SCHEDULE 14A
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
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
STIRLING COOKE BROWN HOLDINGS LIMITED
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(Name of Registrant as Specified in Its Charter)
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(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on the table below per Exchange Act Rules 14a-6(i)(4) 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.
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[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration
statement number, or the form or schedule and the date of its filing.
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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Notes:
Stirling Cooke Brown Holdings Limited is a "foreign private issuer" within
the meaning of Rule 3b-4 under the Securities Exchange Act of 1934, as
amended. As such, the Company is exempt from certain rules and reporting
requirements under the Exchange Act, including the proxy rules under
Section 14.
<PAGE>
April 24, 2000
LOGO
Dear Fellow Shareholders:
I am pleased to invite you to attend the Annual General Meeting of
Shareholders of Stirling Cooke Brown Holdings Limited in Bermuda on May 25,
2000. Information concerning the meeting and the Company are furnished in
the enclosed materials, which include a Notice of the Meeting, the Proxy
Statement, and a proxy card.
One of the matters on which you are being asked to vote is the
election of seven directors. Only two of the seven have been elected by
shareholders previously. Of the other five nominees, four were elected by
the Board to join the Company as Directors since the 1999 Annual General
Meeting.
The most recent nominee is Peter S. Christie, whose candidacy was
agreed by the Board only recently. In fact, this development is so new that
it was not possible to mention it in the Company's Annual Report to
Shareholders, which also is enclosed herewith. Mr. Christie's background
and credentials are included in the Proxy Statement. We are proud to
present this slate of nominees and hope you will agree that they are worthy
of your affirmative vote and ongoing support.
We are also presenting a new Non-Employee Director Stock Option Plan
for approval by shareholders. I believe that our new non-executive
directors will help create significant value for shareholders, and a modest
amount of equity incentives is an appropriate component of their
compensation package. Likewise, we are seeking to expand the Company's 1997
Equity Incentive Plan, through which the Company provides incentives to key
employees. Most of the original authorisation under that Plan was used in
granting stock options exercisable at $22 per share. Not surprisingly, none
of those options have been exercised, and, unfortunately, they currently do
not provide meaningful incentive to our people. Your support for these two
proposals will be greatly appreciated.
I hope I will have the opportunity to greet many of you personally at
the Annual General Meeting. However, if you are unable to attend, please
exercise your right as shareholders to participate by casting your votes
via the enclosed proxy card.
Sincerely,
LOGO
Stephen A. Crane
Chairman, President &
Chief Executive Officer
<PAGE>
STIRLING COOKE BROWN HOLDINGS LIMITED
NOTICE OF ANNUAL GENERAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 25, 2000
TO THE SHAREHOLDERS OF STIRLING COOKE BROWN HOLDINGS LIMITED:
Notice is Hereby Given that the 2000 Annual General Meeting of
Shareholders (the "Meeting") of STIRLING COOKE BROWN HOLDINGS LIMITED (the
"Company") will be held on May 25, 2000, commencing at 9:00 a.m. local
Bermuda time at The Cathedral Hall, Church Street, Hamilton HM 11, Bermuda,
for the following purposes:
1. To elect three Class 3 Directors, two Class 2 Directors and two
Class 1 Directors;
2. To approve the recommendation of the Board of Directors that
Arthur Andersen LLP be appointed auditors of the Company to hold
office until the close of the next Annual General Meeting and
that the Board be authorised to determine the auditor's
remuneration;
3. To approve an amendment to the Company's 1997 Equity Incentive
Plan to increase the Ordinary Shares reserved for issuance
thereunder by an additional 300,000 Ordinary Shares of the
Company;
4. To approve the creation of a new 2000 Non-Employee Director Stock
Option Plan; and,
5. To transact such other business as may properly come before the
Meeting or any adjournments thereof.
Only shareholders of record, as shown by the transfer books of the
Company, at the close of business on April 21, 2000, are entitled to notice
of, and to vote at, the Meeting.
The Meeting will also receive the Company's audited financial
statements for the fiscal year ended December 31, 1999 and the report of
the auditors thereon, as approved by the Company's Board of Directors.
Whether or not you plan to attend the Meeting, please date, sign and
return the enclosed proxy in the return envelope furnished for that purpose
as promptly as possible. If you later desire to revoke your proxy for any
reason, you may do so in the manner described in the attached proxy
statement. A proxy need not be a shareholder of the Company.
BY ORDER OF THE BOARD OF DIRECTORS,
LOGO
James Lawless, IV
Secretary
April 24, 2000
STIRLING COOKE BROWN HOLDINGS LIMITED
VICTORIA HALL, 11 VICTORIA STREET, 3RD FLOOR, HAMILTON, BERMUDA
<PAGE>
STIRLING COOKE BROWN HOLDINGS LIMITED
PROXY STATEMENT
ANNUAL GENERAL MEETING OF SHAREHOLDERS
THIS PROXY STATEMENT IS BEING FURNISHED IN CONNECTION WITH THE
SOLICITATION BY STIRLING COOKE BROWN HOLDINGS LIMITED (THE "COMPANY") OF
PROXIES TO BE VOTED AT THE ANNUAL GENERAL MEETING OF SHAREHOLDERS (THE
"MEETING") TO BE HELD ON MAY 25, 2000, COMMENCING AT 9:00 A.M. AT THE
CATHEDRAL HALL, CHURCH STREET, HAMILTON HM 11, BERMUDA.
The close of business on April 21, 2000 has been fixed as the record
date for the determination of holders of the Company's Ordinary Shares, par
value $0.25 per share (the "Ordinary Shares"), entitled to receive notice
of the Meeting and vote thereat. The Company expects to mail this proxy
material to shareholders on or about April 27, 2000 together with a copy of
the Company's Annual Report to Shareholders for the fiscal year ended
December 31, 1999.
The cost of soliciting proxies will be borne by the Company, which
also will reimburse brokers, custodians, nominees and other fiduciaries for
their reasonable charges and expenses incurred in forwarding proxy material
to beneficial owners of shares. In addition to solicitation by mail,
certain officers and employees of the Company may solicit proxies
personally. These officers and employees will receive no compensation for
such solicitations other than their regular salaries.
No action will be taken at the Meeting with respect to approval or
disapproval of the audited Financial Statements of the Company for the
fiscal year ended December 31, 1999.
Any person giving a proxy may revoke it by depositing an instrument in
writing executed by him or by his attorney authorised in writing at the
registered office of the Company at any time up to the close of business on
the last business day preceding the Meeting or any adjournment thereof,
with the Chairman of the Meeting or in any other manner permitted by law.
All properly executed proxies, not theretofore revoked, will be voted on
any poll taken at the Meeting in accordance with the instructions contained
therein. If no instructions are given with respect to any particular
matter, the proxy authorises a vote in favour of such matter and it will be
voted accordingly. Proxies must be duly executed and deposited at the
office of the Company's transfer agent, Firstar Bank Milwaukee, N.A., in
Milwaukee, Wisconsin, or with the Secretary of the Company at the Company's
office in Bermuda, prior to 9:00 a.m. local Bermuda time on May 23, 2000,
in order to be voted at the Meeting.
