[GRAPHIC OMITED]
[GRAPHIC OMITED]
GORAN CAPITAL INC.
2003 PROXY STATEMENT
GORAN CAPITAL INC.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
NOTICE IS HEREBY GIVEN that the annual meeting (the "Meeting") of the
shareholders of Goran Capital Inc. (the "Corporation") will be held at 2 Eva
Road, Suite 200, Toronto, Ontario, Canada on Tuesday, July 8, 2003, at 10:00
a.m., Toronto time, for the following purposes:
1. To receive the annual report and financial statements of the Corporation
for the year ended December 31, 2002, and the report of the independent
auditors thereon;
2. To elect directors;
3. To appoint auditors and to authorize the directors to fix the auditors'
remuneration;
4. To transact such other business as may properly come before the Meeting or
any adjournment thereof.
The accompanying management information circular provides additional information
relating to the matters to be dealt with at the Meeting and forms part of this
Notice.
SHAREHOLDERS WHO ARE UNABLE TO ATTEND THE MEETING ARE REQUESTED TO DATE, SIGN
AND RETURN THE ACCOMPANYING FORM OF PROXY IN THE ENVELOPE PROVIDED FOR THAT
PURPOSE.
DATED at Toronto, this 23rd day of April, 2003.
BY ORDER OF THE BOARD OF DIRECTORS
[GRAPHIC OMITED]
[GRAPHIC OMITED]
Douglas H. Symons
Chief Executive Officer and President
GORAN CAPITAL INC.
2 EVA ROAD, SUITE 200
TORONTO, ONTARIO, CANADA
M9C 2A8
April 23, 2003
Dear Shareholder:
RE: SUPPLEMENTAL MAILING LIST
If you wish to have your name added to the supplemental mailing list of Goran
Capital Inc. so you may receive the Corporation's quarterly reports which
contain interim unaudited financial statements, please fill in your name and
address in the space provided below and return to our transfer agent, CIBC
Mellon Trust Company, P. O. Box 7010, Adelaide Street Postal Station, Toronto,
ON, Canada M5C 2W9.
NAME: ____________________________________________
PLEASE PRINT
ADDRESS: ____________________________________________
CITY: ____________________________________________
PROVINCE/STATE:__________ POSTAL CODE/ZIP CODE:__________
I hereby confirm that I am the owner of shares issued by the above-mentioned
Corporation.
SIGNATURE: ____________________________________________
DATE: ____________________________________________
GORAN CAPITAL INC.
MANAGEMENT PROXY CIRCULAR
SOLICITATION OF PROXIES
THIS MANAGEMENT PROXY CIRCULAR IS FURNISHED IN CONNECTION WITH THE SOLICITATION
OF PROXIES BY THE MANAGEMENT OF GORAN CAPITAL INC. (THE "CORPORATION") FOR USE
AT THE ANNUAL MEETING OF SHAREHOLDERS OF THE CORPORATION (THE "MEETING") TO BE
HELD TUESDAY, JULY 8, 2003, AT 10:00 A.M. (TORONTO TIME), OR AT ANY AND ALL
ADJOURNMENTS THEREOF, FOR THE PURPOSES SET FORTH IN THE ACCOMPANYING NOTICE OF
MEETING. It is expected that the solicitation will be primarily by mail, but
proxies may also be solicited personally, by telephone or by telecopier, by
directors, officers or regular employees of the Corporation. The costs of such
solicitation will be borne by the Corporation.
REVOCATION OF PROXIES
A shareholder who has given a proxy may revoke it at any time to the extent it
has not been exercised. In addition to revocation in any other manner permitted
by law, a proxy may be revoked by instrument in writing executed by the
shareholder or his/her attorney authorized in writing, and deposited either at
the registered office of the Corporation at any time up to 5:00 p.m. (Toronto
time) on the last business day preceding the day of the meeting, or any
adjournment thereof, at which the proxy is to be used, or with the chairman of
the Meeting prior to the beginning of the Meeting on the day of the Meeting, or
any adjournment thereof or in any other manner provided by law.
VOTING OF SHARES REPRESENTED BY MANAGEMENT PROXIES
The persons specified in the enclosed form of proxy are directors and officers
of the Corporation and will represent management at the Meeting. EACH
SHAREHOLDER OF THE CORPORATION HAS THE RIGHT TO APPOINT A PERSON (WHO NEED NOT
BE A SHAREHOLDER), OTHER THAN THE PERSONS SPECIFIED IN THE ENCLOSED FORM OF
PROXY, TO ATTEND FOR HIM/HER AND ON HIS/HER BEHALF AT THE MEETING OR ANY
ADJOURNMENT THEREOF. Such right may be exercised by striking out the names of
the specified persons and inserting the name of the shareholder's nominee in the
space provided or by completing another appropriate form of proxy and, in either
case, signing, dating and delivering the form of proxy to the Corporation prior
to the holding of the Meeting.
The persons named in the enclosed form of proxy will vote the shares in respect
of which they are appointed by proxy on any ballot that may be called for in
accordance with the instructions thereon. IN THE ABSENCE OF SUCH
SPECIFICATIONS, SUCH SHARES WILL BE VOTED IN FAVOUR OF EACH OF THE MATTERS
REFERRED TO HEREIN.
The enclosed form of proxy confers discretionary authority upon the persons
named therein with respect to amendments to or variations of matters identified
in the Notice of Meeting and with respect to other matters, if any, that may
properly come before the Meeting. As of the date of this circular, management
of the Corporation knows of no such amendments, variations or other matters to
come before the Meeting other than routine matters incidental to the conduct of
the Meeting. However, if any other matters that are not known to management
should properly come before the Meeting, the proxy will be voted on such matters
in accordance with the best judgment of the named proxy.
VOTING SECURITIES
The only voting securities of the Corporation currently outstanding and entitled
to be voted at the Meeting are 5,393,698 common shares as of April 21, 2003,
each of which carries one vote.
The Corporation has fixed May 28, 2003 as the record date for the meeting. The
Corporation will prepare a list of the holders of common shares at the close of
business on that day. Each person named in such list is entitled to be present
and vote the shares shown opposite his/her name on such list at the Meeting.
