UNITED
STATES
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SECURITIES
AND EXCHANGE COMMISSION
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WASHINGTON,
D.C. 20549
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SCHEDULE
14A
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Proxy
Statement Pursuant to Section 14(a)
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of
the Securities Exchange Act of 1934
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Filed
by the Registrant
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[X]
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Filed
by a Party other than the Registrant
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[
]
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Check
the appropriate box:
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[
]
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Preliminary
Proxy Statement
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[
]
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Confidential,
for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
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[X
]
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Definitive
Proxy Statement
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[
]
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Definitive
Additional Materials
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[
]
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Soliciting
Material Pursuant to § 240.14a-12
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Brown
& Brown, Inc.
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(Name
of Registrant as Specified In Its Charter)
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_____________________________________________
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(Name
of Person(s) Filing Proxy Statement, if other than the
Registrant)
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Payment
of Filing Fee (Check the appropriate box):
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[X]
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No
fee required.
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[
]
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Fee
computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
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(1)
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Title
of each class of securities to which transaction
applies:
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__________________________________________
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(2)
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Aggregate
number of securities to which transaction applies:
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_________________________________________________
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(3)
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Per
unit price or other underlying value of transaction computed pursuant
to
Exchange Act Rule 0-11 (set forth the amount on which the filing fee
is calculated and state how it was determined):
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________________________________________________
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(4)
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Proposed
maximum aggregate value of transaction:
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________________________________________________
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(5)
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Total
fee paid:
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________________________________________________
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[
]
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Fee
paid previously with preliminary materials.
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[
]
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Check
box if any part of the fee is offset as provided by Exchange Act
Rule
0-11(a)(2) and identify the filing for which the offsetting fee
was paid
previously. Identify the previous filing by registration statement
number,
or the Form or Schedule and the date of its filing.
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(1)
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Amount
Previously Paid:
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_________________________________________________
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(2)
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Form,
Schedule or Registration Statement No.:
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_________________________________________________
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(3)
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Filing
Party:
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_________________________________________________
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(4)
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Date
Filed:
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________________________________________________
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April
2, 2007
Dear
Shareholder:
You
are invited to attend the Annual Meeting of Shareholders (the “Meeting”) of
Brown & Brown, Inc. (the “Company”), which will be held in the Atlantic Room
of The Shores Resort, 2637 South Atlantic Avenue, Daytona Beach, Florida,
on
Wednesday, May 16, 2007, at 9:00 a.m. (ET).
The
notice of meeting and proxy statement on the following pages cover the formal
business of the Meeting. Whether or not you expect to attend the Meeting,
please
sign and return your proxy card promptly in the enclosed envelope to assure
that
your stock will be represented at the Meeting. If you decide to attend the
Meeting and vote in person, you will, of course, have that
opportunity.
Your
continuing interest in the business of the Company is gratefully acknowledged.
We hope many shareholders will attend the Meeting.
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Sincerely,
J.
Hyatt Brown
Chief
Executive Officer
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BROWN
& BROWN, INC.
220
South Ridgewood Avenue
Daytona
Beach, Florida 32114
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3101
West Martin Luther King Jr. Boulevard
Suite
400
Tampa,
Florida 33607
|
__________________________________
NOTICE
OF ANNUAL MEETING OF SHAREHOLDERS
May
16, 2007
The
Annual Meeting of Shareholders (the “Meeting”) of Brown & Brown, Inc. (the
“Company”) will be held in the Atlantic Room of The Shores Resort, 2637 South
Atlantic Avenue, Daytona Beach, Florida, on Wednesday, May 16, 2007, at 9:00
a.m. (ET), for the following purposes:
1. To
elect eleven (11) nominees to the Company’s Board of Directors; and
2. To
transact such other business as may properly come before the Meeting or any
adjournment thereof.
The
Board of Directors has fixed the close of business on March 16, 2007 as the
record date for the determination of shareholders entitled to notice of and
to
vote at the Meeting.
For
your convenience, we are also offering an audio webcast of the Meeting. If
you
choose to listen to the webcast, please visit the “Investor Relations” section
of our website (www.bbinsurance.com),
and select “Calendar of Events” shortly before the meeting time and follow the
instructions provided. If you miss the Meeting, you may listen to a replay
of
the webcast on our site beginning the afternoon of May 16, 2007 and continuing
for 30 days thereafter.
Shareholders
are requested to vote, date, sign and promptly return the enclosed proxy
in the
envelope provided for that purpose, whether or not they intend to be present
at
the Meeting.
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By
Order of the Board of Directors
Laurel
L. Grammig
Secretary
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Tampa,
Florida
April
2, 2007
BROWN
& BROWN, INC.
PROXY
STATEMENT
ANNUAL
MEETING AND PROXY SOLICITATION INFORMATION
This
Proxy Statement is first being sent to shareholders on or about April 2,
2007 in
connection with the solicitation of proxies by the Board of Directors of
Brown
& Brown, Inc., to be voted at the Annual Meeting of Shareholders to be held
in Atlantic Room of The Shores Resort, 2637 South Atlantic Avenue, Daytona
Beach, Florida at 9:00 a.m. (ET) on Wednesday, May 16, 2007, and at any
adjournment thereof (the “Meeting”). The close of business on March 16, 2007 has
been fixed as the record date for the determination of shareholders entitled
to
notice of and to vote at the Meeting. At the close of business on the record
date, we had outstanding 140,484,807 shares of $.10 par value common stock,
entitled to one vote per share.
Shares
represented by duly executed proxies in the accompanying form that we receive
prior to the Meeting will be voted at the Meeting. If you specify in the
proxy a
choice with respect to any matter to be acted upon, the shares represented
by
such proxy will be voted as specified. If your proxy card is signed and returned
without specifying a vote or an abstention, the shares represented by such
proxy
will be voted according to the recommendation of the Board of Directors.
The
Board of Directors recommends a vote FOR the election of eleven (11) nominees
as
directors.
The Board of Directors knows of no other matters that may be brought before
the
Meeting. However, if any other matters are properly presented for action,
it is
the intention of the named proxies to vote on them according to their best
judgment.
If
you hold your shares in a stock brokerage account, or by a bank or other
nominee, you have the right to provide instructions on voting as requested
by
your broker, bank or nominee. Under the rules of the New York Stock Exchange,
your broker, bank or nominee is permitted to vote your shares on the proposal
concerning the election of directors even if your broker, bank or nominee
has
not been given specific voting instructions as to this matter.
After
you have returned a proxy, you may revoke it at any time before it is voted
by
taking one of the following actions: (i) giving written notice of the revocation
to our Secretary; (ii) executing and delivering a proxy with a later date;
or
(iii) voting in person at the Meeting. Votes cast by proxy or in person at
the
Meeting will be tabulated by our transfer agent, American Stock Transfer
&
Trust Company, and by one or more inspectors of election appointed at the
Meeting, who will also determine whether a quorum is present for the transaction
of business.
The
eleven (11) nominees for election as directors who receive the highest number
of
“FOR” votes will be elected as directors. This number may be a plurality.
Abstentions and broker non-votes will have no effect on the outcome of the
voting to elect directors. Broker non-votes will be treated as shares entitled
to vote but not as votes cast.
Proxies
may be solicited by our officers, directors, and regular supervisory and
executive employees, none of whom will receive any additional compensation
for
their services. Also, The Altman Group, Inc. may solicit proxies on our behalf
at an approximate cost of $4,000, plus reasonable expenses. Such solicitations
may be made personally, or by mail, facsimile, telephone, messenger, or via
the
Internet. We will pay persons holding shares of common stock in their names
or
in the names of nominees, but not owning such shares beneficially, such as
brokerage houses, banks, and other fiduciaries, for the expense of forwarding
solicitation materials to their principals. We will pay all of the costs
of
solicitation of proxies.
Our
executive offices are located at 220 South Ridgewood Avenue, Daytona Beach,
Florida 32114 (telephone number (386) 252-9601) and 3101 West Martin Luther
King
Jr. Boulevard, Suite 400, Tampa, Florida 33607 (telephone number (813)
222-4100).
SECURITY
OWNERSHIP OF MANAGEMENT AND
CERTAIN
BENEFICIAL OWNERS
The
following table sets forth, as of March 16, 2007, information as to our common
stock beneficially owned by (1) each of our directors, (2) each executive
officer named in the Summary Compensation Table, (3) all of our directors
and
executive officers as a group, and (4) any person whom we know to be the
beneficial owner of more than 5% of the outstanding shares of our common
stock:
NAME
OF BENEFICIAL OWNER(1)
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AMOUNT
AND NATURE OF
BENEFICIAL
OWNERSHIP(2)(3)(4)
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PERCENT
OF
TOTAL
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J.
Hyatt Brown(5)
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21,477,177
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15.29%
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Samuel
P. Bell, III
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20,239
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*
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Hugh
M. Brown
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4,239
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*
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Bradley
Currey, Jr.