INTEREST OF CERTAIN PERSONS IN MATTERS TO BE ACTED UPON
No person who has been a director or officer of the Company and no
person who is a proposed nominee for election as a director of the Company
and no associate or affiliate of any such director, officer or proposed
nominee has any material interest, direct or indirect, by way of beneficial
ownership of securities or otherwise, in any matter to be acted upon at the
Meeting except as may hereinafter be disclosed.
<PAGE>
BENEFICIAL OWNERSHIP
As of April 21, 2000 the Company had issued and outstanding 9,419,972
Ordinary Shares. The following table lists the beneficial ownership of each
person or group who, as of a recent date, owned, to the Company's
knowledge, more than five percent of the Company's Ordinary Shares:
Number Percentage
of of
Shares Outstanding
Shares (1)
--------- -----------
The Goldman Sachs Group, Inc. (2)... 2,181,775 23.2%
Fidelity Management & Research
Company (3)....................... 796,200 8.5%
Nicholas Brown...................... 623,473 6.6%
Penelope Atteline Cooke (4)......... 784,745 8.3%
Nicholas Mark Cooke (4) ............ 553,572 5.9%
(1) Each Ordinary Share has one vote, except that if, and so long as, the
Controlled Shares (as hereinafter defined) of any person, other than
an "existing shareholder" as defined in the Company's Bye-Laws,
constitute ten percent (10%) or more of the issued Ordinary Shares,
the voting rights with respect to the Controlled Shares owned by such
person shall be limited, in the aggregate, to a voting power of
approximately 10%, pursuant to a formula specified in the Company's
Bye-Laws. "Controlled Shares" include, among other things, all
Ordinary Shares which such person is deemed to beneficially own
directly or indirectly (within the meaning of Section 13(d) (3) of the
U.S. Securities Exchange Act of 1934, as amended (the "Exchange
Act")).
(2) Represents shares owned by certain investment funds (the "GS Funds"),
affiliated with The Goldman Sachs Group, Inc. (the "GS Group"),
including shares which may be deemed to be beneficially owned as
follows: 1,399,330 shares by GS Capital Partners II, L.P.; 92,419
shares by Bridge Street Fund 1995, L.P.; 82,124 shares by Stone Street
Fund 1995, L.P.; 556,293 shares by GS Capital Partners II Offshore,
L.P.; and 51,609 shares by GS Capital Partners II Germany Civil Law
Partnership. Excludes Ordinary Shares (i) owned by the GS Group that
were acquired in the ordinary course of market-making transactions or
(ii) held in client accounts, for which the GS Group exercises voting
or investment authority, or both. The GS Group disclaims beneficial
ownership of the shares held by the GS Funds (i) to the extent
attributable to equity interests therein held by persons other than
the GS Group and its affiliates or (ii) in client accounts. Each of
the GS Funds shares voting and investment power with certain of its
respective affiliates. The address of the GS Group is 85 Broad Street,
New York, New York 10004.
(3) As reported in a Schedule 13G dated February 14, 2000, filed with
Securities and Exchange Commission by FMR Corp. As of December 31,
1999 FMR Corp., through its subsidiary Fidelity Management & Research
Company, beneficially owned these shares, which were held by Fidelity
Low-Priced Stock Fund (the "Fund"). FMR Corp. reports that it has sole
power to direct the disposition of 796,200 shares and no power to vote
any of such shares. The address for FMR Corp., Fidelity Management &
Research Company and the Fund is 82 Devonshire Street, Boston,
Massachusetts 02109.
(4) Mrs. Cooke is the spouse of Mr. Cooke.
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Messrs. Jeffery and de Pourtales, directors of the Company, are
employed by Goldman, Sachs & Co., or certain of their affiliates. Goldman,
Sachs & Co. acted as a co-managing underwriter for the Company's Initial
Public Offering, which was completed in December 1997 and from which the
underwriters received aggregate underwriting discounts of $5.3 million from
the Company and selling shareholders.
Goldman, Sachs & Co., or certain of their affiliates, maintain certain
contractual relationships with the Company and have provided, and currently
provide, investment banking services to the Company. Goldman, Sachs & Co.
also provide investment management services to Realm National Insurance
Company Limited pursuant to a Corporate Account Agreement dated December
24, 1996, and received customary fees and expenses of approximately $32,000
during 1999 for such services.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
The Company is a "foreign private issuer" within the meaning of Rule
3b-4 promulgated under the Exchange Act and is therefore not subject to
Section 16 of the Exchange Act.
I. ELECTION OF DIRECTORS
The Company's Bye-Laws provide that the Board of Directors shall be
divided into three classes designated Class 1, Class 2 and Class 3, each
class consisting as nearly as possible of one-third of the total number of
Directors constituting the entire Board of Directors.
The term of office for each Director elected at the 2000 Meeting as a
Class 1 Director will expire at the Annual General Meeting in 2001; the
term of office for each Director in Class 2 will expire at the Annual
General Meeting in 2002; and the term of office for each Director in Class
3 will expire at the Annual General Meeting in 2003. At each Annual General
Meeting the successors of the class of Directors whose term expires at that
meeting shall be elected to hold office for a term expiring at the Annual
General Meeting to be held in the third year following the year of their
election.
At the 2000 Meeting, three Class 3 Directors are to be elected to hold
office until the 2003 Annual General Meeting, two Class 2 Directors are to
be elected to hold office until the 2002 Annual General Meeting and two
Class 1 Directors are to be elected to hold office until the 2001 Annual
General Meeting. All of the nominees, except Mr. Christie, are currently
serving as Directors and the remaining Directors of the Company will
continue to serve in accordance with their previously elected term.
All of the nominees have consented to serve if elected but, if any
becomes unavailable to serve, the persons named as proxies may exercise
their discretion to vote for a substitute nominee. The name, principal
occupation and other information concerning each Director is set forth
below.
IT IS INTENDED THAT THE ORDINARY SHARES REPRESENTED BY PROXIES
SOLICITED BY OR ON BEHALF OF THE COMPANY WILL BE VOTED IN FAVOUR OF THE
FOLLOWING NOMINEES, UNLESS AUTHORITY IS WITHHELD BY THE SHAREHOLDERS. THE
BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR THE NOMINEES.
NOMINEES FOR CLASS 3 DIRECTORS WHOSE TERMS EXPIRE IN 2003:
Jean de Pourtales, age 34, is an Executive Director of Goldman Sachs
International. Mr. de Pourtales has been employed by Goldman Sachs
International since 1988, and since 1992 has been a member of Goldman
Sachs' Merchant Banking Division in London.
Nicholas Mark Cooke, age 43, was the Chief Executive Officer of the
Company or its predecessors from 1990 and Chairman and President of the
Company since it began operations in January l996. In July 1999, Mr. Cooke
became non-executive Chairman of the Company and in April 2000, Mr. Cooke
resigned from that position but remains a Director of the Company.
Len Quick, age 56, has been Chief Operating Officer and a Director of
the Company since July 1999. Mr. Quick was Chief of Operations of the
Company's North American-based subsidiaries from 1997 until July 1999 and
served as interim Chief Executive Officer of the Company from July 1999 to
October 1999. Between 1994 and 1997, Mr. Quick was President of the
Company's Dallas, Texas based subsidiary, North American Risk Inc.
