UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
10-K/A
Amendment
No. 1
(Mark
One)
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x
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ANNUAL
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
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For
the Fiscal Year Ended December 31, 2006
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Or
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o
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TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT
OF 1934
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For
the transition period from
to
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Commission
file number 001-31984
BRISTOL
WEST HOLDINGS, INC.
(Exact
name of registrant as specified in its charter)
Delaware
(State
or other jurisdiction of
incorporation
or organization)
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13-3994449
(I.R.S.
Employer Identification No.)
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5701
Stirling Road
Davie,
Florida 33314
(954) 316-5200
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(Address,
of principal executive offices; zip code)
(Registrant’s
telephone number, including area code)
Securities
registered pursuant to Section 12(b) of the
Act:
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Title
of each class
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Name
of each exchange on which
registered
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Common
Stock, $0.01 par value
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New
York Stock Exchange
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Securities
registered pursuant to Section 12(g) of the Act: None
Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined
in
Rule 405 of the Securities Act. Yes o
No x
Indicate
by check mark if the registrant is not required to file reports pursuant to
Section 13 or Section 15(d) of the Act.
Yes o
No x
Indicate
by check mark whether the registrant (1) has filed all reports required to
be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports) and (2) has been subject to
such filing requirements for the past 90 days. Yes x
No o
Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K is not contained herein, and will not be contained, to the
best of registrant’s knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. x
Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, or a non-accelerated filer. See definition of “accelerated
filer and large accelerated filer” in Rule 12b-2 of the Exchange Act.
(Check one):
Large
accelerated filer o
Accelerated
filer x Non-accelerated
filer o
Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Act). Yes o
No x
The
aggregate market value of the registrant’s voting common stock held by
non-affiliates, based on the closing market price, as reported on the New York
Stock Exchange, on the last business day of the second quarter of 2006 was
$317,522,288. As of February 28, 2007, the total number of shares
outstanding of registrant’s common stock was 29,478,865.
AMENDMENT
NO. 1 TO 2006 ANNUAL REPORT ON FORM 10-K
Table
of Contents
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Page
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PART
II |
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Item
5 |
Market
for Registrant's Common Equity, Related Stockholders Matters and
Issuer
Purchases of Equity Securities |
2
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PART
III
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Item
10.
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Directors,
Executive Officers and Corporate Governance
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3
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Item
11.
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Executive
Compensation
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9
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Item
12.
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Security
Ownership of Certain Beneficial Owners and Management and
Related Stockholder Matters
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41
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Item
13.
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Certain
Relationships and Related Transactions, and Director
Independence
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46
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Item
14.
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Principal
Accounting Fees and Services
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51
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PART
IV
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Item
15.
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Exhibits,
Financial
Statement Schedules |
53
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Signatures
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55
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Exhibit
Index
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56
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BRISTOL
WEST HOLDINGS, INC.
AMENDMENT
NO. 1 TO 2006 ANNUAL REPORT ON FORM 10-K
EXPLANATORY
NOTE
Bristol
West Holdings, Inc. is
filing
this Amendment No. 1 (which we refer to as this “Amended Report”) to our
Annual Report on Form 10-K for the fiscal year ended December 31, 2006, as
filed with the SEC (which we refer to as the “Original Report”), filed with the
Securities and Exchange Commission (which we refer to as the “SEC”) on
March 16, 2007, in order to add certain information required by the
following items of Form 10-K:
Item
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Description
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PART
II
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Item
5.
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Market
for the Registrant’s Common Equity, Related Stockholder Matters and Issuer
Purchases of Equity Securities
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PART
III
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Item
10.
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Directors,
Executive Officers and Corporate Governance
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Item
11.
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Executive
Compensation
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Item
12.
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Security
Ownership of Certain Beneficial Owners and Management and
Related Stockholder Matters
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Item
13.
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Certain
Relationships and Related Transactions, and Director
Independence
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Item
14.
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Principal
Accounting Fees and Services
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PART
IV
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Item
15.
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Exhibits,
Financial
Statement Schedules |
When
this
Amended Report uses the words “Bristol West,” “Company,” “we,” “us,” and
“our,” these words refer to Bristol West Holdings, Inc. and its
subsidiaries, unless the context otherwise requires.
We
hereby
amend Item 5 of Part II, Items 10, 11, 12, 13 and 14 of Part III and Item
15 of Part IV of our Original Report by deleting the text of Items 10, 11,
12, 13 and 14 of Part III, and Item 15 of Part IV in their entirety and
replacing them with the information provided below under the respective
headings
in the Amended Report and by
deleting the text in Part II under the heading “Item 5.
Market for the Registrant’s Common Equity, Related Stockholder Matters and
Issuer Purchases of Equity Securities - Securities Authorized for Issuance
Under
Equity Compensation Plans”
in
its
entirety and replacing it with the information below under that heading in
this Amended Report. In accordance with applicable SEC rules, we have
set forth the complete text of Item 5 in Part II as amended in this Annual
Report.
This
Amended Report does not affect any other items in our Original Report. As a
result of the amendments reflected in this Amended Report, we are also filing
as
exhibits to this Amended Report the certifications pursuant to section 302
of
the Sarbanes-Oxley Act of 2002. Because no financial statements are contained
in
this Amended Report, we are not including certifications pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002.
Except
as
otherwise expressly stated for the items amended in this Amended Report, this
Amended Report continues to speak as of the date of the Original Report and
we
have not updated the disclosure contained herein to reflect events that have
occurred since the filing of the Original Report. Accordingly, this Amended
Report should be read in conjunction with our Original Report and our other
filings made with the SEC subsequent to the filing of the Original Report.
Item 5.
Market for the Registrant’s Common Equity, Related Stockholder Matters and
Issuer Purchases of Equity Securities
Our
common stock, $0.01 par value per share (“Common
Stock”), is listed on the New York Stock Exchange (“NYSE”) under the symbol
“BRW”. The following table sets forth the high, low, and closing market
prices of our Common Stock during each of the four calendar quarters of
2006 and
2005. The high, low and closing prices set forth below are as reported on
the NYSE’s consolidated transaction reporting system.
For
the quarter ended:
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High
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Low
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Close
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Dividends
per
Share
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March
31, 2006
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$
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20.49
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$
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17.72
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$
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19.25
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$
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0.07
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June
30, 2006
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19.35
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14.75
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16.00
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0.07
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September
30, 2006
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16.04
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13.68
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14.55
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0.07
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December
31, 2006
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16.70
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13.53
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15.83
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0.08
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For
the quarter ended:
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High
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Low
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Close
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Dividends
per
Share
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March
31, 2005
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$
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21.80
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$
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14.91
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$
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15.50
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$
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0.05
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June
30, 2005
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18.49
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14.76
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18.30
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0.07
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September
30, 2005
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19.64
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15.80
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18.25
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0.07
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December
31, 2005
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19.75
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17.12
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19.03
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0.07
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As
of February 28, 2007, there were 1,195 registered holders of record of
our
Common Stock. A significant number of outstanding shares of Common Stock
are registered in the name of only one holder, which is a nominee of The
Depository Trust Company, a securities depository for banks and brokerage
firms.
The
table above reflects the frequency and amount of cash dividends that we
paid on
our Common Stock during 2006 and 2005. We paid $0.29 per common share for
a total dividend payout of $8.5 million with respect to our Common Stock
during
the year ended December 31, 2006 and $0.26 per common share for a total
dividend
payout of $8.0 million during the year ended December 31, 2005. The
declaration and payment of dividends is subject to the discretion of our
Board
of Directors, and will depend on, among other things, our financial condition,
results of operations, capital and cash requirements, future prospects,
regulatory and contractual restrictions on the payment of dividends by
our
subsidiaries, restrictions under our credit facility on our ability to
pay
dividends to our stockholders and other factors deemed relevant by the
Board of
Directors. Under the Merger Agreement with Farmers, without Farmer’s prior
written consent, the Company is only permitted to pay a regular quarterly
dividend with respect to our Common Stock not to exceed $0.08 per share.
For a discussion of our cash resources and needs, see “Item 7.
Management’s Discussion and Analysis of Financial Condition and Results of
Operations-Liquidity and Capital Resources.”
We
are a holding company without significant operations of our own. Dividends
from our subsidiaries are our principal source of funds. Insurance laws
limit the ability of our insurance subsidiaries to pay dividends to us.
Our non-insurance subsidiaries’ earnings are generally unrestricted as to their
availability for the payment of dividends subject to customary state
corporate
laws regarding solvency. See “Item
1. Regulatory Matters - Regulation of Dividends.”
Our subsidiaries also are not permitted to pay dividends without Farmer’s prior
written consent. See “Item 7.
Management’s Discussion and Analysis of Financial Condition and Results of
Operations-Liquidity and Capital Resources.”
Securities
Authorized for Issuance Under Equity Compensation
Plans
See
the
disclosure regarding securities authorized for issuance under our equity
compensation plans that is included below under the heading “Item
12. Security Ownership of Certain Beneficial Owners and Management and
Related
Stockholder Matters - Securities Authorized for Issuance Under Equity
Compensation Plans.”
Recent
Sales of Unregistered Securities
There
were no sales of unregistered securities during the year ended December
31,
2006.
PART
III
Item
10. Directors, Executive Officers and Corporate Governance
Board
of Directors
The
following information is set forth below regarding our directors: their names,
their ages as of March 31, 2007, their current position(s) with Bristol
West, the committees of our Board of Directors (which we refer to as our
“Board”) of which they are a member, and certain biographical information.
Name
|
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Age
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Position
|
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Director
Since
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James R.
Fisher
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51
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Executive
Chairman of the Board and Director
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2000
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R.
Cary Blair (1)(2)
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67
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Director
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2004
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Jeffrey J.
Dailey
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49
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Chief
Executive Officer, President and Director
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2006
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Richard
T. Delaney (1)(3)
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68
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Director
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2004
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Allan
W. Ditchfield (2)
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69
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Director
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2006
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Todd
A. Fisher
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41
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Director
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1998
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Perry
Golkin
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53
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Director
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1998
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Mary
R. Hennessy (2)(3)
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54
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Director
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2004
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Eileen
Hilton (1)
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60
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Director
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2004
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James
N. Meehan (2)(3)
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61
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Director
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2004
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Arthur
J. Rothkopf (2)
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71
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Director
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2004
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(1)
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Member
of the Compensation Committee
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(2)
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Member
of the Corporate Governance and Nominating Committee
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(3)
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Member
of the Audit Committee
|
Mr.
James R. Fisher
Mr.
Fisher has been our Executive Chairman of the Board since July 2006. He has
served as Chairman of the Board and as a Bristol West director since September
2000. He was our Chief Executive Officer from September 2000 through June 2006.
Mr. Fisher has been the managing member of Fisher Capital Corp. L.L.C. since
March 1997. From 1986 through March 1997, Mr. Fisher held various executive
positions at American Re Corporation. Currently, Mr. Fisher is a director of
Alea Group Holdings (Bermuda) Ltd. and a trustee of Lafayette College in Easton,
Pennsylvania.
Mr.
R. Cary Blair
Mr.
Blair
has been a Bristol West director since March 2004. Mr. Blair retired as Chairman
and Chief Executive Officer of the Westfield Group in August 2003. He served
his
entire career at the Westfield Group from 1961 through August 2003. Currently,
Mr. Blair is a director of First Merit Corporation and Davey Tree Expert Co.,
and the Chairman of the Westfield Group Foundation.
Mr.
Jeffrey J. Dailey
Mr. Dailey
has been a Bristol West director since May 2006. Mr. Dailey has been our
Chief Executive Officer since July 2006 and our President since December 2003.
He was our Chief Operating Officer from April 2001 through June 2006.
Mr. Dailey has 27 years of experience in the insurance industry. Prior
to joining Bristol West in 2001, Mr. Dailey was the Chief Executive Officer
of Reliant Insurance. Prior to joining Reliant Insurance in 1996,
Mr. Dailey spent 14 years with The Progressive Corporation, holding
numerous executive positions culminating as President of Progressive's Northeast
Division.
Mr.
Richard T. Delaney
Mr.
Delaney has been a Bristol West director since March 2004. Mr. Delaney has
worked as an independent consultant since January 2000. From 1994 through
January 2000, Mr. Delaney held the positions of President and Chief
Operating Officer of Am-Re Consultants, Inc. and Vice Chairman of Am-Re Global
Services, Inc. From January 2002 through November 2003, Mr. Delaney was a
director of Alea Group Holdings Ltd. From January 2002 through June 2004,
Mr. Delaney was a director of Associated Industries Insurance Services,
Inc. Mr. Delaney is a member of the CPCU Society.
Mr.
Allan W. Ditchfield
Mr.
Ditchfield has been a Bristol West director since November 2006. He has been
an
independent systems consultant since 1999. Prior to his consulting work, Mr.
Ditchfield held key corporate positions as chief information officer in the
insurance, communications, and process control industries. He currently serves
as Director of the National Council at Northeastern University and a member
of
the board of directors of Atlantic Public Media.
Mr.
Todd A. Fisher
Mr.
Fisher has been a Bristol West director since February 1998. Mr. Fisher has
been
a member of KKR & Co. L.L.C. since January 1, 2001. Mr. Fisher was an
executive of KKR & Co. L.L.C. from June 1993 to December 31, 2000.
Mr. Fisher was an associate at Goldman Sachs & Co. from July 1992 to June
1993. Currently, Mr. Fisher is a director of Alea Group Holdings (Bermuda)
Ltd.,
Rockwood Holdings, Inc., Maxeda B.V., and Duales System Deutschland GmbH.
Mr.
Perry Golkin
Mr.
Golkin has been a Bristol West director since February 1998. Mr. Golkin has
been
a member of KKR & Co. L.L.C. since January 1, 1996. Mr. Golkin was a
general partner of KKR & Co. L.L.C. from 1995 to January 1996. Prior to
1995, he was an executive of KKR & Co. L.L.C. Currently, Mr. Golkin is a
director of Alea Group Holdings (Bermuda) Ltd., PRIMEDIA, Inc., Rockwood
Holdings, Inc., and Willis Group Holdings Limited.
Ms.
Mary R. Hennessy
Ms.
Hennessy has been a Bristol West director since March 2004. Since January 2006,
Ms. Hennessy has been an independent consultant to the insurance and reinsurance
industries. From May 2002 through December 2005, Ms. Hennessy was
employed as a consultant with Webb Associates of Haddonfield, New Jersey. From
January 2000 through May 2002, Ms. Hennessy was the Chief Executive Officer
and President of Overseas Partners, Ltd. From November 1996 through April 1999,
Ms. Hennessy was President and Chief Operating Officer of TIG Holdings.
Prior to serving at TIG, Ms. Hennessy held various executive positions at
American Re Corporation from 1988 to 1996. Ms. Hennessy has been a Fellow
of the Casualty Actuarial Society since 1981. Currently, Ms. Hennessy is a
director of Security Capital Assurance, Ltd. and GeoVera Holdings,
Ltd.
Dr.
Eileen Hilton
Dr.
Hilton has been a Bristol West director since March 2004. Dr. Hilton has been
the Chief Executive Officer and President of Biomedical Research Alliance of
New
York since 1998. Dr. Hilton has been an attending physician at Long Island
Jewish Medical Center since 1985. Dr. Hilton is currently a Fellow with the
American College of Physicians and the Infectious Disease Society of America
and
a member of the American Society of Microbiology, the Long Island Infectious
Disease Society and the New York Society of Infectious Disease.
Mr.
James N. Meehan
Mr.
Meehan has been a Bristol West director since March 2004. Mr. Meehan was a
Managing Director of Bank of America in Chicago, Illinois, from June 1987
through May 2002. Since his retirement in May 2002, he has worked as an
independent consultant. Prior to serving at Bank of America, Mr. Meehan was
Vice President of First National Bank of Chicago. Currently, Mr. Meehan is
a
director of the Delphi Financial Group, American Fuji Fire and Marine Insurance
Company, and Reassure America Life Insurance Company, a subsidiary of Swiss
Re.
Mr.
Arthur J. Rothkopf
Mr.
Rothkopf has been a Bristol West director since March 2004. Mr. Rothkopf has
been Senior Vice President of the U.S. Chamber of Commerce since July 2005.
Prior to serving at the U.S. Chamber of Commerce, Mr. Rothkopf served as
President of Lafayette College in Easton, Pennsylvania, from 1993 until 2005.
He
also has served as the Deputy Secretary and General Counsel of the United States
Department of Transportation and was a partner in the law firm of Hogan &
Hartson in Washington, D.C. Currently, Mr. Rothkopf is a director of
Insurance Services Office, Inc.
Executive
Officers
The
following information is set forth below regarding our executive officers:
their
names, their ages as of March 31, 2007, their current position(s) with
Bristol West, and certain biographical information.
Name
|
|
Age
|
|
Position
|
James R.
Fisher
|
|
51
|
|
Executive
Chairman of the Board
|
Jeffrey J.
Dailey
|
|
49
|
|
Chief
Executive Officer and President
|
Simon J.
Noonan
|
|
43
|
|
Executive
Vice President and Chief Operating Officer
|
Anne M.
Bandi
|
|
50
|
|
Senior
Vice President—Operations
|
Douglas
R. Burtch
|
|
47
|
|
Senior
Vice President—Marketing
|
George
N. Christensen
|
|
61
|
|
Senior
Vice President—Business Integration
|
Brian
J. Dwyer
|
|
50
|
|
Senior
Vice President—Product Research and Development
|
Nila J.
Harrison
|
|
43
|
|
Senior
Vice President—Human Resources
|
Ronald
E. Latva
|
|
42
|
|
Senior
Vice President—Product Management
|
George
G. O’Brien
|
|
51
|
|
Senior
Vice President—Chief Legal Officer and Corporate
Secretary
|
John
L. Ondeck
|
|
47
|
|
Senior
Vice President—Chief Information Officer
|
Alexis
S. Oster
|
|
38
|
|
Senior
Vice President—General Counsel
|
Robert D.
Sadler
|
|
43
|
|
Senior
Vice President—Chief Financial Officer
|
James J.
Sclafani, Jr.
|
|
47
|
|
Senior
Vice President—Claims
|
Audrey
E. Sylvan
|
|
43
|
|
Senior
Vice President—Product Management
|
James
R. Fisher
Mr.
Fisher has been our Executive Chairman of the Board since July 2006. He has
served as Chairman of the Board and as a Bristol West director since September
2000. He was our Chief Executive Officer from September 2000 through June 2006.
Mr. Fisher has been the managing member of Fisher Capital Corp. L.L.C. since
March 1997. From 1986 through March 1997, Mr. Fisher held various executive
positions at American Re Corporation. Currently, Mr. Fisher is a director of
Alea Group Holdings (Bermuda) Ltd. and a trustee of Lafayette College in Easton,
Pennsylvania.
Jeffrey J.
Dailey
Mr. Dailey
has been our Chief Executive Officer since July 2006 and our President since
December 2003. He has also been a Bristol West director since May 2006. He
was
our Chief Operating Officer from April 2001 through June 2006. Mr. Dailey
has 27 years of experience in the insurance industry. Prior to joining
Bristol West in 2001, Mr. Dailey was the Chief Executive Officer of Reliant
Insurance. Prior to joining Reliant Insurance in 1996, Mr. Dailey spent
14 years with The Progressive Corporation, holding numerous executive
positions culminating as President of Progressive's Northeast Division.
Simon J.
Noonan, FIA, MAAA
Mr. Noonan
has been our Executive Vice President and Chief Operating Officer since July
2006. He was our Executive
Vice President—Actuarial/Product from
May
2005 through June 2006. He served as our Senior Vice President—Actuarial/Product
from April 2002 to May 2005. Prior to joining Bristol West in 2002,
Mr. Noonan was the Chief Executive Officer of Metis Financial LLC, a
consulting firm specializing in the property and casualty insurance market,
since November 1997. Prior to joining Metis, Mr. Noonan served as a Senior
Manager and Director in the insurance practice of KPMG from 1991 through 1997.
Anne M.
Bandi
Ms. Bandi
has been our Senior Vice President—Operations since April 2001. Ms. Bandi
has 27 years of insurance operations experience. Prior to joining Bristol
West, Ms. Bandi had been the Senior Vice President of Operations at Reliant
Insurance since February 1996. Prior to joining Reliant Insurance,
Ms. Bandi spent 16 years with The Progressive Corporation in a variety
of operations management positions.
Douglas
R. Burtch
Mr.
Burtch has been our Senior Vice President—Marketing since February 2007. Mr.
Burtch has 29 years of insurance industry experience. From August 1999 until
February 2007, he was our Vice President—Marketing. Prior to joining
Bristol West, Mr. Burtch served as Senior Vice President of Sun States Insurance
from 1998 to August 1999. Prior to joining Sun States, Mr. Burtch held
management positions with regional insurance carriers specializing in marketing
personal and commercial products from 1984 to 1997.
George
N. Christensen
Mr. Christensen
has been our Senior Vice President—Business Integration since April 2001.
Mr. Christensen joined Bristol West in 1978 and has served in various roles
since that time, including Chief Information Officer.
Brian
J. Dwyer
Mr. Dwyer
has been our Senior Vice President—Product Research and Development since August
2003. Mr. Dwyer has 17 years of insurance industry experience. Prior to
joining Bristol West, Mr. Dwyer served in various management roles for The
Progressive Corporation from 1989 through 2002, including Regional Marketing
Manager and General Manager. Prior to joining The Progressive Corporation,
Mr. Dwyer served as a senior manager with Ernst & Whinney, a major
accounting firm.
Nila J.
Harrison
Ms. Harrison
has been our Senior Vice President—Human Resources since April 2001.
Ms. Harrison has 23 years of human resources experience. Prior to joining
Bristol West, Ms. Harrison was the Senior Vice President, Human Resources
for Reliant Insurance. Prior to joining Reliant Insurance in April 1996,
Ms. Harrison was in the retail industry, where she spent 12 years in
human resources management positions with Fabri-Centers of America Inc. and
Limited Brands Inc.
Ronald
E. Latva
Mr.
Latva
has been our Senior Vice President—Product
Management since May 2004. From August 2000 until May 2004, he was a Vice
President and National Product Manager for Bristol
West.
Mr. Latva has over 20 years of insurance experience in pricing, product
management, claims and operations. Prior to joining Bristol
West,
he
served as an Assistant Vice President at Allmerica Financial from 1997 to
2000. From 1986 through 1997, he held various pricing and product
management positions at Great American Insurance.
George
G. O’Brien
Mr.
O'Brien has been our Senior Vice President—Chief Legal Officer and Corporate
Secretary since March 2004. Prior to joining Bristol West, Mr. O'Brien had
his
own litigation practice since 1994. He began consulting with Bristol West in
March 2003. From 1980 until 1994, Mr. O’Brien was a partner with the law
firm of Dechert Price & Rhoads, and from 1980 until 1988 he was an associate
with that firm.
John
L. Ondeck
Mr. Ondeck
has been our Senior Vice President—Chief Information Officer since May 2002.
Mr. Ondeck has over 15 years of information technology experience.
Prior to joining Bristol West in 2002, Mr. Ondeck was President of
Armstrong and Lures, Inc., a software consulting firm from 2001 to 2002 and
1998
to 2000. Mr. Ondeck was a Vice President of Sales and Operations for
Digital Day, a software development firm, from 2000 to 2001. From 1990 through
1997, Mr. Ondeck held management positions at Oracle Corporation and Kraft
General Foods.
Alexis
S. Oster
Ms. Oster
has been our Senior Vice President—General Counsel since April 2001.
Ms. Oster has 14 years of experience in the insurance industry. Prior
to joining Bristol West in 2001, Ms. Oster served as General Counsel for
Reliant Insurance. Prior to joining Reliant Insurance in 1996, Ms. Oster
was corporate counsel of USF&G Insurance, with a primary focus on regulatory
matters, company licensing and general corporate legal matters.
Robert D.
Sadler
Mr. Sadler
has been our Senior Vice President—Chief Financial Officer since December 2006.
From April 2001 until December 2006, he was our Senior Vice President—Marketing.
Prior to joining Bristol West in 2001, Mr. Sadler was the Chief Financial
Officer for Reliant Insurance from 1996 to 2001. Prior
to
joining Reliant Insurance, Mr. Sadler served as the Chief Financial Officer
of Agency Insurance Company of Maryland, Inc. from 1992 to 1996. Mr. Sadler
was
also a manager in the insurance practice of Ernst & Young, where he
worked from 1985 to 1992.
James J.
Sclafani, Jr.
Audrey
E. Sylvan
Ms.
Sylvan has been our Senior Vice President—Product Management since May 2004.
From April 2001 through May 2004, Ms. Sylvan was our Vice President—Product
Management. Ms. Sylvan has 19 years of insurance experience in Product
Management. Prior to joining Bristol West, Ms. Sylvan was Senior Vice
President of Product Management for Reliant Insurance. Prior to joining Reliant
Insurance in 1996, Ms. Sylvan was a Product Manager at The Progressive
Corporation for eight years, where she managed both Specialty and Auto
Products.
SECTION
16 (a) BENEFICIAL
OWNERSHIP
REPORTING
COMPLIANCE
Section
16(a) of the Securities Exchange Act of 1934, as amended (which we refer
to as
the “Exchange Act”), requires our officers and directors and persons who own
more than 10% of our Common Stock, to file reports of ownership and changes
in
ownership (Forms 3, 4 and 5) with the SEC and the NYSE, and to furnish us
with copies of all such forms which they file. To our knowledge, based on
representations to us by such persons and a review of the copies of reports
furnished to us, all of our directors and officers made all required filings
on
time during 2006.
STOCKHOLDER
RECOMMENDATIONS
FOR
DIRECTOR
NOMINEES
No
material changes have been made to the procedures by which our stockholders
may
recommend nominees to our Board since we last described these procedures in
our
definitive proxy statement issued in connection with our 2006 annual
meeting of stockholders and filed with the SEC on March 7, 2007.
The
Board
has established a separately-designated audit committee in accordance with
section 3(a)(58)(A) of the Exchange Act (which we refer to as the “Audit
Committee”). The Audit Committee is composed of three directors: James N. Meehan
(Chairman), Richard T. Delaney and Mary R. Hennessy. The Board has determined
that James N. Meehan qualifies as an “audit committee financial expert” as that
term is defined in Item 407(d)(5) of Regulation S-K under the
Securities Act of 1933, as amended (which we refer to as the “Securities Act”).
The Board also affirmatively determined that the “audit committee financial
expert” was independent in accordance with the independence definition and
procedures set forth in the Corporate Governance Guidelines adopted by our
Board
(which we refer to as our “Corporate Governance Guidelines”), the corporate
governance standards of the NYSE, and applicable rules and regulations of the
SEC. For a description of our Board’s annual assessment of director independence
regarding the directors who are members of this committee, see the disclosure
below under the heading “Item
13. Certain Relationships and Related Transactions, and Director Independence
-
Director Independence.”
