<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[ ] Preliminary Proxy Statement [_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(E)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
Overseas Partners Ltd.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
-------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
-------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-------------------------------------------------------------------------
(5) Total fee paid:
-------------------------------------------------------------------------
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
-------------------------------------------------------------------------
(3) Filing Party:
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(4) Date Filed:
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Notes:
<PAGE>
OVERSEAS PARTNERS LTD.
Mintflower Place
8 Par-la-Ville Road
Hamilton HM GX, Bermuda
NOTICE OF ANNUAL MEETING OF SHAREOWNERS
October 20, 1999
To Our Shareowners:
The Annual Meeting of Shareowners of Overseas Partners Ltd. (OPL or the
Company), a Bermuda Company, will be held at the Company's offices at
Mintflower Place, 8 Par-la-Ville Road, Hamilton, Bermuda, on October 20, 1999
at 9:00 A.M., for the following purposes:
1.To elect a Board of Directors;
2.To amend Bye-law 40 pertaining to the purchase price to be paid by the
Company for its shares;
3. To appoint Deloitte & Touche, Chartered Accountants, as auditors for
OPL for the year ending December 31, 1999; and
4.To transact such other business as may properly come before the
meeting.
The Board of Directors has fixed the close of business on August 31, 1999 as
the record date for the determination of shareowners entitled to notice of and
to vote at the meeting.
By order of the Board of Directors.
Thomas E. Butler
Secretary
Hamilton, Bermuda
September 10, 1999
IN ORDER THAT YOUR SHARES MAY BE REPRESENTED AT THE MEETING, KINDLY SIGN AND
RETURN THE ENCLOSED PROXY AS PROMPTLY AS POSSIBLE IN THE ENCLOSED STAMPED
ENVELOPE. IF YOUR SHARES ARE HELD IN CUSTODY BY FIRST UNION NATIONAL BANK,
KINDLY SIGN AND RETURN THE ENCLOSED LETTER OF INSTRUCTION, OR FOLLOW THE
DIRECTIONS HEREIN FOR OBTAINING A PROXY, TO ASSURE THAT YOUR SHARES ARE VOTED
IN ACCORDANCE WITH YOUR INSTRUCTIONS.
<PAGE>
OVERSEAS PARTNERS LTD.
Mintflower Place
8 Par-la-Ville Road
Hamilton HM GX, Bermuda September 10, 1999
PROXY STATEMENT
The accompanying proxy is solicited by the Board of Directors (the Board) of
Overseas Partners Ltd., a Bermuda Company (OPL or the Company), for the Annual
Meeting of Shareowners to be held on October 20, 1999, and is being mailed
with this Proxy Statement to shareowners on or about September 10, 1999. The
person giving the proxy has the right to revoke it at any time before it is
voted by giving written notice of revocation to the Secretary of OPL, by
submitting a subsequent proxy or by voting in person at the meeting. The
expense of proxy solicitation will be paid by OPL. In addition to solicitation
by mail, proxies may be personally solicited at the direction of OPL's
officers, for which no additional expense is anticipated.
OPL had 127,500,000 shares of Common Stock, $0.10 par value (Common Stock or
OPL Common Stock), outstanding and entitled to vote at the close of business
on August 31, 1999. These shares are the only securities of OPL entitled to be
voted at the meeting. Each share of Common Stock is entitled to one vote,
except that under OPL's Bye-laws the voting rights of any shareowner or
shareowners acting as a group (other than certain shareowners set forth in
OPL's Bye-laws) who beneficially own more than 10 percent of the voting stock
would be scaled back so that such shareowners would be entitled to cast only
one one-hundredth of a vote with respect to each share owned in excess of 10
percent. Only shareowners of record at the close of business on August 31,
1999 will be entitled to vote.
It is intended that all shares of Common Stock represented by proxies
properly executed in the accompanying form, unless otherwise specified
thereon, will be voted FOR the election of the persons nominated by the Board
to be directors, FOR the Bye-law amendment and FOR the appointment of Deloitte
& Touche as auditors.
Saul & Co., nominee for First Union National Bank (First Union), P.O. Box
41784, Philadelphia, PA 19101-1784 is the record owner of 99,034,252 shares,
constituting 77.7% of the outstanding OPL Common Stock as of August 31, 1999.
Such shares are held by First Union as custodian for shareowners who have not
elected to have their shares distributed to them. First Union will forward
this notice of meeting and proxy statement to the beneficial owners of the
shares so held.
Owners of Common Stock held by First Union as custodian may direct the
voting of their shares by executing and returning to First Union before
October 13, 1999, the Letter of Instruction which they receive along with this
notice of meeting and proxy statement. An owner of shares who wishes to vote
his or her shares in person at the meeting may request First Union to issue a
proxy to him or her for the number of shares held for his or her account. Such
request must be received by First Union prior to October 13, 1999. Shares for
which no instructions or requests for proxies are timely received will be
voted by First Union. First Union has advised OPL that it intends to vote such
shares FOR the election of the persons nominated by the Board to be directors,
FOR the Bye-law amendment and FOR the appointment of auditors.
As used in this Proxy Statement, "dollars" and "$" refer to United States
dollars.
<PAGE>
ELECTION OF DIRECTORS
Nominees For Election as Directors
A Board of six directors will be elected at the Annual Meeting. All of the
current directors have been nominated for re-election by the Board. The
directors elected at the Annual Meeting will serve until the next Annual
Meeting and until the election and qualification of their successors, or until
their appointment is terminated in accordance with OPL's Bye-laws.
The Board has no reason to anticipate that any nominee will decline or be
unable to serve. In case any nominee does decline or is unable to serve,
proxies may be voted for the election of a substitute nominee or the Board may
elect to reduce the number of directors to be elected at the Annual Meeting
and to fill any resulting vacancies on the Board subsequent to the Annual
Meeting. Under Bermuda law, a quorum of directors must ordinarily be resident
in Bermuda. OPL Bye-laws provide that two directors shall constitute a quorum.
Set forth below is certain biographical information concerning each of the
nominees for election as director.
- -------------------------------------------------------------------------------
Robert J. Clanin Age 55 Director since 1994
Prior to becoming a director, Bob served as Vice President
of OPL from June 1990 to August 1994. He has been Senior Vice
President, Treasurer and Chief Financial Officer of United
Parcel Service of America, Inc. (UPS) since 1994 and a
director of UPS since 1996. Bob joined UPS in 1971. In 1979
he was named Wisconsin District Controller and Southwest
Region Controller in 1987. He had served as Treasury Manager
and then Finance Manager since 1989, prior to assuming his
present responsibilities.
[PICTURE OF ROBERT J. CLANIN APPEARS HERE]
- -------------------------------------------------------------------------------
D. Scott Davis Age 47 Director since 1999
Scott was elected President and Chief Executive Officer,
and appointed to the Board of Directors of OPL on January 7,
1999. Before taking the helm at Overseas Partners Ltd., Scott
served as Vice President -- Finance and Accounting for UPS,
where his responsibilities for several years included
banking, investments, financial reporting and shareowner
relations. A Certified Public Accountant, he was also a
trustee for the UPS Retirement Plan and was instrumental in
the formation of UPINSCO, the UPS insurance company
headquartered in the U.S. Virgin Islands. Prior to joining
UPS, Scott was chief financial officer and then chief
executive officer of II Morrow, Inc., a technology company
based in Salem, Oregon that was acquired by UPS in 1986.
[PICTURE OF D. SCOTT DAVIS APPEARS HERE]
- -------------------------------------------------------------------------------
2
<PAGE>
Joseph M. Pyne Age 51 Director since 1995
Joe is Senior Vice President -- Corporate Marketing for
UPS. In this capacity, he directs UPS's worldwide marketing
efforts in the U.S. and in more than 200 countries and
territories served by UPS. Previously, he served as Vice
President -- U.S. Marketing at UPS. He began his UPS career
in 1969 and was promoted to North Central Region Business
Development Manager in 1984. In 1989 he became National
Marketing Planning Manager, and later he headed Marketing for
U.S. ground and air delivery services.
[PICTURE OF JOSEPH M. PYNE APPEARS HERE]
- -------------------------------------------------------------------------------
Cyril E. Rance Age 65 Director since 1995
Cyril was President and Chief Executive Officer of a large
Bermuda insurer until his retirement in 1990. He has more
than 40 years experience in all aspects of the insurance
industry. He also has had a long and varied career in civic
and government service, including 10 years as a member of the
Bermuda Parliament. He is a director of XL Capital Ltd, an
insurance holding company, and several international
companies registered in Bermuda.
