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
NCRIC 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)(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:
________________________________________________________________________________
[_] 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:
________________________________________________________________________________
April 9, 2001 NCRIC Group, Inc.
Dear Shareholder:
You are cordially invited to attend the Annual Meeting of Shareholders of NCRIC
Group, Inc. which will be held at 1115 30th Street, N.W., Washington, D.C. at
5:00 p.m. on Tuesday, May 8, 2001.
The enclosed Notice of Annual Meeting and Proxy Statement describe the formal
business to be transacted. During the meeting we will also report on the
operations of NCRIC and its subsidiaries. Directors and officers of NCRIC will
be present to respond to any questions that shareholders may have. Also enclosed
for your review is our 2000 Annual Report to Shareholders, which contains
detailed information concerning the activities and operating performance of
NCRIC.
The business to be conducted at the Annual Meeting consists of the election of
five directors. The NCRIC Board of Directors has determined that the election of
these directors is in the best interest of NCRIC and its shareholders, and the
Board of Directors unanimously recommends a vote "FOR" the matter to be
considered.
On behalf of the Board of Directors, we urge you to sign, date and return the
enclosed Proxy Card as soon as possible. If you currently plan to attend the
Annual Meeting, this will not prevent you from voting in person, but will assure
that your vote is counted if you are unable to attend.
Sincerely,
/s/ R. Ray Pate, Jr.
R. Ray Pate, Jr.
President and Chief Executive Officer
NCRIC Group, Inc.
1115 30th Street, N.W.
Washington, D.C. 20007
(202) 969-1866
NOTICE OF
2001 ANNUAL MEETING OF SHAREHOLDERS
To Be Held On May 8, 2001
Notice is hereby given that the Annual Meeting of Shareholders of NCRIC
Group, Inc. will be held at 1115 30th Street, N.W., Washington, D.C., on
Tuesday, May 8, 2001, at 5:00 p.m. (Eastern daylight time).
A Proxy Card and a Proxy Statement for the Annual Meeting are enclosed.
The Annual Meeting is for the purpose of considering and acting upon:
1. The election of five directors; and
such other matters as may properly come before the Annual Meeting, or any
adjournments thereof.
Any action may be taken on the foregoing proposals at the Annual
Meeting on the date specified above, or on any date or dates to which the Annual
Meeting may be adjourned. Shareholders of record at the close of business on
March 23, 2001, are the shareholders entitled to vote at the Annual Meeting, and
any adjournments thereof.
By Order of the Board of Directors
/s/ William E. Burgess
William E. Burgess
Secretary
Washington, D.C.
April 9, 2001
IMPORTANT: THE PROMPT RETURN OF PROXIES WILL SAVE THE COMPANY THE EXPENSE OF
FURTHER REQUESTS FOR PROXIES TO ENSURE A QUORUM AT THE ANNUAL MEETING. A
SELF-ADDRESSED ENVELOPE IS ENCLOSED FOR YOUR CONVENIENCE. NO POSTAGE IS REQUIRED
IF MAILED WITHIN THE UNITED STATES.
NCRIC Group, Inc.
1115 30th Street, N.W.
Washington, D.C. 20007
(202) 969-1866
-------------------------------------
PROXY STATEMENT
-------------------------------------
ANNUAL MEETING OF SHAREHOLDERS
MAY 8, 2001
-------------------------------------
SOLICITATION AND VOTING OF PROXIES
This Proxy Statement is furnished in connection with the solicitation
of proxies on behalf of the Board of Directors of NCRIC Group, Inc. to be used
at the Annual Meeting of Shareholders of NCRIC, which will be held at 1115 30th
Street, N.W., Washington, D.C., on Tuesday, May 8, 2001, at 5:00 p.m., and at
all adjournments of the Annual Meeting. The accompanying Notice of Annual
Meeting of Shareholders and this Proxy Statement are first being mailed to
shareholders on or about April 9, 2001.
Regardless of the number of shares of common stock owned, it is
important that shareholders be represented by proxy or be present in person at
the Annual Meeting. Shareholders are requested to vote by completing the
enclosed Proxy Card and returning it, signed and dated, in the enclosed
postage-paid envelope. Shareholders are urged to indicate the way they wish to
vote in the spaces provided on the Proxy Card. Proxies solicited by the Board of
Directors of NCRIC will be voted in accordance with the directions given
therein. Where no instructions are indicated, signed proxies will be voted "FOR"
the election of the nominees for director named in this Proxy Statement.
The Board of Directors knows of no additional matters that will be
presented for consideration at the Annual Meeting. Execution of a proxy,
however, confers on the designated proxyholders discretionary authority to vote
the shares in accordance with their best judgement on such other business, if
any, that may properly come before the Annual Meeting or any adjournments
thereof.
Shareholders who execute proxies in the form solicited hereby retain
the right to revoke them in the manner described below. Unless so revoked, the
shares represented by such proxies will be voted at the Annual Meeting and all
adjournments thereof. Proxies solicited on behalf of the Board of Directors of
the Company will be voted in accordance with the directions given thereon. Where
no instructions are indicated, executed proxies will be voted "FOR" the election
of the nominees set forth in this Proxy Statement.
