SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
FPIC INSURANCE GROUP, INC.
(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)(1)
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 to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
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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
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FPIC INSURANCE GROUP, INC.
--------------------------
John R. Byers
President
Chief Executive Officer
April 30, 2001
Dear Shareholder:
You are cordially invited to attend our Annual Meeting of Shareholders.
The meeting will be held on Wednesday, June 6, 2001, at 10:00 a.m. Eastern Time,
in the Pensacola Room at the Omni Hotel, 245 Water Street, Jacksonville, Florida
32202.
At this year's meeting, the Shareholders will vote on the election of
five Directors and on amendments to the Company's stock option plans.
A notice of meeting and a proxy statement containing more information
with regard to these items are attached.
Your vote is important. Please sign and return your proxy card before
the meeting, so that your shares will be represented and voted at the meeting,
even if you cannot attend.
Yours truly,
/s/ John R. Byers
John R. Byers
225 Water Street, Suite 1400 - Jacksonville, Florida 32202-5147 -
(904) 350-1016 - Fax (904) 633-9579
FPIC Insurance Group, Inc.
225 Water Street, Suite 1400
Jacksonville, Florida 32202
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To the Shareholders of FPIC Insurance Group, Inc.:
The Annual Meeting of Shareholders of FPIC Insurance Group, Inc. (the
"Company") will be held in the Pensacola Room at the Omni Hotel, 245 Water
Street, Jacksonville, Florida, on Wednesday, June 6, 2001, at 10:00 a.m. Eastern
Time. The purposes of the meeting are:
1. To elect five Directors to serve until their terms expire.
2. To vote on an amendment to the Director Stock Option Plan.
3. To vote on an amendment to the Omnibus Incentive Plan.
4. To transact such other business as may properly come before the
meeting and at any adjournments or postponements of the meeting.
The Board of Directors has set April 11, 2001, as the record date for
the meeting. This means that shareholders at the close of business on that date
are entitled to:
o receive this notice of the meeting; and
o vote, either by proxy or in person, at the meeting and any
adjournments or postponements of the meeting.
You are cordially invited to attend the Annual Meeting. However,
whether or not you plan to attend the Annual Meeting, we encourage you to sign
and return your proxy card before the meeting, so that your shares will be
represented and voted at the meeting even if you cannot attend. A return
envelope, which requires no postage, if mailed in the United States, has been
provided for your use. If you attend the Annual Meeting and inform the Secretary
of the Company in writing that you wish to vote your shares in person, your
proxy will not be used.
By Order of the Board of Directors
/s/ Roberta Goes Cown
-----------------------------------------
Roberta Goes Cown
Corporate Counsel and
Secretary of the Company
Jacksonville, Florida
April 30, 2001
We urge each shareholder to promptly sign and return the
enclosed proxy card. See our question and answer
section for information about voting,
how to revoke a proxy and how to vote shares in person.
FPIC Insurance Group, Inc.
225 Water Street, Suite 1400
Jacksonville, Florida 32202
April 30, 2001
PROXY STATEMENT
FOR ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JUNE 6, 2001
Our Board of Directors is furnishing you this proxy statement to
solicit your proxy to be voted at the 2001 Annual Meeting of Shareholders of
FPIC Insurance Group, Inc. (the "Company"). The meeting will be held in the
Pensacola Room at the Omni Hotel, 245 Water Street, Jacksonville, Florida 32202,
at 10:00 a.m., Eastern Time. Your proxy may also be voted at any adjournments or
postponements of the meeting.
The Annual Report of the Company to its Shareholders for the 2000
fiscal year and this proxy statement and form of proxy are being distributed on
or about April 30, 2001 to shareholders entitled to vote.
All properly executed written proxies that are delivered pursuant to
this solicitation will be voted at the meeting in accordance with the directions
given in the proxy, unless the proxy is revoked before the meeting.
Only holders of record of shares of Common Stock at the close of
business on April 11, 2001 are entitled to vote at the meeting, or at
adjournments or postponements of the meeting. Each holder of record on the
record date is entitled to one vote for each share of Common Stock held. At the
close of business on April 11, 2001, there were 9,351,255 shares of Common Stock
issued and outstanding.
39
QUESTIONS AND ANSWERS ABOUT
THE MEETING AND VOTING
1. What is a proxy?
A proxy is your legal designation of another person to vote stock you
own. If you designate someone as your proxy in a written document, that
document is called a proxy or a proxy card. The enclosed proxy card
names two officers of the Company as proxies for the 2001 Annual
Meeting of Shareholders. These two officers are Pamela D. Deyo and
Charles Divita, III. A representation of the proxy card for the 2001
Annual Meeting of shareholders can be found at Appendix B.
2. What is a proxy statement?
A proxy statement is a document that the federal securities laws and
regulations require us to give you when we ask you to sign a proxy card
designating each of Pamela D. Deyo and Charles Divita, III as proxies
to vote on your behalf. This year proxy statements are being
distributed on or about April 30, 2001 to shareholders entitled to
vote.
3. What is the difference between a shareholder of record and a shareholder who
holds stock in street name?
o If your shares are registered in your name, you are a shareholder
of record.
o If your shares are in the name of your broker or bank, your shares
are held in street name.
4. What different methods can you use to vote?
o Via Proxy: All shareholders may vote by returning the enclosed
proxy card; or
o In Person: All shareholders may vote in person at the meeting. If
you wish to vote in person at the meeting and your shares of
common stock of the Company are held in the street name of your
broker, you must obtain a legal proxy from your broker in order to
vote in person at the meeting.
5. What is the record date and what does it mean?
The record date for the 2001 Annual Meeting of Shareholders is April
11, 2001. The record date is established by the Board of Directors, as
required by law. Each shareholder of common stock at the close of
business on the record date is entitled:
o to receive notice of the meeting; and
o to vote one vote for each share of common stock held on the
record date, at the meeting and any adjournments or
postponements of the meeting.
2
6. How can you revoke a proxy?
A shareholder can revoke a proxy by any one of the following three
actions:
o giving written notice to the Secretary of the Company;
o delivering a later dated proxy; or
o voting in person at the meeting.
7. Who counts the votes?
The Company's Transfer Agent will tabulate the proxies. Roberta Goes
Cown, Corporate Counsel and Secretary of the Company, has been
designated as the Inspector of Election for the 2001 Annual Meeting of
Shareholders to certify the results of the tabulation.
8. What are your voting choices when voting for Director nominees through the
enclosed proxy card?
In voting on the election of five Director nominees to serve until
their terms expire, you may vote in one of the following ways:
o in favor of all nominees;
o withhold votes as to all nominees; or
o withhold votes as to specific nominees.
9. What vote is needed to elect Directors?
Directors will be elected by a plurality of the votes cast by the
shareholders voting in person or by proxy at the meeting.
The Board of Directors recommends a vote "FOR" each of the nominees.
10. What are your voting choices when voting on each of the amendments to the
Company's stock option plans through the enclosed proxy card?
In voting on each of the amendments to the Company's stock option
plans, you may vote in one of the following ways:
o in favor of the amendment;
o against the amendment; or
o abstain from voting on the amendment.
11. What votes are needed to approve each of the amendments?
A majority of the votes cast by the shareholders voting in person or by
proxy at the Annual Meeting of Shareholders will be necessary to
approve the amendment to the Company's Director Stock Option Plan and
the amendment to the Company's Omnibus Incentive Plan.
The Board of Directors recommends a vote "FOR" each of these
amendments.
3
12. What if a shareholder does not specify a choice for a matter when returning
a proxy?
Shareholders should specify their choice for each matter on the
enclosed form of proxy. If no instructions are given, proxies that are
signed and returned will be voted FOR the election of all Director
nominees and FOR the amendments to the Company's stock option plans.
13. How are abstentions and broker non-votes counted?
Abstentions occur when a shareholder who is entitled to vote a share of
common stock of the Company chooses not to vote that share. Broker
non-votes occur when a broker that holds shares in street name for a
customer does not have authority to vote on certain non-routine matters
because its customer has not provided any voting instruction on the
matter.
Abstentions and broker non-votes will have no effect on business of the
meeting that is of a routine nature and is properly presented at the
meeting. Abstentions and broker non-votes will have no effect on the
outcome of the Company's votes at the 2001 Annual Meeting of
Shareholders.
ELECTION OF DIRECTORS
The Company has a staggered Board of Directors, with three classes of
directors that generally serve for terms of three years. The Board of Directors
currently consists of 14 persons. The Company's Articles of Incorporation
provide that the number of directors may be determined from time to time by
resolution adopted by the affirmative vote of at least 75% of the entire Board
of Directors. This number and its determination is exclusive of directors to be
elected by the holders of any one or more series of Preferred Stock voting
separately as a class or classes. No such Preferred Stock is outstanding. The
Company's Bylaws provide that the Company's President will always be nominated
by the Board of Directors for election to the Board of Directors whenever the
President's term as a director expires or whenever the President is not a
director.
Members of the Board of Directors are required to be between 18 and 70
years of age; provided that (i) any director who is elected prior to becoming 70
years of age may complete his then current term as a director and (ii) any
director serving as of January 10, 1998 who as of such date was older than 70
years of age, or who has or will become older than 70 years of age during his
then current term as a director, will be eligible to serve one additional term
as a director for the term commencing upon the termination of his then current
term. As a result of such age requirement, three directors will be retiring
from the Company's Board upon completion of their 2001 terms. D. L. Van Eldik,
M.D. has served as a director of the Company since its formation in 1996 and as
a
4
director of Florida Physicians Insurance Company, Inc. ("FPIC"), the Company's
largest insurance subsidiary, from 1988 to 1998. Frank Moya, M.D. has served as
a director of the Company since 1998 and as a director of FPIC from 1998 to
1999. Henry M. Yonge, M.D. has served as a director of the Company since its
formation in 1996 and as a director of FPIC from 1985 to 1999. Dr. Yonge also
served as Chairman of FPIC's Board from 1988 to 1991. Each of these Directors
has made significant contributions to the Companies they have served.
As a result of these retirements, the Board of Directors has determined
that there should be thirteen directors after the Annual Meeting of Shareholders
until such time as one additional director is designated by APA Management, Inc.
("APAM") to fill the vacant directorship created by Dr. Moya's retirement. In
connection with the Company's acquisition of Anesthesiologists Professional
Assurance Company ("APAC") in 1998, the Company, APAC and APAM entered into a
Management Agreement pursuant to which APAM manages APAC's business. Under the
APAC acquisition agreement, the Company agreed to cause a designee by APAM to be
appointed to the Company's and FPIC's Boards of Directors, so long as the
Management Agreement remains in effect. Dr. Moya has served as APAM's designee
to the Company's Board of Directors since 1998 and Elizabeth Moya, Dr. Moya's
daughter, a practicing attorney and an officer and director of APAC, is APAM's
current designee to FPIC's Board of Directors. Dr. Moya, upon completion of his
2001 term, will be retiring from the Company's Board, at which time APAM will
designate and the Company's Board will elect a replacement designee to serve
until the 2002 Annual Meeting of Shareholders.
Under Florida Statutes, the classes of directors under a staggered
Board are to be as nearly equal in number as possible. John R. Byers was
elected to the Board during 2000 to replace William R. Russell, whose term
would have expired in 2003. Consequently, in order to comply with Florida
Statutes, Mr. Byers is being elected to hold office until 2003 or until his
successor is elected and qualified. Four other directors are being elected to
hold office until 2004, or until their successors are elected and qualified.
The persons designated as nominees for election in the 2004 class include two
incumbent directors, James W. Bridges, M.D. and J. Stewart Hagen, M.D., and two
director nominees, John K. Anderson, Jr. and M.C. Harden, III, standing for
election for the first time in 2001.
If, for any reason, any of the nominees is not a candidate when the
election occurs, the enclosed Proxy may be voted for a substitute nominee. The
Board of Directors does not anticipate that any nominee will not be a candidate.
Further information regarding the nominees and the other directors is set forth
below.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR"
EACH OF THE NOMINEES.
5
BOARD OF DIRECTORS
OF FPIC INSURANCE GROUP, INC.
Nominee Standing for Election in 2001 for Term Expiring in 2003
John R. Byers, 46, is President and Chief Executive Officer of the
Company. Mr. Byers joined the Company in November 1998 as Executive Vice
President and General Counsel. In May 1999, he was elected Secretary and in
June 1999, he was further elected as Chief Operating Officer. Mr. Byers was
elected director, interim President and Chief Executive Officer in July 2000.
Mr. Byers was elected as President and Chief Executive Officer of the Company in
September 2000. Mr. Byers also serves as a director of each of the Company's
four insurance subsidiaries and of Physicians' Reciprocal Insurers ("PRI"), a
New York medical professional liability insurance reciprocal for which the
Company provides reciprocal management services. Prior to joining the Company,
Mr. Byers was a partner in the LeBoeuf, Lamb, Greene & MacRae, L.L.P. law firm
from 1988 until 1998. Mr. Byers has served as a director of the Company since
July 2000.
Nominees Standing for Election in 2001 for Terms Expiring in 2004
John K. Anderson, Jr., 52, is Executive Vice President, Treasurer and
Chief Financial Officer of American Heritage Life Investment Co., a life
insurance company located in Jacksonville, Florida, which is owned by Allstate
Financial. From 1993 until Mr. Anderson joined American Heritage in January
1996, Mr. Anderson served as Chief Executive Officer of E. G. Baldwin &
Associates, Inc., a regional distributor of medical imaging products and
services to hospitals and other medical providers, located in Cleveland, Ohio.
Prior to that, he was President and Chief Executive Officer of Capitol American
Life Insurance Company and before that Executive Vice President and Chief
Financial Officer of Baptist Health Systems, Inc. Mr. Anderson is also a member
of the Board of Directors of Baptist Medical Center.
James W. Bridges, M.D., 66, is engaged in the private practice of
obstetrics and gynecology in Miami, Florida. Dr. Bridges has practiced medicine
since 1967. Dr. Bridges has served as a director of the Company since its
formation in 1996 and as a director of FPIC since 1985.
J. Stewart Hagen, M.D., 69, is a retired general surgeon who practiced
in Ft. Myers, Florida from 1965 to 1996. Dr. Hagen has served as a director of
the Company since its formation in 1996 and as a director of FPIC since 1988.
M. C. Harden, III, 48, has served as Chairman of the Board and
President and as a Principal of Harden & Associates, Inc., an insurance broker
and risk management and employee benefits consultant, located in Jacksonville,
Florida, since 1976. Mr. Harden is also a member of the Board of Directors of
Baptist Medical Center.
6
Incumbent Directors Whose Terms Expire In 2003
Richard J. Bagby, M.D., 60, is engaged in the private practice of
diagnostic radiology in Orlando, Florida. Dr. Bagby has practiced medicine
since 1972. In 2000, Dr. Bagby joined Boston Diagnostic Imaging as its Medical
Director. Dr. Bagby is a Past-President of the Florida Medical Association
("FMA") and has served as a director of the Company since its formation in 1996.
Dr. Bagby has also served as a director of FPIC since 1993.
Robert O. Baratta, M.D., 60, is engaged in the private practice of
ophthalmology in Stuart, Florida and is Co-Chief Executive Officer of Ultrastrip
Systems, Inc. Dr. Baratta has practiced medicine since 1973. He has served as a
director of the Company since its formation in 1996, and has served as Chairman
of the Board since July 1999. Dr. Baratta also served as a director of FPIC
from 1993 to March 2000.
Louis C. Murray, M.D., 76, is a family physician engaged in private
practice in Orlando, Florida. Dr. Murray has practiced medicine since 1954. Dr.
Murray is a Past-President of the FMA and has served as a director of the
Company since its formation in 1996 and served as a director of FPIC from 1988
to 1999.
Incumbent Directors Whose Terms Expire In 2002
Gaston J. Acosta-Rua, M.D., 63, is a neurosurgeon engaged in private
practice in Jacksonville, Florida. Dr. Acosta-Rua has practiced medicine since
1971. Dr. Acosta-Rua has served as a director of the Company since its
formation in 1996 and served as Chairman of the Board from 1996 to 1997. Dr.
Acosta-Rua has served as a director of FPIC since 1986 and served as Chairman of
FPIC's Board of Directors from 1994 to 1997.
Curtis E. Gause, D.D.S., 76, is a retired dentist who is President-
Emeritus and consultant for St. Petersburg Dental Center, a dental center in St.
Petersburg, Florida. Dr. Gause practiced dentistry from 1954 to 1992. Dr.
Gause, a Past-President of the Florida Dental Association (the "FDA"), has
served as a director of the Company since its formation in 1996 and served as a
director of FPIC from 1993 to 1999.
Guy T. Selander, M.D., 65, is a family physician engaged in private
practice in Jacksonville, Florida. Dr. Selander has practiced medicine since
1964. Dr. Selander is a Past-President of the FMA and has served as a director
of the Company since its formation in 1996 and as a director of FPIC since 1989.
Dr. Selander served as Vice-Chairman of the Board of Directors of the Company
from 1997 to 1999. Dr. Selander is currently Chairman of the Board of
Directors of FPIC.
David M. Shapiro, M.D., 47, is Senior Vice President of Medical Affairs
of Surginet, Inc., an ambulatory surgery center management/development company
located in Nashville, Tennessee. Prior to joining Surginet, Dr. Shapiro engaged
in the private practice of anesthesiology in Ft. Myers, Florida. Dr. Shapiro
has practiced medicine since 1986. Dr. Shapiro has served as a director of the
Company and FPIC since 1996. Dr. Shapiro is currently Vice-Chairman of the
Board of Directors of the Company.
7
James G. White, M.D., 68, is engaged in the private practice of
pediatric medicine in Ormond Beach, Florida. Dr. White has practiced medicine
since 1966. Dr. White is a Past-President of the FMA and has served as a
director of the Company since its formation in 1996 and as a director of FPIC
since 1986. Dr. White served as Chairman of the Board of Directors of the
Company from 1997 until 1999 and as Chairman of the Board of Directors of FPIC
from 1997 to 2000.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS,
DIRECTORS, NOMINEES AND EXECUTIVE OFFICERS
The following table sets forth the names of beneficial owners who own
more than 5% of the Company's common stock as of December 31, 2000. Information
with respect to the 5% beneficial owners and their holdings is based on the
Schedule 13Gs filed by such shareholders with the Securities and Exchange
Commission.
Shares
Beneficially Percentage of
Name of Beneficial Owner Owned Ownership
------------------------------------------------------------------------
Dimensional Fund Advisors1 559,200 5.98%
1299 Ocean Avenue, 11th Floor
Santa Monica, California 90401
Kestrel Investment Management 568,700 6.08%
Corporation2
411 Borel Avenue, Suite 403
San Mateo, California 94402
- -------------------------
1 Dimensional Fund Advisors, Inc. ("Dimensional") is an investment advisor
registered under the Investment Advisors Act of 1940. In its role as investment
advisor or manager, Dimensional possesses voting and/or investment power over
the shares. All shares are owned by advisory clients of Dimensional, no one of
which to the knowledge of Dimensional owns more than 5% of the class.
