<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
375 PARK AVENUE
NEW YORK, NEW YORK 10152
------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
APRIL 26, 1996 AT 2:00 P.M., LOCAL TIME
------------------
CHICAGO TITLE AND TRUST COMPANY
171 NORTH CLARK STREET
TENTH FLOOR
CHICAGO, ILLINOIS
Notice is hereby given that the 1996 Annual Meeting of Stockholders of
Alleghany Corporation (the "Company") will be held at Chicago Title and Trust
Company, 171 North Clark Street, Tenth Floor, Chicago, Illinois, on Friday,
April 26, 1996 at 2:00 p.m., local time, for the following purposes:
1. To elect three directors for terms expiring in 1999.
2. 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 1996.
3. 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, 1996 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 28, 1996 [Recycled Paper Logo]
<PAGE> 3
ALLEGHANY CORPORATION
375 PARK AVENUE
NEW YORK, NEW YORK 10152
PROXY STATEMENT
------------------
ANNUAL MEETING OF STOCKHOLDERS TO BE HELD APRIL 26, 1996
------------------
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 1996 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 28, 1996.
The Board of Directors has fixed the close of business on March 1, 1996 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 1996 Annual Meeting.
On March 1, 1996, there were outstanding and entitled to vote 7,056,993
shares of Common Stock. The number of shares of Common Stock as of March 1,
1996, 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, 1996 to stockholders of record at the close of
business on April 1, 1996.
PRINCIPAL STOCKHOLDERS
As of March 1, 1996, approximately 36.6 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, 1996 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............... 281,020 607,012 888,032(1) 12.6
17 DeHart Street
P.O. Box 151
Morristown, NJ 07963
Allan P. Kirby, Jr....... 598,105 -- 598,105(2) 8.5
14 E. Main Street
P.O. Box 90
Mendham, NJ 07945
Grace Kirby Culbertson... 135,592 250,483 386,075(3) 5.5
Blue Mill Road
Morristown, NJ 07960
Ann Kirby Kirby.......... 317,881 392,786 710,667(4) 10.1
c/o Carter,
Ledyard & Milburn
2 Wall Street
New York, NY 10005
Southeastern Asset
Management, Inc........ (5) (5) 670,965(5) 9.5
6075 Poplar Avenue
Suite 900
Memphis, TN 38119
Neuberger & Berman L.P... 156,315 408,308 408,308(6) 5.8
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; 415,448 shares held by a trust of
which Mr. Kirby is co-trustee and primary beneficiary; and 191,564 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 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 170,676 shares
directly.
2
<PAGE> 5
(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 7,727 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 210,777 shares directly.
(3) Includes 40,263 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 135,592 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 1995 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 172,952 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, 1995 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 1, 1996 to a Schedule 13G statement
filed by Southeastern Asset Management, Inc. ("Southeastern"), an investment
advisor, Southeastern had sole voting power over 490,325 shares, shared
voting power over 142,448 shares and no voting power over 38,192 shares, for
a total of 670,965 shares. Its dispositive power with respect to such shares
was reported as
3
<PAGE> 6
follows: sole dispositive power over 527,393 shares, shared dispositive
power over 142,448 shares and no dispositive power over 1,124 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 142,448
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 L.P., a
broker-dealer and investment advisor, which statement was most recently
amended on February 12, 1996, Neuberger & Berman L.P. had sole voting power
over 156,315 shares and shared dispositive power over 408,308 shares, which
number includes those shares over which it had sole voting power. The
statement indicated that Neuberger & Berman L.P. 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 4,837 shares owned by partners of Neuberger & Berman L.P. in
their personal securities accounts. Neuberger & Berman L.P. disclaimed
beneficial ownership of these shares since such shares were purchased with
the personal funds of such partners and each such partner has exclusive
dispositive and voting power over the shares held in his or her account.
4
<PAGE> 7
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.
S. Arnold Zimmerman, whose term expires this year, is retiring from the
Board of Directors at age 76, and is not a nominee for election for an
additional term. F.M. Kirby, Paul F. Woodberry and Roger Noall have been
nominated by the Board of Directors for election as directors at the 1996 Annual
Meeting, each to serve for a term of three years, until the 1999 Annual Meeting
of Stockholders and until his successor is duly elected and qualified. Messrs.
F.M. Kirby and Woodberry were last elected by stockholders of the Company at
their Annual Meeting on April 23, 1993. Mr. Noall has been nominated by the
Board of Directors to fill the vacancy resulting from Mr. Zimmerman's
retirement.
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 1996 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 1997 or 1998.
5
<PAGE> 8
<TABLE>
<S> <C> <C>
------------------
Nominee for Election: Chairman of the Board, Alleghany Corporation;
F.M. Kirby director, World Minerals Inc. Member of the
Age 76 [PHOTO] Executive Committee.
Director since 1958
------------------
------------------
Financial Consultant; director, BF
Nominee for Election: Enterprises, Inc., World Minerals Inc., URC
Paul F. Woodberry [PHOTO] Holdings Corp. and its subsidiaries, and
Age 68 Alleghany Properties, Inc. and its
Director since 1979 subsidiary.
