<PAGE> 1
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 / / CONFIDENTIAL FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
RULE 14a-6(e)(2))
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or
Section 240.14a-12
GENERAL RE CORPORATION
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(Name of Registrant as Specified In Its Charter)
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(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:6
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2) Aggregate number of securities to which transaction applies:
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3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (Set forth the
amount on which the filing fee is calculated and state how it
was determined):
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4) Proposed maximum aggregate value of transaction:
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5) Total fee paid:
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/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
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2) Form, Schedule or Registration Statement No.:
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3) Filing Party:
General Re Corporation
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4) Date Filed:
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<PAGE> 3
PRELIMINARY COPY
PRELIMINARY PROXY STATEMENT
GENERAL RE CORPORATION
695 EAST MAIN STREET
STAMFORD, CONNECTICUT 06904-2351
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
MAY 19, 1995
The annual meeting of the stockholders of General Re Corporation will
be held on May 19, 1995 at 9:00 a.m. at the offices of the Corporation, 695
East Main Street, Stamford, Connecticut for the following purposes:
(1) To consider and act upon a proposal to amend the
Corporation's By-laws to raise the retirement age for directors from
seventy (70) to seventy-two (72);
(2) To elect directors;
(3) To consider and act upon a proposal to adopt the 1995
Long-Term Compensation Plan;
(4) To consider and act upon a proposal to ratify the
selection of independent public accountants; and
(5) To transact any and all other business which may
properly come before the meeting.
Only stockholders of record at the close of business on March 24, 1995
are entitled to notice of and to vote at this meeting or any adjournment
thereof.
WHETHER OR NOT YOU PLAN TO ATTEND THIS MEETING, PLEASE DATE AND SIGN
THE ENCLOSED PROXY OR VOTING DIRECTION CARD AND RETURN IT PROMPTLY IN THE
ENCLOSED ENVELOPE, WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES.
CHARLES F. BARR, Secretary
Stamford, Connecticut
March 28, 1995
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<PAGE> 4
PRELIMINARY COPY
GENERAL RE CORPORATION
695 EAST MAIN STREET
STAMFORD, CONNECTICUT 06904-2351
PROXY STATEMENT
SOLICITATION OF PROXIES
The accompanying proxy is solicited by the Board of Directors of the
Corporation for use at the annual meeting of stockholders to be held on May 19,
1995. The proxy, when properly executed and received by the Secretary prior to
the meeting, will be voted unless revoked. Any stockholder giving a proxy has
the power to revoke it any time prior to voting by a later dated proxy, notice
in writing or attendance at the meeting and election to vote in person. Except
to the extent that contrary instructions are given by stockholders in the
places provided for this purpose in the proxy, it is the intention of the
persons named in the proxy to vote as follows:
(1) For the amendment of the Corporation's By-laws to
raise the retirement age for directors from seventy (70) to
seventy-two (72);
(2) For the election of each nominee named below under
the caption "Election of Directors";
(3) For the adoption of the 1995 Long-Term Compensation
Plan;
(4) For the proposal to ratify the selection of
independent public accountants; and
(5) In the discretion of the proxies, on any other
matters that may properly come before the meeting.
This proxy statement and the accompanying proxy or voting direction
card(s) are being mailed on or about March 28, 1995. Only stockholders of
record on the books of the Corporation at the close of business on March 24,
1995 will be entitled to vote at the annual meeting. On that date, there were
[82,279,870] shares of common stock, $.50 par value (the "Common Stock"),
issued and outstanding and 2,000,000 shares of convertible preferred stock, no
par value (the "Preferred Stock"), outstanding. Each holder of shares of
Common Stock is entitled to one vote per share. Each share of Preferred Stock
is entitled to the number of votes equal to the number of shares of Common
Stock into which such shares of Preferred Stock could be converted on the
record date for determining the stockholders entitled to vote, rounded to the
nearest one-tenth of a vote. On March 24, 1995, each beneficial owner of
shares of Preferred Stock is entitled to [ONE VOTE PER SHARE]. A majority of
the
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outstanding shares of Common Stock and Preferred Stock will constitute a quorum
for the transaction of business at the annual meeting, but if a quorum is not
present, in person or by proxy, the meeting may adjourn from time to time until
a quorum is obtained.
The affirmative vote of the holders of a majority in interest of the
outstanding shares of Common Stock and Preferred Stock present in person or
represented by proxy at the meeting and entitled to vote, voting together and
not as separate classes, is required for the amendment of the Corporation's
By-laws to raise the retirement age for directors. The affirmative vote of a
majority in interest of the outstanding shares of Common Stock and Preferred
Stock present in person or represented by proxy at the meeting and entitled to
vote, voting together and not as separate classes, is required for the election
of directors, the adoption of the 1995 Long-Term Compensation Plan and the
ratification of the selection of independent public accountants. Shares
represented by proxies that are marked "ABSTAIN" or that are not voted by
brokers who are prohibited from exercising authority for beneficial owners who
have not provided voting instructions with respect to a particular matter
("broker non-votes") are counted for purposes of determining the presence or
absence of a quorum for the transaction of business. Shares represented by
proxies which are marked "WITHHELD" with regard to the election of directors
will be excluded entirely from the vote and will have no effect. Shares
represented by proxies which are marked "ABSTAIN" with respect to any of the
other matters presented for consideration at the annual meeting will be
considered in person or represented by proxy at the meeting and, accordingly,
will have the effect of a negative vote because those matters require the
affirmative vote of a majority of the votes of holders of shares present in
person or represented by proxy. In addition, any broker non-votes on specific
matters will have no effect on the outcome of such matters.
The voting direction cards will serve to instruct the trustees of the
Employee Savings and Stock Ownership Plan of General Re Corporation and its
Subsidiaries (the "ESSOP") on how to vote shares of the Corporation's Common
Stock and Preferred Stock held by such plan. [PRINTED ON ANY VOTING DIRECTION
CARD ACCOMPANYING THIS PROXY STATEMENT IS THE NUMBER OF SHARES ALLOCATED TO THE
PARTICIPANT IN SUCH PLAN. THE INSTRUCTIONS GIVEN BY THE PARTICIPANTS WILL ALSO
SERVE TO INSTRUCT THE TRUSTEE ON HOW TO VOTE THE UNALLOCATED SHARES HELD BY
SUCH PLAN.]
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
At December 31, 1994, no person was known by management to be a
beneficial holder, directly or indirectly, of more than five percent (5%) of
the shares of Common Stock of the Corporation. All of the outstanding shares
of Preferred Stock are held by the ESSOP.
The following table shows the number of shares of the Corporation's
Common Stock beneficially owned as of March 1, 1995 by each director and
nominee for director and by the executive officers named in the Compensation
Table included in this Proxy Statement (including the beneficial ownership of
Preferred Stock held by the ESSOP, which is reported as shares of Common Stock
because the Preferred Stock is convertible into and votes with the Common Stock
as a class). All directors and executive officers as of March 1, 1995 as a
group owned 199,411 shares of Common Stock representing approximately 0.24% of
the outstanding Common Stock. Except as otherwise indicated, each person has
sole voting and investment power with respect to the shares shown.
<TABLE>
<CAPTION>
NUMBER OF SHARES OF NUMBER OF
COMMON STOCK SHARE UNITS IN TOTAL SHARES
NAME OF BENEFICIAL OWNER BENEFICIALLY OWNED(1) DEFERRED COMPENSATION(2) AND SHARE UNITS
------------------------ --------------------- ------------------------ ---------------
<S> <C> <C> <C>
Charles F. Barr 130(3) 0 130
Lucy Wilson Benson 300 0 300
Joseph P. Brandon 8,097(3)(4) 943 9,040
Walter M. Cabot 327 7,736 8,063
John C. Etling 35,376(3)(4) 853 36,229
Ronald E. Ferguson 69,336(3)(4) 4,541 73,877
William C. Ferguson 1,000 299 1,299
Ernest C. Frohboese 6,833(3)(4) 1,544 8,377
Donald J. Kirk 500 2,691 3,191
Kay Koplovitz 0 1,263 1,263
Edward H. Malone 700 4,921 5,621
Andrew W. Mathieson 4,203 6,010 10,213
David E. McKinney 2,325 2,396 4,721
Stephen A. Ross 1,000 809 1,809
Edmond F. Rondepierre 14,690(3)(4) 892 15,582
Walter F. Williams 1,000 312 1,312
</TABLE>
(1) Includes shares of Common Stock held in the names of spouses and
children, as to which beneficial ownership is disclaimed. Fractional
shares are rounded to the nearest whole share. No director or
executive officer owns beneficially more than 1% of the outstanding
stock. Does not include the following shares underlying stock options
exercisable within sixty (60) days: Charles F. Barr - 540 shares;
Joseph P. Brandon - 7,390 shares; John C. Etling - 41,571 shares;
Ronald E. Ferguson - 32,533 shares; Ernest C. Frohboese - 14,937
shares; Edmond F. Rondepierre - 13,892 shares; and all executive
officers as of March 1, 1995 as a group - 175,108 shares.
(2) Non-employee directors may elect to defer all or part of their
compensation to be held in deferral accounts either in cash or as
units equivalent to shares of Common Stock ("share units"). Executive
officers may also receive a portion of their bonuses in share units.
Share units carry no voting rights. Each share unit is equivalent to
one share of Common Stock. Fractional units are rounded to the
nearest whole unit.
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(3) Shares of Preferred Stock are allocated to the accounts of
participants in the ESSOP pursuant to the terms of the ESSOP.
Distributions under the ESSOP are made in cash or shares of Common
Stock into which the Preferred Stock is convertible. The participants
in the ESSOP have the right to instruct the trustee with respect to
the vote of the shares allocated to their accounts and a portion of
the Preferred Stock that has not been allocated to any participant's
account or for which no instructions are timely received by the
trustee, whether or not allocated to the account of any participant.
The minimum number of unallocated shares of Preferred Stock that a
participant may vote is equal to the number of unallocated shares of
Preferred Stock multiplied by a fraction equal to the number of votes
attributable to the shares of Preferred Stock allocated to the
participant's account over the total number of votes attributable to
all of the allocated shares of Preferred Stock. The number of shares
of Common Stock disclosed above that is represented by participants'
beneficial ownership of Preferred Stock is as follows: Charles F.
Barr: __________ allocated shares __________ unallocated shares;
Joseph P. Brandon: __________ allocated shares, __________ unallocated
shares; John C. Etling: __________ allocated shares, __________
unallocated shares; Ronald E. Ferguson: __________ allocated shares,
__________ unallocated shares; Ernest C. Frohboese: __________
allocated shares, __________ unallocated shares; and Edmond F.
Rondepierre: __________ allocated shares, __________ unallocated
shares. All executive officers as a group beneficially own __________
allocated shares and __________ unallocated shares.
(4) Includes restricted stock. Joseph P. Brandon holds 7,500 shares (300
restricted until December, 1997: 500 restricted until April, 1999: 500
restricted until May, 2000: 750 restricted until June, 2001: 1700
restricted until September, 2001: and 3,750 restricted until February,
2019), John C. Etling holds 12,000 shares (restricted until November,
1995), Ronald E. Ferguson holds 22,500 shares (3,750 restricted until
March, 1996, 3,750 restricted until June, 1997 and 15,000 restricted
until January, 2002) and Ernest C. Frohboese holds 6,000 shares
(restricted until September, 2000).
