<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 14, 1995
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the registrant /x/
Filed by a party other than the registrant / /
Check the appropriate box:
/ / Preliminary proxy statement
/x/ Definitive proxy statement
/ / Definitive additional materials
/ / Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
RELIANCE GROUP HOLDINGS, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in its Charter)
RELIANCE GROUP HOLDINGS, INC.
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (Check the appropriate box):
/x/ $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2).
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed pursuant to
Exchange Act
Rule 0-11:(1)
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the form or schedule and the date of its filing.
(1) Amount previously paid:
- --------------------------------------------------------------------------------
(2) Form, schedule or registration statement no.:
- --------------------------------------------------------------------------------
(3) Filing party:
- --------------------------------------------------------------------------------
(4) Date filed:
- --------------------------------------------------------------------------------
- ------------------
(1)Set forth the amount on which the filing fee is calculated and state how it
was determined.
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- --------------------------------------------------------------------------------
<PAGE>
RELIANCE GROUP HOLDINGS, INC.
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
MAY 11, 1995
------------------------
The Annual Meeting of Stockholders of Reliance Group Holdings, Inc., a
Delaware corporation, will be held at the New York Public Library, Celeste
Bartos Forum, Fifth Avenue and 42nd Street, New York, New York at 10:30 a.m. on
Thursday, May 11, 1995.
At this meeting, the stockholders will be asked to:
1. Elect fourteen directors to serve for the ensuing year.
2. Transact any other business which may properly come before the
meeting or any adjournments thereof.
Only stockholders of record at the close of business on March 22, 1995 will
be entitled to notice of, and to vote at, this meeting. A list of such
stockholders will be available for inspection at the offices of Reliance Group
Holdings, Inc. at Park Avenue Plaza, 55 East 52nd Street, New York, New York
10055 during normal business hours during the ten-day period prior to the
meeting.
Your attention is directed to the accompanying proxy statement. Whether or
not you plan to attend the meeting, please vote, sign, date and return the
enclosed proxy as promptly as possible in the enclosed stamped envelope. This
will enable your shares to be voted in accordance with your instructions.
By Order of the Board of Directors,
Reliance Group Holdings, Inc.
Howard E. Steinberg,
Corporate Secretary
Dated: April 14, 1995
<PAGE>
PROXY STATEMENT
RELIANCE GROUP HOLDINGS, INC.
PARK AVENUE PLAZA
55 EAST 52ND STREET
NEW YORK, NEW YORK 10055
------------------------------
ANNUAL MEETING OF STOCKHOLDERS
MAY 11, 1995
------------------------------
VOTING
The enclosed proxy is solicited by and on behalf of the Board of Directors
of Reliance Group Holdings, Inc. (the 'Company') for use at the Annual Meeting
of Stockholders (the 'Annual Meeting') to be held at the New York Public
Library, Celeste Bartos Forum, Fifth Avenue and 42nd Street, New York, New York
on Thursday, May 11, 1995 at 10:30 a.m. and at any adjournments thereof. If the
enclosed proxy is properly executed and returned, it will be voted in accordance
with the instructions thereon. A proxy given pursuant to this solicitation is
revocable by written notice delivered to the Corporate Secretary of the Company
at any time prior to its exercise, by executing and delivering a later dated
proxy or by attending the Annual Meeting and voting in person. Unless previously
revoked or unless other instructions are on the proxy, it will be voted 'for'
the election of the fourteen persons nominated by the Board of Directors for
election as Directors of the Company. The cost of this solicitation will be
borne by the Company. This proxy statement is being mailed commencing April 14,
1995, to stockholders of record on March 22, 1995.
Holders of record at the close of business on March 22, 1995 of Common
Stock, par value $.10 per share (the 'Common Stock'), of the Company are
entitled to vote at the Annual Meeting. On that date, 113,113,869 shares of
Common Stock were outstanding. Each stockholder is entitled to one vote for each
share of Common Stock held. Pursuant to the Delaware General Corporation Law,
only votes cast 'for' a matter constitute affirmative votes. Votes withheld
will not have any effect on the election of Directors.
Approximately 47% of the Common Stock is, (and on March 22, 1995 was),
owned by Saul P. Steinberg, members of his family and affiliated trusts (the
'Steinberg Group'). The members of the Steinberg Group have informed the Company
that they intend to vote for the election of the fourteen persons nominated by
the Board of Directors for election as Directors of the Company. Since Directors
are elected by a plurality of votes cast, the election of such Directors is
virtually assured.
<PAGE>
PROPOSAL 1--ELECTION OF DIRECTORS
The fourteen persons named below (all of whom are presently Directors of
the Company) have been nominated by the Board of Directors, upon the
recommendation of the Nominating Committee, for election as Directors of the
Company to serve until the next annual meeting of stockholders and until their
successors are duly elected and shall qualify. Directors will be elected by a
plurality of the votes cast. Each of the persons named below is also a director
of Reliance Financial Services Corporation and Reliance Insurance Company
('Reliance Insurance'), subsidiaries of the Company.
Saul P. Steinberg, 55, founded and has been the Chief Executive Officer and
a Director of the Company and predecessors of the Company since 1961. Mr.
Steinberg is also a Director of Symbol Technologies, Inc. and Zenith National
Insurance Corp. He is a member of the Board of Trustees of the University of
Pennsylvania; Chairman of The Wharton School Board of Overseers; a member of the
Board of Overseers of Cornell University Medical College; a member of the Board
of Trustees of the Long Island Jewish Medical Center; a Director of New York
Hospital Cornell Medical Center; a Trustee of the New York Public Library; and a
Director of the New York City Partnership. Mr. Steinberg is Chairman of the
Executive Committee and the Regular Compensation Committee of the Board of
Directors. He is the brother of Mr. Robert M. Steinberg and the brother-in-law
of Mr. Bruce L. Sokoloff, Senior Vice President--Administration, of the Company.
Mr. Steinberg served Telemundo Group, Inc. ('Telemundo'), as Chief Executive
Officer from February 1990 until May 1992, and as President from February 1990
until February 1991. On July 30, 1993, Telemundo consented to the entry of an
order for relief under Chapter 11 of the United States Bankruptcy Code.
Telemundo's plan of reorganization was consummated on December 30, 1994.
George R. Baker, 65, has been a Director of the Company since January 1983
and was a Director of predecessors of the Company since 1974, except for the
period February 1982 through January 1983. Since July 1985 his principal
business activity has been serving as a Corporate Director/Advisor to various
business enterprises. Mr. Baker is a Director of The Midland Company, WMS
Industries Inc. and W.W. Grainger, Inc. He is a Member of the Board of Trustees
of The Field Museum of Chicago; the Board of Trustees of Children's Memorial
Hospital, Chicago; and the Board of Trustees of Coe College, Cedar Rapids, Iowa.
Mr. Baker is Chairman of the Stock Option, Special Compensation and Special
Committees of the Board of Directors and a member of the Audit and Nominating
Committees of the Board of Directors.
George E. Bello, 59, became Executive Vice President and Controller and a
Director of the Company in 1982. He has held various positions with predecessors
of the Company since 1968. He is a Director of Zenith National Insurance Corp.
Mr. Bello is Chairman of the Finance Committee of the Board of Directors.
Carter Burden, 53, became a Director of the Company in December 1993. He
has been Chairman of the Board of CRB Broadcasting Corp., a company which owns
and operates radio stations, since 1981 and Managing General Partner of William
A. M. Burden & Co., a private investment partnership, since 1989. Mr. Burden is
a Trustee of The New York Public Library, the Pierpont Morgan Library and the
New York City Ballet. He is also a member of the Committee to Visit the Art
Museums and the University Libraries Committee at Harvard University; Founder
and Chairman Emeritus of The Burden Center For the Aging; and Director of the
Florence V. Burden Foundation. Mr. Burden is a member of the Nominating and
Stock Option Committees of the Board of Directors.
Dennis A. Busti, 52, became a Director of the Company in August 1991. He
has been President and Chief Executive Officer of Reliance National, a principal
operating unit of the Company, since June 1987.
Lowell C. Freiberg, 55, has been a Senior Vice President and a Director of
the Company since 1982 and Chief Financial Officer of the Company since 1985. He
also served as Treasurer of the Company from 1982 until March 1994. Mr. Freiberg
has held various positions with predecessors of the Company since 1969. He is a
2
<PAGE>
Director of Symbol Technologies, Inc. Mr. Freiberg is also a Director of the
Dance Theatre of Harlem and Jazz at Lincoln Center. Mr. Freiberg is a member of
the Finance Committee of the Board of Directors.
