<PAGE>
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
EXEL Limited
- --------------------------------------------------------------------------------
(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)(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:
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Notes:
<PAGE>
EXEL LIMITED
----------------
NOTICE OF ANNUAL GENERAL MEETING OF SHAREHOLDERS
TO BE HELD ON APRIL 11, 1997
----------------
Hamilton, Bermuda
February 18, 1997
TO THE SHAREHOLDERS OF EXEL LIMITED:
Notice is Hereby Given that the Annual General Meeting of Shareholders of
EXEL LIMITED (the "Company") will be held at the Executive Offices of the
Company, Cumberland House, One Victoria Street, 9th Floor, Hamilton HM 11,
Bermuda, on Friday, April 11, 1997, at 8:30 a.m. local time for the following
purposes:
1. To elect five Class I Directors to hold office until 2000;
2. To amend the 1991 Performance Incentive Program, primarily to increase
to 8,000,000 the number of Ordinary Shares of the Company issuable and
reserved for issuance upon exercise of options, and to modify the
eligibility provisions of the 1991 Performance Incentive Program to provide
that awards may also be granted to non-employee Directors.
3. To appoint Coopers & Lybrand, Bermuda, to act as the independent
auditors of the Company for the fiscal year ending November 30, 1997;
and to transact such other business as may properly come before the meeting or
any adjournments thereof.
Only Shareholders of record, as shown by the transfer books of the Company
at the close of business on February 18, 1997, are entitled to notice of and
to vote at the Annual General Meeting.
PLEASE DATE, SIGN AND RETURN THE ENCLOSED PROXY IN THE RETURN ENVELOPE
FURNISHED FOR THAT PURPOSE AS PROMPTLY AS POSSIBLE, WHETHER OR NOT YOU PLAN TO
ATTEND THE MEETING. IF YOU LATER DESIRE TO REVOKE YOUR PROXY FOR ANY REASON,
YOU MAY DO SO IN THE MANNER DESCRIBED IN THE ATTACHED PROXY STATEMENT. A PROXY
NEED NOT BE A SHAREHOLDER OF THE COMPANY.
As ordered,
Brian M. O'Hara,
President and Chief Executive
Officer
<PAGE>
EXEL LIMITED
CUMBERLAND HOUSE, HAMILTON, BERMUDA
----------------
PROXY STATEMENT
FOR
THE ANNUAL GENERAL MEETING OF SHAREHOLDERS
TO BE HELD ON APRIL 11, 1997
----------------
February 18, 1997
The accompanying proxy is solicited by the Board of Directors of EXEL Limited
(the "Company") to be voted at the Annual General Meeting of Shareholders of
the Company to be held on April 11, 1997, and any adjournments thereof.
When such proxy is properly executed and returned, the Ordinary Shares, par
value U.S.$0.01 per share ("Ordinary Shares" or "Shares"), of the Company it
represents will be voted at the meeting on the following: (1) the election of
the five nominees for Class I Directors identified herein; (2) the amendments
to the 1991 Performance Incentive Program, primarily to increase to 8,000,000
the number of Ordinary Shares of the Company issuable and reserved for issuance
upon exercise of options, and to modify the eligibility provisions of the 1991
Performance Incentive Program to provide that awards may also be granted to
non-employee Directors; (3) the appointment of Coopers & Lybrand, Bermuda
("Auditors"), to act as the independent auditors of the Company for the fiscal
year ending November 30, 1997; and (4) such other business as may properly come
before the meeting or any adjournments thereof.
Any Shareholder giving a proxy has the power to revoke it prior to its
exercise by notice of revocation to the Secretary of the Company in writing, by
voting in person at the Annual General Meeting or by execution of a subsequent
proxy, provided that such action is taken in sufficient time to permit the
necessary examination and tabulation of the subsequent proxy or revocation
before the vote is taken.
Shareholders of record as of the close of business on February 18, 1997 will
be entitled to vote at the meeting. As of February 18, 1997, there were
outstanding 86,290,820 Ordinary Shares entitled to vote at the meeting, with
each Share entitling the holder of record on such date to one vote (subject to
certain provisions of the Company's Articles of Association--see "Beneficial
Ownership").
