<PAGE> 1
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:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement
[x] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
[ ] Confidential, for the Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
</TABLE>
CHICAGO TITLE CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(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)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
(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):
------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
(5) Total fee paid:
------------------------------------------------------------------------
[ ] 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:
------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
(3) Filing Party:
------------------------------------------------------------------------
(4) Date Filed:
<PAGE> 2
CHICAGO TITLE CORPORATION
171 NORTH CLARK STREET
CHICAGO, ILLINOIS 60601
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
APRIL 27, 1999 AT 9:00 A.M., LOCAL TIME
------------------------
HOTEL MONACO
225 NORTH WABASH
PARIS ROOM - 3RD FLOOR
CHICAGO, ILLINOIS
Notice is hereby given that the 1999 Annual Meeting of Stockholders of
Chicago Title Corporation (the "Company") will be held at Hotel Monaco, 225
North Wabash, Paris Room - 3rd Floor, Chicago, Illinois, on Tuesday, April 27,
1999 at 9:00 a.m., local time, for the following purposes:
1. To elect five directors for terms expiring in 2002.
2. To consider and take action upon a proposal to ratify the selection
of KPMG LLP, independent certified public accountants, as auditors
for the Company for the year 1999.
3. To transact such other business as may properly come before the
meeting, or any adjournment or adjournments thereof.
Holders of common stock of the Company are entitled to vote for the
election of directors and on each of the other matters set forth above.
The stock transfer books of the Company will not be closed. The Board of
Directors has fixed the close of business on March 1, 1999 as the record date
for the determination of stockholders entitled to notice of, and to vote at, the
Annual Meeting and any adjournments thereof.
You are cordially invited to be present. Stockholders who do not expect to
attend in person are requested to sign and return the enclosed form of proxy in
the envelope provided. At any time prior to their being voted, proxies are
revocable by written notice to the Secretary of the Company or by voting at the
meeting in person.
By order of the Board of Directors
PAUL T. SANDS, JR.
Executive Vice President, General
Counsel and Secretary
March 29, 1999
(LOGO)
<PAGE> 3
CHICAGO TITLE CORPORATION
171 NORTH CLARK STREET
CHICAGO, ILLINOIS 60601
PROXY STATEMENT
------------------------
ANNUAL MEETING OF STOCKHOLDERS TO BE HELD APRIL 27, 1999
------------------------
This statement is furnished in connection with the solicitation of proxies
by the Board of Directors of Chicago Title Corporation (the "Company") from
holders of the Company's outstanding shares of common stock ("Common Stock")
entitled to vote at the 1999 Annual Meeting of Stockholders of the Company (and
at any and all adjournments thereof) (the "1999 Annual Meeting") for the
purposes referred to below and set forth in the accompanying Notice of Annual
Meeting of Stockholders. These proxy materials are being mailed to stockholders
on or about March 29, 1999.
The Board of Directors has fixed the close of business on March 1, 1999 as
the record date for the determination of stockholders entitled to notice of, and
to vote at, said meeting. Holders of Common Stock are entitled to one vote for
each share held of record on the record date with respect to each matter to be
acted on at the 1999 Annual Meeting.
On March 1, 1999, there were outstanding and entitled to vote 21,919,789
shares of Common Stock.
SPIN-OFF OF THE COMPANY
On June 17, 1998, all of the shares of Common Stock of the Company held by
Alleghany Corporation ("Alleghany") were distributed to Alleghany's stockholders
on a pro rata basis (the "Spin-Off"), and the Company thereby became a publicly
held company. Each stockholder of Alleghany received three shares of Common
Stock of the Company for every share of Alleghany common stock owned on the
record date for the Spin-Off. The Spin-Off was not taxable to such stockholders
based upon an Internal Revenue Service ruling issued in March 1998. The
financial services business conducted through Alleghany Asset Management, Inc.
("AAM"), previously a subsidiary of the Company's subsidiary Chicago Title and
Trust Company ("CT&T"), was not a part of the distribution and remained with
Alleghany.
<PAGE> 4
PRINCIPAL STOCKHOLDERS
As of March 1, 1999, approximately 35.3 percent* of the Company's
outstanding Common Stock was believed to be beneficially owned by F.M. Kirby,
Allan P. Kirby, Jr., their sister, Grace Kirby Culbertson, and the estate or one
or more beneficiaries of the estate of Ann Kirby Kirby, the sister of Messrs.
Kirby and Mrs. Culbertson, primarily through a number of family trusts.
The following table sets forth the beneficial ownership of Common Stock as
of March 1, 1999 of certain persons believed by the Company to be the beneficial
owners of more than five percent of such class of securities.
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF BENEFICIAL OWNERSHIP
---------------------------------------------------------------
SOLE VOTING SHARED VOTING POWER
NAME AND ADDRESS POWER AND SOLE AND/OR SHARED PERCENT
OF BENEFICIAL OWNER INVESTMENT POWER INVESTMENT POWER TOTAL OF CLASS
- ------------------- ---------------- ------------------- ---------- --------
<S> <C> <C> <C> <C>
F.M. Kirby.............................. 880,713 1,883,901 2,764,614(1) 12.6
17 DeHart Street
P.O. Box 151
Morristown, NJ 07963
Allan P. Kirby, Jr...................... 1,661,507 -- 1,661,507(2) 7.6
14 E. Main Street
P.O. Box 90
Mendham, NJ 07945
Grace Kirby Culbertson.................. 423,291 756,318 1,179,609(3) 5.4
Blue Mill Road
Morristown, NJ 07960
Estate of Ann Kirby Kirby............... 953,643 1,178,358 2,132,001(4) 9.7
c/o Carter, Ledyard & Milburn
2 Wall Street
New York, NY 10005
</TABLE>
- ---------------
(1) Includes 331,032 shares of Common Stock held by F.M. Kirby as sole trustee
of trusts for the benefit of his children; 1,296,693 shares held by a trust
of which Mr. Kirby is co-trustee and primary beneficiary; and 587,208 shares
held by trusts for the benefit of his children and his children's
descendants as to which Mr. Kirby was granted a proxy and, therefore, had
shared voting power. Mr. Kirby disclaims beneficial ownership of the Common
Stock held for the benefit of his children and for the benefit of his
children and his children's descendants. Mr. Kirby held 549,681 shares
directly.
(2) Includes 104,919 shares of Common Stock held by a child of Allan P. Kirby,
Jr., as to which Mr. Kirby holds an irrevocable power of attorney; and
916,965 shares held by a trust of which of Mr. Kirby is co-trustee and
beneficiary. Mr. Kirby disclaims beneficial ownership of the Common Stock
held by his child. Mr. Kirby held 639,623 shares directly (which includes
1,000 shares granted to him as a restricted stock award under the Chicago
Title Corporation 1998 Long-Term Incentive Plan (the "1998 Long-Term
Incentive Plan"), which shares of restricted stock will vest on June 18,
2001).
(3) Includes 125,658 shares of Common Stock held by Grace Kirby Culbertson as
co-trustee of trusts for the benefit of her children; and 630,660 shares
held by trusts for the benefit of Mrs. Culbertson and her descendants, of
which Mrs. Culbertson is co-trustee. Mrs. Culbertson held 423,291 shares
directly.
(4) The representatives of the estate of Ann Kirby Kirby, who died in 1996, have
declined to supply information with respect to the ownership by her estate
and its beneficiaries of Common Stock of the Company; therefore, the Company
does not know whether her estate or any beneficiary of her estate
beneficially owns more than five percent of its Common Stock. However, Mrs.
Kirby filed a statement on
- ---------------
* See Note (4) on this page 2.
2
<PAGE> 5
Schedule 13D dated April 5, 1982 with the Securities and Exchange Commission
reporting beneficial ownership, both direct and indirect through various trusts,
of 710,667 shares of the common stock of Alleghany Corporation, a Maryland
corporation and the predecessor of Alleghany ("Old Alleghany"). Upon the
liquidation of Old Alleghany in December 1986, stockholders received $43.05 in
cash and one share of Alleghany common stock for each share of Old Alleghany
common stock. The information provided herein as to the ownership by the estate
of Mrs. Kirby of Common Stock of the Company is based solely on her Schedule 13D
statement with respect to ownership of the common stock of Old Alleghany, the
number of shares of Alleghany common stock distributed in respect of such Old
Alleghany shares in the liquidation of Old Alleghany, and the number of shares
of Common Stock of the Company distributed in respect of such Alleghany shares
in the Spin-Off. Such information does not reflect the two-percent stock
dividends paid in each of the years 1985 through 1997 by Old Alleghany or
Alleghany; if Mrs. Kirby, her estate and the beneficiaries of her estate held
the 710,667 shares of Old Alleghany common stock reported in Mrs. Kirby's
Schedule 13D statement together with all stock dividends received in consequence
through the liquidation of Old Alleghany, held all Alleghany shares received in
the liquidation of Old Alleghany together with all stock dividends received in
consequence through the effective date of the Spin-Off, and continued to hold
all shares of Common Stock of the Company received on the effective date of the
Spin-Off through March 1, 1999, the beneficial ownership of Common Stock of the
Company would have increased by 625,947 shares.
3
<PAGE> 6
1. ELECTION OF DIRECTORS
Pursuant to the Company's certificate of incorporation and by-laws, the
Board of Directors is divided into three separate classes of directors, which
are required to be as nearly equal in number as practicable. At each annual
meeting of stockholders, one class of directors is elected to a term of three
years. The Board of Directors increased the authorized number of directors from
fourteen to fifteen earlier this year; the newly created seat on the Board of
Directors is currently vacant.