Dr. Thomas P. Gerrity, 53, became a Director of the Company in December
1993. He has been Dean of the Wharton School of the University of Pennsylvania
since 1990. Dr. Gerrity was Chairman and Chief Executive Officer of Index Group,
Inc., an information technology consulting company he founded, from 1969 to 1989
and was President of CSC Consulting, the commercial professional services group
of Computer Sciences Corporation, from 1989 to 1990. He is a Director of Digital
Equipment Corporation, Federal National Mortgage Association, Sun Company, Inc.
and Melville Corporation and a member of the Executive Committee of Technology
Leaders L.P. Dr. Gerrity is Chairman of the Nominating Committee of the Board of
Directors and is a member of the Audit Committee of the Board of Directors.
Jewell Jackson McCabe, 49, became a Director of the Company in August 1991.
She has been the President of Jewell Jackson McCabe Associates, consultants
specializing in strategic planning and communications, since 1984 and Chair of
the New York State Jobs Training Partnership Council, a federally funded
training program for disadvantaged workers, since 1983. Ms. McCabe is the
Founder and Chair of the National Coalition of 100 Black Women; Chair of the
Coro Foundation; and a Director or Trustee of the National Alliance of Business,
South Street Seaport Museum, United Hospital Fund, New York City Partnership and
the Phelps Stokes Fund. She is also a member of The Wharton School Board of
Overseers, the Government Relations Committee of the United Way of America and
of the Executive Committee of the Association for a Better New York. Ms. McCabe
is a member of the Stock Option, Regular Compensation and Finance Committees of
the Board of Directors.
Irving Schneider, 75, became a Director of the Company in 1982 and was a
Director of predecessors of the Company since 1979. He has been Executive Vice
President of Helmsley-Spear, Inc., a real estate management corporation, for
over twenty years. Mr. Schneider is also Chairman of the Long Island Jewish
Medical Center and Vice Chairman of the Association for a Better New York and
formerly Vice Chairman of the Board of Trustees of Brandeis University. He is
Life Trustee of United Jewish Appeal Federation of New York. Mr. Schneider is a
member of the Audit and Stock Option Committees of the Board of Directors.
Bernard L. Schwartz, 69, became a Director of the Company in 1982 and was a
Director of predecessors of the Company since 1965. He has been Chairman of the
Board and Chief Executive Officer of Loral Corporation, a defense electronics
and communications corporation, since 1972. Since 1989, he has been Chairman and
Chief Executive Officer of K & F Industries, Inc., a manufacturer of aircraft
wheels and brakes. Since 1990, Mr. Schwartz has been Chairman of Space
Systems/Loral, Inc. He is a Director of First Data Corporation and Sorema
International Holding N.V., a Trustee of New York University Medical Center, and
a Director of the New York City Partnership. Mr. Schwartz is a member of the
Executive Committee of the Board of Directors.
Richard E. Snyder, 62, became a Director of the Company in March 1994. Mr.
Snyder was Chief Executive Officer and Chairman of the Board of Directors of
Simon & Schuster, the publishing firm, from 1975 through 1994. Mr. Snyder is a
member of the Board of Directors of the National Book Awards. Mr. Snyder is also
a member of the Society of Fellows of the American Museum of Natural History,
the Council on Foreign Relations, the Economic Club of New York and the Board of
Overseers for the University Libraries of Tufts University. Mr. Snyder is a
member of the Finance and Nominating Committees of the Board of Directors.
Thomas J. Stanton, Jr., 67, became a Director of the Company in 1982 and
was a Director of predecessors of the Company since 1966. He is Chairman
Emeritus of National Westminster Bank NJ, and served as Chairman of the Board of
Directors or President of National Westminster Bank NJ or its predecessor from
1967 through January 1990. He is a Director of Loral Corporation. He is
Treasurer and Director of the New Jersey State Chamber of Commerce and a
Director or Trustee of Hudson County Chamber of Commerce & Industry and the
National Conference of Christians and Jews. He is a member of the Board of
Regents of Saint Peter's College and of Partnership for New Jersey. He is
Chairman of Hudson County Tax Research Council Executive Committee; Trustee of
Montclair Museum, Liberty Science Center and Saint Peter's Prep; and Chairman
and
3
<PAGE>
Treasurer of the Foundation of the University of Medicine and Dentistry of New
Jersey. Mr. Stanton is Chairman of the Audit Committee of the Board of Directors
and a member of the Special Compensation and Special Committees of the Board of
Directors.
Robert M. Steinberg, 52, became a Director of the Company in 1981 and
President and Chief Operating Officer in 1982. He has held various positions
with predecessors of the Company since 1965. In October 1984, Mr. Steinberg was
elected Chairman of the Board and Chief Executive Officer of Reliance Insurance.
He is a Director of Zenith National Insurance Corp. He is a Trustee of the Mount
Sinai Medical Center, The Robert Steel Foundation for Pediatric Cancer Research
and Bank Street College. Mr. Steinberg is a member of the Executive Committee
and the Regular Compensation Committee of the Board of Directors. Mr. Steinberg
is the brother of Mr. Saul P. Steinberg and the brother-in-law of Mr. Bruce L.
Sokoloff, Senior Vice President--Administration, of the Company.
James E. Yacobucci, 43, became a Director of the Company and Senior Vice
President--Investments of Reliance Insurance in May 1989. He became Senior Vice
President--Investments of the Company in December 1990. From January 1982
through April 1989 Mr. Yacobucci was a general partner of Cumberland Associates,
a private investment manager.
BOARD OF DIRECTORS AND COMMITTEES
The Board of Directors of the Company held seven meetings during 1994. The
Board of Directors has an Audit Committee, which held three meetings during
1994, and a Regular Compensation Committee, which acted once by unanimous
written consent during 1994. The Board of Directors also has a Special
Compensation Committee, which held two meetings during 1994, a Stock Option
Committee, which held six meetings during 1994, a Special Committee, which met
once in 1994 and a Nominating Committee, which held two meetings during 1994.
Each Director of the Company attended at least 75% of the aggregate number of
meetings held by the Board of Directors (during the period he or she served as a
Director) and by the committees of which he or she was a member, except that
Dennis A. Busti, Lowell C. Freiberg, Bernard L. Schwartz and Jewell Jackson
McCabe attended five of the seven meetings of the Board of Directors and Jewell
Jackson McCabe attended three of the six meetings of the Stock Option Committee.
The Audit Committee's activities include recommendations as to the
engagement of independent auditors, approval of the scope of the annual audit
and related fee proposals, periodic meetings with both independent auditors and
internal auditors to discuss the results of audit examinations, and review of
the adequacy of internal accounting and financial reporting controls and of
current developments in financial reporting and accounting. The Regular
Compensation Committee is responsible for reviewing the compensation of officers
and employees of the Company who are not Directors of the Company. The Special
Compensation Committee (which is comprised solely of outside directors) is
responsible for reviewing the compensation of officers of the Company who are
also Directors of the Company and of principal officers of the Company's
insurance subsidiaries. The Special Compensation Committee is also responsible
for reviewing the participation of key executives of the Company in certain
transactions involving the Company. The Special Compensation Committee also
administers each of the Reliance Group Holdings, Inc. Executive Bonus Plan, the
Executive Bonus Plan for James E. Yacobucci and, as such stock option plan
applies to the executive officers of the Company, the Reliance Group Holdings,
Inc. 1994 Stock Option Plan. The Stock Option Committee (which is comprised
solely of outside directors) administers the Company's 1986 Stock Option Plan
and selects the key employees who will receive grants of options and stock
appreciation rights and determines the number of shares of Common Stock that
will be subject thereto. The Stock Option Committee also administers the 1994
Stock Option Plan for Non-Employee Directors (but does not select the persons
eligible to receive options thereunder) and the Reliance Group Holdings, Inc.
1994 Stock Option Plan (other than with respect to the executive officers of the
Company). The Special Committee (which is comprised solely of outside directors)
is responsible for authorizing and approving the participation of the Company
and one of its subsidiaries in financial transactions involving Reliance
Figueroa
4
<PAGE>
Associates Limited Partnership, a partnership in which a Company subsidiary is
the general partner and certain Directors and executive officers of the Company
are limited partners. The Nominating Committee is responsible for evaluating and
recommending nominees for election to the Board of Directors. Any stockholder
desiring to recommend a candidate for nomination to the Board of Directors
should furnish to the Corporate Secretary of the Company a resume of the
experience and qualifications of the proposed nominee and a written statement
signed by the proposed nominee consenting to be
nominated by the Board of Directors and to serve if elected. A candidate for
director must be highly experienced, have knowledge and a background that will
be useful to the Company, and the ability to exercise sound business judgment.
