SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
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 [ ] Confidential, for Use of the
[X] Definitive Proxy Statement Commission Only (as permitted
[ ] Definitive Additional Materials by Rule 14a-6(e)(2))
[ ] Soliciting Material Pursuant to
Rule 14a-11(c) or Rule 14a-12
REGAN HOLDING CORP.
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(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 transactions applies:
(2) Aggregate number of securities to which transactions 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:
REGAN HOLDING CORP.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To be Held May 24, 2002
NOTICE IS HEREBY GIVEN THAT the Annual Meeting of Shareholders of Regan
Holding Corp., a California corporation (the "Company"), will be held at the
Petaluma Lodge, B.P.O. Elks, 2105 S. McDowell Blvd., Petaluma, California on
Friday, May 24, 2002 at 8:30 a.m., or at any adjournment thereof (the "Annual
Meeting"). At the Annual Meeting, the shareholders will be asked to consider
and act upon following matters:
1. To elect five (5) Directors to hold office until the Annual Meeting
of Shareholders in 2003 and until their successors shall be elected and
shall qualify.
2. To consider and act upon a proposal to ratify the appointment of
PricewaterhouseCoopers LLP as independent auditors to examine the
financial statements and books and records of Regan Holding Corp. for the
year 2002.
3. To consider and act upon such other business that properly comes
before the meeting or any adjournment or adjournments of the meeting.
Only shareholders of record at the close of business on April 1, 2002 are
entitled to notice of and to vote at the Annual Meeting.
It is very important that your shares are represented and voted at the
meeting. Your shares may be voted by returning the enclosed proxy card. If you
attend the meeting, you may vote in person even if you have previously mailed a
proxy card. We would appreciate your informing us on the proxy card if you
expect to attend the meeting so that we can provide adequate seating for
attendees.
The continuing interest of our shareholders in the business of Regan
Holding Corp. is appreciated and we hope many of you will be able to attend the
Annual Meeting.
By Order of the Board of Directors
R. Preston Pitts
Secretary
Dated: April 2, 2002
Petaluma, California
- --------------------------------------------------------------------------------
It is important that your shares be represented at the Annual Meeting regardless
of the number of shares you hold. Whether or not you plan to attend the Annual
Meeting, please complete and return your proxy in the enclosed envelope as soon
as possible.
- --------------------------------------------------------------------------------
REGAN HOLDING CORP.
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
To be held May 24, 2002
The Annual Meeting of Shareholders of Regan Holding Corp., a California
corporation (the "Company") will be held at the Petaluma Lodge, B.P.O. Elks,
2105 S. McDowell Blvd., Petaluma, California on Friday, May 24, 2002 at 8:30
a.m., or at any adjournment thereof (the "Annual Meeting") for the purposes set
forth in the accompanying Notice of Annual Meeting of Shareholders. This Proxy
Statement is furnished in connection with the solicitation by the Company of
proxies to be used at the Annual Meeting or at any and all adjournments of such
meeting. The enclosed Proxy is solicited by the Board of Directors of the
Company. By executing and returning the enclosed Proxy or by following the
enclosed voting instructions, you authorize the persons named in the Proxy to
represent you and vote your shares on the matters described in the Notice of
Annual Meeting of Shareholders. The mailing address of the Company's principal
executive offices is 2090 Marina Avenue, Petaluma, California 94954.
Commencing approximately April 19, 2002, the Company is mailing its Annual
Report on Form 10-K for the year ended December 31, 2001 together with this
Proxy Statement and the enclosed Proxy to Shareholders. If you attend the
meeting, you may vote in person. If you are not present, your shares can be
voted only if you have completed a properly executed proxy. If you have
completed a properly executed proxy, your shares will be voted as you specify.
If no specification is made, the shares will be voted in accordance with the
recommendations of the Board of Directors. You may revoke the authorization
given in your proxy at any time before the shares are voted at the Annual
Meeting.
Voting Rights
The record date for determination of the shareholders entitled to vote at
the Annual Meeting is the close of business on April 1, 2002. As of the record
date, the Company had outstanding 24,706,030 shares of Common Stock-Series A,
no par value (the "Series A Stock"), and 568,816 shares of Common Stock-Series
B, no par value (the "Series B Stock"). As of the date of this Proxy Statement,
the Company is not in arrears in dividends. The shares of Series A Stock and
Series B Stock are collectively referred to herein as "Common Stock" and the
holders of shares of Common Stock vote together as a single class.
