<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
[PXRE LOGO]
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JUNE 3, 1999
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of PXRE
CORPORATION ("PXRE") will be held on June 3, 1999 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 five members of the Board of Directors who, with the four
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
27, 1999 accompanying this Notice of Annual Meeting (the "Proxy
Statement");
(2) To ratify the appointment of PricewaterhouseCoopers LLP as PXRE's
independent public accountants for the fiscal year ending December 31,
1999;
(3) To approve the adoption of amendments to the PXRE Corporation
Restated Employee Annual Incentive Bonus Plan, as amended;
(4) To approve the adoption of amendments to the PXRE Corporation 1992
Officer Incentive Plan, as amended; and
(5) 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 9, 1999, 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 27, 1999
- --------------------------------------------------------------------------------
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.
- --------------------------------------------------------------------------------
<PAGE> 3
PROXY STATEMENT
---------------------
ANNUAL MEETING OF STOCKHOLDERS
OF PXRE CORPORATION
JUNE 3, 1999
---------------------
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 3, 1999 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 27, 1999.
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 9, 1999 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, 11,796,815 shares of Common Stock were issued and outstanding
and held of record by approximately 193 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.................. 1,385,063 shares(1) 11.74%
82 Devonshire Street
Boston, MA 02109
Common Stock Heartland Advisors, Inc................... 907,152 shares(2) 7.69%
790 North Milwaukee St.
Milwaukee, WI 53202
Common Stock Bank One Corporation...................... 715,373 shares(3) 6.06%
One First National Plaza
Chicago, IL 60670
Common Stock Dimensional Fund Advisors Inc............. 672,257 shares(4) 5.70%
1299 Ocean Avenue
Santa Monica, CA 90401
Common Stock Phoenix Home Life Mutual.................. 636,700 shares(5) 5.40%
Insurance Company
One American Row
Hartford, CT 06115
</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 1,385,063 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 1,385,063 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
725,063 shares of Common Stock (6.15% of PXRE's Common Stock). Neither FMR,
Mr. Johnson nor Ms. Johnson reports sole or shared voting power in respect
of the 1,385,063 shares of Common Stock. Each of FMR, Mr. Johnson and Ms.
Johnson reports sole dispositive power in respect of the 1,385,063 shares of
Common Stock.
(2) According to information delivered by Heartland Advisors, Inc. ("Heartland")
to PXRE (subsequent to Heartland's filing of its Schedule 13G with the
Commission), Heartland, a registered investment advisor, may be deemed to
beneficially own the 907,152 shares of Common Stock indicated opposite
Heartland's name in the above table. Heartland reports sole voting power in
respect of 302,509 shares of Common Stock and sole dispositive power in
respect of 907,152 shares of Common Stock.
(3) According to the Schedule 13G filed by Bank One Corporation ("Bank One")
with the Commission, Bank One may be deemed to beneficially own the 715,373
shares of Common Stock indicated opposite Bank One's name in the above
table. Bank One reports sole voting power in respect of 710,073 shares of
Common Stock and sole dispositive power in respect of 705,385 shares of
Common Stock.
(4) According to the Schedule 13G filed by Dimensional Fund Advisors Inc.
("Dimensional") with the Commission, Dimensional, in its capacity as an
investment advisor, may be deemed to beneficially own
2
<PAGE> 5
the 672,257 shares of Common Stock indicated opposite Dimensional's name in
the above table. Such shares are owned by certain investment vehicles
(including commingled group trusts) to which Dimensional serves as an
investment advisor. Dimensional possesses both voting and investment power
with respect to such shares. Dimensional disclaims beneficial ownership of
the 672,257 shares of Common Stock.
(5) According to the Schedule 13G filed by Phoenix Home Life Mutual Insurance
Company ("Phoenix Home Life") with the Commission, Phoenix Home Life may be
deemed to beneficially own the 636,700 shares of Common Stock indicated
opposite Phoenix Home Life's name in the above table. Phoenix Home Life
reports sole voting power and sole dispositive power in respect of the
636,700 shares of Common Stock.
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 I directors will
terminate and Donald H. Trautlein (a Class II director whose term is scheduled
to end at the annual meeting of stockholders in 2000) will retire in accordance
with PXRE's director retirement policy. Also, Edward P. Lyons, a Class III
director, passed away on April 8, 1999. The Board has determined to reduce the
number of directors from 10 to 9 effective at the Annual Meeting. Therefore, the
Board of Directors has nominated Gerald L. Radke, Franklin D. Haftl and Wendy
Luscombe (all of whom are also presently serving on the Board) for re-election
as Class I directors to serve three-year terms until the annual meeting of
stockholders is held in 2002 and until their successors have been elected and
qualified. The Board of Directors has also nominated Wilson Wilde (who is
presently serving on the Board as a Class I director) for re-election, but as a
Class II director to serve a one-year term until the annual meeting of
stockholders is held in 2000 and until his successor has been elected and
qualified. In addition, the Board of Directors has nominated F. Sedgwick Browne
for election as a Class III director to serve until the annual meeting of
stockholders in 2001 and until his successor has 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.
INFORMATION CONCERNING DIRECTORS AND NOMINEES
Gerald L. Radke (54) 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
3
<PAGE> 6
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.
Robert W. Fiondella (56) has been Chairman of the Board of Directors,
President and Chief Executive Officer of 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 (64), 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 (69), 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 PXRE Ltd. (a corporate member of Lloyd's) and Societe
Generale d'Investissements SA, a quoted Luxembourg industrial holding company,
and is also Chairman of Langbourne Income Growth & Property Unit Trust and Nexus
Structured Finance Ltd., an agency for private sector finance to state (U.K.)
institutions.
Wendy Luscombe (47), 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 (72) 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,
until his death in April 1999, a director of Phoenix Investment Partners,
Limited, formerly Phoenix Duff & Phelps Corporation ("Phoenix Investment
Partners"), an investment management company.
Philip R. McLoughlin (52) has been Chairman, Chief Executive Officer and a
director of Phoenix Investment Partners since October 1995 and, since July 1992,
has been Executive Vice President and Chief Investment Officer of Phoenix Home
Life. From December 1988 to June 1992, he was Executive Vice President,
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 both World Trust and Emerging
World Trust, each 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.
4
<PAGE> 7
David W. Searfoss (48) 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 (72) 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 (71) 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
("HSB Group, Inc."). In May 1994, Mr. Wilde was appointed Chairman of the
Executive Committee, and in April 1998 was named Chairman Emeritus of HSB Group,
Inc. Mr. Wilde is currently a director of Front Royal, Inc., a holding company
that owns specialty insurance carriers and an environmental consulting firm.
F. Sedgwick Browne (56), who has been nominated for election as a Class III
director of PXRE, is a partner of Morgan, Lewis & Bockius LLP (law firm),
specializing in the insurance and reinsurance industry. Prior to joining Morgan,
Lewis & Bockius LLP on October 1, 1994, he was a partner of Lord Day & Lord,
Barrett Smith. Mr. Browne has been Secretary of PXRE since November 1989.
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 (47) has been an Executive Vice President of PXRE
since March 1993 and President of PXRE Reinsurance since 1998. 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 (51) 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.
Michael J. Toman (48) has been an Executive Vice President of PXRE
since June 1998. Prior thereto, he was a Senior Vice President at General
Reinsurance Corporation, where he was responsible for treaty underwriting
operations. Before General Reinsurance Corporation purchased National
Reinsurance Corporation, Mr. Toman had been in charge of National
Reinsurance Corporation's treaty underwriting division.
Sanford M. Kimmel (46) 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.
Peter G. Butler (50) has been a Senior Vice President of PXRE since
September 1996 and is the Managing Underwriter for Lloyd's Syndicate 1224.
Mr. Butler has nearly 30 years of insurance/reinsurance underwriting
experience in Lloyd's and the London company market, most recently as
5
<PAGE> 8
active underwriter for Lloyd's non-marine syndicates 765 and 1179. Mr.
Butler also served as a director of R.J. Kiln & Co. from June 1988 until
September 1996.
A. Joseph Hoane (55) 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 (49) has been a Senior Vice President of PXRE since
April 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 (46) 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.
John C. Brennan (46) has been a Vice President of PXRE and
Transnational Insurance Company since September 1997. Prior thereto, he was
an Associate Vice President of Markel Corporation since May 1997 and a Vice
President of Guy Carpenter/EQECAT since September 1994.
