SCHEDULE 14A
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the registrant [X]
Filed by a party other than the registrant [ ]
Check the appropriate box:
[ ] Preliminary proxy statement. [ ] Confidential, for use of the
Commission only (as permitted by
Rule 14a-6(e)(2)).
[X] Definitive proxy statement.
[ ] Definitive additional materials.
[ ] Soliciting material pursuant to Section 240.14a-12
AMERICAN PHYSICIANS CAPITAL, INC.
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(Name of Registrant as Specified in Its Charter)
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(Name of Person(s) Filing Proxy Statement if Other Than the Registrant)
Payment of filing fee (check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
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[ ] 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:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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[APCAPITAL LOGO]
1301 NORTH HAGADORN ROAD
EAST LANSING, MICHIGAN 48823
April 5, 2002
Dear Shareholder:
You are cordially invited to attend our Annual Meeting of Shareholders,
which will be held on May 8, 2002 at 10:00 a.m. local time at APCapital's
offices in East Lansing, Michigan. After the formal business session, there will
be a report to the shareholders on the state of the Company and a brief question
and answer session.
The attached notice and proxy statement describe the items of business to
be transacted at the meeting. Your vote is important, regardless of the number
of shares you own. I urge you to vote now, even if you plan to attend the Annual
Meeting. You can vote your APCapital shares by phone or by mail. Follow the
instructions on the enclosed proxy card. If you receive more than one proxy
card, please vote each card. Remember, you can always vote in person at the
Annual Meeting if you are a shareholder of record or have a legal proxy from a
shareholder of record, even if you do so now.
Sincerely,
AMERICAN PHYSICIANS CAPITAL, INC.
/s/ William B. Cheeseman
William B. Cheeseman, President and
Chief Executive Officer
East Lansing, Michigan
April 5, 2002
AMERICAN PHYSICIANS CAPITAL, INC.
1301 NORTH HAGADORN ROAD
EAST LANSING, MICHIGAN 48823
(517) 351-1150
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 8, 2002
TO THE SHAREHOLDERS:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of American
Physicians Capital, Inc. (the "Company") will be held at 1301 North Hagadorn
Road, East Lansing, Michigan 48823, on Wednesday, May 8, 2002, at 10:00 a.m.
local time, for the following purposes:
(1) the election of three Class I directors to serve until the 2005
annual meeting of shareholders;
(2) to transact such other business as may properly come before the
meeting or any adjournment thereof.
Only shareholders of record at the close of business on March 11, 2002 are
entitled to vote at the Annual Meeting.
YOUR VOTE IS IMPORTANT. PLEASE VOTE THE ENCLOSED PROXY CARD NOW EVEN IF YOU
PLAN TO ATTEND THE ANNUAL MEETING. YOU CAN VOTE VIA THE TELEPHONE (FOLLOW THE
INSTRUCTIONS ON THE ENCLOSED PROXY CARD) OR YOU CAN VOTE BY REGULAR MAIL BY
RETURNING YOUR COMPLETED PROXY CARD IN THE ENCLOSED RETURN ENVELOPE. IF YOU DO
ATTEND THE ANNUAL MEETING, YOU MAY REVOKE YOUR PROXY AND VOTE IN PERSON IF YOU
ARE A SHAREHOLDER OF RECORD OR HAVE A LEGAL PROXY FROM A SHAREHOLDER OF RECORD.
By Order of the Board of Directors,
/S/ MONTE D. JAHNKE
MONTE D. JAHNKE
Secretary
East Lansing, Michigan
April 5, 2002
AMERICAN PHYSICIANS CAPITAL, INC.
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 8, 2002
PROXY STATEMENT
-------------------------
GENERAL INFORMATION
This Proxy Statement is being sent to shareholders on or about April 5,
2002, and is furnished in connection with the solicitation of proxies by the
Board of Directors (the "Board") of American Physicians Capital, Inc., a
Michigan corporation (the "Company"), for use at the Annual Meeting of
Shareholders (the "Annual Meeting") of the Company to be held at 1301 North
Hagadorn Road, East Lansing, Michigan 48823 at 10:00 a.m. local time on
Wednesday, May 8, 2002, and at any and all adjournments thereof, for the
purposes set forth in the accompanying notice.
Only holders of record of Common Stock at the close of business on March
11, 2002 (the "Record Date") are entitled to vote at the Annual Meeting or any
adjournments thereof. As of the Record Date, there were 10,046,432 shares of the
Company's common stock ("Common Stock") outstanding. Each share of Common Stock
entitles the owner to one vote. The presence at the meeting in person or by
proxy of a majority of the shares of the Company's Common Stock outstanding on
the Record Date will constitute a quorum to transact business at the Annual
Meeting. The election of directors requires a plurality of the votes cast.
The cost of solicitation of proxies by the Board will be borne by the
Company. Such solicitation will be made by mail and may also be made by
directors, officers and employees of the Company personally or by telephone,
facsimile or other electronic means, without additional compensation. Proxy
materials may also be distributed through brokers, custodians and other like
parties to the beneficial owners of Common Stock, and the Company will reimburse
such parties for their reasonable expenses incurred in connection therewith.
A proxy may be revoked at any time before it is exercised by delivering
written notice to the Secretary of the Company, executing and delivering a later
dated proxy or voting in person at the Annual Meeting. Unless revoked, the
shares represented by each validly executed and dated proxy that is returned in
time for the meeting will be voted in accordance with the specifications made.
IF NO SPECIFICATIONS ARE MADE, SUCH SHARES WILL BE VOTED FOR THE ELECTION OF THE
THREE CLASS I DIRECTORS AS PROPOSED IN THIS PROXY STATEMENT. The Board does not
intend to present any other matters at the Annual Meeting. However, should any
other matters properly come before the Annual Meeting, it is the intention of
such proxy holders to vote the proxies in accordance with their best judgment.
COMMON STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the ownership
of the Common Stock as of March 1, 2002, except as otherwise indicated, by each
current director, each director nominee, each of the persons named in the
Summary Compensation Table under "Executive Compensation," all current directors
and executive officers as a group, and each person who is known by the Company
to own beneficially 5% or more of the Company's outstanding shares of Common
Stock (each, a "5% Owner"). The number of shares beneficially owned is
determined under rules of the Securities and Exchange Commission, and the
information is not necessarily indicative of beneficial ownership for any other
purpose. Under such rules, beneficial ownership includes any shares as to which
the individual has sole or shared voting power or investment power and also any
shares which the individual has the right to acquire on March 1, 2002 or within
60 days thereafter through the exercise of any stock option or other right.
Unless otherwise indicated, each holder has sole investment and voting power
with respect to the shares set forth in the following table.
