<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 GROUP LTD.
- --------------------------------------------------------------------------------
(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 GENERAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 16, 2000
NOTICE IS HEREBY GIVEN that the Annual General Meeting of Shareholders of
PXRE GROUP LTD. ("PXRE" or the "Company") will be held on May 16, 2000
commencing at 9:00 a.m., local time, at the offices of PXRE, 99 Front Street,
Hamilton HM12, Bermuda for the following purposes:
(1) To elect three members of the Board of Directors who, with the six
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
10, 2000 accompanying this Notice of Annual Meeting (the "Proxy Statement");
(2) To approve the recommendation of the Board of Directors that
PricewaterhouseCoopers be appointed as the Company's independent auditors
for the fiscal year ending December 31, 2000 and to refer the determination
of the auditors' remuneration to the Board of Directors;
(3) To approve the adoption of amendments to the PXRE Restated Employee
Annual Incentive Bonus Plan, as amended;
(4) To approve the adoption of amendments to the PXRE 1992 Officer
Incentive Plan, as amended;
(5) To approve the adoption of amendments to the PXRE Employee Stock
Purchase Plan, as amended;
(6) To approve the adoption of amendments to the PXRE Director Stock
Option Plan, as amended; and
(7) To approve the adoption of amendments to the PXRE Director Equity
and Deferred Compensation Plan.
Only holders of the Common Shares of PXRE at the close of business on
March 31, 2000, as shown by the transfer books of PXRE, are entitled to
notice of, and to vote at, this Annual General Meeting and any adjournments.
By Order of the Board of Directors
DAVID J. DOYLE, Secretary
Hamilton, Bermuda
April 10, 2000
- --------------------------------------------------------------------------------
ALL SHAREHOLDERS ARE CORDIALLY INVITED TO ATTEND THIS ANNUAL GENERAL MEETING IN
PERSON. THOSE SHAREHOLDERS WHO ARE UNABLE TO ATTEND IN PERSON ARE RESPECTFULLY
URGED TO EXECUTE AND RETURN THE ENCLOSED PROXY AT THEIR EARLIEST CONVENIENCE.
ANY PROXY GIVEN MAY BE REVOKED BY SUBMITTING, AT LEAST TWO (2) HOURS PRIOR TO
THE COMMENCEMENT OF THE ANNUAL GENERAL MEETING, EITHER A WRITTEN NOTICE OF SUCH
REVOCATION OR A DULY EXECUTED PROXY BEARING A LATER DATE TO PXRE AT ITS MAILING
ADDRESS, SUITE 231, 12 CHURCH STREET, HAMILTON HM 11, BERMUDA, ATTN: SECRETARY.
ATTENDANCE AT THE ANNUAL GENERAL MEETING BY A SHAREHOLDER WHO HAS GIVEN A PROXY
SHALL NOT IN AND OF ITSELF CONSTITUTE A REVOCATION OF SUCH PROXY.
- --------------------------------------------------------------------------------
IMPORTANT: PLEASE COMPLETE AND PROMPTLY RETURN YOUR PROXY IN THE ENCLOSED
ENVELOPE.
<PAGE> 3
PROXY STATEMENT
---------------------
ANNUAL GENERAL MEETING OF SHAREHOLDERS
OF PXRE GROUP LTD.
MAY 16, 2000
SOLICITATION OF PROXIES
This Proxy Statement is furnished in connection with the solicitation by
the Board of Directors of PXRE GROUP LTD., 99 Front Street, Hamilton HM 12,
Bermuda ("PXRE") of proxies from the holders of PXRE's common shares, par value
$1.00 per share (the "Common Shares") for use at the Annual General Meeting of
Shareholders to be held on May 16, 2000 and at any and all adjournments thereof
(the "Annual Meeting"). Common Shares represented at the Annual Meeting by a
properly executed and returned Proxy will be voted at the Annual Meeting in
accordance with the instructions noted thereon, or if no instructions are noted,
the Proxy will be voted in favor of the proposals set forth in the Notice of
Annual Meeting. Any Proxy given may be revoked by submitting, at least two (2)
hours prior to the commencement of the Annual Meeting, either a written notice
of such revocation or a duly executed Proxy bearing a later date to PXRE at its
mailing address, Suite 231, 12 Church Street, Hamilton HM 11, Bermuda, Attn:
Secretary. Attendance at the Annual Meeting by a shareholder who has given a
Proxy shall not in and of itself constitute a revocation of such Proxy.
The Annual Meeting will be the first annual general meeting of PXRE, a
Bermuda company, since it became the parent holding company of PXRE Corporation,
a Delaware corporation ("PXRE Delaware"), in October 1999 and succeeded to the
holding company functions previously conducted by PXRE Delaware. In connection
with the October 1999 reorganization, each share of PXRE Delaware common stock
owned by stockholders was automatically converted into and became one PXRE
Common Share; PXRE Delaware's stock plans and other employee and director
benefit plans were revised or amended to reflect the reorganization, including
providing for future use of PXRE Common Shares in lieu of PXRE Delaware common
stock thereunder; the directors who were serving as directors of PXRE Delaware
became directors of PXRE; and Messrs. Gerald L. Radke (Chairman, President and
Chief Executive Officer) and James F. Dore (Executive Vice President and Chief
Financial Officer) who were executive officers of PXRE Delaware and David J.
Doyle (Secretary) became officers of PXRE. Accordingly, except where the context
otherwise requires, references herein to PXRE include its predecessor, PXRE
Delaware.
The mailing address of PXRE is Suite 231, 12 Church Street, Hamilton HM11,
Bermuda. The Notice of Annual General Meeting of Shareholders, the Proxy
Statement and the accompanying Proxy were first transmitted to shareholders of
PXRE on or about April 10, 2000.
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 Shares held in
their names.
<PAGE> 4
OUTSTANDING STOCK AND VOTING RIGHTS
The Board of Directors has fixed the close of business on March 31, 2000 as
the record date (the "Record Date") for the determination of shareholders
entitled to receive notice of, and to vote at, the Annual Meeting. As of the
Record Date, 11,758,174 Common Shares were issued and outstanding and held of
record by approximately 90 shareholders. Each Common Share entitles the holder
thereof to one vote on each matter to be voted upon at the Annual Meeting,
except that if a person constructively or beneficially, directly or indirectly,
owns more than 9.9% of the voting power of the outstanding Common Shares, the
voting rights with respect to such shares will be limited, in the aggregate, to
voting power of 9.9%, as specified in PXRE's Bye-Laws. The presence at the
meeting in person or by proxy of the holders of a majority of the outstanding
Common Shares (giving effect to the limitation on voting referred to above) is
necessary to constitute a quorum for the transaction of business at the Annual
Meeting.
All matters referenced in this Proxy Statement upon which the shareholders
will be asked to consider and vote upon will, in accordance with PXRE's
Bye-Laws, be decided by an ordinary resolution, that is, a resolution passed by
a simple majority of votes cast in person or by proxy at the meeting. A
resolution put to the vote of the meeting will be decided on by a show of hands,
unless a poll has been demanded pursuant to PXRE's Bye-Laws. On matters to be
decided by ordinary resolution, shares represented at the meeting whose votes
are withheld on any matter, shares which are represented by "broker non-votes"
(i.e., shares held by brokers or nominees which are represented at the meeting
but with respect to which the broker or nominee is not empowered to vote on a
particular proposal) and shares which abstain from voting on any particular
matter are not included in the tabulation of the shares voting on such matter
but are counted for quorum purposes. In accordance with the rules of the New
York Stock Exchange, brokers and nominees are precluded from exercising their
voting discretion with respect to the approval and adoption of any of the
matters to be presented at the meeting, other than the re-election of directors
and the re-appointment of the auditors.
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 Shares 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 Shares Phoenix Home Life Mutual...................... 1,131,700 shares(1) 9.6%
Insurance Company
One American Row
Hartford, CT 06115
Common Shares Select Reinsurance Ltd........................ 1,112,200 shares(2) 9.5%
Corner House
20 Parliament Street, 4th Floor
Hamilton, HM 12 Bermuda
Common Shares Dimensional Fund Advisors Inc................. 851,795 shares(3) 7.2%
1299 Ocean Avenue
Santa Monica, CA 90401
Common Shares DePrince, Race & Zollo, Inc................... 781,700 shares(4) 6.6%
201 S. Orange Avenue
Suite 850
Orlando, FL 32801
</TABLE>
2
<PAGE> 5
<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 Shares Royce & Associates, Inc. and Affiliates....... 757,160 shares(5) 6.4%
1414 Avenue of the Americas
New York, NY 10019
Common Shares FMR Corp. and Affiliates...................... 725,063 shares(6) 6.2%
82 Devonshire Street
Boston, MA 02109
</TABLE>
- ---------------
(1) According to the Schedule 13G and Form 4 filed by Phoenix Home Life Mutual
Insurance Company ("Phoenix Home Life") with the Securities and Exchange
Commission (the "Commission"), Phoenix Home Life may be deemed to
beneficially own the 1,131,700 Common Shares 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 1,131,700 Common Shares.
(2) According to the Schedule 13G filed by Select Reinsurance Ltd. ("Select Re")
with the Commission, Select may be deemed to beneficially own the 1,112,200
Common Shares indicated opposite Select Re's name in the above table. Select
Re reports sole voting power and sole dispositive power in respect of the
1,112,200 Common Shares, except that voting and dispositive power is
exercised through Select Re's sole investment advisor Mariner Investment
Group, Inc. and accordingly may be deemed to share voting and dispositive
power. Select Re also reports that Mr. William Michaelcheck is 100%
shareholder of Mariner Investment Group, Inc. and Chairman of the Board of
Select Re.
(3) 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 the 851,795 Common
Shares 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 851,795 Common Shares.
(4) According to the Schedule 13G filed by DePrince, Race & Zollo, Inc.
("DePrince") with the Commission, DePrince may be deemed to beneficially own
the 781,700 Common Shares indicated opposite DePrince's name in the above
table. De Prince reports sole voting and sole dispositive power in respect
of the 781,700 Common Shares.
(5) According to the Schedule 13G filed by Royce & Associates, Inc., Royce
Management Company and Charles M. Royce, as a group, with the Commission,
Royce & Associates, Inc., Royce Management Company and Charles M. Royce may
be deemed to beneficially own the 757,160 Common Shares indicated opposite
their name in the above table, by virtue of Royce & Associates, Inc.'s
ownership of 753,360 Common Shares, as to which it is reported to possess
sole voting and dispositive power, and by virtue of Royce Management
Company's ownership of 3,800 Common Shares, as to which it is reported to
possess sole voting and dispositive power. The group reports that Mr. Royce
may be deemed to beneficially own the Common Shares beneficially owned by
Royce & Associates, Inc. and Royce Management Company but disclaims
beneficial ownership of such Common Shares.
3
<PAGE> 6
(6) According to the Schedule 13G filed by FMR Corp. ("FMR") and various
affiliates thereof with the Commission, FMR, Mr. Edward C. Johnson 3d,
Abigail P. Johnson and other members of the Johnson family may be deemed to
beneficially own the 725,063 Common Shares 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 Fidelity Low Priced Stock Fund may be deemed to be the
beneficial owner of such 725,063 Common Shares. Neither FMR, Mr. Johnson nor
Ms. Johnson reports sole or shared voting power in respect of the 725,063
Common Shares. Each of FMR, Mr. Johnson and Ms. Johnson reports sole
dispositive power in respect of the 725,063 Common Shares.
To PXRE's knowledge, no other person owns of record or beneficially more
than 5% of the outstanding Common Shares as of the Record Date.
NOMINEES FOR ELECTION AS DIRECTORS
PXRE's Bye-Laws provide for the election of directors by the shareholders.
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 shareholders.
At the Annual Meeting, the terms of office of the Class II directors will
terminate. Therefore, the Board of Directors has nominated Robert W. Fiondella,
Philip R. McLoughlin and Wilson Wilde (all of whom are also presently serving on
the Board) for re-election as Class II directors to serve three-year terms until
the annual general meeting of shareholders is held in 2003 and until their
successors have been elected and qualified. It is intended that Proxies will be
voted in favor of these persons. If, for any reason, any of the nominees is not
able or willing to serve as a director when the election occurs (a situation
which is not presently contemplated), it is intended that the Proxies will be
voted for the election of a substitute nominee in accordance with the judgment
of the Proxy holder.
THE BOARD OF DIRECTORS AND MANAGEMENT RECOMMEND A VOTE "FOR" THE ELECTION
OF THE THREE NOMINEES FOR DIRECTOR NAMED ABOVE.
INFORMATION CONCERNING DIRECTORS AND EXECUTIVE OFFICERS
The following are the directors of PXRE:
Gerald L. Radke (55) has been the President, Chief Executive Officer
and a director of PXRE (and its predecessor PXRE Corporation) since 1986
(and its Chairman of the Board of Directors since June 1995). From August
1993 until the merger (the "Merger") in December 1996 of Transnational Re
Corporation ("TREX") with and into PXRE Corporation, Mr. Radke also served
as President, Chief Executive Officer and Chairman of the Board of
Directors of TREX.
F. Sedgwick Browne (57) 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 was elected a director of
PXRE Corporation in June 1999.
Robert W. Fiondella (57) 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
4
<PAGE> 7
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 a director of Phoenix Charter Oak
Trust Company, a well as an officer and director of various other Phoenix
Home Life subsidiaries. Mr. Fiondella is also a director of Hilb, Rogal and
Hamilton, an insurance brokerage firm.
Franklin D. Haftl (65), who was elected a director of PXRE Corporation
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 (70), who was elected a director of PXRE Corporation 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 (48), who was elected a director of PXRE Corporation 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.
Philip R. McLoughlin (53) has been Chairman, Chief Executive Officer
and a director of Phoenix Investment Partners, Ltd., formerly Phoenix Duff
& Phelps Corporation ("Phoenix Investment Partners") since October 1995.
Phoenix Investment Partners is an investment management company and a
public majority-owned subsidiary of Phoenix Home Life. Since July 1992, Mr.
McLoughlin has also 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 31 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.
David W. Searfoss (49) 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 and is a
director of Hilb, Rogal and Hamilton.
5
<PAGE> 8
Wilson Wilde (72) 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.
Unless otherwise indicated, all directors have served in such capacity with
PXRE since its organization in August 1999 and with its predecessor PXRE
Corporation since 1986.
In addition to the executive officer listed as being a director, PXRE has
the following executive officers:
James F. Dore (54) is Executive Vice President and Chief Financial Officer
of PXRE and has been such since June 1999. Prior thereto, Mr. Dore was Senior
Vice President -- Financial Market Products for Employers Reinsurance
Corporation. Before assuming responsibility for Financial Market Products, Mr.
Dore was Chief Financial Officer of Employers Reinsurance Corporation, prior to
which he was Chief Financial Officer of GE Capital Mortgage Corporation.
Michael J. Bleisnick (48) is Executive Vice President -- London Market
Operations and has been an Executive Vice President of PXRE since March 1993.
Prior thereto, he was a Senior Vice President of PXRE. From August 1993 until
the Merger in December 1996, Mr. Bleisnick also served as an Executive Vice
President of TREX.
Gordon Forsyth, III (52) is Executive Vice President -- North American
Operations and has been an Executive Vice President of PXRE since March 1993.
Prior thereto, he was a Senior Vice President of PXRE. From August 1993 until
the Merger in December 1996, Mr. Forsyth also served as an Executive Vice
President of TREX.
Charles B. Penruddocke (56) is Managing Director and Executive Vice
President -- International Operations and has been an Executive Vice President
of PXRE since June 1998. Prior thereto, he was Senior Vice
President -- International Operations at F&G Re, the reinsurance arm of the
USF&G Group.
Jeffrey H. Mayer (38) is Executive Vice President -- Finite Risk Solutions
and has been an Executive Vice President of PXRE since April 1999. Prior
thereto, he was Principal, Chief Actuary and Head of the Client Services Group
of Swiss Re New Markets, an affiliate of Swiss Reinsurance Company. Prior to
that Mr. Mayer was a principal with Milliman & Robertson, Inc., an actuarial
consulting firm. He is a fellow of the Casualty Actuarial Society and a member
of the American Academy of Actuaries.
Michael J. Toman (49) is Executive Vice President -- Direct Reinsurance and
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.
Jeffrey L. Radke (31) is Executive Vice President of PXRE and President of
PXRE Reinsurance Ltd. and has been such since January 2000. Prior thereto, Mr.
Radke served as President of Select Re. From 1996 to 1998 he was Senior Vice
President -- Capital Markets Products of CAT Limited, prior to which he was a
Vice President of Guy Carpenter & Company a reinsurance brokerage firm. Jeffrey
Radke is Gerald Radke's son.
All executive officers of PXRE hold office at the pleasure of the Board of
Directors.
6
<PAGE> 9
The following table sets forth certain information concerning beneficial
ownership of PXRE's Common Shares by the directors, the five executive officers
named below under the heading "EXECUTIVE COMPENSATION" and all directors and
executive officers as a group, as of the Record Date:
<TABLE>
<CAPTION>
SHARES (AND PERCENT) DIRECTOR
DIRECTORS AND FIVE CURRENT NAMED EXECUTIVE OFFICERS BENEFICIALLY OWNED(1) TERM ENDS
- --------------------------------------------------- --------------------- ---------
<S> <C> <C>
Gerald L. Radke...................................... 197,925(2) 2002
F. Sedgwick Browne................................... 24,325(3)* 2001
Robert W. Fiondella.................................. 20,878(3)* (4)
Franklin D. Haftl.................................... 17,365(3)* 2002
Bernard Kelly........................................ 22,878(3)* 2001
Wendy Luscombe....................................... 20,222(3)* 2002
Philip R. McLoughlin................................. 14,528(3)* (4)
David W. Searfoss.................................... 19,830(3)* 2001
Wilson Wilde......................................... 15,418(3)* (4)
Michael J. Bleisnick................................. 94,408(5)* --
Gordon Forsyth, III.................................. 101,474(6)* --
Michael J. Toman..................................... 41,480(7)* --
Charles Penruddocke.................................. 17,128(8)* --
All directors and executive officers as a group
(16 persons)....................................... 678,357(9)
</TABLE>
- ---------------
* Beneficially owns less than 1% of PXRE's issued and outstanding Common
Shares.
(1) The number of Common Shares set forth opposite the names of Mr. Haftl, Mr.
Kelly, Ms. Luscombe, Mr. Wilde and Mr. Browne 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
shareholders in respect of the Common Shares, PXRE makes dividend equivalent
payments, in cash, in respect of each Common Share granted, but not yet
delivered, under such Plan.
(2) Mr. Radke beneficially owns 1.7% of PXRE's issued and outstanding Common
Shares. The number of Common Shares set forth opposite Mr. Radke's name
includes currently exercisable options to purchase 90,277 Common Shares. In
accordance with Rule 13d-3(d)(1) under the Exchange Act, the 90,277 Common
Shares for which Mr. Radke holds currently exercisable options have been
added to the total number of issued and outstanding Common Shares solely for
the purpose of calculating the percentage of such total number of issued and
outstanding Common Shares beneficially owned by Mr. Radke.
(3) Includes with respect to each of the following individuals, currently
exercisable options to purchase the indicated number of Common Shares: Mr.
Fiondella, 20,378 shares; Mr. Haftl, 16,730 shares; Mr. Kelly, 20,378
shares; Ms. Luscombe, 20,072 shares; Mr. McLoughlin, 13,361 shares; Mr.
