UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934 (Amendment No.)
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] Soliciting Material Pursuant to
[_] Confidential, For Use of the SS.240.14a-11(c) or SS.240.14a-12
Commission Only (as permitted
by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
E.W. BLANCH HOLDINGS, INC.
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
________________________________________________________________________________
2) Aggregate number of securities to which transaction applies:
________________________________________________________________________________
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):
________________________________________________________________________________
4) Proposed maximum aggregate value of transaction:
________________________________________________________________________________
5) Total fee paid:
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[_] Fee paid previously with preliminary materials:
________________________________________________________________________________
[_] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the form or schedule and the date of its filing.
1) Amount previously paid:
________________________________________________________________________________
2) Form, Schedule or Registration Statement No.:
________________________________________________________________________________
3) Filing Party:
________________________________________________________________________________
4) Date Filed:
________________________________________________________________________________
E. W. BLANCH HOLDINGS, INC.
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500 N. Akard, Suite 4500
Dallas, Texas 75201
March 23, 2001
Dear Shareholder:
You are cordially invited to attend the Annual Meeting of Shareholders of E. W.
Blanch Holdings, Inc. to be held at Lincoln Plaza, 500 North Akard, 37th Floor,
Dallas, Texas 75201, on Thursday, April 26, 2001, at 10:30 A.M. Central Daylight
Time. I encourage you to attend. Whether or not you plan to attend the meeting,
I urge you to vote your proxy. On behalf of your Board of Directors, thank you
for your continued support of and interest in E. W. Blanch Holdings, Inc.
Sincerely,
/s/ Chris L. Walker
Chris L. Walker
Chairman and Chief Executive Officer
E. W. BLANCH HOLDINGS, INC.
500 N. AKARD, SUITE 4500
DALLAS, TEXAS 75201
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NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
APRIL 26, 2001
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Notice is hereby given that the Annual Meeting of Shareholders of E. W.
Blanch Holdings, Inc. (the "Company") will be held at Lincoln Plaza, 500 North
Akard, 37th Floor, Dallas, Texas 75201, on Thursday, April 26, 2001, at 10:30
A.M. Central Daylight Time, for the following purposes:
1. To elect three Class II directors to serve until the Annual Meeting of
Shareholders in 2004 and until their respective successors are duly
elected and qualified;
2. To approve the E. W. Blanch Holdings, Inc. Management Incentive Plan;
3. To ratify the appointment of Ernst & Young LLP as the Company's
independent auditors for the 2001 fiscal year; and
4. To act upon any other business that may properly be brought before the
Annual Meeting.
The close of business on March 5, 2001 has been fixed as the record date
for determining the shareholders entitled to notice of and to vote at the Annual
Meeting.
Your attention is directed to the accompanying Proxy Statement.
WHETHER OR NOT YOU PLAN TO BE PRESENT AT THE ANNUAL MEETING, PLEASE
COMPLETE, DATE AND SIGN THE ENCLOSED PROXY AND RETURN IT PROMPTLY IN THE
ENCLOSED ENVELOPE.
Enclosed for your information is the Company's Annual Report for the year
ended December 31, 2000.
By Order of the Board of Directors
/s/ Daniel P. O'Keefe
Daniel P. O'Keefe
SECRETARY
March 23, 2001
E. W. BLANCH HOLDINGS, INC.
500 N. AKARD, SUITE 4500
DALLAS, TEXAS 75201
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PROXY STATEMENT
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ANNUAL MEETING OF SHAREHOLDERS
APRIL 26, 2001
INFORMATION CONCERNING SOLICITATION AND VOTING
The enclosed proxy is solicited by the Board of Directors of E. W. Blanch
Holdings, Inc. (the "Company") for use at the Annual Meeting of Shareholders,
which will be held at 10:30 A.M. Central Daylight Time on Thursday, April 26,
2001, at Lincoln Plaza, 500 North Akard, 37th Floor, Dallas, Texas 75201, and at
any adjournment thereof.
Only shareholders of record at the close of business on March 5, 2001 are
entitled to vote at the Annual Meeting or any adjournment thereof. As of said
date, 13,045,666 shares of the Company's common stock, $.01 par value per share
(the "Common Stock"), were outstanding and entitled to one vote per share on all
matters submitted to shareholders. A list of shareholders will be available for
inspection for at least ten days prior to the Annual Meeting at the principal
executive offices of the Company at 500 North Akard, Suite 4500, Dallas, Texas
75201 and at the Annual Meeting.
The Board of Directors is aware of three items of business to be considered
at the Annual Meeting: (1) the election of three Class II directors to serve
until the Annual Meeting of Shareholders in 2004 and until their respective
successors are duly elected and qualified; (2) approval of the Company's
Management Incentive Plan; and (3) ratification of the appointment of Ernst &
Young LLP as the Company's independent auditors for the 2001 fiscal year. The
Board of Directors knows of no matters to be presented for action at the Annual
Meeting other than those mentioned above. However, if any other matters properly
come before the Annual Meeting, the persons named in the proxy will vote on such
other matters and/or for other nominees in accordance with their best judgment.
The Board of Directors recommends that an affirmative vote be cast in favor of
all of the proposals listed above.
The giving of a proxy does not preclude a shareholder from voting in person
at the Annual Meeting. The proxy is revocable before its exercise by delivering
either written notice of such revocation or a later dated proxy to the Secretary
of the Company at its executive office at any time prior to voting of the shares
represented by the earlier proxy. In addition, shareholders attending the Annual
Meeting may revoke their proxies by voting at the Annual Meeting. All returned
proxies that are properly signed and dated will be voted as the shareholder
directs. If no direction is given, executed proxies will be voted FOR election
of the Class II directors named herein, FOR approval of the Management Incentive
Plan, and FOR ratification of the appointment of Ernst & Young LLP as the
Company's independent auditors for the 2001 fiscal year.
This proxy solicitation material is being mailed on or about April 2, 2001
to shareholders as of the record date with a copy of the Company's 2000 Annual
Report to Shareholders, which includes financial statements for the period ended
December 31, 2000.
Proxies will be voted at the Annual Meeting, or at any adjournment thereof,
at which a quorum is present, in accordance with the directions on the proxy
card. The holders of a majority of the Common Stock outstanding and entitled to
vote who are present either in person or represented by proxy will constitute a
quorum for the Annual Meeting.
1
Directors are elected by a plurality of the votes cast. "Plurality" means
that the individuals who receive the largest number of votes cast "For" are
elected as directors up to the maximum number of directors to be chosen at the
Annual Meeting. Consequently, any shares not voted "For" a particular director
(whether as a result of a direction to withhold or a broker non-vote) will not
be counted in such director's favor.
All other matters to be acted on at the Annual Meeting require the
affirmative vote of a majority of the shares present at the meeting, in person
or by proxy, to constitute the action of the shareholders. If an executed proxy
card is returned and the shareholder has voted "abstain" on any matter (or
"withhold authority" as to the election of any Director), the shares represented
by such proxy will be considered present at the meeting for purposes of
determining a quorum and for purposes of calculating the vote, but will not be
considered to have been voted in favor of such matter. If an executed proxy is
returned by a broker holding shares in street name which indicates that the
broker does not have discretionary authority as to certain shares to vote on one
or more matters, such shares will be considered present at the meeting for
purposes of determining a quorum, but will not be considered to be represented
at the meeting for purposes of calculating the vote with respect to such
matters.
The expense of preparing, printing and mailing this Proxy Statement will be
paid by the Company.
