<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:
/X/ Preliminary proxy statement
/ / Definitive proxy statement
/ / Definitive additional materials
/ / Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
W. R. BERKLEY CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
W. R. BERKLEY CORPORATION
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
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).
/ / $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 0-111
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
/ / 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.:
Preliminary Proxy Statement/Preliminary Schedule 14A
------------------------------------------------------------------------
(3) Filing party:
Aetna Life and Casualty Company
------------------------------------------------------------------------
(4) Date filed:
February 27, 1996
------------------------------------------------------------------------
1Set forth the amount on which the filing fee is calculated and state how it
was determined.
<PAGE> 2
W. R. BERKLEY CORPORATION
165 MASON STREET
P.O. BOX 2518
GREENWICH, CONNECTICUT 06836-2518
------------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
MAY 21, 1996
------------------------------
To The Stockholders of
W. R. BERKLEY CORPORATION:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of W. R.
Berkley Corporation, a Delaware corporation (the "Company"), will be held at
W.R. Berkley Corporation, 165 Mason Street, Greenwich, Connecticut on Tuesday,
May 21, 1996 at 2:00 P.M. for the following purposes:
(1) To elect four Directors to serve until their successors are duly
elected and qualify;
(2) To approve the Incentive Compensation Criteria for the Company's
President and Chief Operating Officer;
(3) To ratify the selection of KPMG Peat Marwick LLP as independent
certified public accountants for the Company for the fiscal year ending
December 31, 1996; and
(4) To consider and act upon any other matters which may properly come
before the Annual Meeting or any adjournment thereof.
In accordance with the provisions of the Company's By-Laws, the Board of
Directors has fixed the close of business on March 27, 1996 as the date for
determining stockholders of record entitled to receive notice of, and to vote
at, the Annual Meeting.
Your attention is directed to the accompanying Proxy Statement.
You are cordially invited to attend the Annual Meeting. If you do not
expect to attend the Annual Meeting in person, please vote, date, sign and
return the enclosed proxy as promptly as possible in the enclosed reply
envelope.
By Order of the Board of Directors,
ROBERT S. GORIN,
Senior Vice President--
General Counsel and Secretary
Dated: April 10, 1996
<PAGE> 3
W. R. BERKLEY CORPORATION
PROXY STATEMENT
------------------------------
ANNUAL MEETING OF STOCKHOLDERS
MAY 21, 1996
------------------------------
SOLICITATION AND REVOCATION OF PROXIES
The enclosed proxy is solicited by the Board of Directors of W. R. Berkley
Corporation (the "Company") for use at the Annual Meeting of Stockholders to be
held at the Company's offices at 165 Mason Street, Greenwich, Connecticut on
Tuesday, May 21, 1996 at 2:00 P.M. and at any adjournment thereof. The giving of
a proxy does not preclude a stockholder from voting in person at the Annual
Meeting. The proxy is revocable before its exercise by delivering either written
notice of such revocation or a later dated proxy to the Secretary of the Company
at its executive office at any time prior to voting of the shares represented by
the earlier proxy. In addition, stockholders attending the Annual Meeting may
revoke their proxies by voting at the Annual Meeting. The expense of preparing,
printing and mailing this Proxy Statement will be paid by the Company. The
Company has engaged Georgeson & Company Inc. to assist in the solicitation of
proxies from stockholders. In addition to the use of the mails, proxies may be
solicited personally or by telephone by regular employees of the Company without
additional compensation, as well as by employees of Georgeson & Company Inc. The
Company will reimburse banks, brokers and other custodians, nominees and
fiduciaries for their costs in sending the proxy materials to the beneficial
owners of the Company's Common Stock, par value $.20 per share (the "Common
Stock"). The total cost of the solicitation of proxies is not expected to exceed
$20,000. The Annual Report of the Company for the fiscal year ended December 31,
1995 is being mailed to all stockholders with this Proxy Statement. The
approximate mailing date is April 10, 1996.
A list of stockholders will be available for inspection for at least ten
days prior to the Annual Meeting at the principal executive offices of the
Company at 165 Mason Street, Greenwich, Connecticut 06830.
The matters to be acted upon are described in this Proxy Statement. Proxies
will be voted at the Annual Meeting, or at any adjournment thereof, at which a
quorum is present, in accordance with the directions on the proxy. The holders
of a majority of the Common Stock outstanding and entitled to vote who are
present either in person or represented by proxy constitute a quorum for the
Annual Meeting.
OUTSTANDING STOCK AND VOTING RIGHTS
Only stockholders of record at the close of business on March 27, 1996 are
entitled to receive notice of and to vote at the Annual Meeting. The number of
shares of voting stock of the Company outstanding on that date and entitled to
vote was 20,182,924 shares of Common Stock. Each such share of Common Stock is
entitled to one vote. It should be noted that officers and Directors of the
Company own or control approximately 14% of the outstanding Common Stock.
Information as to
1
<PAGE> 4
persons beneficially owning 5% or more of the Common Stock may be found under
the heading "Principal Stockholders" herein.
Unless otherwise directed in the proxy, the persons named therein will vote
"FOR" the election of the director nominees listed below, "FOR" the approval of
the incentive compensation criteria for the Company's President and Chief
Operating Officer and "FOR" the ratification of the appointment of KPMG Peat
Marwick LLP as the Company's independent public accountants for its fiscal year
ending December 31, 1996. If a returned proxy does not specify a vote for or
against a proposal, it will be voted in favor thereof.
