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SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] Confidential, For Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
LaSalle Re Holdings Limited
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(Name of Registrant as Specified In Its Charter)
LaSalle Re Holdings Limited
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[_] Fee paid previously with preliminary materials:
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the form or schedule and the date of its filing.
(1) Amount previously paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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NOTICE OF ANNUAL GENERAL MEETING
January 14, 1997
Hamilton, Bermuda
TO THE SHAREHOLDERS OF LASALLE RE HOLDINGS LIMITED:
The Annual General Meeting of LaSalle Re Holdings Limited (the "Company")
will be held on Friday, February 28, 1997 at 9:00 a.m. at the Elbow Beach
Hotel, Paget, Bermuda, for the following purposes:
(1) To elect four directors to hold office until 2000; and
(2) To appoint KPMG Peat Marwick as the Company's independent auditors for
the fiscal year ending September 30, 1997 and authorize the Board of
Directors to set the fees for the independent auditors.
The shareholders will also receive at the Annual General Meeting the
Company's financial statements for the fiscal year ended September 30, 1996 as
approved by the Company's Board of Directors.
Only shareholders of record, as shown by the transfer books (Register of
Members) of the Company, at the close of business on December 31, 1996 are
entitled to notice of, and to vote at, the Annual General Meeting.
PLEASE SIGN, DATE AND RETURN THE ENCLOSED PROXY IN THE RETURN ENVELOPE
FURNISHED FOR THAT PURPOSE, AS PROMPTLY AS POSSIBLE, WHETHER OR NOT YOU PLAN
TO ATTEND THE MEETING. IF YOU LATER DESIRE TO REVOKE YOUR PROXY FOR ANY
REASON, YOU MAY DO SO IN THE MANNER DESCRIBED IN THE ATTACHED PROXY STATEMENT.
FOR FURTHER INFORMATION CONCERNING THE INDIVIDUALS NOMINATED AS DIRECTORS, USE
OF THE PROXY AND OTHER RELATED MATTERS, YOU ARE URGED TO READ THE PROXY
STATEMENT CONTAINED ON THE FOLLOWING PAGES.
By Order of the Board of Directors,
Victor H. Blake
Chairman, Chief Executive Officer
and President
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LASALLE RE HOLDINGS LIMITED
25 CHURCH STREET
P.O. BOX HM 1502
HAMILTON HM FX BERMUDA
JANUARY 14, 1997
PROXY STATEMENT
The Board of Directors of LaSalle Re Holdings Limited (the "Company") is
soliciting the accompanying proxy to be voted at the Annual General Meeting of
the Company to be held at 9:00 a.m. on February 28, 1997, at the Elbow Beach
Hotel, Paget, Bermuda, and any adjournments thereof. When the proxy is
properly executed and returned, the common shares of the Company, par value
U.S. $1.00 per share (the "Common Shares"), it represents will, subject to any
direction to the contrary, be voted at the meeting in favor of the matters
specified in the "Notice of Annual General Meeting" attached hereto.
Any shareholder giving a proxy may revoke it prior to its exercise by
providing the Secretary of the Company with written notice of revocation, by
voting in person at the Annual General Meeting or by executing a later-dated
proxy. However, such action must be taken in sufficient time to permit the
necessary examination and tabulation of the subsequent proxy or revocation
before the vote is taken.
Shareholders of record as of the close of business on December 31, 1996 will
be entitled to vote at the meeting. As of December 31, 1996, there were
outstanding 16,517,111 Common Shares of the Company entitled to vote at the
meeting, with each Common Share entitling the holder of record on such date to
one vote.
The election of each nominee for director, and the approval of all other
matters to be voted upon at the Annual General Meeting, require the
affirmative vote of a majority of the votes cast at the Annual General
Meeting, provided there is a quorum (consisting of not less than two persons
present in person or by proxy holding at least 50% of the issued and
outstanding Common Shares entitled to vote at the Annual General Meeting). The
Company will appoint one or more inspectors of election to count votes cast in
person or by proxy. Common Shares owned by shareholders electing to abstain
from voting will be counted towards the presence of a quorum. However, such
Common Shares, and Common Shares owned by shareholders and not voted in person
or by proxy at the Annual General Meeting, will not be counted towards the
majority needed to elect a director or approve any other matter before the
shareholders and thus will have no effect on the outcome of those votes.
"Broker non-votes" will be counted towards the presence of a quorum, but will
not be counted towards the majority needed to elect a director or approve any
other matter before the shareholders and thus will have no effect on the
outcome of those votes.
The Company has enclosed a copy of its 1996 Annual Report to Shareholders
along with this Proxy Statement. This Proxy Statement, the attached Notice of
Annual General Meeting and the accompanying proxy card are first being mailed
to shareholders on or about January 14, 1997.
The Company knows of no specific matter to be brought before the Annual
General Meeting which is not referred to in the attached Notice of Annual
General Meeting and this Proxy Statement. If any such matter comes before the
meeting, including any shareholder proposal properly made (which must relate
to specific agenda items listed in the attached Notice of Annual General
Meeting), the proxy holders will vote proxies in accordance with their best
judgment with respect to such matters.
ELECTION OF DIRECTORS
(ITEM A ON PROXY CARD)
The Company's Board of Directors consists of 13 directors and is divided
into three groups with the terms of office of each group ending in successive
years. The class of directors with terms expiring in 1997 consists of
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four directors, the class of directors with terms expiring in 1998 consists of
four directors and the class of directors with terms expiring in 1999 consists
of five directors. The Board of Directors has nominated Victor H. Blake,
Joseph Haviv, Lester Pollack and Harvey G. Simons for election as directors of
the Company to serve three-year terms to expire at the Annual General Meeting
in 2000 and until their respective successors shall have been elected and
qualified.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF THESE NOMINEES
AS DIRECTORS OF THE COMPANY.
It is the intention of the persons named as proxies, subject to any
direction to the contrary, to vote in favor of the candidates nominated by the
Board of Directors. If any one or more of the nominees is unable or unwilling
to serve, the proxies will, subject to any direction to the contrary, be voted
for such other person or persons as the Board of Directors may recommend, or
the size of the Board of Directors may be reduced.
Certain information with respect to nominees for election as directors
proposed by the Board of Directors of the Company and the other directors
whose terms of office as directors will continue after the Annual General
meeting, including their principal occupation for the past five years, is set
forth below.