The candidate must also be willing and able to commit the time and effort needed
to be an effective director. To be considered for the 1996 Annual Meeting of
Stockholders, any such recommendation must be received at the principal
executive offices of the Company on or before December 16, 1995.
COMPENSATION OF DIRECTORS
Each Director of the Company who is not compensated as an officer of the
Company or one of its subsidiaries receives director's fees of $20,000 per annum
from the Company and $20,000 per annum from Reliance Insurance for serving as a
director of Reliance Insurance. The Company also pays each member of its Audit,
Stock Option, Nominating, Special Compensation and Special Committees $1,000 for
each such meeting attended. In addition, the Company pays to the Chairman of
each of the Audit, Stock Option, Nominating, Special Compensation and Special
Committees a retainer of $5,000 per annum. In addition, each Director of the
Company who is not an employee of the Company or any of its subsidiaries was
granted in 1994, an option to purchase 25,000 shares of Common Stock at the fair
market value of such shares on the date of grant of the option. Each other
person who is elected as a Director of the Company and is not an employee of the
Company or any of its subsidiaries will upon such person's initial election be
granted an option to purchase 25,000 shares of Common Stock at the fair market
value of such shares on the date of grant. The options granted to each Director
of the Company who is not an employee of the Company or any of its subsidiaries
vest one year from the date of grant so long as the Director is still a Director
on such date. The Company provides Mr. Stanton with $100,000 face value of
permanent life insurance.
5
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
Approximately 47% of the Common Stock is owned by the Steinberg Group,
composed of Saul P. Steinberg, members of his family and affiliated trusts. The
following table sets forth information as of February 15, 1995 with respect to
beneficial ownership of Common Stock by the Steinberg Group and its members, by
each Director of the Company and by all executive officers and directors of the
Company as a group. The Company does not know of any other beneficial owners of
more than 5% of the outstanding Common Stock. The persons named below hold sole
voting and investment power with respect to the shares shown opposite their
names, unless otherwise indicated. Saul P. Steinberg, Robert M. Steinberg and
the Steinberg Group have an address of Park Avenue Plaza, 55 East 52nd Street,
New York, New York 10055.
<TABLE>
<CAPTION>
NUMBER OF SHARES
AND NATURE OF PERCENT OF
NAME OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP CLASS(1)
- ----------------------------------------------------------- -------------------- ----------
<S> <C> <C>
Steinberg Group............................................ 53,332,493(2) 47.1%
Saul P. Steinberg.......................................... 43,598,050(3)(4)(5) 38.5%
Robert M. Steinberg........................................ 17,547,897(3)(4)(6)(7)(12) 15.4%
Roni Sokoloff.............................................. 3,137,593(8)(12) 2.8%
Lynda Jurist............................................... 3,106,310(9) 2.7%
George R. Baker............................................ 3,725(4) *
George E. Bello............................................ 2,316,314(10)(11)(12) 2.0%
Carter Burden.............................................. 26,676(13) *
Dennis A. Busti............................................ 111,000(12) *
Dean W. Case............................................... 123,145(12) *
Lowell C. Freiberg......................................... 1,059,726(3)(6)(12) *
Dr. Thomas P. Gerrity...................................... 20,000 *
Jewell J. McCabe........................................... 0 *
Irving Schneider........................................... 174,500 *
Bernard L. Schwartz........................................ 14,350(13)(14) *
Richard E. Snyder.......................................... 1,000 *
Thomas J. Stanton, Jr...................................... 1,000 *
James E. Yacobucci......................................... 1,991,169(3)(6)(10)(12) 1.7%
All Executive Officers and Directors as a Group
(other than the Steinberg Group and Bruce L. Sokoloff)... 4,502,554(3)(6)(10)
(11)(12)(13)(15) 3.9%
</TABLE>
- ------------------
(1) An asterisk indicates that the shares owned are less than 1% of the
class.
(2) Excludes shares of Common Stock held by, and shares of Common Stock
based on the assumed exercise of warrants to purchase Common Stock held by, the
pension plans of the Company and Commonwealth Land Title Insurance Company, a
subsidiary of the Company, and excludes shares of Common Stock allocable to
contributions of members of the Steinberg Group under the Reliance Insurance
Company Savings Incentive Plan (the 'SIP') and shares based on the assumed
exercise of options to purchase Common Stock held by Robert M. Steinberg and
Roni Sokoloff (through her husband, Bruce L. Sokoloff, and over which she
disclaims beneficial ownership). See Notes 3, 5, 6, 7, 8 and 12. Including such
shares and warrants, the Steinberg Group beneficially owned 54,718,708 shares of
Common Stock, representing approximately 48% of the class.
(3) Includes 182,900 shares owned by, and 56,072 shares based on the
assumed exercise of warrants to purchase Common Stock owned by, the Reliance
Group Holdings, Inc. Pension Trust. Saul P. Steinberg, Robert M. Steinberg,
Lowell C. Freiberg and James E. Yacobucci are the trustees thereof. Voting and
dispositive power with respect to such shares and warrants (including the power
to exercise the warrants) has been transferred by the trustees to LaSalle
National Trust, N.A. ('LaSalle'), as independent fiduciary. The trustees may
revoke the
6
<PAGE>
authority of LaSalle on 30 days' notice. Each trustee disclaims beneficial
ownership of all of the shares described in this Note 3.
(4) Includes with respect to each of Saul P. Steinberg and Robert M.
Steinberg, and excludes with respect to George R. Baker, 12,280,830 shares owned
by the Article III Residuary Trust under the will of Julius Steinberg. Saul P.
Steinberg, Robert M. Steinberg, their mother and George R. Baker are the
trustees thereof and have the shared power to vote and otherwise deal with the
shares. Saul P. Steinberg, Robert M. Steinberg and their sisters Roni Sokoloff
and Lynda Jurist are equal beneficiaries under the trust.
(5) Includes 4,000 shares held by Saul P. Steinberg as custodian for his
daughter, as to which he disclaims beneficial ownership. Includes 75,180 shares
owned by Saul P. Steinberg's mother, 336,300 shares owned by his wife, 15,200
shares held by his wife as custodian for their child and 151,340 shares held by
trusts for children of Saul P. Steinberg (for which Robert M. Steinberg serves
as the sole trustee), as to all of which Saul P. Steinberg disclaims beneficial
ownership. Includes 1,010,000 shares held by the Saul & Gayfryd Steinberg
Foundation, Inc. Includes 126,175 shares allocable to Saul P. Steinberg's
contributions under the SIP, as to which he has dispositive power. All of the
Common Stock held under the SIP will be voted by the trustee of the SIP,
Continental Trust Company, in its sole discretion, in accordance with the
fiduciary standards of the Employee Retirement Income Security Act of 1974, as
amended.
(6) Includes 314,100 shares owned by, and 94,154 shares based on the
assumed exercise of warrants to purchase Common Stock owned by, the Commonwealth
Land Title Insurance Company Pension Trust. Robert M. Steinberg, Lowell C.
Freiberg, James E. Yacobucci and two other persons are the trustees thereof.
Voting and dispositive power with respect to such shares and warrants (including
the power to exercise the warrants) has been transferred by the trustees to
LaSalle, as independent fiduciary. The trustees may revoke the authority of
LaSalle on 30 days' notice. Messrs. Steinberg, Freiberg and Yacobucci each
disclaims beneficial ownership of all of the shares described in this Note 6.
(7) Includes 101,730 shares held by Robert M. Steinberg as custodian for
his children and 151,340 shares held by trusts for children of Saul P. Steinberg
for which Robert M. Steinberg serves as sole trustee, as to all of which Robert
M. Steinberg disclaims beneficial ownership. Includes 27,931 shares allocable to
Robert M. Steinberg's contributions under the SIP, as to which he has
dispositive power.
(8) Includes 400,000 shares owned by Bruce L. Sokoloff, the husband of Roni
Sokoloff, and 52,580 shares held by Mr. Sokoloff as custodian for their
children, as to all of which Roni Sokoloff disclaims beneficial ownership.
Includes 19,883 shares allocable to Bruce L. Sokoloff's contributions under the
SIP, as to which he has dispositive power and as to which Roni Sokoloff
disclaims beneficial ownership. Mr. Sokoloff is Senior Vice
President--Administration of the Company.
(9) Includes 10,000 shares owned by Lynda Jurist's husband, as to which she
disclaims beneficial ownership.
(10) Includes 933,300 shares owned by, and 310,643 shares based on the
assumed exercise of warrants to purchase Common Stock owned by, the Reliance
Insurance Company Employee Retirement Trust. George E. Bello, James E. Yacobucci
and one other person are the trustees thereof. Voting and dispositive power with
respect to such shares and warrants (including the power to exercise the
warrants) has been transferred by the trustees to LaSalle, as independent
fiduciary. The trustees may revoke the authority of LaSalle on 30 days' notice.