The
principal duties and responsibilities of the Audit Committee are
set
forth in its charter. See the disclosure below in this section under the heading
“Corporate
Governance - Corporate Governance Documents - Copies of Corporate
Governance Documents.”
In
accordance with the NYSE’s corporate governance standards, our Corporate
Governance Guidelines provide that no member of the Audit Committee may serve
simultaneously on the audit committees of more than three public company boards,
unless the Board determines that such simultaneous service would not impair such
director’s ability to effectively serve on the Audit Committee and that
determination is disclosed in our annual proxy materials distributed in
connection with an Annual Meeting of Stockholders. Directors are required to
advise the Chief Executive Officer and the Chairman of the Board and the
Chairman of the Corporate Governance and Nominating Committee before they accept
an invitation to serve on the audit committee of any public company board.
Currently, no member of the Audit Committee serves simultaneously on the audit
committees of more than three public company boards.
Corporate
Governance Documents
Board
Committee Charters.
Our
Board has adopted charters for the Audit Committee, the Compensation Committee,
and the Corporate Governance and Nominating Committee each of which meets the
corporate governance standards of the NYSE.
Corporate
Governance Guidelines.
The
Corporate Governance Guidelines adopted by our Board meet the corporate
governance standards of the NYSE.
Code
of Conduct and Business Ethics.
The
Board adopted the Code of Conduct and Business Ethics that applies to all of
our
directors, officers and employees (which we refer to as the “Code of Conduct”).
Failure to comply with the Code of Conduct is a serious offense and will result
in appropriate disciplinary action. We will disclose, to the extent and in
the
manner required by any applicable law or NYSE corporate governance standard,
any
waiver of any provision of the Code of Conduct.
Code
of Conduct and Business Ethics Policy for CEO and Senior Financial
Officers.
The
Board also adopted the Code of Conduct and Business Ethics Policy for Chief
Executive Officer and Senior Financial Officers (which we refer to as the
“Senior Financial Officer Code of Conduct”), which applies to our principal
executive officer (our Chief Executive Officer and President) and our principal
financial and principal accounting officer (our Chief Financial Officer) as
well
as our Corporate Controller and other senior financial officers. These officers
are expected to adhere at all times to the Senior Financial Officer Code of
Conduct. Failure to comply with the Senior Financial Officer Code of Conduct
is
a serious offense and will result in appropriate disciplinary action. Our Board
has the authority to independently approve, in their sole discretion, any such
disciplinary action as well as any amendment to and any waiver or material
departure from a provision of the Senior Financial Officer Code of Conduct.
We
will disclose at
www.bristolwest.com/Bristolwest/Investor/Governance.aspx,
our
investor relations website, to the extent and in the manner permitted by
Item 5.05 of Form 8-K under the Exchange Act, the nature of any
amendment to the Senior Financial Officer Code of Conduct (other than technical,
administrative, or other non-substantive amendments), our approval of any
material departure from a provision of the Senior Financial Officer Code of
Conduct, and our failure to take action within a reasonable period of time
regarding any material departure from a provision of the Senior Financial
Officer Code of Conduct that has been made known to any of our executive
officers.
Copies
of Corporate Governance Documents.
Copies
of each of the following corporate governance documents are available, without
charge, at www.bristolwest.com/Bristolwest/Investor/Governance.aspx, our
investor relations website:
· |
the
Audit Committee charter
|
· |
the
Compensation Committee charter
|
· |
the
Corporate Governance and Nominating Committee charter
|
· |
the
Corporate Governance Guidelines
|
· |
the
Senior Financial Officer Code of Conduct
|
Printed
copies of each of the corporate governance documents listed above are also
available, without charge, at the written request of any stockholder of record.
Printed copies of the Senior Financial Officer Code of Conduct are also
available, without charge, at the written request of any other person. Requests
for printed copies should be mailed to: Bristol West Holdings, Inc.,
5701 Stirling Road, Davie, Florida 33314, Attention: Corporate
Secretary.
Meetings
of Non-Management and Independent Directors
Our
non-management directors meet in separate executive sessions without senior
management for a portion of each meeting. At least once per year, the
independent directors meet in a separate executive session without senior
management and non-independent directors for a portion of the meeting. The
NYSE
corporate governance standards define non-management directors to include any
directors who are not executive officers of our Company, including any directors
who are not independent by virtue of a material relationship, former status
or
family relationship, or for any other reason.
Presiding
Director
The
directors at each executive session of non-management or independent directors
determine the Chairman for the executive session.
Communicating
with Our Directors
So
that
our stockholders and other interested parties may make their concerns known,
we
have established a method for communicating with our directors, including
non-management directors. A stockholder may communicate with our directors,
including non-management directors, either (1) by writing to the Chief
Legal Officer and Corporate Secretary at Bristol West Holdings, Inc., 5701
Stirling Road, Davie, Florida 33314, Attention: Corporate Governance Hotline,
or
(2) by calling our Corporate Governance Hotline at (800) 819-9714.
Communications intended specifically for our non-management directors should
be
marked “Attention: Non-Management Director Communications.” Communications
intended specifically for our Audit Committee should be marked “Attention: Audit
Committee.” All other director communications should be marked “Attention:
Director Communications.” Our Corporate Governance Hotline will forward to the
Audit Committee all communications specifically directed to that committee
and
will forward all other Hotline communications to our Chief Legal Officer and
Corporate Secretary. Our Chief Legal Officer and Corporate Secretary will
facilitate all such communications. We have posted a summary of this method
of
communicating with our directors on our investor relations website at
www.bristolwest.com/Bristolwest/Investor/Governance.aspx under the tabs entitled
“Contact
the Board”
and
“Corporate
Governance Hotline.”
Item
11. Executive Compensation
The
Compensation Committee is composed of three directors: R. Cary Blair (Chairman),
Richard T. Delaney and Eileen Hilton. For a description of our Board’s
annual assessment of director independence regarding the directors who are
members of this committee, see the disclosure below under the heading
“Item
13. Certain Relationships and Related Transactions, and Director Independence
-
Director Independence.”
The
principal duties and responsibilities of the Compensation Committee are
set
forth in its charter. See the disclosure above under the heading “Item 10.
Directors, Executive Officers and Corporate Governance - Corporate Governance
-
Corporate Governance Documents.”
The
report of the Compensation Committee is included below in this section under
the
heading “Compensation
Committee Report.”
Processes
and Procedures for the Determination of Executive
Compensation
A
substantial portion of the Compensation Committee’s annual efforts relates to
the determination of executive compensation. In the first quarter of each year,
the Compensation Committee typically determines annual base salary, establishes
the criteria for variable annual incentive compensation awards and grants any
long-term incentive compensation awards for executive officers. After the end
of
each year, the Compensation Committee determines the amount of the variable
annual incentive compensation awards by taking into account the financial
results for the completed year and individual performance. The Compensation
Committee’s annual process also includes a review of our executive compensation
programs and practices.
For
each
executive officer, the Compensation Committee is responsible for the
establishment of annual base salary, granting any long-term incentive
compensation awards under the 2004 Stock Incentive Plan for Bristol West
Holdings, Inc. and Subsidiaries (which we refer to as the “2004 Stock
Incentive Plan”), and setting applicable award levels under the Bristol West
Holdings, Inc. Executive Officer Incentive Plan (which we refer to as the “EIP”)
and the Bristol West Holdings, Inc. Management Incentive Plan (which we refer
to
as the “MIP”). Additional disclosure regarding the Compensation Committee’s
executive compensation procedures is included below in this section under the
heading “Narrative
Disclosure to 2006 Summary Compensation Table and 2006 Grants of Plan Based
Awards Table.”
Within
certain limits, the Compensation Committee may delegate its duties and powers
under the 2004 Stock Incentive Plan in whole or in part as it determines,
including to a Board committee or to Bristol West officers. The Compensation
Committee has delegated the right, under specified circumstances, to grant
restricted stock awards under the 2004 Stock Incentive Plan to key employees
who
are not executive officers. The Compensation Committee has delegated this
right to a committee of the Board (which we refer to as the “CEO
Committee”) the sole member of which is a member of the Board who is also
Bristol West’s Chief Executive Officer. The Compensation Committee
authorizes a pool, in dollars, to be utilized by the CEO Committee in making
such awards of restricted stock for recruiting and retention purposes to key
employees who are not executive officers. The CEO Committee approves such grants
on an individual basis and regularly reports such grants to the Compensation
Committee.
The
Compensation Committee evaluates the individual performances of the Chief
Executive Officer, Chief Operating Officer, and Executive Chairman of the Board.
The Compensation Committee also works closely with the Chief Executive Officer
and the Executive Chairman of the Board in evaluating the individual
performances of the other executive officers for purposes of establishing annual
base salaries, approving variable annual incentive compensation awards under
the
EIP and the MIP, and granting any stock-based, long-term incentive compensation
awards under the 2004 Stock Incentive Plan. The Compensation Committee
(1) administers EIP awards and MIP awards for participants who are
executive officers, including the establishment and achievement of performance
goals and the amount of awards; and (2) designates as an EIP participant or
an MIP participant any executive officer whom they deem to be a key employee.
Our Chief Executive Officer, with assistance from our Chief Operating Officer,
performs such functions for MIP participants who are not executive officers.
Additional disclosure regarding the EIP and the MIP is included below in this
section under the heading “Compensation
Discussion and Analysis - Variable Annual Incentive
Compensation.”
Compensation
Advisors.
The
Compensation Committee has the authority under its charter to engage the
services of outside advisors, experts and others to assist the Compensation
Committee. In accordance with this authority, since 2004, the Compensation
Committee has engaged Gough Management Company (which we refer to as the
“Compensation Consultant”) as an independent outside compensation consultant to
assist the committee in evaluating compensation practices and to advise the
committee on other matters related to compensation for the CEO and other
executive officers. During 2006, the Compensation Committee periodically
consulted with the Compensation Consultant regarding its processes and
procedures and for purposes of considering certain compensation component
alternatives.
In
addition, during 2006, Bristol
West management and our Human Resources Department provided
to the Compensation Committee market pay data for various executive positions
supplied to the Human Resources Department by Mercer Human Resource Consulting,
a compensation consultant. The survey data targeted companies of similar size
(based on total assets) and included information regarding various compensation
components, including base salaries, total cash compensation, and long-term
incentive compensation. Bristol West management also provided to the
Compensation Committee additional publicly available data regarding various
compensation components for executive officers at other property and casualty
insurance companies.
COMPENSATION
DISCUSSION
AND
ANALYSIS
Overview
The
Compensation Committee oversees a compensation program designed to further
the
attainment of our strategic goals of growth and profitability and thus increase
stockholder value. While our compensation program applies to all key employees,
including our executive officers, this section focuses primarily on compensation
of our executive officers and, in particular, the executive officers named
in
the “2006 Summary
Compensation Table”
below
(who we refer to as the “named executive officers”). Currently, we have
15 officers that the Board has designated as our executive officers. Our
executive officers have the broadest job responsibilities and policy making
authority at Bristol West.
To
achieve the objectives of our compensation program in 2006, the Compensation
Committee and management concluded that it was important to recruit and retain
highly competent executives and reward them for superior performance.
Accordingly, the Compensation Committee’s general objective in 2006 was to
structure total cash compensation earned by each executive officer to be within
the third quartile (50% to 75%) of total cash compensation paid to similarly
situated executive officers employed by peer companies and other companies
of
similar size within the insurance industry, subject to certain adjustments
based
on specific needs, our financial performance, and the experience and individual
performance of each executive officer. In addition, the Committee made certain
long-term incentive compensation awards to our executive officers during 2006
in
the form of restricted stock for the purpose of retaining these key employees
over a long-term period, providing them direct ownership in our Common Stock
with a view toward preserving stockholder value, and encouraging decisions
related to increased stockholder value in the future.
Compensation
Program Objectives
Our
executive compensation program was designed to further the attainment of our
strategic goals of growth and profitability and thus increase stockholder value.
Our strategic vision is to be the insurer of choice for our distribution force
and policyholders. To achieve this vision, we seek to align all of our business
processes to create value for our policyholders and producers. We aim to
continually refine our sales practices and technology to make it easier for
our
producers and policyholders to do business with us. We also strive to provide
insureds with faster, higher quality and more flexible service when interacting
with our representatives. Our success in achieving this vision is dependent
upon
our senior management team. To succeed, we must recruit and retain highly
competent executives and reward them for superior performance.
The
Compensation Committee structured our executive compensation program to enable
us to continue to appropriately compete for talented and experienced executives
with companies of similar size within the property and casualty insurance
industry. Within this context, the principal objectives for our executive
compensation program are:
· |
Alignment:
Link
executive compensation rewards with growth in earnings and strategic
operational performance that ultimately results in sustainable increases
in stockholder value
|
· |
Motivation:
Motivate
executive officers to be accountable for and accomplish our financial
and
strategic operational objectives
|
· |
Retention
and Attraction: Retain
and attract key executive officers to drive increases in stockholder
value
|
To
achieve our objectives, the compensation program generally includes the
following elements:
· |
Fixed
annual compensation comprised
of annual base salary levels and periodic salary increases that reflect
position characteristics and individual
contributions
|
· |
Variable
annual incentive compensation based
on our
performance relative to our earnings goals and other strategic objectives
as well as individual performance
|
· |
Long-term
incentive compensation in
the form of equity-based awards that reward executive officers for
performance tied to increasing stockholder value, vest over time,
and
encourage stock ownership
|
· |
Broad
based employee benefit programs
in
which our executives are eligible to
participate
|
In
2006,
total compensation for our executive officers included fixed annual compensation
(base salary), variable annual incentive compensation (EIP and MIP awards paid
75% in cash and 25% in restricted stock awards with two-year cliff vesting
provisions), and long-term incentive compensation (paid in restricted stock
awards with five-year cliff vesting provisions), all of which are addressed
in
more detail below.
Fixed
Annual Compensation
Consistent
with our compensation philosophy, the Compensation Committee establishes for
our
executive officers annual base salaries that the committee intends to be
competitive. To determine competitive compensation levels, the Compensation
Committee reviews survey data regarding base salaries paid to similarly situated
executive officers. The nature and source of this survey data is described
above
in this section under the heading “Compensation
Committee - Processes and Procedures for the Determination of Executive
Compensation - Compensation Advisor.”
The
Compensation Committee also determines executive officer annual base salaries
(including any merit increases) based on a combination of data regarding
executive responsibilities, strategic importance of the position, competitive
market rates, and individual performance and contributions.
For
2006,
the Compensation Committee’s objective was to structure total cash compensation
(annual base salary plus the cash portion of annual incentive compensation)
paid
to each executive officer to be within the third quartile (50% to 75%) of total
cash compensation paid to similarly situated executive officers employed by
peer
companies and other companies of similar size within the insurance industry,
subject to adjustment based on our specific needs, our financial performance,
and the experience and individual performance of each executive officer.
The
Compensation Committee typically establishes annual base salaries for the named
executive officers annually during the committee’s first meeting of the year.
The date for that meeting is typically set during the prior year. Changes in
annual base salaries typically are not effective until the first pay period
that
begins after that meeting of the Compensation Committee.
The
Compensation Committee approved the following annual base salaries and salary
increases for the named executive officers during 2006:
Name
and Principal Position
|
|
Date
Effective
|
|
Annual
Base Salary
|
|
Increase
|
|
|
|
|
|
($)
|
|
(%)
|
|
Jeffrey
J. Dailey:
|
|
|
|
|
|
|
|
|
|
|
Chief
Executive Officer and President (1)(2)
|
|
|
7/01/2006
|
|
|
525,000
|
|
|
23.5
|
|
President
and Chief Operating Officer (1)
|
|
|
2/26/2006
|
|
|
425,000
|
|
|
9.0
|
|
|
|
|
2/27/2005
|
|
|
390,000
|
|
|
|
|
Robert
D. Sadler
|
|
|
|
|
|
|
|
|
|
|
Senior
Vice President-Chief Financial Officer (4)(5)
|
|
|
12/08/2006
|
|
|
275,000
|
|
|
17.0
|
|
Senior
Vice President-Marketing (4)
|
|
|
2/26/2006
|
|
|
235,000
|
|
|
3.3
|
|
|
|
|
2/27/2005
|
|
|
227,500
|
|
|
|
|
Craig
E. Eisenacher:
|
|
|
|
|
|
|
|
|
|
|
Senior
Vice President-former Chief Financial Officer (3)
|
|
|
2/26/2006
|
|
|
295,000
|
|
|
4.7
|
|
|
|
|
|
|
|
281,875
|
|
James
R. Fisher:
|
|
|
|
|
|
|
|
|
|
|
Executive
Chairman of the Board (6)(7)
|
|
|
7/01/2006
|
|
|
350,000
|
|
|
(50.0
|
)
|
Chairman
and Chief Executive Officer (6)
|
|
|
2/26/2006
|
|
|
700,000
|
|
|
0.0
|
|
|
|
|
2/27/2005
|
|
|
700,000
|
|
|
|
|
Simon
J. Noonan:
|
|
|
|
|
|
|
|
|
|
|
Executive
Vice President and Chief Operating Officer (8)(9)
|
|
|
7/01/2006
|
|
|
350,000
|
|
|
7.7
|
|
Executive
Vice President -Actuarial/Product (8)
|
|
|
2/26/2006
|
|
|
325,000
|
|
|
10.3
|
|
|
|
|
2/27/2005
|
|
|
294,688
|
|
|
|
|
James
J. Sclafani, Jr.:
|
|
|
|
|
|
|
|
|
|
|
Senior
Vice President-Claims (10)
|
|
|
2/26/2006
|
|
|
300,000
|
|
|
2.2
|
|
|
|
|
2/27/2005
|
|
|
293,550
|
|
|
|
|
(1) |
Mr.
Dailey’s annual base salary increased to $525,000 effective July 1,
2006, when he succeeded Mr. Fisher to become our Chief Executive
Officer.
|
(2) |
On
February 27, 2007, the Compensation Committee set Mr. Dailey’s annual base
salary at $550,000, a 4.8% increase.
|
(3) |
Mr.
Eisenacher resigned effective December 8, 2006, to accept a position
as
Executive Vice President and Chief Financial Officer of Everest Re
Group,
Ltd.
|
(4) |
The
Board appointed Robert D. Sadler as Senior Vice President-Chief Financial
Officer effective December 8, 2006, when he succeeded Mr. Eisenacher.
Mr. Sadler’s annual base salary increased to $275,000 effective
December 8, 2006.
|
(5) |
Effective
February 27, 2007, the Compensation Committee set Mr. Sadler’s annual base
salary at $275,000. Mr. Sadler’s annual base salary was not increased
from the level established in December
2006.
|
(6) |
Mr.
Fisher’s annual base salary decreased effective July 1, 2006, when he
relinquished his title as Chief Executive Officer to Mr. Dailey.
Mr. Fisher’s annual base salary was not changed from the level
established in 2004 in his employment agreement dated as of
January 1, 2004, until July 1, 2006, when it was decreased from
$700,000 to $350,000.
|
(7) |
Effective
February 27, 2007, the Compensation Committee set Mr. Fisher’s annual base
salary at $350,000. Mr. Fisher’s annual base salary was not increased
from the level established in 2006 in his employment agreement dated
as of
May 25, 2006. See the disclosure below in this section under the
heading
“Narrative
Disclosure to 2006 Summary Compensation Table and 2006 Grants of
Plan
Based Awards Table - Salary - Employment
Agreements.”
|
(8) |
Mr. Noonan’s
annual base salary increased effective July 1, 2006, when he
succeeded Mr. Dailey to become Bristol West’s Chief Operating
Officer.
|
(9) |
On
February 27, 2007, the Compensation Committee set Mr. Noonan’s annual base
salary at $360,000, a 2.9% increase.
|
(10) |
On
February 27, 2007, the Compensation Committee set Mr. Sclafani’s annual
base salary at $305,000, a 1.7% increase.
|
For
additional information about fixed annual compensation, see the “2006 Summary
Compensation Table”
below
in this section and the accompanying description under the heading “Narrative
Disclosure to 2006 Summary Compensation Table and 2006 Grants of Plan Based
Awards Table - Salary.”
Variable
Annual Incentive Compensation
The
purpose of each of our EIP and our MIP is to establish and maintain a result
and
profit oriented environment and to motivate and reward eligible employees by
making a portion of their compensation dependent on the achievement of certain
performance goals related to the performance of Bristol West and its affiliates
and operating units. Each of the EIP and MIP aims to align
the
interests of management and Bristol
West towards
the completion of our strategic objectives, while providing incentives to
continuously expand our earning power. The
EIP
and MIP each also seek to tie compensation directly to our business plan and
encourage teamwork in accomplishing our goals. The EIP provides that the
Compensation Committee may grant only objective performance-based awards to
participating executive officers. The MIP provides that the Compensation
Committee may grant awards based on individual performance under the MIP to
all
participants, including executive officers, and may grant objective
performance-based awards to executive officers who are not EIP participants
and
other participants who are not executive officers. As described below in this
section under the heading “Compensation
Discussion and Analysis - Executive Compensation Tax
Compliance,”
the
Compensation Committee intends that the conditions necessary for deductibility
under Internal Revenue Code Section 162(m) will apply to the EIP but not to
the MIP. The Compensation Committee annually establishes the criteria for EIP
awards for the current year during the committee’s first meeting of that year.
The Compensation Committee annually determines the amount of the EIP awards
and
MIP awards during the committee’s first meeting of the year following the year
with respect to which the EIP and MIP awards were earned. The date for each
of
these meetings is typically set during the prior year.
On
February 21, 2006, the Compensation Committee (1) named all of our
executive officers as participants in the EIP and MIP, and (2) approved the
criteria for annual incentive compensation awards to our executive officers
under the EIP and the MIP. The committee determined that each of the 2006 EIP
awards and 2006 MIP awards would be paid 75% in cash and 25% in restricted
stock
awards that cliff vest in two years and are issued under the 2004 Stock
Incentive Plan. See the disclosure below in this section under the heading
“Compensation
Discussion and Analysis - Compensation Program Objectives - Equity-Based
Incentive Compensation.”
At
the
same meeting, the Compensation Committee established a percentage of annual
base
salary to be each executive officer’s 2006 individual bonus target with respect
to both the EIP and the MIP.
The
Compensation Committee determined that 80% of each executive officer’s 2006
individual bonus target would be applied toward awards based on achievement
of
objective, Company-wide performance-based goals determined under the EIP and
the
remaining 20% would be applied toward awards based upon individual goals
determined under the MIP, as measured by the executive officer’s achievement of
his or her performance objectives and contributions to achievement of our
strategic objectives. The maximum 2006 EIP award payable to any executive
officer was $1 million. There was no such limitation under the
MIP.
Consistent
with our compensation philosophy, for 2006, the Compensation Committee’s
objective was to structure total cash compensation (annual base salary plus
the
cash portion of both the EIP award and the MIP award) paid to each executive
officer to be within the third quartile (50% to 75%) of total cash
compensation paid to similarly situated executive officers employed by peer
companies and other companies of similar size within the insurance industry,
subject to adjustment based on our specific needs, our financial performance,
and the experience and individual performance of each executive
officer.
2006
Objective Performance-Based EIP Awards.
On
February 21, 2006, while the outcome was substantially uncertain, as
contemplated by Internal Revenue Code Section 162(m), the Compensation
Committee established the objective, Company-wide performance goal to be applied
with respect to the 2006 EIP awards (which we refer to as the “2006 EIP
objective performance goal”). The 2006 EIP objective performance goal was based
on Bristol West’s 2006 Adjusted Pre-Tax Underwriting Income (as defined below)
measured against pre-tax underwriting income as set forth in Bristol West’s 2006
business plan. For purposes of the EIP in 2006, the Compensation Committee
defined “Adjusted Pre-Tax Underwriting Income” to mean an amount equal to the
following measured for fiscal year 2006: (1) pre-tax income, plus
(2) interest expense, less (3) investment income, less (4) realized
gains on investments, plus (5) realized losses on investments, and adjusted
to reflect (6) the effect of unusual or extraordinary items, unless the
Compensation Committee determines such adjustments to be inconsistent with
the
requirements of Internal Revenue Code Section 162(m)(4)(C). The
Compensation Committee selected this 2006 EIP objective performance goal as
a
means of effectively measuring management’s ability to generate profitable
insurance business without taking into consideration income, losses, or expenses
that are not directly attributable to the generation of insurance
business.
The
2006
EIP objective performance goal that the Compensation Committee adopted included
the following incentive target schedule, including threshold (or minimum)
amounts payable (50% of the individual bonus target), target amounts payable
(100%
of
the individual bonus target)
and
maximum amounts payable (150% of the individual bonus target), with intermediate
percentages to be determined by straight-line interpolation:
Percent
of EIP Individual
Bonus
Target
Paid
|
|
0%
|
|
50%
|
|
75%
|
|
80%
|
|
90%
|
|
100%
|
|
105%
|
|
115%
|
|
130%
|
|
150%
|
|
Adjusted
Pre-Tax
Underwriting
Income (in millions)
|
|
|
<$28.47
|
|
$
|
28.47
|
|
$
|
42.70
|
|
$
|
45.55
|
|
$
|
51.24
|
|
$
|
56.94
|
|
$
|
59.78
|
|
$
|
65.48
|
|
$
|
74.02
|
|
$
|
85.41
|
|
For
purposes of this table, the Compensation Committee determined that the target
percentage (100% of the individual bonus target paid) would be based on 90%
of
pre-tax underwriting income as set forth in Bristol West’s 2006 business
plan.
Based
on
the criteria established by the Compensation Committee on February 21, 2006,
set
forth below for each named executive officer are (1) the EIP portion of the
individual bonus target, (2) the potential payout range for the 2006 EIP
awards; and (3) the threshold, target, and maximum 2006 EIP awards:
Name
|
|
EIP
Individual
Bonus
Target (A)
|
|
EIP
Award
Payout
Range (A)
|
|
Threshold
(50%)
2006
EIP
Award (B)
|
|
Target
(100%)
2006
EIP
Award (B)
|
|
Maximum
(150%)
2006
EIP
Award (B)
|
|
|
|
(%)
|
|
(%)
|
|
($)
|
|
($)
|
|
($)
|
|
Jeffrey
J. Dailey
|
|
|
80
|
|
|
0
to 120
|
|
|
185,600
|
|
|
371,200
|
|
|
556,800
|
|
Robert
D. Sadler
|
|
|
40
|
|
|
0
to 60
|
|
|
47,238
|
|
|
94,476
|
|
|
141,714
|
|
Craig
E. Eisenacher (1)
|
|
|
56
|
|
|
0
to 84
|
|
|
80,305
|
|
|
160,610
|
|
|
240,915
|
|
James
R. Fisher
|
|
|
80
|
|
|
0
to 120
|
|
|
210,000
|
|
|
420,000
|
|
|
630,000
|
|
Simon
J. Noonan
|
|
|
56
|
|
|
0
to 84
|
|
|
92,599
|
|
|
185,197
|
|
|
277,796
|
|
James
J. Sclafani, Jr.
|
|
|
40
|
|
|
0
to 60
|
|
|
59,752
|
|
|
119,504
|
|
|
179,256
|
|
(A)
|
Established
as a percent of annual base salary
|
(B)
|
The
Compensation Committee determined that each 2006 EIP award would
be paid
75% in cash and 25% in restricted stock awards that cliff vest in
two
years.
|
(1) |
Mr.