Proxies may be revoked at any time prior to exercise by sending written
notice of revocation to the Secretary of NCRIC, William E. Burgess, at the
address of NCRIC shown above, or by delivering to NCRIC a duly executed proxy
bearing a later date. The presence at the Annual Meeting of any shareholder who
had given a proxy shall not revoke such proxy unless the shareholder delivers
his or her ballot in person at the Annual Meeting or delivers a written
revocation to the Secretary of NCRIC prior to the voting of such proxy. However,
if you are a shareholder whose shares are not registered in your own name, you
will need appropriate documentation from your record holder to vote personally
at the Annual Meeting.
The cost of solicitation of proxies in the form enclosed herewith will
be borne by NCRIC. Proxies may also be solicited personally or by mail and
telephone by NCRIC's Directors, officers and regular employees, without
additional compensation therefor. NCRIC will also request persons, firms and
corporations holding shares in their names, or in the name of their nominees,
which are beneficially owned by others, to send proxy material to and obtain
proxies from such beneficial owners, and will reimburse such holders for their
reasonable expenses in doing so.
VOTING SECURITIES
Holders of record of NCRIC's common stock, par value $.01 per share,
the Common Stock, as of the close of business on March 23, 2001, the Record
Date, are entitled to one vote for each share then held. As of the Record Date,
NCRIC had 3,725,355 shares of Common Stock issued and outstanding. The presence,
in person or by proxy, of one-third of the total number of shares of Common
Stock outstanding and entitled to vote is necessary to constitute a quorum at
this Annual Meeting. In the event there are not sufficient votes for a quorum,
or to approve or ratify any matter being presented at the time of this Annual
Meeting, the Annual Meeting may be adjourned in order to permit the further
solicitation of proxies.
VOTING PROCEDURES AND METHOD OF COUNTING VOTES
As to the election of Directors, the proxy card being provided by the
Board of Directors enables a shareholder to vote FOR the election of the five
nominees proposed by the Board, or to WITHHOLD AUTHORITY to vote for the
nominees being proposed. Under NCRIC's Bylaws, Directors are elected by a
plurality of the shares voted at the Annual Meeting, in person or by proxy,
without regard to either broker non-votes, or proxies as to which authority to
vote for the nominees being proposed is withheld. Proxies solicited hereby will
be returned to Registrar and Transfer Company and will be tabulated by an
inspector of election designated by the Board.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
Persons and groups who beneficially own in excess of 5% of the Common
Stock are required to file certain reports with NCRIC and with the Securities
and Exchange Commission, the SEC, regarding such ownership pursuant to the
Securities Exchange Act of 1934. The following table sets forth information
regarding each person known to be the beneficial owner of more than 5% of
NCRIC's outstanding shares of Common Stock on the Record Date.
Amount of Shares
Owned and Nature Percent of Shares
Name and Address of of Beneficial of Common Stock
Beneficial Owner Ownership Outstanding
- ------------------------------- ---------------- -----------------
NCRIC, A Mutual Holding Company 2,220,000(1) 59.6%
1115 30th Street, N.W.
Washington, D.C. 20007
- -----------------
(1) The shares are held by NCRIC Holdings, Inc. a wholly-owned subsidiary of
NCRIC, A Mutual Holding Company.
PROPOSAL 1--ELECTION OF DIRECTORS
Directors of NCRIC are generally elected to serve for a three-year
period or until their respective successors shall have been elected and shall
qualify. Five directors will be elected at the Annual Meeting to serve for a
three-year period and until a successor has been elected and qualified. The
Board of Directors has nominated Martin W. Dukes, Jr., M.D., Luther W. Gray,
Jr., M.D., Edward G. Koch, M.D., Leonard M. Parver, M.D., and Nelson P.
Trujillo, M.D. to serve as directors.
The table below lists certain information regarding NCRIC's Board of
Directors, including the terms of office of Board members. It is intended that
the proxies solicited on behalf of the Board of Directors will be voted at the
Annual Meeting for the election of the nominees identified below (unless
otherwise directed on the Proxy Card). If a nominee is unable to serve, the
shares represented by all such proxies will be voted for the election of such
substitute as the Board of Directors may recommend. At this time, the Board of
Directors knows of no reason why the nominees might be unable to serve, if
elected.
