UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

SCHEDULE 14A

 

March 27, 2008

 

Dear Shareholders:

 

We cordially invite you to our Annual Meeting of Shareholders. The meeting will be held on Sunday, April 27, 2008 at 9:00 a.m. at the Ponce de León Rooms A, B, and C of the Condado Plaza Hotel, 999 Ashford Avenue in San Juan, Puerto Rico. At the meeting, among other matters, shareholders will be asked to elect nominees for the Board of Directors, amend our Amended and Restated Articles of Incorporation, and approve the Triple-S Management Corporation 2007 Incentive Plan.

 

Your vote is very important. Please take the time to carefully read each of the proposals described in the attached Proxy Statement. It is important that your shares be represented and voted at the meeting. Whether you plan to attend or not, please sign, date, and return the proxy card solicited by our Board of Directors. You may vote by mail by sending the enclosed proxy card in the postage-paid envelope enclosed for your convenience. Also, you may vote by telephone or by internet at:

 

 

We strongly encourage you to vote in the above mentioned manner. Shareholders who do not register their proxies before the day of the meeting may register them on Sunday, April 27, 2008, from 8:00 a.m. until 9:00 a.m.

 

To accelerate the process of registration, we enclose a proxy card printed with your name. We are sure that this will contribute to the success of the proxy registration process.

 

This proxy statement and the accompanying proxy card are being mailed to our shareholders beginning on or about March 27, 2008.

 

Your Board of Directors is counting on your participation. Your vote is important!

 

Sincerely,

 

 

Wilmer Rodríguez-Silva, MD
Chairman of the Board

Triple-S Management Corporation
P.O. Box 363628
San Juan, Puerto Rico 00936-3628

 

 

 

This proxy statement and the accompanying proxy card are being mailed to shareholders beginning on or about March 27, 2008.

 

Who is soliciting my vote?

 

The Board of Directors (“Board”) of Triple-S Management Corporation (“Corporation”) is soliciting your vote at the meeting.

 

What will I be voting on?

 

 

How many votes do I have?

 

You will have one vote for every share of our Class A common stock (hereinafter “Class A shares”) and Class B common stock (hereinafter “Class B shares”), entitled to vote, that you owned as of the close of business on March 18, 2008, the record date for the annual meeting. Class A shares and Class B shares are sometimes referred to collectively as common stock.

 

How many votes can be cast by all shareholders?

 

As of the record date there were 32,309,363 shares of common stock issued and outstanding and entitled to vote, consisting of 16,042,809 issued and outstanding Class A shares and 16,266,554 issued and outstanding Class B shares. Each share of common stock is entitled to one vote and all shares of each class shall vote together as a single class on all matters brought before the annual meeting. The shares are entitled to vote by any proxy card that is properly executed and received before 9:00 a.m. on the day of the annual meeting.

 

How many shares must be present to hold the meeting?

 

A majority of the issued and outstanding shares of common stock of the Corporation. If at the designated time quorum is not reached, the annual meeting will be postponed for a half hour, after which one-third (1/3) of the voting shares issued and outstanding will constitute a quorum. We urge you to vote by proxy even if you plan to attend the annual meeting so that we will know as soon as possible that enough voting shares will be present for us to hold the annual meeting.

 

How do I vote?

 

You can vote either in person at the meeting, by telephone, internet or mail, whether or not you attend the meeting.

 

 

If you plan to vote via telephone or internet, you may enter your voting instructions until noon Eastern Time the day before the annual meeting. After such time voting instructions will not be accepted via telephone or internet.

Who can be present at the annual meeting?

 

Only holders of our common stock may be present at the annual meeting. No other person, including those persons accompanying a shareholder, will be allowed at the annual meeting.

 

To vote in person at the annual meeting or be present at the meeting, holders of Class B shares must present a Legal Proxy, which can be obtained through their broker.

 

Who will bear the cost of soliciting proxies?

 

We will bear the entire cost of soliciting proxies for the annual meeting, including the preparation, assembly, printing and mailing of this proxy statement, the proxy card and any additional solicitation materials furnished to shareholders. The original solicitation of proxies by mail may be supplemented by solicitation in person, telephone, facsimile, email or any other means by our directors, officers or certain persons on behalf of our Board. No additional compensation will be paid to those individuals for any such services. In addition, our Board may engage one or more solicitation agents to aid in the solicitation of proxies. We will bear the additional costs of such a solicitation, which, together with the costs of the preparation, assembly, printing and mailing of this proxy statement, the proxy card and any additional solicitation materials furnished to shareholders, are not expected to exceed $200,000. Currently no solicitation agents have been engaged.

 

Can I change my vote?

 

Yes. A shareholder may revoke his or her proxy or change his or her vote at any time before the proxy is voted at the annual meeting. You can revoke your proxy or change your vote in one of four ways:

 

1. by sending a signed notice of revocation to our corporate secretary to revoke your proxy;

 

2. by sending to our corporate secretary a completed proxy card bearing a later date than your original proxy indicating the change in your vote;

 

3. by logging on to the Internet website specified on the proxy card in the same manner you would to submit your proxy electronically or calling the telephone number specified on the proxy card, and in each case following the instructions to revoke or change your vote; or

 

4. by attending the annual meeting and voting in person, which will automatically cancel any proxy previously given, or by revoking your proxy in person.

 

If you choose any of the first two methods, you must take the described action no later than the 2008 annual meeting. If you choose the third method, you have until noon Eastern Time the day before the annual meeting to enter instructions to revoke or change your vote. If your shares are held in street name by a broker, bank or other financial institution, you must contact that institution to change your vote.

 

How are my votes counted?

 

You may either vote for or withhold authority to vote for each nominee for our Board. You may vote for or against or you may abstain on the other proposals. If you withhold authority to vote with respect to any nominee, your shares will be counted for purposes of establishing a quorum, but will have no effect on the election of that nominee. If you abstain from voting on the other proposals, your shares will be counted as present for purposes of establishing a quorum, and the abstention will have the same effect as a vote against that proposal.

 

How many votes are required to elect directors and to adopt the other proposals?

 

Directors are elected (Proposal 1) by a majority of the votes cast by the holders of our common stock at the annual meeting.

 

The amendment of the Articles (Proposals 2 and 3), and the approval of the Plan (Proposal 4) require the affirmative vote of a majority of the issued and outstanding shares of common stock, entitled to vote, as of the record date.

Could other matters be decided at the meeting?

 

We do not know of any other matters that may come before the annual meeting. However, if any new matter requiring the vote of our shareholders is properly presented before the annual meeting, proxies may be voted with respect thereto at the discretion of the proxy holders.

 

What happens if the meeting is postponed or adjourned?

 

Your proxy will still be good and may be voted at the postponed or adjourned meeting. You will still be able to change or revoke your proxy until it is voted.

 

What should I receive?

 

This proxy statement, our Annual Report, the Notice of Annual Meeting of Shareholders and the proxy card, which are being mailed to you on or about March 27, 2008. Our Annual Report includes our audited financial statements for the year ended December 31, 2007, duly audited by KPMG LLP, as independent registered public accounting firm.

 

* * *

 

The following table shows, as of March 11, 2008, the amount of the Corporation’s Class B shares beneficially owned (unless otherwise indicated in the footnotes) by each 5% shareholder of the Corporation. The information is based on reports filed with the Securities and Exchange Commission (“SEC”).

 

 

 

 

The following table shows the beneficial ownership of our common stock by our directors, nominees and certain executive officers as of March 18, 2008, and the number of shares beneficially owned by all directors and executive officers as a group:

 

 

 

 

Section 16(a) of the Securities Exchange Act of 1934, as amended, requires that our directors and executive officers file with the SEC reports of ownership and changes in ownership of our stock and to furnish us with copies of all Section 16(a) forms they file.

 

Based solely on our review of the copies of such reports we received or written representations that no other reports were required, we believe that, during 2007, all filing requirements applicable to our officers and directors were satisfied.

 

In December 2007, each of our directors and executive officers untimely filed a Form 4, reporting shares received under the Plan.

 

v   v   v

 

Our Articles and the Bylaws of the Corporation (“Bylaws”) establish that our Board shall consist of not less than nine (9) directors, nor more than nineteen (19) directors, from which at least the majority must be representatives of the “community,” as such term is defined by the Blue Cross and Blue Shield Association (“BCBSA”). The number of directors shall be fixed from time to time, by resolution of the Board.

 

Our Board is a staggered board divided into three groups, consisting of five (5), six (6) and seven (7) directors, respectively. Each director serves for a term ending on the date of the third annual meeting of shareholders following the annual meeting at which such director was elected or until his successor has been elected and qualified. In the event that there is a vacancy on our Board, or a new directorship is created, our Board shall choose a successor by the affirmative vote of a majority of the current directors, or by an election at an annual or special meeting called for that purpose. A director elected to fill a vacancy shall be elected for the unexpired term of his or her predecessor in office or, if the vacancy is caused by an increase in the number of directors, until the next election of one or more directors by shareholders and in either case, may be reelected for only two (2) additional successive terms. In accordance with our Bylaws, the President and Chief Executive Officer, is a member of the Board and is excluded from the three groups of directors. In addition, our Articles and Bylaws provide that, with the exception of the President and Chief Executive Officer, directors may not be elected to the Board for more than three terms or serve as such for more than nine years. Accordingly, doctor Wilmer Rodríguez-Silva, doctor Arturo Córdova-López and doctor Wilfredo López-Hernández are not being nominated for election at the annual meeting.

PROPOSAL 1: ELECTION OF THREE GROUP 1 DIRECTORS FOR A THREE-YEAR TERM

 

On February 28, 2008 our Board approved a resolution reducing its size to 17 members. The effectiveness and implementation of this resolution is contingent on the approval by the shareholders of Proposal 2. Due to our Board’s reduction in size, “Group 1” of the directors will now be comprised of three members instead of five members. At the annual meeting, shareholders will only be entitled to vote for the election of the three nominees proposed by the Board.

 

At the meeting, three directors assigned to “Group 1” will be elected to serve until the 2011 annual meeting of shareholders or until their respective successors are elected and qualified. The remaining 14 directors will continue to serve as directors, as follows: until the 2009 annual meeting of shareholders, in the case of the six directors assigned to “Group 2,” and until the 2010 annual meeting of shareholders, in the case of the seven directors assigned to “Group 3,” or in each case until their successors are elected and qualified.

 

The persons named as proxies in the accompanying proxy card have advised us that, unless otherwise instructed, they intend to vote at the meeting the shares covered by the proxies FOR the election of the three nominees named below, and that if any one or more of such nominees should become unavailable for election they intend to vote such shares FOR the election of such substitute nominees as your board may propose. We have no knowledge that any nominee will become unavailable for election.