Dimensional disclaims beneficial ownership of all the shares.
2 Kestrel Investment Management Corporation ("Kestrel") is an investment advisor
registered under the Investment Advisors Act of 1940. Kestrel has sole voting
power with respect to 527,700 shares and sole dispositive power with respect to
568,700 shares. David J. Steirman and Abbott J. Keller, the sole shareholders of
Kestrel, are also deemed to be beneficial owners of these shares.
8
The following table sets forth the beneficial ownership of the
Company's common stock, including stock options that have vested or are
exercisable within 60 days of March 31, 2001, by each of the directors and
director nominees.
Shares
Beneficially Percentage of
Name of Beneficial Owner17 Owned Ownership1
------------------------------------------------------------------------
Gaston J. Acosta-Rua, M.D.2 57,233 *
John K. Anderson, Jr. 2,100 *
Richard J. Bagby, M.D. 3 42,007 *
Robert O. Baratta, M.D.4 65,931 *
James W. Bridges, M.D.5 30,667 *
John R. Byers 6 106,620 1.13%
Curtis E. Gause, D.D.S.7 13,333 *
J. Stewart Hagen, M.D.8 34,234 *
M. C. Harden, III -- *
Frank Moya, M.D.9 183,150 1.95%
Louis C. Murray, M.D.10 38,566 *
Guy T. Selander, M.D.11 35,533 *
David M. Shapiro, M.D.12 31,667 *
D. L. Van Eldik, M.D.13 19,668 *
James G. White, M.D.14 36,433 *
Henry M. Yonge, M.D.15 15,101 *
All Directors as a Group (16
Persons)16 712,243 7.29%
-------------------------------
* Less than 1.0% of the total of the Company's outstanding common stock.
1 Based on an aggregate of (i) the number of shares of the Company's common
stock outstanding at March 31, 2001 and (ii) options vested as of March 31, 2001
or that are exercisable within 60 days of March 31, 2001.
2 Dr. Acosta-Rua disclaims beneficial ownership of 400 of these shares, which
are owned by his wife. Dr. Acosta-Rua's beneficial ownership includes 28,333
shares that may be acquired upon the exercise of presently vested nonqualified
options. Shares beneficially owned also include 1,200 shares held for Dr.
Acosta-Rua's account in the Company's Deferred Compensation Plan and over which
Dr. Acosta-Rua has sole dispositive power.
3 Dr. Bagby's beneficial ownership includes 28,333 shares that may be acquired
upon the exercise of presently vested nonqualified options.
4 Dr. Baratta's beneficial ownership includes 28,333 shares that may be
acquired upon the exercise of presently vested nonqualified options. Shares
beneficially owned also include 3,447 shares held for Dr. Baratta's account in
the Company's Deferred Compensation Plan and over which Dr. Baratta has sole
dispositive power.
5 Dr. Bridges' beneficial ownership includes 26,667 shares that may be acquired
upon the exercise of presently vested nonqualified options.
6 Mr. Byers' beneficial ownership includes 104,000 shares that may be acquired
upon the exercise of presently vested options (98,410 nonqualified and 5,590
incentive). Shares beneficially owned also include 620 shares held for Mr.
Byers' account in the Company's Deferred Compensation Plan and over which Mr.
Byers has sole dispositive power.
7 Dr. Gause's beneficial ownership includes 10,333 shares that may be acquired
upon the exercise of presently vested nonqualified options.
8 Dr. Hagen's beneficial ownership includes 23,735 shares that may be acquired
upon the exercise of presently vested nonqualified options. Shares beneficially
owned also include 600 shares held for Dr. Hagen's account in the Company's
Deferred Compensation Plan and over which Dr. Hagen has sole dispositive power.
9 As a result of the Company's age requirement for directors, Dr. Moya
will be retiring upon completion of his 2001 term. Dr. Moya's beneficial
ownership includes 28,334 shares that may be acquired upon the exercise of
presently vested nonqualified
9
options; 59,626 shares held by APAA Liquidating Trust, of which Dr. Moya is a
trustee; and 20,000 shares held by American Professional Assurance Ltd., of
which Dr. Moya is Chairman of the Board of Directors.
10 Dr. Murray's beneficial ownership includes 27,667 shares that may be
acquired upon the exercise of presently vested nonqualified options.
11 Dr. Selander's beneficial ownership includes 28,333 shares that may be
acquired upon the exercise of presently vested nonqualified options.
12 Dr. Shapiro's beneficial ownership includes 22,667 shares that may be
acquired upon the exercise of presently vested nonqualified options.
13 As a result of the Company's age requirement for directors, Dr. Van Eldik
will be retiring upon completion of his 2001 term. Dr. Van Eldik's beneficial
ownership includes 16,668 shares that may be acquired upon the exercise of
presently vested nonqualified options.
14 Dr. White's beneficial ownership includes 28,333 shares that may be
acquired upon the exercise of presently vested nonqualified options.
15 As a result of the Company's age requirement for directors, Dr. Yonge will
be retiring upon completion of his 2001 term. Dr. Yonge's beneficial ownership
includes 15,001 shares that may be acquired upon the exercise of presently
vested nonqualified options.
16 Includes 416,737 vested options (both incentive and nonqualified as detailed
above) of these Directors. Also includes disclaimed beneficial ownership of 400
shares, which are owned by relatives of directors.
17 William R. Russell, former President and Chief Executive Officer of the
Company, is not reported as a beneficial owner due to his departure from the
Company in July 2000.
The following table sets forth the beneficial ownership of the
Company's common stock, including stock options that have vested or are
exercisable within 60 days of March 31, 2001, by each the Company's current
executive officers named in the Summary Compensation Table (other than Mr. Byers
who appears in the Director's table above).
Shares
Beneficially Percent of
Name of Beneficial Owner Owned Ownership1
----------------------------------------------------------------------
David L. Rader2 7,266 *
Kim D. Thorpe3 45,077 *
Kurt J. Cetin4 -- *
Directors and Executive Officers 764,586 7.82%
as a Group (19 Persons)5
- --------------------------------
* Less than 1.0% of the Company's outstanding common stock.
1 Based on an aggregate of (i) the number of shares of the Company's common
stock outstanding at March 31, 2001 and (ii) options vested as of March 31, 2001
or that are exerciseable within 60 days of March 31, 2001.
2 Mr. Rader, 54, re-joined FPIC in September 1999 as President and Chief
Operating Officer and was elected Chief Executive Officer in July 2000. Mr.
Rader served as attorney-in-fact for the Florida Physicians Insurance Reciprocal
and was the first President and Chief Executive Officer of FPIC, a post he held
from 1986 when FPIC was formed in connection with the conversion of the
Reciprocal to a for-profit stock insurance company, until 1990. Mr. Rader's
beneficial ownership includes 3,666 shares that may be acquired upon the
exercise of presently vested options (1,912 nonqualified stock options and 1,754
incentive stock options).
3 Mr. Thorpe, 45, was elected Executive Vice President and Chief Financial
Officer in November 1999. From 1998 until Mr. Thorpe joined the Company, he
served as Chief Financial Officer of First Colony Life Insurance Company, a
10
subsidiary of GE Financial Assurance. Mr. Thorpe also served as a partner with
Coopers & Lybrand, L.L.P. (now PricewaterhouseCoopers LLP) from 1993 until 1998
and served in the firm's Washington, D.C. office as co-leader of the
Mid-Atlantic insurance practice. Mr. Thorpe's beneficial ownership includes
8,533 shares that may be acquired upon the exercise of presently vested options
(6,347 nonqualified stock options and 2,186 incentive stock options). Shares
beneficially owned also include 34,544 of shares held in the Company's 401(k)
Plan, as to which Mr. Thorpe serves as Co-Trustee and over which he exercises
voting power in such capacity.
4 Mr. Cetin, 35, was elected Senior Vice President and Chief Marketing
Officer in 1999. From 1986 until Mr. Cetin joined the Company, he served in
various positions with Administrators for the Professions, the Company's New
York reciprocal management subsidiary.
5 Includes 428,936 vested options (both incentive and nonqualified as
detailed above) of Directors and the Named Executive Officers. Also includes
disclaimed beneficial ownership of 400 of these shares, which are owned by
relatives of directors.
SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934
BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Executive officers, directors and persons who own more than ten percent
of the Company's common stock are required by Section 16(a) of the Securities
Exchange Act of 1934 and related regulations to:
o File reports of their ownership and changes in ownership of
common stock with the SEC and the NASDAQ National Market;
and
o Furnish the Company with copies of the reports.
Based solely on written representations from reporting persons and on
our review of the Section 16(a) reports provided by those individuals, we
believe that all filing requirements have been met, except as set forth below.
Gaston J. Acosta-Rua, a director, acquired shares on April 17, 2000,
which was reported on a Form 4 filed on June 12, 2000 and disposed of shares on
August 18, 2000, which was reported on an amended Form 5 filed on April 10,
2001. J. Stewart Hagen, a director, acquired shares on May 19, 2000, which was
reported on a Form 4 filed on July 10, 2000. Louis C. Murray, a director, gifted
shares on December 23, 1999 and on June 18, 1999, which were reported on a Form
5 filed on May 10, 2000. Guy T. Selander, a director, acquired shares on May 30,
2000, which was reported on a Form 4 filed on July 10, 2000. Robert O. Baratta
acquired shares on September 9, 2000 through the Company's Deferred Compensation
Plan, which was reported on an amended Form 5 filed on April 26, 2001. Each of
the Company's outside directors acquired derivative securities during November
1999, which were reported on a Form 5 filed on February 28, 2000.
MEETINGS OF THE BOARD OF DIRECTORS
AND ITS COMMITTEES
During 2000, the Board of Directors held twelve meetings. All current
Directors attended at least 75% of the meetings of the Board of Directors and
its Committees.
THE AUDIT COMMITTEE
The members of the Audit Committee of the Board of Directors are Drs.
Acosta-Rua, Baratta, Bridges, Murray and Shapiro (Chairman). The Audit Committee
is composed entirely of nonemployee Directors. This committee recommends
selection of the Company's independent accountants to audit the Company's
consolidated financial statements and to perform professional services related
to the audit. The committee reviews the scope and results
11
of such audit and reviews the scope and results of procedures performed with
respect to systems of internal controls and accounting policies and procedures.
Pursuant to the 1999 recommendations of the Blue Ribbon Committee on Improving
the Effectiveness of Corporate Audit Committees and the rules of the Securities
and Exchange Commission and the NASD, the Audit Committee recommended to the
Board an Audit Committee charter, which was approved by the Board at its March
2000 meeting. The newly adopted charter complies with the rules that are
designed to improve disclosure related to the functioning of corporate audit
committees and to enhance the reliability and credibility of financial
statements of public companies. The Audit Committee met eight times during 2000.
For more detail regarding the role, responsibilities and limitations
of the Audit Committee, please refer to the Audit Committee Report below and the
Audit Committee Charter, which is attached to this Proxy Statement as Appendix
A.
Report of the Audit Committee
This report on the responsibilities of the Company's Audit Committee of
the Board of Directors, its management and its independent accountants
with respect to systems of internal control and the preparation and audit
of its financial statements is presented by the Audit Committee of the
Company. The Audit Committee is composed of five directors, each of whom
is considered independent, based on the business judgment of the Company's
Board of Directors, as defined by Rule 4200 of the National Association of
Securities Dealers' ("NASD") listing standards. The Audit Committee
operates pursuant to a written charter adopted by the Board of Directors
in March 2000.
The Audit Committee assists the Board of Directors in its oversight of
the Company's systems of internal control, the Company's preparation of
its consolidated financial statements, the conduct of the annual audit of
the Company and the relationship between the Company and its independent
accountants. The Board of Directors, with the assistance of the Audit
Committee, has the ultimate authority and responsibility to select,
evaluate, and, where appropriate, replace the independent accountants.
As set forth in the Charter, management is responsible for the
preparation, presentation, and integrity of the Company's financial
statements. Management is also responsible for maintaining appropriate
accounting and financial reporting principles and policies and internal
controls and procedures designed to assure compliance with accounting
standards and applicable laws and regulations.
The independent accountants are responsible for planning and carrying
out proper annual audits and quarterly reviews of the Company's financial
statements. The independent accountants express an opinion as to the
conformity of the annual financial statements with accounting principles
generally accepted in the United States of America and also provide a
review report regarding the Company's interim financial statements.
12
In the performance of its oversight function, the Committee has
reviewed and discussed the audited financial statements with management
and the independent accountants. The Committee has also discussed with the
independent accountants the matters required to be discussed by Statement
on Auditing Standards No. 61, Communication with Audit Committees, as
currently in effect. The Committee has also received the written
disclosures and the letter from the independent accountants required by
Independence Standards Board Standard No. 1, Independence Discussions with
Audit Committees, as currently in effect, including disclosures with
respect to other non-audit services provided by the independent
accountants. The Committee has considered whether the provision of all
non-audit services by the independent accountant to the Company is
compatible with maintaining the independent accountant's independence and
has discussed such independence with the Company's independent accountant.
Members of the Committee are not employees of the Company and, as such,
it is not the duty or responsibility of the Committee or its members to
conduct auditing or accounting reviews or procedures. In performing their
oversight responsibility, members of the Committee rely on information,
opinions, reports or statements, including financial statements and other
financial data, prepared or presented by officers or employees of the
Company, legal counsel, independent accountants or other persons with
professional or expert competence. Accordingly, the Audit Committee's
oversight does not provide an independent basis to determine that
management has maintained appropriate accounting and financial reporting
principles, policies, or appropriate internal control and procedures
designed to assure compliance with accounting standards and applicable
laws and regulations. Furthermore, the Audit Committee's considerations
and discussions referred to above do not assure that the audit of the
Company's financial statements by the Company's independent accountants
has been carried out in accordance with auditing standards generally
accepted in the United States of America, that the financial statements
are presented in accordance with accounting principles generally accepted
in the United States of America or that the Company's independent
accountants are in fact "independent."
Based upon the reports, review and discussions described in this
Report, and subject to the limitations on the role and responsibilities of
the Committee, certain of which are referred to above and in the Charter,
the Committee recommended to the Board of Directors that the audited
financial statements be included in the Company's Annual Report on Form
10-K for the year ended December 31, 2000 filed with the Securities and
Exchange Commission.
Audit Committee Report
Submitted by:
David M. Shapiro, M.D., Chairman
Gaston J. Acosta-Rua, M.D.
Robert O. Baratta, M.D.
James W. Bridges, M.D.
Louis C. Murray, M.D.
13
THE BOARD GOVERNANCE COMMITTEE
The members of the Board Governance Committee of the Board of Directors
are Drs. Baratta (Chairman), Bagby, Moya, and Yonge and Mr. Byers. Until March
2000, the Company had a Nominating Committee with responsibility for
recommending qualified candidates to fill vacancies on the Board of Directors.
Beginning March 2000, the Nominating Committee was replaced by the Board
Governance Committee, the responsibilities of which were expanded to include:
determination of remuneration of Board members; oversight of the Director Stock
Option Plan; and development and implementation of a method of evaluating the
Company's Board, its Committees, and the Company's Chief Executive Officer. The
Board Governance Committee met one time during 2000.
THE BUDGET AND COMPENSATION COMMITTEE
The members of the Budget and Compensation Committee of the Board of
Directors are Drs. Acosta-Rua, Bagby, Hagen, Selander (Chairman), Shapiro and
Van Eldik. The Budget and Compensation Committee is composed entirely of
nonemployee Directors. During 1999, this Committee reviewed and determined the
compensation of the Company's executive officers and directors, and administered
the Company's stock option and benefit plans. Beginning March 2000,
determination of remuneration of directors and oversight of the Company's
Director Stock Option Plan became the responsibility of the Board Governance
Committee. The Compensation Committee also establishes budgetary guidelines and
processes for the Company, the Board and Board Committees and oversees the
budgeting function. The Budget and Compensation Committee met four times during
2000 and executed one unanimous written consent in lieu of meeting.
For more detailed information regarding the Committee's administration
of the Company's executive compensation program, please refer to the
Committee's Report on Compensation beginning on page 22 of this Proxy
Statement.
BYLAWS COMMITTEE
The members of the Bylaws Committee of the Board of Directors for 2000
included Drs. Gause, Murray, Van Eldik, and Yonge (Chairman). The Bylaws
Committee is composed entirely of nonemployee Directors. This committee
interprets the Company's Bylaws if questions arise and reviews the Bylaws from
time to time to determine if changes are appropriate for legal or operational
purposes. The Bylaws Committee did not meet during 2000.
THE EXECUTIVE COMMITTEE
The members of the Executive Committee of the Board of Directors are
Drs. Baratta (Chairman), Hagen, Selander, Shapiro and White and Mr. Byers. This
committee may exercise the powers of the Board of Directors whenever the
Chairman of the Board has determined that it is not practical for the full Board
of Directors to meet and action is required to be taken on matters that the
Chairman determines to be of an urgent nature. The Executive Committee did not
meet during 2000 but executed one unanimous written consent in lieu of meeting.
14
THE INVESTMENT COMMITTEE
The members of the Investment Committee of the Board of Directors are
Drs. Bridges, Gause, Hagen (Chairman), Moya, and White. The Investment Committee
is composed entirely of nonemployee Directors. This committee oversees the
Company's investment policy with respect to portfolio investments and recommends
to the Board of Directors for its approval, portfolio investments. The
Investment Committee met two times during 2000.
DIRECTORS' COMPENSATION
During 2000, non-employee members of the Board of Directors received
annual compensation in two components, including (i) an annual fee of $25,000
(subject to reduction as determined by the Board in the event a director is
absent from more than 25% of the Board meetings during any calendar year), with
the Chairman receiving an additional $12,000 and the Vice Chairman receiving an
additional $6,000, and (ii) annual grants of 5,000 options each issued pursuant
to the Company's Director Stock Option Plan (with an exercise price equal to the
market price of the Company's common stock on the date of grant and pro rata
vesting over a three-year period), which grants are made as of the date of each
annual shareholders' meeting. In addition, each director receives reimbursement
for reasonable expenses incurred for attendance at meetings.
In addition, under the Director Stock Option Plan, each new Board
member who is not an employee of the Company receives an initial grant of
nonqualified options to purchase 5,000 shares of the Company's common stock.
Such options are granted on the date the person first becomes a director of the
Company and have an exercise price equal to the fair market value of the
Company's common stock on the date of grant. The Director Stock Option Plan
gives the Board of Directors the ability to make additional grants to members of
the Board of Directors from time to time at its discretion.
During 1999, the Company offered a Stock Purchase Incentive Program
("the Program") to its directors to encourage their ownership of the Company's
stock. Under the Program, directors who purchased shares of the Company's common
stock during the term of the Program were granted matching nonqualified stock
options on a one-for-one basis, up to a maximum of 5,000 options per director.
The Program began July 1, 1999 and terminated April 28, 2000. For transactions
prior to November 6, 1999, the per share exercise price of options granted under
the Program equaled the per share closing market price of the Company's common
stock on November 6, 1999; and for transactions on or after November 6, 1999 and
until the end of the Program, the per share exercise price equaled the per share
closing price of the Company's common stock on the date of the transaction.
