NOTICE OF 2002 ANNUAL MEETING OF SHAREHOLDER
AND PROXY STATEMENT
GET MORE. COVERAGE. SERVICE. SAVINGS.
21st CENTURY INSURANCE
i21.COM 1-800-211-SAVE
- OFC -
CORPORATE INFORMATION
CORPORATE OFFICES
21st Century Plaza
6301 Owensmouth Avenue
Woodland Hills, CA 91367
(818) 704-3700
INTERNET SITE
i21.com
INVESTOR RELATIONS
(818) 704-3595
PUBLIC COMMUNICATIONS
(818) 704-3065
TRANSFER AGENT AND REGISTRAR
American Stock
Transfer & Trust Company
40 Wall Street
New York, NY 10005
INDEPENDENT AUDITORS
PricewaterhouseCoopers LLP
350 South Grand Avenue
Los Angeles, CA 90071
ANNUAL MEETING
The annual meeting of shareholders will be held at 10:00 a.m., Wednesday, June
26, 2002, at Skirball Cultural Center, 2701 N. Sepulveda Blvd., Los Angeles, CA,
in the Ahmanson Hall.
TRADING INFORMATION
The Common Stock is traded on the New York Stock Exchange under the trading
symbol "TW".
- IFC -
NOTICE OF 2002 ANNUAL MEETING OF SHAREHOLDERS
AND PROXY STATEMENT
================================================================================
21ST CENTURY INSURANCE GROUP
Woodland Hills, California 91367
Dear Shareholder,
You are cordially invited to attend the Annual Meeting of Shareholders of 21st
Century Insurance Group on Wednesday, June 26, 2002 at 10:00 a.m., at the
Skirball Cultural Center, Ahmanson Hall, 2701 North Sepulveda Boulevard, Los
Angeles, California 90049.
Details of the business to be conducted at the annual meeting are given in the
attached Notice of Annual Meeting and Proxy Statement.
Whether or not you plan to attend, it is important that your shares be
represented and voted at the meeting. I therefore urge you to sign, date and
promptly return your proxy card in the enclosed self-addressed envelope or to
use one of the other available methods (by telephone or the Internet) so your
shares can be voted in accordance with your instructions. You may attend the
annual meeting and vote in person, if you so decide.
Tickets for the meeting are not required, though we ask that attendees sign the
attendance register prior to the commencement of the meeting.
On behalf of the Board of Directors, I would like to express our appreciation
for your continued interest in the affairs of the Company.
Sincerely,
[GRAPHIC OMITTED]
ROBERT M. SANDLER
CHAIRMAN OF THE BOARD
--------------------------------------------------------------------------------
YOUR VOTE IS IMPORTANT
We encourage you to sign and return your proxy card or use the telephone or the
Internet for voting your shares prior to the meeting.
--------------------------------------------------------------------------------
- 1-
21ST CENTURY INSURANCE GROUP
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
JUNE 26,2002
================================================================================
The Annual Meeting of Shareholders of 21st Century Insurance Group ("21st
Century" or "Company") will be held at the Skirball Cultural Center, Ahmanson
Hall, 2701 North Sepulveda Boulevard, Los Angeles, California 90049 on June 26,
2002 at 10:00 a.m. for the following purposes:
1. To elect nine directors.
2. To ratify the appointment of PricewaterhouseCoopers LLP as independent
accountants for 2002.
3. To transact such other business as may properly come before the
meeting or any adjournment thereof.
The Board of Directors has fixed the close of business on April 10, 2002 as the
record date for the determination of those shareholders entitled to notice of,
and to vote at the meeting.
By Order of the Board of Directors,
MICHAEL J. CASSANEGO
SECRETARY
Woodland Hills, California
DATED: April 29, 2002
--------------------------------------------------------------------------------
IMPORTANT
Whether or not you expect to attend in person, we urge you to sign, date and
return the enclosed Proxy, by mail, telephone or the Internet at your earliest
convenience. This will ensure the presence of a quorum at the meeting. PROMPTLY
SUBMITTING THE PROXY WILL SAVE THE COMPANY THE EXPENSE AND EXTRA WORK OF
ADDITIONAL SOLICITATION. You can also vote your stock at the meeting if you
desire to do so, as your Proxy is revocable at your option.
--------------------------------------------------------------------------------
- 2 -
21ST CENTURY INSURANCE GROUP
6301 OWENSMOUTH AVENUE
WOODLAND HILLS, CALIFORNIA 91367
======================
PROXY STATEMENT
FOR ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JUNE 26, 2002
======================
GENERAL INFORMATION
This Proxy Statement and the accompanying Notice of Annual Meeting and Proxy
Card are solicited by the Board of Directors of 21st Century Insurance Group for
use at the Annual Meeting of Shareholders to be held on Wednesday, June 26, 2002
at 10:00 a.m., at the Skirball Cultural Center, Ahmanson Hall, 2701 North
Sepulveda Boulevard, Los Angeles, California 90049. These proxy materials are
proposed to be sent on or about April 29, 2002 to all shareholders of the
Company's common stock of record as of April 10, 2002. The Company's principal
executive office is located at 6301 Owensmouth Avenue, Woodland Hills,
California 91367.
All proxies, properly executed and returned, will be voted at the annual meeting
as directed by the shareholder. Any shareholder may revoke a proxy by giving
written notice to the Company, by submitting a duly executed proxy bearing a
later date, or by voting in person at the meeting. If no directions are
indicated, the shares represented by the signed proxy will be voted FOR the
election of the nominees and FOR ratifying the appointment of
PricewaterhouseCoopers LLP as the independent accountants for 2002. The cost of
the solicitation of these proxies is to be borne by the Company.
Only shareholders of the Company's common stock at the close of business on
April 10, 2002 will be entitled to notice of and to vote at the meeting. As of
that date, 85,368,891 shares of common stock without par value of 21st Century
Insurance Group were outstanding. A quorum represented by a majority of the
outstanding shares of common stock, present in person or by proxy, is necessary
to conduct the meeting. In the election of directors, nominees receiving the
highest number of affirmative votes cast, up to the number of the directors to
be elected, are elected. Each share is entitled to one vote on all matters
except for the election of directors. In electing directors, each shareholder is
entitled to that number of votes which is equal to the number of shares held
multiplied by the number of directors to be elected. If notice of intention to
cumulate votes is given by any shareholder, all shareholders may cumulate their
votes and give one nominee all of those votes, or they may distribute the votes
among as many nominees as the shareholder deems fit. Votes withheld from any
director are counted for purposes of determining the presence or absence of a
quorum for the transaction of business. The Company believes that abstentions
should be counted for purposes of determining whether a quorum is present at the
Annual Meeting for the transaction of business. In the absence of controlling
precedent to the contrary, the Company intends to count broker non-votes as
present or represented for purposes of determining the absence of a quorum for
the transaction of business.