 

Information relating to principal occupation, business experience and directorships during the past five years (including positions held with us, age and the period during which each director has served) is set forth below.

 

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José Hawayek-Alemañy, MD (59).   Since 2005, Dr. Hawayek-Alemañy has served on our Board. Since 1976, he has been a professor at the University of Puerto Rico, School of Medicine. From 1988 to 1998, he was director of the Office of Graduate Medical Education at the University of Puerto Rico, School of Medicine and, from 1998 to 2002, he was Dean of Academic Affairs at the University of Puerto Rico, School

of Medicine. He is president of the OB-GYN Section of the Puerto Rico Medical Association. Since 2000, he has represented Puerto Rico in the Maternal Mortality & Morbidity Committee of the American College of OB-GYN. From 2003 to 2005, he was Senate Member and Treasurer of the OB-GYN Section of the Medical College of Puerto Rico. He also served as president of the Medicare Carrier Advisory Committee in Puerto Rico. He holds a B.S. degree in pre-medicine from the University of Puerto Rico, Mayaguez Campus, a M.D. degree from the University of Puerto Rico, School of Medicine, and a specialty in OB-GYN from University Hospital.

 

Adamina Soto-Martínez, CPA (60).   Since 2002, Ms. Soto-Martínez has served on our Board. She is treasurer of our Board. She is currently a C.P.A. and a partner and a founding member of the firm Kevane Grant Thornton, LLP (formerly Kevane Soto Pasarell Grant Thornton, LLP), certified public accountants, where she has worked since 1975. Ms. Soto-Martínez is a member of the Puerto Rico Society of Certified Public Accountants and the American Institute of Certified Public Accountants. She is a graduate of the University of Puerto Rico.

 

Jorge L. Fuentes-Benejam, PE (59).   Mr. Fuentes-Benejam is a nominee to our Board. Since 1986, Mr. Fuentes-Benejam has been Chairman of the Board, President and Chief Executive Officer of Fuentes Concrete Pile Co. Inc. and related entities. Currently, Mr. Fuentes-Benejam is a member of the Board of Trustees of Interamerican University. Mr. Fuentes-Benejam is a member of the Board of VS Real Estate Group and is the Chairman of the Board of Trustees of the Patronato del Palacio de Santa Catalina. Mr. Fuentes-Benejam is a licensed engineer who holds a B.S. in Mechanical Engineering from the University of Puerto Rico, Mayagüez Campus.

 

Valeriano Alicea-Cruz, MD (62).   Since 2000, Dr. Alicea-Cruz has served on our Board. He has been an Ophthalmologist with a private practice since 1976, and has offices in two municipalities of Puerto Rico. He is an active member of the Puerto Rico Medical Association, the American Academy of Ophthalmology, the Puerto Rican Society of Ophthalmology, the University of Puerto Rico School of Medicine Alumni Society, and the Pan-American Society of Ophthalmology. He has served on the Medical Board of the Department of Transportation and Public Works, and the board of directors of Ojos, Inc. Dr. Alicea-Cruz holds a B.S. degree from the University of Puerto Rico, an M.D. degree from the University of Puerto Rico, School of Medicine, and a Postgraduate Degree in Ophthalmology from the Puerto Rico Medical Center and Affiliate Hospitals.

 

José Arturo Álvarez-Gallardo (65).   Since 2000, Mr. Álvarez-Gallardo has served on our Board. Since 1964, Mr. Alvarez-Gallardo has served in various positions with Mendez & Co., Inc. , where he has served as president since 1998. He has served on the boards of directors of Mendez & Co., Inc. , Bamco Products Corporation, International Shipping Agency, Menaco Corporation, and Mendez Realty Equities, Inc. Mr. Alvarez-Gallardo holds a B.B.A. degree in Business Administration from Iona College.

 

Luis A. Clavell-Rodríguez, MD (56).   Since 2006, Dr. Clavell-Rodríguez has served on our Board, of which he is currently secretary. He currently serves as the Medical Director at the San Jorge Children’s Hospital and as the Principal Investigator for the Children’s Oncology Group and the Dana Farber Acute Lymphoblastic Leukemia Consortium. He has held positions as professor of Pediatrics and Pathology at the University of Puerto Rico School of Medicine and is a former director of Pediatric Oncology and the training program in Pediatric Hematology/Oncology. He is certified by the National Board of Medical Examiners, the American Board of Pediatrics, and the Sub-Board of Pediatric Hematology/Oncology. He is also a member of the American Society of Hematology, American Society of Clinical Oncology and the American Society of Pediatric Hematology/Oncology. Dr. Clavell-Rodríguez holds a B.S. degree from the Catholic University of Puerto Rico and an M.D. degree from the University of Puerto Rico, School of Medicine. He also completed his training in pediatrics at the University of California, School of Medicine and fellowships training from Harvard Medical School, Children’s Hospital Medical Center in Boston, MA, and the Sidney Farber Cancer Institute.

Porfirio E. Díaz-Torres, MD (65).   Since 2000, he has served on our Board. Since 1988, Dr. Díaz-Torres serves as the Director of the Cardiology Division of the Cardiology and Nuclear Center in San Juan, Puerto Rico. Dr. Díaz-Torres is also President of Old Harbor Brewery of Puerto Rico, Inc. and Di’ Rome Productions, Inc. He is an active member of the American College of Cardiologists and the American Medical Association. He is active on the medical staff of Centro Cardiovascular de Puerto Rico y del Caribe and Auxilio Mutuo Hospital. Dr. Díaz-Torres holds a B.B.A. degree in Business Administration from the University of Puerto Rico and an M.D. degree from Universidad Central del Este in the Dominican Republic.

 

Vicente J. León-Irizarry, CPA (69).   Since 2000, Mr. León-Irizarry has served on our Board, of which he is currently vice chairman. He is a C.P.A. and since January 2002 he has been a business consultant. Since February 2008, he has been a director of the Tax Free Puerto Rico Fund, Fund II and Target Maturity Fund, the Puerto Rico AAA Portfolio Target Maturity Fund, Portfolio Bond Fund and Portfolio Bond Fund II, the Puerto Rico Fixed Income Fund, II, III, IV and V, the PR GNMA & US Government Target Maturity Fund, the Puerto Rico Mortgage Backed & US Securities Fund, the UBS IRA Select Growth and Income Puerto Rico Fund, the Multi-Select Securities Puerto Rico Fund and the Puerto Rico Short Term Investment Fund. He worked as consultant for Falcón-Sánchez & Associates, a certified public accounting firm, from February 2000 to December 2001, and as a business consultant from January 1999 to February 2000. He is a member of the Puerto Rico Society of Certified Public Accountants. He holds a B.B.A. degree with a major in Accounting from the University of Puerto Rico.

 

Jesús R. Sánchez-Colón, DMD (52).   Since 2000, Dr. Sánchez-Colón has served on our Board. He is currently Assistant Secretary of our Board. Dr. Sánchez-Colón is a dentist and has had a private practice since 1982. He is member of the College of Dental Surgeons of Puerto Rico, where he served as secretary and auditor, and he is also a member of the American Dental Association. He currently serves as chairman of the board of directors of B. Fernández & Hermanos, Inc. and since January 2007 is member of the board of directors of BF Holding . He has been chairman of the board of directors of Delta Dental Plan of Puerto Rico and vice chairman of the board of directors of the Corporation for the Economic Development of the City of San Juan. Dr. Sánchez-Colón holds a B.A. degree in Psychology from St. Louis University, a D.M.D. degree from the University of Puerto Rico, and a Postgraduate General Practice Residency at the Veterans Administration Hospital in San Juan, Puerto Rico.

 

Carmen Ana Culpeper-Ramírez (62).   Since 2004, Ms. Culpeper-Ramírez has served on our Board, of which she is currently assistant treasurer. She is currently Vice President of Investments for BBVA Securities in Puerto Rico. She served as the director of the Small Business Administration (SBA) for the Puerto Rico and U.S. Virgin Islands District from April 2004 until April 2007. From 2000 to March 2004, she was president and chief executive officer of C. Culpeper & Associates, a management consulting business, which offered organizational development, project and financial management services. She served as a member of the board of directors of Levitt Homes, Inc., Centennial Communications, Inc., Santander BanCorp, Intech de Puerto Rico and as chairwoman of the board of the San Juan Human Capital Development Board. From 1997 to 1999, Ms. Culpeper-Ramírez worked for two years as President of the Puerto Rico Telephone Company, the tenth largest telephone company in the United States, and was responsible for its sale to GTE/Verizon. From 1999 to 2000, she also served as president of the Puerto Rico Chamber of Commerce. She holds a B.B.A. in Finance from the University of Puerto Rico and an M.B.A. from the University of Pennsylvania, Wharton School of Business (International Business).

 

Antonio F. Faría-Soto (59).   Mr. Faría-Soto has served on our Board since May 2007. From 2005 to 2006, Mr. Faría-Soto was Chairman of the Board of Directors and CEO of Doral Bank and President of Doral Money, a subsidiary of Doral Bank. From 2003 to 2004, Mr. Faría-Soto was President and CEO of the Government Development Bank of Puerto Rico, and he served as ex-officio member and Chairman of the Boards of AFICA (infrastructure development financing vehicle for profit and non-profit organizations), the Economic Development Bank of Puerto Rico, the Tourism Development Fund, and the Children’s Trust Fund. He also served as a member of the boards of the Public Buildings Authority, Government Employees Retirement System Administration, Puerto Rico Telephone Authority Holdings Corp., Puerto Rico Industrial

Development Corp, Teacher’s Retirement System, Ultracom, and Convention Center District Administration. Also, he has served as a member of the Governor’s Economic Development Council for the Government of Puerto Rico, and as member ex-officio of FIDA and Promo Expo. From 2002 to 2003, he served as President of the Economic Development Bank of Puerto Rico and from 2001 to 2002 he was Commissioner of the Office of Financial Institutions. Mr. Faría-Soto holds a B.B.A. from the Catholic University of Puerto Rico and an M.B.A. in Finance from the Inter American University of Puerto Rico.

 

Manuel Figueroa-Collazo, PE, PhD (56).   Since 2004, Dr. Figueroa-Collazo has served on our Board. Since 1999, Dr. Figueroa-Collazo is President of VERNET, Inc., an educational software development Company located in Caguas, Puerto Rico. Dr. Figueroa-Collazo is also a member of the Board of Directors of INTECO, Puerto Rico Products Association, EPSCOR, and Vivero de Tecnología y Ciencia de Puerto Rico . He has 12 years of experience in senior management positions and over twenty years of exposure at all management levels within the communications and systems industries. He was general manager for Lucent Technologies, Mexico and a Department Head at AT&T Bell Laboratories. Dr. Figueroa-Collazo holds B.S., M.S., and Ph.D. degrees in Electrical Engineering from the Florida Institute of Technology, and he attended advanced management programs in INSEAD Fontainebleau, France, and University of Pennsylvania, Wharton School of Business.

