<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
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 Rule 14a-11(c) or Rule 14a-12
ORION CAPITAL CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
ORION CAPITAL CORPORATION
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (Check the appropriate box):
/X/ $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(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:
- --------------------------------------------------------------------------------
/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the form or schedule and the date of its filing.
(1) Amount previously paid:
- --------------------------------------------------------------------------------
(2) Form, schedule or registration statement no.:
- --------------------------------------------------------------------------------
(3) Filing party:
- --------------------------------------------------------------------------------
(4) Date filed:
- --------------------------------------------------------------------------------
- ---------------
/1 Set forth the amount on which the filing fee is calculated and state how it
was determined.
<PAGE> 2
[LOGO]
ORION CAPITAL CORPORATION 30 Rockefeller Plaza, New York, N.Y. 10112
(212) 332-8080
ALAN R. GRUBER
Chairman
&
Chief Executive Officer
April 15, 1994
Dear Stockholder:
On behalf of the Board of Directors and management, I cordially invite you
to the Annual Meeting of Stockholders to be held on Wednesday, June 1, 1994, at
Chemical Bank, 270 Park Avenue, 3rd Floor Auditorium, New York, New York,
commencing at 10 A.M. Your Board of Directors and management look forward to
greeting in person those stockholders able to attend. The formal notice of this
meeting and the Proxy Statement accompany this letter.
Resolutions pertaining to the annual election of your Board of Directors
and ratification of the appointment of independent accountants for 1994 will be
acted upon at this year's meeting. In addition to the matters covered by the
attached notice, the meeting will give us an opportunity to review with you the
business and affairs of your Company during 1993 and to provide a current report
on the progress being made by the Company in 1994 and the Company's prospects
for the future. A discussion period will follow the report, during which
stockholders are invited to raise matters of interest about the Company.
Your vote is important, regardless of the number of shares you may own. TO
BE SURE YOUR SHARES ARE VOTED AT THE MEETING, IF YOU ARE UNABLE TO ATTEND IN
PERSON, PLEASE TAKE A MOMENT NOW TO SIGN, DATE AND MAIL YOUR PROXY IN THE
ENCLOSED POSTAGE PAID ENVELOPE. This will not prevent you from voting your
shares in person if you attend the meeting. Your cooperation in mailing your
proxy promptly will be greatly appreciated.
Thank you for your continued support. We look forward to seeing you on
Wednesday, June 1.
Very truly yours,
/s/ ALAN R. GRUBER
<PAGE> 3
ORION CAPITAL CORPORATION
30 ROCKEFELLER PLAZA
NEW YORK, NEW YORK 10112
------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
JUNE 1, 1994 AT 10:00 A.M., EASTERN DAYLIGHT SAVING TIME
CHEMICAL BANK
270 PARK AVENUE
3RD FLOOR AUDITORIUM
NEW YORK, NEW YORK
Notice is hereby given that the Annual Meeting of Stockholders of Orion
Capital Corporation (the "Company") will be held at Chemical Bank, 270 Park
Avenue, 3rd Floor Auditorium, New York, New York, on Wednesday, June 1, 1994 at
10:00 A.M., Eastern Daylight Saving Time, for the following purposes:
1. To elect a Board of Directors to serve until the 1995 Annual
Meeting of Stockholders and until their successors are elected and qualify.
2. To act upon a proposal to ratify the selection of Deloitte &
Touche, independent certified public accountants, as auditors for the
Company for the year 1994.
3. To transact such other business as may properly come before the
Annual Meeting or any adjournment or adjournments thereof.
Holders of the Company's Common Stock are entitled to vote for the election
of directors and on each of the other matters set forth above.
The stock transfer books of the Company will not be closed. The Board of
Directors has fixed the close of business on April 4, 1994 as the record date
for the determination of stockholders entitled to notice of, and to vote at, the
Annual Meeting and any adjournment thereof. A complete list of all stockholders
entitled to vote at the Annual Meeting will be available for examination by any
stockholder, for any purpose germane to the Annual Meeting, at the Company's
offices, Room 2820, 30 Rockefeller Plaza, New York, New York 10112, during the
ten-day period preceding the meeting.
You are cordially invited to be present. Stockholders who do not expect to
attend in person are requested to sign and return the enclosed form of proxy in
the envelope provided. At any time prior to their being voted, proxies are
revocable by written notice to the Secretary of the Company or by attendance at
the meeting and voting in person. The immediate return of your proxy will be of
great assistance in preparing for the meeting and is therefore urgently
requested.
By order of the Board of Directors,
April 15, 1994
MICHAEL P. MALONEY
Vice President, General Counsel
and Secretary
<PAGE> 4
ORION CAPITAL CORPORATION
30 ROCKEFELLER PLAZA
NEW YORK, NEW YORK 10112
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON JUNE 1, 1994
This statement is furnished in connection with the solicitation of proxies
by your Board of Directors (the "Board") from holders of the outstanding shares
of Common Stock, $1.00 par value (the "Common Stock"), of Orion Capital
Corporation (the "Company") entitled to vote at the Annual Meeting of
Stockholders of the Company (and at any and all adjournments thereof) for the
purposes referred to below and set forth in the accompanying Notice of Annual
Meeting of Stockholders. This proxy statement and enclosed proxy are first being
mailed to stockholders on or about April 15, 1994. A copy of the Company's
Annual Report for 1993 is being mailed to all stockholders with this proxy
statement.
The Company's Board has fixed the close of business on April 4, 1994 as the
record date for the determination of stockholders entitled to notice of, and to
vote at, the Annual Meeting and any adjournment thereof. On that date, there
were outstanding and entitled to vote 14,346,238 shares of Common Stock (which
number excludes 991,412 shares owned by the Company and its subsidiaries).
Holders of Common Stock are entitled to one vote for each share held of record
on the record date with respect to matters on which such holder is entitled to
vote.
The presence, in person or by proxy, of a majority in number of the
outstanding shares of Common Stock as of the record date constitutes a quorum
and is required in order for the Company to conduct business at the Annual
Meeting. Such majority being present, the election of each nominee for Director
requires a plurality of the votes cast and the affirmative vote of the holders
of a majority of the shares of Common Stock represented in person or by proxy at
the Annual Meeting is required to ratify the appointment of the Company's
independent accountants. Abstentions and broker non-votes are counted towards a
quorum. Abstentions are counted in the tabulations of the votes cast, but broker
non-votes are not counted in such tabulations for purposes of determining
whether a proposal has been approved.
1. ELECTION OF DIRECTORS
Pursuant to the Company's By-Laws, the Board has fixed the number of
Directors, to serve after the retirement of Mr. Donald Reich, at thirteen.
Directors are to be elected by the holders of the Company's Common Stock to
serve until the 1995 Annual Meeting of Stockholders and until their successors
are elected and qualify. Unless instructions to the contrary are received,
proxies received in response to this solicitation will be voted in favor of the
nominees listed below to be Directors of the Company. If any nominee should
become unavailable for election (which is not anticipated), the shares
represented by the enclosed proxy will be voted for such substitute nominee as
may be proposed by the Board. If you do not wish your shares to be voted for
particular nominees, please so indicate on the proxy card.
Each nominee was elected or reelected by the stockholders at the last
Annual Meeting of Stockholders. Mr. Reich, a director since March 31, 1976, is
required to retire from the Board at this Annual Meeting in order to comply with
a By-Law requirement that prevents a director from being re-elected to the Board
once he has attained the age of 72. The following information with respect to
principal occupation and business experience has been furnished to the Company
by the respective nominees:
<PAGE> 5
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION, FIVE-YEAR
NAME, AGE AND POSITION BUSINESS EXPERIENCE AND OTHER
WITH THE COMPANY DIRECTOR SINCE CORPORATE DIRECTORSHIPS
- ------------------------- ------------------ ----------------------------------------------
<S> <C> <C>
Bertram J. Cohn, 68...... April 18, 1977 Managing Director and a limited partner, First
Director Manhattan Company (investment bankers) 1982-
present. Director: Bowne & Co., Inc.
John C. Colman, 67....... March 31, 1976 Private investor and consultant. Director:
Director Premier Industrial Corp.
Alan R. Gruber, 66....... March 31, 1976 Chairman of the Board and Chief Executive
Chairman of the Board Officer of the Company, 1976-present.
and Chief Executive Director: Guaranty National Corporation,
Officer, Orion Capital Ketema, Inc., and Trenwick Group Inc. Trustee
Corporation of four trusts which manage the Neuberger &
Berman family of equity mutual funds.