Eisenacher forfeited his right to receive a 2006 EIP award because
he
resigned effective December 8, 2006, to accept a position as Executive
Vice President and Chief Financial Officer of Everest Re Group,
Ltd.
|
The
Compensation Committee postponed its originally scheduled meeting in February
2007 to a date after the public announcement on March 2, 2007 that Bristol
West
had entered into a merger agreement (which we refer to as the “Farmers Merger
Agreement”) with Farmers Group, Inc. (which we refer to as “Farmers”), pursuant
to which BWH Acquisition Company, currently a wholly-owned subsidiary of Farmers
(which we refer to as “Merger Sub”), will be merged with and into Bristol West,
with Bristol West being the surviving corporation (which transaction we refer
to
as the “Pending Farmers Merger”). For more information regarding the Pending
Farmers Merger, see the disclosure below under the heading “Item
12. Security Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters - Changes in Control.”
On
March
6, 2007, the Compensation Committee determined the amount of the 2006 EIP
objective performance-based awards
utilizing the 2006 EIP objective performance goal. The Compensation Committee
confirmed that Adjusted Pre-Tax Underwriting Income in 2006 was $49.735 million.
The percent of each executive officer’s individual bonus target to be paid,
determined by straight-line interpolation based on the incentive target schedule
described above was approximately 87.35%. The Compensation Committee
approved payment of each 2006 EIP award 75% in cash and 25% in restricted stock
awards that cliff vest on March 6, 2009 and are issued under the 2004 Stock
Incentive Plan. Mr. Fisher recommended that he receive no 2006 EIP award.
The Compensation Committee believed that Mr. Fisher had earned a 2006 EIP
award. However, after discussion, the Compensation Committee concurred
with Mr. Fisher’s recommendation, despite his excellent performance, and
exercised their authority under the EIP to eliminate his 2006 EIP award. The
Committee did not exercise its discretionary right to reduce or eliminate the
amount of any other 2006 EIP award. The EIP provides that payment of any EIP
award is subject to the condition that the executive officer be employed by
Bristol West at the time the award is paid. Accordingly, Mr. Eisenacher
received no 2006 EIP award because he resigned effective December 8, 2006,
to
accept a position as Executive Vice President and Chief Financial Officer of
Everest Re Group, Ltd.
Set
forth
below, for each of the named executive officers who were entitled to receive
an
EIP award, are the cash portion of the 2006 EIP award and the number of shares
of our Common Stock representing the restricted stock portion of the 2006 EIP
award:
Name
|
|
2006
EIP
Cash
Award (A)
|
|
2006
EIP
Stock
Award (A)(B)
|
|
|
|
($)
|
|
(#)
|
|
Jeffrey
J. Dailey
|
|
|
243,182
|
|
|
3,669
|
|
Robert
D. Sadler
|
|
|
61,893
|
|
|
933
|
|
James
R. Fisher
|
|
|
—
|
|
|
—
|
|
Simon
J. Noonan
|
|
|
121,327
|
|
|
1,830
|
|
James
J. Sclafani, Jr.
|
|
|
78,290
|
|
|
1,181
|
|
(A) |
Each
2006 EIP award was paid 75% in cash and 25% in restricted stock awards
that cliff vest on March 6, 2009.
|
(B) |
The
number of shares shown in this column equals the dollar amount of
the
restricted stock award divided by the $22.09 closing market price
of our
Common Stock on March 6, 2007, the date of grant, as reported on
the NYSE,
rounded down to the nearest whole
share.
|
For
additional information about the stock component of the 2006 EIP awards, see
the
disclosure below in this section under the heading “Compensation
Discussion and Analysis - Compensation Program Objectives - Equity-Based
Incentive Compensation.”
For
additional information about the cash component of the 2006 EIP awards, see
the
“Non-Equity
Incentive Plan Compensation”
column
of the “2006 Summary
Compensation Table”
below,
and see the accompanying description under the heading “Narrative
Disclosure to 2006 Summary Compensation Table and 2006 Grants of Plan Based
Awards Table - Non-Equity Incentive Plan Awards.”
2006
Performance-Based MIP Awards.
At its
March 6, 2007 meeting, the Compensation Committee determined the amount of
the
2006 MIP awards. The 2006 MIP awards were based on Bristol West’s
2006 Adjusted Pre-Tax Underwriting Income of $49.735 million, an incentive
target schedule based on the schedule applied to determine the amount of the
2006 EIP awards, and MIP individual bonus targets equal to 20% of each
participant's individual bonus target. The Compensation Committee approved
payment of each 2006 MIP award 75% in cash and 25% in restricted stock awards
that cliff vest on March 6, 2009 and are issued under the 2004 Stock Incentive
Plan. Mr. Fisher recommended that he receive no 2006 MIP award. The
Compensation Committee believed that Mr. Fisher had earned an MIP
award. However, after discussion, the Compensation Committee concurred
with Mr. Fisher’s recommendation, despite his excellent performance. The
MIP provides that payment of any MIP award is subject to the condition that
the
participant be employed by Bristol West at time the award is paid. Accordingly,
Mr. Eisenacher received no 2006 MIP award because he resigned effective
December 8, 2006, to accept a position as Executive Vice President and Chief
Financial Officer of Everest Re Group, Ltd.
Set forth
below, for each of the named executive officers who were entitled to receive
an
MIP award, are the cash portion of the 2006 MIP award and the number of shares
of our Common Stock representing the restricted stock portion of the 2006 MIP
award:
Name
|
|
2006
MIP
Cash
Award (A)
|
|
2006
MIP
Stock
Award (A)(B)
|
|
|
|
($)
|
|
(#)
|
|
Jeffrey
J. Dailey
|
|
|
60,796
|
|
|
918
|
|
Robert
D. Sadler
|
|
|
15,473
|
|
|
234
|
|
James
R. Fisher
|
|
|
—
|
|
|
—
|
|
Simon
J. Noonan
|
|
|
30,332
|
|
|
459
|
|
James
J. Sclafani, Jr.
|
|
|
19,573
|
|
|
296
|
|
(A) |
Each
2006 MIP award was paid 75% in cash and 25% in restricted stock awards
that cliff vest on March 6, 2009.
|
(B) |
The
number of shares shown in this column equals the dollar amount of
the
restricted stock award divided by the $22.09 closing market price
of our
Common Stock on March 6, 2007, the date of grant, as reported on
the NYSE,
rounded to the nearest whole number of
shares.
|
For
additional information about the stock component of the 2006 MIP awards, see
the
disclosure below in this section under the heading “Compensation
Discussion and Analysis - Compensation Program Objectives - Equity-Based
Incentive Compensation.”
For
additional information about the cash component of the 2006 EIP awards, see
the
“Bonus”
column
of the “2006 Summary
Compensation Table”
below,
and see the accompanying description under the heading “Narrative
Disclosure to 2006 Summary Compensation Table and 2006 Grants of Plan Based
Awards Table - Bonus Awards.”
Equity-Based
Incentive Compensation
EIP
and MIP Restricted Stock Awards.
In
accordance with the EIP and MIP, the Compensation Committee provided that 25%
of
each 2006 EIP award and 2006 MIP award was payable as restricted stock awards.
These restricted stock awards cliff vest two years after the grant date and
were
granted under the 2004 Stock Incentive Plan. The Compensation Committee
determined that it was appropriate to grant the EIP and MIP restricted stock
awards primarily for the purpose of retaining our executive officers and other
key employees. In addition, the Compensation Committee intended that these
awards provide our executive officers and other key employees with direct
ownership in our Common Stock with a view toward preserving stockholder value
and encouraging decisions related to increased stockholder value in the
future.
The
Compensation Committee typically grants such EIP and MIP restricted stock awards
at the first Compensation Committee meeting of the year following the year
in
which it established the criteria for the EIP and MIP awards. The date for
that
meeting is typically set during the prior year.
For
additional information about MIP and EIP restricted stock awards, see the
disclosure above in this section under the heading “Compensation
Discussion and Analysis - Compensation Program Objectives - Variable Annual
Incentive Compensation.”
Long-Term
Incentive Compensation.
From
time to time, the Compensation Committee grants restricted stock awards under
the 2004 Stock Incentive Plan for the purpose of retaining key employees,
including executive officers, over a long-term period, providing them direct
ownership in our Common Stock with a view toward preserving stockholder value
and encouraging decisions related to increased stockholder value in the future.
These restricted stock awards typically cliff vest five years after the grant
date. The Compensation Committee typically makes any such restricted stock
awards during the committee’s first meeting of the year. The date for that
meeting is typically set during the prior year.
On
February 21, 2006, the Compensation Committee granted the following long-term
restricted stock awards to the named executive officers:
Name
|
|
Number
of Shares (A)
|
|
|
|
(#)
|
|
Jeffrey
J. Dailey
|
|
|
18,717
|
|
Robert
D. Sadler
|
|
|
8,021
|
|
Craig
E. Eisenacher (1)
|
|
|
16,043
|
|
James
R. Fisher (2)
|
|
|
—
|
|
Simon
J. Noonan
|
|
|
17,380
|
|
James
J. Sclafani, Jr.
|
|
|
13,369
|
|
(A) |
The
number of shares reflected equals the dollar amount of the restricted
stock award divided by the $18.70 closing market price of our Common
Stock
on February 21, 2006, the date of grant, as reported on the NYSE,
rounded to the nearest number of whole shares.
|
(1) |
Mr.
Eisenacher forfeited all of his unvested restricted stock awards
because
he resigned effective December 8, 2006, to accept a position as Executive
Vice President and Chief Financial Officer of Everest Re Group,
Ltd.
|
(2) |
Mr.
Fisher recommended that no restricted stock be awarded to him, and
the
Compensation Committee accepted his recommendation, despite his excellent
performance.
|
These
restricted stock awards will cliff vest on February 21, 2011 and will be
forfeited if the recipient’s employment with Bristol West terminates before the
vesting date, except for death or disability. The vesting of these restricted
stock awards is accelerated in full for certain mergers, sales or other business
combinations and for death or disability, including upon the consummation of
the
Pending Farmers Merger.
For
additional information about equity-based incentive
compensation, see also the disclosure below in this section under the heading
“Narrative
Disclosure to 2006 Summary Compensation Table and 2006 Grants of Plan Based
Awards Table - Stock Awards”
and
the
table below in this section under the heading “Outstanding
Equity Awards at Fiscal Year-End.”
Other
Benefits and Perquisites
Bristol
West makes the following benefits available to the named executive officers
on
the same non-discriminatory basis as they are generally available to all
employees: a medical plan, a dental plan, a vision plan, life insurance,
accidental death and dismemberment coverage, business travel accident insurance,
short term disability, long term disability, medical care and dependent care
flexible spending accounts, retirement benefits under The Bristol West
Retirement Plan (which we refer to as the “401(k) Plan”) (including matching
contributions by Bristol West), an employee assistance program, an educational
assistance program, personal time off, and paid holidays.
We
also
provide company cars to certain employees who have a business need for a car,
including certain named executive officers. These named executive officers
are
permitted to use their company cars for personal purposes (which we refer to
as
“fleet car personal use”). We include the value of fleet car personal use in the
2006 compensation of each such named executive officer (which we refer to as
“fleet car compensation”). We also pay these named executive officers additional
compensation to cover the cost of additional taxes associated with fleet car
compensation.
For
additional disclosure regarding this compensation component, see the
“2006 Summary
Compensation Table”
and
the
accompanying description under the heading “Narrative
Disclosure to 2006 Summary Compensation Table and 2006 Grants of Plan Based
Awards Table - All Other Compensation.”
Potential
Payments Upon Termination of Employment or Change in Control
The
Compensation Committee approved an employment agreement between Bristol West
and
James R. Fisher dated as of May 25, 2006. Under the employment agreement,
Mr. Fisher serves as Bristol West’s Executive Chairman of the Board for a term
expiring on June 30, 2007. For a description of the provisions of this agreement
relating to James R. Fisher’s employment, see the disclosure below in this
section under the heading “Executive
Compensation - Narrative
Disclosure to 2006 Summary Compensation Table and 2006 Grants of Plan Based
Awards Table - Salary -
`Employment
Agreements.”
The
employment agreement also provides that if Mr. Fisher’s employment is terminated
under specified circumstances, Mr. Fisher will be entitled to receive a
specified severance. For a description of the provisions of this agreement
relating to severance, see the disclosure below in this section under the
heading “Executive
Compensation - Potential
Payments Upon Termination of Employment or Change in
Control.”
Bristol
West is a party to severance arrangements with other named executive officers
that were entered into before Bristol West’s initial public offering in February
2004. For a description of these severance arrangements, see the disclosure
below in this section under the heading “Executive
Compensation - Potential
Payments Upon Termination of Employment or Change in
Control.”
Executive
Compensation Tax Compliance
The
Compensation Committee strives, where appropriate, to provide for executive
officer compensation that is tax deductible to Bristol West. In certain
circumstances, Section 162(m) of the Internal Revenue Code may deny a federal
income tax deduction for compensation in excess of $1 million paid in any
fiscal year to a company’s CEO or other four most highly compensated executive
officers (who we refer to for this purpose as “covered officers”). Certain
compensation paid to covered officers that qualifies as objective
performance-based compensation pursuant to a plan approved by stockholders
is
exempt from the Section 162(m) deduction limit.
The
Compensation Committee has reviewed the applicability to our executive
compensation program of Internal Revenue Code Section 162(m). It is the
Compensation Committee’s intention that Bristol West will qualify certain
compensation paid to its executive officers for deductibility under the Internal
Revenue Code, including Section 162(m). Specifically, the Compensation
Committee intends that the conditions necessary for deductibility under
Section 162(m) will apply to the EIP, pursuant to which all executive
officers (including covered officers) are eligible for objective
performance-based compensation. Accordingly, the Compensation Committee and
the
Board submitted the EIP to Bristol West’s stockholders for approval. On May 19,
2006, Bristol West’s stockholders approved the EIP. The Compensation Committee
does not expect MIP awards to qualify as performance-based compensation under
Section 162(m).
The
Compensation Committee also believes that the interests of Bristol West and
its
stockholders may sometimes be best served by providing compensation that is
not
deductible in order to attract, retain, motivate and reward executive talent.
Accordingly, the Compensation Committee intends to retain the flexibility to
provide for compensation that is not tax deductible. No compensation that
Bristol West paid during 2006 to any covered officer was subject to the Internal
Revenue Code Section 162(m) deduction limitation.
It
is
also the Compensation Committee’s intention to take such actions as the
committee considers appropriate to cause Bristol West’s executive compensation
program to comply with Internal Revenue Code Section 409A, while retaining
the flexibility to provide for compensation that does not comply.
COMPENSATION
COMMITTEE REPORT
The
Compensation Committee of Bristol West’s Board of Directors is composed of three
directors each of whom is “independent” using the independence definition and
procedures set forth in Bristol West’s Corporate Governance Guidelines, the
corporate governance standards of the NYSE, and applicable rules and regulations
of the SEC. Each member of the Compensation Committee also (1) qualifies as
a “non-employee director” for purposes of Rule 16b-3 of the Exchange Act
and (2) satisfies the requirements of an “outside director” for purposes of
Section 162(m) of the Internal Revenue Code. The Compensation Committee operates
pursuant to a charter, a copy of which is available at
www.bristolwest.com/Bristolwest/Investor/Governance.aspx, Bristol West’s
investor relations website. See the disclosure above under the heading
“Item
10. Directors, Executive Officers and Corporate Governance - Corporate
Governance - Corporate Governance Documents.”
For
a
description of the Compensation Committee’s responsibilities, policies and
procedures, see the disclosure above in this section under the heading
“Compensation
Committee.”
The
Compensation Committee reviewed the information above in this section under
the
heading “Compensation
Discussion and Analysis”
(which
is referred to in this report as the “Compensation Discussion and Analysis”).
The Compensation Committee also discussed the Compensation Discussion and
Analysis with our management. Based on such review and discussions, the
Compensation Committee recommended to Bristol West’s Board of Directors that the
Compensation Discussion and Analysis be included in this Amendment No. 1 to
Bristol West’s Annual Report on Form 10-K for the year ended December 31,
2006.
R.
Cary
Blair (Compensation Committee Chairperson)
Richard
T. Delaney (Compensation Committee member)
Eileen
Hilton (Compensation Committee member)
2006
Summary Compensation Table
The
table
below reflects compensation earned for services performed during 2006 by the
named executive officers, who are our Chief Executive Officer, our Senior Vice
President-Chief Financial Officer as of December 8, 2006, our former Senior
Vice President-Chief Financial Officer who also served during 2006, and the
three other most highly compensated executive officers with respect to 2006.
The
information set forth in this table is described in more detail below in this
section under the heading “Narrative
Disclosure to 2006 Summary Compensation Table and 2006 Grants of Plan Based
Awards Table.”
Name
and Principal Position
|
|
Year
|
|
Salary
|
|
Bonus
|
|
Stock
Awards
|
|
Option
Awards
|
|
Non-Equity
Incentive
Plan
Compensation
|
|
All
Other
Compensation
|
|
Total
|
|
|
|
|
|
($)
|
|
($)
|
|
($)
|
|
($)
|
|
($)
|
|
($)
|
|
($)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jeffrey
J. Dailey, Chief Executive Officer and President
|
|
|
2006
|
|
|
469,615
|
|
|
60,796
|
|
|
325,660
|
|
|
2,303
|
|
|
243,182
|
|
|
45,034
|
(1)
|
|
1,146,590
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert
D. Sadler, Senior Vice President-Chief Financial Officer
|
|
|
2006
|
|
|
237,798
|
|
|
15,473
|
|
|
101,441
|
|
|
557
|
|
|
61,894
|
|
|
13,923
|
(2)
|
|
431,086
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Craig
E. Eisenacher, former Senior Vice President-Chief Financial
Officer
|
|
|
2006
|
|
|
298,864
|
|
|
—
|
|
|
(193,208
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
105,656
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
James
R. Fisher, Executive Chairman of the Board
|
|
|
2006
|
|
|
525,000
|
|
|
—
|
|
|
124,998
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
649,998
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Simon
J. Noonan, Executive Vice President and Chief Operating
Officer
|
|
|
2006
|
|
|
332,837
|
|
|
30,332
|
|
|
201,912
|
|
|
1,114
|
|
|
121,327
|
|
|
35,889
|
(3)
|
|
723,411
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
James
J. Sclafani, Jr., Senior Vice President-Claims
|
|
|
2006
|
|
|
299,007
|
|
|
19,573
|
|
|
145,819
|
|
|
780
|
|
|
78,290
|
|
|
30,768
|
(4)
|
|
574,237
|
|
(1) |
This
amount for Mr. Dailey includes: (1) 401(k) Plan company
contributions; (2) fleet car personal use; and (3) restricted stock
accumulated dividends of $24,975.
|
(2) |
This
amount for Mr. Sadler includes: (1) 401(k) Plan company
contributions; and (2) restricted stock accumulated dividends of
$7,923.
|
(3) |
This
amount for Mr. Noonan includes: (1) 401(k) Plan company
contributions; (2) fleet car personal use; and (3) restricted stock
accumulated dividends of $15,543.
|
(4) |
This
amount for Mr. Sclafani includes: (1) 401(k) Plan company
contributions; (2) fleet car personal use; and (3) restricted stock
accumulated dividends of $11,409.
|
2006
Grants of Plan-Based Awards
The
following table presents information on plan-based awards granted to the named
executive officers during 2006. The information set forth in this table is
described in more detail below in this section under the heading “Narrative
Disclosure to 2006 Summary Compensation Table and 2006 Grants of Plan Based
Awards Table.”
|
|
|
|
|
|
|
|
All
Other Stock Awards: Number of Shares of Stock or
Units
|
|
Grant
Date
Fair
Value
of
Stock
Awards
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Estimated
Possible
Payouts Under Non-Equity Incentive Plan Awards
|
|
Estimated
Possible Payouts Under Equity Incentive Plan
Awards
|
|
Name
|
|
Grant
Date
|
|
Threshold
|
|
Target
|
|
Maximum
|
|
Threshold
|
|
Target
|
|
Maximum
|
|
|
|
|
|
($)
|
|
($)
|
|
($)
|
|
($)
|
|
($)
|
|
($)
|
|
(#)
|
|
($)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jeffrey
J. Dailey
|
|
|
2/21/2006(1)
|
|
|
139,200
|
|
|
278,400
|
|
|
417,600
|
|
|
46,400
|
|
|
92,800
|
|
|
139,200
|
|
|
|
|
|
|
|
|
|
|
2/21/2006(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
18,717
|
|
|
350,008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert
D. Sadler
|
|
|
2/21/2006(1)
|
|
|
35,429
|
|
|
70,857
|
|
|
106,286
|
|
|
11,810
|
|
|
23,619
|
|
|
35,429
|
|
|
|
|
|
|
|
|
|
|
2/21/2006(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,021
|
|
|
149,993
|
|
|
|
|
2/21/2006(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
401
|
|
|
7,499
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Craig
E. Eisenacher (4)
|
|
|
2/21/2006(1)
|
|
|
60,229
|
|
|
120,457
|
|
|
180,686
|
|
|
20,076
|
|
|
40,152
|
|
|
60,229
|
|
|
|
|
|
|
|
|
|
|
2/21/2006(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
16,043
|
|
|
300,004
|
|
|
|
|
2/21/2006(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,029
|
|
|
19,242
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
James
R. Fisher
|
|
|
2/21/2006(1)
|
|
|
157,500
|
|
|
315,000
|
|
|
472,500
|
|
|
52,500
|
|
|
105,000
|
|
|
157,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Simon
J. Noonan
|
|
|
2/21/2006(1)
|
|
|
69,449
|
|
|
138,898
|
|
|
208,347
|
|
|
23,150
|
|
|
46,299
|
|
|
69,449
|
|
|
|
|
|
|
|
|
|
|
2/21/2006(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
17,380
|
|
|
325,006
|
|
|
|
|
2/21/2006(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,003
|
|
|
18,756
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
James
J. Sclafani, Jr.
|
|
|
2/21/2006(1)
|
|
|
44,814
|
|
|
89,628
|
|
|
134,442
|
|
|
14,938
|
|
|
29,876
|
|
|
44,814
|
|
|
|
|
|
|
|
|
|
|
2/21/2006(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13,369
|
|
|
250,000
|
|
|
|
|
2/21/2006(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
869
|
|
|
16,250
|
|
(1)
|
This
row reflects the separate components of the possible 2006 EIP award
payouts. The grant date reflected in this row is the date on which
the
Compensation Committee approved the criteria for the 2006 EIP
awards.
|
(2) |
This
row reflects long-term incentive compensation awarded under the 2004
Stock
Incentive Plan.
|
(3) |
This
row reflects the 25% portion of a 2005 bonus award, which we paid
during
2006 under our predecessor bonus plan with respect to executive officer
performance during 2005.
|
(4) |
Mr.
Eisenacher forfeited all of his unvested restricted stock and was
not
entitled to receive his 2006 EIP award because he resigned effective
December 8, 2006, to accept a position as Executive Vice President
and
Chief Financial Officer of Everest Re Group,
Ltd.
|
Narrative
Disclosure to 2006 Summary Compensation Table and 2006 Grants of Plan Based
Awards Table
Salary
The
“Salary”
column
in the “2006 Summary
Compensation Table”
above
reflects annual base salary earned for services performed during 2006 by the
named executive officers, including deferred compensation pursuant to the
401(k) Plan.
Annual
base salaries are described above in this section under the heading
“Executive
Compensation - Compensation Discussion and Analysis - Compensation Elements
-
Fixed Annual Compensation.”
The
Compensation Committee typically establishes annual base salaries for the named
executive officers annually during the committee’s first meeting of the year.
These annual salaries typically are not effective until the first pay period
after the committee meeting. The Compensation Committee established
approximately two months of the 2006 annual base salaries on February 22, 2005
and the remaining approximately 10 months of the 2006 annual base salaries
on
February 21, 2006.
Employment
Agreements.
The
Compensation Committee established James R. Fisher’s annual base salary during
2006 in accordance with his employment agreement. Bristol West entered into
an
employment agreement with James R. Fisher dated as of May 25, 2006 and
effective as of July 1, 2006. Under this agreement, Mr. Fisher will
serve as our Executive Chairman of the Board for a term expiring on
June 30, 2007. While employed under this agreement, Mr. Fisher is
entitled to receive an annual base salary of no less than $350,000 (subject
to
change at the sole discretion of the Compensation Committee) and will be
eligible to receive an annual bonus in an amount determined by the Compensation
Committee. Pursuant to Mr. Fisher’s previous employment agreement with
Bristol West, he served as our Chairman and Chief Executive Officer for a term
that expired on June 30, 2006. While employed under this agreement,
Mr. Fisher was entitled to receive an annual base salary of $700,000 and
was eligible to receive an annual bonus in an amount determined by the
Compensation Committee of the Board. Effective July 1, 2006,
Mr. Fisher relinquished his position as our Chief Executive
Officer.
No
other
named executive officer is a party to an agreement with Bristol West pursuant
to
which his annual base salary, bonus or other compensation reflected in the
“2006 Summary
Compensation Table”
above
is addressed. Bristol West is a party to severance arrangements with the
named executive officers pursuant to which they are entitled to receive certain
severance benefits, as described below in this section under the heading
“Executive
Compensation - Potential Payments Upon Termination of Employment or Change
in
Control.”
Bonus
Awards
Under
applicable SEC rules, the “Bonus”
column
in the “2006 Summary
Compensation Table”
above
reflects all bonus compensation intended to serve as incentive for performance
to occur over a specified period (including periods less than one year) that
is
not required to be disclosed in the “Non-Equity
Incentive Plan Compensation”
column,
as described below in this section under the heading “Non-Equity
Incentive Plan Awards”
and
does not fall within the scope of Financial Accounting Standards No. 123
(revised), “Share-Based
Payment”
(which
we refer to as “FAS 123(R)”). The “Bonus”
column
reflects the cash portion of each named executive officer’s 2006 MIP award. In
accordance with the MIP, on March 6, 2007, the Compensation Committee determined
the total amount of the 2006 MIP awards and the portion payable in cash during
2007, with respect to executive officer performance during 2006. At that time,
the Compensation Committee determined that 75% of all 2006 MIP awards would
be
paid in cash. The 2006 MIP awards are described above in this section under
the
heading “Compensation
Discussion and Analysis - Compensation Elements - Variable Annual Incentive
Compensation - 2006 Performance-Based MIP Awards.”