NOMINEES FOR CLASS 2 DIRECTORS WHOSE TERMS EXPIRE IN 2002:
Stephen A. Crane, age 54, has been President, Chief Executive Officer
and a Director of the Company since October 26, 1999 and, in April 2000,
was appointed Chairman of the Company. From September 1993 to January 1999,
Mr. Crane was President, Chief Executive Officer and a Director of Gryphon
Holdings Inc., a publicly traded specialty lines property and casualty
underwriter. From April 1993 to December 1993, Mr. Crane served as Chairman
of the Strategic Development Group - North America of Willis Corroon
Corporation and, from November 1989 to March 1993, as President and Chief
Executive Officer of G.L. Hodson & Son, Inc., a reinsurance intermediary
and subsidiary of Willis Corroon Corporation.
Hadley C. Ford, age 64, has been a Director of the Company since March
7, 2000, when he was elected by the Board. Mr. Ford is an independent
management consultant and for the past six years has served as a Senior
Advisor to Andersen Consulting in their insurance industry and strategy
practices. Before associating with Andersen Consulting, Mr. Ford was a
Senior Vice President of Booz, Allen & Hamilton, Inc., a major management
consulting organisation, where he founded and led the firm's insurance
industry practice. Mr. Ford currently is Chairman of the Board of Tesia
Corporation, a privately owned, technology-based electronic processor of
medical and dental claims.
NOMINEES FOR CLASS 1 DIRECTORS WHOSE TERMS EXPIRE IN 2001:
Patrick J. McDonough, age 56, has been a Director of the Company since
May 26, 1999. Mr. McDonough is an attorney admitted in California and
practising law in Los Angeles. From 1997 to 1999, he was Senior Vice
President and Legal Department Manager, Pacific South Region, J&H Marsh &
McLennan, Inc. From 1986 to 1997, he was Senior Vice President & General
Counsel of Johnson & Higgins of California, where he was also a Principal
of the firm.
Peter S. Christie, age 53, is a principal of the London-based firm of
Peter Christie Associates Ltd., which was formed in July 1999 to offer
strategic consulting advice to the insurance industry, as well as
consulting on risk management issues to corporate and professional firms.
From 1997 through May 1999, Mr. Christie was the Vice Chairman of Aon
Group, Inc., a global insurance brokerage and consulting company. From 1992
through 1997, Mr. Christie was the Chairman and Chief Executive Officer of
the Minet Group, a large international insurance and reinsurance broker,
which was acquired by Aon in 1997.
- ---------------
Warren Cabral resigned as a Director of the Company effective May 13,
1999. Nicholas Brown resigned as a Director of the Company in October 1999,
in connection with his stepping down as the Managing Director of Stirling
Cooke Brown Insurance Brokers Limited and of Stirling Cooke Brown
Reinsurance Brokers Limited, U.K. Neither Mr. Cabral nor Mr. Brown resigned
because of any disagreement with the Company on any matter.
<PAGE>
DIRECTORS WHOSE TERMS OF OFFICE DO NOT EXPIRE AT THIS MEETING:
CLASS 1 DIRECTOR WHOSE TERM EXPIRES IN 2001:
George W. Jones, age 45, has been Chief Financial Officer and a
Director of the Company since it began operations in January 1996 and,
prior to 1996, had been Chief Financial Officer and a Director of Stirling
Cooke Brown (U.K.) Holdings Limited since 1992 and its subsidiaries since
1988.
CLASS 2 DIRECTOR WHOSE TERM EXPIRES IN 2002:
Reuben Jeffery III, age 46, has been a Director of the Company since
it began operations in January 1996. Since 1997, Mr. Jeffery has been a
Managing Director of Goldman Sachs Paris Inc. et Cie. Previously, Mr.
Jeffery was a Managing Director of Goldman's European Financial
Institutions business, based in London.
THE BOARD OF DIRECTORS
The Board of Directors has the responsibility for establishing broad
corporate policies and for the overall affairs of the Company.
COMMITTEES OF THE BOARD
The Board has established an Audit Committee and a Compensation
Committee. The Audit Committee reviews the services provided by the
Company's independent public accountants, evaluates the fees charged and
proposed for such services, reviews the adequacy of internal controls and
the need for internal auditing procedures, and approves related party
transactions. The Compensation Committee establishes and reviews the
overall compensation policy of the Company, determines the specific terms
and conditions of employment of senior executives of the Company and
oversees the employee benefit programs of the Company. The Audit Committee
consists of Messrs. Jeffery (Chairman), de Pourtales and McDonough. The
Compensation Committee consists of Messrs. de Pourtales (Chairman), Jeffery
and McDonough.
No member of the Audit Committee or of the Compensation Committee is a
former or current executive officer or employee of the Company or any of
its subsidiaries, nor does any executive officer of the Company serve as an
officer, director or member of a compensation committee of any entity, one
of whose executive officers or directors is a director of the Company.
ATTENDANCE OF DIRECTORS
During 1999, the Board of Directors held twelve meetings. All
directors attended each of the meetings, except for individual absences as
indicated: Mr. Brown (3); Mr. Cabral (1); Mr. Cooke (3); Mr. de Pourtales
(2); and Mr. Quick (1).
COMPENSATION OF DIRECTORS
Directors of the Company who are employees of the Company or its
affiliates receive no directors' fees. All Directors served without
compensation during 1999, with the exception of Mr. McDonough, who was
compensated by means of a $40,000 annual retainer and a stipend of $1,500
per day for each day on which he attended meetings of the Board of
Directors or its committees, and $750 per travel day in connection with
attending such meetings, plus reasonable travel expenses incurred. On
October 26, 1999, Mr. McDonough was awarded options to purchase 10,000
Ordinary Shares, exercisable at the closing market price on that day and
the Company agreed to issue Mr. McDonough 5,000 Ordinary Shares of
restricted stock in 2000.
In 2000, non-employee Directors of the Company (other than Messrs.
Jeffery and de Pourtales) will be paid an annual retainer of $25,000 in
consideration of their services, plus $1,000 per day for attendance at each
Board of Directors meeting and for attendance at meetings of committees of
the Board of Directors occurring on days other than days of Board meetings.
Non-employee Directors (others than Messrs. Jeffery and de Pourtales) will
receive $500 for each meeting of the Board of Directors, and each meeting
of its committees occurring on days other than days of Board meetings, in
which they participate by telephone. If the 2000 Non-Employee Director
Stock Option Plan is approved by the shareholders at the Meeting, the
Directors also will be eligible for awards of stock options as provided in
that Plan. See Item IV, below. In addition, all Directors will be
reimbursed for their reasonable travel expenses incurred in attending these
meetings.
REPORT OF THE COMPENSATION COMMITTEE
The Compensation Committee, which is composed of three non-employee
Directors, is responsible for the establishment and review of the overall
compensation policy of the Company, the general oversight of the employee
benefits plans maintained by the Company and the specific terms and
conditions of employment of senior executives of the Company.
It is the overall policy of the Compensation Committee to align the
interests of management with those of the shareholders by making a
significant portion of executive compensation dependent upon the Company's
performance. The Company's compensation programs emphasise the following
basic principles:
. Compensation should be linked to the creation of value for
shareholders, and executives should be encouraged to acquire
ownership in the Company;
. Compensation programs should be designed to attract, motivate and
retain executives with the requisite skills to effectively pursue
the Company's strategic objectives; and
. Compensation programs should reward individual performance
through an appropriate balance of base salary, annual bonus
awards and long-term equity incentives.