NOMINEES FOR ELECTION TO TERMS EXPIRING IN 2000
Victor H. Blake, age 61, has been Chairman, Chief Executive Officer and
President of the Company since its organization in September 1995 and Chairman
and Chief Executive Officer of the Company's subsidiary, LaSalle Re Limited
("LaSalle Re"), since May 1994. Mr. Blake has 37 years experience in the
insurance industry, concentrating primarily in reinsurance. Mr. Blake served
as Chairman and Chief Executive Officer of CNA International Reinsurance
Company Ltd. ("CNA Re"), a leading property and casualty insurer operating in
the London market, from its formation in 1976 until October 1995. In addition,
he acted as the chairman and chief executive officer of CNA Reinsurance Group
from its formation in April 1994 until October 1995. CNA Reinsurance Group
includes CNA Re and the United States reinsurance operations of CNA Financial
Corporation (together with its affiliates "CNA"). Mr. Blake is the non-
executive chairman of CNA Reinsurance Group. Mr. Blake is also founder
Chairman of LUC Holdings Ltd, the shareholders of the London Underwriting
Centre, a marketplace housing many of the London market insurers and
reinsurers. He also served as a member of the Council of the London Insurance
and Reinsurance Market Association and its predecessor bodies from 1977 to
1996.
Joseph Haviv, age 42, has been a director of the Company since October 1995.
Mr. Haviv has been Vice President of EXOR America Inc. (an international
investment holding company) since April 1994. Prior to his current position
with EXOR America Inc., Mr. Haviv was a Principal of McKinsey & Company, Inc
(a management consulting firm).
Lester Pollack, age 63, has been a director of the Company since its
organization in September 1995 and a director of LaSalle Re since its
organization in October 1993. Mr. Pollack was a Deputy Chairman of LaSalle Re
from October 1993 to May 1996. Mr. Pollack has been a Managing Director of
Centre Partners Management llc (an investment services firm) since 1995,
Senior Managing Director of Corporate Advisors, L.P. (an investment advisory
services firm) since 1988, Managing Director of Lazard Freres & Co. LLC (an
investment banking firm) since 1986 and Chief Executive Officer of Centre
Partners, L.P. since 1986. Mr. Pollack is also a director of Continental
Cablevision, Inc., Parlex Corporation, Polaroid Corporation, Sphere Drake
Holdings, Ltd., SunAmerica, Inc. and Tidewater Inc.
Harvey G. Simons, age 49, has been a director of the Company since its
organization in September 1995 and a director of LaSalle Re since its
organization in October 1993. Mr. Simons has served as Executive Vice
President and Chief Underwriting Officer of CNA Re for more than five years.
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DIRECTORS WHOSE TERMS OF OFFICE WILL CONTINUE AFTER THIS MEETING
Directors Whose Terms Expire in 1998
Andrew Africk, age 30, has been a director of the Company since its
organization in September 1995 and an alternate director of LaSalle Re since
its organization in October 1993. Mr. Africk has been associated since 1992
with Apollo Advisors, L.P., which acts as managing general partner of certain
securities investment funds, and Lion Advisors, L.P., which acts as financial
advisor to and representative for certain institutional investors with respect
to securities investments. Prior thereto, Mr. Africk was completing graduate
degree programs at the Wharton School of Business and the University of
Pennsylvania Law School. Mr. Africk is also a director of Continental Graphics
Holdings, Inc. and Culligan Water Technologies, Inc.
Jonathan H. Kagan, age 40, has been a director of the Company since its
organization in September 1995 and a director of LaSalle Re since its
organization in October 1993. Mr. Kagan is a Managing Director of Corporate
Advisors, L.P., which he joined in 1988. Mr. Kagan has also been associated
with Lazard Freres & Co. LLC since 1980, has been a Managing Director since
1995 and is a Managing Director of Centre Partners Management llc. Mr. Kagan is
also a director of Continental Cablevision, Inc., Tyco Toys Inc. and Firearms
Training Systems, Inc.
Donald P. Koziol, Jr., age 48, has been a director of the Company since its
organization in September 1995. Mr. Koziol has been Executive Vice President of
Aon Specialty Group (an insurance firm) since January 1995. Mr. Koziol was
Chairman and Chief Executive Officer of Carvill America, Inc. (a reinsurance
brokerage firm) from 1984 until 1994.
Peter J. Rackley, age 58, has been a director of the Company since its
organization in September 1995 and a director of LaSalle Re since its
organization in October 1993. Mr. Rackley has been Chairman and Group Chief
Executive of Western International Financial Group Ltd. (a Bermuda-based
insurance business) since 1993. Prior to that, Mr. Rackley held senior
management executive positions in General Accident Fire & Life Assurance
Company plc and NZI Insurance Group. Mr. Rackley is also Chairman of Catlin
Westgen Holdings Limited, Westgen High Ridge Holdings Limited and CHA Insurance
Company Limited and Deputy Chairman of Commercial Risk Partners Limited.
Directors Whose Terms Expire in 1999
William J. Adamson, Jr., age 44, has been Deputy Chairman and a director of
the Company since its organization in September 1995 and a director of LaSalle
Re since its organization in October 1993. He also served as Chairman of
LaSalle Re from its inception until May 1994. Mr. Adamson has 21 years
experience with CNA in the reinsurance industry in Chicago and London. Mr.
Adamson became Chief Executive Officer of CNA Re in November 1995. Mr. Adamson
has been Senior Vice President of Continental Casualty Company ("CCC") since
November 1995 and head of its Chicago-based reinsurance operations and also
President of CNA Re and CNA (Bermuda) Services Ltd. ("CNA Bermuda") since 1993.
Prior to his appointment as Senior Vice President, he was a Group Vice
President and a Vice President of CCC and its principal insurance subsidiaries.
Mr. Adamson has acted as the chief operating officer of CNA Reinsurance Group
since its formation in April 1994 and became its chief executive officer in
November 1995.
Ivan P. Berk, age 59, has been a director of the Company since its
organization in September 1995 and an alternate director of LaSalle Re since
its organization in October 1993. He has been Executive Director-Manager of
Equities of Aon Advisors, Inc. since March 1993 and was Senior Portfolio
Manager of Aon Advisors, Inc. from December 1990 until March 1993. Mr. Berk has
28 years of investment experience, including the formation of six insurance
related companies in the last three years.
Scott A. Schoen, age 38, has been a director of the Company since its
organization in September 1995 and a director of LaSalle Re since its
organization in October 1993. Mr. Schoen is a Managing Director of Thomas H.
Lee Company (a Boston-based private investment firm) which he joined in 1986.
Mr. Schoen is also a director
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of Alliance International Group, Inc., Anchor Advanced Products, Health O Meter
Products Inc., Rayovac Corporation and First Alert, Inc. and a Trustee of
Insight Premier Funds.
David A. Stockman, age 49, has been a director of the Company since its
organization in September 1995 and a director of LaSalle Re since its
organization in October 1993. Mr. Stockman was a Deputy Chairman of LaSalle Re
from October 1993 to May 1996. Mr. Stockman is a Member of Blackstone Group
Holdings L.L.C. (a general partner of Blackstone Group Holdings L.P., an
investment partnership) since February 1996 and was a General Partner of
Blackstone Group Holdings L.P. (together with its successor, "Blackstone") from
1990 to February 1996. Mr. Stockman has been a Senior Managing Director of
Blackstone since 1988. Prior to joining Blackstone, Mr. Stockman was a Managing
Director of Salomon Brothers Inc. (an investment services firm). Mr. Stockman
served as the Director of the Office of Management and Budget in the Reagan
Administration from 1981 to 1985. Prior to that, Mr. Stockman represented
Southern Michigan in the U.S. House of Representatives. Mr. Stockman is also a
director of Bar Technologies, Inc. and Collins & Aikman Corporation.