<Table>
<Caption>
NAME NUMBER OF SHARES(1) % OF CLASS
---- ------------------- ----------
William B. Cheeseman(2)..................................... 159,317 1.6
Billy Ben Baumann, M.D.(3).................................. 23,600 *
Thomas R. Berglund, M.D. ................................... 22,852 *
Myron R. Emerick, D.O. ..................................... 18,051 *
AppaRao Mukkamala, M.D.(4).................................. 23,000 *
Spencer L. Schneider(5)..................................... 30,000 *
Lloyd A. Schwartz........................................... 4,200 *
Frank H. Freund(6).......................................... 18,000 *
Stephen L. Byrnes(7)........................................ 6,670 *
Robert J. Kellogg 8)........................................ 9,178 *
Margo C. Runkle............................................. 8,500 *
Dawn L. Shattuck(9)......................................... 5,910 *
All current executive officers and directors as a group (12
persons)(2)(3)(4)(5)(6)................................... 347,820 3.4
Greenlight Capital, L.L.C. and its principals, Jeffrey A.
Keswin and David Einhorn(10).............................. 1,149,500 11.4
Pzena Investment Management, LLC(11)........................ 1,133,225 11.2
FMR Corporation(12)......................................... 1,009,696 10.0
Boston Partners Asset Management, L.P., its sole general
partner, Boston Partners, Inc. and the principal
stockholder of the general partner, Desmond John
Heathwood(13)............................................. 941,700 9.3
SAB Capital Partners, L.L.C. and Scott A Bommer,
individually and
as a managing Member of (a) Capital Advisors, L.L.C., for
itself and
as general partner of (i) SAB Capital Partners, L.P. and
(ii) SAB Capital Partners II, L.P.; and (b) SAB Capital
Management, L.L.C., for itself and as the general partner
of SAB Overseas Capital Management, L.P.(14).............. 699,200 6.9
</Table>
- -------------------------
* Less than one percent.
(1) Includes restricted shares subject to forfeiture to the Company under
certain circumstances which are owned by the following persons: Mr.
Cheeseman -- 28,960 shares; Dr. Baumann -- 8,640 shares; Dr.
Berglund -- 12,960 shares; Dr. Emerick -- 8,640 shares; Dr.
Mukkamala -- 7,200 shares; Mr. Schwartz -- 1,440 shares; Mr.
Freund -- 9,160 shares; Ms. Runkle -- 2,860 shares; and all current
executive officers and directors as a group -- 80,290 shares. Also includes
shares that may be acquired upon exercise of options granted by the Company
by the following persons: Mr. Cheeseman -- 10,000 shares; Dr.
Baumann -- 2,000 shares; Dr. Berglund -- 2,000 shares; Dr. Emerick -- 2,000
shares; Dr. Mukkamala -- 2,000 shares; Mr. Schwartz -- 1,000 shares; Mr.
Freund -- 5,000 shares; Ms. Runkle -- 4,000 shares; and all current
executive officers and directors as a group -- 28,000 shares.
(2) Includes 1,600 shares of Common Stock held of record by the SCW Agency
Group, Inc., a Michigan corporation, of which Mr. Cheeseman owns a 93.45%
interest.
(3) Includes 7,960 shares of Common Stock held of record by the Rachel A.
Baumann Revocable Living Trust U/A dated November 22, 1982, of which Dr.
Baumann has power of attorney.
(4) Includes 13,000 shares of Common Stock held of record by the Mukkamala
Family Ltd. Partnership, a limited partnership of which Dr. Mukkamala is
the general partner.
(5) Includes 30,000 shares which may be acquired upon exercise of an option
granted by Stilwell Value Partners V, L.P.
2
(6) Includes 300 shares of Common Stock held of record by Mr. Freund's
children.
(7) Beneficial ownership is shown as of December 31, 2001, the date Mr. Byrnes'
employment with the Company terminated, except as to restricted shares and
option shares.
(8) Beneficial ownership is shown as of December 14, 2001, the date Mr.
Kellogg's employment with the Company terminated, except as to restricted
shares and option shares.
(9) Beneficial ownership is shown as of November 2, 2001, the date Ms.
Shattuck's employment with the Company terminated, except as to restricted
shares and option shares.
(10) Based on information contained in a Schedule 13D filed on December 5, 2001
and as of such date. The business address of Greenlight Capital, L.L.C. and
Messrs. Keswin and Einhorn is 420 Lexington Avenue, Suite 1740, New York,
New York 10170.
(11) Based on information contained in a Schedule 13G filed on February 13,
2002, with information as of January 16, 2002. Pzena Investment Management,
LLC is a registered investment advisor which has the sole power to dispose
or direct the disposition of all of the above shares and the sole power to
vote or direct the voting of 1,027,325 of the above shares. The business
address of Pzena Investment Management, LLC is 830 Third Avenue, 14th
Floor, New York, New York 10022.
(12) Based on information contained in a Schedule 13G/A filed on February 13,
2002, with information as of December 31, 2001. FMR Corp. is a parent
holding company which, along with Edward C. Johnson 3d and Abigail P.
Johnson, reports that it has the sole power to dispose or direct the
disposition of all of the shares shown and the sole power to vote or direct
the voting of 147,600 of such shares owned by Fidelity International
Limited. Voting power with respect to the remainder of the shares is held
by the boards of trustees of the respective funds which own the shares. One
of these funds, Fidelity Low Priced Stock Fund, owns 779,900 shares. The
business address of FMR Corp. is 82 Devonshire Street, Boston,
Massachusetts 02109.
(13) Based on information contained in a Schedule 13G/A filed on January 28,
2002, with information as of December 31, 2001. Boston Partners Asset
Management, L.P., Boston Partners, Inc., and Mr. Heathwood share the voting
and dispositive power with respect to all of the shares they own. The
business address of these two entities and Mr. Heathwood is 28 State
Street, 20th Floor, Boston, Massachusetts 02109.
(14) Based on information contained in a Schedule 13G/A filed on February 14,
2002, with information as of December 31, 2001. The individual and entities
share the voting and dispositive power with respect to all of the shares
they own. The business address of SAB Capital Partners, L.L.C. is 650
Madison Avenue, 26th Floor, New York, New York 10022.
3
ELECTION OF DIRECTORS
BACKGROUND
The Company's Articles of Incorporation divide the directors into three
classes, designated Class I (three directors), Class II (two directors) and
Class III (two directors). Each year, on a rotating basis, the terms of office
of the directors in one of the three classes will expire. Successors to the
class of directors whose terms have expired will be elected for a three-year
term. The term for the Class I directors will expire at the 2005 annual meeting
of shareholders or upon the election and qualification of their successors.
Information with respect to the three nominees proposed for election to
membership in Class I is set forth below.