Options granted under the Program will vest in three equal annual installments
commencing on the one-year anniversary of their grant. Options pursuant to the
Program were granted under the Director Stock Option Plan.
The Company also offers directors a nonqualified deferred compensation
plan. Under this plan, directors may defer into the plan all or a portion of
their fees earned as directors. Deferred fees will be paid, as adjusted for
investment gains or losses, at such time in the future as specified by the
participating director.
15
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table sets forth information concerning the compensation
of the principal executive officer and the four other most highly compensated
executive officers during 2000.
Long-Term
Annual Compensation Compensation
-------------------------------------------------------
Securities All Other
Name and Principal Other Annual Underlying Compensation
Position Fiscal Year Salary ($)1 Bonus ($) Compensation Options (#) ($)
- -----------------------------------------------------------------------------------------------------------------
John R. Byers 2000 380,000 151,626 __ 87,000 31,074 3
President and Chief 1999 350,000 100,485 __ 60,000 24,125
Executive Officer
1998 __ __ __ 100,000 __
- -----------------------------------------------------------------------------------------------------------------
Kim D. Thorpe 4 2000 260,000 86,453 __ 70,600 24,644 5
Executive Vice
President and Chief 1999 28,667 45,000 __ 25,000 __
Financial Officer
1998 __ __ __ __ __
- -----------------------------------------------------------------------------------------------------------------
David L. Rader 6 2000 218,750 74,815 __ 31,000 22,862 7
President and
Chief Executive Officer 1999 60,641 25,000 __ __ __
of FPIC
1998 __ __ __ __ __
- -----------------------------------------------------------------------------------------------------------------
Kurt J. Cetin 8 2000 200,000 133,234 __ 15,000 21,250 9
Senior Vice President 1999 33,333 88,899 __ __ 3,333
1998 __ __ __ __ __
- -----------------------------------------------------------------------------------------------------------------
William R. Russell 10 2000 270,833 __ __ 1,000 1,513,675 11
President and Chief 1999 500,000 172,260 __ 160,000 29,869
Executive Officer
1998 269,555 225,000 __ __ 29,712
- -----------------------------------------------------------------------------------------------------------------
1 Includes compensation amounts earned during the fiscal year but deferred by
the employee under the Company's 401(k) plan and benefits set aside pursuant to
the Company's nonqualified deferred compensation plan.
2 Mr. Byers, 46, was elected Executive Vice President and General Counsel of
the Company in November 1998. In May 1999, Mr. Byers became Secretary of the
Company and in June 1999, Mr. Byers was elected Chief Operating Officer. In
July 2000, Mr. Byers was elected as a Director and as interim President and
Chief Executive Officer. In September 2000, Mr. Byers was elected President and
Chief Executive Officer.
3 Includes the Company's contributions to the profit sharing plan of $17,000,
the Company's matching contributions for the 401(k) plan of $4,250,
contributions from the Company pursuant to the Company's nonqualified deferred
compensation plan of $4,125, and $5,699 for the cost of an excess disability
insurance policy.
4 Mr. Thorpe, 45, became Executive Vice President and Chief Financial Officer
in November 1999.
5 Includes the Company's contributions to the profit sharing plan of $17,000,
the Company's matching contributions for the 401(k) plan of $3,250, and $4,394
for the cost of an excess disability insurance policy.
6 Mr. Rader, 54, joined FPIC in September 1999 as President and Chief
Operating Officer and was elected Chief Executive Officer in July 2000.
16
7 Includes the Company's contributions to the profit sharing plan of $17,000,
the Company's matching contributions for the 401(k) plan of $2,813, and $3,049
for the cost of an excess disability insurance policy.
8 Mr. Cetin, 35, was elected Senior Vice President and Chief Marketing Officer
in 1999.
9 Includes the Company's contributions to the profit sharing plan of $17,000
and the Company's matching contributions for the 401(k) plan of $4,250.
10 Mr. Russell departed the Company in July 2000. Mr. Russell's salary is
reported through his departure date. Mr. Russell's departure from the Company
resulted in the forfeiture by Mr. Russell of approximately 130,000 unvested
options and the accrual by the Company of a one-time, pretax charge of
approximately $1.5 million, during the third quarter of 2000.
11 Includes the Company's matching contributions for the 401(k) plan of
$4,250, $9,425 for the cost of an excess disability insurance policy, and
approximately $1.5 million accrued as a one-time, pretax charge during the third
quarter in connection with Mr. Russell's departure from the Company in July
2000.
Option Grants in 2000. The following table contains information
concerning stock option grants during 2000 to the Company's Chief Executive
Officer and to the Company's other four most highly compensated executive
officers:
Potential Realizable Value at Assumed Annual
Rates of Stock Price Appreciation for Option
Term 1
--------------------------------------------
Individual Grants 5% 10%
- ------------------------------------------------------------------------------------------------------------------------------------
% of
Total Market
Number of Options Price
Securities Granted Exercise on
Underlying to or Base Date
Options Employees Price of Expiration Stock Dollar Gain Stock Dollar Gain
Name Granted (#) in 2000 ($/Sh) Grant($) Date Price($) ($) Price($) ($)
- ------------------------------------------------------------------------------------------------------------------------------------
John R. Byers 2,000 2 0.5 $14.38 $14.38 5/01/10 $ 23.42 $ 18,000 $ 37.29 $ 45,800
85,000 3 19.4 10.38 10.38 12/15/10 16.90 554,600 26.91 1,405,500
- ------------------------------------------------------------------------------------------------------------------------------------
Kim D. Thorpe 600 2 0.1 14.38 14.38 5/01/10 23.42 5,400 37.29 13,700
70,000 3 16.0 10.38 10.38 12/15/10 16.90 456,700 26.91 1,157,500
- ------------------------------------------------------------------------------------------------------------------------------------
David L. Rader 10,000 4 2.3 19.00 19.00 3/25/10 30.95 119,500 49.28 302,800
1,000 2 0.2 14.38 14.38 5/01/10 23.42 9,000 37.29 22,900
20,000 3 4.6 10.38 10.38 12/15/10 16.90 130,500 26.91 330,700
- ------------------------------------------------------------------------------------------------------------------------------------
Kurt J. Cetin 7,500 5 1.7 17.75 17.75 7/15/10 28.91 83,700 46.04 212,200
7,500 3 1.7 10.38 10.38 12/15/10 16.90 48,900 26.91 124,000
- ------------------------------------------------------------------------------------------------------------------------------------
William R. Russell6 1,000 2 0.2 14.38 14.38 5/01/10 23.42 9,000 37.29 22,900
- ------------------------------------------------------------------------------------------------------------------------------------
1 The Potential Realizable Values are calculated based on the fair market value
of the Company's common stock on the date of grant, which is equal to the
exercise price of options granted in fiscal 2000, assuming that the stock
appreciates in value from the date of grant until the end of the option term at
the annual rate specified (5% and 10%). Potential Realizable Values are net of
the option exercise price. The assumed rates of appreciation are specified in
rules of the Securities and Exchange Commission, and do not represent the
Company's estimate or projection of its future stock price. Actual gains, if
any, resulting from stock option exercises and common stock holdings are
17
dependent on the future performance of the Company's common stock, overall stock
market conditions, and the option holder's continued employment through the
exercise/vesting period. There can be no assurance that the amounts reflected in
this table will be achieved.
2 One-third of the options granted on May 1, 2000 vest on the one-year
anniversary date of the grant date, with an additional one-third of the options
vesting on each of the next two anniversaries of the grant date.
3 One-third of the options granted on December 15, 2000 vest on the one-year
anniversary date of the grant date, with an additional one-third of the options
vesting on each of the next two anniversaries of the grant date.
4 One-third of the options granted on March 25, 2000 vest on the one-year
anniversary date of the grant date, with an additional one-third of the options
vesting on each of the next two anniversaries of the grant date.
5 One-third of the options granted on July 15, 2000 vest on the one-year
anniversary date of the grant date, with an additional one-third of the
options vesting on each of the next two anniversaries of the grant date.
6 As a result of William R. Russell's departure from the Company in July 2000,
130,000 unvested options, including the 1,000 options issued during 2000, were
forfeited.
Option Exercises. The following table shows stock option exercises
during 2000 by the Company's Chief Executive Officer and by the Company's other
four most highly compensated executive officers.
Option Exercises in Fiscal 2000 and
2000 Fiscal Year-End Option Values
Number of Securities Value of Unexercised
Underlying Unexercised In-The-Money
Options at 12/31/00 Options at 12/31/00 1
--------------------------------------------------------------
Shares ($)
Acquired Value ($) ($)
Name Upon Realized Exercisable Unexercisable Exercisable Unexercisable
Exercise
- --------------------------------------------------------------------------------------------------------------------
John R. Byers -- -- 104,000 143,001 -- --
- --------------------------------------------------------------------------------------------------------------------
Kim D. Thorpe -- -- 8,533 87,067 -- --
- --------------------------------------------------------------------------------------------------------------------
David L. Rader -- -- 3,666 27,334 -- --
- --------------------------------------------------------------------------------------------------------------------
Kurt J. Cetin -- -- -- 15,000 -- --
- --------------------------------------------------------------------------------------------------------------------
William R. Russell2 -- -- 150,833 -- 2 29,025 --
- --------------------------------------------------------------------------------------------------------------------
1 Options are in-the-money if the fair market value of the underlying
securities exceeds the exercise price of the option. The Value of Unexercised
In-The-Money Options represents the difference between the exercise price of
unexercised options and the closing market price of $9.1875 on December 31, 2000
of the Company's common stock. The actual value of unexercised options
fluctuates with market activity.
2 As a result of Mr. Russell's departure from the Company in July, 2000,
approximately 130,000 unvested options were forfeited.
18
Retirement Plans
The following table sets forth the maximum annual benefits payable in
the form of a straight life annuity under the Company's qualified defined
benefit plan (the "Retirement Plan") and, if eligible, the Company's Excess
Benefit Plan (the "Excess Benefit Plan") to an officer or employee retiring at
age 65 with the specified combination of final average compensation (the average
of the five consecutive years of compensation that give the highest average out
of the ten latest years) and years of credited service. The benefit accrual
rate is higher for compensation in excess of the compensation covered by Social
Security than for compensation covered by Social Security. The amounts shown in
the Pension Plan Table attributable to the Retirement Plan and Excess Benefit
Plan, if applicable, were calculated using Social Security covered compensation
levels based upon the average age of five executives and have been calculated
without reflection of the current limit of $170,000 on includible compensation.
Mr. Byers is covered by the Retirement Plan, but not the Excess Benefit Plan. As
of December 31, 2000, the credited Years of Service under the Retirement Plan of
the following officers were as follows: Mr. Rader - 13 years; Mr. Byers - 2
years; Mr. Thorpe - 1 year; Mr. Cetin - 1 year; and Mr. Russell - 11.54 years.
Generally, compensation for purposes of the Retirement Plan and the Excess
Benefit Plan includes salary and annual bonus, as reported in the Summary
Compensation Table, as well as compensation that is contributed by the Company
pursuant to a salary reduction agreement and that is not currently includible
in the individual's gross income by reason of the application of certain
provisions of the Internal Revenue Code of 1986, as amended (the "Code"). The
amounts listed in the Pension Plan Table are not subject to any deduction for
Social Security or any other offset amounts.
PENSION PLAN TABLE
- --------------------------------------------------------------------------------
Years of Service
----------------------------------------------------
Average Compensation 5 10 15
- ------------------------ --------------- ------------ ----------------
$ 200,000 $ 11,660 23,320 34,980
300,000 18,660 37,320 55,980
400,000 25,660 51,320 76,980
500,000 32,660 65,320 97,980
600,000 39,660 79,320 118,980
700,000 46,660 93,320 139,980
800,000 53,660 107,320 160,980
900,000 60,660 121,320 181,980
The Retirement Plan is a funded, tax-qualified, non-contributory plan
that covers substantially all of the Company's employees including executive
officers. For the current year ending December 31, 2001, the annual retirement
benefit payable under the Retirement Plan is limited by Federal Law to $140,000
and the maximum covered compensation is limited to $170,000. The total number of
years of service that may be taken into consideration under the Retirement Plan
is limited to thirty-five, less the number of years, if any, during which an
employee earned a year of service under any other pension plan maintained by the
Company. Optional forms of payment available under the Retirement Plan or a
benefit commencement date prior to age sixty-five may result in substantially
reduced payments to any employee electing such an option.
19
The Excess Benefit Plan provides a means of equalizing the benefits of
those employees participating in the Retirement Plan, other than those
individuals covered under the SERP, whose funded benefits under the Retirement
Plan are or will be limited by the application of ERISA, the Code, or any
applicable law or regulation. The Excess Benefit Plan is a nonqualified plan and
benefits payable under the Excess Benefit Plan are not funded and are payable
out of the Company's general funds.
The SERP is an unfunded nonqualified plan. The SERP provides Mr. Byers,
who has been selected as a participant by the Compensation Committee, with
income at retirement. A participant in the SERP is eligible to retire and
receive a retirement benefit beginning on the earlier of such participant's (i)
early retirement date, (ii) disability retirement date or (iii) normal
retirement date. The retirement benefit at the normal retirement date equals 60%
of pre-retirement compensation (averaged over the highest three consecutive
years of service), less Retirement Plan and all predecessor plans' benefits and
Social Security benefits. Compensation for purposes of the SERP includes the
salary of a participant as reported in the Summary Compensation Table, but does
not include bonuses. The early retirement benefit equals the retirement benefit
at the normal retirement date times the percentage of benefits vested, reduced
by an early retirement factor for each month a participant's early retirement
date occurs prior to such participant's normal retirement date. A participant
terminating employment due to a permanent and total disability will be eligible
for a disability retirement benefit equal to 60% of pre-retirement compensation,
less Retirement Plan and all predecessor plans' benefits and Social Security
benefits. In the event of the participant's death prior to retirement, such
participant's surviving spouse will be eligible to receive a death benefit equal
to 50% of the retirement benefit the participant would otherwise have been
eligible to receive. Benefits attributable to the SERP are subject to reduction
for Social Security benefits received by participants. The estimated annual
retirement benefits for Mr. Byers was calculated using 2000 base salary; Social
Security benefits were based on the maximum benefits payable for an individual
retiring at age sixty-five in 2000; and Retirement Plan benefits were based on
2000 base salary, including bonuses, assuming fifteen years of service. The
estimated annual retirement benefit from the SERP on December 31, 2000 is
$16,137 for Mr. Byers.
The Company's qualified defined contribution plan has two parts. In the
first part, the Company contributes 10% of each participant's compensation for
the plan year. In the second part, the Company allows employees to contribute up
to 5% of their compensation earned during the plan year, of which up to 2.5% is
matched 100% by the Company.
The Company also offers certain key employees selected by the Board of
Directors a nonqualified deferred compensation plan. Mr. Byers currently
participates in this plan. In this plan, key employees may defer into the plan
all or a portion of their compensation. In addition, the Company, at the
discretion of the Board of Directors, may match the contributions made by key
employees and may also make discretionary incentive contributions for key
employees. Participants' account balances generally will be paid, as adjusted
for investment gains or losses, following termination of employment. The Company
contributed $4,125 for Mr. Byers for the 2000 calendar year. Mr. Russell ceased
participation during the 2000 calendar year and received payment of the balance
of his account.
20
Employment and Severance Agreements
Employment Agreements.
The Company has entered into employment agreements (the "Employment
Agreements") with Messrs. Byers, Thorpe, Cetin and Rader. The Employment
Agreements provide for a minimum annual salary and the opportunity for annual
salary increases, incentive compensation and other compensation and perquisites
as approved by the Board of Directors.
Mr. Byers' Employment Agreement is for a term of three years and may be
extended for an additional year by the Board of Directors prior to the end of
each year. The term of Mr. Byers' employment under his Employment Agreement has
been so extended each year and currently continues through December 31, 2003. If
the Board of Directors does not extend the Employment Agreement by the end of
any year, Mr. Byers may terminate his employment by providing at least 90 days'
written notice of such termination. Upon such termination, Mr. Byers would
continue to receive his annual salary and benefits for the remaining term of his
Employment Agreement, or until commencing work for a competing company. Under
the Employment Agreement, Mr. Byers' minimum annual salary for 2001 is $440,000.
Mr. Byers may also terminate his employment in the event of a constructive
discharge and continue to receive annual salary and benefits for the remaining
term of his Employment Agreement.
Mr. Thorpe's Employment Agreement is for a term of two years and may be
extended for an additional year by the Board of Directors prior to the end of
each year. The term of Mr. Thorpe's employment under his Employment Agreement
has been so extended and currently continues through December 31, 2002. If the
Board of Directors does not extend the Employment Agreement by the end of any
year, Mr. Thorpe may terminate his employment by providing at least 90 days'
written notice of such termination. Upon such termination, Mr. Thorpe would
continue to receive his annual salary and benefits for the remaining term of his
Employment Agreement, or until commencing work for a competing company. Under
the Employment Agreement, Mr. Thorpe's minimum annual salary for 2001 is
$300,000. Mr. Thorpe may also terminate his employment in the event of a
constructive discharge and continue to receive annual salary and benefits for
the remaining term of his Employment Agreement.
Mr. Rader's Employment Agreement is for a term of two years and may be
extended for an additional year by the Board of Directors prior to the end of
each year. The term of Mr. Rader's employment under his Employment Agreement
currently continues until December 31, 2002. If the Board of Directors does not
extend the Employment Agreement by the end of any year, Mr. Rader may terminate
his employment by providing at least 90 days' written notice of such
termination. Upon such termination, Mr. Rader would continue to receive his
annual salary and benefits for the remaining term of his Employment Agreement,
or until commencing work for a competing company. Under the Employment
Agreement, Mr. Rader's minimum annual salary for 2001 is $290,000. Mr. Rader may
also terminate his employment in the event of a constructive discharge and
continue to receive annual salary and benefits for the remaining term of his
Employment Agreement.
Mr. Cetin's Employment Agreement is for a term of three years and
currently continues until December 31, 2002. Upon a termination of Mr. Cetin's
employment by the Board, or in the event of a constructive discharge, Mr. Cetin
would continue to receive his annual salary, bonuses and benefits for the longer
of the remaining term of his Employment Agreement or for twenty-four months.
Mr. Cetin may terminate his employment by providing at least 120 days' notice of
such termination. Under the Employment Agreement, Mr. Cetin's minimum annual
salary for 2001 is $209,000.
Severance Agreements.
The Company has entered into severance agreements (the "Severance
Agreements") with Messrs. Byers and Thorpe. The Severance Agreements, which
apply in the case of a change of control of the Company, provide that if at any
time during the coverage period, as defined under the Severance Agreements, the
employment of an individual covered under the Severance Agreements is terminated
by the Company for any reason other than cause, death or disability, or by such
21
individual in the event of a constructive discharge, the Company will pay
severance in a lump sum cash amount equal to three times the sum of such
individual's (i) annual salary and (ii) the greater of the target bonus
opportunity for the current calendar year or the average of the annual bonuses
for the three prior calendar years. Payments under the Severance Agreements are
limited to the maximum amount that would not trigger the excise tax imposed by
Code Section 4999.