PRINCIPAL HOLDERS OF VOTING SECURITIES
To the knowledge of the directors or senior officers of the Corporation, the
following are the only persons who beneficially own, directly or indirectly, or
exercise control or direction over more than 10% of the outstanding common
shares of the Corporation:
NUMBER OF COMMON SHARES PERCENTAGE OF
BENEFICIALLY OWNED, OUTSTANDING
NAME CONTROLLED OR DIRECTED1 COMMON SHARES
----------------------- --------------
Symons International Group, Ltd.2 1,646,413 30.5%
----------------------- --------------
G. Gordon Symons. . . . . . . . . 479,111 8.9%
---------------------- --------------
Alan G. Symons. . . . . . . . . . 568,0653 10.5%
----------------------- --------------
Douglas H. Symons . . . . . . . . 251,455 4.7%
- --------------------------------- ----------------------- --------------
<FN>
1 The information as to beneficial ownership of shares not being within the
knowledge of the Corporation, has been furnished by the persons and
companies listed above. Information presented is as of April 21, 2003 and
does not reflect shares under option.
2 Mr. G. Gordon Symons is the controlling shareholder and Chairman of the
Board of Symons International Group Ltd., a private company ("SIGL").
3 Includes 387,215 shares owned by a trust over which Alan G. Symons
exercises limited direction.
PARTICULARS OF MATTERS TO BE ACTED UPON
At the Meeting, shareholders will be asked to elect directors, appoint auditors,
authorize the directors to fix the auditors' remuneration and deal with other
matters that may properly come before the Meeting.
ELECTION OF DIRECTORS
The articles of the Corporation currently provide for a board consisting of a
minimum of three and a maximum of ten directors. The board currently consists
of seven directors until otherwise determined by further resolution of the board
of directors of the Corporation. During 2001, the board of directors of the
Corporation increased the number of directors by one so that the majority of the
directors are "outside" directors. See "Statement of Corporate Governance
Practices."
Unless otherwise specified therein, proxies received in favour of management
nominees will be voted for the following proposed nominees (or for substitute
nominees in the event of contingencies not known at present) whose term
of office will continue until the next annual meeting of shareholders or
until they are removed or their successors are elected or
appointed in accordance with the Canada Business Corporations Act and the
by-laws of the Corporation.
NUMBER OF NUMBER OF SHARES
COMMON SHARES OF SYMONS
OF THE INTERNATIONAL
YEAR FIRST CORPORATION GROUP, INC.
POSITION IN THE BECAME BENEFICIALLY BENEFICIALLY
NAME AND PRINCIPAL OCCUPATION CORPORATION DIRECTOR OWNED1 OWNED1
------------------ -------- ---------- ------------------
G. Gordon Symons2
Chairman of the Board,
Goran Capital Inc. and
Symons International . . . . . . . . . . Chairman of the
Group, Inc.. . . . . . . . . . . . . . . Board 1986 2,125,5245 10,000
------------------ -------- ---------- ------
Douglas H. Symons2,4
CEO and President, Goran Capital
Inc.;
CEO and President, Symons. . . . . . . . CEO, President and
International Group, Inc. . . . . . . . Secretary 1989 251,455 35,500
J. Ross Schofield3,4
Chairman, Hargraft Schofield Ltd., an
Insurance brokerage company. . . . . . . Director 1992 14,800 1,000
- ---------------------------------------- ------------------ -------- ---------- ------
David B. Shapira3
President, Medbers Limited, an
Investment holding company. . . . . . . Director 1989 100,000 1,000
- ---------------------------------------- ------------------ -------- ---------- ------
John K. McKeating3
Retired, Former President,
Vision 2120, Inc., an optometry
Company . . . . . . . . . . . . . . . . Director 1995 2,000 4,000
- ---------------------------------------- ------------------ -------- ---------- ------
Ron Foxcroft4
President, Fox 40 International, Inc., a
Manufacturing and distribution
Company . . . . . . . . . . . . . . . . Director 2001 16,0006 0
------------------ -------- ---------- --------
Robert C. Whiting
President, Prime Advisors Ltd., a
Reinsurance brokerage company . . . . . Director 2002 20,000 49,800
- ---------------------------------------- ------------------ -------- ---------- ---------------
<FN>
1 Information as to the shareholdings of each nominee has been provided by the nominee
and does not reflect shares under option.
2 Member of the Executive Committee.
3 Member of Audit Committee.
4 Member of the Compensation Committee.
5 Includes 1,646,413 shares owned by SIGL.
6 Includes 4,000 shares owned by Gage North Inc., over which Mr. Foxcroft exercises
voting control.
Douglas H. Symons became the President and Chief Executive Officer of the
Corporation on May 31, 2002. Mr. Schofield became Chairman of Hargraft
Schofield Ltd. in June 2000. Each of the other nominees has held the principal
occupation indicated above during the past five years.
DIRECTORS' AND OFFICERS' REMUNERATION
The aggregate remuneration paid by the Corporation and its subsidiaries to the
Executive Officers, as defined herein, during the year ended December 31, 2002
was (U.S.) $2,163,313 (in the form of salary and consulting fees).
In 2002, the Corporation's directors received (i) a flat annual fee of $10,000
for each director and (ii) a $1,000 fee for each committee meeting attended. In
addition, committee chairmen received
an additional $1,500 per quarter. During 2002, the Corporation also paid Robert
C. Whiting a $10,000 fee for services as an officer of Granite Re, a subsidiary
of the Corporation ("Granite Re").
The Corporation, Symons International Group, Inc., a subsidiary of the
Corporation ("SIG"), and Granite Re have entered into an employment agreement
with G. Gordon Symons, Chairman of the Board of the Corporation, pursuant to
which G. Gordon Symons is entitled to receive from Granite Re an annual sum of
$150,000. Upon a change of control of the Corporation or SIG, G. Gordon Symons
is entitled to a payment in the amount of $1,125,000. In the event Granite Re
shall fail to pay the amounts due under the agreement, the Corporation and SIG
become jointly and severally liable for such amounts.