PROPOSAL TO AMEND THE BY-LAWS TO RAISE
THE RETIREMENT AGE FOR DIRECTORS
THE TEXT OF SECTION 2.2 OF ARTICLE II OF THE BY-LAWS RELATING TO,
AMONG OTHER THINGS, THE TERM OF OFFICE OF DIRECTORS AND THE EVENTS THAT WOULD
REDUCE THE TERM OF OFFICE OF DIRECTORS, AS PROPOSED TO BE AMENDED, IS INCLUDED
AS EXHIBIT A TO THIS PROXY STATEMENT.
Section 2.2 of Article II of the Corporation's By-laws currently
provides that the term of office of a director is three years and until the
director's successor is elected or until the earliest of the annual meeting of
stockholders next following the individual director's seventieth (70th)
birthday or a member's resignation, removal or ineligibility. As a result of
the retirement provision, in the past various directors of the Corporation have
been required to retire from the Board of Directors at the annual meeting of
stockholders immediately after their seventieth (70th) birthday.
The Board of Directors, with one director recusing himself from the
vote, has unanimously adopted a resolution recommending that the stockholders
consider and approve at the annual meeting a proposal to raise the retirement
age for directors from the annual meeting next following the director's
seventieth (70th) birthday to the annual meeting next following a director's
seventy-second (72nd) birthday. The Board of Directors believes that the
current retirement age based upon the director's seventieth (70th) birthday
results in the premature retirement of directors at an age when they are
valuable members of the Board of Directors and contribute in a meaningful way
to the Corporation. If the proposed amendment is adopted, Edward H. Malone, a
director of the Corporation since 1985 who is seventy
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(70) years old, will not be required to retire from the Board of Directors
until 1997.
Under the By-laws and the Corporation's Restated Certificate of
Incorporation, the amendment to Section 2.2(a) of the By-laws requires the
approval of a majority in interest of the outstanding shares of the Corporation
entitled to vote.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR
THE APPROVAL OF THE PROPOSED AMENDMENT TO THE BY-LAWS.
BOARD OF DIRECTORS
The Corporation's By-laws provide that the Board of Directors shall
consist of not less than nine nor more than twenty-one members as established
from time to time by the directors or the stockholders pursuant to the
provisions of the By-laws provided that the number of directors in each of the
three classes of directors is as nearly equal as possible. The Board of
Directors currently consists of twelve (12) members. The members of each class
are elected to serve for a term of three (3) years and until their successors
are elected, or until the earliest of the annual meeting of stockholders next
following a member's seventieth (70th) birthday (or seventy-second (72nd)
birthday if the amendment to the By-laws is approved) or a member's
resignation, removal or ineligibility.
Under the present schedule, regular meetings of the Board of Directors
are held eight (8) times each year and additional special meetings are called
whenever necessary. In 1994 there were eight (8) meetings of the Board.
The Board of Directors has established an Executive Committee to
exercise the powers of the Board during the intervals between meetings of the
Board. The Committee members are Ronald E. Ferguson, Chairman, John C. Etling,
William C. Ferguson, Donald J. Kirk, Andrew W. Mathieson and David E. McKinney.
The Executive Committee did not meet in 1994.
The Board of Directors has established a Finance Committee to review
and monitor the financial affairs of the Corporation, including its investment
strategy, capital resources and expenditures, subsidiary and shareholder
dividends, foreign currency positions and commercial and investment banking
relationships. The members of the Finance Committee are Ronald E. Ferguson,
Chairman, Walter M. Cabot, Edward H. Malone, Andrew W. Mathieson, David E.
McKinney and Stephen A. Ross. The Finance Committee met six (6) times in 1994.
The Board of Directors has established an Audit Committee consisting
of Donald J. Kirk, Chairman, Lucy Wilson Benson, Kay Koplovitz and Walter F.
Williams, all of whom are non-employee directors. This Committee oversees
management's discharge of its financial reporting responsibilities and
recommends appointment
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of the Corporation's independent public accountants. The Audit Committee met
three (3) times during 1994.
The Board has established a Compensation Committee consisting of
Andrew W. Mathieson, Chairman, William C. Ferguson, Edward H. Malone, David E.
McKinney and Walter F. Williams, all of whom are non-employee directors, to
review, approve and report to the Board on all aspects of the Corporation's
human resources (including personnel policies, controls and compensation and
benefit programs), the performance of the senior officers and the compensation
of the Chairman, President and senior officers. The Compensation Committee met
five (5) times in 1994.
The Board has established a Committee on Directors consisting of
William C. Ferguson, Chairman, Lucy Wilson Benson and Andrew W. Mathieson to
recommend board committee structure, recommend a plan of compensation and
benefits for non-employee directors, establish criteria for selection of
directors, review the performance of each director and propose nominees for
election to the Board. It met twice in 1994. The Committee on Directors will
consider nominations submitted by stockholders. Nominations submitted in
writing by stockholders must be received by the Secretary of the Corporation
not less than sixty (60) days nor more than ninety (90) days prior to an annual
meeting. This notice must include the information concerning the nominee that
must be disclosed about nominees for election as directors in proxy
solicitations prepared in accordance with Regulation 14A under the Securities
Exchange Act of 1934, as amended. The notice must be accompanied by the
written consent of each proposed nominee to serve as a director of the
Corporation if so elected.
The Board has established a Committee on Shareholder Relations
consisting of non-management directors Lucy Wilson Benson, Chairman, William C.
Ferguson, Donald J. Kirk and Walter F. Williams to consider matters of special
interest to stockholders, such as stockholder proposals. Although no such
proposals were received during 1994 the Committee on Shareholder Relations met
once in 1994.
The Board has established a Pension & Savings Plan Committee
consisting of Walter M. Cabot, Chairman, Donald J. Kirk, Kay Koplovitz and
Edward H. Malone. The Committee's responsibilities include the approval of the
actuarial assumptions and annual contributions for the Corporation's pension
plans and the selection of trustees, investment managers and independent
actuaries for the Corporation's pension plans and the ESSOP. The Pension &
Savings Plan Committee met twice in 1994.
Each of the directors attended at least seventy-five percent (75%) of
the total of the Board and their committee meetings held during 1994.
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ELECTION OF DIRECTORS
Six (6) directors have been nominated for re-election at the annual
meeting. They are Lucy Wilson Benson, a director since 1990, Walter M. Cabot,
a director since 1979, John C. Etling, a director since 1983, William C.
Ferguson, a director since 1987, Kay Koplovitz, a director since 1990 and
Walter F. Williams, a director since 1989.
It is intended that the proxies received will be voted FOR the six (6)
nominees unless otherwise provided therein. Management knows of no reason why
any of these nominees will be unable to serve, but, in such event, the proxies
received will be voted for such substitute nominees as the Committee on
Directors may recommend, but in no event will proxies received be voted for a
greater number of persons than the number of nominees.
The names, ages, terms of office, and certain other information as of
March 1, 1995 with respect to the persons nominated for election as directors
and other persons serving as directors are as follows:
INFORMATION CONCERNING NOMINEES FOR TERMS EXPIRING IN 1998:
<TABLE>
<S> <C>
LUCY WILSON BENSON, 67, a director of the Corporation since 1990, has been
President of Benson and Associates, consultants to business and government, since
1981. She served as Under Secretary of State for Security Assistance, Science
and Technology from 1977 to 1980. She serves on the boards of directors of
COMSAT Corporation, various Dreyfus Mutual Funds, International Executive Service
Corps and Logistics Management Institute. She is a trustee of the Alfred
P. Sloan Foundation, Vice-Chairman of the board of trustees of Lafayette College
(a)(d)(s) and Vice-Chairman of the Atlantic Council of the U.S.
JOHN C. ETLING, 59, a director of the Corporation since 1983, has been Vice
Chairman of the Corporation since 1987 and Vice Chairman of the Corporation's
subsidiary, General Reinsurance Corporation, since February, 1995. He previously
served as Senior Vice President and Group Executive (1984-1987) and Vice
President and Group Executive (1981-1984) of the Corporation and President and
Chief Executive Officer of General Reinsurance Corporation from 1983 to 1995. He
has been with the General Re Group since 1961. He serves on the boards of
directors of Tempest Reinsurance Company Limited and Federal Home Loan Mortgage
(e) Corporation.
</TABLE>
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<TABLE>
<S> <C>
WILLIAM C. FERGUSON, 64, a director of the Corporation since 1987, is currently
Chairman of NYNEX Corporation, a telecommunications company. He previously
served as Chairman and Chief Executive Officer of NYNEX Corporation (1989-1994).
He serves on the boards of directors of CPC International, Inc., Viacom Inc. and
(c)(d)(e)(s) NYNEX Corporation.
KAY KOPLOVITZ, 49, a director of the Corporation since 1990, is the Founder and
has been Chairman and Chief Executive Officer of USA Networks, an international
television programming company, since 1980. She previously served as Vice
President and Executive Director of USA-Columbia Satellite Services, Inc.
(a)(p) (1977-1980). She serves on the board of directors of Liz Claiborne, Inc.
WALTER F. WILLIAMS, 66, a director of the Corporation since 1989, is retired. He
previously served as Chairman, President and Chief Executive Officer of Bethlehem
Steel Corporation from 1986 to 1992. He serves on the board of trustees of
Moravian College, is a director of Wilmington Trust Company of Florida and is a
(a)(c)(s) member of The Business Council.
</TABLE>
INFORMATION CONCERNING NOMINEE FOR TERM EXPIRING IN 1997:
<TABLE>
<S> <C>
WALTER M. CABOT, 62, a director of the Corporation since 1979, has been Senior
Advisor to and Director of Standish, Ayer & Wood, investment managers since 1991.
He previously served as President (1974-1990) and Senior Advisor (1990-1991) of
Harvard Management Company, Inc., an endowment management company. He is a
trustee of Property Capital Trust and serves on the boards of directors of
Gasbeau, Inc., and Rockefeller Financial Service, Inc. He serves as a trustee
and treasurer of Wellesley College and is Chairman of the New England Medical
(f)(p) Center.
</TABLE>
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF THE
NOMINEES FOR ELECTION AS DIRECTORS.
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INFORMATION CONCERNING DIRECTORS WHOSE TERMS EXPIRE IN 1996:
<TABLE>
<S> <C>
ANDREW W. MATHIESON, 66, a director of the Corporation since 1966, has been
Executive Vice President of Richard K. Mellon and Sons, investment management and
philanthropy, since 1978. He serves on the boards of directors of Mellon Bank
(c)(d)(e)(f) Corporation and Mellon Bank, N.A.
DAVID E. MCKINNEY, 60, a director of the Corporation since 1988, is
self-employed. He previously served as Senior Vice President (1991-1992 and
1987-1988) and Vice President (1979-1987) of IBM Corporation and as Director
General, IBM Europe (1988-1991). He serves on the boards of trustees of Brown
University and the New York Philharmonic, on the boards of directors of
Organization Research Counselors, Fraunhofer Center for Research (in Computer
Graphics) and PAXAR Corporation, and is an overseer of the Thomas J. Watson, Jr.
(c)(e)(f) Institute of International Studies.
</TABLE>
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<TABLE>
<S> <C>
STEPHEN A. ROSS, 51, a director of the Corporation since 1993, has been Sterling
Professor of Economics and Finance at Yale University since 1985. He is also
Co-Chairman of Roll & Ross Asset Corporation and Managing Director, W.P. Capital
Management, L.P. He serves on the board of trustees of the College Retirement
(f) Equities Fund.
