Notice of the Annual Meeting of Shareholders
To be held May 12, 1995
To the Shareholders of
OLD REPUBLIC INTERNATIONAL CORPORATION
NOTICE IS HEREBY GIVEN that the Annual Meeting of the Shareholders of OLD
REPUBLIC INTERNATIONAL CORPORATION will be held in Room 2300 at the offices of
the Company, 307 North Michigan Avenue, Chicago, Illinois 60601, on Friday,
May 12, 1995 at 3:00 P.M. Central Daylight Savings Time, for the purpose of
considering and acting upon the following matters:
1. To elect four Class 2 directors; and
2. To transact such other business as may properly come before the meeting.
Shareholders of record at the close of business on March 21, 1995 will be
entitled to vote, either in person or by proxy. Shareholders who do not expect
to attend in person are urged to execute and return the accompanying proxy in
the envelope enclosed.
The annual report of the Company for the year 1994 is being mailed to all
shareholders of record with this Notice and the Proxy Statement.
By order of the Board of Directors.
SPENCER LEROY III
Secretary
Chicago, Illinois
March 31, 1995
Proxy Statement
OLD REPUBLIC INTERNATIONAL CORPORATION
ANNUAL MEETING OF SHAREHOLDERS
May 12, 1995
GENERAL INFORMATION
This proxy statement is being furnished to the shareholders of Old Republic
International Corporation, a Delaware corporation (the "Company"), 307 North
Michigan Avenue, Chicago Illinois 60601, in connection with the solicitation of
proxies by its Board of Directors for use at the annual meeting of shareholders
to be held on May 12, 1995 and any adjournments thereof. The approximate date
on which this proxy statement and the accompanying proxy are first being sent
to the shareholders is March 31, 1995.
The proxy is revocable at any time before it is voted by written notification
to the persons named therein as proxies, which may be mailed or delivered to
the Company at the above address. All shares represented by effective proxies
will be voted at the meeting and at any adjournments thereof.
If the enclosed proxy is properly executed and returned in time for voting with
a choice specified thereon, the shares represented thereby will be voted as
indicated thereon. If no specification is made, the proxy will be voted by the
proxy committee for the election as directors of the nominees named below (or
substitutes therefor if any nominees are unable or refuse to serve), and in its
discretion upon such matters not presently known or determined which may
properly come before the meeting.
The Company has two classes of stock outstanding, Preferred Stock, $.01 par
value per share ("Preferred Stock"), and Common Stock, $1.00 par value per
share ("Common Stock"). The voting Preferred Stock is composed of Series B
Cumulative Convertible Preferred Stock ("Series B Preferred Stock"), Series D
Cumulative Convertible Preferred Stock ("Series D Preferred Stock"), Series E
Cumulative Convertible Preferred Stock ("Series E Preferred Stock"), and Series
G Convertible Preferred Stock and Series G-2 Convertible Preferred Stock
(collectively "Series G Preferred Stock"). On February 28, 1995, 386,075 shares
of Series B Preferred Stock, 22,874,402 shares of Series D Preferred Stock,
102,026 shares of Series E Preferred Stock, 72,852 shares of Series G Preferred
Stock and 56,101,719 shares of Common Stock were outstanding and entitled to
one vote each on all matters considered at the meeting. Shareholders of record
as of the close of business on March 21, 1995 are entitled to notice of and to
vote at the meeting. On February 28, 1995, the Company also had outstanding
2,192,100 shares of 8-3/4% Series H Cumulative Preferred Stock ("Series H
Preferred Stock") which is not entitled to vote at the meeting. There are no
cumulative voting rights with respect to the election of directors.
PRINCIPAL HOLDERS OF SECURITIES
The following tabulation shows with respect to (i) each person who is known to
be the beneficial owner of more than 5% of any series of the voting Preferred
Stock or the Common Stock of the Company; (ii) each director and executive
officer of the Company; and (iii) all directors and executive officers, as a
group: (a) the total number of shares of Preferred Stock or Common Stock
beneficially owned as of February 28, 1995 and (b) the percent of the class of
stock so owned as of the same date:
<TABLE>
Amount and
Nature of Percent
Name Beneficial of
Title of Class Of Beneficial Owner Ownership Class(*)
<S> <S> <C> <C>
Series B Preferred .......Inter West Assurance Company, Ltd. 386,075 <F1> 100
P.O. Box HM 1022
Hamilton HM DX, Bermuda
Series D Preferred .......Old Republic International Corporation 22,256,682 <F2> 97.3
Employees Savings and Stock
Ownership Plan
Messrs. Sursa, Stover and Zucaro
as members of The Administration
Committee
307 North Michigan Avenue
Chicago, Illinois 60601
Paul D. Adams 13,988 <F3> 0.1
Anthony F. Colao 21,687 <F3> 0.1
Jimmy A. Dew 49,613 <F3> 0.2
Peter Lardner 12,005 <F3> 0.1
Spencer LeRoy III 2,317 <F3> **
William A. Simpson 51,070 <F3> 0.2
A. C. Zucaro 269,869 <F3> 1.2
All executive officers and directors,
as a group 420,549 <F3> 1.8
Series G Preferred........John C. Collopy 3,242 <F4> 4.5
Peter Lardner 10,324 <F4> 14.2
William R. Stover 33,974 <F4> 46.6
A. C. Zucaro 14,006 <F4> 19.2
All executive officers and directors,
as a group 61,546 <F4> 84.5
Series H Preferred........Anthony F. Colao 300 **
William R. Stover 8,000 0.3
A. C. Zucaro 800 **
All executive officers and directors,
as a group 9,100 0.4
Common Stock
Shareholders' beneficial
ownership of more than 5%
of the Common Stock
(excluding directors).....Old Republic International Corporation 4,930,785 <F2> 8.1
Employees Savings and Stock
Ownership Plan
Messrs. Sursa, Stover and Zucaro
as members of The Administration
Committee
307 North Michigan Avenue
Chicago, Illinois 60601
American Business & Mercantile 4,493,640 <F5> 8.0
Insurance Group, lnc.
