<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or
Section 240.142-12
ZENITH NATIONAL INSURANCE CORP.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
ZENITH NATIONAL INSURANCE CORP.
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / 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>
[LOGO]
Zenith National Insurance Corp.
21255 Califa Street
Woodland Hills, California 91367
Telephone (818) 713-1000
NOTICE OF ANNUAL MEETING
- --------------------------------------------------------------------------------
The Annual Meeting of Stockholders of Zenith National Insurance Corp.
("Zenith") will be held at the offices of Zenith, 21255 Califa Street, Woodland
Hills, California, on Wednesday, May 24, 1995, at 9:00 a.m., for the following
purposes:
1. To elect a Board of nine (9) Directors.
2. To transact such other business as may properly come before the meeting
and any adjournments thereof.
Stockholders of record at the close of business on March 27, 1995, the
record date fixed by the Board of Directors for the Annual Meeting, are entitled
to notice of, and to vote at, such meeting.
By Order of the Board of Directors
John J. Tickner
SECRETARY
Woodland Hills, California
Dated: March 28, 1995
STOCKHOLDERS, WHETHER OR NOT THEY EXPECT TO ATTEND THE MEETING IN PERSON,
ARE REQUESTED TO COMPLETE, DATE, SIGN AND RETURN THE ENCLOSED FORM OF PROXY IN
THE ACCOMPANYING POSTPAID AND ADDRESSED ENVELOPE. THE PROXY IS REVOCABLE AT ANY
TIME PRIOR TO THE EXERCISE THEREOF BY WRITTEN NOTICE TO ZENITH, AND STOCKHOLDERS
WHO ARE PRESENT AT THE MEETING MAY WITHDRAW THEIR PROXIES AND VOTE IN PERSON IF
THEY SO DESIRE.
<PAGE>
ZENITH NATIONAL INSURANCE CORP.
21255 Califa Street,
Woodland Hills, California 91367
------------------------
PROXY STATEMENT
------------------------
This Proxy Statement is furnished in connection with the solicitation by the
Board of Directors of Zenith National Insurance Corp. ("Zenith") of proxies to
be voted at the Annual Meeting of Stockholders of Zenith to be held on
Wednesday, May 24, 1995, at 9:00 a.m., and at any adjournments thereof (the
"Annual Meeting"). Any proxy given pursuant to this solicitation may be revoked
at any time prior to its exercise by written notice to Zenith, and the persons
executing the same, if in attendance at the Annual Meeting, may vote in person
instead of by proxy. Unless authority therefor is withheld, all proxies will be
voted as provided therein. In addition to solicitation of proxies by mail,
officers and regular employees of Zenith and its subsidiaries, who will receive
no additional compensation therefor, may solicit proxies by telephone, telegram
or personal interview. The cost of this solicitation will be borne by Zenith. In
addition, Zenith will reimburse brokerage houses and other custodians, nominees
and fiduciaries for expenses incurred in forwarding solicitation materials to
stockholders.
The approximate date on which this Proxy Statement and accompanying form of
proxy is first being sent to stockholders is March 30, 1995.
Only stockholders of record at the close of business on March 27, 1995, the
record date for the Annual Meeting (the "Record Date"), are entitled to notice
of and to vote at such meeting. On such date, Zenith had outstanding 18,850,969
shares of Common Stock, $1.00 par value per share (the "Common Stock"). Each
share of Common Stock entitles the record holder at such time to one vote on all
matters. With respect to the election of Directors only, however, every
stockholder may cumulate his votes with respect to candidates whose names have
been placed in nomination prior to the vote if, but only if, any stockholder has
given notice at the Annual Meeting prior to voting of his intention to cumulate
his votes. In the event there is cumulative voting for Directors, each
stockholder will be entitled to give one candidate the number of votes equal to
the number of Directors to be elected multiplied by the number of votes to which
the stockholder's shares are entitled, or to distribute his votes on the same
principle among as many candidates as such stockholder thinks fit. In the event
the election of Directors is to proceed with cumulative voting, the holder of
any proxy given pursuant to this solicitation will have the authority to
cumulate the votes to which shares covered by the proxy are entitled and to
distribute the votes among the candidates for election as the holder of the
proxy sees fit. The presence, in person or by proxy, of stockholders holding a
majority of the issued and outstanding shares of common stock entitled to vote
shall constitute a quorom. Election of Directors shall be decided by plurality
vote. Other matters submitted for stockholder approval require the affirmative
vote of the majority of shares present in person or represented by proxy at the
meeting and entitled to vote on the subject matter. Abstentions and broker
non-votes (except on matters for which brokers lack discretionary authority to
vote under New York Stock Exchange rules) will be counted and will have the same
effect as "no" votes.
1
<PAGE>
The Board of Directors knows of no matters to come before the Annual Meeting
other than the matters referred to in this Proxy Statement. If, however, any
matters properly come before the meeting, it is the intention of each of the
persons named in the accompanying proxy to vote such proxies in accordance with
his best judgment thereon.
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table contains certain information at the Record Date as to:
(1) all persons who, to the knowledge of Zenith, were the beneficial owners of
more than 5% of the outstanding shares of Common Stock, (2) each of the
Executive Officers named in the Summary Compensation Table, (3) each of the
Directors of Zenith and (4) all Executive Officers named in the Summary
Compensation Table, all other Executive Officers, and all Directors as a group.
The persons named hold sole voting and investment power with respect to the
shares shown opposite their respective names, unless otherwise indicated. The
information with respect to each person specified is as supplied or confirmed by
such person.
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF PERCENT
NAME AND ADDRESS OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP (1) OF CLASS
- -------------------------------------------------- ------------------------ --------
<S> <C> <C>
Reliance Insurance Company(2)(3).................. 6,574,445 34.9%
4 Penn Center Plaza
Philadelphia, PA 19103
Gilder, Gagnon, Howe & Co.(4)..................... 2,070,288 11.0%
1775 Broadway
New York, New York 10019
Harvey L. Silbert(3)(5)(6)........................ 1,083,640 5.7%
10100 Santa Monica Blvd.
Suite 2200
Los Angeles, CA 90067
Stanley R. Zax(3)(5)(7)........................... 681,698 3.5%
21255 Califa Street
Woodland Hills, CA 91367
Jack M. Ostrow(3)(5)(8)........................... 110,000 *
9601 Wilshire Blvd.
Beverly Hills, CA 90210
Gerald Tsai, Jr.(5)(9)............................ 90,581 *
200 Park Ave.
New York, New York 10166
Fredricka Taubitz(10)............................. 76,741 *
21255 Califa Street
Woodland Hills, CA 91367
James P. Ross(11)................................. 27,403 *
21255 Califa Street
Woodland Hills, CA 91367
John J. Tickner(12)............................... 26,339 *
21255 Califa Street
Woodland Hills, CA 91367
Dwight L. Robertson, M.D.(13)..................... 14,083 *
21255 Califa Street
Woodland Hills, CA 91367
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF PERCENT
NAME AND ADDRESS OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP (1) OF CLASS
- -------------------------------------------------- ------------------------ --------
