SYMONS INTERNATIONAL GROUP, INC.
2002 PROXY STATEMENT
NOTICE AND PROXY STATEMENT
SYMONS INTERNATIONAL GROUP, INC.
4720 KINGSWAY DRIVE
INDIANAPOLIS, INDIANA 46205
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 30, 2002
The Annual Meeting of Shareholders of Symons International Group, Inc. (the
"Company") will be held on Thursday, May 30, 2002 at 10:00 a.m. at the Company's
offices, 4720 Kingsway Drive, Indianapolis, Indiana, 46205 for the following
purposes:
1. To elect three directors of the Company for terms to expire in 2005;
2. To consider and act upon the ratification of the appointment of BDO
Seidman, LLP, as independent auditors of the Company for the year ending
December 31, 2002; and
3. To transact such other business as may properly come before the meeting,
or any adjournment thereof.
The accompanying proxy is solicited by the Board of Directors of the
Company. The proxy statement and the Company's Annual Report for the year ended
December 31, 2001 are enclosed.
The record date for the determination of shareholders entitled to vote at
the meeting is April 23, 2002, and only shareholders of record at the close of
business on that date will be entitled to vote at this meeting, or any
adjournment thereof.
YOUR VOTE IS IMPORTANT! WHETHER OR NOT YOU EXPECT TO BE PRESENT AT THE MEETING,
PLEASE MARK, SIGN, DATE AND RETURN THE ENCLOSED PROXY PROMPTLY IN THE ENCLOSED
PREPAID ENVELOPE. IF YOU ATTEND THE MEETING, YOU MAY REVOKE YOUR PROXY AND VOTE
IN PERSON.
FOR THE BOARD OF DIRECTORS
[GRAPHIC OMITED]
Douglas H. Symons
Chief Executive Officer
Indianapolis, Indiana
April 25, 2002
SYMONS INTERNATIONAL GROUP, INC.
PROXY STATEMENT
FOR THE 2002 ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD THURSDAY, MAY 30, 2002
The accompanying proxy is solicited by the board of directors of Symons
International Group, Inc. (the "Company") for use at the annual meeting of
shareholders to be held May 30, 2002 at 4720 Kingsway Drive, Indianapolis,
Indiana, and at any adjournments thereof. The Company is bearing the cost of
this solicitation. When the proxy is properly executed and returned, the shares
it represents will be voted at the annual meeting in accordance with any
directions noted on that proxy. If no direction is indicated, the proxy will be
voted in favor of the proposals set forth in the notice attached to this proxy
statement.
The election of directors will be determined by a plurality of the shares
present in person or represented by proxy. All other matters to come before the
meeting will be approved if the votes cast in favor exceed the votes cast
against. Any abstention or broker non-vote on any such matter will not change
the number of votes cast for or against the matter. However, such abstaining
shares will be counted in determining whether a quorum is present pursuant to
the applicable provisions of the Indiana Business Corporation Law.
The board of directors knows of no matters, other than those reported herein,
which are to be brought before the meeting. However, if other matters properly
come before the meeting, it is the intention of the persons named in the
enclosed form of proxy to vote such proxy in accordance with their judgment on
such matters. Any shareholder giving a proxy has the power to revoke it at any
time before it is voted by a written notice delivered to the Secretary of the
Company or in person at the meeting. The approximate date of first mailing of
this proxy statement and the accompanying proxy card is April 26, 2002.
1. ELECTION OF DIRECTORS
The board of directors is currently comprised of seven members. The directors
of the Company are divided into three classes and are elected to hold office for
a three year term. The election of each class of directors is staggered over
each three year period. Unless otherwise directed, each proxy card executed and
returned by a shareholder will be voted for the election of the nominees listed
below. If any person named as a nominee shall be unable or unwilling to stand
for election at the time of the annual meeting, the proxy holders intend to
nominate and vote for a replacement nominee recommended by the board. At this
time, the board knows of no reason why the nominees listed below may not be able
to serve as directors if elected.
The board of directors unanimously recommends the election of the following
nominees for a three (3) year term to expire in the year 2005. Goran Capital
Inc. ("Goran") owns sufficient shares of the Company to ensure the election of
the nominees, and Goran presently intends to vote for the nominees listed below.