Mark E. Hilsher (44) has been a Vice President of PXRE and
Transnational Insurance Company since September 1997. Prior thereto, he was
a Vice President of Markel Corporation since April 1993 and a Vice
President, Property Manager of Industrial Underwriters, Inc. since March
1989.
Frank A. LoPiccolo (55) has been a Vice President of PXRE since 1982.
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 and nominees, the five
executive officers named below under the heading "EXECUTIVE COMPENSATION" and
all directors, nominees and executive officers as a group, as of the record
date:
<TABLE>
<CAPTION>
SHARES (AND PERCENT) DIRECTOR
DIRECTORS, NOMINEES AND FIVE CURRENT NAMED EXECUTIVE OFFICERS BENEFICIALLY OWNED(1) TERM ENDS
- ------------------------------------------------------------- --------------------- ---------
<S> <C> <C>
Gerald L. Radke......................................... 142,290(2) (4)
Robert W. Fiondella..................................... 12,037(3)* 2000
Franklin D. Haftl....................................... 9,417(3)* (4)
Bernard Kelly........................................... 14,034(3)* 2001
Wendy Luscombe.......................................... 10,734(3)* (4)
Edward P. Lyons......................................... 15,954(3)* 2001
Philip R. McLoughlin.................................... 6,382(3)* 2000
David W. Searfoss....................................... 10,684(3)* 2001
Donald H. Trautlein..................................... 4,167(3)* 2000
Wilson Wilde............................................ 7,260(3)* (4)
</TABLE>
6
<PAGE> 9
<TABLE>
<CAPTION>
SHARES (AND PERCENT) DIRECTOR
DIRECTORS, NOMINEES AND FIVE CURRENT NAMED EXECUTIVE OFFICERS BENEFICIALLY OWNED(1) TERM ENDS
- ------------------------------------------------------------- --------------------- ---------
<S> <C> <C>
F. Sedgwick Browne.......................................... 11,143 (5)* --
Michael J. Bleisnick........................................ 70,275 (6)* --
Gordon Forsyth, III......................................... 84,655 (7)* --
Sanford M. Kimmel........................................... 26,515 (8)* --
Eugene J. Sverchek.......................................... 34,282 (9)* --
All directors, nominees and executive officers as a group
(21 persons).............................................. (581,082)(10)
</TABLE>
- ---------------
* Beneficially owns less than 1% of PXRE's issued and outstanding Common
Stock.
(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) Mr. Radke beneficially owns 1.21% of PXRE's issued and outstanding Common
Stock. The number of shares of Common Stock set forth opposite Mr. Radke's
name includes currently exercisable options to purchase 72,695 shares of
Common Stock. In accordance with Rule 13d-3(d)(1) under the Exchange Act,
the 72,695 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 with respect to each of the following individuals, currently
exercisable options to purchase the indicated number of shares of Common
Stock: Mr. Fiondella, 11,534 shares; Mr. Haftl, 8,917 shares; Mr. Kelly,
11,534 shares; Ms. Luscombe, 10,584 shares; Mr. Lyons, 2,667 shares; Mr.
McLoughlin, 5,215 shares; Mr. Searfoss, 10,584 shares; Mr. Trautlein, 2,667
shares; and Mr. Wilde, 5,204 shares. In accordance with Rule 13d-3(d)(1)
under the Exchange Act, such 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 I directors terminates at the forthcoming 1999
Annual Meeting.
(5) Includes 3,028 shares of Common Stock owned by Mr. Browne's wife, as to
which Mr. Browne disclaims beneficial ownership.
(6) Includes currently exercisable options to purchase 58,553 shares of Common
Stock. In accordance with Rule 13d-3(d)(1) under the Exchange Act, the
58,553 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.
(7) Includes currently exercisable options to purchase 64,908 shares of Common
Stock. In accordance with Rule 13d-3(d)(1) under the Exchange Act, the
64,908 shares of Common Stock for which Mr. Forsyth holds currently
exercisable options have been added to the total number of issued and
outstanding shares
7
<PAGE> 10
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.
(8) Includes currently exercisable options to purchase 17,148 shares of Common
Stock. In accordance with Rule 13d-3(d)(1) under the Exchange Act, the
17,148 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.
(9) Includes currently exercisable options to purchase 27,767 shares of Common
Stock. In accordance with Rule 13d-3(d)(1) under the Exchange Act, the
27,767 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.
(10) Includes currently exercisable options to purchase 365,974 shares of Common
Stock. In accordance with Rule 13d-3(d)(1) under the Exchange Act, the
365,974 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.
THE BOARD OF DIRECTORS AND ITS COMMITTEES
AND DIRECTOR COMPENSATION
THE BOARD OF DIRECTORS AND ITS COMMITTEES
In 1998, the Board of Directors met seven (7) times. 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
the standing 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), Haftl,
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 1998, the Audit Committee met four (4) times.
The members of the Human Resources Committee are Messrs. Fiondella
(Chairman), Trautlein and Wilde. Mr. Lyons was a member of the Human Resources
Committee prior to his death in April 1999. 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 1998, the Human
Resources Committee met three (3) times.
The members of the Investment Committee are Messrs. Haftl, Kelly and Wilde
and Ms. Luscombe. Mr. Lyons was the Chairman of the Investment Committee prior
to his death in April 1999. The members of the Investment Committee are
responsible for monitoring and approving the investment policies and the
8
<PAGE> 11
investments of PXRE and its reinsurance and trading subsidiaries, including PXRE
Reinsurance Company ("PXRE Reinsurance") and Transnational Insurance Company
("Transnational"), and for overseeing investment management carried out by
Phoenix Investment Partners, a public majority-owned subsidiary of Phoenix Home
Life, and selected other managers. In 1998, 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 1998, 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 1998, the Board of Directors
designated a committee consisting of Mr. Haftl and Ms. Luscombe (the "Select
Committee") and authorized the members of the Select Committee to review and
approve the arrangement, renegotiated in 1998, involving a five-year fee based
undertaking by PXRE to produce and underwrite business with Select Reinsurance
Ltd., a Bermuda reinsurer, formerly Investors Reinsurance Ltd., a Barbados
reinsurer ("Select Re").
COMPENSATION OF DIRECTORS
CASH COMPENSATION. In 1998, non-employee director compensation was
restructured such that non-employee directors are entitled to receive an annual
retainer of $25,000 (plus an additional $3,000 for Committee Chairmen) payable
at the beginning of each year plus Board and standing committee meeting fees of
$1,500 per meeting. During the 1998 fiscal year, PXRE paid a total of $125,500
in directors' fees. See "Other Compensation" below.
OTHER COMPENSATION. On April 17, 1997, PXRE adopted the PXRE Corporation
Director Equity and Deferred Compensation Plan (the "Director Compensation
Plan") which, among other things enables 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, allows 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. Deferred
amounts are credited with earnings (losses) mirroring the fund or funds provided
in the PXRE 401(k) Savings and Investments Plan (the "401(k) Plan") that are
designated by the director. 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 is 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.
The number of whole shares of Common Stock subject to an option grant under
the Director Compensation Plan is 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 is 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 are 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
9
<PAGE> 12
terminating service on the Board, any outstanding options 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%.
During the 1998 fiscal year, 18,448 shares of PXRE Common Stock were
awarded pursuant to the Director Compensation Plan to the directors who elected
to receive shares of Common Stock and options for 18,448 shares at an exercise
price of $33.455 were granted pursuant to the Director Compensation Plan to the
directors who elected to receive options to purchase shares of PXRE Common
Stock.
The Director Compensation Plan is administered by the Board of Directors.
The Board has 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 deems desirable. The
Board may amend the Director Compensation Plan as it deems advisable, provided
that no such amendment may 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.
Under the PXRE Corporation Director Stock Option Plan, as amended (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 the amendment of the Director Option Plan in 1997) of
Common Stock at a price per share equal to the market value at the date of
grant. 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., Mr. Lyons and all current
non-employee directors except Mr. Haftl) at exercise prices of $23.25 and
$24.95, respectively. On the date of the annual meetings of PXRE stockholders in
1997 and 1998, options for 3,000 shares were granted pursuant to the Director
Option Plan to each non-employee director then in office at exercise prices of
$28.14 and $31.06, respectively. As of the record date, options for a total of
70,000 shares had been granted pursuant to the Director Option Plan, of which a
total of 22,336 are currently exercisable.
