UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 8-K

 

 

Current Report Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): April 18, 2013

 

 

Donegal Group Inc.

(Exact name of registrant as specified in its charter)

 

 

 

Delaware		0-15341		23-02424711
(State or other jurisdiction of incorporation)		(Commission file number)		(I.R.S. employer identification no.)
1195 River Road, Marietta, Pennsylvania				17547
(Address of principal executive offices)				(Zip code)

Registrant’s telephone number, including area code: 717-426-1931

Not Applicable

(Former name or former address, if changed since last report)

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

¨	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

¨	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

¨	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

¨	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

 

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Item 7.01.     Regulation FD.

We intend to present at our 2013 annual meeting of stockholders to be held at 10 a.m. eastern time on April 18, 2013 the following three presentations:

 

•

Presentation of our chairman and chief executive officer;

 

•

Presentation of the chairman of the special committee of our board of directors; and

 

•

Presentation of the chairman of our compensation committee.

We incorporate by reference in this Item 7.01 the texts of these presentations we attach as Exhibits 99.1, 99.2 and 99.3, respectively.

Item 9.01.     Financial Statements and Exhibits.

 

Exhibit No.		Exhibit Description
99.1		Presentation of the Chairman and Chief Executive Officer of Donegal Group Inc.
99.2		Presentation of the Chairman of the Special Committee of the Donegal Group Inc. Board of Directors.
99.3		Presentation of the Chairman of the Compensation Committee of the Donegal Group Inc. Board of Directors.

 

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

Date: April 18, 2013

 

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EXHIBIT 99.2

SPECIAL COMMITTEE PRESENTATION

 

1.	I am the Chair of the Special Committee of Donegal Group’s Board of Directors.

 

2.	There are five Donegal Group independent directors on the Special Committee. None of the five Special Committee directors are officers or directors of the Donegal Mutual Insurance Company and none are officers of Donegal Group.

 

3.	After Mr. Shepard made his tender offer for the Class B Shares of Donegal Group on March 20, 2013, our Special Committee reviewed his tender offer.

 

4.	We found that Mr. Shepard had attached numerous conditions to his tender offer. You should understand, as we did, that, in the event Mr. Shepard’s conditions were not satisfied by April 19, 2013, he had no obligation to purchase any of the Class B Shares that were the subject of his tender offer.

 

5.

Our Special Committee concluded that Mr. Shepard’s conditions could not be satisfied by his April 19, 2013 expiration date or even within a reasonable period of time following April 19, 2013 and, therefore, he would not have any obligation to purchase any Class B Shares tendered to him. In a word, Mr. Shepard’s offer was illusory.

 

6.	I should note that Mr. Shepard cannot acquire any of Donegal Group’s Class B Shares without first obtaining insurance regulator and banking regulator approvals which will take a minimum of 60 days. By the way, it is possible that Mr. Shepard may not receive these necessary approvals.

 

7.	Our independent Special Committee then made a report to the Donegal Group Board of Directors in which the Special Committee unanimously recommended that the holders of Donegal Group’s Class B Shares reject Mr. Shepard’s tender offer and not tender their Class B Shares to him.

 

8.	The full Board accepted our unanimous recommendation without any modifications, and, in turn, recommended that the holders of Donegal Group’s Class B Shares reject Mr. Shepard’s tender offer and not tender their Class B Shares to him.

 

9.	We have copies of Donegal Group’s 14D-9 filing with the Securities and Exchange Commission concerning Mr. Shepard’s tender offer if you would like one when you leave the meeting.

Exhibit 99.3

STOCK OPTION COMPENSATION PRESENTATION

 

1.

The objective for the option plans is to provide a long-term incentive for directors, officers, management and supervisory personnel of Donegal Group and its subsidiaries and affiliates to use their dedicated efforts to contribute to the growth and financial success of Donegal Group and its subsidiaries and affiliates and, at the same time, to align the interests of those individuals with the interests of Donegal Group’s stockholders.

 

2.

Moreover, the option plans are not designed to exclusively incentivize and benefit Donegal Group’s directors and senior officers, but rather to provide incentives and compensation benefits to the entire management team of the Donegal organization. For this reason, a total of 270 individuals received 2012 option grants, with 67% of the options issued to management personnel other than Donegal Group’s senior officers and only 10% issued to directors and 23% issued to Donegal Group’s senior officers.

 

3.

The decisions starting in 2011 to issue options at the approximate market price on the date of grant and to make options available to be exercised over a ten-year period were based on recommendations by the Donegal Group Compensation Committee’s compensation consultant Towers Watson. Towers noted that Donegal Group’s option awards prior to 2011 were out of step with market practice and general principles of sound long-term incentive design.

 

4.	Stock options have not resulted in a significant number of additional outstanding shares over the past five years. The number of Class A shares outstanding has increased by only 269,000 shares from December 31, 2007 to December 31, 2012.

 

5.

The proposed increase in the authorized Class A shares from 30 million shares to 40 million shares will not have any immediate or near term dilutive effect on Donegal Group’s EPS. Donegal Group has no intention to issue 10 million shares in 2013. The additional 10 million authorized shares will allow for a continuation of the option plans in the future and for other general corporate purposes we have described in our proxy statement.