All matters to be acted on at the Annual Meeting require the affirmative
vote of a majority of the shares present at the meeting to constitute the action
of the stockholders. In accordance with Delaware law, abstentions will, while
broker nonvotes will not, be treated as present for purposes of the preceding
sentence. A broker nonvote is a proxy submitted by a broker in which the broker
fails to vote on behalf of a client on a particular matter for lack of
instruction when such instruction is required.
As of the date hereof, the Board of Directors knows of no other business
that will be presented for consideration at the Annual Meeting. If other
business shall properly come before the Annual Meeting, the persons named in the
proxy will vote according to their best judgment.
ELECTION OF DIRECTORS
As permitted by Delaware law, the Board is divided into three classes, the
classes being divided as equally as possible and each class having a term of
three years. Each year the term of office of one class expires. This year the
term of a class consisting of three Directors expires. It is the intention of
the Board that the shares represented by proxy, unless otherwise indicated
thereon, will be voted for the re-election of Richard G. Merrill, Jack H.
Nusbaum and Mark L. Shapiro as Directors to hold office for a term of three
years until the Annual Meeting of Stockholders in 1999 and until their
respective successors are duly elected and qualify. In addition, it is the
intention of the Board that the shares represented by proxy, unless otherwise
indicated thereon, will be voted for the re-election of John D. Vollaro to hold
office for a term of two years until the Annual Meeting of Stockholders in 1998
and until his successor is duly elected and qualifies. Mr. Vollaro was elected
at a meeting of the Board on September 13, 1995 to fill a vacancy in the class
whose term expires in 1998.
The persons designated as proxies reserve full discretion to cast votes for
other persons in the event any such nominee is unable to serve. However, the
Board has no reason to believe that any nominee will be unable to serve if
elected. The proxies cannot be voted for a greater number of persons than the
four named nominees.
2
<PAGE> 5
The following table sets forth information regarding each nominee and the
remaining Directors who will continue in office after the Annual Meeting.
<TABLE>
<CAPTION>
SERVED AS
DIRECTOR BUSINESS EXPERIENCE DURING PAST 5
CONTINUOUSLY YEARS,
NAME SINCE AGE AND OTHER INFORMATION
- ----------------------------------------- ------------ -------------------------------------
<S> <C> <C>
Nominees to Serve in Office Until 1999
Richard G. Merrill(1).................... 1994 Executive Vice President of
Prudential Insurance Company of
America from August 1987 to March
1991 when he retired. Prior thereto,
he served as Chairman and President
of Prudential Asset Management
Company since 1985. He also is a
director of Sysco Corp. Mr. Merrill
is 65 years of age.
Jack H. Nusbaum(2)(3).................... 1967 Chairman of the New York law firm of
Willkie Farr & Gallagher where he has
been a partner for more than the last
five years. He also is a director of
Pioneer Companies, Inc.; Prime
Hospitality Corp. and The Topps
Company, Inc. Mr. Nusbaum is 55 years
of age.
Mark L. Shapiro(3)(4).................... 1974 A Managing Director for more than the
past five years in the investment
banking firm of Schroder Wertheim &
Co. Incorporated. Mr. Shapiro is 52
years of age.
Nominee to Serve in Office Until 1998
John D. Vollaro.......................... 1995 Elected President and Chief Operating
Officer of the Company effective
January 2, 1996 and Director
effective September 13, 1995. Mr.
Vollaro has served as Chief Executive
Officer and a director of Signet Star
Holdings, Inc., a subsidiary of the
Company engaged in the reinsurance
business, since July 1993. Mr.
Vollaro served as Executive Vice
President of the Company from 1991
until 1993 and was Chief Financial
Officer and Treasurer of the Company
from 1983 to 1993. He also served as
Senior Vice President of the Company
from 1983 to 1991. Mr. Vollaro is 51
years of age.
</TABLE>
3
<PAGE> 6
<TABLE>
<CAPTION>
SERVED AS
DIRECTOR BUSINESS EXPERIENCE DURING PAST 5
CONTINUOUSLY YEARS,
NAME SINCE AGE AND OTHER INFORMATION
- ----------------------------------------- ------------ -------------------------------------
<S> <C> <C>
Directors to Continue in Office Until
1998
Henry Kaufman(1)......................... 1994 President of Henry Kaufman & Co., an
investment management and economic
financial consulting company, since
its establishment in 1988. He serves
as Chairman of the Board of
Overseers, Stern Schools of Business
of NYU; member of the Board of
Directors, Federal Home Loan Mortgage
Corp.; member of the Board of
Directors, Lehman Brothers Holdings
Inc.; member of the Board of
Trustees, New York University; and
member of the International Capital
Markets Advisory Committee of the
Federal Reserve Bank of New York. Mr.
Kaufman is 68 years of age.
Martin Stone(1)(3)(4).................... 1990 Chairman of Professional Sports, Inc.
(the Phoenix Firebirds AAA baseball
team) and Chairman of Adirondack Cor-
poration, all for more than the past
five years. He also is a director of
Canyon Ranch, Inc. and a member of
the Advisory Board of Yosemite
National Park. Mr. Stone is 67 years
of age.
Directors to Continue in Office Until
1997
William R. Berkley(2).................... 1967 Chairman of the Board and Chief
Executive Officer of the Company
since its formation in 1967. He also
served as President at various times
from 1967 to 1995. He also serves as
Chairman of the Board or Director of
a number of public and private
companies. These include Pioneer
Companies, Inc., a chemical manu-
facturing and marketing company;
Strategic Distribution, Inc., an
industrial products distribution and
services company; and Interlaken
Capital, Inc., a private investment
firm with interests in various
businesses including a life insur-
ance holding company. Mr. Berkley is
50 years of age.