Stock
Awards
Under
applicable SEC rules, the “Stock
Awards”
column
in the “2006 Summary
Compensation Table”
above
reflects all compensation expense recognized during 2006 pursuant to
FAS 123(R) with respect to stock-based awards other than options. The
“Stock
Awards”
column
reflects the compensation expense that we recognized during 2006, without any
reduction for risk of forfeiture, with respect to outstanding, unvested
restricted stock awards that the Compensation Committee granted
to each named executive officer during 2006, 2005 and 2004 under the 2004
Stock Incentive Plan. We amortize this compensation expense over the vesting
period. This compensation expense equals the number of shares of restricted
stock multiplied by the FAS 123(R) grant date fair value (computed
utilizing the same calculations and assumptions applied by Bristol West for
financial statement reporting purposes as reflected in “Note
10 - Stock
Ownership - Recent Accounting Pronouncements”
to
the
Consolidated Financial Statements appearing in the Original Report) and divided
by the portion of the two-year or five-year vesting period that occurred during
2006. To determine the FAS 123(R) grant date fair value, we used the last
reported closing market price per share of our Common Stock on the grant date,
as reported on the NYSE. The FAS 123(R) grant date fair value for each such
award included in the total reflected for each named executive officer in the
“Stock
Awards”
column
in the “2006 Summary
Compensation Table”
above
is listed separately in the table below in this section. The amounts in the
“Grant
Date Fair Value of Stock Awards”
column
of the “Grants
of Plan Based Awards”
table
also reflect the FAS 123(R) grant date fair value for the restricted stock
awards reflected in the table. The amounts in the “Stock
Awards”
column
in the “2006 Summary
Compensation Table”
and
in
the “Grant
Date Fair Value of Stock Awards”
column
of the “Grants
of Plan Based Awards”
table
reflect the values described above and do not correspond to the actual value
that the named executive officer will recognize with respect to such
awards.
Pursuant
to each award agreement, the named executive officer does not have the right
to
receive quarterly dividends with respect to the shares of restricted stock
(which we refer to as “restricted stock accumulated dividends”). Pursuant to the
award agreement, we pay these restricted stock accumulated dividends only after
the restricted stock vests and at the same rate as for all other shares of
our
Common Stock. Restricted stock accumulated dividends are not factored into
the
calculation of the award’s FAS 123(R) grant date fair value. Accordingly,
in accordance with applicable SEC rules, these restricted stock accumulated
dividends are not reflected in the “Stock
Awards”
column
of the “2006 Summary
Compensation Table”
or
in
the “Grant
Date Fair Value of Stock Awards”
column
of the “Grants
of Plan Based Awards”
table.
These restricted stock accumulated dividends are reflected in the “All
Other Compensation”
column
of the “2006 Summary
Compensation Table,”
which
is described below in this section under the heading “All
Other Compensation - Restricted Stock Accumulated
Dividends.”
The
following table reflects each of the restricted stock awards held by the named
executive officers with respect to which we recognized compensation expense
during 2006 in accordance with FAS 123(R):
Name
|
|
Restricted
Shares
|
|
FAS
123(R)
Grant
Date
Fair
Value
|
|
Grant
Date
Closing
Price
(A)
|
|
Grant
Date
|
|
Vesting
Date
|
|
2006
Expense
|
|
|
|
(#)
|
|
($)
|
|
($)
|
|
|
|
|
|
($)
|
|
Jeffrey
J. Dailey
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
18,717
|
|
|
350,008
|
|
|
18.70
|
|
|
2/21/2006
|
|
|
2/21/2011
|
|
|
60,029
|
|
|
|
|
4,204
|
|
|
71,258
|
|
|
16.95
|
|
|
2/22/2005
|
|
|
2/22/2007
|
|
|
35,629
|
|
|
|
|
8,850
|
|
|
150,008
|
|
|
16.95
|
|
|
2/22/2005
|
|
|
2/22/2010
|
|
|
30,001
|
|
|
|
|
54,348
|
|
|
1,000,003
|
|
|
18.40
|
|
|
5/14/2004
|
|
|
5/14/2009
|
|
|
200,001
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert
D. Sadler
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
401
|
|
|
7,499
|
|
|
18.70
|
|
|
2/21/2006
|
|
|
2/21/2008
|
|
|
3,215
|
|
|
|
|
8,021
|
|
|
149,993
|
|
|
18.70
|
|
|
2/21/2006
|
|
|
2/21/2011
|
|
|
25,725
|
|
|
|
|
885
|
|
|
15,001
|
|
|
16.95
|
|
|
2/22/2005
|
|
|
2/22/2007
|
|
|
7,500
|
|
|
|
|
4,425
|
|
|
75,004
|
|
|
16.95
|
|
|
2/22/2005
|
|
|
2/22/2010
|
|
|
15,001
|
|
|
|
|
13,587
|
|
|
250,001
|
|
|
18.40
|
|
|
5/14/2004
|
|
|
5/14/2009
|
|
|
50,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Craig
E. Eisenacher (1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,029
|
|
|
19,242
|
|
|
18.70
|
|
|
2/21/2006
|
|
|
2/21/2008
|
|
|
—
|
|
|
|
|
16,043
|
|
|
300,004
|
|
|
18.70
|
|
|
2/21/2006
|
|
|
2/21/2011
|
|
|
—
|
|
|
|
|
1,770
|
|
|
30,002
|
|
|
16.95
|
|
|
2/22/2005
|
|
|
2/22/2007
|
|
|
(12,823
|
)
|
|
|
|
5,900
|
|
|
100,005
|
|
|
16.95
|
|
|
2/22/2005
|
|
|
2/22/2010
|
|
|
(17,097
|
)
|
|
|
|
27,174
|
|
|
500,002
|
|
|
18.40
|
|
|
5/14/2004
|
|
|
5/14/2009
|
|
|
(163,288
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
James
R. Fisher
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
14,749
|
|
|
249,996
|
|
|
16.95
|
|
|
2/22/2005
|
|
|
2/22/2007
|
|
|
124,998
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Simon
J. Noonan
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,003
|
|
|
18,756
|
|
|
18.70
|
|
|
2/21/2006
|
|
|
2/21/2008
|
|
|
8,042
|
|
|
|
|
17,380
|
|
|
325,006
|
|
|
18.70
|
|
|
2/21/2006
|
|
|
2/21/2011
|
|
|
55,741
|
|
|
|
|
2,139
|
|
|
36,256
|
|
|
16.95
|
|
|
2/22/2005
|
|
|
2/22/2007
|
|
|
18,128
|
|
|
|
|
5,900
|
|
|
100,005
|
|
|
16.95
|
|
|
2/22/2005
|
|
|
2/22/2010
|
|
|
20,001
|
|
|
|
|
27,174
|
|
|
500,002
|
|
|
18.40
|
|
|
5/14/2004
|
|
|
5/14/2009
|
|
|
100,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
James
J. Sclafani, Jr.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
869
|
|
|
16,250
|
|
|
18.70
|
|
|
2/21/2006
|
|
|
2/21/2008
|
|
|
6,967
|
|
|
|
|
13,369
|
|
|
250,000
|
|
|
18.70
|
|
|
2/21/2006
|
|
|
2/21/2011
|
|
|
42,877
|
|
|
|
|
1,106
|
|
|
18,747
|
|
|
16.95
|
|
|
2/22/2005
|
|
|
2/22/2007
|
|
|
9,373
|
|
|
|
|
5,900
|
|
|
100,005
|
|
|
16.95
|
|
|
2/22/2005
|
|
|
2/22/2010
|
|
|
20,001
|
|
|
|
|
18,098
|
|
|
333,003
|
|
|
18.40
|
|
|
5/14/2004
|
|
|
5/14/2009
|
|
|
66,601
|
|
(A)
|
Based
on the last reported closing price per share of our Common Stock
on the
grant date, as reported on the
NYSE.
|
(1)
|
We
recognized negative compensation cost during 2006 with respect to
Mr.
Eisenacher’s restricted stock awards because Mr. Eisenacher forfeited all
of such restricted shares when he resigned effective December 8,
2006, to
accept a position as Executive Vice President and Chief Financial
Officer
of Everest Re Group, Ltd.
|
In
accordance with the EIP, the Compensation Committee approved the criteria for
the 2006 EIP awards on February 21, 2006 with respect to executive officer
performance during 2006. The committee determined that 25% of the 2006 EIP
awards would be paid as restricted stock awards. On March 6, 2007, the
Compensation Committee determined the total amount of the 2006 MIP awards and
the portion payable by a grant of restricted stock awards. These restricted
stock awards are not reflected in the “Stock
Awards”
column
in the “2006 Summary
Compensation Table”
above
because we did not recognize any compensation expense during 2006 pursuant
to
FAS 123(R) with respect to such awards. The columns under the heading
“Estimated
Possible Payouts Under Equity Incentive Plan Awards”
in
the
“Grants
of Plan Based Awards”
table
reflect the dollar values of the threshold (or minimum) amounts payable by
a
grant of restricted stock awards (50% of EIP individual bonus target), target
amounts payable by a grant of restricted stock awards (100% of EIP individual
bonus target), and maximum amounts payable by a grant of restricted stock awards
(150% of EIP individual bonus target) with respect to each named executive
officer’s 2006 EIP award in accordance with the award criteria that the
Compensation Committee established on February 21, 2006. The 2006 EIP awards
for
the named executive officers, including the actual number of shares of
restricted stock granted on March 6, 2007 with respect to each such award and
the method used to calculate the number of shares, are described above in this
section under the heading “Compensation
Discussion and Analysis - Variable Annual Incentive Compensation -
2006 Objective Performance-Based EIP Awards.”
The
“All
Other Stock Awards”
column
in the “Grants
of Plan Based Awards”
table
reflects the following:
· |
Restricted
stock awards granted as long-term incentive compensation on
February 21, 2006 to the named executive officers pursuant to the
2004 Stock Incentive Plan. This restricted stock will vest on
February 21, 2011.
|
· |
Restricted
stock awards granted as bonus compensation on February 21, 2006 under
our predecessor bonus plan with respect to executive officer performance
in 2005. This restricted stock will vest on February 21,
2008.
|
These
restricted stock awards are described in more detail above in this
section under
the
headings “Compensation
Discussion and Analysis - Compensation Elements - Variable Annual Incentive
Compensation - 2006 Objective Performance-Based EIP
Awards”
and
“Compensation
Discussion and Analysis - Compensation Elements - Equity-Based Incentive
Compensation.”
More
information regarding these restricted stock awards is also reflected below
in
this section in
the
“Outstanding
Equity Awards at Fiscal Year-End”
table.
For information about the cash portions of the EIP awards, see the disclosure
in
this section under the heading “Non-Equity
Incentive Plan Awards.”
The
award
agreement for each of these restricted stock awards provides that the award
will
be forfeited if the executive officer’s employment with Bristol West terminates
before the vesting date, except for death or disability. Each award agreement
also provides that the vesting conditions for the award will be accelerated
in
full for death or disability and for certain mergers, sales or other business
combinations, including upon the consummation of the Pending Farmers Merger.
Pursuant to each award agreement, the named executive officer has sole voting
power with respect to the shares of restricted stock, but does not have
investment power or the right to receive quarterly dividends with respect to
the
shares. We will pay restricted stock accumulated dividends to the named
executive officers holding restricted stock only after the shares of restricted
stock vest pursuant to the terms of the award agreement. We pay these restricted
stock accumulated dividends at the same rate as for all other shares of our
Common Stock.
Option
Awards
Under
applicable SEC rules, the “Option
Awards”
column
in the “2006 Summary
Compensation Table”
above
reflects all compensation expense recognized during 2006 pursuant to
FAS 123(R) with respect to option awards. The “Option
Awards”
column
in the “2006 Summary
Compensation Table”
reflects the compensation expense that we recognized during 2006, without any
reduction for risk of forfeiture, with respect to outstanding, unvested option
awards that the Compensation Committee granted on April 5, 2004
to each named executive officer under the 2004 Stock Incentive Plan. We
amortize this compensation expense over the vesting period. This compensation
expense equals the number of option shares awarded multiplied by the
FAS 123(R) grant date fair value (computed utilizing the same
calculations and assumptions applied by Bristol West for financial statement
reporting purposes as reflected in “Note
10 - Stock
Ownership - Recent Accounting Pronouncements”
to
the
Consolidated Financial Statements appearing in the Original Report) and divided
by the portion of the two-year vesting period that occurred during 2006. We
used
the Black-Scholes option-pricing model to estimate the grant date fair value
of
these awards. The FAS 123(R) grant date fair value for each award reflected
in the “Stock
Awards”
column
in the “2006 Summary
Compensation Table”
above
is listed in the table below in this section. The amounts in the “Option
Awards”
column
reflect the compensation expense that we recognized during 2006 with respect
to
option awards and do not correspond to the actual value that the named executive
officer will recognize with respect to such awards.
The
following table reflects the option awards with respect to which we recognized
compensation expense during 2006 in accordance with FAS 123(R):
Name
|
|
Shares
|
|
FAS
123(R)
Grant
Date
Fair
Value
|
|
Option
Exercise
Price (A)
|
|
Grant
Date
|
|
Vesting
Date
|
|
2006
Expense
|
|
|
|
(#)
|
|
($)
|
|
($)
|
|
|
|
|
|
($)
|
|
Jeffrey
J. Dailey
|
|
|
3,706
|
|
|
18,419
|
|
|
20.91
|
|
|
4/5/2004
|
|
|
4/5/2006
|
|
|
2,303
|
|
Robert
D. Sadler
|
|
|
897
|
|
|
4,458
|
|
|
20.91
|
|
|
4/5/2004
|
|
|
4/5/2006
|
|
|
557
|
|
Craig
E. Eisenacher
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
James
R. Fisher
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Simon
J. Noonan
|
|
|
1,793
|
|
|
8,911
|
|
|
20.91
|
|
|
4/5/2004
|
|
|
4/5/2006
|
|
|
1,114
|
|
James
J. Sclafani, Jr.
|
|
|
1,255
|
|
|
6,237
|
|
|
20.91
|
|
|
4/5/2004
|
|
|
4/5/2006
|
|
|
780
|
|
(A)
|
Based
on the last reported closing price per share of our Common Stock
on the
grant date, as reported on the
NYSE.
|
Non-Equity
Incentive Plan Awards
Under
applicable SEC rules, the “Non-Equity
Incentive Plan Compensation”
column
in the “2006 Summary
Compensation Table”
above
reflects all bonus compensation intended to serve as incentive for performance
to occur over a specified period (including periods less than one year) that
does not fall within the scope of FAS 123(R) and with respect to which the
outcome of the relevant performance target is substantially uncertain both
at
the time that performance target is established and at the time the target
is
communicated to the executives. The “Non-Equity
Incentive Plan Compensation”
column
reflects the cash portion of the 2006 EIP awards. In accordance with the EIP,
the Compensation Committee established the criteria for the 2006 EIP awards
on
February 21, 2006 with respect to executive officer performance in 2006. At
that time, the committee determined that 75% of the 2006 EIP awards would be
paid in cash. The 2006 objective performance goal for the 2006 EIP awards was
based on Bristol West’s 2006 Adjusted Pre-Tax Underwriting Income measured
against pre-tax underwriting income as set forth in Bristol West’s 2006 business
plan. The “Estimated
Possible Payouts Under Non-Equity Incentive Plan Awards”
columns
in the “Grants
of Plan Based Awards”
table
reflect the threshold (or minimum) amounts payable in cash (50% of EIP
individual bonus target), target amounts payable in cash (100% of EIP individual
bonus target), and maximum amounts payable in cash (150% of EIP individual
bonus
target) with respect to each named executive officer’s 2006 EIP award in
accordance with the award criteria that the Compensation Committee established
on February 21, 2006. The 2006 EIP awards, including the criteria for the
2006 EIP awards, such as individual bonus targets, incentive target
schedule (including the threshold, target and minimum amounts), the definition
of Adjusted Pre-Tax Underwriting Income, and the actual cash paid to each named
executive officer, are described above in this section under the heading
“Compensation
Discussion and Analysis - Variable Annual Incentive Compensation - 2006
Objective Performance-Based EIP Awards.”
All
Other Compensation
The
“All
Other Compensation”
column
in the “2006 Summary
Compensation Table”
reflects perquisites and other personal benefits as well as other compensation
for each named executive officer, subject to the following:
·
|
If
the aggregate amount was less than $10,000, all perquisites and other
personal benefits are excluded for that named executive
officer.
|
·
|
If
the aggregate amount was $10,000 or more, each such benefit is identified
by type in a footnote below the table for that named executive officer
and, if the value of the benefit exceeds the greater of $25,000 or
10% of
the total amount of the benefit, it is also quantified in a footnote
below
the table.
|
·
|
Each
other item of compensation for that named executive officer is identified
and quantified in a footnote below the table only if the value of
the item
exceeded $10,000.
|
Accordingly,
the “All
Other Compensation”
column
reflects the following:
Restricted
stock accumulated dividends.
Restricted stock accumulated dividends under the 2004 Stock Incentive Plan
are
not factored into the calculation of the award’s FAS 123(R) grant date fair
value that is reflected in the “Stock
Awards”
column
in the “2006 Summary
Compensation Table”
above,
which is described above in this section under the heading “Stock
Awards.”
Accordingly, in accordance with applicable SEC rules, the “All
Other Compensation”
column
in the “2006 Summary
Compensation Table”
above
and the footnotes below the table reflect the compensation expense we recognized
in 2006 with respect to restricted stock accumulated dividends.
401(k)
Plan company contributions.
After
one year of employment, Bristol West will match up to 5% of each participant’s
contributions to the
401(k)
Plan at the rate of $0.60 on the dollar. These 401(k) Plan matching
contributions (which we refer to as “401(k) Plan company contributions”) will
vest 20% per year over a five year period provided that the participant is
credited with at least 1,000 hours of service (as defined in the 401(k) Plan)
for each year. Pursuant to the 401(k) Plan, vesting of 401(k) Plan company
contributions is accelerated in full when a participant reaches age 65.
Fleet
car compensation.
We
provide company cars to employees who have a business need for a car, including
certain named executive officers. These named executive officers are permitted
to use their company cars for personal purposes and we include the value thereof
in the 2006 compensation of each such named executive officer. We also pay
these
named executive officers additional compensation to cover the cost of additional
taxes associated with fleet car compensation. See the disclosure above in this
section under the heading “Compensation
Discussion and Analysis - Compensation Program Objectives - Other Benefits
and
Perquisites.”
Outstanding
Equity Awards at Fiscal Year-End
The
following table provides information with respect to outstanding stock option
awards and restricted stock awards held by the named executive officers as
of
December 31, 2006.
|
|
Option
Awards (A)
|
|
Stock
Awards (B)
|
|
Name
|
|
Number
of
Securities
Underlying
Unexercised
Options
|
|
Number
of Securities Underlying Unexercised Options
|
|
Option
Exercise Price
|
|
Option
Expiration Date
|
|
Number
of Shares or Units of Stock That Have Not Vested
|
|
Market
Value of Shares or Units of Stock That Have Not Vested
(C)
|
|
|
|
Exercisable
|
|
Unexercisable
|
|
|
|
|
|
|
|
|
|
|
|
(#)
|
|
(#)
|
|
($)
|
|
|
|
(#)
|
|
($)
|
|
Jeffrey
J. Dailey
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Options
(1)
|
|
|
260,760
|
|
|
|
|
|
3.83
|
|
|
3/31/2011
|
|
|
|
|
|
|
|
Options
(2)
|
|
|
19,557
|
|
|
|
|
|
3.83
|
|
|
1/1/2012
|
|
|
|
|
|
|
|
Options
(3)
|
|
|
8,149
|
|
|
|
|
|
7.67
|
|
|
5/1/2013
|
|
|
|
|
|
|
|
Options
(4)
|
|
|
3,706
|
|
|
|
|
|
20.91
|
|
|
4/5/2014
|
|
|
|
|
|
|
|
Restricted
Stock
(5)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
86,119
|
|
|
1,363,264
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert
D. Sadler
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Options
(1)
|
|
|
71,709
|
|
|
|
|
|
3.83
|
|
|
3/31/2011
|
|
|
|
|
|
|
|
Options
(2)
|
|
|
6,519
|
|
|
|
|
|
3.83
|
|
|
1/1/2012
|
|
|
|
|
|
|
|
Options
(3)
|
|
|
2,200
|
|
|
|
|
|
7.67
|
|
|
5/1/2013
|
|
|
|
|
|
|
|
Options
(4)
|
|
|
897
|
|
|
|
|
|
20.91
|
|
|
4/5/2014
|
|
|
|
|
|
|
|
Restricted
Stock
(6)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
27,319
|
|
|
432,460
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Craig
E. Eisenacher
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Options
(7)
|
|
|
19,557
|
|
|
|
|
|
15.34
|
|
|
3/8/2007
|
|
|
|
|
|
|
|
|
|
Option
Awards (A)
|
|
Stock
Awards (B)
|
|
Name
|
|
Number
of
Securities
Underlying
Unexercised
Options
|
|
Number
of Securities Underlying Unexercised Options
|
|
Option
Exercise Price
|
|
Option
Expiration Date
|
|
Number
of Shares or Units of Stock That Have Not Vested
|
|
Market
Value of Shares or Units of Stock That Have Not Vested
(C)
|
|
|
|
Exercisable
|
|
Unexercisable
|
|
|
|
|
|
|
|
|
|
|
|
(#)
|
|
(#)
|
|
($)
|
|
|
|
(#)
|
|
($)
|
|
James
R. Fisher
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Options
(8)
|
|
|
195,570
|
|
|
|
|
|
3.83
|
|
|
7/9/2013
|
|
|
|
|
|
|
|
Options
(8)
|
|
|
130,380
|
|
|
|
|
|
3.83
|
|
|
9/1/2015
|
|
|
|
|
|
|
|
Options
(8)
|
|
|
32,595
|
|
|
|
|
|
3.83
|
|
|
1/1/2016
|
|
|
|
|
|
|
|
Options
(8)
|
|
|
32,595
|
|
|
|
|
|
3.83
|
|
|
4/1/2016
|
|
|
|
|
|
|
|
Options
(8)
|
|
|
65,190
|
|
|
|
|
|
3.83
|
|
|
4/1/2016
|
|
|
|
|
|
|
|
Options
(8)
|
|
|
32,595
|
|
|
|
|
|
3.83
|
|
|
7/1/2016
|
|
|
|
|
|
|
|
Options
(8)
|
|
|
32,595
|
|
|
|
|
|
3.83
|
|
|
10/1/2016
|
|
|
|
|
|
|
|
Options
(8)
|
|
|
32,595
|
|
|
|
|
|
3.83
|
|
|
1/1/2017
|
|
|
|
|
|
|
|
Options
(8)
|
|
|
32,595
|
|
|
|
|
|
3.83
|
|
|
4/1/2017
|
|
|
|
|
|
|
|
Options
(8)
|
|
|
32,595
|
|
|
|
|
|
3.83
|
|
|
7/1/2017
|
|
|
|
|
|
|
|
Options
(8)
|
|
|
32,595
|
|
|
|
|
|
3.83
|
|
|
10/1/2017
|
|
|
|
|
|
|
|
Options
(8)
|
|
|
32,595
|
|
|
|
|
|
3.83
|
|
|
1/1/2018
|
|
|
|
|
|
|
|
Options
(8)
|
|
|
32,595
|
|
|
|
|
|
3.83
|
|
|
4/1/2018
|
|
|
|
|
|
|
|
Options
(8)
|
|
|
32,595
|
|
|
|
|
|
3.83
|
|
|
7/1/2018
|
|
|
|
|
|
|
|
Options
(8)
|
|
|
32,595
|
|
|
|
|
|
3.83
|
|
|
10/1/2018
|
|
|
|
|
|
|
|
Options
(8)
|
|
|
91,266
|
|
|
|
|
|
3.83
|
|
|
10/1/2018
|
|
|
|
|
|
|
|
Restricted
Stock
(9)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
14,749
|
|
|
233,477
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Simon
J. Noonan
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Options
(10)
|
|
|
92,570
|
|
|
|
|
|
3.83
|
|
|
4/29/2012
|
|
|
|
|
|
|
|
Options
(3)
|
|
|
3,260
|
|
|
|
|
|
7.67
|
|
|
5/1/2013
|
|
|
|
|
|
|
|
Options
(4)
|
|
|
1,793
|
|
|
|
|
|
20.91
|
|
|
4/5/2014
|
|
|
|
|
|
|
|
Restricted
Stock
(11)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
53,596
|
|
|
848,425
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
James
J. Sclafani
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Options
(12)
|
|
|
50,848
|
|
|
|
|
|
3.83
|
|
|
1/1/2013
|
|
|
|
|
|
|
|
Options
(12)(13)
|
|
|
|
|
|
16,949
|
|
|
3.83
|
|
|
1/1/2013
|
|
|
|
|
|
|
|
Options
(12)(14)
|
|
|
|
|
|
16,950
|
|
|
3.83
|
|
|
1/1/2013
|
|
|
|
|
|
|
|
Options
(4)
|
|
|
1,255
|
|
|
|
|
|
20.91
|
|
|
4/5/2014
|
|
|
|
|
|
|
|
Restricted
Stock
(15)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
39,342
|
|
|
622,784
|
|
(A)
|
These
columns reflect stock options awarded under the 1998 Stock Option
Plan for
Management and Key Employees (the “1998 Stock Option Plan”) and the
2004 Stock Incentive Plan.
|
(B) |
These
columns reflect restricted stock awards under the 2004 Stock Incentive
Plan and their market value at December 31, 2006 based on the last
reported closing price per share of our Common Stock on the last
trading
day in 2006, December 29, 2006, as reported on the NYSE, which was
$15.83.
|
(C) |
The
amounts reflected in this column do not include restricted stock
accumulated dividends that, as of December 31, 2006, were payable
by
Bristol West to each named executive officer upon vesting of the
restricted stock in accordance with the terms of the award. See the
footnotes below the “Summary
Compensation Table”
above.
|
(1) |
The
options reported in this row vested at a rate of 20% per year on
March 31,
2002, March 31, 2003, March 31, 2004, March 31, 2005, and
March 31, 2006.
|
(2) |
The
options reported in this row vested at a rate of 50% per year on
January
1, 2003 and January 1, 2004.
|
(3) |
The
options reported in this row vested at a rate of 50% per year on
May 1,
2004 and May 1, 2005.
|
(4) |
The
options reported in this row vested at a rate of 50% per year on
April 5,
2005 and April 5, 2006.
|
(5) |
The
market value for the shares reflected in this row does not include
$50,651
in restricted stock accumulated dividends. The vesting schedule for
Mr.