Paul J. Zepf, age 31, has been a director of the Company since May 1996.
Previously he had been an alternate director of LaSalle Re since its
organization in September 1993. He is a Principal of Corporate Advisors, L.P.,
which he joined in 1989. Mr. Zepf is also a Principal of Centre Partners
Management llc, which manages Centre Capital Investors II, L.P. and related
investment funds. Mr. Zepf is also a director of Firearms Training Systems,
Inc.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
During the year ended September 30, 1996, the Board of Directors met five
times, acted by written consent three times and held sixteen committee
meetings. All directors attended at least 75% of the aggregate of such meetings
of the Board of Directors and the committees of the Board of which they were a
member (or of such meetings during such director's tenure on the Board of
Directors), except for Messrs. Africk, Kagan, Pollack, Schoen and Simons. Mr.
Schoen attended one meeting of the Board of Directors and four committee
meetings by proxy, as permitted under Bermuda law, and on this basis attended
in person or by proxy more than 75% of the aggregate number of meetings of the
Board of Directors and the committees of the Board on which he served. The
Board of Directors has established five standing committees: Audit,
Compensation, Investment, Nominating and Underwriting/Actuarial.
Audit Committee
The Audit Committee is composed entirely of non-management directors and
reviews the adequacy and effectiveness of the Company's external auditors and
their audit report. The Audit Committee is comprised of Jonathan H. Kagan
(Chairman), William J. Adamson, Peter J. Rackley and Scott A. Schoen. The Audit
Committee met three times in fiscal year 1996.
Compensation Committee
The Compensation Committee is composed entirely of non-management directors
and has responsibility for determining executive compensation. The Compensation
Committee is comprised of Lester Pollack (Chairman), Joseph Haviv, Peter J.
Rackley and Scott A. Schoen. The Compensation Committee met twice in fiscal
year 1996.
Investment Committee
The Investment Committee approves guidelines that provide standards to ensure
portfolio liquidity and safety, approves investment managers and custodians for
portfolio assets and recommends asset allocation to the Board of Directors. The
Investment Committee is comprised of Scott A. Schoen (Chairman), William J.
Adamson, Ivan Berk, Victor H. Blake and Paul Zepf. The Investment Committee met
twice in fiscal year 1996.
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Nominating Committee
The Nominating Committee reviews candidates for the Board of Directors and
makes recommendations to the Board of Directors. The Nominating Committee will
consider a shareholder's suggestion for candidates if mailed to: LaSalle Re
Holdings Limited, 25 Church Street, P.O. Box HM 1502, Hamilton HM FX Bermuda.
The Nominating Committee is comprised of William J. Adamson, (Chairman), Ivan
P. Berk and Lester Pollack. The Nominating Committee met once in fiscal year
1996.
Underwriting /Actuarial Committee
The Underwriting/Actuarial Committee establishes guidelines for the Company's
underwriters and actuaries and periodically reviews underwriting decisions. The
Underwriting/Actuarial Committee is comprised of William J. Adamson,
(Chairman), Victor H. Blake, Jonathan H. Kagan, Donald P. Koziol, Jr., Peter J.
Rackley, David A. Stockman and Paul Zepf. The Underwriting/Actuarial Committee
met three times in fiscal year 1996.
DIRECTOR COMPENSATION
Directors of the Company are currently not paid to serve on the Board of
Directors. Non-management directors receive reimbursement of their reasonable
cost for attendance at each meeting (including committee meetings).
CERTAIN TRANSACTIONS
Underwriting Services Agreement
Pursuant to an underwriting services agreement (the "Underwriting Services
Agreement") with CNA Bermuda, CNA Bermuda provides underwriting services and
underwrites all classes of insurance and reinsurance as agent for LaSalle Re.
The Underwriting Services Agreement expires on December 31, 1998 with a two
year extension at the option of the Company. Until December 31, 1995, the fees
for the underwriting services were as follows: (i) 2% for the first $150
million of gross written and collected premiums per fiscal year and 1.5%
thereafter and (ii) for periods during which the Company's loss ratio since
inception of LaSalle Re was 57% or less, subject to certain conditions, an
underwriting profit commission of 2.5% of the aggregate net underwriting
profits of LaSalle Re. Effective January 1, 1996, these fees are (i) 1.5% of
gross written and collected premiums per fiscal year and (ii) subject to the
same loss ratio test and conditions, an underwriting profit commission of 4.0%
of the aggregate net underwriting profits of LaSalle Re. The fees for
underwriting services were renegotiated in September 1995 by and approved by a
vote of directors of LaSalle Re who are not affiliated with either CNA or Aon
Corporation (together with its affiliates, "Aon"). The performance of CNA
Bermuda and the fees paid are periodically reviewed by the Board of Directors
of LaSalle Re.
LaSalle Re accrued underwriting service fees to CNA Bermuda of $3,081,245,
$3,411,321 and $1,465,283 for the years ended September 30, 1996 and 1995 and
the period from October 26, 1993 to September 30, 1994, respectively. In
addition, the Company incurred profit commissions to CNA Bermuda of $4,139,573,
$2,186,071 and $ nil for the years ended September 30, 1996 and 1995 and the
period from October 26, 1993 to September 30, 1994, respectively.
Administrative Services Agreement
Pursuant to an administrative services agreement (the "Administrative
Services Agreement") with Aon Risk Consultants (Bermuda) Ltd. ("Aon Bermuda"),
Aon Bermuda provides LaSalle Re with actuarial and financial reporting,
accounting, office space and other administrative services. The Administrative
Services Agreement expires on December 31, 1998 with a two year extension at
the option of the Company. The fees for administrative services are: (i)
$547,945 for 1993 (pro rata basis), (ii) $3,000,000 for 1994, (iii) $5,000,000
for 1995 and (iv) $7,000,000 for 1996. For periods beginning January 1, 1997,
the fees for administrative services, and for the claims administrator services
currently performed by Integrated Runoff Insurance Services Corporation
("IRISC"), an affiliate of Aon, will be $3,300,000 per year, plus a commission
of 2.75% of the aggregate net underwriting profits of LaSalle Re, for periods
during which the Company's loss ratio is 57% or less, subject to the same
conditions applicable in the Underwriting Services Agreement. The fees for
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administrative services were negotiated in September 1995 by and approved by a
vote of directors of LaSalle Re who are not affiliated with either CNA or Aon.
The performance of Aon Bermuda and the fees paid are periodically reviewed by
the Board of Directors of LaSalle Re.
