<PAGE> 1
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 / / Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
</TABLE>
ALLEGHANY CORPORATION
--------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
--------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), or 14a-6(i)(1), or 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
(5) Total fee paid:
------------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
(3) Filing Party:
------------------------------------------------------------------------
(4) Date Filed:
------------------------------------------------------------------------
<PAGE> 2
ALLEGHANY CORPORATION
PARK AVENUE PLAZA
NEW YORK, NEW YORK 10055
------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
APRIL 28, 1995 AT 10:00 A.M., LOCAL TIME
------------------
FOUR SEASONS BILTMORE HOTEL
1260 CHANNEL DRIVE
SANTA BARBARA, CALIFORNIA
Notice is hereby given that the 1995 Annual Meeting of Stockholders of
Alleghany Corporation (the "Company") will be held at the Four Seasons Biltmore
Hotel, 1260 Channel Drive, Santa Barbara, California, on Friday, April 28, 1995
at 10:00 a.m., local time, for the following purposes:
1. To elect three directors for terms expiring in 1998.
2. To consider and take action upon a proposal to approve the
Company's Directors' Equity Compensation Plan.
3. To consider and take action upon a proposal to approve amendments
to the Company's 1993 Long-Term Incentive Plan.
4. To consider and take action upon a proposal to ratify the selection
of KPMG Peat Marwick LLP, independent certified public accountants,
as auditors for the Company for the year 1995.
5. To transact such other business as may properly come before the
meeting, or any adjournment or adjournments thereof.
Holders of common stock of the Company 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 March 1, 1995 as the record date
for the determination of stockholders entitled to notice of, and to vote at, the
Annual Meeting and any adjournments thereof.
You are cordially invited to be present. Stockholders who do not expect to
attend in person are requested to sign and return the enclosed form of proxy in
the envelope provided. At any time prior to their being voted, proxies are
revocable by written notice to the Secretary of the Company or by voting at the
meeting in person.
By order of the Board of Directors
ROBERT M. HART
Senior Vice President, General Counsel
and Secretary
March 27, 1995 (RECYCLED PAPER LOGO)
<PAGE> 3
ALLEGHANY CORPORATION
PARK AVENUE PLAZA
NEW YORK, NEW YORK 10055
PROXY STATEMENT
------------------
ANNUAL MEETING OF STOCKHOLDERS TO BE HELD APRIL 28, 1995
------------------
This statement is furnished in connection with the solicitation of proxies
by the Board of Directors of Alleghany Corporation (the "Company") from holders
of the Company's outstanding shares of common stock ("Common Stock") entitled to
vote at the 1995 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. These proxy materials
are being mailed to stockholders on or about March 27, 1995.
The Board of Directors has fixed the close of business on March 1, 1995 as
the record date for the determination of stockholders entitled to notice of, and
to vote at, said meeting. Holders of Common Stock are entitled to one vote for
each share held of record on the record date with respect to each matter to be
acted on at the 1995 Annual Meeting.
On March 1, 1995, there were outstanding and entitled to vote 6,903,381
shares of Common Stock. The number of shares of Common Stock as of March 1,
1995, and the share ownership information provided elsewhere herein, do not
include shares to be issued by the Company in respect of the dividend of one
share of Common Stock for every 50 shares of Common Stock outstanding, to be
paid by the Company on April 26, 1995 to stockholders of record at the close of
business on April 3, 1995.
PRINCIPAL STOCKHOLDERS
As of March 1, 1995, approximately 37.1 percent* of the Company's
outstanding Common Stock was believed to be beneficially owned by F.M. Kirby,
Allan P. Kirby, Jr. and their sisters, Grace Kirby Culbertson and Ann Kirby
Kirby, primarily through a number of family trusts.
---------------
* See Note (4) on page 3.
<PAGE> 4
The following table sets forth the beneficial ownership of Common Stock as
of March 1, 1995 of certain persons believed by the Company to be the beneficial
owners of more than five percent of such class of securities.
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF BENEFICIAL OWNERSHIP
-------------------------------------------------------------------
SOLE VOTING SHARED VOTING
NAME AND ADDRESS POWER AND SOLE POWER AND/OR SHARED PERCENT
OF BENEFICIAL OWNER INVESTMENT POWER INVESTMENT POWER TOTAL OF CLASS
---------------------------------------- ------------------- -------- --------
<S> <C> <C> <C> <C>
F.M. Kirby.............. 274,204 596,842 871,046(1) 12.6
17 DeHart Street
P.O. Box 151
Morristown, NJ 07963
Allan P. Kirby, Jr. .... 596,852 -- 596,852(2) 8.6
14 E. Main Street
P.O. Box 90
Mendham, NJ 07945
Grace Kirby
Culbertson............ 132,920 249,694 382,614(3) 5.5
Blue Mill Road
Morristown, NJ 07960
Ann Kirby Kirby......... 317,881 392,786 710,667(4) 10.3
c/o Carter,
Ledyard & Milburn
2 Wall Street
New York, NY 10005
Southeastern Asset
Management, Inc. ..... (5) (5) 639,412(5) 9.3
6075 Poplar Avenue
Suite 900
Memphis, TN 38119
Neuberger & Berman...... 211,997 463,744 463,744(6) 6.7
605 Third Avenue
New York, NY 10158
</TABLE>
---------------
(1) Includes 110,344 shares of Common Stock held by F.M. Kirby as sole trustee
of trusts for the benefit of his children; 407,302 shares held by a trust of
which Mr. Kirby is co-trustee and primary beneficiary; and 189,540 shares
held by trusts for the benefit of his children and his children's
descendants as to which Mr. Kirby was granted a proxy and, therefore, had
shared voting power. Mr. Kirby disclaims
2
<PAGE> 5
beneficial ownership of the Common Stock held for the benefit of his
children and for the benefit of his children and his children's descendants.
Mr. Kirby held 163,860 shares directly.
(2) Includes 73,946 shares of Common Stock held by the children of Allan P.
Kirby, Jr. as to which Mr. Kirby holds an irrevocable power of attorney;
305,655 shares held by a trust of which Mr. Kirby is co-trustee and
beneficiary; and 6,556 shares issuable under stock options granted pursuant
to the Directors' Stock Option Plan and the Amended and Restated Directors'
Stock Option Plan. Mr. Kirby disclaims beneficial ownership of the Common
Stock held by his children. Mr. Kirby held 210,695 shares directly.
(3) Includes 39,474 shares of Common Stock held by Grace Kirby Culbertson as co-
trustee of trusts for the benefit of her children; and 210,220 shares held
by trusts for the benefit of Mrs. Culbertson and her descendants, of which
Mrs. Culbertson is co-trustee. Mrs. Culbertson held 132,920 shares directly.
(4) Ann Kirby Kirby has disclaimed being a controlling person or member of a
controlling group with respect to the Company, and has declined to supply
information with respect to her ownership of Common Stock. However, Mrs.
Kirby filed a statement on Schedule 13D dated April 5, 1982 with the
Securities and Exchange Commission reporting beneficial ownership, both
direct and indirect through various trusts, of 710,667 shares of the common
stock of Alleghany Corporation, a Maryland corporation and the predecessor
of the Company ("Old Alleghany"). Upon the liquidation of Old Alleghany in
December 1986, stockholders received $43.05 in cash and one share of Common
Stock for each share of Old Alleghany common stock. The stock ownership
information provided herein as to Mrs. Kirby is based solely on her
statement on Schedule 13D and does not reflect the two-percent stock
dividends paid in each of the years 1985 through 1994 by Old Alleghany or
the Company; if Mrs. Kirby continued to hold 710,667 shares together with
all stock dividends received in consequence through the date hereof, her
beneficial ownership would have increased by 155,627 shares. The Company has
not received any reports from Mrs. Kirby regarding changes in her ownership
of the Company's Common Stock; therefore, it does not know whether she has
beneficially owned more than ten percent of its Common Stock since January
1, 1994 nor whether she was required to file such reports with the
Securities and Exchange Commission, the New York Stock Exchange and the
Company pursuant to the rules governing the reporting of securities
transactions by directors, officers and ten-percent stockholders.
(5) According to an amendment dated February 6, 1995 to a Schedule 13G statement
filed by Southeastern Asset Management, Inc. ("Southeastern"), an investment
3
<PAGE> 6
advisor, Southeastern had sole voting power over 486,503 shares, shared
voting power over 132,332 shares and no voting power over 20,577 shares, for
a total of 639,412 shares. Its dispositive power with respect to such shares
was reported as follows: sole dispositive power over 505,978 shares, shared
dispositive power over 132,332 shares and no dispositive power over 1,102
shares. O. Mason Hawkins, Chairman of the Board and Chief Executive Officer
of Southeastern, joined in the filing of Southeastern's amendment to its
Schedule 13G statement in the event that he could be deemed to be a
controlling person of Southeastern as a result of his official positions
with, or ownership of, its voting securities. Mr. Hawkins expressly
disclaimed such control. Southeastern's amendment to its Schedule 13G
statement indicated that all shares set forth therein were owned legally by
clients of Southeastern and no such shares were owned directly or indirectly
by Southeastern or Mr. Hawkins, both of whom disclaimed beneficial ownership
of such shares. The statement also indicated that some or all of the 132,332
shares over which Southeastern had shared voting and dispositive power were
owned by two separate series of Longleaf Partners Funds Trust, formerly
Southeastern Asset Management Funds Trust, an open-end management investment
company registered under the Investment Company Act of 1940, as amended.
Neither series owned five percent or more of these shares.
(6) According to a Schedule 13G statement filed by Neuberger & Berman, a broker-
dealer and investment advisor, which statement was most recently amended on
February 10, 1995, Neuberger & Berman had sole voting power over 211,997
shares and shared dispositive power over 463,744 shares, which number
includes those shares over which it had sole voting power. The statement
indicated that Neuberger & Berman was deemed to be a beneficial owner since
it had shared power to make decisions whether to retain or dispose of the
securities of many unrelated clients, but it disclaimed any economic
interest in such securities, stating that its clients were the actual owners
of the securities and had the sole right to receive and the power to direct
the receipt of dividends from or proceeds from the sale of such securities.
None of these clients had an interest that related to five percent or more
of these securities. The statement also indicated that the shares reported
therein as being beneficially owned did not include 4,745 shares owned by
Neuberger & Berman Profit Sharing Retirement Plan (the "N&B Plan"), which
shares were held in a Neuberger & Berman securities account in the name of
the N&B Plan. The sole beneficial owners of the N&B Plan were current and
former Neuberger & Berman employees and partners who were participants in
the N&B Plan. An affiliate of Neuberger & Berman was trustee of the N&B
Plan, and one
4
<PAGE> 7
partner of Neuberger & Berman made day-to-day investment decisions for the
N&B Plan. Neuberger & Berman disclaimed beneficial ownership of these
shares.
1. ELECTION OF DIRECTORS
Pursuant to the Company's certificate of incorporation and by-laws, the
Board of Directors is divided into three separate classes of directors, which
are required to be as nearly equal as practicable. At each annual meeting of
stockholders, one class of directors is elected to a term of three years. The
Board of Directors currently consists of nine members.
Allan P. Kirby, Jr., John E. Tobin and James F. Will have been nominated by
the Board of Directors for election as directors at the 1995 Annual Meeting,
each to serve for a term of three years, until the 1998 Annual Meeting of
Stockholders and until his successor is duly elected and qualified. Messrs.
Kirby and Tobin were last elected by stockholders of the Company at their Annual
Meeting on April 24, 1992. Mr. Will was elected by the Board of Directors
effective June 16, 1992 to fill a vacancy resulting from an increase in the
number of directors of the Company from seven to nine.
Proxies in the enclosed form received from holders of Common Stock will be
voted for the election of the three nominees named above as directors of the
Company unless stockholders indicate otherwise. If any of the foregoing nominees
is unable to serve for any reason (which event is not anticipated), the shares
represented by the enclosed proxy may be voted for such other person or persons
as may be determined by the holders of such proxy unless stockholders indicate
otherwise. Directors will be elected by an affirmative vote of a plurality of
the shares of Common Stock present in person or represented by proxy and
entitled to vote at the 1995 Annual Meeting. Thus, those nominees who receive
the highest, second-highest and third-highest numbers of votes for their
election as directors will be elected, regardless of the number of shares that
are not voted for the election of such nominees. Shares with respect to which
authority to vote for any nominee or nominees is withheld will not be counted in
the total number of shares voted for such nominee or nominees.
The following information includes the age, the year in which first elected
a director of the Company or Old Alleghany, the principal occupation (in
italics), and other directorships of each of the nominees named for election as
directors, and of the other current directors of the Company whose terms will
not expire until 1996 or 1997.
5
<PAGE> 8
<TABLE>
<S> <C> <C>
-------------------
President, Liberty Square, Inc.
Nominee for Election: (investments); management of family and
Allan P. Kirby, Jr. [PHOTO] personal affairs; director, Chicago Title
Age 63 and Trust Company and Chicago Title
Director since 1963 Insurance Company. Chairman of the
Executive Committee.
-------------------
-------------------
Nominee for Election: Retired Partner, law firm of Dorsey &
John E. Tobin [PHOTO] Whitney. Member of the Executive and Audit
Age 71 Committees.
Director since 1968
-------------------
-------------------
Nominee for Election: President and Chief Executive Officer and
James F. Will [PHOTO] director, Armco Inc. (steel manufacturing and
Age 56 metals processing); director, AK Steel
Director since 1992 Corporation. Member of the Audit Committee.
-------------------
-------------------
F.M. Kirby Chairman of the Board, Alleghany Corporation;
Age 75 [PHOTO] director, World Minerals Inc. Member of the
Director since 1958 Executive Committee.
Term expires in 1996
-------------------
-------------------
Financial Consultant; director, BF
Paul F. Woodberry [PHOTO] Enterprises, Inc., World Minerals Inc. and
Age 67 one of its subsidiaries, URC Holdings Corp.
Director since 1979 and its subsidiaries, and Alleghany
Term expires in 1996 Properties, Inc.
-------------------
</TABLE>
6
<PAGE> 9
<TABLE>
<S> <C> <C>
-------------------
S. Arnold Zimmerman Retired Senior Vice President, General
Age 75 Counsel and Secretary, Avon Products, Inc.
Director since 1971 [PHOTO] (beauty products). Chairman of the
Term expires in 1996 Compensation Committee and member of the
Nominating Committee.
-------------------
-------------------
John J. Burns, Jr. President, Alleghany Corporation; director,
Age 63 Santa Fe Pacific Corporation (effective March
Director since 1968 28, 1995), Armco Inc., Chicago Title and
Term expires in 1997 Trust Company, Chicago Title Insurance
[PHOTO] Company, Mineral Holdings Inc., World
Minerals Inc., and URC Holdings Corp. and its
subsidiaries. Chairman of the Nominating
Committee and member of the Executive
Committee.
-------------------
-------------------
Dan R. Carmichael President and Chief Executive Officer and
Age 50 [PHOTO] director, Anthem Casualty Insurance Group,
Director since 1993 Inc. (insurance). Member of the Compensation
Term expires in 1997 Committee.
-------------------
-------------------
William K. Lavin
Age 50 [PHOTO] Consultant. Chairman of the Audit Committee
Director since 1992 and member of the Compensation Committee.
Term expires in 1997
-------------------
</TABLE>
All of the foregoing persons have had the principal occupations indicated
throughout the last five years (or have retired from the principal occupations
indicated), except as follows. Prior to April 24, 1992, Mr. Will was employed by
Cyclops Industries, Inc. (steel manufacturing) as President and Chief Executive
Officer. Mr. Will joined Armco Inc. on that date as President and Chief
Operating Officer upon the merger of a wholly owned subsidiary of Armco Inc. and
Cyclops Industries, Inc., and became President and Chief Executive Officer of
Armco Inc. effective January 1, 1994. Mr. Woodberry's principal
7
<PAGE> 10
occupation prior to his becoming a financial consultant in February 1991 was
Executive Vice President and Chief Financial Officer of BF Enterprises, Inc.
