<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 Section 240.14a-11(c) or Section 240.14a-2.
</TABLE>
ALLEGHANY CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
N/A
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-12.
(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 28, 2000 AT 2:00 P.M., LOCAL TIME
------------------------
THE CHASE MANHATTAN BANK
270 PARK AVENUE
ELEVENTH FLOOR, ROOM C
NEW YORK, NEW YORK
Notice is hereby given that the 2000 Annual Meeting of Stockholders of
Alleghany Corporation (the "Company") will be held at The Chase Manhattan Bank,
270 Park Avenue, Eleventh Floor, Room C, New York, New York, on Friday, April
28, 2000 at 2:00 p.m., local time, for the following purposes:
1. To elect three directors for terms expiring in 2003.
2. To consider and take action upon a proposal to approve the Company's
2000 Directors' Stock Option Plan.
3. To consider and take action upon a proposal to approve the material
terms of certain awards under the Company's 1993 Long-Term Incentive
Plan.
4. To consider and take action upon a proposal to ratify the selection
of KPMG LLP, independent certified public accountants, as auditors
for the Company for the year 2000.
5. To transact such other business as may properly come before the
meeting, or any adjournment or adjournments thereof.
Holders of common stock of the Company are entitled to vote for the election
of directors and on each of the other matters set forth above.
The stock transfer books of the Company will not be closed. The Board of
Directors has fixed the close of business on March 1, 2000 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
Annual Meeting in person.
By order of the Board of Directors
ROBERT M. HART
Senior Vice President, General
Counsel
and Secretary
March 27, 2000 [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 28, 2000
------------------------
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 2000 Annual Meeting of Stockholders of the Company (and at any and
all adjournments thereof) for the purposes referred to below and set forth in
the accompanying Notice of Annual Meeting of Stockholders. These proxy materials
are being mailed to stockholders on or about March 27, 2000.
The Board of Directors has fixed the close of business on March 1, 2000 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 2000 Annual Meeting.
On March 1, 2000, there were outstanding and entitled to vote 7,289,071
shares of Common Stock. The number of shares of Common Stock as of March 1,
2000, 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 28, 2000 to stockholders of record at the close of
business on April 3, 2000.
SALE OF UNDERWRITERS RE GROUP, INC.
On December 30, 1999, the Company entered into an agreement to sell
Underwriters Re Group, Inc. ("URG") to Swiss Re America Holding Corporation for
$725 million in cash, subject to adjustment based upon the stockholder's equity
of URG at the closing date. The Company will retain URG's London-based Lloyd's
operations to be conducted through Alleghany Underwriting Holdings Ltd.
(previously referred to as Venton Holdings Ltd.). The transaction is expected to
close in April 2000.
<PAGE> 4
PRINCIPAL STOCKHOLDERS
As of March 1, 2000, approximately 35.3 percent* of the Company's
outstanding Common Stock was believed to be beneficially owned by F.M. Kirby,
Allan P. Kirby, Jr., their sister, Grace Kirby Culbertson, and the estate or one
or more beneficiaries of the estate of Ann Kirby Kirby, the sister of Messrs.
Kirby and Mrs. Culbertson, primarily through a number of family trusts.
The following table sets forth the beneficial ownership of Common Stock as
of March 1, 2000 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 POWER
NAME AND ADDRESS POWER AND/OR SOLE AND/OR SHARED PERCENT
OF BENEFICIAL OWNER INVESTMENT POWER INVESTMENT POWER TOTAL OF CLASS
- ------------------- ----------------- ------------------- ------- --------
<S> <C> <C> <C> <C>
F.M. Kirby........................ 297,235 638,761 935,996(1) 12.8
17 DeHart Street
P.O. Box 151
Morristown, NJ 07963
Allan P. Kirby, Jr................ 534,385 -- 534,385(2) 7.3
14 E. Main Street
P.O. Box 90
Mendham, NJ 07945
Grace Kirby Culbertson............ 143,933 252,943 396,876(3) 5.4
Blue Mill Road
Morristown, NJ 07960
Estate of Ann Kirby Kirby......... 317,881 392,786 710,667(4) 9.8
c/o Carter, Ledyard & Milburn
2 Wall Street
New York, NY 10005
Southeastern Asset Management, (5) (5) 731,589(5) 10.0
Inc. ...........................
6075 Poplar Avenue
Suite 900
Memphis, TN 38119
Sasco Capital, Incorporated....... (6) -- 370,005(6) 5.1
10 Sasco Hill Road
Fairfield, CT 06430
Franklin Mutual Advisers, Inc..... 578,470 -- 578,470(7) 7.9
51 John F. Kennedy Parkway
Short Hills, NJ 07078
</TABLE>
- ------------------
* See Note (4) on page 3.
2
<PAGE> 5
- ------------------
(1) Includes 110,344 shares of Common Stock held by F.M. Kirby as sole trustee
of trusts for the benefit of his children; 440,875 shares held by a trust of
which Mr. Kirby is co-trustee and primary beneficiary; and 197,886 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 186,891 shares
directly.
(2) Includes 305,655 shares held by a trust of which of Allan P. Kirby, Jr. is
co-trustee and beneficiary; and 14,363 shares issuable under stock options
granted pursuant to the Directors' Stock Option Plan and the Amended and
Restated Directors' Stock Option Plan. Mr. Kirby held 214,367 shares
directly.
(3) Includes 42,723 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 143,933 shares
directly.
(4) Prior to her death in 1996, Ann Kirby Kirby had disclaimed being a
controlling person or member of a controlling group with respect to the
Company, and had declined to supply information with respect to her
ownership of Common Stock. Since her death, the representatives of the
estate of Mrs. Kirby have declined to supply information with respect to
ownership of the Company's Common Stock by her estate or its beneficiaries;
therefore, the Company does not know whether her estate or any beneficiary
of her estate beneficially owns more than five percent of its 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 the estate of 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 1997 and
in 1999 by Old Alleghany or the Company; if Mrs. Kirby, her estate and the
beneficiaries of her estate had continued to hold in the aggregate 710,667
shares together with all stock dividends received in consequence through the
date hereof, the beneficial ownership reported herein would have increased
by 227,035 shares.
3
<PAGE> 6
(5) According to an amendment dated February 9, 2000 to a Schedule 13G statement
filed by Southeastern Asset Management, Inc. ("Southeastern"), an investment
advisor, Southeastern had sole voting power over 390,458 shares, shared
voting power over 243,883 shares and no voting power over 97,248 shares, for
a total of 731,589 shares. Its dispositive power with respect to such shares
was reported as follows: sole dispositive power over 487,706 shares and
shared dispositive power over 243,883 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 243,883 shares over which Southeastern had shared voting power and
shared dispositive power were owned by a series of Longleaf Partners Funds
Trust, an open-end management investment company registered under the
Investment Company Act of 1940, as amended.
(6) According to an amendment dated February 10, 2000 to a Schedule 13G
statement filed by Sasco Capital, Incorporated ("Sasco"), Sasco had sole
voting power over 198,193 shares and sole dispositive power over 370,005
shares.
(7) According to an amendment dated January 18, 2000 to a Schedule 13G statement
filed by Franklin Mutual Advisers, LLC ("Franklin"), Franklin had sole
voting power and sole dispositive power over 578,470 shares. The statement
indicated that such shares may be deemed to be beneficially owned by
Franklin, an investment advisory subsidiary of Franklin Resources, Inc.
("FRI"), and that, under Franklin's advisory contracts, all voting and
investment power over such shares was granted to Franklin. The statement
also indicated that Messrs. Charles B. Johnson and Rupert H. Johnson, Jr.,
were the principal shareholders of FRI, but beneficial ownership of the
shares reported therein are not attributed to FRI or Messrs. Johnson because
Franklin exercises voting and investment powers over such shares
independently of FRI and Messrs. Johnson. Franklin disclaimed any economic
interest or beneficial ownership of such shares.
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 in number 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 directors.
John J. Burns, Jr., Dan R. Carmichael and William K. Lavin have been
nominated by the Board of Directors for election as directors at the 2000 Annual
Meeting, each to serve for a term of three years, until the 2003 Annual Meeting
of Stockholders and until his successor is duly elected and qualified. Messrs.
Burns, Carmichael and Lavin were last elected by the stockholders of the Company
at their Annual Meeting on April 25, 1997.
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 2000 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 2001 or 2002.
5
<PAGE> 8
<TABLE>
<S> <C> <C>
President, Alleghany Corporation;
Nominee for Election: director, Burlington Northern Santa Fe
John J. Burns, Jr. [PHOTO of John J. Burns, Corporation, Fidelity National Financial,
Age 68 Jr.] Inc., Mineral Holdings Inc., Underwriters
Director since 1968 Re Group, Inc. and World Minerals Inc.
Chairman of the Nominating Committee and
member of the Executive Committee.
Nominee for Election: President and Chief Executive Officer,
Dan R. Carmichael [PHOTO of Dan R. IVANS, Inc. (communications technology and
Age 55 Carmichael] remarketer). Chairman of the Compensation
Director since 1993 Committee and member of the Audit
Committee.
Nominee for Election: Financial Consultant; director, Novex
William K. Lavin [PHOTO of William K. Systems International, Inc. and
Age 55 Lavin] Underwriters Re Group, Inc. Chairman of
Director since 1992 the Audit Committee and member of the
Compensation Committee.
Allan P. Kirby, Jr. President, Liberty Square,
Age 68 [PHOTO of Allan P. Inc.(investments); management of family
Director since 1963 Kirby, Jr.] and personal affairs. Chairman of the
Term expires in 2001 Executive Committee.
Chairman and Chief Executive Officer of
Thomas S. Johnson GreenPoint Financial Corp. and its
Age 59 [PHOTO of Thomas S. subsidiary GreenPoint Bank (banking);
Director since 1997 and Johnson] director, R.R. Donnelly & Sons Company and
for 1992-1993 Online Resources & Communications
Term expires in 2001 Corporation. Member of the Audit
Committee.
</TABLE>
6
<PAGE> 9
<TABLE>
<S> <C> <C>
James F. Will Retired President and Chief Executive Officer
Age 61 [PHOTO of James F. Will] of Armco Inc. (steel manufacturing and metals
Director since 1992 processing). Member of the Executive and
Term expires in 2001 Nominating Committees.
F.M. Kirby Chairman of the Board, Alleghany Corporation;
Age 80 [PHOTO of F.M. Kirby] director, World Minerals Inc. Member of the
Director since 1958 Executive Committee.
