<PAGE>
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------------
FORM 10-K/A
Amendment No. 1
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ............................. to ...............
Commission file number 1-8278
..............
RELIANCE GROUP HOLDINGS, INC.
(Exact name of registrant as specified in its charter)
Delaware 13-3082071
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
Park Avenue Plaza
55 East 52nd Street 10055
New York, New York (Zip Code)
(Address of principal executive offices)
Registrant's telephone number, including area code: (212) 909-1100
Securities Registered Pursuant to Section 12(b) of the Act:
<TABLE>
<CAPTION>
Title of each class Name of each exchange on which registered
------------------- -----------------------------------------
<S> <C>
Common Stock, $.10 Par Value New York Stock Exchange and Pacific Exchange
9% Senior Notes, Due November 15, 2000 New York Stock Exchange
93/4% Senior Subordinated Debentures,
Due November 15, 2003 New York Stock Exchange
</TABLE>
Securities Registered Pursuant to Section 12(g) of the Act:
None
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
--- ---
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]
<PAGE>
As of March 15, 2000, 116,166,281 shares of the common stock of Reliance
Group Holdings, Inc. were outstanding, and the aggregate market value of the
voting stock held by nonaffiliates was approximately $240,856,457.
Documents Incorporated by Reference:
(1) Reliance Group Holdings, Inc. 1999 Annual Report--Parts I, II and IV.
EXPLANATORY NOTE This Form 10-K/A, dated April 28, 2000, amends the registrant's
Annual Report on Form 10-K for the fiscal year ended December 31, 1999 (the
"1999 10-K") (filed with the Commission on March 30, 2000) as follows:
The registrant initially incorporated into its 1999 10-K, by reference to its
definitive proxy statement to be filed with the Commission in connection with
its 2000 Annual Meeting of Stockholders, the information required by Item 10
(Directors and Executive Officers of the Registrant), Item 11 (Executive
Compensation), Item 12 (Security Ownership of Certain Beneficial Owners and
Management) and Item 13 (Certain Relationships and Related Transactions). Each
such item is amended to set forth in this Form 10-K/A the information required
by such items.
================================================================================
<PAGE>
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
Information regarding the executive officers of the Company is included
in Part I of this report under the caption "Executive Officers of the
Registrant."
Directors of the Company are elected to serve until the next annual
meeting of stockholders and until their successors are duly elected and qualify.
The next annual meeting is scheduled for June 21, 2000.
Information regarding the directors of the Company is set forth below:
SAUL P. STEINBERG, 60 Director since 1981
Mr. Steinberg founded and served as the Chief Executive Officer of the
Company and predecessors of the Company from 1961 to February 2000 and as Chief
Operating Officer of the Company from November 1999 to February 2000. He has
been a Director of the Company and predecessors of the Company since 1961 and
currently serves as Chairman of the Board of Directors. Mr. Steinberg was
elected Chairman of the Board and Chief Executive Officer of Reliance Insurance
in November 1999. Mr. Steinberg is also a Director of Symbol Technologies, Inc.
He is a member of the Board of Trustees of The University of Pennsylvania; a
Life Overseer of Cornell University Medical College; a Life Trustee of the North
Shore-Long Island Jewish Health System; a Director of New York Hospital Cornell
Medical Center and an Honorary Trustee of the New York Public Library. Mr.
Steinberg is Chairman of the Executive and Regular Compensation Committees of
the Board of Directors. He is the brother of Mr. Robert M. Steinberg, Vice
Chairman of the Board of Directors of the Company and the brother-in-law of Mr.
Bruce L. Sokoloff, Senior Vice President--Administration of the Company.
GEORGE R. BAKER, 70 Director since 1983
Mr. Baker was elected President and Chief Executive Officer of the
Company in February 2000. He served as Assistant to the Chairman from November
l999 to February 2000. Mr. Baker was a director of predecessors of the Company
from 1974 to 1982. His principal business activity during the past five years
has been serving as a Corporate Director/Advisor to various business
enterprises. Mr. Baker is a Director of Loral Cyberstar, Inc. He is a Member of
the Board of Trustees of Children's Memorial Hospital, Chicago; and the Board of
Trustees of Coe College, Cedar Rapids, Iowa. Mr. Baker is a member of the
Executive Committee of the Board of Directors.
GEORGE E. BELLO, 64 Director since 1982
Mr. Bello has been Executive Vice President and Controller of the
Company since 1982. He has held various positions with predecessors of the
Company since 1968. He is a Director of Horizon Health Corporation and
LandAmerica Financial Group, Inc. Mr. Bello is Chairman of the Finance Committee
and a member of the Executive and Regular Compensation Committees of the Board
of Directors.
