DEF 14A
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant þ
Filed by a Party other than the Registrant o
Check the appropriate box:
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Preliminary Proxy Statement |
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Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) |
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Definitive Proxy Statement |
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Definitive Additional Materials |
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Soliciting Material Pursuant to §240.14a-12 |
American National Insurance Company
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
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No fee required. |
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Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. |
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Per unit price or other underlying value of transaction computed pursuant to Exchange Act
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Fee paid previously with preliminary materials. |
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Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2)
and identify the filing for which the offsetting fee was paid previously. Identify the
previous filing by registration statement number, or the Form or Schedule and the date of its
filing. |
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Amount Previously Paid: |
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AMERICAN NATIONAL INSURANCE COMPANY
One Moody Plaza
Galveston, Texas 77550
NOTICE OF ANNUAL STOCKHOLDERS MEETING
To Be Held April 29, 2011
In Galveston, Texas
Notice is hereby given that the Annual Meeting of Stockholders of AMERICAN NATIONAL INSURANCE
COMPANY, a Texas insurance company (the Company), will be held in the Mary Moody Northen
Auditorium of the American National Insurance Company Building, Second Floor, One Moody Plaza,
Galveston, Texas, at 10:00 a.m. local time on April 29, 2011 for the following purposes:
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The election of a Board of nine (9) directors of the Company; |
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A non-binding advisory vote to approve the compensation of the Companys
executive officers as disclosed in the accompanying proxy statement; |
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A non-binding advisory vote on the desired frequency of future non-binding
advisory votes on executive officer compensation; |
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Ratification of the appointment of KPMG LLP as auditors for 2011; and |
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The transaction of such other business as may properly come before the meeting or
any adjournment thereof. |
Only holders of common stock of the Company of record at the close of business on March 1,
2011 are entitled to notice of, and to vote at, the meeting or any adjournment thereof.
IT IS IMPORTANT THAT YOUR STOCK BE REPRESENTED AT THE MEETING. WHETHER OR NOT YOU PLAN TO
ATTEND, PLEASE FILL IN, SIGN, DATE AND RETURN THE ACCOMPANYING PROXY CARD AS PROMPTLY AS POSSIBLE.
A RETURN ENVELOPE, WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES, IS ENCLOSED FOR YOUR
CONVENIENCE.
By Order of the Board of Directors
J. Mark Flippin, Secretary
March 31, 2011
Important Notice Regarding the Availability of Proxy Materials
for the Stockholders Meeting to Be Held on April 29, 2011:
Our proxy material relating to our 2011 Annual Meeting (notice, proxy statement, proxy and
2010 Annual Report) is available at the following website: https://materials.proxyvote.com/028591.
This information as well as similar information relating to all of our future Annual Meetings will
also be available by calling 1-888-252-0177 or by email at investorrelations@anico.com.
For the date, time and location of the 2011 Annual Meeting and an identification of the
matters to be voted upon at the 2011 Annual Meeting, please see the Notice of Annual Stockholders
Meeting above. For the Boards recommendation regarding those matters, please refer to the
accompanying proxy statement. For information on how to obtain directions to be able to attend the
meeting and vote in person, please contact Investor Relations at 1-888-252-1077 or by email at
investorrelations@anico.com.
1
TABLE OF CONTENTS
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2
AMERICAN NATIONAL INSURANCE COMPANY
One Moody Plaza
Galveston, Texas 77550
PROXY STATEMENT
For the Annual Meeting of Stockholders
To Be Held April 29, 2011
in the Mary Moody Northen Auditorium
on the Second Floor of the
American National Insurance Company Building
One Moody Plaza
Galveston, Texas 77550
INTRODUCTION
The Board of Directors of AMERICAN NATIONAL INSURANCE COMPANY, a Texas insurance company
(sometimes referred to in this proxy statement as the Company, American National, or as we,
us and our), is soliciting your proxy for use at the Annual Meeting of Stockholders of the
Company to be held at 10:00 a.m. local time, on April 29, 2011 (the Annual Meeting), and at any
adjournment thereof. At such meeting, the stockholders will consider and vote upon the items set
forth in the attached Notice of Annual Stockholders Meeting. These proxy materials will be
available over the Internet. The Company has elected to deliver a full set of proxy materials to
all of our stockholders entitled to notice of and to vote at the annual meeting, and distribution
will begin on or about April 8, 2011.
INFORMATION CONCERNING PROXY
All shares represented by duly executed proxies received by the Company will be voted in
accordance with the instructions shown thereon. If no contrary instructions are given, such proxies
will be voted FOR the election as directors of the Company of each of the director nominees named
under Proposal 1, FOR the advisory approval of the compensation of our executive officers as
disclosed in this proxy statement, FOR holding the non-binding advisory vote to approve our
executive officer compensation practices every THREE YEARS, and FOR the approval of KPMG LLP as
auditors for 2011. The Board of Directors does not know of any other matters to be acted upon at
the Annual Meeting. As to any other matter of business that may properly be brought before the
Annual Meeting, the enclosed proxy also confers discretionary authority upon the persons named
therein to vote the shares represented by such proxy in accordance with their best judgment.
Any stockholder giving a proxy may revoke it by notice in writing addressed to the Secretary
of the Company at One Moody Plaza, Galveston, Texas 77550, or by a proxy bearing a later date and
properly signed, which may be delivered personally or by mail to the Secretary of the Company prior
to the taking of a vote at the Annual Meeting. The execution of a proxy will not affect a
stockholders right to attend the Annual Meeting and to give the Secretary of the Company notice of
such stockholders intention to vote in person, in which event the proxy will not be used.
All costs of preparing, assembling and distributing the proxy materials and the cost of
solicitation will be paid by the Company. The Company may pay persons holding shares in their names
or the names of their nominees for the benefit of others, such as brokerage firms, banks,
depositories, and other fiduciaries, for costs incurred in forwarding soliciting materials to their
beneficial owners. The Company has retained Broadridge Financial Solutions, Inc., Edgewood, New
York, to distribute proxies. The aggregate cost of these services is not expected to exceed
$32,000. The Company may also retain other firms or individuals to assist with the solicitation of
proxies. Directors, officers and employees of the Company may also solicit some stockholders in
person, or by telephone, email or facsimile, following solicitation by this proxy statement, but
they will not be separately compensated for such solicitation services.
VOTING SECURITIES
As of the close of business on March 1, 2011, which has been fixed as the record date for
the determination of stockholders entitled to notice of and to vote at the Annual Meeting, there
were 26,820,977 shares of the common stock, $1.00 par value per share, of the Company (the Common
Stock) issued and outstanding and entitled to vote at the meeting. There were no other classes of
shares issued and outstanding. An alphabetical list of all registered stockholders entitled to
notice of and to vote at the Annual Meeting will be available for examination by any stockholder
for any purpose germane to the meeting. Such list may be examined during business hours at the
office of the Companys Secretary, Eighth Floor, American National Insurance Company Building, One
Moody Plaza, Galveston, Texas, during the ten (10) day period immediately prior to the meeting, and
it will also be available at the meeting.
Each share of Common Stock entitles the holder to one vote in the determination of all matters
to be brought before the meeting. Abstentions and broker non-votes will be counted for the purpose
of determining the presence or absence of a quorum, and abstentions will be counted for the purpose
of determining the number of votes cast on a given proposal. However, broker non-votes will not be
considered present at the Annual Meeting for such proposals and thus will have the practical effect
of reducing the number of affirmative votes required to achieve a majority vote by reducing the
total number of shares from which a majority is calculated. Any
shares for which a broker or nominee does not have discretionary voting authority under
applicable NASDAQ Stock Market, LLC (NASDAQ) rules will be considered as shares not entitled to
vote and will not be considered in the tabulation of the votes. Votes cast at the Annual Meeting
will be counted by the independent inspector(s) of election appointed by the Company.
3
The required vote for each of the proposals expected to be acted upon at the Annual Meeting is
as follows:
Proposal 1 Election of Directors. The affirmative vote of a majority of shares
present at the Annual Meeting, in person or by proxy, and entitled to vote is required
to elect each nominee for director. Abstentions with respect to any director nominee
have the effect of a vote against such nominee.
Please note that the NASDAQ recently amended its rules regarding broker discretionary
voting. Unlike prior years, the NASDAQ rules do not give brokers discretionary
authority to vote on the election of directors. This means that your broker, bank, or
other nominee cannot vote your shares unless you provide it with voting instructions.
Therefore, if you hold shares of our Common Stock in street name and do not provide
voting instructions to your broker, bank, or other nominee, your shares will not be
voted on the election of directors.
Proposal 2 Advisory (non-binding) vote on executive officer compensation
(say-on-pay). The advisory proposal will be approved if a majority of the shares
present at the Annual Meeting, in person or by proxy, and entitled to vote are voted
in favor of the proposal. Abstentions will have the same effect as voting against the
proposal.
Proposal 3 Advisory (non-binding) vote on frequency of future say-on-pay votes.
The advisory vote on the frequency of future say-on-pay votes provides a choice among
three frequency periods (every one, two or three years). The frequency period that
receives the most votes will be deemed to be the recommendation of the stockholders.
Any shares that are not voted, whether by abstention, broker non-votes or otherwise,
will not affect the outcome of this proposal, except to the extent that the failure to
vote for a particular frequency period may result in another frequency period
receiving a larger proportion of the votes cast.
Proposal 4 Ratification of the appointment of KPMG LLP as auditors for 2011. The
appointment of KPMG LLP as the Companys auditors for 2011 will be ratified by the
affirmative vote of a majority of shares present at the Annual Meeting, in person or
by proxy, and entitled to vote. Abstentions will have the same effect as voting
against the proposal.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
As of the close of business on March 1, 2011, we had 26,820,977 shares of our Common
Stock issued and outstanding. There were no other classes of shares issued and outstanding. The
following table sets forth information as of March 1, 2011 concerning each person or group owning
more than five percent of the outstanding shares of our Common Stock.
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Amount and Nature |
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Name and Address of |
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of Beneficial |
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Percent of |
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Beneficial Owner |
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Ownership |
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Class |
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5% Beneficial Owners: |
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THE MOODY FOUNDATION(1)
2302 Postoffice Street, Suite 704
Galveston, Texas 77550 |
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6,157,822 |
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22.96 |
% |
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LIBBIE SHEARN MOODY TRUST(2)
c/o Moody National Bank Trust Division
2302 Postoffice Street
Galveston, Texas 77550 |
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9,949,585 |
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37.10 |
% |
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MOODY NATIONAL BANK TRUST
DIVISION, TRUSTEE(4)
2302 Postoffice Street
Galveston, Texas 77550 |
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12,488,832 |
(3) |
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46.56 |
% |
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(1) |
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The Moody Foundation is a charitable trust classified as a private foundation
established in 1942 by W. L. Moody, Jr., and his wife, Libbie Shearn Moody, for charitable and
educational purposes. The Trustees of The Moody Foundation are Robert L. Moody, Sr., our
Chairman of the Board and Chief Executive Officer, Frances Anne Moody-Dahlberg, one of our
directors, and Ross Rankin Moody. Frances Anne Moody-Dahlberg and Ross Rankin Moody are
children of Robert L. Moody, Sr. |
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The Libbie Shearn Moody Trust is a split-interest trust with both charitable and
non-charitable beneficiaries. Such trust was established in 1943 and funded by a residuary
bequest under the Will of Libbie Shearn Moody. Moody National Bank is the
Trustee of the Libbie Shearn Moody Trust and, as such, has voting power with respect to the
9,949,585 shares of our Common Stock owned by such Trust. |
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The Moody National Bank Trust Division is Trustee of the Libbie Shearn Moody Trust,
and this number includes the 9,949,585 shares of our Common Stock owned by the Libbie Shearn
Moody Trust. Management has been advised that, in addition to acting as Trustee of and voting
the Common Stock owned by the Libbie Shearn Moody Trust, the Moody National Bank Trust
Division also acts as (i) trustee for and votes the 1,155,000 shares of our Common Stock owned
by the W.L. Moody, Jr. Trust for Grandchildren (Trust 19) (see Security Ownership of
Directors and Executive Officers for additional information regarding Trust 19); (ii) agent
for and votes 896,678 shares of our Common Stock held pursuant to an Agency and Investment
Services Agreement for the benefit of The Moody Endowment, a non-profit corporation; and (iii)
trustee or agent for and votes the 487,569 shares of our Common Stock owned by other trusts.
Accordingly, the Moody National Bank Trust Division, as trustee, agent or custodian, votes an
aggregate of 12,488,832 shares, which constitutes 46.56% of our outstanding shares. |
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(4) |
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Management has been advised that Moody Bank Holding Company, Inc. (MBHC), which is
wholly-owned by Moody Bancshares, Inc. (Bancshares), owns approximately 97.8% of the common
stock of Moody National Bank. Management has further been advised that the Three R Trusts,
trusts created by Robert L. Moody, Sr. for the benefit of his children (two of whom, Russell
S. Moody and Frances Anne Moody-Dahlberg, are our directors), own 100% of Bancshares Class B
Stock (which elects a majority of Bancshares directors) and 51.3% of Bancshares Class A
Stock. Accordingly, the Three R Trusts, through ownership of Bancshares, control Moody
National Bank. The Trustee of the Three R Trusts is Irwin M. Herz, Jr., one of our advisory
directors, and a partner in Greer, Herz & Adams, L.L.P., One Moody Plaza, 18th Floor,
Galveston, Texas, General Counsel to us and counsel to Moody National Bank, Bancshares and
MBHC. Robert L. Moody, Sr. is Chairman of the Board, Chief Executive Officer and a director of
Moody National Bank, Bancshares and MBHC. |
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The beneficial ownership information shown for the Moody National Bank Trust Division is based on
information contained in a Schedule 13G filed jointly on November 23, 2009 by the Libbie Shearn
Moody Trust, the Moody National Bank Trust Division, Bancshares, MBHC, Three R Trusts, and Irwin
M. Herz, Jr., and subsequent information provided to us by Moody National Bank. According to
such Schedule 13G and such information, the Libbie Shearn Moody Trust has shared voting power
with respect to 9,949,585 shares of our Common Stock; the Moody National Bank Trust Division,
Bancshares and MBHC have shared voting power with respect to 12,488,832 shares of our Common
Stock and shared investment power with respect to 17,894 shares of our Common Stock; the Three R
Trusts and Irwin M. Herz, Jr. have shared voting power with respect to 12,498,382 shares of our
Common Stock and shared investment power with respect to 27,444 shares of our Common Stock; and
Irwin M. Herz, Jr. has sole voting and investment power with respect to 16,815 shares of our
Common Stock. According to such Schedule 13G, Bancshares, MBHC, Three R Trusts and Irwin M. Herz,
Jr. disclaim beneficial ownership with respect to the shares of our Common Stock beneficially
owned by the Moody National Bank Trust Division. In addition, Irwin M. Herz, Jr. disclaims
beneficial ownership with respect to the 9,550 shares of our Common Stock beneficially owned by
the Three R Trusts. The principal address of the Libbie Shearn Moody Trust, the Moody National
Bank Trust Division, Bancshares and MBHC is as shown in the table. The principal address of the
Three R Trusts is 2302 Postoffice, Suite 702, Galveston, Texas 77550, and the principal address
of Irwin M. Herz, Jr. is One Moody Plaza, 18th Floor, Galveston, Texas 77550. |
SECURITY OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS
The information contained in the following table is given with respect to the ownership
of our Common Stock on March 1, 2011 by each of our directors, each of the executive officers named
in the Summary Compensation Table, and for our directors and executive officers as a group:
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Name of |
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Amount and Nature of |
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Beneficial Owner |
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Class |
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Arthur O. Dummer |
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4,767 |
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Direct |
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* |
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Dr. Shelby M. Elliott |
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4,667 |
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Direct |
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* |
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G. Richard Ferdinandtsen |
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66,000 |
(3) |
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Direct |
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* |
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Frances Anne Moody-Dahlberg(4) |
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8,000 |
(5) |
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Direct |
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* |
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6,157,822 |
(6) |
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Indirect |
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22.96 |
% |
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Robert L. Moody, Sr.(4)(7) |
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493,919 |
(8) |
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Direct |
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1.84 |
% |
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557,025 |
(9)(10) |
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Indirect |
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2.08 |
% |
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6,157,822 |
(6) |
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Indirect |
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22.96 |
% |
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Russell S. Moody(4) |
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8,000 |
(5) |
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Direct |
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* |
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William L. Moody IV(4)(7) |
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98,240 |
(5) |
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Direct |
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* |
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Frank P. Williamson |
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5,717 |
(1) |
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Direct |
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* |
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5
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Amount and Nature of |
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Percent of |
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Beneficial Owner |
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Beneficial Ownership |
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Class |
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James D. Yarbrough |
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8,000 |
(2) |
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Direct |
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* |
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John J. Dunn, Jr. |
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0 |
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0 |
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Stephen E. Pavlicek |
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800 |
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Direct |
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* |
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Ronald J. Welch |
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1,600 |
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Direct |
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* |
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James E. Pozzi |
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0 |
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0 |
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All Directors(11) and
Executive Officers as a Group |
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741,905 |
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Direct |
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2.77 |
% |
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6,719,360 |
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Indirect |
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25.05 |
% |
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7,461,265 |
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27.82 |
% |
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* |
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Less than 1%. |
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(1) |
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Includes 4,667 shares of our Restricted Stock. |
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(2) |
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Shares of our Restricted Stock. |
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(3) |
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Includes 50,000 shares of our Restricted Stock. |
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(4) |
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Robert L. Moody, Sr. and William L. Moody IV are life income beneficiaries of Trust
19. Frances Anne Moody-Dahlberg and Russell S. Moody, two of our directors, and Robert L.
Moody, Jr., one of our advisory directors, are children of Robert L. Moody, Sr. and, as such,
have a contingent residuary interest in his beneficial interest in Trust 19. The numbers in
the table above do not include shares held in Trust 19. (See Footnote 3 under Security
Ownership of Certain Beneficial Owners above for additional information about Trust 19). |
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(5) |
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Includes 6,000 shares of our Restricted Stock. |
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(6) |
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These shares are owned by The Moody Foundation, of which Frances Anne Moody-Dahlberg
and Robert L. Moody, Sr. are Trustees. (See Security Ownership of Certain Beneficial Owners
above). |
|
(7) |
|
Robert L. Moody, Sr. and William L. Moody IV are life income beneficiaries of the
Libbie Shearn Moody Trust. Robert L. Moody, Sr. has advised management that he has assigned
all of his life income interest in such trust to National Western Life Insurance Company, a
Colorado insurance company controlled by him. The numbers in the table above do not include
shares held in the Libbie Shearn Moody Trust. (See Footnote 2 under Security Ownership of
Certain Beneficial Owners above for additional information about such trust). |
|
(8) |
|
Includes 150,000 shares of our Restricted Stock. |
|
(9) |
|
Robert L. Moody, Sr. is the sole owner of the 1% general partner in the M-N Family
Limited Partnership (the M-N Partnership), which owns 507,025 shares of our Common Stock. As
the sole owner of the general partner of the M-N Partnership, Robert L. Moody, Sr. has the
indirect power to manage the assets of the M-N Partnership, including voting the M-N
Partnerships 507,025 shares of our Common Stock. |
|
(10) |
|
Robert L. Moody, Sr. is a 1% general partner in the RLMFLP Limited Partnership (the
RLMFLP Partnership), which owns 50,000 shares of our Common Stock. As the sole general
partner of the RLMFLP Partnership, Robert L. Moody, Sr. has the power to manage the assets of
the RLMFLP Partnership, including voting the RLMFLP Partnerships 50,000 shares of our Common
Stock. |
|
(11) |
|
Includes our Advisory Directors, whose security ownership is described in the next
section below. |
6
SECURITY OWNERSHIP OF ADVISORY DIRECTORS
The information contained in the following table is given with respect to the ownership
of our Common Stock on March 1, 2011 by each of our advisory directors:
|
|
|
|
|
|
|
|
|
|
|
Name of |
|
Amount and Nature of |
|
Percent of |
|
Beneficial Owner |
|
Beneficial Ownership |
|
Class |
|
|
|
|
|
|
|
|
|
|
|
|
Irwin M. Herz, Jr.(1) |
|
|
16,815 |
(2) |
|
Direct |
|
|
* |
|
|
|
|
|
|
|
|
|
|
|
|
R. Eugene Lucas |
|
|
8,684 |
(2) |
|
Direct |
|
|
* |
|
|
|
|
13 |
(3) |
|
Indirect |
|
|
* |
|
|
|
|
|
|
|
|
|
|
|
|
E. Douglas McLeod |
|
|
12,000 |
(2) |
|
|
|
|
* |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,333 |
(4) |
|
Direct |
|
|
* |
|
Robert L. Moody, Jr. |
|
|
4,000 |
(4) |
|
Indirect |
|
|
* |
|
|
|
|
* |
|
Less than 1%. |
|
(1) |
|
According to a Schedule 13G filed jointly on November 23, 2009 by the Libbie Shearn
Moody Trust, the Moody National Bank Trust Division, Bancshares, MBHC, Three R Trusts, and
Irwin M. Herz, Jr., Mr. Herz may have beneficial ownership of the shares of our Common Stock
beneficially owned by the Moody National Bank Trust Division and the shares of our Common
Stock beneficially owned by the Three R Trusts; however, Mr. Herz disclaims beneficial
ownership of such shares. Accordingly, such shares are not included in this table. (See
Footnote 4 under Security Ownership of Certain Beneficial Owners above for additional
information regarding such Schedule 13G). |
|
(2) |
|
Includes 6,000 shares of our Restricted Stock. |
|
(3) |
|
Shares owned by spouse. |
|
(4) |
|
Shares of our Restricted Stock. |
Unless otherwise noted, the information shown in the previous three tables was obtained from
ownership disclosures furnished to us by each of the persons or entities listed or from other
communications with such persons or entities.
PROPOSAL 1.