Searfoss, 18,730 shares; Mr. Wilde, 13,361 shares; and Mr. Browne, 11,182
shares. In accordance with Rule 13d-3(d)(1) under the Exchange Act, such
Common Shares for which the named director holds currently exercisable
options have been added to the total number of issued and outstanding Common
Shares solely for the purpose of calculating the percentage of such total
number of issued and outstanding Common Shares beneficially owned by such
director.
(4) Term of office of Class II directors terminates at the forthcoming 2000
Annual Meeting.
7
<PAGE> 10
(5) Includes currently exercisable options to purchase 64,908 Common Shares. In
accordance with Rule 13d-3(d)(1) under the Exchange Act, the 64,908 Common
Shares for which Mr. Bleisnick holds currently exercisable options have been
added to the total number of issued and outstanding Common Shares solely for
the purpose of calculating the percentage of such total number of issued and
outstanding Common Shares beneficially owned by Mr. Bleisnick.
(6) Includes currently exercisable options to purchase 63,898 Common Shares. In
accordance with Rule 13d-3(d)(1) under the Exchange Act, the 63,898 Common
Shares for which Mr. Forsyth holds currently exercisable options have been
added to the total number of issued and outstanding Common Shares solely for
the purpose of calculating the percentage of such total number of issued and
outstanding Common Shares beneficially owned by Mr. Forsyth.
(7) Includes currently exercisable options to purchase -0- Common Shares.
(8) Includes currently exercisable options to purchase 1,875 Common Shares. In
accordance with Rule 13d-3(d)(1) under the Exchange Act, the 1,875 Common
Shares for which Mr. Penruddocke holds currently exercisable options have
been added to the total number of issued and outstanding Common Shares
solely for the purpose of calculating the percentage of such total number of
issued and outstanding Common Shares beneficially owned by Mr. Penruddocke.
(9) The director and executive officers as a group beneficially own 5.6% of
PXRE's outstanding Common Shares. The number of shares includes currently
exercisable options to purchase 355,150 Common Shares. In accordance with
Rule 13d-3(d)(1) under the Exchange Act, the 355,150 Common Shares 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 Common Shares solely for the purpose of calculating the
percentage of such total number of issued and outstanding Common Shares
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 1999, the Board of Directors of PXRE (and of its predecessor) met nine
(9) times. Except for Mr. Fiondella, 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), Browne,
Haftl, McLoughlin and Searfoss. 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 1999, the Audit Committee met three (3) times.
The members of the Human Resources Committee are Messrs. Fiondella
(Chairman), McLoughlin, Searfoss and Wilde and Ms. Luscombe. The Human Resources
Committee performs the functions of a
8
<PAGE> 11
compensation committee, including the administration of PXRE's various stock
option and other compensation plans. In 1999, the Human Resources Committee met
four (4) times.
The members of the Investment Committee are Ms. Luscombe (Chairman) and
Messrs. Browne, Haftl, Kelly and Wilde. The members of the Investment Committee
are responsible for monitoring and approving the investment policies and the
investments of PXRE and its reinsurance and trading subsidiaries, including PXRE
Reinsurance Company ("PXRE Reinsurance"), Transnational Insurance Company
("Transnational") and PXRE Reinsurance Ltd. ("PXRE Bermuda"), and for overseeing
investment management carried out by Phoenix Investment Partners and by Mariner.
In 1999, the Investment Committee met five (5) times.
The members of the Executive Committee are Messrs. Radke, Fiondella and
Wilde. 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 1999, 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 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
pass upon transactions between PXRE (and its reinsurance and trading
subsidiaries) and Select Re to which PXRE refers business pursuant to a
multi-year fee based undertaking approved by the Select Committee. In 1999, the
Select Committee met one (1) time.
COMPENSATION OF DIRECTORS
CASH COMPENSATION. In 1999, non-employee directors received an annual
retainer of $25,000 (plus an additional $3,000 for Committee Chairmen) payable
at the beginning of the year plus Board and standing committee meeting fees of
$1,500 per meeting. During the 1999 fiscal year, PXRE (and its predecessor) paid
a total of $162,500 in directors' fees. See "Other Compensation" below.
OTHER COMPENSATION. Under the PXRE Director Equity and Deferred
Compensation Plan (the "Director Compensation Plan") non-employee directors may
elect to defer receipt of fees for services as a member of the Board and, with
respect to the annual retainer for such services, allows such directors to
elect, prior to the subject year, to receive all or a portion of the annual
retainer amount in PXRE Common Shares or options to purchase PXRE Common Shares.
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 Common Shares 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 Common Share, as
determined pursuant to the Director Compensation Plan.
The number of whole Common Shares 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
9
<PAGE> 12
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
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 Shares 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 1999 fiscal year, 34,146 PXRE Common Shares were awarded
pursuant to the Director Compensation Plan to the directors who elected to
receive Common Shares and options for 34,146 shares at exercise prices of
$25.177 and $17.704, respectively, were granted pursuant to the Director
Compensation Plan to the directors who elected to receive options to purchase
PXRE Common Shares.
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 shareholders
in 2007. See "APPROVAL OF AMENDMENTS TO DIRECTOR COMPENSATION PLAN" regarding
proposed amendments to the Director Compensation Plan.
Under the PXRE 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 general meeting, an option exercisable (subject to a
three-year vesting period) for the purchase of 3,000 (previously 1,000) Common
Shares at a price per share equal to the market value at the date of grant. On
the date of the annual meetings of shareholders 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 at exercise prices of $23.25 and $24.95,
respectively. On the date of the annual meetings of shareholders in 1997, 1998
and 1999, 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,
$31.06 and $17.70, respectively. As of the Record Date, options for a total of
94,000 shares had been granted pursuant to the Director Option Plan, of which a
total of 49,000 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
shareholders, 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
10
<PAGE> 13
receive options. See "APPROVAL OF AMENDMENTS TO DIRECTOR STOCK OPTION PLAN"
regarding proposed amendments to the Director Option Plan.
Under the PXRE Director Deferred Stock Plan (the "Director Plan") eligible
non-employee directors of PXRE upon becoming directors are each granted the
right to receive 2,000 Common Shares (subject to anti-dilution adjustments) at
certain specified times following their respective terminations as PXRE
directors. As of the Record Date, eligible non-employee PXRE directors as a
group have the right to receive a total of 10,000 Common Shares pursuant to the
terms of the Director Plan.
On each date on which dividends are paid to holders of PXRE Common Shares,
each director who has been granted the right to receive Common Shares 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.
REAPPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors is recommending that the firm of
PricewaterhouseCoopers be appointed as PXRE's independent auditors for the
fiscal year ending December 31, 2000. This recommendation is being presented to
the shareholders for their approval at the Annual Meeting.
PricewaterhouseCoopers has audited PXRE's financial statements since July 1,
1986. A representative of PricewaterhouseCoopers is expected to attend the
Annual Meeting, with the opportunity to make a statement if he or she so desires
and to respond to questions. Shareholders at the Annual Meeting will also be
asked to vote to refer the determination of the auditors' remuneration to the
Board of Directors.
THE BOARD OF DIRECTORS AND MANAGEMENT RECOMMEND A VOTE "FOR" THE
APPOINTMENT OF PRICEWATERHOUSECOOPERS AS INDEPENDENT AUDITORS FOR THE FISCAL
YEAR ENDING DECEMBER 31, 2000 AND THE REFERRAL TO THE BOARD OF DIRECTORS OF THE
DETERMINATION OF THE AUDITORS' REMUNERATION.
11
<PAGE> 14
EXECUTIVE COMPENSATION
The following tables and narrative text describe the compensation paid in
1999 and the two prior fiscal years to PXRE's Chief Executive Officer and PXRE's
four other most highly compensated executive officers. Also described below is
certain future compensation such individuals may be eligible to receive upon
retirement or following certain terminations of employment or certain changes of
control.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
----------------------------
ANNUAL COMPENSATION SECURITIES
---------------------------------------- RESTRICTED UNDERLYING
NAME AND OTHER ANNUAL STOCK STOCK ALL OTHER
PRINCIPAL POSITION YEAR SALARY BONUS($)(1) COMPENSATION(2) AWARDS($)(3) OPTIONS(#)(4) COMPENSATION(5)
- ------------------ ---- -------- ----------- --------------- ------------ ------------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
Gerald L. Radke............... 1999 $494,000 $ 70,000 $224,986 $510,250 -- $ 28,014
Chairman, President 1998 475,000 -- -- 243,115 15,142 232,021
and Chief Executive 1997 468,270 214,130 3,798 167,301 17,705 236,328
Officer
Michael J. Bleisnick.......... 1999 348,095 25,000 -- 314,000 -- 24,065
Executive Vice 1998 303,662 -- -- 140,118 7,977 210,116
President -- London Market 1997 292,544 102,276 -- 83,854 9,377 209,931
Operations
Gordon Forsyth, III........... 1999 301,729 33,000 -- 255,125 -- 22,048
Executive Vice 1998 288,750 -- -- 140,118 7,977 210,116
President -- North American 1997 285,048 102,276 -- 83,854 9,377 209,931
Operations
Michael J. Toman(6)........... 1999 274,225 33,000 -- 245,312 -- 14,025
Executive Vice President -- 1998 144,800 60,000 -- 415,953 -- 4,200
Direct Reinsurance
Charles B. Penruddocke(6)..... 1999 238,403 20,000 -- 196,250 -- 7,200
Managing Director and 1998 128,855 50,000 -- 46,074 7,500 4,200
Executive Vice President --
International Operations
</TABLE>
- ---------------
(1) For 1999, consists of discretionary cash bonuses awarded in 2000 in respect
of fiscal year 1999. For 1998, consists of discretionary cash bonuses
awarded in 1999 in respect of fiscal year 1998. For 1997, consists of cash
bonuses awarded in 1998 in respect of fiscal year 1997 pursuant to PXRE's
Restated Employee Annual Incentive Bonus Plan (the "Bonus Plan").
(2) Consists of amounts paid to reimburse Mr. Radke for taxes paid by him (i) in
respect of the Bermuda reorganization, (ii) in respect of income he may be
treated as having received for income tax purposes relating to PXRE's
provision of Bermuda housing for Mr. Radke and to PXRE's reimbursement of
travel expenses incurred by Mr. Radke when traveling to Bermuda, and (iii)
in respect of income arising from the 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. See "CERTAIN
BUSINESS RELATIONSHIPS -- Certain Tax Payments" below.
(3) Consists of awards to Messrs. Radke, Bleisnick and Forsyth, respectively, in
respect of fiscal year 1997, of 2,844, 1,358 and 1,358 restricted PXRE
Common Shares pursuant to the Bonus Plan. No restricted shares were awarded
under the Bonus Plan in respect of fiscal year 1998 or 1999. Pursuant to the
terms of the Bonus Plan, such restricted shares will vest and become 100%
nonforfeitable, with respect to the 1997 grants, in one installment on
January 1, 2001. During the holding period, such shares are entitled to
receive dividends, if any, declared with respect to PXRE's Common Shares.
Also includes awards to
12
<PAGE> 15
Messrs. Radke, Bleisnick, Forsyth, Toman and Penruddocke, respectively, in
respect of fiscal year 1997, of 2,895, 1,534, 1,534, 0 and 0 restricted PXRE
Common Shares, and in respect of fiscal year 1998, of 7,381, 4,254, 4,254,
13,500 and 1,500 restricted PXRE Common Shares, and in respect of fiscal
year 1999 of 26,000, 16,000, 13,000, 12,500 and 10,000 restricted PXRE
Common Shares, 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 11, 2003. During the holding periods, such shares are entitled to
receive dividends, if any, declared with respect to PXRE Common Shares. The
aggregate holdings and market value of restricted stock held on December 31,
1999 by Mr. Radke was 39,968 restricted shares with a market value of
$519,584; by Mr. Bleisnick was 23,304 restricted shares with a market value
of $302,952; by Mr. Forsyth was 20,304 restricted shares with a market value
of $263,952; by Mr. Toman was 26,000 restricted shares with a market value
of $338,000; and by Mr. Penruddocke was 11,125 restricted shares with a
market value of $144,625.
(4) Consists of non-qualified options granted in respect of PXRE Common Shares
pursuant to PXRE's 1992 Officer Incentive Plan.
(5) For Mr. Radke, consists of: $24,700, $23,750 and $23,413 contributed by PXRE
in 1999, 1998 and 1997, respectively, to the 401(k) Plan (which is a
contributory defined contribution plan), $1,712 paid by PXRE during each of
1999, 1998 and 1997 with respect to a supplemental term life insurance
policy for Mr. Radke's benefit, $1,602 paid by PXRE during each of 1999,
1998 and 1997 with respect to a supplemental disability insurance policy for
Mr. Radke's benefit, $4,642 representing the amount of interest accrued in
1997 and forgiven in respect of a loan of $70,125 made to Mr. Radke in 1988,
the full principal amount of which was outstanding during 1997 and was
repaid on March 1, 1998 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: $16,865, $14,437 and $14,252 contributed by PXRE
in 1999, 1998 and 1997, respectively, to the 401(k) Plan, $7,200 paid by
PXRE to Mr. Bleisnick during 1999, 1998 and 1997 with respect to a car
allowance, 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: $14,848, $14,437 and $14,252 contributed by PXRE in 1999, 1998
and 1997, respectively, to the 401(k) Plan, $7,200 paid by PXRE to Mr.
Forsyth during 1999, 1998 and 1997 with respect to a car allowance, 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. Toman, consists of $6,825,
contributed by PXRE in 1999 to the 401(k) Plan, $7,200 and $4,200 paid by
PXRE to Mr. Toman during 1999 and 1998 with respect to a car allowance; and
for Mr. Penruddocke, consists of: $7,200 and $4,200 paid by PXRE to Mr.
Penruddocke during 1999 and 1998 with respect to a car allowance.
(6) Joined PXRE in June 1998.
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<PAGE> 16
OPTION GRANTS IN LAST FISCAL YEAR
During 1999 no options were granted pursuant to PXRE's 1992 Officer
Incentive Plan.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND OPTION VALUES AT DECEMBER 31, 1999
<TABLE>
<CAPTION>
NUMBER OF UNEXERCISED VALUE OF UNEXERCISED
STOCK OPTIONS AT IN-THE-MONEY STOCK
SHARES 12/31/99 OPTIONS AT 12/31/99
ACQUIRED ON VALUE (#)(2) ($)(3)
NAME EXERCISE(#) REALIZED($)(1) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
- ---- ----------- -------------- ------------------------- -------------------------
<S> <C> <C> <C> <C>
Gerald L. Radke............. 0 $ 0 77,216/25,059 $ 0/$0
Michael J. Bleisnick........ 0 0 58,552/12,690 87,863/0
Gordon Forsyth, III......... 7,365 7,424 57,542/12,690 84,945/0
Michael J. Toman............ 0 0 0/0 0/0
Charles B. Penruddocke...... 0 0 1,875/5,625 0/0
</TABLE>
- ---------------
(1) Represents the difference between the closing prices of PXRE's Common Shares
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 PXRE Common Shares granted in
1993-1998 pursuant to PXRE's 1992 Officer Incentive Plan at exercise prices
ranging from $23.875 to $32.938 per share, 77,216 of which options were
exercisable at December 31, 1999; for Mr. Bleisnick, consists of options for
26,764 PXRE Common Shares 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, 1999, and options for
44,478 PXRE Common Shares granted in 1993-1998 pursuant to PXRE's 1992
Officer Incentive Plan at exercise prices ranging from $23.875 to $32.938
per share, 31,788 of which options were exercisable at December 31, 1999;
for Mr. Forsyth, consists of options for 25,888 PXRE Common Shares 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, 1999, and options for 44,344 PXRE Common Shares
granted in 1993-1998 pursuant to PXRE's 1992 Officer Incentive Plan at
exercise prices ranging from $23.875 to $32.938 per share, 31,654 of which
options were exercisable at December 31, 1999; for Mr. Toman, no options had
been granted as of December 31, 1999; and for Mr. Penruddocke, consists of
options for 7,500 PXRE Common Shares granted in 1998 pursuant to PXRE's 1992
Officer Incentive Plan at an exercise price of $30.716, of which 1,875
options were exercisable at December 31, 1999.
(3) Represents the difference between the closing price of PXRE's Common Shares
as reported on the New York Stock Exchange on December 31, 1999 ($13.00) and
the exercise prices of the options.
14
<PAGE> 17
PENSION PLAN
The following table indicates estimated total annual benefits payable under
the PXRE Reinsurance Company Retirement Plan and the Supplemental Executive
Retirement Plan as a Life Annuity upon retirement at age 62 in 1999, to persons
in specified final average compensation 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 $ 50,248 $ 62,535
150,000.................................... 20,000 40,000 60,000 60,778 75,972
175,000.................................... 23,333 46,667 70,000 71,528 89,410
200,000.................................... 26,667 53,333 80,000 82,278 102,847
225,000.................................... 30,000 60,000 90,000 93,028 116,285
250,000.................................... 33,333 66,667 100,000 103,778 129,722
275,000.................................... 36,667 73,333 110,000 114,528 143,160
300,000.................................... 40,000 80,000 120,000 125,278 156,597
400,000.................................... 53,333 106,667 160,000 168,278 210,347
500,000.................................... 66,667 133,333 200,000 211,278 264,097
600,000.................................... 80,000 160,000 240,000 254,278 317,847
700,000.................................... 93,333 186,667 280,000 297,278 371,597
800,000.................................... 106,667 213,333 320,000 340,278 425,347
900,000.................................... 120,000 240,000 360,000 383,278 479,097
</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). The benefits in the above table are
not subject to any deduction for Social Security or other offset amounts.
For each of the named current executive officers, annual covered
compensation for 1999 is as follows: Mr. Radke: $649,402; Mr. Bleisnick:
$405,936; Mr. Forsyth: $378,832; Mr. Penruddocke: $280,000 and Mr. Toman:
$320,000. Annual covered compensation consists of base salary (as shown in the
"Salary" column of the Summary Compensation Table) and the average amount of
bonuses paid (including the value of the portion of bonuses paid in shares of
restricted stock) over the preceding 10 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: 15, Mr. Forsyth: 13, Mr. Penruddocke: 1 and Mr.
Toman: 1.
15
<PAGE> 18
STOCK PERFORMANCE GRAPH
Notwithstanding anything to the contrary set forth in any of PXRE's
previous filings under the Securities Act of 1933, as amended, or under the
Securities Exchange Act of 1934, as amended, that might incorporate future
filings, including this Proxy Statement, in whole or in part, the following
Stock Performance Graph and Report of the Human Resources Committee of the Board
of Directors of PXRE shall not be incorporated by reference into any such
filings.
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL
RETURN AMONG PXRE, S&P 500 AND
DOW JONES PROPERTY AND CASUALTY INDEX
[GRAPH]
<TABLE>
<CAPTION>
1994 1995 1996 1997 1998 1999
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
PXRE 100 96 92 127 100 54
S&P 500 100 138 169 226 290 351
Dow Jones P&C 100 140 168 248 268 205
</TABLE>
The total return assumes that dividends were reinvested quarterly and is
based on a $100 investment on December 31, 1994. For each subsequent year, the
total return for PXRE and for each index is stated as of December 31 of such
year.
