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.
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Filed by the Registrant
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Filed by a Party other than the Registrant
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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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Definitive Proxy Statement
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Definitive Additional Materials
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Soliciting Material Pursuant to (S) 240.14a-11(c) or (S) 240.14a-12
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Brooke Corporation
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
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No fee required.
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Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
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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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Proposed maximum aggregate value of transaction:
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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 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.
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Notes:
Reg. (S) 240.14a-101.
SEC 1913 (3-99)
BROOKE
CORPORATION
8500 College Boulevard
Overland Park, Kansas 66210
Dear Shareholder:
On behalf of our Board of Directors, I cordially invite you to
attend the 2008 Annual Meeting of Shareholders of Brooke
Corporation to be held at our corporate offices located at 8500
College Boulevard, Overland Park, Kansas on Thursday,
May 15, 2008 at 11:00 a.m., Overland Park time (CDT).
The Notice of 2008 Annual Meeting of Shareholders and the proxy
statement that follow describe the business to be conducted at
the meeting.
Whether you own a few or many shares of stock of Brooke
Corporation, it is important that your shares of stock be
represented. Whether or not you plan to personally attend the
meeting, we encourage you to make certain you are represented at
the meeting by signing and dating the accompanying proxy card
and promptly returning it in the enclosed envelope. Returning
your proxy card will not prevent you from voting in person, but
will provide assurance that your vote will be counted if you are
unable to attend the meeting.
Sincerely,
Leland G. Orr
President and Chief Executive Officer
April 29, 2008
TO BE HELD MAY 15, 2008
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders
(the Meeting) of Brooke Corporation, a Kansas
corporation (the Company), will be held on Thursday,
May 15, 2008 at 11:00 a.m., Overland Park time (CDT),
at our corporate offices located at 8500 College Boulevard,
Overland Park, Kansas. Free parking is available. The Meeting
will be held for the following purposes:
1. To elect five directors to the Board of Directors of the
Company for a term to expire at the Annual Meeting of
Shareholders in 2009;
2. To ratify the appointment of Summers,
Spencer & Callison, CPAs, Chartered as the
Companys independent registered public accounting firm for
the fiscal year ending December 31, 2008; and
3. To transact such other business as may properly come
before the Meeting and at any postponements or adjournments
thereof.
Only shareholders of record at the close of business on
April 16, 2008, are entitled to notice of and to vote at
the Meeting or at any postponements or adjournments thereof.
You are cordially invited and urged to attend the Meeting. All
shareholders, whether or not they expect to attend the Meeting
in person, are requested to complete, date and sign the enclosed
form of proxy and return it promptly in the postage-paid,
return-addressed envelope provided for that purpose. By
returning your proxy promptly, you can help the Company avoid
the expense of
follow-up
communications. Shareholders who attend the Meeting may revoke a
prior proxy and vote in person as set forth in the proxy
statement.
THE ENCLOSED PROXY IS BEING SOLICITED BY THE BOARD OF
DIRECTORS OF THE COMPANY. THE BOARD OF DIRECTORS RECOMMENDS THAT
YOU VOTE IN FAVOR OF THE PROPOSED ITEMS. YOUR VOTE IS
IMPORTANT.
By Order of the Board of Directors
Carl Baranowski
Secretary
Overland Park, Kansas
April 29, 2008
TABLE OF
CONTENTS
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BROOKE
CORPORATION
8500 College Boulevard
Overland Park, Kansas 66210
(913) 661-0123
PROXY STATEMENT
ANNUAL MEETING OF
SHAREHOLDERS
To be held May 15, 2008
GENERAL
INFORMATION
This proxy statement is furnished in connection with the
solicitation of proxies by and on behalf of the Board of
Directors (the Board) of Brooke Corporation, a
Kansas corporation (we, us, or the
Company), for use at our Annual Meeting of
Shareholders to be held at our corporate offices located at 8500
College Boulevard, Overland Park, Kansas, on Thursday,
May 15, 2008 at 11:00 a.m., local time (CDT), and at
any and all postponements or adjournments thereof (collectively
referred to herein as the Meeting). This proxy
statement, the accompanying form of proxy and the Notice of the
Annual Meeting will be first mailed or given to our shareholders
on or about April 29, 2008.
Because many of our shareholders may be unable to attend the
Meeting in person, the Board solicits proxies by mail to give
each shareholder an opportunity to vote on all matters presented
at the Meeting. Each shareholder is urged to:
(1) read this proxy statement carefully;
(2) specify a choice with respect to each matter by marking
the appropriate box on the enclosed proxy; and
(3) sign, date and return the proxy by mail in the
postage-paid, return-addressed envelope provided for that
purpose.
ABOUT THE
MEETING
What is
being voted on at the Meeting?
The Board is asking shareholders to consider and approve two
items at this years Meeting:
(1) The election of five directors to the Board for a term
to expire at the Annual Meeting of Shareholders in 2009; and
(2) A proposal to ratify the appointment of Summers,
Spencer & Callison, CPAs, Chartered as the
Companys independent registered public accounting firm for
the fiscal year ending December 31, 2008.
Who can
vote at the Meeting?
The Board set the close of business on April 16, 2008 as
the record date for the Meeting. Only persons holding shares of
our common stock, $0.01 par value (common
stock), of record at the close of business on
April 16, 2008 are entitled to receive notice of and to
vote at the Meeting. Each holder of common stock will be
entitled to one vote per share on each matter properly submitted
for vote to our shareholders at the Meeting. At the close of
business on April 16, 2008, there were
14,224,021 shares of common stock outstanding. Therefore,
there are a total of 14,224,021 votes that are entitled to be
cast at the Meeting.
What
constitutes a quorum for the Meeting?
A majority of the outstanding shares of common stock entitled to
vote at the Meeting, represented in person or by proxy,
constitutes a quorum for the Meeting. To establish a quorum, we
need 7,112,011 of the
votes entitled to be cast to be present in person or by proxy.
Votes cast in person or by proxy as to which authority to vote
on any proposal is withheld, shares of stock abstaining as to
any proposal, and broker non-votes (where a broker submits a
proxy, but does not have authority to vote a customers
shares of stock on one or more matters) on any proposal will be
considered present at the Meeting for purposes of establishing a
quorum for the transaction of business at the meeting. Each of
the foregoing categories will be tabulated separately.
How do I
vote?
If you complete and properly sign the accompanying proxy and
return it to us, it will be voted as you direct, unless you
later revoke the proxy.
Unless instructions to the contrary
are marked, or if no instructions are specified, shares of stock
represented by a proxy will be voted for the proposals set forth
on the proxy, and in the discretion of the persons named as
proxies on such other matters as may properly come before the
Meeting
. If you are a registered shareholder, that is, if
you hold your shares of stock in your name in the records of our
transfer agent, and you attend the Meeting, you may deliver your
completed proxy card in person. If you hold your shares of stock
in street name, that is, if you hold your shares of
stock through a broker or other nominee, and you wish to vote in
person at the Meeting, you will need to obtain a proxy from the
institution that holds your shares of stock.
Can I
change my vote after I return my proxy card?
Yes. Even after you have submitted your proxy, you may change
your vote at any time before the proxy is exercised by
(1) filing with the Secretary of the Company, at the
address indicated above, either a written notice of revocation
or a duly executed proxy bearing a later date; or
(2) voting in person at the Meeting. The powers of the
proxy holders will be suspended if you attend the Meeting in
person and so request. However, attendance at the Meeting will
not by itself revoke a previously granted proxy. If you want to
change or revoke your proxy and you hold your shares in
street name, contact your broker or the nominee that
holds your shares. Any written notice of revocation sent to us
must include the shareholders name and must be received
prior to the Meeting to be effective.
What vote
is required to approve each item?
Proposal One Election of
Directors.
The election of each director nominee
requires the affirmative vote of a majority of the outstanding
shares of common stock present in person or by proxy and
entitled to vote at the Meeting. Our shareholders are not
entitled to cumulate votes with respect to the election of
directors.
Proposal Two Ratification of Appointment of
Independent Registered Public Accounting
Firm.
The ratification of the appointment of
Summers, Spencer & Callison, CPAs, Chartered as our
independent registered public accounting firm for the fiscal
year ending December 31, 2008 requires the affirmative vote
of a majority of the outstanding shares of common stock present
and entitled to vote at the Meeting.
Other Matters.
If you hold your shares of
stock in street name, your broker or nominee may not
be permitted to exercise voting discretion with respect to some
of the matters to be acted upon. Thus, if you do not give your
broker or nominee specific instructions, your shares of stock
may not be voted on those matters and will not be counted in
determining the number of shares of stock necessary for
approval. Shares of stock represented by such broker
non-votes will, however, be counted in determining the
existence of a quorum.
Abstentions are counted in tabulations of the votes cast on
proposals presented to shareholders, while broker non-votes are
not counted for purposes of determining whether a proposal has
been approved. Therefore, for all matters presented at the
Meeting, abstentions will have the same effect as a vote against
the proposal and, for all matters presented at the Meeting,
broker non-votes will have no effect.
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PROPOSAL ONE
ELECTION
OF DIRECTORS
The Board currently consists of six members. The Amended and
Restated Bylaws of the Company state that the number of
directors of the Company shall be at least one and not more than
eight. At the Meeting, therefore, it is intended that the common
stock represented by properly executed proxies will be voted to
elect John L. Allen, Joe L. Barnes, Mitchell G. Holthus, Leland
G. Orr and Robert D. Orr, the director nominees, to our Board,
unless authority so to vote is withheld. A majority of the
independent directors on the Board has nominated the persons
whose names are set forth below, all of whom are current
directors. If elected, each nominee will serve until the next
annual meeting of shareholders or until his or her earlier
removal or resignation. All of the nominees have indicated a
willingness to serve as a director if elected, and the Board has
no reason to believe that any of the director nominees will be
unable to serve as a director or become unavailable for any
reason. If, at the time of the Meeting, any of the director
nominees shall become unavailable for any reason, the persons
entitled to vote the proxy will vote, as such persons shall
determine in each persons discretion, for such substituted
nominee or nominees, if any, nominated in accordance with the
Amended and Restated Bylaws. Currently, the only family
relationships among any of our directors are between Robert D.