NOMINEES FOR ELECTION
G. Gordon Symons Age 80 Director Since 1987
Chairman of the Board of Directors of the Company and
Goran
G. Gordon Symons has been Chairman of the Board of Directors of the Company
since its formation in 1987. He founded the predecessor to Goran, the 73%
shareholder of the Company, in 1964 and has served as the Chairman of the Board
of Goran since its formation in 1986. Mr. Symons also served as the President
of Goran until 1992 and the Chief Executive Officer of Goran until 1994. Mr.
Symons currently serves as a director of Symons International Group Ltd.
("SIGL"), a Canadian corporation controlled by him, which together with members
of the Symons family, controls Goran. Mr. Symons also serves as Chairman of the
Board of Directors of all of the subsidiaries of Goran. Mr. Symons is the
father of Alan G. Symons and Douglas H. Symons.
Larry S. Wechter Age 46 Director Since 2000
CEO, Monument Advisors, Inc
Larry S. Wechter, has served as a director of the Company since January 2000.
Mr. Wechter is the founder, Managing Director and Chief Executive Officer of
Monument Advisors, Inc., a private equity fund based in Indianapolis, Indiana.
Prior to joining Monument Advisors, Inc., Mr. Wechter was President and a
director of ADESA Corporation, now a wholly owned subsidiary of Minnesota Power
& Light. Mr. Wechter serves on the board of the Ball State University School of
Entrepreneurship, the Midwest Entrepreneurship Education Association and the
Indiana Humanities Council. Mr. Wechter currently holds NASD Series 7, 24, 27
and 63 securities licenses and is a CPA.
Terry W. Anker Age 36 Director Since 2001
Terry W. Anker became a director of the Company on November 29, 2001 filling a
vacancy created by the resignation of Mr. McKeating, whose term expires this
year. Mr. Anker is the chairman of the board of Anthology Companies, a holding
company consisting of Keystone Lighting and Keystone's Light Lab, retail and
wholesale residential lighting distribution businesses. Mr. Anker previously
led the Marion County Regulatory Review Commission, an organization charged with
streamlining city-county government bureaucracy in Indianapolis. Mr. Anker also
developed the I.T.S. technology for electronic submission of court filings for
HPS, Inc.
DIRECTORS CONTINUING IN OFFICE
Douglas H. Symons Age 49 Director Since 1987
President and CEO of the Company and COO of Goran
Douglas H. Symons has served as a director of the Company since 1987 and as
President of the Company since 1989. His term expires in 2004. Mr. Symons has
served as the Company's Chief Operating Officer since July 1996 and as its Chief
Executive Officer since November 1999. Mr. Symons also served as Chief
Executive Officer of the Company from 1989 until July 1996. Mr. Symons has been
a director of Goran since 1989, and has served as Goran's Chief Operating
Officer and Vice President since 1989. Mr. Symons is the son of G. Gordon
Symons and the brother of Alan G. Symons.
Alan G. Symons Age 55 Director Since 1987
Deputy Chairman of the Company and CEO and President
of Goran
Alan G. Symons has served as a director of the Company since 1987 and served as
its Chief Executive Officer from 1996 until November 1999. Mr. Symons has
served as Deputy Chairman of the Company since November, 1999. His term as a
director expires in 2003. Mr. Symons has been a director of Goran since 1992,
and has served as Goran's President and Chief Executive Officer since 1994.
Prior to becoming the President and Chief Executive Officer of Goran, Mr. Symons
held other executive positions within Goran since its inception in 1986. Mr.
Symons is past president of the Columbia club. He is a director of Fluke
Transport, Inc., Fox 40 Whistle Company, Monument Advisers, Inc. and the Ball
State University School of Entrepreneurship. Mr. Symons is the son of G. Gordon
Symons and the brother of Douglas H. Symons.
Gene S. Yerant Age 55 Director Since 2000
Executive Vice President of the Company and Goran
Gene S. Yerant was named Executive Vice President of the Company and President
and Chief Operating Officer of Superior Insurance Group, Inc. in January 2000
and has served as a director of the Company since January 2000. His term
expires in 2004. Prior to joining the Company, Mr. Yerant served as President
of Transport Insurance in Dallas, Texas. From December 1995 to April 1996 he
also served as President of Leader Insurance. From April 1990 to April 1998,
Mr. Yerant served as a director for National Interstate, a Cleveland, Ohio based
insurance company. From September 1990 to February 1997, Mr. Yerant served as
director for North American Livestock.