</TABLE>
INFORMATION CONCERNING DIRECTORS WHOSE TERMS EXPIRE IN 1997:
<TABLE>
<S> <C>
RONALD E. FERGUSON, 53, a director of the Corporation since 1983, has been
Chairman, President and Chief Executive Officer of the Corporation since 1987 and
Vice Chairman of the Corporation's subsidiary, General Reinsurance Corporation,
since February, 1995. He previously served as President and Chief Operating
Officer (1983-1987) and Vice President and Group Executive (1981-1983) of the
Corporation and Chairman of General Reinsurance Corporation (1985 to 1995). He
has been with the General Re Group since 1969. He serves on the boards of
(e)(f) directors of Colgate-Palmolive Company and General Signal Corporation.
DONALD J. KIRK, 62, a director of the Corporation since 1987, is an Executive-in-
Residence, Columbia University Graduate School of Business, where he had been a
professor from 1987 to 1994. He was Chairman of the Financial Accounting
Standards Board from 1978 to 1986. In 1995 he became a Member of the Public
Oversight Board of the American Institute of Certified Public Accountants' SEC
Practice Section. He is a trustee of the Fidelity Group of Mutual Funds, a
director of Valuation Research Corporation and serves as Vice-Chairman of the
boards of directors of Greenwich Hospital and the National Arts Stabilization
(a)(e)(p)(s) Fund.
EDWARD H. MALONE, 70, a director of the Corporation since 1985, is retired. He
previously served as Vice President of General Electric Company from 1970 to
1985. He is a trustee of Corporate Property Investors, a trustee of the Fidelity
Group of Mutual Funds and serves on the boards of directors of Allegheny Power
Systems, Inc., Butler Capital Corporation and Mattel, Inc. He also serves as a
trustee of the EPS Foundation at Trinity College (Washington, D.C.), the Naples
(c)(f)(p) (Florida) Philharmonic Center for the Arts and Rensselaer Polytechnic Institute.
</TABLE>
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(a) Member Audit Committee
(c) Member Compensation Committee
(d) Member Committee on Directors
(e) Member Executive Committee
(f) Member Finance Committee
(p) Member Pension and Savings Plan Committee
(s) Member Committee on Shareholder Relations
TRANSACTIONS WITH MANAGEMENT AND OTHERS
In May 1994, the Corporation's subsidiary, General Reinsurance
Corporation, entered into an agreement with W.P. Capital Management LP ("WP
Capital") under which WP Capital will manage approximately $50 million of the
Corporation's investment portfolios. Stephen A. Ross, a director of the
Corporation, is an executive officer of WP Capital and owns forty-five percent
(45%) of Roll & Ross, which owns twenty percent (20%) of WP Capital.
Investment manager fees, which will be paid by the Corporation to WP Capital on
an annual basis beginning in 1995, will be based upon the performance of the
portfolio.
EXECUTIVE COMPENSATION
Summary Compensation Table
The aggregate of all plan and non-plan compensation awarded to, earned
by, or paid to the Corporation's Chief Executive Officer, the four most highly
compensated executive officers other than the Chief Executive Officer and a
former executive officer who would have been among the four most highly
compensated executive officers if he had been an executive officer as of
year-end (collectively the "named executives") for services during the three
fiscal years ended December 31, 1994 by the Corporation and its subsidiaries to
or for the benefit of the named executives for services during those years in
all capacities to the Corporation and its subsidiaries is shown in the
following table:
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SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
------------------------------------------------------
ANNUAL COMPENSATION AWARDS PAYOUTS
--------------------------- --------------------- -------
RESTRICTED
STOCK OPTIONS LTIP
NAME AND SALARY BONUS AWARD(S) SARS PAYOUTS ALL OTHER
PRINCIPAL POSITION (1) YEAR ($) ($)(2) ($)(3) (#)(4) ($)(5) COMPENSATION(6)
---------------------- ---- ------ ------ ---------- ------ ------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
Ronald E. Ferguson . . . . . . 1994 $810,417 $647,500 $ 270,928 176,528 $306,884 $49,067
Director, Chairman, President 1993 768,750 610,000 1,046,096 28,942 134,335 51,001
and Chief Executive Officer 1992 740,000 337,500 68,778 24,169 119,625 45,042
John C. Etling . . . . . . . . 1994 541,250 475,000 0 13,000 273,277 32,917
Director and Vice Chairman 1993 520,417 365,000 0 10,898 93,380 35,493
1992 503,750 256,000 0 11,304 116,000 30,865
Ernest C. Frohboese . . . . . . 1994 324,167 240,000 313,464 6,497 101,840 19,892
Vice President 1993 304,167 256,000 229,577 5,905 0 21,456
1992 281,249 150,000 274,757 5,645 0 17,557
Edmond F. Rondepierre . . . . . 1994 340,000 93,750 57,448 6,622 100,139 20,842
Former Vice President, 1993 325,625 170,000 12,533 4,6224 42,300 24,574
General Counsel and 1992 310,833 82,500 36,689 6,596 41,325 19,389
Secretary (7)
Joseph P. Brandon . . . . . . . 1994 222,500 187,500 612,993 6,221 0 13,793
Vice President 1993 187,708 112,500 147,410 4,531 0 13,802
1992 151,667 75,000 114,347 3,818 0 10,304
Charles F. Barr . . . . . . . . 1994 192,258 125,000 0 6,000 0 2,246
Vice President, General
Counsel and Secretary (7)
</TABLE>
(1) Identified positions are as of March 1, 1995.
(2) Includes cash amounts paid as an annual bonus (the "Annual Incentive
Bonus") under certain provisions of the General Re Corporation 1989
Long-Term Compensation Plan (the "Compensation Plan") for services
rendered during the specified calendar year.
(3) Includes grants of restricted stock and, for 1992, 1993 and 1994,
share units which were awarded in lieu of cash bonuses awarded under
the Annual Incentive Bonus provisions of the Compensation Plan and
under the provisions of the Compensation Plan providing for bonus
payments subject to the performance of the Corporation over the prior
five years (the "Performance Bonus"). Restricted stock and share
units awarded for 1994 were granted under the proposed 1995 Long-Term
Compensation Plan, subject to stockholder approval of that plan.
At December 31, 1994 Ronald E. Ferguson held 22,500 restricted shares
and 2,404 share units worth $3,092,766, John C. Etling held 12,000
restricted shares and 853 share units worth $1,596,182, Ernest C.
Frohboese held 6,000 restricted shares and 945 share units worth
$862,482, Edmond F. Rondepierre held 7,436 share units worth $54,146,
Joseph P. Brandon held 7,500 restricted shares and 520 share units
worth $995,984 and Charles F. Barr held no restricted shares or share
units. Dividends are paid on restricted stock and dividend
equivalents are accrued on share units and convert to common stock at
the same time as the units convert.
(4) Includes regular grants of non-qualified stock options ("NQSOs"),
grants of replacement options (see footnote (2) to the option Grants
Table) and options granted in lieu of cash bonuses awarded under the
Annual Incentive Bonus and Performance Bonus provisions of the
Compensation Plan. NQSOs and options awarded for 1994 were granted
under the proposed 1995 Long-Term Compensation Plan, subject to
stockholder approval. In addition, includes performance-based NQSOs
granted to Ronald E. Ferguson.
(5) Includes amounts paid in cash and shares of Common Stock granted under
the Performance Bonus provisions of the Compensation Plan for the
five-year period ending in the specified calendar year, under the
Compensation Plan.
13
<PAGE> 16
(6) Includes corporate allocations under the ESSOP, the unfunded book
account under the Supplemental Executive Retirement Plan (the "SERP")
and the Benefit Equalization Plan (the "BEP") for 1994, as follows:
<TABLE>
<CAPTION>
NAME ESSOP SERP BEP
---- -------- ---- -------
<S> <C> <C> <C>
Ronald E. Ferguson . . . . . . . . . . . . . . . . . . . . $9,442 $1,000 $38,625
John C. Etling . . . . . . . . . . . . . . . . . . . . . . 9,442 363 23,113
Ernest C. Frohboese . . . . . . . . . . . . . . . . . . . . 9,442 8,750 1,700
Edmond F. Rondepierre . . . . . . . . . . . . . . . . . . . 9,442 3,608 7,792
Joseph P. Brandon . . . . . . . . . . . . . . . . . . . . . 9,330 0 4,463
Charles F. Barr . . . . . . . . . . . . . . . . . . . . . . 2,246 0 0
</TABLE>
(7) As of July 1, 1994, Charles F. Barr became Vice President, General
Counsel and Secretary of the Corporation, and Edmond F. Rondepierre
became Senior Vice President of General Reinsurance Corporation.
Option Grants Table
The options granted or awarded in 1994 to the named executives are
shown in the following table (no stock appreciation rights were granted in
1994, and none have been granted since 1987):
14
<PAGE> 17
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
NUMBER OF % OF TOTAL VALUE AT ASSUMED ANNUAL
SECURITIES OPTIONS RATES OF STOCK PRICE
UNDERLYING GRANTED TO EXERCISE APPRECIATION
OPTIONS EMPLOYEES OR FOR OPTION TERM (1)
GRANTED IN FISCAL BASE PRICE GRANT EXPIRATION -----------------------------------
NAME (#) YEAR (S/SH) DATE DATE 0% 5% 10%
---- --------- ---------- -------- ------ ---------- -- -- ---
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Ronald E. Ferguson 2,061(2) 00.25% $108.6875 02/23/94 12/13/98 0 $ 59,150 $ 130,038
10,167(2) 01.25 123.5000 05/09/94 12/12/99 0 394,071 884,465
3,739(2) 00.46 123.5000 05/09/94 12/12/00 0 175,257 403,973
135,000(3) 16.59 114.6875 11/09/94 11/09/04 0 9,737,058 24,675,616
22,000(4) 02.70 120.9375 12/14/94 12/14/04 0 1,673,253 4,240,351
1,227(5) 00.15 123.5000 01/03/95 01/03/05 0 95,299 241,430
2,334(5) 00.29 128.5625 03/01/95 03/01/05 0 108,709 478,226
------ ----- -------- --------- ----------
176,528 21.69% $116.3353 $12,242,797 $31,054,100
John C. Etling 13,000(4) 01.60% $120.9375 12/14/94 12/14/04 0 $988,740 $2,505,662
Ernest C. 5,500(4) 00.68% $120.9375 12/14/94 12/14/04 0 $418,313 $1,060,088
Frohboese 305(5) 00.04 123.5000 01/03/95 01/03/05 0 23,689 60,032
692(5) 00.09 128.5625 03/01/95 03/01/05 0 55,950 141,788
------ ----- -------- -------- ---------
6,497 00.80% $121.8699 $497,952 $1,261,908
Edmond F. 466(2) 00.06% $122.3125 05/06/94 12/13/98 0 $ 14,361 $ 31,410
Rondepierre 1,541(2) 00.19 122.3125 05/06/94 12/12/00 0 71,641 165,170
1,057(2) 00.13 122.3125 05/06/94 12/11/01 0 58,036 137,482
660(2) 00.08 122.3125 05/06/94 12/09/02 0 42,053 102,406
2,137(2) 00.26 122.3125 05/06/94 12/12/99 0 82,171 184,467
400(5) 00.05 123.5000 01/03/95 01/03/05 0 31,067 78,730
361(5) 00.04 128.5625 03/01/95 03/01/05 0 29,188 73,967
----- ----- -------- -------- --------
6,622 00.81% $122.7250 $328,516 $773,633
Joseph P. Brandon 5,500(4) 00.68% $120.9375 12/14/94 12/14/04 0 $418,313 $1,060,087
721(5) 00.09 128.5625 03/01/95 03/01/05 0 58,294 147,730
----- ----- --------- -------- ----------
6,221 00.76% $121.8212 $476,607 $1,207,817
Charles F. Barr 3,000(4) 00.37% $118.7500 06/08/94 06/08/04 0 $224,044 $ 567,771
3,000(4) 00.37% 120.9375 12/14/94 12/14/04 0 228,171 578,230
----- ----- --------- -------- ----------
6,000 00.74% $119.8438 $452,215 $1,146,001
All Stockholders N/A N/A N/A N/A N/A 0 $6,358,885,347 $16,114,663,964
All Optionees 610,000(4) 100% $119.6563 Various 10 Years 0 $45,903,235 $116,327,809
Options Gain as
% of all
Stockholder Gain N/A N/A N/A N/A N/A N/A 0.72% 0.72%
</TABLE>
(1) The dollar amounts under these columns are the results of calculations
at assumed annual rates of stock price appreciation of zero percent
(0%), five percent (5%) and ten percent (10%). These assumed rates of
growth were selected by the Securities and Exchange Commission for
illustration purposes only. They are not intended to forecast
possible future appreciation, if any, of the Corporation's stock
price. No gain to the optionees is possible without an increase in
stock
15
<PAGE> 18
prices, which will benefit all shareholders. A zero percent (0%) gain
in stock price will result in a zero percent (0%) benefit to
optionees.