Term expires in 2002
Roger Noall Retired Executive, KeyCorp (banking); chairman,
Age 64 [PHOTO of Roger Noall] Victory Funds and director, Elite Information
Director since 1996 Systems, Inc. Member of the Compensation and
Term expires in 2002 Nominating Committees.
Dean, Fuqua School of Business at Duke
University (education); chairman, Centre for
Rex D. Adams Economic Policy Research, director, Public
Age 60 [PHOTO of Rex D. Adams] Broadcasting Service, Public/Private Ventures
Director since 1999 and trustee, Committee for Economic Development
Term expires in 2002 and Woods Hole Oceanographic Institution.
Member of the Audit Committee.
</TABLE>
All of the foregoing persons have had the principal occupations indicated
throughout the last five years, except as follows. Mr. Carmichael has been
President and Chief Executive Officer of IVANS, Inc. since July 1995 and
Chairman since March 1997. Mr. Carmichael served as President and Chief
Executive Officer of Anthem Casualty Insurance Group, Inc. (insurance) and
President and Chief Executive Officer of The Shelby Insurance Company
(insurance) prior thereto. Prior to his retirement on September 30, 1999, Mr.
Will was the President and Chief Executive Officer of Armco Inc. Mr. Noall was
an Executive of KeyCorp
7
<PAGE> 10
from January 1, 1997 until his retirement on March 1, 2000. Mr. Noall served as
Senior Executive Vice President and Chief Administrative Officer, and as General
Counsel and Secretary, of KeyCorp prior thereto. Mr. Adams has been Dean of
Fuqua Business School since June 1, 1996. Mr. Adams served as Executive Vice
President, Administration of Mobil Corporation (oil, gas and petrochemicals)
prior thereto.
F.M. Kirby and Allan P. Kirby, Jr. are brothers.
The Board of Directors held eight meetings in 1999. 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 in 1999.
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.
This committee held one meeting in 1999.
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 four meetings in 1999.
The Compensation Committee of the Board of Directors reviews the annual
recommendations of the chief executive officer and the Chairman of the Board
concerning the compensation of officers of the Company and 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. This committee, which
held four meetings in 1999, also administers 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. This committee held two meetings in 1999.
8
<PAGE> 11
SECURITIES OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth the beneficial ownership of Common Stock as
of March 1, 2000 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
POWER AND SOLE AND/OR SHARED PERCENT
NAME OF BENEFICIAL OWNER INVESTMENT POWER INVESTMENT POWER TOTAL OF CLASS
- ------------------------ ---------------- ------------------- ------- --------
<S> <C> <C> <C> <C>
John J. Burns, Jr. ...... 57,409 -- 57,409(1) 0.79
Dan R. Carmichael........ 7,835 208 8,043(2)(3) 0.11
William K. Lavin......... 9,260 -- 9,260(2) 0.13
Allan P. Kirby, Jr. ..... 534,385 -- 534,385(4) 7.31
Thomas S. Johnson........ 2,711 -- 2,711(2) 0.04
James F. Will............ 9,036 -- 9,036(2) 0.12
F.M. Kirby............... 297,235 638,761 935,996(5) 12.84
Roger Noall.............. 4,680 -- 4,680(2) 0.06
Rex D. Adams............. 71 -- 71 0.00
David B. Cuming.......... 30,869 -- 30,869 0.42
Robert M. Hart........... 8,501 -- 8,501 0.12
Peter R. Sismondo........ 4,251 410 4,661 0.06
</TABLE>
- ---------------
(1) Includes 740 shares of Common Stock owned by Mr. Burns's wife. Mr. Burns had
no voting or investment power over these shares, and he disclaims beneficial
ownership of them. Also includes 15,669 shares of Common Stock representing
the vesting of 15,669 performance shares in settlement of a special award of
performance shares (as adjusted for stock dividends and to reflect the
spin-off of Chicago Title Corporation in June 1998) made to Mr. Burns in
1996. The payout in respect of the vested performance shares was deferred
pursuant to the terms of the special award until Mr. Burns's retirement as
an officer of the Company, and will be made one-half in shares of Common
Stock and one-half in cash (based upon the fair market value of one share of
Common Stock on the payout date for each performance share).
(2) Includes 6,897 shares of Common Stock in the case of Mr. Carmichael, 8,708
shares of Common Stock in the case of Messrs. Lavin and Will, 1,673 shares
of Common Stock in the case of Mr. Johnson and 3,380 shares of Common Stock
in the case of Mr. Noall, issuable under stock options granted pursuant to
the Directors' Stock Option Plan and the Amended and Restated Directors'
Stock Option Plan.
9
<PAGE> 12
(3) Includes 216 shares of Common Stock owned by Mr. Carmichael's wife. Mr.
Carmichael had no voting or investment power over these shares, and he
disclaims beneficial ownership of them.
(4) See Note (2) on page 3.
(5) See Note (1) on page 3.
All nominees named for election as a director, directors and executive
officers as a group (12 persons) beneficially owned 1,605,622 shares, or 21.90
percent, of the outstanding Common Stock, adjusted to include shares of Common
Stock issuable within 60 days upon exercise of stock options held by such
nominees, directors and executive officers; such nominees, directors and
executive officers had sole voting and investment power with respect to 965,287
shares, shared voting and/or investment power with respect to 639,379 shares and
no voting or investment power with respect to 956 shares.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
The Company has determined that, except as set forth below, no person who
at any time during 1999 was a director, officer or beneficial owner of more than
ten percent of the Company's Common Stock failed to file on a timely basis
reports required by Section 16(a) of the Securities Exchange Act of 1934, as
amended, during 1999. Such determination is based solely upon the Company's
review of Forms 3, 4 and 5, and written representations that no Form 5 was
required, submitted to it during or with respect to 1999. With regard to Ann
Kirby Kirby who, prior to her death in 1996, was believed by the Company to be a
beneficial owner of more than ten percent of the Company's Common Stock based on
her Schedule 13D statement filed with the Securities and Exchange Commission in
1982, the Company had not received any reports from Mrs. Kirby regarding changes
in her ownership of the Company's Common Stock, and the representatives of the
estate of Mrs. Kirby have declined to supply information with respect to
ownership of the Company's Common Stock by her estate or beneficiaries;
therefore, the Company does not know whether she, her estate, or any beneficiary
of her estate beneficially owned more than ten percent of its Common Stock
during 1999 nor whether any such person was required to file reports required by
Section 16(a).
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
10
<PAGE> 13
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 twelve-months'
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 on the
date of payment, and one-half in cash. On May 4, 1999, each eligible director
received seventy-one 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 April 26, 1999, each eligible director received an option
to purchase 1,641 shares of Common Stock at a price of $187.50 per share; such
option includes antidilution adjustments to reflect the spin-off of Chicago
Title Corporation in June 1998.
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 subsidiary URG and its
subsidiaries, including Mr. Lavin, 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. As chairman of the Audit Committee of the
URG board, Mr. Lavin receives $1,500 for each committee meeting attended. In
1999, Mr. Lavin received a total of $33,021 for services in these capacities.
11
<PAGE> 14
EXECUTIVE COMPENSATION
The information under this heading relates to the chief executive officer
and the four other most highly compensated executive officers of the Company
serving as executive officers at the end of 1999.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION
---------------------------------- LONG-TERM
OTHER ANNUAL INCENTIVE ALL OTHER
NAME AND PRINCIPAL BONUS COMPENSATION PLAN PAYOUTS COMPENSATION
POSITION YEAR SALARY (1) (2) (3) (5)
- ------------------ ---- -------- -------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
John J. Burns, Jr.,........ 1999 $838,400 $512,657 $25,648 $5,336,099(4) $154,854
President and chief 1998 800,000 651,566 23,643 6,306,362(4) 146,139
executive officer 1997 655,750 400,964 12,029 1,171,965 111,835
F.M. Kirby,................ 1999 $394,085 $ -- $17,067 $ -- $ 78,967
Chairman of the 1998 376,035 -- 14,973 793,690 73,789
Board 1997 354,050 -- 8,181 540,080 62,629
David B. Cuming,........... 1999 $377,478 $181,874 $14,829 $ 755,764 $ 71,905
Senior Vice President 1998 360,188 174,359 13,171 846,858 67,572
1997 339,800 166,656 7,489 576,845 58,704
Robert M. Hart,............ 1999 $377,478 $188,671 $ 5,948 $ 755,764 $ 63,391
Senior Vice 1998 360,188 178,140 5,498 846,858 60,189
President, General 1997 339,800 168,057 4,182 576,845 55,605
Counsel and Secretary
Peter R. Sismondo,......... 1999 $183,906 $ 70,068 $ 2,524 $ 387,712 $ 30,420
Vice President, 1998 175,483 42,298 2,251 433,680 28,833
Controller, 1997 165,550 38,205 1,814 282,510 29,536
Assistant Secretary
and Treasurer
</TABLE>
- ---------------
(1) These amounts represent (i) bonuses earned under the Company's Management
Incentive Plan, which is a short-term incentive plan designed to reward
officers for achieving specified net earnings per share and/or individual
objectives; and (ii) for Mr. Burns in 1998, an additional amount
representing the portion of his 1997 bonus opportunity dependent on his
personal objectives, the assessment of which had been deferred pending
completion of the June 1998 spin-off of Chicago Title Corporation, equal to
$40,096.
12
<PAGE> 15
(2) These amounts represent payments for reimbursement of taxes.
(3) These amounts represent payouts in settlement of performance shares awarded
under the Company's 1993 Long-Term Incentive Plan (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 by the Compensation Committee pursuant to the 1993 Plan) in a
four-year award period commencing with the year following that in which the
performance shares were awarded; payouts have been made one-half in cash and
one-half in Common Stock.
(4) The 1999 amount includes a payout of $3,763,750, and the 1998 amount
includes a payout of $4,585,542, each in respect of one-half of a special
award of an aggregate 40,966 performance shares made to Mr. Burns under the
1993 Plan in 1996, as adjusted for stock dividends and to reflect the
spin-off of Chicago Title Corporation. These performance shares entitled Mr.
Burns to a payout one-half in cash and one-half in Common Stock up to a
maximum amount equal to the value of one share of Common Stock on the payout
date for each performance share, depending, in the case of the 1999 amount,
upon the stockholders' equity per share equaling or exceeding $314 as at the
end of any year ending on or before December 31, 1999 and, in the case of
the 1998 amount, upon the closing market price of the Common Stock exceeding
$312 for each of any 20 consecutive trading days ending on or before
December 31, 1999, and in each case occurring while Mr. Burns was chief
executive officer of the Company. The goal for the 1999 amount was achieved
in the year ending December 31, 1999, and the goal for the 1998 amount was
achieved in early 1998 prior to the spin-off of Chicago Title Corporation.