The Board recommends a vote FOR the Class I nominees. THE PERSONS NAMED IN
THE ACCOMPANYING FORM OF PROXY WILL VOTE FOR THE ELECTION OF THE NOMINEES UNLESS
SHAREHOLDERS SPECIFY OTHERWISE IN THEIR PROXIES. If any nominee at the time of
election is unable to serve, or otherwise is unavailable for election, and if
other nominees are designated, the persons named in such proxy will have
discretionary authority to vote or refrain from voting in accordance with their
judgment on such other nominees. If any nominees are substituted by the Board,
the persons named in the accompanying form of proxy intend to vote for such
nominees. Management is not aware of the existence of any circumstance which
would render the nominees named hereunder unavailable for election. All of the
nominees are currently directors of the Company.
NOMINEES FOR CLASS I DIRECTORS WITH TERMS EXPIRING IN 2005
MYRON R. EMERICK, D.O., age 69, is a physician in general practice. He has
been a member of the American Physicians Assurance Corporation ("APA") Board of
Directors since 1985 and a director of the Company since July 2000.
APPARAO MUKKAMALA, M.D., age 56, is a board-certified radiologist. He has
been a member of the APA Board of Directors since 1993 and a director of the
Company since July 2000. He is currently the Treasurer of the Michigan State
Medical Society and has served on its Board of Directors since 1997.
SPENCER L. SCHNEIDER, J.D., age 42, is engaged in the private practice of
law in New York, New York. Opened in 1989, Mr. Schneider's law practice includes
corporate law, securities law, litigation and real estate. Mr. Schneider is a
member of the Bar of the State of New York. He has been a director of the
Company and APA since February 2002.
INCUMBENT DIRECTORS WITH TERMS EXPIRING IN 2003
BILLY B. BAUMANN, M.D., age 65, is a retired pathologist and former chief
of staff at North Oakland Medical Centers, in Pontiac, Michigan, and is
immediate past president of the Michigan State Medical Society. He is also past
treasurer of the Michigan State Medical Society and has served on their board
for the past 20 years. Dr. Baumann has been an APA Board member since 1988 and a
director of the Company since July 2000.
LLOYD A. SCHWARTZ, C.P.A., age 73, is a certified public accountant and has
served as the deputy receiver/rehabilitator of two Michigan-based insurance
companies since 1993. Mr. Schwartz has also served as a technical reviewer for
the Michigan Association of Certified Public Accountants Peer Review Program
since 1991. Prior to 1991, Mr. Schwartz was a partner with the accounting firm
of Coopers & Lybrand LLP (now PricewaterhouseCoopers LLP), where he specialized
in audits of insurance companies. Mr. Schwartz is also a member of the Board of
Directors of Franklin Finance Corporation. He has been a director of the Company
since July 2000.
INCUMBENT DIRECTORS WITH TERMS EXPIRING IN 2004
WILLIAM B. CHEESEMAN, age 60, was named president and chief executive
officer of APA in 1999 and of the Company in July 2000. He has been a director
of APA since May 2000 and of the Company since
4
July 2000. Mr. Cheeseman guided the establishment of APA in 1975. From 1975
until assuming his current position with APA, Mr. Cheeseman was a principal in
the Stratton-Cheeseman Management Company, which managed APA until being
acquired by APA in 1999.
THOMAS R. BERGLUND, M.D., age 68, practices family medicine in Portage,
Michigan. Dr. Berglund has been a member of the Board of Directors of the
Michigan State Medical Society from 1972 to May 2001, serving as chairman from
1981 to 1985, president from 1986 to 1987 and secretary from 1988 to May 2001.
He has been a member of the APA Board since 1985, and has been a member and
Chairman of the Company's Board since July 2000.
STANDSTILL AGREEMENT
The Company has entered into an agreement, dated February 20, 2002 (the
"Agreement"), with Stilwell Value Partners, L.P. and various affiliated entities
and individuals (collectively, the "Stilwell Group") pursuant to which Spencer
L. Schneider, a representative of the Stilwell Group, joined the Company's Board
of Directors and was nominated to stand for election at the annual meeting with
Class I. The Stilwell Group had previously given notice of its intention to
nominate two persons to the Company's Board to be elected at the 2002 annual
meeting and in connection with the Agreement has withdrawn its nomination
notice.
Pursuant to the Agreement, Mr. Schneider has been appointed to the Audit
Committee of the Company's Board of Directors and to the APA Board of Directors.
In addition, the Company agreed that its Board would consider, in light of all
relevant factors, the Stilwell Group's proposal to expand the Company's current
share repurchase program and repurchase 15% of the Company's outstanding common
shares in each of 2002 and 2003. The Company will not be required to authorize
or consummate the repurchase of any shares if the Board determines in good faith
that such action is not in the best interests of the Company or its shareholders
or if any governmental regulatory agency threatens or commences regulatory
action against the Company or any of its subsidiaries as a result of such
repurchases.
The Agreement requires the Stilwell Group during the three year term of the
Agreement to vote all of the Company shares that it beneficially owns (or, if
directed by the Board, pro rata with all other shareholders) for each of the
Company's nominees for election to the Board, for the ratification of the
appointment of independent auditors and, in other matters, in accordance with
the recommendation of the Company's Board. The Stilwell Group has represented
that it currently beneficially owns 480,000 shares of the Company's common
stock.
In addition, the Stilwell Group has agreed not to engage in various
activities, such as (i) initiating a proxy contest to elect persons to the Board
or to approve shareholder proposals, (ii) initiating litigation against the
Company, its directors or officers, (iii) acquiring or retaining more than 5% of
the Company's common stock, or (iv) selling its shares unless such sales are in
the open market and are not to any persons that would beneficially own more than
5% of the Company's outstanding shares.
MEETINGS AND COMMITTEES OF THE BOARD
During 2001, there were eight Board meetings held. Each director attended
75% or more of the total number of meetings of the Board and committees of which
he was a member in 2001. The Company's Board has a Compensation Committee, a
Governance Committee and an Audit Committee.
The Compensation Committee met four times during 2001. The members of the
Compensation Committee, none of whom are employees of the Company, are Mr.
Schwartz, Dr. Emerick and Dr. Mukkamala, with Mr. Schwartz serving as Chair. The
functions of this Committee are to establish and administer the Company's
executive compensation plans and the compensation of executive management.
5
The functions of this committee are described in more detail in its report under
"Compensation of Executive Officers."
The Governance Committee met four times during 2001. The current members of
the Governance Committee, none of whom are employees of the Company, are Dr.
Berglund, Dr. Emerick and Dr. Mukkamala, with Dr. Berglund serving as Chair. The
responsibilities of the Governance Committee include identifying and
recommending to the Board qualified candidates for election as directors of the
Company. The Governance Committee will consider nominees recommended by
shareholders entitled to vote at the meeting and who comply with the notice
procedures set forth in the Company's bylaws, which procedures are more fully
set forth under "Shareholder Proposals."