(2) Replacement options granted following the tender of a like number of
shares to satisfy the option price upon exercise of the underlying
stock option. Replacement options have the same expiration date as the
original option and an exercise price equal to the market price at the
date of the new grant. They are first exercisable one year from the
grant date provided the employee still owns the shares acquired as a
result of the original option exercise, less the number of shares
withheld to pay income tax due as a result of exercising the original
option.
(3) The Corporation awarded Mr. Ferguson a special grant of 135,000
performance-based NQSOs. These options will become exercisable on
January 16, 2002, (or sooner, to the extent of the then current
performance, in the event of death, disability, change in control,
merger or consolidation), if and only if the Corporation's total
return to stockholders compounded annually from the date of grant
exceeds the average return for the Standard & Poor's 500 Index and the
peer group reflected in the Performance Graph included in this proxy
statement.
(4) The Corporation makes annual grants of NQSOs to its executive
officers. These NQSOs have a ten-year term and become exercisable in
twenty percent (20%) increments each year over a five-year period.
These options have the replacement option feature described in (2)
above.
(5) Restricted stock options were granted during the first quarter of 1995
in lieu of cash bonuses awarded under the 1994 Annual Incentive Bonus
and 1990-1994 Performance Bonus provisions of the Compensation Plan.
These options are exercisable immediately, but shares acquired are
restricted from being sold for five years from the grant date and are
forfeitable for termination due to cause or the unauthorized use of
proprietary information. These options have the replacement option
feature described in (2) above.
Aggregated Option Exercises and Fiscal Year-end Option Values Table
The realized value of aggregated option exercises during 1994 and the
value of unexercised in-the-money options at December 31, 1994 held by the
named executives are shown in the following table:
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF VALUE OF
UNEXERCISED UNEXERCISED
SHARES ACQUIRED OPTIONS AT IN-THE-MONEY
ON VALUE FY-END(#) FY-END($)
EXERCISE REALIZED EXERCISABLE/ EXERCISABLE/
NAME (#) ($) UNEXERCISABLE UNEXERCISABLE
---- --------- --------- ------------- -------------
<S> <C> <C> <C> <C>
Ronald E. Ferguson 22,800 832,475 53,621/209,367 $1,141,189/$2,037,368
John C. Etling 0 0 47,188/30,500 1,551,286/355,450
Ernest C. Frohboese 0 0 13,940/16,100 439,380/233,338
Edmond F. Rondepierre 8,000 276,281 13,131/12,861 370,745/137,733
Joseph P. Brandon 0 0 6,669/12,280 161,321/127,019
Charles F. Barr 0 0 1,400/8,540 29,450/69,139
</TABLE>
Long-Term Incentive Plan ("LTIP") Awards Table
The awards made during 1994 under the Compensation Plan to the named
executives are shown in the following table:
16
<PAGE> 19
LONG-TERM INCENTIVE PLANS--AWARDS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
ESTIMATED FUTURE PAYOUTS
PERFORMANCE UNDER NON-STOCK PRICE-
NUMBER OF OR OTHER BASED PLANS
SHARES, UNITS PERIOD UNTIL ------------------------
OR OTHER MATURITIES OR THRESHOLD TARGET MAXIMUM
NAME RIGHTS (#)(1) PAYOUT ($ OR #) ($ OR #) ($ OR #)
---- ------------- ------------- --------- -------- ---------
<S> <C> <C> <C> <C> <C>
Ronald E. Ferguson 1994-1998 $0 $382,500 $765,000
John C. Etling 1994-1998 0 254,250 508,500
Ernest C. Frohboese 1994-1998 0 119,000 238,000
Edmond F. Rondepierre 1994-1998 0 119,000 238,000
Joseph P. Brandon 1994-1998 0 87,500 175,000
Charles F. Barr 1994-1998 0 77,000 154,000
</TABLE>
(1) Executive officers have the right to receive awards under the
Performance Bonus provision of the Compensation Plan. Performance
Bonus distributions under the Compensation Plan are made during the
first quarter of each year with respect to the five-year period ending
in the preceding calendar year and are included in the Summary
Compensation Table. The amount distributable, if any, is determined
by the Compensation Committee at the end of the performance period on
the basis of results. Awards may be paid in the discretion of the
Compensation Committee in cash, in shares of Common Stock, in a
combination of cash and shares, in share units, in restricted NQSOs,
or in a combination of such units and restricted NQSOs.
Compensation of Directors
The directors, except for those who are also employees of the
Corporation, receive an annual retainer of $27,500 and $1,000 for each Board or
committee meeting attended. In addition, non-employee chairmen of Board
committees are paid an annual retainer of $2,500.
Under the non-employee directors' stock option provisions of the
Compensation Plan (the "Directors' Program"), each non-employee director was
granted a non-qualified stock option ("NQSO") on the first business day of each
calendar year of Board service to purchase five hundred shares of Common Stock.
All of the shares available for grant under the Directors' Program have been
granted. On January 3, 1995 the non-employee directors were granted stock
options for five hundred shares of Common Stock under the proposed 1995
Long-Term Compensation Plan, subject to approval by the Corporation's
stockholders of the new plan. The directors' stock options are exercisable six
months after the date of grant at an exercise price equal to the fair market
value of the Common Stock on the date of grant and have a term of ten years.
The exercise price of any option may be paid in cash or previously owned shares
of Common Stock having a fair market value equal to the exercise price or in a
combination of cash and shares. When previously owned shares of Common Stock
are used to
17
<PAGE> 20
exercise a non-employee director stock option, a replacement option is issued
to the director.
Under the proposed 1995 Long-Term Compensation Plan, if adopted, each
non-employee director will receive an automatic grant of 65 shares of
restricted stock immediately following stockholder approval of the plan and on
the first business day of each calendar year thereafter in which the individual
is a member of the Board of Directors. The restrictions on such shares will
lapse upon the later of five years from the date of grant or retirement from
the Board of Directors.
Non-employee directors are permitted to defer all or part of their
compensation to be held in a deferral account either as cash, to which interest
at a market rate is credited quarterly, or as units equivalent to shares of
Common Stock, to which amounts equivalent to dividends paid on such shares are
credited quarterly.
Any director who has completed five or more years of service as a
non-employee director upon his or her retirement from the Corporation's board
will receive an annual amount equal to seventy-five percent (75%) of the final
retainer, to be paid for the greater of five years or the complete number of
years of service following the 1987 annual meeting of stockholders.
Employment Contracts and Termination of Employment and
Change in Control of Management
There are no employment contracts between the Corporation and a named
executive officer.
The Compensation Plan provides that, in the event of a change in
ownership or control of the Corporation, (i) all outstanding stock options
become fully exercisable, (ii) the restrictions lapse on all restricted stock
options, (iii) all share units attributable to bonuses become fully payable,
(iv) all restricted stock and other share units will become vested if the
officer is terminated within two years of the change in ownership or change in
control, (v) annual bonuses ("Annual Incentive Bonuses") become immediately
payable, on a prorated basis, based on the assumption that all performance
objectives have been met and (vi) all bonuses based upon the performance of the
Corporation over a period of time ("Performance Bonuses") become payable, on a
prorated basis, at the higher of the amount payable based on the assumption
that the performance objectives have been achieved or the amount based on
actual performance. If such an event were to have occurred on December 31,
1994, the cash value of outstanding stock options, restricted stock, Annual
Incentive Bonuses, and Performance Bonuses affected by such event, without
regard to the actual performance by the Corporation, payable to Executive
Officers would be as follows: Ronald E. Ferguson, $5,581,118, John C. Etling,
$2,345,950, Ernest C. Frohboese, $1,212,338, Edmund F. Rondepierre, $375,733,
Joseph P. Brandon, $1,228,269 and Charles F. Barr, $84,539.
18
<PAGE> 21
Under the Corporation's Supplemental Executive Retirement Plan
("SERP") and the Benefit Equalization Plan ("BEP"), previously accrued benefits
become immediately vested in the event of a change-in-control. If a
participant in either plan is terminated other than for cause within two years
following a change-in-control, the participant is entitled to a lump sum
payment of the accrued benefits.
Under the Corporation's Severance Pay Plan, employees, including the
executive officers, are entitled to receive certain severance payments upon
their termination of employment within two years following a change in control.
The benefits payable are salary payments for between six and twelve months
depending upon the number of years the person has been an employee. The
aggregate amount payable will be increased by the amount of any excise tax
imposed on the executive officer and by the amount of the tax thereon.
Maximum Retirement Benefits Payable
The following table shows the maximum annual retirement benefits
payable at the normal retirement age of 65 for specified remunerations and
years of credited service under the Employee Retirement Plan of General Re
Corporation and its Affiliates, the BEP and the SERP (collectively, the
"Retirement Program"). The benefits shown in the table are subject to a
reduction of up to fifty percent (50%) of primary Social Security benefits.
<TABLE>
<CAPTION>
YEARS OF CREDITED SERVICES
----------------------------------------------------------------------------------------
REMUNERATION(1) 15 20 25 30 35
--------------- -- -- -- -- --
<S> <C> <C> <C> <C> <C>
$300,000 $ 90,000 $120,000 $150,000 $165,000 $180,000
400,000 120,000 160,000 200,000 220,000 240,000
500,000 150,000 200,000 250,000 275,000 300,000
600,000 180,000 240,000 300,000 330,000 360,000
700,000 210,000 280,000 350,000 385,000 420,000
800,000 240,000 320,000 400,000 440,000 480,000
900,000 270,000 360,000 450,000 495,000 540,000
1,000,000 300,000 400,000 500,000 550,000 600,000
1,100,000 330,000 440,000 550,000 605,000 660,000
1,200,000 360,000 480,000 600,000 660,000 720,000
1,300,000 390,000 520,000 650,000 715,000 780,000
1,400,000 420,000 560,000 700,000 770,000 840,000
1,500,000 450,000 600,000 750,000 825,000 900,000
</TABLE>
(1) Benefits for eligible employees are computed under a formula based
upon years of service and average annual earnings (salary plus Annual
Incentive Bonus) during the 3 consecutive years of highest earnings
during the employee's service with the Company.