The shares of Common Stock are the only outstanding voting securities of
the Company. A holder of Common Stock is entitled to cast one vote for each
share held of record by such holder on the record date on all matters to be
considered at the Annual Meeting. As explained under Item 1 of this Proxy
Statement, cumulative voting will be permitted with respect to the election of
Directors.
The person appointed by us to act as election inspector for the meeting
will count votes cast by proxy or in person at the Annual Meeting. The holders
of a majority of the votes entitled to be cast, present either in person or by
proxy, shall constitute a quorum for purposes of the Annual Meeting. Shares for
which a holder has elected to abstain on a matter and broker non-vote shares
will count for purposes of determining the presence of a quorum. For actions
requiring approval based on a percentage of votes cast, abstentions and broker
non-votes will not affect the outcome of the vote. For actions requiring
approval based on the number of shares outstanding, abstentious and broker
non-votes will have the same effect as a negative vote.
The proxy solicitor, the election inspector and the tabulators of all
proxies, ballots and voting tabulations that identify shareholders are
independent and are not employees of the Company.
1
ITEM 1
ELECTION OF DIRECTORS
The Board of Directors has fixed the number of Directors to be elected at
five (5) and has nominated the persons identified below to serve as Directors
until the next Annual Meeting of Shareholders and their respective successors
shall be elected and shall qualify. Each of the nominees listed below is
currently a Director of the Company.
Name Principal Occupation Director Since
- ------------------------ ------------------------------------------------------------------- ---------------
Lynda L. Regan Ms. Regan, 53 years old, has served as Chairman and Chief Ex- 1990
ecutive Officer of the Company since 1992. She was Senior Vice
President and Treasurer from 1990 to 1992.
R. Preston Pitts Mr. Pitts, 50 years old, served as Chief Financial Officer of the 1995
Company from 1994 to 1997, as President and Secretary of the
Company since 1997, and as President, Secretary and Chief Op-
erating Officer of the Company since 1998. Prior to joining the
Company, he owned Pitts Company, a CPA firm specializing in
services for insurance companies, served as financial officer for
United Family Life Insurance Company and American Security
Insurance Group, both Fortis-owned companies, and was Audit
Manager for Ernst & Young.
Ute Scott-Smith Ms. Scott-Smith, 42 years old, served as Senior Vice-President of 1997
the Company from 1990 to April of 1997.
Dr. Donald Ratajczak Dr. Ratajczak, 59 years old, is the Chief Executive Officer and 2000
Chairman of the Board of Brainworks Ventures, Inc. He is also
a board member of Crown Craft since July 2001. For twenty-
seven years, Dr. Ratajczak has been Director of the Economic
Forecasting Center in the J. Mack Robinson College of Busi-
ness, having retired from Georgia State University at the end of
June 2000. Prior to founding the Center in 1973, Dr. Ratajczak
was Director of Research for the UCLA Business Forecasting
Project. Dr. Ratajczak also serves as a Director of Ruby Tues-
day, Inc. and TBC Corporation and as a Trustee of CIM High
Yield Fund. He is a member of the American Economic Asso-
ciation and the Economic History Association.
J. Daniel Speight, Jr. Mr. Speight, 45 years old, is the President and Director of Flag 2000
Financial Corporation, a bank holding company and Chairman
of FLAG Bank, a wholly owned subsidiary of FLAG Financial.
Mr. Speight served as Chief Executive Officer and a Director of
Middle Georgia Bankshares, Inc. from 1989 until its merger with
Flag Financial in March 1998 and has served in various positions
as President, Chief Executive Officer and a Director of Citizens
Bank and the resultant FLAG organization since 1984. Mr.
Speight previously served as Chairman of The Bankers Bank
and is currently a member of the State Bar of Georgia. He is
past Chairman of the Georgia Bankers Association Community
Banking Committee, past President of the Community Bankers
Association of Georgia, and past Director of the Independent
Bankers Association of America.
The Board of Directors recommends that shareholders vote "FOR" all the nominees.
2
Although it is not contemplated that any of the nominees will decline or
be unable to serve, the Proxies will be voted by the Proxy holders at their
discretion for another person if such a contingency should arise. Unless
otherwise directed in the accompanying Proxy, or as specified above, the
Proxies will be voted "FOR" the election of the nominees named above. Each
nominee has indicated approval of his or her nomination and his or her
willingness to serve if elected.