Shares of
Positions Common Stock
Held in the Director Term to Beneficially Percent
Name Age(1) Company Since(2) Expire Owned (3) Of Class
----- ------ ------- -------- ------ --------- --------
NOMINEES
Martin W. Dukes, Jr. 55 Director 2001 (4) 2004 2,620 *
Luther W. Gray, Jr. 60 Director 1984 2004 6,408 *
Edward G. Koch 58 Director 1996 2004 3,020 *
Leonard M. Parver 56 Director 1998 2004 11,212 *
Nelson P. Trujillo 62 Chairman of the Board 1980 2004 40,410 1.1%
DIRECTORS CONTINUING IN OFFICE
R. Ray Pate, Jr. 41 President, Chief 1998 2003 49,327 1.3%
Executive Officer and
Vice Chairman of
the Board
Vincent C. Burke, III 49 Director 1998 2002 3,137 *
Pamela W. Coleman 44 Director 1989 2002 9,588 *
Leonard M. Glassman 54 Director 1993 2003 19,070 *
Prudence P. Kline 49 Director 1995 2002 3,720 *
J. Paul McNamara 51 Director 1999 2002 20,342 *
Raymond Scalettar 71 Director 1980 2003 6,409 *
David M. Seitzman 71 Director 1980 2003 6,412 *
Robert L. Simmons 68 Director 1984 2003 9,220 *
(footnotes on next page)
Shares of
Positions Common Stock
Held in the Director Term to Beneficially Percent
Name Age(1) Company Since(2) Expire Owned(3) Of Class
----- ------ ------- -------- ------ -------- --------
EXECUTIVE OFFICERS WHO ARE NOT DIRECTORS
Stephen S. Fargis 41 Senior Vice President and n/a n/a 23,126 *
Chief Operating Officer
Rebecca B. Crunk 49 Senior Vice President and n/a n/a 23,981 *
Chief Financial Officer
William E. Burgess 45 Senior Vice President and n/a n/a 13,435 *
Secretary
All Directors and Executive
Officers as a Group (17 persons) 251,435 6.7%
***********
* Less than 1%.
(1) As of March 1, 2001.
(2) Reflects the initial appointment as a director of NCRIC Group, Inc. or as a
governor of National Capital Reciprocal Insurance Company, or a director of
its attorney-in-fact, or its subsidiary Commonwealth Medical Liability
Insurance Company. Except as otherwise indicated, each nominee and
continuing director has served on the Board of Directors of NCRIC since the
reorganization of National Capital Reciprocal Insurance Company and the
formation of NCRIC in December 1998.
(3) Includes shares of common stock held directly and by spouses or minor
children and in trust and other indirect ownership, as well as shares owned
under NCRIC, Inc.'s 401(k) Plan, ESOP, and Stock Award Plan and vested
stock options.
(4) Dr. Dukes was a director of National Capital Underwriters, Inc. and NCRIC,
Inc. His appointment to the Board of NCRIC is effected upon his election by
the shareholders at the Annual Meeting.
Directors
The principal occupation during the past five years of each director
and executive officer of NCRIC is set forth below. All directors have held their
present positions for five years unless otherwise stated.
Nelson P. Trujillo, M.D. was a governor and Chairman of the Board of
National Capital Reciprocal Insurance Company from 1980 until its reorganization
on December 31, 1998. Dr. Trujillo is currently President of Metropolitan
Gastroenterology Group where he is a physician.
R. Ray Pate, Jr. was the Treasurer of National Capital Reciprocal
Insurance Company and President and Chief Executive Officer of National Capital
Underwriters, Inc., attorney-in-fact for National Capital Reciprocal Insurance
Company, from 1996 until the reorganization. Since the reorganization he has
also been President and Chief Executive Office of NCRIC, Inc. Since June 2000 he
has served as Vice Chairman of the Board of Directors.
Vincent C. Burke, III has been a partner with the firm of Furey, Doolan
& Abell, LLP since June 1, 1998. From April 1992 to May 1998, he was counsel to
the law firm of Reed Smith Shaw & McClay. Mr. Burke's practice is in the areas
of corporate, business, real estate and closely-held businesses. He practices in
the District of Columbia and Maryland.
Pamela W. Coleman, M.D. was a governor of National Capital Reciprocal
Insurance Company from 1989 until the reorganization. Dr. Coleman is a urologist
in private practice.
Martin W. Dukes, Jr., M.D. was a director of National Capital
Underwriters from 1997 until the Reorganization, and a director of NCRIC, Inc.
from the reorganization until May 2000. Dr. Dukes is a physician in private
practice in the District of Columbia.
Luther W. Gray, Jr., M.D. was a governor of National Capital Reciprocal
Insurance Company from 1984 until the reorganization. He was a member of the
executive committee of the board and is Chair of the underwriting committee. Dr.
Gray is a physician and general surgeon with Luther W. Gray, Jr., M.D., PC and
is Chair of the Department of Surgery at Sibley Memorial Hospital.
Leonard M. Glassman, M.D. was a Director of National Capital
Underwriters, Inc. from 1993 until the reorganization. Dr. Glassman is a
physician with Washington Radiology Associates, P.C. He is a past member of the
Finance Committee of the Medical Society of the District of Columbia and was
Chief of Radiology of Columbia Hospital for Women Medical Center from 1984 to
1999.
Prudence P. Kline, M.D. was a Director of National Capital
Underwriters, Inc. from 1995 until the reorganization and has been a Director of
NCRIC, Inc. since the reorganization. Dr. Kline has been a physician in private
practice in Washington, D.C. since 1986.