3
<PAGE>
LOWELL C. FREIBERG, 60 Director since 1982
Mr. Freiberg has been Executive Vice President of the Company since May
1998 and Chief Financial Officer of the Company since 1985. Mr. Freiberg also
served as a Senior Vice President of the Company from 1982 to 1998 and 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 Director
of LandAmerica Financial Group, Inc. and Symbol Technologies, Inc. Mr. Freiberg
is a member of the Finance Committee of the Board of Directors.
DR. THOMAS P. GERRITY, 58 Director since 1993
Dr. Gerrity has been Professor of Management of the Wharton School of
the University of Pennsylvania since July 1999 where he served as Dean from 1990
to 1999. He is a Director of Federal National Mortgage Association, Sunoco,
Inc., CVS Corporation, Knight-Ridder, Inc., ICG Commerce, Inc., and Internet
Capital Group, Inc. Dr. Gerrity is also a trustee of the MAS Funds. Dr. Gerrity
is Chairman of the Nominating and Audit Committees of the Board of Directors.
JEWELL JACKSON McCABE, 54 Director since 1991
Ms. McCabe has been President and Chief Executive Officer 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; and a Director or Trustee of the National Alliance
of Business, New York City Investment Fund, Bard College, Research America, The
Children's Advocacy Center, United Hospital Fund and New York City Partnership.
She is also a member of the Board of Overseers of the Wharton School of the
University of Pennsylvania, the Government Relations Committee of the United Way
of America, the Executive Committee of the Association for a Better New York and
a council member of the United States Holocaust Memorial Council. Ms. McCabe is
a member of the Special Compensation, Regular Compensation, Stock Option and
Special Committees of the Board of Directors.
IRVING SCHNEIDER, 80 Director since 1982
Mr. Schneider was a director of predecessors of the Company from 1979
to 1982. He is Co-Chairman and Chief Operating Officer of Helmsley-Spear, Inc.,
a real estate management corporation, which he has been with for over fifty
years. Mr. Schneider is also Chairman Emeritus of the North Shore-Long Island
Jewish Health System, Vice Chairman of the Association for a Better New York and
Trustee Emeritus of Brandeis University. He is Life Trustee of United Jewish
Appeal Federation of New York. Mr. Schneider is Chairman of the Special, Special
Compensation and Stock Option Committees of the Board of Directors, and a member
of the Audit Committee of the Board of Directors.
BERNARD L. SCHWARTZ, 74 Director since 1982
Mr. Schwartz was a director of predecessors of the Company from 1965 to
1982. He has been Chairman of the Board and Chief Executive Officer of Loral
Space & Communications Ltd., a high-technology company concentrating on
satellite manufacturing and satellite-based
4
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services, since 1996. From 1972 through 1996, Mr. Schwartz was Chairman of the
Board and Chief Executive Officer of Loral Corporation, a defense electronics
and communications company. Since 1989, he has also 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., and he is Chairman and Chief Executive Officer of Loral Cyberstar, Inc. He
is a Director of First Data Corporation, Satelites Mexicanos, S.A. De C.V. and
Globalstar Telecommunications, Ltd. (of which he is also Chairman and chief
executive officer) and a Trustee of Mount Sinai-NYU Medical Center and
Thirteen/WNET Education Broadcasting Corp. Mr. Schwartz is a member of the
Executive Committee of the Board of Directors.
RICHARD E. SNYDER, 67 Director since 1994
Mr. Snyder became Chairman and Chief Executive Officer of Golden Books
Family Entertainment, Inc., a publisher of children's books ("Golden Books"), in
May 1996, after serving as President from February 1996 through May 1996. He 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 trustee
of The New York Presbyterian Hospital and a member of the Board of Directors of
the Children's Blood Foundation. Mr. Snyder is also a member of the Wildlife
Conservation Society, Society Fellows, the Library Committee 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. On February 26, 1999, Golden Books and certain of its
subsidiaries filed petitions for reorganization under Chapter 11 of the United
States Bankruptcy Code. On January 27, 2000, a Plan of Reorganization was
consummated.
BRUCE E. SPIVEY, M.D., 65 Director since 1998
Dr. Spivey has been President and Chief Executive Officer of
Columbia-Cornell Care LLC, the physician organization of the clinical faculties
of the medical schools of Columbia and Cornell Universities, since October 1997.