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294,439
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*
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Jim
W. Henderson(6)
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1,377,487
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*
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Theodore
J. Hoepner
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18,239
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*
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David
H. Hughes
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56,239
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*
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Toni
Jennings
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5,904
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*
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John
R. Riedman
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48,885
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*
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Jan
E. Smith(7)
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33,039
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*
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Chilton
D. Varner
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17,339
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*
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Kenneth
D. Kirk(8)
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1,264,486
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*
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Thomas
E. Riley(9)
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564,817
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*
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Cory
T. Walker
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284,449
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*
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All
directors and executive
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officers
as a group (24 persons)
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28,645,424
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20.39%
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Ruane,
Cunniff & Goldfarb, Inc.(10)
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11,897,463
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8.47%
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767
Fifth Ave., Ste. 4701
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New
York, NY 10153
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Select
Equity Group, Inc.(11)
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9,707,974
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6.91%
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380
Lafayette St., 6th Floor
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New
York, NY 10007
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_______________
* Less
than 1%.
(1) Unless
otherwise indicated, the address of such person is c/o Brown & Brown, Inc.,
220 South Ridgewood Avenue, Daytona Beach, Florida 32114.
(2)
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Beneficial
ownership of shares, as determined in accordance with applicable
Securities and Exchange Commission (“SEC”) rules, includes shares as to
which a person has or shares voting power and/or investment power.
We have
been informed that all shares shown are held of record with sole
voting
and investment power, except as otherwise indicated. All share
amounts,
percentages and share values have been adjusted to reflect any
applicable
stock splits.
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(3)
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The
number and percentage of shares owned by the following persons
include the
indicated number of shares owned through our 401(k) plan as of
March 16,
2007: Mr. Walker - 25,363; Mr. Henderson -
250,000; Mr. Kirk - 229; Mr. Riley - 85,551; and all directors
and
officers as a group - 496,373. The number and percentage of shares
owned
by the following persons also include the indicated number of shares
which
such persons have been granted under our Stock Performance Plan
as of
March 16, 2007: Mr. Walker - 181,270; Mr. Henderson - 256,310;
Mr. Kirk -
251,300; Mr. Riley - 253,460; and all directors and officers as
a group -
1,898,115. Certain of these Stock Performance Plan shares have
voting and
dividend rights due to satisfaction of the first condition for
vesting,
but the holders thereof have no power to sell or dispose of the
shares,
and the shares are subject to forfeiture. See “Executive Compensation -
Long-Term Incentive Plans - Awards in Last Fiscal
Year.”
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(4)
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On
April 21, 2000, the indicated number of options were granted to
the
following persons under 2000 Incentive Stock Option Plan for Employees
(the “Incentive Stock Option Plan”): Mr. Walker - 0; Mr.
Henderson -
478,232; Mr. Kirk - 134,928; Mr.
Riley - 253,488; all
directors and officers as a group
-
1,876,712.
Of
these granted amounts, the indicated number of options were exercisable
by
the following persons under the Incentive Stock Option Plan as
of March
16, 2007: Mr. Walker - 0; Mr. Henderson - 0; Mr. Kirk - 41,360;
Mr. Riley
- 82,720; all directors and officers as a group - 339,480, and
the
underlying shares are therefore deemed to be beneficially owned.
On March
23, 2003, the indicated number of options were granted to the following
persons under the Incentive Stock Option Plan: Mr. Walker - 50,000;
Mr.
Henderson - 200,000; Mr. Kirk - 113,400; Mr. Riley - 180,762; all
directors and officers as a group - 958,404. Of these granted amounts,
the
indicated number of options were exercisable by the following persons
under the Incentive Stock Option Plan as of March 16, 2007: Mr.
Walker -
0; Mr. Henderson - 0; Mr. Kirk - 100,728; Mr. Riley -0; all directors
and
officers as a group - 168,056; the underlying shares are therefore
deemed
to be beneficially owned.
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(5)
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All
shares are beneficially owned jointly with Mr. Brown’s spouse, either
directly or indirectly, and these shares have shared voting and
investment
power. Of these shares, 21,436,328 are held by Ormond Riverside
Limited
Partnership, of which Swakopmund, Inc., a corporation controlled
by Mr.
Brown and his spouse as equal shareholders, is the sole general
partner.
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(6)
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Mr.
Henderson’s ownership includes 849,005 shares held in joint tenancy with
Mr. Henderson’s spouse, which shares have shared voting and investment
power.
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(7)
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Mr.
Smith’s ownership includes 12,800 shares owned by his spouse, as to which
he disclaims beneficial ownership. Additionally, Mr. Smith’s ownership
includes 14,000 shares that are pledged as
security.
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(8)
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Mr.
Kirk’s ownership includes 870,869 shares held in a revocable family
trust
for which Mr. Kirk and his spouse serve as trustees. Additionally,
Mr.
Kirk’s ownership includes 350,000 shares that are pledged as
security.
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(9)
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Mr.
Riley’s ownership includes 3,620 shares owned by his spouse, as to
which
he disclaims beneficial ownership.
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(10)
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According
to a Schedule 13G filed with the SEC on or around February 14,
2007, these
shares are held in investment accounts maintained with Ruane,
Cunniff
& Goldfarb Inc. (“Ruane”) as of December 31, 2006, and Ruane disclaims
any beneficial interest in such shares. Ruane has advised that
it has sole
voting power as to 6,857,871 of these shares, no voting power
as to the
balance of these shares, and sole investment power as to all
of these
shares.
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(11)
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According
to a Schedule 13G jointly filed with the SEC on or around February
14,
2007, Select Equity Group, Inc., Select Offshore Advisors, LLC
and George
S. Loening have sole investment and voting power with respect
to these
shares, and no shared voting or investment power as of December
31,
2006.
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MANAGEMENT
Directors
and Executive Officers
Set
forth below is certain information concerning our directors and executive
officers. All directors and officers hold office for one-year terms or until
their successors are elected and qualified.
NAME
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POSITIONS
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AGE
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YEAR
FIRST BECAME
A
DIRECTOR
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J.
Hyatt Brown
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Chairman
of the Board and Chief Executive Officer
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69
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1993
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Jim
W. Henderson
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Vice
Chairman, Chief Operating Officer and Director
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60
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1993
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Samuel
P. Bell, III
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Director
|
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67
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1993
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Hugh
M. Brown
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Director
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71
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2004
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Bradley
Currey, Jr.
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Director
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76
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1995
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Theodore
J. Hoepner
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Director
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65
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1994
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David
H. Hughes
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Director
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63
|
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1997
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Toni
Jennings
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Director
|
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57
|
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2007
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John
R. Riedman
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Director
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78
|
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2001
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Jan
E. Smith
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Director
|
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67
|
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1997
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Chilton
D. Varner
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Director
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64
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2004
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J.
Powell Brown
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President
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39
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|
—
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Thomas
E. Riley
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Regional
President
|
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51
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―
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Kenneth
D. Kirk
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Regional
President
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46
|
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—
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Linda
S. Downs
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Executive
Vice President - Leadership Development
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57
|
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C.
Roy Bridges
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Regional
Executive Vice President
|
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57
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—
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Charles
H. Lydecker
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Regional
Executive Vice President
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43
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—
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Kenneth
Masters
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Regional
Executive Vice President
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53
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—
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J.
Scott Penny
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Regional
Executive Vice President
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40
|
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—
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Cory
T. Walker
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Senior
Vice President, Treasurer and Chief Financial Officer
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49
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—
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Laurel
L. Grammig
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Vice
President, Secretary and General Counsel
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48
|
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—
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Richard
A. Freebourn, Sr.
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|
Vice
President and Director of Internal Operations
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59
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—
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Thomas
M. Donegan, Jr.
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Vice
President, Assistant Secretary and Assistant General
Counsel
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36
|
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—
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Robert
W. Lloyd
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Vice
President and Chief Litigation Officer
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42
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__
|
J.
Hyatt Brown.
Mr. Brown has been our Chief Executive Officer since 1993 and the Chairman
of
the Board of Directors since 1994. Mr. Brown was our President from 1993
to
December 2002, and served as President and Chief Executive Officer of our
predecessor corporation from 1961 to 1993. He was a member of the Florida
House
of Representatives from 1972 to 1980, and Speaker of the House from 1978
to
1980. Mr. Brown serves on the Board of Directors of SunTrust Banks, Inc.,
International Speedway Corporation, FPL Group, Inc., and Rock-Tenn Company,
each
a publicly-held company. Until December 2006, he served on the Board of
BellSouth Corporation, a publicly-held company. Mr. Brown also served as
Chairman of the Council of Insurance Agents & Brokers in 2004-2005 and is
currently a member of the Board of Insurance Services Office, as well as
the
Board of Trustees of Stetson University, of which he is a past Chairman,
and the
Florida Council of 100. Mr. Brown is a past Vice Chairman of the Florida
Residential Property and Casualty Joint Underwriting Association and a past
Trustee of the Florida Chamber Foundation. One of Mr. Brown’s sons, J. Powell
Brown, is employed by us as President.
Jim
W. Henderson.
Mr. Henderson was named Vice Chairman and Chief Operating Officer in January
of
2007. Prior to that time, he served as our President and Chief Operating
Officer
since 2002 and serves as director and as president or in another executive
officer capacity for several of our subsidiaries. He was elected Executive
Vice
President in 1995, and served as our Senior Vice President from 1993 to 1995.
