10-K/A 1 d10ka.txt AMENDMENT TO FORM 10-K -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ---------------- FORM 10-K/A [X]ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2000 or [_]TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File No. 1-10760 ---------------- MUTUAL RISK MANAGEMENT LTD. (Exact name of registrant as specified in its charter)
Bermuda Not Applicable (Jurisdiction of Incorporation) (I.R.S. Employer Identification No.)
44 Church Street Hamilton HM 12 Bermuda (441) 295-5688 (Address, including zip code, and telephone number, including area code, of registrant's principal executive offices). ---------------- Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class Name of Each Exchange on Which Registered ------------------- ----------------------------------------- Common Shares, $.01 par value New York Stock Exchange
---------------- Securities registered pursuant to Section 12(g) of the Act: None ---------------- Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [_] Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the registrant's knowledge, in definitive proxy or information statements incorporated by reference into Part III of this Form 10-K or any amendment to this Form 10-K. [_] At April 26, 2001, the registrant had outstanding 41,623,198 Common Shares, the only class of the registrant's common stock outstanding, and the aggregate market value of voting stock held by non-affiliates at such date was $228,234,106 (based on the closing price of such Common Shares of $5.87 on April 26, 2001, as reported on the New York Stock Exchange, Inc., composite listings). -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- This Amendment amends and supplements the Form 10-K filed by Mutual Risk Management Ltd. (the "Company") on April 2, 2001 by restating Part III, Items 10 through 13, each in its entirety. PART III ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS Directors and Officers The following table shows certain information with respect to each director and executive officer of the Company.
Director Term Principal Occupation & Business Name Age Since Expires Experience ---- --- -------- ------- ------------------------------- Robert A. Mulderig 48 1982 2002 Chairman and Chief Executive Officer of the Company since 1982; Chairman of Legion Insurance Co. ("Legion"); Director of The Galtney Group, Inc. and The Bank of N.T. Butterfield & Sons Ltd. Also serves as a director or officer of a number of unaffiliated captive insurance companies to which the Company provides management services. John Kessock, Jr. 52 1985 2002 President of the Company since 1991; President of Mutual Group Ltd. and Legion; primarily responsible for marketing the Company's programs since 1979; Chairman of Commonwealth Risk Services L.P. ("CRS") and the IPC Companies; Director of Ward North America, Inc. Richard G. Turner 50 1985 2001 Executive Vice President of the Company since 1995; President of CRS since 1984; Vice President of Marketpac International, a subsidiary of American International Group from 1979 to 1984; Director of Colonial Penn Insurance Company; Director of Ward North America, Inc. Glenn R. Partridge 47 1990 2002 Executive Vice President of the Company since 1995; Executive Vice President of Legion; primarily responsible for Legion's underwriting function since 1987; Vice President of CRS from 1983 to 1987. Roger E. Dailey 67 1985 2003 Vice President of Equifax, Inc. for more than five years until retirement in 1993. Currently a self employed consultant. David J. Doyle 47 1977 2003 Partner in the law firm of Appleby, Spurling & Kempe from 1978 to 1996. Specializes in international corporate matters with particular emphasis on insurance law; Director of Bermuda subsidiaries of the Company. In March 1996, Mr. Doyle joined the law firm of Conyers Dill & Pearman, Hamilton, Bermuda. Arthur E. Engel 54 1985 2003 Principal of The Marine Group, LLC since 1997; Director of Mutual Indemnity Ltd. since 1981.
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Director Term Principal Occupation & Business Name Age Since Expires Experience ---- --- -------- ------- ------------------------------- Allan W. Fulkerson 67 1988 2001 President of Century Capital Management, Inc. since 1992; Chairman of Century Shares Trust and Century Capital Management Trust, Director of HCC Insurance Holdings, Inc., Wellington Underwriting PLC., International Financial Group, Inc., The Galtney Group Inc., and LUA Segueros La Portena SA. William F. Galtney, Jr. 48 1988 2001 Chairman, Chief Executive Officer and Director of The Galtney Group Inc. since 1988; Director of Everest Re Group, Ltd. Jerry S. Rosenbloom 61 1991 2001 Frederick H. Ecker Professor of Insurance and Risk Management and Academic Director, Certified Employee Benefit Specialist Program, Wharton School, University of Pennsylvania since 1974; Director of Annuity and Life Re (Holdings) Ltd., Harleysville Insurance Group; Trustee of Century Shares Trust. Norman L. Rosenthal 49 1997 2003 President of Norman L. Rosenthal & Associates, Inc. since August, 1996; Managing Director of Morgan Stanley & Co., Inc, from January 1992 until July 1996; Director of Plymouth Rock Assurance Company since July 1998. Joseph D. Sargent 71 1988 2003 Chairman of Bradley, Foster & Sargent, Inc since 1994; Director of Trenwick Group, Inc. and Command Systems, Inc.
