<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:
------------------------------------------------------------------------
[ORION LOGO]
<PAGE> 2
[CAPITAL LOGO]
---------------------------------------------
ORION CAPITAL CORPORATION
---------------------------------------------
PROXY STATEMENT AND
NOTICE OF ANNUAL MEETING
OF STOCKHOLDERS
---------------------------------------------
1999
<PAGE> 3
Orion Capital
Corporation
9 Farm Springs Road
[ORION CAPITAL LOGO] Farmington, CT 06032
April 9, 1999
Dear Stockholder:
We invite you to attend our Annual Meeting of Stockholders which will be
held beginning at 9:00 a.m. on Tuesday, May 25, 1999.
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 Proxy
Statement are your voting cards and a copy of our 1998 Annual Report.
At the Annual Meeting, in addition to electing the Board of Directors and
ratification of the Auditors, we are asking you to approve an amendment to the
Company's Equity Incentive Plan. Your Board of Directors recommends a vote FOR
these proposals.
Also we will review Orion Capital's 1998 performance and the Company's
prospects for the future, as well as answer your questions.
Regardless of the number of shares you own or whether you plan to attend,
it is important that your shares be represented and voted at the meeting. We
look forward to seeing you on May 25th 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. Martston 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 Tuesday, May 25, 1999 at 9:00
A.M., Eastern Daylight Saving Time, for the following purposes:
1. Election of the Board of Directors to serve until the 2000 Annual
Meeting of Stockholders.
2. Approval of an amendment to the Company's Equity Incentive Plan (the
"Equity Incentive Plan") to increase the number of shares of common
stock reserved thereunder from 1,400,000 to 2,600,000.
3. Ratification of the selection of Deloitte & Touche LLP, independent
certified public accountants, as auditors for the Company for 1999.
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 1, 1999 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
office, Orion Capital Corporation, 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
complete, sign, date 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, by attendance at the meeting and
voting in person or by submission of a proxy bearing a later date.
By order of the Board of Directors,
April 9, 1999
JOHN J. McCANN
Executive Vice President 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 nine (9) members of the Company's Board of Directors (W.
Marston Becker, Gordon F. Cheesbrough, David H. Elliott, Victoria R. Fash,
Robert H. Jeffrey, Warren R. Lyons, James K. McWilliams, Ronald W. Moore
and William B. Weaver).
- Approval of an amendment to the Equity Incentive Plan to increase the
number of shares of common stock reserved thereunder from 1,400,000 to
2,600,000.
- Ratification of the selection of Deloitte & Touche LLP as independent
accountants of the Company.
- --------------------------------------------------------------------------------
Q: WHO IS ENTITLED TO VOTE?
A: Stockholders as of the close of business on April 1, 1999 (the "Record Date")
are entitled to vote at the Annual Meeting. Each share of common stock is
entitled to one vote.
- --------------------------------------------------------------------------------
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 signed proxy card will be
voted for each of the nominees named in the Proxy Statement and in favor of the
other two proposals. You have the right to revoke your proxy at any time before
the meeting by (1) notifying the Company'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, John J. McCann and
Peter M. Vinci will vote on your behalf FOR each of the nominees named in the
Proxy Statement and FOR the other two proposals.
- --------------------------------------------------------------------------------
Q: IS MY VOTE CONFIDENTIAL?
A: Yes. Proxy cards, ballots and voting tabulations that identify individual
stockholders 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 First Chicago Trust Company of New York 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 (e.g.,
different spellings 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 stockholder services, we encourage you to
have all accounts registered in the same name and address. You may do this by
contacting our transfer agent, First Chicago Trust Company of New York, at (800)
446-2617.
- --------------------------------------------------------------------------------
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, 27,278,483, shares of the Company's 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.
- --------------------------------------------------------------------------------
<PAGE> 6
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 back cover of this Proxy Statement.
- --------------------------------------------------------------------------------
Q: WHAT PERCENTAGE OF STOCK DO THE DIRECTORS AND OFFICERS OWN?
A: Together, they own approximately 2.60% of the Company's common stock as of
the Record Date. (See page 7 for more details.)
- --------------------------------------------------------------------------------
Q: WHO ARE THE LARGEST PRINCIPAL STOCKHOLDERS AT DECEMBER 31, 1998?
A: - Southeastern Asset Management, Inc. (6410 Poplar Avenue, Suite 900,
Memphis, Tennessee 38119) owned 2,710,800 shares.
- Neuberger & Berman, LLC (605 Third Avenue, New York, NY 10158-3698) owned
1,850,987 shares.
- The Orion Capital Corporation Employees' 401(k) and Profit Sharing Plan (9
Farm Springs Road, Farmington, CT 06032) owned 1,485,888 shares. (See page
7 for more details.)
- --------------------------------------------------------------------------------
Q: WHAT IS THE LAST DATE ON WHICH TO SUBMIT STOCKHOLDER PROPOSALS FOR THE ANNUAL
MEETING IN 2000?
A: In order to be considered for inclusion in next year's proxy statement,
stockholder proposals must be submitted in writing by December 13, 1999, to the
Secretary of the Company, Orion Capital Corporation, 9 Farm Springs Road,
Farmington, CT 06032.
- --------------------------------------------------------------------------------
Q: HOW DOES A STOCKHOLDER NOMINATE SOMEONE TO BE A DIRECTOR OF THE COMPANY?
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 1999 Annual Stockholders Meeting. Recommendations
for the election to take place in 2000 must be received by the Company no
earlier than February 23, 2000 and no later than March 24, 2000 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.
The Company will reimburse brokerage houses and other custodians, nominees and
fiduciaries for their reasonable out-of-pocket expenses in 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 1999 ANNUAL MEETING
OF STOCKHOLDERS IS TO BE
HELD ON MAY 25, 1999. 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 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 form of proxy
are first being mailed to stockholders on or about
April 9, 1999. A copy of the Company's Annual Report
for 1998 is being mailed to all stockholders with this
Proxy Statement.
THERE ARE 27,278,483
SHARES OUTSTANDING AND
ENTITLED TO VOTE AT THE
ANNUAL MEETING. The Board has fixed the close of business on April
1, 1999 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
27,278,483 shares of Common Stock (which number
excludes 3,396,817 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 holders are
entitled to vote.
THE PROPOSAL FOR THE
RATIFICATION OF
ACCOUNTANTS
REQUIRES A MAJORITY VOTE
OF THOSE PRESENT TO
PASS,
AS DOES THE PROPOSAL TO
APPROVE THE AMENDMENT
TO THE EQUITY INCENTIVE
PLAN TO INCREASE THE
AUTHORIZED NUMBER OF
SHARES AVAILABLE FOR
GRANT.
THOSE NOMINEES FOR
ELECTION AS DIRECTORS
WHO
RECEIVE A PLURALITY OF
THE
VOTES PRESENT OR
REPRESENTED BY PROXY
WILL
BE ELECTED. The presence, in person or by proxy, of a majority
in number of the outstanding shares of Common Stock as
of the Record Date constitutes a quorum and is required
in order for the Company to conduct business at the
Annual Meeting. Such majority being present, the
affirmative vote of the holders of the majority of the
shares of Common Stock represented at the Annual
Meeting is required to approve the amendment to the
Equity Incentive Plan and for ratification of the
appointment of the Company's independent accountants.
The nine (9) nominees who receive a plurality of the
votes present or represented by proxy will be elected
as directors.
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 the proposal to ratify the appointment
of the Company's independent accountants or to approve
the amendment to the Equity Incentive Plan will have
the effect of a vote against such proposal, but any
broker non-votes will have no effect on the outcome of
such proposal.
1
<PAGE> 8
1. ELECTION OF DIRECTORS
A NINE (9) MEMBER BOARD
IS TO BE ELECTED. Currently, the Company has eleven (11) members of
the Board. Pursuant to the Company's By-laws, Mr.
Colman will retire from the Board as of the 1999 Annual
Meeting of Stockholders. In addition, Mr. Kreh has
indicated to the Board that he will not stand for
reelection.
Pursuant to the Company's By-laws, the Board has
fixed the number of directors that will be elected at
the 1999 Annual Meeting of Stockholders at nine (9)
members. Those nine (9) directors are to be elected by
the holders of the Company's Common Stock to serve
until the 2000 Annual Meeting of Stockholders. Each
nominee was elected by the stockholders at the last
Annual Meeting of Stockholders. 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.
The following information with respect to principal occupation and business
experience has been furnished to the Company by the respective nominees:
<TABLE>
<CAPTION>
NAME, AGE AND POSITION BUSINESS EXPERIENCE AND OTHER
WITH THE COMPANY DIRECTOR SINCE CORPORATE DIRECTORSHIPS
---------------------- -------------- -----------------------------
<S> <C> <C>
W. Marston Becker, 46............. 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, Inc. (a wholly-owned insurance
subsidiary of the Company), 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
American Insurance Association.
Gordon F. Cheesbrough, 46......... September 11, 1996 President and Chief Executive Officer of
Director Altamira Investment Services, Inc. (a
Canadian investment adviser, mutual fund
distributor and securities dealer),
1998-present; Chairman and Chief Executive
Officer and member of the Executive
Committee of Scotia McLeod, Inc. (an
international integrated investment
dealer), 1993-1998, President and Chief
Operating Officer, 1990-1993. Director:
Scotia McLeod, Inc. and Canadian Tire
Corporation, Limited.
David H. Elliott, 57.............. 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-
December 31, 1998; Chief Executive Officer
of MBIA, Inc., 1992-1994. Director: Gryphon
Holdings Inc.
</TABLE>
2
<PAGE> 9
<TABLE>
<CAPTION>
NAME, AGE AND POSITION BUSINESS EXPERIENCE AND OTHER
WITH THE COMPANY DIRECTOR SINCE CORPORATE DIRECTORSHIPS
---------------------- -------------- -----------------------------
<S> <C> <C>
Victoria R. Fash, 47.............. September 11, 1996 Chief Executive Officer of IMS Health (a
Director health-care information service company),
1997-present; Executive Vice President and
Chief Financial Officer, Cognizant
Corporation (an information services
company), November 1996-1997; Senior Vice
President-Business Strategy, The Dun &
Bradstreet Corporation (a marketer of
business information), 1995-November 1996,
Vice President-business operations
planning, 1994-1995, Assistant to the
President, 1991-1994.
Robert H. Jeffrey, 69............. 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.
Warren R. Lyons, 53............... September 9, 1992 Consultant to Textron Inc.; Chairman, Avco
Director Financial Services (a financial services
company and a subsidiary of Textron Inc.),
1995-1999, President, 1989-1995.
James K. McWilliams, 71........... January 7, 1981 Proprietor of McWilliams & Company (an
Director investment counselor firm), 1967-present;
General Partner, Mt. Eden Vineyards, 1986-
present.
Ronald W. Moore, 54............... April 1, 1991 Adjunct Professor of Business
Director Administration, Graduate School of Business
Administration, Harvard University,
1990-present. Director: CMAC Investment
Corporation.
William B. Weaver, 48............. October 18, 1997 President of Weaver Capital Management (a
Director money management firm), 1996-present;
Managing Director of Lehman Brothers (an
investment banking firm), 1993-1996;
Managing Director of The First Boston Corp.
(an investment banking firm), 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 has an Audit and Information Services
Committee (the "Audit Committee"), the members of which
are Messrs. Colman (Chairman), Elliott, Kreh, Ms. Fash
and Mr. Weaver. No member of the Audit 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 1998, the Audit Committee held four
meetings.
3
<PAGE> 10
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. Lyons (Chairman), Cheesbrough,
Jeffrey and McWilliams, none of whom is an employee of
the Company. The Compensation Committee reviews the
amount and terms of compensation paid to the principal
executive officers of the Company and of the Company's
subsidiaries and may authorize, or recommend to the
Board the authorization of, such salary levels,
employment agreements and general incentive
compensation arrangements as the Compensation Committee
may deem appropriate. Based on the Committee's ongoing
review of the performance of the Company's key
executives and of alternative forms of current
incentive and performance-based compensation, the Board
may authorize the adoption of one or more of the
available alternatives in addition to or in
substitution for one or more of the present components
of the Company's compensation arrangements. The
Compensation Committee is authorized to act as a search
and nomination committee to recommend nominees to the
full Board for membership on the Board. 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 1998
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 and
Weaver. 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 those policies. The
Company's Chief Investment Officer, Ms. Susan B.
