UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant (X)
Filed by a Party other than the Registrant ( )
Check the appropriate box:
( ) Preliminary Proxy Statement ( ) Confidential, for use of the
Commission Only (as permitted
by Rule 14a-6(e)(2))
(X) Definitive Proxy Statement
( ) Definitive Additional Materials
( ) Soliciting Material Pursuant to
Section 240.14a-11(c) or
Section 240.14a-12
ALFA CORPORATION
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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)
Payment of Filing Fee (Check the appropriate box):
(X) No fee required
( ) Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies: N/A
--------
2) Aggregate number of securities to which transaction applies: N/A
---------
3) 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):
4) Proposed maximum aggregate value of transaction: N/A
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5) Total fee paid: N/A
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( ) Fee paid previously with preliminary materials.
( ) Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid: N/A
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2) Form, Schedule or Registration Statement No.: N/A
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3) Filing Party: N/A
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4) Date Filed: N/A
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Notes:
[LOGO]
ALFA
CORPORATION
Alfa Corporation
P. O. Box 11000
Montgomery, Alabama 36191-0001
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To the Stockholders of Alfa Corporation:
Notice is hereby given that the Annual Meeting of the stockholders of Alfa
Corporation will be held at the Executive Offices of the Company, 2108 East
South Boulevard, Montgomery, Alabama, on April 25, 2002, at 10:00 a.m., for the
purpose of considering and acting upon the following:
(1) To elect a Board of Directors to serve until the next annual meeting of
stockholders.
(2) To receive the report of officers (without taking any action thereon)
and to transact such other business as may properly come before the
meeting or any adjournment thereof.
The close of business on March 14, 2002, has been fixed as the record date
for determination of stockholders entitled to notice of and to vote at the
Annual Meeting of Stockholders. The stock transfer books of the Company will
not be closed.
The Company's Proxy Statement is submitted herewith, together with the
Annual Report for the Year ended December 31, 2001.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ H. AL SCOTT
H. Al Scott
Secretary
DATED: March 21, 2002
YOUR VOTE IS IMPORTANT
YOU ARE URGED TO DATE, SIGN AND PROMPTLY RETURN YOUR PROXY SO THAT YOUR
SHARES MAY BE VOTED IN ACCORDANCE WITH YOUR WISHES AND IN ORDER THAT THE
PRESENCE OF A QUORUM MAY BE ASSURED. THE GIVING OF SUCH PROXY DOES NOT AFFECT
YOUR RIGHT TO VOTE IN PERSON IN THE EVENT YOU ATTEND THE MEETING.
Alfa Corporation
P. O. Box 11000
Montgomery, Alabama 36191-0001
-------------------
PROXY STATEMENT
-------------------
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON APRIL 25, 2002
This proxy statement is furnished to the stockholders of Alfa Corporation
(the "Company") in connection with the solicitation of proxies on behalf of
management of the Company for use only at the annual meeting of stockholders to
be held on April 25, 2002, and any and all adjournments thereof.
If the enclosed proxy form is properly executed and received by the Company
prior to the vote taken at such meeting, shares represented thereby will be
voted in the manner thereon, and in the absence of specification will be voted
FOR the election of all management nominees for directors. If no instructions
are given, proxies will also be voted in accordance with the discretion of the
proxy holders as to any shareholder proposal that may come before the meeting
provided that the Company did not have notice of the proposal at least 45 days
before March 21, 2002. If any of the management nominees should become
unavailable to serve at the time of the meeting, the shares represented by the
proxies not withholding authority will be voted for the remaining management
nominees and for any substitute nominee (or nominees, as the case may be)
designated by the Board of Directors or in the absence of such designation by
the Board of Directors in accordance with the judgment of the persons holding
such proxies. Management has no reason to believe that any management nominee
will be unable or unwilling to serve as director if elected. The Company will
bear the cost arising in connection with this solicitation. Abstentions and
broker non-votes are each included in the determination of the number of shares
present and voting. Each is tabulated separately. Abstentions are counted in
tabulations of the votes cast on proposals presented to shareholders, whereas
broker non-votes are not counted for purposes of determining whether a proposal
has been approved.