307 North Michigan Avenue
Chicago, Illinois 60601
Heine Securities Corporation 3,117,530 <F6> 5.6
Michael F. Price, President
51 J.F.K. Parkway
Short HIlls, New Jersey 07078
</TABLE>
<TABLE>
Other Shares Percent
Name of Shares Subject to Shares Held by Beneficially of
Title of Class Beneficial Owner Stock Options<F19> Employee Plans<F19> Owned<F19> Total Class<F19>
<S> <S> <C> <C> <C> <C> <C>
Directors' and Paul D. Adams 28,652 497 <F3> 19,650 48,799 0.1
executive officers' Anthony F. Colao 70,390 1,679 <F3> 6,238 78,307 0.1
beneficial John C. Collopy -- -- 60,785 <F7> 60,785 0.1
ownership Jimmy A. Dew 24,874 973 <F3> 133,270 <F8) 159,117 0.3
Kurt W. Kreyling -- -- 159,712 <F9> 159,712 0.3
Peter Lardner 20,398 8,012 <F3> 73,638 <F10> 102,048 0.2
Wilbur S. Legg -- -- 21,552 <F11> 21,552 <F20>
Spencer LeRoy III 10,000 45 <F3> 4,038 <F12> 14,083 <F20>
John W. Popp -- -- 2,000 2,000 <F20>
William A. Simpson 25,624 1,002 <F3> 101,600 <F13> 128,226 0.2
Arnold L. Steiner -- -- 456,098 <F14> 456,098 0.8
William R. Stover -- -- 285,773 <F15><F16> 285,773 0.5
David Sursa -- -- 262,188 <F16><F17> 262,188 0.5
William G. White, Jr. -- -- 20,111 20,111 <F20>
A. C. Zucaro 97,206 16,808 <F3> 190,349 <F16><F18> 304,363 0.5
All executive
officers and
directors,
as a group 277,144 29,016 <F4> 1,797,002 2,103,162 3.8
<FN>
<F19> Calculated pursuant to Rule 13d-3(d) of the Securities Exchange Act of 1934. Unless otherwise stated below, each such
person has sole voting and investment power with respect to all such shares. Under Rule 13d-3(d), shares not outstanding
which are subject to options, warrants, rights or conversion privileges exercisable within 60 days are deemed outstanding
for the purpose of calculating the number and percentage owned by such person, but are not deemed outstanding for the
purpose of calculating the percentage owned by each other person listed. Common shares used for calculation purposes include
4,493,640 shares held by American Business & Mercantile Insurance Group, Inc. and its subsidiary (See Note 4), and
equivalent common shares to be issued upon conversion of all series of Preferred Stock convertible within 60 days.
<F20> Less than one-tenth of one percent.
<F1>Inter West Assurance Company, Ltd. ("Inter West") is wholly owned by Ridgefield International Corporation ("Ridgefield"),
an insurance holding company in which the Company, through a subsidiary, owns none of the Company's voting securities but
99.4% of the total voting and non-voting stock of Ridgefield. All of Ridgefield's voting stock is owned by a subsidiary
of American Business & Mercantile Insurance Mutual, Inc. (See Note 4). Mr. Zucaro is a director of Inter West and
Ridgefield. Inter West also owns 424,683 shares of Series D Preferred Stock and 48,594 shares of Common Stock of the
Company.
<F2>22,256,682 shares of Series D Preferred Stock and 479,449 shares of Common Stock are held by the Old Republic Inter
national Corporation Employees Savings and Stock Ownership Plan. Under the terms of the Plan, a participant is entitled to
vote the Company stock held by the Plan the value of which has been allocated to the participant's account. The
Administration Committee appointed pursuant to the Plan is authorized to vote the Company stock held by the Plan until such
time as the value of such stock has been allocated to a participant's account or where a participant fails to exercise his
or her voting rights. The value of a portion of the shares of the Series D Preferred Stock and Common Stock has been
allocated to the accounts of Plan participants. Additionally, the Administration Committee may be deemed to have investment
power with respect to stock held by the Plan. The Administration Committee is composed of Messrs. Sursa, Stover, and Zucaro,
all directors of the Company. Under the rules of the Securities and Exchange Commission, each of them may be deemed to be
the beneficial owner of such shares of Series D Preferred Stock and Common Stock by virtue of such shared voting and
investment power.
The Series D Preferred Stock held by the Old Republic International Corporation Employees Savings and Stock Ownership Plan
is convertible at any time into 4,451,336 shares of Company Common Stock. Accordingly, under the rules of the Securities
and Exchange Commission, Messrs. Sursa, Stover, and Zucaro each may be deemed to be the beneficial owners of 4,930,785
shares of Common Stock (The shares that would be obtained on the conversion of the Series D Preferred Stock plus the 479,449
shares of Common Stock actually owned by the Plan). The foregoing presentation should not be construed as an admission of
beneficial ownership, and such persons disclaim beneficial ownership of shares held by the Plan.
<F3>Includes only the shares that have been allocated to the account of the director or the executive officer as a Plan
participant. Excludes those shares for which the director may be deemed to have investment and voting power as a result of
being a member of the Administration Committee of the Plan.
<F4>Each share of Series G Preferred Stock is convertible at any time after six months from the date of issuance into 0.95
share of Common Stock, and accordingly, under the rules of the Securities and Exchange Commission, Messrs. Collopy, Lardner,
Stover and Zucaro are deemed to be the beneficial owners of 3,079, 9,807, 32,275 and 13,305 shares, respectively, of Common
Stock issuable upon conversion of their Series G Preferred Stock.
<F5>American Business & Mercantile Insurance Group, Inc. ("AB&M Group") and its wholly-owned subsidiary, American Business
& Mercantile Reassurance Company, own 4,493,640 shares of the Company's Common Stock. Voting control of AB&M Group is
divided between American Business & Mercantile Insurance Mutual, Inc. ("AB&M Mutual"), which through a subsidiary, owns 60%
of AB&M Group's voting stock, and the Company, which through a subsidiary, owns 40% of AB&M Group's voting stock. At
February 28, 1995, the Company held 98.8%, AB&M Mutual .1%, and public shareholders 1.1% of the total voting and non-voting
equity securities of AB&M Group. AB&M Mutual is a property and liability mutual insurer affiliated with the Company through
management agreements, and is owned by its policyholders. Mr. Zucaro is Chairman, President and Chief Executive Officer of
AB&M Mutual and AB&M Group. Messrs. Colao, Kreyling, Legg, Steiner, Stover, Sursa, and Zucaro are directors of AB&M
Group. Through subsidiaries, AB&M Mutual also owns 193,037 shares of Series D Preferred Stock and 48,566 shares of Common
Stock of the Company.
<F6>Reflects number of shares, adjusted for stock dividends and splits, shown in the most recent Schedule 13-G filings with
the Securities and Exchange Commission through February 28, 1995.
<F7>Includes 53,954 shares held by himself as trustee and 3,538 shares owned jointly by Mr. Collopy and his daughter and
3,079 shares that would be issued if Mr. Collopy converted his Series G Preferred Stock to Common Stock.
<F8>Includes 24,024 shares owned by Mr. Dew's wife.
<F9>Includes 158,730 shares owned by or in trust for Mr. Kreyling's wife of which Mr. Kreyling disclaims beneficial
ownership.
<F10>Includes 50,451 shares held in a living trust of which Mr. Lardner's wife is the trustee for which Mr. Lardner disclaims
beneficial ownership and 9,807 shares that would be issued if Mr. Lardner converted his Series G Preferred Stock to Common
Stock.
<F11>Includes 18,490 shares owned jointly by Mr. Legg and his wife and 1,968 shares owned by Mr. Legg's wife of which Mr.
Legg disclaims beneficial ownership.
<F12>Includes 2,188 shares held in trust for Mr. LeRoy's benefit.
<F13>Includes 11,210 shares owned by Mr. Simpson's wife.
<F14>Includes 63,032 shares owned by Mr. Steiner directly or as trustee of a grantor retained trust, 84,298 shares owned by
Mr. Steiner's wife directly or as trustee of a grantor retained trust, 217,714 shares held in a trust of which Mr. Steiner
is a co-trustee, 69,436 shares held in trust for Mr. Steiner's children and 21,618 shares held by a foundation of which Mr.
Steiner is a trustee.
<F15>Includes 74,082 shares owned jointly by Mr. Stover and his wife and 32,275 shares that would be issued if Mr. Stover
converted his Series G Preferred Stock to Common Stock.