Sweeney, serves as a non-voting member of the
Investment Committee. During 1998, the Investment
Committee held seven meetings.
THE EXECUTIVE COMMITTEE
ACTS IN PLACE OF THE
FULL
BOARD. The Board also has an Executive Committee. The
members of the Executive Committee are 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, the Compensation Committee or the Investment
Committee. Actions taken by the Executive Committee are
reported to the Board at the next meeting of the Board.
During 1998, the Executive Committee held eight
meetings.
The Board held eight meetings in 1998. 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.
4
<PAGE> 11
DIRECTORS' COMPENSATION
NON-EMPLOYEE DIRECTORS
ARE
PAID A $20,000 ANNUAL
RETAINER FEE AND A
$1,200
PER MEETING ATTENDANCE
FEE. Fees: During 1998 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.
During 1998 each non-employee director received an
attendance fee of $1,200 for each meeting of the Board
and each meeting of a committee he or she attended. A
fee of only $400 was paid for a committee meeting held
on the same day as a meeting of the Board. Those
amounts will be adjusted to $1,500 and $600,
respectively, as of May 25, 1999. The Company
reimburses all directors and officers for travel,
lodging and related expenses which they incur in
attending directors' and committee meetings but Company
employees who serve as directors do not receive either
retainer or attendance fees.
The Company's By-Laws provide that meetings of the
Board can be held by teleconference and on occasion
individual directors participate by telephone in
meetings of the Board. In recognition of the added
value of personal attendance during Board
deliberations, the Board has determined that beginning
in June, 1999, the meeting fees for a Board meeting in
which a director participates by telephone will be
reduced by one-third.
GUARANTY NATIONAL
CORPORATION PAYMENTS. On January 2, 1998, three individuals who then
were, but no longer are, directors of the Company, in
appreciation for their years of service to Guaranty
National Corporation and the Company 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. Guaranty National Corporation was a
majority-owned subsidiary of the Company until it
became by merger a wholly-owned subsidiary of the
Company in December 1997.
DIRECTORS' BENEFIT PLANS
THE DIRECTORS'
RETIREMENT
PLAN HAS BEEN
TERMINATED. Retirement Plan. As previously reported, as of
December 31, 1997, the Company's pension plan for the
non-employee directors of the Company was terminated,
and in January 1998 vested benefits were paid out in
cash (or credited to the Deferred Compensation Plan) to
the following persons who were directors at the time.
<TABLE>
<CAPTION>
DIRECTOR BENEFIT PAYMENT
-------- ---------------
<S> <C> <C>
Bertram Cohn*......... $ 83,715
John Colman........... 83,715 (Deferred)
Robert Jeffrey........ 83,715 (Deferred)
Warren Lyons.......... 42,725
James McWilliams...... 83,715
Ronald Moore.......... 51,030 (Deferred)
William Shepherd*..... 83,715
John Thorne*.......... 83,715 (Deferred)
--------
Total....... $596,045
---------------
</TABLE>
* Resigned pursuant to the Company's By-Laws, effective
as of the 1998 Annual Meeting of Shareholders.
5
<PAGE> 12
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 Common Stock on January 2, 1998
by the Compensation Committee to cover the 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 (10) 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, as
amended, was approved by the stockholders of the
Company on May 31, 1995 and May 29, 1997 (as amended,
the "Option Plan"). Under the Option Plan, each member
of the Board who is not an employee of the Company or
any subsidiary of the Company is eligible to
participate. The Option Plan is administered by the
Compensation Committee. 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 director
who is re-elected, immediately following the Company's
Annual Meeting. Each option granted under the Option
Plan expires ten (10) 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 vest fully 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 date on which such option is
granted, if the director has continued to serve as such
until that date.
6
<PAGE> 13
SECURITY OWNERSHIP OF DIRECTORS, OFFICERS
AND PRINCIPAL BENEFICIAL OWNERS
The following table sets forth information concerning the shares of Common
Stock beneficially owned by all directors, by each of the executive officers
named in the Summary Compensation Table on page 10 and all directors and
executive 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 5% of the total
number of shares of Common Stock outstanding and entitled to vote. All such
information is given as of April 1, 1999, 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............................. 133,113(2) *
Gordon F. Cheesbrough......................... 18,200(3) *
John C. Colman................................ 42,440(4) *
David H. Elliott.............................. 8,100(5) *
Victoria R. Fash.............................. 18,000(6) *
Raymond W. Jacobsen........................... 67,210(7) *
Robert H. Jeffrey............................. 28,274(8) *
Gordon W. Kreh................................ 6,000(9) *
Warren R. Lyons............................... 23,266(10) *
James K. McWilliams........................... 29,374(11) *
Ronald W. Moore............................... 22,472(12) *
James R. Pouliot.............................. 43,692(13) *
William B. Weaver............................. 10,000(14) *
All directors and executive officers as a
group (24 persons).......................... 719,563(15) 2.60%
Neuberger & Berman, LLC....................... 1,850,987(16) 6.79%
605 Third Avenue
New York, New York 10158
Southeastern Asset Management, Inc............ 2,710,800(17) 9.94%
6075 Poplar Avenue--Suite 900
Memphis, Tennessee 38119
Orion Capital Corporation..................... 1,485,888(18) 5.45%
Employees' 401(k) and Profit Sharing Plan
9 Farm Springs Road
Farmington, Connecticut 06032
</TABLE>
- ---------------
* less than one per cent.
(1) Excludes 3,396,817 shares owned by the Company and its subsidiaries.
(2) Includes 40,260 shares as to which Mr. Becker has sole voting and
investment power, 4,200 shares held in trust for Mr. Becker's children,
7,500 shares of vested 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 Plans"), 70,554
shares which Mr. Becker has a right to purchase as of June 30, 1999
pursuant to the terms of the Performance Incentive Plans, approximately
3,067 shares which represent his proportionate interest in shares held by
the Trustee under the Company's Employees 401(k) and Profit Sharing Plan
(the "Retirement Plan") as of December 31, 1998, and approximately 7,532
shares held in an IRA by Mr. Becker. Mr. Becker disclaims beneficial
ownership of the shares owned by his children.
(3) Includes 2,200 shares as to which the Mr. Cheesbrough has sole voting and
investment power and 16,000 shares which Mr. Cheesbrough has the right to
purchase as of June 30, 1999, pursuant to the current terms of the Option
Plan.
7
<PAGE> 14
(4) Includes 15,950 shares as to which Mr. Colman has sole voting and
investment power, 20,000 shares which Mr. Colman has a right to purchase as
of June 30, 1999 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.
(5) Includes 2,200 shares as to which Mr. Elliot has sole voting and investment
power, 5,000 shares which Mr. Elliot has a right to purchase as of June 30,
1999 pursuant to the terms of the Option Plan, and 900 shares held by his
children. Mr. Elliot disclaims beneficial ownership of the shares held by
his children.
(6) Includes 2,000 shares as to which Ms. Fash has sole voting and investment
power and 16,000 shares which Ms. Fash has a right to purchase as of June
30, 1999 pursuant to the terms of the Option Plan.
(7) Includes 17,920 shares as to which Mr. Jacobsen has sole voting and
investment power, 32,554 shares which Mr. Jacobsen has a right to purchase
as of June 30, 1999, 12,000 shares of vested Restricted Stock held pursuant
to the terms of the Performance Incentive Plans, and approximately 4,736
shares which represent his proportionate interest in shares held by the
Trustee under the Retirement Plan as of December 31, 1998.
(8) Includes 8,274 shares as to which Mr. Jeffrey has sole voting and
investment power and 20,000 shares which he has a right to purchase as of
June 30, 1999 pursuant to the terms of the Option Plan.
(9) Includes 1,000 shares as to which Mr. Kreh has sole voting and investment
power and 5,000 shares which Mr. Kreh has a right to purchase as of June
30, 1999 pursuant to the terms of the Option Plan.
(10) Includes 2,804 shares as to which Mr. Lyons has sole voting and investment
power, 20,000 shares which Mr. Lyons has a right to purchase as of June 30,
1999 pursuant to the terms of the Option Plan, and 462 shares held by Mrs.
Lyons. Mr. Lyons disclaims beneficial ownership of the shares held by his
wife.
(11) Includes 9,374 shares as to which Mr. McWilliams has sole voting and
investment power and 20,000 shares which he has a right to purchase as of
June 30, 1999 pursuant to the terms of the Option Plan.
(12) Includes 2,472 shares as to which Mr. Moore has sole voting and investment
power and 20,000 shares which he has a right to purchase as of June 30,
1999 pursuant to the terms of the Option Plan.
(13) Includes 343 shares as to which Mr. Pouliot has sole voting and investment
power and 43,349 shares which Mr. Pouliot has a right to purchase as of
June 30, 1999 pursuant to the terms of the Performance Incentive Plans.
(14) Includes 3,000 shares as to which Mr. Weaver has sole voting and investment
power and 7,000 shares which he has a right to purchase as of June 30, 1999
pursuant to the terms of the Option Plan.
(15) Includes 62,204 shares which represent the group's proportionate interest
in shares held by the Trustee under the Retirement Plan as of December 31,
1998, 407,145 shares which the group has rights to acquire as of June 30,
1999 pursuant to the Performance Incentive Plan or the Option Plan and
30,798 shares of Restricted Stock held pursuant to the terms of the
Performance Incentive Plan.
(16) Neuberger & Berman, LLC ("N&B") reported in an amendment to its Schedule
13G filed with the Securities and Exchange Commission on February 10, 1999
that it held 1,850,987 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 699,378 shares and shared voting power as to 967,300
of such shares. N&B reported that it held such shares for many clients,
none of whom
8
<PAGE> 15
has an interest amounting to five percent or more of the Company's Common
Stock. The number reported in the table excludes 47,750 shares of Common
Stock held by certain principals of N&B in their own personal securities
accounts. N&B disclaims beneficial ownership of such shares owned directly
by N&B principals and the N&B Plan.
(17) Southeastern Asset Management, Inc. ("Southeastern") reported in an
amendment to its initial Schedule 13G, filed with the Securities and
Exchange Commission on February 10, 1999, that it held an aggregate of
2,710,800 shares of the Company's Common Stock in its discretionary and
non-discretionary accounts, with sole voting power over 260,000 shares of
Common Stock, shared voting power over 2,276,800 shares, no voting power as
to 174,000 shares, sole dispositive power over 434,000 shares and shared
dispositive power over 2,276,800 of such shares. Southeastern reported none
of the shares are owned by it and that it holds such shares for its
investment advisory clients.
(18) Includes 62,204 shares which represent the group's proportionate interest
in shares held by the Trustee under the Retirement Plan as of December 31,
1998. As of December 31, 1998, the Retirement Plan, as a whole, held
1,485,888 shares of the Company's Common Stock. Shares of the Company's
Common Stock held by the 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 Retirement Plan
Trustee will vote such shares in the same proportion as it votes shares for
which it does receive instructions from other participating employees.
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 ("NYSE") 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. As an administrative convenience most of
the Company's officers and directors submit information on changes in ownership
to the Company and the Company files such reports on behalf of its officers and
directors. The Company believes that all of its officers and directors complied
with requirements applicable to them with respect to transactions during 1998.