Norman R Bobins, John F. Farrell, Jr., Robert M. Hart, Philip G. Heasley
and Alan N. Prince have been nominated by the Board of Directors for election as
directors at the 1999 Annual Meeting, each to serve for a term of three years,
until the 2002 Annual Meeting of Stockholders and until his successor is duly
elected and qualified. Messrs. Bobins, Hart, Heasley and Prince were elected by
the Board of Directors effective upon the Spin-Off to fill vacancies resulting
from the adoption by Alleghany as the sole stockholder of the Company of new
by-laws of the Company as of such date. Mr. Hart also served on the Board of
Directors of the Company prior to the Spin-Off. Mr. Farrell has been nominated
to fill the vacancy resulting from the increase in the authorized number of
directors described above.
Proxies in the enclosed form received from holders of Common Stock prior to
the 1999 Annual Meeting will be voted for the election of the five nominees
named above as directors of the Company unless stockholders indicate otherwise.
If any of the foregoing nominees is unable to serve for any reason (which event
is not anticipated), the shares represented by the enclosed proxy may be voted
for such other person or persons as may be determined by the holders of such
proxy unless stockholders indicate otherwise. Directors will be elected by an
affirmative vote of a plurality of the shares of Common Stock present in person
or represented by proxy and entitled to vote at the 1999 Annual Meeting. Thus,
those nominees who receive the five highest number of votes for their election
as directors will be elected, regardless of the number of shares that are not
voted for the election of such nominees. Shares with respect to which authority
to vote for any nominee or nominees is withheld will not be counted in the total
number of shares voted for such nominee or nominees.
The following information includes the age, the year in which first elected
a director of the Company, the principal occupation (in italics), and other
directorships of each of the nominees named for election as directors, and of
the other current directors of the Company whose terms will not expire until
2000 or 2001.
NOMINEES FOR ELECTION
NORMAN R BOBINS Director since 1998 Age 56
President and Chief Executive Officer, LaSalle National Bank and LaSalle
National Corporation (commercial banking); Chairman, LaSalle N.A.; director,
Center Point Properties. Member of the Audit Committee.
JOHN F. FARRELL, JR. Age 61
Chairman, Automatic Service Company (food and vending service company); trustee,
Boston College and John F. Kennedy Library.
ROBERT M. HART Director since 1998 Age 54
Senior Vice President, General Counsel and Secretary, Alleghany Corporation
(reinsurance and insurance, financial services and mining). Chairman of the
Compensation Committee.
PHILIP G. HEASLEY Director since 1998 Age 49
Vice Chairman, U.S. Bancorp (banking); director, SunAmerica Inc. Member of the
Audit and Compensation Committees.
4
<PAGE> 7
ALAN N. PRINCE Director since 1998 Age 60
Retired Senior Executive Vice President, Chicago Title Insurance Company. Member
of the Real Estate Committee.
DIRECTORS WHOSE TERMS EXPIRE IN 2000
WILLIAM K. LAVIN Director since 1998 Age 54
Financial Consultant; director, Alleghany Corporation and Stratford Acquisition
Corporation. Chairman of the Audit Committee and member of the Executive and
Nominating Committees.
MARGARET P. MacKIMM Director since 1998 Age 65
Retired Senior Vice President -- Communications, Kraft Foods, Inc. and its
predecessor Kraft, Inc. (multinational marketer and processor of food products);
director, Venator Group, Inc. Member of the Compensation Committee.
LANGDON D. NEAL Director since 1998 Age 41
Attorney, Earl L. Neal and Associates (law firm). Member of the Real Estate
Committee.
JOHN RAU Director since 1998 Age 50
President and Chief Executive Officer, Chicago Title Corporation; President and
Chief Executive Officer, Chicago Title and Trust Company and Chicago Title
Insurance Company; director, Borg-Warner Automotive, Inc., First Industrial
Realty Trust, Inc., LaSalle National Bank and Nicor, Inc. Member of the
Executive Committee.
RICHARD P. TOFT Director since 1998 Age 62
Chairman of the Board of Directors, Chicago Title Corporation; Chairman and
Chief Executive Officer, Alleghany Asset Management, Inc. (financial services);
director, Peoples Energy Corporation and Cologne Life Reinsurance Company.
Member of the Executive and Nominating Committees.
DIRECTORS WHOSE TERMS EXPIRE IN 2001
JOHN J. BURNS, JR. Director since 1998 Age 67
President, chief executive officer and chief operating officer, Alleghany
Corporation (reinsurance and insurance, financial services and mining);
director, Alleghany Corporation and Burlington Northern Santa Fe Corporation.
Chairman of the Executive and Nominating Committees.
PETER H. DAILEY Director since 1998 Age 68
Chairman, Enniskerry Financial (investments); director, Jacobs Engineering Group
Inc., Krause Furniture Co., Pinkerton's, Inc., Sizzler, Inc. and Wirthlin
Worldwide. Member of the Compensation Committee.
ALLAN P. KIRBY, JR. Director since 1998 Age 67
President, Liberty Square, Inc. (investments); management of family and personal
affairs; director, Alleghany Corporation. Member of the Audit and Compensation
Committees.
5
<PAGE> 8
M. LEANNE LACHMAN Director since 1998 Age 56
Managing Director, Boston Financial (investment management-equity real estate);
director, Lincoln National Corporation and Liberty Property Trust. Chairman of
the Real Estate Committee and member of the Audit Committee.
LAWRENCE F. LEVY Director since 1998 Age 55
Chairman of the Board and Chief Executive Officer, The Levy Organization (real
estate, restaurants, and food service). Member of the Executive and Real Estate
Committees.
All of the foregoing persons have had the principal occupations indicated
throughout the last five years, except as follows. Mr. Farrell also served as
Chairman and Chief Executive Officer of North American Mortgage Company
(mortgage company) until October 1997. Mr. Hart has served as Senior Vice
President and General Counsel of Alleghany since September 1994 and as Secretary
since 1995; he was a partner of Donovan Leisure Newton & Irvine (law firm) prior
thereto. Mr. Prince served as Senior Executive Vice President of CT&T's
subsidiary Chicago Title Insurance Company ("CTI") from January 1995 to December
1998 and as Executive Vice President prior thereto. Mr. Lavin served as
Vice-Chairman of the Board and Chief Executive Officer of Woolworth Corporation
(retailing) from May 1994 to September 1994 and as Chairman of the Board and
Chief Executive Officer prior thereto. Ms. MacKimm served as Senior Vice
President -- Communications, Kraft Foods, Inc. and its predecessor Kraft, Inc.
prior to her retirement in June 1989. Mr. Rau has served as President and Chief
Executive Officer of the Company since June 1998 and as President and Chief
Executive Officer of CT&T and CTI since January 1997; he was Dean of the School
of Business at Indiana University (education) prior thereto. Mr. Toft has served
as Chairman of the Board of Directors of the Company since June 1998 and as
Chairman and Chief Executive Officer of AAM since October 1995; he also served
as Chairman of CT&T from January 1994 to July 1998, as President and Chief
Executive Officer of CT&T from January 1994 to July 1996, as President and Chief
Executive Officer of CTI prior thereto, and as Senior Vice President of
Alleghany until October 1995. Ms. Lachman joined Boston Financial as Managing
Director in January 1999 following its acquisition of Schroder Real Estate
Associates; she was Managing Director, Schroder Real Estate Associates
(investment management-equity real estate) prior thereto and Managing Director,
Schroder Mortgage Associates (investment management-commercial mortgages) until
August 1998.
The Board of Directors held four meetings in 1998. Each director attended
all of the meetings of the Board of Directors that were held during the period
of his or her service in 1998, except that each of Mr. Dailey and Mr. Kirby
attended two of the three meetings that were held during the period of his
service.
The Executive Committee may exercise certain powers of the Board of
Directors regarding the management and direction of the business and affairs of
the Company when the Board of Directors is not in session. All action taken by
the Executive Committee is reported to and reviewed by the Board of Directors.
This committee held two meetings in 1998, which all members attended.
The Audit Committee of the Board of Directors reviews and makes reports and
recommendations to the Board of Directors with respect to the selection of the
independent auditors of the Company and its subsidiaries, the arrangements for
and the scope of the audits to be performed by them, and the internal audit
activities, accounting procedures and controls of the Company and its
subsidiaries, and reviews the annual consolidated financial statements of the
Company and its subsidiaries. This committee held three meetings in 1998, which
all members attended except that each of Mr. Heasley, Ms. Lachman and Mr. Kirby
attended two of the three meetings that were held.
The Compensation Committee of the Board of Directors reviews and makes
reports to the Board of Directors with respect to the compensation policies and
practices of the Company. This committee reviews the annual recommendations of
the Chief Executive Officer regarding the compensation of officers of the
Company and its subsidiaries and reviews the annual recommendation of the
Chairman of the Executive Committee regarding the compensation of the Chief
Executive Officer of the Company, and makes
6
<PAGE> 9
recommendations to the Board of Directors with respect to such compensation.
This committee also administers the Company's 1998 Long-Term Incentive Plan and
Employee Stock Purchase Plan. The Compensation Committee held five meetings in
1998, and each member attended at least 75 percent of the meetings that were
held during the period of his or her service.