REPORT OF THE HUMAN RESOURCES COMMITTEE OF THE BOARD OF DIRECTORS OF PXRE
The Human Resources Committee of the Board of Directors has furnished the
following report on executive compensation:
PXRE Group Ltd. (the "Company") has implemented compensation policies,
plans and programs which seek to increase the profitability of the Company, and
thus shareholder value, by aligning closely the financial
16
<PAGE> 19
interests of the Company's executives with those of its shareholders. 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 shareholder 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
1999 the Committee determined that it was appropriate to increase executive base
salaries by an average of 4.36%.
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 shareholder
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 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
17
<PAGE> 20
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 (other than fluctuations in the PXRE stock price)
are credited to the account.
In February 2000, 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 1999 performance of the Company. Nevertheless,
upon the recommendation of management that to attract and retain key performers
even in years with poor results it was necessary to pay reasonable bonus
amounts, the Committee determined to grant discretionary bonus amounts
aggregating approximately $725,000 outside of the Annual Bonus Plan,
representing for most officers receiving bonuses approximately 20% of target
bonuses determined as provided in the Annual Bonus Plan.
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 shareholders 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 shareholders 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 shareholder value.
The Committee granted a total of 192,000 restricted Common Shares in
February 1999 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 Shares on the date of grant and competitive compensation levels
within the industry.
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.
CHIEF EXECUTIVE COMPENSATION
The Committee determined the Chief Executive Officer's compensation for
1999 based upon a number of factors and criteria. The Chief Executive Officer's
base salary was increased by 5.2% during 1999, 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.
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In February 2000 the Committee, as noted above, determined to grant
discretionary bonus amounts, including a bonus award to the Chief Executive
Officer of $70,000.
In February 1999, the Chief Executive Officer received a restricted share
grant of 26,000 Common Shares 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 Shares on the date of grant and
competitive CEO compensation levels within the industry.
Human Resources Committee
Robert W. Fiondella, Chairman
Wendy Luscombe
Philip McLoughlin
David Searfoss
Wilson Wilde
February 7, 2000
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Of the five current members of the Human Resources Committee, Mr. Fiondella
is an executive officer and a director of Phoenix Home Life, 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.
As of the Record Date, Phoenix Home Life owned 9.6% of the issued and
outstanding Common Shares of PXRE. PXRE and various of its subsidiaries are
parties to investment advisory agreements with Phoenix Investment Partners.
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 generally is equal to 0.15% of
average assets under management plus out-of-pocket expenses. PXRE and its
subsidiaries incurred fees of approximately $515,000 to Phoenix Investment
Partners for services performed in fiscal year 1999. Management of PXRE expects
such fees for 2000 will, in the aggregate, be approximately $491,000, plus
out-of-pocket expenses. PXRE believes that the terms of the investment advisory
agreements described above are no less favorable to PXRE and its affiliates than
terms available for comparable services from unaffiliated persons.
TOMAN EMPLOYMENT AGREEMENT
Michael J. Toman, Executive Vice President--Direct Reinsurance, and PXRE
Reinsurance are parties to an employment agreement, dated as of June 8, 1998
providing for Mr. Toman's employment with PXRE Reinsurance for a three year term
expiring in June 2001. See the Summary Compensation Table above and "Termination
and Change of Control Arrangements" below for information regarding Mr. Toman's
compensation and regarding Mr. Toman's participation in various PXRE benefit
plans with termination and change of control arrangements. Mr. Toman's
employment agreement with PXRE Reinsurance contains non solicitation,
confidentiality and non competition provisions.
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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 has been renewed
for an additional five year term to and including August 31, 2004.
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. Gerald 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 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
such 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,
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. Gerald 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. Gerald Radke, Bleisnick, Forsyth, Toman and Penruddocke participate
in the Plan, with 53 others. Were a change of control of PXRE to have occurred
on December 31, 1999 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,
Toman and Penruddocke would have been $1,000,000, $340,000, $300,000, $273,000
and $242,000, respectively.
1988 STOCK OPTION PLAN. Adopted in 1988 and subsequently frozen, the 1988
Stock Option Plan (the "1988 Option Plan") provided for the grant of incentive
stock options 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 not intended to qualify as incentive stock options under
the Code. As of the Record
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Date, Messrs. Bleisnick and Forsyth held outstanding non-qualified options to
purchase 26,764 and 25,888 Common Shares, 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. Gerald
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.
Messrs. Toman and Penruddocke are omitted from the foregoing discussion because
they were not participants in the 1988 Option Plan.)
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 shareholder 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, 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 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 approve a
plan of liquidation or dissolution of PXRE; or (iv) during
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a period of two consecutive years 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.
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 Common Shares. More
specifically, the Restated Bonus Plan (i) provides for the grant of Common
Shares 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 PXRE Common Shares has been reserved for awards of Restricted
Shares under the Restated Bonus Plan. Authorized and unissued shares 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 PXRE Common Shares, 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 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,
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.
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Messrs. Gerald Radke, Bleisnick, Forsyth, Toman and Penruddocke 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, Toman and Penruddocke in respect of fiscal year 1999,
although discretionary cash bonuses were made to those individuals outside of
the Restated Bonus Plan in respect of fiscal year 1999 as noted in the Summary
Compensation Table above. Restricted Share and cash bonus awards under the
Restated Bonus Plan were made in prior years to Messrs. Radke, Bleisnick and
Forsyth, 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 Shares 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
1,750,000 PXRE Common Shares (and a maximum of 2,750,000 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 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.
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 and Non-Qualified Options must be
equal to or exceed the fair market value of the Common Shares on the date the
option is granted.
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 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.
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The 1992 Officer Incentive Plan provides that upon the earlier of (i) a
Change of Control of PXRE or (ii) the Common Shares 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 Shares (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
Common 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 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.
In addition, under the 1992 Officer Incentive Plan the optionee may elect
up to 60 days following the cessation of the public trading of PXRE Common
Shares (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. Gerald Radke, Bleisnick, Forsyth, Toman and Penruddocke are each
eligible to participate in the 1992 Officer Incentive Plan. In February 1999,
Restricted Share awards were granted under the Plan to Messrs. Radke, Bleisnick,
Forsyth, Toman and Penruddocke in respect of fiscal year 1999, as noted in the
Summary Compensation Table above. Non-qualified options were also granted in
prior years under the Plan to Messrs. Radke, Bleisnick, Forsyth and Penruddocke.
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
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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 were 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 (other than Messrs.
Toman and Penruddocke) was a participant in the TREX Plan and the amounts earned
thereunder in the applicable years 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. PXRE's shareholders approved the adoption of the Bonus
Plan in 1992, and approved the amendments of the Bonus Plan in 1994, 1997 and
1999.
On March 30, 2000, the Board of Directors amended the Bonus Plan, subject
to the approval of the shareholders of PXRE, in the following manner: (1) to
increase the number of Restricted Shares (as defined below) available under the
Bonus Plan to 350,000, (2) to provide that shareholder approval is required for
any amendment to the Bonus Plan which (i) materially increases the benefits
accruing to participants under the Bonus Plan, (ii) increases the number of
securities which may be issued under the Bonus Plan or (iii) materially modifies
the requirements for participants in the Bonus Plan, (3) to provide that the
restriction period for all Restricted Shares granted under the Bonus Plan shall
in no event be less than 3 years (other than in the case of a change in control,
the Common Shares of PXRE ceasing to be publicly traded, or the death,
disability or retirement of a participant and (4) to amend the definition of
"Retirement" to provide that a participant may retire before age 65 with the
consent of PXRE (the "Amendment"). The purpose of Part (1) of the Amendment,
namely, the increase in the number of Shares available under the Plan, is to
assure that PXRE can continue to be able to provide incentives to attract and
retain talented employees. Parts (2) and (3) of the Amendment, namely, that
shareholder approval is required generally for material Plan amendments, and
that the restricted period last for at least 3 years, were approved and adopted
by the Board of Directors in direct response to institutional shareholder
comments received with respect to the Plan. The purpose of Part (4) of the
Amendment is to change the definition of "Retirement" to permit retirement
before age 65 consistent with other PXRE benefit plans.
The changes made by the Amendment are effective for awards made for 2000
(paid in early 2001) 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 1997, 1998, or 1999, no additional
Restricted Shares would have been awarded.
The following is a description of the principal features of the Bonus Plan,
as amended, for which shareholder 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 PXRE's return
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on equity 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, if approved by the
shareholders, the maximum number of PXRE Common Shares reserved for awards under
the Bonus Plan will be increased from 150,000 to 350,000. Authorized and
unissued shares may be used for grants of Restricted Shares under the Bonus
Plan. As of the Record Date, 72,779 shares remain for future grants under the
Bonus Plan. On the Record Date, the closing price of PXRE's Common Shares as
reported on the New York Stock Exchange was $17.00.
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 PXRE 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 or her target bonus for the
fiscal year if PXRE achieves a 13% return for such fiscal year. The
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other percentages of the target bonus earned by each Bonus Plan participant will
be payable in accordance with the following table:
<TABLE>
<CAPTION>
COMPANY ROE PERFORMANCE PERCENTAGE
- ----------- ----------------------
<S> <C>
8%................................................... 0%
9.................................................... 20
11.................................................... 60
13.................................................... 100
15.................................................... 140
17.................................................... 180
20.................................................... 240
</TABLE>
"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
shareholders' equity for such fiscal year, which average will be computed by
dividing (i) the sum of PXRE's shareholders' equity as of the end of each of the
four calendar quarters in such fiscal year and PXRE's shareholders' 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. 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 share pool and a junior officer restricted share pool, respectively.
The Restricted Share 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 an amount equal to
85% of the fair market value of PXRE shares on the date the Committee approves
the awards to determine the number of
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<PAGE> 30
shares allocated to each participant. This 15% discount is provided to
participants in order to recognize that such Restricted Shares were granted in
lieu of cash and the inherent risks and illiquidity associated with holding
Restricted Shares during the restricted period.
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 Share bonus awards that a participant who
is a "covered employee" at the end of the year may receive is $1 million.
In 2000, no cash or Restricted Share bonuses were paid by PXRE to any
employees pursuant to the Bonus Plan, with respect to fiscal year 1999, because
PXRE's return on equity was below 8% for the year.
RESTRICTED SHARES. Awards of Common Shares of PXRE which are subject to
certain restrictions ("Restricted Shares") consist of grants of PXRE's Common
Shares 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") with ratable vesting during 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
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 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, 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.
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<PAGE> 31
ALTERNATIVE AWARDS. Awards to officers who are tax residents of Belgium or
other countries that tax restricted share 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
(other than fluctuations in the PXRE stock price) will be credited to the
account.
ADJUSTMENTS IN AUTHORIZED SHARES AND RETURN ON EQUITY. In the event the
outstanding Common Shares of PXRE are increased or changed into or exchanged for
a different number or kind of shares of capital stock or other securities of
PXRE by reason of any stock dividend or split, recapitalization, corporate
reorganization or other corporate change, the Bonus Plan Committee may make such
substitution or adjustment, if any, as it deems to be equitable, in the number
or kind of shares or other securities as to which Restricted Shares may be
granted under the Bonus Plan. In addition, in the event of any such corporate
change or in the event of any material changes in accounting practices, tax law
or interpretation or corporate strategy, the Bonus Plan Committee may make such
adjustment in the definition of "return on equity" as may be necessary to
preserve the intent of the Bonus Plan.
PARTICIPATION AFTER START OF FISCAL YEAR; TERMINATION. If an individual
begins participation in the Bonus Plan after the start of a fiscal year, such
individual's cash and Restricted Share award, if any, will be reduced. The
amount paid to the individual for such fiscal year will be the pro-rata amount
of such cash and Restricted Share award based on the number of months for which
the participant was employed during such fiscal year.
In addition, if any individual terminates employment prior to the end of
the fiscal year due to retirement, permanent disability or death, such
individual's cash and Restricted Share award, if any, will be reduced. If
approved by the shareholders, a participant may retire before age 65 with the
consent of PXRE. 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 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 or any corporation in the PXRE tax group for federal income tax
purposes, since the Restricted Shares are subject to restrictions constituting a
"substantial risk of forfeiture" as defined in the Internal Revenue Code of
1986, as amended (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.
29
<PAGE> 32
Dividends paid on the Restricted Shares during the Restricted Period will also
be taxable compensation income to the recipient when received by the recipient.
In general, any corporation in the PXRE tax group employing the relevant
recipient 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, the
corporation in the PXRE tax group employing the relevant recipient 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; provided, however, shareholder approval will be necessary for any
amendment which (i) materially increases the benefits accruing to participants
under the Bonus Plan, (ii) increases the number of securities which may be
issued under the Bonus Plan or (iii) materially modifies the requirements for
participants in the Bonus Plan.
THE BOARD OF DIRECTORS AND MANAGEMENT RECOMMEND A VOTE "FOR" THE PROPOSAL TO
ADOPT THE AMENDMENTS TO THE RESTATED EMPLOYEE ANNUAL INCENTIVE BONUS PLAN.
APPROVAL OF AMENDMENTS
TO THE 1992 OFFICER INCENTIVE PLAN
The 1992 Officer Incentive Plan (the "Incentive Plan") provides incentives
linking key employees' interests to shareholder 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 shareholders approved the
adoption of the Incentive Plan in 1992, and amendments to the Incentive Plan in
1994, 1997 and 1999.
On March 30, 2000, the Board of Directors amended the Incentive Plan,
subject to approval of the shareholders, to (1) increase the number of Common
Shares authorized for issuance under the Incentive Plan to 2,750,000 Common
Shares, (2) provide that the restriction period for all Restricted Shares
granted under the Incentive Plan, is subject to the discretion of the Incentive
Plan Committee (as defined herein), but in no event will be less than 3 years
(other than in the case of a Change in Control, the Common Shares of PXRE
ceasing to be publicly traded, or the death, disability or retirement of a
participant), (3) provide that shareholder approval is required for any
amendment to the Incentive Plan which (i) materially increases the benefits
accruing to participants under the Incentive Plan, (ii) increases the number of
securities which may be issued under the Incentive Plan or (iii) materially
modifies the requirements for participants in the Incentive Plan, (4) provide
that options granted under the Incentive Plan cannot be repriced (other than in
connection with an adjustment in the Company's Common Shares, as provided in the
Plan) and (5) amend the definition of "Retirement" to provide that a participant
may retire before age 65 with the consent of PXRE (the "Amendment"). The purpose
of part (1) of the Amendment is to increase the number of shares available under
the Plan, so as to assure that PXRE can continue to be able to provide
incentives to attract and retain the most talented employees. Parts (2) through
(4) of the Amendment, namely, that shareholder approval is required generally
for material Plan amendments, that the restricted period last for at least 3
years,
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<PAGE> 33
and that options granted under the Plan cannot be repriced, were approved and
adopted by the Board of Directors in direct response to institutional
shareholder comments received with respect to the Plan. The purpose of Part (5)
of the Amendment is to change the definition of "Retirement" to permit
retirement before age 65 consistent with other PXRE benefit plans.
In order to continue to grant options and Common Shares under the Incentive
Plan to provide continued incentive to executives of PXRE, the Board of
Directors amended the Incentive Plan, subject to shareholder approval, to
increase the number of shares authorized for issuance thereunder from 1,750,000
shares to 2,750,000 shares. After the awards in February, 2000 under the
Incentive Plan, only 6,617 shares remained available for future grants under the
Plan. In addition, the changes made by the Amendment are effective for awards
granted in 2001 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 years 1996-1999, would not have changed the amounts of option and
restricted stock awards indicated in (or otherwise changed) the Summary
Compensation Table above.
The following is a description of the principal features of the Incentive
Plan for which shareholder 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 Common Shares 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 Amendment, a maximum of 2,750,000
Common Shares of PXRE is reserved for issuance upon the exercise of options and
grants of Restricted Shares under the Incentive Plan. Authorized but unissued
shares may be used for grants of options or Restricted Shares under the
Incentive Plan. As of the Record Date, without giving effect to the Amendment,
6,617 shares remain for future grants (or 1,006,617 shares, giving effect to the
Amendment). On the Record Date, the closing price of PXRE Common Stock on the
New York Stock Exchange was $17.00.
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.
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<PAGE> 34
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 PXRE's approximately 102 salaried non-temporary
employees, 56 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 Shares 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 with PXRE's consent. If approved by the
shareholders, a participant may retire before age 65 with the consent of PXRE.
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. Pursuant to the
Amendment, no repricing of outstanding options shall be permissible (other than
in connection with an adjustment in the Company's Common Shares, as provided in
the Plan).
For fiscal year 1999, no options were granted pursuant to the Incentive
Plan to Messrs. Gerald Radke, Bleisnick, Forsyth, Toman and Penruddocke,
respectively. For fiscal year 2000, 82,000, 50,000, 50,000, 50,000 and 48,000
options were granted pursuant to the Incentive Plan to Messrs. Radke, Bleisnick,
Forsyth, Toman and Penruddocke, respectively.
TERMS OF RESTRICTED SHARES. The Incentive Plan Committee may make awards
of Common Shares with certain restrictions as it may determine, subject to the
Incentive Plan. 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"). If adopted by the shareholders, the term of the Restricted
Period is subject to the discretion of the Incentive Plan Committee, but in no
event will be less than three (3) years, with ratable vesting during the
Restricted Period (other than in the case of a Change in Control, the Common
Shares of PXRE ceasing to be publicly traded, or the death, disability or
retirement of a participant). The Grantee 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 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, disability or
retirement, in the discretion of the Incentive Plan Committee. If approved by
the shareholders, a participant may retire before age 65 with the consent of
PXRE. 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.
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<PAGE> 35
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 Shares 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 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 approve a plan of liquidation
or dissolution of PXRE; or (iv) during a period of two consecutive years,
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 Shares (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
Common 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 shareholder approval of a merger, or consolidation (as described
in the Incentive Plan) or any sale or other disposition of all or substantially
all of the assets of PXRE, the highest price per share paid pursuant to such
transaction. With respect to Incentive Stock Options, "fair market value" means
fair market value as determined under 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 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 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 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
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<PAGE> 36
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 Common Shares 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 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, any corporation in the PXRE tax
group employing the relevant Grantee 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, no
corporation in the PXRE tax group will 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 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 any corporation in the PXRE
tax group employing the relevant Grantee. 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 the
applicable corporation. 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 the
relevant corporation in the PXRE tax group 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
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<PAGE> 37
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
any member of the PXRE tax group 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. In general, any
corporation in the PXRE tax group employing the relevant Grantee 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, the
corporation in the PXRE tax group employing the relevant Grantee 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; provided, however, shareholder
approval will be required for any amendment to the Incentive Plan which (i)
materially increases the benefits accruing to participants under the Incentive
Plan, (ii) increases the number of securities which may be issued under the
Incentive Plan or (iii) materially modifies the requirements for participants in
the Incentive Plan.
THE BOARD OF DIRECTORS AND MANAGEMENT RECOMMEND A VOTE "FOR" THE PROPOSAL TO
ADOPT THE AMENDMENTS TO THE 1992 OFFICER INCENTIVE PLAN.
APPROVAL OF AMENDMENTS
TO THE EMPLOYEE STOCK PURCHASE PLAN
The Employee Stock Purchase Plan (the "Employee Plan") provides employees
of PXRE and its participating subsidiaries with an opportunity to own an
interest in PXRE by purchasing Common Shares at a discount through payroll
deductions.