19
<PAGE> 22
As of December 31, 1994, Mr. Ferguson had 25 years of credited
service, Mr. Etling 33 years, Mr. Rondepierre 18 years, Mr. Frohboese 4 years,
Mr. Brandon 5 years and Mr. Barr 5 years.
Compensation Committee Report on Executive Compensation
The Compensation Committee reports as follows:
INTRODUCTION. The Compensation Committee (or the "Committee") of the
Corporation's Board of Directors is responsible for approving and reporting to
the Board of Directors the compensation of the Corporation's executive
officers, including compensation awarded in the form of bonuses and
equity-based awards. Since its adoption, the Compensation Committee has
administered the Corporation's 1989 Long-Term Compensation Plan under which
equity-based and bonus awards have been made. The 1989 Long-Term Compensation
Plan provides that no awards can be made thereunder after December 31, 1994.
Therefore, the Compensation Committee approved and recommended to the Board of
Directors the adoption, subject to stockholder approval, of the proposed 1995
Long-Term Compensation Plan. The Committee's five members, who have never been
employees of the Corporation, meet in executive session to evaluate the
performance of and compensation paid to the Corporation's executive officers.
COMPENSATION PROGRAM. The Corporation's compensation program is
designed to attract, retain and reward executive officers in a manner that is
in the best interests of stockholders by providing for competitive salaries,
bonuses based upon the achievement of the Corporation's business strategy and
operating objectives and equity-based awards, including stock options and
restricted stock awards, that align the interests of executive officers to
those of the stockholders.
The Corporation's total compensation program enables executive
officers to earn premier pay for premier performance and to be rewarded as
value is created for stockholders. Special emphasis is placed on fostering
employee ownership of common stock through programs which encourage executive
officers to acquire stock and receive compensation, otherwise paid in cash, in
the form of share units and restricted non-qualified stock options ("NQSOs").
The components of the total compensation program include base salary,
annual incentives, long-term performance bonus awards, NQSOs, share units and
restricted stock awards. These components of compensation play specific roles
in attracting, rewarding and retaining executive officers and in balancing the
Corporation's short and long-term interests. As an individual's level of
responsibility increases, a greater portion of the total compensation is "at
risk" or variable and performance driven and the mix of total compensation
shifts for executive officers
20
<PAGE> 23
toward stock and stock option awards to more closely align the long-term
interests of executive officers and stockholders.
The Compensation Committee annually evaluates the Corporation's
performance, executive compensation and executive share ownership compared with
other property/casualty insurance and reinsurance companies and leading
financial services companies reflected in compensation surveys obtained from
compensation consultants and compares stockholder returns to the Standard &
Poor's 500 and the stockholder returns of the property/casualty and multiline
insurance companies that are subsets of the Standard & Poor's 500 and other
leading insurance and reinsurance companies. Generally, the Compensation
Committee's objective has been to award amounts of total compensation
equivalent to the amounts reflected in the top of the third quartile (that is,
the 75th percentile) of the range of compensation paid by the companies
surveyed. (The salary compensation paid to Mr. Ferguson and most of the other
named executive officers in 1994 was in the third quartile of the range of
compensation paid by the companies surveyed.)
Based upon its analysis of the compensation surveys and stockholder
returns, the Compensation Committee determines target percentages of total
compensation to be paid in the form of salaries, annual bonuses, long-term
performance bonuses and stock-based awards.
SALARY. Salary level targets for various grades are established so
that the Corporation can attract and retain the most qualified employees. The
Compensation Committee approves the individual salaries of executive officers.
In determining an executive officer's salary, the Compensation Committee
considers, but does not assign specific weights to, the following factors:
individual performance, corporate performance, industry salary trends and
competitive salary levels. Based on its discretion in evaluating these
factors, the Committee determines appropriate salary levels. The Compensation
Committee has lengthened the time between salary increases beyond twelve months
for certain executive officers in order to place more emphasis on variable
compensation.
ANNUAL INCENTIVE BONUS. Executive officers of the Corporation may be
awarded an annual incentive bonus as determined by the Compensation Committee
for individual and collective efforts resulting in the achievement of (or
progress toward) an underwriting profit, superior investment returns and
achievement of other corporate and division objectives. Under the Compensation
Plan, two-thirds of the annual incentive award for each executive officer is
formula-driven based on a pre-determined performance matrix consisting of
underwriting goals and, in the case of Mr. Frohboese, investment portfolio
goals. The remaining one-third is based on a qualitative assessment of the
Corporation's progress toward corporate strategic initiatives including, but
not limited to, quality and organizational change efforts, expense control and
international expansion. Each
21
<PAGE> 24
executive has a target incentive amount expressed as a percentage of base
salary. Actual awards can range from zero percent (0%) to two hundred percent
(200%) of the target amount based on the degree of attainment of the goals.
Awards may be paid out in cash, shares of common stock, share units, or
restricted NQSOs.
PERFORMANCE BONUS. Performance bonus awards may be made to executive
officers. Award payouts are based on the relationship between the
Corporation's total return to stockholders over the prior five-year period and
the weighted average return (the "Actual Return") of the Standard & Poor's 500
Index and a peer group of property/casualty and multi-line insurance companies
selected by the Committee prior to the beginning of the five-year performance
period. The amount of the award paid to an executive officer is the product of
a percentage of the salary paid during the last year of the award cycle (the
target award which is determined for each executive officer at the beginning of
the five-year period) times the performance factor relating to the Actual
Return, which is set forth in a payout matrix determined prior to the beginning
of the award cycle and which ranges from zero percent (0%) to two hundred
percent (200%). Awards may be paid out in cash, shares of common stock, share
units, or restricted NQSOs. For the recently completed 1990 to 1994 cycle,
awards equal to one hundred twelve and two-tenth's percent (112.2%) of the
target award were paid. The Corporation's total return to stockholders
exceeded the weighted average return of the peer group and the Standard &
Poor's 500 Index.
DEFERRAL OF ANNUAL INCENTIVE AND PERFORMANCE BONUS AWARDS. Executive
officers generally may elect to defer up to twenty-five percent (25%) of their
annual incentive and performance bonus awards prior to the year in which such
awards will be earned. Such deferral awards will be awarded as share units and
restricted stock options pursuant to a formula adopted by the Compensation
Committee in 1992. The Committee has the authority to establish a mandatory
deferral amount for certain executive officers. Mr. Ferguson was required to
defer a portion of his 1994 annual incentive award and performance bonus for
the 1990 to 1994 period.
STOCK-BASED AWARDS. The Corporation normally makes annual grants of
NQSOs to executive officers of the Corporation at market value on the grant
date. The Compensation Committee determines a target size of option awards
based on a percentage of salary for each participant but may vary the size of
the grants in its discretion. In determining the percentage for each executive
officer, the Committee reviews total compensation and stock option grant
practices for the companies included in the reviewed compensation surveys.
Each stock option grant typically becomes exercisable in twenty percent (20%)
increments over a five-year period. In 1994, the Compensation Committee
granted stock options, not including replacement options, certain performance
based NQSOs and NQSOs granted in lieu of annual incentive and performance bonus
awards, for a total of 74,100
22
<PAGE> 25
shares (about 1/10th of 1% of the total shares outstanding) to eight (8)
executive officers.
The Corporation grants replacement options automatically when an
executive officer tenders a like number of shares to satisfy the option price
upon exercise of underlying stock options. Replacement options have the same
expiration date as the original options and an exercise price equal to the
market price at the new grant date. They are issued to encourage executive
officers to exercise options early and to retain the profit in shares.
Replacement options are exercisable one year from the date of grant provided
the executive officer still owns the shares acquired as a result of the
original option exercise less the number of shares withheld to pay income tax
due as a result of exercising the original NQSO. Replacement options for a
total of 28,969 shares were granted in 1994.
The Compensation Committee also has the ability to grant restricted
stock options in lieu of cash annual incentive and performance bonus awards as
described above. Restricted stock options are exercisable immediately, but
shares acquired are restricted from transfer, sale, exchange and other
disposition for five years from the date of grant. Restricted stock options
for a total of 8,784 shares were granted to six (6) executive officers in the
first quarter of 1995 in lieu of part of their 1994 annual incentive awards or
1990 to 1994 performance bonus awards.
Restricted stock awards and various types of other awards, such as
performance-based NQSOs, can be made in appropriate circumstances (generally
limited) to retain key executive officers of the Corporation at the discretion
of the Committee. In 1994, 11,900 restricted shares and performance-based
NQSOs for 135,000 shares were awarded to four (4) executive officers.
TAX CONSIDERATIONS. Effective January 1, 1994, Section 162(m) of the
Internal Revenue Code of 1986 (the "Code") generally denies a tax deduction to
any publicly-held corporation for compensation that exceeds $1 million paid to
certain senior executives in a taxable year, subject to an exception for
"performance-based compensation" as defined in the Code and subject to certain
transition provisions.
Going forward, it is the Committee's intention, to the extent
possible, that incentive and stock compensation paid to executive officers be
deductible for federal tax purposes. Annual incentive, performance bonus and
stock option awards granted under the 1995 Long-Term Compensation Plan (the
"Proposed Plan"), if adopted, will be deductible in accordance with Code
Section 162(m). Previous grants that may result in future compensation should
be deductible under the transition rules with the exception of restricted stock
grants made after February 17, 1993.
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<PAGE> 26
The Committee is committed to ensuring that annual incentive awards
are commensurate with performance. The Committee believes that in order to
meet this objective it needs to have the ability to exercise its judgment or
discretion to evaluate performance against qualitative criteria. Therefore,
the Committee will have the right under the Proposed Plan to reduce the amount
of or to not pay an annual incentive award.
CEO'S COMPENSATION. The Corporation's Chairman, President and Chief
Executive Officer in 1994, Ronald E. Ferguson, received an annualized increase
in base salary of five and four-tenths percent (5.4%) in response to industry
salary trends and in recognition of his ongoing contribution to the
Corporation's strong performance during the fourteen months since his last
salary increase. The Compensation Committee reviewed the salary levels and
total compensation for chief executive officers of the companies reflected in
the compensation surveys.
Mr. Ferguson's 1994 annual incentive award was made in recognition of
the Corporation's continued out-performance of the reinsurance industry during
this difficult environment for property/casualty insurers and reinsurers and
his efforts in the successful completion of certain strategic initiatives,
including the expansion of the Corporation's international operations. For
1994, the statutory combined ratio of the Corporation's reinsurance and
insurance subsidiaries was 101.3, compared to 107.7 for the companies reporting
to the Reinsurance Association of America (excluding the Corporation and its
subsidiaries). Mr. Ferguson received an annual incentive award in cash in the
amount of $647,500, restricted NQSOs for 2,334 shares and 1,400 share units.
Mr. Ferguson also received a bonus under the five-year performance bonus
program for the 1990 to 1994 performance cycle, which was awarded in cash in
the amount of $306,884, restricted NQSOs for 1,227 shares and 736 share units.
In 1994, the Committee awarded Mr. Ferguson a special grant of 135,000
performance-based NQSOs. These options will become exercisable on January 16,
2002, (or sooner, to the extent of the then current performance, in the event
of death, disability, change in control, merger or consolidation), if and only
if the Corporation's total return to stockholders compounded annually from the
date of grant exceeds the average return for the Standard & Poor's 500 Index
and the peer group reflected in the Performance Graph included in this proxy
statement. The Committee feels Mr. Ferguson's continued service as Chairman
and Chief Executive Officer is extremely important to the Corporation as its
strategic initiatives are designed and implemented.