He
served as Senior Vice President of our predecessor corporation from 1989
to
1993, and as Chief Financial Officer from 1985 to 1989. Mr. Henderson is
Chairman of the Board of Trustees of Embry-Riddle Aeronautical University,
and
is a member of the Board of Directors of the School of Business Administration
of Stetson University, the Council of Insurance Agents and Brokers and the
Florida Hurricane Catastrophe Fund. He previously served as Co-Chairman of
the
Insurance Accounting and Systems Association’s Property & Casualty
Committee, President of the Central Florida Chapter of Financial Executives
International, and as a member of the Board of Directors of United Way of
Volusia/Flagler Counties and the Ronald McDonald House.
Samuel
P. Bell, III.
Mr. Bell has been a shareholder of the law firm of Pennington, Moore, Wilkinson,
Bell & Dunbar, P.A. since January 1, 1998. Prior to that, he was a
shareholder and managing partner of Cobb Cole & Bell (now Cobb & Cole,
P.A.), and he served as Of Counsel to Cobb Cole & Bell until August 2002.
Mr. Bell was a member of the Florida House of Representatives from 1974 to
1988.
He is Chairman of the Advisory Board for the College of Public Health at
the
University of South Florida, President of the Florida Public Health Foundation
and a member of the Board of Directors of the Florida Children’s Home Society.
Mr. Bell is a former member of the Florida Elections Commission, and past
Chairman of the Florida Legislature’s Commission on Local Government
II.
Hugh
M. Brown. Mr.
Brown founded BAMSI, Inc., a full-service engineering and technical services
company, in 1978, and served as its Chief Executive Officer until his retirement
in 1998. Mr. Brown currently serves as a member of the Board of Directors
of
SunTrust Bank of Orlando, the Florida Council of 100 and the Florida Council
on
Economic Education. He is a past Chairman of the Federal Reserve Bank of
Atlanta, and previously served on the Florida Commission on Education, and
as
Chairman of the Spaceport Florida Authority (now Florida Space Authority)
Board
of Supervisors. Mr. Brown was named Small Business Person of the Year, 1985,
by
the U.S. Small Business Administration, and Regional Minority Small Business
Person of the Year for the Atlanta region. In 1991, he received the U.S.
Small
Business Administration’s Graduate of the Year Award. He is an inductee of the
Junior Achievement Business Hall of Fame for East Central Florida and recipient
of the Ernst & Young Entrepreneur of the Year - Services Category - in 1993
for the State of Florida.
Bradley
Currey, Jr. Mr.
Currey served as Chief Executive Officer of Rock-Tenn Company, a publicly-held
manufacturer of packaging and recycled paperboard products, from 1989 to
1999
and as Chairman of the Board of Rock-Tenn Company from 1993 to 2000, when
he
retired. He also previously served as President (1978-1995) and Chief Operating
Officer (1978-1989) of Rock-Tenn Company. Mr. Currey previously served as
a
member of the Board of Directors and Executive Committee of Rock-Tenn Company,
and is currently Director Emeritus
of Genuine Parts Company, a publicly-traded company, and a member of the
Board
of Directors of Enzymatic Deinking Technologies, L.L.C. and Fresh Frozen
Foods,
Inc. Mr. Currey is Trustee Emeritus
and a past Chairman of the Board of Trustees of Emory University. He is a
Trustee Emeritus and past Chairman of the Board of the Woodruff Arts Center
and
the Atlanta Symphony Orchestra, a division of the Woodruff Arts Center in
Atlanta, Georgia. He is also a past Chairman of the Federal Reserve Bank
of
Atlanta and the Metro Atlanta Chamber of Commerce.
Theodore
J. Hoepner.
Mr. Hoepner served as Vice Chairman of SunTrust Bank Holding Company from
January 1, 2005 until June 30, 2005, when he retired. Mr. Hoepner is the
Chairman of the Florida Prepaid College Board, to which he was appointed
by the
Governor of Florida in 2005. He served as Vice Chairman of SunTrust Banks,
Inc.,
a publicly held company, from 2000 to 2005. From 1995 to 2000, Mr. Hoepner
was
Executive Vice President of SunTrust Banks, Inc. and Chairman of the Board,
President and Chief Executive Officer of SunTrust Banks of Florida, Inc.
From
1990 through 1995, he served as Chairman of the Board, President and Chief
Executive Officer of SunBank, N.A. From 1983 through 1990, he was the Chairman
of the Board and Chief Executive Officer of SunBank/Miami, N.A. He is a past
Chairman of the Board of Trustees of Rollins College, the Economic Development
Commission of Mid-Florida, the Heart of Florida United Way, the Greater Miami
Chamber of Commerce, the Beacon Council of Miami, Florida, and the Financial
Executives Institute of Jacksonville, Florida.
David
H. Hughes.
Mr. Hughes served as Chairman of the Board of Hughes Supply, Inc., a
publicly-held business-to-business distributor of construction and industrial
supplies, from 1986 to 2006. He retired from this position effective April
1,
2006. Mr. Hughes served as Chief Executive Officer of Hughes Supply, Inc.
from
1974 until May 2003. Mr. Hughes is a member of the Board of Directors of
Darden
Restaurants, Inc. and SunTrust Banks, Inc., both of which are publicly-held
companies. He is a past director of Florida Tax Watch, The Florida Council
of
100 and the Economic Development Commission of Mid-Florida. He is Chairman
of
the Board of Trinity Preparatory School and a member of the Florida Bar
Association.
Toni
Jennings.
Ms. Jennings served as Lieutenant Governor of the State of
Florida from 2003 through 2006. She served as President of Jack Jennings
&
Sons, Inc., a commercial construction firm based in Orlando, Florida, from
1982
to 2003. She also served as Secretary and Treasurer of Jennings & Jennings,
Inc., an architectural millwork firm based in Orlando, Florida. Ms. Jennings
was
a member of the Florida Senate from 1980 to 2000, and President of the Florida
Senate from 1996 to 2000. She previously served in the Florida House of
Representatives from 1976 to 1980. She is a member of the Board of Directors
of
FPL Group, a publicly-held company, SunTrust Bank/Central Florida and The
Nemours Foundation, and she is Chair of the Board of the Florida Chamber
of
Commerce. She previously served as the Chair of Workforce Florida, Incorporated,
and as a director with the Salvation Army Advisory Board, the University
of
Central Florida Foundation, Enterprise Florida, and the Florida Partnership
for
School Readiness. She is also a member of the Board of Trustees of Rollins
College.
John
R. Riedman.
Mr. Riedman has served as Chairman of Riedman Corporation, based in Rochester,
New York, since 1992. From January 2001 through July 2002, he was employed
as
Vice Chairman of Brown & Brown of New York, Inc., one of our
subsidiaries. Mr.
Riedman is a Trustee and the Chairman of the Finance Committee of ViaHealth,
a
Rochester-based healthcare services network. He serves as President of 657
Corporation (a subsidiary of Rochester Museum & Science Center) and is a
past Chairman of the Board of the Rochester Museum & Science Center. He also
serves as President of the Monroe County Sheriff’s Foundation. He serves on the
Board of Directors of High Falls Brewing Company, LLC and previously served
as a
director of the New York State Thruway Authority and the New York State Canal
Corporation. Mr. Riedman served as a director and Chairman of the Audit
Committee of Fleet Financial Group, a publicly-held company, from 1988 to
1999,
and as a board member of Genesee Hospital, serving as Chairman of its Finance
and Building Committees. He served as a member of the Public Affairs Committee
of the United States Chamber of Commerce and as a Delegate to the White House
Conference on Small Business, and is a former member of the Federal Personnel
Interchange Commission, the National Flood Insurance Advisory Committee,
and the
Monroe County Airport Advisory Committee, of which he is a past
Chairman.
Jan
E. Smith.
Mr. Smith has served as President of Jan Smith and Company, a commercial
real
estate and business investment firm, since 1978. Mr. Smith is also the President
of Sun West Homes, LLC, manager of Sand Pile, LLC, managing partner of PMG
Real
Estate Investors, LLP and a Director and President of Jan Smith and Company.
Mr.
Smith serves on the Board of Directors of SunTrust Bank/Gulf Coast and the
Board
of Governors of the Florida Chamber of Commerce, and is also the Chairman
Emeritus
of the Campus Board of University of South Florida’s Regional Sarasota/Manatee
Campus, and a member of the University of South Florida Board of Trustees.
Mr.
Smith is a past member of the Board of Directors of GTE of Florida, Inc.,
a
publicly-held company, the Advisory Council of the Federal Reserve Bank of
Atlanta, the Board of Directors of the United States Chamber of Commerce,
the
Board of the National Chamber Litigation Center, the National Advisory Council
of the U.S. Small Business Administration, the Board of Directors of the
Florida
Chamber of Commerce Management, Inc., the Florida Education Governance
Reorganization Transition Task Force, the Nominating Council of the Public
Service Commission of Florida, the Florida Council on Economic Education,
the
Manatee County (FL) Independent Insurance Agents Association, managing general
partner of River Bend Road, Ltd., and past managing general partner of Ramblers
Rest Resort, Ltd. He previously served as a Delegate to the White House
Conference on Small Business and to the Small Business National Issues
Conference. He is a past Chairman of the Board of Trustees of Manatee Community
College in Florida, and of the Manatee County (FL) Chamber of Commerce, and
is
an inductee of the Tampa Bay Business Hall of Fame. He is a member of the
Florida Council of 100 and a member of the Board of Directors of the Florida
Chamber of Commerce.