The Director Option Plan is administered by the Board of Directors, which
is authorized to interpret the Director Option Plan but has 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 deems 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.
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
10
<PAGE> 13
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 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.
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 PricewaterhouseCoopers LLP
as PXRE's independent public accountants for the fiscal year ending December 31,
1999. This selection is being presented to the stockholders for their
ratification at the Annual Meeting. PricewaterhouseCoopers LLP has audited
PXRE's financial statements since July 1, 1986. A representative of
PricewaterhouseCoopers LLP is expected to attend
11
<PAGE> 14
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 PRICEWATERHOUSECOOPERS 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.
EXECUTIVE COMPENSATION
The following tables and narrative text describe the compensation paid in
1998 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>
ANNUAL COMPENSATION LONG-TERM 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...... 1998 $475,000 -- -- $243,115 15,142 $232,021
Chairman, President 1997 468,270 $214,130 $3,798 167,301 17,705 236,328
and Chief Executive 1996 457,115 252,032 4,276 111,263 19,394 211,982
Officer
Michael J.
Bleisnick.......... 1998 303,662 -- -- 140,118 7,977 210,116
Executive Vice 1997 292,544 102,276 -- 83,854 9,377 209,931
President--Brokerage 1996 284,969 121,015 -- 53,428 8,071 182,691
Operations and
President of
PXRE Reinsurance
Gordon Forsyth,
III................ 1998 288,750 -- -- 140,118 7,977 210,116
Executive Vice 1997 285,048 102,276 -- 83,854 9,377 209,931
President-- 1996 270,423 121,015 -- 53,428 8,071 182,691
International
Operations
Sanford M. Kimmel.... 1998 207,278 -- -- 91,304 4,912 196,729
Senior Vice 1997 202,738 64,772 -- 55,341 5,641 196,540
President,
Treasurer 1996 198,000 74,810 -- 33,029 5,152 178,633
and Chief Financial
Officer
Eugene J. Sverchek... 1998 186,923 -- -- 23,254 4,487 186,054
Senior Vice 1997 183,689 59,119 -- 48,505 5,429 185,810
President--Domestic 1996 186,851 72,009 -- 31,793 5,152 178,364
Treaty
</TABLE>
- ---------------
(1) For 1998, consists of cash bonuses awarded in 1999 in respect of fiscal year
1998 pursuant to PXRE's Restated Employee Annual Incentive Bonus Plan (the
"Bonus Plan"). For 1997, consists of cash bonuses awarded in 1998 in respect
of fiscal year 1997 pursuant to the Bonus Plan. For 1996, consists of cash
bonuses awarded in 1997 in respect of fiscal year 1996 pursuant to the Bonus
Plan.
12
<PAGE> 15
(2) Consists of amounts 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".) The loan was repaid in full on March 1, 1998.
(3) Consists of awards to Messrs. Radke, Bleisnick, Forsyth, Kimmel and
Sverchek, respectively, in respect of fiscal year 1997, of 2,844, 1,358,
1,358, 859 and 785 restricted shares of PXRE Common Stock and 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 pursuant to the Bonus Plan. No restricted shares were
awarded under the Bonus Plan in respect of fiscal year 1998. Pursuant to the
terms of the Bonus Plan, such restricted shares will vest and become 100%
nonforfeitable, with respect to the 1996 grants, in one installment on
January 1, 2000 and with respect to the 1997 grants, in one installment on
January 1, 2001. During the holding periods, such shares are entitled to
receive dividends, if any, declared with respect to PXRE's Common Stock.
Also includes awards to Messrs. Radke, Bleisnick, Forsyth, Kimmel and
Sverchek, respectively, in respect of fiscal year 1997, of 2,895, 1,534,
1,534, 1,058 and 888 restricted shares of PXRE Common Stock and, in respect
of fiscal year 1998, of 7,381, 4,254, 4,254, 2,772 and 706 restricted shares
of PXRE Common Stock, in each case pursuant to PXRE's 1992 Officer Incentive
Plan. Pursuant to the 1992 Officer Incentive Plan, such restricted shares
will vest in four equal annual installments, with the final installment on
February 12, 2002. 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,
1998 by Mr. Radke was 21,208 restricted shares with a market value of
$531,472; by Mr. Bleisnick was 10,924 restricted shares with market value of
$273,755; by Mr. Forsyth was 10,924 restricted shares with market value of
$273,755; by Mr. Kimmel was 6,981 restricted shares with market value of
$174,943; and by Mr. Sverchek was 4,769 restricted shares with market value
of $119,511.
(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: $23,750, $23,413 and $21,923 contributed by PXRE
in 1998, 1997 and 1996, respectively, to the 401(k) Plan (which is a
contributory defined contribution plan), $1,712 paid by PXRE during each of
1998, 1997 and 1996 with respect to a supplemental term life insurance
policy for Mr. Radke's benefit, $1,602 paid by PXRE during each of 1998,
1997 and 1996 with respect to a supplemental disability insurance policy for
Mr. Radke's benefit, $0, $4,642 and $5,168 representing the amount of
interest accrued in 1998, 1997 and 1996, 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 was outstanding during 1997 and 1996 and was
repaid on March 1, 1998 (see "CERTAIN BUSINESS RELATIONSHIPS" below) and,
for 1996, $181,577 paid in February 1997 (but earned as of December 31,
1996) and, for 1997, $204,959 paid in February 1998 (but earned as of
December 31, 1997) and, for 1998, $204,957 paid in February 1999 (but earned
as of December 31, 1998) pursuant to the Transnational Re Officer Incentive
Plan assumed by PXRE in the Merger (the "TREX Plan"); for Mr. Bleisnick,
consists of: $14,437, $14,252 and $13,212 contributed by PXRE in 1998, 1997
and 1996, respectively, to the 401(k) Plan, $441 paid by PXRE during 1995,
with respect to a supplemental term life insurance policy for Mr.
Bleisnick's benefit, $7,200 paid by PXRE to Mr. Bleisnick during 1998 and
1997, with respect to a car allowance, and, for 1996, $169,479 paid in
February 1997 (but earned as of December 31, 1996) and, for 1997, $188,479
paid in February 1998 (but earned as of December 31, 1997) and, for 1998,
$188,479 paid in February 1999 (but earned as of December 31, 1998) pursuant
to the TREX Plan; for Mr. Forsyth, consists of: $14,437, $14,252 and $13,212
contributed by PXRE in 1998, 1997 and 1996, respectively, to the 401(k)
Plan, $471 paid by PXRE during 1995 with respect to a supplemental term life
insurance policy for Mr. Forsyth's benefit, $7,200 paid by PXRE to Mr.
