<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement [ ] 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 Rule 14a-11(c) or Rule 14a-12
</TABLE>
PXRE Corporation
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials:
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE> 2
LOGO
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JUNE 5, 1997
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of PXRE
CORPORATION ("PXRE") will be held on June 5, 1997 commencing at 9:00 a.m. at the
offices of PXRE Corporation, 399 Thornall Street, 14th Floor, Edison, New Jersey
for the following purposes:
(1) To elect three members of the Board of Directors who, with the
seven other directors whose terms of office do not expire at this meeting,
will constitute the full Board, as described in the Proxy Statement dated
April 30, 1997 accompanying this Notice of Annual Meeting (the "Proxy
Statement");
(2) To ratify the appointment of Price Waterhouse LLP as PXRE's
independent public accountants for the fiscal year ending December 31,
1997;
(3) To approve the PXRE Corporation Restated Employee Annual Incentive
Bonus Plan, as amended;
(4) To approve the PXRE Corporation 1992 Officer Incentive Plan, as
amended;
(5) To approve the adoption of an amendment to the PXRE Corporation
Director Stock Option Plan;
(6) To approve the adoption of the PXRE Corporation Director Equity
and Deferred Compensation Plan; and
(7) To transact such other business as may properly come before the
meeting or any adjournment or adjournments thereof.
Only holders of the Common Stock of PXRE at the close of business on April
11, 1997, as shown by the transfer books of PXRE, are entitled to notice of, and
to vote at, this Annual Meeting and any adjournments.
By Order of the Board of Directors
PXRE CORPORATION
F. SEDGWICK BROWNE, Secretary
April 30, 1997
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ALL HOLDERS OF THE COMMON STOCK OF PXRE ARE INVITED TO ATTEND THIS ANNUAL
MEETING IN PERSON. THOSE HOLDERS OF COMMON STOCK WHO ARE UNABLE TO ATTEND IN
PERSON ARE RESPECTFULLY URGED TO EXECUTE AND RETURN THE ENCLOSED PROXY AT THEIR
EARLIEST CONVENIENCE. HOLDERS OF COMMON STOCK WHO EXECUTE THIS PROXY MAY
NEVERTHELESS ATTEND THE MEETING AND VOTE THEIR SHARES IN PERSON.
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<PAGE> 3
PROXY STATEMENT
---------------------
ANNUAL MEETING OF STOCKHOLDERS
OF PXRE CORPORATION
JUNE 5, 1997
---------------------
SOLICITATION OF PROXIES
The accompanying Proxy is solicited by the Board of Directors of PXRE
CORPORATION, 399 Thornall Street, 14th Floor, Edison, New Jersey 08837 ("PXRE")
for use at the Annual Meeting of Stockholders to be held on June 5, 1997 and at
any and all adjournments thereof (the "Annual Meeting"). Any Proxy given may be
revoked at any time before it is actually voted on any matter by notifying the
Treasurer of PXRE in writing, or by submitting a duly executed Proxy bearing a
later date or by voting at the Annual Meeting. This Proxy Statement and the
accompanying Proxy are being mailed on or about April 30, 1997.
The cost of preparing, assembling and mailing this Proxy Statement and the
material enclosed herewith is being borne by PXRE. Directors, officers and
employees of PXRE may solicit Proxies orally or in writing, without additional
compensation. PXRE's regularly retained investor relations firm, Corporate
Communications Inc., may also be called upon to solicit Proxies by telephone or
by mail. PXRE will reimburse brokers, fiduciaries and custodians for their costs
in forwarding proxy materials to beneficial owners of Common Stock held in their
names.
OUTSTANDING STOCK AND VOTING RIGHTS
The Board of Directors has fixed the close of business on April 11, 1997 as
the record date for the determination of stockholders entitled to notice of the
Annual Meeting, and only holders of record of the Common Stock (par value $.01
per share) of PXRE at that time will be entitled to vote at the meeting. As of
the record date, 13,925,447 shares of Common Stock were issued and outstanding
and held of record by approximately 150 stockholders. Each share of Common Stock
is entitled to one vote on each matter presented at the Annual Meeting. The
presence at the meeting in person or by proxy of the holders of a majority of
the outstanding shares of Common Stock entitled to vote is necessary to
constitute a quorum.
A broker non-vote occurs when a nominee holding shares for a beneficial
owner does not vote on a particular proposal because the nominee does not have
discretionary voting power with respect to that item under consideration and has
not received instructions from the beneficial owner. Under Delaware law,
abstaining votes and broker non-votes are deemed to be present for purposes of
determining whether a quorum is present at a meeting. All matters to be voted on
at the Annual Meeting will be decided by the affirmative vote of a majority of
the shares of Common Stock present or represented at the meeting and entitled to
vote. On any such matter, an abstention will have the same effect as a negative
vote, but a broker non-vote will have no effect on the vote.
<PAGE> 4
The following table indicates those persons known to PXRE (including any
"group" as that term is used in Section 13(d)(3) of the Securities Exchange Act
of 1934, as amended (the "Exchange Act")) who own beneficially more than 5% of
PXRE's Common Stock as of the record date:
<TABLE>
<CAPTION>
NAME AND ADDRESS AMOUNT AND NATURE OF PERCENT
TITLE OF CLASS OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP OF CLASS
- -------------- ------------------- -------------------- --------
<S> <C> <C> <C>
Common Stock FMR Corp. and Affiliates.................. 1,249,463 shares(1) 9.0%
82 Devonshire Street
Boston, MA 02109
Common Stock T. Rowe Price Associates, Inc............. 925,163 shares(2) 6.6
100 East Pratt Street
Baltimore, MD 21202
Common Stock Heartland Advisors, Inc................... 900,880 shares(3) 6.5
790 North Milwaukee St.
Milwaukee, WI 53202
Common Stock Franklin Resources, Inc. and Affiliates... 788,938 shares(4) 5.7
777 Mariners Island Blvd.
San Mateo, CA 94404
Merrill Lynch & Co., Inc. and
Common Stock Affiliates................................ 772,800 shares(5) 5.5
World Financial Center, North Tower
250 Vesey Street
New York, NY 10281
</TABLE>
- ---------------
(1) According to the Schedule 13G filed by FMR Corp. ("FMR") and various
affiliates thereof with the Securities and Exchange Commission (the
"Commission"), FMR, Mr. Edward C. Johnson 3d, and Abigail P. Johnson, may be
deemed to beneficially own the 1,249,463 shares of Common Stock indicated
opposite FMR's name in the above table, by virtue of FMR's 100% ownership of
Fidelity Management & Research Company ("Fidelity"). Fidelity, in its
capacity as a registered investment advisor to various registered investment
companies, may be deemed to be the beneficial owner of 1,249,463 shares of
Common Stock. Fidelity Low-Priced Stock Fund, an investment company of which
Fidelity is investment advisor, may be deemed to be the beneficial owner of
727,063 shares of Common Stock (5.2% of PXRE's Common Stock). Neither FMR,
Mr. Johnson nor Ms. Johnson report sole or shared voting power in respect of
the 1,249,463 shares of Common Stock. Each of FMR, Mr. Johnson and Ms.
Johnson report sole dispositive power in respect of the 1,249,463 shares of
Common Stock.
(2) According to the Schedule 13G filed by T. Rowe Price Associates, Inc.
("Price Associates") with the Commission, Price Associates, in its capacity
as an investment advisor, may be deemed to be the beneficial owner of the
925,163 shares of Common Stock indicated opposite Price Associates' name in
the above table. Such shares are owned by various individual and
institutional investors which Price Associates serves as an investment
advisor. Price Associates has power to direct investments with respect to
such shares. Price Associates disclaims beneficial ownership of the 925,163
shares of Common Stock.
(3) According to the Schedule 13G filed by Heartland Associates, Inc.
("Heartland") with the Commission, Heartland, a registered investment
advisor, may be deemed to beneficially own the 900,880 shares of Common
Stock indicated opposite Heartland's name in the above table. Heartland
reports sole voting power in respect of 810,283 shares of Common Stock and
sole dispositive power in respect of 900,880 shares of Common Stock.
2
<PAGE> 5
(4) According to the Schedule 13G filed by Franklin Resources, Inc. ("FRI") and
various affiliates thereof with the Commission, FRI (a parent holding
company) and Charles B. Johnson and Rupert H. Johnson, Jr. (principal
shareholders of FRI), may be deemed to beneficially own the 788,938 shares
of Common Stock indicated opposite FRI's name in the above table, which
shares are held by persons and entities advised by FRI or its subsidiaries.
Franklin Advisory Services, Inc. and Franklin Mutual Advisers, Inc.,
investment advisory subsidiaries of FRI, report sole voting and dispositive
power in respect of 425,700 shares and 363,238 shares of Common Stock,
respectively (in each case, less than 5% of PXRE's Common Stock). According
to the Schedule 13G, Franklin Balance Sheet Investment Fund, a series of
Franklin Value Investors Trust and a registered investment company, has an
interest in more than 5% of PXRE's Common Stock. FRI, Messrs. Johnson and
the investment advisory subsidiaries of FRI disclaim beneficial ownership of
the 788,938 shares of Common Stock.
(5) According to the Schedule 13G filed by Merrill Lynch & Co., Inc. ("ML&Co.")
and various affiliates thereof with the Commission, ML&Co., a parent holding
company, may be deemed to beneficially own the 772,800 shares of Common
Stock indicated opposite its name in the above table, which shares may be
deemed to be beneficially owned by Merrill Lynch Group, Inc. ("ML Group"), a
wholly-owned direct subsidiary of ML&Co. ML Group and Princeton Services,
Inc. ("PSI"), a wholly-owned direct subsidiary of ML Group, are parent
holding companies each of which may be deemed to beneficially own 772,800
shares of Common Stock, with respect to which they may be deemed to have
shared voting and shared investment power. PSI is the general partner of
Fund Asset Management, L.P. ("FAM"). Merrill Lynch Special Value Fund (the
"Fund"), a registered investment company of which FAM is the investment
advisor, and FAM may each be deemed to be the beneficial owner of, and to
have shared voting and investment power with respect to, 700,300 shares of
Common Stock (5.0% of PXRE's Common Stock). Each of ML&Co., ML Group and PSI
disclaim beneficial ownership of all such shares.
To PXRE's knowledge, no other person owns of record or beneficially more
than 5% of the outstanding shares of its Common Stock as of the record date.
NOMINEES FOR ELECTION AS DIRECTORS
PXRE's Certificate of Incorporation and Bylaws provide for the election of
directors by the stockholders. For this purpose, the Board of Directors is
divided into three classes (Classes I, II and III) as nearly equal in number as
possible. The terms of office of the members of one class expire and a successor
class is elected at each annual meeting of the stockholders. Under the
Certificate of Incorporation, the Board of Directors has the power to create up
to two additional directorships within any twelve-month period. Vacancies in
directorships (including vacancies resulting from resignations and newly created
directorships) may be filled, until the expiration of the term of the vacated
directorship and until a successor is elected and qualified, by the vote of
66 2/3% of the directors then in office.
At the Annual Meeting, the terms of office of the Class II directors will
terminate; therefore, the Board of Directors has nominated Robert W. Fiondella,
Philip R. McLoughlin and Donald Trautlein (all of whom are also presently
serving on the Board) for re-election as Class II directors to serve three-year
terms until the annual meeting of stockholders is held in 2000 and until their
successors have been elected and qualified. It is intended that Proxies will be
voted in favor of these persons. If, for any reason, any of the nominees is not
able or willing to serve as a director when the election occurs (a situation
which is not presently contemplated), it is intended that the Proxies will be
voted for the election of a substitute nominee in accordance with the judgment
of the Proxy holder.
3
<PAGE> 6
INFORMATION CONCERNING DIRECTORS AND NOMINEES
Gerald L. Radke (52) has been the President, Chief Executive Officer and a
director of PXRE since 1986 (and its Chairman of the Board of Directors since
June 1995), and of PXRE's predecessor since its formation in April 1982. From
August 1993 until the merger (the "Merger") in December 1996 of Transnational Re
Corporation ("TREX") with and into PXRE, Mr. Radke also served as President,
Chief Executive Officer and Chairman of the Board of Directors of TREX. (See
"CERTAIN BUSINESS RELATIONSHIPS -- The Transnational Companies".)
Robert W. Fiondella (54) has been Chairman of the Board of Directors,
President and Chief Executive Officer of Phoenix Home Life Mutual Insurance
Company ("Phoenix Home Life") since February 1994. From July 1992 to February
1994, he was President and Principal Operating Officer of Phoenix Home Life, and
from February 1989 to June 1992, he was President and Chief Operating Officer of
Phoenix Mutual Life Insurance Company, a predecessor of Phoenix Home Life
("Phoenix Mutual"). Mr. Fiondella is also an officer and director of various
Phoenix Home Life subsidiaries.
Franklin D. Haftl (62), who was elected a director of PXRE in February
1997, has been in the insurance and reinsurance industry since 1958 and
currently serves as a director of Unione Italiana Reinsurance Company of
America, Inc. ("Unione"), having previously served as President and Chief
Executive Officer and a director of Unione from October 1988 to March 1994. Mr.
Haftl served as a director of TREX from January 1994 until the Merger in
December 1996. Mr. Haftl is a member of the American Arbitration Association and
has served and continues to serve as umpire on numerous arbitration panels
adjudicating commercial insurance and reinsurance related disputes.
Bernard Kelly (66), who was elected a director of PXRE in December 1988, is
a U.K. attorney and Chairman of Bernard Kelly & Associates, a financial
consultant, and was formerly Vice Chairman and Managing Director of Lazard
Brothers & Co. Ltd., London. Mr. Kelly also is a director of a number of
companies, including American Phoenix Investments Ltd., London (a U.K.
subsidiary of Phoenix Home Life) and Societe Generale d'Investissements SA, a
quoted Luxembourg industrial holding company, and is also Chairman of First
Equity Holdings Ltd., an inter-broker dealer and member of the London Stock
Exchange, Lazard Income Growth & Property Unit Trust and Nexus Structured
Finance Ltd., an agency for private sector finance to state (U.K.) institutions.
Wendy Luscombe (45), who was elected a director of PXRE in November 1993,
has been a principal of WKL Associates, a company which provides U.S. real
estate investment advisory services to U.K. companies, since May 1994. Ms.
Luscombe is also principal real estate advisor to Prudential Portfolio Managers
America Limited. From November 1992 to May 1994, she was Senior Vice President
of Aldrich Eastman Waltch, a Boston-based company specializing in real estate
investment and pension fund advisory services. Ms. Luscombe was also a director
of Berkeley Commercial Investments, the commercial real estate investment arm of
Berkeley Group plc, a U.K. public company, until June 1996.
Edward P. Lyons (70) was Vice Chairman of the Board of Directors of Olin
Corp., a diversified chemical manufacturing corporation, prior to his retirement
in 1986. Mr. Lyons was a director of Phoenix Home Life until February 1996 and
is currently a director of Phoenix Duff & Phelps Corporation ("Phoenix Duff &
Phelps"), an investment management company.
Philip R. McLoughlin (50) has been Executive Vice President and Chief
Investment Officer of Phoenix Home Life since July 1992 and, since October 1995,
has been Vice Chairman, Chief Executive Officer and a director of Phoenix Duff &
Phelps. From December 1988 to June 1992, he was Executive Vice President,
4
<PAGE> 7
Investments of Phoenix Mutual. Mr. McLoughlin is currently president and a
director or trustee of several registered investment companies which are
affiliated with Phoenix Home Life, a director of World Trust, a Luxembourg
organized investment trust, and Phoenix Charter Oak Trust Company, as well as a
director and officer of various other Phoenix Home Life subsidiaries.
David W. Searfoss (46) has been Executive Vice President and Chief
Financial Officer of Phoenix Home Life since October 1994. From July 1992 to
October 1994, he was Senior Vice President and Chief Financial Officer of
Phoenix Home Life, and from November 1987 to June 1992, he was Senior Vice
President and Chief Financial Officer of Phoenix Mutual. Mr. Searfoss has served
as a director of PXRE since December 1987. Mr. Searfoss is also an officer and
director of various Phoenix Home Life subsidiaries.
Donald H. Trautlein (70) was Chairman and Chief Executive Officer of
Bethlehem Steel Corporation from 1980 until his retirement in 1986. Mr.
Trautlein is currently a director of Data General Corporation. He was elected a
director of PXRE in March 1988.
Wilson Wilde (69) was, from September 1993 to May 1994, Chairman and Chief
Executive Officer and, from November 1971 to September 1993, President and Chief
Executive Officer of The Hartford Steam Boiler Inspection and Insurance Company
("Hartford Steam Boiler"). Since May 1994, Mr. Wilde has been Chairman of the
Executive Committee, and has continued as a director, of Hartford Steam Boiler.
Mr. Wilde is currently a director of Phoenix Home Life and Front Royal Inc., a
holding company that owns specialty insurance carriers and an environmental
consulting firm.
Unless otherwise indicated, all directors have served in such capacity
since 1986.
In addition to the executive officer listed as being a director of PXRE,
PXRE has the following executive officers:
Michael J. Bleisnick (45) has been an Executive Vice President of PXRE
since March 1993. Prior thereto, he was a Senior Vice President of PXRE
since February 1990 and a Vice President of PXRE since July 1986. From
August 1993 until the Merger in December 1996, Mr. Bleisnick also served as
an Executive Vice President of TREX.
Gordon Forsyth, III (48) has been an Executive Vice President of PXRE
since March 1993. Prior thereto, he was a Senior Vice President of PXRE
since February 1990 and a Vice President of PXRE since October 1986. From
August 1993 until the Merger in December 1996, Mr. Forsyth also served as
an Executive Vice President of TREX.
Sanford M. Kimmel (44) has been Senior Vice President, Treasurer and
Chief Financial Officer of PXRE since February 1994. From March 1994 until
the Merger in December 1996, Mr. Kimmel also served as Senior Vice
President, Treasurer and Chief Financial Officer and as a director of TREX.
Prior to joining PXRE, he was Vice President, Finance of Page America
Group, Inc. since 1992. From 1991 to 1992, he was Vice President, Expense
Management and Special Projects of Home Life Insurance Company, a
predecessor of Phoenix Home Life ("Home Life Insurance"). From 1987 to
1991, he was Vice President and Treasurer, and from 1982 to 1987 he was
Treasurer, of Home Life Insurance. From August 1982 to July 1991, Mr.
Kimmel was also an officer of four registered investment companies which
were affiliated with Home Life Insurance.
Peter G. Butler (48) has been a Senior Vice President of PXRE since
August 1996 and is the Managing Underwriter for Lloyd's Syndicate 1224. Mr.
Butler has nearly 30 years of insur-
5
<PAGE> 8
ance/reinsurance underwriting experience in Lloyd's and the London company
market, most recently as active underwriter for Lloyd's non-marine
syndicates 765 and 1179.
A. Joseph Hoane (53) has been a Senior Vice President of PXRE since
February 1997. Prior thereto, he was a Vice President of PXRE since March
1992 and an Assistant Vice President of PXRE since November 1989. From
October 1993 until the Merger in December 1996, Mr. Hoane also served as a
Vice President of TREX.
Eugene J. Sverchek (47) has been a Senior Vice President of PXRE since
May 1991. From August 1993 until the Merger in December 1996, Mr. Sverchek
also served as a Senior Vice President of TREX. Prior to joining PXRE, he
held various positions (including Senior Vice President) during his sixteen
years at MONY Reinsurance Company where he specialized in property treaty
reinsurance underwriting.
Alain Tounquet (44) has been a Senior Vice President of PXRE since
March 1994, prior to which he served as a Vice President of PXRE since
October 1989. Mr. Tounquet has also been the General Manager of the
Brussels Office of PXRE since October 1989. Mr. Tounquet also served as a
Senior Vice President of TREX from May 1994 until the Merger in December
1996, prior to which he served as a Vice President of TREX since October
1993.
Frank A. LoPiccolo (53) has been a Vice President of PXRE since 1986.
From August 1993 until the Merger in December 1996, Mr. LoPiccolo also
served as a Vice President of TREX.
All executive officers of PXRE hold office at the pleasure of the Board of
Directors.
The following table sets forth certain information concerning beneficial
ownership of PXRE's Common Stock by the directors, the five executive officers
named below under the heading "EXECUTIVE COMPENSATION" and all directors and
executive officers as a group, as of the record date:
<TABLE>
<CAPTION>
SHARES (AND PERCENT) DIRECTOR
DIRECTORS AND FIVE CURRENT NAMED EXECUTIVE OFFICERS BENEFICIALLY OWNED(1) TERM ENDS
- --------------------------------------------------- --------------------- ----------
<S> <C> <C>
Gerald L. Radke.................................... 129,788(2)* 1999
Robert W. Fiondella................................ 833(3)* (4)
Franklin D. Haftl.................................. 500* 1999
Bernard Kelly...................................... 2,833(3)* 1998
Wendy Luscombe..................................... 483(3)* 1999
Edward P. Lyons.................................... 13,620(3)* 1998
Philip R. McLoughlin............................... 433(3)* (4)
David W. Searfoss.................................. 433(3)* 1998
Donald H. Trautlein................................ 2,361(3)* (4)
Wilson Wilde....................................... 2,390(3)* 1999
Michael J. Bleisnick............................... 52,065(5)* --
Gordon Forsyth, III................................ 72,615(6)* --
Sanford M. Kimmel.................................. 13,081(7)* --
Eugene J. Sverchek................................. 23,939(8)* --
All directors and executive officers as a group (18
persons)......................................... 375,303(2.7%)(9)
</TABLE>
- ---------------
* Beneficially owns less than 1% of PXRE's issued and outstanding Common
Stock.
6
<PAGE> 9
(1) The number of shares of Common Stock set forth opposite the names of Mr.
Haftl, Mr. Kelly, Ms. Luscombe, Mr. Lyons, Mr. Trautlein and Mr. Wilde does
not include the 2,000 shares granted to each such director under the PXRE
Director Deferred Stock Plan (described below under the heading "THE BOARD
OF DIRECTORS AND ITS COMMITTEES AND DIRECTOR COMPENSATION"), as to which
shares such directors currently hold neither voting nor investment power.
Pursuant to the terms of the Director Deferred Stock Plan, on each date that
dividends are paid to stockholders in respect of the Common Stock, PXRE
makes dividend equivalent payments, in cash, in respect of each share of
Common Stock granted, but not yet delivered, under such Plan.
(2) Includes currently exercisable options to purchase 41,439 shares of Common
Stock. In accordance with Rule 13d-3(d)(1) under the Exchange Act, the
41,439 shares of Common Stock for which Mr. Radke holds currently
exercisable options have been added to the total number of issued and
outstanding shares of Common Stock solely for the purpose of calculating the
percentage of such total number of issued and outstanding shares of Common
Stock beneficially owned by Mr. Radke.
(3) Includes currently exercisable options to purchase 333 shares of Common
Stock. In accordance with Rule 13d-3(d)(1) under the Exchange Act, the 333
shares of Common Stock for which the named director holds currently
exercisable options have been added to the total number of issued and
outstanding shares of Common Stock solely for the purpose of calculating the
percentage of such total number of issued and outstanding shares of Common
Stock beneficially owned by such director.
(4) Term of office of Class II directors terminates at the forthcoming 1997
Annual Meeting.
(5) Includes currently exercisable options to purchase 42,380 shares of Common
Stock. In accordance with Rule 13d-3(d)(1) under the Exchange Act, the
42,380 shares of Common Stock for which Mr. Bleisnick holds currently
exercisable options have been added to the total number of issued and
outstanding shares of Common Stock solely for the purpose of calculating the
percentage of such total number of issued and outstanding shares of Common
Stock beneficially owned by Mr. Bleisnick.
(6) Includes currently exercisable options to purchase 56,311 shares of Common
Stock. In accordance with Rule 13d-3(d)(1) under the Exchange Act, the
56,311 shares of Common Stock for which Mr. Forsyth holds currently
exercisable options have been added to the total number of issued and
outstanding shares of Common Stock solely for the purpose of calculating the
percentage of such total number of issued and outstanding shares of Common
Stock beneficially owned by Mr. Forsyth.
(7) Includes currently exercisable options to purchase 7,083 shares of Common
Stock. In accordance with Rule 13d-3(d)(1) under the Exchange Act, the 7,083
shares of Common Stock for which Mr. Kimmel holds currently exercisable
options have been added to the total number of issued and outstanding shares
of Common Stock solely for the purpose of calculating the percentage of such
total number of issued and outstanding shares of Common Stock beneficially
owned by Mr. Kimmel.
(8) Includes currently exercisable options to purchase 17,918 shares of Common
Stock. In accordance with Rule 13d-3(d)(1) under the Exchange Act, the
17,918 shares of Common Stock for which Mr. Sverchek holds currently
exercisable options have been added to the total number of issued and
outstanding shares of Common Stock solely for the purpose of calculating the
percentage of such total number of issued and outstanding shares of Common
Stock beneficially owned by Mr. Sverchek.
(9) Includes currently exercisable options to purchase 212,754 shares of Common
Stock. In accordance with Rule 13d-3(d)(1) under the Exchange Act, the
212,754 shares of Common Stock for which PXRE's directors and executive
officers as a group hold currently exercisable options have been added to
the total number of issued and outstanding shares of Common Stock solely for
the purpose of calculating the percentage of such total number of issued and
outstanding shares of Common Stock beneficially owned by such directors and
executive officers as a group.
7
<PAGE> 10
THE BOARD OF DIRECTORS AND ITS COMMITTEES
AND DIRECTOR COMPENSATION
THE BOARD OF DIRECTORS AND ITS COMMITTEES
In 1996, the Board of Directors met six (6) times. Except for Mr.
McLoughlin, no director attended fewer than 75% of the aggregate of (i) the
total number of Board meetings (held when such person was a director) and (ii)
the total number of meetings held by committees on which he or she served
(during the periods that he or she served).
There are four standing committees of the Board of Directors: the Audit
Committee, the Human Resources Committee, the Investment Committee and the
Executive Committee. The committees are composed entirely of directors who are
not employees of PXRE, except that Mr. Radke is a member of the Executive
Committee.
The members of the Audit Committee are Messrs. Kelly (Chairman),
McLoughlin, Searfoss and Trautlein and Ms. Luscombe. The members of the Audit
Committee are responsible for assisting the Board of Directors in fulfilling its
responsibilities in connection with PXRE's accounting and financial reporting
practices. In 1996, the Audit Committee met three (3) times.
The members of the Human Resources Committee are Messrs. Trautlein
(Chairman), Fiondella, Lyons and Wilde. The Human Resources Committee performs
the functions of a compensation committee, including the administration of
PXRE's various stock option and other compensation plans. In 1996, the Human
Resources Committee met three (3) times.
The members of the Investment Committee are Messrs. Lyons (Chairman), Kelly
and Wilde and Ms. Luscombe. The members of the Investment Committee are
responsible for monitoring and approving the investment policies and the
investments of PXRE and its reinsurance and trading subsidiaries, including PXRE
Reinsurance Company ("PXRE Reinsurance") and Transnational Reinsurance Company
("Transnational"), and for overseeing investment management carried out by
Phoenix Duff & Phelps, a public majority-owned subsidiary of Phoenix Home Life.
In 1996, the Investment Committee met two (2) times.
The members of the Executive Committee are Messrs. Radke, Fiondella and
Trautlein. The Executive Committee is vested with the authority to exercise the
powers of the full Board of Directors during the intervals between its meetings.
In 1996, the Executive Committee did not meet.
PXRE does not have a standing nominating committee. However, upon the
request of the Board of Directors, the Executive Committee has occasionally
functioned in this role.
From time to time the Board of Directors designates other committees of the
Board to carry out certain specified activities, particularly in connection with
financings and other major transactions by PXRE. In 1996, the Board of Directors
designated a committee consisting of Messrs. Lyons (Chairman) and Trautlein and
Ms. Luscombe (the "Merger Committee") and authorized the members of the Merger
Committee to implement the strategic business combination of PXRE and TREX.