If Messrs. Byers and Thorpe are entitled to receive benefits under both
their Employment Agreements and their Severance Agreements, then each will be
permitted to select and receive benefits under either his Employment Agreement
or his Severance Agreement, but not benefits from both the Employment Agreement
and the Severance Agreement.
Compensation Committee Interlocks And Insider Participation
During fiscal year 2000, no executive officer of the Company served as
a director of or as a member of the compensation or equivalent committee of any
other entity, one of whose executive officers served on the Board of Directors'
Compensation Committee or otherwise as a member of the Board of Directors.
Notwithstanding anything to the contrary set forth in any of the
Company's previous filings under the Securities Act of 1933, as amended, or the
Securities Exchange Act of 1934, as amended, that incorporated future filings,
including this Proxy Statement, in whole or in part, the following sections
titled "Committee Report on Compensation" and "Stock Performance" shall not be
incorporated by reference into any such filings.
Committee Report on Compensation
This report on the responsibilities of the Company's Budget
and Compensation Committee of the Board of Directors, relating to the
compensation of the Company's employees, its Chief Executive Officer
("CEO") and its named executive officers, is presented by the Budget
and Compensation Committee. The Budget and Compensation Committee of
the Company is composed of six outside directors and operates pursuant
to a written charter.
Goal of the Compensation Committee. The goal of the Committee
is to establish remuneration in an appropriate, fair manner, with
compensation that is justifiable, comparable and provides incentives
for retention and longevity.
Philosophy of the Compensation Committee. The Committee's
philosophy on the incentive components of compensation included the
establishment of performance goals. Such variable compensation provides
for award opportunities based on individual performance, corporate
performance and on the individual's ability to affect the Company's
annual results and market competitiveness. Such variable compensation
was further designed to attract and
22
retain high-performing executives focused on increasing shareholder
value and Company performance.
Structure of the Compensation Program. The Company's executive
compensation program was structured to include base salary, annual
bonus, long-term compensation and retirement and disability benefits.
Each component is designed in relation to the other components to offer
management competitive remuneration and incentives to enhance
shareholder value. Executive officers were also eligible for other
employee benefits as set forth in the Summary Compensation Table on
page 16 of this Proxy Statement.
Base Salary. The base salary for executives was established at a level
that the Compensation Committee believes is both appropriate and
consistent within the industry and relative to other peer companies.
For 2000, the base salaries of executive officers named in the Summary
Compensation Table ranged from 60% to 100% of their total annual cash
compensation (base salary plus bonus). There are many criteria used in
determining the appropriate executive salary level, including, but not
limited to, contribution to performance, scope of responsibility,
productivity, expense and risk control, management development and
strategic planning.
Bonus Program. The Company's bonus program provided for the
establishment of a bonus pool as a direct incentive to improve
financial results of the Company. This bonus program was assessed
through a formal evaluation of overall Company performance and special
circumstances, which included, but was not limited to, targets in 1)
operating earnings, 2) return on equity and, 3) premium growth, as well
as a subjective evaluation of each employee in the areas of, among
others, quality of work, reliability, initiative and creativity. The
maximum formula bonus for all employees was determined as a percentage,
ranging from 6% to 45% of base salary. For the President and Chief
Executive Officer, the maximum bonus award, as a percentage of base
salary, is 45%. Based on the Company's financial performance in 2000,
actual bonus percentages for the year ranged from approximately 5% to
40% of base salary.
Long-Term Compensation. Long-term compensation for executives
was designed to motivate and reward the creation of long-term
shareholder value by linking executive compensation with gains realized
by shareholders. Through the Company's Omnibus Incentive Plan, the
Company grants from time to time stock options to the Company's
executives and other employees. The Company also offers an Employee
Stock Purchase Plan and an option under its 401(k) plan for the
Company's executives and other employees to purchase the Company's
common stock.
During 2000, the Company offered a Stock Purchase Incentive
Program ("the Program") to eligible employees, including executive
officers, to encourage ownership of the Company's stock. Under the
Program, employees who
23
purchased shares of the Company's common stock in the open market
during the term of the Program were granted matching nonqualified stock
options on a one-for-one basis, up to the maximum of 5,000 options per
employee. The Program began January 22, 2000 and ended April 28, 2000.
Option grants under the Program were made as of May 1, 2000 at a per
share exercise price equal to the per share closing market price of the
Company's common stock as of May 1, 2000. Options granted under the
Program will vest in three equal annual installments commencing on the
one-year anniversary of their grant. Options under this Program were
granted under the Omnibus Incentive Plan.
Retirement and Disability Benefits. Also included in the
Company's overall compensation package for its executive officers were
various employee benefits, including retirement and disability
benefits. Generally, the benefits offered to such persons serve a
different purpose than do the other components of compensation. In
general, these benefits provide protection against financial loss that
can result from illness, disability or death. Benefits offered to
executive officers are mainly those that are offered to the Company's
other employees, with some variation primarily to promote tax
efficiency and replacement of benefit opportunities lost due to
regulatory limits.
Each year the Compensation Committee reviews executive
compensation to ensure that such compensation programs are aligned with
the Company's long and short-term performance goals and objectives. The
Compensation Committee will also consider, as part of this review, any
changes in laws and regulations governing compensation programs and
will often seek advice from counsel and other independent third
parties.
Deductibility of Executive Compensation. Section 162(m) of the
Internal Revenue Code (the "Code") limits the Company's ability to
deduct, for federal income tax purposes, certain compensation in excess
of $1 million per year paid to individual officers named in the Summary
Compensation Table unless such compensation is "performance-based." The
determination of whether compensation is performance-based depends upon
a number of factors, including shareholder approval of the plan under
which the compensation is paid, the exercise price at which options or
similar awards are granted, the disclosure to and approval by the
shareholders of applicable performance standards, the composition of
the Compensation Committee, and certification by the Compensation
Committee that performance standards were satisfied. The amount of
compensation paid to each of the named officers during fiscal year 2000
was less than $1 million. It is possible for the Company to compensate
or make awards under the Omnibus Incentive Plan that may either qualify
or not qualify as performance-based compensation deductible under
Section 162(m). The Compensation Committee, in structuring compensation
programs for its top executive officers, intends to give strong
consideration to the deductibility of awards.
24
The Board of Directors believes the Company has implemented an
executive compensation policy that serves to retain, motivate and
reward management while aligning management's interests closely with
those of the Company and its shareholders. The Board of Directors has
neither modified nor rejected, in any material way, any action or
recommendations of the Committee. The Company's compensation policies
reflect the advice of an independent executive compensation consultant
who is retained from time to time to review the Company's compensation
practices.
Budget and Compensation Committee
Report Submitted by:
Guy T. Selander, M.D., Chairman
Gaston J. Acosta-Rua, M.D.
Richard J. Bagby, M.D.
J. Stewart Hagen, M.D.
David M. Shapiro, M.D.
D. L. Van Eldik, M.D.
25
STOCK PERFORMANCE
The following graph compares the cumulative total return for the
Company's common stock, the Russell 2000 index and a peer group comprised of MMI
Companies, Inc., Frontier Insurance Group, Inc., Medical Assurance, Inc.,
Professionals Group, Inc. and St. Paul Companies for the period August 1, 1996
(first day of public trading of the Company's common stock on the Nasdaq
National Market) through December 31, 2000. The graph assumes an investment on
August 1, 1996 of $100 in each of the Company's common stock, the stocks
comprising the Russell 2000 index and the common stocks of the peer group
companies. The graph further assumes that all paid dividends were reinvested.
The peer group and the Russell 2000 index are weighted by market capitalization.
The calculations for the information below were prepared by SNL Securities, LC
of Charlottesville, Virginia.
(object omitted)
Period Ending
------------------------------------------------------------
Index 08/01/96 12/31/96 12/31/97 12/31/98 12/31/99 12/31/00
- -----------------------------------------------------------------------------------------
FPIC Insurance Group, Inc. 100.00 128.57 277.38 455.36 158.93 87.50
Russell 2000 100.00 114.39 139.97 136.41 165.40 160.41
SNL Cuystom Peer Group 100.00 114.10 159.18 138.52 127.17 200.29
26
CERTAIN RELATIONSHIPS
AND RELATED TRANSACTIONS
Pursuant to the Bylaws of FPIC, the FMA recommends to FPIC's Board of
Directors three nominees for FPIC's Board of Directors each year. Current
directors of the Company that were recommended for their current terms on FPIC's
Board of Directors by the FMA are Drs. Bagby and Shapiro. Terence P. McCoy,
M.D., a director of FPIC, is also recommended by the FMA. Dr. McCoy, a
physician specializing in family practice, is the current President of the FMA
and a voting member of the FMA Board of Governors. Dr. Shapiro is a non-voting
member of the FMA's Board of Governors.
The FMA and FPIC are parties to an Endorsement Agreement pursuant to
which the FMA exclusively endorses FPIC's professional liability insurance and
health insurance program and cooperates with FPIC's marketing efforts. Under
such agreement, FPIC pays the FMA a minimum of $500,000 per year with such
amount increasing if certain premium or revenue targets are met by FPIC or its
affiliates. In addition, pursuant to such agreement, FPIC will contribute
$50,000 each year to assist the campaigns of two FMA members for election to
American Medical Association offices.
Pursuant to FPIC's Bylaws, the FDA recommends to FPIC's Board of
Directors a nominee for FPIC's Board of Directors each year. H. Raymond Klein,
D.D.S., a practicing pediatric dentist, presently serves as the FDA's
recommended nominee on FPIC's Board of Directors. The FDA has an insurance
agency that receives commissions from FPIC as a result of a related Agency
Agreement.
The FDA and FPIC are parties to an Endorsement and Sponsorship
Agreement pursuant to which the FDA exclusively endorses FPIC's dental
professional liability insurance program and cooperates with FPIC's marketing
efforts.
In connection with the Company's acquisition of APAC in 1998, the
Company, APAC and APAM entered into a Management Agreement pursuant to which
APAM manages APAC's business. Under the APAC acquisition agreement, the Company
agreed to cause a designee by APAM to be appointed to the Company's and FPIC's
Boards of Directors so long as the Management Agreement remains in effect. Dr.
Moya has served as APAM's designee to the Company's Board of Directors since
1998 and Elizabeth Moya, Dr. Moya's daughter, a practicing attorney and an
officer and director of APAC, is APAM's current designee to FPIC's Board of
Directors. Dr. Moya, upon completion of his 2001 term, will be retiring from the
Company's Board, at which time APAM will designate and the Company's Board will
elect a replacement designee to serve until the 2002 Annual Shareholders'
Meeting.
M. C. Harden, III is a 2001 director nominee for election to the
Company's Board of Directors for a term expiring at the 2004 Annual Meeting of
Shareholders or until his successor is elected and qualified. Mr. Harden is also
Chairman of the Board and President and a majority shareholder of Harden &
Associates, Inc. ("Harden & Associates"), an insurance broker and risk
management and employee benefits consultant, located in Jacksonville, Florida.
Harden & Associates acts as an agent for FPIC, the Company's largest insurance
subsidiary, and to a lesser
27
extent for APAC, another of the Company's insurance subsidiaries. Commission
expense incurred by the Company and commission income earned by Harden &
Associates as a result of such agency relationship totaled approximately
$157,000 for fiscal year 2000. Harden & Associates also acts as a broker for the
Company in the procurement of various business insurance coverages. Brokerage
fees earned by Harden & Associates as a result of its brokerage relationship
with the Company were less than $60,000 for fiscal year 2000.
All of the physician members of the Company's Board of Directors are
also policyholders of FPIC or FPIC's other insurance company affiliates, and as
such, may experience claims from time to time in the usual course of business
that may require coverage under their policies that FPIC or FPIC's other
insurance company affiliates would provide to any policyholder.
PROPOSAL 2
AMENDMENT TO THE
DIRECTOR STOCK OPTION PLAN
The Company's Director Stock Option Plan (the "Plan") was adopted in
1996 to provide the Company's non-employee directors an incentive to contribute
materially to expanding and improving the Company's profits, to aid in
attracting and retaining directors of outstanding ability, and to encourage
ownership of shares by directors.
The Director Stock Option Plan currently provides that a non-employee
director will receive nonqualified options for 5,000 shares when such director
initially joins the Company's Board of Directors. Subsequent options will be
granted on an annual basis and additional options may be granted to directors
from time to time at the discretion of the Board of Directors. Under the
Director Stock Option Plan, options vest at the rate determined by the Board of
Directors, provided that no option may vest prior to six months or after the
tenth anniversary of the date of grant.
The Board of Directors of the Company has adopted a resolution
approving and recommending to the Company's shareholders for their approval an
amendment to increase the number of shares of the Company's common stock
issuable under the Director Stock Option Plan to 680,000 shares from 630,000
shares.
The Director Stock Option Plan as it is proposed to be amended is set
forth in Exhibit A to this Proxy Statement. If the amendment is adopted, it will
become effective immediately.
Reasons for the Proposed Amendment
The Board of Directors believes that the ability to grant stock options
allows the Company to attract and retain the services of experienced and
knowledgeable independent directors and provides an additional incentive for
such directors to work for the benefit of the Company and its shareholders. The
increase in the number of shares authorized for issuance under the Director
Stock Option Plan is sought because only approximately 157,000 authorized shares
remain available to be issued under the plan.
28
The Board of Directors believes that it is desirable to continue
providing incentives to the Company's directors and therefore recommends that
the shareholders approve the amendment to the Director Stock Option Plan.
The Plan
Administration. The Director Stock Option Plan is administered by the
Director Stock Option Plan Committee (the "DSOP Committee"), which is the Board
Governance Committee of the Board of Directors.
Awards. A director receives options to purchase shares on the date on
which such individual first becomes a director. The options granted at such time
are for 5,000 shares with an option price equal to the fair market value of such
shares on the date of grant. Directors also may be granted additional options
from time to time. Each of the Company's outside directors is eligible to
participate in the plan.
Transferability, Term and Vesting. The Director Stock Option Plan, as
previously amended, allows options to be transferred by the optionee during his
or her lifetime to any member of his or her immediate family or to a trust
established for the exclusive benefit of one or more members of his or her
immediate family or to a former spouse pursuant to a domestic relations order.
In general, the Director Stock Option Plan, as previously amended,
provides that an option will terminate upon the earlier of:
(i) the exercise of the option;
(ii) the expiration date of the option by its terms; or
(iii) no more than two years following the date of termination of
service as a director.
No option may be granted ten years after the effective date of the
Plan. Grants under the Plan may vest anywhere between six months and ten years
as determined by the Board of Directors at the time of grant.
Amendment and Termination. The Board of Directors may amend the
Director Stock Option Plan, without shareholder approval, at any time in any
respect, unless shareholder approval of the amendment in question is required
under Florida law, the Code, any exemption from Section 16 of the Securities
Exchange Act of 1934, as amended, any national securities exchange system on
which the Company's shares are then listed or reported, by any regulatory body
having jurisdiction with respect to the Director Stock Option Plan, or any other
applicable laws, rules or regulations. No amendment to the Director Stock Option
Plan may alter or impair any option previously granted under the Plan without
the consent of the holders thereof. The Director Stock Option Plan may be
terminated at any time by the Board of Directors.
29
Number of Shares. A total of 630,000 shares have previously been
authorized for issuance pursuant to the Director Stock Option Plan. Options for
approximately 473,000 of the 630,000 shares have been previously granted. If the
shareholders approve the proposed amendment to the Director Stock Option Plan, a
total of 680,000 shares will be authorized for issuance, of which approximately
207,000 shares, representing 2.2% of the 9,351,255 shares outstanding at March
31, 2001, will be available for future grant. The exercise prices for options
granted under the Director Stock Option Plan range from $8.22 to $48.0625 per
share, with expiration dates ranging from January 13, 2006 to June 7, 2010. On
April 11, 2001, the record date for the Company's 2001 Annual Meeting of
Shareholders, the closing market price for the Company's common stock was $9.87
per share.
The maximum number of shares that may be granted pursuant to the
Director Stock Option Plan, as well as the number of shares that may be
purchased pursuant to the exercise of any option outstanding thereunder, may be
equitably adjusted by the DSOP Committee in the event of a stock split, stock
dividend, recapitalization, merger, consolidation, combination or similar
events.
Federal Tax Consequences. The stock options granted under the Director
Stock Option Plan are nonqualified stock options. Non-employee directors
recognize no taxable income at the time of grant. Upon the exercise of
nonqualified stock options, non-employee directors recognize ordinary income and
the Company is entitled to a deduction equal to the difference between the
exercise price and the fair market value of the shares on the date of exercise.
Non-employee directors recognize as capital gain or loss any subsequent profit
or loss realized on the sale or exchange of any shares disposed of or sold.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" APPROVAL OF THE
AMENDMENT TO THE DIRECTOR STOCK OPTION PLAN.
PROPOSAL 3
AMENDMENT TO THE
OMNIBUS INCENTIVE PLAN
The Company's Omnibus Incentive Plan was adopted in 1996 to provide
incentives to employees whose performance, contributions and skills add to the
value of the Company.
The Board of Directors of the Company has adopted a resolution
approving and recommending to the Company's shareholders for their approval an
amendment to the Omnibus Incentive Plan. The amendment will increase the number
of shares of the Company's common stock issuable under the Omnibus Incentive
Plan to 2,088,000 shares from 1,865,000 shares.
The Omnibus Incentive Plan as it is proposed to be amended is set forth
in Exhibit B to this Proxy Statement. If the amendments are adopted, they will
become effective immediately.
30
Reasons for the Proposed Amendment
The Board of Directors believes that the ability to grant stock options
allows the Company to attract and retain the services of experienced and
knowledgeable employees and provides an additional incentive for such employees
to work for the benefit of the Company and its shareholders. The increase in the
number of shares authorized for issuance under the Omnibus Incentive Plan is
sought because only approximately 327,000 shares remain available to be issued
under the plan. Such increase in the number of shares authorized for issuance by
223,000 shares is sought to restore the total number of available shares for
issuance under the Omnibus Incentive Plan to an appropriate level considering
these objectives. Such amount has been approved by the Board of Directors,
taking into account a broad range of factors, including strategic plans,
performance goals and objectives, personnel needs and other reasonably possible
potential uses.
The Plan
Administration. The Omnibus Incentive Plan is administered by the
Omnibus Incentive Plan Committee ("OIP Committee"), which is the Budget &
Compensation Committee of the Board of Directors. The OIP Committee will
determine, from time to time, the individuals to whom awards shall be made, the
type of awards, and the amount, size and terms of each award. Each of these
types of awards is described below. The OIP Committee will make all other
determinations necessary or advisable for the administration of the Omnibus
Incentive Plan.
Types of Awards. Awards under the Omnibus Incentive Plan may be in the
form of options (both nonqualified stock options and incentive stock options),
contingent stock, restricted stock, and stock appreciation rights, or such other
forms as the OIP Committee in its discretion may deem appropriate.