The Audit Committee met five times during 2001. The members of the Audit
Committee are Mr. Schwartz, Dr. Baumann, and Dr. Emerick, with Dr. Baumann
serving as Chair. Mr. Schneider was appointed to the Audit Committee in February
2002. The functions of the Audit Committee include overseeing management's
conduct of the financial reporting process, monitoring systems of internal
accounting and financial controls; selecting the outside auditors and reviewing
the independence of the outside auditors from time to time; reviewing the scope
of the annual audit performed by the Company's independent outside auditors,
PricewaterhouseCoopers LLC; and reviewing the Company's annual audited and
quarterly financial statements and other financial information provided to
regulatory bodies.
AUDIT COMMITTEE REPORT
In accordance with its written charter, the Audit Committee provides
assistance to the Board in fulfilling its responsibility to the shareholders,
potential shareholders and investment community relating to corporate
accounting, reporting practices and the quality and integrity of the financial
reports of the Company. Each Audit Committee member is "independent," as defined
in Rule 4200(a)(14) of the National Association of Securities Dealers Listing
Standards.
The Audit Committee received from the independent auditors and reviewed a
formal written statement describing all relationships between the auditors and
the Company that might bear on the auditors' independence consistent with
Independence Standards Board Standard No. 1, "Independence Discussions with
Audit Committees," discussed with the auditors any relationships that may impact
their objectivity and independence and satisfied itself as to the auditors'
independence.
The Audit Committee discussed with the independent auditors the matters
required to be discussed by Statement on Auditing Standards No. 61, as amended,
"Communication with Audit Committees," and, with and without management present,
discussed and reviewed the results of the independent auditors' examination of
the financial statements.
The Audit Committee reviewed and discussed with management and the
independent auditors the audited financial statements of the Company as of and
for the year ended December 31, 2001.
Based on the above-mentioned reviews and discussions with management and
the independent auditors, the Audit Committee recommended to the Board of
Directors that the Company's audited
6
financial statements be included in its Annual Report on Form 10-K for the year
ended December 31, 2001 for filing with the Securities and Exchange Commission.
AUDIT COMMITTEE: BILLY B. BAUMANN, M.D., CHAIR
MYRON R. EMERICK, D.O.
SPENCER L. SCHNEIDER, J.D.
LLOYD A. SCHWARTZ, CPA
DIRECTOR COMPENSATION
The following table sets forth the compensation paid and to be paid during
2001 and 2002 to the directors of the Company who are not employees of the
Company. These directors are also reimbursed for their expenses incident to
attendance at Board and committee meetings.
<Table>
<Caption>
ANNUAL RETAINER: BOARD MEETING; COMMITTEE MEETING:
CHAIR/DIRECTORS CHAIR/DIRECTORS CHAIR/DIRECTORS
---------------- --------------- ------------------
2002:
APCapital................................... $30,000/$20,000 $1,500/$1,500 $1,000/$500
APA......................................... $0/$8,000 $0/$1,000 $0/$0
Other Insurance Subsidiaries................ $0/$0 $500/$500 $500/$500
2001:
APCapital................................... $25,000/$14,000 $2,000/$1,500 $1,500/$500
APA......................................... $5,000/$10,000 $1,750/$1,250 $1,250/$500
Other Insurance Subsidiaries................ $0/$0 $500/$500 $500/$500
</Table>
In 2002, Mr. Schneider is the only non-employee director of the Company to
sit on the Board of APA, and Dr. Berglund, Dr. Baumann and Dr. Emerick are the
only non-employee directors of the Company to sit on the Boards of the other
insurance subsidiaries. In 2001, four non-employee directors of the Company were
also directors of the Company's other insurance subsidiaries. Dr. Berglund and
Dr. Baumann sat on the Board of APA and two other insurance subsidiary Boards,
and Dr. Emerick and Dr. Mukkamala sat on the Board of APA and one other
insurance subsidiary Board in 2001. Dr. Berglund was chair of APA and the two
other insurance subsidiary Boards.
EXECUTIVE OFFICERS
The executive officers of the Company are elected or appointed annually and
serve as executive officers of the Company at the pleasure of the Company's
Board of Directors. The Company's current executive officers are described
below.
WILLIAM B. CHEESEMAN See "Election of Directors" for information concerning
Mr. Cheeseman.
R. KEVIN CLINTON, age 47, has been the executive vice president and chief
operating officer of the Company since October 2001. Prior to joining the
Company in September 2001, he was president, chief executive officer and a
director of MEEMIC Holdings Inc., a publicly traded subsidiary of ProNational
Insurance Company and Professionals Group, Inc., in Auburn Hills, Michigan from
1997 until July 2001. Mr. Clinton was chief financial officer at ProNational
Insurance Company from 1990 to 1997. Mr. Clinton is a Fellow of the Casualty
Actuarial Society and a member of the American Academy of Actuaries.
ANNETTE E. FLOOD, J.D., R.N., age 42, joined the Company in October 2001 as
vice president of APA, overseeing the Company's medical professional liability
operations. Prior to joining the Company, Ms. Flood served as senior vice
president, corporate secretary and legal counsel of ProNational Insurance
Company, a subsidiary of Professionals Group, Inc., from 1992 to 2000. Ms. Flood
was the secretary of Professionals Group from 1996 to 2000. She served as
secretary and a director of MEEMIC Holdings, Inc. from 1998 to July 2001. She
also served as chief operating officer, secretary and director of MEEMIC
Insurance Company, a subsidiary of MEEMIC Holdings, Inc., from 1998 to July
2001.
7
FRANK H. FREUND, C.P.A., age 41, is the executive vice president, treasurer
and chief financial officer of APA. Mr. Freund, who joined the Company as chief
financial officer in September 1997, was officially appointed to his current
position in May 2000. He also became treasurer and chief financial officer of
the Company in July 2000. Mr. Freund's previous employment includes working with
the Michigan practice of Deloitte & Touche LLP from October 1994 to September
1997, serving as an audit senior manager in that firm's insurance and health
care business insurance services group.
LAURA A. KLINE, age 37, was appointed vice president of marketing of APA in
January 2002. Ms. Kline joined the Company in 1987, and has held various sales,
marketing and management positions. Ms. Kline was appointed president of
APConsulting, the alternative risk transfer subsidiary of the Company, in
November 2001 and continues to hold this position. Prior to this appointment,
Ms. Kline served as vice president and senior sales consultant for APA from 1999
to October 2001.
