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:
( ) Preliminary Proxy Statement ( ) Confidential, for Use of the
Commission Only (as permitted
by Rule 14a-6(e)(2))
(X) Definitive Proxy Statement
( ) Definitive Additional Materials
( ) Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
MARKEL CORPORATION
(Name of Registrant as Specified in its Charter)
(Name of Person(s) Filing Proxy Statement, if other than Registrant)
Payment of Filing Fee (Check the appropriate box):
(X) No fee required
( ) Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
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>
[MARKEL LOGO]
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO THE SHAREHOLDERS OF MARKEL CORPORATION:
Notice is hereby given that the 1999 Annual Meeting of Shareholders of
Markel Corporation (the "Company") will be held at the Jefferson Hotel,
Franklin & Adams Streets, Richmond, Virginia, on Thursday, May 13, 1999,
starting at 4:30 p.m.
The purposes for which the meeting is being held are:
1. To elect a Board of Directors consisting of eight persons to serve for
the ensuing year;
2. To ratify or reject the selection by the Board of Directors of KPMG LLP
as the Company's independent auditors for the year ending December 31, 1999;
and
3. To transact such other business as may properly come before the
meeting.
It is important that your shares be represented and voted. Shareholders,
whether or not they expect to attend the meeting in person, are requested to
date, sign and return the accompanying proxy card in the envelope provided, on
which no postage is needed if mailed in the United States.
A copy of the Company's Annual Report to Shareholders for the year ended
December 31, 1998 is being mailed to you with this Notice and the Proxy
Statement.
You are cordially invited to attend the meeting.
By Order of the Board of Directors
Leslie A. Grandis
SECRETARY
March 24, 1999
<PAGE>
[MARKEL LOGO]
4551 Cox Road
Glen Allen, Virginia 23060
----------------
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 13, 1999
----------------
The accompanying proxy is solicited by and on behalf of the Board of
Directors of Markel Corporation (the "Company") for use at the Annual Meeting
of Shareholders of the Company to be held May 13, 1999, or any adjournments
thereof, for the purposes set forth in this Proxy Statement and the attached
Notice of Annual Meeting of Shareholders. This Proxy Statement and the related
form of proxy are first being mailed to the shareholders of the Company on or
about March 24, 1999. The Board of Directors has fixed the close of business on
March 15, 1999, as the record date for the determination of shareholders
entitled to notice of and to vote at the meeting and any adjournments thereof.
Each holder of record of the Company's Common Stock, no par value (the "Common
Stock"), on the record date will be entitled to one vote for each share then
registered in his or her name with respect to each matter properly brought
before the meeting. As of the close of business on the record date, 5,572,779
shares of Common Stock were outstanding and entitled to vote at the meeting.
If sufficient proxies are not returned in response to this solicitation,
supplementary solicitations may also be made by mail or by telephone, telegraph
or personal interview by directors, officers and regular employees of the
Company, none of whom will receive additional compensation for these services.
The Company reserves the right to retain an outside proxy solicitation firm to
assist in the solicitation of proxies, but at this time does not have plans to
do so. Costs of solicitation of proxies will be borne by the Company, which
will reimburse banks, brokerage firms and other custodians, nominees and
fiduciaries for reasonable out-of-pocket expenses incurred by them in
forwarding proxy materials to the beneficial owners of shares held by them.
The shares represented by all properly executed proxies received by the
Secretary of the Company and not revoked as herein provided will be voted as
set forth herein, unless the shareholder directs otherwise in the proxy, in
which event such shares will be voted in accordance with such directions. Any
proxy may be revoked at any time before the shares to which it relates are
voted, either by written notice (which may be in the form of a substitute proxy
bearing a later date delivered to the secretary of the meeting) or by attending
the meeting and voting in person.
March 24, 1999
<PAGE>
PRINCIPAL SHAREHOLDERS
The following table and footnotes set forth information with respect to
beneficial ownership of equity securities of the Company as of January 31,
1999, by (i) each director; (ii) each executive officer named in the Summary
Compensation Table; (iii) each person known to the Company to be the beneficial
owner of more than 5% of its outstanding Common Stock and (iv) all directors
and executive officers as a group. For purposes of this table, "beneficial
ownership" includes, as required by applicable regulations, shares over which a
person has or shares voting or investment power. Except as otherwise indicated,
each of the persons named below has sole voting and investment power with
respect to the shares of Common Stock beneficially owned by that person.