From 1992 through part of 1997, Dr. Spivey served as President and Chief
Executive Officer of the Northwestern Healthcare Network, a multi-hospital
system in Chicago. Dr. Spivey serves as a Director of Phoenix Alliance,
PrimeSight, and the United States - China Educational Institute, and is a
Founder and Director of the Pacific Vision Foundation and the Ophthalmic Mutual
Insurance Company. Dr. Spivey also is a Director or Trustee of Coe College, the
Foundation of the American Academy of Ophthalmology and the International
Council of Ophthalmology (as Secretary General). Dr. Spivey is a member of the
Stock Option, Audit and Finance Committees of the Board of Directors.
HOWARD E. STEINBERG, 55 Director since 2000
Mr. Steinberg was elected Chief of Corporate Operations in March 2000.
He has been Executive Vice President of the Company since May 1998, and served
as General Counsel and Corporate Secretary of the Company from March 1983, when
he joined the company, until March 2000. He also served as Senior Vice President
of the Company from March 1983 to May 1998. Prior to joining the Company, he was
a partner in the law firm of Dewey, Ballantine, Bushby, Palmer & Wood. Mr.
Steinberg also serves as Deputy Chairman of the Long Island Power Authority, an
unpaid position to which he was appointed in May 1999. He previously
5
<PAGE>
served from January 1996 to May 1999 as Chairman of the New York State Thruway
Authority, an unpaid position. He became a director of LandAmerica Financial
Group, Inc. in March 2000. Mr. Steinberg is a member of the Board of Regents of
Georgetown University, a member of the Board of Overseers of the School of Arts
and Sciences of the University of Pennsylvania and a Trustee of Sheltering Arms
Children Services.
ROBERT M. STEINBERG, 57 Director since 1981
Mr. Steinberg was elected Vice Chairman of the Board of Directors in
November 1999. He served as President and Chief Operating Officer of the Company
from 1982 to November 1999. Mr. Steinberg became Vice Chairman of the Board of
Reliance Insurance in November 1999 where he served as Chairman of the Board and
Chief Executive Officer from 1984 to November 1999. He has held various
positions with predecessors of the Company since 1965. Mr. Steinberg is a
Trustee of The Robert Steel Foundation for Pediatric Cancer Research and Bank
Street College. Mr. Steinberg is the brother of Mr. Saul P. Steinberg, Chairman
of the Board of Directors of the Company, and the brother-in-law of Mr. Bruce L.
Sokoloff, Senior Vice President--Administration, of the Company.
JAMES E. YACOBUCCI, 48 Director since 1989
Mr. Yacobucci has served as Senior Vice President--Investments of
Reliance Insurance since May 1989. He became Senior Vice President--Investments
of the Company in December 1990.
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 $25,000 per
annum from the Company and $25,000 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 committee 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. Under the
Reliance Group Holdings, Inc. 1998 Stock Option Plan for Non-Employee Directors
(the "1998 Director Plan"), the Board of Directors of the Company has the
discretion to grant options to purchase common stock of the Company to directors
who are not officers or employees of the Company or any of its subsidiaries 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.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act and the regulations of the Securities
and Exchange Commission (the "Commission") thereunder require the Company's
Executive Officers and Directors, and persons who own more than 10% of the
outstanding Common Stock, to file reports of ownership and changes in ownership
with the Commission and The New York Stock Exchange, Inc. and to furnish the
Company with copies of all such forms they file.
6
<PAGE>
Based solely on its review of the copies of such forms received by it
and written representations from certain reporting persons, the Company believes
that, during the year ended December 31, 1999, all of its Executive Officers,
Directors, and 10% stockholders complied with the filing requirements applicable
to them, except that Lynda Jurist, a sister of Saul P. Steinberg and Robert M.
Steinberg, filed a late Form 4 with respect to one sale transaction.
ITEM 11. 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, 1999, 1998 and 1997 by the Company's Chief Executive Officer and
the four other most highly compensated executive officers of the Company (the
"named executive officers").