Payout of 15,669 of these performance shares was deferred pursuant to the
terms of the special award until Mr. Burns's retirement as an officer of the
Company.
(5) The 1999 amounts listed for Messrs. Burns, Kirby, Cuming, Hart and Sismondo
include (i) savings benefits of $125,520, $59,000, $56,513, $56,513 and
$27,533, respectively, credited pursuant to the Company's Deferred
Compensation Plan; and (ii) benefits, valued at $25,958, $19,967, $12,016,
$3,502 and $817, respectively, pursuant to Securities and Exchange
Commission rules, of life insurance maintained by the Company on their
behalf. Such life insurance policies provide a death benefit to an executive
officer who is an employee at the time of his death equal to four times (or,
in the case of Mr. Kirby, two times) the amount of such executive officer's
annual salary at January 1 of the year of his death. In the case of Mr.
Burns, at his election, such death benefit shall not exceed $3,000,000. The
1999 amounts listed for Messrs. Burns, Cuming, Hart and Sismondo also
include compensation of $3,376, $3,376, $3,376 and $2,070, respectively, in
respect of other insurance coverage.
13
<PAGE> 16
LONG-TERM INCENTIVE PLAN -- AWARDS IN 1999
<TABLE>
<CAPTION>
PERFORMANCE
OR OTHER ESTIMATED FUTURE PAYOUTS UNDER
NUMBER OF SHARES, PERIOD UNTIL NON-STOCK PRICE-BASED PLANS
UNITS OR OTHER MATURATION -------------------------------
NAME RIGHTS OR PAYOUT THRESHOLD TARGET MAXIMUM
- ---- ----------------- ------------ --------- ------ ----------
<S> <C> <C> <C> <C> <C>
John J. Burns, Jr. ........... 30,000(1) 2000-2002 $13,547 -- $5,418,750
F.M. Kirby.................... -- -- -- -- --
David B. Cuming............... 2,776(2) 2000-2003 $ 1,292 -- $ 516,943
Robert M. Hart................ 2,776(2) 2000-2003 $ 1,292 -- $ 516,943
Peter R. Sismondo............. 1,427(2) 2000-2003 $ 664 -- $ 265,734
</TABLE>
- ---------------
(1) This amount represents a special award of performance shares under the 1993
Plan to Mr. Burns. The payout of these performance shares will be made
one-half in cash and one-half in Common Stock up to a maximum amount equal
to the value of one share of Common Stock on the payout date for each
performance share awarded. The maximum payout in respect of one-half of such
award will be made if the closing market price of the Common Stock for each
of any twenty consecutive trading days ending on or before June 30, 2002 and
occurring while Mr. Burns is chief executive officer of the Company equals
or exceeds $267, and no payout will be made if such closing market price
does not equal or exceed $233. The maximum payout in respect of the
remaining one-half of such award will be made if stockholders' equity per
share of Common Stock equals or exceeds $234 as at the end of any fiscal
quarter ending on or before June 30, 2002 and while Mr. Burns is chief
executive officer of the Company, and no payout will be made if such
stockholders' equity per share of Common Stock does not equal or exceed
$205. The payout for market prices between $233 and $267, and for
stockholders' equity per share of Common Stock between $205 and $234, will
be determined by interpolation. The payout of 15,000 of these performance
shares will be deferred pursuant to the terms of the special award until Mr.
Burns's retirement as an officer of the Company. There is no estimated
future target payout because under the 1993 Plan no performance target for
these performance shares is specified. The Compensation Committee granted to
Mr. Burns in January 2000, instead of December 1999, an award of 6,721
performance shares with performance criteria as described in Note (2) below,
in order to qualify the award pursuant to the 1993 Plan as
"performance-based compensation" for purposes of Section 162(m) of the
Internal Revenue Code of 1986, as amended, and thus to preserve the
Company's right to a tax deduction in respect of such compensation.
(2) These amounts represent performance shares awarded under the Company's 1993
Plan. These 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
14
<PAGE> 17
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 by the Compensation
Committee pursuant to the 1993 Plan) equals or exceeds 12 percent in the
award period, measured from a base of $9.06 in respect of performance shares
for the 2000-2003 award period. 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. There is no estimated future target payout
because under the 1993 Plan no performance target for these performance
shares is specified.
PENSION PLAN TABLE
The Company's Retirement Plan provides for designated employees, including
all of its current executive officers (excluding Mr. Kirby), retirement benefits
in the form of an annuity for the participant's life or, alternatively,
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 compensation, which is defined as the sum of (i) the
highest average annual base salary over a consecutive three-year period during
the last ten years of employment, plus (ii) one-half of the highest average
annual bonus over a consecutive five-year period during the last ten years of
employment; 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. (Annual base salary and
annual bonus are the amounts that would appear in the salary and bonus columns
of the Summary Compensation Table for the relevant years.) 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,
and such participant's average annual bonus shall be based on the average over
the five consecutive years (or lesser period of employment) prior to disability,
each adjusted annually for inflation; such participant's period of disability
will be treated as continued employment for all purposes under the Retirement
Plan, 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
15
<PAGE> 18
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 an estimate of such
increase.
A participant may retire as early as age 55, but the benefit payable at
that time will be reduced to reflect the commencement of benefit payments prior
to age 65. 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 decreased period over which the normal
retirement benefit will be paid. The Retirement Plan 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. Pursuant to this
provision, Mr. Kirby elected in 1996 to receive his benefits under, and no
longer participates in, the Retirement Plan.
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 December
31, 1999 at age 65, had achieved the average compensation and years of service
indicated. The amounts shown assume payment in the form of a straight life
annuity.
<TABLE>
<CAPTION>
YEARS OF SERVICE
AVERAGE ----------------------
COMPENSATION 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
900,000................................... 387,279 580,919
1,000,000................................... 430,310 645,466
1,100,000................................... 473,341 710,012
</TABLE>
16
<PAGE> 19
As of December 31, 1999, the credited years of service for Messrs. Burns,
Cuming, Hart and Sismondo were 31.75, 23, 10 and 12, respectively. The average
salary of each of Messrs. Burns, Cuming, Hart and Sismondo for purposes of the
Retirement Plan was $997,472, $436,126, $437,049, and $195,730, respectively.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors (the "Compensation
Committee") is currently composed of the three non-employee directors whose
names appear at the end of this report.
An important objective of the Compensation Committee is to ensure that the
compensation practices of the Company are competitive and effectively designed
to attract, retain and motivate highly-qualified personnel. In performing its
functions, the Compensation Committee in recent years has obtained and utilized
information and advice furnished by a recognized national compensation
consulting firm.
Compensation paid to the executive officers of the Company in 1997, 1998,
and 1999 consisted chiefly of salary, cash bonuses under the Management
Incentive Plan which in large part were tied to the financial results of the
Company, and payouts of cash and Common Stock under the Company's 1993 Plan
which were tied both to the price of the Common Stock and to the financial
results of the Company. These compensation practices help to link the interests
of the Company's executive officers with the interests of the Company's
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.
Annual cash bonuses are paid to executive officers under the Company's
Management Incentive Plan (except that Mr. Kirby did not receive any such
bonuses in respect of 1997, 1998 or 1999). This plan is designed to reward
officers for the achievement of specified corporate and/or individual
objectives. Bonus opportunities for 1999 for each of Messrs. Burns, Cuming and
Hart were adjusted from the prior year at the rate of 4.8 percent or in
proportion to changes in salaries; Mr. Sismondo's 1999 maximum bonus opportunity
was increased to 40 percent of his 1999 salary, which represented a 54 percent
increase in bonus opportunity from 1998, in recognition of his current
responsibilities. Bonus opportunities for executive officers for 1998 were
adjusted from the prior year in proportion to changes in salaries; bonus
opportunities for executive officers for 1997 were adjusted from the prior year
at the rate of
17
<PAGE> 20
10 percent, which was in excess of average salary increases of 7.5 percent from
1996. Bonus opportunities for executive officers of the Company as a percentage
of salaries for 1999 ranged from 76 percent of salary for Mr. Burns to 40
percent of salary for the most junior executive officer of the Company, and are
believed to fall at or below the median of prevailing practices in a broad
cross-section of American industry reflecting the Company's policy of
emphasizing long-term corporate performance and long-term incentive
compensation.
For 1999, the portion of the cash bonus opportunities which depended 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
1999-2003. 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. The Company's 1999 net earnings per share exceeded 110 percent of the
plan for 1999; therefore, the maximum amounts were earned on that portion of the
cash bonus opportunities that was dependent on corporate objectives.
The remainder of the cash bonus opportunities of the executive officers of
the Company for 1999 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. 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. No amount was authorized in
respect of Mr. Burns's individual objectives for 1999 since such objectives were
not achieved.
Long-Term Incentive Compensation
In addition to annual compensation, the Company provides long-term
incentive compensation to its executive officers pursuant to awards under the
1993 Plan (except that Mr. Kirby did not receive any such awards in 1997, 1998
or 1999). 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 long-term incentive awards to the Company's executive officers 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
18
<PAGE> 21
date for each performance share awarded. Payouts generally have been made
one-half in cash and one-half in Common Stock. 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 by the
Compensation Committee pursuant to the 1993 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. 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 1999 for the 2000-2003 award period was determined by
adjusting the prior year's award to reflect the increase in his salary from 1999
to 2000 and to reflect the movements in the price of the Common Stock.
In the case of the Company's most senior executive officers, 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 1999, the Compensation Committee granted a special award of 30,000
performance shares for the award period ending June 30, 2002 to Mr. Burns, to
reward his continuing contributions to the Company and to ensure his retention
until such time as he is succeeded. The terms of such performance shares, the
value of which depends upon significant growth in the market value of the Common
Stock and stockholders' equity per share of Common Stock,
19
<PAGE> 22
are consistent with similar arrangements of comparable public companies. Such
terms are more fully described in Note (1) to the table relating to long-term
incentive awards.