The Company's Bylaws provide that each shareholder is entitled to cumulate
such shareholder's votes and give one nominee a number of votes equal to the
number of directors to be elected multiplied by the number of votes to which
such shareholder's shares are normally entitled, or distribute the
shareholder's votes on the same principle among as many nominees as the
shareholder considers appropriate. This cumulative voting right may not be
exercised unless the nominee's name has been placed in nomination prior to the
voting and one or more shareholders has given notice at the meeting prior to
the voting of the shareholder's intent to cumulate such shareholder's vote. The
Proxy holders may exercise this cumulative voting right at their discretion.
The candidates receiving the highest number of votes of the shares entitled to
be voted for them up to the number of directors to be elected by such shares
are elected.
Under an insurance brokerage agreement among the Company, Lynda L. Regan
and Moody Insurance Group ("MIG"), Ms. Regan has agreed that, so long as the
brokerage agreement remains in effect, she will vote her shares in favor of the
election of Robert Moody, Jr., MIG's president and sole shareholder, as a
Director of the Company should he wish to be elected. However, at the present
time, MIG engages in business activities that compete with the Company.
Therefore, in order to avoid any issue as to the propriety of Mr. Moody's
serving on the Company's Board, Mr. Moody has agreed to relinquish his right to
serve on the Board for a period of one year in return for nominal consideration
from the Company. The termination of the brokerage agreement with MIG would not
have a material effect on the financial condition of the Company.
Executive Officers
In addition to the Directors who serve as executive officers of the Company
and who are identified above, the following individuals also serve as executive
officers of the Company:
H. Lynn Stafford, 45 years old, served as Vice President of Operations of
Legacy Marketing Group, a subsidiary of the Company, from July 1995 to June 1997
and served as Chief Information Officer of the Company since March 1999. Prior
to July 1995, he served as Chief Operations Officer for Lincoln Liberty Life
Insurance Company and First Delaware Life Insurance Company.
G. Steven Taylor, 43 years old, has served as Chief Financial Officer of
the Company since July 2000. From 1998 to 2000, Mr. Taylor was Vice President of
Finance for First Colony Life, a division of GE Financial Assurance. Also he
served as Chief Financial Officer of Professional Benefits Insurance Company
from 1995 to 1997.
William J. Hrabik, 46 years old, served as Chief Information Officer of the
Company since June 2000. From 1996 to 2000, Mr. Hrabik was Vice President of
Operations of ARM Financial Group. ARM Financial Group filed for bankruptcy in
June 2000. From 1988 to 1995, Mr. Hrabik served as Vice President at Fortis.
Family Relationships
Lynda L. Regan, Chairman and Chief Executive Officer of the Company, is
married to R. Preston Pitts, President, Chief Operating Officer and Director of
the Company.
3
Security Ownership of Certain Beneficial Owners and Management
The following table shows the amount of the Company's Series A Common
Stock beneficially owned by the Company's directors and executive officers as
of March 18, 2002. No Director or executive officer owns any Series B Common
Stock.
Name Position Total Percent
- --------------------------------- ---------------------------- --------------------- ----------
Lynda L. Regan .................. Director, Chairman & Chief
Executive Officer 11,711,754(1) 47.4%
R. Preston Pitts ................ Director, President & Chief
Operating Officer 1,211,475(2) 4.9%
Ute Scott-Smith ................. Director 425,072(3) 1.7%
J. Daniel Speight, Jr. .......... Director 5,000(4) *
Donald Ratajczak ................ Director 5,000(4) *
H. Lynn Stafford ................ Chief Information Officer 285,000(5) 1.2%
William J. Hrabik ............... Chief Operations Officer 30,000(6) *
G. Steven Taylor ................ Chief Financial Officer 30,000(6) *
All executive officers and
directors as a group 13,703,301 55.4%
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(1) Includes 402,380 shares issuable pursuant to stock options that are
exercisable within 60 days.
(2) Includes 455,000 shares issuable pursuant to stock options that are
exercisable within 60 days.
(3) Includes 23,333 shares issuable pursuant to stock options that are
exercisable within 60 days.
(4) Includes 5,000 shares issuable pursuant to stock options that are
exercisable within 60 days.
(5) Includes 285,000 shares issuable pursuant to stock options that are
exercisable within 60 days.
(6) Includes 30,000 shares issuable pursuant to stock options that are
exercisable within 60 days.
* Indicates that the percentage of the outstanding shares beneficially owned
is less than one percent (1%).