9
<PAGE> 16
EXECUTIVE COMPENSATION
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, 1998, 1997 and 1996 of those persons who were on
December 31, 1998 (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 1998. (The chief executive officer and the
other four most highly compensated executive officers are referred to
collectively as the "Named Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
ANNUAL --------------------------------------------
COMPENSATION AWARDS PAYOUTS
------------------- ----------------------------- ------------
RESTRICTED STOCK LONG-TERM
STOCK OPTIONS INCENTIVE ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY $ BONUS $ AWARD(S)$(1) (SHARES)(1)(2) PAYOUTS $(3) COMPENSATION $(4)
- --------------------------- ---- -------- ------- ------------ -------------- ------------ -----------------
<S> <C> <C> <C> <C> <C> <C> <C>
W. Marston Becker......... 1998 $409,277 $425,000 -0- 50,632 $133,913 $65,495
Chairman of the Board 1997 401,180 500,000 -0- 40,000 85,903 75,092
and Chief Executive 1996 282,746 250,000 -0- 70,000 32,953 53,407
Officer
James R. Pouliot.......... 1998 $308,073 $165,000 -0- 13,880 $ 23,372 $70,894
Executive Vice President 1997 300,000 190,000 -0- 64,215 22,049 56,466
of the Company and
Chairman, President and
Chief Executive Officer
of Guaranty National
Corporation
Raymond W. Jacobsen....... 1998 $256,974 $150,000 -0- 12,672 $102,015 $37,651
Executive Vice President 1997 237,662 190,000 -0- 8,032 95,563 43,201
of the Company and 1996 226,584 140,000 -0- 15,436 69,053 41,532
President of EBI
Companies
Okarma, Thomas, M......... 1998 $211,149 $110,000 -0- 9,232 $ 16,825 $31,442
Senior Vice President 1997 201,558 110,000 -0- 6,748 14,757 39,569
1996 155,000 70,000 -0- 10,336 -0- 20,840
Raymond J. Schuyler....... 1998 $214,854 $105,000 -0- 9,680 $ 33,994 $36,305
Senior Vice President and 1997 207,661 150,000 -0- 7,020 43,485 45,727
Chief Investment Officer 1996 197,738 122,000 -0- 13,422 26,846 44,675
</TABLE>
- ---------------
(1) 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 Plans. The value of a Performance Unit under the Performance
Incentive Plans 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 award and after September 1996, the
Performance Period generally is four (4) 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 an 11%
compound 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
10
<PAGE> 17
defined in the Performance Incentive Plans) were to occur before the
Performance Units are fully vested, all such Units would become immediately
vested and the Compensation Committee could, in its sole discretion, declare
the Performance Units immediately payable in such amounts as the Committee
might determine. The Compensation Committee elected not to award any
Performance Units to any executive officers of the Company in 1997 and 1998.
The Named Officers received the following Performance Unit awards over the
past three years:
<TABLE>
<CAPTION>
NUMBER OF
PERFORMANCE
NAME DATE OF AWARD UNITS AWARDED
- ---- ------------- -------------
<S> <C> <C>
W. Marston Becker.......................... Fiscal 1998 0
Fiscal 1997 0
March 7, 1996 5,000
James R. Pouliot........................... Fiscal 1998 0
Fiscal 1997 0
December 17, 1996 3,552
Raymond W. Jacobsen........................ Fiscal 1998 0
Fiscal 1997 0
September 11, 1996 1,906
Thomas M. Okarma........................... Fiscal 1998 0
Fiscal 1997 0
September 11, 1996 1,276
Raymond J. Schuyler........................ Fiscal 1998 0
Fiscal 1997 0
September 11, 1996 1,658
</TABLE>
(2) Options awarded to the Named Officers are granted pursuant to the terms of
the Performance Incentive Plans. 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 (10) years from the 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 Plans) 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 National Corporation becoming a wholly-owned subsidiary
of the Company and pursuant to the Merger Agreement, all of Mr. Pouliot's
options previously granted to him by Guaranty National Corporation were
converted on December 16, 1997 into options to purchase 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 National
Corporation and the market price of Common Stock of the Company immediately
prior to the merger.
11
<PAGE> 18
(3) Cash value of Performance Units paid under the Performance Incentive Plans
for Performance Periods ended December 31, 1998, 1997 and 1996.
(4) Detail of amounts reported in the "All Other Compensation" column for 1998
is provided in the table below.
<TABLE>
<CAPTION>
MR. MR.
ITEM MR. BECKER MR. POULIOT JACOBSEN OKARMA MR. SCHUYLER
---- ---------- ----------- -------- ------ ------------
<S> <C> <C> <C> <C> <C>
Company Contributions to the Supplemental Benefits Plan
(see below)............................................. $33,689 $42,015 $12,993 $ 7,098 $ 8,989
Company Contributions to Retirement Plan................ 13,600 12,000 13,600 13,600 13,024
Split Dollar Insurance Premium.......................... 18,206 16,879 11,058 10,744 14,292
------- ------- ------- ------- -------
Total All Other Compensation........................ $65,495 $70,894 $37,651 $31,442 $36,305
======= ======= ======= ======= =======
</TABLE>
The Retirement Plan is a qualified 401(k) savings plan in which all
employees of the Company are eligible to participate. The Company makes
matching contributions to the Retirement Plan of up to 6% of a participating
employee's base salary, unless limited by federal tax regulations. The
Company contributes to the Supplemental Benefits Plan ("Supplemental Plan")
that portion of the Company's contribution to the Retirement Plan that an
employee failed to receive because of federal tax regulations. All benefits
under the Supplemental Plan are fully vested but no benefits are paid until
January of the year following the year employment terminates. The
Supplemental Plan is not funded.
OPTION GRANTS, EXERCISES AND FISCAL YEAR-END VALUES
Option Grants in Last Fiscal Year
The following tables set forth information with respect to options granted
to the Named Officers in 1998:
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED
NUMBER OF % OF TOTAL ANNUAL RATES OF STOCK
SECURITIES OPTIONS EXERCISE PRICE APPRECIATION FOR
UNDERLYING GRANTED TO OR BASE OPTION TERM$(2)
OPTIONS EMPLOYEES IN PRICE EXPIRATION -------------------------------
NAME (#)(1) FISCAL YEAR ($/SH) DATE 0%($) 5%($) 10%($)
---- ---------- ------------ -------- ---------- ----- ----- ------
<S> <C> <C> <C> <C> <C> <C> <C>
W. Marston Becker................... 50,632 9.39% $36.21875 9/2/08 $0.00 $1,153,284 $2,922,649
James R. Pouliot.................... 13,880 2.58 36.21875 9/2/08 0.00 316,156 807,200
Raymond W. Jacobsen................. 12,672 2.35 36.21875 9/2/08 0.00 288,640 731,470
Thomas M. Olarma.................... 9,232 1.71 36.21875 9/2/08 0.00 210,284 532,902
Raymond J. Schuyler................. 9,680 1.80 36.21875 9/2/08 0.00 220.489 558,762
</TABLE>
- ---------------
(1) For a description of the material terms of the Options and the Performance
Units awarded in tandem therewith, see footnotes 1 and 2 to the Summary
Compensation Table above.
(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 (10)
years. Using the same assumptions and based on 27,170,209 shares outstanding
as of December 31, 1998, the total dollar gains for all stockholders as a
group would be $618.9 million (5%) and $1,568.4 million (10%) based on the
September 2, 1998 price per share of $36.21875.
12
<PAGE> 19
AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR AND YEAR END OPTION VALUES
The following table provides information with respect to the unexercised
options to purchase Common Stock granted in prior years under the Performance
Incentive Plans for each of the Named Officers and held by them at December 31,
1998.
<TABLE>
<CAPTION>
NUMBER OF VALUE OF UNEXERCISED
UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS
SHARES VALUE AT DECEMBER 31, 1998 AT DECEMBER 31, 1998$(2)
ACQUIRED REALIZED --------------------------- ---------------------------
NAME ON EXERCISE $(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
W. Marston Becker........... 2,646 $ 82,688 65,554 115,632 $957,188 $647,950
James R. Pouliot............ -0- -0- 43,349 34,746 716,263 271,189
Raymond W. Jacobsen......... 7,236 185,712 32,554 26,414 642,341 142,623
Thomas M. Okarma............ -0- -0- 6,855 19,461 70,576 97,695
Raymond J. Schuyler......... -0- -0- 32,205 21,655 680,733 120,068
</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 1 and 2 on
pages 10-11.
(2) Based on the fair market value on the NYSE--Composite Transactions of the
Company's Common Stock on that date ($39.15625).
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 17 shall not be incorporated by reference into any
such filing.
13
<PAGE> 20
REPORT OF THE COMPENSATION COMMITTEE
EXECUTIVE COMPENSATION
HAS THREE 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; to align the interest of
the executive officers with those of stockholders; and
to place a significant proportion of the executive
officers' total compensation at risk by aligning it
with the Company's financial and Common Stock
performance.
Executive compensation is composed of three
components: base salary, annual incentive awards
(bonus) 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 SALARY 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 1998, 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. 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.
14
<PAGE> 21
Business unit pools were determined for 1998 based
on pre-tax operating income, combined ratio, return on
equity and premiums.
LONG-TERM INCENTIVES; STOCK
OWNERSHIP
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 Plans. The Performance Incentive Plans are
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
stockholders.
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 1998 the Company granted restricted stock
and/or options to induce prospective executive officers
to become employed by the Company. In 1998 executive
officers otherwise received only stock options; other
key employees received a combination of incentive stock
options and restricted stock. The Compensation
Committee has not elected to award performance units to
the Company's executive officers since 1996.
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 Plans, 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.
In order to align the interest of the Company's
executive officers with the interests of the
stockholders, the Company has encouraged stock
ownership by executive officers. In 1998 the
Compensation Committee took a further step in that
direction by making loans available to those officers,
many of whom had recently been elected, whose holdings
of Common Stock were below the informal guideline which
the Company thought appropriate. All loans are fully
recourse to the executive and must be used solely to
purchase Common Stock. The stock purchased may not be
disposed of unless the corresponding loan amount has
been repaid, and interest is payable on the loan at the
higher of the applicable federal tax rate or the
Company's internal rate of return. Twelve (12)
executive officers were eligible for loans under the
program.
CEO COMPENSATION
Utilizing 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 determining Mr. Becker's compensation, the
Compensation Committee considers the Company's
financial performance; industry wide and peer group
compensation data; the Company's positioning for future
performance; as well as Mr. Becker's
15
<PAGE> 22
experience, knowledge, and his leadership,
decision-making and communications skills. No specific
weighting is assigned to each factor, but the committee
gives greater weight to current and anticipated future
financial performances. The Committee's decision
regarding Mr. Becker's compensation is reported to the
full Board at its next regularly scheduled meeting.
BASED ON A MARKET STUDY
OF
PEER GROUP COMPENSATION,
AND TAKING INTO ACCOUNT
HIS
PERFORMANCE IN 1998,
MR. BECKER'S
COMPENSATION
PACKAGE WAS COMPRISED OF
(I) A BASE SALARY
INCREASE TO
$535,000, AND (II) AN
ANNUAL BONUS OF
$425,000. In September of 1998, the Committee awarded Mr.
Becker a stock option to purchase 50,632 shares of
Common Stock. In March of 1999, the Compensation
Committee elected to increase Mr. Becker's base salary
by 30% to the annualized amount of $535,000 and
authorized a cash bonus payment in the amount of
$425,000.
In deciding upon Mr. Becker's compensation
package, the Compensation Committee considered the
accomplishments of Mr. Becker as Chairman and Chief
Executive Officer during the past twelve months. These
accomplishments included an increase in revenues of 8%,
an increase in book value of 2% and an adjusted
combined ratio of 98.7%, which was 1% lower than that
reported for 1997. The Committee also took into account
the significant steps taken by Mr. Becker to position
the Company for the future, including the Orion
Specialty restructuring charge, as well as his
compensation position relative to his peers in the
industry.
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
Warren R. Lyons, Chairman
Gordon F. Cheesbrough
Robert H. Jeffrey
James K. McWilliams
16
<PAGE> 23
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 Standard and
Poor's 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 STANDARD AND POOR'S
PROPERTY AND CASUALTY INDEX*
<TABLE>
<CAPTION>
STANDARD & POOR'S P&C
ORION CAPITAL S&P 500 INDEX INDEX
------------- ------------- ---------------------
<S> <C> <C> <C>
1/1/94 100.00 100.00 100.00
12/31/94 112.97 101.28 102.25
12/31/95 141.77 138.88 135.87
12/31/96 203.17 170.38 161.98
12/31/97 312.82 226.78 232.10
12/31/98 272.91 291.04 212.96
</TABLE>
- ---------------
* Assumes that the investment in the Company's Common Stock and each index was
$100 on December 31, 1994 and that all dividends were reinvested.