</TABLE>
4
<PAGE> 7
<TABLE>
<CAPTION>
SERVED AS
DIRECTOR BUSINESS EXPERIENCE DURING PAST 5
CONTINUOUSLY YEARS,
NAME SINCE AGE AND OTHER INFORMATION
- ----------------------------------------- ------------ -------------------------------------
<S> <C> <C>
Scott M. Cunningham...................... 1986 Managing Director of Interlaken
Capital, Inc., which he joined in
January 1987. Mr. Cunningham is 61
years of age.
Robert B. Hodes(4)....................... 1970 Counsel to the New York law firm of
Willkie Farr & Gallagher where he had
previously been a partner for more
than the past five years. He also is
a director of Aerointernational,
Inc.; Crystal Oil Company; Global
Telecommunications, Limited; Loral
Corporation; Loral Space &
Communications Ltd.; Mueller
Industries, Inc.; R.V.I. Guaranty,
Ltd.; LCH Investments N.V.; and
Restructured Capital Holdings, Ltd.
Mr. Hodes is 70 years of age.
</TABLE>
- ---------------
(1) Member of Compensation and Stock Option Committee.
(2) Member of Executive Committee.
(3) Member of Business Ethics Committee.
(4) Member of Audit Committee.
5
<PAGE> 8
BOARD OF DIRECTORS AND COMMITTEES
During 1995, the Board had four standing committees: the Executive
Committee, the Compensation and Stock Option Committee, the Audit Committee and
the Business Ethics Committee. Nominees for Directors are selected by the Board
rather than by any committee of the Board. The Board met four times and held
three telephone meetings during 1995, and action by the Board was taken by
unanimous written consent on two occasions. No Director attended fewer than 75%
of the total number of meetings of the Board and all committees on which he
served.
The Executive Committee is authorized to act on behalf of the Board during
periods between Board meetings. The Committee is composed of Messrs. Berkley and
Nusbaum and until May 23, 1995 was composed of Messrs. Berkley, Nusbaum and
Miller. The Committee held no formal meetings during 1995.
Prior to March 7, 1996, the Compensation and Stock Option Committee was
composed of Messrs. Merrill, Shapiro and Stone. At meetings in December 1995,
January 1996 and March 1996, the Compensation and Stock Option Committee
established the base compensation for 1996 and the incentive compensation for
1995 to be paid to the Chief Executive Officer, established incentive
compensation criteria for the Company's Chief Operating Officer, reviewed and
approved the base compensation for 1996 and the incentive compensation for 1995
to be paid to the other executive officers of the Company and reviewed the
levels of compensation of the senior officers of the Company's subsidiaries. The
Committee also administered the 1992 Stock Option Plan. During 1995, the
Committee held one telephone meeting and action by the Committee was taken by
unanimous written consent on four occasions. On March 7, 1996, the Compensation
and Stock Committee, composed of Messrs. Kaufman, Merrill and Stone, adopted the
determinations theretofore made by the Committee.
The Audit Committee, which during 1995 was composed of Messrs. Hodes,
Shapiro and Stone, advises the Board as to the selection of the Company's
independent public accountants, monitors their performance, reviews all reports
submitted by them and consults with them with regard to the adequacy of internal
controls. During 1995, the Committee held three formal meetings.
The Business Ethics Committee, which during 1995 was composed of Messrs.
Nusbaum, Shapiro and Stone, administers the Company-wide Business Ethics
program. During 1995, the Committee held one formal meeting.
DIRECTOR COMPENSATION
For 1995, each Director received an annual retainer of $16,000 and a fee of
$1,000 for each Board meeting attended. The Director fees and the annual
retainer are included in the Summary Compensation Table for Mr. Berkley.
6
<PAGE> 9
PRINCIPAL STOCKHOLDERS
The following table sets forth as of March 27, 1996 those persons known by
the Company to be the beneficial owners of more than 5% of the Common Stock:
<TABLE>
<CAPTION>
AMOUNT AND NATURE PERCENT
NAME AND ADDRESS OF BENEFICIAL OWNER OF BENEFICIAL OWNERSHIP OF CLASS
----------------------------------------- ----------------------- --------
<S> <C> <C>
William R. Berkley 2,577,920 12.8%
165 Mason Street
Greenwich, CT 06830
FMR Corp 2,550,860(1) 12.6%(4)
82 Devonshire Street
Boston, MA 02109-3614
Franklin Resources, Inc. 2,055,000(2) 10.2%(4)
777 Mariners Island Blvd.
San Mateo, CA 94404
The Prudential Insurance Company
of America 1,231,862(3) 6.1%(4)
Prudential Plaza
Newark, NJ 07102-3777
</TABLE>
- ------------------------------
(1) Information obtained from the Schedule 13G, dated February 14, 1996, filed
with the Securities and Exchange Commission by FMR Corporation. The Schedule
13G reported ownership of 2,550,860 shares of Common Stock then outstanding.
FMR Corporation has sole voting power over 209,800 shares and shared
dispositive power over all shares held.
(2) Information obtained from a Schedule 13G, dated February 12, 1996, filed
with the Securities and Exchange Commission on behalf of Franklin Resources,
Inc. The Schedule 13G reported ownership of 10.2% of the Common Stock then
outstanding. Franklin Resources, Inc. has sole voting power over and shared
dispositive power over all shares held.
(3) Information obtained from the Schedule 13G, dated February 13, 1996, filed
with the Securities and Exchange Commission by The Prudential Insurance
Company of America. The Schedule 13G reported ownership of 6.1% of the
Common Stock then outstanding. The Prudential Insurance Company of America
has sole voting power over 391,150 shares, shared voting power over 840,712
shares, sole dispositive power over 391,150 shares and shared dispositive
power over 840,712 shares.