<S> <C> <C>
Keith E. Trotman(14).............................. 9,726 *
21255 Califa Street
Woodland Hills, CA 91367
Max M. Kampelman(5)............................... 4,992 *
1001 Pennsylvania Avenue N.W.
Washington D.C. 20004
William Steele Sessions(5)(15).................... 1,461 *
3920 Argyle Terrace N.W.
Washington, D.C. 20011
George E. Bello(5)(16)............................ 0 0
Park Avenue Plaza
55 East 52nd Street
New York, NY 10055
Robert M. Steinberg(5)(16)........................ 0 0
Park Avenue Plaza
55 East 52nd Street
New York, NY 10055
Saul P. Steinberg(5)(16)(17)...................... 6,574,445 34.9%
Park Avenue Plaza
55 East 52nd Street
New York, NY 10055
All Executive Officers named in the Summary
Compensation Table, all other Executive Officers,
and all Directors as a group (15
persons)(17)(18).................................. 8,707,685 44.8%
<FN>
- ------------------------
* Less than 1%
(1) Subject to applicable community property and similar statutes.
(2) Reliance Financial Services Corporation, a wholly-owned indirect subsidiary
of Reliance Group Holdings, Inc. ("RGH"), owns 100% of the common stock
(97% of the voting power) of Reliance Insurance Company ("Reliance"). Saul
P. Steinberg, members of his family and affiliated trusts own 47.1% of the
common stock of RGH. Pursuant to an Amended Exemption issued to Reliance by
the Insurance Commissioner of the State of California, Reliance has agreed
that it will not vote shares in excess of 28.7% of the outstanding Common
Stock unless Reliance obtains the Insurance Commissioner's consent or
qualifies for an exemption from such consent.
(3) Reliance and each of Jack M. Ostrow, Harvey L. Silbert (individually and as
trustee of a family trust) and Stanley R. Zax were granted certain rights
to require Zenith to register for sale, under the Securities Act of 1933,
shares of Common Stock beneficially owned by each of them. Zenith granted
these rights in connection with the sale in February 1981 of an aggregate
of 1,387,375 shares of Zenith Common Stock (20.5% of the then outstanding
shares) to Reliance by certain selling stockholders, including Messrs.
Ostrow, Silbert and Zax.
(4) In February 1995, Zenith received a copy of Amendment No. 1 to a
notification form on Schedule 13G filed by Gilder, Gagnon, Howe & Co. with
the Securities and Exchange Commission. The information in the table is
based upon such filing. The filing indicates that Gilder, Gagnon, Howe &
Co. has shared dispositive power and shared voting power with respect to
279,700 shares and sole dispositive power, but no voting power, with
respect to 1,790,588 shares. Gilder, Gagnon, Howe & Co. disclaims
beneficial ownership with respect to all of the shares shown in the table.
(5) Director of Zenith.
</TABLE>
3
<PAGE>
<TABLE>
<S> <C>
(6) Number of shares shown includes 183,551 shares held by Mr. Silbert as
trustee of certain family trusts, as to which shares Mr. Silbert disclaims
beneficial ownership. Number of shares shown also includes 900,089 shares
held by The Harvey L. and Lillian Silbert Family Trust, a revocable trust,
of which Mr. Silbert is a trustee.
(7) Chief Executive Officer of Zenith. Number of shares shown includes 1,030
shares owned by Mr. Zax as custodian for his adult children, as to which
shares Mr. Zax disclaims beneficial ownership; 440,000 shares subject to
options that are exercisable within 60 days; and 34,100 shares held by Mr.
Zax as co-trustee of trusts, as to which Mr. Zax shares voting and
investment power.
(8) Number of shares shown includes 105,000 held by The Ostrow Family Trust, a
revocable trust, and 5,000 shares held by California Certificate Corp., the
sole shareholder of which is The Ostrow Family Trust. Mr. Ostrow is a
trustee of The Ostrow Family Trust and is president and a director of
California Certificate Corp.
(9) Number of shares shown includes 40,581 shares owned by the Gerald Tsai
Foundation, of which Mr. Tsai is the president and a trustee. Mr. Tsai
disclaims beneficial ownership of shares held by the foundation.
(10) Executive Officer of Zenith. Number of shares shown includes 4,391 shares
allocated to such Executive Officer's account in the Zenith Investment
Partnership 401(k) Plan as of December 31, 1994, the latest date for which
such information is available, and 71,250 shares subject to options that
are exercisable within sixty days.
(11) Executive Officer of Zenith. Number of shares shown includes 27,250 shares
subject to options that are exercisable within sixty days.
(12) Executive Officer of Zenith. Number of shares shown includes 1,027 shares
allocated to such Executive Officer's account in the Zenith Investment
Partnership 401(k) Plan as of December 31, 1994, the latest date for which
such information is available, and 22,500 shares subject to options that
are exercisable within sixty days.
(13) Executive Officer of Zenith for part of last fiscal year, but not as of the
end of such year. Number of shares shown includes 216 shares allocated to
such Executive Officer's account in the Zenith Investment Partnership
401(k) Plan as of December 31, 1994, the latest date for which such
information is available and 12,500 shares subject to options that are
exercisable within sixty days.
(14) Executive Officer of Zenith. Number of shares shown consists of 3,476
shares allocated to such Executive Officer's account in the Zenith
Investment Partnership 401(k) Plan as of December 31, 1994, the latest date
for which such information is available, and 6,250 shares subject to
options that are exercisable within sixty days.
(15) Shares shown are held in Mr. Sessions' Simplified Employee Pension --
Individual Retirement Account.
(16) Director of Reliance Insurance Company.
(17) Shares shown are those owned by Reliance Insurance Company. See notes (2)
and (3) above.
(18) Number of shares shown includes 586,250 shares subject to options that are
exercisable within 60 days and excludes shares allocated to the Zenith
Investment Partnership 401(k) Plan accounts of the identified Executive
Officers subsequent to December 31, 1994, which information is not
available as of the date of this Proxy Statement.
</TABLE>
4
<PAGE>
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934 and the regulations of
the Securities and Exchange Commission ("Commission") thereunder require
Zenith's Executive Officers and Directors, and persons who own more than ten
percent of a registered class of Zenith's equity securities, to file reports of
ownership and changes in ownership with the Commission and the New York Stock
Exchange and to furnish Zenith with copies of all such forms they file.
Based solely on its review of the copies of such forms received by it and
written representations from certain reporting persons, Zenith believes that,
during the year ended December 31, 1994, all filing requirements applicable to
its Executive Officers, Directors, and 10% stockholders were complied with,
except that due to inadvertent error, two individuals, Linda R. Smith and Dwight
L. Robertson, M.D., who were identified as Executive Officers by the Board of
Directors at a meeting held on May 25, 1994, filed their Initial Statements of
Beneficial Ownership on Form 3 late. Neither Ms. Smith nor Dr. Robertson was an
Executive Officer as of the end of the fiscal year.