Number of Shares. A total of 1,865,000 shares have previously been
authorized for issuance pursuant to the Omnibus Incentive Plan. As of March 31,
2001, options for approximately 1,538,000 of the 1,865,000 shares have
previously been granted and have not been forfeited. If the shareholders approve
the proposed amendments to the Omnibus Incentive Plan, a total of 2,088,000
shares will be authorized for issuance, of which approximately 550,000, or 5.9%
of the 9,351,255 total shares outstanding at March 31, 2001, will be available
for future grant. The exercise prices for options granted under the Omnibus
Incentive Plan range from $8.22 to $40.00 per share, with expiration dates
ranging from January 13, 2006 to December 15, 2010. On April 11, 2001, the
record date for the Company's 2001 Annual Meeting of Shareholders, the closing
market price for the Company's common stock was $9.87 per share.
As currently amended, the maximum number of shares that may be issued
pursuant to options granted to any one individual during the life of the Omnibus
Incentive Plan is 600,000 shares of the Company's common stock.
The OIP Committee has discretion to grant nonqualified stock options
pursuant to the Omnibus Incentive Plan that are transferable by the optionee
during his or her lifetime to any
31
member of his or her immediate family or a trust established for the exclusive
benefit of one or more members of his or her immediate family or to a former
spouse pursuant to a domestic relations order.
During 2000, a total of approximately 205,000 options were granted
under the Omnibus Incentive Plan for shares of the Company's common stock to the
President and Chief Executive Officer and the four other most highly compensated
executive officers. These options have a three-year vesting period and an
exercise price equal to the closing price of the Company's common stock on the
last business day prior to the date of grant. As a result of Mr. Russell's
departure from the Company in July 2000, approximately 1,000 of the options
granted to him in 2000 were forfeited and approximately 129,000 of the options
granted to him during 1999 were forfeited.
Awards that may be made in the future under the Omnibus Incentive Plan
are within the discretion of the OIP Committee. The OIP Committee has not
determined future awards or who might receive them.
The maximum number of shares that may be granted pursuant to options
under the Omnibus Incentive Plan, as well as the number of shares that may be
purchased pursuant to the exercise of any option outstanding thereunder, may be
equitably adjusted by the OIP Committee in the event of a stock split, stock
dividend, recapitalization, merger, consolidation, combination or similar
events.
Amendment and Termination. The Board of Directors may amend the Omnibus
Incentive Plan, without shareholder approval, at any time in any respect, unless
shareholder approval of the amendment in question is required under Florida law,
the Code, any exemption from Section 16 of the Exchange Act, any national
securities exchange system on which the shares are then listed or reported, by
any regulatory body having jurisdiction with respect to the Omnibus Incentive
Plan, or any other applicable laws, rules or regulations.
No amendment to the Omnibus Incentive Plan may alter or impair any
option granted under such Plan without the consent of the holder thereof.
The Omnibus Incentive Plan may be terminated at any time by the Board
of Directors.
Stock Options. The OIP Committee may grant both incentive stock options
and nonqualified stock options to the same individual. When both an incentive
stock option and a nonqualified stock option are awarded at one time, such
options are deemed to have been awarded in separate grants, and in no event will
the exercise of one such option affect the right to exercise the other such
option except to the extent the OIP Committee determines in writing otherwise.
32
The option price of an incentive stock option shall not be less than
100% of the fair market value of the underlying share on the day the option is
granted, as determined by the OIP Committee. The option price of a nonqualified
stock option issued under the Omnibus Incentive Plan shall not be less than 50%
of the fair market value of the underlying share on the day the option is
granted, as determined by the OIP Committee.
Each option may be exercised by a participant, in whole or in part,
provided such exercise shall not occur earlier than six months after the grant
of the option and not later than ten years after the grant of the option.
Any option designated by the OIP Committee as an incentive stock option
will be subject to the general provisions applicable to all options granted
under the Omnibus Incentive Plan and will be subject to the following specific
provisions:
(a) At the time the incentive stock option is granted, if a recipient
employee owns, directly or indirectly, stock representing more
than 10% of the total combined voting power of all classes of the
Company's stock, then: (i) the option price must equal at least
110% of the fair market value on the effective date of grant of
the shares subject to the option; and (ii) the term of the option
shall not be greater than five years from the date such option is
granted.
(b) The aggregate fair market value of shares (determined at the date
of grant) with respect to which incentive stock options granted by
the Company that can be exercised by a participant employee for
the first time in any one calendar year shall not exceed $100,000.
If any option is not granted, exercised, or held pursuant to the
provisions applicable to an incentive stock option, it will be considered to be
a nonqualified stock option to the extent that any or all of the grant is in
conflict with these restrictions.
In general, options granted pursuant to the Omnibus Incentive Plan
terminate upon the earlier of: (i) the full exercise of the option; (ii) the
expiration of the option by its terms; or (iii) no more than three years (three
months for incentive stock options) following termination of the option holder's
employment with the Company.
Stock Appreciation Rights. A stock appreciation right ("SAR") may be
granted in connection with an option and entitles the grantee, subject to the
terms and conditions determined by the OIP Committee, to receive, upon surrender
of the option, all or a portion of the excess of (i) the fair market value of a
specified number of shares at the time of the surrender, as determined by the
OIP Committee, over (ii) 100% of the fair market value of such shares at the
time the option was granted plus any dividends paid while the option was
outstanding but unexercised.
SARs may be granted for a period of not less than six months nor more
than ten years, and shall be exercisable in whole or in part, at such time or
times and subject to such other terms and conditions as shall be prescribed by
the OIP Committee at the time of the grant.
33
SARs will be exercisable only during a grantee's employment by the
Company, except that in the discretion of the OIP Committee an SAR may be made
exercisable for up to three months after a grantee's employment is terminated
for any reason other than death, retirement or disability.
In the event that a grantee's employment is terminated as a result of
death, retirement or disability without having fully exercised such grantee's
SARs, the grantee, or the grantee's beneficiary following the grantee's death,
may have the right to exercise the SARs during their term within a period of 24
months after the date of such termination to the extent that the right was
exercisable at the date of such termination, or such other period and subject to
such terms as may be determined by the OIP Committee.
Contingent Stock Awards. The OIP Committee will determine the amount of
a contingent stock award to be granted to an employee based on the expected
impact the employee can have on the financial well-being of the Company and
other factors determined by the OIP Committee to be appropriate. Contingent
stock awards under the Omnibus Incentive Plan shall be subject to such terms,
conditions, and restrictions, if any, including without limitation, substantial
risks of forfeiture and/or attainment of performance objectives, and for such
period or periods (in excess of six months) as will be determined by the OIP
Committee at the time of grant. The OIP Committee in its discretion may permit
an acceleration of the expiration of the applicable restriction period, so long
as the minimum six-month period is retained, with respect to any part or all of
the award to any participant.
In the event of a participant's termination of employment for any
reason prior to lapse of restrictions applicable to a contingent stock award
paid to such participant and unless otherwise provided for by the Omnibus
Incentive Plan or as provided in a contingent stock agreement, all rights to
shares as to which there still remain unlapsed restrictions will be forfeited by
such participant to the Company without payment of any consideration by the
Company.
Restricted Stock Award. The OIP Committee will determine the amount of
a restricted stock award to be granted to an employee based on the past or
expected impact the employee has had or can have on the financial well-being of
the Company and other factors deemed by the OIP Committee to be appropriate.
Restricted stock awards made pursuant to the Omnibus Incentive Plan shall be
subject to such terms, conditions, and restrictions, including attainment of
performance objectives, and for such period or periods (in excess of six
months), as will be determined by the OIP Committee at the time of grant. The
OIP Committee in its discretion may permit an acceleration of the expiration of
the applicable restriction period, so long as the minimum six-month period is
retained, with respect to any part or all of the award to any participant.
In the event of a participant's termination of employment for any
reason prior to the lapse of restrictions applicable to a restricted stock award
made to such participant and unless otherwise provided for by the Omnibus
Incentive Plan or as provided in a restricted stock agreement, all rights to
shares as to which there still remain unlapsed restrictions will be forfeited by
such participant to the Company without payment of any consideration by the
Company.
34
Change in Control. Upon a change in control, all options, contingent
stock awards, restricted stock awards and stock appreciation rights will
automatically vest as of the date of the change in control and all restrictions
or contingencies will be deemed to have been satisfied.
Federal Tax Consequences
General. The rules governing the tax treatment of stock options,
contingent stock, restricted stock, and stock appreciation rights are very
technical. Therefore, the description of the federal income tax consequences set
forth below is necessarily general in nature and does not purport to be
complete. Moreover, statutory provisions are subject to change, as are their
interpretations, and their applications may vary in individual circumstances.
Finally, the tax consequences under applicable state and local tax laws may not
be the same as under the federal tax laws. Individuals who have received
stock-based compensation under any of the Company's plans are encouraged to
consult with their own tax advisors regarding tax consequences.
Incentive Stock Options. The participant recognizes no gain or loss
when an incentive stock option (an "ISO") is granted. In general, an employee
exercising an ISO will not be taxed at the time of exercise if the stock
purchased is held for at least one year after the exercise date and at least two
years after the date of grant (the "Holding Period"); provided, however, the
bargain element of the exercised ISO is treated as an item of adjustment under
the alternative minimum tax rules. If the Holding Period is satisfied, the
difference between the exercise price and the amount realized upon subsequent
disposition of the stock will constitute long-term capital gain or loss. If the
Holding Period is not satisfied, the employee will recognize ordinary income to
the extent of the lesser of the gain realized or the excess of the fair market
value of the stock on the exercise date over the exercise price and any gain
realized in excess of the amount recognized as ordinary income will be
short-term or long-term capital gain. The Company will not recognize income,
gain, or loss upon the granting or exercise of an ISO, nor will it be entitled
to any deduction upon the disposition of an ISO or the shares subject thereto,
if the Holding Period is satisfied. If the Holding Period is not satisfied, the
Company will be entitled to a deduction equal to the amount of the ordinary
income recognized by the employee.
Nonqualified Stock Options. If any Option granted under the Plan does
not meet the conditions set forth in the Code for ISOs, then the Option is a
non-qualified stock option (an "NSO"). The participant typically recognizes no
taxable income and the Company receives no deduction when an NSO is granted.
Upon exercise of an NSO, however, the participant recognizes ordinary income and
the Company is entitled to a deduction equal to the difference between the
exercise price and the fair market value of the shares on the date of the
exercise. When stock obtained under an NSO is disposed of by the participant,
the difference between the sales price and the tax basis (the amount, if any,
paid for the Option, plus the exercise price) of the stock will be treated as
long-term or short-term capital gain or loss by the participant, depending on
the holding period of the shares.
Restricted Stock. A participant granted restricted stock is not
required to include the value of such shares in income until the first time such
participant's rights in the shares are transferable or are not subject to
substantial risk of forfeiture, whichever occurs earlier, unless
35
such participant timely files an election under Code Section 83(b) to be taxed
on the receipt of the shares. In either case, the amount of such ordinary income
will be equal to the excess of the fair market value of the shares at the time
the income is recognized over the amount (if any) paid for the shares. The
Company is entitled to a deduction in the amount of the ordinary income
recognized by the participant, for the Company's taxable year in which the
participant recognizes such income.
Contingent Stock. A participant granted contingent stock is not
required to include the value of such shares in income until the first time such
participant's rights in the shares are transferable or are not subject to a
substantial risk of forfeiture, whichever occurs earlier, unless such
participant timely files an election under Code Section 83(b) to be taxed on the
receipt of the shares. In either case, the amount of such ordinary income will
be equal to the excess of the fair market value of the shares at the time the
income is recognized over the amount (if any) paid for the shares. The Company
is entitled to a deduction, in the amount of the ordinary income recognized by
the participant, for the Company's taxable year in which the participant
recognizes such income.
Stock Appreciation Rights. Upon the grant of an SAR, the participant
recognizes no taxable income and the Company receives no deduction. The
participant recognizes ordinary income and the Company is entitled to a
deduction at the time of exercise equal to the cash and fair market value of the
shares payable upon such exercise.
Parachute Payments. Under certain circumstances, an accelerated vesting
or cash out of stock options, or accelerated lapse of restrictions on other
awards, in connection with a change in control of the Company might be deemed an
"excess parachute payment" for purposes of the golden parachute tax provisions
of Code Sections 280G and 4999. To the extent it is so considered, the
participant may be subject to a 20% excise tax and the Company may be denied a
tax deduction.
Section 162(m). Code Section 162(m) limits to $1 million per year the
federal income tax deduction available to a public company for compensation paid
to any of its chief executive officer and four other highest paid executive
officers. However, Code Section 162(m) provides an exception from its limitation
for certain "performance based" compensation if various requirements are
satisfied.
The Omnibus Incentive Plan contains provisions that are intended to
satisfy these requirements for awards that are "performance based" compensation.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" APPROVAL
OF THE AMENDMENT TO THE OMNIBUS INCENTIVE PLAN.
36
INDEPENDENT AUDITORS
The Company's Board of Directors appointed PricewaterhouseCoopers LLP
("PricewaterhouseCoopers") as the Company's independent auditors.
PricewaterhouseCoopers was initially appointed as the Company's independent
auditors for the 2000 fiscal year. Representatives of PricewaterhouseCoopers are
expected to be present at the Annual Meeting and will be available to respond to
appropriate questions and have the opportunity to make a statement, if they
desire to do so.
The Company retained the services of PricewaterhouseCoopers as its
independent accountants and replaced KPMG LLP ("KPMG") effective April 4, 2000.
No report of KPMG on the financial statements of the Company for either of the
past two years contained an adverse opinion, or disclaimer of opinion, or was
qualified or modified as to uncertainty, audit scope or accounting principles.
Since the engagement of KPMG and through the date of replacement, there were no
disagreements between the Company and KPMG on any matter of accounting
principles or practices, financial statement disclosure, or auditing scope or
procedure. The change in independent accountants was approved by the Audit
Committee and the Board of Directors of the Company.
Fees Incurred Relating to 2000 Services Performed by PricewaterhouseCoopers,
as the Company's Principal Accountant
Audit Fees (1) $ 460,000
Financial Information System Design
and Implementation Fees __
All Other Fees
Other Audit-Related Services 114,000
Statutory Audits 70,000
Tax Services 65,000
Market-Related Services 55,000
Benefit Plan Services 35,000
Review Services 10,000
---------
Total Fees Billed During 2000 by PricewaterhouseCoopers,
as the Company's Principal Accountant $ 809,000
========
- -----------------------
(1) Aggregate fees billed for professional services rendered for the audit of
the Company's annual financial statements for 2000 and the reviews of the
financial statements included in the Company's 2000 Form 10-Qs.
The Audit Committee has considered the non-audit services provided by
PricewaterhouseCoopers and believes such services to be compatible with
maintaining PricewaterhouseCoopers' independence.
37
SHAREHOLDER PROPOSALS FOR 2001 ANNUAL MEETING
Proposals by the Company's shareholders, intended to be presented at
the Company's 2002 Annual Meeting of Shareholders, must be received by the
Company at its principal executive offices on or before December 31, 2001, in
order to be included in the Company's Notice of Meeting, Proxy Statement and
Proxy relating to such Meeting. In accordance with the Company's Bylaws,
shareholders who wish to submit a proposal for consideration at the Company's
2002 Annual Meeting of Shareholders but who do not wish to submit the proposal
for inclusion in the Company's proxy statement must deliver a copy of their
proposal to the Company at its principal executive offices on or before February
7, 2002.
ANNUAL REPORT ON FORM 10-K
The Company will provide, without charge, to each security holder
solicited, a copy of the Company's Annual Report on Form 10-K filed with the
Securities and Exchange Commission, for the most recent year, including
financial statements, financial statement schedules, and a listing of all
exhibits to Form 10-K. The Company will also furnish a copy of any exhibit, upon
payment of a reasonable fee to cover the cost of copying and mailing the
exhibit. Requests should be directed to the attention of the Finance
Department, FPIC Insurance Group, Inc., P. O. Box 44033, Jacksonville, Florida
32231-4033.
SOLICITATION OF PROXIES
The cost of solicitation of proxies will be borne by the Company,
including expenses in connection with the preparation and mailing of this proxy
statement. In addition, the Company will reimburse banks, brokers and nominees
for their reasonable expenses incurred in sending proxy material to principals
and obtaining their proxies. In addition to solicitation by mail, proxies may be
solicited in person or by telephone by directors, officers and other employees
of the Company.
38
OTHER BUSINESS
The Board of Directors is not aware of any other matters that will be
presented for action at the meeting. However, if any other matters come before
the meeting, the persons named in the enclosed form of proxy or their
substitutes will vote such proxy in respect of any such matters in accordance
with their best judgment pursuant to the discretionary authority conferred
thereby.
BY ORDER OF THE BOARD OF DIRECTORS
April 30, 2001 /s/ Roberta Goes Cown
-----------------------------------------
Roberta Goes Cown
Corporate Counsel and
Secretary of the Company
PLEASE RETURN THE ENCLOSED FORM OF PROXY,
DATED AND SIGNED, IN THE ENCLOSED ADDRESSED
ENVELOPE, WHICH REQUIRES NO POSTAGE.
39
Appendix A
FPIC INSURANCE GROUP, INC.
AUDIT COMMITTEE CHARTER
There shall be a Committee of the Board of Directors to be known as the
Audit Committee. The Audit Committee shall be composed of directors who are
independent of the management of the corporation and are free of any
relationship that, in the opinion of the Board of Directors, would interfere
with the exercise of independent judgment as a committee member.
Statement of Policy
The Audit Committee shall provide assistance to the corporate directors
in fulfilling their responsibility to the shareholders, potential shareholders,
and investment community relating to corporate accounting and internal
accounting controls, reporting practices of the corporation, and the quality and
integrity of the financial reports of the corporation. In so doing, it is the
responsibility of the Audit Committee to maintain free and open means of
communication between the directors, the independent auditors, the internal
auditors, and the financial management of the corporation.
Responsibilities
In carrying out its responsibilities, the Audit Committee believes its
policies and procedures should remain flexible, in order to best react to
changing conditions and to ensure to the directors and shareholders that the
corporate accounting and reporting practices of the corporation are in
accordance with all requirements and of the highest quality.
In carrying out these responsibilities, the audit committee will:
o Review and recommend to the directors the independent auditors
to be selected to audit the financial statements of the
corporation and its divisions and subsidiaries.
o Meet with the independent auditors and financial management of
the corporation to review the scope of the proposed audit for
the current year and the audit procedures to be utilized, and
at the conclusion thereof review such audit, including any
comments or recommendations of the independent auditors.
o Review with the independent auditors, the Company's internal
auditor, and financial and accounting personnel, the adequacy
and effectiveness of the accounting and financial controls of
the corporation, and elicit any recommendations for the
improvement of such internal control procedures or particular
areas where new or more detailed controls or procedures are
desirable. Particular emphasis should be given to the adequacy
of such internal controls to expose any payments,
transactions, or procedures that might be deemed illegal or
otherwise improper. Further, the committee periodically should
review Company policy statements to determine their
adherence to the code of conduct.