(real estate), a position in which Mr. Woodberry continues to serve. Mr.
Carmichael became President and Chief Executive Officer of Anthem Casualty
Insurance Group, Inc. on February 1, 1993; he also has been President and Chief
Executive Officer of The Shelby Insurance Company from January 1987 to February
1993 and since June 1994. The Shelby Insurance Company was owned by the Company
from 1986 through 1991. Mr. Lavin served as Chairman of the Board and Chief
Executive Officer of Woolworth Corporation until September 1994; he served as
Executive Vice President -- Finance and Administration and Chief Financial
Officer from May 1991 to June 30, 1993 and as Executive Vice
President -- Finance and Chief Financial Officer prior thereto.
F.M. Kirby and Allan P. Kirby, Jr. are brothers, and are among the
principal stockholders of the Company.
The Board of Directors held eight meetings in 1994. Each director attended
more than 75 percent of the meetings of the Board of Directors held during the
period of his service in 1994. Each director attended 100 percent of the
meetings of the committees of the Board on which he served that were held during
the period of his service in 1994.
The Executive Committee may exercise certain powers of the Board of
Directors regarding the management and direction of the business and affairs of
the Company when the Board of Directors is not in session. All action taken by
the Executive Committee is reported to and reviewed by the Board of Directors.
The Audit Committee of the Board of Directors reviews and makes reports and
recommendations to the Board of Directors with respect to the selection of the
independent auditors of the Company and its subsidiaries, the arrangements for
and the scope of the audits to be performed by them, and the internal audit
activities, accounting procedures and controls of the Company and its
subsidiaries, and reviews the annual consolidated financial statements of the
Company and its subsidiaries. This committee held three meetings in 1994.
The Compensation Committee of the Board of Directors reviews the annual
recommendations of the chief executive officer and the Chairman of the Board
concerning the compensation of officers of the Company and of certain of the
most highly paid employees of its division and makes recommendations to the
Board of Directors with respect thereto; and reviews the annual adjustments
proposed to be made to the compensation of certain of the most highly paid
officers of the Company's subsidiaries, reports to the Board of Directors with
respect thereto, and makes such recommendations
8
<PAGE> 11
to the Board of Directors with respect thereto as the committee may deem
appropriate. This committee, which held three meetings in 1994, also administers
the Company's 1983 Long-Term Incentive Plan (under which the right to make
awards of incentive compensation terminated on December 31, 1992) and the
Company's 1993 Long-Term Incentive Plan.
The Nominating Committee of the Board of Directors screens candidates and
makes recommendations to the Board of Directors as to persons to be nominated by
the Board of Directors for election thereto by the stockholders or to be chosen
by the Board of Directors to fill newly created directorships or vacancies on
the Board of Directors. The Nominating Committee did not meet in 1994.
The following table sets forth the beneficial ownership of Common Stock as
of March 1, 1995 of each of the nominees named for election as a director, each
of the other current directors and each of the executive officers named in the
Summary Compensation Table below.
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF BENEFICIAL OWNERSHIP
-----------------------------------------------------------------
SOLE VOTING SHARED VOTING
POWER AND POWER AND/OR
NAME OF SOLE INVESTMENT SHARED INVESTMENT PERCENT OF
BENEFICIAL OWNER POWER POWER TOTAL CLASS
------------------------- --------------- ----------------- ------- ----------
<S> <C> <C> <C> <C>
Allan P. Kirby, Jr. ..... 596,852 -- 596,852(1) 8.64
John E. Tobin............ 7,746 -- 7,746(2) 0.11
James F. Will............ 340 -- 340(2) *
F.M. Kirby............... 274,204 596,842 871,046(3) 12.62
Paul F. Woodberry........ 6,556 13,442 19,998(2) 0.29
S. Arnold Zimmerman...... 5,530 -- 5,530(2) 0.08
John J. Burns, Jr........ 19,810 -- 19,810(4) 0.29
Dan R. Carmichael........ 365 430 795 0.01
William K. Lavin......... 548 -- 548(2) *
David B. Cuming.......... 20,886 -- 20,886 0.30
Richard P. Toft.......... 4,053 -- 4,053 0.06
Robert M. Hart........... 500 -- 500 *
Theodore E.
Somerville(5).......... 9,919 -- 9,919 0.14
</TABLE>
---------------
* Represents less than 0.01 percent of the outstanding Common Stock.
(1) See Note (2) on page 3.
9
<PAGE> 12
(2) Includes 6,556 shares of Common Stock in the case of Messrs. Woodberry and
Tobin, 4,281 shares of Common Stock in the case of Mr. Zimmerman, and 340
shares of Common Stock in the case of Messrs. Lavin and Will, issuable under
stock options granted pursuant to the Directors' Stock Option Plan and the
Amended and Restated Directors' Stock Option Plan.
(3) See Note (1) on page 2.
(4) Includes 872 shares of Common Stock owned by Mr. Burns's wife or held by her
as custodian for their daughter. Mr. Burns had no voting or investment power
over these shares, and he disclaims beneficial ownership of them.
(5) Mr. Somerville retired as Vice President of the Company effective as of
December 31, 1994, and is included in the above table pursuant to Securities
and Exchange Commission rules.
All directors and executive officers as a group (14 persons, including Mr.
Somerville) beneficially owned 1,559,667 shares, or 22.5 percent, of the
outstanding Common Stock (adjusted to include shares of Common Stock issuable
upon exercise of stock options); such directors and executive officers had sole
voting and investment power with respect to 947,775 shares, shared voting and/or
investment power with respect to 611,020 shares and no voting or investment
power with respect to 872 shares.
10
<PAGE> 13
EXECUTIVE COMPENSATION
The information under this heading relates to the chief executive officer,
the four other most highly compensated executive officers of the Company serving
as executive officers at the end of 1994, and Theodore E. Somerville, who would
have been among the four other most highly compensated executive officers of the
Company but for his retirement effective as of December 31, 1994.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------
ANNUAL COMPENSATION
------------------------------------------------ LONG-TERM ALL
OTHER ANNUAL INCENTIVE OTHER
NAME AND PRINCIPAL BONUS COMPENSATION PLAN PAYOUTS COMPENSATION
POSITION YEAR SALARY (1) (2) (3)(4) (5)
----------------------- ----- --------- --------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
John J. Burns, Jr., 1994 $ 500,000 $ 681,801 $331,311 $ -- $ 78,540
President and, since 1993 500,000 257,930 2,515 631,960 78,120
July 1, 1992, chief 1992 483,500 220,404 3,048 1,275,507 74,640
executive officer
F.M. Kirby, 1994 $ 300,000 $ 183,885 $ 15,060 $ -- $ 62,499
Chairman of the 1993 300,000 148,005 12,073 798,840 60,472
Board and prior to 1992 468,500 314,265 15,934 1,735,965 85,808
July 1, 1992, chief
executive officer
David B. Cuming, 1994 $ 267,100 $ 199,465 $ 73,860 $ -- $ 41,637
Senior Vice President 1993 252,000 117,162 1,223 301,560 39,101
1992 240,000 108,418 1,512 591,934 37,010
Richard P. Toft, 1994 $ 396,250 $ 178,396 $ -- $ 327,480 $ 119,092
Senior Vice 1993 377,500 254,812 1,670 721,511 94,783
President; 1992 372,500 295,310 1,659 614,079 77,068
President, Chief
Executive Officer
and, since January
25, 1994, Chairman of
Chicago Title and
Trust Company
("CT&T"); Chairman
and, prior to January
25, 1994, Chief
Executive Officer of
Chicago Title
Insurance Company
Robert M. Hart, 1994 $ 77,904 $ 197,149 $ 65,627 $ -- $ --
Senior Vice President
and General Counsel
since September 1994
and Secretary since
January 1, 1995
Theodore E. Somerville, 1994 $ 244,900 $ 87,259 $ 625 $ -- $1,913,856
Vice President and, 1993 231,000 81,217 850 274,120 35,182
prior to September 1, 1992 220,000 75,977 707 591,934 36,458
1994, General Counsel
</TABLE>
11
<PAGE> 14
---------------
(1) Except for amounts listed for Mr. Toft, these amounts represent (i) bonuses
paid under the Company's Management Incentive Plan, which is a short-term
incentive plan designed to reward officers (other than Mr. Toft) for
achieving specified net earnings per share and/or individual objectives; and
(ii) for each of Messrs. Burns, Cuming and Hart, an award in 1994 of shares
of Common Stock under the Company's 1993 Long-Term Incentive Plan (the "1993
Plan") valued at $366,094, $73,219 and $73,219, respectively. Amounts listed
for Mr. Toft represent bonuses paid under the Presidents' Plan of CT&T,
which is a short-term incentive plan designed to reward Mr. Toft for CT&T's
achievement of specified after-tax operating income and Mr. Toft's
achievement of specified individual objectives (such bonuses do not include
additional amounts earned under such plan in each of the reported years,
payment of which was deferred and is subject to adjustment to reflect title
insurance policy claims experience in the year of the deferral and for three
years thereafter, as more fully explained in Note (2) to the table relating
to long-term incentive plans; the deferred amount for 1994 is reported below
in such table); and an award of shares of Common Stock under the Company's
1983 Long-Term Incentive Plan (the "1983 Plan") valued at $44,744 in 1992.
(2) These amounts represent payments for reimbursement of taxes incurred by the
named individuals (except for Mr. Hart) as a result of (i) the payment by
the Company (or, in the case of Mr. Toft, by CT&T) of premiums on life
insurance policies maintained on their behalf, and (ii) the reimbursement
itself; the 1994 amounts for Messrs. Burns, Cuming and Hart also include
$328,138, $72,308 and $65,627, respectively, representing payments for
reimbursement of taxes incurred as a result of (i) the awards of shares of
Common Stock under the 1993 Plan, as described in Note (1) above, and (ii)
the reimbursement itself.
(3) Except for amounts listed for Mr. Toft, these amounts represent payouts in
settlement of performance shares awarded under the 1983 Plan. Except as
described below, performance shares entitle the holder thereof to payouts of
cash and/or Common Stock (in such proportion as is determined by the
Compensation Committee) up to a maximum amount equal to the value of one
share of Common Stock on the payout date, depending upon the average annual
compound growth in the Company's Earnings Per Share (as defined pursuant to
the 1983 Plan) in a four-year award period commencing with the year
following that in which the performance shares were awarded; payouts have
been made one-half in cash and one-half in Common Stock. Mr. Kirby's payout
for the 1988-91 award period was deferred under the Company's Deferred
Compensation Plan and thereafter was paid in cash. Amounts listed for Mr.
Toft in 1993 and 1992 represent payouts in settlement of
12
<PAGE> 15
performance units awarded under CT&T's Performance Unit Incentive Plan of
1989 (the "CT&T 1989 Plan"). Each performance unit entitled the holder
thereof to a payout of $1.00 in cash for each $1 million of cumulative
operating income (after provision for taxes and for annual dividends equal
to 6 percent of each year's beginning net worth) of CT&T and its
subsidiaries in a three-year award period commencing with the year in which
the performance unit was awarded. Payouts under the CT&T 1989 Plan were
increased or decreased by the application of a multiplier based on CT&T's
return on equity and a second multiplier based on dividends actually or
constructively paid by CT&T. The former multiplier ranged from a maximum of
1.75 for a return on equity of 21 percent or higher to a minimum of 1.0 for
a return on equity of 12 percent or lower; the latter ranged from 1.30 for
dividends equalling 12 percent or more of CT&T's operating equity to 0.85
percent for dividends equalling 3 percent or less of CT&T's operating
equity. In addition, the amounts listed for Mr. Toft in 1993 and 1992
include $227,360 and $131,598, respectively, in settlement of performance
shares awarded under the 1983 Plan; each such amount was paid one-half in
cash and one-half in Common Stock. The 1994, 1993 and 1992 amounts also
include amounts representing earlier bonus deferrals under the Presidents'
Plan of CT&T, as follows: (i) the 1994 amount includes $63,125 representing
the portion of Mr. Toft's bonus that was deferred in 1991 and was subject to
reduction to reflect unfavorable title insurance policy claims during
1991-94, $11,855 representing interest earned thereon during such period,
and $252,500 representing a related incentive payment; (ii) the 1993 amount
includes $33,394 representing the portion of Mr. Toft's bonus that was
deferred in 1990 and was subject to reduction to reflect unfavorable title
insurance policy claims during 1990-93, $9,621 representing interest earned
thereon during such period, and $111,754 representing a related incentive
payment; and (iii) the 1992 amount includes $67,469 representing the portion
of Mr. Toft's bonus that was deferred in 1989 and was subject to reduction
to reflect unfavorable title insurance policy claims during 1989-92, $20,874
representing interest earned thereon during such period, and $112,077
representing a related incentive payment; this deferral program is more
fully explained in Note (2) to the table relating to long-term incentive
plans.
(4) The 1992 amounts represent payouts for two award periods (ending in 1991 and
1992, respectively), and the 1993 amounts represent payouts for one award
period (ending in 1993); there were no payouts of long-term incentive
compensation in 1994 other than to Mr. Toft under the Presidents' Plan of
CT&T, as explained in Note (3) above. The payouts for the award period
ending in 1992 would ordinarily have been made in early 1993 but were
accelerated into December 1992 in view of
13
<PAGE> 16
an anticipated increase in individual tax rates in 1993 and a proposal to
implement a $1 million limitation on the amount of compensation deductible
by the Company or CT&T with respect to any single individual. The payouts
for the award period ending in 1993 would ordinarily have been made in early
1994 but were accelerated into December 1993 in view of the enactment of the
Revenue Reconciliation Act of 1993 which removed a cap, formerly at
$135,000, on earnings received after December 31, 1993 that would be subject
to the Medicare hospital insurance payroll tax payable by the Company and
its employees. The payouts for the award period ending in 1994 were not
accelerated and will be made in the normal course in early 1995.
(5) The 1994 amounts listed for Messrs. Burns, Kirby and Cuming represent (i)
savings benefits of $75,000, $45,000 and $40,065, respectively, credited
pursuant to the Company's Deferred Compensation Plan; and (ii) benefits,
valued at $3,540, $17,499 and $1,572, respectively, pursuant to Securities
and Exchange Commission rules, of life insurance policies maintained by the
Company on their behalf. The 1994 amount listed for Mr. Toft represents (i)
$100,095 accrued under the CT&T Executive Salary Continuation Plan, which is
a retirement plan designed to encourage key employees to remain with CT&T
until retirement and which provides post-retirement monthly income of 2
percent of final monthly income at retirement multiplied by the number of
years of participation in the plan, up to a maximum of 10 percent of final
monthly salary; (ii) $18,997 credited to Mr. Toft's account under the CT&T
Savings and Profit Sharing Plan, which is a 401(k) plan offering CT&T
employees an opportunity to save a portion of their income on a tax-deferred
basis, and providing for matching CT&T contributions, as follows: (a) $0.25
for every $1.00, up to 6 percent, of salary that such an employee
contributes to the plan (within Internal Revenue Service limits), (b) up to
an additional $1.25 for every such $1.00, depending on the profitability of
CT&T, and (c) a supplemental bonus in an amount equal to the additional
amount (if any) that CT&T would have contributed but for Internal Revenue
Service regulations which limit the amount that an employee may contribute
to a 401(k) plan; and (iii) benefits, valued at $4,068 pursuant to
Securities and Exchange Commission rules, of a split-dollar insurance
arrangement maintained by CT&T on behalf of Mr. Toft. The 1994 amount for
Mr. Somerville represents (i) savings benefits of $36,735 credited pursuant
to the Company's Deferred Compensation Plan; (ii) benefits, valued at $635
pursuant to Securities and Exchange Commission rules, of a life insurance
policy maintained by the Company on his behalf; and (iii) cash payments
aggregating $1,876,486 to which he may be entitled, based upon the
assumption described below, pursuant to an agreement entered into in
connection with his retirement effective as of Decem-
14
<PAGE> 17
ber 31, 1994. Pursuant to such agreement, Mr. Somerville will receive (i)
$490,000 in approximately 48 equal bimonthly payments in part as severance
and in part for consulting services; (ii) savings benefits, valued at
$83,103 in the aggregate, to be credited in 1995 and 1996 pursuant to the
Deferred Compensation Plan; and (iii) the continuation in 1995 and 1996 of
all fringe benefits he received in 1994, including the life insurance
maintained on his behalf, the payment by the Company of the premiums thereon
and the related income and employment taxes on such premiums, valued at
$1,260. Mr. Somerville also received $10,200 for accrued, unused vacation
remaining at December 31, 1994. In addition, Mr. Somerville will receive,
based on the assumption described below, $845,582 representing the amounts
which are due to him in respect of performance shares previously awarded to
him under the 1983 Plan and the 1993 Plan; the agreement provides that Mr.