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF
BENEFICIAL OWNERSHIP
--------------------------
COMMON
NAME STOCK PERCENT
---- ------------- ----------
<S> <C> <C>
Anthony F. Markel ....................................... 411,833(a) 7.41%
4551 Cox Road
Glen Allen, VA 23060
Gary L. Markel .......................................... 369,378(b) 6.66%
9700 Ninth Street North
St. Petersburg, FL 33702
Steven A. Markel ........................................ 624,398(c) 11.25%
4551 Cox Road
Glen Allen, VA 23060
Alan I. Kirshner ........................................ 135,413(d) 2.44%
Thomas S. Gayner ........................................ 62,856(e) 1.13%
Leslie A. Grandis ....................................... 20,170(f) *
Stewart M. Kasen ........................................ 12,576(g) *
Darrell D. Martin ....................................... 73,950(h) 1.33%
All directors and executive officers as a group ......... 1,676,404(i) 29.95%
</TABLE>
- ----------
* Less than 1% of class.
(a) Includes 18,000 shares represented by options granted under the
Company's 1986 Stock Option Plan which may be exercised within sixty days of
January 31, 1999. Includes 40,901 shares held in a Grantor Retained Annuity
Trust for which Mr. Anthony F. Markel is trustee and partial beneficiary.
Includes 1,525 shares held as trustee for the benefit of Mr. Anthony F.
Markel's children. Includes 6,150 shares held as co-trustee with Gary Markel
under trusts for the benefit of their mother. Includes 2,850 shares held as
trustee for the benefit of his children. Includes 6,000 shares held by Mr.
Markel's wife as to which shares he disclaims beneficial ownership.
(b) Includes 6,000 shares represented by options granted under the Company's
Stock Option Plan for Non-Employee Directors which may be exercised within
sixty days of January 31, 1999. Includes 20,345 shares held as co-trustee with
Steven A. Markel for the benefit of Mr. Anthony F. Markel's children as to
which he disclaims beneficial ownership. Includes 334,033 shares held by the
Markel Family Limited Partnership, Bank of America Plaza, Suite 1100, South
Fourth Street, Las Vegas, Nevada 89101. Gary Markel is the sole general partner
of, and holder of 99.9% of the beneficial interests in, the Markel Family
Limited Partnership. Includes 6,150 shares held as
2
<PAGE>
co-trustee with Anthony Markel under trusts for the benefit of their mother.
Includes 2,850 shares held as trustee for the benefit of his child.
(c) Includes 6,975 shares represented by options granted under the Company's
1986 Stock Option Plan which may be exercised within sixty days of January 31,
1999. Includes 91,726 shares held as co-trustee for the benefit of the Lewis C.
Markel Residuary Trust as to which he disclaims beneficial ownership. Includes
24,625 shares held as co-trustee for the benefit of Mr. Kirshner's children as
to which he disclaims beneficial ownership. Includes 20,345 shares held as
co-trustee with Gary L. Markel for the benefit of Mr. Anthony F. Markel's
children as to which he disclaims beneficial ownership. Includes 3,040 shares
owned by Mr. Steven A. Markel's children.
(d) Includes 202 shares held by Mr. Kirshner's wife as to which he disclaims
beneficial ownership.
(e) Includes 4,500 shares represented by options granted under the Company's
1986 Stock Option Plan which may be exercised within sixty days of January 31,
1999. Includes 1,600 shares held by his wife and 447 shares held as trustee for
the benefit of his wife as to which Mr. Gayner disclaims beneficial ownership.
Includes 30,387 shares held in client accounts of Markel Gayner Asset
Management Corporation, a wholly owned subsidiary of the Company, over which
Mr. Gayner shares investment power but as to which he disclaims beneficial
ownership.
(f) Includes 6,000 shares represented by options granted under the Company's
Stock Option Plan for Non-Employee Directors which may be exercised within
sixty days of January 31, 1999. Includes 400 shares held by Mr. Grandis' wife
and 600 shares held by Mr. Grandis' children as to which shares he disclaims
beneficial ownership.