Section 162(m) of the Internal Revenue Code of 1986
Section 162(m) of the Internal Revenue Code of 1986, as amended (the
"Code"), 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." In
general, those requirements include the establishment of objective performance
goals for the payment of such compensation by a committee of the Board of
Directors composed solely of two or more outside directors, stockholder approval
of the material terms of such compensation prior to payment, and certification
by the committee that the performance goals for the payment of such compensation
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" under Section 162(m). To that end, the 1993 Plan was amended and
submitted to and approved by the stockholders of the Company at the 1995 Annual
Meeting, and certain material terms of such awards under the 1993 Plan are again
being submitted for the approval of stockholders at the 2000 Annual Meeting. All
of the performance shares awarded in 1999 to Messrs. Cuming, Hart and Sismondo
described in Note (2) to the table relating to long-term incentive awards are
intended to qualify as "performance-based compensation" for purposes of Section
162(m). Of the 30,000 performance shares awarded to Mr. Burns in 1999 and
described in Note (1) to such table, 15,000 performance shares are also intended
to so qualify; the Company believes that the deferred payout of the remaining
15,000 performance shares will preserve the Company's deduction for compensation
in respect thereof. As described in Note (1) to such table, the Compensation
Committee granted an award of performance shares to Mr. Burns in January 2000,
instead of December 1999, in order to qualify such award as "performance-based
compensation" for purposes of Section 162(m).
20
<PAGE> 23
The Compensation Committee does not currently intend to structure the
annual cash bonuses under the Management Incentive Plan to comply with the
"performance-based compensation" rules of 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 material terms of bonuses 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.
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 regarding compliance
with Section 162(m) based upon the best interests of the Company and its
stockholders.
Other Benefits
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.
Dan R. Carmichael
William K. Lavin
Roger Noall
Compensation Committee
of the Board of Directors
21
<PAGE> 24
PERFORMANCE GRAPH
The following graph compares for the years 1995-99 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 revenues
currently generated by its operations in property and casualty reinsurance and
insurance, industrial minerals, financial services and steel fasteners.
"Peer" issuers for the Company are publicly held, diversified financial
services companies which have been 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,
although any "peer" issuer, in the Company's view, would be significantly
different from other "peer" issuers and from the Company due to the individual
character of its business. In past years, the Company had compared its
performance to a group of "peer" issuers that, in addition to the Company,
consisted of Loews Corporation, Old Republic International Corp., Transamerica
Corporation, Lincoln National Corporation, American Financial Group, Inc. and
Reliance Group Holdings, Inc.
In July 1999, Transamerica Corporation was acquired by AEGON N.V. As a
result, Transamerica is no longer included in the group of "peer" issuers for
the Company.
22
<PAGE> 25
Performance Graph
<TABLE>
<CAPTION>
ALLEGHANY S&P 500 PEER GROUP
--------- ------- ----------
<S> <C> <C> <C>
1995 132.87 137.58 167.69
1996 145.11 169.17 193.21
1997 198.80 225.60 247.72
1998 210.46 290.08 245.04
1999 211.95 351.12 180.73
</TABLE>
The foregoing performance graph is based on the following assumptions: (i)
cash dividends are reinvested on the ex-dividend date in respect of such
dividend; (ii) the two-percent stock dividends paid by the Company in each of
the years 1995 through 1997 and in 1999 are included in the cumulative total
stockholder return on the Common Stock; and (iii) total returns on the common
stock of "peer" issuers are weighted by stock market capitalization at the
beginning of each year. On June 17, 1998, the Company distributed its shares of
Chicago Title Corporation to the Company's stockholders on a pro rata basis.
Accordingly, of the five years shown in the above graph, three years and five
and one-half months represent the performance of the Company prior to the
spin-off and one year and six and one-half months represent the performance of
the Company after the spin-off. The graph accounts for the spin-off as though it
were paid in cash and reinvested in Common Stock of the Company on the date of
the spin-off.
23
<PAGE> 26
2. 2000 DIRECTORS' STOCK OPTION PLAN
The 2000 Plan
The Board of Directors believes it to be in the best interests of the
Company and its stockholders to encourage increased share ownership by directors
who are not employees of the Company or any of its subsidiaries, in order to
promote long-term stockholder value through continuing ownership of shares of
the Company's Common Stock. To provide for such increased share ownership, the
Board of Directors has adopted the Alleghany Corporation 2000 Directors' Stock
Option Plan (the "2000 Plan"). The 2000 Plan is in substantially the same form
as the Amended and Restated Directors' Stock Option Plan, which was approved by
the Company's stockholders at the 1994 Annual Meeting, and which expired
December 31, 1999 (the "Old Plan"). Like the Old Plan, the 2000 Plan provides
for the automatic grant of nonqualified stock options ("Options") to purchase
1,000 shares of Common Stock of the Company, subject to antidilution and other
adjustments, in each year as of the first business day after the Annual Meeting
of Stockholders of the Company to each director of the Company who is not an
employee thereof or of any of its subsidiaries. No consideration will be paid to
the Company upon the grant of the Options. There are currently seven directors
of the Company who are not employees thereof or of any of its subsidiaries.
The 2000 Plan is administered by the Board of Directors. The Board of
Directors shall, subject to the provisions of the 2000 Plan, grant Options under
the 2000 Plan and has authority, within the limits of the 2000 Plan, to
prescribe the form of agreement embodying awards of Options, to construe the
2000 Plan, to determine all questions arising thereunder and to adopt and amend
such rules and regulations for the administration of the 2000 Plan as it may
deem desirable.
Awards under the 2000 Plan shall include only Options to purchase shares of
Common Stock of the Company. A maximum of 50,000 shares of Common Stock may be
issued under the 2000 Plan pursuant to the exercise of Options, subject to
antidilution and other adjustments. Such shares of Common Stock may be either
authorized but unissued shares or shares held by the Company as treasury shares.
On March 1, 2000, the fair market value (as defined in the 2000 Plan) of shares
of Common Stock of the Company was $187.625 per share, or $9,381,250 in the
aggregate for the 50,000 shares of Common Stock subject to the 2000 Plan.
The 2000 Plan provides that no Option granted under the 2000 Plan shall be
exercisable more than ten years after its grant and the price at which shares of
Common Stock may be purchased under any such Option shall be the fair market
value of such shares on the date such Option is granted, which is defined as the
average of the high and low sales prices of a
24
<PAGE> 27
share of the Company's Common Stock as reported on the New York Stock Exchange
Composite Transactions Tape on the date of grant or, if the New York Stock
Exchange is closed on that date, on the last preceding date on which the New
York Stock Exchange was open for trading. Upon exercise of an Option, the Option
price is required to be paid in cash or by check, or in shares of Common Stock
valued at the fair market value thereof on the date of payment, or in a
combination of cash and shares of Common Stock.
An Option granted under the 2000 Plan becomes exercisable as to one-third
of the total number of shares of Common Stock covered by the Option on each of
the first, second and third anniversaries of the date of grant of the Option,
provided that the Option automatically becomes immediately exercisable in full
when the director's service ceases for any reason other than death.
The Board of Directors may amend or terminate the 2000 Plan at any time,
provided, however, that no such action shall materially and adversely affect any
rights or obligations of any person, without his consent, under any Option
theretofore granted under the 2000 Plan, and provided further, that no such
amendment, without approval of the holder of a majority of the shares of Common
Stock voted thereon in person or by proxy, shall increase the maximum number of
shares of Common Stock as to which Options may be granted under the 2000 Plan,
reduce the minimum Option exercise price described in the 2000 Plan, extend the
period during which Options may be granted or exercised under the 2000 Plan or
change the class of persons eligible to receive Options under the 2000 Plan.
The 2000 Plan will be effective upon approval of the 2000 Plan by the
stockholders of the Company at the 2000 Annual Meeting. If the 2000 Plan is
approved, awards will be made, commencing in May 2000 and annually thereafter,
on the day after the Annual Meeting of Stockholders of the Company in accordance
with the 2000 Plan. No awards may be granted under the 2000 Plan after December
31, 2004.
A copy of the 2000 Plan is set forth in full in Exhibit A to this proxy
statement. The foregoing description is a summary of some, but not all, of the
essential provisions of the 2000 Plan, and is qualified by reference to the full
text of the 2000 Plan.
Federal Income Tax Consequences
All Options issued under the 2000 Plan are "nonqualified" for federal
income tax purposes. A recipient of an Option will realize no income on the
grant of the Option. However, a recipient will realize ordinary income on the
exercise of the Option, in an amount equal to the excess of the fair market
value of the shares of Common Stock acquired on that date over the exercise
price of the Option. Any difference between such fair market value and the price
at
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which the Common Stock may be subsequently sold by the recipient will be treated
as capital gain or loss, short-term or long-term, depending on the holding
period for the Common Stock acquired on the exercise of the Option. The Company
generally will be entitled to deduct as compensation the amount realized by the
recipient as ordinary income.
The dollar value of benefits to be received by non-employee directors of
the Company are not determinable as of the date hereof; however, if the 2000
Plan is approved by the stockholders of the Company, options to purchase 1,000
shares, or 7,000 shares in the aggregate, will be granted to the Company's
non-employee directors on May 1, 2000.
Vote Required
An affirmative vote of a majority of the shares of Common Stock present in
person or represented by proxy and entitled to vote at the 2000 Annual Meeting
is required to approve the 2000 Plan, provided that the total votes cast on the
proposal represent more than the majority of the outstanding Common Stock.
Shares which are voted against the approval of the 2000 Plan, shares the holders
of which abstain from voting for the approval of the 2000 Plan, and shares held
by brokers or nominees as to which (i) such brokers or nominees do not have
discretionary authority to vote on this matter and (ii) instructions have not
been received from the beneficial owners of such shares ("broker non-votes")
will not be counted in the total number of shares voted for the approval of the
2000 Plan. Abstentions and broker non-votes will be counted as present at the
meeting for quorum purposes.
Management recommends a vote "FOR" the approval of the 2000 Plan. Proxies
solicited by the Board of Directors will be so voted unless stockholders specify
a contrary vote.
3. MATERIAL TERMS OF CERTAIN AWARDS UNDER
THE 1993 LONG-TERM INCENTIVE PLAN
Background
Section 162(m) of the Code generally disallows a deduction to the Company
for compensation paid in any year in excess of $1 million to either the
Company's chief executive officer or the four other most highly compensated
executive officers who are in the employ of the Company at the end of the year.
This deduction limit does not apply to compensation that meets the requirements
for "performance-based compensation." In 1995, the Board of Directors adopted,
and the stockholders approved, amendments to the 1993 Plan to permit certain
awards of long-term incentive compensation under the 1993 Plan to qualify as
"performance-based compensation" under Section 162(m) (a "Qualifying Award").