COMPENSATION OF DIRECTORS
CASH COMPENSATION. During the 1996 fiscal year, PXRE paid annual retainers
of $16,000 (plus $1,500 each for members ($3,000 for the Chairman) of the Audit
Committee, the Investment Committee and the Human Resources Committee) and fees
per Board and Committee meeting (including Merger Committee
8
<PAGE> 11
meetings) of $1,000 ($3,000 for the Chairman) to each director of PXRE, except
for directors who were also officers of PXRE who individually received no
compensation for attendance at meetings. For fiscal 1996, PXRE paid a total of
$283,000 in directors' fees (including $52,000 paid to members of the Merger
Committee). Directors have the ability to defer receipt of their cash
compensation by making an irrevocable written election prior to the beginning of
the calendar year to defer receipt of such compensation until the earlier of
their retirement or resignation as a director of PXRE, death or disability. An
unfunded account is established by PXRE in the director's name and interest is
credited to the account balance at an annual rate equal to the annualized
average rate of return earned on accounts invested during such period in the
Intermediate Term U.S. Treasury Portfolio fund of PXRE's 401(k) Savings and
Investment Plan (the "401(k) Plan"). On April 17, 1997, the Board of Directors
adopted the PXRE Corporation Director Equity and Deferred Compensation Plan (the
"Director Compensation Plan"), subject to stockholder approval, which, among
other things, provides that deferred amounts shall be credited with earnings
(losses) mirroring the fund or funds provided in the 401(k) Plan that are
designated by the director (rather than just the Intermediate Term U.S. Treasury
Portfolio fund).
OTHER COMPENSATION. The Director Compensation Plan will also enable
non-employee directors to elect to receive all or a portion of their annual
retainer fees in shares of PXRE Common Stock or in options to purchase shares of
PXRE Common Stock. For a detailed description of the Director Compensation Plan,
see "APPROVAL OF THE DIRECTOR EQUITY AND DEFERRED COMPENSATION PLAN" below.
Under the PXRE Corporation Director Stock Option Plan (the "Director Option
Plan"), each non-employee director is automatically granted annually, on the
date of PXRE's Annual Meeting, an option exercisable (subject to a three-year
vesting period) for the purchase of 3,000 shares (previously 1,000 shares prior
to an amendment which is subject to stockholder approval at the Annual Meeting)
of Common Stock at a price per share equal to the market value at the date of
grant. See "APPROVAL OF AMENDMENT TO THE DIRECTOR STOCK OPTION PLAN" below.
On August 23, 1990, PXRE adopted a Director Deferred Stock Plan (the
"Director Plan") pursuant to which directors of PXRE who are not employees of
PXRE or of Phoenix Home Life are each granted the right to receive 2,000 shares
of Common Stock (subject to anti-dilution adjustments) at certain specified
times following their respective terminations as PXRE directors. On August 23,
1990, Messrs. Kelly, Lyons, Trautlein and Wilde were each granted the right to
receive 2,000 shares of Common Stock pursuant to the terms of the Director Plan.
The Director Plan was subsequently amended effective August 23, 1990 to allow
participation by directors who were employees of Phoenix Home Life and who were
PXRE directors on August 23, 1990, provided that shares allocable under the
Director Plan to such directors were delivered at the time specified in the
Director Plan. Effective August 23, 1990, Messrs. Fiondella, Gummere (who
resigned as a PXRE director on February 21, 1994), McLoughlin and Searfoss, all
full-time employees of Phoenix Home Life who were PXRE directors on such date,
were each granted the right to receive 2,000 shares of Common Stock, which
shares were delivered to Phoenix Home Life (as described below) on August 24,
1993 pursuant to the terms of the Director Plan, as amended. Upon becoming a
director of PXRE on November 12, 1993, Ms. Luscombe was granted the right to
receive 2,000 shares of Common Stock pursuant to the terms of the Director Plan.
Upon becoming a director of PXRE on February 13, 1997, Mr. Haftl was granted the
right to receive 2,000 shares of Common Stock pursuant to the terms of the
Director Plan. As of the record date, eligible non-employee PXRE directors as a
group have the right to receive a total of 12,000 shares of Common Stock
pursuant to the terms of the Director Plan.
On each date on which dividends are paid to holders of shares of PXRE
Common Stock, each director who has been granted the right to receive shares of
Common Stock under the Director Plan is paid an amount
9
<PAGE> 12
in cash equal to the product of (i) the dividend per share for the applicable
dividend payment date and (ii) the number of shares which have been granted to
the director but which have not yet been delivered.
The Director Plan is administered by the Board of Directors, which may
amend or terminate the Director Plan at any time. However, no such amendment or
termination may reduce the number of shares that had been granted to the
directors prior to such amendment or termination.
Until 1995, Phoenix Home Life maintained a practice that no employee could
accept any individual remuneration for serving on the Board of Directors of
PXRE, and that any such remuneration that would otherwise be payable by PXRE to
a Phoenix Home Life employee would instead be paid directly to Phoenix Home
Life. In accordance with Phoenix Home Life's practice, the above-described
dividend equivalents were, from August 23, 1990 to August 24, 1993, paid by PXRE
directly to Phoenix Home Life and, on August 24, 1993, the aggregate of 8,000
shares of Common Stock that would otherwise have been delivered by PXRE to
Messrs. Fiondella, Gummere, McLoughlin and Searfoss on such date were instead
delivered by PXRE directly to Phoenix Home Life. Effective January 1, 1995,
Phoenix Home Life changed such practice and employees of Phoenix Home Life
serving as directors of PXRE are entitled to receive directly any compensation
therefor (including options granted pursuant to the Director Option Plan).
THE AFFIRMATIVE VOTE OF A MAJORITY OF THE SHARES OF COMMON STOCK PRESENT IN
PERSON OR REPRESENTED BY PROXY AT THE ANNUAL MEETING AND ENTITLED TO VOTE IS
REQUIRED TO ELECT THE NOMINEES FOR DIRECTOR. THE BOARD OF DIRECTORS AND
MANAGEMENT RECOMMEND A VOTE "FOR" THE ELECTION OF THE NOMINEES FOR DIRECTOR AND,
UNLESS A STOCKHOLDER SIGNIFIES OTHERWISE, THE PERSONS NAMED IN THE PROXY WILL SO
VOTE.
RATIFICATION OF THE APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors has selected the firm of Price Waterhouse LLP as
PXRE's independent public accountants for the fiscal year ending December 31,
1997. This selection is being presented to the stockholders for their
ratification at the Annual Meeting. Price Waterhouse LLP has audited PXRE's
financial statements since July 1, 1986. A representative of Price Waterhouse
LLP is expected to attend the Annual Meeting, with the opportunity to make a
statement if he or she so desires and to respond to questions.
RATIFICATION OF THE SELECTION OF PRICE WATERHOUSE LLP AS INDEPENDENT PUBLIC
ACCOUNTANTS WILL REQUIRE THE AFFIRMATIVE VOTE OF A MAJORITY OF THE SHARES OF
COMMON STOCK PRESENT IN PERSON OR REPRESENTED BY PROXY AT THE ANNUAL MEETING AND
ENTITLED TO VOTE. THE BOARD OF DIRECTORS AND MANAGEMENT RECOMMEND A VOTE "FOR"
RATIFICATION AND, UNLESS A STOCKHOLDER SIGNIFIES OTHERWISE, THE PERSONS NAMED IN
THE PROXY WILL SO VOTE.
10
<PAGE> 13
EXECUTIVE COMPENSATION
The following tables and narrative text describe the compensation paid in
1996 and the two prior fiscal years to PXRE's Chief Executive Officer and PXRE's
four other most highly compensated executive officers. Also described below is
certain future compensation such individuals may be eligible to receive upon
retirement or following certain terminations of employment or certain changes of
control.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
----------------------------
ANNUAL COMPENSATION SECURITIES
---------------------------------------- RESTRICTED UNDERLYING
NAME AND OTHER ANNUAL STOCK STOCK ALL OTHER
PRINCIPAL POSITION YEAR SALARY BONUS($)(1) COMPENSATION(2) AWARDS($)(3) OPTIONS(#)(4) COMPENSATION(5)
------------------ ---- -------- ----------- --------------- ------------ ------------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
Gerald L. Radke........ 1996 $457,115 $252,032 $4,276 $111,263 19,394 $211,982
Chairman, President 1995 393,750 294,000 4,488 116,498 18,090 22,903
and Chief Executive 1994 368,846 275,625 4,934 115,495 17,592 20,284
Officer
Michael J. Bleisnick... 1996 284,969 121,015 -- 53,428 8,071 182,691
Executive Vice 1995 221,710 135,713 -- 67,147 7,347 10,011
President--Domestic 1994 211,307 124,103 -- 52,039 7,120 5,777
Operations
Gordon Forsyth, III.... 1996 270,423 121,015 -- 53,428 8,071 182,691
Executive Vice 1995 221,710 135,713 -- 67,147 7,347 9,966
President-- 1994 211,307 124,103 -- 52,039 7,120 6,930
International
Operations
Sanford M. Kimmel...... 1996 198,000 74,810 -- 33,029 5,152 178,633
Senior Vice 1995 167,399 89,250 -- 35,368 4,253 7,150
President, Treasurer 1994 135,599 72,214 -- 30,273 4,712 --
and Chief Financial
Officer
Eugene J. Sverchek..... 1996 186,851 72,009 -- 31,793 5,152 178,364
Senior Vice 1995 168,649 89,250 -- 35,368 4,673 6,860
President--Domestic 1994 151,305 81,375 -- 34,104 4,398 4,546
Treaty
</TABLE>
- ---------------
(1) For 1996, consists of cash bonuses awarded in 1997 in respect of fiscal year
1996 pursuant to PXRE's Restated Employee Annual Incentive Bonus Plan (the
"Bonus Plan"). For 1995, consists of cash bonuses awarded in 1996 in respect
of fiscal year 1995 pursuant to the Bonus Plan. For 1994, consists of cash
bonuses awarded in 1995 in respect of fiscal year 1994 pursuant to the Bonus
Plan.
(2) For 1996, 1995 and 1994, for Mr. Radke, consists of $4,276, $4,488 and
$4,934, respectively, paid to reimburse Mr. Radke for taxes paid by him in
respect of income arising from PXRE's forgiveness of certain accrued
interest on an outstanding loan. (See column entitled "All Other
Compensation".)
(3) Consists of awards to Messrs. Radke, Bleisnick, Forsyth, Kimmel and
Sverchek, respectively, in respect of fiscal year 1996, of 4,140, 1,988,
1,988, 1,229 and 1,183 restricted shares of PXRE's Common Stock, in respect
of fiscal year 1995, of 4,707, 2,713, 2,713, 1,429 and 1,429 restricted
shares of PXRE's Common Stock, and in respect of fiscal year 1994, of 4,643,
2,092, 2,092, 1,217 and 1,371 restricted shares of PXRE's Common Stock
pursuant to the Bonus Plan. Pursuant to the terms of the Bonus Plan, such
restricted shares will vest and become 100% nonforfeitable, with respect to
the 1994 grants, in one
11
<PAGE> 14
installment on January 1, 1998, with respect to the 1995 grants, in one
installment on January 1, 1999, and with respect to the 1996 grants, in one
installment on January 1, 2000. During the holding periods such shares are
entitled to receive dividends, if any, declared with respect to PXRE's
Common Stock. The aggregate holdings and market value of restricted stock
held on December 31, 1996 by Mr. Radke was 13,561 restricted shares with a
market value of $335,635; by Mr. Bleisnick was 5,983 restricted shares with
market value of $148,079; by Mr. Forsyth was 5,983 restricted shares with
market value of $148,079; by Mr. Kimmel was 2,646 restricted shares with
market value of $65,489; and by Mr. Sverchek was 4,003 restricted shares
with market value of $99,074.
(4) Consists of non-qualified options granted in respect of PXRE's Common Stock
pursuant to PXRE's 1992 Officer Incentive Plan.
(5) For Mr. Radke, consists of: $21,923, $15,766 and $11,178 contributed by PXRE
in 1996, 1995 and 1994, respectively, to the 401(k) Plan (which is a
contributory defined contribution plan), $1,712 paid by PXRE during each of
1996, 1995 and 1994 with respect to a supplemental term life insurance
policy for Mr. Radke's benefit, $1,602 paid by PXRE during each of 1996,
1995 and 1994 with respect to a supplemental disability insurance policy for
Mr. Radke's benefit, $5,168, $3,823 and $5,792 representing the amount of
interest accrued in 1996, 1995 and 1994, respectively, and forgiven by PXRE
in respect of a loan of $70,125 made by PXRE to Mr. Radke in 1988, the full
principal amount of which remained outstanding during 1996, 1995 and 1994
(see "CERTAIN BUSINESS RELATIONSHIPS" below) and, for 1996, $181,577 paid in
February 1997 (but earned as of December 31, 1996) pursuant to the
Transnational Re Officer Incentive Plan assumed by PXRE in the Merger (the
"TREX Plan"); for Mr. Bleisnick, consists of: $13,212, $9,570 and $5,336
contributed by PXRE in 1996, 1995 and 1994, respectively, to the 401(k)
Plan, $441 paid by PXRE during each of 1995 and 1994, with respect to a
supplemental term life insurance policy for Mr. Bleisnick's benefit and, for
1996, $169,479 paid in February 1997 (but earned as of December 31, 1996)
pursuant to the TREX Plan; for Mr. Forsyth, consists of: $13,212, $9,495 and
$6,459 contributed by PXRE in 1996, 1995 and 1994, respectively, to the
401(k) Plan, $471 paid by PXRE during each of 1995 and 1994 with respect to
a supplemental term life insurance policy for Mr. Forsyth's benefit and, for
1996, $169,479 paid in February 1997 (but earned as of December 31, 1996)
pursuant to the TREX Plan; for Mr. Kimmel, consists of $9,154 and $7,150
contributed by PXRE in 1996 and 1995 to the 401(k) Plan and, for 1996,
$169,479 paid in February 1997 (but earned as of December 31, 1996) pursuant
to the TREX Plan; and for Mr. Sverchek, consists of: $8,885, $6,860 and
$4,546 contributed by PXRE in 1996, 1995 and 1994, respectively, to the
401(k) Plan and, for 1996, $169,479 paid in February 1997 (but earned as of
December 31, 1996) pursuant to the TREX Plan.
12
<PAGE> 15
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
--------------------------------------------------------------------------
NUMBER OF % OF TOTAL
SECURITIES OPTIONS
UNDERLYING GRANTED TO GRANT DATE
OPTIONS EMPLOYEES IN EXERCISE OR EXPIRATION PRESENT
NAME GRANTED(#)(1) FISCAL YEAR BASE PRICE($/SH) DATE VALUE($)(2)
- ---- ------------- ------------ ---------------- ---------- -----------
<S> <C> <C> <C> <C> <C>
Gerald L. Radke.................. 19,394 26.3% $ 24.75 2/15/06 $183,079
Michael J. Bleisnick............. 8,071 10.9 24.75 2/15/06 76,190
Gordon Forsyth, III.............. 8,071 10.9 24.75 2/15/06 76,190
Sanford M. Kimmel................ 5,152 7.0 24.75 2/15/06 48,634
Eugene J. Sverchek............... 5,152 7.0 24.75 2/15/06 48,634
</TABLE>
- ---------------
(1) Consists of non-qualified options granted pursuant to PXRE's 1992 Officer
Incentive Plan. Under such Plan, the option exercise price may be less than,
equal to or greater than the fair market value of the Common Stock of PXRE
on the date the option is granted, but may not be less than 50% of such fair
market value. For this purpose, the fair market value of a share of PXRE's
Common Stock is the average of the high and low bid and asked prices of the
Common Stock as reported on the Nasdaq Stock Market National Market System
(or, if the Common Stock is listed on an exchange, the average of the high
and low prices per share quoted on such exchange) on the date of grant. The
exercise price of the options listed in the above table is 100% of the fair
market value of PXRE's Common Stock on the date of grant (February 15,
1996). The options listed above become exercisable in four equal annual
installments, subject to the grantee remaining in the continuous employ of
PXRE or its affiliates for at least one year from the date of grant, except
where such employment terminates by reason of death, permanent disability or
retirement at or after age 65 with PXRE's consent; provided, however, that
upon the earlier of (i) a change of control of PXRE or (ii) the Common Stock
of PXRE ceasing to be publicly traded, any unexercised portion of an option
will become exercisable. Options may also be surrendered in exchange for a
cash payment in the event of a change of control of PXRE or the cessation of
public trading of the Common Stock of PXRE, in each case under certain
circumstances. Options are not transferable by a grantee other than by will
or the laws of descent and distribution, and during the lifetime of a
grantee an option will be exercisable only by the grantee or, if the grantee
is legally incapacitated, by the grantee's duly appointed guardian or legal
representative. The Plan authorizes the administering committee to include
in individual stock option agreements with grantees a provision allowing
grantees to satisfy any federal, state or local income tax liabilities
resulting from option exercises by having PXRE withhold the appropriate
number of shares of Common Stock at the time of exercise (subject in each
instance to committee approval), but the Plan does not provide for cash
payments by PXRE to cover any such income taxes.
(2) In accordance with the Commission's rules, in order to determine grant date
present values in the above table PXRE used the Black-Scholes model of
option valuation, adjusted to reflect an option term of 5 years, which
represents the weighted average (by number of options) over the past ten
years of the length of time between the grant dates of options under PXRE's
plans and their exercise dates for the named executive officers. The model
also assumes: (i) an interest rate that represents the interest rate on a
U.S. government zero coupon bond with a maturity equal to the term of the
grant; (ii) volatility calculated using a weekly stock price for five years
(260 weeks) prior to the grant date; and (iii) dividends estimated at the
annual rate of $0.72 per share (the quarterly dividend on PXRE's Common
Stock having been increased in November 1996 from $0.18 per share to $0.21
per share). Based on this model, the present value of the options on the
February 15, 1996 grant date was determined
13
<PAGE> 16
to be $9.44 per option. PXRE does not advocate or necessarily agree that the
Black-Scholes model can properly determine the value of an option.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND OPTION VALUES AT DECEMBER 31, 1996
<TABLE>
<CAPTION>
NUMBER OF UNEXERCISED VALUE OF UNEXERCISED
STOCK OPTIONS AT IN-THE-MONEY STOCK
SHARES 12/31/96 OPTIONS AT 12/31/96
ACQUIRED ON VALUE (#)(2) ($)(3)
NAME EXERCISE(#) REALIZED($)(1) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
---- ------------ --------------- ------------------------- -------------------------
<S> <C> <C> <C> <C>
Gerald L. Radke............ 20,000 $317,751 47,449/45,346 $347,306/$7,696
Michael J. Bleisnick....... 9,750 108,874 38,849/18,289 $443,615/$3,115
Gordon Forsyth, III........ 0 0 49,564/18,255 $596,646/$2,921
Sanford M. Kimmel.......... 0 0 3,486/10,901 $2,061/$2,061
Eugene J. Sverchek......... 0 0 13,446/11,773 $103,600/$1,924
</TABLE>
- ---------------
(1) Represents the difference between the closing prices of PXRE's Common Stock
as reported on the Nasdaq Stock Market National Market System on the dates
of exercise and the exercise prices of the options.
(2) For Mr. Radke, consists of options for 23,367 shares of PXRE Common Stock
granted in 1990-1992 pursuant to PXRE's 1988 Stock Option Plan at exercise
prices ranging from $8.75 to $11.50 per share, all of which options were
exercisable at December 31, 1996, and options for 69,428 shares of PXRE
Common Stock granted in 1993-1996 pursuant to PXRE's 1992 Officer Incentive
Plan at exercise prices ranging from $23.875 to $25.00 per share, 24,082 of
which options were exercisable at December 31, 1996; for Mr. Bleisnick,
consists of options for 3,250 shares of PXRE Common Stock granted in 1987
pursuant to PXRE's 1987 Stock Option Plan at an exercise price of $13.00 per
share, all of which options were exercisable at December 31, 1996, options
for 26,764 shares of PXRE Common Stock granted in 1989-1992 pursuant to
PXRE's 1988 Stock Option Plan at exercise prices ranging from $8.75 to
$11.50 per share, all of which options were exercisable at December 31,
1996, and options for 27,124 shares of PXRE Common Stock granted in
1993-1996 pursuant to PXRE's 1992 Officer Incentive Plan at exercise prices
ranging from $23.875 to $25.00 per share, 8,835 of which options were
exercisable at December 31, 1996; for Mr. Forsyth, consists of options for
40,829 shares of PXRE Common Stock granted in 1989-1992 pursuant to PXRE's
1988 Stock Option Plan at exercise prices ranging from $8.75 to $11.50 per
share, all of which options were exercisable at December 31, 1996, and
options for 26,990 shares of PXRE Common Stock granted in 1993-1996 pursuant
to PXRE's 1992 Officer Incentive Plan at exercise prices ranging from
$23.875 to $25.00 per share, 8,735 of which options were exercisable at
December 31, 1996; for Mr. Kimmel, consists of options for 14,387 shares of
PXRE Common Stock granted in 1994-1996 pursuant to PXRE's 1992 Officer
Incentive Plan at exercise prices of $23.875 to $24.875 per share,
respectively, 3,486 of which options were exercisable at December 31, 1996;
and for Mr. Sverchek, consists of options for 7,328 shares of PXRE Common
Stock granted in 1992 pursuant to PXRE's 1988 Stock Option Plan at an
exercise price of $10.875 per share, all of which options were exercisable
at December 31, 1996, and options for 17,891 shares of PXRE Common Stock
granted in 1993-1996 pursuant to PXRE's 1992 Officer Incentive Plan at
exercise prices ranging from $23.875 to $25.00 per share, 6,118 of which
options were exercisable at December 31, 1996.
(3) Represents the difference between the closing price of PXRE's Common Stock
as reported on the New York Stock Exchange on December 31, 1996 ($24.75) and
the exercise prices of the options.
14
<PAGE> 17
PENSION PLAN
The following table illustrates the maximum annual estimated benefits
payable under PXRE's defined benefit plan (in conjunction with the predecessor
actuarial retirement plan) and its non-qualified supplemental plan, to employees
for specified covered compensation and specified years of service, assuming
retirement at age 62.
<TABLE>
<CAPTION>
YEARS OF SERVICE
----------------------------------------------------
REMUNERATION 5 10 15 20 25
- ------------ -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
$125,000.................................... $ 16,667 $ 33,333 $ 50,000 $ 50,262 $ 64,077
150,000.................................... 20,000 40,000 60,000 62,012 77,515
175,000.................................... 23,333 46,667 70,000 72,762 90,952
200,000.................................... 26,667 53,333 80,000 83,512 104,390
225,000.................................... 30,000 60,000 90,000 94,262 117,827
250,000.................................... 33,333 66,667 100,000 105,012 131,265
300,000.................................... 40,000 80,000 120,000 126,512 158,140
400,000.................................... 53,333 106,667 160,000 169,512 211,890
500,000.................................... 66,667 133,333 200,000 212,512 265,640
600,000.................................... 79,980 159,960 240,000 255,333 319,166
700,000.................................... 93,310 186,620 280,000 297,850 372,330
800,000.................................... 106,640 213,280 320,000 340,400 425,520
900,000.................................... 119,970 239,940 360,000 382,950 478,710
</TABLE>
Benefits are calculated on a straight-life annuity basis. Benefits shown in
the Pension Plan Table are not subject to any reduction for Social Security or
other offset amounts.
For each of the named current executive officers, annual covered
compensation for 1996 is: Mr. Radke: $709,145; Mr. Bleisnick: $403,507; Mr.
Forsyth: $383,058; Mr. Kimmel: $310,510; and Mr. Sverchek: $251,313. Covered
compensation consists of base salary (as shown in the "Salary" column of the
Summary Compensation Table) and the average amount of bonuses paid (including
the value of the portion of bonuses paid in shares of restricted stock) over the
preceding ten years (or shorter period of employment). The full years of
credited service under the plans as of December 31, 1996 for each of the named
current executive officers is: Mr. Radke: 24; Mr. Bleisnick: 12; Mr. Forsyth:
10; Mr. Kimmel: 2; and Mr. Sverchek: 5.
15
<PAGE> 18
STOCK PERFORMANCE GRAPH
Notwithstanding anything to the contrary set forth in any of PXRE's
previous filings under the Securities Act of 1933, as amended, or under the
Securities Exchange Act of 1934, as amended, that might incorporate future
filings, including this Proxy Statement, in whole or in part, the following
Stock Performance Graph and Report of the Human Resources Committee of the Board
of Directors of PXRE shall not be incorporated by reference into any such
filings.
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN
AMONG PXRE CORPORATION, S&P 500 AND
DOW JONES PROPERTY AND CASUALTY INDEX
<TABLE>
<CAPTION>
MEASUREMENT PERIOD DOW JONES
(FISCAL YEAR COVERED) PXRE CORP S&P 500 P&C
<S> <C> <C> <C>
1991 100 100 100
1992 150.00 108.00 122.00
1993 260.00 118.00 123.00
1994 269.00 120.00 129.00
1995 252.00 165.00 182.00
1996 236.00 203.00 219.00
</TABLE>
The total return assumes that dividends were reinvested quarterly and is
based on a $100 investment on December 31, 1991. For each subsequent year, the
total return for PXRE and for each index is stated as of December 31 of such
year.
16
<PAGE> 19
REPORT OF THE HUMAN RESOURCES COMMITTEE OF THE BOARD OF DIRECTORS OF PXRE
CORPORATION
The Human Resources Committee of the Board of Directors has furnished the
following report on executive compensation:
PXRE Corporation (the "Company") has implemented compensation policies,
plans and programs which seek to increase the profitability of the Company, and
thus stockholder value, by aligning closely the financial interests of the
Company's executives with those of its stockholders. Emphasis is placed on the
achievements of the Company as an integrated unit.
The Human Resources Committee of the Company has established an executive
compensation program to achieve the following goals:
1. To attract and retain key executives critical to the long-term
success of the Company.
2. To promote the enhancement of stockholder value.
3. To reward executives for long-term strategic management.
4. To support a performance-oriented environment resulting in above
average total compensation for above average Company results.
COMPENSATION MIX
The Company's executive compensation program consists of three components
(base salary, annual incentives and long-term incentives) designed to promote
the above-stated goals.
BASE SALARY. Base salary is targeted at the competitive median for
competitors in the reinsurance industry. For the purpose of establishing base
salary levels, the Company from time to time compares the levels of executive
base salary paid by it to those levels paid to the executives of other public
and private reinsurance companies in the United States.
Executive salaries are reviewed by the Committee in the first quarter of
each year. The Chief Executive Officer submits an annual salary plan to the
Committee and the Committee reviews the plan and determines any appropriate
modifications. Any increases in an individual executive's salary from year to
year are based on (1) increased contribution to the Company by the individual
and (2) increases in median competitive pay levels. Based upon these factors, in
1996 the Committee determined that it was appropriate to increase executive base
salaries by an average of 9.48%.
ANNUAL INCENTIVES. The Restated Employee Annual Incentive Bonus Plan,
adopted by the Company in 1992, is intended to reflect the Company's belief that
management's contribution to stockholder returns comes from maximizing earnings
at an appropriate level of risk across the reinsurance cycle. Annual target
bonuses are determined for each eligible employee, and following the end of each
year the Committee determines to what extent each employee's target bonus for
the year has been earned. The full target bonus will be paid to the employee if
the Company achieved a 13% after tax return on equity for the year. The bonus
award will be adjusted up to 150% or down to 0% of the target bonus based on the
actual return on equity achieved by the Company for the year.
Pursuant to the Annual Bonus Plan, the bonus award for all officers is
payable 70% in cash and 30% in restricted stock, at the current market value.
The partial payment in restricted stock ties a portion of each executive's
annual incentive award to the Company's stock price over time. Employees who are
not officers of
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the Company receive the entire bonus award in cash. The Committee may adjust the
cash portion of any bonus award (plus or minus 20% for officers, 40% for
non-officers) to reflect individual performance.
In February 1997, the Committee determined that total bonus amounts equal
to $1,179,930 were payable to the Company's executive officers under the
Restated Employee Annual Incentive Bonus Plan based on the 1996 performance of
the Company. These awards, which were based on a 15.0% return on equity
calculated under the Plan and a corresponding upward adjustment in individual
performance percentages to 114.3%, consisted of cash payments of $825,952 and
restricted stock grants valued at $353,978 containing a three-year vesting
provision.