<F16>Messrs. Sursa, Stover and Zucaro are members of the Administration Committee of the Old Republic International
Corporation Salaried Employees Restated Retirement Plan ("Retirement Plan"). As such, they are entitled to vote 163,494
shares of Common Stock owned by the Retirement Plan. Under the rules of the Securities and Exchange Commission each of them
may be deemed to be the beneficial owner of this Common Stock by virtue of such shared voting power. However, the foregoing
presentation should not be construed as an admission of beneficial ownership. The members of the Administration Committee
disclaim beneficial ownership of the Common Stock held by the Retirement Plan and these shares are not reflected in this
table as shares beneficially owned by each of them.
<F17>Includes 135,854 shares owned by E.F.S. Investments, Inc., in which Mr. Sursa and his wife have a beneficial interest.
<F18>Includes 176,654 shares owned jointly by Mr. Zucaro and his wife, 13,305 shares that would be issued if Mr. Zucaro
converted his Series G Stock to Common Stock and 390 shares if Mr. Zucaro converted his 5-3/4% Convertible Debentures to
Common Stock.
</TABLE>
Under federal securities law, the Corporations directors and executive officers
are required to report, within specified monthly and annual due dates, their
acquisitions, dispositions or other transfers of interest in such securities to
the extent reportable events occur which require reporting by such due dates.
The Corporation is required to describe in this proxy statement whether it has
knowledge that any person required to file such a report may have failed to do
so in a timely manner. In this regard, all of the Corporation's directors and
executive officers satisfied such filing requirements in full, except for John
C. Collopy who inadvertently filed one monthly report relating to one
transaction after the due date. The foregoing is based upon reports furnished
to the Corporation and written representations and information provided to the
Corporation by the persons required to make such filings.
THE BOARD OF DIRECTORS AND ITS STANDING COMMITTEES
The Company's Board of Directors has the responsibility to review the overall
operations of the Company. The Board members are kept informed of the Company's
results of operations and proposed plans and business objectives through
periodic reports sent to them by the Company's management or presented at Board
and Committee meetings. The Board met four times last year, once each quarter.
Each incumbent director attended at least 75% of the aggregate of the meetings
of the Board of Directors and Committees on which each served during 1994.
Directors' Compensation
Directors of the Company (other than full time employees) receive an annual
retainer of $9,600 plus $900 for each Board or Committee meeting they attend.
Directors of the Company or any of its subsidiaries who are full time employees
receive $900 for each meeting they attend of the Board or a Committee of the
Company (other than meetings of the Executive Committee). Mr. Collopy, who is
the retired Chairman of the Board of one of the Company's subsidiaries, has a
consulting agreement with that subsidiary whereby he is paid $74,400 per year
through 1997.
Board Committees
The Board of Directors has three principal standing committees.
The Executive Committee is empowered to exercise the authority of the Board of
Directors in the management of the business and affairs of the Company between
the meetings of the Board, except as provided in the By-laws or limited by the
provisions of the General Corporation Law of the State of Delaware. The
Committee, which is composed of Messrs. Kreyling, Legg, Stover, Steiner, Sursa
and Zucaro, met four times during 1994 and took action by unanimous written
consent on one occasion. Mr. Stover is Chairman of the Committee.
The Company has no standing nominating committee of the Board of Directors.
This function is performed by the Executive Committee of the Board of Directors
itself. The Executive Committee has not established any formal policy or
procedure for considering nominees recommended by shareholders.
The Audit Committee recommends to the Executive Committee the appointment of
the independent certified public accountants for the following year. The
Committee reviews with the accountants the scope of the Company's annual audit,
the annual financial statements of the Company, and the auditors' comments
relative to the adequacy of the Company's system of internal controls and
accounting systems. The Committee, which reports directly to the Executive
Committee, is currently composed of four non-employee directors, Messrs.
Popp, Steiner, Sursa and White. The Committee met twice during 1994.
Mr Steiner is Chairman of the Committee.
The Compensation Committee, whose Report follows, is composed of five
non-employee directors, reports directly to the Executive Committee, and is
currently composed of five directors, Messrs. Kreyling, Legg, Popp, Sursa and
White. Mr. Sursa is chairman of the Committee. The Committee met once during
1994.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
None of the members of the Compensation Committee has ever served as an officer
or employee of the Company or any of its subsidiaries nor has any executive
officer of the Company served as a director or member of a compensation
committee for any company that employs any director of the Company or member of
the Compensation Committee.
REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE MANAGEMENT COMPENSATION
The Compensation Committee of the Board of Directors (the "Committee") of Old
Republic International Corporation (the "Company") evaluates and approves the
overall compensation, policies and practices which govern the annual base
salaries of the Company's management, including its Chief Executive Officer
("CEO") and other executive officers, and the Company's incentive programs,
including the Key Employees Performance Recognition Plan ("KEPRP"), the Stock
Option Plan, and the Employees Savings and Stock Ownership Plan ("ESSOP").
The Committee reviews and evaluates the Company's corporate performance and
executive management compensation once each year. In making its evaluations,
the Committee considers a large number of factors including those set forth
under "Compensation Policies" herein, together with other matters such as the
inflation rate, and the Company's past performance, generally over consecutive
five-year time frames. The Committee does not consider such factors based upon
any scientific or other formula nor on any quantitative analysis of the
relationship among such factors. Rather, the Committee's evaluation is best
described as subjective since each Committee member is expected to exercise
common sense and reasonable business judgment in attaching varying degrees of
importance each year to each such factor.
Compensation Policies
The Company's compensation policies and practices, particularly as they apply
to its executive officers, including the CEO, are intended to achieve the
following major objectives:
1.To set base annual salaries (base income) for key executive officers at
amounts which: a) are deemed reasonably competitive in the context of
prevailing salary scales within the insurance industry in particular; and (b)
in the Committee's judgment provide a fixed, reasonable source of current
income during the period of employment. Other sources of executive
compensation discussed in separate sections hereunder are not taken into
account when setting base annual salaries. Among the factors considered in
varying degrees, as previously noted, are business size, level of
responsibility, complexity of operations, long term performance, loyalty,
commitment to Old Republic's long term objectives, and future prospects.
Additionally, the Committee also takes into account prevailing salary scales in
the insurance industry in particular. It monitors trends in salary levels by
reference to published compilations and reports as well as Company compilations
of data contained in the proxy statements of publicly held insurance
organizations whose assets, revenues, and net income are larger, smaller, or
approximately the same as the Company's. These insurance organizations include
but are not limited to those that are a part of the Peer Group comparisons on
page 14 of this Proxy Statement, and have significant interests in commercial
property and liability insurance. Based on a review and evaluation of all
such data, the Committee believes that the base salaries of the CEO and key
executives tend to be within a range encompassed by the 25th percentile and
median salaries of the above mentioned insurance organizations.
2.To afford personnel an opportunity and incentive to increase their base
income over time through participation in incentive compensation and related
stock option and savings programs. With respect to all such programs the
Committee approves various criteria, the objectives of which are to:
a) Establish tangible means of evaluating the overall financial performance of
the Company or individual profit centers;
b) Align performance criteria with shareholders' interests by establishing
minimum requirements relative to such performance indicators as return on
equity, return or profit margin on revenues, and increases in earnings;
c) Encourage a long-term commitment to the organization.