Chilton
D. Varner.
Ms. Varner is a partner of the law firm of King & Spalding in Atlanta,
Georgia. A graduate of Smith College, where she was named to membership in
Phi
Beta Kappa, and Emory University School of Law, Ms. Varner was honored with
Emory University School of Law’s Distinguished Alumni Award in 1998. In 2001,
the National
Law Journal
profiled Ms. Varner as one of the nation’s top ten women litigators. With more
than 25 years of courtroom experience, she specializes in defending corporations
in product liability, commercial and other civil disputes. The author of
many
books and papers on areas of interest in her practice, she has also served
as a
member of the faculty of the Trial Academy of the International Association
of
Defense Counsel and regularly presents at bar association meetings around
the
country. She has been a trustee of Emory University since 1995 and has served
on
the Board of Wesley Woods Geriatric Center since 1996 and on the Board of
the
Atlanta Symphony Orchestra.
J.
Powell Brown.
Mr. Brown was named President in January 2007. Prior to that time, he had
served
as one of our Regional Executive Vice Presidents since 2002. He also serves
as
director and as president or in another executive officer capacity for certain
of our subsidiaries. Mr. Brown oversees certain of our wholesale brokerage
operations as well as the public entity business of certain of our subsidiaries
located in Florida, Georgia, Illinois, Indiana, New Jersey, North Carolina,
Oklahoma, Texas and Washington, and is also responsible for our Service Division
operations and for Florida Intracoastal Underwriters, a subsidiary that
administers a specialty program offering insurance coverage for Florida
condominium properties. From 1998 to 2003, Mr. Brown served as profit center
leader of our Orlando, Florida retail office. Prior to that, Mr. Brown served
as
an account executive and then as Marketing Manager in our Daytona Beach,
Florida
retail office from 1995 to 1998. Mr. Brown serves on the Board of Directors
of
the SunTrust Bank/Central Florida, and previously served as Vice Chairman
of
Finance for the Board of Governors of the Orlando Regional Chamber of Commerce,
and as a member of the Board of Directors of Junior Achievement of Central
Florida and the Bolles School Board of Visitors. Mr. Brown is the son of
our
Chairman and Chief Executive Officer, J. Hyatt Brown.
Thomas
E. Riley.
Mr. Riley has been a Regional President since January 2005. He served as
one of
our Regional Executive Vice Presidents from 2001 to 2005 and serves as director
and as president or in another executive officer capacity for several of
our
subsidiaries. Since 1999, Mr. Riley has overseen certain of our profit centers
in southeastern Florida, as well as offices of certain of our subsidiaries
in
other states including New Jersey, Pennsylvania and Virginia. Prior to
undertaking his current duties, Mr. Riley served as profit center leader
of our
Fort Lauderdale, Florida retail office from 1992 to 2001, and as Chief Financial
Officer of our predecessor corporation from 1990-91. He is a member of various
regional and national insurance carriers’ advisory councils as well as the
American Institute of Certified Public Accountants, and the Florida Institute
of
Certified Public Accountants.
Kenneth
D. Kirk.
Mr. Kirk was named Regional President in January 2007. Prior to that time,
he
had served as one of our Regional Executive Vice Presidents since 2001. He
currently serves as director and as president or in another executive officer
capacity for several of our subsidiaries. Since 1995, Mr. Kirk has overseen
retail and brokerage profit center operations of certain of our subsidiaries
in
Arizona, California, Colorado, New Mexico, Nevada, Texas and Washington.
Prior
to undertaking his current duties, Mr. Kirk served as profit center leader
of
the Phoenix, Arizona retail office of Brown & Brown Insurance of Arizona,
Inc., one of our subsidiaries, from 1995 to 2000.
Linda
S. Downs.
Ms. Downs was promoted to Executive Vice President for Leadership Development
in
January 2006. Prior to that time, she had served as one of our Regional
Executive Vice Presidents since 2001. She currently serves as director and
as
president or in another executive officer capacity for several of our
subsidiaries. Ms. Downs also oversees our National Professional Programs
and
National Commercial Programs based in Tampa, Florida, as well as Parcel
Insurance Plan®, based in St. Louis Missouri, and is responsible for the
Company’s Leadership Development Department, Quality Control team and Market
Security Committees. Prior to undertaking her current duties, she founded
and
served as profit center leader of our Orlando, Florida retail office from
1980
to 1998. Ms. Downs is actively involved with Habitat for Humanity, and is
a past
member of the Florida Symphony Board and the Downtown (Orlando) Women’s
Executive Council.
C.
Roy Bridges.
Mr. Bridges has been one of our Regional Executive Vice Presidents since
2001
and serves as director and as president or in another executive officer capacity
for several of our subsidiaries. Since 1998, Mr. Bridges has overseen certain
of
our retail profit center operations in northern and western Florida, as well
as
retail and brokerage profit centers of certain of our subsidiaries in Arkansas,
Louisiana, Oklahoma and Texas. Prior to undertaking his current duties, Mr.
Bridges served as profit center leader of our Tampa, Florida retail office
from
1998 to 2001, and as profit center leader of our Fort Myers, Florida retail
office from 1993 to 1998. He was previously the profit center leader of our
Brooksville, Florida retail office. He served as 2002 Chairman of the CNA
Florida Pacer program, and is a past board member of the Hernando County
Committee of 100, the Salvation Army, and the Lee County Committee of 100,
and a
past member of Leadership Southwest Florida.
Charles
H. Lydecker. Mr.
Lydecker has been one of our Regional Executive Vice Presidents since 2002
and
serves as director and as president or in another executive officer capacity
for
several of our subsidiaries. Mr. Lydecker oversees certain of our retail
profit
center operations in central and northern Florida, and retail profit center
operations of certain of our subsidiaries in Georgia, South Carolina, Texas
and
Virginia. From January 2000 until 2002, and commencing again in 2004 until
2006,
Mr. Lydecker served as profit center leader in Daytona Beach, Florida. Prior
to
that, Mr. Lydecker served as an account executive from 1990 to 1995 and then
as
Sales Manager of our Daytona Beach, Florida retail office from 1995 to 2000.
Mr.
Lydecker is a director of Gateway Bank of Florida, Florida Hospitals - Memorial
Health Systems, Stonewood Holdings, LLC, the Florida Commission on Ethics
and
the Florida Self-Insurers Guaranty Association, and he served as the 2002
Board
Chairman of the United Way of Volusia/Flagler (FL) Counties. He is a member
of
the Board of Trustees of American University, and a director and past Chairman
of Futures Public Education Foundation, the Daytona Beach/Halifax Chamber
of
Commerce, and the Boy Scouts of America, Halifax District. Mr. Lydecker is
also
past Chairman of the Florida Housing Finance Corporation and a past president
of
the Volusia/Flagler Chapter of the Florida Association of Independent
Agents.
Kenneth
R. Masters. Mr.
Masters was elected as a Regional Executive Vice President in January of
2007.
From 1999 until our acquisition of the operations of Cal-Surance Associates,
Inc. in 2002, he served as President of that entity, and since that time,
he has
continued to serve as President of the CalSurance division of Brown & Brown
of California, Inc., a subsidiary of the Company. He has also been responsible
for the acquisition and oversight of other Program Division entities based
in
Michigan and Oklahoma. From 1999 until 2002, Mr. Masters served as President
of
Cal-Surance Associates, Inc.
J.
Scott Penny.
Mr. Penny has been one of our Regional Executive Vice Presidents since 2002
and
serves as director and as president or in another executive officer capacity
for
several of our subsidiaries. Mr. Penny oversees retail and brokerage profit
center operations of certain of our subsidiaries in Connecticut, Illinois,
Indiana, Kentucky, Massachusetts, Michigan, Minnesota, New Hampshire, New
York,
Ohio and Wisconsin. From 1999 until January 2003, Mr. Penny served as profit
center leader of the Indianapolis, Indiana retail office of Brown & Brown of
Indiana, Inc., one of our subsidiaries. Prior to that, Mr. Penny served as
profit center leader of our Jacksonville, Florida retail office from 1997
to
1999. From 1989 to 1997, Mr. Penny was employed as an account executive and
marketing representative in our Daytona Beach, Florida office.
Cory
T. Walker.
Mr. Walker was named Senior Vice President, Treasurer and Chief Financial
Officer in April 2004. Prior to that time, he had served as our Vice President,
Treasurer and Chief Financial Officer since 2000. Mr. Walker also serves
as an
executive officer for a number of our subsidiaries. Mr. Walker previously
served
as our Vice President and Chief Financial Officer from 1992 to 1994. From
1995
to 2000, Mr. Walker served as profit center leader of the Oakland, California
office of Brown & Brown of California, Inc., one of our subsidiaries. Before
joining us, Mr. Walker was a Certified Public Accountant and Senior Audit
Manager for Ernst & Young LLP.