7
<PAGE>
<TABLE>
<CAPTION>
Annual Compensation Long Term
---------------------------- Compensation
Awards
------
Securities
Underlying
Name and Other Annual Options/ All Other
Principal Position Year Salary($) Bonus ($) Compensation($) SARs(#) Compensation($)
- ------------------ ---- --------- ---------- --------------- ------------ ---------------
<S> <C> <C> <C> <C> <C> <C>
Saul P. Steinberg 1999 $2,150,000(1) - 0 - ----(3) - 0 - $1,442,000(5)
Chairman of the Board & 1998 $2,150,000(1) $6,300,000 $ 61,500(2) - 0 - 1,406,200
Chief Executive Officer* 1997 1,800,000(1) 3,500,000 51,000(2) 1,000,000 1,364,800
Robert M. Steinberg 1999 2,050,000(1) - 0 - ---- 1,000,000 307,700(5)
Vice Chairman of 1998 2,050,000(1) 6,000,000 140,000(2) 3,000,000 308,700
the Board 1997 1,550,000(1) 3,000,000 ---- 1,000,000 299,700
George E. Bello 1999 725,000(1) 708,750 1,250,000(4) 80,600(5)
Executive Vice President 1998 725,000(1) 1,518,750 ---- 750,000 587,200
& Controller 1997 725,000(1) 1,012,500 ---- 200,000 412,700
Lowell C. Freiberg 1999 650,000 682,500 1,250,000(4) 74,500(5)
Executive Vice President 1998 650,000 1,072,500 ---- 750,000 951,700
& Chief Financial Officer 1997 650,000 715,000 ---- 200,000 661,700
James E. Yacobucci 1999 1,250,000 500,000 300,000(4) 4,800(5)
Senior Vice President- 1998 1,250,000 1,500,000 ---- 100,000 4,300
Investments 1997 1,250,000 1,500,000 ---- 100,000 4,700
</TABLE>
- --------------
*Served as Chief Executive Officer until February, 2000.
(1) Includes a $50,000 director's fee paid by a company, since sold,
which may have been deemed to be an affiliate of the Company, on whose board the
executive served at the request of the Company.
(2) Includes for Saul P. Steinberg for 1998 and 1997, respectively,
$61,500 and $49,500 for certain personal use of corporate aircraft and for
Robert M. Steinberg for 1998, $126,000 for certain personal use of corporate
aircraft.
(3) This mark throughout the table indicates information not required
to be reported under the rules of the Securities and Exchange Commission.
8
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(4) Of these options, 950,000 in case of George E. Bello, 950,000 in
case of Lowell C. Freiberg and 200,000 in the case of James E. Yacobucci were
granted subject to obtaining the approval of the Company's stockholders of the
1999 Stock Option Plan.
(5) Includes 1999 contributions by the Company and its subsidiaries
under the SIP for each of Saul P. Steinberg, Robert M. Steinberg, George E.
Bello, Lowell C. Freiberg and James E. Yacobucci of $4,800. Includes bonuses
paid by the Company that were used to obtain certain life insurance benefits as
follows: $3,900 for each of Saul P. Steinberg, Robert M. Steinberg and Lowell C.
Freiberg and $6,000 for George E. Bello. Includes the aggregate of the value of
premiums paid by the Company for split dollar life insurance in excess of the
premiums paid by the executive officers and the amount of the bonuses paid by
the Company to the executives for such split dollar premiums as follows:
$1,394,100 for Saul P. Steinberg, $285,800 for Robert M. Steinberg, $56,600 for
George E. Bello and $23,100 for Lowell C. Freiberg. Includes premiums paid by
the Company and its subsidiaries for medical reimbursement insurance for each of
Saul P. Steinberg, Robert M. Steinberg, George E. Bello and Lowell C. Freiberg
of $13,200. 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: $26,000 for Saul P. Steinberg
and $29,500 for Lowell C. Freiberg.
OPTION GRANTS IN FISCAL 1999
The following table sets forth information relating to the grant of
stock options by the Company during 1999 to the named executive officers.
<TABLE>
<CAPTION>
Individual Grants (1)
----------------------------
Number of Percent of
Securities Total Options
underlying Granted to Exercise or
options Employees Base Price Expiration Grant Date
Name Granted (#) in Fiscal Year ($/Sh) Date Value $(3)
- ---- ----------- -------------- ------------ ---------- -----------
<S> <C> <C> <C> <C> <C>
Saul P. Steinberg.......... ---- ---- ---- ---- ----
Robert M. Steinberg........ 1,000,000 6.9% $7.4375 05/09/09 $2,660,000
George E. Bello............ 300,000 2.1% 7.4375 05/09/09 798,000
950,000(2) 6.6% 3.125 11/27/09 997,500
Lowell C. Freiberg......... 300,000 2.1% 7.4375 05/09/09 798,000
950,000(2) 6.6% 3.125 11/27/09 997,500
James E. Yacobucci......... 100,000 0.7% 7.4375 05/09/09 266,000
200,000(2) 1.4% 3.125 11/27/09 210,000
</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. See "Employment
Contracts".
(2) These options were granted subject to obtaining the approval of the
Company's stockholders of the 1999 Stock Option Plan.
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(3) 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 of return, future dividend yield and term of the option. In
calculating the grant date present values set forth in the table for Messrs.