Somerville will receive, based on the assumption described below, an
additional $446,341 representing the amounts which would have been due to
him in respect of such performance shares had he remained in the employ of
the Company through the relevant payment dates with respect to those awards.
All amounts in respect of such performance shares will be payable at the
times and in the manner provided under the 1983 Plan and the 1993 Plan as if
Mr. Somerville had remained in the employ of the Company through the
relevant payment dates with respect to those awards. For purposes of the
Summary Compensation Table, the amounts due in respect of such performance
shares have been valued at the maximum estimated future payouts, using
$152.06 as the value of one share of Common Stock, which is the mean of the
high and low sales prices of Common Stock on December 30, 1994.
15
<PAGE> 18
LONG-TERM INCENTIVE PLANS -- AWARDS IN 1994
<TABLE>
<CAPTION>
PERFORMANCE OR
OTHER PERIOD
NUMBER OF UNTIL ESTIMATED FUTURE PAYOUTS(1)
SHARES, UNITS MATURATION -----------------------------------
NAME OR DOLLARS(1) OR PAYOUT THRESHOLD TARGET MAXIMUM
------------------------------- ------------- --------------- --------- -------- --------
<S> <C> <C> <C> <C> <C>
F.M. Kirby..................... -- -- -- -- --
John J. Burns, Jr.............. 4,916 1995-98 $ 1,800 -- $719,887
David B. Cuming................ 2,363 1995-98 $ 865 -- $346,032
Richard P. Toft................ 3,000 1995-98 $110,377 -- $439,313
$59,465(2) 1994-97 -- $307,358(2) --
Robert M. Hart................. 2,363 1995-98 $ 865 -- $346,032
2,296(3) 1994-97 829 -- 331,772
2,578(3) 1993-96 931 -- 372,521
2,916(3) 1992-95 1,053 -- 421,362
2,618(3) 1991-94 946 -- 378,301
Theodore E. Somerville......... -- -- -- -- --
</TABLE>
---------------
(1) Except as otherwise noted in the table, these amounts represent performance
shares awarded under the Company's 1993 Plan. Such amounts do not reflect
antidilution adjustments made in respect of the dividend of one share of
Common Stock for every 50 shares of Common Stock outstanding, to be paid by
the Company on April 26, 1995 to stockholders of record at the close of
business on April 3, 1995. Performance shares entitle the holder thereof to
payouts of cash and/or Common Stock (in such proportion as is determined by
the Compensation Committee) up to a maximum amount equal to the value of one
share of Common Stock on the payout date. Except for performance shares
awarded to Mr. Toft, maximum payouts will be made in respect of these
performance shares only if average annual compound growth in the Company's
Earnings Per Share (as defined pursuant to the 1993 Plan) equals or exceeds
12 percent in the award period 1995-98, measured from a base of $10.00, and,
in the case of Mr. Hart, for award periods 1994-97, 1993-96, 1992-95 and
1991-94 measured from bases of $9.21, $8.92, $6.37, and $6.21, respectively,
and no payouts will be made if such growth is 8 percent or less; payouts for
growth between 8 percent and 12 percent will be determined by interpolation.
The calculations of estimated future threshold payouts (at 8.01 percent
growth) and maximum payouts (at 12 percent growth) use $146.44 (or, in the
case of the performance shares awarded to Mr. Hart for the award periods
1994-97, 1993-96, 1992-95 and 1991-94, $144.50) as the value of one share of
Common Stock, which in each case is the mean of the high and low sales
prices of Common Stock on the respective dates of the awards. The maximum
payout will be made in respect of performance
16
<PAGE> 19
shares awarded to Mr. Toft only if (i) with respect to one-half of his
award, average annual compound growth in the Company's Earnings Per Share
equals or exceeds 12 percent in the award period 1995-98, measured from a
base of $10.00, and (ii) with respect to the remaining half of his award,
CT&T's total net income for the period 1995-98 equals or exceeds $251
million; and no payouts will be made if (i) such growth is 8 percent or
less, and (ii) such income is less than $175 million. The payout for growth
and income between 8 percent and 12 percent, and $175 million and $251
million, respectively, will be determined by interpolation. The calculation
of estimated future threshold payouts (at 8.01 percent growth and income
equal to $175 million) and maximum payouts (at 12 percent growth and income
equal to $251 million) use $146.44 as the value of one share of Common
Stock, which is the mean of the high and low sales prices of Common Stock on
the date of the award. There is no estimated future target payout because
under the 1993 Plan no performance target for these performance shares is
specified.
(2) These amounts represent the portion of the cash bonus earned by Mr. Toft
under the Presidents' Plan of CT&T in 1994 which was deferred and is subject
to reduction to reflect unfavorable title insurance claims experience during
1994-97 for policies written in 1994. If such experience compares favorably
with (i) a pre-established hypothetical claims experience deemed acceptable
by the Board of Directors of CT&T, and/or (ii) the historical claims
experience during 1991-96 for policies written in 1991, 1992 and 1993, Mr.
Toft will be entitled to receive such deferred amount in full with interest
at a rate during the deferral period equal to the average of the prime rates
of the nation's largest banks and the three-year U.S. Treasury note yield as
of June 30 and December 31 of each year, each as published in The Wall
Street Journal; in addition, Mr. Toft will be entitled to a related
incentive payment, limited to four times the amount of the deferral. The
target value shown is a representative amount, assuming that title insurance
policy claims experience in 1994-97 for policies written in 1994 will be
identical to such experience in 1991-94 for policies written in 1991, and
further assuming identical interest rates in the two periods. This award
does not have threshold or maximum payout amounts.
(3) Mr. Hart was granted performance share awards in connection with his
employment by the Company in September 1994 for all award periods which were
then pending.
17
<PAGE> 20
PENSION PLAN TABLES
The Company's Retirement Plan
The Company's Retirement Plan provides for designated employees, including
all of its current executive officers other than Mr. Toft, retirement benefits
in the form of an annuity for the participant's life or alternative, actuarially
equivalent forms of benefit, including a lump sum.
The annual retirement benefit under the Company's Retirement Plan, if paid
in the form of a life annuity to an officer participant who retires on reaching
age 65 with 15 or more years of service, is equal to 52.7625 percent of the
participant's average salary, which is defined as the highest average annual
base salary (not including any non-cash compensation, annual incentive bonuses,
long-term incentive bonuses, restricted stock or other extraordinary
compensation, payments, allowances or reimbursements) over a consecutive
three-year period during the last ten years of employment (base salaries being
the amounts that would appear in the salary column of the Summary Compensation
Table for the relevant years); however, such benefit is reduced by 33.5 percent
of his unreduced primary Social Security benefit and by 67 percent of his
accrued benefit under a previously terminated retirement plan of the Company.
Since the funds accumulated under the Company's Retirement Plan to provide
for each participant's annual retirement benefit are currently taxable to each
participant, the plan provides for the payment to the appropriate tax
authorities as withholding tax on behalf of each participant of an amount equal
to the income and employment tax liabilities imposed upon the participant each
year by reason of his participation in the plan. As a result, benefits payable
in the form of a lump sum are not taxable at the time of payment. Benefits
payable in the form of an annuity are taxable in part; the Retirement Plan
provides that such benefits will be increased to offset the impact of any such
tax liability, and the estimated benefits set forth in the table below include
such increase. The Company is entitled to deduct the amounts of its
contributions and tax payments under the plan in the year in which such
contributions and payments are taxable to the participant.
A participant may retire as early as age 55, but the benefit payable at
that time will be actuarially reduced to reflect the commencement of benefit
payments prior to age 65. Prior to April 1, 1995, the benefit payable to a
participant who retires after age 65 was increased by an actuarial adjustment
through the actual date of retirement, with the adjustment to reflect salary
increases through the later of a participant's 65th birthday or January 1, 1989.
As of the date hereof, Mr. Kirby, age 75, was entitled to an actuarial
18
<PAGE> 21
adjustment of his benefit to reflect 10.4 years beyond his 65th birthday under
such late retirement provisions. On March 14, 1995, the Board of Directors
adopted amendments to the Company's Retirement Plan (i) to eliminate future
actuarial adjustments for late retirement, (ii) to provide that the benefits
accruing subsequent to March 31, 1995 to a participant who retires after age 65
will be increased to reflect salary increases and additional years of service
through the actual date of retirement, and the savings accruing to the Company
of providing the benefit commencing at a later date, (iii) to provide that a
participant over age 65 may elect prior to the actual date of retirement to
receive the benefits to which he would have been entitled had he retired on the
date of such election, and (iv) to provide an increased death benefit for any
surviving spouse of a participant over age 65 who does not elect to receive
benefits prior to the actual date of retirement.
The following table shows the estimated annual retirement benefit payable
under the Company's Retirement Plan (without giving effect to the Social
Security offset or the offset for benefits accrued under the previously
terminated retirement plan) to a participant who, upon retirement on January 1,
1995 at age 65, had achieved the average salary and years of service indicated.
The amounts shown assume payment in the form of a straight life annuity.
<TABLE>
<CAPTION>
YEARS OF SERVICE
AVERAGE -------------------------
SALARY 10 15 OR MORE
-------------------------------------- -- ----------
<S> <C> <C>
$125,000.............................. $ 53,788 $ 80,682
150,000.............................. 64,546 96,819
175,000.............................. 75,303 112,955
200,000.............................. 86,061 129,091
225,000.............................. 96,819 145,228
250,000.............................. 107,576 161,364
300,000.............................. 129,091 193,637
400,000.............................. 172,122 258,183
450,000.............................. 193,637 290,456
500,000.............................. 215,152 322,729
600,000.............................. 258,183 387,274
700,000.............................. 301,213 451,820
800,000.............................. 344,244 516,366
</TABLE>
As of December 31, 1994, the credited years of service for Messrs. Burns,
Kirby, Cuming, Hart and Somerville were 26.8, 27.3,18, 5.3 and 21.8,
respectively. In connection with Mr. Hart's employment by the Company in
September 1994, Mr. Hart received a
19
<PAGE> 22
special grant in 1994 of five credited years of service prior to such
employment. As of December 31, 1994, the average salary of each of Messrs.
Burns, Kirby, Cuming, Hart and Somerville for purposes of the plan was $494,477,
$596,000, $252,700, $270,000 and $231,814, respectively.
CT&T's Pension Plan and Excess Benefits Pension Plan
CT&T'S Pension Plan provides to employees who meet its eligibility
requirements, including Mr. Toft, retirement income in the form of monthly life
annuity payments after their retirement. CT&T's Excess Benefits Pension Plan
restores benefits to certain employees, including Mr. Toft, whose benefits are
limited under CT&T's Pension Plan due to provisions in the Internal Revenue Code
of 1986, as amended, regarding the maximum amount of covered remuneration taken
into account and the maximum amount of benefits payable under qualified plans.
The following table shows the estimated annual retirement benefit payable
under CT&T's Pension Plan (reflecting the Social Security offset described
below) to a participant who, upon retirement on January 1, 1995 at age 65, had
achieved the final average annual covered remuneration and years of service
indicated. The amounts shown include the additional sums payable under CT&T's
Excess Benefits Pension Plan. The amounts shown assume payment in the form of a
straight life annuity, with payment continuing for a period of ten years from
retirement if the participant dies during such period.
<TABLE>
<CAPTION>
FINAL AVERAGE YEARS OF SERVICE
ANNUAL COVERED ------------------------------------------------------------
REMUNERATION 15 20 25 30 35
-------------- -- -- -- -- --
<S> <C> <C> <C> <C> <C>
$125,000 $ 28,792 $ 38,389 $ 47,986 $ 57,584 $ 67,181
150,000 35,167 46,889 58,611 70,334 82,056
175,000 41,542 55,389 69,236 83,084 96,931
200,000 47,917 63,889 79,861 95,834 111,806
225,000 54,292 72,389 90,486 108,584 126,681
250,000 60,667 80,889 101,111 121,334 141,556
300,000 73,417 97,889 122,361 146,834 171,306
400,000 98,917 131,889 164,861 197,834 230,806
450,000 111,667 148,889 186,111 223,334 260,556
500,000 124,417 165,889 207,361 248,834 290,306
</TABLE>
20
<PAGE> 23
A participant's accrued benefit under CT&T's Pension Plan, expressed as a
monthly annuity starting at age 65, is calculated by multiplying his final
average annual covered remuneration by 1.7 percent, dividing by twelve and
multiplying the result by his years of credited service not exceeding
thirty-five. Final average annual covered remuneration is defined as the highest
average monthly base salary (excluding bonuses and overtime pay and subject to
certain tax limitations, but including any amount by which an employee's
compensation is reduced to make before-tax contributions under CT&T's Savings
and Profit Sharing Plan or any similar plan) over a consecutive 60-month period
during the last 120 months of employment, multiplied by twelve. Pursuant to
CT&T's Pension Plan and Excess Benefits Pension Plan, such salary is determined
using amounts which would appear in the salary column in the Summary
Compensation Table for the relevant years. The benefit is reduced by a portion
of the participant's Social Security benefits. A participant may retire as early
as age 55, but the benefit payable to him at that time will be actuarially
reduced to reflect the commencement of benefit payments prior to age 65, unless
he has reached age 62 and has at least twenty years of service.
As of December 31, 1994, Mr. Toft's credited years of service were 33.25,
and his average annual covered remuneration was $381,833.
COMPENSATION ARRANGEMENTS UPON RESIGNATION,
RETIREMENT OR OTHER TERMINATION; EMPLOYMENT AGREEMENT
In addition to the Company's Retirement Plan, which is described above,
Messrs. Burns, Kirby, Cuming, Hart and Somerville participate in a death benefit
plan which provides that a participant who dies after completion of at least
five years of service and who is an employee at the time of death will receive a
death benefit equal to twice the amount of his highest annual salary in the
preceding five years.
Mr. Toft has an employment agreement with CT&T and the Company, which had
an initial term from January 1, 1992 to December 31, 1994, and which was
automatically extended to December 31, 1995. The agreement will be automatically
extended from year to year unless either party gives notice to the contrary at
least 180 days before the end of any year. If the agreement is not renewed at
1995 year-end due to action by CT&T and Mr. Toft's employment by CT&T
terminates, Mr. Toft is entitled to a lump sum equal to his then-current annual
salary plus his average annual bonus in the preceding three years.
The agreement entitles Mr. Toft to be employed as Chief Executive Officer
of CT&T, to receive a salary at an annual rate of at least $357,500 from January
1, 1992 through
21
<PAGE> 24
April 2, 1992 and at an annual rate of at least $377,500 thereafter, to
participate in all CT&T incentive and benefit plans, and to enjoy specified
fringe benefits.
During the term of the agreement, CT&T may terminate Mr. Toft's employment
only for "good cause," which is defined to mean acts of dishonesty or wrongdoing
or material breach of the agreement. Mr. Toft may terminate his employment only
for "good reason," which is defined to mean material breach of the agreement by
CT&T. However, Mr. Toft may not terminate his employment for any reason prior to
October 1, 1995, and may terminate his employment with or without good reason
between October 1, 1995 and December 30, 1995 (inclusive). Further, Mr. Toft is
entitled to terminate his employment without good reason in the event of a
change in control (as defined in the agreement) of CT&T or the Company (after
which he would be obligated to provide consulting services to CT&T and the
Company for one year).