REVOCABILITY OF PROXY
The stockholder giving the enclosed proxy for voting the shares thereby
represented has the power to revoke it at any time before it is exercised. The
proxy may be revoked by executing a subsequently dated proxy, or by other
written notice delivered to the Secretary of the Company, or by attendance at
the stockholders meeting and giving notice to the Secretary or inspector
appointed for the meeting of his intention to revoke the proxy. The executive
offices of the Company are located at 2108 East South Boulevard, P. O. Box
11000, Montgomery, Alabama 36191-0001.
1
VOTING SECURITIES AND PRINCIPAL HOLDERS
All of the outstanding capital stock of the Company is $1.00 par value
common stock. Each share is entitled to one vote. At the close of business on
March 1, 2002, there were 39,231,878/1/ shares of stock outstanding and
entitled to vote. Stockholders entitled to vote in person or by proxy are
stockholders of record at the close of business on March 14, 2002.
The following table contains information concerning anyone known by the
Company to be beneficial owner of more than 5% of the Company's outstanding
common shares as of March 1, 2002.
Number of
Name and Address Shares Owned Percent
---------------- ------------ -------
Alfa Mutual Ins. Co.
P. O. Box 11000
Montgomery, AL 36191.... 16,234,988 41.38
Alfa Mutual Fire Ins. Co.
P. O. Box 11000
Montgomery, AL 36191.... 4,128,336 10.52
PROPOSAL 1
ELECTION OF DIRECTORS
The By-laws call for the election of directors annually. Accordingly, all of
the directors of the Company will stand for election.
All nominees of management for election as directors currently serve as
directors of the Company.
Vote Required: The affirmative vote of the holders of a majority of the
Common Stock represented by proxy or in person at the meeting at which a quorum
is present shall be required for the election of directors. Proxies solicited
by Management will be voted FOR the election of management nominees for
directors, unless specified to the contrary in such proxies.
Your Board of Directors recommends that you vote FOR the election of
management nominees for directors.
The following table sets forth as of March 1, 2002 information concerning
each of the nominees' present offices and positions held with the Company, his
principal occupation or employment during the last five years, the date he
first became a director, directorships in other publicly held companies, and
the approximate number of shares beneficially owned by each of them. The
information presented below as to principal occupations and shares of stock
beneficially owned is as of March 1, 2002 and is based in part on information
received from the respective nominees and in part from the records of the
Company. The current term of each of the directors expires at the annual
meeting when their successors are elected.
--------
/1/ There are an additional 8,000 shares outstanding issued to Alfa Life
Insurance Corporation (ALIC), a subsidiary of the Company, upon
organization of the Company, which are not entitled to be voted or counted
for quorum purposes as long as they are owned by ALIC.