The Corporation, SIG, Granite Re, Goran Management Bermuda Ltd. ("Goran
Bermuda") and G. Gordon Symons have entered into a consulting agreement,
pursuant to which Goran Bermuda is entitled to receive from Granite Re an annual
sum of $250,000. Upon a change of control of the Corporation or SIG, Goran
Bermuda is entitled to a payment in the amount of $1,875,000. In the event
Granite Re shall fail to pay the amounts due under the agreement, the
Corporation and SIG become jointly and severally liable for such amounts.
INTERESTS OF INSIDERS IN MATERIAL TRANSACTIONS
In 1997, SIG guaranteed a personal loan by an unrelated third party lender to
Douglas H. Symons in the amount of $250,000. During 2002, the loan was renewed
by the unrelated third party lender, and SIG did not renew its guarantee.
As of December 31, 2002, Symons International Group Ltd., a private company
("SIGL"), was indebted to the Corporation in the amount of approximately (U.S.)
$1,743,000. This indebtedness does not bear interest. During 2002, the
Corporation paid SIGL $400,000 for consulting services which include
reinsurance, investment banking and other miscellaneous matters. G. Gordon
Symons, a director of the Corporation, is the majority shareholder of SIGL
(which is an insider of the Corporation), and Alan G. Symons (who is an insider
of the Corporation) and Douglas H. Symons (who is a director and officer of the
Corporation) own a minority interest in SIGL.
As of December 31, 2002, Symons Underwriting Managers Ltd., a private company
("SUML"), was indebted to the Corporation in the amount of approximately (Cdn.)
$3,340,000. This indebtedness does not bear interest and is secured by the
pledge of 100,000 shares of the Corporation. SIGL is the sole shareholder of
SUML.
SIG paid $12,967 to Stargate Solutions Group, Inc. ("Stargate") in 2002 for
consulting and other services related to the Corporation's non-standard
automobile operating system. Stargate is owned by Kirk Symons, son of G. Gordon
Symons and brother of Alan G. Symons and Douglas H. Symons.
Superior Insurance Group, Inc., a wholly owned subsidiary of the Corporation,
owns a less than 1% limited partnership interest in Monument Capital Partners I.
The amount of the investment was $100,000. Larry S. Wechter, a director of SIG
until August 12, 2002, is Managing Director and Chief Executive Officer of
Monument Advisors, Inc. and Alan G. Symons is a director of Monument Advisors,
Inc. Monument Advisors, Inc. is the general partner of Monument Capital
Partners I.
The Corporation leases office space in Toronto, Canada from Tritech Financial
Systems Inc. ("Tritech"). Tritech is owned by Robert T. Symons, son of G.
Gordon Symons and brother of Alan G. Symons and Douglas H. Symons. The total
amount paid during 2002 was $34,000.
In 1999, Granite Re issued a performance bond in favor of Tritech in the amount
of $328,000. In August 2000 the creditor called the bond. The bond is secured
by a guarantee from Tritech, a personal guarantee from Robert T. Symons and a
pledge of 50,000 shares of the Corporation's common stock owned by Robert T.
Symons. Tritech is paying interest on the outstanding balance at an annual rate
of 7.5%. During 2002, Tritech paid interest to the Corporation on the bond of
$24,600.
During 2002, SIG paid David G. Symons approximately $7,076 for legal services.
David G. Symons is the son of Alan G. Symons.
INDEBTEDNESS OF OFFICERS AND DIRECTORS OF THE CORPORATION
The following directors and officers of the Corporation and their associates
were indebted to the Corporation, or its subsidiaries, in amounts exceeding
(Cdn.) $25,000 during 2002. All amounts listed in this section are denominated
in U.S. Dollars based upon the March 28, 2003 inter-bank market rate for
currency exchange. The approximate aggregate indebtedness of all officers,
directors, employees and former officers, directors and employees of the
Corporation or any of its subsidiaries entered into primarily in connection with
a purchase of securities of the Corporation or its subsidiary as of April 21,
2003 was $1,746,264. The aggregate indebtedness of all other indebtedness of
all officers, directors, employees and former officers and directors and
employees of the Corporation or any of its subsidiaries as of April 21, 2003 was
$1,680,887.
LARGEST
LOAN BALANCE BALANCE AS OF
NAME AND PRINCIPAL POSITION DATE OF LOAN DURING 2002 APRIL 21, 2003
- ---------------------------- --------------------- -------------- ---------------
G. Gordon Symons . . . . . . June 27, 1986 $ 115,8071 $ 0
Chairman of the Board. . . . June 30, 1986 $ 156,4951 $ 129,112
Prior to 1997. . . . . $ 30,0242 $ 30,752
July 12, 2001. . . . . $ 832,7513 $ 29,733
- ---------------------------- --------------------- -------------- ---------------
Alan G. Symons . . . . . . . June 30, 1986 $ 6,6174 $ 0
CEO and President (14) . . . February 25, 1988 $ 27,3094 $ 27,309
March 19, 1998 . . . $ 15,2935 $ 15,293
October 28, 1999 . .. $ 119,5006 $ 121,125
November 17, 2000. .. $ 1,145,8207 $ 1,149,398
July 26, 2002. . . .. $ 130,7947 $ 131,203
- ---------------------------- --------------------- -------------- ----------------
Douglas H. Symons (15) . . . Prior to 1997 $ 66,25613 $ 66,256
CEO, President and . . . . . June 30, 1986 $ 9,79813 $ 0
Secretary. . . . . . . . . . February 24, 1988 $ 2,2198 $ 2,219
September 29, 1999 . . $ 119,5009 $ 121,125
October 20, 1999 . . . $ 418,25010 $ 423,938
June 28, 2000. . . . . $ 80,00013 $ 80,000
November 17, 2000. . . $ 675,9347 $ 678,042
March 23, 2001 . . . . $ 103,37211 $ 103,630
June 4, 2001 . . . . . $ 50,00013 $ 50,000
October 15, 2001 . . . $ 202,72112 $ 180,317
July 26, 2002. . . . . $ 76,6547 $ 77,898
- ---------------------------- --------------------- -------------- ----------------
<FN>
1 The loans by the Corporation to G. Gordon Symons in 1986 were made to
facilitate the purchase of common shares of the Corporation. Such loans are
collateralized by pledges of the common shares of the Corporation acquired,
are payable on demand and are interest free.