The Nominating Committee of the Board of Directors screens candidates and
makes recommendations to the Board of Directors as to persons to be nominated by
the Board of Directors for election thereto by the stockholders or to be chosen
by the Board of Directors to fill newly created directorships or vacancies on
the Board of Directors. This committee held no meetings in 1998.
The Real Estate Committee of the Board of Directors evaluates and reviews
any real estate transaction proposed to be entered into by the Company or any of
its subsidiaries as principal which involves amounts in excess of $1 million.
This committee held two meetings in 1998, which all members attended except that
Mr. Levy attended one of the two meetings that were held.
SECURITIES OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth the beneficial ownership of Common Stock as
of March 1, 1999 of each of the nominees named for election as a director, each
of the other current directors and each of the executive officers named in the
Summary Compensation Table below.
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF BENEFICIAL OWNERSHIP
-----------------------------------------------------------------
SOLE VOTING SHARED VOTING POWER
POWER AND/OR SOLE AND/OR SHARED PERCENT
NAME OF BENEFICIAL OWNER INVESTMENT POWER INVESTMENT POWER TOTAL OF CLASS
------------------------ ----------------- ------------------- --------- --------
<S> <C> <C> <C> <C>
Richard P. Toft..................... 24,507 -- 24,507 0.11
Norman R Bobins..................... 1,000 -- 1,000 *
John J. Burns, Jr................... 69,994 -- 69,994(1) 0.32
Peter H. Dailey..................... 1,217 -- 1,217 *
John F. Farrell, Jr................. -- -- -- *
Robert M. Hart...................... 10,051 -- 10,051 0.05
Philip G. Heasley................... 1,360 -- 1,360 *
Allan P. Kirby, Jr.................. 1,661,507 -- 1,661,507(2) 7.58
M. Leanne Lachman................... 1,733 -- 1,733 *
William K. Lavin.................... 2,633 -- 2,633 0.01
Lawrence F. Levy.................... 1,217 -- 1,217 *
Margaret P. MacKimm................. 1,217 -- 1,217 *
Langdon D. Neal..................... 1,225 -- 1,225 *
Alan N. Prince...................... 17,050 -- 17,050 0.08
John Rau............................ 134,462 -- 134,462 0.61
Thomas H. Hodges.................... 33,264 -- 33,264 0.15
Michael J. Keller................... 30,000 -- 30,000 0.14
Peter G. Leemputte.................. 31,672 -- 31,672 0.14
Christopher Abbinante............... 32,906 -- 32,906 0.15
</TABLE>
- ---------------
* Less than 0.01%.
(1) Includes 2,178 shares of Common Stock owned by Mr. Burns's wife. Mr. Burns
had no voting or investment power over these shares, and he disclaims
beneficial ownership of them.
(2) See Note (2) on page 2.
All nominees named for election as a director, directors and executive
officers as a group (22 persons) beneficially owned 2,143,678 shares, or
approximately 9.8 percent, of the outstanding Common Stock; such
7
<PAGE> 10
nominees, directors and executive officers had sole voting and investment power
with respect to 2,141,500 shares, and no voting or investment power with respect
to 2,178 shares.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
The Company has determined that, except as set forth below, no person who
at any time during 1998 was a director, officer or beneficial owner of more than
ten percent of the Company's Common Stock failed to file on a timely basis
reports required by Section 16(a) of the Securities Exchange Act of 1934, as
amended, during 1998. Such determination is based solely upon the Company's
review of Forms 3, 4 and 5, and written representations that no Form 5 was
required, submitted to it during or with respect to 1998. With regard to Ann
Kirby Kirby, who, prior to her death in 1996, was believed to be a beneficial
owner of more than ten percent of Alleghany Stock based on her Schedule 13D
statement filed with the Securities and Exchange Commission in 1982, and,
therefore, may be a beneficial owner of more than ten percent of the Company's
Common Stock as a result of the Spin-Off, the representatives of the estate of
Mrs. Kirby have declined to supply information with respect to its ownership of
Common Stock of the Company; therefore, the Company does not know whether her
estate or any beneficiary of her estate beneficially owns more than ten percent
of its Common Stock during 1998 nor whether any such person was required to file
reports required by Section 16(a).
COMPENSATION OF DIRECTORS
Each director of the Company who is not an employee of the Company or any
of its subsidiaries receives an annual retainer of $21,000, payable one-half in
cash and one-half in shares of the Company's Common Stock as more fully
explained below, as well as $750 for each board meeting attended in person and
$375 for each conference telephone meeting attended. The Chairman of the Board
of Directors receives an additional annual fee of $100,000. In addition, the
Chairman of the Executive Committee receives an annual fee of $15,000, and each
other member thereof who is not an officer of the Company receives an annual fee
of $7,500. The Chairman of the Audit Committee receives an annual fee of $7,500,
and each other member thereof receives an annual fee of $4,500. The Chairman of
the Compensation Committee receives an annual fee of $4,000, and each other
member thereof receives an annual fee of $3,000. Each member of the Nominating
Committee who is not an officer of the Company receives $1,000 for each meeting
attended. The Chairman of the Real Estate Committee receives an annual fee of
$4,000, and each other member thereof receives an annual fee of $3,000. Pursuant
to the Directors' Deferred Compensation Plan, a director of the Company may
defer all or part of the cash portion of the retainer and committee and per
meeting fees.
Pursuant to the Directors' Equity Compensation Plan, each director of the
Company who is not an employee of the Company or any of its subsidiaries
received on June 18, 1998 and thereafter will receive in May of each year his or
her retainer for the following twelve-months' service as a director, exclusive
of any per meeting fees, committee fees or expense reimbursements, payable
one-half in shares of the Company's Common Stock, based on the market value (as
defined in the plan) of such shares, and one-half in cash. On June 18, 1998,
each eligible director received 217 shares of Common Stock.
On the effective date of the Spin-Off, Mr. Toft, as Chairman of the Board
of Directors, received 5,000 shares, and each other director of the Company who
was not an employee of the Company or any of its subsidiaries received 1,000
shares, of the Company's Common Stock as restricted stock awards under the 1998
Long-Term Incentive Plan. Such shares of restricted stock may not be transferred
until, and will vest on, the third anniversary of the effective date of the
Spin-Off.
Pursuant to the Directors' Stock Option Plan, each director of the Company
who is not an employee of the Company or any of its subsidiaries received on
June 18, 1998, and thereafter will receive annually as of the first business day
after the conclusion of each Annual Meeting of Stockholders held prior to June
30, 2002 an option to purchase 1,000 shares of Common Stock (subject to
antidilution adjustments) at a price equal to the fair market value (as defined
in the plan) of such shares on the date of grant. Such options may not be
transferred until they are exercised, and they become exercisable as to
one-third of such shares on each of the
8
<PAGE> 11
first three anniversaries of the date of grant. The options to purchase 1,000
shares of Common Stock granted to each eligible director on June 18, 1998 were
granted at a price of $47.0625 per share.
Mr. Toft received $313,417 from CT&T in 1998 as a payout of a long-term
incentive award granted prior to his retirement in 1996 from the executive
positions of President and Chief Executive Officer of CT&T. In addition, Mr.
Toft receives annual payments of $38,166 under the CT&T Executive Salary
Continuation Plan. Mr. Toft serves as Chairman and Chief Executive Officer of
AAM for which he earned $167,635 in salary and $92,585 in bonus for the period
in 1998 during which AAM was a subsidiary of CT&T.
Pursuant to an employment agreement with CTI, which term ended on December
31, 1998, Mr. Prince was entitled (i) to receive a salary at an annual rate of
$200,000 for 1998 and reimbursement for the cost of leasing an apartment in
Chicago (not to exceed $3,000 per month plus an amount equal to income taxes
imposed on the amount of such rental allowance), (ii) to be deemed to receive
credit for a salary at a rate of $290,000 for 1998 for purposes of the Executive
Salary Continuation Plan, the Pension Plan and the Excess Benefits Plan of CT&T,
and (iii) to be eligible for a special incentive opportunity of $100,000 based
upon performance of personal objectives mutually agreed to by Messrs. Prince and
Rau. In connection with such agreement, Mr. Prince served in 1998 as Senior
Executive Vice President of CTI, for which he received a salary of $200,000, a
bonus of $192,674 and a special bonus of $90,000. Mr. Prince also received in
1998 matching and profit sharing contributions under the CT&T Savings and Profit
Sharing Plan, which is a 401(k) plan, in the amount of $14,400, and taxable life
insurance benefits valued at $1,379. Mr. Prince retired from CTI on December 31,
1998, and his agreement with CTI entitles him to certain severance benefits in
respect of his termination of employment by reason of retirement or otherwise,
and prohibits him for a period extending for two years beyond the date of his
termination of employment from being associated in any capacity with any
business that competes with CTI.
Each of the non-employee directors of the combined boards of the Company's
subsidiaries CT&T and CTI was entitled to receive an annual retainer of $15,000
for his services as such in 1998, as well as $1,300 for the first board meeting
held in January and $650 for each board meeting attended thereafter. In
addition, each non-employee member of the Finance, Audit and Personnel
Committees of these boards was entitled to receive $1,300 for the first
committee meeting held in January and $650 for each committee meeting attended
thereafter. Mr. Kirby served on these boards and committees until July 15, 1998,
and received a total of $15,300 for services in these capacities in 1998.
