Notice of the Annual Meeting of Shareholders
To be held May 24, 1996
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
24, 1996 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 3 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, 1996 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 1995 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 29, 1996
Proxy Statement
OLD REPUBLIC INTERNATIONAL CORPORATION
ANNUAL MEETING OF SHAREHOLDERS
May 24, 1996
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 24, 1996 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 29, 1996.
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 D
Cumulative Convertible Preferred Stock ("Series D Preferred Stock") and Series
G Convertible Preferred Stock and Series G-2 Convertible Preferred Stock
(collectively "Series G Preferred Stock"). On February 29, 1996 22,874,402
shares of Series D Preferred Stock, 86,210 shares of Series G Preferred Stock
and 57,727,285 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, 1996 are entitled to notice of and to
vote at the meeting. On February 29, 1996, 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 29, 1996 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<F18>
<S> <S> <C> <C>
Series D Preferred .... Old Republic International Corporation 22,256,682<F1> 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 15,002<F2> 0.1
Anthony F. Colao 22,946<F2> 0.1
Jimmy A. Dew 51,760<F2> 0.2
Peter Lardner 12,957<F2> 0.1
Spencer LeRoy III 2,961<F2> <F19>
William A. Simpson 53,264<F2> 0.2
A. C. Zucaro 279,018<F2> 1.2
All executive officers and directors, as
a group 437,908<F2> 1.9
Series G Preferred .... John C. Collopy 3,242<F3> 3.8
Peter Lardner 14,526<F3> 16.8
William R. Stover 33,974<F3> 39.4
A. C. Zucaro 14,006<F3> 16.2
All executive officers and directors, as
a group 65,748<F3> 76.3
Series H Preferred .... Anthony F. Colao 300 <F19>
William R. Stover 8,000 0.3
A. C. Zucaro 800 <F19>
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 direc-
tors) ............. Old Republic International Corporation 4,898,584<F1> 7.4
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<F4> 7.3
Insurance Group, lnc.
307 North Michigan Avenue
Chicago, Illinois 60601
FMR Corp. 3,283,024<F5> 5.7
82 Devonshire Street
Boston, Massachusetts 02107
</TABLE>
<TABLE>
Other Shares Percent
Name of Shares Subject to Shares Held by Beneficially of
Title of Class Beneficial Owner Stock Options<F18> Employee Plans<F18> Owned<F18> Total Class<F18>
<S> <S> <C> <C> <C> <C> <C>
Directors' and Paul D. Adams 30,362 481<F2> 19,650 50,493 0.1
executive officers' Anthony F. Colao 51,958 1,733<F2> 6,238 59,929 0.1
beneficial John C. Collopy -- -- 50,785<F6> 50,785 0.1
ownership Jimmy A. Dew 30,624 877<F2> 133,270<F7> 164,771 0.3
Kurt W. Kreyling -- -- 159,712<F8> 159,712 0.3
Peter Lardner 15,176 7,916<F2> 77,310<F9> 100,402 0.2
Wilbur S. Legg -- -- 21,552<F10> 21,552 <F19>
Spencer LeRoy III 14,000 679<F2> 4,038<F11> 18,717 <F19>
John W. Popp -- -- 2,000 2,000 <F19>
William A. Simpson 32,624 902<F2> 101,230<F12> 134,756 0.2
Arnold L. Steiner -- -- 452,598<F13> 452,598 0.8
William R. Stover -- -- 285,773<F14><F15> 285,773 0.5
David Sursa -- -- 258,967<F15><F16> 258,967 0.4
William G. White, Jr. -- -- 20,481 20,481 <F19>
A. C. Zucaro 112,206 16,529<F2> 191,349<F15><F17> 320,084 0.6
All executive officers
and directors,
as a group 286,950 29,117 1,784,953 2,101,020 3.6
<FN>
<F18> 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 that may be issued upon
conversion by the beneficial owner of all series of Preferred Stock convertible within 60 days.
<F19> Less than one-tenth of one percent.
<F1> 22,256,682 shares of Series D Preferred Stock and 447,248 shares of Common Stock are held by Old Republic International
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 4,898,584 shares of Common Stock
(The shares that would be obtained on the conversion of the Series D Preferred Stock plus the 447,248 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.
<F2> 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.
<F3> Each share of Series G Preferred Stock is convertible at any time after six months from the date of issuance into .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, 13,799, 32,275 and 13,305 shares, respectively, of Common Stock issuable
upon conversion of their Series G Preferred Stock.
<F4> 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 29, 1996, 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.
<F5> Reflects the number of shares shown in the most recent Schedule 13-G filings with the Securities and Exchange Commission
through February 29, 1996. Shares reported as owned by FMR Corp. also include shares held by Fidelity Management & Research Company
and Fidelity Management Trust Company and includes 167,413 shares of Common Stock that would result from the conversion of the
Company's 5-3/4% Convertible Subordinated Debentures. FMR Corp. disclaims sole voting power of this stock except as to 142,311
shares.