2 The loan by the Corporation prior to 1997 was made to an entity controlled
by G. Gordon Symons, is unsecured and bears no interest.
3 The loan by Granite Reinsurance Company Ltd. to G. Gordon Symons in the
principal amount of $800,000 was made during 2001 at 6% interest. The
principal amount was repaid on April 1, 2002. The balance remaining
represents interest on the loan.
4 The loans by the Corporation to Alan G. Symons in 1986 and 1988 were made
to facilitate the purchase of common shares of the Corporation, are
collateralized by a pledge of the common shares of the Corporation
acquired, are payable on demand and are interest free.
5 The loan by SIG to Alan G. Symons on March 19, 1998 was made to satisfy
obligations to third parties. Such loan was inadvertently referred to in
the Corporation's 2002 Proxy Statement as a loan by the Corporation. Such
loan was secured by a pledge of his options to purchase shares in Superior
Insurance Group Management, Inc. (formerly, GGS Management Holdings, Inc.),
a subsidiary of the Corporation, and bore interest at the rate of 5.85% per
year. The principal of the loan was repaid during 1999. The balance
remaining represents interest on the loan.
6 The loan by SIG to Alan G. Symons on October 28, 1999 was made to pay third
party indebtedness secured by common shares of the Corporation and SIG.
Such loan was inadvertently referred to in the Corporation's 2002 Proxy
Statement as a loan by the Corporation. Such loan is unsecured and bears
interest at the rate of 6.5% per year and is payable on demand.
7 In April 1999, the Corporation guaranteed loans from an unrelated third
party to Alan G. Symons and Douglas H. Symons in the approximate amounts of
$1,552,000 and $945,000, respectively. Such guarantee was in place until
November 17, 2000 at which time the Corporation made loans to Alan G.
Symons and Douglas H. Symons in the amounts of $630,392 and $369,608
respectively. On April 19, 2001, the Corporation made additional loans to
Alan G. Symons and Douglas H. Symons in the amounts of $470,250 and
$279,750, respectively, and Alan G. Symons and Douglas H. Symons executed
amended promissory notes in the aggregate amount of $1,100,642 and
$649,358, respectively. These notes bear interest at variable rate based
upon the Royal Bank of Canada's rate paid on deposits. At December 31,
2002, the total accrued interest on the amended promissory notes of Alan G.
Symons and Douglas H. Symons was $45,178 and $26,576, respectively. The
proceeds of all of such loans were used to reduce the principal outstanding
on the third party loans. The Corporation's guarantee to the unrelated
third party is with regard to the remaining balance of the third party
loans ($358,189 and $212,748 to Alan G. Symons and Douglas H. Symons,
respectively) secured by a pledge of certain shares of SIG owned by the
Corporation. In turn, Alan G. Symons and Douglas H. Symons have executed
guarantees in favor of the Corporation which are triggered in the event
that the Corporation is required to perform its guarantee to such unrelated
third party. The guarantees by Alan G. Symons and Douglas H. Symons are
secured by all shares of SIG and the Corporation held respectively by Alan
G. Symons and Douglas H. Symons. On July 26, 2002 additional loans were
made to Alan G. Symons and Douglas H. Symons in the amounts of $125,480 and
$74,520, respectively. These notes bear interest at variable rate based
upon the Royal Bank of Canada's rate paid on deposits. At December 31,
2002, accrued interest on these loans was $5,314 and $3,134, respectively.
8 The loans by the Corporation to Douglas H. Symons in 1988 were made to
facilitate the purchase of common shares of the Corporation. Such loans are
collateralized by pledges of the common shares of the Corporation acquired,
are payable on demand and are interest free.
9 The loan by SIG to Douglas H. Symons on September 29, 1999 was made to
satisfy indebtedness to third parties. Such loan is unsecured, bears
interest at the rate of 6.5% per year and is payable on demand.
10 The loan by the Corporation to Douglas H. Symons on October 20, 1999 was
made to satisfy indebtedness to third parties. Such loan is unsecured,
bears interest at the rate of 6.5% per year and is payable on demand.
11 The loan by the Corporation was an advance and bears interest at the
Corporation's short term funds rate.
12 The loan by Symons International Group (Florida), Inc., a subsidiary of the
Corporation, on October 15, 2001, was an advance against bonus for 2002.
Such loan is unsecured, bears interest at the rate of 6% per year or the
applicable federal rate, whichever is higher and was due no later than
March 31, 2003. Douglas H. Symons was unable to repay the loan upon
maturity and has agreed to enter into a repayment plan with the
Corporation.
13 The loan by SIG represents an advance and does not bear interest.
14 Alan G. Symons retired on May 31, 2002.
15 Douglas H. Symons became CEO and President of the Corporation on May 31,
2002.
STATEMENT OF EXECUTIVE COMPENSATION
The aggregate cash compensation paid by the Corporation and its subsidiaries
during 2002 to the Corporation's five most highly paid executive officers (the
"Executive Officers"), (including officers of its subsidiaries) including
salaries, fees, commissions and bonuses was (U.S.) $2,163,313. The aggregate
value of compensation, other than that referred to above, paid to Executive
Officers during 2002 does not exceed (Cdn.) $10,000 times the number of
Executive Officers.
Table 1 sets forth compensation paid by the Corporation and its subsidiaries to
the Corporation's Chief Executive Officer and each of the Corporation's other
Executive Officers during the Corporation's three most recently completed fiscal
years.