(4) The percent of class shown was based on the shares of Common Stock reported
on the respective 13G's and the total number of shares outstanding as of
December 31, 1995. The difference in the total number of shares outstanding
on December 31, 1995 and March 27, 1996 does not materially affect the
percentage of ownership of the class.
- ------------------------------
7
<PAGE> 10
The following table sets forth information as of March 27, 1996 regarding
ownership by all Directors and executive officers of the Company, as a group,
and each Director and each executive officer named in the Summary Compensation
Table, individually, of the Common Stock. Except as described in the footnotes
below, all amounts reflected in the table represent shares the beneficial owners
of which have sole voting and investment power.
<TABLE>
<CAPTION>
AMOUNT AND NATURE PERCENT
NAME OF BENEFICIAL OWNER OF BENEFICIAL OWNERSHIP OF CLASS
----------------------------------- ----------------------- -----------
<S> <C> <C>
All Directors and executive
officers as a group 2,771,174(1)(2)(3)(4)(5) 13.7%
William R. Berkley 2,577,920(1) 12.8%
Scott M. Cunningham 225 *
Sam Daniel, Jr. 17,000 *
Anthony J. Del Tufo 563(2) *
Robert S. Gorin 237(2) *
Robert B. Hodes 20,000 *
Henry Kaufman 20,000 *
Richard G. Merrill 3,824(3) *
Jack H. Nusbaum 29,761(4) *
Mark L. Shapiro 1,612 *
Martin Stone 10,000 *
Edward A. Thomas 22,941 *
John D. Vollaro 35,000 *
</TABLE>
- ------------------------------
* less than 1%
(1) Includes 8,389 shares held by Mr. Berkley's wife, as to which shares he
disclaims beneficial ownership, 3,405 shares held in several trusts as to
which Mr. Berkley is a custodian, and 58,333 shares of Common Stock which
are subject to currently exercisable stock options held by Mr. Berkley.
(2) The amounts shown for Messrs. Del Tufo and Gorin include 363 and 194 shares,
respectively, held under the Company's Profit Sharing Plan.
(3) Includes 1,544 shares held in an individual retirement account, 1,780 shares
held in a KEOGH plan with Mr. Merrill as trustee and 500 shares held in a
trust with Mr. Merrill and his spouse as trustees.
(4) The amounts shown for all Directors and executive officers as a group and
Mr. Nusbaum include 22,750 shares of Common Stock held in several trusts as
to which Mr. Nusbaum is a co-trustee with United States Trust Company of New
York, and as to which he shares voting and investment power with U.S. Trust
Company of New York.
(5) The amounts shown for all Directors and executive officers as a group
include an aggregate of 112,747 shares of Common Stock which are subject to
currently exercisable stock options held by executive officers of the
Company and an aggregate of 1,502 shares of Common Stock which are currently
held by executive officers under the Company's Profit Sharing Plan.
The Company knows of no arrangements, including any pledge by any person of
securities of the Company, the operation of which may at a subsequent date
result in a change of control of the Company. Under applicable Insurance Holding
Company Acts in various states, a potential owner cannot exercise voting control
over an amount in excess of 10% of the Company's outstanding voting securities
(5% in the State of Florida) without obtaining prior regulatory approval.
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<PAGE> 11
TRANSACTIONS WITH MANAGEMENT AND OTHERS
During 1995, the Company engaged in several transactions with companies
controlled by or affiliated with its Chairman of the Board, William R. Berkley.
In these transactions, fees paid by the Company consisted primarily of
$1,061,390 of management, storage, maintenance and operation services in
connection with travel on corporate aircraft and fees received by the Company
consisted of $107,002 for rent and other services.
During February 1996, the Company purchased the outstanding capital stock
of a corporation owned by William R. Berkley which provides management, storage,
maintenance and operations services for aircraft owned by the Company and an
unaffiliated third party. In connection with the acquisition, the Company paid
Mr. Berkley $100,000 (an amount equal to the acquired corporation's net asset
value on the purchase date) and assumed at cost the obligations incurred by the
acquired corporation in connection with the construction of certain aircraft
facilities.
During 1995, the Company paid $112,000 in consulting fees to a firm owned
by Scott M. Cunningham, a Director of the Company.
The Company believes that, in each of the transactions with management and
others described above, the amounts paid or received by the Company were
comparable to those that would have been paid to or received from an
unaffiliated party in an arm's-length transaction.
Robert B. Hodes and Jack H. Nusbaum, both Directors of the Company, are
Counsel and Chairman, respectively, of Willkie Farr & Gallagher, outside counsel
to the Company.
9
<PAGE> 12
COMPENSATION AND STOCK OPTION COMMITTEE
REPORT ON EXECUTIVE COMPENSATION
CEO COMPENSATION. The Compensation and Stock Option Committee continues to
believe that the Chief Executive Officer's (the CEO's) compensation should be
heavily influenced by Company performance, as measured by operating, financial
and strategic objectives, viewed both from a short-term and a long-term
perspective. The CEO's compensation is set based on the Committee's general
evaluation of these factors as well as the CEO's individual performance.