Forsyth during 1998 and 1997, with respect to a car allowance, and, for
1996, $169,479 paid in February 1997
13
<PAGE> 16
(but earned as of December 31, 1996) and, for 1997, $188,479 paid in
February 1998 (but earned as of December 31, 1997) and, for 1998, $188,479
paid in February 1999 (but earned as of December 31, 1998) pursuant to the
TREX Plan; for Mr. Kimmel, consists of $10,050, $9,861 and $9,154
contributed by PXRE in 1998, 1997 and 1996, respectively, to the 401(k)
Plan, $7,200 paid by PXRE to Mr. Kimmel during 1998 and 1997, with respect
to a car allowance and, for 1996, $169,479 paid in February 1997 (but earned
as of December 31, 1996) and, for 1997, $179,479 paid in February 1998 (but
earned as of December 31, 1997) and, for 1998, $179,479 paid in February
1999 (but earned as of December 31, 1998) pursuant to the TREX Plan; and for
Mr. Sverchek, consists of: $9,375, $9,131 and $8,885 contributed by PXRE in
1998, 1997 and 1996, respectively, to the 401(k) Plan, $7,200 paid by PXRE
to Mr. Sverchek during 1998 and 1997, with respect to a car allowance and,
for 1996, $169,479 paid in February 1997 (but earned as of December 31,
1996) and, for 1997, $169,479 paid in February 1998 (but earned as of
December 31, 1997) and for 1998, $169,479 paid in February 1999 (but earned
as of December 31, 1998) pursuant to the TREX Plan.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
---------------------------------------------------------------------
NUMBER OF % OF TOTAL
SECURITIES OPTIONS
UNDERLYING GRANTED TO EXERCISE GRANT DATE
OPTIONS EMPLOYEES IN OR BASE EXPIRATION PRESENT
NAME GRANTED(#)(1) FISCAL YEAR PRICE($/SH) DATE VALUE($)(2)
- ---- ------------- ------------ ----------- ---------- -----------
<S> <C> <C> <C> <C> <C>
Gerald L. Radke...................... 15,142 19.4% $32.938 2/12/08 $148,694
Michael J. Bleisnick................. 7,977 10.3 32.938 2/12/08 78,334
Gordon Forsyth, III.................. 7,977 10.3 32.938 2/12/08 78,334
Sanford M. Kimmel.................... 4,912 6.3 32.938 2/12/08 48,236
Eugene J. Sverchek................... 4,487 5.8 32.938 2/12/08 44,062
</TABLE>
- ---------------
(1) Consists of non-qualified options granted pursuant to PXRE's 1992 Officer
Incentive Plan. 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 12, 1998). Under the pre-amended Plan, the option exercise price
could have been 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 could not
have been less than 50% of such fair market value. See "APPROVAL OF
AMENDMENTS TO THE 1992 OFFICER INCENTIVE PLAN" regarding the proposed
amendment which eliminates the right to grant options at an exercise price
less than the fair market value of the Common Stock of PXRE on the date the
option is granted. For this purpose, the fair market value of a share of
PXRE's Common Stock is the average of the high and low prices per share
quoted on the New York Stock Exchange on the date of grant. 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
14
<PAGE> 17
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 $1.00 per share (the quarterly dividend on PXRE's Common
Stock having been increased in November 1998 from $0.25 per share to $0.26
per share). Based on this model, the present value of the options on the
February 12, 1998 grant date was determined to be $9.82 per option. PXRE
does not advocate or necessarily agree that the Black-Scholes model can
properly determine the value of an option.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND OPTION VALUES AT DECEMBER 31, 1998
<TABLE>
<CAPTION>
NUMBER OF UNEXERCISED VALUE OF UNEXERCISED
STOCK OPTIONS AT IN-THE-MONEY STOCK
SHARES 12/31/98 OPTIONS AT 12/31/98
ACQUIRED ON VALUE (#)(2) ($)(3)
NAME EXERCISE(#) REALIZED($)(1) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
---- ----------- -------------- ------------------------- -------------------------
<S> <C> <C> <C> <C>
Gerald L. Radke............. 0 $0 59,634/42,641 $27,223/$3,842
Michael J. Bleisnick........ 0 0 50,359/20,883 $421,593/$1,590
Gordon Forsyth, III......... 0 0 56,714/20,883 $507,998/$1,590
Sanford M. Kimmel........... 0 0 12,090/12,850 $7,009/$1,007
Eugene J. Sverchek.......... 0 0 22,832/12,303 $110,826/$1,014
</TABLE>
- ---------------
(1) Represents the difference between the closing prices of PXRE's Common Stock
as reported on the New York Stock Exchange on the dates of exercise and the
exercise prices of the options.
(2) For Mr. Radke, consists of options for 102,275 shares of PXRE Common Stock
granted in 1993-1998 pursuant to PXRE's 1992 Officer Incentive Plan at
exercise prices ranging from $23.875 to $32.938 per share, 59,634 of which
options were exercisable at December 31, 1998; for Mr. Bleisnick, consists
of 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, 1998, and options for 44,478 shares of PXRE Common Stock granted in
1993-1998 pursuant to PXRE's 1992 Officer Incentive Plan at exercise prices
ranging from $23.875 to $32.938 per share, 23,595 of which options were
exercisable at December 31, 1998; for Mr. Forsyth, consists of options for
33,253 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, 1998, and
options for 44,344 shares of PXRE Common Stock granted
15
<PAGE> 18
in 1993-1998 pursuant to PXRE's 1992 Officer Incentive Plan at exercise
prices ranging from $23.875 to $32.938 per share, 23,461 of which options
were exercisable at December 31, 1998; for Mr. Kimmel, consists of options
for 24,940 shares of PXRE Common Stock granted in 1994-1998 pursuant to
PXRE's 1992 Officer Incentive Plan at exercise prices of $23.875 to $32.938
per share, respectively, 12,090 of which options were exercisable at
December 31, 1998; 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, 1998, and options for 27,807 shares of PXRE
Common Stock granted in 1993-1998 pursuant to PXRE's 1992 Officer Incentive
Plan at exercise prices ranging from $23.875 to $32.938 per share, 15,504 of
which options were exercisable at December 31, 1998.
(3) Represents the difference between the closing price of PXRE's Common Stock
as reported on the New York Stock Exchange on December 31, 1998 ($25.06) and
the exercise prices of the options.
PENSION PLAN
The following table indicates estimated total annual benefits payable under
the PXRE Retirement Plan and the Supplemental Executive Retirement Plan as a
life annuity upon retirement at age 62 in 1998, to persons of specified Average
Annual Earnings and years of service classifications.
<TABLE>
<CAPTION>
YEARS OF SERVICE
----------------------------------------------------
AVERAGE ANNUAL EARNINGS 5 10 15 20 25
- ----------------------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
$125,000.................................... $ 16,667 $ 33,333 $ 50,000 $ 50,243 $ 62,804
150,000.................................... 20,000 40,000 60,000 60,993 76,242
175,000.................................... 23,333 46,667 70,000 71,743 89,679
200,000.................................... 26,667 53,333 80,000 82,493 103,117
225,000.................................... 30,000 60,000 90,000 93,243 116,554
250,000.................................... 33,333 66,667 100,000 103,993 129,992
275,000.................................... 36,667 73,333 110,000 114,743 143,429
300,000.................................... 40,000 80,000 120,000 125,493 156,867
400,000.................................... 53,333 106,667 160,000 168,493 210,617
500,000.................................... 66,667 133,333 200,000 211,493 264,367
600,000.................................... 80,000 160,000 240,000 254,493 318,117
700,000.................................... 93,333 186,667 280,000 297,493 371,867
800,000.................................... 106,667 213,333 320,000 340,493 425,617
900,000.................................... 120,000 240,000 360,000 383,493 479,367
</TABLE>
These benefits include benefits that may be payable from the Retirement
Plan, the Supplemental Executive Retirement Plan and the Savings Plan (which are
attributable to the Target Benefit Plan).
For each of the named current executive officers, Average Annual Earnings
for 1998 is as follows: Mr. Radke: $618,990; Mr. Bleisnick: $368,297; Mr.
Forsyth: $354,526; Mr. Kimmel: $278,517; and Mr. Sverchek: $235,530. Average
Annual Earnings consists of a three-year average 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 for each of the named current
officers is: Mr. Radke: 25; Mr. Bleisnick: 14; Mr. Forsyth: 12; Mr. Kimmel: 4;
and Mr. Sverchek: 7.
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<PAGE> 19
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>
1993 100 100 100
1994 105 101 105
1995 101 139 147
1996 97 171 177
1997 134 229 261
1998 105 294 282
</TABLE>
The total return assumes that dividends were reinvested quarterly and is
based on a $100 investment on December 31, 1993. For each subsequent year, the
total return for PXRE and for each index is stated as of December 31 of such
year.
17
<PAGE> 20
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
1998 the Committee determined that it was appropriate to increase executive base
salaries by an average of 2.50%.
ANNUAL INCENTIVES. The Restated Employee Annual Incentive Bonus Plan,
adopted by the Company in 1992 and amended in 1994 and 1997, 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 the Company receive the entire bonus award in cash. The
Committee may adjust the cash portion of any
18
<PAGE> 21
bonus award (plus or minus 20% for officers, 40% for non-officers) to reflect
individual performance. The maximum cash and restricted stock bonus awards that
a participant who is a covered employee at the end of the year may receive is $1
million.
Commencing with awards for 1996, 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) are made in cash
units credited to an unfunded account. The units vest at the same time that
restricted stock awards vest, and are paid to the officer in cash. No earnings
or losses are credited to the account.
In February 1999, the Committee determined that no bonus amounts were
payable to the Company's executive officers under the Restated Employee Annual
Incentive Bonus Plan based on the 1998 performance of the Company.
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 78,809
shares of Common Stock at an exercise price of $32.938 per share (market value
on grant date) in February 1998 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. Grants with respect to 24,766 shares of
restricted stock were made during or with respect to 1998 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 regulations regarding the
deductibility of executive compensation expense, the Restated Employee Annual
Incentive Bonus Plan and the 1992 Officer Incentive Plan were amended in 1997.