2
Stock Beneficially Owned
Since March 1, 2001
Positions with Company, Director -------------------------------
Nominee Age Business & Directorship Since Directly Indirectly/1/ Percent
------- --- --------------------------------- -------- --------- ------------- -------
Jerry A. Newby/3/........ 54 Chairman of the Board 1993 104,012 20,555,042/2/ 52.66
& President and CEO;
President of Alabama Farmers
Federation and farmer
Hal F. Lee/3,4,5/........ 57 Farmer 1998 1,426 4,000 .01
Russell R. Wiggins/3,4,5/ 52 Farmer 1999 6,223 .02
Dean Wysner/3,4/......... 55 Farmer 2000 544 .00
Steve Dunn/3,4/.......... 45 Farmer 2000 612 .00
James A. Tolar, Jr./3,4/. 67 Farmer 1983 3,000 .00
B. Phil Richardson/3,4,5/ 76 Retired (04-01-97) Ex. V. P. of 1983 175,176 .45
Operations Alfa Insurance
Group
Boyd E. Christenberry.... 73 Retired (01-31-93) Executive 1983 232,579 60,462 .75
Vice President of Marketing
Alfa Insurance Group
John R. Thomas/3,4/...... 64 Chairman, President & Chief 1989 8,886 .02
Executive Officer of Aliant
Financial Corp. of Alexander
City, Alabama. Director: Aliant
Financial Corp., Russell
Corporation, Aliant Bank
James I. Harrison, Jr.... 69 Chairman and CEO, Carport, Inc. 1995 6,864 .02
C. Lee Ellis............. 50 Executive Vice President, 1999 167,121 12,623 .46
Operations; Director NAII
Wayne Hawkins/6/......... 64 Executive Vice President, 57,058 1,288 .15
Marketing; Board, Jacksonville
State University
Stephen G. Rutledge/6/... 43 Sr. Vice President, CFO & Chief 47,527 5,031 .13
Investment Officer
John T. Jung/6/.......... 55 Sr. Vice President & CIO 23,149 60 .06
Directors and Officers as a Group 1,174,995 20,684,172 55.72
(24 persons)
--------
/1/ Indirect beneficial ownership includes shares, if any, (a) owned as
Trustees in which the Director or officer or any member of his/her
immediate family has a beneficial interest, or (b) held in trust in which
the Director or officer has a beneficial interest, or (c) owned and traded
in the name of the spouse, minor children or other relative of the Director
or officer living in his home, or (d) owned by a corporation, partnership
or other legal organization in which the Director or officer has a
substantial beneficial interest, or (e) held in a 401(K) Plan Account
maintained by Alfa Mutual Insurance Company to which shares the Officer has
no right to vote or to direct when and under what price, terms, or
conditions said shares are purchased in said account.
/2/ Includes 16,234,988 shares owned by Alfa Mutual Insurance Company,
4,128,336 shares owned by Alfa Mutual Fire Insurance Company and 143,650
shares owned by Alfa Mutual General Insurance Company of which he is
Chairman of the Board and President and has voting and investment authority.
/3/ Member, Executive Committee.
3
/4/ Member, Compensation Committee.
/5/ Member, Audit Committee.
/6/ Executive Officer of the Company but not a director and not a nominee for
director.
Directors who are not salaried employees of the Company or its subsidiaries
receive a monthly retainer of $1,550. They also receive a fee of $800 per day,
plus reasonable expenses for attending a board meeting or committee meeting.
Salaried employees do not receive any fees but are reimbursed all reasonable
expenses incurred in attending meetings. When the director is also a director
of an associated Company that meets contemporaneously with the board or
committee of the Company, such fees and expenses may be shared. The full Board
of Directors met 11 times during 2001.
The Executive Committee during 2001 consisted of Directors Newby, Lee,
Wiggins, Wysner, Tolar, Dunn, Richardson and Thomas. The Executive Committee
confers informally with the President of the Company on a regular basis
concerning important business issues. The Executive Committee met five times
during 2001.
The Audit Committee which during 2001 consisted of Directors Lee, Richardson
and Wiggins met seven times.
The responsibility of the Audit Committee is to monitor, oversee and approve
the activities of the external and internal audit functions, to make
appropriate reviews of all related party transactions of the Company, to review
potential conflicts of interest situations where appropriate and to perform
other oversight functions as requested by the Board of Directors. The Audit
Committee is directed to render reports of its meetings and any actions or
recommendations to the Board of Directors.
The Compensation Committee during 2001 consisted of Directors Lee, Wiggins,
Wysner, Tolar, Dunn, Richardson and Thomas. The duty of the Compensation
Committee is to review compensation reimbursed by the Company to Alfa Mutual
Insurance Company under the Management and Operating Agreement and to provide
such reports as are necessary to comply with the Securities and Exchange
Commission Rules regarding executive compensation. The Compensation Committee
met one time in 2001.