COMPENSATION PROGRAM
The Company's executive compensation program consists of three major
components: base salary, annual bonus awards and long-term equity
incentives. Each of these components supports the Company's overall
compensation policy, which relates pay to performance.
BASE SALARY
Amounts paid in base salary, including periodic increases, are
determined primarily by the scope of the executive's responsibilities, his
performance and the salaries offered within the industry for comparable
positions. In connection with its overall evaluation of the foregoing
factors, the Compensation Committee draws upon its members' general
knowledge of compensation practices within the insurance and financial
services industries, supplemented by outside consultants in certain
circumstances.
ANNUAL BONUS AWARDS
Annual cash bonus awards earned by executives are based upon their
performance during each fiscal year, taking into account the overall
performance of the Company as well as the contribution of individual
executives to the achievement of specific goals related to their particular
responsibilities. The Company does not have a specific cash bonus plan or
policy.
LONG-TERM EQUITY INCENTIVES
Certain executives of the Company may earn equity-based incentive
awards, the ultimate value of which is related to the long-term performance
of the Company's Ordinary Shares. Long-term equity incentives have taken
the form of stock options or restricted stock.
Stock options have been the principal vehicle of the Company for the
payment of long-term incentive compensation. Stock options granted to
executives under the Company's 1997 Equity Incentive Plan provide
incentives to executives by giving them a strong economic interest in
building value for shareholders. Stock options generally become exercisable
in three substantially equal annual instalments commencing one year after
the date of grant, and the exercise price of each option is the fair market
value of the Company's Ordinary Shares on the date of grant. As a result,
executives benefit from options only through a rise over time in the market
value of the underlying shares.
Restricted stock also motivates executives by providing incentives
tied to shareholder value. Restricted stock granted to executives under the
Company's 1997 Equity Incentive Plan is subject to restrictions on transfer
that lapse in three substantially equal annual instalments commencing one
year following the date of grant. Accordingly, the ultimate value of
restricted stock awards is linked to the performance of the Company's
Ordinary Shares over an extended period.
Long-term equity incentives are granted by the Compensation Committee
based upon an executive's position, his or her ability to contribute to the
future performance of the Company, and the amount and type of prior grants
to such executive. The Compensation Committee is responsible for
determining the form and terms of all such awards.
COMPENSATION OF THE CHIEF EXECUTIVE OFFICER
The overall compensation of the Chief Executive Officer (the "CEO")
reflects the Compensation Committee's evaluation of (i) the Company's
performance as measured by operating, financial and strategic objectives,
viewed from both a short-term and a long-term perspective, (ii) the CEO's
individual performance in pursuing the foregoing objectives and (iii) the
compensation paid to chief executive officers of other companies of similar
size and complexity in the insurance and financial services industries.
Mr. Crane's annual base salary upon being appointed President and
Chief Executive Officer of the Company in October 1999 was set at $400,000.
The Compensation Committee determined this amount based upon a review of
the compensation paid to CEOs of other insurance companies, and in
consultation with certain outside consultants. On October 26, 1999, Mr.
Crane was awarded options for 200,000 Ordinary Shares in connection with
his appointment, exercisable at the market price at the date of grant and
the Company agreed to issue Mr. Crane 100,000 Ordinary Shares of restricted
stock in 2000.
COMPENSATION COMMITTEE
Jean de Pourtales, Chairman
Reuben Jeffery III
Patrick J. McDonough
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
No member of the Compensation Committee is a former or current
executive officer or employee of the Company or any of its subsidiaries,
nor does any executive officer of the Company serve as an officer, director
or member of a compensation committee of any entity, one of whose executive
officers or directors is a director of the Company.
<PAGE>
SECURITY OWNERSHIP OF MANAGEMENT
The following table summarises the beneficial ownership as of April
21, 2000, of the Ordinary Shares of the Company by each director and
executive officer of the Company, and all such directors and executive
officers of the Company as a group.
Number Percentage
of of Class
Shares (1)
---------- ----------
Nicholas Mark Cooke (2).................................. 553,572 5.9%
Stephen A. Crane ........................................ 218,900 2.3%
Reuben Jeffery III....................................... -- --
George Jones............................................. 429,176 4.6%
Hadley C. Ford........................................... 10,000 0.11%
James Lawless, IV ....................................... 15,000 0.16%
Patrick J. McDonough ................................... 5,000 0.05%
Jean de Pourtales ...................................... -- --
Len Quick................................................ 13,500 0.14%
All current directors and executive officers of the
Company as a group (9 persons)......................... 1,245,148 13.22%
(1) Based on 9,419,972 Ordinary Shares outstanding.
(2) Excludes 784,745 shares owned by Mrs. Penelope A. Cooke, the spouse of
Mr. Cooke, as to which Mr. Cooke disclaims beneficial ownership.
<PAGE>
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth certain information concerning
compensation paid to or earned by each person who served as the Company's
Chief Executive Officer and by the Company's three other most highly
compensated executive officers (collectively, the "named executive
officers") for services rendered in the fiscal years ended December 31,
1999, 1998 and 1997, respectively, to the Company and its subsidiaries in
all capacities:
Long-Term
Compensation
------------
Annual Compensation Securities All Other
----------------------- Underlying Compen-
Name and Principal Position Year Salary Bonus Options (1) sation(2)
- --------------------------- ---- -------- ------- ----------- ---------
Stephen A. Crane (3)............. 1999 $ 66,667 $100,000 200,000 --
President and Chief Executive
Officer
Nicholas Mark Cooke (4).......... 1999 $375,000 -- $ 30,000
Former President and Chief 1998 $375,000 -- $ 30,000
Executive Officer 1997 $346,875 -- $ 27,750
Nicholas Brown (5)............... 1999 $298,823 $102,600 $ 64,125
Former Managing Director of 1998 $390,165 $165,900 $103,588
Insurance Brokers And 1997 $370,781 $ 82,000 $ 47,500
Reinsurance Brokers
George W. Jones.................. 1999 $275,000 $ 50,000 $ 22,000
Chief Financial Officer 1998 $275,000 $ 50,000 $ 22,000
1997 $266,921 -- $ 21,353
Len Quick (6).................... 1999 $254,167 $150,000 75,000 $ 4,000
Chief Operating Officer 1998 $138,750 $ 32,500 $ 2,200
1997 $125,702 $ 2,340 --
(1) Reflects the number of Ordinary Shares underlying the options granted.
(2) "All Other Compensation" relates to contributions to the Company's
Defined Contribution Money Accumulation Pension Plan, or 401(K) plan,
as applicable.
(3) Mr. Crane became President and Chief Executive Officer of the Company
on October 26, 1999. The compensation set forth in the table for Mr.
Crane represents compensation earned through December 31, 1999.
(4) Mr. Cooke resigned as President and Chief Executive Officer of the
Company, effective July 6, 1999.
(5) Mr. Brown resigned as Managing Director of Stirling Cooke Brown
Insurance Brokers Limited and of Stirling Cooke Brown Reinsurance
Brokers Limited, effective October 5, 1999. The compensation set forth
in the table for Mr. Brown represents all compensation earned up to
that date, converted from pounds sterling at a rate of (pound)1=$1.71.