Edward G. Koch, M.D. has served as a Director of Commonwealth Medical
Liability Insurance Company since 1996. Dr. Koch is an OB/GYN physician in
private practice in Arlington, Virginia and Washington, D.C. Since 1997, he has
been President of the Arlington County Medical Society Foundation.
J. Paul McNamara has been President and Chief Operating Officer of
Sequoia National Bank/Sequoia Bancshares, Inc. since 1988. From 1976 to 1988,
Mr. McNamara was employed by the National Bank of Washington in several senior
management positions.
Leonard M. Parver, M.D. was Chairman of the Board of Directors of NCRIC
MSO, Inc. from 1998 until 2000. He has practiced medicine in Washington, D.C.
for the past 22 years.
Raymond Scalettar, M.D. was Vice Chairman of the Board of Directors of
National Capital Underwriters, Inc. from 1980 until the reorganization. He is a
founder of the Washington Internal Medicine Group, a health policy consultant, a
past trustee and Chair of the Board of Directors of the AMA, and a past
Commissioner and Senior Consultant to the Joint Commission on Accreditation of
HealthCare Organizations.
David M. Seitzman, M.D. was a member of the Board of Directors of
National Capital Underwriters, Inc. from 1980 until the reorganization. Dr.
Seitzman is now retired from the practice of medicine. He served on the boards
of Blue Cross and Blue Shield of the National Capital Area and the Medical
Society of the District of Columbia and served as President and co-founder of
the Center for Ambulatory Surgery, Inc. Since 1993, Dr. Seitzman has been a
trustee of portfolios of The 59 Wall Street Fund, Inc., which is advised by
Brown Brothers Harriman & Co., one of NCRIC, Inc.'s investment advisors until
January 1, 2000.
Robert L. Simmons, M.D. was a member of the Board of Directors of
National Capital Underwriters, Inc. from 1984 until the reorganization. Dr.
Simmons is Vice President of Medical Affairs at Providence Hospital in
Washington, D.C. and is a thoracic and cardiovascular surgeon.
Executive Officers Who Are Not Directors
Stephen S. Fargis was Senior Vice President - Business Development of
National Capital Reciprocal Insurance Company from 1995 until the
reorganization. Since the reorganization he has also been Senior Vice President
and Chief Operating Officer of NCRIC, Inc. and in 2001 was named President of
NCRIC MSO, Inc.
Rebecca B. Crunk was the Chief Financial Officer of National Capital
Reciprocal Insurance Company from April 1998 until the reorganization. Since the
reorganization she has also been Senior Vice President, Chief Financial Officer
and Treasurer of NCRIC, Inc. Ms. Crunk is a certified public accountant and is a
member of the American Institute of Certified Public Accountants. From 1995 to
1998, she was Vice President, Treasurer and Controller of ReliaStar United
Services Life Insurance Company.
William E. Burgess was Senior Vice President - Claims and Risk
Management of National Capital Reciprocal Insurance Company from August 1997
until the reorganization. From 1993 to August 1997, he was a Vice President of
National Capital Reciprocal Insurance Company. Since the reorganization he has
also been Senior Vice President and Secretary of NCRIC, Inc.
Committees and Meetings of the Board of Directors
The business of NCRIC is conducted through regular and special meetings
of the Board of Directors and its committees. The Board of Directors met eleven
times during 2000. No director attended fewer than 75% of the total meetings
held by the Board of Directors and the committees on which such director served.
The Board of Directors has an Audit Committee and a Compensation
Committee. The Board of Directors performs and functions as the Nominating
Committee.
The Audit Committee is comprised of Directors Burke, Coleman, Seitzman
and, effective March 13, 2001, McNamara. The Audit Committee recommends the firm
to be appointed as independent accountants to audit the financial statements,
reviews the scope and results of the audit with the independent accountants,
reviews with management and the independent accountants NCRIC's year-end audit,
and considers the adequacy of NCRIC's internal accounting controls. The Audit
Committee met six times in 2000.
The Compensation Committee is comprised of Directors Burke, Kline,
Seitzman and Trujillo. The Compensation Committee reviews and makes
recommendations to the Board of Directors concerning compensation, benefit
policies and stock ownership programs, as well as the compensation of the chief
executive officer. The Compensation Committee administers the stock option plan
and the stock award plan. The Compensation Committee met four times during 2000.
While the Board will consider nominees recommended by the shareholders,
it has not actively solicited recommendations from shareholders. Nominations by
shareholders must comply with certain procedural and informational requirements
set forth in NCRIC's Bylaws. See "Advance Notice of Business to be Conducted at
an Annual Meeting."
Audit Committee Report
In accordance with rules recently established by the SEC, this report
has been prepared by the Audit Committee for inclusion in this proxy statement.
Each member of the Audit Committee satisfies the definition of independent
director as established by the National Association of Securities Dealers. The
Board of Directors has adopted a written charter of the Audit Committee, which
is attached to this proxy statement as Appendix 1.