Section 16(a) Beneficial Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's Officers and Directors and persons who own more than 10% of the
Company's common stock to file reports of ownership and changes in ownership
with the Securities and Exchange Commission. The rules of the Securities
Exchange Commission require reporting persons to supply the Company with copies
of these reports.
Based solely on its review of the copies of such reports received from
reporting persons, the Company believes that with respect to the fiscal year
ended December 31, 2001, all reporting persons timely filed the required
reports.
Certain Shareholders
The Company knows of no person who is the beneficial owner of more than
five percent of any class of the Company's outstanding Common Stock other than
Lynda L. Regan, Chairman and Chief Executive Officer of the Company, whose
ownership is listed above.
Audit Committee
The Company has a standing Audit Committee and has adopted a written
charter for the Audit Committee. The Audit Committee oversees the financial
reporting process, the system of internal controls, the audit processor and the
process for monitoring compliance with laws and regulations. The
4
company's independent auditors are responsible for performing an audit of the
Company's consolidated financial statements in accordance with auditing
standards generally accepted in the United States. The following functions are
the key responsibilities of the Audit Committee:
o Selecting, evaluating and, where appropriate, replacing the
independent auditors;
o Reviewing the terms of engagement of the independent auditors;
o Reviewing the Company's procedures with respect to appropriateness of
significant financial policies and accounting systems and
effectiveness of the Company's internal controls;
o Reviewing information from the independent auditors pertaining to the
independent auditors' independence;
o Reviewing the audited financial statements in the Annual Report filed
on Form 10-K with management, including a discussion of the quality,
not just the acceptability, of the accounting principles, the
reasonableness of significant adjustments, if any, and the clarity of
disclosures in the financial statements;
o Reviewing with the Company's independent auditors who are responsible
for expressing an opinion on the conformity of those audited financial
statements with generally accepted accounting principles, their
judgment as to the quality, not just the acceptability, of the
Company's accounting principles; and
o Reviewing and assessing the adequacy of the Audit Committee's Charter
annually and recommending revisions to the Board.
Directors' Compensation
The compensation for Directors of the Company who are not officers or
employees of the Company currently consists of a $10,000 annual retainer plus a
$1,500 attendance fee for each Board or committee meeting attended. Also,
outside Directors of the Company are eligible to receive stock options.
Currently, Donald Ratajczak, Ute Scott-Smith and J. Daniel Speight, Jr. are the
only outside Directors of the Company. The other Directors are otherwise
employed by the Company and are not compensated for serving as Directors or
attending Board of Directors' or committee meetings.
5
Executive Compensation
The following Summary Compensation Table sets forth the compensation of
the Company's Chief Executive Officer and five most highly compensated officers
(the "named executive officers") for services in all capacities to the Company
and its subsidiaries during 2001, 2000, and 1999:
Summary Compensation Table
Annual Compensation
All Other
Name and Position Year Salary Bonus(1) Other Compensation
- --------------------------------- --------------- ------------------- ---------- --------------- -------------
Lynda L. Regan .................. 2001 $ 613,872 (8) $179,999 $ 3,150(2) --
Chief Executive Officer $ 18,811(4)
$ 14,126(3)
2000 $ 590,847 $118,169 $ 4,741(2) --
$ 13,788(4)
$ 16,825(3)
1999 $ 548,462 $192,562 $ 5,000(2) --
$ 21,750(4)
$ 16,825(3)
R. Preston Pitts ................ 2001 $ 460,414 (8) $157,503 $ 3,150(2) --
President and Chief $ 15,343(4)
Operating Officer 2000 $ 445,793 $156,028 $ 4,639(2) --
$ 10,327(4)
1999 $ 425,883 $157,562 $ 2,105(2) --
$ 16,540(4)
H. Lynn Stafford ................ 2001 $ 208,952 (8) $ 66,625 $ 5,100(2) --
Chief Information Officer $ 3,053(4)
2000 $ 202,575 $ 62,798 $ 5,100(2) --
$ 2,935(4)
1999 $ 190,521 $ 65,274 $ 5,000(2) --
$ 2,730(4)
G. Steven Taylor ................ 2001 $ 197,019 (9) $ 78,808 $ 5,100(2) --
Chief Financial Officer 2000(5) $ 74,712 $ 37,356 $ -- --
William J. Hrabik ............... 2001 $ 189,615 (9) $ 90,067 $ 4,960(2) --
Chief Operations Officer $ 2,173(4)
2000(6) $ 100,384 $ 48,154 $ 1,454(2) --
Gregory C Egger ................. 2001(7) $ 145,984 $ -- $ 5,250(2) $116,550
Officer of Strategic Development 2000 $ 233,010 $ 62,331 $ 5,100(2) --
$ 5,018(4)
1999 $ 243,309 $104,154 $ 5,000(2) --
$ 4,572(4)
- ------------
(1) Includes bonuses in the year in which they were earned.