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
19
<PAGE> 22
Re Officer Incentive Plan (which was assumed by PXRE in the Merger), which
resulted in cash payments to such executive officers of $1,453,233 in February
1999 (but earned as of December 31, 1998).
CHIEF EXECUTIVE COMPENSATION
The Committee determined the Chief Executive Officer's compensation for
1998 based upon a number of factors and criteria. The Chief Executive Officer's
base salary was not increased during 1998, 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 1999, additional cash compensation of $204,957 was paid to the
Chief Executive Officer under the terms of the Transnational Re Officer
Incentive Plan.
In February 1998, the Chief Executive Officer received options to purchase
a total of 15,142 shares of Common Stock at an exercise price of $32.938 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
Robert W. Fiondella, Chairman
Edward P. Lyons
Donald H. Trautlein
Wilson Wilde
February 11, 1999
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Of the three current members of the Human Resources Committee, one member,
namely Mr. Fiondella, is an executive officer and a director of Phoenix Home
Life. Until his death in April 1999, Mr. Lyons served as director of an
affiliate of Phoenix Home Life. As of the record date, Phoenix Home Life owned
5.40% of the issued and outstanding Common Stock of PXRE. Each of PXRE, PXRE
Reinsurance and Transnational are parties to investment advisory agreements with
Phoenix Investment Partners, a public majority-owned subsidiary of Phoenix Home
Life. Pursuant to these agreements, which are terminable by either party on 60
days' notice, Phoenix Investment Partners 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 incurred fees of
approximately $8,000, PXRE Reinsurance incurred fees of approximately $383,000,
and Transnational incurred fees of approximately $159,000, to Phoenix Investment
Partners for services performed in fiscal year 1998. Management of PXRE expects
such fees for 1999 will, in the aggregate, be approximately $467,000, 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.
20
<PAGE> 23
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 39 others. Were a change of control of PXRE to have occurred on
December 31, 1998 and 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 $950,000, $330,000, $289,000, $201,000 and
$188,000, respectively.
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
21
<PAGE> 24
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 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,
22
<PAGE> 25
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. Bleisnick, Forsyth and Sverchek held
outstanding non-qualified options to purchase 26,764, 33,253 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. Radke is omitted from the
foregoing discussion because as of the record date he had fully exercised the
options granted to him pursuant to the 1988 Option Plan. Mr. Kimmel is omitted
from the foregoing discussion because he is not a participant in the 1988 Option
Plan.)
RESTATED EMPLOYEE ANNUAL INCENTIVE BONUS PLAN. Adopted in 1992, the
Restated Employee Annual Incentive Bonus Plan, as amended (the "Restated Bonus
Plan"), provides for annual employee incentive awards comprised of cash and, in
the case of senior and junior executives, restricted shares of Common Stock.
More specifically, the Restated Bonus Plan (i) provides for the grant of shares
of Common Stock subject to restrictions, as determined by the administering
committee ("Restricted Shares"), in lieu of 30% of the annual cash bonus payable
to eligible officers under the Restated Bonus Plan; (ii) links the funding of
the annual bonus pool for all participating employees to PXRE's "return on
equity" (defined in the Restated Bonus Plan as PXRE's consolidated net income
for the fiscal year divided by PXRE's average stockholders' equity for such
fiscal year); and (iii) provides the Restated Bonus Plan Committee (which
administers the Restated Bonus Plan) with the discretion to adjust the final
annual bonus pool amount for allocation to participants by up to plus or minus
25% of such pool. Subject to certain adjustments as provided in the Restated
Bonus Plan, a maximum of 150,000 shares of PXRE Common Stock has been reserved
for awards of Restricted Shares under the Restated Bonus Plan. Authorized and
unissued shares or treasury shares or both may be used for grants of Restricted
Shares under the Restated Bonus Plan. See "APPROVAL OF AMENDMENTS TO THE
RESTATED EMPLOYEE ANNUAL INCENTIVE BONUS PLAN" regarding proposed amendments to
the Restated Bonus Plan.
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 Restated Bonus Plan Committee, the period must be at least
three years, measured as provided in the Restated Bonus Plan (the "Restricted
Period"). The recipient of a Restricted Share award is entitled to all the
rights of a shareholder with regard to the awarded Restricted
23
<PAGE> 26
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 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 Restated Bonus Plan Committee. The Restated
Bonus Plan Committee requires a participant 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 Restated 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 Restated 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 shareholders of PXRE approve a merger or consolidation of
PXRE with another corporation (other than certain situations where the
shareholders 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 shareholders 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
constitute 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 previously so
approved, cease to constitute a majority of the Board. The Restated Bonus Plan
was amended in June 1996 to provide that the Merger with TREX would not be a
Change of Control of PXRE.
Messrs. Radke, Bleisnick, Forsyth, Sverchek and Kimmel are each eligible to
participate in the Restated Bonus Plan. No Restricted Share and cash bonus
awards under the Restated Bonus Plan were made to Messrs. Radke, Bleisnick,
Forsyth, Sverchek and Kimmel in respect of fiscal year 1998. Restricted Share
and cash bonus awards under the Restated Bonus Plan were made in prior years to
Messrs. Radke, Bleisnick, Forsyth, Sverchek and Kimmel, as noted in the summary
compensation table above.
1992 OFFICER INCENTIVE PLAN. Adopted in 1992, the 1992 Officer Incentive
Plan, as amended (the "1992 Officer Incentive Plan") provides for both grants of
options and awards of Common Stock with certain restrictions ("Restricted
Shares") to officers of PXRE or its affiliates. More specifically, the 1992
Officer Incentive Plan provides for the grant of incentive stock options (the
"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 Restricted Shares, as determined by the 1992 Incentive
Plan Committee, which administers the 1992 Officer Incentive Plan. Subject to
certain adjustments as provided in the 1992 Officer Incentive Plan, a maximum of
750,000 shares of the Common Stock of PXRE (and a maximum of 1,750,000 under the
proposed amendment to the Plan) has been reserved for issuance upon the exercise
of options and grants of Restricted Shares under the Plan. Authorized but
unissued shares or treasury shares or both may be used for grants of options or
Restricted Shares under the Plan. See "APPROVAL OF AMENDMENTS TO THE 1992
OFFICER INCENTIVE PLAN" regarding proposed amendments to the 1992 Officer
Incentive Plan.
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 1992 Officer Incentive Plan and such
other terms and conditions as the 1992 Incentive Plan Committee shall determine.
24
<PAGE> 27
Options must be granted within ten years of the adoption of the 1992
Officer 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 the Common Stock on the date the option is granted, and, under
the pre-amended Plan, the exercise price for Non-Qualified Options may be less
than, equal to, or greater than the fair market of the Common Stock on the date
of grant, but not less than 50% of such fair market value. Under the amended
Plan, the exercise price for all options must be equal to or exceed the fair
market value of the Common Stock on the date the option is granted. See
"APPROVAL OF AMENDMENTS TO THE 1992 OFFICER INCENTIVE PLAN" regarding proposed
amendments to the 1992 Officer Incentive Plan.
Subject to the 1992 Incentive Plan Committee's discretion, 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, permanent
disability or retirement at or after age 65 with PXRE's consent.
No options will be 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.
Restricted Shares are generally subject to forfeiture if the recipient's
employment with PXRE terminates during the restricted period determined by the
1992 Incentive Plan Committee to be applicable to the award (the "Restricted
Period"). The recipient of a Restricted Share award is entitled to all the
rights of a shareholder 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 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
1992 Incentive Plan Committee.
The 1992 Officer 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. The Plan incorporates the same definition of "Change of Control" as that
contained in the Restated Bonus Plan.
The 1992 Incentive Plan Committee may grant to an optionee 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 net worth (as determined under the 1992 Officer
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 1992 Officer 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 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 shareholder approval of a merger or consolidation (as
described in the 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 Plan.
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<PAGE> 28
In addition, under the 1992 Officer Incentive Plan the optionee 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 or her 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 excess of the per share net worth (as
determined under the 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, "fair market value" means the
highest trading price (as determined under the 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 Plan.
The 1992 Officer Incentive 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,
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 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.