As part of its ongoing activities, the Audit Committee has:
o Reviewed and discussed with management NCRIC's audited
consolidated financial statements for the year ended December
31, 2000;
o Discussed with the independent auditors the matters required
to be discussed by Statement on Auditing Standards No. 61,
Communications with Audit Committees, as amended; and
o Received the written disclosures and the letter from the
independent auditors required by Independence Standards Board
Standard No. 1, Independence Discussions with Audit
Committees, and has discussed with the independent auditors
their independence.
Based on the review and discussions referred to above, the Audit
Committee recommended to the Board of Directors that the audited consolidated
financial statements be included in NCRIC's Annual Report on Form 10-K for the
year ended December 31, 2000 and be filed with the SEC.
This report shall not be deemed incorporated by reference by any
general statement incorporating by reference this proxy statement into any
filing under the Securities Act of 1933, as amended, or the Securities Exchange
Act of 1934, as amended, except to the extent that NCRIC specifically
incorporates this information by reference, and shall not otherwise be deemed
filed under such Acts.
The Audit Committee
David M. Seitzman, M.D., Chair
Pamela W. Coleman, M.D.
Vincent C. Burke, III, Esq.
Director Compensation
NCRIC pays cash compensation to each of its non-employee directors,
other than the Chairman, of $25,000 per year. The Chairman of the Board of
Directors receives $30,000 per year. Directors who are officers or employees of
NCRIC receive no cash compensation for serving as directors. All directors are
reimbursed for out-of-pocket expenses in connection with attendance at
any meeting of the Board or any committee. During 2000, directors received stock
grants under the NCRIC Group, Inc. Stock Award Plan. Dr. Trujillo was granted
8,880 shares of Common Stock. Mr. Pate was granted 13,320 shares of Common
Stock. The remaining eleven directors were each granted 2,220 shares of Common
Stock. Stock grants vest over a three-year period. The market value of NCRIC
stock was $7.875 per share on the date of the stock grant.
Executive Compensation
The following table sets forth information as to annual, long-term and
other compensation for services in all capacities to the President and Chief
Executive Officer for the years ended December 31, 2000, 1999 and 1998 and the
other executive officers (collectively referred to as "Named Executive
Officers") who earned over $100,000 in salary and bonuses during 2000.
========================================================================================================================
Summary Compensation Table
- ------------------------------------------------------------------------------------------------------------------------
Annual Compensation(1) Long-Term Compensation
Awards
- --------------------------------------------------------------------------------------------------------
Restricted
Name and Principal Other Stock Options/
Position Fiscal Annual Award(2) SARs All Other
Year(1) Salary Bonus Compensation (#) Compensation
- ------------------------------------------------------------------------------------------------------------------------
R. Ray Pate, Jr., 2000 $240,000 $60,000 - $104,895 - $22,528
President and Chief 1999 240,000 90,000 - - 13,320 22,410
Executive Officer 1998 240,010 75,000 - - - 17,432
- ------------------------------------------------------------------------------------------------------------------------
Stephen S. Fargis, 2000 $151,667 $30,308 - $ 69,930 - $22,312
Senior Vice President & 1999 150,000 42,000 - - 9,250 21,253
Chief Operating Officer 1998 151,440 37,500 - - - 14,716
- ------------------------------------------------------------------------------------------------------------------------
Rebecca B. Crunk, 2000 $135,000 $27,000 - $ 69,930 - $22,414
Senior Vice President & 1999 135,000 40,500 - - 7,400 21,339
Chief Financial Officer 1998 84,135 31,250 - - - 406
- ------------------------------------------------------------------------------------------------------------------------
William E. Burgess, 2000 $120,000 $24,000 - $ 58,275 - $20,249
Senior Vice President and 1999 120,000 28,600 - - 7,400 18,579
Secretary 1998 109,981 27,500 - - - 11,082
========================================================================================================================
- -------------------
(1) For the fiscal years ended December 31.
(2) Equals the market value of the stock award on the date of the grant,
which was $7.875 per share.
Employment Agreements. R. Ray Pate, Jr. serves as the President and
Chief Executive Officer of NCRIC under an employment agreement between NCRIC and
Mr. Pate dated January 1, 2001. Under the terms of his employment agreement, Mr.
Pate is entitled to basic compensation of $290,000 per year and is reimbursed
for all reasonable and proper business expenses incurred by him in the
performance of his duties. The terms of the employment agreement also provide
that Mr. Pate is entitled to:
(1) participate in any retirement and/or pension plans or health and
medical insurance plans offered to NCRIC's senior executives;
(2) receive use of an automobile; and
(3) be covered by both term life insurance and disability insurance.
The term of the employment agreement is five years commencing January
1, 2001. NCRIC may terminate the employment agreement for cause or without
cause, at any time. Any dispute as to whether NCRIC had cause will be determined
by arbitration. If NCRIC terminates Mr. Pate's employment agreement without
cause, Mr. Pate is entitled to receive, as severance pay, an amount equal to
three years base compensation at the level in effect on the date of the
termination. Mr. Pate may voluntarily terminate his employment provided that he
gives 60 days prior notice of his voluntary termination or pays liquidated
damages equal to the amount of two months base compensation.