------------------
------------------
Nominee for Election: Senior Executive Vice President, Chief
Roger Noall Administrative Officer, General Counsel and
Age 60 [PHOTO] Secretary, KeyCorp (banking).
------------------
President, Alleghany Corporation; director,
------------------ Burlington Northern Santa Fe Corporation,
Armco Inc., Chicago Title and Trust Company,
John J. Burns, Jr. Chicago Title Insurance Company, The Chicago
Age 64 [PHOTO] Trust Company, Mineral Holdings Inc., World
Director since 1968 Minerals Inc., and URC Holdings Corp. and its
Term expires in 1997 subsidiaries. Chairman of the Nominating
------------------ Committee and member of the Executive
Committee.
------------------
Dan R. Carmichael President and Chief Executive Officer, IVANS,
Age 51 Inc. (communications technology and
Director since 1993 [PHOTO] remarketer). Member of the Audit and
Term expires in 1997 Compensation Commitees.
------------------
</TABLE>
6
<PAGE> 9
<TABLE>
<S> <C> <C>
------------------
William K. Lavin Financial Consultant. Chairman of the Audit
Age 51 Committee and member of the Compensation
Director since 1992 [PHOTO] Committee.
Term expires in 1997
------------------
------------------
President, Liberty Square, Inc.
Allan P. Kirby, Jr. (investments); management of family and
Age 64 [PHOTO] personal affairs; director, Chicago Title and
Director since 1963 Trust Company, Chicago Title Insurance
Term expires 1998 Company, and The Chicago Trust Company.
------------------- Chairman of the Executive Committee.
-------------------
John E. Tobin Retired Partner, law firm of Dorsey &
Age 72 [PHOTO] Whitney. Member of the Executive and
Director since 1968 Nominating Committees.
Term expires 1998
------------------
------------------
James F. Will President and Chief Executive Officer and
Age 57 director, Armco Inc. (steel manufacturing and
Director since 1992 [PHOTO] metals processing); director, AK Steel
Term expires 1998 Corporation. Member of the Audit Committee.
------------------
</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. Mr. Noall has served as Senior Vice President and
Chief Administrative Officer of KeyCorp since March 1, 1994, and has served in
the additional positions of General Counsel and Secretary since September 1,
1995. Prior to March 1, 1994, Mr. Noall was Vice Chairman of the Board and Chief
Administrative Officer of Society Corporation (banking). Mr. Noall joined
KeyCorp on that date upon the merger of Society Corporation
7
<PAGE> 10
and KeyCorp. Mr. Carmichael became President and Chief Executive Officer of
IVANS, Inc. on July 15, 1995. Mr. Carmichael served as President and Chief
Executive Officer of Anthem Casualty Insurance Group, Inc. from February 1993
until July 15, 1995; he also was President and Chief Executive Officer of The
Shelby Insurance Company from January 1987 to February 1993 and from June 1994
to July 15, 1995. The Shelby Insurance Company was owned by the Company from
1986 through 1991. Mr. Lavin served as Vice Chairman of the Board and Chief
Executive Officer of Woolworth Corporation (retailing) until September 1994; he
served as Chairman of the Board and Chief Executive Officer from June 30, 1993
to May 1994, 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. 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.
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 1995. Each director attended
more than 75 percent of the aggregate number of meetings of the Board of
Directors and meetings of the committees of the Board on which he served that
were held during the period of his service in 1995.
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 1995.
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
8
<PAGE> 11
compensation of officers of the Company and 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 the most highly paid officers of the Company's subsidiaries,
reports to the Board of Directors with respect thereto, and makes such
recommendations to the Board of Directors with respect thereto as the committee
may deem appropriate. Mr. Zimmerman is the Chairman of the Compensation
Committee, and will cease to be a member of this committee upon the expiration
on April 26, 1996 of his term as a director of the Company. This committee,
which held three meetings in 1995, 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. Mr. Zimmerman is a member of the Nominating Committee,
and will cease to be a member of this committee upon the expiration of his term
as a director of the Company. The Nominating Committee did not meet in 1995. Mr.
Noall was nominated for election as a director of the Company at meetings of the
Nominating Committee held in 1996.
9
<PAGE> 12
The following table sets forth the beneficial ownership of Common Stock as
of March 1, 1996 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>
F.M. Kirby............ 281,020 607,012 888,032(1) 12.58
Paul F. Woodberry..... 11,327 14,092 25,419(2) 0.36
Roger Noall........... 485 -- 485 0.01
John J. Burns, Jr..... 22,143 -- 22,143(3) 0.31
Dan R. Carmichael..... 1,115 -- 1,115(2)(4) 0.02
William K. Lavin...... 1,327 -- 1,327(2) 0.02
Allan P. Kirby, Jr.... 598,105 -- 598,105(5) 8.47
John E. Tobin......... 9,022 -- 9,022(2) 0.13
James F. Will......... 1,115 -- 1,115(2) 0.02
S. Arnold
Zimmerman(6)........ 5,636 -- 5,636(2) 0.08
David B. Cuming....... 23,138 -- 23,138 0.33
Robert M. Hart........ 2,345 -- 2,345 0.03
Peter R. Sismondo..... -- 2,256 2,256 0.03
Richard P. Toft(7).... 5,385 -- 5,385 0.08
</TABLE>
- ---------------
(1) See Note (1) on page 2.