In 1994, Mr. Ferguson also received NQSOs for 22,000 shares in
accordance with the Corporation's practice of granting NQSOs on an annual
basis. This grant was determined based on an analysis of total compensation
and stock option grant practices for CEOs of the companies reflected in the
compensation surveys and in recognition of the Corporation's strong performance
and the continued emphasis in creating stockholder value.
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<PAGE> 27
CONCLUSION. The Committee believes that it is in the best interests
of stockholders for the Corporation to compensate the executive officers well
when their performance meets or exceeds the high expectations of the Committee.
The Committee believes the Corporation's current compensation program meets its
objectives of appropriately aligning the interests of executive officers and
stockholders.
By the Compensation Committee:
Andrew W. Mathieson, Chairman,
William C. Ferguson, Edward H. Malone,
David E. McKinney, Walter F. Williams
Performance Graph
The following line graph compares the yearly percentage change, over
five years, in the Corporation's total stockholder return on Common Stock with
the cumulative total return on the Standard & Poor's 500 Index and the
cumulative total return of a peer group index:
<TABLE>
<CAPTION>
GENERAL RE PEER S&P
CORPORATION GROUP 500
<S> <C> <C> <C>
1989 100 100 100
1990 109 87 97
1991 121 122 126
1992 140 144 136
1993 132 157 151
1994 155 163 151
</TABLE>
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COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN AMONG
GENERAL RE CORPORATION, S&P 500 INDEX AND PEER GROUP INDEX(1)
(1) Assuming the investment of $100 in the Corporation's Common Stock, the
Standard & Poor's 500 Index and the peer group index on December 30,
1989 and the reinvestment of all dividends. The peer group index
combines the Standard & Poor's Multiline and Property/Casualty
Indexes, except for the Corporation, and consists of the following
companies: Aetna Life & Casualty Company, American International
Group, Chubb Corporation, CIGNA Corporation, Continental Corporation,
Safeco Corporation, The St. Paul Companies and United States Fidelity
& Guaranty Corporation. Three of the companies included in the
Standard & Poor's Multiline and Property/Casualty Indexes in 1993, CNA
Financial Corporation, Lincoln National Corporation and Travelers
Corporation, are no longer included in those indices.
PROPOSAL TO APPROVE ADOPTION OF THE
GENERAL RE CORPORATION
1995 LONG-TERM COMPENSATION PLAN
In 1989, the Corporation's stockholders approved the 1989 Long-Term
Compensation Plan (the "Compensation Plan") under which the Corporation's
Compensation Committee has awarded bonuses and equity-based awards. Since
1989, the Committee has awarded stock options exercisable for 3,014,425 shares
of Common Stock, 178,650 restricted shares of Common Stock and share units
relating to 33,094 shares of Common Stock. The Compensation Plan provides that
no awards can be made thereunder after December 31, 1994. Therefore, on
February 7, 1995 the Compensation Committee (the "Committee") of the Board
recommended to the Board the adoption of the General Re Corporation 1995
Long-Term Compensation Plan (the "Proposed Plan"), subject to stockholder
approval. On February 8, 1995, the Board ratified the Committee's
recommendation and determined to submit the Proposed Plan to the stockholders.
The stockholders are now requested to approve the adoption of the Proposed
Plan.
The summary of the Proposed Plan which follows is subject to the
specific provisions contained in the official text of the Proposed Plan.
THE PROPOSED PLAN
The Proposed Plan, like its predecessor, the Compensation Plan, is
intended to be an integral part of the Corporation's executive and non-employee
director compensation program by providing incentives that will enable the
Corporation to attract and retain highly qualified officers, key employees and
non-employee directors. The Proposed Plan provides long-term
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<PAGE> 29
incentives in the form of grants of stock options, approved stock options,
restricted stock options, stock appreciation rights ("SARs"), share units,
restricted stock, annual incentive bonuses and long-term performance bonuses
(collectively, "Awards"). These long-term incentives are designed also to
advance the longer term interests of the Corporation and its stockholders. The
Proposed Plan also will enable officers, other key employees and non-employee
directors to acquire a larger personal financial interest in the Corporation
through stock-based awards and stock ownership. Award recipients may include
individuals ("Reporting Persons") who are subject to the requirements of
Section 16 of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"). It is intended that certain Awards provided under the Proposed Plan
will be treated as qualified performance-based compensation under Section
162(m) of the Internal Revenue Code of 1986, as amended ("Code"), which would
otherwise limit the Corporation's deduction for compensation in excess of
$1,000,000 paid to the CEO and the top four executive officers.
ADMINISTRATION
The Proposed Plan will be administered by the Committee, whose members
must be (and are currently) "disinterested persons" as such term is defined
under Rule 16b-3 promulgated under the Exchange Act. The members of the
Committee also must qualify (and currently do qualify) as "outside directors"
as that term is defined in proposed regulations issued by the Department of the
Treasury under Section 162(m) of the Code. Committee members may not receive
any Award under the Proposed Plan other than the annual automatic grant of (i)
an option for five hundred shares on the first business day of each calendar
year and (ii) 65 shares of restricted stock on the first business day following
stockholder approval of the Proposed Plan and the first business day of each
calendar year thereafter, under the non-discretionary provisions of the
Proposed Plan or stock options or rights under any other plans of the
Corporation unless the Board determines that such grant would not jeopardize
their status as disinterested persons. With respect to Awards granted to
employees, the Committee has the authority under the Proposed Plan to determine
the eligibility of employees, the form of Awards, the number of shares of
Common Stock or share units subject to Awards and the terms, conditions and
restrictions of Awards, including the time of exercise and vesting, and to
establish and administer any performance objectives related to Awards,
including certifying that performance objectives were met.
BENEFITS
Options and SARs. Both nonqualified stock options ("NQSOs") and
incentive stock options ("ISOs") (as defined in Section 422 of the Code)
(collectively, "Options") may be granted under the Proposed Plan. In addition,
stock options also may be granted under the United Kingdom Sub-Plan of the
Proposed Plan ("Approved Options"). Under the United Kingdom Sub-Plan,
Approved Options
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<PAGE> 30
may be granted only to employees whose remuneration is subject to income tax in
the United Kingdom (i.e., employees who are resident and ordinarily resident in
the United Kingdom and whose duties are performed there). The total number of
shares of Common Stock with respect to which Options and SARs may be granted to
any one individual may not exceed ten percent (10%) of the aggregate shares of
Common Stock authorized for issuance under the Proposed Plan. In addition,
each non-employee director will automatically receive an NQSO for five hundred
(500) shares of Common Stock (subject to adjustment) on the first business day
of 1995 and of each calendar year thereafter.
Options granted to non-employee directors will have a term of ten (10)
years. The term of other Options will be a maximum of ten (10) years in the
discretion of the Committee. The Option exercise price must be at least one
hundred percent (100%) of the fair market value of the Common Stock on the date
of the grant. On March 1, 1995, the last reported sale price of the
Corporation's Common Stock on the New York Stock Exchange composite tape was
$127.50 per share. The exercise price of options may be paid with previously
acquired shares which have been held for at least six months. If NQSOs are
exercised by using shares, the grantee is automatically granted a replacement
option to purchase shares of Common Stock equal to the number of shares used to
pay the exercise price but at the then fair market value of the Common Stock.
Under the Plan, Options may include SARs exercisable only to the
extent the Option is at the time exercisable. The holder of an SAR may
surrender to the Corporation all or part of the unexercised Option in which
such right is included and receive in exchange shares of Common Stock (or, at
the discretion of the Committee, cash or a combination of shares of Common
Stock and cash) having a value equal to the difference between the current fair
market value of one share and the Option exercise price per share times the
number of shares covered by the Option or part thereof which is being
surrendered.
Options and SARs granted to Reporting Persons and non-employee
directors may not be exercised for at least six months from the date of grant.
If a grantee terminates employment due to death, disability or
retirement, the Options otherwise exercisable through the date of such
termination may be exercised within five years of such date; provided, however,
that no Option may be exercised after the expiration date thereof. Any Option
exercisable after death may be exercised by the decedent's legal
representatives. In the event a holder's employment terminates on account of
resignation or discharge not for cause, the Options otherwise exercisable by
the holder through the date of such termination may be exercised by the holder
no later than three (3) months following the date of such termination except
that in the case of NQSOs, the Committee may, in its sole discretion, provide
for a later date; provided, however, that no Option may be exercised after the
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<PAGE> 31
expiration date thereof. If a holder's employment shall terminate on account
of discharge for cause, the holder will forfeit all outstanding Options as of
the date of termination. Stock options will terminate to the extent that they
are not exercisable on the date of the holder's termination of employment
unless otherwise provided by the Compensation Committee with respect to a
holder whose termination is not for cause.
Approved Options. Approved Options to purchase Common Stock are
granted under the United Kingdom Sub-Plan, the portion of the Proposed Plan
applicable to certain United Kingdom employees, as described above. The
following is a summary of the terms of the United Kingdom Sub-Plan which are
different from those of the Proposed Plan.
Approved Options may not be granted to any grantee within two years
prior to his normal retirement date, nor to any grantee who, immediately
following the grant, would hold outstanding Approved Options having an
aggregate exercise price exceeding the greater of L100,000 or four times the
amount of the employee's taxable salary or wages. Approved Options may not be
exercised prior to the third anniversary of the date of grant. If a grantee
dies, his legal personal representatives may exercise his outstanding Approved
Options within twelve months after the date of death. If a grantee ceases
employment by reason of retirement, injury, sickness, disability or redundancy,
he may exercise his outstanding Approved Options within the later of twelve
months after such cessation or forty-two months from the date of grant. If a
grantee technically ceases employment because his employer ceases to be
affiliated with the Corporation, he may exercise his outstanding Approved
Options within three months after such cessation.
The United Kingdom Sub-Plan and the grant of Approved Options
thereunder, and any amendments thereto (including adjustments due to
recapitalization, merger, consolidation and similar transactions), are subject
to the prior approval of the United Kingdom Board of Inland Revenue.
Bonuses. The Committee, in its discretion, may grant bonuses to
grantees to be paid if annual performance objectives or long-term performance
objectives are satisfied ("Annual Incentive Bonuses" and "Performance Bonuses,"
respectively).
Prior to the beginning of the fiscal year for Annual Incentive Bonuses
and the first fiscal year of a period of three to five years for Performance
Bonuses (the "Award Period") (or during the first 90 days of an Award Period if
permitted under the final regulations adopted under Section 162(m) of the
Code), the Committee will determine, in writing, the performance objectives
applicable to a grantee or group of grantees. In addition, prior to the
beginning of an Award Period (or the 90-day period described above), the
Committee will determine the percentage of the Annual Incentive or Performance
Bonus to be awarded if a performance objective is not fully achieved or is
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<PAGE> 32
exceeded. The Committee will retain the discretion to award a bonus in an
amount equal to less than the amount otherwise payable for the Award Period.
Performance objectives applicable to the Annual Incentive Bonus may be
measured by the Corporation's statutory underwriting combined ratio, a targeted
improvement in the statutory underwriting combined ratio, the relationship
between the statutory combined ratio of the Corporation's reinsurance and
insurance subsidiaries and that of the companies reporting to the Reinsurance
Association of America (excluding the Corporation's subsidiaries), the total
return on various investment portfolios, or in any other manner the Committee
deems an appropriate measure of performance. The amount of an Annual Incentive
Bonus awarded to a grantee will be based on a percentage of the grantee's
salary rate in effect at the end of the fiscal year. The performance objective
applicable to a Performance Bonus will be based on the relative total return to
stockholders over the Award Period as described below, and may range from zero
percent (0%) to two hundred percent (200%) of the target awards, which are
expressed as a percentage of the grantee's paid salary for the final year of
the Award Period. Relative total return to stockholders means the comparison
of the total return to stockholders, including reinvestment of dividends, to
the total return to an individual who had invested in an index comprised of the
Standard & Poor's 500 Index and a group of property/casualty, multiline
insurance and/or reinsurance companies, as determined by the Committee.