(6) Mr. Quick became Chief Operating Officer of the Company in July 1999,
at which time his base annual compensation was increased from $200,000
to $325,000. From 1997 to July 1999, Mr. Quick was Chief of Operations
of the Company's North American-based operations.
<PAGE>
OPTION GRANTS
IN THE FISCAL YEAR ENDED DECEMBER 31, 1999
Stock Options Granted in Last Fiscal Year. The following table sets
forth information concerning individual grants of stock options made by the
Company during the fiscal year ended December 31, 1999 to each of the named
executive officers.
<TABLE>
<CAPTION>
Percent Potential
of Total Realisable Value
Options at Assumed
Granted to Annual Rates
Number of Employees Exercise of Stock Price
Securities in Price Appreciation for
Underlying Fiscal (per Expiration Option Term
Grant(1) Year(2) share) Date(3) 5%(4) 10%(4)
--------- ------- ------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Stephen A. Crane(5)... 200,000 72.7% $2.31 10/26/10 $290,549 $736,309
Nicholas Mark
Cooke................. -- -- -- -- -- --
Nicholas Brown........ -- -- -- -- -- --
George W. Jones....... -- -- -- -- -- --
Len Quick............. 75,000 27.3% $2.31 10/26/10 $108,956 $276,116
<FN>
(1) Generally, one-third of the total number of options granted will
become exercisable in three substantially equal instalments beginning
one year after the date of grant.
(2) The Company granted a total of 275,000 options to employees during the
fiscal year ended December 31, 1999.
(3) The options generally expire ten years from the date of grant, absent
earlier termination of employment or exercise of the options.
(4) The assumed 5% and 10% annual rates of appreciation over the term of
the options are set forth in accordance with the rules and regulations
adopted by the Securities and Exchange Commission and do not represent
the Company's estimate of stock price appreciation.
(5) The options granted to Mr. Crane were granted in connection with his
assuming the title of President and Chief Executive Officer of the
Company and were not granted under the Company's 1997 Equity Incentive
Plan.
</FN>
</TABLE>
<PAGE>
FISCAL YEAR-END OPTION VALUES
The named executive officers did not exercise any options during the
fiscal year ended December 31, 1999. The following table sets forth
information concerning the number of securities underlying unexercised
options at fiscal year-end and the value of such unexercised options at
fiscal year-end.
Number of Securities
Underlying Unexercised Value of Unexercised
Options at Fiscal "In-the-Money"
Year-End Options at Year-End(1)
Name Exercisable Unexercisable Exercisable Unexercisable
- ---- ----------- ------------- ----------- -------------
Stephen A. Crane....... 0 200,000 -- 0
Nicholas Mark Cooke.... 0 0 -- --
Nicholas Brown......... 0 0 -- --
George W. Jones........ 0 0 -- --
Len Quick.............. 0 75,000 -- 0
(1) Options are "in-the-money" at fiscal year-end if the fair market value
of the underlying securities on such date exceeds the exercise or base
price of the option. The amounts set forth above represent the
difference between the fair market value of the securities underlying
the options on December 31, 1999 ($1.9375 per share) and the average
exercise price of the options, multiplied by the applicable number of
options.
II. APPOINTMENT OF AUDITORS
The Board of Directors recommends that Arthur Andersen LLP be
appointed as auditors of the Company to hold office until the next Annual
General Meeting of Shareholders. Representatives of Arthur Andersen LLP are
expected to be present at the Meeting and will be available to answer
appropriate questions. Such representatives of Arthur Andersen LLP also
will be given an opportunity to make a statement to the shareholders if
they so wish.
Arthur Andersen was engaged to provide audit services to the Company
on April 29, 1999, after the Company was notified by its former auditors,
KPMG, that KPMG would not seek re-election for the year ended December 31,
1999. For a further discussion of the circumstances surrounding the
replacement of KPMG as auditor, please refer to Note 9 ("Changes in and
Disagreements with Accountants on Accounting and Financial Disclosure") to
the financial statements contained in the Company's 1999 Annual Report on
Form 10-K, a copy of which is enclosed with this proxy statement and
incorporated herein.
IT IS INTENDED THAT THE ORDINARY SHARES REPRESENTED BY PROXIES
SOLICITED BY OR ON BEHALF OF THE COMPANY WILL BE VOTED IN FAVOUR OF THE
APPOINTMENT OF ARTHUR ANDERSEN LLP AS AUDITORS OF THE COMPANY AND
AUTHORISING THE DIRECTORS TO FIX THEIR REMUNERATION, UNLESS OTHERWISE
INDICATED.
III. APPROVAL OF AN AMENDMENT TO THE 1997 EQUITY INCENTIVE PLAN
The Board of Directors recommends that an amendment (the "Amendment")
to the Company's 1997 Equity Incentive Plan (the "Existing Plan") be
approved by the shareholders. The Amendment authorises an additional
300,000 Ordinary Shares to be awarded pursuant to the Existing Plan. When
initially approved by the Board of Directors in 1997, the Existing Plan
provided for the issuance of up to 500,000 Ordinary Shares in the form of
options, restricted stock or share appreciation rights. Under the Existing
Plan, options for approximately 300,000 Ordinary Shares were issued in
November 1997 at an exercise price of $22.00 per share, which reflected the
estimated fair value of the shares at the grant date. None of these
options, which expire in November 2007, unless terminated earlier in the
event of death, disability, retirement or other circumstances detailed in
the Existing Plan, have been exercised. Due to various forfeitures of the
options subsequent to the initial grants, options for 186,750 Ordinary
Shares remained outstanding as of December 31, 1999.
The Board of Directors recommends the Amendment based upon its belief
that equity incentives will give employees a strong economic interest in
building value for shareholders. Under the Existing Plan, the exercise
price of awarded options is not less than the fair value of the Ordinary
Shares on the date of grant, and all stock options become exercisable in
equal annual instalments over the ensuing three years. As a result,
optionholders benefit from options only through a rise over time in the
market value of the underlying shares, aligning their interests directly
with those of the shareholders. The amount of the increase in authorised
shares represents Management's best estimate of the number of shares (which
may be awarded in the form of options, restricted stock or share
appreciation rights under the Existing Plan) which it anticipates would be
awarded over the next two to three years in order to provide adequate
incentives to Company employees.
If the Amendment is not approved by the shareholders, no awards will
be made in respect of the additional 300,000 Ordinary Shares.
IT IS INTENDED THAT THE ORDINARY SHARES REPRESENTED BY PROXIES
SOLICITED BY OR ON BEHALF OF THE COMPANY WILL BE VOTED IN FAVOUR OF THE
AMENDMENT TO AUTHORISE AN ADDITIONAL 300,000 ORDINARY SHARES FOR ISSUANCE
UNDER THE 1997 EQUITY INCENTIVE PLAN.
IV. APPROVAL OF THE 2000 NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN
On March 7, 2000, the Board of Directors authorised, subject to
shareholder approval, the creation of a new 2000 Non-Employee Director
Stock Option Plan (the "Independent Director Plan"). The Board recommends
that the Independent Director Plan be approved by the shareholders at the
Meeting. A copy of the Independent Director Plan is attached hereto as
Annex A.
The purpose of the Independent Director Plan is to attract, retain and
motivate qualified candidates as directors of the Company, and to help
achieve the goal of aligning director and shareholder interests.