ELECTION OF DIRECTORS
The Board of Directors is divided into three classes, being divided as
equally as possible and each class having a term of three years. Each year the
term of office of one class expires. This year the term of Class II, consisting
of three Directors, expires. It is the intention of the Board that the shares
represented by proxy, unless otherwise indicated thereon, will be voted for the
reelection of Paul B. Ingrey, James N. Land, Jr., and Chris L. Walker as
Directors to hold office for a term of three years until the Annual Meeting of
Shareholders in 2004 and until their respective successors are duly elected and
qualified.
The persons designated as proxies reserve full discretion to cast votes for
other persons in the event any such nominee is unable to serve. However, the
Board of Directors has no reason to believe that any nominee will be unable to
serve if elected. The election of Directors requires a plurality of the votes
cast at the Annual Meeting, in person or by proxy. The proxies cannot be voted
for a greater number of persons than the three named nominees.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR EACH OF THE
NOMINEES.
The following sets forth information regarding each nominee and the
remaining Directors who will continue in office after the Annual Meeting.
NOMINEES FOR CLASS II DIRECTORS
(TERMS EXPIRING IN 2001)
PAUL B. INGREY (61) -- Mr. Ingrey has served as a Director of the Company
since January 1997. Mr. Ingrey retired in January 1997 from F&G Re, which he
helped found and where he served as Chairman of the Board and Chief Executive
Officer from January 1996 until his retirement. Prior to 1996, Mr. Ingrey served
as President of F&G Re. F&G Re was a reinsurance company and a division of
United States Fidelity and Guaranty Company, which was purchased by St. Paul Re
Corp. (SPC) in 1998.
JAMES N. LAND, JR. (71) -- Mr. Land has served as a Director of the Company
since April 1993 and as a corporate financial consultant to a number of
companies since October 1976. Mr. Land currently serves on the Board of
Directors of Riviera Holdings Corporation. In addition, Mr. Land served on the
Executive Committee of the Board of Directors of The First Boston Corporation
from 1967 to 1976.
CHRIS L. WALKER (43) -- Mr. Walker was appointed Chief Executive Officer
and Chairman of the Board on January 25, 2001. Prior to then he served as
President and Chief Operating Officer of the Company, offices to which he was
appointed in July 1995. Mr. Walker has been a Director of the Company since
October 1994 and previously served as Executive Vice President from March 1993
to July 1995. Mr. Walker has been associated with predecessors of the Company
since 1980. From 1985 to
2
1990, he served as Vice President, from 1990 to 1993, he served as Senior Vice
President, and from February 1993 to March 1993, he served as Executive Vice
President of those predecessors. He also is currently serving as President and
Chief Executive Officer of the Company's wholly owned subsidiary, E. W. Blanch
Co., Inc.
CLASS III DIRECTORS
(TERMS EXPIRING IN 2002)
EDGAR W. BLANCH, JR. (64) -- Mr. Blanch served as Chief Executive Officer
and Chairman of the Board of Directors of the Company from its formation in
March 1993 until January 25, 2001. He currently serves as Chairman Emeritus. Mr.
Blanch has been associated with predecessors of the Company since 1958. From
1976 to 1993, he served as Chief Executive Officer of those predecessors.
WILLIAM B. MADDEN (61) -- Mr. Madden has served as a Director of the
Company since April 1993 and as the President of Madden Securities Corporation,
a general securities and investment banking firm, since 1986. Mr. Madden
currently is on the Board of Directors of Mercantile Bank and Trust and serves
as a Director of Pillowtex Corporation.
STEVEN G. ROTHMEIER (54) -- Mr. Rothmeier has served as a Director of the
Company since April 1993 and as Chairman of the Board of Directors and Chief
Executive Officer of Great Northern Capital, a private investment management
firm, since March 1993. Mr. Rothmeier served as President of IAI Capital Group,
a venture capital and merchant banking firm, from 1989 to 1993 and as Chairman
of the Board of Directors and Chief Executive Officer of NWA, Inc. and Northwest
Airlines Inc. from 1985 to 1989. Mr. Rothmeier currently is a Director of
GenCorp, Department 56, Inc., Precision Castparts Corp., and Waste Management,
Inc.
CLASS I DIRECTORS
(TERMS EXPIRING IN 2003)
KAJ AHLMANN (50) -- Mr. Ahlmann has served as Vice Chairman and Director of
the Company since November 24, 1999. Mr. Ahlmann has worked in the insurance
industry since 1972. He was appointed as Deputy General Manager of Baltica
Insurance in 1980. Baltica acquired Nordisk Reinsurance Company A/S and Mr.
Ahlmann was appointed Chief General Manager of Baltica-Nordisk Reinsurance in
1985 and as Managing Director of Nordisk Reinsurance Company A/S in 1988.
Following the acquisition of Nordisk Reinsurance Company by Employers
Reinsurance Corporation in 1988, Mr. Ahlmann served as Managing Director of
Nordisk and Chief Operating Officer for Europe beginning in 1990. In 1992 he
assumed the additional responsibility of Chief Operating Officer of Employers
Reinsurance International, and in September of 1993 he was named Chairman,
President and Chief Executive Officer of the parent organization, Employers
Reinsurance Corporation. Mr. Ahlmann served as a Director of Insurance Holdings
of America, Inc. until September 19, 2000. Mr. Ahlmann has announced that he
intends to resign from the Company, including his position as a Director,
effective April 1, 2001.
GERALD A. ISOM (62) -- Mr. Isom has served as a Director of the Company
since December of 1999, when he was appointed to the vacancy created by the
retirement of Mr. Joseph Sargent. Mr. Isom was President of CIGNA Property &
Casualty from March 1993 until his retirement in August 1999. Mr. Isom began his
insurance career with Fireman's Fund. In June 1985 he became President and CEO
of Transamerica Insurance; he also served as a group Vice President of
Transamerica Corporation from 1991 to 1993. Mr. Isom is currently a director of
Clinician Support Technology, Inc., a member of the Ohio Valley College Board of
Trustees and a member of the Pepperdine University Board of Regents.
3
BOARD OF DIRECTORS AND COMMITTEES
COMPENSATION COMMITTEE
The Compensation Committee of the Board of Directors (the "Compensation
Committee") consists of Messrs. Ingrey, Isom, Land, Madden and Rothmeier. The
Compensation Committee determines the compensation for executive officers of the
Company and establishes the Company's compensation policies and practices. The
Compensation Committee also grants awards under the Company's employee stock
plans.
AUDIT COMMITTEE
The Audit Committee of the Board of Directors (the "Audit Committee")
consists of Messrs. Ingrey, Isom, Land, Madden and Rothmeier. Information
regarding the functions performed by the Committee is set forth in the "Report
of the Audit Committee" included in this annual proxy statement. The Audit
Committee is governed by a written charter approved by the Board of Directors. A
copy of this charter is included as Appendix A. All Audit Committee members are
"independent" as that term is defined by the Audit Committee Charter and by New
York Stock Exchange listing standards.
MEETINGS OF THE BOARD OF DIRECTORS AND COMMITTEES
During the fiscal year ended December 31, 2000, the Board of Directors held
eighteen meetings, the Compensation Committee held six meetings and the Audit
Committee held four meetings. The Board of Directors does not have a nominating
committee. All Directors except Kaj Ahlmann attended at least 75% of the
meetings of the Board of Directors and committees on which they served; Mr.
Ahlmann attended 67% of such meetings.