Robert C. Whiting Age 69 Director Since 1996
President, Prime Advisors Ltd
Robert C. Whiting has served as a director of the Company since 1996. His term
as a director expires in 2003. Since July 1994, Mr. Whiting has served as
President of Prime Advisors, Ltd., a Bermuda-based insurance consulting firm.
From its inception until June 1994 Mr. Whiting served as President and Chairman
of the Board of Jardine Pinehurst Management Co., Ltd., a Bermuda-based
insurance management and brokerage firm.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
During the year ended December 31, 2001, the board of directors of the Company
met seven times, including teleconferences. Each director participated in 75%
or more of the meetings of the board and committee meetings (held during the
period for which he has been a director). The board of directors appoints from
its members an Executive Committee, a Security Committee, an Audit Committee and
a Compensation Committee.
EXECUTIVE COMMITTEE
The Executive Committee is comprised of G. Gordon Symons, Alan G. Symons and
Douglas H. Symons. The Executive Committee is empowered by the board of
directors to take action on behalf of the board in connection with the
management and affairs of the business of the Company. The Executive Committee
had frequent informal meetings, including telephonically, during 2001.
SECURITY COMMITTEE
The Security Committee is comprised of Robert C. Whiting and Douglas H. Symons.
The primary responsibility of the Security Committee is to review risk exposure
to the Company in connection with its reinsurance programs and other property
and liability exposures. The Security Committee met twice during 2001.
AUDIT COMMITTEE
The members of the Audit Committee are Larry S. Wechter, Robert C. Whiting and
Terry W. Anker. The primary responsibilities of the Audit Committee are set
forth in the Charter of the Audit Committee. The Audit Committee met four times
during 2001.
COMPENSATION COMMITTEE
The Compensation Committee of the Company is comprised of Terry W. Anker, Robert
C. Whiting and Douglas H. Symons. The Compensation Committee makes
recommendations concerning executive compensation and benefit levels to the
board of directors and has the authority to approve all specific transactions
pursuant to the Symons International Group, Inc. 1996 Stock Option Plan (the
"Plan"). The Compensation Committee met once during 2001.
COMPENSATION OF DIRECTORS
Directors of the Company who are not employees of the Company or its affiliates
receive an annual retainer of $10,000. In addition, the Company reimburses its
directors for reasonable travel expenses incurred in attending board and board
committee meetings. Each director of the Company who is not also an employee of
the Company receives a meeting fee of $1,000 for each committee meeting
attended, with committee chairs receiving an additional $1,500 per quarter.
VOTING SECURITIES AND BENEFICIAL OWNERS
Only shareholders of record as of the close of business on April 23, 2002 will
be entitled to vote at the annual meeting. On the record date, there were
10,385,399 shares of common stock outstanding, the only class of the Company's
stock which is currently outstanding.
The following table shows, as of April 20, 2002, the number and percentage of
shares of common stock of the Company held by each person known to the Company
to own beneficially more than five percent of the issued and outstanding common
stock of the Company, and the ownership interests of each of the Company's
directors and named executive officers, and all directors and executive officers
of the Company as a group, in the common stock of the Company and in the common
stock of the Company's 73.3% shareholder, Goran. Unless otherwise indicated in
a footnote to the following table, each beneficial owner possesses sole voting
and investment power with respect to the shares owned.
SYMONS INTERNATIONAL GROUP, INC. GORAN CAPITAL INC.
