BRW Holdings, Inc. 2006 Proxy
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
SCHEDULE
14A
(Rule 14a-101)
Proxy
Statement Pursuant to Section 14(a) of
the
Securities Exchange Act of 1934
Filed
by the Registrant x
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Filed
by a Party other than the Registrant o
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Check
the appropriate box:
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Preliminary
Proxy Statement
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Confidential,
for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
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x
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Definitive
Proxy Statement
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o
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Definitive
Additional Materials
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Soliciting
Material Under Rule 14a-12
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Bristol
West Holdings, Inc.
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(Name
of Registrant as Specified In Its Charter)
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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):
x
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No
fee required.
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Fee
computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
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(1)
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Title
of each class of securities to which transaction
applies:
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Aggregate
number of securities to which transaction applies:
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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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(4)
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Proposed
maximum aggregate value of transaction:
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(5)
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Total
fee paid:
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Fee
paid previously with preliminary materials.
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Check
box if any part of the fee is offset as provided by Exchange Act
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0-11(a)(2) and identify the filing for which the offsetting fee was
paid
previously. Identify the previous filing by registration statement
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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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Form,
Schedule or Registration Statement No.:
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(3)
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Filing
Party:
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Date
Filed:
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Bristol
West Holdings, Inc.
5701
Stirling Road
Davie,
Florida 33314
April
24,
2006
Dear
Stockholder,
You
are
invited to attend our Annual Meeting of Stockholders on Friday, May 19, 2006,
at
our headquarters in Davie, Florida.
In
addition to the matters described in the attached proxy statement, I will report
on our current activities and operations. You also will have an opportunity
to
ask questions of and to meet with your directors and executive
officers.
Your
representation and vote are important, and your shares should be voted whether
or not you plan to attend the meeting. To ensure that your shares are
represented at the meeting, please complete, sign, date and return the enclosed
proxy card promptly.
I
look
forward to seeing you at the meeting.
Yours
sincerely,
James
R.
Fisher
Chairman
and Chief Executive Officer
BRISTOL
WEST HOLDINGS, INC.
5701
Stirling Road
Davie,
Florida 33314
(954)
316-2500
NOTICE
OF ANNUAL MEETING OF STOCKHOLDERS
Time
and Date:
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1:30
pm Eastern
Daylight Time on
Friday, May 19, 2006
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Place:
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Bristol
West Holdings, Inc. Headquarters
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5701
Stirling Road, Davie, Florida 33314
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Purpose:
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(1)
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The
election of directors
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(2) |
The
ratification of the Audit Committee’s selection of Deloitte & Touche
LLP as the independent auditor for
2006
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(3)
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The
approval of the Bristol West Executive Officer Incentive
Plan
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(4)
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The
transaction of any other business that properly comes before the
meeting
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In
addition, during the annual meeting, the directors will present Bristol
West’s audited consolidated financial statements for the financial year ended
December 31, 2005.
Adjournments
and
Postponements:
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Any
action on the items of business described above may be considered
at the
annual meeting at the time and on the date specified above or at
any time
and date to which the annual meeting may be properly adjourned or
postponed.
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Who
May Vote:
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You
will be entitled to vote at the annual meeting only if you were a
stockholder of record as of the close of business April 3, 2006,
the
record date for voting.
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Meeting
Admission:
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You
are entitled to attend the annual meeting only if you were a Bristol
West
stockholder as of the close of business on April 3, 2006 or hold
a valid
proxy for the annual meeting. You may be required to verify your
ownership
at the admissions desk.
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Voting:
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Your
vote is important. Whether or not you plan to attend the annual meeting,
we encourage you to read this proxy statement and submit your proxy
as
soon as possible to ensure that your shares are represented at the
annual
meeting. For specific instructions on how to vote your shares and
submit
your proxy, please refer to this proxy statement and your proxy
card.
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Annual
Report:
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A
copy of our 2005 Annual Report is
enclosed.
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Date
of Mailing:
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We
first distributed this notice and proxy statement to stockholders
on or
about April 24, 2006.
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By
Order of the Board of Directors.
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George
G. O’Brien
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Chief
Legal Officer & Corporate
Secretary
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GENERAL
INFORMATION
Why
am I receiving these materials?
The
Board of Directors (which we refer to as the “Board”)
of Bristol West Holdings, Inc. (which we refer to as “Bristol
West,”
“Company,”
“us”
or “we”),
is providing these proxy materials to you in connection with Bristol
West’s 2006 annual meeting of stockholders (which we refer to as the
“2006
Annual Meeting”),
which will take place on Friday, May 19, 2006 at 1:30 pm Eastern
Daylight Time at our headquarters in Davie, Florida. As a stockholder,
you
are invited to attend the 2006 Annual Meeting and are entitled and
requested to vote on the items of business described in this proxy
statement.
What
information is contained in this proxy statement?
The
information in this proxy statement relates to the proposals to be
voted
on at the 2006 Annual Meeting, the voting process, the Board and
Board
committees, the compensation of directors and executive officers
for
fiscal 2005, and other required information.
How
may I obtain Bristol West’s Form 10-K and other financial information?
We
have enclosed a copy of our annual report to our stockholders with
respect
to fiscal 2005 (which we refer to as our “2005
Annual Report”)
in accordance with applicable rules of the New York Stock Exchange
(which
we refer to as the “NYSE”)
and the Securities and Exchange Commission (which we refer to as
the
“SEC”).
We also prepared and filed with the SEC an Annual Report on Form
10-K for
the fiscal year ended December 31, 2005 (which we refer to as our
“2005
Form 10-K”).
Stockholders
may request another free copy of our 2005 Annual Report and a free
copy of
our 2005 Form 10-K (including the financial statements and financial
statement schedules, but excluding exhibits) by contacting Bristol
West at
5701 Stirling Road, Davie, FL 33314, Attention: Craig E. Eisenacher,
or by
calling Craig E. Eisenacher at (954) 316-5192. Alternatively, current
and
prospective investors can access our 2005 Annual Report and our 2005
Form 10-K (including exhibits) and other financial information, on
our investor relations web site at: www.bristolwest.com/investor/index.html.
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How
may I obtain a separate set of proxy materials?
SEC
rules permit a single set of annual reports and proxy statements
to be
delivered to any household at which two or more stockholders reside
if
they appear to be members of the same family. Under the circumstances,
each stockholder continues to receive a separate proxy card. This
procedure is referred to as “householding.” While Bristol West does not
participate in householding for mailings to its stockholders of record,
a
number of brokerage firms with account holders who are Bristol West
stockholders have instituted householding. In these cases, your broker
will deliver a single proxy statement and annual report to multiple
stockholders sharing your address unless the broker has received
contrary
instructions from you or one or more of the other affected stockholders.
Once you have received notice from your broker that the broker will
be
householding communications to your address, householding will continue
until you are notified otherwise or until you revoke your explicit
or
implied consent by contacting your broker. If at any time you no
longer
wish to participate in householding and would prefer to receive a
separate
proxy statement and annual report, you should notify your
broker.
You
can receive a copy of this proxy statement and the 2005 Annual Report
by
contacting us at Bristol West Holdings, Inc., 5701 Stirling Road,
Davie, FL 33314, Attention: Craig E. Eisenacher, or by calling Craig
E.
Eisenacher at (954) 316-5192.
How
may I request a single set of proxy materials for my household?
If
you share an address with another stockholder and have received multiple
copies of our proxy materials, you may write us at Bristol West Holdings,
Inc., 5701 Stirling Road, Davie, FL 33314, Attention: Craig E.
Eisenacher to request delivery of a single copy of these materials
in the
future.
What
should I do if I receive more than one set of voting materials?
You
may receive more than one set of voting materials, including multiple
copies of this proxy statement and multiple proxy cards. For example,
if
you hold your shares in more than one brokerage account, you may
receive a
separate voting instruction card for each brokerage account in which
you
hold shares. If you are a stockholder of record and your shares are
registered in more than one name, you will receive more than one
proxy
card. Please complete, sign, date and return each proxy card that
you
receive.
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What
items of business will be voted on at the 2006 Annual Meeting?
The
items of business on which we have scheduled a vote at the annual
meeting
are:
·
The
election of directors
· The
ratification of the Audit Committee’s selection of Deloitte & Touche
LLP as the independent auditor for 2006
·
The
approval of the Bristol West Executive Officer Incentive Plan
(which we
refer to as the “EIP”)
We
also will consider any other business that properly comes before
the 2006
Annual Meeting or any adjournment or postponement of the 2006 Annual
Meeting. See the following questions below: “What
happens if additional matters are presented at the 2006 Annual
Meeting?”
and “How
many votes are needed for any such other matters?”
How
does the Board recommend that I vote?
Our
Board recommends that you vote your shares “FOR” each of the nominees to
the Board, “FOR” the ratification of the appointment of our independent
auditor for 2006, and “FOR” approval of the EIP.
Who
may vote?
Holders
of shares of Bristol West’s common stock, $0.01 par value per share (which
we refer to as “Common
Stock”),
as recorded in our share register on April 3, 2006 (which we refer
to as
the “Record
Date”),
may vote at the 2006 Annual Meeting. As of the Record Date, there
were
30,160,493 shares of Common Stock outstanding and entitled to one
vote per
share. A list of stockholders will be available for inspection for
at
least 10 days before the 2006 Annual Meeting at Bristol West’s offices at
5701 Stirling Road, Davie, Florida 33314.
How
do I vote?
You
may vote in person at the 2006 Annual Meeting or by proxy. We recommend
that you vote by proxy even if you expect to attend the 2006 Annual
Meeting. You will be able to change your vote at the 2006 Annual
Meeting.
Please refer to this proxy statement and your proxy card or the
information forwarded by your bank, broker or other holder of record
to
see how you should complete your proxy card and deliver it to
us.
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What
is the deadline for voting my shares?
If
you hold shares as the stockholder of record, we must receive your
vote by
proxy before the polls close at the 2006 Annual Meeting.
How
do proxies work?
The
Board is asking for your proxy. Giving your proxy to the persons
named as
proxy holders, James R. Fisher, our Chairman and Chief Executive
Officer
(whom we refer to as our “CEO”),
Jeffrey J. Dailey, our President and Chief Operating Officer, and
Craig E. Eisenacher, our Chief Financial Officer, means you authorize
us to vote your shares at the 2006 Annual Meeting, or at any adjournment
or postponement thereof, in the manner you direct. You may vote for
or
against the proposals or abstain from voting. You may also vote for
all,
some or none of the directors seeking election.
Please
complete, sign, date and return each proxy card that you receive.
Executors, administrators, trustees, guardians, attorneys and other
representatives should indicate the capacity in which they are signing.
Corporations should sign by an authorized officer whose title should
be
indicated.
If
you sign and return the enclosed proxy card but do not specify how
to
vote, the persons named as proxy holders will vote your shares in
favor of
all items herein to be voted on. As of the date hereof, we do not
know of
any other business that will be presented at the 2006 Annual Meeting.
If
other business properly comes before the 2006 Annual Meeting or any
adjournment or postponement thereof, the persons named as proxy holders
will vote according to their best judgment.
Who
is making the solicitation and who will bear the cost of soliciting
votes
for the 2006 Annual Meeting?
Bristol
West is making this solicitation and will pay the entire cost of
preparing, assembling, printing, mailing and distributing these proxy
materials and soliciting votes. In addition to the mailing of these
proxy
materials, our directors, officers and employees may solicit proxies
or
votes in person, by telephone or by electronic communication. These
individuals will not receive any additional compensation for such
solicitation activities. We have also retained Georgeson Shareholder
Communications Inc. (which we refer to as “Georgeson”)
to assist us in the distribution of proxy materials and the solicitation
of votes described above. We will pay Georgeson a fee of approximately
$7,000 plus customary costs and expenses for these services. Bristol
West
has agreed to indemnify Georgeson against certain liabilities arising
out
of or in connection with its agreement. We also will reimburse brokerage
houses and other custodians, nominees and fiduciaries for forwarding
proxy
and solicitation materials to you and getting your voting instructions.
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May
I change my vote?
You
may change your vote at any time before the vote at the 2006 Annual
Meeting. If you are the stockholder of record, you may revoke a proxy
that
you previously submitted before it is voted by submitting a new proxy
with
a later date, by voting in person at the 2006 Annual Meeting or by
submitting written notice bearing a later date to Bristol West’s Corporate
Secretary, at 5701 Stirling Road, Davie, Florida 33314. Your attendance
alone at the 2006 Annual Meeting will not revoke a proxy that you
previously submitted.
How
many shares must be present or represented to conduct business at
the 2006
Annual Meeting?
In
order to transact business at the 2006 Annual Meeting, we must have
a
quorum. Under our by-laws, the quorum requirement is that stockholders
representing a majority of the issued and outstanding shares of Common
Stock that are entitled to vote must be present at the 2006 Annual
Meeting. Your shares will be counted as present at the 2006 Annual
Meeting
if you take one of the following actions:
· return
a properly executed proxy (even if you do not provide voting
instructions)
·
attend
the 2006 Annual Meeting and vote in person
Both
abstentions and broker non-votes (described below in the questions
“How
are votes counted?”
and “Will
my shares be voted if I do not provide my proxy?”)
are counted for the purpose of determining the presence of a
quorum.
How
are votes counted?
You
are entitled to one vote for each share of Common Stock you own with
respect to which you are entitled to vote at the 2006 Annual Meeting.
In
the election of directors, you may vote “FOR” all or some of the nominees
or you may “WITHHOLD” your vote with respect to one or more of the
nominees. For the other items of business, you may vote “FOR,” “AGAINST”
or “ABSTAIN.” If you elect to “ABSTAIN,” the abstention has the same
effect as a vote “AGAINST.”
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If
you provide specific instructions with regard to certain items, your
shares will be voted as you instruct on such items. If you sign your
proxy
card without giving specific instructions, your shares will be voted
in
accordance with the recommendations of the Board (“FOR” all of Bristol
West’s nominees to the Board, “FOR” ratification of the appointment of our
independent auditor for 2006, and “FOR” approval of the EIP). We have
included below under the heading entitled “Will
my shares be voted if I do not provide my proxy?”
a
description of how your shares may be voted if you do not vote or
submit a
proxy.
How
many votes are needed to elect directors?
The
10 director nominees receiving the highest number of “FOR” votes will be
elected directors if a quorum is present at the 2006 Annual Meeting.
This
number is called a plurality.
How
many votes are needed to ratify the appointment of Bristol West’s
independent auditor?
To
ratify the appointment of Bristol West’s independent auditor, if a quorum
is present at the 2006 Annual Meeting, the “FOR” votes must exceed the
“AGAINST” votes cast at the 2006 Annual Meeting.
How
many votes are needed to approve the EIP?
To
approve the EIP, if a quorum is present at the 2006 Annual Meeting,
the
“FOR” votes must exceed the “AGAINST” votes cast at the 2006 Annual
Meeting.
What
happens if additional matters are presented at the 2006 Annual Meeting?
Other
than the three items of business described in this proxy statement,
we are
not aware of any other business to be acted upon at the 2006 Annual
Meeting. If you grant a proxy, the persons named as proxy holders
will
have the discretion to vote your shares on any additional matters
properly
presented for a vote at the meeting. If for any reason any of our
nominees
is not available as a candidate for director, the persons named as
proxy
holders will vote your proxy for such other candidate or candidates
as the
Board may nominate. In no event, however, can a proxy be voted to
elect
any more than 10 nominees for
director.
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How
many votes are needed for any such other matters?
To
approve any other matter that properly comes before the 2006 Annual
Meeting, if a quorum is present at
the 2006 Annual Meeting, the “FOR” votes cast in favor of the matter must
exceed the “AGAINST” votes cast against the matter.
Will
my shares be voted if I do not provide my proxy?
Your
shares may be voted under certain circumstances if they are held
in the
name of a brokerage firm. Brokerage firms have the authority under
rules
of the NYSE to vote their customers’ unvoted shares on “routine” matters,
which includes the election of directors, the ratification of the
appointment of Bristol West’s independent auditor, and approval of the
EIP. Accordingly, if a brokerage firm votes your shares on these
matters
in accordance with these rules, your shares will count as present
at the
2006 Annual Meeting for purposes of establishing a quorum and will
count
as “FOR” votes or “AGAINST” votes, as the case may be, with respect to all
“routine” matters voted on at the 2006 Annual Meeting. If you hold your
shares directly in your own name, they will not be voted if you do
not
provide a proxy. If a brokerage firm signs and returns a proxy on
your
behalf that does not contain voting instructions, your shares will
count
as present at the annual meeting for quorum purposes, but will not
count
as “FOR” votes or “AGAINST” votes on any matter voted on at the 2006
Annual Meeting. These are referred to as broker non-votes.
Who
will serve as inspector of elections?
The
inspector of elections will be a representative from an independent
firm,
The Bank of New York.
Where
can I find the voting results of the 2006 Annual Meeting?
We
intend to announce preliminary voting results at the 2006 Annual
Meeting
and publish final results in our Quarterly Report on Form 10-Q for
the fiscal quarter ending June 30, 2006.
STOCK
OWNERSHIP INFORMATION
What
is the difference between holding shares as a stockholder of record
and as
a beneficial owner?
Most
Bristol West stockholders hold their shares through a broker or other
nominee rather than directly in their own name. As summarized below,
there
are some distinctions between shares held of record and those owned
beneficially.
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Stockholder
of Record
If
your shares are registered directly in your name with Bristol West’s
transfer agent, Bank of New York (which we refer to as the “Transfer
Agent”),
you are considered, with respect to those shares, the stockholder
of
record, and Bristol West is sending these proxy materials directly
to you.
As the stockholder of record, you have the right to grant your voting
proxy directly to the individuals selected to be proxy holders by
Bristol
West or to a third party, or to vote in person at the 2006 Annual
Meeting.
Bristol West has enclosed a proxy card for you to use.
Beneficial
Owner
If
your shares are held in a brokerage account or by another nominee,
you are
considered the beneficial owner of shares held in street name, and
these
proxy materials are being forwarded to you together with a voting
instruction card on behalf of your broker, trustee or nominee. As
the
beneficial owner, you have the right to direct your broker, trustee
or
nominee how to vote, and you also are invited to attend the 2006
Annual
Meeting. Your broker, trustee or nominee has enclosed or provided
voting
instructions for you to use in directing the broker, trustee or nominee
how to vote your shares.
Since
a beneficial owner is not the stockholder of record, you may not
vote
these shares in person at the 2006 Annual Meeting unless you obtain a
“legal proxy” from the broker, trustee or nominee that holds your shares,
giving you the right to vote the shares at the 2006 Annual Meeting.
What
if I have questions for Bristol West’s transfer agent?
If
you have questions concerning stock certificates, dividend checks,
transfer of ownership or other matters pertaining to your stock account,
please contact our Transfer Agent, at the following address, phone
numbers, or email address: The Bank of New York, Investor Services
Department, P.O. Box 11258, New York, NY 10286-1258; (800) 524-4458;
(212)
815-3700; [email protected].
2006
ANNUAL MEETING INFORMATION
How
can I attend the 2006 Annual Meeting?
You
are entitled to attend the 2006 Annual Meeting only if you were a
Bristol
West stockholder or joint holder as of the close of business on the
Record
Date, April 3, 2006, or you hold a valid proxy for the 2006 Annual
Meeting. You may be required to verify your Common Stock ownership
at the
admissions desk. If your shares are held in the name of your broker,
bank
or other nominee, you must bring with you to the 2006 Annual Meeting
an
account statement or letter from the nominee indicating that you
are the
beneficial owner of the shares on the Record Date. If you execute
a proxy,
you may still attend the 2006 Annual Meeting and vote in person.