Performance objectives may be revised if there are adjustments to the
accounting standards applicable in determining the objectives. A grantee may
not receive in any one year either an Annual Incentive Bonus or a Performance
Bonus in excess of $1,500,000. The aggregate dollar amount available for
Annual Incentive Bonuses for Reporting Persons in any fiscal year may not
exceed one percent (1%) of the consolidated net income of the Company and its
subsidiaries. If an Annual Incentive Bonus or Performance Bonus is to be paid
to a Reporting Person, prior to payment the Committee must certify, in writing,
that the applicable performance objectives have been satisfied.
Annual Incentive Bonuses and Performance Bonuses are payable in cash,
shares of Common Stock, share units or restricted NQSOs, or any combination
thereof. At the Committee's discretion, a bonus Award may be deferred by a
grantee into share units and restricted stock options. The Committee has the
authority to require certain executive officers to defer portions of their
bonuses.
If a grantee terminates employment due to death, disability or
retirement, he may receive, at the Committee's discretion, a payment
proportionate to the number of full months of active service performed during
the Award Period over the total number of months in the Award Period. If the
grantee otherwise terminates employment, the right to receive a bonus will be
forfeited. However, the Committee, in its discretion, may award a grantee
(other than a Reporting Person) a portion of the
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<PAGE> 33
Performance Bonus if termination of employment occurs during the Award Period.
Restricted Stock Options. The terms of a restricted stock option
awarded as payment of all or a portion of an Annual Incentive or Performance
Bonus will be the same as those applicable to an NQSO except that a restricted
stock option will continue to be exercisable upon the termination of an
optionee's employment with the Corporation, unless the holder is terminated for
cause or engages in the unauthorized use of proprietary information. In
addition, the shares of Common Stock issuable upon the exercise of a restricted
stock option will be subject to such restrictions as to the transfer and sale
thereof as the Committee, in its discretion, may set forth in the notice of the
Award.
Restricted Stock. Under the Proposed Plan, the Committee may make
grants of shares restricted as to transfer, sale, exchange and other
disposition (or as the Committee may otherwise determine) ("Restricted Stock").
The Committee will specify the terms and conditions upon which restrictions
will expire. Such restrictions will lapse upon a grantee's termination of
employment due to death, disability or attainment of normal retirement age, as
defined in the Proposed Plan. Unless the Committee, in its discretion
determines otherwise, Restricted Stock upon which restrictions have not yet
expired are forfeited upon any other termination of employment. Grantees
granted Restricted Stock will be entitled to dividends and voting rights with
respect to such shares.
Each Non-employee director will receive an automatic grant of 65
shares of Restricted Stock immediately following approval of the Proposed Plan
by stockholders and on the first business day of each calendar year thereafter
in which the individual is a member of the Board of Directors of the
Corporation. The restrictions on such shares will lapse upon the later of five
years from the date of grant or retirement from the Board of Directors.
Share Units. Under the Proposed Plan, the Committee may make an Award
to a grantee of the right to receive one or more shares of Common Stock at a
specified time in the future, at least five years from the date of the Award.
The Award will be expressed in terms of share units equal to the number of
shares of Common Stock underlying the Award. Share units may be awarded in
lieu of all or a portion of an Annual Incentive or Performance Bonus or
independently of a bonus award. Share units attributable to bonuses will be
fully vested on the date of the Award. The number of share units awarded in
lieu of a bonus will be determined by reference to the fair market value of one
share of Common Stock but taking into account the illiquidity of the share
unit, the investment risk for the deferral period of time, the absence of
voting rights and the risk of forfeiture; provided, however, that the value
will not be less than seventy-five percent (75%) of the fair market value of a
share of Common
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Stock on the grant date. The Award will specify its terms, including vesting
schedules for share units not attributable to bonuses. Awards of share units
not attributable to bonuses will vest upon a grantee's termination of
employment due to death, disability or attainment of a grantee's normal
retirement age. Unless the Committee provides otherwise, unvested share units
will be forfeited upon any other termination of employment. Any unauthorized
use of proprietary information by a holder of share units will result in the
holder's forfeiture of such units. Share units will be paid in shares of
Common Stock. Fractional shares will be paid in cash.
SHARES AVAILABLE
The maximum number of shares of Common Stock that may be subject to
Awards under the Proposed Plan is 5,000,000 shares. However, the maximum
number of shares of Common Stock available for grants of Restricted Stock and
share units is 500,000 shares (out of the total 5,000,000 authorized shares)
unless such Restricted Stock and/or share unit is granted in lieu of cash
compensation. The maximum number of shares of Common Stock available for
Option grants and grants of Restricted Stock to non-employee directors is
60,000 shares. Any shares that are not issued because an Award (i) terminates
upon its expiration, forfeiture, cancellation or otherwise, (ii) is settled in
cash or (iii) is exchanged for an Award that is not stock based are available
for regrant to grantees who are not Reporting Persons. Common Stock issued
under the Proposed Plan may be either authorized and unissued shares or
treasury shares of Common Stock.
ADJUSTMENTS
The number of shares subject to awards granted under the Proposed Plan
may be adjusted due to various types of transactions, including
recapitalizations, mergers, consolidations and similar transactions under which
the number of shares of Common Stock outstanding is increased, decreased or
changed into or exchanged for a different number or kind of shares of capital
stock of the Corporation or of another corporation.
CHANGE IN CONTROL
Awards under the Proposed Plan may accelerate upon a "change in
control" of the Company as defined in the Proposed Plan. Upon a change in
control: (i) all Options become immediately exercisable, (ii) all Performance
Bonuses become immediately payable at the higher of the amount determined
assuming the performance objectives have been met or the amount payable based
on actual performance achieved and then are prorated for the term of the Award
Period; (iii) all Annual Incentive Bonuses become payable at the amount
determined assuming the performance objectives have been met and then are
prorated over the portion of the year that has elapsed; (iv) all restrictions
on restricted
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stock options will lapse and share units attributable to bonuses will become
fully payable; and (v) Restricted Stock and all other share units will become
vested if the grantee's employment is terminated within two years after the
change in control, provided that the Committee may determine, in its
discretion, to vest all or some percentage of the grantee's Restricted Stock
and/or share units.
AMENDMENT AND TERMINATION
The Proposed Plan may be amended by the Board of Directors or the
Committee (or its delegate), except that, without the approval of the
Corporation's stockholders, no amendment may increase the number of shares
subject to the Proposed Plan, decrease the exercise price of an Option or SAR,
increase the amount to be received upon exercise of an Option or SAR,
materially increase the benefits to grantees under the Proposed Plan or
materially modify the eligibility for participation in the Proposed Plan.
If adopted, the Proposed Plan will terminate at the later of (i)
December 31, 1999; or (ii) the exercise, expiration or termination of all
Options, SARs or other Awards under the Proposed Plan; provided that Awards
cannot be granted under the Proposed Plan after December 31, 1999.
TAX CONSEQUENCES
Under the present provisions of the Code, the Federal income tax
consequences of the Proposed Plan are summarized as follows:
1. Nonqualified Stock Options. The granting of an NQSO to an
optionee will not result in taxable income to the optionee or a deduction in
computing the income tax of the Corporation. Upon exercise of an NQSO, the
excess of the fair market value of the shares acquired over the option price is
(i) taxable to the optionee as ordinary income and (ii) deductible in computing
the Corporation's income tax, subject to satisfying general rules relating to
reasonableness of compensation.
2. Incentive Stock Options. An optionee will not be deemed to
receive any income at the time an ISO is granted or exercised, although the
exercise may give rise to alternative tax liability for the optionee. If an
optionee does not dispose of the shares acquired on exercise of an ISO within
the two-year period beginning on the day after the grant date of the ISO or
within the one-year period beginning on the day after the day of the transfer
of the shares to the optionee, the gain (if any) on a subsequent sale (i.e.,
the excess of the proceeds received over the option price) will be long term
capital gain and any loss the optionee may sustain on such sale will be long
term capital loss.
If the optionee disposes of the shares within the two-year or one-year
period referred to above, the disposition is a "disqualifying disposition," and
the optionee will generally
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realize ordinary income taxable as compensation in the year of the
disqualifying disposition to the extent of the excess of the fair market value
of the shares on the date of purchase over the option price, and the balance,
if any, will be long-term or short-term capital gain depending, generally, on
whether the shares were held more than one year after the ISO was exercised.
To the extent the optionee recognizes compensation income with respect to a
disqualifying disposition, the Corporation will be entitled to a corresponding
deduction, subject to general rules relating to reasonableness of compensation.
3. Approved Options. Assuming the United Kingdom Sub-Plan
receives the approval of the United Kingdom Board of Inland Revenue, no income
tax is paid by an employee resident in the U.K. upon exercise of an Approved
Option, provided that the Approved Option is exercised in accordance with rules
of the United Kingdom Sub-Plan. If the shares are subsequently sold, capital
gains tax will be payable on the difference between the acquisition cost and
the sales price (if higher) at that time. Neither the Corporation nor any of
its U.K. subsidiaries will be entitled to a deduction upon the exercise of an
Approved Option.
4. Stock Appreciation Rights. The inclusion of an SAR in an
Option grant will not result in taxable income to the optionee or a deduction
in computing the income tax of the Corporation. However, the amount of any
cash, or the fair market value of any shares, received by the employee pursuant
to the exercise of any such right will be, upon receipt by the optionee,
taxable to the optionee as ordinary compensation income and the Corporation
will be entitled to a corresponding deduction, subject to satisfying general
rules relating to the reasonableness of compensation.
5. Bonuses. Amounts paid in cash or shares of common stock are
included in an employee's income as taxable compensation in the year paid and,
subject to the applicability of Section 162(m) of the Code and general rulings
relating to reasonableness of compensation, the Corporation will be entitled to
a corresponding deduction. If an Annual or Performance Bonus is paid in
restricted stock options or share units, the tax consequences to the grantees
are indicated above.
6. Restricted Stock. No taxable income will be recognized by a
grantee upon the grant of Restricted Stock. In the year that the Restricted
Stock is no longer subject to "a substantial risk of forfeiture," within the
meaning of Section 83 of the Code, the grantee will realize ordinary income
taxable as compensation equal to the excess of the fair market value of shares
upon which restrictions lapse over the amount paid, if any. The Corporation
will be entitled to a corresponding deduction, subject to satisfying general
rules relating to the reasonableness of compensation.
7. Share Units. No taxable income will be recognized by a
grantee upon the grant of an Award. A grantee of share units will be
considered to have taxable income at the time amounts
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<PAGE> 37
payable are first considered to be made available to the grantee. When the
Award becomes payable, the grantee will realize ordinary income equal to the
fair market value of the shares and cash payable at such time. The Corporation
will be entitled to a corresponding deduction subject to general rules relating
to the reasonableness of compensation. When an Award of share units vests, the
then current value of the units is reported as earnings subject to FICA tax
withholding.