On March 30, 2000, the Board of Directors approved an amendment to the
Employee Stock Purchase Plan (the "Employee Plan"), subject to the approval of
the shareholders of PXRE, to increase the number of Common Shares authorized to
be issued upon the exercise of options granted under the Employee Plan from
85,000 shares to 185,000 shares (the "Amendment"). The purpose of the Amendment
is to increase the number of shares available under the Plan so as to assure
that PXRE can continue to be able to provide incentives to attract and retain
talented employees.
The following is a brief description of the principal features of the
Employee Plan and of the Amendment for which shareholder approval is being
sought. Such description is qualified in its entirety by reference to the terms
of the Employee Plan, as amended, a complete copy of which is attached hereto as
Appendix C.
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PURPOSE OF EMPLOYEE PLAN. The stated purpose of the Employee Plan is (i)
to encourage the ownership of PXRE Common Shares by, and foster increased
incentive in, full-time employees of PXRE and its subsidiaries, (ii) to promote
the continue success of PXRE and further the interests of its shareholders and
(iii) to enable PXRE and its subsidiaries to attract and retain valued
employees. The Employee Plan is intended to qualify as an employee stock
purchase plan under Section 423 of the Code.
TERMS OF EMPLOYEE PLAN. Adopted in 1987, the Employee Plan provides for
the grant to participating employees of PXRE and its participating subsidiaries
of stock options which are intended to qualify as qualified stock options under
Section 423 of the Code. Such options enable participating employees to purchase
at a specified discount, through a payroll deduction mechanism, Common Shares of
PXRE. Subject to certain adjustments for recapitalization events as provided in
the Employee Plan, the maximum number of Common Shares reserved for issuance
upon the exercise of options granted under the Employee Plan was, until the
adoption of the Amendment, 85,000. Pursuant to the Amendment, however, such
maximum number of shares was increased from 85,000 (of which none remained
available for issuance), to 185,000.
All employees of PXRE and its participating subsidiaries whose customary
employment is more than 20 hours per week for more than five months per calendar
year are eligible to participate in the Employee Plan, except for any employee
owning stock of PXRE representing 5% or more of the total combined voting power
or value of all classes of stock of PXRE. As of the Record Date, there were
approximately 102 full-time employees of PXRE, of whom 40 were participants in
the Employee Plan. Of such 40 participants, 4 are executive officers, 24 are
other officers and 12 are non-officer employees.
An eligible employee may participate in the Employee Plan by completing and
filing with the appropriate payroll officer a payroll authorization form, which
will authorize payroll deductions from the employee's basic compensation (as
defined in the Employee Plan) for deposit into a payroll deduction account
established for such employee. A participating employee may authorize the
deduction of any amount, provided that such amount is not less than $5.00 per
week or more than the larger of $5.00 per week or 20% of such employee's basic
compensation for the payroll period. An employee may change the amount of his or
her payroll deduction by filing a new payroll authorization form. The change
will become effective with the first payroll period after the change in January,
April, July or October, whichever occurs first.
Each employee participating in the Employee Plan is granted options
thereunder at the beginning of each calendar quarter. On each grant date (as
determined under the Employee Plan), a participating employee is granted an
option to purchase Common Shares on the next quarterly grant date (the "exercise
date") at the applicable per share option price (determined as set forth below).
Options granted under the Employee Plan are not cumulative and expire once the
next quarterly option grant is made.
The option price per share under the Employee Plan is the lesser of (i) 85%
of the fair market value of a Common Share on the date that an option is granted
or (ii) 85% of the fair market value of a Common Share on the exercise date. For
purposes of the Employee Plan, the fair market value of a Common Share on any
such date is equal to the average of the high and low prices quoted for the
Common Shares on such date on the New York Stock Exchange. On the Record Date,
the average of the high and low prices of PXRE Common Shares on the New York
Stock Exchange was $17.00.
On each exercise date, a participating employee's payroll deduction account
is automatically charged for an amount sufficient to purchase the maximum number
of whole Common Shares purchasable at the option price with the balance in the
account on such date. The minimum purchase under the Employee Plan is one share.
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<PAGE> 39
During the calendar year ended December 31, 1999, a total of 20,326 Common
Shares were issued pursuant to the Employee Plan. Of such total, Messrs. Radke,
Bleisnick, Forsyth, Toman and Penruddocke respectively, purchased 1,344, 0,
1,591, 1,172 and 0 Common Shares, the current executive officers of the
corporations participating in the Plan as a group (6 persons) purchased 4,107
Common Shares, and all other current employees (including all current
non-executive officers) of the corporations participating in the Plan as a group
(37) persons) purchased 16,219 Common Shares, pursuant to the Employee Plan.
Options granted to a participating employee under the Employee Plan are not
transferable other than by will or the laws of descent and distribution and,
during lifetime of participating employee, such options are exercisable only by
such employee. In addition, unless a participating employee's participation in
the Employee Plan terminates, such employee may not withdraw any portion of the
credit balance in his or her payroll deduction account. Participation by an
employee in the Employee Plan will terminate if (i) the employee files a written
notification of withdrawal, (ii) the employee is no longer employed by PXRE or
one of its subsidiaries (including cessation of employment by reason of
retirement or death), (iii) the employee ceases to be eligible for participation
in the Employee Plan or (iv) the Employee Plan is terminated.
The Board of Directors of PXRE may at any time amend, suspend or terminate
the Employee Plan without the approval of the shareholders of PXRE; provided,
however, except for any amendment the purpose of which is to conform the
Employee Plan to the requirements of Code, no amendment may be effected that
would (i) increase or decrease the number of shares authorized for issuance
under the Employee Plan (other than as provided in the following paragraph),
(ii) change the formula for determining the option price per share under the
Employee Plan or (iii) further limit (except by termination of the Employee
Plan) the employees of PXRE or its subsidiaries who may participate in the
Employee Plan, in each case unless such amendment is approved by the
shareholders of PXRE. The Employee Plan will terminate upon its termination by
the Board of Directors of PXRE or when no more Common Shares remain to be
purchased under the Employee Plan, whichever occurs first.
The Employee Plan provides for appropriate adjustment to be made in the
Employee Plan and in any options granted thereunder to reflect any changes in
the Common Shares of PXRE by reason of a stock dividend, stock split or
otherwise.
The Employee Plan is administered by the Board of Directors of PXRE or any
committee appointed by the Board of Directors whose members are "disinterested
persons" within the meaning of Rule 16b-3 under the Exchange Act (the
"Committee").
FEDERAL INCOME TAX CONSEQUENCES. Employees participating in the Employee
Plan will not report as income, for U.S. federal income tax purposes, the
benefit received upon the grant of options under the Employee Plan, nor will
they be taxed at the time the options are exercised and the shares are purchased
under the Employee Plan. Similarly, no corporation in the PXRE tax group
participating in the Employee Plan is allowed a deduction upon the grant or
exercise of options. Thereafter, tax consequences depend upon the timing of the
disposition of the shares. (With certain limited exceptions, the term
"disposition" means a sale, exchange, gift or transfer of legal title.
Consequently, even a gift to a member of an employee's family is treated as a
disposition of the shares.). At the time of any disposition, the employee making
such disposition will generally have to report a combination of ordinary
(compensation) income and capital gain or loss.
If Employee Plan shares are disposed of by a participating employee before
the holding periods incorporated by Section 423 of the Code are satisfied (that
is, within two years after the option is granted or within one year after the
stock is acquired), then the employee will be deemed to have made a
"disqualifying disposition" and will realize ordinary (compensation) income in
the year of disposition in the amount of the
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<PAGE> 40
difference between what he or she paid for shares and the fair market value of
the shares on the date of purchase. If the disqualifying disposition is effected
by means of a sale, then the employee may also realize a capital gain or loss.
The difference between the fair market value of the shares on the date of
purchase and the sale price will be treated as capital gain or loss.
If Employee Plan shares are disposed of after the Section 423 holding
periods are satisfied, or upon a participating employee's death at any time,
then the employee (or his or her estate) will realize ordinary (compensation)
income equal to the lesser of (i) the difference between the fair market value
of the shares and the option price on the date the option was granted or (ii)
the actual gain on the disposition. If the disposition is effected by means of a
sale, then the remaining portion of the gain, if any, will be treated as capital
gain. If the sale price for the shares is less than the option price, then there
will be no ordinary income and the employee will have a capital loss in the
amount of the difference.
In general, except in respect of the ordinary income realized by a
participating employee in the event of an early disposition of shares in a
disqualifying disposition, any corporation in the PXRE tax group employing the
employee will have no tax consequences in connection with the grant or exercise
of stock options pursuant to the Employee Plan. However, when an employee
realizes ordinary (compensation) income upon the early disposition of Employee
Plan shares, such corporation will be entitled to a federal income tax deduction
in an amount equal to the ordinary (compensation) income so realized by such
employee.
THE BOARD OF DIRECTORS AND MANAGEMENT RECOMMEND A VOTE "FOR" THE PROPOSAL TO
ADOPT THE AMENDMENTS TO THE EMPLOYEE STOCK PURCHASE PLAN.
APPROVAL OF AMENDMENTS TO THE DIRECTOR STOCK OPTION PLAN
The Director Stock Plan, formally known as the Director Stock Option Plan
(the "Director Stock Plan"), provides automatic annual grants of options to
purchase PXRE Common Shares to the non-employee directors of PXRE. The
shareholders approved the adoption of the Director Stock Option Plan in 1995. On
March 30, 2000 the Board of Directors amended the Director Stock Plan, subject
to shareholder approval, to (1) increase the automatic annual option grant (made
on the date of the annual general meeting of PXRE shareholders) to each
non-employee director from 3,000 to 5,000 PXRE Common Shares, (2) provide for
additional automatic annual grants of 1,000 PXRE Common Shares subject to
certain restrictions ("Restricted Shares") to each non-employee director (made
on the date of the annual general meeting of PXRE shareholders), (3) provide
that the restrictions on the Restricted Shares granted under the Director Stock
Plan will lapse ratably over a period of 3 years from the date of grant (other
than in the case of a change in control, the Common Shares of PXRE ceasing to be
publicly traded or the death, disability or retirement of the director), and (4)
provide that options under the Director Stock Plan cannot be repriced (other
than in connection with an adjustment in the Company's Common Shares as provided
in the Plan) (the "Amendment").
The purpose of parts (1) and (2) of the Amendment is to increase the value
of equity-based compensation provided to PXRE directors in order to make such
compensation competitive with that provided by other companies, to assure that
the interests of the Board of Directors are further aligned with those of PXRE
shareholders, and to provide additional incentives to continue to attract and
retain qualified outside directors. Management and the Board of Directors
believe that the availability of options under the Director Stock Plan for a
competitive number of shares, and the grant of Restricted Shares under the
Director Stock Plan, are critical factors in PXRE's ability to attract and
retain the services of qualified directors. Parts
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(3) and (4) of the Amendment were approved in response to comments from
institutional investors regarding the PXRE plans generally.
A summary of the principal provisions of the Director Stock Plan, as
amended, are set forth below. Such description is qualified in its entirety by
reference to the terms of the Director Stock Plan, a complete copy of which is
attached as Appendix D.
PURPOSE OF DIRECTOR STOCK PLAN. The purpose of the Director Stock Plan is
to maintain PXRE's ability to attract and retain the services of experienced and
highly qualified non-employee directors and to increase their proprietary
interest in PXRE's success.
TERMS OF DIRECTOR STOCK PLAN. The Director Stock Plan provides for
automatic annual grants of stock options and, if approved by shareholders,
Restricted Shares, on the date of PXRE's annual general meeting of shareholders,
until 2005, to each individual who is elected to the Board of Directors
following such meeting, or who continues to be a member of the Board of
Directors following such meeting, provided such individual is not also an
employee of PXRE or any of its subsidiaries. Presently all the directors except
Mr. Gerald Radke are eligible to participate in the Director Stock Plan.
Under the Director Stock Plan as amended, each annual grant will permit the
holder, for a period of ten years from the date of grant, to purchase from PXRE
5,000 PXRE Common Shares (subject to adjustment for stock splits, stock
dividends, reclassifications and certain other events as provided in the
Director Stock Plan) at the fair market value of such shares on the date the
option was granted. Each option becomes vested and exercisable ratably over the
three years immediately following its date of grant. In the event a director
terminates service on the Board by reason of death, retirement (defined to be
retirement as of the annual general meeting of shareholders coinciding with or
next following attainment of age 72) or disability, the total number of option
shares will become immediately exercisable and will continue to be exercisable
for three years (but not beyond its original expiration date). In the event a
director terminates service on the Board other than by reason of death,
disability or retirement, such person's options (to the extent vested and
exercisable upon such termination) will be exercisable for three months after
the date of termination of service, but not beyond the original expiration date.
In the event of death of a director after terminating service on the Board, any
outstanding options will expire on the later of the date applicable to the
director at the time the director terminated service or one year from the date
of death, provided that in no event may an option be exercised beyond its
original expiration date. Each option and all rights thereunder are
nonassignable and nontransferable other than by will or the laws of descent and
distribution, or pursuant to a qualified domestic relations order (as described
in Section 414(p) of the Code). No option may be repriced after the date of
grant (other than in connection with an adjustment in the Company's Common
Shares, as provided in the Plan).
Additionally, under the Directors Stock Plan as amended, each eligible
member of the Board of Directors will receive an automatic annual grant of 1,000
Restricted Shares on the date of each annual general meeting of the PXRE
shareholders. The restrictions on the Restricted Shares will lapse ratably over
a period of three (3) years after the date of grant (the "Restricted Period")
(other than in the case of a change of control, the Common Shares of PXRE
ceasing to be publicly traded, or the death, disability or retirement of a
director). Restricted Shares are generally subject to forfeiture if a director
terminates service during the Restricted Period. The directors who are granted
the Restricted Shares are 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
director until the applicable Restricted Period has lapsed. The lapse of the
Restricted Period
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will be accelerated in the event of the director's death, disability or
retirement. Upon the grant of Restricted Shares, directors are required to enter
into a Restricted Share Agreement with PXRE containing the forgoing restrictions
and such other terms and conditions that the Board of Directors may deem
advisable.
An aggregate of 250,000 PXRE Common Shares (subject to adjustment for stock
splits, stock dividends, reclassifications and certain other events as provided
in the Director Stock Plan) are subject to the Director Stock Plan, including a
total of 94,000 shares currently subject to outstanding awards. Shares subject
to options which terminate or expire unexercised or Restricted Shares which are
forfeited will be available for future grants.
On the date of the annual general meetings of PXRE shareholders in 1995 and
1996, options for 1,000 shares were granted pursuant to the Director Stock Plan
to each non-employee director then in office at exercise prices of $23.25 and
$24.95, respectively. On the date of the annual general meeting of PXRE
shareholders in 1997, 1998 and 1999, options for 3,000 shares were granted
pursuant to the Director Stock Plan to each non-employee director then in office
at exercise prices of $28.14, $31.06 and $17.70, respectively. As of the Record
Date, options for a total of 94,000 shares had been granted pursuant to the
Director Stock Plan, of which a total of 49,000 are currently exercisable. After
giving effect to the Amendment, 156,000 Common Shares will be available for
issuance in the future. On the Record Date, the closing price of PXRE Common
Shares on the New York Stock Exchange was $17.00.
The Director Stock Plan is administered by the Board of Directors, who are
authorized to interpret the Director Stock Plan but have no authority with
respect to the selection of directors to receive options, the number of shares
subject to the Director Stock Plan or to each grant thereunder, or the option
price for shares subject to options. The Board may amend the Director Stock Plan
as it shall deem advisable but may not, without the approval of the
shareholders, increase the maximum number of shares under the Director Stock
Plan or options or Restricted Shares to be granted thereunder, change the option
price or price of the Restricted Shares provided in the Director Stock Plan,
extend the period during which options or Restricted Shares may be granted or
exercised, or change the class of persons eligible to receive options or
Restricted Shares. Adjustments will be made in the number and kind of shares
subject to the Director Stock Plan and the number and kind of shares subject to
outstanding and subsequent option and Restricted Shares grants and in the
purchase price of outstanding options, in each case to reflect changes in PXRE's
Common Shares through changes in corporate structure or capitalization.
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NEW PLAN BENEFITS TABLE. The following table sets forth the number of
options and Restricted Shares that, subject to shareholder approval of the
Amendment to the Director Stock Plan at the Annual Meeting, and subject further
to the terms of the Director Stock Plan, will be granted to the non-employee
directors as a group on the date of such meeting:
NEW PLAN BENEFITS
DIRECTOR STOCK PLAN
<TABLE>
<CAPTION>
TOTAL NUMBER OF
TOTAL NUMBER OF RESTRICTED SHARES
NAME AND POSITION(1) OPTIONS GRANTED(2) GRANTED(2)
- -------------------- ------------------ -----------------
<S> <C> <C>
All Non-Executive Directors as a group (8 persons).... 40,000 8,000
</TABLE>
- ---------------
(1) The table does not include any information regarding each of the five named
Executive Officers, all current Executive Officers as a group or all
employees who are not Executive Officers as a group, as none of those
individuals or groups is eligible to participate in the Director Stock Plan.
(2) The value of such options and Restricted Shares is not determinable because,
as described above, the exercise price of the options and the value of the
Restricted Shares will not be determined until the date of grant (i.e., the
date of the Annual Meeting).
FEDERAL INCOME TAX CONSEQUENCES. The options under the Director Stock Plan
are nonstatutory options, not intended to qualify as incentive stock options
under Section 422 of the Code. The grant of options will not result in taxable
income to the director or a tax deduction to PXRE. The exercise of an option by
a director will result in taxable ordinary income to the director equal to the
difference between the fair market value on the date the option is exercised and
the fair market value on the date the option was granted (the option price)
multiplied by the number of shares acquired upon such exercise. Any gain (or
loss) on the director's subsequent sale of such shares, determined by comparing
the amount realized from such sale with the fair market value on the date of
exercise, will be long or short-term capital gain (or loss) depending on how
long the shares were held before the sale.
The grant of Restricted Shares will not result in income to the director 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 director elects to be taxed at the
date of grant, such director 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 income to the director when
received by the director.
THE BOARD OF DIRECTORS AND MANAGEMENT RECOMMEND A VOTE "FOR" THE PROPOSAL TO
ADOPT THE AMENDMENTS TO THE DIRECTOR STOCK OPTION PLAN.
APPROVAL OF AMENDMENTS TO THE DIRECTOR EQUITY
AND DEFERRED COMPENSATION PLAN
The Director Equity and Deferred Compensation Plan (the "Director
Compensation Plan") enables non-employee directors to elect to defer receipt of
all or part of the fees for services as a member of the Board of Directors, and
allows the directors to elect to receive all or some of the annual retainer in
PXRE Common
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Shares or options to purchase PXRE Common Shares. The shareholders approved the
adoption of the Director Compensation Plan in 1997.
On March 30, 2000 the Board of Directors amended the Director Compensation
Plan, subject to shareholder approval, to (1) provide that directors can make an
election to receive some or all of the fees that they would otherwise receive in
cash, in respect of services for committee memberships, attendance at meeting,
committee chairs and similar services, in PXRE Common Shares or options to
purchase PXRE Common Shares, and (2) provide that shareholder approval is
required for any amendment to the Director Compensation Plan which (i)
materially increases the benefits accruing to participants under the Director
Compensation Plan, (ii) increases the number of securities which may be issued
under the Director Compensation Plan or (iii) materially modifies the
requirements for participants in the Director Compensation Plan (the
"Amendment"). The purpose of part (1) of the Amendment is to offer to directors
the opportunity to increase their total holdings in PXRE equity so that the
interests of the members of the Board of Directors are further aligned with
those of the shareholders. Part (2) of the Amendment is in response to comments
from institutional investors regarding the PXRE plans generally.