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STOCKHOLDER
PROPOSALS, DIRECTOR NOMINATIONS AND RELATED BY-LAW PROVISIONS
What
is the procedure for proposing actions for consideration at the 2007
Annual Meeting?
Our
Corporate Secretary must receive all stockholder proposals (including
director nominations) for consideration at next year’s annual meeting of
stockholders (which we refer to as the “2007
Annual Meeting”)
at our principal executive offices located at 5701 Stirling Road,
Davie, Florida 33314.
Our
by-laws provide that you may submit proposals (including director
nominations) for consideration at the 2007 Annual Meeting if you are
a stockholder who is entitled to vote at the 2007 Annual Meeting
and who
is a stockholder of record at the time our Corporate Secretary receives
notice of your proposals and if your proposals meet the notice procedures
set forth in our by-laws, which we have summarized below and in the
questions entitled “What
is the deadline to propose actions for consideration at the 2007
Annual
Meeting?,”
“How
may I recommend or nominate individuals to serve as directors?”
and
“What
is the deadline to propose or nominate individuals to serve as
directors?”:
Any
proposals you submit must include the following:
·
Your
name and address, as they appear in our share
records
·
The
class and number of shares of Common Stock that you own
·
With
respect to any beneficial owner of Common Stock on whose behalf
you may be
making the proposal:
o
The
class and number of shares of Common Stock that they
own
If
you submit any proposal for consideration at the 2007 Annual Meeting
other
than director nominations, your notice to our Corporate Secretary
must
include a brief description of the business you desire to bring before
the
2007 Annual Meeting, the reasons for conducting that business at the
2007 Annual Meeting, and any material interest in that business that
you
may have and that any beneficial owner of Common Stock on whose behalf
you
may be making the proposal may have. All matters that you submit
for
consideration at the 2007 Annual Meeting must be proper for stockholder
action.
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What
is the deadline to propose actions for consideration at the 2007
Annual
Meeting?
Proposal
to be included in our 2007 proxy materials.
You
may submit proposals for consideration at the 2007 Annual Meeting.
For us
to consider your stockholder proposal for inclusion in our proxy
materials
to be distributed in connection with the 2007 Annual Meeting,
including nominations for the election of directors, our Corporate
Secretary must receive your proposal at our principal executive offices,
located at 5701 Stirling Road, Davie, Florida 33314, not later than
December 25, 2006, which is 120 calendar days before the anniversary
of the date we first distributed this notice and proxy statement
to
stockholders. Your proposal also must comply with SEC regulations
under
Rule 14a-8 regarding the inclusion of stockholder proposals in
company-sponsored proxy materials.
Proposal
not included in our 2007 proxy materials.
For
any proposal that is not timely submitted for inclusion in our proxy
materials to be distributed in connection with the 2007 Annual Meeting
under Rule 14a-8, but is instead sought to be presented directly at
the 2007 Annual Meeting, SEC rules permit the proxy holders to vote
their
proxies in their discretion as follows:
·
If
our Corporate Secretary receives notice of the proposal no earlier
than
the close of business on February 17, 2007, which is 90 days
before the
first anniversary of the date of the 2006 Annual Meeting, and
no later
than the close of business on March 10, 2007, which is 70 days before
the first anniversary of the date of the 2006 Annual Meeting.
Notices of
intention to present proposals at the 2007 Annual Meeting should
be
addressed to George G. O’Brien, Chief Legal Officer and Corporate
Secretary, Bristol West Holdings, Inc., 5701 Stirling Road, Davie,
FL
33314.
·
If
we move the date of the 2007 Annual Meeting more than 20 days before
or 70 days after the anniversary of the 2006 Annual Meeting, then our
Corporate Secretary must
receive notice of the proposal not earlier than the close of
business
90 days before the 2007 Annual Meeting and not later than the close
of business on the later of the following two dates:
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o
70 days
before the 2007 Annual Meeting; and
o
10 days
after we make the first public announcement of the date of the
2007 Annual
Meeting.
How
may I recommend or nominate individuals to serve as directors?
You
may propose director candidates for consideration by our Corporate
Governance and Nominating Committee. You should direct such proposals
to
George G. O’Brien, Chief Legal Officer and Corporate Secretary, Bristol
West Holdings, Inc., 5701 Stirling Road, Davie, FL 33314.
If
you submit any director nomination for consideration at the 2007
Annual
Meeting, your notice to our Corporate Secretary must meet the requirements
that we have described above under the heading “What
is the procedure for proposing actions for consideration at the 2007
Annual Meeting?”
In addition, your notice to our Corporate Secretary must include
all
information relating to that person that Regulation 14A under the
Securities Exchange Act of 1934, as amended (which we refer to as
the
“Exchange
Act”)
requires us to include in our proxy materials to be distributed in
connection with the solicitation of proxies for the election of directors
at the 2007 Annual Meeting, including the nominee’s written consent to
being named in the proxy statement as a nominee and to serving as
a
director if elected.
What
is the deadline to propose or nominate individuals to serve as directors?
You
may send an informal recommendation regarding a proposed director
candidate to our Corporate Governance and Nominating Committee and
Board
at any time. Generally, such proposed candidates are considered at
the
Board meeting prior to the next annual meeting of stockholders. You
should
direct such informal recommendations either to (1) George G. O’Brien,
Chief Legal Officer and Corporate Secretary, Bristol West Holdings,
Inc.,
5701 Stirling Road, Davie, FL 33314, Attention: Corporate Governance
Hotline, or (2) our Corporate Governance Hotline at (800) 819-9714.
|
|
If
you formally submit any director nomination for consideration at
the 2007
Annual Meeting, your notice to our Corporate Secretary must meet
the
timing requirements that we have described above under the heading
“What
is the deadline to propose actions for consideration at the 2007
Annual
Meeting?”
In addition, if the number of directors to be elected to the Board
is
increased and we make no public announcement naming all of the nominees
for director or specifying the size of the increased Board by at
least
February 28, 2007, which is 80 days before the first anniversary
of the
date of the 2006 Annual Meeting, we must receive notice of a director
nomination not later than 10 days after we make the first public
announcement naming all of the nominees for director or specifying
the
size of the increased Board. A description of such nominations will
not be included in our proxy materials to be distributed in connection
with the 2007 Annual Meeting under Rule 14a-8.
How
may I obtain a copy of Bristol West’s by-law provisions regarding director
nominations and other stockholder proposals?
To
receive a copy of the relevant by-law provisions regarding the
requirements for making stockholder proposals and nominating director
candidates, you may send your request to George G. O’Brien, Chief Legal
Officer and Corporate Secretary, Bristol West Holdings, Inc., 5701
Stirling Road, Davie, FL 33314.
|
ITEM
1
ELECTION
OF DIRECTORS
Board
of Directors
Our
Board
currently has 11 members each of whom serve until the 2006 Annual Meeting or
until their successors are qualified and elected, subject, however, to prior
death, resignation, retirement, disqualification or removal from office. Two
of
our directors have advised us that they do not intend to stand for re-election
at the 2006 Annual Meeting and will retire from the Board at that time, as
described below under the heading “Election
of Directors - Retiring Directors.”
At
this time, the Board has elected to fill one of the two vacancies by nominating
a new director candidate, as described below under the heading “Election
of Directors - Recommendation of the Board of
Directors.”
Accordingly, at the 2006 Annual Meeting, each of 10 nominees for director is
to
be elected to serve on our Board until the 2007 Annual Meeting or until their
successors are qualified and elected, subject, however, to prior death,
resignation, retirement, disqualification or removal from office. Our Board
is
authorized to fill the remaining vacancy after the 2006 Annual Meeting. The
Board will consider potential nominees to fill the vacancy or decrease the
size
of the Board to 10 directors. Our Board is also authorized to increase the
size
of the Board and is authorized to fill the vacancies created by the increase.
Directors elected by the Board to fill any such vacancies will stand for
re-election at the next annual meeting of stockholders after their
election.
We
do not
believe that any of the 10 nominees for director will be unwilling or unable
to
serve as director. However, if at the time of the 2006 Annual Meeting any of
the
nominees should be unwilling or unable to serve, proxies will be voted as
recommended by the Board to do one of the following:
·
|
To
elect substitute nominees recommended by the Board.
|
·
|
To
allow the vacancy created to remain open until filled by the Board.
|
·
|
To
reduce the number of directors for the ensuing
year.
|
In
no
event, however, can a proxy be voted to elect any more than 10 nominees for
director.
Recommendation
of the Board of Directors
The
Board recommends that you vote “FOR” each of the following individuals proposed
for election, including nine incumbent directors proposed for
re-election
(proxies
returned without instructions will be voted “FOR” each of the following
individuals):
Nominees
for Election
Mr.
James R. Fisher
Mr.
Fisher, age 50, has been our Chief Executive Officer and Chairman of the Board
since September 2000 and has been a Bristol West director since July 1998.
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 Willis Group
Holdings Limited (which we refer to as “Willis”)(retiring
April 2006), Alea Group Holdings (Bermuda) Ltd. (which we refer to as
“Alea
(Bermuda)”)
and a
trustee of Lafayette College in Easton, Pennsylvania. On February 21, 2006,
Mr.
Fisher notified the Board that, as part of our ongoing management succession
process, he would like to relinquish his title as Chief Executive Officer
effective as of July 1, 2006. Mr. Fisher recommended the promotion of
Jeffrey J. Dailey, Bristol West’s President and Chief Operating Officer, to the
position of Chief Executive Officer. The Board accepted Mr. Fisher’s
recommendations. Effective July 1, 2006, Mr. Fisher will continue to serve
as
Executive Chairman of the Board.
Mr.
R. Cary Blair
Mr.
Blair, age 66, 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
Foundation.
Mr.
Jeffrey J. Dailey
Mr. Dailey,
age 49, is not currently a Bristol West director. Mr. Dailey has been our
President since December 2003 and Chief Operating Officer since April 2001.
Mr. Dailey has 26 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 in 1996, Mr. Dailey spent
14 years with The Progressive Corporation, holding numerous executive
positions culminating as President of Progressive's Northeast Division. On
February 21, 2006, James R. Fisher, Bristol West’s Chairman and Chief Executive
Officer, notified the Board that, as part of our ongoing management succession
process, he would like to relinquish his title as Chief Executive Officer
effective as of July 1, 2006. Mr. Fisher recommended that Mr. Dailey be
promoted to the position of Chief Executive Officer and that he be nominated
to
serve on the Board. The Board accepted Mr. Fisher’s recommendations.
Accordingly, the Board has nominated Mr. Dailey to serve on the
Board.
Mr.
Richard T. Delaney
Mr.
Delaney, age 67, 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. (which we refer to as “Alea”).
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.
Todd A. Fisher
Mr.
Fisher, age 40, 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 (Bermuda), Rockwood
Holdings, Inc., Koninklijke Vendex KBB B.V., and Duales System
Deutschland AG.
Mr.
Perry Golkin
Mr.
Golkin, age 52, 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 (Bermuda), PRIMEDIA, Inc., Rockwood Holdings, Inc., and
Willis.
Ms.
Mary R. Hennessy
Ms.
Hennessy, age 53, 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.
Dr.
Eileen Hilton
Dr.
Hilton, age 59, 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, age 60, 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, age 70, 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.
Retiring
Directors
Each
of
the following incumbent directors has advised us that they do not intend to
stand for re-election at the 2006 Annual Meeting and will retire from the
Board at that time:
Mr.
Inder-Jeet S. Gujral
Mr.
Gujral, age 47, has been a Bristol West director since March 2004. In
January 2000, Mr. Gujral founded and became Chairman of OneShield, Inc. and
also
founded Firemark Partners, LLC. Mr. Gujral is currently Chairman of Newton
Sensors, Inc. and a director of Quosa, Inc. and SSI Corp. Mr. Gujral
was an Executive Vice President of WebMD Corp. from April 2003 until June 30,
2005.
Mr.
Scott C. Nuttall
Mr.
Nuttall, age 33, has been a Bristol West director since August 2000. Mr. Nuttall
has been a member of KKR & Co. L.L.C. since June 1, 2005. Mr. Nuttall was an
executive of KKR & Co. L.L.C. from November 1996 to June 1, 2005. Mr.
Nuttall was an executive at The Blackstone Group from January 1995 to November
1996. Currently, Mr. Nuttall is a director of Alea (Bermuda), Willis
(retiring April 2006), KKR Financial Corporation and Masonite International
Corporation.
Corporate
Governance
Corporate
Governance Guidelines.
As
required by the NYSE, the Board has adopted Corporate Governance Guidelines
(which we refer to as our “Corporate
Governance Guidelines”)
that
meet the corporate governance standards of the NYSE. We have posted our
Corporate Governance Guidelines on our Internet website at www.bristolwest.com.
Director Independence.
Our
Board
annually conducts an assessment of the independence of each director in
accordance with our Corporate Governance Guidelines, applicable rules and
regulations of the SEC, and the corporate governance standards of the NYSE.
An
independent director is free of any relationship with Bristol West or our
management that impairs the director’s ability to make independent judgments.
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”).
The
Categorical Standards are attached hereto as Appendix
A.
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 such relationships are
deemed to be not material. With respect to directors who have a business or
other relationship that 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 in February.
Based on this assessment, the Board affirmatively determined that the following
Board members were independent: R. Cary Blair, Richard T. Delaney, 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 Kohlberg Kravis Roberts & Co. L.P. (which we
refer to as “KKR”)
owned
40.5% and 38.5% of our Common Stock as of December 31, 2005 and 2004,
respectively, and were significant stockholders as of December 31, 2003 before
our initial public offering. For more information regarding our relationships
with KKR, see the information below under the caption entitled “Certain
Relationships and Related Transactions - Consulting Services
Fees.”
Partnerships affiliated with KKR owned approximately 40.7%, 40.6%, and 40.6%
of
Alea at December 31, 2005, 2004 and 2003, respectively.
Richard
T. Delaney: Mr.
Delaney was a director of Alea from January 1, 2002 to October 16, 2003, prior
to joining our Board. After he resigned from Alea’s board of directors through
the end of 2004, Mr. Delaney continued consulting for Alea. In 2004, he received
consulting fees from Alea totalling $150,000 plus grants for 26,964 shares
of
Alea 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 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.
James
N. Meehan:
Mr.
Meehan’s son is an employee of Deloitte Consulting LLP, a member firm of
Deloitte Touche Tohmatsu. Deloitte & Touche LLP, our independent auditors,
is also a member firm of Deloitte Touche Tohmatsu. Mr. Meehan’s son is not a
partner of Deloitte Consulting LLP, does not work in any audit, assurance or
tax
compliance practice of Deloitte Touche Tohmatsu or any of its member firms,
and
has never worked on the audit of Bristol West’s financial statements. The Board
did not consider this relationship to be material for purposes of determining
Mr. Meehan’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. Our payments to ISO in
2005,
2004 and 2003 were approximately $1,053,000, $823,000, and $788,000,
respectively. The payments we made to ISO in 2005, which exceeded
$1 million, also did not exceed 2% of ISO’s consolidated gross revenues for
2005. The Board did not consider this relationship to be material for purposes
of determining Mr. Rothkopf’s
independence.
Audit
Committee Membership Criteria.
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 other 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 statement. 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.
Director
Self-Evaluation.
Our
Corporate Governance Guidelines address evaluation of the performance of the
Board and Board committees. Our Board, acting through the Corporate Governance
and Nominating Committee, conducts an annual self-evaluation to determine
whether it is functioning effectively. Each Board committee, other than the
executive committee, conducts an annual self-evaluation to determine whether
it
is functioning effectively and reports the results to the Board, acting through
the Corporate Governance and Nominating Committee.
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.
Communications
with Stockholders and Other Constituencies. Our
CEO
is responsible for establishing effective communications with our stakeholder
groups, including stockholders, the press, clients, suppliers, governments
and
representatives of the communities in which it operates. It is our policy to
appoint individuals to communicate and interact fully with these stakeholders
and the Board will look to senior management to speak for Bristol West. This
policy does not preclude outside directors from communicating directly with
stockholders or other constituencies about Bristol West matters, but any such
communications will generally be held at the request of the Board or senior
management with senior management present.
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 the non-management
directors or propose an individual to the Corporate Governance and Nominating
Committee for its consideration as a nominee for election to the Board 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 Internet website at www.bristolwest.com.
More
information regarding stockholder submissions of recommendations for director
candidates is included below under the caption “Election
of Directors - Director Nominations - Stockholder
Nominations.”
Codes
of Conduct and Business Ethics
Code
of Conduct and Business Ethics.
The
Board adopted a Code of Conduct and Business Ethics for all of our directors,
officers and employees. Failure to comply with the Code of Conduct and Business
Ethics 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 this
Code
of Conduct and Business Ethics.
Code
of Conduct and Business Ethics Policy for Chief Executive Officer and Senior
Financial Officers.
The
Board also adopted a Code of Conduct and Business Ethics Policy for our
principal executive officer (our Chairman and Chief Executive Officer) 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 this Code of
Conduct and Business Ethics Policy. Failure to comply with this Code of Conduct
and Business Ethics Policy 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 this Code of Conduct
and Business Ethics Policy. We will disclose on our website at www.bristolwest.com,
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 this Code of Conduct and Business
Ethics Policy (other than technical, administrative, or other non-substantive
amendments), our approval of any material departure from a provision of this
Code of Conduct and Business Ethics Policy, and our failure to take action
within a reasonable period of time regarding any material departure from a
provision of this Code of Conduct and Business Ethics Policy that has been
made
known to any of our executive officers.
Copies.
We have
posted copies of each of these codes of conduct and business ethics on our
website at www.bristolwest.com.
Copies
of
these codes of conduct and business ethics are also available, without charge,
at the written request of any shareholder of record. Requests for copies should
be mailed to: Bristol West Holdings, Inc., 5701 Stirling Road, Davie,
Florida 33314, Attention: Corporate Secretary.
Meetings
of the Board of Directors
The
Board
held five meetings during 2005. It is expected that the Board will hold at
least
five meetings during 2006.
Each
of
the incumbent directors who held office in 2005 attended at least 75% of the
aggregate of the total number of meetings of the Board and the total number
of
meetings held by all Board committees on which he or she served during his
or
her period of office. Our Corporate Governance Guidelines provide that all
directors should make every effort to attend meetings of our stockholders,
either in person or by telephone or video conference. All 11 of
our
directors attended the annual meeting of our stockholders held on May 12, 2005,
either in person or by telephone.
Committees
of the Board of Directors
Independent
Board Committees
The
Board
has an audit committee, a compensation committee, and a corporate governance
and
nominating committee. The Board has determined that each member of these three
committees is independent. See “Election
of Directors — Corporate Governance — Director
Independence” above.
Audit
Committee.
The
Audit Committee of the Board (which we refer to as 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 401(h)
of Regulation S-K under the Securities Act of 1933, as amended (which we
refer to as the “Securities
Act”).
All
members of the Audit Committee qualify as “financially literate” pursuant to the
NYSE’s corporate governance standards.
The
principal duties and responsibilities of the Audit Committee are
set
forth in its charter, which was adopted by the Board. See “Copies
of Committee Charters” below.
The Audit Committee’s purpose is to have direct responsibility for the duties
and responsibilities that are set forth in its charter and are otherwise
delegated to the committee by the Board. These duties and responsibilities
include the following: (a) review the integrity of our financial reporting
process, both internal and external; (b) retain and terminate the independent
auditors and approve all engagement fees and terms; (c) oversee the work of
the
independent auditors and any other registered public accounting firm engaged
by
Bristol West; (d) review the qualifications, performance and independence of
the
independent auditors; (e) review and discuss the responsibilities, budget
and staffing of Bristol West’s internal audit function; (f) discuss Bristol
West’s guidelines and policies with respect to risk assessment and risk
management; and (g) review and approve related party transactions to which
Bristol West is a party.