MARGO C. RUNKLE, J.D., age 43, is vice president of human resources and
legal of APA. Ms. Runkle joined the Company in August 1994, serving as a
director in the information systems department for APA until August 1997, when
she left to pursue a doctorate in organizational behavior. Ms. Runkle returned
to the Company to serve APA as its chief human resources officer in October 1998
until being appointed to her current position in October 2001. Prior to joining
the Company, Ms. Runkle worked as an appellate attorney for the Michigan Court
of Appeals and served as Chief Appellate Prosecutor for Jackson County,
Michigan.
8
COMPENSATION OF EXECUTIVE OFFICERS
SUMMARY
The following table provides a summary of compensation paid or accrued by
the Company and its subsidiaries during the last three years to or on behalf of
the Company's Chief Executive Officer, the three other executive officers at
December 31, 2001 who earned more than $100,000 in salary and bonus, and two
former executive officers who terminated employment in 2001 (the "Named
Officers").
SUMMARY COMPENSATION TABLE
<Table>
<Caption>
LONG-TERM COMPENSATION
AWARDS
--------------------------
ANNUAL COMPENSATION RESTRICTED SECURITIES
-------------------- STOCK UNDERLYING ALL OTHER
FISCAL SALARY BONUS AWARDS OPTIONS/SARS COMPENSATION
NAME AND PRINCIPAL POSITION YEAR $ $ ($)(1) (#) ($)(2)(3)
- --------------------------- ------ ------ ----- ---------- ------------ ------------
William B. Cheeseman.............. 2001 606,000 -- -- 260,000 17,642
President and Chief Executive 2000 600,000 150,000 434,700 100,000 23,397
Officer 1999 288,739 -- -- -- 20,982
Robert J. Kellogg(3).............. 2001 222,116 -- -- -- 551,045
Former Chief Operating Officer 2000 227,077 40,000 43,200 40,000 23,185
1999 187,528 50,000 -- -- 70,479
Frank H. Freund................... 2001 215,000 -- -- 95,000 17,672
Executive Vice President,
Treasurer 2000 210,000 50,000 137,700 50,000 23,170
and Chief Financial Officer 1999 180,115 50,000 -- -- 21,927
Stephen L. Byrnes(4).............. 2001 184,154 -- -- 20,000 470,726
Vice President, Marketing 2000 175,000 40,000 70,200 40,000 23,368
1999 120,013 50,000 -- -- 21,335
Margo C. Runkle................... 2001 151,000 -- -- 25,500 17,247
Vice President, Human Resources/ 2000 147,077 40,000 43,200 40,000 19,500
Legal 1999 105,019 50,000 -- -- 16,322
Dawn L. Shattuck(5)............... 2001 135,231 -- -- -- 418,174
Former Chief Information Officer 2000 150,462 40,000 40,500 40,000 8,576
1999 29,038 50,000 -- -- --
</Table>
- -------------------------
(1) The amounts in the table are calculated based upon the public offering price
of $13.50 per share since the grants were made prior to the establishment of
a public market for the Common Stock. At December 31, 2001, the Named
Officers had the following number and value of restricted shares: Mr.
Cheeseman -- 28,960/$390,960; Mr. Kellogg -- none; Mr.
Freund -- 9,160/$123,660; Mr. Byrnes -- 4,660/$62,910; Ms.
Runkle -- 2,860/$38,610; and Ms. Shattuck -- none. Mr. Byrnes' restricted
shares were forfeited at the close of business on December 31, 2001 upon his
termination. These amounts do not include shares as to which the
restrictions have lapsed. All but 200 of the restricted shares granted to
each person in 2000 become transferable as follows: 10% on December 5, 2001;
15% on December 5, 2002; 20% on December 5, 2003; 25% on December 5, 2004;
and 30% on December 5, 2005; or immediately upon death, disability,
retirement or a change in control. The remaining 200 shares become
transferable 20% on December 5, 2001; 35% on December 5, 2002; and 45% on
December 5, 2003; or immediately upon death, disability, retirement or a
change in control.
9
(2) The amounts included in "All Other Compensation" for 2001 paid to or
contributed for the Named Officers are as follows:
<Table>
<Caption>
SEVERANCE/
NAME 401(K) PENSION COBRA
---- ------ ------- ----------
William B. Cheeseman........................... $4,662 $12,980 --
Robert J. Kellogg.............................. 4,361 -- $546,684
Frank H. Freund................................ 4,692 12,980 --
Stephen L. Byrnes.............................. 7,018 12,980 450,728
Margo C. Runkle................................ 4,267 12,980 --
Dawn L. Shattuck............................... 4,324 -- 413,850
</Table>
(3) Mr. Kellogg's employment with the Company terminated on December 14, 2001,
Mr. Byrnes' employment with the Company terminated on December 31, 2001 and
Ms. Shattuck's employment with the Company terminated on November 2, 2001.
As a part of their termination, in accordance with their employment
agreements, each was paid a severance equal to 24 months' salary at their
pay rate on January 1, 2001. Additionally, each was paid 1.5 times their
bonus for 2000, up to $15,000 for outplacement and $4,000 for replacement
life and disability insurance. The Company will pay health insurance
premiums for up to 24 months, or until other coverage is secured. Each
received the portions of restricted stock and options that would have
otherwise vested in December 2001. All remaining unvested restricted shares
and options were forfeited.
OPTION GRANTS
The following table provides information with respect to options granted to
the Named Officers during 2001.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<Table>
<Caption>
INDIVIDUAL GRANTS
----------------------------- POTENTIAL REALIZABLE VALUE
NUMBER OF % OF TOTAL AT ASSUMED ANNUAL RATES
SECURITIES OPTIONS OF STOCK PRICE APPRECIATION
UNDERLYING GRANTED TO EXERCISE OR FOR OPTION TERM(2)
OPTIONS EMPLOYEES IN BASE PRICE EXPIRATION ---------------------------
NAME GRANTED(#)(1) FISCAL YEAR ($/SH) DATE 5%($) 10%($)
- ---- ------------- ------------ ----------- ---------- ----- ------
William B. Cheeseman..... 260,000 53.0 20.44 12/06/11 8,655,400 13,785,200
Robert J. Kellogg........ -- -- -- -- -- --
Frank H. Freund.......... 95,000 19.4 20.44 12/06/11 3,162,550 5,036,900
Stephen L. Byrnes........ 20,000 4.1 20.44 12/06/11 665,800 1,060,400
Margo C. Runkle.......... 25,500 5.2 20.44 12/06/11 848,895 1,352,010
Dawn L. Shattuck......... -- -- -- -- -- --
</Table>
- -------------------------
(1) All of these options, which were granted pursuant to the Company's Stock
Compensation Plan, become exercisable as follows: 33% on December 6, 2002;
33% on December 6, 2003; and 34% on December 6, 2004, and immediately in the
event of a change in control of the Company, termination due to death or
disability or if the vesting restrictions are otherwise waived by the
Compensation Committee.