Messrs. Radke, Bleisnick, Forsyth, Sverchek and Kimmel are each eligible to
participate in the 1992 Officer Incentive Plan. In February 1998, non-qualified
options were granted under the Plan to Messrs. Radke, Bleisnick, Forsyth,
Sverchek and Kimmel in respect of fiscal year 1998, as noted in the Option Grant
Table above. Non-qualified options were also granted in prior years under the
Plan to Messrs. Radke, Bleisnick, Forsyth, Sverchek and Kimmel.
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 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 second installment was earned as of December 31, 1997 and was paid in
February 1998; the third installment was earned on December 31, 1998 and was
paid in February 1999. Each of the named executive officers is a participant in
the TREX Plan and the amounts earned thereunder in 1998 are set forth in note
(5) to the Summary Compensation Table.
APPROVAL OF AMENDMENTS TO THE RESTATED EMPLOYEE
ANNUAL INCENTIVE BONUS PLAN
The Restated Employee Annual Incentive Bonus Plan (the "Bonus Plan")
provides participants therein with the possibility of receiving annual bonus
incentives 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 amendments of the Bonus Plan in 1994 and 1997. On April 15,
1999, the Board of Directors amended the Bonus Plan, subject to the approval of
the stockholders of PXRE, in the following manner: (1) as an incentive for
employees to achieve superior performance, the Board of Directors increased the
potential bonus incentives payable under the Plan in the event of extraordinary
corporate performance; (2) so as to limit
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<PAGE> 29
PXRE's cash exposure, the Board limited payments under the Bonus Plan in any
year of extraordinary corporate performance to 150% of targeted bonus awards,
and, in connection therewith, provided for a potential "future" bonus pool which
could pay incentive bonuses in future years; and (3) to increase officers' stock
holdings in PXRE, the Board provided for a greater number of restricted shares
to be granted to officers under the Bonus Plan in the event of an award under
the Plan, all as described below (the "Amendment").
The changes made by the Amendment are effective for awards made for 1999
(paid in early 2000) and thereafter. The benefits or amounts that will be
received by or allocated to participants under the Bonus Plan based on the
Amendment are not determinable. In addition, had the changes made by the
Amendment been effective with respect to 1998, no additional restricted shares
would have been awarded. Had the changes made by the Amendment been in effect
for awards made with respect to 1996-1997 that are reported in the Bonus column
in the Summary Compensation Table above, the changes would have increased the
amounts indicated for the individuals who were "covered employees" at the end of
such years in the following way: in 1996, Messrs. Radke, Bleisnick, Forsyth,
Kimmel and Sverchek, respectively, would have been awarded 730, 351, 351, 217
and 209 additional restricted shares; and in 1997, Messrs. Radke, Bleisnick,
Forsyth, Kimmel and Sverchek, respectively, would have been awarded 502, 240,
240, 152 and 139 additional restricted shares.
1. INCREASE POTENTIAL BONUS INCENTIVES IN THE EVENT OF EXTRAORDINARY CORPORATE
PERFORMANCE
The Amendment would increase the potential award levels above the target
under the Bonus Plan to reward employees for extraordinary corporate
performance. During the first calendar quarter following the end of each PXRE
fiscal year, the Committee administering the Bonus Plan awards earned bonuses to
Bonus Plan participants based on PXRE's return on equity during such fiscal year
in the event that certain threshold financial targets of the Company are met
(i.e., if PXRE achieves below an 8% return on equity, no award will be paid
under the Bonus Plan). 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. The Amendment increased the potential level of awards to
Bonus Plan participants in the event that PXRE achieves more than a 13% return
on equity (the award levels for 13% return on equity and below remain
unchanged). Prior to the Amendment, the percentage of the target bonus earned by
each Bonus Plan participant would have been payable 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 would have been 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%
11%...................................................... 60%
13%...................................................... 100%
15%...................................................... 114.3%
17%...................................................... 128.6%
20%...................................................... 150%
</TABLE>
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<PAGE> 30
After the effectiveness of the Amendment (i.e., for the 1999 year and
thereafter), the percentage of the target bonus that may be earned by each Bonus
Plan participant will be payable in accordance with the following table (subject
to the same interpolation as described above):
<TABLE>
<CAPTION>
COMPANY PERFORMANCE
ROE PERCENTAGE
------- -----------
<S> <C>
8%...................................................... 0%
9%...................................................... 20%
11%...................................................... 60%
13%...................................................... 100%
15%...................................................... 140%
17%...................................................... 180%
20%...................................................... 240%
</TABLE>
2. LIMIT PAYMENTS UNDER PLAN IN YEAR OF EXTRAORDINARY CORPORATE PERFORMANCE TO
150% OF TARGETED BONUS AWARDS, AND PROVIDE FOR A "FUTURE" BONUS POOL
In order to limit PXRE's cash exposure in years of extraordinary corporate
performance, the Amendment limits the maximum bonus payable under the Bonus Plan
in any fiscal year to no more than 150% of the target annual incentive (i.e.,
the bonus payment is limited to the maximum bonus threshold under the
pre-Amended Bonus Plan, previously achieved at 20% ROE). In the event that the
total bonus pool for any fiscal year after the effectiveness of the Amendment
would have been greater than 150%, an unfunded account will be established under
the Plan (the "Future Bonus Pool"), into which will be credited any such
overage. If established, the Future Bonus Pool will provide bonus payments to
Bonus Plan participants in any subsequent year or years in which 100% of the
target bonus is not achieved, but only in an amount up to 100% of the targeted
bonuses in any such year. If established, the Future Bonus Pool would be
credited annually with notional earnings at the rate of prime plus 2% at the
time of such crediting. If established, a pro-rata portion of the Future Bonus
Pool will be payable to participants upon their termination of employment due to
retirement, disability or death, and upon the termination of the Bonus Plan in
the event of any credit balance in the Future Bonus Pool at such time.
3. INCREASE NUMBER OF RESTRICTED SHARES TO BE GRANTED TO OFFICERS
With respect to the senior officer and junior officer bonuses under the
Bonus Plan, 70% of each participant's bonus for any year is paid in cash, while
the other 30% of such bonus is delivered in the form of shares of Common Stock
subject to certain restrictions established by the administering committee
("Restricted Shares") (note that with respect to the other employees' bonuses,
the entire amount thereof is paid in cash). The Restricted Share pools under the
Plan are allocated to the officers according to the ratio that 30% of each
officer's target bonus bears to 30% of the sum of the target bonuses of all
officers in the pool. Prior to the Amendment, the dollar amount of Restricted
Shares allocated to each officer was divided by 100% of the fair market value of
PXRE shares on the date the Committee approved the awards to determine the
number of Restricted Shares allocated to each officer. The Amendment provides
that the Restricted Shares allocated to each officer will be based on 85% of the
fair market value of PXRE shares (rather than 100%) on the date the Committee
approves the awards, thereby increasing the number of Restricted Shares to be
granted under the Bonus Plan.
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<PAGE> 31
The following is a description of the principal features of the Bonus Plan
as amended for which stockholder approval is being sought. 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 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, 67,837 shares
remain for future grants under the Bonus Plan. On the record date, the closing
price of PXRE's Common Stock as reported on the New York Stock Exchange was
$19.31.
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
("Rule 16b-3") under the Exchange Act 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.
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
aggregate product of which for all Bonus Plan participants will equal the target
bonus pool for such year). 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 in the event that
certain threshold financial targets of the Company are met based on the amended
table as set forth in Section 1 above (describing the Amendment). 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
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<PAGE> 32
(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 may benefit from any discretionary increase in the pool for the year. As
described above, in the event that the total bonus pool for any year would be
greater than 150% of the target bonus pool, the total bonus pool for such year
will be deemed to be reduced to 150% of the target bonus pool, and any excess
over the 150% will be notionally credited to a Future Bonus Pool for possible
inclusion in the annual bonus pool in subsequent fiscal years. If established,
the Future Bonus Pool would provide bonus payments to participants in any
subsequent year or years in which 100% of the target bonus is not achieved, but
only in an amount up to 100% of the targeted bonuses in any such 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 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 85% of the fair
market value of PXRE shares on the date the Committee approves the awards to
determine the number of 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" 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 stock bonus awards that a participant who
is a "covered employee" at the end of the year may receive is $1 million.
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<PAGE> 33
In 1999, no cash or Restricted Share bonuses were paid by PXRE, with
respect to fiscal year 1998, to any employees pursuant to the Bonus Plan because
PXRE's return on equity was below 8% for the year.