Orr and Leland G. Orr, who are brothers.
The affirmative vote of a plurality of the outstanding shares of
common stock present in person or by proxy and entitled to vote
at the Meeting is necessary to elect each director nominee. Our
shareholders will have an opportunity on their proxy to vote in
favor of one or more director nominees while withholding
authority to vote for one or more director nominees. Our
shareholders are not entitled to cumulate votes with respect to
the election of directors.
THE BOARD RECOMMENDS THE ELECTION OF ALL OF THE NOMINEES TO
THE BOARD OF DIRECTORS AND PROXIES SOLICITED BY THE BOARD WILL
BE SO VOTED IN THE ABSENCE OF INSTRUCTIONS TO THE
CONTRARY.
DIRECTORS
The following table sets forth certain information with respect
to our director nominees:
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Director
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Name
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Since
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Age
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Position with Brooke Corporation
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Robert D. Orr
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1986
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54
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Director and Chairman of the Board
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Leland G. Orr
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1986
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45
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Director, President, Chief Executive Officer and Vice Chairman
of the Board
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John L. Allen
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2001
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59
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Director
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Joe L. Barnes
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2003
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54
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Director
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Mitchell G. Holthus
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2006
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50
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Director
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The following is a brief summary of the background of each
director nominee.
Robert D. Orr,
director and Chairman of the Board, is our
founder. Mr. Orr has served as a director since our
inception in 1986 and served as our Chief Executive Officer from
1986 until October 2007. He was our President from 1986 until
1991 and has been our Chairman of the Board since 1991. Prior to
focusing full time as our Chairman of the Board, Mr. Orr
served as President of Farmers State Bank, Phillipsburg, Kansas,
Chairman of the Board of Brooke State Bank, Jewell, Kansas,
President of First National Bank, Smith Center, Kansas, and a
self-employed insurance agent for American Family Insurance
Company. Mr. Orr is an honors graduate from Fort Hays
State University in Hays, Kansas, with a Bachelor of Arts degree
in Political Science. He also completed the Graduate School of
Banking program at the University of Colorado. Mr. Orr is
the author of a book published in 2000 about the sale of
insurance and financial services in the internet age entitled
Death of an Insurance Salesman?
Mr. Orr has been a
director and Chairman of the Board of Brooke
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Capital Corporation since it became our majority-owned
subsidiary in January 2007. In March 2008, Mr. Orr was
elected as a director, Chairman and Chief Executive Officer of
Brooke Credit Corporation.
Leland G. Orr,
director, Chief Executive Officer,
President and Vice Chairman of the Board, has served as a
director and officer since our inception in 1986. Mr. Orr
has been our Chief Executive Officer and President since March
2008, our Chief Financial Officer from 1995 to 2008, Treasurer
from 1986 to 2007, Assistant Secretary from 1995 to 2008 and
Vice-Chairman of the Board since 2007. He served as our
President from 2003 until January 2005 and as Secretary from
1986 until 2001. Mr. Orr also served as Chairman of the
Board of our former subsidiary, Brooke Franchise Corporation
from May 2006 to June 2007, and currently serves as Chief
Financial Officer and Treasurer of Brooke Capital Corporation.
In addition to his other responsibilities, Mr. Orr manages
our processing center in Phillipsburg, Kansas. Prior to assuming
the role of our Chief Financial Officer, Mr. Orr served as
President of Brooke State Bank, Jewell, Kansas, and as an
accountant with Kennedy McKee and Company, LLP (formerly
Fox & Company) in Dodge City, Kansas. He is a
Certified Public Accountant and a member of each of the American
Institute of Certified Public Accountants and the Kansas Society
of Certified Public Accountants. Mr. Orr received a
Bachelor of Science degree in Accounting from Fort Hays
State University in Hays, Kansas.
John L. Allen
has been a director since January 2001.
Mr. Allen served as the Chief Operating Officer of the
Cincinnati Reds from 1999 to 2007, Executive Vice President from
2006 to 2007, Managing Executive of such organization from 1996
to 1999 and as its Controller from 1995 to 1996. Mr. Allen
retired from the Cincinnati Reds at the end of 2007, but
continues to have an active role as a special consultant to Reds
CEO, Bob Castellini. Prior to joining the Cincinnati Reds,
Mr. Allen was employed by the Columbus Clippers, the
Class AAA minor league affiliate of the New York Yankees,
last serving as Director of Business Operations for that
organization. Mr. Allen was previously employed by the
accounting firms of Arthur Andersen in Kansas City, Missouri,
and GRA, Inc. in Merriam, Kansas. He has a Bachelor of Science
degree in Accounting from Kansas State University and a
Masters degree in Sports Management from The Ohio State
University.
Joe L. Barnes
has been our director since April 2003.
Dr. Barnes is a practicing family physician within the
Smith County Family Practice in Smith Center, Kansas. He is a
native of Kansas and a licensed Kansas physician who has
maintained his medical practice in the state since 1985.
Dr. Barnes is a community leader, currently serving on the
Smith County Development Committee. He has a Bachelor of Science
degree in Biology from Wichita State University and a Medical
Doctorate from the University of Kansas School of Medicine.
Mitchell G. Holthus
has been our director since April
2006 and served as a director of Brooke Franchise Corporation,
our subsidiary, from February 2003 until April 2006.
Mr. Holthus has been the Voice of the Kansas City
Chiefs NFL football team since 1994 and was the
play-by-play
voice of the Kansas State Wildcats from 1983 until 1996. He has
also been a
play-by-play
sportscaster of Missouri Valley Conference collegiate basketball
games from 1996 through the
2007-2008
season. He served as the President of the National Sportscasters
and Sportswriters Association from 2004 until 2006, has been
named Kansas Sportscaster of the Year eight times in
his career, has been named top
play-by-play
sportscaster in Kansas nine times, and was awarded the Hod
Humiston Award by the Kansas Association of Broadcasters.
Mr. Holthus was the sales manager for the Wildcat Sports
Network from 1986 until 1996 and currently owns his own business
featuring talent, marketing and motivational programs and
services. He currently serves on the Board of Trustees of
Southwestern College in Winfield, Kansas. He received Bachelor
of Science degrees in Journalism and Business Administration
from Kansas State University.
4
CORPORATE
GOVERNANCE AND BOARD MATTERS
Policies
and Procedures
The Board has adopted a Code of Ethics and Conduct to provide
guidance on maintaining our commitment to being honest and
ethical in our business endeavors. The Code of Ethics and
Conduct covers a wide range of business practices, procedures
and basic principles regarding corporate and personal conduct
and applies to all of our directors, executive officers and
employees. A copy of the Code of Ethics and Conduct may be
obtained by written request submitted to Brooke Corporation,
c/o Secretary,
8500 College Boulevard, Overland Park, Kansas 66210.
Director
Independence
Rule 4350(c)(5) of the NASDAQ Marketplace Rules applicable
to companies listed on the NASDAQ Global Market
(NASDAQ) exempts a controlled company (defined as a
company with over 50% of the voting power held by an individual,
group or other company) from the requirements that a majority of
its board of directors be comprised of independent
directors, that the compensation of its chief executive officer
and all of its other executive officers be determined or
recommended to the board of directors for determination either
by a majority of independent directors or a compensation
committee comprised solely of independent directors, and that
director nominees either be selected or recommended for
selection by the board of directors by a majority of independent
directors or a nominations committee comprised solely of
independent directors.
Until June 28, 2007, we were a controlled company because a
group owned approximately 51% of our outstanding common stock
and had orally agreed to vote their shares of common stock
together as a group. As a result of a private placement of units
in June of 2007, this group now owns approximately 45% of our
outstanding common stock as of April 16, 2008 and has
terminated their oral agreement to vote their shares as a group.
Therefore, we are no longer a controlled company
within the meaning of the NASDAQ Marketplace Rules and, thus,
are required to have a board of directors comprised of a
majority of independent directors and nominating and
compensation committees composed entirely of independent
directors or a majority of independent directors reviewing
certain compensation and nomination decisions. A company that
has ceased to be a controlled company is permitted to phase-in
independent nomination and compensation committees or reviews as
follows: (1) one independent member at the time of losing
controlled status; and (2) all independent members within
one year of losing controlled status. Furthermore, a company
having ceased to be controlled has twelve months from the date
of losing controlled status to comply with the majority
independent board requirement.
Our Board has determined that all of our non-employee directors,
namely John L. Allen, Joe L. Barnes and Mitchell G. Holthus,
meet the independence requirements of NASDAQ
Rule 4200(a)(15). Thus, our Board is composed of a majority
of independent directors. In addition, our Audit Committee and
Compensation Committee are made up of all independent directors.
At this time, the Board has not created a nominating committee.
However, pursuant to the NASDAQ Marketplace Rules, we may rely
upon a majority of our independent directors to discharge the
responsibilities that would be delegated to a nominating
committee.
Board and
Committee Meeting Attendance and Annual Meeting
Attendance
The Board held four meetings during the year ended
December 31, 2007. Each incumbent director attended at
least 75% of the aggregate of (1) the total number of
meetings of the Board during 2007; and (2) the total number
of meetings held by all committees of the Board on which the
director served during 2007.