The
Audit
Committee held 15 meetings during 2005. The report of the Audit Committee is
included below under the heading “Audit
Committee Report.”
Compensation
Committee.
The
Compensation Committee of the Board (which we refer to as the “Compensation Committee”)
is
composed of three directors: R. Cary Blair (Chairman), Richard T. Delaney and
Eileen Hilton.
The
principal duties and responsibilities of the Compensation Committee are
set
forth in its charter, which was adopted by the Board. See “Copies
of Committee Charters” below. The
Compensation Committee’s purpose is to have direct responsibility for the duties
and responsibilities that are set forth in its charter and are otherwise
delegated to the committee by the Board. These duties and responsibilities
include the following: (a) establish and review our overall compensation
philosophy; (b) review and approve corporate goals and objectives relevant
to the compensation of our CEO and other executive officers, including annual
performance objectives; (c) evaluate the performance of our CEO and other
executive officers in light of these goals and objectives and, based on this
evaluation, determine and approve the annual salary, bonus, stock options and
other benefits of the CEO and other executive officers; (d) oversee the
development and implementation of our executive compensation programs; and
(e) review and make recommendations to the Board with respect to our
incentive compensation plans and equity-based plans and oversee the activities
of the individuals responsible for administering these plans.
The
Compensation Committee held five meetings during 2005. The report of the
Compensation Committee is included in this proxy statement under the heading
“Compensation
Committee Report.”
Corporate
Governance and Nominating Committee.
The
Corporate Governance and Nominating Committee (which we refer to as the
“Corporate
Governance and Nominating Committee”) is
composed of four directors: Arthur J. Rothkopf (Chairman), R. Cary Blair, Mary
R. Hennessy and James N. Meehan.
The
principal duties and responsibilities of the Corporate Governance and Nominating
Committee are set forth in its charter, which was adopted by the
Board. See
“Copies
of Committee Charters”
below. The
Corporate Governance and Nominating Committee’s purpose is to have direct
responsibility for the duties and responsibilities that are set forth in its
charter and are otherwise delegated to the committee by the Board. These duties
and responsibilities include the following: (a) identify individuals believed
to
be qualified to serve on the Board and select, or recommend that the Board
select, candidates to be nominated for election to the Board; (b) evaluate
candidates for nomination to the Board, including those recommended by
stockholders; (c) review and make recommendations regarding the composition
and size of the Board; (d) recommend members of the Board to serve on Board
committees and as the Chair of each committee; (e) review the adequacy of
Bristol West’s charter and by-laws and propose amendments, as appropriate;
(f) develop and recommend to the Board corporate governance principles for
Bristol West and propose amendments, as appropriate; and (g) oversee and
approve our management continuity planning process.
The Corporate
Governance and Nominating Committee selects and evaluates director nominees
using a process that is described below under the heading “Election
of Directors - Director Nominations.” In
addition, the Corporate Governance and Nominating Committee develops and
recommends to the Board corporate governance principles applicable to Bristol
West’s directors, officers and employees. The
Corporate Governance and Nominating Committee will
also
consider and evaluate candidates properly submitted for nomination by
stockholders in accordance with the procedures set forth in our by-laws, which
are described below under the heading “Election
of Directors - Director Nominations - Stockholder
Nominations.”
The
Corporate Governance and Nominating Committee held four meetings during 2005.
Copies
of Committee Charters.
We have
posted on our Internet website at www.bristolwest.com
copies
of the charters of the Audit Committee, the Compensation Committee and the
Corporate Governance and Nominating Committee.
A
copy of
the Audit Committee charter is also attached to this proxy statement as
Appendix
B. Copies
of
these charters are also available, without charge, at the written request of
any
shareholder of record. Requests for copies should be mailed to: Bristol West
Holdings, Inc., 5701 Stirling Road, Davie, Florida 33314, Attention:
Corporate Secretary.
Director
Nominations
As
provided in its charter, our Corporate Governance and Nominating Committee
is
responsible for evaluating and recommending candidates for the Board, including
incumbent directors whose terms are expiring and potential new directors. The
committee takes into account all factors it considers appropriate in identifying
candidates for membership on the Board, which may include (1) ensuring that
the Board as a whole is diverse and consists of individuals with various and
relevant knowledge, skills, experience and expertise; (2) minimum
individual qualifications, including strength of character, mature judgment,
familiarity with our business and industry, independence of thought and an
ability to work collegially; and (3) present needs on the Board. The
committee periodically assesses the appropriate size of the Board, and whether
any vacancies on the Board are expected due to retirement or otherwise. If
no
vacancies are anticipated, the committee considers the current qualifications
of
incumbent directors whose terms are expiring. If vacancies arise or the
committee anticipates vacancies, the committee considers various potential
candidates for director.
Stockholder
Nominations.
The
Corporate Governance and Nominating Committee will consider all stockholder
recommendations for director candidates, which should be sent to the committee,
c/o George G. O’Brien, Chief Legal Officer and Corporate Secretary, Bristol West
Holdings, Inc., 5701 Stirling Road, Davie, FL 33314. Different requirements
apply with respect to submitting shareholder proposals (including director
nominations) for inclusion in the Proxy Statement and with respect to other
proposals (including director nominations) to be considered at an Annual Meeting
of Stockholders, as described above under the heading “General
Information - Stockholder Proposals, Director Nominations And Related
By-law Provisions.”
Our
Corporate Secretary received no stockholder nominations for consideration at
the
2006 Annual Meeting.
Director
Selection Process.
In
addition to considering candidates suggested by stockholders, the Committee
considers candidates recommended by current directors, company officers,
employees, professional search firms the committee may seek to engage, or other
persons. Nine of the nominees that the Board has recommended for election by
the
stockholders are
incumbent directors whose terms are expiring. The Board has also nominated
Jeffrey J. Dailey, our President and Chief Operating Officer. The Board
nominated Mr. Dailey at the recommendation of James R. Fisher. The Board’s
recommendations are described above under the heading “Election
of Directors - Recommendation of the Board of
Directors.”
Our
by-laws do not establish a mandatory retirement age for directors. As described
above under the heading “Election
of Directors - Retiring Directors,”
two
of
our directors have advised us that they do not intend to stand for re-election
at the 2006 Annual Meeting and will retire from the Board at that time. At
this
time, the Board has elected to fill only one of these vacancies, as described
above under the heading “Election
of Directors - Recommendation of the Board of
Directors.”
With
respect to stockholder recommendations for director candidates, the Corporate
Governance and Nominating Committee first will confirm that the recommending
stockholders have met the applicable requirements with respect to stockholder
nominations, which are described above under the heading “General
Information - Stockholder
Proposals, Director Nominations and Related By-law
Provisions.”
The
committee will then aggregate and consider qualifying nominations. The committee
screens all candidates in the same manner regardless of the source of the
recommendation. The Corporate Governance and Nominating Committee uses the
Director Selection Process included in our Corporate Governance Guidelines
in
performing its selection function. We have posted our Corporate Governance
Guidelines on our Internet website at www.bristolwest.com.
The
committee reviews written materials provided with respect to the candidate.
If a
stockholder provides materials in connection with the nomination of a director
candidate, our Corporate Secretary will forward such materials to the committee.
The committee determines whether the candidate meets all of the qualifications
applicable to Bristol West director candidates and whether it is appropriate
to
request additional information or an interview.
The
Board, based on the recommendation of the Corporate Governance and Nominating
Committee, will select new nominees for the position of director by reference
to
the Director Qualification Standards included in our Corporate Governance
Guidelines, which, at a minimum, include the following factors: integrity,
reputation, judgment, knowledge, experience, maturity, skills and personality,
and commitment. The Board also considers the candidate’s independence, as
described above under the heading “Election
of Directors - Corporate Governance - Director
Independence.” Based
on
its evaluation of any director candidates nominated by stockholders, the Board
will determine whether to include the candidate in its recommended slate of
director nominees.
Director
Compensation
Pursuant
to the schedule for non-employee director compensation approved by the
Compensation Committee and the Board, in 2005, the directors, other than Mr.
James R. Fisher, received annual directors’ fees of $40,000. Mr. James N.
Meehan received an additional annual fee of $15,000 in 2005 for his duties
as
Chairman of the Audit Committee. Mr. Richard T. Delaney and Ms. Mary R. Hennessy
each received an additional annual fee of $7,500 in 2005 for their duties as
members of the Audit Committee. The directors are entitled to receive currently
any portion of their fees in the form of Common Stock and to defer receipt
of
any portion of their fees under the Bristol West Holdings, Inc. Non-Employee
Directors’ Deferred Compensation and Stock Award Plan (which we refer to as the
“Non-Employee
Directors’ Plan”),
and
some of the directors have made such an election. Directors were also reimbursed
for their reasonable out-of-pocket expenses in attending meetings. Mr. James
R.
Fisher received no separate compensation in 2005 for his services as a
director.
Non-Employee
Director Compensation Table for 2005
The
following table provides information on compensation for non-employee directors
who served during 2005:
Name
|
|
Annual
Cash
Retainer
|
|
Committee
Chair
Retainer
|
|
Committee
Membership
Retainer
|
|
Total
2005 Compensation
|
|
Received
in 2005
|
|
Deferred
in 2005 as Phantom
Stock(#)
|
|
Dividends
Credited
in
2005
to Deferred
Account
(1)
|
|
Value
of
Aggregate
Phantom
Stock Holdings
at 12/31/2005
(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
R.
Cary Blair
|
|
$40,000
|
|
|
--
|
|
|
--
|
|
$40,000
|
|
$40,000
|
|
|
--
|
|
|
--
|
|
|
|
|
--
|
|
Richard
T. Delaney
|
|
|
40,000
|
|
|
--
|
|
$7,500
|
|
|
47,500
|
|
|
47,500
|
(3) |
|
--
|
|
|
--
|
|
|
|
--
|
|
Todd
A. Fisher
|
|
|
40,000
|
|
|
--
|
|
|
--
|
|
|
40,000
|
|
|
--
|
|
|
2,267
|
|
$533
|
(4) |
$65,023
|
|
Perry
Golkin
|
|
|
40,000
|
|
|
--
|
|
|
--
|
|
|
40,000
|
|
|
--
|
|
|
2,267
|
|
|
533
|
(4) |
|
65,023
|
|
Inder-Jeet
S. Gujral
|
|
|
40,000
|
|
|
--
|
|
|
--
|
|
|
40,000
|
|
|
--
|
|
|
2,267
|
|
|
533
|
(4) |
|
65,023
|
|
Mary
R. Hennessy
|
|
|
40,000
|
|
|
--
|
|
|
7,500
|
|
|
47,500
|
|
|
--
|
|
|
2,692
|
|
|
633
|
(5) |
|
77,215
|
|
Eileen
Hilton
|
|
|
40,000
|
|
|
--
|
|
|
--
|
|
|
40,000
|
|
|
40,000
|
|
|
--
|
|
|
--
|
|
|
|
--
|
|
James
N. Meehan
|
|
|
40,000
|
|
$15,000
|
|
|
--
|
|
|
55,000
|
|
|
27,500
|
|
|
1,558
|
|
|
367
|
(6) |
|
44,704
|
|
Scott
C. Nuttall
|
|
|
40,000
|
|
|
--
|
|
|
--
|
|
|
40,000
|
|
|
--
|
|
|
2,267
|
|
|
533
|
(4) |
|
65,023
|
|
Arthur
J. Rothkopf
|
|
|
40,000
|
|
|
--
|
|
|
--
|
|
|
40,000
|
|
|
20,000
|
|
|
1,133
|
|
|
267
|
(7) |
|
32,512
|
|
(1) |
No
director has voting power with respect to phantom shares of Common
Stock.
This column reflects dividends accrued for the benefit of, but not
yet
received by, the directors with respect to the phantom shares. We
pay such
accrued dividends when the director elects to receive the deferred
compensation.
|
(2) |
These
values are based on the last reported closing price per share of
Common
Stock of $19.03 on December 30, 2005, the last trading day of 2005,
as
reported on the NYSE.
|
(3) |
Mr.
Delaney elected to receive all of his 2005 fees in Common Stock.
During
2005, he received 2,692 shares of Common Stock at the following price
per share for each quarter, which was determined based on the average
fair
market value of the shares over the quarter, in accordance with the
Non-Employee Directors’ Plan: $18.28 for the first quarter, $16.53 for the
second quarter, $17.37 for the third quarter, $18.55 for the fourth
quarter.
|
(4) |
The
amount reflected was invested in Common Stock as follows: approximately
$56 at $15.72 per share on March 10, 2005, approximately $117 at
$17.71 per share on June 9, 2005, approximately $160 at $17.42 per
share
on September 1, 2005, and approximately $201 at $18.74 per share
on
November 25, 2005, with each per share price representing the last
reported closing price per share of Common Stock on that date as
reported
on the NYSE.
|
(5) |
The
amount reflected was invested in Common Stock as follows: approximately
$67 at $15.72 per share on March 10, 2005, approximately $139 at
$17.71 per share on June 9, 2005, approximately $190 at $17.42 per
share
on September 1, 2005, and approximately $238 at $18.74 per share
on
November 25, 2005, with each per share price representing the last
reported closing price per share of Common Stock on that date as
reported
on the NYSE.
|
(6) |
The
amount reflected was invested in Common Stock as follows: approximately
$39 at $15.72 per share on March 10, 2005, approximately $80 at
$17.71 per share on June 9, 2005, approximately $110 at $17.42 per
share
on September 1, 2005, and approximately $138 at $18.74 per share
on
November 25, 2005, with each per share price representing the last
reported closing price per share of Common Stock on that date as
reported
on the NYSE.
|
(7) |
The
amount reflected was invested in Common Stock as follows: approximately
$28 at $15.72 per share on March 10, 2005, approximately $58 at
$17.71 per share on June 9, 2005, approximately $80 at $17.42 per
share on
September 1, 2005, and approximately $100 at $18.74 per share on
November
25, 2005, with each per share price representing the last reported
closing
price per share of Common Stock on that date as reported on the
NYSE.
|
Restricted
Stock Awards Granted, Dividends Paid and Aggregate Number and Value of Holdings
The
following table sets forth certain information concerning restricted stock
held
by non-employee directors during 2005:
Name
|
|
Aggregate
Restricted
Stock
Holdings at
December
31, 2005 (1)
(#)
|
|
Dividends
Credited in 2005 on Aggregate Restricted Stock
Holdings
(2)
($)
|
|
Value
of Aggregate
Restricted
Stock
Holdings
at
12/31/2005
(3)
($)
|
|
|
|
|
|
|
|
|
|
R.
Cary Blair
|
|
|
2,174
|
|
$565
|
|
$41,371
|
|
Richard
T. Delaney
|
|
|
2,174
|
|
|
565
|
|
|
41,371
|
|
Todd
A. Fisher
|
|
|
--
|
|
|
--
|
|
|
--
|
|
Perry
Golkin
|
|
|
--
|
|
|
--
|
|
|
--
|
|
Inder-Jeet
S. Gujral
|
|
|
2,174
|
|
|
565
|
|
|
41,371
|
|
Mary
R. Hennessy
|
|
|
2,174
|
|
|
565
|
|
|
41,371
|
|
Eileen
Hilton
|
|
|
2,174
|
|
|
565
|
|
|
41,371
|
|
James
N. Meehan
|
|
|
2,174
|
|
|
565
|
|
|
41,371
|
|
Scott
C. Nuttall
|
|
|
--
|
|
|
--
|
|
|
--
|
|
Arthur
J. Rothkopf
|
|
|
2,174
|
|
|
565
|
|
|
41,371
|
|
(1) |
These
restricted stock awards will be forfeited if the director’s service with
Bristol West terminates prior to 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. Each director has sole voting power with respect
to
shares of restricted stock, but does not have investment power or
the
right to receive dividends with respect to the shares until the shares
are
vested pursuant to the terms of the restricted stock
grants.
|
(2) |
This
column reflects dividends accrued for the benefit of, but not received
by,
the directors for the restricted stock awards. We pay such accrued
dividends to the directors upon the vesting of the restricted
stock.
|
(3) |
These
values are based on the last reported closing price per share of
Common
Stock of $19.03 on December 30, 2005, the last trading day of 2005,
as
reported on the NYSE.
|
Non-Employee
Director Compensation Schedule
Bristol
West’s employee directors receive no separate compensation for serving on our
Board. In February 2006, the Compensation Committee and the Board approved
the
following schedule for non-employee director compensation, subject to change
from time to time as determined by the Compensation Committee and the
Board:
·
|
Fees
in 2006:
Bristol West’s non-employee directors will receive the following fees
payable quarterly in arrears during
2006:
|
|
o
|
Annual
Cash Retainer:
The non-employee directors will each receive annual directors’ fees of
$40,000.
|
|
o
|
Audit
Committee Retainers:
|
|
§
|
Committee
Chair Retainer:
The Chairperson of the Audit Committee will receive an additional
annual
fee of $15,000.
|
|
§
|
Committee
Member Retainer:
The other members of the Audit Committee will each receive an additional
annual fee of $7,500.
|
|
o
|
Compensation
Committee Chair Retainer:
The Chairperson of the Compensation Committee will receive an additional
annual fee of $7,500.
|
|
o
|
Corporate
Governance and Nominating Committee Chair Retainer:
The Chairperson of the Corporate Governance and Nominating Committee
will
receive an additional annual fee of
$7,500.
|
|
o
|
Form
of Awards:
Each non-employee director will receive such fees in cash unless
he or she
elects to receive all or a portion of such fees in the form of Common
Stock issued pursuant to the 2004 Stock Incentive Plan and the
Non-Employee Directors’ Plan. The non-employee directors are also entitled
to defer receipt of all or a portion of these fees in phantom shares
of
Common Stock under the Non-Employee Directors’
Plan.
|
·
|
Restricted
Stock Awards. The
Compensation Committee awarded the following directors restricted
stock in
the amount of $40,000 in February 2006: R. Cary Blair, Richard T.
Delaney, Inder-Jeet S. Gujral, Mary R. Hennessy, Eileen Hilton, James
N.
Meehan and Arthur J. Rothkopf. These directors are non-employee directors
who are not affiliated with KKR. These restricted stock awards will
cliff
vest on February 21, 2008 and will be forfeited if the director ceases
to
serve as a director prior to 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. The Compensation Committee also approved the
making
of such awards every other year on a regular
basis.
|
Directors will also be reimbursed for their reasonable
out-of-pocket expenses in attending meetings.
EXECUTIVE
OFFICERS
Set
forth
below are the names, ages and current positions of our executive officers.
Name
|
|
Age
|
|
Position
|
James R.
Fisher
|
|
50
|
|
Chief
Executive Officer and Chairman of the Board
|
Jeffrey J.
Dailey
|
|
49
|
|
President
and Chief Operating Officer
|
Simon J.
Noonan
|
|
42
|
|
Executive
Vice President—Actuarial/Product
|
Anne M.
Bandi
|
|
49
|
|
Senior
Vice President—Operations
|
George
N. Christensen
|
|
60
|
|
Senior
Vice President—Business Integration
|
Brian
J. Dwyer
|
|
49
|
|
Senior
Vice President—Product Research and Development
|
Craig E.
Eisenacher
|
|
58
|
|
Senior
Vice President—Chief Financial Officer
|
Nila J.
Harrison
|
|
42
|
|
Senior
Vice President—Human Resources
|
Ronald
E. Latva
|
|
41
|
|
Senior
Vice President—Product Management
|
George
G. O’Brien
|
|
50
|
|
Senior
Vice President—Chief Legal Officer and Corporate
Secretary
|
John
L. Ondeck
|
|
46
|
|
Senior
Vice President—Chief Information Officer
|
Alexis
S. Oster
|
|
37
|
|
Senior
Vice President—General Counsel
|
Robert D.