(2) The Company matches contributions made to its 401(k) Plan at a rate of $.50
for every $1.00 deferred, up to 6% of total annual compensation.
(3) The Company pays interest on debt related to a split dollar life insurance
policy under which Ms. Regan is the beneficiary.
(4) The Company matches contributions made by certain employees to the
Company's non-qualified deferred compensation plan at a rate of $0.50 for
every $1.00 deferred, up to 6% of total annual compensation less amounts
matched under the Company's 401(k) Plan.
(5) Mr. Taylor's employment commenced July 31, 2000.
(6) Mr. Hrabik's employment commenced June 5, 2000.
(7) Mr. Egger's last day of employment with the Company was July 2, 2001.
Amounts included in All Other Compensation represent payments in
connection with his termination.
(8) Includes full year impact of a pay raise effective April 1, 2000.
(9) Includes full year impact of a pay raise effective July 31, 2000.
6
Aggregated Options/SAR Exercises in Last Fiscal Year
And Fiscal Year-end Options/SAR Values
The following table sets forth certain information concerning the exercise
of options by each of the named executive officers during fiscal 2001 and the
number and value of unexercised options held by each of the named executive
officers as of December 31, 2001.
Number of Securities
Shares Underlying Unexercised Value of Unexercised
Acquired Options/SARs at in-the-money Options/SARs
on Value Fiscal Year End (#) at Fiscal Year End ($)
Name Exercise (#) Realized ($) Exercisable/Unexercisable Exercisable/Unexercisable
- --------------------------- -------------- -------------- --------------------------- --------------------------
Lynda L. Regan ............ -- -- 241,815/483,185 $ 95,911/$ 89,144
R. Preston Pitts .......... -- -- 290,000/535,000 $162,900/$179,350
H. Lynn Stafford .......... -- -- 195,000/255,000 $138,250/$121,750
G. Steven Taylor .......... -- -- 30,000/120,000 $ 4,500/$ 18,000
William J. Hrabik ......... -- -- 30,000/120,000 $ 4,500/$ 18,000
Gregory C Egger ........... -- -- -- / -- $ -- / --
Certain Relationships and Related Transactions
Pursuant to a Shareholder's Agreement with Lynda L. Regan, Chief Executive
Officer of the Company and Chairman of the Company's Board of Directors, in the
event of the death of Ms. Regan, the Company shall repurchase from Ms. Regan's
estate all of the shares of the Company's common stock that were owned,
directly or indirectly, by Ms. Regan at the time of her death, including shares
that were transferred to trusts in which Ms. Regan maintains an ownership
interest. The purchase price to be paid by the Company shall be equal to 125%
of the fair market value of the shares. The Company has purchased two life
insurance policies with a combined face amount of $29 million for the purpose
of funding this obligation in the event of Ms. Regan's death.
Report on Executive Compensation
The Board of Directors develops and administers the Company's executive
compensation policies and programs. These policies and programs are generally
intended to: (i) relate the compensation of the Company's executives to the
success of the Company and to the creation of shareholder value; and (ii)
attract, motivate and retain highly qualified executives. In establishing a
level of compensation, the Board considers a number of factors, including; (i)
the financial condition and performance of the Company; (ii) the compensation
levels of executives in comparable positions of companies in industries in
which the Company competes for executives, primarily the financial services and
insurance industries; and (iii) the abilities of the executives and their
contributions to the Company's strategic goals and performance.
Each year, the Board of Directors reviews the Company's executive
compensation policies and programs to ensure that executive compensation is
linked to the creation of shareholder value and to assess the competitiveness
of the compensation programs.
Compensation for executives during 2001 consisted of base pay and
incentive bonuses. Base pay for executives is determined based on the factors
set forth above. It is generally the Board of Directors' policy to position
executive salaries in the top 51% to 75% of compensation levels for comparable
positions in the market, although individual salaries may be higher or lower
based on the considerations discussed above.