[PICTURE OF CYRIL E. RANCE APPEARS HERE]
- -------------------------------------------------------------------------------
Edwin H. Reitman Age 56 Director since 1991
Ed became non-executive Chairman of the OPL Board of
Directors in 1995. Previously, he had served as President and
Chief Executive Officer since 1991. Ed held the position of
Vice President -- Corporate Marketing for UPS from May, 1997
until January 1999, when he announced his retirement from
UPS. Previously, he had been President of UPS Europe since
April 1995. In that capacity, he had overall responsibility
for UPS's operations in Europe, Africa and the Middle East.
Ed was Manager of the UPS Legal Department from 1989 until
1995. Ed became of counsel to the Atlanta law firm of King &
Spalding in February 1999.
[PICTURE OF EDWIN H. REITMAN APPEARS HERE]
- -------------------------------------------------------------------------------
Walter A. Scott Age 62 Director since 1995
Prior to his retirement in September 1994, Walter served as
Chairman, President and Chief Executive Officer of ACE
Limited, an insurer based in Bermuda. He has served as a
director of ACE since 1989 and was a consultant to the
Company after his retirement until September 1996. Prior to
1989, Walter served in various senior positions with
Primerica Corporation, (now Citigroup Inc.), a major publicly
owned diversified financial services company. He is also a
director of Annuity and Life Re Holdings Ltd., an insurer
based in Bermuda.
[PICTURE OF WALTER A. SCOTT APPEARS HERE]
- -------------------------------------------------------------------------------
3
<PAGE>
Stock Ownership of Certain Beneficial Owners and Management
Set forth below is information relating to the beneficial ownership of OPL
Common Stock by (i) each director or director nominee, (ii) the Chief
Executive Officer and the Named Executive Officers, and (iii) all directors
and executive officers as a group. All shares are owned of record and
beneficially, and each person and group identified has sole voting and
investment power with respect to such shares, except as otherwise indicated.
No individual or group known to the Company beneficially owns more than five
percent of the outstanding shares of the Company.
<TABLE>
<CAPTION>
Common Stock Held as of August 31, 1999(1)
----------------------------------------------------
Additional Shares in
which the Director or
Nominee has, or
Shares Participates in the
Beneficially Voting or Investment Total Shares and
Name Owned(2) Power(3) Percent of Class
---- ------------ --------------------- -----------------
<S> <C> <C> <C>
Bruce M. Barone
54 Atkinson Lane
Sudbury, MA 01776........ 32,610 -- 32,610 (0.03%)
Mark R. Bridges
Mintflower Place
8 Par-la-Ville Road
P.O. Box 1581
Hamilton, HM GX,
Bermuda................. 3,810 -- 3,810 (0.00%)
Thomas E. Butler
Mintflower Place
8 Par-la-Ville Road
Hamilton HM GX, Bermuda.. 16,705 -- 16,705 (0.01%)
Robert J. Clanin
55 Glenlake Parkway, NE
Atlanta, GA 30328........ 39,544 5,649,355(a)(b) 5,688,899 (4.46%)
D. Scott Davis
Mintflower Place
8 Par-la-Ville Road
P.O. Box 1581
Hamilton, HM GX,
Bermuda................. 14,881 -- 14,881 (0.01%)
Michael J. Molletta
115 Perimeter Center
Place
Suite 940
Atlanta, GA 30346........ 9,902 -- 9,902 (0.01%)
Joseph M. Pyne
55 Glenlake Parkway, NE
Atlanta, GA 30328........ 22,613 -- 22,613 (0.02%)
Cyril E. Rance
Blue Anchorage
No. 6 Agars Hill-Point
Shares
Pembroke HM 05, Bermuda.. 2,000 -- 2,000 (0.00%)
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
Common Stock Held as of August 31, 1999(1)
----------------------------------------------------
Additional Shares in
which the Director or
Nominee has, or
Shares Participates in the
Beneficially Voting or Investment Total Shares and
Name Owned(2) Power(3) Percent of Class
---- ------------ --------------------- -----------------
<S> <C> <C> <C>
Edwin H. Reitman
1050 Mitchell Hill Court
Greensboro, GA 30642.... 40,847 -- 40,847 (0.03%)
Leopold A. Schmidt
103 Quill Place
Williamsburg, VA
23185................... 36,948 -- 36,948 (0.03%)
Walter A. Scott
c/o Tempest Re
Par-la-Ville Place
14 Par-la-Ville Road
Hamilton HM 08,
Bermuda................ 2,000 -- 2,000 (0.00%)
Joe E. Strawn, Jr.
556 Conway Village Dr.
St. Louis, MO 63141..... 5,220 -- 5,220 (0.00%)
All directors and
executive officers as a
group
(10 persons)(4)......... 152,302 5,649,355 5,801,657 (4.55%)
</TABLE>
- -----------
(1) These holdings are reported in accordance with regulations of the
Securities and Exchange Commission (SEC) requiring the disclosure of
shares as to which directors and officers hold voting or disposition
power, notwithstanding the fact that they are held in a fiduciary, rather
than a personal, capacity and that the power is shared among a number of
fiduciaries including, in several cases, corporate trustees, directors or
other persons who are neither officers nor directors of OPL.
(2) The amounts shown in this column include an aggregate of 27,871 shares
owned by or held in trust for members of the families of Messrs. Butler,
Clanin, and Schmidt as to which they disclaim beneficial ownership.
(3) Neither the directors, nominees, other officers nor members of their
families, have any ownership rights in the shares listed in this column.
Of the shares (a) 5,312,193 shares are owned by a charitable foundation on
whose Board of Trustees Mr. Clanin and other persons serve and (b) 337,162
shares are held by a charitable foundation of which Mr. Clanin and other
persons are trustees.
(4) All directors and officers as a group are totalled as of August 31, 1999.
As such, Messrs. Barone, Strawn and Schmidt have been excluded from the
total as Mr. Barone resigned from the Company as of December 3, 1998, Mr.
Strawn retired from Parcel Insurance Plan, Inc. as of February 1, 1999,
and Mr. Schmidt retired from OPL on May 31, 1999.
Meetings of the Board of Directors
The OPL Board of Directors held four meetings during 1998. Each director
attended all of the meetings of the Board of Directors and of Board Committees
on which they served during 1998.
5
<PAGE>
Committees of the Board of Directors
The OPL Board of Directors has an Executive Committee, an Audit Committee, a
Compensation Committee, a Nominating Committee and an Underwriting Committee.
Messrs. Davis, Clanin and Reitman, each of whom is an officer and/or
director of OPL, presently constitute the Executive Committee of the Board.
Mr. Clanin is Chairman of the Executive Committee. This Committee has been
authorized by the Board of Directors of OPL to exercise all of the powers of
the Board except those acts which by law must be performed by the Board
itself. The Executive Committee did not hold any meetings during 1998.
Messrs. Pyne, Clanin and Rance, with Mr. Pyne as Chairman constitute the
members of the Audit Committee. The Audit Committee meets with management to
consider the adequacy of the internal controls and the objectivity of
financial reporting. The Audit Committee also meets with the independent
auditors and with appropriate financial personnel and internal auditors of the
Company regarding these matters. The Audit Committee recommends to the Board
the appointment of the independent auditors. Both the internal auditors and
the independent auditors periodically meet with the Audit Committee and have
unrestricted access to the Audit Committee. During 1998 the Chief Executive
Officer periodically sat as an ex officio member of this Committee but did not
participate in discussions on audit matters or in private sessions with
internal or external audit personnel. The Audit Committee met twice in 1998.
Messrs. Clanin, Reitman and Scott, with Mr. Clanin as Chairman, constitute
the members of the Compensation Committee. The Compensation Committee is
responsible: (i) to recommend to the Board of Directors the appropriate
compensation of outside directors; (ii) to determine the compensation of the
Chief Executive Officer; and (iii) to approve the compensation of the other
officers of OPL and its subsidiaries upon recommendation of the Chief
Executive Officer. The Compensation Committee met two times in 1998.
Messrs. Clanin, Reitman and Scott, with Mr. Reitman as Chairman, constitute
the members of the Nominating Committee. This Committee is responsible for the
recommendation of director nominees to the Board of Directors and will
consider nominees recommended by shareowners. Shareowners may submit their
recommendations in writing to the attention of the Secretary of OPL. The
Committee will consider nominations for the 2000 Annual Meeting if they are
received by the Secretary not later than January 15, 2000. The Nominating
Committee met once in 1998.
The Underwriting Committee performs an oversight role of the Company's
underwriting activities. It assists in the development of underwriting
standards and helps identify lines of reinsurance which may be appropriate for
the Company. The Committee reviews major new and renewing reinsurance programs
and the financial performance of existing programs. The members of the
Committee are Messrs. Davis, Rance and Scott, with Mr. Davis as Chairman. The
Underwriting Committee met four times in 1998.