Sadler
|
|
42
|
|
Senior
Vice President—Marketing
|
James J.
Sclafani, Jr.
|
|
46
|
|
Senior
Vice President—Claims
|
Audrey
E. Sylvan
|
|
42
|
|
Senior
Vice President—Product Management
|
James
R. Fisher.
Mr. Fisher has been our CEO and Chairman of the Board since September 2000
and
has been a Bristol West director since July 1998. 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 Willis (retiring April
2006)
and Alea (Bermuda) and a trustee of Lafayette College in Easton, Pennsylvania.
On February 21, 2006, Mr. Fisher notified our Board that, as part of our ongoing
management succession process, he would like to relinquish his title as CEO
effective as of July 1, 2006. The Board accepted Mr. Fisher’s
recommendations. Effective July 1, 2006, Mr. Fisher will continue to serve
as
Executive Chairman of the Board.
Jeffrey J.
Dailey. Mr. Dailey
has been our President since December 2003 and Chief Operating Officer since
April 2001. Mr. Dailey has 26 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 in 1996,
Mr. Dailey spent 14 years with The Progressive Corporation, holding
numerous executive positions culminating as President of Progressive's Northeast
Division. On February 21, 2006, James R. Fisher notified our Board that, as
part
of our ongoing management succession process, he would like to relinquish his
title as CEO effective as of July 1, 2006. Mr. Fisher recommended the promotion
of Mr. Dailey to the position of CEO. The Board accepted Mr. Fisher’s
recommendations.
Simon J.
Noonan, FIA, MAAA. Mr. Noonan
has been our Executive Vice President—Actuarial/Product since May 2005. 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 of 1997. Prior to joining
Metis, Mr. Noonan served as a Senior Manager and Director in the insurance
practice of KPMG from 1991 through 1997. On February 21, 2006, James R. Fisher,
our CEO and Chairman of the Board, notified our Board that, as part of our
ongoing management succession process, he would like to relinquish his title
as
CEO effective as of July 1, 2006. Mr. Fisher recommended the promotion of Mr.
Dailey, our President and Chief Operating Officer, to the position of CEO.
Mr. Fisher also recommended that, effective as of July 1, 2006,
Mr. Noonan succeed Mr. Dailey to the position of Chief Operating Officer.
The Board accepted Mr. Fisher’s recommendations.
Anne M.
Bandi. Ms. Bandi
has been our Senior Vice President—Operations since April 2001. Ms. Bandi
has 26 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, Ms. Bandi spent
16 years with The Progressive Corporation in a variety of operations
management positions.
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 16 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.
Craig E.
Eisenacher. Mr. Eisenacher
has been our Senior Vice President—Chief Financial Officer since June 1,
2004. From December 2003 until June 1, 2004, he was our Senior Vice
President—Corporate Finance. Prior to joining Bristol West in December 2003,
Mr. Eisenacher was a Managing Director with Century Capital
Management, Inc., an investment management firm engaged in public and
private equity investing with a focus on companies engaged in insurance and
financial services. From 1996 through 1999, Mr. Eisenacher was Vice
President of General Reinsurance Corp. Prior to 1996, Mr. Eisenacher held
several senior management positions at insurance and reinsurance companies,
including Treasurer and Controller of the CIGNA Property and Casualty Group,
Vice President—Finance of American Re-Insurance Company and Senior Vice
President and Chief Financial Officer of Prudential Reinsurance Company.
Nila J.
Harrison. Ms. Harrison
has been our Senior Vice President—Human Resources since April 2001.
Ms. Harrison has 21 years of human resources experience. Prior to joining
Bristol West, Ms. Harrison was the Senior Vice President, Human Resources
for Reliant. Prior to joining Reliant 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 19 years of insurance product management experience.
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 14 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 13 years of experience in the insurance industry. Prior
to joining Bristol West in 2001, Ms. Oster served as General Counsel for
Reliant. Prior to joining Reliant 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—Marketing since April 2001. Prior to joining
Bristol West in 2001, Mr. Sadler was the Chief Financial Officer for
Reliant Insurance. Mr. Sadler was with Reliant Insurance from May 1996
through March 2001. Prior to joining Reliant, Mr. Sadler served as the
Chief Financial Officer of Agency Insurance Company and as a manager for
Ernst & Young in their insurance practice.
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 18 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
in 1996, Ms. Sylvan was a Product Manager at The Progressive Corporation for
eight years, where she managed both Specialty and Auto Products.
SECURITY
OWNERSHIP
We
are
reporting the beneficial ownership of the shares of our Common Stock that is
reflected in the two tables below on the basis of regulations of the SEC
governing the determination of beneficial ownership of securities. Pursuant
to
SEC regulations, a person beneficially owns a security if that person, directly
or indirectly, has or shares voting power (the power to vote or direct the
voting) or investment power (the power to dispose or direct the disposition)
with respect to that security. Under SEC regulations, more than one person
may
be considered to beneficially own the same securities and a person may be
considered to beneficially own securities as to which that person has no
economic interest. A person also beneficially owns securities if the person
has
a right to acquire beneficial ownership of the security within 60 days. In
computing the number of shares of our Common Stock that a person beneficially
owned and the percentage of beneficial ownership of that person, we have
included in the table below with respect to each person any shares of Common
Stock that the person may acquire through the exercise of options that are
currently exercisable or exercisable within 60 days after the Record Date.
However, these beneficially owned shares are not deemed outstanding for purposes
of computing percentage beneficial ownership of any other person. Except as
indicated in the footnotes to the table, each of the shareholders named in
the
table below has (or upon exercise will have) sole voting power and sole
investment power with respect to the shares of Common Stock shown as
beneficially owned by them.
Security
Ownership of 5% Holders
The
table
below shows, as of April 3, 2006, the Record Date, with respect to each person
known to us to be the beneficial owner of more than 5% of the outstanding shares
of Common Stock, how many shares of our Common Stock such person beneficially
owned:
Name
and Address
|
|
Number
of
Shares
|
|
|
Percentage
of
Shares
(1)
|
|
|
|
|
|
|
|
|
Bristol
West Associates LLC (2)
c/o
Kohlberg Kravis Roberts & Co
9
West 57th
St
New
York, NY 10019
|
|
|
12,434,318
|
(3) |
|
|
41.2
|
%
|
Stadium
Capital Management LLC (4)
19785
Village Office Court, Suite 101
Bend,
OR 97702
|
|
|
3,045,400
|
|
|
|
|
|
10.1
|
%
|
T.
Rowe Price Associates Inc.
(5)
100
E. Pratt Street
Baltimore,
MD 21202
|
|
|
1,972,150
|
|
|
|
|
|
6.5
|
%
|
(1)
|
The
amounts in this column are based on an aggregate of 30,160,493 shares
of Common Stock issued and outstanding as of April 3,
2006.
|
(2)
|
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. Accordingly, as of December 31,
2005,
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 (approximately 40.6% of the outstanding shares)(See
Note
(1)).
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.
|
(3)
|
This
amount includes 176,950 shares owned by Aurora Investments II LLC,
an
affiliate of Bristol West Associates LLC. (which we refer to as
“Aurora
II”).
|
(4) |
According
to a Schedule 13G filed with the SEC on February 13, 2006, Stadium
Capital
Management LLC (which we refer to as “SCM”),
is an investment adviser whose clients 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, 2005,
SCM
had shared voting and shared dispositive power for all of the shares
reported. SCM is the general partner of Stadium Relative Value Partners,
L.P., which is also a client of SCM and as of December 31, 2005, had
shared voting power and shared dispositive power for 1,629,042 of
the
shares reported (approximately 5.4% of the outstanding Common Stock)(See
Note (1)).
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,
2005.
|
(5)
|
According
to a Schedule 13G filed with the SEC on February 14, 2006, these
securities are owned by various individuals 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, 2005, Price Associates
had sole voting power for 251,300 of the shares reported 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 April 3, 2006, how many shares of our Common Stock each
of
the following beneficially owned: our directors, our nominees for director,
our
NEOs (as defined below under “Executive
Compensation — Summary Compensation Table”)
and our
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) |
|
|
*
|
|
Richard
T. Delaney
|
|
|
12,649
|
(3) |
|
|
*
|
|
Todd
A. Fisher
(4)
|
|
|
12,434,318
|
(5)(6) |
|
|
41.2
|
%
|
Perry
Golkin (4)
|
|
|
12,434,318
|
(5)(7) |
|
|
41.2
|
%
|
Inder-Jeet
S. Gujral
|
|
|
82,474
|
(8) |
|
|
*
|
|
Mary
R. Hennessy
|
|
|
4,313
|
(9) |
|
|
*
|
|
Eileen
Hilton
|
|
|
4,313
|
(10) |
|
|
*
|
|
James
N. Meehan
|
|
|
24,313
|
(11) |
|
|
*
|
|
Scott
C. Nuttall
|
|
|
--
|
(12) |
|
|
*
|
|
Arthur
J. Rothkopf
|
|
|
4,313
|
(13) |
|
|
*
|
|
Jeffrey
J. Dailey
|
|
|
433,043
|
(14) |
|
|
1.4
|
%
|
Craig
E. Eisenacher
|
|
|
85,258
|
(15) |
|
|
*
|
|
Simon
J. Noonan
|
|
|
170,776
|
(16) |
|
|
*
|
|
James
J. Sclafani, Jr.
|
|
|
109,294
|
(17) |
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
|
All
directors and executive officers
as a group (25 persons)
|
|
|
15,351,133
|
|
|
|
|
|
49.3
|
%
|
(A) |
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, some of which had not vested as of April 3, 2006.
Each
such person has sole voting power with respect to the shares, but
does not
have investment power with respect to the shares. We pay accrued
dividends
to the holder only after the shares of restricted stock are vested
pursuant to the terms of such awards. The shares reported in this
column
also include, for each individual and for all directors and executive
officers as a group, the number of shares of Common Stock issuable
upon
exercise by each such individual and all members of the group of
outstanding stock options that are or will become exercisable prior
to
June 2, 2006.
|
(B) |
The
percentages in this column are based on an aggregate of
30,160,493 shares of Common Stock issued and outstanding as of April
3, 2006. For each individual, the issued and outstanding shares also
are
deemed to include the number of shares of Common Stock issuable upon
exercise by that individual of outstanding stock options that are
or will
become exercisable prior to June 2, 2006. For all directors and executive
officers as a group, the issued and outstanding shares also are deemed
to
include the number of shares of Common Stock issuable upon exercise
by all
members of the group of outstanding stock options that are or will
become
exercisable prior to June 2, 2006.
|
(1) |
This
amount includes 14,749 shares of restricted stock issued under the
2004
Stock Incentive Plan for Bristol West Holdings, Inc. and Subsidiaries
(which we refer to as the “2004
Stock Incentive Plan”)
that vest on February 22, 2007. Mr. Fisher has sole voting power and
no investment power with respect to these restricted shares during
the
restriction period. Also, Mr. Fisher is the managing member of Fisher
Capital Corp. LLC. As such, Mr. Fisher may be deemed to beneficially
own
65,190 shares and 873,546 currently exercisable options to purchase
shares of Common Stock at an exercise price of $3.83 that are held
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 2,174 shares of restricted stock that vest on May
14, 2006
and 2,139 shares of restricted stock that vest on February 21,
2008.
|
(3) |
This
amount includes 5,000 shares held by Mr. Delaney’s spouse. This amount
also includes 2,174 shares of restricted stock that vest on May 14,
2006 and 2,139 shares of restricted stock that vest on February 21,
2008.
|
(4) |
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.
|
(5) |
This
amount also includes 12,257,368 shares owned by BW Associates and
176,950
shares owned by Aurora II. 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. As of December 31, 2004, 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 under the heading “Security
Ownership of 5% Holders”).
|
(6) |
This
amount does not include approximately 3,966 phantom shares held by
Mr. Todd A. Fisher under the Non-Employee Directors’ Plan.
|
(7) |
This
amount does not include approximately 3,966 phantom shares held by
Mr. Golkin under the Non-Employee Directors’ Plan.
|
(8) |
This
amount includes 2,174 shares of restricted stock that vest on May
14, 2006
and 2,139 shares of restricted stock that vest on February 21, 2008.
This
amount also includes 78,161 shares of Common Stock that are held
by
Firemark Partners LLC. We entered into a services agreement with
Firemark
Partners LLC (which we refer to as “Firemark”),
a service company created by Mr. Gujral. Pursuant to the Firemark
services
agreement, we granted Firemark options to purchase 521,520 shares
of our
Common Stock (which we refer to as the “Firemark
Options”).
Twenty-five percent of the Firemark Options vested in the first year
of
the Firemark services agreement. On November 21, 2005, Firemark assigned
to OneShield 15% of the Firemark Options, representing options to
purchase
78,228 shares of Common Stock. Subsequently, on March 24, 2006, Firemark
exercised vested Firemark Options to purchase 110,823 shares of Common
Stock. Firemark settled the exercise price of $424,452 for these
options
by foregoing 22,662 shares of Common Stock at a per share market
close
price of $18.73 per share. As of April 3, 2006, Firemark held unvested
Firemark Options to purchase 332,469 shares of Common Stock. See
“Certain
Relationships and Related Transactions -
OneShield.”
Mr. Gujral as a member and partner of Firemark may be deemed to share
beneficial ownership of any shares beneficially owned by Firemark
but
disclaims such beneficial ownership except to the extent of his pecuniary
interest therein. This amount does not include approximately 3,966 phantom
shares held by Mr. Gujral under the Non-Employee Directors’ Plan.
|
(9) |
This
amount includes 2,174 shares of restricted stock that vest on May
14, 2006
and 2,139 shares of restricted stock that vest on February 21, 2008.
This
amount does not include approximately 4,710
phantom shares held by Ms. Hennessy under the Non-Employee Directors’
Plan.
|
(10) |
This
amount includes 2,174 shares of restricted stock that vest on May
14, 2006
and 2,139 shares of restricted stock that vest on February 21, 2008.
|
(11) |
This
amount includes 2,174 shares of restricted stock that vest on May
14, 2006
and 2,139 shares of restricted stock that vest on February 21, 2008.
This
amount does not include approximately 2,727
phantom shares held by Mr. Meehan under the Non-Employee Directors’
Plan.
|
(12) |
This
amount does not include approximately 3,966 phantom
shares held by Mr. Nuttall under the Non-Employee Directors’
Plan.
|
(13) |
This
amount includes 2,174 shares of restricted stock that vest on May
14, 2006
and 2,139 shares of restricted stock that vest on February 21, 2008.
This
amount does not include approximately 2,033 phantom shares held by
Mr. Rothkopf under the Non-Employee Directors’
Plan.
|
(14) |
This
amount includes options to purchase 292,172 shares that are currently
exercisable or become exercisable by Mr. Dailey within 60 days. This
amount also includes 4,204 shares of restricted stock that vest on
February 22, 2007; 54,348 shares of restricted stock that vest on
May 14,
2009; 8,850 shares of restricted stock that vest on February 22,
2010; and
18,717 shares of restricted stock that vest on February 21,
2011.
|
(15) |
This
amount includes options to purchase 19,557 shares that are currently
exercisable or become exercisable by Mr. Eisenacher within 60 days
and 2,500 shares held by Mr. Eisenacher’s son. This amount also includes
1,770 shares of restricted stock that vest on February 22, 2007;
1,029 shares of restricted stock that vest on February 21, 2008;
27,174 shares of restricted stock that vest on May 14, 2009; 5,900
shares
of restricted stock that vest on February 22, 2010; and 16,043 shares
of
restricted stock that vest on February 21, 2011.
|
(16) |
This
amount includes options to purchase 97,623 shares that are currently
exercisable or become exercisable by Mr. Noonan within 60 days. This
amount also includes 2,139 shares of restricted stock that vest on
February 22, 2007; 1,003 shares of restricted stock that vest on
February
21, 2008; 27,174 shares of restricted stock that vest on May 14,
2009;
5,900 shares of restricted stock that vest on February 22, 2010;
and
17,380 shares of restricted stock that vest on February 21, 2011.
|
(17) |
This
amount includes options to purchase 52,103 shares that are currently
exercisable or become exercisable by Mr. Sclafani within 60 days.
This amount also includes 1,106 shares of restricted stock that vest
on
February 22, 2007; 869 shares of restricted stock that vest on February
21, 2008; 18,098 shares of restricted stock that vest on May 14,
2009; 5,900 shares of restricted stock that vest on February 22,
2010; and
13,369 shares of restricted stock that vest on February 21, 2011.
|
ITEM
2
RATIFICATION
OF SELECTION OF DELOITTE & TOUCHE LLP
AS
INDEPENDENT
AUDITOR FOR
2006
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, 2006. The Board has ratified this selection.
Deloitte & Touche LLP acted as our independent auditor for the fiscal year
ended December 31, 2005. Representatives of Deloitte & Touche LLP will
attend the 2006 Annual Meeting, will have an opportunity to make a statement
if
they desire to do so and will be available to answer any appropriate questions.
Recommendation
of the Board of Directors
The
Board recommends that you vote FOR this proposal. Proxies
returned without instructions will be voted FOR the ratification of the Audit
Committee’s selection of Deloitte & Touche LLP as the independent auditor
for 2006.
Other
Independent Auditor Information
Fees
to Deloitte & Touche LLP
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, 2005 and
December 31, 2004:
|
|
2005
(5)
|
|
2004
(5)
|
|
Audit
fees (1)
|
|
$1,348,750
|
|
$1,344,420
|
|
Audit-related
fees (2)
|
|
|
695,900
|
|
|
37,700
|
|
Tax
fees (3)
|
|
|
88,237
|
|
|
98,737
|
|
All
other fees (4)
|
|
|
--
|
|
|
--
|
|
Total
fees
|
|
$2,132,887
|
|
$1,480,857
|
|
(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, 2005 and
December 31, 2004, 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 2005 and 2004 include the audit fees and expenses
regardless of when billed.
|
(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, 2005 and
December 31, 2004, that are not included in the amounts disclosed as
audit fees above. For 2005, audit-related fees represent internal
control
advisory services outside the scope of the audit ($660,500) as well
as
fees associated with the audit of our retirement plan. For 2004,
audit-related fees represent fees associated with the audit of our
retirement plan. The amounts reflected for this fee category for
fiscal
2005 and 2004 include the audit-related fees and expenses billed
in 2005
and 2004.
|
(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, 2005 and December 31, 2004.
The amounts reflected for this fee category for fiscal 2005 and 2004
include the tax fees and expenses billed in 2005 and
2004.
|
(4) |
All
other fees consist primarily of fees and expenses related to products
and
professional services for the fiscal years ended December 31, 2005
and December 31, 2004, that are not included in the amounts disclosed
in the three other categories above. Deloitte did not perform any
such
services for which it billed us during 2005 or 2004.
|
(5) |
The
Audit Committee approved 100% of Deloitte’s services and the fees and
expenses reflected in the line items entitled Audit fees, Audit-related
fees, Tax fees and All other fees.
|
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. The 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 at the next regularly scheduled
meeting is required to review and affirm this engagement. This procedure relates
only to pre-approval of engagements by our independent auditor.
AUDIT
COMMITTEE REPORT
The
Audit
Committee of Bristol West’s Board of Directors is composed of three directors
each of whom is “independent” in accordance with the corporate governance
standards of the NYSE, applicable rules and regulations of the SEC and Bristol
West’s Corporate Governance Guidelines. The Audit Committee operates pursuant to
a charter, a copy of which is attached to this proxy statement as Appendix
B
and is
available on Bristol West’s Internet website at www.bristolwest.com.