The following is a description of the principal features of the Director
Compensation Plan as amended for which shareholder approval is being sought
hereby. Such description is qualified in its entirety by reference to the terms
of the Director Compensation Plan, a complete copy of which is attached as
Appendix E.
PURPOSE OF DIRECTOR COMPENSATION PLAN. The purpose of the Director
Compensation Plan is to attract and retain highly qualified persons to serve as
non-employee directors of PXRE by providing the directors with greater
flexibility in the form and timing of receipt of compensation for services on
the Board of Directors, and an opportunity to obtain a greater proprietary
interest in PXRE's success and progress through receipt of fees in the form of
PXRE Common Shares and options on PXRE Common Shares, thereby aligning the
directors' interests with the interests of the shareholders.
PARTICIPANTS. Only non-employee directors of PXRE are eligible to
participate in the Director Compensation Plan. Currently eight non-employee
directors (i.e., all directors except Mr. Gerald Radke) are eligible to
participate in the Director Compensation Plan.
TERMS OF DIRECTOR COMPENSATION PLAN. The Director Compensation Plan will,
until December 31, 2007, enable non-employee directors to elect to defer receipt
of fees for services as a member of the Board payable to such non-employee
directors, and will allow such directors to elect, prior to the subject year, to
receive all or a portion of the annual retainer amount, and/or the
fee-for-services amount, if the Amendment is approved by shareholders, in PXRE
Common Shares or options to purchase PXRE Common Shares.
Prior to the fiscal year for which directors' fees will be paid, a director
may irrevocably elect to defer receipt of all or a portion of the cash
compensation payable to such director for such year (including annual retainer
fees, committee membership fees, fees associated with a committee chair and fees
for attendance at meetings of the Board and its committees, but not including
reimbursement for expenses) until after the director ceases to be a director of
PXRE or another designated future date or dates. In such event, a notional
account is established for such director and earnings (or losses) on the
balances in such account are credited to the account in an amount equal to the
earnings (or losses) on the fund or funds of PXRE's 401(k) Plan designated by
the director from time to time.
Each non-employee director may, prior to the year for which the annual
retainer fees will be paid, irrevocably elect to receive PXRE Common Shares or
stock options (or a combination thereof) in lieu of all or a portion (in
increments of 25%) of his or her annual cash retainer. The number of shares
which may be
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awarded to a director upon such director's election to receive Common Shares in
lieu of all or a portion of the annual retainer will be the number of whole
shares equal to (i) the portion of the annual retainer for which the director
has made such election, divided by (ii) the "fair market value" per Common
Share, as determined pursuant to the Director Compensation Plan. Certificates
for such shares will be issued promptly following the date on which the annual
retainer is payable. If the Amendment is approved by the shareholders, the
Director Compensation Plan will also allow each non-employee director to make an
irrevocable election to receive all or a portion of the fees for services (i.e.,
committee membership fees, fees associated with a committee chair and fees for
attendance at meetings of the Board and its committees) in PXRE Common Shares or
options to purchase PXRE Common Shares (or a combination thereof) in lieu of all
or a portion (in increments of 25%) of his or her annual fees for services. The
number of shares which may be awarded to a director upon such director's
election to receive Common Shares in lieu of all or a portion of the fees will
be the number of whole shares equal to (i) the portion of the fees for which the
director has made such election, divided by (ii) the "fair market value" per
Common Share, determined pursuant to the Director Compensation Plan.
Certificates for such shares will be issued promptly following the date on which
the fees are payable.
The number of whole Common Shares subject to an option grant under the
Director Compensation Plan will be determined by dividing the portion of the
annual retainer and, if approved by shareholders, the portion of the fees for
which the director has made such election, by the "option value," as determined
pursuant to the Director Compensation Plan. The exercise price per share under
each option will be equal to the "fair market value" per share, as determined
pursuant to the Director Compensation Plan.
For purposes of the Director Compensation Plan, with respect to the annual
retainer, unless otherwise defined, "fair market value" means the average of the
high and low share prices quoted for PXRE Common Shares 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, as the case
may be. 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, as the case may be, in
accordance with the Black-Scholes option valuation model, discounted by 20%.
For purposes of the Director Compensation Plan, with respect to the fees
for services paid, unless otherwise defined, "fair market value" means the
average of the high and low share prices quoted for PXRE Common Shares on the
New York Stock Exchange on the date of the meeting for which the fees relate.
For purposes of the Director Compensation Plan, with respect to the fees for
services paid, "option value" means the value of an option determined as of the
date of the meeting for which the fees relate and computed as provided above.
Options granted under the Director Compensation Plan are immediately
exercisable and may be exercised until the tenth anniversary of the date of
grant. In the event a director terminates service on the Board, such person's
options will be exercisable for three years after the date of termination of
service, but not beyond the original expiration date. In the event of death of a
director after terminating service on the Board, any outstanding options will
expire on the later of the date applicable to the director at the time the
director terminated service or one year from the date of death, provided that in
no event may an option be exercised beyond its original expiration date.
A director's interest in an account or an option, and his or her rights
under the Director Compensation Plan are nonassignable and nontransferable other
than by will or the laws of descent and distribution, or pursuant to a domestic
relations order (as described in Section 414(p) of the Code).
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<PAGE> 46
An aggregate of 250,000 PXRE Common Shares (subject to adjustment for stock
splits, stock dividends, reclassifications and certain other events as provided
in the Director Compensation Plan) will be subject to the Director Compensation
Plan. Shares subject to options which terminate or expire unexercised will be
available for future option grants. On the Record Date, the closing price of
PXRE Common Shares on the New York Stock Exchange was $17.00.
The Director Compensation Plan will be administered by the Board of
Directors. The Board will have full power and authority to construe and
interpret the Director Compensation Plan and adopt and amend such rules and
regulations for the administration of the Director Compensation Plan as it shall
deem desirable. The Board may amend the Director Compensation Plan as it shall
deem advisable, provided, however, that if the Amendment is approved by the
shareholders, shareholder approval will be necessary for those amendments which
(i) materially increase the benefits accruing to participants under the Director
Compensation Plan, (ii) increase the number of securities which may be issued
under the Director Compensation Plan or (iii) materially modify the requirements
for participants in the Director Compensation Plan. Additionally, the Director
Compensation Plan provides that no such amendment shall materially and adversely
affect any right of a director with respect to any award 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
general meeting of PXRE's shareholders in 2007.
FEDERAL INCOME TAX CONSEQUENCES. It is intended that deferred annual
retainer fees and fees for services, including any earnings thereon, will be
taxable to the director in the year or years in which they are paid to the
director in cash.
The receipt of Common Shares under the Director Compensation Plan will
generally result in taxable income for the director, based on the fair market
value of the shares on the date awarded. The grant of options under the Director
Compensation Plan will not generally result in taxable income to the director or
a tax deduction to PXRE. The exercise of an option by a director will result in
taxable ordinary income to the director equal to the difference between the
exercise price and the fair market value on the date the option is exercised,
multiplied by the number of shares acquired upon such exercise. Any gain (or
loss) on the director's subsequent sale of such shares, determined by comparing
the amount realized from such sale with the fair market value on the date of
exercise, will be long or short-term capital gain (or loss) depending on how
long the shares were held before the sale.
NEW PLAN BENEFITS. The only participants in the Director Compensation Plan
are the non-employee directors of PXRE. The value of any shares and shares
subject to options which may be awarded in 2000 and thereafter is not currently
determinable due to the elective nature of the Director Compensation Plan.
THE BOARD OF DIRECTORS AND MANAGEMENT RECOMMEND A VOTE "FOR" THE PROPOSAL TO
ADOPT THE AMENDMENTS TO THE DIRECTOR EQUITY AND DEFERRED COMPENSATION PLAN.
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<PAGE> 47
CERTAIN BUSINESS RELATIONSHIPS
PHOENIX HOME LIFE MUTUAL INSURANCE COMPANY
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 principally involve a
multi-year fee-based undertaking by PXRE through the year ending December 31,
2003 to produce and underwrite business with Select Re. The undertaking, which
is subject to adjustment based on Select Re's shareholders' equity, was
approximately $29.5 million in aggregate premium for 1999 for which PXRE
received override commissions of $2,298,000 for 1999. See Exhibit 10.3 to PXRE's
Form S-4 Registration Statement dated August 18, 1999 (File No. 333-85451).
Gerald Radke (Chairman, President and Chief Executive Officer of PXRE) and
Jeffrey Radke (Executive Vice President of PXRE and President of its Bermuda
reinsurance subsidiary PXRE Reinsurance Ltd.) are on the Board of Directors of
Select Re and are shareholders of Select Re. Gerald Radke is Co-Vice Chairman of
Select Re and Jeffrey Radke was formerly the President of Select Re. The Select
Committee of the Board of Directors of PXRE (composed of Mr. Haftl and Ms.
Luscombe) has independently reviewed the agreements between PXRE and Select Re
and approved the same.
BERMUDA HOUSING
During 1999, PXRE entered into a lease for a home in Bermuda for a term of
2 years that allows it to provide housing for PXRE's Chairman, President and
Chief Executive Officer at an annual rental of approximately $90,000, and a
lease for a home in Bermuda for a term of 2 years that allows it to provide
housing for PXRE's Chief Financial Officer at an annual rent of approximately
$72,000 in the first year and $84,000 in the second year. These leases relieve
PXRE from providing such persons with a housing allowance.
During 2000 PXRE entered into an arrangement in which Jeffrey Radke leased
and PXRE provided a mortgage for a home in Bermuda for a term of up to 20 years.
This arrangement fixed the housing allowance expense borne by PXRE for the
period of the PXRE mortgage. The PXRE mortgage, in the amount of $500,000, was
provided to a charitable trust to purchase the house and PXRE received a second
mortgage (the first mortgage will be in the amount of $1,000,000). The PXRE
mortgage earns interest at a rate dependent on the sale price of the home at the
conclusion of the PXRE mortgage. The expected rate is LIBOR.
CERTAIN TAX PAYMENTS
In December 1999, PXRE approved payments aggregating $176,181 to reimburse
Gerald Radke for the tax consequences to him of the conversion of certain of his
shares of PXRE Corporation common stock into PXRE Common Shares in connection
with the October 1999 reorganization pursuant to which PXRE Corporation became
an indirect subsidiary of PXRE Group Ltd.
Both the respective fair value of the Bermuda housing provided by PXRE to
Mr. Gerald Radke and Mr. Dore and the respective amounts reimbursed to them by
PXRE for the expense of traveling to and from Bermuda may be treated for income
tax purposes as compensation to Mr. Radke and Mr. Dore. PXRE has
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<PAGE> 48
agreed to reimburse $48,805 to Mr. Radke and $23,055 to Mr. Dore for the
additional income taxes associated with the inclusion of such amounts as taxable
income.
MORGAN, LEWIS & BOCKIUS
During 1999 PXRE retained, and during 2000 PXRE intends to retain, Morgan,
Lewis & Bockius LLP to provide legal services. Mr. Browne, a director of PXRE,
is a partner in Morgan, Lewis & Bockius LLP.
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, 1999, all Section 16(a) filing requirements applicable to PXRE's executive
officers, directors and greater-than-10% stockholders were complied with.
SHAREHOLDER PROPOSALS
If a shareholder desires to present a proposal for inclusion in next year's
Proxy Statement, such shareholder must submit such proposal in writing to PXRE
for receipt not later than December 31, 2000. Proposals must comply with the
proxy rules relating to shareholder proposals, in particular Rule 14a-8 under
the Exchange Act, to be included in PXRE's year 2001 proxy materials.
Shareholders who wish to submit a proposal for consideration at PXRE's year 2001
annual general meeting of shareholders, but who do not wish to submit a proposal
for inclusion in PXRE'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 2000
Annual General Meeting of Shareholders during the year 2001 and otherwise comply
with the notice provisions of PXRE's Bye-Laws. If a shareholder 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 general meeting. In either case, proposals
should be delivered to PXRE Group Ltd., Suite 231, 12 Church Street, Hamilton HM
11, Bermuda, Attention: Secretary.
GENERAL
PXRE's Annual Report to Shareholders, which contains financial statements
for the year ended December 31, 1999 as well as other information concerning the
operations of PXRE, is being sent to you with this Proxy Statement.
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PXRE FILES WITH THE SECURITIES AND EXCHANGE COMMISSION AN ANNUAL REPORT ON
FORM 10-K. A copy of the report for fiscal 1999 will be furnished without
charge to any shareholder sending a written request therefor to Secretary, PXRE
Group Ltd., Suite 231, 12 Church Street, Hamilton HM 11, Bermuda, or can be
accessed through PXRE's web site at: www.pxre.com. At the date of this Proxy
Statement, management 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, which will be presented at the Annual 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 GROUP LTD.
Hamilton, Bermuda
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APPENDIX A
PXRE GROUP LTD.
RESTATED EMPLOYEE ANNUAL INCENTIVE BONUS PLAN
AS AMENDED AND RESTATED
(MARCH 30, 2000)
SECTION 1. PURPOSE
The purpose of the Plan is to foster and promote the interests of PXRE
Group Ltd. 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.(1)
SECTION 2. DEFINITIONS
<TABLE>
<C> <C> <S>
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 Group Ltd. (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).
</TABLE>
- ---------------
(1) The Plan was originally a plan of PXRE Corporation, a Delaware corporation
("PXRE Corp."), which provided, among other things, for the grant of PXRE
Corp. common stock. Pursuant to an Agreement and Plan of Merger dated as of
July 7, 1999 among the Company, PXRE Corp. and PXRE Merger Corp., PXRE Corp.
reorganized so that, among other things, the Company, a Bermuda corporation,
became the parent holding company for PXRE Corp. As a result of the
reorganization, each outstanding share of PXRE Corp. under the Plan was
automatically converted into one common share of the Company. Additionally,
pursuant to the reorganization, the Company assumed all of the obligations
of PXRE Corp. under the Plan.
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<PAGE> 51
<TABLE>
<C> <C> <S>
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).
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 Group Ltd. 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.
2.20 -- "RETURN ON 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 common share or common shares,
par value $1.00 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).
</TABLE>
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
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<PAGE> 52
advisable and to interpret the terms and provisions of the Plan. It is the
intent of the Company that the Plan comply in all respects with Rule 16b-3 and
Section 162(m) with respect to persons subject to Section 16 and Section 162(m),
that any ambiguities or inconsistencies in construction of the Plan be
interpreted to give effect to such intention and that if any provision of the
Plan is found not to be in compliance with Rule 16b-3 and Section 162(m), such
provision shall be deemed null and void to the extent required to permit the
Plan to comply with Rule 16b-3 and Section 162(m). The Board may adopt rules and
regulations under, and amend, the Plan in furtherance of the intent of the
foregoing.
The Committee shall keep minutes of its meetings and of action taken by it
without a meeting. A majority of the Committee shall constitute a quorum, and
the acts of a majority of the members present at any meeting at which a quorum
is present, or acts approved in writing by all of the members of the Committee
without a meeting, shall constitute the acts of the Committee.
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.
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<PAGE> 53
(a) TENTATIVE BONUS POOL. The Tentative Bonus Pool for a Fiscal Year shall
be equal to the product of (i) the Target Bonus Pool for the Fiscal Year
multiplied by (ii) the Performance Percentage for such Year. The Performance
Percentage shall be the percentage opposite the Company's Return on Equity
("ROE") for the Fiscal Year in the following table:
<TABLE>
<CAPTION>
PERFORMANCE
COMPANY ROE PERCENTAGE
- ----------- -----------
<S> <C>
8%......................................................... 0%
9.......................................................... 20.0
11.......................................................... 60.0
13.......................................................... 100.0
15.......................................................... 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
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<PAGE> 54
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 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
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<PAGE> 55
Cash Bonus Pool for the Year unless approved by the Board of Directors, and
further provided that, in the case of any Participant who is a "covered
employee" and the deduction of whose non-performance based compensation for
such year would likely be limited by Section 162(m) at the end of the
Fiscal Year for purposes of Section 162(m) of the Code, the Committee may
decrease his Tentative Cash Bonus by up to 20% (but may not increase it),
and such Participant may not benefit from the portion of the pool not
awarded to other Participants. The amount finally determined by the
Committee, which shall be the Participant's Cash Bonus for such Year, shall
be paid as provided in Section 5.7.
(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
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<PAGE> 56
Bonus for the Year to the total of all Target Bonuses of such Participants
for the Year (a Participant's "Tentative Cash Bonus"). In determining a
Participant's Cash Bonus for the Year, upon the recommendations of the
Participant's supervisor and senior officers of the Company and the
approval of the Chief Executive Officer, the Committee may increase or
decrease each Participant's Tentative Cash Bonus by up to 40% of the amount
of such Tentative Cash Bonus in order to take into account the
Participant's individual performance and his or her contribution to the
Company's performance for the Year, provided that the total Cash Bonuses
for non-officer Participants for the Year shall not exceed the amount of
the Employee Cash Bonus Pool unless approved by the Board of Directors.
5.6 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
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<PAGE> 57
sum with such reduction as the Company may deem necessary for federal and other
withholding taxes. Such payment shall be made to the Participant except that any
payment due to a deceased Participant shall be made to the Participant's estate.
(c) RESTRICTED SHARE BONUSES. Except as provided in Section 5.7(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 350,000 Shares,
which may be 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 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 GROUP LTD.
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 ENCUM-
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<PAGE> 58
BERED IN ANY MANNER DURING THE RESTRICTED PERIOD SPECIFIED IN SUCH
AGREEMENT. COPIES OF SUCH PLAN AND AGREEMENT ARE ON FILE WITH THE SECRETARY
OF THE COMPANY."
(d) LAPSE OF RESTRICTED PERIOD. The Restricted Period shall commence upon
the award of the Restricted Share Bonus and, unless sooner terminated as
otherwise provided herein, shall continue for such period of time as specified
by the Committee in the Restricted Share Agreement. Notwithstanding anything in
the Plan which may be construed to the contrary, the Restricted Period shall
continue for a period of not less than three (3) years (unless sooner terminated
pursuant to subparagraphs (e) or (h) hereof); provided, however, that the
restrictions may lapse ratably during the Restricted Period.
(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
(3) the stockholders of the Company approve a plan or proposal for the
liquidation or dissolution of the Company; or
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(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 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
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<PAGE> 60
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; provided, however, 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; provided, further, that except as
provided in Section 6.1, without further approval by the holders of a majority
of the outstanding shares of the Company entitled to vote, no amendment shall be
made to the Plan which (i) materially increases the benefits accruing to
Participants, (ii) increases the number of Shares which may be issued under the
Plan, or (iii) materially modifies the requirements for Participants to
participate in the Plan.
(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 was originally adopted by the Board of Directors of PXRE Corporation, a
Delaware corporation, and became effective for fiscal years beginning on and
after January 1, 1992.(2)
- ---------------
(2) The Plan was approved by the affirmative vote of the holders of a majority
of the outstanding shares of PXRE Corporation common stock present in person
or represented by proxy at the 1992 Annual Meeting of Stockholders of PXRE
Corporation. See Footnote 1.