If there are nominees other than those designated by the Board of Directors, the
proxyholders have discretionary authority to cumulate votes, which they will do
through instructions from the Board, with the objective of electing as many of
the nominees of the Board of Directors as possible. The effect of the decision
of the proxyholders to exercise their discretionary authority to cumulate votes
will be to make it more difficult for nominees, other than those designated by
the Board of Directors, to be elected.
- 3 -
BENEFICIAL OWNERSHIP OF SECURITIES
PRINCIPAL SHAREHOLDERS
The following table lists the beneficial ownership of each person or group who
owned as of March 31, 2002, to the Company's knowledge, more than five percent
of any class of its outstanding voting securities.
AMOUNT AND
NATURE OF
BENEFICIAL PERCENT OF
TITLE OF CLASS NAME AND ADDRESS OF BENEFICIAL OWNER OWNERSHIP CLASS
Common AMERICAN INTERNATIONAL GROUP, INC. ("AIG") 53,445,778 62.6%
Through its subsidiaries:
American Home Assurance Company,
Commerce & Industry Insurance Company,
National Union Fire Insurance Company of Pittsburgh, Pa.
and New Hampshire Insurance Company
70 Pine Street
New York, NY 10270
Common AMERICAN UNION INSURANCE COMPANY 6,026,200 7.1%
2205 East Empire Street, Suite A
Bloomington, IL 61704
Common CAPITAL RESEARCH AND MANAGEMENT COMPANY 4,299,600 5.0%
333 South Hope Street
Los Angeles, CA 90071
- 4 -
MANAGEMENT OWNERSHIP
The following table summarizes the ownership of equity securities of 21st
Century Insurance Group and an affiliated company, AIG, by the directors, the
Company's Chief Executive Officer, former Chief Executive Officer and the four
other highest paid executive officers, and the directors and officers as a
group.
EQUITY SECURITIES OF 21ST CENTURY INSURANCE GROUP AND AIG
AS OF MARCH 31, 2002
---------------------------------------------------------------------------
21ST CENTURY AIG
------------------------- -----------------------
AMOUNT AND NATURE OF AMOUNT AND NATURE OF
TITLE OF NAME OF BENEFICIAL OWNERSHIP (1) PERCENT BENEFICIAL OWNERSHIP PERCENT
CLASS BENEFICIAL OWNER AS OF MARCH 31, 2002 OF CLASS AS OF MARCH 31, 2002 OF CLASS
----------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------
Common Robert M. Sandler 20,000 (2) * 431,951 *
(11)
Common John B. De Nault, III 1,233,700 (2) 1.4% 0 *
Common William N. Dooley 12,000 (3) * 66,281 *
(12)
Common R. Scott Foster 62,080 (2) * 1,000 *
Common Roxani M. Gillespie 12,000 (3) * 0 *
Common James P. Miscoll 14,195 (3) * 18,897 *
(13)
Common Gregory M. Shepard 6,046,200(2)(4) 7.1% 0 *
Common Howard I. Smith 20,000 (2) * 399,945 *
(14)
Common Bruce W. Marlow 165,564 (5) * 0 *
Common G. Edward Combs 44,031 (6) * 0 *
Common Michael J. Cassanego 52,131 (7) * 278 *
Common Dean E. Stark 91,363 (8) * 115 *
Common Richard A. Andre 77,640(9) * 58 *
Common All Directors and Officers 8,208,833 (10) 9.61% * *
as a Group (22 individuals)
----------------------------------------------------------------------------------------------------------------------
* LESS THAN 1%
(1) UNDER THE RULES OF THE SECURITIES AND EXCHANGE COMMISSION (THE "SEC"), A
PERSON IS DEEMED TO BE A BENEFICIAL OWNER OF A SECURITY IF HE OR SHE HAS OR
SHARES THE POWER TO VOTE OR TO DIRECT THE VOTING OF SUCH SECURITY, OR THE
POWER TO DISPOSE OR TO DIRECT THE DISPOSITION OF SUCH SECURITY. A PERSON IS
ALSO DEEMED TO BE A BENEFICIAL OWNER OF ANY SECURITIES OF WHICH THAT PERSON
HAS THE RIGHT TO ACQUIRE BENEFICIAL OWNERSHIP WITHIN 60 DAYS, AS WELL AS
ANY SECURITIES OWNED BY SUCH PERSON'S SPOUSE, CHILDREN OR RELATIVES LIVING
IN THE SAME HOUSEHOLD. ACCORDINGLY, MORE THAN ONE PERSON MAY BE DEEMED TO
BE A BENEFICIAL OWNER OF THE SAME SECURITIES.
(2) INCLUDES 20,000 SHARES ISSUABLE UPON EXERCISE OF STOCK OPTIONS EXERCISABLE
WITHIN 60 DAYS OF THE DATE OF THIS PROXY STATEMENT.
(3) INCLUDES 12,000 SHARES ISSUABLE UPON EXERCISE OF STOCK OPTIONS EXERCISABLE
WITHIN 60 DAYS OF THE DATE OF THIS PROXY STATEMENT.
(4) MR. SHEPARD IS CHAIRMAN OF THE BOARD AND PRESIDENT OF AMERICAN UNION
INSURANCE COMPANY WHICH OWNS 6,026,200 SHARES.
(5) INCLUDES 130,772 SHARES ISSUABLE UPON EXERCISE OF STOCK OPTIONS EXERCISABLE
WITHIN 60 DAYS OF THE DATE OF THIS PROXY STATEMENT.
(6) INCLUDES 29,031 SHARES ISSUABLE UPON EXERCISE OF STOCK OPTIONS EXERCISABLE
WITHIN 60 DAYS OF THIS PROXY STATEMENT
(7) INCLUDES 36,396 SHARES ISSUABLE UPON EXERCISE OF STOCK OPTIONS EXERCISABLE
WITHIN 60 DAYS OF THIS PROXY STATEMENT.
(8) INCLUDES 79,663 SHARES ISSUABLE UPON EXERCISE OF STOCK OPTIONS EXERCISABLE
WITHIN 60 DAYS OF THIS PROXY STATEMENT.
(9) INCLUDES 69,190 SHARES ISSUABLE UPON EXERCISE OF STOCK OPTIONS EXERCISABLE
WITHIN 60 DAYS OF THIS PROXY STATEMENT.
(10) INCLUDES 722,338 SHARES ISSUABLE UPON EXERCISE OF STOCK OPTIONS EXERCISABLE
WITHIN 60 DAYS OF THIS PROXY STATEMENT.
(11) INCLUDES 132,743 SHARES ISSUABLE UPON EXERCISE OF STOCK OPTIONS EXERCISABLE
WITHIN 60 DAYS OF THIS PROXY STATEMENT.