DIRECTORS' COMPENSATION
Directors of the Company who are not officers or employees of the Company
receive a fee of $9,000 per quarter plus $1,000 per meeting, including committee
meetings, attended. Directors of the Company who are officers or employees of
the Company do not receive additional compensation for their services as a
Director. No Director receives additional compensation for serving on a
committee other than the fee for attendance at committee meetings. Directors of
the Company who are not officers or employees of the Company may elect to
receive their fees in the form of Common Stock of the Company, or to defer
receipt of such fees and have the deferred amounts treated as if invested in
Common Stock, pursuant to the Company's Non-Employee Directors' Stock Plan.
In addition, pursuant to the Company's Directors' Stock Option Plan (the
"Directors' Stock Option Plan") adopted on July 24, 1997, each non-employee
Director automatically receives an initial stock option grant for 5,000 shares
of Common Stock on the date such person first becomes a Director and an
additional annual stock option grant for 2,000 shares of Common Stock on the
date of the Annual Meeting of Shareholders in each year. The initial stock
option grant of 5,000 shares was granted to each non-employee Director in office
on the date the Directors' Stock Option Plan was adopted and to Mr. Isom on
December 20, 1999, when he became a member of the Company's Board of Directors.
The initial stock option grant vests one-third on the date of grant and
one-third on each of the first and second anniversary dates of the date of
grant, provided the non-employee Director is still a Director of the Company on
such date. The annual option grants vest in full six months following the date
of grant, provided the non-employee Director is still a Director of the Company
on such date. The annual stock option grant is only awarded to non-employee
Directors who have served since the date of the last annual Meeting of
Shareholders and who will continue to serve as Directors after the date of such
grant. All options granted under the Directors' Stock Option Plan are
nonqualified stock options with a term of ten years and are granted at an option
price equal to the fair market value of the Common Stock on the date of grant.
4
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth certain information regarding the beneficial
ownership of Common Stock as of March 5, 2001: (i) by each Director; (ii) by
each of the executive officers included in the Summary Compensation Table set
forth under the caption "Executive Compensation"; (iii) by all Directors and
executive officers of the Company as a group; and (iv) by each person known to
the Company to be the beneficial owner of more than 5% of the outstanding shares
of Common Stock. Except as otherwise indicated, the named beneficial owner has
sole voting and investment power with respect to the shares held by such
beneficial owner.
AMOUNT AND NATURE OF
NAME OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP PERCENT OF CLASS
- ------------------------------------------------------ ---------------------- -----------------
Kaj Ahlmann 50,219(1) *
Edgar W. Blanch, Jr. 821,454(2) 6.08%
Rodman R. Fox 80(15) *
Paul B. Ingrey 44,500(3) *
Gerald A. Isom 3,334(4) *
James N. Land, Jr. 22,000(5) *
William B. Madden 14,000(6) *
Daniel P. O'Keefe 38,051(16) *
Ian D. Packer 539(15) *
Steven G. Rothmeier 16,000(7) *
Chris L. Walker 490,010(8) 3.67%
Susan B. Wollenberg 3,400(17) *
All directors and executive officers 1,503,587 10.47%
as a group (12 persons)
American Express Financial Corporation 770,179(9) 5.90%
IDS Tower 10
Minneapolis, MN 55440
BankAmerica Corporation 768,600(10) 5.89%
555 California Street, Suite 2600
San Francisco, CA 94104
Capital Research and Management Company 1,110,000(11) 8.50%
SMALLCAP World Fund, Inc. 860,000(11) 6.59%
333 South Hope Street
Los Angeles, CA 90071
FMR Corp. 745,300(12) 5.71%
82 Devonshire Street
Boston, MA 02109
Kayne Anderson Rudnick Investment Management, LLC 785,419(13) 6.02%
1800 Avenue of the Stars, Second Floor
Los Angeles, CA 90067
Royce & Associates, Inc. 1,399,300(14) 10.73%
Royce Management Company 55,100(14) *
Charles M. Royce, Controlling Person
1414 Avenue of the Americas
New York, NY 10019
- ---------------------
* Indicates ownership of less than 1% of the outstanding Common Stock.
(1) Includes 219 shares of Common Stock held in Mr. Ahlmann's 401K account and
50,000 vested options.
(2) Includes 9,819 shares of Common Stock held in Mr. Blanch's 401K account,
35,000 shares held in Mr. Blanch's EWB Retirement Account, 150,000 shares
of Common Stock in a Call Option, 150,000 shares of Common Stock in a Put
Option and 455,910 vested options.
(3) Includes 10,000 shares of Common Stock beneficially owned by a family trust
and which, due to Mr. Ingrey's position as trustee of such trust, may be
deemed to be beneficially owned by him.
5
Includes 12,000 shares of Common Stock owned by Mr. Ingrey's spouse as to
which he disclaims beneficial ownership. Includes 11,000 vested options.
(4) Includes Mr. Isom's 3,334 vested options.
(5) Includes Mr. Land's 11,000 vested options.
(6) Includes 1,000 shares of Common Stock beneficially owned by Mr. Madden's
spouse as to which he disclaims beneficial ownership. Includes 11,000
vested options.
(7) Includes 1,000 shares owned by a trust and which, due to Mr. Rothmeier's
position as co-trustee of such trust, may be deemed to be beneficially
owned by him. Includes Mr. Rothmeier's 11,000 vested options.
(8) Includes 1,221 shares of Common Stock held in Mr. Walker's 401K account and
1,439 shares of Common Stock held by Mr. Walker in the Company's Employee
Stock Purchase Plan. Includes 238,128 vested options and 60,000 options,
which will vest within 60 days.
(9) Based on a Schedule 13G dated December 31, 1999 prepared by American
Express Financial Corporation ("Amex Financial") and filed with the
Securities and Exchange Commission. Amex Financial and American Express
Company ("Amex") had shared voting power with respect to 14,800 shares and
shared dispositive power with respect to 770,179 shares. Amex Financial
also reported that it was an investment advisor and that Amex was a parent
holding company.
(10) Based on a Schedule 13G dated February 8, 1999 prepared by BankAmerica
Corporation ("BankAmerica") and filed with the Securities and Exchange
Commission. BankAmerica and certain of its affiliates and subsidiaries had
shared voting power and shared dispositive power with respect to 768,600
shares. BankAmerica also reported that this filing was made in its capacity
as a bank holding company, and as the successor to all assets and
liabilities after a merger between NationsBank Corporation and BankAmerica
on September 30, 1998.
(11) Based on a Schedule 13G, dated February 9, 2001, prepared jointly by
Capital Research and Management Company ("Capital") and SMALLCAP World
Fund, Inc. ("SMALLCAP"), filed with the Securities and Exchange Commission.
Capital reported that it is an investment advisor to SMALLCAP and others.
Capital had sole dispositive power with respect to 1,100,000 shares.
Capital disclaims beneficial ownership of these shares pursuant to Rule
13d-4. SMALLCAP reported that it is an investment company. SMALLCAP had
sole voting power with respect to 860,000 shares. Capital and SMALLCAP
reported that the filing was made pursuant to an agreement to file jointly.
(12) Based on an amended Schedule 13G dated, December 31, 2000, prepared by FMR
Corp. and filed with the Securities and Exchange Commission. FMR Corp. and
certain of its affiliates and subsidiaries had sole voting power with
respect to 228,100 shares, no shared voting power with respect to the
shares and sole dispositive power with respect to 745,300 shares. FMR Corp.
also reported that various persons have the right to receive or the power
to direct the receipt of dividends from, or the proceeds from the sale of,
the shares, and that none of such persons had an interest relating to more
than 5% of the Company's outstanding Common Stock.