Dailey’s restricted stock is as
follows:
|
|
· |
54,348
shares, in full on May 14, 2009 (5-year cliff
vesting)
|
|
· |
4,204
shares, in full on February 22, 2007 (2-year cliff
vesting)
|
|
· |
8,850
shares, in full on February 22, 2010 (5-year cliff
vesting)
|
|
· |
18,717
shares, in full on February 21, 2011 (5-year cliff
vesting)
|
(6) |
The
market value for the shares reflected in this row does not include
$14,874
in restricted stock accumulated dividends. The vesting schedule for
Mr.
Sadler’s restricted stock is as follows:
|
|
· |
13,587
shares, in full on May 14, 2009 (5-year cliff
vesting)
|
|
· |
885
shares, in full on February 22, 2007 (2-year cliff
vesting)
|
|
· |
4,425
shares, in full on February 22, 2010 (5-year cliff
vesting)
|
|
· |
401
shares, in full on February 21, 2008 (2-year cliff
vesting)
|
|
· |
8,021
shares, in full on February 21, 2011 (5-year cliff
vesting)
|
(7) |
The
options reported in this row vested for Mr. Eisenacher in part on
December 8, 2004, and in part on December 8, 2005. Mr.
Eisenacher forfeited all of his unvested restricted stock and unvested
options for 29,336 shares of Common Stock because he resigned effective
December 8, 2006, to accept a position as Executive Vice President
and
Chief Financial Officer of Everest Re Group,
Ltd.
|
(8) |
For
the year ended December 31, 2003, James R. Fisher was not an employee
of Bristol West. He served as our Chairman and Chief Executive Officer
in
2003 pursuant to an agreement with Fisher Capital Corp., LLC (which
we
refer to as “Fisher Capital”) to provide to us management, consulting and
certain other services, which is also described below under the heading
“Item
13. Certain Relationships and Related Transactions, and Director
Independence.”
For the year ended December 31, 2003, we granted Fisher Capital
options to purchase an aggregate of 221,646 shares of Common Stock
at an
exercise price of $3.83 per option share. These options vested immediately
on the grant date. James R. Fisher is the managing member of Fisher
Capital and may be deemed to beneficially own these options, as described
above under the heading “Item
12. Security Ownership - Security Ownership of Directors and
Management.”
Mr. Fisher’s ownership interest in these options based on his ownership
interest in Fisher Capital is approximately
86.5%.
|
(9) |
The
market value for the shares reflected in this row does not include
$8,112
in restricted stock accumulated dividends. The vesting schedule for
Mr.
Fisher’s restricted stock is as follows:
|
|
· |
14,749
shares, in full on February 22, 2007 (2-year cliff
vesting)
|
(10) |
The
options reported in this row vested for Mr. Noonan at a rate of 50%
per
year on April 29, 2003 and April 29,
2004.
|
(11) |
The
market value for the shares reflected in this row does not include
$28,774
in restricted stock accumulated dividends. The vesting schedule for
Mr.
Noonan’s restricted stock is as follows:
|
|
· |
27,174
shares, in full on May 14, 2009 (5-year cliff
vesting)
|
|
· |
2,139
shares, in full on February 22, 2007 (2-year cliff
vesting)
|
|
· |
5,900
shares, in full on February 22, 2010 (5-year cliff
vesting)
|
|
· |
1,003
shares, in full on February 21, 2008 (2-year cliff
vesting)
|
|
· |
17,380
shares, in full on February 21, 2011 (5-year cliff
vesting)
|
(12) |
The
options reported in these rows vest for Mr. Sclafani at a rate of
20% per
year on January 1, 2004, January 1, 2005, January 1, 2006,
January 1, 2007, and January 1,
2008.
|
(13) |
The
options reported in this row vested for Mr. Sclafani on January 1,
2007.
|
(14) |
The
options reported in this row are scheduled to vest for Mr. Sclafani
on
January 1, 2008.
|
(15) |
The
market value for the shares reflected in this row does not include
$20,651
in restricted stock accumulated dividends. The vesting schedule for
Mr.
Sclafani’s restricted stock is as follows:
|
|
· |
18,098
shares, in full on May 14, 2009 (5-year cliff
vesting)
|
|
· |
1,106
shares, in full on February 22, 2007 (2-year cliff
vesting)
|
|
· |
5,900
shares, in full on February 22, 2010 (5-year cliff
vesting)
|
|
· |
869
shares, in full on February 21, 2008 (2-year cliff
vesting)
|
|
· |
13,369
shares, in full on February 21, 2011 (5-year cliff
vesting)
|
Potential
Payments Upon Termination of Employment or Change in Control
Severance
Arrangements
We
entered into an employment agreement with James R. Fisher dated as of May 25,
2006. Under the employment agreement, Mr. Fisher serves as Bristol West’s
Executive Chairman of the Board for a term expiring on June 30, 2007. For a
description of the provisions of this agreement relating to James R. Fisher’s
employment, see the disclosure above in this section under the heading
“Narrative
Disclosure to 2006 Summary Compensation Table and 2006 Grants of Plan Based
Awards Table - Salary - Employment Agreements.”
See
also, Exhibit 10.6 in the Exhibit Index to this Amended Report. This
employment agreement provides that the term will be automatically extended
for
additional one-year periods beginning July 1, 2007 after each July 1st
thereafter unless terminated by either party pursuant to the agreement. The
employment agreement also provides that if Mr. Fisher’s employment is terminated
for either of the following reasons, Mr. Fisher will be entitled to receive
severance benefits in an amount equal to his base salary then in effect for
the
remainder of the applicable term of his employment, which will terminate on
the
following June 30th:
·
|
If
Bristol West terminates Mr. Fisher’s employment without cause (defined
therein to mean (1) willful and continued failure to perform his
material
duties which continues beyond 10 days after a written demand for
substantial performance is delivered, (2) willful misconduct involving
dishonesty or breach of trust in connection with his employment which
results in a demonstrable injury (which is other than de minimis
or
insignificant), (3) conviction for any felony or misdemeanor
involving moral turpitude, or (4) any material breach of the
confidentiality and non-disparagement covenants in the agreement,
which
are described below).
|
·
|
If
Mr. Fisher terminates his employment for any reason as a result of
an
Associates Sale (defined therein to mean the sale or other disposition,
either in one transaction or in a series of transactions, of all
of the
shares of Bristol West’s common stock that Bristol West Associates LLC
owns, directly or indirectly). The Pending Farmers Merger would qualify
as
an Associates Sale.
|
Pursuant
to the Farmers Merger Agreement, Bristol West agreed that, if renewed on July
1,
2007, this employment agreement would not include any provision regarding the
payment of severance to Mr. Fisher.
Mr.
Fisher’s current and prior employment agreements include covenants relating to
confidentiality and non-disparagement (both unlimited by term) as well as
covenants regarding non-solicitation of employment (12 months), and no
competition (12 months). Nevertheless, the employment agreements permit him
to
provide services to Kohlberg Kravis Roberts & Co. L.P. (which we refer
to as “KKR”) and its affiliates and to manage and direct his personal
investments without limitation. KKR and its affiliates are not subject to any
non-competition agreements with us. In addition, the current and prior
employment agreements permit Mr. Fisher to engage in certain investment and
advisory activities related to his position with Fisher Capital, for which
he is
the managing member.
Bristol
West is a party to severance arrangements with each of Messrs. Dailey, Sadler,
Noonan, and Sclafani. These severance arrangements are included in Employee
Stockholder Agreements (which we refer to as the “Employee Stockholder
Agreements”). See Exhibits 4.6, 4.9 and 4.10 in the Exhibit Index to this
Amended Report. The severance arrangement for Mr. Sclafani provides
that, in the event of a qualified termination of employment, he will receive
severance benefits for a period of 36 months following the termination in an
amount equal to his annual compensation as such compensation was in effect
for
the year prior to the year in which the termination occurred. These Employee
Stockholder Agreements for each of Messrs. Dailey, Sadler, and Noonan are the
same as Mr. Sclafani’s except that the period for which the named executive
officer will receive the severance benefits is 12 months following the qualified
termination. Further, pursuant to these Employee Stockholder Agreements,
severance is subject to covenants relating to confidentiality (unlimited as
to
term), no competition (12 months) and non-solicitation of employment (12
months).
For
purposes of these Employee Stockholder Agreements:
·
|
a
qualified termination of employment means an involuntary termination
without cause (defined in the agreement to have the meaning
summarized below) or a voluntary termination for good reason (defined
therein to mean (1) a reduction in the executive officer’s base
salary (other than any general salary reduction affecting at least
the
majority of Bristol West’s employees), (2) a material and adverse
change in the executive officer’s duties and responsibilities or (3) a
transfer of the executive officer’s primary workplace by more than
50 miles from the executive officer’s workplace as of the date of the
arrangement), and
|
·
|
cause
means (1) the named executive officer’s willful and continued failure to
perform his defined duties which continues after a demand for substantial
performance is delivered to him by Bristol West, (ii) willful misconduct
by the named executive officer involving dishonesty or breach of
trust in
connection with his employment, (iii) an indictment of the named
executive officer for a felony or misdemeanor involving moral turpitude,
or (iv) any material breach by the named executive officer of the
covenants in the agreement relating to confidentiality, no competition
and
non-solicitation of employment or (v) violation of any written Company
policy.
|
Change
in Control Arrangements
The
award
agreement for each restricted stock award granted to the named executive
officers provides that the vesting conditions for the award will be accelerated
in full for death or permanent disability (defined in the agreement to have
the
meaning that is summarized below) and upon a change in control (defined in
the
agreement to have the meaning set forth in the 2004 Stock Incentive Plan, which
is summarized below), which would include the consummation of the Pending
Farmers Merger. For purposes of these restricted stock agreements:
·
|
the
named executive officer shall be deemed to have a permanent disability
if
he is unable to engage in the activities required by his job by reason
of
any medically determined physical or mental impairment which can
be
expected to result in death or which has lasted or can be expected
to last
for a continuous period of not less than 12 months,
and
|
·
|
a
change in control occurs when both of the following are
true:
|
|
|
any
one of the following events has
occurred:
|
|
·
|
sale
of all or substantially all of the assets of Bristol West to a person
or
group that is not KKR or an affiliate of KKR (referred to collectively
as
the “KKR Partnerships”), or
|
|
·
|
a
sale by any member of the KKR Partnerships resulting in more than
50% of
Bristol West’s voting equity securities being held by a person or group
that is not a member of the KKR partnerships, or
|
|
·
|
a
merger, consolidation, recapitalization or reorganization of Bristol
West
with and into another person which is not a member of the KKR
Partnerships, and
|
|
|
following
any such event, both of the following are
true:
|
|
·
|
the
KKR Partnerships no longer have the ability, without the approval
of a
person or group or an affiliate of Bristol West that is not a member
of
the KKR Partnerships, to elect a majority of the Board (or the resulting
entity in the transaction), and
|
|
·
|
any
person or group who is not a member of the KKR Partnerships is or
becomes
the beneficial owner, directly or indirectly, in the aggregate, of
a
greater percentage of Bristol West’s voting equity securities than that
held, directly or indirectly, in the aggregate, by the KKR
Partnerships.
|
The
award
agreement for each option award granted to the named executive officers provides
that the vesting conditions for the award will be accelerated in full upon
a
change of control (defined in the agreement to have the meaning that is
summarized below), which would include the consummation of the Pending Farmers
Merger. For purposes of these option award agreements, a change of control
occurs when both of the following are true:
·
|
any
one of the following events has
occurred:
|
|
|
sales
of all or substantially all of the assets of Bristol West to a person
who
is not an affiliate of KKR, or
|
|
|
a
sale by KKR or any of its respective affiliates resulting in more
than 50%
of the Common Stock being held by a person or group that does not
include
KKR or any of its affiliates, or
|
|
|
a
merger or consolidation of Bristol West into another person which
is not
an affiliate of KKR, and
|
·
|
any
such event results in the inability of KKR or any of its affiliates
to
elect a majority of the board of directors of Bristol West (or the
resulting entity).
|
Payments
and Other Benefits
The
table
below reflects the payments that would have been made to, and other benefits
that would have been received by, the named executive officers as of December
31, 2006 (which we refer to as the “triggering event date”) pursuant to the
agreements described above in this section upon the occurrence of each of the
following triggering events: (1) pursuant to the severance arrangements:
voluntary termination for good reason (as described above) at any time,
involuntary termination not for cause (as described above) at any time,
voluntary termination upon an Associates Sale (as described above), which
applies exclusively to Mr. Fisher, and (2) pursuant to the applicable
option and restricted stock award agreements: a change in control (as described
above), death, and permanent disability (as described above).
Mr. Eisenacher
is not included in the table below because he was not entitled to receive any
such payments or other benefits when he resigned effective
December 8, 2006, to accept a position as Executive Vice President and Chief
Financial Officer of Everest Re Group, Ltd. and, as a result, would not have
been entitled to receive any such payments or other benefits on December 31,
2006.
For
purposes of the table below, we assumed the following with respect to each
named
executive officer:
·
|
that
the triggering event(s) took place on December 31,
2006,
|
·
|
that,
for purposes of computing severance benefits for each named executive
officer, the applicable annual compensation is equal to the sum of
the
following:
|
|
·
|
the
named executive officer’s annual base salary that was in effect on
December 31, 2006, which is described above in this section under
the
heading “Executive
Compensation - Compensation Discussion and Analysis - Compensation
Elements - Fixed Annual Compensation,”
plus
|
|
·
|
total
employer contributions payable during the applicable severance period
with
respect to the named executive officer’s medical and dental benefits
applicable in January 2007, and
|
·
|
that
the Compensation Committee would not waive the requirement that payment
of
any EIP award and of any MIP award is subject to the condition that
the
named executive officer be employed by Bristol West at time of award
payment, which occurred on March 6,
2007.
|
|
|
Severance
Arrangements
|
|
Equity-Based
Incentive Compensation
|
|
Name
|
|
Voluntary
Termination
for
Good Reason
(A)
|
|
Involuntary
Termination
Not
for Cause
(A) (B)
|
|
Voluntary
Termination
Upon
an Associates
Sale
(B)
|
|
Change
in
Control
(C)
|
|
Death
(C)
|
|
Disability
(C)
|
|
|
|
($)
|
|
($)
|
|
($)
|
|
($)
|
|
($)
|
|
($)
|
|
Jeffrey
J. Dailey
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Base
Salary
|
|
|
525,000
|
|
|
525,000
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
EIP
Plan (1)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
MIP
Plan
(1)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Unvested
Stock Options
(2)(3)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Unvested
Restricted Stock
(2)(4)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,413,915
|
|
|
1,413,915
|
|
|
1,413,915
|
|
Health
Care
|
|
|
7,415
|
|
|
7,415
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
TOTAL
|
|
|
532,415
|
|
|
532,415
|
|
|
—
|
|
|
1,413,915
|
|
|
1,413,915
|
|
|
1,413,915
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert
D. Sadler
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Base
Salary
|
|
|
275,000
|
|
|
275,000
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
EIP
Plan (1)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
MIP
Plan
(1)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Unvested
Stock Options
(2)(3)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Unvested
Restricted Stock
(2)(4)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
447,334
|
|
|
447,334
|
|
|
447,334
|
|
Health
Care
|
|
|
10,193
|
|
|
10,193
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
TOTAL
|
|
|
285,193
|
|
|
285,193
|
|
|
—
|
|
|
447,334
|
|
|
447,334
|
|
|
447,334
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
James
R. Fisher
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Base
Salary
|
|
|
—
|
|
|
173,562
|
|
|
173,562
|
|
|
—
|
|
|
—
|
|
|
—
|
|
EIP
Plan (1)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
MIP
Plan (1)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Unvested
Stock Options
(2)(3)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Unvested
Restricted Stock
(2)(4)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
241,589
|
|
|
241,589
|
|
|
241,589
|
|
Health
Care
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
TOTAL
|
|
|
—
|
|
|
173,562
|
|
|
173,562
|
|
|
241,589
|
|
|
241,589
|
|
|
241,589
|
|
|
|
Severance
Arrangements
|
|
Equity-Based
Incentive Compensation
|
|
Name
|
|
Voluntary
Termination
for
Good Reason
(A)
|
|
Involuntary
Termination
Not
for Cause
(A) (B)
|
|
Voluntary
Termination
Upon
an Associates
Sale
(B)
|
|
Change
in
Control
(C)
|
|
Death
(C)
|
|
Disability
(C)
|
|
|
|
($)
|
|
($)
|
|
($)
|
|
($)
|
|
($)
|
|
($)
|
|
Simon
J. Noonan
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Base
Salary
|
|
|
350,000
|
|
|
350,000
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
EIP
Plan (1)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
MIP
Plan (1)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Unvested
Stock Options
(2)(3)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Unvested
Restricted Stock
(2)(4)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
877,199
|
|
|
877,199
|
|
|
877,199
|
|
Health
Care
|
|
|
9,672
|
|
|
9,672
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
TOTAL
|
|
|
359,672
|
|
|
359,672
|
|
|
—
|
|
|
877,199
|
|
|
877,199
|
|
|
877,199
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
James
J. Sclafani
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Base
Salary
|
|
|
900,000
|
|
|
900,000
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
EIP
Plan (1)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
MIP
Plan (1)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Unvested
Stock Options
(2)(3)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
406,788
|
|
|
—
|
|
|
—
|
|
Unvested
Restricted Stock
(2)(4)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
643,435
|
|
|
643,435
|
|
|
643,435
|
|
Health
Care
|
|
|
29,192
|
|
|
29,192
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
TOTAL
|
|
|
929,192
|
|
|
929,192
|
|
|
—
|
|
|
1,050,223
|
|
|
643,435
|
|
|
643,435
|
|
(A)
|
The
amounts in this column with respect to each of the named executive
officers other than Mr. Fisher reflect severance benefits payable
pursuant
to the Employee Stockholder Agreement to which he is a party, as
described
above.
|
(B)
|
The
amounts in this column with respect to Mr. Fisher reflect amounts
payable
pursuant to his employment agreement, as described above.
|
(C)
|
The
amounts in this column reflect the value (as described in footnotes
(3)
and (4)
below) of the Common Stock underlying a previously unvested stock
option
award or of a previously unvested restricted Common Stock award,
in each
case the vesting of which is accelerated upon the occurrence of the
applicable triggering event.
|
(1)
|
An
EIP participant must be on the payroll on the date an EIP award is
to be
paid and an MIP participant must be on the payroll on the date an
MIP
award is to be paid, in each case unless otherwise determined by
the
Compensation Committee in its sole discretion in the event of retirement,
death, disability or other
circumstances.
|
(2)
|
For
purposes of determining the amount reflected in this row, the price
of the
Common Stock underlying the applicable stock option award or of the
applicable restricted Common Stock award, as appropriate, is the
price on
the triggering event date, based on the last reported closing price
per
share of $15.83, as reported on the NYSE, on December 29, 2006, the
last trading day of 2006 (which we refer to as the “triggering event
Common Stock value”).
|
(3)
|
The
amounts in this row reflect for each previously unvested stock option
award an amount equal to the number of shares of Common Stock underlying
the stock option multiplied by an amount equal to the difference
between
the triggering event Common Stock value and the exercise price per
share
of the applicable stock option.
|
(4)
|
The
amounts in this row include for each previously unvested restricted
stock
award an amount equal to the number of shares of restricted Common
Stock
multiplied by the triggering event Common Stock value. The amounts
in this
row also include
the restricted stock accumulated dividends that are payable by Bristol
West to the named executive officer upon vesting of the restricted
stock
in accordance with the terms of the award. The aggregate amount of
these
restricted stock accumulated dividends for each executive officer
is
reflected above in this section in footnote (C)
to
the “Outstanding
Equity Awards at Fiscal Year-End”
table.
|
The
table
below reflects compensation that our directors in 2006 earned for services
performed during 2006. The information set forth in this table is described
in
more detail below in this section under the heading “Narrative
Disclosure to 2006 Director Compensation Table.”
2006
Director Compensation
Name
|
|
Fees
Earned
or
Paid in Cash
|
|
Stock
Awards
|
|
All
Other
Compensation
|
|
Total
|
|
|
|
($)
|
|
($)
|
|
($)
|
|
($)
|
|
R.
Cary Blair
|
|
|
47,500
|
|
|
24,493
|
|
|
773
|
(1)
|
|
72,766
|
|
Jeffrey J.
Dailey (2)
|
|
|
NA
|
|
|
NA
|
|
|
NA
|
|
|
NA
|
|
Richard
T. Delaney
|
|
|
47,500
|
|
|
24,493
|
|
|
773
|
(1)
|
|
72,766
|
|
Allan
W. Ditchfield
|
|
|
5,870
|
|
|
1,622
|
|
|
—
|
|
|
7,492
|
|
Todd
A. Fisher
|
|
|
—
|
|
|
—
|
|
|
41,258
|
(3)
|
|
41,258
|
|
James
R. Fisher (2)
|
|
|
NA
|
|
|
NA
|
|
|
NA
|
|
|
NA
|
|
Perry
Golkin
|
|
|
—
|
|
|
—
|
|
|
41,258
|
(3)
|
|
41,258
|
|
Mary
R. Hennessy
|
|
|
—
|
|
|
24,493
|
|
|
49,766
|
(1)
(4)
|
|
74,259
|
|
Eileen
Hilton
|
|
|
40,000
|
|
|
24,493
|
|
|
773
|
(1)
|
|
65,266
|
|
James
N. Meehan
|
|
|
27,500
|
|
|
24,493
|
|
|
28,616
|
(1)
(5)
|
|
80,609
|
|
Arthur
J. Rothkopf
|
|
|
23,750
|
|
|
24,493
|
|
|
25,176
|
(1)
(6)
|
|
73,419
|
|
Former
directors:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Inder-Jeet
S. Gujral (7)(8)
|
|
|
—
|
|
|
7,343
|
|
|
16,700
|
(9)
|
|
24,043
|
|
Scott
C. Nuttall (7)
|
|
|
—
|
|
|
—
|
|
|
16,548
|
(3)
|
|
16,548
|
|
(1)
|
This
amount includes restricted stock accumulated dividends of
$773.
|
(2)
|
Bristol
West’s employee directors receive no separate compensation for serving
on
our Board. See the disclosure above in this section under the heading
“Executive
Compensation.”
|
(3)
|
This
amount for reflects compensation expense recognized during 2006 with
respect to Phantom Stock.
|
(4)
|
This
amount for Ms. Hennessy includes compensation expense recognized
during
2006 with respect to Phantom Stock of
$48,993.
|
(5)
|
This
amount for Mr. Meehan includes compensation expense recognized during
2006
with respect to Phantom Stock of
$27,843.
|
(6)
|
This
amount for Mr. Rothkopf includes compensation expense recognized
during
2006 with respect to Phantom Stock of
$24,403.
|
(7)
|
This
director retired as of the 2006 Annual Stockholders Meeting on May
19,
2006.
|
(8)
|
All
unvested restricted stock awards (2,139 shares) held by this director
expired as of May 19, 2006, the date he
retired.
|
(9)
|
This
amount for Mr. Gujral includes compensation expense recognized during
2006
with respect to Phantom Stock of $16,548 and restricted stock accumulated
dividends of $152.
|
Narrative
Disclosure to 2006 Director Compensation Table
Fees
Earned or Paid in Cash
Pursuant
to the schedule for non-employee director compensation approved by the
Compensation Committee and the Board, the non-employee directors named in the
table above were entitled to receive the following directors’ fees in
2006:
|
Each
non-employee director was entitled to receive annual directors’ fees of
$40,000.
|
|
·
|
Upon
his election in November 2006, the Compensation Committee determined
that
Mr. Ditchfield would receive for the fourth quarter of 2006 the same
director fees on a pro-rata basis.
|
|
Mr. Meehan
was entitled to receive an additional annual fee of $15,000 as Chairman
of
the Audit Committee.
|
·
|
Each
of Mr. Delaney and Ms. Hennessy was entitled to receive an additional
annual fee of $7,500 as members of the
Audit Committee.
|
·
|
Mr.
Blair was entitled to receive an additional annual fee of $7,500
as
Chairman of the Compensation
Committee.
|
·
|
Mr.
Rothkopf was entitled to receive an additional annual fee of $7,500
as
Chairman of the Corporate Governance and Nominating Committee.
|
We
do not
pay our directors meeting fees.
Each
non-employee director was entitled to receive directors’ fees in cash in four
installments at the end of each quarter of service unless he or she elected
to
receive all or a portion of such fees as Common Stock issued under to the
Non-Employee Directors’ Plan and the 2004 Stock Incentive Plan. No director
made such an election with respect to 2006 directors’ fees. Each non-employee
director also was entitled to defer receipt of all or a portion of these
directors’ fees in the form of hypothetical shares of Common Stock (which
we refer to as “Phantom Stock”). Several of our directors made an election to
defer receipt of all or a portion of his or her 2006 directors’ fees, as
indicated below in this section under the heading “Narrative
Disclosure to 2006 Director Compensation Table - All Other Compensation -
Phantom Stock.”
Stock
Awards
Restricted
Stock Awards.
From
time to time, the Compensation Committee has granted restricted stock awards
under the 2004 Stock Incentive Plan for the purpose of retaining directors,
providing them direct ownership in our Common Stock with a view toward
preserving stockholder value and encouraging decisions related to increased
stockholder value in the future. These restricted stock awards typically cliff
vest two years after the grant date.
Under
applicable SEC rules, the “Stock
Awards”
column
in the table above reflects all compensation expense recognized during 2006
pursuant to FAS 123(R) with respect to stock-based awards other than
options. The “Stock
Awards”
column
of the “2006 Director
Compensation Table”
reflects the compensation expense that we recognized during 2006, without any
reduction for risk of forfeiture, with respect to outstanding, unvested
restricted stock awards that the Compensation Committee granted to the
named non-employee directors during 2006 and 2004 under the 2004 Stock Incentive
Plan. We amortize compensation expense over the vesting period. This
compensation expense equals the number of shares of restricted stock multiplied
by the FAS 123(R) grant date fair value (computed utilizing the same
calculations and assumptions applied by Bristol West for financial statement
reporting purposes as reflected in “Note 10
- Stock
Ownership - Recent Accounting Pronouncements”
to
the
Consolidated Financial Statements appearing in the Original Report) and divided
by the portion of the two-year vesting period that occurred during 2006. To
determine the FAS 123(R) grant date fair value, we used the last reported
closing market price per share of our Common Stock on the grant date, as
reported on the NYSE ($18.40 on May 14, 2004; $18.70 on February 21, 2006).