In 2001, the Board of Directors approved the following two bonus policies
(i) the Executive Officer Personal Performance Bonus policy (the "Performance
Bonus"), and (ii) the Executive Officer Net Income Bonus policy (the "Net
Income Bonus"). These bonus policies provide compensation for the following
executive officer positions: Chief Executive Officer, President/Chief Operating
Officer, Chief Financial Officer, Officer of Strategic Development, Chief
Information Officer and Chief Operations Officer (collectively, the "Executive
Officers").
The Performance Bonus will be calculated as follows: Each Executive
Officer is entitled to an annual Personal Performance bonus that is to be based
on a percentage of annual salary (the "Bonus Percentage"). The maximum Bonus
Percentage will be established by the CEO, President and the Board of
7
Directors no later than the first quarter of the year in which the bonus can be
earned (the "Bonus Year"). Payment of the maximum Bonus Percentage will be
contingent upon achievement of personal performance goals during the Bonus
Year. Each respective Executive Officer and his or her superior officer will
agree upon personal performance goals no later than the first quarter of each
Bonus Year. Calculation of the personal performance bonus to be paid will be
based on the percentage of personal performance goals achieved. Payment of the
Personal Performance Bonus will be made during the first quarter of the year
following the Bonus Year.
In addition to the Performance Bonus, Executive Officers can earn the Net
Income Bonus. Each Executive Officer's Net Income Bonus will be calculated as
follows: A percentage of Regan Holding Corp. consolidated net income (defined
below) during the Bonus Year will be allocated to each Executive Officer. The
percentage to be allocated to each Executive Officer will be established by the
Chief Executive Officer, the President and the Board of Directors. For purposes
of this calculation, Net Income is defined as consolidated net income from
operations, prepared in accordance with accounting principles generally
accepted in the United States, excluding all Executive Officer bonuses and net
of applicable income taxes.
Respectfully submitted,
Lynda L. Regan
R. Preston Pitts
Donald Ratajczak
Ute Scott-Smith
J. Daniel Speight, Jr.
8
Performance Data
The Company's Common Stock became subject to the Securities Exchange Act
of 1934 in November 1991 as a result of the issuance of shares of Common Stock
in connection with the acquisition of LifeSurance Corporation. There has never
been an active public trading market for the Common Stock. Prior to December
31, 1992, Regan Holding Corp. issued 5,935,094 shares of Series A Redeemable
Common Stock at prices ranging from $1.00 to $2.25 per share. This stock was
issued in accordance with the terms of the 701 Asset Accumulator Program (the
"701 Plan") between the Company, its independent insurance producers and
employees, and the Confidential Private Placement Memorandum and Subscription
Agreement (the "Subscription Agreement") between the Company and certain
accredited investors. Under the terms of the 701 Plan and the Subscription
Agreement, the Series A Redeemable Common Stock may be redeemed at the option
of the holder after being held for two consecutive years, at a redemption price
based upon current market value, subject to the Company's ability to make such
purchases under applicable corporate law. In connection with the merger in 1991
between the Company and LifeSurance Corporation, 615,242 shares of Series B
Redeemable Common Stock were authorized and issued in exchange for all of the
outstanding stock of LifeSurance Corporation. Under the merger agreement, the
Series B Redeemable Common Stock may be redeemed by the holder in quantities of
up to 10% per year, at a redemption price based upon current market value,
provided that the redemption is in accordance with applicable corporate law.
In 1996, the Company began repurchasing shares of its Series A and Series
B Redeemable Common Stock (collectively referred to as "Redeemable Common
Stock") and began voluntarily repurchasing shares of its Common Stock that are
not redeemable at the option of the holder ("Non-Redeemable Common Stock"). The
repurchase prices of the Redeemable and Non-Redeemable shares of Common Stock
are based on an independent appraisal of the fair market value of the shares.
The fair market value of the Non-Redeemable Common Stock is typically lower
than that of the Redeemable Common Stock. This difference in fair market values
reflects the fact that the Company is not obligated to repurchase the
Non-Redeemable Common Stock. The prices paid for the Redeemable and
Non-Redeemable Common Stock since December 31, 1996 are set forth in the
following table:
Price Per Share
--------------------------------
Redeemable Non-Redeemable
Appraisal Date Common Stock Common Stock
- --------------------------- -------------- ---------------
December 31, 1996 ......... $ 0.78 $ 0.70
June 30, 1997 ............. $ 0.84 $ 0.84
December 31, 1997 ......... $ 0.96 $ 0.73
June 30, 1998 ............. $ 1.35 $ 1.03
December 31, 1998 ......... $ 1.66 $ 1.27
June 30, 1999 ............. $ 1.81 $ 1.39
December 31, 1999 ......... $ 1.99 $ 1.53
June 30, 2000 ............. $ 2.00 $ 1.53
December 31, 2000 ......... $ 2.10 $ 1.61
June 30, 2001 ............. $ 2.16 $ 1.65
December 31, 2001 ......... $ 2.19 $ 1.68
Compensation Committee Interlocks and Insider Participation
As noted above, the Company does not have a compensation committee. The
compensation of executive officers is determined by the Board of Directors.