The Committee approved the CEO's salary for 1995 at its meeting in December
1994. The Committee considered the Company's financial performance and the
performance of the Company's stock during 1994 as compared with the Peer Group
companies selected for the Stock Performance Graph. In evaluating the Company's
financial performance, the Committee reviewed, among other factors, the
Company's return on capital relative to the return on a five (5) year treasury
bond. The Committee noted that the Company's combined ratio was 106.3 at
September 30, 1994 compared to 103.1 at September 30, 1993. The Committee also
noted that the combined ratio at September 30, 1994 included the impact of the
Northridge Earthquake and that, absent this event, the combined ratio would have
been 102.0 at September 30, 1994 and therefore would have been more comparable
to September 30, 1993. The Committee further noted the Company's annualized
return on stockholders' equity was 4.3% at September 30, 1994 compared to 10.3%
at December 31, 1993. The Committee evaluated the CEO's individual performance
during 1994, and noted Mr. Berkley's tireless efforts to achieve growth through
acquisitions and start-up companies during 1994 as well as the fact that Mr.
Berkley's leadership and dedication were critical to the Company's long-term
success. The Committee also considered the salaries of the chief executive
officers of the companies in the Peer Group, believing that the CEO's combined
salary and anticipated bonus should generally be within the range of the
executive officers of the companies included in the Peer Group. In view of the
foregoing factors, the Committee determined to increase Mr. Berkley's salary
from $950,000 to $985,000.
For purposes of determining incentive compensation for the CEO, the
Committee determined that the Company should consider the limitations on tax
deductibility imposed under Section 162(m) of the Internal Revenue Code of 1986,
as amended (the "Code"). Section 162(m) limits deductions for compensation in
excess of $1 million a year paid by a public corporation to certain of its
executives unless certain criteria are met. Therefore, in order to meet the
criteria, the Committee determined that the CEO's incentive compensation should
be structured to qualify as "performance-based compensation," which is exempt
from the deduction limits. In general, this rule requires that the CEO's
incentive compensation be based on attainment of one or more performance goals
and that the Company's stockholders approve both the performance goals and the
amount to be paid. For these reasons, the Committee recommended that the CEO
should receive incentive compensation for a fiscal year only if the Company's
annual net income available to common stockholders for such fiscal year, as
reported in the Company's audited financial statements for such year, exceeds an
amount (the "Base Amount") calculated by multiplying the Company's average
common stockholders' equity (computed as one-half of the sum of the beginning of
the fiscal year and the end of the fiscal year common stockholders' equity) by a
percentage rate of return for such fiscal year to be determined by the
Committee, in its discretion. During 1995, the percentage rate of return was
7 3/8% (the rate being paid by the Company on its Depositary Shares (each
representing 1/6 of a share of the Company's 7 3/8% Series A Cumulative
Redeemable Preferred Stock)). Common stockholders' equity represents total
10
<PAGE> 13
stockholders' equity less the liquidation preference of the Company's
outstanding preferred stock. If the Company's annual net income available to
common stockholders for a fiscal year exceeds the Base Amount for such year,
then the CEO's incentive compensation for such year will be equal to 10% of the
excess; provided, however, that in no event will the CEO's incentive
compensation exceed 2% of the Company's net income available to common
stockholders for such year, as reported in the Company's audited financial
statements.
In determining the Base Amount for 1995, the Committee noted that the
method of computing average common stockholders' equity described above would
not give proper economic effect to the Company's public offering in October 1995
of 3,450,000 shares of Common Stock (proceeds to the Company of $145,107,000).
In order to properly reflect such amount, the Committee determined that it would
be appropriate to make an equitable adjustment to give proper treatment to the
proceeds of the offering. Accordingly, average common stockholders' equity was
computed without regard to the proceeds of the offering and then was increased
by such proceeds weighted for the number of days (73) such proceeds were
available to the Company. The combined amount was then treated as average common
stockholders' equity against which the rate of 7 3/8% was applied to determine
the Base Amount.
Application of the foregoing performance goals resulted in the maximum
incentive compensation being payable to Mr. Berkley for fiscal 1995.
For the 1996 performance based incentive program, the Committee determined
that it would be in the best interests of the Company to redefine average common
stockholders' equity as the average of common stockholders equity as of the
beginning of the fiscal year and as of the end of each fiscal quarter. The
Committee noted that this would better reflect average common stockholders'
equity and mitigate the impact that events such as the foregoing stock issuance
would have on the CEO's performance based compensation.
The Committee also determined that the rate of 7 3/8% would be applied in
determining the Base Amount for 1996.
COMPENSATION OF EXECUTIVE OFFICERS GENERALLY. The Company has not entered
into employment agreements with any officers. The Committee believes it
continued to be important, therefore, to use compensation to enable the Company
to attract and reward officers who contribute to the Company's long-term success
by demonstrated, sustained performance. To this end, the Company relies on cash
and individual bonus awards and on equity-based compensation through the 1992
Stock Option Plan.
In setting compensation, the Committee considered the individual
performance and past pay levels of all executive officers and the President of
each subsidiary. The Committee also considered the same factors identified above
relating to CEO compensation, although there is no specific quantitative,
formula relationship between these factors and the actual compensation
established for any individual. For 1995, the Committee generally sought to
increase executive salaries to remain in the average range of members of the
Company's Peer Group, while bonus compensation approximated 30% of salary.
INCENTIVE COMPENSATION PROPOSAL. The Committee determined that the
President and Chief Operating Officer's incentive compensation should be
structured to qualify as "performance-based compensation." As a result, the
Committee recommended that the President and Chief Operating
11
<PAGE> 14
Officer's incentive compensation should be based upon attainment of the
performance goals described under "Incentive Compensation for the Company's
President and Chief Operating Officer," and that such goals and the amount to be
paid be submitted to stockholders for their approval.