The FAS 123(R) grant date fair value for each such award included in the
total reflected for each director in the “Stock
Awards”
column
in the “2006 Directors
Compensation Table”
is
listed separately in the table below in this section. The amounts in the
“Stock
Awards”
column
reflect the compensation expense that we recognized during 2006 with respect
to
restricted stock awards and do not correspond to the actual value that the
director will recognize with respect to such awards.
Restricted
stock accumulated dividends, which accumulate in cash until the shares vest,
are
not factored into the calculation of the restricted stock award’s FAS 123(R)
grant date fair value. Accordingly, in accordance with applicable SEC rules,
these restricted stock accumulated dividends are not reflected in the
“Stock
Awards”
column
of the “2006 Directors
Compensation Table.”
These
restricted stock accumulated dividends are reflected in the “All
Other Compensation”
column,
which is described below in this section under the heading “All
Other Compensation - Restricted Stock Accumulated
Dividends.”
The
following table reflects each of the restricted stock awards held by the
non-employee directors with respect to which we recognized compensation expense
during 2006 in accordance with FAS 123(R):
Name
|
|
Restricted
Shares
|
|
FAS
123(R)
Grant
Date
Fair
Value
|
|
Grant
Date
Closing
Price
(A)
|
|
Grant
Date
|
|
Vesting
Date
|
|
2006
Expense
|
|
|
|
(#)
|
|
($)
|
|
($)
|
|
|
|
|
|
($)
|
|
R.
Cary Blair
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,139
|
|
|
39,999
|
|
|
18.70
|
|
|
2/21/2006
|
|
|
2/21/2008
|
|
|
17,150
|
|
|
|
|
2,174
|
|
|
40,002
|
|
|
18.40
|
|
|
5/14/2004
|
|
|
5/14/2006
|
|
|
7,343
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Richard
T. Delaney
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,139
|
|
|
39,999
|
|
|
18.70
|
|
|
2/21/2006
|
|
|
2/21/2008
|
|
|
17,150
|
|
|
|
|
2,174
|
|
|
40,002
|
|
|
18.40
|
|
|
5/14/2004
|
|
|
5/14/2006
|
|
|
7,343
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Allan
W. Ditchfield
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,741
|
|
|
25,749
|
|
|
14.79
|
|
|
11/15/2006
|
|
|
2/21/2008
|
|
|
1,623
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mary
R. Hennessy
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,139
|
|
|
39,999
|
|
|
18.70
|
|
|
2/21/2006
|
|
|
2/21/2008
|
|
|
17,150
|
|
|
|
|
2,174
|
|
|
40,002
|
|
|
18.40
|
|
|
5/14/2004
|
|
|
5/14/2006
|
|
|
7,343
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Eileen
Hilton
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,139
|
|
|
39,999
|
|
|
18.70
|
|
|
2/21/2006
|
|
|
2/21/2008
|
|
|
17,150
|
|
|
|
|
2,174
|
|
|
40,002
|
|
|
18.40
|
|
|
5/14/2004
|
|
|
5/14/2006
|
|
|
7,343
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
James
N. Meehan
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,139
|
|
|
39,999
|
|
|
18.70
|
|
|
2/21/2006
|
|
|
2/21/2008
|
|
|
17,150
|
|
|
|
|
2,174
|
|
|
40,002
|
|
|
18.40
|
|
|
5/14/2004
|
|
|
5/14/2006
|
|
|
7,343
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Arthur
J. Rothkopf
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,139
|
|
|
39,999
|
|
|
18.70
|
|
|
2/21/2006
|
|
|
2/21/2008
|
|
|
17,150
|
|
|
|
|
2,174
|
|
|
40,002
|
|
|
18.40
|
|
|
5/14/2004
|
|
|
5/14/2006
|
|
|
7,343
|
|
(A)
|
Based
on the last reported closing price per share of our Common Stock
on the
grant date, as reported on the
NYSE.
|
The
Compensation Committee made its determinations regarding awards to our directors
under the 2004 Stock Incentive Plan for 2006 during the committee’s first
meeting of 2006. The date for that meeting was set during 2005. On February
21,
2006, the Compensation Committee made restricted stock awards to the following
directors in the amount of $40,000 pursuant to the 2004 Stock Incentive Plan:
R. Cary Blair, Richard T. Delaney, Inder-Jeet S. Gujral, Mary R.
Hennessy, Eileen Hilton, James N. Meehan and Arthur J. Rothkopf. At that time,
these individuals were all of the non-employee directors who were not affiliated
with KKR. At the same meeting, the Compensation Committee determined that it
would make such restricted stock awards to non-employee directors who are not
affiliated with KKR every other year on a regular basis. On November 15, 2006,
in connection with his election as a director, the Compensation Committee made
a
similar pro-rata restricted stock award to Mr. Ditchfield in the amount of
$25,753 pursuant to the 2004 Stock Incentive Plan.
The
table
below sets forth, as of December 31, 2006, the outstanding, unvested restricted
stock issued to each non-employee director:
|
|
Unvested
Restricted
Stock
|
|
|
|
(#)
|
|
R.
Cary Blair
|
|
|
2,139
|
|
Richard
T. Delaney
|
|
|
2,139
|
|
Allan
W. Ditchfield
|
|
|
1,741
|
|
Todd
A. Fisher
|
|
|
—
|
|
Perry
Golkin
|
|
|
—
|
|
Mary
R. Hennessy
|
|
|
2,139
|
|
Eileen
Hilton
|
|
|
2,139
|
|
James
N. Meehan
|
|
|
2,139
|
|
Arthur
J. Rothkopf
|
|
|
2,139
|
|
TOTAL
|
|
|
14,575
|
|
The
award
agreement for each of these restricted stock awards provides that the award
will
be forfeited if the director’s service with Bristol West terminates before
February 21, 2008, the vesting date, except for death or disability. As
indicated in the footnotes to the “2006 Director
Compensation Table”
above,
Mr. Gujral forfeited his award upon his retirement from the Board effective
May 19, 2006. Each award agreement also provides that the vesting
conditions for the award will be accelerated in full for death or disability
and
for certain mergers, sales or other business combinations, including the Pending
Farmers Merger. Pursuant to each award agreement, the named director has sole
voting power with respect to shares of restricted stock, but does not have
investment power or the right to receive restricted stock accumulated dividends
with respect to the shares. We will pay restricted stock accumulated dividends
to each such non-employee director only after the shares of restricted stock
are
vested pursuant to the terms of the award agreement. We pay these restricted
stock accumulated dividends at the same rate as for all other Common Stock.
The
“All
Other Compensation”
column
in the table above reflects restricted stock accumulated dividends.
All
Other Compensation
The
“All
Other Compensation”
column
in the “2006 Director
Compensation Table”
reflects other compensation for each director (there were no perquisites or
other personal benefits), each of which is identified and quantified in a
footnote below the table only if the value of the item exceeded $10,000.
Accordingly, the “All
Other Compensation”
column
reflects the following:
Phantom
Stock.
Each
non-employee director also was entitled to defer receipt of all or a portion
of
these directors’ fees in the form of Phantom Stock. During 2006, Messrs. Todd
Fisher, Golkin, Gujral and Nuttall and Ms. Hennessy elected to defer 100% of
their respective 2006 director fees. During 2006, Messrs. Meehan and Rothkopf
elected to defer 50% of their respective 2006 director fees.
Phantom
Stock is not actual Common Stock. Each share of Phantom Stock in a non-employee
director’s deferred compensation account represents a promise by Bristol West to
pay an amount equal to the value of a share of Common Stock at the end of the
deferral period. No such director has voting or investment power with respect
to
Phantom Stock in his or her deferred compensation account.
Under
the
Non-Employee Directors’ Plan, to reflect the payment of deferred directors’
fees, after the end of each quarter, on the tenth day after Bristol West
announces quarterly results, Bristol West records in the appropriate deferred
compensation accounts a number of shares of Phantom Stock calculated by dividing
the appropriate deferred directors’ fees by the average closing price per share
of our Common Stock over the quarter, as reported on the NYSE. Under the
Non-Employee Directors’ Plan, non-employee directors receive quarterly
dividend-equivalent payments on Phantom Stock during the deferral period at
the
same rate as the dividends that we pay with respect to our Common Stock. These
dividends are reinvested in additional Phantom Stock. On each Common Stock
dividend payment date, Bristol West records in the appropriate deferred
compensation accounts a number of shares of Phantom Stock equal to (1) the
product of (a) the per share Common Stock dividend amount and (b) the
number of shares of Phantom Stock in each non-employee director’s deferred
compensation account, divided by (2) the last reported closing price per
share of our Common Stock, as reported on the NYSE on the Common Stock dividend
payment date. Phantom Stock is accounted for in each non-employee director’s
deferred compensation account rounded to two decimal points.
The
table
below sets forth, as of December 31, 2006, the undistributed Phantom Stock
in
each non-employee director’s deferred compensation account under the
Non-Employee Directors’ Plan:
|
|
Undistributed
Phantom
Stock
|
|
|
|
(#)
|
|
R.
Cary Blair
|
|
|
|
|
Richard
T. Delaney
|
|
|
|
|
Allan
W. Ditchfield
|
|
|
|
|
Todd
A. Fisher
|
|
|
5,291.66
|
|
Perry
Golkin
|
|
|
5,291.66
|
|
Mary
R. Hennessy
|
|
|
6,283.82
|
|
Eileen
Hilton
|
|
|
|
|
James
N. Meehan
|
|
|
1,245.57
|
|
Arthur
J. Rothkopf
|
|
|
2,815.68
|
|
Former
directors:
|
|
|
|
|
Inder-Jeet
S. Gujral (1)
|
|
|
4,342.91
|
|
Scott
C. Nuttall (1)
|
|
|
4,342.91
|
|
TOTAL
|
|
|
29,614.21
|
|
(1)
|
This
director retired as of the 2006 Annual Stockholders Meeting on May
19,
2006. In accordance with the Non-Employee Directors’ Plan, Bristol West
issued to him 4,343 shares of Common Stock in January 2007, after the
end of the 2006 deferral period, representing the distribution of all
Phantom Stock in his deferred compensation
account.
|
The
“All
Other Compensation”
column
in the “2006
Director Compensation Table”
reflects the compensation expense that we recognized during 2006 with respect
to
all Phantom Stock recorded in each director’s deferred compensation account
during 2006. We do not account for compensation expense recognized with respect
to Phantom Stock under FAS 123(R). The compensation expense recognized
during 2006 with respect to Phantom Stock for each named executive officer
is an
amount equal to the dollar amount of the compensation deferred during 2006
in
the form of Phantom Stock, plus an amount representing the Common Stock
dividends paid during 2006 that is equal to the number of shares of Phantom
Stock in the director’s deferred compensation account on each of the four
dividend payment dates multiplied by the per share amount of each such dividend.
Under
the
Non-Employee Directors’ Plan, at the end of the deferral period for each
non-employee director, determined pursuant to the plan and each such director’s
election, Bristol West issues to the non-employee director under the 2004 Stock
Incentive Plan shares of Common Stock equal to the number of shares of Phantom
Stock in the director’s deferred compensation account rounded to the nearest
whole number. See also the disclosure below in this section under the heading
“Compensation
Arrangements Triggered Upon Changes in Control.”
Restricted
Stock Accumulated Dividends.
Restricted
stock accumulated dividends under
the
2004 Stock Incentive Plan are not factored into the calculation of the
restricted stock award’s FAS 123(R) grant date fair value that is reflected
in the “Stock
Awards”
column
in the “2006 Directors
Compensation Table”
above,
as described above in this section under the heading “Stock
Awards.”
Accordingly, in accordance with applicable SEC rules, the “All
Other Compensation”
column
in the “2006
Director Compensation Table”
above
and footnotes (1)
and
(9)
below
the table also reflect the compensation expense we recognized in 2006 with
respect to such restricted stock accumulated dividends.
Expense
Reimbursement Policy
Directors
are also reimbursed for their reasonable out-of-pocket expenses in attending
meetings.
2007
Directors’ Fees
Bristol
West’s non-employee directors will be entitled to receive the following fees
during 2007 in four installments at the end of each quarter of service (subject
to change from time to time as determined by the Compensation Committee and
the
Board):
· |
Annual
Cash Retainer:
The non-employee directors will be entitled to each receive annual
directors’ fees of $40,000.
|
· |
Audit
Committee Retainers:
|
|
· |
Committee
Chair Retainer:
The Chairperson of the Audit Committee will be entitled to receive
an
additional annual fee of
$15,000.
|
|
· |
Committee
Member Retainer:
The other members of the Audit Committee will each be entitled
to receive
an additional annual fee of
$7,500.
|
· |
Compensation
Committee Chair Retainer:
The Chairperson of the Compensation Committee will be entitled
to receive
an additional annual fee of
$7,500.
|
· |
Corporate
Governance and Nominating Committee Chair Retainer:
The Chairperson of the Corporate Governance and Nominating Committee
will
be entitled to receive an additional annual fee of
$7,500.
|
· |
Form
of Payment:
The payment alternatives available to non-employee directors is
explained
above in this section under the heading “Narrative
Disclosure to 2006 Director Compensation Table - Stock Awards -
Phantom
Stock.”
|
Potential
Payments Upon Change in Control
The
award
agreement for each restricted stock award granted to the non-employee directors
provides that the vesting conditions for the award will be accelerated in full
for death or disability (defined in the agreement to have the meaning
that
is
summarized below)
and
upon as change of control (defined in the agreement to have the meaning set
forth in the 2004 Stock Incentive Plan, which is summarized above under the
heading “Executive
Compensation - Potential
Payments Upon Termination of Employment or Change in
Control
- Change
in Control Arrangements”),
which
would include the consummation of the Pending Farmers Merger. For purposes
of
these restricted stock agreements disability is defined as it is defined in
Bristol West’s long-term disability plan as in effect from time to time, or if
there is no such plan or if not defined therein, the non-employee director’s
becoming unable to engage in the activities required by non-employee director’s
position as a director by reason of any medically determined physical or mental
impairment which can be expected to result in death or which has lasted or
can
be expected to last for a continuous period of not less than six
months.
The
Non-Employee Directors’ Plan provides that the shares of Phantom Stock will be
distributed as Common Stock upon as change in control (defined in the agreement
to have the same meaning as the definition of change in control set forth in
the
2004 Stock Incentive Plan, which is summarized above under the heading
“Executive
Compensation - Potential
Payments Upon Termination of Employment or Change in
Control
- Change
in Control Arrangements”),
which
would include the consummation of the Pending Farmers Merger.
The
table
below reflects the payments that would have been made to, and other benefits
that would have been received by, the non-employee directors as of December
31,
2006 pursuant to the Non-Employee Directors’ Plan and the restricted stock award
agreements described above in this section upon the occurrence of the following
triggering events: a change in control (as described above), death, and
permanent disability (as described above). For purposes of the table below,
we
assumed with respect to each non-employee director that the triggering event(s)
took place on December 31, 2006,
|
|
Restricted
Stock
|
|
Phantom
Stock
|
|
|
|
|
|
Unvested
Shares
|
|
Resulting
Consideration
(A)
|
|
Undistributed
Shares
|
|
Resulting
Consideration
(B)
|
|
Total
Consideration
|
|
|
|
(#)
|
|
($)
|
|
(#)
|
|
($)
|
|
($)
|
|
R.
Cary Blair
|
|
|
2,139
|
|
|
34,481
|
|
|
|
|
|
|
|
|
34,481
|
|
Richard
T. Delaney
|
|
|
2,139
|
|
|
34,481
|
|
|
|
|
|
|
|
|
34,481
|
|
Allan
W. Ditchfield
|
|
|
1,741
|
|
|
27,560
|
|
|
|
|
|
|
|
|
27,560
|
|
Todd
A. Fisher
|
|
|
|
|
|
|
|
|
5,962
|
|
|
94,378
|
|
|
94,378
|
|
Perry
Golkin
|
|
|
|
|
|
|
|
|
5,962
|
|
|
94,378
|
|
|
94,378
|
|
Mary
R. Hennessy
|
|
|
2,139
|
|
|
34,481
|
|
|
7,080
|
|
|
112,076
|
|
|
146,557
|
|
Eileen
Hilton
|
|
|
2,139
|
|
|
34,481
|
|
|
|
|
|
|
|
|
34,481
|
|
James
N. Meehan
|
|
|
2,139
|
|
|
34,481
|
|
|
1,707
|
|
|
27,022
|
|
|
61,503
|
|
Arthur
J. Rothkopf
|
|
|
2,139
|
|
|
34,481
|
|
|
3,214
|
|
|
50,878
|
|
|
85,359
|
|
(A)
|
The
amounts in this column reflect the value on December 31, 2006 of
the
previously unvested restricted stock award, which is an amount equal
to
the number of shares of restricted Common Stock multiplied by the
value of
Common Stock on December 31, 2006, based on last reported closing
price
per share of $15.83, as reported on the NYSE on December 29, 2006,
the last trading day of 2006. The amounts in this row also include
restricted stock accumulated dividends, which are payable by Bristol
West
to the named executive officer upon vesting of the restricted stock
in
accordance with the terms of the
award.
|
(B)
|
The
amounts in this column reflect the value on December 31, 2006 of
the
previously unvested restricted stock award, which is an amount equal
to
the number of shares of previously undistributed Phantom Stock multiplied
by the value of Common Stock on December 31, 2006, based on last
reported
closing price per share of $15.83, as reported on the NYSE on
December 29, 2006, the last trading day of 2006.
|
Item
12. Security Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters
SECURITY
OWNERSHIP
OF
5% HOLDERS
The
table
below shows, as of March 31, 2007, with respect to each person known to us
to be
the beneficial owner of more than 5% of the outstanding shares of our Common
Stock, how many shares of Bristol West common stock such person beneficially
owned:
Name
and Address
|
|
Number
of
Shares
|
|
Percentage
of
Shares
(A)
|
|
|
|
|
|
|
|
Bristol
West Associates LLC (1)
c/o
Kohlberg Kravis Roberts & Co
9
West 57th
St
New
York, NY 10019
|
|
|
12,434,318
|
|
|
42.1
|
%
|
Stadium
Capital Management LLC (3)
19785
Village Office Court, Suite 101
Bend,
OR 97702
|
|
|
3,945,800
|
|
|
13.4
|
%
|
T.
Rowe Price Associates Inc.
(4)
100
E. Pratt Street
Baltimore,
MD 21202
|
|
|
2,568,350
|
|
|
8.7
|
%
|
(A) |
The
amounts in this column are based on an aggregate of 29,543,076 shares
of Common Stock issued and outstanding as of March 31, 2007.
|
(1) |
According
to a Schedule 13G filed with the SEC on February 15, 2005, KKR 1996
GP,
L.L.C. (which we refer to as “KKR
1996 GP”)
is the general partner of KKR Associates 1996 L.P. (which we refer
to as
“KKR
Associates 1996”),
which is the general partner of KKR 1996 Fund L.P. (which we refer
to as
“KKR
1996 Fund”),
which is the managing member of Bristol West Associates LLC (which
we
refer to as “BW
Associates”).
Further, according to this Schedule 13G, Messrs. Henry R.
Kravis, George R. Roberts, Paul E. Raether, Michael W.
Michelson, James H. Greene, Jr., Edward A. Gilhuly, Perry
Golkin, Scott M. Stuart, Johannes P. Huth, Alex Navab and
Todd A. Fisher, as members of KKR 1996 GP, may be deemed to share
beneficial ownership of any shares beneficially owned by KKR 1996
GP, but
disclaim such beneficial ownership. No amendment has been filed to
this
Schedule 13G. Accordingly, to our knowledge, as of December 31, 2006,
each
of BW Associates, KKR 1996 Fund, KKR Associates 1996, and KKR 1996
GP had
shared voting and shared dispositive power for 12,257,368 shares
of
Bristol West common stock (approximately 41.5% of the outstanding
Bristol
West common stock)(See footnote (A)
above). The address of Bristol West Associates LLC and of each individual
listed in this footnote is c/o Kohlberg Kravis Roberts & Co.
L.P., 9 West 57th
Street,
Suite 4200, New York, New York,
10019.
|
(2) |
This
amount includes 176,950 shares of Common Stock owned by Aurora Investments
II LLC, an affiliate of Bristol West Associates
LLC.
|
(3) |
According
to a Schedule 13G filed with the SEC on February 14, 2007, Stadium
Capital
Management LLC (which we refer to as “SCM”),
is an investment adviser whose clients, including Stadium Relative
Value
Partners, L.P. (which we refer to as “SRV”), have the right to receive or
the power to direct the receipt of dividends from, or the proceeds
from
the sale of, the shares reported. Accordingly, as of December 31,
2006,
SCM had shared voting and shared dispositive power for all of the
shares
reported. SCM is the general partner of SRV, which as of December 31,
2006, had shared voting power and shared dispositive power for 2,368,662
of the shares reported (approximately 8.0% of the outstanding Bristol
West
common stock)(See footnote (A)
above). Each of Alexander M. Seaver and Bradley R. Kent is a managing
member of SCM and is reported to have had shared voting and shared
dispositive power for all of the shares reported as of December 31,
2006.
|
(4) |
According
to a Schedule 13G filed with the SEC on February 13, 2007, these
securities are owned by various individuals and institutional investors
which T. Rowe Price Associates Inc. (which we refer to as “Price
Associates”)
serves as investment adviser with power to direct investments and/or
sole
power to vote the securities. As of December 31, 2006, Price Associates
had sole voting power for 327,800 of the shares reported (approximately
1.1% of the outstanding Bristol West common stock) (See footnote
(A)
above) and shared dispositive power for all of the shares reported.
For
purposes of the reporting requirements of the Exchange Act, Price
Associates expressly disclaims that it is, in fact, the beneficial
owner
of such securities.
|
SECURITY
OWNERSHIP
OF DIRECTORS
AND MANAGEMENT
The
table
below shows, as of March 31, 2007, how many shares of Common
Stock the following beneficially owned: each of Bristol West’s directors, each
of the named executive officers who are currently employed by Bristol West,
and
all of Bristol West’s directors and executive officers as a group:
Name
|
|
Number
of
Shares
(A)
|
|
Percentage
of
Shares
(B)
|
|
|
|
|
|
|
|
James
R. Fisher
|
|
|
1,053,485
|
(1)
|
|
3.5
|
%
|
R.
Cary Blair
|
|
|
6,313
|
(2)
|
|
*
|
|
Jeffrey
J. Dailey
|
|
|
436,457
|
(3)
|
|
1.5
|
%
|
Richard
T. Delaney
|
|
|
12,649
|
(4)
|
|
*
|
|
Allan
W. Ditchfield
|
|
|
1,741
|
(5)
|
|
*
|
|
Todd
A. Fisher
(6)
|
|
|
12,434,318
|
(7)(8)
|
|
42.1
|
%
|
Perry
Golkin (6)
|
|
|
12,434,318
|
(7)(9)
|
|
42.1
|
%
|
Mary
R. Hennessy
|
|
|
4,313
|
(10)
|
|
*
|
|
Eileen
Hilton
|
|
|
4,313
|
(11)
|
|
*
|
|
James
N. Meehan
|
|
|
26,671
|
(12)
|
|
*
|
|
Arthur
J. Rothkopf
|
|
|
4,313
|
(13)
|
|
*
|
|
Robert D.
Sadler
|
|
|
122,849
|
(14)
|
|
*
|
|
Simon
J. Noonan
|
|
|
172,366
|
(15)
|
|
*
|
|
James
J. Sclafani, Jr.
|
|
|
127,720
|
(16)
|
|
*
|
|
All
directors and executive officers
as a group (24 persons)
|
|
|
15,290,698
|
|
|
48.6
|
%
|
(A)
|
Beneficial
ownership is determined in accordance with the SEC’s rules. The shares
reported in this column include restricted stock awards that the
Compensation Committee granted under the 2004 Stock Incentive Plan
to our
executive officers that had not vested as of March 31, 2007. Each
such
person has sole voting power with respect to such restricted stock,
but
does not have investment power with respect to the shares. The following
shares of our Common Stock also would be deemed to be beneficially
owned
by each person in accordance with the SEC’s rules: (1) any shares of
Common Stock subject to options held by that person that are currently
exercisable, or exercisable within 60 days after March 31, 2007, and
(2) any shares of Phantom Stock that are distributable as Common
Stock to a director within 60 days after March 31, 2007 at the election
of
the director. Accordingly,
for each individual, the shares reported in this column include the
number
of shares of Common Stock issuable upon exercise by that individual
of
outstanding stock options that are or will become exercisable before
May
30, 2007. Further, for all directors and executive officers as a
group,
the shares reported in this column include the number of such shares
of
Common Stock issuable upon exercise by all members of the group of
outstanding stock options that are or will become exercisable before
May
30, 2007. No shares of Phantom Stock are distributable as Common
Stock to
any director before May 30, 2007, pursuant to the Non-Employee
Directors’ Plan
at
the election of a director.
|
(B)
|
The
percentages in this column are based on an aggregate of
29,543,076 shares of Common Stock issued and outstanding as of March
31, 2007. In computing percentage ownership of each person, the shares
of
Common Stock deemed to be beneficially owned by each individual are
added
to the issued and outstanding shares as of March 31, 2007. These
shares,
however, are not deemed to be issued and outstanding for the purpose
of
computing the percentage ownership of each other person. Further,
in
computing percentage ownership for all directors and executive officers
as
a group, the shares of Common Stock deemed to be beneficially owned
by all
members of the group are added to the issued and outstanding shares
as of
March 31, 2007.
|
(1)
|
Mr.
Fisher is the managing member of Fisher Capital. As such, Mr. Fisher
may
be deemed to beneficially own 65,190 shares of Common Stock and
873,546 currently exercisable options to purchase shares of Common
Stock
at an exercise price of $3.83 that are beneficially owned by Fisher
Capital. Mr. Fisher disclaims beneficial ownership of these
securities, except to the extent of his pecuniary interest therein.