(2) Represents the value of such option at the end of its 10-year term (without
discounting to present value), assuming the market price of the Common Stock
appreciates from the exercise price beginning on the grant date at an
annually compounded rate of 5% or 10%. These amounts represent assumed rates
of appreciation only. Actual gains, if any, will be dependent on overall
market conditions and on the future performance of the Common Stock. There
can be no assurance that the price appreciation reflected in this table will
be achieved.
10
OPTION HOLDINGS
The following table provides information with respect to the exercisable
and unexercised options held as of the end of 2001 by the Named Officers. The
Named Officers did not exercise any options during 2001.
AGGREGATED OPTION/SAR EXERCISES IN
LAST FISCAL YEAR AND FISCAL YEAR-END OPTION/SAR VALUES
<Table>
<Caption>
VALUE OF EXERCISABLE AND
NUMBER OF EXERCISABLE AND UNEXERCISED IN-THE-MONEY
UNEXERCISED OPTIONS/SARS AT OPTIONS/SARS AT FISCAL YEAR
FISCAL YEAR END (#) END ($)(1)
------------------------------- -------------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ----------- ------------- ----------- -------------
William B. Cheeseman.................. 10,000 350,000 82,500 1,083,100
Robert J. Kellogg..................... 4,000 -0- 33,000 -0-
Frank H. Freund....................... 5,000 140,000 41,250 495,700
Stephen L. Byrnes..................... 4,000 56,000(2) 33,000 323,200(2)
Margo C. Runkle....................... 4,000 61,500 33,000 330,405
Dawn L. Shattuck...................... 4,000 -0- 33,000 -0-
</Table>
- -------------------------
(1) Value was determined by multiplying the number of shares subject to an
option by the difference between the closing price of the Common Stock at
the end of 2001 on The Nasdaq National Market and the option exercise price.
(2) Mr. Byrnes' unexercisable options were forfeited at the close of business on
December 31, 2001 upon his termination.
EMPLOYMENT AGREEMENTS
The Company, through its APA subsidiary, has an employment agreement with
Mr. Cheeseman for a term expiring on October 27, 2009, at a level of
compensation including a base salary, incentive plan, discretionary bonus and
fringe benefits agreed upon annually by the Company and Mr. Cheeseman. For 2002,
base salary will be $625,000, discretionary bonus will be an amount up to 50% of
base salary and fringe benefits will include an option grant of 260,000 shares,
with vesting over 3 years and a 10-year expiration term. The agreement will
terminate upon Mr. Cheeseman's death or total disability or the Company may
terminate the agreement for cause. The agreement prohibits Mr. Cheeseman from
competing with the Company during the term of the agreement and for a period of
two years following termination. Compensation for the covenant not to compete is
an amount equal to two times the annual base salary paid to Mr. Cheeseman during
the year preceding the year in which employment is terminated.
The Company, through its APA subsidiary, has an employment agreement with
each of the other Named Officers. Each agreement continues through at least
August 1, 2002, and will automatically renew for an additional one-year term on
August 1, 2002 unless terminated in accordance with the agreement. These
agreements specify the terms of employment, including pay factors listed above.
The agreements provide that employment shall be at will, but if employment is
terminated without cause, or after the first three consecutive terms by
non-renewal upon at least six months' notice, or the Named Officer resigns
within 60 days of the occurrence of a "Qualifying Reason," the Named Officer is
entitled to severance pay equal to two years of salary at his or her
then-current rate plus an amount equal to one and one-half times the bonus paid
to him or her for the prior year, and to all benefits under APA's benefit plans
for 24 months after termination as if he or she were still employed (or tax
equivalent payments). A "Qualifying Reason" includes the loss of position as a
member of the senior executive staff or other material reduction in duties, a
reduction in base salary, a permanent change in the location of the performance
of the Named Officer's duties from the Company's East Lansing, Michigan
headquarters, and termination within one year after a change in control of APA.
11
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The members of the Compensation Committee during 2001 were Mr. Schwartz,
Dr. Emerick and Dr. Mukkamala. Dr. Emerick and Dr. Mukkamala served as
non-employee officers of the Company's subsidiary, APA, prior to APA's
conversion and prior to their appointment to the Compensation Committee of the
Company's Board.
COMPENSATION COMMITTEE REPORT
The Compensation Committee is responsible for executive compensation
policies and practices and regularly reports on its activities to the full Board
of Directors. To fulfill these responsibilities, the Committee reviews
significant employee benefits programs and may establish, as appropriate,
executive compensation programs, including bonus plans, equity-based programs,
deferred compensation plans and any other such cash or stock incentive programs.
The Committee also administers the Stock Compensation Plan, which provides for
stock-based awards to officers, directors and other employees.
EXECUTIVE COMPENSATION PHILOSOPHY. The Committee's overall compensation
philosophy is to provide competitive compensation and benefit levels to enable
the Company to attract, retain and motivate quality talent, which is critical to
both the short-term and long-term success of this Company. The Company seeks to
create executive compensation programs that:
- Reinforce strategic performance objectives through the use of incentive
compensation programs;
- Align the interests of executive officers with the interests of the
Company's shareholders through stock ownership and stock option plans;
- Remain cost effective, by delivering the most talented and effective
executives that are available to the Company at a cost that bears an
appropriate relationship to shareholder value; and
- Are congruent with other human resource philosophies and programs of the
Company.
The Company's executive officers, including its Chief Executive Officer,
are compensated through a combination of base salary, and short-term and
long-term incentives. The short-term incentives are intended to focus executives
on short-term goals and recognize their current performance and contributions.
The long-term incentives, in the form of restricted stock and stock options
awards under the Stock Compensation Plan, are intended to align individual
executive performance with long-term Company strategy and the interests of the
Company's shareholders. Executive officers are also eligible to participate in
the compensation and benefit programs generally available to other employees,
such as the pension and 401(k) plans, health care and supplemental life and
disability insurance programs.
BASE SALARY. The Committee's goal is to establish base salaries of
executive officers that generally are competitive in comparison to those of
their peers at similarly situated insurance and financial services companies and
reflect an individual's responsibility, experience, level of performance and
contribution to the organization. Salaries are reviewed annually using executive
compensation survey data for the insurance and financial services industries,
which is a broader group than that to which the Company's stock price is
compared in the graph under "--Stock Performance Graph". Additional factors such
as management recommendations, job responsibilities, amounts required under
applicable employment contracts and market opportunities are taken into
consideration. Determinations made by the Committee are, by their nature,
subjective.