(13) Based on a 13G, dated February 9, 2001, prepared by Kayne Anderson Rudnick
Investment Management, LLC ("Kayne") and filed with the Securities and
Exchange Commission. Kayne had shared voting power and shared dispositive
power for 785, 419 shares. Kayne reported that it is an investment advisor.
Kayne disclaims beneficial ownership of the shares reported.
(14) Based on an amended Schedule 13G, dated February 5, 2001, prepared by Royce
& Associates, Inc. ("Royce"), Royce Management Company ("RMC") and Charles
M. Royce, filed with the Securities and Exchange Commission. Royce had sole
voting and dispositive powers with respect to 1,399,300 shares and RMC had
sole voting and dispositive powers with respect to 43,600 shares. Royce and
RMC reported that the filing was made on their behalf as investment
advisers. Mr. Royce reported that he may be deemed to be a controlling
person of Royce and RMC, and as such may be deemed to be a beneficial owner
of such securities beneficially owned by Royce and RMC. Mr. Royce also
reported that he does not own any shares of the Company's Common Stock and
he disclaims beneficial ownership of the shares held by Royce and RMC.
(15) Resigned from the Company during 2000; no other holdings known to the
Company on March 5, 2001.
(16) Includes 2,434 shares of Common Stock held in Mr. O'Keefe's 401K account,
593 shares held by Mr. O'Keefe's Spouse in a Retirement Plan, 21,962 vested
options and 6,667 options which will vest within 60 days.
(17) Includes 66 shares of Common Stock held in Ms. Wollenberg's 401K account
and 3,334 options which will vest within 60 days.
6
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
Directors and executive officers to file reports of ownership and changes in
ownership of the Company's Common Stock with the Securities and Exchange
Commission and the New York Stock Exchange, and the Company is required to
identify any of those individuals who failed to file such reports on a timely
basis. The Company believes that during 2000 all Directors and executive
officers of the Company complied with their Section 16(a) filing requirements,
except: a Form 3, Initial Statement of Beneficial Ownership Of Securities due
February 6, 2000 was filed April 3, 2000 for Susan B. Wollenberg; and, a Form 4
Statement of Changes in Beneficial Ownership for March, due April 10, 2000, was
filed April 11, 2000 for Paul B. Ingrey.
EXECUTIVE COMPENSATION
The following table shows compensation for each of the last three fiscal
years of the Chief Executive Officer and the other four most highly compensated
persons serving as executive officers at the end of the last fiscal year.
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION
------------------------------------------------------
OTHER ANNUAL
NAME AND PRINCIPAL POSITION YEAR SALARY ($) BONUS($)(1) COMPENSATION($)(2)
- ---------------------------------- ------ ------------ ------------- --------------------
Edgar W. Blanch, Jr.(5) 2000 $904,167 $ 87,188 $16,039
Director 1999 $800,000 $159,352 $73,755
1998 $800,000 $764,292 -0-
Chris L. Walker(5) 2000 $551,667 $ 56,672 $ 4,345
Chairman of the Board, 1999 $480,000 $ 95,611 -0-
President, CEO, COO 1998 $455,000 $598,575 -0-
And Director
Kaj Ahlmann(6) 2000 $576,875 $ 42,513 $24,368
Vice Chairman 1999 $ 66,667 -0- -0-
Rodman R. Fox(7) 2000 $142,917 -0- $ 3,440
Executive Vice President 1999 $400,000 $ 79,686 -0-
of E. W. Blanch Co., Inc. 1998 $400,000 $582,146 -0-
Daniel P. O'Keefe 2000 $231,875 $ 11,561 -0-
Executive Vice President 1999 $212,000 $ 42,242 -0-
and General Counsel 1998 $203,000 $ 43,532 -0-
Ian D. Packer 2000 $101,346 -0- -0-
Executive Vice President 1999 $285,000 -0- -0-
and Chief Financial Officer(8) 1998 $240,000 $174,288 $35,334
Susan B. Wollenberg 2000 $189,455 -0- $50,692
Executive Vice President
and Chief Financial Officer(9)
[WIDE TABLE CONTINUED FROM ABOVE]
LONG-TERM
COMPENSATION AWARDS
----------------------------
RESTRICTED SECURITIES
STOCK UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION AWARDS($)(3) OPTIONS (#) COMPENSATION($)(4)
- ---------------------------------- -------------- ------------- -------------------
Edgar W. Blanch, Jr.(5) -0- -0- $80,465
Director $318,704 41,864 $82,576
$328,584 -0- $84,688
Chris L. Walker(5) -0- 15,000 $45,828
Chairman of the Board, $191,223 49,691 $43,774
President, CEO, COO $197,150 15,000 $44,063
And Director
Kaj Ahlmann(6) -0- -0- $ 1,904
Vice Chairman -0- 250,000 -0-
Rodman R. Fox(7) -0- -0- $37,686
Executive Vice President $159,373 40,411 $38,404
of E. W. Blanch Co., Inc. $164,292 12,000 $38,409
Daniel P. O'Keefe -0- 20,000 $21,117
Executive Vice President $ 84,484 888 $20,853
and General Counsel $ 87,063 -0- $18,280
Ian D. Packer -0- -0- $22,624
Executive Vice President -0- 8,782 $23,204
and Chief Financial Officer(8) $ 98,575 -0- $23,238
Susan B. Wollenberg -0- 40,000 $ 477
Executive Vice President
and Chief Financial Officer(9)
- ------------------
(1) "Bonus" for 2000 consists solely of vested shares of Common Stock which
will be paid on April 1, 2001 pursuant to the Executive Restricted Stock
Incentive Plan for 2000, as follows: Mr. Blanch (5,000); Mr. Walker
(3,250); Mr. Ahlmann (2,438); and Mr. O'Keefe (663). The value of such
shares is based on $17.4375 per share, the closing price of a share of the
Common Stock on the New York Stock Exchange on December 29, 2000, which was
the last trading day of the Calendar Year 2000.
No bonus was paid under the 2000 Management Incentive Plan described below.
(2) "Other Annual Compensation" includes: commuting expenses, with respect to
Ms. Wollenberg ($50,692).
(3) As of December 31, 2000, the named executive officers held total shares of
restricted stock, as follows: Mr. Blanch (8,667 shares; $151,131), Mr.
Walker (5,200 shares; $90,675), and Mr. O'Keefe (2,297 shares; $40,054).
Share values are based on $17.4375 per share, the closing price of a share
of the Common Stock on the New York Stock Exchange on December 29, 2000,
which was the last trading day of the Calendar Year 2000.
(4) "All Other Compensation" for 2000 includes:
(a) Discretionary contribution at 7.5% of salary pursuant to the Company's
retirement plan,
7
subject to the Internal Revenue Code limitation of $12,000 with the
remainder being paid in cash, to Mr. Blanch ($63,000); Mr. Walker
($33,000); Mr. Ahlmann ($0); Mr. Fox ($25,500); Mr. Packer ($10,500);
Mr. O'Keefe ($7,875); and Ms. Wollenberg ($0).
(b) Group term life taxable income with regard to Mr. Blanch ($5,465); Mr.
Walker ($828); and Mr. Ahlmann ($1,904).
(5) Mr. Walker replaced Mr. Blanch as Chairman of the Board and Chief Executive
Officer on January 25, 2001.
(6) Mr. Ahlmann has announced his resignation from the Company, and from the
Board of Directors, effective April 1, 2001.
(7) Mr. Fox resigned his employment with the Company, effective March 20, 2000.
(8) Mr. Packer resigned his employment with the Company, effective February 18,
2000.