STOCK OPTION GRANTS. It has been the Company's practice to grant stock
options every other year. Under the 1992 Stock Option Plan, options may be
granted to the CEO and to the other executives based on an evaluation of such
individual's ability to influence the Company's long-term growth and
profitability. In the case of executives employed by subsidiaries, the
subsidiary's financial performance and potential future contributions to overall
corporate profitability were also taken into account. The Committee also
considers a recipient's annual salary. During 1995, the Committee granted
options based upon a subjective application of the foregoing criteria.
Compensation and Stock Option
Committee
Henry Kaufman
Richard Merrill
Martin Stone
March 7, 1996
The above report of the Compensation and Stock Option Committee shall not
be deemed incorporated by reference by any general statement incorporating by
reference this Proxy Statement into any filing under the Securities Act of 1933
or under the Securities Exchange Act of 1934 except to the extent that the
Company specifically incorporates this information by reference, and shall not
otherwise be deemed filed under such Acts.
12
<PAGE> 15
EXECUTIVE COMPENSATION
The following table sets forth all the cash and non-cash compensation for
each of the last three fiscal years awarded to or earned by the Chairman of the
Board and Chief Executive Officer of the Company and the four other highest paid
executive officers of the Company whose earnings exceeded $100,000 in salary and
bonus.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
--------------------------------
PAYOUTS
ANNUAL COMPENSATION ---------
----------------------------------------- AWARDS LONG
OTHER --------------------- TERM
ANNUAL RESTRICTED SECURITIES INCENTIVE
COMPEN- STOCK UNDERLYING PLAN ALL OTHER
SALARY BONUS SATION AWARD(S) OPTIONS PAYOUTS COMPENSATION
NAME AND PRINCIPAL POSITION YEAR ($) ($) ($) ($) # GRANTED ($) ($)
(A) (B) (C) (D) (E) (F) (G) (H) (I)
- ---------------------------------- ----- ------------- ------- ----------- ---------- --------- --------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
William R. Berkley................ 1995 1,022,500(1) 996,000 198,880(2) -- -- -- 75,749(3)
Chairman of the Board and 1994 986,000(4) 0 226,250(5) -- 40,000 -- 57,846
Chief Executive Officer 1993 778,000(6) 500,700 230,821(7) -- -- -- 51,106
Anthony J. Del Tufo............... 1995 315,000 75,000 0 -- -- -- 21,216(3)
Senior Vice President 1994 300,000 65,000 0 -- 7,500 -- 16,500
Chief Financial Officer and
Treasurer 1993 98,077(8) 30,000 0 -- 10,000 -- --
Edward A. Thomas.................. 1995 250,000 75,000 0 -- -- -- 16,665(3)
Senior Vice President 1994 235,000 50,000 0 -- 6,750 -- 12,914
Specialty Operations 1993 225,000 50,300 -- -- -- -- 14,587
Sam Daniel, Jr. .................. 1995 242,500 82,500 0 -- -- -- 16,123(3)
Senior Vice President 1994 225,000 50,000 0 -- 7,500 -- 12,364
Regional Operations 1993 215,000 50,300 -- -- -- -- 13,931
Robert S. Gorin................... 1995 235,000 75,000 0 -- -- -- 15,581(3)
Senior Vice President 1994 215,000 50,000 0 -- 7,500 -- 11,804
General Counsel and Secretary 1993 195,000 45,000 0 -- -- -- 12,655
</TABLE>
- ------------------------------
(1) Of this amount, $21,000 represents Directors fees paid by the Company and
$16,500 represents director fees paid by Signet Star Holdings, Inc.
(2) Of this amount, $78,880 represents personal use of Company and chartered
aircraft and $120,000 represents compensation paid to Mr. Berkley by Signet
Star Holdings, Inc. for serving as chairman of its board of directors.
(3) For Messrs. Berkley, Del Tufo, Thomas, Daniel and Gorin, these amounts
include contributions to the profit sharing plan of $9,750 each and Benefit
Replacement Plan contributions of $54,231, $10,706, $6,481, $5,991 and
$5,500, respectively. For Mr. Berkley, Del Tufo, Thomas, Daniel and Gorin,
this amount includes interest on deferred compensation of $11,768, $760,
$434, $383 and $331, respectively.
(4) Of this amount, $20,000 represents Directors fees paid by the Company and
$16,000 represents director fees paid by Signet Star Holdings, Inc.
(5) Of this amount, $106,250 represents personal use of Company and chartered
aircraft and $120,000 represents compensation paid to Mr. Berkley by Signet
Star Holdings, Inc. for serving as chairman of its board of directors.
(6) Of this amount, $20,000 represents Directors fees paid by the Company and
$8,000 represents fees paid by Signet Star Holdings, Inc.
(7) Of this amount, $93,121 represents personal use of Company and chartered
aircraft, $77,700 represents the fair market value of art work owned by the
Company and transferred to Mr. Berkley and $60,000 represents compensation
paid to Mr. Berkley by Signet Star Holdings, Inc. for serving as chairman of
its board of directors.
(8) Represents salary from August 30, 1993.