ELECTION OF DIRECTORS
Nine (9) directors of the Company are to be elected at the Annual Meeting to serve until
our Annual Meeting of Stockholders to be held in April 2012. All nominees now serve as directors of
the Company, and all nominees have consented to be nominated as directors and to be named in this
proxy statement. Accordingly, it is not contemplated that any nominee named herein will be
unwilling or unable to serve as a director. However, if either of such events should occur, the
enclosed proxy permits the persons named in the proxy to vote the shares represented by the proxy
in favor of such person or persons as our Board of Directors may nominate upon the recommendation
of the Nominating Committee.
The Board has determined that Arthur O. Dummer, Dr. Shelby M. Elliott, W. L. Moody IV, Frank
P. Williamson and James D. Yarbrough, currently directors, continue to be independent as defined
in the NASDAQ listing standards.
Board Recommendation: The Board of Directors recommends a vote FOR each of the director
nominees named under this Proposal 1.
7
INFORMATION CONCERNING NOMINEES FOR DIRECTORS
The following information is given with respect to the nominees for election at the
Annual Meeting:
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Year |
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First |
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Elected |
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|
|
|
|
|
|
to |
|
Name |
|
Age |
|
|
Principal Occupation and Background |
|
Board |
|
|
|
|
|
|
|
|
|
|
|
|
Arthur O. Dummer
|
|
|
77 |
|
|
President, The Donner Company
(privately owned actuarial
consulting company), Salt Lake
City, Utah since 1985; Director of
Casualty Underwriters Insurance
Company, Salt Lake City, Utah
(privately owned insurance
company); President and Director
of Western United Holding Company,
Spokane, Washington (privately
owned insurance holding company);
Director of American Underwriters
Insurance Company (privately owned
insurance company); Past Chairman
of the Board of Directors of the
National Organization of Life and
Health Guaranty Associations,
Herndon, Virginia; Past Director
of American Community Mutual
Insurance Company, Livonia,
Michigan (mutual insurance
company); Past Director of
Beneficial Life Insurance Company,
Salt Lake City, Utah; Aurora
National Life Assurance Company,
Los Angeles, California;
Continental Western Life Insurance
Company, Des Moines, Iowa; Utah
Home Fire Insurance Company, Salt
Lake City, Utah; and PHA Life
Insurance Company, Portland,
Oregon (all privately owned
insurance companies); Past
Director of National Western Life
Insurance Company, Austin, Texas.
Mr. Dummer is a Fellow of the
Society of Actuaries and a Member
of the American Academy of
Actuaries. He has fifty-one years
of experience in the insurance
industry, including service as the
former Chief Examiner and Actuary
of the Utah Insurance Department.
His extensive background in the
insurance industry and his
knowledge of actuarial and
accounting issues are valuable to
our Boards discussion of these
issues.
|
|
|
2004 |
|
|
|
|
|
|
|
|
|
|
|
|
Dr. Shelby M. Elliott
|
|
|
84 |
|
|
President-Emeritus of Texas
Chiropractic College since 2004;
President of Texas Chiropractic
College from 1990 through 2003;
Director of Moody National Bank
from March 2000 to March 2004;
Past Director of First Texas Bank,
Vidor, Texas (privately owned
bank); Past Director of Yettie
Kersting Memorial Hospital,
Liberty, Texas; and Past Chairman
of the American Chiropractic
Association.
Dr. Elliott brings solid
administrative and executive
skills to our Board from his
service as President of Texas
Chiropractic College. His
experience in the health care
field, both as a practitioner and
an educator, enables him to
provide a unique perspective to
our Board. Dr. Elliott is a member
of the American Chiropractic
Association, the Texas
Chiropractic Association and the
Florida Chiropractic Association.
|
|
|
2004 |
|
8
|
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|
|
Year |
|
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|
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|
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First |
|
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|
|
|
|
|
|
Elected |
|
|
|
|
|
|
|
|
|
to |
|
Name |
|
Age |
|
|
Principal Occupation and Background |
|
Board |
|
|
|
|
|
|
|
|
|
|
|
|
G. Richard Ferdinandtsen
|
|
|
74 |
|
|
President of the Company since
April 2000 and Chief Operating
Officer since April 1997; also a
director and/or officer of each
principal subsidiary of the
Company. Prior positions with the
Company include Senior Executive
Vice President, Chief
Administrative Officer from April
1996 to April 1997; Senior Vice
President, Health Insurance from
April 1993 to April 1996; and
Senior Vice President, Group
Insurance from July 1990 to April
1993. Prior to joining the
Company, Mr. Ferdinandtsen served
as President and Chief Operating
Officer of American Security Life
Insurance Company from April 1983
to January 1991.
Mr. Ferdinandtsen has over fifty
years of experience in the
insurance industry, including
thirty years as an executive
officer. Mr. Ferdinandtsens
day-to-day leadership as our
President and Chief Operating
Officer provides him with intimate
knowledge of our operations.
|
|
|
1997 |
|
|
|
|
|
|
|
|
|
|
|
|
Frances Anne
Moody-Dahlberg(1)(2)
|
|
|
41 |
|
|
Executive Director of The Moody
Foundation (charitable and
educational foundation) since
1998, and a Trustee of The Moody
Foundation since 2004; Director of
National Western Life Insurance
Company, Austin, Texas since 1990;
Director of Gal-Tex Hotel
Corporation (hotel management
corporation) from March 2000 to
December 2003; Director of The
Moody Endowment (charitable
organization) from 1991 to
February 2004.
Ms. Moody-Dahlberg has twenty-four
years of experience as a member of
our Board. Her service as
Executive Director of The Moody
Foundation, one of the largest
charitable foundations in the
State of Texas, provides her with
valuable insight regarding the
concerns of our significant
non-profit stockholders.
|
|
|
1987 |
|
|
|
|
|
|
|
|
|
|
|
|
Robert L.
Moody, Sr.(1)
|
|
|
75 |
|
|
Chief Executive Officer since July
1991 and Chairman of the Board
since 1982; Chairman of the Board,
Chief Executive Officer and
Director of Moody National Bank;
Chairman of the Board, Chief
Executive Officer and Director of
National Western Life Insurance
Company, Austin, Texas (publicly
traded life insurance company);
Trustee of The Moody Foundation
(charitable and educational
foundation).
Mr. Moody has a lifetime of
experience in the financial
services industry, serving as a
director or executive officer of a
variety of insurance and banking
interests. He has served on our
Board for over fifty years and has
served as our Chairman for
twenty-nine years. His wealth of
experience as our Chairman and
Chief Executive Officer provides
our Board with an insightful,
long-term perspective of our
Companys challenges,
opportunities and operations.
|
|
|
1960 |
|
|
|
|
|
|
|
|
|
|
|
|
Russell S.
Moody(1)(2)
|
|
|
49 |
|
|
Investments, League City, Texas,
since 2003. Director of National
Western Life Insurance Company,
Austin, Texas; Director of The
Moody Endowment since July 2009
and Director of Transitional
Learning Center at Galveston since
July 2009 (charitable
organizations); Director of
Gal-Tex Hotel Corporation (hotel
management company) from March
2000 to December 2003.
Mr. Moody has served as a member
of our Board for twenty-five
years. Along with his sister,
Frances Anne Moody-Dahlberg, Mr.
Moody helps to represent the
concerns of our significant
non-profit stockholders. Mr. Moody
serves as a director of The Moody
Endowment, a charitable
organization that owns nearly
900,000 shares of our Common
Stock.
|
|
|
1986 |
|
|
|
|
|
|
|
|
|
|
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|
9
|
|
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year |
|
|
|
|
|
|
|
|
|
First |
|
|
|
|
|
|
|
|
|
Elected |
|
|
|
|
|
|
|
|
|
to |
|
Name |
|
Age |
|
|
Principal Occupation and Background |
|
Board |
|
|
William L.
Moody IV
|
|
|
86 |
|
|
Investments and Ranching, Oil and
Gas, Galveston, Texas, since 1959;
Trustee, Board of Trustees of
Rosenberg Library (charitable
organization); Trustee, University
of Texas Medical Branch
Development Board (charitable
organization); President and
Director of Moody Ranches, Inc.
(investments and ranching);
Director of American National Life
Insurance Company of Texas
(subsidiary life insurance
company).
Mr. Moodys sixty years of service
as a member of our Board and his
background as an investor, rancher
and oilman bring a valuable
perspective to the Boards
discussion of how the past
challenges that have faced the
Company may impact present and
future opportunities.
|
|
|
1951 |
|
|
|
|
|
|
|
|
|
|
|
|
Frank P. Williamson
|
|
|
78 |
|
|
Retired Pharmacist, since 2009;
Director of The Moody Endowment
and Transitional Learning Center
at Galveston (charitable
organizations); Director and
Member of the Executive Committee
and Governance Committee of
American National Life Insurance
Company of New York (subsidiary
life insurance company); Director
of SM&R Investments, Inc. and
American National Investment
Accounts, Inc. from 1997 to March,
2004 (mutual funds formerly
advised by a Company subsidiary).
Mr. Williamsons thirty-four years
of experience as a small business
owner brings a comprehensive view
of business operations to our
Board. His years of service as a
pharmacist bring a unique
perspective and contribute to the
diversity of experience
represented on our Board.
|
|
|
2004 |
|
|
|
|
|
|
|
|
|
|
|
|
James D. Yarbrough
|
|
|
55 |
|
|
Director of Economic Development,
City of Galveston, Texas, since
February 2011; County Judge,
County of Galveston, Texas, 1995
through 2010; James D. Yarbrough &
Co., October 1989 through December
1994 (privately owned contract
management and financial
consulting firm); Director and
Member of the Governance and
Executive Committees of American
National Life Insurance Company of
New York (subsidiary life
insurance company); Member,
Galveston County Economic
Development Alliance; Advisory
Director, Texas First Bank -
Galveston, Galveston, Texas
(privately owned bank); Ex-Officio
Director, Texas City-LaMarque
Chamber of Commerce; Member,
Development and Advisory Council,
University of Houston Clear
Lake, Houston, Texas.
Judge Yarbrough has management
experience in both the private and
public sectors, including sixteen
years as the chief executive of
the County of Galveston. In the
private sector, he has served as a
bank president, owner of a
business consulting firm, and
director of numerous interests.
This varied experience makes him a
valuable contributor to the
Boards deliberations.
|
|
|
2001 |
|
|
|
|
(1) |
|
Robert L. Moody, Sr. is Chairman of the Board, Chief Executive Officer and
controlling stockholder of National Western Life Insurance Company, a publicly traded life
insurance company. |
|
(2) |
|
The Moody Foundation owns 34.0% and the Libbie Shearn Moody Trust owns 50.2% of
Gal-Tex Hotel Corporation. |
INFORMATION CONCERNING ADVISORY DIRECTORS
The Board of Directors has appointed the following persons as our advisory directors. Our
advisory directors serve at the pleasure of the Board. Although advisory directors do not vote on
matters considered by the Board, we benefit from their experience and advice. Advisory directors
receive the same compensation and benefits as our Directors who are not also our officers.
10
The following information is given with respect to our advisory directors:
|
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|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year First |
|
|
Years |
|
|
|
|
|
|
|
|
Appointed |
|
|
Served |
|
|
|
|
|
|
|
|
Advisory |
|
|
as a |
Name |
|
Age |
|
|
Principal Occupation and Background |
|
Director |
|
|
Director |
|
|
|
|
|
|
|
|
|
|
|
|
|
Irwin M. Herz, Jr.
|
|
|
70 |
|
|
Since 1980, Partner of Greer, Herz
& Adams, L.L.P., General Counsel
to the Company; Trustee of the
Three R Trusts (trusts for the
benefit of the children of Robert
L. Moody, Sr.).
Mr. Herzs service as a director
of numerous insurance companies,
including thirty years on our
Board, has provided him with
extensive knowledge of the
insurance industry. In addition,
his background as a corporate and
commercial lawyer provides an
invaluable source of knowledge and
problem-solving skills to the
Board.
|
|
|
2004 |
|
|
1981 to 1983;
1984
to 2004 |
|
|
|
|
|
|
|
|
|
|
|
|
|
R. Eugene
Lucas(1)
|
|
|
85 |
|
|
Since 1971, President and Director
of Gal-Tex Hotel Corporation
(hospitality and hotel management
company); President of Gal-Tenn
Hotel Corporation, LHH
Hospitality, LLC, Colorado
Landmark Hotels, LLC, Kentucky
Landmark Hotels, LLC, and Virginia
Landmark Hotels, LLC (hospitality
and hotel management companies);
Director of Colonel Museum, Inc.
(charitable corporation);
President and Director of
1859-Beverage Company (hospitality
company).
Mr. Lucas has served on our Board
for thirty years, including
twenty-three years as a member of
our Audit Committee. In addition,
Mr. Lucas provides our Board with
the perspective of an experienced
and knowledgeable executive
officer outside of the insurance
industry. He has been associated
with Gal-Tex Hotel Corporation
since 1941, including forty years
as its President.
|
|
|
2004 |
|
|
1981 to 2004 |
|
|
|
|
|
|
|
|
|
|
|
|
|
E. Douglas
McLeod(2)
|
|
|
69 |
|
|
Since 1982, Director of
Development of The Moody
Foundation (charitable and
educational foundation); Chairman
and Director of Moody Gardens,
Inc. (charitable corporation);
Attorney; Director of National
Western Life Insurance Company,
Austin, Texas; Director of ANREM
Corporation (subsidiary real
estate management corporation);
Vice President and Director of
Colonel Museum, Inc. (charitable
organization); Director, San
Jacinto Museum of History
(charitable organization); Past
Director and past Chairman of
Center for Transportation and
Commerce (charitable
organization); Past Director and
Executive Board Member, South
Texas College of Law (law school);
Past Member of State House of
Representatives of the State of
Texas (terms ended
January 1983).
Mr. McLeod has experience as a
lawyer and public servant,
including as a state legislator,
as well as experience in real
estate development and non-profit
administration. He brings a varied
set of problem-solving skills and
valuable insight to the Board.
|
|
|
2004 |
|
|
1984 to 2004 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert L. Moody, Jr.
|
|
|
51 |
|
|
Since 1986, President and Director
of Moody Insurance Group, Inc.
(privately owned insurance
agency); Director of Moody
National Bank; Director of ANREM
Corporation (subsidiary real
estate management corporation);
Director of HomeTown Bank,
National Association (national
bank); Director of The Moody
Endowment (charitable
organization); Ranching; Oil and
Gas Investments.
Mr. Moody is the owner of Moody
Insurance Group, Inc., a marketing
consultant to the Company and one
of the many significant producers
marketing our products. Through
this insurance agency experience,
Mr. Moody brings the valuable
perspective of an agent to our
Boards deliberations. In
addition, Mr. Moodys experience
as an entrepreneur provides him
with a broad perspective of
business operations.
|
|
|
2009 |
|
|
1982 to 1987 |
|
|
|
(1) |
|
The Moody Foundation owns 34.0% and the Libbie Shearn Moody Trust owns 50.2% of
Gal-Tex Hotel Corporation. |
|
(2) |
|
Robert L. Moody, Sr. is Chairman of the Board, Chief Executive Officer and
controlling stockholder of National Western Life Insurance Company, a publicly traded life
insurance company. |
11
Family Relationships
Robert L. Moody, Sr., our Chairman of the Board and Chief Executive Officer, is the cousin of
William L. Moody IV, one of our directors, and the brother-in-law of E. Douglas McLeod, one of our
advisory directors. Russell S. Moody and Frances Anne Moody-Dahlberg, two of our directors, are
children of Robert L. Moody, Sr. Robert L. Moody, Jr., a son of Robert L. Moody, Sr. and brother
of Russell S. Moody and Frances Ann Moody-Dahlberg, is one of our advisory directors.
PROPOSAL 2.
ADVISORY (NON-BINDING) VOTE ON EXECUTIVE OFFICER COMPENSATION
The Dodd-Frank Wall Street Reform and Consumer Protection Act (the Dodd-Frank Act)
requires that stockholders have the opportunity to cast an advisory (non-binding) vote on executive
compensation at the Annual Meeting (a so-called say-on-pay vote), as well as an advisory vote
with respect to whether future say-on-pay votes will be held every one, two or three years, which
is the subject of Proposal 3.
The advisory vote on executive compensation is a non-binding vote on the compensation of our
named executive officers, as described in this proxy statement. Please read the Executive
Compensation section of this proxy statement. That section of the proxy statement, which includes
our Compensation Discussion and Analysis, executive officer compensation tables and related
narrative discussion, describes in detail our compensation programs and policies for our executive
officers and the decisions made by our Board Compensation Committee for fiscal 2010. The advisory
vote on executive compensation is not a vote on our general compensation policies, the compensation
of our Board of Directors, or our compensation policies as they relate to risk management. The
Dodd-Frank Act requires us to hold the advisory vote on executive compensation at least once every
three years.
Our philosophy in setting compensation policies for executive officers has four objectives:
(i) to attract and retain experienced, highly qualified individuals who are in a position to make
significant contributions to our success, (ii) to drive exceptional performance and motivate our
executive officers to achieve desired financial results, (iii) to provide our executives with
opportunities to develop a significant ownership stake in the Company, and (iv) to align the
interests of our executive officers with the long-term interests of our stockholders. The
Compensation Discussion and Analysis provides more detail regarding our executive compensation
program and compensation philosophy.
The vote on this Proposal 2 is advisory and, therefore, not binding on us, the Board of
Directors or the Board Compensation Committee. Our Board, however, including the Board Compensation
Committee, values the opinions of our stockholders and, to the extent there is any significant vote
against the executive officer compensation as disclosed in this proxy statement, we will consider
our stockholders concerns and evaluate what actions may be appropriate to address those concerns.
Stockholders will be asked at the Annual Meeting to approve the following resolution pursuant
to this Proposal 2:
RESOLVED, that the stockholders of American National Insurance Company approve, on an advisory
basis, the compensation of the Companys named executive officers, as disclosed in the Compensation
Discussion and Analysis, the Summary Compensation Table and the related compensation tables, and
the accompanying narrative disclosure contained in the proxy statement for the Companys 2011
Annual Meeting of Stockholders.
Board Recommendation: The Board of Directors recommends a vote FOR the approval of the
foregoing advisory resolution on executive compensation.
12
PROPOSAL 3.
ADVISORY (NON-BINDING) VOTE ON FREQUENCY OF FUTURE SAY-ON-PAY VOTES.
We are also required by the Dodd-Frank Act to hold a separate advisory (non-binding) vote
to allow stockholders to express their preference regarding the frequency of future say-on-pay
votes. Stockholders may indicate whether they would prefer a say-on-pay vote every one, two or
three years.
We ask that stockholders approve a frequency of every three years for future say-on-pay votes.
We believe a three-year cycle provides our Board of Directors and the Board Compensation Committee
with sufficient time to thoughtfully evaluate and respond to stockholder input and effectively
implement such changes to our executive compensation program as they believe are appropriate. In
addition, one aspect of our compensation philosophy is the alignment of our executive officers
long-term interests with those of our stockholders, and a vote every three years will provide
stockholders with sufficient time to evaluate the effectiveness of our executive compensation
philosophy as it related to our performance.
The frequency period that receives the most votes (every one, two or three years) will be
deemed to be the recommendation of the stockholders. However, because the vote is advisory only
and not binding on the Board of Directors or the Company, the Board may decide that it is in the
best interests of our stockholders and the Company to hold a say-on-pay vote more or less
frequently than the option selected by a plurality of our stockholders.
Board Recommendation: The Board of Directors recommends an advisory vote FOR a frequency of
every THREE YEARS for future say-on-pay votes.
DIRECTOR ATTENDANCE AT MEETINGS
During the fiscal year ended December 31, 2010, the Board of Directors of the Company
held a total of five (5) meetings. All of the nominees for director and all of the advisory
directors attended at least 75% of the aggregate of (1) the total number of such meetings and (2)
the total number of meetings held by all committees of the Board on which such nominees served
during such year. It is the Companys policy that all directors should make an effort to attend the
Companys annual meeting of stockholders. All directors attended the 2010 Annual Meeting.
BOARD OF DIRECTORS AND COMMITTEES
Board Leadership Structure
The Board believes that our Chief Executive Officer is best situated to serve as Chairman
because he is the director most experienced with our business and most capable of effectively
identifying present and future strategic priorities and leading the discussion and execution of
strategy. Independent directors and management have different perspectives and roles in strategy
development. The Company does not have a lead independent director. Our independent directors bring
experience, oversight and expertise from outside the Company and the industry, while the Chief
Executive Officer brings Company-specific experience and expertise. The Board believes that the
combined role of Chairman and Chief Executive Officer promotes strategy development and execution
and facilitates information flow between management and the Board, which are essential to effective
governance.
The Boards Role in Risk Oversight
The Company is exposed to a number of risks and undertakes enterprise risk management reviews
to identify and evaluate these risks and to develop plans to manage them effectively. Two
committees lend support to the Board in reviewing the Companys consideration of material risks and
overseeing the Companys management of material risks. The Audit Committee of the Board of
Directors makes inquiries to senior management (including the Senior Executive Vice President,
Corporate Risk Officer & Chief Actuary) about the Companys risk assessment and risk management
policies, including risks related to our financial position and internal controls. These policies
address our major financial risk exposures and the steps management has taken to monitor and
mitigate these risks. In addition, the Company has formed a Management Risk Committee, comprised of
several members of our senior management team, to coordinate the risk management efforts that occur
within our business segments to (i) ensure alignment between our risk-taking activities and
strategic objectives and (ii) ensure consistent application of enterprise risk management processes
across all business units. The Management Risk Committee provides periodic reports to the Board of
Directors concerning the Companys risk management which may cover risk identification, risk limits
and related significant breaches, returns on risk-adjusted capital, and information related to the
development of the Companys enterprise risk management program.
Additionally, our Board Compensation Committee reviews and attempts to mitigate risks that may
result from our compensation policies, including working directly with senior management to
determine whether such programs improperly encourage management to take risks relating to our
business and/or whether risks arising from our compensation programs are likely to have a material
adverse effect on the Company.