(2) Includes 7,727 shares of Common Stock in the case of Messrs. Woodberry and
Tobin, 4,281 shares of Common Stock in the case of Mr. Zimmerman, 1,033
shares of Common Stock in the case of Messrs. Lavin and Will, and 340 shares
of Common Stock in the case of Mr. Carmichael, issuable under stock options
granted pursuant to the Directors' Stock Option Plan and the Amended and
Restated Directors' Stock Option Plan.
(3) Includes 937 shares of Common Stock owned by Mr. Burns's wife or daughter.
Mr. Burns had no voting or investment power over these shares, and he
disclaims beneficial ownership of them.
10
<PAGE> 13
(4) Includes 321 shares of Common Stock owned by Mr. Carmichael's wife or son.
Mr. Carmichael had no voting or investment power over these shares, and he
disclaims beneficial ownership of them.
(5) See Note (2) on page 3.
(6) Mr. Zimmerman will retire as a director of the Company this year and is not
a nominee for an additional term. He is included in the above table pursuant
to Securities and Exchange Commission rules.
(7) Mr. Toft resigned as Senior Vice President of the Company effective October
16, 1995, and is included in the above table pursuant to Securities and
Exchange Commission rules.
All directors and executive officers as a group (13 persons, including
Messrs. Zimmerman and Toft) beneficially owned 1,585,523 shares, or 22.4
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 960,905 shares,
shared voting and/or investment power with respect to 623,360 shares and no
voting or investment power with respect to 1,258 shares.
11
<PAGE> 14
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 1995, and Richard P. Toft, who would have
been among the four other most highly compensated executive officers of the
Company but for his resignation as Senior Vice President of the Company
effective October 16, 1995.
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., 1995 $550,000 $586,815 $179,110 $ 843,061 $ 86,882
President and 1994 500,000 681,801 331,311 -- 78,540
chief executive officer 1993 500,000 257,930 2,515 631,960 78,120
F.M. Kirby, 1995 $300,000 $ -- $ 11,347 $1,065,727 $ 58,207
Chairman of the Board 1994 300,000 183,885 15,060 -- 62,499
1993 300,000 148,005 12,073 798,840 60,472
David B. Cuming, 1995 $287,100 $232,702 $ 99,286 $ 402,027 $ 45,907
Senior Vice President 1994 267,100 199,465 73,860 -- 41,637
1993 252,000 117,162 1,223 301,560 39,101
Robert M. Hart, 1995 $287,100 $237,646 $ 89,288 $ 402,027 $ 56,673
Senior Vice President and 1994 77,904 197,149 65,627 -- --
General Counsel since September
1994 and Secretary since January
1, 1995
Peter R. Sismondo, 1995 $140,000 $ 51,222 $ 18,234 $ 186,425 $ 21,772
Vice President, Controller, 1994 130,000 30,483 114 -- 19,627
Assistant Secretary and, since 1993 117,300 26,990 97 139,720 17,768
January 1, 1995, Treasurer
Richard P. Toft, 1995 $392,087 $129,047 $ -- $1,519,586 $4,093,196
Senior Vice President until 1994 396,250 178,396 -- 327,480 119,092
October 16, 1995; President, 1993 377,500 254,812 1,670 721,511 94,783
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
</TABLE>
- ---------------
(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
12
<PAGE> 15
earnings per share and/or individual objectives; (ii) for each of Messrs.
Burns, Cuming, Hart and Sismondo, an award in 1995 of shares of Common Stock
under the Company's 1993 Long-Term Incentive Plan (the "1993 Plan"), valued
at $196,500, $98,250, $98,250 and $19,650, respectively; and (iii) for each
of Messrs. Burns, Cuming and Hart, an award in 1994 of shares of Common
Stock under 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 1995 is reported below in such table).
(2) These amounts represent payments for reimbursement of taxes, including
reimbursement of taxes incurred in respect of the awards of shares of Common
Stock under the 1993 Plan, as described in Note (1) above, and the
reimbursement itself.