The
Audit Committee met 15 times in 2005. Audit Committee members also engaged
in
other discussions with management, Bristol West’s independent auditors, Deloitte
& Touche LLP, and each other from time to time during the year.
The
Audit
Committee’s purpose is to have direct responsibility for the duties and
responsibilities that are set forth in its charter and are otherwise delegated
to the committee by the Board. These duties and responsibilities include (a)
review the integrity of Bristol West’s financial reporting process, both
internal and external; (b) retain and terminate the independent auditors and
approve all engagement fees and terms; (c) oversee the work of the independent
auditors and any other registered public accounting firm engaged by Bristol
West; (d) review the qualifications, performance and independence of the
independent auditors; (e) review and discuss the responsibilities, budget
and staffing of Bristol West’s internal audit function; (f) discuss Bristol
West’s guidelines and policies with respect to risk assessment and risk
management; and (g) review and approve related party transactions to which
Bristol West is a party.
Bristol
West’s executive management is responsible for the financial statements and
overall reporting process, including the system of internal control over
financial reporting. The independent auditors are responsible for conducting
annual audits and quarterly reviews of the financial statements and conducting
an annual audit of management’s assessment that Bristol West maintained
effective internal control over financial reporting as of the end of the year.
The independent auditors report directly to the Audit Committee, consistent
with
the committee’s responsibilities. The independent auditors are responsible for
expressing an opinion as to whether the consolidated financial statements
present fairly in all material respects Bristol West’s financial position,
results of operations and cash flows as of and for the periods presented in
conformity with generally accepted accounting principles.
In
the
performance of its oversight function, the Audit Committee discussed with
Bristol West’s internal auditors and the independent auditors the overall scope
and plans for their respective audits. The Audit Committee met with Bristol
West’s internal auditors and the independent auditors, with and without
management present, to discuss the results of their examinations, their
evaluations of Bristol West’s internal control over financial reporting, and the
overall quality of Bristol West’s financial reporting. The Audit Committee also
reviewed and discussed with management and the independent auditors the fiscal
2005 audited financial statements and management’s assessment that Bristol West
maintained effective internal control over financial reporting as of December
31, 2005.
The
Audit
Committee monitored the progress and results of testing of internal control
over
financial reporting pursuant to Section 404 of the Sarbanes-Oxley Act of
2002. The Audit Committee has been updated no less than quarterly on
management’s process to assess the adequacy of the system of internal control
over financial reporting, the framework used to make the assessment, and
management’s conclusions regarding the effectiveness of internal control over
financial reporting. The Audit Committee has also discussed with the independent
auditors Bristol West’s internal control assessment process, management’s
assessment with respect thereto and the independent auditors’ evaluation of the
system of internal control over financial reporting.
The
Audit
Committee also received from the independent auditors the required
communications, including the written disclosures and the letter from the
independent auditors required by Independence Standards Board Standard No.
1,
Independence
Discussions with Audit Committees,
as
amended. The Audit Committee also discussed with the independent auditors the
independent auditors’ independence and the matters required to be discussed by
the Statement on Auditing Standards No. 61, Communication
with Audit Committees,
as
amended.
It
is not
the duty or responsibility of the Audit Committee to conduct auditing or
accounting reviews or procedures. In performing their oversight responsibility,
members of the Audit Committee rely without independent verification on the
information provided to them and on the representations made by management
and
the independent auditors. Accordingly, the Audit Committee’s review, discussions
and recommendations do not assure that the audit of Bristol West’s financial
statements has been carried out in accordance with generally accepted auditing
standards, that the financial statements are presented in accordance with
generally accepted accounting principles, or that management’s assessment that
Bristol West maintained effective internal control over financial reporting
as
of the end of the year is fairly stated.
Based
on
the review and discussions described in this report, and subject to the
limitations on the role and responsibilities of the Audit Committee referred
to
above and in the Audit Committee Charter, the Audit Committee recommended to
the
Board that the audited financial statements be included in Bristol West’s Annual
Report on Form 10-K for the year ended December 31, 2005 for filing with the
SEC, and selected Deloitte & Touche LLP to serve as Bristol West’s
independent auditor for 2006.
James
N.
Meehan (Audit Committee Chairperson)
Richard
T. Delaney (Audit Committee member)
Mary
R.
Hennessy (Audit Committee member)
The
foregoing report should not be deemed incorporated by reference by any general
statement incorporating by reference this proxy statement into any filing under
the Securities Act or under the Exchange Act, except to the extent that we
specifically incorporate this information by reference, and shall not otherwise
be deemed to be soliciting material or to be filed under such
Acts.
EXECUTIVE
COMPENSATION
Summary
Compensation Table
The
following table sets forth cash and other compensation paid or accrued for
services rendered in 2005, 2004, and 2003 to our CEO and each of our four most
highly compensated executive officers other than the CEO (whom we refer to,
collectively with our CEO, as the “NEOs”).
|
|
|
|
Annual
Compensation
|
|
Long
Term
Compensation
Awards
|
|
|
|
Name
and Principal
Position
|
|
Year
|
|
Salary
($)
|
|
Bonus
($)
(A)
|
|
Other
Annual Compensation
($)
(B)
|
|
Restricted
Stock
Awards
($)
(C)
|
|
Securities
Underlying
Options
(#)
(D)
|
|
All
Other Compensation
($)
(E)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
James
R. Fisher (1)
|
|
|
2005
|
|
$700,000
|
|
|
--
|
(2) |
|
|
--
|
|
|
|
|
|
--
|
|
|
|
|
|
--
|
|
|
|
|
|
--
|
|
Chairman
and Chief
|
|
|
2004
|
|
|
700,000
|
|
$175,000
|
(3) |
|
|
--
|
|
|
|
|
$
250,000
|
(4) |
|
|
--
|
|
|
|
|
|
--
|
|
Executive
Officer
|
|
|
2003
|
|
|
-
|
|
|
--
|
|
|
|
|
$
25,000
|
(1) |
|
|
--
|
|
|
|
|
|
--
|
(1) |
|
|
--
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jeffrey
J. Dailey
|
|
|
2005
|
|
$390,000
|
|
|
--
|
(2) |
|
|
--
|
|
|
|
|
$
150,000
|
(5) |
|
|
--
|
|
|
|
|
$6,000
|
|
President
and Chief
|
|
|
2004
|
|
|
390,000
|
|
$213,750
|
|
|
|
|
$
56,138
|
(6) |
|
|
1,071,250
|
(5) |
|
|
--
|
|
|
|
|
|
2,340
|
|
Operating
Officer
|
|
|
2003
|
|
|
387,115
|
|
|
232,500
|
|
|
|
|
|
--
|
|
|
|
|
|
--
|
|
|
|
|
|
3,706
|
(7) |
|
|
398
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Simon
J. Noonan
|
|
|
2005
|
|
$293,305
|
|
$
56,250
|
|
|
|
|
|
--
|
|
|
|
|
$
118,750
|
(8) |
|
|
--
|
|
|
|
|
$6,000
|
|
Executive
Vice President-
|
|
|
2004
|
|
|
282,692
|
|
|
108,750
|
|
|
|
|
|
--
|
|
|
|
|
|
536,250
|
(8) |
|
|
--
|
|
|
|
|
|
6,000
|
|
Actuarial/Product
|
|
|
2003
|
|
|
260,096
|
|
|
112,500
|
|
|
|
|
|
--
|
|
|
|
|
|
--
|
|
|
|
|
|
1,793
|
(9) |
|
|
4,456
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Craig
E. Eisenacher
|
|
|
2005
|
|
$280,553
|
|
$
57,750
|
|
|
|
|
|
--
|
|
|
|
|
$
119,250
|
(10) |
|
|
--
|
|
|
|
|
$6,000
|
|
Senior
Vice President-
|
|
|
2004
|
|
|
275,000
|
|
|
90,000
|
|
|
|
|
|
--
|
|
|
|
|
|
530,000
|
(10) |
|
|
--
|
|
|
|
|
|
--
|
|
Chief
Financial Officer
|
|
|
2003
|
|
|
10,577
|
|
|
150,000
|
(11) |
|
$202,580
|
(12) |
|
|
--
|
|
|
|
|
|
--
|
|
|
|
|
|
--
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
James
J. Sclafani, Jr.
|
|
|
2005
|
|
$291,906
|
|
$
48,750
|
|
|
|
|
|
--
|
|
|
|
|
$
116,250
|
(13) |
|
|
--
|
|
|
|
$2,322
|
|
Senior
Vice President-
|
|
|
2004
|
|
|
283,077
|
|
|
56,250
|
|
|
|
|
|
--
|
|
|
|
|
|
351,750
|
(13) |
|
|
--
|
|
|
|
|
|
2,054
|
|
Claims
|
|
|
2003
|
|
|
266,538
|
|
|
284,353
|
(14) |
|
|
--
|
|
|
|
|
|
--
|
|
|
|
|
|
1,255
|
(15) |
|
|
--
|
|
(A) |
Twenty-five
percent of the annual bonus awards with respect to each of 2005 and
2004
was in the form of restricted stock awards. These restricted stock
awards
are included in the “Restricted
Stock Awards”
column of this table, not in this column. Twenty-five percent of
the
annual bonus awards with respect to 2003 was in the form of stock
option
awards. These stock option awards are included in the “Securities
Underlying Options”
column of this table, not in this column.
|
(B) |
Unless
reported in this column, the aggregate amount of perquisites and
other
personal benefits for any fiscal year did not exceed the lesser of
$50,000
or 10% of the total annual salary and bonus reported for a named
executive
officer.
|
(C) |
Dollar
amounts shown equal the number of shares of restricted stock multiplied
by
the closing market price of our Common Stock on the dates of grant
(i.e.,
$18.70 on February 21, 2006, $16.95 on February 22, 2005, and $18.40
on May 14, 2004). These restricted stock awards will be forfeited if
the NEO’s employment with Bristol West terminates prior to 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. Each NEO has sole
voting power with respect to shares of restricted stock, but does
not have
investment power with respect to the shares. We pay accrued dividends
to
the holder only after the shares of restricted stock are vested pursuant
to the terms of such awards.
|
(D) |
These
stock option awards vested 50% on April 5, 2005 and 50% on April
5, 2006,
the first and second anniversaries of the grant date, respectively.
These
stock option awards will expire on the following dates, among others,
(1) April 5, 2014, the tenth anniversary of the grant date;
(2) the first anniversary of the date on which the NEO’s employment
with Bristol West terminates by reason of death, permanent disability
or
retirement; (3) immediately on the date on which Bristol West
terminates the NEO’s employment for cause, or (4) 90 days after
the date on which the NEO’s employment with Bristol West terminates for
any other reason.
|
(E) |
Dollar
amounts reflected in this column represent matching contributions
to the
NEO’s 401(k) account under The Bristol West Retirement Plan (the
“401(k)
Plan”).
These matching contributions 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. The vesting
of
matching contributions under the 401(k) Plan is accelerated in full
when a
participant reaches age 65.
|
(1) |
For
the year ended December 31, 2003, James R. Fisher was not a direct
employee of Bristol West. Mr. Fisher served as 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
we refer to as the “Fisher
Capital Contract”),
which is also described below under the heading “Certain
Relationships and Related Party Transactions.”
We paid to Fisher Capital all compensation for services provided
to us by
Mr. Fisher in 2003 pursuant to the Fisher Capital Contract.
Mr. Fisher is the managing member of Fisher Capital, and received
86.5% of all compensation we paid to Fisher Capital in 2003 for his
services. For the year ended December 31, 2003, the fee we paid to
Fisher Capital as compensation for Mr. Fisher's services was
$700,000. In addition, for the year ended December 31, 2003, we
granted Fisher Capital options to purchase 221,646 shares at an exercise
price of $3.83 per option share. Mr. Fisher may be deemed to
beneficially own these options, as described above under the heading
entitled “Security
Ownership - Security Ownership of Directors and
Management.”
In 2003, Mr. Fisher directly received a $25,000 annual fee for serving
on
the Board as a non-employee director. Effective January 1, 2004, we
entered into an employment agreement with Mr. Fisher pursuant to
which he became a direct employee of Bristol West and we pay his
compensation directly to him, as described below under the heading
“Executive
Compensation - Chairman and CEO Employment
Agreement.”
As an employee director, Mr. Fisher is no longer eligible to receive
fees for serving on the Board.
|
(2) |
Messrs.
Fisher and Dailey recommended that they receive no bonus awards for
2005.
The Compensation Committee believed that both men had earned a bonus
award, but, after discussion, concurred with their recommendation
despite
their successful management of Bristol West in a very competitive
market.
|
(3) |
We
paid Mr. Fisher a one-time signing bonus of $175,000 for entering
into his
employment agreement effective as of January 1,
2004.
|
(4) |
Mr.
Fisher received $250,000 in a restricted stock award as a bonus for
2004
performance. This restricted stock cliff vests on February 22, 2007,
two
years after the grant date. The number and value of the aggregate
restricted stock holdings of Mr. Fisher as of December 31, 2005 are
disclosed below under the caption “Executive
Compensation - Restricted Stock Holdings, Dividends Paid and Value
of
Holdings.”
|
(5) |
In
2005, Mr. Dailey received a restricted stock award of $150,000, which
cliff vests on February 22, 2010, five years after the grant date and
a restricted stock award of $71,250 as a bonus for 2004 performance,
which
cliff vests on February 22, 2007, two years after the grant date.
In 2004,
Mr. Dailey received a restricted stock award of $1,000,000, which
cliff
vests on May 14, 2009, five years after the grant date. The number of
shares and value of the aggregate restricted stock holdings of Mr.
Dailey
as of December 31, 2005 are disclosed below under the caption
“Executive
Compensation - Restricted Stock Holdings, Dividends Paid and Value
of
Holdings.”
|
(6) |
The
amount in this column for 2004 includes $22,388 of expenses paid
by us in
connection with an automobile provided to Mr. Dailey for personal use
and $33,750 in expenses paid by us to Mr. Dailey for unused paid
time off.
|
(7) |
In
2004, Mr. Dailey received a stock option award to purchase 3,706
shares of
Common Stock as a bonus for 2003
performance.
|
(8) |
In
2006, Mr. Noonan received a restricted stock award of $18,750 as
a bonus
for 2005 performance, which cliff vests on February 21, 2008, two
years
after the grant date. In 2005, Mr. Noonan received a restricted stock
award of $100,000, which cliff vests on February 22, 2010, five years
after the grant date, and a restricted stock award of $36,250 as
a bonus
for 2004 performance, which cliff vests on February 22, 2007, two
years after the grant date. In 2004, Mr. Noonan received a restricted
stock award of $500,000, which cliff vests on May 14, 2009, five
years after the grant date. The number of shares and value of the
aggregate restricted stock holdings of Mr. Noonan as of December 31,
2005 are disclosed below under the caption “Executive
Compensation - Restricted Stock Holdings, Dividends Paid and Value
of
Holdings.”
|
(9) |
In
2004, Mr. Noonan received a stock option award to purchase 1,793
shares of
Common Stock as a bonus for 2003
performance.
|
(10) |
In
2006, Mr. Eisenacher received a restricted stock award of $19,250
as a
bonus for 2005 performance, which cliff vests on February 21, 2008,
two
years after the grant date. In 2005, Mr. Eisenacher received a
restricted stock award of $100,000, which cliff vests on February
22,
2010, five years after the grant date, and a restricted stock award
of
$30,000 as a bonus for 2004 performance, which cliff vests on February
22,
2007, two years after the grant date. In 2004, Mr. Eisenacher
received a restricted stock award of $500,000, which cliff vests
on
May 14, 2009, five years after the grant date. The number of shares
and value of the aggregate restricted stock holdings of Mr. Eisenacher
as
of December 31, 2005 are disclosed below under the caption “Executive
Compensation - Restricted Stock Holdings, Dividends Paid and Value
of
Holdings.”
|
(11) |
Mr.
Eisenacher began his employment with Bristol West in December 2003
and
received a one-time signing bonus of $150,000.
|
(12) |
This
amount consists of expenses paid by us in connection with the relocation
of Mr. Eisenacher.
|
(13) |
In
2006, Mr. Sclafani received a restricted stock award of $16,250 as
a bonus
for 2005 performance, which cliff vests of February 21, 2008, two
years after the grant date. In 2005, Mr. Sclafani received a restricted
stock award of $100,000, which cliff vests on February 22, 2010,
five
years after the grant date, and a restricted stock award of $18,750
as a
bonus for 2004 performance, which cliff vests on February 22, 2007,
two
years after the grant date. In 2004, Mr. Sclafani received a restricted
stock award of $333,000, which cliff vests on May 14, 2009, five
years
after the grant date. The number of shares and value of the aggregate
restricted stock holdings of Mr. Sclafani as of December 31, 2005 are
disclosed below under the caption “Executive
Compensation - Restricted Stock Holdings, Dividends Paid and Value
of
Holdings.”
|
(14) |
This
amount includes a one-time signing bonus of $205,603 in
2003.
|
(15) |
In
2004, Mr. Sclafani received a stock option award to purchase 1,255
shares
of Common Stock as a bonus for 2003
performance.
|
Restricted
Stock Holdings, Dividends Paid and Value of Holdings
The
following table sets forth certain information concerning restricted stock
held
by the NEOs during 2005:
Name
|
|
Aggregate
Restricted Stock
Holdings at December
31, 2005 (#)
|
|
Dividends
Credited in 2005
on Aggregate Restricted
Stock Holdings(1)
($)
|
|
Value
of Aggregate
Restricted Stock
Holdings at 12/31/2005
(2) ($)
|
|
|
|
|
|
|
|
|
|
James
R. Fisher
|
|
|
14,749
|
|
$
3,835
|
|
$
280,673
|
|
Jeffrey
J. Dailey
|
|
|
67,402
|
|
|
17,525
|
|
|
1,282,660
|
|
Simon
J. Noonan
|
|
|
35,213
|
|
|
9,155
|
|
|
670,103
|
|
Craig
E. Eisenacher
|
|
|
34,844
|
|
|
9,059
|
|
|
663,081
|
|
James
J. Sclafani, Jr.
|
|
|
25,104
|
|
|
6,527
|
|
|
477,729
|
|
(1) |
Each
NEO has sole voting power with respect to shares of restricted stock,
but
does not have investment power with respect to the shares. We pay
accrued
dividends to the holder only after the shares of restricted stock
are
vested pursuant to the terms of such awards. This column reflects
market
rate dividends accrued for the benefit of, but not received by, the
NEOs
for the restricted stock awards.
|
(2) |
These
values are based on the last reported closing price per share of
Common
Stock of $19.03 on December 30, 2005, the last trading day of 2005,
as
reported on the NYSE.
|
Aggregated
Option Exercises and Fiscal Year-End Option Value
The
NEOs
exercised no stock options during 2005. The following table shows the number
and
value of specified unexercised options at December 31, 2005. The actual amount,
if any, realized upon exercise of stock options will depend upon the market
price of the underlying shares of Common Stock relative to the exercise price
per share at the time the stock option is exercised. There can be no assurance
that any of the NEOs will realize the values of unexercised in-the-money stock
options reflected in this table.