13
Board Independence
The Board has determined, after considering all of the relevant facts and circumstances, that
Arthur O. Dummer, Dr. Shelby M. Elliott, W. L. Moody IV, Frank P. Williamson and James D. Yarbrough
are independent from management in accordance with the NASDAQ listing standards. To be considered
independent, the Board must determine that a director does not have any direct or indirect material
relationships with us. In making this determination, the Board considered the fact that W. L. Moody
IV is related to other members of the Board and determined that the familial relationship did not
impair his independence.
Our independent directors meet in executive session at least twice per year, generally in
connection with the April and October Board meetings.
Board Committees
The Companys Board has an Audit Committee, a Compensation Committee, a Nominating Committee
and an Executive Committee. The Compensation Committee of the Board of Directors is referred to
herein as the Board Compensation Committee to distinguish it from the Management Compensation
Committee.
The following sets forth Committee memberships as of the date hereof:
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Audit |
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Compensation |
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Nominating |
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Executive |
Director |
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Committee |
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Committee |
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Committee |
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Committee |
James D. Yarbrough |
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X |
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XX |
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Arthur O. Dummer1 |
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XX |
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Dr. Shelby M. Elliott |
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X |
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XX |
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Frank P. Williamson |
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X |
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X |
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X |
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William L. Moody IV |
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X |
Robert L. Moody, Sr. |
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XX |
G. Richard Ferdinandtsen |
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X |
X = Member
XX = Committee Chair
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(1) |
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The Board has determined that Mr. Dummer is the financial expert on the Audit
Committee, as defined and required by NASDAQs rules and by the Securities Exchange Act of 1934
(the 1934 Act). |
Audit Committee
Arthur O. Dummer, Chairman, Frank P. Williamson and James D. Yarbrough are the present members
of the Audit Committee. The Audit Committee held thirteen (13) meetings during the Companys last
fiscal year. The Audit Committee is responsible for, among other matters, recommending the
appointment of independent auditors for the Company, reviewing the activities and independence of
such independent auditors, including the plan and scope of the audit and audit fees, monitoring the
adequacy of the Companys reporting and internal controls, reviewing related party transactions,
recommending the inclusion of the Companys audited financial statements in the Companys Annual
Report, and meeting periodically with management and the Companys independent auditors. Pursuant
to the NASDAQ Marketplace Rules and applicable independence requirements under the 1934 Act, the
Board has determined that all of the members of the Audit Committee are independent.
The Board of Directors has adopted a written Charter of the Audit Committee, and the Audit
Committee reviews the Charter annually. The Audit Committee Charter is posted on the Companys
website and can be viewed by going to www.anico.com/corp_gov.dhtml and clicking Audit Committee
Charter. You may also obtain a printed copy of the Charter at no charge by writing the office of
the Secretary at One Moody Plaza, Galveston, Texas 77550.
Board Compensation Committee
The Board Compensation Committee was established in 1975 to make recommendations as to the
compensation of the Companys executive officers. The present members of such committee are James
D. Yarbrough, Chairman, Dr. Shelby M. Elliott and Frank P. Williamson. Pursuant to the NASDAQ
Marketplace Rules, all of the members of the Compensation Committee are independent. The Board
Compensation Committee held five (5) meetings during the Companys last fiscal year.
The Board of Directors has adopted a written Charter of the Board Compensation Committee, and
the Board Compensation Committee reviews the Charter annually. The Board Compensation Committee
Charter is posted on the Companys website and can be viewed by going to
www.anico.com/corp_gov.dhtml and clicking Compensation Committee Charter. You may also obtain a
printed copy of the Charter at no charge by writing the office of the Secretary at One Moody Plaza,
Galveston, Texas 77550. A description of the Companys process and procedures for the consideration
and determination of executive compensation is provided below in the Compensation Discussion and
Analysis.
14
Nominating Committee
The Nominating Committee was established in 2004 to recommend to the Board director nominees
to be submitted for election at each Annual Meeting of Stockholders. While there are no specific
minimum qualifications that a potential nominee must possess, director nominees are evaluated based
upon, among other things, their integrity, diversity of experience, business or other relevant
experience, leadership, the ability to exercise sound judgment, satisfaction of applicable
independence standards, civility, and ability to devote sufficient time to board matters. The Board
of Directors and the Nominating Committee believe that, based on their knowledge of the needs and
qualifications of the Board at any given time, the Board, with the help of the Nominating
Committee, is best equipped to select nominees that will result in a well-qualified and
well-rounded Board of Directors. The Nominating Committee may (but is not required to) consider
candidates suggested by management or other members of the Board. In addition, the Nominating
Committee may (but is not required to) consider stockholder recommendations for candidates to the
Board. In order to recommend a candidate to the Board, stockholders should submit the
recommendation to the Chairperson of the Nominating Committee in the manner described in the
section of this proxy statement titled Communications with the Board of Directors.
In making its nominations, the Board and the Nominating Committee identify nominees by first
evaluating the current members of the Board willing to continue their service. Current members with
qualifications and skills that are consistent with the criteria for Board service are re-nominated.
As to potential new candidates, it is expected that the Board and the Nominating Committee would
discuss among themselves and members of management their respective recommendations and any
recommendations submitted by stockholders and evaluate the qualifications, experience and
background of the potential candidates. The Nominating Committee does not have a formal policy with
respect to diversity; however, the Board and the Nominating Committee believe that it is valuable
that Board members represent diverse experience and viewpoints.
Dr. Shelby M. Elliott, Chairman, and Frank P. Williamson are the present members of the
Nominating Committee. Pursuant to the NASDAQ Marketplace Rules, both members of the Nominating
Committee are independent. The Nominating Committee held one (1) meeting during the prior fiscal
year. After receiving the Nominating Committees recommendations, the full Board nominates the
slate of directors to be presented to the Companys stockholders at the Annual Meeting. The Board
of Directors has adopted a written Charter of the Nominating Committee, and the Nominating
Committee reviews the Charter annually. The Nominating Committee Charter is posted on the Companys
website and can be viewed by going to www.anico.com/corp_gov.dhtml and clicking Nominating
Committee Charter. You may also obtain a printed copy of the Charter at no charge by writing the
office of the Secretary at One Moody Plaza, Galveston, Texas 77550.
Executive Committee
The Executive Committee was established in 1977 to act on behalf of the full Board of
Directors, within certain limitations, between regular Board meetings. The present members of such
committee are Robert L. Moody, Sr., Chairman; G. Richard Ferdinandtsen; and W. L. Moody IV. The
Executive Committee held two (2) meetings during the Companys last fiscal year.
Consideration of Risks from Compensation Policies and Practices
In early 2011, at the request of the Board Compensation Committee, Frederic W. Cook & Co.,
Inc. (Cook & Co.) performed an assessment of our compensation policies and practices to determine
whether those programs encourage excessive risk taking that is reasonably likely to have a material
adverse effect on us as a whole. This assessment was based in part on a comprehensive assessment
conducted in 2010 by Cook & Co. Based on these assessments, the committee concluded that our
compensation programs do not present any such material adverse risk. In reaching such conclusion,
the Board Compensation Committee considered the size of our Company and the following features of
our compensation programs that discourage excessive or unnecessary risk taking:
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appropriate pay philosophy, peer group and market positioning to support core business
objectives; |
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conservative overall pay positioning; |
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payment of 40% of annual incentives in restricted stock units (30% for the Chairman and
CEO) with time-based vesting; |
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effective balance in: (i) short- and long-term performance focus; (ii) corporate,
business unit, and individual performance focus and measurement; and (iii) financial and
non-financial performance measurements used that are well balanced between growth,
profitability, return on capital, and other relevant measures in the industry; and |
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independent Board Compensation Committee oversight. |
15
INFORMATION CONCERNING EXECUTIVE OFFICERS
The following is a list of our executive officers, other than Messrs. Moody and
Ferdinandtsen, who are also directors, their current ages, and their positions and offices for the
past five years. For executive officers who have been with us for less than five years, information
is also provided with respect to the nature of their responsibilities undertaken with their prior
employers during such time.
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Name of Officer |
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Age |
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Position (Year Elected to Position) |
James E. Pozzi
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60 |
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Senior Executive Vice President, Chief Administrative Officer (2008); Senior
Executive Vice President, Corporate Planning, Systems and Life
Administration (2004-2008) |
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Ronald J. Welch
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65 |
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Senior Executive Vice President, Corporate Risk Officer & Chief Actuary
(2008); Senior Executive Vice President, Chief Actuary and Chief Corporate
Risk Management Officer (2004-2008) |
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David A. Behrens
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48 |
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Executive Vice President, Independent Marketing (1999) |
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John J. Dunn, Jr.
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52 |
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Executive Vice President, Corporate Chief Financial Officer (July 2010);
Vice President International Accounting of Ally Financial, Inc. (formerly
GMAC, Inc.) (2009 May 2010)(charged with responsibility for auto finance
and insurance accounting outside of the U.S. and Canada for this financial
services provider); Vice President and Chief Financial Officer (2007-2009)
and Vice President Finance (1997-2006) of GMAC Insurance (charged with
overall responsibility for the finance and accounting areas) |
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Bill J. Garrison
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77 |
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Executive Vice President, Director of Career Sales & Service Division (1988) |
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Gregory V. Ostergren
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55 |
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Executive Vice President, Director of Multiple Line (2000) |
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Stephen E. Pavlicek*
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64 |
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Executive Vice President, Chief Financial Officer & Corporate Treasurer
(2010); Senior Vice President, Chief Financial Officer (2007-2010); Senior
Vice President, Controller (1996-2007) |
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Dwain A. Akins
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59 |
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Senior Vice President, Corporate Affairs, Chief Corporate Compliance Officer
(2006); Vice President, Corporate Compliance (2003-2006) |
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Albert L. Amato, Jr.
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62 |
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Senior Vice President, Life Insurance Administration (1994) |
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Scott F. Brast
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47 |
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Senior Vice President, Real Estate / Mortgage Loan Investments (2005); Vice
President, Real Estate Investments (2000-2005) |
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Frank V. Broll, Jr.
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61 |
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Senior Vice President & Actuary (2005); Vice President & Actuary (1986-2005) |
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William F. Carlton
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52 |
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Senior Vice President & Corporate Controller (2010); Vice President and
Controller (2007-2010); Vice President and Assistant Controller, Financial
Reports (1998-2007) |
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Gordon D. Dixon
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65 |
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Senior Vice President, Chief Investment Officer (2010); Senior Vice
President, Securities Investments (2004-2010) |
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Bernard S. Gerwel
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52 |
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Senior Vice President, Chief Information/Innovation Officer Multiple Line
(2010); Senior Vice President, Chief MLEA Administrative Officer (2006-2010) |
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Rex D. Hemme
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62 |
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Senior Vice President & Actuary (2005); Vice President & Actuary (1993-2005) |
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Johnny D. Johnson
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58 |
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Senior Vice President, Corporate Chief Information Officer (2008); Senior
Vice President, Chief Information Officer (2007); Chief Information Officer,
AEGON Financial Partners, AEGON USA (2002-2007)(charged with developing IT
strategy and policy and overseeing an IT staff of approximately 450
employees for this financial services provider) |
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Bruce M. LePard
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54 |
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Senior Vice President, Human Resources (2006) |
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James W. Pangburn
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54 |
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Senior Vice President, Credit Insurance Division (2004) |
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Ronald C. Price
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59 |
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Senior Vice President, Chief Marketing Officer Career Life Agencies (2004) |
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Steven H. Schouweiler
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64 |
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Senior Vice President, Health Insurance Operations (1998) |
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Shannon L. Smith
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51 |
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Senior Vice President, Chief Multiple Line Marketing Officer (July 2008);
Program Marketing Manager of Meadowbrook Insurance Group (April 2008 July
2008)(charged with identifying and developing business opportunities and
creating and managing programs to enhance growth of this specialty property
and casualty insurance holding company); Vice President Marketing and
Distribution of Lincoln General Insurance Company (July 2003 October
2007)(charged with developing marketing and distribution strategies for this
provider of property and casualty insurance to the transportation industry) |
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Hoyt J. Strickland
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54 |
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Senior Vice President, Career Sales and Service Division (April 2009);
National Field Director, Career Sales and Service Division (2001 April
2009) |
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* |
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Mr. Pavlicek retired effective March 31, 2011. |
16
There are no arrangements or understandings pursuant to which any officer was elected. All
officers are elected annually by the Board of Directors and serve until their successors are
elected and qualified, unless otherwise specified by the Board.
EXECUTIVE COMPENSATION
Compensation Discussion and Analysis
This Compensation Discussion and Analysis explains the philosophy underlying our compensation
strategy and the fundamental elements of compensation paid to the Chief Executive Officer (CEO),
Chief Financial Officer, and other executive officers included in the Summary Compensation Table,
to whom we refer collectively as our Named Executive Officers. Specifically, this Compensation
Discussion and Analysis addresses the following:
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Oversight of our compensation programs; |
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Objectives of our compensation programs; |
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How we determine each element of compensation; |
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Elements of compensation; and |
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Other important compensation policies. |
Oversight of Our Compensation Programs
The Board Compensation Committee oversees the compensation programs for our Named Executive
Officers. The Board Compensation Committee is supported in its role by our Management Compensation
Committee. The Management Compensation Committee is comprised of three of our most senior officers:
G. Richard Ferdinandtsen, President and Chief Operating Officer; James E. Pozzi, Senior Executive
Vice President and Chief Administrative Officer; and Ronald J. Welch, Senior Executive Vice
President, Corporate Risk Officer and Chief Actuary.
The compensation process for our Named Executive Officers and other executive officers begins
with an annual evaluation by the Management Compensation Committee. As part of this evaluation
process, the Management Compensation Committee considers our performance, internal equity and
consistency, each executive officers individual performance over the prior year, any changes in
responsibilities, and the future potential of each executive officer. The Management Compensation
Committee also considers data available from nationally published compensation surveys obtained
from a range of industry and general market sources.
Based on these evaluations, the Management Compensation Committee formulates recommendations
for our Board Compensation Committee with respect to (i) annual pay increases, (ii) performance
criteria for incentive compensation, and (iii) long-term incentive grants, if any. The Management
Compensation Committee does not make recommendations relating to the pay of our Chairman and CEO or
our President and Chief Operating Officer. Following the review and approval of these
recommendations by the Chairman and CEO, the President and Chief Operating Officer presents the
Management Compensation Committees evaluations and recommendations to the Board Compensation
Committee. The Board Compensation Committee makes its own determination of pay for the Chairman and
CEO and the President and Chief Operating Officer with the advice of its outside consultant.
To evaluate the compensation of our Named Executive Officers and other senior executive
officers relative to market comparables and to better inform the Board Compensation Committee in
making fiscal 2010 compensation decisions, the Board Compensation Committee engaged Frederic W.
Cook & Co., Inc. (Cook & Co.), a national compensation consulting firm, to conduct a review of
our executive officer compensation practices relative to a peer group and nationally published
market surveys of executive compensation practices. Cook & Co. is independent of us and has no
relationship with us other than assisting the Board Compensation Committee with its executive
compensation practices. After considering the Management Compensation Committees recommendations
and Cook & Co.s report, the Board Compensation Committee determined not to make any material
changes from the 2009 compensation of our Named Executive Officers and submitted its compensation
recommendations to our Board of Directors. The Board of Directors approved those recommendations.
17
Objectives of Our Compensation Programs
The overall goal of our executive compensation programs is to retain and reward leaders who
create long-term value for our stockholders. With this goal in mind, our compensation programs are
designed to:
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Attract and retain experienced, highly qualified individuals who are in a position to
make significant contributions to our success; |
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Drive exceptional performance and motivate our executive officers to achieve desired
financial results; |
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Provide our executives with opportunities to develop a significant ownership stake in
our company; and |
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Align the interests of our executive officers with the long-term interests of our
stockholders. |
How We Determine Each Element of Compensation
In determining the amounts of each element of compensation and the aggregate compensation for
our Named Executive Officers, we review market practices as described under Market Comparisons
below. We do not use any specific formulae or attempt to satisfy any specific ratio for
compensation among our executive officers. We also do not generally target any particular
allocation for base salary, annual incentive, or long-term equity awards as a percentage of total
compensation. Target compensation levels are decided subjectively based on a review of relevant
market practices, the responsibilities and future potential of each executive, internal equity, and
each executives ability to impact financial and operational results. Historically, our
compensation programs have more heavily emphasized fixed compensation, while many of our peers
place a greater emphasis on incentive compensation. In 2009, however, we modified our compensation
program to increase the proportion of performance-based compensation paid to our Named Executive
Officers.
Market Comparisons
During early 2010, Cook & Co. evaluated the total direct compensation (consisting of base
salary, annual incentives, and long-term incentives) of our Named Executive Officers relative to
market practices. The compensation of each of our Named Executive Officers was compared to that of
individuals in comparable positions among a peer group of companies listed below, and to nationally
published compensation survey data.
The peer group consists of companies that compete with us for talent, face similar challenges
in the financial services sector, and have senior executives with comparable responsibilities. As
of the date of Cook & Co.s report, peer group revenues for the prior four quarters ranged from
$0.9 billion to $4.5 billion (median revenues of $2.8 billion), and assets ranged from $6.3 billion
to $41.8 billion (median assets of $14.7 billion). Our total revenues were approximately $2.9
billion in 2009, and our assets were approximately $20.0 billion at the end of 2009. The peer group
is comprised of the following companies:
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W.R. Berkley Corporation
Cincinnati Financial Corporation
The Hanover Insurance Group, Inc.
HCC Insurance Holdings, Inc.
Horace Mann Educators Corporation
Old Republic International Corporation
Phoenix Companies, Inc.
Protective Life Corporation
StanCorp Financial Group, Inc.
Torchmark Corporation
Transatlantic Holdings, Inc.
Unitrin, Inc.
White Mountains Insurance Group, Ltd. |
The published survey data covers a broader set of companies, including many if not all of the
peer companies within the insurance industry. The specific surveys used for fiscal 2010 were:
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Mercer 2009 Benchmark Database (containing tabular data of insurance companies with
greater than $5 billion in assets); |
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Watson Wyatts 2009/2010 Top Management Calculator (containing insurance industry data
regressed to each executives individual scope as measured in assets); and |
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LOMAs 2009 Executive Compensation Survey Report (containing tabular insurance industry
data from companies with assets between $5 billion and $30 billion). |
18
Key findings of Cook & Co.s evaluation for 2010 were as follows:
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The total direct compensation of our Chairman and CEO was in the top quartile of the
peer and survey organizations, consistent with his substantial experience and consistent
performance. The total direct compensation of our other Named Executive Officers generally
approximated the median of the peer and survey organizations, with the exception of the
Executive Vice President, Chief Financial Officer and Corporate Treasurer, whose total
direct compensation was lower as a result of a narrower scope of responsibilities compared
to comparable positions within the peer group. |
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Although we have restructured our pay mix to better emphasize performance-based pay and
equity-based compensation in the last couple of years, the market continues to provide more
emphasis on long-term compensation as compared to our compensation practices, particularly
with respect to our Chairman and CEO and our President and Chief Operating Officer. The
Board Compensation Committee has made certain modifications to the 2011 Executive Incentive
Compensation Program to enhance long-term incentives, as explained below under 2011
Program. |
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Base salaries and short-term cash incentive opportunities for most of our top executives
are competitive, with the exception of the Executive Vice President, Chief Financial
Officer and Corporate Treasurer, as noted above. Base salaries and short-term cash
incentive opportunities for our Chairman and CEO and our President and Chief Operating
Officer are in the top quartile, consistent with their substantial experience and
consistent performance. |
Elements of Compensation Provided to the Named Executive Officers and Why We Pay Each Element
The following table lists the primary elements of our executive compensation program and the
primary purpose of each element. Additional explanation of each element follows the table.
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Element |
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Purpose |
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Base Salary
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Provides a fixed level of
competitive compensation |
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Annual Incentive Compensation
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Focuses executive attention on
key financial and operational
performance measures |
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Long-Term Incentive Compensation
(consisting of restricted stock units,
restricted stock and stock appreciation
rights)
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Aligns the interests of
executives with long-term
stockholder value and retains
executive talent |
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Retirement Benefits
(consisting of qualified and
non-qualified Company pension plans and
the Companys 401(k) plan)
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Assists executives in providing
for their and their families
long-term financial security
and future personal needs |
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Health and Welfare Benefits
(consisting of basic and supplemental
health insurance, disability protection,
and life insurance)
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Assists executives in providing
for their and their families
current personal needs |
Base Salary
Base salary is an important component of total compensation for our Named Executive Officers,
and it is vital to our goal of recruiting and retaining executive officers with proven abilities.
Base salaries are determined for each Named Executive Officer based on abilities, qualifications,
accomplishments, and prior work experience. Adjustments are considered annually based on current
market data, the consistency of the executive officers individual performance over the prior year,
changes in responsibilities, future potential and internal equity.
As shown in the Summary Compensation Table below, a significant change was made to the base
salary of our Chairman and CEO in 2009. As part of an effort to shift the pay mix away from fixed
compensation into incentive-based compensation, the base salary of the Chairman and CEO was reduced
from $5 million to $2 million in 2009; correspondingly, his annual performance-based incentive
opportunity was substantially increased. This shift better aligned the pay mix of the Chairman and
CEO with the market, and this compensation philosophy remained unchanged in 2010. The base
salaries of our other Named Executive Officers remained unchanged or increased modestly. The base
salary increases reflect our view of competitive pressures in the industry.
Note Regarding Our Principal Financial Officer: On December 17, 2010, our Board of Directors
designated John J. Dunn, Jr., Executive Vice President and Corporate Chief Financial Officer, as
our principal financial officer for purposes of our reporting responsibilities under the 1934
Act. Mr. Dunn began his service with us on August 16, 2010. During the interim period following
Mr. Dunns hiring until December 17, 2010, Stephen E. Pavlicek, Executive Vice President, Chief
Financial Officer and Corporate Treasurer, continued to serve as our principal financial officer.