 

Jaime Morgan-Stubbe, Esq. (49).   Mr. Morgan-Stubbe has served on our Board since May 2007. Since 2000 he is an active member of the Board of Directors of the Puerto Rico Homebuilders Association and member of the Board of Trustees of the Palmas del Mar Academy. From 2002 to 2004 he served as a member of the Board of Trustees of the Baldwin School of Puerto Rico. Since 2000 he has served as President of Palmas del Mar Properties, Inc., a land and real estate development company and owner of the largest master planned residential-resort community in Humacao, Puerto Rico. Prior to becoming a real estate developer, Mr. Morgan was a business, corporate, real estate and tax attorney. He worked for the law firm of Goldman Antonetti & Córdova, P.S.C. He was director of the Economic Development Administration (FOMENTO), President of the Puerto Rico Industrial Development Company (PRIDCO), and Executive Director of the Puerto Rico Maritime Shipping Authority (Navieras de Puerto Rico), during his tenure in Government from 1993 to 1999. He graduated from Tulane University in New Orleans in 1980 and continued graduate studies in law at the University of Puerto Rico.

 

Roberto Muñoz-Zayas, MD (78).   Dr. Muñoz-Zayas has served on our Board since May 2007. He was President of the Board of Directors of the Regional Bank of Bayamón and the Bayamón Mortgage Loan Corp. He also served as a member of the Board of Directors of the Hospital Matilde Brenes, Inc. Dr. Muñoz-Zayas was President of the Athletics Federation of Puerto Rico, and he was President of the Colonia Hispanoamericana de Puerto Rico, the Club Exchange in Bayamón, and the Federation of Sport Medicine of Puerto Rico. From 1974 to 2004, Dr. Muñoz-Zayas was Medical Director of the Olympic Committee of Puerto Rico and the Caribbean Series of Puerto Rico. He holds a B.A. degree in Science from the University of Puerto Rico, a Ph.D. degree in Medicine from the University of Santiago de Compostela, and a Post-Graduate Degree from the Jacobi Municipal Hospital in New York.

 

Miguel A. Nazario-Franco (60).   Since 2004, Mr. Nazario-Franco has served on our Board. Mr. Nazario-Franco is an active member of the boards of directors of FRG (formerly Ferré Investment Fund) and Empresas Santana . He is also a member of the Advisory Board of Cortez Industrial Organization. From 1994 to 2002, Mr. Nazario-Franco worked for Puerto Rican Cement Co., Inc. where he held various positions, including those of president, chief executive officer, and president of the board of directors. From 1995 to 2005 he served as a member of the board of directors of El Día, Inc. From January 1999 to August 2000, he was president of the Puerto Rico Manufacturers Association. From 2002 to 2004, he served as a member of the Advisory Boards of the Puerto Rico Department of Education and Consejo Asesor de la Industria de la Construcción until December 2004. He also served on the boards of directors of the Puerto Rico Aqueduct and Sewer Authority and Compañía para el Desarrollo Integral de la Peninsula de Cantera until December 2005 and on the board of directors of Puerto Rico Electric Power Authority until January 2006. Mr. Nazario-Franco holds a B.B.A. degree in Accounting from the University of Puerto Rico.

 

Juan E. Rodríguez-Díaz, Esq. (66).   Since December 2004, Mr. Rodríguez-Díaz has served on our Board. Mr. Rodríguez-Díaz is a commercial, corporate and tax attorney admitted to the practice of law in Puerto Rico and New York who currently works as senior and managing partner of Totti & Rodríguez Díaz. He has worked

in various prestigious law firms including Baker & McKenzie, McConnell Valdés, and Sweeting, Pons, González & Rodríguez. Mr. Rodríguez-Díaz also served as Undersecretary of the Department of Treasury of Puerto Rico from 1971-1973. He serves as a member of the boards of directors of Industrias Vassallo, Inc. , Vassallo Research and Development, Inc., Ochoa Industrial Sales Corp., Triangle Cargo Services, Inc., and Luis Ayala Colón Sucrs., Inc. Mr. Rodríguez-Díaz holds a B.A. degree from Yale University, a J.D. degree from Harvard University and a Masters of Laws (L.L.M. in taxation) from New York University, School of Law.

 

Our Board holds scheduled meetings at least quarterly. Special board meetings are held when convened by the Chairman, or by at least five directors. Our Board met 20 times during 2007, and all directors attended at least 75% of the meetings scheduled by the Board and the committees of which they were members.

 

While we encourage directors to attend our annual meeting of shareholders, we have not adopted a formal policy requiring director attendance at the annual meeting of shareholders. All of our directors attended the last annual meeting of shareholders.

 

Our Board has determined that Mr. Álvarez-Gallardo, Ms. Culpeper-Ramírez, Mr. Figueroa-Collazo, Mr. León-Irizarry, Mr. Nazario-Franco, Mr. Rodríguez-Díaz, Ms. Soto-Martínez, Mr. Faría-Soto, Mr. Morgan-Stubbe and Dr. Muñoz-Zayas have no material relationship with the Corporation. Also, Mr. Jorge L. Fuentes-Benejam is a nominee for the Board and has no material relationship with the Corporation. Our Board has adopted the New York Stock Exchange (“NYSE”) director independence standards as guidelines for corporate governance policy. The previously mentioned directors are independent under these director independence standards as determined and approved by the Board. A copy of the Independence Standards adopted by the Board is attached to this Proxy Statement as Exhibit A.

 

* * *

 

Any shareholder who desires to contact our Board or any of its members individually may do so by writing to: Triple-S Management Corporation, Board of Directors, P.O. Box 363628, San Juan, P.R. 00936-3628. The Board will give appropriate attention to written communications that are submitted by the shareholders and will respond if and as appropriate. Absent unusual circumstances or as contemplated by committee charters and subject to any required assistance or advice from legal counsel, the Chairman of the Board is responsible for monitoring communications from shareholders and for providing copies or summaries of such communications to the other directors as he considers appropriate. The Chairman will forward communications to all directors if they relate to important substantive matters or include important suggestions or comments that merit a director’s attention. In general, communications related to corporate governance and long-term corporate strategy are more likely to be forwarded than communications related to ordinary business affairs, personal grievances, and matters as to which we tend to receive repetitive or duplicative communications.

 

Alternatively, a shareholder may confidentially contact our Audit Committee by calling our EthicsPoint services at the toll-free number 1-866-384-4277 or electronically through www.ethicspoint.com . Communications will be received by the Audit Committee, and communications that are not related to accounting or auditing matters, may be discretionally forwarded by the Audit Committee or any of its members to other committees of the Board or management for review. Communications received by EthicsPoint are completely confidential and allow for shareholders and employees to report any violations or irregularities that could affect the Corporation.

 

* * *

 

The Board has established a code of business conduct and ethics that applies to our employees, agents, independent contractors, consultants, officers and directors. Any waiver of the code of business conduct and ethics may be made only by our Board and will be promptly disclosed as required by law or stock exchange regulations. Our Board has not granted any waivers to the code of business conduct and ethics. The complete text of the Code of Business Conduct and Ethics is available at the Corporation’s website at www.triplesmanagement.com.

 

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The Bylaws provide that our Board may, by resolution passed by a majority of the entire board, designate one or more committees. The Corporation currently has the following standing committees: corporate governance, nominations, compensation and audit. All members of the standing committees serve for a one year term. In addition to these standing committees, we have a number of ad hoc committees. According to BCBSA requirements, our officers and employees, including those of our subsidiaries, cannot be members of the Compensation, Nominations or Audit Committees.

 

A brief description of each of the Nominations Committee, Compensation Committee and the Audit Committee is set forth below:

 

The duties of the nominations committee are to (i) identify and recommend individuals who are best suited to become members of our Board, who will be presented as candidates endorsed by the Board at the annual meeting of shareholders, (ii) recommend to our Board the best qualified candidates to fill vacancies, (iii) evaluate the performance of the directors pursuant to criteria and objectives established by the Board from time to time; (iv) establish and periodically review the qualifications of the candidates to be endorsed by the Board and (v) recommend to the Board the best qualified candidates to occupy the position of our president. The Nominations Committee Charter is available at the Corporation’s web site: www.triplesmanagement.com.

 

Also, the committee reviews and recommends a board composition that meets the independence criteria set forth by the NYSE, the BCBSA and good governance practices. It recommends the nomination of directors to terms of office which meet the BCBSA guidelines established for a staggered term board and reviews board members group evaluations. Based on these evaluations, the committee may either recommend re-nominations or replacements when their terms expire, or if the member’s term has not elapsed recommend corrective actions to address performance weaknesses. If the deficiencies are of a significant nature, the committee may recommend the replacement of such director.

 

The committee met 5 times during the fiscal year ended on December 31, 2007. As of March 27, 2008, the members of the committee are: Mr. Miguel Nazario-Franco, Chair of the committee, Mr. Álvarez-Gallardo, Mr. Morgan-Stubbe, Mr. Figueroa-Collazo, Ms. Culpeper-Ramírez, Dr. Muñoz-Zayas and Mr. Rodríguez-Díaz. The Board has determined all members of the nominations committee are independent within the meaning of the NYSE rules.

 

The nominations process followed by the committee is as follows:

 

(1) Shareholders may nominate candidates to the Board. Candidates recommended by shareholders will receive the same consideration as candidates recommended otherwise. Information regarding candidates nominated by a shareholder must be addressed to the attention of the Secretary of the Board.

 

(2) A shareholder may present a nominee at the annual meeting if he or she is a holder of record as of the applicable record date and such shareholder has delivered written notice of such proposal containing the information specified in our Bylaws not later than 120 days nor earlier than 150 days prior to the first anniversary of the preceding year’s annual meeting.

(3) The Nominations Committee’s duties are to ensure that the Board has the plans, procedures, and resources needed to identify, recruit, and retain directors. The Nominations Committee will identify the individuals who, in their judgment, are best qualified to serve on the Board and present its recommendations to the Board for endorsement at the annual meeting. This committee will also make recommendations to fill any vacancies in the Board that might arise from time to time.

 

(4) Individuals interested in serving as directors must meet all legal and statutory requirements. These minimum requirements are contained in Article 6-2 of our Bylaws. They include the following: (a) not having filed for bankruptcy, nor granted a fraudulent general assignment for the benefit of creditors, (b) not have been convicted of a felony or grave misdemeanor which involves moral depravation or turpitude, and (c) comply with any applicable requirements under BCBSA rules.