Lynda L. Regan, who is Chief Executive Officer of the Company, is also Chairman
of the Board of Directors and R. Preston Pitts, who is President and Chief
Operating Officer, is also a Director. None of the executive officers of the
Company serve as a director or member of the compensation committee of an
entity, any of whose executive officers serves as a Director of the Company.
9
Audit Committee Report
During 2001, at each of its meetings, the Audit Committee met with senior
members of management and the Company's independent auditors. Management
reviewed the audited financial statements in the Annual Report on Form 10-K
with the Audit Committee. The Audit Committee discussed with management and the
independent auditors the quality, not just the acceptability, of the accounting
principles, the reasonableness of significant judgments, and the clarity of
disclosures in the financial statements.
The Audit Committee also discussed with its independent auditors the
matters required to be discussed by Statement Of Auditing Standards No. 61
(Communications with Audit Committees, as amended). The Audit Committee also
received from its independent auditors the written disclosures required by
Independence Board Standard No. 1 and discussed with them their independence
from management and the Company, and considered the compatibility of non-audit
services with the auditors' independence.
In performing these functions, the Audit Committee acts in an oversight
capacity, relying on the work and assurances of the Company's management, which
has the primary responsibility for the financial statements, and or the
independent auditors, who in their report, express an opinion on the conformity
of the Company's annual financial statements to generally accepted accounting
principles.
In reliance on these reviews and discussions, the Audit Committee has
recommended to the Board of Directors that the audited consolidated financial
statements be included in the Company's Annual Report on Form 10-K for the year
ended December 31, 2001 for filing with the Securities and Exchange Commission.
Respectfully submitted by the Audit Committee,
Ute Scott-Smith, Chairperson
Dr. Donald Ratajczak
J. Daniel Speight, Jr.
Audit Fees
The aggregate audit-related fees, including expense reimbursement, billed
or expected to be billed by PricewaterhouseCoopers LLP for professional
services rendered for the audit of the Company's annual consolidated financial
statements, evaluation of the consolidated financial statements included in the
Company's quarterly report on Form 10-Q, and audit of the financial statements
of Legacy Financial Services, Inc., a wholly-owned subsidiary of the Company,
for the year ended December 31, 2001 were $161,798.
Fees for Financial Information Systems Design and Implementation
None.
All Other Fees
PricewaterhouseCoopers LLP also billed the Company $98,452 for non-audit
professional services performed during the fiscal year ended December 31, 2001
related primarily to review of registration statements filed with the
Securities and Exchange Commission.
10
ITEM 2
RATIFICATION OF APPOINTMENT OF PRINCIPAL INDEPENDENT AUDITORS
The Board of Directors recommends that the shareholders vote "FOR"
ratification of the appointment of PricewaterhouseCoopers LLP as principal
independent auditors for the year ended December 31, 2002, and your proxy will
be so voted unless you specify otherwise.
The Board of Directors has appointed PricewaterhouseCoopers LLP as
principal independent auditors for the Company for the year ended December 31,
2002.
Representatives of PricewaterhouseCoopers LLP are expected to be present
at the Annual Meeting and will be available to respond to appropriate
questions. Those representatives will have the opportunity to make a statement
if they desire to do so.
The approval of this appointment requires the affirmative vote of the
holders of a majority of the outstanding shares of Common Stock.
ITEM 3
OTHER MATTERS
As of the date of this Proxy Statement, the Board of Directors knows of no
matters which will be presented for consideration at the Annual Meeting other
than the proposals set forth in this proxy statement. If any other matters
properly come before the Annual Meeting, it is intended that the persons named
in the proxy will act in respect thereof in accordance with their best
judgment.
SHAREHOLDER PROPOSALS
Any shareholder who intends to present a proposal at the 2003 Annual
Meeting of Shareholders for inclusion in the Company's Proxy Statement and
Proxy form relating to such meeting must submit such proposal in writing to the
Secretary of Regan Holding Corp. (2090 Marina Avenue, Petaluma, CA 94954). Such
proposals must be received by the Company no later than November 22, 2002.