This Proxy Statement, the attached Notice of Annual Meeting and the
accompanying proxy card are first being mailed to Shareholders on or about
February 28, 1997.
Other than the approval of the minutes of the 1996 Annual General Meeting,
the Company knows of no specific matter to be brought before the Annual General
Meeting which is not referred to in this Notice of Meeting. If any such matter
comes before the meeting, including any Shareholder proposal properly made, the
proxy holders will vote proxies in accordance with their judgment.
Directors will be elected at the Annual General Meeting by a majority of the
votes cast at the meeting by the holders of Shares represented in person or by
proxy at the meeting, provided there is a quorum (consisting of holders of at
least fifty percent of the outstanding Shares being present in person or by
proxy). Approval of the amendments to the 1991 Performance Incentive Program
and the appointment of the Auditors will be by similar vote.
<PAGE>
All Ordinary Share and related information contained herein has been
adjusted for a one-for-one share dividend paid to shareholders of record on
July 26, 1996.
BENEFICIAL OWNERSHIP
The following table lists the beneficial ownership of each person or group
who, as of a recent date, owned, to the Company's knowledge, more than five
percent of the Company's Ordinary Shares:
<TABLE>
<CAPTION>
PERCENTAGE
OF
NUMBER OUTSTANDING
NAME AND ADDRESS OF SHARES SHARES(1)
---------------- ---------- -----------
<S> <C> <C>
Oppenheimer Group, Inc............................. 17,481,463 20.26%
Oppenheimer Tower
World Financial Centre
New York, New York 10281
Capital Group Companies............................ 14,750,040 17.09%
333 South Hope Street
Los Angeles, California 90071
Scudder, Stevens & Clark, Inc...................... 6,521,925 7.56%
345 Park Avenue
New York, New York 10154
</TABLE>
- --------
(1) Each Ordinary Share has one vote, except that if, and so long as, the
Controlled Shares (as hereinafter defined) of any person constitute ten
percent (10%) or more of the issued Ordinary Shares, the voting rights
with respect to the Controlled Shares owned by such person shall be
limited, in the aggregate, to a voting power of approximately 10%,
pursuant to a formula specified in the Company's Articles of Association.
"Controlled Shares" shall include, among other things, all Ordinary Shares
which such person is deemed to beneficially own directly, indirectly or
constructively (within the meaning of Section 13(d)(3) of the Securities
Exchange Act of 1934).
BOARD OF DIRECTORS
The Company's Articles of Association provide that the Board of Directors
shall be divided into three classes designated Class I, Class II and Class
III, each class consisting as nearly as possible of one-third of the total
number of Directors constituting the entire Board of Directors.
The term of office for each Director in Class I expires at the Annual
General Meeting of the Company in 1997; the term of office for each Director
in Class II expires at the Annual General Meeting in 1998; and the term of
office for each Director in Class III expires at the Annual General Meeting in
1999; and at each Annual General Meeting the successors of the class of
Directors whose term expires at that meeting shall be elected to hold office
for a term expiring at the Annual General Meeting to be held in the third year
following the year of their election.
In fiscal 1996, there were six meetings of the Board and all incumbent
Directors attended at least 75% of such meetings and of the meetings held by
all committees of the Board of which they were a member. The Board of
Directors has passed a resolution that if a Director does not attend 50% of
the Board meetings during his term, such Director will not be eligible for
nomination for reelection unless the Board feels there are exceptional reasons
to retain such Director.
The Board of Directors has established an Audit Committee, Compensation
Committee, Nominating and Corporate Governance Committee and a Finance
Committee.
2
<PAGE>
AUDIT COMMITTEE
The Audit Committee of the Board of Directors meets with the Company's
independent accountants to discuss the scope and results of their audit and to
review the adequacy of the Company's accounting and control system. The
Committee reviews the audit fee and considers issues raised by its members, the
independent accountants and management. Each year the Audit Committee
recommends to the Board an independent accounting firm to audit the financial
statements of the Company. Messrs. Gould, Heap, Rance and Thornton and Dr.