We encourage members of the Board to attend the Annual Meeting
of Shareholders. We do so by, among other things, holding our
Annual Meeting of Shareholders on the same date and immediately
prior to the annual meeting of the Board. All members of the
Board attended the 2007 Annual Meeting of Shareholders.
5
Committees
of the Board of Directors
The Board has three committees: an Audit Committee, a
Compensation Committee and an Executive Committee. Copies of the
charters of these committees are posted on our web site at
www.brookeagent.com/corporation.
Audit
Committee
Our Audit Committee is comprised of John L. Allen, Joe L. Barnes
and Derrol D. Hubbard. Mr. Hubbard will no longer be a
director after the end of his term, which terminates at the 2008
Annual Meeting of Shareholders. The Board, at such time, may
choose to replace Mr. Hubbard with another independent
director. During 2007, the Audit Committee met five times,
including one meeting with our independent registered public
accounting firm. Each member of the Audit Committee satisfies
the independence standards specified in NASDAQ Marketplace
Rule 4200(a)(15) and those standards provided for under the
Securities Exchange Act of 1934. Our Board has determined that
none of its members qualify as an audit committee financial
expert as defined by applicable Securities and Exchange
Commission regulations. The reason that the Board has not
appointed an audit committee financial expert is because it
believes that the current members of the Audit Committee as a
group have an understanding of Audit Committee functions, have
the ability to read and understand fundamental financial
statements, including, without limitation, our balance sheet,
income statement and cash flow statement, have substantial
business experience that results in financial sophistication,
have the ability to understand generally accepted accounting
principles, have the ability to assess the general application
of such principles in connection with the accounting for
estimates, accruals and reserves, and have an understanding of
internal controls and procedures for financial reporting. The
Audit Committees charter grants the Audit Committee
authority to retain advisors with financial expertise at the
Companys expense. The Board has encouraged the Audit
Committee to retain such advisors if the Audit Committee, in its
sole discretion, feels that such expertise is needed, or
desired, and have encouraged the selection of advisors who meet
the independence standards applicable to independent directors.
The Audit Committee has the sole and direct authority to engage,
appoint, evaluate, compensate and replace our independent
registered public accounting firm. The Audit Committee also
reviews and approves all audit, audit-related and
non-audit-related services performed by the independent
registered public accounting firm (to the extent those services
are permitted by the Securities Exchange Act of 1934). The Audit
Committee meets with our management regularly to consider the
adequacy of our internal controls and financial reporting
process and the reliability of our financial reports to the
public. The Audit Committee also meets with the independent
registered public accounting firm and with our own appropriate
financial personnel regarding these matters. The independent
registered public accounting firm regularly meets privately with
this committee and has unrestricted access to this committee.
The Audit Committee examines the independence and performance of
our internal financial personnel and the independent registered
public accounting firm. In addition, among its other
responsibilities, the Audit Committee reviews our critical
accounting policies, our annual and quarterly reports on
Forms 10-K
and
10-Q
and
our earnings releases before they are published. See Audit
Committee Report below under Proposal Two for more
information. The Board has adopted a written charter of the
Audit Committee, which was most recently amended on
April 28, 2005, and can be found at our website at
http://invest.brookecorp.com.
Compensation
Committee
Our Compensation Committee is comprised of Joe L. Barnes and
Mitchell G. Holthus. During 2007, the Compensation Committee met
four times. Each member of the Compensation Committee satisfies
the independence standards specified in NASDAQ Marketplace
Rule 4200(a)(15). The Compensation Committee meets with
such frequency and at such intervals as it determines is
necessary to carry out its duties and responsibilities, but in
any case, not less than three times a year. The Compensation
Committee has adopted a charter, which was most recently amended
on April 27, 2006, and can be found on our website at
http://invest.brookecorp.com.
The purpose of the Compensation Committee is to provide
assistance with respect to granting of equity awards to
employees of the Company by assisting with the administration of
our equity compensation plans: the Brooke Corporation 2001
Compensatory Stock Option Plan (the 2001 Plan) and
the 2006 Brooke
6
Corporation Equity Incentive Plan (the 2006 Plan).
Committee members are appointed by the Board on the
recommendation of the majority of our independent directors and
serve such terms as the Board may determine, or until their
earlier resignation, death or removal by the Board.
The Compensation Committee does not have the power to delegate
its duties without approval of the entire Board of Directors.
The committee may employ, with the approval of the Board,
attorneys, consultants, accountants, appraisers, brokers or
other persons to assist or advise the committee in fulfilling
its duties, but did not employ any such persons or firms in
2007. The Compensation Committee considers recommendations from
our Chairman, CEO and other management in making decisions
regarding our executive compensation program and compensation of
our executive officers.
Executive
Committee
The purpose of the Executive Committee is to provide assistance
to the Board through its power to act and adopt resolutions on
administrative matters and its limited powers to act in
emergency situations. In addition, the Board may delegate to the
Executive Committee authority or responsibility to perform
specific functions, as specified in the Charter of the Executive
Committee adopted by the Board or by specific resolution adopted
by the Board. The Executive Committee met five times during
2007. The members of the Executive Committee are Leland G. Orr
and Robert D. Orr.
Compensation
Committee Interlocks and Insider Participation
The members of the Compensation Committee in 2007 were Joe L.
Barnes and Mitchell G. Holthus. None of the Compensation
Committee members were at any time during 2007, or at any other
time, an officer or employee of Brooke Corporation or any of our
subsidiaries. No member of the Compensation Committee serves as
a member of the board of directors or compensation committee of
any entity that has one or more executive officers serving as a
member of our Board or on our Compensation Committee.
Nomination
of Directors
The Company does not have a nominating committee. As formerly a
controlled company within the meaning of the NASDAQ Marketplace
Rules, we were exempt from the rules that require director
nominees to be either selected, or recommended for the
Boards selection, by either a nominating committee
comprised solely of independent directors or by a majority of
the independent directors. As we were not required to have an
independent nominating function prior to July 2007, we have not
created a nominating committee governed by a separate charter at
this time. The Board has delegated to the independent directors
of the Board the right to select nominees for our Board, to
elect directors when vacancies or newly created directorships
occur, and to remove directors.
In addition, the Board has adopted written resolutions regarding
the consideration of candidates recommended by shareholders and
the specific minimum requirements with respect to nominees
qualities and skills other than those relating to director
independence, as required by the Securities and Exchange
Commission and NASDAQ. Our policies provide that the independent
directors will consider candidates suggested by a shareholder of
the Company that beneficially own 5% or more of our voting
stock. All shareholder director nominees will be evaluated using
the same criteria as are applicable to persons nominated by
other sources. The primary factors used in considering any
candidate is our need to meet the independence standards imposed
by law and the rules of NASDAQ with respect to our Board and our
various committees. Other factors that are considered include
the proposed nominees personal and professional
background, demonstration of sound business judgment, field of
expertise and whether such expertise coincides with our core
businesses, commitment to attend meetings, integrity, Kansas
roots and other factors deemed in the best interests of the
Company and our shareholders. We have not used third party
consultants in our selection process.
Shareholders wishing to nominate a director may do so by
providing all information regarding the nominee that would be
required under applicable proxy rules, including: (1) the
full name and resident address of the nominee; (2) the age
of the nominee; (3) the principal occupation of the nominee
for the past five years; (4) any
7
current directorship held on public company boards; (5) the
number of shares of our common stock held by the nominee, if
any; and (6) a signed statement of the nominee consenting
to serve if elected. In addition, the shareholder making the
nomination and the beneficial owner, if any, on whose behalf the
nomination is being made must provide (1) the name and
address, as they appear on our books, of such shareholder and
such beneficial owner; (2) the class and number of shares
of Brooke Corporation that are owned beneficially and of record
by such shareholder and such beneficial owner; and (3) any
material interest of the shareholder
and/or
such
beneficial owner in the nominee or the nominees election
as a director. Such information should be sent to the
Independent Directors, Brooke Corporation,
c/o Secretary,
8500 College Boulevard, Overland Park, Kansas 66210.
No candidates for director nominations were submitted to the
Company by any shareholder in connection with the Meeting. All
director nominees included in this proxy statement were
incumbent directors reviewed and approved of by a majority of
our independent directors. Any shareholder desiring to present a
nomination for consideration prior to the 2009 Annual Meeting of
Shareholders must do so in accordance with our policies.
Shareholder
Communication with Directors
Because we were a controlled company until June of
2007, we have not yet established a written procedure providing
for communications by our shareholders directly with the Board.
The Board will focus on establishing such a policy in the near
future. However, any director may be contacted by writing to him
c/o Brooke
Corporation, Attention: Secretary, 8500 College Boulevard,
Overland Park, Kansas 66210. Although our Secretary may screen
frivolous or unlawful communications and commercial
advertisements, subsequent to such screening, our Secretary will
promptly forward all such correspondence to the indicated
director(s)
and/or
the
Chairman of the Board. Although the Chairman of the Board may
decide to refer other correspondence to the other director(s),
correspondence will be forwarded to the indicated director(s) if
it pertains to matters relating to a breach or violation of our
ethics or whistle blowing policies.
EXECUTIVE
OFFICERS
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Officer
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Name
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Since
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Age
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Position(s)
|
|
Robert D. Orr
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1986
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|
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54
|
|
|
Chairman of the Board
|
Leland G. Orr
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1986
|
|
|
|
45
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|
|
Vice Chairman of the Board, Chief Executive Officer and President
|
Travis W. Vrbas
|
|
|
2008
|
|
|
|
28
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|
|
Chief Financial Officer, Treasurer and Assistant Secretary
|
Carl Baranowski
|
|
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2008
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|
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50
|
|
|
Senior Vice President, General Counsel and Secretary
|
Currently, the only family relationships among any of our
officers are between Robert D. Orr and Leland G. Orr, who
are brothers. The business experience of each of the executive
officers is described below.