If Mr. Toft's employment is terminated by CT&T for any reason not
constituting good cause, or by himself with or without good reason between
October 1, 1995 and December 30, 1995 (inclusive), or following a change in
control, he is entitled to receive all accrued and vested benefits under CT&T's
incentive and benefit plans, and a severance payment equal to two times (i) his
then-current salary plus (ii) his average annual bonus in the preceding three
years. These benefits would be reduced if necessary to prevent their treatment
as parachute payments under the Internal Revenue Code of 1986, as amended. If
Mr. Toft terminates his employment between October 1, 1995 and October 30, 1995
(inclusive), his 1995 annual bonus and long-term incentive payouts for 1995 will
be calculated on a pro rata basis. If he terminates his employment between
October 31, 1995 and December 30, 1995 (inclusive), his 1995 annual bonus and
long-term incentive payouts will be calculated as though his service continued
throughout 1995.
If Mr. Toft dies, CT&T is required to pay a death benefit equal to three
times his annual salary in effect at the time of death, reduced by the present
value of the death benefits payable under CT&T's generally applicable benefit
plans (other than death benefits that have been paid for by Mr. Toft himself, or
are provided under a split-dollar insurance arrangement with a current death
benefit of $283,858 which is maintained by CT&T for Mr. Toft), and to provide
dependent benefits and insurance coverages for three years after death. If Mr.
Toft is disabled, CT&T is required to pay his salary for three years, and a
bonus for each of those years equal to the annual average of his bonuses for the
three years preceding his becoming disabled. Employee and dependent health,
dental, disability, accident and life insurance coverages would also continue
for the three years. His disability benefits under the agreement would, however,
be reduced by the
22
<PAGE> 25
amount of any disability benefits available under any CT&T benefit plan, social
security or similar program.
Mr. Toft is prohibited, for a period of two years after the initial or any
renewal term of the agreement, from being involved in a business which competes
with CT&T and from soliciting customers or employees of CT&T. He is permitted to
return to his former employer, Lincoln National Corporation, but is barred for
two years from involvement in any title insurance business conducted by Lincoln
National. Mr. Toft is also prohibited forever from disclosing confidential
information of CT&T.
The Company is a guarantor of CT&T's obligations under the agreement in the
event that there is a change in control of CT&T and CT&T thereafter defaults on
its obligations.
In addition to CT&T's Pension Plan, CT&T's excess pension plan and Mr.
Toft's employment agreement, which are described above, Mr. Toft participates in
CT&T's Executive Salary Continuation Plan, which is a retirement plan designed
to encourage key employees to remain with CT&T until retirement. The plan
provides post-retirement monthly income of two percent of final monthly income
at retirement multiplied by the number of years of participation in the plan, up
to a maximum of 10 percent of final monthly salary. Benefits are actuarially
reduced for early retirement between the ages of 55 and 65. No benefits are
payable upon retirement prior to age 55, or upon retirement prior to age 65 if
the retiree has not completed five years of service. Payments under the plan are
payable for life or ten years, whichever is greater. If a participant dies prior
to retirement, annual payments of 25 percent of final salary are payable until
what would have been the employee's 65th birthday or for ten years, whichever is
greater.
The Company entered into an agreement with Mr. Somerville in August 1994 in
connection with his retirement effective as of December 31, 1994. Pursuant to
the agreement, Mr. Somerville continued as a Vice President of the Company until
December 31, 1994. In addition to his salary and bonus for 1994, the agreement
provides that the Company will pay to Mr. Somerville, in part as severance pay
and in part for consulting services, $490,000, to be paid in approximately 48
equal bimonthly payments commencing January 1995. The agreement also entitles
Mr. Somerville to receive the following benefits: (i) payment of amounts which
would have been due in respect of awards previously made to him under the 1983
Plan and the 1993 Plan, at the times and in the manner provided thereunder as if
he had remained in the employ of the Company through the relevant payment dates
with respect to those awards; (ii) payment of his accrued savings benefits under
the Company's Deferred Compensation Plan, together with interest accrued
thereon, to be paid in March of the first year after 1996 in which he does not
receive a long-term incentive payout; (iii) savings benefits (and interest
thereon) to
23
<PAGE> 26
be credited in 1995 and 1996 pursuant to the Deferred Compensation Plan
(calculated as if his base annual salary were $245,000), to be paid in March of
the first year after 1996 in which he does not receive a long-term incentive
payout; (iv) the continuation in 1995 and 1996 of all fringe benefits provided
to him in 1994, including the life insurance maintained on his behalf, the
payment by the Company of the premiums thereon and the related income and
employment taxes on such premiums; (v) payment for any accrued, unused vacation
remaining at December 31, 1994; and (vi) until he attains age 65, medical,
dental and hospitalization benefits, on the same terms and conditions as such
benefits are provided to officers of the Company. See also Note (5) to the
Summary Compensation Table.
COMPENSATION OF DIRECTORS
Each director of the Company who is not an officer thereof receives an
annual retainer of $22,000, as well as $1,000 for each board meeting attended in
person and $500 for each conference telephone meeting attended. Such annual
retainer will increase to $26,000 commencing July 1, 1995; provided, however,
that if the stockholders of the Company approve the Directors' Equity
Compensation Plan, which is being submitted to the stockholders for their
consideration at the 1995 Annual Meeting, the increase will be effective May 1,
1995 and fifty percent of such annual retainer will be paid in Common Stock
pursuant to such plan. See "Directors' Equity Compensation Plan" below. In
addition, the Chairman of the Executive Committee receives an annual fee of
$25,000, and each other member thereof who is not an officer of the Company
receives an annual fee of $7,500. The Chairman of the Audit Committee receives
an annual fee of $4,500, and each other member thereof receives an annual fee of
$3,600. The Chairman of the Compensation Committee receives an annual fee of
$3,500, and each other member thereof receives an annual fee of $3,000. Each
member of the Nominating Committee who is not an officer of the Company receives
$1,000 for each meeting attended and $500 for each conference telephone meeting
attended.
Pursuant to the Amended and Restated Directors' Stock Option Plan, each
director of the Company who is not an employee of the Company or any of its
subsidiaries receives annually, as of the first business day after the
conclusion of each Annual Meeting of Stockholders of the Company, an option to
purchase 1,000 shares of Common Stock (subject to antidilution adjustments) at a
price equal to the fair market value (as defined in the plan) of such shares on
the date of grant. On April 25, 1994, each such director received an option to
purchase 1,000 shares of Common Stock at a price of $141.75 per share.
24
<PAGE> 27
Pursuant to the Non-Employee Directors' Retirement Plan, each person who
has served as a non-employee director of the Company after July 1, 1990 is
entitled to receive, after his retirement from the Board of Directors, an annual
retirement benefit equal to the annual retainer payable to directors of the
Company at the time of such retirement. To be entitled to this benefit, the
director must have served as such for at least five years, and must have
continued so to serve either until the time he is required to retire by the
Company's retirement policy for directors or until he has attained age 70. The
benefit is paid from the date of the director's retirement from the Board of
Directors until the end of a period equal to his length of service thereon or
until his death, whichever occurs sooner.
Each of the non-employee directors of the Company's subsidiaries CT&T and
Chicago Title Insurance Company, including Allan P. Kirby, Jr., receives an
annual retainer of $15,000 for his services as such, as well as $650 for each
board meeting attended. In addition, each member of the Finance and Audit
Committees of these boards, including Mr. Kirby, receives $650 for each
committee meeting attended. In 1994, Mr. Kirby received a total of $24,750 for
services in these capacities.
Each of the non-employee directors of the Company's subsidiary URC Holdings
Corp. and its subsidiaries, including Mr. Woodberry, receives an annual retainer
of $18,000 for his services as such, as well as $750 for each board meeting
attended or conference telephone meeting attended. In addition, each member of
the Compensation Committee of these boards, including Mr. Woodberry, receives
$750 for each committee meeting attended. In 1994, Mr. Woodberry received a
total of $24,000 for services in these capacities. Each of the non-employee
directors of the Company's subsidiary Alleghany Properties, Inc., including Mr.
Woodberry, receives an annual retainer of $25,000 for his services as such. Mr.
Woodberry did not receive any compensation for such services in 1994. Mr.
Woodberry received $21,700 for his services during the period January 1 through
October 31, 1994 as a director and a member of the Audit Committee of Sacramento
Savings Bank, a wholly owned subsidiary of the Company until its sale to First
Interstate Bank of California on October 31, 1994. Mr. Woodberry also provides
consulting services to the Company and certain of its subsidiaries and received
$273,333 in respect of such services performed in 1994.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The current members of the Compensation Committee of the Board of Directors
are William K. Lavin, S. Arnold Zimmerman and Dan R. Carmichael. Messrs. Lavin
and Zimmerman served during all of 1994, and Mr. Carmichael was appointed by the
Board of
25
<PAGE> 28
Directors on December 20, 1994. Mr. Carmichael has been President and Chief
Executive Officer of The Shelby Insurance Company from January 1987 to February
1993 and since June 1994; the Company owned The Shelby Insurance Company from
1986 through 1991.
John J. Burns, Jr., the Company's President and chief executive officer,
serves on the Compensation Committee of the Board of Directors of Armco Inc.
("Armco"). James F. Will, who is a director of the Company, is President and
Chief Executive Officer and a director of Armco.
As of March 1, 1995, the Company and its subsidiaries owned 5,643,355
shares of Armco common stock, or 5.3 percent of the outstanding common stock of
Armco. A portion of such shares was acquired upon the merger in April 1992 of
Cyclops Industries, Inc., formerly a wholly owned subsidiary of the Company
("Cyclops"), into a wholly owned subsidiary of Armco. As a condition of the
merger, the Company and certain of its affiliates agreed to refrain from
acquiring more than 15 percent of the outstanding voting securities of Armco for
five years from the date of the merger.
26
<PAGE> 29
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors (the "Compensation
Committee") is currently composed of the three non-employee directors whose
names appear at the end of this report.
An important objective of the Compensation Committee is to ensure that the
compensation practices of the Company are competitive and effectively designed
to attract, retain and motivate highly-qualified personnel. In performing its
functions, the Compensation Committee in recent years has obtained and utilized
information and advice furnished by a recognized national compensation
consulting firm.
Compensation paid to the executive officers of the Company for 1992, 1993
and 1994 consisted chiefly of annual compensation in the form of salary and cash
bonuses under short-term incentive plans, and compensation paid under long-term
incentive plans. Most of the cash bonuses paid under the short-term incentive
plans were tied to the financial results of the Company (or in the case of Mr.
Toft, who is Chairman, President and Chief Executive Officer of CT&T, the
financial results of CT&T). All compensation paid under the long-term incentive
plans was tied both to the price of the Common Stock* and to the financial
results of the Company (except that in the case of Mr. Toft a substantial part
of such compensation was tied solely to the financial results of CT&T). These
relationships between the executive officers' compensation, on the one hand, and
the financial results of the Company (or CT&T) and the price of the Common
Stock, on the other, help to link the interests of the Company's executive
officers with the interests of the Company's stockholders.
The Revenue Reconciliation Act of 1993 added Section 162(m) to the Internal
Revenue Code of 1986, as amended. Section 162(m), which became effective for tax
years beginning January 1, 1994, disallows a deduction to the Company for any
---------------
* The long-term incentive plan payouts in the Summary Compensation Table on
page 11 (other than those made to Mr. Toft) reflect appreciation in the
market price of the Common Stock (adjusted for stock dividends) from the
beginning of the respective award periods through the respective payment
dates as follows:
<TABLE>
<CAPTION>
MARKET PRICE
AT BEGINNING MARKET PRICE
YEAR OF PAYOUT AWARD PERIOD OF AWARD PERIOD ON PAYMENT DATE
-------------- ------------ ---------------- ---------------
<S> <C> <C> <C>
1993 1990-93 $82.42 $137.25
1992 1989-92 $62.72 $116.67
1992 1988-91 $63.23 $114.61
</TABLE>
27
<PAGE> 30
compensation paid to a "covered employee" in excess of $1 million per year,
subject to certain exceptions. In general, "covered employees" include the chief
executive officer and the four other most highly compensated executive officers
of the Company who are in the employ of the Company at the end of the tax year.
Among other exceptions, the deduction limit does not apply to compensation that
meets the specified requirements for "performance-based compensation." Those
requirements include the establishment of objective performance goals by a
committee of the Board of Directors composed solely of two or more outside
directors, stockholder approval of the material terms of the performance goals
under which the compensation is to be paid prior to payment of such
compensation, and certification by the committee that the performance goals have
been achieved. While the Committee considers the deductibility of compensation
paid to executive officers, it believes its principal objectives are to assure
that executive officers are appropriately compensated and incentivized.
Since final regulations have not yet been adopted under Section 162(m),
many uncertainties surround its interpretation and application. The Committee
has, however, endeavored, to the extent it deems consistent with its objectives,
to cause awards of long-term incentive compensation to so qualify. To that end,
the Committee (which is composed of three outside directors) recommended that
the 1993 Plan be amended so that certain awards of long-term incentive
compensation thereunder will qualify for deductibility under Section 162(m). See
"Amendments to the 1993 Long-Term Incentive Plan" below.
The Committee does not currently intend to structure the annual cash
bonuses under the Management Incentive Plan, described below, to comply with
Section 162(m). Such bonuses do not meet the requirement of Section 162(m) that
they be payable "solely on account of the attainment of one or more
preestablished, objective performance goals," since in most cases such bonuses
also have subjective performance goals. In addition, the performance goals under
the Management Incentive Plan were not submitted for the approval of the
stockholders of the Company, as required by Section 162(m). The Committee
believes the annual cash bonuses, as currently structured, best serve the
interests of the Company and its stockholders by allowing the Company to
recognize an executive officer's contribution as appropriate.
With respect to other compensation that may be paid to executive officers
of the Company in the future, the Committee will consider the requirements of
Section 162(m) and will make determinations based upon the best interests of the
Company.
28
<PAGE> 31
Annual Compensation
Salary adjustments for executive officers are generally made annually, and
are based on salaries for the prior year, executive salary movements nationally,
individual performance, length of service and internal comparability
considerations. Adjustments in the salaries of Messrs. Burns and Kirby were made
in mid-1992, however, to reflect their changed responsibilities when Mr. Burns
became chief executive officer of the Company, succeeding Mr. Kirby in that
capacity. For 1994, Messrs. Burns and Kirby, at their request, received no
increase in salary from 1993 levels, which also reflected no increase from 1992
year-end levels.
Mr. Toft has an employment agreement with CT&T and the Company, which
entitles him to receive a salary at an annual rate of at least $377,500, to
participate in all CT&T incentive and benefit plans, and to enjoy specified
fringe benefits. Adjustments to Mr. Toft's salary in excess of the minimum are
made based upon the same factors considered in respect of adjustments to the
salaries of the Company's other executive officers.
Annual cash bonuses are paid to executive officers under the Company's
Management Incentive Plan or, with respect to Mr. Toft, the Presidents' Plan of
CT&T. Both plans are designed to reward officers for the achievement of
specified corporate and/or individual objectives. Bonus opportunities under
these short-term incentive plans are generally adjusted from year to year in
proportion to changes in salaries, except as noted below. Maximum annual bonus
opportunities for 1994, measured as a percentage of the salaries simultaneously
established for that year, ranged from 90 percent in the case of Mr. Toft, 67
percent in the case of Mr. Burns and 61 percent in the case of Mr. Kirby to 25
percent in the case of the most junior executive officer. The percentages for
Messrs. Burns and Kirby represent increases from 55 percent of salary and 49
percent of salary in 1993. The increased bonus opportunities in 1994 reflect the
Committee's desire to tie a greater proportion of the total annual compensation
of the President and Chairman to the financial results of the Company. Despite
the increases for Messrs. Burns and Kirby, and except in the case of Mr. Toft,
bonus opportunities for executive officers of the Company as a percentage of
salaries are believed to be modest relative to prevailing practices in a broad
cross-section of American industry and reflect the Company's policy of
emphasizing long-term corporate performance and, hence, long-term incentive
compensation.