TABLE 1: SUMMARY COMPENSATION TABLE
LONG-TERM
ANNUAL COMPENSATION AWARDS
------------------- -----------
NUMBER OF
SECURITIES
OTHER ANNUAL UNDER ALL OTHER
NAME AND PRINCIPAL SALARY BONUS COMPENSATION OPTIONS COMPENSATION US
POSITION YEAR US $A US $A US $B GRANTEDC $A
- --------------------------------------------------------------------------------------------
G. Gordon Symons, . . 2002 $ 0 $ 0 Nil 0 $ 400,613R
Chairman of the Board 2001 $ 0 $ 0 Nil 250,000 $ 448,672D
2000 $ 0 $ 0 Nil 0 $ 403,638O
- --------------------------------------------------------------------------------------------
Alan G. Symons,S. . . 2002 $ 0 $ 0 Nil 0 $ 464,119Q
CEO and President . . 2001 $ 0 $ 0 Nil 200,000 $ 400,000H
2000 $ 0 $ 0 Nil 0 $ 401,638G
- --------------------------------------------------------------------------------------------
Douglas H. Symons, 2002 $ 461,463 $ 250,368I Nil 0 $ 17,526E
CEO, President and 2001 $ 375,000 $ 0 Nil 60,000 $ 1,651N
Secretary 2000 $ 375,000 $ 0 Nil 0 $ 45,846F
- --------------------------------------------------------------------------------------------
John G. PendlJ. . . . 2002 $ 72,361 $ 0 Nil 1,000 $ 1,981N
Vice President, Chief 2001 $ 14,807 $ 0 Nil 0 $ 0
Financial Officer
- --------------------------------------------------------------------------------------------
Gene S. YerantK . . . 2002 $ 235,105 $ 0 Nil 0 $ 262,371P
President, Superior . 2001 $ 500,000 $ 912 Nil 0 $ 11,223M
Insurance Group, Inc. 2000 $ 500,000 $ 250,000 Nil 100,000 $ 21,635L
- --------------------------------------------------------------------------------------------
<FN>
Note A Salary, bonus and other compensation are stated in U.S. dollars as the
majority of payments are actually made in U.S. dollars.
Note B Aggregate amounts are not greater than the lesser of $50,000 and 10% of the
total of the annual salary and bonus.
Note C No stock appreciation rights, restricted shares, or restricted share
units were granted during any of the past three completed fiscal years.
Amounts reflect stock options
granted during 2000, 2001 and 2002.
Note D Includes $400,000 paid by a subsidiary of the Corporation, Granite Re to
companies owned by Mr. G. Gordon Symons and $48,672 of other compensation
paid by the Corporation and Granite Re.
Note E Includes $1,981 of health and life insurance premiums and $15,545 of
medical expense reimbursement paid by SIG.
Note F Includes $43,510 of accrued vacation and $2,336 of health and life
insurance premiums paid by SIG.
Note G Includes a consulting fee paid to SIG Capital Fund, Ltd. of $400,000 and
health insurance premiums of $1,638 paid by SIG.
Note H Consulting fee of $400,000 paid to SIG Capital Fund, Ltd.
Note I Includes $25,368 paid by SIG.
Note J Mr. Pendl joined the Corporation on October 8, 2001.
Note K Mr. Yerant joined the Corporation on January 10, 2000. Mr. Yerant's
employment terminated May 20, 2002.
Note L Includes $19,067 of relocation expenses and $2,568 of health and life insurance
premiums paid by SIG.
Note M Includes $1,990 of health and life insurance premiums paid by SIG.
Note N Health and life insurance premiums paid by SIG.
Note O Includes consulting fee of $400,000 paid by Granite Re and $1,638 of
health and life insurance premiums paid by SIG.
Note P Includes a severance payment of $250,000 and $12,371 of insurance
premiums.
Note Q Includes consulting fee of $182,051 paid to SIG Capital Fund, Ltd. and
$282,068 paid pursuant to a consulting agreement effective May 31, 2002
between the Corporation,
Granite Re and AGS Capital Ltd.
Note R Includes consulting fee of $400,000 paid by Granite Re and $613 of health
and life insurance premiums paid by SIG.
Note S Alan G. Symons retired on May 31, 2002.
EMPLOYEE SHARE OPTION PLAN
The Corporation has a Share Option Plan (the "Option Plan"). The terms,
conditions and limitations of options granted under the Option Plan are
determined by the board of directors of the Corporation with respect to each
option, within certain limitations. The exercise price per share is payable in
full on the date of exercise. Options granted under the Option Plan are not
assignable. During 2002 the Corporation granted 1,000 options to executive
officers, 15,000 options to directors and 10,000 options to employees of the
Corporation's subsidiaries.
The following table sets forth stock options granted to acquire common shares of
the Corporation during the fiscal year ended December 31, 2002 to each of the
Executive Officers:
TABLE 2: OPTION GRANTS IN LAST FISCAL YEAR
NUMBER OF MARKET VALUE OF
COMMON % OF TOTAL COMMON SHARES
SHARES UNDER OPTIONS EXERCISE PRICE(2) UNDERLYING OPTIONS
OPTIONS GRANTED IN ($/COMMON ON DATE OF GRANT
NAME GRANTED (1) (#) FISCAL YEAR SHARE) ($/COMMON SHARES) EXPIRATION DATE
- -------------------------------------------------------------------------------------------------------
G. Gordon Symons. -- -- -- -- --
-----------------------------------------------------------------------------------
Alan G. Symons. . -- -- -- -- --
------------------------------------------------------------------------------------
Douglas H. Symons -- -- -- -- --
------------------------------------------------------------------------------------
John G. Pendl . . 1,000 3.8% $ .23 $ .23 October 11, 2012
------------------------------------------------------------------------------------
Gene S. Yerant. . -- -- -- -- --
- -------------------------------------------------------------------------------------------------------
<FN>
(1) Options are for a term of 10 years. One-third of the total options granted
vest each year.
(2) The exercise price of the option is determined by the board of directors
and is not less than the closing price of the common shares on the Toronto
Stock Exchange on the date prior to the date of grant.
The following table sets forth details of all exercises of stock options during
the fiscal year ended December 31, 2002 by each of the Executive Officers and
the fiscal year-end value of unexercised options on an aggregated basis.