(12) INCLUDES 29,959 SHARES ISSUABLE UPON EXERCISE OF STOCK OPTIONS EXERCISABLE
WITHIN 60 DAYS OF THIS PROXY STATEMENT.
(13) INCLUDES 702 SHARES ISSUABLE UPON EXERCISE OF STOCK OPTIONS EXERCISABLE
WITHIN 60 DAYS OF THIS PROXY STATEMENT.
(14) INCLUDES 170,474 SHARES ISSUABLE UPON EXERCISE OF STOCK OPTIONS EXERCISABLE
WITHIN 60 DAYS OF THIS PROXY STATEMENT.
- 5 -
ELECTION OF DIRECTORS
(PROPOSAL 1)
The Board of Directors recommends the election of the nine nominees named in
this Proxy Statement to hold office until the next annual meeting or their
successors are elected and qualified. It is intended that the accompanying proxy
will be voted in favor of the following persons, all of whom are members of the
present Board, to serve as directors unless the shareholder indicates to the
contrary on the proxy. Management expects that each of the nominees will be
available for election, but if any of them is not a candidate at the time the
election occurs, it is intended that such proxy will be voted for the election
of another nominee to be designated by the Board of Directors to fill any such
vacancy. The proxy may not be voted for more than nine nominees.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
NOMINEES FOR BOARD OF DIRECTORS
[GRAPHIC OMITTED]
ROBERT M. SANDLER
DIRECTOR SINCE 1994 AGE 60
Chairman of the Board of the Company. Executive Vice
President, Senior Casualty Actuary and Senior Claims Officer
of AIG located in New York, NY.
[GRAPHIC OMITTED]
JOHN B. DE NAULT, III
DIRECTOR SINCE 1988 AGE 54
Chairman of the Board of Omnithruster, Inc. in Orange, CA
and private investor with offices in Los Angeles, CA. He
currently serves as a director of Liberty Bank. He is the
son of John B. De Nault, former chairman and director of the
Company.
- 6 -
[GRAPHIC OMITTED]
WILLIAM N. DOOLEY
DIRECTOR SINCE 1998 AGE 49
Senior Vice President, AIG Financial Services, located in
New York, NY. He also serves as a Director of International
Lease Finance Corporation, a wholly-owned subsidiary of AIG.
[GRAPHIC OMITTED]
R. SCOTT FOSTER, M.D.
DIRECTOR SINCE 1986 AGE 61
Ophthalmologist in Stockton, CA and Clinical Professor at
Stanford University. He is the son of the late Louis W.
Foster, Founder of the Company.
[GRAPHIC OMITTED]
ROXANI M. GILLESPIE
DIRECTOR SINCE 1998 AGE 61
Partner in the law firm of Barger & Wolen located in San
Francisco, CA since 1997. Previously, Ms. Gillespie was a
member of the law firm of Buchalter, Nemer, Fields & Younger
for 7 years. She was the California Insurance Commissioner
from 1986 to 1991.
[GRAPHIC OMITTED]
BRUCE W. MARLOW
DIRECTOR SINCE 2000 AGE 53
Vice Chairman of the Board, Chief Executive Officer,
President and Chief Operating Officer of the Company. Prior
to joining the Company in February 2000, Mr. Marlow was
employed by Allstate Corporation, since 1999, as Senior Vice
President and President of its Independent Agency Markets
subsidiary. Before retiring for three years, he served
Progressive Corporation from 1978-96, holding various
positions including Chief Operating Officer from 1988-1996.
- 7 -
[GRAPHIC OMITTED]
JAMES P. MISCOLL
DIRECTOR SINCE 1998 AGE 67
Retired as Vice Chairman of Bank of America in 1992. Mr.
Miscoll currently serves as consultant for AIG, and as
director of Chela Financial, East West Bank, Encore
Productions, MK Gold Company and Westinghouse Air Brake
Company.
[GRAPHIC OMITTED]
GREGORY M. SHEPARD
DIRECTOR SINCE 1995 AGE 46
Chairman of the Board and President of American Union
Insurance Company (AUIC) since 1985. Previously, Mr. Shepard
also served as Chairman of the Board of Directors and
President of Direct Auto Insurance Company, which changed
its name to AUIC in 1998, and American Union Financial
Corporation, American Union Life Insurance Company, and
Direct Auto Indemnity Company, which merged into AUIC in
1998 and 1999. In addition, he was Chairman and President of
Illinois HealthCare Insurance Company, resigning in 2000.
[GRAPHIC OMITTED]
HOWARD I. SMITH
DIRECTOR SINCE 1994 AGE 57
Executive Vice President and Chief Financial Officer of AIG
located in New York, NY. Mr. Smith currently serves as a
director of Transatlantic Holdings, Inc., a majority-owned
subsidiary of AIG; and International Lease Finance
Corporation, a wholly-owned subsidiary of AIG.
- 8 -
EXECUTIVE OFFICERS
The following is information concerning the executive officers of the Company.
HAS SERVED
AS AN OFFICER
OFFICERS OF THE COMPANY AGE SINCE BUSINESS BACKGROUND
---------------------------------------------------------------------------------------------------------------
BRUCE W. MARLOW 53 2000 Chief Executive Officer, President and Chief Operating
Officer. Prior to joining the Company in February 2000,
Mr. Marlow was employed by Allstate Corporation, since 1999,
as Senior Vice President and President of its Independent
Agency Markets subsidiary. Before retiring for three years,
he served Progressive Corporation from 1978-96, holding
various positions including Chief Operating Officer from
1988-1996.
RICHARD A. ANDRE 52 1988 Senior Vice President, Human Resources. Before joining the
Company in 1988, Mr. Andre was with Fidelity National Title
Insurance Company. Prior to that time, he was with Safeco
Corporation where he held a variety of positions including
Vice President of Personnel for Safeco Title Insurance
Company.
MICHAEL J. CASSANEGO 51 1999 Senior Vice President, General Counsel and Secretary.
Mr. Cassanego joined the Company in March 1999. He
previously was Vice President and Deputy General Counsel for
Fremont Compensation Insurance Group, which he joined upon
Fremont's acquisition of Industrial Indemnity Company in
1997. Mr. Cassanego was employed for 21 years with
Industrial Indemnity Company, serving in several positions
including Senior Vice President, Secretary and General
Counsel.
G. EDWARD COMBS 49 2000 Senior Vice President, New Business. Mr. Combs joined the
Company in 2000. Previously, he was employed by Progressive
Corporation for 22 years, serving in various management
positions.
MICHAEL A. GOGGIO 36 2001 Vice President, Finance. Mr. Goggio joined the Company in
June 2001. He was previously employed as Vice President and
Corporate Auditor by GuideOne Insurance Group from 1998 to
2001 and as Assistant Vice President and Assistant
Controller at United Insurance Company from 1993 to 1998.