Messrs. Bello and Yacobucci each disclaims beneficial ownership of all of the
shares described in this Note 10.
(11) Includes shares allocable to employee contributions under the SIP, as
to which the employee has dispositive power, as follows: George E. Bello--15,426
shares, and all executive officers and directors as a group (other than the
Steinberg Group and Bruce L. Sokoloff)--15,426 shares.
(12) Includes shares based on the assumed exercise of currently exercisable
options to purchase Common Stock owned through the Company's 1986 Stock Option
Plan as follows: Robert M. Steinberg--500,000, Roni Sokoloff--65,000 (these
options are owned by Bruce L. Sokoloff and Roni Sokoloff disclaims beneficial
7
<PAGE>
ownership), George E. Bello--350,000, Dennis A. Busti--110,000, Dean W.
Case--97,500, Lowell C. Freiberg--350,000, James E. Yacobucci--100,000 and all
executive officers and directors as a group (other than the Steinberg Group and
Bruce L. Sokoloff)--1,420,000 shares.
(13) Includes shares based on the assumed exercise of warrants to purchase
Common Stock as follows: Carter Burden--21,676 shares, Bernard L.
Schwartz--4,350 shares (owned by the Bernard and Irene Schwartz Foundation) and
all executive officers and directors as a group (other than the Steinberg Group
and Bruce L. Sokoloff)--487,299 shares.
(14) These shares and warrants are beneficially owned by the Bernard and
Irene Schwartz Foundation and investment and voting power over these shares and
warrants are shared.
(15) Excludes 12,280,830 shares owned by the Article III Residuary Trust
under the will of Julius Steinberg. See Note 4. Includes 10,000 shares held by a
Company officer as trustee for his children, as to which beneficial ownership is
disclaimed.
The following table sets forth information as of February 15, 1995 with
respect to beneficial ownership of warrants to purchase Common Stock by each
Director of the Company and by all executive officers and Directors of the
Company as a group.
<TABLE>
<CAPTION>
NUMBER OF WARRANTS
AND NATURE OF PERCENT
NAME OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP OF CLASS(1)
- ------------------------------------------------------------------------------ -------------------- -----------
<S> <C> <C>
George E. Bello............................................................... 310,643(2) 6.2%
Carter Burden................................................................. 21,676 *
Lowell C. Freiberg............................................................ 150,226(3)(4) 3.0%
Bernard L. Schwartz........................................................... 4,350 *
Robert M. Steinberg........................................................... 150,226(3)(4) 3.0%
Saul P. Steinberg............................................................. 56,072(3) 1.1%
James E. Yacobucci............................................................ 460,869(2)(3)(4) 9.2%
All Executive Officers and Directors as a Group............................... 487,299(2)(3)(4) 9.7%
</TABLE>
- ------------------
(1) An asterisk indicates that the securities owned are less than 1% of the
class.
(2) Includes 310,643 warrants to purchase Common Stock owned by the
Reliance Insurance Company Employee Retirement Trust. George E. Bello, James E.
Yacobucci and one other person are the trustees thereof. Dispositive power with
respect to such warrants (including the power to exercise them) and voting power
with respect to the underlying Common Stock has been transferred by the trustees
to LaSalle, as independent fiduciary. The trustees may revoke the authority of
LaSalle on 30 days' notice. Messrs. Bello and Yacobucci each disclaims
beneficial ownership of the warrants described in this Note 2.
(3) Includes 56,072 warrants to purchase Common Stock owned by the Reliance
Group Holdings, Inc. Pension Trust. Lowell C. Freiberg, Robert M. Steinberg,
Saul P. Steinberg and James E. Yacobucci are the trustees thereof. Dispositive
power with respect to such warrants (including the power to exercise them) and
voting power with respect to the underlying Common Stock has been transferred by
the trustees to LaSalle, as independent fiduciary. The trustees may revoke the
authority of LaSalle on 30 days' notice. Each trustee disclaims beneficial
ownership of the warrants described in this Note 3.
(4) Includes 94,154 warrants to purchase Common Stock owned by the
Commonwealth Land Title Insurance Company Pension Trust. Lowell C. Freiberg,
Robert M. Steinberg, James E. Yacobucci and two other persons are the trustees
thereof. Dispositive power with respect to such warrants (including the power to
exercise them) and voting power with respect to the underlying Common Stock has
been transferred by the trustees to LaSalle, as independent fiduciary. The
trustees may revoke the authority of LaSalle on 30 days' notice. Each trustee
disclaims beneficial ownership of the warrants described in this Note 4.
8
<PAGE>
The following table sets forth information as of February 15, 1995 with
respect to beneficial ownership of equity securities of Reliance Insurance by
each Director of the Company and by all executive officers and Directors of the
Company as a group.
<TABLE>
<CAPTION>
NUMBER OF PERCENT
SHARES AND NATURE OF OF
TITLE OF CLASS NAME OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP CLASS(1)
- --------------------------------------- --------------------------------------- -------------------- ---------
<S> <C> <C> <C>
Reliance Insurance Company
$2.68 Series A Preferred
Stock, $1.00 par value: Robert M. Steinberg.................... 4,500 *
All Executive Officers and
Directors as a Group................... 4,500 *
</TABLE>
- ------------------
(1) An asterisk indicates that the securities owned are less than 1% of the
class.
9
<PAGE>
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table summarizes the compensation for services rendered in
all capacities to the Company and its subsidiaries for the fiscal years ended
December 31, 1994, 1993 and 1992 by the Company's Chief Executive Officer and
the four other most highly compensated executive officers of the Company (the
'named executive officers').
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
------------------------
AWARDS
---------- PAYOUTS
ANNUAL COMPENSATION SECURITIES ----------
-------------------------- UNDERLYING LTIP
NAME AND OTHER ANNUAL OPTIONS/ PAYOUTS ALL OTHER
PRINCIPAL POSITION YEAR SALARY($) BONUS($) COMPENSATION($) SARS(#) ($) COMPENSATION($)
- ------------------ ---- ---------- ---------- --------------- ---------- ---------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
Saul P. Steinberg 1994 $1,800,000(1) $1,925,000 $ 74,000(2) 500,000 $ 0 $ 44,000(7)(8)
Chairman of the Board & 1993 2,750,000(1) 2,700,000 85,000 0 0 696,000(8)(9)
Chief Executive Officer 1992 2,750,000(1) 3,135,000 77,000 0 0 357,000(9)
Robert M. Steinberg 1994 1,200,000(1) 1,265,000 --(3) 500,000 0 107,000(7)(8)
President & Chief 1993 1,400,000(1) 1,350,000 -- 0 0 40,000(8)(9)
Operating Officer 1992 1,400,000(1) 1,350,000 -- 1,000,000 (4) 0 130,000(9)
George E. Bello 1994 675,000(1) 687,500 -- 75,000 0 64,000(7)(8)
Executive Vice President 1993 590,000(1) 625,000 -- 0 0 59,000(8)(9)
& Controller 1992 590,000(1) 630,000 700,000 (4) 483,000(5) 103,000(9)
James E. Yacobucci 1994 1,250,000 1,250,000 -- 0 1,234,000(6) 5,000(7)
Senior Vice President-- 1993 1,125,000 0 -- 0 0 7,000
Investments 1992 1,125,000 400,000 200,000 (4) 0 7,000
Lowell C. Freiberg 1994 600,000 660,000 -- 75,000 0 65,000(7)
Senior Vice President 1993 495,000 700,000 -- 0 0 54,000(8)
& Chief Financial Officer 1992 495,000 540,000 700,000 (4) 353,000(5) 84,000
</TABLE>
- ------------------
(1) Includes directors' fees paid by a company, which may be deemed to be
an affiliate of the Company, on whose board the executives serve at the request
of the Company as follows: $50,000 for Saul P. Steinberg, $50,000 for Robert M.
Steinberg and $50,000 for George E. Bello. In prior years, amounts in respect of
the directors' fees paid to these persons were included in 'All Other
Compensation'.
(2) The 1994 amount includes $57,000 for certain personal use of corporate
aircraft. The 1993 amount includes $57,000 for certain personal use of corporate
aircraft and $26,000 for club membership dues. The 1992 amount includes $27,000
for certain personal use of corporate aircraft and $42,000 in 1992 net operating
expenses for a Company condominium that was used during 1992 primarily by Saul
P. Steinberg and members of his family. The Company condominium was sold in
1993.
(3) This mark throughout the table indicates information not required to be
reported under the rules of the Securities and Exchange Commission.