WITHHOLDING OF TAXES
The Proposed Plan requires a grantee to pay, or make provision
satisfactory to the Committee for payment of, federal, state, and local income
taxes, or other taxes, which the Corporation may be obligated to collect as a
result of the payment of any Award. The Proposed Plan permits a grantee to
instruct the Corporation to withhold up to the number of nonrestricted shares
otherwise deliverable to a grantee with a fair market value equal to the amount
of tax to be withheld; provided, that a Reporting Person's election is made
during a "window period," six months prior to the date an Award becomes taxable
or during any other period permitted by Rule 16b-3 under the Exchange Act.
Grantees should consult with their own tax advisors to determine the
particular tax consequences that may result from participation in the Proposed
Plan and the subsequent disposition of shares of Common Stock. Nothing
contained herein should be treated as tax advice.
NEW PLAN BENEFITS
No benefits have been received by or allocated to any employee under
the Proposed Plan except that, subject to stockholder approval of the Proposed
Plan: (i) each non-employee director has been automatically granted on January
3, 1995 an option to purchase five hundred (500) shares of Common Stock as
described above, (ii) share units and restricted stock options have been
granted pursuant to elections to defer Annual Incentive or Performance Bonuses
which would have been payable during the first quarter of 1995, (iii) share
units have been granted to key employees of Cologne Re, (iv) replacement
options have been granted automatically pursuant to certain option exercises
under the Compensation Plan occurring during 1995, and (v) restricted stock has
been granted. The Proposed Plan is replacing the Compensation Plan.
Therefore, the Awards that would have been made under the Proposed Plan if it
and not the Compensation Plan had been in effect for fiscal year 1994 would
have been at least those that were granted for 1994 under the provisions of the
Compensation Plan as well as those described above granted under the Proposed
Plan subject to stockholder approval. Reference is made to the Summary
Compensation Table, the Option Grants Table and the Long-Term Incentive Plan
("LTIP") Awards Table which show the grants and awards that were made under the
Compensation Plan in 1994. In addition to those awards, for 1994 the following
35
<PAGE> 38
awards were made: (i) stock options exercisable for 239,447 shares of Common
Stock were granted to all executive officers as of March 1, 1995 as a group,
for 5,000 shares to all current nonemployee directors as a group, and for
570,024 shares to all employees, including all officers as of March 1, 1995 who
are not executive officers as a group; (ii) share units for 5,269 shares of
Common Stock were granted to all executive officers as of March 1, 1995 as a
group, and for 45,076 shares to all employees, including all officers as of
March 1, 1995 who are not executive officers as a group; (iii) Annual Incentive
Bonuses earned under the Compensation Plan were paid in the amount of
$2,492,500 in cash or stock to all executive officers as of March 1, 1995 as a
group and in the amount of $20,489,675 to all employees, including all officers
as of March 1, 1995 who are not executive officers as a group; (iv) Performance
Bonuses earned under the Compensation Plan were paid in the amount of
$1,070,480 in cash or stock to all executive officers as of March 1, 1995 as a
group and in the amount of $4,753,562 to all employees, including all officers
as of March 1, 1995 who are not executive officers as a group. In addition,
rights to receive Performance Bonuses were granted in 1994 under the
Compensation Plan for the 1994-1998 performance period to all executive
officers as of March 1, 1995 as a group having a target value of $1,541,500 and
to all employees, including all officers as of March 1, 1995 who are not
executive officers as a group having a target value of $5,187,234.
The following awards were made for 1994 under the Proposed Plan,
subject to stockholder approval:
36
<PAGE> 39
Awards Made Under the
GENERAL RE CORPORATION 1995 LONG-TERM COMPENSATION PLAN
<TABLE>
<CAPTION>
Options Restricted Stock Share Units
-------------------------------------- ---------------- -----------------
# of
Shares
Underlying
Grant Options Grant Grant Grant
Date Granted Price(1) Date Value # Date Value #
<S> <C> <C> <C> <C> <C> <C> <C>
Ronald E. Ferguson . . . . . . 01/03/95 1,227(2) $123.5000 0 0 $270,928 2,136
Director, Chairman, President 02/09/95 11,634(3) 131.3750
and Chief Executive Officer 03/01/95 2,334(2) 128.5625
John C. Etling . . . . . . . . 0 0 0 0 0 0 0
Director, and Vice Chairman
Ernest C. Frohboese . . . . . . 01/03/95 305(3) 123.5000 0 0 75,964 598
Vice President 03/01/95 692(3) 128.5625
Edmond F. Rondepierre . . . . . 01/03/95 400(3) 123.5000 0 0 57,488 456
Former Vice President, 03/01/95 361(3) 128.5625
General Counsel and
Secretary
Joseph P. Brandon . . . . . . . 03/01/95 721(3) 128.5625 0 0 54,382 423
Vice President
Charles F. Barr . . . . . . . . 0 0 0 0 0 0 0
Vice President, General
Counsel and Secretary
Executive officers as a group Various 20,448 Various $654,37 5,000 1,115,711 8,784
(including those named above)
Non-employee Directors as a 01/03/95 5,000 123.5 0 0 0 0
group
Non-executive officer employee Various 38,492 Various 515,938 4,000 5,628,591 45,076
group
</TABLE>
(1) All Options were NQSOs granted at fair market value on the date of
grant.
(2) Restricted NQSO's were granted in lieu of cash bonuses under the 1994
Annual Incentive Bonus and 1990-1994 Performance Bonus provisions of
the Compensation Plan.
(3) Replacement options were granted following the tender of a like number
of shares to satisfy the option price upon exercise of the underlying
stock option. Replacement options have the same expiration date as
the original option and an exercise
37
<PAGE> 40
price equal to the market price at the date of the new grant. They
are first exercisable one year from the grant date provided the
employee still owns the shares acquired as a result of the original
option exercise, less the number of shares withheld to pay income tax
due as a result of exercising the original option.
38
<PAGE> 41
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ADOPTION OF THE
1995 LONG-TERM COMPENSATION PLAN.
RATIFICATION OF SELECTION OF INDEPENDENT PUBLIC ACCOUNTANTS
The Audit Committee of the Board of Directors has selected Coopers &
Lybrand LLP as independent public accountants to audit the financial statements
of the Corporation and its domestic subsidiaries for the fiscal year 1995.
This selection is being presented to the stockholders for their ratification at
this annual meeting. The firm of Coopers & Lybrand LLP has audited the
Corporation's financial statements since prior to January 1, 1975.
It is expected that representatives of Coopers & Lybrand LLP will
attend the meeting, will have the opportunity to make a statement if they so
desire and will be available to respond to appropriate stockholder questions.
Ratification of the selection of Coopers & Lybrand LLP as independent
public accountants will require the affirmative vote of a majority of the
shares present in person or represented by proxy at the annual meeting. The
Board of Directors and management recommend a vote FOR ratification and, unless
a stockholder signifies otherwise, the persons named in the proxy will so vote.
OTHER MATTERS
The Board of Directors and management of the Corporation do not know
of any other matters to be presented for action at the meeting. Should any
other matters come before the meeting, however, the persons named in the
enclosed proxy will have discretionary authority to vote all proxies with
respect to such matters in accordance with their judgment except to the extent
the proxy is limited to the contrary.
The expense of proxy solicitation will be borne by the Corporation.
Proxies will be solicited on behalf of the directors by Georgeson & Co. Inc.
for a fee which will not exceed [$13,000]. Expenses incurred by Georgeson &
Co. Inc. will be reimbursed by the Corporation. Proxies may also be solicited
in person or by telephone or telegraph by officers or regular employees of the
Corporation and its subsidiaries.
In order for stockholder proposals for the 1996 annual meeting of
stockholders to be eligible for inclusion in the Corporation's proxy statement,
they must be received by the Corporation at its principal office in Stamford,
Connecticut, prior to November 29, 1995.
Charles F. Barr
Secretary
March 28, 1995
39
<PAGE> 42
Preliminary Proxy Card
GENERAL RE CORPORATION PROXY
695 EAST MAIN STREET
STAMFORD, CONNECTICUT 06904-2351
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
Revoking any such prior appointment, the undersigned hereby appoints Ronald E.
Ferguson, John C. Etling, Charles F. Barr, Elizabeth A. Monrad and Robert D.
Graham, and each of them, attorneys and agents, with power of substitution to
vote as Proxy for the undersigned, as herein stated, at the annual meeting of
stockholders of General Re Corporation to be held at the offices of the
Corporation, 695 East Main Street, Stamford, Connecticut, on Friday, May 19,
1995, at 9:00 A.M., and at any adjournment thereof, with respect to the number
of shares the undersigned would be entitled to vote if personally present.
This proxy, when properly executed, will be voted (1) to amend the
Corporation's By-laws to raise the retirement age for directors and (2) for the
election of Directors and (3) to consider and act upon a proposal to adopt the
1995 Long-Term Compensation Plan and (4) to consider and act upon a proposal to
ratify the selection of independent public accountants, if no instructions to
the contrary are indicated in Items (1), (2), (3) and (4) below, and in the
discretion of the named attorneys and agents on such other matters as may
properly come before the meeting.
The undersigned hereby acknowledges receipt of a copy of the Proxy Statement
relating to such annual meeting.
PLEASE MARK BOXES OR /X/ IN BLUE OR BLACK INK.
1. To amend the Corporation's By-laws to raise the retirement age for directors
from age seventy (70) to age seventy-two (72).
<TABLE>
<S> <C> <C>
FOR AGAINST ABSTAIN
/ / / / / /
</TABLE>
2. ELECTION OF DIRECTORS:
Lucy Wilson Benson, Walter M. Cabot, John C. Etling, William C. Ferguson, Kay
Koplovitz and Walter F. Williams
<TABLE>
<S> <C>
FOR ALL NOMINEES LISTED / / (Except as indicated to the contrary below) WITHHOLD AUTHORITY / / (To vote for all nominees)
</TABLE>
(INSTRUCTION: To withhold authority to vote for any individual nominee, print
that nominee's name.)
--------------------------------------------------------------------------------
(Continued, and to be signed on other side.)
<PAGE> 43
Preliminary Proxy Card
3. Proposal to adopt the 1995 Long-Term Compensation Plan.
<TABLE>
<S> <C> <C>
FOR AGAINST ABSTAIN
/ / / / / /
</TABLE>
4. Proposal to ratify the selection of independent public accountants.
<TABLE>
<S> <C> <C>
FOR AGAINST ABSTAIN
/ / / / / /
</TABLE>
5. In accordance with their discretion on any other matters or proposal which
may properly come before the meeting.
(Signatures should conform exactly
to name shown on this proxy.
Executors, administrators,
guardians, trustees, attorneys and
officers signing for corporations
should give full title.)
Dated: ......................., 1995
Please be sure to insert date
Signed..............................
...................................
SIGN, DATE AND RETURN THIS PROXY
PROMPTLY USING THE ENCLOSED ENVELOPE
<PAGE> 44
APPENDIX
List and description of graphic and image information
I. Under caption "Information concerning NOMINEES for Terms
Expiring in 1998:"
A. Photograph of Lucy Wilson Benson
B. Photograph of John C. Etling
C. Photograph of William C. Ferguson
D. Photograph of Kay Koplovitz
E. Photograph of Walter F. Williams
II. Under caption "Information concerning NOMINEE for Term
Expiring in 1997:"
A. Photograph of Walter M. Cabot
III. Under caption "Information concerning Directors Whose Terms
Expire in 1996:"
A. Photograph of Andrew W. Matheson
B. Photograph of David E. McKinney
C. Photograph of Stephen A. Ross
IV. Under caption "Information Concerning Directors Whose Terms
Expire in 1997:"
A. Photograph of Ronald E. Ferguson
B. Photograph of Donald J. Kirk
C. Photograph of Edward H. Malone