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 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, individuals who at the
beginning of such period constitute 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.
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) are made in cash units credited to an
unfunded account. The units vest at the same time that Restricted Share awards
vest, and are then 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
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<PAGE> 34
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 award based on the number of months for which
the participant was employed during such fiscal year (including any amount
payable with respect to the Future Bonus Pool, if established and applicable at
such time). 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 interest is credited to the account at an annual rate
equal to the annualized average rate of return earned on accounts invested
during such period in one or more of the funds of PXRE's 401(k) Plan.
FEDERAL INCOME TAX CONSEQUENCES; CASH AWARDS. Cash awards under the Bonus
Plan, including any interest earned 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. PXRE is generally entitled to a
deduction in the corresponding amount.
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.
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, except that without the consent and approval
of stockholders, the Board may not make any amendment to the Bonus Plan that
requires the consent of a majority of stockholders if required under Section
162(m) of the Code.
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"
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<PAGE> 35
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.
APPROVAL OF AMENDMENTS TO 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 and 1997.
On April 15, 1999, the Board of Directors amended the Incentive Plan,
subject to approval of the stockholders, to (1) increase the number of shares of
Common Stock authorized for issuance under the Incentive Plan to 1,750,000
shares of Common Stock, and (2) provide that all options granted under the Plan
(including non-qualified options) be granted at an exercise price equal to no
less than the fair market value of the Common Stock on the date of grant, as
described below (the "Amendment").
In order to continue to grant options and shares of Common Stock under the
Incentive Plan to provide continued incentive to executives of PXRE, the Board
of Directors amended the Incentive Plan, subject to stockholder approval, to
increase the number of shares authorized for issuance thereunder from 750,000
shares to 1,750,000 shares. After the February, 1999 awards under the Incentive
Plan, only 20,178 shares remained available for future grants under the Plan. In
addition, in order to eliminate the potential for future grants of PXRE stock
options with below-market exercise prices, the Incentive Plan has been amended
to provide that the price of shares purchasable upon the exercise of options
under the Incentive Plan (including nonqualified options) may not be less than
the fair market value thereof as of the date of option grant (prior to the
Amendment, the exercise price for non-qualified options could have been less
than the fair market value of the Common Stock on the date of grant, but not
less than 50% of such fair market value thereof).
The changes made by the Amendment are effective for awards made for 1999
(granted in early 2000) and thereafter. The benefits or amounts that will be
received by or allocated to participants under the Incentive Plan based on the
Amendment are not determinable. In addition, the changes, had they been in
effect for awards made in 1996-1998 years, would not have changed the amounts of
the option and restricted stock awards indicated in (or otherwise changed) the
Summary Compensation Table and the Option Grants Table above.
The following is a description of principal features of the Incentive Plan
for which stockholder approval is being sought hereby. Such description is
qualified in its entirety by reference to the terms of the Incentive Plan, which
incorporates the Amendment, 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 ("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 15, 1999
Amendment, a maximum of 1,750,000 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
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record date, without giving effect to the April 15, 1999 Amendment, 20,178
shares remain for future grants (or 1,020,178 shares, giving effect to the April
15, 1999 Amendment). On the record date, the closing price of PXRE Common Stock
on the New York Stock Exchange was $19.31.
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 Committee.
As of the record date, of the approximately 78 salaried non-temporary
employees of PXRE, 44 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 both Incentive Stock Options and Non-Qualified Options must
be equal to or exceed the fair market value of the Common Stock on the date the
option is granted.
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.
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.
For fiscal year 1998, 15,142, 7,977, 7,977,4,912 and 4,487 options were
granted pursuant to the Incentive Plan to Messrs. Radke, Bleisnick, Forsyth,
Kimmel and Sverchek, respectively.
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TERMS OF RESTRICTED SHARES. The Incentive Plan Committee may make awards
of 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.
MAXIMUM AWARD. Under the incentive Plan, the maximum number of shares that
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" 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
constitute 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.
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 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 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
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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 canceled.
Under the Incentive Plan, an election is not transferable other than by
will or the laws of intestacy. A Grantee who is subject to Section 16(b) of the
Exchange Act may only exercise an election in compliance with Rule 16b-3(e)
under the Exchange Act.
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 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. 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
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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 a 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, 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 withheld in payment of taxes
will not be available for use in subsequent grants of options or Restricted
Share awards.
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 AMENDMENT TO THE 1992 OFFICER INCENTIVE 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 1992 OFFICER INCENTIVE PLAN AND, UNLESS A STOCKHOLDER
SIGNIFIES OTHERWISE, THE PERSONS NAMED IN THE PROXY WILL SO VOTE.
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CERTAIN BUSINESS RELATIONSHIPS
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 Investment Partners and Mr.
Searfoss and Mr. McLoughlin 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 Investment Partners, a subsidiary of Phoenix Home Life.
SELECT REINSURANCE LTD.
PXRE is a party to agreements with Select Re, which were renegotiated in
1998 and which involve a five-year based undertaking by PXRE to produce and
underwrite business with Select Re. The undertaking, which is subject to
adjustment based on Select Re's shareholders' equity, was approximately $10.6
million in aggregate premium for 1998 (and is expected to be at least $20
million for 1999) for which PXRE received override commissions of $1,107,000 for
1998. See Exhibit 10.37 to PXRE's Form 10-K for the fiscal year ended December
31, 1998. Mr. Radke is on the Board of Directors of Select Re and is a
stockholder of Select Re and his son (Jeffrey Radke) is a Director, the
President and a stockholder of Select Re. The Select Committee of the Board of
Directors of PXRE (composed of Mr. Haftl and Ms. Luscombe) has independently
reviewed the proposed agreements between PXRE and Select Re and approved the
same prior to their execution.
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. The loan was repaid in full on March 1, 1998.
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, 1998, all Section 16(a) filing requirements applicable to PXRE's executive
officers, directors and greater-than-10% stockholders were complied with.
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STOCKHOLDER PROPOSALS
If a stockholder desires to present a proposal for inclusion in next year's
Proxy Statement, such stockholder must submit such proposal in writing to PXRE
for receipt not later than December 31, 1999. Proposals must comply with the
proxy rules relating to stockholder proposals, in particular Rule 14a-8 under
the Exchange Act, to be included in PXRE's year 2000 proxy materials.
Stockholders who wish to submit a proposal for consideration at PXRE's year 2000
annual meeting of stockholders, but who do not wish to submit a proposal for
inclusion in the Company's proxy materials pursuant to Rule 14a-8 under the
Exchange Act, should deliver a copy of their proposal no later than 45 days
prior to the day and month of the notice of meeting pertaining to the 1999
Annual Meeting of Stockholders during the year 2000. If a stockholder fails to
provide such 45 day notice, the respective proposal need not be addressed in the
proxy materials and the proxies may exercise their discretionary voting
authority when the proposal is raised at the annual meeting. In either case,
proposals should be delivered to PXRE Corporation, 399 Thornall Street, Edison,
New Jersey 08837, Attention: Treasurer.
GENERAL
PXRE's Annual Report to Stockholders, which contains financial statements
for the year ended December 31, 1998 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 1998 WILL BE FURNISHED WITHOUT CHARGE
TO ANY STOCKHOLDER SENDING A WRITTEN REQUEST THEREFOR TO TREASURER, PXRE
CORPORATION, 399 THORNALL STREET, EDISON, NEW JERSEY 08837, OR CAN BE ACCESSED
THROUGH PXRE'S WEB SITE AT: WWW.PXRE.COM. 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 27, 1999
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APPENDIX A
PXRE CORPORATION
RESTATED EMPLOYEE ANNUAL INCENTIVE BONUS PLAN
(AS AMENDED APRIL 15, 1999)
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
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 5.8(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 5.5.
2.10 -- "FAIR MARKET VALUE" has the meaning provided in Section 5.5(b).
2.11 -- "FISCAL YEAR" means a financial accounting year of the Company
ending December 31.
2.12 -- "FUTURE BONUS POOL" has the meaning provided in Section 5.3(b).
2.13 -- "NET INCOME" has the meaning provided in Section 5.3(a)(2).
2.14 -- "PARTICIPANT" means an individual employed by the Company or an
Affiliate who is eligible to participate in the Plan under Section
4.
2.15 -- "PERFORMANCE PERCENTAGE" has the meaning provided in Section
5.3(a).