ELECTION OF DIRECTORS
It is the intention of the persons named in the enclosed proxy, unless
otherwise specifically instructed, to vote the proxies received by them for the
election of the nominees listed in the table below as Directors of Zenith. In
the event that there should be cumulative voting in the election of Directors,
as set forth in this Proxy Statement under "Voting" above, it is the intention
of such persons to distribute the votes represented by each proxy among such
nominees in such proportion as they see fit, unless otherwise specifically
instructed.
All nominees have consented to being named herein and have indicated their
intention to serve if elected. In the unanticipated event that any of the
nominees becomes unable to serve as a Director, the proxies will be voted for a
substitute nominee in accordance with the best judgment of the person or persons
voting them.
A Director of Zenith serves until the next Annual Meeting of Stockholders
and until his successor is elected and qualified.
The nominees for Director listed below were designated by the Board of
Directors of Zenith. The information with respect to each nominee is as supplied
or confirmed by such nominee.
<TABLE>
<CAPTION>
POSITIONS AND PRINCIPAL OCCUPATIONS AND OTHER PUBLICLY HELD
SERVED AS DIRECTOR OFFICES HELD EMPLOYMENT DURING PAST CORPORATIONS IN WHICH
NAME AGE SINCE WITH ZENITH FIVE YEARS DIRECTORSHIPS HELD
- -------------------- ----- -------------------- ------------- ------------------------- -------------------------
<S> <C> <C> <C> <C> <C>
George E. Bello 59 May Director of Executive Vice President Reliance Group Holdings,
(1) 1984 Zenith and and Controller of Inc.; Reliance Insurance
Zenith Reliance Group Holdings, Company; Reliance
Insurance Inc. for more than the Financial Services
Company past five years (2) Corporation
("Zenith
Insurance")
</TABLE>
5
<PAGE>
<TABLE>
<CAPTION>
POSITIONS AND PRINCIPAL OCCUPATIONS AND OTHER PUBLICLY HELD
SERVED AS DIRECTOR OFFICES HELD EMPLOYMENT DURING PAST CORPORATIONS IN WHICH
NAME AGE SINCE WITH ZENITH FIVE YEARS DIRECTORSHIPS HELD
- -------------------- ----- -------------------- ------------- ------------------------- -------------------------
<S> <C> <C> <C> <C> <C>
Max M. Kampelman 74 February 1989 Director of Attorney, Of Counsel, ECC International Corp.
Zenith and March 1991 to present,
Zenith and Partner, January 1989
Insurance to March 1991, Fried,
Frank, Harris, Shriver &
Jacobson; Counselor of
the Department of State
and Head of the U.S.
Delegation to
Negotiations on Nuclear
and Space Arms with the
Soviet Union from January
1985 to January 1989
Jack M. Ostrow 73 September 1977 Director of Attorney and Certified None
(1) Zenith and Public Accountant for
Zenith more than the past five
Insurance, years
Chairman of
Audit
Committee,
Member of
Performance
Bonus
Committee
William Steele 64 September 1993 Director of Attorney, Consultant, None
Sessions Zenith and O'Gara-Hess & Eisenhardt
Zenith since 1993; Director,
Insurance Federal Bureau of
Investigation from 1987
to 1993
Harvey L. Silbert 82 January 1978 Director of Attorney, Of Counsel, None
(1)(3) Zenith and Loeb and Loeb since March
Zenith 1991; Of Counsel, Wyman,
Insurance, Bautzer, Kuchel & Silbert
Member of for more than five years
Performance prior to March 1991;
Bonus management of personal
Committee investments for more than
the past five years
Robert M. Steinberg 52 February 1981 Director of President and Chief Reliance Group Holdings,
(1)(4) Zenith and Operating Officer of Inc.; Reliance Insurance
Zenith Reliance Group Holdings, Company; Reliance
Insurance Inc. and Chairman of the Financial Services
Board and Chief Executive Corporation
Officer of Reliance
Insurance Company for
more than the past five
years (2)
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
POSITIONS AND PRINCIPAL OCCUPATIONS AND OTHER PUBLICLY HELD
SERVED AS DIRECTOR OFFICES HELD EMPLOYMENT DURING PAST CORPORATIONS IN WHICH
NAME AGE SINCE WITH ZENITH FIVE YEARS DIRECTORSHIPS HELD
- -------------------- ----- -------------------- ------------- ------------------------- -------------------------
<S> <C> <C> <C> <C> <C>
Saul P. Steinberg 55 February 1981 Director of Chairman of the Board and Reliance Group Holdings,
(1)(4)(5) Zenith and Chief Executive Officer Inc.; Reliance Insurance
Zenith of Reliance Group Company; Reliance
Insurance Holdings, Inc. for more Financial Services
than the past five years Corporation;
(2) Symbol Technologies, Inc.
Gerald Tsai, Jr. 66 December 1991 Director of Chairman, President, and Rite Aid Corporation;
Zenith and Chief Executive Officer Sequa Corporation;
Zenith of Delta Life Corporation Meditrust; Proffitt's,
Insurance, since February 1993; Inc.; Triarc Companies,
Chairman of management of private Inc.
Performance investments since January
Bonus 1989; Chairman and CEO,
Committee Primerica Corp., February
1987 to December 1988
Stanley R. Zax 57 July Chairman of the Board and President of None
(1) 1977 Zenith and Zenith Insurance, Chairman of
the Board of CalFarm Life Insurance
Company ("CalFarm Life") for more than
the past five years, Chairman of the
Board and President of CalFarm Insurance
Company ("CalFarm") for more than five
years prior to January 1995, and
Chairman of the Executive Committee of
the Board of Directors of CalFarm since
January 1995
<FN>
- ------------------------
(1) In connection with the sale in February 1981 of an aggregate of 1,387,375
shares of Common Stock (20.5% of the then outstanding shares) to Reliance
by certain selling stockholders, including Messrs. Ostrow, Silbert and Zax,
the selling stockholders agreed to use their best efforts to expand the
Boards of Directors of Zenith and Zenith Insurance and to cause (so long as
Reliance owns at least 10% of Zenith's outstanding Common Stock) the
election thereto of three qualified persons designated by Reliance.
Reliance has designated George E. Bello, Robert M. Steinberg and Saul P.
Steinberg.
(2) Reliance Insurance Company, Reliance Group Holdings, Inc. and Reliance
Financial Services Corporation are insurance and insurance holding
companies. Based on Reliance Insurance Company's holdings of Zenith Common
Stock, Reliance Insurance Company, Reliance Group Holdings, Inc., and
Reliance Financial Services Corporation may be deemed to be affiliates of
Zenith.
(3) Mr. Silbert is of counsel to the law firm of Loeb and Loeb, which performed
certain legal services for Zenith in 1994.
(4) Robert M. Steinberg and Saul P. Steinberg are brothers.