Under the terms of the Independent Director Plan, each Director of the
Company who is not an employee of the Company or its affiliates is eligible
for the grant, on the later of (i) May 25, 2000 or (ii) the date on which
such Director is first elected to the Board, of an initial option to
purchase 10,000 Ordinary Shares. Options under the Independent Director
Plan will be granted by a Committee of the Board at not less than the fair
market value of such shares on the date of grant and will become
exercisable in four equal annual instalments commencing one year after the
date of the grant. Options remain outstanding for ten years from the date
of grant, unless terminated earlier as detailed in the Independent Director
Plan. On the fifth anniversary of the date of the initial grant, and
continuing on each subsequent anniversary of such date during a Director's
tenure on the Board, such Director will be granted an option to purchase an
additional 2,000 Ordinary Shares or such lesser proportionate amount as
then remains available for grant. Each of these subsequent options will
become exercisable one year after the date of the grant. An aggregate of
100,000 Ordinary Shares have been authorised for issuance upon the exercise
of options under the terms of the Independent Director Plan. The Board may
from time to time amend the Independent Director Plan, but no amendment may
be made without shareholder approval where such approval is required under
the Bye-Laws of the Company, under applicable law or under the rules or
listing requirements of the NASDAQ Stock Market.
IT IS INTENDED THAT THE ORDINARY SHARES REPRESENTED BY PROXIES
SOLICITED BY OR ON BEHALF OF THE COMPANY WILL BE VOTED IN FAVOUR OF
APPROVING THE INDEPENDENT DIRECTOR PLAN.
<PAGE>
ADDITIONAL INFORMATION
SHAREHOLDER PROPOSALS FOR THE COMPANY'S 2000 ANNUAL GENERAL MEETING
Pursuant to the Company's Bye-Laws, resolutions intended to be
presented by shareholders for action at the 2000 Annual General Meeting
must comply with the provisions of the Bermuda Companies Act, 1991 (the
"Companies Act") and the Bye-Laws and be deposited at the Company's head
office not later than six weeks prior to the 2000 Annual General Meeting.
COMPANY'S 1999 ANNUAL REPORT
The Company has elected to file with the United States Securities and
Exchange Commission an annual report for the year ended December 31, 1999
on Form 10-K (the "Form 10-K") containing certain information with respect
to the Company and its business and properties, including financial
statements and related schedules. The Form 10-K also contains a list of
exhibits filed as part of the report.
UPON THE WRITTEN REQUEST OF ANY BENEFICIAL OWNER OF THE COMPANY'S
ORDINARY SHARES, THE COMPANY WILL MAIL TO SUCH OWNER, WITHOUT CHARGE, A
COPY OF THE FORM 10-K. In addition, upon payment to the Company of $0.25
per page, the Company will mail to such owner a copy of any or all of the
exhibits listed in the Form 10-K. Requests for copies of the Form 10-K
and/or exhibits should be addressed to: The Secretary, Stirling Cooke Brown
Holdings Limited, Victoria Hall, 11 Victoria Street, Hamilton HM 11,
Bermuda.
VOTING
Each Ordinary Share has one vote, except that if, and so long as, the
Controlled Shares (as hereinafter defined) of any person, other than an
"existing shareholder" as defined in the Company's Bye-Laws, constitute ten
percent (10%) or more of the issued Ordinary Shares, the voting rights with
respect to the Controlled Shares owned by such person shall be limited, in
the aggregate, to a voting power of approximately 10%, pursuant to a
formula specified in the Company's Bye-Laws. "Controlled Shares" include,
among other things, all Ordinary Shares which such person is deemed to
beneficially own directly or indirectly (within the meaning of Section
13(d) (3) of the Exchange Act).
Except where a greater majority is required by the Companies Act, the
Company's Bye-Laws, or the rules of the NASDAQ Stock Market, any question
proposed for consideration at any general meeting will be decided upon by a
simple majority of votes cast. Each of the proposals presented in the
Notice of the Meeting will be determined by the simple majority of votes
cast. At the Meeting a resolution put to the vote of a Meeting will be
decided on by a show of hands, unless a poll has been demanded pursuant to
the terms of the Company's Bye-Laws. If a poll has not been demanded, a
declaration by the Chairman that a resolution has passed will be final and
conclusive. If a poll has been demanded, then the result of such poll shall
be final.
Proxies recording abstentions are nevertheless counted in determining
the quorum of the Meeting. As a result, on those proposals which require an
affirmative vote of the majority of those shareholders present at a Meeting
or of the outstanding Ordinary Shares, an abstention has the effect of a
vote against the proposal. Similarly, where brokers report a non-vote, the
shares are counted in determining the quorum of the Meeting but they are
not counted as having voted on the proposal. A non-vote, therefore, has the
effect of a vote against the proposal.
The shares represented by the enclosed form of proxy, duly executed
and deposited at the office of the Company's transfer agent, Firstar Bank
Milwaukee, N.A., 1555 N. RiverCenter Drive, Suite 301, Milwaukee, Wisconsin
53212, or with the Secretary of the Company at the Company's office in
Bermuda, prior to 9:00 a.m. local Bermuda time on May 23, 2000, will be
voted at the Meeting. All properly executed proxies, not theretofore
revoked, will be voted on any poll taken at the Meeting in accordance with
the instructions contained therein. If no instructions are given with
respect to any particular matter, the proxy authorises a vote in favour of
such matter and it will be voted accordingly.
The enclosed form of proxy confers discretionary authority with
respect to amendments and variations with respect to the matters identified
in the Notice of Meeting and other matters which may properly come before
the Meeting.
Each shareholder has the right to appoint a person, who need not be a
shareholder, other than the persons specified in the enclosed form of proxy
to attend and act for him and on his behalf at the Meeting. Such right may
be exercised by striking out the names of management's nominees in the
enclosed form of proxy and inserting the name of the person to be appointed
in the blank space provided in the form of proxy, signing the form of proxy
and returning it in the reply envelope provided.
BY ORDER OF THE BOARD OF DIRECTORS
LOGO
James Lawless, IV
Secretary
Dated: April 24, 2000
<PAGE>
ANNEX A
STIRLING COOKE BROWN HOLDINGS LIMITED
2000 NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN
SECTION 1. PURPOSE.
The purpose of the Stirling Cooke Brown Holdings Limited 2000
Non-Employee Director Stock Option Plan (the "Plan") is to promote the best
interests of Stirling Cooke Brown Holdings Limited (together with any
successor thereto, the "Company") and its shareholders by providing
Non-Employee Directors of the Company with an opportunity to acquire a or
increase their proprietary interest in the Company. It is intended that the
Plan will promote increased incentive and personal interest in the welfare
of the Company by those Non-Employee Directors who are primarily
responsible for determining the long-range plans of the Company and
directing the Company's continued growth and financial success.
SECTION 2. DEFINITIONS.
As used in the Plan, the following terms shall have the respective
meanings set forth below:
(a) "Affiliate" shall mean any entity that, directly or through one or
more intermediaries, is controlled by, controls, or is under common control
with, the Company.
(b) "Award" shall mean any Stock Option granted under the Plan.
(c) "Award Agreement" shall mean any written agreement, contract, or
other instrument or document evidencing any Award granted under the Plan.