During 2001 all directors except Director Harrison attended at least 75% of
the meetings of the Board. All members of the Compensation and Audit Committees
attended at least 75% of the meetings of these respective committees. All
members of the Executive Committee except Director Thomas attended at least 75%
of the meetings.
4
EXECUTIVE COMPENSATION
The Company's executive officers are employees of Alfa Mutual Insurance
Company (AMIC) and the Company pays no compensation directly to them. The
Company is a party to a Management and Operating Agreement with AMIC under
which it reimburses AMIC for allocated compensation costs incurred by AMIC in
furnishing management and operational services to the Company.
The following table shows the compensation reimbursed to AMIC for the
Company's chief executive officer and the four remaining most highly
compensated executive officers for the three fiscal years ended December 31,
2001, 2000 and 1999.
EXECUTIVE COMPENSATION TABLE
Long Term
Base Other Annual Compensation All Other
Year Name - Position Salary Bonus Compensation/1/ Options Compensation/2/
---- --------------- -------- -------- -------------- ------------ --------------
2001 Jerry A. Newby........... $249,268 $316,197 $0 30,000 $3,740
2000 CEO and President $236,019 $298,299 $0 30,000 $3,740
1999 $220,704 $235,400 $0 30,000 $ 550
2001 C. Lee Ellis............. $217,660 $258,232 $0 25,000 $5,015
2000 EVP-Operations $198,190 $247,001 $0 25,000 $5,015
1999 $183,676 $197,281 $0 25,000 $ 738
2001 C. Wayne Hawkins*........ $158,230 $135,324 $0 20,000 $5,015
2000 EVP-Marketing $128,339 $ 75,572 $0 7,500 $5,015
1999 $121,488 $ 48,917 $0 7,500 $ 738
2001 Stephen G. Rutledge**.... $155,910 $115,343 $0 15,000 $5,015
2000 SVP-CFO and $145,103 $110,183 $0 12,000 $5,015
1999 Chief Investments Officer $123,464 $ 51,153 $0 7,500 $ 738
2001 John T. Jung............. $151,659 $ 86,591 $0 7,500 $5,015
2000 SVP-CIO $149,603 $ 85,914 $0 7,500 $ 0
1999 $ 27,816 $ 57,525 $0 8,000 $ 0
--------
* Mr. Hawkins was Senior Vice President of Marketing at December 31, 1999.
During 2000, Mr. Hawkins was promoted to Executive Vice President of
Marketing.
** Mr. Rutledge was Senior Vice President of Investments at December 31, 1999.
During 2000, Mr. Rutledge was promoted to Senior Vice President - CFO and
Chief Investment Officer.
/1/ Perquisites, tax gross ups and other in excess of $50,000 or 10% of salary
and bonus.
/2/ Includes amounts reimbursed to AMIC as its share of the cost of AMIC's
matching contribution to a 401(K) Plan maintained by AMIC. The maximum
matching contribution out of the 401(K) Plan maintained by AMIC for 2001
was dollar for dollar on the first 3% and fifty cents on the dollar for
the next 2% of an employee's annual compensation up to a maximum of $6,800
or dollar for dollar up to a maximum of $1000, whichever match provides
the greater benefit.
The Company's executive officers are participants as employees of AMIC in a
defined benefit plan maintained by AMIC. AMIC's retirement plan provides
monthly benefits payable upon normal retirement at age 65 equal to the sum of
2% of the employee's average monthly earnings for the five highest consecutive
complete calendar years of earnings during his last ten years of employment
(all calendar years if less than five) multiplied by the number of years of
credited service (up to a maximum of 35 years). Under AMIC's retirement plan
there
5
is no deduction for social security. With respect to the executives named in
the Summary Compensation Table, their years of credited service for retirement
purposes are: Jerry A. Newby 2 years, C. Lee Ellis 25 years, Wayne Hawkins 35
years, Stephen G. Rutledge 16 years, and John Jung 1 year.