(3) Except for amounts listed for Mr. Toft, these amounts represent payouts in
settlement of performance shares awarded under the Company's 1983 Long-Term
Incentive Plan (the "1983 Plan") (or in the case of Mr. Hart, the 1993
Plan). 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 for each performance share, depending upon the
average annual compound growth in the Company's Earnings Per Share (as
defined pursuant to the 1983 Plan or 1993 Plan, as the case may be) 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. The amount listed for Mr. Toft in 1995 includes a
payout in settlement of performance units awarded under CT&T's Executive
Performance Unit Plan of 1992 (the "CT&T 1992 Plan"). The CT&T 1992 Plan
provided for payouts in cash of performance units for the award period
1992-94 based upon the amount of CT&T's net operating income as defined, the
achievement of specified levels of CT&T's return on equity and the
application of a multiplier relating to CT&T's expense ratio in each year of
the award period. The amount listed for Mr. Toft in 1993 includes a payout
in settlement of performance units awarded under CT&T's Performance Unit
Incentive Plan of 1989 (the "CT&T
13
<PAGE> 16
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. In
addition, the amount listed for Mr. Toft in 1993 includes $227,360 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 1995,
1994 and 1993 amounts also include amounts in respect of earlier bonus
deferrals under the Presidents' Plan of CT&T. A portion of the cash bonus
earned by Mr. Toft under the Presidents' Plan of CT&T in each of 1992, 1991
and 1990 was deferred and was subject to reduction in the event of
unfavorable title insurance claims experience during 1992-95, 1991-94 and
1990-93, respectively, for policies written in the first year of each such
period. Mr. Toft was entitled to receive each of the deferred amounts in
full with interest, as well as a related incentive payment, limited to four
times the amount of the deferral. Such payouts are included in the table as
follows: (i) the 1995 amount includes $83,522 representing the portion of
Mr. Toft's bonus that was deferred in 1992, $14,965 representing interest
earned thereon during such period, and $334,088 representing a related
incentive payment; (ii) the 1994 amount includes $63,125 representing the
portion of Mr. Toft's bonus that was deferred in 1991, $11,855 representing
interest earned thereon during such period, and $252,500 representing a
related incentive payment; and (iii) the 1993 amount includes $33,394
representing the portion of Mr. Toft's bonus that was deferred in 1990,
$9,621 representing interest earned thereon during such period, and $111,754
representing a related incentive payment.
(4) 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 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 1993 amounts represent payouts for only
one award period because the payout for the award period ending in 1992
which would ordinarily have been made in early 1993 was accelerated into
December 1992 in view of an anticipated increase in individual
14
<PAGE> 17
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 1994 were made
in the normal course in early 1995.
(5) The 1995 amounts listed for Messrs. Burns, Kirby, Cuming, Hart and Sismondo
include (i) savings benefits of $82,187, $45,000, $42,940, $12,560 and
$20,938, respectively, credited pursuant to the Company's Deferred
Compensation Plan; and (ii) benefits, valued at $3,180, $13,207, $1,517,
$598 and $127, respectively, pursuant to Securities and Exchange Commission
rules, of life insurance policies maintained by the Company on their behalf.
The 1995 amounts listed for Messrs. Burns, Cuming, Hart and Sismondo also
include compensation of $1,515, $1,450, $1,450 and $707, respectively, in
respect of other insurance coverage. In addition, the 1995 amount for Mr.
Hart includes $42,065, representing a cash payment in 1995 to Mr. Hart in
lieu of participation in the Company's Deferred Compensation Plan during the
first year of his employment by the Company. The 1995 amount listed for Mr.
Toft represents (i) $64,121 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) $16,632 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; (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; and (iv) in connection with his
resignation as Senior Vice President of the Company effective October 16,
1995 and exercise of certain rights under his employment agreement with CT&T
and the Company in contemplation of his retirement from his executive
positions at CT&T, expected to occur in 1996, cash payments and Common Stock
aggregating $4,008,375 to which Mr. Toft is, or to which he may be, entitled
based upon the assumptions described below. Pursuant to Mr. Toft's exercise
of such rights under his employment agreement, he became entitled to the
following: (i) a lump sum payment (less required withholding) of $1,445,250
(representing two times the sum of (a) his salary, plus (b) his average
annual bonus in the preceding three years including the amount deferred in
each such year under the Presidents' Plan of CT&T, as more fully explained
in Note (3) above), and (ii) based upon the assumptions
15
<PAGE> 18
described below, cash and Common Stock valued in the aggregate at
$1,599,979, representing the payout of a long-term incentive award granted
in 1992 to Mr. Toft and the pro rata value through December 31, 1995 of
long-term incentive awards granted in 1993 and 1994 to Mr. Toft. Although
Mr. Toft is expected to retire from his executive positions at CT&T, he will
remain as non-executive Chairman of CT&T and assume the position of Chairman
and Chief Executive Officer of CT&T's wholly owned subsidiary Alleghany
Asset Management, Inc. ("AAM"). It has been agreed that the long-term
incentive awards granted in 1993, 1994 and 1995 to Mr. Toft will be
continued through the relevant payment dates, provided that Mr. Toft
continues to hold either of such positions through such dates. The value of
such continuation of awards, based upon the assumptions described below, is
$963,146. If Mr. Toft ceases to be non-executive Chairman of CT&T and
Chairman and Chief Executive Officer of AAM prior to such payment dates,
such incentives will be continued until the end of the year in which Mr.
Toft no longer holds either of such positions. For purposes of the Summary
Compensation Table, the amounts due in respect of amounts deferred in 1993,
1994 and 1995 under the Presidents' Plan of CT&T (which deferral program is
explained in Note (2) to the table relating to long-term incentive plans)
have been valued on the assumption that CT&T's title insurance claims
experience during the relevant periods will require that such amounts be
paid in full; the amounts due in respect of Mr. Toft's awards for the
1994-96 award period and one-half of the amounts due in respect of his
awards for the 1995-98 award period, which are based on CT&T's financial
performance, have been valued based upon CT&T's actual return on equity,
expense ratio and net operating results for 1994 and 1995, and CT&T's
planned return on equity, expense ratio and net operating results for 1996,
1997 and 1998; and the remaining amounts due in respect of Mr. Toft's awards
for the 1995-98 award period, which are based on the Company's financial
performance, have been valued at the maximum estimated future payouts, using
$197.375 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 31, 1995.