SHORT-TERM INCENTIVE COMPENSATION. For 2001, the Company had a short-term
incentive program whereby all employees, including senior executives, were
eligible for a bonus for meeting the pre-established Company net income
performance goal. The Committee assessed executive performance in relation to
this goal and determined that no bonuses would be paid for 2001.
LONG-TERM INCENTIVE COMPENSATION. The Compensation Committee may grant
stock options, restricted stock or performance shares to employees of the
Company, including executive officers, under the Stock Compensation Plan. The
Committee strongly believes that stock ownership by management and stock-
12
based performance compensation arrangements are beneficial in aligning
management's interests with shareholder interests and in enhancing shareholder
value. The Compensation Committee granted the options listed in the Summary
Compensation Table to bring the stock ownership of management to a level that it
believes is appropriate to better align the interests of management with the
interests of shareholders, in view of stock ownership of management at the time.
The grant amounts were based on the recommendation of the Committee and were
generally a function of the position held by an executive, the executive's past
contribution to the Company's success and the executive's expected contribution
to the Company's future growth and profitability. Option grants become
exercisable over a period of time and have an exercise price equal to the fair
market value of the Common Stock on the grant date, creating long-term
incentives to enhance the value of the Common Stock.
THE CHIEF EXECUTIVE OFFICER'S 2001 COMPENSATION. Mr. Cheeseman's salary
compensation for 2001 was determined in accordance with his employment contract
entered into on October 27, 1999 in connection with the Company's purchase of
Stratton-Cheeseman Management Company, a company 94% of which was owned by Mr.
Cheeseman and which managed the business of the Company's subsidiaries prior to
November 1, 1999. The Compensation Committee understands that the salary figure
was based upon the salary earned by Mr. Cheeseman as an employee of the
management company and the annual equity generated by his ownership of the
management company, and believes that Mr. Cheeseman's base salary in 2001 was
comparable to that of other chief executive officers in other public companies
of similar size and nature. Mr. Cheeseman's base salary was increased slightly
in 2001 to reflect a change in the Company's automobile policy. Since the
Company did not achieve its net income goal for 2001, he did not receive a bonus
for the year. Options were awarded to Mr. Cheeseman during 2001 on the basis
described above. Mr. Cheeseman's contract was modified in 2001 to increase the
compensation to be paid thereunder during 2002. The modified terms are described
above under "--Employment Agreements".
DEDUCTIBILITY OF EXECUTIVE COMPENSATION. Section 162(m) of the Internal
Revenue Code of 1986, as amended, restricts the deductibility of executive
compensation paid to the Company's Chief Executive Officer and any of the four
other most highly compensated executive officers at the end of any fiscal year
to not more than $1 million in annual compensation (including gains from the
exercise of certain stock option grants). Certain performance-based compensation
is exempt from this limitation if it complies with the various conditions
described in Section 162(m).
The Compensation Committee believes that compensation associated with
option grants made under the Stock Compensation Plan will qualify for an
exemption from the $1 million limitation, and does not believe that the other
components of the Company's compensation program are likely to result in
payments to any executive officer in any year which would be subject to the
restriction on deductibility. Therefore, the Committee has concluded that no
further action with respect to qualifying such compensation for deductibility is
necessary at this time. The Compensation Committee intends to continue to
evaluate from time to time the advisability of qualifying future executive
compensation programs for exemption from the Section 162(m) restriction on
deductibility.
COMPENSATION COMMITTEE: Lloyd A. Schwartz, Chair
Myron R. Emerick, D.O.
AppaRao Mukkamala, M.D.
13
STOCK PERFORMANCE GRAPH
The following graph compares the percentage change in the cumulative total
shareholder return on the Company's Common Stock during the period beginning
December 8, 2000 and ending on December 31, 2001, with the Nasdaq Market Value
Index (the "Nasdaq Index") and the Fire, Marine, Casualty Insurance SIC Code
Index (the "SIC Code Index"). The SIC Code Index is comprised of over 80
companies engaged in the same industry as the Company. The graph assumes that
the value of the investment in the Common Stock, the Nasdaq Index and the SIC
Code Index was $100 on December 8, 2000 and that all dividends were reinvested.
[LINE GRAPH]
<Table>
<Caption>
- ----------------------------------------------------------------------------------------------------------------
12/08/00 12/31/00 12/31/01
- ----------------------------------------------------------------------------------------------------------------
AMERICAN PHYSICIANS CAPITAL, INC. 100.00 122.12 160.36
- ----------------------------------------------------------------------------------------------------------------
SIC CODE INDEX 100.00 105.81 90.62
- ----------------------------------------------------------------------------------------------------------------
NASDAQ MARKET INDEX 100.00 94.87 75.62
- ----------------------------------------------------------------------------------------------------------------
</Table>
CERTAIN RELATIONSHIPS AND TRANSACTIONS
The Company, through its subsidiaries, has a relationship with SCW Agency
Group, Inc. and its subsidiaries, an insurance agency that is 93.45% owned by
Mr. Cheeseman. SCW and its subsidiaries provide sales and marketing services to
the Company in Michigan, Kentucky, Florida, Nevada and Illinois with respect to
medical professional liability insurance. The commission rates currently paid
are substantially the same or lower than rates the Company pays to other
agencies with regard to medical professional liability insurance. Direct
premiums written by SCW totaled $68.9 million during 2001, representing 29.9% of
the Company's total direct premiums written during 2001. The Company, through
its subsidiaries, paid commissions on these premiums to SCW of $4.7 million
during 2001.
During 2001, SCW Agency Group, Inc. was indebted to APA in connection with
its purchase of APA's subsidiary, KMA Insurance Agency, Inc., for $705,292 in
1997. The payment terms consisted of a down payment of $176,573, with the
balance to be paid in five equal annual installments of $105,944, plus interest
at the prime rate. The remaining debt of $105,943, which was the highest amount
of such indebtedness outstanding during 2001, plus interest, was paid to APA in
full during 2001.
In 2001, SCW Agency Group, Inc. used a total of approximately 11,000 square
feet of the office space leased by the Company in facilities in Michigan and
Florida. Pursuant to an unwritten arrangement
14
between SCW and the Company, the Company charges SCW an allocable share of the
lease and related office expenses the Company incurs under the primary leases
with the third-party landlords based upon the amount of the rented space used by
SCW. The rental rate charged to SCW is the same rate per square foot paid by the
Company under the primary leases. During 2001, SCW paid approximately $216,000
to the Company pursuant to this arrangement. The Company will also have a
similar arrangement with SCW for office space in Nevada beginning in 2002.