In addition, the Committee considers a variety of intangible and other
subjective factors such as each person's likely future contribution to the
Company's successful growth, his or her level and years of experience the
current state and prospects of the industry or segment(s) thereof, and the
Company's long-term goals and strategies which might from time to time
require temporary investment in personnel resources in the absence of immediate
positive results. Further, the Committee considers the compensation and
benefits previously paid to its executive officers.
In making its performance evaluations, the Committee takes the shareholders'
interests into account from the standpoints of both total market return for the
Common Stock as well as the Company's intrinsic performance as such and
relative to the Company's Peer Group. However, the Committee places greater
emphasis on the latter two factors since total market return is influenced
materially by the vagaries of the securities markets.
The Committee has not adopted any policy with respect to qualifying
compensation paid to executive officers under Section 162(m) of the Internal
Revenue Code. No executive officer has been paid compensation in excess of the
level referred to in such Section 162(m).
Compensation of the Chief Executive Officer
With specific reference to the CEO's compensation, the Committee takes into
account all of the factors and objectives discussed above. In addition, special
emphasis is also placed on such other considerations as the CEO's vision and
planning for the Company's future and the strategies implemented for their
realization, his leadership qualities and judgment, and his commitment to and
abilities in setting and promoting the character of the organization in the
best interests of its insurance subsidiaries, insurance beneficiaries, and
shareholders. The Committee's evaluation of the CEO's performance takes place
without his presence.
Mr. Zucaro joined the Company in 1976 as Executive Vice President and Chief
Financial Officer. He was promoted to President in 1981, to Chief Executive
Officer in 1990, and to Chairman on January 1, 1993 while retaining his offices
as President and Chief Executive Officer. Until 1989, Mr. Zucaro's cash
compensation consisted solely of a base annual salary and a small amount of
fees earned in his capacity as a director of a number of the Company's
subsidiaries. His other compensation was fully deferred pursuant to his
participation in the Company's KEPRP, ESSOP, and stock option plans. Since
1990, his cash compensation has been enhanced by 50% of the awards granted to
him under the Company's KEPRP pursuant to the revised terms of that plan.
The following table reflects certain key data pertaining to the Company's
performance during the past three years together with the CEO's compensation
during the period. The Company's performance is a significant factor in the
Committee's evaluation of the CEO's and other executives' cash and deferred
compensation. It is only one of the many factors cited under "Compensation
Policies" above, the relative significance of which is left to the subjective
business judgment of the Committee. In comparing this data, it should be noted
that trends in the CEO's compensation to some extent lag, up or down, trends in
the Company's performance.
<TABLE>
Summary of Company Performance Indicators
VS.
CEO Compensation
1992 to 1994
Amounts % of Change
1994 1993 1992 '94 vs '93 '93 vs '92 '94 vs '92
Company Performance Indicators <F1>
($ in Millions)
<S> <C> <C> <C> <C> <C> <C>
Consolidated assets $6,262.9 $6,098.3 $4,141.6 2.7% 47.2% 51.2%
Common shareholders' equity $1,329.3 $1,256.9 $1,084.9 5.8% 15.9% 22.5%
Net revenue $1,679.0 $1,736.3 $1,617.0 -3.3% 7.4% 3.8%
Net operating income $ 146.0 $ 140.6 $ 129.9 3.8% 8.2% 12.4%
Net income $ 151.0 $ 175.1 $ 174.7 -13.7% 0.2% -13.6%
Percent return on equity 12.0% 16.1% 19.8%
Primary Per Share Data:
(in dollars and cents)
Book value $ 25.79 $ 24.25 $ 21.40 6.4% 13.3% 20.5%
Net operating income $ 2.46 $ 2.38 $ 2.28 3.4% 4.4% 7.9%
Net income $ 2.55 $ 2.98 $ 3.09 -14.4% -3.6% -17.5%
CEO Compensation <F2>
1. Cash compensation $698,843 $658,536 $607,053 6.1% 8.5% 15.1%
2. Deferred incentive
compensation $230,840 $201,800 $183,728 14.4% 9.8% 25.6%
Incentive stock options:
3. Valued at 5% appreciation: $ -- $791,438 $ -- -- -- --
4. Valued at 10% appreciation: $ -- $1,997,438 $ -- -- -- --
5. Total cash & deferred incentive
compensation with options,
if any, valued at:
6. 5% appreciation (1 +2+3) $929,683 $1,651,774 $790,781 -43.7% 108.9% 17.6%
7. 10% appreciation (1 +2+4) $929,683 $2,857,774 $790,781 -67.5% 261.4% 17.6%
<FN>
<F1>Data taken from the Company's audited financial statements and stock market tables as
applicable. Return on equity is calculated by dividing each year's net income by the common
shareholders' equity balance at the beginning of the year. Net operating income excludes fresh
start tax credits and realized capital gains which are a part of net income; both net operating
income and net income per share are shown after deduction of Preferred Stock dividend.
<F2>In this table, Cash Compensation includes annual salary, the cash portion of awards under the
KEPRP, the amount of premium for group term life insurance attributed to the CEO's compensation,
and directors' fees; Deferred Incentive Compensation includes the deferred portion, which is
non-interest bearing, of awards granted under the Company's KEPRP and the employer matching
contribution to the ESSOP; Incentive Stock Options have been valued alternatively by assuming that
the market value of the Common Stock subject to options will compound at a 5% and a 10% annual rate
(or 63% and 159%, respectively, in the aggregate) over the 10-year term of the options. The actual
future value of such options may be higher or lower than these arbitrary estimates. Also see
"Summary Compensation Table".
</TABLE>
Employee Benefit Plans
In addition to determining base salaries, the Committee also administers the
Company's employee benefit plans. The employee benefit plans are an important
part of the Company's compensation structure and provide employees, including
the CEO and other executive officers, with an opportunity and incentive to
increase their base income.
Key Employee Performance Recognition Plan ("KEPRP"): Under the Company's KEPRP,
a performance recognition pool is established each year for allocation
among eligable key employees of the Company and its participating subsidiaries,
including the CEO and other executive officers. Employees eligible to share in
this pool are selected annually by the Committee in consultation with the CEO.
However, the CEO does not consult with the Committee with regard to the
performance, eligibility or award for himself. After prior plan participants
are credited with a certain portion, if any, of each year's pool the CEO may
recommend the allocation of the balance of the pool to participants in the
plan, other than himself, or may recommend to carry forward up to 50% of such
amount for up to three years for later allocation. In designating eligible
employees and determining amounts to be allocated, the Committee consults with
the CEO and considers the positions and responsibilities of the employees, the
perceived value of their accomplishments to the Company, their expected future
contributions to Old Republic and other relevant factors. The Committee's
evaluation of all such factors is subjective.
The pool amount is established in accordance with a complex formula which takes
into account (a) the eligible participating employees' annual salaries, (b) the
current year's earnings of the Company in excess of the prior year's earnings
(excluding income from capital gains or losses), multiplied by a factor
determined by the increase in the Company's earnings per share, and (c) the
latest year's return on equity in excess of an amount determined by taking into
account the latest five years' average inflation rate (as measured by the
Consumer Price Index) and the average return on equity for the same five year
period reported by ten major publicly held insurance organizations. Each year's
pool is in turn limited to no more than 25% of plan participants' aggregate
annual base salaries. There is no prescribed limit as to how much of each
year's available pool may be awarded to each participant.