Investment Management Agreement
Pursuant to an investment management agreement (the "Investment Management
Agreement") with Aon Advisors (UK) Limited ("Aon Advisors"), Aon Advisors
provides LaSalle Re with investment management services in accordance with the
investment guidelines set by the Board of Directors of LaSalle Re. The
Investment Management Agreement expires on September 30, 1998 with a one year
extension at the option of the Company. The fees for the investment management
services are as follows: (i) 35 basis points for the first $100 million of
funds under management, (ii) 25 basis points for the next $100 million of funds
under management and (iii) 15 basis points for all funds managed in excess of
$200 million. The fees for investment management services were reviewed in
September 1995 by and reapproved by a vote of directors of LaSalle Re who are
not affiliated with either CNA or Aon. The performance of Aon Advisors and the
fees paid are periodically reviewed by the Board of Directors of LaSalle Re.
LaSalle Re paid Aon Advisors investment management fees of $1,027,685, $986,774
and $752,348 for the years ended September 30, 1996 and 1995 and the period
from October 26, 1993 to September 30, 1994, respectively.
Claims Agreement
Pursuant to a claims agreement (the "Claims Agreement") with IRISC, IRISC
serves as claims administrator for LaSalle Re. After a review in September 1995
by directors who are not affiliated with CNA or Aon, the Company notified IRISC
that it would not renew the Claims Agreement. As a result, the Claims Agreement
will terminate on December 31, 1996. The services provided under the Claims
Agreement will be provided by Aon Bermuda for no additional charge under the
Administrative Services Agreement after December 31, 1996. The Claims Agreement
provides for certain minimum fees to be paid per year, and also provides for
additional fees calculated on an hourly basis if services provided exceed 450
hours in a given year. The fees paid under the Claims Agreement were as
follows: (i) $47,334 for the period from October 26, 1993 to September 30,
1994, (ii) $78,026 for the year ended September 30, 1995 and (iii) $89,776 for
the year ended September 30, 1996.
Shareholders Agreement
Pursuant to the Amended and Restated Shareholders Agreement dated November
27, 1995 among the Company, LaSalle Re, each of the founding shareholders of
LaSalle Re (the "Founding Shareholders") and Mr. Blake (the "Shareholders
Agreement"), certain holders of Common Shares have the right to demand that the
Company register such shares with the Securities and Exchange Commission for an
underwritten or at the market public offering. Such shareholders also have the
right to have their Common Shares registered in connection with any
registration of securities by the Company. Such demand right may be exercised
at any time, subject to limitations. In connection with the first four such
registrations, the Company is required to bear all registration and selling
expenses, other than underwriting fees and commissions. Pursuant to the
Shareholders Agreement, the Company also is (i) prevented from engaging in
certain activities without the consent of a majority of the holders of
exchangeable non-voting shares of LaSalle Re (the "Exchangeable Non-Voting
Shares"), (ii) prevented from incurring certain indebtedness without the
consent of a majority of the holders of Common Shares who are parties to the
Shareholders Agreement and (iii) prevented from changing the terms of the
Exchangeable Non-Voting Shares (other than as contemplated by a conversion
agreement among the Company, LaSalle Re and certain of the Founding
Shareholders) without the consent of a majority of both of (A) the outstanding
Exchangeable Non-Voting Shares and (B) the Common Shares held by certain
Founding Shareholders. In addition, upon a liquidation of LaSalle Re, holders
of Exchangeable Non-Voting Shares will be contractually obligated to the
parties to the Shareholders Agreement to transfer to holders of Common Shares
such amount so as to ensure that the proceeds of the liquidation will be shared
on a pro rata basis among the holders of Common Shares and the Exchangeable
Non-Voting Shares. Additionally, LaSalle Re may not knowingly sell reinsurance
so as to generate "related person insurance income" of 20% or more of its gross
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insurance income without approval of 85% of the Board of Directors of LaSalle
Re. If LaSalle Re knowingly sells reinsurance so as to generate "related person
insurance income" of 20% or more of its gross insurance income, then any such
shareholder may exercise its registration rights regardless of the number of
Common Shares it holds or, at the option of the Company, the Company may
repurchase such shareholder's shares for their fair market value.
Excess Ownership Agreement
Pursuant to an excess ownership agreement dated November 27, 1995 among
LaSalle Re, the Company and certain Founding Shareholders (the "Excess
Ownership Agreement"), each such shareholder will at the request of the Company
(i) provide certain information on its ownership to the Company, (ii) notify
the Company of any change in its ownership and (iii) inquire of each new
partner or new 10% owner of the shareholder if such party owns shares in the
Company or any ownership interest in any shareholder of the Company.
Additionally, under certain circumstances such Founding Shareholders will agree
to dispose of all or part of their respective shares of the Company or to
exchange them for Exchangeable Non-Voting Shares.
Reinsurance Transactions with Aon and CNA
In the years ended September 30, 1996 and 1995 and the period from October
26, 1993 to September 30, 1994 the Company assumed premiums totaling
approximately $24,045,470, $28,835,485 and $24,186,000, respectively, from a
ceding company related to CNA. Absent CNA's relationship with the Company, such
premiums may not have been written by the Company. In addition, during the same
periods the Company wrote premiums totaling approximately $23,577,000,
$22,057,000 and $14,163,000, respectively, through brokers related to Aon;
brokerage fees incurred in respect of this business were approximately
$2,357,700, $2,205,700 and $1,416,300, respectively, during the same periods.
The terms of these reinsurance transactions were negotiated between the parties
and the Company believes that such terms were at market rates.
Loan to Executive Officer
In accordance with Mr. Blake's employment agreement, the Company loaned Mr.
Blake $695,000 to purchase a condominium in Bermuda. The loan is secured by an
equitable mortgage on the condominium. The Company has agreed to reimburse Mr.
Blake for interest paid on the loan. The loan is due at the time the
condominium is sold or otherwise transferred by Mr. Blake. Subject to Mr.
Blake's right to purchase the condominium upon termination of his employment,
the sale of the condominium is required within a reasonable time following
termination of his employment. If Mr. Blake elects to purchase the condominium
upon termination of his employment, the principal of, and any unpaid interest
on, the loan will be due on the 50th day after the termination date. If, as of
the termination date, the fair market value of the condominium has increased
over the purchase price, Mr. Blake shall also be required to pay the amount of
the increase to the Company. If the fair market value of the condominium has
decreased to below the purchase price, the amount due from Mr. Blake shall be
reduced by the amount of the decrease.
Other Transactions
During 1996, the Company engaged the investment banking firm of Lazard Freres
& Co. LLC for services. Messrs. Pollack and Kagan, directors of the Company,
are both Managing Directors of Lazard Freres & Co. LLC. The Company may engage
Lazard Freres & Co. LLC or its affiliates during 1997.
SECTION 16 REPORTING
Directors, officers and beneficial owners of more than 10 percent of Common
Shares of the Company are subject to the reporting requirements of Section 16
of the United States Securities Exchange Act of 1934, as amended. Based solely
upon a review of Forms 3 and 4 and amendments thereto furnished to the Company
pursuant to Rule 16a-3(e) of the Securities Exchange Act of 1934, as amended,
during the year ended September 30, 1996, all of such forms have been timely
filed by the directors, officers and beneficial owners of more than 10 percent
of Common Shares of the Company.