LONG-TERM INCENTIVES. In March 1992, the Committee made its final awards
under the Company's 1988 Stock Option Plan, which was effectively "frozen" by
the Board of Directors as of December 31, 1992 so that no further options could
thereafter be granted under such Plan. In May 1992, the stockholders of the
Company approved the 1992 Senior Executive Incentive Plan, which provided for
grants of long-term incentive awards to senior executives of the Company. The
Plan was amended in 1994 by vote of the stockholders of the Company to allow the
grant of long-term incentive awards to any officer of the Company, and the name
of the Plan was changed to 1992 Officer Incentive Plan to recognize the broader
base of participants. The 1992 Officer Incentive Plan provides the Committee
with the flexibility to grant long-term incentives in two forms: stock options
and restricted stock.
Each year, the Committee determines whether it is appropriate to grant
stock option and/or restricted stock awards to eligible officers. Grants for
each officer are determined based on industry norms, with the Committee having
the flexibility to adjust individual awards. Awards are considered in
conjunction with the annual salary plan and the overall goals of the Company's
executive compensation program. The Committee believes that its past option
grants under the 1988 Stock Option Plan have focused, and its option and
restricted stock grants under the 1992 Officer Incentive Plan will continue to
focus, management's attention on building stockholder value.
The Committee granted non-qualified options to purchase a total of 73,748
shares of Common Stock at an exercise price of $24.75 per share (market value on
grant date) in February 1996 to the Company's officers pursuant to the 1992
Officer Incentive Plan. Such grants were made pursuant to the Committee's
evaluation of each grantee's base salary and position with the Company, the fair
market value of the Common Stock on the date of grant and competitive
compensation levels within the industry. No grants of restricted stock were made
during or with respect to 1996 under this Plan.
The Internal Revenue Code has set certain limitations on the deductibility
of compensation paid to a public company's five most highly compensated
executive officers. Provided that other compensation objectives are met, it is
the Committee's intention that executive compensation be deductible for federal
income tax purposes. Accordingly, to comply with newly released regulations
regarding the deductibility of executive compensation expense, the Committee has
recommended amendments to the Restated Employee Annual Incentive Bonus Plan and
the 1992 Officer Incentive Plan. The amendments have been approved by PXRE's
Board of Directors and such amended plans are being submitted to the
stockholders at the Annual Meeting for approval.
ADDITIONAL COMPENSATION. PXRE officers were also responsible for managing
the affairs of Transnational Re Corporation (TREX), under the terms of a
Management Agreement between the companies, from November 1993 until the
December 11, 1996 merger of TREX with PXRE. Commencing January 1, 1994, certain
executive officers of PXRE who were also executive officers of TREX participated
in the Transnational
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Re Officer Incentive Plan (which was assumed by PXRE in the Merger), which
resulted in cash payments to such executive officers of $1,162,119 in February
1997.
CHIEF EXECUTIVE COMPENSATION
The Committee determined the Chief Executive Officer's compensation for
1996 based upon a number of factors and criteria. The Chief Executive Officer's
base salary was increased by 12.5% during 1996 and was based upon a review of
similar companies adjusted for size and capitalization and upon review of the
Chief Executive Officer's performance as regards the achievement of long-term
strategic goals and the management of the Company.
In February 1997, the Committee granted an award to the Chief Executive
Officer under the Restated Employee Annual Incentive Bonus Plan consisting of a
cash payment of $252,032 and a restricted stock grant valued at $111,263 and
containing a three-year vesting provision.
In February 1997, additional cash compensation of $181,577 was paid to the
Chief Executive Officer under the terms of the Transnational Re Officer
Incentive Plan.
In February 1996, the Chief Executive Officer received options to purchase
a total of 19,394 shares of Common Stock at an exercise price of $24.75 per
share (market value on grant date) under the 1992 Officer Incentive Plan. As
discussed above, such grant was determined pursuant to the Committee's
evaluation of the Chief Executive Officer's base salary and position with the
Company, the fair market value of the Common Stock on the date of grant and
competitive CEO compensation levels within the industry.
Human Resources Committee
Donald H. Trautlein, Chairman
Robert W. Fiondella
Edward P. Lyons
Wilson Wilde
February 13, 1997
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Of the four members of the Human Resources Committee, one member, namely
Mr. Fiondella, is an executive officer of Phoenix Home Life and three members,
namely Messrs. Fiondella, Lyons and Wilde serve as directors of Phoenix Home
Life and/or one of its affiliates. In 1996, prior to the Merger, Phoenix Home
Life owned approximately 7.3% of the issued and outstanding Common Stock of
PXRE. After the Merger, and as of the record date, Phoenix Home Life owned less
than 5% of the issued and outstanding Common Stock of PXRE. Each of PXRE, PXRE
Reinsurance and Transnational are parties to investment advisory agreements with
Phoenix Duff & Phelps, a public majority-owned subsidiary of Phoenix Home Life.
Pursuant to these agreements, which are terminable by either party on 60 days'
notice, Phoenix Duff & Phelps provides, or arranges for another party to
provide, investment research and advice, implementation of investment
transactions, clearing agent and custodian services, monthly reports on
portfolio transactions and other related services. The amount of investment
advisory fees payable pursuant to such agreements is equal to 0.15% of average
assets under management plus out-of-pocket expenses. PXRE entered into its
investment advisory agreement with Phoenix Duff & Phelps in January 1997 and,
accordingly, incurred no fees thereunder in fiscal year 1996. PXRE Reinsurance
incurred fees of approximately $367,000, and Transnational incurred fees of
approximately $257,000, to Phoenix Duff & Phelps for services performed in
fiscal year 1996. Management of
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PXRE expects such fees for 1997 will, in the aggregate, be approximately
$758,000, plus out-of-pocket expenses. Based upon management's experience
related to similar agreements with unaffiliated persons, PXRE believes that the
terms and conditions of the investment advisory agreements described above are
no less favorable to PXRE, PXRE Reinsurance and Transnational than terms and
conditions available for comparable services from unaffiliated persons.
TERMINATION AND CHANGE OF CONTROL ARRANGEMENTS
EXECUTIVE SEVERANCE PLAN. In 1989, the Board of Directors approved an
Executive Severance Plan for designated officers of PXRE, which was renewed for
an additional five year term in August 1994.
The Executive Severance Plan provides to designated officers certain
benefits in the event of termination without cause or constructive discharge
within 6 months before a "Change of Control" (as defined in the Executive
Severance Plan) or within one year thereafter (two years for Mr. Radke). The
Executive Severance Plan provides that a "Change of Control" will be deemed to
have occurred if (i) any person (as defined in the Executive Severance Plan)
other than PXRE becomes the beneficial owner, directly or indirectly, of
securities representing 30% or more of the combined voting power of PXRE's
outstanding securities; (ii) the stockholders of PXRE approve a merger or
consolidation of PXRE with another corporation (other than certain situations
where the stockholders of PXRE before such transaction continue in control after
such transaction) or a sale or other disposition of all or substantially all of
the assets of PXRE; (iii) the stockholders of PXRE approve a plan of liquidation
or dissolution of PXRE; or (iv) during any period of two consecutive years
following August 17, 1989, individuals who at the beginning of such period
constituted the Board of Directors of PXRE and any new director whose election
was approved by at least two-thirds of the directors who were directors at the
beginning of the period or whose election had previously been so approved, cease
to constitute a majority of the Board.
The benefits consist of a lump sum cash payment equal to (i) one year's
salary (for Mr. Radke two years if terminated within 12 months of a change of
control), (ii) accrued but unpaid bonuses, (iii) present value of employer
contributions to PXRE's Pension Plan and the 401(k) Plan (the "Qualified Plans")
for one year (two years for Mr. Radke if terminated within 12 months of a change
of control), and (iv) amounts forfeited under the Qualified Plans on termination
of employment, reduced by the present value of payments under any employment
agreement, Company policy or statute. In addition, one year's coverage (two
years for Mr. Radke) is provided to the officer under PXRE's medical, life and
other welfare benefit plans in which the officer participated. In determining
these benefits, the one and two year periods do not extend past age 65.
PXRE also indemnifies the officer for any excess parachute payment excise
tax (and the excise and income tax on such indemnity) for which the officer may
become responsible, as well as attorney's fees required to enforce such
officer's rights under the Plan.
The Executive Severance Plan has a five year term subject to renewal only
if the Board of Directors determines prior to the end of such term (or the end
of any subsequent renewal term) that the Plan shall be renewed; the Plan
continues in the event of a change of control until all obligations are
satisfied.
Messrs. Radke, Bleisnick, Forsyth, Kimmel and Sverchek participate in the
Plan, with 11 others. The Merger with TREX is deemed to be a "change of control"
for purposes of the Executive Severance Plan. Accordingly, if the employment of
the named executive officers with PXRE had then been terminated as provided in
the Executive Severance Plan, it is estimated that the compensation payable to
Messrs. Radke, Bleisnick, Forsyth, Kimmel and Sverchek would have been $900,000,
$275,000, $275,000, $180,000 and $187,000, respectively. Also, if the employment
with PXRE of any of the named executive officers is
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terminated as provided in the Plan within one year of the date of the Merger
(two years in the case of Mr. Radke), such person would be eligible to receive
the compensation payable under the Executive Severance Plan.
1988 STOCK OPTION PLAN. Adopted in 1988 and subsequently amended, the 1988
Stock Option Plan (the "1988 Option Plan") provides for the grant of incentive
stock options which are intended to qualify as incentive stock options under
Section 422 of the Internal Revenue Code of 1986, as amended (the "Code"), as
well as non-qualified stock options which are not intended to qualify as
incentive stock options under the Code. Subject to certain adjustments as
provided in the 1988 Option Plan, the maximum number of shares of Common Stock
reserved for issuance upon the exercise of options granted under the 1988 Option
Plan is 450,000. As of March 19, 1992, options to purchase a total of 449,965
shares of Common Stock were outstanding under the 1988 Option Plan, all of which
options were non-qualified stock options. At a meeting held on such date, the
Board of Directors of PXRE resolved to "freeze" the 1988 Option Plan as of
December 31, 1992 so that no further options could thereafter be granted under
the 1988 Option Plan.
Each non-qualified option granted under the 1988 Option Plan has a term not
exceeding ten years and one day. In each case, the exercise price is equal to or
in excess of the fair market value of the Common Stock on the date the option
was granted.
No part of any option may be exercised unless the optionee remains in the
continuous employ of PXRE or its affiliates for at least one year from the date
of grant of the option, except where such employment terminates by reason of
death or permanent disability, or retirement on or after age 65 with PXRE's
consent. Subject to the foregoing, options become exercisable in four equal
annual installments, unless otherwise provided by the 1988 Option Plan Committee
(which administers the 1988 Option Plan), provided, however, that upon the
earlier of (i) a Change of Control (as defined in the 1988 Option Plan) or (ii)
the Common Stock of PXRE ceasing to be publicly traded, any unexercised portion
of an option will become exercisable.
No options are transferable by an optionee other than by will or the laws
of descent and distribution, and during the lifetime of an optionee an option
will be exercisable only by the optionee or, if the optionee is legally
incapacitated, by the optionee's duly appointed guardian or legal
representative.
Under the 1988 Option Plan an optionee may elect up to 60 days following a
Change of Control to surrender all or part of his or her non-qualified option
and to receive a cash payment equal to the greater of (a) the excess of the fair
market value of the option shares surrendered over the exercise price for such
shares, or (b) the excess of the per share net worth (as determined under the
1988 Option Plan) of the shares to which the surrendered option pertains on the
date of surrender over the per share net worth of such shares on the date the
option was granted.
For this purpose, the 1988 Option Plan provides that "fair market value"
for non-qualified options is the higher of (a) the highest trading price of
PXRE's shares (as determined under the 1988 Option Plan) during the 90-day
period ending on the date of such election, or (b) if the transaction occurs as
the result of a person acquiring a 30% interest in PXRE, the highest price per
share shown on Schedule 13D or any amendment thereto filed by any person holding
30% or more of such shares, or (c) if the Change of Control occurs as the result
of stockholder approval of a merger or consolidation (as described in the 1988
Option Plan) or any sale or other disposition of all or substantially all of the
assets of PXRE, the highest price paid pursuant to such transaction.
In addition, under the 1988 Option Plan an optionee may elect up to 60 days
following the cessation of the public trading of the shares of PXRE (other than
where due to the fraud or other misconduct of the
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management of PXRE) to surrender all or part of his or her non-qualified option
and receive a cash payment equal to the greater of (a) the excess of the fair
market value of the shares subject to the surrendered option over the exercise
price, or (b) the amount determined under the per share net worth valuation
method described above. For this purpose, "fair market value" means the highest
public trading value (as determined under the 1988 Option Plan) during the
90-day period ending on the date of such cessation of public trading.
The 1988 Option Plan also provides that if an optionee does not make an
election under either of the above provisions on or before the 60th day
following a Change of Control resulting from certain mergers and consolidations,
sale of all or substantially all of the assets of PXRE, the liquidation or
dissolution of PXRE, or such cessation of public trading, the optionee will be
deemed to have made such election as of such 60th day, the optionee will receive
the cash payment that would be due upon such an election and the optionee's
option and surrender rights will be deemed to have been canceled.
Under the 1988 Option Plan, an election is not transferable other than by
will or the laws of intestacy. An optionee who is subject to Section 16(b) of
the Exchange Act may only exercise an election in compliance with Rule 16b-3(e)
thereunder.
The 1988 Option Plan provides that a "Change of Control" will be deemed to
have occurred if (i) any person (as defined in the Plan) other than PXRE or
Phoenix Home Life or an affiliate thereof, becomes the beneficial owner,
directly or indirectly, of securities representing 30% or more of the combined
voting power of PXRE's outstanding securities; (ii) the stockholders of PXRE
approve a merger or consolidation of PXRE with another corporation (other than
certain situations where the stockholders of PXRE before such transaction
continue in control after the transaction) or a sale or other disposition of all
or substantially all of the assets of PXRE; (iii) the stockholders approve a
plan of liquidation or dissolution of PXRE; or (iv) during a period of two
consecutive years following August 17, 1989 individuals who at the beginning of
such period constituted the Board of Directors of PXRE and any new director
whose election was approved by at least two-thirds of the directors who were
directors at the beginning of the period or whose election had been previously
so approved, cease to constitute a majority of the Board.
As of the record date, Messrs. Radke, Bleisnick, Forsyth and Sverchek held
outstanding non-qualified options to purchase 23,367, 26,764, 40,829 and 7,328
shares of Common Stock, respectively, pursuant to the 1988 Option Plan. All of
such options had vested in accordance with the provisions of the 1988 Option
Plan, and were exercisable, as of the record date. (Mr. Kimmel is omitted from
the foregoing discussion because he is not a participant in the 1988 Option
Plan.)
1987 STOCK OPTION PLAN. The 1987 Stock Option Plan (the "1987 Option
Plan") originally consisted of six non-qualified stock option agreements, as
amended, with certain officers of PXRE (including three of the five current
executive officers named in the Summary Compensation Table) that were entered
into in anticipation of PXRE's initial public offering of its Common Stock which
began on March 25, 1987. The only persons currently participating in the 1987
Option Plan are those four officers of PXRE who have been granted non-qualified
options.
Options to purchase an aggregate of 169,800 shares of Common Stock were
granted (being all of the shares reserved under the 1987 Option Plan) at an
exercise price of $13.00 per share, which price was equivalent to the price per
share in PXRE's initial public offering. Unless the parties otherwise agree,
this price may not be modified. Options granted under the 1987 Option Plan
became exercisable in four cumulative annual installments starting in 1988, and
are currently fully exercisable.
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For officers other than Mr. Radke, the option to purchase shares of Common
Stock granted under the 1987 Option Plan, and all installments thereof, expires
upon the first of the following events to occur: (i) the expiration of ten (10)
years from the option date (March 25, 1987), (ii) the officer's termination of
employment with PXRE for any reason other than death or disability, (iii) the
expiration of one (1) year from the date of the officer's death or disability,
if such death or disability occurs while the officer is employed by PXRE, or
(iv) a Change of Control of PXRE. If death or disability is the cause of the
termination of employment, unexercised installments of the option which would
have been exercisable by the officer are exercisable within one (1) year of the
officer's death by his executor, administrator or personal representative or by
those succeeding to the officer's interest by will or the laws of descent and
distribution.
Mr. Radke's option to purchase shares of Common Stock granted under the
1987 Option Plan, and all installments thereunder, expires upon the first of the
following events to occur: (i) the expiration of ten (10) years from the option
date (March 25, 1987), (ii) the termination of employment by PXRE for "cause",
as such term is defined in a former employment agreement between Mr. Radke and
PXRE, (iii) the voluntary termination of employment by Mr. Radke, or (iv) the
expiration of five (5) years from the date of Mr. Radke's death or disability,
if such death or disability occurs while he is employed by PXRE. If death or
disability is the cause of termination of employment, unexercised installments
of the option may be exercised within the lesser of (i) five (5) years after
such death or disability, or (ii) the time permitted under the 1987 Option Plan
in the case of a Change of Control of PXRE. The option may be exercised by Mr.
Radke's executor, administrator or personal representative or by those
succeeding to his interest by will or the laws of descent and distribution.
The 1987 Option Plan contains the same definition of "Change of Control" as
the 1988 Option Plan described above and the same provisions as the 1988 Option
Plan respecting (i) the right of optionees to surrender options for a cash
payment for 60 days following a Change of Control of PXRE and for 60 days
following the cessation of public trading of PXRE's shares and (ii) the
cancellation of options and the deemed exercise of such surrender rights in the
event of a Change of Control of PXRE resulting from certain mergers or
consolidations, the sale of all or substantially all of PXRE's assets, the
liquidation or dissolution of PXRE or the cessation of public trading of PXRE's
shares (except where such cessation is due to the fraud or other misconduct of
PXRE's management).
As of the record date, Messrs. Radke, Bleisnick and Forsyth have fully
exercised the options granted to them pursuant to the 1987 Option Plan. (Mr.
Sverchek and Mr. Kimmel are omitted from the foregoing discussion because they
are not participants in the 1987 Option Plan.)
RESTATED EMPLOYEE ANNUAL INCENTIVE BONUS PLAN. Adopted in 1992, the
Restated Employee Annual Incentive Bonus Plan, as amended, is proposed to be
approved below. See "APPROVAL OF THE RESTATED EMPLOYEE ANNUAL INCENTIVE BONUS
PLAN" for a description of such plan (including provisions relating to
employment termination and changes of control).
1992 OFFICER INCENTIVE PLAN. Adopted in 1992 as the 1992 Senior Executive
Officer Incentive Plan, and amended and renamed in 1994, the 1992 Officer
Incentive Plan, as amended, is proposed to be approved below. See "APPROVAL OF
THE 1992 OFFICER INCENTIVE PLAN" for a description of such plan (including
provisions relating to employment termination and changes of control).
TRANSNATIONAL RE OFFICER INCENTIVE PLAN. The Transnational Re Officer
Incentive Plan, an unfunded non-tax-qualified officer incentive plan was assumed
by PXRE in the Merger. According to the TREX Plan, designated officers of TREX
(who are also officers of PXRE) were eligible to participate in an annual bonus
pool equal to the net income (as defined) of TREX for each fiscal year in the
period 1994 through 1998. In
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connection with the Merger, the TREX Plan was amended to provide that, among
other things, the annual bonus pool for 1996 would be the final annual bonus
pool under the TREX Plan and, therefore, amounts payable pursuant to the TREX
Plan would be frozen as of December 31, 1996. The bonuses payable under the TREX
Plan are earned in three equal installments. The first installment was earned as
of December 31, 1996 and was paid in February 1997; the two additional
installments will be earned (provided that the participant is an officer of PXRE
at such time) on December 31, 1997 and 1998 and will be paid prior to March 31
of the following year. Each of the named executive officers is a participant in
the TREX Plan and the amounts earned thereunder in 1996 are set forth in note
(5) to the Summary Compensation Table.
APPROVAL OF THE RESTATED EMPLOYEE
ANNUAL INCENTIVE BONUS PLAN
The Restated Employee Annual Incentive Bonus Plan (the Bonus Plan) provides
annual incentives to the employees of PXRE based on PXRE's performance and is a
key part of PXRE's incentive compensation program. The stockholders approved the
adoption of the Bonus Plan in 1992 and the amendment of the Bonus Plan in 1994.
On February 13, 1997, the Board of Directors amended the Bonus Plan to (a)
qualify awards to the chief executive officer and other four most highly
compensated executive officers at the end of a fiscal year ("covered employees")
for the performance-based compensation exception in Section 162(m) of the Code
(which generally disallows any deduction for compensation paid to such officers
in excess of $1 million annually), (b) conform the Bonus Plan to final Rule
16b-3 under the Exchange Act ("Rule 16b-3") issued by the Commission effective
in October, 1996, (c) correct certain performance percentages under the Bonus
Plan to conform to the straight-line interpolation methodology utilized in the
Bonus Plan, (d) improve the financial terms associated with deferred bonuses,
and (e) modify awards for officers resident in Belgium to reflect local country
tax treatment of restricted stock, all as described below (the "Amendment").
The Omnibus Reconciliation Act of 1993 added Section 162(m) to the Code
which generally disallows a federal income tax deduction to any publicly held
corporation for salary and other compensation paid to covered employees which is
in excess of $1 million. Section 162(m) provides an exception for performance-
based compensation paid under a plan meeting certain requirements. Accordingly,
the Board of Directors has amended the Bonus Plan and is seeking approval of the
material terms of the Bonus Plan to qualify awards to the executive officers who
are covered employees for the performance-based compensation exception. The
Amendment (i) requires that the Bonus Plan be administered by "outside
directors" (as defined in Section 162(m)), (ii) bars any covered employee the
deduction of whose non-performance based compensation for the year is likely to
be limited by Section 162(m) from benefiting from any discretionary increase in
the Total Bonus Pool, receiving any discretionary increase in the covered
employee's tentative cash bonus or benefiting from any portion of the pool not
awarded to other participants, and (iii) limits the amount of the annual awards
to any covered employee to $1 million. These changes made by the Amendment are
effective for awards made for 1997 (to be paid in early 1998) and thereafter.
Such changes, had they been in effect for the awards made in 1994-1996 that are
reported in the Bonus column in the Summary Compensation Table, would not have
changed the amounts indicated for the individuals who were covered employees at
the end of such years.
The Amendment, for purposes of conforming the Bonus Plan to final Rule
16b-3, requires that (i) the Plan be administered by "non-employee directors"
(as defined in the Rule), and (ii) eliminates the requirement that amendments to
the Bonus Plan be approved by stockholders for Rule 16b-3 purposes.
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The Amendment revises certain performance percentages set forth in the
Bonus Plan (as described below) to more accurately reflect the straight-line
interpolation methodology utilized for determining performance percentages
pursuant to the Bonus Plan.
The Amendment permits deferred bonus awards to be credited with earnings
(losses) mirroring the performance of the fund or funds provided in the 401(k)
Plan that are designated by the participant (rather than just the Intermediate
Term U.S. Treasury Portfolio fund).
The Amendment also authorizes the Bonus Plan Committee to modify awards to
take into account local country tax treatment of restricted stock. Because
Belgium taxes restricted stock when granted (rather than when the restrictions
lapse, as is the case in the United States), awards made in 1997 and later to
officers who are subject to Belgian tax will be made fully in cash, provided
that the portion of the bonus payment which would otherwise be made in
restricted stock will vest and be paid at the same time as restricted stock
awards would vest.
The changes made by the Amendment, except the changes relating to Section
162(m) of the Code (which are discussed above), are effective as of February 13,
1997, including with respect to grants made on that date.
The following is a description of the principal features of the Bonus Plan,
including the material terms for which stockholder approval is being sought
hereby for Section 162(m) purposes. Such description is qualified in its
entirety by reference to the terms of the Bonus Plan, which incorporates the
Amendment, a complete copy of which is attached as Appendix A.
BONUS PLAN. The Bonus Plan provides for the annual award of bonuses to
employees of PXRE and its subsidiaries and affiliates based on the positions of
the individual employees within PXRE and the return on equity with respect to
PXRE's capital stock for such fiscal year. Under the Bonus Plan, the amount of
the annual bonus is paid to an eligible individual in cash, except that for
junior and senior officers, 30% of such award is payable in shares of Common
Stock subject to certain restrictions established by the administering committee
("Restricted Shares"). Subject to certain adjustments as provided in the Bonus
Plan, a maximum of 150,000 shares of PXRE Common Stock is reserved for awards
under the Bonus Plan. Authorized and unissued shares or treasury shares or both
may be used for grants of Restricted Shares under the Bonus Plan. As of the
record date, 81,008 shares remain for future grants. On the record date, the
closing price of PXRE Common Stock on the New York Stock Exchange was $25.50.
ADMINISTRATION OF THE BONUS PLAN. The Bonus Plan is administered by a
committee (the "Bonus Plan Committee") whose members are appointed by the Board
of Directors and are "non-employee directors" within the meaning of Rule 16b-3
and are "outside directors" within the meaning of Section 162(m).
Subject to the provisions of the Bonus Plan, the Bonus Plan Committee has
sole and complete authority (a) to adopt, alter and repeal such administrative
rules, guidelines and practices governing the operation of the Bonus Plan as the
Bonus Plan Committee shall, from time to time, deem advisable, (b) to interpret
the terms and provisions of the Bonus Plan, and (c) to make all other
determinations necessary or advisable for administration of the Bonus Plan. The
Board of Directors may fill any Bonus Plan Committee vacancy and remove any
member at any time with or without cause, provided, however, that each such
replacement must be a "non-employee director" within the meaning of Rule 16b-3
and an "outside director" within the meaning of Section 162(m), and that the
Bonus Plan Committee must at all times consist of at least two members.
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ELIGIBILITY. Each individual shall participate in the Bonus Plan
commencing on his or her date of hire for the fiscal year in which such date of
hire occurs, provided that such individual is employed by PXRE or any affiliate
on a salaried non-temporary basis during the fiscal year in which such date of
hire occurs.
BONUS FORMULA. There will be calculated for each participant in the Bonus
Plan a target bonus for each PXRE fiscal year consisting of such participant's
base compensation at the end of such fiscal year multiplied by a target bonus
percentage, as determined by the Bonus Plan Committee before the beginning of
the fiscal year, applicable to such participant's position within PXRE. The
current target bonus percentages, as established by the Bonus Plan Committee,
are 70% for the Chief Executive Officer, 55% for Executive Vice Presidents, 50%
for Senior Vice Presidents, 45% for Vice Presidents, 35% for Assistant Vice
Presidents and Controllers, 25% for Assistant Secretaries and Assistant
Treasurers, and 10% for all other employees.
During the first calendar quarter following the end of each PXRE fiscal
year, the Bonus Plan Committee awards earned bonuses to Bonus Plan participants
based on the PXRE return on equity during such fiscal year. The earned bonus of
each participant will equal 100% of his target bonus for the fiscal year if PXRE
has achieved a 13% return on equity for such fiscal year. If PXRE has achieved
more or less than a 13% return on equity, the percentage of the target bonus
earned by each Bonus Plan participant will be increased or reduced in accordance
with the following table, provided that if PXRE's return on equity for any
fiscal year falls between the listed percentages, the percentage of the target
bonus earned by each participant will be determined by interpolation on a
straight-line basis, rounded to the nearest 1/10th of 1%:
<TABLE>
<CAPTION>
COMPANY PERFORMANCE
ROE PERCENTAGE
- ------- -----------
<S> <C>
8%......................................................... 0%
9%......................................................... 20.0
11%......................................................... 60.0
15%......................................................... 114.3
17%......................................................... 128.6
20%......................................................... 150.0
</TABLE>
For example, if PXRE's return on equity for a fiscal year is 11.4%, the
performance percentage shall be 68% (.60 + ((.004 x .4)/.02).
"Return on equity" for a fiscal year means the result of dividing (a)
PXRE's consolidated net income for such fiscal year by (b) PXRE's average
stockholders' equity for such fiscal year, which average will be computed by
dividing (i) the sum of PXRE's stockholders' equity as of the end of each of the
four calendar quarters in such fiscal year and PXRE's stockholders' equity as of
the end of the calendar quarter ending on December 31 of the preceding fiscal
year, by (ii) five.