(d) "Committee" shall mean a committee of the Board of Directors of
the Company designated by such Board to administer the Plan and composed of
not fewer than two directors, each of whom is a "Non-Employee Director", or
the full Board of Directors, as applicable.
(e) "Exchange Act" shall mean the United States Securities Exchange
Act of 1934, as amended from time to time.
(f) "Fair Market Value" shall mean, with respect to any property
(including, without limitation, any Shares or other securities), the fair
market value of such property determined by such methods or procedures as
shall be established from time to time by the Committee.
(g) "Non-Employee Director" shall mean a "non-employee director"
within the meaning of Rule 16b-3 promulgated under the Exchange Act.
(h) "Person" shall mean any individual, corporation, partnership,
association, joint-stock company, trust, unincorporated organisation, or
government or political subdivision thereof.
(i) "Shares" shall mean Ordinary Shares of the Company, par value
$0.25 per share, and such other securities or property as may become
subject to Awards pursuant to an adjustment made under Section 4(b) of the
Plan.
(j) "Stock Option" shall mean an option to purchase Ordinary Shares of
the Company granted under the Plan.
SECTION 3. ADMINISTRATION.
The Plan shall be administered by the Committee; provided, however,
that if at any time the Committee shall not be in existence, the functions
of the Committee as specified in the Plan shall be exercised by a committee
consisting of those members of the Board of Directors of the Company who
qualify as "Non-Employee Directors"; provided further, however, that if the
foregoing specified requirements cannot be met, then the Plan shall be
administered by the Board of Directors of the Company. Subject to the terms
of the Plan and without limitation by reason of enumeration, the Committee
shall have full power and authority to: (i) interpret and administer the
Plan and any instrument or agreement relating to, or Award made under, the
Plan (including, without limitation, any Award Agreement); (ii) establish,
amend, suspend, or waive such rules and regulations and appoint such agents
as it shall deem appropriate for the proper administration of the Plan; and
(iii) make any other determination and take any other action that the
Committee deems necessary or desirable for the administration of the Plan.
Unless otherwise expressly provided in the Plan, all designations,
determinations, interpretations, and other decisions under or with respect
to the Plan or any Award shall be within the sole discretion of the
Committee, may be made at any time, and shall be final, conclusive, and
binding upon all Persons.
No member of the Committee shall be liable for any action, failure to
act, determination or interpretation made in good faith with respect to
this Plan or any transaction hereunder. The Company hereby agrees to
indemnify each member of the Committee for all costs and expenses and, to
the extent permitted by applicable law, any liability incurred in
connection with defending against, responding to, negotiating for the
settlement of or otherwise dealing with any claim, cause of action or
dispute of any kind arising in connection with any actions in administering
this Plan or in authorising or denying authorisation to any transaction
hereunder.
SECTION 4. SHARES AVAILABLE FOR AWARD.
(a) Shares Available. Subject to adjustment as provided in Section
4(b):
(i) Number of Shares Available. The number of Shares with respect
to which Awards may be granted under the Plan shall be 100,000.
If, after the effective date of the Plan, any Shares covered by
an Award granted under the Plan, or to which any Award relates,
are forfeited or if an Award otherwise terminates, expires or is
cancelled prior to the delivery of all of the Shares, then the
number of Shares counted against the number of Shares available
under the Plan in connection with the grant of such Award, to the
extent of any such forfeiture, termination, expiration or
cancellation, shall again be available for granting of additional
Awards under the Plan.
(ii) Accounting for Awards. The number of Shares covered by an
Award under the Plan, or to which such Award relates, shall be
counted on the date of grant of such Award against the number of
Shares available for granting Awards under the Plan.
(iii)Sources of Shares Deliverable Under Awards. Any Shares
delivered pursuant to an Award may consist, in whole in or in
part, of authorised and unissued Shares or of treasury Shares.
(b) Adjustments. In the event that the Committee shall determine that
any dividend or other distribution (whether in the form of cash, Shares,
other securities, or other property), recapitalisation, stock split,
reverse stock split, reorganisation, merger, consolidation, split-up,
spin-off, combination, repurchase, or exchange of Shares or other
securities of the Company, issuance of warrants or other rights to purchase
Shares or other securities of the Company, or other similar corporate
transaction or event affects the Shares such that an adjustment is
determined by the Committee to be appropriate in order to prevent dilution
or enlargement of the benefits or potential benefits intended to be made
available under the Plan, then the Committee may, in such manner as it may
deem equitable, adjust any or all of (i) the number and type of Shares
subject to the Plan and which thereafter may be made the subject of Awards
under the Plan, (ii) the number and type of Shares subject to outstanding
Awards, and (iii) the grant, purchase, or exercise price with respect to
any Award, or, if deemed appropriate, make provision for a cash payment to
the holder of an outstanding Award; provided, however, in each case, that
the number of Shares subject to any Award payable or denominated in Shares
shall always be a whole number.
SECTION 5. ELIGIBILITY.
Any Non-Employee Director shall be eligible for an Award in accordance
with the Plan. Any Non-Employee Director may refuse options for which he is
eligible by forwarding a written notice to that effect to the Secretary of
the Company.
SECTION 6. AWARDS.
(a) Option Awards to Non-Employee Directors. Options shall be granted
to Non-Employee Directors in accordance with the terms and conditions as
set forth below and with such additional terms and conditions, in either
case not inconsistent with the provisions of the Plan, as the Committee
shall determine.
(i) Grant of Options. The Committee shall grant, on the later of
May 25, 2000 or the date on which such Non-Employee Director is
first elected to the Board, an initial option to purchase 10,000
shares of Ordinary Stock of the Company ("Initial Stock Option").
On the fifth anniversary of the date of the grant of the Initial
Stock Option to a Director, and on each subsequent annual
anniversary of such date during a Director's tenure on the Board,
the Committee shall grant an option to purchase an additional
2,000 shares of Ordinary Stock or such lesser proportionate
amount as then remains available for grant ("Subsequent Grant").
(ii) Exercise Price. The exercise price per Share of Options
granted pursuant to Section 6(a)(i) shall be the Fair Market
Value of an Ordinary Share on the date of grant of such Options,
but in no event less than the closing price of an Ordinary Share
on the date of grant.
(iii) Option Term. The term of each Option shall be a period of
ten years from the date of its grant unless earlier forfeited
pursuant to Section 6(b)(v).
(iv) Exercisability and Method of Exercise. An Initial Stock
Option shall become exercisable in four equal annual instalments
commencing on the first anniversary of the date of grant.
Subsequent Grants shall become exercisable on the first
anniversary of the date of grant. The Committee shall determine
the manner and period(s) within which the Options may be
exercised. The Committee also shall determine the method or
methods by which, and the form or forms, including, without
limitation, cash, Shares, other securities or other property, or
any combination thereof, having a Fair Market Value on the
exercise date equal to the relevant exercise price, in which
payment of the exercise price with respect to any Option may be
made or deemed to have been made.
(v) Term of Plan. Notwithstanding any provision in the Plan to
the contrary, no Stock Option may be granted hereunder after the
tenth anniversary of the Effective Date of the Plan.
(b) General.
(i) No Consideration for Awards. Awards shall be granted to
Non-Employee Directors for no cash consideration unless otherwise
determined by the Committee.