Peter B. Hawes, 58....... June 8, 1988 Senior Vice President of the Company,
Senior Vice President, 1988-present; President of the DPIC Companies,
Orion Capital wholly-owned subsidiaries of the Company,
Corporation 1982-present.
Larry D. Hollen, 48...... March 20, 1992 President and Chief Operating Officer of the
President and Chief Op- Company since March 1, 1994; Executive Vice
erating Officer, Orion President and Assistant Chief Operating
Capital Corporation Officer of the Company from December 1, 1992
to February 28, 1994, Senior Vice President
from 1990 to 1992 and Vice President from 1988
to 1990; President of the EBI Companies,
wholly-owned subsidiaries of the Company, from
January 1990 to May 31, 1993, President of the
Eastern Division of the EBI Companies from
July 1988 to December 1989.
Robert H. Jeffrey, 64.... March 31, 1976 President, Jeflion Investment Company,
Director 1974-present; President, The Jeffrey Company
(a privately held investment company which is
the parent of Jeflion Investment Company),
1973-present.
Warren R. Lyons, 48...... September 9, 1992 President, Avco Financial Services (a
Director financial services company and a subsidiary of
Textron Inc.), 1989-present; Group Vice
President of Textron Inc. (a diverse holding
company) from January 1989 to November 1989.
James K. McWilliams, 66... January 7, 1981 Proprietor of McWilliams & Company and general
Director partner of McWilliams Associates (investment
counselors), 1967-present; General Partner,
Mt. Eden Vineyards, 1986-present.
Ronald W. Moore, 49...... April 1, 1991 Adjunct Professor of Business Administration,
Director Graduate School of Business Administration,
Harvard University, 1990-present; Managing
Director of Shearson Lehman Brothers Inc.
(investment bankers) 1984 to 1990. Director:
CMAC Investment Corporation.
Robert B. Sanborn, 65.... June 3, 1987 Vice Chairman of the Board of the Company
Vice Chairman of the since March 1, 1994; President and Chief
Board, Orion Operating Officer of the Company from 1987 to
Capital Corporation February 28, 1994; Chairman of the American
Insurance Association (a property and casualty
insurance company trade group) from January
1993 to January 1994. Director: Guaranty
National Corporation, HCG Lloyd's Investment
Trust plc and Intercargo Corporation.
</TABLE>
2
<PAGE> 6
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION, FIVE-YEAR
NAME, AGE AND POSITION BUSINESS EXPERIENCE AND OTHER
WITH THE COMPANY DIRECTOR SINCE CORPORATE DIRECTORSHIPS
- ------------------------- ------------------ ----------------------------------------------
<S> <C> <C>
William J. Shepherd, September 22, 1976 Private Investor; Chairman, Chemical New
67..................... Jersey Holdings (a bank holding company),
Director 1990-1991, Chairman and Chief Executive
Officer, 1989-1990; Chairman, Chemical Bank
New Jersey (a commercial bank), 1989-1991;
Chairman, Princeton Bank and Trust Company (a
commercial bank), 1989-1991. Director:
Guaranty National Corporation.
John R. Thorne, 68....... April 18, 1977 Morgenthaler Professor of Entrepreneurship,
Director Graduate School of Industrial Administration
of Carnegie Mellon University, 1986-present;
Chairman, The Enterprise Corporation of
Pittsburgh (a private, non-profit corporation
encouraging and supporting entrepreneurial
businesses), 1983-present; a general partner
of Pittsburgh Venture Partners, the general
partner of the Pittsburgh Seed Fund (a private
venture capital fund), 1985-present. Direc-
tor: Medrad Inc.
Roger B. Ware, 59........ November 1, 1988 President and Chief Executive Officer of
Director Guaranty National Corporation (a property and
casualty insurance company), 1983-present;
Senior Vice President of the Company, 1988 to
November 1991. Director: Guaranty National
Corporation.
</TABLE>
The Board of Directors has an Audit Committee, the current members of which
are Messrs. Colman (Chairman), Moore, Cohn and Thorne, none of whom is an
employee of the Company. The Audit Committee confers periodically with
management, the Company's internal auditors and the Company's independent
accountants in connection with the preparation of financial statements and
audits thereof and the maintenance of proper financial records and controls. The
Audit Committee also reviews the nature and extent of any non-audit services
provided by the Company's independent accountants. The Audit Committee makes
recommendations to the Board with respect to the foregoing and brings to the
attention of the Board any criticisms and recommendations that the independent
accountants may have or any suggestions of the Audit Committee itself. During
1993, the Audit Committee held two meetings.
The Board has a Compensation Committee, the current members of which are
Messrs. Shepherd (Chairman), Jeffrey, Lyons, McWilliams and Reich, none of whom
is an employee of the Company. The Compensation Committee reviews the amount and
terms of compensation paid to the principal executive officers of the Company
and of the Company's subsidiaries and may authorize, or recommend to the Board
the authorization of, such salary levels, employment agreements and general
incentive compensation arrangements as the Compensation Committee may deem
appropriate. Based on the Committee's ongoing review of the performance of the
Company's key executives and of alternative forms of current incentive and
performance-based compensation, the Board may authorize the adoption of one or
more of the available alternatives in addition to or in substitution for one or
more of the present components of the Company's compensation arrangements. The
Company does not have a standing nominating committee, but the Compensation
Committee is authorized to act as a search and nomination committee to recommend
nominees to the full Board for membership on the Company's Board of Directors.
Nominees suggested by stockholders (accompanied by biographical material and the
candidate's written consent to nomination) sent to the Corporation in care of
the Secretary will be considered by the Compensation Committee. The Compensation
Committee also performs such other functions as may be delegated to it by the
Board. During 1993, the Compensation Committee held three meetings.
The Board also has an Executive Committee, the members of which are Messrs.
Gruber (Chairman), Shepherd and Cohn. The Executive Committee, during intervals
between meetings of
3
<PAGE> 7
the Board, may exercise all of the powers of the Board in the management and
control of the business of the Company, except as limited by law and except with
respect to matters within the powers of the Audit Committee or Compensation
Committee. Actions taken by the Executive Committee are reported to the Board at
the next meeting of the Board. During 1993, the Executive Committee held one
meeting.
The Board held nine meetings in 1993. Each director attended at least 75%
of the aggregate number of meetings of the Board and of all committees on which
he served, except for Mr. Cohn who, due to illness, attended 72% of such
meetings.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Company's subsidiaries hold slightly less than 50% of the outstanding
common stock of Guaranty National Corporation ("Guaranty"). The Company and
Guaranty have entered into a shareholder agreement with respect to the
composition of the Board of Directors and committees of Guaranty. So long as the
Company or its subsidiaries beneficially own in the aggregate 30% or more of the
voting securities of Guaranty, the Company has the right to designate three
nominees to the Guaranty Board, and so long as the Company or its subsidiaries
beneficially own 20% or more of such Guaranty securities, two nominees to
Guaranty's Board. Currently, Messrs. Gruber, Sanborn and Shepherd serve as
directors of Guaranty and constitute the entire membership of Guaranty's
Compensation Committee. The Company's Compensation Committee is composed of
Messrs. Shepherd, Jeffrey, Lyons, and McWilliams. Mr. Shepherd is the Chairman
of both the Company's Compensation Committee and Guaranty's Compensation
Committee. Roger B. Ware, Guaranty's President and Chief Executive Officer,
serves as a member of the Company's Board of Directors but is not a member of
any of its Committees. Mr. Ware receives the regular fees paid to all
non-employee directors of the Company.
4
<PAGE> 8
SECURITY OWNERSHIP OF DIRECTORS, OFFICERS
AND PRINCIPAL BENEFICIAL OWNERS
The following table sets forth information concerning the shares of the
Company's Common Stock beneficially owned by all Directors, by each of the
executive officers named in the Summary Compensation Table on page 8 and all
Directors and officers of the Company as a group, and each person or group who
is known by the Company to be the beneficial owner of more than five percent of
the total number of shares of the Company's Common Stock outstanding and
entitled to vote.(1) All such information is given as of April 4, 1994, unless
otherwise indicated.