Appendix A-1
o Provide sufficient opportunity for the internal and
independent auditors to meet with the members of the Audit
Committee without the members of management present.
o Review succession planning for accounting and financial human
resources within the department.
o Submit the minutes of all meetings of the Audit Committee to,
or discuss the matters discussed at each committee meeting
with, the Board of Directors.
o Investigate any matter brought to its attention within the
scope of its duties, with the power to retain outside counsel
for this purpose if, in its judgment, that is appropriate.
Guidelines
Size and Term of Appointment
o 3 years
o 5 members
o Staggered terms (2, 2, 1)
Meetings--Should meet at least 3-4 times a year.
o The committee should meet privately with the internal auditor and the
independent auditor.
Reporting to the Board of Directors
o After each meeting
Expand Knowledge of Company Operations
o Learning process for Audit Committee members
Company Counsel
o The committee should meet regularly with the Company's general counsel
(and outside counsel when appropriate), to discuss legal matters that
may have a significant effect on the Company's financial statements.
Audit Plans
o Review with the internal and external auditors their annual audit plan
prior to and after the audits.
Areas Requiring Special Attention
o The committee should instruct both the independent auditor and internal
auditor that we expect to be advised if there are any areas that
require special attention or if they encounter any difficulty in
securing access to the appropriate management levels or data.
Appendix A-2
Appendix B
PROXY/VOTING INSTRUCTION CARD
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FPIC INSURANCE GROUP, INC.
ANNUAL MEETING OF SHAREHOLDERS
JUNE 6, 2001
The undersigned shareholder hereby appoints Pamela D. Deyo and Charles
Divita, III, or either of them, as proxies, with full power of substitution, to
vote, as designated below, all shares of Common Stock of FPIC Insurance Group,
Inc. held of record by the undersigned on April 11, 2001, that the undersigned
would be entitled to vote if personally present at the Annual Meeting of
Shareholders of the Company on June 6, 2001, and at any adjournment thereof,
upon all subjects that may properly come before the meeting, including the
matters described in the proxy statement furnished herewith, subject to any
directions indicated on the other side of this card.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" ALL PROPOSALS
Your vote is important. Please sign and date on the reverse and return
promptly in the enclosed postage-paid envelope.
This Proxy will be voted as directed. If no directions are given, the
proxies will vote for (1) the election of all nominees for director listed on
the other side of this card, (2) the approval of the amendment to the Director
Stock Option Plan as described in the Proxy Statement furnished herewith, (3)
the approval of the amendment to the Omnibus Incentive Plan as described in the
Proxy Statement furnished herewith and (4) at their discretion, on any other
matters that may properly come before the meeting. The undersigned hereby
revokes any proxy heretofore given to any person or persons whomsoever (other
than the proxies named above) to vote such Common Stock and ratifies and
confirms all that such proxies may or shall do by virtue hereof.
(Continued and to be dated and signed on reverse side.)
Appendix B-1
Appendix B
Please mark [X] This Proxy will be voted as directed. If no
votes as in direction is made, it will be voted "FOR" the
this example: proposals set forth below. The Board of Directors
recommends a vote "FOR" all nominees, a vote "FOR"
amending the Director Stock Option Plan and a vote
"FOR" amending the Omnibus Incentive Plan.
1. Election of Directors: John K. Anderson, Jr., James W. Bridges, M.D.,
John R. Byers, J. Stewart Hagen, M.D., M. C. Harden,
III
[ ] FOR all nominees listed above. [ ] WITHHOLD AUTHORITY to vote
(except as marked to the contrary) for all nominees listed above.
(INSTRUCTION: To withhold authority to vote for any individual
nominee, strike out that nominee's name
on the list above)
2. Approval of Amendment to Director Stock Option Plan
[ ] FOR Approval [ ] AGAINST Approval [ ] ABSTAIN
3. Approval of Amendment to Omnibus Incentive Plan
[ ] FOR Approval [ ] AGAINST Approval [ ] ABSTAIN
- --------------------------------------------------------------------------------
Account No.
Date: ___________________________, 2001
_______________________________________
PLEASE DATE THIS PROXY AND SIGN EXACTLY AS YOUR NAME OR NAMES APPEAR HEREON.
WHERE MORE THAN ONE OWNER IS SHOWN, EACH SHOULD SIGN. WHEN SIGNING IN A
FIDUCIARY OR REPRESENTATIVE CAPACITY, PLEASE GIVE FULL TITLE. IF ANY PROXY IS
SUBMITTED BY A CORPORATION, IT SHOULD BE EXECUTED IN FULL CORPORATE NAME BY A
DULY AUTHORIZED OFFICER. IF ANY PROXY IS SUBMITTED BY A PARTNERSHIP, IT SHOULD
BE EXECUTED IN THE PARTNERSHIP NAME BY AN AUTHORIZED PERSON.
Appendix B-2
Exhibit A
DIRECTOR STOCK OPTION PLAN
1. PURPOSE
1.1 The purpose of the Florida Physicians Insurance Company Director
Stock Option Plan is to provide an incentive to Directors of the Company who are
in a position to contribute materially to expanding and improving the Company's
profits, to aid in attracting and retaining Directors of outstanding ability,
and to encourage ownership of Shares by Directors.
2. DEFINITIONS
2.1 For purposes of the Plan the following terms shall have the
definition, which is attributed to them, unless another definition is clearly
indicated by a particular usage and context.
a. "Board" means the Company's Board of Directors.
b. "Book Value" means the value per Share determined for
statutory book purposes by dividing the total equity of the
Company on a given date by all Shares of stock outstanding on
such date.
c. "Code" means the Internal Revenue Code of 1986, as amended.
d. "Committee" means the Director Stock Option Committee
appointed by the Company's Board of Directors pursuant to
Section 3.1 hereof.
e. "Company" means Florida Physicians Insurance Company until the
Restructure and on and after the Restructure, FPIC Insurance
Group, Inc.
f. "Directors" means the members of the Board who are not
employees either of the Company or an affiliate thereof.
g. "Effective Date of Exercise" means the later of (i) the date
on which the Company has received a written notice of exercise
of an Option and full payment of the purchase price from the
Optionee, or (ii) the effective date of exercise set forth in
the written notice.
h. "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
i. "Fair Market Value" means on, or with respect to, any given
date:
(i) If determined on the date of the IPO, the initial
offering price to the public.
(ii) If not on the date of the IPO and the Shares are
listed on a national stock exchange, the closing
market price of such Shares as reported on the
composite tape for issues listed on such exchange on
such date or, if no trades shall have been reported
for such date, on the next preceding date on which
there were trades reported; provided, that if no such
quotations shall have been made within the ten
business days preceding such date, Fair Market Value
shall be determined under (iv) below.
(iii) If not on the date of the IPO and the Shares are not
listed on a national stock exchange but is traded on the
over-the-counter market, the mean between the closing
dealer bid and asked price of such Shares of Common
Exhibit A-1
Stock as reported by the National Association of
Securities Dealers through their Automated Quotation
System for such date, or if no quotations shall have
been made on such date, on the next preceding date on
which there were quotations; provided, that, if no such
quotations shall have been made within the ten business
days preceding such date, Fair Market Value shall be
determined under (iv) below.
(iv) If (i), (ii), and (iii) do not apply, the Fair Market
Value of a Share without regard to any control
premium or discount for lack of control as determined
by the Committee in good faith consistent with the
valuation by the Company as provided by a third party
appraiser for other corporate purposes before
adjustments or any discounts applied due to lack of
marketability. The Committee may rely upon the most
recent valuation and there shall be no requirement to
cause a more recent valuation to be made.
j. "IPO" means the initial public offering of the Company's
common stock pursuant to a registration statement on Form S-1
filed by the Company with the U.S. Securities and Exchange
Commission.
k. "Option" means the right to purchase from the Company Shares
at a specified price and subject to the terms of the Plan, and
such other conditions and restrictions as the Committee deems
appropriate.
l. "Option Price" means the purchase price per Share subject to
an Option.
m. "Optionee" means a Director who has been awarded an Option
under the Plan.
n. "Optioned Shares" means Shares subject to outstanding Options.
o. "Parent" shall mean any corporation (other than the Company)
in an unbroken chain of corporations ending with the Company
if, at the time of a granting of an Option, each of the
corporations (other than the Company) owns stock possessing
50% or more of the total combined voting power of all classes
of stock in one of the other corporations in such chain within
the meaning of Section 424(e) of the Code and any regulations
or rulings promulgated thereunder.
p. "Permanent and Total Disability" shall have the same meaning
as given to that term by Section 22(e)(3) of the Code and any
regulations or rulings promulgated thereunder.
q. "Plan" means Florida Physicians Insurance Company Director
Stock Option Plan, as evidenced herein and as amended from
time to time.
r. "Plan Effective Date" means January 13, 1996.
Exhibit A-2
s. "Restructure" means the corporate reorganization pursuant to
which Florida Physicians Insurance Company shall become the
wholly owned subsidiary of FPIC Insurance Group, Inc.
t. "SEC Rule 16b-3" means Rule 16b-3 of the Securities and
Exchange Commission promulgated under the Exchange Act.
u. "Section 16 Person" means a person subject to Section 16(b) of
the Exchange Act with respect to transactions involving equity
securities of the Company.
v. "Share" means one share of the $1.00 par value common stock of
the Company. On and after the Restructure, "Share" means one
share of $0.10 par value common stock of FPIC Insurance Group,
Inc.
w. "Subsidiary" shall mean any corporation in an unbroken chain
of corporations beginning with the Company if, at the time of
the granting of the Option, each of the corporations (other
than the last corporation) in the unbroken chain owns stock
possessing 50% or more of the total combined voting power of
all classes of stock in one of the other corporations in such
chain, within the meaning of Section 424(f) of the Code and
any regulations or rulings promulgated thereunder.
3. ADMINISTRATION
3.1 The Plan shall be administered by the Committee. The Committee
shall be comprised of not less than two of the then members of the Board. The
Plan is intended to be a formula plan meeting the conditions of Rule
16b-3(c)(2)(ii). The members of the Committee shall be appointed by the Board.
The Board may from time to time remove members from or add members to the
Committee. Vacancies on the Committee, howsoever caused, shall be filled by the
Board.
3.2 The action of a majority of the Committee at which a quorum is
present, or acts reduced to or so approved in writing by a majority of the
Committee, shall be the valid acts of the Committee.
3.3 The interpretation and construction by the Committee of any
provisions of the Plan or of any Option granted under it and all actions of the
Committee shall be final and binding on all parties hereto. No member of the
Board or the Committee shall be liable for any action or determination made in
good faith with respect to the Plan or any Option granted under it.
4. ELIGIBILITY
4.1 Each Optionee shall be a Director of the Company.
Exhibit A-3
5. STOCK
5.1 Prior to the Restructure, the aggregate number of Shares which may
be issued under Options granted pursuant to the Plan shall not exceed 33,000
Shares and on or after the Restructure the aggregate number of Shares which may
be issued under Options granted pursuant to the Plan shall not exceed 165,000
Shares.
5.2 Each eligible individual who is a Director on the Plan Effective
Date, except those Directors who on the Plan Effective Date have not been
nominated for additional service on the Board and whose terms expire in 1996,
shall receive an Option to purchase 1,000 Shares with an Option Price equal to
Book Value of such Shares on the Plan Effective Date. In addition, such
individual who is also a Director on the date of the IPO shall receive an Option
to purchase 1,000 additional Shares with an Option Price equal to Fair Market
Value of such Shares on the date of the IPO.
5.3 Each eligible individual who is not a Director on the Plan
Effective Date shall receive an Option to purchase 1,000 Shares with an Option
Price equal to the Fair Market Value of such Shares on the date of grant which
shall be the later of (i) the date of the IPO, or (ii) the date on which such
individual first becomes a Director.
5.4 In the event that any outstanding Option under the Plan expires or
is terminated for any reason, the Optioned Shares subject to that option may
again be subjected to an Option under the Plan.
5.5 For Options issued prior to the Restructure, any Option still
unexercised and outstanding on the effective date of the Restructure shall be
deemed to be an Option to purchase FPIC Insurance Group, Inc. shares as adjusted
pursuant to Section 6.1(f).
6. TERMS AND CONDITIONS
6.1 Options granted pursuant to the Plan shall be evidenced by
agreements in such form as the Committee shall from time to time approve, which
agreements shall contain or shall be subject to the following terms and
conditions, whether or not such terms and conditions are specifically included
therein:
(a) Number of Shares. Each Option shall state the number of
Shares to which it pertains.
(b) Date. Each Option shall state the effective date of grant of
the Option.
(c) Option Price. Each Option shall state the Option Price.
Exhibit A-4
(d) Method and Time of Payment. The Option Price shall be
payable on the exercise of the Option and shall be paid in cash, in
Shares, including Shares acquired pursuant to the Plan, or part in cash
and part in Shares. Shares transferred in payment of the Option Price
shall be valued as of date of transfer based on the Fair Market Value.
(e) Transfer of Option. No Option shall be transferable by the
Optionee, except by will or the laws of descent and distribution upon
the Optionee's death and subject to any other limitations of the Plan.
(f) Recapitalization. The number of Optioned Shares and the
Option Price shall be correspondingly adjusted in order to give effect
to changes made in the number of outstanding Shares as a result of a
merger, consolidation, recapitalization, reclassification, combination,
stock dividend, stock split, or other relevant change.
(g) Rights as a Shareholder. An Optionee shall have no rights
as a shareholder with respect to any Optioned Shares until the date of
the issuance of a stock certificate to him for such Shares. No
adjustment shall be made for dividends (ordinary or extraordinary,
whether in cash, securities or other property) or distributions or
other rights for which the record date is prior to the date such stock
certificate is issued, except as provided in Section 6.1(f).
(i) Duration of Option. Each Option shall be for a term of
ten years from the effective date of grant, except as provided in
Section 7.1(b).
(j) Vesting. One-third (rounded up to a whole number) of each
grant under this Plan shall vest on the one-year anniversary of the
date of grant, with an additional one-third vesting on each of the next
two anniversaries of the date of grant. A Director shall forfeit the
unvested Options upon termination of service as a Director.
(k) Other Provisions. Options authorized under the Plan may
contain any other provisions or restrictions as the Committee in its
sole and absolute discretion shall deem advisable including but not
limited to offering Options in tandem with or reduced by other options
or benefits and reducing one award by the exercise of another option or
benefit. The Company may place such restriction legends on stock
certificates representing the Shares as the Company, in its sole
discretion, deems necessary or appropriate to reflect restrictions
under the securities laws or this Plan.
6.2 Options granted pursuant to the Plan shall not be exercisable until
such Options are vested as provided in Section 6.1(j). Any person entitled to
exercise an Option may do so in whole or in part by delivering to the Company,
attention Corporate Secretary, at its principal office a written notice of
exercise. The written notice shall specify the number of Shares for which an
Option is being exercised and shall be accompanied by full payment of the Option
Price for the Shares being purchased. During the Optionee's lifetime, an Option
may be exercised only by the Optionee, or on his behalf by the Optionee's
guardian or legal representative.
Exhibit A-5
7. TERMINATION OF OPTIONS
7.1 An Option may be terminated as follows:
(a) During the period of continuous service as a Director of
the Company or Subsidiary, an Option will be terminated only if it has
been fully exercised or it has expired by its terms.
(b) Upon termination of service as a Director for any reason,
the Option will terminate upon the earlier of (i) the full exercise of
the Option, (ii) the expiration of the Option by its terms, or (iii)
one year following the date of termination of service as a Director.
(c) If an Optionee shall die or becomes subject to a Permanent
and Total Disability prior to the termination of an Option, such Option
may be exercised to the extent that the Optionee shall have been
entitled to exercise it at the time of death or disability, as the case
may be, by the Optionee, the estate of the Optionee or the person or
persons to whom the Option may have been transferred by will or by the
laws of descent and distribution, provided, however, such right must be
exercised, if at all, within one year after the date of such death or
disability.
7.2 Except as otherwise expressly provided in the written agreement
with the Optionee referred to in Section 6 hereof, and except as provided in
this Section, in no event will the continuation of the term of an Option beyond
the date of termination of service allow the Director, or his beneficiaries or
heirs, to accrue additional rights under the Plan, or to purchase more Shares
through the exercise of an Option than could have been purchased on the day that
service as a Director was terminated.
8. AMENDMENT OR DISCONTINUANCE OF PLAN
8.1 The Plan may be amended by the Board, without Shareholder approval,
at any time in any respect unless Shareholder approval of the amendment in
question is required under Florida law, the Code, any exemption from Section 16
of the Exchange Act (including without limitation SEC Rule 16b-3) for which the
Company intends Section 16 persons to qualify, any national securities exchange
system on which the shares are then listed or reported, by any regulatory body
having jurisdiction with respect to the Plan, or any other applicable laws,
rules or regulations.
8.2 The Plan provisions that determine the amount, price and timing of
the option grants to Section 16 persons may not be amended more than once every
six months, other than to comport with changes in the Code, the Employment
Income Retirement Security Act of 1974, or rules thereunder, unless the
Company's legal counsel determines that such restriction on amendments is not
necessary to secure or maintain any exemptions from Section 16 of the Exchange
Act for which the Company intends Section 16 persons to qualify.
Exhibit A-6
8.3 The Plan may be terminated at any time by the Board of Directors.
8.4 No amendment to the Plan will alter or impair any Option granted
under the Plan without the consent of the holders thereof.
9. NO OBLIGATION TO EXERCISE OPTION
9.1 The granting of an option shall impose no obligation upon the
Optionee to exercise such option.
10. EFFECTIVE DATE; DURATION OF THE PLAN
10.1 The Plan shall be effective as of January 13, 1996.
10.2 No Option may be granted after the tenth anniversary of the
earlier of the date the Plan is adopted or the date the Plan is approved by
shareholders.
11. EFFECT OF PLAN
11.1 The granting of an option pursuant to the Plan shall not give the
Optionee any right to similar grants in future years or any right to be retained
in the employ of the Company, the Parent or a Subsidiary, but an Optionee shall
remain subject to discharge to the same extent as if the Plan were not in
effect.
FIRST AMENDMENT TO THE
DIRECTOR STOCK OPTION PLAN
This First Amendment to the Florida Physicians Insurance Company
Director Stock Option Plan (the "Plan") is made effective as of March 16, 1996.
1. Section 2.1(q) of the Plan shall be amended to read as
follows:
"(q) 'Plan' means the Director Stock Option Plan, as evidenced
herein and as amended from time to time."
2. Section 6.1(j) of the Plan shall be amended to read as
follows:
"(j) Vesting. One-third (rounded up to a whole number) of the
number of shares set forth in paragraph 2 shall vest on the
one year anniversary of this Agreement, with an additional
one-third vesting on each of the next two anniversaries of
this Agreement. Unvested options shall vest on the death or
Permanent and Total Disability of the Director. The Director
shall forfeit any unvested Options upon termination of service
as a Director for any reason other than death or Permanent and
Total Disability of the Director."
Exhibit A-7
All provisions of the Plan not specifically mentioned in this First
Amendment shall be considered modified to the extent necessary to be consistent
with the changes made in this First Amendment.