(9) Ms. Wollenberg joined the Company on January 27, 2000; she served as Senior
Vice President and Chief Financial Officer from January 27, 2000 through
December 10, 2000. Effective December 11, 2000 she was elected Executive
Vice President and Chief Financial Officer.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
POTENTIAL REALIZABLE
INDIVIDUAL GRANTS VALUE AT ASSUMED
----------------------------------------------------------- ANNUAL RATES OF
STOCK PRICE
NUMBER OF % OF TOTAL APPRECIATION
SECURITIES OPTIONS/SARS FOR OPTION TERM
UNDERLYING GRANTED TO EXERCISE OR ------------------------------
OPTIONS/SARS EMPLOYEES IN BASE PRICE EXPIRATION
GRANTED (#) FISCAL YEAR ($/SH) DATE 5% 10%
-------------- ------------- ------------ ----------- ----------- -------------
Edgar W. Blanch, Jr. ......... -0-
Chris L. Walker ............... 15,000(1) 1.72% $ 21.3813 4/25/10 $154,205 $ 435,518
Kaj Ahlmann ................... -0-
Rodman R. Fox ................. -0-
Daniel P. O'Keefe ............. 20,000 2.29% $ 19.8125 3/30/10 $249,199 $ 631,520
Ian D. Packer ................. -0-
Susan B. Wollenberg ........... 10,000 1.14% $ 19.8125 3/30/10 $124,599 $ 315,760
30,000 3.43% $ 51.2500 1/27/10 $966,925 $2,450,379
- ------------------
(1) Granted automatically pursuant to a special agreement entered into in 1995;
the exercise price for these options is ten percent above the trading price
of the Company's Common Stock on the date of each annual issuance. Options
fully vest on 4/25/01. Vesting of non-vested options accelerates in the
event of a change in control. Options have a ten-year term.
AGGREGATE OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR-END OPTION/SAR VALUES
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
OPTIONS/SARS AT FY-END (#) OPTIONS/SARS AT FY-END ($)(1)
SHARES ACQUIRED ------------------------------ -----------------------------
ON EXERCISE VALUE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---------------- --------------- ------------- --------------- ------------- --------------
Edgar W. Blanch, Jr. ......... 72,000 $1,806,250 441,955 27,909 (2) (2)
Chris L. Walker .............. -0- -0- 226,564 68,127 (2) (2)
Kaj Ahlmann .................. -0- -0- 50,00 200,000 (2) (2)
Rodman R. Fox ................ -0- -0- -0- -0- -0- -0-
Daniel P. O'Keefe ............ -0- -0- 21,962 20,592 (2) (2)
Ian D. Packer ................ -0- -0- -0- -0- -0- -0-
Susan B. Wollenberg .......... -0- -0- -0- 40,000 -0- (2)
- ------------------
(1) Based on $17.4375 per share, which was the closing price of a share of the
Common Stock on the New York Stock Exchange on December 29, 2000, which was
the last trading day of the Calendar Year 2000.
(2) Held no in-the-money options at December 31, 2000.
8
EMPLOYMENT AGREEMENTS
On May 6, 1993, at the time of the Company's initial public offering, the
Company entered into employment agreements with Messrs. Blanch, Fox, and Walker.
These agreements provide for an initial term of three years and are renewable
thereafter on a month-to-month basis at a minimum annual salary as follows: Mr.
Blanch ($895,000), Mr. Fox ($135,000), and Mr. Walker ($265,000). On January 1,
1997, the Company entered into a new employment agreement with Mr. Blanch; this
agreement provides for a term of five years and a minimum annual salary of
$1,000,000. On March 2, 1998 the Company entered into an employment agreement
with Mr. Daniel P. O'Keefe; the term of this agreement is from March 2, 1998 to
March 31, 2001, the agreement is renewable thereafter on an annual basis and
provides for a minimum annual salary of $265,000. On November 24, 1999 the
Company entered into an employment agreement with Mr. Kaj Ahlmann; the term of
this agreement is from November 24, 1999 to March 31, 2004, the agreement is
renewable thereafter on an annual basis and provides for a minimum annual salary
of $650,000. On January 24, 2000 the Company entered into an employment
agreement with Ms. Susan Wollenberg; the term of this agreement is from January
24, 2000 to March 31, 2002, the agreement is renewable thereafter on an annual
basis and provides for a minimum annual salary of $175,000. Pursuant to the
terms of the employment agreements, each executive has certain prohibitions from
competing against the Company for a period ending two years after the
termination of the executive's employment with the Company.
The Company has entered into change of control Severance Agreements (the
"Agreements") with Mr. Blanch, Mr. Walker, Mr. O'Keefe and Ms. Wollenberg (the
"Executives"). The Agreements provide for certain payments and other benefits
from the Company to the Executives if, following a Change in Control, the
Company terminates the Executive's employment without Cause or the Executive
terminates his employment for Good Reason. Such payments and benefits include:
(i) with respect to Messrs. Blanch, and Walker, severance pay equal to three
times the Executive's salary, bonus and incentive payments (at the highest
annual rate in effect during the three years prior to the termination) and with
respect to Mr. O'Keefe and Ms. Wollenberg, severance pay equal to two times the
Executive's salary, bonus and incentive payments (at the highest annual rate in
effect during the three years prior to the termination); (ii) a lump-sum payment
equal to the benefit the Executive would have received under the Company's
retirement plan if he had remained employed by the Company at the compensation
level provided by the Agreement for three years following the date of
termination; (iii) payment for [a] any earned bonus for the preceding fiscal
year not already paid; and [b] any vacation earned or accrued but not taken;
(iv) the payment of legal fees and expenses relating to the termination; (v) the
termination of any noncompetition arrangement between the Company and the
Executive; and (vi) a gross-up payment for any excise tax imposed on such
payments or benefits and for any tax imposed on such gross-up. Under the
Agreements, "Cause" is defined as willful and continued failure to perform
duties and obligations or willful misconduct materially injurious to the
Company; "Good Reason" is defined to include a change in the Executive's
responsibility or status which is not comparable with those prior to a Change in
Control, a reduction in salary or benefits, or a mandatory relocation; and
"Change in Control" is defined to include a change in the control of the type
required to be disclosed under Securities and Exchange Commission proxy rules,
acquisition by a person or group of 20% of the outstanding voting stock of the
Company, a proxy fight or contested election which results in Continuing
Directors (as defined in the Agreements) not constituting a majority of the
Company's Board of Directors, or another event the majority of the Continuing
Directors determines to be a Change in Control. The Agreements for Messrs.
Blanch, Walker and O'Keefe cover an initial period from July 24, 1997 to April
1, 2001 and may be extended on an annual basis thereafter. The Agreement for Ms.
Wollenberg covers an initial period from January 24, 2000 to April 1, 2001 and
may be extended on an annual basis thereafter.
AUDIT COMMITTEE REPORT OF E. W. BLANCH HOLDINGS, INC.
The Audit Committee of the Board of Directors (the "Committee") is composed
of five independent directors and operates under a written charter adopted by
the Board of Directors (Appendix A). The members of the Committee are William
Madden (Chair), Paul Ingrey, Gerald Isom, James Land, and
9
Steven Rothmeier. The Committee recommends to the Board of Directors, subject to
stockholder ratification, the selection of the Corporation's independent
accountants.
The Committee oversees the Company's financial reporting process on behalf
of the Board of Directors. Management has the primary responsibility for the
financial statements and the reporting process including the systems of internal
controls. In fulfilling its oversight responsibilities, the Committee reviewed
the audited financial statements in the Annual Report with management including
a discussion of the quality, not just the acceptability, of the accounting
principles, the reasonableness of significant judgments, and the clarity of
disclosures in the financial statements.