AMIC maintains a Supplemental Retirement Plan to provide supplementary
benefits to each employee equal to the reduction of their defined benefit plan
benefits because of limitations provided by Section 401(a)(17) of the Internal
Revenue Code.
The following table shows the maximum estimated annual retirement benefit
payable from the Defined Benefit Plan and the Supplemental Retirement Plan at
normal retirement age to employees in the higher salary classifications:
Years of Service
- ---------------------------------------
Renumeration 15 20 25 30 35
------------ ------- ------- ------- ------- -------
150,000 45,000 60,000 75,000 90,000 105,000
200,000 60,000 80,000 100,000 120,000 140,000
250,000 75,000 100,000 125,000 150,000 175,000
300,000 90,000 120,000 150,000 180,000 210,000
350,000 105,000 140,000 175,000 210,000 245,000
400,000 120,000 160,000 200,000 240,000 280,000
450,000 135,000 180,000 225,000 270,000 315,000
500,000 150,000 200,000 250,000 300,000 350,000
550,000 165,000 220,000 275,000 330,000 385,000
The following table lists all grants of options in 2001 under the 1993 Stock
Incentive Plan for the officers listed in the Summary Compensation Table.
OPTION GRANTS IN LAST FISCAL YEAR
Individual Grants
----------------------
Potential Realizable
Number of % of Total Value at Assumed Annual
Securities Options Rates of Stock Price
Underlying Granted to Exercise Appreciation
- Options Employees in Price Expiration ------------------------
Granted Fiscal Year ($/Share) Date 0% ($) 5% ($) 10% ($)
- ---------- ------------ --------- ---------- ------ -------- --------
Jerry A. Newby..... 30,000 14.851% $18.8125 03/26/11 $0 $354,932 $899,468
C. Lee Ellis....... 25,000 12.376% $18.8125 03/26/11 $0 $295,777 $749,557
C. Wayne Hawkins... 20,000 9.901% $18.8125 03/26/11 $0 $236,622 $599,646
Stephen G. Rutledge 15,000 7.426% $18.8125 03/26/11 $0 $177,466 $449,734
John T. Jung....... 7,500 3.713% $18.8125 03/26/11 $0 $ 88,733 $224,867
The above option grants were approved on March 26, 2001. The grants were
made as non-qualified options under the plan.
6
The following table lists the aggregated fiscal year-end option values as of
December 31, 2001.
AGGREGATED FISCAL YEAR-END OPTION VALUES
Number of
Securities
Underlying
Unexercised Value of
Options at Unexercised
Shares Fiscal In-the-Money
Acquired Year-End (#) Options at Fiscal
on Value Exercisable/ Year-End ($)
Name Exercise (#) Realized ($) Unexercisable Exercisable/Unexercisable
---- ------------ ------------ ------------- -------------------------
Jerry A. Newby..... 0 $ 0 30,000/60,000 $171,325/$271,400
C. Lee Ellis....... 0 $ 0 85,001/49,999 $800,026/$226,161
C. Wayne Hawkins... 0 $ 0 13,500/27,500 $ 96,671/$113,194
Stephen G. Rutledge 0 $ 0 27,000/25,500 $233,111/$111,376
John T. Jung....... 0 $ 0 7,834/15,166 $ 41,502/$67,180
7
Notwithstanding anything to the contrary set forth in any of the Company's
previous filings under the Securities Act of 1933, as amended, or the Exchange
Act that might incorporate future filings, including this Proxy Statement, in
whole or in part, the following report and the Performance Graph shall not be
incorporated by reference into any such filings.
REPORT OF THE COMMITTEE ON EXECUTIVE COMPENSATION
The following report was prepared by the Compensation Committee of the Board
of Directors which reviewed all items of executive compensation as shown in
this Proxy Statement. The Committee is of the opinion that the Company's
objective should be to provide incentives to encourage all the Company's
Executive Officers and other employees to perform at the highest level.