Robert D. Orr
serves as Chairman of the
Board. More detailed information regarding
Mr. Orrs business experience is set forth under
Directors.
Leland G. Orr
serves as Vice Chairman of the Board, Chief
Executive Officer and President. More detailed information
regarding Mr. Orrs business experience is set forth
under Directors.
Travis W. Vrbas
serves as Chief Financial Officer,
Treasurer and Assistant Secretary. Mr. Vrbas, the
Companys director of internal audit since January 2004,
has been with the Company since March 2003. Since joining the
Company, Mr. Vrbas was responsible for the Sarbanes-Oxley
compliance of the Company and its subsidiaries. Mr. Vrbas
has worked closely with the Companys external auditors
during quarterly reviews, SOX testing and year-end audits. Since
January 2004, Mr. Vrbas has also served as a liaison to the
Chief Financial Officer with respect to the Companys SEC
filings and other accounting matters. Mr. Vrbas received a
Bachelor of Science Degree in Accounting from Kansas State
University and is a Phi Kappa Phi.
8
Carl Baranowski
serves as Senior Vice President, General
Counsel and Secretary. Mr. Baranowski joined the Company in
September 2007 as Senior Counsel. He has practiced law for over
20 years in law firms and as in-house counsel. From 2003 to
2006, he served as counsel to Jabil Circuit, Inc., a large
contract electronics manufacturer, and was responsible for
securities, finance, intellectual property, corporate governance
and Sarbanes-Oxley compliance. During 2006 and 2007,
Mr. Baranowski founded a software business, CorpMaster,
developing web-based expert systems for entity and stock option
management. He received the Juris Doctor and Master of Business
Administration degrees from Stanford University in 1983. He
received a Master of Science Degree in Political Science, a
Bachelor of Science Degree in Economics and a Bachelor of
Science Degree in Urban Studies and Planning from the
Massachusetts Institute of Technology in 1979.
EXECUTIVE
COMPENSATION
Compensation
Discussion and Analysis
Executive Compensation Overview
.
We are
dependent upon the continued services of senior management,
particularly the services of Robert D. Orr, our Chairman of the
Board, Leland G. Orr, our Chief Executive Officer, President and
Vice Chairman of the Board, and Travis W. Vrbas, our Chief
Financial Officer. We have entered into employment agreements
with Robert Orr, Leland Orr, Travis W. Vrbas and other key
executives. The loss of the services of any of these key
personnel, or our inability to identify, hire and retain other
qualified personnel in the future, could have a material adverse
effect on us. Our compensation programs are designed to help us
retain and motivate these key officers and other members of
senior management and recruit, retain and motivate the executive
talent that will be required to successfully manage our business
and continue our growth.
General Compensation Philosophy and
Components
.
Our compensation philosophy
focuses on balancing (1) base compensation that is
competitive in the market and sufficient to attract, retain and
motivate a highly capable and top-performing senior management
team; (2) performance-focused incentive compensation for
those members of senior management in key sales leadership and
operational positions that is both challenging and rewarding
with respect to the achievement of performance goals; and
(3) equity-based compensation that is sufficient to align
senior managements interests with those of our
shareholders and truly a reward for top performance, but never
an annual expectation. It has been our policy and practice that
all compensation paid to our executive officers be deductible
under Internal Revenue Code Section 162(m).
Determination of Compensation
.
Until
June 28, 2007, we were a controlled company within the
meaning of the NASDAQ Marketplace Rules and, as such, were not
required to have the compensation of our chief executive officer
and all of our other executive officers be determined or
recommended to the Board for determination either by a majority
of independent directors or a compensation committee comprised
solely of independent directors. Thus, prior to June 28,
2007, our Compensation Committee administered the 2001 Plan and
the 2006 Plan, but did not review and recommend our executive
officers compensation. Executive compensation was
determined by the control group. However, as of July 2007, we
have transitioned the review and recommendation of the
compensation of our chief executive officer and other executive
officers to our independent directors. Thus, our compensation
results from a combination of past decisions made by the control
group and decisions of our independent directors. Our
independent directors determine compensation based largely on
the recommendation of our Chairman and our human resource
department. These recommendations are in turn based upon
compensation that these persons received prior to becoming our
executive officers (for recent hires and promotions), and
comparisons to compensation received by persons with similar
responsibilities, focusing on the Kansas City area. These
comparisons are obtained by accessing compensation databases,
local media reports and personal contacts. On the basis of these
comparisons, we believe that total compensation received by our
executive officers is in the middle to low end of compensation
received by persons with similar responsibilities in comparable
companies.
Base Salary
.
We consider base salary a
basic and necessary component of executive compensation, to
compete with other insurance agency businesses, finance
companies and other competitors for top talent, to retain our
key personnel and limit their temptation to consider positions
with other businesses within and
9
without the industries in which we operate, and to motivate our
senior management to meet our strategic objectives and
performance goals. The Compensation Committee, in determining
base salaries for senior management for 2008, determined that
the substantial increase in executive-level base salaries in
2007 aligned the Company with the market and positioned the
Company to retain key personnel. Accordingly, Leland Orrs
salary was raised to $185,000, a 32% increase, for 2007. The
Compensation Committee has determined that his salary shall be
$250,000 effective March 2, 2008, a 35% increase. In 2007,
Robert Orr was paid annual base salary at the rate of $230,000,
an increase from the $180,000 annual rate of base salary for
2005. In September 2007, Robert Orr announced his intention to
reduce his role in the day-to-day management of the Company, and
the Compensation Committee approved a reduction in his annual
salary to $150,000, effective January 1, 2008. Robert
Orrs salary may be increased in the future if he increases
his role in the day-to-day management of the Company. Base
salaries of Travis Vrbas and Carl Baranowski were determined
based on recommendations of our Chairman and our human resources
department, as described above.
Incentive Compensation
.
For 2007, the
Company established annual nondiscretionary incentive
compensation targets of $25,000 for Leland Orr and of $50,000
for Robert Orr, in each case with payment of any actual bonus to
be made on a quarterly basis based upon the accomplishment
during the year of certain benchmarks. For Leland Orr, these
benchmarks related to our Sarbanes-Oxley 404 internal control
evaluation process. Robert Orr had benchmark goals to conduct at
least 15 leadership academy sessions for our management
employees and to submit a second edition of his book
Death of
an Insurance Salesman?
to the publisher by year end. Neither
Leland Orr nor Robert Orr achieved substantially all of their
incentive target goals, and neither received bonus payments in
2007. The Company currently plans to adopt discretionary
incentive compensation for all executives for 2008, with
recommendations to the Companys independent directors
coming from our Chairman, other executives and human resources
department. These recommendations will be based upon individual
performance and upon the Companys overall performance.
Equity-Based Compensation
.
Our Board,
its Compensation Committee and our management all believe that
equity-based compensation is effective in attracting executives
and key employees to us and our subsidiaries and in providing
long-term incentives and rewards to those directors, executives
and key employees responsible for our continued growth. We
further believe that incentive stock options and nonqualified
stock options granted under the 2001 Plan have provided a form
of incentive that aligns the economic interests of management
and other key employees with those of our shareholders. Our
philosophy, however is that equity-based awards should be
awarded only to top performers and, on occasion, to newly
recruited executives. We do not believe that equity compensation
should be an expectation of our employees and directors on an
annual or other basis. As such, we do not have an annual or
other periodic grant program. At least annually, our
Compensation Committee considers whether it is in the best
interests of the Company to grant equity awards, including
consideration, when made, of recommendations of management.
Prior to 2006, in accordance with applicable accounting rules,
the value of stock option compensation was not treated as an
expense in our financial statements. SFAS No. 123R,
Share-Based Payment,
however, required us to expense the
value of employee stock options beginning with the quarter ended
March 31, 2006, so all forms of share-based payments to
employees, including stock options, must now be treated the same
as other forms of compensation by recognizing the related cost
in the income statement. While recognizing both the value of
equity compensation and the need to consider the expenses
resulting from the award of stock options, the Compensation
Committee desired a plan that gives it flexibility. Awards under
the 2001 Plan were limited to nonqualified stock options and
incentive stock options. The Compensation Committee, the Board
itself and our shareholders approved in 2006 the adoption of the
2006 Plan to replace the 2001 Plan. On April 27, 2006, the
2006 Plan became effective and the 2001 Plan terminated, except
with respect to options then outstanding. The 2006 Plan,
administered by the Compensation Committee, authorizes up to
500,000 shares of our common stock to be issued pursuant to
awards made under the 2006 Plan in the form of nonqualified
stock options, incentive stock options, restricted shares of
common stock, stock appreciation rights, performance shares,
performance units, or restricted share units. Accordingly, the
2006 Plan provides the flexibility that the Compensation
Committee desired to determine what types of awards are
beneficial to us, our employees, directors and shareholders as
changes occur with respect to compensation trends, accounting
treatment of awards, tax treatment of awards to us or our
employees or directors, or our cash flow
10
needs. Grants of 62,150 restricted shares of common stock and
incentive stock options for an additional 90,000 shares of
common stock were granted to executive officers and other
employees under the 2006 Plan during 2007. These grants were
discretionary, based upon the recommendation of our Chairman and
human resourced department as described above and intended to
reward individual performance.
In 2002, Robert Orr and Leland Orr were each granted incentive
stock options to purchase 24,000 (split-adjusted) shares of our
common stock under the 2001 Plan. In September 2002, Robert Orr
remitted to us the options that had been granted to him. Because
of the significant length of time between the grant of equity
awards to most members of senior management, our significant
growth and success since the date of such awards, and the
importance of senior management in 2007 in our efforts to meet
profitability goals, the Compensation Committee granted
incentive stock options to certain executive officers and other
key employees pursuant to the 2006 Plan with a date of grant of
February 8, 2007, a six-year term, and an exercise price
equal to the fair market value of the Companys common
stock determined in accordance with the terms of such 2006 Plan.