- 9 -
HAS SERVED
AS AN OFFICER
OFFICERS OF THE COMPANY AGE SINCE BUSINESS BACKGROUND
---------------------------------------------------------------------------------------------------------------
DOUGLAS K. HOWELL 40 2001 Senior Vice President and Chief Financial Officer.
Mr. Howell joined the Company in April 2001. He was Senior
Vice President, Chief Financial Officer and Treasurer of
GuideOne Insurance Group from 1997 to 2001 and Vice
President, Finance and Corporate Development of Conseco and
its affiliate, Bankers Life Holding Company, in 1996 and
1997.
JOHN L. INGERSOLL 36 2001 Vice President, New Customer Marketing. Prior to joining the
Company in February 2001, Mr. Ingersoll served as President
of Netcubator, LLC from September 2000 to February 2001;
Senior Vice President of InsWeb Corporation from 1999 to
2000; and Senior Vice President, Business Development of
Countrywide Financial from 1996 to 1999.
JOHN M. LORENTZ 49 1996 Controller. Mr. Lorentz joined the Company in 1996. He was
previously employed by Transamerica Financial Services as
Vice President and Controller in 1995 and 1996 and as
Assistant Controller from 1990 to 1995.
JOSEPH J. PRATT 53 1995 Vice President and Chief Actuary. Mr. Pratt joined the Company
in 1995. He was an actuary with Farmers Insurance Group from
June 1994 to October 1995. He also served as Vice President
and Actuary for Transamerica Insurance Group from 1988 to 1994.
ERIC SAUDI 55 2001 Vice President, Customer Care. Mr. Saudi joined the Company
in July 1978, serving in various claim positions, including
Assistant Vice President. He was promoted to Vice President
in October 2001. He has over 26 years in the insurance
industry.
CAREN L. SILVESTRI 48 2000 Vice President and Product Manager. Ms. Silvestri joined the
Company in 1982, serving in various positions in Marketing,
Operations and Underwriting. She has over 20 years
experience in the insurance industry.
DEAN E. STARK 48 1993 Senior Vice President, Claims. Mr. Stark joined the Company
in 1979, serving in numerous claim positions including Vice
President. He has over 25 years of experience in the
insurance industry.
JOHN M. VRIJMOET 40 2000 Vice President, Consumer Marketing. Mr. Vrijmoet joined the
Company in July 2000. He was previously employed by
Progressive Corporation, serving in various marketing and
management positions from 1991 to 2000.
- 10 -
Each executive officer serves at the pleasure of the Board of Directors. Every
person chosen by the Board of Directors to be an executive officer is listed
above.
BOARD OF DIRECTORS AND COMMITTEE MEETINGS
The business of the Company is managed under the direction of the Board of
Directors. The Board meets on a regularly scheduled basis during the year to
review significant developments affecting the Company and to act on matters
requiring Board approval. It also holds special meetings when an important
matter requires Board action between scheduled meetings. The Board of Directors
met six times during 2001. Each Board member participated in at least 75% of the
meetings of the Board and Committees of the Board on which he or she served.
The Board of Directors has standing audit and compensation committees,
identified below. The Company does not have a standing nominating committee. The
functions of a nominating committee are performed by the Board as a whole.
COMPENSATION COMMITTEE. The Compensation Committee met once last year. The
Compensation Committee reviews and approves compensation policies, except those
related to equities, and makes recommendations regarding executive compensation
to the Board of Directors. No member of the Committee is a former or current
officer or employee of the Company or any of its subsidiaries. Current members
of the Committee are Robert M. Sandler, William N. Dooley, R. Scott Foster,
James P. Miscoll and Gregory M. Shepard.
EQUITY BASED COMPENSATION COMMITTEE. The Equity Based Compensation Committee met
once last year. The Committee reviews and approves equity-based compensation
policies and makes recommendations regarding equity-based compensation to the
Board of Directors. No member of the Committee is a former or current officer or
employee of the Company or any of its subsidiaries. Members of the Committee are
John B. De Nault, III, R. Scott Foster and Gregory M. Shepard.
AUDIT COMMITTEE. The Audit Committee met four times during 2001. Pursuant to the
charter approved by the Board of Directors, it recommends to the Board of
Directors the appointment of the firm selected to be independent auditors for
the Company, reviews the Company's procedures and accounting objectives, reviews
and approves the findings and reports of the independent auditors, and makes
recommendations and reports to the Board of Directors as it deems appropriate.
Current members of the Committee, who the Board believes are independent per the
listing standards of the New York Stock Exchange, are John B. De Nault, III, R.
Scott Foster and Gregory M. Shepard.
REPORT OF THE AUDIT COMMITTEE
The Audit Committee oversees the Company's financial reporting process on behalf
of the Board of Directors. Management has the primary responsibility for the
financial statements and the reporting process including the systems of internal
controls. In fulfilling its oversight responsibilities, the Committee reviewed
the audited financial statements in the Annual Report with management including
a discussion of the quality, not just the acceptability, of the accounting
principles, the reasonableness of significant judgments, and the clarity of
disclosures in the financial statements.
The Committee reviewed with the independent auditors, who are responsible for
expressing an opinion on the conformity of those audited financial statements
with generally accepted accounting principles, their judgments as to the
quality, not just the acceptability, of the Company's accounting principles and
such other matters as are required to be discussed with the Committee under
generally accepted auditing standards. In addition, the Committee has discussed
with the independent auditors the auditors'
- 11 -
independence from the Company and its management including the matters in the
written disclosures required by the Independence Standards Board and considered
the compatibility of non-audit services with the auditors' independence. The
consulting services provided by the independent auditors in 2001 were limited to
certain technical tax matters and financial reporting developments, which the
Committee believes do not impair the auditors' independence.
The Committee discussed with the Company's internal and independent auditors the
overall scope and plans for their respective audits. The Committee meets with
the internal and independent auditors, with and without management present, to
discuss the results of their examinations, their evaluations of the Company's
internal controls, and the overall quality of the Company's financial reporting.
In reliance on the reviews and discussions referred to above, this Committee
recommended to the Board of Directors that the audited financial statements be
included in the Annual Report on Form 10-K for the year ended December 31, 2001
for filing with the Securities and Exchange Commission.
The Audit Committee's recommendations as outlined in this report have been
submitted to, reviewed and approved by the Board of Directors.
Submitted by the Audit Committee
John B. De Nault III
R. Scott Foster
Gregory M. Shepard
COMPENSATION OF DIRECTORS
For 2001, each outside director of the Company received an annual remuneration
of $15,000. All directors received $1,250 for each attended meeting of the Board
of Directors. In addition, each committee member received $1,250 for each
attended meeting of a committee, if otherwise entitled. No director is entitled
to more than $1,250 for any calendar day, regardless of the number of meetings
attended on that day. Under the Company's 1995 Stock Option Plan, nonemployee
directors receive an option to purchase 4,000 shares of the Company's common
stock on the day of each Annual Meeting of Shareholders or the date on which the
individual initially becomes a director. The options have an exercise price
equal to the fair market value of the underlying shares subject to the option on
the date of grant and become exercisable one year after the date of grant.