There is an immediate payment in cash of 50% of any award made; the balance of
the award vests at the rate of 10% per year of participation. The deferred
balance(s) do not bear interest. Pursuant to the plan, participants become
vested in their account balances upon total and permanent disability or death,
or upon the earlier of attaining age 55 or being employed for 10 years after
first becoming eligible. Benefits are payable in installments, beginning no
earlier than age 55 and/or following termination of employment, death,
disability or retirement.
In addition to the KEPRP, the Company also maintains a number of separate plans
for several individual subsidiaries or separate profit centers. Such plans
similarly provide for the achievement of certain financial results and
objectives as to each such subsidiary or profit center.
Stock Option Plan: To encourage growth in shareholder value and a long-term
commitment to the business, the Company believes that key employees, including
the CEO and other executive officers, who are in a position to make a
substantial contribution to the long-term success of the Company should have a
stake in its on-going success. As a result, the Company maintains a
non-qualified stock option plan (the "Plan") for key employees of the Company
and its participating subsidiaries. The primary reason for granting options is
to encourage long-term commitments to the Company by key employees so they will
have a greater incentive to promote the Company's success. The decision to
award stock options pursuant to the Plan and the factors that contribute to the
amount of such awards are the same factors as those set forth under
"Compensation Policies" herein. The performance factors the Committee
considers include the achievements of the individual key employee, the overall
performance of the Company and the likelihood of future contributions to the
Company's successful growth by the individual key employee. The relative
significance of these and all other factors with respect to awards granted to
the CEO and other executive officers is determined subjectively by the
Committee. The Plan provides for the issuance of options for up to 5% of the
Common Stock issued and outstanding at any one time. The purchase price per
share of Common Stock subject to an option under the Plan is fixed by the
Committee. However, such purchase price may not be less than the mean high and
low sale price or the last reported sale price of the Company's Common Stock
as reported on the New York Stock Exchange on the date immediately preceding
the date the option is granted. Optionees may exercise their options for shares
of either Common Stock or Series G Preferred Stock. The term of each option may
not be for more than 10 years from the date of grant. Under ordinary
circumstances, options may be exercised to the extent of 10% of the number of
shares covered thereby on and after the date of grant and cumulatively to the
extent of an additional 10% on and after each of the first through ninth
years after the date of grant. Under the Plan and certain other previously
granted options with vesting acceleration prices, optionees may exercise
their options to the extent of 10% of the number of shares covered by the
option for each year that the optionee has been employed by the Company or
its subsidiaries once the vesting acceleration price is reached. The vesting
acceleration price is established by the Committee at the time of grant at 150%
of the option purchase price per share.
Under certain options previously granted, the Company may extend 15 year loans
at a prevailing market rate of interest for a portion of the exercise price.
Under certain options, but not under options granted in accordance with the
Company's 1992 Option Plan, the employee's right to exercise options is
accelerated if the Company is dissolved or liquidated, merged, or consolidated
with another company and the Company is not the surviving corporation, or more
than 50% of the members of the Board of Directors of the Company change in any
one year unless one or more of the new directors was nominated by the Board of
Directors of the Company.
Employees Savings and Stock Ownership Plan ("ESSOP"): The Company's ESSOP
allows eligible employees with one or more years of service with the Company or
participating subsidiaries ("employers") to save a minimum of 1% up to a
maximum of 15% of their total compensation. Employees' savings up to 6% are
matched by employer contributions ranging from 20% to 140% of such savings in
accordance with a formula based upon the percentages saved and the increase in
the Company's average net operating earnings per share for the five years
ending with the calendar year immediately prior to the year for which the
contribution is being made. Under the terms of the ESSOP, employer
contributions are invested exclusively in Preferred or Common Stock of the
Company and employee savings may be invested at the employee's direction in
either a fund providing for a diversified investment portfolio or in a fund
established for more speculative investments. A participant becomes vested
in the account balance allocated from employer contributions upon being
totally and permanently disabled, dying, or upon the earlier of attaining age
65 or being employed for 7 years. Vesting also occurs in increments of 20% a
year, beginning after two years of service. Benefits are payable upon
termination of service, death or disability, or following retirement. At the
election of the participant, benefits derived from employer contributions
are payable either in cash or in Common Stock.
RMIC Profit-Sharing Plan: Mr. Simpson also participates in the RMIC profit
sharing plan. The RMIC profit-sharing plan covers substantially all employees
of RMIC and its subsidiaries. Contributions to the plan are determined annually
by RMIC's Board of Directors, and voluntary contributions of up to 10% of
annual income are permitted. Plan participants' interests vest in increments of
10% of contributed amounts beginning with 40% after one year and extending to
100% after seven years. Account balances are payable upon death or permanent
disability. Normal retirement is at age 65 and the plan provides for early
retirement at age 50 with ten years of service. With the consent of RMIC,
retirement may be deferred. Benefits upon retirement may be received as a
monthly annuity, periodic cash payments, or in a lump-sum distribution at the
participant's election.
Compensation Committee
David Sursa, Chairman
Darrel M. Holt
Kurt W. Kreyling
John W. Popp
William G. White, Jr.
The foregoing Report of the Compensation Committee on Executive Management
Compensation shall not be deemed to be incorporated by reference into any
filing of the Company under the Securities Act of 1933 or the Securities
Exchange Act of 1934, except to the extent that the Company specifically
incorporates such information by reference.
Executive Compensation
The following table sets forth certain information regarding the compensation
paid or accrued by the Company to or for the account of the Chief Executive
Officer and each of the three other executive officers of the Company for
services rendered in all capacities during each of the Company's fiscal years
ended December 31, 1994, 1993 and 1992:
<TABLE>
SUMMARY COMPENSATION TABLE
Long-Term
Annual Compensation Compensation
(a) (b) (c) (d) (e) (f)
Securities
Name and Underlying
Principal Option All Other
Position Year Salary<F1> Bonus<F2> Awards<F3> Compensation<F4>
<S> <S> <C> <C> <C> <C>
A.C. Zucaro 1994 $468,083 $450,000 -- $11,600
President 1993 454,850 400,000 50,000 5,486
Chief Executive 1992 428,367 350,000 -- 11,786
Officer
Paul D. Adams 1994 242,500 115,000 -- 7,353
Senior Vice 1993 235,000 110,000 15,000 3,262
President, 1992 226,833 95,000 -- 9,504
Chief Financial
Officer & Treasurer
Spencer LeRoy III 1994 256,667 80,000 -- 7,406
Senior Vice 1993 251,800 62,500 -- 3,366
President, Secretary 1992 127,600 <F5> -- 25,000 783
& General Counsel
William A. Simpson 1994 230,308 <F6> 250,000 -- 20,840 <F7>
Senior Vice 1993 223,978 <F6> 200,000 20,000 21,800 <F7>
President 1992 208,475 <F6> 125,000 -- 24,547 <F7>
<FN>
<F1>Includes fees paid for services as a director of certain of the Company's subsidiaries.
<F2>This column includes combined cash and deferred incentive compensation awards granted under the
Company's KEPRP and similar plans maintained for different profit centers. Awards thereunder are
typically made 50% in cash and 50% deferred. The deferred amounts included in this column are
usually not payable before the person retires at 55 years of age or later; the amount deferred does
not accrue interest and it is included in this column without a present value discount. None of
the awards shown differed in any respect from the Company's regular compensation policies and
practices.