AMOUNT AND NATURE
OF BENEFICIAL PERCENT OF AMOUNT AND NATURE OF PERCENT OF
NAME OWNERSHIP CLASS BENEFICIAL OWNERSHIP CLASS
- ------------------------------------- ----------------- ----------- -------------------- -----------
G. Gordon Symons1 . . . . . . . . . . 520,000 4.8% 2,375,524 38.4%
----------------- ----------- -------------------- -----------
Alan G. Symons2 . . . . . . . . . . . 332,691 3.1% 768,065 12.4%
----------------- ----------- -------------------- -----------
Douglas H. Symons3. . . . . . . . . . 245,500 2.3% 311,455 5.0%
----------------- ----------- -------------------- -----------
Robert C. Whiting4. . . . . . . . . . 82,800 * 20,000 *
----------------- ----------- -------------------- -----------
Larry S. Wechter5 . . . . . . . . . . 31,000 * 0 0
----------------- ----------- -------------------- -----------
Gene S. Yerant6 . . . . . . . . . . . 4,170 * 40,000 *
----------------- ----------- -------------------- -----------
Terry W. Anker. . . . . . . . . . . . 0 0 0 0
----------------- ----------- -------------------- -----------
David N. Hafling7 . . . . . . . . . . 10,413 * 0 0
----------------- ----------- -------------------- -----------
Mark A. Paul. . . . . . . . . . . . . 0 0 0 0
----------------- ----------- -------------------- -----------
Gregg F. Albacete8. . . . . . . . . . 6,666 * 0 0
----------------- ----------- -------------------- -----------
Goran Capital Inc.9 . . . . . . . . . 7,590,300 73.3% 0 0
----------------- ----------- -------------------- -----------
All executive officers and directors. 1,229,070 12.9% 3,024,044 52.2%
as a group (10 persons)
- -------------------------------------
<FN>
* Less than 1% of class
1 With respect to the shares of the Company, 10,000 shares are owned directly and 510,000 shares may
be purchased pursuant to stock options that are exercisable within 60 days. With respect to the shares
of Goran, 479,111 shares are held by trusts of which Mr. Symons is the beneficiary, 1,646,413 of the
shares indicated are owned by Symons International Group Ltd., of which Mr. Symons is the controlling
shareholder, and 250,000 shares are subject to options exercisable within 60 days.
2 With respect to shares of the Company, 72,691 are owned directly and 260,000 shares may be
purchased pursuant to stock options that are exercisable within 60 days. With respect to the shares of
Goran, 387,215 are held by a trust over which Mr. Symons exercises limited direction, 180,850 are owned
directly, and 200,000 shares may be purchased pursuant to stock options that are exercisable within 60
days.
3 With respect to shares of the Company, 35,500 shares are owned directly and 210,000 shares may be
purchased pursuant to stock options that are exercisable within 60 days. With respect to Goran, 251,455
shares are owned directly and 60,000 shares may be purchased pursuant to stock options that are
exercisable within 60 days.
4 With respect to shares of the Company, 54,800 shares are owned directly and 28,000 shares may be
purchased pursuant to stock options that are exercisable within 60 days.
5 Mr. Wechter owns 8,000 shares directly, 5,000 are held by a foundation of which Mr. Wechter is a
trustee and 18,000 shares may be purchased pursuant to stock options that are exercisable within 60
days.
6 With respect to shares of the Company, 4,170 are held in Mr. Yerant's 401(k) account, and with
respect to shares of Goran, 40,000 shares may be purchased pursuant to stock options that are
exercisable within 60 days.
7 With respect to shares of the Company, 3,747 are held in Mr. Hafling's 401(k) account, and 6,666
shares may be purchased pursuant to stock options that are exercisable within 60 days.
8 With respect to shares of the Company 6,666 shares may be purchased pursuant to stock options that
are exercisable within 60 days.
9 Goran's office address is 2 Eva Road, Suite 201, Toronto, Ontario Canada M9C 2A8.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
officers and directors, as well as persons who own more than 10% of the
outstanding common shares of the Company, to file reports of ownership with the
Securities and Exchange Commission. Officers, directors and greater than 10%
shareholders are required to furnish the Company with copies of all Section
16(a) forms they file. Based solely on its review of copies of such forms
received by it, or written representations from certain reporting persons that
no reports were required for those persons, the Company believes that during
2001, all filing requirements applicable to its officers, directors and greater
than 10% shareholders were met.
REPORT OF THE COMPENSATION COMMITTEE
The Committee regularly reviews the Company's executive compensation policies
and practices and approves of the compensation of executive officers. The
Committee's executive compensation policy is designed to attract, retain, and
motivate highly talented individuals at the executive level of the organization.
Executive compensation is based on the level of job responsibility, individual
performance, and Company performance. Compensation also reflects the value of
the job in the marketplace. To attract and retain highly skilled executives,
the Company must remain competitive with the pay of other premier employers who
compete with the Company for talent. The Committee believes that the Company's
executive compensation program reflects these principles and gives executives
strong incentives to maximize Company performance and therefore enhance
shareholder value. The policy consists of both annual and long-term components,
which should be considered together in assessing whether the policy is attaining
its objectives.