For 1994, the portion of the cash bonus opportunities which depends on
corporate objectives ranged from 100 percent of Mr. Kirby's bonus opportunity to
50 percent of the cash bonus opportunity of the most junior executive officer of
the Company. The
29
<PAGE> 32
corporate objective under the Management Incentive Plan was the achievement by
the Company of a specified level of net earnings per share, which was based on
the planned net earnings per share for the year as approved by the Board of
Directors and included in the Alleghany Strategic Plan 1994-1998. Target amounts
were to be earned if plan net earnings per share were achieved, and maximum
amounts were to be earned at 110 percent of plan. Net earnings per share were
required to exceed 80 percent of plan for any amounts to be earned. The
Company's net earnings per share exceeded 110 percent of Plan for 1994;
therefore, the maximum amounts were earned on that portion of the cash bonus
opportunities that was dependent on corporate objectives.
The corporate objective applicable to Mr. Toft under the Presidents' Plan
of CT&T for 1994 was the achievement by CT&T of a specified after-tax operating
income, which was based on planned after-tax operating income for the year as
contained in CT&T's Financial Plan in effect at 1993 year-end. The target amount
was to be earned if plan after-tax operating income was achieved, the threshold
amount was to be earned at target income minus $5,000,000, and the maximum
amount was to be earned at target income plus $5,000,000. No amount was to be
earned if after-tax operating income was less than the threshold amount. CT&T's
after-tax operating income equalled approximately 99 percent of the target
income; therefore, an interpolated amount equal to approximately 99 percent of
the target amount was earned on that portion of Mr. Toft's cash bonus
opportunity that was dependent on corporate objectives.
The remainder of the cash bonus opportunities of the executive officers of
the Company under the short-term incentive plans for 1994 was based on
achievement of individual objectives. Individual objectives for the executive
officers of the Company (other than Mr. Burns) were determined, and the
performance of such officers was assessed, by the chief executive officer upon
authority delegated by the Board of Directors, subject, in Mr. Toft's case, to
the approval of the CT&T Board of Directors. Individual objectives for Mr. Burns
were determined, and his performance was assessed, by the Board of Directors
upon the recommendation of the Compensation Committee, which received the
recommendation of the Chairman of the Board with respect thereto.
Eighty percent of Mr. Burns's opportunity was based on the corporate
objective of net earnings per share, as discussed above. The remaining 20
percent was based on his achievements with respect to his individual objectives,
including the consummation of a significant investment in an operating company
and the development of several alternative plans for the strategic
recapitalization of the Company.
30
<PAGE> 33
Long-Term Incentive Plans
In addition to annual compensation, the Company provides to its executive
officers long-term incentives under the 1993 Plan.* This plan provides for
long-term incentives based upon objective, quantifiable measures of the
Company's performance over a period of time. Most of the awards to the Company's
executive officers under the 1993 Plan and the 1983 Plan have been made in the
form of performance shares, which entitle the holder thereof to payouts in cash
and/or Common Stock (in such proportion as is determined by the Compensation
Committee) up to a maximum amount equal to the value of one share of Common
Stock on the payout date for each performance share awarded. Payouts have been
generally made one-half in cash and one-half in Common Stock. Except for
performance shares awarded to Mr. Toft, maximum payouts with respect to
currently outstanding performance shares will be made only if average annual
compound growth in the Company's Earnings Per Share (as defined pursuant to the
1993 Plan and the 1983 Plan) equals or exceeds 12 percent as measured from a
specified base in the four-year award period commencing with the year following
that in which the performance shares were awarded, and no payouts will be made
if such growth is 8 percent or less; payouts for growth between 8 percent and 12
percent will be determined by interpolation. The Board of Directors and its
Compensation Committee have provided for antidilution adjustments with respect
to performance shares. The specified base Earnings Per Share is determined by
reference to the projected earnings per share for the year in which the
performance shares were awarded, as adjusted to eliminate certain non-recurring
items. Subject to certain limitations, the Compensation Committee may provide
for adjustments in the cash and/or Common Stock to be paid with respect to
performance share awards in order to adjust for the effect upon Earnings Per
Share of transactions of an extraordinary, unusual or non-recurring nature,
capital gains, or any purchase, pooling of interests, disposal or discontinuance
of any operations, change in accounting rules or practices, retroactive
restatement of earnings, or the like. The Board of Directors has adopted
amendments to the 1993 Plan so that certain awards of long-term incentive
compensation thereunder will qualify for deductibility under Section 162(m), and
such amendments are being submitted to the stockholders of the Company for their
consideration at the 1995 Annual Meeting. See "Amendments to the 1993 Long-Term
Incentive Plan" below.
---------------
* The 1993 Plan replaced the 1983 Plan, which was substantially similar to the
1993 Plan. The right to make awards of incentive compensation under the 1983
Plan terminated on December 31, 1992.
31
<PAGE> 34
In December 1993, the Compensation Committee accelerated the payout of the
performance shares for the 1990-93 award period from early 1994 to December 1993
in view of the enactment of the Revenue Reconciliation Act of 1993 which removed
a cap, formerly at $135,000, on earnings received after December 31, 1993 that
would be subject to the Medicare hospital insurance payroll tax payable by the
Company and its employees. Maximum payouts were made in respect of such
performance shares, including those held by Mr. Burns, based upon a planned
growth in Earnings Per Share in the 1990-93 award period of more than 12
percent. (Each of the executive officers of the Company who received such
payouts entered into an agreement with the Company providing for the repayment
of any amount in excess of the amount to which he was entitled upon completion
of the Company's audited financial statements.) The payout of the performance
shares for the 1991-94 award period was not accelerated and will be made in the
normal course in early 1995. Accordingly, no payouts of long-term incentive
compensation were made in 1994 other than to Mr. Toft under the Presidents' Plan
of CT&T, as explained below.
In determining the number of performance shares awarded each year, the
Compensation Committee has sought to achieve reasonable continuity. Except for
Messrs. Hart and Toft, the number of performance shares awarded to an executive
officer in 1994 for the 1995-98 award period was determined by adjusting the
prior year's award for changes in his salary from 1994 to 1995 and the price of
the Common Stock from late 1993 to late 1994. Consequently, the performance
share awards made in 1994 (as measured by the market value of the Common Stock
at the time of the grant) to executive officers other than Messrs. Hart and Toft
bore the same general relationship to such officers' salaries in 1995 as the
performance share awards made in 1993 bore to such officers' salaries in 1994.
Mr. Hart's awards in 1994 were granted on a basis consistent with awards granted
in past years to Mr. Cuming for the award periods 1994-97, 1993-96, 1992-95 and
1991-94. Mr. Toft was granted performance shares in 1994 in order to conform his
long-term incentive with his evolving role at the Company, in contrast to
previous years in which he was awarded performance units, the value of which
depended primarily upon the financial results of CT&T.
Maximum payouts on performance shares awarded for the 1995-98 award period
(assuming that the market price of the Common Stock on the payment date is the
same as on the date of the award), expressed as a percentage of the salaries
simultaneously established for 1995, would range from 144 percent in the case of
Mr. Burns to 126 percent in the case of the most junior executive officer. In
the case of the Company's most senior executive officers, these long-term
incentive compensation opportunities are believed to be close to the prevailing
practices in a broad cross-section of American
32
<PAGE> 35
industry; in the case of the Company's more junior executive officers, such
opportunities are believed to be somewhat more generous than such prevailing
practices. The awards reflect the Company's policy of emphasizing long-term
corporate performance and long-term incentive compensation opportunities over
short-term results and short-term incentive compensation opportunities.
In December 1994, the Compensation Committee made special tax paid grants
under the 1993 Plan to Messrs. Burns, Cuming and Hart of 2,500 shares of Common
Stock, 500 shares of Common Stock and 500 shares of Common Stock, respectively
(which grants are reflected in the columns labelled "Bonus" and "Other Annual
Compensation" in the Summary Compensation Table on page 11). These awards were
made in recognition of the completion of the sale of the Company's wholly owned
subsidiary Sacramento Savings Bank to First Interstate Bank of California on
October 31, 1994. Mr. Burns's award was also in recognition of other special
accomplishments during 1994.
Mr. Toft participates in various long-term incentive plans offered by CT&T.
Like the 1993 Plan, the CT&T plans provide for long-term incentives based upon
objective, quantifiable measures of corporate performance over a period of time,
but they utilize measures of CT&T's performance rather than measures of the
Company's performance.
As more fully explained in Note (3) to the Summary Compensation Table,
payouts under the CT&T 1989 Plan were based upon CT&T's cumulative operating
income over a three-year period (as adjusted by a multiplier based on CT&T's
return on equity and by a second multiplier based on dividends actually or
constructively paid by CT&T). The committee administering the CT&T 1989 Plan has
discretion to change the provisions relating to awards made thereunder in order
to adjust for the effect upon the final value of such awards of transactions of
an extraordinary, unusual or non-recurring nature.
In December 1993, with the approval of the Board of Directors upon the
recommendation of the Compensation Committee, and with the approval of the CT&T
Board of Directors, CT&T accelerated the payout of the performance units awarded
to Mr. Toft under the CT&T 1989 Plan for the 1991-93 award period, in view of
the enactment of the Revenue Reconciliation Act of 1993 described above. (Such
payouts were based on planned financial results of CT&T for 1993; Mr. Toft
entered into an agreement with CT&T providing for the repayment of any amount in
excess of the amount to which he was entitled upon completion of CT&T's audited
financial statements.) The payout of the performance units granted under the
successor to the CT&T 1989 Plan for the 1992-94 award period was not accelerated
and will be made in the normal course in early 1995. Accordingly, no payout of
long-term incentive compensation was made to Mr. Toft in 1994 other than under
the Presidents' Plan of CT&T, as explained below.
33
<PAGE> 36
In 1992 and 1993, Mr. Toft was granted long-term compensation awards under
the 1983 Plan and the 1993 Plan but, because he was President and Chief
Executive Officer of CT&T and Chief Executive Officer of Chicago Title Insurance
Company, his payouts with respect thereto were based upon the same performance
criteria that would have applied if such awards had been made under CT&T's
Executive Performance Unit Plan of 1992.
In 1994, Mr. Toft was awarded performance shares under the 1993 Plan for
the 1995-98 award period. Also in that year, Mr. Toft became Chairman of CT&T
and relinquished the position of Chief Executive Officer of Chicago Title
Insurance Company. In recognition of Mr. Toft's evolving role at CT&T and the
Company, one-half of his payout with respect thereto is based upon the level of
CT&T's total net income for the award period 1995-98, and one-half of his payout
is based upon the criteria applied to awards granted to the other executive
officers of the Company. The formula is more fully explained in Note (1) to the
table relating to long-term incentive plans.
The maximum payout on performance shares awarded to Mr. Toft for the
1995-98 period (assuming that the market price of the Common Stock on the
payment date is the same as on the date of the award, and based upon planned
levels of total net income for 1995-98 as set forth in CT&T's Financial Plan in
effect at 1994 year-end), would be 104 percent of his 1994 salary.
Pursuant to the Presidents' Plan of CT&T, a portion of the cash bonus
payable thereunder is deferred for three years and is subject to title insurance
claims experience during such three-year period, in an effort to encourage
better underwriting and claims control at CT&T. This formula is explained in
Note (2) to the table relating to long-term incentive plans.
The Company also provides to its executive officers other benefits, such as
retirement income, death benefits and savings credits, including those described
elsewhere in this proxy statement. The amounts of these benefits generally are
tied directly to salaries, as variously defined in the relevant plans. Such
additional benefits are believed to be typical of the benefits provided by other
public companies to their executives.
William K. Lavin
S. Arnold Zimmerman
Dan R. Carmichael
Compensation Committee
of the Board of Directors
34
<PAGE> 37
PERFORMANCE GRAPH
The following is a graph which compares for the years 1990-94 the
cumulative total stockholder return on the Common Stock, the cumulative total
return on the Standard & Poor's 500 Stock Index (the "S&P 500") and the
cumulative total return on the common stock of a group of "peer" issuers.
The Company is a moderately diversified business enterprise with the
majority of its revenues currently generated by its title insurance and
reinsurance operations and most of the remainder from its industrial minerals
and steel fastener operations. Except for the steel fastener operations, all of
these businesses were acquired within the last ten years and are conducted
through subsidiaries.
The group of "peer" issuers includes publicly held, diversified financial
services companies which were selected for their similarities to the Company in
terms of lines of business, recent history of acquisitions and dispositions,
holding company structure and/or concentration of ownership; nevertheless, the
Company believes that the "peer" issuers are significantly different from each
other and from the Company due to the individual characteristics of their
businesses. In addition to the Company, the group of "peer" issuers consists of
the following: American Express Company, Loews Corporation, Old Republic
International Corp., Transamerica Corporation, Kemper Corporation, Lincoln
National Corporation, ITT Corporation and American Premier Underwriters Inc.
(formerly, Penn Central Corporation).
<TABLE>
<CAPTION>
Measurement Period
(Fiscal Year Covered) Alleghany S&P 500 Peer Group
<S> <C> <C> <C>
1989 100.00 100.00 100.00
1990 94.89 96.90 95.10
1991 126.21 126.43 81.37
1992 155.12 136.06 113.68
1993 169.76 149.80 159.54
1994 183.41 151.78 181.79
</TABLE>
35
<PAGE> 38
The foregoing performance graph is based on the following assumptions: (i)
cash dividends are reinvested at the end of the month in which such dividends
are received and the Company's annual two-percent stock dividends are included
in the cumulative total stockholder return on the Common Stock; and (ii) total
returns on the common stock of "peer" issuers are weighted by stock market
capitalization at the beginning of each year.
2. DIRECTORS' EQUITY COMPENSATION PLAN
The Board of Directors believes it to be in the best interests of the
Company and its stockholders to encourage increased share ownership by directors
who are not employees of the Company or any of its subsidiaries, in order to
promote long-term stockholder value through continuing ownership of shares of
the Company's Common Stock. To provide for such increased share ownership, the
Board of Directors adopted the Alleghany Corporation Directors' Equity
Compensation Plan (the "Equity Plan") in January 1995. The Equity Plan is
intended to supplement the stock ownership opportunities offered by the
existing Amended and Restated Directors' Stock Option Plan and its predecessor,
which were approved by the stockholders of the Company at the 1994 and 1988
Annual Meetings, respectively.
The Equity Plan provides that, commencing in May 1995 and annually
thereafter, each director of the Company who is not an employee thereof or of
any of its subsidiaries shall receive his retainer for the following year's
service as a director, exclusive of any per meeting fees, committee fees or
expense reimbursements, fifty percent in shares of the Company's Common Stock
and fifty percent in cash. There are currently seven directors of the Company
who are not employees thereof or of any of its subsidiaries. The Equity Plan
provides that it shall be submitted to the stockholders of the Company for their
approval.
The Equity Plan is administered by the Board of Directors. The Board of
Directors shall, subject to the provisions of the Equity Plan, issue shares of
Common Stock under the Equity Plan in payment of fifty percent of the annual
retainer of directors who are not employees of the Company or its subsidiaries,
and has authority, within the limits of the Equity Plan, to prescribe the form
of agreement embodying payments in shares of the Company's Common Stock, to
construe the Equity Plan, to determine all questions arising thereunder and to
adopt and amend such rules and regulations for the administration of the Equity
Plan as it may deem desirable.
A maximum of 10,000 shares of Common Stock may be issued under the Equity
Plan, subject to antidilution and other adjustments in certain events specified
in the Equity Plan.
36
<PAGE> 39
Such shares of Common Stock may be either authorized but unissued shares or
shares held by the Company as treasury shares.
The Equity Plan provides that the total number of shares of Common Stock
payable to an eligible director is determined by dividing one-half of the
director's annual retainer by the market value of such shares, which is defined
as the average of the high and low sales prices of a share of the Company's
Common Stock as reported on the New York Stock Exchange Composite Transactions
Tape for all trading days during the April immediately preceding such payment.