Mr. Pavlicek retired effective March 31, 2011.
At the time of our hiring of Mr. Dunn, the Board of Directors, upon recommendation of the
Board Compensation Committee, approved Mr. Dunns 2010 compensation package, which included a base
salary based on an annualized salary of $300,000 and participation in the Executive Incentive
Compensation Program. The Compensation Committee made its recommendation after considering Mr.
Dunns prior employment and the compensation of our executive officers who would be his peers. The
actual salary received by Mr. Dunn during 2010, for the portion of the year he was employed by us,
was $112,500.
19
Annual Incentive Compensation
Our Named Executive Officers participate in our Executive Incentive Compensation Program.
Eligibility to participate in this program is determined by our Board Compensation Committee and
approved by the Board of Directors. Payouts are based on actual performance relative to
predetermined performance objectives across a range of performance measures that an executive has
the ability to impact. All incentive compensation is subject to review and approval by the Board
Compensation Committee and the Board of Directors, both at the time of the setting of the
performance objectives and at the time of payment of the annual incentive award. In order to
receive an incentive compensation payout, an executive must be employed by the Company at the time
of payout; provided, however, that in the event of death, disability or normal retirement after the
age of 65 prior to such payout, the payout will be prorated for the portion of the calendar year up
to the date of death, disability or retirement.
Incentive Opportunities: Annual incentive opportunities are expressed as a percentage of base
salary. For each applicable performance measure, there are three levels of performance objectives
(Level 1, Level 2, and Level 3), with increased incentive opportunities associated with each level.
Once a Level 1 performance objective is reached for a particular performance measure, the actual
amount of the award will be prorated toward each subsequent performance objective for that
performance measure. For example, a Named Executive Officer who, as of the end of the year, has met
a Level 1 performance objective for a particular performance measure and is halfway toward his
Level 2 performance objective for that particular performance measure would receive his Level 1
award plus 50% of the additional award attributable to Level 2 achievement for that measure.
Pursuant to the 2010 Executive Incentive Compensation Program, incentive awards for individual
performance measures can be earned for Level 3 performance; however, a Named Executive Officer
cannot earn an aggregate annual incentive award in excess of the amount he would receive if he were
to satisfy all performance measures at Level 2 (target). In other words, a Named Executive Officer
may earn a payout consistent with Level 3 for a particular performances measure, but the total
incentive award in aggregate is capped at the sum of Level 2 performance for each of the measures.
We instituted this cap to help manage compensation risk and incentive plan payments.
Incentive Payouts: Prior to 2009, annual incentive awards were settled entirely in cash. In
2009, however, we modified the Executive Incentive Compensation Program to make a portion of the
incentive award subject to longer-term performance. The total incentive, when earned, is paid out
60% in cash and 40% in Restricted Stock Units (RSUs) for each of the Named Executive Officers,
except the Chairman and CEO. Because the Chairman and CEO is a significant stockholder and his base
salary was substantially reduced for 2009, his annual incentive is paid 70% in cash and 30% in
RSUs. Payment of a portion of the annual incentive in RSUs permits the Executive Incentive
Compensation Program to serve both annual and long-term compensation purposes and better aligns our
pay-mix with market practices. RSUs have no voting or dividend rights.
The aggregate annual incentive award earned that is allocable to RSUs is divided by the market
price of our Common Stock on a predetermined date to set the number of RSUs awarded to each Named
Executive Officer. Fractional RSUs are not awarded, but amounts representing a fractional unit are
paid in cash. RSUs granted under the 2009 and 2010 Executive Incentive Compensation Programs
convert into shares of Common Stock on a one-for-one basis two years after the date issued,
provided that the executive remains employed with the Company until such time. The employment
service requirement will be waived in the event of death, disability or normal retirement after the
age of 65, and RSUs will convert to shares of Common Stock upon any such event. Because the
executive bears the risk of the difference in the market value of our Common Stock at the time the
RSUs were awarded and the value of such stock at the time the RSUs are converted into shares, the
portion of the annual incentive paid in RSUs provides an additional incentive for each Named
Executive Officer to remain a major contributor to the future growth and success of the Company.
The Companys Chairman and CEO and the Companys President and Chief Operating Officer are
eligible to receive quarterly incentive payments under the Executive Incentive Compensation
Program. Because the potential incentive payout for these two Named Executive Officers constitutes
a substantial portion of their compensation, the Board Compensation Committee decided to spread the
payout throughout the year. Quarterly payments are based on the total incentive award projected
for the year based on year-to-date performance following the end of the first three quarters of the
year. The amount payable for any quarter is discounted by 20%, and then pro-rated by the percentage
of the annual incentive to be paid in cash. Amounts paid in prior quarters are subtracted from
payments due in subsequent quarters. The total cash incentive awards earned by our Chairman and
CEO and our President and Chief Operating Officer for 2010 performance were $5,390,000 and
$960,000, respectively. Of these amounts, $3,234,000 and $565,885 were paid to our Chairman and
CEO and our President and Chief Operating Officer, respectively, for the first three quarters of
2010, and the remaining cash incentive payments of $2,156,000 and $394,115, respectively, were made
in February 2011.
Performance Measures: The Board Compensation Committee generally establishes specific
performance measures and the corresponding levels of performance objectives for each of our Named
Executive Officers after consideration of our annual corporate plan and after review of
recommendations from the Management Compensation Committee. The specific performance measures and
performance objectives for the 2010 Executive Incentive Compensation Program were approved in
February 2010 and communicated to the Named Executive Officers in March 2010.
Named Executive Officers are reasonably likely to meet some, but not all, Level 1 objectives.
The Board Compensation Committee considers Level 2 objectives to be aggressive. Level 3 objectives
are established at levels above and beyond the expected achievement associated with a particular
performance measure. Achievement of an aggregate Level 2 payout generally means that the Named
Executive Officers performance has met yearly objectives established under our annual corporate
plan.
20
Performance measures used in the 2010 Executive Incentive Compensation Program are listed and
explained below. Specific performance measures are selected for each Named Executive Officer based
on the financial and operational measures that he has the ability to impact. Not all measures are
used for every Named Executive Officer.
1. |
|
Consolidated Operating Revenues. This is total revenues less amounts reported as
realized gains and losses. |
2. |
|
Five Year Average Adjusted after Tax Net Gain from Operations (as a percentage of
stockholders dividends). Adjusted after tax net gain from operations is equal to net
income less after-tax net realized gains and losses. |
3. |
|
Return on Equity from Insurance Lines (adjusted for unusual items). This is after tax
net gain from operations for the insurance lines (adjusted for unusual items) divided by
the equity assigned to the insurance lines. |
4. |
|
Total Corporate Return on Equity: This is adjusted gain divided by adjusted equity. |
|
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|
Adjusted gain is consolidated net income, adjusted for changes in unrealized capital
gains/losses, and adjusted for unusual items. |
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Adjusted equity is beginning stockholders equity minus unrealized gain/loss on bonds
(FAS 115). |
5. |
|
Weighted Direct Earned Premium: This is the total weighted direct earned premium, which
is premium income to us that is weighted in accordance with industry standards for
measuring premium. Pursuant to such standards, recurring premiums are weighted at 100%, and
single life premiums, excess life premiums, and annuity deposits are weighted at 10% of the
actual amount received. Direct earned premium refers to premium actually received. |
6. |
|
Home Office Expenses: This is the actual controllable non-distribution related
operating expenses for our home office, San Antonio, and League City, Texas operations. |
7. |
|
Timeliness of Report: This represents the average working days past the end of the
month until our monthly operating reports are distributed, excluding the month of January
and the end of each quarter. |
Adjustments may be made for extraordinary occurrences in a particular year that are not
expected to recur. Any such adjustments are approved by the Board Compensation Committee and could
include such unusual items as unexpected litigation against us. The amount of incentive award
payable based on performance measures unrelated to earnings is reduced by 50% of the calculated
amount if a certain threshold Return on Equity from Insurance Lines is not achieved. Although for
2009 this resulted in downward adjustments for each Named Executive Officer whose applicable
performance measures included Weighted Direct Earned Premium or Timeliness of Report, no such
adjustments were required for the Named Executive Officers for 2010.
Because Mr. Dunns employment with us during 2010 would be limited to only four and a half
months, the Board Compensation Committee recommended that specific performance measures and targets
not be developed for Mr. Dunn and that Mr. Dunn instead be paid a bonus of 85% of the salary he
would receive in 2010. In accordance with the terms of the Executive Incentive Compensation
Program, Mr. Dunns incentive bonus was payable 60% in cash and 40% in RSUs. As a result, Mr. Dunn
is not included in the three tables immediately below regarding the Executive Incentive
Compensation Program.
The table below shows the performance measures and their relative weightings as a percentage
of the total incentive opportunity for each Named Executive Officer during 2010.
2010 Annual Incentive Performance Measures and Weightings for the Named Executive Officers
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Performance |
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Measure |
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Moody |
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Ferdinandtsen |
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Welch |
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Pozzi |
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Pavlicek |
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Consolidated Operating Revenues |
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12 |
% |
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22.2 |
% |
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22.5 |
% |
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22.5 |
% |
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10 |
% |
Five Year Average
Adjusted After Tax
Net Gain from
Operations |
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52 |
% |
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11.2 |
% |
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10 |
% |
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10 |
% |
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20 |
% |
Return on Equity
from Insurance
Lines |
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12 |
% |
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22.2 |
% |
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22.5 |
% |
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15 |
% |
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|
20 |
% |
Total Corporate
Return on Equity |
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|
12 |
% |
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22.2 |
% |
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22.5 |
% |
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15 |
% |
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Weighted Direct
Earned Premium |
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12 |
% |
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22.2 |
% |
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22.5 |
% |
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22.5 |
% |
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10 |
% |
Home Office Expenses |
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15 |
% |
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20 |
% |
Timeliness of Report |
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20 |
% |
21
The next table shows each performance measure and the Level 1, Level 2 and Level 3 goals
associated with each, along with actual 2010 performance with respect to each performance measure.
Information regarding our performance measures is provided in the limited context of our Executive
Incentive Compensation Program and should not be understood to be statements of managements
expectations or estimates of results or other guidance. We specifically caution investors not to
apply these statements to other contexts.
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Performance |
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Level 2 |
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|
|
Measure |
|
Level 1 |
|
(Target) |
|
Level 3 |
|
2010 Actual |
Consolidated Operating Revenues |
|
$2.87 billion |
|
$2.92 billion |
|
$2.97 billion |
|
$3.00 billion |
Five Year Average Adjusted After Tax Net Gain from Operations |
|
50.0% of stockholders dividend |
|
75.0% of stockholders dividend |
|
100.0% of stockholders dividend |
|
163.9% of stockholders dividend |
Return on Equity
from Insurance
Lines |
|
5.5% |
|
6.0% |
|
6.5% |
|
2.9% |
Total Corporate
Return on Equity |
|
5.5% |
|
6.0% |
|
6.5% |
|
7.5% |
Weighted Direct
Earned Premium |
|
$2.0 billion |
|
$2.1 billion |
|
$2.2 billion |
|
$2.1 billion |
Home Office Expenses |
|
$117.0 million |
|
$115.0 million |
|
$113.0 million |
|
$116.7 million |
Timeliness of Report |
|
17.0 days |
|
15.0 days |
|
13.0 days |
|
15.3 days |
A Named Executive Officers aggregate incentive opportunity is equal to the sum of the
incentive opportunities tied to the specific performance measures applicable to that individual. As
noted above, incentive opportunities are expressed as a percentage of base salary.
Following the completion of the 2010 performance year, the Board Compensation Committee
assessed the performance of the Named Executive Officers against the objectives established at the
beginning of the year in order to determine the aggregate incentive award payable to each. The
actual aggregate annual incentive award payment for 2010 to the Named Executive Officers ranged
from 42% to 385% of their respective base salaries.
The following table shows how each Named Executive Officer performed relative to his aggregate
Level 1 and Level 2 award opportunities under the 2010 Executive Incentive Compensation Program. As
noted above, each Named Executive Officers maximum aggregate incentive that may be earned is
limited to the sum of the Level 2 award opportunities for all performance measures applicable to
the specific executive; therefore, aggregate Level 3 opportunities are not shown below. Actual
performance relative to each specific performance measure is disclosed in the table immediately
above. As discussed above, 30% of the incentive award earned by our Chairman and CEO is paid in
RSUs, and 40% of the award earned is paid in RSUs for each of the other Named Executive Officers.
2010 Potential Aggregate Incentive Opportunities
for the Named Executive Officers Compared to Actual Aggregate Incentive Award Earned
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Actual Aggregate |
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Level 1 |
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Level 2 (Target) |
|
|
Incentive Award Earned |
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As a % |
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As a % |
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As a % |
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of |
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As $ |
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of |
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As $ |
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of |
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As $ |
|
Name/Title |
|
Salary |
|
|
Amount |
|
|
Salary |
|
|
Amount |
|
|
Salary |
|
|
Amount |
|
Robert L. Moody,
Sr., Chairman of
the Board of
Directors and CEO |
|
|
192.5 |
% |
|
$ |
3,850,000 |
|
|
|
385 |
% |
|
$ |
7,700,000 |
|
|
|
385 |
% |
|
$ |
7,700,000 |
|
G. Richard
Ferdinandtsen,
President and Chief
Operating Officer |
|
|
80 |
% |
|
$ |
800,000 |
|
|
|
160 |
% |
|
$ |
1,600,000 |
|
|
|
160 |
% |
|
$ |
1,600,000 |
|
Ronald J. Welch,
Senior Executive
Vice President,
Corporate Risk
Management Officer
and Chief Actuary |
|
|
50 |
% |
|
$ |
204,443 |
|
|
|
100 |
% |
|
$ |
408,887 |
|
|
|
100 |
% |
|
$ |
408,887 |
|
James E. Pozzi,
Senior Executive
Vice President and
Chief
Administrative
Officer |
|
|
50 |
% |
|
$ |
212,879 |
|
|
|
100 |
% |
|
$ |
425,759 |
|
|
|
100 |
% |
|
$ |
425,759 |
|
Stephen E.
Pavlicek, Executive
Vice President,
Chief Financial
Officer and
Corporate Treasurer |
|
|
25 |
% |
|
$ |
65,590 |
|
|
|
50 |
% |
|
$ |
131,181 |
|
|
|
42 |
% |
|
$ |
110,944 |
|
22
Long-Term Incentive Compensation
In 1999, our Board of Directors and stockholders approved the American National Insurance
Company 1999 Stock and Incentive Plan (the 1999 Plan). All of our employees, as well as directors
and consultants of American National Insurance Company, are eligible to participate in the 1999
Plan. The Plan is administered by our Board Compensation Committee. The 1999 Plan provides for the
grant of any or all of the following types of awards: (1) stock options, including incentive stock
options and non-qualified stock options; (2) stock appreciation rights (SARs), in tandem with
stock options or freestanding; (3) restricted stock and RSUs; (4) performance awards; and (5) other
stock-based awards.
Until 2010, we made grants only of restricted stock and freestanding SARs under the 1999 Plan.
During 2010, grants of RSUs were made based on the achievement of performance objectives under the
2009 Executive Incentive Compensation Program. For the 2010 Executive Incentive Compensation
Program, RSUs were issued to the Named Executive Officers effective March 1, 2011 as follows, in
accordance with the satisfaction of applicable performance measures under such plan:
|
|
|
Robert L. Moody, Sr., Chairman of the Board and CEO
|
|
29,009 RSUs |
|
|
|
G. Richard Ferdinandtsen, President and Chief Operating Officer
|
|
8,037 RSUs |
|
|
|
Ronald J. Welch, Senior Executive Vice President, Corporate
Risk Management Officer and Chief Actuary
|
|
2,053 RSUs |
|
|
|
James E. Pozzi, Senior Executive Vice President and Chief
Administrative Officer
|
|
2,138 RSUs |
|
|
|
Stephen E. Pavlicek, Executive Vice President, Chief Financial
Officer and Corporate Treasurer
|
|
557 RSUs |
|
|
|
John J. Dunn, Jr., Executive Vice President and Corporate
Chief Financial Officer*
|
|
480 RSUs |
|
|
|
* |
|
As noted above under Annual Incentive Compensation, specific performance measures and targets
were not established for Mr. Dunn. |
Prior to 2010, we generally made grants under the 1999 Plan every three years. Such grants
were made following a general, discretionary evaluation of a large group of individuals eligible
for inclusion in the 1999 Plan. We intend to make grants of RSUs under the 1999 Plan on an annual
basis, by paying a portion of the annual incentive to our Named Executive Officers in RSUs, as
described above under Annual Incentive Compensation. We believe that providing equity
opportunities on an annual basis will provide stronger retention incentives for our executive
officers and mitigate pricing problems in a volatile market through more frequent grants. In
addition, such opportunities improve our competitive positioning with respect to long-term
incentive compensation.
Retirement Benefits
We maintain Company-sponsored retirement and deferred compensation plans for the benefit of
our salaried employees, including our Named Executive Officers. These benefits are designed to
assist employees, including our Named Executive Officers, in providing for their and their
families long-term financial security. Specifically, we maintain a qualified pension plan and
non-qualified deferred compensation plans. The purpose of the non-qualified deferred compensation
plans is to restore curtailments of benefits under the qualified plan required to comply with the
Internal Revenue Code of 1986, as amended (the Code). Each of these plans, and the benefits
provided under each to the Named Executive Officers, is further discussed below in connection with
the Pension Benefits table.
The Named Executive Officers are also eligible to participate in our 401(k) Plan, which is a
Company-wide, tax-qualified retirement plan. The intent of the plan is to provide all employees
with a tax-advantaged savings opportunity for retirement. We sponsor this plan to help employees at
all levels save and accumulate assets for use during their retirement. As required, eligible pay
under this plan is capped at Code annual limits. We do not match employee contributions in our
401(k) Plan.
23
Other Benefits
Basic health benefits, disability protection, life insurance and similar programs are provided
to make certain that access to healthcare and income protection is available to our employees and
their family members. Each of our Named Executive Officers, as well as all of our officers at the
level of vice president and above, participates in our Merit Plan, an insured medical plan that
supplements our core medical insurance plan. The Merit Plan provides coverage for co-pays,
deductibles, and other out-of-pocket expenses that are not covered by the core medical insurance
plan. Such coverage is limited to medical expenses that could be deducted by the recipient for
federal income tax purposes.
Perquisites
During 2010, perquisites to our Named Executive Officers included benefits under the Merit
Plan discussed immediately above; automobile allowances; club memberships; payment of certain life
insurance premiums; and guest travel, lodging, leisure activities, and food and beverage at Company
business conferences and other events. The perquisites and benefits provided to each Named
Executive Officer during 2010 are reported in further detail in the All Other Compensation column
of the Summary Compensation Table and are reported in further detail in the All Other Compensation
Table Named Executive Officers.
Other Important Compensation-Related Policies Affecting Our Named Executive Officers
Employment and Severance Contracts. In general, it is our Board of Directors policy not to
enter into employment agreements with, or provide executive severance benefits to, our executive
officers beyond those generally available to our salaried employees. As a result, our Named
Executive Officers serve at the pleasure of the Board and are at will employees.
Trading in Our Stock Derivatives. Our Insider Trading Policy prohibits executive officers from
purchasing or selling options, including puts and calls, on our Common Stock or engaging in short
sales with respect to our Common Stock.
Stock Ownership Guidelines
On February 23, 2011, our Board Compensation Committee adopted stock ownership guidelines for
our officers and directors in order to encourage ownership of our stock by these individuals and to
further align their long-term goals and objectives with those of the Companys stockholders. The
stock ownership guidelines for our officers are based on a multiple of base salary. The guidelines
recommend that our Chairman and CEO own an amount of our stock at least equivalent to five times
his annual base salary. For our President and Chief Operating Officer, the recommended amount is
three times base salary. For our other executive officers, the guidelines recommend ownership of
an amount of stock at least equivalent to one times base salary, and all other officers are
encouraged, but not required, to own the same amount. Pursuant to these guidelines, each of our
directors and advisory directors should own two thousand shares of our Common Stock. For those
officers and directors not currently meeting these guidelines, the Board Compensation Committee has
recommended that such individuals retain at least fifty percent of all after-tax shares received as
compensation as such shares vest, until such time as these individuals are in compliance with the
guidelines.
2011 Program
In response to recommendations from Cook & Co., we have made certain changes to our 2011
incentive compensation program in order to better align the program with current market trends and
practices. First, RSUs earned by our executive officers under the 2011 Executive Incentive
Compensation Program will be subject to a three-year ratable vesting period, rather than two-year
cliff vesting. One-third of the RSUs granted for 2011 performance will vest on the first, second
and third anniversaries of the grant date. We believe this change from a two-year to a three-year
vesting period will enhance the long-term retention incentive provided to our executives by these
awards.
Additionally, pursuant to the 2011 Executive Incentive Compensation Program, the cap on the
aggregate annual incentive that can be earned by our executive officers has been modified. As
explained under Annual Incentive Compensation above, for the past two years, our executive
officers were not permitted to earn an aggregate annual incentive award in excess of the amount
each would receive if he were to satisfy all performance measures at Level 2 (target). For 2011,
this limitation on the aggregate incentive award has been removed for all executive officers other
than our Chairman and CEO. For the particular percentage of base salary earned as incentive
compensation in excess of the aggregate target amount, the entire amount of such excess award will
be paid in RSUs. This change is intended to give executives an opportunity to earn above-target
payouts for superior performance and also to enhance the long-term retention incentive provided to
our executives through RSU awards. The Chairman and CEOs aggregate incentive award for 2011 will
continue to be limited to the aggregate target incentive award.