To align the interest of employees with those of shareholders, the Company
provides employees the opportunity for equity ownership through the Plan. The
Compensation Committee makes recommendations to the board for the award of stock
options pursuant to the Plan. The objectives of the Plan are to align employee
and shareholder long-term interests by creating a strong and direct link between
employee compensation and shareholder return and to enable employees to develop
and maintain a long-term ownership position in the Company's common stock. A
total of 1,500,000 shares of the Company's common stock have been reserved for
issuance under the Plan. As of April 10, 2002, 238,667 shares were available
for grant of options pursuant to the Plan. There were no grants of options
during 2001.
The Company's total compensation program for officers includes base salaries,
bonuses and the grant of stock options pursuant to the Plan. The Company's
primary objective is to achieve above-average performance by providing the
opportunity to earn above-average total compensation (base salary, bonus and
value derived from stock options) for above-average performance. The program is
designed to attract, motivate, reward and retain the management talent required
to serve shareholder, customer and employee interests. The Company believes
that this program also motivates the Company's officers to acquire and retain
appropriate levels of stock ownership. It is the opinion of the Compensation
Committee that the total compensation earned by Company officers during 2001
achieves these objectives and is fair and reasonable.
The compensation of Douglas H. Symons, Chief Executive Officer of the Company,
was approved by the Compensation Committee in March, 1999. The Committee has
not reviewed the compensation of Douglas H. Symons subsequent to the date he
became Chief Executive Officer.
Federal income tax law disallows corporate deductibility for "compensation" paid
in excess of $1 million, unless such compensation is payable solely on account
of achievement of an objective performance goal approved by the shareholders.
As part of its on-going responsibilities with respect to executive compensation,
the Compensation Committee will monitor this issue to determine what actions, if
any, should be taken as a result of the limitation on deductibility.
The Compensation Committee
Terry W. Anker, Chairman
Robert C. Whiting
Douglas H. Symons
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Prior to November 29, 2001, the Company's Compensation Committee consisted of
John K. McKeating, Robert C. Whiting and Douglas H. Symons. Upon the
resignation of Mr. McKeating from the Company's board of directors, Terry W.
Anker became chairman of the Compensation Committee. Neither Mr. Whiting, Mr.
McKeating nor Mr. Anker has any interlocks reportable under Item 402(j)(3) of
Regulation S-K. Douglas H. Symons has served as a director and executive
officer of the Company since its formation in 1987 and as a director and
executive officer of Goran since 1989. Douglas H. Symons is also an executive
officer of each of the Company's subsidiaries. Since Alan G. Symons, Deputy
Chairman of the Company, is a director of each of the Company's subsidiaries and
is empowered to determine the compensation of the managers of the Company's
subsidiaries, Douglas H. Symons and Alan G. Symons have reportable interests
under Item 402(j)(3) (i)-(iii) of Regulation S-K for 2001.
REMUNERATION OF EXECUTIVE OFFICERS
The following table shows the cash compensation paid by the Company or any of
its subsidiaries and other compensation paid during the last three calendar
years to the Company's Chief Executive Officer and the other four highest paid
executive officers who were serving as executive officers at the end of 2001
(the "named executive officers").
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION
-------------------
LONG TERM
COMPENSATION
AWARDS-SECURITIES ALL
UNDERLYING OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS OPTIONS COMPENSATION
- --------------------------------------- ------------------- -------- -------- -------- -------------