No fractional shares will be issued by the Company; an amount in lieu thereof
shall be paid in cash. A director who does not serve as such for the full year
for which such Common Stock was paid will repay a pro-rata portion of his annual
retainer.
The Board of Directors may amend or terminate the Equity Plan at any time,
provided, however, that no such action shall materially and adversely affect any
right of any participant with respect to any annual retainer theretofore paid
under the Equity Plan without his written consent, and provided further, that no
amendment shall become effective, without the further approval of the
stockholders, if stockholder approval is required to enable the Equity Plan to
satisfy any applicable statutory or regulatory requirements, or if the Company,
on the advice of counsel, determines that stockholder approval is otherwise
necessary or desirable. In addition, in order to comply with rules and
regulations promulgated by the Securities and Exchange Commission, the Equity
Plan may not be amended more than once every six months other than to comport
with changes in the Internal Revenue Code of 1986, as amended, the Employee
Retirement Income Security Act of 1974, as amended, or the rules under either of
such laws. No shares may be issued under the Equity Plan after December 31,
2005.
The following table sets forth the aggregate amounts of cash and Common
Stock which would have been received by the seven directors who are not
employees of the Company or any of its subsidiaries, had the Equity Plan been in
effect during 1994.
37
<PAGE> 40
NEW PLAN BENEFITS
DIRECTORS' EQUITY COMPENSATION PLAN
<TABLE>
<CAPTION>
DOLLAR NUMBER OF SHARES
NAME AND POSITION VALUE($) OF COMMON STOCK
-------------------------------------------------- -------- ----------------
<S> <C> <C>
John J. Burns, Jr................................. -- --
President and chief
executive officer (1)
F.M. Kirby........................................ -- --
Chairman of the Board (1)
David B. Cuming................................... -- --
Senior Vice President (1)
Richard P. Toft................................... -- --
Senior Vice President;
President, Chief Executive
Officer and Chairman
of CT&T (1)
Robert M. Hart.................................... -- --
Senior Vice President,
General Counsel and
Secretary (1)
Theodore E. Somerville (1)........................ -- --
Executive Officers as a
group (1)....................................... -- --
Non-executive officer directors
as a group (seven
directors)...................................... $70,685(2) --
$69,315(3) 490(3)
Non-executive officer employees
as a group (1).................................. -- --
</TABLE>
---------------
(1) Such persons or groups are not entitled to participate in the Equity Plan,
but are included in the table pursuant to Securities and Exchange Commission
rules.
(2) Amount represents one-half of the aggregate annual retainer which would have
been paid in cash to the seven directors who are not employees of the
Company or any of its subsidiaries if the Equity Plan had been in effect
during 1994 ($70,000), plus an amount equal to cash in lieu of fractional
shares ($685). Effective July 1, 1994, the
38
<PAGE> 41
annual retainer paid to directors of the Company who are not employees
thereof or of any of its subsidiaries, was increased from $18,000 to
$22,000; amounts shown in the New Plan Benefits table are based on an annual
retainer equal to the average of such amounts ($20,000) for 1994. Such
annual retainer will increase to $26,000 commencing May 1, 1995 if the
stockholders of the Company approve the Equity Plan at the 1995 Annual
Meeting, or July 1, 1995 if such approval is not obtained.
(3) The number of shares of Common Stock was based upon the market value of the
Common Stock for April 1994, determined pursuant to the Equity Plan
($141.46). The cash amount represents the aggregate market value of such
number of shares of Common Stock.
A copy of the Equity Plan is set forth in full as Exhibit A to this proxy
statement. The foregoing description is a summary of some, but not all, of the
essential provisions of the Equity Plan, and is qualified by reference to the
full text of the Equity Plan.
Stockholder Approval of the Equity Plan
An affirmative vote of a majority of the shares of Common Stock present in
person or represented by proxy and entitled to vote at the 1995 Annual Meeting
is required to approve the Equity Plan. Shares which are voted against the
approval of the Equity Plan, shares the holders of which abstain from voting for
the approval of the Equity Plan, and shares held by brokers or nominees as to
which (i) such brokers or nominees do not have discretionary authority to vote
on this matter and (ii) instructions have not been received from the beneficial
owners of such shares ("broker non-votes") will not be counted in the total
number of shares voted for the approval of the Equity Plan. Abstentions and
broker non-votes will be counted as present at the meeting for quorum purposes.
Management recommends a vote "FOR" the approval of the Equity Plan. Proxies
solicited by the Board of Directors will be so voted unless stockholders specify
a contrary vote.
3. AMENDMENTS TO THE 1993 LONG-TERM INCENTIVE PLAN
The 1993 Plan was approved by the stockholders of the Company at their
Annual Meeting on April 23, 1993. The purpose of the 1993 Plan is to provide
long-term incentives to employees who are responsible for the continued success
and growth of the Company and its subsidiaries, and to assist the Company in
attracting and retaining executives of experience and ability on a basis
competitive with industry practices. The 1993 Plan permits the Company to
provide incentive compensation of the types commonly known as restricted stock,
stock options, stock appreciation rights, performance
39
<PAGE> 42
shares, performance units and phantom stock, as well as other types of incentive
compensation. No awards may be granted under the 1993 Plan after December 31,
2002.
The Board of Directors has adopted amendments to the 1993 Plan effective as
to awards granted on or after January 1, 1994 and awards with performance
periods which began in 1994, and is submitting such amendments for approval of
the stockholders of the Company. In accordance with regulations of the
Securities and Exchange Commission, the following information about the proposed
amendments also includes a full description of the 1993 Plan, as amended.
However, that description is a summary of some, but not all, of the essential
provisions of the 1993 Plan, as amended, and is qualified by reference to the
full text of the 1993 Plan, as amended. A copy of the 1993 Plan, as amended, is
set forth in full as Exhibit B to this proxy statement; the proposed amendments
are marked by underlining.
Reason for Proposed Amendments
Section 162(m) of the Internal Revenue Code of 1986, as amended (the
"Code"), generally disallows a deduction to the Company for compensation paid in
any year in excess of $1 million to the Company's chief executive officer and
the four other most highly compensated executive officers who are in the employ
of the Company at the end of the year. This deduction limit does not apply to
compensation that meets the specified requirements for "performance-based
compensation." Those requirements include the establishment of objective
performance goals as a condition to the payment of that compensation by a
committee of the Board of Directors composed solely of two or more outside
directors, stockholder approval of the material terms of the performance goals
under which the compensation is to be paid prior to payment of such
compensation, and certification by the committee that the performance goals have
been achieved.
The reason for these amendments to the 1993 Plan is to permit the deduction
by the Company of the income realized by certain officers in respect of awards
of long-term incentive compensation under the 1993 Plan as "performance-based
compensation" under Section 162(m). These amendments do not increase the amount
of compensation that may be paid under the 1993 Plan for officers of the
Company, and the qualification of such income as "performance-based
compensation" does not affect the taxation of the income realized by any
officer.
Description of Proposed Amendments
The amendments to the 1993 Plan provide that the Compensation Committee may
grant an award to any participant that is intended to qualify as
"performance-based
40
<PAGE> 43
compensation" under Section 162(m) (a "Qualifying Award"). However, the
Compensation Committee has the discretion to grant awards under the 1993 Plan
which are not Qualifying Awards.
Awards granted by the Compensation Committee which are intended to be
Qualifying Awards must be granted conditional upon the achievement of one or
more of the performance goals established by the Compensation Committee in
writing at the time the award is granted. These performance goals may vary from
participant to participant and award to award, and may be based upon the
attainment of specific amounts of, or increases in, one or more of the
following: revenues, operating income, cash flow, income before income taxes,
net income, earnings per share, net worth, stockholders' equity, return on
equity or assets or total return to stockholders, whether applicable to the
Company or any relevant subsidiary or business unit or entity in which the
Company has a significant investment, or any combination thereof as the
Compensation Committee may deem appropriate. The Compensation Committee can also
condition payment of any Qualifying Award upon the attainment of other
conditions, such as the completion of a specified period of service with the
Company, and can reduce the amount payable pursuant to such a Qualifying Award
even if the specified performance goal is attained. Prior to the payment of any
Qualifying Award, the Compensation Committee must certify in writing that the
performance goals were satisfied.
The amendments further provide that the maximum number of shares of Common
Stock with respect to which Qualifying Awards may be granted to any participant
in any calendar year shall be 15,000 shares of Common Stock (subject to
antidilution and other adjustments). Finally, the amendments restrict the
Compensation Committee's discretionary authority to make various adjustments in
any Qualifying Award if such adjustment would adversely affect its status as a
Qualifying Award.
Description of the 1993 Plan, as Amended
The 1993 Plan is administered by the Compensation Committee. No member of
the Compensation Committee, during the one-year period prior to such membership
or during such membership, shall be granted or awarded equity securities
pursuant to the 1993 Plan or any other plan of the Company or any of its
affiliates, except as permitted by Securities and Exchange Commission rules. The
Compensation Committee has authority to determine, within the limits of the 1993
Plan, the individuals to whom awards will be granted, and the type and size of
such awards, including any objectives or conditions for earning payment pursuant
to such awards.
The Compensation Committee may select participants in the 1993 Plan from
among the employees of the Company and its subsidiaries. The term "employee," as
used in the
41
<PAGE> 44
1993 Plan, means any person (including any officer or director) employed by the
Company or a subsidiary on a salaried basis, and the term "subsidiary," as used
in the 1993 Plan, means any corporation a majority of whose outstanding voting
securities is beneficially owned, directly or indirectly, by the Company. The
Company and its subsidiaries currently have approximately 9,115 employees.
Awards under the 1993 Plan may include, but need not be limited to, cash
and/or shares of the Company's Common Stock, rights to receive cash and/or
Common Stock and options to purchase shares of Common Stock, including options
intended to qualify as incentive stock options under section 422 of the Code,
and options not intended so to qualify. The Compensation Committee may also make
any other type of award deemed by it to be consistent with the purposes of the
1993 Plan.
A maximum of 300,000 shares of Common Stock may be paid to participants
under the 1993 Plan and/or purchased pursuant to stock options granted under the
1993 Plan, subject to antidilution and other adjustments in certain events
specified in the 1993 Plan. Such shares of Common Stock may be either authorized
but unissued shares or shares held by the Company as treasury shares.
The 1993 Plan provides that no stock option granted under the 1993 Plan
shall be exercisable more than twelve years after its grant and the price at
which shares of Common Stock may be purchased under any such stock option shall
not be less than 100 percent of its "fair market value," as defined in the 1993
Plan, on the date of grant. "Fair market value" is defined in the 1993 Plan
generally as the mean of the high and low sales prices of the Common Stock on
the relevant date as reported on the stock exchange or market on which the
Common Stock is primarily traded, or, if no sale is made on such date, then fair
market value is the weighted average of the mean of the high and low sales
prices of the Common Stock on the next preceding day and the next succeeding day
on which such sales were made as reported on the stock exchange or market on
which the Common Stock is primarily traded. Upon exercise of a stock option, the
option price is required to be paid in cash, or, at the discretion of the
Compensation Committee, in shares of Common Stock valued at the fair market
value thereof on the date of payment, or in a combination of cash and shares of
Common Stock.
The 1993 Plan authorizes the Compensation Committee, in the event of any
tender offer or exchange offer (other than an offer by the Company) for shares
of Common Stock, to take such action as it may deem appropriate to enable
recipients of outstanding awards to avail themselves of the benefits of such
offer, including acceleration of payment or exercise dates and purchase of
outstanding stock options.
42
<PAGE> 45
The Board of Directors, without the consent of any participant, may amend
or terminate the 1993 Plan at any time, provided, however, that no such action
shall adversely affect any rights or obligations with respect to any awards
theretofore made under the 1993 Plan, and provided further, that no such
amendment, without approval of the holders of a majority of the shares of Common
Stock voted thereon in person or by proxy, shall increase the number of shares
of Common Stock subject to the 1993 Plan, extend the period during which awards
may be granted, increase the maximum term for which stock options may be issued
under the 1993 Plan, decrease the minimum price at which stock options may be
issued under the 1993 Plan, or materially modify the requirements for
eligibility to participate in the 1993 Plan.
The per share fair market value (as defined in the 1993 Plan) of the
Company's Common Stock on March 1, 1995 was $156.75 and the aggregate market
value on such date of the 300,000 shares of Common Stock subject to the 1993
Plan was $47,025,000. There is no limit specified in the 1993 Plan on the amount
of cash which may be paid pursuant to awards granted under the 1993 Plan.
The Company's Deferred Compensation Plan, which provides for unfunded
deferred compensation arrangements for directors and officers of the Company,
permits deferrals of all or a portion of any payments under the 1993 Plan or any
successor long-term incentive plan.
Federal Income Tax Consequences
The grant and payment of awards of stock options under the 1993 Plan have
varying tax consequences to the Company and varying tax consequences to the
participant, depending upon the nature of the award and certain other
considerations.
A participant who is granted a non-qualified stock option will not realize
any income on the grant of the option. However, a participant will realize
ordinary income on the exercise of the option, in an amount equal to the excess
of the fair market value (at the time of exercise) of the shares of Common Stock
acquired over the option price. Any difference between such fair market value
and the price at which the Common Stock may be subsequently sold will be treated
as capital gain or loss, short-term or long-term, depending on the holding
period for the stock acquired upon the exercise of the option. Subject to the
deduction limit of Section 162(m) of the Code, the Company will be entitled to
deduct as compensation the amount realized by the recipient as ordinary income.
Special rules apply to awards of incentive stock options. A participant who
is granted an incentive stock option will not realize income upon the grant or
exercise of such
43
<PAGE> 46
option, provided that the optionee was an employee of the Company or a
subsidiary of the Company for the entire period from the date of grant until
three months before the date of exercise. If the optionee does not dispose of
the Common Stock acquired upon exercise of an incentive stock option for at
least two years after grant and at least one year after the Common Stock is
transferred to him, all gain subsequently realized upon the disposition of the
shares of Common Stock will be treated as long-term capital gain, and any loss
will be treated as long-term capital loss. If these holding periods are met, the
Company will not be allowed any deduction with respect to the exercise of the
incentive stock option.
The exercise of an incentive stock option may result in the imposition of
an alternative minimum tax. In lieu of the regular income tax, the alternative
minimum tax may be imposed in any taxable year on a taxpayer's alternative
minimum taxable income ("AMTI"), a specially calculated income tax base.
Generally, the difference between the option price and the fair market value of
the shares of Common Stock acquired upon exercise of an incentive stock option
on the date of exercise will be included in computing an optionee's AMTI in the
year of exercise. However, for purposes of determining AMTI in any later year
(but not the regular income tax liability), the basis of the shares of Common
Stock received will be increased by the amount included in the optionee's AMTI
in the year of exercise.
If the optionee disposes of the Common Stock acquired on the exercise of an
incentive stock option within two years from the date of grant or within one
year from the date of exercise, he will realize ordinary income in the amount of
the lesser of (i) the fair market value of the Common Stock on the date of
exercise less the option price, or (ii) the gain realized, provided the stock
was disposed of by sale or exchange. Any amount realized in excess of the fair
market value of the Common Stock on the date of exercise will be taxable as
long-term or short-term capital gain, depending on the period during which the
optionee has held the Common Stock. In such event, the Company will be allowed a
deduction, subject to the limit of Section 162(m) of the Code, equal to the
amount of ordinary income taxable to the optionee.
All or some part of the income realized upon the exercise of any incentive
stock option or non-qualified stock option that becomes exercisable upon a
change in control may constitute an "excess parachute payment" as described in
Section 280G of the Code. In that event the income realized could be subject to
a non-deductible 20 percent excise tax (in addition to regular income tax) and
may not be deductible by the Company. Furthermore, to the extent that the
aggregate fair market value of the Common Stock which can be acquired upon the
exercise of incentive stock options upon a change in
44
<PAGE> 47
control, when added to the aggregate fair market value of the Common Stock which
could be acquired upon the exercise of incentive stock options and which first
became exercisable in the calendar year, exceeds $100,000, the excess options
will not be treated as incentive stock options.