(g) Includes 6,000 shares represented by options granted under the Company's
Stock Option Plan for Non-Employee Directors which may be exercised within
sixty days of January 31, 1999.
(h) Includes 6,000 shares represented by options granted under the Company's
1986 Stock Option Plan which may be exercised within sixty days of January 31,
1999. Includes 3,500 shares held by Mr. Martin's wife and 500 shares held by
Mr. Martin's child as to which shares he disclaims beneficial ownership.
(i) Includes 53,475 shares represented by options granted under the
Company's 1986 Stock Option Plan and the Company's Stock Option Plan for
Non-Employee Directors which may be exercised within sixty days of January 31,
1999. Includes 149,498 shares as to which beneficial ownership is disclaimed.
ELECTION OF DIRECTORS
NOMINEES
A board of eight directors is to be elected at the meeting to serve until
the next annual meeting of shareholders and the election and qualification of
their successors. The Company's Board of Directors presently consists of the
eight directors who are named below as nominees. All of the current directors
were elected at the last annual meeting of shareholders, except for Mr. Gayner
who was appointed by the Board to fill a vacancy in November, 1998.
Each of the nominees has consented to his being named as a nominee in this
Proxy Statement, has agreed to serve if elected, and has furnished to the
Company the information set forth in the table on the following page with
respect to his age as of January 31, 1999 and his principal occupation or
employment.
It is expected that each of the nominees will be able to serve, but in the
event that any such nominee is unable to serve for any reason (which event is
not now anticipated), the proxies reserve discretion to vote or refrain from
voting for a substitute nominee or nominees.
3
<PAGE>
Shareholders may withhold authority to vote for any of the nominees on the
accompanying proxy. In the election of directors, those receiving the greatest
number of votes will be elected even if they do not receive a majority.
Abstentions and broker non-votes will count towards a quorum but will have no
effect on any action taken at the meeting.
<TABLE>
<CAPTION>
NAME, AGE, POSITIONS WITH THE COMPANY
OR PRINCIPAL OCCUPATION FOR PAST DIRECTOR
FIVE YEARS, AND OTHER INFORMATION SINCE
------------------------------------- --------
<S> <C>
ALAN I. KIRSHNER, 63 1978
Chairman of the Board of Directors and Chief Executive Officer since September 1986.
President from 1979 to March 1992.
ANTHONY F. MARKEL, 56 1978
President and Chief Operating Officer since March 1992. Executive Vice President from
1979 to March 1992. Director of Open Plan Systems, Inc.; Hilb, Rogal and Hamilton Company.
STEVEN A. MARKEL, 50 1978
Vice Chairman since March 1992. Treasurer from October 1986 to August 1993. Executive
Vice President from October 1986 to March 1992. Director of S&K Famous Brands, Inc.
DARRELL D. MARTIN, 50 1991
Executive Vice President and Chief Financial Officer since March 1992. Chief Financial
Officer since 1988.
THOMAS S. GAYNER, 37 1998
Vice President, Equity Investments since May, 1995. President, Markel Gayner Asset
Management Corporation, a subsidiary of the Company, since December 1990.
LESLIE A. GRANDIS, 54 1987
Secretary since February 1989. Partner, McGuire, Woods, Battle & Boothe LLP, Richmond,
Virginia, attorneys-at-law, since 1974. Director of Cornerstone Realty Income Trust,
Inc.; CSX Trade Receivables Corporation.
STEWART M. KASEN, 59 1987
Chairman, President and Chief Executive Officer of Factory Card Outlet Corp. since May
1998; Private Investor from 1996 to 1998; Chairman from January 1994 and President and Chief
Executive Officer, Best Products Co., Inc., Richmond, Virginia from June 1991 to April
1996; Best Products Co., Inc. filed a petition in bankruptcy on September 24, 1996; Director of
O'Sullivan Industries Holdings, Inc.; K2, Inc.; and Elder-Beerman Stores Corp.
GARY L. MARKEL, 52 1978
President, Gary Markel & Associates, Inc., St. Petersburg, Florida, an independent
insurance agency since December 1984. President, Gary Markel Surplus Lines Brokerage, Inc.