On the recommendation of PXRE's chief executive officer the Bonus Plan
Committee may, in its sole discretion, adjust the amount of the annual bonus
pool available for the allocation of annual bonuses to participants for a fiscal
year by increasing or decreasing such pool by up to 25% of such pool for such
year. However, no executive who is a covered employee at the end of the fiscal
year and the deduction of whose non-performance based compensation for the year
is likely to be limited by Section 162(m) may benefit from any discretionary
increase in the pool for the year.
BONUS AWARDS. Once the total bonus pool available for allocation is
calculated for a fiscal year under the Bonus Plan, such pool is allocated by the
Bonus Plan Committee into three separate pools: the senior officer, junior
officer and other employee bonus pools. The amount allocated to each separate
bonus pool is
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<PAGE> 29
determined by separately calculating the ratio that the product of each senior
officer's, junior officer's and other employee's base compensation multiplied by
the respective participant's bonus percentage bears to the amount of the total
bonus pool. With respect to the senior officer and junior officer bonuses, 70%
of each participant's bonus for the year will be paid to such participant in
cash, while the other 30% of such bonus will be delivered to such participant in
the form of Restricted Shares (or in cash, subject to certain vesting
requirements, in the case of officers who are residents of Belgium). With
respect to the other employees' bonuses, the entire amount thereof will be paid
in cash.
With respect to the senior officer and junior officer bonus pools, 70% of
each pool is allocated to a senior officer cash bonus pool and a junior officer
cash bonus pool, respectively, and 30% is allocated to a senior officer
restricted stock pool and a junior officer restricted stock pool, respectively.
The restricted stock pools are allocated to the participants therein
according to the ratio that 30% of each participant's target bonus bears to 30%
of the sum of the target bonuses of all participants in the pool. The dollar
amount thus allocated to each participant is then divided by the fair market
value of shares of PXRE Common Stock on the date the Committee approves the
awards to determine the number of Restricted Shares allocated to each
participant.
The cash pools for the senior officers and the junior officers are each
allocated among the pool participants in proportion to the ratio which 70% of
each participant's target bonus bears to 70% of the total of the target bonuses
of the pool participants. This tentative allocation may be increased or
decreased by the Bonus Plan Committee by up to 20% to take into account the
individual's performance and contribution to PXRE's performance for the year,
except that no covered employee the deduction of whose non-performance based
compensation is likely to be limited by Section 162(m) may benefit from an
increase. The cash pool for non-officers is allocated to the participants
therein in proportion to the ratio which each participant's target bonus bears
to the total of the target bonuses of the pool participants. This tentative
allocation may be increased or decreased by the Bonus Plan Committee by up to
40% to take into account the individual's performance and contribution to PXRE's
performance for the year. The final allocation is paid in cash.
The maximum cash and Restricted Share bonus awards that a participant who
is a covered employee at the end of the year may receive is $1 million.
For fiscal year 1996, cash bonuses of $252,032, $121,015, $121,015, $74,810
and $72,009 were paid by PXRE to Messrs. Radke, Bleisnick, Forsyth, Kimmel and
Sverchek, respectively, pursuant to the Bonus Plan. Total cash bonuses paid by
PXRE pursuant to the Bonus Plan for fiscal year 1996 to all executive officers
as a group (9 people) and to all other officers and non-officer employees as a
group (45 people) were $825,952 and $1,283,449, respectively.
RESTRICTED SHARES. Restricted Share awards consist of grants of shares of
PXRE's Common Stock which are generally subject to forfeiture if the recipient's
employment with PXRE terminates during the restricted period specified in the
award. Subject to the discretion of the Bonus Plan Committee, the period must be
at least three years, measured as provided in the Bonus Plan (the "Restricted
Period"). The recipient of a Restricted Share award is entitled to all the
rights of a stockholder with regard to the awarded Restricted Shares during the
Restricted Period, including the right to receive dividends on, and to vote, the
Restricted Shares, except that the Restricted Shares may not be sold, pledged or
otherwise transferred by a recipient until the applicable Restricted Period has
lapsed. The lapse of the Restricted Period may be accelerated in the event of a
recipient's death, permanent disability or retirement, as determined by the
Bonus Plan Committee. The Bonus Plan Committee will require a participant
receiving an award of Restricted Shares to enter into a
27
<PAGE> 30
Restricted Share Agreement with PXRE containing the foregoing restrictions and
such other terms as the Bonus Plan Committee may deem advisable.
Upon the earlier of a Change of Control of PXRE or the shares of PXRE
ceasing to be publicly traded, any remaining Restricted Period applicable to
Restricted Shares will immediately lapse. For this purpose, a "Change of
Control" of PXRE will be deemed to have occurred if (i) any person (as defined
in the Bonus Plan) other than PXRE or Phoenix Home Life or an affiliate thereof,
becomes the beneficial owner, directly or indirectly, of securities representing
30% or more of the combined voting power of PXRE's outstanding securities; (ii)
the stockholders of PXRE approve a merger or consolidation of PXRE with another
corporation (other than certain situations where the stockholders of PXRE before
such transaction continue in control after the transaction) or a sale or other
disposition of all or substantially all of the assets of PXRE; (iii) the
stockholders of PXRE approve a plan of liquidation or dissolution of PXRE; or
(iv) during any period of two consecutive years following March 19, 1992,
individuals who at the beginning of such period constituted the entire Board of
Directors of PXRE and any new director, whose election was approved by at least
two-thirds of the directors who were directors at the beginning of the period or
whose election had been so approved, cease to constitute a majority of the
Board. The Bonus Plan was amended in June 1996 to provide that the Merger with
TREX would not be a Change of Control of PXRE.
For fiscal year 1996, awards of 4,140, 1,988, 1,988, 1,229 and 1,183
Restricted Shares were made by PXRE to Messrs. Radke, Bleisnick, Forsyth, Kimmel
and Sverchek, respectively, pursuant to the Bonus Plan. A total of 12,459 and
3,912 Restricted Shares, respectively, were awarded by PXRE to all executive
officers as a group (9 people) and to all other officers as a group (18 people)
pursuant to the Bonus Plan for fiscal year 1996.
ALTERNATIVE AWARDS. Commencing with awards for 1996 (which were made in
February 1997), awards to officers who are tax residents of Belgium (or other
countries) that tax restricted stock awards in the year received (rather than in
the year that the restrictions lapse) shall be made in cash units credited to an
unfunded account. The units will vest at the same time that Restricted Share
awards vest, and will then be paid to the officer in cash. No earnings or losses
will be credited to the account.
ADJUSTMENTS IN AUTHORIZED SHARES AND RETURN ON EQUITY. In the event the
outstanding shares of Common Stock of PXRE are increased or changed into or
exchanged for a different number or kind of shares of capital stock or other
securities of PXRE by reason of any stock dividend or split, recapitalization,
corporate reorganization or other corporate change, the Bonus Plan Committee may
make such substitution or adjustment, if any, as it deems to be equitable, in
the number or kind of shares or other securities as to which Restricted Shares
may be granted under the Bonus Plan. In addition, in the event of any such
corporate change or in the event of any material changes in accounting
practices, tax law or interpretation or corporate strategy, the Bonus Plan
Committee may make such adjustment in the definition of "return on equity" as
may be necessary to preserve the intent of the Bonus Plan.
PARTICIPATION AFTER START OF FISCAL YEAR; TERMINATION. If an individual
begins participation in the Bonus Plan after the start of a fiscal year, such
individual's cash and Restricted Share award, if any, will be reduced. The
amount paid to the individual for such fiscal year will be the pro rata amount
of such cash and Restricted Share award based on the number of months for which
the participant was employed during such fiscal year.
In addition, if any individual terminates employment prior to the end of
the fiscal year due to retirement, permanent disability or death, such
individual's cash and Restricted Share award, if any, will be reduced. The
amount paid to the individual for such fiscal year will be the pro rata amount
of the cash and Restricted Share
28
<PAGE> 31
award based on the number of months for which the participant was employed
during such fiscal year. If an individual's employment terminates for any other
reason, the individual will receive no bonus under the Bonus Plan.
DEFERRAL OF CASH AWARDS. Prior to the beginning of a fiscal year, a
participant may irrevocably elect to defer receipt of his or her cash award
until the termination of employment or another designated future date or dates.
In such event, an unfunded account is established by the Bonus Plan Committee
for such participant and earnings (or losses) on the balances in such unfunded
account are credited to the account in an amount equal to the earnings (or
losses) on the fund or funds of the 401(k) Plan designated by the participant
from time to time.
FEDERAL INCOME TAX CONSEQUENCES; CASH AWARDS. Cash awards under the Bonus
Plan, including any earnings on deferred amounts, are taxable to the recipient
thereof as ordinary income in the year or years in which the award is paid or
made available to the recipient in cash. PXRE will generally be entitled to a
tax deduction at the same time and in the corresponding amount, subject to
Section 162(m) of the Code.
FEDERAL INCOME TAX CONSEQUENCES; RESTRICTED SHARES. The grant of
Restricted Shares will not result in income to the recipient or any deduction
for PXRE for federal income tax purposes, since the Restricted Shares are
subject to restrictions constituting a "substantial risk of forfeiture" as
defined in the Code. Unless a recipient of a Restricted Share award elects to be
taxed at the date of grant, such recipient will generally realize taxable
compensation income when the Restricted Period applicable to the award lapses.
The amount of such income will be the fair market value of the Restricted Share
award on the date of such lapse of the Restricted Period. Dividends paid on the
Restricted Shares during the Restricted Period will also be taxable compensation
income to the recipient when received by the recipient. PXRE will be entitled to
a tax deduction to the extent, and at the time, that the recipient realizes
compensation income. Income tax withholding will be required at the same time
the Restricted Period lapses.
Upon the lapse of the Restricted Period for any Restricted Shares, PXRE
will withhold from the number of Restricted Shares to be received by a recipient
sufficient whole shares with a value not in excess of the amount of the
recipient's withholding tax in respect thereof and will withhold any remaining
amount needed to cover the amount of such withholding tax from other
compensation payable to the recipient. Any shares withheld in payment of taxes
will not be available for use in subsequent Restricted Share awards.
The foregoing tax analysis is intended to summarize certain relevant U.S.
federal income tax consequences of the Bonus Plan, as amended, in effect as of
the date of this Proxy Statement. Legislation may be enacted and regulations may
be issued in the future which create different tax consequences.
AMENDMENT OF THE BONUS PLAN. The Board of Directors of PXRE may, from time
to time, amend, suspend or terminate any or all of the provisions of the Bonus
Plan without stockholder approval.
APPROVAL OF THE RESTATED EMPLOYEE ANNUAL INCENTIVE BONUS PLAN, AS AMENDED,
WILL REQUIRE THE AFFIRMATIVE VOTE OF A MAJORITY OF THE SHARES OF COMMON STOCK
PRESENT IN PERSON OR REPRESENTED BY PROXY AT THE ANNUAL MEETING AND ENTITLED TO
VOTE. THE BOARD OF DIRECTORS AND MANAGEMENT RECOMMEND A VOTE "FOR" THE PROPOSAL
TO APPROVE THE RESTATED EMPLOYEE ANNUAL INCENTIVE BONUS PLAN, AS AMENDED, AND,
UNLESS A STOCKHOLDER SIGNIFIES OTHERWISE, THE PERSONS NAMED IN THE PROXY WILL SO
VOTE.
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<PAGE> 32
APPROVAL OF THE 1992 OFFICER INCENTIVE PLAN
The 1992 Officer Incentive Plan (the "Incentive Plan") provides incentives
linking key employees' interests to stockholder interests through equity based
awards. These awards are key aspects of PXRE's compensation programs which are
designed to attract, retain and motivate the best possible employees to
accomplish the business objectives of PXRE. The stockholders approved the
adoption of the Incentive Plan in 1992 and the amendment of the Incentive Plan
in 1994.
On February 13, 1997, the Board of Directors amended the Incentive Plan to
(a) continue to qualify awards to the chief executive officer and other four
most highly compensated executive officers at the end of the fiscal year
(covered employees) for the performance-based compensation exception to Section
162(m) of the Code (which generally disallows any deduction for compensation
paid to such officers in excess of $1 million annually), and (b) conform the
Incentive Plan to final Rule 16b-3 issued by the Commission that became
effective in October 1996, all as described below.
The Omnibus Reconciliation Act of 1993 added Section 162(m) to the Code
which generally disallows a federal income tax deduction to any publicly held
corporation for salary and other compensation paid to covered employees which is
in excess of $1 million. Section 162(m) provides an exception for performance-
based compensation paid under a plan meeting certain requirements. The Incentive
Plan has operated since the adoption of Section 162(m) under transition rules
providing that stockholder approval for purposes of Section 16 of the Exchange
Act and administration by "disinterested directors" within the meaning of former
Rule 16b-3 would be deemed to satisfy the stockholder approval and director
administration requirements of Section 162(m). Those transition rules expire at
the PXRE 1997 Annual Meeting. Accordingly, the Board of Directors has amended
the Incentive Plan and is seeking approval of the material terms of the
Incentive Plan to qualify awards made after the 1997 Annual Meeting to executive
officers who are covered employees for the performance-based compensation
exception. The amendment (i) requires that the Incentive Plan be administered by
"outside directors" (as defined in Section 162(m)), and (ii) limits the amount
of the annual awards to any covered employee to 100,000 shares. These changes,
had they been in effect for awards made in 1994-1996, would not have changed the
amounts of the option and restricted stock awards indicated in the Summary
Compensation Table and the Option Grants Table for the individuals who were
covered employees at the end of such year.
The amendment, for purposes of conforming the Incentive Plan to final Rule
16b-3, requires that (i) the Incentive Plan be administered by "non-employee
directors" (as defined in the Rule), and (ii) eliminates the requirement that
amendments to the Incentive Plan be approved by stockholders for Rule 16b-3
purposes.
On April 17, 1997, the Board of Directors amended the Incentive Plan to
increase the maximum number of shares reserved for issuance upon the exercise of
options and grants of Restricted Shares under the Incentive Plan from 500,000 to
750,000 shares.
The following is a description of the principal features of the Incentive
Plan for which stockholder approval is being sought hereby for Section 162(m)
purposes. Such description is qualified in its entirety by reference to the
terms of the Incentive Plan, which incorporates the amendments, a complete copy
of which is attached as Appendix B.
INCENTIVE PLAN. The Incentive Plan provides for the grant of incentive
stock options ("Incentive Stock Options") which are intended to qualify as
incentive stock options under Section 422 of the Code, non-qualified stock
options which are not intended to qualify as incentive stock options under the
Code ("Non-Qualified Options"), and awards of shares of Common Stock of PXRE
subject to certain restrictions
30
<PAGE> 33
("Restricted Shares"), as determined by the administering committee. Subject to
certain adjustments as provided in the Incentive Plan and described below, and
giving effect to the April 17, 1997 amendment, a maximum of 750,000 shares of
the Common Stock of PXRE is reserved for issuance upon the exercise of options
and grants of Restricted Shares under the Incentive Plan. Authorized but
unissued shares or treasury shares or both may be used for grants of options or
Restricted Shares under the Incentive Plan. As of the record date, without
giving effect to the April 17, 1997 amendment, 163,698 shares remain for future
grants (or 413,698 shares, giving effect to the April 17, 1997 amendment). On
the record date, the closing price of PXRE Common Stock on the New York Stock
Exchange was $25.50.
ADMINISTRATION OF THE INCENTIVE PLAN. The Incentive Plan is administered
by a committee (the "Incentive Plan Committee") whose members are appointed by
the Board of Directors and are "non-employee directors" within the meaning of
Rule 16b-3 under the Exchange Act and are "outside directors" within the meaning
of Section 162(m). Subject to the provisions of the Incentive Plan, the
Incentive Plan Committee has sole and complete authority (a) to determine, in
its discretion, the individuals to whom, and the times at which, options or
Restricted Shares will be granted (such individuals being referred to
collectively herein as "Grantees"), the number of shares in each Restricted
Share award or subject to each option and the provisions of the option
agreements and Restricted Share agreements evidencing such options or relating
to such Restricted Shares, (b) to adopt, alter and repeal such administrative
rules, guidelines and practices governing the operation of the Incentive Plan as
the Incentive Plan Committee shall, from time to time, deem advisable, (c) to
interpret the terms and provisions of the Incentive Plan, and (d) to correct any
defect, supply any omission or reconcile any inconsistency in the Incentive
Plan. The Board of Directors may fill any Incentive Plan Committee vacancy and
remove any member at any time with or without cause, provided, however, that
each such replacement must be a "non-employee director" within the meaning of
Rule 16b-3 and an "outside director" within the meaning of Section 162(m), and
that the Incentive Plan Committee must at all times consist of at least two
members.
All options and Restricted Share awards will be evidenced by agreements
("Stock Option Agreements" and "Restricted Share Agreements", respectively) on
the terms and conditions set forth in the Incentive Plan and such other terms
and conditions as the Incentive Plan Committee shall determine.
ELIGIBILITY. All officers of PXRE or any affiliate, as selected by the
Incentive Plan Committee, are eligible to be Grantees under the Incentive Plan.
The Incentive Plan contemplates that options and/or Restricted Shares will be
granted no more frequently than annually to eligible individuals, in the sole
discretion of the Incentive Plan Committee.
As of the record date, of the approximately 53 salaried non-temporary
employees of PXRE, 20 were eligible to be Grantees under the Incentive Plan.
TERMS OF OPTIONS. Options must be granted within ten years of the adoption
of the Incentive Plan. Options will have a term not to exceed ten years. The
exercise price for Incentive Stock Options must be equal to or exceed the fair
market value of PXRE's Common Stock on the date the option is granted, and the
exercise price for Non-Qualified Options may be less than, equal to or greater
than the fair market value of PXRE's Common Stock on the date of grant, but not
less than 50% of such fair market value.
Subject to the Incentive Plan Committee's discretion, no part of any option
may be exercised unless the Grantee remains in the continuous employ of PXRE or
its affiliates for at least one year from the date of grant of the option,
except where such employment terminates by reason of death, permanent disability
or retirement at or after age 65 with PXRE's consent.
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<PAGE> 34
No options will be transferable by a Grantee other than by will or the laws
of descent and distribution, and during the lifetime of a Grantee an option will
be exercisable only by the Grantee or, if the Grantee is legally incapacitated,
by the Grantee's duly appointed guardian or legal representative.
A total of 73,748 options were granted pursuant to the Incentive Plan for
fiscal year 1996 to all eligible officers as a group (18 people). For fiscal
year 1996, awards of 19,394, 8,071, 8,071, 5,152 and 5,152 options were made by
PXRE to Messrs. Radke, Bleisnick, Forsyth, Kimmel and Sverchek, respectively,
pursuant to the Incentive Plan.
TERMS OF RESTRICTED SHARES. The Incentive Plan Committee may make awards
of PXRE's Common Stock with certain restrictions as it may determine. Restricted
Shares are generally subject to forfeiture if the recipient's employment with
PXRE terminates during the restricted period determined by the Incentive Plan
Committee to be applicable to the award (the "Restricted Period"). The Grantee
of a Restricted Share award is entitled to all the rights of a stockholder with
regard to the awarded Restricted Shares during the Restricted Period, including
the right to receive dividends on and to vote the Restricted Shares, except that
the Restricted Shares may not be sold, pledged or otherwise transferred by the
Grantee until the applicable Restricted Period has lapsed. The lapse of the
Restricted Period may be accelerated in the event of a recipient's death,
permanent disability or retirement, in the discretion of the Incentive Plan
Committee. The Incentive Plan Committee will require a Grantee receiving an
award of Restricted Shares to enter into a Restricted Share Agreement with PXRE
containing the foregoing restrictions and such other terms as the Incentive Plan
Committee may deem advisable. There were no grants of Restricted Shares made
pursuant to the Incentive Plan for fiscal year 1996.
MAXIMUM AWARD. The maximum number of shares for which options may be
awarded to any participant in any fiscal year is 100,000.
ACCELERATION OF OPTION EXERCISABILITY AND LAPSE OF RESTRICTED PERIOD. The
Incentive Plan provides that upon the earlier of (i) a Change of Control of PXRE
or (ii) the Common Stock of PXRE ceasing to be publicly traded, any unexercised
portion of an option shall become exercisable and any Restricted Period
applicable to Restricted Shares shall immediately lapse.
Under the Incentive Plan, a "Change of Control" of PXRE is deemed to have
occurred if (i) any person (as defined in the Incentive Plan) other than PXRE or
Phoenix Home Life or an affiliate thereof, becomes the beneficial owner,
directly or indirectly, of securities representing 30% or more of the combined
voting power of PXRE's outstanding securities; (ii) the stockholders of PXRE
approve a merger or consolidation of PXRE with another corporation (other than
certain situations where the stockholders of PXRE before such transaction,
continue in control after the transaction), or a sale or other disposition of
all or substantially all of the assets of PXRE; (iii) the stockholders approve a
plan of liquidation or dissolution of PXRE; or (iv) during a period of two
consecutive years following March 19, 1992, individuals who at the beginning of
such period constituted the Board of Directors of PXRE and any new director
whose election was approved by at least two-thirds of the directors who were
directors at the beginning of the period or whose election had been previously
so approved, cease to constitute a majority of the Board. The Incentive Plan was
amended in June 1996 to provide that the Merger with TREX would not be a Change
of Control of PXRE.
OPTIONAL SURRENDER RIGHTS. The Incentive Plan Committee may grant to a
Grantee for up to 60 days following a Change of Control the right to elect to
surrender all or part of his or her option and to receive a cash payment equal
to the greater of (a) the excess of the fair market value of the option shares
surrendered over the exercise price for such shares, or (b) except for Incentive
Stock Options, the excess of the per share
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<PAGE> 35
net worth (as determined under the Incentive Plan) of the shares to which the
surrendered option pertains on the date of surrender over the per share net
worth of such shares on the date the option was granted.
For this purpose, the Incentive Plan provides that "fair market value" for
Non-Qualified Options is the higher of (a) the highest trading price of PXRE's
Common Stock (as determined under the Incentive Plan) during the 90-day period
ending on the date of such election, or (b) if the transaction occurs as the
result of a person acquiring a 30% interest in PXRE, the highest price per share
of Common Stock shown on Schedule 13D or any amendment thereto filed by any
person holding 30% or more of such shares, or (c) if the Change of Control
occurs as the result of stockholder approval of a merger, or consolidation (as
described in the Incentive Plan) or any sale or other disposition of all or
substantially all of the assets of PXRE, the highest price per share paid
pursuant to such transaction. With respect to Incentive Stock Options, "fair
market value" means fair market value as determined under Section 1.2(g) of the
Incentive Plan.
In addition, under the Incentive Plan the Grantee may elect up to 60 days
following the cessation of the public trading of the Common Stock of PXRE (other
than where due to the fraud or other misconduct of the management of PXRE) to
surrender all or part of his option and receive a cash payment equal to the
greater of (a) the excess of the fair market value of the shares subject to the
surrendered option over the exercise price, or (b) except for Incentive Stock
Options, the amount determined under the per share net worth valuation method
described above. For this purpose, "fair market value" means the highest public
trading value (as determined under the Incentive Plan) during the 90-day period
ending on the date of such cessation of public trading, except that for
Incentive Stock Options it means "fair market value" as determined under Section
1.2(g) of the Incentive Plan.
The Incentive Plan also provides that if a Grantee does not make an
election under either of the above provisions on or before the 60th day
following a Change of Control resulting from certain mergers and consolidations,
the sale of all or substantially all of the assets of PXRE, the liquidation or
dissolution of PXRE, or such cessation of public trading, the Grantee will be
deemed to have made such election as of such 60th day, the Grantee will receive
the cash payment that would be due upon such an election and the Grantee's
option and surrender rights will be deemed to have been cancelled. Under the
Incentive Plan, an election is not transferable other than by will or the laws
of intestacy.
ADJUSTMENTS IN OUTSTANDING OPTIONS AND RESTRICTED SHARES. In the event the
outstanding shares of Common Stock of PXRE are increased or changed into or
exchanged for a different number or kind of shares of capital stock or other
securities of PXRE by reason of any stock dividend or split, recapitalization,
reclassification, merger, consolidation, combination of shares or other
corporate change, the Incentive Plan Committee may make such substitution or
adjustment, if any, as it deems to be equitable, in the number or kind of shares
or other securities authorized for issuance under the Incentive Plan and in the
number of shares and the exercise price under options granted prior to such
change.
FEDERAL INCOME TAX CONSEQUENCES; OPTIONS. Options under the Incentive Plan
may, for federal income tax purposes, be treated as Non-Qualified Options or as
Incentive Stock Options. The grant of a Non-Qualified Option is not a taxable
event to the Grantee. The difference between the option price and the fair
market value of the stock on the date of exercise of a Non-Qualified Option is
taxable as ordinary income to the Grantee at the time of exercise. Such amount
is subject to withholding of federal income tax. Gain or loss on the subsequent
sale of stock acquired upon exercise of a Non-Qualified Option will be eligible
for capital gain or loss treatment (long-term or short-term, as the case may
be). For this purpose, such stock has a basis
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<PAGE> 36
equal to the option price plus the amount included in income by the Grantee. In
general, PXRE will be entitled to an income tax deduction in the same amount and
at the same date as the Grantee recognizes ordinary income.
An Incentive Stock Option results in no taxable income to the Grantee at
the time it is granted. Upon the exercise of an Incentive Stock Option, PXRE
will not be entitled to any deduction and no ordinary income will be recognized
by the Grantee. For alternative minimum tax purposes, the exercise of an
Incentive Stock Option is treated in the same manner as the exercise of a
Non-Qualified Option, and the Grantee will have alternative minimum taxable
income in the year of exercise of an Incentive Stock Option in an amount equal
to the excess of the fair market value of the stock at exercise over the
exercise price. If the stock acquired by the Grantee upon exercise of an
Incentive Stock Option while an employee, or within three months of termination
of employment (one year in the case of permanent disability), is held for a
period of more than (a) two years from the date of the grant of the option and
(b) one year after the date of acquisition of the stock, any gain on the
subsequent sale of the stock will be taxed to the optionee as long-term capital
gain.
If stock acquired upon exercise of any Incentive Stock Option is disposed
of before the expiration of either the two-year or one-year periods referred to
above, the lesser of (a) any excess of the fair market value of the stock at the
time the option is exercised over the option price or (b) if applicable, any
excess of the amount realized upon a taxable sale of stock over the option
price, will be treated as ordinary income to the Grantee at the time of such
disposition and will be allowed as a deduction to PXRE. Any excess of the amount
realized upon sale over the fair market value of the stock at the time the
option is exercised will be treated as capital gain (long-term or short-term, as
the case may be), and will not be allowed as a deduction to PXRE. In the event
that a Grantee pays all or part of the exercise price by surrendering previously
acquired shares of stock, the foregoing tax consequences may be modified.
If provided by the Incentive Plan Committee in the Stock Option Agreement,
a Grantee may satisfy any withholding tax requirements by electing to have PXRE
withhold from the shares to be received by such Grantee upon the exercise of
options sufficient whole shares having a value not in excess of the Grantee's
withholding tax in respect thereof, with any remaining amount needed to cover
the amount of such withholding tax to be paid by the Grantee in cash. Any shares
withheld in payment of taxes will not be available for use in subsequent grants
of options or Restricted Share awards.
FEDERAL INCOME TAX CONSEQUENCES; RESTRICTED SHARES. The grant of
Restricted Shares will not result in income to the Grantee or any deduction for
PXRE for federal income tax purposes, since the Restricted Shares are subject to
restrictions constituting a "substantial risk of forfeiture" as defined in the
Code. Unless a Grantee of a Restricted Share award elects to be taxed at the
date of grant, such Grantee will generally realize taxable compensation income
when the Restricted Period applicable to the award lapses. The amount of such
income will be the fair market value of the Restricted Shares on the date of
such lapse of the Restricted Period. Dividends paid on the Restricted Shares
during the Restricted Period will also be taxable compensation income to the
Grantee when received by the Grantee. PXRE will be entitled to a tax deduction
to the extent, and at the time, that the Grantee realizes compensation income.
Income tax withholding will be required at the same time the Restricted Period
lapses.
Upon the lapse of the Restricted Period for any Restricted Shares, PXRE
will withhold from the number of Restricted Shares to be received by a Grantee
sufficient whole Shares with a value not in excess of the amount of the
Grantee's withholding tax in respect thereof and will withhold any remaining
amount needed to cover the amount of such withholding tax from other
compensation payable to the Grantee. Any shares
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<PAGE> 37
withheld in payment of taxes will not be available for use in subsequent grants
of options or Restricted Share awards.