Thrower comprised the Audit Committee. The Audit Committee met twice during
fiscal 1996.
COMPENSATION COMMITTEE
The Compensation Committee reviews the performance of corporate officers,
establishes overall employee compensation policies and recommends to the Board
of Directors major compensation programs. No member of the Compensation
Committee is a member of management or eligible for compensation from the
Company other than as a Director. Messrs. Clements and Heap comprised the
Compensation Committee. The Compensation Committee met three times during
fiscal 1996.
NOMINATING AND CORPORATE GOVERNANCE COMMITTEE
The Nominating and Corporate Governance Committee makes recommendations to
the Board as to nominations for the Board (including qualifications and
criteria for Board and Committee memberships) and compensation for Board and
Committee members, as well as structural, governance and procedural matters.
Messrs. Esposito, Clements, Loudon and O'Hara and Dr. Parker comprised the
Nominating and Corporate Governance Committee. The Nominating and Corporate
Governance Committee met three times during fiscal 1996.
FINANCE COMMITTEE
The Finance Committee reviews capital issues, dividend policy, acquisitions
and overall investment policy. Messrs. Esposito, Loudon, O'Hara, Senter,
Thornton and Weiser and Dr. Parker comprised the Finance Committee. The Finance
Committee met eight times during fiscal 1996.
DIRECTORS COMPENSATION
During fiscal 1996, all Directors, except for Directors who are also
employees of the Company, received an annual fee of $25,000 plus $3,000 per
meeting. Committee Chairmen received an annual fee of $2,000 and all Committee
members an attendance fee of $1,000 per meeting. Directors may elect to have
all or part of the Board annual retainer paid in the form of shares, with a
market value amount equal to 110% of such retainer fee elected, in accordance
with the terms of the Directors Stock & Option Plan.
For fiscal 1996, the following Directors elected to defer all or a portion of
their annual retainer:
<TABLE>
<CAPTION>
AMOUNT SHARE UNITS
DIRECTORS DEFERRED CREDITED
--------- -------- -----------
<S> <C> <C>
Robert S. Parker.................................... $15,000 528
Alan Z. Senter...................................... $25,000 880
John T. Thornton.................................... $25,000 880
John W. Weiser...................................... $25,000 880
</TABLE>
On December 1, 1995, all non-employee Directors were granted 2,000 options
exercisable at $31.1875 per share (the Fair Market Value on December 1, 1995)
pursuant to the terms of the Directors Stock & Option Plan. As of December 4,
1996, the automatic stock option grants to non-employee Directors under the
Directors Stock & Option Plan have been eliminated and, subject to Shareholder
approval of the amendments described herein, non-employee Directors will be
eligible to receive awards under the 1991 Performance Incentive Program.
3
<PAGE>
A Retirement Plan for Non-Employee Directors (the "Retirement Plan") was
implemented effective July 1, 1994, to provide the Directors with a pension on
the termination of service for a period equal to the time served as a
Director. The amount to be paid to each Director was to equal the annual
retainer at the date of termination of service multiplied by the number of
years served on the Board. Except in the case of two directors for whom the
plan will continue, the Retirement Plan was terminated in 1996 and, under the
Company's Stock Plan for Non-employee Directors (the "Stock Plan"), the
present value of the accrued benefits of each Director under the Retirement
Plan was converted into an equivalent amount of Ordinary Share units (each
unit corresponding to one Ordinary Share.) In addition, under the Stock Plan,
as of December 1 of each year, Ordinary Share units are credited to the
account of each non-employee Director (other than the Directors who continue
to accrue benefits under the Retirement Plan.) The number of Ordinary Share
units credited each year is equal to the annual retainer fee divided by the
fair market value of an Ordinary Share on each December 1. Benefits under the
Stock Plan will be distributed in the form of Ordinary Shares following
termination of a non-employee Director's service on the Board.