 

(5) The Nominations Committee develops qualifying criteria and is responsible for identifying, interviewing, and recommending to the Board those potential candidates that, in their judgment, are best qualified. Throughout this process, the committee may verify that the selected individuals possess the following specific qualities or skills: (a) experience or relevant knowledge, (b) time availability and commitment, (c) good reputation, (d) analytical thinking, (e) ability to work as a team, (f) independent judgment, and (g) ability to verbalize and present ideas in a rational and eloquent fashion. In addition, the Nominations Committee may include other requirements that it may deem necessary to strengthen the Corporation and fulfill its needs as vacancies occur. This practice is aimed at complying with good corporate governance practices.

 

(6) The Nominations Committee has the authority to hire and terminate the services of any professional third-party search firm to identify potential candidates for the position of director. During 2007, the Committee hired the services of a third party search firm to evaluate and identify possible nominees for the Board.

 

(7) The committee identified and recommended the nominations of Dr. José Hawayek-Alemañy and Ms. Adamina Soto-Martínez, each of whom is currently a member of our Board.

 

(8) The committee also identified and recommended one nominee who is not currently serving as director. Mr. Jorge L. Fuentes Benejam, PE is being nominated for election for the first time.

 

The duties of the compensation committee are to (i) develop, recommend and review the compensation policies for our executive officers, (ii) recommend to the Board the compensation of our executive officers and (iii) recommend to the Board those changes to the compensation levels of our directors that it deems necessary. The Compensations Committee Charter is available at the Corporation’s web site: www.triplesmanagement.com.

 

The committee met 12 times during the fiscal year ended December 31, 2007. As of March 27, 2008, the members of the committee are: Ms. Soto-Martínez, Chair of the committee, Ms. Culpeper-Ramírez, Mr. León-Irizarry, Mr. Morgan-Stubbe, Mr. Figueroa-Collazo and Mr. Nazario-Franco.

 

The Board has determined that all members of the compensation committee are independent within the meaning of NYSE rules.

 

For a complete discussion of the processes and procedures for the consideration and determination of executive and director compensation, please see the “Compensation and Discussion Analysis” in this Proxy Statement.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

 

None of the members of the Compensation Committee is or has been one of our officers or employees. None of our executive officers served on any board of directors’ Compensation Committee of any other company for which any of our directors served as an executive officer at any time during 2007. Other than disclosed in “Other Relationships, Transactions and Events” in this proxy statement, none of the members of

the Compensation Committee had any relationship with us requiring disclosure under Item 404 of the SEC Regulation S-K.

 

Audit Committee

 

The Audit Committee reviews the following matters: (1) adequacy of internal controls and compliance with applicable laws and regulations, (2) activities/reports of the Internal Audit Office, (3) results from audits made by regulators, (4) our consolidated financial statements, and (5) the annual audit report prepared by the independent registered public accounting firm. In addition, the Audit Committee appoints the independent registered public accounting firm to serve as our external auditors and the Vice-President of Internal Audit, when such position becomes vacant. The Audit Committee Charter is available at the Corporation’s web site: www.triplesmanagement.com.

 

The committee met ten times during the fiscal year ended December 31, 2007. As of March 27, 2008, the members of the committee are: Mr. Vicente J. León-Irizarry (Chair), Ms. Carmen Ana Culpeper-Ramírez, Mr. Antonio F. Faría-Soto, Mr. Jaime Morgan-Stubbe, Mr. Miguel Nazario-Franco and Ms. Adamina Soto-Martínez. The Board has determined that all members of the audit committee are independent within the meaning of NYSE rules.

AUDIT COMMITTEE REPORT

 

The Audit Committee Charter (“Charter”) establishes that the Audit Committee (“Committee”) shall consist of three or more members of the Board. The Board has determined that each member of the Committee is independent. In making this determination, the Board follows the audit committee independence standards set forth in the NYSE’s director independence rules. Currently, the Committee is comprised of six directors all of whom are independent under such standards. The Committee held ten meetings during the year ended December 31, 2007. Form 10-K and Form 10-Q filings were discussed in four of such meetings.

 

The role of the Committee is to assist the Board in its oversight of our financial reporting process, as well as our internal and external audit processes, independent registered public accounting firm’s qualifications and performance of the internal audit function. The Committee also is responsible for the appointment, compensation, retention and oversight of the independent registered public accounting firm and the establishment of procedures for handling complaints. The Committee operates pursuant to the Charter that was adopted by the Board and ratified on January 31, 2008.

 

The Charter states that: (1) the Chair of the Audit Committee shall be appointed by the members of the Committee and (2) the Committee shall appoint the Vice-President of the Internal Audit Office when such position is vacant. The Committee has the resources and authority to discharge its responsibilities, including the authority to engage independent registered public accounting firm for special audits, reviews, and other procedures and to retain special counsel and other experts, consultants, or advisors. The Committee appoints or terminates the engagement of the independent registered public accounting firm and reviews the proposed audit scope and approach, including coordination of the audit effort with the Internal Audit Office.

 

In the performance of its oversight function, the Committee has considered and discussed our audited consolidated financial statements for the fiscal year ended December 31, 2007 with management and KPMG LLP, our independent registered public accounting firm.

 

The Committee has also discussed with the independent registered public accounting firm the matters required to be discussed by Statement on Auditing Standards No. 61, as amended, “Communication with Audit Committees.” In addition, the Committee has received the written disclosures and the letter from KPMG LLP required by Independence Standards Board Standard No. 1 (“Independence Discussion with Audit Committees”), as currently modified or supplemented. The Committee has also considered whether the provision of non-audit services by the independent registered public accounting firm to the Corporation is compatible with maintaining the auditors’ independence, and has discussed with the independent auditors the auditors’ independence from us and our management.

As set forth in the Charter, management is responsible for: (1) the preparation, presentation, and integrity of our consolidated financial statements, and (2) maintaining appropriate accounting and financial reporting principles, policies, and internal controls and procedures that comply with accounting standards and applicable laws and regulations. The independent registered public accounting firm, KPMG LLP, is responsible for auditing our consolidated financial statements and expressing an opinion as to their conformity with U.S. generally accepted accounting principles.

 

The members of the Committee are not employees of the Corporation or any of its subsidiaries. While some of them may be accountants or auditors by profession, the Committee relies on, and makes no independent verification of, the financial or other information presented to it or representations made by management or the independent registered public accounting firm. Accordingly, the Committee’s oversight does not provide an independent basis to determine that management has maintained appropriate accounting and financial reporting principles and policies, or internal controls and procedures, designed to achieve compliance with accounting standards, and applicable laws and regulations.

 

Based on the Committee’s consideration of the audited consolidated financial statements and the discussions referred to above with management and the independent registered public accounting firm, and subject to the limitations on the role and responsibilities of the Committee set forth in the Charter and those discussed above, the Committee recommended and the Board approved that our audited consolidated financial statements be included in our Annual Report on Form 10-K for the year ended December 31, 2007 for filing with the SEC.

 

No portion of this Audit Committee Report shall be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, through any general statement incorporating by reference in its entirety the Proxy Statement in which this report appears, except to the extent that the Corporation specifically incorporates this report or a portion of it by reference. In addition, this report shall not be deemed to be filed under either the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended.

 

Submitted by:

 

Vicente J. León-Irizarry, CPA, Chair of the Audit Committee
Carmen Ana Culpeper-Ramírez
Antonio F. Faría-Soto
Jaime Morgan-Stubbe, Esq.
Miguel A. Nazario-Franco
Adamina Soto-Martínez, CPA

 

Dated: March 11, 2008

 

The Board has determined that Mr. León-Irizarry and Ms. Soto-Martínez are the audit committee financial experts as defined by Item 401(h) of Regulation S-K under the Securities Exchange Act of 1934, as amended, and are independent within the meaning of the NYSE director independence standards. For a brief listing of the relevant experience of the members of the Audit Committee, please see “Board of Directors” and “Standing Committees” above.

 

* * *

 

The following information sets forth the names of our executive officers, including their age, education and business experience during the past five years and the period during which each such person has served as one of our executive officers.

Ramón M. Ruiz-Comas, CPA (51).   Since May 2002, Mr. Ruiz-Comas has served as our president and chief executive officer. Mr. Ruiz has also served on our Board since May 2002. Mr. Ruiz-Comas served as our executive vice president from November 2001 to April 2002 and as our senior vice president and chief financial officer from February 1999 to October 2001. From 1995 to 1999, Mr. Ruiz-Comas served as our managed care subsidiary’s senior vice president of finance and from 1990 to 1995 he was vice president of finance. Prior to joining us, Mr. Ruiz-Comas worked at KPMG LLP from 1978 to 1990. He is a Certified Public Accountant (CPA) and a member of the Puerto Rico Society of Certified Public Accountants, as well as the American Institute of Certified Public Accountants. He holds a B.B.A. degree with a major in Accounting from the University of Puerto Rico and a Juris Doctor (J.D.) degree from the University of Puerto Rico, School of Law. In 2002, he attended the Advance Management Program at the University of Pennsylvania’s Wharton School of Business.

 

Socorro Rivas-Rodríguez, CPA (60).   Ms. Rivas-Rodríguez has served as president and chief executive officer of our managed care business since May 2002. Prior to her appointment as president and chief executive officer, Ms. Rivas-Rodríguez served in various positions at our managed care business, including general manager from 1999 to 2002, executive vice president from 1990 to 2002, and director of internal audit from 1982 to 1990. She has been a Certified Public Accountant since 1987 and a member of the Puerto Rico Society of Certified Public Accountants. Ms. Rivas-Rodríguez has a B.A. degree with concentrations in mathematics and accounting from the University of Puerto Rico.

 

Eva G. Salgado-Micheo (50).   Ms. Salgado has served as president of our property and casualty insurance business since July 2003. Prior to this appointment, Ms. Salgado served in various positions in our property and casualty insurance business, including senior vice president of the underwriting department from 2002 to 2003, vice-president of the underwriting department from 1997 to 2002 and vice-president of marketing. Prior to joining our property and casualty insurance business, Ms. Salgado worked at Integrand Assurance Company as senior vice-president of the underwriting department from 1992 to 1996. Ms. Salgado holds a B.A. degree with a concentration in Finance from the University of Puerto Rico. She also studied underwriting at the Insurance Institute of America.

 

Arturo Carrión-Crespo, CPA (50).   Mr. Carrión has served as president of our life insurance subsidiary, Triple-S Vida, Inc. (formerly Great American Life Assurance Company (“GA Life”)), since 1998. Prior to this appointment, Mr. Carrión served as vice president of finance of GA Life from 1987 to 1998. Prior to joining GA Life, Mr. Carrión worked at KPMG LLP from 1978 to 1987. He is a Certified Public Accountant and a member of the Puerto Rico Society of Certified Public Accountants. Mr. Carrión holds a B.B.A. degree with a major in Accounting from the University of Puerto Rico.