(4) These Company options were granted in connection with the surrender of
an equal number of outstanding Company options.
(5) Includes amounts paid in respect of a Frank B. Hall & Co. Inc. ('Hall')
compensation unit plan. Such amounts were paid in 1992 pursuant to a waiver by
the Company of a condition to payout in connection with the sale by Hall of
substantially all of its operating assets and the merger of Hall with a
wholly-owned subsidiary of the Company.
(6) Represents an amount paid to Mr. Yacobucci in early 1994, but earned
for the period from July 1, 1989 through December 31, 1993. Until December 31,
1993, Mr. Yacobucci's employment was governed by an employment agreement with
Reliance Insurance pursuant to which Mr. Yacobucci was entitled, in addition to
10
<PAGE>
salary and bonus, to 'Distributable Portfolio Profits' (defined as 15% of the
amount (if any) by which the total return earned on a portion of the
consolidated investment portfolio of Reliance Insurance exceeded the amount
which would have been earned on such portion of the portfolio if its performance
matched the total return on the Standard & Poor's 500) for the period from July
1, 1989 through December 31, 1993. The $1,234,000 paid to Mr. Yacobucci
represents an amount equal to the excess of (i) Distributable Portfolio Profits,
over (ii) the aggregate amount of advances against Distributable Portfolio
Profits paid to him prior to 1994.
(7) Includes 1994 contributions by the Company and its subsidiaries under
the SIP as follows: $4,500 for Saul P. Steinberg, $4,500 for Robert M.
Steinberg, $4,500 for George E. Bello, $4,500 for James E. Yacobucci and $4,500
for Lowell C. Freiberg. Includes bonuses paid by the Company that were used to
obtain certain life insurance benefits as follows: $2,700 for Saul P. Steinberg,
$2,700 for Robert M. Steinberg, $4,300 for George E. Bello, $-0- for James E.
Yacobucci and $2,700 for Lowell C. Freiberg. Includes the value of premiums paid
by the Company for split dollar life insurance in excess of the premiums paid by
the executive officers as follows: $-0- for Saul P. Steinberg, $86,000 for
Robert M. Steinberg, $42,000 for George E. Bello, $-0- for James E. Yacobucci
and $19,000 for Lowell C. Freiberg. Includes premiums paid by the Company and
its subsidiaries for medical reimbursement insurance as follows: $13,200 for
Saul P. Steinberg, $13,200 for Robert M. Steinberg, $13,200 for George E. Bello,
$-0- for James E. Yacobucci and $13,200 for Lowell C. Freiberg. Includes
directors' fees paid by a company on whose board the executives serve at the
request of the Company because the Company has a significant investment in such
company as follows: $24,000 for Saul P. Steinberg, $-0- for Robert M. Steinberg,
$-0- for George E. Bello, $-0- for James E. Yacobucci and $26,000 for Lowell C.
Freiberg.
(8) Certain bonuses paid by the Company for 1994 life insurance premiums
for the split dollar life insurance for these executive officers were paid in
1993 and were, therefore, reflected in 'All Other Compensation' for 1993.
(9) In prior years, these amounts included certain directors' fees which
have now been included in 'Salary' for all years presented. See footnote 1.
11
<PAGE>
OPTION/SAR GRANTS IN FISCAL 1994
The following table sets forth information relating to the grant of stock
options and stock appreciation rights by the Company during 1994 to the named
executive officers.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS (1)
------------------------------
NUMBER OF PERCENT OF
SECURITIES TOTAL OPTIONS/
UNDERLYING SARS GRANTED EXERCISE OR GRANT DATE
OPTION/SARS TO EMPLOYEES BASE PRICE EXPIRATION PRESENT VALUE $
NAME GRANTED (#) IN FISCAL YEAR ($/SH) DATE (2)
- ---- ----------- --------------- ----------- ---------- ---------------
<S> <C> <C> <C> <C> <C>
Saul P. Steinberg......................... 500,000 33% $ 5.875 4/25/2004 $ 885,000
Robert M. Steinberg....................... 500,000 33% $ 5.875 4/25/2004 885,000
George E. Bello........................... 75,000 5% $ 5.00 7/21/2004 99,750
James E. Yacobucci........................ -- -- -- -- --
Lowell C. Freiberg........................ 75,000 5% $ 5.00 7/21/2004 99,750
</TABLE>
- ------------------
(1) All options listed in this table vest and become exercisable in
cumulative installments of one-fourth of the number of shares of Common Stock
after each of the second, third, fourth and fifth anniversaries of the date of
grant if the optionee is an employee on such anniversaries. Each option listed
in this table carries one tandem stock appreciation right.
(2) Based on the Black-Scholes option pricing model adapted for use in
valuing employee stock options. The actual value, if any, a named executive
officer will realize will depend on the excess of the stock price over the
exercise price on the date the options are exercised, so that there is no
assurance the value realized by an executive will be at or near the value
estimated by the Black-Scholes model. The estimated values under the model are
based upon certain assumptions as to variables such as stock price volatility,
risk-free rate, future dividend yield and term of the option. In calculating the
grant date present values set forth in the table, a factor of 40.76% has been
assigned to the volatility of the Common Stock, based on weekly stock market
quotations for the twelve months preceding December 31, 1994, the yield on the
Common Stock has been set at 5.45% for Messrs. Saul and Robert Steinberg and at
6.4% for Messrs. Bello and Freiberg, based upon its annual divided rate of $.32
per share at the applicable date of grant divided by the price of the Common
Stock on that date, the risk-free rate of return has been fixed at 6.97% for
Messrs. Saul and Robert Steinberg and 7.3% for Messrs. Bello and Freiberg, which
equals the average monthly rate of a ten-year Treasury Note in April and July,
1994, the applicable months of grant, as reported in the Federal Reserve
Bulletin, and the actual option term of ten years from the date of grant has
been used.
FISCAL 1994 YEAR-END OPTION/SAR VALUES
The following table sets forth the number of shares covered by stock
options (each of which carries one tandem stock appreciation right) held by the
named executive officers at December 31, 1994 and also shows the values for
'in-the-money' options at that date.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED OPTIONS/SARS IN-THE-MONEY OPTIONS/SARS AT
HELD AT DECEMBER 31, 1994 DECEMBER 31, 1994($)(1)
----------------------------------- ------------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Saul P. Steinberg.............................. 0 500,000 $ 0 $ 0
Robert M. Steinberg............................ 500,000 1,000,000 681,000 681,000
George E. Bello................................ 350,000 425,000 477,000 491,000
James E. Yacobucci............................. 100,000 100,000 136,000 136,000
Lowell C. Freiberg............................. 350,000 425,000 477,000 491,000
</TABLE>
- ------------------
(1) Options and stock appreciation rights are classified as 'in-the-money'
if the fair market value of the underlying common stock exceeds the exercise or
base price of the option or stock appreciation right. The value
12
<PAGE>
of such in-the-money options and stock appreciation rights is the difference
between the exercise or base price and the fair market value of the underlying
common stock as of December 31, 1994. The fair market value of the Common Stock
on December 31, 1994 was $5.1875 per share.
PENSION PLAN TABLE
The following table sets forth the approximate annual pension that a named
executive officer may receive under (1) the Company's pension plan (the 'Company
Pension Plan') and the Company's supplemental pension plan (the 'Company
Supplemental Pension Plan') or (2) Reliance Insurance's pension plan (the
'Reliance Insurance Pension Plan') and Reliance Insurance's supplemental pension
plan (the 'Reliance Insurance Supplemental Pension Plan'), in each case assuming
selection of a single life annuity, retirement at age 65 and the current level
of covered compensation, based on the indicated assumptions as to salary and
years of service. Under the Internal Revenue Code of 1986, as amended (the
'Code'), for each of the Company Pension Plan and the Reliance Insurance Pension
Plan, the maximum annual benefit allowed is $120,000 and the maximum annual
compensation for years beginning with 1994 that may be taken into account in
1995 is presently $150,000. Amounts shown on the following table in excess of
$120,000 are payable by the Company only to persons participating in the Company
Supplemental Pension Plan, including Saul P. Steinberg, Robert M. Steinberg,
George E. Bello and Lowell C. Freiberg, and are payable by Reliance Insurance
only to persons participating in the Reliance Insurance Supplemental Pension
Plan, including Saul P. Steinberg and Robert M. Steinberg.