7
<PAGE>
BENEFICIAL OWNERSHIP OF COMMON SHARES
DIRECTORS, OFFICERS AND OTHER BENEFICIAL OWNERS
The following table sets forth information, as of December 31, 1996 with
respect to the beneficial ownership of Common Shares and Exchangeable Non-
Voting Shares by Victor H. Blake, the Company's Chairman, Chief Executive
Officer and President, the Company's other executive officers whose salary and
benefits for 1996 exceeded $100,000, each of the Company's directors and
nominees, by all directors, nominees and executive officers of the Company as
a group and by each shareholder who is known by the Company to beneficially
own more than five percent of the outstanding Common Shares or Exchangeable
Non-Voting Shares. Unless otherwise indicated, the named individual or entity
has sole voting and investment power over the Common Shares set forth below.
<TABLE>
<CAPTION>
PERCENT OF
TOTAL COMMON
PERCENT NUMBER OF PERCENT OF SHARES AND
NUMBER OF OF EXCHANGEABLE EXCHANGEABLE EXCHANGEABLE
COMMON COMMON NON-VOTING NON-VOTING NON-VOTING
NAME OF BENEFICIAL OWNER SHARES SHARES SHARES SHARES SHARES
- ------------------------ --------- ------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Victor H. Blake(1)...... 59,054 *% 0 -- *%
William J. Adamson...... 1,000 * 0 -- *
Andrew Africk........... 0 -- 0 -- --
Ivan P. Berk............ 300 * 0 -- *
Andrew Cook(2).......... 7,600 * 0 -- *
Joseph Haviv............ 0 -- 0 -- --
Guy Hengesbaugh(3)...... 10,000 * 0 -- *
Jonathan H. Kagan(4).... 911,917 5.52 1,019,777 16.42% 8.50
Donald P. Koziol, Jr.... 0 -- 0 -- --
Lester Pollack(4)....... 911,917 5.52 1,019,777 16.42 8.50
Peter J. Rackley........ 0 -- 0 -- --
Scott A. Schoen(5)...... 493,847 * 196,044 * *
Harvey G. Simons........ 0 -- 0 -- --
David A. Stockman(6).... 403,569 * 976,213 15.72 6.07
Paul J. Zepf(7)......... 912,417 5.52 1,019,777 16.42 8.50
All directors and
executive officers as a
group (15 persons)(8).. 1,887,787 11.43 2,192,034 35.30 17.95
Aon Corporation(9)...... 556,500 * 2,443,500 39.35 13.20
123 North Wacker Drive
Chicago, IL 60606
Continental Casualty 1,425,354 8.63 1,574,646 25.36 13.20
Company(10)............
CNA Plaza
Chicago, IL 60685
Corporate Partners(4)... 911,917 5.52 1,019,777 16.42 8.50
30 Rockefeller Plaza
Suite 5050
New York, NY 10020
</TABLE>
8
<PAGE>
<TABLE>
<CAPTION>
PERCENT OF
TOTAL COMMON
NUMBER PERCENT NUMBER OF PERCENT OF SHARES AND
OF OF EXCHANGEABLE EXCHANGEABLE EXCHANGEABLE
COMMON COMMON NON-VOTING NON-VOTING NON-VOTING
NAME OF BENEFICIAL OWNER SHARES SHARES SHARES SHARES SHARES
- ------------------------ ------- ------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Blackstone Entities(6).. 403,569 *% 976,213 15.72% 6.07%
345 Park Avenue
31st Floor
New York, NY 10154
Hyatt Minneapolis 974,710 5.90 0 -- *
Corporation............
200 West Madison Street
Chicago, IL 60606
</TABLE>
- --------
*Less than 1%
(1) Includes options to purchase 17,044 Common Shares.
(2) Includes options to purchase 6,600 Common Shares.
(3) Includes options to purchase 9,000 Common Shares.
(4) Of these 911,917 shares, approximately 85%, 6% and 9% are owned by
Corporate Partners, L.P., Corporate Offshore Partners, L.P. and the State
Board Administration of Florida ("SBA"), respectively, which are the
registered shareholders of the Common Shares. Corporate Advisors, as the
general partner of Corporate Partners, L.P. and Corporate Offshore
Partners, L.P., has sole voting and investment power as to the shares
held by them. Corporate Advisors serves as investment manager over a
certain investment management account for SBA and has sole voting and
dispositive power with respect to the Common Shares held by SBA. All
shares listed in the table as being beneficially owned by Messrs. Pollack
and Kagan are beneficially owned by Corporate Advisors. Mr. Pollack may
be deemed to share voting and investment power over such shares as the
Chairman and Treasurer and as a Director of LFCP Corp. and Senior
Managing Director of Corporate Advisors. Mr. Kagan may be deemed to share
voting and investment power over such shares as the President of LFCP
Corp. and Managing Director of Corporate Advisors. LFCP Corp. is the sole
general partner of Corporate Advisors and a wholly owned subsidiary of
Lazard Freres & Co. LLC. Mr. Pollack and Mr. Kagan are both Managing
Directors of Lazard Freres & Co. LLC. Each of Messrs. Pollack and Kagan
disclaims beneficial ownership of such shares. Excludes options to
purchase 454,500 Exchangeable Non-Voting Shares.
(5) Of these 493,847 shares, approximately 82% and 18% are owned by Thomas H.
Lee Equity Partners and THL-CCI Investors Limited Partnership,
respectively, which are the registered shareholders of the Common Shares.
Mr. Schoen is an employee of Thomas H. Lee Company, which is an affiliate
of Thomas H. Lee Equity Partners and THL-CCI Investors Limited
Partnership and may be deemed to share voting and investment power with
respect to all of such Common Shares. Mr. Schoen disclaims beneficial
ownership of such Common Shares. Excludes options to purchase 68,175
Exchangeable Non-Voting Shares.
(6) Of these 403,569 shares, approximately 71%, 22% and 7% are owned by
Blackstone LR Capital Partners L.P., Blackstone LR Offshore Capital
Partners, L.P., and Blackstone Family Investment Partnership (Cayman)
L.P., respectively, which are the registered shareholders of the Common
Shares. Mr. Stockman has an interest in the general partner of each of
the Blackstone Entities and may be deemed to share voting and investment
power with respect to all of such Common Shares. The general partner of
the general partner of the Blackstone Entities is owned and controlled by
Peter G. Peterson and Stephen A. Schwarzman, each of whom have voting and
investment power over the Common Shares held or controlled by the
Blackstone Entities. Each of Messrs. Peterson, Schwarzman and Stockman
disclaims beneficial ownership of such Common Shares. Excludes options to
purchase 136,350 Exchangeable Non-Voting Shares.