<F6> Includes 43,954 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.
<F7> Includes 24,024 shares owned by Mr. Dew's wife.
<F8> Includes 158,730 shares owned by or in trust for Mr. Kreyling's wife of which Mr. Kreyling disclaims beneficial ownership.
<F9> Includes 50,301 shares held in a living trust of which Mr. Lardner's wife is the trustee for which Mr. Lardner disclaims
beneficial ownership and 13,799 shares that would be issued if Mr. Lardner converted his Series G Preferred Stock to Common Stock.
<F10> 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.
<F11> Includes 2,188 shares held in trust for Mr. LeRoy's benefit.
<F12> Includes 31,210 shares owned by Mr. Simpson's wife.
<F13> Includes 85,294 shares owned by Mr. Steiner directly or as trustee of a grantor retained trust, 59,036 shares owned by Mr.
Steiner's wife directly or as trustee of a grantor retained trust, 217,214 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.
<F14> Includes 74,082 shares owned jointly by Mr. Stover and his wife and 32,275 shares that would be issued if Mr. Stover con-
verted his Series G Preferred Stock to Common Stock.
<F15> 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.
<F16> Includes 135,854 shares owned by E.F.S. Investments, Inc., in which Mr. Sursa and his wife have a beneficial interest.
<F17> Includes 177,654 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 that would result from the conversion of the Company's 5-3/4%
Convertible Subordinated Debentures held by Mr. Zucaro.
</TABLE>
Under federal securities law, the Corporation's 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.
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
1995.
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 1995 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 1995. 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
1995.
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 in 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
1993 to 1995
Amounts % of Change
1995 1994 1993 '95 vs '94 '94 vs '93 '95 vs '93
Company Performance Indicators <F1>
($ in Millions)
<S> <C> <C> <C> <C> <C> <C>
Consolidated assets $ 6,593.5 $ 6,262.9 $ 6,098.3 5.3% 2.7% 8.1%
Common shareholders' equity $ 1,612.5 $ 1,329.3 $ 1,256.9 21.3% 5.8% 28.3%
Net revenue $ 1,695.9 $ 1,679.0 $ 1,736.3 1.0% -3.3% -2.3%
Net operating income $ 180.4 $ 146.0 $ 140.6 23.5% 3.8% 28.3%
Net income $ 212.7 $ 151.0 $ 175.1 40.8% -13.7% 21.5%
Percent return on equity 16.0% 12.0% 16.1%
Primary Per Share Data:
(in dollars and cents)
Book value $ 30.56 $ 25.79 $ 24.25 18.5% 6.4% 26.0%
Net operating income $ 3.07 $ 2.46 $ 2.38 24.8% 3.4% 29.0%
Net income $ 3.63 $ 2.55 $ 2.98 42.4% -14.4% 21.8%
CEO Compensation <F2>
1. Cash compensation $ 599,893 $ 698,843 $ 658,536 -14.2% 6.1% -8.9%
2. Deferred incentive compensation $ 101,800 $ 230,840 $ 201,800 -55.9% 14.4% -49.6%
Incentive stock options:
3. Valued at 5% appreciation: $ 767,970 $ -- $ 791,438 -- -- -3.0%
4. Valued at 10% appreciation: $ 1,938,210 $ -- $ 1,997,438 -- -- -3.0%
5. Total cash & deferred incentive
compensation with options,
if any, valued at:
6. 5% appreciation (1 +2+3) $ 1,469,663 $ 929,683 $ 1,651,774 58.1% -43.7% -11.0%
7. 10% appreciation (1 +2+4) $ 2,639,903 $ 929,683 $ 2,857,774 184.0% -67.5% -7.6%
<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 is defined as net income before fresh start
tax credits, extraordinary items, realized investment gains or losses and
accounting changes; 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
eligible 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 realized investment 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 two times the
mean of the five year average post-tax yield on 10 year and 30 year U.S.