COMPENSATION OF DIRECTORS
Directors who are employees of OPL receive no additional compensation for
their service as directors or as members of committees appointed by the Board
of Directors. Other directors receive an annual fee of $40,000. Members of the
Audit, Compensation, Nominating and Underwriting Committees who are not
employees of OPL receive an additional fee of $1,250 for each Committee
meeting they attend.
6
<PAGE>
COMPENSATION OF EXECUTIVE OFFICERS AND OTHER INFORMATION
Report of Compensation Committee on Executive Compensation
The Compensation Committee of the Board of Directors has furnished the
following report on Executive Compensation:
The Compensation Committee of the Board of Directors has responsibility for
determining the compensation of the Chief Executive Officer (CEO) and for
approving the compensation of the other officers of OPL and its subsidiaries
upon recommendation of the CEO. Overall compensation currently includes
salary, bonus, and Stock Appreciation Rights. The Committee also determines
cost of living allowances paid to executive officers resident in Bermuda. The
Committee is assisted in carrying out its responsibility by OPL management and
by outside consultants.
In determining appropriate compensation levels, the Committee reviews data
received from a consultant concerning compensation for comparable positions at
reinsurance and real estate investment companies in Bermuda and the United
States. The 1998 compensation of OPL's executive officers was less than the
median compensation levels at the companies studied. Companies studied are not
limited to those in the Standard & Poor's 500 Index and the Standard & Poor's
Multi-Line Insurance Companies Index used in the performance charts following
this report.
All elements of the current compensation package are payable in cash. With
respect to the salaries and bonuses of the CEO and other executive officers,
the Committee does not employ formulas but instead exercises its judgment
based on considerations including overall responsibilities, experience and
ability, ability to work with others, performance against budget, prior year
compensation and compensation programs of their previous employers. The
Committee stresses collaborative working relationships and does not use
objective corporate performance standards in determining the salaries and
bonuses of individual executive officers, including the CEO.
With respect to the resignation of Mr. Bruce Barone as President and Chief
Executive Officer, members of the Compensation Committee met prior to Mr.
Barone's departure, to consider its policies in negotiating his separation
agreement. The members of the Committee delegated to Mr. Clanin the
negotiation of Mr. Barone's agreement, and approved the agreement's terms and
conditions upon completion of the negotiations between Messrs. Clanin and
Barone.
Awards under the Stock Appreciation Rights Plan are long-term awards
intended to promote growth in shareowner value and continuity of employment.
The number of performance units comprising each award is determined by a
formula based on the salary of the recipient at the time of grant. The amount
received upon exercise of the award depends on the performance of OPL Common
Stock over the five-year period between grant and exercise.
Cost of living allowances are intended to permit executive officers that
have relocated to Bermuda from the United States to maintain a comparable
standard of living.
The Compensation Committee
Robert J. Clanin, Chairman
Edwin H. Reitman
Walter A. Scott
7
<PAGE>
Summary Compensation Table
The following table shows the cash compensation paid or to be paid by OPL or
any of its subsidiaries, as well as certain other compensation paid in 1998,
1997, and 1996 to the following Named Executive Officers in all capacities in
which they served:
<TABLE>
<CAPTION>
Long-term
Annual Compensation Compensation
------------------------------------- ------------
Stock
Name and Principal Other Annual Appreciation All Other
Position Year Salary Bonus Compensation(4) Rights(5) Compensation(6)
- ------------------ ---- -------- ------- --------------- ------------ ---------------
<S> <C> <C> <C> <C> <C> <C>
Bruce M. Barone......... 1998 $274,125 $63,180 $234,757 18,791 $285,659
President and Chief 1997 $243,750 $71,740 $234,035 13,870 $ --
Executive Officer(1) 1996 $212,500 $57,300 $ 54,001 13,267 $ --
Thomas E. Butler........ 1998 $132,500 $35,586 $153,702 5,474 $ --
Vice President and 1997 $126,250 $40,512 $132,851 3,832 $ --
Secretary 1996 $120,000 $34,762 $ -- 3,996 $ --
Mark R. Bridges......... 1998 $104,000 $ -- $ 84,375 -- $ --
Vice President and
Treasurer(2)
D. Scott Davis.......... 1998 $ -- $ -- $ -- -- $ --
President and Chief
Executive
Officer(1)
Michael J. Molletta..... 1998 $126,250 $29,160 $ -- 4,013 $ --
President of Overseas 1997 $112,500 $34,604 $ -- 2,561 $ --
Management, Inc. 1996 $102,500 $29,701 $ -- 2,561 $ --
Leopold A. Schmidt...... 1998 $142,500 $37,098 $151,260 5,888 $ --
Vice President 1997 $131,250 $37,980 $165,675 3,983 $ --
1996 $112,500 $30,560 $ 27,905 3,747 $ --
Joe E. Strawn, Jr.(3)... 1998 $168,750 $ -- $ -- -- $ --
President of Parcel $ 13,500 $ -- $ -- -- $ --
Insurance 1997
Plan, Inc.
</TABLE>
- -----------
(1) Mr. Barone resigned on December 3, 1998 and was replaced by Mr. Davis on
January 7, 1999.
(2) Mr. Bridges commenced employment with OPL in May 1998.
(3) Mr. Strawn became President of Parcel Insurance Plan, Inc. in December
1997.
(4) Other annual compensation consists of cost of living allowances, and for
Messrs. Barone, Butler, and Schmidt, reimbursement of additional U.S.
income taxes paid as a result of the foreign assignment. These allowances
are intended to permit such executives to maintain comparable living
standards. Mr. Barone and Mr. Schmidt became Bermuda residents in
September and November of 1996, respectively. Mr. Butler became a Bermuda
resident in January 1997.
(5) Number of shares underlying Stock Appreciation Rights granted.
(6) These payments were made in connection with Mr. Barone's agreement, dated
December 18, 1998, and included $85,625 for reimbursement of relocation
expenses, $137,286 for his bonus paid before December 31, 1998, generally
paid in January of 1999, $48,000 for rent and $14,748 paid for
reimbursement of reasonable attorney's fees.
8
<PAGE>
Stock Appreciation Rights -- Grants
The following table sets forth information concerning grants of Stock
Appreciation Rights to the Named Executive Officers in 1998:
<TABLE>
<CAPTION>
Potential Realizable
Value at
Assumed Annual Rates
of OPL Stock
% of Total Appreciation
Rights For Rights Term(3)
Rights Granted to Appreciation Expiration --------------------
Name Granted Employees Base(1) Date(2) 5% 10%
- ---- ------- ---------- ------------ ---------- --------- ----------
<S> <C> <C> <C> <C> <C> <C>
Bruce M. Barone......... 18,791 39% $17.00 9/30/03 $ 88,257 $ 195,026
Mark R. Bridges......... -- -- $ -- -- $ -- $ --
Thomas E. Butler........ 5,474 11% $17.00 9/30/03 $ 25,710 $ 56,813
D. Scott Davis.......... -- -- $ -- -- $ -- $ --
Michael J. Molletta..... 4,013 8% $17.00 9/30/03 $ 18,848 $ 41,650
Joe E. Strawn, Jr....... -- -- $ -- -- $ -- $ --
Leopold A. Schmidt...... 5,888 12% $17.00 9/30/03 $ 27,655 $ 61,110
</TABLE>
- -----------
(1) Represents the price of OPL Common Stock on the date of grant.
(2) Generally, Rights may not be exercised until the expiration of five years
from the date of grant, and then only during a 30-day period following the
mailing date of OPL's Annual Report on Form 10-K for the prior year.
(3) Based on actual term of Stock Appreciation Rights and annual compounding.
The dollar amounts in these columns are the result of calculations at the
assumed appreciation rates set by the Securities and Exchange Commission
and are not intended to forecast future appreciation of shares of Common
Stock.
Stock Appreciation Rights Exercises and Holdings
The following table sets forth information concerning Stock Appreciation
Rights exercised in 1998 by the Named Executive Officers and the value of
their unexercised Rights on December 31, 1998.
Aggregated Stock Appreciation Rights Exercised in 1998 and Year-End Rights
Value
<TABLE>
<CAPTION>
Number of
Shares Value Number of Unexercised Value of Unexercised
Underlying Realized Rights at 12/31/98 Rights at 12/31/98
Rights Upon ------------------------- ----------------------------
Name Exercised Exercise Exercisable Unexercisable Exercisable Unexercisable(1)
- ---- ---------- -------- ----------- ------------- ----------- ----------------
<S> <C> <C> <C> <C> <C> <C>
Bruce M. Barone......... 6,799 $65,270 -- 58,162 $-- $363,858
Mark R. Bridges......... -- $ -- -- -- $-- $ --
Thomas E. Butler........ 4,420 $42,432 -- 21,582 $-- $155,364
D. Scott Davis.......... -- $ -- -- -- $-- $ --
Michael J. Molletta..... 1,877 $18,019 -- 13,532 $-- $ 91,552
Joe E. Strawn, Jr....... -- $ -- -- -- $-- $ --
Leopold A. Schmidt...... 1,785 $17,136 -- 19,754 $-- $132,287
</TABLE>
- -----------
(1) Based on net book value per share of OPL Common Stock as of December 31,
1998 minus exercise price.