<TABLE>
<CAPTION>
PERCENT
NAME OF AMOUNT AND NATURE OF
BENEFICIAL OWNER OF BENEFICIAL OWNERSHIP CLASS
------------------------------------------- ----------------------- -------
<S> <C> <C>
Bertram J. Cohn............................ 7,812(2) 0.05%
John C. Colman............................. 12,822(3) 0.09%
Alan R. Gruber............................. 229,396(4) 1.60%
Peter B. Hawes............................. 75,574(5) 0.53%
Larry D. Hollen............................ 40,991(6) 0.29%
Robert H. Jeffrey.......................... 3,437(2) 0.02%
Warren R. Lyons............................ 933(7) 0.01%
James K. McWilliams........................ 4,687(2) 0.03%
Ronald W. Moore............................ 1,087(2) 0.01%
Donald Reich............................... 96,214(2) 0.67%
Robert B. Sanborn.......................... 88,322(8) 0.62%
Raymond J. Schuyler........................ 29,218(9) 0.20%
William J. Shepherd........................ 15,625(2) 0.11%
John R. Thorne............................. 10,936(10) 0.08%
Roger B. Ware.............................. 3,918(2) 0.03%
All Directors and officers as a group (20
persons)................................. 740,180(11) 5.16%
Neuberger & Berman......................... 1,439,163(12) 10.03%
605 Third Ave,
New York, New York 10158
College Retirement Equities Fund........... 851,206(13) 5.93%
730 Third Avenue
New York, New York 10017
Orion Capital Corporation Employees' Stock
Savings and Retirement Plan.............. 669,265(11) 4.67%
30 Rockefeller Plaza
New York, New York 10112
</TABLE>
- ---------------
(1) Excludes 991,412 shares owned by the Company and its subsidiaries.
(2) Indicates sole voting and investment power.
(3) Includes 3,204 shares held in trust for Mr. Colman's children, over which
he has shared voting and investment power, and 1,643 shares held by Mrs.
Colman. Mr. Colman disclaims beneficial ownership of the shares held by his
wife and held in trust for his children.
(4) Includes 119,587 shares as to which Mr. Gruber has sole voting and
investment power, 83,728 shares which Mr. Gruber has a right to purchase as
of June 30, 1994 pursuant to the terms of the 1979 Stock Option Plan or the
1982 Long-Term Performance Incentive Plan ("Performance Incentive Plan")
and approximately 26,081 shares which represent his proportionate interest
in shares held by the Trustee under the Company's Employees' Stock Savings
and Retirement Plan ("Savings and Retirement Plan") as of December 31,
1993.
(5) Includes 55,171 shares as to which Mr. Hawes has sole voting and investment
power, 1,758 shares which Mr. Hawes has a right to purchase as of June 30,
1994 pursuant to the terms of the Performance Incentive Plan, 12,265 shares
of restricted stock held pursuant to the terms of the Performance Incentive
Plan ("Restricted Stock") and approximately 6,380 shares which represent
his proportionate interest in shares held by the Trustee under the Savings
and Retirement Plan as of December 31, 1993.
5
<PAGE> 9
(6) Includes 10,546 shares as to which Mr. Hollen has sole voting and
investment power, 1,758 shares which Mr. Hollen has a right to purchase as
of June 30, 1994 pursuant to the terms of the Performance Incentive Plan,
17,655 shares of Restricted Stock held pursuant to the terms of the
Performance Incentive Plan and approximately 10,600 shares which represent
his proportionate interest in shares held by the Trustee under the Savings
and Retirement Plan as of December 31, 1993. Also includes 432 shares held
by Mrs. Hollen, as to which Mr. Hollen disclaims beneficial ownership.
(7) Includes 702 shares as to which Mr. Lyons has sole voting and investment
power and 231 shares owned by Mrs. Lyons. Mr. Lyons disclaims beneficial
ownership of the shares owned by Mrs. Lyons.
(8) Includes 9,500 shares as to which Mr. Sanborn has sole voting and
investment power, 69,631 shares which Mr. Sanborn has a right to purchase
as of June 30, 1994 pursuant to the terms of the Performance Incentive Plan
and approximately 6,691 shares which represent his proportionate interest
in shares held by the Trustee under the Savings and Retirement Plan as of
December 31, 1993. Also includes 2,500 shares held by Mrs. Sanborn, as to
which Mr. Sanborn disclaims beneficial ownership.
(9) Includes 13,631 shares as to which Mr. Schuyler has sole voting and
investment power, 4,492 shares which Mr. Schuyler has a right to purchase
as of June 30, 1994 pursuant to the terms of the Performance Incentive
Plan, 1,562 shares of Restricted Stock held pursuant to the terms of the
Performance Incentive Plan and approximately 9,533 shares which represent
his proportionate interest in shares held by the Trustee under the Savings
and Retirement Plan as of December 31, 1993.
(10) Includes 8,593 shares as to which Mr. Thorne has sole voting and investment
power and 2,343 shares owned by Mrs. Thorne. Mr. Thorne disclaims
beneficial ownership of the shares owned by Mrs. Thorne.
(11) Includes 84,973 shares which represent the group's proportionate interest
in shares held by the Trustee under the Savings and Retirement Plan as of
December 31, 1993, 172,891 shares which the group has rights to acquire as
of June 30, 1994 pursuant to the 1979 Stock Option Plan and the Performance
Incentive Plan and 38,938 shares of Restricted Stock held pursuant to the
terms of the Performance Incentive Plan. As of December 31, 1993, the
Savings and Retirement Plan, as a whole, held 669,265 shares (4.67%) of the
Company's Common Stock. Shares of the Company's Common Stock held by the
Savings and Retirement Plan Trustee will be voted in accordance with the
instructions of the employees for whose account the shares are held. If no
such instructions are received, the Savings and Retirement Plan Trustee
will vote such shares in the same proportion as it votes shares for which
it does receive instructions from other participating employees.
(12) Neuberger & Berman ("N&B") reported in an amendment to its Schedule 13-G
filed with the Securities and Exchange Commission on January 31, 1994 that
it held 1,439,163 shares of the Company's Common Stock with shared power to
dispose or direct the disposition of all such shares, sole voting power
with respect to 511,344 shares and shared voting power as to 664,344 of
such shares. N&B has reported that it holds such shares for many unrelated
clients, none of whom has an interest relating to five percent or more of
the Company's Common Stock. The number reported in the table excludes
70,781 shares of Common Stock held by certain partners of N&B in their own
personal securities accounts. N&B disclaims beneficial ownership of such
shares owned directly by N&B partners. Mr. Gruber is a trustee of four
trusts which manage the Neuberger & Berman family of equity mutual funds.
(13) College Retirement Equities Fund reported in an amendment to its Schedule
13-G, filed with the Securities and Exchange Commission on February 11,
1994, that it held 851,206 shares of the Company's Common Stock with sole
power to vote to dispose or direct the disposition of such shares.
6
<PAGE> 10
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT.
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires the Company's Directors and executive officers to file
with the Securities and Exchange Commission (the "SEC") and the New York Stock
Exchange initial reports of ownership and reports of changes in ownership of
Common Stock and other equity securities of the Company. Officers and Directors
are required by SEC regulation to furnish the Company with copies of all Section
16(a) forms they file.
To the Company's knowledge, based solely on a review of the copies of such
reports furnished to the Company and written representations from reporting
persons that they were not required to file Form 5, all of its officers and
Directors have complied with all filing requirements applicable to them with
respect to transactions during 1993.
7
<PAGE> 11
EXECUTIVE COMPENSATION
The information presented in this section and elsewhere in this Proxy
Statement with respect to the Company's Common Stock market prices, number of
shares of Restricted Stock, number of shares of Common Stock covered by Options,
Option exercise prices and number of Performance Units have been adjusted to
reflect the effect of the 5-for-4 stock splits paid on both November 15, 1993
and December 7, 1992.
SUMMARY COMPENSATION TABLE
The Summary Compensation Table shows information concerning the annual and
long-term compensation for services in all capacities to the Company for the
years ended December 31, 1993, 1992 and 1991 of those persons who were at
December 31, 1993 (1) the chief executive officer and (2) the other four most
highly compensated executive officers of the Company. (The chief executive
officer and the other four most highly compensated executive officers are
referred to collectively as the "Named Officers.") On March 1, 1994, Mr. Sanborn
became Vice Chairman of the Board of Directors of the Company and Mr. Hollen
became President and Chief Operating Officer.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
--------------------------------------------
AWARDS PAYOUTS
ANNUAL COMPENSATION -------------------------------- ---------
RESTRICTED STOCK LONG-TERM
------------------- STOCK OPTIONS INCENTIVE ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS AWARD(S)(1)(2) (SHARES)(2)(3) PAYOUTS(4) COMPENSATION(5)(6)
- --------------------------------- ---- -------- -------- -------------- -------------- --------- ------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Alan R. Gruber................... 1993 $466,794 $370,000 $ -0- -0- $ 87,891 $ 63,879
Chairman of the Board & 1992 445,548 325,000 -0- 23,438 312,487 74,357
Chief Executive Officer 1991 416,700 250,000 -0- -0- 25,849
Robert B. Sanborn................ 1993 312,450 235,000 -0- -0- 63,052 40,318
President & 1992 294,948 225,000 -0- 14,063 55,714 43,626
Chief Operating Officer 1991 271,194 200,000 -0- -0- 22,828
Larry D. Hollen.................. 1993 212,450 150,000 -0- -0- 22,116 35,527
Executive Vice President 1992 175,133 100,000 375,000 7,031 22,282 31,753
& Assistant Chief 1991 159,825 73,000 -0- -0- 6,972
Operating Officer
Peter B. Hawes................... 1993 214,700 135,000 -0- -0- 154,687 40,092
Senior Vice President 1992 204,700 115,000 -0- 7,031 151,453 47,686
of the Company 1991 194,445 130,000 -0- -0- 25,245
and President of the
DPIC Companies
Raymond J. Schuyler.............. 1993 169,700 85,000 -0- -0- 19,169 33,040
Vice President -- 1992 160,700 75,000 -0- 5,469 24,374 34,916
Investments 1991 151,200 65,000 -0- -0- 7,600
</TABLE>
- ---------------
(1) Represents shares of Restricted Stock awarded to the Named Officers pursuant
to the terms of the Performance Incentive Plan. No awards were made to any
of the Named Officers in 1993. Pursuant to his employment agreement, 15,625
shares of Restricted Stock were awarded to Mr. Hollen on December 1, 1992,
based on a market price per share of $24.00. Each award vests in four equal
installments beginning on the second anniversary of each award. Awards of
Restricted Stock are subject to restrictions on transfer and will be
forfeited if the Named Officer terminates his employment prior to the fifth
anniversary of the date of each award. If a Change in Control (as defined in
the Performance Incentive Plan) were to occur before the shares of
Restricted Stock were fully vested, all of such shares would become
immediately vested. Dividends are paid on Restricted Stock when and as paid
on the Company's Common Stock.
8
<PAGE> 12
The aggregate total of Restricted Stock holdings of each of the Named
Officers, valued as of December 31, 1993, at a market price of $31.875
per share are as follows:
<TABLE>
<CAPTION>
RESTRICTED STOCK
--------------------
NAME SHARES VALUE
------ --------
<S> <C> <C>
Larry D. Hollen.......................................... 17,655 $562,753
Peter B. Hawes........................................... 22,030 702,206
Raymond J. Schuyler...................................... 1,562 49,789
</TABLE>
(2) Awards of Restricted Stock or Options are made in tandem with awards of
Performance Units pursuant to the terms of the Performance Incentive Plan.
The value of a Performance Unit under the Performance Incentive Plan will be
equal at any time to the book value per share of the Company's Common Stock.
However, the right of any Named Officer to receive payment in respect of a
Performance Unit award is contingent upon (a) whether the Named Officer
remains an employee of the Company (except in the case of retirement,
disability or death) throughout the applicable period ("Performance
Period"), and (b) whether the applicable target ("Performance Target"), as
established at the time of award by the Compensation Committee, has been
achieved. The Compensation Committee has determined that all Performance
Units awarded to date will have a Performance Target of an 11% compound
annual increase in the Company's book value per share during a five-year
Performance Period to achieve the maximum payout. If the compound annual
increase in the Company's book value per share during the Performance Period
does not exceed 6%, no payout is made.
No awards of Performance Units were made to any Named Officer in 1993. On
December 1, 1992, 7,812.5 Performance Units were awarded to Mr. Hollen; on
September 9, 1992, 5,859.4, 3,515.6, 1,757.8, 1,757.8 and 1,367.2
Performance Units were awarded to Messrs. Gruber, Sanborn, Hollen, Hawes and
Schuyler, respectively.
(3) Options awarded to the Named Officers are granted pursuant to the terms of
the Performance Incentive Plan. To the maximum possible extent, all stock
options have been structured to qualify as Incentive Stock Options. No
option may be exercised more than ten years from the date of grant, and the
exercise price may not be less than 100% of the fair market value on the
date of grant of the shares covered thereby. When an option is exercised,
the full exercise price must be paid in cash and/or by the surrender, at
fair market value, of shares of the Company's Common Stock. Generally, each
option is exercisable in installments, as follows: 25% of the shares of
Common Stock covered by the option may be purchased on and after the first
anniversary of the date of grant and additional 25% installments on and
after each of the second, third and fourth anniversaries of the date of
grant.
(4) Cash value of Performance Units granted under the Performance Incentive Plan
for Performance Periods ended December 31, 1993, 1992 and 1991. In addition,
during 1992 the Company terminated its 1979 Performance Unit Plan (the "Old
Unit Plan") and distributed to all participants their vested benefits under
the Old Unit Plan. As a result of that termination, Mr. Gruber received a
distribution of all his benefits under the Old Unit Plan in the amount of
$216,002.
(5) Detail of amounts reported in the "All Other Compensation" column for 1993
is provided in the table below.
<TABLE>
<CAPTION>
ITEM MR. GRUBER MR. SANBORN MR. HOLLEN MR. HAWES MR. SCHUYLER
- ----------------------------------------------------- ---------- ----------- ---------- --------- ------------
<S> <C> <C> <C> <C> <C>
- - Company Contributions to the Supplemental Benefits
Plan (see below)................................... $ 43,646 $20,085 $ 7,756 $ 2,396 $ 1,480
- - Company Contributions to Savings and Retirement
Plan............................................... 20,233 20,233 20,233 19,043 17,034
- - Split Dollar Insurance Premium..................... -- -- 7,538 18,653 14,526
---------- ----------- ---------- --------- ------------
Total All Other Compensation.................. $ 63,879 $40,318 $ 35,527 $40,092 $ 33,040
---------- ----------- ---------- --------- ------------
---------- ----------- ---------- --------- ------------
</TABLE>
In addition to the above, Mr. Gruber is provided term life insurance
pursuant to the terms of his employment agreement. A premium of $10,393 for
that insurance was paid in 1993 by the Company.
The Savings and Retirement Plan is a qualified 401(k) savings plan in which
all employees of the Company are eligible to participate. The Company makes
matching contributions to the Plan of up
9
<PAGE> 13
to 6% of a participating employee's base salary, unless limited by federal tax
regulations. The Company contributes to the Supplemental Benefits Plan that
portion of the Company's contribution in the Savings and Retirement Plan that an
employee failed to receive because of federal tax regulations limiting such
contributions.
(6) In accordance with the rules of the SEC, information with respect to years
prior to 1992 has been omitted.
OPTION EXERCISES AND FISCAL YEAR-END VALUES
The following table provides information with respect to the unexercised
options to purchase Common Stock granted in fiscal 1992 and prior years under
the Performance Incentive Plan and under the Company's 1979 Stock Option Plan
for each of the Named Officers and held by them at December 31, 1993. No options
were granted to any Named Officer in 1993.
<TABLE>
<CAPTION>
NUMBER OF VALUE OF UNEXERCISED
UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS
SHARES AT DECEMBER 31, 1993 AT DECEMBER 31, 1993(2)
ACQUIRED VALUE ---------------------------- ----------------------------
NAME ON EXERCISE REALIZED(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ------------------------------ ------------ ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Alan R. Gruber................ 11,000 $ 175,090 83,728 26,365 $1,509,891 $ 320,123
Robert B. Sanborn............. 12,400 281,641 69,632 15,234 1,263,053 180,055
Larry D. Hollen............... -0- -0- 1,758 5,273 13,985 41,947
Peter B. Hawes................ -0- -0- 8,008 5,273 93,204 41,947
Raymond J. Schuyler........... -0- -0- 4,492 4,102 66,984 32,631
</TABLE>
- ---------------
(1) Represents difference between exercise price and market value on date of
exercise. For a description of the material terms of Options and the
Performance Units awarded in tandem therewith, see footnotes 2 and 3 on page
9.
(2) Based on the closing price on the New York Stock Exchange -- Composite
Transactions of the Company's Common Stock on that date ($31.875).
Notwithstanding anything to the contrary set forth in any of the Company's
previous filings under the Securities Act of 1933, as amended, or the Exchange
Act that might incorporate future filings, including this proxy statement, in
whole or in part, the following Report of the Compensation Committee and the
Performance Graph on page 13 shall not be incorporated by reference into any
such filing.
REPORT OF THE COMPENSATION COMMITTEE
The Compensation Committee, currently composed of five members of the Board
of Directors, is a standing committee of the Board and only "outside"
non-employee directors serve on this Committee. Among its duties the
Compensation Committee is charged with the responsibilities of establishing and
administering the Company's policies concerning the compensation of management,
including the Chief Executive Officer and all other key officers. In discharging
such duties, the Compensation Committee is responsible for annually determining,
and recommending to the full Board, the salary grade, the annual base salary and
bonus for each of the Company's officers, and for awarding grants under the
Company's Performance Incentive Plan.
GENERAL
The Company's stated objective is to achieve superior growth in shareholder
value by being the best specialty property and casualty insurer in each of its
businesses. In furtherance of that mission the Committee attempts to provide
incentives to motivate management to superior performance in order to enhance
the profitability of the Company (and, thus, shareholder value). Such incentives
also enable the Company to attract and retain qualified executives who will
contribute significantly to the long-term success of the Company.
10
<PAGE> 14
Executive compensation consists of a base salary, annual bonus and
long-term incentive compensation. Guidelines for executive compensation at the
Company are at levels which are generally at about the median of the range of
salaries paid to peer executives at other companies of generally similar size
that are engaged in similar businesses. The Committee believes that compensation
should be based upon the attainment of individual and Company goals and should
make possible total compensation levels in excess of industry averages if the
Company's or business unit's performance is above average.
In the first quarter of 1994 the Compensation Committee reviewed material
provided by Messrs. Gruber, Hollen and Sanborn and the Company's Human Resources
staff in connection with recommendations for bonuses with respect to services
provided in the prior year and for adjustments in base salaries. The process
involves an evaluation of many diverse elements.
ANNUAL COMPENSATION
The Committee believes that it is important to encourage a
performance-based environment that motivates individual performance by
recognizing the past year's results and by providing incentives for improvements
in the future. This includes an evaluation of an executive's ability to
implement the Company's business plans as well as to react to unanticipated
external factors that can have a significant impact on the Company's
performance. In making its recommendations for base salaries and annual bonuses
for key officers, the Compensation Committee considers a variety of factors,
including survey material on salary movements for peer executives at other
companies, each executive's success in meeting objectives, level of
responsibility, length of service, knowledge and potential for advancement,
although none of these factors is assigned a specific weight. Industry
compensation statistics are derived from a survey completed by an outside
consultant of 14 public property and casualty companies, including three of the
thirteen companies in the Dow Jones Property and Casualty Index, that compete
with the Company in one or more of its lines of business and range in size from
twice to one-half of the Company in total assets. The Committee also gives
consideration to its assessment of the quality of services rendered by the
executive during the year, the Company's success compared to its competitors,
and the internal comparability of compensation among the Company's executives.
All cash bonuses awarded to officers in respect of fiscal 1993 were awarded
pursuant to the Company's Annual Incentive Plan, a somewhat formalized,
target-oriented bonus program. A variety of financial and project targets are
established for each senior officer. These targets may include one or more of
the following measurements: return on stockholders' equity, operating earnings,
premium growth, loss and expense ratios, reduction in expenses and completion of
specific projects. Awards are generally based on the degree to which the targets
are attained and on individual performance during the year. Target annual bonus
awards, as a percentage of base salary, range from 25% for certain vice
presidents to 40% and 45% for the President and the Chairman, respectively.
Depending on performance, an individual could receive no bonus or an amount
equal to as much as twice his or her target bonus. In addition, personal
performance is measured against other relevant non-quantitative factors, such as
customer satisfaction, work efficiency or degree of skill required to perform
the task. The Compensation Committee, when it deems appropriate, may authorize
the payment of an individual bonus award even if the individual's targets are
not achieved. After the Company's year-end results have been audited by its
independent certified public accountants, payments under the program are made in
cash.
Mr. Gruber has an employment agreement with the Company (see "Employment
Agreements" below), pursuant to which he was paid a base salary of $470,000 for
the twelve month period beginning April 1, 1993. In determining bonus and the
increase in base salary for Mr. Gruber for 1994, the Committee considered the
Company's outstanding performance during 1993 as reflected in, among other
factors, a 16% increase in operating earnings and a 26.6% increase in
shareholders' equity from 1992, the Company's high return on equity and
relatively low combined ratios over each of the past five years, the 12.6%
increase in the market price of the Company's stock from the end of 1992 and the
11
<PAGE> 15
increase in the ratings assigned the Company, its subsidiaries and its
securities during 1993 by A.M. Best Company and other insurance and securities
rating services. Based on the above factors, Mr. Gruber was awarded a cash bonus
for 1993 of $370,000, an increase of 13.8% over the bonus awarded for services
rendered in 1992. Mr. Gruber's base salary was increased to $480,000 per year
beginning March 28, 1994, a 2.1% increase over his 1993 base salary.
In determining the bonus awards to other key officers, the Committee
reviewed with Messrs. Gruber, Hollen and Sanborn recommendations of management
based on individual performance of each officer as well as the evaluation of
general factors substantially comparable to those considered in establishing the
award for Mr. Gruber.
LONG-TERM INCENTIVES
Long-term incentives for the Company's Chief Executive Officer and other
key officers are provided through the Company's Performance Incentive Plan. The
Committee grants awards under the Performance Incentive Plan to individuals that
the Company believes have the ability to influence its long-term growth and
profitability. Awards are based on guidelines that provide for larger awards
commensurate with position level and that reflect competitive practices within
the property and casualty insurance industry. The awards can be in the form of
Stock Options and Performance Units or Restricted Stock and Performance Units.
Awards under the Performance Incentive Plan are usually made every two years.
Since the last awards were made in 1992, no awards were made in 1993. In
general, prior to 1992, awards of Options were limited to Mr. Gruber and Mr.
Sanborn, with all other officers receiving awards of Restricted Stock. However,
based in part on a study completed in 1992 by an outside consultant, the Company
now awards Stock Options, rather than Restricted Stock, to the top 11 officers
of the Company. Performance Unit awards are made in tandem with Option and
Restricted Stock awards. The number of Stock Options or shares of Restricted
Stock granted is generally based on the grade level of an executive's position
and the most recent assessment of the executive's performance.
The Committee has the authority to determine the individuals to whom awards
are made, the type of awards (Options or Restricted Stock), the conditions of
the awards and the number of shares of Restricted Stock and the number of shares
covered by an Option and number of Performance Units. It is through the award of
Options and Restricted Stock that the Company attempts to align management's
interests with those of the stockholders and to provide an opportunity to its
key officers to build a meaningful stake in the Company. The Option exercise
price must be no less than the fair market value of the Company's stock on the
date of grant. Thus, the value of each stockholder's investment in the Company
must appreciate before an optionee receives any benefit from the Option. Maximum
payout on awards of Performance Units is made only if the Company achieves an
11% compound annual increase in its book value per share during the Performance
Period. As a result, as with Options, the value of the Performance Unit to the
executive will be realized only with the creation of value for stockholders.
The Committee believes that these non-cash awards emphasize the Committee's
position that a significant equity stake in the Company connects an executive's
compensation to future enhancement of stockholder value.
OTHER BENEFITS
Executive officers may also participate in the Company's Employees' Stock
Savings and Retirement Plan which includes the Company's contributions to that
Plan, a Supplemental Benefits Plan under which certain executives are entitled
to additional benefits that cannot be awarded under qualified plans due to
Internal Revenue Code limitations, as well as other benefits that are generally
available to all employees.
12
<PAGE> 16
DEDUCTIBILITY OF COMPENSATION
Section 162 (m) of the Internal Revenue Code, enacted in 1993, generally
disallows a tax deduction to public companies for compensation over $1 million
paid to the Company's Chief Executive Officer or any of the four other most
highly compensated executive officers. Qualifying performance-based compensation
will not be subject to the deduction limit if certain requirements are met. No
executive officer would have been subject to the limitations of Section 162 (m)
had it applied in 1993. The Committee intends to structure any compensation for
executive officers so that it qualifies for deductibility under the new statute
to the extent feasible. However, to maintain a competitive position within the
Company's peer group of companies, the Committee retains the authority to
authorize payments, including salary and bonuses, that may not be deductible.
Compensation Committee
William J. Shepherd, Chairman
Robert H. Jeffrey
Warren R. Lyons
James K. McWilliams
Donald Reich
13
<PAGE> 17
PERFORMANCE GRAPH
Set forth below is a line graph comparing the cumulative total stockholder
return on the Company's Common Stock, based on the market price of the Common
Stock and assuming reinvestment of dividends, with the cumulative total return
of companies on the Standard & Poor's 500 Stock Index and the Dow Jones Property
and Casualty Index.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN* AMONG THE
COMPANY'S COMMON STOCK,
THE STANDARD & POOR'S 500 STOCK INDEX AND THE DOW JONES
PROPERTY AND CASUALTY INDEX
<TABLE>
<CAPTION>
MEASUREMENT PERIOD DOW JONES P &
(FISCAL YEAR COVERED) S&P 500 C ORION CAPITAL
<S> <C> <C> <C>
1988 100 100 100
1989 132 149 152
1990 127 142 124
1991 166 177 231
1992 179 216 331
1993 197 216 381
</TABLE>
- ---------------
* Assumes that the investment in the Corporation's Common Stock and each index
was $100 on December 31, 1988 and that all dividends were reinvested.
There can be no assurance that the Company's stock performance will
continue into the future with the same or similar trends depicted in the graph
above. The Company will not make or endorse any predictions as to future stock
performance.
DIRECTORS' COMPENSATION
Fees: Each Director who is not an officer of the Company receives a
retainer fee which as of July 1, 1993 was increased to $18,000 per year from
$15,000. The Chairman of the Audit and of the Compensation Committees of the
Board each receives an additional fee of $10,000. In addition, each Director
receives an attendance fee of $1,000 (an increase from $900 as of July 1, 1993)
for each meeting of the Board and each meeting of a committee actually attended,
except that a fee of $300 is paid for a committee meeting held on the same day
as a meeting of the Board. Officers of the Company who serve as Directors do not
receive either a retainer or any attendance fee for such service. The Company
reimburses all Directors and officers for travel, lodging and related expenses
which they incur in attending Directors' and committee meetings.
14
<PAGE> 18
Directors' Retirement Plan: Since 1990, the Company has had a pension plan
for the non-employee directors of the Company. Under the terms of the plan, a
director is entitled on retirement to receive an annual payment equal to one
half the annual retainer fee (excluding meeting fees, fees paid to chairmen and
expenses) for directors of the Company in effect on the date of his retirement.
This retirement benefit is to be paid to the director, or his beneficiaries, for
fifteen years or the number of years that the individual served as a director of
the Company, whichever is less. The plan is not qualified under the Employee
Retirement Income Security Act of 1974 and is not funded.
EMPLOYMENT AGREEMENTS
The Company has employment agreements with four of its current executive
officers and directors: Alan R. Gruber, Robert B. Sanborn, Larry D. Hollen and
Peter B. Hawes.
Messrs. Gruber and Sanborn: The Company entered into employment agreements
with Messrs. Gruber and Sanborn as of March 19, 1993. The contracts are similar
in most material respects except as noted below.
Mr. Gruber's agreement provides for a minimum base annual compensation
beginning March 28, 1994 of not less than $480,000 with such salary increases as
may from time to time be approved by the Board and requires that the Company
provide Mr. Gruber with term life insurance in the amount of $500,000. The
contract has an Initial Term ending on December 31, 1996, during which Mr.
Gruber will serve as Chairman and Chief Executive Officer, and a Successive Term
of five years during which Mr. Gruber will be a Senior Executive Consultant.
Mr. Sanborn's contract provides for a minimum base annual compensation
beginning March 28, 1994 of not less than $325,000 with such salary increases as
may from time to time be approved by the Board. The Initial Term of his
agreement ends on February 28, 1995 with a Successive Term of six years. Mr.
Sanborn served as President and Chief Operating Officer until February 28, 1994
and will serve as Vice Chairman of the Board of the Company until February 28,
1995. During the Successive Term he will be a Senior Executive Consultant.
The Initial Term of each contract may be shortened by either the Company or
the employee in certain circumstances; the Successive Term would then start at
such earlier date. Mr. Sanborn may terminate the Initial Term of his contract at
any time after January 1, 1994, on three months' notice. The Company may
terminate the Initial Term of Mr. Gruber's contract at any time on two years'
notice and Mr. Gruber may terminate it on three months' notice, but not prior to
September 30, 1994. In addition, either the Company or Mr. Gruber may terminate
the Initial Term of his contract at any time after the end of four months
following a change in effective voting control of the Company, effective ten
days after notice. A change in effective voting control shall be deemed to have
occurred upon (i) acquisition by any person or group of 40% or more of the
Company's Common Stock, (ii) a merger or consolidation in which the Company is
not a survivor or (iii) any time a majority of the members of the Board are
persons who were not members of the Board twelve months prior to that time. If
there is a change in effective voting control of the Company and at any time
thereafter Mr. Gruber terminates his employment or if Mr. Gruber receives
written notice of termination, he (or his beneficiary) would be entitled to
receive, until the termination date of his agreement, base salary (at the level
in effect on the date of notice), a bonus equal to the bonus which would have
been payable to him in the year in which notice is given if he had achieved
target performance, and other usual employee benefits provided by the Company.
If the Initial Term of either contract is ended on notice, as described
above, all previously unexercised Stock Options will be deemed to be exercisable
and all unexpired periods of performance with respect to any Performance Units
or awards will be deemed to have expired. The executive will be entitled to
receive the value of such Performance Units at the end of the month during which
termination occurs on the basis of an equitable pro-rating of the Performance
Period, Performance Target and award amount.
15
<PAGE> 19
Each agreement provides that in the event of the executive's death during
the Initial Term, his beneficiaries would be entitled to receive his base salary
to date of death, a pro-rata portion of any bonus that would have been payable
to him with respect to the fiscal year in which he dies and other usual death
benefits provided by the Company. If the executive becomes disabled, he will be
entitled to receive, for the remainder of the Initial Term, disability
compensation of not less than 50% of base salary plus other usual employee
benefits provided by the Company.
Upon commencement of the Successive Term, the cash compensation to be paid
to each executive will be reduced. Mr. Gruber's base compensation will be
reduced to an amount equal to (i) one-half his average salary and bonus
compensation during the five years preceding the start of the Successive Term
minus (ii) the annuitized present value of all amounts credited to him by the
Company under its former Pension Plan, under the Company's Savings and
Retirement Plan and under the Company's Supplemental Benefits Plan. Such reduced
level of compensation shall continue for Mr. Gruber's life. Mr. Gruber can elect
actuarially-equivalent survivor benefits prior to the start of the Successive
Term. Mr. Sanborn will be paid $125,000 per year during his Successive Term.
After the second year of his Successive Term (or, if later, November 2, 1997 in
the case of Mr. Gruber), neither executive will any longer be eligible to
participate in the Company's bonus, option and other benefit plans for its
employees.
The Company agreed to purchase an annuity to fund the payments to be made
to Mr. Gruber following termination of the Initial Term. It will also purchase
an annuity to fund a joint-and-survivor benefit of $48,000 per year to Mr.
Sanborn and his spouse, commencing upon completion of the Successive Term of his
contract. If either executive chooses a payment option other than the one
provided in his contract, the amount payable per month will be actuarially
adjusted. Unless a "transfer event" shall occur (by reason of a change of
effective voting control or of certain reductions of the Company's credit
standing), each annuity shall be the property of the Company. If a transfer
event occurs, ownership of the annuity contract will be transferred to their
designated beneficiaries, if any, and the income tax cost to the recipient of
that transfer will be borne by the Company, subject to recoupment as and to the
extent payments are subsequently made under the annuity contracts.
Messrs. Hollen and Hawes: The Company entered into an employment agreement
with Mr. Hollen as of December 1, 1992, upon his promotion to Executive Vice
President and Assistant Chief Operating Officer of the Company. As of March 1,
1994, Mr. Hollen was promoted to President and Chief Operating Officer of the
Company. The agreement with Mr. Hollen currently provides for a base salary of
$250,000 with such salary increases as may from time to time be approved by the
Company. Pursuant to the agreement, Mr. Hollen was granted, as of December 1,
1992, 15,625 shares of Restricted Stock and 7,812.5 Performance Units in
accordance with the terms of the Performance Incentive Plan.
The Company also entered into an employment agreement with Mr. Hawes as
President of Design Professionals Insurance Company ("DPIC") in 1987, which was
amended as of April 1, 1990. The agreement currently provides for a base salary
of $225,000 with such salary increases as may from time to time be approved by
DPIC and the Company. Pursuant to the agreement, Mr. Hawes was granted 39,062
shares of Restricted Stock and 19,531.25 Performance Units in accordance with
the terms of the Performance Incentive Plan. Each of Mr. Hollen and Mr. Hawes is
referred to as "Executive" below.
The term of each agreement is for five years and is automatically renewed
yearly until either party thereto gives notice of termination. Any notice of
termination other than for death, cause or disability must be given two years in
advance in writing. The agreements will not be terminated by any merger,
consolidation, sale of assets or voluntary or involuntary dissolution in which
the Company (or in, Mr. Hawes' case, DPIC) is not the survivor. The agreement
may be terminated by the Company or DPIC, as the case may be, only in the event
the Executive becomes disabled, is convicted of a felony or a misdemeanor,
engages in conduct which is materially injurious to the Company or willfully
fails to
16
<PAGE> 20
substantially perform his duties with the Company. During the term of the
agreement, and for two years thereafter, the Executive agrees not to compete
with the Company.
Each agreement provides that in the event of the Executive's death while
employed, his beneficiaries would be entitled to receive his base salary to date
of death, a pro-rata portion of any bonus that would have been payable to him
with respect to the fiscal year in which he dies and other usual death benefits
provided by the Company. If the Executive becomes disabled, he would be entitled
to receive disability compensation in accordance with the terms of the Company's
disability insurance program, a pro-rata portion of any bonus as described
above, plus other usual employee benefits provided by the Company. In addition,
if the Executive dies or becomes disabled prior to the complete vesting of the
shares of Restricted Stock and Performance Units awarded to him under the
agreement, such awards will nevertheless continue to vest as if he were fully
employed by the Company.
Severance Policy: The Board of Directors has adopted a severance policy
applicable to the executive officers of the Company including the Named
Officers. Pursuant to this policy, such officers will be entitled to receive one
year's notice of termination, except in the event of termination for cause. This
policy currently applies to the executive officers of the Company, including Mr.
Schuyler, who do not have an individual employment agreement with the Company.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company and certain of its subsidiaries have a policy of making loans
to key officers, in connection with hiring or transfer to new locations, to
assist such personnel in purchasing new residences. During 1989, Larry D. Hollen
was required to move his residence from Illinois to Connecticut. In connection
with this move, the Company loaned Mr. Hollen an aggregate of $150,000, secured
by a mortgage on his Connecticut residence, for fifteen years, with interest at
10% per year.
At the 1987 Annual Meeting of Stockholders of the Company, the stockholders
authorized the execution by the Company of indemnification agreements with its
Directors and executive officers. Subsequently, the Company entered into
indemnification agreements with each of its Directors and executive officers
which, among other things, contractually confirmed the indemnity provided under
the Company's Restated Certificate of Incorporation, its By-Laws and under the
Delaware General Corporation law.
The Company and its subsidiaries have entered into several agreements with
Guaranty National Corporation ("Guaranty National"). Mr. Ware, a director of the
Company, is Guaranty National's President and Chief Executive Officer. Pursuant
to one such agreement, Messrs. Gruber, Sanborn, and Shepherd serve on Guaranty
National's board of directors (see Compensation Committee Interlocks and Insider
Participation, at page 4). Also, the Company and Guaranty National have an
investment management agreement pursuant to which a portion of Guaranty
National's investment portfolio is managed by the Company's investment managers
(under the direction and supervision of Guaranty National) for a fee of $550,000
per year for 1993 and 1994. In addition, the Company's insurance subsidiaries
have entered into certain reinsurance agreements and a trade name agreement with
Guaranty National.
2. RATIFICATION OF SELECTION OF AUDITORS
The Board has selected Deloitte & Touche, independent certified public
accountants, as independent auditors for the Company for the year 1994. A
resolution will be submitted to stockholders at the meeting for ratification of
such selection and the accompanying proxy will be voted for such ratification,
unless instructions to the contrary are indicated therein. Although ratification
by stockholders is not a legal prerequisite to the Board's selection of Deloitte
& Touche as the Company's independent certified public accountants, the Company
believes such ratification to be desirable. If the stockholders do not ratify
the selection of Deloitte & Touche, the selection of independent certified
public accountants will be reconsidered by the Board; however, the Board may
select Deloitte & Touche, notwithstanding the failure of the stockholders to
ratify its selection.
17
<PAGE> 21
The Board expects that a representative of Deloitte & Touche will be
present at the meeting, will have an opportunity to make a statement if he or
she so desires, and will be available to respond to appropriate questions.
Deloitte & Touche (or its predecessor Touche Ross & Co.) has been the
Company's independent certified public accountants since March 31, 1976. During
the fiscal year ended December 31, 1993, Deloitte & Touche performed audit
services for the Company, including attendance at meetings with the Audit
Committee and the Board on matters related to the audit, consultations during
the year on matters related to accounting, tax and financial reporting and
review of financial and related information included in filings with the SEC and
other regulatory agencies.
The appointment of auditors is approved annually by the Board. The decision
of the Board is based upon the recommendation of the Audit Committee of the
Board. In making its recommendation as to the appointment of auditors, the Audit
Committee has regularly reviewed both the proposed audit scope and the estimated
audit fees for the coming year.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" THIS PROPOSAL.
3. MISCELLANEOUS MATTERS
As of the date of this Proxy Statement, the Board knows of no business that
will be presented for consideration at the meeting other than that which has
been referred to above. As to other business, if any, that may come before the
meeting, proxies in the enclosed form will be voted in accordance with the
judgment of the person or persons voting the proxies.
STOCKHOLDER NOMINATIONS AND PROPOSALS
The Company's By-Laws require that there be furnished to the Company
written notice with respect to the nomination of a person for election as a
Director (other than a person nominated at the direction of the Board), as well
as the submission of a proposal (other than a proposal submitted at the
direction of the Board), at a meeting of stockholders. In order for any such
nomination or submission to be proper, the notice must contain certain
information concerning the nominating or proposing stockholder, and the nominee
or the proposal, as the case may be, and must be furnished to the Company not
later than April 1, 1995. A copy of the applicable provisions of the By-Laws may
be obtained by a stockholder, without charge, upon written request to the
Secretary of the Company at its principal executive offices.
In addition to the foregoing, in accordance with the rules of the SEC, any
proposal of a stockholder intended to be presented at the Company's 1995 Annual
Meeting of Stockholders must be received by the Secretary of the Company by
December 17, 1994, in the form and subject to the other requirements of the
applicable rules of the SEC, in order for the proposal to be considered for
inclusion in the Company's notice of meeting, proxy statement and proxy relating
to the 1995 Annual Meeting, scheduled for Wednesday, June 7, 1995.
COST OF PROXY SOLICITATION
The Company will bear the cost of the solicitation of proxies, including
the charges and expenses of brokerage firms and others for forwarding
solicitation material to beneficial owners of shares of Common Stock. In
addition to solicitation by mail, officers and regular employees of the Company
may solicit proxies personally or by telephone. No compensation other than their
regular compensation will be paid to officers or employees for any solicitation
which they may make. The Company has retained D.F. King & Co., Inc., New York,
New York to assist in the solicitation of proxies for an estimated fee of $9,000
plus reimbursement of out-of-pocket expenses.
At any time prior to being voted, the enclosed proxy is revocable by
written notice to the Secretary of the Company or by attendance at the meeting
and voting in person.
By order of the Board of Directors,
April 15, 1994
Michael P. Maloney
Vice President, General Counsel
and Secretary
18
<PAGE> 22
FOLD AND DETACH HERE
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
ORION CAPITAL CORPORATION
PROXY FOR HOLDERS OF COMMON STOCK--ANNUAL MEETING, JUNE 1, 1994
The undersigned holder of Common Stock of Orion Capital Corporation hereby
appoints Alan R. Gruber, Robert B. Sanborn and Michael P. Maloney, and each of
them, with full power of substitution to each of them, and with authority in
each to act in the absence of the other, as attorneys and proxies of the
undersigned to vote, as designated below, all the shares of Common Stock which
the undersigned could vote if personally present at the Annual Meeting of
Stockholders of Orion Capital Corporation to be held at 10:00 A.M., Eastern
Daylight Saving Time, Wednesday, June 1, 1994, at Chemical Bank, 270 Park
Avenue, 3rd Floor Auditorium, New York, New York and any adjournments thereof.
PROXIES WILL BE VOTED AS SPECIFIED. WHERE NO SPECIFICATION IS GIVEN, PROXIES
WILL BE VOTED FOR THE ELECTION OF DIRECTORS AND FOR PROPOSAL 2. IF ANY NOMINEE
FOR DIRECTOR SHOULD BECOME UNAVAILABLE FOR ELECTION, THIS PROXY WILL BE VOTED
FOR SUCH SUBSTITUTE NOMINEE AS MAY BE PROPOSED BY THE BOARD OF DIRECTORS.
(CONTINUED AND TO BE SIGNED ON THE REVERSE SIDE.)
PROXIES WILL BE VOTED AS SPECIFIED. WHERE NO SPECIFICATION IS GIVEN, PROXIES
WILL BE VOTED "FOR" THE ELECTION OF DIRECTORS AND "FOR" PROPOSAL 2. IF ANY
NOMINEE FOR DIRECTOR SHOULD BECOME UNAVAILABLE FOR ELECTION, THIS PROXY WILL BE
VOTED FOR SUCH SUBSTITUTE NOMINEE AS MAY BE PROPOSED BY THE BOARD OF DIRECTORS.
/X/ PLEASE MARK
YOUR VOTES
AS THIS
--------------
COMMON
THE BOARD RECOMMENDS A VOTE "FOR" PROPOSALS 1 AND 2.
WITHHOLD
FOR AUTHORITY
1. ELECTION OF DIRECTORS for all nominees listed / / / /
(except as marked)
B. Cohn, J. Colman, A. Gruber, P. Hawes, L. Hollen,
R. Jeffrey, W. Lyons, J. McWilliams, R. Moore,
R. Sanborn, W. Shepherd, J. Thorne, R. Ware
(INSTRUCTIONS: To withhold authority to vote for any
individual nominee write that nominee's name in the
space provided below.)
- -----------------------------------
FOR AGAINST ABSTAIN
2. APPROVAL OF AUDITORS. A proposal to ratify the / / / / / /
selection of Deloitte & Touche, independent certified
public accountants, as auditors for the Company for
the year 1994.
3. Upon such other business as may properly come
before the meeting, or any adjournments thereof.
The undersigned hereby acknowledges receipt of the Notice of Annual Meeting
of Stockholders, the Proxy Statement for such meeting and Annual Report of the
Company for 1993.
I PLAN TO
ATTEND / /
MEETING
SIGNATURE(S) DATE
--------------------------------------------- ------------------
NOTE: Please sign exactly as your name appears hereon. All joint owners must
sign. When signing as executor, administrator, attorney, trustee or guardian,
please give full title as such. If a corporation, please sign in full
corporation name by president, vice president or other authorized person. If a
partnership, please sign in partnership name by a partner. PLEASE SIGN, DATE
AND RETURN YOUR PROXY IN THE ENCLOSED ENVELOPE.
<PAGE> 23
VOTING INSTRUCTIONS TO UNITED STATES TRUST COMPANY OF NEW YORK AS TRUSTEE
UNDER THE ORION CAPITAL CORPORATION
EMPLOYEES' STOCK SAVINGS AND RETIREMENT PLAN
I hereby direct that at the Annual Meeting of Stockholders of Orion Capital
Corporation on June, 1, 1994, and at any adjournments thereof, the voting
rights pertaining to my pro rata share of Orion Capital Corporation Common Stock
held by the Trustee under the Employees' Stock Savings and Retirement Plan shall
be exercised in accordance with the Proxy Statement for the election of the
persons nominated as directors (unless such authority is withheld as provided on
this card) and with respect to the following additional proposals as checked on
this card, or if not checked, for such proposals.
(CONTINUED AND TO BE SIGNED ON THE REVERSE SIDE.)
PROXIES WILL BE VOTED AS SPECIFIED. WHERE NO SPECIFICATION IS GIVEN, PROXIES
WILL BE VOTED "FOR" THE ELECTION OF DIRECTORS AND "FOR" PROPOSAL 2. IF ANY
NOMINEE FOR DIRECTOR SHOULD BECOME UNAVAILABLE FOR ELECTION, THIS PROXY WILL BE
VOTED FOR SUCH SUBSTITUTE NOMINEE AS MAY BE PROPOSED BY THE BOARD OF DIRECTORS.
/X/ PLEASE MARK
YOUR VOTES
AS THIS
--------------
COMMON
THE BOARD RECOMMENDS A VOTE "FOR" PROPOSALS 1 AND 2.
WITHHOLD
FOR AUTHORITY
1. ELECTION OF DIRECTORS for all nominees listed / / / /
(except as marked)
B. Cohn, J. Colman, A. Gruber, P. Hawes, L. Hollen,
R. Jeffrey, W. Lyons, J. McWilliams, R. Moore,
R. Sanborn, W. Shepherd, J. Thorne, R. Ware
(INSTRUCTIONS: To withhold authority to vote for any
individual nominee write that nominee's name in the
space provided below.)
- -----------------------------------
FOR AGAINST ABSTAIN
2. APPROVAL OF AUDITORS. A proposal to ratify the / / / / / /
selection of Deloitte & Touche, independent certified
public accountants, as auditors for the Company for
the year 1994.
3. Upon such other business as may properly come
before the meeting, or any adjournments thereof.
The undersigned hereby acknowledges receipt of the Notice of Annual Meeting
of Stockholders, the Proxy Statement for such meeting and Annual Report of the
Company for 1993.
I PLAN TO
ATTEND / /
MEETING
SIGNATURE(S) DATE
--------------------------------------------- ------------------
PLEASE SIGN AND RETURN THIS CARD PROMPTLY. As to any matters coming before the
Meeting (whether or not specifically mentioned above) for which no written
direction is received by the Trustee prior to the date of the Meeting, the
Trustee shall exercise voting rights on your behalf in the same proportions as
the Trustee was instructed to vote with respect to the shares for which it
received instructions. PLEASE SIGN, DATE AND RETURN YOUR PROXY IN THE
ENCLOSED ENVELOPE.
FOLD AND DETACH HERE
<PAGE> 24
PROXY ORION CAPITAL CORPORATION
PROXY FOR HOLDERS OF COMMON STOCK -- ANNUAL MEETING JUNE 1, 1994
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The unersigned holder of Common Stock of Orion Capital Corporation hereby
appoints Alan R. Gruber, Robert B. Sanborn and Michael P. Maloney, and each of
them, with full power of substitution to each of them, and with authority in
each to act in the absence of the other, as attorneys and proxies of the
undersigned to vote, as designated below, all the shares of Common Stock which
the undersigned could vote if personally present at the Annual Meeting of
Stockholders of Orion Capital Corporation to be held at 10:00 A.M., Eastern
Daylight Saving Time, Wednesday, June 1, 1994, at Chemical Bank, 270 Park
Avenue, 3rd Floor Auditorium, New York, New York, and any adjournment thereof.
PROXIES WILL BE VOTED AS SPECIFIED. WHERE NO SPECIFICATION IS GIVEN,
PROXIES WILL BE VOTED FOR THE ELECTION OF DIRECTORS AND FOR PROPOSAL 2. IF ANY
NOMINEE FOR DIRECTOR SHOULD BECOME UNAVAILABLE FOR ELECTION, THIS PROXY WILL BE
VOTED FOR SUCH SUBSTITUTE NOMINEE AS MAY BE PROPOSED BY THE BOARD OF DIRECTORS.
A VOTE FOR ITEMS 1 AND 2 IS RECOMMENDED
Item 1 - ELECTION OF DIRECTORS: B. Cohn, J. Colman, A. Gruber, P. Hawes, L.
Hollen, R. Jeffrey, W. Lyons, J. McWilliams, R. Moore, R. Sanborn, W. Shepherd,
J. Thorne, R. Ware
FOR all nominees listed \ \ WITHHOLD AUTHORITY FOR ALL \ \
(except as marked)
(To withhold authority to vote for any individual nominee, write that nominee's
name in the space provided below).
- --------------------------------------------------------------------------------
Item 2 - APPROVAL OF AUDITORS. To ratify the appointment of Deloitte & Touche,
independent certified public accountants, as auditors for the Company for the
year 1994.
FOR \ \ AGAINST \ \ ABSTAIN \ \
Item 3 - With discretionary authority upon such other matters as may properly
come before the meeting.
(Continued and to be signed on the reverse side)
PROXIES WILL BE VOTED AS SPECIFIED. WHERE NO SPECIFICATION IS GIVEN,
PROXIES WILL BE VOTED FOR THE ELECTION OF DIRECTORS AND FOR PROPOSAL 2. IF ANY
NOMINEE FOR DIRECTOR SHOULD BECOME UNAVAILABLE FOR ELECTION, THIS PROXY WILL BE
VOTED FOR SUCH SUBSTITUTE NOMINEE AS MAY BE PROPOSED BY THE BOARD OF DIRECTORS.
Dated , 1994
-----------------------------------------------------------------
Signauture(s)
---------------------------------------------------------------
- ----------------------------------------------------------------------------
NOTE: Please sign as name appears hereon. Joint owners should each sign. When
signing as attorney, executor, administrator, trustee or guardian, please give
full title as such.