<TABLE>
<CAPTION>
YEARS OF SERVICE
--------------------------------------------------------------------------------
SALARY 5 10 15 20 25 30 35
- ------ -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
$150,000.................... $ 12,998 $ 25,995 $ 38,993 $ 51,990 $ 64,988 $ 77,985 $ 90,983
200,000.................... 17,623 35,245 52,868 70,490 88,113 105,735 123,358
300,000.................... 26,873 53,745 80,618 107,490 134,363 161,235 188,108
500,000.................... 45,373 90,745 136,118 181,490 226,863 272,235 317,608
750,000.................... 68,498 136,995 205,493 273,990 342,488 410,985 479,483
1,000,000.................. 91,623 183,245 274,868 366,490 458,113 549,735 620,000
2,000,000.................. 184,123 368,245 552,368 620,000 620,000 620,000 620,000
</TABLE>
As of January 1, 1995, for purposes of calculating pension benefits under
the Company Pension Plan and the Company Supplemental Pension Plan, Saul P.
Steinberg, Robert M. Steinberg, George E. Bello and Lowell C. Freiberg had 34,
29, 26 and 25 years of credited service, respectively, and had salaries of
$1,465,625, $920,000, $625,000 and $600,000, respectively. As of January 1,
1995, for purposes of calculating pension benefits under the Reliance Insurance
Pension Plan and the Reliance Insurance Supplemental Pension Plan, Saul P.
Steinberg, Robert M. Steinberg and James E. Yacobucci had 18, 6 and 5 years of
credited service, respectively, and had salaries of $284,375, $230,000 and
$150,000, respectively. Under current Code limits and plan provisions, the
aggregate pension benefit payable to an individual under all pension plans and
supplemental pension plans maintained by the Company and its subsidiaries cannot
exceed $620,000. Benefits under each of the above named plans are calculated on
the basis of a single life annuity and are not subject to any deduction for
Social Security benefits or other offset amounts.
EMPLOYMENT CONTRACTS
Saul P. Steinberg has an employment agreement with the Company to act as
Chief Executive Officer for a five-year term, which commenced January 1, 1992,
at a salary of $1,465,625 per annum, subject to increases as approved by the
Special Compensation Committee of the Company's Board of Directors. Mr.
Steinberg also has an employment agreement with Reliance Insurance to act as
Chairman of the Executive and Finance Committee of Reliance Insurance for a
five-year term, which commenced January 1, 1992, at a salary of $284,375 per
annum, subject to increases as approved by the Special Compensation Committee of
the Board of Directors of Reliance Insurance. Pursuant to his employment
agreements with the Company and Reliance Insurance, Mr. Steinberg's bonuses from
the Company and Reliance Insurance are paid in accordance with the terms of the
Reliance Group Holdings, Inc. Executive Bonus Plan (the 'Executive Bonus Plan').
The Executive Bonus Plan
13
<PAGE>
provides for a maximum bonus equal to 115% of annual base salary from the
Company and Reliance Insurance if certain preestablished, objective performance
goals are achieved.
Robert M. Steinberg has an employment agreement with the Company to act as
President and Chief Operating Officer for a five-year term, which commenced
January 1, 1994, at a salary of $920,000 per annum, subject to increases as
approved by the Special Compensation Committee of the Company's Board of
Directors. Mr. Steinberg also has an employment agreement with Reliance
Insurance to act as Chairman of the Board and Chief Executive Officer of
Reliance Insurance for a five-year term, which commenced January 1, 1994, at a
salary of $230,000 per annum, subject to increases as approved by the Special
Compensation Committee of the Board of Directors of Reliance Insurance. Pursuant
to his employment agreements with the Company and Reliance Insurance, Mr.
Steinberg's bonuses from the Company and Reliance Insurance are paid in
accordance with the terms of the Executive Bonus Plan. The Executive Bonus Plan
provides for a maximum bonus equal to 115% of annual base salary from the
Company and Reliance Insurance if certain preestablished, objective performance
goals are achieved.
REPORT OF COMPENSATION COMMITTEES OF THE BOARD
Three separate committees of the Board of Directors of the Company have
responsibility for reviewing and determining the overall compensation of
executive officers of the Company. The Regular Compensation Committee is
responsible for reviewing and determining the compensation of executive officers
who are not Directors of the Company. The Special Compensation Committee is
responsible for reviewing and determining the compensation of executive officers
who are Directors of the Company, which includes all of the five named executive
officers, and of principal officers of the Company's insurance subsidiaries.
These committees are together referred to below as the 'Compensation
Committees.' In addition, the Stock Option Committee of the Board makes
determinations as to the award of stock options and stock appreciation rights
for executive officers of the Company under the Company's 1986 and 1994 Stock
Option Plans (except, under the 1994 Plan, with respect to the executive
officers, which decisions are made by the Special Compensation Committee). Both
the Special Compensation Committee and the Stock Option Committee are composed
solely of outside Directors.
I. Executive Compensation Philosophy
The executive compensation policies of the Company, as applied by the
Compensation Committees and the Stock Option Committee during 1994, are designed
to align compensation with the interests of the Company's stockholders. The
goals of the Company are to attract and retain executives whose abilities are
critical to the success of the Company, to support a performance-oriented
environment that rewards individual initiative and achievement, to establish a
relationship between compensation and the attainment of corporate objectives and
to reward executives for the enhancement of long-term stockholder value. The
Compensation Committees and the Stock Option Committee specifically endorse the
position that stock-based compensation and stock ownership by executives are an
important element in aligning the interests of executives with the stockholders
and in enhancing stockholder value.
II. Elements of Executive Compensation
The compensation package for executive officers of the Company, including
the Company's Chief Executive Officer, consists of the following basic elements.
A. Base Salary. The base salaries of executive officers of the Company are
set on an individual basis and are designed to enhance the Company's ability to
attract and retain highly qualified key executives. Salaries bear a direct
relationship to the executive's level of responsibility and reflect his
individual talents and skills and are not directly determined by specific
reference to overall corporate performance. The base salaries of Saul P.
Steinberg and Robert M. Steinberg are subject to the terms of individual
employment agreements. See 'Employment Contracts.'
B. Annual Bonus. The annual bonus paid to executive officers is a critical
element of compensation designed to reward the achievement of short-term
corporate goals, as well as individual productivity and performance. The Regular
Compensation Committee determines the amounts of the bonuses paid to executive
officers (other than the executive officers who are Directors of the Company)
based upon performance of the Company and its subsidiaries during the year, as
well as upon the contribution of the individual executive to such
14
<PAGE>
performance. The bonuses for the named executive officers (other than James E.
Yacobucci) (the 'Executive Bonus Plan Officers') are paid in accordance with the
terms of the Executive Bonus Plan. Such Plan provides for a maximum bonus equal
to 115% of annual base salary if certain preestablished, objective performance
goals are achieved by the Company and its subsidiaries, including the property
and casualty operations of the Company ('Reliance Insurance Group') and the
title
insurance operations of the Company ('CLTIC'). Pursuant to the Executive Bonus
Plan, each of the Executive Bonus Plan Officers will be paid a bonus equal to
115% of his annual base salary from the Company and its subsidiaries in the
event that at least eight of fourteen performance goals enumerated in the
Executive Bonus Plan are achieved. In the event that fewer than eight of the
performance goals are achieved, each Executive Bonus Plan Officer's bonus is
reduced by 5% of his respective base salary multiplied by the difference between
the number of goals achieved and 'eight.' In the event that fewer than two goals
are achieved, the Executive Bonus Plan Officers will not be paid any bonus under
the Executive Bonus Plan. The business criteria on which the performance goals
enumerated in the Executive Bonus Plan are based are (i) the average return on
shareholders' equity of the Company, (ii) the combined ratio of the Reliance
Insurance Group, (iii) the total return on the combined investment portfolio of
the Reliance Insurance Group and CLTIC, (iv) the amount of pre-tax net realized
capital gains of the combined investment portfolio of the Reliance Insurance
Group and CLTIC, (v) the pre-tax operating income (exclusive of capital gains)
of the Reliance Insurance Group, (vi) net premiums written of the Reliance
Insurance Group, (vii) pre-tax operating income (exclusive of realized capital
gains) of CLTIC, (viii) net premiums earned of CLTIC, (ix) the price of the
Common Stock, (x) pre-tax operating earnings per share (exclusive of realized
capital gains of the combined investment portfolio of the Reliance Insurance
Group and CLTIC) of the Company, (xi) net investment income of the combined
investment portfolio of the Reliance Insurance Group and CLTIC, (xii) debt to
capitalization ratio of the Company as of the end of the applicable calendar
year and (xiii) shareholders' equity of the Company as of the end of the
applicable calendar year.