Treasury Securities. Each year's pool is in turn limited to a percentage of
plan participants' aggregate annual base salaries, ranging from 25% to 45%,
depending upon the amount by which the current year's actual return on equity
exceeds the target return on equity for such year. 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, as well as
50% of the multiplier factor applied to the deferred balances of prior years'
participants; the balance of each 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 except that employees over age 55 and with 10 years of service credited
under the Plan may diversify a portion of the employer's contributions out of
the Company's Stock and into alternative investments. These alternative
investments are all publicly managed mutual funds that either focus on
short-term securities maturities, intermediate-term securities maturities or
capital appreciation. Likewise, under the terms of the ESSOP, employee
savings may be invested, at the employee's direction, in publicly managed
mutual funds that focus on long term capital appreciation, long term capital
growth, long term growth of capital and income, long term growth through
investments in common stocks of non-U.S. companies and in short to
intermediate term bonds and other fixed income securities. Further,
employee savings may be invested in funds managed by the ESSOP trustee or
ESSOP Administration Committee. One fund provides for a diversified
investment portfolio and the other fund was 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
Kurt W. Kreyling
Wilbur S. Legg
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, 1995, 1994 and 1993:
<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> <C> <C> <C> <C> <C>
A.C. Zucaro 1995 $ 494,133 $ 200,000 50,000 $ 7,560
President 1994 468,083 450,000 -- 11,600
Chief Executive 1993 454,850 400,000 50,000 5,486
Officer
Paul D. Adams 1995 250,000 100,000 5,000 4,373
Senior Vice 1994 242,500 115,000 -- 7,353
President, 1993 235,000 110,000 15,000 3,262
Chief Financial
Officer & Treasurer
Spencer LeRoy III 1995 266,667 75,000 7,500 3,366
Senior Vice 1994 256,667 80,000 -- 7,406
Pr
esident, Secretary 1993 251,800 62,500 -- 3,366
& General Counsel
William A. Simpson 1995 242,325<F5> 325,000 25,000 17,777 <F6>
Senior Vice 1994 230,308<F5> 250,000 -- 20,840 <F6>
President 1993 223,978<F5> 200,000 20,000 21,800 <F6>
<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 1995, the Company's matching
contribution for each was $1,800. For 1995, $5,760, $2,573, $1,566, and $979 were attributed to the compensation of Messrs.
Zucaro, Adams, LeRoy, and Simpson, respectively, for group term life insurance premiums paid by the Company.
<F5> 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.
<F6> Includes $15,000, $15,000 and $20,000 as the vested amount accrued for Mr. Simpson in the RMIC Profit Sharing Plan for
1995, 1994 and 1993, 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, 1995, 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 5 10 15 20 25 30
<S> <C> <C> <C> <C> <C> <C>
$150,000 $11,250 $22,500 $33,750 $45,000 $56,250 $67,500
200,000 15,000 30,000 45,000 60,000 75,000 90,000
250,000 18,750 37,500 56,250 75,000 93,750 112,500
300,000 22,500 45,000 67,500 90,000 112,500 135,000
350,000 26,250 52,500 78,750 105,000 131,250 157,000
400,000 30,000 60,000 90,000 120,000 150,000 180,000
450,000 33,750 67,500 101,250 135,000 168,750 202,500
500,000 37,500 75,000 112,500 150,000 187,500 225,000
550,000 41,500 82,500 123,750 165,000 206,250 247,500
<FN>
<F1> The maximum benefit allowed by law for a qualified plan is limited to
$120,000 in 1996. 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, 1995, Mr. Zucaro was credited with 19 years of
service, Mr. Adams was credited with 6 years of service and Mr. LeRoy was
credited with 3 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, 1995, the
highest average annual earnings for purposes of the above computations under
the Company Plan were approximately $430,333 for Mr. Zucaro, $234,267 for Mr.
Adams and $257,778 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 (3 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 1995
The following table sets forth certain information regarding options to
purchase shares of Common Stock granted during the Company's 1995 fiscal year
to the Executive officers of the Company named in the Executive Compensation
Table:
<TABLE>
Option Grants in 1995
(a) (b) (c) (d) (e) (f)
Potential
Realizable Value of Assumed
Annual Rates of Stock Price
Appreciation for Option Term
Individual Grants
% of @ Annual Compounding
Number of Total Growth Rate Of:
Securities Options
Underlying Granted to Expira-
Options Employees Exercise tion
Name Granted<F1> in 1995 Price Date 5% 10%
<S> <C> <C> <C> <C> <C> <C>
A. C. Zucaro 50,000 8.1 $ 24.38 12/31/04 $ 767,970 $1,938,210
Paul D. Adams 5,000 .8 $ 24.38 12/31/04 $ 76,797 $ 193,821
Spencer LeRoy III 7,500 1.2 $ 24.38 12/31/04 $ 115,196 $ 290,732
William A. Simpson 25,000 4.1 $ 24.38 12/31/04 $ 383,985 $ 969,105
<FN>
<F1> See the Report of the Compensation Committee on Executive Management Compensation "Stock Option Plan" regarding the vesting
of stock options.