Vesting occurs in one-fifth annual increments beginning on the
first anniversary of the date of grant. Included in these awards
were incentive stock options for 10,000 shares each granted
to Leland G. Orr and certain former executive officers of the
Company. Unlike options granted to other employees, Leland
Orrs option has a five-year term and an exercise price
equal to 110% of the fair market value of the common stock.
The Compensation Committee in February 2007 awarded restricted
shares of our common stock to some managers and other key
employees, although no restricted shares have been awarded to
any of our executive officers. The goals with respect to such
awards are to reward top-performing employees with an ownership
interest in us without any initial cost and provide assistance
with retention. Recipients of restricted share awards are
entitled to receive dividends and vote the shares in matters
submitted to shareholder vote. Transfer restrictions on the
shares lapse in one-fifth annual increments. We believe such
vesting schedule provides the appropriate balance between
short-term and long-term incentives, as well as aids in
retention.
Pursuant to Keith Boucheys executive employment agreement
effective October 1, 2007, Mr. Bouchey received
50,000 shares of Brooke Corporation restricted stock
pursuant to the 2006 Plan, vesting in one-third increments over
the following three anniversaries of the grant. These shares
were all forfeited as a result of Mr. Boucheys
resignation on March 11, 2008.
Benefit and Perquisite Programs
.
Our
executive officers, including all of the officers named in our
Summary Compensation Table, below, are eligible to participate
in a number of broad-based benefit programs on the same terms as
other employees, including health care, dental care, flexible
benefits, life insurance, long-term disability, and qualified
401(k) retirement savings. A perquisite for Robert Orr and for
Leland Orr is use of a company car. We also provide to Robert
Orr a club membership, the occasional personal use of a
professional driver, and travel by his spouse on a
Company-provided aircraft in order to accompany him on business
trips. Mr. Bouchey was reimbursed for club dues and home
Internet service. We have determined these perquisites to be of
greater benefit to their recipients than would payment of the
cash cost of such benefits to such persons as additional base
salary. Thus, these perquisites are a cost-effective component
of the total compensation we have determined as necessary to
retain our executive officers. This determination is based on
informal comparison of compensation paid to executives with
similar responsibilities in comparable companies and, in the
case of Mr. Bouchey, with compensation received in his
prior employment.
Severance and Change in Control
Benefits
.
We currently have severance
agreements, change in control agreements, or provisions in
employment agreements that provide severance or
change-in-control
benefits to our executive management in the event of a cessation
of employment or change in control. While
Keith Boucheys employment agreement, entered into
effective October 1, 2007, contained severance benefits,
these benefits were waived pursuant to the separation agreement,
entered into effective as of Mr. Boucheys resignation
on March 11, 2008. The separation agreement provided for
continuation of Mr. Boucheys salary and benefits
through March 31, 2008.
11
Compensation
Committee Report
The Compensation Committee of the Company has reviewed and
discussed with management the Compensation Discussion and
Analysis required to be included in this proxy statement
pursuant to Item 402(b) of
Regulation S-K.
Based on such review and discussions, the Compensation Committee
recommended to the Board of Directors that such Compensation
Discussion and Analysis be included in this proxy statement and
in our
Form 10-K
for the fiscal year ended December 31, 2007.
THE COMPENSATION COMMITTEE
Joe L. Barnes
Mitchell G. Holthus
Summary
Compensation Table
The following table sets forth information with respect to the
compensation earned in 2007 by each individual that served as
our Chief Executive Officer and Chief Financial Officer, as well
as certain former executive officers, as of December 31,
2007 (the named executive officers). Columns for
which no compensation was awarded to, earned by, or paid to any
of the named executive officers have been omitted.
Summary
Compensation Table
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|
|
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|
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|
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Non-Equity
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|
Stock
|
|
Option
|
|
Incentive Plan
|
|
All Other
|
|
|
|
|
|
|
Salary
|
|
Bonus
|
|
Awards
|
|
Awards
|
|
Compensation
|
|
Compensation(2)
|
|
Total
|
Name and Principal Position
|
|
Year
|
|
($)
|
|
($)
|
|
($)
|
|
($)
|
|
($)
|
|
($)
|
|
($)
|
|
Robert D. Orr
|
|
|
2007
|
|
|
|
230,000
|
(1)
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
3,029
|
|
|
|
233,029
|
|
Chairman of the Board
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|
|
2006
|
|
|
|
230,000
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
20,601
|
(3)
|
|
|
250,572
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|
Leland G. Orr
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|
|
2007
|
|
|
|
183,269
|
(4)
|
|
|
0
|
|
|
|
0
|
|
|
|
4,700
|
(5)
|
|
|
0
|
|
|
|
3,029
|
|
|
|
190,998
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|
Chief Executive Officer,
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|
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2006
|
|
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140,000
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0
|
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0
|
|
|
|
0
|
|
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|
75,000
|
(6)
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5,629
|
(7)
|
|
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220,600
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|
President and Vice
Chairman of the Board
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|
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|
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|
Former Named Executive Officers
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|
|
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|
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|
|
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|
|
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Keith E. Bouchey(8)
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2007
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69,231
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40,000
|
(6)
|
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159,167
|
(9)
|
|
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0
|
|
|
|
0
|
|
|
|
0
|
|
|
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268,398
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|
President and Chief
Executive Officer
|
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|
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Anita F. Larson
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2007
|
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183,269
|
|
|
|
0
|
|
|
|
818,837
|
(10)
|
|
|
0
|
|
|
|
0
|
|
|
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19,088
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(11)
|
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1,021,194
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|
President and Chief
Operating Officer
|
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|
|
|
|
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(1)
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Consists of total compensation paid for Robert Orrs
services to the Company and for his services to Brooke Capital
Corporation. For financial statement reporting purposes, 27% of
Mr. Orrs total compensation was allocated to the
Company and 77% was allocated to Brooke Capital Corporation.
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(2)
|
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Includes matching funds paid by the Company for the named
persons participation in the Brooke Corporation 401(k)
plan and life insurance premiums paid by the Company on behalf
of such person.
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(3)
|
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Includes personal and commuting use by Robert Orr of a Company
vehicle ($8,450), a Company-provided driver ($6,766),
spouse-travel on Company aircraft ($3,750) and a club membership
($1,606).
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(4)
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Consists of total compensation paid for Leland Orrs
services to the Company and for his services to Brooke Capital
Corporation. For financial statement reporting purposes, 88% of
Mr. Orrs total compensation was allocated to the
Company and 12% was allocated to Brooke Capital Corporation.
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(5)
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Fair value of an option to purchase the Companys shares
granted to Leland Orr during 2007. (See Grants of
Plan-Based Awards, below, for an explanation of how the
Company calculates such values.)
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(6)
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Discretionary cash bonus.
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(7)
|
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Includes personal and commuting use by Leland Orr of a Company
vehicle.
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(8)
|
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Mr. Bouchey resigned his position as director, Chief
Executive Officer and President on March 11, 2008.
|
12
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(9)
|
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Expense recognized for financial statement reporting purposes in
2007, in accordance with FAS 123R, for 50,000 shares
of Brooke Corporation restricted stock granted to Keith Bouchey
on October 1, 2007. The entire grant was forfeited upon
Mr. Boucheys resignation on March 11, 2008.
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(10)
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Expense recognized for financial statement reporting purposes in
2007, in accordance with FAS 123R, for 437,881 shares
of Brooke Credit Corporation restricted stock granted to Anita
Larson on July 16, 2007.
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(11)
|
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Includes an incentive trip ($10,000) and personal and commuting
use by Anita Larson of a Company vehicle ($6,059).
|
Grants of
Plan-Based Awards
The following table sets forth certain information regarding
plan based awards that were made to our named executive officers
during fiscal year 2007. The Company calculates fair values of
awards of stock options and restricted shares using to
SFAS 123R, Share-Based Payment, and those
assumptions disclosed in footnote 12 to the audited consolidated
financial statements included in the Companys annual
report on
Form 10-K
for the year ended December 31, 2007. Other than as
described below, there were no stock options or stock awards
granted to the named executive officers or directors during
2007, and there are no future payouts upon satisfaction of any
conditions under any non-equity incentive plan awards granted
during such year:
Grants of
Plan Based Awards
|
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All
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All
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Other
|
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|
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|
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Grant
|
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Other
|
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Option
|
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|
Date
|
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Stock
|
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|
Awards:
|
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Exercise
|
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|
Fair
|
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Awards:
|
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Number of
|
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|
or Base
|
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|
Value of
|
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Number of
|
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|
Securities
|
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|
Price of
|
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|
Grant
|
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|
Stock and
|
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|
|
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|
Estimated Possible Payouts
|
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|
Shares of
|
|
|
Underlying
|
|
|
Option/
|
|
|
Date
|
|
|
Option/
|
|
|
|
|
|
|
Under Non-Equity Incentive Plan Awards
|
|
|
Stock or
|
|
|
Option/
|
|
|
SAR
|
|
|
Closing
|
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|
SAR
|
|
|
|
Grant
|
|
|
Threshold
|
|
|
Target
|
|
|
Maximum
|
|
|
Units(1)
|
|
|
SARs
|
|
|
Awards
|
|
|
Price
|
|
|
Awards(1)
|
|
Name
|
|
Date
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
(#)
|
|
|
(#)
|
|
|
($/shr)
|
|
|
(#)
|
|
|
($)
|
|
|
Leland G. Orr
|
|
|
2/8/2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,000
|
(2)
|
|
|
13.54
|
|
|
|
12.70
|
(2)
|
|
|
4,700
|
|
Former Named Executive
Officers
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Keith E. Bouchey
|
|
|
10/1/2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
50,000
|
(2)(3)
|
|
|
|
|
|
|
|
|
|
|
9.55
|
(2)
|
|
|
159,167
|
(2)(3)
|
Anita F. Larson
|
|
|
7/16/2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
437,881
|
(4)
|
|
|
|
|
|
|
|
|
|
|
5.61
|
(4)
|
|
|
159,167
|
|
|
|
|
(1)
|
|
Expense recognized for financial statement reporting purposes in
2007, in accordance with FAS 123R.
|
|
(2)
|
|
Brooke Corporation restricted stock.
|
|
(3)
|
|
The entire grant was forfeited upon Mr. Boucheys
resignation on March 11, 2008.
|
|
(4)
|
|
Brooke Credit Corporation restricted stock.
|
13
Outstanding
Equity Awards at Fiscal Year End Table
The following table provides information regarding exercisable
and unexercisable options and unvested stock awards held by our
named executive officers on December 31, 2007.