The Company has no direct employees and pays no compensation directly to any
of the Executive Officers of the Company. AMIC is the statutory employer of all
persons providing services to the Company. AMIC owns approximately 41% of the
outstanding common stock of the Company. The Company and AMIC are parties to a
Management and Operating Agreement whereby AMIC provides management and
operational services to the Company including the use of employees. The Company
reimburses AMIC for the allocated costs and expenses of those services,
including compensation costs as well as other operational expenses. AMIC
periodically conducts allocation studies of the usage of facilities and
personnel to determine the amount of costs and expenses to be charged to the
Company. The Company's Property and Casualty insurance subsidiaries and AMIC
are also parties to a Pooling Agreement where certain costs and expenses are
pooled on a percentage basis.
AMIC uses the services of Hay Associates Compensation and Management
Consultants to assist it in establishing compensation guidelines and amounts.
Compensation ranges are established based on comparisons to various industry
and outside consultant salary surveys. AMIC generally attempts to establish
compensation within the same range as the surveys to which it compares.
Salary ranges are established for each job and compensation is based on
these ranges. Job descriptions are prepared for each job within the Company and
these are used to develop compensation criteria for each particular job. All
employees including Executive Officers of the Company are evaluated annually.
Increases in compensation are based on these evaluations.
The Chief Executive Officer is evaluated by the Board of Directors each
year. The Chief Executive Officer is evaluated on the overall performance of
the Company and all of its subsidiaries. The Board evaluates the Chief
Executive Officer on a broad range of factors relative to the Company's
financial strength and performance. This includes comparing the Company's
performance to other companies engaged in insurance and financial services. All
of these factors are given relatively equal weight by the Board in evaluating
the Chief Executive Officer's compensation.
The Company achieved record earnings in 2001. All of the Company's
subsidiaries were profitable for the year. The Company continued its effort to
control loss ratios and expenses. The Company also continued the implementation
of new technology in order to provide a higher level of service to customers.
8
The Company compares itself to a peer group of other insurance and financial
institutions. These comparisons were favorable in 2001. In addition the Company
sets targets for premium growth, combined ratio and return on equity. All these
targets were met in 2001.
Based on these factors, the Committee is of the opinion that the Chief
Executive Officer and other Executive Officers met the appropriate goals within
their job descriptions and each received an appropriate evaluation. The
Committee is also of the opinion that in 2001 the compensation of the Executive
Officers of the Company was appropriate and reasonable based on the size of the
Company and its financial performance. The Committee also believes that the
Company's cost of compensation compares favorably to other companies within the
insurance and financial services industry.
Section 162(m) of the Internal Revenue Code limits the deductibility of
compensation to an individual officer over $1 million dollars. None of the
Executive Officers of the Company were compensated in excess of $1 million
dollars and thus the provisions of (S)162(m) are inapplicable.
Bonuses paid to the Chief Executive Officer and other Officers of the
Company were based on a written bonus plan adopted in 1999. The Chief Executive
Officer's bonus was based on Company performance, as determined by factors
including premium growth, the achievement of the combined ratio target, and
return on equity. Based on these factors the Chief Executive Officer received
the maximum bonus percentage allowed under the plan. The bonuses of the other
Officers of the Company were based partly upon Company performance and partly
upon the achievement of individual goals. Individual performance levels were
determined for each job. These individual measurements were weighted in favor
of those items most critical to Company success. Also included in the
individual performance goals was a goal by which each Officer was to promote
team work within the organization. As stated above, the Company met all of the
Company performance goals for the year. Bonuses paid to Officers other than the
Chief Executive Officer varied based on the achievement of individual
performance goals.