The bonus for James E. Yacobucci is paid in accordance with the terms of
the Executive Bonus Plan for James E. Yacobucci (the 'Yacobucci Plan'). Such
Plan provides that, subject to the discretion of the Special Compensation
Committee to reduce or eliminate the bonus, Mr. Yacobucci may earn a maximum
annual bonus of 400% of his 'base salary,' which for purposes of the Yacobucci
Plan is defined as being $1,000,000, if a preestablished, objective performance
goal based upon the total return earned during such year on a portion of the
consolidated investment portfolio of the Company and its subsidiaries is
achieved. The return earned during any year shall include interest and dividend
income, realized gains and losses, and unrealized appreciation and depreciation.
Responsibility for payment of any bonuses payable under the Yacobucci Bonus Plan
will be allocated between the Company and any subsidiary in proportion to the
amount of base salary paid to Mr. Yacobucci for such year by the Company and
such subsidiary. Mr. Yacobucci's salary has always been paid by Reliance
Insurance.
C. Stock Options. Stock option awards provide the most significant element
of long-term compensation to executives. Stock options provide compensation in a
manner that is intrinsically related to long-term corporate performance and
stockholder value, because the value of stock options is determined solely by
movements in the Company's stock price over the term of the option. Stock option
awards are granted at the discretion of the Stock Option Committee (except,
under the 1994 Stock Option Plan, in the case of the executive officers of the
Company with respect to which the grants are made by the Special Compensation
Committee), which makes its determinations based on a variety of factors,
including the level of responsibility and performance of the executive and his
ability to affect stockholder value and the amount of past option grants to the
executive. The Company's 1986 Stock Option Plan also permits the award of stock
appreciation rights.
D. Retirement Plans. The Company has designed a retirement benefit program
to provide executives with retirement compensation that is competitive within
its industry and which promotes the long-term employment of its executives. The
program includes the SIP, which enables participants to contribute a portion of
their compensation on a pre-tax and an after-tax basis and provides for matching
contributions. In addition, the Company maintains the Company Pension Plan, a
tax-qualified plan, and the Company Supplemental Pension Plan, which together
provide a retirement benefit that is a function of an executive's compensation
and years of service with the Company. Certain executive officers of the Company
participate in the Reliance Insurance
15
<PAGE>
Pension Plan, a tax-qualified plan, and the Reliance Insurance Supplemental
Pension Plan, which together provide a retirement benefit that is a function of
an executive's compensation and years of service with Reliance Insurance.
E. Subsidiary Compensation. A portion of the salary and bonuses of Saul P.
Steinberg and Robert M. Steinberg and all of the salary and bonus of James E.
Yacobucci are paid by Reliance Insurance, the principal operating subsidiary of
the Company. The amounts paid by Reliance Insurance are included in the 'Salary'
and 'Bonus' columns of the Summary Compensation Table above.
III. 1994 Compensation of Executive Officers Other than the CEO
The Compensation Committees and the Stock Option Committee took actions
with respect to executive compensation during 1994 that were consistent with the
Company's compensation philosophy, and reflected an emphasis on
performance-based compensation.
The Regular Compensation Committee considered and increased the base salary
for one executive officer of the Company in 1994. In accordance with the
Company's compensation policies, no other executive officer was eligible to be
considered for an increase in base salary during 1994. The Special Compensation
Committee did not consider any adjustments to the base salaries of the named
executive officers in 1994.
The annual bonuses for 1994 of the Executive Bonus Plan Officers were paid
to such persons in accordance with the terms of the Executive Bonus Plan. The
seven performance goals relating to the following six business criteria
enumerated in the Executive Bonus Plan were achieved by the Company and its
subsidiaries in 1994: average return on shareholders' equity, combined ratio,
return on investment portfolio, pre-tax operating income, pre-tax earnings per
share and net investment income of the investment portfolio. Based on these
achievements, in accordance with the terms of the Executive Bonus Plan, the
Executive Bonus Plan Officers each received bonuses equal to 110% of their base
salaries for 1994.
The total return earned in the consolidated investment portfolio of the
Company and its subsidiaries exceeded the threshold in the Yacobucci Plan.
Therefore, James E. Yacobucci was paid his annual bonus for 1994 pursuant to the
Yacobucci Plan. The Special Compensation Committee determined the amount of Mr.
Yacobucci's bonus (which pursuant to the Yacobucci Plan could not exceed 400% of
his base salary (as defined in this Yacobucci Plan)) after considering the
actual return earned on the investment portfolio, the performance of the
portfolio against the Standard & Poor's 500, the performance of the portfolio as
compared to the prior year and to certain other indices deemed appropriate by
the Special Compensation Committee and Mr. Yacobucci's performance as head of
the investment department of the Company and its subsidiaries.
At the beginning of 1995, the Compensation Committee determined the amount
of the bonuses of executive officers (other than the Executive Bonus Plan
Officers and James E. Yacobucci) for 1994 by taking into account the performance
goals enumerated in the Executive Bonus Plan, and the role of the individual
executives in enabling the Company to achieve such goals. The Compensation
Committee did not assign objective or relative weights to the performance goals,
all of which contributed favorably in the determination of annual bonuses for
1994.
Executive officers were granted stock options during 1994 in accordance
with the Company's philosophy on stock option compensation described above.
IV. 1994 Chief Executive Officer Compensation
The compensation of Saul P. Steinberg, the Company's Chief Executive
Officer, is determined by the Special Compensation Committee.
Mr. Steinberg's salaries from the Company and Reliance Insurance were
established in 1992 and incorporated in his employment agreements, subject to
increases as approved by the Special Compensation Committee. See 'Employment
Contracts.' Mr. Steinberg's bonuses for 1994 from the Company and Reliance
Insurance were paid in accordance with the terms of the Executive Bonus Plan.
The performance goals relating to
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<PAGE>
the business criteria described under '1994 Compensation of Executive Officers
Other than the CEO' were achieved by the Company and its subsidiaries in 1994,
and, therefore, Mr. Steinberg received bonuses for 1994 equal to 110% of his
base salary from each of the Company and Reliance Insurance.
In 1994, Mr. Steinberg was granted options to purchase 500,000 shares of
Common Stock at the closing price of Common Stock on the date of such grant. The
options were granted to Mr. Steinberg in light of the factors described above
under 'Elements of Executive Compensation-Stock Options,' including his
contribution to the Company's performance and to the capital enhancement program
effected by the Company in 1993. The grant to Mr. Steinberg was the first grant
of options made to him under the 1986 Plan.
V. Compensation Deduction Limitation
Beginning in 1994, a new federal law disallowed corporate tax deductibility
for certain compensation in excess of $1,000,000 paid to each of the chief
executive officer and the four other most highly paid executive officers. One of
the exceptions to the deductibility limitation is for 'performance-based
compensation,' provided stockholder approval and other requirements are met.
Each of the Executive Bonus Plan and the Yacobucci Plan and the Reliance Group
Holdings, Inc. 1994 Stock Option Plan is intended to meet the requirements of
the new law and thereby preserve deductibility of both cash bonuses and stock
option compensation. Except in the cases of Saul P. Steinberg, Robert M.
Steinberg and James E. Yacobucci, the 1994 salaries of the named executive
officers did not exceed $1,000,000 and were fully deductible. The 1994 salary of
Saul P. Steinberg should qualify for the exception to the deductibility
limitation for certain pre-existing contracts and should be fully deductible.
The portions of the 1994 base salaries of Robert M. Steinberg and James E.
Yacobucci that exceed $1,000,000 were not deductible, which did not have a
material effect on the Company's 1994 tax liability. The Company believes that
stock option compensation under the Reliance Group Holdings, Inc. 1986 Stock
Option Plan will not be affected by the deductibility limitation.
<TABLE>
<CAPTION>
SPECIAL COMPENSATION COMMITTEE REGULAR COMPENSATION COMMITTEE STOCK OPTION COMMITTEE
- ------------------------------ ------------------------------ ----------------------
<S> <C> <C>
George R. Baker Saul P. Steinberg George R. Baker
Thomas J. Stanton, Jr. Robert M. Steinberg Carter Burden
Jewell Jackson McCabe Jewell Jackson McCabe
Irving Schneider
</TABLE>
17
<PAGE>
PERFORMANCE GRAPH
Set forth below is a line graph comparing the Company's cumulative total
shareholder return on common stock for 1990 through 1994 with the returns of the
Media General Composite Index of 7000 Public Companies and the Media General
Industry Group Index 26-Insurance. The graph assumes $100 was invested on
January 1, 1990, with all dividends fully reinvested.
1990 1991 1992 1993 1994
RELIANCE GROUP HOLDINGS 100 95.75 90.90 143.16 195.43 133.91
MEDIA GENERAL INDUSTRY GROUP
INDEX 26-INSURANCE 100 83.12 108.80 131.55 140.11 135.41
MEDIA GENERAL COMPOSITE INDEX 100 92.98 120.02 124.83 143.29 142.10
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<PAGE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Regular Compensation Committee of the Board of Directors consists of
Saul P. Steinberg, Robert M. Steinberg and Jewell Jackson McCabe. Saul P.