SOLICITATION OF PROXIES
The cost of soliciting proxies in the accompanying form has been or will
be paid by the Company. In addition to solicitation by mail, arrangements may
be made with brokerage houses and other custodians, nominees and fiduciaries to
send proxy material to their principals, and the Company may reimburse them for
their expenses in doing so. To the extent necessary in order to assure
sufficient representation, officers and regular employees of the Company may
engage (without additional compensation) in the solicitation of proxies
personally, by telephone, electronic mail or facsimile.
ANNUAL REPORT AND FORM 10-K
Without charge, beneficial owners of our Common Stock as of the record
date of April 1, 2002 may obtain copies of our Annual Report on Form 10-K,
including financial statements and financial statement schedules, required to
be filed with the SEC for 2001 by submitting a written request to G. Steven
Taylor, Chief Financial Officer, at 2090 Marina Avenue, Petaluma, California
94954.
11
Regan Holding Corp. 000000 0000000000 0 0000
000000000.000 ext
000000000.000 ext
000000000.000 ext
000000000.000 ext
000000000.000 ext
000000000.000 ext
MR A SAMPLE 000000000.000 ext
DESIGNATION (IF ANY)
ADD 1
ADD 2
ADD 3 Holder Account Number
ADD 4
ADD 5
ADD 6 C 1234567890 J N T
Use a black pen. Print in Mark this box with an X if you have made changes to
CAPITAL letters inside the grey A B C 1 2 3 X [ ] your name or address details above.
areas as shown in this example.
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Annual Meeting Proxy Card
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A Election of Directors
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1. The Board of Directors recommends a vote FOR the listed nominees.
For Withhold For Withhold
01 - Ute Scott-Smith [ ] [ ] 05 - Lynda L. Regan [ ] [ ]
02 - J. Daniel Speight, Jr. [ ] [ ]
03 - Dr. Donald Ratajczak [ ] [ ]
04 - R. Preston Pitts [ ] [ ]
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B Issues
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The Board of Directors recommends a vote FOR the following resolutions.
For Against Abstain
2. Ratification of the appointment of
PricewaterhouseCoopers LLP as the [ ] [ ] [ ] Mark this box with an X if you plan to [ ]
Company's independent auditors attend the Annual Meeting.
for the year ended December 31, 2002.
3. Consideration of any other matters which may
properly come before the meeting or any
adjournments of the meeting.
----
C Authorized Signatures - Sign Here - This section must be completed for your instructions to be executed.
----
NOTE: Please sign exactly as your name appears hereon. When shares are held by joint tenants, both should sign. When
signing as attorney, executor, administrator, trustee or guardian, please give full title as such. If a corporation,
please sign in full corporate name by President or other authorized officer. If a partnership, please sign in
partnership name by authorized person.
Signature 1 Signature 2 Date (dd/mm/yyyy)
[ ] [ ] [ ]
[ ] A650 1 U P X +
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Proxy - Regan Holding Corp.
- --------------------------------------------------------------------------------
PROXY FOR THE ANNUAL MEETING OF SHAREHOLDERS
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned shareholder of Regan Holding Corp. (the "Company") hereby
appoints Lynda L. Regan and R. Preston Pitts or any one of them (with full
power to act alone and to designate substitute) Proxies of the undersigned,
with authority to vote and act with respect to all shares of Common Stock of
the Company which the undersigned would be entitled to vote at the Annual
Meeting of Shareholders to be held on Friday, May 24, 2002 at 8:30 a.m.,
Pacific Time, at the Petaluma Lodge, B.P.O. Elks, 2105 South McDowell Blvd.,
Petaluma, California, and any adjournment thereof, with all the powers the
undersigned would possess if personally present, upon matters noted below (each
of which is being proposed by the Company) and upon such other matters as may
properly come before the meeting. The shares represented by this Proxy shall be
voted as follows:
THIS PROXY CONFERS AUTHORITY TO VOTE "FOR" EACH PROPOSITION LISTED ON THE
REVERSE UNLESS OTHERWISE INDICATED. The Proxy is solicited on behalf of the
Board of Directors of Regan Holding Corp. and may be revoked prior to its
exercise.
YOUR VOTE IS IMPORTANT!
PLEASE SIGN, DATE AND RETURN THIS PROXY PROMPTLY IN THE ENCLOSED ENVELOPE
WHICH REQUIRES NO POSTAGE.
(Continued and to be signed on reverse side.)