Section 16(a) Beneficial Ownership Reporting Compliance Section 16(a) of the Securities Exchange Act of 1934 requires the Company's directors and executive officers, and persons who own more than ten percent of a registered class of the Company's equity securities, to file with the United States Securities and Exchange Commission ("SEC") initial reports of ownership and reports of changes in ownership of Common Shares and other equity securities of the Company. 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 review of the copies of such reports furnished to the Company and written representations that no other reports were required, during the year ended December 31, 2000, all Section 16(a) filing requirements applicable to the Company's officers, directors and greater than ten-percent beneficial owners were complied with, except Mr. Dailey who filed a Form 4 late with respect to an option exercise and subsequent sale of Common Shares. 3 ITEM 11. EXECUTIVE COMPENSATION Compensation The following table sets forth the compensation, including bonuses, paid or accrued during the Company's last three fiscal years to the Chief Executive Officer and each of the other four highest paid executive officers of the Company (the "Named Executive Officers"). Summary Compensation Table
Long Term Compensation ------------ Annual Compensation Securities ------------------ Underlying Name and Principal Options All Other Position Year Salary($) Bonus($) Granted(#) Compensation(1)($) ------------------ ---- --------- -------- ------------ ------------------ Robert A. Mulderig...... 2000 537,985 145,867 70,000 13,368 Chairman and Chief 1999 525,000 233,850 95,444 13,125 Executive Officer 1998 500,000 614,485 60,000 12,500 John Kessock, Jr........ 2000 525,000 145,867 70,000 4,250 President 1999 525,000 233,850 95,444 4,000 1998 500,000 614,485 60,000 4,000 Richard G. Turner....... 2000 325,500 91,161 52,500 4,250 Executive Vice 1999 325,500 144,987 70,000 4,000 President 1998 310,000 409,656 40,000 4,000 Glenn R. Partridge...... 2000 325,500 91,161 52,500 4,250 Executive Vice 1999 325,500 144,987 70,000 4,000 President 1998 310,000 380,395 40,000 4,000 James C. Kelly.......... 2000 275,485 73,517 20,000 6,806 Senior Vice President 1999 262,500 116,925 58,000 6,562 and CFO 1998 250,000 307,242 33,333 6,250
-------- (1) Consists of Company contributions to pension plans. Stock Options Stock options to directors and employees are currently awarded only under the provisions of the Company's 1998 Long Term Incentive Plan ("LTIP"). Options are awarded to employees at the market price at the time of issuance for five year terms with 25% becoming exercisable each year. During 2000, options for 355,000 shares were issued to seven executive officers of the Company. 4 The following table provides certain information on options granted in 2000 to the Named Executive Officers. The last two columns of the table present possible values of these grants assuming certain rates of growth in the price of the Common Shares. Option Grants In 2000
Individual Grants(1) ----------------------------------------------- Potential Realizable Value at Assumed Annual Rates of stock Number of % of Total Price Securities Options Appreciation underlying Granted to Exercise or for Option Term Options Employees in Base Expiration --------------- Name Granted(#) Fiscal Year Price ($/Sh) Date 5%($) 10%($) ---- ---------- ------------ ------------ ---------- ------- ------- Robert A. Mulderig...... 70,000 5.81% 13.25 12/14/05 256,251 566,248 John Kessock, Jr........ 70,000 5.81% 13.25 12/14/05 256,251 566,248 Richard G. Turner....... 52,500 4.36% 13.25 12/14/05 192,188 424,686 Glenn R. Partridge...... 52,500 4.36% 13.25 12/14/05 192,188 424,686 James C. Kelly.......... 20,000 1.66% 13.25 12/14/05 73,215 161,785
-------- (1) Options to purchase Common Shares are granted under the Company's LTIP. The option price equals the face market value of the Common Shares on the day of the grant and an option's maximum term is five to ten years. Options granted vest ratably over a four year period. The following table presents certain information with respect to the value of options at December 31, 2000 held by the named Executive Officers. The table presents information with respect to both exercisable and unexercisable options. Aggregated Option Exercises In 2000 and Year End Option Values
Number of Securities Value of Unexercised In- Shares Underlying Unexercised the-Money Options At FY-End Acquired on Value Options at FY-End(#) ($)(2) Name Exercise(#) Realized($)(1) (Exercisable/Unexercisable) (Exercisable/Unexercisable) ---- ----------- -------------- --------------------------- --------------------------- Robert A. Mulderig...... 0 0 138,737/187,583 21,858/180,435 John Kessock, Jr........ 32,000 111,872 138,737/187,583 21,858/180,435 Richard G. Turner....... 26,666 92,290 102,876/137,000 16,469/134,584 Glenn R. Partridge...... 26,666 77,915 100,626/136,250 16,469/134,584 James C. Kelly.......... 16,000 56,750 94,916/93,917 13,300/65,969