Steinberg and Robert M. Steinberg are both officers and employees of the
Company. The Special Compensation Committee of the Board of Directors consists
of George R. Baker and Thomas J. Stanton, Jr. The Stock Option Committee of the
Board of Directors consists of George R. Baker, Carter Burden, Jewell Jackson
McCabe and Irving Schneider. See 'Proposal 1--Election of Directors--Board of
Directors and Committees.'
A Company subsidiary is the general partner of Reliance Figueroa Associates
Limited Partnership ('Reliance Figueroa'), a limited partnership which owns
apartment buildings and commercial properties. As general partner of Reliance
Figueroa, the Company subsidiary will receive 48% of any cumulative net profits
(as defined) realized from the activities of Reliance Figueroa and will receive
the benefit of any tax losses. The remainder of any cumulative net profits are
allocated to the limited partners of Reliance Figueroa, including Saul P.
Steinberg, who has a limited partnership interest of 56%, and Robert M.
Steinberg, whose interest is 24%. The limited partnership interests of other
executive officers and directors of the Company are set forth below under
'Related Party Transactions.' Reliance Financial Services Corporation ('RFS'), a
subsidiary of the Company, guarantees certain indebtedness of Reliance Figueroa,
for which RFS receives a fee of .5% per annum of the average outstanding debt
covered by such guarantees. The amount of indebtedness guaranteed by RFS as of
March 31, 1995 was $38,000,000. The largest amount of guaranteed indebtedness at
any time since January 1, 1994 was $45,000,000. The Company has provided
Reliance Figueroa with an $8,000,000 subordinated revolving credit facility,
under which borrowings bore interest at a weighted average effective rate during
1994 of 11.24% per annum and effective January 1, 1995, bears interest at a rate
equal to 10% per annum. The subordinated revolving credit facility has a final
maturity of June 30, 2005. The Company receives a commitment fee of .5% per
annum, payable quarterly, on the unused portion of the revolving credit
facility. The Company has received an $80,000 closing fee from Reliance Figueroa
for providing the revolving credit facility. The amount of the indebtedness
outstanding under the revolving credit facility as of March 31, 1995 was
$4,655,000. The largest amount outstanding at any time since January 1, 1994 was
$8,000,000. During 1994, the Company also provided Reliance Figueroa with a
$4,950,000 subordinated revolving credit facility, under which borrowings bore
interest at prime plus 4% per annum and had a final maturity of June 30, 1995.
The largest amount outstanding at any time during 1994 was $2,963,000. The
$4,950,000 revolving credit facility was repaid in full and cancelled on
November 14, 1994.
In September 1994, Reliance Insurance exercised warrants to purchase
222,222 shares of common stock of Individual Investor Group, Inc. ('Individual
Investor') at an exercise price of $3.50 per share and warrants to purchase
111,111 shares of common stock of Individual Investor at an exercise price of
$4.00 per share. The warrants were purchased by Reliance Insurance in a private
placement of units consisting of common stock and warrants of Individual
Investor, at a price equal to that at which the units were offered to the
public. Individual Investor is a corporation in which RFS (the beneficial owner
of the Reliance Insurance shares), Mr. Saul P. Steinberg and Mr. Saul P.
Steinberg's son own approximately 14.6%, 13.6% and 18.4%, respectively, of the
outstanding shares of common stock. Mr. Steinberg's son is also the chief
executive officer and chairman of the board of directors of Individual Investor.
The Company believes that the consideration received by it for the related
party transactions described above represented fair market value to the Company.
Except as set forth above, the consideration received by the Company was
determined by negotiations between the parties involved in each transaction and,
in the case of Reliance Figueroa, was approved by the Special Committee of the
Company's Board of Directors which is composed solely of outside directors.
RELATED PARTY TRANSACTIONS
A description of certain transactions between the Company and Reliance
Figueroa is set forth above under 'Compensation Committee Interlocks and Insider
Participation.' The limited partners of Reliance Figueroa include the following
additional executive officers or directors of the Company who hold the following
limited
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<PAGE>
partnership interests: Messrs. Bello (3.8%), Freiberg (2.5%), Henry Lambert
(3.8%), Dennis O'Leary (.635%), Philip Sherman (.635%), Sokoloff (1.3%) and
Howard E. Steinberg (1.3%).
In May 1994, Reliance Figueroa paid Eastdil Realty, Inc. ('Eastdil')
approximately $76,000 for procuring a mortgage proposal in connection with the
refinancing of one of the properties owned by Reliance Figueroa. A majority of
the common stock of Eastdil is owned by the brother of Henry A. Lambert, an
executive officer of the Company.
The Company believes that the consideration received or paid by it for the
related party transactions described above represented fair market value to the
Company. The consideration received by the Company was determined by
negotiations between the parties involved in each transaction.
RELATIONSHIP WITH INDEPENDENT AUDITORS
The Board of Directors has selected Deloitte & Touche LLP as the
independent auditors to audit the consolidated financial statements of the
Company for the year 1995.
Representatives of Deloitte & Touche LLP are expected to be present at the
Annual Meeting, will have the opportunity to make a statement if they so desire
and are expected to be available to respond to appropriate questions.
STOCKHOLDER PROPOSALS AT THE NEXT ANNUAL MEETING
Stockholders who intend to present proposals at the 1996 annual meeting of
stockholders must submit such proposals to the Company no later than December
16, 1995 in order for them to be included in the Company's proxy materials for
such meeting. Stockholder proposals must be submitted to the Company, at Park
Avenue Plaza, 55 East 52nd Street, New York, New York 10055, Attention:
Corporate Secretary.
OTHER MATTERS TO COME BEFORE THE ANNUAL MEETING
The Board of Directors knows of no other matter to be presented which is a
proper subject for action by the stockholders at the Annual Meeting. If,
however, any other matters should properly come before the Annual Meeting, it is
intended that proxies given pursuant to this solicitation will be voted thereon
in accordance with the judgment of the person or persons voting such proxies.
By Order of the Board of Directors,
Reliance Group Holdings, Inc.
Howard E. Steinberg,
Corporate Secretary
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<PAGE>
RELIANCE GROUP HOLDINGS, INC.
ANNUAL MEETING OF STOCKHOLDERS
MAY 11, 1995
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
RELIANCE GROUP HOLDINGS, INC.
The undersigned hereby appoints Saul P. Steinberg and Howard E. Steinberg,
and each of them, with full power of substitution, as proxies to represent and
vote, as designated below, all the shares of common stock of Reliance Group
Holdings, Inc. held of record by the undersigned on March 22, 1995, at the
Annual Meeting of Stockholders to be held on May 11, 1995 or any adjournments
thereof.
This proxy when properly executed will be voted in the manner directed
herein by the undersigned stockholder. If no direction is made, this proxy will
be voted FOR the election of the nominees named herein.
<PAGE>
This Proxy, when properly executed, will be voted in the manner directed herein
or, IF NO DIRECTION IS GIVEN,
<TABLE>
<S> <C>
THIS PROXY WILL BE VOTED FOR ELECTION OF THE NOMINEES NAMED BELOW. /X/Please mark
your votes
as this:
-----------------
COMMON
</TABLE>
<TABLE>
<S> <C> <C>
1. Election of Directors.
FOR all nominees listed WITHHOLD George R. Baker Lowell C. Freiberg Richard E. Snyder
at right (Except as AUTHORITY George E. Bello Thomas P. Gerrity Thomas J. Stanton, Jr.
marked to the contrary to vote for all nominees Carter Burden Jewell J. McCabe Robert M. Steinberg
to the right below) listed at right Dennis A. Busti Irving Schneider Saul P. Steinberg
/ / / / Bernard L. Schwartz James E. Yacobucci
(INSTRUCTION: To withhold authority to vote for any individual
nominee write that nominee's name in the space provided below.)
---------------------------------------------------------------
</TABLE>
2. In their discretion, the Proxies are authorized to vote upon
such other matters as may properly come before the meeting or any
adjournment thereof.
____ Please sign exactly as name appears below. When shares are held
| by joint tenants, both should sign. When signing as attorney,
| executor, administrator, trustee or guardian, please give full
title as such. If a corporation, please sign in full corporate
name by President or other authorized officer. If a partnership,
please sign in partnership name by authorized person.
Date: --------------------------------------------------, 1995
--------------------------------------------------------------
Signature
--------------------------------------------------------------
Signature if held jointly
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