Michael P. Esposito, Jr.'s annual compensation as Chairman of the Board with
respect to fiscal 1996 comprised a salary of $250,000, pension contributions
of $25,000, bonus of $100,000, a grant of 13,245 incentive stock options at an
exercise price of $37.750 per share, a grant of 36,755 options at an exercise
price of $37.875 per share and a grant of 10,500 Shares of restricted stock.
CERTAIN TRANSACTIONS
Certain Shareholders of the Company and their affiliates, including the
employers of or entities otherwise associated with certain of the Directors,
have purchased insurance from the Company's subsidiaries on terms the Company
believes were no more favorable to the insured than those made available to
non-affiliated customers.
The Company has engaged and may continue to engage, in the ordinary course
of its business, in insurance, investment or other transactions with
subsidiaries of Marsh & McLennan Companies, Inc. (collectively "Marsh") or
companies in which Marsh has equity interests, including Marsh & McLennan Risk
Capital Corp. ("MMRCC") and Risk Capital Reinsurance Company ("RCRe"). Robert
Clements, a Director of the company, was the Chairman of the Board of MMRCC
during a portion of the Company's 1996 fiscal year and is a consultant to
MMRCC and has been the Chairman of Risk Capital Holdings, Inc., the parent
company of RCRe, since its formation in the fall of 1995.
The Company has provided to Mr. O'Hara, the President and Chief Executive
Officer of the Company and Chairman and Chief Executive Officer of X.L.
Insurance Company, Ltd. ("X.L."), a facility to borrow up to $1 million from
the Company. This facility does not bear interest unless Mr. O'Hara terminates
his employment with the Company, at which time the interest will be the
applicable United States Federal rate for long-term loans determined in
accordance with Section 1274(d) of the United States Internal Revenue Code of
1986, as amended. The facility requires repayment of amounts drawn in ten
annual installments. During fiscal 1996, Mr. O'Hara borrowed $400,000 under
the terms of this facility.
During fiscal 1996, the Company retained Mr. Weiser, a Director of the
Company, to provide certain advisory services and paid Mr. Weiser $67,000 in
fees for such services in fiscal 1996.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
The Company is not aware of any Director or officer who failed to file on a
timely basis disclosure reports required by Section 16 of the Securities
Exchange Act of 1934, except that certain Forms 3 and 5 were filed after their
date due.
I. ELECTION OF DIRECTORS
At the Annual General Meeting, five Directors are to be elected to hold
office until the 2000 Annual General Meeting of Shareholders. All of the
nominees are currently serving as Directors and have been elected by the
Shareholders at prior meetings. The remaining Directors of the Company will
continue to serve in accordance with their previously elected term.
4
<PAGE>
Unless authority is withheld by the Shareholders, it is the intention of the
persons named in the enclosed proxy to vote for the nominees listed below. All
of the nominees have consented to serve if elected, but if any becomes
unavailable to serve, the persons named as proxies may exercise their
discretion to vote for a substitute nominee. The name, principal occupation and
other information concerning each Director is set forth below.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR THE NOMINEES.
NOMINEES FOR WHOM PROXIES WILL BE VOTED
Nominees for Class I Directors for terms to expire in 2000:
Gilbert Gould, age 46, has been a Director of the Company since 1987. Mr.
Gould has served as Manager of Financial Services for Southern California
Edison Company since 1993. He previously served as Manager of Insurance for
Southern California Edison Company from 1984 to 1993.
Ian R. Heap, age 71, has been a Director of the Company since 1987 and was
Chairman of the Board of the Company from 1988 to 1992. He was President and
Chief Executive Officer of the Company and X.L. from 1987 to 1988. From 1992 to
1993 he served as President and Chief Executive Officer of Mid Ocean
Reinsurance Company Ltd. Mr. Heap also serves as a director of Risk Capital
Holdings, Inc.
John Loudon, age 60, has been a Director of the Company since 1992. Mr.
Loudon has been Chairman of Caneminster Ltd., a British investment company,
since 1991 and previously served as Chairman of Warrior International Limited
from 1988 to 1991. Mr. Loudon also serves as a director of Tambrands Inc.,
Heineken N.V., Derby Trust plc, BNB Resources plc, Ocean Group plc, and Alex
Brown & Sons (Holdings) Ltd.