There can be no assurance that the Company's future stock performance will
continue 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.
17
<PAGE> 24
EMPLOYMENT AGREEMENTS
AND CHANGE IN CONTROL
ARRANGEMENTS
The Company has employment agreements with all of
its current executive officers. The Company entered
into an employment agreement with Mr. Becker on October
31, 1995. The agreement, as amended, currently provides
for a base salary of $410,000 with such salary
increases as may from time to time be approved by the
Company. In February 1999, the Company entered into
employment agreements with its eleven (11) other
executive officers. The initial terms of the agreements
range from twelve to forty-four months and each is
automatically extended, as each day expires during its
term, for one additional day.
The contracts provide for continuation of salary
and certain benefits through the remainder of the
unexpired term in the event of termination by the
Company other than for Cause (as defined in the
contracts) or in the event of a termination by an
executive for Good Reason following a Change in Control
(both terms as defined in the contracts).
In the event of a Change in Control there is no
acceleration of compensation and benefit payments,
which are made as due during the balance of the
unexpired term of each contract. However outstanding
options immediately vest and restricted stock
conditions are deemed met.
The Company obtains, by virtue of the agreements,
a covenant from each executive to preserve the
confidentiality of the Company's trade secrets for the
remaining unexpired term of the contract and, for that
same period a covenant not to solicit the Company's
customers or employees. Each executive also agrees not
to compete with the Company following termination of
active employment (a) absolutely for a fixed period of
time ranging from six to twelve months and (b)
thereafter for the remainder of the unexpired term so
long as the executive continues to receive compensation
payments.
CERTAIN RELATIONSHIPS
AND RELATED TRANSACTIONS
The Company and certain of its subsidiaries have a
policy of making unsecured 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 five
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, Inc. 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 five years, at an interest rate of 9.25%
per year.
18
<PAGE> 25
In 1998 the Company adopted a policy to make loans
to executive officers to purchase Common Stock, thereby
aligning their interests more closely with those of the
Company's stockholders. A total of twelve (12)
executives are eligible to participate in the program
and as of December 31, 1998 loans had been made to Mr.
Becker ($412,000), Mr. Jacobsen ($262,000), Mr. McCann
($493,900), and Ms. Lindsey ($208,000) in connection
with open-market purchases of Common Stock by them. The
shares purchased may not be disposed of unless the
related debt to the Company has been repaid.
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. The Company has
entered into indemnification agreements with each of
its directors and executive officers which, among other
things, contractually confirm the indemnity provided
under the Company's Restated Certificate of
Incorporation, its By-Laws and under the Delaware
General Corporation law.
2. APPROVAL OF THE AMENDMENT TO THE EQUITY
INCENTIVE PLAN TO INCREASE THE NUMBER OF SHARES
RESERVED THEREUNDER FROM 1,400,000 TO 2,600,000.
INTRODUCTION The Board adopted on September 11, 1996 a
stock-based, long-term incentive plan entitled the
"Orion Capital Corporation Equity Incentive Plan" (the
"Equity Incentive Plan") for key employees of the
Company, which was approved by the Company's
stockholders at the 1997 Annual Meeting. The Equity
Incentive Plan became effective as of September 11,
1996. The number of shares of Common Stock originally
reserved under the Equity Incentive Plan was 1,400,000
(after giving effect to the 2-for-1 stock split on July
7, 1997). On April 1, 1999, approximately 100,000
shares of Common Stock remained available for awards
under the Equity Incentive Plan. As of April 1, 1999
the closing price of the Common Stock on the NYSE was
$32.875 per share. The Board has adopted an amendment
to the Equity Incentive Plan, subject to stockholder
approval at the Annual Meeting, increasing the number
of shares reserved for issuance under the Equity
Incentive Plan by 1,200,000 shares.
The Board believes that the Equity Incentive Plan
has been, and will continue to be, an important element
in the Company's management compensation program. In
addition to assisting the Company in its efforts to
attract and retain the services of key management
personnel, grants of options serve to link more
effectively executive compensation to stockholder
returns through stock price performance and provide
recipients with an additional incentive for outstanding
performance. The Equity Incentive Plan as amended will
make available an additional 1,200,000 shares for grant
under the Equity Incentive Plan. The Board believes
that this increase in the total number of shares
available for grant is appropriate and will enable the
Company to continue to avail itself of the benefits of
the Equity Incentive Plan. Except for the increase in
the number of shares reserved for the Equity Incentive
Plan, there have been no other amendments to the Equity
Incentive Plan.
19
<PAGE> 26
A summary of the principal provisions of the
Equity Incentive Plan is set forth below. This summary
is qualified in its entirety by reference to the full
text of the Equity Incentive Plan, which is attached
hereto as Exhibit A. Capitalized terms used herein
will, unless otherwise defined, have the meanings
assigned to them in the text of the Equity Incentive
Plan.
THE EQUITY INCENTIVE PLAN
ADMINISTRATION The Equity Incentive Plan is administered by the
Compensation Committee (the "Committee") of the Board.
The Company's By-Laws require that the Committee
consist only of directors who are not officers or
employees of the Company. The Committee is authorized,
among other things, to construe, interpret and
implement the provisions of the Equity Incentive Plan,
to select the employees to whom awards will be granted,
to determine the terms and conditions of such awards
and to make all other determinations deemed necessary
or advisable for the administration of the Equity
Incentive Plan. The Committee has determined, however,
not to subsequently reprice any awards previously
granted under the Equity Incentive Plan.
SHARES AVAILABLE The aggregate number of shares of Common Stock
available for issuance, subject to adjustment as
described below, under the Equity Incentive Plan is
currently 1,400,000, of which approximately 100,000
currently remain available for issuance. If this
proposal is approved by the stockholders of the Company
the number of shares which can be awarded under the
Equity Plan will be increased to 2,600,000. Such shares
may be authorized and unissued shares or treasury
shares. The authorized and unissued shares under the
Equity Incentive Plan, if the proposed amendment is
approved, will represent approximately 4.8% of the
Company's outstanding Common Stock as of April 1, 1999.
If any shares of Common Stock subject to an award
are forfeited or an award is settled in cash or
otherwise terminates for any reason whatsoever without
an actual distribution of shares, the shares subject to
such award will again be available for awards. If any
Performance Units awarded under the Equity Incentive
Plan are forfeited or canceled, the Performance Units
will again be available for awards. If the Committee
determines that any stock dividend, recapitalization,
split, reorganization, merger, consolidation,
combination, repurchase, or other similar corporate
transaction or event, affects the Common Stock or the
book value of the Company such that an adjustment is
appropriate in order to prevent dilution or enlargement
of the rights of participants, then the Committee may
adjust any or all of (i) the number and kind of shares
of Common Stock which may thereafter be issued in
connection with awards, (ii) the number and kind of
shares of Common Stock issuable in respect of
outstanding awards, (iii) the aggregate number and kind
of shares of Common Stock available, (iv) the number of
Performance Units which may thereafter be granted and
the book value of the Company with respect to
outstanding Performance Units, and (v) the exercise
price, grant price, or purchase price relating to any
award. If deemed appropriate, the Committee may also
provide for cash payments relating to outstanding
20
<PAGE> 27
awards. The Committee may also adjust performance
conditions and other terms of awards in response to
unusual or nonrecurring events or to changes in
applicable laws, regulations, or accounting principles,
except to the extent that such adjustment would
adversely affect the status of any outstanding
Performance-Based Awards as "performance-based
compensation" under Section 162(m) of the Internal
Revenue Code of 1986, as amended (the "Code").
ELIGIBILITY Persons eligible to participate in the Equity
Incentive Plan include all key employees of the Company
and its subsidiaries, as determined by the Committee.
See "Executive Compensation -- Summary Compensation
Table" for information on awards made to the Named
Officers. While the specific individuals to whom awards
will be made in the future cannot be determined at this
time, it is anticipated that currently approximately
200 key employees are eligible for participation in the
Equity Incentive Plan.
AWARDS The Equity Incentive Plan is designed to give the
Committee the maximum flexibility in providing
incentive compensation to key employees. The Equity
Incentive Plan provides for the grant of incentive
stock options, nonqualified stock options, stock
appreciation rights, restricted stock, bonus stock,
awards in lieu of cash obligations, other stock-based
awards and Performance Units. The Equity Incentive Plan
also permits cash payments either as a separate award
or as a supplement to a stock-based award, and for the
income and employment taxes imposed on a participant in
respect of any award. Since the Committee may, in its
discretion, grant a combination of an option, stock
appreciation rights, other stock-based awards and a
cash award, it is possible that one or more
restrictions or requirements in the Equity Incentive
Plan applicable to any individual type of award,
including the requirements that options be granted at
fair market value, can, in effect, be avoided. The
Committee has no current intention of taking such
action.
STOCK OPTIONS AND STOCK
APPRECIATION RIGHTS The Committee is authorized to grant stock
options, including both incentive stock options
("ISOs"), which can result in potentially favorable tax
treatment to the participant, and nonqualified stock
options. The Committee can also grant stock
appreciation rights ("SARs") entitling the participant
to receive the excess of the fair market value of a
share of Common Stock on the date of exercise over the
grant price of the SAR. The exercise price per share of
Common Stock subject to an option and the grant price
of an SAR is determined by the Committee, provided that
the exercise price may not be less than the fair market
value of the Common Stock on the date of grant.
However, the Equity Incentive Plan also allows the
Committee to grant an option, an SAR or other award
allowing the purchase of Common Stock at an exercise
price or grant price less than fair market value when
it is granted in substitution for some other award or
retroactively in tandem with an outstanding award. In
those cases, the exercise or grant price may be the
fair market value at that date, at the date of the
earlier award or at that date reduced by the fair
market value of the award required to be surrendered as
a condition to the receipt of the substitute award. The
terms of each option or SAR, the times at which each
option or SAR will be
21
<PAGE> 28
exercisable, and provisions requiring forfeiture of
unexercised options or SARs at or following termination
of employment will be fixed by the Committee. However,
no ISO or SAR granted in tandem will have a term
exceeding ten years. Options may be exercised by
payment of the exercise price in cash or in Common
Stock, outstanding awards or other property (including
notes or obligations to make payment on a deferred
basis, or through "cashless exercises") having a fair
market value equal to the exercise price, as the
Committee may determine from time to time. The
Committee also determines the methods of exercise and
settlement and certain other terms of the SARs.
RESTRICTED STOCK The Equity Incentive Plan also authorizes the
Committee to grant restricted stock. Restricted stock
is an award of shares of Common Stock which may not be
disposed of by participants and which may be forfeited
in the event of certain terminations of employment or
certain other events prior to the end of a restriction
period established by the Committee. Such an award
entitles the participant to all of the rights of a
stockholder of the Company, including the right to vote
the shares and the right to receive any dividends
thereon, unless otherwise determined by the Committee.
OTHER STOCK-BASED
AWARDS, BONUS STOCK AND
AWARDS IN LIEU OF CASH
OBLIGATIONS In order to enable the Company to respond to
business and economic developments and trends in
executive compensation practices, the Equity Incentive
Plan authorizes the Committee to grant awards that are
denominated or payable in, or valued in whole or in
part by reference to the value of, Common Stock. The
Committee will determine the terms and conditions of
such awards, including consideration to be paid to
exercise awards in the nature of purchase rights, the
period during which awards will be outstanding and
forfeiture conditions and restrictions on awards. In
addition, the Committee is authorized to grant shares
as a bonus, free of restrictions, or to grant shares or
other awards in lieu of Company obligations to pay cash
or deliver other property under other plans or
compensatory arrangements, subject to such terms as the
Committee may specify.
CASH PAYMENTS The Committee may grant the right to receive cash
payments whether as a separate award or as a supplement
to any stock-based awards. Also, to encourage
participants to retain awards payable in stock by
providing a source of cash sufficient to pay the income
and employment taxes imposed as a result of a payment
pursuant to, or the exercise or vesting of, any award,
the Equity Incentive Plan authorizes the Committee to
grant a Tax Bonus in respect of any award.
