UNICO American Corp elects Board of Directors – Messrs. Andrew L. Furgatch and Ernest A. Wish
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held Thursday, May 24, 2018
PROPOSAL 1 – ELECTION OF DIRECTORS
The Company’s Bylaws provide for a range of three to eleven directors and allow the Board of Directors to set the exact number of authorized directors within that range. The current number of authorized directors is eight (8). Directors are elected at each Annual Meeting of Shareholders to serve thereafter until their successors have been duly elected and qualified. Mr. Lester A. Aaron, who served as a director since 1985, passed away on June 30, 2017, and, on July 14, 2017, the Board of Directors appointed Mr. Michael Budnitsky, the Company’s Treasurer, Chief Financial Officer, and Secretary, to the Board of Directors of Unico to fill the vacancy created by the passing of Mr. Lester A. Aaron. Mr. Donald B. Urfrig, who served as a director and a member of Audit Committee of the Company since 2001, and Mr. Terry L. Kinigstein, who served as a director since 2008, have elected for personal reasons not to stand for re-election as directors of the Company at the Annual Meeting. The Board of Directors has nominated Messrs. Andrew L. Furgatch and Ernest A. Wish to stand for election as directors of the Company at the Annual Meeting in place of Messrs. Urfrig and Kinigstein. Except for Messrs. Furgatch and Wish, each nominee is currently a director having served in that capacity since the date indicated in the following table. All nominees have advised the Company that they are able and willing to serve as directors. If any nominee refuses or is unable to serve (an event which is not anticipated), the persons named in the accompanying proxy card will vote for another person nominated by the Board of Directors. Unless otherwise directed in the accompanying proxy card, the persons named therein will vote FOR the election of the eight (8) nominees listed in the following table.
The following table sets forth all of the Company’s executive officers and directors and indicates the position with the Company, tenure as director and age as of April 9, 2018, for each person nominated for election as a director:
(1) Mr. Budnitsky was appointed to the Board of Directors of Unico in 2017.
(2) Messrs. Kinigstein and Urfrig are not standing for re-election as directors at the Annual Meeting.
Each nominee for election to the Board of Directors has extensive management and leadership experience gained through executive and professional service in insurance and other industries. In these roles, the directors have developed attributes and skills in management of capital, risk and operations. In addition, all of the current directors have long standing relationships with the Company. This experience with the Company provides the current directors with a thorough understanding of the Company’s policies and processes, rules and regulations, risks and mitigating solutions and controls environment.
Set forth below are the names of the nominees for election to the Board of Directors, along with their present and prior positions, principal occupations and the specific individual qualifications and skills of such directors that contribute to the overall effectiveness of the Board of Directors and its committees.
Cary L. Cheldin, Chairman of the Board of Directors, has served as Chairman, President and Chief Executive Officer since April 1, 2009. From 1991 to 2009, Mr. Cary L. Cheldin was Executive Vice President of the Company and prior thereto he served as Vice President from 1986 to 1991 and as Secretary from 1987 to 1991. Mr. Cary L. Cheldin has been a director of the Company since 1983 and has held management positions in the Company since 1986. The Company believes that Mr. Cary L. Cheldin’s knowledge of and expertise in the insurance industry and his historical experience and understanding of the Company’s underwriting, claims management and rate-making processes qualify him for service on the Board of Directors.
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Michael Budnitsky has served as a Director since July 14, 2017, and as Treasurer, Chief Financial Officer, and Secretary of the Company since August 1, 2016. From September 2014 through July 2016, Mr. Budnitsky served as Vice President of Accounting of the Company and was responsible for various accounting and finance functions, including financial and tax reporting, Sarbanes Oxley compliance, and oversight of the accounting department. From May 2005 until joining the Company in 2014, Mr. Budnitsky worked at HCC Surety Group, eventually as its Vice President, Controller. Prior thereto, Mr. Budnitsky worked as a financial reporting manager at the Automobile Club of Southern California and as an audit manager at KPMG LLP. Mr. Budnitsky is an active Certified Public Accountant in California. The Company believes that Mr. Budnitsky’s industry experience and background, as well as his familiarity with the Company’s operations, qualifies him for service on the Board of Directors.