The foregoing tax analysis is intended to summarize certain relevant U.S.
federal income tax consequences of the Incentive Plan, as amended, in effect as
of the date of this Proxy Statement. Legislation may be enacted and regulations
may be issued in the future which create different tax consequences.
AMENDMENT OF THE INCENTIVE PLAN. The Board of Directors of PXRE or the
Incentive Plan Committee may, from time to time, amend, suspend or terminate any
or all of the provisions of the Incentive Plan.
APPROVAL OF THE 1992 OFFICER INCENTIVE PLAN, AS AMENDED, WILL REQUIRE THE
AFFIRMATIVE VOTE OF A MAJORITY OF THE SHARES OF COMMON STOCK PRESENT IN PERSON
OR REPRESENTED BY PROXY AT THE ANNUAL MEETING AND ENTITLED TO VOTE. THE BOARD OF
DIRECTORS AND MANAGEMENT RECOMMEND A VOTE "FOR" THE PROPOSAL TO APPROVE THE 1992
OFFICER INCENTIVE PLAN, AS AMENDED, AND, UNLESS A STOCKHOLDER SIGNIFIES
OTHERWISE, THE PERSONS NAMED IN THE PROXY WILL SO VOTE.
APPROVAL OF AMENDMENT TO THE
DIRECTOR STOCK OPTION PLAN
The Director Stock Option Plan (the Director Option Plan) provides
automatic annual grants of options to purchase PXRE Common Stock to the
non-employee directors of PXRE. The stockholders approved the adoption of the
Director Option Plan in 1995. On April 17, 1997, the Board of Directors amended
the Director Option Plan, subject to stockholder approval, to (a) increase the
annual option grant (made on the date of the PXRE annual meeting of
stockholders) to non-employee directors from 1,000 shares to 3,000 shares and
(b) increase the aggregate number of shares subject to the Director Option Plan
from 100,000 shares to an aggregate of 250,000 shares (the "Amendment").
The purpose of the Amendment is to increase the value of equity-based
compensation provided to PXRE directors in order to make such compensation
competitive with that provided by other companies. Management and the Board of
Directors believe that the continuing availability of options under the Director
Option Plan for a competitive number of shares is an important factor in PXRE's
ability to attract and retain the services of qualified directors.
A summary of the principal provisions of the Director Option Plan, as
amended, are set forth below:
PURPOSE OF DIRECTOR OPTION PLAN. The purpose of the Director Option Plan
is to maintain PXRE's ability to attract and retain the services of experienced
and highly qualified non-employee directors and to increase their proprietary
interest in PXRE's continued success.
TERMS OF DIRECTOR OPTION PLAN. The Director Option Plan provides for
automatic annual grants of stock options on the date of PXRE's annual meeting of
stockholders, from 1995 until 2005 inclusive, to each individual who is elected
to the Board of Directors following such meeting, or who continues to be a
member of the Board of Directors following such meeting, provided such
individual is not also an employee of PXRE or any of its subsidiaries. Presently
all the directors except Mr. Radke are eligible to participate in the Director
Option Plan.
After giving effect to the Amendment, each annual grant will permit the
holder, for a period of ten years from the date of grant, to purchase from PXRE
3,000 shares of PXRE's Common Stock (subject to adjustment for stock splits,
stock dividends, reclassifications and certain other events as provided in the
Director Option Plan) at the fair market value of such shares on the date the
option was granted. Each option
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<PAGE> 38
is exercisable one term-year after the date of the grant (defined to be the
period from one annual meeting to the next) with respect to 1,000 shares; is
exercisable two term-years after the date of grant with respect to another 1,000
shares; and is exercisable three term-years after the date of the grant for the
final 1,000 shares; provided, that the holder continues to be a director at the
end of such term-year in question.
In the event a director terminates service on the Board by reason of death,
retirement (defined to be retirement as of the annual meeting of stockholders
coinciding with or next following attainment of age 72) or disability, the total
number of option shares will become immediately exercisable and will continue to
be exercisable for three years (but not beyond its original expiration date).
In the event a director terminates service on the Board other than by
reason of death, disability or retirement, such person's options (to the extent
exercisable upon such termination) will be exercisable for three months after
the date of termination of service, but not beyond the original expiration date.
In the event of death of a director after terminating service on the Board,
any outstanding options will expire on the later of the date applicable to the
director at the time the director terminated service or one year from the date
of death, provided that in no event may an option be exercised beyond its
original expiration date.
Each option and all rights thereunder are nonassignable and nontransferable
other than by will or the laws of descent and distribution, or pursuant to a
qualified domestic relations order (as described in Section 414(p) of the Code).
After giving effect to the Amendment, an aggregate of 250,000 shares of
PXRE Common Stock (subject to adjustment for stock splits, stock dividends,
reclassifications and certain other events as provided in the Director Option
Plan) will be subject to the Director Option Plan, including a total of 16,000
shares currently subject to outstanding options. Shares subject to options which
terminate or expire unexercised will be available for future option grants.
On the date of the annual meetings of PXRE stockholders in 1995 and 1996,
options for 1,000 shares were granted pursuant to the Director Option Plan to
each non-employee director then in office (i.e., all current directors except
Messrs. Radke and Haftl) at exercise prices of $23.25 and $24.95, respectively.
As of the record date, options for a total of 16,000 shares had been granted
pursuant to the Director Option Plan, of which a total of 2,664 are currently
exercisable. After giving effect to the amendment, 234,000 shares of Common
Stock will be available for issuance upon exercise of options that will be
granted in the future. On the record date, the closing price of PXRE Common
Stock on the New York Stock Exchange was $25.50.
The Director Option Plan is administered by the Board of Directors, who are
authorized to interpret the Director Option Plan but have no authority with
respect to the selection of directors to receive options, the number of shares
subject to the Director Option Plan or to each grant thereunder, or the option
price for shares subject to options. The Board may amend the Director Option
Plan as it shall deem advisable but may not, without further approval of the
stockholders, increase the maximum number of shares under the Director Option
Plan or options to be granted thereunder, change the option price provided in
the Director Option Plan, extend the period during which options may be granted
or exercised, or change the class of persons eligible to receive options.
Adjustments will be made in the number and kind of shares subject to the
Director Option Plan and the number and kind of shares subject to outstanding
and subsequent option grants and in the purchase price of outstanding options,
in each case to reflect changes in PXRE's Common Stock through changes in
corporate structure or capitalization.
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<PAGE> 39
NEW PLAN BENEFITS TABLE. The following table sets forth the number of
options that, subject to stockholder approval of the amendment to the Director
Option Plan at the Annual Meeting, and subject further to the terms of the
Director Option Plan, will be granted to the non-employee directors as a group
on the date of such meeting:
NEW PLAN BENEFITS
DIRECTOR STOCK OPTION PLAN
<TABLE>
<CAPTION>
NAME AND POSITION(1) NUMBER OF OPTIONS(2)
- -------------------- --------------------
<S> <C>
All Non-Executive Directors as a group (9 persons).......... 27,000
</TABLE>
- ---------------
(1) The table does not include any information regarding each of the five named
Executive Officers, all current Executive Officers as a group or all
employees who are not Executive Officers as a group, as none of those
individuals or groups is eligible to participate in the Director Option
Plan.
(2) The value of such options is not determinable because, as described above,
the exercise price thereof will not be determined until the date of grant
(i.e., the date of the Annual Meeting).
FEDERAL INCOME TAX CONSEQUENCES. The options under the Director Option
Plan are nonstatutory options not intended to qualify as incentive stock options
under Section 422 of the Code. The grant of options will not result in taxable
income to the director or a tax deduction to PXRE. The exercise of an option by
a director will result in taxable ordinary income to the director and a
corresponding deduction for PXRE, in each case equal to the difference between
the fair market value on the date the option is exercised and the fair market
value on the date the option was granted (the option price) multiplied by the
number of shares acquired upon such exercise. Any gain (or loss) on the
director's subsequent sale of such shares, determined by comparing the amount
realized from such sale with the fair market value on the date of exercise, will
be long or short-term capital gain (or loss) depending on how long the shares
were held before the sale.
The foregoing tax analysis is intended to summarize certain relevant U.S.
federal income tax consequences of the Director Option Plan, as amended, in
effect as of the date of this Proxy Statement. Legislation may be enacted and
regulations may be issued in the future which create different tax consequences.
APPROVAL OF THE AMENDMENT TO THE DIRECTOR STOCK OPTION PLAN WILL REQUIRE
THE AFFIRMATIVE VOTE OF A MAJORITY OF THE SHARES OF COMMON STOCK PRESENT IN
PERSON OR REPRESENTED BY PROXY AT THE ANNUAL MEETING AND ENTITLED TO VOTE. THE
BOARD OF DIRECTORS AND MANAGEMENT RECOMMEND A VOTE "FOR" THE PROPOSAL TO ADOPT
THE AMENDMENT TO THE DIRECTOR STOCK OPTION PLAN AND, UNLESS A STOCKHOLDER
SIGNIFIES OTHERWISE, THE PERSONS NAMED IN THE PROXY WILL SO VOTE.
APPROVAL OF THE DIRECTOR EQUITY
AND DEFERRED COMPENSATION PLAN
On April 17, 1997, the Board of Directors adopted the PXRE Corporation
Director Equity and Deferred Compensation Plan (the Director Compensation Plan),
subject to the approval of the stockholders of PXRE at the 1997 Annual Meeting.
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<PAGE> 40
The following is a description of the principal features of the Director
Compensation Plan for which stockholder approval is being sought hereby. Such
description is qualified in its entirety by reference to the terms of the
Director Compensation Plan, a complete copy of which is attached as Appendix C.
PURPOSE OF DIRECTOR COMPENSATION PLAN. The purpose of the Director
Compensation Plan is to attract and retain highly qualified persons to serve as
non-employee directors of PXRE by providing the directors with greater
flexibility in the form and timing of receipt of compensation for services on
the Board of Directors, and an opportunity to obtain a greater proprietary
interest in PXRE's success and progress through receipt of fees in the form of
shares of PXRE Common Stock and options on shares of PXRE Common Stock, thereby
aligning the directors' interests with the interests of the stockholders.
PARTICIPANTS. Only non-employee directors of PXRE are eligible to
participate in the Director Compensation Plan. Currently nine non-employee
directors (i.e., all directors except Mr. Radke) are eligible to participate in
the Director Compensation Plan.
TERMS OF DIRECTOR COMPENSATION PLAN. If approved by the stockholders, the
Director Compensation Plan will, from the date of the Annual Meeting until
December 31, 2007, enable non-employee directors to elect to defer receipt of
fees for services as a member of the Board and, with respect to the annual
retainer for such services, payable to such non-employee directors for 1998
through 2007, allow such directors to elect, prior to the subject year, to
receive all or a portion of the annual retainer amount in shares of PXRE Common
Stock or options to purchase shares of PXRE Common Stock.
Prior to the fiscal year for which directors' fees will be paid, a director
may irrevocably elect to defer receipt of all or a portion of the cash
compensation payable to such director for such year (including annual retainer
fees, committee membership fees, fees associated with a committee chair and fees
for attendance at meetings of the Board and its committees, but not including
reimbursement for expenses) until after the director ceases to be a director of
PXRE or another designated future date or dates. In such event, an unfunded
account is established for such director and earnings (or losses) on the
balances in such unfunded account are credited to the account in an amount equal
to the earnings (or losses) on the fund or funds of PXRE's 401(k) Plan
designated by the director from time to time.
Additionally, commencing with annual retainer fees payable for 1998, each
non-employee director may, prior to the year for which the annual retainer fees
will be paid, irrevocably elect to receive shares of PXRE Common Stock or stock
options (or a combination thereof) in lieu of all or a portion (in increments of
25%) of his or her annual cash retainer. The number of shares which may be
awarded to a director upon such director's election to receive shares of Common
Stock in lieu of all or a portion of the annual retainer will be the number of
whole shares equal to (i) the portion of the annual retainer for which the
director has made such election, divided by (ii) the "fair market value" per
share of Common Stock, as determined pursuant to the Director Compensation Plan.
Certificates for such shares will be issued promptly following the date on which
the annual retainer is payable.
The number of whole shares of Common Stock subject to an option grant under
the Director Compensation Plan will be determined by dividing the portion of the
annual retainer for which the director has made such election by the "option
value", as determined pursuant to the Director Compensation Plan. The exercise
price per share under each option will be equal to the "fair market value" per
share, as determined pursuant to the Director Compensation Plan. Options granted
under the Director Compensation Plan are immediately exercisable and may be
exercised until the tenth anniversary of the date of grant. In the event a
director terminates service on the Board, such person's options will be
exercisable for three years after the date of termination of service, but not
beyond the original expiration date. In the event of death of a director after
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<PAGE> 41
terminating service on the Board, any outstanding options will expire on the
later of the date applicable to the director at the time the director terminated
service or one year from the date of death, provided that in no event may an
option be exercised beyond its original expiration date.
For purposes of the Director Compensation Plan, "fair market value" means
the average of the high and low share prices quoted for PXRE Common Stock on the
New York Stock Exchange over the twenty (20) trading days prior to the December
31 immediately prior to the calendar year for which the annual retainer is
payable. For purposes of the Director Compensation Plan, "option value" means
the value of an option determined as of December 31 immediately preceding the
calendar year for which the annual retainer is payable in accordance with the
Black-Scholes option valuation model, discounted by 20%.
A director's interest in an account or an option, and his or her rights
under the Director Compensation Plan are nonassignable and nontransferable other
than by will or the laws of descent and distribution, or pursuant to a domestic
relations order (as described in Section 414(p) of the Code).
An aggregate of 250,000 shares of PXRE Common Stock (subject to adjustment
for stock splits, stock dividends, reclassifications and certain other events as
provided in the Director Compensation Plan) will be subject to the Director
Compensation Plan. Shares subject to options which terminate or expire
unexercised will be available for future option grants. On the record date, the
closing price of PXRE Common Stock on the New York Stock Exchange was $25.50.
The Director Compensation Plan will be administered by the Board of
Directors. The Board will have full power and authority to construe and
interpret the Director Compensation Plan and adopt and amend such rules and
regulations for the administration of the Director Compensation Plan as it shall
deem desirable. The Board may amend the Director Compensation Plan as it shall
deem advisable, provided that no such amendment shall materially and adversely
affect any right of a director with respect to any option previously granted
without such director's written consent. The Board may terminate the Director
Compensation Plan at any time. If not earlier terminated by the Board, the
Director Compensation Plan will terminate immediately following the annual
meeting of PXRE's stockholders in 2007.
FEDERAL INCOME TAX CONSEQUENCES. Deferred annual retainer fees, including
any earnings thereon, will be taxable to the director in the year or years in
which they are paid to the director in cash. PXRE will generally be entitled to
a tax deduction at the same time and in the corresponding amount.
The receipt of shares of Common Stock under the Director Compensation Plan
will generally result in taxable income for the director and a deduction for
PXRE, based on the fair market value of the shares on the date awarded. The
grant of options under the Director Compensation Plan will not generally result
in taxable income to the director or a tax deduction to PXRE. The exercise of an
option by a director will result in taxable ordinary income to the director and
a corresponding deduction for PXRE, in each case equal to the difference between
the exercise price and the fair market value on the date the option is
exercised, multiplied by the number of shares acquired upon such exercise. Any
gain (or loss) on the director's subsequent sale of such shares, determined by
comparing the amount realized from such sale with the fair market value on the
date of exercise, will be long or short-term capital gain (or loss) depending on
how long the shares were held before the sale.
The foregoing tax analysis is intended to summarize certain relevant U.S.
federal income tax consequences of the Director Compensation Plan, as amended,
in effect as of the date of this Proxy Statement. Legislation may be enacted and
regulations may be issued in the future which create different tax consequences.
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<PAGE> 42
NEW PLAN BENEFITS. The only participants in the Director Compensation Plan
are the non-employee directors of PXRE. No awards of shares or options will be
made pursuant to the Director Compensation Plan in 1997. The value of any shares
and shares subject to options which may be awarded in 1998 and thereafter is not
currently determinable due to the elective nature of the Director Compensation
Plan.
APPROVAL OF THE DIRECTOR EQUITY AND DEFERRED COMPENSATION PLAN WILL REQUIRE
THE AFFIRMATIVE VOTE OF A MAJORITY OF THE SHARES OF COMMON STOCK PRESENT IN
PERSON OR REPRESENTED BY PROXY AT THE ANNUAL MEETING AND ENTITLED TO VOTE. THE
BOARD OF DIRECTORS AND MANAGEMENT RECOMMEND A VOTE "FOR" THE PROPOSAL TO ADOPT
THE DIRECTOR EQUITY AND DEFERRED COMPENSATION PLAN AND, UNLESS A STOCKHOLDER
SIGNIFIES OTHERWISE, THE PERSONS NAMED IN THE PROXY WILL SO VOTE.
CERTAIN BUSINESS RELATIONSHIPS
THE TRANSNATIONAL COMPANIES
In November 1993, TREX, a newly-organized subsidiary of PXRE, effected an
initial public offering (the "TREX Offering"), and in a related transaction PXRE
caused PXRE Reinsurance to contribute all of the outstanding capital stock of
Transnational (formerly Transnational Insurance Company) to TREX. This
contribution was made in exchange for TREX's issuance to PXRE Reinsurance of
shares of an unregistered class of TREX's common stock, convertible on a
one-for-one basis into TREX's registered shares, which resulted in PXRE
Reinsurance owning approximately 21% of TREX's total issued and outstanding
common stock after completion of the TREX Offering and being entitled to
designate two of the five directors of TREX. Pursuant to a management agreement
discussed below, PXRE Reinsurance undertook, for a fee, to manage the businesses
of TREX and Transnational, including the reinsurance operations of
Transnational. To this end, the executive officers of PXRE and PXRE Reinsurance
(including the five current executive officers named in the Summary Compensation
Table) served as the executive officers of TREX and Transnational. These
executive officers, while not salaried employees of TREX or Transnational, were
eligible to receive directly from TREX pursuant to a TREX incentive plan, cash
incentive awards based on the net income of TREX. In addition, Messrs. Radke and
Kimmel served as directors of TREX and Messrs. Radke, Kimmel, Bleisnick and
Forsyth served as directors of Transnational. Effective December 11, 1996, TREX
merged with PXRE and Transnational became a wholly-owned subsidiary of PXRE
Reinsurance.
Described below are certain transactions and arrangements to which PXRE
Reinsurance and TREX and/or Transnational were parties.
MANAGEMENT AGREEMENT. Since November 8, 1993 until the Merger in December
1996, PXRE Reinsurance was party to a management agreement (the "Management
Agreement") with TREX and Transnational. Under the Management Agreement, PXRE
Reinsurance had responsibility for the day-to-day operations of TREX and
Transnational, including all the reinsurance operations of Transnational. TREX
and Transnational did not have any operating properties, systems or paid
employees. Pursuant to the Management Agreement, PXRE Reinsurance provided all
the operating facilities, systems, equipment and management and clerical
personnel required to conduct the businesses of TREX and Transnational.
Transnational paid PXRE Reinsurance an annual basic management fee under
the Management Agreement equal to 5% of gross premiums written (including
reinstatement premiums less return premiums) of Transnational and its
consolidated subsidiaries (if any) as reflected in Transnational's statutory
quarterly and annual statements filed with state insurance authorities.
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<PAGE> 43
TREX and Transnational also paid all expenses directly attributable to
them, including a proportionate share of PXRE Reinsurance's rental expenses with
respect to office space based on gross premiums written for the management year.
TREX and Transnational incurred a total of approximately $2,992,000 in fees
and expense reimbursements to PXRE Reinsurance under the Management Agreement
during PXRE's 1996 fiscal year.
PHOENIX HOME LIFE MUTUAL INSURANCE COMPANY
In addition to the relationships described above under "EXECUTIVE
COMPENSATION -- Compensation Committee Interlocks and Insider Participation",
Mr. Searfoss is an executive officer of Phoenix Home Life, Mr. McLoughlin is an
executive officer of Phoenix Home Life and Phoenix Duff & Phelps and Mr.
Searfoss, Mr. McLoughlin and Mr. Kelly serve as directors of Phoenix Home Life
and/or one of its affiliates. Reference is made to the discussion under
"EXECUTIVE COMPENSATION -- Compensation Committee Interlocks and Insider
Participation" regarding the investment advisory relationship between PXRE and
its subsidiaries and Phoenix Duff & Phelps, a subsidiary of Phoenix Home Life.
LOAN TO MR. RADKE
In 1988, PXRE loaned Mr. Radke $70,125 pursuant to a demand promissory note
to fund certain estimated tax liabilities of Mr. Radke incurred in connection
with the organization of PXRE. All of the principal amount of such loan remained
outstanding as of March 31, 1997. Interest accrues on the unpaid principal
amount of the loan at a rate of 7.37% per annum, subject to adjustment from time
to time to the Federal short-term rate for the appropriate semi-annual period.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires PXRE's directors and executive
officers, and persons who own more than 10% of a registered class of PXRE's
equity securities, to file with the Commission and the New York Stock Exchange
reports of ownership and changes in ownership of PXRE's registered equity
securities. Executive officers, directors and greater-than-10% stockholders are
also required to furnish PXRE with copies of all Section 16(a) reports they
file.
Based solely upon a review of the copies of such reports, and any
amendments thereto, furnished to PXRE and written representations that no Form 5
reports were required, PXRE believes that, during the fiscal year ended December
31, 1996, all Section 16(a) filing requirements applicable to PXRE's executive
officers, directors and greater-than-10% stockholders were complied with.
STOCKHOLDER PROPOSALS
If a stockholder desires to present a proposal for inclusion in next year's
Proxy Statement and to present such proposal at the 1998 Annual Meeting of
Stockholders of PXRE, such stockholder must submit such proposal in writing to
PXRE Corporation, 399 Thornall Street, Edison, New Jersey 08837, Attention:
Treasurer, for receipt by PXRE not later than December 31, 1997.
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GENERAL
PXRE's Annual Report to Stockholders, which contains financial statements
for the year ended December 31, 1996 as well as other information concerning the
operations of PXRE, is being sent to you with this Proxy Statement.
PXRE FILES WITH THE SECURITIES AND EXCHANGE COMMISSION AN ANNUAL REPORT ON
FORM 10-K. A COPY OF THE REPORT FOR FISCAL 1996 WILL BE FURNISHED WITHOUT CHARGE
TO ANY STOCKHOLDER SENDING A WRITTEN REQUEST THEREFOR TO TREASURER, PXRE
CORPORATION, 399 THORNALL STREET, EDISON, NEW JERSEY 08837. PXRE Corporation has
no knowledge of any matters other than those set forth in this Proxy Statement
or referred to in the accompanying Notice of Annual Meeting of Stockholders,
which will be presented at the meeting. However, if any other matters should
properly come before the meeting it is intended that Proxies shall be voted
thereon in accordance with the best judgment of the person or persons voting
such Proxies.
PXRE CORPORATION
Edison, New Jersey
April 30, 1997
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APPENDIX A
PXRE CORPORATION
RESTATED EMPLOYEE ANNUAL INCENTIVE BONUS PLAN
(AS AMENDED FEBRUARY 13, 1997)
SECTION 1. PURPOSE
The purpose of the Plan is to foster and promote the interests of PXRE
Corporation and its Affiliates by attracting and retaining employees who
contribute to the success of the Company by their ability, ingenuity and
industry, to motivate employees to achieve common, overall corporate results and
to enable such individuals to participate in the success and growth of the
Company by providing them with the opportunity to receive compensation based
directly on the achievement of Company performance goals.
SECTION 2. DEFINITIONS
<TABLE>
<S> <C> <C>
2.1 -- "AFFILIATE" means any corporation or other entity as to
which the Company possesses a direct or indirect ownership
interest and has power to exercise control.
2.2 -- "AVERAGE STOCKHOLDERS' EQUITY" has the meaning provided in
Section 5.3(a)(4).
2.3 -- "BASE COMPENSATION" has the meaning provided in Section 5.1.
2.4 -- "BOARD" means the Board of Directors of the Company.
2.5 -- "CHANGE OF CONTROL" has the meaning provided in Section
5.7(h).
2.6 -- "CODE" means the Internal Revenue Code of 1986, as amended.
2.7 -- "COMMITTEE" means the Committee described in Section 3. If
at any time no Committee shall be in office then the
functions of the Committee shall be exercised by the Board
for purposes required under Rule 16b-3 or any successor rule
("Rule 16b-3") under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), provided in the case of
functions required under Section 162(m) of the Code to be
performed by "outside directors" they shall be performed by
those members of the Board who are "outside directors" for
Section 162(m) purposes.
2.8 -- "COMPANY" means PXRE Corporation (or any successor
corporation).
2.9 -- "CASH BONUS" has the meaning provided in Section 5.4.
2.10 -- "FAIR MARKET VALUE" has the meaning provided in Section
5.4(b).
2.11 -- "FISCAL YEAR" means a financial accounting year of the
Company ending December 31.
2.12 -- "NET INCOME" has the meaning provided in Section 5.3(a)(2).
2.13 -- "PARTICIPANT" means an individual employed by the Company or
an Affiliate who is eligible to participate in the Plan
under Section 4.
2.14 -- "PERFORMANCE PERCENTAGE" has the meaning provided in Section
5.3(a).
2.15 -- "PERMANENT DISABILITY" means total and permanent disability
within the meaning of Section 22(e)(3) of the Code.
2.16 -- "PLAN" means the PXRE Corporation Restated Employee Annual
Incentive Bonus Plan as described herein.
2.17 -- "RESTRICTED SHARE BONUS" has the meaning provided in
Sections 5.4 and 5.7.
</TABLE>
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<PAGE> 46
2.18 -- "RETIREMENT" means termination of employment with the
Company or Affiliate with the consent of the Company or
Affiliate on or after attaining age 65.
2.19 -- "RETURN OF EQUITY" has the meaning provided in Section
5.3(a)(1).
2.20 -- "SENIOR OFFICER BONUS POOL", "JUNIOR OFFICER BONUS POOL" and
"OTHER EMPLOYEE BONUS POOL" have the meanings provided in
Section 5.4
2.21 -- "SHARE" or "SHARES" means a share or shares of common stock,
par value $0.01 per share, of the Company.
2.22 -- "STOCKHOLDERS' EQUITY" has the meaning provided in Section
5.3(a)(3).
2.23 -- "TARGET BONUS" has the meaning provided in Section 5.1.
2.24 -- "TARGET BONUS PERCENTAGE" has the meaning provided in
Section 5.1 and Exhibit A.
2.25 -- "TARGET BONUS POOL" has the meaning provided in Section 5.2.
2.26 -- "TENTATIVE BONUS POOL" has the meaning provided in Section
5.3(a).
2.27 -- "TOTAL BONUS POOL" has the meaning provided in Section
5.3(b).
SECTION 3. ADMINISTRATION
This Plan shall be administered by the Board or a Committee appointed by it
and consisting of two or more "non-employee directors" within the meaning of
Rule 16b-3 (or such other number of "non-employee directors" as may be needed
under Rule 16b-3), provided in the case of functions required under Section
162(m) of the Code to be performed by "outside directors" they shall be
performed by two or more persons appointed by the Board who are "outside
directors" for Section 162(m) purposes. The Committee shall serve at the
pleasure of the Board and shall have such powers as the Board may, from time to
time, confer upon it. The Committee may delegate the administration of such
portions of the Plan as may be permitted by Rule 16b-3 and Section 162(m)
without adversely affecting the ability of the Plan to comply with the
conditions for exemption from Section 16 of the Exchange Act provided by that
Rule and the exception for performance-based compensation provided by Section
162(m). Such delegation shall be on such terms and conditions, and to such
person or persons, as the Committee may determine in its discretion as it
relates to persons not subject to Section 16 and Section 162(m).