Independent Compensation Consultant
As noted above, the Board Compensation Committee retained Cook & Co. to provide information,
analyses, and advice regarding our 2010 executive compensation program. Cook & Co. performed the
following services for the Company:
|
|
|
Evaluated the competitive positioning of our executive officers base salaries, annual
incentive and long-term incentive compensation relative our primary peers and the broader
insurance industry; |
|
|
|
Briefed the Board Compensation Committee on executive compensation trends among our
peers and the broader industry; and |
|
|
|
Provided ongoing advice to the Board Compensation Committee as needed for ad hoc
requests related to the determination of the amount and form of executive compensation. |
24
The Board Compensation Committee has established procedures that it considers adequate to
ensure that the compensation consultants advice to the committee remains objective and is not
influenced by our management. These procedures included the
following: a direct reporting relationship of the consultant to the committee chairman; a
provision in the committees engagement letter with Cook & Co. specifying the information, data,
and recommendations that can and cannot be shared with management; and an annual update to the
committee on Cook & Co.s financial relationship with us, including a summary of the work performed
for us during the preceding twelve months. Additionally, Cook & Co. has no service lines other
than executive compensation consulting, so the potential for any conflict of interest as a result
of providing other services to the Company is eliminated.
With the consent of the Board Compensation Committee chair, the independent compensation
consultant may, from time to time, contact our executive officers for information necessary to
complete its assignments and may make reports and presentations to and on behalf of the committee
that the executive officers also receive.
All of the decisions with respect to determining the amount or form of executive compensation
under our executive compensation programs are ultimately made by our Board of Directors upon the
recommendation of the Board Compensation Committee and may reflect factors and considerations other
than the information and advice provided by the compensation consultant.
COMPENSATION COMMITTEE REPORT
The Board Compensation Committee has reviewed and discussed the Compensation Discussion
and Analysis with management. Based upon such review, the related discussions and such other
matters deemed relevant and appropriate to the Board Compensation Committee, the Board Compensation
Committee has recommended to the Board of Directors that the Compensation Discussion and Analysis
be included in this proxy statement to be delivered to stockholders.
Submitted by the Board Compensation Committee:
James D. Yarbrough, Chairman
Dr. Shelby M. Elliott
Frank P. Williamson
25
Summary Compensation Table
The following table sets forth all of the compensation awarded to or earned by the Named
Executive Officers for the years ended December 31, 2010, 2009 and 2008. None of the Named
Executive Officers has a written or unwritten employment agreement or arrangement with us.
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Change in |
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Pension Value |
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and Non- |
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qualified |
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|
|
|
|
|
|
|
|
|
|
|
Non-Equity |
|
|
Deferred |
|
|
|
|
|
|
|
Name and |
|
|
|
|
|
|
|
|
|
|
|
Stock |
|
|
SAR |
|
|
Incentive Plan |
|
|
Compensation |
|
|
All Other |
|
|
|
|
Principal |
|
|
|
Salary |
|
|
Bonus |
|
|
Awards |
|
|
Awards |
|
|
Compensation |
|
|
Earnings |
|
|
Compensation |
|
|
|
|
Position |
|
Year |
|
(a) |
|
|
(b) |
|
|
(c) |
|
|
(d) |
|
|
(e) |
|
|
(f) |
|
|
(g) |
|
|
Total |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert L. Moody, Sr., |
|
2010 |
|
$ |
2,000,000 |
|
|
$ |
157 |
|
|
$ |
1,154,969 |
|
|
$ |
0 |
|
|
$ |
5,390,000 |
|
|
$ |
7,457,759 |
|
|
$ |
480,271 |
* |
|
$ |
16,483,156 |
|
Chairman of the |
|
2009 |
|
$ |
2,000,000 |
|
|
$ |
157 |
|
|
$ |
416,813 |
|
|
$ |
0 |
|
|
$ |
5,390,000 |
|
|
$ |
13,926,478 |
|
|
$ |
591,984 |
* |
|
$ |
22,325,432 |
|
Board and Chief |
|
2008 |
|
$ |
5,000,000 |
|
|
$ |
157 |
|
|
$ |
5,824,000 |
|
|
$ |
0 |
|
|
$ |
1,350,000 |
|
|
$ |
5,788,062 |
|
|
$ |
603,599 |
* |
|
$ |
18,565,818 |
|
Executive Officer |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
G. Richard Ferdinandtsen, |
|
2010 |
|
$ |
1,000,000 |
|
|
$ |
157 |
|
|
$ |
319,980 |
|
|
$ |
0 |
|
|
$ |
960,000 |
|
|
$ |
2,248,465 |
|
|
$ |
177,356 |
* |
|
$ |
4,705,958 |
|
President and |
|
2009 |
|
$ |
1,000,000 |
|
|
$ |
157 |
|
|
$ |
24,714 |
|
|
$ |
0 |
|
|
$ |
754,774 |
|
|
$ |
3,461,612 |
|
|
$ |
196,679 |
* |
|
$ |
5,437,936 |
|
Chief Operating Officer |
|
2008 |
|
$ |
1,000,000 |
|
|
$ |
158 |
|
|
$ |
2,329,600 |
|
|
$ |
0 |
|
|
$ |
240,000 |
|
|
$ |
1,458,632 |
|
|
$ |
199,911 |
* |
|
$ |
5,228,301 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ronald J. Welch, |
|
2010 |
|
$ |
408,887 |
|
|
$ |
136 |
|
|
$ |
81,720 |
|
|
$ |
0 |
|
|
$ |
245,332 |
|
|
$ |
496,690 |
|
|
$ |
20,505 |
|
|
$ |
1,253,270 |
|
Senior Executive Vice |
|
2009 |
|
$ |
408,887 |
|
|
$ |
136 |
|
|
$ |
81,759 |
|
|
$ |
0 |
|
|
$ |
190,419 |
|
|
$ |
539,636 |
|
|
$ |
23,363 |
|
|
$ |
1,244,200 |
|
President, Corporate |
|
2008 |
|
$ |
402,221 |
|
|
$ |
136 |
|
|
$ |
0 |
|
|
$ |
178,433 |
|
|
$ |
72,400 |
|
|
$ |
483,255 |
|
|
$ |
18,616 |
|
|
$ |
1,155,061 |
|
Risk Officer and
Chief Actuary |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
James E. Pozzi, |
|
2010 |
|
$ |
425,759 |
|
|
$ |
136 |
|
|
$ |
85,062 |
|
|
$ |
0 |
|
|
$ |
255,455 |
|
|
$ |
374,352 |
|
|
$ |
19,108 |
|
|
$ |
1,159,872 |
|
Senior Executive Vice |
|
2009 |
|
$ |
412,425 |
|
|
$ |
136 |
|
|
$ |
82,468 |
|
|
$ |
0 |
|
|
$ |
108,552 |
|
|
$ |
360,037 |
|
|
$ |
27,366 |
|
|
$ |
990,984 |
|
President and Chief |
|
2008 |
|
$ |
404,092 |
|
|
$ |
136 |
|
|
$ |
0 |
|
|
$ |
178,433 |
|
|
$ |
122,039 |
|
|
$ |
282,622 |
|
|
$ |
24,286 |
|
|
$ |
1,011,608 |
|
Administrative Officer |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stephen E.
Pavlicek,(1) |
|
2010 |
|
$ |
262,362 |
|
|
$ |
136 |
|
|
$ |
26,198 |
|
|
$ |
28,189 |
|
|
$ |
66,567 |
|
|
$ |
268,906 |
|
|
$ |
18,980 |
|
|
$ |
671,338 |
|
Executive Vice |
|
2009 |
|
$ |
252,362 |
|
|
$ |
136 |
|
|
$ |
25,201 |
|
|
$ |
0 |
|
|
$ |
32,426 |
|
|
$ |
236,402 |
|
|
$ |
29,308 |
|
|
$ |
575,835 |
|
President, Chief |
|
2008 |
|
$ |
248,493 |
|
|
$ |
136 |
|
|
$ |
0 |
|
|
$ |
76,471 |
|
|
$ |
45,052 |
|
|
$ |
203,564 |
|
|
$ |
24,774 |
|
|
$ |
598,490 |
|
Financial Officer and
Corporate Treasurer |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John J. Dunn, Jr., (2) |
|
2010 |
|
$ |
112,500 |
|
|
$ |
34 |
|
|
$ |
38,165 |
|
|
$ |
0 |
|
|
$ |
57,375 |
|
|
$ |
0 |
|
|
$ |
65,555 |
|
|
$ |
273,629 |
|
Executive Vice
President and
Corporate
Chief Financial Officer |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
* |
|
Consists primarily of dividends on restricted stock, as shown in the All Other Compensation
Table Named Executive Officers below. |
|
(1) |
|
Mr. Pavlicek served as our principal financial officer during 2009 and until
December 17, 2010. He retired effective March 31, 2011. |
|
(2) |
|
Mr. Dunn began his service with us on August 16, 2010. He was designated our
principal financial officer by the Board of Directors on December 17, 2010. |
26
Column (a) Salary. These amounts represent base salary, including any amount of base salary the
Named Executive Officer may have contributed to our 401(k) plan.
Column (b) Bonus. These amounts reflect an annual holiday bonus paid in December.
Column (c) Stock Awards. For 2009 and 2010, the values shown for each Named Executive Officer,
other than Mr. Dunn, represent the grant date fair value of conditional performance-based
restricted stock units granted under the Executive Incentive Compensation Program during 2009 and
2010, but not issued until 2010 and 2011, respectively, based on the probable outcome (as of the
grant date) of the performance based conditions applicable to the awards. For this purpose, the
probable outcome is based on achievement at threshold performance levels (Level 1, as discussed in
the Compensation Discussion and Analysis above), calculated in accordance with FASB ASC 718,
excluding the effect of estimated forfeitures, based on a stock price at the grant dates of
February 26, 2009 and February 25, 2010 of $44.29 and $107.81, respectively. Named Executive
Officers are reasonably likely to meet some, but not all, Level 1 objectives. The amounts in the
table do not correspond to the actual value that is ultimately recognized by the Named Executive
Officers. See the Grants of Plan-Based Awards table below for further information on these
performance-based restricted stock units. The Board Compensation Committee reduced the number of
RSUs to be awarded to Mr. Moody and Mr. Ferdinandtsen for 2009 performance by 16,667 RSUs and 6,667
RSUs, respectively, to account for grants of restricted stock made to these officers in 2008.
Because Mr. Dunns employment with us during 2010 was limited to only four and a half months, the
Board Compensation Committee recommended that specific performance measures and targets not be
developed for Mr. Dunn and that Mr. Dunn instead be paid a target bonus of 85% of the salary he
would receive in 2010. In accordance with the terms of the Executive Incentive Compensation
Program, Mr. Dunns incentive bonus was payable 60% in cash and 40% in RSUs.
For 2008, the values shown represent grants of restricted stock to Mr. Moody and Mr. Ferdinandtsen
pursuant to the American National Insurance Company 1999 Stock and Incentive Plan. The values
shown for such restricted stock represent the aggregate grant date fair value of these awards
computed in accordance with FASB ASC Topic 718. The restricted stock granted in 2008 will vest
fully in 2018, provided that the recipient remains employed with the Company continuously until
such time. In addition, such stock will fully vest upon the death or disability of the recipient
or, with the Board of Directors consent, upon the recipients retirement. Dividends on restricted
stock are included in column (g), All Other Compensation. Further information regarding the
American National Insurance Company 1999 Stock and Incentive Plan is provided below.
Column (d) SAR Awards. No stock appreciation rights (SARs) were awarded to our Named Executive
Officers during 2009. For 2008 and 2010, the values shown represent SARs granted to certain Named
Executive Officers pursuant to the American National Insurance Company 1999 Stock and Incentive
Plan. The numbers in Column (d) represent the aggregate grant date fair value of SARs computed in
accordance with FASB ASC Topic 718, excluding the effect of estimated forfeitures. Such amounts do
not represent cash payments, amounts realized, or amounts that may be realized by the Named
Executive Officers. These SARs are cash-settled. SARs exercised during 2010 are reflected in the
SARs Exercised and Restricted Stock Vested table below. SAR grants vest 20% per year over a
five-year period beginning the first anniversary of the grant. Vested SARs have a life of five
years from the date of vesting. The SARs granted during 2010 have an exercise price of $110.83, the
closing price of our Common Stock on May 3, 2010, the grant date. The SARs granted during 2008 have
an exercise price of $116.48, the closing price of our Common Stock on May 1, 2008, the grant date.
The grant date fair values shown in the table above have been estimated using a
Black-Scholes-Merton option pricing model. For purposes of this calculation, each SAR grant was
separated into five tranches based on the vesting schedule described above in this paragraph. The
grant date fair value shown in the table above for each SAR grant is the sum of the grant date fair
values for each tranche of the corresponding grant. For Mr. Pozzi and Mr. Welch, their 2008 SAR
grants were separated into five tranches of 1,400 SARs per tranche for purposes of this
calculation. For Mr. Pavlicek, his 2008 SAR grant was separated into five tranches of 600 SARs per
tranche for purposes of this calculation, and his 2010 SAR grant was separated into three tranches
of 133 SARs per tranche and two tranches of 134 SARs per tranche. The common assumptions used in
determining the grant date fair value of each tranche were a stock price at the date of grant of
$116.48 for the May 1, 2008 grants and $110.83 for the May 3, 2010 grant. The remaining assumptions
used for each tranche of the 2008 SAR grants were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expected |
|
|
Safe Harbor |
|
|
Expected Annual |
|
|
Risk Free |
|
|
|
Annual Volatility |
|
|
Expected Life |
|
|
Dividend Yield |
|
|
Rate of Return |
|
Tranche 1
(first 20% to vest) |
|
|
33.36 |
% |
|
3.5 years |
|
|
3.09 |
% |
|
|
2.53 |
% |
Tranche 2
(next 20% to vest) |
|
|
30.76 |
% |
|
4.5 years |
|
|
3.34 |
% |
|
|
2.53 |
% |
Tranche 3
(next 20% to vest) |
|
|
29.72 |
% |
|
5.5 years |
|
|
3.55 |
% |
|
|
3.06 |
% |
Tranche 4
(next 20% to vest) |
|
|
30.16 |
% |
|
6.5 years |
|
|
3.74 |
% |
|
|
3.06 |
% |
Tranche 5
(final 20% to vest) |
|
|
31.50 |
% |
|
7.5 years |
|
|
4.05 |
% |
|
|
3.36 |
% |
27
The remaining assumptions used for each tranche of the 2010 SAR grant were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expected |
|
|
Safe Harbor |
|
|
Expected Annual |
|
|
Risk Free |
|
|
|
Annual Volatility |
|
|
Expected Life |
|
|
Dividend Yield |
|
|
Rate of Return |
|
Tranche 1
(first 20% to vest) |
|
|
65.60 |
% |
|
3.5 years |
|
|
3.36 |
% |
|
|
1.56 |
% |
Tranche 2
(next 20% to vest) |
|
|
58.39 |
% |
|
4.5 years |
|
|
3.30 |
% |
|
|
1.56 |
% |
Tranche 3
(next 20% to vest) |
|
|
53.95 |
% |
|
5.5 years |
|
|
3.35 |
% |
|
|
3.18 |
% |
Tranche 4
(next 20% to vest) |
|
|
50.19 |
% |
|
6.5 years |
|
|
3.49 |
% |
|
|
3.18 |
% |
Tranche 5
(final 20% to vest) |
|
|
47.58 |
% |
|
7.5 years |
|
|
3.64 |
% |
|
|
3.16 |
% |
The risk free rate of return used for each tranche is the annual percentage yield of U.S.
government securities (Treasury Constant Maturities) for the term of the safe harbor expected life
of each tranche.
Column (e) Non-Equity Incentive Plan Compensation. These amounts show the annual incentives paid
in cash under the Executive Incentive Compensation Program for 2010, 2009 and 2008 performance. The
amounts for 2010 are further described in the Compensation Discussion and Analysis section above
and in the Grants of Plan-Based Awards table below. For 2008, the entire incentive opportunity was
paid in cash.
Column (f) Change in Pension Value and Nonqualified Deferred Compensation Earnings. These
amounts represent the 2010, 2009 and 2008 increase in the present value of each Named Executive
Officers benefits under our tax-qualified pension plan and nonqualified pension plan. For Mr.
Moody and Mr. Ferdinandtsen, the amounts shown include in-service distributions from the Companys
non-qualified and qualified pension plans. The Pension Benefits Table below has more information.
There is no nonqualified deferred compensation plan for the Named Executive Officers. Mr. Dunn was
not eligible for pension plan participation during 2010, as one year of service with the Company is
required.
The Company does not pay above-market earnings on deferred compensation; therefore, no amounts are
reported in this column for deferred compensation.
Column (g) All Other Compensation. Amounts included in this column for 2010 are further detailed
in the table that follows.
28
All Other Compensation Table Named Executive Officers
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Group Life |
|
|
|
|
|
|
|
Name and Principal |
|
|
|
Restricted Stock |
|
|
Insurance |
|
|
|
|
|
|
|
Position |
|
Year |
|
Dividends |
|
|
Premium(1) |
|
|
Perquisites |
|
|
Total |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert L. Moody, Sr.,
Chairman of the Board
and Chief Executive
Officer |
|
2010 |
|
$ |
462,000 |
|
|
$ |
0 |
|
|
$ |
18,271 |
(2)(4) |
|
$ |
480,271 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
G. Richard
Ferdinandtsen,
President and
Chief Operating Officer |
|
2010 |
|
$ |
154,000 |
|
|
$ |
0 |
|
|
$ |
23,356 |
(2)(4)(5) |
|
$ |
177,356 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ronald J. Welch,
Senior Executive Vice
President, Corporate
Risk Officer and Chief
Actuary |
|
2010 |
|
$ |
0 |
|
|
$ |
762 |
|
|
$ |
19,743 |
(2)(3)(5)(6) |
|
$ |
20,505 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
James E. Pozzi, Senior
Executive Vice
President and Chief
Administrative Officer |
|
2010 |
|
$ |
0 |
|
|
$ |
396 |
|
|
$ |
18,712 |
(2)(3)(5) |
|
$ |
19,108 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stephen E. Pavlicek,*
Executive Vice
President, Chief
Financial Officer and
Corporate Treasurer |
|
2010 |
|
$ |
0 |
|
|
$ |
396 |
|
|
$ |
18,584 |
(2)(3) |
|
$ |
18,980 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John J. Dunn, Jr.,*
Executive Vice
President and
Corporate Chief
Financial Officer |
|
2010 |
|
$ |
0 |
|
|
$ |
52 |
|
|
$ |
65,503 |
(2)(7) |
|
$ |
65,555 |
|
|
|
|
* |
|
Mr. Pavlicek served as our principal financial officer during 2009 and until December
17, 2010. He retired effective March 31, 2011. Mr. Dunn began his service with us on August 16,
2010. He was designated our principal financial officer by the Board of Directors on December 17,
2010. |
|
(1) |
|
We provide group life insurance coverage to all salaried employees. The amount
included in the table represents the premium for such coverage for each Named Executive Officer. |
|
(2) |
|
Includes our Merit Plan benefit. The Merit Plan is an insured medical plan that
supplements our core medical insurance plan. Coverage under the Merit Plan is provided for all
officers of the level of vice president and above, as well as for their spouses and any dependents.
