directors of
London Pacific Group Limited
Composition:
The Audit Committee shall be composed of three or more directors, as
determined by the Board of Directors, each of whom shall meet the independence
and financial literacy requirements of the New York Stock Exchange, and at least
one of whom shall have past employment experience in finance or accounting,
requisite professional certification in accounting or any other comparable
experience or background which results in the individual's financial
sophistication, including being or having been a chief executive officer, chief
financial officer or other senior officer with financial oversight
responsibilities.
Unless a chairperson is designated by the Board of Directors, the members
of the Audit Committee may appoint their own chairperson by majority vote.
Responsibilities:
1. Recommend to the Board of Directors the selection of the independent
auditor, evaluate the performance of the independent auditor and, if so
determined by the Audit Committee, recommend to the Board of Directors
replacement of the independent auditor; it being acknowledged that the
independent auditor is ultimately accountable to the shareholders of the
Company.
2. Ensure the receipt of, and evaluate, the written disclosures and the letter
that the independent auditor submits to the Audit Committee regarding the
auditor's independence in accordance with Independence Standards Board
Standard No. 1, discuss such reports with the auditor and, if so determined
by the Audit Committee in response to such reports, recommend that the
Board of Directors take appropriate action to address issues raised by such
evaluation.
3. Discuss with the independent auditor the matters required to be discussed
by Statement of Auditing Standards No. 61, as it may be modified or
supplemented.
4. Instruct management and the independent auditor that the Audit Committee
expects to be informed if there are any subjects that require special
attention or if they perceive any significant weaknesses in the Company's
information and reporting systems.
5. Meet with management and the independent auditor to discuss the annual
financial statements and the report of the independent auditor thereon, and
to discuss significant issues encountered in the course of the audit work,
including restrictions on the scope of activities, access to required
information and adequacy of internal financial controls.
6. Review the management letter delivered by the independent auditor in
connection with the audit.
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7. Meet quarterly with management and the independent auditor to discuss the
quarterly financial statements prior to the filing of the Form 10-Q;
provided that this responsibility may be delegated to the Chairman of the
Audit Committee.
8. Meet at least once each year in separate executive sessions with management
and the independent auditor to discuss matters that any of them or the
Audit Committee believes could significantly affect the financial
statements and should be discussed privately.
9. Have such meetings with management and the independent auditor as the Audit
Committee deems appropriate to discuss significant financial risk exposures
facing the Company and management's plans for monitoring and controlling
such exposures.
10. Review significant changes to the Company's accounting principles and
practices proposed by the independent auditor or management.
11. Conduct or authorize such inquiries into matters within the Audit
Committee's scope of responsibility as the Audit Committee deems
appropriate. The Audit Committee shall be empowered to retain independent
counsel and other professionals to assist in the conduct of any such
inquiries.
12. Provide minutes of Audit Committee meetings to the Board of Directors, and
report to the Board of Directors on any significant matters arising from
the Audit Committee's work.
13. At least annually, review and reassess this charter and, if appropriate,
recommend proposed changes to the Board of Directors.
14. Prepare the report required by the rules of the U.S. Securities and
Exchange Commission to be included in the Company's annual proxy statement.
15. In the performance of its responsibilities, the Audit Committee is the
representative of the shareholders. However, it is not the responsibility
of the Audit Committee to plan or conduct audits, or to determine whether
the Company's financial statements are complete and accurate or in
accordance with generally accepted accounting principles.
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