The qualification of income as
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"performance-based compensation" does not affect the taxation of the income
realized by any officer.
The regulations under Section 162(m) provide that every five years the
Company's stockholders must approve certain material terms of Qualifying Awards.
Such material terms include the employees eligible to receive awards under the
1993 Plan, a description of the performance goals on which a Qualifying Award is
based, and the maximum amount of compensation payable to any employee pursuant
to a Qualifying Award. Because these materials terms were last approved by the
stockholders at the Company's 1995 Annual Meeting in connection with the
approval of amendments to the 1993 Plan, they are being presented again for
approval at the 2000 Annual Meeting in order that certain future awards under
the 1993 Plan will qualify as "performance-based compensation."
Purpose
The purpose of the 1993 Plan is to provide long-term incentives to
employees who are responsible for the continued success and growth of the
Company and its subsidiaries, and to assist the Company in attracting and
retaining executives of experience and ability on a basis competitive with
industry practices. The 1993 Plan permits the Company to provide incentive
compensation of the types commonly known as restricted stock, stock options,
stock appreciation rights, performance shares, performance units and phantom
stock, as well as other types of incentive compensation. The 1993 Plan will
terminate on December 31, 2002, unless sooner terminated by action of the Board
of Directors. No awards may be granted after termination of the 1993 Plan.
Material Terms for Approval by Stockholders
Eligible Employees
The Compensation Committee may select participants in the 1993 Plan from
among the employees of the Company and its subsidiaries. The term "employee," as
used in the 1993 Plan, means any person (including any officer or director)
employed by the Company or a subsidiary on a salaried basis, and the term
"subsidiary," as used in the 1993 Plan, means any corporation a majority of
whose outstanding voting securities is beneficially owned, directly or
indirectly, by the Company. The Company and its subsidiaries currently have
approximately 2,670 employees.
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Performance Goals
The Compensation Committee may grant an award to any participant that is
intended to be a Qualifying Award. Awards granted by the Compensation Committee
which are intended to be Qualifying Awards (other than stock options) must be
granted conditional upon the achievement of one or more of the performance goals
established by the Compensation Committee in writing at the time the award is
granted. The performance goals may vary from participant to participant and
award to award, and may be based upon the attainment of specific amounts of, or
increases in, one or more of the following: revenues, operating income, cash
flow, income before income taxes, net income, earnings per share, net worth,
stockholders' equity, return on equity or assets or total return to
stockholders, whether applicable to the Company or any relevant subsidiary or
business unit or entity in which the Company has a significant investment, or
any combination thereof, as the Compensation Committee may deem appropriate. The
Compensation Committee can also condition payment of any Qualifying Award upon
the attainment of other conditions, such as the completion of a specified period
of service with the Company, and can reduce the amount payable pursuant to such
a Qualifying Award even if the specified performance goal is attained. Prior to
the payment of any Qualifying Award (other than stock options), the Compensation
Committee must certify in writing that the performance goals were satisfied. The
Compensation Committee also has the discretion to grant awards under the 1993
Plan which are not Qualifying Awards.
Maximum Amount of Compensation Payable to Any Employee Pursuant to a
Qualifying Award
A maximum of 26,115 shares of Common Stock, as adjusted to reflect the
two-percent stock dividends paid by the Company in each of the years 1996, 1997
and 1999, and to reflect the spin-off of Chicago Title Corporation in June 1998,
may be granted as Qualifying Awards to any participant in any calendar year,
subject to antidilution and other adjustments. The Compensation Committee's
discretionary authority to make various adjustments to any Qualifying Award is
restricted if such adjustment would adversely affect its status as a Qualifying
Award.
Other Terms of the 1993 Plan
The 1993 Plan is administered by the Compensation Committee. No member of
the Compensation Committee, during the one-year period prior to such membership
or during such membership, shall be granted or awarded equity securities
pursuant to the 1993 Plan or any other plan of the Company or any of its
affiliates, except as permitted by Securities and Exchange Commission rules. The
Compensation Committee has authority to determine, within
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the limits of the 1993 Plan, the individuals to whom awards will be granted, the
type, size and terms of such awards, including any objectives or conditions for
earning payment pursuant to such awards, and the time or times when awards will
be granted.
Awards under the 1993 Plan may include, but need not be limited to, cash
and/or shares of the Company's Common Stock, rights to receive cash and/or
Common Stock and options to purchase shares of Common Stock, including options
intended to qualify as incentive stock options under section 422 of the Code,
and options not intended to so qualify. The Compensation Committee may also make
any other type of award deemed by it to be consistent with the purposes of the
1993 Plan.
Under the terms of the 1993 Plan, an aggregate of 300,000 shares of Common
Stock may be paid to participants under the 1993 Plan and/or purchased pursuant
to stock options granted under the 1993 Plan, subject to antidilution and other
adjustments. Shares of Common Stock paid to participants and/or purchased
pursuant to stock options granted under the 1993 Plan may be either authorized
but unissued shares or shares held by the Company as treasury shares. As of
March 1, 2000, approximately 53,483 shares of Common Stock have been paid
pursuant to awards granted under the 1993 Plan; an additional 480,860 shares of
Common Stock (as adjusted to reflect the two-percent stock dividends paid by the
Company in each of the years 1993 through 1997 and in 1999, and to reflect the
spin-off of Chicago Title Corporation in June 1998) are available for awards
granted under the 1993 Plan.
The 1993 Plan provides that the term of a stock option shall be determined
by the Compensation Committee but that no stock option granted under the 1993
Plan shall be exercisable more than twelve years (or, in the case of an
incentive stock option, ten years) after its grant and the price at which shares
of Common Stock may be purchased under any such stock option shall not be less
than 100 percent of its "fair market value," as defined in the 1993 Plan, on the
date of grant. "Fair market value" is defined in the 1993 Plan generally as the
mean of the high and low sales prices of the Common Stock on the relevant date
as reported on the stock exchange or market on which the Common Stock is
primarily traded, or, if no sale is made on such date, then fair market value is
the weighted average of the mean of the high and low sales prices of the Common
Stock on the next preceding day and the next succeeding day on which such sales
were made as reported on the stock exchange or market on which the Common Stock
is primarily traded. Upon exercise of a stock option, the option price is
required to be paid in cash or, at the discretion of the Compensation Committee,
in shares of Common Stock valued at the fair market value thereof on the date of
payment, or in a combination of cash and shares of Common Stock.
The 1993 Plan authorizes the Compensation Committee, in the event of any
tender offer or exchange offer (other than an offer by the Company) for shares
of Common Stock, to take such action as it may deem appropriate to enable
recipients of outstanding awards to avail
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themselves of the benefits of such offer, including acceleration of payment or
exercise dates and purchase of outstanding stock options.
The Board of Directors, without the consent of any participant, may amend
or terminate the 1993 Plan at any time, provided, however, that no such action
shall adversely affect any rights or obligations with respect to any awards
theretofore made under the 1993 Plan, and provided further, that no such
amendment, without approval of the holders of a majority of the shares of Common
Stock voted thereon, shall increase the number of shares of Common Stock subject
to the 1993 Plan (other than increases pursuant to antidilution and other
adjustments), extend the period during which awards may be granted, increase the
maximum term for which stock options may be issued under the 1993 Plan, decrease
the minimum price at which stock options may be issued under the 1993 Plan, or
materially modify the requirements for eligibility to participate in the 1993
Plan.
The per share fair market value (as defined in the 1993 Plan) of the
Company's Common Stock on March 1, 2000 was $187.625 and the aggregate market
value on such date of the 480,860 shares of Common Stock available to be paid
pursuant to awards granted under the 1993 Plan was $90,221,357.50. There is no
limit specified in the 1993 Plan on the amount of cash which may be paid
pursuant to awards granted under the 1993 Plan.
The Company's Deferred Compensation Plan, which provides for unfunded
deferred compensation arrangements for directors and officers of the Company,
permits deferrals of all or a portion of any payments under the 1993 Plan or any
successor long-term incentive plan for such periods and upon such terms as the
Compensation Committee determines.
A copy of the 1993 Plan is set forth in full in Exhibit B to this proxy
statement. The foregoing description is a summary of some, but not all, of the
essential provisions of the 1993 Plan, and is qualified by reference to the full
text of the 1993 Plan.
Federal Income Tax Consequences
The grant and payment of awards under the 1993 Plan have varying tax
consequences to the Company and varying tax consequences to the participant,
depending upon the nature of the award and certain other consequences.
A participant in the 1993 Plan that is granted shares of Common Stock as
"performance shares" generally will not realize income upon the grant of the
performance shares. Rather, such participant would realize ordinary income, and
the Company would be entitled to a corresponding deduction, subject to the
limitation of Section 162(m), at the time the performance shares are paid. The
amount of income realized by the participant would be equal
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to the fair market value of the shares of Common Stock received as payment for
the "performance shares."
A participant who is granted a non-qualified stock option will not realize
any income on the grant of the option. However, a participant will realize
ordinary income on the exercise of the option, in an amount equal to the excess
of the fair market value of the shares of Common Stock acquired on that date
over the option price. Any difference between such fair market value and the
price at which the Common Stock may be subsequently sold by the participant will
be treated as capital gain or loss, short-term or long-term, depending on the
holding period for the Common Stock acquired on the exercise of the option. The
Company generally will be entitled to deduct as compensation the amount realized
by the participant as ordinary income.
Special rules apply to awards of incentive stock options. A participant who
is granted an incentive stock option will not realize income upon the grant or
exercise of such option, provided that the optionee was an employee of the
Company or a subsidiary of the Company for the entire period from the date of
grant until three months before the date of exercise. If the optionee does not
dispose of the Common Stock acquired upon exercise of an incentive stock option
for at least two years after grant and at least one year after the Common Stock
is transferred to him, all gain realized upon the disposition of the shares of
Common Stock will be treated as long-term capital gain, and any loss will be
treated as long-term capital loss. If these holding periods are met, the Company
will not be allowed any deduction with respect to the exercise of the incentive
stock option.
The amount of options granted under the 1993 Plan which are eligible for
favorable tax treatment as incentive stock options is subject to certain
limitations. In particular, to the extent that the aggregate fair market value
of the Common Stock with respect to which incentive stock options are
exercisable (including by reason of a change in control) for the first time by
any individual during any calendar year exceeds $100,000, the options are not
treated as incentive stock options, but rather are treated as non-qualified
stock options as described above.