(7) Of these 912,417 shares, 911,917 are owned by Corporate Partners, L.P.,
Corporate Offshore Partners, L.P. and SBA. Corporate Advisors, as the
general partner of Corporate Partners, L.P. and Corporate Offshore
9
<PAGE>
Partners, L.P., has sole voting and investment power as to the shares held
by them. Corporate Advisors serves as investment manager over a certain
investment management account for SBA and has sole voting and dispositive
power with respect to the Common Shares held by SBA. Mr. Zepf may be deemed
to share voting and investment power over such shares as a Principal of
Corporate Advisors. Mr. Zepf disclaims beneficial ownership of such shares.
Excludes options to purchase 454,500 Exchangeable Non-Voting Shares.
(8) Includes options to purchase 32,644 Common Shares.
(9) Of these 556,500 shares, approximately 50% are owned by each of Combined
Insurance Company of America and Virginia Surety Company, Inc., which are
the registered shareholders of the Common Shares and wholly-owned
subsidiaries of Aon. Excludes option to purchase 909,000 Exchangeable Non-
Voting Shares.
(10) All of these shares are owned by Continental Casualty Company, the
registered shareholder of the Common Shares and a wholly-owned subsidiary
of CNA Financial Corporation. At December 31, 1995, approximately 84% of
the outstanding voting securities of CNA Financial Corporation were owned
by Loews Corporation. Excludes options to purchase 454,500 Exchangeable
Non-Voting Shares.
MANAGEMENT
COMPENSATION
The following table sets forth, in summary form, the compensation earned by
Victor H. Blake, the Company's Chairman, Chief Executive Officer and President,
and each of the Company's other executive officers whose salary and benefits
for periods presented exceeded $100,000.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATIONS COMPENSATION
--------------------------------- ------------
SECURITIES
NAME AND PRINCIPAL FISCAL OTHER ANNUAL UNDERLYING ALL OTHER
POSITION YEAR SALARY BONUS COMPENSATION OPTIONS COMPENSATION
------------------ ------ -------- -------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Victor H. Blake......... 1995 $262,500(1) $ 90,421 $146,992(2) $ 22,695(3)
Chief Executive Officer 1996 529,038 525,000 136,590(2) 85,218 852,308(4)
and President
Guy D. Hengesbaugh(5)... 1995 $170,000 $ 45,000 $ 71,783(6) $ 5,950(7)
Executive Vice
President and 1996 200,000 100,000 104,756(6) 45,000 7,788(7)
Chief Underwriting
Officer
Andrew Cook(8).......... 1995 $ 97,333 $ 19,000 $ 30,835(9) $ 7,740(10)
Chief Financial Officer 1996 161,231 75,000 76,077(9) 33,000 13,701(11)
and Treasurer
</TABLE>
- --------
(1) The compensation indicated relates to Mr. Blake's part-time service. See
"Management--Employment Agreements."
(2) Includes housing expenses of $123,541 for fiscal 1995 and $116,346 for
fiscal 1996.
(3) Consists of amounts paid for life insurance covering Mr. Blake.
(4) Consists of $489,061 paid in connection with certain pension benefits for
services rendered in fiscal 1996 and prior periods, $249,863 paid in
connection with certain pension benefits for future services, $88,096 paid
for monthly pension contributions, $22,032 paid for life insurance
covering Mr. Blake and $3,256 paid for permanent health insurance covering
Mr. Blake.
(5) The compensation indicated was paid by CNA Bermuda pursuant to the
Underwriting Services Agreement. See "Election of Directors--Certain
Transactions--Underwriting Agreement."
10
<PAGE>
(6) Includes housing expenses and overseas allowances of $66,106 for fiscal
1995 and $97,607 for fiscal 1996.
(7) Consists of contributions to a 401(k) Plan.
(8) The compensation indicated for fiscal 1995 was paid by Aon Bermuda
pursuant to the Administrative Services Agreement. See "Election of
Directors--Certain Transactions--Administrative Services Agreement."
(9) Includes housing expenses of $28,800 for fiscal 1995 and $60,462 for
fiscal 1996.
(10) Consists of $5,740 paid in connection with a noncontributory pension plan
and $2,000 paid in connection with a Company savings plan.
(11) Consists of $13,701 paid in connection with a noncontributory pension
plan.
The following table sets forth information concerning stock options granted
to each of the Company's executive officers whose salary and benefits during
the year ended September 30, 1996 exceeded $100,000.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
--------------------------
POTENTIAL REALIZABLE
VALUE AT ASSUMED
NUMBER OF ANNUAL RATES OF STOCK
SECURITIES % OF TOTAL PRICE APPRECIATION
UNDERLYING OPTIONS GRANTED EXERCISE FOR OPTION TERM(2)
OPTIONS TO EMPLOYEES IN OR BASE ---------------------
NAME GRANTED(1) FISCAL YEAR PRICE EXPIRATION DATE 5% 10%
- ---- ---------- --------------- -------- ----------------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Victor H. Blake......... 85,218 52.2% $18.75 November 27, 2005 $1,507,937 $3,115,753
Guy D. Hengesbaugh...... 45,000 27.6% $18.75 November 27, 2005 $ 796,277 $1,645,297
Andrew Cook............. 33,000 20.2% $18.75 November 27, 2005 $ 583,937 $1,206,551
</TABLE>
- --------
(1) The options vest ratably in five annual installments over five years from
the date of grant.
(2) The actual value, if any, an executive officer may realize will depend on
the future performance of the Common Shares and the excess of the stock
price over the exercise price on the date the option is exercised, so that
there is no assurance the value realized by an executive officer will be
at or near the value reflected in the above table. These amounts represent
certain assumed rates of appreciation only and may not be realized by the
executive officer.
The following table sets forth information for each of the Company's
executive officers, whose salary and benefits during the year ended September
30, 1996 exceeded $100,000, with regard to the number of Common Shares
underlying unexercised stock options and SARs, and the value of such stock
options and SARs, in each case at September 30, 1996. No stock options or SARs
have been exercised by any of the executive officers.
AGGREGATE OPTIONS/SAR EXERCISES IN FISCAL YEAR 1996 AND 1996 FISCAL YEAR-END
OPTIONS/SAR VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS/SARS AT IN-THE-MONEY OPTIONS/SARS
SEPTEMBER 30, 1996 AT SEPTEMBER 30, 1996
NAME EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
- ---- ------------------------- -------------------------
<S> <C> <C>
Victor H. Blake(1).......... 0/426,090 0/$4,802,034
Guy D. Hengesbaugh.......... 0/ 45,000 0/$ 208,350
Andrew Cook................. 0/ 33,000 0/$ 152,790
</TABLE>
- --------
(1) Of the 426,090 securities underlying Mr. Blake's options/SARs, 85,218
pertain to stock options and 340,872 pertain to SARs. These are valued at
$394,559 and $4,407,475, respectively.