9
<PAGE> 12
EXECUTIVE COMPENSATION
The information under this heading relates to the chief executive officer
and the four other most highly compensated executive officers of the Company
serving as executive officers at the end of 1998 and reflects compensation paid
by the Company or, prior to the Spin-Off on June 17, 1998, by CT&T.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG-TERM COMPENSATION
---------------------------------- --------------------------------------
AWARDS PAYOUTS
----------------------- ------------
RESTRICTED SECURITIES LONG-TERM
OTHER ANNUAL STOCK UNDERLYING INCENTIVE ALL OTHER
NAME AND PRINCIPAL BONUS COMPENSATION AWARDS OPTIONS PLAN PAYOUTS COMPENSATION
POSITION(1) YEAR SALARY (2) (3) (4) (#) (5) (6)
- ------------------ ---- -------- -------- ------------ ---------- ---------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
John Rau................ 1998 $415,384 $770,000 $4,061,361 $6,010,548 109,440 $ -- $6,912,123
President and Chief 1997 387,692 357,199 1,062,869 1,356,800 -- -- 575,619
Executive Officer
Thomas H. Hodges........ 1998 $259,615 $245,000 $1,121,179 $1,410,000(7) 30,000(7) $ -- $ 42,219
Executive Vice 1997 55,769 50,583 -- -- -- -- 4,256
President
Michael J. Keller(8).... 1998 $234,131 $212,400 $1,121,179 $1,410,000(7) 30,000(7) $ -- $ 76,288
Executive Vice 1997 189,519 178,020 -- -- -- -- 53,149
President
Peter G. Leemputte...... 1998 $215,481 $222,188 $1,121,179 $1,410,000 30,000 $ -- $ 219,357
Executive Vice -- -- -- -- -- -- -- --
President, Chief
Administrative Officer
and Chief Financial
Officer
Christopher Abbinante... 1998 $169,077 $395,000 $1,121,179 $1,410,000 30,000 $ 59,109 $ 32,320
Senior Vice President 1997 140,000 318,941 -- -- -- 117,006 27,722
and Manager, Eastern
Division
</TABLE>
- ---------------
(1) All of these executive officers held the specified positions with the
Company since the Spin-Off on June 17, 1998. For the last five years, each
executive officer had the following principal occupations: Mr. Rau has also
served as President and Chief Executive Officer of CT&T and CTI since
January 1997, and he was Dean of the School of Business at Indiana
University (education) prior thereto. Mr. Hodges has also served as
Executive Vice President of CT&T since October 1997, and was Executive Vice
President from January 1995 to December 1996, and Senior Vice President
prior thereto, of First Chicago NBD Corp. (banking). Mr. Keller has also
served as Executive Vice President of CT&T and CTI since February 1997, and
was Executive Vice President of Mortgage Banking at Norwest Mortgage Banking
(mortgage banking) prior thereto. Mr. Leemputte has also served as Executive
Vice President and Chief Administrative Officer of CT&T since January 1998
and Chief Financial Officer of CT&T since March 1998, was Vice President of
Mercer Management Consulting, Inc. (management consulting) from July 1996 to
January 1998, and was Corporate Vice President and Controller of Armco Inc.
(steel manufacturing and metals processing) prior thereto. In addition to
his position as Senior Vice President and Manager, Eastern Division, of the
Company since the Spin-Off, Mr. Abbinante has also served in those
capacities at CTI since such date and prior thereto.
(2) These amounts represent bonuses earned in 1998 under the Company's 1998
Annual Incentive Plan or earned in 1997 under the CT&T Annual Incentive
Plan, which are short-term incentive plans designed to reward officers and
employees for achieving specified corporate financial performance and
specified individual objectives, operating unit objectives, or both, except
that the 1997 amount reported for Mr. Abbinante represents a similar bonus
paid under an individual agreement.
(3) As more fully explained in Note (4) below, the 1998 amounts represent
payments for reimbursement of taxes, including reimbursement of taxes
incurred in respect of awards of shares of Common Stock as restricted stock
and the reimbursement itself, and the 1997 amount for Mr. Rau represents
payments for reimbursement of taxes incurred by Mr. Rau as a result of the
award of shares of Alleghany common stock as restricted stock and the
reimbursement itself.
10
<PAGE> 13
(4) The 1998 amount for Mr. Rau represents 108,684 restricted shares of Common
Stock of the Company granted under the 1998 Long-Term Incentive Plan in
connection with the Spin-Off, valued on June 16, 1998, which was the date of
grant. All of such shares will vest on the first day that the New York Stock
Exchange is open for the transaction of business (a "business day") after
the third anniversary of the date of grant. Prior to vesting, the shares are
not transferable. Any dividends payable on these restricted shares are
subject to the same restrictions that exist in respect of such restricted
shares. The 1997 amount for Mr. Rau represents 6,400 restricted shares of
Alleghany common stock granted to him in connection with the commencement of
his term of employment as President and Chief Executive Officer of CT&T on
January 1, 1997, valued on the date of grant. The Alleghany shares are not
transferable by Mr. Rau during his employment with the Company or for two
years thereafter. Dividends will be payable on the restricted shares of
Alleghany common stock if and to the extent paid on Alleghany common stock
generally, regardless of whether the shares are vested at the time the
dividend is paid. Of the Alleghany shares awarded to Mr. Rau, 2,800 shares
vested upon commencement of his employment and the remaining 3,600 shares
vest at the rate of 75 shares per month over the period from January 1997
through December 2000. On the effective date of the Spin-Off, Mr. Rau
received 19,200 shares of Common Stock of the Company in respect of such
Alleghany restricted shares, and such shares of Common Stock of the Company
are subject to the same restrictions and vesting schedule as the Alleghany
restricted shares in respect of which the Company's shares were distributed.
Mr. Rau held an aggregate of 6,400 restricted shares of Alleghany common
stock and 127,884 restricted shares of Common Stock of the Company on
December 31, 1998, with values of $1,202,400 and $6,002,555, respectively.
The 1998 amounts for each of Messrs. Hodges, Keller, Leemputte and Abbinante
represent 30,000 restricted shares of Common Stock granted to each under the
1998 Long-Term Incentive Plan in connection with the Spin-Off, valued on
June 16, 1998, which was the date of grant. 15,000 of such shares will vest
on the first business day after the second anniversary of the date of grant
and 15,000 shares will vest on the first business day after the third
anniversary of the date of grant. Prior to vesting, the shares are not
transferable. Cash dividends will be payable on these restricted shares if
and to the extent paid on the Company's Common Stock generally, regardless
of whether the shares are vested at the time the dividend is paid; any other
dividends are subject to the same restrictions that exist in respect of such
restricted shares. In the event of a "change in control" of the Company (as
defined in the 1998 Long-Term Incentive Plan), all restricted shares of
Common Stock of the Company that are not yet vested immediately become 100%
vested. Each of Messrs. Hodges, Keller, Leemputte and Abbinante held 30,000
restricted shares of Common Stock of the Company on December 31, 1998, with
a value of $1,408,125.
(5) These amounts represent (i) payouts in 1998 and 1997 in settlement of
performance units awarded under the Manager Section of CT&T's Performance
Unit Incentive Plan of 1995, which was a long-term incentive plan providing
for payouts in cash and common stock of Alleghany based upon CT&T's return
on equity and the application of multipliers relating to dividends paid and
an expense ratio in each year of the award period; and (ii) payouts in 1998
and 1997 under CT&T's Quality Business Management Incentive Plan, which was
a long-term incentive plan providing for payouts in cash based upon
favorable title insurance claims experience.
(6) The 1998 amounts represent (i) benefits of a group life insurance policy
maintained by the Company on behalf of its employees, including Messrs. Rau,
Hodges, Keller, Leemputte and Abbinante, valued at $3,168, $1,872, $1,656,
$542, and $652, respectively, (ii) $14,400 credited to each of the accounts
of Messrs. Rau, Hodges, Keller, Leemputte and Abbinante under CT&T's Savings
and Profit Sharing Plan, which is a 401(k) plan offering employees an
opportunity to save a portion of their income on a deferred basis, and
providing for matching contributions by CT&T of $0.25 for every $1.00, up to
6 percent of salary, that such employees contribute to the plan (within
Internal Revenue Service limits), and up to an additional $1.25 for every
such $1.00, depending on the profitability of the Company, (iii) $37,450,
$22,511, $21,065, $16,915 and $17,268 accrued in respect of Messrs. Rau,
Hodges, Keller, Leemputte and Abbinante, respectively, under CT&T's
Executive Salary Continuation Plan, which is a retirement plan designed to
encourage key employees to remain with the Company until retirement and
which provides post-retirement monthly income of 2 percent of final monthly
income at retirement multiplied
11
<PAGE> 14
by the number of years of participation in the plan, up to a maximum of 10
percent of final monthly salary, (iv) in the case of Messrs. Rau, Hodges and
Keller, $7,533, $2,075 and $6,901, respectively, contributed to a defined
contribution retirement savings plan maintained for certain employees, (v)
in the case of Messrs. Rau, Hodges and Keller, $39,731, $1,361 and $3,270,
respectively, accrued under an excess benefits savings plan maintained for
certain employees, representing the amount by which the Company's
contribution to the defined contribution retirement savings plan referred to
above was limited by the application of certain provisions of the Internal
Revenue Code, (vi) in the case of Mr. Rau, in connection with the
commencement of his employment as President and Chief Executive Officer of
the Company, $6,809,841, paid to him for the repurchase by the Company of an
option to purchase one percent of the outstanding common stock of CT&T for
$3.5 million, (vii) in the case of Mr. Leemputte, a bonus of $187,500 paid
in connection with the commencement of his employment with the Company, and
(viii) in the case of Mr. Keller, $28,996 in reimbursement of various costs
incurred in relocation.