The exercise of an incentive stock option may result in the imposition of
an alternative minimum tax. In lieu of the regular income tax, the alternative
minimum tax may be imposed in any taxable year on a taxpayer's alternative
minimum taxable income ("AMTI"), a specially calculated income tax base.
Generally, the difference between the option price and the fair market value on
the date of exercise of the shares of Common Stock acquired upon exercise of an
incentive stock option will be included in computing an optionee's AMTI in the
year of exercise. However, for purposes of determining AMTI in any later year
(but not the regular income tax liability), the basis of the shares of Common
Stock received will be increased by the amount included in the optionee's AMTI
in the year of exercise.
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If the optionee disposes of the Common Stock acquired on the exercise of an
incentive stock option within two years from the date of grant or within one
year from the date of exercise, he will realize ordinary income in the amount of
the lesser of (i) the fair market value of the Common Stock on the date of
exercise less the option price, or (ii) the gain realized, provided the stock
was disposed of by sale or exchange. Any amount realized in excess of the fair
market value of the Common Stock on the date of exercise will be taxable as
long-term or short-term capital gain, depending on the period during which the
optionee has held the Common Stock. In such event, the Company will be allowed a
deduction, subject to the limit of Section 162(m), equal to the amount of
ordinary income taxable to the optionee.
All or some part of the income realized upon the exercise of any incentive
stock option or non-qualified stock option that becomes exercisable upon a
change in control may constitute an "excess parachute payment" as described in
Section 280G of the Code. In that event, the income realized could be subject to
a non-deductible 20 percent excise tax (in addition to regular income tax) and
may not be deductible by the Company.
Vote Required
An affirmative vote of a majority of the shares of Common Stock present in
person or represented by proxy and entitled to vote at the 2000 Annual Meeting
is required to approve the material terms of Qualifying Awards under the 1993
Plan, provided that the total votes cast on the proposal represent more than the
majority of the outstanding Common Stock. Shares which are voted against such
approval, shares the holders of which abstain from voting for such approval, and
broker non-votes will not be counted in the total number of shares voted for
such approval. Abstentions and broker non-votes will be counted as present at
the meeting for quorum purposes. In the event the material terms of Qualifying
Awards are not approved by the stockholders of the Company, the 1993 Plan will
remain in effect as approved in 1995 and the Compensation Committee will
consider what awards are advisable in lieu of Qualifying Awards.
Management recommends a vote "FOR" the approval of the material terms of
Qualifying Awards under the 1993 Plan. Proxies solicited by the Board of
Directors will be so voted unless stockholders specify a contrary vote.
4. RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
The Board of Directors has selected KPMG LLP, independent certified public
accountants, as independent auditors for the Company for the year 2000. A
resolution will be submitted to stockholders at the Annual Meeting for
ratification of such selection. Although
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ratification by stockholders is not a prerequisite to the ability of the Board
of Directors to select KPMG 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 LLP, the selection of independent auditors will be
reconsidered by the Board of Directors; however, the Board of Directors may
select KPMG 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 LLP was Old Alleghany's independent auditors from 1947 and has been
the Company's independent auditors since its incorporation in November 1984.
It is expected that a representative of KPMG LLP will be present at the
Annual Meeting, will have an opportunity to make a statement if he desires to do
so, and will be available to respond to appropriate questions.
5. ALL OTHER MATTERS THAT MAY COME BEFORE THE ANNUAL MEETING
As of the date of this statement, the Board of Directors knows of no
business that will be presented for consideration at the Annual Meeting other
than that referred to above. As to other business, if any, that may come before
the Annual Meeting, proxies in the enclosed form will be voted in accordance
with the judgment of the person or persons voting the proxies.
STOCKHOLDER NOMINATIONS AND PROPOSALS
The 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
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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 2001 Annual
Meeting of Stockholders must be received by the Secretary of the Company by
November 23, 2000 in order for the proposal to be considered for inclusion in
the Company's notice of meeting, proxy statement and proxy relating to the 2001
Annual Meeting, scheduled for Friday, April 27, 2001.
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 Annual
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 2000
Annual Meeting.
Solicitation of proxies will be made by mail, telephone and, to the extent
necessary, by telegrams and personal interviews. Expenses in connection with the
solicitation of proxies will be borne by the Company. Brokers, custodians and
fiduciaries will be requested to transmit proxy material to the beneficial
owners of Common Stock held of record by such persons, at the expense of the
Company. The Company has retained Georgeson Shareholder Communications Inc. to
aid in the solicitation of proxies, and for its services the Company expects to
pay fees of approximately $9,000 plus expenses.
By order of the Board of Directors
ROBERT M. HART
Senior Vice President, General
Counsel and Secretary
March 27, 2000
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EXHIBIT A
ALLEGHANY CORPORATION
2000 DIRECTORS' STOCK OPTION PLAN
1. PURPOSE. The purpose of the Alleghany Corporation 2000 Directors' Stock
Option Plan (the "Plan") is to advance the interests of Alleghany Corporation
(the "Company") and its stockholders by encouraging increased stock ownership by
members of the Board of Directors (the "Board") of the Company who are not
employees of the Company or any of its subsidiaries, in order to promote
long-term stockholder value through ownership of the Company's common stock.
2. ADMINISTRATION. The Plan shall be administered by the Board. The Board
shall have all the powers vested in it by the terms of the Plan, such powers to
include authority (within the limitations described herein) to prescribe the
form of the agreement embodying awards of nonqualified stock options made under
the Plan ("Options"). The Board shall have the power to construe the Plan, to
determine all questions arising thereunder and, subject to the provisions of the
Plan, to adopt and amend such rules and regulations for the administration of
the Plan as it may deem desirable. Any decision of the Board in the
administration of the Plan shall be final and conclusive. The Board may act only
by a majority of its members in office, except that the members thereof may
authorize any one or more of their number or the Secretary or any other officer
of the Company to execute and deliver documents on behalf of the Company. No
member of the Board shall be liable for anything done or omitted to be done by
him or by any other member of the Board in connection with the Plan, except for
his own willful misconduct or as expressly provided by statute.
3. PARTICIPATION. Each member of the Board of the Company who is not an
employee of the Company or any of its subsidiaries (a "Non-Employee Director")
shall be eligible to receive an Option in accordance with Paragraph 5 below. As
used herein, the term "subsidiary" means any corporation at least 40 percent of
whose outstanding voting stock is owned, directly or indirectly, by the Company.
4. AWARDS UNDER THE PLAN.
(a) Types of Awards. Awards under the Plan shall consist only of Options,
which are rights to purchase shares of common stock, par value $1.00 per share,
of the Company (the "Common Stock"). Such Options are subject to the terms,
conditions and restrictions specified in Paragraph 5 below.
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(b) Maximum Number of Shares That May Be Issued. There may be issued under
the Plan pursuant to the exercise of Options granted after April 28, 2000 an
aggregate of not more than 50,000 shares of Common Stock, subject to adjustment
as provided in Paragraph 6 below.
(c) Rights With Respect to Shares. A Non-Employee Director to whom an
Option is granted (and any person succeeding to such a Non-Employee Director's
rights pursuant to the Plan) shall have no rights as a stockholder with respect
to any shares of Common Stock issuable pursuant to any such Option until the
date of the issuance of a stock certificate to him for such shares. Except as
provided in Paragraph 6 below, no adjustment shall be made for dividends,
distributions or other rights (whether ordinary or extraordinary, and whether in
cash, securities or other property) for which the record date is prior to the
date such stock certificate is issued.
5. NONQUALIFIED STOCK OPTIONS. Each Option granted under the Plan shall be
evidenced by an agreement in such form as the Board shall prescribe from time to
time in accordance with the Plan and shall comply with the following terms and
conditions:
(a) The Option exercise price shall be the fair market value of the shares
of Common Stock subject to such Option on the date the Option is granted, which
shall be the average of the high and the low sales prices of a share of Common
Stock on the date of grant as reported on the New York Stock Exchange Composite
Transactions Tape or, if the New York Stock Exchange is closed on that date, on
the last preceding date on which the New York Stock Exchange was open for
trading.
(b) The term of any Option shall be determined by the Board of Directors,
but in no event shall any Option be exercisable more than ten years after the
date on which it was granted.
(c) As of the first business day after the conclusion of each annual
meeting of stockholders of the Company, each Non-Employee Director shall
automatically receive an Option for 1,000 shares of Common Stock; provided,
however, that any Options granted under the Plan prior to any required approval
by the stockholders of the Company shall be conditioned upon such approval.
(d) Prior to stockholder approval of the Plan, the Option shall not be
transferable by the optionee. Thereafter, the Option shall be transferable only
by will or the laws of descent and distribution, and shall be exercisable during
the optionee's lifetime only by him.
(e) The Option shall not be exercisable:
(i) before the expiration of one year from the date it is granted or
after the expiration of ten years from the date it is granted and, subject
to prior stockholder approval in
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accordance with Paragraph 10 below, may be exercised during such period as
follows: one-third (33 1/3 percent) of the total number of shares of Common
Stock covered by the Option shall become exercisable each year beginning
with the first anniversary of the date it is granted; provided that an
Option shall automatically become immediately exercisable in full when the
Non-Employee Director ceases to be a Non-Employee Director for any reason
other than death;
(ii) unless payment in full is made for the shares of Common Stock
being acquired thereunder at the time of exercise; such payment shall be
made
(A) in United States dollars by cash or check, or
(B) in lieu thereof, by tendering to the Company shares of Common
Stock owned by the person exercising the Option and having a fair market
value equal to the cash exercise price applicable to such Option, such
fair market value to be the average of the high and the low sales prices
of a share of Common Stock on the date of exercise as reported on the
New York Stock Exchange Composite Transactions Tape, or, if the New York
Stock Exchange is closed on that date, on the last preceding date on
which the New York Stock Exchange was open for trading, or
(C) by a combination of United States dollars and shares of Common
Stock as aforesaid; and
(iii) unless the person exercising the Option has been, at all times
during the period beginning with the date of grant of the Option and ending
on the date of such exercise, a Non-Employee Director of the Company,
except that
(A) if such person shall cease to be such a Non-Employee Director
for reasons other than death, while holding an Option that has not
expired and has not been fully exercised, such person, at any time
within one year of the date he ceased to be such a Non-Employee Director
(but in no event after the Option has expired under the provisions of
subparagraph 5(e)(i) above), may exercise the Option with respect to any
shares of Common Stock as to which he has not exercised the Option on
the date he ceased to be such a Non-Employee Director; or
(B) if any person to whom an Option has been granted shall die
holding an Option that has not been fully exercised, his executors,
administrators, heirs or distributees, as the case may be, may, at any
time within one year after the date of such death (but in no event after
the Option has expired under the provisions of subparagraph 5(e)(i)
above), exercise the Option with respect to any shares of
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Common Stock as to which the decedent could have exercised the Option at
the time of his death.