</TABLE>
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
During 1998 Mr. Anthony Markel inadvertently failed to timely file two
reports under Section 16 of the Securities Exchange Act of 1934 with respect to
three sales (totaling 145 shares of common stock) by two trusts established for
the benefit of his children.
COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors has a Compensation Committee and an Audit
Committee. The Company does not have a nominating committee.
4
<PAGE>
Mr. Kasen is the sole member of the Audit Committee. The Audit Committee
has responsibility for recommending to the Board of Directors the firm of
independent auditors to be engaged by the Company; reviewing with the Company's
independent auditors the scope and results of their audits and their
independence with respect thereto; reviewing with the independent auditors and
management the Company's accounting and reporting principles, policies and
practices; and reviewing the adequacy of the Company's accounting and financial
controls.
During 1998 the Board of Directors held four regular meetings. There were
two meetings of the Audit Committee and one meeting of the Compensation
Committee during 1998.
COMPENSATION OF DIRECTORS
Each non-employee director received for services as a director during 1998
an annual fee of $10,000, plus $1,250 for each regular director's meeting
attended and reimbursement of expenses incurred in connection with attending
meetings. Non-employee directors are also eligible to participate, up to the
total amount of fees received by the director, in the Company's Employee Stock
Purchase and Bonus Plan (the "Stock Plan"). Under this plan amounts specified
by a director are withheld from a director's fees and forwarded to an
independent administrator who purchases shares of the Company's Common Stock on
behalf of the director participant. In addition the Company provides a "bonus"
of one share for every ten share (20 share if a Company loan is made) net
increase in shares owned under the plan in a calendar year. During 1997 the
Company offered loans to all employees to facilitate the purchase of shares
under this Plan. Non-employee directors were also eligible to participate and
Messrs. Kasen and Grandis availed themselves of this opportunity. See "Certain
Transactions." No non-employee director participated in the Stock Plan during
1998.
NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN
In 1989, the Company established a Stock Option Plan for Non-Employee
Directors (the "Directors Plan") which provided for one-time automatic awards
to non-employee directors of options to purchase 6,000 shares of the Company's
Common Stock. This plan terminated, as to future grants, on December 31, 1998.
The Directors Plan was used to attract and retain the services of experienced
and qualified outside directors of the Company and to enhance the
identification of directors' interests with those of the shareholders. The
Directors Plan was amended in early 1999 to permit participants to defer
receipt of shares of common stock upon exercise of options. At December 31,
1998, three non-employee directors had received options under the Directors
Plan. No options were granted pursuant to the Directors Plan during the fiscal
year ended December 31, 1998.
FAMILY RELATIONSHIPS
Anthony Markel and Gary Markel are brothers, and Steven Markel is their
first cousin.
5
<PAGE>
EXECUTIVE COMPENSATION
The following table provides compensation information for the Company's
Chief Executive Officer and all other executive officers.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
NAME AND ANNUAL COMPENSATION(1) COMPENSATION
PRINCIPAL -------------------------- RESTRICTED ALL OTHER
POSITION YEAR SALARY ($) BONUS ($) STOCK AWARD ($)(2) COMPENSATION ($)(3)
- ------------------- ------ ------------ ----------- -------------------- --------------------
<S> <C> <C> <C> <C> <C>
Alan I. Kirshner 1998 $354,770 $300,000 -- $129,775
Chairman and 1997 $335,038 $341,000 -- $119,972
CEO 1996 $310,000 $248,000 -- $107,153
Anthony F. Markel 1998 $354,770 $300,000 -- $ 90,423
President 1997 $335,038 $341,000 -- $ 83,949
and COO 1996 $310,000 $248,000 -- $ 75,135
Steven A. Markel 1998 $354,770 $300,000 -- $ 70,714
Vice Chairman 1997 $335,038 $341,000 -- $ 65,918
1996 $310,000 $248,000 -- $ 59,155
Darrell D. Martin 1998 $260,096 $220,000 $16,960 $ 54,615
Executive Vice 1997 $244,423 $250,000 -- $ 40,913
President & CFO 1996 $221,000 $176,800 -- $ 36,610
</TABLE>
- ----------
(1) In accordance with applicable rules of the Securities and Exchange
Commission, this table excludes all amounts paid under group life, health,
hospitalization, medical reimbursement and relocation plans which do not
discriminate in scope, terms or operation in favor of executive officers or
directors. This table also excludes the value of perquisites because they do
not exceed the lesser of $50,000 or 10% of salary and bonus for any executive
officer.