In 2001 the Compensation Committee recommended and the Board of Directors
approved additional awards under the 1993 Stock Incentive Plan. Included in the
options awarded were options to 23 executive officers to purchase a total of
190,500 shares of the Company's common stock at a purchase price equal to the
price of the stock on the date of the grant. An additional grant of 7500 shares
was made to one officer at below market price. The purpose of the Stock Option
Plan is to promote the interests of the Company and its' shareholders by
encouraging stock ownership among key officers and employees, which in turn
provides for them additional incentive, personal interest, and an increased
desire to work toward the growth, development and financial success of the
Company. The Committee felt that it was appropriate to make additional awards
to the Officers of the Company based on the Company's financial performance and
to provide incentive to the Officers to assure that the Company performs in the
future at the highest possible levels. In determining the number of grants to
be made, the Committee and the Board took into account the number of prior
grants made. The Compensation Committee and the Board deem it to be sound
corporate policy to reward executive management by the grant of options. This
allows them to participate in the long term growth in share value thus giving
them an increased incentive to perform at the highest levels.
Compensation Committee Interlocks and Insider Participation and Compensation
Decisions. Mr Richardson who is a member of the Compensation Committee is
retired as Executive Vice President, Operations of the Company. The Company is
unaware of any other Compensation Committee Interlocks between the members of
the Compensation Committee and the Executive Officers of the Company.
9
Report of the Audit Committee
The Audit Committee of the Company consist of Directors, Lee, Richardson,
and Wiggins. All three members of the Audit Committee are independent directors
in accordance with NASDAQ rules.
The Committee met seven times during 2001. The meetings were designed to
facilitate and encourage private communication between the Committee and
Company management and the Committee and the Company's independent auditors,
KPMG LLP.
During these meetings, the Committee reviewed and discussed the audited
financial statements with management and with KPMG LLP. The Committee also met
separately with KPMG LLP and the Company's Internal Audit Department. The Audit
Committee believes that management maintains an effective system of internal
controls that results in fairly presented financial statements.
The discussions with KPMG LLP also included the matters required by
statement on auditing standards No. 61. The Audit Committee also received from
KPMG LLP written disclosures and a letter regarding its independence as
required by Independent Standards Board standard No. 1. The Committee had the
opportunity to discuss the Independence of KPMG LLP.
Based on the foregoing, we recommended to the Board of Directors that the
audited financial statements be included in the Company's Annual Report on Form
10-K for the year ended December 31, 2001 to be filed with Securities and
Exchange Commission.
Audit Fees
The aggregate fees for professional services rendered to the Company by KPMG
LLP for the year ended December 31, 2001, were as follows:
Audit services--Audit of the Company's consolidated financial
statements for the year ended December 31, 2001....................... $200,400
Financial information systems design and implementation fees............ 0
All other related services:
Separate audits of statutory financial statements, required by
insurance regulatory authorities.................................. $124,000
Separate audits of subsidiaries and employee benefit plans.......... $177,300
Tax-related services................................................ $ 71,000
Accounting reconciliation assistance in connection with general
ledger migration.................................................. $324,300
Total all other related services................................. $696,600
--------
TOTAL FEES....................................................... $897,000
========
The Audit Committee of the Board of Directors has considered whether the
provision of the non-audit professional services is compatible with maintaining
KPMG LLP's independence.
10
[CHART]
ALFA THE NASDAQ THE NASDAQ
CORPORATION MARKET (US) INDEX INSURANCE STOCKS INDEX
1996 100.000 100.000 100.000
1997 140.586 121.635 122.691
1998 202.067 169.840 122.612
1999 139.667 315.199 129.401
2000 161.838 191.360 149.674
2001 202.978 151.073 160.297
Nasdaq Insur
Alfa A Index B Index C
X-Labels Data Data Data
-------- -------- -------- --------
1996.. $100.000 $100.000 $100.000
1997.. $140.586 $121.635 $122.691
1998.. $202.067 $ 169.84 $122.612
1999.. $139.667 $315.199 $129.401
2000.. $161.838 $ 191.36 $149.674
2001.. $202.978 $151.073 $160.297
11
STOCK OWNERSHIP REPORTING BY DIRECTORS AND OFFICERS
Section 16(a) of the Securities Exchange Act of 1934 requires that executive
officers and directors of the Company file reports of stock ownership and
changes in ownership with the Securities and Exchange Commission on Forms 3
(Initial Statement of Ownership), 4 (Monthly Reports) and 5 (Annual Reports).