The Merit Plan provides coverage for co-pays, deductibles, and other out-of-pocket expenses that
are not covered by the core medical insurance plan. Benefits under the Merit Plan are taxable to
the recipient only to the extent such benefits are provided for medical expenses that would not be
deductible by the recipient for federal income tax purposes. The Merit Plan is underwritten by
National Western Life Insurance Company, of which Robert L. Moody, Sr. is Chairman of the Board,
Chief Executive Officer, and the controlling stockholder. Total premium and fees paid to National
Western Life Insurance Company for all Merit Plan participants in 2010 was $1,328,170. As there is
no individual underwriting or individual premium assessed in connection with the Merit Plan, the
amount shown in the table is an average premium computed by dividing the total premium for all
Merit Plan participants by the number of participants. |
|
(3) |
|
Includes guest travel, lodging, leisure activities, and food and beverage at our
business conferences or other events. |
|
(4) |
|
Includes an automobile allowance. |
|
(5) |
|
Includes dining club membership. |
|
(6) |
|
Includes country club membership. |
|
(7) |
|
Includes payment of moving and relocation expenses in the amount of $49,774. |
29
Grants of Plan-Based Awards
The following table has information about grants made under our Executive Incentive
Compensation Program. Please see the Annual Incentive Compensation section of the Compensation
Discussion and Analysis above for a more complete description of this program. The table also
reflects stock appreciation rights (SARs) granted to Mr. Pavlicek during 2010 pursuant to the
American National Insurance Company 1999 Stock and Incentive Plan.
|
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|
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All |
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Other |
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|
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|
|
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|
|
|
Stock |
|
|
All Other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
|
|
|
|
|
|
|
|
|
Awards: |
|
|
SAR |
|
|
Exercise |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
|
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|
|
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|
|
|
|
|
|
|
|
Number |
|
|
Awards: |
|
|
or Base |
|
|
Grant Date |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
of |
|
|
Number of |
|
|
Price of |
|
|
Fair Value |
|
|
|
|
|
|
|
Estimated Possible Payouts Under |
|
|
Estimated Possible Payouts Under |
|
|
Shares |
|
|
Securities |
|
|
SAR |
|
|
of Stock and |
|
|
|
Grant |
|
|
Non-Equity Incentive Plan Awards |
|
|
Equity Incentive Plan Awards |
|
|
of Stock |
|
|
Underlying |
|
|
Awards |
|
|
SAR |
|
|
|
Date |
|
|
Threshold |
|
|
Target |
|
|
Maximum |
|
|
Threshold |
|
|
Target |
|
|
Maximum |
|
|
or Units |
|
|
SARs |
|
|
($/share) |
|
|
Awards |
|
Name |
|
(a) |
|
|
(b) |
|
|
(c) |
|
|
(d) |
|
|
(e) |
|
|
(f) |
|
|
(g) |
|
|
(#)(h) |
|
|
(i) |
|
|
(j) |
|
|
(k) |
|
Robert L. Moody, |
|
|
2/25/10 |
|
|
$ |
2,695,000 |
|
|
$ |
5,390,000 |
|
|
|
* |
|
|
$ |
1,155,000 |
|
|
$ |
2,310,000 |
|
|
|
* |
|
|
|
4,469 |
|
|
|
0 |
|
|
|
|
|
|
$ |
1,154,969 |
|
Chairman of the Board
and Chief Executive
Officer |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
G. Richard Ferdinandtsen, |
|
|
2/25/10 |
|
|
$ |
480,000 |
|
|
$ |
960,000 |
|
|
|
* |
|
|
$ |
320,000 |
|
|
$ |
640,000 |
|
|
|
* |
|
|
|
0 |
|
|
|
0 |
|
|
|
|
|
|
$ |
319,980 |
|
President and
Chief Operating Officer |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ronald J. Welch, |
|
|
2/25/10 |
|
|
$ |
122,666 |
|
|
$ |
245,332 |
|
|
|
* |
|
|
$ |
81,777 |
|
|
$ |
163,555 |
|
|
|
* |
|
|
|
1,161 |
|
|
|
0 |
|
|
|
|
|
|
$ |
81,720 |
|
Senior Executive Vice
President, Corporate
Risk Officer and Chief
Actuary |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
James E. Pozzi, |
|
|
2/25/10 |
|
|
$ |
127,728 |
|
|
$ |
255,455 |
|
|
|
* |
|
|
$ |
85,152 |
|
|
$ |
170,304 |
|
|
|
* |
|
|
|
662 |
|
|
|
0 |
|
|
|
|
|
|
$ |
85,062 |
|
Senior Executive Vice
President and Chief
Administrative Officer |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stephen E. Pavlicek,(1) |
|
|
2/25/10 |
|
|
$ |
39,354 |
|
|
$ |
78,709 |
|
|
|
* |
|
|
$ |
26,236 |
|
|
$ |
52,472 |
|
|
|
* |
|
|
|
197 |
|
|
|
|
|
|
|
|
|
|
$ |
26,198 |
|
Executive Vice
President, Chief
Financial Officer and
Corporate Treasurer |
|
|
5/3/10 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
667 |
|
|
$ |
110.83 |
|
|
$ |
28,189 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John J. Dunn, Jr., (2) |
|
|
|
|
|
|
* |
|
|
$ |
57,375 |
|
|
|
* |
|
|
|
* |
|
|
$ |
38,250 |
|
|
|
* |
|
|
|
0 |
|
|
|
0 |
|
|
|
|
|
|
$ |
38,165 |
|
Executive Vice
President and Corporate
Chief Financial Officer |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
* |
|
For 2010, non-equity and equity incentive compensation was capped at the applicable target
opportunity for each Named Executive Officer. In connection with the commencement of Mr. Dunns
service with us in August 2010, the Board Compensation Committee recommended that his award be
fixed at 85% of the salary he would receive in 2010, and this award is reflected in the target
column. |
|
(1) |
|
Mr. Pavlicek served as our principal financial officer until December 17, 2010. He
retired effective March 31, 2011. |
|
(2) |
|
Mr. Dunn began his service with us on August 16, 2010. He was designated our
principal financial officer by the Board of Directors on December 17, 2010. |
|
(3) |
|
Mr. Pavliceks grant of SARs was approved by the Board of Directors on April 30,
2010 upon recommendation of the Board Compensation Committee. |
30
Column (a) Grant Date. This is the effective date of an award. With respect to restricted stock
units, the effective date is the date upon which the incentive award opportunity was approved by
the Board of Directors upon recommendation of the Board Compensation Committee. See the
description of Columns (b) (d) immediately below for further information regarding these
incentive award opportunities. As noted in footnote (3) immediately above, Mr. Pavliceks SAR
grant was approved on April 30, 2010.
Column (b) (d) Estimated Possible Payouts Under Non-Equity Incentive Plan Awards. These
columns include the threshold and target cash award opportunities for each Named Executive Officer
under the 2010 Executive Incentive Compensation Program that related to 2010 performance targets.
Under this program, each Named Executive Officer received an annual incentive award payable in a
combination of cash and restricted stock units (RSUs), with final payouts based on actual
performance relative to predetermined performance objectives across a range of performance
measures. For each Named Executive Officer other than the Chairman and CEO, the annual incentive
award was paid out 60% in cash. The annual incentive award was paid out 70% in cash for the
Chairman and CEO. Annual incentive opportunities were based on a percentage of base salary. For
each applicable performance measure, there were generally three levels of performance objectives,
with increased incentive opportunities associated with each level. Once a Level 1 performance
objective was reached, the actual amount of the award was prorated toward each subsequent
performance objective. Cash incentive awards actually earned by the Named Executive Officers under
the 2010 Executive Annual Incentive Compensation Program are reported in the Non-Equity Incentive
Plan Compensation column of the Summary Compensation Table.
Column (e) (g) Estimated Possible Payouts Under Equity Incentive Plan Awards. These columns
include the dollar value of threshold and target RSU award opportunities for each Named Executive
Officer under the 2010 Executive Incentive Compensation Program. The actual number of RSUs awarded
for 2010 performance equals the aggregate annual incentive award earned for 2010 that was allocable
to RSUs divided by the closing price of our Common Stock on March 1, 2011. For each Named Executive
Officer other than the Chairman and CEO, the annual incentive award opportunity was paid out 40% in
RSUs. The annual incentive award was paid out 30% in RSUs for our Chairman and CEO. The number of
RSUs actually awarded to the Named Executive Officers for 2010 performance is disclosed in the
Long-Term Incentive Compensation section of the Compensation Discussion and Analysis above.
Column (h) All Other Stock Awards: Number of Shares of Stock or Units. This column shows the
number of shares of restricted stock units issued to the Named Executive Officers in 2010 for 2009
performance attained under the 2009 Executive Incentive Compensation Program. Such RSUs convert to
shares of our Common Stock on a one-for-one basis on March 1, 2012. The Board Compensation
Committee reduced the number of RSUs to be awarded to Mr. Moody and Mr. Ferdinandtsen for 2009
performance by 16,667 RSUs and 6,667 RSUs, respectively, to account for grants of restricted stock
made to these officers in 2008. Such reduction resulted in no RSUs being issued to Mr.
Ferdinandtsen in 2010 for 2009 performance.
Column (i) All Other SAR Awards: Number of Securities Underlying SARs. This column shows the
number of SARs granted to Mr. Pavlicek during 2010 pursuant to the American National Insurance
Company 1999 Stock and Incentive Plan. This grant was made in connection with Mr. Pavliceks
promotion to Executive Vice President, Chief Financial Officer and Corporate Treasurer. An SAR
gives its owner the right to exercise the SAR and receive, at such time, an amount equal in value
to the excess, if any, of the then fair market value of one share of our common stock over an
amount (the exercise price) specified in the owners SAR agreement.
Column (j) Exercise or Base Price of SAR Awards. The exercise price of each SAR is equal to the
closing price of our common stock on the date of the grant.
Column (k) Grant Date Fair Value of Stock Awards. These amounts represent the grant date fair
value of conditional performance-based RSU awards granted during 2010, but not issued until 2011,
based on the probable outcome (as of the grant date) of the performance based conditions applicable
to the awards. For Mr. Pavlicek, this amount also includes the grant date fair value of SARs
granted to him during 2010 computed in accordance with FASB ASC Topic 718, excluding the effect of
estimated forfeitures. For information regarding the calculation of the grant date fair values
shown, please see the notes to Column (c) and (d) of the Summary Compensation Table above. The
grant date fair value of the RSU awards based on maximum performance across all applicable
performance measures is as follows: For Mr. Moody, $2,309,937; for Mr. Ferdinandtsen, $639,960;
for Mr. Welch, $163,548; for Mr. Pozzi, $170,232; for Mr. Pavlicek, $52,396; and for Mr. Dunn,
$38,165.
31
Outstanding Equity Awards at Fiscal Year End
The following table has information about each Named Executive Officers outstanding equity
awards at December 31, 2010.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SAR Awards |
|
|
Stock Awards |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity |
|
|
Incentive |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incentive |
|
|
Plan |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Plan |
|
|
Awards: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Awards: |
|
|
Market |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of |
|
|
Value of |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unearned |
|
|
Unearned |
|
|
|
Number of |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares, |
|
|
Shares, |
|
|
|
Securities |
|
|
Number of |
|
|
|
|
|
|
|
|
|
|
Number of |
|
|
Market Value |
|
|
Units or |
|
|
Units or |
|
|
|
Underlying |
|
|
Securities |
|
|
|
|
|
|
|
|
|
|
Shares or Units |
|
|
of Shares or |
|
|
Other |
|
|
Other |
|
|
|
Unexercised |
|
|
Underlying |
|
|
|
|
|
|
SAR |
|
|
of Stock That |
|
|
Units of Stock |
|
|
Rights that |
|
|
Rights that |
|
|
|
SARs |
|
|
Unexercised SARs |
|
|
SAR Exercise |
|
|
Expiration |
|
|
Have Not |
|
|
That Have Not |
|
|
Have Not |
|
|
Have Not |
|
|
|
Exercisable |
|
|
Unexercisable |
|
|
Price |
|
|
Date |
|
|
Vested |
|
|
Vested* |
|
|
Vested |
|
|
Vested |
|
Name |
|
(a) |
|
|
(b) |
|
|
(c) |
|
|
(d) |
|
|
(e) |
|
|
(f) |
|
|
(g) |
|
|
(h) |
|
Robert L. Moody, Sr., |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
50,000 |
1 |
|
$ |
4,281,000 |
|
|
|
26,979 |
7 |
|
$ |
2,309,942 |
8 |
Chairman of the Board |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
50,000 |
2 |
|
$ |
4,281,000 |
|
|
|
|
|
|
|
|
|
and Chief Executive |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
50,000 |
3 |
|
$ |
4,281,000 |
|
|
|
|
|
|
|
|
|
Officer |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,469 |
4 |
|
$ |
382,636 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
G. Richard |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,000 |
1 |
|
$ |
856,200 |
|
|
|
7,474 |
7 |
|
$ |
639,924 |
8 |
Ferdinandtsen, |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20,000 |
2 |
|
$ |
1,712,400 |
|
|
|
|
|
|
|
|
|
President and |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20,000 |
3 |
|
$ |
1,712,400 |
|
|
|
|
|
|
|
|
|
Chief Operating Officer |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ronald J. Welch, |
|
|
2,800 |
|
|
|
4,200 |
5 |
|
$ |
116.48 |
|
|
|
5/1/2018 |
6 |
|
|
1,161 |
4 |
|
$ |
99,405 |
|
|
|
1,910 |
7 |
|
$ |
163,534 |
8 |
Senior Executive Vice |
|
|
5,000 |
|
|
|
0 |
|
|
$ |
100.46 |
|
|
|
5/1/2015 |
6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
President, Corporate |
|
|
2,000 |
|
|
|
0 |
|
|
$ |
88.00 |
|
|
|
8/1/2012 |
6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Risk Officer and Chief
Actuary |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
James E. Pozzi, |
|
|
2,800 |
|
|
|
4,200 |
5 |
|
|
116.48 |
|
|
|
5/1/2018 |
6 |
|
|
662 |
4 |
|
$ |
56,680 |
|
|
|
1,989 |
7 |
|
$ |
170,298 |
8 |
Senior Executive Vice
President
and Chief
Administrative Officer |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stephen E. Pavlicek,10 |
|
|
0 |
|
|
|
667 |
9 |
|
$ |
110.83 |
|
|
|
5/3/2020 |
6 |
|
|
197 |
4 |
|
$ |
16,867 |
|
|
|
612 |
7 |
|
$ |
52,399 |
8 |
Executive Vice President, |
|
|
1,200 |
|
|
|
1,800 |
5 |
|
$ |
116.48 |
|
|
|
5/1/2018 |
6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Chief Financial Officer
|
|
|
1,800 |
|
|
|
0 |
|
|
$ |
100.46 |
|
|
|
5/1/2015 |
6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
and Corporate Treasurer |
|
|
400 |
|
|
|
0 |
|
|
$ |
88.00 |
|
|
|
8/1/2012 |
6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John J. Dunn, Jr., |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
446 |
7 |
|
$ |
38,187 |
8 |
11
Executive Vice
President and
Corporate Chief
Financial Officer |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
* |
|
Based on an assumed stock price of $85.62, which was the closing price of our Common
Stock on December 31, 2010. |
|
1 |
|
Restrictions with respect to these shares lapse on August 1, 2012. |
|
2 |
|
Restrictions with respect to these shares lapse on May 1, 2015. |
|
3 |
|
Restrictions with respect to these shares lapse on May 1, 2018. |
|
4 |
|
The vesting date for these restricted stock units is March 1, 2012. |
|
5 |
|
These SARS become exercisable in five equal annual installments beginning May 1, 2009. |
|
6 |
|
SARs expire five years from the date they become exercisable. The date shown
represents the expiration of the final SARs to become exercisable under the particular award shown. |
|
7 |
|
This number represents the number of conditional performance-based RSUs awarded to
each Named Executive Officer under the 2010 Executive Incentive Compensation Program, assuming
performance at target levels and a stock price of $85.62, the closing price of our Common Stock on
December 31, 2010. These amounts do not correspond to the actual number of RSUs issued to the
Named Executive Officers for 2010 performance. The actual number of RSUs issued to the Named
Executive Officers in March 2011 were as follows: Mr. Moody 29,009 RSUs; Mr. Ferdinandtsen
8,037 RSUs; Mr. Welch 2,053 RSUs; Mr. Pozzi 2,138 RSUs; Mr. Pavlicek 557 RSUs; and Mr.
Dunn 480 RSUs. |
|
8 |
|
The dollar amount shown is determined by multiplying the applicable number of RSUs
shown in column (g) by $85.62, the closing price of our Common Stock on December 31, 2010. |
|
9 |
|
These SARs become exercisable in five annual installments beginning May 3, 2011. |
|
10 |
|
Mr. Pavlicek served as our principal financial officer until December 17,
2010. He retired effective March 31, 2011. |
|
11 |
|
Mr. Dunn began his service with us on August 16, 2010. He was designated
our principal financial officer by the Board of Directors on December 17, 2010. |
32
SAR Exercises and Stock Vested
The following table has information about SARs exercised by Mr. Pozzi during 2010. No other
Named Executive Officers exercised SARs during 2010, and no restricted stock or RSUs that have been
granted to our Named Executive Officers vested during 2010.
SAR Exercises in Fiscal Year 2010
|
|
|
|
|
|
|
|
|
|
|
Number of |
|
|
Value Realized |
|
|
|
SARs Exercised |
|
|
on Exercise |
|
|
|
(a) |
|
|
(b) |
|
|
|
|
|
|
|
|
|
|
James E. Pozzi, Senior Executive Vice
President and Chief Administrative
Officer |
|
|
1,000 |
|
|
$ |
9,020 |
|
Column (a) Number of SARs Exercised. This number represents the total number of SARs exercised
by Mr. Pozzi during 2010.
Column (b) Value Realized on Exercise. This amount represents the aggregate dollar value
realized by Mr. Pozzi during 2010 upon the exercise of SARs. The amount realized upon the exercise
of an SAR is the excess of the fair market value of one share of our Common Stock on the date of
exercise over an amount (the exercise price) specified in the owners SAR agreement.
33
Pension Benefits
The following table provides information regarding benefits under the American National
Employees Retirement Plan, the American National Insurance Company (ANICO) Nonqualified
Retirement Plan, and the ANICO Nonqualified Retirement Plan for Certain Salaried Employees.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of |
|
|
|
|
|
|
|
|
|
|
|
Years of |
|
|
Present Value |
|
|
Payments |
|
|
|
|
|
Credited |
|
|
of Accumulated |
|
|
During Last |
|
|
|
Plan Name |
|
Service |
|
|
Benefit |
|
|
Fiscal Year |
|
Name |
|
(a) |
|
(b) |
|
|
(c) |
|
|
(d) |
|
Robert L. Moody, Sr., |
|
American National |
|
|
28.6 |
|
|
$ |
1,188,016 |
|
|
$ |
118,955 |
|
Chairman of the Board and Chief |
|
Employees |
|
|
|
|
|
|
|
|
|
|
|
|
Executive Officer |
|
Retirement Plan |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ANICO Nonqualified |
|
|
45.0 |
|
|
$ |
60,810,301 |
|
|
$ |
6,087,421 |
|
|
|
Retirement Plan |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
G. Richard Ferdinandtsen, |
|
American National |
|
|
20.51 |
|
|
$ |
57,018 |
|
|
$ |
65,171 |
|
President and |
|
Employees |
|
|
|
|
|
|
|
|
|
|
|
|
Chief Operating Officer |
|
Retirement Plan |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ANICO Nonqualified |
|
|
45.0 |
|
|
$ |
13,298,194 |
|
|
$ |
1,224,430 |
|
|
|
Retirement Plan |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ronald J. Welch, |
|
American National |
|
|
35.0 |
|
|
$ |
1,354,829 |
|
|
$ |
0 |
|
Senior Executive Vice President, |
|
Employees |
|
|
|
|
|
|
|
|
|
|
|
|
Corporate Risk Officer and |
|
Retirement Plan |
|
|
|
|
|
|
|
|
|
|
|
|
Chief Actuary |
|
|
ANICO Nonqualified |
|
|
35.0 |
|
|
$ |
2,656,863 |
|
|
$ |
0 |
|
|
|
Retirement Plan for |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Certain Salaried |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Employees |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
James E. Pozzi, |
|
American National |
|
|
34.61 |
|
|
$ |
1,018,144 |
|
|
$ |
0 |
|
Senior Executive Vice President |
|
Employees |
|
|
|
|
|
|
|
|
|
|
|
|
and Chief Administrative |
|
Retirement Plan |
|
|
|
|
|
|
|
|
|
|
|
|
Officer |
|
|
ANICO Nonqualified |
|
|
34.61 |
|
|
$ |
1,368,842 |
|
|
$ |
0 |
|
|
|
Retirement Plan for |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Certain Salaried |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Employees |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stephen E. Pavlicek,* |
|
American National |
|
|
34.61 |
|
|
$ |
1,278,864 |
|
|
$ |
0 |
|
Executive Vice President, Chief |
|
Employees |
|
|
|
|
|
|
|
|
|
|
|
|
Financial Officer and Corporate |
|
Retirement Plan |
|
|
|
|
|
|
|
|
|
|
|
|
Treasurer |
|
|
ANICO Nonqualified |
|
|
34.61 |
|
|
$ |
511,193 |
|
|
$ |
0 |
|
|
|
Retirement Plan for |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Certain Salaried |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Employees |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John J. Dunn, Jr.,* |
|
American National |
|
|
0 |
|
|
$ |
0 |
|
|
$ |
0 |
|
Executive Vice President and |
|
Employees |
|
|
|
|
|
|
|
|
|
|
|
|
Corporate Chief Financial |
|
Retirement Plan |
|
|
|
|
|
|
|
|
|
|
|
|
Officer |
|
|
ANICO Nonqualified |
|
|
0 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
|
Retirement Plan for |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Certain Salaried |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Employees |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
* |
|
Mr. Pavlicek served as our principal financial officer until December 17, 2010. He
retired effective March 31, 2011. Mr. Dunn began his service with us on August 16, 2010. He was
designated our principal financial officer by the Board of Directors on
December 17, 2010. As of December 31, 2010, Mr. Dunn had not satisfied the one-year employment
eligibility requirement for participation in the retirement plans referenced in the table above. |
34
Column (a) Plan Name. This column identifies the pension plans in which each Named Executive
Officer participates. Further information regarding each plan is provided below in this section.
Column (b) Number of Years of Credited Service. This column represents the number of years of
service that are used to calculate the Named Executive Officers benefit under each plan, as of
December 31, 2010.
Column (c) Present Value of Accumulated Benefit. The present value of the
accumulated benefit under each plan is calculated using the December 31, 2007 FAS 87 disclosure
assumptions as follows: (a) discount rate of 5.35%, (b) 1994 Group Annuity Mortality table, and (c)
the calculated present value at age 65 is discounted with interest only to the current age. Since
2007, Mr. Ferdinandtsen, based on his age, has elected to receive a lump sum distribution of all
prior accrued benefits under the American National Employees Retirement Plan. The Present Value of
his Accumulated Benefit for such plan shown above, therefore, represents only benefits accrued
during 2010.
Column (d) Payments During Last Fiscal Year. This column represents in-service distributions of
benefits paid from the plans shown. The amount of such distributions was determined according to
the terms of the plan for a life payout.
American National Employees Retirement Plan (the Qualified Plan). The Qualified Plan covers
substantially all employees and officers of American National Insurance Company and provides
benefits based on the participants years of service and compensation. The monthly benefit payable
under the plan at normal retirement age (usually age 65) equals:
|
|
|
1.667% of the employees final average pay times years of service (up to 35 years), |
|
|
|
Less a social security offset amount equal to 0.7% (0.65% for Year of Birth after
1954) times the Social Security covered pay |
For purposes of this calculation, final average pay is the average of the employees pay for the
sixty consecutive months that produces the highest average (out of the prior ten years). Pay
includes base salary, overtime, bonus incentives, stock dividends paid on restricted stock awards
prior to the vesting of such awards, and gains on SAR exercises and vesting of restricted stock
awarded before July 25, 2002. Pay does not include gains on SAR exercises and vesting of restricted
stock or RSUs awarded on or after July 25, 2002, or other extraordinary items. In addition, Social
Security covered pay is one-twelfth of the average of the Social Security wage bases for the
thirty-five year period ending when the employee reaches Social Security retirement age. The wage
base is the maximum amount of pay for a year for which Social Security taxes are paid. Social
Security retirement age is between age 65 and 67, depending on the employees date of birth.