(2) Represents the grant date value of 121 restricted bonus shares awarded
in connection with the 1998 Loan Program. See "Certain Transactions" below.
Based on the closing market price at December 31, 1998, such shares had a value
of $21,901. If dividends were paid on shares of common stock the same dividend
would be paid on restricted bonus shares. The Company has never paid a cash
dividend on its common shares and does not anticipate paying cash dividends in
the near future.
(3) Amounts shown in this column represent the Company's contributions
under the Company's Retirement Savings (401k) Plan in the amount of $14,400 for
each executive. In the case of Messrs. Kirshner and Anthony and Steven Markel,
the amounts shown also include accruals of $115,375 for Mr. Kirshner, $76,023
for Anthony Markel and $56,314 for Steven Markel pursuant to Employment
Agreements which provide for supplemental retirement benefits and earnings
thereon. Includes for Mr. Martin $16,960 representing the value of bonus shares
awarded in connection with to the Company's 1998 Loan Program. Also includes
for Mr. Martin $23,255, representing the difference between the interest rate
charged on the loan made to Mr. Martin under the Loan Program (See "Certain
Transactions" below) and 120% of the applicable federal long-term rate at the
time the loan was made
6
<PAGE>
(a rate presumed for certain purposes under Securities and Exchange Commission
regulations to be a maximum market rate). In accordance with applicable rules
the information in this footnote relates only to 1998.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
Messrs. Kasen and Gary Markel are members of the Compensation Committee of
which Mr. Kasen is Chairman. The Compensation Committee has responsibility for
establishing and reviewing the compensation of executive officers,
administering the 1986 Stock Option Plan and administering the 1993 Incentive
Stock Plan.
The Company's compensation packages for its executive officers for 1998
consisted of base salary, annual performance based bonuses and contributions to
retirement plans.
In general, base salary levels are set at the minimum levels believed by
the Committee to be sufficient to attract and retain qualified executives when
considered with other components of the Company's compensation structure.
Effective as of December 28, 1998, annual base salaries were set at $375,000
for each of Messrs. Kirshner, Anthony Markel and Steven Markel and $275,000 for
Mr. Martin. In establishing salaries, including Mr. Kirshner's salary as Chief
Executive Officer, the Committee considers years of service, level of
experience and areas of responsibility, the annual rate of inflation and the
Company's operating performance.
In addition to base salary, the Company has approved a bonus plan for
executives in which cash bonuses are paid based on increases in the book value
of the Company's Common Stock (the "Executive Bonus Plan"). The Committee
believes that consistent increases in book value will enhance the value of the
Company and will, over time, result in higher stock prices.
BONUS PLAN FOR EXECUTIVE OFFICERS
Under the Executive Bonus Plan, executive bonuses, expressed as a
percentage of base salary, are awarded based on a five year average of the
compound growth in book value per share of Common Stock. Growth in book value
for these purposes excludes, in the year of an applicable transaction, the
impact of the issuance or redemption of capital shares and is adjusted for
changes in accounting principles which affect shareholders' equity.
7
<PAGE>
The table below shows the level of bonus which will be paid under the
Executive Bonus Plan for 1999 if goals for increased book value are met. The
Committee will also retain discretionary authority to award bonuses outside the
Plan to reward superior performance as determined by the Committee.
FIVE YEAR AVERAGE
COMPOUND GROWTH
IN BOOK VALUE BONUS AS % OF
PER SHARE BASE SALARY
- ------------------ ---------------------------------------
15% 0%
16% 10%
17% 20%
18% 30%
19% 40%
20% 50%
21% 60%
22% 70%
23% 80%
24% 90%
25% 100%
26%+ Discretionary
The five year average compound growth in adjusted book value per share for
1998 was 23% and accordingly a bonus of 80% of base salary was earned under the
Plan. Amounts paid in 1999 as bonus for 1998 are included in the Summary
Compensation Table.
The Committee has not historically made annual stock option grants to
executive officers but has made grants from time to time to attract new
officers.