Robert Steinberg, Bello, Freiberg and Yacobucci, a factor of 47% and 82% has
been assigned to the volatility of the Common Stock, based on daily stock market
quotations for the 100 trading days preceding April 30, 1999 and November 17,
1999, respectively, the yield on the Common Stock for Messrs. Robert Steinberg,
Bello, Freiberg and Yacobucci has been set at 4.3025% and 10.24%, respectively,
based upon its annual dividend rate of $.32 per share at the applicable date of
grant divided by the price of the Common Stock on such date, the risk-free rate
of return has been fixed for Messrs. Robert Steinberg, Bello, Freiberg and
Yacobucci at 5.28% and 6.17%, respectively, which equal the average monthly
rates of a seven-year Treasury Note in April and November, the applicable month
of grant, as reported in the Federal Reserve Bulletin, and a term of seven years
from the date of grant has been used. A seven-year term has been used in lieu of
the actual term of the options of ten years based on the expected life of the
options.
Option Exercises In Fiscal 1999 and 1999 Year-End Option/SAR Values
The following table sets forth the number of shares covered by stock
options held by the named executive officers at December 31, 1999 and also shows
the values for "in-the-money" options at that date.
<TABLE>
<CAPTION>
Shares Number of Securities Underlying
Acquired Unexercised Options/SARs Value of Unexercised In
On Value Held at the Money Options/SARs At
Name Exercise(#) Realized ($) December 31, 1999 (1) December 31, 1999(2)
- ---- ----------- ------------ --------------------------------- -------------------------------
Exercisable($) Unexercisable($) Exercisable($) Unexercisable($)
-------------- ---------------- -------------- ----------------
<S> <C> <C> <C> <C> <C> <C>
Saul P. Steinberg.............. N/A N/A 750,000 750,000 375,000 --0--
Robert M. Steinberg............ N/A N/A 1,875,000 4,875,000 3,175,000 --0--
George E. Bello................ N/A N/A 937,500 2,262,500 2,081,875 3,325,000
Lowell C. Freiberg............. N/A N/A 937,500 2,262,500 2,081,875 3,325,000
James E. Yacobucci............. N/A N/A 175,000 625,000 --0-- 700,000
</TABLE>
- --------------
(1) The options shown were granted with one tandem stock appreciation
right to the following extent: Robert M. Steinberg, George E. Bello and Lowell
C. Freiberg -- 1,375,000, 756,250 and 756,250 of the options shown in the
"Exercisable" column, respectively.
(2) 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
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<PAGE>
stock appreciation right. The value 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, 1999. The
fair market value of the Common Stock on December 31, 1999 was $6.625 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" and together
with the Company Supplemental Pension Plan, the "Supplemental Pension Plans"),
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 covered compensation 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 $135,000 (which is a combined maximum for persons participating in both
plans) and the maximum annual compensation for years beginning with 1994 that
may be taken into account in 2000 is presently $170,000. Amounts shown on the
following table in excess of $135,000 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. For purposes of the Supplemental Pension Plans, the covered
compensation of each of Saul P. Steinberg, Robert M. Steinberg, George E. Bello
and Lowell C. Freiberg includes his bonus paid by the Company or Reliance
Insurance, as applicable.
<TABLE>
<CAPTION>
Years of Service
------------------------------------------------------------------------------------------
Covered
Compensation 5 10 15 20 25 30 35
- ----------------------------- ------- ------ ------ ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
$ 170,000.................. 14,555 29,110 43,665 58,220 72,775 87,330 101,885
750,000.................. 68,205 136,410 204,615 272,820 341,025 409,230 447,435
1,000,000.................. 91,330 182,660 273,990 365,320 456,650 547,980 635,000
1,250,000.................. 114,455 228,910 343,365 457,820 572,275 635,000 635,000
1,500,000.................. 137,580 275,160 412,740 550,320 635,000 635,000 635,000
2,000,000.................. 183,830 367,660 551,490 635,000 635,000 635,000 635,000
</TABLE>
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 39, 34, 31 and 30 years of
credited service and 43, 38, 35 and 34 years of credited service, respectively.
For purposes of calculating pension benefits under the Company Pension Plan, as
of January 1, 2000, Saul P. Steinberg, Robert M. Steinberg, George E. Bello and
Lowell C. Freiberg had salaries of $170,000 each and for purposes of the Company
Supplemental Pension Plan, had aggregate salaries and bonuses of approximately
$4,600,000,
11
<PAGE>
$3,400,000, $1,700,000 and $1,500,000, respectively (representing, in each case,
the average of the salary and bonuses paid to such person in the last five full
fiscal years). For purposes of calculating pension benefits under the Reliance
Insurance Pension Plan, Saul P. Steinberg, Robert M. Steinberg and James E.
Yacobucci had 23, 11 and 10 years of credited service, respectively. As of
January 1, 2000, for purposes of calculating pension benefits under the Reliance
Insurance Pension Plan, Saul P. Steinberg, Robert M. Steinberg and James E.