NCRIC entered into an employment agreement commencing December 1, 2000
with Stephen S. Fargis on substantially similar terms except that Mr. Fargis'
employment agreement terminates November 30, 2003, and provides for basic
compensation of $170,000 per year.
NCRIC entered into an employment agreement commencing January 1, 2001
with Rebecca B. Crunk on substantially similar terms to Mr. Pate's, except Ms.
Crunk's agreement terminates December 31, 2003, and provides for basic
compensation of $170,000 per year.
Stock Option Plan. The Company has established a stock option plan for
its directors, officers and key employees. Set forth below is certain
information concerning options outstanding to the Named Executive Officers at
December 31, 2000. No options were granted to or exercised by the Named
Executive Officers during 2000.
====================================================================================================================
AGGREGATED OPTIONS EXERCISED IN LAST FISCAL YEAR AND
FISCAL YEAR-END OPTION VALUES
====================================================================================================================
Number of Value of Unexercised
Shares Acquired Value Options at In-The-Money Options at
Name Upon Exercise Realized Year-End Year-End(1)
------------------------- --------------------------
Exercisable/Unexercisable Exercisable/Unexercisable
(#) ($)
- ---------------------------- ---------------- ----------------- ------------------------- --------------------------
R. Ray Pate, Jr. 0 $-- 4,440/8,880 $4,440/$8,880
Stephen S. Fargis 0 $-- 3,083/6,167 $3,083/$6,167
William E. Burgess 0 $-- 2,442/4,958 $2,442/$4,958
Rebecca B. Crunk 0 $-- 2,442/4,958 $2,442/$4,958
============================ ================ ================= ========================= ==========================
- ------------------
(1) Equals the difference between the aggregate exercise price of such
options and the aggregate fair market value of the shares of Common
Stock that would be received upon exercise, assuming such exercise
occurred on December 31, 2000, at which date the last trade price of
the Common Stock as quoted on the Nasdaq SmallCap Market was $8.00.
Compensation Committee Report on Executive Compensation
The Compensation Committee has adopted a compensation strategy that
seeks to provide competitive compensation that is strongly aligned with the
business objectives and financial and stock performance of NCRIC. The
compensation program has three key elements: base salary, annual incentives and
long-term incentives. The Compensation Committee periodically reviews salary
levels and other aspects of executive compensation to ensure that NCRIC's
overall executive compensation program remains competitive and that executive
pay reflects both the individual's performance and the performance of NCRIC.
NCRIC has an annual incentive plan based on a combination of NCRIC and
individual executive performance in relation to established objectives. Plan
pay-outs vary based on NCRIC's performance in relation to the targeted
objectives. Individual payments are then increased or decreased based on the
performance of the individual executive during the year. The target level of
incentive pay opportunities is 20% - 25% of base pay, with actual payments in a
range of zero to 150% of the target percentage based on performance levels.
Actual payments made in 2000 ranged from 26% to 37.5% of base pay.
The Committee believes that long-term incentives are the most effective
way of aligning executive compensation with the creation of value for the
shareholders through stock appreciation. The Stock Option Plan and the Stock
Award Plan were established in connection with the Initial Public Offering. The
stock options were allocated in 1999 and the restricted stock awards were
allocated in 2000.
For the compensation of the Chief Executive Officer in 2000, the
Compensation Committee operated under the previously disclosed employment
agreement with an annual base salary of $240,000 for Mr. Pate. This agreement
was executed in 1997 and the base salary was fixed through December 31, 2000.
Additionally, in 2000 Mr. Pate received an allocation of 13,320 shares of
restricted stock under the Stock Award Plan discussed above. In January 2001, at
the recommendation of the Compensation Committee, NCRIC entered into a new five
year employment agreement with Mr. Pate. The base salary level was increased to
$290,000 in recognition of Mr. Pate's leadership of NCRIC and recognizing that
the prior salary level had been unchanged for over three years.
The Compensation Committee
Vincent C. Burke, III, Esq., Chair
Prudence P. Kline, M.D.
David M. Seitzman, M.D.
Nelson P. Trujillo, M.D.
STOCK PERFORMANCE
The following graph compares the cumulative total return for NCRIC's
common stock, the S&P 500 index, and a peer group comprised of Medical
Assurance, Inc., FPIC Insurance Group, Inc., The MIIX Group, Incorporated, and
SCPIE Holdings, Inc. for the period July 29, 1999, the first day of public
trading of NCRIC's common stock on the Nasdaq SmallCap Market, through
December 31, 2000. The graph assumes an investment on July 29, 1999 of $100 in
each of NCRIC's common stock, the stocks comprising the S&P 500 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 S&P 500 index are
weighted by market capitalization. The calculations for the information below
were prepared by SNL Securities, LC of Charlottesville, Virginia.