A special rule determines the amount of income and the date such income is
realized by a participant subject to Section 16(b) of the Securities Exchange
Act of 1934, as amended (the "Act"), who receives Common Stock upon the exercise
of a stock option within six months of the date of grant of the option. Such
rule provides that the recipient will, unless he elects otherwise within 30 days
of the date of exercise or transfer, realize ordinary income at the time of the
expiration of the six-month period from the date of grant or transfer based upon
the fair market value at that time.
New Plan Benefits
The following table sets forth the dollar value and number of performance
shares awarded in 1994 to participants in the 1993 Plan.
NEW PLAN BENEFITS
1993 LONG-TERM INCENTIVE PLAN, AS AMENDED
<TABLE>
<CAPTION>
DOLLAR VALUE
NAME AND POSITION ($)(1) NUMBER OF UNITS
---------------------------------------------- ------------ ---------------
<S> <C> <C>
John J. Burns, Jr............................. $ 719,887 4,916
President and chief
executive officer
F.M. Kirby.................................... -- --
Chairman of the Board
David B. Cuming............................... $ 346,032 2,363
Senior Vice President
Richard P. Toft............................... $ 439,313 3,000
Senior Vice President; President,
Chief Executive Officer
and Chairman of CT&T
Robert M. Hart................................ $ 346,032 2,363
Senior Vice President, General $ 331,772 2,296
Counsel and Secretary $ 372,521 2,578
$ 421,362 2,916
$ 378,301 2,618
</TABLE>
45
<PAGE> 48
<TABLE>
<CAPTION>
DOLLAR VALUE
NAME AND POSITION ($)(1) NUMBER OF UNITS
---------------------------------------------- ------------ ---------------
<S> <C> <C>
Theodore E. Somerville........................ -- --
Executive Officers as a group (2)............. $ 3,530,353 24,262
Non-executive officer directors
as a group.................................. -- --
Non-executive officer employees $ 2,389,308 16,535
as a group (3)..............................
</TABLE>
---------------
(1) Amounts represent the maximum estimated future payouts with respect to
performance shares awarded in 1994; such amounts in respect of Messrs.
Burns, Cuming, Toft and Hart are more fully described in Notes (1) and (3)
to the table relating to long-term incentive plans.
(2) In addition to amounts set forth in the table above for Messrs. Burns,
Cuming, Toft and Hart, these amounts include 1,212 performance shares
awarded to an executive officer of the Company not named in the Summary
Compensation table and the maximum estimated future payout (determined on a
basis consistent with performance shares awarded in 1994 to Messrs. Burns
and Cuming) with respect to such performance shares.
(3) Amounts include (i) 3,021 performance shares awarded to three non-executive
officers of the Company and the maximum estimated future payout (determined
on a basis consistent with performance shares awarded in 1994 to Messrs.
Burns and Cuming) with respect to such performance shares, and (ii) 13,514
performance shares awarded to an officer of a subsidiary of the Company and
the maximum estimated future payout (determined pursuant to a formula which
takes into account the level of total net income of such subsidiary over the
five-year award period commencing in 1995) with respect to such shares.
Stockholder Approval of Amendments to the 1993 Plan
An affirmative vote of a majority of the shares of Common Stock present in
person or represented by proxy and entitled to vote at the 1995 Annual Meeting
is required to approve the amendments to the 1993 Plan. Shares which are voted
against the approval of such amendments, shares the holders of which abstain
from voting for the approval of such amendments, and shares held by brokers or
nominees as to which (i) such brokers or nominees do not have discretionary
authority to vote on this matter and (ii) instructions have not been received
from the beneficial owners of such shares
46
<PAGE> 49
("broker non-votes") will not be counted in the total number of shares voted for
the approval of such amendments. Abstentions and broker non-votes will be
counted as present at the meeting for quorum purposes.
Performance shares issued to executive officers in 1993 and 1994 for award
periods commencing January 1, 1994 and 1995, respectively, were conditioned upon
stockholder approval to qualify such awards as "performance-based compensation"
for purposes of Section 162(m). In the event that the proposed amendments are
not approved by the stockholders of the Company, the 1993 Plan will remain in
effect as originally approved in 1993 and the Compensation Committee will
consider what action is advisable in respect of such outstanding awards in order
to compensate executive officers in lieu of the performance shares issued to
them in 1993 and 1994.
Management recommends a vote "FOR" the approval of the amendments to the
1993 Plan. Proxies solicited by the Board of Directors will be so voted unless
stockholders specify a contrary vote.
4. RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
The Board of Directors has selected KPMG Peat Marwick LLP, independent
certified public accountants, as independent auditors for the Company for the
year 1995. A resolution will be submitted to stockholders at the meeting for
ratification of such selection. Although ratification by stockholders is not a
prerequisite to the ability of the Board of Directors to select KPMG Peat
Marwick LLP as the Company's independent auditors, the Company believes such
ratification to be desirable. If the stockholders do not ratify the selection of
KPMG Peat Marwick LLP, the selection of independent auditors will be
reconsidered by the Board of Directors; however, the Board of Directors may
select KPMG Peat Marwick LLP notwithstanding the failure of the stockholders to
ratify its selection.
The Board of Directors recommends a vote "FOR" this resolution. Proxies
solicited by the Board of Directors will be so voted unless stockholders specify
a contrary vote. The resolution may be adopted by a majority of the votes cast
with respect thereto.
KPMG Peat Marwick LLP were Old Alleghany's auditors since 1947 and the
Company's auditors since its incorporation in November 1984.
It is expected that a representative of KPMG Peat Marwick LLP will be
present at the meeting, will have an opportunity to make a statement if he
desires to do so, and will be available to respond to appropriate questions.
47
<PAGE> 50
5. ALL OTHER MATTERS THAT MAY COME BEFORE THE MEETING
As of the date of this statement, the Board of Directors knows of no
business that will be presented for consideration at the meeting other than that
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.
6. STOCKHOLDER NOMINATIONS AND PROPOSALS
The Nominating Committee of the Board of Directors will receive at any time
and will consider from time to time suggestions from stockholders as to persons
to be nominated by the Board of Directors for election thereto by the
stockholders or to be chosen by the Board of Directors to fill newly created
directorships or vacancies on the Board of Directors.
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 by or at the direction of the Board of
Directors), as well as the submission of a proposal (other than a proposal
submitted by or at the direction of the Board of Directors), at a meeting of
stockholders. In order for any such nomination or submission to be proper, the
notice must contain certain information concerning the nominating or proposing
stockholder, and the nominee or the proposal, as the case may be, and must be
furnished to the Company generally not less than 30 days prior to the meeting. A
copy of the applicable by-law provisions may be obtained, without charge, upon
written request to the Secretary of the Company at its principal executive
offices.
In accordance with the rules of the Securities and Exchange Commission, any
proposal of a stockholder intended to be presented at the Company's 1996 Annual
Meeting of Stockholders must be received by the Secretary of the Company by
November 28, 1995 in order for the proposal to be considered for inclusion in
the Company's notice of meeting, proxy statement and proxy relating to the 1996
Annual Meeting, scheduled for Friday, April 26, 1996.
48
<PAGE> 51
7. ADDITIONAL INFORMATION
At any time prior to their being voted, the enclosed proxies are revocable
by written notice to the Secretary of the Company or by appearance at the
meeting and voting in person. A quorom comprising the holders of a majority of
the outstanding shares of Common Stock on the record date must be present in
person or represented by proxy for the transaction of business at the 1995
Annual Meeting.
Solicitation of proxies will be made by mail, telephone and, to the extent
necessary, by telegrams and personal interviews. Expenses in connection with the
solicitation of proxies will be borne by the Company. Brokers, custodians and
fiduciaries will be requested to transmit proxy material to the beneficial
owners of Common Stock held of record by such persons, at the expense of the
Company. The Company has retained Kissel-Blake Inc. to aid in the solicitation
of proxies, and for its services the Company expects to pay fees of
approximately $7,500 plus expenses.
By order of the Board of Directors
ROBERT M. HART
Senior Vice President, General Counsel
and Secretary
March 27, 1995
49
<PAGE> 52
EXHIBIT A
ALLEGHANY CORPORATION
DIRECTORS' EQUITY COMPENSATION PLAN
1. PURPOSE. The purpose of the Alleghany Corporation Directors' Equity
Compensation Plan (the "Plan") is to advance the interests of Alleghany
Corporation (the "Company") and its stockholders by encouraging increased stock
ownership by members of the Board of Directors (the "Board") of the Company who
are not employees of the Company or any of its subsidiaries, in order to promote
long-term stockholder value through continuing ownership of the Company's common
stock.
2. ADMINISTRATION. The Plan shall be administered by the Board. The Board
shall have all the powers vested in it by the terms of the Plan, such powers to
include authority (within the limitations described herein) to prescribe the
form of the agreement embodying payments in shares of the Company's common stock
made under the Plan. The Board shall have the power to construe the Plan, to
determine all questions arising thereunder and, subject to the provisions of the
Plan, to adopt and amend such rules and regulations for the administration of
the Plan as it may deem desirable. Any decision of the Board in the
administration of the Plan shall be final and conclusive. The Board may act only
by a majority of its members in office, except that the members thereof may
authorize any one or more of their number or the Secretary or any other officer
of the Company to execute and deliver documents on behalf of the Company. No
member of the Board shall be liable for anything done or omitted to be done by
him or by any other member of the Board in connection with the Plan, except for
his own willful misconduct or as expressly provided by statute.
3. PARTICIPATION. Each member of the Board of the Company who is not an
employee of the Company or any of its subsidiaries (a "Non-Employee Director")
shall be eligible to receive stock payments (each, a "Stock Payment") as a
portion of the annual retainer payable to such Non-Employee Director in shares
of the Company's common stock, $1.00 par value ("Common Stock"), in accordance
with Paragraph 5 below. As used herein, the term "subsidiary" means any
corporation at least 40 percent of whose outstanding voting stock is owned,
directly or indirectly, by the Company.
4. SHARES OF STOCK SUBJECT TO PLAN. Subject to adjustment as provided in
Paragraph 6 below, the shares of Common Stock paid to Non-Employee Directors
under the Plan shall not exceed an aggregate of 10,000 shares. Shares to be
delivered under the Plan may be
A-1
<PAGE> 53
either authorized but unissued shares of Common Stock or shares of Common Stock
held by the Company as treasury shares.
5. ANNUAL RETAINER.
(a) Annual Retainer. Commencing in May 1995 and in each May thereafter,
each Non-Employee Director shall receive for the following year's service as a
director of the Company his annual retainer, exclusive of any per meeting fees,
committee fees or expense reimbursements, as set from time to time by the Board
("Annual Retainer") fifty percent in the form of a Stock Payment and fifty
percent in cash.
(b) Date of Payment, Number of Shares Comprising Stock Payment. The Annual
Retainer shall be paid in May of each year. The total number of shares of Common
Stock included in each Stock Payment shall be determined by dividing the amount
of a Non-Employee Director's Annual Retainer that is to be paid in shares of
Common Stock by the Market Price of a share of Common Stock. For purposes of the
Plan, Market Price is the average of the high and low sales prices of a share of
Common Stock as reported on the New York Stock Exchange Composite Transactions
Tape for all trading days during the immediately preceding April. No fractional
shares will be issued by the Company. An amount in lieu thereof shall be paid in
cash based upon the Market Price of such fractional share.
(c) Adjustment of Annual Retainer. If a Non-Employee Director's services
as a board member are terminated prior to the next annual meeting of the
Company's stockholders, for any reason, a pro rata portion of the Annual
Retainer reflecting payment for service during the remainder of such annual term
shall be repaid to the Company by such Non-Employee Director promptly after such
termination.
6. DILUTION AND OTHER ADJUSTMENTS. In the event of any change in the
outstanding shares of Common Stock of the Company by reason of any stock split,
stock dividend, recapitalization, merger, consolidation, reorganization,
combination or exchange of shares or other similar event, the number or kind of
shares that may be issued under the Plan pursuant to Paragraph 4 above shall be
automatically adjusted to give effect to the occurrence of such event.
7. MISCELLANEOUS PROVISIONS.
(a) Except as expressly provided for in the Plan, no Non-Employee Director
or other person shall have any claim or right to receive Stock Payments. Neither
the Plan nor any action taken hereunder shall be construed as giving any
Non-Employee Director any right to be retained in the service of the Company.
A-2
<PAGE> 54
(b) No shares of Common Stock shall be issued hereunder unless counsel for
the Company shall be satisfied that such issuance will be in compliance with
applicable federal, state and other securities laws.
(c) It shall be a condition to the obligation of the Company to issue
shares of Common Stock pursuant to a Stock Payment, that the participant pay to
the Company, upon its demand, such amount as may be requested by the Company for
the purpose of satisfying any liability to withhold federal, state, local or
foreign income or other taxes.
(d) The expenses of the Plan shall be borne by the Company.
8. AMENDMENT OR DISCONTINUANCE. The Plan may be amended or modified at
any time and from time to time by the Board as the Board shall deem advisable,
provided, however, that no amendment or modification may become effective
without approval by the stockholders of the Company in accordance with Paragraph
10 below if stockholder approval is required to enable the Plan to satisfy any
applicable statutory or regulatory requirements, or if the Company, on the
advice of counsel, determines that stockholder approval is otherwise necessary
or desirable, and provided further, that no amendment or modification shall be
made more than once every six months, other than to comport with changes in the
Internal Revenue Code of 1986, as amended, the Employment Retirement Income
Security Act of 1974, as amended, or the rules promulgated thereunder. No
amendment or modification of the Plan shall materially and adversely affect any
right of any participant with respect to any Annual Retainer theretofore paid,
without such participant's written consent.
9. TERMINATION. The Plan shall terminate upon the earlier of the
following dates or events to occur:
(a) upon the adoption of a resolution of the Board terminating the Plan; or
(b) December 31, 2005.
No termination of the Plan shall materially and adversely affect any of the
rights or obligations of any person, without his consent, with respect to any
Annual Retainer theretofore paid under the Plan.
10. STOCKHOLDER APPROVAL. The Plan shall be submitted to the stockholders
of the Company for their approval. Except to the extent otherwise required by
the Company's Restated Certificate of Incorporation or the Company's By-Laws,
the stockholders shall be deemed to have approved the Plan if and when it is
approved at a meeting of the stockholders by a majority of the voting power of
the Voting Stock (all as defined in the Company's Restated Certificate of
Incorporation) present in person or represented by proxy and entitled to vote at
such meeting.
January 16, 1995
A-3
<PAGE> 55
EXHIBIT B
ALLEGHANY CORPORATION
1993 LONG-TERM INCENTIVE PLAN
(AS AMENDED AND RESTATED
EFFECTIVE AS OF JANUARY 1, 1994)*
1. PURPOSES OF THE PLAN. The purposes of the Alleghany Corporation 1993
Long-Term Incentive Plan ("the Plan") are to further the long-term growth of
Alleghany Corporation ("the Corporation"), to the benefit of its stockholders,
by providing incentives to the officers and employees of the Corporation and its
subsidiaries who will be largely responsible for such growth, and to assist the
Corporation in attracting and retaining executives of experience and ability on
a basis competitive with industry practices. The Plan permits the Corporation to
provide incentive compensation of the types commonly known as restricted stock,
stock options, stock appreciation rights, performance shares, performance units
and phantom stock, as well as other types of incentive compensation.
2. ADMINISTRATION OF THE PLAN. The Plan shall be administered by the
Compensation Committee of the Board of Directors of the Corporation (the
"Committee"). No member of the Committee, during the one year period prior to
such membership or during such membership, shall be granted or awarded equity
securities pursuant to the Plan or any other plan of the Corporation or any of
its affiliates, except as permitted by Rule 16b-3(c)(2)(i) promulgated under the
Securities Exchange Act of 1934, as amended, as such Rule may be amended from
time to time. Subject to the provisions of the Plan, the Committee shall have
exclusive power to select the employees to participate in the Plan, to determine
the type, size and terms of awards to be made to each participant selected, and
to determine the time or times when awards will be granted. The Committee's
interpretation of the Plan or of any awards granted thereunder shall be final
and binding on all parties concerned, including the Corporation and any
participant. The Committee shall have authority, subject to the provisions of
the Plan, to establish, adopt and revise such rules, regulations, guidelines,
forms of agreements and instruments relating to the Plan as it may deem
necessary or advisable for the administration of the Plan.