TABLE 3: AGGREGATED OPTION EXERCISES
DURING 2002 AND YEAR-END OPTION VALUES
VALUE OF UNEXERCISED
COMMON SHARES NUMBER OF UNEXERCISED IN THE MONEY OPTIONS
ACQUIRED ON AGGREGATE VALUE OPTIONS AT FY END ($) EXERCISABLE/
NAME EXERCISE REALIZED EXERCISABLE/UNEXERCISABLE UNEXERCISABLE1
- ----------------------------------------------------------------------------------------------
G. Gordon Symons. 0 0 250,000/0 0/0
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Alan G. Symons. . 0 0 0/0 2 0/0
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Douglas H. Symons 0 0 60,000/0 0/0
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John G. Pendl . . 0 0 0/1,000 0/0
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Gene S. Yerant. . 0 0 0/0 3 0/0
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<FN>
1 Based on the TSX closing price as of December 31, 2002 of $.60 (Cdn.).
2 Alan G. Symons forfeited his options upon retirement.
3 Mr. Yerant forfeited his options upon termination of employment.
COMPOSITION OF THE COMPENSATION COMMITTEE
During 2002, Ron Foxcroft was the Chairman of the Compensation Committee. Other
members of the Compensation Committee during 2002 were J. Ross Schofield and
Douglas H. Symons. Douglas H. Symons is the Corporation's Chief Executive
Officer, President and Secretary. Prior to May 31, 2002, Douglas H. Symons was
the Corporation's Senior Executive Vice President, Chief Operating Officer and
Secretary.
REPORT ON EXECUTIVE COMPENSATION
The Corporation's Executive Compensation Policy (the "Policy") considers an
individual's experience, market conditions (including industry surveys),
individual performance and the overall financial performance of the Corporation.
The Corporation's total compensation program for officers includes base
salaries, bonuses and the grant of stock options pursuant to the Option Plan.
The Corporation's primary objective is to achieve above-average performance by
providing the opportunity to earn above-average total compensation (base salary,
bonus, and value derived from stock options) for above-average performance.
Each element of total compensation is designed to work in concert. The total
program is designed to attract, motivate, reward and retain the management
talent required to serve shareholder, customer and employee interests. The
Corporation believes that this program also motivates the Corporation's officers
to acquire and retain appropriate levels of share ownership. It is the opinion
of the Compensation Committee that the total compensation earned by the
Corporation's officers during 2002 achieves these objectives and is fair and
reasonable.
Compensation comprises base salary, annual cash incentive (bonus) opportunities,
and long-term incentive opportunities in the form of stock options. Individual
performance is determined in relation to short and long-term objectives that are
established and maintained on an on-going basis. Performance of these
objectives is formally reviewed annually and base salary adjusted as a result.
Bonus rewards are provided upon the attainment of corporate financial
performance objectives as well as the individual's direct responsibilities and
their attainment of budget and other objectives.
The Policy also strives to establish long-term incentives to executive officers
by aligning their interests with those of the Corporation's shareholders through
award opportunities that can result in the ownership of the Corporation's common
shares.
The compensation of Alan G. Symons, Chief Executive Officer of the Corporation
until May 31, 2002, was determined pursuant to an arrangement between the
Corporation and SIG Capital Fund, Ltd. Under the arrangement, a consulting fee
was paid to SIG Capital Fund, Ltd. with respect to the provision of services by
Alan G. Symons. Alan G. Symons was not paid a salary by the Corporation. Upon
the resignation of Alan G. Symons, Douglas H. Symons was appointed Chief
Executive Officer, President and Secretary of the Corporation. The Compensation
Committee reviewed and increased the salary of Douglas H. Symons upon his
appointment as Chief Executive Officer and President of the Corporation and
approved the payment by the Corporation of the annual salary obligations of SIG
and the Corporation under an employment agreement which provides for a base
salary of not less than $500,000 per year. This agreement became effective on
May 31, 2002 and continues in effect for an initial period of two years. Upon
the expiration of the initial two-year period, the term of the agreement is
automatically extended from year to year thereafter and is cancelable upon six
months' notice. This agreement contains restrictive covenants regarding
confidentiality and non-competition during the term of employment and for a
period of two years after the termination of the agreement. In addition to
annual salary, Douglas H. Symons may earn a bonus in an amount ranging from 0 to
100% of base salary. At the discretion of the board, bonus awards may be
greater than the amounts indicated if agreed upon financial targets are
exceeded. Upon a change of control of the Corporation or SIG and in the
event of a non-renewal of Douglas H. Symons' employment
agreement, Douglas H. Symons is entitled to a severance amount equal to two
years salary. The Compensation Committee also approved a retention bonus in
2002 for Douglas H. Symons. During 2002, the board of directors did not grant
any additional stock options to the Chief Executive Officer.
The board of directors also approved the grant of 26,000 additional stock
options to certain officers, directors and employees of the Corporation during
2002.
COMPENSATION COMMITTEE
Ron Foxcroft, Chairman
J. Ross Schofield
Douglas H. Symons
APPOINTMENT OF AUDITORS
Unless otherwise instructed, the persons named in the enclosed form of proxy
intend to vote for the appointment of BDO Seidman, LLP as auditor of the
Corporation to hold office until the next annual meeting of shareholders and to
authorize the directors to fix the remuneration of the auditor. BDO Seidman,
LLP was first appointed during 2000. Prior to that, Schwartz Levitsky Feldman
LLP was the auditor of the Corporation. Schwartz Levitsky Feldman LLP was first
appointed in 1990.
STATEMENT OF CORPORATE GOVERNANCE PRACTICES
The board of directors and management of the Corporation believe that sound
corporate governance practices are essential to the performance of the
Corporation. The Corporation's practices and policies have been developed over
many years. They are addressed here generally and within the framework of the
guidelines for effective corporate governance adopted by the Toronto Stock
Exchange (the "Guidelines").
BOARD OF DIRECTORS
The board of directors is elected by the shareholders and oversees the conduct
of the business and affairs of the Corporation, supervises its management and
ensures that all major issues affecting the Corporation are given appropriate
consideration. In fulfilling its responsibilities the board delegates
day-to-day authorities to management, while reserving the ability to review
management decisions and to exercise final judgment on any matter. The board
discharges its responsibilities directly and through its committees.