Cumulative Total Return
[TOTAL RETURN PERFORMANCE GRAPH APPEARS HERE. PLOTTED POINTS LISTED BELOW]
Period Ending
--------------------------------------------------------------------------------------
Index 07/29/99 09/30/99 12/31/99 03/31/00 06/30/00 09/30/00 12/31/00
- -------------------------------------------------------------------------------------------------------------------
NCRIC Group, Inc. 100.00 113.22 115.70 105.79 97.52 115.70 105.79
S&P 500 100.00 95.89 110.16 112.68 109.69 108.63 100.12
Custom Peer Group 100.00 73.01 67.48 65.08 46.01 43.28 47.99
INDEPENDENT AUDITORS
NCRIC's independent auditors for the year ended December 31, 2000 were
Deloitte & Touche LLP. The Audit Committee's review of the impact of fees for
non-audit services in regard to auditor independence concluded that the
non-audit fees had no bearing on auditor independence. The expense incurred by
NCRIC for fees to Deloitte & Touche during 2000 was as follows:
Audit fees $240,000
Financial Information Systems
Design and Implementation fees --
All other fees 179,000
--------
Total $419,000
A representative of Deloitte & Touche will attend the Annual Meeting
and will be given the opportunity to make a statement if they desire to do so
and will be available to respond to appropriate questions from shareholders
present at the Annual Meeting.
ADVANCE NOTICE OF BUSINESS TO BE CONDUCTED
AT AN ANNUAL MEETING
The Bylaws of NCRIC provide an advance notice procedure for certain
business, or nominations to the Board of Directors, to be brought before an
annual meeting. In order for a shareholder to properly bring business before an
annual meeting, or to propose a nominee to the Board, the shareholder must give
written notice to the Secretary of NCRIC not less than ninety (90) days before
the date of the proxy statement relating to the prior year's annual meeting. The
notice must include the shareholder's name, record address, and number of shares
owned by the shareholder, describe briefly the proposed business, the reasons
for bringing the business before the annual meeting, and any material interest
of the shareholder in the proposed business. In the case of nominations to the
Board, certain information regarding the nominee must be provided. Nothing in
this paragraph shall be deemed to require NCRIC to include in its proxy
statement and proxy relating to an annual meeting any shareholder proposal which
does not meet all of the requirements for inclusion established by the SEC in
effect at the time such proposal is received. Accordingly, in accordance with
the foregoing, advance written notice of business or nominations to the Board of
Directors to be brought before the 2002 Annual Meeting of Shareholders must be
given to NCRIC no later than January 9, 2002. If notice is received after
January 9, 2002, it will be considered untimely, and NCRIC will not be required
to present the matter at the shareholders meeting.
SHAREHOLDER PROPOSALS
In order to be eligible for inclusion in NCRIC's proxy material for
next year's Annual Meeting of Shareholders, any shareholder proposal to take
action at such meeting must be received at NCRIC's office, 1115 30th Street,
N.W., Washington, D.C. 20007, no later than December 10, 2001. Nothing in this
paragraph shall be deemed to require NCRIC to include in its proxy statement and
proxy relating to an annual meeting any shareholder proposal which does not meet
all of the requirements for inclusion established by the SEC.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ William E. Burgess
William E. Burgess
Secretary
Washington, D.C.
April 9, 2001
Appendix
NCRIC Group, Inc.
Audit Committee Charter
-----------------------
One committee of the board of directors will be known as the audit committee.
The committee will be composed of a minimum of three independent directors, all
of which possess the ability to read and understand financial statements and one
of which has financial expertise, in accordance with NASD rules.
The primary function of the audit committee is to assist the board in fulfilling
its oversight responsibilities by reviewing the financial information that will
be provided to the shareholders and others, the systems of internal controls
management and the board of directors have established and all audit processes.
o General Responsibilities
1. The audit committee provides open avenues of communication
among the independent accountant and the board of directors.
2. The audit committee must report committee actions to the full
board of directors and may make appropriate recommendations.
3. The audit committee has the power to conduct or authorize
investigations into matters within the committee's scope of
responsibilities. The committee is authorized to retain
independent counsel, accountants or others it needs to assist
in an investigation.
4. The committee will meet at least four times each year, more
frequently if circumstances make that preferable. The audit
committee chair has the power to call a committee meeting
whenever he or she thinks there is a need. An audit committee
member should not vote on any matter in which he or she is not
independent. The committee may ask members of management or
others to attend the meeting and is authorized to receive all
pertinent information from management.
5. The committee will do whatever else the law, the company's
charter or bylaws or the board of directors require.
o Responsibilities for engaging independent accountants
1. The audit committee will select the independent accountants
for company audits. The committee's selection is subject to
approval by the full board of directors. The audit committee
will also review and set any fees paid to the independent
accountants and review and approve dismissal of the
independent accountants.
2. The audit committee will confirm and assure the independence
of the independent accountant, including a review of
management consulting services provided by the independent
accountant and the fees paid for them. The audit committee
will obtain from the auditors a formal written statement
delineating all relationships between the auditor and the
company, consistent with Independence Standards Board Standard
1.