Name
|
|
Shares
Acquired
On
Exercise
(#)
|
|
Value
Realized
($)
|
|
Number
of Securities Underlying
Unexercised Options/SARs at
12/31/2005 (#)
|
|
Value
of Unexercised in-the-Money
Options/SARs
at
12/31/2005 (1)
($)
|
|
|
|
|
|
|
|
Exercisable
|
|
Unexercisable
|
|
Exercisable
|
|
Unexercisable
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
James
R. Fisher
|
|
|
--
|
|
|
--
|
|
|
873,546
|
(2) |
|
--
|
|
$13,277,899
|
|
|
--
|
|
Jeffrey
J. Dailey
|
|
|
--
|
|
|
--
|
|
|
238,167
|
|
|
54,005
|
|
|
3,560,681
|
|
$792,710
|
|
Simon
J. Noonan
|
|
|
--
|
|
|
--
|
|
|
96,726
|
|
|
897
|
|
|
1,444,098
|
|
|
--
|
|
Craig
E. Eisenacher
|
|
|
--
|
|
|
--
|
|
|
19,557
|
|
|
29,336
|
|
|
72,165
|
|
|
108,250
|
|
James
J. Sclafani, Jr.
|
|
|
--
|
|
|
--
|
|
|
34,525
|
|
|
51,477
|
|
|
515,250
|
|
|
772,905
|
|
(1) |
These
amounts are presented pursuant to SEC rules and reflect the difference
between:
|
|
·
|
the
fair market value of the shares of Common Stock underlying the options
held by each NEO based on the last reported closing price per share
of
Common Stock of $19.03 on December 30, 2005, the last trading day
of 2005,
as reported on the NYSE, and
|
|
·
|
the
aggregate exercise price of such options.
|
(2) |
Consists
of options to purchase Common Stock that we granted to Fisher Capital,
as
discussed above under the caption entitled “Security
Ownership - Security Ownership of Directors and
Management.”
|
Equity
Compensation Plan Information
The
table
below shows information with respect to our equity compensation plans as of
December 31, 2005:
Plan
Category
|
|
Number
of Securities
to be Issued
Upon Exercise of
Outstanding Options, Warrants and Rights
|
|
Weighted-Average
Exercise
Price of Outstanding
Options, Warrants and Rights
|
|
Number
of Securities
Remaining
Available
For Future
Issuance (1)
|
|
|
|
|
|
|
|
|
|
Equity
compensation plans approved by security holders:
|
|
|
|
|
|
|
|
None
(2)
|
|
|
--
|
|
|
--
|
|
|
--
|
|
Equity
compensation plans not approved by security
holders:
|
|
|
|
|
|
|
|
|
|
|
1998
Stock Option Plan
|
|
|
1,330,606
|
|
$ 4.50
|
|
|
114,692
|
|
2004
Stock Incentive Plan
|
|
|
22,212
|
|
$20.91
|
|
|
2,502,547
|
|
Total
|
|
|
1,352,818
|
|
$ 4.77
|
|
|
2,617,239
|
|
(1) |
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.”
|
(2) |
The
1998 Stock Option Plan and the 2004 Stock Incentive Plan were not
subject
to stockholder approval because Bristol West was privately held until
its
initial public offering on February 12,
2004.
|
Chairman
and CEO’s Employment Agreement
Effective
as of January 1, 2004, we entered into an employment agreement with James
R. Fisher. Under this agreement, Mr. Fisher will serve as our Chairman and
Chief Executive Officer for a term expiring on June 30, 2006. In connection
with entering into this agreement, Mr. Fisher received a one-time signing
bonus of $175,000 in 2004. While employed under this agreement, Mr. Fisher
will receive an annual base salary of $700,000 and will be eligible to receive
an annual bonus in an amount determined by the Compensation Committee of the
Board. Effective July 1, 2006, Mr. Fisher will relinquish his position as
Bristol West’s Chief Executive Officer and will continue to serve as Executive
Chairman, as discussed above under the heading “Executive
Officers.”
At
that time, Mr. Fisher’s annual base salary will be reduced to $350,000. If,
during the term of his employment agreement, we terminate Mr. Fisher's
employment without cause (as defined in the employment agreement),
Mr. Fisher will be entitled to receive his base salary and group health
insurance coverage (at the same rates as he paid immediately prior to the
termination) for the remainder of the applicable term of his employment, which
will terminate on the following June 30th.
While
Mr. Fisher is subject to a non-competition provision under this agreement,
which requires him to fulfill his duties and responsibilities to Bristol West,
he is permitted to provide services to 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,
Mr. Fisher is permitted to engage in certain investment and advisory
activities related to his position with Fisher Capital.
Employment
Agreements for the Other NEOs
We
entered into Employee Stockholder Agreements with each of our other NEOs,
Messrs. Dailey, Noonan, Eisenacher and Sclafani, on or about the time that
they
became employees (which we refer to as the “Employee
Stockholder Agreements”).
Each
Employee Stockholder Agreement
provides for the grant of shares of Common Stock and options to purchase Common
Stock under our 1998 Stock Option Plan for Management and Key Employees (which
we refer to as the “1998
Stock Option Plan”)
and
the 2004 Stock Incentive Plan. These agreements impose restrictions on the
executives’ ability to transfer shares of Common Sock prior to the fifth
anniversary of the date on which the executive acquired the shares. We waived
these transfer restrictions with respect to each executive on a pro rata basis
relative to the percentage of shares Bristol West Associates LLC sold in our
initial public offering in February 2004.
Under
the
Employee Stockholder Agreements with Messrs. Dailey, Noonan and Eisenacher,
in
the case of termination of the executive officers and in exchange for a promise
not to compete with us for 12 months or disclose our confidential information,
each will receive payments and benefits in an amount equal to 12 months’ salary
and benefits due him. Under the Employee Stockholder Agreement with Mr.
Sclafani, in the case of termination and in exchange for a promise not to
compete with us for 12 months or disclose our confidential information, he
will
receive payments and benefits in an amount equal to 36 months’ salary and
benefits due him.
In
addition, under the Employee Stockholder Agreements with Messrs. Dailey and
Sclafani, other than options granted in connection with annual bonus awards,
options granted under the 1998 Stock Option Plan become exercisable by the
executives in installments over a five-year period: 20% of the stock subject
to
the option becomes exercisable on each of the first five anniversaries of the
grant date of the particular option. Under the Employee Stockholder Agreement
with Mr. Noonan, options granted under the 1998 Stock Option Plan become
exercisable by Mr. Noonan in installments over a two-year period: 50% of the
stock subject to the options becomes exercisable on each of the first two
anniversaries of the grant of the particular option.
In
addition, Messrs. Dailey, Noonan, Eisenacher and Sclafani have entered into
sale
participation agreements with us that provide that if we sell shares of Common
Stock other than in a qualified public offering (as defined in the Employee
Stockholder Agreements),
they have a right to participate in that sale.
COMPENSATION
COMMITTEE REPORT
Report
of the Compensation Committee on Executive Compensation
The
Compensation Committee, which consists entirely of independent directors as
defined in Section 162(m) of the Internal Revenue Code of 1986, as amended
(which is referred to as the “Code”),
oversees a management compensation program designed to further the attainment
of
Bristol West’s strategic goals of growth and profitability and thus increase
shareholder value. For each executive officer, the Compensation Committee is
responsible for the establishment of base salary, as well as the award level
for
the annual Incentive Compensation Program (which is referred to as the
“ICP”).
The
Compensation Committee is also responsible for the award level and
administration of the stock programs for executive officers, as well as
recommendations regarding other executive benefits and plans, subject to the
approval of the Board.
Compensation Philosophy
Bristol
West’s vision is to be the insurer of choice for its distribution force and
policyholders. To achieve this vision, Bristol West must align all of its
business processes to create value for policyholders and producers. Bristol
West
must continually refine its sales practices and technology to make it easier
for
producers and policyholders to do business with the Company. Bristol West must
strive to provide insureds with faster, higher quality and more flexible service
when interacting with its representatives. To accomplish these goals, Bristol
West must recruit and retain highly competent executives.
Within
this context, the three major objectives for Bristol West’s executive
compensation program are:
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§
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Alignment:
Link
executive compensation rewards with growth in earnings and strategic
operational performance that ultimately results in sustainable increases
in shareholder value.
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§
|
Motivation:
Motivate
executives to be accountable for and accomplish Bristol West’s financial
and strategic operational
objectives.
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§
|
Retention
and Attraction: Retain
and attract key executives to drive increases in shareholder
value.
|
Bristol
West’s total compensation philosophy encompasses the following:
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§
|
Salary
levels and salary increases
that reflect position responsibilities, competitive market rates,
strategic importance of the position, and individual performance
and
contributions.
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|
§
|
Annual
incentive payments, based
on Bristol
West’s performance relative to its earnings goals and other strategic
objectives and individual
performance.
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|
§
|
Long-term
incentives, provided through
restricted stock and stock option grants, that reward
key executives for performance related to increasing shareholder
value,
vest over time, and encourage executive stock ownership.
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|
§
|
Benefit
programs
provided to all employees in which Bristol West’s executives are eligible
to participate.
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Compensation
Methodology
The
purpose of Bristol West’s compensation program is to enable it to appropriately
compete for talented and experienced executives with companies of similar size
within the property and casualty insurance industry. Bristol West seeks to
attract and retain high performing executives and reward them for above average
performance. To determine competitive compensation levels, the Compensation
Committee reviews data regarding rates for compensation and compensation plan
structures employed by peer companies and other companies of similar size within
the insurance industry. The data is derived from analysis of publicly available
information and proprietary survey sources.
In
2005,
total compensation was comprised of fixed compensation (annual base salary),
variable compensation (annual ICP awards, paid 75% in cash and 25% in restricted
stock), and long-term incentive in the form of restricted stock. In general,
the
Compensation Committee’s objective is to structure total cash compensation (base
salary plus the cash portion of ICP awards) paid to executive officers to be
within the third quartile (50% to 75%) of companies of similar size within
the
property and casualty insurance industry, subject to Bristol West’s needs and
the experience and performance of the executive officers. The Compensation
Committee works closely with the CEO and the Chief Operating Officer in
evaluating the individual performances of the other executive
officers.
The
specific components of the Bristol West’s compensation program and how these
components function are set forth below:
Base
Salary
Consistent
with the compensation philosophy discussed above, annual base salaries for
Bristol West’s executive officers are designed to be competitive with companies
of similar size within the property and casualty insurance industry. The
Compensation Committee determines salaries and any increases for executive
officers after the close of the fiscal year based on a combination of individual
performance and competitive compensation data.
Annual
Incentive Compensation Program
The
Board
each year adopts a business plan with earnings goals and other strategic
objectives. The purpose of the 2005 ICP bonus awards was to pay each of Bristol
West’s executive officers a maximum award at levels ranging from 30% to 100% of
their individual annual base salary based upon the executive officer’s position
and responsibilities, Bristol West’s performance relative to its earnings goals
and other strategic objectives and the executive officer’s individual
performance. In assessing Bristol West’s performance in 2005 for the purpose of
making ICP awards to the Company’s executive officers, the Compensation
Committee considered Bristol West’s return on equity, net income, gross written
premium and combined ratio relative to business plan objectives and in light
of
a very competitive market and the Company’s maintenance of its underwriting
discipline in that market. The Compensation Committee approved the payment
of
the 2005 ICP awards 75% in cash and 25% in restricted stock issued pursuant
to
the 2004 Stock Incentive Plan. These restricted stock awards will cliff vest
in
February 2008 and will be forfeited if the executive’s employment with Bristol
West terminates prior to the vesting date, except for death or disability.
ICP
restricted stock award vesting is accelerated for certain mergers, sales or
other business combinations and for death or disability.
Long-Term
Restricted Stock Awards
Bristol
West’s success is dependent upon its senior management team. From time to time,
the Compensation Committee grants restricted stock awards under the 2004 Stock
Incentive Plan for the purpose of retaining key employees over a long-term
period, providing them direct ownership in Common Stock with a view toward
preserving shareholder value, and encouraging decisions related to increased
shareholder value in the future.
In
2005,
the Compensation Committee granted such restricted stock awards to certain
key
employees, including all of the executive officers other than James R. Fisher,
the CEO. The total value of these grants was $2 million, which included
aggregate awards of $1.25 million to executive officers. These restricted
stock awards will cliff vest on February 21, 2011 and will be forfeited if
the
executive officer’s employment with Bristol West terminates prior to the vesting
date, except for death or disability. The vesting of these restricted stock
awards is accelerated for certain mergers, sales or other business combinations
and for death or disability.
Determination
of the Chief Executive Officer’s Compensation
James
R.
Fisher has served as the CEO since September 2000. Mr. Fisher’s
compensation package for 2003 through 2005 is detailed in this proxy statement
in the section above entitled “Executive
Compensation.”
Mr.
Fisher’s base salary for 2005 was set at $700,000 per annum. Mr. Fisher’s annual
base salary was not increased from the level established in 2004 in his
employment agreement with Bristol West dated as of January 1, 2004. Mr. Fisher
recommended that the Compensation Committee not consider awarding him any ICP
bonus with respect to 2005 or any long-term restricted stock grants. After
discussing the recommendation with Mr. Fisher, the Committee concurred
with his recommendation despite his successful management of Bristol West in
a
very competitive market.
Deductibility
of Executive Compensation
The
Compensation Committee has reviewed the applicability of Code
Section 162(m). In certain circumstances, Code Section 162(m) 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 (which is referred to as “covered
officers”).
No
compensation that Bristol West paid during 2005 to any covered officer was
subject to the Code Section 162(m) deduction limitation.
Certain
compensation that qualifies as “performance based” and is approved by
stockholders may be exempt from the Section 162(m) limit. The Compensation
Committee intends that Bristol West qualify certain compensation paid to its
executive officers for deductibility under the Code, including
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 payments of compensation that is not
deductible.
Bristol
West is seeking stockholder approval of the Executive Officer Incentive Plan
(which is referred to as the “EIP”)
pursuant to this proxy statement, as discussed below under the heading entitled
“Approval
of the Executive Officer Incentive Plan.”
It
is
the Compensation Committee’s intention that, if approved by Bristol West’s
stockholders, awards under the EIP will meet the conditions necessary for
deductibility under Code Section 162(m). The performance goals for awards
to be approved by the Compensation Committee and issued under the EIP are set
forth below under the heading “Approval
of the Executive Officer Incentive Plan - Individual Bonus Targets and
Performance Goals.”
R.
Cary
Blair (Compensation Committee Chairperson)
Richard
T. Delaney (Compensation Committee member)
Eileen
Hilton (Compensation Committee member)
The
foregoing report should not be deemed incorporated by reference by any general
statement incorporating by reference this proxy statement into any filing under
the Securities Act or under the Exchange Act, except to the extent that we
specifically incorporate this information by reference, and shall not otherwise
be deemed to be soliciting material or to be filed under such
Acts.
COMPARISON
OF CUMULATIVE TOTAL STOCKHOLDER RETURN
Our
Common Stock has been traded on the NYSE under the ticker symbol “BRW” since
Bristol West’s initial public offering on February 12, 2004. The initial public
offering price of the Common Stock was $20.00 per share. The following chart
reflects cumulative stockholder return (assuming the reinvestment of dividends)
on our Common Stock compared with the total return on the S&P 500 Index and
the S&P 500 Property and Casualty Insurance Index (which we refer to as the
“S&P
500 - P&C”).
The
graph reflects the investment of $100 in our Common Stock, the S&P 500 Index
and the S&P 500 - P&C Index at the close of trading on February 12,
2004, and the reinvestment of dividends.
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|
02/12/2004
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|
12/31/2004
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|
12/31/2005
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|
Bristol
West Holdings, Inc. Common Stock
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|
$100.00
|
|
$
88.42
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|
$
85.26
|
|
S&P
500 Property & Casualty Insurance Index (1)
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|
$100.00
|
|
$106.80
|
|
$119.27
|
|
S&P
500 Index (1)
|
|
$100.00
|
|
$103.61
|
|
$112.05
|
|
(1)
Source:
Index Services, Standard & Poor’s Company
The
stock price performance graph shall not be deemed incorporated by reference
by
any general statement incorporating by reference this proxy statement into
any
filing under the Securities Act or under the Exchange Act, except to the
extent
that we specifically incorporate this information by reference, and shall
not
otherwise be deemed to be soliciting material or to be filed under such
Acts.
CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS
Consulting
Services Fees
KKR
performs consulting and certain other services for us pursuant to an
agreement to provide management, consulting and certain other services (the
“KKR
Contract”).
Pursuant to the KKR Contract, we 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 us to amend or terminate
the
contract. Partnerships affiliated with KKR owned 40.5% of our Common Stock
as of
December 31, 2005. Pursuant to the KKR Contract, during 2005, we paid fees
to
KKR of $500,000 and reimbursed KKR for expenses in the amount of approximately
$21,800. We owed KKR fees of $125,000 as of December 31, 2005.
Pursuant
to the Fisher Capital Contract, Fisher Capital performs management,
consulting and certain other services for us. Pursuant to the Fisher Capital
Contract, we agreed to pay Fisher Capital $95,000 per year, plus reasonable
expenses incurred to provide the services. The Fisher Capital Contract continues
in effect from year to year unless Fisher Capital agrees with us to amend or
terminate the contract. James R. Fisher, our CEO, is the managing member of
Fisher Capital. Pursuant to the Fisher Capital Contract, during 2005, we paid
fees to Fisher Capital of $95,000 and reimbursed Fisher Capital for expenses
incurred on our behalf in the amount of approximately $42,870. Mr. Fisher did
not receive any portion of the fees paid to Fisher Capital in 2005. We owed
no
fees to Fisher Capital as of December 31, 2005.
Investigation
Expenses
In
2005,
each of KKR; Gary Colton, a member of Fisher Capital; and James R. Fisher,
our
CEO, incurred separate expenses in connection with governmental investigations
by the SEC and the United States Attorney for the Southern District of New
York
relating to our reinsurance agreements. Please see the disclosure under the
heading “Item
3. Legal Proceedings”
of
our
Annual Report on Form 10-K with respect to the fiscal year ended
December 31, 2005 that we filed with the SEC on March 14, 2006. We and
these individuals and entities are cooperating with these investigations. In
2005, we paid on behalf of KKR legal fees and related expenses associated with
these investigations of approximately $479,600. In 2005, we paid on behalf
of
Mr. Colton legal fees and related expenses associated with these
investigations of approximately $89,200. In 2005, we paid on behalf of James
R.
Fisher legal fees and related expenses associated with these investigations
of
approximately $214,700.
Firemark
Services Agreement and OneShield
We
entered into a services agreement, dated July 24, 2002, as corrected and
amended on November 8, 2005 (which
we
refer to as the “Firemark
Agreement”),
with
Firemark, 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.
He is also the Chairman of the Board of Directors of OneShield and a controlling
partner of Firemark. Mr. Gujral became a Bristol West director on March 24,
2004. Mr. Gujral has advised us that he does not intend to stand for re-election
at the 2006 Annual Meeting and will retire from the Board at that time, as
described above under the heading “Election
of Directors - Retiring Directors.”
As
of
December 31, 2005, Mr. Gujral owned 0.57% of OneShield’s shares on a fully
diluted basis. Certain members and employees of KKR, Fisher Capital and
James R. Fisher also have interests in OneShield through Aurora Investments
LLC (which we refer to as “Aurora”).
As of
December 31, 2005, Aurora’s interest in OneShield was 13.0% on a fully
diluted basis. In addition, Mr. Fisher has been granted vested rights to
purchase common stock equal to 0.02% of the fully diluted capital of OneShield
in connection with his role on its strategic advisory board. Jeffrey J. Dailey,
our President and Chief Operating Officer, became a director of OneShield on
November 25, 2003.
We
paid
Firemark and OneShield collectively approximately $3,411,000 for services and
license fees under the Firemark Agreement in 2005. Pursuant to the Firemark
Agreement, we agreed to pay Firemark during 2006 license fees of $900,000 and
to
pay OneShield fees for consulting services provided during 2006 plus reasonable
expenses. Pursuant to the Firemark Agreement, in exchange for providing
development and implementation assistance to us 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 the Firemark Options vested
in
the first year of the Firemark Agreement and the remaining 75% of the Firemark
Options will vest 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. On November 21, 2005, Firemark assigned to OneShield
15%
of the Firemark Options, representing options to purchase 78,228 shares of
Common Stock, based on OneShield’s 15% ownership interest in Firemark.