Ms. Gillespie is a partner in the law firm of Barger & Wolen who rendered
services to the Company currently not exceeding 5% of its gross revenues.
- 12 -
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth the annual and long-term compensation and the
compensation paid during each of the Company's last three years to the Company's
Chief Executive Officer and the four highest-paid executive officers (the "Named
Executives"), based on base salary and bonus earned during 2001.
ANNUAL COMPENSATION LONG TERM COMPENSATION (2)
-------------------------------------- --------------------------------------
AWARDS
-----------------------
OTHER RESTRICTED SECURITIES
ANNUAL STOCK UNDERLYING ALL OTHER
SALARY BONUS COMPENSATION AWARDS OPTIONS COMPENSATION
NAME AND PRINCIPAL POSITION YEAR ($) ($) ($)(1) ($)(3) (#)(4) ($)(5)
---------------------------------------------------------------------------------------------------------------------
Bruce W. Marlow 2001 704,327 150,000 -- 610,571 9,720
CEO, President, COO, Vice 2000 550,000 250,000 600,000 100,000 24,919
Chairman and Director 1999 -- -- -- -- --
G. Edward Combs 2001 311,181 35,000 77,462 20,083
Senior Vice President, 2000 200,000 75,000 300,000 87,094 58,678
Marketing 1999 -- -- -- -- --
Michael J. Cassanego 2001 274,423 41,250 -- 68,408 17,479
Senior Vice President, 2000 245,000 50,000 -- 69,188 15,656
General Counsel & Secretary 1999 187,320 65,000 230,000 20,000 27,235
Dean E. Stark 2001 249,230 37,500 -- 64,676 15,512
Senior Vice President 2000 210,000 50,000 -- 58,988 12,349
Claims 1999 171,000 50,000 171,000 15,000 11,621
Richard A. Andre 2001 223,212 33,541 -- 57,214 13,398
Senior Vice President 2000 203,100 20,000 -- 57,569 12,472
Human Resources 1999 194,100 40,000 194,100 12,000 12,210
---------------------------------------------------------------------------------------------------------------------
(1) For each Named Executive, his Other Annual Compensation was less than
$50,000 and 10% of his combined total salary and bonus.
(2) During 2001, there were no awards of Stock Appreciation Rights ("SARs"),
nor were there any Long-Term Incentive Plan ("LTIP") payouts.
(3) Restricted Stock awards are for a five-year period, vesting at 20% per
year. During the restriction period, participants are entitled to receive
dividends on and may vote for the shares. The program was discontinued as
of January 1, 2001. The following table sets forth the restricted stock
award information and the vesting schedule for the named executives.
BALANCE AS PRESENT VALUE
DATE SHARES AWARD SHARES OF AS OF 12/31/01
AWARDED AWARDED VALUE VESTED 12/31/01 $19.45 PER SHARE
Bruce W. Marlow 2/09/00 32,990 $600,000 6,598 26,392 $513,324
G. Edward Combs 5/01/00 15,000 $300,000 3,000 12,000 $233,400
Michael J. Cassanego 5/25/99 12,735 $230,000 5,094 7,641 $148,617
Dean E. Stark 5/25/99 9,465 $171,000 3,786 5,679 $110,457
Richard A. Andre 5/25/99 10,745 $194,100 4,298 6,447 $125,394
--------------------------------------------------------------------------------------------------------------------
- 13 -
(4) Represents the number of shares of the Company's common stock for which
options were granted under the Company's 1995 Stock Option Plan.
(5) Includes the following other compensation for each Named Executive for
2001.
(A) Imputed income of group term life in excess of $50,000.
(B) Deferred employer's contribution to the Company's qualified 401(k)
Plan and supplemental 401(k) Plan.
2001
(A) (B) TOTAL
------------------------------------------------------------------------------------------------------
Bruce W. Marlow $2,070 $7,650 $9,720
G. Edward Combs 1,292 18,971 20,263
Michael J. Cassanego 1,830 15,649 17,479
Dean E. Stark 1,124 14,388 15,512
Richard A. Andre 1,615 11,783 13,398
------------------------------------------------------------------------------------------------------
Total $7,931 $68,441 $76,372
OPTION GRANTS AND EXERCISES IN 2001
The following table sets forth as to each of the Named Executives information
with respect to options granted for the year ended December 31, 2001 and the
present value of the options on the date of grant.
PERCENT OF
NUMBER OF TOTAL OPTIONS
OPTIONS GRANTED TO EXERCISE OR GRANT DATE
GRANTED EMPLOYEES BASE PRICE EXPIRATION PRESENT VALUE
NAME (1) IN 2001 ($/SH)(1) DATE $(2)
----------------------------------------------------------------------------------------------------------------
Bruce W. Marlow 610,571 33.5% $18.15 06/06/11 3,883,232
G. Edward Combs 77,462 4.25 % $18.15 06/06/11 492,658
Michael J. Cassanego 68,408 3.75 % $18.15 06/06/11 435,075
Dean E. Stark 64,676 3.54 % $18.15 06/06/11 411,339
Richard A. Andre 57,214 3.14 % $18.15 06/06/11 363,881
----------------------------------------------------------------------------------------------------------------
(1) Options were granted to the Named Executives on June 6, 2001. The
respective exercise price is equal to the closing price of $18.150 of the
Company's common stock on the business day immediately preceding the date
of grant, as reported in the Wall Street Journal, Western Edition. These
options vest in three equal annual installments beginning June 6, 2002.
(2) Present value was calculated using the Black-Scholes option pricing model
valued at $6.36. Use of this model should not be viewed in any way as a
forecast of the future performance of the Company's common stock, which
will be determined by future events and unknown factors. The estimated
values under the Black-Scholes model are based upon certain assumptions as
to variables, including expected stock price volatility of .33, an annual
interest rate of 4.88% and 5.28% a dividend yield of 2.50% for the options
granted on June 6, 2001, and an expected term of eight (8) years.
- 14 -
DECEMBER 31, 2001 OPTION VALUES
The following table provides information as to the value of options held by each
of the Named Executives at December 31, 2001. No options were exercised by the
Named Executives during 2001.