Laurel
L. Grammig.
Ms. Grammig has been our Vice President, Secretary and General Counsel since
1994 and serves as an executive officer for a number of our subsidiaries.
Before
joining us, Ms. Grammig was a partner of the law firm of Holland & Knight
LLP in Tampa, Florida.
Richard
A. Freebourn, Sr. Mr.
Freebourn has been our Director of Internal Operations since 2002, and was
elected Vice President in January 2004. From 2000 until 2002, he served as
our
Director of Internal Audit, and from 1998 until 2000, he served as Vice
President and Operations Manager of Brown & Brown of Indiana, Inc., one of
our subsidiaries. Mr. Freebourn has been employed by us since 1984.
Thomas
M. Donegan, Jr.
Mr. Donegan has been our Vice President, Assistant Secretary and Assistant
General Counsel since 2000 and serves as an executive officer for a number
of
our subsidiaries. Before joining us, Mr. Donegan was an associate with the
law
firm of Smith, Gambrell & Russell, LLP in Atlanta, Georgia.
Robert
W. Lloyd. Mr.
Lloyd was named Vice President and Chief Litigation Officer in October 2006.
Prior to that time he had served as Assistant General Counsel since 2001.
Prior
to that, he worked as Sales Manager and Marketing Manager, respectively,
in our
Daytona Beach, Florida retail office. Before joining us, Mr. Lloyd practiced
law
with the law firm of Cobb & Cole, P.A. in Daytona Beach.
Board
and Board Committee Matters
During
2006, our Board of Directors held four regular meetings, one in-person special
meeting and four telephonic special meetings. Each incumbent director serving
during 2006 attended at least 75% of the total number of Board meetings,
and at
least 75% of the total number of meetings of committees of which such director
is a member. The Board expects, but does not require, all directors and director
nominees to attend the Annual Shareholders’ Meeting. All but one member of the
Board, who was absent due to illness, attended the 2006 Annual Shareholders’
Meeting. The Board conducts executive sessions of non-management directors
in
connection with each regularly scheduled meeting of the Board. The executive
sessions are presided over by the Chairman of the Nominating/Corporate
Governance Committee, Bradley Currey, Jr. All of the 11 members of the Board
attended an accredited director education program in January 2007.
The
New York Stock Exchange (“NYSE”) has adopted listing standards relating to
director independence. In addition to requiring that directors satisfy certain
“bright line” criteria in order to be deemed “independent,” as that term is
defined in the NYSE listing standards, the NYSE listing standards permit
the
Board to adopt categorical standards to assist it in affirmatively determining
that the Company’s directors have no material relationship with the Company that
would impair such directors’ independence. The Board has adopted such
categorical standards to assist it in determining director independence,
and the
standards adopted conform to or are more exacting than the independence
requirements contained in the NYSE listing standards. As required by the
NYSE
listing standards, the Board of Directors will consider all material relevant
facts and circumstances known to it in making an independence determination,
both from the standpoint of the director and from that of persons or
organizations with which the director has an affiliation.
A
director will not be independent if the director falls within one of the
following categories as determined by the Board of Directors or a committee
thereof based on facts known to it in light of the meanings ascribed to those
categories under applicable NYSE guidance and the Company’s Corporate Governance
Principles, where applicable, and otherwise by the Board of Directors or
a
committee thereof within its discretion:
· |
The
director is or has been, within the past three years, employed by
the
Company, or an immediate family member is an executive officer of
the
Company;
|
· |
The
director receives more than $100,000 per year in direct compensation
from
the Company, other than director and committee fees and pension or
other
forms of deferred compensation for prior service (provided such
compensation is not contingent in any way on continued
service);
|
· |
An
immediate family member of the director is employed by the Company
and
receives more than $100,000 per year in direct compensation from
the
Company;
|
· |
The
director is or has been, within the past three years, affiliated
with or
employed by the Company’s independent auditor, or an immediate family
member is or has been, within the past three years, affiliated with
or
employed in a professional capacity by the Company’s independent
auditor;
|
· |
A
Company executive is or has been, within the past three years, on
the
compensation committee of the Board of Directors of a company which
employs a Company director, or an immediate family member of that
Company
director, as an executive officer;
|
· |
The
director is an executive officer or employee, or an immediate family
member is an executive officer, of another company that does business
with
the Company and the sales by that company to the Company or purchases
by
that company from the Company, in any single fiscal year are more
than the
greater of two percent of the annual revenues of that company or
$1
million;
|
· |
The
director is an executive officer or employee, or an immediate family
member is an executive officer, of another company which is indebted
to
the Company for borrowed money, or to which the Company is indebted
for
borrowed money, and the total amount of either of such companies’
indebtedness to the other at the end of the last completed fiscal
year is
more than two percent of the other company’s total consolidated assets;
or
|
· |
The
director serves as an officer, director or trustee or a charitable
organization, and the Company’s discretionary charitable contributions to
the organization are more than two percent of that organization’s total
annual charitable receipts during its last completed fiscal
year.
|
The
Board has applied the foregoing standards and considerations to each member
of
the Board and to such Board members’ immediate family members, and has
affirmatively determined that the following eight of the 11 directors have
no
material relationship with us other than service as a director, and are
therefore independent: Samuel P. Bell, III, Hugh M. Brown, Bradley Currey,
Jr.,
Theodore J. Hoepner, David H. Hughes, Toni Jennings, Jan E. Smith and Chilton
D.
Varner. In the case of Mr. Bell, the Board’s determination that the Company’s
relationship with the law firm of which Mr. Bell is a partner is not material
was based on the fact that the total amount of fees paid to that firm by
the
Company and its subsidiaries in 2006 was significantly less than 1% of either
entity’s total revenues. In each case, the Board also considered the fact that
from time to time, in the ordinary course of business and on usual commercial
terms, the Company and its subsidiaries may provide services in their capacities
as insurance intermediaries to various directors of the Company, and to entities
in which various directors of the Company have direct or indirect
interests.
Our
Board of Directors has an Audit Committee, Compensation Committee, and
Nominating/Corporate Governance Committee. The
charters of each of these Board committees are available in the “Corporate
Governance” section, under “Key Documents” on our website (www.bbinsurance.com)
and are also available in print to any shareholder who requests a copy
from the
Corporate Secretary. The current members of the Audit Committee are Jan
E. Smith
(Chairman), Hugh M. Brown, Bradley Currey, Jr., Theodore J. Hoepner, David
H.
Hughes and Toni Jennings, each of whom is independent as defined within
the NYSE
listing standards. The duties of the Audit Committee, which held four regular
meetings and two special meetings during 2006, are to recommend to the
Board of
Directors the selection of independent certified public accountants, to
meet
with our independent certified public accountants to review and discuss
the
scope and results of the annual audit, and to consider various accounting
and
auditing matters related to the Company, including our system of internal
controls and financial management practices. The
Audit Committee includes at least one audit committee financial expert,
Bradley
Currey, Jr., among its members.
The
Compensation Committee currently consists of Samuel P. Bell, III (Chairman),
Hugh M. Brown, Bradley Currey, Jr., David H. Hughes, Toni Jennings, Jan E.
Smith
and Chilton D. Varner, each of whom is independent as defined in the listing
standards for the NYSE. The Compensation Committee recommends to the Board
base
salary levels and bonuses for our Chief Executive Officer, and approves the
guidelines used to determine salary levels and bonuses for our other executive
officers, including the Named Executive Officers. See “Executive Compensation -
Board Compensation Committee Report on Executive Compensation” and “Compensation
Discussion and Analysis.” The Compensation Committee also reviews and makes
recommendations with respect to our existing and proposed compensation plans,
and is responsible for administering our 1990 Employee Stock Purchase Plan,
our
Stock Performance Plan, and our 2000 Incentive Stock Option Plan for Employees.
The Compensation Committee is authorized by its charter to form and delegate
authority to subcommittees when appropriate. The Compensation Committee held
four regular meetings in 2006.
The
Nominating/Corporate Governance Committee currently consists of Bradley Currey,
Jr. (Chairman), Samuel P. Bell, III, Theodore J. Hoepner, Jan E. Smith and
Chilton D. Varner, each of whom is independent, as defined in the listing
standards for the NYSE. This Committee’s duties include duties associated with
corporate governance, as well as the nomination of persons to stand for election
to the Board at our Annual Shareholders’ Meeting and recommendation of nominees
to the Board of Directors to fill vacancies on, or as additions to, the Board.
The Nominating/Corporate Governance Committee held four regular meetings
in
2006.