Robert S. Parker, age 59, has been a Director of the Company since 1991. Dr.
Parker has been Dean of the School of Business Administration at Georgetown
University since 1986. Dr. Parker also serves as a director of Back Bay
Restaurant Group, Inc.
Alan Z. Senter, age 55, has been a Director of the Company since 1986. Mr.
Senter served as Executive Vice President and Chief Financial Officer of Nynex
Corporation from 1994 to 1996. Mr. Senter served as Principal of Senter
Associates, a financial advisory company, from 1993 to 1994. Mr. Senter served
as a director and Executive Vice President and Chief Financial Officer of
International Specialty Products and GAF Corporation from 1992 to 1993. Mr.
Senter previously served as the Vice President and Senior Financial Officer of
Xerox Corporation from 1990 to 1992.
DIRECTORS WHOSE TERMS OF OFFICE DO NOT EXPIRE AT THIS MEETING
Class II Directors whose terms expire in 1998:
Brian M. O'Hara, age 48, has been President and Chief Executive Officer of
the Company since 1994 and a Director of the Company since 1986, having
previously served as Vice Chairman of the Company from 1987 to 1994. He has
also served as Chairman and Chief Executive Officer of X.L. since December
1995, having served as Chairman, President and Chief Executive Officer from
1994, as President and Chief Executive Officer from 1992, and as President and
Chief Operating Officer from 1986. Mr. O'Hara also serves as a director of Mid
Ocean Limited.
John T. Thornton, age 59, has been a Director of the Company since 1988. Mr.
Thornton has served as Executive Vice President and Chief Financial Officer of
Norwest Corporation since 1987.
John Weiser, age 65, has been a Director of the Company since 1986. Mr.
Weiser served as Senior Vice President and director of Bechtel Group, Inc. from
1980 to 1996 and continues as a director thereof. Mr. Weiser also served as
President of Bechtel Enterprises, Inc. from 1988 to 1992 and as General Counsel
of Bechtel Group, Inc. from 1980 to 1988 and from 1992 to 1994.
5
<PAGE>
Class III Directors whose terms expire in 1999:
Robert Clements, age 64, has been a Director of the Company since 1986. Mr.
Clements has served as Chairman of Marsh & McLennan Risk Capital Corp. since
1994. He served as President of Marsh & McLennan Companies, Inc. from 1992 to
1994 and has been a director of Marsh & McLennan Companies, Inc. since 1981.
He previously served as President and Chairman of the Board of Marsh and
McLennan, Incorporated from 1985 and 1988, respectively. Mr. Clements also
serves as Chairman and director of Risk Capital Holdings, Inc., the parent
company of RCRe.
Michael P. Esposito, Jr., age 57, has been Chairman of the Board since April
1995 and a Director of the Company since 1986. Mr. Esposito has been a Partner
of Inter-Atlantic Securities Corporation since June 1995. Mr. Esposito served
as Chief Corporate Compliance, Control and Administration Officer of The Chase
Manhattan Corporation from 1991 to 1995, having previously served as Executive
Vice President and Chief Financial Officer from 1987 to 1991. Mr. Esposito
serves as a director of Mid Ocean Limited, Risk Capital Holdings, Inc. and
Forest City Enterprises.
Cyril Rance, age 62, has been a Director of the Company since 1990. Mr.
Rance served as President and Chief Executive Officer of the Bermuda Fire &
Marine Insurance Co. Ltd. from 1985 to 1990.
Ellen E. Thrower, age 50, has been a Director of the Company since December
1995. Dr. Thrower has been President and Chief Executive Officer of The
College of Insurance since 1988.
EQUITY SECURITIES OWNED BENEFICIALLY AS OF JANUARY 31, 1997
The following table summarizes the beneficial ownership as of January 31,
1997, of the Shares of the Company by each Director and executive officer and
all Directors and executive officers of the Company as a group.