The Committee shall have sole and complete authority to adopt, alter and
repeal such administrative rules, guidelines and practices governing the
operation of the Plan as it shall, from time to time, deem advisable and to
interpret the terms and provisions of the Plan. It is the intent of the Company
that the Plan comply in all respects with Rule 16b-3 and Section 162(m) with
respect to persons subject to Section 16 and Section 162(m), that any
ambiguities or inconsistencies in construction of the Plan be interpreted to
give effect to such intention and that if any provision of the Plan is found not
to be in compliance with Rule 16b-3 and Section 162(m), such provision shall be
deemed null and void to the extent required to permit the Plan to comply with
Rule 16b-3 and Section 162(m). The Board may adopt rules and regulations under,
and amend, the Plan in furtherance of the intent of the foregoing.
The Committee shall keep minutes of its meetings and of action taken by it
without a meeting. A majority of the Committee shall constitute a quorum, and
the acts of a majority of the members present at any meeting at which a quorum
is present, or acts approved in writing by all of the members of the Committee
without a meeting, shall constitute the acts of the Committee.
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<PAGE> 47
SECTION 4. ELIGIBILITY
All individuals shall participate in the Plan commencing on their date of
hire for the Fiscal Year in which such date of hire occurs and for each Fiscal
Year thereafter, provided that they are employed by the Company or an Affiliate
on a salaried non-temporary basis during the Fiscal Year in which such date of
hire occurs and each Fiscal Year thereafter. Individuals whose date of hire
occurs after the first day of a Fiscal Year shall participate in the Plan on a
pro rata basis for such Fiscal Year as determined in accordance with Section 5.5
below.
SECTION 5. EMPLOYEE ANNUAL INCENTIVE BONUSES
5.1 TARGET BONUSES. A Participant's Target Bonus for a Fiscal Year shall
consist of the contingent right to receive an amount equal to (i) the Target
Bonus Percentage for the Participant's position for the Fiscal Year, as
determined by the Committee on or about the beginning of the Fiscal Year, or on
or about the individual's date of hire for Participants who begin participation
after the first day of a Fiscal Year (the Target Bonus Percentages being set
forth in Exhibit A hereto and in any amendments thereto made by the Board)
multiplied by (ii) the Participant's Base Compensation for such Fiscal Year.
For this purpose --
"BASE COMPENSATION" for a Fiscal Year means the Participant's rate of
base salary, expressed as an annual amount in dollars, excluding any
bonuses or other compensation in addition to salary, as in effect at the
end of that Fiscal Year. For example, if a Participant's salary rate at the
end of a Fiscal Year was $40,000 and his Target Bonus Percentage was 10%,
his Target Bonus for that Fiscal Year is $4,000.
5.2 TARGET BONUS POOL. The Target Bonus Pool for a Fiscal Year shall be
equal to the sum of the Target Bonuses of the Participants in the Plan for the
Year.
5.3 TOTAL BONUS POOL.
(a) TENTATIVE BONUS POOL. The Tentative Bonus Pool for a Fiscal Year shall
be equal to the product of (i) the Target Bonus Pool for the Fiscal Year
multiplied by (ii) the Performance Percentage for such Year. The Performance
Percentage shall be the percentage opposite the Company's Return on Equity
("ROE") for the Fiscal Year in the following table:
<TABLE>
<CAPTION>
PERFORMANCE
COMPANY ROE PERCENTAGE
- ----------- -----------
<S> <C>
8%......................................................... 0%
9%......................................................... 20.0
11%......................................................... 60.0
13%......................................................... 100.0
15%......................................................... 114.3
17%......................................................... 128.6
20%......................................................... 150.0
</TABLE>
If the Company's ROE for the Fiscal Year falls between the percentages
listed in the table, the Performance Percentage shall be determined by
interpolation on a straight line basis, rounded to the nearest one-tenth of one
percent. For example, if the Company's ROE for a Year is 11.4%, the Performance
Percentage shall be 68% (.60 + (.004 X .4)/.02).
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<PAGE> 48
For this purpose --
(1) "RETURN ON EQUITY" for any Fiscal Year means the result of
dividing (A) the Company's Net Income for such Fiscal Year by (B) the
Company's Average Stockholders' Equity for such Fiscal Year, rounded to the
nearest one-tenth of one percent.
(2) "NET INCOME" for any Fiscal Year means the total net income of the
Company and its consolidated subsidiaries for such Fiscal Year (including
all charges for any Cash and Share Bonus payments accrued under the Plan),
as computed in conformity with generally accepted accounting principles and
reported to stockholders in the Company's consolidated financial statements
for such Fiscal Year.
(3) "STOCKHOLDERS' EQUITY" at the end of any calendar quarter means
the excess of (A) the total assets of the Company at such quarter-end over
(B) the total liabilities of the Company at such quarter-end (including all
liabilities for any Cash and Share Bonuses accrued under the Plan), as
computed in conformity with generally accepted accounting principles and
reported to stockholders in the Company's consolidated financial statements
for such quarter-end.
(4) "AVERAGE STOCKHOLDERS' EQUITY" for any Fiscal Year means the
result of dividing (A) the sum of the Stockholders' Equity as of the end of
each of the four calendar quarters in such Fiscal Year plus the
Stockholders' Equity as of the end of the calendar quarter ending on
December 31 of the preceding Fiscal Year, by (B) five.
(b) TOTAL BONUS POOL. On the recommendation of the Company's Chief
Executive Officer, the Committee may, at its sole discretion, adjust the amount
of the Tentative Bonus Pool for a Fiscal Year by increasing or decreasing it by
up to 25% of the Target Bonus Pool for such Year, provided that no increase
shall benefit any Participant who is a "covered employee" at the end of the
Fiscal Year for Section 162(m) purposes and the deduction of whose
non-performance based compensation for such year would likely be limited by
Section 162(m). The resulting amount shall be the Total Bonus Pool for such
Year.
5.4 CASH AND SHARE BONUSES.
(a) OFFICER AND OTHER EMPLOYEE BONUS POOLS. The Committee shall allocate
the Total Bonus Pool for a Fiscal Year into three pools: the Senior Officer,
Junior Officer and Other Employee Bonus Pools. Each Participant shall
participate in one of the Pools based on his or her position at the beginning of
the Fiscal Year as designated in Exhibit A. The amount allocated to the Senior
Officer Bonus Pool for the Year shall be the Total Bonus Pool multiplied by the
ratio of (i) the sum of the products of (x) each Senior Officer Participant's
Base Compensation for the Year multiplied by (y) the Participant's Target Bonus
Percentage (as shown in Exhibit A) for the Year, to (ii) the Target Bonus Pool
for the Year. The amount allocable to the Junior Officer Bonus Pool and the
Other Employee Bonus Pool shall be determined in the same fashion by
substituting in (i)(x) and (i)(y), respectively, each Junior Officer
Participant's (or Other Employee Participant's) Base Compensation, as the case
may be, and the Target Bonus Percentages for each such Participant.
(b) SENIOR OFFICER BONUSES
(i) ALLOCATION. The Committee shall allocate 70% of the Senior
Officer Bonus Pool for a Fiscal Year to the Senior Officer Cash Bonus Pool
for such Year and the remaining 30% to the Senior Officer Restricted Share
Bonus Pool for such Year.
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<PAGE> 49
(ii) CASH BONUSES. The Senior Officer Cash Bonus Pool for the Year
shall be allocated by the Committee among the Senior Officers who are
Participants for the Year in proportion to the ratio which (1) 70% of the
Participant's Target Bonus for the Year bears to (2) 70% of all Senior
Officer Participant Target Bonuses for the Year (the Participant's
"Tentative Cash Bonus"). In determining a Participant's Cash Bonus for the
Year, upon the recommendation of the Chief Executive Officer of the
Company, the Committee may increase or decrease each Participant's
Tentative Cash Bonus by up to 20% of the amount of such Tentative Cash
Bonus in order to take into account the Participant's individual
performance and his or her contribution to the Company's performance for
the Year, provided that the total Cash Bonuses for Senior Officers for the
Year shall not exceed the amount of the Senior Officer Cash Bonus Pool for
the Year unless approved by the Board of Directors, and further provided
that, in the case of any Participant who is a "covered employee" and the
deduction of whose non-performance based compensation for such year would
likely be limited by Section 162(m) at the end of the Fiscal Year for
purposes of Section 162(m) of the Code, the Committee may decrease his
Tentative Cash Bonus by up to 20% (but may not increase it), and such
Participant may not benefit from the portion of the pool not awarded to
other Participants. The amount finally determined by the Committee, which
shall be the Participant's Cash Bonus for such Year, shall be paid as
provided in Section 5.6.
(iii) RESTRICTED SHARE BONUSES. The Senior Officer Restricted Share
Bonus Pool for the Year shall be allocated among the Senior Officer
Participants for such Year in proportion to the ratio which (1) 30% of the
Participant's Target Bonus for the Year bears to (2) 30% of all Senior
Officer Participant Target Bonuses for the Year (the Participant's
"Restricted Share Bonus"). The number of Shares, subject to the
restrictions in Section 5.7, which shall be delivered to each Participant
in payment of his or her Restricted Share Bonus, shall be the number of
whole shares equal to the Participant's Restricted Share Bonus for the Year
divided by the Fair Market Value of the Company's Shares on the date the
Committee approves the Restricted Share Bonus awards.
(iv) MAXIMUM BONUSES. The maximum aggregate Cash and Restricted Share
Bonuses that may be awarded to any Participant who is a "covered employee"
at the end of the Fiscal Year for the purposes of Section 162(m) may not
exceed $1,000,000 for any fiscal year.
For this purpose --
"FAIR MARKET VALUE" as of any day means the average of the high and
low per share bid and asked prices for Shares on the 20 consecutive trading
days immediately prior to such date as reported by the NASDAQ Interdealer
Quotation System, or if the Shares are listed on an exchange, the average
of the high and low per share prices quoted for Shares for such period. If
the Shares are not publicly traded, Fair Market Value shall be determined
by the Committee in a manner consistent with the requirements of Section
422(b)(4) of the Code.
(c) JUNIOR OFFICER BONUSES
(i) ALLOCATION. The Committee shall allocate 70% of the Junior
Officer Bonus Pool for a Fiscal Year to the Junior Officer Cash Bonus Pool
for such Year and the remaining 30% to the Junior Officer Restricted Share
Bonus Pool for such Year.
(ii) CASH BONUSES. The Junior Officer Cash Bonus Pool shall be
allocated to Participants for the Year who are Junior Officers, and the
resulting Tentative Cash Bonuses may be increased or decreased, in the same
manner as provided above for the Senior Officer Cash Bonus Pool, provided
that the Total
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<PAGE> 50
Cash Bonuses for Junior Officers for the Year shall not exceed the amount
of the Junior Officer Cash Bonus Pool for the Year unless approved by the
Board of Directors.
(iii) RESTRICTED SHARE BONUSES. The Junior Officer Restricted Share
Bonus Pool shall be allocated to Junior Officer Participants, and the
number of Shares and the restrictions thereon shall be determined, in the
same manner as that provided above for the Senior Officer Restricted Share
Bonus Pool.
(d) EMPLOYEE BONUSES
(i) ALLOCATION. The Committee shall allocate 100% of the Other
Employee Bonus Pool to the Employee Cash Bonus Pool; no portion of the
Other Employee Bonus Pool shall be paid in Shares.
(ii) CASH BONUSES. The Employee Cash Bonus Pool shall be allocated by
the Committee among Participants for the Year who are not officers in
proportion to the ratio of each such Participant's Target Bonus for the
Year to the total of all Target Bonuses of such Participants for the Year
(a Participant's "Tentative Cash Bonus"). In determining a Participant's
Cash Bonus for the Year, upon the recommendations of the Participant's
supervisor and senior officers of the Company and the approval of the Chief
Executive Officer, the Committee may increase or decrease each
Participant's Tentative Cash Bonus by up to 40% of the amount of such
Tentative Cash Bonus in order to take into account the Participant's
individual performance and his or her contribution to the Company's
performance for the Year, provided that the total Cash Bonuses for
non-officer Participants for the Year shall not exceed the amount of the
Employee Cash Bonus Pool unless approved by the Board of Directors.
5.5 TERMINATION OF EMPLOYMENT, CHANGE IN STATUS DURING A FISCAL YEAR OR
PARTICIPATION AFTER START OF
A FISCAL YEAR.
(a) If a Participant's employment terminates before the end of the Fiscal
Year because of Retirement, Permanent Disability or death, the Participant's
Cash and Restricted Share Bonuses (as determined following the end of the Fiscal
Year under Section 5.4), if any, shall be reduced by the ratio which (i) the
number of months in the Fiscal Year for which the Participant was not employed
bears to (ii) the total number of months in such Year. If the Participant's
employment terminates before the end of such Fiscal Year for any other reason,
including but not limited to resignation or termination by the Company or an
Affiliate, the Participant shall receive no Bonus.
(b) If a Participant's position with the Company changes after the
beginning of a Fiscal Year and his or her new position has a different Target
Bonus Percentage and participates in a different Bonus Pool, the Committee shall
at its sole discretion, with the recommendation of the Chief Executive Officer,
determine the Participant's Cash Bonus and Restricted Share Bonus, if any, for
such Year.
(c) If a Participant begins participating in the Plan after the first day
of a Fiscal Year, the Participant's Cash and Restricted Share Bonuses for such
Fiscal Year (as determined following the end of such Fiscal Year under Section
5.4), if any, shall be reduced by the ratio which (i) the number of months in
such Fiscal Year before the Participant's date of hire bears to (ii) the total
number of months in such Fiscal Year. If a Participant's employment terminates
before the end of such Fiscal Year, the Participant's Cash and Restricted Share
Bonus for such Fiscal Year shall be determined in accordance with this
subsection and subsection (a), above.
5.6 PAYMENT OF BONUSES.
(a) BONUS AMOUNTS. The Committee shall certify to the Company or Affiliate
which is the Participant's principal employer as soon as possible after the end
of the Fiscal Year the amount of each Participant's
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<PAGE> 51
Cash Bonus and the number of Restricted Shares, if any, in his or her Restricted
Share Bonus, as determined under Sections 5.3, 5.4 and 5.5.
(b) CASH BONUSES. If the Participant has not filed a written election
under Section 5.8, the Company shall promptly pay to the Participant the Cash
Bonus amount certified under subsection (a) in cash in a single sum with such
reduction as the Company may deem necessary for federal and other withholding
taxes. Such payment shall be made to the Participant except that any payment due
to a deceased Participant shall be made to the Participant's estate.
(c) RESTRICTED SHARE BONUSES. Except as provided in Section 5.6(d) below,
the Company shall promptly deliver the Shares in the Participant's Restricted
Share Bonus subject to the conditions in Section 5.7.
(d) ALTERNATIVE AWARDS. If the Committee determines that Restricted Share
Bonuses are taxable when awarded (rather then when the restrictions lapse) under
the income tax laws applicable to Participants who are tax residents in other
countries, the Committee shall establish an unfunded account for each such
Participant and credit to it an amount equal to the dollar amount of the
Restricted Share Bonus that is allocable to the Participant under Section
5.4(b)(iii) or (c)(iii). The account shall not be credited with earnings or
losses. Portions of the account shall be paid to the Participant in cash at such
time or times as the Restricted Shares that would otherwise have been awarded
would have become 100% vested under Section 5.7.
5.7 RESTRICTED SHARES. All Restricted Share Bonuses shall be subject to
the following terms and conditions and to any other terms and conditions not
inconsistent with the Plan as may be prescribed by the Committee in its sole
discretion and contained in the agreement between the Company and the
Participant relating to such Shares (the "Restricted Share Agreement").
(a) AUTHORIZED SHARES. The aggregate number of Shares for which Restricted
Share Bonuses may be awarded under the Plan shall not exceed 150,000 Shares,
which may be treasury Shares or authorized but unissued Shares. The Committee
shall adjust the number of Shares available for grants in the event of any stock
split, stock dividend, recapitalization, corporate reorganization or similar
event so that the number of shares which may be awarded following such event is
proportionate to the number of shares which could be awarded before such action.
(b) DELIVERY OF RESTRICTED SHARES. Unless otherwise determined by the
Committee, the Company shall transfer from its treasury Shares or from its
authorized but unissued Shares to each Participant receiving a Restricted Share
Bonus, the number of Shares specified in the Bonus, and shall hold the
certificates representing such Shares for the Participant for the period during
which such Shares are subject to the restrictions provided by the Committee (the
"Restricted Period"). Restricted Shares may not be sold, assigned, transferred,
pledged, hypothecated or otherwise encumbered by a Participant during the
Restricted Period, except as hereinafter provided. Except for the restrictions
set forth herein and unless otherwise determined by the Committee, a Participant
shall have all the rights of a stockholder with respect to his or her Restricted
Shares, including but not limited to the right to vote and the right to receive
dividends (which if in Shares shall be restricted under the same terms and
conditions as the Shares to which they relate).
(c) LEGEND. Each certificate for Shares transferred or issued to a
Participant under a Restricted Share Bonus shall be registered in the name of
the Participant and shall bear the following (or a similar) legend:
"THIS CERTIFICATE AND THE SHARES OF STOCK REPRESENTED HEREBY ARE
SUBJECT TO THE TERMS AND CONDITIONS CONTAINED IN THE PXRE CORPORA-
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<PAGE> 52
TION RESTATED EMPLOYEE ANNUAL INCENTIVE BONUS PLAN (THE "PLAN") APPLICABLE
TO RESTRICTED SHARES AND TO THE RESTRICTED SHARE AGREEMENT DATED
(THE "AGREEMENT"), AND MAY NOT BE SOLD, PLEDGED,
TRANSFERRED, ASSIGNED, HYPOTHECATED, OR OTHERWISE DISPOSED OF OR ENCUMBERED
IN ANY MANNER DURING THE RESTRICTED PERIOD SPECIFIED IN SUCH AGREEMENT.
COPIES OF SUCH PLAN AND AGREEMENT ARE ON FILE WITH THE SECRETARY OF THE
COMPANY."
(d) LAPSE OF RESTRICTED PERIOD. The Restricted Period shall commence upon
the award of the Restricted Share Bonus and, unless sooner terminated as
otherwise provided herein, shall continue for such period of time as specified
by the Committee in the Restricted Share Agreement. Unless the Committee in its
discretion otherwise provides in the Restricted Share Agreement, Shares in a
Restricted Share Bonus shall become 100% nonforfeitable on the January 1st
immediately following the third anniversary of the end of the Fiscal Year for
which the Restricted Share Bonus was awarded. For example, Restricted Shares
awarded to a Participant for the Fiscal Year 1992 and transferred to the
Participant in February 1993 following the determination of the 1992 award shall
be 100% nonforfeitable on January 1, 1996.
(e) RETIREMENT, DEATH OR DISABILITY. Unless the Committee shall otherwise
provide in the Restricted Share Agreement (and subject to subparagraph (i)
hereof), the Restricted Period covering all Shares transferred to a Participant
under the Plan shall immediately lapse upon such Participant's termination of
employment due to Retirement, death or Permanent Disability.
(f) TERMINATION OF EMPLOYMENT. Unless the Committee shall otherwise
provide in the Restricted Share Agreement, if a Participant ceases to be
employed by the Company other than due to Retirement, death or Permanent
Disability, all Shares owned by such Participant for which the Restricted Period
has not lapsed shall revert back to the Company upon such termination and shall
be available for grant in subsequent Restricted Share awards. Authorized leave
of absence or absence in military service shall constitute employment for this
purpose.
(g) WAIVER OF FORFEITURE PROVISIONS. The Committee, in its sole and
absolute discretion (but subject to the provisions of subsection (i) hereof),
may waive the forfeiture provisions in respect of all or some of the Shares
awarded to a Participant.
(h) CHANGE OF CONTROL; DELISTING. Subject to subparagraph (i) hereof, upon
the earlier of (i) a Change of Control of the Company (as defined below), or
(ii) the Shares of the Company ceasing to be publicly traded, any remaining
Restricted Period on the Shares shall immediately lapse.
For the purposes hereof, a "Change of Control" of the Company shall be
deemed to have occurred if:
(1) any "person" (as such term is used in Sections 13(d) and 14(d) of
the Exchange Act) other than the Company and other than Phoenix Mutual Life
Insurance Company or an affiliate thereof, becomes the "beneficial owner"
(as determined for purposes of Regulation 13-D under the Exchange Act as
currently in effect), directly or indirectly, of securities of the Company
representing 30% or more of the combined voting power of the Company's then
outstanding securities; or
(2) the stockholders of the Company approve (A) any merger or
consolidation of the Company with any other corporation, other than a
merger or consolidation with Transnational Re Corporation in which the
Company is the surviving entity or a merger or consolidation which would
result in the holders of the voting securities of the Company outstanding
immediately prior thereto holding immediately thereafter securities
representing more than 80% of the combined voting power of the voting
securities of
A-8
<PAGE> 53
the Company or such surviving entity outstanding immediately after such
merger or consolidation, or (B) any sale or other disposition (in one
transaction or a series of related transactions) of all, or substantially
all, of the assets of the Company; or
(3) the stockholders of the Company approve a plan or proposal for the
liquidation or dissolution of the Company; or
(4) during any period of two consecutive years (not including any
period prior to March 19, 1992), individuals who at the beginning of such
period constitute the entire Board of Directors of the Company and any new
director, whose election to the Board or nomination for election to the
Board by the Company's stockholders was approved by a vote of at least
two-thirds ( 2/3rds) of the directors then still in office who either were
directors at the beginning of the period or whose election or nomination
for election was previously so approved, cease for any reason to constitute
a majority of the Board.
(i) EXCHANGE ACT LIMITATIONS. In the case of any Participant subject to
the reporting requirements of Section 16 of the Exchange Act, no Shares received
under a Restricted Share Bonus may be sold, assigned, pledged or otherwise
transferred for the period of time after the date such Bonus was granted as may
be applicable to the Participant under Rule 16b-3.
(j) ISSUANCE OF NEW CERTIFICATES. Upon the lapse of the Restricted Period
with respect to any Shares, such Shares shall no longer be subject to the
restriction imposed in the Restricted Share Agreement, and the Company shall
issue new share certificates representing such shares registered in the name of
the Participant without the legend described in subparagraph (c) in exchange for
those previously issued.
(k) WITHHOLDING TAX. Upon the lapse of the Restricted Period for any
Shares (or such other date on which Shares issued to a person subject to the
reporting requirements of Section 16 of the Exchange Act cease to be subject to
restrictions under that Act for purposes of Section 83(c) of the Code), the
Company shall withhold from the Participant's Shares a sufficient whole number
of Shares with a value not in excess of the amount which the Company is required
to withhold under any applicable Federal or other tax law and may withhold the
remaining amount necessary to pay the tax from other compensation due to the
Participant or require the Participant to pay such remainder to the Company in
cash prior to releasing the new certificates. Any Shares received in payment of
taxes shall not be available for use in subsequent Restricted Share Bonus
awards.
5.8 DEFERRAL ELECTION FOR CASH BONUS.
(a) A Participant may, with the approval of the Committee, irrevocably
elect, by written notice filed with the Committee before the beginning of the
Fiscal Year in question or, in the case of the Fiscal Year beginning January 1,
1992, within 30 days after the approval of the Plan by the Board of Directors,
to have all or any portion of the Cash Bonus which may become payable under
Section 5.4, deferred to the termination of his or her employment with the
Company or an Affiliate or such other future date or dates as he or she may
designate. Upon receipt of such election the Committee shall establish an
unfunded account for the Participant and credit to it the portion of the Cash
Bonus specified in the election. Earnings (or losses) on the balance in such
unfunded account shall be credited to such account's balance in an amount equal
to the earnings (or losses) on the fund or funds of the Company's 401(k) Plan
designated by the Participant from time to time.
(b) On or about the future date elected by the Participant, the Committee
shall certify the amount of such account, with earnings (or losses) as provided
above, to the Company or Affiliate which is the Participant's principal employer
for payment to the Participant in cash in three equal annual payments with
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<PAGE> 54
earnings (or losses) on the unpaid portion to the date of payment as provided
above. The Participant by written notice filed with the Committee at least 12
months before such future date may request that his account be paid in a
different manner. The Committee may approve such request at its discretion,
applied on a uniform and nondiscriminatory basis, and shall then certify such
method to the appropriate employer. If the Participant dies or incurs a
Permanent Disability before such future date the Committee shall determine the
amount of his account, with earnings (or losses) as provided above, and shall
certify such amount to the appropriate employer for payment to the Participant
or his or her estate, as the case may be, in cash in three annual payments, with
earnings (or losses) on the unpaid portion to the date of payment as provided
above. The Participant or his estate, as the case may be, may request that the
account be paid in a different manner by written notice filed with the Committee
within 60 days following such date of Disability or death, as the case may be,
and the Committee may approve such request at its discretion.
(c) If the Participant incurs a substantial financial hardship prior to
such future date, he or she may apply to the Committee for payment of the
portion of his or her account which is necessary to meet such hardship. The
Committee may, in its discretion applied on a uniform and nondiscriminatory
basis, approve such application and, if it does so, it shall certify to the
Participant's principal employer the amount to be paid to the Participant in
cash in a single sum payment and shall cancel a corresponding portion of the
account.
(d) All payments made under this Section 5.8 shall be reduced by such
amounts as the Company may deem necessary for federal and other withholding
taxes.
SECTION 6. GENERAL PROVISIONS
6.1 ADJUSTMENTS DUE TO MERGERS, CONSOLIDATIONS, ETC. In the event of any
merger, consolidation, reorganization, combination or other corporate change, or
any material changes in accounting practices, in tax law or interpretation or in
Company strategy, the Committee shall make such substitution or adjustment, if
any, in Return on Equity as shall be necessary and equitable to preserve the
intent of the Plan. The Committee may rely on the recommendations regarding such
adjustments which are made by the Company's independent public accountants.
6.2 ASSIGNMENT. No benefit which shall be payable under the Plan shall be
subject in any manner to anticipation, alienation, sale, transfer, assignment,
pledge, encumbrance or charge.
6.3 ADMINISTRATION EXPENSES. The entire expense of administering the Plan
shall be borne by the Company and shall be a charge against Net Income.
6.4 EFFECT ON OTHER PLANS. Bonus payments under the Plan shall not be
regarded as compensation for other employee benefits provided by the Company or
an Affiliate, such as group life insurance, long-term disability coverage and
pension benefits.
6.5 OTHER CONDITIONS.
(a) The Board may, from time to time, amend, suspend or terminate any or
all of the provisions of the Plan, except that without the consent and approval
of the holders of the specified percentage of the outstanding Shares required
under Section 162(m), the Board shall not make any amendment that requires such
consent and approval.
(b) With the written consent of the Participant affected thereby, the
Committee may amend or modify any Bonus in any manner not inconsistent with the
terms of the Plan.
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<PAGE> 55
(c) Nothing contained in the Plan shall prohibit the Company or an
Affiliate from establishing other additional incentive compensation arrangements
for one or more employees of the Company or an Affiliate.
(d) Nothing in the Plan shall be deemed to give any Participant the right
to remain employed by the Company or any Affiliate or to limit, in any way, the
right of the Company or of an Affiliate to terminate, or to change the terms of,
a Participant's employment with the Company or such Affiliate at any time.
(e) Any decision or action taken by the Board or the Committee arising out
of or in connection with the construction, administration, interpretation or
effect of the Plan shall be conclusive and binding upon all Participants and any
person claiming under or through any Participant.
(f) In the administration of the Plan, no member of the Board or of the
Committee shall be liable for any act or action, whether of commission or
omission, (i) by such member except in circumstances involving such member's
gross negligence or willful misconduct, or (ii) by any other member or by any
officer, agent or employee.
(g) The Plan shall be unfunded and the obligations under the Plan shall not
be secured by any security interest, pledge or encumbrance on any property of
the Company or any Affiliate.
(h) No payment obligation under the Plan shall bear any interest, except as
provided in Section 5.8(a).
(i) Notwithstanding any other provision of this Plan, the Company shall not
be obligated to issue any Shares unless it is advised by counsel of its
selection that it may do so without violation of the applicable Federal and
State laws pertaining to the issuance of securities, and may require any stock
so issued to bear a legend, may give its transfer agent instructions, and may
take such other steps, as in its judgment are reasonably required to prevent any
such violation.
(j) The Plan shall be governed by and construed in accordance with the laws
of New York.