Outstanding
Equity Awards at Fiscal Year End
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of Securities Underlying Unexercised Options at Fiscal
Year End
|
|
|
Option Information
|
|
|
|
|
|
|
|
|
|
Option Exercise
|
|
|
Option
|
|
|
|
Exercisable
|
|
|
Unexercisable
|
|
|
Price
|
|
|
Expiration
|
|
Name
|
|
(#)
|
|
|
(#)
|
|
|
($/shr)
|
|
|
Date
|
|
|
Leland G. Orr
|
|
|
0
|
|
|
|
10,000
|
(1)
|
|
$
|
13.54
|
|
|
|
2/8/2013
|
|
Former Named Executive Officers
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Keith E. Bouchey
|
|
|
0
|
|
|
|
50,000
|
(2)
|
|
|
|
|
|
|
|
|
Anita F. Larson
|
|
|
0
|
|
|
|
437,881
|
(3)
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
This stock option was granted on February 8, 2007 and vests
in one-fifth increments on each of the five following
anniversaries of the grant date.
|
|
(2)
|
|
These shares of Brooke Corporation restricted stock were granted
on October 1, 2007, and vest in one-third increments on
each of the three following anniversaries of the grant date.
Mr. Bouchey subsequently forfeited this entire grant upon
his resignation on March 11, 2008.
|
|
(3)
|
|
These shares of Brooke Credit Corporation restricted stock were
granted on July 16, 2007, and vest in one-third increments
on January 1 of each of the three years following the grant date.
|
Option
Exercises and Stock Vested During Fiscal 2007
The following table sets forth information regarding option
exercises and vesting of restricted stock during the fiscal year
ended December 31, 2007 for our named executive officers.
Option
Exercises and Stock Vested During Fiscal Year
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
|
Stock Awards
|
|
|
|
Number
|
|
|
|
|
|
Number
|
|
|
|
|
|
|
of Shares
|
|
|
Value
|
|
|
of Shares
|
|
|
|
|
|
|
Acquired
|
|
|
Realized
|
|
|
Acquired
|
|
|
Value
|
|
|
|
on
|
|
|
on
|
|
|
on
|
|
|
Realized
|
|
|
|
Exercise
|
|
|
Exercise
|
|
|
Vesting
|
|
|
on Vesting
|
|
Name
|
|
#
|
|
|
$
|
|
|
#
|
|
|
$
|
|
|
Leland G. Orr
|
|
|
4,800
|
|
|
|
52,000
|
|
|
|
|
|
|
|
|
|
Employment
Agreements
Robert
D. Orr and Leland G. Orr
Effective January 1, 2005, Robert D. Orr and Leland G. Orr
each entered into an executive employment agreement with us to
serve as our Chairman of the Board and Chief Executive Officer
and Chief Financial Officer, Treasurer and Assistant Secretary,
respectively. Robert Orrs agreement provided for an annual
base salary of $180,000, subject to review and adjustment by the
Board, and Leland Orrs agreement provided for an annual
base salary of $130,000, subject to review and adjustment by the
Board. Each of the executive employment agreements establishes
an at-will employment relationship, provides for an automobile
for business use and commuting, provides that the employee is
eligible to participate in any short-term or long-term bonus or
incentive compensation programs designated by the Company,
contains a two-year post-termination covenant by the employee
not to solicit customers, franchise agents or lenders of the
employer or its affiliates, contains a two-year post-termination
covenant by the employee not to solicit or hire employees,
franchise agents, or producers of the employer or its
affiliates, contains a covenant by the employee not to
14
plan, organize, fund or operate any business activity
competitive with any of the lines of business of the employer or
its affiliates during the period of employment, contains a
post-termination covenant not to compete against the employer or
its affiliates in the United States in any lines of business in
which the employer and its affiliates is engaged on the date of
termination, and provides for mediation and arbitration of any
disputes arising in connection with the Agreement, the
employment relationship, or the termination of employment.
Other
Executive Officers
The Company has at-will employment agreements with its other
executive officers. These agreements specify the initial salary,
title and position of the officer, and contain customary
non-disclosure/non-solicitation and non- competition provisions.
These agreements do not, however, provide for a fixed term of
employment or special compensation or termination benefits.
Compensation
of Directors
Directors Robert D. Orr and Leland G. Orr serve as such without
cash compensation and without other fixed remuneration, except
for compensation each receives as our employee. Effective
October 22, 2007, directors Allen, Barnes and Holthus (who
are not employees of the Company or any of our subsidiaries) had
their compensation increased so that each receives an annual
retainer of $25,000, plus $1,000 for each meeting of the Board
attended. These directors also receive $500 for each meeting of
a Board committee attended, if such meeting occurs on a day that
the full Board is not already meeting. Mr. Allen, who
serves as chairman of our Audit Committee, receives an
additional annual retainer of $3,000 for such service. Directors
are reimbursed their reasonable travel costs for attending Board
and committee meetings.
The following table sets forth information concerning the
compensation of our directors for the fiscal year ended
December 31, 2007. The directors listed in the table
received no stock awards, option awards, non-equity incentive
plan compensation, pension earnings, nonqualified deferred
compensation or other compensation for services as a director.
Columns for which no compensation was awarded to, earned by, or
paid to any of the directors have been omitted.
Director
Compensation
|
|
|
|
|
|
|
|
|
|
|
Fees Earned
|
|
|
|
|
|
|
or Paid in Cash
|
|
|
Total
|
|
Name
|
|
($)
|
|
|
($)
|
|
|
John L. Allen
|
|
|
4,500
|
|
|
|
4,500
|
|
Joe L. Barnes
|
|
|
9,500
|
|
|
|
9,500
|
|
Mitchell G. Holthus
|
|
|
9,000
|
|
|
|
9,000
|
|
Derrol D. Hubbard
|
|
|
4,000
|
|
|
|
4,000
|
|
PRINCIPAL
SHAREHOLDERS AND SECURITY OWNERSHIP OF MANAGEMENT
Principal
Security Holders
The following table sets forth the name, address and share
ownership of each person, group or organization known to us to
be the beneficial owner of more than 5% of our outstanding
common stock. The number of shares reported as beneficially
owned in such table and in the table below under the section
entitled Security Ownership of Management, is
determined under rules of the Securities and Exchange Commission
applicable to disclosure in this proxy statement and is not
necessarily indicative of beneficial ownership for other
purposes. Under these rules, beneficial ownership includes any
shares as to which the individual has either sole or shared
voting power or investment power and also any shares that the
individual has the right to acquire within 60 days of
April 16, 2008.
15
|
|
|
|
|
|
|
|
|
|
|
|
|
Percent of
|
|
|
Shares
|
|
Common
|
|
|
Beneficially
|
|
Stock
|
|
|
Owned
|
|
Outstanding
|
|
|
(#)
|
|
(%)
|
|
Brooke Holdings, Inc.
|
|
|
6,408,169
|
|
|
|
45.1
|
%
|
210 West State Street
Phillipsburg, Kansas 67661(1)
|
|
|
|
|
|
|
|
|
Jayhawk Capital Management, L.L.C.; Jayhawk
|
|
|
1,671,918
|
|
|
|
9.9
|
%
|
Institutional Partners, L.P.; Kent C. McCarthy
5410 West 61st Place, Suite 100
Mission, Kansas 66205(2)
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Robert D. Orr and Leland G. Orr, the principal shareholders of
Brooke Holdings, are considered to beneficially own in excess of
5% of the outstanding shares of our common stock as of
April 16, 2008.
|
|
(2)
|
|
Information as to the number of shares beneficially owned is
furnished solely in reliance on the Schedule 13G filed on
December 31, 2007 by Jayhawk Capital Management, L.L.C.,
Jayhawk Institutional Partners, L.P. and Kent C. McCarthy. The
Schedule 13G indicates that Mr. McCarthy controls
Jayhawk Capital Management, and Jayhawk Capital Management is
the general partner of Jayhawk Institutional Partners. Of the
1,671,918 shares beneficially owned, 300,000 are
exercisable pursuant to outstanding warrants. The terms of these
warrants limit their exercise if such exercise would result in
Jayhawks ownership of our stock exceeding 9.99%.