Mr. Fisher also has an interest in, but does not beneficially own,
26,076 shares of Common Stock as an investor through an affiliate
of
KKR.
|
(2)
|
This
amount includes 2,139 shares of restricted stock held by Mr. Blair
that
vest on February 21, 2008.
|
(3)
|
This
amount includes options to purchase 292,172 shares that are currently
exercisable. This amount also includes the following shares of restricted
stock held by Mr. Dailey: 54,348 shares that vest on May 14, 2009
(5-year
cliff vesting);
8,850 shares that vest on February 22, 2010 (5-year cliff vesting);
18,717
shares that vest on February 21, 2011 (5-year cliff vesting); and
4,587
shares that vest on March 6, 2009 (2-year cliff
vesting).
|
(4)
|
This
amount includes 5,000 shares held by Mr. Delaney’s spouse. This amount
also includes 2,139 shares of restricted stock held by Mr. Delaney
that
vest on February 21, 2008.
|
(5)
|
This
amount includes 1,741 shares of restricted stock held by Mr. Ditchfield
that vest on February 21, 2008.
|
(6)
|
The
address of each of Mr. Todd A. Fisher and Mr. Golkin is c/o Kohlberg
Kravis Roberts & Co. L.P., 9 West 57th
Street,
Suite 4200, New York, New York,
10019.
|
(7)
|
This
amount also includes 12,257,368 shares owned by BW Associates and
176,950
shares owned by Aurora Investments II LLC. KKR 1996 GP is the general
partner of KKR Associates 1996, which is the general partner of KKR
1996
Fund, which is the managing member of BW Associates. Mr. Todd A.
Fisher
and Mr. Golkin, as members of KKR 1996 GP, may be deemed to share
beneficial ownership of any shares beneficially owned by KKR 1996
GP, but
disclaim such beneficial ownership. Each of BW Associates, KKR 1996
Fund,
KKR Associates 1996, and KKR 1996 GP had shared voting and shared
dispositive power for 12,257,368 shares of Common Stock (see table
above
in this section under the heading “Security
Ownership of 5% Holders”).
|
(8)
|
This
amount does not include approximately 5,984 shares of Phantom Stock
held by Mr. Todd A. Fisher under the Non-Employee Directors’ Plan.
|
(9)
|
This
amount does not include approximately 5,984 shares of Phantom Stock
held by Mr. Golkin under the Non-Employee Directors’ Plan.
|
(10)
|
This
amount includes 2,139 shares of restricted stock held by Ms. Hennessy
that
vest on February 21, 2008. This amount does not include approximately
7,106 shares of Phantom Stock held by Ms. Hennessy under the
Non-Employee Directors’ Plan.
|
(11)
|
This
amount includes 2,139 shares of restricted stock held by Dr. Hilton
that vest on February 21, 2008.
|
(12)
|
This
amount includes 2,139 shares of restricted stock held by Mr. Meehan
that vest on February 21, 2008. This amount does not include approximately
1,713 shares of Phantom Stock held by Mr. Meehan under the
Non-Employee Directors’ Plan.
|
(13)
|
This
amount includes 2,139 shares of restricted stock held by Mr. Rothkopf
that vest on February 21, 2008. This amount does not include approximately
3,226 shares of Phantom Stock held by Mr. Rothkopf under the
Non-Employee Directors’ Plan.
|
(14)
|
This
amount includes options to purchase 81,325 shares that are currently
exercisable by Mr. Sadler. This amount also includes the following
shares of restricted stock held by Mr. Sadler: 13,587 shares that
vest on
May 14, 2009 (5-year cliff vesting); 4,425 shares that vest on
February 22, 2010 (5-year cliff vesting); 401 shares that vest on
February 21, 2008 (2-year cliff vesting); 8,021 shares that vest on
February 21, 2011 (5-year cliff vesting); and 1,167 shares that vest
on
March 6, 2009 (2-year cliff
vesting).
|
(15)
|
This
amount includes options to purchase 97,623 shares that are currently
exercisable by Mr. Noonan. This amount also includes the following
shares of restricted stock held by Mr. Noonan: 27,174 shares
that vest on May 14, 2009 (5-year cliff vesting); 5,900 shares that
vest on February 22, 2010 (5-year cliff vesting); 1,003 shares that
vest
on February 21, 2008 (2-year cliff vesting); 17,380 shares that vest
on February 21, 2011 (5-year cliff vesting); and 2,289 shares that
vest on March 6, 2009 (2-year cliff vesting).
|
(16)
|
This
amount includes options to purchase 69,052 shares that are currently
exercisable by Mr. Sclafani. This amount also includes the following
shares of restricted stock held by Mr. Sclafani: 18,098 shares that
vest on May 14, 2009 (5-year cliff vesting); 5,900 shares that
vest on February 22, 2010 (5-year cliff vesting); 869 shares that
vest on February 21, 2008 (2-year cliff vesting); 13,369 shares that
vest on February 21, 2011 (5-year cliff vesting); and 1,477 shares
that vest on March 6, 2009 (2-year cliff vesting).
|
On
March
1, 2007, Bristol West entered into the Farmers Merger Agreement with Farmers.
A
copy of the Farmers Merger Agreement is attached as Exhibit 2.1 to our Form
8-K
that we filed with the SEC on March 7, 2007 and is included as part of our
Preliminary Proxy Statement filed with the SEC on April 23, 2007. Under the
Farmers Merger Agreement, Merger Sub will be merged with and into Bristol West,
with Bristol West being the surviving corporation. Farmers is a Nevada
corporation which, along with its subsidiaries, provides insurance management
services to members of the Farmers Insurance Exchange, Truck Insurance Exchange
and Fire Insurance Exchange (which we refer to as the “Exchanges”), which are
among the leading U.S. property and casualty insurers. Merger Sub is a Delaware
corporation formed in connection with the execution of the Farmers Merger
Agreement. Farmers is currently owned by Zurich Financial Services Group, which,
if the Pending Farmers Merger is completed, will indirectly own all of the
outstanding capital stock of Bristol West immediately after the Pending Farmers
Merger. Immediately prior to the consummation of the Pending Farmers Merger,
Farmers will contribute 50% of the issued and outstanding common stock of Merger
Sub to each of two of Farmers’ subsidiaries. Farmers and these subsidiaries have
agreed that, immediately following the Pending Farmers Merger, the subsidiaries
will distribute certain assets and assign certain employees of Bristol West
to
Farmers and then sell all of the outstanding capital stock of Bristol West
to
the Exchanges and Mid-Century Insurance Company. Following the sale, Parent
will
continue to provide insurance management services with respect to Bristol West’s
insurance operations.
Concurrently
with the execution of the Farmers Merger Agreement, Bristol West, Farmers,
Merger Sub as well as Bristol West Associates LLC and Aurora Investments II
LLC,
each Bristol West stockholders affiliated with KKR (which we refer to
collectively as the “KKR Stockholders”), entered into a voting agreement (which
we refer to as the “Farmers Voting Agreement”). Pursuant to the Farmers Voting
Agreement, and subject to its terms and conditions, each of the KKR Stockholders
has agreed, among other things, to vote all of its shares of our Common Stock
in
favor of the Proposed Farmers Merger, but also retains the right to vote 50%
of
its shares in favor of an alternative acquisition agreement if the
Board
changes its recommendation to vote in
favor
of the Proposed Farmers Merger in accordance with the terms of the Farmers
Merger Agreement. A copy of the Farmers Voting Agreement is attached as Exhibit
99.1 to our Form 8-K that we filed with the SEC on March 7, 2007
For
more
information regarding the Pending Farmers Merger, the Farmers
Merger
Agreement and the Farmers Voting Agreement, see our Preliminary Proxy Statement
filed with the SEC on April 23, 2007.
SECURITIES
AUTHORIZED
FOR ISSUANCE
UNDER
EQUITY
COMPENSATION
PLANS
The
table
below shows information with respect to our equity compensation plans and
individual compensation arrangements as of December 31, 2006, and amends the
disclosure
that is included in the Original Report, under the heading “Item 5.
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer
Purchase of Equity Securities - Securities Authorized for Issuance Under Equity
Compensation Plans.”
Plan
Category
|
|
Number
of
Securities
to be
Issued
Upon
Exercise
of
Outstanding
Options,
Warrants
and
Rights (A)
|
|
Weighted-Average
Exercise
Price of
Outstanding
Options,
Warrants
and
Rights
(B)
|
|
Number
of
Securities
Remaining
Available
For
Future
Issuance
(C)
|
|
|
|
(#)
|
|
($)
|
|
(#)
|
|
|
|
|
|
|
|
|
|
Equity
compensation plans approved by security holders
|
|
|
—
|
|
|
|
|
|
|
|
Equity
compensation plans not approved by security holders (1)
|
|
|
3,041,598.21
|
|
|
4.13
|
|
|
2,378,981
|
|
(A)
|
The
amounts reflected in this column include undistributed Phantom Stock
in
our non-employee director’s deferred compensation accounts under
our Non-Employee Directors’ Plan, which is accounted for in each such
account rounded to two decimal points. Phantom
Stock is described in more detail above
under the heading “Item
11. Executive Compensation - Director Compensation - Narrative Disclosure
to 2006 Director Compensation Table - All Other Compensation - Phantom
Stock”).
The amounts
reflected in this column exclude restricted stock awards issued under
the
2004 Stock Incentive Plan that are outstanding but not yet
vested.
|
(B)
|
Amounts
reflected in this column do not take any Phantom Stock into
account.
|
(C)
|
Amounts
reflected in this column exclude securities reflected in the column
entitled “Number
of Securities to be Issued Upon Exercise of Outstanding Options,
Warrants
and Rights.”
The amounts reflected in this column include 2,212,084 shares of
Common
Stock available for issuance under our 2004 Stock Incentive Plan
in the
form of (a) restricted stock, (b) options and other derivative
securities convertible into Common Stock, and (c) Phantom Stock that
is issuable under our Non-Employee Directors’ Plan and the 2004 Stock
Incentive Plan. See Note 10 to the Consolidated Financial Statements
included in the
Original Report.
|
(1)
|
All
outstanding options, warrants and other rights were issued as follows
and
were not subject to stockholder approval because Bristol West was
privately held until an initial public offering on February 12,
2004:
|
|
|
Options
issued under the 1998 Stock Option Plan. See Note 10 to the
Consolidated Financial Statements included in the Original
Report.
|
|
|
Options
issued under the 2004 Stock Incentive Plan. See Note 10 to the
Consolidated Financial Statements included in the Original
Report.
|
|
|
Phantom
Stock issued under our Non-Employee Directors’ Plan.
|
|
|
Options
originally issued to Firemark Partners, LLC, on July 23, 2002, to
purchase
521,520 shares of Common Stock at an exercise price of $3.83 per
share
pursuant to a Services Agreement, dated July 24, 2002. See
Notes 8 and 10 to the Consolidated Financial Statements included
in the
Original Report.
|
|
|
Warrants
issued to Inter-Ocean Reinsurance (Ireland) Limited, on July 1, 2001,
to
purchase 782,280 shares of Common Stock at an exercise price of $3.83
per
share. See Note 10 to the Consolidated Financial Statements included
in the Original Report.
|
|
|
Options
issued to Fisher Capital LLC, from July 9, 1998 to October 1, 2003,
to
purchase 873,546 shares of Common Stock at an exercise price of $3.83
per
share. These options are fully vested. See Note 8 to the
Consolidated Financial Statements included in the Original
Report.
|
|
|
Options
issued to George O’Brien, currently our Senior Vice President-Chief Legal
Officer, on April 1, 2003, while he was outside counsel, to purchase
19,557 shares of Common Stock at an exercise price of $3.83 per
share. These options are fully vested. See Note 10 to the
Consolidated Financial Statements included in the Original
Report.
|
Item
13. Certain Relationships and Related Transactions, and Director
Independence
ERTAIN
RELATIONSHIPS
AND
RELATED
TRANSACTIONS
Kohlberg
Kravis Roberts & Co. L.P.
KKR
performs consulting and certain other services for Bristol West pursuant to
an agreement to provide management, consulting and certain other services (the
“KKR Contract”). Pursuant to the KKR Contract, Bristol West agreed to pay
KKR $500,000 per year, plus reasonable expenses incurred to provide the
services. The KKR Contract continues in effect from year to year unless
KKR agrees with Bristol West to amend or terminate the contract.
Partnerships affiliated with KKR owned 42.2% of the Common Stock as of December
31, 2006. Pursuant to the KKR Contract, we incurred fees of $500,000
related to services provided by KKR during the year ended December 31,
2006. We also reimbursed KKR for expenses incurred on our behalf in the
amount of $6,702 during the year ended December 31, 2006. We owed KKR
fees of $125,000 as of December 31, 2006.
Fisher
Capital Corporation, LLC
Fisher
Capital performs consulting and certain other services for Bristol West
pursuant to an agreement to provide management, consulting and certain other
services (which we refer to as the “Fisher Capital Contract”). Pursuant to
the Fisher Capital Contract, we agreed to pay Fisher Capital, during the year
ended December 31, 2006, $95,000 per year plus reasonable expenses incurred
to
provide the services. James R. Fisher, our Executive Chairman of the
Board, is the managing member of Fisher Capital. Pursuant to the Fisher
Capital Contract, we incurred fees of $95,000 related to services provided
by
Fisher Capital during the year ended December 31, 2006. We also
reimbursed Fisher Capital for expenses incurred on Bristol West’s behalf in the
amount of $32,258 during the year ended December 31, 2006.
Mr. Fisher did not receive any portion of the fees paid to Fisher Capital
in 2006. We owed no fees to Fisher Capital as of December 31,
2006. Bristol West and Fisher Capital agreed to terminate the Fisher
Capital Contract effective December 31, 2006.
At
December 31, 2006, Fisher Capital held options to purchase 873,546 shares of
our
Common Stock. These options have an exercise price of $3.83 per share and
will expire beginning on July 9, 2013 through October 1, 2018. All these
options were issued prior to 2004 and are fully vested. See the
“Outstanding Equity Awards at Fiscal Year-End” table
above in the section entitled “Item 11. Executive
Compensation.”
Firemark
Services Agreement and OneShield
Firemark
Partners LLC (which we refer to as “Firemark”) is a service company created by
Inder-Jeet Gujral. Mr. Gujral is one of the founders of
OneShield Inc. (which we refer to as “OneShield”), the developer of our
OneStep® software. Mr. Gujral is also Chairman of the Board of Directors
of OneShield and a controlling partner of Firemark. Mr. Gujral was one of
our directors from March 24, 2004 through May 19, 2006. As of
December 31, 2006, Mr. Gujral owned 0.15% of OneShield’s shares on a fully
diluted basis. Certain members and employees of KKR, Fisher Capital and
James R. Fisher, our Executive Chairman of the Board, have interests in
OneShield through Aurora Investments LLC. As of December 31, 2006,
the interest of Aurora Investments LLC in OneShield was 7.1% on a fully diluted
basis.
Firemark
Services Agreement.
Bristol
West entered into a services agreement with Firemark, dated July 24, 2002,
as corrected and amended on November 8, 2005 and amended as of October 1,
2006 (which we refer to as the “Firemark Agreement”). We paid Firemark and
OneShield, collectively, $2,679,670 for services and license fees under the
Firemark Agreement in 2006. This payment includes the prepayment of all
remaining license fees under the Firemark Agreement in the amount of $818,091
which constituted prepayment of $900,000 in license fees remaining due under
the
Firemark Services Agreement, at the present value of the remaining monthly
payments discounted by 15% at the time of prepayment.
Firemark
Options.
Pursuant to the Firemark Agreement, in exchange for providing development and
implementation assistance to Bristol West with respect to OneStep, we granted
Firemark options to purchase 521,520 shares of our Common Stock at a price
of
$3.83 per share. Twenty-five percent of these options vested in the first
year of the Firemark Agreement, while vesting of the remaining 75% of these
options is based upon delivery of the OneStep system and future specified
improvements in our underwriting expense ratio, as measured against the
underwriting expense ratio for the four quarters prior to the effective date
of
the Firemark Agreement. As of December 31, 2006, these vesting
requirements had not been satisfied.
On
November 21, 2005, Firemark assigned 78,228 of these options (representing
15%
of the total 521,520 option shares) to OneShield, the developer of our OneStep
software and owner of 15% of the equity interest of Firemark.
On March 24, 2006, Firemark exercised options to purchase 110,823
shares of our Common Stock. Firemark used 22,662 of the option shares
to settle the exercise price of $424,452 for these options. The number of
option shares used to settle the exercise price was calculated using the per
share closing market price of our Common Stock on the date of exercise of
$18.73, as reported on the NYSE. As of December 31, 2006, Firemark held
options to purchase 332,469 shares of our Common Stock and OneShield held
options to purchase 58,671 shares of our Common Stock.
Company
Investments in and Loans to OneShield.
As
consideration for OneShield being chosen as the subcontractor in this services
agreement, OneShield granted Bristol West warrants to purchase OneShield common
stock equal to 2% of the then fully diluted capital stock of OneShield. In
addition, Bristol West purchased 8.0 million shares of Series D preferred
stock of OneShield. Jeffrey J. Dailey, our President and Chief Executive
Officer, became a director of OneShield on November 25, 2003, pursuant to
an investor rights agreement entered into in connection with Bristol West’s
investment in OneShield.
Effective
March 30, 2006, OneShield completed a recapitalization and an equity financing
with the consent of its stockholders, including Bristol West. Pursuant to
the recapitalization, Bristol West’s 8.0 million shares of OneShield Series
D preferred stock were converted into 1.6 million units consisting of 1.6
million shares of OneShield Series E-2 preferred stock and 1.6 million shares
of
OneShield Series C-2 common stock. Bristol West’s warrants to purchase
OneShield common stock also were converted into warrants to purchase OneShield
Series C-3 common stock. Pursuant to the recapitalization and the
financing, OneShield authorized and issued Series E-1 preferred stock with
liquidation preferences equal to three times the investment amount that are
senior to the Series E-2 preferred stock.
Bristol
West’s total ownership of OneShield stock (including the warrants but excluding
debt conversion rights) represented 6.5% of the fully diluted capital stock
of
OneShield as of December 31, 2006. As of December 31, 2006,
Bristol West owned $2,000,000 of OneShield Series E-2 preferred stock and Series
D preferred stock, and had loans receivable, including accrued interest
receivable, from OneShield of $312,988.
On
February 15, 2007, Bristol West invested $500,000 in exchange for 400,000 units,
each consisting of one share of OneShield Series E-1 preferred stock and one
share of OneShield Series C-1 common stock, on substantially the same terms
as
OneShield’s March 30, 2006 equity financing. The Series E-1 preferred
stock has senior liquidation preferences equal to three times the initial
investment amount. As of February 28, 2007, Bristol West’s total ownership
of OneShield stock (including the warrants but excluding debt conversion rights)
represented 7.2% of the fully diluted capital stock of OneShield.
REVIEW,
APPROVAL
OR
RATIFICATION
OF
TRANSACTIONS
WITH RELATED
PERSONS
Pursuant
to our written Policies and Procedures for Related Person Transactions, the
Audit Committee reviews and analyzes any known or proposed related person
transactions (including amendments of previously approved related person
transactions) that the Audit Committee has not previously reviewed. The Audit
Committee will approve, ratify or reject each such Related Person Transaction.
For such purposes, a “transaction” is any financial transaction, arrangement or
relationship (including any indebtedness or guarantee of indebtedness) or any
series of similar transactions, arrangements or relationships. For such
purposes, a “related person transaction” is a transaction with respect to which
Bristol West and any related person are parties or participants (including
any
transactions reportable pursuant to the following (which we refer to
therein as “Related Person Reporting Rules”): (1) generally accepted
accounting principles in the United States, including Financial Accounting
Statement No. 57, “Related
Party Disclosures,”
(2) the Securities Act and the Exchange Act, and all related rules and
regulations promulgated by the SEC, including Item 404 of Regulation S-K,
and (3) all other applicable laws, rules and regulations), other
than:
· |
transactions
available to all Bristol West employees
generally
|
· |
transactions
that are neither material nor otherwise reportable pursuant to the
Related
Person Reporting Rules because (1) the amount involved, when
aggregated with all similar transactions, is neither material nor
otherwise in excess of minimum amounts established for reporting
purposes,
or (2) each Related Person who is a party or participant has no
direct or indirect material
interest
|
For
such
purposes, a “Related Person” is:
· |
a
Bristol West director or nominee for
director
|
· |
a
Bristol West executive officer (solely within the meaning of Section
16(a)
of the Exchange Act)
|
· |
a
person who is an immediate family member (as defined below) of an
executive officer or director
|
· |
a
Bristol West stockholder owning in excess of 5% of our Common Stock
|
· |
an
entity with respect to which any of the foregoing people or entities
is
the owner, has a controlling interest, or has any other substantial
ownership interest
|
For
such
purposes, “immediate family member” means, with respect to any Related Person,
their spouse, parents (including step-parents), children (including
step-children), siblings, mother-in-law, father-in-law, sons-in-law,
daughters-in-law, brothers-in-law, sisters-in-law and anyone (other than a
tenant or employee) who shares their home.
We
have
established disclosure controls and procedures to facilitate identification
of
related persons and related person transactions and communication of this
information to our Chief Legal Officer and members of our Legal Department,
who
are responsible for reviewing and analyzing such information. If the Chief
Legal
Officer concludes that any transaction is or may be a related person
transaction, the Chief Legal Officer notifies our Chief Financial Officer and/or
our Chief Executive Officer. After further review and analysis, if the Chief
Legal Officer and the Chief Financial Officer and/or the Chief Executive Officer
concur with the analysis that the transaction is a related person transaction,
the Chief Legal Officer, the Chief Financial Officer and/or the Chief Executive
Officer submit the transaction to the Audit Committee for approval, ratification
or rejection after further review and analysis.
Our
Board
annually conducts an assessment of the independence of each director using
the
independence definition and procedures set forth in our Corporate Governance
Guidelines, the corporate governance standards of the NYSE, and applicable
rules
and regulations of the SEC. See the disclosure above under the heading
“Item
10. Directors, Executive Officers and Corporate Governance - Corporate
Governance - Corporate Governance Documents - Corporate Governance
Guidelines.”
The
Board conducts this assessment not only for purposes of Board membership, but
also for purposes of membership on each Board committee on which a director
serves.
The
Board
has adopted categorical standards as part of our Corporate Governance Guidelines
to assist it in evaluating the independence of each of its directors (which
we
refer to as the “Categorical Standards”). See the disclosure below in this
section under the heading “Director
Independence - Categorical Standards.”
The
Board adopted the Categorical Standards to assist the Board in determining
whether or not certain relationships between our directors and Bristol West
(either directly or as a partner, stockholder or officer of an organization
that
has a relationship with Bristol West) constitute material relationships. The
Categorical Standards establish thresholds at which certain relationships are
deemed to be not material. With respect to directors who have a business or
other relationship that is significant but does not fit within the Categorical
Standards, the Board assesses each director’s independence with respect to that
relationship by reviewing any potential conflicts of interest and significant
outside relationships. In determining any such director’s independence, the
Board broadly considers all relevant facts and circumstances, including specific
criteria included in the NYSE’s corporate governance standards. For these
purposes, the NYSE requires the Board to consider certain relationships that
existed during a three-year look-back period. The Board considers the issue
not
merely from the standpoint of a director, but also from the standpoint of
persons or organizations with which the director has an affiliation.
The
Board
conducted an assessment of the independence of each director at its regularly
scheduled meeting on February
20, 2007. Based on this assessment, the Board affirmatively determined that
the
following current Board members were independent: R. Cary Blair, Richard T.
Delaney, Allan W. Ditchfield, Mary R. Hennessy, Eileen Hilton, James
N. Meehan and Arthur J. Rothkopf. Except
with respect to the relationships described below, the Board affirmatively
determined that these Board members were independent because they met the
requirements of the Categorical Standards:
General
Information:
Partnerships affiliated with KKR owned 42.2%, 40.5% and 38.5% of our Common
Stock as of December 31, 2006, 2005 and 2004, respectively. For more information
regarding our relationships with KKR, see the information above in this section
under the heading “Certain
Relationships and Related Transactions.”
Partnerships affiliated with KKR owned approximately 40.6% of Alea Group
Holdings Ltd. at December 31, 2004.
Richard
T. Delaney: Mr.
Delaney was a director of Alea Group Holdings Ltd. from January 1, 2002 to
October 16, 2003, before he joined our Board. After he resigned from Alea
Group Holdings Ltd.’s board of directors through the end of 2004, Mr. Delaney
continued consulting for Alea Group Holdings Ltd. In 2004, he received
consulting fees from Alea Group Holdings Ltd. plus grants for shares of Alea
Group Holdings Ltd. stock. In late 2004 and early 2005, Mr. Delaney
consulted briefly with KKR in connection with a potential acquisition, but
he
did not bill KKR for that work. None of Mr. Delaney’s consulting work for Alea
Group Holdings Ltd. or KKR involved Bristol West or any of its subsidiaries.
The
Board did not consider these relationships, individually or in the aggregate,
to
be material for purposes of determining Mr. Delaney’s
independence.
Mary
R. Hennessy:
In late
2004 and 2005, Ms. Hennessy performed consulting services for KKR in
connection with a portfolio investment and a potential acquisition. The total
consulting fees that Ms. Hennessy received for this work constituted less than
10% of her 2005 total income. None of Ms. Hennessy’s consulting work for
KKR involved Bristol West or any of its subsidiaries. The Board did not consider
this consulting relationship to be material for purposes of determining Ms.
Hennessy’s independence.
Arthur
J. Rothkopf: Mr. Rothkopf
is a director of Insurance Services Office (which we refer to as “ISO”).
ISO
is a vendor that provides services to Bristol West. Bristol West’s payments to
ISO in 2006, 2005, and 2004 were $851,113, $1,052,729, and $823,246,
respectively. None of these payments exceeded the greater of $1 million or
2% of ISO’s consolidated gross revenues. The Board did not consider this
relationship to be material for purposes of determining Mr. Rothkopf’s
independence.