AGGREGATED OPTION EXERCISES DURING THE YEAR ENDED
DECEMBER 31, 2001 AND DECEMBER 31, 2001 OPTION VALUES
NUMBER OF VALUE OF UNEXERCISED
SECURITIES UNDERLYING IN-THE-MONEY OPTIONS
UNEXERCISED OPTIONS AT DECEMBER 31, 2001
AT DECEMBER 31, 2001 (#) ($)(1)
VALUE
SHARES ACQUIRED REALIZED
NAME ON EXERCISE (#) ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
----------------------------------------------------------------------------------------------------------------------
Bruce W. Marlow -- -- 120,772 589,799 165,625 783,978
G. Edward Combs -- -- 29,031 135,525 65,977 232,651
Michael J. Cassanego -- -- 36,396 121,200 70,194 196,580
Dean E. Stark -- -- 79,663 109,001 68,082 172.873
Richard A. Andre -- -- 69,190 99,593 63,099 162,677
----------------------------------------------------------------------------------------------------------------------
(1) In accordance with proxy statement reporting requirements, values of both
exercisable and unexercisable options are based on the difference between
the exercise price of each option and $19.45, The closing price of the
Company's common stock on December 31, 2001, as reported in The Wall Street
Journal, Western Edition.
COMPENSATION COMMITTEE REPORT ON
EXECUTIVE MANAGEMENT COMPENSATION
The Compensation Committee, consisting of nonemployee directors Robert M.
Sandler, William N. Dooley, R. Scott Foster, James P. Miscoll and Gregory M.
Shepard, has furnished the following report on executive compensation:
GENERAL COMPENSATION POLICY
The Board of Directors' fundamental policy has been to offer the Company's
executive officers competitive compensation opportunities based in large part
upon their contributions to the success of the Company, and upon their personal
performance. The Company believes in compensating its executives for
demonstrated and sustained levels of performance in their individual jobs. The
achievement of higher levels of performance and contribution is rewarded by
higher levels of compensation. In November 2000, the Board of Directors,
pursuant to the recommendations of the Equity Based Compensation and
Compensation Committees, revised the criteria for short-term compensation and
long-term incentives for its officers.
- 15 -
The compensation package is comprised of these three elements:
o base salary, perquisites and other personal benefits designed principally
to be competitive with relevant compensation levels in the industry;
o short-term cash compensation based upon performance levels achieved in
relation to pre-established target levels; and
o long-term incentive plan providing only stock option grants to its
officers also based upon their performance levels.
Some of the more important factors, which the Board considered in establishing
the components of each executive officer's compensation package for the 2001
fiscal year, are summarized below.
BASE SALARY. Base salary for each officer is set subjectively, after reviewing
personal performance, internal comparability considerations and salary levels in
effect for comparable positions in the market place. The Company uses salary
survey information to assign a salary grade range to each position, including
executive officers. Salary range midpoints are targeted at the 50th percentile
of like business enterprises in the same geographic area, if possible.
Salary recommendations for the year were based in part upon salary survey
information published by the National Association of Independent Insurers, SNL
Executive Compensation Review for Insurance Companies, and Sibson & Company. The
Committee believes that information provided by these groups presents a broadly
based cross-section of insurance company compensation practices. Individual
salary adjustments for executive officers were based upon analysis of base
salary levels, effectiveness of performance, changes in job responsibilities and
a subjective assessment of their personal contributions to the effectiveness of
the organization as a whole. All of the factors enumerated were applied in a
subjective, non-quantitative manner to establish an executive officer's base
salary. The peer group examined when establishing these compensation levels is
different from the industry group utilized in the Stockholder Return Performance
Graph shown on page 18.
SHORT-TERM COMPENSATION. Variable payments for the officers are based upon the
enhancement of value to the shareholders and customers as measured by
pre-established targets relative to the Company's revenue growth rate and GAAP
combined ratio.
LONG-TERM INCENTIVE COMPENSATION. In 1995, the Compensation Committee concluded
that a stock option plan would improve the linkage between shareholder value and
executive compensation. Upon this Committee's recommendation, the Board of
Directors adopted the 1995 Stock Option Plan. Shareholders approved the plan and
amendments thereto at the 1995, 1997 and 2000 Annual Meetings. Executives and
key employees are eligible to receive stock options from time to time, giving
them the right to purchase shares of the Company's common stock at a specified
price in the future. The Plan is currently administered by the Equity Based
Compensation Committee, which has authority to select optionees and to determine
the number of shares granted to them.
CEO COMPENSATION. Bruce W. Marlow's annual salary of $700,000 was established by
the Board of Directors upon recommendation of the Compensation Committee and
took into account the fact that he would hold the offices of Chief Executive
Officer and President. For year 2001, Mr. Marlow was awarded 610,571 stock
options under the 1995 Stock Option Plan and a cash bonus of $150,000 for
services rendered in 2001, based upon an evaluation by the Compensation
Committee of his year 2001 performance. In addition to subjective factors, the
factors considered for both salary and bonus consideration included the
Company's overall underwriting performance as measured by its GAAP combined
ratio.
- 16 -
The Compensation Committee's recommendations as outlined in this report have
been submitted to, reviewed and approved by the Board of Directors.
The Company has reviewed Section 162(m) of the Internal Revenue Code which
generally limits the deduction of compensation paid to a company's chief
executive officer and each of the other four highest compensated executive
officers to $1,000,000 for each individual, with certain exceptions. The
Company's deductions for compensation paid during 2001 were not limited by
Section 162(m). None of the compensation deduction attributable to stock options
granted by the Company is limited by this section, but compensation deductions
attributable to restricted stock grants, generally equaling the fair market
value of the underlying stock on the date of vesting, do not qualify as an
exception. The deductibility of compensation attributable to restricted stock
grants or other forms of compensation paid by the Company may be limited in the
future. While the Compensation Committee considers Section 162(m) in evaluating
compensation of executive officers, it is only one of several factors considered
in arriving at a compensation package.
Submitted by the Compensation Committee.
Robert M. Sandler
William N. Dooley
R. Scott Foster
James P. Miscoll
Gregory M. Shepard
COMPENSATION COMMITTEE INTERLOCKS
AND INSIDER PARTICIPATION
As indicated above, the Company's Compensation Committee consists of Robert M.
Sandler, William N. Dooley, R. Scott Foster, James P. Miscoll and Gregory M.
Shepard. No Committee member is or was an officer or employee of the Company or
any of its subsidiaries.
Bruce W. Marlow, Director and Chief Executive Officer also participated in
deliberations concerning executive officers' compensation during 2001, other
than his own. Mr. Marlow has been Chief Executive Officer and a director since
February 9, 2000.
- 17 -
STOCKHOLDER RETURN PERFORMANCE GRAPH
Set forth below is a line graph comparing the cumulative total stockholder
return on the Company's Common Stock against the cumulative total return of the
Standard & Poor's 500 Stock Index and the Standard & Poor's Property & Casualty
Insurance Index for the period of five years commencing December 31, 1996 and
ending December 31, 2001. The graph and table assume the $100 was invested on
December 31, 1996 in each of the Company's Common Stock, the Standard & Poor's
500 Stock Index and the Standard & Poor's Property & Casualty Insurance Index,
and that all dividends were reinvested. This data was furnished by Research Data
Group, Inc.