Yacobucci had salaries of $170,000 each, and for purposes of the Reliance
Insurance Supplemental Pension Plan, Saul P. Steinberg and Robert M. Steinberg
had aggregate salaries and bonuses of $819,000 and $843,000 (representing, in
each case, the average of the salary and bonuses paid to such person in the last
five full fiscal years) and 27 and 15 years of credited service, 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 $635,000. 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
offset amounts.
Employment Contracts
In February 1996, Mr. Saul P. Steinberg and the Company entered into an
employment agreement (the "SPS Employment Agreement") for a five-year term which
commenced February 15, 1996 and which may be extended by Mr. Steinberg or the
Company for three successive one-year periods (the "Extended Term"). Pursuant to
the SPS Employment Agreement, Mr. Steinberg's base salary will be at least his
salary as in effect on January 1, 1996 (which was $1,465,625), subject to
increase by the Board of Directors (or any duly empowered committee thereof).
Mr. Steinberg's base salary effective as of January 1, 1999 from the Company is
$1,758,750. Pursuant to the SPS Employment Agreement, Mr. Steinberg is eligible
to receive a bonus for each year determined pursuant to the Executive Bonus Plan
or any other subsequent plan in which the chief executive officer or the chief
operating officer of the Company participate. See description of the Executive
Bonus Plan below. Any subsequent plan must be approved by the stockholders of
the Company and provide for a bonus potential of at least 100% of Mr.
Steinberg's base salary. Pursuant to the SPS Employment Agreement, if Mr.
Steinberg is discharged without "cause" or resigns because of the occurrence of
certain events relating to a diminution or change in his duties, the Company is
obligated to (i) continue his medical and dental benefits until the end of the
Extended Term at the same charge to Mr. Steinberg as he would have paid had he
remained employed by the Company, (ii) fully vest all stock option grants and
permit the immediate exercise thereof for a period of twelve months after the
date of such discharge or resignation and (iii) pay Mr. Steinberg an amount
determined by multiplying the number of years remaining from the date of such
discharge or such resignation to the end of the Extended Term by the sum of his
base salary plus the average bonus paid to him for the two years immediately
prior to the date of such discharge or resignation. In the event of the
termination of the SPS Employment Agreement because of the death of Mr.
Steinberg, his estate will receive a one-time payment in an amount equal to the
sum of his base salary plus the average bonus paid to him for the two years
immediately prior to his death. In the event of "total disability" or "partial
disability" (each as defined in the SPS Employment Agreement), Mr. Steinberg
will be paid, until the third anniversary of the date of the total disability or
the fifth anniversary of the date of the partial disability (or until the end of
the Extended Term, whichever is earlier), his base salary and a bonus in an
amount equal to the average bonus paid to him for the two years immediately
preceding such disability (less any amounts paid to him under any of the
Company's other disability plans). In addition, the SPS Employment Agreement
provides that
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for purposes of the Company Supplemental Pension Plan, Mr. Steinberg's benefits
will be calculated using his total base salary and bonus compensation and Mr.
Steinberg will be credited for all years of actual service with the Company and
with all years until the end of the Extended Term (unless he is terminated for
"cause," in which event he will only be credited with all years of actual
service).
In February 1996, Mr. Saul P. Steinberg also entered into a employment
agreement with Reliance Insurance (together with the SPS Employment Agreement,
the "SPS Employment Agreements") on substantially the same terms as the SPS
Employment Agreement (except that Mr. Steinberg's base salary as in effect on
January 1, 1996 from Reliance Insurance was $284,375). Mr. Steinberg's base
salary effective as of January 1, 1999 from Reliance Insurance is $341,250.
In February 1996, Mr. Robert M. Steinberg entered into employment
agreements with the Company and Reliance Insurance on substantially the same
terms as the SPS Employment Agreements (the "RMS Employment Agreements"). The
base salaries effective on February 15, 1996 for Robert M. Steinberg from the
Company and Reliance Insurance were $1,060,000 and $265,000, respectively. The
base salaries for Robert M. Steinberg effective as of January 1, 1999 from the
Company and Reliance Insurance are $1,600,000 and $400,000, respectively.
Pursuant to the terms of Robert M. Steinberg's employment agreement with the
Company, his base salary may be reduced by not more than 15% by the Board of
Directors (or any duly empowered committee thereof) for any year in which the
base salary of the chief executive officer is similarly reduced.
In February 1996, each of Messrs. George E. Bello, Executive Vice
President and Controller of the Company, and Lowell C. Freiberg, Executive Vice
President and Chief Financial Officer of the Company, entered into employment
agreements with the Company (collectively, the "Executive Employment
Agreements") on substantially the same terms as the RMS Employment Agreements.