Erwin Cheldin is the Company’s former President, Chief Executive Officer and Chairman of the Board. Mr. Erwin Cheldin retired from being an employee of the Company effective April 1, 2009. Mr. Erwin Cheldin became an officer and director of the Company in 1969. Mr. Erwin Cheldin has over 50 years of experience in all phases of the property and casualty insurance industry. The Company believes that Mr. Erwin Cheldin’s historical knowledge of the Company and its operations and long standing service to the Company qualify him for service on the Board of Directors.
George C. Gilpatrick is the Company’s former Vice President of Management Information Systems. Mr. Gilpatrick served the Company as Vice President from 1981 until his retirement in April 2008 and as a director since 1985. The Company believes that Mr. Gilpatrick’s knowledge and expertise in the data processing field and his past experience directing the Company’s information systems as well as his experience as a director of the Company, qualify him for service on the Board of Directors.
Samuel J. Sorich is a respected representative of the California insurance industry for more than 30 years. Mr. Sorich has been a consultant to the insurance industry regarding, among other things, regulatory and legislative matters since 2011. From 2002 to 2010 he served as president of the Association of California Insurance Companies (ACIC), California’s longest established property/casualty insurance trade association. From 1985 to 2002, prior to joining the ACIC, he served as regional vice president of the National Association of Independent Insurers (NAII), a predecessor association of the Property Casualty Insurers Association of America (PCI). The Company believes that Mr. Sorich’s experience as an attorney and his experience in the insurance industry qualify him for service on the Board of Directors.
David T. Russell has been a Professor of Insurance and Finance at California State University, Northridge, since 2002. He is a member of the Risk and Insurance Management Society, the American Risk and Insurance Association, and is former president of the Western Risk and Insurance Association. Mr. Russell serves on various professional and community boards, including his current position as Chairman of the Board for First Connect Insurance Services, LLC, where he served on the board since July 2013. Since 1997, Mr. Russell also served as an expert witness on life and property and casualty insurance cases. Mr. Russell also offers corporate training and insurance education for legislators through the Griffith Foundation. The Company believes that Mr. Russell’s experience as a professor and his experience in the insurance industry qualify him for service on the Board of Directors.
Andrew L. Furgatch served as Chairman of the Board and Chief Executive Officer of Magna Carta Companies, Inc. for 24 years, from 1993 to 2017. Prior to joining Magna Carta, Mr. Furgatch practiced law in Los Angeles for seven years, eventually as in-house counsel for PennCorp Financial and serving as that company’s General Counsel and Secretary. Mr. Furgatch has also served as a member of the Board of Directors for the Alliance of American Insurers and as a member of the Board of Governors for the Property Casualty Insurers Association of America (PCI). The Company believes that Mr. Furgatch’s knowledge and expertise in the insurance industry, as well as his experience as an attorney, qualify him for service on the Board of Directors.
Ernest A. Wish is an attorney licensed to practice law throughout the state of California, in both State Court and in Federal Court. Since December of 1976, for over 35 years, Mr. Wish’s law practice focused on business and real estate in California, during which time he oversaw and structured thousands of transactions. Since June of 2012, Mr. Wish has served as President and General Counsel for Wish Properties, Inc. dba Wish Sotheby’s International Realty, in the Southern California area. The Company believes that Mr. Wish’s knowledge and expertise in business transactions, as well as his experience as an attorney, qualify him for service on the Board of Directors.