 

Luis A. Marini-Mir (59).   Dr. Marini has been president of our Commonwealth of Puerto Rico Health Reform business since October 1999. Prior to his appointment, Dr. Marini served as dental director of our managed care business from February 1998 to October 1999. From April 1975 to December 2000, Dr. Marini had a pediatric dentistry private practice. Dr. Marini is a former dean of the University of Puerto Rico, School of Dentistry. Dr. Marini received a degree from the University of Puerto Rico (Mayaguez Campus) with a concentration in pre-medicine and obtained a D.M.D. degree from the University of Puerto Rico, School of Dentistry. He also obtained a Certificate in Pediatric Dentistry from the University of Puerto Rico, School of Dentistry.

 

Roberto O. Morales-Tirado, Esq. (64).   Mr. Morales was appointed president of our insurance agency, Signature Insurance Agency, in February 2006. Prior to being appointed to this position, Mr. Morales served as president and chief executive officer of our life insurance business from 2000 through February 2006. From 1998 to 2000, Mr. Morales served as a consultant for us. From 1993 to 1998, Mr. Morales served as president and chief executive officer of AIG Life Insurance Company of Puerto Rico. Mr. Morales received a B.A. degree from the University of Puerto Rico and a J.D. degree from the Interamerican University of Puerto Rico, School of Law.

 

Juan J. Román-Jiménez, CPA (42).   Mr. Román-Jiménez has served as our vice president of finance and chief financial officer since 2002. Prior to his appointment as chief financial officer, Mr. Román-Jiménez served as executive vice-president of our Commonwealth of Puerto Rico Health Reform business (Triple-C,

Inc.) from 1999 to 2002 and vice-president of finance from 1996 to 1999. Prior to joining us, Mr. Román-Jiménez worked at KPMG LLP from 1987 to 1995. He has been a Certified Public Accountant and a member of the Puerto Rico Society of Certified Public Accountants as well as the American Institute of Certified Public Accountants since 1989. He earned a B.A. degree in Business Administration with a concentration in Accounting from the University of Puerto Rico, Rio Piedras.

 

Juan J. Rodríguez-Gilibertys, CPA (44).   Mr. Rodríguez-Gilibertys has served as Vice-President of the Audit Department of the Corporation since December 2004. Prior to his appointment at the Corporation, Mr. Rodríguez-Gilibertys served as Undersecretary of the Puerto Rico Treasury Department from January 2001 to November 2004. Mr. Rodríguez-Gilibertys served as Director of Finance for the Municipality of San Juan from 1997 to 2001. Mr. Rodríguez-Gilibertys received a degree of Bachelor in Business Administration (B.B.A.) from the University of Puerto Rico with a concentration in Accounting. He also received a Juris Doctor degree from the Interamerican University School of Law. He is a Certified Public Accountant, a Certified Internal Auditor, a Certified Information System Auditor and a member of the Puerto Rico Society of Certified Public Accountants.

 

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The Board’s Compensation Committee oversees the design and administration of the Corporation’s executive and director compensation programs. The Compensation Committee works to ensure that the total compensation paid to the executive officers and outside directors is fair, reasonable and competitive with its peer group.

 

The individuals who served as our chief executive officer and chief financial officer during fiscal 2007, as well as the other individuals included in the Summary Compensation Table, are referred to as the “Named Executive Officers.”

 

The Compensation Committee is comprised of only independent directors and is responsible for the administration of the Corporation’s executive compensation program. Prior to May 2007, the Compensation Committee was comprised of a majority of independent directors (four out of five). The Compensation Committee met twelve times during 2007.

 

The Compensation Committee has the sole authority to engage the services of outside consultants to assist them. The Compensation Committee retained Frederic W. Cook & Co., Inc. (“Cook”) as its compensation consultant during 2007 to advise the Compensation Committee in all matters related to the executives’ and directors’ compensation.

 

Our executive compensation program is designed to support the attainment of our vision, business strategy, and operating imperatives. Specifically, we believe that the most effective executive compensation program is one that is designed to reward the achievement of specific annual and long-term goals which align the executives’ interests with those of the shareholders, and ultimately improve shareholder value.

 

To this end, our compensation program is designed to accomplish the following objectives:

 

 

 

position, market level increases, our financial performance and ability to pay. Also, the Policy establishes that base pay adjustments send clear performance messages and make moderate distinctions based on performance; for executives, significant distinctions in performance are recognized through our annual cash program. In addition, this Policy requires that timing for increases be consistent with market practice, and base salaries for executives are reviewed and adjusted as necessary on an annual basis to ensure pay levels remain competitive, as well as the time of promotion or changes in responsibilities.

 

Annual Cash Bonus

 

The annual cash bonus portion of an executive’s total compensation opportunity is intended to accomplish a number of objectives, including: reinforce the optimization of operating results throughout the year, achievement of our stated objectives; pay for performance and reinforce individual accountability; support our long-term objective to create shareholder value; and to provide market competitive cash compensation when performance objectives are met or exceeded. This bonus can be highly variable from year to year depending on actual performance results.

 

The annual cash bonus is based on achievement of the Corporation’s and individual business units’ goals that are established at the beginning of each year. Goals are approved by the Board and include financial goals, such as consolidated premium earned and net income, as well as specific performance goals for each Named Executive Officer. The annual amount, if any, of the annual cash bonus is based on an evaluation of each Named Executive Officer’s performance and on the financial goal achievement. Depending on the performance for the year, payment under the annual incentive may range from 0 percent to 150 percent of the target bonuses established by the Compensation Committee. The Compensation Committee approves the awards and has discretion to determine any changes to the amount to be paid. The final recommendation of the Compensation Committee is approved by the Board.

 

Target bonuses are currently established at 70 percent of base salary for the Chief Executive Officer (“CEO”) and from 50 percent to 70 percent for the other Named Executive Officers. For the CEO and the Chief Financial Officer, the financial performance goals are based 80 percent on the Corporation’s actual financial performance, against the corporate objectives for that year, and 20 percent on non-financial performance. This includes individual objectives that can be quantitative or qualitative. For all other executive officers, the performance measures are based 30 percent on the Corporation’s actual financial performance, against the corporate objectives for that year, 50 percent on the actual performance of the corresponding business unit for which the executive is responsible, and 20 percent on the executive officer’s non-financial performance, as established by the Compensation Committee.

 

In addition, we pay an annual bonus each December to all of our active employees, including the Named Executive Officers. This bonus is determined based on a non-performance predetermined formula and paid if the employee has worked more than 700 hours as of September 30 of each year and is an employee at the date of payment. The amount paid under this bonus approximates nine percent of base salary and, with respect to the bonus payable to the Named Executive Officers, is included in the bonus column of the Summary of Compensation Table.

 

Long-Term Incentive Awards

 

During 2007, on the closing of our initial public offering, we awarded stock options, restricted stock awards and performance awards to 11 executive officers, including Named Executive Officers, under the Plan. We believe that long-term incentives are an important and essential element that need to be offered as part of the total compensation program of the Corporation as a public entity to ensure our ability to attract, motivate, and retain top talent. As such, our long-term incentives to key management are designed to accomplish a number of important objectives:

 

 

 

At the time of this award, the Compensation Committee determined the terms of the award, including the performance period and the performance objectives relating to the award of performance shares. At the conclusion of a performance share award performance period, the Compensation Committee will review actual performance versus the pre-established performance goals to determine whether the performance objectives were met in whole or in part, and the associated payment that may be due as a result. The Compensation Committee carefully considered the impact of stock option expensing, as well as dilution, in order to achieve a balance between our cost, competitiveness and maintaining employee incentives.

 

The awards granted on the date of our initial public offering, were intended to provide what we deem to be a proper and competitive balance between stock options, restricted stock awards and performance awards. Based on the fair value of the awards determined in accordance with the Statement of Financial Accounting Standards (SFAS) No. 123(R), Share-Based Payment , approximately 51% of the cost of the grant was delivered in stock options that only benefit participants when the stock price increases, approximately 25% of the cost was delivered in restricted stock awards, which allows us to retain key talent over the long term, and the remaining 24% was delivered in performance awards, which allows us to tie compensation to the long-term market and financial performance of the Corporation.

 

Future long-term incentives may be delivered through a variety of award types that we may adopt in the future, including: stock options, restricted stock/units, performance-based equity (performance shares), performance-based cash (performance cash), and other equity/non-equity award types (e.g., stock SARs/cash SARs). We intend to provide long-term awards through a combination of some of the above mentioned types of awards.

 

Retirement Programs

 

Executive officers participate in our qualified and non-qualified employee retirement programs designed to provide retirement income. Our qualified and non-qualified pension plans provide a retirement income base.

 

Non-Qualified Deferred Compensation Plan

 

The purpose of this program is to provide certain executives who elect to become participants with the opportunity of deferring a portion of their compensation to a later date and benefiting from the tax advantages related thereto.

 

Role of Executive Officers in Compensation Decisions

 

The Compensation Committee makes all compensation decisions for Named Executive Officers of the Corporation. Decisions regarding the non-equity compensation of other executive officers are made by the Chief Executive Officer. The CEO annually reviews the performance of the other Named Executive Officer. The conclusions reached and recommendations based on these reviews, including with respect to salary adjustments and annual incentive award amounts, are presented to the Compensation Committee. The Compensation Committee reviews and approves or recommends changes in the compensation of the Named Executive Officers, including the CEO, and makes recommendations for final approval to the Board.

Compensation of Named Executive Officers for 2007

 

As part of the process of becoming a corporation whose shares are publicly-traded, the Compensation Committee evaluated the different components of compensation of the executive officers. The purpose was to ascertain compensation at adequate levels (defined as total compensation targeted at median external pay levels) when compared with peer companies and to retain its executive officers.

 

As part of the engagement of Cook, the Compensation Committee reviewed each pay component to align compensation for the first time to that of similar companies. The main purpose was to assure that we established a competitive compensation program. Based on the initial analysis, we began providing long-term incentive awards during 2007.

 

Base Salary

 

In setting base salaries for 2007, the Compensation Committee considered the following factors:

 

 

In establishing Mr. Ruiz’s base salary for 2007, the Compensation Committee applied the principles described above. In an executive session, the Compensation Committee assessed Mr. Ruiz’s 2006 performance, based on established corporate goals and financial objectives. They considered the Corporation’s and Mr. Ruiz’s accomplishment of objectives that had been established at the beginning of the year, strategic direction of the Corporation and its own subjective assessment of his performance. The Compensation Committee approved the salary increase of Mr. Ruiz and recommended it to the Board, which also approved it.