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<PAGE> 62
EXHIBIT A
<TABLE>
<CAPTION>
TARGET
BONUS
POSITION PERCENTAGE
- -------- ----------
<S> <C>
SENIOR OFFICER BONUS POOL
Chief Executive Officer................................... 70%
Executive Vice Presidents................................. 55
Senior Vice Presidents.................................... 50
Vice Presidents........................................... 45
JUNIOR OFFICER BONUS POOL
Assistant Vice Presidents and Controller.................. 35
Assistant Secretaries and Assistant Treasurers............ 25
OTHER EMPLOYEE BONUS POOL
All other employees....................................... 10
</TABLE>
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<PAGE> 63
PXRE GROUP LTD.
RESTATED EMPLOYEE ANNUAL INCENTIVE BONUS PLAN
PAYMENT ELECTION
PXRE Group Ltd.
Suite 231, 12 Church Street
Hamilton HM 11, Bermuda
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, 20 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 , 20 (insert specific date, such as
January 10, 2000).
[ ] (b) Commencing within 1 month following termination of my employment
with PXRE Group Ltd. (the "Company") and any Affiliate.
[ ] (c) Commencing on January 5 of the calendar year following
termination of my employment with the Company and any Affiliate.
[ ] (d) Commencing upon the earlier of (a) or (b) or upon the earlier of
(a) or (c). (If you check this box, you must check and complete
(a) and check either (b) or (c)).
I understand that the deferred portion, plus earnings (or losses), will be
paid to me in three annual installments beginning on the date selected above,
except that at any time before such date I may request the Committee to approve
a hardship payment or not later than 12 months before such date I may request
the Committee to make payment in a different manner. The Committee is not
required to approve such requests.
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I understand that if I die before my Cash Bonus, if any, is entirely paid,
the rest will be paid to my estate.
--------------------------------------
Signature
Print Name
---------------------------
Soc. Sec. No.
------------------------
Approved by the Committee:
By
--------------------------------------------------
Date:
---------------------------------------------
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<PAGE> 65
APPENDIX B
PXRE GROUP LTD.
1992 OFFICER INCENTIVE PLAN
AS AMENDED AND RESTATED
(MARCH 30, 2000)
SECTION 1. GENERAL PROVISIONS
1.1 NAME AND GENERAL PURPOSE. The name of this plan is the PXRE Group Ltd.
1992 Officer Incentive Plan (hereinafter called the "Plan"). The purpose of the
Plan is to enable PXRE Group Ltd. (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)
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 Group Ltd. (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
- ---------------
(1) The Plan was originally a plan of PXRE Corporation, a Delaware corporation
("PXRE Corp."), which provided, among other things, for the grant of PXRE
Corp. common stock. Pursuant to an Agreement and Plan of Merger dated as of
July 7, 1999 among the Company, PXRE Corp. and PXRE Merger Corp., PXRE Corp.
reorganized so that, among other things, the Company, a Bermuda corporation,
became the parent holding company for PXRE Corp. As a result of the
reorganization, each outstanding share of PXRE Corp. under the Plan was
automatically converted into one common share of the Company. Additionally,
pursuant to the reorganization, the Company assumed all of the obligations
of PXRE Corp. under the Plan.
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<PAGE> 66
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 Group Ltd. 1992 Officer Incentive Plan.
(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.
(o) "SHARES" mean the common shares, par value $1.00 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.
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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 2,750,000. 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 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. Except as set forth in Section 4.1, Options granted under the
Plan may not be repriced.
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
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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 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
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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.
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
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(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 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").
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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).
(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 GROUP LTD. 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. Notwithstanding anything in the
Plan which may be construed to the contrary, the Restricted Period shall
continue for a period of not less than three (3) years (unless sooner terminated
pursuant to subparagraph (a) hereof or Section 4.2(a) of the Plan); provided,
however, that the restrictions may lapse ratably during the Restricted Period.
(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.
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(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 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
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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 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 canceled as of such date,
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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) 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.
(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.
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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; provided, further, except as provided in Section 4.1, that without
further approval by the holders of a majority of the outstanding Shares of the
Company entitled to vote thereon, no amendment shall be made to the Plan which
(i) materially increases the benefits accruing to Participants, (ii) increases
the number of Shares which may be issued under the Plan, or (iii) materially
modifies the requirements for Participants to participate in the Plan.
Except as otherwise prohibited in the Plan (including but not limited to
Sections 2.2 and 3.3 of the Plan), and subject to the terms of the Plan, the
Committee may modify, extend or renew outstanding Options or Restricted Shares
in any manner. However, the Committee shall not modify any rights or obligations
under any outstanding Option or Restricted Share without the consent of the
Participant.
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 originally adopted by the Board of
Directors of PXRE Corporation, a Delaware corporation, on March 19, 1992.(2) The
Plan shall terminate on May 21, 2002.
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(2) The Plan was approved by the affirmative vote of the holders of a majority
of the outstanding shares of PXRE Corporation common stock present in person
or represented by proxy at the 1992 Annual Meeting of Stockholders of PXRE
Corporation. See Footnote 1.
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APPENDIX C
PXRE GROUP LTD.
EMPLOYEE STOCK PURCHASE PLAN
(AS AMENDED AND RESTATED MARCH 30, 2000)
This Stock Purchase Plan (the "Plan") of PXRE Group Ltd. (the
"Corporation") is established to provide eligible employees of the Corporation
or its subsidiaries a continual opportunity to purchase common stock of the
Corporation through payroll deductions.(1)
1. STOCK SUBJECT TO PLAN
The stock subject to the Plan shall be Shares of the Corporation's
authorized but unissued or reacquired Common Shares ("Common Shares" or
"Shares"), par value $1.00 per share. The aggregate number of Shares on which
options may be granted pursuant to the Plan shall not exceed 185,000 Shares. If
an option shall expire or terminate for any reason without having been exercised
in full, the Shares subject to the unexercised or terminated option shall not be
considered to have been subject to an option for purposes of the limitation on
the aggregate number of Shares subject to the Plan.
2. ADMINISTRATION
The Plan shall be administered by the Board of Directors of the Corporation
or any committee thereof appointed by the Board of Directors. Subject to the
provisions of the Plan set forth herein, the Board or such committee is
authorized to establish rules and regulations pertaining to administration of
the Plan.
3. GENERAL RESTRICTIONS
Under this Plan:
(1) Options are to be granted only to employees of the Corporation or
of its parent or subsidiary corporations to purchase stock in any such
corporation.
(2) No employee shall be granted an option if such employee,
immediately after the option is granted, owns stock possessing 5 percent or
more of the total combined voting power or value of all classes of stock of
the Corporation or of its parent or subsidiary corporation. For purposes of
this paragraph, the rules of Sec. 425(d) of the Internal Revenue Code shall
apply in determining the stock ownership of an individual, and stock which
the employee may purchase under outstanding options shall be treated as
stock owned by the employee.
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(1) The Plan was originally a plan of PXRE Corporation, a Delaware corporation
("PXRE Corp."), which provided, among other things, for the grant of PXRE
Corp. stock. Pursuant to an Agreement and Plan of Merger dated as of July 7,
1999 among the Corporation, PXRE Corp. and PXRE Merger Corp., PXRE Corp.
reorganized so that, among other things, the Corporation, a Bermuda
corporation, became the parent holding company for PXRE Corp. As a result of
the reorganization, each outstanding share of PXRE Corp. under the Plan was
automatically converted into one common share of the Corporation.
Additionally, pursuant to the reorganization, the Corporation assumed all of
the obligations of PXRE Corp. under the Plan.
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(3) No employee shall be granted an option which permits his rights to
purchase stock under all such plans of his employer Corporation and its
parent and subsidiary corporations to accrue at a rate which exceeds
$25,000 of fair market value of such stock (determined at the time such
option is granted) for each calendar year in which such option is
outstanding at any time. For purposes of this paragraph:
(1) the right to purchase stock under an option accrues when the
option (or any portion thereof) first becomes exercisable during the
calendar year;
(2) the right to purchase stock under an option accrues at the rate
provided in the option, but in no case may such rate exceed $25,000 of
fair market value of such stock (determined at the time such option is
granted) for any one calendar year; and
(3) a right to purchase stock which has accrued under one option
granted pursuant to the plan may not be carried over to any other
option.
(4) Such option shall not be transferable by such employee otherwise
than by will or the laws of descent and distribution, and such option may
be exercised, during his lifetime, only by him.
(5) All employees granted options under this plan shall have the same
rights and privileges, other than restrictions herein related to the
percentage of an employee's compensation which may be credited toward such
employee's account hereunder.
(6) No option granted hereunder may be exercised after the expiration
of 3 months from the date such option is granted.
4. ELIGIBILITY
All employees of the Corporation or any of its subsidiaries shall be
eligible to participate in the Plan except:
(1) Employees whose customary employment is 20 hours or less per week,
and
(2) Employees whose customary employment is for not more than 5 months
in any calendar year.
5. PARTICIPATION IN THE PLAN
To participate in the Plan, whether participating for the first time or
renewing participation after it has been terminated, an eligible employee must
complete and file with the appropriate payroll office a Payroll Authorization
Form, which shall authorize payroll deductions from the employee's Basic
Compensation. Such deductions shall commence with the pay period after the form
is filed with and recorded in the appropriate payroll office, and shall continue
until the employee terminates participation in the Plan or the Plan is
terminated. "Basic Compensation" is regular compensation including commissions,
before any deductions or withholdings, but excluding overtime, bonuses, amounts
paid in reimbursement of expenses (including those paid as part of commissions)
and other additional compensation.
(1) A Participant may authorize the deduction of any amount, provided
such amount is not less than $5.00 per week, nor more than the larger of
$5.00 per week or 20% of his Basic Compensation for the payroll period. The
Corporation shall maintain a payroll deduction account for each
participating employee (the "plan account") to which shall be credited all
such payroll deductions and from which shall be deducted amounts charged
for the purchase of Shares hereunder and withdrawals, as hereinafter
provided. No interest will be paid on any plan account balance.
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(2) A Participant may change the amount of his payroll deduction by
filing a new Payroll Authorization Form. Any change must conform to the
minimum and maximum limitations above. The change will become effective
with the first payroll period after the change in January, April, July, or
October, whichever occurs first. Two such changes are permitted per
calendar year.
(3) Each Participant shall have an option to purchase Common Shares of
the Corporation four times per year. The "Grant Date" of the option to
purchase Shares is the first Monday of January, April, July, and October,
respectively, on which sales of the Corporation's Common Shares are traded
on an exchange, or if the Corporation's Common Shares is not traded on any
such Monday, then the Grant Date is the next succeeding day on which such
stock is traded. On each Grant Date a Participant shall be given an option
to purchase Shares on the next Grant Date (the date on which the Shares are
purchased is hereinafter called the "Exercise Date") at the "Option Price,"
as defined below. Each Option will be exercisable for the three-month
period (an "Option Period") beginning on a Grant Date and ending on the
Exercise Date next succeeding such Grant Date. Effective as of October 1,
1999 and notwithstanding the foregoing, the Exercise Date for options
granted on the July, 1999 Grant Date shall be October 6, 1999.
On each Exercise Date the Participant's account will automatically be
charged for an amount sufficient to purchase the maximum number of whole
Shares purchasable at the Option Price with the balance in such account on
the Exercise Date. As soon after each Exercise Date as practicable,
certificates for the Shares purchased on such Participant's behalf at such
Exercise Date will be distributed to such Participant.
(4) The "Option Price" per share shall be the lesser of (1) 85% of the
fair market value of a share of the Corporation's Common Shares on the
Grant Date, or (2) 85% of the fair market value of a share of the
Corporation's Common Shares on the Exercise Date, but in no event less than
the par value of the Common Shares, which is $1.00 per share. The fair
market value of such stock shall be considered as the mean of the per share
bid and asked price of the Common Shares as reported by the NASDAQ
Interdealer Quotation System on such date or, if the stock is listed on an
exchange, the average of the high and low prices quoted for such stock on
such date.
Notwithstanding the foregoing, it is the express intent of the
Corporation that the Plan comply with the requirements of Sec. 423 (or a
successor section) of the Internal Revenue Code. In the event of an
amendment to such section which would require that this Plan provide for an
Option Price greater than the Option Price provided above, then the Option
Price shall be the lowest price which will bring the Plan into compliance
with such section.
(5) The minimum purchase under the Plan is one share.
(6) As of the close of each calendar year, each Participant will be
given a report setting forth the Grant Date and Option Price for his
current option, the net balance in his account as of the beginning of the
year, credits thereto reflecting his payroll deductions during the year,
the number of Shares issued to him during the year, if any, and the price
at which they were issued, refunds, if any, to him during the year and the
net balance in his account at the end of the year.
(7) Stock certificates representing the Shares that a Participant
purchases under the Plan may be issued in his name alone or, if he so
designated in his Payroll Authorization Form, in his name and the name of
another as joint tenants with right of survivorship.
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(8) A Participant's rights under the Plan, including any options which
are granted, may not be transferred. Upon his death, any credit balance in
his account or stock certificate representing Shares for which an option
has already been exercised shall be distributed in accordance with
applicable state law. Rights under the Plan are exercisable only by a
Participant or, in the event of death, by his estate.
(9) A Participant may not withdraw any portion of the credit balance
in his account unless his participation terminates. Participation will
terminate only if one of the following events occurs:
(1) A Participant files a written notification of his withdrawal,
as provided by rules to be established by the Board of Directors. A
Participant may withdraw at any time and for any reason.
(2) A Participant is no longer employed by the Corporation or any
of its subsidiaries. This includes cessation of employment by reason of
death or retirement.
(3) A Participant ceases to be eligible for participation. Thus, if
he is a full-time employee but for some reason he begins working on
part-time basis of 20 hours or less per week or for 5 months or less in
any calendar year, his participation will terminate.
(4) Termination of the Plan.
If one of the above events occurs terminating participation in the Plan, a
withdrawal of the credit balance in a Participant's account can be made.
If participation in the Plan terminates for any of the above reasons, no
further payroll deductions shall be made from a Participant's Basic
Compensation. At his election or that of his estate, as the case may be, the
balance in his account shall be either paid to him or his estate, or shall be
retained until the next Exercise Date to purchase Shares. After termination, he
may not once again begin participation in the Plan until after the next two
succeeding Option Periods following the date of such termination have expired.
6. CHANGE IN CAPITAL STRUCTURE
The Corporation shall make appropriate adjustment in the Plan and any
option granted under the Plan to reflect any change in the Common Shares of the
Corporation by reason of a stock dividend or split-up or otherwise.
7. USE OF PROCEEDS
All proceeds received by the Corporation under the Plan shall be used for
its general corporate purposes.
8. AMENDMENTS
The Board of Directors of the Corporation, at any time, or from time to
time, may amend, suspend, or terminate the Plan without the approval of the
shareholders, provided, however, that except to conform the Plan to the
requirements of the Internal Revenue Code, no amendment shall without the
approval of the shareholders, be made (i) increasing the number of Shares
authorized for the Plan (other than as provided in Section 6), (ii) changing the
formula for determining the Option Price per share, or (iii) further limiting
the employees of the Corporation or its subsidiaries who may participate in the
Plan.
9. EFFECTIVE DATE, SUSPENSION AND TERMINATION
The Plan shall become effective when (i) the Plan has been adopted by the
Board of Directors and approved by the stockholders of the Corporation by a
majority vote of those present and entitled to vote at any annual or special
meeting at which a quorum is present, (ii) a registration statement under the
Securities Act
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of 1933, as amended, has become effective with respect to the Shares to be
purchased under the Plan and (iii) the Board of Directors of the Corporation has
specified the date of the first Option Period. In all events, this Plan shall
not be effective unless approved by the stockholders of the Corporation within
12 months before or after the date the Plan is adopted. The Plan shall terminate
upon the termination of the Plan by the Board of Directors of the Corporation or
when no more Shares remain to be purchased under the Plan, whichever occurs
first. Upon the termination of the Plan, all unexercised options theretofore
granted pursuant hereto and all authorized payroll deductions hereunder shall
remain in full force and be carried out and effected, and upon the exercise or
termination of such options, as the case may be, the then remaining credit
balances in the respective Participants' plan accounts shall be returned to the
Participants for whom such plan accounts were established. The Plan shall be
suspended and become inoperative with respect to Shares not theretofore optioned
under the Plan (but not with respect to any uncompleted offerings) during any
period in which no registration statement or amendment thereto under the
Securities Act of 1933, as amended, is in effect with respect to the Shares so
remaining to be purchased under the Plan.(2)
10. GOVERNMENTAL REGULATIONS
The Corporation's obligation to sell and deliver its Common Shares under
the Plan is subject to the approval of any governmental authority required in
connection with the authorization, issuance or sale of such stock.
11. MISCELLANEOUS
(1) This Plan shall be subject to, and governed by, the laws of the State
of Delaware irrespective of the fact that one or more of the parties now is, or
may become, a resident of a different state.
(2) In the event any parts of this Plan are found to be void, the remaining
provisions of this Plan shall nevertheless be binding with the same effect as
though the void parts were deleted.
(3) Wherever in this Plan, words including pronouns, are used in the
masculine, they shall be read and construed in the feminine or neuter whenever
they would so apply, and wherever in this Plan words, including pronouns, are
used in the singular or plural, they shall be read and construed in the plural
or singular, respectively, wherever they would so apply.
(4) Claims for benefits under the Plan shall be made in writing to the
Corporation. If such claim for benefits is wholly or partially denied, the
Corporation shall, within a reasonable period of time, but no later than ninety
(90) days after receipt of the claim, notify the claimant of the denial of the
claim. Such notice of denial (i) shall be in writing, (ii) shall be written in a
manner calculated to be understood by the claimant, and (iii) shall contain (a)
the specific reason or reasons for denial of the claim, (b) a specific reference
to the pertinent plan provisions upon which the denial is based, (c) a
description of any additional material or information necessary for the claimant
to perfect the claim, along with an explanation why such material or information
is necessary, and (d) an explanation of the Plan's claim review procedure.
(5) Within one hundred twenty (120) days of the receipt by the claimant of
the written notice of denial of the claim, or such later time as shall be deemed
reasonable taking into account the nature of the benefit
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(2) The Plan was originally adopted by the Board of Directors of PXRE
Corporation and approved by the shareholders of PXRE Corporation on February
18, 1987; amended by the Board of Directors of PXRE Corporation on March 25,
1993; approved by the shareholders of PXRE Corporation on May 20, 1993. See
Footnote 1.
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subject to the claim and any other attendant circumstances or if the claim has
not been granted within a reasonable period of time, the claimant may file a
written request with the Corporation that it conduct a full and fair review of
the denial of the claimant's claim for benefits, including the conducting of a
hearing, if deemed necessary by the reviewing party. In connection with the
claimant's appeal of the denial of his benefit, the claimant may review
pertinent documents and may submit issues and comments in writing.
(6) The Corporation shall deliver to the claimant a written decision on the
claim promptly, but not later than sixty (60) days, after the receipt of the
claimant's request for review, except that if there are special circumstances
(such as the need to hold a hearing, if necessary) which require an extension of
time for processing, the aforesaid sixty (60) day period shall be extended to
one hundred twenty (120) days. Such decision shall (i) be written in a manner
calculated to be understood by the claimant, (ii) include specific reasons for
the decision, and (iii) contain specific references to the pertinent plan
provisions upon which the decision is based.
(7) The Secretary of the Corporation shall maintain a copy of the Plan, and
any amendments thereto.
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APPENDIX D
PXRE GROUP LTD.