PERFORMANCE UNITS The Committee is also authorized to grant
Performance Units. A Performance Unit is a right to
receive a payment in cash equal to the increase in the
book value of the Company if specified performance
goals during a specified time period are met. The
Committee has the discretion to establish the
performance goals and the performance periods relating
to each Performance Unit. A performance goal is a goal
expressed in terms of growth in book value, earnings
per share, return on equity or any other financial or
other measurement selected by the Committee, in its
discretion, and may relate to the operations of the
Company as a whole or any subsidiary, division or
department, and the performance periods may be of such
length as the Committee
22
<PAGE> 29
may select. Neither the performance goals nor the
performance periods need be identical for all
Performance Units awarded at any time or from time to
time.
PERFORMANCE-BASED
AWARDS The Committee may (but is not required to) grant
awards pursuant to the Equity Incentive Plan to a
participant who, in the year of grant, may be among the
Company's Chief Executive Officer and the four other
most highly compensated executive officers ("Covered
Employees"), which are intended to qualify as a
Performance-Based Award. If the Committee grants an
award as a Performance-Based Award, the right to
receive payment of such award, other than stock options
and SARs granted at not less than fair market value on
the date of grant, will be conditional upon the
achievement of performance goals established by the
Committee in writing at the time such Performance-Based
Award is granted. Such performance goals may vary from
participant to participant and Performance-Based Award
to Performance-Based Award. The goals will be based
upon (i) the attainment of specific amounts of, or
increases in, one or more of the following: revenues,
earnings, cash flow, net worth, book value,
stockholder's equity, financial return ratios, market
performance or total stockholder return, and/or (ii)
the completion of certain business or capital
transactions. Before any Performance-Based Award is
paid, the Committee will certify in writing that the
performance goals applicable to the Performance-Based
Award were in fact satisfied.
The maximum amount which may be granted as
Performance-Based Awards to any participant in any
calendar year shall not exceed (i) stock-based awards
for 100,000 shares of Common Stock (whether payable in
cash or stock), subject to adjustment as provided in
the Equity Incentive Plan, (ii) 100,000 Performance
Units, (iii) a Tax Bonus payable with respect to the
stock-based awards and Performance Units and (iv) cash
payments (other than Tax Bonuses) of $1,000,000. The
Committee has the discretion to grant an award to a
participant who may be a Covered Employee which is not
a Performance-Based Award.
OTHER TERMS OF AWARDS In the discretion of the Committee, awards may be
settled in cash, Common Stock, other awards or other
property. The Committee may require or permit
participants to defer the distribution of all or part
of an award in accordance with such terms and
conditions as the Committee may establish, including
payment of reasonable interest on any amounts deferred
under the Equity Incentive Plan. Awards granted under
the Equity Incentive Plan may not be pledged or
otherwise encumbered. Generally, unless the Committee
determines otherwise, awards are not transferable
except by will or by the laws of descent and
distribution, or otherwise if permitted under Rule
16b-3 of the Exchange Act and by the Committee.
The Equity Incentive Plan grants the Committee
broad discretion in the operation and administration of
the Equity Incentive Plan. This discretion includes the
authority to make adjustments in the terms and
conditions of, and the criteria included in performance
conditions related to, any awards in recognition of
unusual or nonrecurring events affecting the Company or
in response to changes in applicable laws, regulations
or accounting principles. However, no such
23
<PAGE> 30
adjustment may adversely affect the status of any
outstanding award as a Performance-Based Award. The
Committee can waive any condition applicable to any
award, and may adjust any performance condition
specified in connection with any award, if such
adjustment is necessary, to take account of a change in
the Company's strategy, performance of comparable
companies or other circumstances. However no adjustment
may adversely affect the status of any outstanding
award as a Performance-Based Award. The Committee has
determined not to subsequently re-price any awards
previously granted under the Equity Incentive Plan.
Awards under the Equity Incentive Plan generally
will be granted for no consideration other than
services. The Committee may, however, grant awards
alone, in addition to, in tandem with, or in
substitution for, any other award under the Equity
Incentive Plan, other awards under other Company plans,
or other rights to payment from the Company. Awards
granted in addition to or in tandem with other awards
may be granted either at the same time or at different
times. If an award is granted in substitution for
another award, the participant must surrender such
other award in consideration for the grant of the new
award.
CHANGE OF CONTROL In the event of a change of control of the
Company, all awards granted under the Equity Incentive
Plan (including Performance-Based Awards) that are
outstanding and not yet vested or exercisable or which
are subject to restrictions, will become immediately
100% vested in each participant or will be free of any
restrictions, and will be exercisable for the remaining
duration of the award. All awards that are exercisable
as of the effective date of the change of control will
remain exercisable for the remaining duration of the
award.
Under the Equity Incentive Plan, a change of
control occurs upon any of the following events: (i)
the acquisition, in one or more transactions, of
beneficial ownership by any person or group, (other
than a trustee or other fiduciary holding securities
under an employee benefit plan of the Company or a
subsidiary), of any securities of the Company such
that, as a result of such acquisition, such person or
group, either (A) beneficially owns, directly or
indirectly, more than 20% of the Company's outstanding
voting securities entitled to vote on a regular basis
for a majority of the members of the Board or (B)
otherwise has the ability to elect, directly or
indirectly, a majority of the members of the Board;
(ii) a change in the composition of the Board such that
a majority of the members of the Board are not
Continuing directors; or (iii) the stockholders of the
Company approve a merger or consolidation of the
Company with any other corporation, other than a merger
or consolidation which would result in the voting
securities of the Company outstanding immediately prior
thereto continuing to represent (either by remaining
outstanding or by being converted into voting
securities of the surviving entity) at least 80% of the
total voting power represented by the voting securities
of the Company or such surviving entity outstanding
immediately after such merger or consolidation, or the
stockholders of the Company approve a plan of complete
liquidation of the Company or an agreement for the sale
or disposition by the Company, in one or more
24
<PAGE> 31
transactions, of all or substantially all the Company's
assets. The foregoing events will not be deemed to be a
change of control if the transactions causing such
change are approved in advance by the affirmative vote
of at least a majority of the Continuing directors.
AMENDMENT AND
TERMINATION The Equity Incentive Plan is of indefinite
duration; continuing until all shares and performance
units reserved therefore have been issued or until
terminated by the Board. The Board may amend, alter,
suspend, discontinue, or terminate the Equity Incentive
Plan or the Committee's authority to grant awards
thereunder without further stockholder approval or the
consent of the participants, except stockholder
approval must be obtained within one year after the
effectiveness of such action if required by law or
regulation or under the rules of the securities
exchange on which the Common Stock is then quoted or
listed or as otherwise required by Rule 16b-3 under the
Exchange Act. Notwithstanding the foregoing, unless
approved by the stockholders, no amendment will: (i)
change the class of persons eligible to receive awards;
(ii) materially increase the benefits accruing to
participants under the Equity Incentive Plan; or (iii)
increase the number of shares of Common Stock subject
to the Equity Incentive Plan.
CERTAIN FEDERAL INCOME
TAX CONSEQUENCES TO THE
COMPANY AND THE
PARTICIPANT The following discussion is a brief summary of the
principal United States Federal income tax consequences
under current Federal income tax laws relating to
awards under the Equity Incentive Plan. This summary is
not intended to be exhaustive and, among other things,
does not describe state, local or foreign income and
other tax consequences.
A participant will not realize any income upon the
award of an option (including any other stock-based
award in the nature of a purchase right), an SAR or a
Performance Unit, nor will the Company be entitled to
any tax deduction.
When a participant who has been granted an option
which is not designated as an ISO exercises that option
and receives Common Stock which is either
"transferable" or not subject to a "substantial risk of
forfeiture" under Section 83(c) of the Code, the
participant will realize compensation income subject to
withholding taxes. The amount of that compensation
income will equal the excess of the fair market value
of the Common Stock (without regard to any
restrictions) on the date of exercise of the option
over its exercise price, 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 so acquired will equal the sum of the
compensation income realized and the exercise price.
Upon any subsequent sale or exchange of the Common
Stock, the gain or loss will generally be taxed as a
capital gain or loss and will be a long-term capital
gain or loss if the Common Stock has been held for more
than one year after the date of exercise.
If a participant exercises an option which is
designated as an ISO and the participant has been an
employee of the Company or its subsidiaries throughout
the period from the date of grant of the ISO until
three months prior to its exercise, the participant
will not realize
25
<PAGE> 32
any income upon the exercise of the ISO (although
alternative minimum tax liability may result), and the
Company will not be entitled to any tax deduction. If
the participant sells or exchanges any of the shares
acquired upon the exercise of the ISO more than one
year after the transfer of the shares to the
participant and more than two years after the date of
grant of the ISO, any gain or loss (based upon the
difference between the amount realized and the exercise
price of the ISO) will be treated as long-term capital
gain or loss to the participant. If such sale, exchange
or other disposition takes place within two years of
the grant of the ISO or within one year of the transfer
of shares to the participant, the sale, exchange or
other disposition will generally constitute a
"disqualifying disposition" of such shares. In such
event, to the extent that the gain realized on the
disqualifying disposition does not exceed the
difference between the fair market value of the shares
at the time of exercise of the ISO over the exercise
price, such amount will be treated as compensation
income in the year of the disqualifying disposition,
and the Company will be entitled to a deduction in the
same amount and at the same time as the compensation
income is realized by the participant. The balance of
the gain, if any, will be treated as capital gain and
will not result in any deduction by the Company.
With respect to other awards (including an SAR or
a Performance Unit) granted under the Equity Incentive
Plan that may be settled either in cash or in Common
Stock or other property that is either transferable or
not subject to a substantial risk of forfeiture under
Section 83(c) of the Code, the participant will realize
compensation income (subject to withholding taxes)
equal to the amount of cash or the fair market value of
the Common Stock or other property received. The
Company will be entitled to a deduction in the same
amount and at the same time as the compensation income
is realized by the participant.
With respect to awards involving Common Stock or
other property that is both nontransferable and subject
to a substantial risk of forfeiture, unless an election
is made under Section 83(b) of the Code, as described
below, the participant will realize compensation income
equal to the fair market value of the Common Stock or
other property received at the first time the Common
Stock or other property is either transferable or not
subject to a substantial risk of forfeiture. The
Company will be entitled to a deduction in the same
amount and at the same time as the compensation income
is realized by the participant.
Even though Common Stock or other property may be
nontransferable and subject to a substantial risk of
forfeiture, a participant may elect (within 30 days of
receipt of the Common Stock or other property) to
include in gross income the fair market value
(determined without regard to such restrictions) of
such Common Stock or other property at the time
received. In that event, the participant will not
realize any income at the time the Common Stock or
other property either becomes transferable or is not
subject to a substantial risk of forfeiture, but if the
participant subsequently forfeits such Common Stock or
other property, the participant's loss would be
26
<PAGE> 33
limited only to the amount actually paid for the Common
Stock or other property. While such Common Stock or
other property remains nontransferable and subject to a
substantial risk of forfeiture, any dividends or other
income will be taxable as additional compensation
income. Finally, special rules may apply with respect
to participants subject to Section 16(b) of the
Exchange Act.
The Committee may condition the payment, exercise
or vesting of any award on the payment of the
withholding taxes and may provide that a portion of the
Common Stock or other property to be distributed will
be withheld (or previously acquired stock or other
property surrendered by the participant) to satisfy
such withholding and other tax obligations.
Finally, amounts paid pursuant to an award which
vests or becomes exercisable, or with respect to which
restrictions lapse, upon a Change in Control may
constitute a "parachute payment" under Section 280G of
the Code. To the extent any such payment constitutes an
"excess parachute payment," the Company would not be
entitled to deduct such payment and the participant
would be subject to a 20 percent excise tax (in
addition to regular income tax).