11
<PAGE>
EMPLOYMENT AGREEMENTS
The Company has entered into an employment agreement, as amended, with Victor
H. Blake, pursuant to which he serves as Chairman of the Board of Directors,
Chief Executive Officer and President of the Company. The agreement provides
for an annual base salary of $575,000, effective October 1, 1996. In addition,
Mr. Blake is entitled to an annual non-discretionary bonus based on the amount,
if any, by which the Company's return on equity for that year exceeds 15% per
annum, subject to a maximum of $855,000 (which he would receive at a 35% rate
of return). In addition, Mr. Blake has been awarded 340,872 stock appreciation
rights ("SARs") with respect to Common Shares. A portion of these SARs may
become exercisable on January 1 of each of 1997, 1998 or 1999 based upon the
amount, if any, by which the Company's compound annual rate of return exceeds
18% per annum for the entire measurement period. Once exercisable, each SAR may
be exercised on or before March 30, 2004 or, if earlier, two years after Mr.
Blake's termination of employment, for an amount equal to the fair market value
of a Common Share, minus an amount equal to $16.67 minus dividend adjustments.
The current exercise price is $10.45. The Company's dividend policy will likely
result in substantial downward adjustments to this exercise price.
Alternatively, at the Company's sole discretion, the SARs will entitle Mr.
Blake to either (i) the number of special non-voting shares, par value U.S.
$1.00 per share, which were issued by LaSalle Re in connection with the
formation and capitalization of LaSalle Re (the "Special Non-Voting Shares")
equal to the aggregate value of the SARs divided by the fair market value of a
Special Non-Voting Share at the exercise date, or (ii) upon payment of the base
value for each SAR, the number of Special Non-Voting Shares equal to the number
of SARs exercised. The SARs may also become exercisable upon the occurrence of
an "extraordinary transaction" involving a change in control of the Company.
The agreement also provides Mr. Blake with certain benefits, including certain
disability, pension and life insurance benefits, use of an automobile, certain
club memberships and reimbursement of expenses incurred on a basis appropriate
to an individual holding the position of chairman of a company such as the
Company. In addition, the Company has loaned $695,000 to Mr. Blake in order to
finance the purchase of a condominium in Bermuda. The agreement expires on
March 31, 2000, but provides for automatic annual one-year renewals thereafter
unless notice of non-renewal is provided by either party at least 18 months
prior to the expiration of the agreement.
Mr. Blake has agreed that, during the Non-Competition Period (as defined
below), he will not directly or indirectly (i) provide goods or perform
services for the benefit of any client, except with respect to goods provided
or services performed for the benefit of the Company or CNA by the Company
during the period in which Mr. Blake is employed by the Company, or (ii)
solicit, attempt to solicit, or endeavor to procure engagement, for himself or
for any business, the opportunity to provide such goods or perform services for
any person (a) to whom the Company has provided such goods or performed such
services for the benefit of the Company or CNA in the 12-month period prior to
Mr. Blake's termination date or (b) to whom, during the six-month period prior
to Mr. Blake's termination date, the Company has devoted material efforts to
obtaining as a purchase of its goods or services. Mr. Blake has also agreed
that, during the Non-Competition Period, he will not directly or indirectly,
divert or attempt to divert any business from the Company. For purposes of the
agreement, the "Non-Competition Period" means (i) if Mr. Blake's employment is
terminated because of his permanent disability, for cause or it Mr. Blake
resigns, the period commencing on the date Mr. Blake's employment is terminated
and continuing for 24 months following such termination date and (ii) if Mr.
Blake terminates his employment following a breach of the agreement by the
Company or if Mr. Blake's employment is otherwise terminated by the Company,
the period commencing on the date Mr. Blake's employment is terminated and
continuing until the earlier to occur of the last day of the agreement term or
24 months following the termination date; provided that, for purposes of clause
(ii), the Company may extend the Non-Competition Period beyond the end of the
agreement term to a specified date not later than 24 months following the
termination date upon continuation of Mr. blake's then applicable base salary.
The Company has entered into an employment agreement with Andrew Cook
pursuant to which he serves as Chief Financial Officer and Treasurer of both
the Company and LaSalle Re. The agreement is for a three-year term and provides
for an annual base salary of $185,000, effective October 1, 1996. In addition,
Mr. Cook is entitled to an annual partially discretionary bonus based in part
on the Company's return on equity, subject to a maximum of $185,000. The
agreement provides Mr. Cook with certain benefits, including disability and
pension
12
<PAGE>
benefits, use of an automobile, club membership, housing and living allowance
and reimbursement of reasonable business expenses. The agreement also includes
a non-competition clause that is similar to the non-competition clause
contained in Mr. Blake's employment agreement and described above.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee of the Board consists of Messrs. Pollack, Rackley,
Haviv and Schoen. No member of the Compensation Committee is or was an officer
or employee of the Company or served as a director or a member of the
compensation committee of any other company, one of whose executive officers
served as a member of the Board or a member of the Compensation Committee of
the Board.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Company's executive compensation program is administered by the
Compensation Committee of the Board, which is composed solely of independent
outside directors. Where appropriate, the Committee reviews and considers the
recommendations of management before determining compensation policy. In
addition, the Committee has employed outside consultants with respect to
certain compensation-related issues. The Company's compensation programs are
designed to be tied closely to Company performance and shareholder value, and
to enable the Company to attract and retain the best possible executive talent.
In general, the compensation of the Company's executive officers is
determined under contracts previously approved by the Compensation Committee.
The relation between Company performance and compensation is embodied in part
in the bonus provisions contained in those contracts. Messrs. Blake and Cook
have been employees of the Company since October 1, 1995. Prior to 1995,
Messrs. Blake, Hengesbaugh and Cook were officers of LaSalle Re and the
compensation of Mr. Cook was paid by Aon Bermuda pursuant to the Administrative
Services Agreement. Mr. Hengesbaugh is employed by CNA Bermuda and his
compensation is paid by CNA Bermuda pursuant to the Underwriting Service
Agreement. See "Election of Directors--Certain Transactions--Underwriting
Services Agreement."
With respect to chief executive compensation, Mr. Blake's compensation during
the year was based on an amended and restated employment agreement effective
October 1, 1995. For the 1996 fiscal year, the contract provided for a fixed
annual salary and an annual non-discretionary performance-based bonus. The
measure of performance for purposes of the annual non-discretionary bonus is
the Company's return on equity for the year in question. A one-time award of
SARs was granted previously under the contract, a portion of which becomes
exercisable based on the Company's compound annual rate of return since the
inception of the Company. See "Management--Employment Agreements." Upon re-
negotiation of the agreement in 1995, the Compensation Committee and the Board
of Directors took into account, among other things, (1) their desire to
compensate officers competitively with other companies in the property
catastrophe business, (2) Mr. Blake's past compensation and (3) their view
that, for purposes of determining compensation, the portion of compensation
tied to performance should be measured both on an annual basis, as is done with
the non-discretionary performance-based bonus, and on a long-term basis in the
form of equity or equity equivalents, as is done with the SARs and stock
options.