Section 162(m) of the Internal Revenue Code of 1986, as amended, which was
enacted in 1993, imposes a $1,000,000 limit on the amount of compensation that
will be deductible by the Company with respect to each of the Chief Executive
Officer and the four other most highly compensated executive officers.
Performance based compensation that meets certain requirements will not be
subject to the deduction limit. The Committee, with the assistance of the
Company's legal counsel, has reviewed the impact of Section 162(m) on the
Company and believes it is unlikely that the compensation paid to any executive
officer during the fiscal year ending December 31, 1999 will exceed the limit.
The Committee will continue to monitor the impact of the Section 162(m) limit
and will attempt to avoid loss of tax deductions in future years as long as
doing so is consistent with the Committee's objectives for management
compensation.
COMPENSATION COMMITTEE
Stewart M. Kasen, Gary L. Markel
8
<PAGE>
PERFORMANCE GRAPH
The following graph compares the cumulative total return (based on share
price) on the Company's Common Stock with the cumulative total return of
companies included in the S&P 500 Index and the Dow Jones Property and Casualty
Insurance Companies Index.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURNS*
[GRAPH]
1993 1994 1995 1996 1997 1998
Markel Corporation 100 106 192 229 398 461
S&P 500 100 101 139 171 229 294
Dow Jones Property &
Casualty Insurance 100 105 149 179 261 282
*$100 INVESTED ON 12/31/93 IN STOCK OR INDEX - INCLUDING REINVESTMENT OF
DIVIDENDS. FISCAL YEAR ENDING DECEMBER 31.
9
<PAGE>
EMPLOYMENT AGREEMENTS
The Company has entered into employment agreements with Mr. Kirshner and
Mr. Anthony Markel and Mr. Steven Markel which provide for the employment of
those individuals as executive officers. Each agreement has an initial term of
one year and is automatically renewed for additional terms of one year unless
either party gives 60 days notice of non-renewal. If the Company chooses not to
renew, the Company will be deemed to have terminated the executive's employment
without cause. The agreements provide for a base annual salary, currently
$375,000 for Messrs. Kirshner, Anthony Markel and Steven Markel. Each executive
has agreed to preserve the confidentiality of the Company's proprietary data
and has also agreed not to compete with the Company for a period of two years
following termination. In the event of an executive's death or disability, the
Company will continue to pay base salary and benefits for twelve months. In the
event the agreement is terminated by the Company for cause or voluntarily by
the executive, the Company's obligations under the agreement will terminate. In
the event the agreement is terminated by the Company without cause, the Company
will pay the executive his base salary for twenty-four months from the date of
termination. The agreements also provide for annual salary reviews, bonuses by
the Board of Directors and certain additional benefits.
The employment agreements also provide each executive with a supplemental
retirement benefit pursuant to which the Company will set aside annually an
amount equal to between 8% and 16% of the executive's base salary plus interest
at the rate of 8% per annum on the amount set aside from the date of each
installment of base salary. The supplemental retirement benefit is payable to
the executive on the earliest of termination of the employment agreement,
retirement or death. Amounts accrued for the year ended December 31, 1998 are
included in the Summary Compensation Table in the "All Other Compensation"
column.
The Company has entered into a similar employment agreement with Mr.
Martin at a current base annual salary of $275,000. The agreement with Mr.
Martin does not provide for salary continuation in the event of termination due
to death or for supplemental retirement benefits.
CERTAIN TRANSACTIONS
LOAN PROGRAM
Since 1993, the Company has, from time to time, offered a loan program to
all employees and non-employee directors to facilitate the purchase of shares
of the Company's Common Stock (the "Loan Program"). As part of the program the
Company has offered to refinance similar loans the Company had made previously.
The Loan Program also provides for the award of bonus shares to participants at
the rate of one bonus share for every 20 new shares purchased in connection
with the Loan Program. In 1998, a new restricted bonus feature was added which
awards bonus shares at the same one for 20 share rate, but the restricted
shares vest 20% a year commencing on the second anniversary of the purchase.