(5) On June 8, 1993, an involuntary petition was filed against Telemundo Group,
Inc. ("Telemundo") under chapter 11 of the United States Bankruptcy Code in
the United States Bankruptcy Court for the Southern District of New York.
On July 30, 1993, Telemundo consented to the entry of the order for relief,
and on December 30, 1994, Telemundo's Plan of Reorganization was
consummated. Saul P. Steinberg previously served as President (February
1990 through February 1991) and Chief Executive Officer (February 1990
through May 1992) of Telemundo.
</TABLE>
7
<PAGE>
The Board of Directors communicated frequently during the year ended
December 31, 1994 and held five formal meetings. Zenith's Board of Directors has
a standing Audit Committee and a Performance Bonus
Committee but has no nominating committee or any committee performing similar
functions. The sole member and Chairman of the Audit Committee is currently Mr.
Ostrow. The functions of the Audit Committee are to recommend to the Board of
Directors retention or change of Zenith's independent auditors; to consider the
range of audit and non-audit fees; to review the independence of the auditors;
to meet with them and Zenith's internal audit personnel to discuss and review
the results of their respective examinations and audit plans for the ensuing
year; to review the adequacy of Zenith's system of internal accounting controls
and like matters. This Committee is also authorized to review and discuss other
matters as it deems appropriate. During 1994, the Audit Committee communicated
frequently with Zenith's financial and accounting and internal audit department
personnel and independent auditors, including five formal meetings. The
Performance Bonus Committee, consisting of Messrs. Ostrow, Silbert, and Tsai
(Chairman), is responsible for performance-based compensation plans for
Executive Officers, namely, the Executive Officer Bonus Plan and the
Non-Qualified Stock Option Plan as it relates to grants thereunder to Executive
Officers. The Board of Directors retains responsibility for all other
compensation matters. The Performance Bonus Committee did not hold any formal
meetings in 1994, but communicated frequently and took action by unanimous
written consent. Each Director attended at least 75% of the aggregate of all
meetings of the Board of Directors and of any committees thereof on which such
Director served.
DIRECTORS' COMPENSATION
Zenith pays each Director (other than Mr. Zax, who receives no additional
compensation therefor) a fee of $50,000 per annum for serving as a member of the
Board of Directors. Mr. Ostrow also receives a fee of $25,000 per annum for
serving as the Chairman and sole member of Zenith's Audit Committee.
8
<PAGE>
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
----------------
AWARDS
ANNUAL COMPENSATION ----------------
--------------------------------------- SECURITIES
OTHER ANNUAL UNDERLYING ALL OTHER
COMPENSATION OPTIONS/ COMPENSATION
NAME AND PRINCIPAL POSITION YEAR SALARY ($) BONUS ($)(1) ($)(2) SARS (#) ($)(3)
- ---------------------------------------- ---- ---------- ---------- --------------- ---------------- ------------
<S> <C> <C> <C> <C> <C> <C>
STANLEY R. ZAX 1994 $1,027,320 $1,500,000 0 0 $31,926
Chairman of the Board and President of 1993 1,021,080 1,000,000 0 0 10,707
Zenith and 1992 1,017,375 1,000,000 0 0 10,544
Zenith Insurance,
Chairman of CalFarm Life, Chairman of
the Executive Committee of the Board of
Directors of CalFarm
FREDRICKA TAUBITZ 1994 $ 368,100 $ 250,000 0 0 $ 8,840
Executive Vice President and 1993 355,600 240,000 0 25,000 6,478
Chief Financial Officer of Zenith and 1992 345,600 200,000 0 20,000 6,389
Zenith Insurance, Senior Vice President
of CalFarm and CalFarm Life
KEITH E. TROTMAN 1994 $ 325,600 $ 240,000 0 0 $ 7,786
Senior Vice President of Zenith 1993 320,600 240,000 0 25,000 7,678
Insurance, CalFarm, and CalFarm Life 1992 305,600 200,000 0 0 7,556
JAMES P. ROSS 1994 $ 254,011 $ 345,000 0 0 $13,933
Senior Vice President of 1993 246,750 300,000 0 25,000 1,946
Zenith, Zenith Insurance and CalFarm, 1992 218,350 250,000 0 20,000 2,255
Actuary of Zenith Insurance
JOHN J. TICKNER 1994 $ 245,528 $ 85,000 0 0 $31,326
Senior Vice President and 1993 234,582 75,000 0 10,000 6,156
Secretary of Zenith, Senior Vice 1992 226,110 75,000 0 0 6,811
President, General Counsel and Secretary
of Zenith Insurance and CalFarm Life,
Senior Vice President and Secretary of
CalFarm
DWIGHT L. ROBERTSON, M.D. 1994 $ 319,900 $ 55,000 $284,047 50,000 $ 3,930
Senior Vice President of Zenith and 1993 -- -- -- -- --
Zenith Insurance(4) 1992 -- -- -- -- --
<FN>
- ------------------------
(1) Amounts shown for Ms. Taubitz and Messrs. Zax, Tickner, Trotman, and Ross
were determined and paid under the Executive Officer Bonus Plan. Amount
shown for Dr. Robertson consists of a hiring bonus of $50,000 and a
discretionary bonus of $5,000.
</TABLE>
9
<PAGE>
<TABLE>
<S> <C>
(2) Amount shown for Dr. Robertson consists of (a) reimbursed relocation
expenses of $164,942; (b) reimbursement of $112,855 for payment of tax
liability incurred on the reimbursed relocation expenses; and (c) Zenith's
matching contribution of $6,250 under its Stock Purchase Plan.
(3) The following amounts are included in the above table: (a) Zenith's
matching contributions made in fiscal year 1994 to the Zenith Investment
Partnership 401(k) Plan, as follows: Stanley R. Zax, none; Fredricka
Taubitz, $3,080; Keith E. Trotman, $3,080; James P. Ross, none; John J.
Tickner, $3,080; and Dwight L. Robertson, M.D., $3,080; (b) the dollar
value of insurance premiums paid in fiscal year 1994 by, or on behalf of,
Zenith with respect to term life insurance for the benefit of the named
Executive Officer, as follows: Stanley R. Zax, $9,000; Fredricka Taubitz,
$5,760; Keith E. Trotman, $4,706; James P. Ross, $1,815; John J. Tickner,
$4,500; and Dwight L. Robertson, M.D., $850; and (c) the dollar value of
the benefit to the named Executive Officer of premiums paid by, or on
behalf of, Zenith during fiscal year 1994, with respect to certain split
dollar life insurance policies, as follows: Stanley R. Zax, $22,926;
Fredricka Taubitz, none; Keith E. Trotman, none; James P. Ross, $12,118;
John J. Tickner, $23,746; and Dwight L. Robertson, M.D., none.
(4) Executive Officer of Zenith for part of last fiscal year, but not as of the
end of such year.