The Committee reviewed with the independent auditors, who are responsible
for expressing an opinion on the conformity of those audited financial
statements with generally accepted accounting principles, their judgments as to
the quality, not just the acceptability, of the Company's accounting principles
and such other matters as are required to be discussed with the Committee under
generally accepted auditing standards. In addition, the Committee has discussed
with the independent auditors the auditors' independence from management and the
Company including the matters in the written disclosures required by the
Independence Standards Board and considered the compatibility of nonaudit
services with the auditors' independence.
The Committee discussed with the Company's internal and independent
auditors the overall scope and plans for their respective audits. The Committee
meets with the internal and independent auditors, with and without management
present, to discuss the results of their examinations, their evaluations of the
Company's internal controls, and the overall quality of the Company's financial
reporting. The Committee held four meetings during fiscal year 2000.
In reliance on the reviews and discussions referred to above, the Committee
recommended to the Board of Directors (and the Board has approved) that the
audited financial statements be included in the Annual Report on Form 10-K for
the year ended December 31, 2000 for filing with the Securities and Exchange
Commission. The Committee and the Board have also recommended, subject to
shareholder approval, the selection of the Company's independent auditors.
Audit Committee
William B. Madden, Chairman
Paul B. Ingrey, Member
Gerald A. Isom, Member
James N. Land, Jr., Member
Steven G. Rothmeier, Member
10
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board has the overall responsibility for
compensation actions affecting the Company's executive officers. The
Compensation Committee's responsibilities include approving base and incentive
compensation. The Compensation Committee is comprised entirely of Directors who
are neither current nor former employees of the Company. There are no
compensation committee interlocks, i.e., no executive officer of the Company
serves as a member of the board of directors or compensation committee of
another entity that has an executive officer serving on the Board or the
Compensation Committee at the Company.
The goal of the Company's executive compensation program is to encourage
performance, as well as to attract and retain the management talent required to
operate the Company successfully. The program has also been designed to create a
strong and direct link between the compensation of the Company's executive
officers, on the one hand, and the Company's long range success and shareholder
value, on the other hand.
BASE COMPENSATION
The Compensation Committee reviews and approves annually all salary
increases for executive officers. As discussed above, minimum annual base
salaries were established pursuant to the employment agreements with certain
executive officers. Base salaries are adjusted in the discretion of the
Compensation Committee based on the level of responsibility and the individual
performance of each officer. Determinations with respect to base salaries are
primarily subjective and are not targeted to any specific criteria.
During 2000, the Company paid base compensation to each of the executive
officers as follows: Mr. Blanch, $904,167; Mr. Walker, $551,667; Mr. Ahlmann,
$576,875; Mr. Fox $142,917; Mr. O'Keefe $231,875; Mr. Packer $101,346 and Ms.
Wollenberg $189,455.
INCENTIVE COMPENSATION
The incentive compensation for executive officers of the Company is
principally derived from the Company's Management Incentive Plan. The Management
Incentive Plan is a shareholder-approved cash bonus plan designed to reward the
executive officers for exceptional performance based on the achievement of
annual Company performance goals. In order for participants to earn an award,
the Company's growth in revenues and net income must exceed predefined amounts.
For the year ended December 31, 2000 those predefined amounts were not exceeded
and therefore no bonuses were distributed to the executive officers pursuant to
the Management Incentive Plan.
STOCK BASED COMPENSATION
The Compensation Committee believes that ownership of the Company's Common
Stock by management can effectively motivate the building of shareholder wealth
by aligning the interests of management with those of the Company's
shareholders. Stock based compensation for executive officers of the Company has
historically taken the form of stock options.
In 1998 the Board of Directors adopted the E. W. Blanch Holdings, Inc.
Global Compensation Plan. This plan includes a long term incentive compensation
program under which all full-time employees receive an annual grant of stock
options, according to a formula set forth in the plan. No options were granted
under this plan in 2000 to any of the executive officers.
EXECUTIVE RESTRICTED STOCK INCENTIVE PLAN
In 1997, the Compensation Committee adopted and the shareholders approved
the Company's Executive Restricted Stock Incentive Plan (the "Restricted Stock
Incentive Plan"). The purpose of the Restricted Stock Incentive Plan is to
provide at-risk, equity-based compensation for officer-level employees, in order
to further incentivize those key employees to contribute to the financial
success and growth of the Company, to the benefit of the Company's shareholders.
Under the Restricted Stock Incentive Plan, each eligible participant may
make an irrevocable election to forego a specified percent of his or her base
compensation in exchange for the right to
11
receive a restricted stock grant. If the target performance goals set by the
Committee for the performance period are achieved, the participant is awarded
restricted stock equal in value to two times the amount of base compensation the
participant elected to forego, which restricted stock vests one-third on the
April 1 following the end of that performance period and one-third on April 1 of
the two subsequent years. If those target performance goals are not achieved,
the participant is awarded restricted stock equal in value to 50% of the amount
of base compensation the participant elected to forego, which restricted stock
fully vests on the April 1 following the end of that performance period. Messrs.
Blanch, Walker, Ahlmann, and O'Keefe elected to participate in the Restricted
Stock Incentive Plan in 2000. The performance target established by the
Compensation Committee for the 2000 performance period was not achieved,
resulting in the award of shares as reported in the Summary Compensation Table.
RETIREMENT BENEFITS
Executive officers also participate in the Company's retirement plan which
provides for a discretionary contribution by the Company. For 2000 that
contribution was 7.5%, of which the first $170,000 of compensation (which is the
Internal Revenue Code compensation limit for retirement plans) was contributed
to the Company's retirement plan, and the 7.5% of the compensation in excess of
the $170,000 Internal Revenue Code limit was paid by the Company as a cash
award.
CEO COMPENSATION
Mr. Blanch served as CEO of the Company from its formation in March 1993
until January 25, 2001. Based on the Stock Performance Graph below, the
Company's shareholders have received a total return (consisting of changes in
the price of the Common Stock and assuming the reinvestment of all dividends) of
- -19.34% from December 31, 1995 through December 31, 2000. Effective January 1,
1998 the base salary for Mr. Blanch was increased to $1,000,000 pursuant to the
employment agreement discussed above. Effective July 27, 2000, the Committee
increased Mr. Blanch's base salary to $1,250,000, but with the commitment that
he would be a 20% participant in the Executive Restricted Stock Incentive Plan.
On December 11, 2000, at Mr. Blanch's recommendation, his salary was reduced to
$750,000, effective for 2001. On January 25, 2001, Mr. Blanch was replaced as
CEO by Mr. Chris Walker. Mr. Walker's salary as CEO currently is $750,000. Mr.
Blanch was eligible to receive incentive compensation under the Company's
Management Incentive Plan, eligible to participate in the Executive Restricted
Stock Incentive Plan and received benefits pursuant to the Company's retirement
plan. Mr. Blanch received no bonus under the 2000 Management Incentive Plan. Mr.
Blanch received no options under the Company's Global Compensation Plan, as
discussed above. Compensation decisions with regard to Mr. Blanch were based
primarily on his level of responsibility, individual performance and Company
performance.