The directors are kept informed of the Corporation's operations at meetings of
the board and its committees and through discussions with management. In
addition to its primary roles of oversight of the Corporation's performance and
the provision of quality, depth and continuity for management to meet the
Corporation's objectives, the board of directors, among other things:
- - reviews the development and implementation of business and strategic plans
and approves business, strategic, financial and succession plans;
- - approves communications to shareholders;
- - oversees financial programs and policies;
- - appoints officers and reviews their performance at least annually;
- - approves items such as the issue, purchase and redemption of securities,
acquisition and disposition of significant capital assets, executive
officer compensation, employee benefits, including profit sharing and
incentive award plans and dividends, if any; and
- - approves changes in the by-laws of the Corporation and submits them to
shareholders for approval.
In order to carry out its responsibilities the board of directors meets on a
regularly scheduled basis and otherwise as required by circumstances. The board
met five times during 2002 and took a number of actions by unanimous written
consent.
The Chairman of the Board is responsible for the functioning of the board
including, among other things, setting the agenda for each board meeting,
ensuring that directors are kept informed of appropriate corporate matters,
chairing the meetings and acting as a key liaison between the board and
executive management.
COMMITTEES OF THE BOARD OF DIRECTORS
The board of directors has established three standing committees and has
delegated certain functions to each of the committees.
EXECUTIVE COMMITTEE
The Executive Committee communicates regularly with executive management of the
Corporation. The Executive Committee reviews and approves communications with
shareholders and adds significant direction to the function of executive
management on significant issues affecting the Corporation. This committee is
composed of G. Gordon Symons and Douglas H. Symons.
AUDIT COMMITTEE
The Audit Committee serves as an independent and objective party to monitor the
Corporation's financial reporting process and system of internal controls. The
Audit Committee communicates directly with the Corporation's independent
auditors, senior financial management of the Corporation, internal auditors and
the board of directors. The Audit Committee is composed of unrelated directors,
David B. Shapira, J. Ross Schofield and John K. McKeating. The Audit Committee
met four times during 2002.
COMPENSATION COMMITTEE
The role of the Compensation Committee is to review the total compensation of
the Corporation's executive officers in an effort to ensure that the Corporation
attracts and retains the talent commensurate with its business objectives. In
2002, this committee met once and took a number of actions by written consent.
See "Composition of Compensation Committee."
SHAREHOLDER PROPOSALS FOR NEXT MEETING
The Canada Business Corporations Act, which governs the Corporation, provides
that shareholder proposals must be received by January 21, 2004 to be considered
for inclusion in the management information circular and the form of proxy for
the 2004 annual meeting of shareholders, which is expected to be held on or
about May 30, 2004.
TSX GUIDELINES
The Guidelines require each listed company to disclose its approach to corporate
governance and, where the Corporation's system is different from the Guidelines,
to explain the differences. The Corporation's corporate governance is
substantially consistent with the objectives set out in the
Guidelines. The approach of the Corporation to matters of corporate governance
referred to in each of the fourteen Guidelines follows.
1. The Board should explicitly assume responsibility for stewardship of the
Corporation, and specifically for:
(i) Adoption of Strategic Planning Process.
The objectives of the Chief Executive Officer of the Corporation include
responsibility for the development of strategic plans. The board reviews
strategic planning matters on a regular basis which includes the approval of
long term strategic plans and annual business plans and the monitoring of
performance against, and continuing stability of, such plans.
(ii) Identification of Principal Risks and Ensuring Implementation of Risk
Management Systems.
Identification of the Corporation's principal business risks is the
responsibility of the Corporation's management. Management's plans for risk
management are subject to review by the board.
(iii) Succession Planning and Monitoring Senior Management.
The Executive Committee reviews and reports at least annually to the board on
organizational and succession planning matters. The Chief Executive Officer has
responsibility for succession planning for senior management and monitoring the
performance of executive management.
(iv) Communications Policy.
To ensure that the rules of timely disclosure are observed, management has put
in place structures for effective communication between the Corporation, its
shareholders and the public, including having the CEO responsible for advising
on and reviewing disclosure documents and recommending timely disclosure of
material transactions and changes.
(v) Integrity of Internal Control and Management Information Systems.
Systems and Controls. The Audit Committee reviews the Corporation's systems and
controls principally by monitoring planning and staffing of the internal audit
function and reporting and by reviewing the external auditors' annual letter of
comments on these items and management's responses thereto.
Occupational Health and Safety and Environmental. The Corporation's business
activities do not typically involve occupational health and safety matters or
environmental issues. Should a health and safety or environmental issue arise,
executive management implements corrective and preventative measures and reports
its activities in that regard to the board.
Human Resources Matters. In addition to the role of the Compensation Committee,
the Executive Committee reviews and monitors the Corporation's policies and
activities in human resources and related employment matters to ensure excellent
relations with employees of the Corporation and compliance with applicable laws.
Information Systems. As part of the ongoing planning processes of the
Corporation, executive management regularly informs the board of the development
and status of the Corporation's management information systems.
2. Majority of directors should be "unrelated" (independent of management and
free from conflicting interests).
The board of directors is composed of seven members. The composition of the
board includes a majority of directors who are unrelated to the Corporation.
3. Disclosure for each director whether he or she is related, and how that
conclusion is reached.
Mr. Gordon Symons is the Chairman of the Board and a controlling shareholder;
therefore, he is related to the Corporation. Mr. Douglas H. Symons is the Chief
Executive Officer, President and Secretary and is therefore related to the
Corporation. Robert C. Whiting became a director of the Corporation during
2002. Mr. Whiting received a fee for his services as an officer of Granite Re;
therefore, Mr. Whiting is related to the Corporation.
None of the remaining directors, being a majority of the board members, is
related by reason of having worked for the Corporation, having material
contracts with the Corporation or having received remuneration from the
Corporation other than directors' fees. None of the directors has any interest
or any business or other relationship with G. Gordon Symons or Douglas H. Symons
which could, or could reasonably be perceived to, materially interfere with his
ability to act with a view to the best interests of the Corporation, and as
such, none of the directors is related to G. Gordon Symons or Douglas H. Symons.
4. Appoint a committee responsible for the appointment/assessment of directors
composed exclusively of outside directors, a majority of whom are
unrelated.
The board of directors recommends candidates for the board. The board reviews
the qualifications of prospective members in consideration of current board
compositions and the Corporation's needs. The board does not have in place
assessment procedures for board and director performance.