The base salaries as in effect on January 1, 1996 for Messrs. Bello and Freiberg
were $625,000 and $600,000, respectively. The base salaries effective as of
January 1, 1999 for Messrs. Bello and Freiberg were $675,000 and $650,000,
respectively. Pursuant to the terms of the Executive Employment Agreements, the
base salary of each of Messrs. Bello and Freiberg may be reduced by not more
than 15% by the Board of Directors (or any duly empowered committee thereof) for
any year in which the chief executive officer's and the chief operating
officer's base salaries are similarly reduced.
The Executive Bonus Plan, in which Messrs. Saul P. Steinberg, Robert M.
Steinberg and Messrs. George E. Bello and Lowell C. Freiberg participate,
provide for basic bonuses of between 85% and 150% of annual base salary (as
defined) depending upon the number of targets, between two and fifteen, relating
to the performance criteria described in the Executive Bonus Plan that are
achieved, and supplemental bonuses of up to 285% of annual base salary if at
least eight targets and one or both of two additional targets relating to
stockholders' equity are achieved. In no event may any bonus paid under the
Executive Bonus Plan to any executive exceed 400% of his base salary. The
Special Compensation Committee has the discretion under the Executive Bonus Plan
to reduce any bonus in excess of 300% of an executive's base salary to no less
than 300% of such salary.
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ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The following table sets forth information as of March 31, 2000 with
respect to beneficial ownership of Common Stock by each Director of the Company
and by all executive officers and Directors of the Company as a group. 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
and Robert M. Steinberg have an address of Park Avenue Plaza, 55 East 52nd
Street, New York, New York 10055.
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<TABLE>
<CAPTION>
Number of Shares Percent
And Nature of of
Name of Beneficial Owner Beneficial Ownership Class (1)
- ------------------------ -------------------- ---------
<S> <C> <C>
Saul P. Steinberg.......................... 36,386,563(2)(3)(5) 31.3
Robert M. Steinberg........................ 12,185,618(2)(4)(5)(6) 10.3
George R. Baker............................ 53,725(2)(7) *
George E. Bello............................ 1,670,873(5)(6) 1.4
Lowell C. Freiberg......................... 1,007,783(5) *
Dr. Thomas P. Gerrity...................... 70,088(7) *
Jewell J. McCabe........................... 50,000(7) *
Irving Schneider........................... 224,500(7) *
Bernard L. Schwartz........................ 60,000(7)(8) *
Richard E. Snyder.......................... 51,000(7) *
Dr. Bruce E. Spivey........................ 25,000(7) *
Howard E. Steinberg........................ 772,699(5)(6)(9) *
James E. Yacobucci......................... 179,064(5) *
All Executive Officers and Directors as a
Group 52,218,953(3)(4)(5)(6)(7) 42.7
(9)(10)
</TABLE>
- --------------------
(1) An asterisk indicates that the shares owned represent less than 1%
of the class.
(2) Includes with respect to, Saul P. Steinberg and Robert M.
Steinberg, and excludes with respect to George R. Baker, 5,280,830 shares owned
by four separate trusts relating to the estate of Julius Steinberg. Saul P.
Steinberg, Robert M. Steinberg, their mother and George R. Baker are the
trustees of each of the trusts 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 respective beneficiaries under each of the
trusts.
(3) 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 his daughter, 650,000 shares
held by the Saul & Gayfryd Steinberg Foundation, Inc. and 3,000,000 shares owned
by Steinberg Family Partners, L.P., a family limited partnership whose general
partner is an entity controlled by Saul P. Steinberg. Saul P. Steinberg
disclaims beneficial
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ownership over all of those shares, except, in the case of the shares held by
Steinberg Family Partners, those shares in which Mr. Steinberg is deemed to have
a pecuniary interest. Excludes 151,340 shares held by trusts for the children of
Saul P. Steinberg (for which Robert M. Steinberg serves as the sole trustee).
(4) Includes 151,340 shares held by trusts for the 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.
(5) Includes shares based on the assumed exercise of currently
exercisable options to purchase Common Stock owned through the Company's Option
Plans as follows: Saul P. Steinberg--750,000, Robert M. Steinberg--1,875,000,
George E. Bello--937,500, Lowell C. Freiberg--937,500, Howard E.
Steinberg--687,500, James E. Yacobucci--175,000 and all Executive Officers and
Directors as a Group --6,190,000 shares.
(6) Includes shares allocable to employee contributions under the SIP,
as to which the employee has dispositive power, as follows: Robert M.