[LINE CHART OMITTED]
----------------------------------------------------------------------------------------
1996 1997 1998 1999 2000 2001
----------------------------------------------------------------------------------------
21st Century (TW) $100 $155.81 $142.07 $122.47 $92.88 $129.06
S&P 500 $100 $133.36 $171.47 $207.56 $188.66 $166.24
S&P P&C $100 $145.47 $135.35 $100.89 $157.14 $144.50
----------------------------------------------------------------------------------------
- 18 -
RETIREMENT PLANS
PENSION PLAN
The Company's Pension Plan is a noncontributory defined benefit plan for all
regular employees under which normal retirement is at age 65 and early
retirement can be elected by any participant who has reached age 55 and has at
least 10 years of service. The plan, subject to certain maximum and minimum
provisions, bases pension benefits on an employee's career average compensation
and length of service. The annual pension benefit payable upon normal retirement
is equal to the sum of the accruals for each year a participant was in the plan.
At retirement, the participant has various life and contingent annuity payment
elections. For purposes of this plan, compensation includes base annual salary
plus overtime and bonuses. These pension benefits serve as an offset in
calculating benefits for participants under the Supplemental Executive
Retirement Plan.
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
Employees nominated by the Chief Executive Officer and approved by the Board of
Directors are eligible to participate in the Supplemental Executive Retirement
Plan. The plan is a nonqualified defined benefit plan under which normal
retirement is age 65 with at least 5 years of service, and early retirement can
be elected by any participant who has reached age 55 with at least 10 years of
service. The annual retirement benefit payable for 15 years is equal to 60% of
the average of the three highest consecutive years of compensation during the
ten year period preceding retirement, reduced by the participant's benefit under
the Pension Plan and 50% of the participant's social security benefit.
PENSION SUPPLEMENTAL PLAN AND 401(K) SUPPLEMENTAL PLAN
Effective January 1, 1996, the Company adopted the Pension Supplemental Plan and
the 401(k) Supplemental Plan. Each is a non-qualified deferred compensation plan
designed for certain executives and key employees of the Company whose benefits
under the Company's qualified Pension and 401(k) Plans have been limited by
certain provisions of the Internal Revenue Code (the "Code").
The Pension Supplemental Plan provides a benefit equal to the difference between
the pension that would be payable under the Pension Plan, absent the Code's
limitations upon compensation considered in calculating pension benefits, and
the actual benefits payable subject to those limitations. If a participant in
this plan is also entitled to receive benefits under the Supplemental Executive
Retirement Plan, the Pension Supplemental Plan benefits will be reduced
accordingly.
The 401(k) Supplemental Plan permits certain executives and key employees to
defer an amount of current compensation which, in addition to amounts actually
contributed to the 401(k) Plan, allows the participant to defer the full amount
of contributions that could have been deferred under the 401(k) Plan without
regard to limitations which the Code places on contributions and eligible
compensation. To the extent that such limitations preclude a participant's
account from receiving matching contributions under the 401(k) Plan, the
participant will receive a like amount of matching contributions under the
401(k) Supplemental Plan.
- 19 -
The table below sets forth the benefit payable for 15 years after retirement
from the Pension Plan, Supplemental Executive Retirement Plan, the Pension
Supplemental Plan, and one half of the Social Security benefit (assuming the
recipient is entitled to the age 65 Social Security benefit).
NUMBER OF YEARS OF SERVICE
---------------------------------------------
FINAL AVERAGE
COMPENSATION 5 10 15 OR MORE
--------------------------------------------------------------------
$150,000 $ 45,000 $ 67,500 $ 90,000
200,000 60,000 90,000 120,000
250,000 75,000 112,500 150,000
300,000 90,000 135,000 180,000
350,000 105,000 157,500 210,000
400,000 120,000 180,000 240,000
450,000 135,000 202,500 270,000
500,000 150,000 225,000 300,000
550,000 165,000 247,500 330,000
600,000 180,000 270,000 360,000
650,000 195,000 292,500 390,000
Any deduction for Social Security or other offset has already been taken into
account.
As set forth above, compensation used in calculating the Pension, Supplemental
Executive Retirement Plan and Pension Supplemental retirement benefit includes
annual base salary, overtime and bonuses and will approximate and fall within
10% of the total of 1999 through 2001 salary and bonus amounts shown in the
Summary Compensation Table for the listed individuals.
The credited years for the Named Executives in the Summary Compensation Table
are Bruce W. Marlow -- 1 year; G. Edward Combs -- 1 year; Michael J. Cassanego
-- 2 years; Dean E. Stark -- 22 years; and Richard A. Andre -- 13 years.
RESTRICTED SHARES PLAN
The shareholders at their meeting held on May 23, 1982 approved the 21st Century
Insurance Group Restricted Shares Plan. Pursuant to the Plan, the Board of
Directors established a committee of its members currently entitled the Equity
Based Compensation Committee (the "Committee") to designate the participants in
the Plan, the amount of benefits thereunder, and to otherwise administer the
Plan. Members of the Committee are not eligible for benefits under the Plan.
Designation of an employee for benefits under the Restricted Shares Plan does
not necessarily entitle the employee to benefits under any other Company benefit
plan.
In general, the shares granted are restricted for a period of five years,
vesting at the rate of 20% per year. If the employment of the participant is
terminated within the five-year period, all shares not then vested are
forfeited. Any shares forfeited may be regranted to an existing participant or
any other employee eligible to be designated as a participant. During the
restricted period, a participant has the right to receive dividends and the
right to vote the shares.
The Plan does not create any right of any employee or class of employees to
receive a grant, nor does it create in any employee or class of employees any
right with respect to continuation of employment by the Company.
Presently, officers are not granted shares under this Plan.
- 20 -
STOCK OPTION PLAN
In 1995, the Company's shareholders approved the Company's 1995 Stock Option
Plan in order to enable the Company to attract, retain and motivate key
employees and nonemployee directors and to further align their interests with
those of the Company's shareholders by providing for or increasing their
proprietary interest in the Company. The Stock Option Plan is administered by a
committee comprised of disinterested members of the Board of Directors. The
committee has the authority to select persons to be granted options and to
determine exercise prices, vesting schedules and other provisions not
inconsistent with the provisions of the Stock Option Plan.
Each option gives a grantee the right to purchase shares of the Company's common
stock at a specified price in the future. Shares vest at fixed numbers of shares
per year over varying future periods. The Stock Option Plan provides that on the
day of an annual meeting of shareholders of the Company each nonemployee
director will be granted an option to purchase 4,000 shares of the Company's
common stock. Nonemployee director options have an exercise price equal to the
fair market value of the underlying shares subject to the option on the date of
grant and become exercisable one year after the date of grant.
