RELATED-PARTY TRANSACTIONS

12 Months Ended

Dec. 31, 2011

Related Party Transactions [Abstract]

Related-Party Transactions

RELATED-PARTY TRANSACTIONS:

The Company entered into a three year employment agreement with Mr. John R. Hart, President and Chief Executive Officer effective from October 2011 to December 31, 2014.  

The agreement provided for the following:

•An initial base salary of $2 million for 2011, and standard benefits package, subject to an annual cost of living adjustment, subject to Compensation Committee approval.

•An incentive award based on the growth of the Company's book value per share during the fiscal year, above a threshold.  The threshold above which an incentive award is earned is 80% of the S&P 500 total return for the five previous years.  If the increase in book value per share exceeds this threshold, the incentive award is equal to 7.5% multiplied by the number of shares outstanding at the beginning (January 1) of the applicable year.  The award earned for an applicable year is subject to proration if Hart's employment is terminated other than for cause or if he resigns for good reason.  For 2011 and 2010, the growth in book value per share did not exceed the threshold and no incentive award was earned.  For 2009, the increase in book value per share did exceed the threshold and an incentive award of $509,000 was earned.  

•Termination benefits for a termination for other than cause, or termination by employee for good reason would provide for payment of the following:

•Base salary earned to date of termination;

•All accrued and unused vacation;

•All vested equity interests (including RSU and SAR) and all vested deferred compensation.

•Lifetime health benefits; and

•Cash compensation that is equal to the greater of (a) the base salary for the term, minus the amount previously paid to him from the effective date of the agreement to the date of termination, or (b) two times his base salary in effect at the date of the termination.

• Termination benefits for a termination for cause, would provide for payment of base salary earned to the date of the termination, all accrued and unused vacation, all vested equity interests (including RSU and SAR), and vested deferred compensation.

On February 28, 2011, the Company entered into a consulting agreement (the “Consulting Agreement”) with the Company’s non-executive chairman, Ronald Langley. The consulting services that Mr. Langley will provide to the Company include the identification and analysis of public equity investment opportunities and related advice. Pursuant to the Consulting Agreement, the Company will compensate Mr. Langley for his services as they relate to individual investment opportunities only if the Company’s total return on such investment exceeds twenty percent (20%) compounded per annum; Mr. Langley will receive compensation based on the Company’s net realized gain from any such investments. During 2011, the Company paid $155,000 to Mr. Langley under this agreement for investment returns that met the required threshold.

During 2011, the Company loaned $165,000 to Northstar Agri Industries, LLC, the owner of the 12% interest in Northstar. The proceeds were used to finance certain operating costs of Agri Industries, LLC. Interest is charged at approximately 10% per annum, based on LIBOR plus 920 basis points, the maximum amount that may be borrowed is $250,000 and the balance payable is due on demand.

On December 31, 2010, the Company and Maxim C.W. Webb, Executive Vice President, Chief Financial Officer and Treasurer entered into an agreement to modify the terms of Mr. Webb's employment with the Company (the “Agreement”). Pursuant to the Agreement, Mr. Webb's prior employment agreement dated March 3, 2009 was surrendered and terminated.  Mr. Webb's employment with the Company continues on an at will basis and he is eligible to receive severance benefits only in accordance with the Company's current benefit plans that are available to employees of the Company generally.  The Agreement provides for a base salary of $500,000 in 2011.  The Agreement further provides for Mr. Webb to receive an annual incentive award as summarized in the disclosure regarding Incentive Compensation Plans above in Note 11.

The Company has agreements with its President and CEO, and certain other officers and non-employee directors, to defer compensation into Rabbi Trust accounts held in the name of the Company.  The total value of the deferred compensation obligation for all participants at December 31, 2011 is $36.3 million and is included in accompanying consolidated balance sheets.  This total includes a fair value of $465,000 of PICO stock with the balance in various publicly traded equities and bonds.  Within these accounts at December 31, 2011, the following officers and non-employee directors are the beneficiaries of the following number of PICO common shares:  Mr. John Hart owns 19,940 PICO shares; and Mr. Carlos Campbell owns 2,644 PICO shares.  The trustee for the accounts is Union Bank.  The accounts are subject to the claims of outside creditors, and the shares of PICO common stock held in the accounts are reported as treasury stock in the consolidated financial statements.

On August 13, 2010, the Company invested $2.1 million in exchange for 273,229 shares of Series D Convertible Voting Preferred Stock of Synthonics, Inc.  Kenneth J. Slepicka, a director of the Company, is currently the Chairman, Chief Executive Officer and acting Chief Financial Officer of Synthonics, Inc.  The investment is held at cost and classified as other investment in the accompanying consolidated financial statements.