Subsequently, on November 21, 2005, OneShield exercised vested Firemark Options
to purchase 19,557 shares of Common Stock. OneShield settled the exercise price
of $74,903 for these options by foregoing 3,863 shares of Common Stock at a
per
share market close price of $19.39 per share. As of December 31, 2005, Firemark
held Firemark Options to purchase 443,292 shares of Common Stock and OneShield
held Firemark Options to purchase 58,671 shares of Common Stock. Please
also see the disclosure under the heading “Security
Ownership - Security Ownership of Directors and
Management.”
As
consideration for OneShield being chosen as the subcontractor for the Firemark
Agreement, OneShield granted us warrants to purchase OneShield common stock
equal to 2% of the then fully diluted capital stock of OneShield. In addition,
we purchased 8.0 million shares of Series D preferred stock of OneShield.
Our total ownership of OneShield stock, including the warrants, represented
6.2%
of the fully diluted capital stock of OneShield as of December 31, 2005. As
of December 31, 2005, we had loans receivable, including accrued interest
receivable, from OneShield of approximately $290,300. 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,
our 8.0 million shares of OneShield Series D preferred stock were converted
into 1.6 million shares of OneShield Series E-2 preferred stock and 1.6 million
shares of OneShield Series C-2 common stock. Our 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
senior to the Series E-2 preferred stock. As of March 31, 2006, taking into
account the recapitalization and financing, our total ownership of OneShield
stock (including the warrants but excluding debt conversion rights) represented
6.6% of the fully diluted capital stock of OneShield.
SECTION
16 (a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section
16(a) of the Securities Exchange Act of 1934 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 2005 except for Craig E. Eisenacher, one of
our
executive officers, who filed late in April 2006 a statement of changes in
beneficial ownership on Form 4 to report his purchase of 1,885 shares
of Common Stock in June 2004.
APPROVAL
OF THE EXECUTIVE OFFICER INCENTIVE PLAN
We
are
providing the following description of the Bristol West Executive Officer
Incentive Plan in connection with the solicitation of proxies for approval
of
the EIP. The following description is a summary of the material terms of the
EIP
and does not purport to be complete. The summary is qualified in its entirety
by
reference to the text of the EIP, which is attached hereto as Appendix
C.
Description
Background
In
certain circumstances, Code Section 162(m) may deny a federal income tax
deduction for compensation in excess of $1 million per year that we pay to
any
of our CEO or our other four most highly compensated executive officers (which
we refer to as our “covered
officers”).
See
the related discussion above under the heading entitled “Compensation
Committee Report - Deductibility of Executive
Compensation.”
We
can
only deduct compensation in excess of that amount if it qualifies as
“performance-based compensation” under Code Section 162(m).
To
date,
we have not paid compensation to any covered officer that has been subject
to
the Code Section 162(m) deduction limitation. Through 2005, the
Compensation Committee approved annual incentive bonus awards to the NEOs and
our other executive officers under Bristol West’s previously disclosed annual
Incentive Compensation Program (which we refer to as the “ICP”).
Effective for fiscal 2006, the Compensation Committee replaced the ICP with
both
the EIP, subject to the approval of our stockholders, and the Bristol West
Holdings, Inc. Management Incentive Plan (the “MIP”).
The
MIP is an exhibit to our Current Report on Form 8-K that we filed with the
SEC
on February 27, 2005. The Compensation Committee will award bonuses to our
executive officers under the EIP and the MIP. Annually, with respect to each
executive officer, the Compensation Committee will establish, for the applicable
fiscal year, the executive officer’s individual bonus target as a participant
under the EIP and the MIP. Eighty percent of the executive officer’s individual
bonus target will be based on achievement of performance goals under the EIP.
Twenty percent of the executive officer’s individual bonus target will be based
upon individual performance 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
Compensation Committee adopted the EIP to permit us to pay incentive
compensation that qualifies as performance-based compensation, thereby
permitting us to receive a federal income tax deduction for the payment of
such
incentive compensation. As described above under the heading entitled
“Compensation
Committee Report - Deductibility of Executive
Compensation,”
the
Compensation Committee 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 in certain instances compensation that is not deductible. The
Compensation Committee does not expect MIP bonuses to qualify as
performance-based compensation under Code Section 162(m).
For
incentive compensation under the EIP to qualify as performance-based
compensation under Code Section 162(m), our stockholders must approve the
EIP. On February 21, 2006, our Compensation Committee and Board adopted the
EIP
subject to the approval of our stockholders pursuant to Code
Section 162(m). To approve the EIP, if a quorum is present at the 2006
Annual Meeting, the “FOR” votes must exceed the “AGAINST” votes cast at the
2006 Annual Meeting.
Purpose
The
purpose of the EIP 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 our affiliates and operating
units. The EIP aims to align
the
interests of management and Bristol
West towards
the completion of our strategic objectives, while providing incentives to
constantly expand our earning power. The
EIP
also seeks to have direct ties to our business plan and encourage teamwork
in
accomplishing our goals. The EIP is designed to preserve the income tax
deductibility of incentives paid under the EIP to covered officers who are
subject to the limitations of Code Section 162(m) and the regulations and
interpretations promulgated under Code Section 162(m).
Administration
The
EIP
is administered by our Compensation Committee, each member of which is an
“outside director” within the meaning of Code Section 162(m).
Eligible
Individuals
Each
of
our 15 executive officers, including our CEO, and other key employees will
be
eligible to participate in the EIP for any fiscal year. Our Compensation
Committee has the discretionary authority to designate for each fiscal year
which executive officers and key employees will be participants in the EIP
for
such fiscal year.
Individual
Bonus Targets and Performance Goals
Annually,
our Compensation Committee will establish individual bonus targets and
performance goals for each participant in compliance with Code
Section 162(m). The Compensation Committee will establish the performance
goals during the first quarter while the outcome of the performance goals is
substantially uncertain.
The
Compensation Committee will establish each participant’s individual bonus target
and performance goal(s) for the fiscal year. The Compensation Committee may
provide that performance goals for any fiscal year will be adjusted based on
factors that relate to unusual or extraordinary items. The performance goals
will include one or more objective measurable performance factors as determined
by the Compensation Committee with respect to each fiscal year based upon one
or
more factors of the following factors: (1) gross written premium;
(2) net written premium; (3) underwriting income; (4) operating
income; (5) earnings (including earnings before interest and taxes (EBIT),
earnings before interest, taxes, depreciation and amortization (EBITDA), and
earnings before interest, taxes, depreciation and amortization and other
non-cash items); (6) net income; (7) cash flow; (8) loss ratio;
(9) expense ratio; (10) combined ratio; (11) return on equity;
(12) return on assets; (13) earnings or net income per share;
(14) book value or book value per share; and/or (15) stock price, each
with respect to the Bristol West and/or one or more of our affiliates or
operating units. For purposes of the EIP, such criteria may be measured by
comparing actual results in a current period to either or both of the following:
(i) comparable estimates in our business plan or (ii) comparable
actual results in prior periods.
Payment
of Bonus Award
The
Compensation Committee will determine whether the terms and conditions
underlying the payment of each participant’s bonus award under the EIP have been
satisfied in compliance with Code Section 162(m). No EIP bonus award shall
become payable to a participant with respect to any fiscal year until the
Compensation Committee has certified in writing (in the manner prescribed under
applicable regulations under Code Section 162(m)) that the terms and
conditions underlying the payment of the award have been satisfied. Finally,
our
Compensation Committee, in its sole discretion, may reduce or eliminate (but
not
increase) the bonus award payable under the EIP to any participant. Payments
of
EIP awards may be made either in cash and/or in the form of any award available
under the 2004 Stock Incentive Plan, as determined by the Committee in its
sole
discretion.
Maximum
Annual Individual Bonus
The
maximum annual bonus awards payable under the EIP to any participant during
any
fiscal year cannot exceed $1 million.
Amendments
The
Board
may terminate the EIP at any time, provided such termination will not affect
the
payment of any awards accrued under the EIP before the date of the termination.
The Board may, at any time, or from time to time, amend or suspend and, if
suspended, reinstate, the EIP in whole or in part, provided however, that any
amendment of the EIP will be subject to the approval of our stockholders to
the
extent required to comply with the requirements of Code Section 162(m), or
any
other applicable laws, regulations or rules.
Fiscal
2006 Participants, Performance Goal and Estimate of Benefits
At
its
meeting on February 21, 2006, our Compensation Committee selected our CEO and
our other executive officers to participate in the EIP. Subject to our
stockholders approving the EIP, the Compensation Committee established
performance goals for the EIP participants. The 2006 EIP performance goal
includes a range of potential bonus payouts 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, “Adjusted
Pre-Tax Underwriting Income”
will
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 Code
Section 162(m)(4)(C). In 2006, each EIP award will be paid 75% in cash and
25% in restricted stock issued under the 2004 Stock Incentive Plan that cliff
vests in two years.
The
following table sets forth the maximum 2006 EIP award that would be payable
to
each NEO and the maximum 2006 EIP awards that would be payable to all current
executive officers as a group if Bristol West achieves the 2006 EIP performance
goal at the top end of the range and the Compensation Committee does not
exercise its discretion to reduce or eliminate the EIP award otherwise payable
to any participant. We have assumed for purposes of the following table that
salaries for the 2006 fiscal year remain as established by the Compensation
Committee on February 21, 2006, including the scheduled changes for Messrs.
Fisher, Dailey and Noonan effective July 1, 2006, as discussed above under
the
heading “Executive
Officers.”
Maximum
2006 Potential Awards Under the Bristol West Executive Officer Incentive
Plan
Name
and Position
|
|
Maximum
Total
EIP
Bonus
($)
|
|
Maximum
EIP
Cash
Bonus
Portion
($)
|
|
Maximum
EIP Restricted
Stock
Award
Portion
($)
|
|
|
|
|
|
|
|
|
|
James
R. Fisher
.............................................................................
|
|
$
630,000
|
|
$
472,500
|
|
$157,500
|
|
Chairman
and Chief Executive Officer
|
|
|
|
|
|
|
|
|
|
|
Jeffrey
J. Dailey
............................................................................
|
|
$
563,538
|
|
$
422,654
|
|
$140,885
|
|
President
and Chief Operating Officer
|
|
|
|
|
|
|
|
|
|
|
Simon
J. Noonan
..........................................................................
|
|
$
279,404
|
|
$
209,553
|
|
$
69,851
|
|
Executive
Vice President-Actuarial/Product
|
|
|
|
|
|
|
|
|
|
|
Craig
E. Eisenacher
......................................................................
|
|
$
245,933
|
|
$
184,450
|
|
$
61,483
|
|
Senior
Vice President-Chief Financial Officer
|
|
|
|
|
|
|
|
|
|
|
James
J. Sclafani, Jr
.....................................................................
|
|
$
179,253
|
|
$
134,440
|
|
$
44,813
|
|
Senior
Vice President-Claims
|
|
|
|
|
|
|
|
|
|
|
All
current executive officers as a group
................................
|
|
$3,329,862
|
|
$2,497,397
|
|
$832,466
|
|
All
current directors who are not executive officers as
a
group
........................................................................................
|
|
|
--
|
|
|
--
|
|
|
--
|
|
All
employees, including current officers who are not
executive
officers, as a group
..................................................
|
|
|
--
|
|
|
--
|
|
|
--
|
|
Recommendation
of the Board of Directors
Your
Board recommends that you vote FOR the proposal to approve the EIP.
Proxies
returned without instructions will be voted FOR the approval of the
EIP.
|
|
|
|
|
|
Appendices
|
|
|
|
|
|
Appendix
A
|
|
Categorical
Standards
|
Appendix
B
|
|
Audit
Committee Charter
|
Appendix
C
|
|
Bristol
West Executive Officer Incentive Plan
|
|
|
|
Appendix
A
Categorical
Standards
The
Categorical Standards 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.
|
Appendix
B
BRISTOL
WEST HOLDINGS, INC.
AUDIT
COMMITTEE OF
THE
BOARD OF DIRECTORS CHARTER
The
Audit
Committee’s (the “Committee”) purpose shall be to have direct responsibility for
those duties and responsibilities set forth in Section IV of this Charter,
as
well as any other duties and responsibilities delegated to the Committee
by the
Board of Directors from time to time.
II. |
STRUCTURE
AND OPERATIONS
|
Composition
and Qualifications
The
Committee shall be comprised of three or more members of the Board of Directors,
each of whom is determined by the Board of Directors to be “independent” under
the rules of the New York Stock Exchange, Inc. and the Sarbanes-Oxley Act.
No
member of the Committee may serve on the audit committee of more than three
public companies, including the corporation, unless the Board of Directors
(i)
determines that such simultaneous service would not impair the ability of
such
member to effectively serve on the Committee and (ii) discloses such
determination in the annual proxy statement.
All
members of the Committee shall have a working familiarity with basic finance
and
accounting practices (or acquire such familiarity within a reasonable period
after his or her appointment) and at least one member must be a “financial
expert” under the requirements of the Sarbanes-Oxley Act. Committee members may
enhance their familiarity with finance and accounting by participating in
educational programs conducted by the corporation or by an outside
consultant.
No
member
of the Committee shall receive compensation other than (i) director’s fees for
service as a director of the corporation, including reasonable compensation
for
serving on the Committee and regular benefits that other directors receive
and
(ii) a pension or similar compensation for past performance, provided that
such
compensation is not conditioned on continued or future service to the
corporation.
Appointment
and Removal
The
members of the Committee shall be appointed by the Board of Directors and
shall
serve until such member’s successor is duly elected and qualified or until such
member’s earlier resignation or removal. The members of the Committee may be
removed, with or without cause, by a majority vote of the Board of
Directors.
Chairman
Unless
a
Chairman is elected by the full Board of Directors, the members of the Committee
shall designate a Chairman by the majority vote of the full Committee
membership.
The
Chairman shall be entitled to cast a vote to resolve any ties. The Chairman
will
chair all regular sessions of the Committee and set the agendas for Committee
meetings.
The
Committee shall meet at least quarterly, or more frequently as circumstances
dictate. As part of its goal to foster open communication, the Committee
shall
periodically meet separately with each of management, the director of the
internal auditing department and the independent auditors to discuss any
matters
that the Committee or each of these groups believe would be appropriate to
discuss privately. In addition, the Committee should meet with the independent
auditors and management quarterly to review the corporation’s financial
statements in a manner consistent with that outlined in Section IV of this
Charter. The Chairman of the Board or any member of the Committee may call
meetings of the Committee. All meetings of the Committee may be held
telephonically.
All
non-management directors that are not members of the Committee may attend
meetings of the Committee but may not vote. Additionally, the Committee may
invite to its meetings any director, management of the corporation and such
other persons as it deems appropriate in order to carry out its
responsibilities. The Committee may also exclude from its meetings any persons
it deems appropriate in order to carry out its responsibilities.
IV. |
RESPONSIBILITIES
AND DUTIES
|
The
following functions shall be the common recurring activities of the Committee.
These functions should serve as a guide with the understanding that the
Committee may carry out additional functions and adopt additional policies
and
procedures as may be appropriate in light of changing business, legislative,
regulatory, legal or other conditions. The Committee shall also carry out
any
other responsibilities and duties delegated to it by the Board of Directors
from
time to time related to the purposes of the Committee outlined in Section
I of
this Charter.
The
Committee, in discharging its oversight role, is empowered to study or
investigate any matter of interest or concern that the Committee deems
appropriate. In this regard, the Committee shall have the authority to retain
outside legal, accounting or other advisors for this purpose, including the
authority to approve the fees payable to such advisors and any other terms
of
retention.
The
Committee shall be given full access to the corporation’s internal audit group,
Board of Directors, corporate executives and independent accountants as
necessary to carry out these responsibilities. While acting within the scope
of
its stated purpose, the Committee shall have all the authority of the Board
of
Directors.
Notwithstanding
the foregoing, the Committee is not responsible for certifying the corporation’s
financial statements or guaranteeing the auditor’s report. The fundamental
responsibility for the corporation’s financial statements and disclosures rests
with management and the independent auditors.
Documents/Reports
Review
1. |
Review
with management and the independent auditors prior to public dissemination
the corporation’s annual audited financial statements and quarterly
financial statements, including the corporation’s disclosures under
“Management’s Discussion and Analysis of Financial Condition and Results
of Operations” and a discussion with the independent auditors of the
matters required to be discussed by Statement of Auditing Standards
No.
61.
|
2. |
Review
and discuss with management and the independent auditors the corporation’s
earnings press releases (paying particular attention to the use of
any
“pro forma” or “adjusted” non-GAAP information), as well as financial
information and earnings guidance provided to analysts and rating
agencies. The Committee’s discussion in this regard may be general in
nature (i.e., discussion of the types of information to be disclosed
and
the type of presentation to be made) and need not take place in advance
of
each earnings release or each instance in which the corporation may
provide earnings guidance.
|
3. |
Perform
any functions required to be performed by it or otherwise appropriate
under applicable law, rules or regulations, the corporation’s by-laws and
the resolutions or other directives of the Board, including review
of any
certification required to be reviewed in accordance with applicable
law or
regulations of the SEC.
|
Independent
Auditors
4. |
Retain
and terminate independent auditors and approve all audit engagement
fees
and terms.
|
5. |
Inform
each registered public accounting firm performing work for the corporation
that such firm shall report directly to the
Committee.
|
6. |
Oversee
the work of any registered public accounting firm employed by the
corporation, including the resolution of any disagreement between
management and the auditor regarding financial reporting, for the
purpose
of preparing or issuing an audit report or related
work.
|
7. |
Approve
in advance any significant audit or non-audit engagement or relationship
between the corporation and the independent auditors, other than
“prohibited non-auditing services”.
|
The
following shall be “prohibited non-auditing services”: (i) bookkeeping or other
services related to the accounting records or financial statements of the
audit
client; (ii) financial information systems design and implementation; (iii)
appraisal or valuation services, providing fairness opinions or preparing
contribution-in-kind reports; (iv) actuarial services; (v) internal audit
outsourcing services; (vi) management functions or human resources; (vii)
broker
or dealer, investment adviser or investment banking services; (viii) legal
services and expert services unrelated to the audit; and (ix) any other service
that the Public Company Accounting Oversight Board prohibits through
regulation.
Notwithstanding
the foregoing, pre-approval is not necessary for minor audit services if:
(i)
the aggregate amount of all such non-audit services provided to the corporation
constitutes not more than five percent of the total amount of revenues paid
by
the corporation to its auditor during the fiscal year in which the non-audit
services are provided; (ii) such services were not recognized by the corporation
at the time of the engagement to be non-audit services; and (iii) such services
are promptly brought to the attention of the Committee and approved prior
to the
completion of the audit by the Committee or by one or more members of the
Committee who are members of the Board to whom authority to grant such approvals
has been delegated by the Committee. The Committee may delegate to one or
more
of its members the authority to approve in advance all significant audit
or
non-audit services to be provided by the independent auditors so long as
it is
presented to the full Committee at a later time.
8. |
Review,
at least annually, the qualifications, performance and independence
of the
independent auditors. In conducting its review and evaluation, the
Committee should:
|
(a) Obtain
and review a report by the corporation’s independent auditor describing: (i) the
auditing firm’s internal quality-control procedures; (ii) any material issues
raised by the most recent internal quality-control review, or peer review,
of
the auditing firm, or by any inquiry or investigation by governmental or
professional authorities, within the preceding five years, respecting one
or
more independent audits carried out by the auditing firm, and any steps taken
to
deal with any such issues; and (iii) to assess the auditor’s independence, all
relationships between the independent auditor and the corporation;
(b) Ensure
the rotation of the lead audit partner at least every five years, and consider
whether there should be regular rotation of the audit firm itself.