3. PARTICIPATION. Participants in the Plan shall be selected by the Committee
from among the employees of the Corporation and its subsidiaries. The term
"employee" shall mean any person (including any officer or director) employed by
the Corporation or a subsidiary on a salaried basis. The term "subsidiary" shall
mean any corporation a majority of whose outstanding voting securities is
beneficially owned, directly or indirectly, by the Corporation. Participants may
receive multiple awards under the Plan.
---------------
* Underlining reflects proposed amendments.
B-1
<PAGE> 56
4. AWARDS.
(a) Types. Awards under the Plan may include, but need not be limited to,
cash and/or shares of the Corporation's common stock, $1.00 par value ("Common
Stock"), rights to receive cash and/or shares of Common Stock, and options
("Options") to purchase shares of Common Stock, including options intended to
qualify as incentive stock options under section 422 of the Internal Revenue
Code of 1986, as amended, and options not intended so to qualify. The Committee
may also make any other type of award deemed by it to be consistent with the
purposes of the Plan.
(b) Certain Qualifying Awards. The Committee, in its sole discretion, may
--------------------------------------------------------------------------
grant an award to any participant with the intent that such award qualifies as
------------------------------------------------------------------------------
"performance-based compensation" under Section 162(m) of the Internal Revenue
-----------------------------------------------------------------------------
Code of 1986, as amended (a "Qualifying Award"). The right to receive (or
-------------------------------------------------------------------------
retain) any award granted as a Qualifying Award shall be conditional upon the
-----------------------------------------------------------------------------
achievement of performance goals established by the Committee in writing at the
-------------------------------------------------------------------------------
time such award is granted. Such performance goals, which may vary from
-----------------------------------------------------------------------
participant to participant and award to award, shall be based upon the
----------------------------------------------------------------------
attainment of specific amounts of, or increases in, one or more of the
----------------------------------------------------------------------
following: revenues, operating income, cash flow, income before income taxes,
-----------------------------------------------------------------------------
net income, earnings per share, net worth, stockholders' equity, return on
--------------------------------------------------------------------------
equity or assets or total return to stockholders, whether applicable to the
---------------------------------------------------------------------------
Corporation or any relevant subsidiary or business unit or entity in which the
------------------------------------------------------------------------------
Corporation has a significant investment, or any combination thereof as the
---------------------------------------------------------------------------
Committee may deem appropriate. Prior to the payment of any award granted as a
------------------------------------------------------------------------------
Qualifying Award, the Committee shall certify in writing that the performance
-----------------------------------------------------------------------------
goals were satisfied. The maximum number of shares of Common Stock with respect
-------------------------------------------------------------------------------
to which Qualifying Awards may be granted to any participant in any calendar
----------------------------------------------------------------------------
year shall be 15,000 shares of Common Stock, subject to adjustment as provided
------------------------------------------------------------------------------
in section 7(a) hereof.
-----------------------
(c) Deferred Payments. In awarding any right to receive cash and/or shares
of Common Stock, the Committee may specify that the payment of all or any
portion of such cash and/or shares of Common Stock shall be deferred until a
later date. Deferrals shall be for such periods and upon such other terms as the
Committee may determine.
(d) Vesting, Other Performance Requirements and Forfeiture. In awarding
-----
any Options or any rights to receive cash and/or shares of Common Stock
(including Qualifying Awards), the Committee (1) may specify that the right to
-----------------------------
exercise such Options or the right to receive payment of such cash and/or shares
of Common Stock shall be conditional upon the fulfillment of specified
conditions, including, without limitation, completion of specified periods of
service in the employ of the Corporation or its subsidiaries, and the
achievement of specified business and/or personal performance
B-2
<PAGE> 57
goals, and (2) may provide for the forfeiture of all or any portion of any such
Options or rights in specified circumstances. The Committee may also specify by
whom and/or in what manner the accomplishment of any such performance goals
shall be determined.
(e) Agreements. Any award under the Plan may, in the Committee's
discretion, be evidenced by an agreement, which, subject to the provisions of
the Plan, may contain such terms and conditions as may be approved by the
Committee, and shall be executed by an officer on behalf of the Corporation and
by the recipient of the award.
5. SHARES OF STOCK SUBJECT TO THE PLAN. Subject to adjustment as provided in
section 7(a) hereof, the number of shares of Common Stock which may be paid to
participants under the Plan and/or purchased pursuant to Options granted under
the Plan shall not exceed an aggregate of 300,000 shares. Shares to be delivered
or purchased under the Plan may be either authorized but unissued shares of
Common Stock or shares of Common Stock held by the Corporation as treasury
shares.
6. OPTIONS.
(a) Term of Options. The term of any Option shall be determined by the
Committee, but in no event shall any Option be exercisable more than twelve
years after the date on which it was granted.
(b) Option Price; Fair Market Value. The price ("Option Price") at which
shares of Common Stock may be purchased pursuant to any Option shall be
determined by the Committee at the time the Option is granted, but in no event
shall the Option Price be less than 100 per cent of the Fair Market Value of
such shares on the date the Option is granted. For purposes of the Plan, Fair
Market Value is the mean of the high and low sales prices of the Common Stock on
the relevant date as reported on the stock exchange or market on which the
Common Stock is primarily traded, or, if no sale is made on such date, then Fair
Market Value is the weighted average of the mean of the high and low sales
prices of the Common Stock on the next preceding day and the next succeeding day
on which such sales were made as reported on the stock exchange or market on
which the Common Stock is primarily traded.
(c) Payment Upon Exercise. Upon exercise of an Option, the Option Price
shall be payable to the Corporation in cash, or, at the discretion of the
Committee, in shares of Common Stock valued at the Fair Market Value thereof on
the date of payment, or in a combination of cash and shares of Common Stock.
(d) Stock Appreciation Rights; Surrender of Options. The Corporation may,
if the Committee so determines, accept the surrender by a participant, or the
personal
B-3
<PAGE> 58
representative of a participant, of an Option, in consideration of a payment by
the Corporation equal to the difference obtained by subtracting the aggregate
Option Price from the aggregate Fair Market Value of the Common Stock covered by
the Option on the date of such surrender, such payment to be in cash, or, if the
Committee so provides, in shares of Common Stock valued at Fair Market Value on
the date of such surrender, or partly in shares of Common Stock and partly in
cash.
(e) Effect of Expiration, Termination or Surrender of Options. If an
Option shall expire or terminate unexercised as to any shares of Common Stock
covered thereby, such shares of Common Stock shall not be deducted from the
number available under section 5 hereof. If an Option shall be surrendered as
provided in section 6(d) hereof, the shares of Common Stock (if any) paid in
consideration of such surrender, but not the shares which had been covered by
the Option, shall be deducted from the number available under section 5 hereof.
7. DILUTION AND OTHER ADJUSTMENTS.
(a) Changes in Capital Structure. In the event of any subdivision or
combination of the outstanding shares of Common Stock, stock dividend, capital
reorganization, liquidation, reclassification of shares, merger, consolidation,
or sale, lease or transfer of substantially all of the assets of the
Corporation, the Board of Directors of the Corporation shall make such equitable
adjustments as it may deem appropriate in the Plan and the awards thereunder,
including, without limitation, an adjustment in the total number of shares of
--
Common Stock which may thereafter be delivered or purchased under the Plan and
---
in the maximum number of shares of Common Stock with respect to which awards may
--------------------------------------------------------------------------------
be granted to any participant in any year under Section 4(b) hereof. Agreements
--------------------------------------------------------------------
evidencing Options may include such provisions as the Committee may deem
appropriate with respect to the adjustments to be made to the terms of such
Options upon the occurrence of any of the foregoing events.
(b) Tender Offers and Exchange Offers. In the event of any tender offer or
exchange offer, by any person other than the Corporation, for shares of Common
Stock, the Committee may make such adjustments in outstanding awards and
authorize such further action as it may deem appropriate to enable the
recipients of outstanding awards to avail themselves of the benefits of such
offer, including, without limitation, acceleration of the exercise date of
outstanding Options so that they become immediately exercisable in whole or in
part, or offering to acquire all or any portion of specified categories of
Options for a price determined pursuant to section 6(d) hereof, or acceleration
of the payment of outstanding awards payable, in whole or in part, in shares of
Common Stock.
B-4
<PAGE> 59
(c) Limits on Discretion to Make Adjustments. Notwithstanding any
------------------------------------------------------------------
provision of this section 7 to the contrary, no adjustment shall be made in any
-------------------------------------------------------------------------------
outstanding Qualifying Awards to the extent that such adjustment would adversely
-------------------------------------------------------------------------------
affect the status of that Qualifying Award as "performance-based compensation"
------------------------------------------------------------------------------
under Section 162(m) of the Internal Revenue Code of 1986, as amended.
----------------------------------------------------------------------
8. MISCELLANEOUS PROVISIONS.
(a) Right to Awards. No employee or other person shall have any claim or
right to be granted any award under the Plan.
(b) Rights as Stockholders. A participant shall have no rights as a holder
of Common Stock by reason of awards under the Plan, unless and until
certificates for shares of Common Stock are issued to the participant.
(c) No Assurance of Employment. Neither the Plan nor any action taken
thereunder shall be construed as giving any employee any right to be retained in
the employ of the Corporation or any subsidiary.
(d) Costs and Expenses. All costs and expenses incurred in administering
the Plan shall be borne by the Corporation.
(e) Unfunded Plan. The Plan shall be unfunded. The Corporation shall not
be required to establish any special or separate fund nor to make any other
segregation of assets to assure the payment of any award under the Plan.
(f) Withholding Taxes. The Corporation shall have the right to deduct from
all awards hereunder paid in cash any federal, state, local or foreign taxes
required by law to be withheld with respect to such payments and, with respect
to awards paid in stock, to require the payment (through withholding from the
participant's salary or otherwise) of any such taxes, but the Committee may make
such arrangements for the payment of such taxes as the Committee in its
discretion shall determine, including payment with shares of Common Stock.
(g) Assignment or Transfer. No awards under the Plan nor any rights or
interests therein shall be assignable or transferable by the recipient thereof
except, in the event of a participant's death, to his designated beneficiary as
hereinafter provided, or by will or the laws of descent and distribution. During
the lifetime of the recipient, awards under the Plan requiring exercise shall be
exercisable only by such holder or by the guardian or legal representative of
such holder.
B-5
<PAGE> 60
(h) Beneficiary. Any payments on account of awards under the Plan to a
deceased participant shall be paid to such beneficiary as has been designated by
the participant in writing to the Secretary of the Corporation or, in the
absence of such designation, according to the laws of descent and distribution.
(i) Nature of Benefits. Awards under the Plan, and payments made pursuant
thereto, are not a part of salary or base compensation.
(j) Compliance with Legal Requirements. The obligation of the Corporation
to issue or deliver shares of Common Stock upon exercise of Options or otherwise
shall be subject to satisfaction of all applicable legal and securities exchange
requirements, including, without limitation, the provisions of the Securities
Act of 1933, as amended, and the Securities Exchange Act of 1934, as amended.
The Corporation shall endeavor to satisfy all such requirements in such a manner
as to permit at all times the exercise of all outstanding Options in accordance
with their terms, and to permit the issuance and delivery of shares of Common
Stock whenever provided for by the terms of any award made under the Plan.
9. AMENDMENT OR TERMINATION OF THE PLAN. The Board of Directors of the
Corporation, without the consent of any participant, may at any time terminate
or from time to time amend the Plan in whole or in part, provided, however, that
no such action shall adversely affect any rights or obligations with respect to
any awards theretofore made under the Plan, and provided further, that no
amendment, without approval of the holders of Common Stock by an affirmative
vote of a majority of the shares of Common Stock voted thereon in person or by
proxy, shall (i) increase the aggregate number of shares subject to the Plan
(other than increases pursuant to section 7 hereof), (ii) extend the period
during which awards may be granted under the Plan, (iii) increase the maximum
term for which Options may be issued under the Plan, (iv) decrease the minimum
Option Price at which Options may be issued under the Plan, or (v) materially
modify the requirements for eligibility to participate in the Plan. With the
consent of the participants affected, the Committee may amend outstanding
agreements evidencing awards under the Plan, and may amend the terms of awards
not evidenced by such agreements, in any manner not inconsistent with the terms
of the Plan.
10. EFFECTIVE DATE AND TERM OF PLAN. The Plan, as amended and restated, shall
------------------------
be effective as to awards granted on or after January 1, 1994, and awards with
-----------------------------------------------------------------
performance periods which begin in 1994, and shall become effective when
------------------------------------------------------------------------
approved at a meeting of stockholders by a majority of the voting power of the
------------------------------------------------------------------------------
Voting Stock (all as defined in the Corporation's Restated Certificate of
-------------------------------------------------------------------------
Incorporation) present in person or represented by proxy and entitled to vote at
--------------------------------------------------------------------------------
such meeting. The Plan shall terminate at the close of
-------------
B-6
<PAGE> 61
business on December 31, 2002, unless sooner terminated by action of the Board
of Directors of the Corporation. No award may be granted hereunder after
termination of the Plan, but such termination shall not affect the validity of
any award then outstanding.
11. LAW GOVERNING. The validity and construction of the Plan and any
agreements entered into thereunder shall be governed by the laws of the State of
New York, but without regard to the conflict laws of the State of New York
except to the extent that such conflict laws require application of the laws of
the State of Delaware.
B-7
<PAGE> 62
ALLEGHANY CORPORATION
PROXY FOR ANNUAL MEETING ON APRIL 28, 1995
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints F.M. Kirby, John J. Burns, Jr. and John E.
Tobin proxies, each with the power to appoint his substitute and with authority
in each to act in the absence of the other, to represent and to vote all shares
of stock of Alleghany Corporation which the undersigned is entitled to vote at
the Annual Meeting of Stockholders of Alleghany Corporation to be held at the
Four Seasons Biltmore Hotel, 1260 Channel Drive, Santa Barbara, California, on
Friday, April 28, 1995 at 10:00 a.m., local time, and any adjournments thereof,
as indicated on the proposals described in the Proxy Statement, and all other
matters properly coming before the meeting.
IMPORTANT--THIS PROXY MUST BE SIGNED AND DATED ON THE REVERSE SIDE.
PROXY
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY.
[ ]
A VOTE FOR ITEMS 1, 2, 3 AND 4 IS RECOM-
---
MENDED BY THE BOARD OF DIRECTORS
<TABLE>
<S> <C> <C> <C>
1. Election of Directors
FOR ALL
Allan P. Kirby, Jr. John E. Tobin James F. Will FOR WITHHOLD EXCEPT
/ / / / / /
</TABLE>
INSTRUCTION: To withhold authority to vote for an individual nominee, write
that nominee's name in the following space:
------------------------------------------------------------------------------
FOR AGAINST ABSTAIN
2. Approval of the Company's Directors / / / / / /
Equity Compensation Plan.
3. Approval of amendments to the Company's / / / / / /
1993 Long-Term Incentive Plan.
4. Ratification of appointment of KPMG Peat / / / / / /
Marwick LLP as independent auditors for
the year 1995.
Dated , 1995
------------------
-------------------------------------- -------------------------------------
Signature Signature
Please sign exactly as your name or names appear hereon. For joint accounts,
both owners should sign. When signing as executor, administrator, attorney,
trustee or guardian, etc., please give your full title.
THIS PROXY WILL BE VOTED IN ACCORDANCE WITH SPECIFICATIONS MADE. IF NO CHOICES
ARE INDICATED, THIS PROXY WILL BE VOTED FOR ITEMS 1, 2, 3 AND 4.
---