16
<PAGE> 19
LONG-TERM INCENTIVE PLANS -- AWARDS IN 1995
<TABLE>
<CAPTION>
PERFORMANCE
NUMBER OF OR ESTIMATED FUTURE PAYOUTS
SHARES, OTHER PERIOD UNDER NON-STOCK
UNITS UNTIL PRICE-BASED PLANS(1)
OR MATURATION -----------------------------------
NAME OTHER RIGHTS(1) OR PAYOUT THRESHOLD TARGET MAXIMUM
- ---------------------------- --------------- --------------- --------- -------- --------
<S> <C> <C> <C> <C> <C>
F.M. Kirby -- -- -- -- --
John J. Burns, Jr. 4,428 1996-99 $ 2,175 -- $870,102
David B. Cuming 2,106 1996-99 $ 1,035 -- $413,829
Robert M. Hart 2,106 1996-99 $ 1,035 -- $413,829
Peter R. Sismondo 1,081 1996-99 $ 531 -- $212,417
Richard P. Toft $43,016(2) 1995-98 -- 224,789(2) --
</TABLE>
- ---------------
(1) 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, 1996 to
stockholders of record at the close of business on April 1, 1996.
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 for each performance share awarded. 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 1996-99,
measured from a base of $10.00, 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 $196.50 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 awards. 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 in 1995 by Mr.
Toft under the President's Plan of CT&T which was deferred and is subject to
reduction to reflect unfavorable title insurance claims experience during
1995-98 for policies written in 1995. If such experience compares favorably
with (i) a pre-established hypothetical claims experience deemed acceptable
by the Board of Directors of
17
<PAGE> 20
CT&T, and/or (ii) the historical claims experience during 1992-97 for
policies written in 1992, 1993 and 1994, Mr. Toft will be entitled to
receive such deferred amount in full with interest; 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 the title insurance policy claims experience in 1995-98 for
policies written in 1995 will be identical to such experience in 1992-95 for
policies written in 1992, and further assuming identical interest rates in
the two periods. This award does not have threshold or maximum payout
amounts. Mr. Toft received no other long-term incentive award in 1995 in
view of his resignation as Senior Vice President of the Company effective
October 16, 1995 and his contemplated retirement from his executive
positions at CT&T, expected to occur in 1996. Mr. Toft has assumed the
positions of Chairman and Chief Executive Officer of AAM, and long-term
incentive arrangements in respect thereof have been established.
PENSION PLAN TABLES
The Company's Retirement Plan
The Company's Retirement Plan provides for designated employees, including
all of its current executive officers, 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 a 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.
The Retirement Plan was amended in March 1996 to provide that in the event a
participant becomes totally disabled prior to retirement, such participant's
annual base salary shall equal his annual base salary at the time of disability
adjusted annually for inflation, and such participant's
18
<PAGE> 21
period of disability will be treated as continued employment for all plan
purposes, including determining his years of service.
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 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. Pursuant to an amendment to the Retirement Plan
adopted in March 1995, the benefit payable to a participant who retires after
age 65 is 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 but, except as described
below, there are no actuarial adjustments for late retirement. Mr. Kirby was
entitled to an actuarial adjustment of his benefit to reflect 10.4 years beyond
his 65th birthday prior to such amendment, and that adjustment was preserved in
the Retirement Plan as amended. The Retirement Plan as amended also provides
that a participant over age 65 who is still in the employ of the Company 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
provides 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,
1996 at age 65, had achieved the average salary
19
<PAGE> 22
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, 1995, the credited years of service for Messrs. Burns,
Kirby, Cuming, Hart and Sismondo were 27.8, 28.3, 19, 6.3 and 8, respectively.
In connection with Mr. Hart's employment by the Company in September 1994, Mr.
Hart received a special grant in 1994 of five credited years of service prior to
such employment. As of December 31, 1995, the average salary of each of Messrs.
Burns, Kirby, Cuming, Hart and Sismondo for purposes of the plan was $515,972,
$596,000, $268,122, $286,684 and $128,878, 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 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, 1996 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
20
<PAGE> 23
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 $ 28,666 $ 38,221 $ 47,776 $ 57,332 $ 66,887
150,000 35,041 46,721 58,401 70,062 81,762
175,000 41,416 55,221 69,026 82,832 96,637
200,000 47,791 63,721 79,651 95,582 111,512
225,000 54,196 72,221 90,276 108,332 126,387
250,000 60,541 80,721 100,901 121,082 141,262
300,000 73,291 97,721 122,151 146,582 171,012
400,000 98,791 131,721 164,651 197,382 230,512
500,000 124,291 165,721 207,151 248,582 290,012
</TABLE>
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, 1995, Mr. Toft's credited years of service were 35, and
his average annual covered remuneration was $387,750. In connection with his
exercise of certain rights under his employment agreement with CT&T and the
Company in contemplation of his retirement from his executive positions at CT&T,
expected to occur in 1996, Mr. Toft was granted an additional year of service
under the CT&T Pension Plan and Excess Benefits Pension Plan, which gave him the
maximum 35 years of credited service.