9
<PAGE>
Retirement Plans
The following table shows the estimated annual retirement benefit payable
under OPL's Retirement Plan and Coordinating Benefit Plan (the Plans) at age
65 on a single life only annuity basis to participating employees, including
the Named Executive Officers, who are also entitled to receive $16,008 per
year (maximum currently payable) in primary Social Security benefits:
Pension Plan Table
<TABLE>
<CAPTION>
Estimated Annual Retirement Benefits (as of
12/31/98)
For Years of Service(1)(2)(3)(4)
Average -----------------------------------------------------------------------
Remuneration 15 Years 20 Years 25 Years 30 Years
------------ -------- -------- -------- ---------
<S> <C> <C> <C> <C>
$125,000 $ 27,248 $ 36,327 $ 45,417 $ 54,596
$150,000 $ 33,498 $ 44,659 $ 55,834 $ 66,996
$175,000 $ 39,748 $ 52,992 $ 66,252 $ 79,496
$200,000 $ 45,998 $ 61,324 $ 76,669 $ 91,996
$225,000 $ 52,248 $ 69,657 $ 87,087 $104,496
$250,000 $ 58,498 $ 77,989 $ 97,504 $116,996
$300,000 $ 70,998 $ 94,654 $118,339 $141,996
$400,000 $ 95,998 $127,984 $160,009 $191,996
$450,000 $108,498 $144,649 $180,844 $216,996
$500,000 $120,998 $161,314 $201,679 $241,996
</TABLE>
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(1) Under the OPL Retirement Plan, participants receive credit for prior
service with UPS. In the case of participants with UPS deferred vested
benefits, OPL is responsible for the difference between the amounts shown
above and the amounts such participants receive from UPS at retirement.
(2) Amounts exceeding $130,000 would be paid pursuant to OPL's Coordinating
Benefit Plan.
(3) For 1998, no more than $160,000 (which is adjusted from time to time by
the Internal Revenue Service) of cash compensation could be taken into
account in calculating benefits payable under OPL Retirement Plan.
(4) Participants who elect payment forms with survivor options will receive
lesser monthly amounts than those shown in the above table.
The compensation covered by the Plans whose benefits are summarized in the
table above includes salary plus bonus. The Covered Compensation for each
participant in the Plans is the average Covered Compensation of the
participant during the five highest consecutive years out of the last ten full
calendar years of service.
Estimated or actual credited years of service under the Plans to the Named
Executive Officers was as follows: Barone -- 22 years, Butler -- 33 years,
Molletta -- 21 years, Schmidt -- 30 years and Strawn -- 1 year. Mr. Bridges
does not participate in the Plan.
The Plans permit participants with 25 or more years of benefit service to
retire as early as age 55 with no or only a limited reduction in the amount of
their monthly benefits.
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Compensation Committee Interlocks and Insider Participation
Two members of the Compensation Committee of the Board of Directors of OPL
were officers of the Company prior to 1998. Robert J. Clanin served as Vice
President of OPL from 1990 until 1994, and Edwin H. Reitman served as
President and Chief Executive Officer of OPL from 1991 until 1995. Mr. Reitman
serves as of counsel to the Atlanta law firm of King & Spalding, which
provides legal services to OPL.
Employment Contracts and Termination of Employment and Change-in-Control
Arrangements
Bruce M. Barone resigned from OPL as President, Chief Executive Officer and
director as of December 3, 1998. On December 18, 1998, OPL entered into an
agreement with Mr. Barone. The agreement contained non-competition provisions
and provided for certain payments and benefits, including those set forth in
the Summary Compensation Table on page 8. In addition, Mr. Barone will receive
monthly consulting fees through December 2001, continued payment of health
insurance premiums until Mr. Barone becomes covered under another group
medical plan, and cash payments equal to the payments Mr. Barone would have
received under his Stock Appreciation Rights had he remained with OPL for the
term of the Rights. As in prior years, Mr. Barone will also receive a tax
equalization payment with respect to his 1998 income. Under the agreement, Mr.
Barone will also receive retirement benefits when he becomes eligible, as if
he had been 55 years old when he resigned (but without credit for service
during the intervening years).
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Performance Graph
The following graph shows a five year comparison of cumulative total
shareowner returns for OPL, the Standard & Poor's 500 Index (the S&P 500) and
the Standard & Poor's Multi-Line Insurance Companies Index (the S&P Multi-
Line). The comparison of the cumulative total returns on investment (change in
annual stock price plus reinvested dividends) for each of the annual periods
assumes that $100 was invested on December 31, 1993 in each of OPL's Common
Stock, the S&P 500 and the S&P Multi-Line.
Comparison of Five Year Cumulative Total Returns
(OPL, S&P 500, S&P Multi-Line)
[GRAPH APPEARS HERE]
OPL S&P 500 S&P Multi-Line
------ ------- --------------
Dec-93 100.00 100.00 100.00
Dec-94 117.73 101.28 105.56
Dec-95 143.18 135.00 151.72
Dec-96 170.00 162.00 181.39
Dec-97 203.41 211.37 280.73
Dec-98 237.27 267.00 312.99
OPL Common Stock is not listed on a securities exchange or traded in the
over-the-counter market. The current price of OPL Common Stock at any time
during a year is equal to the book value of OPL Common Stock on December 31 of
the prior year as reported in OPL's Annual Report to Shareowners. The current
price of OPL Common Stock is announced approximately ten days after the end of
the year. Because the date varied during the years listed above, the
performance graph assumes that the price was announced on December 31.
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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Common Relationships with UPS
OPL was organized under Bermuda law in June 1983 by UPS. On December 31,
1983, prior to commencing operations, OPL was spun off when UPS paid a special
dividend to shareowners of one share of Common Stock for each share of UPS
Common Stock outstanding as of November 18, 1983, resulting in the
distribution of approximately 97% of the outstanding Common Stock.
OPL was organized to reinsure shippers' risks relating to packages carried
by subsidiaries of UPS as well as to underwrite other reinsurance for insureds
unaffiliated with UPS. Since commencing operations on January 1, 1984, OPL's
primary reinsurance business has been reinsuring insurance issued by United
States-based insurance companies unaffiliated with UPS or OPL. This
reinsurance covers the risk of loss or damage to shippers' packages carried by
UPS's subsidiaries and unaffiliated foreign common carriers whose declared
value exceeds $100 or equivalent in foreign currency. The reinsurance of
shipper's risk insurance does not involve transactions conducted between UPS
and OPL. Various subsidiaries of American International Group, Inc. (AIG), (an
insurance company unaffiliated with OPL or UPS) insure customer packages in
return for premiums paid by the customers. OPL reinsures these primary
insurers, whose premium payments constitute OPL's largest source of revenues
and profits. Reinsurance premiums earned by OPL for reinsuring these risks
from January 1, 1998 to December 31, 1998 were $371.8 million or 29.6% of
OPL's 1998 revenues, a reduction from 32.3% in 1997. On August 9, 1999, a
judge of the United States Tax Court issued an opinion in United Parcel
Service of America, Inc. v. Commissioner of Internal Revenue. OPL is not a
party to the case and is not directly affected by this decision. However, the
opinion concerns the taxability of premiums paid by UPS shippers for shipper's
risk insurance and, as noted above, shipper's risk insurance is reinsured by
OPL. The Tax Court opinion is adverse to UPS and caused UPS to change its
current arrangements for shipper's risk insurance. OPL has been notified by
AIG that its agreements for shipper's risk reinsurance have been terminated,
effective October 1, 1999. OPL continues to reinsure workers' compensation
insurance issued by another unaffiliated United States-based insurance company
covering risks of a UPS subsidiary in the State of California.
Several members of OPL's Board of Directors served as officers of UPS during
1998. Mr. Robert J. Clanin has served as Vice President, Treasurer, Chief
Financial Officer and director of UPS; Mr. Joseph M. Pyne serves as Senior
Vice President -- Corporate Marketing of UPS; Mr. Edwin H. Reitman served as
Vice President -- Corporate Marketing of UPS and Mr. D. Scott Davis served as
Vice President -- Finance and Accounting for UPS. As such these individuals
had an interest in transactions occurring between the Company and UPS in 1998.