6. DILUTION AND OTHER ADJUSTMENTS. In the event of any change in the
outstanding shares of Common Stock of the Company by reason of any stock split,
stock dividend, recapitalization, merger, consolidation, reorganization,
combination or exchange of shares or other similar event, the number or kind of
shares that may be issued under the Plan pursuant to subparagraphs 4(a) and 4(b)
above shall be automatically adjusted to give effect to the occurrence of such
event, and the number or kind of shares subject to, or the Option price per
share under, any outstanding Option shall be automatically adjusted so that the
proportionate interest of the participant shall be maintained as before the
occurrence of such event; such adjustment in outstanding Options shall be made
without change in the total Option exercise price applicable to the unexercised
portion of such Options and with a corresponding adjustment in the Option
exercise price per share, and such adjustment shall be conclusive and binding
for all purposes of the Plan.
7. MISCELLANEOUS PROVISIONS.
(a) Except as expressly provided for in the Plan, no Non-Employee Director
or other person shall have any claim or right to be granted an Option under the
Plan. Neither the Plan nor any action taken hereunder shall be construed as
giving any Non-Employee Director any right to be retained in the service of the
Company.
(b) A participant's rights and interest under the Plan may not be assigned
or transferred in whole or in part either directly or by operation of law or
otherwise (except, in the event of a participant's death, by will or the laws of
descent and distribution), including, but not by way of limitation, execution,
levy, garnishment, attachment, pledge, bankruptcy or in any other manner, and no
such right or interest of any participant in the Plan shall be subject to any
obligation or liability of such participant.
(c) No shares of Common Stock shall be issued hereunder unless counsel for
the Company shall be satisfied that such issuance will be in compliance with
applicable federal, state and other securities laws.
(d) It shall be a condition to the obligation of the Company to issue
shares of Common Stock upon exercise of an Option, that the participant (or any
beneficiary or person entitled to act under subparagraphs 5(e)(iii)(B) above)
pay to the Company, upon its demand, such amount as may be requested by the
Company for the purpose of satisfying any liability to withhold federal, state,
local or foreign income or other taxes. If the amount requested is not paid, the
Company may refuse to issue shares of Common Stock.
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(e) The expenses of the Plan shall be borne by the Company.
(f) The Plan shall be unfunded. The Company shall not be required to
establish any special or separate fund or to make any other segregation of
assets to assure the issuance of shares upon exercise of any Option under the
Plan and issuance of shares upon exercise of Options shall be subordinate to the
claims of the Company's general creditors.
(g) By accepting any Option or other benefit under the Plan, each
participant and each person claiming under or through him shall be conclusively
deemed to have indicated his acceptance and ratification of, and consent to, the
Plan, the terms and conditions of any agreement embodying awards of Options and
any action taken under the Plan by the Company or the Board.
(h) The masculine pronoun means the feminine and the singular means the
plural wherever appropriate.
(i) The appropriate officers of the Company shall cause to be filed any
reports, returns or other information regarding Options hereunder or any shares
of Common Stock issued pursuant hereto as may be required by Section 13 or 15(d)
of the Securities Exchange Act of 1934, as amended, or any other applicable
statute, rule or regulation.
8. AMENDMENT OR DISCONTINUANCE. The Plan may be amended at any time and
from time to time by the Board as the Board shall deem advisable; provided,
however, that (a) except as provided in Paragraph 6 above, the Board may not,
without further approval by the stockholders of the Company in accordance with
Paragraph 10 below, increase the maximum number of shares of Common Stock as to
which Options may be granted under the Plan, reduce the minimum Option exercise
price described in subparagraph 5(a) above, extend the period during which
Options may be granted or exercised under the Plan or change the class of
persons eligible to receive Options under the Plan; and (b) Paragraph 3 and
subparagraphs 5(a) and 5(d) shall not be amended more than once every six
months, other than to comport with changes in the Internal Revenue Code of 1986,
as amended, the Employee Retirement Income Security Act of 1974, as amended, or
the rules under either of such laws. No amendment of the Plan shall materially
and adversely affect any right of any participant with respect to any Option
theretofore granted without such participant's written consent.
9. TERMINATION. The Plan shall terminate upon the earlier of the following
dates or events to occur:
(a) upon the adoption of a resolution of the Board terminating the Plan; or
(b) December 31, 2004.
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No termination of the Plan shall materially and adversely affect any of the
rights or obligations of any person, without his consent, under any Option
theretofore granted under the Plan.
10. STOCKHOLDER APPROVAL. The Plan shall be submitted to the stockholders
of the Company for their approval. Except to the extent otherwise required by
the Company's Restated Certificate of Incorporation or the Company's By-Laws,
the stockholders shall be deemed to have approved the Plan if and when it is
approved at a meeting of the stockholders by a majority of the voting power of
the Voting Stock (all as defined in the Company's Restated Certificate of
Incorporation) present in person or represented by proxy and entitled to vote at
such meeting.
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EXHIBIT B
ALLEGHANY CORPORATION
1993 LONG-TERM INCENTIVE PLAN
1. PURPOSES OF THE PLAN. The purposes of the Alleghany Corporation 1993
Long-Term Incentive Plan (the "Plan") are to further the long-term growth of
Alleghany Corporation (the "Corporation"), to the benefit of its stockholders,
by providing incentives to the officers and employees of the Corporation and its
subsidiaries who will be largely responsible for such growth, and to assist the
Corporation in attracting and retaining executives of experience and ability on
a basis competitive with industry practices. The Plan permits the Corporation to
provide incentive compensation of the types commonly known as restricted stock,
stock options, stock appreciation rights, performance shares, performance units
and phantom stock, as well as other types of incentive compensation.
2. ADMINISTRATION OF THE PLAN. The Plan shall be administered by the
Compensation Committee of the Board of Directors of the Corporation (the
"Committee"). No member of the Committee, during the one year period prior to
such membership or during such membership, shall be granted or awarded equity
securities pursuant to the Plan or any other plan of the Corporation or any of
its affiliates, except as permitted by Rule 16b-3(c)(2)(i) promulgated under the
Securities Exchange Act of 1934, as amended, as such Rule may be amended from
time to time. Subject to the provisions of the Plan, the Committee shall have
exclusive power to select the employees to participate in the Plan, to determine
the type, size and terms of awards to be made to each participant selected, and
to determine the time or times when awards will be granted. The Committee's
interpretation of the Plan or of any awards granted thereunder shall be final
and binding on all parties concerned, including the Corporation and any
participant. The Committee shall have authority, subject to the provisions of
the Plan, to establish, adopt and revise such rules, regulations, guidelines,
forms of agreements and instruments relating to the Plan as it may deem
necessary or advisable for the administration of the Plan.
3. PARTICIPATION. Participants in the Plan shall be selected by the
Committee from among the employees of the Corporation and its subsidiaries. The
term "employee" shall mean any person (including any officer or director)
employed by the Corporation or a subsidiary on a salaried basis. The term
"subsidiary" shall mean any corporation a majority of whose outstanding voting
securities is beneficially owned, directly or indirectly, by the Corporation.
Participants may receive multiple awards under the Plan.
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4. AWARDS.
(a) Types. Awards under the Plan may include, but need not be limited to,
cash and/or shares of the Corporation's common stock, $1.00 par value ("Common
Stock"), rights to receive cash and/or shares of Common Stock, and options
("Options") to purchase shares of Common Stock, including options intended to
qualify as incentive stock options under Section 422 of the Internal Revenue
Code of 1986, as amended, and options not intended so to qualify. The Committee
may also make any other type of award deemed by it to be consistent with the
purposes of the Plan.
(b) Certain Qualifying Awards. The Committee, in its sole discretion, may
grant an award to any participant with the intent that such award qualifies as
"performance-based compensation" under Section 162(m) of the Internal Revenue
Code of 1986, as amended (a "Qualifying Award"). The right to receive (or
retain) any award granted as a Qualifying Award (other than an Option) shall be
conditional upon the achievement of performance goals established by the
Committee in writing at the time such award is granted. Such performance goals,
which may vary from participant to participant and award to award, shall be
based upon the attainment of specific amounts of, or increases in, one or more
of the following: revenues, operating income, cash flow, income before income
taxes, net income, earnings per share, net worth, stockholders' equity, return
on equity or assets or total return to stockholders, whether applicable to the
Corporation or any relevant subsidiary or business unit or entity in which the
Corporation has a significant investment, or any combination thereof as the
Committee may deem appropriate. Prior to the payment of any award granted as a
Qualifying Award (other than an Option), the Committee shall certify in writing
that the performance goals were satisfied. The maximum number of shares of
Common Stock with respect to which Qualifying Awards may be granted to any
participant in any calendar year shall be 15,000 shares of Common Stock, subject
to adjustment as provided in section 7(a) hereof.
(c) Deferred Payments. In awarding any right to receive cash and/or shares
of Common Stock, the Committee may specify that the payment of all or any
portion of such cash and/or shares of Common Stock shall be deferred until a
later date. Deferrals shall be for such periods and upon such other terms as the
Committee may determine.
(d) Vesting, Other Performance Requirements and Forfeiture. In awarding
any Options or any rights to receive cash and/or shares of Common Stock
(including Qualifying Awards), the Committee (1) may specify that the right to
exercise such Options or the right to receive payment of such cash and/or shares
of Common Stock shall be conditional upon the fulfillment of specified
conditions, including, without limitation, completion of specified periods of
service in the employ of the Corporation or its subsidiaries, and the
achievement of specified business and/or personal performance goals, and (2) may
provide for the forfeiture of all or any portion
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of any such Options or rights in specified circumstances. The Committee may also
specify by whom and/or in what manner the accomplishment of any such performance
goals shall be determined.
(e) Agreements. Any award under the Plan may, in the Committee's
discretion, be evidenced by an agreement, which, subject to the provisions of
the Plan, may contain such terms and conditions as may be approved by the
Committee, and shall be executed by an officer on behalf of the Corporation and
by the recipient of the award.