5. Implement a process for assessing the effectiveness of the Board, its
committees and individual directors.
Although the board does not have a formal process to address the effectiveness
of the board, its committees and individual directors as recommended by the
Guidelines, the board believes it carries on its duties and responsibilities
effectively and in the best interests of the shareholders.
6. Provide orientation and educational programs for new directors.
Upon the election of a new member to the board of directors, the board
summarizes and documents the Corporation's business, affairs and governance and
provides orientation to the new director through meetings with officers and
other board members on an informal basis.
7. Consider reducing the size of the Board, with a view to improving
effectiveness.
The board increased the number of members during 2001 so that the board became
composed of a majority of members who are outside directors. The board believes
that the current number of directors promotes effectiveness and efficiency and
is appropriate in the circumstances. The board does not believe it should have
less than six directors.
8. Review compensation of directors in light of risks and responsibilities.
The Compensation Committee reviews and recommends to the board of directors for
approval the remuneration of directors. The board considers the time
commitment, comparative remuneration, responsibilities and other factors in
determining remuneration.
9. Committees should generally be composed of outside directors and a majority
of Committee members should be unrelated.
The Audit Committee is composed entirely of outside directors. A majority of
the members of the Compensation Committee are outside directors. The Executive
Committee is composed of non-outside, related directors.
10. Appoint a committee responsible for approach to corporate governance
issues.
Although the board of directors has not established a separate corporate
governance committee, the Executive Committee, is, among other things,
responsible for making recommendations to the board of directors regarding the
Corporation's approach to corporate governance and for the Corporation's
disclosure of such approach.
11. Define limits to management's responsibilities by developing mandates for
the Board and the Chief Executive Officer; the Board should approve the
Chief Executive Officer's corporate objectives.
The board of directors has the authority to manage or supervise the management
of the Corporation's business as more fully described under the heading "Board
of Directors" above. Certain roles are delegated to management or a board
committee subject to review by the full board. Although the Chief Executive
Officer's corporate objectives are not formally set out, the board of directors
oversees the performance of the Chief Executive Officer with a view toward
compliance with the overall objectives of the Corporation.
12. Establish structures and procedures to enable the Board to function
independently of management.
The board of directors has the prerogative of meeting independently of
management. The committees of the board function independently of management
when appropriate. The Chairman of the Board, who is not a member of management,
has responsibility to ensure that the board of directors discharges its
responsibilities.
13. Establish an audit committee with a specifically defined mandate, all
members of which should be outside directors.
The Audit Committee is composed of unrelated directors. The Audit Committee's
primary responsibilities are to serve as an independent and objective party to
monitor the Corporation's financial reporting processes and internal control
system, consider the independence of the Corporation's independent accountants,
review and appraise the efforts of the Corporation's independent accountants and
internal auditors, and provide an open avenue of communication among the
independent accountants, senior management, internal auditors, and the board of
directors. The Audit Committee reviews the process for the preparation of the
Corporation's financial statements and makes recommendations regarding
presentation of the annual financial statements.
14. Implement a system to enable individual directors to engage outside
advisors at the Corporation's expense.
Consistent with past practice individual directors may engage outside advisors
at the Corporation's expense with the authorization of the board.
DIRECTORS' AND OFFICERS' LIABILITY INSURANCE
The Corporation purchased directors and officers liability insurance from
Greenwich Insurance Company. This coverage expires on November 10, 2003 and
contains a limit of liability of (U.S.) $5 million. A premium of (U.S.)
$420,000 was paid in 2002 to Greenwich Insurance Company for one year of
coverage. There is no deductible for coverage other than executive
indemnification and securities claims for which the deductible is (U.S.)
$500,000.
REPORT OF THE AUDIT COMMITTEE
The Corporation's Audit Committee is responsible for, among other things,
reviewing with BDO Seidman, LLP its independent auditors, the scope and results
of their audit engagement. In connection with the fiscal 2002 audit, the Audit
Committee has:
1. Reviewed and discussed with management the audited financial statements to
be included in the Corporation's Annual Report on Form 10-K for the year
ended December 31, 2002;
2. Discussed with BDO Seidman, LLP the matters required by Statement of
Accounting Standards No. 61, as amended, in accordance with rules of the
Securities and Exchange Commission; and
3. Received from and discussed with BDO Seidman, LLP the communication from
BDO Seidman, LLP required by Independence Standards Board Standard No. 1
regarding their independence, in accordance with rules of the Securities
and Exchange Commission.
Based on the review and discussions described in the preceding items, the Audit
Committee has recommended to the board of directors that the audited financial
statements be included in its Annual Report on Form 10-K for the year ended
December 31, 2002 for filing with the Securities and Exchange Commission and all
other applicable securities commissions in Canada.
The Audit Committee:
David B. Shapira, Chairman
J. Ross Schofield
John K. McKeating
PERFORMANCE GRAPH
The following performance graph compares the cumulative total shareholder return
on the Corporation's common stock with the TSX/S&P Composite Index for the years
1998 through 2002.
[GRAPHIC OMITED]
Notwithstanding anything to the contrary set forth in any of the Corporation's
previous filings under the Securities Act of 1933, as amended or the Securities
Exchange Act of 1934, as amended, that may incorporate future filings (including
this Management Proxy Circular, in whole or in part), the preceding Report on
Executive Compensation and the historical Performance Graph shall not be
incorporated by reference in any such filings.
NORMAL COURSE ISSUER BID
On October 3, 2001, the Corporation filed, and the Toronto Stock Exchange
accepted, a notice of intention to make a normal course issuer bid to purchase
up to an aggregate of 272,555 common shares (representing approximately 10% of
the public float at such time) during the one-year period commencing on October
4, 2001 and terminating on the earlier of the date on which the maximum number
of common shares is purchased and October 3, 2002. All shares purchased
pursuant to the normal course issuer bid were canceled.
DIRECTORS' APPROVAL
The contents of this Management Proxy Circular and the sending thereof have been
approved by the board of directors of the Corporation.
April 21, 2003
[GRAPHIC OMITED]
[GRAPHIC OMITED]
Douglas H. Symons
Chief Executive Officer and President
Douglas H. Symons,
CEO, President and
Secretary