In considering which risks related to UPS's business to reinsure, directors of
OPL who are also officers and shareowners of UPS must consider the impact of
their business decisions on each of the two companies. Although prevailing
market conditions are among the factors considered by them in making such
decisions, there can be no assurance that transactions relating to the two
companies will be on the most favorable terms that could be obtained by either
party in the open market. OPL does not have any formal conflict resolution
procedures. Nevertheless, in connection with the reinsurance by OPL of risks
related to the business of UPS, OPL believes that the rates charged by the
primary insurers reinsured by OPL are competitive with those charged to
shippers utilizing other carriers.
OPL's business has included leasing certain aircraft and real property to
subsidiaries of UPS through Overseas Partners Leasing Inc. (OPLI) (formerly
Overseas Partners Capital Corp.). OPLI is a wholly owned subsidiary of OPL,
and OPL has guaranteed OPLI's performance of the leasing arrangements
described below. In December 1989, OPLI acquired from UPS the Ramapo Ridge
facility (the Facility). Beginning in July 1990, the Facility was leased to
UPS for an initial term ending in 2019. UPS uses the Facility as a data
processing, telecommunications and operations
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center. Lease payments have fixed and variable components. The fixed component
provides for aggregate lease payments of approximately $216 million over the
initial term of the lease. The variable component of the lease payments is
based on the number of customer accounts maintained by UPS.
In December 1989, OPLI acquired from UPS for approximately $67.9 million its
rights to purchase from the Boeing Company five 757 aircraft which were then
being manufactured. The aircraft were delivered to OPLI in 1990 and were
leased to UPS until July 8, 1998. On that date, the aircraft were sold
pursuant to the terms of a purchase option granted to United Parcel Service
Co. in a May 31, 1990 Aircraft Lease Agreement between the parties. The sales
price was calculated according to a Termination Value as specified in the
Aircraft Lease Agreement. Proceeds from the sale were approximately $202
million, yielding a gain on sale before income taxes of approximately $12
million.
OPLI has irrevocably assigned the right to receive the fixed component of
rentals on the Facility lease to its subsidiary, OPL Funding Corp. (OPL
Funding), a Delaware corporation. OPL Funding pledged its interest in these
payments to secure bonds issued to finance the acquisition of the leased
assets. UPS's obligation to pay the fixed rentals to OPL Funding is absolute
and unconditional during the initial term of the lease, and continues after an
early lease termination unless UPS pays to OPL Funding an amount sufficient to
defease the remaining interest payments on the bonds. In the event that OPLI
fails to pay certain income taxes, UPS is obligated to pay additional rentals
to provide for such taxes. OPLI is required to reimburse UPS the amount of any
such termination or tax payments.
At the conclusion of the lease, UPS may purchase the Facility at fair market
value. UPS has an option to purchase the land on which the Facility is
located, but not the buildings, from Overseas Partners Capital Corp. (OPCC) in
2050 for approximately $63.7 million, subject to certain adjustments for
increases in the fair market value of the land. In 1998, OPCC and its
subsidiary received rental payments of approximately $27.1 million in the
aggregate from UPS pursuant to the leases described above.
Other Transactions
OPL used the services of the Atlanta law firm of King & Spalding in 1998.
Mr. Edwin H. Reitman, a director of OPL, became of counsel to this firm in
February 1999.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Based solely on the review of the forms required by Section 16(a) of the
Securities Exchange Act of 1934 that have been filed, and written
representations that no other forms are required, OPL believes that all filing
requirements applicable to its officers and directors have been complied with.
There are no beneficial owners known to the Company that own more than 10%
percent of the outstanding shares of the Company's Common Stock.
AMENDMENT TO BYE-LAW 40
At its meeting on August 10, 11, and 12, 1999, the Board approved and set
for shareowner vote an amendment to the Company's Bye-Laws that would change
the method of determining the price the Company pays for its shares.
Introduction
Under the Company's Bye-Laws, OPL has rights of purchase and/or first
refusal with respect to all of its shares. See Bye-laws 40, 40A and 40B
attached as Exhibit "A". As a result, the Company is the only market for its
shares, and the price the Company pays for its shares constitutes the actual
value of the shares for most purposes.
Currently, Bye-law 40(13) provides that the price OPL pays for its stock is
the net book value per share as determined from the Company's most recent
audited balance sheet as reported to Members or otherwise generally made
available. The net book value per share is now $19.84.
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<PAGE>
The proposed amendment to Bye-law 40(13) provides that the price the Company
would hereafter pay for its shares would be the fair value per share as
determined by the Board of Directors in good faith from time to time using
such criteria as it deems appropriate in the circumstances. See Exhibit "B".
Reasons for the Amendment
Although the book value method has worked well since OPL commenced
operations in 1984 and has been an appropriate way of determining the price of
OPL shares to date, the Board believes that the proposed change will be in the
best interests of shareowners as the Company grows and expands its business in
the future.
Book value measures the historic value of a business and is closely tied to
accounting rules and time periods. It does not take into consideration future
earnings and prospects or the value of the business as a going concern.
The more discretionary method proposed by the Board will permit it to focus
on the long term value of the Company in determining the price of the stock
and to minimize short term fluctuations in book value. Such fluctuations could
result in many ways. For example:
. The Company's investment portfolio, which amounted to $2,621,927 (or 52%
of assets) at June 30, 1999, is invested in publicly traded securities
that are subject to the high level of volatility that has prevailed in
the public markets in recent years. A major market correction could
result in a significant reduction in book value and stock price.
. As the Company's reinsurance business has grown in today's highly
competitive market, the Company has been required to assume more
significant risks as part of its book of business. While these risks
provide attractive returns over the long term and meet the Company's
underwriting guidelines, they have added another element of volatility to
the Company's financial results. The occurrence of an unusual number of
losses in a short time frame could result in a temporary or longer-term
reduction in book value and stock price.
Initial Stock Price Determination
If the proposed Bye-law amendment is approved by shareowners at the Annual
Meeting in October, the Board intends to set an initial stock price at its
meeting in November. In setting the initial and subsequent stock prices, the
Board may consider a variety of factors including past and current earnings
and cash flow, the present value of discounted projected future earnings and
cash flow, the stock price, earnings and book value of comparable companies,
industry considerations, liquidity, debt-to-equity ratios, industry multiples
and supply and demand for OPL shares. Currently, the Board expects to
determine the fair value per share twice annually.
The Board may engage an investment banking or financial advisory firm with
recognized expertise in insurance company valuations to advise the Board
concerning the methodology to be used by the Board in setting the initial and
subsequent stock prices and may from time to time obtain advice on a range of
fair values from one or more such firms.
Relationship of Fair Value to Book Value
While the Board believes that the proposed amendment will enable the Board
to better price the Company's stock over the long term, the Board does not
anticipate a significant change in the stock price in the short term because
most
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<PAGE>
comparable property and casualty reinsurers are not currently valued at
significant premiums over book value and are trading at low multiples to
earnings. In part, this is because of the current market conditions in
property and casualty reinsurance where depressed rates and intense
competition prevail in many lines of business.
In summary, the Board of Directors believes that the proposed amendment will
enable the Board to better price OPL stock over the long term and to minimize
short term fluctuations. The Board of Directors recommends shareowners vote
FOR the proposed amendment. Approval of the amendment requires the affirmative
vote of 80% of outstanding shares.
APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board recommends, for appointment by the shareowners, Deloitte & Touche,
Chartered Accountants, as independent auditors, to audit the consolidated
financial statements of OPL for the year ending December 31, 1999 and to
prepare a report on such audit. A representative of Deloitte & Touche will not
be present at the Annual Meeting, but officers of OPL will be available to
respond to appropriate questions by shareowners.
VOTING REQUIREMENTS
OPL's Bye-laws require that at any Annual Meeting of Shareowners, two
shareowners present in person and representing in person or by proxy in excess
of 50% of the outstanding voting shares of Common Stock will constitute a
quorum for the Meeting. The Bye-laws further provide that any question brought
before the Meeting will be decided on a simple majority of the votes cast,
unless otherwise provided by The Companies Act of 1981 of Bermuda.
The election of Directors and the appointment of auditors will be decided by
a simple majority of 50% plus one of the votes cast. Approval of the Bye-law
amendment requires the affirmative vote of 80% of outstanding shares. A vote
withheld in the election of directors will be counted as a vote against a
nominee. An abstention will have no effect on the outcome of the voting in
respect of the election of directors or appointment of auditors, but will have
the effect of a vote against the Bye-law amendment.