(c) Confirm
with any independent auditor retained to provide audit services for any fiscal
year that the lead (or coordinating) audit partner (having primary
responsibility for the audit), or the audit partner responsible for reviewing
the audit, has not performed audit services for the corporation in each of
the
five previous fiscal years of that corporation.
(d) Take
into
account the opinions of management and the corporation’s internal auditors (or
other personnel responsible for the internal audit function).
Financial
Reporting Process
9. |
In
consultation with the independent auditors, management and the internal
auditors, review the integrity of the corporation’s financial reporting
processes, both internal and external. In that connection, the Committee
should obtain and discuss with management and the independent auditor
reports from management and the independent auditor regarding: (i)
all
critical accounting policies and practices to be used by the corporation;
(ii) analyses prepared by management and/or the independent auditor
setting forth significant financial reporting issues and judgments
made in
connection with the preparation of the financial statements, including
all
alternative treatments of financial information within generally
accepted
accounting principles that have been discussed with the corporation’s
management, the ramifications of the use of the alternative disclosures
and treatments, and the treatment preferred by the independent auditor;
(iii) major issues regarding accounting principles and financial
|
|
statement
presentations, including any significant changes in the corporation’s
selection or application of accounting principles; (iv) major issues
as to
the adequacy of the corporation’s internal controls and any specific audit
steps adopted in light of material control deficiencies; and (v)
any other
material written communications between the independent auditor
and the
corporation’s management.
|
10. |
Review
periodically the effect of regulatory and accounting initiatives,
as well
as off-balance sheet structures, on the financial statements of the
corporation.
|
11. |
Review
with the independent auditor (i) any audit problems or other difficulties
encountered by the auditor in the course of the audit process, including
any restrictions on the scope of the independent auditor’s activities or
on access to requested information, and any significant disagreements
with
management and (ii) management’s responses to such matters. Without
excluding other possibilities, the Committee may wish to review with
the
independent auditor (i) any accounting adjustments that were noted
or
proposed by the auditor but were “passed” (as immaterial or otherwise),
(ii) any communications between the audit team and the audit firm’s
national office respecting auditing or accounting issues presented
by the
engagement and (iii) any “management” or “internal control” letter issued,
or proposed to be issued, by the independent auditor to the
corporation.
|
12. |
Review
and discuss with the independent auditor the responsibilities, budget
and
staffing of the corporation’s internal audit
function.
|
Legal
Compliance / General
13. |
Review
periodically, with the corporation’s counsel, any legal matter that could
have a significant impact on the corporation’s financial statements.
|
14. |
Discuss
with management and the independent auditors the corporation’s guidelines
and policies with respect to risk assessment and risk management.
The
Committee should discuss the corporation’s major financial risk exposures
and the steps management has taken to monitor and control such
exposures.
|
15. |
Set
clear hiring policies for employees or former employees of the independent
auditors. At a minimum, these policies should provide that any registered
public accounting firm may not provided audit services to the corporation
if the CEO, controller, CFO, chief accounting officer or any person
serving in an equivalent capacity for the corporation was employed
by the
registered public accounting firm and participated in the audit of
the
corporation within one year of the initiation of the current audit.
|
16. |
Establish
procedures for: (i) the receipt, retention and treatment of complaints
received by the corporation regarding accounting, internal accounting
controls, or auditing matters; and (ii) the confidential, anonymous
submission by employees of the corporation of concerns regarding
questionable accounting or auditing
matters.
|
17. |
Review
and approve all related party transactions to which the corporation
is a
party.
|
Reports
18. |
Prepare
all reports required to be included in the corporation’s proxy statement,
pursuant to and in accordance with applicable rules and regulations
of the
SEC.
|
19. |
Report
regularly to the full Board of Directors
including:
|
|
(i)
|
with
respect to any issues that arise with respect to the quality or
integrity
of the corporation’s financial statements, the corporation’s compliance
with legal or regulatory requirements, the performance and independence
of
the corporation’s independent auditors or the performance of the internal
audit function;
|
|
(ii)
|
following
all meetings of the Committee; and
|
|
(iii)
|
with
respect to such other matters as are relevant to the Committee’s discharge
of its responsibilities.
|
The
Committee shall provide such recommendations as the Committee may deem
appropriate. The report to the Board of Directors may take the form of an
oral
report by the Chairman or any other member of the Committee designated by
the
Committee to make such report.
20. |
Maintain
minutes or other records of meetings and activities of the Committee.
|
V. |
ANNUAL
PERFORMANCE EVALUATION
|
The
Committee shall perform a review and evaluation, at least annually, of the
performance of the Committee and its members, including by reviewing the
compliance of the Committee with this Charter. In addition, the Committee
shall
review and reassess, at least annually, the adequacy of this Charter and
recommend to the Board of Directors any improvements to this Charter that
the
Committee considers necessary or valuable. The Committee shall conduct such
evaluations and reviews in such manner as it deems appropriate.
10/05
Revision
Appendix
C
BRISTOL
WEST HOLDINGS, INC.
EXECUTIVE
OFFICER INCENTIVE PLAN
As
Adopted by the Board of Directors on February 21, 2006
The
purpose of the Plan 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 Holdings, Inc. (the “Company”)
and
its affiliates and operating units. The Plan aims to align
the
interests of management and the Company towards the completion of the Company’s
strategic objectives, while providing incentives to constantly expand the
Company’s earning power. The
Plan
also seeks to have direct ties to the Company’s business plan and encourage
teamwork in accomplishing Company goals. The Plan is designed to preserve
the
income tax deductibility of incentives paid hereunder to Company executive
officers who are subject to the limitations of Section 162(m) of the Internal
Revenue Code of 1986, as amended, and the regulations and interpretations
promulgated thereunder (the “Code”).
Accordingly, the adoption of the Plan is subject to the approval of the
Company’s stockholders pursuant to Code Section 162(m).
The
following definitions shall be applicable throughout the Plan:
(a) “Award”
means
the amount of bonus payable under the Plan to a Participant with respect
to a
Fiscal Year.
(b) “Board”
means
the Board of Directors of the Company.
(c) “Business
Plan”
means
the Company’s Business Plan as approved by the Board from time to time (but in
no event later than 90 days after the commencement of the applicable Fiscal
Year).
(d) “Committee”
means
the Compensation Committee of the Board or another Committee designated by
the
Board that is comprised of two or more “outside directors” as defined in Code
Section 162(m).
(e) “Covered
Employees”
means
those persons who are (or who in the Committee’s sole discretion may become)
subject to the limitations of Code Section 162(m).
(f) “Fiscal
Year”
means
the Company's fiscal year.
(g) “Individual
Bonus Target”
means
a
Participant’s incentive target with respect to a Fiscal Year.
(h) “Participant”
means
each Covered Employee and any officer or key employee of the Company who
is
designated as a Participant by the Committee.
(i) “Performance
Goals”
means
one or more objective measurable performance factors as determined by the
Committee with respect to each Fiscal Year based upon one or more factors,
including, but not limited to: (1) gross written premium; (2) net
written premium; (3) underwriting income; (4) operating income;
(5) earnings (including earnings before interest and taxes (EBIT), earnings
before interest, taxes, depreciation and amortization (EBITDA), and earnings
before interest, taxes, depreciation and amortization and other non-cash
items);
(6) net income; (7) cash flow; (8) loss ratio; (9) expense
ratio; (10) combined ratio; (11) return on equity; (12) return on
assets; (13) earnings or net income per share; (14) book value or book
value per share; and/or (15) stock price, each with respect to the Company
and/or one or more of its affiliates or operating units. For purposes of
the
Plan, such criteria may be measured by comparing actual results in a current
period to either or both of the following: (i) comparable estimates in the
Business Plan, or (ii) comparable actual results in prior
periods.
(j) “Plan”
means
this Bristol West Holdings, Inc. Executive Officer Incentive Plan, as amended
from time to time.
The
Plan
shall be administered by the Committee, which shall have the discretionary
authority to interpret the provisions of the Plan and to take any actions
and
make any other determinations that it deems necessary or desirable for the
administration of the Plan to the extent any such action would be permitted
under Code Section 162(m), including, without limitation, all decisions on
eligibility to participate, participation, the establishment of payment targets
and the amount and terms of the Awards payable under the Plan. The decisions
of
the Committee shall be final and binding on all parties making claims under
the
Plan.
Officers
and key employees of the Company shall be eligible to participate in the
Plan as
determined at the sole discretion of the Committee.
With
respect to each Participant, the Committee will establish the Participant’s
Individual Bonus Target for the Fiscal Year and the Participant’s Performance
Goal or Goals for the Fiscal Year (increased or decreased, in each case in
accordance with factors adopted by the Committee with respect to the Fiscal
Year
that relate to unusual or extraordinary items). With respect to each
Participant, the Committee will also determine whether the terms and conditions
underlying the payment of the Participant’s Award have been satisfied. The
selection and adjustment of applicable Performance Goals and Individual Bonus
Targets and determination of Awards for Participants shall be made in compliance
with the rules of Code Section 162(m). The maximum amount of any Awards that
can
be paid under the Plan to any Participant during any Fiscal Year is $1,000,000.
The Committee reserves the right, in its sole discretion, to reduce or eliminate
the amount of an Award otherwise payable to a Participant with respect to
any
Fiscal Year in its sole discretion.
(a) Unless
otherwise determined by the Committee, a Participant must be on the Company’s
payroll on the date the Award is to be paid. The Committee may make exceptions
to this requirement in the case of retirement, death or disability or under
other circumstances, as determined by the Committee in its sole
discretion.
(b) Payments
of Awards may be made (i) in cash; and/or (ii) in the form of any award
available under the Bristol West Holdings, Inc. 2004 Stock Incentive Plan
as it
may be replaced, modified, amended or supplemented from time to time (the
“Stock
Incentive Plan”),
as
determined by the Committee in its sole discretion. The number of shares
underlying any award granted under the Stock Incentive Plan shall be determined
by dividing the applicable cash amount to be converted into a stock award
by the
fair market value of the shares on the applicable grant date. Fair market
value
for such purpose shall be determined based on any objective and appropriate
method determined by the Committee in its sole discretion.
(c) Any
distribution or payment made under the Plan shall occur within a reasonable
period of time after the end of the Fiscal Year in which the Participant
has
earned the Award (but in no event later than two and one-half months following
the Fiscal Year in which the Award is no longer subject to a substantial
risk of
forfeiture as determined under Code Section 409A and all applicable guidance
and
Treasury regulations); provided, that no Award shall become payable to a
Participant with respect to any Fiscal Year until the Committee has certified
in
writing (in the manner prescribed under applicable regulations under Code
Section 162(m)) that the terms and conditions underlying the payment of
such Award have been satisfied. The Committee, in its sole discretion, may
permit a Participant to defer receipt of cash that would otherwise be delivered
to the Participant under the Plan. Any such deferral elections shall be subject
to such rules and procedures as determined by the Committee in its sole
discretion.
(d) If
a
Participant entitled to the payment of an Award under the Plan dies prior
to the
distribution of such Award, the distribution shall be made to the Participant’s
beneficiary or legal representative in accordance with Section 7(d) of the
Plan within the same time period in which the Award otherwise would have
been
paid to the Participant.
(a) TAX
WITHHOLDING. The Company shall have the right to deduct from all Awards paid
in
cash any federal, state or local income and/or payroll taxes required by
law to
be withheld with respect to such payments. In the case of Awards settled
by an
award granted under the Stock Incentive Plan, the terms of the Stock Incentive
Plan regarding tax withholding shall govern or, if the Stock Incentive Plan
does
not address tax withholding, the person receiving such common stock may be
required to pay to the Company the amount of any such taxes which the Company
is
required to withhold with respect to such common stock or, at the Committee’s
sole discretion, the Company may withhold a number of shares of Company common
stock which have a fair market value equal to the amount of such withholdings.
The Company also may withhold from any other amount payable by the Company
or
any affiliate to the Participant an amount equal to the taxes required to
be
withheld from any Award.
(b) CLAIM
TO
AWARDS AND EMPLOYMENT RIGHTS. Nothing in the Plan shall confer on any
Participant the right to continued employment with the Company or any of
its
affiliates, or affect in any way the right of the Company or any affiliate
to
terminate the Participant’s employment at any time, and for any reason, or
change the Participant’s responsibilities. Awards represent unfunded and
unsecured obligations of the Company and a holder of any right hereunder
in
respect of any Award shall have no rights other than those of a general
unsecured creditor to the Company.
(c) BENEFICIARIES.
To the extent the Committee permits beneficiary designations, any payment
of
Awards due under the Plan to a deceased Participant shall be paid to the
beneficiary duly designated by the Participant in accordance with the Company’s
practices. If no such beneficiary has been designated or survives the
Participant, payment shall be made to the Participant’s legal representative. A
beneficiary designation may be changed or revoked by a Participant at any
time,
provided the change or revocation is filed with the Company prior to the
Participant’s death.
(d) NONTRANSFERABILITY.
A person’s rights and interests under the Plan, including any Award previously
made to such person or any amounts payable under the Plan, may not be assigned,
pledged, or transferred except, in the event of a Participant’s death, to a
designated beneficiary as provided in the Plan, or in the absence of such
designation, by will or the laws of descent and distribution.
(e) INDEMNIFICATION.
Each person who is or shall have been a member of the Committee and each
employee of the Company or an affiliate who is delegated a duty under the
Plan
shall be indemnified and held harmless by the Company from and against any
loss,
cost, liability or expense that may be imposed upon or reasonably incurred
by
him in connection with or resulting from any claim, action, suit or proceeding
to which he may be a party or in which he may be involved by reason of any
action or failure to act under the Plan and against and from any and all
amounts
paid by him in satisfaction of judgment in any such action, suit or proceeding
against him, provided such loss, cost, liability or expense is not attributable
to such person’s willful misconduct. Any person seeking indemnification under
this provision shall give the Company prompt notice of any claim and shall
give
the Company an opportunity, at its own expense, to handle and defend the
same
before the person undertakes to handle and defend it on his own behalf. The
foregoing right of indemnification shall not be exclusive of any other rights
of
indemnification to which such persons may be entitled under the Company’s
Certificate of Incorporation or Bylaws, as a matter of law, or otherwise,
or any
power that the Company may have to indemnify them or hold them
harmless.
(f) EXPENSES.
The expenses of administering the Plan shall be borne by the
Company.
(g) PRONOUNS.
Masculine pronouns and other words of masculine gender shall refer to both
men
and women.
(h) TITLES
AND HEADINGS. The titles and headings of the sections in the Plan are for
convenience of reference only, and in the event of any conflict, the text
of the
Plan, rather than such titles or headings, shall control.
(i) INTENT.
The intention of the Company and the Committee is to administer the Plan
in
compliance with Code Section 162(m) so that the Awards paid under the Plan
to
Covered Employees will be treated as performance-based compensation under
Code
Section 162(m)(4)(C). If any provision of the Plan applicable to Covered
Employees does not comply with the requirements of Code Section 162(m), then
such provision shall be construed or deemed amended to the extent necessary
to
conform to such requirements. The Company and/or the Committee, in their
sole
discretion, may pay bonuses outside of and independent of the Plan to any
Participant.
(j) GOVERNING
LAW. The validity, construction, and effect of the Plan, any rules and
regulations relating to the Plan, and any Award shall be determined in
accordance with the laws of the State of Delaware (without giving effect
to
principles of conflicts of laws thereof) and applicable Federal
law.
(k) AMENDMENTS
AND TERMINATION. The Board may terminate the Plan at any time, provided such
termination shall not affect the payment of any Awards accrued under the
Plan
prior to the date of the termination. The Board may, at any time, or from
time
to time, amend or suspend and, if suspended, reinstate, the Plan in whole
or in
part, provided however, that any amendment of the Plan shall be subject to
the
approval of the Company’s stockholders to the extent required to comply with the
requirements of Code Section 162(m), or any other applicable laws, regulations
or rules.
BRISTOL
WEST HOLDINGS, INC.
PROXY
FOR
ANNUAL MEETING OF STOCKHOLDERS MAY 19, 2006
SOLICITED
BY THE BOARD OF DIRECTORS
The
stockholder(s) whose signature(s) appear(s) on the reverse side of this Proxy
Card hereby appoints James R. Fisher, Chief Executive Officer and Chairman
of
the Board, Jeffrey J. Dailey, President and Chief Operating Officer, and Craig
E. Eisenacher, Chief Financial Officer, the proxies, and each of them (with
power to act without the others and with power of substitution) the proxy of
the
stockholder(s), for and in the name of the stockholder(s), to vote at the Annual
Meeting of Stockholders of Bristol West Holdings, Inc., (the “Meeting”) to be
held at Bristol West Holdings, Inc., 5701 Stirling Road, Davie, Florida
33314, on the 19th
day of
May, 2006 at 1:30 p.m., and at any adjournment thereof, the shares of stock
which the stockholder(s) would be entitled to vote if personally
present.
The
stockholder(s) hereby ratifies all actions of said proxies, or any of them,
or
their or his substitutes or substitute by virtue hereof; and hereby revokes
any
authorization to vote such shares heretofore given by the stockholder(s) to
anyone. The undersigned hereby acknowledges receipt of the Notice of Annual
Meeting of Stockholders dated April 24, 2006, and the Proxy Statement furnished
therewith.
This
proxy will be voted as directed, or, if the stockholder(s) fails to specify
herein how this proxy is to be voted, this proxy shall be voted “FOR” proposals
(1), (2) and (3) and in the discretion of the proxy holders with respect to
any
other matter.
(over)
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BRISTOL
WEST HOLDINGS, INC.
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P.O.
BOX 11364
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NEW
YORK, NY 10203-0364
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▼DETACH
PROXY CARD HERE▼
Sign,
Date and Return the Proxy Card Promptly Using the Enclosed
Envelope.
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x
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Votes
MUST be indicated
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(x)
in Black or Blue
ink.
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BOARD
OF DIRECTORS RECOMMENDS VOTES “FOR”
PROPOSALS (1), (2) and (3).
1.
SELECTION OF DIRECTORS:
VOTE
FOR ALL NOMINEES o
WITHHOLD
ALL o
FOR
ALL EXCEPT o
Nominees:
01-
James R. Fisher, 02-R. Cary Blair, 03- Jeffrey J.
Dailey, 04-Richard T. Delaney, 05-Todd A. Fisher, 06-Perry Golkin,
07-Mary R. Hennessy, 08-Eileen Hilton, 09-James N. Meehan, 10-Arthur
J. Rothkopf
INSTRUCTIONS:
To withhold authority to vote for any individual nominee, mark
“For All
Except” and write the nominee’s number on the line
below.
FOR
ALL EXCEPT___________________________________
_________________________________________________
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2.
THE RATIFICATION OF THE SELECTION OF
DELOITTE
& TOUCHE LLP AS INDEPENDENT
AUDITOR FOR 2006.
3.
APPROVAL
OF THE
BRISTOL
WEST
EXECUTIVE OFFICER INCENTIVE PLAN.
To
change your address, please mark this box.
o
Attend
Meeting mark here.
o
In
their discretion, the Proxies are authorized to vote upon all other
business that may properly come before the Meeting with all the
powers the
undersigned would possess if personally present.
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FOR
o
o
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AGAINST
o
o
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ABSTAIN
o
o
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NOTE:
The signature(s) should correspond with the name of the stockholder(s)
as
it appears hereon
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Date
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Stockholder
sign here
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Co-owner
sign here
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