 

For all other Named Executive Officers salary increases were based on the aforementioned principles and were in line with budget increases.

 

Long-Term Incentive Awards

 

On the closing date of our initial public offering, the Compensation Committee awarded certain executive officers, including Named Executive Officers, stock options, restricted stock awards and performance awards. A summary of the long-term incentive awards granted during 2007 is included on the Grants of Plan Based Awards table.

 

Non-Equity Incentive Plan

 

The non-equity incentive award for 2007 was based on the performance of the Corporation against the stated objectives. For 2007, our reported net income was $58.5 million, which exceeded the targeted level and reached the superior level. Also, total operating revenues, excluding net investment income, was $1.5 billion, which was just at targeted level.

 

In February 2008, the Compensation Committee and the Board approved payments to the Named Executive Officers under the 2007 non-equity incentive plan, in the amounts set-forth below in the Summary Compensation Table. Payments were made within the parameters established.

 

The Corporation’s Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis required above with management and, based on such review and discussions, the Compensation Committee recommended to the Board that the Compensation Discussion and Analysis be included in this proxy statement.

 

 

 

 

 

 

Grants of Plan-Based Awards

 

 

 

 

Outstanding Equity Awards at Fiscal Year-End

 

 

 

 

The following table illustrates the present value of accumulated benefits and the number of years credited service for the Named Executive Officers under our Non-Contributory Retirement Program and our Supplemental Retirement Program.

 

 

 

 

We sponsor a Non-Contributory Retirement Program for certain of our employees. The compensation covered by the pension plans is the annual salary as set forth in the Summary Compensation Table. The Supplemental Retirement Program covers benefits in excess of the Internal Revenue Service (“IRS”) limits that apply to the Non-Contributory Retirement Program, which is a qualified program under IRS rules. The following is a summary of the pension plans’ provisions.

 

Non-Contributory Defined-Benefit Pension Plan

 

 

Employees of a subsidiary that participate in this Program are treated as employees of the Sponsoring Employer for purposes of this Program.

 

 

i. 2% of Final Average Earnings multiplied by Plan and Association Service (defined as years worked by an employee working with the BCBSA)

 

ii. up to 30 years, minus

 

iii. Prior Plan benefit (if any)

 

The Accrued Benefit cannot be less than the benefit calculated considering Employer Service only.

 

 

iv.  Eligibility  — Termination of employment after both the attainment of age 65 and after either the fifth anniversary of Program participation or completion of five years of Vesting Service.

 

v.  Benefit  — The Accrued Benefit payable at Normal Retirement Date.

 

To be eligible for early retirement, termination of employment should occur after attaining age 55 with five years of Plan Service. The benefit will be the Accrued Benefit at Normal Retirement Date reduced using factors that are actuarially equivalent to the age 62 benefit. There is no reduction if retirement occurs after age 62.

 

The Plan also has a special early retirement. To be eligible, the termination of employment should occur after attaining 30 years of Plan Service and election of immediate benefit commencement. The Accrued Benefit is calculated at date of termination with no early retirement reductions. This benefit replaces the Early Retirement benefit for those meeting the Special Early Retirement benefit eligibility.

 

 

In lieu of the automatic form of payment, a Participant may elect, with the proper spousal consent, one of the optional forms of annuity payment or, alternatively, a single lump sum payment.

 

Supplementary Retirement Plan

 

 

vi. 2% of Final Average Earnings multiplied by Plan and Association Service up to 30 years, minus

 

vii. Prior Plan benefit (if any), minus

viii. Qualified Retirement Program Benefit

 

The Accrued Benefit cannot be less than the benefit calculated considering Employer Service only.

 

 

ix.  Eligibility  — Termination of employment after both the attainment of age 65 and after either the fifth anniversary of Program participation or completion of five years of Vesting Service.

 

x.  Benefit  — The Accrued Benefit payable at Normal Retirement Date.

 

 

xi.  Eligibility  — Termination of employment after attaining age 55 with five years of Plan and Association Service.

 

xii.  Benefit  — The Accrued Benefit at Normal Retirement Date reduced using factors that are actuarially equivalent to the age 62 benefit. No reduction if retirement occurs after age 62.

 

 

xiii.  Eligibility  — Termination of employment after attaining 30 years of Plan and Association Service and election of immediate benefit commencement.

 

xiv.  Benefit  — This benefit replaces the Early Retirement benefit for those meeting the Special Early Retirement benefit eligibility.

 

Non-Qualified Deferred Compensation Table

 

The following table presents the non-qualified deferred compensation for the Named Executive Officers:

 

 

 

(1) Amounts included in this column are reported as compensation in the Summary Compensation Table.

 

Participants may elect to defer up to twenty percent (20%) of gross annual cash compensation under the Program. They forfeit all rights to the compensation deferred until the occurrence of any of the following events:

 

 

Please refer to Proposal #4 for information regarding the Plan.

DIRECTORS’ COMPENSATION AND BENEFITS

 

Effective July 1, 2007, we revised the compensation structure for members of our Board. Under our new directors’ compensation structure, the Chairman of the Board receives a monthly retainer of $6,500 and all other Board members receive a monthly retainer of $2,500. The Chairman of the Audit Committee receives an additional monthly retainer of $416.66, and the respective Chairmen of the Compensation, Corporate Governance, and Nominations Committees receive an additional monthly retainer of $250. The following is the amount received by each director for Board or committee meetings:

 

 

In addition, all Board members receive $522.15 as a monthly stipend for health insurance. Directors who are also employees do not receive any compensation for service, as members of the Board or any committee of the Board, or the board of directors of a subsidiary.

 

The following tables summarize the fees or other compensation that our directors earned for services as members of the Board or any committee of the Board during 2007, pursuant to our outstanding compensation structures.

 

 

 

 

 

* * *

 

Certain directors and executive officers of the Corporation have immediate family members who are employed by the Corporation or its subsidiaries. The compensation of these family members is established in accordance with the employment and compensation practices applicable to employees with equivalent qualifications and responsibilities and holding similar positions.

 

In the ordinary course of business, the Corporation’s subsidiaries provide insurance to a number of individual directors and executive officers of the Corporation, to the medical practices of such directors, and to members of their respective immediate families. The Corporation’s subsidiaries also provide insurance to Méndez & Co., Inc., Menaco Corporation, Clínica Las Américas Guaynabo, Palmas del Mar Properties, Inc., B. Fernández & Hermanos, Inc., Pan Pepin (a wholly-owned subsidiary of B Fernandez & Hermanos Holding), Kevane Grant Thorton , LLP, San Jorge Medical Specialties and Vernet, Inc . Certain directors and nominees have material ownership interests in or occupy senior positions at these entities, including as President and Director. The aggregate amount paid to the Corporation’s subsidiaries for services to these entities in 2007 amounted to approximately $3,734,788. The terms on which the Corporation’s subsidiaries provide insurance to related parties are substantially the same as the terms offered to unrelated parties.

 

Directors of the Corporation that are physicians, dentists or their affiliated entities are also service providers of Triple-S, Inc. in the ordinary course of their business as physicians and dentists. Some of our directors, their immediate family members and affiliated entities received more than $120,000 in compensation for services as healthcare providers for one of the Corporation’s subsidiaries. Dr. Wilmer Rodríguez-Silva, chairman of the Board, received approximately $191,430 in 2007. Dr. Porfirio Díaz-Torres, a director of our Board, and members of his immediate family received approximately $374, 161 in 2007. Clínica Las Américas Guaynabo, a medical clinic of which our director, Dr. Arturo Córdova-López, is Medical Director and a

principal shareholder, received total payments from Triple-S, Inc. of approximately $1,950,593 in 2007. San Jorge Children’s Medical Specialties , a medical group of which our director, Dr. Luis A. Clavell-Rodríguez, is the managing partner and controlling shareholder, received total payments from Triple-S, Inc of approximately $540,684 in 2007. San Jorge Children’s Hospital , a hospital at which Dr. Luis A. Clavell-Rodríguez is the Chief Medical Officer, received total payments from TSI of approximately $10,207,699 in 2007. The terms of the provider agreements with Triple-S, Inc. pursuant to which the above payments were made are the same as the terms of the provider agreements of physicians and healthcare organizations who are not directors or affiliated with directors of the Corporation.

 

While the Corporation periodically monitors transactions with related persons, the Corporation has not adopted a formal written policy regarding the review, approval or ratification of transactions with related persons. On an annual basis, each director and executive officer of the Corporation is obligated to complete a Director and Officer Questionnaire which requires disclosure of any transactions with the Corporation in which the director or executive officer, or any member of his or her immediate family, have a direct or indirect material interest.

 

* * *

 

On February 28, 2008, our Board adopted resolutions approving the amendments to the Articles, and recommended that they be presented for shareholder approval at the annual meeting of shareholders, as required by the Articles. The adoption of the amendments to the Articles would modify the composition of the three groups into which our Board is divided, making them more consistent with those contained in the articles of incorporation of comparable publicly-traded companies and the requirements of the BCBSA. For the reasons set forth below, our Board believes that it is in the best interest of the Corporation and that of its shareholders to adopt the amendments to the Articles (Proposals 2 and 3).

 

Currently, the Articles of the Corporation establish that the Board shall be divided into three groups, consisting of five (5), six (6) and seven (7) directors, respectively. Although our By-laws provide that our Board may determine its size by resolution, the current staggered board provision included in our Articles prevents our Board from exercising the authority granted to it by our By-laws. Our Board believes that it should be afforded the flexibility currently provided by our By-laws, which in turn, will enable it to make decisions regarding its effectiveness and productivity.

 

During the 2008 Annual Meeting of Shareholders, a proposal for adopting certain amendments to our Articles will be presented. Our Board believes that the amendments present changes that are important to the continued improvement of its performance.

PROPOSAL 2: AMENDMENT OF ARTICLE TENTH B OF THE AMENDED AND RESTATED ARTICLES OF INCORPORATION

 

Proposal 2 is presented by the Board to amend Article TENTH B of our Articles. Proposal 2 eliminates the requirement that each group of directors be comprised of a specific number of directors and authorizes the Board to make certain changes regarding the size of each group of the Board.

 

TENTH :

 

B.  Subject to the terms of this paragraph, The the Board of Directors is shall be divided into three groups, plus the President of the Corporation, respectively designated “Group 1,” “Group 2,” and “Group 3,” as nearly equal in number as possible and whose term expire at different times. Directors in each group shall be elected for a term ending on the date of the third annual meeting of shareholders following the annual meeting at which such director is elected. The Board of Directors may (i) reduce the size of each group of directors and (ii) nominate directors for shorter terms of office and assign such nominees to another group, in order to meet the requirements of the first sentence of this paragraph by

the 2010 annual meeting of shareholders. The first is made up of five (5) directors, the second group is composed of six (6) directors, and the third group is made up of seven (7) directors. The terms of the groups will be placed at intervals, therefore, the term of the first group of directors will end in the Shareholders Annual Meeting in the year 2005; the term of the second group of directors will end in the Shareholders Annual Meeting in the year 2006 and the term of the third group of directors will end in the Shareholders Annual Meeting in the year 2007.