OTHER BUSINESS
The Board is not aware of any business other than the election of Directors,
the amendment to the Bye-laws and the appointment of auditors to be presented
for action at the Meeting. However, should any other matters requiring a vote
of the shareowners arise, the proxies named in the accompanying proxy or
Letter of Instruction, as the case may be, will vote in accordance with their
own best judgment.
SHAREOWNER PROPOSALS
In order for proposals of shareowners to be considered for inclusion in the
proxy materials for the 2000 Annual Meeting, such proposals must be received
by the Secretary of OPL not later than January 15, 2000.
Notice of a proposal which a shareowner wishes to raise at the 2000 Annual
Meeting but does not wish to have included in OPL's proxy materials for that
meeting must be received by the Secretary of the Company not more than
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<PAGE>
60 days and not less than 30 days in advance of the 2000 Annual Meeting in
order to be considered timely under the Company's Bye-laws. However, in the
event less than 40 days' notice or prior public disclosure of the date of the
2000 Annual Meeting is given to shareowners, notice of a proposal by a
shareowner, to be timely, must be received not later than the close of
business on the tenth day following the date that notice of the 2000 Annual
Meeting was mailed or such public disclosure was made, whichever occurs first.
ANNUAL REPORT ON FORM 10-K
A copy of OPL's 1998 Annual Report on Form 10-K, including financial
statements and schedules thereto, as filed with the Securities and Exchange
Commission, may be obtained without charge upon written request to: Thomas E.
Butler, Secretary, Overseas Partners Ltd., Mintflower Place, 8 Par-la-Ville
Road, Hamilton HM GX, Bermuda.
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<PAGE>
EXHIBIT A
BYE-LAWS 40, 40A AND 40B
TRANSFER OF SHARES
40. The instrument of transfer shall be in the form or as near thereto as
circumstances permit of Form "A" in the Schedule hereto. The transferor shall
be deemed to remain the holder of each share until the same has been
transferred to the transferee in the Register of Members. The following
conditions shall apply to the transfer of shares:
(1) No shares in the Company entitled to vote generally in the election
of directors ("voting shares"), or an interest in said shares, shall be
transferred to any person, firm or corporation, unless said shares shall
have been offered for sale, as provided in this Bye-law, to the Company, or
any corporation or corporations which shall succeed the Company by way of
consolidation, merger, reorganisation or otherwise. (For exceptions
relating to bona fide gifts, inheritance and certain other transfers see
paragraph (8)).
(2) A Member who in good faith desires to transfer to a transferee, other
than the Company, all or any of his voting shares in the Company shall
deliver to the treasurer of the Company at its principal place of business
as designated by the Company, written notice of his intention to make such
transfer, stating the number of voting shares to be transferred, the name
and address of the proposed transferee and the price and terms upon which
such shares will be transferred. Such notice shall also bear a statement
signed by the proposed transferee representing that the information therein
set forth is true and correct.
(3) For a period of thirty days after receipt of such notice of intention
by the treasurer of the Company, the Company shall have the exclusive
option to purchase all, or a part, of said voting shares at the price and
on the terms set forth in this Bye-law. The Company shall exercise its
option to purchase any such voting shares by mailing, registered or
certified mail, postage prepaid, prior to the expiration of the thirty-day
period, to the Member at his last known address, written notice by the
Company, signed by the treasurer or an assistant treasurer of the Company
of the decision by the Company to exercise its option. The Company shall be
free to transfer shares of the Company without compliance with this Bye-
law, but any transferee shall transfer shares so obtained from the Company
only in accordance with this Bye-law.
(4) If the Company shall fail to exercise its option as set forth above
with respect to all voting shares set forth in the Member's notice of
intention, or if the Company shall by a writing, signed by its treasurer or
assistant treasurer, elect either not to exercise such option or to waive
such option prior to receipt of formal notice of a proposed transfer, then
the Member may, within a period of twenty days after either the expiration
of the thirty-day period of the Company option or the execution of written
election or waiver by the treasurer or assistant treasurer of the Company,
as the case may be, sell pursuant to the notice of intention given by him
or the written waiver, as the case may be, all, but not a part, of the
shares, therein described which the Company elected not to purchase
pursuant to its option as above set forth, for the price and on the terms
therein described.
(5) If the Company fails to exercise, elects not to exercise, or waives
its options hereunder with respect to all voting shares set forth in the
Member's notice of intention, and the transfer of any such shares as
proposed is made within such twenty-day period provided for such transfer,
the transferee shall thereafter hold said shares subject to all the
restrictions herein provided. If the Company fails to exercise, elects not
to exercise, or waives its option hereunder with respect to all voting
shares set forth in the Member's notice of intention, and the proposed
transfer of any such shares is not made within said twenty-day period
provided for such transfer, no
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future proposed transfer by the Member, whether to the same or to a
different proposed transferee or whether on the same or different terms,
may be made until and unless the procedure hereinabove set forth has been
again followed.
(6) The closing of any purchase by the Company pursuant to this Bye-law
shall take place at the principal place of business of the Company, at a
time agreed upon by the parties but no later than thirty days from the date
notice of the Company's intention to purchase is mailed to the Member. If
the Member fails to deliver the certificates or other evidence of the
Member's interest therein at the time of the closing of such sale, the
Company may deposit the purchase price in any bank or trust company in a
special account with instructions to pay the same to such Member upon
receipt of the certificates for the Company's voting shares duly endorsed.
From and after the date of such deposit, all rights and interest of such
Member, and all persons claiming by, through and under him, in and to such
shares shall cease, and he shall have no further rights or interest with
respect to such shares other than to receive the purchase price without
interest; and, if the Company shall record the transfer of such shares to
the Company, it shall cancel the Member's certificate or certificates on
its books.
(7) (a) Voting shares of the Company distributed by UPS as dividends upon
the Capital Stock of UPS, which shares of Capital Stock of UPS are or were
held in the UPS Managers Stock Trust ("Trust") for the account of a member
of such Trust, shall be subject to purchase by the Company, at the
Company's option, upon the termination, by death or otherwise, of the
Member's employment with Overseas, UPS or any of their respective
subsidiaries, or upon the termination of the Trust. If the Member
beneficially owns less than 500 shares of the Capital Stock of UPS in the
Trust, then for a period of three years from termination of the Member's
employment the Company shall have the right to purchase all or part of the
voting shares of the Company described in this subparagraph (a) held by
such Member. If the Member beneficially owns 500 or more shares of UPS
Capital Stock in the Trust, then for a period of Thirteen years from the
termination of the Member's employment the Company shall have the right to
purchase a cumulative annual maximum of ten percent of the voting shares of
the Company described in this subparagraph (a) held by such Member. All
heirs, legatees and personal representatives who receive such shares of the
Company distributed as dividends as described in this subparagraph (a)
shall hold such shares subject to this subparagraph (a). If the Trust
terminates the Company shall have the right to purchase voting shares of
the Company described in this subparagraph (a) in accordance with
subparagraph (b) below.
(b) Voting shares of the Company distributed by UPS as dividends upon the
Capital Stock of UPS, which shares of Capital Stock of UPS are or were held
pursuant to the UPS Managers Stock Plan, shall be subject to purchase by
the Company when the Member serves notice of his desire to terminate the
option which allows UPS to purchase UPS Capital Stock distributed under UPS
Managers Stock Plan and held by such Member. The Company shall have the
exclusive option to purchase voting shares of this Company within sixty
days from receipt of such notice.
If the Member does not serve notice on the Company, then for three years
after the termination of such Member's employment the Company shall have
the option to purchase any or all of the voting shares of the Company
described in this subparagraph (b). If a Member transfers voting shares of
the Company described in this subparagraph (b) to anyone other than the
Company, then the transferee of such Member shall hold such shares of the
Company subject to this subparagraph (b).
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(c) Voting shares of the Company distributed as dividends upon the
Capital Stock of UPS, which shares of Capital Stock of UPS are held
pursuant to the UPS Stock Plan, shall be subject to purchase by the Company
whenever the Member requests the Company to purchase such voting shares of
the Company. If the Member requests such purchase by the Company then the
Company is obligated to purchase annually ten percent of the voting shares
of the Company held by the Member until all of such shares are purchased by
the Company or the Member transfers such shares to a third party. If the
Member transfers such shares of the Company to a third party, the Company
shall have the option at any time to purchase any or all of the shares so
transferred for one year after the transfer.
(d) Voting shares of the Company distributed by UPS as dividends upon the
Capital Stock of UPS, which shares of Capital Stock of UPS are or were held
by the UPS Thrift Plan Trust or the UPS Retirement Trust, shall be subject
to purchase by the Company, at the Company's option, at any time within
three years of the transfer of the Company shares or voting shares of the
Company by the trustee of the UPS Thrift Plan Trust or the trustee of the
UPS Retirement Trust.