</TABLE>
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS POTENTIAL
------------------------------------------------------------ REALIZABLE
% OF TOTAL VALUE AT ASSUMED
OPTIONS/ ANNUAL RATES OF
NUMBER OF SARS STOCK PRICE
SECURITIES GRANTED TO APPRECIATION FOR
UNDERLYING EMPLOYEES EXERCISE OR OPTION TERM (4)
OPTIONS/SARS IN FISCAL BASE PRICE EXPIRATION ------------------
NAME GRANTED (#) (1) YEAR ($/SH) (2) DATE (3) 5% ($) 10% ($)
- ---------------------------- ------------------- ---------- ----------- ----------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Stanley R. Zax -- -- -- -- -- --
Fredricka Taubitz -- -- -- -- -- --
Keith E. Trotman -- -- -- -- -- --
James P. Ross -- -- -- -- -- --
John J. Tickner -- -- -- -- -- --
Dwight L. Robertson, M.D.(5) 50,000 26.32% $ 21.8750 3/16/99 $302,183 $667,745
<FN>
- ------------------------
(1) All stock options granted in 1994 provide for maximum purchases of optioned
shares on the following schedule: first year, none; second year, 25%; third
year, 50%, reduced by prior purchases; fourth year, 75% reduced by prior
purchases; and fifth year, 100%, reduced by prior purchases.
(2) All options were granted at market value on the date of grant (average of
high and low prices for Zenith Common Stock as traded on the New York Stock
Exchange for such date).
(3) Options granted in 1994 expire on the earlier to occur of (a) five years
from the date of grant, (b) in the event of termination of the optionee's
employment, three months from the date of such termination, or (c) in the
event of the optionee's death, one year from the date thereof and,
following termination of employment or death, may be exercised only to the
extent they were exercisable on the date of the optionee's termination of
employment or death.
(4) The potential gains shown are net of the option exercise price and do not
include the effect of any taxes associated with exercise. The amounts shown
are for the assumed rates of appreciation only, do not
</TABLE>
10
<PAGE>
<TABLE>
<S> <C>
constitute projections of future stock price performance, and may not
necessarily be realized. Actual gains, if any, on stock option exercises
depend on the future performance of Zenith Common Stock, continued
employment of the optionee through the term of the option, and other
factors.
(5) Executive Officer of Zenith for part of last fiscal year, but not as of the
end of such year. Stock options granted to Dr. Robertson prior to his
becoming an Executive Officer.
</TABLE>
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR END OPTION/SAR VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED IN-THE-
OPTIONS/SARS AT FY-END (#) MONEY OPTIONS/SARS AT FY-END
SHARES ($)
ACQUIRED ON VALUE --------------------------- -----------------------------
NAME EXERCISE (#) REALIZED ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ------------------------- ------------ ------------ ----------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Stanley R. Zax -- -- 440,000(1) 0 $1,553,761(1) $ 0
Fredricka Taubitz -- -- 71,250 28,750 $ 346,172 $59,766
Keith E. Trotman 6,250 18,750 $ 1,172 $ 3,516
James P. Ross -- -- 27,250 28,750 $ 111,422 $59,766
John J. Tickner 22,500 7,500 $ 105,469 $ 1,406
Dwight L. Robertson,
M.D.(2) -- -- 0 50,000 0 $43,750
<FN>
- ------------------------
(1) Mr. Zax holds Limited Stock Appreciation Rights ("LSARs") granted in
connection with his stock options. The LSARs are exercisable by Mr. Zax in
lieu of his stock options only in the event of termination of his
employment within 270 days following a "Change in Control" (See "Employment
Agreements and Termination of Employment and Change in Control
Arrangements").
(2) Executive Officer of Zenith for part of last fiscal year, but not as of the
end of such year.
</TABLE>
EMPLOYMENT AGREEMENTS AND TERMINATION OF EMPLOYMENT
AND CHANGE IN CONTROL ARRANGEMENTS
Effective December 6, 1994, Zenith entered into an amended and restated
employment agreement with Mr. Zax, which extends the expiration date of his
employment agreement from December 31, 1995 to December 31, 1998. The amended
and restated employment agreement provides for an annual base compensation plus
an annual bonus to be determined under Zenith's Executive Officer Bonus Plan.
Under the agreement, Mr. Zax's base compensation is continued at $1,000,000,
subject to such other increases as the Board of Directors may determine from
time to time. Upon Mr. Zax's death, Zenith will continue to pay either his wife,
children or estate his base compensation and annual bonus for a period of twelve
months. If Mr. Zax's employment is terminated for disability, he will receive
his base compensation and annual bonus for a period of six months. If Mr. Zax's
employment is terminated for breach of his employment agreement, he will receive
his base compensation through the end of the month in which the termination
occurs. If his employment is terminated for any reason other than for breach of
his employment agreement, death, or disability, Zenith will pay Mr. Zax his base
compensation and annual bonus through the term of his employment agreement. Upon
a Change in Control (as defined in the employment agreement) of Zenith, all
stock options and stock appreciation rights granted to Mr. Zax, to the extent
not exercisable at such time, become immediately exercisable. Further, in the
event Mr. Zax ceases being an employee of Zenith or a subsidiary within 270 days
following a Change in Control, Mr. Zax may elect to exercise his LSARs and
receive cash in lieu of exercising his stock options. The amount payable by
Zenith upon exercise of the LSARs is equal to the excess of the fair market
value on the date of such election of the shares subject to
11
<PAGE>
option over the option exercise price for such shares. Mr. Zax may exercise his
LSARs up to ninety days following such termination of employment. In addition,
if Mr. Zax's employment is terminated subsequent to any Change in Control either
by Mr. Zax within 180 days of the Change in Control or by Zenith for any reason
other than disability or breach of his employment agreement, Mr. Zax is entitled
to receive Severance Payments (as defined below).
Effective December 6, 1994, Zenith entered into an amended and restated
employment agreement with Ms. Taubitz, which extends the expiration date of her
employment agreement from October 1, 1995 to October 1, 1998. The amended and
restated employment agreement provides for an annual base compensation plus an
annual bonus to be determined under Zenith's Executive Officer Bonus Plan and
certain additional benefits. The base compensation is $365,000, subject to such
increases as the Board of Directors may determine from time to time.
Effective February 16, 1995, Zenith entered into an amended and restated
employment agreement with Mr. Tickner, which extends the expiration date of his
employment agreement from October 1, 1995 to October 1, 1998. The amended and
restated employment agreement provides for an annual base compensation plus an
annual bonus and certain additional benefits. The base compensation is $242,000,
subject to such increases as the Board of Directors may determine from time to
time.
Zenith's employment agreements with Ms. Taubitz and Mr. Tickner provide that
if her or his employment is terminated by Zenith other than for cause or
disability, the executive is entitled to Severance Payments. In addition, each
of Ms. Taubitz and Mr. Tickner may terminate her or his employment with Zenith
and receive Severance Payments should (a) Mr. Zax cease, for any reason other
than death or disability, to be the full-time Chairman of the Board and
President of Zenith, (b) she or he be prohibited or restricted in the
performance of her or his duties, (c) any payment due her or him under her or
his agreement remain unpaid for more than 60 days, or (d) she or he give written
notice of termination of the employment agreement to Zenith within 180 days of a
Change in Control (as defined in the employment agreements) of Zenith.