5. SHARES OF STOCK SUBJECT TO THE PLAN. Subject to adjustment as provided
in section 7(a) hereof, the number of shares of Common Stock which may be paid
to participants under the Plan and/or purchased pursuant to Options granted
under the Plan shall not exceed an aggregate of 300,000 shares. Shares to be
delivered or purchased under the Plan may be either authorized but unissued
shares of Common Stock or shares of Common Stock held by the Corporation as
treasury shares.
6. OPTIONS.
(a) Term of Options. The term of any Option shall be determined by the
Committee, but in no event shall any Option be exercisable more than twelve
years after the date on which it was granted.
(b) Option Price; Fair Market Value. The price ("Option Price") at which
shares of Common Stock may be purchased pursuant to any Option shall be
determined by the Committee at the time the Option is granted, but in no event
shall the Option Price be less than 100 per cent of the Fair Market Value of
such shares on the date the Option is granted. For purposes of the Plan, Fair
Market Value is the mean of the high and low sales prices of the Common Stock on
the relevant date as reported on the stock exchange or market on which the
Common Stock is primarily traded, or, if no sale is made on such date, then Fair
Market Value is the weighted average of the mean of the high and low sales
prices of the Common Stock on the next preceding day and the next succeeding day
on which such sales were made as reported on the stock exchange or market on
which the Common Stock is primarily traded.
(c) Payment Upon Exercise. Upon exercise of an Option, the Option Price
shall be payable to the Corporation in cash, or, at the discretion of the
Committee, in shares of Common Stock valued at the Fair Market Value thereof on
the date of payment, or in a combination of cash and shares of Common Stock.
(d) Stock Appreciation Rights; Surrender of Options. The Corporation may,
if the Committee so determines, accept the surrender by a participant, or the
personal representative of a participant, of an Option, in consideration of a
payment by the Corporation equal to the
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difference obtained by subtracting the aggregate Option Price from the aggregate
Fair Market Value of the Common Stock covered by the Option on the date of such
surrender, such payment to be in cash, or, if the Committee so provides, in
shares of Common Stock valued at Fair Market Value on the date of such
surrender, or partly in shares of Common Stock and partly in cash.
(e) Effect of Expiration, Termination or Surrender of Options. If an
Option shall expire or terminate unexercised as to any shares of Common Stock
covered thereby, such shares of Common Stock shall not be deducted from the
number available under section 5 hereof. If an Option shall be surrendered as
provided in section 6(d) hereof, the shares of Common Stock (if any) paid in
consideration of such surrender, but not the shares which had been covered by
the Option, shall be deducted from the number available under section 5 hereof.
7. DILUTION AND OTHER ADJUSTMENTS.
(a) Changes in Capital Structure. In the event of any subdivision or
combination of the outstanding shares of Common Stock, stock dividend, capital
reorganization, liquidation, reclassification of shares, merger, consolidation,
or sale, lease or transfer of substantially all of the assets of the
Corporation, the Board of Directors of the Corporation shall make such equitable
adjustments as it may deem appropriate in the Plan and the awards thereunder,
including, without limitation, an adjustment in the total number of shares of
Common Stock which may thereafter be delivered or purchased under the Plan and
in the maximum number of shares of Common Stock with respect to which awards may
be granted to any participant in any year under section 4(b) hereof. Agreements
evidencing Options may include such provisions as the Committee may deem
appropriate with respect to the adjustments to be made to the terms of such
Options upon the occurrence of any of the foregoing events.
(b) Tender Offers and Exchange Offers. In the event of any tender offer or
exchange offer, by any person other than the Corporation, for shares of Common
Stock, the Committee may make such adjustments in outstanding awards and
authorize such further action as it may deem appropriate to enable the
recipients of outstanding awards to avail themselves of the benefits of such
offer, including, without limitation, acceleration of the exercise date of
outstanding Options so that they become immediately exercisable in whole or in
part, or offering to acquire all or any portion of specified categories of
Options for a price determined pursuant to section 6(d) hereof, or acceleration
of the payment of outstanding awards payable, in whole or in part, in shares of
Common Stock.
(c) Limits on Discretion to Make Adjustments. Notwithstanding any
provision of this section 7 to the contrary, no adjustment shall be made in any
outstanding Qualifying Awards to the extent that such adjustment would adversely
affect the status of that Qualifying Award as
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"performance-based compensation" under Section 162(m) of the Internal Revenue
Code of 1986, as amended.
8. MISCELLANEOUS PROVISIONS.
(a) Right to Awards. No employee or other person shall have any claim or
right to be granted any award under the Plan.
(b) Rights as Stockholders. A participant shall have no rights as a holder
of Common Stock by reason of awards under the Plan, unless and until
certificates for shares of Common Stock are issued to the participant.
(c) No Assurance of Employment. Neither the Plan nor any action taken
thereunder shall be construed as giving any employee any right to be retained in
the employ of the Corporation or any subsidiary.
(d) Costs and Expenses. All costs and expenses incurred in administering
the Plan shall be borne by the Corporation.
(e) Unfunded Plan. The Plan shall be unfunded. The Corporation shall not
be required to establish any special or separate fund nor to make any other
segregation of assets to assure the payment of any award under the Plan.
(f) Withholding Taxes. The Corporation shall have the right to deduct from
all awards hereunder paid in cash any federal, state, local or foreign taxes
required by law to be withheld with respect to such payments and, with respect
to awards paid in stock, to require the payment (through withholding from the
participant's salary or otherwise) of any such taxes, but the Committee may make
such arrangements for the payment of such taxes as the Committee in its
discretion shall determine, including payment with shares of Common Stock.
(g) Assignment or Transfer. No awards under the Plan nor any rights or
interests therein shall be assignable or transferable by the recipient thereof
except, in the event of a participant's death, to his designated beneficiary as
hereinafter provided, or by will or the laws of descent and distribution. During
the lifetime of the recipient, awards under the Plan requiring exercise shall be
exercisable only by such holder or by the guardian or legal representative of
such holder.
(h) Beneficiary. Any payments on account of awards under the Plan to a
deceased participant shall be paid to such beneficiary as has been designated by
the participant in writing to the Secretary of the Corporation or, in the
absence of such designation, according to the laws of descent and distribution.
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(i) Nature of Benefits. Awards under the Plan, and payments made pursuant
thereto, are not a part of salary or base compensation.
(j) Compliance with Legal Requirements. The obligation of the Corporation
to issue or deliver shares of Common Stock upon exercise of Options or otherwise
shall be subject to satisfaction of all applicable legal and securities exchange
requirements, including, without limitation, the provisions of the Securities
Act of 1933, as amended, and the Securities Exchange Act of 1934, as amended.
The Corporation shall endeavor to satisfy all such requirements in such a manner
as to permit at all times the exercise of all outstanding Options in accordance
with their terms, and to permit the issuance and delivery of shares of Common
Stock whenever provided for by the terms of any award made under the Plan.
9. AMENDMENT OR TERMINATION OF THE PLAN. The Board of Directors of the
Corporation, without the consent of any participant, may at any time terminate
or from time to time amend the Plan in whole or in part; provided, however, that
no such action shall adversely affect any rights or obligations with respect to
any awards theretofore made under the Plan; and provided, further, that no
amendment, without approval of the holders of Common Stock by an affirmative
vote of a majority of the shares of Common Stock voted thereon in person or by
proxy, shall (i) increase the aggregate number of shares subject to the Plan
(other than increases pursuant to section 7 hereof), (ii) extend the period
during which awards may be granted under the Plan, (iii) increase the maximum
term for which Options may be issued under the Plan, (iv) decrease the minimum
Option Price at which Options may be issued under the Plan, or (v) materially
modify the requirements for eligibility to participate in the Plan. With the
consent of the participants affected, the Committee may amend outstanding
agreements evidencing awards under the Plan, and may amend the terms of awards
not evidenced by such agreements, in any manner not inconsistent with the terms
of the Plan.
10. EFFECTIVE DATE AND TERM OF PLAN. The Plan, as amended and restated,
shall be effective as to awards granted on or after January 1, 1994, and awards
with performance periods which begin in 1994, and shall become effective when
approved at a meeting of stockholders by a majority of the voting power of the
Voting Stock (all as defined in the Corporation's Restated Certificate of
Incorporation) present in person or represented by proxy and entitled to vote at
such meeting. The Plan shall terminate at the close of business on December 31,
2002, unless sooner terminated by action of the Board of Directors of the
Corporation. No award may be granted hereunder after termination of the Plan,
but such termination shall not affect the validity of any award then
outstanding.
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11. LAW GOVERNING.
The validity and construction of the Plan and any agreements entered into
thereunder shall be governed by the laws of the State of New York, but without
regard to the conflict laws of the State of New York except to the extent that
such conflict laws require application of the laws of the State of Delaware.
Amended and Restated
January 1, 1994
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PROXY PROXY
ALLEGHANY CORPORATION
PROXY FOR ANNUAL MEETING ON APRIL 28, 2000
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints F.M. Kirby, John J. Burns, Jr. and
Robert M. Hart proxies, each with the power to appoint his substitute and with
authority in each to act in the absence of the other, to represent and to vote
all shares of stock of Alleghany Corporation which the undersigned is entitled
to vote at the Annual Meeting of Stockholders of Alleghany Corporation to be
held at The Chase Manhattan Bank, 270 Park Avenue, Eleventh Floor, Room C, New
York, New York, on Friday, April 28, 2000 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
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ALLEGHANY CORPORATION
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY. [X]
A VOTE FOR ITEMS 1, 2, 3 AND 4 IS RECOMMENDED BY THE BOARD OF DIRECTORS
1. Election of Directors:
John J. Burns, Jr. Dan R. Carmichael William K. Lavin
FOR WITHHELD FOR ALL
ALL ALL EXCEPT
[ ] [ ] [ ]
INSTRUCTION: To withhold authority to vote for an individual nominee, write
that nominee's name in the following space:
2. Proposal to approve the Company's 2000 Directors' Stock Option Plan.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
3. Proposal to approve the material terms of certain awards under the Company's
1993 Long-Term Incentive Plan.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
4. Ratification of KPMG LLP as independent auditors for the Company for the year
2000.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
THIS PROXY WILL BE VOTED IN ACCORDANCE WITH SPECIFICATIONS MADE. IF NO
CHOICES ARE INDICATED, THIS PROXY WILL BE VOTED FOR ITEMS 1, 2, 3 AND 4.
Please sign exactly as your name or names appear hereon. For joint accounts,
both owners should sign. When signing as executor, administrator, attorney,
trustee or guardian, etc., please give your full title.
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Signature
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Signature
Dated: , 2000
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