(e) Voting shares of the Company distributed by UPS as dividends upon the
Capital Stock of UPS, which shares of Capital Stock of UPS were issued
pursuant to any of the Agreements and Plans of Reorganisation dated as of
December 4, 1979, between UPS on the one hand, and Parmac Corporation,
Nuparmac Corporation or Parco Managers Corporation, on the other, or as the
result of any stock dividend, stock split, recapitalisation or other
similar event in respect of shares of the Company's Capital Stock shall be
subject to purchase by the Company, at the Company's option, at any time
after January 10, 1985, upon the Company giving the Member ninety days
prior notice of the Company's intent to purchase such shares. Any
transferee who receives voting shares of the Company described in this
subparagraph (e) shall hold such shares subject to this subparagraph (e).
(f) Voting shares of the Company distributed by UPS as dividends upon the
Book Value Shares issued pursuant to the 1981 Stock Option Plan shall be
subject to purchase by the Company, at the Company's option, at any time in
accordance with the provisions of subparagraph (a) of this paragraph (7).
(g) Voting shares of the Company issued as incentive awards to employees
of the Company or UPS, or any of their respective subsidiaries shall be
subject to purchase by the Company in the same manner and at the same times
as such shares would be subject to purchase if they had been issued as
dividends upon the Capital Stock of UPS held in the Trust pursuant to
subparagraph (a) of this paragraph (7).
(h) If a Member executes an Option Extension Agreement under the UPS
Managers Stock Trust or the UPS Managers Stock Plan then the Company shall
retain the right to purchase voting shares of the Company, held by such
Member, in accordance with subparagraphs (a) and (b), except that the
longer period of time stipulated in the duly executed Option Extension
Agreement shall apply.
(8) A transfer of voting shares, or interest therein, by way of a bona
fide gift or by way of inheritance, and a transfer of voting shares by the
Trustee of the UPS Managers Stock Trust to the member of such Trust for
whose account the Trustee has received such shares, shall not require a
prior offering to the Company as herein provided, but the donee, legatee,
or other recipient thereof shall hold such shares subject to the
restrictions provided in this Bye-law. A transfer of voting shares, or
interest therein, by operation of law, which includes, but is not limited
to, bankruptcy and descent or distribution, shall not require a prior
offering to the Company as provided in this Bye-law, but the trustee, heir
or other recipient thereof shall hold said shares subject to the
restrictions provided in this Bye-law. A transfer of a security interest in
voting shares of the Company, whether by lien, pledge,
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mortgage, deposit or otherwise shall not require a prior offering to the
Company, but no purchaser at any sale, private or judicial, upon
foreclosure or execution shall become the owner of said shares or have said
shares registered in his name until he shall have first offered said shares
to the Company for purchase in accordance with this Bye-law.
(9) The restrictions upon the sale or transfer of voting shares of the
Company provided in this Bye-law shall apply to all voting shares in the
hands of all holders or owners, whether original Members or subsequent
purchasers or transferees, and whether acquired through the voluntary or
involuntary act of a Member or by operation of law, and whether part of the
first authorised issue or by any subsequent or increased issue.
(10) Any transfer in violation of this Bye-law shall be null and void and
of no force or effect whatsoever. No voting shares of the Company shall be
transferred on the books of the Company until the Member intending such
transfer shall have complied with the provisions of this Bye-law.
(11) A legend referring to the provisions of this Bye-law shall be
printed, stamped, written or endorsed upon each and every share certificate
issued after the effective date of this revised Bye-law 40(11) by the
Company. Such legend shall read as follows:
"The sale or other transfer of shares of the Company, or any interest
therein, as represented by this certificate, whether voluntary or
involuntary or by operation of law, is subject to a right to purchase by
the Company as more fully provided for in the Bye-laws of the Company.
The holder of this certificate is hereby put on notice that any transfer
or sale of the shares represented by this certificate in violation of
said right of purchase will be null and void and of no force or effect
whatsoever. Copies of the Bye-laws of the Company are available for
inspection during business hours at the Company's principal place of
business."
Any legend referring to the right of UPS to purchase the shares of the
Company, or any interest therein, appearing on share certificates issued
prior to the effective date of this revised Bye-law 40(11) shall be deemed,
from and after the effective date of this revised Bye-law 40(11), to refer
to the right of the Company to purchase the shares represented by such
share certificate pursuant to the provisions of this revised Bye-law 40.
(12) In addition to the legend described in paragraph (11) hereof, a
legend specifically referring to the provisions of paragraph (7) hereof
shall be printed, stamped, written or endorsed upon each and every share
certificate issued by the Company. Such legend shall read as follows:
"In addition to the right of purchase in connection with the sale or
transfer of the shares of the Company or any interest therein stated
above, the Company has the right to purchase the shares of the Company
represented by this certificate in certain circumstances. Any transferee
of these shares shall hold them subject to such rights. Copies of the
Bye-laws of the Company are available for inspection during business
hours at the Company's principal place of business."
Any legend referring to the right of UPS to purchase the shares of the
Company, or any interest therein, appearing on share certificates issued
prior to the effective date of this revised Bye-law 40(12) shall be deemed,
from and after the effective date of this revised Bye-law 40(12) to refer
to the right of the Company to purchase the shares represented by such
share certificate pursuant to the provisions of this revised Bye-law 40.
(13) The purchase price per share to be paid by the Company upon the
exercise of the options provided by this Bye-law shall be the net book
value of each such share as determined from the Company's most recent
audited balance sheet as reported in its annual report to Members and
mailed to its Members or otherwise
A-4
<PAGE>
generally made available as of the date of the closing of such sale, or, if
purchased by the Company pursuant to the right described in paragraph (3)
of this Bye-law, the lesser of: (a) such net book value of such share; or
(b) the price at which such shares are proposed to be sold as set forth in
paragraph (2) of this Bye-law 40. Net book value shall be determined in
accordance with generally accepted accounting principles as applied in the
United States of America. The aforementioned purchase price shall be paid
in United States dollars.
(14) Notwithstanding anything contained in the Bye-laws to the contrary,
any amendment to or deletion of this Bye-law 40 shall require the
affirmative vote of the holders of at least 80% of the voting power of all
outstanding shares of stock of the Company entitled to vote generally in
the election of Directors.
40A. Voting shares of the Company subscribed for (on or after the effective
date of these Amended and Restated Bye-laws) by a Member pursuant to stock
purchase plans maintained by the Company or UPS from time to time, and any
voting shares distributed by UPS or the Company as dividends on such shares or
in stock splits or reclassifications of the Company's voting shares and any
other securities or property delivered as a distribution on the Company's
voting shares (all of which are referred to collectively as "Resulting
Securities") shall be subject to purchase by the Company following the
retirement, death or other termination of employment of the Member with
Overseas, UPS or any of their respective Subsidiaries. If at the time of the
Member's retirement, death or other termination of employment with Overseas,
UPS or any of their respective Subsidiaries, the Member beneficially owns less
than 500 shares of the Capital Stock of UPS, then the Company may exercise its
right to repurchase all or a portion of the Company's voting shares and any
Resulting Securities at any time within a period of three years following such
termination. If at the time of the Member's retirement, death or other
termination of employment with Overseas, UPS or any of their respective
Subsidiaries, the Member beneficially owns 500 or more shares of the Capital
Stock of UPS, then for a period of thirteen years from such termination the
Company may exercise its right to repurchase a cumulative annual amount of ten
percent of the Company's voting shares and any Resulting Securities. The
purchase price per share to be paid by the Company upon the exercise of the
foregoing right to purchase shall be that provided in Bye-law 40(13) hereof.
Any transferee of the Company's voting shares and any Resulting Securities
including, without limitation, purchasers, donees, heirs, legatees and
personal representatives and any subsequent transferee thereof, will acquire
and hold such voting shares and Resulting Securities subject to the rights of
the Company described in this Bye-law 40A.
Notwithstanding anything contained in these Bye-laws to the contrary, any
amendment to or deletion of this Bye-law 40A shall require the affirmative
vote of the holders of at least 80% of the voting power of all outstanding
shares of stock of the Company entitled to vote generally in the election of
Directors.
40B. Any and all shares of the Company distributed on or after the effective
date of these Amended and Restated Bye-laws that for any reason are not
subject to the provisions of Bye-law 40 or Bye-law 40A shall be subject to
purchase by the Company, at the Company's option, following the retirement,
death or other termination of the Member's employment with Overseas, UPS, or
any of their respective subsidiaries. If, at the time of the Member's
retirement, death or other termination of employment with the Company, UPS, or
any of their respective subsidiaries, the Member beneficially owns less than
500 shares of the Capital Stock of the Company then for a period of three
years from such termination of the Member's employment the Company shall have
the right to purchase all or part of such voting shares of the Company held by
such Member. If, at the time of the Member's retirement, death or other
termination of employment with the Company, UPS, or any of their respective
subsidiaries, the Member beneficially
A-5
<PAGE>
owns 500 or more shares of the Capital Stock of the Company then for a period
of thirteen years from such termination of the Member's employment the Company
shall have the right to purchase a cumulative annual maximum of ten percent of
the voting shares of the Company held by such member. The purchase price per
share to be paid by the Company upon the exercise of the foregoing right to
purchase shall be that provided in Bye-law 40(13) hereof.