|
Security
Ownership of Management
The following table sets forth certain information regarding the
beneficial ownership of our common stock as of April 16,
2008 by (1) each our directors; (2) each of our named
executive officers; and (3) all of our directors and
executive officers as a group. The columns indicating numbers of
shares with sole power and numbers of shares with shared power
report the number of shares beneficially owned with respect to
which the individual has sole voting
and/or
investment power or shared voting
and/or
investment power, respectively.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
|
|
|
Number of
|
|
|
Number of
|
|
|
|
|
|
|
Number of
|
|
|
Number of
|
|
|
Number of
|
|
|
Shares with
|
|
|
Shares with
|
|
|
|
|
|
|
Shares
|
|
|
Shares with
|
|
|
Shares with
|
|
|
Sole
|
|
|
Shared
|
|
|
|
|
|
|
Beneficially
|
|
|
Sole Voting
|
|
|
Shared Voting
|
|
|
Investment
|
|
|
Investment
|
|
|
Percentage
|
|
Name of Owner
|
|
Owned
|
|
|
Power
|
|
|
Power
|
|
|
Power
|
|
|
Power
|
|
|
of Class(1)
|
|
|
Robert D. Orr(2)(3)
|
|
|
6,443,663
|
|
|
|
25,453
|
|
|
|
6,418,210
|
|
|
|
25,453
|
|
|
|
6,418,210
|
|
|
|
45.3
|
%
|
Leland G. Orr(2)(4)
|
|
|
1,455,197
|
|
|
|
24,624
|
|
|
|
1,430,573
|
|
|
|
24,624
|
|
|
|
1,430,573
|
|
|
|
10.2
|
%
|
John L. Allen
|
|
|
24,000
|
|
|
|
24,000
|
|
|
|
0
|
|
|
|
24,000
|
|
|
|
0
|
|
|
|
*
|
|
Joe L. Barnes(5)
|
|
|
2,600
|
|
|
|
2,600
|
|
|
|
0
|
|
|
|
2,600
|
|
|
|
0
|
|
|
|
*
|
|
Mitchell G. Holthus
|
|
|
4,000
|
|
|
|
4,000
|
|
|
|
0
|
|
|
|
4,000
|
|
|
|
0
|
|
|
|
*
|
|
Travis W. Vrbas
|
|
|
1,120
|
|
|
|
1,120
|
|
|
|
0
|
|
|
|
1,120
|
|
|
|
0
|
|
|
|
*
|
|
Former Named Executive Officers
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Keith E. Bouchey
|
|
|
27,500
|
|
|
|
0
|
|
|
|
27,500
|
|
|
|
27,500
|
|
|
|
0
|
|
|
|
*
|
|
Anita F. Larson
|
|
|
174,800
|
|
|
|
|
|
|
|
174,800
|
|
|
|
172,400
|
|
|
|
2,400
|
|
|
|
1.2
|
%
|
All directors and executive officers as a group
(7 persons)(6)
|
|
|
6,540,007
|
|
|
|
80,677
|
|
|
|
6,459,330
|
|
|
|
85,477
|
|
|
|
6,459,330
|
|
|
|
46.0
|
%
|
|
|
|
(1)
|
|
All percentages herein represent the total number of shares
shown as beneficially owned by the individual or group as a
percentage of (1) 14,224,021 shares of common stock
issued and outstanding as of April 16, 2008; plus
(2) any shares that the individual or group had the right
to purchase within 60 days after such date pursuant to the
exercise of a vested stock option.
|
16
|
|
|
(2)
|
|
As of April 16, 2008, Brooke Holdings, Inc. owned
6,408,169 shares of our common stock, which represents
45.1% of the shares of common stock then outstanding. Robert D.
Orr and Leland G. Orr beneficially owned 68.2%, and 21.7%,
respectively, of the shares of common stock of Brooke Holdings,
Inc. as of that date. Robert Orrs wife also owned 5.5% of
the shares of common stock of Brooke Holdings, Inc. as of that
date.
|
|
(3)
|
|
Robert Orr indirectly beneficially owned all
6,408,169 shares of our common stock owned by Brooke
Holdings, Inc. as of April 16, 2008 by virtue of his
majority ownership and voting power of the common stock of
Brooke Holdings, Inc. on that date. As of that same date, Robert
Orr directly owned 25,453 shares, and members of his
immediate family owned 10,041 shares, of our common stock.
As of April 16, 2008, 6,098,000 shares of our common
stock owned by Brooke Holdings, Inc. were pledged as security
for loans. Accordingly
,
6,098,000 of the shares shown as
beneficially owned by Robert Orr have been pledged as security.
|
|
(4)
|
|
Leland Orr indirectly beneficially owned 1,390,573 shares of our
common stock as of April 16, 2008 through his 21.7%
ownership of the common stock of Brooke Holdings, Inc. on that
date. As of that same date, Leland Orr directly owned
24,624 shares, and members of his immediate family owned
40,000 shares, of our common stock. As of April 16,
2008, 6,098,000 shares of our common stock owned by Brooke
Holdings, Inc. were pledged as security for loans.
Accordingly
,
1,324,486 of the shares shown as
beneficially owned by Leland Orr have been pledged as security,
based on his percentage of beneficial ownership in Brooke
Holdings, Inc.
|
|
(5)
|
|
Shares reported as beneficially owned by Joe Barnes include
57,867 shares held by his wifes living trust with
respect to which Dr. Barnes is a co-trustee and a
beneficiary. Dr. Barnes disclaims beneficial ownership of
the shares held in trust.
|
|
(6)
|
|
All directors and executive officers as a group have pledged an
aggregate of 6,098,000 of the shares shown as beneficially owned
by such group as security for loans.
|
|
*
|
|
Represents less than one percent.
|
CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS
Robert D. Orr, Chairman of the Board, and Leland G. Orr,
President, Chief Executive Officer and Vice Chairman of the
Board, own a controlling interest in Brooke Holdings, Inc.,
which owned 45.1% of the Companys common stock at
April 16, 2008. On December 31, 2007, Brooke Holdings
loaned the Company $1,668,000 in the form of a demand revolving
credit facility bearing interest at the New York Prime rate as
published in the Wall Street Journal. Additionally, on
December 31, 2007, Brooke Holdings purchased a loan
participation from Brooke Capital Advisors, Inc. amounting to
$12,382,000.
Anita F. Larson, our President and Chief Operating Officer until
her resignation in September 2007 and currently a Senior Vice
President of Brooke Credit Corporation (d/b/a Aleritas Capital
Corp.), one of our majority-owned subsidiaries, is married to
John Arensberg, a partner in Arensberg Insurance of Overland
Park, Kansas. Arensberg Insurance is a franchisee of Brooke
Capital Corporation pursuant to a standard form franchise
agreement, and utilizes the administrative and processing
services of Brooke Capital Corporations service center
employees pursuant to a standard form service center agreement.
Brooke Capital Corporation receives in excess of $135,000 in
fees from the franchisee in connection with each of these
agreements.
PROPOSAL TWO
RATIFICATION
OF APPOINTMENT OF
INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM
The Audit Committee of our Board has appointed Summers,
Spencer & Callison, CPAs, Chartered to serve as our
independent registered public accounting firm for the fiscal
year ending December 31, 2008. The Board has ratified that
appointment. Summers, Spencer & Callison, CPAs,
Chartered has served as our independent auditor since 1997. Our
shareholders are being asked to further ratify this appointment
at the Meeting.
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Representatives of Summers, Spencer & Callison, CPAs,
Chartered (SS&C) will be present at the
Meeting, will have the opportunity to make a statement if they
desire to do so, and will be available to respond to appropriate
questions from shareholders.
Although it is not required to do so, the Board is submitting
its appointment of our independent registered public accounting
firm for ratification by the shareholders at the Meeting in
order to ascertain the views of shareholders regarding such
appointment. A majority of the votes cast at the Meeting, if a
quorum is present, will be sufficient to ratify the appointment
of Summers, Spencer & Callison, CPAs, Chartered as our
independent registered public accounting firm for the fiscal
year ending December 31, 2008. Whether the proposal is
approved or defeated, the Audit Committee of the Board may
reconsider its appointment.
Fees of
Independent Registered Public Accounting Firm
The following is a summary of anticipated and actual fees billed
by Summers, Spencer & Callison, CPAs, Chartered, our
independent auditors, for professional services rendered for the
fiscal years ended December 31, 2007 and December 31,
2006.
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Fiscal 2007
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Fiscal 2006
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Services Category
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Services
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Services
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Audit Fees(1)
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$
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529,000
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$
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325,000
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Audit Related Fees(2)
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$
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35,000
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$
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55,000
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Tax Fees
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$
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$
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9,000
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All Other Fees
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$
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$
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4,000
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Total Services
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$
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564,000
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$
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393,000
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(1)
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Audit fees consist of aggregate fees billed and anticipated in
2007 and 2006 for professional services rendered for
(1) the audit of our annual financial statements;
(2) the review of the interim financial statements included
in quarterly reports; (3) services that are normally
provided by the independent auditor in connection with statutory
and regulatory filings or engagements; or (4) the audits of
our wholly-owned subsidiary Brooke Brokerage Corporation and our
formerly wholly-owned subsidiaries Brooke Capital Corporation
and Brooke Credit Corporation.
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(2)
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Audit-Related Fees consist of aggregate fees billed and
anticipated for assurance and related services that are
reasonably related to the performance of the audit or review of
our financial statements and are not reported under Audit
Fees. Fees for 2007 included fees for the review of
registration statements and issuances of comfort letters in
connection with our registration of shares of our common stock
issued pursuant to a private placement of units in June 2007 and
the performance of
agreed-upon
and other procedures for our subsidiary, Brooke Credit
Corporation. Fees for 2006 included fees for the review of
registration statements and issuances of comfort letters in
connection with our registration of shares of our common stock
(1) to which shares of our designated 13% Perpetual
Convertible Preferred Stock Series 2006 sold in a private
placement to an accredited investor are convertible; and
(2) which may be purchased pursuant to a warrant issued to
such accredited investor. Fees for both years included fees for
agreed upon procedures for securitization offerings and fees for
the audit of our 401(k) retirement plan.
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The Audit Committee has considered whether the provision of
non-audit services by SS&C is compatible with maintaining
auditor independence and has determined that it is.