The benefit formula determines the employees monthly benefit as a life annuity (that is, monthly
payments until the employee dies). Unless special IRS rules apply, benefits are not paid before
employment ends, or age 701/2 if sooner and if elected by the employee. Instead of taking a life
annuity, the employee may elect to receive:
|
|
|
a 50%, 66 2/3%, 75% or 100% joint and survivor annuity (the employee receives a smaller
benefit for life, and the employees designated survivor receives a benefit of 50%, 66
2/3%, 75% or 100% of the reduced amount for life), or |
|
|
|
a 10, 15 or 20 year period certain and life annuity benefit (the employee receives a
smaller benefit for life and, if the employee dies before the selected period, the
employees designated survivor receives the reduced amount until the end of the period), or |
|
|
|
a lump sum benefit, if eligible under the plan (most management/professional employees
would be). |
If an employee chooses one of these benefit options, the plan actuary uses the interest rate
assumptions and mortality tables specified in the plan to adjust the benefit so it has the same
value as the life annuity, as determined on an actuarial basis.
An employee whose employment ends before age 65 may begin benefit payments as early as age 55, if
the employee had at least twenty years of vesting service; however, benefits may not begin before
employment terminates. The plan actuary reduces this vested benefit below the level of the age 65
benefit to account for early commencement, so the benefit remains the actuarial equivalent of a
benefit beginning at age 65.
If an employee retires after age 55 with at least twenty years of service, the employee may take an
early retirement benefit, beginning immediately after employment ends. Mr. Pavlicek and Mr. Pozzi
are eligible for early retirement. The early retirement benefit is based on the pension plan
formula. The benefit is reduced below the level of the age 65 benefit, similar in magnitude to the
reductions Social Security exacts for early commencement. Mr. Moody and Mr. Ferdinandtsen are over
701/2 and are receiving in-service retirement benefits.
ANICO Nonqualified Retirement Plan for Certain Salaried Employees and the ANICO Nonqualified
Retirement Plan (together, the Excess Benefit Plans). Benefits under the Qualified Plan are
limited by the Internal Revenue Code. Our Board of Directors believes we should pay our employees
the total pension benefit they have earned, without imposing these Code limits. Therefore, like
many large companies, we have nonqualified excess benefit plans that make up the difference
between the benefit determined under the Qualified Plan formula, without applying these limits, and
the benefit actually payable under the Qualified Plan, taking these limits into account. To the
extent that any individuals annual retirement income benefit exceeds the maximum amount payable
from the Qualified Plan, it shall be paid from one of the Excess Benefit Plans, provided the
individual is covered by one of such plans. Payment is made from our general assets and not from
the assets of the Qualified Plan.
35
Mr. Moody and Mr. Ferdinandtsen are the only participants in the ANICO Nonqualified Retirement
Plan. As participants in the ANICO Nonqualified Retirement Plan, Mr. Moody and Mr. Ferdinandtsen
are provided benefits not provided to the other Named Executive Officers under the ANICO
Nonqualified Retirement Plan for Certain Salaried Employees. Such benefits are a higher maximum on
years of service counted for benefit service (45 years for these two individuals versus 35 years
for other plan participants) which could potentially increase benefits by as much as 28.5%; a
guarantee of benefit continuation for 21 years after retirement benefits commence, in the event of
death during that period; inclusion of service on our Board of Directors or service with a company
acquired by us for pension benefit purposes; and the right to receive retirement benefits beginning
at age 65 while in service as our employee, in lieu of an actuarially enhanced benefit deferred
until the actual service termination date.
If an employee retires after age 55 with at least twenty years of service, the employee may take an
early retirement benefit, beginning immediately after employment ends. Mr. Pavlicek and Mr. Pozzi
are eligible for early retirement under the Excess Benefit Plan in which they participate. The
early retirement benefit is based on the pension plan formula. The benefit is reduced below the
level of the age 65 benefit, similar in magnitude to the reductions Social Security exacts for
early commencement. Mr. Moody and Mr. Ferdinandtsen are over 70 1/2 and are receiving in-service
retirement benefits from the Excess Benefit Plan in which they participate.
Potential Payments Upon Termination or Change in Control
We do not have employment contracts, severance agreements, salary continuation agreements or
severance plans with the Named Executive Officers. This section describes and quantifies certain
compensation that would become payable under existing plans and arrangements if a Named Executive
Officers employment had terminated on December 31, 2010, given each Named Executive Officers
compensation and service levels as of such date and, if applicable, based on our closing stock
price on that date, which was $85.62.
Restricted Stock and Termination of Employment
Pursuant to the 1999 Plan and award terms approved by the Board of Directors, shares of
restricted stock issued to Mr. Moody and Mr. Ferdinandtsen vest upon death, disability, or upon
retirement with the consent of the Board of Directors. Such shares are forfeited upon other
termination of employment. In addition, such shares vest upon a change of control of our company.
For purposes of the 1999 Plan, a change of control occurs if (i) there is a change in ownership of
our outstanding securities which causes any person other than The Moody Foundation to become the
beneficial owner, directly or indirectly, of securities representing fifty percent (50%) or more of
the combined voting power of our outstanding securities then entitled to vote for the election of
directors; (ii) the Board of Directors approves the sale of all or substantially all of our assets;
or (iii) the Board of Directors approves any merger, consolidation, issuance of securities or
purchase of assets, the result of which would be the occurrence of an event described in clause (i)
above.
The aggregate market value of unvested restricted stock as of December 31, 2010 for Mr. Moody
was $12,843,000 and for Mr. Ferdinandtsen was $4,281,000.
SARs and Termination of Employment
Pursuant to the 1999 Plan and award terms approved by the Board of Directors, SARs vest upon
death or retirement at or after attaining the age of 65. SARs are no longer exercisable in the
event of any other termination of employment. In addition, all SARs vest immediately upon a change
of control of our company. The events constituting a change of control are described immediately
above under Restricted Stock and Termination of Employment.
Upon an officers death or an officers retirement at or after attaining the age of 65, the
five year vesting period for SARs is reduced. The officer, or in the case of his death his
estate or heirs has one year following the date of death or retirement to exercise a percentage
of the officers SARs equal to the sum of (i) the percentage of the SARs the officer was entitled
to exercise as of the date of death or retirement, plus (ii) the pro rata portion based upon the
period included between the date of death or retirement and the preceding May 1, of any additional
twenty percent (20%) of the SARs which would have become exercisable had the officer remained
employed with us until the following May 1. SARs not exercised within such one-year period
terminate and are no longer exercisable.
Assuming a change of control of our company or a termination by reason of death or retirement
on December 31, 2010, Mr. Welch, Mr. Pozzi and Mr. Pavlicek would not have been entitled to receive
any amounts upon the exercise of their SARs that were then exercisable, because the closing price
of our Common Stock on such date was less than the exercise price of all SARs granted to them. Mr.
Dunn had no SARs issued to him as of December 31, 2010.
36
RSUs and Termination of Employment
Pursuant to the 1999 Plan and award terms approved by the Board of Directors, RSUs vest by
converting to shares of our Common Stock on a one-for-one basis upon the officers death or
disability or upon the officers retirement at or after attaining the age of 65. If the officers
employment with us terminates for any other reason prior to the vesting of any RSUs, all of such
RSUs are forfeited. In addition, all RSUs vest immediately upon a change of control of our
company. The events constituting a change of control are described above under Restricted Stock
and Termination of Employment.
Assuming a change of control of our company or a termination by reason of death, retirement or
disability on December 31, 2010, the RSUs issued to certain of our Named Executive Officers
pursuant to our 2009 Executive Incentive Compensation Plan would convert to shares of our Common
Stock. As of such date, each of Named Executive Officers who received RSUs pursuant to the 2009
Executive Incentive Compensation Program would have received the following number of shares of our
Common Stock with the following market value, assuming an $85.62 closing price of our Common Stock
on December 31, 2010:
|
|
|
|
|
|
|
|
|
|
|
No. of Shares |
|
|
|
|
Officer Name |
|
of Common Stock |
|
|
Market Value |
|
|
|
|
|
|
|
|
|
|
Moody |
|
|
4,469 |
|
|
$ |
382,636 |
|
|
|
|
|
|
|
|
|
|
Welch |
|
|
1,161 |
|
|
$ |
99,405 |
|
|
|
|
|
|
|
|
|
|
Pozzi |
|
|
662 |
|
|
$ |
56,680 |
|
|
|
|
|
|
|
|
|
|
Pavlicek |
|
|
197 |
|
|
$ |
16,867 |
|
Mr. Dunn had no RSUs issued to him as of December 31, 2010.
Pension Benefits
The Pension Benefits table above describes the general terms of each pension plan in which the
Named Executive Officers participate, the years of credited service, and the present value of
accumulated benefits under these plans as of December 31, 2010. The following table describes the
estimated benefits that would have been due to our Named Executive Officers under the Qualified
Plan and under the Excess Benefit Plans in the event of any of such executives termination of
employment as of December 31, 2010:
Qualified Plan
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Potential Payout on |
|
|
|
|
|
|
|
|
|
|
|
|
|
Retirement or |
|
|
Potential Payout if |
|
|
|
|
|
|
Potential Payout if |
|
|
|
Voluntary |
|
|
Terminated Upon |
|
|
Potential Payout if |
|
|
Terminated |
|
|
|
Termination |
|
|
Disability |
|
|
Terminated Upon Death |
|
|
Involuntarily |
|
|
|
12/31/10 |
|
|
12/31/10 |
|
|
12/31/10 |
|
|
12/31/10 |
|
Name |
|
(a) |
|
|
(b) |
|
|
(c) |
|
|
(d) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert L. Moody, Sr.,
Chairman of the Board
and Chief Executive
Officer |
|
$ |
1,188,016 |
|
|
$ |
1,188,016 |
|
|
$ |
582,286 |
|
|
$ |
1,188,016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
G. Richard
Ferdinandtsen,
President and
Chief Operating Officer |
|
$ |
57,018 |
|
|
$ |
57,018 |
|
|
|
N/A |
|
|
$ |
57,018 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ronald J. Welch,
Senior Executive Vice
President, Corporate
Risk Officer and Chief
Actuary |
|
$ |
1,354,829 |
|
|
$ |
1,354,829 |
|
|
$ |
1,141,829 |
|
|
$ |
1,354,829 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
James E. Pozzi, Senior
Executive Vice
President and Chief
Administrative Officer |
|
$ |
1,018,144 |
|
|
$ |
1,018,144 |
|
|
$ |
1,370,484 |
|
|
$ |
1,018,144 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stephen E. Pavlicek,*
Executive Vice
President, Chief
Financial Officer and
Corporate Treasurer |
|
$ |
1,278,864 |
|
|
$ |
1,278,864 |
|
|
$ |
1,154,055 |
|
|
$ |
1,278,864 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John J. Dunn, Jr.,*
Executive Vice
President and
Corporate Chief
Financial Officer |
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
0 |
|
37
Excess Benefit Plans
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Potential Payout on |
|
|
|
|
|
|
|
|
|
|
|
|
|
Retirement or |
|
|
Potential Payout if |
|
|
|
|
|
|
Potential Payout if |
|
|
|
Voluntary |
|
|
Terminated Upon |
|
|
Potential Payout if |
|
|
Terminated |
|
|
|
Termination |
|
|
Disability |
|
|
Terminated Upon Death |
|
|
Involuntarily |
|
|
|
12/31/10 |
|
|
12/31/10 |
|
|
12/31/10 |
|
|
12/31/10 |
|
Name |
|
(a) |
|
|
(b) |
|
|
(c) |
|
|
(d) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert L. Moody, Sr.,
Chairman of the Board
and Chief Executive
Officer |
|
$ |
60,810,301 |
|
|
$ |
60,810,301 |
|
|
$ |
53,445,303 |
|
|
$ |
60,810,301 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
G. Richard
Ferdinandtsen,
President and
Chief Operating Officer |
|
$ |
13,298,194 |
|
|
$ |
13,298,194 |
|
|
$ |
11,688,776 |
|
|
$ |
13,298,194 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ronald J. Welch,
Senior Executive Vice
President, Corporate
Risk Officer and Chief
Actuary |
|
$ |
2,656,863 |
|
|
$ |
2,656,863 |
|
|
$ |
2,159,958 |
|
|
$ |
2,656,863 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
James E. Pozzi, Senior
Executive Vice
President and Chief
Administrative Officer |
|
$ |
1,368,842 |
|
|
$ |
1,368,842 |
|
|
$ |
1,840,450 |
|
|
$ |
1,368,842 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stephen E. Pavlicek,*
Executive Vice
President, Chief
Financial Officer and
Corporate Treasurer |
|
$ |
511,193 |
|
|
$ |
511,193 |
|
|
$ |
508,626 |
|
|
$ |
511,193 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John J. Dunn, Jr.,*
Executive Vice
President and
Corporate Chief
Financial Officer |
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
|
|
* |
|
Mr. Pavlicek served as our principal financial officer until December 17, 2010.
He retired effective March 31, 2011. Mr. Dunn began his service with us on August 16, 2010. He
was designated our principal financial officer by the Board of Directors on December 17, 2010. As
of December 31, 2010, Mr. Dunn had not satisfied the one-year employment eligibility requirement
for participation in the retirement plans referenced in the tables above. |
38
Column (a) Potential Payout on Retirement or Voluntary Termination
This column shows the potential payout that would have been made upon the retirement or voluntary
termination of each Named Executive Officer on December 31, 2010. The potential payout refers to
the actuarial present value of the benefit payable. As explained in connection with the Pension
Benefits table above, Mr. Moody and Mr. Ferdinandtsen are currently receiving in-service
distributions under both the Qualified Plan and the Excess Benefit Plan in which they participate,
and Mr. Pozzi and Mr. Pavlicek are currently eligible for early retirement under both the Qualified
Plan and the Excess Benefit Plan in which they participate. In the case of Mr. Moody, Mr.
Ferdinandtsen and Mr. Welch, each of them would have been eligible to receive their accumulated
benefit upon retirement or voluntary termination on December 31, 2010. Mr. Pozzi and Mr. Pavlicek
would have been eligible to receive the early retirement benefit disclosed in column (a). The early
retirement benefit represents an actuarially reduced value of Mr. Pozzis and Mr. Pavliceks
accumulated benefits, calculated based upon a reduced percentage of their deferred benefits at age
65, as specified under the applicable plans, which percentage varies depending on the number of
years of age prior to 65. In Mr. Pozzis case, the applicable reduced percentage of his deferred
benefit was 71.0% at December 31, 2010, and in Mr. Pavliceks case, it was 94.8% as of such date.
Column (b) Potential Payout if Terminated Upon Disability
This column shows the potential payout that would have been made upon the disability of any of the
Named Executive Officers on December 31, 2010. The potential payout refers to the actuarial
present value of the benefit payable. In the event of total disability prior to age 65, no
additional benefits become immediately payable, unless the individual is entitled to retirement at
the time of disability. Otherwise, we will continue granting credited service from the date of
disability to age 65 under the terms of the applicable plan for the duration of the disability.
Total disability must be validated by approval for Social Security disability. Had the employment
of Mr. Moody, Mr. Ferdinandtsen or Mr. Welch been terminated by disability on December 31, 2010,
each would be entitled to his accumulated benefit. In the case of the disability of Mr. Pozzi or
Mr. Pavlicek on December 31, 2010, each would have been entitled to his early retirement benefit.
Column (c) Potential Payout if Terminated Upon Death
This column shows the potential payout that would have been made upon the death of any of the Named
Executive Officers on December 31, 2010. The potential payout refers to the actuarial present
value of the benefit payable. This amount represents the value of a surviving spouses benefit as
determined based upon a percentage of the accrued or projected benefit at age 65, as specified in
the applicable plans. In the case of an individual who has already commenced receiving benefits
under the plans, any surviving spouses benefit would be according to the form of payment elected
at retirement. Mr. Moody and Mr. Ferdinandtsen have a guaranteed period of twenty-one years under
the applicable Excess Benefit Plan that would provide a surviving spouses benefit based on the
remaining portion of such period since benefit commencement. No payment under the Qualified Plan
would have been available to Mr. Ferdinandtsen in the event of his death on December 31, 2010, as
he elected to receive a lump sum distribution of all prior accrued benefits under such plan in
2007. In the event of death prior to retirement, a pension is available for the surviving spouse
for the life of the spouse that would be at most 75% of the Named Executive Officers projected
monthly pension at age 65. Eligibility for this death benefit requires that the executive have been
at least age 45 at the time of death and have age plus years of service equal to at least 55.
Column (d) Potential Payout if Terminated Involuntarily
This column shows the potential payout that would have been made upon the involuntary termination
of any the Named Executive Officers on December 31, 2010. The potential payout refers to the
actuarial present value of the benefit payable. Please see the explanation provided above in
connection with Column A Potential Payout on Retirement or Voluntary Termination. No special
benefits are triggered by involuntary termination.
39
Director Compensation
The following table has information about the 2010 compensation of our non-employee directors
and advisory directors. There were no equity awards to our directors during 2010.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fees Earned or |
|
|
All Other |
|
|
|
|
|
|
Paid in Cash |
|
|
Compensation |
|
|
|
|
Name |
|
(a) |
|
|
(b) |
|
|
Total |
|
Directors |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Arthur O. Dummer |
|
$ |
45,250 |
|
|
$ |
27,872 |
|
|
$ |
73,122 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shelby M. Elliott |
|
$ |
43,750 |
|
|
$ |
23,207 |
|
|
$ |
66,957 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Russell S. Moody |
|
$ |
41,250 |
|
|
$ |
27,512 |
|
|
$ |
68,762 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
William L. Moody, IV |
|
$ |
43,750 |
|
|
$ |
21,835 |
|
|
$ |
65,585 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Frances A. Moody-Dahlberg |
|
$ |
40,000 |
|
|
$ |
21,054 |
|
|
$ |
61,054 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Frank P. Williamson |
|
$ |
45,000 |
|
|
$ |
32,693 |
|
|
$ |
77,693 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
James D. Yarbrough |
|
$ |
46,250 |
|
|
$ |
62,036 |
|
|
$ |
108,286 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Advisory Directors |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Irwin M. Herz, Jr. |
|
$ |
41,250 |
|
|
$ |
61,585 |
|
|
$ |
102,835 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
R. Eugene Lucas |
|
$ |
41,250 |
|
|
$ |
20,980 |
|
|
$ |
62,230 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
E. Douglas McLeod |
|
$ |
41,250 |
|
|
$ |
26,536 |
|
|
$ |
67,786 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert L. Moody, Jr.* |
|
$ |
41,250 |
|
|
$ |
58,714 |
|
|
$ |
99,964 |
|
|
|
|
* |
|
Please see the section below entitled Certain Relationships and Related Transactions for a
discussion of agent-related compensation paid to Robert L. Moody, Jr., primarily through his
wholly-owned insurance agency, Moody Insurance Group, Inc. |
Column (a) Fees Earned or Paid in Cash. We pay director compensation only to those directors who
are not our employees. Such directors and our advisory directors each receive $35,000 per year
directors fees, plus $1,250 per meeting attended. Such directors also receive $1,250 for each
Executive Committee meeting attended, $1,000 for each Audit Committee meeting attended and $500 for
Compensation Committee and Nominating Committee meetings attended. Members of the Audit and
Nominating Committees do not receive a per committee meeting fee for single-item agenda meetings,
which are generally held by telephone conference, that arise between regularly scheduled meetings.
Directors may elect to defer their compensation, with interest accrued at the Wall Street Journal
prime rate published on the first business day of each quarter. We do not provide any above-market
or preferential earnings rates on compensation that is deferred.
Column (b) All Other Compensation. These amounts include the following:
All Other Compensation Table Directors and Advisory Directors
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restricted Stock |
|
|
|
|
|
|
Subsidiary |
|
|
|
|
Name |
|
Dividends |
|
|
Perquisites |
|
|
Director Fees |
|
|
Total |
|
Directors |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Arthur O. Dummer |
|
$ |
14,374 |
|
|
$ |
13,498 |
(1)(2) |
|
$ |
0 |
|
|
$ |
27,872 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shelby M. Elliott |
|
$ |
14,374 |
|
|
$ |
8,833 |
(1)(2) |
|
$ |
0 |
|
|
$ |
23,207 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Russell S. Moody |
|
$ |
18,480 |
|
|
$ |
9,032 |
(2) |
|
$ |
0 |
|
|
$ |
27,512 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
William L. Moody, IV |
|
$ |
18,480 |
|
|
$ |
2,855 |
(2) |
|
$ |
500 |
|
|
$ |
21,835 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Frances A. Moody-Dahlberg |
|
$ |
18,480 |
|
|
$ |
2,574 |
(2) |
|
$ |
0 |
|
|
$ |
21,054 |
(4) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Frank P. Williamson |
|
$ |
14,374 |
|
|
$ |
16,319 |
(1) |
|
$ |
2,000 |
|
|
$ |
32,693 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
James D. Yarbrough |
|
$ |
18,480 |
|
|
$ |
39,556 |
(1)(2) |
|
$ |
4,000 |
|
|
$ |
62,036 |
|
40
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restricted Stock |
|
|
|
|
|
|
Subsidiary |
|
|
|
|
Name |
|
Dividends |
|
|
Perquisites |
|
|
Director Fees |
|
|
Total |
|
Advisory Directors |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Irwin M. Herz, Jr. |
|
$ |
18,480 |
|
|
$ |
32,105 |
(1)(2)(5) |
|
$ |
11,000 |
|
|
$ |
61,585 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
R. Eugene Lucas |
|
$ |
18,480 |
|
|
$ |
0 |
|
|
$ |
2,500 |
|
|
$ |
20,980 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
E. Douglas McLeod |
|
$ |
18,480 |
|
|
$ |
4,056 |
(1)(2) |
|
$ |
4,000 |
|
|
$ |
26,536 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert L. Moody, Jr. |
|
$ |
4,106 |
(3) |
|
$ |
51,858 |
(1) (2) |
|
$ |
2,750 |
|
|
$ |
58,714 |
|
|
|
|
(1) |
|
This amount includes a medical reimbursement plan benefit. We provide a
medical reimbursement plan designed to reimburse certain medical expenses that are not covered by
an underlying insurance policy for the benefit of (1) directors who are not current or former
common law employees, (2) retired directors who have at least twenty (20) years of service who are
not current or former common law employees, (3) designated consultants who are not current or
former common law employees, (4) advisory directors who are not current or former common law
employees, and (5) the spouses and any dependents of the foregoing. The amounts of such benefit
during 2010 with respect to Mr. Yarbrough, Mr. Herz and Mr. Moody were $34,942, $26,641 and
$43,711, respectively. The amount of such benefit to the other directors and advisory directors did
not exceed thresholds for specific numerical disclosure under applicable proxy disclosure rules,
although the value of such benefit is included in the Perquisites column. |
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Moody Insurance Group, Inc., a company owned by Mr. Moody, was previously awarded
shares of our restricted stock as a Company consultant. Dividends on such shares are included in
amounts reported in the Certain Relationships and Related Transactions section below. |
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Ms. Moody-Dahlberg also received $10,000 during 2010 for serving as Charitable
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Compensation Committee Interlocks and Insider Participation
No member of the Board Compensation Committee is or has been an officer or employee of the
Company or any of its subsidiaries or had a relationship with us requiring disclosure under
Regulation S-K Item 404. No executive officer of the Company served as a member of the Board of
Directors or compensation committee (or other Board committee performing similar functions or, in
the absence of any such committee, the entire Board of Directors) of another corporation, one of
whose executive officers served on our Board Compensation Committee or as our director. Robert L.