Messrs. Martin and Gayner participated in the 1998 Loan Program purchasing
2,426 and 628 shares of the Company's Common Stock respectively, and receiving
bonus awards of 121 and 31 shares, respectively, and receiving restricted bonus
awards of 121 and 31 shares, respectively. The value of bonus shares awarded to
Mr. Martin is included in the "All Other Compensation" column of the Summary
Compensation Table. The value of the Restricted Bonus Award is included in the
"Restricted Stock Award" column of the Summary Compensation Table.
Messrs. Kasen and Grandis, non-employee directors, participated in the
1997 Loan Program, each borrowing a total of $500,000 and each purchasing 3,427
shares. They each also received 171 bonus shares with an approximate value at
the time of the award of $25,000.
All loans made under the Loan Program bear interest at 3% and are
generally due and payable within 10 years of the loan date. The unsecured loans
are full recourse and are partially amortizing, requiring a balloon
10
<PAGE>
payment at maturity in the case of Messrs. Gayner and Martin, and are fully
amortizing in the case of Messrs. Grandis and Kasen. The loan may be prepaid at
any time, must be repaid in the event of an employee's termination, or in the
event a non-employee director ceases to be a director and the interest rate and
payment terms are adjusted to terms comparable to market rates and terms in the
event a participant sells or pledges the shares purchased pursuant to the Loan
Program (including bonus shares awarded in connection with the Program) without
the Company's prior consent.
The largest aggregate amount of principal and interest outstanding during
1998 in loans made to the individuals named above was as follows: Thomas Gayner
- -- $260,000; Leslie Grandis -- $487,681; Stewart Kasen -- $487,681; Darrell
Martin -- $1,037,677.
OTHER TRANSACTIONS
In December 1997 the Company purchased for approximately $160,000 a 1/8th
interest in Dominion Citation Group, L.C. ("Dominion"), a limited liability
company formed to own and operate a private aircraft. Steven Markel and Anthony
Markel also purchased individually 1/8th interests in Dominion on the same
terms as those afforded to the Company. Ownership interests in Dominion entitle
the member to use of the aircraft for a specified number of hours at rates more
favorable than those generally available in the market.
McGuire, Woods, Battle & Boothe LLP, of which Leslie A. Grandis is a
partner, provides legal services to the Company.
STOCK PLANS FOR EMPLOYEES
The Company has in effect a 1986 Stock Option Plan which expired on
November 3, 1996, and the 1993 Incentive Stock Plan. As of January 31, 1999,
97,500 shares were available for issuance to employees of the Company and its
consolidated or unconsolidated subsidiaries under the 1993 Incentive Stock
Plan. It is the Company's current policy to use option and other stock award
plans sparingly. No options or other awards were granted to executive officers
during 1998.
The following table provides information, as of December 31, 1998,
concerning options held by the individuals included in the Summary Compensation
Table.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
SHARES UNDERLYING UNEXERCISED IN-THE-MONEY
ACQUIRED OPTIONS AT FY-END (#) OPTIONS AT FY-END ($)(2)
ON EXERCISE VALUE ------------------------------- ------------------------------
NAME (#) REALIZED($)(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ------------------- ------------- -------------- ------------- --------------- ------------- --------------
<S> <C> <C> <C> <C> <C> <C>
Alan I. Kirshner -- -- 18,000 -- 2,944,890 --
Anthony F. Markel -- -- 15,675 2,325 2,143,155 310,853
Steven A. Markel 11,025 1,335,403 4,650 2,325 621,705 310,853
Darrell D. Martin 23,440 3,319,690 6,000 4,000 835,500 557,000
</TABLE>
- ----------
(1) Difference between fair market value and exercise price on date of exercise.
(2) Difference between fair market value and exercise price at fiscal year end.
11
<PAGE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
As noted earlier, the Members of the Compensation Committee are Messrs.
Kasen and Gary Markel. Mr. Kasen participated in the Company's 1997 Loan
Program and as a result had indebtedness outstanding to the Company at December
31, 1998 of $487,681. See "Certain Transactions -- Loan Program."
Gary Markel & Associates, Inc. and Gary Markel Surplus Lines Brokerage,
Inc., entities owned by Gary L. Markel, place insurance with and on behalf of
the Company. During 1998, the Company paid approximately $400,000 in
commissions on premium volume placed by entities owned by Gary Markel.
