BRADENTON, Fla., Feb. 17, 2014 /PRNewswire/ -- (NASDAQ:
"DGICA" and "DGICB") – Mr. Shepard announced today that he is
voluntarily withdrawing his Form A applications to increase his
holdings in Donegal Group Inc. ("Donegal"), as filed with the insurance
departments of Pennsylvania,
Iowa, Virginia, Wisconsin, Michigan, and Maryland. Mr. Shepard stated: "The focus of
the insurance departments is to have people and entities in control
positions who are committed to increasing surplus and protecting
policyholders. My focus is rather on shareholder value, although I
believe that an increase in shareholder value leads to a stronger
company and greater protection for the policyholders." Mr. Shepard
thanks the insurance departments for their time, attention, and
professionalism.
Mr. Shepard continued: "I want Donegal and its shareholders to know that I am
not going away. I will continue to fight for shareholder value and
to call out, in my opinion, the egregious compensation and stock
option grants, and overall lack of performance, of Don Nikolaus, Donegal's CEO and Chairman, who is also the
CEO and Chairman of Donegal's
parent, Donegal Mutual Insurance Company, which owns approximately
66% of Donegal's voting power,
according to Donegal's 10-Q filed
on November 7, 2013."
"My intent now is to hold discussions with property and casualty
mutual insurance companies, professional activists, hedge funds,
and others to determine ways to persuade Nikolaus' cronies on the
Donegal Board of Directors to do
the right thing and maximize value for the shareholders, not just
for Don Nikolaus and other insiders.
In my opinion, Donegal's Board of
Directors has failed miserably to meet its fiduciary duties and is
one of the worst Boards in corporate America. I intend to hold them
to account."
Mr. Shepard notes that the closing price of Donegal's Class A stock was $18.84 on February 13,
2007, while seven years later the closing price for the
Class A stock was $14.78 on
February 13, 2014. This represents a
decline of approximately 21.5% over a seven-year period. There are
20,681,588 Class A shares outstanding and 5,576,775 Class B shares
outstanding as of November 1, 2013,
according to Donegal's 10-Q filed
on November 7, 2013. Mr. Shepard also
notes that Donegal's Compensation
Committee granted an additional 175,000 Class A stock options to
Don Nikolaus, according to Nikolaus'
Form 4 filed with the SEC on December 23,
2013, apparently as his reward for Donegal's miserable stock price
performance.
This press release is neither an offer to purchase nor a
solicitation of an offer to sell shares of Donegal. In
addition, this press release is not intended to, and does not,
constitute (1) a solicitation of a proxy, consent, or authorization
for or with respect to the annual meeting or any special meeting of
Donegal's shareholders, or (2) a
solicitation of a consent or authorization in the absence of any
such meeting.
SOURCE Gregory M. Shepard