SECTION 162(m)
PROVISIONS The Equity Incentive Plan was designed to permit
the deduction by the Company of the compensation
realized by certain officers in respect of long-term
incentive compensation granted under the Equity
Incentive Plan which is intended by the Committee to
qualify as "performance-based compensation" under
Section 162(m) of the Code. Section 162(m) of the Code
generally disallows a deduction to the Company for
compensation paid in any year in excess of $1 million
to any Covered Employee. Certain compensation,
including compensation that meets the specified
requirements for "performance-based compensation," is
not subject to this deduction limit. Among the
requirements for compensation to qualify as
"performance-based compensation" is that the material
terms pursuant to which the compensation is to be paid
be disclosed to, and approved by, the stockholders of
the Company in a separate vote prior to the payment.
Accordingly, if the Equity Incentive Plan is approved
by the stockholders, then the compensation payable
pursuant to awards granted to officers who in the year
of grant may be Covered Employees and which are
intended by the Committee to qualify as
"performance-based compensation" should, provided the
other requirements of Section 162(m) of the Code are
satisfied, not be subject to the deduction limit of
Section 162(m) of the Code.
SHAREHOLDER APPROVAL Adoption of the proposal will require the
affirmative vote of a majority of the outstanding
shares of Common Stock entitled to vote thereon.
Proxies not indicated to the contrary will be voted for
the approval of the proposal.
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3. 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 1999.
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,
1998, 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.
Deloitte & Touche LLP also performed certain other
consulting services relating to the Company's program
to effect year 2000 compliance.
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.
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
STOCKHOLDER NOMINATIONS
FOR BOARD MEMBERSHIP OR
OTHER PROPOSALS FOR
CONSIDERATION AT ITS
2000
ANNUAL MEETING. 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
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<PAGE> 35
than a proposal submitted at the direction of the
Board), at a meeting of stockholders.
For any nomination of a person for election as a
director to be proper, the notice must contain certain
information concerning the nominating or proposing
stockholder and information concerning the nominee,
which must be furnished to the Company no earlier than
February 23, 2000 and no later than March 24, 2000. 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 other proposal of a
stockholder intended to be presented at the Company's
2000 Annual Meeting of Stockholders must be received by
the Secretary of the Company by December 13, 1999, 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 2000 Annual Meeting, which is
expected to be held on Tuesday, May 23, 2000. Since the
Company did not receive advance notice of any
stockholder proposals by February 24, 1999 for
inclusion in this Proxy Statement, it will have
discretionary authority to vote on any stockholder
proposals presented at the Annual Meeting.
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.
At any time prior to being voted, the enclosed
proxy is revocable by written notice to the Secretary
of the Company, by attendance at the meeting and voting
in person or by submitting a later-dated proxy.
By order of the Board of Directors,
April 9, 1999
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<PAGE> 36
EXHIBIT A
ORION CAPITAL CORPORATION
EQUITY INCENTIVE PLAN (AS AMENDED)
SECTION 1. PURPOSE OF THE PLAN
The purpose of the Orion Capital Corporation Equity Incentive Plan (the
"Plan") is to further the interests of Orion Capital Corporation (the "Company")
and its shareholders by providing long-term performance incentives to those key
employees of the Company and its Subsidiaries who are largely responsible for
the management, growth and protection of the business of the Company and its
Subsidiaries.
SECTION 2. DEFINITIONS
For purposes of the Plan, the following terms shall be defined as set forth
below:
(a) "Award" means any Option, Performance Unit, SAR (including a
Limited SAR), restricted Stock, Stock granted as a bonus or in lieu of
other awards, other Stock-Based Award, Tax Bonus or other cash payments
granted to a Participant under the Plan.
(b) "Award Agreement" means the written agreement, instrument or
document evidencing an Award.
(c) "Change of Control" means and includes each of the following:
(i) the acquisition, in one or more transactions, of beneficial
ownership (within the meaning of Rule 13d-3 under the Exchange Act) by
any person or entity or any group of persons or entities who constitute
a group (within the meaning of Section 13(d)(3) of the Exchange Act),
other than a trustee or other fiduciary holding securities under an
employee benefit plan of the Company or a Subsidiary, of any securities
of the Company such that, as a result of such acquisition, such person,
entity or group either (A) beneficially owns (within the meaning of Rule
13d-3 under the Exchange Act), directly or indirectly, more than 20% of
the Company's outstanding voting securities entitled to vote on a
regular basis for a majority of the members of the Board of Directors of
the Company or (B) otherwise has the ability to elect, directly or
indirectly, a majority of the members of the Board;
(ii) a change in the composition of the Board of Directors of the
Company such that a majority of the members of the Board of Directors of
the Company are not Continuing Directors; or
(iii) the stockholders of the Company approve a merger or
consolidation of the Company with any other corporation, other than a
merger or consolidation which would result in the voting securities of
the Company outstanding immediately prior thereto continuing to
represent (either by remaining outstanding or by being converted into
voting securities of the surviving entity) at least 80% of the total
voting power represented by the voting securities of the Company or such
surviving entity outstanding immediately after such merger or
consolidation, or the stockholders of the Company approve a plan of
complete liquidation of the Company or an agreement for the sale or
disposition by the Company of (in one or more transactions) all or
substantially all of the Company's assets.
Notwithstanding the foregoing, the preceding events shall not be
deemed to be a Change of Control if, prior to any transaction or
transactions causing such change, a majority of the Continuing Directors
shall have voted not to treat such transaction or transactions as
resulting in a Change of Control.
<PAGE> 37
(d) "Code" means the Internal Revenue Code of 1986, as amended from
time to time.
(e) A "Continuing Director" means, as of any date of determination,
any member of the Board of Directors of the Company who (i) was a member of
such Board on the effective date of the Plan or (ii) was nominated for
election or elected to such Board with the affirmative vote of a majority
of the Continuing Directors who were members of such Board at the time of
such nomination or election.
(f) "Exchange Act" means the Securities Exchange Act of 1934, as
amended from time to time.
(g) "Fair Market Value" means, with respect to Stock, Awards, or other
property, the fair market value of such Stock, Awards, or other property
determined by such methods or procedures as shall be established from time
to time by the Committee in good faith and in accordance with applicable
law. Unless otherwise determined by the Committee, the Fair Market Value of
Stock shall mean the mean of the high and low sales prices of Stock on the
relevant date as reported on the stock exchange or market on which the
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 the 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 the Stock is primarily traded.
(h) "ISO" means any Option designated as an incentive stock option
within the meaning of Section 422 of the Code.
(i) "Limited SAR" means an SAR exercisable only for cash upon a Change
of Control or other event, as specified by the Committee.
(j) "Option" means a right granted to a Participant pursuant to
Section 6(b) to purchase Stock at a specified price during specified time
periods. An Option may be either an ISO or a nonstatutory Option (an Option
not designated as an ISO).
(k) "Performance Unit" means a right granted to a Participant pursuant
to Section 6(c) to receive a payment in cash equal to the increase in the
book value of the Company during specified time periods if specified
performance goals are met.
(l) "Restricted Stock" means Stock awarded to a Participant pursuant
to Section 6(d) that may be subject to certain restrictions and to a risk
of forfeiture.
(m) "Stock-Based Award" means a right that may be denominated or
payable in, or valued in whole or in part by reference to the market value
of, Stock, including, but not limited to, any Option, SAR (including a
Limited SAR), Restricted Stock, Stock granted as a bonus or Awards in lieu
of cash obligations.
(n) "SAR" or "Stock Appreciation Right" means the right granted to a
Participant pursuant to Section 6(e) to be paid an amount measured by the
appreciation in the Fair Market Value of Stock from the date of grant to
the date of exercise of the right, with payment to be made in cash, Stock
or as specified in the Award, as determined by the Committee.
(o) "Subsidiary" means any corporation, partnership, joint venture or
other business entity of which 50% or more of the outstanding voting power
is beneficially owned, directly or indirectly, by the Company.
(p) "Tax Bonus" means a payment in cash in the year in which an amount
is included in the gross income of a Participant in respect of an Award of
an amount equal to the federal, foreign, if any, and applicable state and
local income and employment tax liabilities payable by the Participant as a
result of (i) the amount included in gross income in respect of the Award
and (ii) the payment of the amount in clause (i) and the amount in this
clause (ii). For purposes of determining the amount to be paid to the
Participant pursuant to the preceding
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sentence, the Participant shall be deemed to pay federal, foreign, if any,
and state and local income taxes at the highest marginal rate of tax
imposed upon ordinary income for the year in which an amount in respect of
the Award is included in gross income, after giving effect to any
deductions therefrom or credits available with respect to the payment of
any such taxes.
SECTION 3. ADMINISTRATION OF THE PLAN
The Plan shall be administered by the Compensation Committee of the Board
of Directors of the Company (the "Committee"). No member of the Committee while
serving as such shall be eligible for participation in the Plan. Any action of
the Committee in administering the Plan shall be final, conclusive and binding
on all persons, including the Company, its Subsidiaries, employees,
Participants, persons claiming rights from or through Participants and
stockholders of the Company.
Subject to the provisions of the Plan, the Committee shall have full and
final authority in its discretion (a) to select the key employees who will
receive Awards pursuant to the Plan ("Participants"), (b) to determine the type
or types of Awards to be granted to each Participant, (c) to determine the
number of shares of Stock to which an Award will relate, the terms and
conditions of any Award granted under the Plan (including, but not limited to,
restrictions as to transferability or forfeiture, exercisability or settlement
of an Award and waivers of accelerations thereof, and waivers of or
modifications to performance conditions relating to an Award, based in each case
on such considerations as the Committee shall determine) and all other matters
to be determined in connection with an Award; (d) to determine whether, to what
extent, and under what circumstances an Award may be settled, or the exercise
price of an Award may be paid, in cash, Stock, other Awards or other property,
or an Award may be cancelled, forfeited, or surrendered; (e) to determine
whether, and to certify that, performance goals to which the settlement of an
Award is subject are satisfied; (f) to correct any defect or supply any omission
or reconcile any inconsistency in the Plan, and to adopt, amend and rescind such
rules and regulations as, in its opinion, may be advisable in the administration
of the Plan; and (g) to make all other determinations as it may deem necessary
or advisable for the administration of the Plan. The Committee may delegate to
officers or managers of the Company or any Subsidiary or to unaffiliated service
providers the authority, subject to such terms as the Committee shall determine,
to perform administrative functions and to perform such other functions as the
Committee may determine, to the extent permitted under Rule 16b-3, Section
162(m) of the Code and applicable law.
SECTION 4. PARTICIPATION IN THE PLAN
Participants in the Plan shall be selected by the Committee from among the
key employees of the Company and its Subsidiaries.
SECTION 5. PLAN LIMITATIONS; SHARES SUBJECT TO THE PLAN
(a) Subject to the provisions of Section 8(a) hereof, the aggregate number
of shares of common stock, $1.00 par value, of the Company (the "Stock")
available for issuance as Awards under the Plan shall not exceed 2,600,000
shares.
No Award may be granted if the number of shares to which such Award
relates, when added to the number of shares previously issued under the Plan and
the number of shares which may then be acquired pursuant to other outstanding,
unexercised Awards, exceeds the number of shares available for issuance pursuant
to the Plan. If any shares subject to an Award are forfeited or such Award is
settled in cash or otherwise terminates for any reason whatsoever without an
actual distribution of shares to the Participant, any shares counted against the
number of shares available for issuance pursuant to the Plan with respect to
such Award shall, to the extent of any such forfeiture, settlement, or
termination, again be available for Awards under the Plan; provided, however,
that the Committee may adopt procedures for the counting of shares relating to
any
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<PAGE> 39
Award to ensure appropriate counting, avoid double counting, and provide for
adjustments in any case in which the number of shares actually distributed
differs from the number of shares previously counted in connection with such
Award.
(b) Subject to the provisions of Section 8(a) hereof, the aggregate number
of Performance Units which may be awarded under the Plan shall not exceed
350,000. If any Performance Units awarded under the Plan shall be forfeited or
cancelled, such Performance Units shall thereafter be available for award under
the Plan.