SELECTION OF AUDITORS
KPMG LLP, independent certified public accountants, has been selected by
the Board of Directors as independent auditors of the Company for the current
fiscal year, subject to ratification or rejection by the shareholders.
Representatives of KPMG LLP are expected to be present at the Annual Meeting of
Shareholders and will have an opportunity to make a statement if they so desire
and are expected to be available to respond to appropriate questions from the
shareholders. In the event the shareholders do not ratify the selection of KPMG
LLP the selection of other independent auditors will be considered by the Board
of Directors.
OTHER MATTERS
The Board of Directors knows of no other matters which will be brought
before the meeting. However, if any other matters are properly presented, or if
any question arises as to whether any matter has been properly presented and is
a proper subject for shareholder action, the persons named as proxies in the
accompanying proxy intend to vote the shares represented by such proxy in
accordance with their best judgment.
SHAREHOLDER PROPOSALS FOR NEXT MEETING
Any shareholder desiring to make a proposal to be acted upon at the next
Annual Meeting of Shareholders must present the proposal to the Company at its
principal executive offices in Glen Allen, Virginia, no later than November 28,
1999 in order for the proposal to be included in the Company's proxy materials.
Any such proposal should meet the applicable requirements of the Securities
Exchange Act of 1934 (the "Exchange Act") and the rules and regulations
thereunder.
For shareholder proposals not included in the Company's proxy statement
for the 2000 Annual Meeting, the persons named by the Board of Directors proxy
will be entitled to exercise discretionary voting power in the circumstances
set forth in Rule 14a-4(c) of the Exchange Act unless the shareholder making a
proposal (i) notifies the Company Secretary of the proposal by February 10,
2000 and (ii) otherwise follows the procedures specified in Rule 14a-4(c).
By order of the Board of Directors
Leslie A. Grandis
SECRETARY
March 24, 1999
12
<PAGE>
- FOLD AND DETACH HERE -
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
MARKEL CORPORATION
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS FOR
ANNUAL MEETING OF SHAREHOLDERS TO BE HELD MAY 13, 1999
The undersigned, having received the Annual Report to Shareholders and the
accompanying Notice of Annual Meeting of Shareholders and Proxy Statement dated
March 24, 1999, hereby appoints Alan I. Kirshner, Anthony F. Markel and Steven
A. Markel (each with power to act alone) as proxies, with full power of
substitution, and hereby authorizes them to represent and vote, as directed
below, all the shares of the Common Stock of Markel Corporation, held of record
by the undersigned on March 15, 1999, at the Annual Meeting of Shareholders to
be held on May 13, 1999, and any adjournment thereof.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" PROPOSALS 1 AND 2.
1. Election of Directors
[ ] FOR all nominees listed (except as indicated to the contrary)
[ ] WITHHOLD AUTHORITY to vote for all nominees listed
Nominees: Alan I. Kirshner, Anthony F. Markel, Steven A. Markel, Darrell D.
Martin, Thomas S. Gayner, Leslie A. Grandis, Stewart M. Kasen and
Gary L. Markel
(INSTRUCTION: To withhold authority to vote for any individual nominee write
the nominee's name on the line provided below.)
- --------------------------------------------------------------------------------
2. To ratify or reject the selection by the Board of Directors of KPMG LLP as
the Company's independent auditors for the year ending December 31, 1999.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(Please date and sign on the reverse side)
<PAGE>
- FOLD AND DETACH HERE -
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
3. IN THEIR DISCRETION, on such other matters as may properly come before
the meeting, or, if any nominee listed in Proposal 1 above is unable to
serve for any reason, to vote or refrain from voting for a substitute
nominee or nominees.
This proxy when properly executed, will be voted as directed. WHERE NO
DIRECTION IS GIVEN, THIS PROXY WILL BE VOTED FOR PROPOSALS 1 AND 2.
Please sign your name(s) exactly as they
appear hereon. If signer is a corporation,
please sign the full corporate name by duly
authorized officer. If an attorney,
guardian, administrator, executor, or
trustee, please give full title as such. If
a partnership, sign in partnership name by
authorized person.
Date: ____________________________, 1999
__________________________________
__________________________________
PLEASE COMPLETE, DATE, SIGN AND RETURN THIS
PROXY PROMPTLY IN THE ACCOMPANYING
ENVELOPE.