For purposes of the foregoing, "Severance Payments" include the following
benefits: (1) in the case of Mr. Tickner, all salary payments that would have
been payable to the executive for the greater of (a) the remaining term of the
employment agreement or (b) one year, plus a pro rata portion of any bonus that
would have been payable to the executive with respect to the year of
termination; (2) in the case of Mr. Zax and Ms. Taubitz, a cash lump sum payment
equal to the greater of (a) twice the sum of the executive's then current base
compensation and the highest annual bonus paid or payable during the three
consecutive years immediately preceding termination of employment or (b) the
actuarial equivalent of the base compensation and annual bonuses that would have
been payable to the executive under the remaining term of the employment
agreement; (3) continuation of life, disability, dental, accident and group
health insurance benefits, plus an additional amount necessary to reimburse the
executive for any taxes attributable solely to the executive's receipt of such
benefits; (4) in the case of Ms. Taubitz and Mr. Tickner, vesting of all stock
option and similar rights; and (5) an additional payment, if necessary, to
assure that none of the above benefits are subject to net reduction due to the
imposition of excise taxes under section 4999 of the Internal Revenue Code of
1986, as amended.
12
<PAGE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
In 1994, all decisions on Executive Officer compensation, other than
decisions related to performance-based compensation plans, were made by the
Board of Directors. Mr. Zax, Chairman of the Board and President, is a member of
the Board of Directors, and except with respect to his own compensation,
participated in the Board's deliberations concerning Executive Officer
compensation.
The Performance Bonus Committee, consisting of Messrs. Ostrow, Silbert, and
Tsai, determines matters relating to performance-based compensation plans for
Executive Officers. Mr. Silbert is of counsel to the law firm of Loeb and Loeb,
which performed certain legal services for Zenith in 1994.
BOARD REPORT ON EXECUTIVE COMPENSATION; PERFORMANCE
BONUS COMMITTEE REPORT ON PERFORMANCE BASED
COMPENSATION PLANS FOR EXECUTIVE OFFICERS
Zenith's entire Board of Directors made determinations with respect to
compensation of Executive Officers in 1994, except with respect to Mr. Zax's
compensation, which is established in Board actions from which Mr. Zax excuses
himself and in which he does not participate and except with respect to matters
related to performance-based compensation plans for Executive Officers. The
Performance Bonus Committee made determinations under performance-based
compensation plans for Executive Officers. The Board's report on Executive
Compensation and the Performance Bonus Committee's report on its determinations
shall not be deemed to be incorporated by reference through any general
statement incorporating by reference this proxy statement into any filings under
the Securities Act of 1933 or under the Securities Exchange Act of 1934 and
shall not otherwise be deemed to be filed under such Acts.
The Board's report on Executive Compensation follows:
EXECUTIVE OFFICERS
The level of compensation for Executive Officers of Zenith is intended to be
competitive (that is, "attractive") and to provide appropriate incentives.
Executive Officers of Zenith are generally compensated through salary, grants of
stock options, and bonuses under the Executive Officer Bonus Plan ("Bonus
Plan"). The Bonus Plan, approved by the stockholders of Zenith at the 1994
Annual Meeting, is administered by the Performance Bonus Committee. The
Performance Bonus Committee also grants stock options to Executive Officers
under Zenith's Non-Qualified Stock Option Plan. The report of the Performance
Bonus Committee follows this report.
The level of an Executive Officer's base compensation is generally based on
a combination of (1) the performance of Zenith, (2) the performance of the
insurance subsidiary, if any, to which the Executive Officer is principally
assigned, and (3) a subjective and qualitative evaluation of the personal
contribution made by the Executive Officer to Zenith. Success in these areas
does not translate mechanically into compensation levels; the manner in which
these factors are taken into account is discretionary with the Board and is not
based on any formulaic weighting.
The performance of Zenith is generally measured by the combined ratio of its
property and casualty insurance operations and by its overall profitability.
Zenith strives for and has achieved long term average combined ratios that are
about 100%. Zenith also strives for combined ratios that compare favorably in
both the short and long term with insurers primarily engaged in writing workers'
compensation insurance. These insurers include, but are not limited to, those
constituting the Peer Group utilized in the Stock Price Performance Graph. In
addition, Zenith endeavors to have loss ratios that are among the lowest for the
industry in any rolling previous five year period. The performance of the Zenith
insurance subsidiaries is generally measured by the same factors, as applicable.
13
<PAGE>
With respect to the subjective and qualitative evaluation of an Executive
Officer's personal contribution to the business of Zenith, a variety of factors
are taken into account. These factors vary and include, but are not limited to,
the manner in which the Executive Officer favorably affects Zenith's combined
ratio and profitability. Equally, if not more, important is the manner in which
the Executive Officer performs in Zenith's environment, which fosters an
entrepreneurial spirit, teamwork, and a commitment to education. Zenith believes
an entrepreneurial spirit maximizes profits, promotes sound execution of good
business fundamentals, and maintains a pool of executive talent. Teamwork is
crucial to the effective and efficient implementation of Zenith's goals. A
commitment to education means a dedication to lifelong learning and training for
oneself and creating conditions so that the workforce is similarly dedicated.
Such dedication is critical to Zenith's ability not only to meet change, but to
use it to its competitive advantage. In such an environment, proactive and
innovative approaches are strongly encouraged and rewarded.
On the operational side, activities that demonstrate an opportunistic
outlook, anticipation of changing business conditions and the development of
postures to take advantage of opportunities to increase short and long term
profits are rewarded. On the administrative side, efficiency, competence, strong
compliance efforts, anticipation and avoidance of problems, as well as
innovation, are rewarded.
Certain of the Executive Officers are employed under employment agreements
that provide for minimum base compensation and annual bonuses. Determinations as
to bonus levels and salary increases for these Executive Officers, as well as
those without employment agreements, have been discretionary and have not been
made on the basis of a formulaic weighting of the factors described above.
However, since adoption of the Bonus Plan in 1994, although the determination of
salary levels will continue to be discretionary, bonuses to Executive Officers
will no longer be at the discretion of the Board, but will be made in accordance
with the Bonus Plan.
In 1994, the combined ratio of Zenith's property and casualty operations was
less than 100% and was about ten percentage points below the industry as a
whole. Overall, Zenith not only continued to be profitable in 1994, but results
excluding realized gains on investments improved over 1993. Given this
performance and taking into account the subjective and qualitative evaluations
of individual Executive Officers, the level of individual Executive Officer's
base compensation was set accordingly. Please see the separate report of the
Performance Bonus Committee for a discussion of the bonuses earned by Executive
Officers in 1994.
STANLEY R. ZAX, CHIEF EXECUTIVE OFFICER
Mr. Zax is never present when the Board deliberates with respect to his
compensation and, accordingly, does not participate in Board decisions on his
own compensation.