Categorical
Standards
The
Categorical Standards adopted by our Board provide as follows:
The
Board
and the Corporate Governance and Nominating Committee will broadly consider
all
relevant facts and circumstances and will apply the following
standards.
|
a.
|
A
director will not be considered independent if,
|
|
·
|
the
director is, or has been within the last three years, an employee
of the
Company, or an immediate family member is or has been within the
last
three years, an executive officer, of the Company;
or
|
|
·
|
the
director or an immediate family member of the director, has received,
during any twelve-month period within the last three years, more
than
$100,000 in direct compensation from the Company, other than director
and
committee fees and pension or other forms of deferred compensation
for
prior service (provided that such compensation is not contingent
in any
way on continued service with the Company); except that compensation
received by an immediate family member of the director for services
as an
non-executive employee of the Company need not be considered in
determining independence under this test;
or
|
|
·
|
the
director or an immediate family member is a current partner of a
firm that
is the Company’s internal or external auditor; or the director is a
current employee of such a firm; or the director has an immediate
family
member who is a current employee of such a firm and who participates
in
the firm’s audit, assurance or tax compliance (but not tax planning)
practice; or the director or an immediate family member was within
the
last three years (but is no longer) a partner or employee of such
a firm
and personally worked on the Company’s audit within that time frame; or
the director, or an immediate family member of the director, is or
has
been within the last three years, employed as an executive officer
of
another company where any of the Company’s present executives at the same
time serves or served on that company’s compensation committee; or
|
|
·
|
the
director, or an immediate family member of the director, is or has
been
within the last three years, employed as an executive officer of
another
company where any of the Company’s present executives at the same time
serves or served on that company’s compensation committee;
or
|
|
·
|
the
director is a current employee, or an immediate family member is
a current
executive officer, of a company (other than a charitable organization)
that has made payments to, or received payments from, the Company
for
property or services in an amount which, in any of the last three
fiscal
years, exceeds the greater of $1 million or 2% of such other company’s
consolidated gross revenues; provided, however, that in applying
this
test, both the payments and the consolidated gross revenues to be
measured
will be those reported in the last completed fiscal year; and provided,
further, that this test applies solely to the financial relationship
between the Company and the director’s (or immediate family member’s)
current employer - the former employment of the director or immediate
family member need not be
considered.
|
|
b.
|
A
director will only be appointed as a member of the Board Audit Committee
if he or she also satisfies the independence criteria laid down in
SEC
Rule 10A-3.
|
|
c.
|
The
following relationships will not be considered to be material
relationships that would impair a director’s
independence:
|
|
·
|
Commercial Relationship: If a director
of the
Company is an executive officer or an employee, or whose immediate
family
member is an executive officer, of another company that makes payments
to,
or receives payments from, the Company for property or services in
an
amount which, in any single fiscal year, does not exceed the greater
of
(a) $1,000,000 or (b) 2% of such other company’s consolidated gross
revenues; |
|
·
|
Indebtedness Relationship: If a director
of
the Company is an executive officer of another company which is indebted
to the Company, or to which the Company is indebted, and the total
amount
of either company’s indebtedness is less than 2% of the consolidated
assets of the company wherein the director serves as an executive
officer; |
|
·
|
Equity Relationship: If the director
is an
executive officer of another company in which the Company owns a common
stock interest, and the amount of the common stock interest is less
than
10% of the total shareholders’ equity of the company where the director
serves as an executive officer; or |
|
·
|
Charitable Relationship: If a director
of the
Company, or the spouse of a director of the Company, serves as a director,
officer or trustee of a charitable organization, and the Company’s
contributions to the organization in any single fiscal year are less
than
the greater of (a) $1,000,000 or (b) 2% of that organization’s gross
revenues. |
|
d.
|
For
relationships that do not meet the categorical standards of immateriality
set forth in section (c) above, or for relationships that are covered,
but
as to which the Board believes a director may nevertheless be considered
independent, the determination of whether the relationship is material
or
not, and therefore whether the director would be independent, will
be made
by the directors who satisfy the independence guidelines set forth
in
Sections (a) to (c) above. The Company will explain in its proxy
statement
any Board determination that a relationship was immaterial in the
event
that it did not meet the categorical standards of immateriality set
forth
in Section (c) above.
|
|
e.
|
For
the purposes of these standards, an “immediate family member” includes a
person’s spouse, parents, children, siblings, mothers-in-law,
fathers-in-law, sons-in-law, daughters-in law, brothers-in-law,
sisters-in-law and anyone (other than domestic employees) who shares
such
person’s home; except that when applying the independence tests described
above, the Company need not consider individuals who are no longer
immediate family members as a result of legal separation or divorce
or
those who have died or have become
incapacitated.
|
Copies
of
the Corporate Governance Guidelines, including the Categorical Standards, are
available, without charge, at
www.bristolwest.com/Bristolwest/Investor/Governance.aspx, our investor relations
website. See the disclosure above under the heading “Item
10. Directors, Executive Officers and Corporate Governance - Corporate
Governance - Corporate Governance Documents.”
Item
14. Principal Accounting Fees and Services
The
Audit
Committee has selected Deloitte & Touche LLP as the independent
registered public accounting firm to perform the audit of our financial
statements for the fiscal year ending December 31, 2007. The Board has ratified
this selection. Deloitte & Touche LLP acted as our independent auditor for
the fiscal year ended December 31, 2006.
FEES
PAID
TO
INDEPENDENT
AUDITOR
The
Board
delegates the determination of the audit fees of Deloitte & Touche LLP and
their respective affiliates (which we refer to collectively as “Deloitte”) to
the Audit Committee. Deloitte has billed us for the following fees and expenses
for professional services rendered to us for the fiscal years ended December
31,
2006 and December 31, 2005:
|
|
2006
(A)
|
|
2005
(A)
|
|
|
|
($)
|
|
($)
|
|
Audit
fees (1)
|
|
|
1,155,713
|
|
|
1,358,992
|
|
Audit-related
fees (2)
|
|
|
172,680
|
|
|
695,900
|
|
Tax
fees (3)
|
|
|
112,400
|
|
|
88,237
|
|
All
other fees (4)
|
|
|
1,500
|
|
|
—
|
|
Total
fees
|
|
|
1,442,293
|
|
|
2,143,129
|
|
(A) |
The
Audit Committee approved 100% of Deloitte’s services and the fees and
expenses reflected in this column in accordance with the committee’s
pre-approval policies and procedures, which are described below
in this
section under the heading “Audit
Committee Pre-Approval of Services by the Independent
Auditor.”
In 2006, the Audit Committee approved $46,700 of the fees and expenses
reflected above in the line items entitled “Audit-related
fees”
(this portion representing 12.2% of such fees and expenses) and
“Tax
Fees” (this portion representing 22.9% of such fees and expenses)
pursuant to the de
minimus
exception set forth Rule 2-01(c)(7)(i)(C) of Regulation S-X,
with respect to which the pre-approval requirement is waived. This
amount
represents 2.9% of total amounts paid by Bristol West to Deloitte
during
2006, which is less than the 5% maximum contemplated by
Rule 2-01(c)(7)(i)(C) of Regulation S-X with respect to such
waivers.
|
(1) |
Audit
fees consist primarily of fees and expenses related to professional
services rendered for the audit of our annual financial statements
and the
review of interim financial statements included in our quarterly
reports
on Form 10-Q during fiscal years ended December 31, 2006 and
December 31, 2005, accounting consultations to the extent necessary
for Deloitte to fulfill its responsibility under generally accepted
auditing standards, as well as services that are normally provided
by
Deloitte in connection with other statutory and regulatory filings
or
engagements for those fiscal years. The amounts reflected for this
fee
category for fiscal 2006 and 2005 include such audit fees and expenses
regardless of when billed. We expect that Deloitte will submit
to us
during May 2007 a final billing installment with respect to the audit
of our annual financial statements for the fiscal year ended
December 31, 2006, in an amount of approximately $140,000 plus
expenses.
|
(2) |
Audit-related
fees consist primarily of fees and expenses related to professional
services rendered for assurance and related services that are reasonably
related to the performance of the audit or review of our annual
financial
statements for the fiscal years ended December 31, 2006 and
December 31, 2005, that are not included in the amounts disclosed as
audit fees above. The amounts reflected for this fee category for
fiscal
2006 and 2005 include such audit-related fees and expenses billed
in 2006
and 2005, respectively. For 2006 and 2005, such audit-related fees
include
internal control advisory services and related expenses outside
the scope
of the audit ($116,650 and $660,500, respectively) as well as fees
and
expenses associated with the audit of our retirement plan ($35,030
and
$35,400, respectively).
|
(3) |
Tax
fees consist primarily of fees and expenses related to professional
services rendered for tax compliance, tax consulting, and tax planning
for
the fiscal years ended December 31, 2006 and December 31, 2005.
The amounts reflected for this fee category for fiscal 2006 and 2005
include such tax fees and expenses billed in 2006 and 2005,
respectively.
|
(4) |
All
other fees consist primarily of fees and expenses related to products
and
professional services for the fiscal years ended December 31, 2006
and December 31, 2005, that are not included in the amounts disclosed
in the three other categories above. The amounts reflected for this
fee
category for fiscal 2006 and 2005 include such other fees and expenses
billed in 2006 and 2005, respectively. For 2006, this amount consisted
of
the annual subscription fee to Deloitte’s Accounting Research Tool (DART).
Deloitte did not perform any such services for which it billed us
during
2005.
|
Audit
Committee Pre-Approval of Services by the Independent
Auditor
The
Audit
Committee approves in advance any audit or non-audit engagement or relationship
between Bristol West and our independent auditor, other than prohibited
non-auditing services. The Audit Committee has adopted procedures for the
approval of audit and non-audit services between regularly scheduled Audit
Committee meetings. Our Chief Financial Officer is required to contact the
Audit
Committee Chairperson to request such approval. The Audit Committee Chairperson
or another member of the Audit Committee designated by the Chairperson is
empowered to approve in writing such services that in the aggregate will not
exceed $100,000. The entire Audit Committee is required to review and affirm
this engagement at the next regularly scheduled meeting of the committee. This
procedure relates only to pre-approval of engagements by our independent
auditor.
Item
15. Exhibits, Financial Statement Schedules
|
a)
|
|
|
|
|
|
|
|
1.
|
Financial
Statements: The following financial statements were previously
included in
the Original Report:
|
|
|
|
|
|
|
|
The
Consolidated Financial Statements for the year ended December 31,
2006 commence on page F-1 of the Original Report.
|
|
|
|
|
|
|
2.
|
Financial
Statement Schedules Index: The following financial statement
schedules
were previously included in the Original Report:
|
|
|
|
|
Title
|
|
|
|
|
|
|
|
Schedule
I-Summary of Investments-Other than Investments in
Affiliates
|
|
|
|
Schedule
II-Condensed Financial Information of Registrant
|
|
|
|
Schedule
III-Supplementary Insurance Information
|
|
|
|
Schedule
IV-Reinsurance
|
|
|
|
Schedule
V-Valuation and Qualifying Accounts
|
|
|
|
Schedule
VI-Supplementary Information Concerning Property and Casualty
Operations
|
|
|
|
|
|
|
|
The
Financial Statement Schedules commence on page S-1 of the
Original
Report.
|
|
|
|
|
|
|
|
All
other schedules have been omitted as the required information
is
inapplicable or the information is presented in the Consolidated
Financial
Statements or Notes thereto.
|
|
|
|
|
|
|
3.
|
Exhibits
|
|
|
|
|
|
|
|
Part
IV of the Original Report is hereby amended to add the exhibits
listed
below that are required to be filed in connection with this
Amended
Report. See the separate
Exhibit
Index attached hereto and incorporated herein.
|
Exhibit
Number
|
|
Description
of Document
|
|
|
|
31.1
|
|
Rule 13a-14(a)/15d-14(a)
Certification executed by Jeffrey J. Dailey, Chief Executive
Officer and
President of Bristol West Holdings, Inc. (pursuant to Section 302 of
the Sarbanes-Oxley Act of 2002) (exhibit 31.1 to this Amendment
No. 1
to Annual Report on Form 10-K)
|
|
|
|
31.2
|
|
Rule 13a-14(a)/15d-14(a)
Certification executed by Robert D. Sadler, Senior Vice President-Chief
Financial Officer of Bristol West Holdings, Inc. (pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002) (exhibit 31.2 to this
Amendment No. 1 to Annual Report on Form 10-K)
|
|
|
|
Additional
Exhibits.
In accordance with Item 601(32)(ii) of Regulation S-K, Exhibit 32.1
is to be treated as “furnished” rather than “filed” as part of the
report.
|
|
|
|
32.1
|
|
Section 1350
Certification executed by Jeffrey J. Dailey, Chief Executive
Officer and
President of Bristol West Holdings, Inc., and by Robert D.
Sadler, Senior
Vice President-Chief Financial Officer of Bristol West Holdings,
Inc.
(exhibit 32.1 to this Amendment No. 1 to Annual Report on Form
10-K)
|
|
(b)
|
See
Item 15(a)(3) and the separate
Exhibit Index attached hereto and incorporated herein.
|
|
|
|
|
(c)
|
See
item 15(a)(2).
|
SIGNATURES
Pursuant
to the requirements of Section 13 or 15(d) of the Securities Exchange Act
of 1934, the Registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.
|
|
|
|
BRISTOL
WEST HOLDINGS, INC. |
|
|
|
|
By: |
/s/ Jeffrey
J. Dailey |
|
Jeffrey J. Dailey
Chief
Executive Officer and President
Date:
April 27, 2007
|
Pursuant
to the requirements of the Securities Exchange Act of 1934, this report has
been
signed below by the following persons on behalf of the registrant and in the
capacities and on the dates indicated.
Signature
|
|
Title
|
|
Date
|
|
|
|
|
|
/s/
Jeffrey J. Dailey
|
|
Director,
Chief Executive Officer and President
|
|
April
27,
2007
|
Jeffrey
J. Dailey
|
|
(Principal
Executive Officer) |
|
|
|
|
|
|
|
/s/
Robert D. Sadler
|
|
Senior
Vice President-Chief Financial Officer
|
|
April
27,
2007
|
Robert
D. Sadler
|
|
(Principal
Financial Officer and Principal Accounting Officer) |
|
|
|
|
|
|
|
R.
Cary Blair*
|
|
Director
|
|
|
|
|
|
|
|
Richard
T. Delaney*
|
|
Director
|
|
|
|
|
|
|
|
Allan
W. Ditchfield*
|
|
Director
|
|
|
|
|
|
|
|
James
R. Fisher*
|
|
Director
|
|
|
|
|
|
|
|
Todd
A. Fisher*
|
|
Director
|
|
|
|
|
|
|
|
Perry
Golkin*
|
|
Director
|
|
|
|
|
|
|
|
Mary
R. Hennessy*
|
|
Director
|
|
|
|
|
|
|
|
Eileen
Hilton*
|
|
Director
|
|
|
|
|
|
|
|
James
N. Meehan*
|
|
Director
|
|
|
|
|
|
|
|
Arthur
J. Rothkopf*
|
|
Director
|
|
|
*By:
/s/
Robert D. Sadler
Attorney-in-fact
by power of
attorney
EXHIBIT
INDEX
Exhibit
Number
|
|
Description
of Document
|
|
|
|
2.1
|
|
Agreement
and Plan of Merger, dated as of March 1, 2007, among the Registrant,
Farmers Group, Inc. and BWH Acquisition Company (incorporated
by reference to Exhibit 2.1 of Form 8-K filed on March 7,
2007)
|
|
|
|
3.1
|
|
Amended
and Restated Certificate of Incorporation of the Registrant (incorporated
by reference to Exhibit 3.1 of Registrant’s Registration Statement
(File No. 333-111259) on Form S-1)
|
|
|
|
3.2
|
|
Amended
and Restated Bylaws of the Registrant (incorporated by reference
to
Exhibit 3.2 of Registrant’s Registration Statement (File
No. 333-111259) on Form S-1)
|
|
|
|
4.1
|
|
Form
of Certificate of Common Stock (incorporated by reference to
Exhibit 4.1 of Registrant’s Registration Statement (File
No. 333-111259) on Form S-1)
|
|
|
|
4.2
|
|
Registration
Rights Agreement, dated as of July 10, 1998, between the Registrant
and Bristol West Associates LLC (incorporated by reference to
Exhibit 4.2 of Registrant’s Registration Statement
(File No. 333-111259) on Form S-1)
|
|
|
|
4.3
|
|
Subscription
Agreement, dated as of July 9, 1998, between the Registrant and
Fisher Capital Corp. LLC (incorporated by reference to Exhibit 4.3 of
Registrant’s Registration Statement (File No. 333-111259) on
Form S-1)
|
|
|
|
4.4
|
|
Sale
Participation Agreement, dated as of July 9, 1998, among KKR Partners
II, L.P., KKR 1996 Fund L.P., Bristol West Associates LLC and Fisher
Capital Corp. LLC (incorporated by reference to Exhibit 4.4 of
Registrant’s Registration Statement (File No. 333-111259) on
Form S-1)
|
|
|
|
4.5
|
|
Equity
Contribution Agreement, dated as of July 10, 1998, between the Registrant,
Bristol West Associates LLC, Fisher Capital Corp. LLC, Jeanne Rosner,
Jeffrey Rosner, Sylvia Rosner, Wendy Schlesinger, and Donald Simon
(exhibit 4.5 to Registrant’s Annual Report on Form 10-K for the
fiscal year ended December 31, 2006)
|
|
|
|
4.6
|
|
Form
of Employee Stockholder’s Agreement for Senior Management (incorporated by
reference to Exhibit 4.5 of Registrant’s Registration Statement (File
No. 333-111259) on Form S-1), as amended by form of Amendment to
Employee Stockholder’s Agreement effective as of December 29, 2005,
between Bristol West Holdings, Inc. and the stockholder (form of
amendment
is incorporated by reference to Exhibit 4.5 of Registrant’s Annual
Report on Form 10-K for the fiscal year ended December 31,
2005)
|
|
|
|
4.7
|
|
Form
of Employee Stockholder’s Agreement for Employees (incorporated by
reference to Exhibit 4.6 of Registrant’s Registration Statement (File
No. 333-111259) on Form S-1), as amended by form of Amendment to
Employee Stockholder’s Agreement effective as of December 29, 2005,
between Bristol West Holdings, Inc. and the stockholder (form of
amendment
is incorporated by reference to Exhibit 4.5 of Registrant’s Annual
Report on Form 10-K for the fiscal year ended December 31, 2005)
|
|
|
|
4.8
|
|
Form
of Sale Participation Agreement (incorporated by reference to
Exhibit 4.7 of Registrant’s Registration Statement (File
No. 333-111259) on Form S-1)
|
|
|
|
4.9
|
|
Employee
Stockholder’s Agreement between the Registrant and Simon Noonan dated as
of July 25, 2002 (incorporated by reference to Exhibit 10.32 of
Registrant’s Annual Report on Form 10-K for the fiscal year ended
December 31, 2004), as amended by Amendment to Employee Stockholder’s
Agreement effective as of December 29, 2005, between Bristol West
Holdings, Inc. and Simon Noonan (form of amendment is incorporated
by
reference to Exhibit 4.5 of Registrant’s Annual Report on
Form 10-K for the fiscal year ended December 31,
2005)
|
4.10
|
|
Employee
Stockholder’s Agreement between the Registrant and James J. Sclafani, Jr.
dated as of March 20, 2003 (incorporated by reference to
Exhibit 10.33 of Registrant’s Annual Report on Form 10-K for the
fiscal year ended December 31, 2004), as amended by Amendment to
Employee
Stockholder’s Agreement effective as of December 29, 2005, between Bristol
West Holdings, Inc. and James J. Sclafani, Jr. (form of amendment
is
incorporated by reference to Exhibit 4.5 of Registrant’s Annual
Report on Form 10-K for the fiscal year ended December 31,
2005)
|
|
|
|
10.1
|
|
Credit
Agreement dated as of July 31, 2006, among the Registrant, the Lenders
(ING Capital LLC, JPMorgan Chase Bank, N.A., LaSalle Bank National
Association, Regions Bank, General Electric Capital Corporation,
and Bank
of Communications Co., Ltd., New York Branch), the Administrative
Agent
(ING Capital LLC), the Joint Bookrunners and Joint Lead Arrangers
(ING
Capital LLC and JP Morgan Securities, Inc.), and the Documentation
agent
(LaSalle Bank National Association) (incorporated by reference to
Exhibit
10.10 of Registrant’s Quarterly Report on Form 10-Q for the fiscal quarter
ended June 30, 2006)
|
|
|
|
10.2
|
|
Form
of California Brokerage Agreement effective January 1, 2005 (incorporated
by reference to Exhibit 10.18 of Registrant’s Annual Report on
Form 10-K for the fiscal year ended December 31,
2004)
|
|
|
|
10.3
|
|
Letter
Agreement, dated as of July 9, 1998, between the Registrant and
Fisher Capital Corp. LLC (incorporated by reference to Exhibit 10.13
of Registrant’s Registration Statement (File No. 333-111259) on
Form S-1); as amended by an Amendatory Agreement between the
Registrant and Fisher Capital Corp. LLC, dated as of December 18,
2000 (incorporated by reference to Exhibit 10.14 of Registrant’s
Registration Statement (File No. 333-111259) on Form S-1); and
as further amended by Amendatory Agreement to Letter Agreement between
the
Registrant and Fisher Capital Corp. LLC, dated as of January 1, 2002
(incorporated by reference to Exhibit 10.15 of Registrant’s
Registration Statement (File No. 333-111259) on
Form S-1); as
further amended by an Amendatory Agreement between the Registrant
and
Fisher Capital Corp. LLC, dated as of January 1, 2004 (exhibit 10.3
to Registrant’s Annual Report on Form 10-K for the fiscal year ended
December 31, 2006); and as further amended by a Termination Agreement
between the Registrant and Fisher Capital Corp. LLC, effective as
of
December 31, 2006 (exhibit 10.3 to Registrant’s Annual Report on
Form 10-K for the fiscal year ended December 31,
2006)
|
|
|
|
10.4
|
|
Letter
Agreement, dated as of July 10, 1998, between the Registrant and
Kohlberg
Kravis Roberts & Co. L.P. (exhibit 10.4 to Registrant’s Annual Report
on Form 10-K for the fiscal year ended December 31,
2006)
|
|
|
|
*10.5
|
|
1998
Stock Option Plan for the Management and Key Employees of the Registrant
and Subsidiaries (incorporated by reference to Exhibit 10.16 of
Registrant’s Registration Statement (File No. 333-111259) on
Form S-1)
|
|
|
|
*10.6
|
|
Employment
Agreement, dated as of May 25, 2006, between James R. Fisher and
the
Registrant (incorporated by reference to Exhibit 10.1 of Form 8-K
filed on
May 25, 2006)
|
|
|
|
*10.7
|
|
Amended
and Restated 2004 Stock Incentive Plan for the Registrant and Subsidiaries
(incorporated by reference to Exhibit 10.1 of Registrant’s Quarterly
Report on Form 10-Q for the quarterly period ended September 30,
2006)
|
|
|
|
*10.8
|
|
Form
of Restricted Stock Award Agreement for Executives with two-year
vesting
schedule (incorporated by reference to Exhibit 10.1 of Form 8-K filed
on
February 27, 2006)
|
|
|
|
*10.9
|
|
Form
of Restricted Stock Award Agreement for Executives with a five-year
vesting schedule (incorporated by reference to Exhibit 10.2 of Form
8-K
filed on February 27, 2006)
|
|
|
|
*10.10
|
|
Form
of Restricted Stock Award Agreement for Directors with a two-year
vesting
schedule (incorporated by reference to Exhibit 10.6 of Form 8-K filed
on
February 27, 2006)
|
*10.11
|
|
Non-Employee
Directors’ Deferred Compensation and Stock Award Plan (incorporated by
reference to Exhibit 10.5 of Form 8-K filed on February 27,
2006)
|
|
|
|
*10.12
|
|
Form
of Restricted Stock Award Agreement for Employees with two-year
vesting
schedule (incorporated by reference to Exhibit 10.14 of Registrant’s
Annual Report on Form 10-K for the fiscal year ended December 31,
2005)
|
|
|
|
*10.13
|
|
Form
of Restricted Stock Award Agreement for Employees with five-year
vesting
schedule (incorporated by reference to Exhibit 10.15 of Registrant’s
Annual Report on Form 10-K for the fiscal year ended December 31,
2005)
|
|
|
|
*10.14
|
|
Form
of Restricted Stock Award Agreement for Employees with Equity Investment
(incorporated by reference to Exhibit 10.16 of Registrant’s Annual
Report on Form 10-K for the fiscal year ended December 31, 2005)
|
|
|
|
*10.15
|
|
Executive
Officer Incentive Plan (incorporated by reference to Exhibit 10.3
of Form
8-K filed on February 27, 2006)
|
|
|
|
*10.16
|
|
Management
Incentive Plan (incorporated by reference to Exhibit 10.4 of Form
8-K
filed on February 27, 2006)
|
|
|
|
10.17
|
|
Services
Agreement by and among BRW Acquisition, Inc. and Firemark Partners,
LLC,
dated July 24, 2002 (incorporated by reference to Exhibit 10.2 of
Registrant’s Quarterly Report on Form 10-Q for the fiscal quarter
ended September 30, 2005); as amended by Correction and Amendment
of the
July 24, 2002 Services Agreement between BRW Acquisition, Inc.
and
Firemark Partners, LLC, dated November 8, 2005 (incorporated by
reference
to Exhibit 10.3 of Registrant’s Quarterly Report on Form 10-Q
for the fiscal quarter ended September 30, 2005); and as further
amended
by Amendment No. 2 dated as of October 1, 2006 (exhibit 10.17 to
Registrant’s Annual Report on Form 10-K for the fiscal year ended
December 31, 2006)
|
|
|
|
10.18
|
|
Voting
Agreement, dated as of March 1, 2007, by and among the Registrant,
Farmers
Group, Inc., BWH Acquisition Company, Bristol West Associates LLC and
Aurora Investments II LLC (incorporated
by reference to Exhibit 99.1 of Form 8-K filed on March 7,
2007)
|
|
|
|
21.1
|
|
List
of Subsidiaries of the Registrant (exhibit 21.1 to Registrant’s Annual
Report on Form 10-K for the fiscal year ended December 31,
2006)
|
|
|
|
23.1
|
|
Consent
of Independent Registered Public Accounting Firm (exhibit 23.1
to
Registrant’s Annual Report on Form 10-K for the fiscal year ended
December 31, 2006)
|
|
|
|
24.1
|
|
Powers
of Attorney (exhibit 24.1 to Registrant’s Annual Report on
Form 10-K for the fiscal year ended December 31,
2006)
|
|
|
|
31.1
|
|
Rule 13a-14(a)/15d-14(a)
Certification executed by Jeffrey J. Dailey, Chief Executive Officer
and
President of Bristol West Holdings, Inc. (pursuant to Section 302 of
the Sarbanes-Oxley Act of 2002) (exhibit 31.1 to this Amendment
No. 1
to Annual Report on
Form 10-K)
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31.2
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Rule 13a-14(a)/15d-14(a)
Certification executed by Robert D. Sadler, Senior Vice President-Chief
Financial Officer of Bristol West Holdings, Inc. (pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002) (exhibit 31.2 to this
Amendment No. 1 to Annual Report on Form 10-K)
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*
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Management
contract or compensatory plan or arrangement.
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Additional
Exhibits.
In accordance with Item 601(32)(ii) of Regulation S-K, Exhibit 32.1
is to be treated as “furnished” rather than “filed” as part of the report.
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32.1
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Section 1350
Certification executed by Jeffrey J. Dailey, Chief Executive Officer
and
President of Bristol West Holdings, Inc., and by Robert D. Sadler,
Senior
Vice President-Chief Financial Officer of Bristol West Holdings,
Inc.
(exhibit 32.1 to this Amendment No. 1 to Annual Report on
Form 10-K for the fiscal year ended December 31,
2006)
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