13
<PAGE> 16
The following table shows for the fiscal year ended December 31, 1995 the
number of stock option grants which were exercised during 1995 and the number
and value of unexercised options for the executive officers named in the Summary
Compensation Table:
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR END OPTION/SAR VALUES
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES VALUE OF
UNDERLYING UNEXERCISED
UNEXERCISED IN THE MONEY
OPTIONS/SAR'S OPTIONS/SAR'S
AT AT
FISCAL YEAR FISCAL YEAR
END END
SHARES 12/31/95(#)(1) 12/31/95($)(1)
NAME ACQUIRED
AND ON VALUE EXERCISABLE/ EXERCISABLE/
PRINCIPAL POSITION EXERCISE(#) REALIZED($) UNEXERCISABLE UNEXERCISABLE
(A) (B) (C) (D) (E)
- ---------------------------------------------- ----------- ----------- ------------- -------------
<S> <C> <C> <C> <C>
William R. Berkley -- -- 58,333/ 1,470,827/
Chairman of the Board and 81,667 1,615,948
Chief Executive Officer
Anthony J. Del Tufo -- -- 0/ 0/
Senior Vice President 17,500 196,075
Chief Financial Officer and Treasurer
Edward A. Thomas -- -- 12,583/ 317,687/
Senior Vice President 14,667 283,605
Specialty Operations
Sam Daniel, Jr. -- -- 17,000/ 510,200/
Senior Vice President 11,500 195,325
Regional Operations
Robert S. Gorin 2,833 35,484 0/ 0/
Senior Vice President 10,167 170,998
General Counsel and Secretary
</TABLE>
- ------------------------------
(1) The Company does not have a Stock Appreciation Rights Plan.
14
<PAGE> 17
COMPANY STOCK PERFORMANCE GRAPH
The graph below compares the cumulative total return on the Common Stock of
the Company for the last five fiscal years with the cumulative total return on
the Standard & Poor's (S&P) 500 Index and a Peer Group over the same period
(assuming the investment of $100 in each category on December 31, 1990 and the
reinvestment of all dividends).
<TABLE>
<CAPTION>
Measurement Period W.R. Berkley
(Fiscal Year Covered) Corporation S&P 500 Peer Group
<S> <C> <C> <C>
1990 100.00 100.00 100.00
1991 123.00 130.00 126.00
1992 176.00 140.00 153.00
1993 144.00 155.00 160.00
1994 157.00 157.00 170.00
1995 227.00 215.00 233.00
</TABLE>
The Peer Group includes the following companies:
American International Group, Inc., The Chubb Corporation, The Continental
Corporation(1),
GEICO Corporation, General Re Corporation, The Hartford Steam Boiler Inspection
and
Insurance Company. The Ohio Casualty Corporation, The Progressive Corporation,
SAFECO
Corporation, The St. Paul Companies, Inc. and USF&G Corporation
- ---------------
(1) For 1995, the total return for the Peer Group includes data for the
Continental Corporation through March 31, 1995. The Continental Corporation
was acquired by another entity during the second quarter of 1995.
15
<PAGE> 18
INCENTIVE COMPENSATION CRITERIA
FOR THE COMPANY'S PRESIDENT AND CHIEF OPERATING OFFICER
For purposes of determining future incentive compensation for the Company's
President and Chief Operating Officer, the Compensation and Stock Option
Committee determined that the Company should consider the limitations on tax
deductibility imposed under Section 162(m) of the Code. Section 162(m) limits
deductions for compensation in excess of $1 million a year paid by a public
corporation to certain of its executives unless certain criteria are met.
Therefore, in order to meet the criteria, the Compensation and Stock Option
Committee determined that the President and Chief Operating Officer's incentive
compensation should be structured to qualify as "performance-based
compensation," which is exempt from the deduction limits. In general, this rule
requires that the President and Chief Operating Officer's incentive compensation
be based on attainment of one or more performance goals and that the Company's
stockholders approve both the performance goals and the amount to be paid. For
these reasons, the Company has included this proposal for stockholder approval
relating to the President and Chief Operating Officer's future incentive
compensation. Under this proposal, the President and Chief Operating Officer
would receive incentive compensation for a fiscal year if the Company's annual
net income available to common stockholders for such fiscal year, as reported in
the Company's audited financial statements for such year, exceeds an amount (the
"Base Amount") calculated by multiplying the Company's average common
stockholders' equity (computed as the average of common stockholders' equity as
of the beginning of the fiscal year and as of the end of each fiscal quarter) by
a rate of return of 7 3/8%. Common stockholders' equity represents total
stockholders' equity less the liquidation preference of the Company's
outstanding preferred stock. If the Company's annual net income available to
common stockholders for a fiscal year exceeds the Base Amount for such year,
then the President and Chief Operating Officer's incentive compensation for such
year will be equal to 5% of the excess; provided, however, that in no event will
the President and Chief Operating Officer's incentive compensation exceed 1% of
the Company's net income available to common stockholders for such year, as
reported in the Company's audited financial statements. In formulating this
proposal, the Compensation and Stock Option Committee determined that the
President and Chief Operating Officer should receive incentive compensation for
the fiscal year ending December 31, 1996 if the return on the Company's common
stockholders' equity exceeds the rate (7 3/8%) being paid by the Company on its
Depositary Shares (each representing 1/6 of a share of the Company's 7 3/8%
Series A Cumulative Redeemable Preferred Stock.) The Compensation and Stock
Option Committee reserves the discretion to change this target rate of return
for fiscal years ending subsequent to December 31, 1996.
The amount of incentive compensation payable to the President and Chief
Operating Officer under this arrangement for fiscal year 1996 is not
determinable at this time. If the arrangement had been in effect for fiscal
1995, the President and Chief Operating Officer would have been paid $498,000 in
incentive compensation.
It is the intention of the persons named on the enclosed form of proxy to
vote "FOR" approval of the Incentive Compensation Criteria for the Company's
President and Chief Operating Officer. The President and Chief Operating
Officer's incentive compensation will be paid only if these criteria are so
approved.