The
Nominating/Corporate Governance Committee will consider nominations of persons
for election as directors that are submitted in writing by shareholders in
accordance with our procedures for shareholder proposals. See “Proposals of
Shareholders.” Such proposals must contain all information with respect to such
proposed candidate as required by the SEC’s proxy rules, must address the manner
in which the proposed candidate meets the criteria described below, and must
be
accompanied by the consent of such proposed candidate to serve as a director,
if
elected. The Nominating/Corporate Governance Committee has not established
“minimum qualifications” for director nominees, because it is the view of the
Committee that the establishment of rigid “minimum qualifications” might
preclude the consideration of otherwise desirable candidates for election
to the
Board. The Nominating/Corporate Governance Committee will consider proposed
candidates identified by non-management directors, the Chief Executive Officer
and other executive officers, and shareholders, and will evaluate such
candidates based on a number of factors, including: (a) the need or desirability
of maintaining or expanding the size of the Board; (b) independence; (c)
credentials, including, without limitation, business experience, experience
within the insurance industry, educational background, professional training,
designations and certifications; (d) interest in, and willingness to serve
on,
the Board; (e) ability to contribute by way of participation as a member
of
Board committees; (f) financial expertise and sophistication; (g) basic
understanding of the Company’s principal operational and financial objectives,
plans and strategies, results of operations and financial condition, and
relative standing in relation to the Company’s competitors; and (h) willingness
to commit requisite time and attention to Board service, including preparation
for and attendance at regular quarterly meetings, special meetings, Committee
meetings and periodic Board “retreats.”
The
Nominating/Corporate Governance Committee and the Board consider a variety
of
sources when identifying individuals as potential Board members, including
other
enterprises with which Board members are or have previously been involved
and
through which they have become acquainted with qualified candidates. The
Company
does not pay any third party a fee to assist in the identification or evaluation
of candidates.
The
Nominating/Corporate Governance Committee has nominated those persons named
in
“Proposal 1 - Election of Directors” below to stand for election to the Board of
Directors at the 2007 Annual Shareholders’ Meeting. One of these nominees, Toni
Jennings, was appointed to the Board effective January 24, 2007. Ms.
Jennings previously served on our Board of Directors from 1999 until April
2003,
when she withdrew her name from consideration for renomination due to
obligations associated with her appointment to the office of Lieutenant Governor
of the State of Florida effective March 2003. Ms. Jennings was recommended
for
consideration for nomination in January 2007 by the Chief Executive Officer
and
a non-management Board member.
Corporate
Governance Principles; Code of Business Conduct and Ethics; Code of Ethics
for
Chief Executive Officer and Senior Financial Officers
The
Board of Directors has adopted Corporate Governance Principles, a Code of
Business Conduct and Ethics, and a Code of Ethics for Chief Executive Officer
and Senior Financial Officers. The full text of the Corporate Governance
Principles, Code of Business Conduct and Ethics, and Code of Ethics for Chief
Executive Officer and Senior Financial Officers can be found in the “Corporate
Governance” section, under “Key Documents” on our website (www.bbinsurance.com)
and are available in print to any shareholder who requests a copy from the
Corporate Secretary.
Communication
with Directors
Interested
parties, including shareholders, may communicate with our Board of Directors,
with specified members or committees of our Board, or with non-management
directors as a group or with the Presiding Director of the non-management
directors, Bradley Currey, Jr., by sending correspondence to our Corporate
Secretary at 3101 West Martin Luther King Jr. Boulevard, Suite 400, Tampa,
Florida 33607, and specifying in such correspondence that the message is
for our
Board or for one or more of its members or committees. Communications will
be
relayed to Directors no later than the next regularly scheduled quarterly
meeting of the Board and Board committees.
Compensation
of Directors
During
2006, Directors who are not employees of ours were paid $7,500 for attendance
at
each regular quarterly Board meeting attended in person, $2,000 for attendance
at the annual Board “retreat,” $1,500 for attendance at each special Board
meeting, and $1,500 for each committee meeting attended if such meeting occurred
other than in conjunction with regularly scheduled quarterly Board meetings.
Directors who are members of a special committee of the Board received a
fee of
$2,500 for special committee meetings attended in person, and $1,500 for
special
committee meetings attended by phone. In addition, the Chairman of the Audit
Committee is paid $4,000 in January of each year for services associated
with
that office. Commencing in 2006, each director who is not an employee of
ours
also receives in January of each year $32,000 worth of shares of our common
stock, valued as of the close of business on the last business day before
the
regular January meeting of the Compensation Committee, as additional
compensation for such director’s services. Prior to 2006, each director who is
not an employee of ours received 500 shares of our common stock in January
of
each year as additional compensation for such director’s services.
All
directors receive reimbursement of reasonable out-of-pocket expenses incurred
in
connection with meetings of the Board. No director who is an employee of
ours
receives separate compensation for services rendered as a director.
The
following table sets forth cash and other compensation paid to directors
during
2006:
2006
DIRECTOR COMPENSATION
Name
|
|
Fees
Earned or
Paid
in Cash
($)
|
|
Stock
Awards
($)
|
|
All
Other
Compensation
($)
|
|
Total
($)
|
|
Samuel
P. Bell, III
|
|
$
|
38,000
|
|
$
|
32,000
|
|
$
|
0
|
|
$
|
70,000
|
|
Hugh
M. Brown
|
|
|
44,000
|
|
|
32,000
|
|
|
0
|
|
|
76,000
|
|
Bradley
Currey, Jr.
|
|
|
39,500
|
|
|
32,000
|
|
|
0
|
|
|
71,500
|
|
Theodore
J. Hoepner
|
|
|
36,500
|
|
|
32,000
|
|
|
0
|
|
|
68,500
|
|
David
H. Hughes
|
|
|
38,000
|
|
|
32,000
|
|
|
0
|
|
|
70,000
|
|
Toni
Jennings (appointed January 24, 2007)
|
|
|
--
|
|
|
--
|
|
|
0
|
|
|
--
|
|
John
R. Riedman
|
|
|
38,000
|
|
|
32,000
|
|
|
0
|
|
|
70,000
|
|
Jan
E. Smith
|
|
|
43,500
|
|
|
32,000
|
|
|
0
|
|
|
75,500
|
|
Chilton
D. Varner
|
|
|
41,000
|
|
|
32,000
|
|
|
0
|
|
|
73,000
|
|
Certain
Relationships and Related Transactions
John
R. Riedman, one of our directors, is Chairman of, and holds an equity interest
of greater than ten percent in, Riedman Corporation, the landlord under a
lease
agreement with a subsidiary of the Company, as tenant, with respect to office
space in Rochester, New York. The lease provides for payment of annual rent
of
$255,000 for the first three years of a five-year lease term that commenced
January 1, 2006, and 3.0% of the total revenues of the Rochester office for
the
remaining two years of the term.
J.
Powell Brown, who is the son of J. Hyatt Brown, is employed by us as President
and received compensation of $875,828 for services rendered to us in 2006.
P.
Barrett Brown, who is also the son of J. Hyatt Brown, is employed by Brown
&
Brown of California, Inc., one of our subsidiaries, as a producer in the
Orange,
California retail office and received compensation of $213,792 for services
rendered to that subsidiary in 2006.
Brian
Henderson, who is the son of Jim W. Henderson, is employed by Peachtree Special
Risk Brokers, LLC, one of our subsidiaries, as a vice president and profit
center leader in Boca Raton, Florida and received compensation of $474,340
for
services rendered to that subsidiary in 2006.
Joanne
B. Penny, who is the mother of J. Scott Penny, is employed by us as a producer
in our Daytona Beach, Florida retail office and received compensation of
$204,849 for services rendered in 2006.
Richard
A. Freebourn, Jr., who is the son of Richard A. Freebourn, Sr., is employed
by
us as a bond manager in our Daytona Beach, Florida retail office and received
compensation of $126,713 for services rendered in 2006.
J.
Hyatt Brown is a director of SunTrust Banks, Inc., an affiliate of SunTrust
Bank
Holding Company. J. Powell Brown is a member of the Board of the SunTrust
Bank/Central Florida. We have a $20 million revolving credit facility and
a
$12.9 million outstanding term loan balance at December 31, 2006 with SunTrust
Banks, Inc., and SunTrust Banks, Inc. also acts as escrow agent with respect
to
accounts related to certain acquisitions we have made. We expect to continue
to
use SunTrust Banks, Inc. during 2007 for most of our cash management
requirements. Two
of our subsidiaries provide insurance-related services to subsidiaries of
SunTrust Banks, Inc., and a number of our offices provide services with respect
to premium financing to another such subsidiary of SunTrust Banks, Inc.
For
additional information concerning transactions with related persons, see
“Executive Compensation - Compensation Committee Interlocks and Insider
Participation.”
SECTION
16(a) BENEFICIAL OWNERSHIP REPORTING
Section
16(a) of the Securities Exchange Act requires our directors, officers, and
persons who own more than 10% of our outstanding shares of common stock to
file
reports of ownership and changes in ownership with the Securities and Exchange
Commission. Directors, officers and 10% shareholders are required by SEC
regulations to furnish us with copies of all Section 16(a) reports they
file.
Based
solely on our review of the copies of such reports furnished to us and written
representations from certain reporting persons that no SEC Form 5s were required
to be filed by those persons, we believe that during 2006, our directors,
officers and 10% beneficial owners timely complied with all applicable filing
requirements.