COMPLIANCE WITH INTERNAL REVENUE CODE SECTION 162(M)
Section 162(m) of the Internal Revenue Code, enacted in 1993, generally
disallows a tax deduction to public companies for compensation over $1,000,000
paid to the Company's Chief Executive Officer and four other most highly
compensated executive officers. Qualifying "performance-based compensation" and
compensation paid pursuant to plans adopted prior to a Company's initial public
offering of securities will not be subject to the deduction limit if certain
requirements are met. During fiscal year 2000 Mr. Blanch's compensation exceeded
the Section 162(m) limit; accordingly, a tax deduction was not taken on this
amount. The Company currently intends to structure the compensation of its
executive officers in a manner that avoids the deduction limits of Section
162(m). Accordingly, in order to comply with the shareholder approval
requirements for "performance-based compensation", the Company is submitting for
shareholder approval its Management Incentive Plan.
Compensation Committee
Steven G. Rothmeier, Chairman
Paul B. Ingrey, Member
Gerald A. Isom, Member
James N. Land, Jr., Member
William B. Madden, Member
12
STOCK PERFORMANCE GRAPH
The graph below compares the cumulative total shareholder return* (assuming
dividends reinvested) on the Common Stock since December 31, 1995 to the
cumulative total shareholder return over such period of (i) the S&P 500 Index
and (ii) the S&P Insurance Broker Index.
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN*
AMONG E. W. BLANCH HOLDINGS, INC., THE S&P 500 INDEX
AND THE S&P INSURANCE BROKERS INDEX
[GRAPH]
CUMULATIVE TOTAL RETURN
12/95 12/96 12/97 12/98 12/99 12/00
----------- ---------- ----------- ----------- ----------- ----------
E. W. BLANCH HOLDINGS, INC. 100.00 87.72 152.39 212.58 276.79 80.66
S&P 500 100.00 122.96 163.98 210.84 255.22 231.98
S&P INSURANCE BROKERS 100.00 118.89 172.87 189.95 276.96 315.84
- ------------------
* $100 invested on December 31, 1995 in Common Stock -- including
reinvestment of dividends.
13
APPROVAL OF THE E. W. BLANCH HOLDINGS, INC.
MANAGEMENT INCENTIVE PLAN
The Compensation Committee has adopted a Management Incentive Plan, for
2001 which is summarized below. The Plan is being submitted for shareholder
approval in order to comply with the shareholder approval requirement for
qualifying "performance-based compensation" under Section 162(m) of the Code
which would generally preserve the tax-deductible status of the incentive
compensation payments.
SUMMARY OF MANAGEMENT INCENTIVE PLAN
The participants in the Management Incentive Plan for 2001 are certain
executive officers of the Company, to be determined by the Compensation
Committee. Under the Management Incentive Plan for 2001, participants will be
allocated awards from a bonus pool equal to 37.5% of the aggregate bonus amount
awarded to all employees under the Company's Employee Incentive Plan. The amount
awarded to all employees under the Employee Incentive Plan is based on the
achievement of earnings growth in excess of a predefined goal, established by
the Compensation Committee.
The plan provides that the Chief Executive Officer shall be paid 50% of the
Management Incentive Plan bonus pool. The Compensation Committee may not
increase this percentage allocation, but may, in its discretion, reduce it.
Bonuses will be allocated to the other participating executive officers from the
remaining funds in the pool based upon the Committee's judgment of their
performance during the year. In addition, individual bonuses paid to the
participants may not exceed 100% of their respective base salaries for the year.
Bonuses available for distribution will be paid by March 15 of the following
year. In order to be eligible to receive a bonus, a participant must be an
employee of the Company on the date such bonus is to be paid.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR THE
APPROVAL OF THE MANAGEMENT INCENTIVE PLAN.
RATIFICATION AND APPROVAL OF THE
APPOINTMENT OF INDEPENDENT AUDITORS
Subject to ratification by the shareholders, the Board of Directors has
reappointed Ernst & Young LLP as independent auditors to audit the financial
statements of the Company for the current fiscal year. All fees for the 2000
annual audit have not yet been billed. The estimated amount of audit fees is
$450,000. The estimated amount of all other fees is $1.3 million. Other fees
generally include fees for pension and statutory audits including audits
required in foreign countries, business acquisitions, accounting and tax
consultations, and SEC registration statements.
Representatives of the firm of Ernst & Young LLP are expected to be present
at the Annual meeting and will have an opportunity to make a statement if they
so desire and will be available to respond to appropriate questions.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR THE
APPOINTMENT OF ERNST & YOUNG LLP AS INDEPENDENT AUDITORS.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On March 2, 2000, following approval of the Board of Directors, the Company
purchased 15,798 shares of Common Stock from Edgar W. Blanch, Jr. to be held as
treasury shares. The shares of Common Stock were purchased at a price of $47.07
per share, based on the average of the trading price for the preceding ten (10)
trading days.
On December 21, 1998, the Company loaned $500,000 to Rodman R. Fox, who was
then the President and Chief Operating Officer of E. W. Blanch Co., Inc., a
wholly owned subsidiary of the Company. The interest rate on the loan was
one-half of the prime rate, adjusted annually. The term of the loan was for five
years, to be fully paid on December 31, 2003. Mr. Fox resigned from the Company
effective March 20, 2000; this loan has been repaid.
14
ADDITIONAL INFORMATION
GENERAL
As of the date of this Proxy Statement, management knows of no matters that
will be presented for determination at the Annual Meeting other than those
referred to herein. However, since matters of which Management is not now aware
may come before the Annual Meeting or any adjournment, the proxies intend to
vote, act and consent in accordance with their best judgment with respect
thereto. Upon receipt of such proxies (in the form enclosed and properly signed)
in time for voting, the shares represented thereby will be voted as indicated
thereon and in this Proxy Statement.
SHAREHOLDER PROPOSALS FOR THE NEXT ANNUAL MEETING
It is anticipated that the next Annual Meeting, after the one scheduled for
April 26, 2001, will be held on or about April 25, 2002. All shareholder
proposals relating to a proper subject for action at the Annual Meeting in 2001,
to be included in the Company's Proxy Statement and form of proxy relating to
that meeting, must be received by the Company for its consideration at its
principal executive offices no later than November 29, 2001. Any such proposal
should be submitted by certified mail, return receipt requested.
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K IS AVAILABLE WITHOUT
CHARGE TO ANY SHAREHOLDER OF THE COMPANY WHO REQUESTS A COPY IN WRITING.
REQUESTS FOR COPIES OF THIS REPORT SHOULD BE DIRECTED TO THE INVESTOR RELATIONS
DEPARTMENT, E.W. BLANCH HOLDINGS, INC., 500 N. AKARD, SUITE 4500, DALLAS, TX
75201.
By Order of the Board of Directors
/S/ Daniel P. O'Keefe
Daniel P. O'Keefe
SECRETARY
March 23, 2001
15
APPENDIX A
E.W. BLANCH HOLDINGS, INC.
AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
CHARTER
I. PURPOSE
The primary function of the Audit Committee is to assist the Board of
Directors in fulfilling its oversight responsibilities by reviewing the
financial reports and other financial information provided by the Company
to any governmental body or the public; the Company's systems of internal
controls regarding finance, accounting, legal compliance and ethics that
management and the Board have established; and the Company's auditing,
accounting and financial reporting processes generally. The Audit
Committee's primary duties and responsibilities are to:
o Serve as an independent and objective party to monitor the Company's
financial reporting process and internal control system.
o Review and appraise the audit efforts of the Company's independent
accountants and internal auditing department.
o Provide an open avenue of communication among the independent
accountants, financial and senior management, the internal auditing
department, and the Board of Directors.
The Audit Committee will primarily fulfill these responsibilities by
carrying out the activities enumerated in Section IV. of this Charter.