Douglas H. Symons . . . . . . . . . . . 2001 $375,000 $ 0 0 $ 1,6515
Chief Executive Officer and President . 2000 $375,000 $ 0 210,000 $ 45,8466
1999 $375,000 $ 0 0 $ 0
------------------- -------- -------- -------- -------------
Gene S. Yerant1 . . . . . . . . . . . . 2001 $500,000 $ 912.00 0 $ 11,2237
Executive Vice President. . . . . . . . 2000 $500,000 $250,000 0 $ 21,6358
------------------- -------- -------- -------- -------------
David N. Hafling2 . . . . . . . . . . . 2001 $135,230 $ 0 0 $ 1,7435
Vice President, Chief Actuary . . . . . 2000 $118,846 $ 0 2,000 $ 3005
1999 $107,985 $ 0 $ 0
------------------- -------- -------- --------
Mark A. Paul3 . . . . . . . . . . . . . 2001 $ 69,230 $ 0 0 $ 7355
Vice President, Chief Financial Officer
Gregg F. Albacete4. . . . . . . . . . . 2001 $184,875 $ 37,986 $ 1,7475
Vice President, Chief Information . . . 2000 $175,000 $ 50,000 10,000 $ 19,3259
Officer
- ---------------------------------------
<FN>
1 Mr. Yerant joined the Company on January 10, 2000.
2 Mr. Hafling joined the Company on January 1, 1999.
3 Mr. Paul joined the Company on May 7, 2001.
4 Mr. Albacete joined the Company on January 26, 2000.
5 Health and life insurance premiums.
6 Includes $43,510 of accrued vacation and $2,336 of health and life insurance premiums.
7 Includes $1,990 of health and life insurance premiums.
8 Includes $19,067 of relocation expenses and $2,568 of health and life insurance premiums.
9 Includes $17,362 of relocation expenses and $1,963 of health and life insurance premiums.
OPTION EXERCISES AND YEAR-END VALUES
The following table shows unexercised stock options held by the Company's named
executive officers at December 31, 2001. In addition, this table includes the
number of shares covered by both exercisable and non-exercisable stock options.
The closing OTC stock price as of December 31, 2001 was $.07 per share, which
was lower than the option exercise prices; therefore, there were no unexercised
in the money options as of December 31, 2001. There were no exercises of stock
options by the named executive officers during 2001.
AGGREGATED OPTION EXERCISES IN 2001
AND DECEMBER 31, 2001 OPTION VALUES
NUMBER OF SHARES UNDERLYING VALUE OF UNEXERCISED IN THE
UNEXERCISED OPTIONS AT MONEY OPTIONS AT
NAME DECEMBER 31, 2001 DECEMBER 31, 20011
- ----------------- --------------------------- --------------------------
Exercisable Unexercisable Exercisable Unexercisable
--------------------------- --------------------------- ----------- -------------
Douglas H. Symons 210,000 0 0 0
--------------------------- --------------------------- ----------- -------------
Gene S. Yerant. . 0 0 0 0
--------------------------- --------------------------- ----------- -------------
David N. Hafling. 3,333 6,667 0 0
--------------------------- --------------------------- ----------- -------------
Gregg F. Albacete 3,333 6,667 0 0
--------------------------- --------------------------- ----------- -------------
Mark A. Paul. . . 0 0 0 0
- ----------------- --------------------------- --------------------------- ----------- -------------
<FN>
1 Based on the December 31, 2001 closing OTC stock price which was $.07 per share.
STOCK OPTION GRANTS
There were no grants of stock options to the Company's named executive officers
in 2001.
CERTAIN EMPLOYMENT AGREEMENTS
Certain of the Company's officers have entered into employment contracts with
the Company or one of its subsidiaries.
Douglas H. Symons, Chief Executive Officer of the Company, is subject to an
employment agreement, with such agreement calling for a base salary of not less
than $375,000 per year. This agreement became effective on March 8, 1999 and
continues in effect for an initial period of two years. Upon the expiration of
the initial two year period, the term of the agreement is automatically extended
from year to year thereafter and is cancelable (after the expiration of the
initial two year term) upon six months' notice. This agreement contains
customary restrictive covenants respecting confidentiality and non-competition
during the term of employment and for a period of two years after the
termination of the agreement. In addition to annual salary, Douglas H. Symons
may earn a bonus in an amount ranging from 0 to 100% of base salary. At the
discretion of the board, bonus awards may be greater than the amounts indicated
if agreed upon financial targets are exceeded.
The Company and Goran entered into an employment agreement with Gene S. Yerant
under which he has agreed to serve as Executive Vice President of the Company
and President of Superior Insurance Group, Inc., a subsidiary of the Company.
The agreement became effective on January 10, 2000 and continues in effect for
an initial term of five years. The agreement provides that Mr. Yerant will
receive a base salary of $500,000 annually and a bonus of up to 100% of salary
based upon achievement of certain performance objectives.
The Company and Goran entered into an employment agreement with David N. Hafling
under which he serves as Vice President and Chief Actuary of the Company. The
agreement became effective on October 15, 2001 and continues until December 31,
2004. The agreement is automatically renewed for one year periods thereafter
unless earlier terminated upon 60 days advance notice. The agreement provides
that Mr. Hafling will receive a base salary of not less than $150,000 annually
and an annual bonus of up to $30,000.
The Company and Goran entered into an employment agreement with Gregg F.