Mr. Zax's base salary for 1994 was set out in his five year employment
agreement that was executed in 1990. Mr. Zax's employment agreement was amended
and restated in December 1994 on essentially the same terms and conditions,
without any change in base compensation, but with a new expiration date of
December 1998. Increases to that base compensation and the granting of annual
bonuses have been at the discretion of the Board of Directors and have not been
based on formulaic weighting of factors. In determining whether to grant any
salary increase or bonus, the same performance criteria that had been applied to
Executive Officers in general had also been applied to Mr. Zax. However, as with
Executive Officers generally, since adoption of the Bonus Plan in 1994, although
the determination of Mr. Zax's salary level will continue to be discretionary,
any bonuses to him will no longer be at the discretion of the Board, but will be
made in accordance with the Bonus Plan.
Taking the objective and subjective criteria described above into account,
the Board was pleased with Mr. Zax's performance in 1994, but did not increase
his base compensation for 1995. The Board believes
14
<PAGE>
Mr. Zax's base compensation to be at a level that continues to be competitive
(that is, "attractive") and that it is appropriate that any further incentives
and rewards be under the Bonus Plan. Please see the separate report of the
Performance Bonus Committee for a discussion of the bonus earned by Mr. Zax in
1994. Finally, although Mr. Zax's employment agreement was amended and restated
in 1994, the base compensation thereunder was not changed for the reasons stated
above.
SECTION 162(M) POLICY
Section 162(m) of the Internal Revenue Code of 1986, as amended ("Code"),
generally limits the federal income tax deduction that a public corporation may
claim for annual compensation paid to certain executive officers. The limitation
with respect to each affected Executive Officer is $1,000,000 per year. However,
the limitation does not apply to compensation which is performance-based, earned
under a plan approved by Zenith's stockholders and which satisfies certain other
conditions set forth in Section 162(m) and the regulations thereunder. Stock
option grants awarded to Executive Officers under Zenith's Non-Qualified Stock
Option Plan and bonuses payable under the Bonus Plan are intended to comply with
Section 162(m). Accordingly, neither income accruing to Executive Officers upon
exercise of stock options nor the amount of any bonus payment made to Executive
Officers under the Bonus Plan should be subject to the $1,000,000 limit on
deductibility. The Board has determined that it will pay Mr. Zax's annual salary
even though any portion in excess of $1,000,000 would not be deductible by
Zenith.
Stanley R. Zax, Chairman of the Board
George E. Bello Harvey L. Silbert
Max M. Kampelman Robert M. Steinberg
Jack M. Ostrow Saul P. Steinberg
William Steele Sessions Gerald Tsai, Jr.
The Performance Bonus Committee's report on its determinations on
performance-based compensation plans for Executive Officers follows:
The Performance Bonus Committee ("Committee") is responsible for
administering the Executive Officer Bonus Plan ("Bonus Plan") and for granting
stock options under the Non-Qualified Stock Option Plan to Executive Officers.
In so doing, the Committee implements and reinforces the compensation philosophy
of the Board of Directors, as set out in the Board Report on Executive
Compensation.
EXECUTIVE OFFICER BONUS PLAN
The Bonus Plan was approved by the stockholders at the 1994 Annual Meeting
as a performance-based compensation plan. It provides for bonuses to Executive
Officers based upon attainment by Zenith in any fiscal year of an objectively
measured performance goal, namely a combined ratio that is below the industry's
combined ratio. The Bonus Plan provides for bonuses to Executive Officers up to
an amount equal to:
100% of his or her salary at the beginning of the fiscal year if the Company
Combined Ratio for such fiscal year is at least three percentage points, but
less than five percentage points, below the Industry Combined Ratio or
150% of his or her salary at the beginning of the fiscal year if the Company
Combined Ratio for such fiscal year is at least five percentage points below
the Industry Combined Ratio;
provided, however, in either instance, the Committee may, in its sole
discretion, on a case by case basis, reduce such bonus by any amount.
15
<PAGE>
In 1994, Zenith's combined ratio was 97.6%; the industry's 1994 combined
ratio, as estimated and reported by A.M. Best Company, was 109.4%. Accordingly,
the objective performance goal under the Bonus Plan was met, which the Committee
hereby certifies in accordance with Section 162(m) of the Internal Revenue Code
of 1986, as amended. Pursuant to the terms of the Bonus Plan, each Executive
Officer may receive a maximum bonus equal to 150% of his or her salary in effect
as of January 1, 1994.
EXECUTIVE OFFICERS
The Committee undertook a subjective and qualitative evaluation of the
personal contribution made by each Executive Officer, other than Stanley R. Zax,
the Chief Executive Officer. This subjective and qualitative evaluation
considered the same factors set out in the Board Report on Executive
Compensation. Based on these evaluations, the Committee exercised its discretion
with respect to the bonus to be paid to each Executive Officer and reduced the
amount payable in some cases. For all Executive Officers, with the exception of
Mr. Zax, the total percentage of the bonuses paid was 51.3% of the maximum that
could have been paid.
STANLEY R. ZAX, CHIEF EXECUTIVE OFFICER
As it had with the other Executive Officers, the Committee undertook a
subjective and qualitative evaluation of the personal contribution made by Mr.
Zax. In so doing, the Committee elected not to exercise its discretion relative
to any reduction in the amount of bonus that Mr. Zax is entitled to receive
under the Bonus Plan. Accordingly, Mr. Zax's bonus is 150% of his salary in
effect as of January 1, 1994.
STOCK OPTION GRANTS
From time to time, options to purchase Common Stock are to be granted to an
Executive Officer by the Committee under the Non-Qualified Stock Option Plan.
Such options are considered a part of compensation to recognize an Executive
Officer's contribution and to reinforce that Executive Officer's long term
commitment to the success of Zenith. It is contemplated that an Executive
Officer would be suggested by the Chairman of the Board as an optionee. The
Committee would then take into consideration the Chairman's recommendation,
subjective measures and prior grants to that Executive Officer in determining
whether to grant options to him or her. Beyond these general considerations,
there would be no particular formula governing the number of shares awarded.
In 1994, the Committee did not grant stock options to any Executive Officer.
However, prior to becoming Executive Officers, Linda R. Smith and Dwight L.
Robertson, M.D., were granted options in 1994 to purchase 25,000 shares and
50,000 shares of Common Stock, respectively by the Board, acting as a whole.
Neither Ms. Smith nor Dr. Robertson was an Executive Officer as of the end of
the fiscal year.
Gerald Tsai, Chairman
Jack M. Ostrow
Harvey L. Silbert
16
<PAGE>
STOCK PRICE PERFORMANCE GRAPH
The Stock Price Performance Graph shall not be deemed incorporated by
reference through any general statement incorporating by reference this proxy
statement into any filings under the Securities Act of 1933 or under the
Securities Exchange Act of 1934 and shall not otherwise be deemed to be filed
under such Acts.