DIRECTOR STOCK PLAN
(AS AMENDED AND RESTATED)
SECTION 1. PURPOSE
The purpose of the Plan is to secure for PXRE Group Ltd. and its shareholders
the benefits inherent in increased common stock ownership by directors of the
Company who are not employees of the Company or any of its subsidiaries.(1)
SECTION 2. DEFINITIONS
Whenever used in this plan, the following terms shall have the definitions
set forth in this section:
<TABLE>
<S> <C> <C>
2.1 -- "BOARD OF DIRECTORS" shall mean the Board of Directors of
PXRE Group Ltd.
2.2 -- "CHANGE OF CONTROL" has the meaning provided in Section 8.2
of the Plan.
2.3 -- "CODE" shall mean the Internal Revenue Code of 1986, as
amended.
2.4 -- "COMPANY" shall mean PXRE Group Ltd.
2.5 -- "DATE OF GRANT" shall mean the date of the Annual Meeting as
of which a Director is granted an Option under Section 5.1.
2.6 -- "DIRECTOR" shall mean a member of the Board of Directors who
is not a full-time employee of the Company or a subsidiary.
2.7 -- "DISABILITY" shall mean the inability, in the judgment of
the Board, of a Director to perform his or her duties due to
mental or physical impairment.
2.8 -- "EFFECTIVE DATE" shall mean the date provided in Section 13
of the Plan.
2.9 -- "FAIR MARKET VALUE" as of any day shall mean the arithmetic
mean of the per share bid and asked price for Shares on such
day as reported by the NASDAQ Interdealer Quotation System,
or if the shares are listed on an exchange, the average of
the high and low per share prices quoted for Shares on such
date. If the Shares are not publicly traded, Fair Market
Value shall be determined by the Board in a manner
consistent with the requirements of Section 422 of the Code.
2.10 -- "OPTION" shall mean an option to purchase Shares granted
under Section 5 of the Plan.
2.11 -- "RESTRICTED PERIOD" shall have the meaning provided in
Section 6.1 of the Plan.
</TABLE>
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(1) The Plan was originally a plan of PXRE Corporation, a Delaware corporation
("PXRE Corp."), which provided, among other things, for the grant of PXRE
Corp. common stock. Pursuant to an Agreement and Plan of Merger dated as of
July 7, 1999 among the Company, PXRE Corp. and PXRE Merger Corp., PXRE Corp.
reorganized so that, among other things, the Company, a Bermuda corporation,
became the parent holding company for PXRE Corp. As a result of the
reorganization, each outstanding share of PXRE Corp. under the Plan was
automatically converted into one common share of the Company. Additionally,
pursuant to the reorganization, the Company assumed all of the obligations
of PXRE Corp. under the Plan.
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<TABLE>
<S> <C> <C>
2.12 -- "RESTRICTED SHARE" shall mean a Share subject to the
conditions and restrictions set forth in Section 6 of the
Plan.
2.13 -- "RETIREMENT" shall mean retirement from the Board as of the
Annual Meeting of Shareholders coinciding with or next
following the Director's attainment of age of 72.
2.14 -- "RULE 16B-3" shall mean Rule 16b-3 promulgated under the
Securities Exchange Act of 1934, as amended (the "Exchange
Act").
2.15 -- "SHARES OF STOCK" OR "SHARES" shall mean Common Shares, par
value $1.00 per share, of the Company.
2.16 -- "TERM-YEAR" shall mean the period from one Annual Meeting to
the subsequent Annual Meeting.
</TABLE>
SECTION 3. AMOUNT OF STOCK
The stock which may be issued and sold under the Plan shall not exceed
250,000 Shares, subject to adjustment as provided in Section 6 below. The Shares
to be issued may be either authorized and unissued shares, issued shares
acquired by the Company or its subsidiaries or any combination thereof. In the
event that Options granted under the Plan shall terminate or expire without
being exercised in whole or in part, new Options may be granted covering the
shares not purchased under such lapsed Options.
SECTION 4. ELIGIBILITY
Each Director shall be eligible to receive an Option and Restricted Shares
in accordance with Sections 5 and 6 below.
SECTION 5. TERMS AND CONDITIONS OF OPTIONS
Each Option granted under the Plan shall be evidenced by an agreement in
such form as the Board shall prescribe from time to time in accordance with the
Plan and shall comply with the following terms and conditions:
5.1 OPTION GRANTS. As of the date of the Annual Meeting of Shareholders of
the Company each year on and after the Effective Date, each Director who has
been elected or re-elected or who is continuing as a member of the Board as of
the adjournment of the Annual Meeting shall automatically receive an Option for
5,000 Shares.
5.2 EXERCISE PRICE. The Option exercise price shall be the Fair Market
Value of the Shares on the Date of Grant of the Option. Except as provided in
Section 7, Options granted under the Plan may not be repriced.
5.3 VESTING. Except as provided in Sections 5.4, 5.5 and 8.1, no portion
of an Option shall be exercisable prior to the Director's completion of one
Term-year on the Board next following the Date of Grant, and thereafter the
Option shall be exercisable with respect to 1,666 Shares on and after the
Director's completion of his or her first Term-year following the Date of Grant,
it shall be exercisable for an additional 1,667 Shares on and after the
Director's completion of a second Term-year following the Date of Grant, and it
shall be exercisable for the remaining 1,667 Shares on or after the Director's
completion of a third Term-year after the Date of Grant.
5.4 OPTION EXPIRATION. No portion of an Option shall be exercisable after
the expiration of ten years from the Option's Date of Grant.
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5.5 EXERCISE WHEN NO LONGER A DIRECTOR. No Option shall be exercisable
unless the person exercising the Option has been, at all times during the period
beginning with the Date of Grant of the Option and ending on the date of such
exercise, a Director of the Company, except that:
(1) Retirement or Disability. If such a person shall cease to be a
Director by reason of Retirement or Disability while holding an Option
(whether or not then exercisable) that has not expired, such person may, at
any time within three years following such termination (but in no event
after the Option has expired under the provisions of Section 5.4), exercise
the Option with respect to any shares as to which such person has not
exercised the Option on the date the person ceased to be a Director;
provided, however, that no Shares issuable on exercise of the Option may be
sold, assigned, pledged or otherwise transferred for the period of time
after the date of the grant of the Option as is specified in Rule 16b-3;
(2) Death. If such a person shall cease to be a Director by reason of
death while holding an Option (whether or not then exercisable) that has
not expired, his or her executors, administrators, heirs, legatees or
distributees, as the case may be, may, at any time within three years
following such termination (but in no event after the Option has expired
under the provisions of Section 5.4), exercise the Option with respect to
any shares as to which such person has not exercised the Option on the date
the person died; provided, however, that no shares of Common Stock issuable
on exercise of the Option may be sold, assigned, pledged or otherwise
transferred for the period of time after the date of the grant of the
Option as is specified in Rule 16b-3;
(3) Other. If such a person shall cease to be a Director for reasons
other than Retirement, Disability or death, while holding an Option then
exercisable that has not expired, such person may, at any time within three
months after the date he or she ceases to be a Director (but in no event
after the Option has expired under the provisions of Section 5.4 above),
exercise the Option with respect to any Shares as to which such person
could have but has not exercised the Option on the date the person ceased
to be a Director; and
(4) Death of a Former Director. If any person should die within three
years following the date he or she ceased to be a Director by reason of
Retirement or Disability or within three months following the date he or
she ceased to be a Director for reasons other than Retirement, Disability
or death, the decedent's estate or any person who acquires the right to
exercise the Option by reason of the decedent's death may exercise the
Option (to the extent that the decedent was entitled to do so on the date
the decedent ceased to be a Director) at any time (but in no event after
the Option has expired under the provisions of Section 5.4) within the
period ending on the later of (i) the last day of the period within which
the decedent could have exercised the Option but for his or her death and
(ii) the first anniversary of such person's death.
5.6 EXERCISE NOTICE. A Director may exercise all or part of an Option that
is exercisable under Section 5.5 by delivering a written notice substantially in
the form attached hereto to the Treasurer of the Company specifying the number
of Shares to be purchased and providing payment in full of the exercise price in
United States dollars by certified check or bank draft.
5.7 PERSONAL REPRESENTATIVES. In the event any Option is exercised by the
executors, administrators, heirs, legatees or distributees of the estate of a
deceased Director or by the guardian or legal representative of a disabled
former Director, the Company shall be under no obligation to issue Shares
thereunder unless and until the Company is satisfied that the person or persons
exercising the Option are the duly appointed legal representatives of the
deceased Director's estate or the proper legatees or distributees thereof or the
duly appointed guardian or legal representative of the disabled former Director.
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SECTION 6. TERMS AND CONDITIONS OF RESTRICTED SHARES
All Restricted Shares shall be evidenced by an agreement in such form as
the Board shall prescribe from time to time in accordance with the Plan and
shall comply with the following terms and conditions ("Restricted Share
Agreement"):
6.1 RESTRICTED SHARE GRANTS. As of the date of the Annual Meeting of
Shareholders of the Company each year, each Director who has been elected or
re-elected or who is continuing as a member of the Board as of the adjournment
of the Annual Meeting shall automatically receive 1,000 Restricted Shares.
(a) Restricted Period. The Company shall transfer from its authorized
but unissued Shares to each Director and shall hold the certificates
representing such Shares for the Director for the three year Restricted
Period as described in Section 6.2 below. Restricted Shares may not be
sold, assigned, transferred, pledged, hypothecated or otherwise encumbered
by a Director during the Restricted Period, except as hereinafter provided.
Except for the restrictions set forth herein, a Director shall have all the
rights of a shareholder 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).
(b) Legend. Each certificate for Shares transferred or issued to a
Director shall be registered in the name of the Director 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 GROUP LTD.
DIRECTOR STOCK 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."
6.2 LAPSE OF RESTRICTED PERIOD. The Restricted Period shall commence upon
the award of Restricted Shares and, unless sooner terminated as provided in
subclause (a) or Section 8 hereof, shall continue for three years; provided,
however, that except as provided in subclause (a) or Section 8 hereof, the
restrictions on each annual grant of Restricted Shares will lapse with respect
to 333 Shares on and after the Director's completion of his or her first
Term-year following the Date of Grant, restrictions on an additional 333 Shares
will lapse on and after the Director's completion of his or her second Term-year
following the Date of Grant, and the restrictions on 334 Shares will lapse on
and after the Director's completion of his or her third Term-year following the
Date of Grant.
(a) Retirement, Death or Disability. If such person shall cease to be
a Director by reason of Retirement, death or Disability while holding
Restricted Shares, the Restricted Period covering all Shares transferred to
such Director under the Plan shall immediately lapse upon such Director's
termination of directorship due to Retirement, death or Disability.
(b) Other. If such person shall cease to be a Director for reasons
other than Retirement, death or Disability, all Shares owned by such
Director 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.
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(c) Exchange Act Limitations. 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.
(d) 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 6.1 in exchange for those previously issued.
SECTION 7. ADJUSTMENT IN THE EVENT OF CHANGE IN STOCK
In the event the outstanding Shares are increased or changed into or
exchanged for a different number or kind of shares of capital stock or other
securities of the Company by reason of any stock dividend or split,
recapitalization, reclassification, merger, consolidation, combination of Shares
or other corporate change, the Board shall make such substitution or adjustment,
if any, as it deems to be equitable, in the number or kind of Shares or other
securities as to which Options may be granted and in the number of Shares or the
exercise price under unexercised Options granted prior to such change.
In the case of any such substitution or adjustment, the aggregate Option
price in each 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.
SECTION 8. ACCELERATION
8.1 CHANGE OF CONTROL; DELISTING. Notwithstanding any other provisions of
the Plan, upon the earlier of (a) a "Change of Control" of the Company (as
defined below), or (b) the Shares of the Company ceasing to be publicly traded,
any unexercisable portion of an Option shall become exercisable and the
Restricted Period covering all Shares shall immediately lapse.
8.2 CHANGE OF CONTROL DEFINED. For the purposes hereof, a "Change of
Control" of the Company shall be deemed to have occurred if:
(a) any "person" (as such term is used in Section 13(d) and 14(d) of
the Exchange Act other than the Company 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
(b) the shareholders of the Company approve (i) any merger or
consolidation of the Company with any other corporation, other than 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 (ii) 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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(c) the shareholders of the Company approve a plan or proposal for the
liquidation or dissolution of the Company; or
(d) during any period of two consecutive years (not including any
period prior to June 8, 1995), 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 shareholders 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.
SECTION 9. MISCELLANEOUS PROVISIONS
9.1 NO RIGHT TO DIRECTORSHIP. Neither the Plan nor any action taken
hereunder shall be construed as giving any Director any right to be retained in
the service of the Company.
9.2 NONTRANSFERABILITY. A Director's interest in an Option or in
Restricted Shares and his or her rights under the Plan may not be assigned or
transferred in whole or in part either directly or by operation of law or
otherwise (except under a qualified domestic relations order (as defined in
Section 414(p) of the Code) or, in the event of Director's death, by will or the
laws of descent and distribution), including, but not by way of limitation,
execution, levy, garnishment, attachment, pledge, bankruptcy or in any other
manner, and no such right or interest of any Director in the Plan shall be
subject to any obligation or liability of such Director.
9.3 COMPLIANCE WITH LAW. No Shares shall be issued hereunder unless
counsel for the Company shall be satisfied that such issuance will be in
compliance with all applicable federal, state and other securities, insurance
and other laws and regulations.
9.4 EXPENSES. The expenses of the Plan shall be borne by the Company.
9.5 UNFUNDED. The Plan shall be unfunded. The Company shall not be
required to establish any special or separate fund or to make any other
segregation of assets to assure the issuance of Shares upon exercise of any
Option under the Plan and issuance of Shares upon exercise of Options shall be
subordinate to the claims of the Company's general creditors.
9.6 ACCEPTANCE. By accepting any Option, Restricted Share, or other
benefit under the Plan, each Director and each person claiming under or through
such person shall be conclusively deemed to have indicated his or her acceptance
and ratification of, and consent to, any action taken under the Plan by the
Company or the Board.
9.7 CONSTRUCTION. It is the intent of the Company that the Plan comply in
all respects with Rule 16b-3 or any successor rule, that any ambiguities or
inconsistencies in construction of the Plan be interpreted to give effect to
such intention and that if any provision of the Plan is found not to be in
compliance with Rule 16b-3, such provision shall be deemed null and void to the
extent required to permit the Plan to comply with Rule 16b-3. The Board may
adopt rules and regulations under, and amend, the Plan in furtherance of the
intent of the foregoing.
In all other respects the Plan and Restricted Shares and Options granted
thereunder shall be governed by, and construed in accordance with the laws of
the State of Delaware without regard to the conflict of laws principles thereof.
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SECTION 10. AMENDMENT OR DISCONTINUANCE
The Plan may be amended at any time and from time to time by the Board as
the Board shall deem advisable, including, but not limited to, amendments
necessary to qualify for any exemption or to comply with applicable law or
regulations; provided, however, that except as provided in Section 7 above, the
Board may not, without further approval by the holders of a majority of the
outstanding Shares of the Company entitled to vote thereon increase the maximum
number of Shares as to which Options or Restricted Shares may be granted under
the Plan, increase the number of shares that may be awarded under the Plan,
change the Option exercise price described in Section 5.2 above, extend the
period during which awards may be granted or exercised under the Plan or change
the class of persons eligible to receive awards under the Plan. Subject to the
provision of Section 9.7 relating to Rule 16b-3, no amendment of the Plan shall
materially and adversely affect any right of any Director with respect to any
Option or Restricted Share theretofore granted without such Director's written
consent.
SECTION 11. ADMINISTRATION
The Plan shall be administered by the Board. The Board shall have all the
powers vested in it by the terms of the Plan, such powers to include authority
(within the limitations described herein) to prescribe the form of the agreement
embodying Options and Restricted Shares granted under the Plan. The Board shall,
subject to the provisions of the Plan, have the power to construe the Plan, to
determine all questions arising thereunder and to adopt and amend such rules and
regulations for the administration of the Plan as it may deem desirable. Any
decision of the Board in the administration of the Plan, as described herein,
shall be final and conclusive. The Board may act only by a majority of its
members in office, except that the members thereof may authorize any one or more
of their number or the Secretary or any other officer of the Company to execute
and deliver documents on behalf of the Board. No member of the Board shall be
liable for anything done or omitted to be done by such member or by any other
member of the Board in connection with the Plan, except in circumstances
involving actual bad faith.
SECTION 12. TERMINATION
This Plan shall terminate upon the earlier of the following dates or events
to occur:
(1) upon the adoption of a resolution of the Board terminating the
Plan; or
(2) immediately following the automatic grant of Options at the Annual
Meeting in 2005.
SECTION 13. EFFECTIVE DATE OF PLAN
The Plan originally became effective as a Plan of PXRE Corporation, a
Delaware corporation, as of April 20, 1995, and the adoption of the Plan was
approved by the affirmative vote of the holders of a majority of the outstanding
Shares of the Company present in person or represented by proxy at the 1995
Annual Meeting of Shareholders of PXRE Corporation(2).
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(2) See Footnote 1.
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APPENDIX E
PXRE GROUP LTD.
DIRECTOR EQUITY AND DEFERRED COMPENSATION PLAN
SECTION 1. PURPOSE
The purpose of the Plan is to attract and retain highly qualified persons
to serve as non-employee Directors of PXRE Group Ltd. by providing the Directors
with greater flexibility in the form and timing of receipt of compensation for
services on the Board of Directors, and an opportunity to obtain a greater
proprietary interest in the Company's success and progress through receipt of
fees in the form of Shares and Options on Shares, thereby aligning the
Director's interests with the interests of the stockholders of the Company.(1)
SECTION 2. DEFINITIONS
Whenever used in this plan, the following terms shall have the definitions
set forth in this section:
<TABLE>
<C> <C> <S>
2.1 -- "ACCOUNT"shall have the meaning provided in Section 8.3
2.2 -- "ANNUAL RETAINER"shall mean the annual retainer fee payable
to a Director for serving as a Director of PXRE Group Ltd.
2.3 -- "BOARD OF DIRECTORS" or "BOARD" shall mean the Board of
Directors of PXRE Group Ltd.
2.4 -- "CODE" shall mean the Internal Revenue Code of 1986, as
amended.
2.5 -- "COMPANY" shall mean PXRE Group Ltd.
2.6 -- "DIRECTOR" shall mean a member of the Board of Directors who
is not a full-time employee of the Company or a subsidiary.
2.7 -- "DIRECTOR FEES" shall mean all cash compensation payable to
a Director other than the Annual Retainer, including,
without limitation, committee membership fees, fees
associated with a chair and fees for attendance at meetings
of the Board and its committees, but not including
reimbursements for expenses.
2.8 -- "DISABILITY" shall mean the inability, in the judgment of
the Board, of a Director to perform his or her duties due to
mental or physical impairment.
</TABLE>
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(1) The Plan was originally a plan of PXRE Corporation, a Delaware corporation
("PXRE Corp."), which provided, among other things, for the grant of PXRE
Corp. common stock. Pursuant to an Agreement and Plan of Merger dated as of
July 7, 1999 among the Company, PXRE Corp. and PXRE Merger Corp., PXRE Corp.
reorganized so that, among other things, the Company, a Bermuda corporation,
became the parent holding company for PXRE Corp. As a result of the
reorganization, each outstanding share of PXRE Corp. under the Plan was
automatically converted into one common share of the Company. Additionally,
pursuant to the reorganization, the Company assumed all of the obligations
of PXRE Corp. under the Plan.