Moody, Sr., our Chairman and Chief Executive Officer, serves as a director of Gal-Tex Hotel
Corporation, 34% of which is owned by the Moody Foundation and 50.2% of which is owned by the
Libbie Shearn Moody Trust. R. Eugene Lucas, the President of Gal-Tex Hotel Corporation, serves as
one of our advisory directors.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The following is a description of certain transactions and relationships existing since
the beginning of fiscal year 2010 between us and certain related parties.
Mortgage Loans to Gal-Tex Hotel Corporation: The Moody Foundation and the Libbie Shearn Moody
Trust own 34% and 50.2%, respectively, of Gal-Tex Hotel Corporation (Gal-Tex). As of December 31,
2010, we held a first mortgage loan issued to Gal-Tex secured by hotel property in San Antonio,
Texas. This loan was originated in 1999, had a balance of $10,950,662 as of December 31, 2010, has
a current interest rate of 7.30%, and has a final maturity date of April 1, 2019. During 2010,
Gal-Tex paid $924,029 in principal and $830,611 in interest with respect to this loan, which is
current as to principal and interest payments.
Management Contracts with Gal-Tex Hotel Corporation: We have entered into management
contracts with Gal-Tex for the management of a hotel and adjacent fitness center owned by us.
During our fiscal year ended December 31, 2010, we paid Gal-Tex $175,908 and $78,577, respectively,
for services rendered under such contracts for these two facilities. Both of such contracts are
terminable by us upon thirty days prior written notice.
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Transactions with Robert L. Moody, Jr.: Robert L. Moody, Jr. (RLM Jr.), one of our advisory
directors, is the son of our Chairman and Chief Executive Officer and brother of two of our
directors. RLM Jr., mainly through his wholly-owned insurance agency, Moody Insurance Group, Inc.
(MIG), has entered into a number of agency agreements with us and some of our subsidiaries. In
2010, total commissions paid under such agency contracts, primarily from the marketing of health
insurance products, were $1,701,638. MIG and we are also parties to a Consulting and Special
Marketing Agreement concerning development and marketing of new products. During 2010, we paid
compensation of $129,920 under this agreement and a predecessor agreement. In addition to
consulting fees, such amount includes dividends on shares of our Restricted Stock granted to MIG as
a consultant. MIG and we
entered into a National Marketing Directors Contract in 1994, which gave MIG the exclusive
right to sell annuities in the financial institutions market. In a subsequent restructuring of such
contract, MIG gave up such exclusive right, and we assumed all responsibilities for sales and
service in such market. During 2010, MIG received $1,422,758 in commissions under such restructured
contract. As agreed by us and certain of our subsidiaries, MIG markets products of unrelated
companies through certain of our agents. MIG receives commissions from the companies issuing such
products. In 1994, MIG provided brokerage and business development services to an unrelated
marketing company which has had a marketing agreement with us since such time. MIG has advised us
that, during 2010, commissions received from such marketing company related to sales of our
products aggregated $115,650. MIG and we entered into an agreement in 2006 pursuant to which our
Systems Planning and Computing division provides certain software and related computer services to
MIG and its agents in connection with sales of health insurance products issued by one of our
subsidiaries. MIG paid us $5,960 for such services during 2010, based on the same rates charged to
our internal departments. We paid for one MIG representative to attend our Multiple Line Marketing
conference last year, at a cost of $5,120.
Transactions with Moody National Bank: We and some of our subsidiaries have entered into
various depository, custodian and safekeeping arrangements with the Bank in the ordinary course of
our business.
Health Insurance Contracts with Certain Affiliates: Our Merit Plan is insured by National
Western Life Insurance Company (National Western). Further information regarding the Merit Plan
is provided above in connection with the All Other Compensation Table Named Executives.
Robert L. Moody, Sr., our Chairman of the Board and Chief Executive Officer, is also the Chairman
of the Board, Chief Executive Officer, and controlling stockholder of National Western. During
2010, we paid National Western $1,328,170 in premium and fees with respect to the Merit Plan. In
addition, we insure substantially similar plans offered by National Western, Gal-Tex, and The Moody
Foundation to certain of their officers. During 2010, National Western, Gal-Tex, and The Moody
Foundation paid us premium and fees with respect to such plans in the amounts of $135,251; $56,250;
and $106,779, respectively. We also insure The Moody Foundations basic health insurance plan, for
which we received $156,283 in premium during 2010.
Transactions with Greer, Herz & Adams, L.L.P.: Irwin M. Herz, Jr. is an advisory director of
ours and a Partner with Greer, Herz Adams, L.L.P. which serves as our General Counsel. In the
fiscal year ending December 31, 2010, it received approximately $10,785,000 in legal fees and
reimbursements of expenses in connection with its services as our General Counsel and all of our
subsidiaries. We also furnished offices, telephones and the use of certain office decorations to
the law firm, the value of which was credited against additional fees due to such firm.
Other Family Relationships: E. Vince Matthews III, a step-son of Robert L. Moody, Sr., is a
director of a mutual insurer managed by us and an advisory director of one of our subsidiaries. He
is also employed as one of our officers, for which he received total compensation during 2010,
including the Companys Merit Plan for officers, of $159,239.
Procedure for Review, Approval or Ratification of Related Persons Transactions
The Audit Committee reviews, approves or ratifies any related party transactions in which we
do or will have an amount involved exceeding $120,000 and a related person has or will have a
direct or indirect material interest. The Audit Committee will approve or ratify the transaction
only if it determines that the transaction is in our best interests. In considering the
transaction, the Audit Committee will consider all relevant factors, including (as applicable) the
business rationale for entering into the transaction; the alternatives to entering into the
transaction; whether the transaction is on terms comparable to those that could be obtained in
arms-length dealings with an unrelated third party; and the overall fairness of the transaction to
us. We have not adopted formal written procedures for the review of related party transactions.
Rather, we are guided by the corporate governance rules of the NASDAQ, the requirements of Item
404(a) of Regulation S-K promulgated by the SEC, and other SEC guidance on related party
transactions.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Under the securities laws of the United States, our directors, executive officers, and
any persons holding more than ten percent of our Common Stock are required to report their initial
ownership of our Common Stock and other equity securities and any subsequent changes in that
ownership to the SEC and to submit copies of these reports to the Company. To the Companys
knowledge, based solely on review of the copies of such reports furnished to the Company
and the written representations of such reporting persons, during the fiscal year ended December
31, 2010, all required Section 16(a) filings applicable to our directors, executive officers, and
greater than ten percent beneficial owners were timely and correctly made, except that due to an
inadvertent clerical error at the Company, Mr. Welch had one Form 4 that was filed one day late.
42
PROPOSAL 4.
RATIFICATION OF AUDITORS FOR 2011
Our Board Audit Committee has selected KPMG LLP, a firm of independent public accountants
(KPMG) to serve as our independent registered public accounting firm to examine our consolidated
financial statements for the year ending December 31, 2011. While the Audit Committee is
responsible for the appointment, compensation, retention, termination and oversight of the
independent auditor, we are requesting, as a matter of good corporate governance, that the
stockholders ratify the appointment of KPMG as our principal independent registered public
accounting firm. If the stockholders fail to ratify the selection, the Audit Committee will
reconsider whether to retain KPMG and may retain that firm or another without re-submitting the
matter to our stockholders. Even if the appointment is ratified, the Audit Committee may, in its
discretion, direct the appointment of a different independent registered public accounting firm at
any time during the year if it determines that such change would be in our best interests and in
the best interests of our stockholders.
KPMG served as the Companys principal independent registered public accounting firm for
its fiscal year ended December 31, 2010. During the Companys fiscal year ended December 31, 2010,
such firm performed audit services and tax consulting services for the Company. The independence of
such firm and the use of such firm for the provision of audit and non-audit services during such
fiscal year were approved by the Companys Audit Committee.
KPMG has advised the Company that neither it nor any of its partners has any material
financial interest in, or any connection (other than as independent auditors) with the Company.
Fees Paid to KPMG
Audit Fees
During the years ended December 31, 2010 and 2009, the aggregate fees billed by KPMG for the
audit of the Companys consolidated financial statements and insurance company statutory financial
statements, review of our interim financial statements, and review of our systems of internal
control over financial reporting were $4,132,068 and $3,749,525, respectively.
Audit-Related Fees
In 2010, KPMG did not perform any services that were related to the performance of the audit
or review of our financial statements but were not reportable as Audit Fees. During the year ended
December 31, 2009, we paid KPMG $1,031,643 in fees for work done in connection with our SEC
registration on Form 10-12B.
Tax Fees
During the years ended December 31, 2010 and 2009, the aggregate fees billed by KPMG for tax
compliance, tax advice and tax planning services were $596,290 and $913,476, respectively. Such
fees related to professional services for review of tax returns of the Company and certain
subsidiaries, as well as tax research services related to tax return compliance.
All Other Fees
During the years ended December 31, 2010 and 2009, there were no fees paid to KPMG for
services not reportable as Audit Fees, Audit-Related Fees or Tax Fees.
The services provided by KPMG described in Audit-Related Fees, Tax Fees and All Other
Fees above, were approved by the Audit Committee according to Rule 2-01(c)(7)(i)(C) of Regulation
S-X. The Audit Committee has determined the rendering of the above-mentioned non-audit services by
KPMG was compatible with maintaining KPMGs independence.
Pre-Approval of Audit, Audit-Related, Tax and Non-Audit Services
The Audit Committee pre-approves all audit services and non-audit services (including the fees
and terms thereof) to be performed for the Company by its independent registered public accounting
firm, as required by applicable law or listing standards and the Charter of the Audit Committee.
The committee may delegate authority to one or more of its members when appropriate, including the
authority to grant pre-approvals of audit and permitted non-audit services, provided that decisions
of any such member to grant pre-approvals are presented to the full Committee at its next scheduled
meeting.
Representatives of KPMG are expected to be present at the Annual Meeting and will be given the
opportunity to make a statement and to respond to appropriate questions.
Board Recommendation: The Board of Directors recommends a vote FOR ratification of the
appointment of KPMG as our auditors for 2011.
ANNUAL REPORT AND FINANCIAL STATEMENTS
A copy of the Annual Report of the Company for the fiscal year ended December 31, 2010,
including financial statements, accompanies this proxy statement. The financial statements
contained in the annual report have been audited by KPMG. We will furnish without charge to each
person whose proxy is being solicited, upon request of any such person, a copy of our Annual Report
on Form 10-K for the year ended December 31, 2010, as filed with the SEC, including the
consolidated financial statements and schedules thereto, but not the exhibits. Requests for copies
of such report should be directed to the following address or telephone number: Secretary, American
National Insurance Company, One Moody Plaza, Galveston, Texas 77550, telephone (409) 766-6537.
43
AUDIT COMMITTEE REPORT
As of the date of this proxy statement, the Audit Committee of the Board of Directors is
comprised of three directors: Arthur O. Dummer, who currently serves as Committee Chairman, James
D. Yarbrough, and Frank P. Williamson.
The Audit Committee assists the Board of Directors in fulfilling its oversight
responsibilities by reviewing the Companys consolidated financial reports, its internal financial
and accounting controls, and its auditing, accounting and financial reporting processes generally.
However, the committee is not professionally engaged in the practice of accounting or auditing and
does not provide any expert or special assurance as to such financial statements concerning
compliance with laws, regulations or generally accepted accounting principles or as to auditor
independence. The committee relies, without independent verification, on the information provided
to it and on the representations made by management and the independent registered accounting firm.
Management is responsible for the financial reporting process, including the system of internal
controls, for the preparation of consolidated financial statements in accordance with generally
accepted accounting principles and for the report on the Companys internal control over financial
reporting. The Companys independent registered public accounting firm is responsible for auditing
those financial statements and expressing an opinion as to their conformity with accounting
principles generally accepted in the United States of America.
In discharging its oversight responsibilities regarding the audit process, the Audit Committee
reviewed and discussed the audited consolidated financial statements of the Company as of and for
the year ended December 31, 2010 with Company management and KPMG LLP (KPMG), the independent
auditors. The Audit Committee received the written disclosures and the letter from KPMG required by
Independence Standards Board Standard No. 1, Independence Discussions with Audit Committees,
discussed with KPMG any relationships which might impair the firms independence from management
and the Company, and satisfied itself as to the auditors independence. The Audit Committee
reviewed and discussed with KPMG all communications required by auditing standards generally
accepted in the United States of America, including Statement on Auditing Standards No. 61,
Communications with Audit Committees, as amended.
Based upon these reviews and discussions, and subject to the limitations on the committees
role and responsibilities referred to above and in the committees Charter, the Audit Committee
recommended to the Board of Directors that the Companys audited consolidated financial statements
be included in the Companys Annual Report on Form 10-K for the fiscal year ended December 31, 2010
for filing with the SEC.
Submitted by the Audit Committee:
Arthur O. Dummer, Chairman
James D.
Yarbrough
Frank P. Williamson
44
STOCKHOLDER PROPOSALS
Any stockholder who intends to present a proposal at the 2012 Annual Meeting of
Stockholders for inclusion in the proxy statement and proxy card relating to that meeting is
advised that the proposal must be received by the Company at our principal executive offices not
later than December 2, 2011. The Company will not be required to include in its proxy statement or
proxy card a stockholder proposal which is received after that date or which otherwise fails to
meet requirements for stockholder proposals established by regulations of the SEC. If the date of
the 2012 Annual Meeting is changed by more than thirty days from the date of the 2011 Annual
Meeting, the deadline for submitting proposals to be included in managements 2012 proxy statement
is a reasonable time before the Company begins to print and mail its proxy materials for its 2012
Annual Meeting.
The persons named in the Companys proxy card for the 2012 Annual Meeting of Stockholders will
have discretionary authority to vote any proxies they hold at such meeting on any matter for which
the Company does not receive notice by February 15, 2012. If the Company changes the date of its
2012 Annual Meeting by more than thirty days from the date of the 2011 Annual Meeting, the persons
named in the Companys 2012 proxy statement will be able to exercise discretionary authority if
notice of the matter has not been received in a reasonable time before the Company mails its proxy
materials for the 2012 Annual Meeting of Stockholders.
If the date of the 2012 Annual Meeting is advanced or delayed by more than thirty calendar
days from the date of the 2011 Annual Meeting, the Company shall, in a timely manner, inform
stockholders of such change by including a notice, under Item 5, in its earliest possible quarterly
report on Form 10-Q. The notice will include the new deadline for submitting proposals to be
included in the Companys 2012 proxy statement and the new date for determining whether the Company
may exercise discretionary voting authority because it has not received timely notice of a matter.
In order to avoid controversy as to the date on which the Company receives any such proposal,
it is suggested that stockholders submit their proposals by certified mail, return receipt
requested, or other means that permit them to prove the date of delivery.
HOUSEHOLDING OF ANNUAL MEETING MATERIALS
Some banks, brokers and other nominee record holders may participate in the practice of
householding proxy statements and annual reports. This means that unless stockholders give
contrary instructions, multiple stockholders in each household will receive a single envelope
containing the Notice of Annual Stockholders Meeting and proxy statement. This procedure will
reduce our printing costs and postage fees.
For those stockholders who request to receive a printed copy of our proxy statement and Annual
Report by mail, we will send only one copy of such materials to each address, unless one or more of
those stockholders notifies us, in the manner described below, that they wish to receive a printed
copy for each stockholder at that address. We will promptly deliver a separate copy of the proxy
materials to you if you call or write to us at the following address or telephone number:
Secretary, American National Insurance Company, One Moody Plaza, Galveston, Texas 77550, telephone
(409) 766-6537.
If in the future, you want to receive your Notice in a separate envelope, or separate copies
of our proxy statement or Annual Report, or if you are receiving multiple copies and would like to
receive only one copy per household, you should contact your bank, broker or other record holder,
or you may contact us at the above address or telephone number.
CODE OF BUSINESS CONDUCT AND ETHICS
We have adopted a Code of Business Conduct and Ethics that applies to all directors,
officers and employees of our Company. The complete text of the Code of Business Conduct and Ethics
is available on our website at www.anico.com/docs/coe.pdf and will be provided to any person free
of charge upon request made to the Companys Secretary at the address shown on page 1. Any
amendments to the Code of Business Conduct and Ethics and any waivers granted under the Code of
Business Conduct and Ethics to our directors or executive officers will be disclosed on a Form 8-K
filed with the SEC.
COMMUNICATIONS WITH THE BOARD OF DIRECTORS
Stockholders may communicate with the full Board of Directors by writing to the Board or
a specific director or directors in care of the Companys Secretary at the address shown on page 1,
by facsimile transmission to (409) 766-6803, or by e-mail to mark.flippin@anico.com.
45
INCORPORATION BY REFERENCE
Notwithstanding anything to the contrary set forth in any of our previous filings under
the Securities Exchange Act of 1934, as amended, that might incorporate future filings including
this proxy statement, in whole or in part, the report of the Compensation Committee and the report
of the Audit Committee included in this proxy statement shall not be incorporated by reference to
any such filings.
OTHER MATTERS
The Board of Directors knows of no other matters that may properly be, or which are
likely to be, brought before the meeting. However, if any matters are properly brought before the
meeting, the persons named in the enclosed proxy or their substitutes will vote in accordance with
their best judgment on such matters.
By Order of the Board of Directors
J. Mark Flippin, Secretary
Galveston, Texas
March 31, 2011
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YOUR VOTE IS IMPORTANT. PLEASE VOTE TODAY.
To vote by mail, mark, sign and date your proxy card
and return it in the enclosed postage-paid envelope.
AMERICAN NATIONAL
INSURANCE COMPANY
94705
▼ FOLD AND DETACH HERE ▼
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THIS PROXY WILL BE VOTED
AS DIRECTED, OR IF NO DIRECTION IS MADE, WILL
BE VOTED IN ACCORDANCE WITH THE RECOMMENDATIONS |
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OF THE BOARD OF DIRECTORS, WHICH ARE FOR ALL IN PROPOSAL 1, FOR PROPOSALS
2 AND 4, AND 3 YEARS FOR PROPOSAL 3.
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Robert L. Moody,
G. Richard Ferdinandtsen,
Frances Anne Moody-Dahlberg,
Russell S. Moody,
William L. Moody, IV,
James D. Yarbrough,
Arthur O. Dummer,
Dr. Shelby M. Elliott, and
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(INSTRUCTIONS: To withhold authority to vote for any individual nominee, mark the
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Mark Here for
Address Change
or Comments
SEE REVERSE
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NOTE: Please sign as name appears hereon. Joint owners should each sign. When signing as
attorney, executor, administrator, trustee or guardian, please give full title as such.
You can now access your American National Insurance Company account online.
Access your American National Insurance Company account online via Investor
ServiceDirect® (ISD).
BNY Mellon Shareowner Services, the transfer agent for American National Insurance Company, now
makes it easy and convenient to get current information on your shareholder account.
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View account status
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View payment history for dividends |
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View certificate history
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Make address changes |
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View book-entry information
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Obtain a duplicate 1099 tax form |
Visit us on the web at http://www.bnymellon.com/shareowner/equityaccess
For Technical Assistance Call 1-877-978-7778 between 9am-7pm
Monday-Friday Eastern Time
Investor ServiceDirect®
Available 24 hours per day, 7 days per week
TOLL FREE NUMBER: 1-800-370-1163
Choose MLinkSM for fast, easy and secure 24/7 online access to your
future proxy materials, investment plan statements, tax documents and more.
Simply log on to Investor ServiceDirect® at
www.bnymellon.com/shareowner/equityaccess where step-by-step
instructions will prompt you through enrollment.
▼ FOLD AND DETACH HERE ▼
AMERICAN NATIONAL INSURANCE COMPANY
Proxy for Annual Meeting April 29, 2011.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF THE COMPANY
The undersigned hereby appoints Robert L. Moody and G. Richard Ferdinandtsen, or either
of them, as lawful attorneys and proxies of the undersigned with full powers of substitution and
appointment, for and in the name, place and stead of the undersigned to act for and to vote all of
the shares of Common Stock of American National Insurance Company (the Company) which the
undersigned may be entitled to vote at the Annual Meeting to be held in the Mary Moody Northen
Auditorium of the American National Insurance Company Building, One Moody Plaza, Galveston, Texas,
at 10:00 a.m., Local Time, on April 29, 2011 and at any and every adjournment thereof, and there to
vote.
Proxy materials are available on-line at:
https://materials.proxyvote.com/028591
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(Mark the corresponding box on the reverse side) |
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BNY MELLON SHAREOWNER SERVICES |
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P.O. BOX 3550 |
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SOUTH HACKENSACK, NJ 07606-9250 |
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(Continued and to be marked, dated and signed, on the other side)
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94705 |