The Stock Price Performance Graph compares the cumulative total returns of
Zenith Common Stock, the S&P 500 Index, and a Peer Group consisting of Argonaut
Group, Inc., CII Financial, Inc., Citation Insurance Group, Fremont General
Corporation, Pacific Rim Holding Corporation, and American Premier Underwriters,
Inc. (formerly named The Penn Central Corporation) for a five year period. Some
of the members of the Peer Group were not publicly traded during the entire five
years and the results of those members are included only for those periods when
they were publicly traded. The Peer Group differs from that shown in Zenith's
1994 Proxy Statement in that Unicare Financial Corp. is no longer included in
the Peer Group. Unicare Financial Corp. was acquired in January 1994 by another
public company and its common stock is no longer publicly traded. Consequently,
it has been deleted from the Peer Group. Stock price performance is based on
historical results and is not necessarily indicative of future stock price
performance.
COMPARATIVE FIVE-YEAR TOTAL RETURNS*
ZENITH, S&P 500, PEER GROUP
(PERFORMANCE RESULTS THROUGH 12/31/94)
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
ZNT S&P 500 PEER GROUP
<S> <C> <C> <C>
0
1989 $100.00 $100.00 $100.00
1990 $80.58 $96.89 $79.20
1991 $106.56 $126.42 $100.15
1992 $132.22 $136.05 $115.58
1993 $155.77 $149.76 $138.48
1994 $165.33 $151.74 $121.18
</TABLE>
Assumes $100 invested at the close of trading on the last trading day preceding
the first day of the fifth preceding fiscal year in Zenith Common Stock, the S&P
500, and the Peer Group.
*Cumulative total return assumes reinvestment of dividends.
The foregoing graph was prepared by Standard and Poor's Compustat, which
obtained factual materials from sources believed by it to be reliable, but which
disclaims responsibility for any errors or omissions contained in such data.
17
<PAGE>
INVESTMENT IN DELTA LIFE CORPORATION
Zenith's subsidiary, CalFarm Life, is currently considering making an
investment in Delta Life Corporation ("Delta Life"). It is proposed that CalFarm
Life would purchase 75,000 shares of Convertible Preferred Stock of Delta Life
for $3.75 million and 75,000 shares of Common Stock Class A of Delta Life for
$3.75 million. Mr. Tsai, a Director of Zenith, is the Chairman, President, Chief
Executive Officer, and a director of Delta Life, as well as being deemed the
beneficial owner of more than 10% of the outstanding common stock of Delta Life.
Zenith understands that Reliance is also separately considering making an
investment in Delta Life. It is proposed that Reliance would purchase 75,000
shares of Convertible Preferred Stock of Delta Life for $3.75 million and 75,000
shares of Common Stock Class A of Delta Life for $3.75 million.
These transactions are subject to the negotiation of definitive
documentation satisfactory to each of CalFarm Life and Reliance, as well as
further due diligence by each of CalFarm Life and Reliance.
INFORMATION RELATING TO INDEPENDENT PUBLIC ACCOUNTANTS
Zenith's independent auditor for fiscal year 1994 was Coopers & Lybrand
L.L.P., and, upon the recommendation of the Audit Committee, the Board of
Directors of Zenith has selected Coopers & Lybrand L.L.P. as Zenith's
independent auditor for fiscal year 1995.
Representatives of Coopers & Lybrand L.L.P. are expected to be present at
the meeting and will have an opportunity to respond to appropriate questions and
to make a statement if they desire to do so.
For information concerning Zenith's Audit Committee, see "Election of
Directors" above.
STOCKHOLDER PROPOSALS AT THE NEXT ANNUAL
MEETING OF STOCKHOLDERS
Stockholders of Zenith who intend to submit proposals to Zenith's
stockholders at the next Annual Meeting of Stockholders to be held in 1996 must
submit such proposals to Zenith no later than December 1, 1995 in order for them
to be included in Zenith's proxy materials for such meeting. Stockholder
proposals should be submitted to Zenith National Insurance Corp., 21255 Califa
Street, Woodland Hills, California 91367, Attention: Secretary.
By Order of the Board of Directors
JOHN J. TICKNER
SECRETARY
Dated: March 28, 1995
18
<PAGE>
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF
ZENITH NATIONAL INSURANCE CORP.
The undersigned stockholder hereby appoints Harvey L. Silbert, Jack M.
Ostrow and Stanley R. Zax and each or any of them (each with full power of
substitution), proxies for the undersigned to vote all shares of Common Stock of
Zenith National Insurance Corp. ("Zenith") owned by the undersigned at the
Annual Meeting of Stockholders to be held on Wednesday, May 24, 1995, at 9:00
a.m., at the offices of Zenith, 21255 Califa Street, Woodland Hills, California,
and at any adjournments thereof, in connection with the matters set forth in the
Notice of Annual Meeting and Proxy Statement dated March 28, 1995 (the "Proxy
Statement"), copies of which have been received by the undersigned.
1. ELECTION OF FOR all nominees listed below WITHHOLD AUTHORITY
DIRECTORS: (except as marked to the to vote for all nominees
contrary below) / / listed below / /
George E. Bello, Max M. Kampelman, Harvey L. Silbert, Jack M. Ostrow,
William Steele Sessions, Robert M. Steinberg, Saul P. Steinberg, Gerald
Tsai, Jr. and Stanley R. Zax.
(INSTRUCTION: To withhold authority for any individual nominee write that
nominee's name on the space provided below.)
- --------------------------------------------------------------------------------
2. In their discretion, upon such other matters as may properly come before
the meeting.
(Continued and to be signed on other side)
<PAGE>
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN ACCORDANCE WITH
[LOGO] THE INSTRUCTIONS OF THE STOCKHOLDER, BUT IF NO INSTRUCTIONS ARE
GIVEN THIS PROXY WILL BE VOTED FOR THE ELECTION OF DIRECTORS AS
PROVIDED BY ZENITH'S PROXY STATEMENT AND IN ACCORDANCE WITH THE
DISCRETION OF THE PROXIES ON SUCH OTHER MATTERS AS MAY PROPERLY
COME BEFORE THE MEETING.
IN THE EVENT OF CUMULATIVE VOTING IN THE ELECTION OF DIRECTORS,
THE PROXIES MAY DISTRIBUTE THE VOTES REPRESENTED BY THIS PROXY
AMONG THE NOMINEES IN SUCH PROPORTION AS THEY SEE FIT.
Dated ........................ , 1995
______________________________________
______________________________________
NOTE: Please sign EXACTLY as your name
appears herein. When signing as
attorney, executor, administrator,
trustee or guardian, please give your
full title as such. If executed by a
corporation, an authorized officer
should sign, and the corporate seal
should be affixed. A copy for shares
held in joint ownership should be signed
by each joint owner.
PLEASE DATE AND SIGN THIS PROXY, AND RETURN IT PROMPTLY IN THE ACCOMPANYING
ENVELOPE,
WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES.