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<TABLE>
<C> <C> <S>
2.9 -- "EFFECTIVE DATE" shall mean the date provided in Section 13
of the Plan.
2.10 -- "FAIR MARKET VALUE" shall mean:
(a) with respect to the Annual Retainer, the average of the
high and low per share prices quoted for Shares on the New
York Stock Exchange over the twenty (20) trading days
prior to the December 31 immediately preceding the
calendar year for which the Annual Retainer is payable.
If the Shares are not publicly traded, Fair Market Value
shall be determined by the Board in a manner consistent
with the requirements of Section 422 of the Code.
(b) with respect to the Director Fees, the average of the
high and low share prices quoted for Shares on the New York
Stock Exchange on the date of the meeting for which the
Director Fees relate. If the Shares are not publicly
traded, Fair Market Value shall be determined by the
Board in a manner consistent with the requirements of
Section 422 of the Code.
2.11 -- "GRANT DATE" shall have the meaning provided in Section 7.2.
2.12 -- "OPTION" shall mean an option to purchase Shares granted
under Section 7 of the Plan.
2.13 -- "OPTION VALUE" shall mean:
(a) with respect to the Annual Retainer, the value of an
Option determined as of the December 31 immediately
preceding the calendar year for which the Annual
Retainer is payable in accordance with the Black-Scholes
option valuation model and assumptions consistent with
those used by the Company in preparing footnotes to the
Company's financial statements under Statement of
Financial Accounting Standards No. 123, with a 20%
discount to compensate for the additional risk.
(b) with respect to the Director Fees, the value of an
Option determined as of the date of the meeting for which
the Director Fees relate in accordance with the
Black-Scholes option valuation model and assumptions
consistent with those used by the Company in preparing
footnotes to the Company's financial statements under
Statement of Financial Accounting Standards No. 123,
with a 20% discount to compensate for the additional
risk.
2.14 -- "RULE 16B-3" shall mean Rule 16b-3 promulgated under the
Securities Exchange Act of 1934, as amended.
2.15 -- "SHARES OF STOCK" or "SHARES" shall mean Common Shares, par
value $1.00 per share, of the Company.
</TABLE>
SECTION 3. AMOUNT OF SHARES
The number of Shares which may be issued and sold under the Plan shall not
exceed 250,000 Shares, subject to adjustment as provided in Section 7.3 below.
The Shares to be issued may be either authorized and unissued Shares, treasury
Shares, issued Shares acquired by the Company or its subsidiaries or any
combination thereof. In the event that Options granted under the Plan shall
terminate or expire without being exercised in whole or in part, new Options may
be granted covering the Shares not purchased under such lapsed Options.
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SECTION 4. ELIGIBILITY AND PARTICIPATION
Each Director in office on the Effective Date of the Plan shall be eligible
to participate in the Plan, and each Director elected or reelected after the
Effective Date shall be eligible to participate in the Plan upon election or
reelection to the Board of Directors.
SECTION 5. ELECTIONS OF FORM AND TIME OF PAYMENT
5.1 ELECTION ALTERNATIVES. In lieu of receiving all of his or her Annual
Retainer and other Director Fees in cash at such time as such Fees are payable
under the policies and practices of the Company, a Director may elect to:
(a) convert all or a portion (in increments of 25%) of his or her
Annual Retainer and/or Director Fees into Shares as provided in Section 6;
(b) convert all or a portion (in increments of 25%) of his or her
Annual Retainer and/or Director Fees into Options as provided in Section 7;
and
(c) defer the payment of all or a portion of his or her Annual
Retainer and/or Director Fees as provided in Section 8.
5.2 ELECTION AGREEMENT. A Director who desires to have any portion of his
or her Annual Retainer or Director Fees converted into Shares or Options or to
have any portion of his or her Annual Retainer or Director Fees deferred must
complete and deliver an Election Agreement (on a form approved by the Board) to
the Treasurer of the Company or other person designated by the Board no later
than the December 31 immediately preceding the calendar year for which the
Annual Retainer and other Director Fees would be payable; provided, however,
that
(a) any Director in office on the Effective Date of the Plan may make
an election to defer his or her Annual Retainer and/or Director Fees not
yet earned as of the Effective Date by filing an Election Agreement within
thirty (30) days after such Effective Date; and
(b) any Director elected to the Board after the Effective Date who was
not a Director on the preceding December 31 may make an election to defer
his or her Annual Retainer and/or Director Fees not yet earned for the
calendar year in which he or she is first elected to the Board by
delivering an Election Agreement within thirty (30) days after such
election.
An Election Agreement, once timely delivered, shall be effective for the
succeeding calendar year(s) unless revoked or modified for a future year by the
Director by delivering a new Election Agreement before the December 31
immediately preceding the calendar year for which the new election is to apply.
A Participant's election for a given year is irrevocable.
If a Director does not provide an Election Agreement, his or her Annual
Retainer and Director Fees shall be paid pursuant to the Company's policies and
practices for the payment of such Fees.
SECTION 6. SHARES
6.1 NUMBER OF SHARES. A Director who elects to have all or a portion of his
or her Annual Retainer paid in the form of Shares shall receive the whole number
of Shares that is equal to the amount of his or her Annual Retainer designated
in his or her Election Agreement divided by the per Share Fair Market Value of
the Shares of the Company, as determined pursuant to Section 2.10(a). A Director
who elects to have all or a
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portion of his or her Director Fees paid in the form of Shares shall receive the
whole number of Shares that is equal to the amount of his or her Director Fees
designated in his or her Election Agreement divided by the per Share Fair Market
Value of the Shares of the Company, as determined pursuant to Section 2.10(b).
No fractional Shares will be issued, and any remainder of the designated Annual
Retainer amount shall be paid to the Director promptly in cash.
6.2 ISSUANCE OF SHARES. The Company shall issue certificates for such
Shares promptly following the date on which the Annual Retainer or Director Fees
is payable. Such Shares shall be subject to Section 9.4 of the Plan.
SECTION 7. OPTIONS
7.1 NUMBER OF OPTIONED SHARES. A Director who elects to have all or a
portion of his or her Annual Retainer paid in the form of an Option shall
receive an Option to purchase the number of whole Shares determined by dividing
the amount of the Annual Retainer designated in his or her Election Agreement by
the per Share Option Value, as determined pursuant to Section 2.13(a). A
Director who elects to have all or a portion of his or her Director Fees paid in
the form of an Option shall receive an Option to purchase the number of whole
Shares determined by dividing the amount of the Director Fees designated in his
or her Election Agreement by the per Share Option Value, as determined pursuant
to 2.13(b). No Option will be issued on fractional Shares, and any remaining
amount of the designated Annual Retainer or the Director Fees shall be paid to
the Director promptly in cash.
7.2 OPTION AGREEMENTS. The Company shall issue to the Director an Option
Agreement as of the date on which the Annual Retainer or Director Fees is
payable (the "Grant Date") to evidence the Option granted to the Director. Each
Option Agreement shall comply with the following terms and conditions and be in
a form approved by the Board:
(a) Exercise Price. The Option per Share exercise price shall be the
per Share Fair Market Value, as determined pursuant to Section 2.10, as
applicable.
(b) Vesting. The Option shall be 100% exercisable when issued.
(c) Expiration. No portion of an Option shall be exercisable after
the expiration of ten years following the Grant Date, provided that, upon a
Director's ceasing to serve as a Director within such ten year period, the
Option will expire unless it is exercised within three years following such
cessation. If a Director should die within three years following the date
he or she ceased to be a Director, the decedent's estate or any person who
acquires the right to exercise the Option by reason of the decedent's death
may exercise the Option at any time (but in no event after 10 years after
the Grant Date) within the period ending on the later of (i) the last day
of the period within which the decedent could have exercised the Option but
for his or her death and (ii) the first anniversary of such person's death.
(d) Exercise. A Director may exercise all or part of an Option by
delivering a written notice substantially in the form approved by the Board
to the Treasurer of the Company identifying the number of whole Shares to
be purchased and providing payment in full of the exercise price in United
States dollars by certified check or bank draft.
Options and Shares acquired upon the exercise of an Option shall be subject
to Section 9.4.
7.3 ANTI-DILUTION MEASURES. In the event the outstanding Shares are
increased or changed into or exchanged for a different number or kind of shares
of capital stock or other securities of the Company by
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reason of any stock dividend or split, recapitalization, reclassification,
merger, consolidation, combination of Shares or other corporate change, the
Board of Directors shall make such substitution or adjustment, if any, as it
deems to be equitable, in the number or kind of shares or other securities as to
which Options may be granted and in the number of Shares or the exercise price
under unexercised Options granted prior to such change.
In the case of any such substitution or adjustment, the aggregate Option
price in each Option Agreement of all the Shares covered thereby prior to such
substitution or adjustment shall be the Option price for all the shares or other
securities substituted for such Shares or to which such Shares are adjusted, and
the Option price per share after such substitution or adjustment shall be
determined accordingly; provided, however, that no such determination shall
obligate the Company to issue or sell fractional shares or other securities.
SECTION 8. DEFERRALS
8.1 DEFERRAL CHOICES. A Director who elects to have all or a portion of
his or her Director Fees and/or Annual Retainer deferred shall make the
following irrevocable elections on an Election Agreement:
(a) The amount or percentage of Director Fees and/or Annual Retainer
to be deferred;
(b) The length of the deferral period pursuant to Section 8.2;
(c) The investment return choice(s) pursuant to Section 8.3; and
(d) The form of payment of deferred amounts following the end of the
deferral period pursuant to Section 8.4.
In addition, the Director shall designate one or more primary and
contingent beneficiaries pursuant to Section 8.5.
8.2 DEFERRAL PERIOD. The deferral period elected by each Director with
respect to deferrals of Director Fees and/or Annual Retainer for any given year
shall be at least equal to one (1) year, and no more than fifteen (15) years,
following the end of the calendar year in which the Director Fees and/or Annual
Retainer are earned. However, notwithstanding the deferral period elected by a
Director, payment of a Director's Account shall be made to the Director, or the
Director's beneficiary designated under Section 8.5, as the case may be, in a
single lump sum within sixty (60) days in the event the Director's service as a
Director of the Company ceases by reason of death or Disability at any time
prior to full payment of the balance of the Director's Account.
8.3 ACCOUNTS AND INVESTMENT RETURN. The Director Fees and/or Annual
Retainer which a Director elects to defer shall be credited to an unfunded
deferred compensation account maintained by the Company or its agent for
bookkeeping purposes (the "Account") on the date the Director Fees and/or Annual
Retainer otherwise would have been paid to the Director.
A Director's Account balance will be credited with the investment return
(and debited with any losses) experienced on the investment choice or choices
specified by the Director from time to time from among the fund or funds of the
Company's 401(k) Plan. As of the Effective Date, the funds of the Company's
401(k) Plan are the Baron Asset Fund, GAM International Fund, Oakmark Growth
Fund and Vanguard Fixed Income Securities Fund.
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Unless the Board otherwise determines, a Director may change the investment
return choice(s) for his or her Account as often as the Director wishes by
notifying the Treasurer of the Company or agent of the Company appointed to
manage the Accounts under the Plan.
The obligation of the Company under the Plan to pay the Account balance to
a Director or his or her beneficiary constitutes an unsecured promise of the
Company to make payments from its general assets, and a Director shall have the
status of a general unsecured creditor of the Company with respect to his or her
Account.
8.4 PAYMENT OF ACCOUNT. The balance of a Director's Account shall be paid
following the end of the deferral period as elected under Section 8.2 in either
(a) a single lump sum cash payment as soon as practicable thereafter, or (b)
annual installments over a period not to exceed fifteen (15) years, in either
case as elected by the Director on his or her Election Agreement. The annual
installment payments, if elected, will be based upon a Director's then existing
Account balance divided by the number of installment payments remaining to be
made.
8.5 DEATH OF DIRECTOR. A Director shall designate on a form approved by
the Board a primary and contingent beneficiary or beneficiaries who, upon the
Director's death, will receive payment of the Director's Account. All
designations shall be signed by the Director, and shall be effective as of the
date received by the Treasurer of the Company or other designated agent.
Directors may change their designations of beneficiary by submitting a new
designation form. The payment of amounts deferred under the Plan shall be in
accordance with the last unrevoked designation of beneficiary that has been
signed by the Director and delivered by the Director to the Treasurer of the
Company or other designated agent prior to the Director's death.
In the event that all the beneficiaries designated by a Director predecease
the Director, the Director's Account balance shall be paid to the Director's
estate.
In the event a Director does not designate a beneficiary, or for any reason
such designation is ineffective, in whole or in part, the amounts that otherwise
would have been paid to the Director or the Director's beneficiaries shall be
paid to the Director's estate.
SECTION 9. MISCELLANEOUS PROVISIONS
9.1 PERSONAL REPRESENTATIVES. In the event any Account or Share is payable
to or an Option is exercised by the executors, administrators, heirs, legatees
or distributees of the estate of a deceased Director or by the guardian or legal
representative of a disabled former Director, the Company shall be under no
obligation to issue, make payment or deliver Shares unless and until the Company
is satisfied that the person or persons requesting payment or exercising the
Option are the duly appointed legal representatives of the deceased Director's
estate or the proper legatees or distributees thereof or the duly appointed
guardian or legal representative of the disabled former Director.
9.2 NO RIGHT TO DIRECTORSHIP. Neither the Plan nor any action taken
hereunder shall be construed as giving any Director any right to be retained in
the service of the Company.
9.3 NONTRANSFERABLE INTERESTS AND RIGHTS. A Director's interest in an
Account or an Option and his or her rights under the Plan may not be assigned or
transferred in whole or in part either directly or by operation of law or
otherwise (except under a domestic relations order (as defined in Section 414(p)
of the Code)) or, in the event of Director's death, by will or the laws of
descent and distribution), including, but not by way of
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limitation, execution, levy, garnishment, attachment, pledge, bankruptcy or in
any other manner, and no such right or interest of any Director in the Plan
shall be subject to any obligation or liability of such Director.
9.4 COMPLIANCE WITH LAW. The Company shall not be required to deliver any
Shares under Section 6 or 7 unless the Committee has determined that it may do
so without violation of applicable federal or state laws pertaining to the
issuance of securities, and the Company may require any Shares to bear a legend,
may give the transfer agent instructions, and may take such other steps, as in
its judgment are reasonably required to prevent any such violation. No Shares
shall be issued under the Plan unless the Director first enters into an
agreement with the Company providing for compliance with all such applicable
laws. The Company is under no obligation to register the Shares covered by this
Agreement under federal securities laws, nor is the Company under any obligation
to register any of the Shares or otherwise qualify them for sale under any state
law. Any Shares acquired hereunder must be held indefinitely unless they are
registered under the Securities Act of 1933, as amended (the "Act") or the
disposition thereof is exempt from the registration requirements of the Act.
9.5 EXPENSES. The expenses of the Plan shall be borne by the Company.
9.6 UNFUNDED. The Plan shall be unfunded. The Company shall not be
required to establish any special or separate fund or to make any other
segregation of assets to assure the payment of Accounts or the issuance of
Shares upon exercise of any Option under the Plan, and the payment of Accounts
and the issuance of Shares shall be unsecured general obligations of the
Company.
9.7 ACCEPTANCE. By accepting a Share, Option or Account, each Director and
each person claiming under or through such person shall be conclusively deemed
to have indicated his or her acceptance and ratification of and consent to, any
action taken under the Plan by the Company or the Board of Directors.
9.8 CONSTRUCTION. It is the intent of the Company that the Plan comply in
all respects with Rule 16b-3 or any successor rule, that any ambiguities or
inconsistencies in construction of the Plan be interpreted to give effect to
such intention and that if any provision of the Plan is found not to be in
compliance with Rule 16b-3, such provision shall be deemed null and void to the
extent required to permit the Plan to comply with Rule 16b-3. The Board may
adopt rules and regulations under, and amend, the Plan in furtherance of the
intent of the foregoing.
In all other respects the Plan and Shares, Options and Accounts provided
thereunder shall be governed by, and construed in accordance with the laws of
the State of Delaware without regard to the conflict of laws principles thereof.
SECTION 10. AMENDMENT OR DISCONTINUANCE
The Plan may be amended at any time and from time to time by the Board as
the Board shall deem advisable, including, but not limited to, amendments
necessary to qualify for any exemption or to comply with applicable law or
regulations; provided, however, except as provided in Section 7.3, without
further approval by the holders of a majority of the outstanding Shares of the
Company entitled to vote thereon, no amendment shall be made to the Plan which
(i) materially increases the benefits accruing to Directors, (ii) increases the
number of securities which may be issued, or (iii) materially modifies the
requirements for Directors. Subject to the provision of Section 9.8 relating to
Rule 16b-3, no amendment of the Plan shall materially and adversely affect any
right of any Director with respect to any Option theretofore granted without
such Director's written consent.
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SECTION 11. ADMINISTRATION
The Plan shall be administered by the Board. The Board shall have all the
powers vested in it by the terms of the Plan, such powers to include authority
(within the limitations described herein) to prescribe the form of the Election
Agreement, Option Agreement and Beneficiary Designation, have the power to
construe the Plan, to determine all questions arising thereunder and to adopt
and amend such rules and regulations for the administration of the Plan as it
may deem desirable. Any decision of the Board in the administration of the Plan,
as described herein, shall be final and conclusive. The Board may act only by a
majority of its members in office, except that the members thereof may authorize
any one or more of their number or the Secretary or any other officer of the
Company to execute and deliver documents on behalf of the Board. No member of
the Board shall be liable for anything done or omitted to be done by such member
or by any other member of the Board in connection with the Plan, except in
circumstances involving actual bad faith.
SECTION 12. TERMINATION
This Plan shall terminate upon the earlier of the following dates or events
to occur:
(a) upon the adoption of a resolution of the Board terminating the
Plan; or
(b) immediately following the annual meeting of stockholders in 2007.
SECTION 13. EFFECTIVE DATE OF PLAN
The Plan was originally adopted by the Board of Directors of PXRE
Corporation, a Delaware corporation, and became effective as of June 5, 1997.(2)
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(2) The Plan was approved by the affirmative vote of the holders of a majority
of the outstanding shares of PXRE Corporation common stock present in person
or represented by proxy at the 1997 Annual Meeting of Stockholders of PXRE
Corporation. See Footnote 1.
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<PAGE> 97
PROXY PXRE GROUP LTD. PROXY
ANNUAL GENERAL MEETING OF SHAREHOLDERS
MAY 16, 2000
THIS PROXY IS BEING SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
[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 MARKING THROUGH OR OTHERWISE STRIKING
OUT HIS OR HER NAME.
NOMINEES: Robert W. Fiondella Philip R. McLoughlin Wilson Wilde
(2) To approve the recommendation of the Board of Directors that
PricewaterhouseCoopers be appointed as the Company's independent auditors
for the fiscal year ending December 31, 2000 and to refer the determination
of the auditor's recommendation to the Board of Directors.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(3) To approve the adoption of amendments to the PXRE Restated Employee Annual
Incentive Bonus Plan as amended;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(4) To approve the adoption of amendments to the PXRE 1992 Officer Incentive
Plan as amended;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(See other side)
(5) To approve the adoption of amendments to the PXRE Employee Stock Purchase
Plan as amended;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(6) To approve the adoption of amendments to the PXRE Director Stock Option Plan
as amended; and
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(7) To approve the adoption of amendments to the PXRE Director Equity and
Deferred Compensation Plan.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
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: , 2000
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Signature
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Signature