21
<PAGE> 24
Such credited service also includes Mr. Toft's years of service with the former
owner of CT&T, Lincoln National Corporation. In addition, CT&T has agreed to
hold Mr. Toft harmless on an after-tax basis against any diminution of his lump
sum retirement benefits from November 1995 to the date of Mr. Toft's retirement
from his executive positions at CT&T. Upon such retirement Mr. Toft will be
eligible to receive benefits under CT&T's Pension Plan and Excess Benefits
Pension Plan.
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 Sismondo participate in a death benefit
plan which provides that a participant who is an employee at the time of death
will receive a death benefit equal to twice the amount of his annual salary at
January 1 of the year of his death.
Mr. Toft exercised certain rights under his employment agreement with CT&T
and the Company, which had an initial term from January 1, 1992 to December 31,
1994, and which was extended to December 31, 1995. In connection with Mr. Toft's
exercise of such rights under the agreement, he became entitled to receive
certain benefits which are more fully described in Note (5) to the Summary
Compensation Table, "Pension Plan Tables," and "Compensation Committee Report on
Executive Compensation."
Mr. Toft is prohibited, for a period of two years commencing December 31,
1995, from being involved in a business which competes with the title insurance
business of 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 employment
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 Benefits Pension Plan,
Mr. Toft's employment agreement and other arrangements in contemplation of his
retirement from his executive positions with CT&T, 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
22
<PAGE> 25
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. Payments under the plan are payable
for life or ten years, whichever is greater. Mr. Toft will be eligible to
receive benefits under CT&T's Executive Salary Continuation Plan upon his
retirement from his executive positions at CT&T, expected to occur in 1996.
COMPENSATION OF DIRECTORS
Each director of the Company who is not an officer thereof receives an
annual retainer of $26,000, payable one-half in cash and one-half in shares of
the Company's Common Stock as more fully explained below, as well as $1,000 for
each board meeting attended in person and $500 for each conference telephone
meeting attended. 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 Directors' Equity Compensation Plan, each director of the
Company who is not an employee of the Company or any of its subsidiaries
receives in May of each year his retainer for the following year's service as a
director, exclusive of any per meeting fees, committee fees or expense
reimbursements, payable one-half in shares of the Company's Common Stock, based
on the market value (as defined in the plan) of such shares, and one-half in
cash. On May 8, 1995, each eligible director received eighty-two shares of
Common Stock.
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 May 1, 1995, each such director received an option to
purchase 1,000 shares of Common Stock at a price of $155.25 per share.
23
<PAGE> 26
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 payable in cash 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, Audit and
Personnel Committees of these boards, including Mr. Kirby, receives $650 for
each committee meeting attended. In 1995, Mr. Kirby received a total of $26,050
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 1995, 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. ("API"),
including Mr. Woodberry, receives an annual retainer of $25,000 for his services
as such, which Mr. Woodberry received in 1995. In addition, in 1995 the Company
authorized the grant to Mr. Woodberry of a long-term incentive award equal to
1.5 percent of the proceeds in excess of $90 million from the sale of the real
estate assets owned by API and its subsidiary. The payment of such incentive
will be made twice a year commencing at the end of the year in which such
proceeds exceed $90 million, which was the net book value of such assets at the
time API acquired such assets in connection with the sale of the Company's
former retail banking subsidiary. The incentive will be paid in shares of the
Company's Common Stock (valued at $186.12 per share, which is equal to the book
value per share of the Common Stock as of December 31, 1995) or, in the
discretion of the Compensation Committee, in a combination of Common Stock (as
so valued) and cash in an amount not to exceed one-half of such payout. In the
event that Mr. Woodberry is terminated without cause after a change in control
of the Company or after more than 50 percent of the book value of the real
24
<PAGE> 27
estate assets of API has been sold, the incentive shall be paid on the basis of
the aggregate of (i) the cash proceeds and book value of non-cash proceeds
realized to the date of his termination, plus (ii) the book value or appraised
value (depending on the type of asset) of the real estate assets of API
remaining unsold on the date of his termination. Mr. Woodberry also provides
consulting services to the Company and certain of its subsidiaries and received
$294,583 in respect of such services performed in 1995.
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. Mr. Zimmerman's
term as a director expires this year and, because he is retiring from the Board
of Directors and is not a nominee for an additional term, he will cease to be a
member of this Committee at that time. Mr. Carmichael was President and Chief
Executive Officer of the Shelby Insurance Company from January 1987 to February
1993 and from June 1994 to July 15, 1995; 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, 1996, 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,
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.