SECTION 7. EFFECTIVE DATE
The Plan shall become effective for Fiscal Years beginning on and after
January 1, 1992 if approved by the holders of a majority of the outstanding
Shares present in person or represented by proxy and entitled to vote thereon at
the 1992 Annual Meeting of Stockholders.(1)
- ---------------
(1) The provisions of the Plan, as modified or added by the Amendment adopted by
the Board of Directors of the Company on February 13, 1997, are effective as
of February 13, 1997, including with respect to awards made on that date,
except that changes relating to Section 162(m) of the Code shall be
effective with respect to awards for Fiscal Years beginning after 1996.
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EXHIBIT A
<TABLE>
<CAPTION>
TARGET
BONUS
POSITION PERCENTAGE
- -------- ----------
<S> <C>
SENIOR OFFICER BONUS POOL
Chief Executive Officer................................... 70%
Executive Vice Presidents................................. 55
Senior Vice Presidents.................................... 50
Vice Presidents........................................... 45
JUNIOR OFFICER BONUS POOL
Assistant Vice Presidents and Controller.................. 35
Assistant Secretaries and Assistant Treasurers............ 25
OTHER EMPLOYEE BONUS POOL
All other employees....................................... 10
</TABLE>
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<PAGE> 57
PXRE CORPORATION
RESTATED EMPLOYEE ANNUAL INCENTIVE BONUS PLAN
PAYMENT ELECTION
, 199
PXRE Corporation
399 Thornall Street
Edison, NJ 08837
Dear Sir:
Pursuant to the Plan, I elect to have the Cash Bonus, if any, to which I
may become entitled for the Fiscal Year ending December 31, 199 to be paid to
me as follows:
1. Immediate Payment: (You must complete this.)
% (insert 0, 35, 70 or 100%) of such Bonus as soon as it is
determined following the end of the Fiscal Year.
2. Deferred Payment: (If you have elected immediate payment of 100%,
you do not need to complete this.)
The remainder shall be paid:
[ ] (a) Commencing on , 19 (insert specific date, such as
January 10, 2000).
[ ] (b) Commencing within 1 month following termination of my
employment with PXRE Corporation (the "Company") and any
Affiliate.
[ ] (c) Commencing on January 5 of the calendar year following
termination of my employment with the Company and any
Affiliate.
[ ] (d) Commencing upon the earlier of (a) or (b) or upon the earlier
of (a) or (c). (If you check this box, you must check and
complete (a) and check either (b) or (c)).
I understand that the deferred portion, plus earnings (or losses), will be
paid to me in three annual installments beginning on the date selected above,
except that at any time before such date I may request the Committee to approve
a hardship payment or not later than 12 months before such date I may request
the Committee to make payment in a different manner. The Committee is not
required to approve such requests.
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I understand that if I die before my Cash Bonus, if any, is entirely paid,
the rest will be paid to my estate.
--------------------------------------
Signature
Print Name
--------------------------------
Soc. Sec. No.
-------------------------------
Approved by the Committee:
By
----------------------------------
Date:
---------------------------------
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<PAGE> 59
APPENDIX B
PXRE CORPORATION
1992 OFFICER INCENTIVE PLAN
(AS AMENDED FEBRUARY 13, 1997 AND APRIL 17, 1997)
SECTION 1. GENERAL PROVISIONS
1.1 NAME AND GENERAL PURPOSE. The name of this plan is the PXRE
Corporation 1992 Officer Incentive Plan (hereinafter called the "Plan"). The
purpose of the Plan is to enable PXRE Corporation (the "Company") and its
affiliates to retain and attract officers who contribute to the success of the
Company by their ability, ingenuity and industry, and to enable such officers to
participate in the growth of the Company by giving them a proprietary interest
in the Company.
1.2 DEFINITIONS.
(a) "AFFILIATE" means any corporation or other entity as to which the
Company possesses a direct or indirect ownership interest and has power to
exercise control, including a Subsidiary.
(b) "BOARD" means the Board of Directors of the Company.
(c) "CHANGE OF CONTROL" has the meaning provided in Section 4.2(c) of the
Plan.
(d) "CODE" means the Internal Revenue Code of 1986, as amended.
(e) "COMPANY" means PXRE Corporation (or any successor corporation).
(f) "COMMITTEE" means the Committee referred to in Section 1.3 of the Plan.
The functions of the Committee specified in the Plan may also be exercised by
the Board (without regard to whether directors are "non-employee directors"
within the meaning of Rule 16b-3 or any successor rule ("Rule 16b-3") under the
Securities Exchange Act of 1934, as amended (the "Exchange Act")).
Notwithstanding the foregoing, with respect to a Participant who is likely to be
a "covered employee" at the end of the fiscal year in which an Option is
exercised for purposes of Section 162(m) of the Code, the functions of the
Committee specified in the Plan that must be exercised by "outsider directors"
under Section 162(m) shall be exercised only by a committee appointed by the
Board that consists of two or more "outside directors" (as defined in the
interpretative regulations).
(g) "FAIR MARKET VALUE" as of any day means the average of the high and low
bid and asked prices per share for Shares on such day as reported by the NASDAQ
Interdealer Quotation System, or if the Shares are listed on an exchange, the
average of the high and low prices per share quoted for Shares on such exchange
on such date. If the Shares are not publicly traded, Fair Market Value shall be
determined by the Committee in a manner consistent with the requirements of
Section 422(b)(4) of the Code.
(h) "OPTION" means any option to purchase Shares under Section 2 of the
Plan.
(i) "PARTICIPANT" means any officer of the Company or of an Affiliate who
is selected by the Committee to participate in the Plan.
(j) "PERMANENT DISABILITY" means a permanent and total disability within
the meaning of Section 22(e)(3) of the Code.
(k) "PLAN" means the PXRE Corporation 1992 Officer Incentive Plan.
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<PAGE> 60
(l) "RESTRICTED PERIOD" has the meaning provided in Section 3.2(a) of the
Plan.
(m) "RESTRICTED SHARE" has the meaning provided in Section 3 of the Plan.
(n) "RETIREMENT" means separation from the Company or an Affiliate with the
consent of the Company or Affiliate on or after attaining age 65.
(o) "SHARES" mean the shares of common stock, par value $0.01 per share, of
the Company.
(p) "SUBSIDIARY" means any corporation as to which the Company owns
directly or indirectly fifty percent (50%) or more of the total combined voting
power of all classes of its stock.
1.3 ADMINISTRATION OF THE PLAN. The Plan shall be administered by the
Committee, which shall consist of two or more members appointed by the Board who
are "non-employee directors" within the meaning of Rule 16b-3 and, as
applicable, are "outside directors" for purposes of Section 162(m) of the Code.
The Committee shall serve at the pleasure of the Board and have such powers as
the Board may, from time to time, confer upon it. Subject to this Section 1.3,
the Committee shall have sole and complete authority to adopt, alter and repeal
such administrative rules, guidelines and practices governing the operation of
the Plan as it shall, from time to time, deem advisable, to interpret the terms
and provisions of the Plan and to correct any defect, supply any omission or
reconcile any inconsistency in the Plan. Any decision or action taken by the
Board (or any members thereof) or the Committee arising out of or in connection
with the construction, administration, interpretation or effect of the Plan
shall be conclusive and binding upon all Participants and any person claiming
under or through any Participant.
Members of the Committee shall not receive compensation for their services
as members but all expenses and liabilities they incur in connection with the
administration of the Plan shall be borne by the Company. The Committee may
employ attorneys, consultants, appraisers, brokers or other persons. The
Committee, the Company and the officers and directors of the Company shall be
entitled to rely upon the advice, opinions or evaluations of any such persons.
No member of the Board or of the Committee shall be liable for any act or
action, whether of commission or omission, taken by any other member or by an
officer, agent or employee, nor for anything done or omitted to be done by such
director except resulting from his own gross negligence or willful misconduct.
The Committee shall keep minutes of its meetings and of actions taken by it
without a meeting. A majority of the Committee shall constitute a quorum, and
the acts of a majority of the members present at any meeting at which a quorum
is present, or acts approved in writing by all of the members of the Committee
without a meeting, shall constitute the acts of the Committee.
1.4 ELIGIBILITY. All officers of the Company or any Affiliate which are
selected by the Committee shall be Participants in the Plan.
1.5 SHARES SUBJECT TO THE PLAN. Subject to adjustment as provided in
Section 4.1, the aggregate number of Shares (i) to be issued upon exercise of
all Options granted pursuant to the Plan and (ii) to be awarded as Restricted
Shares pursuant to the Plan shall not exceed 750,000. Such Shares may be
authorized but unissued Shares or treasury Shares. Shares subject to, but not
issued under, any Option terminating or expiring for any reason prior to its
exercise in full, or Restricted Shares which are forfeited prior to the lapse of
the Restricted Period, will again be available for Options or Restricted Share
awards thereafter granted during the balance of the term of the Plan.
1.6 AUTHORITY OF COMMITTEE. Subject to the provisions of the Plan, the
Committee shall have the sole and complete authority to determine (i) the
Participants to whom Options and Restricted Shares shall be
B-2
<PAGE> 61
granted; (ii) the number of Shares to be covered by each grant; (iii) the time
or times at which Options shall be granted and exercisable; (iv) the time or
times at which Restricted Shares shall be granted and become nonforfeitable; and
(v) the conditions and limitations, if any, in addition to or in substitution of
those set forth in Sections 2, 3 and 4 hereof, applicable to the exercise of an
Option or vesting of Restricted Shares, including, without limitation, the
nature and duration of the restrictions, if any, to be imposed upon the sale or
other disposition of Shares acquired upon exercise of an Option or receipt of
Restricted Shares. It is contemplated that grants of Options and/or Restricted
Shares shall be granted no more frequently than annually.
SECTION 2. OPTIONS
2.1 TYPES OF OPTIONS. Options granted under the Plan may be of two types,
a non-qualified stock option ("Non-Qualified Option"), and an incentive stock
option ("Incentive Stock Option"). The Committee shall have the authority to
grant Non-Qualified Options, or to grant Incentive Stock Options, or to grant
both types of Options to any Participant, provided, however, that only
Participants employed by the Company or a Subsidiary shall receive Incentive
Stock Options. To the extent that any Option is not designated as an Incentive
Stock Option, it shall constitute a separate Non-Qualified Option.
It is intended that the Incentive Stock Options granted hereunder shall
constitute incentive stock options within the meaning of Section 422(b) of the
Code and shall be subject to the tax treatment described in Section 421 of the
Code. Anything in the Plan to the contrary notwithstanding, no provision of this
Plan relating to Incentive Stock Options shall be interpreted, amended or
altered, nor shall any discretion or authority granted under the Plan be so
exercised, so as to disqualify either the Plan or any Incentive Stock Option
under Section 422 of the Code.
2.2 OPTION PRICE. The price of Shares purchased upon exercise of Options
granted pursuant to the Plan shall be the Fair Market Value thereof as of the
date that the Option is granted except that for Non-Qualified Options such price
may be less than, equal to, or greater than, such Fair Market Value, as
determined by the Committee, but in no event may the price be less than 50% of
such Fair Market Value. If an employee owns or is deemed to own (by reason of
the attribution rules applicable under Section 425(d) of the Code) more than 10%
of the combined voting power of all classes of the stock of the Company or a
Subsidiary and an Option granted to such employee is intended to qualify as an
Incentive Stock Option within the meaning of Section 422(b) of the Code, the
option price shall be no less than 110% of the Fair Market Value of the Shares
on the date the Option is granted.
The purchase price, plus any required Federal income tax or other
withholding amount, shall be paid in full in cash or by certified check or, if
authorized by the Committee in the Stock Option Agreement, Shares of the Company
when the Option is exercised, and certificates evidencing Shares will be
delivered only against such payment.
The Committee may provide in the Stock Option Agreement that an optionee
may satisfy the Company's withholding tax requirements by electing to have the
Company withhold Shares otherwise issuable to the optionee which have a Fair
Market Value on the Tax Date equal to or less than the amount required to be
withheld. The difference, if any, between the withholding amount and the Fair
Market Value of the Shares retained by the Company in satisfaction thereof must
be paid in cash by the Participant. The election shall be irrevocable and shall
be subject to the approval of the Committee. For this purpose, "Tax Date" means
the date which tax is determined due to the exercise of a Non-Qualified Option.
Any Shares withheld in payment of taxes shall not be available for use in
subsequent Option grants or Restricted Share awards.
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<PAGE> 62
2.3 STOCK OPTION AGREEMENTS. Options shall be evidenced by agreements
("Stock Option Agreements") on the terms and conditions set forth in the Plan
and on such other terms and conditions as the Committee may deem advisable. Each
Stock Option Agreement shall specify the number of Shares subject to the Option,
the date or dates on which such Option shall become exercisable, the expiration
date of such Option, the designation of such Option as an Incentive Stock Option
or a Non-Qualified Option, the exercise price of such Option and the date of the
grant of the Option.
2.4 NON-QUALIFIED OPTIONS.
(a) TERM OF OPTION. Each Non-Qualified Option shall be for a term of not
more than ten years from the date of grant.
(b) EXERCISE.
(i) Subject to Section 4.2 and the Committee's discretion, each
Non-Qualified Option by its terms shall require the optionee to remain in
the continuous employ of the Company or an Affiliate for at least one year
from the date of grant of the Option before the option shall be
exercisable, except in the event that the optionee's employment with the
Company or Affiliate terminates as a result of Retirement, Permanent
Disability or death.
(ii) Subject to the Committee's discretion, a Non-Qualified Option
shall not be exercisable by the optionee unless, at the time of exercise,
such optionee is an employee of the Company or an Affiliate, except that,
upon termination of employment with the Company or Affiliate, the optionee
may exercise an Option (1) to the extent of any unexercised Shares, whether
or not the optionee was entitled to do so at the termination of his
employment, at any time within three years thereafter if the termination of
employment results from Retirement or Permanent Disability, or (2) to the
extent that the optionee was entitled to do so at the termination of his
employment, at any time within three months thereafter if the termination
of employment results from a cause other than Retirement, Permanent
Disability or death.
(iii) Subject to the Committee's discretion, in the event of the death
of an optionee while an employee of the Company or an Affiliate, such
optionee's estate or any person who acquired the right to exercise such
Option by bequest or inheritance or by reason of the death of the Optionee
may exercise such optionee's Option to the extent of all unexercised
Shares, whether or not the optionee was entitled to do so at the time of
his death, at any time within three years following his date of death.
(iv) Subject to the Committee's discretion, if the optionee dies
within three months after termination of employment with the Company or any
Affiliate other than resulting from Retirement or Permanent Disability or
within three years after such termination in the case of Retirement or
Permanent Disability, such optionee's estate or any person who acquired the
right to exercise such Option by bequest or inheritance or by reason of the
death of the optionee may exercise (to the extent that the optionee was
entitled to do so at the termination of his employment) such optionee's
Option at any time within the period ending on the later of (1) the last
day of the period within which the optionee could have exercised such
option but for his death or (2) the first anniversary of the optionee's
death.
(v) Notwithstanding any of the foregoing, in no event shall an Option
be exercisable in whole or in part after the termination date provided in
the Stock Option Agreement.
(c) TRANSFERABILITY. Non-Qualified Options shall not be transferable
otherwise than by will or by the laws of descent and distribution, and shall be
exercisable during the optionee's lifetime only by the optionee or, if legally
incapacitated, by the optionee's duly appointed guardian or legal
representative.
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<PAGE> 63
(d) VESTING. The Committee may, in its sole discretion, provide for the
vesting schedule, if any, applicable to the Option, in an optionee's Stock
Option Agreement. The Committee may also, in its sole discretion, permit the
acceleration of the time to exercise the Option or any installments thereof.
2.5 INCENTIVE STOCK OPTIONS.
(a) TERM OF OPTION. Except as otherwise provided herein, each Incentive
Stock Option shall be for a term of not more than ten years from the date of
grant, except that if any employee owns or is deemed to own (by reason of the
attribution rules of Section 425(d) of the Code) more than 10% of the combined
voting power of all classes of stock of the Company or any Subsidiary and an
Incentive Stock Option is granted to such employee, the term of such Option
shall be no more than five years from the date of grant.
(b) ANNUAL LIMIT. The aggregate Fair Market Value of the Shares
(determined as of the date of grant) with respect to which Options intended to
be and designated as Incentive Stock Options under the Plan (or any other stock
option plan of the Company or any Subsidiary) are exercisable for the first time
by any employee in any calendar year shall not exceed $100,000.
(c) EXERCISE.
(i) Subject to Section 4.2 and the Committee's discretion, each
Incentive Stock Option by its terms shall require the optionee to remain in
the continuous employ of the Company or an Affiliate for at least one year
from the date of grant of the Option before the Option shall be
exercisable, except in the event that the optionee's employment with the
Company or Affiliate terminates as a result of Retirement, Permanent
Disability or death.
(ii) Subject to the Committee's discretion, an Incentive Stock Option
shall not be exercisable by the Optionee unless, at the time of exercise,
such optionee is an employee of the Company or an Affiliate except that
upon termination of employment with the Company or Affiliate the optionee
may exercise an Incentive Stock Option (1) to the extent of all unexercised
Shares, whether or not the optionee was entitled to do so at the
termination of his employment, at any time within three years thereafter if
the termination of his employment results from Retirement or Permanent
Disability, or (2) to the extent that the optionee was entitled to do so at
the termination of his employment, at any time within three months
thereafter if the termination of employment results from a cause other than
Retirement, Permanent Disability or death. However, the Committee shall
advise the optionee that, under current law, the exercise of an Incentive
Stock Option will be treated for federal income tax purposes as an exercise
of a Non-Qualified Option if he exercises the option (A) more than three
months after the termination of his employment with the Company or a
Subsidiary other than by reason of Permanent Disability or death, or (B)
more than one year after the termination of his employment with the Company
or a Subsidiary by reason of Permanent Disability.
(iii) Subject to the Committee's discretion, in the event of the death
of an optionee while an employee of the Company or an Affiliate, such
optionee's estate or any person who acquired the right to exercise such
Option by bequest or inheritance or by reason of the death of the Optionee
may exercise such optionee's Option to the extent of all unexercised
Shares, whether or not the optionee was entitled to do so at the time of
his death, at any time within three years following his date of death.
(iv) Subject to the Committee's discretion, if the optionee dies
within three months after termination of employment with the Company or any
Affiliate other than resulting from Retirement or Permanent Disability or
within three years after such termination in the case of Retirement or
Permanent Disability, such optionee's estate or any person who acquired the
right to exercise such Option by bequest
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<PAGE> 64
or inheritance or by reason of the death of the Optionee may exercise (to
the extent that the optionee was entitled to do so at the termination of
his employment) such optionee's Option at any time within the period ending
on the later of (1) the last day of the period within which the optionee
could have exercised such Option but for his death or (2) the first
anniversary of the optionee's death. However, the Committee shall advise
the optionee or other person entitled hereunder to exercise the Option,
that, under current law, if he was not an employee of the Company or a
Subsidiary either at the time of his death or within three months before
such time, the exercise by his estate or the person who acquired the right
to exercise such Option by bequest or inheritance or by reason of the death
of the optionee will be treated for federal income tax purposes as the
exercise of a Non-Qualified Option.
(v) Notwithstanding any of the foregoing, in no event shall an Option
be exercisable in whole or in part after the termination date provided in
the Stock Option Agreement.
(d) TRANSFERABILITY. Incentive Stock Options shall not be transferable
otherwise than by will or by the laws of descent and distribution, and shall be
exercisable during the optionee's lifetime only by the optionee or, if legally
incapacitated, by the optionee's duly appointed guardian or representative.
(e) VESTING. The Committee may, in its sole discretion, provide for the
vesting schedule, if any, applicable to the Option, in an optionee's Stock
Option Agreement. The Committee may, in its sole discretion, permit the
acceleration of the time to exercise an Option or any installments thereof.
2.6 STATUS OF OPTIONEES. An optionee shall not be, nor have any of the
rights or privileges of, a holder of Shares purchasable upon the exercise of an
Option unless and until certificates representing such Shares have been issued
to such optionee.
2.7 MAXIMUM AWARD. The maximum number of Shares for which Options may be
awarded to any Participant in any fiscal year of the Company shall be 100,000
Shares.
SECTION 3. RESTRICTED SHARES
3.1 RESTRICTED SHARE GRANTS. All Restricted Shares shall be subject to the
following terms and conditions and to any other terms and conditions not
inconsistent with the Plan as may be prescribed by the Committee in its sole
discretion and contained in the agreement between the Company and the
Participant relating to such Shares (the "Restricted Share Agreement").
3.2 RESTRICTED SHARE AGREEMENT.
(a) DELIVERY OF RESTRICTED SHARES. Unless otherwise determined by the
Committee in its sole discretion, the Company shall transfer from its treasury
Shares or from its authorized but unissued Shares to each Participant receiving
a Restricted Share award, the number of Shares specified in the Restricted Share
Agreement, and shall hold the certificates representing such Shares for the
Participant for the period during which such Shares are subject to the
restrictions provided by the Committee in the Restricted Share Agreement (the
"Restricted Period"). Restricted Shares may not be sold, assigned, transferred,
pledged, hypothecated or otherwise encumbered by a Participant during the
Restricted Period, except as hereinafter provided. Except for the restrictions
set forth herein and unless otherwise determined by the Committee, a Participant
shall have all the rights of a stockholder with respect to his or her Restricted
Shares, including but not limited to the right to vote and the right to receive
dividends (which if in Shares shall be restricted under the same terms and
conditions as the Shares to which they relate).
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(b) LEGEND. Each certificate for Shares transferred or issued to a
Participant under a Restricted Share Agreement shall be registered in the name
of the Participant and shall bear the following (or a similar) legend:
"THIS CERTIFICATE AND THE SHARES OF STOCK REPRESENTED HEREBY ARE
SUBJECT TO THE TERMS AND CONDITIONS CONTAINED IN THE PXRE CORPORATION 1992
OFFICER INCENTIVE PLAN (THE 'PLAN') APPLICABLE TO RESTRICTED SHARES AND TO
THE RESTRICTED SHARE AGREEMENT DATED (THE 'AGREEMENT'), AND MAY
NOT BE SOLD, PLEDGED, TRANSFERRED, ASSIGNED, HYPOTHECATED, OR OTHERWISE
DISPOSED OF OR ENCUMBERED IN ANY MANNER DURING THE RESTRICTED PERIOD
SPECIFIED IN SUCH AGREEMENT. COPIES OF SUCH PLAN AND AGREEMENT ARE ON FILE
WITH THE SECRETARY OF THE COMPANY."
3.3 LAPSE OF RESTRICTED PERIOD. The Restricted Period shall commence upon
the award of Restricted Shares and, unless sooner terminated as otherwise
provided herein, shall continue for such period of time as specified by the
Committee in the Restricted Share Agreement.
(a) RETIREMENT, DEATH OR DISABILITY. Unless the Committee shall otherwise
provide in the Restricted Share Agreement (and subject to Section 3.3(c) and (d)
hereof), the Restricted Period covering all Shares transferred to a Participant
under the Plan shall immediately lapse upon such Participant's termination of
employment due to Retirement, death or Permanent Disability.
(b) TERMINATION OF EMPLOYMENT. Unless the Committee shall otherwise
provide in the Restricted Share Agreement, if a Participant ceases to be
employed by the Company other than due to Retirement, death or Permanent
Disability, all Shares owned by such Participant for which the Restricted Period
has not lapsed shall revert back to the Company upon such termination and shall
be available for grant in subsequent Restricted Share awards. Authorized leaves
of absence or absence in military service shall constitute employment for this
purpose.
(c) WAIVER OF FORFEITURE PROVISIONS. The Committee, in its sole and
absolute discretion (but subject to the provisions of Section 3.3(d) hereof),
may waive the forfeiture provisions in respect of all or some of the Restricted
Shares awarded to a Participant.
(d) EXCHANGE ACT LIMITATIONS. In the case of any Participant subject to
the reporting requirements of Section 16 of the Exchange Act, no Shares received
under a Restricted Share award may be sold, assigned, pledged or otherwise
transferred for the period of time after the date such Restricted Share award
was granted as is specified in Rule 16b-3.
(e) ISSUANCE OF NEW CERTIFICATES. Upon the lapse of the Restricted Period
with respect to any Shares, such Shares shall no longer be subject to the
restriction imposed in the Restricted Share Agreement, and the Company shall
issue new share certificates respecting such shares registered in the name of
the Participant without the legend described in Section 3.2(b) in exchange for
those previously issued.
3.4 WITHHOLDING TAX. Upon the lapse of the Restricted Period for any
Shares, the Company shall withhold from the Participant's Shares sufficient
Shares to cover the amount which the Company is required to withhold under any
applicable Federal or other tax law. The number of Shares withheld shall be the
number of whole Shares the value of which, based on the Fair Market Value of the
Shares on the day the Restricted Period lapses, does not exceed the applicable
withholding tax. The Company may withhold any remaining amount required to
satisfy its withholding tax requirement from other compensation due to the
Participant or
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may require the Participant to give the Company a check for such amount before
delivering new certificates. Any Shares withheld in payment of taxes shall not
be available for use in subsequent Option grants or Restricted Share awards.
SECTION 4. OTHER PROVISIONS
4.1 ADJUSTMENTS IN AUTHORIZED SHARES AND IN OUTSTANDING OPTIONS. In the
event the outstanding Shares are increased or changed into or exchanged for a
different number or kind of shares of capital stock or other securities of the
Company by reason of any stock dividend or split, recapitalization,
reclassification, merger, consolidation, combination of Shares or other
corporate change, the Committee shall make such substitution or adjustment, if
any, as it deems to be equitable, in the number or kind of Shares or other
securities as to which Options or Restricted Share awards may be granted under
Section 1.5 and in the number of Shares or the exercise price under unexercised
Options granted prior to such change.
In the case of any such substitution or adjustment, the aggregate Option
price in each Stock Option Agreement of all the Shares covered thereby prior to
such substitution or adjustment shall be the Option price for all the shares or
other securities substituted for such Shares or to which such Shares are
adjusted, and the Option price per share after such substitution or adjustment
shall be determined accordingly; provided, however, that no such determination
shall obligate the Company to issue or sell fractional shares or other
securities.
4.2 ACCELERATION AND SETTLEMENT ON CERTAIN CHANGES.
(a) ACCELERATION. Notwithstanding any other provisions of the Plan, upon
the earlier of (i) a "Change of Control" of the Company (as defined below), or
(ii) the Shares of the Company ceasing to be publicly traded, any unexercised
portion of an Option shall become exercisable, and any Restricted Period with
respect to Restricted Shares shall lapse.
(b) OPTIONAL SURRENDER RIGHTS.
(i) The Committee may, in its sole discretion, grant to optionees who
are subject to Section 16(b) of the Exchange Act in conjunction with
Options, either at the time of grant or, with the consent of the optionee,
by amendment thereafter, the right to elect up to 60 days following a
Change of Control (other than where a person becomes a person described in
Section 4.2(c)(i) after March 19, 1992, by acquiring from Phoenix Home Life
Mutual Insurance Company or an affiliate ("Phoenix Home Life") in a private
transaction Shares equal to the number of shares owned by Phoenix Home Life
on March 19, 1992) to surrender all or part of his or her Options and to
receive a cash payment equal to the greater of (A) the excess of the fair
market value of the Shares subject to the Options surrendered over the
exercise price for such Shares, or (B) except for Incentive Stock Options,
the excess of the per Share net worth (determined in accordance with
generally accepted accounting principles consistently applied as of the
close of the Company's next preceding fiscal year) of the Shares to which
the surrendered Option or portion thereof pertains on the date of surrender
over the per Share net worth of such Shares on the date that the Option was
granted. For this purpose, "fair market value" with respect to Shares
subject to Non-Qualified Options means the higher of (1) the highest weekly
weighted average trading price for the Shares during a calendar week which
is included in the 90-day period ending on the date of such election and in
which the average weekly reported volume of trading in the Shares is equal
to or greater than the mean of the weekly reported volumes of trading in
the Shares during such 90-day period, or (2) if the Change of Control
occurs as a result of a transaction described in Section 4.2(c)(i), the
highest price per share shown on Schedule 13D or an amendment thereto filed
pursuant to Section 13(d) of the Exchange
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Act by any person (as defined in Section 4.2(c)(i) holding 30% or more of
the combined voting power of the Company's then outstanding voting
securities, or (C) if the Change of Control occurs as a result of
shareholder approval of a transaction described in Section 4.2(c)(ii), the
highest price paid or to be paid per share pursuant to such transaction as
determined by the Committee. With respect to Shares subject to an Incentive
Stock Option, "fair market value" means Fair Market Value as provided in
Section 1.2(g). Payment of such amount, less applicable withholding taxes,
shall be made by the Company to the optionee in cash, subject to the
applicable provisions of Rule 16b-3 under the Exchange Act as then in
effect, promptly upon the receipt by the Committee of the optionee's
election.