COMPENSATION
DISCUSSION AND ANALYSIS
Our
overall compensation philosophy is as follows:
· |
Attract
and retain high-quality people, which is crucial to both the short-term
and long-term success of the Company;
|
· |
Reinforce
strategic performance objectives through the use of incentive compensation
programs; and
|
· |
Create
a mutuality of interest between the executive officers and shareholders
through compensation structures that promote the sharing of the rewards
and risks of strategic decision-making.
|
Our
compensation system is designed to reward results as manifested in increases
in
pre-tax earnings, operating profit, revenue, and our stock price. We seek
to
provide an executive compensation package that is driven by our overall
financial performance, the increase in shareholder value, the success of
the
business units directly impacted by the executive’s performance, and the
performance of the individual executive.
We
provide a combination of pay elements with the goal of aligning executive
incentives with shareholder value. Our executive compensation program includes
both short and long-term compensation, with an emphasis on compensation that
is
tied to corporate and stock price performance. In the case of both our 2000
Incentive Stock Option Plan for Employees and our Stock Performance Plan,
stock
price appreciation is fundamental in realizing a compensation benefit. By
emphasizing longer performance measurement periods by using long-term
incentives, we align our executives’ interests with our shareholders’ interests
and create an effective retention measure.
In
this section, we discuss certain aspects of our compensation program as it
pertains to our principal executive officer, our principal financial officer,
and our three other most highly-compensated executive officers in 2006
(collectively, the “Named Executive Officers”). Our discussion focuses on
compensation and practices relating to our most recently completed fiscal
year.
Base
Compensation.
Base salaries are designed to provide competitive levels of compensation
to our
executives based on scopes of responsibility and duties. We pay base salaries
because they provide a basic level of compensation and are necessary to recruit
and retain executives. Salary levels for the executive officers other than
the
Chief Executive Officer, including the Named Executive Officers, are recommended
by the Chief Executive Officer and reviewed by the Compensation Committee
during
the first quarter based upon the qualitative performance of each officer
during
the previous year and guidelines approved by the Compensation Committee.
Each of
the Named Executive Officers other than the Chief Executive Officer reports
to
the Chief Executive Officer. If an officer has had no change in duties, the
percentage of annual salary increases for such officer generally is expected
to
be approximately 3-5% of the officer’s base salary. Exceptional performance or
an increase in the officer’s responsibilities may merit a larger
increase.
Annual
Bonuses.
The bonuses for the executive officers, including the Named Executive Officers
other than the Chief Executive Officer, are recommended by the Chief Executive
Officer and reviewed by the Compensation Committee. The bonuses are based
primarily on objective criteria, such as the earnings growth of the Company
as a
whole and/or the performance of the offices for which such executive officer
is
responsible. In 2006, the bonuses of the Named Executive Officers were generally
calculated based upon the following formula: 90% of the bonus in the previous
year multiplied by the percentage increase in earnings per share in the most
recently completed fiscal year. The resulting figure is subject to adjustment
based upon a subjective analysis of the officer’s duties and performance, in the
discretion of the Compensation Committee.
Long-Term
Compensation:
Stock
Performance Plan and 2000 Incentive Stock Option Plan.
We emphasize long-term variable compensation at the senior executive levels
because of our desire to reward effective long-term management decision-making
and our desire to retain executive officers who have the potential to impact
both our short-term and long-term profitability. Long-term incentives are
designed to focus attention on long-range objectives and future returns to
shareholders, and are presently delivered to the Named Executive Officers
through the Stock Performance Plan (the “PSP”) and our 2000 Incentive Stock
Option Plan for Employees (the “ISO Plan”). The Compensation Committee
administers both our PSP and our ISO Plan, and may grant shares of performance
stock and/or stock options to key employees based upon salary levels, sales
production levels and performance evaluations. Grants of stock pursuant to
the
PSP and grants of options pursuant to the ISO Plan have in past years been
made
to each of the Named Executive Officers other than J. Hyatt Brown, the Chairman
and Chief Executive Officer of the Company, who is not a participant in either
the PSP or the ISO Plan. No grants were made to any of the Named Executive
Officers in 2006 under either the PSP or the ISO Plan.
Grants
of stock under our PSP are intended to provide an incentive for key employees
to
achieve our long-range performance goals by providing incentives to remain
with
us for a long period after the grant date and by tying the vesting of the
grant
to appreciation of our stock price. All of the Named Executive Officers other
than Mr. Hyatt Brown have received PSP grants that include two conditions
of
vesting: first, the grants “tranche” in increments of 20% each time that the
20-day trading average of our stock price increases by 20% in the five years
following the date of the grant. Thus, in the event that the stock price
doubles, or increases by 100%, within five years following the date of grant,
the first condition of vesting is met with respect to the entire amount of
the
grant. Alternatively, if the stock price did not increase by 20% within five
years following the date of grant, the first condition of vesting would not
be
met with respect to any portion of the grant. Once the first condition of
vesting is met with respect to any portion of shares granted under this Plan,
the grantee is entitled to receive dividends and to vote that portion of
the
shares. The Named Executive Officers other than Mr. Hyatt Brown initially
received grants under the PSP in 1996, and
thereafter in 1998,
2001 and 2003, in
each instance after the first condition of vesting had been met with respect
to
all previous grants under this Plan. Grant amounts were determined based
upon
the nature and extent of job duties. Additionally, Messrs. Kirk and Walker
received PSP grants in 1997 and 2000, respectively, based upon expansions
of
their job responsibilities. The second condition of vesting for all of the
Named
Executive Officers who have received PSP grants is continued employment with
us
for a period of 15 years following the date of grant or, if earlier, until
the
attainment of age 64, or disability or death. None of the grants made to
the
Named Executive Officers have met the second condition of vesting. If and
when
such condition is met, the vested shares will be delivered, and the market
value
of such shares as of the vesting date will be taxed as ordinary income to
the
recipients.
Grants
of qualified and non-qualified stock options under our ISO Plan are intended
to
provide an incentive for key employees to achieve our short- to medium-range
performance goals. In 2000, such grants were made to the Named Executive
Officers other than Messrs. Hyatt Brown and Walker, and in 2003, when it
was
apparent that all grants made in 2000 had vested on an accelerated basis
due to
the satisfaction of the performance standard described below, grants were
made
to all of the Named Executive Officers other than Mr. Hyatt Brown. The amounts
of the grants made in 2000 and 2003 were
generally based on operating profit of the offices for which each of the
Named
Executive Officers receiving such grants was responsible. In each instance
(other than the 2003 grant to Mr. Walker), there was potential for acceleration
of the vesting of these option grants based on the achievement of compound
annual growth in pre-tax earnings in excess of 15% in the grantee’s region over
the three-year period following the end of the specified “base year.” The
granted options vest either (a) as this performance standard is achieved
(that
is, vesting is accelerated and occurs, in whole or in part, as the case may
be,
based on the extent to which pre-tax earnings grow in the referenced period)
or
(b) on the day prior to the ten-year anniversary date of the grant, whichever
is
earlier. Additionally, in some instances, at the election of the grantee,
the
exercise dates of limited portions of the grants have been established to
maximize the extent to which the options are tax-qualified rather than
nonqualified. Vested stock options may be exercised only pursuant to a schedule
set forth in each grantee’s agreement with us. The grantee may not sell or
transfer any granted stock options.
CEO
Compensation.
With respect to the salary and bonus of J. Hyatt Brown, the Chairman and
Chief
Executive Officer of the Company, the Compensation Committee annually sets
these
amounts based upon the general operating performance of the Company. The
performance criteria most closely examined by the Committee are improvements
in
the Company’s earnings per share and net income, as well as the continuing
growth of the Company’s business. The Committee also considers the annual Board
evaluations of the performance of the Chief Executive Officer, and the salary
levels and other compensation of chief executive officers in companies
competitive with the Company (for 2006, the Committee considered publicly
available information concerning the compensation of chief executive officers
of
Aon Corporation, Arthur J. Gallagher & Co., Hilb Rogal & Hobbs Company,
Hub International Limited, Marsh & McLennan Companies, USI Holdings
Corporation and Willis Group Holdings Limited) and makes adjustments believed
appropriate based upon the differences in size of the peer companies as compared
with the Company. The Committee reports the salary and bonus amounts recommended
for the Chief Executive Officer to the full Board of Directors (excluding
Mr.
Hyatt Brown) and responds to questions, if any.
The
$1,142,292 bonus recommended by the Compensation Committee and approved by
the
Board (excluding Mr. Hyatt Brown) reflects the increase of more than 13%
in the
Company’s earnings per share over 2005.
Other
Compensation.
As appropriate, and in the reasonable discretion of the Chief Executive Officer,
certain golf or social club membership dues of the Named Executive Officers
who
have responsibility for the entertainment of clients, prospective clients
and
principals of acquisition prospects are reimbursed by the Company. Additionally,
the Company reimburses the costs of annual physical examinations for each
of the
Named Executive Officers that are not otherwise covered by insurance. Along
with
all other full-time employees, each of the Named Executive Officers is eligible:
(a) to receive matching and profit-sharing contributions made by the Company
to
the 401(k) accounts of participants in the qualified 401(k) Plan sponsored
by
the Company, (b) to participate in the Company’s Employee Stock Purchase Plan,
(c) to participate in group medical, dental and other benefit plans subscribed
to by the Company and its subsidiaries and (d) to the extent permitted by
applicable law, for reimbursement of any amounts earned by the Company on
personal lines insurance such as homeowners and flood insurance purchased
by
employees.