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
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<PAGE> 28
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 1993, 1994
and 1995 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 the 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
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 and are officers 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
- ---------------
* The long-term incentive plan payouts in the Summary Compensation Table on page
12 (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>
1995 1991-94 $ 76.59 $150.55
1993 1990-93 $ 80.81 $134.56
</TABLE>
26
<PAGE> 29
payment of such compensation, and certification by the committee that the
performance goals have been achieved. While the Compensation Committee believes
that the Company should seek to obtain maximum deductibility of compensation
paid to executive officers, the Compensation Committee also believes that the
interests of the Company and its stockholders are best served by assuring that
appropriate compensation arrangements are established to retain and incentivize
executive officers.
The Compensation Committee has endeavored, to the extent it deems
consistent with the best interests of the Company and its stockholders, to cause
awards of long-term incentive compensation to qualify as "performance-based
compensation." To that end, the 1993 Plan was amended, and submitted to and
approved by the stockholders of the Company at the 1995 Annual Meeting of
Stockholders, so that compensation payable pursuant to certain long-term
incentive awards under the 1993 Plan as amended may qualify for deductibility
under Section 162(m).
The Compensation 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 Compensation
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 Compensation Committee will consider the
requirements of Section 162(m) and will make determinations based upon the best
interests of the Company and its stockholders.
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. For 1993, 1994 and 1995, Mr. Kirby, at his request, received no
salary increase from 1992 year-end levels. For 1994 and 1993, Mr. Burns, at his
request, received no salary increase from 1992 year-end levels.
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<PAGE> 30
Mr. Toft had an employment agreement with CT&T and the Company which
entitled 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 were
made based upon the same factors considered in respect of adjustments to the
salaries of the Company's other executive officers, as well as general business
conditions at CT&T. Salary adjustments at CT&T are typically made in April of
the year in question. In 1995, Mr. Toft's salary was not increased from its 1994
level until August 1995 due to poor business conditions. In addition, prior
thereto Mr. Toft's salary was decreased temporarily, along with the salaries of
other highly compensated CT&T employees, also due to poor business conditions.
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. For 1995, no annual
bonus opportunity was established for Mr. Kirby. Maximum annual bonus
opportunities for 1995, measured as a percentage of the salaries simultaneously
established for that year, ranged from 90 percent in the case of Mr. Toft and 75
percent in the case of Mr. Burns to 25 percent in the case of the most junior
executive officer. The percentage for Mr. Burns represents an increase from 67
percent of salary in 1994. The increased bonus opportunity in 1995 reflects the
Compensation Committee's continued desire to tie a greater proportion of the
total annual compensation of the President to the financial results of the
Company. Despite the increase for Mr. Burns, 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 1995, the portion of the cash bonus opportunities which depends on
corporate objectives ranged from 80 percent of Mr. Burns's bonus opportunity to
50 percent of the cash bonus opportunity of the most junior executive officer of
the Company. The 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 Corporation Strategic Plan
1995-1999. 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. For any
amounts to be earned, net earnings per share were required to exceed 80 percent
of plan, as adjusted to the extent that gains related to the
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<PAGE> 31
Company's holdings of shares of common stock of Burlington Northern Santa Fe
Corporation included in the Company's Strategic Plan were not realized in 1995.
The Company's net earnings per share exceeded 110 percent of plan for 1995, as
so adjusted; 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 1995 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 1994 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 was less than the threshold amount; therefore, Mr.
Toft did not receive a cash bonus in respect of the corporate objective
applicable to him.
The remainder of the cash bonus opportunities of the executive officers of
the Company under the short-term incentive plans for 1995 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 study of the long-term prospective vitality of the title insurance
industry. While his individual objectives were not specifically met in 1995, the
Chairman recognized that Mr. Burns worked intensively and effectively on matters
closely related to them, including investigating significant acquisition
opportunities with the willingness to abandon acquisitions that could not be
consummated on attractive terms, and attending to various matters at CT&T. The
Board of Directors and the Compensation Committee accepted the recommendation of
the Chairman that Mr. Burns be paid a special bonus equal to 75 percent of such
individual
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<PAGE> 32
opportunity but otherwise unrelated to the Management Incentive Plan in
recognition of his other achievements for 1995.
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.
In determining the number of performance shares awarded each year, the
Compensation Committee has sought to achieve reasonable continuity in awards
from prior years.
- ---------------
* The 1993 Plan replaced the Company's 1983 Long-Term Incentive Plan (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.
30
<PAGE> 33
Also, the Compensation Committee considers changes in salaries and the price of
Common Stock. The number of performance shares awarded to an executive officer
in 1995 for the 1996-99 award period was determined by adjusting the prior
year's award for changes in his salary from 1995 to 1996 and the price of the
Common Stock from late 1994 to late 1995. Consequently, the performance share
awards to executive officers made in 1995 for the award period 1996-99 (as
measured by the market value of the Common Stock at the time of the grant) bore
the same general relationship to such officers' salaries in 1996 as the
performance share awards to such officers made in 1994 for the award period
1995-98 bore to such officers' salaries in 1995.