Pre-approval
of Policies and Procedures
The Audit Committees Charter provides for the Audit
Committee to pre-approve work to be performed by SS&C. The
Audit Committee must pre-approve all audit and permitted
non-audit services to be performed by our independent auditors.
All 2007 and 2006 services performed by SS&C were
pre-approved by the Audit Committee.
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Audit
Committee Report
The Audit Committee has reviewed and discussed the audited
financial statements with the Companys management. In
addition, the Audit Committee has discussed with the independent
registered public accounting firm of the Company the matters
required to be discussed by Auditing Standards 61, as amended.
The Audit Committee has received the written disclosures and the
letter from the independent registered public accounting firm
required by Independence Standards Board Standard No. 1,
has discussed with the independent registered public accounting
firm the independent registered public accounting firms
independence, and has discussed other matters as required by law
and the Audit Committees Charter. Based on the review and
discussions recited in this paragraph, the Audit Committee
recommended to the Board of Directors that our audited financial
statements be included in the Companys Annual Report on
Form 10-K
for the fiscal year ended December 31, 2007.
THE AUDIT COMMITTEE
John L. Allen
Joe L. Barnes
Derrol D. Hubbard
The affirmative vote of a majority of the outstanding shares of
common stock present and entitled to vote at the Meeting is
required to approve Proposal Two.
THE BOARD OF DIRECTORS RECOMMENDS RATIFICATION OF THE
APPOINTMENT OF SUMMERS, SPENCER AND CALLISON, CPAS, CHARTERED AS
OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR THE FISCAL
YEAR ENDING DECEMBER 31, 2008 AND PROXIES SOLICITED BY THE BOARD
WILL BE SO VOTED IN THE ABSENCE OF INSTRUCTIONS TO THE
CONTRARY.
SECTION 16(a)
BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as
amended, requires our executive officers and directors, and
persons who own more than ten percent (10%) of a registered
class of our equity securities (10% shareholders) to
file with the Securities and Exchange Commission reports of
beneficial ownership and changes in ownership of equity
securities of the Company and to furnish us with copies of all
Section 16(a) forms they file with the Securities and
Exchange Commission. Based solely on its review of the copies of
such forms prepared or received by us for our fiscal year ended
December 31, 2007, to the best of our knowledge, all
required reports were filed on time, and transactions by our
executive officers, directors and 10% shareholder were reported
in a timely manner.
SOLICITATION
OF PROXIES
This solicitation is being made by mail on behalf of the Board,
but may also be made without additional remuneration by our
officers or employees by telephone, email, telegraph, facsimile
transmission or personal interview. The expense of the
preparation, printing and mailing of this proxy statement and
the enclosed form of proxy and Notice of Annual Meeting, and any
additional material relating to the Meeting, which may be
furnished to shareholders by the Board subsequent to the
furnishing of this proxy statement, has been or will be borne by
us. We will reimburse banks and brokers who hold the common
stock in their name or custody, or in the name of nominees for
others, for their out-of-pocket expenses incurred in forwarding
copies of the proxy materials to those persons for whom they
hold common stock. To obtain the necessary representation of
shareholders at the Meeting, supplementary solicitations may be
made by mail, telephone, email or interview by our officers or
selected securities dealers. It is anticipated that the cost of
any other supplementary solicitations, if any, will not be
material.
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ANNUAL
REPORT
We have mailed with this proxy solicitation material our Annual
Report to Shareholders for the fiscal year ended
December 31, 2007.
SHAREHOLDER
PROPOSALS FOR 2009 ANNUAL MEETING
Shareholders are entitled to present proposals for action at
meetings of shareholders if they comply with the requirements of
the proxy rules of the Securities and Exchange Commission,
Kansas law and our charter and bylaws. In connection with this
years Meeting, no shareholder proposals were presented.
Any proposals intended to be presented at the Companys
Annual Meeting of Shareholders to be held in the year 2009 must
be received at our offices on or before November 26, 2008,
in order to be considered for inclusion in our proxy statement
and form of proxy relating to such meeting.
The accompanying proxy card grants the proxy holders
discretionary authority to vote on any matter raised at the
Meeting. If a shareholder intends to submit a proposal at our
2009 Annual Meeting of Shareholders, which proposal is not
intended to be included in our proxy statement and form of proxy
relating to such meeting, the shareholders notice of the
proposal must be received by us by February 9, 2009. If a
shareholder fails to submit the proposal by such date, we will
not be required to provide any information about the nature of
the proposal in our proxy statement, and the proxy for the 2009
Annual Meeting of Shareholders may confer discretionary
authority to vote on such proposal.
Proposals should be sent to the Secretary of the Company at 8500
College Boulevard, Overland Park, Kansas 66210.
OTHER
MATTERS
The Board is not aware of any matters to come before the
Meeting, other than those specified in the Notice of Annual
Meeting. However, if any other matter requiring a vote of the
shareholders should arise at the Meeting, it is the intention of
the persons named in the accompanying proxy to vote such proxy
in accordance with their best judgment.
VOTING
TRUSTEES AND THEIR NOMINEES
Please advise us whether other persons are the beneficial owners
of common stock for which proxies are being solicited from you,
and, if so, the number of copies of this proxy statement and
other soliciting materials you wish to receive in order to
supply copies to the beneficial owners of the common stock.
IT IS IMPORTANT THAT PROXIES BE RETURNED
PROMPTLY. SHAREHOLDERS, WHETHER OR NOT THEY EXPECT TO
ATTEND THE MEETING IN PERSON, ARE URGED TO COMPLETE, DATE AND
SIGN THE ENCLOSED PROXY CARD AND RETURN IT PROMPTLY IN THE
ENVELOPE PROVIDED FOR THAT PURPOSE. BY RETURNING YOUR PROXY CARD
PROMPTLY, YOU CAN HELP THE COMPANY AVOID THE EXPENSE OF
FOLLOW-UP
COMMUNICATIONS. SHAREHOLDERS WHO ATTEND THE MEETING MAY REVOKE A
PRIOR PROXY AND VOTE THEIR PROXY IN PERSON AS SET FORTH IN THIS
PROXY STATEMENT.
By Order of the Board of Directors
Carl Baranowski
Secretary
Overland Park, Kansas
April 29, 2008
20
ANNUAL MEETING OF SHAREHOLDERS OF
BROOKE CORPORATION
May 15, 2008
Please date, sign and mail
your proxy card in the envelope
provided as soon as possible.
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1
â
Please detach along perforated line and mail in the envelope provided
â
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20830000000000001000 3
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042607
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THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSAL 1 AND FOR PROPOSAL 2.
PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. PLEASE MARK YOUR VOTE
IN BLUE OR BLACK INK AS SHOWN HERE
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1.
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Election of Directors:
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NOMINEES:
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2.
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Proposal to ratify the appointment of Summers,
Spencer & Callison, CPAs, Chartered as the Companys independent
registered public accounting firm for the fiscal year ending December 31, 2008.
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FOR
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AGAINST
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ABSTAIN
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FOR ALL NOMINEES
WITHHOLD AUTHORITY
FOR ALL
NOMINEES
FOR ALL EXCEPT
(See instructions below)
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¡
¡
¡
¡
¡
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ROBERT D. ORR
LELAND G. ORR
JOHN L. ALLEN
JOE L. BARNES
MITCHELL G. HOLTHUS
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o
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o
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In the discretion of such proxy holders, upon such other business as may
properly come before the Meeting or any and all postponements or
adjournments thereof.
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The undersigned hereby acknowledges receipt of the Notice of Annual Meeting
of Shareholders for the Meeting and the Proxy Statement furnished
therewith.
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INSTRUCTION:
To withhold authority to vote for any individual nominee(s), mark FOR ALL EXCEPT
and fill in the circle next to each nominee you wish to withhold, as
shown here:
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TO SAVE THE COMPANY ADDITIONAL VOTE SOLICITATION EXPENSES, PLEASE SIGN, DATE AND
RETURN THIS PROXY PROMPTLY, USING THE ENCLOSED ENVELOPE.
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MARK
X HERE IF YOU PLAN TO ATTEND THE
MEETING
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To change the address on your account, please check the box at right and indicate your new address in the address space above.
Please note that changes to the registered name(s) on the account may not be submitted via this method.
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Signature
of
Shareholder
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Date:
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Signature
of
Shareholder
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Date:
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Note:
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Please sign exactly as your name or names appear on this Proxy. When shares are held jointly, each holder should sign. When signing as executor, administrator, attorney, trustee or guardian, please give full title as such. If the signer is a corporation, please sign full corporate name by duly authorized officer, giving full title as such. If signer is a partnership, please sign in partnership name by authorized person.
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BROOKE CORPORATION
8500 College Boulevard
Overland Park, Kansas 66210
(913) 661-0123
ANNUAL MEETING DATE: MAY 15, 2008
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
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The shareholder(s) of Brooke Corporation (the Company), a Kansas corporation, whose signature(s) appear on the reverse side hereby constitute(s) and
appoint(s) Robert D. Orr and Leland G. Orr, and each of them, proxies, with full power of substitution, for and on behalf of the undersigned to vote, as designated on the reverse side,
according to the number of shares of the Companys $0.01 par value common stock held of record by the undersigned at the close of business on April 16, 2008, and as fully as the
undersigned would be entitled to vote if personally present, at the
Annual Meeting of Shareholders to be held at our corporate offices
located at 8500 College Boulevard, Overland Park, Kansas, on Thursday, May 15, 2008, at 11:00 a.m. local time (CDT), and at any postponements or adjournments thereof.
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THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY THE UNDERSIGNED. IF PROPERLY EXECUTED AND NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR EACH OF THE OTHER ITEMS SET FORTH ON THE PROXY.
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(Continued and to be signed on the reverse side)