Albacete under which he serves as Vice President and Chief Information Officer
of the Company. The agreement became effective on January 26, 2000 for an
initial term of three years and is automatically renewed for one year periods
thereafter unless sooner terminated. The agreement provides that Mr. Albacete
will receive a base salary of not less than $175,000 annually and an annual
bonus of up to $75,000.
The Company entered into an employment agreement with Mark A. Paul under which
he serves as Vice President and Chief Financial Officer of the Company. The
agreement became effective on July 30, 2001 for an initial term of one year.
The term of the agreement is automatically extended from year to year thereafter
unless earlier terminated upon 120 days notice. The agreement provides that Mr.
Paul will receive a base salary of $120,000 annually and a bonus of up to 30% of
salary based upon certain preestablished goals.
2. RATIFICATION OF APPOINTMENT OF AUDITORS
The board of directors proposes the ratification by the shareholders at the
annual meeting of the appointment of the accounting firm of BDO Seidman, LLP
("BDO Seidman") as independent auditors for the Company's year ending December
31, 2002. A representative of BDO Seidman is expected to be present at the
annual meeting with the opportunity to make a statement if he or she so desires.
This individual will also be available to respond to any appropriate questions
the shareholders may have.
REPORT OF THE AUDIT COMMITTEE
The Company's Audit Committee is responsible for, among other things, reviewing
with BDO Seidman, its independent auditors, the scope and results of their audit
engagement. In connection with the fiscal 2001 audit, the Audit Committee has:
1. Reviewed and discussed with management the Company's audited financial
statements for the year ended December 31, 2001;
2. Discussed with BDO Seidman the matters required by Statement on Auditing
Standards No. 61, as amended, and
3. Received from and discussed with BDO Seidman the communication from BDO
Seidman required by Independence Standards Board Standard No. 1 regarding their
independence.
Based on the review and discussions described in the preceding items, the Audit
Committee recommended to the board of directors that the audited financial
statements be included in its Annual Report on Form 10-K for the year ended
December 31, 2001 for filing with the Securities and Exchange Commission.
The Audit Committee has adopted a charter, which was attached to the Company's
2001 proxy statement as Appendix A. The members of the Audit Committee have
been determined to be independent in accordance with the requirements of Nasdaq
Rule 4200.
The Audit Committee:
Larry S. Wechter, Chairman
Robert C. Whiting
Terry W. Anker
FEES PAID TO AUDITORS
AUDIT FEES
The aggregate fees billed by BDO Seidman for professional services rendered for
the audit of the Company's annual financial statements for the fiscal year ended
December 31, 2001 and for the reviews of the financial statements included in
the Company's quarterly reports on Form 10-Q for the same fiscal year were
approximately $326,826.
FINANCIAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION FEES
The Company paid no fees to BDO Seidman during the year ended December 31, 2001
relating to financial systems design and implementation.
ALL OTHER FEES
There were no other fees paid to BDO Seidman during the year ended December 31,
2001.
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
The Company has made the following personal loans to Alan G. Symons, which were
outstanding during 2001:
LARGEST LOAN BALANCE BALANCE AS OF
DATE OF LOAN DURING 2001 MARCH 30, 2002 INTEREST RATE
- ----------------- --------------------- --------------- --------------
June 30, 1986 . . $ 6,617 $ 6,617 None
--------------------- --------------- --------------
February 24, 1988 $ 27,309 $ 27,309 None
--------------------- --------------- --------------
March 19, 1998. . $ 15,293 $ 15,293 5.85%
- ----------------- --------------------- --------------- --------------
The Company has made the following personal loans to Douglas H. Symons, which
were outstanding during 2001:
LARGEST LOAN BALANCE BALANCE AS OF
DATE OF LOAN DURING 2001 MARCH 31, 2002 INTEREST RATE
- ------------------- --------------------- --------------- --------------
June 30, 1986 . . . $ 9,798 $ 0 None
--------------------- --------------- --------------
February 24, 1988 . $ 2,219 $ 2,219 None
--------------------- --------------- --------------
September 29, 1999. $ 100,000 $ 100,000 6.5%
--------------------- --------------- --------------
June 28, 2000 . . . $ 80,000 $ 80,000 None
--------------------- --------------- --------------
Prior to 1997(1). . $ 66,256 $ 66,256 None
--------------------- --------------- --------------
June 4, 2001(1) . . $ 50,000 $ 50,000 None
- ------------------- --------------------- --------------- --------------
<FN>
(1) Represents advances.