<TABLE>
<CAPTION>
NUMBER
OF NUMBER OF
NAME SHARES OPTIONS (1) TOTAL (2)
---- ------- ----------- ---------
<S> <C> <C> <C>
James J. Ansaldi........................... 37,000 143,000 180,000
Robert Clements (3)........................ 38,700 9,000 47,700
K. Bruce Connell........................... 27,000 107,800 134,800
Robert J. Cooney (4)....................... 98,550 259,000 357,550
Michael P. Esposito, Jr. (5)............... 23,960 125,000 148,960
Gilbert Gould.............................. 1,990 9,000 10,990
Ian R. Heap................................ 4,000 9,000 13,000
John Loudon................................ 2,042 9,000 11,042
Brian M. O'Hara............................ 334,980 664,490 999,470
Robert S. Parker........................... 2,853 9,000 11,853
Cyril Rance................................ 5,976 9,000 14,976
Alan Z. Senter............................. 2,266 9,000 11,266
John T. Thornton........................... 9,066 9,000 18,066
Ellen E. Thrower........................... 1,255 7,000 8,255
Brian G. Walford........................... 189,667 142,333 332,000
John W. Weiser............................. 29,786 9,000 38,786
------- --------- ---------
All Directors and executive officers of the
Company as a group (16 individuals)....... 809,091 1,529,623 2,338,714
======= ========= =========
</TABLE>
- --------
(1) Includes all outstanding options, whether or not currently exercisable.
(2) To the Company's knowledge, no Director or executive officer other than
Mr. O'Hara, who had a beneficial ownership interest in approximately 1.16%
of the outstanding Ordinary Shares as of January 31, 1997, had
6
<PAGE>
a beneficial ownership interest in excess of 1 percent of the outstanding
Ordinary Shares as of such date. As a group, all Directors and executive
officers of the Company had a beneficial ownership interest in approximately
2.71% of the outstanding Ordinary Shares as of January 31, 1997. The
percentages of outstanding Ordinary Shares are calculated separately for
each Shareholder and for all Directors and executive officers of the Company
as a group on the basis of the number of outstanding Ordinary Shares as of
January 31, 1997.
(3) Includes 5,000 shares that Mr. Clements owns indirectly.
(4) Excludes 5,050 shares owned by Mr. Cooney's family as to which Mr. Cooney
disclaims beneficial ownership.
(5) Includes 4,000 shares that Mr. Esposito owns indirectly.
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table shows the compensation of the five most highly
compensated executive officers of the Company for services paid for or rendered
with respect to fiscal 1996 to the Company and its subsidiaries in all
capacities:
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG-TERM COMPENSATION
----------------------------------- -----------------------------------------------
AWARDS PAYOUTS
--------------------- ---------
NAME AND OTHER RESTRICTED SECURITIES LONG-TERM ALL
PRINCIPAL ANNUAL STOCK UNDERLYING INCENTIVE OTHER
POSITION YEAR SALARY BONUS COMPENSATION(1) AWARDS OPTIONS PAYOUTS COMPENSATION(2)
--------- ---- -------- ---------- --------------- ---------- ---------- --------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Brian M. O'Hara(3).......... 1996 $550,000 $1,000,000 $104,358 $3,522,375 354,490 $ 0 $55,000
President and Chief 1995 500,000 450,000 107,652 935,625 35,000 0 50,000
Executive Officer of the 1994 437,500 375,000 80,208 562,500 30,000 0 43,750
Company and Chairman
and Chief Executive
Officer of X.L.
Robert J. Cooney............ 1996 $400,000 $ 350,000 $101,365 $ 946,875 50,000 $ 0 $40,000
Executive Vice President 1995 330,000 250,000 93,759 623,750 25,000 0 33,000
of the Company and 1994 285,000 150,000 61,594 375,000 25,000 0 33,798
President and Chief
Operating Officer of X.L.
Brian G. Walford............ 1996 $345,000 $ 250,000 $ 89,017 $ 568,125 35,000 $ 0 $34,500
Executive Vice President 1995 320,000 220,000 98,788 249,500 17,500 0 32,000
and Chief Financial Officer 1994 275,000 135,000 62,447 225,000 20,000 0 32,798
of the Company and X.L.