Steinberg--39,608, George E. Bello--23,089, Howard E. Steinberg -- 3,038 and all
Executive Officers and Directors as a Group-- 65,735 shares. All of the Common
Stock held under the SIP will be voted by a trustee of the SIP, CTC Illinois
Trust Company, in its sole discretion, in accordance with the fiduciary
standards of the Employee Retirement Income Security Act of 1974, as amended.
(7) Includes, for each of George R. Baker, Dr. Thomas P. Gerrity,
Jewell J. McCabe, Irving Schneider, Bernard L. Schwartz and Richard E. Snyder,
50,000 shares and for Dr. Bruce E. Spivey, 25,000 shares based on the assumed
exercise of currently exercisable options to purchase Common Stock. Includes for
all Executive Officers and Directors as a Group, with respect to the options
held by these persons, 325,000 shares based on the assumed exercise of such
options.
(8) All of these shares (except for those included based on the assumed
exercise of currently exercisable options) are beneficially owned by the Bernard
and Irene Schwartz Foundation and investment and voting power over these shares
are shared.
(9) Includes 2,000 shares held as trustee for his child, as to which
beneficial ownership is disclaimed.
(10) Includes 5,280,830 shares owned by four separate trusts relating
to the estate of Julius Steinberg. See Note 2.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
Compensation Committee Interlocks and Insider Participation
The Regular Compensation Committee of the Board of Directors consists
of Saul P. Steinberg, George E. Bello and Jewell Jackson McCabe. Saul P.
Steinberg and George E. Bello are both officers and employees of the Company.
The Special Compensation Committee of the Board of Directors is comprised solely
of the following outside directors: Irving Schneider and Jewell Jackson McCabe.
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Reliance Figueroa Associates Limited Partnership ("Reliance Figueroa")
is a limited partnership which owns apartment buildings and commercial
properties and in which Saul P. Steinberg, Chairman of the Board of the Company,
has a limited partnership interest of 56%, and Robert M. Steinberg, Vice
Chairman of the Board of the Company, has a limited partnership interest of 24%.
The general partner of Reliance Figueroa was, until June 1997, an indirect
subsidiary of the Company (the "GP") and was entitled to receive 48% of any
cumulative net profits (as defined) realized from the activities of Reliance
Figueroa and received the benefit of any tax losses. The remainder of the
cumulative net profits of Reliance Figueroa were allocated to the limited
partners in accordance with their respective partnership interests.
In June 1997, all of the common stock of Onyx, Inc. ("Onyx"), the
Company subsidiary that owned all of the common stock of the GP, was acquired by
investors unaffiliated with the Company (the "Investors") and Reliance Insurance
acquired a $27.6 million preferred stock interest in Onyx. Subsequently, the
Company and Reliance Insurance purchased from Onyx, $18 million aggregate
principal amount of its 11.9% promissory notes due 2020 (the "Company Note") and
$11 million aggregate principal amount of its 11.9% promissory notes due 2010
(the "Reliance Insurance Note"), respectively. In July 1998, the Reliance
Insurance Note was repaid in full and a $5 million prepayment was made on the
Company Note.
During 1999, the Company contracted for certain graphic design services
with an unaffiliated graphic design firm which subcontracted certain related
printing services with a printing company in which a brother-in-law of Messrs.
Saul P. Steinberg and Robert M. Steinberg, Joseph Jurist, holds a material
interest. Including amounts received pursuant to that subcontracting
arrangement, such printing company received approximately $171,000 relating to
services provided to the Company and its subsidiaries. The Company believes the
amount paid to the printing company represented fair market value to the
Company.
On March 8, 1999, Reliance Insurance, a wholly-owned subsidiary of the
Company, purchased from Roni Sokoloff, the wife of Bruce L. Sokoloff, Senior
Vice President-Administration, of the Company and the sister of Messrs. Saul P.
Steinberg and Robert M. Steinberg, 100,000 shares of the Company's Common Stock
for a purchase price of $9.4375 per share, the closing price of the Common Stock
on the New York Stock Exchange on that day. The shares were purchased by
Reliance Insurance for anticipated contributions to employee compensation plans.
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 of the Company who hold the following limited
partnership interests: Messrs. Bello (3.8%), Freiberg (2.5%), Henry A. Lambert
(3.8%), Dennis J. O'Leary (.635%), Philip S. Sherman (.635%), Bruce L. Sokoloff
(1.3%) and Howard E. Steinberg (1.3%).
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized, on the 28 day of
April, 2000.
RELIANCE GROUP HOLDINGS, INC.
By: /s/ GEORGE R. BAKER
-------------------------------------
George R. Baker
President and Chief Executive Officer
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