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Except for Mr. Cary L. Cheldin, who is the son of Mr. Erwin Cheldin, none of the executive officers or directors of the Company are related to any other officer or director of the Company. The executive officers of the Company are elected by the Board of Directors. Mr. Cary L. Cheldin serves in his present office pursuant to an employment agreement with the Company. The employment agreement of Mr. Cary L. Cheldin was amended and restated on March 16, 2015, and further amended as of March 23, 2018 and March 27, 2017.
Messrs. Erwin Cheldin, Cary L. Cheldin, and George C. Gilpatrick who hold approximately 50.2% of the voting power of the Company have agreed to vote the shares of common stock held by each of them so as to elect each of them to the Board of Directors and to vote on all other matters as they may agree. As a result of this agreement, the Company is a “Controlled Company” as defined in the NASDAQ Stock Market (“NASDAQ”) Listing Rules. A Controlled Company is exempt from the requirements of the NASDAQ Listing Rules requiring that (i) the Company have a majority of independent directors on the Board of Directors, (ii) the Compensation Committee be composed solely of independent directors, (iii) the Compensation Committee have a written charter, (iv) the compensation of the executive officers be determined by a majority of the independent directors or a compensation committee comprised solely of independent directors, and (v) director nominees be elected or recommended either by a majority of the independent directors or a nominating committee comprised solely of independent directors. The Board of Directors has determined that each of Messrs. Russell and Sorich, and Messrs. Furgatch and Wish, if they should become elected as directors at the Annual Meeting, are independent directors as defined by the NASDAQ Listing Rules.
During the year ended December 31, 2017, the Company’s Board of Directors held one regular meeting and seven special meetings. The independent directors met without any management directors or employees present four times during the year ended December 31, 2017. Non-employee directors receive $2,000 each quarter plus $1,000 for each regular Board meeting they attend; there is no compensation for attendance of special meetings. All directors, excluding Mr. Budnitsky, attended at least 75% of the combined total meetings of the Board of Directors and the committees on which they served. Mr. Budnitsky attended all meetings of the Board of Directors after his appointment to the Board on July 14, 2017.
The Company does not have a Nominating Committee of the Board of Directors. The Board of Directors consists of eight members. Since three directors, of which one is presently an executive officer, control approximately 50.2% of the voting power of the outstanding common stock of the Company, the Board of Directors believes that it is appropriate to not have a Nominating Committee. If there were a new nominee for Director to be considered, it is expected that all of the directors would participate in the process. The Company’s executive officers recommended to the Board of Directors that Messrs. Andrew L. Furgatch and Ernest A. Wish be nominated to be elected directors to fill the vacancies to be created by Messrs. Kinigstein and Urfrig’s departure effective with the Annual Meeting of Shareholders scheduled for May 24, 2018. All directors, except Mr. George C. Gilpatrick, participated in the process of reviewing and approving the nomination of Messrs. Andrew L. Furgatch and Ernest A. Wish.
The Board of Directors does not have a formal policy with regard to the consideration of any director candidates recommended by shareholders. The Board of Directors, however, would consider qualified nominees recommended by shareholders. Shareholders who wish to recommend a qualified nominee should submit complete information as to the identity and qualifications of the person recommended to the Secretary of the Company at 26050 Mureau Road, Calabasas, CA 91302. The Board of Directors generally requires that nominees be persons of sound ethical character, be able to represent all shareholders fairly, have no material conflicts of interest, have demonstrated professional achievement, have meaningful experience, and have a general appreciation of the major business issues facing the Company. The Board of Directors does not have a formal process for identifying and evaluating nominees for director. The Board of Directors does not have a formal policy regarding diversity, but as described above considers a broad range of attributes and characteristics in identifying and evaluating nominees for election to the Board of Directors. The Board of Directors views diversity broadly to include diversity of experience, skills and viewpoint in addition to more traditional diversity concepts. Absent special circumstances, the Board of Directors will continue to nominate qualified incumbent directors whom the Board of Directors believes will continue to make important contributions to the Board of Directors.
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