16
<PAGE> 19
APPOINTMENT OF INDEPENDENT AUDITORS
KPMG Peat Marwick LLP has been appointed by the Board as independent
certified public accountants to audit the financial statements of the Company
for the fiscal year ending December 31, 1996. The appointment of this firm was
recommended to the Board by the Audit Committee. The Board is submitting this
matter to a vote of stockholders in order to ascertain their views. If the
appointment of KPMG Peat Marwick LLP is not ratified, the Board will reconsider
its action and will appoint auditors for the 1996 fiscal year without further
stockholder action. Further, even if the appointment is ratified by stockholder
action, the Board may at any time in the future in its discretion reconsider the
appointment without submitting the matter to a vote of stockholders.
It is expected that representatives of KPMG Peat Marwick LLP will attend
the Annual Meeting, will have the opportunity to make a statement if they desire
to do so and will be available to respond to appropriate stockholder questions.
It is the intention of the persons named on the enclosed form of proxy to
vote "FOR" ratification of the selection of KPMG Peat Marwick LLP unless
otherwise directed.
OTHER MATTERS
Management is not aware of any matters to come before the Annual Meeting
other than as set forth above. However, since matters of which Management is not
now aware may come before the Annual Meeting or any adjournment thereof, the
proxies intend to vote, act and consent in accordance with their best judgment
with respect thereto. Upon receipt of such proxies (in the form enclosed and
properly signed) in time for voting, the shares represented thereby will be
voted as indicated thereon and in this Proxy Statement.
Based solely on its review of the copies of Forms 3 and 4 received by it,
or written representations from certain reporting persons that no Forms 5 were
required for such persons, the Company believes that, during the period from
January 1, 1995 until December 1995, all filing requirements under Section 16(a)
of the Securities Exchange Act of 1934 applicable to its officers, directors and
ten-percent stockholders were complied with, except that Messrs. Scott
Cunningham, a Director of the Company, and E. LeRoy Heer, an executive officer
of the Company, failed to file Forms 4 with respect to the sale of 200 and 500
shares of Common Stock, respectively. Messrs. Cunningham and Heer filed timely
Forms 5 with respect to these transactions.
17
<PAGE> 20
STOCKHOLDER PROPOSALS FOR 1997 ANNUAL MEETING
It is anticipated that the next Annual Meeting after the one scheduled for
May 21, 1996 will be held on or about May 20, 1997. All stockholder proposals
relating to a proper subject for action at the 1997 Annual Meeting to be
included in the Company's Proxy Statement and form of proxy relating to that
meeting must be received by the Company for its consideration at its principal
executive offices no later than December 15, 1996. Any such proposal should be
submitted by certified mail, return receipt requested.
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K IS AVAILABLE WITHOUT
CHARGE TO ANY STOCKHOLDER OF THE COMPANY WHO REQUESTS A COPY IN WRITING.
REQUESTS FOR COPIES OF THIS REPORT SHOULD BE DIRECTED TO THE SECRETARY, W.R.
BERKLEY CORPORATION, 165 MASON STREET, P.O. BOX 2518, GREENWICH, CONNECTICUT
06836-2518.
By Order of the Board of Directors,
WILLIAM R. BERKLEY
Chairman of the Board and
Chief Executive Officer
18
<PAGE> 21
PLEASE MARK YOUR VOTES AS INDICATED IN THIS EXAMPLE. /X/
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL
BE VOTED FOR PROPOSAL 1, 2, 3 AND 4.
1. ELECTION OF DIRECTORS:
Richard G. Merrill, Jack H. Nusbaum, Mark L. Shapiro and John D. Vollaro
FOR WITHHOLD INSTRUCTION: To withhold authority to
all nominees AUTHORITY vote for any individual nominee write
listed above to vote that nominee's name on the space
(except as marked for all nominees provided below
to the contrary listed above
on the right)
/ / / / -------------------------------------
2. TO APPROVE THE INCENTIVE COMPENSATION CRITERIA FOR THE COMPANY'S PRESIDENT
AND CHIEF OPERATING OFFICER.
FOR AGAINST ABSTAIN
/ / / / / /
3. TO RATIFY THE SELECTION OF KPMG PEAT MARWICK LLP AS INDEPENDENT CERTIFIED
PUBLIC ACCOUNTANTS FOR THE COMPANY FOR THE FISCAL YEAR ENDING DECEMBER 31,
1996.
FOR AGAINST ABSTAIN
/ / / / / /
4. In their discretion, the proxies are authorized to vote upon such other
matters as may properly come before the meeting.
FOR AGAINST ABSTAIN
/ / / / / /
The undersigned hereby acknowledges receipt of the Notice of Annual Meeting and
Proxy Statement for the 1996 Annual Meeting and the Annual Report for the
fiscal year ended December 31, 1995.
Dated: , 1996
-----------------------------------------
- -----------------------------------------------------
- -----------------------------------------------------
Please sign your name or names exactly as printed opposite. When signing as
attorney, executor, administrator, trustee, guardian or corporate officer,
please give your full title as such. Joint owners should each sign.
DATE, VOTE, SIGN AND MAIL PROMPTLY IN THE ENCLOSED ENVELOPE.
<PAGE> 22
PROXY
W.R. BERKLEY CORPORATION
This Proxy is Solicited on Behalf of the Board of Directors
The undersigned stockholder of W.R. BERKLEY CORPORATION hereby appoints
ROBERT S. GORIN and ROBERT B. HODES, and either of them, the true and lawful
attorneys, agents and proxies of the undersigned, with full power of
substitution to each of them, to vote all the shares of Common Stock which the
undersigned may be entitled to vote at the Annual Meeting of Stockholders to be
held at W.R. Berkley Corporation, 165 Mason Street, Greenwich Connecticut on
May 21, 1996, and at any adjournment of such meeting.
(Continued and to be signed on the reverse side)