EXECUTIVE SEVERANCE PLAN
The Company has enacted an Executive Severance Plan covering each of its
executive officers. If an officer is terminated for reasons other than death,
long-term disability, or good cause within a three-year period following a
change of control of the Company, or if the officer resigns after significant
adverse changes in his authority, duties, compensation, benefits or geographical
location, then the officer is entitled to a lump sum severance payment of one to
three times his or her current annual salary and most recent cash bonus. Junior
officers could receive one year of severance payments; senior officers, two
years; and the Chief Executive Officer, three years; with all severance payments
limited to the amount deductible to the Company under the provisions of Internal
Revenue Code Section 280G.
SECTION 16(a) BENEFICIAL OWNERSHIP
REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors, executive officers and persons who own more than ten percent of a
registered class of the Company's equity securities to file with the Securities
and Exchange Commission (the "SEC") initial reports of ownership and reports of
changes in ownership of Common Stock and other equity securities of the Company.
Executive officers, directors and greater than ten percent shareholders are
required by SEC regulation to furnish the Company with copies of all Section
16(a) forms they file.
To the Company's knowledge, based solely on a review of reports furnished to the
Company and written representations that no other reports were required during
the 2001 fiscal year, all Section 16(a) filing requirements were complied with
in a timely manner.
- 21 -
INDEPENDENT ACCOUNTANTS
(PROPOSAL 2)
The Board of Directors has approved a resolution retaining
PricewaterhouseCoopers LLP as its independent accountants for 2002. The
appointment was recommended by the Audit Committee. It is intended that unless
otherwise directed by the shareholders, proxies will be voted for the
ratification of this appointment.
On April 23, 2001, the Board of Directors, on the recommendation of the Audit
Committee and management, dismissed Ernst & Young LLP as the Company's
independent accountants and approved the appointment of PricewaterhouseCoopers
LLP as the Company's independent accountants to audit its consolidated financial
statements for 2001. Ernst & Young LLP had audited the Company's financial
statements since 1991.
During the two most recent fiscal years and the subsequent interim period
preceding this change in independent accountants, there were no reportable
events within the meaning of Item 304(a)(v) of Regulation S-K. There were no
disagreements between the Company and Ernst & Young LLP on any matters of
accounting principles or practices, financial statement disclosure, or auditing
scope or procedure, which disagreements, if not resolved to the satisfaction of
either independent accounting firm, would have caused such firm to make a
reference to the subject matter of the disagreements in connection with its
reports. Also, during the last two fiscal years, reports from Ernst & Young LLP
on the financial statements contained no adverse opinions or disclaimers of
opinion and have not been qualified or modified as to uncertainty, audit scope,
or accounting principles.
The Company provided PricewaterhouseCoopers LLP and Ernst & Young LLP with a
copy of this disclosure. Ernst & Young LLP furnished a letter addressed to the
Securities and Exchange Commission stating that Ernst & Young LLP agrees with
the above statements.
Fees paid to PricewaterhouseCoopers LLP for 2001 were as follows:
Audit Fees $377,264
Financial Information Systems Design
and Implementation Fees 0
All Other Fees (Tax Consulting) 189,876
-------
$567,140
Representatives of PricewaterhouseCoopers LLP are expected to be present at the
annual meeting to make a statement, if they desire, and to be available to
respond to appropriate questions.
- 22 -
SHAREHOLDERS PROPOSALS
AT 2003 ANNUAL MEETING OF SHAREHOLDERS
If a shareholder desires to present a proposal at the Annual Meeting of
Shareholders of the Company for the year 2003 (scheduled to be held on May 27,
2003), such proposal must conform with all of the requirements of Rule 14a-8,
paragraphs (a), (b), and (c) under the Securities Exchange Act of 1934, and must
be received at the principal executive offices of the Company at 6301 Owensmouth
Avenue, Woodland Hills, California 91367 no later than December 31, 2002. In
addition, if stockholders wish to present other matters for action at the 2003
annual meeting of stockholders (other than matters included in the Company's
proxy materials in accordance with Rule 14a-8 under the Securities Exchange Act
of 1934), the Company must receive such notice at the address noted above by
March 15, 2003.
ADDITIONAL INFORMATION
The Annual Report to Shareholders for the year ended December 31, 2001 is being
mailed to the shareholders along with this Proxy Statement.
THE COMPANY WILL PROVIDE WITHOUT CHARGE ON WRITTEN REQUEST A COPY OF 21ST
CENTURY INSURANCE GROUP'S ANNUAL REPORT ON FORM 10-K FILED WITH THE SECURITIES
AND EXCHANGE COMMISSION. THE REQUEST SHOULD BE DIRECTED TO THE INVESTOR
RELATIONS DEPARTMENT OF 21ST CENTURY INSURANCE GROUP, 6301 OWENSMOUTH AVENUE,
WOODLAND HILLS, CALIFORNIA 91367.
OTHER BUSINESS
The Company is unaware of any matter to be acted upon at the meeting by
shareholder vote except the election of directors and the ratification of the
appointment of independent accountants. In the case of any matter properly
coming before the meeting for shareholder vote, the proxyholders named in the
proxy accompanying this statement shall vote shares held by them in accordance
with their best judgment.
- 23 -
BOARD OF DIRECTORS
ROBERT M. SANDLER
Chairman of the Board
BRUCE W. MARLOW
Vice Chairman of the Board
JOHN B. DE NAULT, III
Director
WILLIAM N. DOOLEY
Director
R. SCOTT FOSTER, M.D.
Director
ROXANI M. GILLESPIE
Director
JAMES P. MISCOLL
Director
GREGORY M. SHEPARD
Director
HOWARD I. SMITH
Director
COMPANY OFFICERS
BRUCE W. MARLOW
Chief Executive Officer
President
RICHARD A. ANDRE
Sr. Vice President
Human Resources
MICHAEL J. CASSANEGO
Sr. Vice President
General Counsel & Secretary
G. EDWARD COMBS
Sr. Vice President
New Business
DOUGLAS K. HOWELL
Sr. Vice President
Chief Financial Officer
DEAN E. STARK
Sr. Vice President
Claims
MARGARET CHANG
Treasurer
Assistant Secretary
MICHAEL A. GOGGIO
Vice President
Finance
JOHN L. INGERSOLL
Vice President
New Customer Marketing
JOHN M. LORENTZ
Controller
JOSEPH J. PRATT
Vice President
Chief Actuary
ERIC SAUDI
Vice President
Customer Care
CAREN L. SILVESTRI
Vice President
Product Manager
JOHN M. VRIJMOET
Vice President
Consumer Marketing
- IBC -