</TABLE>
Aggregate Options Exercised in 1995 and Option Values at December 31, 1995
The following table sets forth certain information regarding options to
purchase shares of Common Stock exercised during the Company's 1995 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 1995 fiscal year by the
executive officers of the Company named in the Executive Compensation Table:
<TABLE>
Aggregated Option Exercises in 1995
and Option Values at December 31, 1995
(a) (b) (c) (d) (e)
Number of
Securities Value of
Underlying Unexercised
Unexercised In-the-Money
Options at Options at
12/31/95 12/31/95
Shares Acquired Exercisable/ Exercisable/
Name on Exercise Value Realized<F1> Unexercisable Unexercisable <F2>
<S> <C> <C> <C> <C> <C> <C>
A. C. Zucaro None -- 102,206 / 80,000 $2,067,468 / $863,700
Paul D. Adams 790 $ 11,854 28,362 / 15,000 $ 599,876 / $159,030
Spencer LeRoy III None -- 10,750 / 21,750 $ 158,340 / $300,060
William A. Simpson None -- 28,124 / 36,500 $ 564,540 / $395,520
<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 option 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, 1995 and the option exercise price per share multiplied by the number of shares subject to options.
</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, 1995. For pur-
poses 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.
<TABLE>
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, 1995)
(INSERT CHART HERE)
1990 1991 1992 1993 1994 1995
<S> <C> <C> <C> <C> <C> <C>
ORI $100.00 $175.05 $249.56 $231.03 $221.71 $377.16
S&P 500 $100.00 $130.47 $140.41 $154.56 $156.60 $215.45
Peer Group $100.00 $133.85 $155.12 $168.89 $171.75 $249.05
</TABLE>
The Peer Group of companies selected by Old Republic 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 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.
PROPOSAL I - ELECTION OF DIRECTORS
The following tabulation lists all nominees and continuing directors of
the Company. Four Class 3 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 3 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.
<TABLE>
Positions with Company,
Business Experience, and
Name Age Other Directorships
Nominees for Election
<S> <C> <C>
CLASS 3 (Term expires in 1996)
Peter Lardner 64 Director since 1985; Chairman and Chief Executive
Officer of Bituminous Casualty Corporation, a subsidiary
of the Company, for more than the past five years.
William A. Simpson 54 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 58 Director since 1974; Retired for more than the past five
years; formerly President of Steiner Bank,
Birmingham, Alabama.
William R. Stover 73 Director since 1969; Retired; prior to 1993, Chairman
of the Board of the Company and various subsidiaries,
Chief Executive Officer of the Company and various
subsidiaries prior to 1990.
Continuing Member
CLASS 1 (Term expires in 1997)
Anthony F. Colao 68 Director since 1987; Senior Vice President of the
Company since 1987; formerly Partner of Coopers &
Lybrand, L.L.P., 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 75 Director since 1980; Retired; Consultant to Old
Republic Title Holding Company, Inc. (formerly
Founders Title Group, Inc.), a subsidiary of the
Company. Formerly Chairman of the Board of Founders
Title Group, Inc. for more than 5 years prior to his
retirement in 1992.
Kurt W. Kreyling 74 Director since 1974; Retired for more than the last five
years; formerly President and Treasurer of
Kreyling Company, wholesaler of floor coverings,
Evansville, Indiana.
CLASS 1 (Term expires in 1997)
William G. White, Jr. 67 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 56 Director since 1976; Chairman of the Board of the
Company and various subsidiaries since 1993; Chief
Executive Officer of the Company and various
subsidiaries since 1990; President of the Company and
various subsidiaries for more than the past five years.
CLASS 2 (Term expires in 1998)
Jimmy A. Dew 55 Director since 1980; Executive Vice President of
Republic Mortgage Insurance Company, a subsidiary of
the Company, for more than the past five years.
Wilbur S. Legg 73 Director since 1969; Retired; formerly Partner of Lord,
Bissell & Brook, attorneys, Chicago, Illinois. Mr. Legg's
former firm has been retained by the Company as counsel
during more than the last two fiscal years.
John W. Popp 73 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.
David Sursa 70 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.
</TABLE>
Board of Directors Recommendation
The Board of Directors recommends a vote FOR the Class 3 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 corporation's 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 matters to be 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
Company's 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, 1995 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 1996. 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 1997 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 1997 Annual Meeting of
Shareholders, the proposal must be received by the Company no later than
December 2, 1996.
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 telephone.
By order of the Board of Directors.
SPENCER LEROY III
Secretary
Chicago, Illinois
March 29, 1996
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 24, 1996, at 3:00 P.M.,
Chicago Time, or at any adjournment thereof.
Election of four Class 3 Directors. Nominees:
Peter Lardner, William A. Simpson, Arnold L. Steiner and William R. Stover
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.
1. Election of Directors
FOR [ ] WITHHELD [ ]
___________________________________________
For, except vote withheld from the following nominee(s):
2. In their discretion upon such other business as may properly come before
the meeting or any adjournment thereof.
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 29, 1996
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 24, 1996. 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
(Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
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