Based solely upon a review of copies of such reports and representations made
by directors and officers of the Company, the Company believes that during the
prior fiscal year beginning January 1, 2001 its officers and directors complied
with all Section 16(a) filing requirements. The Company has procedures in place
to monitor Section 16(a) compliance and also sends out regular reminders to
directors and officers about their reporting obligations under Section 16(a).
STOCKHOLDERS PROPOSALS
Stockholders are hereby notified that any proposals which they wish to have
included in the proxy and proxy statement for the annual meeting of the
stockholders of the Company in 2003 must be received in writing at its offices
in Montgomery, Alabama, no later than December 10, 2002. To insure prompt
receipt by the Company, all such proposals should be sent by certified mail,
return receipt requested, addressed to Secretary, Alfa Corporation, P. O. Box
11000, Montgomery, Alabama 36191-0001. Proposals must comply with the
Securities and Exchange Commission proxy rules relating to stockholders'
proposals to be included in the proxy materials.
INDEPENDENT PUBLIC ACCOUNTANTS
The Company's principal auditors for the fiscal year just completed were
KPMG. The Board of Directors normally selects auditors at the first regular
board meeting following the annual meeting of the stockholders. A
representative of KPMG is expected to be present at the stockholders meeting
with the opportunity to make a statement, and also to respond to appropriate
questions.
OTHER PROPOSED ACTION
Management is not aware of any other matters to be brought before the
meeting. If other proper business or questions are presented at the meeting,
the persons holding the proxies will vote in accordance with their judgment on
such business or questions.
STOCKHOLDERS ARE URGED TO SIGN, DATE AND RETURN THE ENCLOSED PROXY IN THE
ENCLOSED ENVELOPE.
The date of this proxy statement is March 21, 2002.
12
[LOGO]
ALFA
CORPORATION
Alfa Corporation
P. O. Box 11000
Montgomery, Alabama 36191-0001
Please Detach and Mail in the Envelope Provided
A [X] Please mark your
votes as in this
example.
WITHHOLD
AUTHORITY to vote
FOR all nominees for all nominees
listed at right listed at right
1. ELECTION Nominees: Jerry A. Newby
OF [ ] [ ] Hal F. Lee In their discretion, the Proxies are authorized to
DIRECTORS. Russell R. Wiggins vote upon such other mattters as may properly come
Dean Wysner before meeting.
(Instructions: To withhold authority to vote James A. Tolar, Jr.
for any individual nominee, mark the "FOR" Steve Dunn This proxy when properly signed will be voided in
box and write that nominee's name in the B. Phil Richardson the manner directed herein. If no direction is
space provided below.) Boyd E. Christenberry made, this proxy will be voted FOR the election of
John R. Thomas all nominees listed at left for directors.
James I. Harrison
_____________________________________________ C. Lee Ellis
Change of address and/or
Comments Mark here [ ]
PLEASE SIGN, DATE AND RETURN THIS PROXY IN THE
ENCLOSED POSTAGE PAID ENVELOPE.
Signature _______________________________ Signature, if held jointly ____________________________ Dated: ___________, 2002
NOTE: (Please sign exactly as name appears on stock certificate. When shares are held by joint tenants both should sign. When
signing as attorney, as executor, administrator, trustee or guardian, please give full title as such. If a corporation, please
sign in full corporate name by President or other authorized officer and if a partnership, please sign in the partnership name
by authorized person.)
Please date, sign and mail your
proxy card back as soon as possible!
Annual Meeting of Stockholders
ALFA CORPORATION
April 25, 2002