3. The audit committee will consider, in consultation with the
independent accountant, the audit scope and procedural plans
made by the independent accountant.
o Responsibilities for reviewing the annual external audit and the review
of quarterly and annual financial statements.
1. The audit committee will ascertain that the independent
accountant views the board of directors and the audit
committee, as representatives of the shareholders, as its
client, that it will be available to the full board of
directors at least annually and that it will provide the
committee with a timely analysis of significant financial
reporting issues.
2. The audit committee will ask management and the independent
accountant about significant risks and exposures and will
assess management's steps to minimize them.
3. The audit committee will review the following with the
independent accountant:
A. The adequacy of the company's internal controls,
including computerized information system controls
and security.
B. Any significant findings and recommendations made by
the independent accountant together with management's
responses to them.
4. Shortly after the annual examination is completed, the audit
committee will review the following with management and the
independent accountant:
A. The company's annual financial statements and related
footnotes.
B. The independent accountant's audit of and report on
the financial statements.
C. The auditor's qualitative judgements about the
appropriateness, not just the acceptability, of
accounting principles and financial disclosures and
how aggressive (or conservative) the accounting
principles and underlying estimates are.
D. Any serious difficulties or disputes with management
encountered during the course of the audit.
E. Anything else about the audit procedures or findings
that GAAS requires the auditors to discuss with the
committee.
5. The audit committee will review annual filings with the SEC
and other published documents containing the company's
financial statements and will consider whether the information
in the filings is consistent with the information in the
financial statements.
6. The audit committee will review the interim and annual
financial reports with management and the independent
accountant before those reports are released to the public or
filed with the SEC or other regulators.
7. The audit committee will prepare a report for inclusion in the
proxy (beginning with the 2001 proxy) that describes the
committee's composition and responsibilities and how the
responsibilities were fulfilled, in accordance with SEC
requirements.
o Periodic Responsibilities
1. Review and update the committee's charter annually.
2. Review policies and procedures covering officers' expense
accounts and perquisites, including their use of corporate
assets, and consider the results of any review of those areas
by the independent accountant.
3. Review legal and regulatory matters that may have a material
effect on the organization's financial statements, compliance
policies and programs and reports from regulators.
4. Meet with the independent accountant and management in
separate executive sessions to discuss any matters the
committee or these groups believe should be discussed
privately with the audit committee.
X PLEASE MARK VOTES
AS IN THIS EXAMPLE
REVOCABLE PROXY
NCRIC GROUP, INC.
ANNUAL MEETING OF STOCKHOLDERS
MAY 8, 2001
The undersigned appoints R. Ray Pate, Jr. and Leonard M. Glassman, M.D.,
and each of them, with full powers of substitution, as proxies to vote all
shares of the undersigned in NCRIC Group, Inc. at the Annual Meeting of
Stockholders to be held on May 8, 2001, at 5:00 p.m. and at any and all
adjournments, in the manner set forth herein.
1. To elect as directors the nominees listed below (except as indicated to the
contrary below):
Martin W. Dukes, Jr., M.D., Luther W. Gray, Jr., M.D., Edward G. Koch,
M.D., Leonard M. Parver, M.D., Nelson P. Trujillo, M.D.
For All
For Withhold Except
[_] [_] [_]
INSTRUCTION: To withhold authority to vote for any individual nominee, mark "For
All Except" and write that nominee's name in the space provided below.
- --------------------------------------------------------------------------------
PLEASE CHECK BOX IF YOU PLAN TO ATTEND THE MEETING. [__]
Such proxies are authorized to vote in their discretion on any other
business that may properly come before the meeting or any adjournments.
The Board of Directors recommends a vote "FOR" the above listed Nominees.
THIS SIGNED PROXY CARD WILL BE VOTED AS DIRECTED, BUT IF NO INSTRUCTIONS
ARE SPECIFIED, THIS PROXY CARD WILL BE VOTED FOR THE NOMINEES LISTED.
Please sign exactly as your name appears on this proxy card. When signing
as attorney, executor, administrator, trustee or guardian, please give your full
title. If shares are held jointly, each holder should sign.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS.
_________________________________________
Please be sure to sign and date Date
this Proxy in the box below.
________________________________________________________________________________
________Stockholder sign above_________Co-holder (if any) sign above____________
=> Detach above card, sign, date and mail in postage paid envelope provided. =>
NCRIC GROUP, INC.
- --------------------------------------------------------------------------------
PLEASE COMPLETE, DATE, SIGN AND MAIL THIS PROXY CARD
PROMPTLY IN THE ENCLOSED POSTAGE-PAID ENVELOPE.
- --------------------------------------------------------------------------------
IF YOUR ADDRESS HAS CHANGED, PLEASE CORRECT THE ADDRESS IN THE SPACE PROVIDED
BELOW AND RETURN THIS PORTION WITH THE PROXY IN THE ENVELOPE PROVIDED.
- ----------------------------------------------------
- ----------------------------------------------------
- ----------------------------------------------------