Pafco General Insurance Company ("Pafco"), an insurance subsidiary of the
Company, engaged in reinsurance transactions with Granite Reinsurance Company
Ltd. ("Granite Re") during 2001. Granite Re is a wholly owned subsidiary of
Goran, and G. Gordon Symons, Alan G. Symons and Douglas H. Symons are directors
and executive officers of Goran.
During 2001, IGF received $32,197 from Granite Re with regard to reinsurance
treaties in effect during 2000.
On an ongoing basis, Pafco also reinsures with Granite Re non-automobile
business written by Pafco and originated through Symons International Group,
Inc. - Florida, a subsidiary of Goran. Under this reinsurance arrangement, Pafco
ceded approximately $3,700 in premiums to Granite Re in 2001. Those reinsurance
arrangements have been continued for 2002.
The Company paid $15,000 to Stargate Solutions Group, Inc. in 2001 for
consulting and other services relative to the conversion to the Company's
non-standard automobile operating system. Stargate Solutions Group, Inc. is
owned by Kirk Symons, the son of G. Gordon Symons and brother of Alan G. Symons
and Douglas H. Symons.
During 2001, the Company and Pafco paid David G. Symons, an attorney licensed in
California, approximately $45,000 for legal fees relating to claims against such
companies. David G. Symons is the son of Alan G. Symons.
Superior Insurance Group, Inc., a wholly owned subsidiary of the Company, owns a
less than 1% limited partnership interest in Monument Capital Partners I. The
amount of the investment was $100,000. Larry S. Wechter, a director of the
Company is Managing Director and Chief Executive Officer of Monument Advisors,
Inc. and Alan G. Symons, a director of the Company, is a director of Monument
Advisors, Inc. Monument Advisors, Inc. is the general partner of Monument
Capital Partners I.
PERFORMANCE GRAPH
The following performance graph compares the cumulative total shareholder return
on the Company's common stock with Standard & Poor's 500 Stock Index and the
Company's peer group for the years 1996 through 2001.
[GRAPHIC OMITED]
Notwithstanding anything to the contrary set forth in any of the Company's
previous filings under the Securities Act of 1933, as amended, or the Securities
Exchange Act of 1934, as amended, that may incorporate future filings (including
this proxy statement, in whole or in part), the preceding Compensation Committee
and Audit Committee Reports and the stock price performance graph shall not be
incorporated by reference in any such filings.
SHAREHOLDER PROPOSALS AND NOMINATIONS
Any shareholder of the Company wishing to have a proposal considered for
inclusion in the Company's 2003 proxy solicitation materials must set forth such
proposal in writing and file it with the Secretary of the Company on or before
December 26, 2002. In order to be considered in the 2003 annual meeting,
shareholder proposals not included in the Company's 2003 proxy solicitation
materials, as well as shareholder nominations for directors, must be submitted
in writing to the Secretary of the Company at least sixty (60) days before the
date of the 2003 annual meeting, or, if the 2003 annual meeting is held prior to
March 31, 2003, within ten (10) days after notice of the annual meeting is
mailed to shareholders. The board of directors of the Company will review any
shareholder proposals that are filed as required, and will determine whether
such proposals meet applicable criteria for inclusion in its 2003 proxy
solicitation materials or consideration at the 2003 annual meeting.
OTHER MATTERS
Management is not aware of any business to come before the annual meeting other
than those matters described in this proxy statement. However, if any other
matters should properly come before the annual meeting, it is intended that the
proxies solicited hereby will be voted with respect to those matters in
accordance with the judgment of the persons voting the proxies. The cost of
solicitation of proxies will be borne by the Company. The Company will
reimburse brokerage firms and other custodians, nominees and fiduciaries for
reasonable expenses incurred by them in sending proxy material to the beneficial
owners of common stock of the Company. In addition to solicitation by mail,
directors, officers and employees of the Company may solicit proxies personally
or by telephone without additional compensation.
Each shareholder is urged to complete, date and sign the proxy and return it
promptly in the enclosed return envelope. Insofar as any of the information in
this proxy statement may rest peculiarly within the knowledge of persons other
than the Company, the Company relies upon information furnished by others for
the accuracy and completeness thereof.
Signed by Order of the Board of Directors
[GRAPHIC OMITED]
Douglas H. Symons
Chief Executive Officer