SECOND AMENDMENT TO THE
DIRECTOR STOCK OPTION PLAN
This Second Amendment to the Florida Physicians Insurance Company
Director Stock Option Plan (the "Plan") is made effective as of September 14,
1997.
1. Section 3.1 of the Plan shall be amended to read as follows:
"3.1 The Plan shall be administered by the Committee. The
Committee shall be comprised of not less than two of the then
members of the Board. The members of the Committee shall be
appointed by the Board. The Board may from time to time remove
members from or add members to the Committee. Vacancies on the
Committee, howsoever caused, shall be filled by the Board."
2. Section 5.1 of the Plan shall be amended to read as follows:
"5.1 The aggregate number of Shares which may be issued under
Options granted pursuant to the Plan shall not exceed 300,000
Shares."
3. Section 5.6 shall be added to the Plan to read as follows:
"5.6 In addition to the Option grants provided for above, the
Board may, in its sole discretion, grant from time to time
additional Options to eligible Directors."
4. Section 6.1(j) of the Plan shall be amended to read as
follows:
"6.1(j) Vesting. The vesting schedule of an Option granted
under this Plan shall be determined by the Board, in its sole
discretion, upon granting of the Option; provided, however,
that no Option shall vest prior to the expiration of six
months from the effective date of the Option grant or after
the tenth anniversary of the effective date of the Option
grant. A director shall forfeit any unvested Options upon
termination of service as a Director."
All provisions of the Plan not specifically mentioned in this Second
Amendment shall be considered modified to the extent necessary to be consistent
with the changes made in this Second Amendment.
Exhibit A-8
1999 AMENDMENT TO THE
DIRECTOR STOCK OPTION PLAN
This 1999 Amendment to the Florida Physicians Insurance Company
Director Stock Option Plan (the "Plan") is made effective as of June 8, 1999.
1. Section 5.1 of the Plan shall be amended to read as follows:
"5.1 The aggregate number of Shares which may be issued under
Options granted pursuant to the Plan shall not exceed 430,000
Shares."
2. Section 6.1(e) shall be amended to read as follows:
"(e) Transfer of Option. Options may be transferred by the
Optionee during his or her lifetime only to any member of his
or her immediate family or a trust established for the
exclusive benefit of one or more members of his or her
immediate family or to a former spouse pursuant to a domestic
relations order. For purposes of this Section, the term
"immediate family" is defined as an Optionee's spouse,
children, stepchildren, grandchildren (including relationships
arising from legal adoption), and parents. Upon an Optionee's
death, Options are transferable by will or the law of descent
and distribution."
3. Section 7.1(b) of the Plan shall be amended to read as
follows:
"(b) Upon termination of service as a Director for any reason,
the Option will terminate upon the earlier of (i) the full
exercise of the Option, (ii) the expiration of the Option by
its terms, or (iii) two years following the date of
termination of service as a Director."
All provisions of the Plan not specifically mentioned in this 1999
Amendment shall be considered modified to the extent necessary to be consistent
with the changes made in this Amendment.
SECOND 1999 AMENDMENT TO THE
DIRECTOR STOCK OPTION PLAN
This Second 1999 Amendment to the Florida Physicians Insurance Company
Director Stock Option (the "Plan") is entered into to clarify the original
intent of FPIC Insurance Group, Inc., the sponsor of the Plan, in adopting the
1999 Amendment to the Plan and is made effective as of June 8, 1999.
Exhibit A-9
1. Section 7.1(c) of the Plan shall be amended by deleting the
phrase "within one year after the date of such death or
disability" and replacing it with the phrase "within two years
after the date of such death or disability."
All provisions of the Plan not specifically mentioned in this Second
1999 Amendment shall be modified to the extent necessary to be consistent with
the changes made in this Amendment.
2000 AMENDMENT TO THE
DIRECTOR STOCK OPTION PLAN
This 2000 Amendment to the Director Stock Option Plan (the "Plan") is
made effective as of June 7, 2000, subject to shareholder approval at the 2000
Annual Meeting of Shareholders.
Section 5.1 of the Plan shall be amended to read as follows:
"5.1 The aggregate number of shares that may be issued under
options granted pursuant to the Plan shall not exceed 630,000
shares."
All provisions of the Plan not specifically mentioned in this 2000
Amendment shall be considered modified to the extent necessary to be consistent
with the changes made in this Amendment.
PROPOSED
2001 AMENDMENT TO THE
DIRECTOR STOCK OPTION PLAN
This 2001 Amendment to the Director Stock Option Plan (the "Plan") is
made effective as of June 6, 2001, subject to shareholder approval at the 2001
Annual Meeting of Shareholders.
Section 5.1 of the Plan shall be amended to read as follows:
"5.1 The aggregate number of shares that may be issued under
options granted pursuant to the Plan shall not exceed 680,000
shares."
All provisions of the Plan not specifically mentioned in this 2001
Amendment shall be considered modified to the extent necessary to be consistent
with the changes made in this Amendment.
Exhibit A-10
Exhibit B
OMNIBUS INCENTIVE PLAN
1. PURPOSE
1.1 The purpose of the Florida Physicians Insurance Company Omnibus
Incentive Plan is to provide incentives to specified individuals whose
performance, contributions and skills add to the value of Florida Physicians
Insurance Company. The Company also believes that the Plan will facilitate
attracting, retaining and motivating Employees of high caliber and potential.
1.2 Plan participants shall include those officers and key employees of
the Company and subsidiaries who, in the opinion of the Committee, are making or
are in a position to make substantial contributions to the Company by their
ability and efforts.
2. DEFINITIONS
2.1 For purposes of the Plan, the following terms shall have the
definition, which is attributed to them, unless the context clearly indicates to
the contrary.
(a) "Award" shall mean a grant of Restricted Stock,
Contingent Stock, an Option, or an SAR.
(b) "Board" means the Company's Board of Directors.
(c) "Book Value" means the value per Share determined for
statutory book purposes by dividing the total equity
of the Company on a given date by all Shares of stock
outstanding on such date.
(d) "Change in Control" shall not mean the Restructure
but shall mean the earlier of the following events
which are not connected to the Restructure:
(i) either (A) receipt by the Company of a
report on Schedule 13D, or an amendment to
such a report, filed with the SEC pursuant
to Section 13(d) of the Exchange Act,
disclosing that any person (as such term is
used in Section 13(d) of the Exchange Act)
("Person"), is the beneficial owner,
directly or indirectly, of twenty
(20) percent or more of the outstanding
stock of the Company, or (B) actual
knowledge by the Company of facts on the
basis of which any Person is required to
file such a report on Schedule 13D, or to
file an amendment to such a report, with the
SEC (or would be required to file such a
report or amendment upon the lapse of the
applicable period of time specified in
Section 13(d) of the Exchange Act)
disclosing that such Person is the
beneficial owner, directly or indirectly, of
twenty (20) percent or more of the
outstanding stock of the Company;
Exhibit B-1
(ii) purchase by any Person, other than the
Company or a wholly owned subsidiary of
the Company, of shares pursuant to a tender
or exchange offer to acquire any stock of
the Company (or securities convertible into
stock) for cash, securities or any other
consideration provided that, after
consummation of the offer, such Person is
the beneficial owner (as defined in Rule
13d-3 under the Exchange Act regardless of
whether the Company or such Person would
otherwise be subject to the Exchange Act),
directly or indirectly, of twenty (20)
percent or more of the outstanding stock of
the Company (calculated as provided in
paragraph (d) of Rule 13d-3 under the
Exchange Act in the case of rights to
acquire stock regardless of whether the
Company or such Person would otherwise be
subject to the Exchange Act);
(iii) either (A) the filing by any Person
acquiring, directly or indirectly, twenty
(20) percent or more of the outstanding
stock of the Company of a statement with the
Florida Department of Insurance pursuant to
Section 628.461 of the Florida Statutes, or
(B) actual knowledge by the Company of facts
on the basis of which any Person acquiring,
directly or indirectly, twenty (20) percent
or more of the outstanding stock of the
Company or a controlling company is required
to file such a statement pursuant to Section
628.461.
(iv) approval by the shareholders of the Company
of (A) any consolidation or merger of the
Company in which the Company is not the
continuing or surviving corporation or
pursuant to which shares of stock of the
Company would be converted into cash,
securities or other property, other than a
consolidation or merger of the Company in
which holders of its stock immediately prior
to the consolidation or merger have
substantially the same proportionate
ownership of common stock of the surviving
corporation immediately after the
consolidation or merger as immediately
before, or (B) any consolidation or merger
in which the Company is the continuing or
surviving corporation but in which the
common shareholders of the Company
immediately prior to the consolidation or
merger do not hold at least a majority of
the outstanding common stock of the
continuing or surviving corporation (except
where such holders of common stock hold at
least a majority of the common stock of the
corporation that owns all of the common
stock of the Company), or (C) any sale,
lease, exchange or other transfer (in one
transaction or a series of related
transactions) of all or substantially all
the assets of the Company, or (D) any merger
or consolidation of the Company where, after
the merger or consolidation, one Person owns
100% of the shares of stock of the Company
(except where the holders of the Company's
common stock immediately prior to such
merger or
Exhibit B-2
consolidation own at least 90% of the
outstanding stock of such Person immediately
after such merger or consolidation); or
(v) a change in the majority of the members of
the Board within a 24-month period unless
the election or nomination for election by
the Company's shareholders of each new
director was approved by the vote of at
least two-thirds of the directors then still
in office who were in office at the
beginning of the 24-month period.
(e) "Code" means the Internal Revenue Code of 1986, as
amended.
(f) "Committee" means the members of the Compensation
Committee of the Board who are "outside directors"
(within the meaning of Code Section 162(m)) and
"disinterested persons" (within the meaning of Rule
16b-3 of the Exchange Act).
(g) "Company" means Florida Physicians Insurance Company
until the Restructure and on and after the
Restructure, FPIC Insurance Group, Inc.
(h) "Contingent Stock" means stock issued, subject to
certain conditions, to a Grantee pursuant to Section
9 hereof.
(i) "Directors" means the members of the Board.
(j) "Effective Date" means January 13, 1996.
(k) "Employee" means any individual who performs services
for the Company, a Parent or Subsidiary, and is
included on the regular payroll of the Company, a
parent or subsidiary.
(l) "Exchange Act" means the Securities Exchange Act of
1934, as amended.
(m) "Fair Market Value" means on, or with respect to, any
given date:
(i) If determined on the date of the IPO, the
initial offering price to the public.
(ii) If not on the date of the IPO and the Shares
are listed on a national stock exchange, the
closing market price of such Shares as
reported on the composite tape for issues
listed on such exchange on such date or, if
no trade shall have been reported for such
date, on the next preceding date on which
there were trades reported; provided, that
if no such quotation shall have been made
within the ten business days preceding such
date, Fair Market Value shall be determined
under (iv) below.
Exhibit B-3
(iii) If not on the date of the IPO and the Shares
are not listed on a national stock exchange
but are traded on the over-the-counter
market, the mean between the closing dealer
bid and asked price of such Shares as
reported by the National Association of
Securities Dealers through their Automated
Quotation System for such date, or if no
quotations shall have been made on such
date, on the next preceding date on which
there were quotations; provided, that, if
such quotations shall have been made within
the ten business days preceding such date,
Fair Market Value shall be determined under
(iv) below.
(iv) If (i), (ii), and (iii) do not apply, the
Fair Market Value of a Share without regard
to any control premium or discount for lack
of control (except as otherwise required by
Section 422 of the Code) as determined by
the Committee in good faith consistent with
the valuation of the Company as provided by
a third party appraiser for other corporate
purposes before adjustments or any discounts
applied due to lack of marketability. The
Committee may rely upon the most recent
valuation and there shall be no requirement
to cause a more recent valuation to be made.
(n) "Grantee" means an Employee who is an Optionee or an
Employee who has received an Award.
(o) "Incentive Stock Option" shall have the same meaning
as given to the term by Section 422 of the Code and
any regulations or rulings promulgated thereunder.
(p) "IPO" means the initial public offering of the
Company's common stock pursuant to a registration
statement on Form S-1 filed by the Company with the
U.S. Securities and Exchange Commission.
(q) "Nonqualified Stock Option" means any option granted
under the Plan which is not considered an Incentive
Stock Option.
(r) "Option" means the right to purchase from the Company
a stated number of Shares at a specified price. The
Option may be granted to an Employee subject to the
terms of this Plan, and such other conditions and
restrictions as the Committee deems appropriate. Each
Option shall be designated by the Committee to be
either an Incentive Stock Option or a Nonqualified
Stock Option.
(s) "Option Price" means the purchase price per Share
subject to an Option, as described in Section 7.2(a).
Exhibit B-4
(t) "Optionee" means an Employee who has been awarded an
Option under the Plan.
(u) "Parent" shall mean any corporation (other than the
Company) in an unbroken chain of corporations ending
with the Company if, at the time of a granting of an
Option, each of the corporations (other than the
Company) owns stock possessing 50% or more of the
total combined voting power of all classes of stock
in one of the other corporations in such chain within
the meaning of Section 424(e) of the Code and any
regulations or rulings promulgated thereunder.
(v) "Plan" means Florida Physicians Insurance Company
Omnibus Incentive Plan, as evidenced herein and as
amended from time to time.
(w) "Restricted Stock" shall mean stock issued, subject
to restrictions, to a Grantee pursuant to Section 10
hereof.
(x) "Restructure" means the corporate reorganization
pursuant to which Florida Physicians Insurance
Company shall become the wholly owned subsidiary of
FPIC Insurance Group, Inc.
(y) "SAR" means a stock appreciation right.
(z) "SEC" means the U.S. Securities and Exchange
Commission.
(aa) "Section 16 Person" means a person subject to Section
16(b) of the Exchange Act with respect to
transactions involving equity securities of the
Company.
(bb) "Share" means one share of the $1.00 par value common
stock of the Company. On and after the Restructure,
"Share" means one share of $.10 par value common
stock of FPIC Insurance Group, Inc.
(cc) "Subsidiary" means any corporation in an unbroken
chain of corporations beginning with the Company if,
at the time of the granting of the Option, each of
the corporations (other than the last corporation) in
the unbroken chain owns stock possessing 50% or more
of the total combined voting power of all classes of
stock in one of the other corporations in such chain,
within the meaning of Section 424(f) of the Code and
any regulations or rulings promulgated thereunder.
3. ADMINISTRATION
3.1 The Plan shall be administered by the Committee. As applied
to Employees, the Committee shall have full and final authority in its
discretion to:
Exhibit B-5
(a) conclusively interpret the provisions of the Plan and
to decide all questions of fact arising in its
application;
(b) determine the individuals to whom awards shall be
made under the Plan;
(c) determine the type of award to be made to such
Employees and the amount, size and terms of each
award;
(d) determine the time when awards will be granted to
Employees; and
(e) make all other determinations necessary or advisable
for the administration of the Plan.
4. SHARES SUBJECT TO THE PLAN
4.1 Prior to the Restructure the Shares subject to Awards under the
Plan shall not exceed in the aggregate 183,000 Shares and on and after the
Restructure the Shares subject to Awards under the Plan shall not exceed in the
aggregate 915,000 Shares.
4.2 Shares may be authorized and unissued Shares or treasury
Shares.
4.3 The maximum number of Shares that may be awarded pursuant to the
Contingent or Restricted Stock Award provisions of Sections 9 and 10 shall be
25% of the total Shares authorized for issuance under the Plan.
4.4 Except as provided herein, any Shares subject to an Option or right
for which any reason expires or is terminated unexercised as to such Shares
shall again be available under the Plan.
5. PARTICIPANTS
5.1 Awards permitted pursuant to the Plan may only be made to
Employees.
6. AWARDS UNDER THE PLAN
6.1 Awards under the Plan may be in the form of Options (both
Nonqualified Stock Options and Incentive Stock Options), Contingent Stock,
Restricted Stock, and SARs, or such other forms as the Committee may in its
discretion deem appropriate but in any event which are consistent with the
Plan's purpose, including any combination of the above.
6.2 Prior to the Restructure the maximum number of Awards that may be
awarded to any one person during the life of the Plan shall be 60,000 Shares and
on and after the Restructure the maximum number of Awards that may be awarded to
any one person during the life of the Plan shall be 300,000 Shares. Prior to the
Restructure the maximum number of Shares with respect to which Options or rights
may be granted during a calendar year to any Employee is 60,000 Shares and on
and after the Restructure the maximum number of Shares with respect to
Exhibit B-6
which Options or rights may be granted during a calendar year to any Employee is
300,000 Shares.
7. STOCK OPTIONS
7.1 The Committee in its sole discretion may designate whether an
Option is to be considered an Incentive Stock Option or a Nonqualified Stock
Option. The Committee may grant both an Incentive Stock Option and a
Nonqualified Stock Option to the same individual. However, where both an
Incentive Stock Option and a Nonqualified Stock Option are awarded at one time,
such Options shall be deemed to have been awarded in separate grants, shall be
clearly identified, and in no event will the exercise of one such Option affect
the right to exercise the other such Option except to the extent the Committee
determines in writing otherwise.
7.2 Options granted pursuant to the Plan shall be authorized by the
Committee under terms and conditions approved by the Committee, not inconsistent
with this Plan or Exchange Act Rule 16b-3(c), and shall be evidenced by
agreements in such form as the Committee shall from time to time approve, which
agreements shall contain or shall be subject to the following terms and
conditions, whether or not such terms and conditions are specifically included
therein:
(a) The Option Price of an Incentive Stock Option shall
not be less than 100% of the Fair Market Value of
such Share on the day the Option is granted, as
determined by the Committee. The Option Price of a
Nonqualified Stock Option issued prior to the IPO
shall not be less than 100% of Book Value of such
Share on the day the Option is granted, as determined
by the Committee. The Option Price of a Nonqualified
Stock Option issued on or after the IPO shall not be
less than 50% of the Fair Market Value of such Share
on the day the Option is granted, as determined by
the Committee. The option agreement for a
Nonqualified Stock Option at the Committee's sole
discretion, may, but need not, provide for a
reduction of the purchase price by dividends paid on
a Share as long as the Option is outstanding and not
exercised, but in no event shall this price be less
than the par value of such Share.
(b) Each option agreement shall state the period or
periods of time, as may be determined by the
Committee, within which the Option may be exercised
by the participant, in whole or in part, provided
such period shall not commence earlier than six
months after the date of grant of the Option and not
later than ten years after the date of the grant of
the Option. The Committee shall have the power to
permit in its discretion an acceleration of
previously determined exercise terms, subject to the
terms of this Plan, to the extent permitted by
Exchange Act Rule 16b-3(c), and under such
circumstances and upon such terms and conditions
as deemed appropriate and which are not inconsistent
with Exchange Act Rule 16b-3(c)(1).
Exhibit B-7
(c) Shares purchased pursuant to an option agreement
shall be paid for in full at the time of purchase,
either in the form of cash, common stock of the
Company at Fair Market Value, or a combination
thereof, as the Committee may determine.