Any transferee of the Company's voting shares including, without limitation,
purchasers, donees, heirs, legatees and personal representatives and any
subsequent transferee thereof, will acquire and hold such voting shares and
Resulting Securities (as defined in Bye-law 40A) subject to the rights of the
Company described in this Bye-law.
Notwithstanding anything contained in the Bye-laws to the contrary, any
amendment to or deletion of this Bye-law 40B shall require the affirmative
vote of the holders of at least 80% of the voting power of all outstanding
shares of stock of the Company entitled to vote generally in the election of
Directors.
Bye-law 40, Bye-law 40A and Bye-law 40B set forth herein shall become
effective on August 7, 1996 (the "Effective Date") and shall apply to all of
the voting shares of the Company issued and outstanding on such Effective Date
and to any and all voting shares of the Company thereafter issued. If for any
reason the amendments to Bye-law 40 made as of such Effective Date, or the
additional provisions of Bye-law 40A and Bye-law 40B shall be determined by a
final judicial decree to be invalid or unenforceable, then the provisions of
Bye-law 40 as in effect immediately prior to the Effective Date shall be
deemed to have been continued in full force and effect from and after the
Effective Date with respect to all voting shares of the Company issued prior
to, on or after the Effective Date.
A-6
<PAGE>
EXHIBIT B
PROPOSED BYE-LAW 40(13)
TRANSFER OF SHARES
(40)
Bye-law 40
(13) The purchase price per share to be paid by the Company upon the exercise
of the options provided by this Bye-law shall be the fair value per share as
determined by the Board of Directors in good faith from time to time using
such criteria as it deems appropriate in the circumstances. If purchased by
the Company pursuant to the right described in paragraph (3) of this Bye-law,
the purchase price shall be the lesser of (a) the price determined by the
Board of Directors, or (b) the price at which such shares are proposed to be
sold as set forth in paragraph (2) of this Bye-law 40.
B-1
<PAGE>
{LOGO}
OVERSEAS PARTNERS LTD.
This Proxy is Solicited on Behalf of the Board of Directors
Proxy for Annual Meeting of Shareowners -- October 20, 1999
The undersigned hereby appoints D. Scott Davis, Robert J. Clanin and Edwin H.
Reitman, or any of them, with power of substitution, as attorneys and proxies
to vote all of the shares of stock standing in the name of the undersigned as
of August 31, 1999 at the Annual Meeting of Shareowners of OVERSEAS PARTNERS
LTD (OPL or the Company), to be held at the Company's offices in Hamilton,
Bermuda, on October 20, 1999 at 9:00 A.M., and at any or all adjournments
thereof, the undersigned hereby instructs and authorizes said attorneys to
vote:
1. ELECTION OF DIRECTORS:
FOR ALL NOMINEES LISTED BELOW [_]
WITHHOLD AUTHORITY [_]
(except as marked to the contrary below)
to vote for all nominees listed
below
Robert J. Clanin, D. Scott Davis, Joseph M. Pyne, Cyril E. Rance, Edwin H.
Reitman and Walter A. Scott
INSTRUCTION: to withhold authority to vote for any individual nominee, write
that nominee's name in the space provided below.
- --------------------------------------------------------------------------------
2. FOR [_] AGAINST [_] ABSTAIN [_]
Bye-Law amendment pertaining to the purchase price
to be paid by the Company for its shares.
3. FOR [_] AGAINST [_] ABSTAIN [_]
Appointment of Deloitte & Touche, Chartered
Accountants, as auditors for OPL for the year ended
December 31, 1999.
4. In their discretion upon such other matters as may properly come before the
meeting or any adjournment thereof.
This proxy when properly executed
will be voted in the manner
directed herein by the undersigned
shareowner. If no direction is
made, this proxy will be voted FOR
the Election of Directors and FOR
Proposals 2, 3 and 4.
Dated this day of
, 1999.
___________________________________
SIGNATURE (sign exactly as name
appears hereon)
___________________________________
SIGNATURE OF CO-OWNER IF ANY
For joint accounts, all co-owners
must sign. Executors,
administrators, trustees, etc.
should so indicate when signing.
<PAGE>
- -------------------------------------------------------------------------------
s FOLD AND DETACH HERE s
Letter of Instruction to Execute Proxy for Annual Meeting of Shareowners -
October 20, 1999
OVERSEAS PARTNERS LTD.
This Letter of Instruction is Solicited on Behalf of the Board of Directors
Attn: MR. THOMAS A. O'CONNELL, Vice President
FIRST UNION NATIONAL BANK
Corporate Trust Operations
P.O. Box 41784
Philadelphia, PA 19101-1784
Dear Sir or Madam:
In connection with the annual meeting of shareowners of OVERSEAS PARTNERS
LTD. (OPL or the Company), to be held at the Company's offices in Hamilton,
Bermuda, on October 20, 1999 at 9:00 A.M., and at any or all adjournments
thereof, you are hereby instructed and directed to deliver a proxy to D. Scott
Davis, Robert J. Clanin and Edwin H. Reitman, or any of them, with power of
substitution, instructing and authorizing them to vote all shares which you
are holding in custody for the undersigned as of August 31, 1999.
<TABLE>
<CAPTION>
<S> <C> <C>
1. ELECTION OF DIRECTORS: FOR ALL NOMINEES LISTED BELOW [_] WITHHOLDING AUTHORITY [_]
(except as marked to the contrary below) to vote for all nominees listed below
Robert J. Clanin, D. Scott Davis, Joseph M. Pyne, Cyril E. Rance, Edwin H. Reitman and Walter A. Scott
INSTRUCTION: To withhold authority to vote for any individual nominees, write that nominee's name in the space provided below.
- -------------------------------------------------------------------------------
2. FOR [_] AGAINST [_] ABSTAIN [_] Bye-law amendment pertaining to the price to be paid by the Company for its shares.
3. FOR [_] AGAINST [_] ABSTAIN [_] Appointment of Deloitte & Touche, Chartered Accountants, as auditors for OPL for the year
ended December 31, 1999.
4. In their discretion upon such other matters as may properly come before the meeting or any adjournment thereof.
</TABLE>
The shares of OPL to which this Letter of Instruction relates shall be voted in
the manner directed herein by the undersigned when this Letter has been properly
executed. If no direction is made, such shares will be voted FOR the Election of
Directors and FOR Proposals 2, 3 and 4.
Dated this day of , 1999.
- ------------------------------------- ----------------------------------------
SIGNATURE (sign exactly as name SIGNATURE OF CO-OWNER IF ANY
appears hereon) For joint accounts, all co-owners must
sign. Executors, administrators,
trustees, etc. should so indicate when
signing.
<PAGE>
[LOGO OF OVERSEAS PARTNERS LTD. APPEARS HERE]
- --------------------------------------------------------------------------------
<PAGE>
P.O. Box 41784
Philadelphia, PA 19101-1784
FIRST UNION NATIONAL BANK
September 10, 1999
To: Shareowners of Overseas Partners Ltd.
Whose Shares are Held in Custody by
First Union National Bank:
We have been advised that the Annual Meeting of Shareowners of Overseas
Partners Ltd. (OPL or the Company) will be held at the Company's offices in
Hamilton, Bermuda on October 20, 1999 at 9:00 A.M. A copy of the notice of the
meeting and proxy statement are enclosed.
Under the arrangements pursuant to which we hold shares of OPL in custody,
we are to notify you of the time and place of the meeting and offer to furnish
you, and furnish if requested, a proxy permitting you to vote at the meeting
the number of shares of Common Stock of OPL held by us for you as of August
31, 1999. If you want such a proxy, we must receive your request prior to
October 13, 1999.
If you do not request a proxy, you may direct us to vote your stock by
dating, signing and returning the enclosed Letter of Instruction in the
enclosed addressed envelope, which requires no postage if mailed from within
the United States. Your shares will be voted in accordance with your Letter of
Instruction if it is received prior to October 13, 1999.
Shares for which we do not receive a timely request for a proxy or a Letter
of Instruction will be voted by us for the election of the directors, for the
Bye-law amendment and to appoint auditors.
Very truly yours,
FIRST UNION NATIONAL BANK