SECTION 6. AWARDS
(a) General. Awards may be granted on the terms and conditions set forth
in this Section 6. In addition, the Committee may impose on any Award or the
exercise thereof, at the date of grant or thereafter (subject to Section 8(a)),
such additional terms and conditions, not inconsistent with the provisions of
the Plan, as the Committee shall determine, including terms requiring forfeiture
of Awards in the event of termination of employment by the Participant;
provided, however, that the Committee shall retain full power to accelerate or
waive any such additional term or condition as it may have previously imposed.
All Awards shall be evidenced by an Award Agreement.
(b) Options. The Committee may grant Options to Participants on the
following terms and conditions:
(i) Exercise Price. The exercise price of each Option shall be
determined by the Committee at the time the Option is granted, but (except
as provided in Section 7(a)) the exercise price of any Option shall not be
less than the Fair Market Value of the shares covered thereby at the time
the Option is granted.
(ii) Time and Method of Exercise. The Committee shall determine the
time or times at which an Option may be exercised in whole or in part,
whether the exercise price shall be paid in cash or by the surrender at
Fair Market Value of Stock, or by any combination of cash and shares of
Stock, including, without limitation, cash, Stock, other Awards, or other
property (including notes or other contractual obligations of Participants
to make payment on a deferred basis, such as through "cashless exercise"
arrangements, to the extent permitted by applicable law), and the methods
by which Stock will be delivered or deemed to be delivered to Participants.
(iii) Incentive Stock Options. The terms of any Option granted under
the Plan as an ISO shall comply in all respects with the provisions of
Section 422 of the Code, including, but not limited to, the requirement
that no ISO shall be granted more than ten years after the effective date
of the Plan.
(c) Performance Units. The Committee is authorized to grant Performance
Units to Participants on the following terms and conditions:
(i) Performance Criteria and Period. At the time it makes an award of
Performance Units, the Committee shall establish both the performance goal
or goals and the performance period or periods applicable to the
Performance Units so awarded. A performance goal shall be a goal, expressed
in terms of growth in book value, earnings per share, return on equity or
any other financial or other measurement deemed appropriate by the
Committee, or may relate to the results of operations or other measurable
progress of either the Company as a whole or the Participant's Subsidiary,
division or department. The performance period will be the period of time
over which one or more of the performance goals must be achieved, which may
be of such length as the Committee, in its discretion, shall select.
Neither the performance goals nor the performance periods need be identical
for all Performance Units awarded at any time or from time to time. The
Committee shall have the authority, in its discretion, to accelerate the
time at which any performance period will expire or waive or modify the
performance goals of any Participant or Participants. The Committee may
also make such adjustments, to the extent
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<PAGE> 40
it deems appropriate, to the performance goals for any Performance Units
awarded to compensate for, or to reflect, any material changes which may
have occurred in accounting practices, tax laws, other laws or regulations,
the financial structure of the Company, acquisitions or dispositions of
business or Subsidiaries or any unusual circumstances outside of
management's control which, in the sole judgment of the Committee, alters
or affects the computation of such performance goals or the performance of
the Company or any relevant Subsidiary, division or department.
(ii) Value of Performance Units. The value of each Performance Unit
at any time shall equal the book value per share of the Company's Stock, as
such value appears on the consolidated balance sheet of the Company as of
the end of the fiscal quarter immediately preceding the date of valuation.
(d) Restricted Stock. The Committee is authorized to grant Restricted
Stock to Participants on the following terms and conditions:
(i) Restricted Period. Restricted Stock awarded to a Participant
shall be subject to such restrictions on transferability and other
restrictions for such periods as shall be established by the Committee, in
its discretion, at the time of such Award, which restrictions may lapse
separately or in combination at such times, under such circumstances, or
otherwise, as the Committee may determine.
(ii) Forfeiture. Restricted Stock shall be forfeitable to the Company
upon termination of employment during the applicable restricted periods.
The Committee, in its discretion, whether in an Award Agreement or anytime
after an Award is made, may accelerate the time at which restrictions or
forfeiture conditions will lapse or remove any such restrictions, including
upon death, disability or retirement, whenever the Committee determines
that such action is in the best interests of the Company.
(iii) Certificates for Stock. Restricted Stock granted under the Plan
may be evidenced in such manner as the Committee shall determine. If
certificates representing Restricted Stock are registered in the name of
the Participant, such certificates may bear an appropriate legend referring
to the terms, conditions and restrictions applicable to such Restricted
Stock.
(iv) Rights as a Shareholder. Subject to the terms and conditions of
the Award Agreement, the Participant shall have all the rights of a
stockholder with respect to shares of Restricted Stock awarded to him or
her, including, without limitation, the right to vote such shares and the
right to receive all dividends or other distributions made with respect to
such shares. If any such dividends or distributions are paid in Stock, the
Stock shall be subject to restrictions and a risk of forfeiture to the same
extent as the Restricted Stock with respect to which the Stock has been
distributed.
(e) Stock Appreciation Rights. The Committee is authorized to grant SARs
to Participants on the following terms and conditions:
(i) Right to Payment. An SAR shall confer on the Participant to whom
it is granted a right to receive, upon exercise thereof, the excess of (A)
the Fair Market Value of one share of Stock on the date of exercise over
(B) the grant price of the SAR as determined by the Committee as of the
date of grant of the SAR, which grant price (except as provided in Section
7(a)) shall not be less than the Fair Market Value of one share of Stock on
the date of grant.
(ii) Other Terms. The Committee shall determine the time or times at
which an SAR may be exercised in whole or in part, the method of exercise,
method of settlement, form of consideration payable in settlement, method
by which Stock will be delivered or deemed to be delivered to Participants,
whether or not an SAR shall be in tandem with any other Award, and any
other terms and conditions of any SAR. Limited SARs may be granted on such
terms, not
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<PAGE> 41
inconsistent with this Section 6(e), as the Committee may determine.
Limited SARs may be either freestanding or in tandem with other Awards.
(f) Bonus Stock and Awards in Lieu of Cash Obligations. The Committee is
authorized to grant Stock as a bonus, or to grant Stock or other Awards in lieu
of Company or Subsidiary obligations to pay cash or deliver other property under
other plans or compensatory arrangements; provided that, in the case of
Participants subject to Section 16 of the Exchange Act, such cash amounts are
determined under such other plans in a manner that complies with applicable
requirements of Rule 16b-3 so that the acquisition of Stock or Awards hereunder
shall be exempt from Section 16(b) liability. Stock or Awards granted hereunder
shall be subject to such other terms as shall be determined by the Committee.
(g) Other Stock-Based Awards. The Committee is authorized, subject to
limitations under applicable law, to grant to Participants such other
Stock-Based Awards in addition to those provided in Sections 6(b) and (d)
through (e) hereof, as deemed by the Committee to be consistent with the
purposes of the Plan. The Committee shall determine the terms and conditions of
such Awards. Stock delivered pursuant to an Award in the nature of a purchase
right granted under this Section 6(g) shall be purchased for such consideration
and paid for at such times, by such methods, and in such forms, including,
without limitation, cash, Stock, other Awards, or other property, as the
Committee shall determine.
(h) Cash Payments. The Committee is authorized, subject to limitations
under applicable law, to grant to Participants Tax Bonuses and other cash
payments, whether awarded separately or as a supplement to any Stock-Based
Award. The Committee shall determine the terms and conditions of such Awards.
SECTION 7. ADDITIONAL PROVISIONS APPLICABLE TO AWARDS
(a) Stand-Alone, Additional, Tandem, and Substitute Awards. Awards granted
under the Plan may, in the discretion of the Committee, be granted either alone
or in addition to, in tandem with, or in substitution for, any other Award
granted under the Plan or any award granted under any other plan of the Company
or any Subsidiary, or any business entity acquired by the Company or any
Subsidiary, or any other right of a Participant to receive payment from the
Company or any Subsidiary. If an Award is granted in substitution for another
Award or award, the Committee shall require the surrender of such other Award or
award in consideration for the grant of the new Award. Awards granted in
addition to, or in tandem with other Awards or awards may be granted either as
of the same time as, or a different time from, the grant of such other Awards or
awards. The per share exercise price of any Option, grant price of any SAR, or
purchase price of any other Award conferring a right to purchase Stock:
(i) granted in substitution for an outstanding Award or award, shall
be not less than the lesser of (A) the Fair Market Value of a share of
Stock at the date such substitute Award is granted or (B) such Fair Market
Value at that date, reduced to reflect the Fair Market Value at that date
of the Award or award required to be surrendered by the Participant as a
condition to receipt of the substitute Award; or
(ii) retroactively granted in tandem with an outstanding Award or
award, shall not be less than the lesser of the Fair Market Value of a
share of Stock at the date of grant of the later Award or at the date of
grant of the earlier Award or award.
(b) Exchange and Buy Out Provisions. The Committee may at any time offer
to exchange or buy out any previously granted Award for a payment in cash,
Stock, other Awards (subject to Section 7(a)), or other property based on such
terms and conditions as the Committee shall determine and communicate to a
Participant at the time that such offer is made.
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<PAGE> 42
(c) Performance Conditions. The right of a Participant to exercise or
receive a grant or settlement of any Award, and the timing thereof, may be
subject to such performance conditions as may be specified by the Committee.
(d) Term of Awards. The term of each Award shall, except as provided
herein, be for such period as may be determined by the Committee; provided,
however, that in no event shall the term of any ISO, or any SAR granted in
tandem therewith, exceed a period of ten years from the date of its grant (or
such shorter period as may be applicable under Section 422 of the Code).
(e) Form of Payment. Subject to the terms of the Plan and any applicable
Award Agreement, payments or transfers to be made by the Company or a Subsidiary
upon the grant or exercise of an Award may be made in such forms as the
Committee shall determine, including, without limitation, cash, Stock, other
Awards, or other property (and may be made in a single payment or transfer, in
installments, or on a deferred basis), in each case determined in accordance
with rules adopted by, and at the discretion of, the Committee. (Such payments
may include, without limitation, provisions for the payment or crediting of
reasonable interest on installments or deferred payments.) The Committee, in its
discretion, may accelerate any payment or transfer upon a change in control as
defined by the Committee. The Committee may also authorize payment upon the
exercise of an Option by net issuance or other cashless exercise methods.
(f) Loan Provisions. With the consent of the Committee, and subject at all
times to laws and regulations and other binding obligations or provisions
applicable to the Company, the Company may make, guarantee, or arrange for a
loan or loans to a Participant with respect to the exercise of any Option or
other payment in connection with any Award, including the payment by a
Participant of any or all federal, state, or local income or other taxes due in
connection with any Award. Subject to such limitations, the Committee shall have
full authority to decide whether to make a loan or loans hereunder and to
determine the amount, terms, and provisions of any such loan or loans, including
the interest rate to be charged in respect of any such loan or loans, whether
the loan or loans are to be with or without recourse against the borrower, the
terms on which the loan is to be repaid and the conditions, if any, under which
the loan or loans may be forgiven.
(g) Awards to Comply with Section 162(m). The Committee may (but is not
required to) grant an Award pursuant to the Plan to a Participant who, in the
year of grant, may be a "covered employee," within the meaning of Section 162(m)
of the Code, which is intended to qualify as "performance-based compensation"
under Section 162(m) of the Code (a "Performance-Based Award"). The right to
receive a Performance-Based Award, other than Options and SARs granted at not
less than Fair Market Value, shall be conditional upon the achievement of
performance goals established by the Committee in writing at the time such
Performance-Based Award is granted. Such performance goals, which may vary from
Participant to Participant and Performance-Based Award to Performance-Based
Award, shall be based upon the attainment by the Company or any Subsidiary,
division or department of specific amounts of, or increases in, one or more of
the following, any of which may be measured either in absolute terms or as
compared to another company or companies: revenues, earnings, cash flow, net
worth, book value, stockholders' equity, financial return ratios, market
performance or total stockholder return, and/or the completion of certain
business or capital transactions. Before any compensation pursuant to a
Performance-Based Award is paid, the Committee shall certify in writing that the
performance goals applicable to the Performance-Based Award were in fact
satisfied.