-------- (1) Represents difference between stock price and market price on date of exercise. (2) Based on the closing price of the Common Shares on December 31, 2000 of $15.188. Pension Plans In 1990, the Company instituted two defined contribution pension plans, which are available to most of the Company's employees. In order to comply with the National Pension Scheme Act of 1998, the Company offered two new pension plans for its Bermuda employees beginning in 2000. Pursuant to these plans, the Company contributes up to 2.5% of an employee's salary. In 1998, the Company adopted a deferred compensation plan for senior executives. The deferred compensation plan allows eligible employees to defer receipt of any percentage of his or her compensation by filing the appropriate election with the Company. The deferred compensation plan is not funded by the Company although a rabbi trust, a trust used to provide funds for a deferred compensation arrangement but which remain subject to the claims of the creditors in the event of the payor's insolvency, has been established to hold funds relating to the plan. Compensation Committee Interlocks and Insider Participation Mr. Mulderig, the Company's Chief Executive Officer, is a director and a member of the compensation committee of The Galtney Group, Inc. of which Mr. Galtney is a director and executive officer. 5 ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT As of April 26, 2001, the Company had outstanding 41,623,198 Common Shares, par value $.01 per share (the "Common Shares"), entitled to be voted at the Meeting. Each Common Share is entitled to one vote. The following table sets forth certain information regarding beneficial ownership of the Common Shares as of April 27, 2001, by each person who is known by the Company to own beneficially more than 5% of the Common Shares, by each of the Company's directors and by all executive officers and directors as a group.
Shares Beneficially Owned (1) ----------------- Number Percent --------- ------- Franklin Resources, Inc.(2)................................. 4,649,621 11.17% 777 Mariners Island Blvd. San Mateo, CA 94404 Neuberger Berman, Inc.(3)................................... 3,599,804 8.65% 605 Third Avenue, New York, NY 10158-3698 Reich & Tang Asset Management, L.P.(4)...................... 2,272,148 5.46% 600 Fifth Avenue, New York, NY 10020 Robert A. Mulderig(5)....................................... 1,080,653 2.60% John Kessock, Jr.(6)........................................ 863,761 2.08% Glenn R. Partridge(7)....................................... 315,276 0.76% Richard G. Turner(8)........................................ 335,343 0.81% Roger E. Dailey(9).......................................... 89,322 0.21% David J. Doyle(10).......................................... -- -- Arthur E. Engel(11)......................................... 230,507 0.55% Allan W. Fulkerson(9)....................................... 73,620 0.18% William F. Galtney, Jr.(12)................................. 244,705 0.59% Jerry S. Rosenbloom(9)...................................... 90,954 0.22% Norman L. Rosenthal(9)...................................... 69,319 0.17% Joseph D. Sargent(9)........................................ 95,507 0.23% All directors and executive officers as a group (15 persons)................................................... 3,731,136 8.97%
-------- (1) Includes Common Shares and Common Shares issuable pursuant to options to acquire Common Shares that are exercisable within 60 days of April 26, 2001. (2) Based on Amendment No. 2 to Schedule 13G of Franklin Resources dated January 31, 2001. (3) Based on Schedule 13G of Neuberger Berman, Inc. dated February 2, 2001. (4) Based on Schedule 13G of Reich & Tang Asset Management, L.P. dated February 15, 2001. (5) Does not include 94,116 Common Shares, which are owned by trusts the beneficiaries of which are members of Mr. Mulderig's family. Mr. Mulderig disclaims beneficial ownership of such shares. Includes options to acquire 138,737 Common Shares. (6) Includes 725,024 Common Shares owned by the Kessock Family Trust. Does not include 60,864 Common Shares owned by the Kessock Family Irrevocable Trust as to which Mr. Kessock disclaims beneficial ownership. The beneficiaries of these trusts include Mr. Kessock and members of his family. Includes options to acquire 138,737 Common Shares. 6 (7) Includes options to acquire 100,626 Common Shares. (8) Does not include 27,666 Common Shares held in the Children's Trust of the Turner Family Trust as to which Mr. Turner disclaims beneficial ownership. Includes options to acquire 102,876 Common Shares. (9) Includes options to acquire 52,500 Common Shares. (10) Does not include 94,166 Common Shares beneficially owned by certain trusts of which Mr. Doyle is a co-trustee. (11) Includes options to acquire 52,500 Common Shares. Does not include 622,700 Common Shares owned by Mutual Indemnity Ltd. as to which Mr. Engel may be deemed the beneficial owner. (12) Includes options to acquire 52,500 Common Shares. Also includes 129,198 Common Shares, which are owned by Galtney Family Investors, Ltd. of which Mr. Galtney is the General Partner. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS The Company and its subsidiaries provide administrative and accounting services to a number of unaffiliated insurance and reinsurance companies. Certain officers, directors and employees of the Company serve as officers and directors of these companies, generally without remuneration. Mutual Finance Ltd, a subsidiary of the Company, has an investment of approximately $2.2 million in Century Capital Partners L.P. ("Century Capital"). This investment was made by the Mutual Finance pool, which is principally comprised of assets being invested for the benefit of participants in the Company's IPC Programs. Century Capital is a limited partnership which invests in insurance and other financial services companies. The general partner of Century Capital is CCP Capital, Inc. and the investment advisor is Century Capital Management, Inc. Mr. Allan Fulkerson, a director of the Company, is President and a director of CCP Capital Inc. and Century Capital Management, Inc. In connection with the Company's acquisition of The Hemisphere Group Limited ("Hemisphere") in July 1996, the Company acquired a 40% interest in the Hemisphere Trust Company Limited ("Hemisphere Trust"), a Bermuda "local" trust company, which had formerly been a wholly owned subsidiary of Hemisphere. As a "local" Bermuda company, at least 60% of the shares of Hemisphere Trust must be owned by Bermudians. In compliance with this requirement, Mr. Robert A. Mulderig, Chairman and Chief Executive Officer of the Company, acquired 60% of Hemisphere Trust for $0.2 million at the time of the Company's acquisition of Hemisphere. The amount of the purchase price was equal to 60% of the book value of Hemisphere Trust on the date of acquisition. The Company and Mr. Mulderig have entered into a Shareholders' Agreement relating to Hemisphere Trust which provides, amongst other things, that (i) the Company has the option, subject to regulatory approval, to acquire Mr. Mulderig's interest in Hemisphere Trust at Mr. Mulderig's cost, plus interest at 6% per annum; (ii) the Company has a pre-emptive right, also subject to regulatory approval, over the shares held by Mr. Mulderig; and (iii) no dividends or other distributions can be made by Hemisphere Trust without the prior consent of the Company. The Company provides management services to Hemisphere Trust for an annual fee of $0.3 million. Certain significant shareholders and directors of the Company represent or are employed by entities which have purchased IPC Programs or other services from the Company and its subsidiaries. These services are provided by the Company based on arms-length negotiations. On October 12, 2000, the Company's subsidiary, Legion, acquired Psychiatrists' Risk Retention Group, Inc. and its related subsidiaries. In connection with that acquisition, PRMS Holdings, LLC, a subsidiary of Psychiatrists' Risk Retention Group, Inc., repaid a promissory note in the principal amount of $700,000 owing to The Galtney Group, Inc. Mr. Galtney, a director of the Company, is the Chairman, Chief Executive Officer and a director of The Galtney Group, Inc. 7 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto, duly authorized, in Hamilton, Bermuda, on April 27, 2001. Mutual Risk Management, Ltd. /s/ Richard E. O'Brien By: _________________________________ Senior Vice President Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.
Signature Title Date --------- ----- ---- /s/ Robert A. Mulderig* Chairman and Chief Executive Officer April 27, 2001 _____________________________________ Robert A. Mulderig /s/ John Kessock, Jr.* President, Director and Authorized April 27, 2001 _____________________________________ U.S. Representative John Kessock Jr. /s/ Richard G. Turner* Executive Vice President and April 27, 2001 _____________________________________ Director Richard G. Turner /s/ Glenn R. Partridge* Executive Vice President and April 27, 2001 _____________________________________ Director Glenn R. Partridge /s/ Andrew Cook* Senior Vice President and Chief April 27, 2001 _____________________________________ Financial Officer (Principal Andrew Cook Financial and Accounting Officer) /s/ Roger E. Dailey* Director April 27, 2001 _____________________________________ Roger E. Dailey /s/ David J. Doyle * Director April 27, 2001 _____________________________________ David J. Doyle /s/ Arthur E. Engel* Director April 27, 2001 _____________________________________ Arthur E. Engel /s/ Allan W. Fulkerson* Director April 27, 2001 _____________________________________ Allan W. Fulkerson /s/ William F. Galtney, Jr.* Director April 27, 2001 _____________________________________ William F. Galtney Jr. /s/ Jerry S. Rosenbloom* Director April 27, 2001 _____________________________________ Jerry S. Rosenbloom /s/ Norman L. Rosenthal* Director April 27, 2001 _____________________________________ Norman L. Rosenthal /s/ Joseph D. Sargent* Director April 27, 2001 _____________________________________ Joseph D. Sargent /s/ Richard E. O'Brien * ____________________________________ Richard E. O'Brien Attorney-in-Fact
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