II. COMPOSITION
The Audit Committee shall be comprised of three or more directors as
determined by the Board, each of whom shall be independent directors, and
free from any relationship that, in the opinion of the Board, would
interfere with the exercise of his or her independent judgment as a member
of the Committee. Directors are "independent" if they have no relationship
to the Company that may interfere with the exercise of their independence
from management and the Company. In particular, no member of the Committee
shall be a current employee of the Company or an employee during the
previous three years; shall have (or in the previous three years has had) a
business relationship with the Company, unless the Board of Directors
determines that the business relationship does not interfere with the
director's exercise of independent judgment; shall be employed as an
executive of another corporation where any of the Company's executives
serve on that corporation's compensation committee; or shall be an
immediate family member of an executive officer of the Company or any of
its affiliates.
All members of the Committee shall have a working familiarity with basic
finance and accounting practices, and at least one member of the Committee
shall have accounting or related financial management expertise.
The members of the Committee shall be elected by the Board at the annual
organizational meeting of the Board or until their successors shall be duly
elected and qualified. Unless a Chair is elected by the full Board, the
members of the Committee may designate a Chair by majority vote of the full
Committee membership.
III. MEETINGS
The Committee shall meet at least four times annually, or more frequently
as circumstances dictate. The Committee at its discretion may meet
periodically with management, the director of the internal auditing
department and the independent accountants in separate executive sessions
to discuss any matters that the Committee or each of these groups believe
should be discussed privately. In addition, the Committee or its Chair
should meet with the independent accountants and management quarterly to
review the Company's financials consistent with IV.4. below.
A-1
IV. RESPONSIBILITIES AND DUTIES
To fulfill its responsibilities and duties the Audit Committee shall:
DOCUMENTS/REPORTS REVIEW
1. Review and update this Charter periodically, at least annually, as
conditions dictate.
2. Review the organization's annual financial statements and any reports
or other financial information submitted to any governmental body, or
the public, including any certification, report, opinion, or review
rendered by the independent accountants.
3. Review the regular internal reports to management prepared by the
internal auditing department and management's response, and review and
approve the scope of the annual internal audit plan.
4. Review with financial management and the independent accountants the
10-Q prior to its filing or prior to the release of earnings. The
Chair of the Committee may represent the entire Committee for purposes
of this review.
INDEPENDENT ACCOUNTANTS
5. Recommend to the Board of Directors the selection of the independent
accountants, considering independence and effectiveness, and approve
the fees and other compensation to be paid to the independent
accountants. On an annual basis, the Committee should review and
discuss with the accountants all significant relationships the
accountants have with the Company to determine the accountants'
independence.
6. Review the performance of the independent accountants and approve any
proposed discharge of the independent accountants when circumstances
warrant.
7. Periodically consult with the independent accountants out of the
presence of management about internal controls and the fullness and
accuracy of the organization's financial statements.
FINANCIAL REPORTING PROCESSES
8. In consultation with the independent accountants and the internal
auditors, review the integrity of the organization's financial
reporting processes, both internal and external.
9. Consider the independent accountants' judgments about the quality and
appropriateness of the Company's accounting principles as applied to
its financial reporting.
10. Consider and approve, if appropriate, major changes to the Company's
auditing and accounting principles and practices as suggested by the
independent accountants, management, or the internal auditing
department.
11. Prepare a report annually to be included in the Company's proxy
statement. The report shall disclose whether the Committee has
reviewed and discussed the audited financial statements with
management and with the Company's independent auditors (including
those matters set forth in SAS 61); whether the Committee has received
the written disclosures from the Company's independent auditors as
required by ISB Standard No. 1 and has discussed with the auditors the
auditor's independence; and whether, based on its discussions with
management and the auditors, the Committee recommended to the Board of
Directors that the financial statements be included in the Company's
Annual Report on Form 10-K.
PROCESS IMPROVEMENT
12. Establish systems of reporting to the Audit Committee by each of
management, the independent accountants and the internal auditors
regarding any significant judgments made in management's preparation
of the financial statements and the view of each as to appropriateness
of such judgments.
13. Following completion of the annual audit, review with management, the
independent accountants and the internal auditing department any
significant difficulties encountered during the course of the audit,
including any restrictions on the scope of work or access to required
information.
A-2
14. Review any significant disagreement among management and the
independent accountants or the internal auditing department in
connection with the preparation of the financial statements.
ETHICAL AND LEGAL COMPLIANCE
15. Establish, review and update periodically a Compliance Policy that
establishes a code of ethical conduct, and review periodically
management's enforcement and implementation of this Compliance Policy.
16. Review activities, organizational structure, and qualifications of the
internal audit department.
17. Review, with the organization's counsel, legal compliance matters
including corporate securities trading policies.
18. Review, with the organization's counsel, any legal matter that could
have a significant impact on the organization's financial statements.
19. Perform any other activities consistent with this Charter, the
Company's By-laws and governing law, as the Committee or the Board
deems necessary or appropriate.
A-3
E. W. BLANCH HOLDINGS, INC.
ANNUAL MEETING OF SHAREHOLDERS
THURSDAY, APRIL 26, 2001
10:30 A.M.
LINCOLN PLAZA
500 NORTH AKARD, 37TH FLOOR
DALLAS, TX 75201
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E. W. BLANCH HOLDINGS, INC.
500 NORTH AKARD, SUITE 4500
DALLAS, TX 75201 PROXY
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THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS FOR USE AT THE ANNUAL MEETING
ON APRIL 26, 2001.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED OR, IF NO
DIRECTION IS GIVEN, WILL BE VOTED FOR EACH PROPOSAL.
By signature on this proxy, signer hereby appoints Chris L. Walker and Daniel P.
O'Keefe as Proxies, each with the power to appoint his substitute, and hereby
authorizes them to represent and to vote, as designated on the reverse side, all
the shares of Common Stock of E. W. Blanch Holdings, Inc. held of record by the
undersigned on March 5, 2001, at the Annual Meeting of Shareholders to be held
on April 26, 2001 or any adjournment thereof.
SEE REVERSE FOR VOTING INSTRUCTIONS.
VOTE BY MAIL
Mark, sign and date your proxy card and return it in the postage-paid envelope
we've provided or return it to E. W. Blanch Holdings, Inc., c/o Shareowner
Services-, P.O. Box 64873, St. Paul, MN 55164-0873.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ITEMS 1, 2, 3 AND 4.
1. Election of directors: 01 Paul B. Ingrey 03 Chris L. Walker [ ] Vote FOR [ ] Vote WITHHELD
02 James N. Land, Jr. all nominees from all
nominees
________________________________________
(INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDICATED NOMINEE, | |
WRITE THE NUMBER(S) OF THE NOMINEE(S) IN THE BOX PROVIDED TO THE RIGHT.) |________________________________________|
2. Approval of the E. W. Blanch Holdings, Inc. Management Incentive Plan [ ]For [ ] Against [ ] Abstain
3. Ratification of appointment of Ernst & Young LLP as independent auditors [ ]For [ ] Against [ ] Abstain
4. In their discretion the Proxies are authorized to vote upon such other business as may properly come before the Meeting.
Address Change? Mark Box [ ] Indicate changes below: Date , 2001
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Signature(s) in Box
Please sign exactly as your name(s) appear
on this Proxy. If held in joint tenancy,
all persons must sign. When signing as
attorney, executor, administrator,
trustee, guardian, etc., please give full
title as such. Corporations should provide
full name of corporation and title of
authorized officer signing the proxy. If a
partnership, please sign in partnership
name by authorized person.