<F3>Number of shares of Common Stock subject to options granted during the year indicated.
<F4>Represents employer matching contribution to the Company's ESSOP and the amount of premium for
the Company's group term life insurance plan attributed to the compensation of executive officers
of the Company. For 1994, the Company's matching contribution for each was $5,840. For 1994,
$5,760, $1,513, $1,566, and $0 were attributed to the compensation of Messrs. Zucaro, Adams,
LeRoy, and Simpson, respectively, for group term life insurance premiums paid by the Company.
<F5>Mr. LeRoy became an executive officer of the Company on July 1, 1992.
<F6>Includes $6,600 paid under an agreement with the Company's subsidiary, Republic Mortgage
Insurance Company ("RMIC"), which requires such a payment for each year through 1995 which Mr.
Simpson is employed by RMIC at year end.
<F7>Includes $15,000, $20,000 and $20,000 as the vested amount accrued for Mr. Simpson in the RMIC
Profit Sharing Plan for 1994, 1993 and 1992, respectively.
</TABLE>
Retirement Plans
The Company maintains the Old Republic International Corporation Salaried
Employees Restated Retirement Plan (the "Company Plan") for its employees and
those of participating subsidiaries. The Company Plan, which is
noncontributory, provides for benefits based upon 1.5% of the participant's
"Final Average Monthly Earnings" (1/60th of the aggregate earnings of the
employee during the period of the five consecutive years of service out of the
last ten consecutive years of service which results in the highest "Final
Average Monthly Earnings") multiplied by the participant's years of service.
Earnings equal base salary and commissions but excludes cash and deferred
incentive compensation awards granted under the Company's KEPRP.
The following table sets forth the estimated annual benefits payable under the
Company Plan to an employee, upon retirement at December 31, 1994, at age 65
after specified years of service:
<TABLE>
Highest Average
Annual Earnings of
the 5 Consecutive Estimated Annual Retirement Income for
Plan Years Out of the Representative Years of Credited Service<F1>
Last 10 Plan Years 15 20 25 30 35 40
<S> <C> <C> <C> <C> <C> <C>
$150,000 $33,750 $45,000 $56,250 $67,500 $78,750 $90,000
200,000 45,000 60,000 75,000 90,000 105,000 120,000
250,000 56,250 75,000 93,750 112,500 131,250 150,000
300,000 67,500 90,000 112,500 135,000 157,500 180,000
350,000 78,750 105,000 131,250 157,500 183,750 210,000
400,000 90,000 120,000 150,000 180,000 210,000 240,000
450,000 101,250 135,000 168,750 202,500 236,250 270,000
500,000 112,500 150,000 187,500 225,000 262,500 300,000
550,000 123,750 165,000 206,250 247,500 288,750 330,000
<FN>
<F1>The maximum benefit allowed by law for a qualified plan is limited to $120,000 in 1995. Any
excess over such limit would only be payable to a qualified participant under the Old Republic
International Corporation Executive's Excess Benefit Plan described below.
</TABLE>
The amounts shown in the chart are computed on the basis of straight life
annuity amounts and are not subject to offsets for any Social Security
payments. At December 31, 1994, Mr. Zucaro was credited with 18 years of
service, Mr. Adams was credited with 5 years of service and Mr. LeRoy was
credited with 2 years of service, for purposes of the Company Plan. However,
Mr. LeRoy's participation under the Plan will not vest until July 1, 1997.
Mr. Simpson did not participate because employees of RMIC participate in the
RMIC Profit-Sharing Plan instead of the Company Plan. At December 31, 1994,
the highest average annual earnings for purposes of the above computations
under the Company Plan were approximately $407,333 for Mr. Zucaro, $225,600
for Mr. Adams and $253,333 for Mr. LeRoy. The differences between such
amounts and the Annual Compensation amounts shown for Messrs. Zucaro, Adams
and LeRoy in the Summary Compensation Table on page 11 are threefold: the
figures above are averages of annual base salaries over the past 5 years (2
years for Mr. LeRoy) and do not include either directors' fees or any
form of incentive compensation awards.
The Company also maintains the Old Republic International Corporation
Executive's Excess Benefit Plan to provide certain key executives with pension
benefits in excess of the benefits provided by the Company Plan. The plan is
administered by the Compensation Committee of the Board of Directors, which
selects the employees to participate in the plan from those who are
participants in the Company Plan. None of the Company's current executive
officers have been selected to participate, nor are they assured that they
will be selected. The benefits payable under this plan equal the excess of
the amount otherwise payable under the terms of the Company Plan over the
reduced benefits required by applicable law. Benefits under this plan are
payable at the time benefits are payable under the Company Plan. The plan is
unfunded and no contributions are made to any separate funding vehicle.
Option Grants in 1994
No options to purchase shares of Common Stock were granted to the executive
officers of the Company listed in the Executive Compensation Table during the
Company's 1994 fiscal year. As such, no table of Option Grants in 1994 is
included.
Aggregate Options Exercised in 1994 and Option Values at December 31, 1994
The following table sets forth certain information regarding options to
purchase shares of Common Stock exercised during the Company's 1994 fiscal year
and the number and value of exercisable and unexercisable options to purchase
shares of Common Stock held at the end of the Company's 1994 fiscal year by the
executive officers of the Company named in the Executive Compensation Table:
<TABLE>
Aggregated Option Exercises in 1994
and Option Values at December 31, 1994
(a) (b) (c) (d) (e)
Number of
Securities Value of
Underlying Unexercised
Unexercised ln-the-Money
Options at Options at
12/31/94 12/31/94
Shares Acquired Exercisable/ Exercisable/
Name on Exercise Value Realized<F1> Unexercisable Unexercisable<F2>
<S> <C> <C> <C> <C> <C> <C>
A. C. Zucaro 14,006 <F3> $ 139,979 <F4> 92,206 / 40,000 $ 822,412 / $ 0
Paul D. Adams None -- 27,152 / 12,000 $ 223,523 / $ 0
Spencer LeRoy III None -- 7,500 / 17,500 $ 5,625 / $ 13,125
William A. Simpson None -- 23,624 / 16,000 $ 194,315 / $ 0
<FN>
<F1>Value realized is equal to the difference between the fair market value per share of Common
Stock on the date of exercise and the optio exercise price per share multiplied by the number of
shares acquired upon exercise of an option.
<F2>Value of exercisable/unexercisable in-the-money options is equal to the difference between the
fair market value per share of Common Stock at December 31, 1994 and the option exercise price per
share multiplied by the number of shares subject to options.
<F3>Mr. Zucaro exercised an option to acquire the Company's Series G-2 Preferred Stock.
<F4>Represents the exercise of an option granted in 1987. The value shown here is the difference
between the option price and market price on the day of the exercise of the option. Mr. Zucaro has
not in fact realized any gain on the exercise of these option shares since he has not sold the
shares received.
</TABLE>
Comparative Five-Year Total Market Returns
The following table, prepared on the basis of market and related data furnished
by Standard & Poor's Compustat Services, reflects total market return data for
the most recent five calendar years ended December 31, 1994. For purposes of
the presentation the information is shown in terms of $100 invested at the
close of trading on the last trading day preceding the first day of the fifth
preceding year. The $100 investment is deemed to have been made either in Old
Republic Common Stock, in the S&P 500 Index of common stocks, or in an
aggregate of the common shares of a Peer Group of ten publicly held insurance
businesses selected by Old Republic. In each instance the cumulative total
return assumes reinvestment of cash dividends.The information utilized to
prepare this table has been obtained from sources believed to be reliable, but
no representation is made that it is accurate or complete in all respects.