Mr. Cook's compensation during the 1996 fiscal year was based on an
employment agreement effective October 1, 1995 providing for a fixed annual
salary for the period. Based solely on the Company's return on equity for the
year, Mr. Cook qualified for the maximum non-discretionary bonus of $56,250
provided under the contract. On the recommendation of the Chief Executive
Officer based on the achievement of financial and personal performance
objectives, the Committee approved awarding him the full discretionary bonus of
$18,750 available under the contract, resulting in a total bonus for the fiscal
year of $75,000.
In line with the Company's general compensation policies and the goal of
encouraging alignment of management and shareholder interests through equity
participation, the November 1995 option grants pursuant to the Company's Long-
Term Incentive Plan for the Company's three executive officers were based on an
analysis of the compensation offered by publicly traded Bermuda-based property
catastrophe companies and took into account the increased responsibilities the
executive officers would have as officers of a public company.
13
<PAGE>
The Company is not a U.S. taxpayer, and therefore Section 162(m) of the U.S.
Internal Revenue Code (which restricts the deductibility of certain
compensation under U.S. tax rules) is inapplicable to the Company's
compensation payments.
COMPENSATION COMMITTEE
Lester Pollack, Chairman
Joseph Haviv
Peter J. Rackley
Scott A. Schoen
PERFORMANCE GRAPH
The following graph shows a comparison of cumulative total shareholder
returns, including reinvestment of dividends, on the Company's Common Shares
to such return for the NASDAQ combined composite index and the NASDAQ combined
insurance index for the period beginning on November 20, 1995 (the first day
of public trading for the Common Shares) and ending on September 30, 1996
assuming $100 was invested on November 20, 1995. Each measurement point on the
graph represents the cumulative shareholder return as measured by the last
reported sale price at the end of each quarter during the relevant period.
[GRAPH APPEARS HERE]
COMPARATIVE RETURNS AMONG LASALLE RE HOLDINGS LIMITED,
NASDAQ COMP AND NASDAQ INS
<TABLE>
<CAPTION>
LaSalle Re Holdings
Measurement Period Limited Nasdaq Comp Nasdaq Ins
- ------------------ ------------------- ----------- ----------
<S> <C> <C> <C>
Measurement Pt-
11/21/95 $100.00 $100.00 $100.00
12/29/95 $112.96 $102.65 $108.62
01/31/96 $116.05 $103.40 $108.87
02/29/96 $113.58 $107.32 $110.69
03/29/96 $106.17 $107.45 $108.51
04/30/96 $ 98.15 $116.16 $108.46
05/31/96 $104.94 $121.31 $110.21
06/28/96 $111.11 $115.61 $110.18
07/31/96 $111.11 $105.43 $102.26
08/30/96 $114.81 $111.37 $108.89
09/30/96 $116.05 $119.70 $112.59
</TABLE>
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
(ITEM B ON PROXY CARD)
The appointment and authorization of fees for independent auditors are
approved annually by the Board of Directors and ratified by the Company's
shareholders. The appointment and authorization of the Board is based on the
recommendation of the Audit Committee. In making its recommendation, the Audit
Committee reviews both the audit scope and estimate fees for professional
services for the coming year. The Board of Directors has authorized the
engagement of KPMG Peat Marwick as the Company's independent auditors for the
year ended September 30, 1997. KPMG Peat Marwick has had responsibility for
examining the consolidated financial statements of the Company and its
subsidiaries since 1993.
14
<PAGE>
Representatives of KPMG Peat Marwick will attend the Annual General Meeting
and will have an opportunity to make a statement if they wish. They will also
be available to answer questions at the meeting.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR RATIFICATION OF THE APPOINTMENT
OF AND AUTHORIZATION OF FEES FOR KPMG PEAT MARWICK AS THE COMPANY'S INDEPENDENT
AUDITORS.
SHAREHOLDER PROPOSALS FOR 1998 ANNUAL MEETING
Stockholder proposals must be received no later than September 14, 1997 and
must otherwise comply with the rules of the Securities and Exchange Commission
to be eligible for inclusion in the 1998 Annual General Meeting proxy
statement.
SOLICITATION OF PROXIES
The cost of solicitation of proxies will be borne by the Company.
Solicitation will be made by the Company by mail, and may be made by directors,
officers and employees, personally or by telephone or telegram. Proxy cards and
materials also will be distributed to beneficial owners of Common Shares
through brokers, custodians, nominees and other parties, and the Company
expects to reimburse such parties for their charges and expenses.
OTHER MATTERS
The Board of Directors of the Company does not know of any matters which may
be presented at the Annual General Meeting other than those specifically set
forth in the attached Notice Of Annual General Meeting. If any other matters
come before the meeting or any adjournment thereof, the persons named in the
accompanying form of proxy and acting thereunder will vote in accordance with
their best judgment with respect to such matters.
By Order of the Board of Directors,
Victor H. Blake
Chairman, Chief Executive Officer
and President
15
<PAGE>
PROXY
LASALLE RE HOLDINGS, LIMITED
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby constitutes and appoints Andrew Cook and T.W. Tucker
Hall, or either of them, proxies with full power of substitution and each of
them is hereby authorized to represent the undersigned and to vote all shares of
the Company held by the undersigned at the Annual Meeting of Stockholders, to be
held at the Elbow Beach Hotel, South Shore Road, Bermuda on February 28, 1997 at
9:00 a.m. local time.
(1) ELECTION OF DIRECTORS: Nominees for terms expiring in 2000:
Victor H. Blake
Joseph Haviv
Lester Pollack
Harvey G. Simons
(2) TO APPOINT KPMG Peat Marwick as the Company's independent auditors for
1997, and authorize the Board of Directors to set the fees for the
independent auditors.
You are encouraged to specify your choices by marking the appropriate boxes (SEE
REVERSE SIDE), but you need not mark any box if you wish to vote in accordance
with the Board of Directors' recommendations. THE PROXIES CANNOT VOTE YOUR
SHARES UNLESS YOU SIGN AND RETURN THIS CARD.
SEE REVERSE
SIDE
<PAGE>
[X] Please mark your votes as in this example. 6820
----
This proxy, when properly executed, will be voted in the manner directed
herein by the stockholder. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR
PROPOSALS 1 AND 2.
- --------------------------------------------------------------------------------
The Board of Directors recommends a vote FOR proposals 1 and 2.
- --------------------------------------------------------------------------------
1. Election of Directors (see reverse)
FOR WITHHELD
[_] [_]
For, except vote from the following nominee(s):
- ---------------------------------------------
2. Appointment of Auditors.
FOR AGAINST ABSTAIN
[_] [_] [_]
- --------------------------------------------------------------------------------
Please sign below exactly as name(s)
appears hereon. Joint owners should
each sign. When signing as attorney,
executor, administrator, trustee or
guardian, please give full title as
such.
--------------------------------------
SIGNATURE(S) DATE
--------------------------------------
SIGNATURE(S) DATE
- --------------------------------------------------------------------------------