(ii) An optionee may, if at the time of the grant or, with the consent
of the optionee, by amendment thereafter, the Committee so determines in
its sole discretion, elect up to 60 days following the date the Shares
cease to be publicly traded (except where the stock is delisted due to
fraud or other misconduct of the Company's management) to surrender all or
part of his Options and to receive a cash payment equal to the greater of
(A) the excess of the fair market value of the Shares subject to such
surrendered Options over the exercise price for such Shares, or (B) except
for Incentive Stock Options, the amount determined using the per Share net
worth valuation method in Section 4.2(b)(i) as of the surrender date. For
this purpose, "fair market value" means the highest weekly weighted average
trading price for the Shares during a calendar week which is included in
the 90-day period ending on the date the Shares cease to be publicly traded
and in which the average weekly reported volume of trading in the Shares is
equal to or greater than the mean of the weekly reported volumes of trading
in the Shares during such 90-day period, except that with respect to Shares
which are subject to an Incentive Stock Option it shall mean Fair Market
Value as provided in Section 1.2(g) on the date of surrender. Payment of
such amount, less applicable withholding taxes, shall be made by the
Company in cash promptly upon the receipt by the Committee of the
optionee's election.
(iii) If an optionee does not make an election under part (i) or (ii)
on or before the 60th day following a Change of Control described in
Section 4.2(c)(ii) or (iii) or the date the Shares cease to be publicly
traded (except where the stock is delisted due to fraud or other misconduct
of the Company's management), as the case may be, the optionee shall be
deemed to have made such an election as of such 60th day, he shall receive
the cash payment which he would have received had he made an election on
such date, all of his Options and surrender rights shall be deemed to have
been cancelled as of such date, and his sole right under the Plan shall be
to receive such cash payment, subject to applicable withholding taxes. In
the case of an optionee who does not have an election under part (i) and
whose Option is unexercised in whole or part on the 60th day following a
Change of Control described in Section 4.2(c)(ii) or (iii) the optionee
shall receive a cash payment with respect to his unexercised Option
determined under the foregoing as if he had had an election, and had made
it, on such 60th day, and his rights under the Plan thereafter shall solely
be those provided to an optionee subject to the first sentence in this part
(iii).
(iv) An optionee who is subject to Section 16(b) of the Exchange Act
may not exercise an election under this subsection (b): (A) during the
first six months of the respective terms of the election and the Option to
which it is related (unless an earlier election is permitted under Rule
16b-3(e)) and (B) in any manner which is not in compliance with Rule
16b-3(e).
(v) An election shall not be transferable other than by will or by the
laws of descent and distribution and shall be exercisable during the
optionee's lifetime only by the optionee or, if legally incapacitated, by
the optionee's duly appointed guardian or representative.
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(c) CHANGE OF CONTROL. For the purposes hereof, a "Change of Control" of
the Company shall be deemed to have occurred if:
(i) any "person" (as such term is used in Sections 13(d) and 14(d) of
the Exchange Act other than the Company and other than Phoenix Home Life or
an affiliate thereof) becomes the "beneficial owner" (as determined for
purposes of Regulation 13-D under the Exchange Act as currently in effect),
directly or indirectly, of securities of the Company representing 30% or
more of the combined voting power of the Company's then outstanding
securities; or
(ii) the stockholders of the Company approve (A) any merger or
consolidation of the Company with any other corporation, other than a
merger or consolidation with Transnational Re Corporation in which the
Company is the surviving entity or a merger or consolidation which would
result in the holders of the voting securities of the Company outstanding
immediately prior thereto holding immediately thereafter securities
representing more than 80% of the combined voting power of the voting
securities of the Company or such surviving entity outstanding immediately
after such merger or consolidation, or (B) any sale or other disposition
(in one transaction or a series of related transactions) of all, or
substantially all, of the assets of the Company; or
(iii) the stockholders of the Company approve a plan or proposal for
the liquidation or dissolution of the Company; or
(iv) during any period of two consecutive years (not including any
period prior to March 19, 1992), individuals who at the beginning of such
period constitute the entire Board of Directors of the Company and any new
director, whose election to the Board or nomination for election to the
Board by the Company's stockholders was approved by a vote of at least
two-thirds ( 2/3) of the directors then still in office who either were
directors at the beginning of the period or whose election or nomination
for election was previously so approved, cease for any reason to constitute
a majority of the Board.
4.3 NON-ALIENATION OF BENEFITS. Except as herein specifically provided, no
Option, no Restricted Share, and no right or interest under the Plan shall be
subject to transfer, assignment, pledge, charge or other alienation, whether
voluntary or involuntary, and any attempt to transfer, assign, pledge, charge or
otherwise alienate the same shall be null and void and of no effect. If any
Participant or other person entitled to benefits hereunder should attempt to
assign, pledge, charge or otherwise alienate any right or interest hereunder,
then such benefits shall, in the discretion of the Committee, cease.
4.4 ADMINISTRATION EXPENSES. The Company shall bear the entire expense of
administering the Plan.
4.5 AMENDMENT. The Board or the Committee may, from time to time, amend,
suspend or terminate any or all of the provisions of the Plan, provided,
however, without an optionee's approval, no change may be made which would
prevent an Incentive Stock Option granted under the Plan from qualifying as an
Incentive Stock Option under Section 422 of the Code, result in a "modification"
of the Incentive Stock Option under Section 424(h) of the Code or otherwise
adversely alter or impair any right granted to any Participant prior to such
action.
Subject to the terms of the Plan, the Committee may modify, extend or renew
outstanding Options or Restricted Shares in any manner, including without
limitation, to change the date or dates as of which an Option becomes
exercisable, accept the exchange of outstanding Options (to the extent not
theretofore exercised) for the granting of new Options in substitution therefor,
or accelerate the lapse of the Restricted Period applicable to Restricted
Shares. However, the Committee shall not modify any rights or obligations under
any outstanding Option or Restricted Share without the consent of the
Participant.
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4.6 CONTINUATION OF EMPLOYMENT. Participation in the Plan will not confer
upon any employee any right to continue in the employ of the Company or any
Affiliate or limit, in any way, the right of the Company or any Affiliate to
terminate a Participant's employment with the Company or Affiliate, at any time.
Nothing contained in the Plan shall prohibit the Company or any Subsidiary or
Affiliate from establishing other additional incentive compensation arrangements
for employees of the Company or such Subsidiary or Affiliate.
4.7 COMPLIANCE WITH APPLICABLE LAW. Notwithstanding any other provision of
the Plan, the Company shall not be under any obligation to distribute any
Shares, unless the Committee has determined that it may do so without violation
of the applicable federal or state laws pertaining to the issuance of
securities, and the Company may require any certificates evidencing such Shares
to bear a legend (in addition to the legend required by Section 3.2(b) hereof),
may give its transfer agent instructions, and may take such other steps, as in
its judgment are reasonably required to prevent any such violation. No Shares
shall be issued under the Plan unless the Participant first enters into an
agreement with the Company providing for compliance by the Participant with all
such applicable laws.
The Plan shall be governed by and construed in accordance with the laws of
New York.
4.8 EFFECTIVE DATE. This Plan was adopted by the Board on March 19, 1992,
and approved by the stockholders of the Company on May 21, 1992. The Plan is
effective on the date of approval thereof by the stockholders of the Company,
and shall terminate on May 21, 2002.(1)
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(1) The provisions of the Plan, as modified or added by the Amendments adopted
by the Board of Directors of the Company on February 13, 1997 and April 17,
1997 are effective on and after the 1997 Annual Meeting of Stockholders.
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APPENDIX C
PXRE CORPORATION
DIRECTOR EQUITY AND DEFERRED COMPENSATION PLAN
SECTION 1. PURPOSE
The purpose of the Plan is to attract and retain highly qualified persons
to serve as non-employee Directors of PXRE Corporation by providing the
Directors with greater flexibility in the form and timing of receipt of
compensation for services on the Board of Directors, and an opportunity to
obtain a greater proprietary interest in the Company's success and progress
through receipt of fees in the form of Shares and Options on Shares, thereby
aligning the Director's interests with the interests of the stockholders of the
Company.
SECTION 2. DEFINITIONS
Whenever used in this plan, the following terms shall have the definitions
set forth in this section:
<TABLE>
<S> <C> <C>
2.1 -- "ACCOUNT" shall have the meaning provided in Section 8.3.
2.2 -- "ANNUAL RETAINER" shall mean the annual retainer fee payable
to a Director for serving as a Director of PXRE Corporation.
2.3 -- "BOARD OF DIRECTORS" or "BOARD" shall mean the Board of
Directors of PXRE Corporation.
2.4 -- "CODE" shall mean the Internal Revenue Code of 1986, as
amended.
2.5 -- "COMPANY" shall mean PXRE Corporation.
2.6 -- "DIRECTOR" shall mean a member of the Board of Directors who
is not a full-time employee of the Company or a subsidiary.
2.7 -- "DIRECTOR FEES" shall mean all cash compensation payable to
a Director, including the Annual Retainer, committee
membership fees, fees associated with a chair and fees for
attendance at meetings of the Board and its committees, but
not including reimbursements for expenses.
2.8 -- "DISABILITY" shall mean the inability, in the judgment of
the Board, of a Director to perform his or her duties due to
mental or physical impairment.
2.9 -- "EFFECTIVE DATE" shall mean the date provided in Section 13
of the Plan.
2.10 -- "FAIR MARKET VALUE" shall mean the average of the high and
low per share prices quoted for Shares on the New York Stock
Exchange over the twenty (20) trading days prior to the
December 31 immediately preceding the calendar year for
which the Annual Retainer is payable. If the Shares are not
publicly traded, Fair Market Value shall be determined by
the Board in a manner consistent with the requirements of
Section 422 of the Code.
2.11 -- "GRANT DATE" shall have the meaning provided in Section 7.2.
2.12 -- "OPTION" shall mean an option to purchase Shares granted
under Section 7 of the Plan.
</TABLE>
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2.13 -- "OPTION VALUE" shall mean the value of an Option determined
as of the December 31 immediately preceding the calendar
year for which the Annual Retainer is payable in accordance
with the Black-Scholes option valuation model and
assumptions consistent with those used by the Company in
preparing footnotes to the Company's financial statements
under Statement of Financial Accounting Standards No. 123,
with a 20% discount to compensate for the additional risk.
2.14 -- "RULE 16B-3" shall mean Rule 16b-3 promulgated under the
Securities Exchange Act of 1934, as amended.
2.15 -- "SHARES OF STOCK" or "SHARES" shall mean shares of the
Common Stock, par value $0.01 per share, of the Company.
SECTION 3. AMOUNT OF STOCK
The stock which may be issued and sold under the Plan shall not exceed
250,000 Shares, subject to adjustment as provided in Section 7.3 below. The
Shares to be issued may be either authorized and unissued shares, treasury
shares, issued shares acquired by the Company or its subsidiaries or any
combination thereof. In the event that Options granted under the Plan shall
terminate or expire without being exercised in whole or in part, new Options may
be granted covering the shares not purchased under such lapsed Options.
SECTION 4. ELIGIBILITY AND PARTICIPATION
Each Director in office on the Effective Date of the Plan shall be eligible
to participate in the Plan, and each Director elected or reelected after the
Effective Date shall be eligible to participate in the Plan upon election or
reelection to the Board of Directors.
SECTION 5. ELECTIONS OF FORM AND TIME OF PAYMENT
5.1 ELECTION ALTERNATIVES. In lieu of receiving all of his or her Annual
Retainer and other Director Fees in cash at such time as such Fees are payable
under the policies and practices of the Company, a Director may elect to:
(a) convert all or a portion (in increments of 25%) of his or her
Annual Retainer into Shares as provided in Section 6;
(b) convert all or a portion (in increments of 25%) of his or her
Annual Retainer into Options as provided in Section 7; and
(c) defer the payment of all or a portion of his or her Director Fees
as provided in Section 8.
5.2 ELECTION AGREEMENT. A Director who desires to have any portion of his
or her Annual Retainer converted into Shares or Options or to have any portion
of his or her Director Fees deferred must complete and deliver an Election
Agreement (on a form approved by the Board) to the Treasurer of the Company or
other person designated by the Board no later than the December 31 immediately
preceding the calendar year for which the Annual Retainer and other Director
Fees would be payable; provided, however, that
(a) any Director in office on the Effective Date of the Plan may make
an election with respect to his or her Director Fees not yet earned as of
the Effective Date by filing an Election Agreement within thirty (30) days
after such Effective Date; and
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(b) any Director elected to the Board after the Effective Date who was
not a Director on the preceding December 31 may make an election with
respect to his or her Director Fees not yet earned for the calendar year in
which he or she is first elected to the Board by delivering an Election
Agreement within thirty (30) days after such election.
An Election Agreement, once timely delivered, shall be effective for the
succeeding calendar year(s) unless revoked or modified for a future year by the
Director by delivering a new Election Agreement before the December 31
immediately preceding the calendar year for which the new election is to apply.
A Participant's election for a given year is irrevocable.
If a Director does not provide an Election Agreement, his or her Director
Fees shall be paid pursuant to the Company's policies and practices for the
payment of such Fees.
SECTION 6. SHARES
6.1 NUMBER OF SHARES. A Director who elects to have all or a portion of
his or her Annual Retainer paid in the form of Shares shall receive the whole
number of Shares that is equal to the amount of his or her Annual Retainer
designated in his or her Election Agreement divided by the per Share Fair Market
Value of the Shares of the Company, as determined pursuant to Section 2.10. No
fractional Shares will be issued, and any remainder of the designated Annual
Retainer amount shall be paid to the Director promptly in cash.
6.2 ISSUANCE OF SHARES. The Company shall issue certificates for such
Shares promptly following the date on which the Annual Retainer is payable. Such
Shares shall be subject to Section 9.4 of the Plan.
SECTION 7. OPTIONS
7.1 NUMBER OF OPTIONED SHARES. A Director who elects to have all or a
portion of his or her Annual Retainer paid in the form of an Option shall
receive an Option to purchase the number of whole Shares determined by dividing
the amount of the Annual Retainer designated in his or her Election Agreement by
the per Share Option Value, as determined pursuant to Section 2.13. No Option
will be issued on fractional Shares, and any remaining amount of the designated
Annual Retainer shall be paid to the Director promptly in cash.
7.2 OPTION AGREEMENTS. The Company shall issue to the Director an Option
Agreement as of the date on which the Annual Retainer is payable (the "Grant
Date") to evidence the Option granted to the Director. Each Option Agreement
shall comply with the following terms and conditions and be in a form approved
by the Board:
(a) Exercise Price. The Option per Share exercise price shall be the
per Share Fair Market Value, as determined pursuant to Section 2.10.
(b) Vesting. The Option shall be 100% exercisable when issued.
(c) Expiration. No portion of an Option shall be exercisable after
the expiration of ten years following the Grant Date, provided that, upon a
Director's ceasing to serve as a Director within such ten year period, the
Option will expire unless it is exercised within three years following such
cessation. If a Director should die within three years following the date
he or she ceased to be a Director, the decedent's estate or any person who
acquires the right to exercise the Option by reason of the decedent's death
may exercise the Option at any time (but in no event after 10 years after
the Grant Date) within the period
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ending on the later of (i) the last day of the period within which the
decedent could have exercised the Option but for his or her death and (ii)
the first anniversary of such person's death.
(d) Exercise. A Director may exercise all or part of an Option by
delivering a written notice substantially in the form approved by the Board
to the Treasurer of the Company identifying the number of whole Shares to
be purchased and providing payment in full of the exercise price in United
States dollars by certified check or bank draft.
Options and Shares acquired upon the exercise of an Option shall be subject
to Section 9.4.
7.3 ANTI-DILUTION MEASURES. In the event the outstanding Shares are
increased or changed into or exchanged for a different number or kind of shares
of capital stock or other securities of the Company by reason of any stock
dividend or split, recapitalization, reclassification, merger, consolidation,
combination of Shares or other corporate change, the Board of Directors shall
make such substitution or adjustment, if any, as it deems to be equitable, in
the number or kind of shares or other securities as to which Options may be
granted and in the number of Shares or the exercise price under unexercised
Options granted prior to such change.
In the case of any such substitution or adjustment, the aggregate Option
price in each Option Agreement of all the Shares covered thereby prior to such
substitution or adjustment shall be the Option price for all the shares or other
securities substituted for such Shares or to which such Shares are adjusted, and
the Option price per share after such substitution or adjustment shall be
determined accordingly; provided, however, that no such determination shall
obligate the Company to issue or sell fractional shares or other securities.
SECTION 8. DEFERRALS
8.1 DEFERRAL CHOICES. A Director who elects to have all or a portion of
his or her Director Fees deferred shall make the following irrevocable elections
on an Election Agreement:
(a) The amount or percentage of Director Fees to be deferred;
(b) The length of the deferral period pursuant to Section 8.2;
(c) The investment return choice(s) pursuant to Section 8.3; and
(d) The form of payment of deferred amounts following the end of the
deferral period pursuant to Section 8.4
In addition, the Director shall designate one or more primary and
contingent beneficiaries pursuant to Section 8.5.
8.2 DEFERRAL PERIOD. The deferral period elected by each Director with
respect to deferrals of Director Fees for any given year shall be at least equal
to one (1) year, and no more than fifteen (15) years, following the end of the
calendar year in which the Director Fees are earned. However, notwithstanding
the deferral period elected by a Director, payment of a Director's Account shall
be made to the Director, or the Director's beneficiary designated under Section
8.5, as the case may be, in a single lump sum within sixty (60) days in the
event the Director's service as a Director of the Company ceases by reason of
death or Disability at any time prior to full payment of the balance of the
Director's Account.
8.3 ACCOUNTS AND INVESTMENT RETURN. The Director Fees which a Director
elects to defer shall be credited to an unfunded deferred compensation account
maintained by the Company or its agent for
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bookkeeping purposes (the "ACCOUNT") on the date the Director Fees otherwise
would have been paid to the Director.
A Director's Account balance will be credited with the investment return
(and debited with any losses) experienced on the investment choice or choices
specified by the Director from time to time from among the fund or funds of the
Company's 401(k) Plan. As of the Effective Date, the funds of the Company's
401(k) Plan are the Baron Asset Fund, GAM International Fund, Oakmark Growth
Fund and Vanguard Fixed Income Securities Fund.
Unless the Board otherwise determines, a Director may change the investment
return choice(s) for his or her Account as often as the Director wishes by
notifying the Treasurer of the Company or agent of the Company appointed to
manage the Accounts under the Plan.
The obligation of the Company under the Plan to pay the Account balance to
a Director or his or her beneficiary constitutes an unsecured promise of the
Company to make payments from its general assets, and a Director shall have the
status of a general unsecured creditor of the Company with respect to his or her
Account.
8.4 PAYMENT OF ACCOUNT. The balance of a Director's Account shall be paid
following the end of the deferral period as elected under Section 8.2 in either
(a) a single lump sum cash payment as soon as practicable thereafter, or (b)
annual installments over a period not to exceed fifteen (15) years, in either
case as elected by the Director on his or her Election Agreement. The annual
installment payments, if elected, will be based upon a Director's then existing
Account balance divided by the number of installment payments remaining to be
made.
8.5 DEATH OF DIRECTOR. A Director shall designate on a form approved by
the Board a primary and contingent beneficiary or beneficiaries who, upon the
Director's death, will receive payment of the Director's Account. All
designations shall be signed by the Director, and shall be effective as of the
date received by the Treasurer of the Company or other designated agent.
Directors may change their designations of beneficiary by submitting a new
designation form. The payment of amounts deferred under the Plan shall be in
accordance with the last unrevoked designation of beneficiary that has been
signed by the Director and delivered by the Director to the Treasurer of the
Company or other designated agent prior to the Director's death.
In the event that all the beneficiaries designated by a Director predecease
the Director, the Director's Account balance shall be paid to the Director's
estate.
In the event a Director does not designate a beneficiary, or for any reason
such designation is ineffective, in whole or in part, the amounts that otherwise
would have been paid to the Director or the Director's beneficiaries shall be
paid to the Director's estate.
SECTION 9. MISCELLANEOUS PROVISIONS
9.1 PERSONAL REPRESENTATIVES. In the event any Account or Share is payable
to or an Option is exercised by the executors, administrators, heirs, legatees
or distributees of the estate of a deceased Director or by the guardian or legal
representative of a disabled former Director, the Company shall be under no
obligation to issue, make payment or deliver Shares unless and until the Company
is satisfied that the person or persons requesting payment or exercising the
Option are the duly appointed legal representatives of the
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deceased Director's estate or the proper legatees or distributees thereof or the
duly appointed guardian or legal representative of the disabled former Director.
9.2 NO RIGHT TO DIRECTORSHIP. Neither the Plan nor any action taken
hereunder shall be construed as giving any Director any right to be retained in
the service of the Company.
9.3 NONTRANSFERABLE INTERESTS AND RIGHTS. A Director's interest in an
Account or an Option and his or her rights under the Plan may not be assigned or
transferred in whole or in part either directly or by operation of law or
otherwise (except under a domestic relations order (as defined in Section 414(p)
of the Code)) or, in the event of Director'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 Director in the Plan shall be subject to any
obligation or liability of such Director.
9.4 COMPLIANCE WITH LAW. The Company shall not be required to deliver any
Shares under Section 6 or 7 unless the Committee has determined that it may do
so without violation of applicable federal or state laws pertaining to the
issuance of securities, and the Company may require any Shares to bear a legend,
may give the transfer agent instructions, and may take such other steps, as in
its judgment are reasonably required to prevent any such violation. No Shares
shall be issued under the Plan unless the Director first enters into an
agreement with the Company providing for compliance with all such applicable
laws. The Company is under no obligation to register the Shares covered by this
Agreement under federal securities laws, nor is the Company under any obligation
to register any of the Shares or otherwise qualify them for sale under any state
law. Any Shares acquired hereunder must be held indefinitely unless they are
registered under the Securities Act of 1933, as amended (the "Act") or the
disposition thereof is exempt from the registration requirements of the Act.
9.5 EXPENSES. The expenses of the Plan shall be borne by the Company.
9.6 UNFUNDED. 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 payment of Accounts or the issuance of
Shares upon exercise of any Option under the Plan, and the payment of Accounts
and the issuance of Shares shall be unsecured general obligations of the
Company.
9.7 ACCEPTANCE. By accepting a Share, Option or Account, each Director and
each person claiming under or through such person shall be conclusively deemed
to have indicated his or her acceptance and ratification of and consent to, any
action taken under the Plan by the Company or the Board of Directors.
9.8 CONSTRUCTION. It is the intent of the Company that the Plan comply in
all respects with Rule 16b-3 or any successor rule, that any ambiguities or
inconsistencies in construction of the Plan be interpreted to give effect to
such intention and that if any provision of the Plan is found not to be in
compliance with Rule 16b-3, such provision shall be deemed null and void to the
extent required to permit the Plan to comply with Rule 16b-3. The Board may
adopt rules and regulations under, and amend, the Plan in furtherance of the
intent of the foregoing.
In all other respects the Plan and Shares, Options and Accounts provided
thereunder shall be governed by, and construed in accordance with the laws of
the State of Delaware without regard to the conflict of laws principles thereof.
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SECTION 10. 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, including, but not limited to, amendments
necessary to qualify for any exemption or to comply with applicable law or
regulations. Subject to the provision of Section 9.8 relating to Rule 16b-3, no
amendment of the Plan shall materially and adversely affect any right of any
Director with respect to any Option theretofore granted without such Director's
written consent.
SECTION 11. 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 Election
Agreement, Option Agreement and Beneficiary Designation, have the power to
construe the Plan, to determine all questions arising thereunder and 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,
as described herein, 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 Board. No member of
the Board shall be liable for anything done or omitted to be done by such member
or by any other member of the Board in connection with the Plan, except in
circumstances involving actual bad faith.
SECTION 12. TERMINATION
This 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) immediately following the annual meeting of stockholders in 2007.
SECTION 13. EFFECTIVE DATE OF PLAN
The Plan shall become effective as of June 5, 1997, provided that the
adoption of the Plan shall have been approved by the affirmative vote of the
holders of a majority of the outstanding Shares of the Company present in person
or represented by proxy at the 1997 Annual Meeting of Stockholders.
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<PAGE> 77
APPENDIX D
PROXY PXRE CORPORATION PROXY
ANNUAL MEETING OF STOCKHOLDERS
JUNE 5, 1997
THIS PROXY IS BEING SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Gerald L. Radke, F. Sedgwick Browne and
Sanford M. Kimmel, and each or any of them, with full power of substitution, the
proxies of the undersigned to vote all of the shares of Common Stock of PXRE
Corporation which the undersigned is entitled to vote at the Annual Meeting of
Stockholders of PXRE Corporation to be held at the offices of PXRE Corporation,
399 Thornall Street, 14th Floor, Edison, New Jersey on June 5, 1997 commencing
at 9:00 a.m. and at any adjournment or adjournments thereof, with all the powers
the undersigned would possess if personally present upon:
(1)ELECTION OF DIRECTORS: Authority to vote this Proxy for the election of the
following persons as directors is:
[ ] GRANTED [ ] WITHHELD
(Except as indicated otherwise)
IF THERE IS ANY INDIVIDUAL DIRECTOR WITH RESPECT TO WHOM YOU DESIRE TO
WITHHOLD YOUR VOTE, YOU MAY DO SO BY LINING THROUGH OR OTHERWISE STRIKING OUT
HIS NAME.
Robert W. Fiondella Philip R. McLoughlin Donald H. Trautlein
(2) To ratify the appointment of Price Waterhouse LLP as PXRE Corporation's
independent public accountants for the fiscal year ending December 31, 1997.
[ ] APPROVE [ ] DISAPPROVE [ ] ABSTAIN
(3) To approve the PXRE Corporation Restated Employee Annual Incentive Bonus
Plan, as amended;
[ ] APPROVE [ ] DISAPPROVE [ ] ABSTAIN
(4) To approve the PXRE Corporation 1992 Officer Incentive Plan, as amended;
[ ] APPROVE [ ] DISAPPROVE [ ] ABSTAIN
(See other side)
(5) To approve the adoption of an amendment to the PXRE Corporation Director
Stock Option Plan;
[ ] APPROVE [ ] DISAPPROVE [ ] ABSTAIN
(6) To approve the adoption of the PXRE Corporation Director Equity and Deferred
Compensation Plan; and
[ ] APPROVE [ ] DISAPPROVE [ ] ABSTAIN
(7) In their discretion, such other matters as may properly come before the
meeting.
UNLESS A CONTRARY DIRECTION IS INDICATED, THE SHARES REPRESENTED BY THIS
PROXY SHALL BE VOTED FOR THE ELECTION OF DIRECTORS, FOR THE RATIFICATION OF
PRICE WATERHOUSE LLP AS INDEPENDENT PUBLIC ACCOUNTANTS FOR THE FISCAL YEAR
ENDING DECEMBER 31, 1997, FOR THE APPROVAL OF THE PXRE CORPORATION RESTATED
EMPLOYEE ANNUAL INCENTIVE BONUS PLAN, AS AMENDED, FOR THE APPROVAL OF THE PXRE
CORPORATION 1992 OFFICER INCENTIVE PLAN, AS AMENDED, FOR THE APPROVAL OF THE
ADOPTION OF AN AMENDMENT TO THE PXRE CORPORATION DIRECTOR STOCK OPTION PLAN, AND
FOR THE APPROVAL OF THE ADOPTION OF THE PXRE CORPORATION DIRECTOR EQUITY AND
DEFERRED COMPENSATION PLAN.
Please sign exactly as your name
appears on this Proxy. If
signing for estates, trusts or
corporations, title or capacity
should be stated. If shares are
held jointly, each holder should
sign.
Dated: ,1997
--------------------
--------------------------------
Signature
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Signature