We
offer a qualified 401(k) Plan to provide a tax-advantaged savings vehicle.
We
make matching contributions to the 401(k) Plan to encourage employees to
save
money for their retirement. These plans, and our contributions to them, enhance
the range of benefits we offer to executives and enhance our ability to attract
and retain key employees.
Policy
on Tax Deductibility.
The Committee considers the anticipated tax treatment to the Company in its
review and establishment of compensation programs and payments, including
the
potential impact of Section 162(m) of the Internal Revenue Code of 1986,
as
amended (“Section 162(m)”). Section 162(m) disallows a tax deduction for any
publicly held corporation for individual compensation exceeding $1 million
in
any taxable year for the Chief Executive Officer and the Named Executive
Officers, other than compensation that is performance-based under a plan
that is
approved by the shareholders and that meets certain other technical
requirements. The deductibility of compensation payments can depend upon
numerous factors, including the nature of the payment and the time that income
is recognized under various awards. Interpretations of, and changes in,
applicable tax laws and regulations as well as other factors beyond the control
of the Committee also can affect deductibility of compensation. Our general
policy is to preserve the tax deductibility of compensation paid to our Chief
Executive Officer and the Named Executive Officers. It is also our general
policy to deliver equity-based compensation to employees in as tax-efficient
a
manner as possible, taking into consideration the overall cost to the Company,
for which the Company accounts in accordance with Statement of Financial
Accounting Standards (SFAS) 123R, “Share-Based Payment,” issued by the Financial
Accounting Standards Board (FASB). The Committee will continue to monitor
developments and assess alternatives for preserving the deductibility of
compensation payments and benefits to the extent reasonably practicable,
consistent with its compensation policies and as determined to be in the
best
interests of the Company and its shareholders.
Payments
in the Event of Change in Control.
The only Named Executive Officer whose employment agreement includes change
in
control provisions is J. Hyatt Brown. Those provisions require that there
be
both a change in control and an involuntary termination without “cause” or a
voluntary termination for “good reason,” which is often referred to as a
“double-trigger.” The double-trigger ensures that we will become obligated to
make payments under the employment agreement only if Mr. Hyatt Brown’s
employment actually terminates as a result of the change in control. For
details
of the change in control provisions applicable to Mr. Hyatt Brown, please
see
the table titled “Potential Payments Upon Termination or Change in Control -
2006” and the section titled “Employment and Deferred Compensation
Agreements,” below.
The
PSP and the ISO Plan include change in control provisions. The PSP provides
that
all granted PSP stock shall
become fully vested and nonforfeitable in the event of (i) the Company’s entry
into any agreement to sell all or substantially all of its assets or to enter
into any merger, consolidation, reorganization, division or other corporate
transaction in which Company stock is converted into another security or
into
the right to receive securities or property where such agreement does not
provide for the assumption or substitution of PSP Stock; (ii) any tender
or
exchange offer for Stock accepted by a majority of the shareholders of the
Company; or (iii) the death of J. Hyatt Brown and the subsequent sale by
his estate, his wife, his parents, his lineal descendants, any trust created
for
his benefit during his lifetime, or any combination of the foregoing, of
the
Stock owned by J. Hyatt Brown prior to his death. The PSP further provides
that
if any shares of PSP stock become fully vested and nonforfeitable because
of the
occurrence of these events the Company shall pay to the holders of such shares,
within 60 days of the occurrence of such event, the full amount of any federal
and state income tax liability incurred by such holder as a result of such
vesting, including, without limitation, any excise tax with respect to such
vesting (e.g., under Internal Revenue Code § 4999 and any successor provision)
as well as the amount of any tax liability with respect to the “gross-up”
payment described in the preceding sentence. Additionally, the PSP provides
that
in the event of any “Change in Control” (as defined in the PSP), the Board
thereafter shall have the right to take such action with respect to any shares
of PSP stock that are forfeitable, or all such shares of PSP stock, as the
Board
in its sole and absolute discretion deems appropriate under the circumstances
to
protect the interests of the Company in maintaining the integrity of the
awards
under the PSP, and states that the Board shall have the right to take different
action with respect to different “Key Employees” (as defined in the PSP) or
different groups of “Key Employees,” as the Board in its sole and absolute
discretion deems appropriate under the circumstances. For information concerning
the value of the vested PSP stock that each of the Named Executive Officers
would have in the event that one of the triggering events described above
occurred on the last business day of 2006, please see the table titled
“Potential
Payments Upon Termination or Change in Control - 2006”
below.
The
ISO Plan provides that all participants, which includes all of the Named
Executive Officers other than J. Hyatt Brown, shall be deemed to have vested
one
hundred percent (100%) in all options granted under the plan in the event
of
such participant’s involuntary or constructive termination of service with us
(other than for specified causes, as set forth in the plan) within 12 months
after a “Transfer of Control” as defined in the ISO Plan. For information
concerning the value of the vested options that each of the Named Executive
Officers would have under the ISO Plan in the event that termination of
employment after “Transfer of Control” had occurred on the last business day of
2006, please see the table titled “Potential Payments Upon Termination or Change
in Control” below.
POTENTIAL
PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL - 2006
|
|
|
|
Before Change in
Control
|
|
After Change in
Control
|
|
|
|
|
|
|
|
|
|
Name
|
|
Benefit
|
|
Termination
w/o Cause
or Resignation for
Good
Reason
|
|
Termination
w/o Cause
or
Resignation
for Good Reason
|
|
Voluntary
Termination
|
|
Death
|
|
Disability
|
|
Change in
Control
|
|
J.
Hyatt Brown
|
|
Employment
Agreement
|
|
$
|
0
|
|
$
|
65,868,177(1)
|
|
$
|
0
|
|
$
|
0
|
|
$
|
0
|
|
$
|
65,868,177
|
|
Cory
W. Walker
|
|
ISO(2)
|
|
|
0
|
|
|
621,500
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
621,500
|
|
|
|
PSP(2)
|
|
|
0
|
|
|
4,992,719
|
|
|
0
|
|
|
4,992,719
|
|
|
4,992,719
|
|
|
4,992,719
|
|
Jim
W. Henderson
|
|
ISO(2)
|
|
|
0
|
|
|
236,269
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
236,269
|
|
|
|
PSP(2)
|
|
|
0
|
|
|
7,085,449
|
|
|
0
|
|
|
7,085,449
|
|
|
7,085,449
|
|
|
7,085,449
|
|
Thomas
E. Riley
|
|
ISO(2)
|
|
|
0
|
|
|
2,246,872
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
2,246,872
|
|
|
|
PSP(2)
|
|
|
0
|
|
|
7,021,130
|
|
|
0
|
|
|
7,021,130
|
|
|
7,021,130
|
|
|
7,021,130
|
|
Kenneth
D. Kirk
|
|
ISO(2)
|
|
|
0
|
|
|
236,269
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
236,269
|
|
|
|
PSP(2)
|
|
|
0
|
|
|
6,960,197
|
|
|
0
|
|
|
6,960,197
|
|
|
6,960,197
|
|
|
6,960,197
|
|
(1)
|
Additionally,
in the event of termination of Mr. Hyatt Brown’s employment following a
change in control as defined in the employment agreement, the
Company (or
our successor) would be required to
pay Mr. Hyatt Brown an amount (a “gross-up payment”) with respect to
excise taxes that may be imposed under applicable tax laws on
payments and
benefits received in connection with a change of control. The
gross-up
payment would make Mr. Brown whole for excise taxes (and for
all taxes on
the gross-up payment) in respect of payments and benefits received.
Mr.
Hyatt Brown would also be entitled to continuation of group medical
and
other like benefits offered by the Company to employees for a
period of
three years following involuntary or constructive termination
following a
change in control, which, had the triggering events occurred
on December
29, 2006, the last business day of the Company’s last completed fiscal
year, would total approximately $24,177 for medical and other
benefits and
$26,400 representing Company contributions to 401(k) Plan. For
more
detailed information concerning the terms of Mr. Hyatt Brown’s employment
agreement, please see the section titled “Employment and Deferred
Compensation Agreements” below.
|
|
|
(2)
|
All
figures shown for the value of stock granted under the Stock
Performance
Plan and the 2000 Incentive Stock Option Plan for Employees that
would
vest upon death, disability or following a change
in control are calculated based on the assumption that the triggering
event(s) for such vesting took place on December 29, 2006, the
last
business day of the Company’s last completed fiscal year, and that the
price per share of our common stock is $28.21, the closing market
price as
of that date. For more detailed information concerning the change
in
control provisions of the PSP and the ISO Plan, please see the
section
titled “Compensation Discussion and Analysis - Payments in the Event
of
Change in Control” above.
|