(7) These restricted shares were granted to each of Messrs. Hodges and Keller in
lieu of an option to acquire 0.285% of the outstanding common stock of CT&T
for $1.0 million, exercisable in the event of a sale or public offering of
CT&T, which was granted to each in connection with the commencement of his
employment as an Executive Vice President of CT&T.
(8) Mr. Keller left the Company in March 1999.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT
ASSUMED ANNUAL
RATES OF STOCK
PRICE APPRECIATION
INDIVIDUAL GRANTS FOR OPTION TERM(2)
- ------------------------------------------------------------------------------------------ -----------------------
PERCENT OF
NUMBER OF TOTAL
SECURITIES OPTIONS
UNDERLYING GRANTED TO EXERCISE OR
OPTIONS EMPLOYEES IN BASE PRICE EXPIRATION
NAME GRANTED(#) 1998 ($/SH)(1) DATE 5%($) 10%($)
---- ---------- ------------ ----------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
John Rau............................ 109,440 12.4% $47.0625 6/18/08 $3,239,118 $8,208,624
Thomas H. Hodges.................... 30,000 3.4% $47.0625 6/18/08 $ 887,916 $2,250,171
Michael J. Keller................... 30,000 3.4% $47.0625 6/18/08 $ 887,916 $2,250,171
Peter G. Leemputte.................. 30,000 3.4% $47.0625 6/18/08 $ 887,916 $2,250,171
Christopher Abbinante............... 30,000 3.4% $47.0625 6/18/08 $ 887,916 $2,250,171
</TABLE>
- ---------------
(1) These options, which were granted under the 1998 Long-Term Incentive Plan,
become exercisable on the first business day after the third anniversary of
the date of grant. The exercise price is equal to the fair market value of
the Company's Common Stock on the date of grant. The option exercise price
may be paid in shares of the Company's Common Stock owned by the executive
officer, in cash, or a combination thereof. In the event of a "change in
control" of the Company (as defined in the 1998 Long-Term Incentive Plan),
all options that are not yet exercisable immediately become 100% exercisable
and will be exercisable for the remaining duration of the award.
(2) These amounts represent values that might be realized upon exercise of the
options immediately prior to the expiration of their ten-year term, assuming
the specified annual rates of stock price appreciation compounded annually
over such term. Such rates are presented as examples pursuant to Securities
and Exchange Commission rules, and do not reflect management's assessment of
the Company's future stock price performance. These amounts do not take into
account provisions of the options relating to a change in control of the
Company, termination of the options following termination of employment or
restrictions on transferability.
12
<PAGE> 15
EMPLOYMENT CONTRACTS, TERMINATION OF EMPLOYMENT
AND CHANGE-IN-CONTROL AGREEMENTS
Mr. Rau has an employment agreement with the Company, with an initial term
from January 1, 1997 to December 31, 2001. Thereafter, the agreement will be
automatically extended from year to year unless either party gives notice to the
contrary at least nine months before the initial term or any subsequent renewal
date. The agreement may be terminated on or after January 1, 1999, by Mr. Rau or
by the Company, without cause on sixty days written notice. However, if the
Company terminates his employment without cause, Mr. Rau will receive severance
benefits based upon the remaining term of the agreement. Such severance benefits
will consist of continuation of Mr. Rau's base salary and annual bonuses for
that remaining term, at the rate of his then current annual base salary and 60%
of his maximum annual bonus, pro rata vesting of his long-term incentive awards,
and continuation of all employee benefits for that remaining term. If Mr. Rau
resigns due to a reduction in base salary or a material reduction in his duties
or authority, or if he resigns within ninety days after the Company gives notice
that the agreement will not be renewed, such resignation will be deemed a
termination by the Company without cause. Mr. Rau's employment may also be
terminated for cause (defined as willful failure to perform his duties after
written notice from the Company's Board of Directors, gross misconduct or
conviction of a felony involving personal dishonesty), or disability (inability
to perform his duties for ninety or more days within any twelve-month period).
In the event of termination for cause or disability or death or voluntary
resignation, Mr. Rau is not entitled to further compensation except as provided
under the terms of the various incentive and benefit plans in which he
participates at the time of termination.
The agreement entitles Mr. Rau to be employed as President and Chief
Executive Officer of the Company and CT&T, to receive a salary at an annual rate
of at least $400,000 for 1998 (to be adjusted thereafter as periodically
recommended by the Compensation Committee), to participate in all the Company
incentive and benefit plans for which he is eligible, to be credited under
qualified and non-qualified defined contribution plans with years of service
credit beginning in June 1972, and to receive vacation and all other benefits
normally provided to senior executives of the Company. Mr. Rau is entitled to
participate in the Company's annual incentive plans with the opportunity to earn
each year an annual bonus at a maximum amount equal to not less than 150% of his
base salary. For calendar year 1998, his bonus opportunity was equal to 150% of
his base salary, with two-thirds of such bonus opportunity dependent upon the
accomplishment of specified corporate financial goals, and one-third of such
bonus opportunity dependent upon the accomplishment of personal objectives
agreed to by Mr. Rau and the Compensation Committee. Such annual bonus was paid
under the 1998 Annual Incentive Plan in a combination of cash and shares of the
Company Common Stock, as determined by the Company's Board of Directors;
however, not more than 25% of such bonus shall be paid in shares of the
Company's Common Stock. In addition, prior to the Spin-Off, Mr. Rau entered into
an agreement modifying the terms of performance units awarded to him under
CT&T's Executive Performance Unit Plan of 1995, a long-term incentive plan which
provided for payouts of performance units for the award period in cash and
common stock of Alleghany based upon CT&T's return on equity and the application
of multipliers relating to dividends paid and an expense ratio in each year of
the award period. On June 16, 1998, pursuant to such agreement, the Company
granted to Mr. Rau an award of 108,684 restricted shares of Common stock which
will vest (including as to dividends) on the first business day after the third
anniversary of the date of grant. On June 18, 1998, the Compensation Committee,
awarded to Mr. Rau non-qualified stock options to purchase 109,440 shares of the
Company Common Stock. Such awards are governed by separate agreements and by the
provisions of the 1998 Long-Term Incentive Plan. In the event of a "change in
control" (as defined in the 1998 Long-Term Incentive Plan), (i) all unvested
shares of restricted stock shall vest, and become transferable and shall cease
to be forfeitable and (ii) all options not then exercisable shall become
exercisable. In connection with the restricted stock award, Mr. Rau made an
election under Section 83(b) of the Code, and the Company made a payment to Mr.
Rau to reimburse him for income and employment taxes imposed on the value of the
restricted stock award and the amount of the payment.
In the event of termination of his employment, any unvested shares of
Alleghany restricted stock, or Common Stock of the Company distributed in
respect thereof, will be subject to mandatory sale at $0.66 per share of
Alleghany restricted stock or $0.34 per share of Common Stock of the Company, to
Alleghany or the Company, as the case may be. Vesting of all of Mr. Rau's shares
of Alleghany restricted stock and shares of
13
<PAGE> 16
the Company Common Stock distributed in respect thereof will be accelerated if
the Company's Board of Directors approves an acquisition of the Company prior to
January 1, 2001. Neither the shares of Alleghany restricted stock nor the shares
of the Company's Common Stock distributed in respect thereof will be
transferable during Mr. Rau's employment with the Company or for two years
thereafter.
Mr. Rau is prohibited, for a period of two years from any termination of
his employment, from soliciting the employment or engagement of any employees or
agents of the Company and, at any time, from disclosing any confidential
information of the Company. In addition, he is prohibited from competing with
the title insurance business, or title related businesses, of the Company for
one year after any termination of his employment. However, at any time following
termination by the Company without cause, Mr. Rau may elect to waive further
payment of all severance benefits described above and be released from his
covenant not to compete.
Mr. Hodges has an arrangement which established his title,
responsibilities, initial salary and participation in the annual and long-term
incentive plans of CT&T. It also provides that in the event of an involuntary
termination of his employment with the Company prior to October 1999, he will be
paid a severance of 18 months of his base salary and bonus at 60% of his base
salary reduced by one-half month's base salary and bonus at 60% of base for each
month since October 1997.
Mr. Leemputte has an arrangement which established his title,
responsibilities, initial salary, signing bonus and participation in the annual
and long-term incentive plans of CT&T. It also provides that in the event of an
involuntary termination of his employment with the Company prior to December
1999, he will be paid a severance of 18 months of his base salary and target
cash bonus ("target compensation"), reduced by one-half month's target
compensation for each month served.
In connection with the end of Mr. Keller's employment with the Company in
March 1999, CT&T and Mr. Keller entered into a termination agreement. This
agreement entitles Mr. Keller to receive $112,500, payable in six equal monthly
installments, which amount represents one-half of his annual base salary at the
time of the end of his employment. Mr. Keller will also receive approximately
$626,500 in cash in February 2000 in settlement of an award granted to him under
the Performance Unit Incentive Plan of 1995, which award would have otherwise
been forfeited at the time of his termination of employment.