 

Reasons for Voting in Favor of the Proposal

 

Our Board may determine its size by resolution pursuant to an amendment to our Articles approved in the 2007 Annual Meeting of Shareholders. Our Articles provide, however, that our Board must be comprised of at least nine (9) directors but no more than nineteen (19). Our Board is currently comprised of nineteen (19) directors.

 

Our Board has considered the advantages and disadvantages of its current size. In connection with the 2008 Annual Meeting of Shareholders, the Board has approved a resolution to reduce the number of directors from nineteen (19) to seventeen (17). The Corporation will achieve this reduction by proposing three (3) nominees to fill the five (5) vacancies up for election by shareholders at the 2008 annual meeting of shareholders. The Board also has voted to approve Proposal 2, which amends Article TENTH B of the Articles in order to provide flexibility in the determination of the size of each of the groups into which our Board is divided, and recommends it to our shareholders as being in the best interest of the Corporation and our shareholders. In reaching this determination, our Board concluded that the flexibility and added efficiency that a smaller board of directors provides a company whose shares are publicly-traded outweighed the benefits of a larger board of directors.

 

At present, our Articles establish that the Board shall be divided into three groups, consisting of five (5), six (6) and seven (7) directors, respectively. Upon the approval by our shareholders of Proposal 2, the Board resolution reducing the amount of directors serving on our Board will take effect. Our Board will reduce the size of each group of directors in the manner it deems appropriate and nominate sufficient directors to fill the remaining vacancies in each group at annual meetings of shareholders following the 2008 annual meeting of shareholders. This process will begin at the 2008 annual meeting of shareholders and will be completed at the 2010 annual meeting of shareholders.

 

Vote Requirement

 

The affirmative vote of the majority of the issued and outstanding shares of common stock entitled to vote on the record date is required to approve the amendment to Article TENTH B of the Articles. This reduced vote requirement is due to the approval by the BCBSA of this Proposal 2.

 

The Board believes that the proposal to approve the amendment to Article TENTH B of the Articles is in the best interests of our shareholders and recommends a vote FOR the proposal.

PROPOSAL 3: AMENDMENT OF ARTICLE TENTH C OF THE AMENDED AND RESTATED ARTICLES OF INCORPORATION

 

Proposal 3 is presented by the Board to amend Article TENTH C of our Articles. Proposal 3 eliminates director term limits and certain provisions that have been addressed in Proposal 2.

 

TENTH :

 

C.  The term each group member subsequently elected at the Shareholders Annual Meeting will occupy will be three (3) years. Every director will perform his/her duties until his/her successor is duly elected and in possession of his/her position. No director, except the Corporation’s President, while fulfilling said hierarchic duties, may be elected for more than three (3) terms or serve as such for more than nine (9) years. The President of the Corporation , which is also shall be a member of the Board of Directors , and will be is

excluded from the aforementioned groups. Every director will perform his/her duties until his/her successor is duly elected and in possession of his/her position.   

 

Reasons for Voting in Favor of the Proposal

 

Our Board has considered the advantages and disadvantages of current director term limits, and has voted to approve Proposal 3 and recommends it to our shareholders as being in the best interest of the Corporation and our shareholders. The elimination of director term limits is inteded to provide and promote greater stability, continuity and knowledge of the Corporation’s business affairs and financial strategies. The approval of Proposal 3 would ensure the retention of directors with prior experience as directors of the Corporation and that are familiar with the Corporation’s strategies and operations. Experienced directors are a valuable resource and, with their knowledge about the Corporation’s business and affairs, are better positioned to make decisions that are in the best interests of the Corporation and its shareholders. The Board believes that maintaining director term limits would risk the loss of directors with core knowledge of the Corporation, its business and its operations that has been gained during their service to the Corporation and its shareholders. The Board believes that the elimination of director term limits will also help attract more qualified candidates who are willing to commit the time and dedication necessary to understand the Corporation and its competitive environment.

 

Moreover, the elimination of director term limits does not compromise the directors’ accountability to our shareholders. Every director is required to uphold his or her fiduciary duties to the Corporation and our shareholders, regardless of whether the duration of the director’s stay on the Board. Although the shareholders have an opportunity to express any dissatisfaction they may have with a director by withholding votes from said director when standing for election, if this proposal is approved, our current and any future director may be indefinitely elected to our Board.

 

Vote Requirement

 

The affirmative vote of the majority of the issued and outstanding shares of common stock entitled to vote on the record date is required to approve the amendment to Article TENTH C of the Articles.

 

The Board believes that the proposal to approve the amendment to Article TENTH C of the Articles is in the best interests of our shareholders and recommends a vote FOR the proposal.

PROPOSAL 4: APPROVAL OF THE TRIPLE-S MANAGEMENT CORPORATION 2007 INCENTIVE PLAN

 

2007 Incentive Plan

 

On October 16, 2007, our Board adopted the Triple-S Management Corporation 2007 Incentive Plan (the “Plan”). The purposes of our Plan are to create incentives designed to motivate our employees to significantly contribute toward our growth and profitability, to provide our executives, directors and other employees, and persons who, by their position, ability and diligence, are able to make important contributions to our growth and profitability, with an incentive to assist us in achieving our long-term corporate objectives, to attract and retain executives and other employees of outstanding competence, and to provide such persons with an opportunity to acquire an equity interest in us.

 

According to the Plan, we may grant incentive stock options, non-qualified stock options, stock appreciation rights, restricted stock, deferred shares, performance awards, including cash bonus awards, and other stock-based awards, to our officers and key employees, and those of our subsidiaries. In addition, the Plan authorized the grant of equity-based compensation incentives to our directors and to any independent contractors and consultants who by their position, ability and diligence are able to make important contributions to our future growth and profitability. Generally, all classes of our employees are eligible to participate in the Plan. On October 16, 2007 the Board awarded performance stocks, restricted stocks and stock options to various executive officers of the Corporation.

We have reserved a maximum of 4,700,000 shares of our authorized Class B common stock for issuance upon the exercise of awards to be granted pursuant to the Plan. Each share issued under an option or under a restricted stock award will be counted against this limit. Shares to be delivered at the time a stock option is exercised or at the time a restricted stock award is made may be available from authorized but unissued shares or from stock previously issued but which we have reacquired and hold in our treasury.

 

Shareholder approval will provide shareholders with a complete picture of all aspects of director and executive compensation, and to qualify the Plan with the Department of the Treasury of the Commonwealth of Puerto Rico, which would allow the recipient of a grant of qualified stock options to receive certain tax benefits. The following is a summary of the material provisions of the Plan and is qualified in its entirety by reference to the complete text of the Plan, a copy of which is attached to this proxy statement as Exhibit B.

 

Plan Term.   The Plan will have a 10-year term, subject to earlier termination by our Board.

 

Authorized Shares.   Subject to adjustment, up to 4,700,000 of the shares of our Class B shares outstanding will be available for awards to be granted under the Plan. No participant in the Plan may receive stock options and stock appreciation rights in any calendar year that relate to more than 600,000 shares of our class B shares. Shares of common stock to be issued under the Plan may be made available from authorized but unissued Class B shares or Class B shares that we acquire.

 

If an award (other than a substitute award as defined below) terminates, is forfeited, cancelled or settled for cash then the shares covered by such award will again be available for issuance under the Plan. In addition, shares tendered or withheld in payment of an exercise price or for withholding taxes also will again be available for issuance under the Plan. Shares of our common stock underlying substitute awards shall not reduce the number of such shares available for delivery under the Plan. A “substitute award” is any award granted in assumption of, or in substitution for, an outstanding award previously granted by a company acquired by us or with which we combine.

 

Administration.   The Compensation Committee will administer the Plan and will have authority to select individuals to whom awards are granted, determine the types of awards and number of shares covered, and determine the terms and conditions of awards, including the applicable vesting schedule, performance conditions, and whether the award will be settled in cash, shares or a combination of the two.

 

Types of Awards.   The Plan will provide for grants of incentive stock options, non-qualified stock options, stock appreciation rights, restricted stock, deferred shares, performance awards, including cash bonus awards, and other stock-based awards.

 

 

 

Eligibility.   All our employees and members of our Board will be eligible to participate in the Plan. From time to time, our Board will determine who will be granted awards, the number of shares or performance units subject to such grants, and the terms of awards. Under the Plan, awards may be granted to our employees, our directors and other individuals providing services to us, including but not limited to consultants, advisors and independent contractors. As of December 31, 2007, there were about 2,300 people who would have been eligible to receive awards under the Plan.

 

Adjustments.   The Compensation Committee shall adjust the terms of any outstanding awards and the number of shares of Class B common stock issuable under the Plan for any change in shares of our common stock resulting from a stock split, reverse stock split, stock dividend, spin-off, combination or reclassification of our Class B common stock, an issuance of shares pursuant to the anti-dilution provisions of the Class B common stock or any other event that affects our capitalization if the Compensation Committee determines an adjustment is equitable or appropriate.

 

Termination of Service and Change in Control.   The Compensation Committee will determine the effect of a termination of employment and a change in control (as defined in the Plan) or service on awards granted under the Plan.

 

Plan Benefits.   Future benefits under the Plan are not currently determinable. However, current benefits granted to our directors, named executive officers and all our other employees would not have been increased

if they had been made under the Plan. Grants of performance stock, restricted stock and stock options to our named executive officers are shown in the Grant of Plan-Based Awards table in the proxy statement.

 

Amendment, Modification and Termination.   The Board may from time to time suspend, discontinue, revise or amend the Plan and the Compensation Committee may amend the terms of any award in any respect, provided that no such action will adversely impair or affect the rights of a holder of an outstanding award under the Plan without the holder’s consent, and no such action will be taken without shareholder approval, if required by the rules of the stock exchange on which our shares are traded.

 

Vote Requirement

 

The affirmative vote of the majority of the votes present in person or by proxy by shareholders entitled to vote at the Annual Meeting of Shareholders is required to approve the Plan. Therefore, abstentions shall have the effect of a vote against the proposal. Broker-non-votes will have no effect on the proposal.

 

The Board believes that the proposal to approve the Plan is in the best interests of our shareholders and recommends a vote FOR the proposal.

 

* * *

 

The Audit Committee intends to retain the services of KPMG LLP, as independent registered public accounting firm, to audit the consolidated financial statements of the Corporation for the fiscal year ending December 31, 2008. Representatives of KPMG LLP will be present at the annual meeting and will be given an opportunity to make a statement if so desired and to respond to appropriate questions.