K. Bruce Connell............ 1996 $250,000 $ 220,000 $ 72,683 $ 568,125 30,000 $ 0 $25,000
Executive Vice President 1995 200,000 175,000 73,515 187,125 7,500 0 20,000
and Chief Underwriting 1994 160,000 85,000 58,356 112,500 10,000 0 21,298
Officer of X.L. Reinsurance
Company, Ltd.
James J. Ansaldi............ 1996 $250,000 $ 200,000 $ 79,954 $ 378,750 30,000 $ 0 $25,000
Senior Vice President 1995 250,000 140,000 73,904 124,750 7,500 0 25,000
of X.L. 1994 236,775 120,000 61,105 37,500 10,000 0 28,975
</TABLE>
- --------
(1) Mr. O'Hara received $96,000 for housing expenses in each of fiscal 1996 and
1995, and $79,380 in fiscal 1994. Mr. Cooney received $96,000 for housing
expenses in fiscal 1996, $84,000 in fiscal 1995 and $52,980 in fiscal 1994.
Mr. Walford received $84,000 for housing expenses in each of fiscal 1995
and 1995, and $52,980 in fiscal 1994. Messrs. Connell and Ansaldi each
received $66,000 for housing expenses in each of fiscal 1996 and 1995, and
$52,980 in fiscal 1994.
(2) All other compensation relates to contributions to the Money Accumulation
Pension Plan.
(3) See "Board of Directors--Certain Transactions."
7
<PAGE>
OPTION GRANTS IN LAST FISCAL YEAR
The following table shows the options granted with respect to fiscal 1996 to
the five most highly paid executive officers together with the potential
realizable value at assumed rates of return:
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED ANNUAL
RATES OF STOCK PRICE
APPRECIATION FOR
INDIVIDUAL GRANTS OPTIONS TERM
----------------------------------------------------------- ------------------------
% OF
NUMBER OF TOTAL OPTIONS
SECURITIES GRANTED TO EXERCISE
UNDERLYING EMPLOYEES OR BASE
OPTIONS IN LAST PRICE
NAME GRANTED(1) FISCAL YEAR(2) (PER SHARE)(3) EXPIRATION DATE 5% 10%
---- ---------- -------------- -------------- ---------------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
Brian M. O'Hara............. 328,000 33.5 $37.875 December 1, 2006 $ 7,812,632 $ 19,799,064
President and Chief 26,490(4) 66.7 $37.750 December 4, 2006 $ 630,965 $ 1,599,016
Executive Officer of the
Company and Chairman
and Chief Executive
Officer of X.L.
Robert J. Cooney............ 50,000 5.1 $37.875 December 1, 2006 $ 1,190,950 $ 3,018,150
Executive Vice President
of the Company and
President and Chief
Operating Officer of X.L.
Brian G. Walford............ 35,000 3.6 $37.875 December 1, 2006 $ 833,665 $ 2,112,075
Executive Vice President
and Chief Financial
Officer of the Company and
X.L.
K. Bruce Connell............ 30,000 3.1 $37.875 December 1, 2006 $ 714,570 $ 1,810,890
Executive Vice President
and Chief Underwriting
Officer of X.L. Reinsurance
Company, Ltd.
James J. Ansaldi............ 30,000 3.1 $37.875 December 1, 2006 $ 714,570 $ 1,810,890
Senior Vice President
of X.L.
</TABLE>
- --------
(1) Unless otherwise indicated, all options were granted under the Company's
1991 Performance Incentive Program.
(2) Calculated separately for each type of option granted.
(3) Market price at date of grant.
(4) In fiscal 1996, Mr. O'Hara received an award of 26,490 incentive stock
options.