Comparison of Five Year Total Market Return
OLD REPUBLIC INTERNATIONAL CORPORATION vs. S&P 500 vs. Peer Group
(For the five years ended December 31, 1994)
Insert Chart Here
<TABLE>
1989 1990 1991 1992 1993 1994
<S> <C> <C> <C> <C> <C> <C>
ORI $100.00 $97.63 $170.90 $243.65 $225.56 $216.46
S&P 500 $100.00 $96.89 $126.42 $136.05 $149.76 $151.74
<F1>Peer Group $100.00 $84.66 $113.31 $131.32 $142.98 $145.40
<F2>Prior Peer Group $100.00 $87.54 $116.37 $133.31 $145.62 $147.43
<FN>
<F1>The Peer Group of companies selected by Old Republic for 1994 consists of:
Aetna Life & Casualty Company, American International Group, Inc., Chubb
Corporation, CNA Financial Corporation, CIGNA Corporation, Lincoln National
Corporation, Ohio Casualty Corporation, SAFECO Corporation, St. Paul Companies,
Inc., and USF&G Corporation. The companies in the Peer Group have been approved
by the Compensation Committee. The Peer Group of companies selected by Old
Republic was changed for 1994. SAFECO Corporation replaced The Travelers
Corporation because The Travelers Corporation was acquired by another
corporation who is not primarily an insurance company and USF&G Corporation
replaced The Continental Corporation because The Continental Corporation has
reached an agreement to be acquired by CNA Financial Corporation.
<F2>The Prior Peer Group consists of the Peer Group of companies used by the
company in 1993. However, The Travelers Corporation was deleted as it was
acquired by another corporation and the successor corporation is not primarily
an insurance company.
</TABLE>
The foregoing table shall not be deemed to be incorporated by reference into
any filing of the Company under the Securities Act of 1933 or the Securities
Exchange Act of 1934, except to the extent that the Company specifically
incorporates such information by reference.<PAGE>
PROPOSAL I - ELECTION OF DIRECTORS
The following tabulation lists all nominees and continuing directors of the
Company. Four Class 2 directors are to be elected to hold office for a term of
three years and until their successors are elected and qualified. The nominees
are presently Class 2 directors. It is intended that, in the absence of
contrary specifications, votes will be cast pursuant to the enclosed proxies
for the election of such nominees. Should any of the nominees become unable
or unwilling to accept nomination or election, it is intended, in the absence
of contrary specifications, that the proxies will be voted for the balance of
those named and for a substitute nominee or nominees. However, the Company now
knows of no reason to anticipate such an occurrence. All of the nominees have
consented to be named as nominees and to serve as directors if elected.
Positions with Company,
Business Experience, and
Name Age Other Directorships
Nominees for Election
CLASS 2 (Term expires in 1995)
Jimmy A. Dew 54 Director since 1980; Executive Vice President
of Republic Mortgage Insurance Company, a
subsidiary of the Company, for more than the
past five years.
John W. Popp 72 Director since 1993; Retired; formerly Partner
of KPMG Peat Marwick, accountants. Director of
Bituminous Casualty Corporation and Great West
Casualty Company, subsidiaries of the Company
for more than the past five years. Director of
SCOR U.S. Corporation.
Wilbur S. Legg 72 Director since 1969; Retired; formerly Partner
Lord, Bissell & Brook, attorneys, Chicago,
Illinois. Mr. Legg's former firm has been
retained by the Company as counsel during more
the last two fiscal years.
David Sursa 69 Director since 1969; Retired, formerly Chairman
of the Board, NBD Bank, N.A., Muncie, Indiana,
for more than the past five years prior to his
retirement in 1994.
Continuing Members
CLASS 3 (Term expires in 1996)
Peter Lardner 63 Director since 1985; Chairman and President of
Bituminous Casualty Corporation, a subsidiary
of the Company, for more than the past five
years.
William A. Simpson 53 Director since 1980; Senior Vice President of
the Company and President of Republic Mortgage
Insurance Company, a subsidiary of the Company,
for more than the past five years. Director of
Salem Trust Bank, Winston-Salem, North Carolina
Arnold L. Steiner 57 Director since 1974; Retired for more than the
past five years; formerly President of Steiner
Bank, Birmingham, Alabama.
Positions with Company,
Business Experience, and
Name Age Other Directorships
Continuing Members
CLASS 3 (Term expires in 1996)
William R. Stover 72 Director since 1969; Retired; prior to January
1993, Chairman of the Board of the Company and
various subsidiaries, Chief Executive Officer
of the Company and various subsidiaries prior
to August, 1990.
CLASS 1 (Term expires in 1997)
Anthony F. Colao 67 Director since 1987; Senior Vice President of
the Company since 1987; formerly Partner of
Coopers & Lybrand, accountants, for more than
five years. Mr. Colao's former firm has been
retained by the Company as independent
accountants during more than the last two
fiscal years.
John C. Collopy 74 Director since 1980; Retired Consultant to Old
Republic Title Holding, Inc. (formerly Founders
Title Group, Inc.), a subsidiary of the
Company. Formerly Chairman of the Board of
Founders Title Group, Inc. until his retirement
in 1992.
Kurt W. Kreyling 73 Director since 1974; Retired for more than the
last five years; formerly President and
Treasurer of Kreyling Company, wholesaler of
floor coverings, Evansville, Indiana.
William G. White, Jr. 66 Director since 1993; Retired; formerly
President of The First Federal Savings Bank,
Winston-Salem, North Carolina; Consultant to
Southern National Bank, Winston-Salem, North
Carolina; Director of Republic Mortgage
Insurance Company, a subsidiary of the Company
for more than the past five years. Director of
Savers Life Insurance Company, Winston-Salem,
North Carolina.
A. C. Zucaro 55 Director since 1976; Chairman of the Board of
the Company and various subsidiaries since
January, 1993; Chief Executive Officer of the
Company and various subsidiaries since August,
1990; President of the Company and various
subsidiaries for more than the past five years.
On March 16, 1995, Darrel M. Holt announced his resignation as a Class 2
director, effective immediately. Mr. Holt, having served as a director of the
Company since 1978, indicated that he was resigning for personal and family
reasons. He was 79 at the time of his resignation. The Company's By-laws
require at least 9 directors and permit as many as 15. The remaining directors
elected not to fill the vacancy created by Mr. Holt's resignation but instead
chose to reduce the number of directors from 14 to 13. The By-laws also
require that the number of directors be divided as equally as possible into
three classes. As a result of Mr. Holt's resignation, Class 1 had five
members, Class 2 had three, and Class 3 had five. The directors, therefore,
re-classified one of the Class 3 members, Wilbur S. Legg, as a Class 2
director in order to comply with the By-laws' requirement as to class sizes.
Board of Directors Recommendation
The Board of Directors recommends a vote FOR the Class 2 directors that are
listed as nominees. Proxies solicited by the Board of Directors will be voted
for the election of these nominees unless shareholders specify to the contrary
in their proxies.