 

The following is a description of the fees paid or accrued by us for the professional services rendered by KPMG LLP for the years ended December 31, 2007 and 2006:

 

Audit Fees

 

The aggregate fees paid or accrued by us for professional services rendered by KPMG LLP for the audit of our annual financial statements as of and for the years ended December 31, 2007 and 2006, and for the reviews of the financial statements included in our quarterly reports on Form 10-Q were $1,045,000 and $908,000, respectively.

 

Audit-Related Fees

 

The aggregate fees paid or accrued by us for professional services rendered by KPMG LLP as of and for the years ended December 31, 2007 and 2006 were $234,000 and $30,000, respectively. The 2007 fees were related to work performed in the IPO registration statements such as due diligence and issuance of the comfort letter. The 2006 fees were associated with due diligence services related to the acquisition of Great American Life Assurance Company (Triple-S Vida, Inc.).

 

Tax Fees

 

The aggregate fees paid or accrued by us for professional services rendered by KPMG LLP for tax compliance, tax advice and tax consulting as of and for the year ended December 31, 2006 was $11,000. For the year ended December 31, 2007, there were no fees paid or accrued.

 

All Other Fees

 

The aggregate fees paid or accrued by us for professional services rendered by KPMG LLP other than those previously reported as of and for the year ended December 31, 2007 was $23,000. The 2007 fees were

associated with the work performed to issue the Statement of Actuarial Opinion included in the Seguros Triple-S, Inc. statutory filing. For the year ended December 31, 2006, there were no fees paid or accrued.

 

Pre-Approval Policies and Procedures

 

All auditing services and non-audit services must be pre-approved by the Audit Committee. Pre-approval is not required for non-audit services if: (1) the aggregate dollar value of such services does not exceed five percent of the total fees paid by the Corporation to the external auditors during the fiscal year in which the non-audit services are provided, (2) such services were not recognized by the Corporation at the time of the engagement to be non-audit services, and (3) such services are promptly brought to the attention of and approved by the Audit Committee prior to the completion of the audit.

 

All non-audit services were pre-approved by the Audit Committee.

 

v   v   v

 

To be eligible for inclusion in the proxy statement and proxy card for our 2009 annual meeting of shareholders, shareholders’ proposals must be received by the board’s Secretary, at its principal executive offices, 1441 F.D. Roosevelt Avenue, 6th Floor, San Juan, Puerto Rico, 00920, no later than November 27, 2008 . If the proposal meets the applicable legal and statutory requirements, it will be included in the Proxy Statement and proxy card for our 2009 annual meeting of shareholders. Our Bylaws provide that a shareholder may present a proposal (including a nomination for election to the Board) at the 2009 Annual Meeting and be voted upon by shareholders if it is made by a shareholder who is a record holder as of the applicable record date and such shareholder has delivered written notice of such proposal (containing the information specified in our Bylaws) to the board’s Secretary, at its principal executive offices, 1441 F.D. Roosevelt Avenue, 6th Floor, San Juan, Puerto Rico, 00920, not earlier than November 27, 2008 nor later than December 27, 2008.

 

 

YOU MAY REQUEST A COPY, FREE OF CHARGE, OF OUR REPORT ON FORM 10-K (WITHOUT EXHIBITS) FOR THE YEAR 2006 AS FILED WITH THE SEC OR BY CALLING (787) 749-4949 OR WRITING TO SANTIA BARTOLOMEI, MANAGER, TRIPLE-S MANAGEMENT CORPORATION, PO BOX 363628, SAN JUAN, PR 00936-3628.

 

The following individuals shall not be deemed an “independent” director of the Company:

 

1. A director who is an employee or whose immediate family member ¹ is an executive officer of the Company ² would not be independent until three years after the end of such employment relationship;

 

2. A director who receives or whose immediate family member receives during any twelve-month period more than $100,000 in direct compensation ³ from the Company, would not be independent until three years after he or she ceases to receive more than $100,000 per year in such compensation;

 

3. A director who is affiliated with or employed by, or whose immediate family member is affiliated with or employed in a professional capacity by, a present or former internal or external auditor of the Company would not be independent until three years after the end of the affiliation or the employment or auditing relationship;

 

4. A director or an immediate family member who is employed, as an executive officer of another company where any of the Company’s present executive officers serve on that company’s compensation committee would not be independent until three years after the end of such service or the employment relationship; or

 

5. A director who is an employee, or whose immediate family member is an executive officer of a company that makes payments to, or receives payments from, the Company for property or services in an amount which, in any single fiscal year, exceeds the greater of $1 million, or 2% of such other company’s consolidated gross revenues, would not be independent until three years after falling below such threshold.

 

Moreover, no director qualifies as “independent” unless the Board of Directors of Triple-S Management Corporation affirmatively so determines that he or she has no material relationship with the company.

 

 

¹  “Immediate family member” includes a person’s spouse, parents, children, siblings, mothers- and fathers-in-law, sons- and daughters-in-law, brothers- and sisters-in-law, and anyone (other than domestic employees) who shares such person’s home.

²  “Company” includes any parent or subsidiary of Triple-S Management Corporation.

³  Direct compensation received from the Company does not include director and committee fees, and pension or other forms of deferred compensation for prior service no contingent on continued service.

 

Section  1.   Purpose.   The purpose of the Triple-S Management Corporation 2007 Incentive Plan is to enhance the incentive of those employees, directors and other individuals who are expected to contribute significantly to the success of the Company and its Affiliates to perform at the highest level, and, in general, to further the best interests of the Company and its shareholders.

 

Section  2.   Definition.

 

As used in the Plan, the following terms shall have the meanings set forth below:

 

(a)  “Act” shall mean the Securities Exchange Act of 1934, as amended.

 

(b)  “Affiliate” shall mean (i) any entity that, directly or indirectly, is controlled by or under common control with the Company and (ii) any entity in which the Company has a significant equity interest, in either case as determined by the Committee.

 

(c)  “Award” shall mean any Option, Stock Appreciation Right, Restricted Stock, Restricted Stock Unit, Performance Award or Other Stock-Based Award granted under the Plan, which may be denominated or settled in Shares, cash or in such other forms as provided for herein.

 

(d)  “Award Agreement” shall mean any agreement, contract or other instrument or document evidencing any Award granted under the Plan, which may, but need not, be executed or acknowledged by a Participant.

 

(e)  “Beneficiary” shall mean a person or persons entitled to receive payments or other benefits or exercise rights that are available under the Plan in the event of the Participant’s death. If no such person is named by a Participant who is an individual, such individual’s Beneficiary shall be the individual’s estate.

 

(f)  “Board” shall mean the board of directors of the Company.

 

(g)  “Change in Control” shall mean the occurrence of:

 

(i) any “person” (as defined in Section 13(d) of the Act) other than the Company, its Affiliates or an employee benefit plan or trust maintained by the Company or its affiliates, becoming the “beneficial owner” (as defined in Rule 13d-3 under the Act), directly or indirectly, of more than 30% of the combined voting power of the Company’s then outstanding securities (excluding any “person” who becomes such a beneficial owner in connection with a transaction described in clause (A) of paragraph (iii) below), unless such person acquires beneficial ownership of more than 30% of the combined voting power of the Company’s Voting Stock then outstanding solely as a result of an acquisition of Company Voting Stock by the Company which, by reducing the Company Voting Stock outstanding, increases the proportionate Company Voting Stock beneficially owned by such person to more than 30% of the combined voting power of the Company’s Voting Stock then outstanding; provided , that if a person shall become the beneficial owner of more than 30% of the combined voting power of the Company’s Voting Stock then outstanding by reason of such Voting Stock acquisition by the Company and shall thereafter become the beneficial owner of any additional Company Voting Stock which causes the proportionate voting power of such Company Voting Stock beneficially owned by such person to increase to more than 30% of the combined voting power of such Voting Stock then outstanding, such person shall, upon becoming the beneficial owner of such additional Company Voting Stock, be deemed to have become the beneficial owner of more than 30% of the combined voting power of the Company’s Voting Stock then outstanding other than solely as a result of such Voting Stock acquisition by the Company;

 

(ii) at any time during a period of twelve consecutive months, individuals who at the beginning of such period constituted the Board and any new member of the Board whose election by the Board or nomination for election by the Company’s shareholders was approved by a vote of at least a majority of the directors then still in office who were directors at the beginning of such twelve-

month period or whose election or nomination for election was so approved, cease for any reason to constitute a majority of members then constituting the Board; or

 

(iii) the consummation of (A) a merger or consolidation of the Company or any direct or indirect subsidiary of the Company with any other corporation, other than a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior to such merger or consolidation continuing to represent (either by remaining outstanding or being converted into voting securities of the surviving entity or any parent thereof) at least 50% of the combined voting power or the total fair market value of the securities of the Company or such surviving entity or any parent thereof outstanding immediately after such merger or consolidation, or (B) any sale, lease, exchange or other transfer (in one transaction or a series of transactions) of all or substantially all assets of the Company.

 

Notwithstanding the foregoing, in no event shall a Change in Control be deemed to have occurred with respect to a Participant if the Participant is part of a “group”, within the meaning of Section 13(d)(3) of the Act, which consummates the Change in Control transaction. In addition, for purposes of the definition of

 

Change in Control, a person engaged in business as an underwriter of securities shall not be deemed to be the beneficial owner of, or to beneficially own, any securities acquired through such person’s participation in good faith in a firm commitment underwriting until the expiration of forty days after the date of such acquisition.

 

(h)  “Code” shall mean the Internal Revenue Code of 1986, as amended from time to time.

 

(i)  “Committee” shall mean the Compensation Committee of the Board or such other committee as may be designated by the Board. If the Board does not designate the Committee, references herein to the “Committee” shall refer to the Board.

 

(j)  “Company” shall mean Triple-S Management Corporation.

 

(k)  “Covered Employee” means an individual who is (i) a “covered employee” within the meaning of Section 162(m)(3) of the Code, or any successor provision thereto or (ii) expected by the Committee to be the recipient of compensation (other than “qualified performance based compensation” as defined in Section 162(m) of the Code) in excess of $1,000,000 for the tax year of the Company with regard to which a deduction in respect of such individual’s Award would be claimed.

 

(l)  “Fair Market Value” shall mean with respect to Shares, the closing price of a Share on the date in question (or, if there is no reported sale on such date, on the last preceding date on which any reported sale occurred) on the principal stock exchange on which the Shares trade or are quoted, or if Shares are not so listed or quoted, fair market value as determined by the Committee, and with respect to any property other than Shares, the fair market value of such property determined by such methods or procedures as shall be established from time to time by the Committee.