PENSION PLAN TABLE
CT&T maintains a defined benefit pension plan for eligible employees hired
before January 1, 1995. Mr. Abbinante participates in CT&T's Pension Plan, which
provides eligible employees with retirement income in the form of monthly life
annuity payments after their retirement. CT&T's Excess Benefits Pension Plan
restores benefits to certain employees whose benefits are limited under the
Pension Plan due to provisions in the Internal Revenue Code regarding the
maximum amount of benefits payable under qualified plans.
The following table shows the estimated annual retirement benefit payable
under CT&T's Pension Plan (reflecting the Social Security offset described
below) to a participant who, upon retirement on January 1, 1998 at age 65, had
achieved the final average annual covered remuneration and years of service
indicated. The amounts shown include the additional sums payable under CT&T's
Excess Benefits Pension Plan. The amounts shown assume payment in the form of a
straight life annuity, with payment continuing for a period of ten years from
retirement if the participant dies during such period.
<TABLE>
<CAPTION>
FINAL AVERAGE YEARS OF SERVICE
ANNUAL COVERED ------------------------------------------------------
REMUNERATION 15 20 25 30 35
-------------- ------- ------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
$125,000.............................. $28,666 $38,221 $ 47,776 $ 57,332 $ 66,887
150,000.............................. 35,041 46,721 58,401 70,062 81,762
175,000.............................. 41,416 55,221 69,026 82,832 96,637
200,000.............................. 47,791 63,721 79,651 95,582 111,512
225,000.............................. 54,196 72,221 90,276 108,332 126,387
250,000.............................. 60,541 80,721 100,901 121,082 141,262
</TABLE>
14
<PAGE> 17
A participant's accrued benefit under CT&T's Pension Plan, expressed as a
monthly annuity starting at age 65, is calculated by multiplying his or her
final average annual covered remuneration by 1.7 percent, dividing by twelve and
multiplying the result by his or her years of credited service not exceeding
thirty-five. Final average annual covered remuneration is defined as the highest
average monthly base salary (excluding bonuses and overtime pay and subject to
certain tax limitations, but including any amount by which an employee's
compensation is reduced to make before-tax contributions under CT&T's Savings
and Profit Sharing Plan or any similar plan) over a consecutive 60-month period
during the last 120 months of employment, multiplied by twelve. Pursuant to
CT&T's Pension Plan and CT&T's Excess Benefits Pension Plan, such salary is
determined using amounts which would appear in the salary column in the Summary
Compensation Table for the relevant years. The benefit is reduced by a portion
of the participant's Social Security benefits. A participant may retire as early
as age 55, but the benefit payable to him or her at that time will be
actuarially reduced to reflect the commencement of benefit payments prior to age
65, unless he or she has reached age 62 and has at least twenty years of
service.
As of December 31, 1998, the credited years of service and the average
annual covered remuneration for Mr. Abbinante were 22.8 years and $128,650,
respectively.
For employees hired after January 1, 1995, including Messrs. Rau, Hodges,
Keller and Leemputte, CT&T maintains a defined contribution retirement savings
plan and an excess benefits savings plan, contributions and accruals,
respectively, to which are based upon salary, length of service and age. The
contributions and accruals to these plans on behalf of Messrs. Rau, Hodges and
Keller in 1998 appear in the column entitled "All Other Compensation" in the
Summary Compensation Table set forth herein. No contribution or accrual was made
to either plan on behalf of Mr. Leemputte in 1998 because he joined CT&T after
January 1 of that year.
EXECUTIVE SALARY CONTINUATION PLAN
Messrs. Rau, Hodges, Keller, Leemputte and Abbinante participate in CT&T's
Executive Salary Continuation Plan, which is a retirement plan designed to
encourage key employees to remain with CT&T or the Company until retirement. The
plan provides post-retirement monthly income of two percent of final monthly
income at retirement multiplied by the number of years of participation in the
plan, up to a maximum of 10 percent of final monthly salary. Benefits are
actuarially reduced for early retirement between the ages of 55 and 65. Payments
under the plan are payable for life or ten years, whichever is greater. If a
participant dies prior to retirement, annual payments of 25 percent of final
salary are payable until what would have been the employee's 65th birthday or
for ten years, whichever is greater. Based upon 1998 year-end salaries, Messrs.
Rau, Hodges, Keller, Leemputte and Abbinante would be entitled to an annual
benefit at their normal retirement age of $40,000, $25,000, $22,500, $22,500 and
$21,000, respectively.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Prior to the effective date of the Spin-Off, AAM and its subsidiary The
Chicago Trust Company ("TCTC") were subsidiaries of CT&T, and these companies
furnished various services to each other while they were affiliated. Upon the
Spin-Off, AAM and TCTC remained with Alleghany and agreements were entered into
to provide for the continuation of such services between AAM and TCTC, on the
one hand, and the Company and its subsidiaries, on the other hand, as described
below. Mr. Toft, Chairman of the Board of Directors of the Company, is also
Chairman and Chief Executive Officer of AAM.
The Company and certain of its subsidiaries entered into agreements with
TCTC providing for the management by TCTC of substantially all of the long-term
investable assets and certain of the short-term investable assets of the Company
and its subsidiaries. The term of the agreements is five years, with automatic
one-year renewals unless either party terminates by giving notice of such
termination at least three months prior to the end of any such term. The
agreements also may be terminated by the Company or its subsidiaries party
thereto in the event that investment performance is unsatisfactory. The
investment management fees paid by the Company and certain of its subsidiaries
to TCTC in 1998 under such agreements were approximately $600,000. CT&T and AAM
entered into an agreement pursuant to which CT&T will continue
15
<PAGE> 18
to furnish various administrative services to AAM. The initial term of the
agreement ended on December 31, 1998. Certain administrative services continue
to be furnished pursuant to recently negotiated terms. Fees paid by AAM to CT&T
in 1998 under this agreement were approximately $585,000. TCTC has a sublease
with CT&T for space in the Company's headquarters in Chicago until 2012 at a
rent and on such other terms as are currently applicable to CT&T for such space.
Total payments made in 1998 under this sublease were $875,000. Finally, in
connection with the Spin-Off, CT&T forgave $500,000 of indebtedness of AAM to
CT&T.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Prior to the establishment of the Compensation Committee of the Company in
connection with the Spin-Off, the President and Chief Executive Officer of CT&T
and the Personnel Committee of the Board of Directors of CT&T (two of the
members of which were executive officers of CT&T or a subsidiary thereof)
determined the compensation arrangements of executive officers of CT&T,
including executive officers of the Company who then held similar positions at
CT&T. The Compensation Committee of CT&T's parent Alleghany, none of the members
of which was an officer or employee of Alleghany or any of its subsidiaries in
1998, reviewed such compensation arrangements at CT&T.
Messrs. Burns and Hart, executive officers of Alleghany, were members of
the Compensation Committee of the Board of Directors of the Company from its
establishment on June 15, 1998 until the Spin-Off on June 17, 1998. On such
date, Mr. Burns resigned as a member, Mr. Hart was reappointed as Chairman, and
Messrs. Dailey, Heasley and Kirby and Ms. MacKimm were appointed as members of
this committee. None of such members was an officer or employee of the Company
or any of its subsidiaries in 1998.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
Preparing for the Spin-Off
One of the primary reasons for the Spin-Off was the need, in the
competitive and rapidly changing environment in which the Company operates, to
foster development of an entrepreneurial culture at the Company. As an
independent public company, the Company would be able to provide equity-based
compensation and incentives to enable it to retain and recruit senior management
and motivate employees throughout the organization. Therefore, in anticipation
of the Spin-Off, the overall compensation arrangements of CT&T were reviewed
and, with the assistance of a recognized national compensation consulting firm,
substantially modified at the direction of the Board of Directors of Alleghany
to make them more performance-driven and equity-based. These modifications
included the following:
- CT&T's Annual Incentive Plan, a short-term plan that paid annual bonuses
in cash, was carried over to the Company in 1998, but a portion of such
bonuses for 1998 was paid, and for future years will be payable, in
Common Stock.
- The values of outstanding performance units previously awarded to certain
executive officers (including Mr. Rau and the other named executive
officers) under the CT&T Performance Unit Incentive Plan of 1995, CT&T's
long-term incentive plan which made payouts primarily in cash, were fixed
as of year-end 1998 or, in the case of one award granted to Mr. Rau,
terminated in consideration of awards of restricted shares of Common
Stock pursuant to the 1998 Long-Term Incentive Plan.
- In place of the CT&T Performance Unit Incentive Plan of 1995, the 1998
Long-Term Incentive Plan was established, pursuant to which substantial
awards of restricted shares of Common Stock and options to purchase
Common Stock were made to executive officers, as described below under
"Long-Term Incentive Compensation."
- The CT&T Savings and Profit Sharing Plan was amended to provide that the
guaranteed matching contribution payable by Chicago Title is payable in
Common Stock.
- Chicago Title established the Employee Stock Purchase Plan, which
provides for the purchase of Common Stock by employees at a discount to
market prices.
- The compensation arrangements of executive officers who were hired in the
early months of 1998 were established by the Board of Directors of CT&T
and reviewed by the Alleghany Board of Directors with
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<PAGE> 19
an eye toward the policies underlying the Spin-Off. Messrs. Keller and
Hodges were hired in 1997; outstanding options to purchase CT&T common
stock, which were granted to each in connection with the commencement of
his employment with CT&T, were terminated in consideration of awards of
restricted shares of Common Stock under the 1998 Long-Term Incentive
Plan.
- The employment agreement with Mr. Rau, who was the President and Chief
Executive Officer of CT&T and who assumed those positions at the Company,
was amended to provide for the increase of his annual bonus opportunity
to 150 percent of his salary and to provide for substantial awards of
restricted stock and, at the discretion of the Compensation Committee of
the Board of Directors of the Company, options to purchase Common Stock
of the Company. An outstanding option to purchase CT&T common stock
granted to Mr. Rau was repurchased by the Company.
After the Spin-Off
The Compensation Committee of the Board of Directors (the "Compensation
Committee") was appointed in June 1998 in connection with the Spin-Off, and is
currently composed of the five non-employee directors whose names appear at the
end of this report. An important objective of the Compensation Committee is to
continue the equity-based incentive policies underlying the Spin-Off to ensure
that the compensation and general human resource programs and practices of the
Company are competitive and are effectively designed to attract, retain, develop
and motivate highly qualified personnel. Such policies are also intended to link
the interests of the Company's executive officers with the interests of the
Company's stockholders. The remainder of this report describes in more detail
the compensation policies underlying the Spin-Off and in effect thereafter as
they relate to the executive officers of the Company.
Annual Compensation
There were no salary adjustments for executive officers from 1997 to 1998.
Salary adjustments during 1998 were made only for those executive officers whose
responsibilities changed during the year. Salaries are expected to be reviewed
annually in the future.
Annual bonuses are generally paid to executive officers under an annual
incentive plan. The 1998 Annual Incentive Plan was designed to reward officers
for the achievement of specified corporate financial performance and, in the
case of certain officers, the attainment of special objectives crafted on an
individual or group basis. Consistent with the Company's policy of emphasizing
equity-based compensation, 25% of the annual bonuses paid in respect of 1998 to
certain participants (including Mr. Rau and the other named executive officers)
was paid in Common Stock and the remainder was paid in cash unless deferred at
the election of the participant. In anticipation of the Spin-Off, the 1998
annual bonus opportunity of the President and Chief Executive Officer of the
Company was increased from 90 percent to 150 percent of salary in his amended
employment agreement with the Company, which was approved by the Board of
Directors upon the recommendation of the Compensation Committee. For other
executive officers employed by CT&T for any portion of 1997, bonus opportunities
for 1998 were adjusted from those established in the prior year by CT&T in
proportion to changes in salaries, if any, in 1998. Bonus opportunities for
executive officers of the Company as a percentage of salaries are believed to
generally conform to prevailing practices in a broad cross-section of American
industry.
For 1998, one-half to two-thirds of the annual bonus opportunities depended
on corporate financial objectives; two-thirds of Mr. Rau's annual bonus
opportunity depended on such corporate financial objectives. The corporate
financial objective under the 1998 Annual Incentive Plan was the achievement of
a level of cyclical pre-tax earnings in 1998 as compared against plan earnings,
with an incentive factor or multiplier based on cyclical net revenue margin in
1998, which was calculated as adjusted pre-tax contribution from title
operations and real estate services divided by net revenue. The target for
cyclical pre-tax earnings was 100 percent of plan, which would have produced a
payout of 60 percent of the bonus opportunity, subject to the application of the
incentive factor. The maximum amount(100 percent of the bonus opportunity) could
have been earned at 110 percent of plan cyclical pre-tax earnings, and the
minimum amount (25 percent of the bonus opportunity) could have been earned at
90 percent of plan cyclical pre-tax earnings, in each case subject
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<PAGE> 20
to the application of the incentive factor. The target for the application of
the incentive factor for cyclical net revenue margin in 1998 was 5 percent,
which would have produced an incentive factor of 1.0. The maximum incentive
factor (1.5) would have been applied if cyclical net revenue margin reached 8
percent or more, and the minimum incentive factor (0.5) would have been applied
if cyclical net revenue margin reached 3 percent. Bonus opportunities between
the minimum and maximum amounts of cyclical pre-tax earnings and cyclical net
revenue margin would have been interpolated on a straight line basis. For 1998,
the Company's cyclical pre-tax earnings exceeded 110 percent of plan and
cyclical net revenue margin exceeded 8 percent. Therefore, the maximum amounts
were earned on that portion of the annual bonus opportunities that was dependent
on corporate financial objectives.
The remainder of the annual bonus opportunities of the executive officers
of the Company for 1998 was based on achievement of special objectives. Mr. Rau
earned 85 percent of the one-third of his annual bonus opportunity for 1998 that
was dependent upon special objectives as a result of the substantial completion
of his objectives, including streamlining various operations of the Company,
planning for the development of institutional business and for changes in the
business cycle, and successfully completing the Spin-Off.
Long-Term Incentive Compensation
In addition to annual compensation, the Company provides long-term
incentive compensation to its executive officers pursuant to awards under the
1998 Long-Term Incentive Plan. The Compensation Committee selects from among
eligible individuals those persons who shall receive awards, and determines the
types and terms and conditions of all awards, which may include the completion
of specified periods of service in the employ of the Company, the achievement of
specified business objectives and/or personal performance goals. Subject to
certain limitations, the Compensation Committee may provide for adjustments in
the number and kind of shares of Common Stock subject to outstanding awards and
option prices of outstanding stock options in the event of corporate
transactions involving the Company, such as stock dividends, stock splits,
recapitalizations, mergers, liquidations and the like. In the event of a "change
in control" of the Company (as defined in the 1998 Long-Term Incentive Plan),
all outstanding awards immediately become exercisable or vested, as the case may
be. The 1998 Long-Term Incentive Plan authorized the award of a maximum of
2,230,000 shares of Common Stock, of which (i) a maximum of 1,580,000 shares may
be issued in connection with awards in the form of options and stock
appreciation rights, and (ii) a maximum of 650,000 shares may be issued in
connection with stock awards. These amounts were intended to be sufficient for
awards to be made during the three-to-five years after the Spin-Off.
Consistent with the equity-based compensation practices adopted in
anticipation of the Spin-Off, the long-term incentive awards to the Company's
executive officers in 1998 were made in the form of restricted shares of Common
Stock that vest on the third anniversary (in the case of Mr. Rau) and one-half
on the second anniversary and one-half on the third anniversary (in the case of
the other executive officers) of the grant date (and, except for one executive
officer who was hired after the Spin-Off, reimbursement of taxes associated with
such awards), and options to purchase Common Stock that become exercisable on
the third anniversary of the grant date. These awards of long-term incentive
compensation to executive officers of the Company in 1998, which totaled 303,684
shares (and $11,111,395 in tax reimbursements), were believed to be
substantially above the median of prevailing practices in a broad cross-section
of American industry and were intended to provide an initial, significant equity
ownership in the executive officers as an incentive to maximize long-term
stockholder value and in recognition of the early payout or termination of
existing long-term incentives. The substantial vesting periods associated with
these awards also encourage the executive officers to remain with the Company
during and after its transition to an independent, publicly traded company.
These awards reflect the Company's policy of emphasizing long-term corporate
performance over short-term results, and align the interests of the executive
officers with those of the stockholders of the Company. In light of the size of
these awards, additional awards to the executive officers are not expected in
1999 or 2000 except in the event of changes in responsibilities or as a result
of other special circumstances.
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<PAGE> 21
Section 162(m) of the Internal Revenue Code of 1986
The Revenue Reconciliation Act of 1993 added Section 162(m) to the Internal
Revenue Code of 1986, as amended. Section 162(m), which became effective for tax
years beginning January 1, 1994, disallows a deduction to the Company for any
compensation paid to a "covered employee" in excess of $1 million per year,
subject to certain exceptions. In general, "covered employees" include the chief
executive officer and the four other most highly compensated executive officers
of the Company who are in the employ of the Company and are officers at the end
of the tax year. Among other exceptions, the deduction limit does not apply to
compensation that meets the specified requirements for "performance-based
compensation." Those requirements include the establishment of objective
performance goals by a committee of the Board of Directors composed solely of
two or more outside directors, stockholder approval of the material terms of the
performance goals under which the compensation is to be paid prior to payment of
such compensation, and certification by the committee that the performance goals
have been achieved. While the Compensation Committee believes that the Company
should seek to obtain maximum deductibility of compensation paid to executive
officers, the Compensation Committee also believes that the interests of the
Company and its stockholders are best served by assuring that appropriate
compensation arrangements are established to retain and incent executive
officers.
Currently, awards of long-term compensation under the 1998 Long-Term
Incentive Plan are intended to qualify as "performance-based compensation" for
purposes of Section 162(m). The Compensation Committee does not currently intend
to structure the annual bonuses to comply with Section 162(m). Such bonuses do
not meet the requirement of Section 162(m) that they be payable "solely on
account of the attainment of one or more preestablished, objective performance
goals," since in most cases such bonuses also have subjective performance goals.
In addition, the performance goals under the Company's 1998 and 1999 Annual
Incentive Plans were not submitted for the approval of the stockholders of the
Company, as required by Section 162(m). The Compensation Committee believes the
annual bonuses, as currently structured, best serve the interests of the Company
and its stockholders by allowing the Company to recognize an executive officer's
contribution.
With respect to other compensation that may be paid to executive officers
of the Company in the future, the Compensation Committee will consider the
requirements of Section 162(m) and will make determinations based upon the best
interests of the Company and its stockholders.
Other Benefits
The Company also provides to its executive officers other benefits, such as
retirement income, death benefits and savings credits, including those described
elsewhere in this proxy statement. The amounts of these benefits generally are
tied directly to salaries, as variously defined in the relevant plans. Such
additional benefits are believed to be typical of the benefits provided by other
public companies to their executives.
Robert M. Hart
Peter H. Dailey
Philip G. Heasley
Allan P. Kirby, Jr.
Margaret P. MacKimm
Compensation Committee
of the Board of Directors
19
<PAGE> 22
PERFORMANCE GRAPH
The following graph compares at the end of each of the last seven months of
1998 the cumulative total stockholder return on the Common Stock, the cumulative
total return on the Standard & Poor's 500 Stock Index (the "S&P 500") and the
cumulative total return on the common stock of a group of "peer" issuers.
The Company is engaged through its subsidiaries in the business of title
insurance and other related services for residential and commercial real estate
transactions. "Peer" issuers for the Company are publicly held title insurance
companies which have been selected for their similarities to the Company in
terms of line of business, holding company structure and/or concentration of
ownership, although any "peer" issuer, in the Company's view, is significantly
different from other "peer" issuers and from the Company due to the individual
character of the business of each.
The group of "peer" issuers consists of Fidelity National Financial, Inc.,
The First American Financial Corporation, LandAmerica Financial Group, Inc., Old
Republic International Corporation, and Stewart Information Services
Corporation.
[PERFORMANCE GRAPH]
<TABLE>
<CAPTION>
CHICAGO TITLE S&P 500 INDEX PEER GROUP
------------- ------------- ----------
<S> <C> <C> <C>
June 18,1998 100 100 100
Jun 1998 98.27 104.06 112.75
Jul 1998 99.47 102.95 103.44
Aug 1998 75.59 88.07 90.80
Sep 1998 94.79 93.71 99.19
Oct 1998 89.82 101.33 88.92
Nov 1998 101.16 107.47 96.47
Dec 1998 101.57 113.67 100.54
</TABLE>
The foregoing performance graph assumes the investment of $100 on June 18,
1998 (the first day of regular way trading of the Common Stock of the Company on
the New York Stock Exchange), and the reinvestment of any cash dividend on the
ex-dividend date in respect of such dividend. Total returns on the common stock
of "peer" issuers are weighted by stock market capitalization at June 30, 1998.
2. RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
The Board of Directors has selected KPMG LLP, independent certified public
accountants, as independent auditors for the Company for the year 1999. A
resolution will be submitted to stockholders at the meeting for ratification of
such selection. Although ratification by stockholders is not a prerequisite to
the ability of the Board of Directors to select KPMG LLP as the Company's
independent auditors, the Company believes such ratification to be desirable. If
the stockholders do not ratify the selection of KPMG LLP, the selection of
independent auditors will be reconsidered by the Board of Directors; however,
the Board of Directors may select KPMG LLP notwithstanding the failure of the
stockholders to ratify its selection.
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<PAGE> 23
The Board of Directors recommends a vote "FOR" this resolution. Proxies
solicited by the Board of Directors will be so voted unless stockholders specify
a contrary vote. The resolution may be adopted by a majority of the votes cast
with respect thereto.
KPMG LLP have been the Company's independent auditors since its
incorporation in March 1998 and CT&T's independent auditors since 1985.
It is expected that a representative of KPMG LLP will be present at the
meeting, will have an opportunity to make a statement if he or she desires to do
so, and will be available to respond to appropriate questions.
3. ALL OTHER MATTERS THAT MAY COME BEFORE THE MEETING
As of the date of this statement, the Board of Directors knows of no
business that will be presented for consideration at the meeting other than that
referred to above. As to other business, if any, that may come before the
meeting, proxies in the enclosed form will be voted in accordance with the
judgment of the person or persons voting the proxies.
STOCKHOLDER NOMINATIONS AND PROPOSALS
The Nominating Committee of the Board of Directors will receive at any time
and will consider from time to time suggestions from stockholders as to persons
to be nominated by the Board of Directors for election thereto by the
stockholders or to be chosen by the Board of Directors to fill newly created
directorships or vacancies on the Board of Directors.
The Company's by-laws require that there be furnished to the Secretary of
the Company at the Company's principal executive offices written notice with
respect to the nomination of a person for election as a director (other than a
person nominated by or at the direction of the Board of Directors), as well as
the submission of a proposal (other than a proposal submitted by or at the
direction of the Board of Directors), at an annual meeting of stockholders. In
order for any such nomination or submission to be proper, the notice must
contain certain information concerning the nominating or proposing stockholder
and the nominee or the proposal, as the case may be, and must be delivered to
the Secretary of the Company at the Company's principal executive offices not
less than 90 days prior to the first anniversary of the preceding year's annual
meeting of stockholders; provided, however, that if the date of the annual
meeting is advanced more than 30 days prior to or delayed more than 60 days
after such anniversary date, notice by the stockholder to be timely must be
delivered not later than the close of business on the later of the 90th day
prior to such annual meeting or the tenth day following the day on which the
public announcement of the date of such meeting is first made.
In the event that the number of directors to be elected to the Board of
Directors is increased and there is no public announcement naming all of the
nominees for director or specifying the size of the increased Board of Directors
made by the Company at least 100 days prior to the first anniversary of the
preceding year's annual meeting, a stockholder's notice required by the
Company's by-laws shall also be considered timely, but only with respect to
nominees for any new positions created by such increase, if it is delivered not
later than the close of business on the tenth day following the day on which
such public announcement is first made by the Company.
Nominations by stockholders of persons for election to the Board of
Directors may be made at a special meeting of stockholders if the stockholder's
notice required by the Company's by-laws is delivered not later than the close
of business on the later of the 90 days prior to such special meeting or the
tenth day following the day on which public announcement is first made of the
date of the special meeting and of the nominees proposed by the Board of
Directors to be elected at such meeting.
A copy of the applicable by-law provisions may be obtained, without charge,
upon written request to the Secretary of the Company at the Company's principal
executive offices.
21
<PAGE> 24
In accordance with the rules of the Securities and Exchange Commission, any
proposal of a stockholder intended to be presented at the Company's 2000 Annual
Meeting of Stockholders must be received by the Secretary of the Company by
November 30, 1999 in order for the proposal to be considered for inclusion in
the Company's notice of meeting, proxy statement and proxy relating to the 2000
Annual Meeting, scheduled for Tuesday, April 25, 2000.
ADDITIONAL INFORMATION
At any time prior to their being voted, the enclosed proxies are revocable
by written notice to the Secretary of the Company or by appearance at the
meeting and voting in person. A quorum comprising the holders of a majority of
the outstanding shares of Common Stock on the record date must be present in
person or represented by proxy for the transaction of business at the 1999
Annual Meeting.
Solicitation of proxies will be made by mail, telephone and, to the extent
necessary, by telegrams and personal interviews. Expenses in connection with the
solicitation of proxies will be borne by the Company. Brokers, custodians and
fiduciaries will be requested to transmit proxy material to the beneficial
owners of Common Stock held of record by such persons, at the expense of the
Company. The Company has retained Kissel-Blake to aid in the solicitation of
proxies, and for its services the Company expects to pay fees of approximately
$8,000 plus expenses.
By order of the Board of Directors
PAUL T. SANDS, JR.
Executive Vice President, General
Counsel and Secretary
March 29, 1999
22
<PAGE> 25
PROXY PROXY
CHICAGO TITLE CORPORATION
Proxy For Annual Meeting on April 27, 1999
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Richard P. Toft, John Rau and Paul T. Sands,
Jr. proxies, each with the power to appoint his substitute and with authority
in each to act in the absence of the other, to represent and to vote all shares
of stock of Chicago Title Corporation which the undersigned is entitled to vote
at the Annual Meeting of Stockholders of Chicago Title Corporation to be held
at Hotel Monaco, 225 North Wabash, Paris Room -- 3rd Floor, Chicago, Illinois,
on Tuesday, April 27, 1999 at 9:00 a.m., local time, and any adjournments
thereof, as indicated on the proposals described in the Proxy Statement, and
all other matters properly coming before the meeting.
IMPORTANT--This Proxy Must Be Signed And Dated On The Reverse Side.
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<PAGE> 26
Chicago Title Corporation
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY.
A vote FOR Items 1 and 2 is recommended by the Board of Directors
For Withhold For All
All All Except
1. Election of Directors [ ] [ ] [ ]
Norman R Bobins John F. Farrell, Jr.
Robert M. Hart Philip G. Heasley
Alan N. Prince
Instruction: To withhold authority to vote
for an individual nominee, write that
nominee's name in the following space:
__________________________________________
For Against Abstain
2. Ratification of KPMG LLP as independent [ ] [ ] [ ]
auditors for the year 1999.
Dated: _________________, 1999
______________________________
Signature
______________________________
Signature (if held jointly)
THIS PROXY WILL BE VOTED IN ACCORDANCE WITH SPECIFICATIONS MADE. IF NO
CHOICES ARE INDICATED. THIS PROXY WILL BE VOTED FOR ITEMS 1 AND 2.
Please sign exactly as your name or names appear hereon. For joint accounts,
both owners should sign. When signing as executor, administrator, attorney,
trustee or guardian, etc., please give your full title.
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FOLD AND DETACH HERE