INDEPENDENT ACCOUNTANTS
GENERAL
The accounting firm of PricewaterhouseCoopers LLP ("PwC") has acted as
independent accountants to audit the financial statements of the Company and its
consolidated subsidiaries since 1983 and the Audit Committee has selected such
firm to audit the Company's financial statements for 2002. Representatives of
PwC are expected to be present at the Annual Meeting and to be available to
respond to appropriate questions. Such representatives will have the opportunity
to make a statement if they desire to do so.
FEES PAID TO INDEPENDENT AUDITORS
AUDIT FEES. PwC billed the Company a total of $194,500 for professional
services in connection with the audit of the 2001 financial statements and
review of the Company's Form 10-Q reports filed during 2001.
FINANCIAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION FEES. PwC did not
bill the Company for operating, designing or supervising the Company's computer,
financial or information systems during 2001.
ALL OTHER FEES. PwC billed the Company a total of $159,681 for other
services rendered during 2001. Substantially all of these fees related to tax
services and to accounting due diligence services related to potential
acquisitions. The Audit Committee of the Board does not consider the provision
of the services described above by PwC to be incompatible with the maintenance
of PwC's independence.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Based solely upon a review of Forms 3, 4 and 5 and amendments thereto and
written representations furnished to the Company, the Company's officers,
directors and ten percent owners timely filed all required reports for 2001
pursuant to Section 16(a) of the Securities Exchange Act of 1934, as amended.
SHAREHOLDER PROPOSALS
Shareholder proposals intended to be presented at the 2003 Annual Meeting
of Shareholders which are eligible for inclusion in the Company's Proxy
Statement for that meeting under the applicable rules of the Securities and
Exchange Commission must be received by the Company not later than December 6,
2002 in order to be considered for inclusion in the Company's Proxy Statement
relating to that meeting. Such proposals should be addressed to the Secretary at
the Company's principal executive offices and should satisfy the informational
requirements applicable to shareholder proposals contained in the Company's
bylaws and applicable rules of the Securities and Exchange Commission. In
addition, the Company's bylaws provide that, in order for a shareholder proposal
or nomination to be properly brought before the Annual Meeting, written notice
of such proposal or nomination must be received by the Company on or before
February 7, 2003. If the date for the 2003 Annual Meeting is significantly
different than the first anniversary of the 2002 Annual Meeting, the bylaws and
Securities and Exchange Commission rules provide for an adjustment to the notice
periods described above. The Company also expects the persons named as proxies
for the 2003 Annual Meeting to use their discretionary voting authority with
respect to any proposal presented or offered to be presented at that meeting by
a
15
shareholder who does not provide the Company with written notice of such
proposal during the period provided in the Company's bylaws.
By Order of the Board of Directors,
/s/Monte D. Jahnke
Monte D. Jahnke
Secretary
East Lansing, Michigan
April 5, 2002
16
PROXY PROXY
AMERICAN PHYSICIANS CAPITAL, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF SHAREHOLDERS MAY 8, 2002
The undersigned hereby constitutes and appoints William B. Cheeseman and
Frank H. Freund, and each of them, attorneys and proxies, with the power of
substitution in each of them, to vote all of the shares of Common Stock of
American Physicians Capital, Inc., that the undersigned is entitled to vote at
the Annual Meeting of Shareholders of the Corporation to be held on May 8, 2002
at 10:00 a.m., local time, and at any adjournments thereof, upon all matters
properly coming before the meeting including, without limitation, those set
forth in the related Notice of Meeting and Proxy Statement. This Proxy, when
properly executed, will be voted in the manner directed. IF NO SPECIFICATION IS
MADE, THIS PROXY WILL BE VOTED FOR THE NOMINEES NAMED ON THE OTHER SIDE. In
their discretion, to the extent permitted by law, the proxies are also
authorized to vote upon such other matters as may properly come before the
meeting, including the election of any person to the Board of Directors where a
nominee named in the Proxy Statement dated April 5, 2002 is unable to serve or,
for good cause, will not serve. The undersigned acknowledges receipt of the
Notice of Annual Meeting of Shareholders and the Proxy Statement dated April 5,
2002 and the 2001 Annual Report to Shareholders and ratifies all that the
proxies or either of them or their substitutes may lawfully do or cause to be
done by virtue hereof and revokes all former proxies.
YOUR VOTE IS IMPORTANT! PLEASE VOTE YOUR SHARES BY TELEPHONE,
OR BY MARKING, SIGNING AND DATING THIS PROXY ON THE REVERSE SIDE
AND RETURN IT PROMPTLY IN THE ACCOMPANYING ENVELOPE.
(Continued and to be marked, dated and signed on reverse side)
- --------------------------------------------------------------------------------
/\ FOLD AND DETACH HERE /\
[APCAPITAL LOGO]
ANNUAL MEETING OF SHAREHOLDERS
WEDNESDAY, MAY 8, 2002
10:00 A.M., LOCAL TIME
APCAPITAL'S CORPORATE HEADQUARTERS
1301 NORTH HAGADORN ROAD
EAST LANSING, MICHIGAN
- --------------------------------------------------------------------------------
PLEASE MARK
YOUR VOTES AS
INDICATED IN [ X ]
THIS EXAMPLE
ELECTION OF DIRECTORS:
FOR All WITHHOLD
Nominees From All Nominees
[ ] [ ]
NOMINEES: 01 Myron R. Emerick, D.O., 02 AppaRao Mukkamala, M.D.,
03 Spencer L. Schneider, Esq.
(Instruction: To withhold authority to vote for any individual nominee, write
that nominee's name in the space provided below.)
- ------------------------------------------------------------------
---------
|
|
|
SIGNATURE___________________________________________________SIGNATURE__________________________________________ DATE _____________
Please sign exactly as name appears on the proxy card. 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 an authorized person.
- ----------------------------------------------------------------------------------------------------------------------------------
FOLD AND DETACH HERE
VOTE BY TELEPHONE OR MAIL
24 HOURS A DAY, 7 DAYS A WEEK
TELEPHONE VOTING IS AVAILABLE THROUGH 4PM EASTERN TIME
THE BUSINESS DAY PRIOR TO ANNUAL MEETING DAY.
YOUR TELEPHONE VOTE AUTHORIZES THE NAMED PROXIES TO VOTE YOUR SHARES IN THE
SAME MANNER AS IF YOU MARKED, SIGNED AND RETURNED YOUR PROXY CARD.
- -------------------------------------- ---------------------------
TELEPHONE MAIL
1-800-435-6710
Use any touch-tone telephone to
vote your proxy. Have your proxy Mark, sign and date
card in hand when you call. You OR your proxy card
will be prompted to enter your and
control number, located in the box return it in the
below, and then follow the enclosed postage-paid
directions given. envelope.
- -------------------------------------- ---------------------------
IF YOU VOTE YOUR PROXY BY TELEPHONE,
YOU DO NOT NEED TO MAIL BACK YOUR PROXY CARD.