(d) Notwithstanding anything herein to the contrary, the
aggregate Fair Market Value (determined as of the
time the Option is granted) of Incentive Stock
Options for any Employee which may become first
exercisable in any calendar year shall not exceed
$100,000.
(e) Notwithstanding anything herein to the contrary, no
Incentive Stock Option shall be granted to any
individual if, at the time the Option is to be
granted, the individual owns stock possessing more
than 10% of the total combined voting power of all
classes of stock of the Company unless at the time
such Option is granted the Option Price is at least
110% of the Fair Market Value of the stock subject to
Option and such Option by its terms is not
exercisable after the expiration of five years from
the date such Option is granted.
(f) Each Incentive Stock Option agreement shall contain
such other terms, conditions and provisions as the
Committee may determine to be necessary or desirable
in order to qualify such Option as a tax-favored
option within the meaning of Section 422 of the Code,
or any amendment thereof, substitute therefor, or
regulation thereunder. Subject to the limitations of
Section 19, and without limiting any provisions
hereof, the Committee shall have the power without
further approval to amend the terms of any Option for
Employees.
7.3 If any Option is not granted, exercised, or held pursuant to the
provisions applicable to an Incentive Stock Option, it will be considered to be
a Nonqualified Stock Option to the extent that any or all of the grant is in
conflict with such provisions.
7.4 An Option may be terminated (subject to any shorter periods set
forth in an individual option agreement by the Committee, in its sole
discretion) as follows:
(a) During the period of continuous employment with the
Company or Subsidiary, an Option will be terminated
only if it has been fully exercised or it has expired
by its terms.
(b) In the event of termination of employment for any
reason, the Option will terminate upon the earlier of
(i) the full exercise of the Option, (ii) the
expiration of the Option by its terms, or (iii)
except as provided in 7.4(c), no more than three
years (three months for Incentive Stock Options)
following the date of employment termination. For
purposes of the Plan, a leave of absence approved by
the Company shall not be deemed to be termination of
employment except with respect to an Incentive Stock
Option as required to comply with Code Section 422
and the regulations issued thereunder.
Exhibit B-8
(c) If an Optionee's employment terminates by reason of
death or Permanent and Total Disability prior to the
termination of an Option, such Option may be
exercised to the extent that the Optionee shall have
been entitled to exercise it at the time of death or
disability, as the case may be, by the Optionee, the
estate of the Optionee or the person or persons to
whom the Option may have been transferred by will or
by the laws of descent and distribution for the
period set forth in the Option, but no more than
three years following the date of such death or
disability, provided, however, with respect to an
Incentive Stock Option, such right must be exercised,
if at all, within one year after the date of such
death or disability.
8. STOCK APPRECIATION RIGHTS
8.1 SARs shall be evidenced by SAR agreements in such form, and not
inconsistent with this Plan or Exchange Act Rule 16b-3(c)(1), as the Committee
shall approve from time to time, which agreements shall contain in substance the
following terms and conditions as discussed in Sections 8.2 through 8.4.
8.2 An SAR may be granted in connection with an Option and shall
entitle the Grantee, subject to such terms and conditions determined by the
Committee, to receive, upon surrender of the Option, all or a portion of the
excess of (i) the Fair Market Value of a specified number of Shares at the time
of the surrender, as determined by the Committee, over (ii) 100% of the Fair
Market Value of such Shares at the time the Option was granted less any
dividends paid while the Option was outstanding but unexercised.
8.3 SARs shall be granted for a period of not less than six months nor
more than ten years, and shall be exercisable in whole or in part, at such time
or times and subject to such other terms and conditions as shall be prescribed
by the Committee at the time of grant, subject to the following:
(a) No SAR shall be exercisable, in whole or in part,
during the six-month period starting with the date
of grant; and
(b) SARs will be exercisable only during a Grantee's
employment by the Company or a Subsidiary, except
that in the discretion of the Committee an SAR may be
made exercisable for up to three months after the
Grantee's employment is terminated for any reason
other than death, retirement or disability. In the
event that a Grantee's employment is terminated as a
result of death, retirement or disability without
having fully exercised such Grantee's SARs, the
Grantee or such Grantee's beneficiary may have the
right to exercise the SARs during their term within
a period of 24 months after the date of such
termination to the extent that the right was
exercisable at the date of such termination, or
during such other period and subject to such terms as
may be determined by the Committee. The Committee in
its sole discretion may reserve the right to
accelerate previously determined exercised terms,
Exhibit B-9
within the terms of the Plan, under such
circumstances and upon such terms and conditions as
it deems appropriate.
(c) The Committee shall establish such additional terms
and conditions, without limiting the foregoing, as it
determines to be necessary or desirable to avoid
"short-swing" trading liability in connection with an
SAR within the meaning of Section 16(b) of the
Exchange Act.
8.4 Upon exercise of an SAR, payment shall be made in the form of
common stock of the Company (at Fair Market Value on the date of exercise),
cash, or a combination thereof, as the Committee may determine.
9. CONTINGENT STOCK AWARDS
9.1 Contingent Stock Awards under the Plan shall be evidenced by
Contingent Stock agreements in such form and not inconsistent with this Plan as
the Committee shall approve from time to time, which agreements shall contain in
substance the terms and conditions described in Sections 9.2 through 9.5.
9.2 The Committee shall determine the amount of Contingent Stock Award
to be granted to an Employee based on the expected impact the Employee can have,
or actually has had, on the financial well being of the Company and other
factors deemed by the Committee to be appropriate.
9.3 Contingent Stock Awards made pursuant to this Plan shall be subject
to such terms, conditions, and restrictions, including without limitation,
substantial risks of forfeiture and/or attainment of performance objectives, and
for such period or periods (in excess of six months) as shall be determined by
the Committee at the time of grant. The Committee shall have the power to
permit, in its discretion, an acceleration of the expiration of the applicable
restriction period (so long as the minimum six-month period is retained) with
respect to any part or all of the Award to any participant. The Committee shall
have the power to make a Contingent Stock Award that is not subject to vesting
or any other contingencies in recognition of an Employee's prior service and
financial impact on the Company.
9.4 The agreement shall specify the terms and conditions upon which any
restrictions on the right to receive Shares representing Contingent Stock Awards
under the Plan shall lapse, as determined by the Committee. Upon the lapse of
such restrictions, Shares shall be issued to the participant or such
participant's legal representative.
9.5 In the event of a participant's termination of employment for any
reason prior to the lapse of restrictions applicable to a Contingent Stock Award
made to such participant and unless otherwise provided for herein by this Plan
or as provided for in the Contingent Stock agreement, all rights to Shares as to
which there still remain unlapsed restrictions shall be forfeited by such
participant to the Company without payment or any consideration by the Company,
and neither the participant nor any successors, heirs, assigns or personal
Exhibit B-10
representatives of such participants shall thereafter have any further rights or
interest in such Shares.
10. RESTRICTED STOCK AWARD
10.1 Restricted Stock Awards under the Plan shall be evidenced by
Restricted Stock agreements in such form, and not inconsistent with this Plan,
as the Committee shall approve from time to time, which agreements shall contain
in substance the terms and conditions described in Sections 10.2 through 10.6.
10.2 The Committee shall determine the amount of a Restricted Stock
Award to be granted to an Employee based on the past or expected impact the
Employee has had or can have on the financial well-being of the Company and
other factors deemed by the Committee to be appropriate.
10.3 Restricted Stock Awards made pursuant to this Plan shall be
subject to such terms, conditions, and restrictions, including without
limitation, substantial risks of forfeiture and/or attainment of performance
objectives, and for such period or periods (in excess of six months) as shall be
determined by the Committee at the time of grant. The Committee shall have the
power to permit, in its discretion, an acceleration of the expiration of the
applicable restriction period (so long as the minimum six-month period is
retained) with respect to any part or all of the Award to any participant. Upon
issuance of a Restricted Stock Award, Shares will be issued in the name of the
recipient. During the restriction period, recipient shall have the rights of a
shareholder for all such Shares of Restricted Stock, including the right to vote
and the right to receive dividends thereon as paid.
10.4 Each certificate evidencing stock subject to Restricted Stock
Awards shall bear an appropriate legend referring to the terms, conditions and
restrictions applicable to such Award. Any attempt to dispose of stock in
contravention of such terms, conditions and restrictions shall be ineffective.
The Committee may adopt rules which provide that the certificates evidencing
such Shares may be held in custody by a bank or other institution, or that the
Company may itself hold such Shares in custody, until the restrictions thereon
shall have lapsed and may require as a condition of any Award that the recipient
shall have delivered a stock power endorsed in blank relating to the stock
covered by such Award.
10.5 The Restricted Stock agreement shall specify the terms and
conditions upon which any restrictions on the right to receive shares
representing Restricted Stock awarded under the Plan shall lapse as determined
by the Committee. Upon the lapse of such restrictions, Shares which have not
been delivered to the recipient or such recipient's legal representative shall
be delivered to such participant or such participant's legal representative.
10.6 In the event of a participant's termination of employment for any
reason prior to the lapse of restrictions applicable to a Restricted Stock Award
made to such participant and unless otherwise provided for herein by this Plan
or as provided for in the Restricted Stock agreement, all rights to Shares as to
which there remain unlapsed restrictions shall be forfeited by such participant
to the Company without payment or any consideration by the Company, and
Exhibit B-11
neither the participant nor any successors, heirs, assigns or personal
representatives of such participant shall thereafter have any further rights or
interest in such Shares.
11. OTHER PROVISIONS RELATING TO CONTINGENT AND RESTRICTED STOCK AWARDS AND
STOCK OPTIONS
11.1 Notwithstanding any other provisions to the contrary in Sections
7, 9, or 10 or elsewhere in this Plan, the additional provisions described in
Sections 11.1 and 11.2 shall apply to Contingent and Restricted Stock Awards and
to stock option Awards (except that Section 11.2 shall only apply to Contingent
and Restricted Stock Awards).
11.2 If a recipient of a Contingent or Restricted Stock Award has his
or her employment terminated and his or her salary continued through an
employment agreement, severance program or other comparable arrangement, then
any contingencies and restrictions which are satisfied or which would have been
satisfied during the period for which the recipient's salary is to be continued,
irrespective of form, will be deemed to have been satisfied, and such Shares of
Contingent and/or Restricted Stock shall be issued and delivered to the
recipient or such recipient's legal representative no later than the expiration
of the salaries continuation program.
11.3 Upon a Change in Control, all Options, Contingent Stock Awards,
Restricted Stock Awards, and SARs will automatically vest as of that date and
all restrictions or contingencies will be deemed to have been satisfied.
11.4 The Committee may provide in any individual agreement in
connection with an Award that upon a Change in Control the Executive may have a
period of time to exercise such Award which period does not exceed its original
term.
12. GENERAL RESTRICTIONS
12.1 The Plan and each Award under the Plan shall be subject to the
requirement that, if at any time the Committee shall determine that (i) the
listing, registration or qualification of the Shares subject or related thereto
upon any securities exchange or under any state or federal law, (ii) the consent
or approval of any government regulatory body, or (iii) an agreement by the
recipient of an Award with respect to the disposition of Shares, is necessary or
desirable as a condition of, or in connection with the Plan or the granting of
such Award or the issue or purchase of Shares of common stock thereunder, the
Plan will not be effective and/or the Award may not be consummated in whole or
in part unless such listing, registration, qualification, consent, approval or
agreement shall have been effected or obtained free of any conditions not
acceptable to the Committee.
13. RIGHTS OF A SHAREHOLDER
13.1 The recipient of any Award under the Plan shall have no rights as
a shareholder with respect thereto unless and until certificates for Shares of
common stock are issued to such
Exhibit B-12
recipient, except for the rights provided in Section 11 of this Plan as it
pertains to Restricted Stock Awards.
14. RIGHTS TO TERMINATE EMPLOYMENT
14.1 Nothing in the Plan or in any agreement entered into pursuant to
the Plan shall confer upon any participant the right to continue in the
employment of the Company or its subsidiary or affect any right which the
Company or its subsidiary may have to terminate the employment of such
participant.
15. WITHHOLDING OF TAXES
15.1 Whenever the Company proposes, or is required, to issue or
transfer Shares under the Plan, the Company shall have the right to require the
recipient to remit to the Company an amount, or a number of shares, sufficient
to satisfy any federal, state and/or local withholding tax requirements prior to
the delivery of any certificate or certificates for such Shares. Whenever under
the Plan payments are to be made in cash, such payments shall be net of an
amount sufficient to satisfy any federal, state and/or local withholding tax
requirements.
16. NONASSIGNABILITY
16.1 No Award or benefit under the Plan shall be assignable or
transferable by the recipient thereof except by will or by the laws of descent
and distribution. During the life of the recipient, such Award shall be
exercisable only by such person or by such person's guardian or legal
representative.
17. NON-UNIFORM DETERMINATIONS
17.1 The Committee's determination under the Plan (including, without
limitation, determinations of the persons to receive Awards, the form, amount
and timing of such Awards, the terms and conditions of such Awards and the
agreements evidencing same, and the establishment of values and performance
targets) need not be uniform and may be made by the Committee selectively among
persons who receive, or are eligible to receive, Awards under the Plan, whether
or not such persons are similarly situated.
18. ADJUSTMENTS
18.1 In the event of any change in the outstanding common stock of the
Company by reason of the Restructure, a stock dividend, recapitalization,
merger, consolidation, split-up, combination, exchange of Shares or the like,
the Committee shall adjust the number of Shares of common stock which may be
issued under the Plan and shall provide for an equitable adjustment of any
outstanding Award or Shares issuable pursuant to an outstanding Award under this
Plan.
Exhibit B-13
19. AMENDMENT
19.1 The Plan may be amended by the Board, without Shareholder
approval, at any time in any respect, unless Shareholder approval of the
amendment in question is required under Florida law, the Code, any exemption
from Section 16 of the Exchange Act (including without limitation SEC Rule
16b-3) for which the Company intends Section 16 Persons to qualify, any national
securities exchange system on which the Shares are then listed or reported, by
any regulatory body having jurisdiction with respect to the Plan, or any other
applicable laws, rules or regulations.
19.2 The termination or modification or amendment of the Plan shall
not, without the consent of a participant, affect a participant's rights under
an Award previously granted. Notwithstanding the foregoing, however, the
corporation reserves the right to terminate the Plan in whole or in part, at any
time and for any reason, provided that full and equitable compensation is made
to participants with respect to Awards previously granted.
20. EFFECT ON OTHER PLAN
20.1 Participation in this Plan shall not affect a participant's
eligibility to participate in any other benefit or incentive plan of the
Company, and any Awards made pursuant to this Plan shall not be used in
determining the benefits provided under any other plan of the Company unless
specifically provided.
21. DURATION OF PLAN
21.1 The Plan shall remain in effect until all Awards under the Plan
have been satisfied by the issuance of Shares or the payment of cash, but no
Awards shall be granted more than ten years after the date the Plan is adopted
by the Company.
22. FUNDING OF THE PLAN
22.1 This Plan shall be unfunded. The Company shall not be required to
establish any special or separate fund or to make any other segregation of
assets to assure the payment of any Award under this Plan, and payment of Awards
shall be on the same basis as the claims of the Company's general creditors. In
no event shall interest be paid or accrued on any Award including unpaid
installments of Awards.
23. GOVERNING LAW
23.1 The laws of the State of Florida shall govern, control and
determine all questions arising with respect to the Plan and the interpretation
and validity of its respective provisions.
Exhibit B-14
FIRST AMENDMENT TO THE
FLORIDA PHYSICIANS INSURANCE COMPANY
OMNIBUS INCENTIVE PLAN
This First Amendment to the Florida Physicians Insurance Company
Omnibus Incentive Plan (the "Plan") is made effective as of March 16, 1996.
1. Section 2.1(v) of the Plan shall be amended to read as
follows:
"(v) 'Plan' means Omnibus Incentive Plan, as evidenced herein
and as amended from time to time."
All provisions of the Plan not specifically mentioned in this First
Amendment shall be considered modified to the extent necessary to be
consistent with the changes made in this First Amendment.
SECOND AMENDMENT TO THE
OMNIBUS INCENTIVE PLAN
This Second Amendment to the Omnibus Incentive Plan (the "Plan") is
made effective as of September 14, 1997.
1. Section 4.1 of the Plan shall be amended to read as follows:
"4.1 The aggregate number of Shares which may be issued
under Options granted pursuant to the Plan shall not
exceed in the aggregate 1,165,000 Shares."
All provisions of the Plan not specifically mentioned in this Second
Amendment shall be considered modified to the extent necessary to be consistent
with the changes made in this Second Amendment.
1999 AMENDMENT TO THE
OMNIBUS INCENTIVE PLAN
This 1999 Amendment to the Omnibus Incentive Plan (the "Plan") is made
effective as of June 8, 1999.
1. Section 4.1 of the Plan shall be amended to read as
follows:
"4.1 The aggregate number of Shares which may be
issued under Options granted pursuant to the Plan
shall not exceed 1,665,000 Shares."
2. Section 6.2 of the Plan shall be amended to read as
follows:
Exhibit B-15
"6.2 The maximum number of Awards that may be awarded
to any one person during the life of the Plan shall
be 600,000 Shares."
3. Section 16.1 shall be amended by the addition of the
following sentence at the end of such Section:
"Notwithstanding the foregoing, under certain
circumstances The Committee may grant (or sanction by
amending an existing grant) Nonqualified Stock
Options which may be transferred by the Optionee
during his or her lifetime to any member of his or
her immediate family or a trust established for the
exclusive benefit of one or more members of his or
her immediate family or to a former spouse pursuant
to a domestic relations order. For purposes of this
Section, the term "immediate family" is defined as an
Optionee's spouse, children, stepchildren,
grandchildren (including relationships arising from
legal adoption), and parents."
All provisions of the Plan not specifically mentioned in this 1999
Amendment shall be considered modified to the extent necessary to be consistent
with the changes made in this Amendment.
2000 AMENDMENT TO THE
OMNIBUS INCENTIVE PLAN
This 2000 Amendment to the Omnibus Incentive Plan (the "Plan") is made
effective as of June 7, 2000, subject to shareholder approval at the 2000 Annual
Meeting of Shareholders.
Section 4.1 of the Plan shall be amended to read as follows:
"4.1 The aggregate number of Shares that may be
issued under Options granted pursuant to the Plan
shall not exceed 1,865,000 Shares."
All provisions of the Plan not specifically mentioned in this 2000
Amendment shall be considered modified to the extent necessary to be consistent
with the changes made in this Amendment.
Exhibit B-16
PROPOSED
2001 AMENDMENT TO THE
OMNIBUS INCENTIVE PLAN
This 2001 Amendment to the Omnibus Incentive Plan (the "Plan") is made
effective as of June 6, 2001, subject to shareholder approval at the 2001 Annual
Meeting of Shareholders.
Section 4.1 of the Plan shall be amended to read as follows:
"4.1 The aggregate number of Shares that may be
issued under Options granted pursuant to the Plan
shall not exceed 2,088,000 shares."
All provisions of the Plan not specifically mentioned in this 2001
Amendment shall be considered modified to the extent necessary to be consistent
with the changes made in this Amendment.
Exhibit B-17