Maximum payouts on performance shares awarded for the 1996-99 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 1996, would range from 143 percent in the case of
Mr. Burns to 138 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 industry; in the case of the
Company's most junior executive officer, such opportunity is 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 1995, the Compensation Committee made special tax paid grants
under the 1993 Plan to Messrs. Burns, Cuming, Hart and Sismondo of 1,000 shares
of Common Stock, 500 shares of Common Stock, 500 shares of Common Stock and 100
shares of Common Stock, respectively (which grants are reflected in the columns
labelled "Bonus" and "Other Annual Compensation" in the Summary Compensation
Table). These awards were made in recognition of the success of the Company's
significant equity investment in Burlington Northern Santa Fe Corporation and
the implementation of Company-directed cost control measures and a revised
compensation plan at CT&T.
Mr. Toft had an employment agreement with CT&T and the Company, which was
originally entered into as of January 1, 1992. In connection with Mr. Toft's
resignation as Senior Vice President of the Company effective October 16, 1995
and exercise of certain rights under such agreement in contemplation of his
retirement from his executive positions at CT&T, expected to occur in 1996, Mr.
Toft became entitled to receive certain benefits under such agreement, more
fully described in Note (5) to the Summary Compensation Table. In addition to
the benefits provided by the agreement, Mr. Toft's
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<PAGE> 34
long-term incentive awards, which were to be paid out based upon the pro rata
value of such awards through December 31, 1995, were continued to the relevant
payment date of such awards because Mr. Toft will continue to serve the Company
as non-executive Chairman of CT&T and Chairman and Chief Executive Officer of
AAM.
Pursuant to the President's Plan of CT&T, a portion of the cash bonus
earned by Mr. Toft thereunder in 1995 was deferred for three years and is
subject to adjustment to reflect title insurance policy claims experience during
1995-98, in an effort to encourage better underwriting and claims control at
CT&T. This deferral program is more fully explained in Note (2) to the table
relating to long-term incentive plans.
Mr. Toft received no other long-term incentive award in 1995 in view of his
resignation as Senior Vice President of the Company and his contemplated
retirement from his executive positions at CT&T. Long-term incentive
arrangements in respect of Mr. Toft's positions as Chairman and Chief Executive
Officer of AAM have been established.
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
PERFORMANCE GRAPH
The following is a graph which compares for the years 1991-95 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
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<PAGE> 35
steel fastener operations, all of these businesses were acquired within the last
eleven 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, Lincoln National Corporation,
Kemper Corporation and American Financial Group, Inc. (as of April 1995, the
publicly held successor of American Premier Underwriters Inc.). ITT Corporation
is no longer included in the group of "peer" issuers due to the division in
December 1995 of ITT Corporation into three public companies that separately
conduct the businesses formerly conducted by ITT Corporation.
[Performance Graph]
<TABLE>
<CAPTION>
Measurement Period
(Fiscal Year Covered) Alleghany S&P 500 Peer Group
<S> <C> <C> <C>
1990 100.00 100.00 100.00
1991 133.00 130.47 117.55
1992 163.46 140.41 140.98
1993 178.88 154.56 158.92
1994 193.27 156.60 160.08
1995 256.79 215.45 243.23
</TABLE>
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<PAGE> 36
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. 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 1996. 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.
3. 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.
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<PAGE> 37
4. 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 1997 Annual
Meeting of Stockholders must be received by the Secretary of the Company by
November 28, 1996 in order for the proposal to be considered for inclusion in
the Company's notice of meeting, proxy statement and proxy relating to the 1997
Annual Meeting, scheduled for Friday, April 25, 1997.
5. 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 quorum 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 1996
Annual Meeting.
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<PAGE> 38
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 $8,000 plus expenses.
By order of the Board of Directors
ROBERT M. HART
Senior Vice President, General
Counsel and Secretary
March 28, 1996
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<PAGE> 39
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY. [/]
<TABLE>
<CAPTION>
A vote FOR Items 1 and 2 is recommended by the Board of Directors
For All
For Withhold Except FOR AGAINST ABSTAIN
<S> <C> <C> <C> <C> <C> <C>
P 1. Election of Directors [ ] [ ] [ ] 2. Ratification of [ ] [ ] [ ]
appointment of KPMG
F.M. Kirby Paul F. Woodberry Roger Noall Peat Marwick LLP as inde-
R pendent auditors for the
INSTRUCTION: To withhold authority to vote year 1996.
for an individual nominee, write that
O nominee's name in the following space:
--------------------------------------------
X
Y
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
Dated ______________, 1996
__________________________________ _________________________________
Signature Signature
THIS PROXY WILL BE VOTED IN ACCORDANCE WITH SPECIFICATIONS Please sign exactly as your name or names appear hereon. For joint ac-
MADE. IF NO CHOICES ARE INDICATED, THIS PROXY WILL BE counts, both owners should sign. When signing as executor, administra-
VOTED FOR ITEMS 1 and 2. tor, attorney, trustee or guardian, etc., please give your full title.
</TABLE>
<PAGE> 40
ALLEGHANY CORPORATION
PROXY FOR ANNUAL MEETING ON APRIL 26, 1996
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 Chicago Title and Trust Company, 171 North Clark Street, Tenth Floor,
Chicago, Illinois, on Friday, April 26, 1996 at 2:00 p.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.