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2.16 -- "PERMANENT DISABILITY" means total and permanent disability within
the meaning of Section 22(e)(3) of the Code.
2.17 -- "PLAN" means the PXRE Corporation Restated Employee Annual
Incentive Bonus Plan as described herein.
2.18 -- "RESTRICTED SHARE BONUS" has the meaning provided in Sections 5.5
and 5.8.
2.19 -- "RETIREMENT" means termination of employment with the Company or
Affiliate with the consent of the Company or Affiliate on or after
attaining age 65.
2.20 -- "RETURN OF EQUITY" has the meaning provided in Section 5.3(a)(1).
2.21 -- "SENIOR OFFICER BONUS POOL", "JUNIOR OFFICER BONUS POOL" and "OTHER
EMPLOYEE BONUS POOL" have the meanings provided in Section 5.5
2.22 -- "SHARE" or "SHARES" means a share or shares of common stock, par
value $0.01 per share, of the Company.
2.23 -- "STOCKHOLDERS' EQUITY" has the meaning provided in Section
5.3(a)(3).
2.24 -- "TARGET BONUS" has the meaning provided in Section 5.1.
2.25 -- "TARGET BONUS PERCENTAGE" has the meaning provided in Section 5.1
and Exhibit A.
2.26 -- "TARGET BONUS POOL" has the meaning provided in Section 5.2.
2.27 -- "TENTATIVE BONUS POOL" has the meaning provided in Section 5.3(a).
2.28 -- "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
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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.
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 5.6
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.
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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>
COMPANY PERFORMANCE
ROE PERCENTAGE
- ------- -----------
<S> <C>
8%...................................................... 0%
9%...................................................... 20.0%
11%...................................................... 60.0%
13%...................................................... 100.0%
15%...................................................... 140.0%
17%...................................................... 180.0%
20%...................................................... 240.0%
</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).
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. In the event that the Total Bonus Pool for any such Year, as so
determined, shall be greater than 150% of the Target Bonus Pool, the following
shall occur: (i) the Total Bonus Pool for such Year shall be deemed to equal
150% of the
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Target Bonus Pool; (ii) there shall be established an unfunded account under the
Plan (such unfunded account, the "Future Bonus Pool"); and (iii) the amount by
which the Total Bonus Pool would have exceeded 150% of the Target Bonus Pool but
for clause (i) hereof shall be notionally credited to the Future Bonus Pool
account for possible inclusion in the Total Bonus Pool in subsequent Fiscal
Years in accordance with Section 5.4 hereof.
5.4 FUTURE BONUS POOL. In any Fiscal Year subsequent to the establishment
of the Future Bonus Pool pursuant to Section 5.3(b) hereof (if applicable), in
the event that the Total Bonus Pool determined in accordance with Section 5.3(b)
(after adjustment by the Committee, if any) in any such year is less than 100%
of the Target Bonus Pool, the balance in the Future Bonus Pool account shall be
decreased, and the Total Bonus Pool shall be increased, by an amount such that
the Total Bonus Pool for such subsequent Fiscal Year shall equal 100% of the
Target Bonus Pool for such Fiscal Year (or such lesser percentage in the event
of insufficient credits in the Future Bonus Pool account to raise the Total
Bonus Pool to such level). The balance in the Future Bonus Pool account shall
also be decreased by the appropriate amounts set forth in Section 5.6(a) (if
applicable). Notional earnings on the balance in the Future Bonus Pool account
shall be credited to such account annually in an amount equal to the prime rate
of interest as established from time to time by Chase Manhattan Bank, plus two
percent (2%).
5.5 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.
(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
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<PAGE> 47
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 5.7.
(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 5.8, 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 85% of 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 prices quoted for the Shares on the 20 consecutive trading days
immediately prior to such date on the New York Stock Exchange. 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 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 recommen-
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<PAGE> 48
dations 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.
5.6 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 5.5), if any, shall be (i) with respect to the Cash Bonus
portion, increased by an amount equal to the credit balance in the Future Bonus
Pool (if any), determined after reduction in the Future Bonus Pool (if any) in
connection with any adjustment in the Total Bonus Pool required pursuant to
Section 5.4 hereof with respect to such Fiscal Year, multiplied by a fraction,
the numerator of which is the product of the Target Bonus Percentage for the
Participant's position for such Fiscal Year (as set forth in Exhibit A hereto)
multiplied by the Participant's Base Compensation for such Fiscal Year, and the
denominator of which is the total amount of the Target Bonus Pool for such
Fiscal Year, and (ii) with respect to both the Participant's Cash and Restricted
Share Bonuses (if applicable), reduced by the ratio which (x) the number of
months in the Fiscal Year for which the Participant was not employed bears to
(y) 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
5.5), 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.
5.7 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 Cash Bonus and the number of
Restricted Shares, if any, in his or her Restricted Share Bonus, as determined
under Sections 5.3, 5.5 and 5.6.
(b) CASH BONUSES. If the Participant has not filed a written election
under Section 5.9, 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
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<PAGE> 49
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 5.7(d) below,
the Company shall promptly deliver the Shares in the Participant's Restricted
Share Bonus subject to the conditions in Section 5.8.
(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
5.5(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 5.8.
5.8 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 CORPORATION
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
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<PAGE> 50
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 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
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<PAGE> 51
(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.
5.9 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 5.5, 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
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
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<PAGE> 52
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 5.9 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.
(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.
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(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. In the event of the termination of the Plan, the
remaining credit balance in the Future Bonus Pool, if any, shall be distributed
by the Company to Participants in cash on a pro rata basis as follows: with
respect to each such Participant, the credit balance in the Future Bonus Pool at
the time of termination (if any) shall be multiplied by a fraction, the
numerator of which is the Target Bonus Percentage for the Participant's position
for the Fiscal Year of Plan termination (as set forth in Exhibit A hereto)
multiplied by the Participant's Base Compensation for such Fiscal Year, and the
denominator of which is the amount of the Target Bonus Pool for such Fiscal Year
(h) No payment obligation under the Plan shall bear any interest, except as
provided in Sections 5.4 and 5.9(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 April 15, 1999, are effective as of
the 1999 Annual Meeting of Stockholders, including with respect to awards
made on that date.
A-12
<PAGE> 54
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>
A-13
<PAGE> 55
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, 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 , (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.
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:
A-14
<PAGE> 56
APPENDIX B
PXRE CORPORATION
1992 OFFICER INCENTIVE PLAN
(AS AMENDED APRIL 15, 1999)
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
prices per share quoted for Shares on the New York Stock 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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(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 1,750,000. 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
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<PAGE> 58
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 (including Non-Qualified Options) shall be no less
than the Fair Market Value thereof as of the date that the Option is granted. 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.
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
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<PAGE> 59
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.
(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.
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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 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
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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, if applicable.
(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 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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<PAGE> 66
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)
- ---------------
(1) The provisions of the Plan, as modified or added by the Amendments adopted
by the Board of Directors of the Company on April 15, 1999 are effective on
and after the 1999 Annual Meeting of Stockholders.
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<PAGE> 67
PROXY PXRE CORPORATION PROXY
ANNUAL MEETING OF STOCKHOLDERS
JUNE 3, 1999
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 3, 1999 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:
[X] PLEASE MARK YOUR VOTES AS IN THIS EXAMPLE.
(1) ELECTION OF DIRECTORS:
[ ] FOR [ ] 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 OR HER NAME.
Gerald L. Radke Franklin D. Haftl Wendy Luscombe Wilson Wilde F. Sedgwick
Browne
(2) To ratify the appointment of PricewaterhouseCoopers LLP as PXRE
Corporation's independent public accountants for the fiscal year ending
December 31, 1999.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(3) To approve the amendments to the Restated Employee Annual Incentive Bonus
Plan
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(4) To approve the amendments to the 1992 Officer Incentive Plan.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(See other side)
(5) In their discretion, such other matters that 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
PRICEWATERHOUSECOOPERS LLP AS INDEPENDENT PUBLIC ACCOUNTANTS FOR THE FISCAL YEAR
ENDING DECEMBER 31, 1999, FOR APPROVAL OF AMENDMENTS TO THE RESTATED EMPLOYEE
ANNUAL INCENTIVE BONUS PLAN AND THE APPROVAL OF AMENDMENTS TO THE 1992 OFFICER
INCENTIVE 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: , 1999
-------------------
--------------------------------
Signature
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Signature