(ii) Award Agreements. Awards granted under the Plan shall be
evidenced by an Award Agreement in such form (consistent with the
terms of the Plan) as shall have been approved by the Committee.
(iii) Limits on Transfer of Awards.
(A) No Award, and no right under any such Award, shall be
assignable, alienable, saleable, or transferable by a
Non-Employee Director otherwise than by will or by the laws
of descent and distribution; provided, however, that a
participating Non-Employee Director at the discretion of the
Committee may be entitled, in the manner established by the
Committee, to designate a beneficiary or beneficiaries to
exercise his or her rights, and to receive any property
distributable, with respect to any Award upon the death of
the Non-Employee Director. Each Award, and each right under
any Award, shall be exercisable, during the lifetime of the
Non-Employee Director, only by such individual or, if
permissible under applicable law, by such individual's
guardian or legal representative. No Award, and no right
under any such Award, may be pledged, alienated, attached,
or otherwise encumbered, and any purported pledge,
alienation, attachment, or encumbrance thereof shall be void
and unenforceable against the Company or any Affiliate.
(iv) Share Certificates; Representation. All certificates for
Shares delivered under the Plan pursuant to any Award or the
exercise thereof shall be subject to such stop transfer orders
and other restrictions as the Committee may deem advisable under
the Plan or the rules, regulations, and other requirements of the
Commission, any stock exchange or other market upon which such
Shares are then listed or traded, and any applicable federal or
state securities laws, and the Committee may cause a legend or
legends to be put on any such certificates to make appropriate
reference to such restrictions. The Committee may require each
Non-Employee Director or other Person who acquires an Award or
Shares under the Plan by means of an Award originally made to a
Non-Employee Director to represent to the Company in writing that
such Non-Employee Director or other Person is acquiring the
Shares without a view to the distribution thereof.
(v) Forfeiture. Except as otherwise determined by the Committee,
upon termination of the directorship of a Non-Employee Director
for any reason (as determined under criteria established by the
Committee), all Options which have not become exercisable shall
be forfeited by the Non-Employee Director, provided, however,
that the Committee may, when it finds that a waiver would be in
the best interests of the Company, waive in whole or in part any
or all remaining restrictions on the exerciseability of any
Option. Upon the forfeiture of any options hereunder, the
Committee shall, upon request, provide an accounting as to the
number of forfeited Options to the Non-Employee Director.
SECTION 7. AMENDMENT AND TERMINATION OF THE PLAN; CORRECTION OF DEFECTS
AND OMISSIONS.
(a) Amendments to and Termination of the Plan. The Board of Directors
of the Company may at any time amend, alter, suspend, discontinue, or
terminate the Plan; provided, however, that shareholder approval of any
amendment of the Plan shall also be obtained if otherwise required by: (i)
applicable law or the (ii) quotation or listing requirements of the NASDAQ
Stock Market or any principal securities exchange or market on which the
Shares are then traded (in order to maintain the quotation or listing of
the Shares thereon). Termination of the Plan shall not affect the rights of
Non-Employee Directors with respect to Awards previously granted to them,
and all unexpired Awards shall continue in force and effect after
termination of the Plan except as they may lapse or be terminated by their
own terms and conditions.
(b) Correction of Defects, Omissions and Inconsistencies. The
Committee may correct any defect, supply an omission, or reconcile any
inconsistency in any Award or Award Agreement in the manner and to the
extent it shall deem desirable to carry the Plan into effect.
SECTION 8. GENERAL PROVISIONS.
(a) No Rights to Awards. No Non-Employee Director or other Person,
except as provided otherwise herein, shall have any claim to be granted any
Award under the Plan, and there is no obligation for uniformity of
treatment of Non-Employee Directors, or holders or beneficiaries of Awards
under the plan.
(b) Withholding. No later than the date as of which an amount first
becomes includible in the gross income of a Non-Employee Director for
federal income tax purposes with respect to any Award under the Plan, the
Non-Employee Director shall pay to the Company, or make arrangements
satisfactory to the Company regarding the payment of, any federal, state,
local or foreign taxes of any kind required by law to be withheld with
respect to such amount. Unless otherwise determined by the Committee,
withholding obligations arising with respect to Awards to Non-Employee
Directors under the Plan may be settled with Shares (other than Restricted
Securities), including Shares that are part of, or are received upon
exercise of, the Award that gives rise to the withholding requirement. The
obligations of the Company under the Plan shall be conditional on such
payment or arrangements, and the Company shall, to the extent permitted by
law, have the right to deduct any such taxes from any payment otherwise due
to the Non-Employee Director.
(c) No Limit on Other Compensation Agreements. Nothing contained in
the Plan shall prevent the Company or any Affiliate from adopting or
continuing in effect other or additional compensation arrangements, and
such arrangements may be either generally applicable or applicable only in
specific cases.
(d) Rights and Status of Recipients of Awards. The grant of an Award
shall not be construed as giving a Non-Employee Director the right to
continue in office as a Director of the Company. Except for rights accorded
under the Plan and under any applicable Award Agreement Non-Employee
Directors shall have no rights as holders of Shares as a result of the
granting of Awards hereunder.
(e) Unfunded Status of the Plan. Unless otherwise determined by the
Committee, the Plan shall be unfunded and shall not create (or be construed
to create) a trust or a separate fund or funds. The Plan shall not
establish any fiduciary relationship between the Company and any
Non-Employee Director or other Person. To the extent any Person holds any
right by virtue of a grant under the Plan, such right (unless otherwise
determined by the Committee) shall be no greater than the right of an
unsecured general creditor of the Company.
(f) Governing Law. The validity, construction, and effect of the Plan
and any rules and regulations relating to the Plan shall be determined in
accordance with the laws of Bermuda and any applicable United States
federal law.
(g) Severability. If any provision of the Plan or any Award Agreement
or any Award is or becomes or is deemed to be invalid, illegal, or
unenforceable in any jurisdiction, or as to any Person or Award, or would
disqualify the Plan, any Award Agreement or any Award under any law deemed
applicable by the Committee, such provision shall be construed or deemed
amended to conform to applicable laws or, if it cannot be so construed or
deemed amended without, in the determination of the Committee, materially
altering the intent of the Plan, any Award Agreement or the Award, such
provision shall be stricken as to such jurisdiction, Person, or Award, and
the remainder of the Plan, any such Award Agreement and any such Award
shall remain in full force and effect.
(h) No Fractional Shares. No fractional Shares or other securities
shall be issued or delivered pursuant to the Plan, any Award Agreement or
any Award, and the Committee shall determine (except as otherwise provided
in the Plan) whether cash, other securities, or other property shall be
paid or transferred in lieu of such fractional Shares or other securities,
or whether such fractional Shares or other securities or any rights thereto
shall be cancelled, terminated, or otherwise eliminated.
(i) Headings. Headings are given to the Sections and subsections of
the Plan solely as a convenience to facilitate reference. Such headings
shall not be deemed in any way material or relevant to the construction or
interpretation of the Plan or any provision thereof.
SECTION 9. EFFECTIVE DATE OF THE PLAN.
The Plan shall be effective on the date immediately following its
approval by the shareholders of the Company provided that such approval is
obtained within twelve months following the date of adoption of the Plan by
the Board of Directors of the Company.