VOTING PROCEDURES
The General Corporation Law of the State of Delaware specifies that in the
absence of contrary requirements in a corporations Certificate of Incorporation
or By-laws, the votes on matters at Shareholders Meetings are decided as
follows: (1) Directors are elected by a plurality of the shares present in
person or by proxy at the meeting and who are entitled to vote in the election,
and (2) all other matters are determined by the affirmative vote of the
majority of the shares present in person or by proxy at the meeting and who are
entitled to vote on the subject matter.
The Company's Restated Certificate of Incorporation and By-laws do not require
any different treatment for any of the proposals being considered at the
Company's Annual Shareholders Meeting.
The Company's Restated Certificate of Incorporation and its By-laws are silent
on the mechanics of voting. As a result, the General Corporation Law of the
State of Delaware is controlling. Under Delaware law the votes at the Companys
Annual Shareholders Meeting will be counted by the inspectors of election
required to be appointed at the meeting. The inspectors are charged with
ascertaining the number of shares outstanding, the number of shares present,
whether in person or by proxy, and the validity of all proxies. The inspectors
are entitled to rule on any voting challenges and are responsible for the
tabulation of the voting results.
Under Delaware law, abstentions are counted in determining the quorum of the
meeting and as having voted on any proposal on which an abstention is voted. As
a result, on those proposals which require a plurality vote of the shares at
the meeting that are entitled to vote, the vote of an abstention has no effect.
However, on those proposals which require an affirmative vote of the majority
of shares present in person or by proxy at the meeting, the vote of an
abstention has the effect of a vote against the proposal.
In the event of a broker non-vote arising from the absence of authorization by
the beneficial owner to vote on a proposal, the shares reported are counted for
the determination of a quorum for the meeting but they are not counted as
having voted on the proposal where there is a non-vote. As a result, on those
proposals which require a plurality vote of the shares at the meeting that are
entitled to vote, a non-vote will have no effect. However, on the proposals
which require an affirmative vote of the majority of the shares present, a non-
vote has the effect of a vote against the proposal.
RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS
The Company's consolidated financial statements for the year ended December 31,
1994 were examined by Coopers & Lybrand, independent certified public
accountants. No decision has as yet been made with respect to the selection of
independent certified public accountants for fiscal 1995. A member of Coopers &
Lybrand is expected to attend the annual meeting with an opportunity to make an
appropriate statement if the representative desires to do so and will be
available to respond to appropriate questions.
SHAREHOLDER PROPOSALS FOR 1996 ANNUAL MEETING
In order for a proposal by a shareholder of the Company to be included in the
Company's proxy statement and form of proxy for the 1996 Annual Meeting of
Shareholders, the proposal must be received by the Company no later than
December 1, 1995.
OTHER MATTERS
The Company knows of no matters, other than those referred to herein, which
will be presented at the meeting. If, however, any other appropriate business
should properly be presented at the meeting, the proxies named in the enclosed
form of proxy will vote the proxies in accordance with their best judgment.
EXPENSES OF SOLICITATION
All expenses incident to the solicitation of proxies by the Company will be
paid by the Company. In addition to solicitation by mail, the Company has
retained Georgeson & Co. (with respect to street name holders) and D.F. King &
Company, Inc. (with respect to individual shareholders) both of New York City,
to assist in the solicitation of proxies, including delivery of proxy
materials. Fees for this solicitation are expected to be approximately $12,000.
The Company intends to reimburse brokerage houses and other custodians,
nominees and fiduciaries for reasonable out-of-pocket expenses incurred in
forwarding copies of solicitation material to beneficial owners of Common
Stock held of record by such persons. In a limited number of instances,
regular employees of the Company may solicit proxies in person or by
telegraph or telephone.
By order of the Board of Directors.
SPENCER LEROY III
Secretary
Chicago, Illinois
March 31, 1995
OLD REPUBLIC INTERNATIONAL CORPORATION
Proxy Solicited on Behalf of the Board of Directors
P
R
O
X
Y
The undersigned hereby appoints PAUL D. ADAMS, SPENCER LEROY III and
A. C. Zucaro or any one of them (with full power of substitution in each) the
proxy or proxies of the undersigned to vote, as designated below, all shares of
Old Republic International Corporation Common and Preferred Stock that the
undersigned is entitled to vote at the annual meeting of the shareholders to be
held in Room 2300 at the offices of Old Republic International Corporation,
307 North Michigan Avenue, Chicago, Illinois 60601, on May 12, 1995, at 3:00
P.M., Chicago Time, or at any adjournment thereof.
Election of four Class 2 Directors. Nominees:
Jimmy A. Dew, Darrel M. Holt, John W. Popp and David Sursa
This proxy is revocable at any time before it is exercised.
This proxy when properly executed will be voted in the manner directed herein
by the undersigned shareholder. If no direction is made, this proxy will be
voted for proposal 1 and in the proxy's discretion upon such other business as
may properly come before the meeting or any adjournment thereof.
(continued, and to be signed and dated, on reverse side)
Please mark your votes as in this example [x]
This proxy when properly executed will be voted in the manner directed herein
by the undersigned shareholder. If no direction is made, this proxy will be
voted FOR proposal 1.
The Board of Directors recommends a vote FOR Proposal 1
[ ] FOR [ ] WITHHELD
1. Election of Directors 2.In their discretion upon such other business
as may properly come before the meeting or
any adjournment thereof.
___________________________________________________
For, except vote withheld from the follownig nominee(s):
Please sign exactly as your name or names appears hereon. Joint owners should
each sign personally. If signing in fiduciary or representative capacity, give
full title as such.
_______________________________________________________________
_______________________________________________________________
Signature Date
ESSOP EXPLANATION CARD
March 31, 1995
To Participants in the Old Republic International
Corporation Employees Savings and Stock Ownership Plan
Enclosed with this mailing is a copy of a proxy statement relating to the
Annual Meeting of Shareholders of Old Republic International Corporation to be
held May 12, 1995. The Old Republic International Corporation Employees
Savings and Stock Ownership Plan, in which you are a participant, holds a
number of shares of Old Republic Series D Preferred Stock and Common Stock,
each of which is entitled to one (1) vote at the meeting. Under the terms of
the Plan, you as a participant are entitled to vote a portion of this stock
held by the Plan, the value of which has been allocated to your account. By
returning the enclosed proxy card to us you will assure that this stock will
be voted in accordance with your instructions. If you fail to exercise these
voting rights, the shares will be voted by the Administration Committee under
this Plan.
The Administration Committee
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
[x] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to subsections 240.14a-11(c) or 240.14a-12
Old Republic International Corporation
(Name of Registrant as Specified In Its Charter)
Old Republic International Corporation
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[x] $125 per Exchange Act Rules 0.11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2).
[ ] $500 per each party to the controversy pursuant to Exchange Act
Rule 14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1)Title of each class of securities to which transaction applies:
2)Aggregate number of securities to which transaction applies:
3)Per unit price or other underlying value of transaction computed pursuant to
Exchange Act Rule 0-11:(1)
4)Proposed maximum aggregate value of transaction:
(1) Set forth the amount on which the filing fee is calculated and state how it
was determined
[ ]Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1)Amount Previously Paid:
2)Form, Schedule or Registration Statement No.:
3)Filing Party:
4)Date Filed:
