<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:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
[ ] Confidential, for the Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
</TABLE>
ORION CAPITAL CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
(5) Total fee paid:
------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
(3) Filing Party:
------------------------------------------------------------------------
(4) Date Filed:
<PAGE> 2
1998
PROXY STATEMENT
AND NOTICE OF
ANNUAL MEETING
OF SHAREHOLDERS
ORION CAPITAL CORPORATION
[ORION LOGO]
[CAPITAL LOGO]
PROXY 98
<PAGE> 3
Orion Capital
Corporation
9 Farm Springs Road
Farmington, CT 06032
[ORION CAPITAL LOGO]
April 14, 1998
Dear Stockholder:
We invite you to attend our Annual Meeting of Stockholders which will be
held beginning at 9:00 a.m. on Thursday, May 28, 1998.
The meeting will be held at Orion Capital's corporate headquarters in
Farmington, Connecticut at 9 Farm Springs Road. A map and directions can be
found on the back cover of this Proxy Statement. Also enclosed with this
Statement are your voting card and a copy of our 1997 Annual Report.
At the Annual Meeting, we will review Orion Capital's 1997 performance and
the Company's prospects for the future, as well as answer your questions.
We look forward to seeing you on May 28th and remind you that, even if you
cannot join us, your vote is important.
Thank you for your continued support.
Very truly yours,
/s/ W. MARSTON BECKER
W. MARSTON BECKER
Chairman of the Board and
Chief Executive Officer
<PAGE> 4
ORION CAPITAL CORPORATION
9 FARM SPRINGS ROAD
FARMINGTON, CONNECTICUT 06032
------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
Notice is hereby given that the Annual Meeting of Stockholders of Orion
Capital Corporation (the "Company") will be held at Orion Capital Corporation, 9
Farm Springs Road, Farmington, Connecticut, on Thursday, May 28, 1998 at 9:00
A.M., Eastern Daylight Saving Time, for the following purposes:
1. Election of the Board of Directors to serve until the 1999 Annual
Meeting of Stockholders.
2. Ratification of Deloitte & Touche LLP, independent certified public
accountants, as auditors for the Company for 1998.
3. Approval of the Orion Capital Corporation Employees' Stock Purchase
Plan.
4. Transaction of any other business properly before the Annual Meeting.
Your Board of Directors recommends a vote "in favor of" all proposals.
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 6, 1998 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, Orion Capital Corporation, Legal Department, 9 Farm Springs Road,
Farmington, Connecticut 06032, during the ten-day period preceding the meeting.
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.
By order of the Board of Directors,
April 14, 1998
MICHAEL P. MALONEY
Senior Vice President, General
Counsel
and Secretary
<PAGE> 5
Q U E S T I O N S AND A N S W E R S
- --------------------------------------------------------------------------------
Q: WHAT AM I VOTING ON?
A: - The election of all eleven members of the Company's Board of Directors (W.
Marston Becker, Gordon F. Cheesbrough, John C. Colman, David H. Elliott,
Victoria R. Fash, Robert H. Jeffrey, Gordon W. Kreh, Warren R. Lyons, James
K. McWilliams, Ronald W. Moore and William B. Weaver).
- Ratification of Deloitte & Touche LLP as independent accountants of the
Company.
- Approval of the Orion Capital Corporation Employees' Stock Purchase Plan.
- --------------------------------------------------------------------------------
Q: WHAT IS THE ORION CAPITAL CORPORATION EMPLOYEES' STOCK PURCHASE PLAN?
A: It is an employee plan available to almost all the Company's employees that
provides eligible employees an incentive to purchase Orion common stock through
payroll deduction. The incentive to participate in the plan is that Orion stock
is purchased at a 10% discount from its fair market value. (See page 21 for more
details.)
- --------------------------------------------------------------------------------
Q: WHY DOES THE COMPANY WANT TO OFFER THE EMPLOYEES' STOCK PURCHASE PLAN TO
EMPLOYEES?
A: It is the Company's expectation that the Stock Purchase Plan will encourage
participants to: 1) remain employees of Orion, 2) more closely align their
interests with those of our shareholders by buying a stake in the Company and 3)
participate in the success of the Company.
- --------------------------------------------------------------------------------
Q: WHO IS ENTITLED TO VOTE?
A: Shareholders as of the close of business on April 6, 1998 (the Record Date)
are entitled to vote at the Annual Meeting. Each share of common stock is
entitled to one vote. (See page 1 for more details.)
- --------------------------------------------------------------------------------
Q: HOW DO I VOTE?
A: Sign and date each proxy card you receive and return it in the prepaid
envelope. If you do not mark any selections, your proxy card will be voted in
favor of the three proposals. You have the right to revoke your proxy at any
time before the meeting by 1) notifying Orion's Secretary, 2) voting in person
or 3) returning a later-dated proxy. If you return your signed proxy card, but
do not indicate your voting preferences, W. Marston Becker, Michael P. Maloney
and Peter M. Vinci will vote FOR the three proposals on your behalf.
- --------------------------------------------------------------------------------
Q: IS MY VOTE CONFIDENTIAL?
A: Yes. Proxy cards, ballots and voting tabulations that identify individual
shareholders are confidential. Only the inspectors of election and certain
employees associated with processing proxy cards and counting the vote have
access to your card. Additionally, the names of persons directing comments to
management (whether written on the proxy card or elsewhere) will remain
confidential, unless you ask that your name be disclosed.
- --------------------------------------------------------------------------------
Q: WHO WILL COUNT THE VOTE?
A: Representatives of ChaseMellon Shareholder Services will tabulate the votes
and act as inspectors of election.
- --------------------------------------------------------------------------------
Q: WHAT DOES IT MEAN IF I GET MORE THAN ONE PROXY CARD?
A: It is an indication that your shares are registered differently (ie,
different spelling of your name or a different address) and are in more than one
account. Sign and return all proxy cards you receive to ensure that all your
shares are voted. To provide better shareholder services, we encourage you to
have all accounts registered in the same name and address. You may do this by
contacting our transfer agent, ChaseMellon Shareholders Services, at (800)
851-9677.
<PAGE> 6
- --------------------------------------------------------------------------------
Q: WHAT CONSTITUTES A QUORUM?
A: A majority of the outstanding shares, present or represented by proxy,
constitutes a quorum for the purpose of adopting proposals at the Annual
Meeting. As of the Record Date, April 6, 1998, 27,529,520 shares of Orion
Capital Corporation common stock were issued and outstanding. If you submit a
properly executed proxy card, then you will be considered part of the quorum. If
you are present or represented by a proxy at the Annual Meeting and you abstain,
your abstention will have the same effect as a vote against such proposal.
Broker non-votes will be counted in determining a quorum but will not be part of
the voting power present.
- --------------------------------------------------------------------------------
Q: WHO CAN ATTEND THE ANNUAL MEETING?
A: All stockholders of the Company are invited to attend. Directions to the
meeting can be found on the last page of this Proxy.
- --------------------------------------------------------------------------------
Q: WHAT PERCENTAGE OF STOCK DO THE DIRECTORS AND OFFICERS OWN?
A: Together, they own approximately 3.05% of our common stock as of the Record
Date. (See page 8 for more details.)
- --------------------------------------------------------------------------------
Q: WHO ARE THE LARGEST PRINCIPAL STOCKHOLDERS AT DECEMBER 31, 1997?
A: Neuberger & Berman, LLC (605 Third Avenue, New York, NY 10158-3698)owned
2,304,616 shares.
Southeastern Asset Management, Inc.(6410 Poplar Ave., Suite 900, Memphis, TN
38119) owned 2,046,200 shares.
The Orion Capital Corporation Employees' Stock Savings and Retirement Plan (9
Farm Springs Road, Farmington, CT 06032) owned 1,549,041 shares. (See page 8 for
more details.)
- --------------------------------------------------------------------------------
Q: WHEN ARE THE 1999 STOCKHOLDER PROPOSALS DUE?
A: In order to be considered for inclusion in next year's proxy statement,
shareholder proposals must be submitted in writing by December 11, 1998, to
Michael P. Maloney, Esq., Secretary, Orion Capital Corporation, 9 Farm Springs
Road, Farmington, CT 06032.
- --------------------------------------------------------------------------------
Q: HOW DOES A STOCKHOLDER NOMINATE SOMEONE TO BE A DIRECTOR OF ORION CAPITAL
CORPORATION?
A: Any stockholder may recommend any person as a nominee for director of Orion
Capital Corporation by writing to the Secretary of the Company or the Chairman
of the Compensation and Nomination Committee, Orion Capital Corporation, 9 Farm
Springs Road, Farmington, CT 06032. No recommendations were received this year
from any stockholder for the 1998 Annual Stockholders Meeting. Recommendations
for Board membership that are to be elected in 1999 must be received by the
Company by March 20, 1999 and must be accompanied by a notarized statement from
the nominee indicating his or her willingness to serve if elected and disclosing
principal occupations or employment over the past five years.
- --------------------------------------------------------------------------------
Q: WILL THE COMPANY HIRE PROXY SOLICITORS?
A: D.F. King & Co., Inc. has been hired to assist in the distribution of proxy
materials and solicitation of votes for $10,000, plus out-of-pocket expenses.
Orion will reimburse brokerage houses and other custodians, nominees and
fiduciaries for their reasonable out-of-pocket expenses for forwarding proxy and
solicitation material to the owners of common stock.
<PAGE> 7
ORION CAPITAL CORPORATION
9 FARM SPRINGS ROAD
FARMINGTON, CT 06032
PROXY STATEMENT
THE 1998 ANNUAL MEETING
OF STOCKHOLDERS IS TO BE
HELD ON MAY 28, 1998. 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 14, 1998. A
copy of the Company's Annual Report for 1997 is being
mailed to all stockholders with this Proxy Statement.
THERE ARE 27,529,520
SHARES OUTSTANDING AND
ENTITLED TO VOTE AT THE
ANNUAL MEETING. The Company's Board has fixed the close of
business on April 6, 1998 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 27,529,520 shares of Common Stock
(which number excludes 3,145,780 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 PROPOSALS FOR THE
ELECTION OF DIRECTORS
AND
RATIFICATION OF
ACCOUNTANTS
REQUIRE A MAJORITY VOTE
OF
THOSE PRESENT TO PASS.
THE
PROPOSAL TO APPROVE THE
EMPLOYEES' STOCK
PURCHASE PLAN REQUIRES A
MAJORITY VOTE OF ALL
OUTSTANDING SHARES TO
PASS. The presence, in person or by proxy, of a majority
in the number of 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
affirmative vote of the holders of the majority of the
shares of Common Stock represented at the Annual
Meeting is required (i) for the election of each
nominee for director and (ii) to ratify the appointment
of the Company's independent accountants. The
affirmative vote of the majority of the shares
outstanding is required to approve the adoption of the
Employees' Stock Purchase Plan (the "Purchase Plan").
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. Thus, abstentions on any of
the Company's proposals will have the effect of a vote
against such proposal, but any broker non-votes will
have no effect on the outcome of the proposals.
1
<PAGE> 8
1. ELECTION OF DIRECTORS
AN ELEVEN MEMBER BOARD
IS TO BE ELECTED. Currently, the Company has fifteen (15) members of
the Board of Directors. However, as a result of the
Company's By-law provision which prohibits a director
from standing for election to the Board after the
individual has reached the age of 72 and the decision
by one director to retire early, four (4) members of
the Board will not seek re-election to the Board at the
1998 Annual Meeting. Messrs. Bertram J. Cohn, William
J. Shepherd, John R. Thorne, and Robert B. Sanborn will
all retire from the Board as of the 1998 Annual Meeting
of Stockholders. Consequently, pursuant to the
Company's By-laws, the Board has fixed the number of
directors that will be elected at the 1998 Annual
Meeting of Stockholders at eleven (11) members. Those
eleven directors are to be elected by the holders of
the Company's Common Stock to serve until the 1999
Annual Meeting of Stockholders. Except for Messrs.
William B. Weaver, David H. Elliott and Gordon W. Kreh,
each nominee was reelected by the stockholders at the
last Annual Meeting of Stockholders. Mr. Weaver was
appointed on October 18, 1997 to fill the position on
the Board left open when Mr. Roger B. Ware, formerly
the President and Chief Operating Officer of Guaranty
National Corporation, resigned from the Company's Board
of Directors. Mr. Elliott was appointed to the Board on
March 13, 1998 and Mr. Kreh was appointed to the Board
on April 6, 1998, each in anticipation of the
retirement of the four Board members.
Unless instructions to the contrary are received,
proxies obtained 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, 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.
2
<PAGE> 9
The following information with respect to principal occupation and business
experience has been furnished to the Company by the respective nominees:
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION, FIVE-YEAR
NAME, AGE AND POSITION BUSINESS EXPERIENCE AND OTHER
WITH THE COMPANY DIRECTOR SINCE CORPORATE DIRECTORSHIPS
---------------------- -------------- -------------------------------
<S> <C> <C>
W. Marston Becker, 45............. March 8, 1996 Chairman of the Board and Chief Executive
Chairman of the Board and Officer of the Company since January 1997;
Chief Executive Officer Vice Chairman of the Board, March 1996-
of the Company December 1996; Senior Vice President of the
Company, July 1994-March 1996; President
and Chief Executive Officer of DPIC
Companies, July 1994-June 1996; President
and Chief Executive Officer of McDonough
Caperton Insurance Group, an insurance
brokerage firm, March 1987-July 1994.
Director: Trenwick Group, Inc. and the
American Insurance Association.
Gordon F. Cheesbrough, 45......... September 11, 1996 President and Chief Executive Officer of
Director Altamira Investment Services, Inc., (a
Canadian investment adviser and securities
dealer) 1998-Present; Chairman and Chief
Executive Officer and member of the
Executive Committee of Scotia McLeod, Inc.,
1993-1998, President and Chief Operating
Officer, 1990-1993. Director: Scotia
McLeod, Inc.
John C. Colman, 71................ March 31, 1976 Private investor and consultant. Director:
Director Premier Farnell PLC.
David H. Elliott, 56.............. March 13, 1998 Chairman of the Board and Chief Executive
Director Officer of MBIA, Inc. and MBIA Insurance
Corporation (a publicly held financial
guarantee insurance provider),
1994-present; Chief Executive Officer of
MBIA Inc., 1992-1994; Director: Gryphon
Holdings Inc.
Victoria R. Fash, 46.............. September 11, 1996 Chief Executive Officer of IMS (a
Director health-care information service company),
1997-present; Executive Vice President and
Chief Financial Officer, Cognizant
Corporation, November 1996-1997; Senior
Vice President-Business Strategy, The Dun &
Bradstreet Corporation, 1995-November 1996,
Vice President-business operations
planning, 1994-1995, Assistant to the
President, 1991-1994.
Robert H. Jeffrey, 68............. March 31, 1976 Chairman of the Board, Jeflion Investment
Director Company, 1994-present, President,
1974-1994; Chairman of the Board, The
Jeffrey Company (a privately held
investment company which is the parent of
Jeflion Investment Company), 1994-present,
President, 1973-1994.
Gordon W. Kreh, 50................ April 6, 1998 Director, President and Chief Executive
Director Officer of The Hartford Steam Boiler
Inspection and Insurance Company,
1994-present; Director and President,
1993-1994; Director of the American
Insurance Association.
Warren R. Lyons, 52............... September 9, 1992 Chairman, Avco Financial Services (a
Director financial services company and a subsidiary
of Textron Inc.), 1995-present, President,
1989-1995.
</TABLE>
3
<PAGE> 10
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION, FIVE-YEAR
NAME, AGE AND POSITION BUSINESS EXPERIENCE AND OTHER
WITH THE COMPANY DIRECTOR SINCE CORPORATE DIRECTORSHIPS
---------------------- -------------- -------------------------------
<S> <C> <C>
James K. McWilliams, 70........ January 7, 1981 Proprietor of McWilliams & Company (investment
Director counselor), 1967-present; General Partner, Mt.
Eden Vineyards, 1986-present.
Ronald W. Moore, 53............ April 1, 1991 Adjunct Professor of Business Administration,
Director Graduate School of Business Administration,
Harvard University, 1990-present. Director:
CMAC Investment Corporation.
William B. Weaver, 47.......... October 18, 1997 President of Weaver Capital Management, 1996 -
Director present; Managing Director of Lehman Brothers,
1993-1996; Managing Director of the First
Boston Corp., 1978-1993.
</TABLE>
THE AUDIT AND
INFORMATION SERVICES
COMMITTEE IS CHARGED
WITH THE OVERSIGHT OF
THE COMPANY'S FINANCIAL
RECORDS AND THE ADEQUACY
AND INTEGRITY OF THE
COMPANY'S INFORMATION
SYSTEMS, INCLUDING YEAR
2000 COMPLIANCE. The Board of Directors has an Audit and
Information Services Committee (the "Audit Committee"),
the members of which are Messrs. Colman (Chairman),
Elliott, Kreh, and Ms. Fash. Messrs. Sanborn and Thorne
are also currently members of the Audit Committee but
will leave the Committee upon their retirement from the
Board. No member of the Committee 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. In addition, the Audit
Committee reviews the adequacy, accuracy and security
of the Company's data processing and information
systems and establishes standards and procedures with
respect to such systems and is charged with directing
and monitoring the Company's Year 2000 compliance.
During 1997, the Audit Committee held three meetings.
THE COMPENSATION AND
NOMINATION COMMITTEE
IS CHARGED WITH THE
REVIEW OF EXECUTIVE
COMPENSATION, APPROVAL
AND ADMINISTRATION OF
THE COMPANY'S BENEFIT
PLANS AND THE SELECTION,
REVIEW AND NOMINATION
OF NEW DIRECTORS. The Board has a Compensation and Nomination
Committee (the "Compensation Committee"), the members
of which are Messrs. Shepherd (Chairman), Cheesbrough,
Jeffrey, Lyons and McWilliams, none of whom is an
employee of the Company. When Mr. Shepherd retires as a
director at the 1998 Annual Meeting, Mr. Lyons will be
elected Chairman. 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
Compensation Committee is authorized to act as a search
and nomination committee to recommend nominees to the
full Board for
4
<PAGE> 11
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 Company in care of the Chairman of the
Committee or the Company's Secretary will be considered by the Compensation
Committee. During 1997 the Compensation Committee held four meetings.
THE FINANCE AND
INVESTMENT COMMITTEE
MONITORS THE COMPANY'S
INVESTMENT POLICIES AND
PRACTICES. The Board has a Finance and Investment Committee
(the "Investment Committee"), the members of which are
Messrs. Moore (Chairman), Becker, Cheesbrough, Cohn and
Weaver. Mr. Cohn will leave the Committee upon his
retirement from the Board. The Investment Committee
approves and recommends to the Board the adoption of
the Company's investment policies and periodically
reviews such policies for conformance with applicable
federal and state laws and regulations and for
consistency with the Company's performance objectives.
The Investment Committee reviews the Company's
investment portfolio for compliance with approved
policies and approves, where appropriate, exceptions to
defined policies. The Company's Chief Investment
Officer, Mr. Raymond J. Schuyler, and Chief Financial
Officer, Mr. Donald W. Ebbert, Jr., also serve as non-
voting members of the Investment Committee. During
1997, the Investment Committee held three meetings.
THE EXECUTIVE COMMITTEE
ACTS IN PLACE OF THE
FULL BOARD. The Board also has an Executive Committee.
After the retirement of Messrs. Cohn and Shepherd, the
members of the Executive Committee will consist of
Messrs. Becker (Chairman) Colman, Moore and Lyons. The
Executive Committee, during intervals between meetings
of 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, Compensation Committee or Investment
Committee. Actions taken by the Executive Committee are
reported to the Board at the next meeting of the Board.
During 1997, the Executive Committee held four
meetings.
The Board held eleven meetings in 1997. Each
Director attended at least 75% of the aggregate number
of meetings of the Board and of all committees on which
he or she served.
COMPENSATION COMMITTEE
INTERLOCKS AND INSIDER
PARTICIPATION. Prior to Guaranty National Corporation
("Guaranty") becoming a wholly-owned subsidiary of the
Company in December, 1997, the Company's subsidiaries
held 81% of the outstanding common stock of Guaranty.
Guaranty was an independent company listed on the New
York Stock Exchange. The Company and Guaranty had
entered into a shareholder agreement with respect to
the composition of the Board of Directors and
committees of Guaranty. The Company had a right to
designate four nominees to the Guaranty Board (one of
whom was to be the Chairman of Guaranty's Board).
Guaranty's Compensation Committee included the
Company's nominees to the Guaranty Board. Messrs.
Becker, Shepherd and Vincent T. Papa, a Senior Vice
President of the Company, served as Orion's designated
directors on Guaranty's Board. Mr. Sanborn, formerly
President and Chief Operating Officer of the Company
prior to his retirement, was also a member of
Guaranty's Board. Messrs. Sanborn and Shepherd were
members of Guaranty's Compensation Committee. The
current Chairman of the Company's Compensation
Committee is Mr. Shepherd. Mr. Shepherd was also the
Chairman of Guaranty's Compensation Committee.
5
<PAGE> 12
Upon Guaranty becoming a wholly-owned subsidiary
of the Company, all non-employee directors of Guaranty
resigned. On January 2, 1998, in appreciation for their
years of service to Guaranty and the Company, each such
non-employee Guaranty Director, including Messrs.
Shepherd, Sanborn and Ware were given, with taxes paid,
100 shares of the Company's Common Stock. On that date,
the market price of the Common Stock was $45.875 per
share.
DIRECTORS' COMPENSATION
DIRECTORS ARE PAID A
$20,000 ANNUAL RETAINER
FEE AND A $1,200 PER
MEETING ATTENDANCE FEE. Fees: During 1997 each Director who was not an
employee of the Company received a retainer fee of
$20,000. The Chairman of the Audit Committee, the
Compensation Committee and the Investment Committee of
the Board each received an additional fee of $10,000.
Also, during 1997 each Director received an attendance
fee of $1,200 for each meeting of the Board and each
meeting of a committee attended. In addition, in 1997 a
fee of only $400 was paid for a committee meeting held
on the same day as a meeting of the Board. Employees 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.
DIRECTORS' BENEFIT
PLANS.
THE DIRECTORS'
RETIREMENT
PLAN HAS BEEN
TERMINATED. Retirement Plan. Since 1990, the Company has had
a pension plan for the non-employee Directors of the
Company. This plan was terminated as of December 31,
1997. Under the terms of the plan, a Director was
entitled on retirement to receive an annual payment
equal to one half the annual retainer fee (excluding
meeting fees, fees paid to committee chairmen and
expenses) for Directors of the Company in effect on the
date of his or her retirement. This retirement benefit
was to be paid to the Director, or his or her
beneficiaries, for fifteen years or the number of years
that the individual served as a Director of the
Company, whichever was less. In the event of a Change
in Control (as defined in the plan) of the Company,
benefits would have been paid out as a lump sum. As a
result of the termination of the plan, in January 1998
vested benefits were paid out in cash (or credited to
the Deferred Compensation Plan) to the following
directors.
<TABLE>
<CAPTION>
DIRECTOR BENEFIT PAYMENT
-------- ---------------
<S> <C> <C>
Bertram Cohn.......... $ 83,715
John Colman........... 83,715 (Deferred Plan)
Robert Jeffrey........ 83,715 (Deferred Plan)
Warren Lyons.......... 42,725
James McWilliams...... 83,715
Ronald Moore.......... 51,030 (Deferred Plan)
William Shepherd...... 83,715
John Thorne........... 83,715 (Deferred Plan)
--------
Total............ $596,045
</TABLE>
In addition, two Directors who had not vested in
their benefits under the terms of the plan prior to its
termination (Ms. Fash and Mr. Cheesbrough) were each
granted 200 shares of Orion Common Stock on January 2,
1998 by the Compensation Committee to cover the
6
<PAGE> 13
loss of these benefits. The market price on the date of grant was $45.875 per
share.
EACH DIRECTOR MAY DEFER
ALL OR PART OF HIS OR
HER FEES UNDER THE
DEFERRED COMPENSATION
PLAN. Deferred Compensation Plan. Under the Company's
Deferred Compensation Plan (the "Deferred Plan"),
non-employee Directors may elect to defer receipt of
all or a portion of fees to be earned in the next
succeeding year and have such fees accrue either (i) at
the interest rate determined by the Compensation
Committee (currently 9% compounded quarterly) or (ii)
as units equivalent to shares of the Company's Common
Stock to which additional amounts equivalent to
dividends paid on such shares are credited quarterly. A
participating non-employee Director will receive all
amounts deferred and accrued under the Deferred Plan,
either in one payment or as ten equal annual
installments, starting in the first month of the year
following the year in which the participant ceases to
be a Director.
EACH DIRECTOR RECEIVES
AN OPTION FOR 5,000
SHARES UPON HIS OR HER
INITIAL ELECTION AS A
DIRECTOR AND AN OPTION
FOR 2,000 SHARES
AT EACH ANNUAL MEETING
DATE THEREAFTER. Non-Employee Director Stock Option Plan. The 1994
Stock Option Plan for Non-Employee Directors (the
"Option Plan"), as amended, was approved by the
stockholders of the Company on May 31, 1995 and May 29,
1997. Under the Option Plan, each member of the Board
of Directors who is not otherwise an employee of the
Company or any subsidiary of the Company is eligible to
participate. The Option Plan is administered by the
Compensation Committee of the Board. Options granted
under the Option Plan are nonstatutory options and have
no income tax consequences until exercised.
Upon first being elected to the Board a
non-employee Director is granted an initial option to
purchase 5,000 shares. Thereafter, each year, an option
to purchase 2,000 shares is granted to each eligible
Director immediately following the Company's Annual
Meeting. Each option granted under the Option Plan
expires ten years from the date of grant. The option
exercise price per share may not be less than 100% of
the fair market value per share on the day the option
is granted. Options granted immediately following an
Annual Meeting shall fully vest and become exercisable
and non-forfeitable on the day of the next Annual
Meeting, if the optionee has continued to serve as a
Director until that meeting. Options granted other than
immediately following an Annual Meeting vest fully and
become exercisable and non-forfeitable on the first
anniversary of the day on which such option is granted,
if the Director has continued to serve as such until
that day.
7
<PAGE> 14
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. All share and per share amounts in this document have been
adjusted to reflect the 2-for-1 stock split of the Company's Common Stock on
July 7, 1997. All such information is given as of April 6, 1998, unless
otherwise indicated.
<TABLE>
<CAPTION>
NAME OF AMOUNT AND NATURE PERCENT
BENEFICIAL OWNER OF BENEFICIAL OWNERSHIP OF CLASS(1)
---------------- ----------------------- -----------
<S> <C> <C>
W. Marston Becker......................... 75,262(2) *
Daniel L. Barry........................... 44,516(3) *
Gordon F. Cheesbrough..................... 16,000(4) *
John C. Colman............................ 40,440(5) *
David H. Elliott.......................... 500(6) *
Victoria R. Fash.......................... 16,000(4) *
Raymond W. Jacobsen....................... 52,889(7) *
Robert H. Jeffrey......................... 26,274(8) *
Gordon W. Kreh............................ 1,000(6) *
Warren R. Lyons........................... 20,266(9) *
James K. McWilliams....................... 27,374(10) *
Ronald W. Moore........................... 20,172(11) *
James R. Pouliot.......................... 34,252(12) *
Raymond J. Schuyler....................... 83,947(13) *
William B. Weaver......................... 1,000(6) *
All Directors and officers as a group (29
persons)................................ 838,909(14) 3.05%
Neuberger & Berman, LLC................... 2,304,616(15) 8.37%
605 Third Avenue
New York, New York 10158
Southeastern Asset Management, Inc........ 2,046,200(16) 7.43%
6075 Poplar Avenue--Suite 900
Memphis, Tennessee 38119
Orion Capital Corporation Employees'
Stock................................... 1,549,041(14) 5.63%
Savings and Retirement Plan.............
9 Farm Springs Road
Farmington, Connecticut 06032
</TABLE>
- ---------------
* less than one per cent.
(1) Excludes 3,145,780 shares owned by the Company and its subsidiaries.
(2) Includes 21,850 shares as to which Mr. Becker has sole voting and
investment power, 4,000 shares held in trust for Mr. Becker's children,
11,250 shares of Restricted Stock held pursuant to the terms of either the
Company's 1982 Long-Term Performance Incentive Plan or Equity Incentive
Plan (collectively the "Performance Incentive Plan"), 35,554 shares as to
which Mr. Becker has a right to purchase as of June 30, 1998 pursuant to
the terms of the Performance Incentive Plan and approximately 2,608 shares
which represent his proportionate interest in shares held by the Trustee
under the Company's Employees Stock Savings and
8
<PAGE> 15
Retirement Plan ("Savings and Retirement Plan") as of December 31, 1997.
Mr. Becker disclaims beneficial ownership of the shares owned by his
children.
(3) Includes 28,487 shares as to which Mr. Barry has sole voting and investment
power and approximately 16,029 shares which represent his proportionate
interest in shares held by the Trustee under the Savings and Retirement
Plan as of December 31, 1997.
(4) Includes 2,000 shares as to which the Director has sole voting and
investment power and 14,000 shares which the Director has a right to
purchase as of June 30, 1998, pursuant to the current terms of the Option
Plan.
(5) Includes 15,950 shares as to which Mr. Colman has sole voting and
investment power, 18,000 shares which Mr. Colman has a right to purchase as
of May 29, 1998 pursuant to the terms of the Option Plan, 3,204 shares held
in trust for Mr. Colman's daughter (over which he has shared voting and
investment power) and 3,286 shares held by Mrs. Colman. Mr. Colman
disclaims beneficial ownership of the shares held by his wife and the
shares held in trust for his daughter.
(6) Indicates sole voting and investment power.
(7) Includes 10,684 shares as to which Mr. Jacobsen has sole voting and
investment power, 29,923 shares which Mr. Jacobsen has a right to purchase
as of June 30, 1998 and 8,000 shares of Restricted Stock both held pursuant
to the terms of the Performance Incentive Plan and approximately 4,282
shares which represent his proportionate interest in shares held by the
Trustee under the Savings and Retirement Plan as of December 31, 1997.
(8) Includes 8,274 shares as to which Mr. Jeffrey has sole voting and
investment power and 18,000 shares which he has a right to purchase as of
June 30, 1998, pursuant to the terms of the Option Plan.
(9) Includes 1,804 shares as to which Mr. Lyons has sole voting and investment
power, 18,000 shares which Mr. Lyons has a right to purchase as of June 30,
1998, pursuant to the terms of the Option Plan and 462 shares owned by Mrs.
Lyons. Mr. Lyons disclaims beneficial ownership of the shares owned by Mrs.
Lyons.
(10) Includes 9,374 shares as to which Mr. McWilliams has sole voting and
investment power and 18,000 shares which he has a right to purchase as of
June 30, 1998, pursuant to the current terms of the Option Plan.
(11) Includes 2,172 shares as to which Mr. Moore has sole voting and investment
power and 18,000 shares which he has a right to purchase as of June 30,
1998, pursuant to the current terms of the Option Plan.
(12) Includes 34,252 shares as to which Mr. Pouliot has a right to purchase as
of June 30, 1998, pursuant to the terms of the Performance Incentive Plan.
(13) Includes 36,636 shares as to which Mr. Schuyler has sole voting and
investment power, 23,894 shares which Mr. Schuyler has a right to purchase
as of June 30, 1998 pursuant to the terms of the Performance Incentive Plan
and approximately 23,417 shares which represent his proportionate interest
in shares held by the Trustee under the Savings and Retirement Plan as of
December 31, 1997.
(14) Includes 135,162 shares which represent the group's proportionate interest
in shares held by the Trustee under the Savings and Retirement Plan as of
December 31, 1997, 348,390 shares which the group has rights to acquire as
of June 30, 1998 pursuant to the Performance Incentive Plan or the Option
Plan and 34,650 shares of Restricted Stock held pursuant to the terms of
the Performance Incentive Plan. As of December 31, 1997, the Savings and
Retirement Plan, as a whole, held 1,549,041 shares 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 employee 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
9
<PAGE> 16
same proportion as it votes shares for which it does receive instructions from
other participating employees.
(15) Neuberger & Berman, LLC ("N&B") reported in an amendment to its Schedule
13G filed with the Securities and Exchange Commission on February 11, 1998
that it held 2,304,616 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 shares and shared voting power as to 680,884 of such
shares. N&B reported that it held such shares for many clients, none of
whom has an interest amounting to five percent or more of the Company's
Common Stock. The number reported in the table excludes 43,750 shares of
Common Stock held by certain partners of N&B in their own personal
securities accounts and shares held by the Neuberger & Berman Profit
Sharing Retirement Plan ("N&B Plan") for the benefit of the N&B Plan's
participants who are current and former N&B employees and partners. N&B
disclaims beneficial ownership of such shares owned directly by N&B
partners and the N&B Plan.
(16) Southeastern Asset Management, Inc. ("Southeastern") reported in its
initial Schedule 13G, filed with the Securities and Exchange Commission on
February 4, 1998, that it held an aggregate of 2,046,200 shares of the
Company's Common Stock in its discretionary and non-discretionary accounts,
with sole voting power over 1,335,400 shares of Common Stock, shared voting
power over 660,800 shares, no voting power as to 50,000 shares, sole
dispositive power over 1,385,400 shares and shared dispositive power over
660,800 of such shares. Southeastern reported none of the shares are owned
by it and that it holds such shares for its investment advisory clients.
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 a Form 5, all of its officers and
Directors have complied with all filing requirements applicable to them with
respect to transactions during 1997 with the exception of Thomas M. Okarma, a
Senior Vice President of Orion, who inadvertently failed to file a Form 4 until
March 1998 to reflect an October 1997 purchase of 311 shares of Common Stock
under a self-directed IRA.
10
<PAGE> 17
EXECUTIVE COMPENSATION
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, 1997, 1996 and 1995 of those persons who were on
December 31, 1997 (1) the chief executive officer and (2) the other four most
highly compensated executive officers of the Company who were serving as
executive officers at the end of 1997. (The chief executive officer and the
other four most highly compensated executive officers are referred to
collectively as the "Named Officers."). Mr. Barry retired as Senior Vice
President and Chief Financial Officer of the Company on December 31, 1997, and
Mr. Pouliot was first elected an Executive Vice President of the Company in
December 1997 when Guaranty became a wholly-owned subsidiary of the Company. All
share and per share amounts in the following charts have been adjusted to
reflect the 2-for-1 stock split of the Company's Common Stock on July 7, 1997.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
-------------------------------------------------
ANNUAL PAYOUTS
COMPENSATION AWARDS ------------
--------------------- ---------------------------------- LONG-TERM
RESTRICTED STOCK INCENTIVE
STOCK OPTIONS PAYOUTS
NAME AND PRINCIPAL POSITION YEAR SALARY $ BONUS $ AWARD(S)$(1)(2) (SHARES)(2)(3) $(4)
--------------------------- ---- -------- ------- --------------- -------------- ---------
<S> <C> <C> <C> <C> <C> <C>
W. Marston Becker............ 1997 401,180 500,000 -0- 40,000 85,903
Chairman of the Board 1996 282,746 250,000 -0- 70,000 32,953
and Chief Executive Officer 1995 218,892 150,000 307,500 -0- -0-
James R. Pouliot............. 1997 300,000 190,000 -0- 64,215 22,049
Executive Vice President of
the Company and Chairman of
Guaranty
Raymond W. Jacobsen.......... 1997 237,662 190,000 -0- 8,032 95,563
Executive Vice President of 1996 226,584 140,000 -0- 15,436 69,053
the Company and President 1995 207,738 140,000 -0- -0- 26,753
of EBI Companies
Raymond J. Schuyler.......... 1997 207,661 150,000 -0- 7,020 43,485
Senior Vice President and 1996 197,738 122,000 -0- 13,422 26,846
Chief Investment Officer 1995 184,584 105,000 -0- -0- 22,925
Daniel L. Barry.............. 1997 216,480 129,000 -0- -0- 43,107
Senior Vice President and 1996 188,700 115,000 -0- 12,886 26,846
Chief Financial Officer 1995 171,969 100,000 -0- -0- 22,925
(Retired)
<CAPTION>
ALL OTHER
COMPENSATION
NAME AND PRINCIPAL POSITION $(5)
--------------------------- ------------
<S> <C>
W. Marston Becker............ 75,092
Chairman of the Board 53,407
and Chief Executive Officer 40,143
James R. Pouliot............. 56,466
Executive Vice President of
the Company and Chairman of
Guaranty
Raymond W. Jacobsen.......... 43,201
Executive Vice President of 41,532
the Company and President 37,640
of EBI Companies
Raymond J. Schuyler.......... 45,727
Senior Vice President and 44,675
Chief Investment Officer 41,937
Daniel L. Barry.............. 39,554
Senior Vice President and 34,901
Chief Financial Officer 32,233
(Retired)
</TABLE>
- ---------------
(1) Represents the value of shares of Restricted Stock awarded to the Named
Officers pursuant to the terms of the Performance Incentive Plan. Pursuant
to Mr. Becker's employment agreement, 15,000 shares of Restricted Stock were
awarded to him on October 31, 1995, based on a market price per share of
$20.50. This award of Restricted Stock vests in four equal installments
beginning on the second anniversary of such award. In general, awards made
after September 1996 vest in four equal installments, beginning on the first
anniversary of such 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 date the entire award has vested. In
the event of death, the Restricted Stock awarded to Mr. Becker in 1995
continues to vest and would be paid to his designated beneficiary. If a
Change in Control of the Company (as defined in the Performance Incentive
Plan) were to occur before the shares of Restricted Stock are fully vested,
all of such shares would become immediately vested. Dividends on Restricted
Stock are paid when and as dividends are paid on the Company's Common Stock.
In general, the senior executives of the
11
<PAGE> 18
Company, including the Named Officers, receive only options and not awards
of Restricted Stock, except pursuant to the terms of employment agreements,
as reported below.
The aggregate total of Restricted Stock holdings of each of the Named
Officers, valued as of December 31, 1997, at a market price of $46.4375 per
share, are as follows:
<TABLE>
<CAPTION>
RESTRICTED STOCK
------------------
SHARES VALUE $
NAME ------ -------
<S> <C> <C>
W. Marston Becker......................................... 11,250 522,422
Raymond W. Jacobsen....................................... 8,000 371,500
</TABLE>
(2) Prior to 1997, awards of Restricted Stock or Options had been 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. Prior to September 1996, the Performance Period was a
five year period from the date of the awards and after September 1996, the
Performance Period generally is four years. 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 each year of the Performance Period to achieve the
100% payout. If the Company's book value increases at less than a 11%
compounded annual rate, but more than a 6% rate, the percent of payout is
reduced proportionately. 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. If a Change in Control of the Company (as defined in the
Performance Incentive Plan) were to occur before the Performance Units are
fully vested, all such Units would become immediately vested and the
Compensation Committee may, in its sole discretion, declare the Performance
Units immediately payable in such amounts as the Committee may determine.
The Compensation Committee elected not to award any Performance Units to
executive officers in 1997.
The Named Officers received the following Performance Unit awards over the
past 5 years:
<TABLE>
<CAPTION>
NUMBER OF
PERFORMANCE
NAME DATE OF AWARD UNITS AWARDED
- ---- ------------- -------------
<S> <C> <C>
W. Marston Becker.......................... March 7, 1996 5,000
October 31, 1995 7,500
July 19, 1994 7,500
James R. Pouliot........................... December 17, 1996 3,552
Raymond W. Jacobsen........................ September 11, 1996 1,906
September 12, 1994 4,000
July 19, 1994 8,000
June 3, 1993 782
Raymond J. Schuyler........................ September 11, 1996 1,658
September 12, 1994 3,200
Daniel L. Barry............................ September 11, 1996 1,592
September 12, 1994 3,200
</TABLE>
(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
12
<PAGE> 19
date of grant, and in most circumstances the exercise price may not be less
than 100% of the fair market value of the shares covered thereby on the date
of grant. 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 becomes 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. If a Change in Control of the
Company (as defined in the Performance Incentive Plan) were to occur before
the Option is exercisable in full, the Option would become immediately
exercisable for all shares of Common Stock covered by such Option.
As a result of Guaranty becoming a wholly-owned subsidiary of Orion, all of
Mr. Pouliot's options previously granted to him by Guaranty were converted
on December 16, 1997 into options to purchase Orion common stock. Pursuant
to the Merger Agreement between Orion and Guaranty, each option outstanding
pursuant to Guaranty's equity incentive plans for key employees whether or
not then exercisable, was converted into or replaced by an option, granted
under Performance Incentive Plan, to purchase a number of shares of Orion
common stock at an exercise price (adjusted as to both number of shares and
exercise price) to reflect differences between the merger price for Guaranty
and the market price of Orion's common stock immediately prior to the
merger.
(4) Cash value of Performance Units paid under the Performance Incentive Plan
for Performance Periods ended December 31, 1997, 1996 and 1995.
(5) Detail of amounts reported in the "All Other Compensation" column for 1997
is provided in the table below.
<TABLE>
<CAPTION>
ITEM MR. BECKER MR. POULIOT MR. JACOBSEN MR. SCHUYLER MR. BARRY
---- ---------- ----------- ------------ ------------ ---------
<S> <C> <C> <C> <C> <C>
- - Company Contributions to the Supplemental
Benefits Plan (see below)....................... $ 48,898 $ 38,000 $ 21,308 $ 16,388 $ 17,035
- - Company Contributions to Savings and
Retirement Plan................................. 15,996 9,500 15,996 15,218 15,996
- - Split Dollar Insurance Premium.................. 10,198 8,966 5,897 14,121 6,523
------------- ------------- ------------- ------------- -------------
Total All Other Compensation.................. $ 75,092 $ 56,466 $ 43,201 $ 45,727 $ 39,554
============= ============= ============= ============= =============
</TABLE>
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 to 6% of a participating employee's
base salary, unless limited by federal tax regulations. The Company
contributes to the Supplemental Benefits Plan ("Supplemental 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. All
benefits under the Supplemental Plan are fully vested but no benefits are
paid until January of the year following the year employment terminates. The
Supplemental Plan is not funded.
13
<PAGE> 20
OPTION GRANTS, EXERCISES AND FISCAL YEAR-END VALUES
Option Grants in Last Fiscal Year
The following tables set forth information with respect to options granted
to the Named Officers in 1997:
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
NUMBER OF VALUE AT ASSUMED
SECURITIES % OF TOTAL ANNUAL RATES OF STOCK
UNDERLYING OPTIONS EXERCISE PRICE APPRECIATION FOR
OPTIONS GRANTED TO OR BASE OPTION TERM$(2)
GRANTED EMPLOYEES IN PRICE EXPIRATION --------------------------------------------
NAME (#)(1) FISCAL YEAR ($/SH) DATE 0%($) 5%($) 10%($)
---- ---------- ------------ -------- ---------- ----- ----- ------
<S> <C> <C> <C> <C> <C> <C> <C>
W. Marston Becker............ 40,000 5.74 43.5625 9/12/07 -0- 1,095,849 2,777,096
James R. Pouliot(3).......... 27,827 3.99 21.6967 7/27/05 680,636(3) 1,293,875 2,149,450
25,700 3.69 21.2250 12/17/06 640,733(3) 1,294,727 2,251,552
10,688 1.53 45.0313 12/9/07 -0- 302,683 767,059
Raymond W. Jacobsen.......... 8,032 1.15 43.5625 9/12/07 -0- 220,046 557,641
Raymond J. Schuyler.......... 7,020 1.01 43.5625 9/12/07 -0- 192,321 487,380
Daniel L. Barry.............. -0- -0- 0.0 -- -0- -0- -0-
</TABLE>
- ---------------
(1) For a description of the material terms of the Options and the Performance
Units awarded in tandem therewith, see footnotes 2 and 3 on pages 12-13.
(2) Calculations are based on hypothetical annual compounded rates of stock
price appreciation of 0%, 5% and 10% over the option term, which is ten
years except for options converted pursuant to the merger of Guaranty with a
subsidiary of the Company. Using the same assumptions and based on
27,605,544 shares outstanding as of December 31, 1997, the total dollar
gains for all shareholders as a group would be $781.8 million (5%) and
$1,981.2 million (10%) based on the December 9, 1997 price per share of
$45.03125 and $756.3 million (5%) and $1,916.6 million (10%) based on the
December 12, 1997 price per share of $43.5625, $801.3 million (5%) and
$2,030.6 million (10%) based on the December 16, 1997 price per share of
$45.15625.
(3) As part of the merger of Guaranty with a subsidiary of the Company in
December 1997, Mr. Pouliot's outstanding options under Guaranty's incentive
plans for key employees were converted into or replaced by 53,527 options,
granted under one of Orion's equity incentive plans for key employees, to
purchase shares of the Company's Common Stock at exercise prices ranging
from $21.2250 to $21.6967 (adjusted as to both number of shares and exercise
price) to reflect differences between the merger price of $36 per share and
the market price of the Company's Common Stock of $46.15625 the day prior to
the merger.
AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR AND YEAR END OPTION VALUES
The following table provides information with respect to the unexercised
options to purchase Common Stock granted in prior years under the Performance
Incentive Plan for each of the Named Officers and held by them at December 31,
1997.
<TABLE>
<CAPTION>
NUMBER OF VALUE OF UNEXERCISED
UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS
SHARES VALUE AT DECEMBER 31, 1997 AT DECEMBER 31, 1997 $(2)
ACQUIRED REALIZED --------------------------- ---------------------------
NAME ON EXERCISE $(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---------------------------- ----------- ------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
W. Marston Becker........... 6,800 188,489 33,200 100,000 841,163 1,467,813
James R. Pouliot............ -0- -0- 34,252 29,963 850,453 501,001
Raymond W. Jacobsen......... -0- -0- 29,923 23,609 913,185 385,785
Raymond J. Schuyler......... -0- -0- 23,894 20,286 735,971 327,129
Daniel L. Barry............. 21,216 640,795 2,544 12,864 53,255 298,530
</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
pages 12-13.
14
<PAGE> 21
(2) Based on the closing price on the New York Stock Exchange--Composite
Transactions of the Company's Common Stock on that date ($46.4375).
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 18 shall not be incorporated by reference into any
such filing.
REPORT OF THE COMPENSATION COMMITTEE
EXECUTIVE COMPENSATION
HAS 3 COMPONENTS
-- BASE SALARY
-- ANNUAL INCENTIVE
AWARDS (BONUS)
-- ANNUAL LONG-TERM
INCENTIVE AWARDS. The Company's executive compensation program is
designed to attract, motivate and retain executive
officers who can make significant contributions to the
Company's long-term success; align the interest of the
executive officers with those of stockholders; and
place a significant proportion of the executive
officers' total compensation at risk by aligning it to
the Company's financial and Common Stock performance.
Executive compensation is composed of three
components: base salary, annual incentive awards and
annual long-term incentive awards. The targets of each
component of compensation are determined by comparative
compensation data for the property and casualty
insurance industry as a whole, a selected peer group of
specialty niche property and casualty companies which
compete in markets served by the Company and other
comparative data obtained from nationally recognized
compensation consulting firms.
BASE SALARY
BASE PAY IS TARGETED
AT THE MEDIAN OF THE
MARKETPLACE. The base salary is targeted at the median of the
competitive marketplace. The base salary target for an
executive position is determined through an annual
formal assessment conducted by the Company's human
resource personnel and an independent compensation
consultant. This assessment considers a position's
degree of complexity and level of responsibility, its
importance to the Company in relation to other
executive positions, and the competitiveness of an
executive's total compensation.
Subject to the Compensation Committee's approval,
the level of an executive officer's base pay is
determined on the basis of relevant comparative
compensation data; and the Chairman and Chief Executive
Officer's assessment of the executive's performance,
experience, demonstrated leadership, job knowledge and
management skills.
ANNUAL INCENTIVES
BONUS PAYOUT IS, IN
GENERAL, MADE ONLY IF
TARGETS ARE ACHIEVED. Annual Incentives are paid in the form of cash
bonuses in the year following performance. In 1997, the
Compensation Committee formalized the cash bonus
structure to be a target-oriented plan based on the
achievement of predetermined corporate, business unit,
and corporate unit goals and individual goals. The plan
provides that no payouts will occur unless a minimum
"threshold" of performance has been met. The threshold
for 1997 was the Company's consolidated
15
<PAGE> 22
operating earnings after tax of $75 million which threshold was met. Assuming
that the threshold is met, "pools" are established for each business unit and
corporate staff unit based on the achievement of specific goals. A maximum of
200% of target can be achieved for superior results. Once the performance goals
have been established, the Compensation Committee may adjust them upon the
occurrence of extraordinary events.
1997 bonus payout level: Based on the achievement
of the plan's threshold--consolidated operating
earnings after tax--business unit pools were determined
based on pre-tax operating income, combined ratio,
return on equity and premiums. Business unit and
corporate payouts ranged from 25% of target to 105% of
target for 1997.
LONG-TERM INCENTIVES
EXECUTIVE OFFICERS OF
THE COMPANY MAY
RECEIVE OPTIONS AS
LONG-TERM INCENTIVE
AWARDS. The long-term incentives awarded to the Company's
executive officers and other key employees are made
pursuant to the terms of the Company's Performance
Incentive Plan. The Performance Incentive Plan is
intended to focus the efforts of the executive officers
and other key employees on performance, which will
increase the equity value of the Company for
shareholders.
The Compensation Committee may grant incentive
stock options and non-statutory stock options to
purchase shares of Common Stock as well as restricted
stock and performance units.
In 1997 executive officers received only stock
options; other key employees received a combination of
incentive stock options and restricted stock. The
Compensation Committee elected not to award performance
units in 1997 to the Company's executive officers.
The exercise price of a stock option is equal to
the fair market value of the Company's stock on the
date of grant.
In accordance with provisions of the Performance
Incentive Plan the Committee approves all long-term
incentive recommendations. Individual awards are based
on competitive data, results of the Company's
performance, the executive's performance, and the
competitiveness of an executive's total compensation.
CEO COMPENSATION
With input from the Company's independent
compensation consultant, the Compensation Committee
discusses matters affecting Mr. Becker's compensation
privately, without Mr. Becker or other officers
present. In arriving at a decision concerning Mr.
Becker's compensation, the Compensation Committee
considered the Company's financial performance; Common
Stock price performance; industry-wide and peer group
compensation data; as well as Mr. Becker's leadership,
decision-making skills, experience, knowledge,
communication with the Board and strategic
recommendations, and the Company's position for
improved future performance. The Committee did not
assign a specific weight to each factor, but the
Company's financial performance is generally given
greater weight than other factors. The Committee's
decisions regarding Mr. Becker's
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<PAGE> 23
compensation is reported to the full Board at its next regularly scheduled
meeting.
FOR HIS OUTSTANDING
PERFORMANCE IN 1997,
MR. BECKER'S
COMPENSATION PACKAGE WAS
COMPRISED OF (1) A BASE
SALARY INCREASE TO
410,000, (II) AN ANNUAL
BONUS OF $500,000 AND
(III) A LONG-TERM
INCENTIVE AWARD OF AN
OPTION ON 40,000
SHARES. In September of 1997, the Committee awarded Mr.
Becker a stock option to purchase 40,000 shares of
Common Stock. In March of 1998, the Compensation
Committee elected to increase Mr. Becker's base salary
by 2.5% to the annualized amount of $410,000 and
authorized a cash bonus payment in the amount of
$500,000.
In deciding upon Mr. Becker's compensation
package, the Compensation Committee considered the
significant accomplishments of Mr. Becker as Chairman
and Chief Executive Officer during the past 12 months,
including, among other factors, that the Company's
after-tax operating earnings per share was up 17.5%
from 1996, the Company's net earnings per share
increased 34.2% to $4.15 per share from 1996, the book
value per share of the Company increased 25.1% to
$26.19 per share from 1996 and the Company's combined
ratio in 1997 was 99.7% as compared to 99.8% for 1996.
DEDUCTIBILITY OF COMPENSATION
Section 162(m) of the Internal Revenue Code
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.
The Committee intends to structure any compensation for
executive officers so that it qualifies for
deductibility under Section 162(m) 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 bonus, that may not be deductible.
Compensation and Nomination Committee
William J. Shepherd, Chairman
Gordon F. Cheesbrough
Robert H. Jeffrey
Warren R. Lyons
James K. McWilliams
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<PAGE> 24
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
(FISCAL YEAR COVERED) ORION CAPITAL S&P 500 DOW JONES P & C
<S> <C> <C> <C>
1992 100 100 100
1993 115 110 101
1994 131 112 106
1995 164 153 149
1996 235 188 179
1997 361 252 263
</TABLE>
- ---------------
* Assumes that the investment in the Company's Common Stock and each index was
$100 on December 31, 1992 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 does not make or endorse any predictions as to future stock
performance.
EMPLOYMENT AGREEMENTS AND TERMINATION OF EMPLOYMENT AND CHANGE IN CONTROL
ARRANGEMENTS
The Company has employment agreements with three
of its current executive officers: W. Marston Becker,
James R. Pouliot and Raymond W. Jacobsen.
18
<PAGE> 25
The Company entered into an employment agreement
with Mr. Becker on October 31, 1995 which was amended
on January 1, 1997 and April 6, 1998. The agreement
currently provides for a base salary of $410,000 with
such salary increases as may from time to time be
approved by the Company. When the agreement was first
executed, Mr. Becker was granted 15,000 shares of
Restricted Stock and 7,500 Performance Units in
accordance with the terms of the Performance Incentive
Plan.
Guaranty entered into an employment agreement with
Mr. Pouliot as of December 31, 1996, when Mr. Pouliot
became President and Chief Executive Officer of
Guaranty. The agreement currently provides for a base
salary of $300,000 with such salary increases as may
from time to time be approved by Guaranty.
The Company entered into an employment agreement
with Mr. Jacobsen on July 19, 1994, which was amended
and restated as of December 6, 1995. The agreement
provides for a base salary of $238,000 with such salary
increases as may from time to time be approved by the
Company. When the agreement was first executed, Mr.
Jacobsen was granted 16,000 shares of Restricted Stock
and 8,000 Performance Units in accordance with the
terms of the Performance Incentive Plan. Each of Mr.
Becker, Mr. Pouliot and Mr. Jacobsen is referred to as
"Executive" below.
EACH AGREEMENT HAS A TWO
YEAR TERM WHICH
AUTOMATICALLY RENEWS,
UNLESS NOTICE IS GIVEN. The term of each agreement is two years and is
automatically renewed yearly unless either party
thereto gives notice of termination. The agreements
will not be terminated by any merger, consolidation,
sale of assets or voluntary or involuntary dissolution
in which the Company is not the survivor. Each
agreement may be terminated by the Company 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
substantially to perform his duties with the Company.
In addition, termination may be effected on seven days
notice by the Company or Executive at any time prior to
the expiration of the term of the agreement or during
the twelve months following the month in which there is
a Change in Control (see below). For a period of two
years after the term of the agreement 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 the
date of his 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.
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<PAGE> 26
IF THERE IS A CHANGE IN
CONTROL OF THE COMPANY,
THE EXECUTIVES'
LONG-TERM
INCENTIVE AWARDS
ACCELERATE AND
COMPENSATION IS
GUARANTEED FOR A
PERIOD OF TIME. For a period of one year following a Change in
Control of the Company, if the Executive terminates his
employment or if the Executive receives written notice
of termination other than for cause, or the Executive
terminates for "good reason", he (or his beneficiary)
would be entitled to receive his base salary (at the
level in effect on the date of notice). Mr. Becker
would be entitled to receive his base salary until the
later of (i) the termination date of his agreement or
(ii) 3 years. Mr. Pouliot and Mr. Jacobsen would each
be entitled to receive his base salary until the later
of (i) the termination of his agreement or (ii) 2
years. In addition, the Executive would receive a bonus
equal to the bonus which would have been payable to him
in the year in which notice was given if he had
achieved target performance. The Executive would also
receive other usual employee benefits provided by the
Company. In addition, all previously unexercised stock
options would be deemed to be exercisable, all
restrictions with respect to any Restricted Stock would
be deemed to have been satisfied and lapsed, and all
unexpired periods of performance with respect to any
performance-related units or awards would be deemed to
have expired. The Executive will be entitled to receive
the value of such units at the end of the month during
which termination occurs on the basis of an equitable
proration of the performance period, performance target
and award amount. Under his contract, if Mr. Becker
incurs an excise tax as a result of the acceleration of
his benefits as a result of a Change in Control, his
compensation would be increased so that the value of
his compensation package would remain the same
regardless of the imposition of an excise tax.
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 all executive officers of the
Company, including Mr. Schuyler, who do not have
individual employment agreements 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. In 1997,
Mr. Jacobsen moved his residence from Connecticut to
Illinois. In connection with that move the Company
loaned Mr. Jacobsen an aggregate of $200,000 for 5
years at an interest rate of 9.25% per year. In 1996,
Mr. Thomas Okarma, a Senior Vice President of the
Company and President and Chief Executive Officer of
DPIC Companies, was required to move his residence from
Illinois to California. In connection with that move,
the Company loaned Mr. Okarma an aggregate of $150,000
secured by a mortgage on his California residence, for
5 years, at an interest rate of 9.25% 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.
20
<PAGE> 27
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.
2. RATIFICATION OF SELECTION OF AUDITORS
DELOITTE & TOUCHE LLP
HAVE BEEN APPOINTED THE
COMPANY'S AUDITORS. The Board has selected Deloitte & Touche LLP as
independent auditors for the Company for the year 1998.
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 LLP 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 LLP, the
selection of independent certified public accountants
will be reconsidered by the Board; however, the Board
may select Deloitte & Touche LLP, notwithstanding the
failure of the stockholders to ratify its selection.
A DELOITTE & TOUCHE LLP
REPRESENTATIVE WILL BE
AT THE ANNUAL MEETING
TO ANSWER QUESTIONS. A representative of Deloitte & Touche LLP 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 LLP has been the Company's
independent certified public accountants since March
31, 1976. During the fiscal year ended December 31,
1997, Deloitte & Touche LLP 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. APPROVAL OF THE ORION CAPITAL CORPORATION EMPLOYEES' STOCK PURCHASE PLAN
The Company's stockholders are being asked to
approve the Employees' Stock Purchase Plan (the
"Purchase Plan"), pursuant to which 300,000 shares of
the Company's Common Stock will be reserved for
issuance.
21
<PAGE> 28
THE STOCK PURCHASE PLAN
LETS EMPLOYEES BUY
COMMON STOCK BY PAYROLL
DEDUCTION AT A 10%
DISCOUNT FROM FAIR
MARKET
VALUE. The Purchase Plan is intended to provide eligible
employees of the Company and its participating
subsidiaries with the continuing opportunity to acquire
a proprietary interest in the Company through
participation in a payroll-deduction-based employee
stock purchase plan designed to operate in compliance
with Section 423 of the Internal Revenue Code. The
Purchase Plan was adopted by the Board on March 6,
1998, and the initial purchase period under the
Purchase Plan will begin on July 1, 1998. However, no
purchase rights under the Purchase Plan will be
exercised, and no shares of Common Stock will be issued
under the Purchase Plan, unless it is approved by the
Company's stockholders at the Annual Meeting.
The following is a summary of the principal
features of the Purchase Plan. The summary, however,
does not purport to be a complete description of all
the provisions of the Purchase Plan. A copy of the
actual plan document is attached to this proxy
statement as Exhibit A.
SHARE RESERVE
300,000 SHARES
AUTHORIZED. The Company has reserved three hundred thousand
(300,000) shares of Common Stock for issuance over the
term of the Purchase Plan. This share reserve will be
drawn either from newly issued shares of Common Stock
or shares of Common Stock repurchased by the Company,
including shares repurchased on the open market.
In the event any change is made to the outstanding
shares of Common Stock by reason of any
recapitalization, stock dividend, stock split,
combination of shares, exchange of shares or other
change in corporate structure effected without the
Company's receipt of consideration, appropriate
adjustments will be made to (i) the class and maximum
number of securities issuable under the Purchase Plan,
including the class and number of securities issuable
per participant on any one purchase date, and (ii) the
class and maximum number of securities subject to each
outstanding purchase right and the purchase price
payable per share thereunder.
ADMINISTRATION
STOCK PURCHASE PLAN IS
ADMINISTERED BY THE
COMPENSATION
COMMITTEES. The Purchase Plan will be administered by the
Compensation Committee of the Company's Board of
Directors. Such Committee, as Plan Administrator, will
have full authority to adopt such rules and procedures
as it may deem necessary for proper plan administration
and to interpret the provisions of the Purchase Plan.
All costs and expenses incurred in plan administration
will be paid by the Company without charge to
participants.
PAYROLL DEDUCTIONS AND STOCK PURCHASES
Each participant may authorize periodic payroll
deductions between $10 and $800 per pay period from his
or her base salary to be applied to the acquisition of
Common Stock on each purchase date. On each purchase
date (the last business day in June and December of
each year), the payroll deductions of each participant
will
22
<PAGE> 29
automatically be applied to the purchase of shares of Common Stock at the
purchase price in effect for that offering period.
PURCHASE PRICE
EMPLOYEES WILL BE ABLE
TO PURCHASE ORION
COMMON STOCK AT 90% OF
THE FAIR MARKET VALUE
ON THE LOWER OF THE
FIRST OR LAST DAY OF
THE OFFERING PERIOD. The purchase price per share at which Common Stock
will be purchased on the participant's behalf on each
purchase date will be equal to ninety percent (90%) of
the lower of (i) the fair market value per share of
Common Stock on the first business day of that offering
period or (ii) the fair market value per share of
Common Stock on that purchase date.
OFFERING PERIODS
The Purchase Plan will be implemented in a series
of successive offering periods, each with a maximum
duration (not to exceed twelve (12) months) designated
by the Plan Administrator prior to the start date. The
initial offering period will begin on July 1, 1998 and
will continue through December 31, 1998. The next
offering period will start on the first business day in
January, 1999, and any subsequent offering periods will
begin as designated by the Plan Administrator. Shares
of Common Stock will be purchased on behalf of
participants on the last business day of each offering
period.
ELIGIBILITY
ALMOST ALL EMPLOYEES ARE
ELIGIBLE. Any individual who is employed on a basis under
which he or she is regularly expected to work for at
least 17 1/2 hours per week, for more than five months
per calendar year in the employ of the Company or any
participating subsidiary corporation and has completed
fifteen days of employment as of the first day of an
offering period will be eligible to participate in the
Purchase Plan ("eligible employee").
An individual who is an eligible employee on the
start date of any offering period may join that
offering period. An individual who first becomes an
eligible employee after such start date may join the
Purchase Plan on the next entry date on which he or she
is an eligible employee. Each participant will be
entitled to purchase shares of Common Stock at the end
of such offering period with his or her accumulated
payroll deductions.
As of April 1, 1998, approximately 3,500
employees, including executive officers, would have
been eligible to participate in the Purchase Plan.
VALUATION
The fair market value per share of Common Stock on
any relevant date will be the mean of the high and low
sale prices per share on such date on the New York
Stock Exchange. On April 9, 1998, the fair market value
per share of common Stock was $56.00 per share.
23
<PAGE> 30
SPECIAL LIMITATIONS
NO EMPLOYEE CAN
PURCHASE MORE THAN 1,000
SHARES OF THE COMPANY'S
COMMON STOCK UNDER THE
PURCHASE PLAN IN ANY SIX
MONTH PERIOD. The Purchase Plan imposes certain limitations upon
a participant's rights to acquire Common Stock,
including the following limitations:
(i) No purchase right may be granted to any
individual who owns stock (including stock
purchasable under any outstanding purchase rights)
possessing 5% or more of the total combined voting
power or value of all classes of stock of the
Company.
(ii) No purchase right granted to a participant
may permit such individual to purchase Common
Stock at a rate greater than $25,000 worth of such
Common Stock (valued at the time such purchase
right is granted) for each calendar year the
purchase right remains outstanding.
(iii) No participant may purchase more than 1,000
shares of Common Stock on any purchase date.
TERMINATION OF PURCHASE RIGHTS
A participant's purchase right will immediately
terminate upon the participant's termination of
employment or loss of eligible employee status or upon
his or her affirmative withdrawal from the offering
period. The payroll deductions collected for the
purchase period in which the purchase right terminates
will be refunded.
ASSIGNABILITY
No purchase right will be assignable or
transferable. The right is exercisable only by the
participant.
STOCKHOLDER RIGHTS
NO EMPLOYEE HAS ANY
STOCKHOLDER RIGHTS UNTIL
THE SHARES ARE ACTUALLY
PURCHASED. No participant will have any stockholder rights
with respect to the shares of Common Stock covered by
his or her purchase right until the shares are actually
purchased on the participant's behalf. No adjustment
will be made for dividends, distributions or other
rights for a record date which is prior to the date of
such purchase.
ACQUISITION
Should a merger or consolidation occur in which
securities possessing more than fifty percent (50%) of
the total combined voting power of the Company's
outstanding securities would be transferred to a person
or persons different from the person holding those
securities immediately prior to such transaction, any
outstanding offering under the Purchase Plan will
terminate and such date shall be treated as a purchase
date. In lieu of the issuance of Common Stock to
participating eligible employees, there shall be paid
for each share of Common Stock, as nearly as reasonably
may be determined, the cash, securities and/or property
which a holder of one share of the Common Stock was
entitled to receive upon and at the time of such merger
or consolidation.
24
<PAGE> 31
PRO-RATION OF SHARES
Should the total number of shares of Common Stock
to be purchased pursuant to outstanding purchase rights
on any particular date exceed the number of shares then
available for issuance under the Purchase Plan, then
the Plan Administrator will make a pro-rata allocation
of the available shares on a uniform and
nondiscriminatory basis, and the payroll deductions of
each participant, to the extent in excess of the
aggregate purchase price payable for the Common Stock
pro-rated to such individual, will be refunded.
AMENDMENT AND TERMINATION
THE PLAN WILL TERMINATE
WHEN ALL AUTHORIZED
SHARES ARE ISSUED TO
PARTICIPANTS. Unless sooner terminated by the Board, the
Purchase Plan will terminate upon the earlier to occur
of (i) the date on which all available shares are
issued or (ii) the date the Company is acquired.
The Board may at any time alter, suspend or
discontinue the Purchase Plan as of the close of any
purchase period. However, the Board may not, without
stockholder approval, increase the number of shares
issuable under the Purchase Plan, and certain other
amendments may require stockholder approval pursuant to
applicable laws or regulations.
FEDERAL TAX CONSEQUENCES
A participant will not realize any income upon the
purchase of Common Stock under the Purchase Plan at a
discount and the Company will not be entitled to any
tax deduction. However, when a participant disposes of
the Common Stock acquired pursuant to the Purchase
Plan, the participant will realize compensation income
in the year in which he or she disposes of the Common
Stock.
If the participant disposes of Common Stock within
two years of the first business day of the offering
period in which he or she purchased the Common Stock,
the amount of that compensation income will equal the
excess of the fair market value of the Common Stock on
the date of its purchase over the purchase price of the
Common Stock, and the Company will generally be
entitled to a tax deduction in the same amount and at
the same time as the compensation income is realized by
the participant. The participant's tax basis for the
Common Stock will equal the sum of the compensation
income realized and the purchase price, and any gain or
loss will generally be taxed as a capital gain or loss.
That gain or loss will be a long-term capital gain or
loss if the Common Stock has been held for more than 18
months after the date of its purchase and will be a
"mid-term" gain or loss if the Common Stock has been
held for at least 12 months but less than 18 months.
If a participant disposes of the Common Stock more
than two years after the first day of the offering
period in which he or she purchased the Common Stock,
the amount of that compensation income is equal to the
lesser of (i) the difference between the fair market
value of the Common Stock at the time of its
disposition over the purchase price for the Common
Stock, or (ii) an amount equal to
25
<PAGE> 32
the discount for the shares of Common Stock on the first day of the offering
period with the balance of the gain, if any, being treated as capital gain. The
Company will not be entitled to any income tax deduction with respect to such
compensation income.
Finally, if a participant still owns the shares of
Common Stock at the time of his or her death, then the
lesser of (i) the amount by which the fair market value
of the shares of Common Stock on the date of death
exceeds the purchase price for the Common Stock or (ii)
an amount equal to the discount for the shares of
Common Stock on the first day of the offering period
will constitute compensation income includable on the
final return for the year of death.
ACCOUNTING TREATMENT
Under current accounting rules, the issuance of
shares of Common Stock under the Purchase Plan will not
result in a compensation expense chargeable against the
Company's reported earnings. However, the Company must
disclose, in the footnotes to the Company's financial
statements, the pro forma earnings and earnings per
share impact of the purchase rights granted under the
Purchase Plan as if the value of the purchase rights
were chargeable as a compensation expense.
STOCKHOLDER APPROVAL
THE PURCHASE PLAN MUST
BE APPROVED BY HOLDERS
OF A MAJORITY OF THE
COMPANY'S OUTSTANDING
SHARES. The affirmative vote of a majority of the
outstanding shares of Common Stock of the Company
entitled to vote at the 1998 Annual Meeting is required
for approval of the Purchase Plan. Should such
stockholder approval not be obtained, the Purchase Plan
will terminate and no purchase rights will be granted
and no Common Stock issuances will be made under the
Purchase Plan.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE
STOCKHOLDERS VOTE FOR THE APPROVAL OF THE PURCHASE
PLAN. THE BOARD BELIEVES THAT IT IS IN THE BEST
INTERESTS OF THE COMPANY TO CONTINUE A PROGRAM OF STOCK
OWNERSHIP FOR THE COMPANY'S EMPLOYEES TO PROVIDE THEM
WITH A MEANINGFUL OPPORTUNITY TO ACQUIRE A SUBSTANTIAL
PROPRIETARY INTEREST IN THE COMPANY AND THEREBY
ENCOURAGE SUCH INDIVIDUALS TO REMAIN IN THE COMPANY'S
SERVICE AND MORE CLOSELY ALIGN THEIR INTERESTS WITH
THOSE OF THE STOCKHOLDERS.
PLAN BENEFITS
Each participant in the Purchase Plan will have
the right to purchase a maximum of 1,000 shares of
Common Stock on each purchase date. However, the actual
number of shares of Common Stock which may be issued to
any individual is not determinable at this time.
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<PAGE> 33
4. 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
SHAREHOLDER NOMINATIONS
FOR BOARD MEMBERSHIP OR
OTHER PROPOSALS FOR
CONSIDERATION AT ITS
1999
ANNUAL MEETING MUST BE
RECEIVED BY THE COMPANY
BY MARCH 20, 1999. 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. 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 March 20, 1999. 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
headquarters in Farmington, Connecticut.
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 1999 Annual
Meeting of Stockholders must be received by the
Secretary of the Company by December 11, 1998, in the
form required under 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 1999 Annual Meeting, scheduled
for Thursday, May 20, 1999.
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 $10,000 plus
reimbursement of out-of-pocket expenses.
27
<PAGE> 34
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 14, 1998
Michael P. Maloney
Senior Vice President, General Counsel
and Secretary
28
<PAGE> 35
EXHIBIT A
ORION CAPITAL CORPORATION
EMPLOYEES' STOCK PURCHASE PLAN
SECTION 1. PURPOSE OF THE PLAN
The purpose of the Orion Capital Corporation Employees' Stock Purchase Plan
(the "Plan") is to provide employees of Orion Capital Corporation ("Orion") and
designated Subsidiaries an opportunity to acquire a proprietary interest in
Orion through the purchase of shares of the common stock, $1.00 par value, of
Orion ("Common Stock"). It is intended that the Plan qualify as an "employee
stock purchase plan" under Section 423 of the Internal Revenue Code of 1986, as
amended ("Code"), and the provisions of the Plan shall be construed accordingly.
SECTION 2. DEFINITIONS
For purposes of the Plan, the following terms shall be defined as set forth
below:
(a) "Business Day" means each day that the New York Stock Exchange,
Inc. (or such other exchange on which Common Stock is principally traded on
the date of reference) is open for the transaction of business.
(b) "Corporate Transaction" means either:
(i) a merger or consolidation in which securities possessing more
than fifty percent (50%) of the total combined voting power of Orion's
outstanding securities are transferred to a person or persons different
from the person holding those securities immediately prior to such
transaction; or
(ii) the complete liquidation or dissolution of Orion.
(c) "Fair Market Value" means, with respect to Common Stock, the mean
of the high and low sales prices of Common Stock on the relevant date as
reported on the stock exchange or market on which the Common Stock is
primarily traded, or if no sale is made on such date, then the Fair Market
Value is the weighted average of the mean of the high and low sales prices
of Common Stock on the next preceding day and the next succeeding day on
which such sales were made, as reported on the stock exchange or market on
which Common Stock is primarily traded.
(d) "Participating Company" shall mean Orion and each Subsidiary which
the Committee has designated to participate in the Plan.
(e) "Offering Period" means each period which begins on a Commencement
Date and ends on a Purchase Date during which Eligible Employees may
purchase Common Stock pursuant to an Offering under the Plan.
(f) "Commencement Date" shall mean the first Business Day of each
Offering Period.
(g) "Eligible Employee" means any person who, on a Commencement Date,
(i) is customarily scheduled to be employed by any Participating Company as
an employee for at least seventeen and one-half (17 1/2) hours per week and
for more than five (5) months in any calendar year, and (ii) has completed
fifteen (15) days of employment with Orion or any Subsidiary.
(h) "Purchase Date" shall mean the last Business Day of each Offering
Period.
(i) "Offering" means any proposal made in accordance with the terms
and conditions of the Plan permitting Eligible Employees to purchase Common
Stock under the Plan during an Offering Period.
<PAGE> 36
(j) "Subsidiary" shall mean any corporation which is a "subsidiary" of
Orion, as that term is defined in Section 424(f) of the Code.
SECTION 3. ADMINISTRATION OF THE PLAN
The Plan shall be administered by the Compensation and Nominating Committee
of the Board of Directors of Orion (the "Committee"). Any action of the
Committee in administering the Plan shall be final, conclusive and binding on
all persons, including Orion, its Subsidiaries, employees, persons claiming
rights from or through employees and the stockholders of Orion.
Subject to the provisions of the Plan, the Committee shall have full and
final authority in its discretion (a) to designate the Subsidiaries whose
employees will participate in the Plan, (b) to determine the maximum number of
shares of Common Stock to be acquired by each Eligible Employee during each
Offering Period, (c) to determine the terms and conditions of each Offering, (d)
to determine the length of each Offering Period and the Commencement Date
thereof, (e) to correct any defect or supply any omission or reconcile any
inconsistency in the Plan, (f) to adopt, amend and rescind such rules and
regulations as, in its opinion, may be advisable in the administration of the
Plan and the conduct of each Offering, and (g) to make all other determinations
as it may deem necessary or advisable for the administration of the Plan.
SECTION 4. PARTICIPATION IN THE PLAN
(a) Only individuals who are employees of a Participating Company shall be
eligible to acquire Common Stock pursuant to any Offering under the Plan. Except
as provided in paragraph (b) hereof, every Eligible Employee on the Commencement
Date of an Offering shall be eligible to participate in such Offering, provided
such individual remains an Eligible Employee until the Purchase Date.
(b) Notwithstanding any provisions of the Plan to the contrary, no Eligible
Employee shall be eligible to participate in any Offering if:
(i) on the Commencement Date, such Eligible Employee (or any other
person whose stock would be attributed to such Eligible Employee pursuant
to Section 424(d) of the Code) would own stock and/or hold outstanding
options to purchase stock possessing five (5) percent or more of the total
combined voting power or value of all classes of stock of Orion or a
Subsidiary; or
(ii) the Eligible Employee belongs to a class or group of Eligible
Employees that the Committee deems ineligible for participation in any
Offering (as the Committee may do from time to time), so long as the
exclusion of such class or group of Eligible Employees from participation
in an Offering does not jeopardize the qualification of the Plan under
Section 423 of the Code or other applicable law.
SECTION 5. OFFERINGS
(a) The Plan shall be implemented by a series of Offerings to all Eligible
Employees, the duration and frequency of which will be specified from time to
time by the Committee.
(b) Each Offering shall permit each Eligible Employee to purchase on the
Purchase Date Common Stock at a purchase price per share which shall not be less
than the lower of (i) 90% of the Fair Market Value of the Common Stock on the
Commencement Date, or (ii) 90% of the Fair Market Value of Common Stock on the
Purchase Date.
(c) No Offering Period pursuant to the Plan shall be for a period greater
than 12 months from the Commencement Date.
(d) All Eligible Employees participating in an Offering under the Plan
shall have the same rights and privileges, except that the Committee may from
time to time provide for differences in
2
<PAGE> 37
the rights and privileges of Eligible Employees so long as such differences do
not jeopardize the qualification of the Plan under Section 423 of the Code or
violate other applicable law.
SECTION 6. SHARES AVAILABLE UNDER THE PLAN
(a) Subject to the provisions of Section 7 hereof, the aggregate number of
shares of Common Stock available for purchase pursuant to all Offerings under
the Plan shall not exceed 300,000 shares.
(b) If the total number of shares of Common Stock to be purchased on any
Purchase Date when added to the number of shares of Common Stock previously
issued pursuant to Offerings under the Plan exceeds the maximum number of shares
then available under the Plan, the Committee shall make a pro rata allocation of
the shares available for purchase in such Offering in as nearly a uniform manner
as shall be practicable and as it shall determine to be equitable, and the
amounts received from each Eligible Employee in excess of the amounts applied to
purchase Common Stock shall be refunded to each Eligible Employee.
SECTION 7. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION
In the event that the Committee determines that any stock dividend,
recapitalization, forward split or reverse split, reorganization, merger,
consolidation, spin-off, combination share exchange or other similar corporate
transaction or event affects the Common Stock such that an adjustment is
appropriate in order to prevent dilution or enlargement of the rights of
Eligible Employees under the Plan, then the Committee shall, in such manner as
it may deem equitable, adjust any or all of (i) the number and kind of shares of
Common Stock which may thereafter be available under the Plan, (ii) the number
and kind of shares of Common Stock issuable in respect of any current Offering,
and (iii) the purchase price relating to any purchase of Common Stock to be
acquired in any Offering; provided, however, that no adjustment shall be made
if, or to the extent that, such adjustment would cause the Plan to violate
Section 423 of the Code.
SECTION 8. ACCRUAL LIMITATIONS
(a) No Eligible Employee shall be entitled to accrue rights to acquire
Common Stock in any Offering under this Plan (which right shall accrue on the
Purchase Date for an Offering Period) if and to the extent such accrual, when
aggregated with (i) rights to purchase Common Stock accrued under any other
Offering under this Plan during the same calendar year and (ii) rights accrued
under any other employee stock purchase plan (within the meaning of Section 423
of the Code) of Orion or any Subsidiary during the same calendar year, would
cause such Eligible Employee to be able to purchase more than Twenty-Five
Thousand Dollars ($25,000) worth of Common Stock or stock of any Subsidiary
(determined on the basis of the Fair Market Value of such stock on the date or
dates such rights are granted) for each calendar year such rights are at any
time outstanding.
SECTION 9. GENERAL PROVISIONS
(a) Neither the Plan nor any action taken hereunder shall be construed as
giving any employee any right to be retained in the employ of Orion or any
Subsidiary, and no employee of any Subsidiary which is not a Participating
Company shall have any claim or right to participate in any Offerings under the
Plan.
(b) No right of an Eligible Employee to purchase Common Stock pursuant to
an Offering under the Plan shall be assigned or transferred by such Eligible
Employee and such rights to purchase Common Stock pursuant to an Offering shall
be exercisable during the lifetime of the Eligible Employee only by the Eligible
Employee.
3
<PAGE> 38
(c) No Offering shall confer on any Eligible Employee any of the rights of
a stockholder of Orion unless and until Common Stock is duly issued or
transferred to the Eligible Employee in accordance with the terms of the
Offering.
(d) Upon the date of any Corporate Transaction, any outstanding Offering
under the Plan will terminate and such date shall be treated as the Purchase
Date, and in lieu of the issuance of Common Stock to participating Eligible
Employees, there shall be paid for each share of Common Stock, as nearly as
reasonably may be determined, the cash, securities and/or property which a
holder of one share of the Common Stock was entitled to receive upon and at the
time of such Corporate Transaction.
(e) The provisions of the Plan shall be governed by the laws of the State
of New York without resort to that State's conflict-of-laws rules.
SECTION 10. EFFECTIVE DATE; AMENDMENT; TERMINATION
(a) The Plan shall become effective if and when approved by the
stockholders of Orion at the 1998 Annual Meeting of Stockholders.
(b) The Board of Directors of Orion may terminate the Plan or amend the
Plan from time to time; provided, however, that the Board of Directors of Orion
shall not, without the approval of the stockholders of Orion (i) increase the
number of shares available for purchase pursuant to all Offerings, (ii) change
the class of persons eligible to participate in Offering under the Plan, or
(iii) reduce the purchase price of Common Stock below that set forth in Section
5(b) herein.
(c) Unless sooner terminated by the Board of Directors of Orion, the Plan
shall terminate when all shares available for issuance under the Plan have been
purchased pursuant to an Offering under the Plan, or the date of any Corporate
Transaction, if earlier.
4
<PAGE> 39
DIRECTIONS TO ORION CAPITAL
9 FARM SPRINGS ROAD
FARMINGTON, CONNECTICUT
From Points West:
Interstate 84 East to Exit 37, Fienemann Road. At end of exit, turn left.
At light, turn right onto Farm Springs Road. Orion Capital is the third right.
From Points East:
Interstate 84 West, to Exit 37, Fienemann Road. At end of exit, go straight
onto Farm Springs Road. Orion Capital is the third right.
['MAP FOR DIRECTIONS TO ORION CAPITAL']
<PAGE> 40
PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
ORION CAPITAL CORPORATION
PROXY FOR HOLDERS OF COMMON STOCK -- ANNUAL MEETING MAY 28, 1998
The undersigned holder of Common Stock of Orion Capital Corporation hereby
appoints W. MARSTON BECKER, MICHAEL P. MALONEY and PETER M. VINCI, 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 9:00 A.M., Eastern
Daylight Saving Time, Thursday, May 28, 1998, at the Company's Headquarters,
9 Farm Springs Road, Farmington, Connecticut, and at 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" PROPOSALS 2 AND 3. 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 REVERSE SIDE.)
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- FOLD AND DETACH HERE -
<PAGE> 41
THE BOARD RECOMMENDS A VOTE "FOR" PROPOSALS 1, 2 AND 3
______________________________________________________
Please mark your votes as indicated in this example [X]
1. ELECTION OF DIRECTORS FOR WITHHOLD
for all nominees listed all nominees AUTHORITY
(except as marked) listed (except to vote for
as marked) nominees listed
[ ] [ ]
M. Becker, G. Cheesbrough, J. Colman,
D. Elliot, V. Fash, R. Jeffrey, G. Kreh,
W. Lyons, J. McWilliams, R. Moore,
W. Weaver
(INSTRUCTIONS: To withhold authority to vote for any individual nominee,
write that nominee's name in the space provided below.)
_______________________________________________________________________________
2. APPROVAL OF AUDITORS. A proposal to ratify the selection of Deloitte & Touche
LLP, independent certified public accountants, as auditors for the Company
for the year 1998.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
3. APPROVAL OF ORION CAPITAL CORPORATION EMPLOYEES' STOCK PURCHASE PLAN.
A proposal to approve the Orion Capital Corporation's Employee's Stock
Purchase Plan.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
4. Upon such other business as may properly come before the meeting, or any
adjournments thereof.
I PLAN TO ATTEND THE MEETING [ ]
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 1997.
PLEASE SIGN, DATE AND RETURN YOUR PROXY IN THE ENCLOSED ENVELOPE.
Signature(s)______________________________________________ Date__________, 1998
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 for each. If a corporation, please sign in corporation
name by president, vice president or other authorized person. If a partnership,
please sign in partnership name by a partner.
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-- FOLD AND DETACH HERE --
<PAGE> 42
VOTING INSTRUCTIONS TO FIDELITY MANAGEMENT TRUST COMPANY AS TRUSTEE
UNDER THE WM. H. MCGEE & CO., INC.
PROFIT SHARING PLAN
I hereby direct that at the Annual Meeting of Stockholders of Orion Capital
Corporation on May 28, 1998, 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 Profit Sharing 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
all the additional proposals as checked on this card, or if not checked, for
such proposals.
INSTRUCTION CARDS WILL BE VOTED AS SPECIFIED. WHERE NO SPECIFICATION IS GIVEN,
CARDS WILL BE VOTED "FOR" THE ELECTION OF DIRECTORS AND "FOR" PROPOSALS 2 AND 3.
IF ANY NOMINEE FOR DIRECTOR SHOULD BECOME UNAVAILABLE FOR ELECTION, THIS CARD
WILL BE VOTED FOR SUCH SUBSTITUTE NOMINEE AS MAY BE PROPOSED BY THE BOARD OF
DIRECTORS.
(CONTINUED AND TO BE SIGNED ON REVERSE SIDE.)
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- FOLD AND DETACH HERE-
<PAGE> 43
PLEASE MARK
YOUR VOTES AS /X/
INDICATED IN
THIS EXAMPLE.
FOR WITHHOLD
ALL NOMINEES AUTHORITY
LISTED (EXCEPT TO VOTE FOR
AS MARKED) NOMINEES LISTED
1. ELECTION OF DIRECTORS
for all nominees listed (except as marked) / / / /
M. Becker, G. Cheesbrough, J. Colman,
D. Elliot, V. Fash, H. Jeffrey, G. Kreh,
W. Lyons, J. McWilliams, R. Moore, W. Weaver
(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 LLP, independent
certified public accountants, as auditors for the
Company for the year 1998.
FOR AGAINST ABSTAIN
3. APPROVAL OF ORION CAPITAL CORPORATION EMPLOYEES' / / / / / /
STOCK PURCHASE PLAN. A proposal to approve the
Orion Capital Corporation's Employees' Stock
Purchase Plan.
4. Upon such other business as may properly come before the meeting, or any
adjournments thereof.
I PLAN TO ATTEND THE MEETING / /
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 1997.
PLEASE SIGN, DATE AND RETURN YOUR CARD
IN THE ENCLOSED ENVELOPE.
Signature__________________________________________________Date___________, 1998
NOTE: Please sign exactly as your name appears hereon.
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-FOLD AND DETACH HERE-
<PAGE> 44
VOTING INSTRUCTIONS TO VANGUARD FIDUCIARY TRUST COMPANY 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 May 28, 1998, 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 all the additional proposals as checked on this card,
or if not checked, for such proposals.
PROXIES WILL BE VOTED AS SPECIFIED. WHERE NO SPECIFICATION IS GIVEN, PROXIES
WILL BE VOTED "FOR" THE ELECTION OF DIRECTORS AND "FOR" PROPOSALS 2 AND 3. 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 reverse side)
- --------------------------------------------------------------------------------
*FOLD AND DETACH HERE*
<PAGE> 45
THE BOARD RECOMMENDS A VOTE "FOR" PROPOSALS 1, 2 AND 3.
Please mark /X/
your votes as
indicated in
this example
FOR WITHHOLD
all nominees AUTHORITY
listed (except to vote for
as marked) nominees listed
1. ELECTION OF DIRECTORS / / / /
for all nominees listed (except as marked)
M. Becker, G. Cheesbrough, J. Colman, D. Elliot,
V. Fash, R. Jeffrey, B. Kreh, W. Lyons, J. McWilliams,
R. Moore, W. Weaver
(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 LLP, independent
certified public accountants, as auditors for
the Company for the year 1998.
FOR AGAINST ABSTAIN
3. APPROVAL OF ORION CAPITAL CORPORATION EMPLOYEES' / / / / / /
STOCK PURCHASE PLAN. A proposal to approve the
Orion Capital Corporation's Employees' Stock
Purchase Plan.
4. Upon such other business as may properly come
before the meeting, or any adjournments thereof.
I PLAN TO ATTEND THE MEETING / /
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 1997.
PLEASE SIGN, DATE AND RETURN YOUR PROXY IN THE ENCLOSED ENVELOPE.
Signature(s) _________________________________________ Date _____________, 1998
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 for each. If a corporation, please sign
in corporation name by president, vice president or other authorized
person. If a partnership, please sign in partnership name by a partner.
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[Arrow pointing up] FOLD AND DETACH HERE [Arrow pointing up]