The maximum amount which may be granted as Performance-Based Awards to any
Participant in any calendar year shall not exceed (i) Stock-Based Awards for
100,000 shares of Stock (whether payable in cash or stock), subject to
adjustment as provided in Section 8(a) hereof, (ii) 100,000 Performance Units,
(iii) a Tax Bonus payable with respect to the Stock-Based Awards described in
clause (i) and Performance Units described in clause (ii), and (iv) cash
payments (other than tax Bonuses) of $1,000,000.
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(h) Change of Control. In the event of a Change of Control of the Company,
all Awards granted under the Plan (including Performance-Based Awards) that are
still outstanding and not yet vested or exercisable or which are subject to
restrictions shall become immediately 100% vested in each Participant or shall
be free of any restrictions, as of the first date that the definition of Change
of Control has been fulfilled, and shall be exercisable for the remaining
duration of the Award. All Awards that are exercisable as of the effective date
of the Change of Control will remain exercisable for the remaining duration of
the Award.
SECTION 8. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION; ACCELERATION IN CERTAIN
EVENTS
(a) In the event that the Committee shall determine that any stock
dividend, recapitalization, forward split or reverse split, reorganization,
merger, consolidation, spin-off, combination, repurchase or share exchange, or
other similar corporate transaction or event, affects the Stock or the book
value of the Company such that an adjustment is appropriate in order to prevent
dilution or enlargement of the rights of Participants 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 Stock which may thereafter be issued in
connection with Awards, (ii) the number and kind of shares of Stock issuable in
respect of outstanding Awards, (iii) the aggregate number and kind of shares of
Stock available under the Plan, (iv) the number of Performance Units which may
thereafter be granted and the book value of the Company with respect to
outstanding Performance Units, and (v) the exercise price, grant price, or
purchase price relating to any Award, or, if deemed appropriate, make provision
for a cash payment with respect to any outstanding Award; provided, however, in
each case, that no adjustment shall be made which would cause the Plan to
violate Section 422(b)(1) of the Code with respect to ISOs or would adversely
affect the status of a Performance-Based Award as "performance-based
compensation" under Section 162(m) of the Code.
(b) In addition, the Committee is authorized to make adjustments in the
terms and conditions of, and the criteria included in, Awards in recognition of
unusual or nonrecurring events (including, without limitation, events described
in the preceding paragraph) affecting the Company or any Subsidiary, or in
response to changes in applicable laws, regulations, or accounting principles.
Notwithstanding the foregoing, no adjustment shall be made in any outstanding
Performance-Based Awards to the extent that such adjustment would adversely
affect the status of that Performance-Based Award as "performance-based
compensation" under Section 162(m) of the Code.
SECTION 9. GENERAL PROVISIONS
(a) Changes to the Plan and Awards. The Board of Directors of the Company
may amend, alter, suspend, discontinue, or terminate the Plan or the Committee's
authority to grant Awards under the Plan without the consent of the Company's
stockholders or Participants, except that any such amendment, alteration,
suspension, discontinuation, or termination shall be subject to the approval of
the Company's stockholders within one year after such Board action if such
stockholder approval is required by any federal or state law or regulation or
the rules of any stock exchange or automated quotation system on which the Stock
may then be listed or quoted, and the Board may otherwise, in its discretion,
determine to submit other such changes to the Plan to the stockholders for
approval; provided, however, that without the consent of an affected
Participant, no amendment, alteration, suspension, discontinuation, or
termination of the Plan may materially and adversely affect the rights of such
participant under any Award theretofore granted and any Award Agreement relating
thereto. The Committee may waive any conditions or rights under, or amend,
alter, suspend, discontinue, or terminate, any Award theretofore granted and any
Award Agreement relating thereto; provided, however, that without the consent of
an affected Participant, no such amendment, alteration, suspension,
discontinuation, or termination of any Award may materially and adversely affect
the rights of such Participant under such Award.
8
<PAGE> 44
The foregoing notwithstanding, any performance condition specified in
connection with an Award shall not be deemed a fixed contractual term, but shall
remain subject to adjustment by the Committee, in its discretion at any time in
view of the Committee's assessment of the Company's strategy, performance of
comparable companies, and other circumstances, except to the extent that any
such adjustment to a performance condition would adversely affect the status of
a Performance-Based Award as "performance-based compensation" under Section
162(m) of the Code.
Notwithstanding the foregoing, if the Plan is ratified by the stockholders
of the Company at the Company's 1997 Annual Meeting of Stockholders, then unless
approved by the stockholders of the Company, no amendment will: (i) change the
class of persons eligible to receive Awards; (ii) materially increase the
benefits accruing to Participants under the Plan, or (iii) increase the number
of shares of Stock or the number of Performance Units subject to the Plan.
(b) No Right to Award or Employment. No employee or other person shall
have any claim or right to receive an Award under the Plan. Neither the Plan nor
any action taken hereunder shall be construed as giving any employee any right
to be retained in the employ of the Company or any Subsidiary.
(c) Taxes. The Company or any Subsidiary is authorized to withhold from
any Award granted, any payment relating to an Award under the Plan, including
from a distribution of Stock or any payroll or other payment to a Participant
amounts of withholding and other taxes due in connection with any transaction
involving an Award, and to take such other action as the Committee may deem
advisable to enable the Company and Participants to satisfy obligations for the
payment of withholding taxes and other tax obligations relating to any Award.
This authority shall include authority to withhold or receive Stock or other
property and to make cash payments in respect thereof in satisfaction of a
Participant's tax obligations.
(d) Limits on Transferability; Beneficiaries. No Award or other right or
interest of a Participant under the Plan shall be pledged, encumbered, or
hypothecated to, or in favor of, or subject to any lien, obligation, or
liability of such Participants to, any party, other than the Company or any
Subsidiary, or assigned or transferred by such Participant otherwise than by
will or the laws of descent and distribution, and such Awards and rights shall
be exercisable during the lifetime of the Participant only by the Participant or
his or her guardian or legal representative. Notwithstanding the foregoing, the
Committee may, in its discretion, provide that Awards or other rights or
interests of a Participant granted pursuant to the Plan (other than an ISO) be
transferable, without consideration, to immediate family members (i.e.,
children, grandchildren or spouse), to trusts for the benefit of such immediate
family members and to partnerships in which such family members are the only
partners. The Committee may attach to such transferability feature such terms
and conditions as it deems advisable. In addition, a Participant may, in the
manner established by the Committee, designate a beneficiary (which may be a
person or a trust) to exercise the rights of the Participant, and to receive any
distribution, with respect to any Award upon the death of the Participant. A
beneficiary, guardian, legal representative or other person claiming any rights
under the Plan from or through any Participant shall be subject to all terms and
conditions of the Plan and any Award Agreement applicable to such Participant,
except as otherwise determined by the Committee, and to any additional
restrictions deemed necessary or appropriate by the Committee.
(e) No Rights to Awards; No Stockholder Rights. No Participant shall have
any claim to be granted any Award under the Plan, and there is no obligation for
uniformity of treatment of Participants. No Award shall confer on any
Participant any of the rights of a stockholder of the Company unless and until
Stock is duly issued or transferred to the Participant in accordance with the
terms of the Award.
(f) Discretion. In exercising, or declining to exercise, any grant of
authority or discretion hereunder, the Committee may consider or ignore such
factors or circumstances and may accord
9
<PAGE> 45
such weight to such factors and circumstances as the Committee alone and in its
sole judgment deems appropriate and without regard to the affect such exercise,
or declining to exercise such grant of authority or discretion, would have upon
the affected Participant, any other Participant, any employee, the Company, any
Subsidiary, any stockholder or any other person.
(g) Effective Date. The effective date of the Plan is September 11, 1996.
(h) Shareholder Approval. Unless and until the Plan is approved by the
stockholders of the Company at the Company's 1997 Annual Meeting of
Stockholders, no Stock-Based Award may be granted to any officer of the Company.
10
<PAGE> 46
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.
<PAGE> 47
PROXY
VOTING INSTRUCTIONS TO THE TRUSTEES
UNDER THE ORION CAPITAL 401(K) AND PROFIT SHARING PLAN,
THE ORION CAPITAL CORPORATION RETIREMENT SAVINGS PLAN FOR
THE EMPLOYEES OF GUARANTY NATIONAL INSURANCE COMPANY
AND 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 25, 1999, and at any adjournments thereof, the voting rights
pertaining to my pro rata share of Orion Capital Corporation Common Stock held
by the trustees under the Orion Capital 401(k) and Profit Sharing Plan, the
Orion Capital Retirement Savings Plan for the Employees of Guaranty National
Insurance Company, and the Wm. H. McGee & Co., Inc. 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.
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.)
_______________
SEE REVERSE
SIDE
_______________
- --------------------------------------------------------------------------------
FOLD AND DETACH HERE
<PAGE> 48
_________________________________________________________________________
[x] Please mark your
votes as in this
example.
The Board Recommends a Vote "FOR" Proposals 1, 2 and 3.
1. ELECTION OF DIRECTORS for all FOR WITHHOLD
nominees listed (except as marked) all noniees AUTHORITY
listed except to vote for
M. Becker, G. Cheesbrough, D. Elliott, as marked nominees below
V. Fash, R. Jeffrey, W. Lyons,
J. McWilliams, R. Moore, W. Weaver [ ] [ ]
INSTRUCTIONS: To withhold authority to vote for any individual nominee.
write that nominee's name in this 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 1999. FOR AGAINST ABSTAIN
[ ] [ ] [ ]
3. APPROVAL OF AN AMENDMENT TO THE ORION CAPITAL FOR AGAINST ABSTAIN
CORPORATION EQUITY INCENTIVE PLAN. A proposal
to approve an amendment to the Orion Capital [ ] [ ] [ ]
Corporation Equity Incentive Plan to increase
the number of authorized shares.
4. Transaction of such other business as may properly come before the meeting
or any adjournment 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 1998. Please sign, date and return your
proxy in the enclosed envelope.
NOTE: Please sign exactly as name appears hereon.
All joint owners should each sign. When signing as
attorney, executor, administrator, trustee or
guardian, please give full title as such in corporate
name by president, vice president or other authorized
person. If a partnership, please sign in partnership
name by a partner.
_____________________________________________________
_____________________________________________________
SIGNATURE(S) DATE
- -------------------------------------------------------------------------------
FOLD AND DETACH HERE
<PAGE> 49
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
ORION CAPITAL CORPORATION
PROXY FOR HOLDERS OF COMMON STOCK -- ANNUAL MEETING MAY 25, 1999
The undersigned holder of Common Stock of Orion Capital Corporation hereby
appoints W. MARSTON BECKER, JOHN J. McCANN 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, Tuesday, May 25, 1999, 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)
<PAGE> 50
_________________________________________________________________________
[x] Please mark your
votes as in this
example.
The Board Recommends a Vote "FOR" Proposals 1, 2 and 3.
1. ELECTION OF DIRECTORS for all FOR WITHHOLD
nominees listed (except as marked) all noniees AUTHORITY
listed except to vote for
M. Becker, G. Cheesbrough, D. Elliott, as marked nominees below
V. Fash, R. Jeffrey, W. Lyons,
J. McWilliams, R. Moore, W. Weaver [ ] [ ]
INSTRUCTIONS: To withhold authority to vote for any individual nominee.
write that nominee's name in this 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 1999. FOR AGAINST ABSTAIN
[ ] [ ] [ ]
3. APPROVAL OF AN AMENDMENT TO THE ORION CAPITAL FOR AGAINST ABSTAIN
CORPORATION EQUITY INCENTIVE PLAN. A proposal
to approve an amendment to the Orion Capital [ ] [ ] [ ]
Corporation Equity Incentive Plan to increase
the number of authorized shares.
4. Transaction of such other business as may properly come before the meeting
or any adjournment 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 1998. Please sign, date and return your
proxy in the enclosed envelope.
NOTE: Please sign exactly as name appears hereon.
All joint owners should each sign. When signing as
attorney, executor, administrator, trustee or
guardian, please give full title as such in corporate
name by president, vice president or other authorized
person. If a partnership, please sign in partnership
name by a partner.
_____________________________________________________
_____________________________________________________
SIGNATURE(S) DATE
- -------------------------------------------------------------------------------
FOLD AND DETACH HERE