8
<PAGE>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
The following table shows the options exercised during the last fiscal year
by the five most highly paid executive officers together with the number and
value of unexercised options at November 30, 1996:
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
SHARES UNDERLYING OPTIONS AT IN-THE-MONEY OPTIONS
ACQUIRED IMPLIED VALUE NOVEMBER 30, 1996 AT NOVEMBER 30, 1996
NAME ON EXERCISE REALIZED EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
- ---- ----------- ------------- ------------------------- -------------------------
<S> <C> <C> <C> <C>
Brian M. O'Hara................ 65,840 $1,958,740 243,328 / 394,672 $4,740,534 / $1,089,341
President and Chief Executive
Officer of the Company and
Chairman and Chief Executive
Officer of X.L.
Robert J. Cooney............... -- $ -- 168,996 / 100,004 $3,382,761 / $ 641,739
Executive Vice President of
the
Company and President and
Chief Operating Officer of
X.L.
Brian G. Walford............... 38,000 $ 745,500 87,331 / 71,669 $1,418,928 / $ 482,759
Executive Vice President and
Chief Financial Officer of the
Company and X.L.
K. Bruce Connell............... -- $ -- 61,134 / 46,666 $1,150,684 / $ 241,028
Executive Vice President and
Chief Underwriting Officer of
X.L. Reinsurance Company, Ltd.
James J. Ansaldi............... -- $ -- 96,334 / 46,666 $1,970,784 / $ 241,028
Senior Vice President of X.L.
</TABLE>
No options have adjustable exercise prices.
RESTRICTED STOCK GRANTS
The following table shows the restricted stock grants held by the five most
highly paid executive officers at November 30, 1996:
<TABLE>
<CAPTION>
NO. OF RESTRICTED VALUE OF RESTRICTED
STOCK GRANTS AT STOCK GRANTS AT
NOVEMBER 30, 1996 NOVEMBER 30, 1996
NAME VESTED/UNVESTED VESTED/UNVESTED
- ---- ----------------- -----------------------
<S> <C> <C>
Brian M. O'Hara...................... 49,000 / 153,300 $1,855,875 / $5,806,237
President and Chief Executive
Officer of the Company
and Chairman and Chief Executive
Officer of X.L.
Robert J. Cooney..................... 27,000 / 65,000 $1,022,625 / $2,461,875
Executive Vice President of the
Company and
President and Chief Operating
Officer of X.L.
Brian G. Walford..................... 33,000 / 35,000 $1,249,875 / $1,325,625
Executive Vice President and Chief
Financial
Officer of the Company and X.L.
K. Bruce Connell..................... 0 / 27,000 $ 0 / $1,022,625
Executive Vice President and Chief
Underwriting
Officer of X.L. Reinsurance Company,
Ltd.
James J. Ansaldi..................... 21,000 / 16,000 $ 795,375 / $ 606,000
Senior Vice President of X.L.
</TABLE>
9
<PAGE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Mr. Heap, a member of the Compensation Committee of the Company, is a former
Chairman of the Board of the Company and former President and Chief Executive
officer of X.L. Mr. Clements, a member of the Compensation Committee of the
Company, was the Chairman of the Board of MMRCC during a portion of the
Company's 1996 fiscal year and is a consultant to MMRCC and has been the
Chairman of Risk Capital Holdings, Inc., the parent company of RCRe, since its
formation in the fall of 1995. See "Board of Directors--Certain Transactions."
COMPENSATION COMMITTEE REPORT
The Compensation Committee, composed of two independent outside Directors,
recommends guiding principles and major compensation programs to the Board of
Directors and approves annual incentive compensation awards under the program.
The Board of Directors and the Compensation Committee believe that the
Company's success requires a small but highly motivated and professional
staff. The compensation policies, therefore, are designed to attract and
retain at the Company's offshore location, and to motivate, such a staff.
The executive compensation program combines base salary, annual bonus and a
long-term incentive in the form of a stock ownership program. Annual
compensation is highly leveraged with at risk components, to provide a strong
link to Company and individual performance. To further align the interests of
executive management with the interests of Shareholders, the program provides
management with a significant stock component to their compensation package.
The Company retained the services of Sibson & Company, Inc., a human
resource management consulting firm, to advise on competitive pay levels for
senior executives and to recommend appropriate pay levels for future
compensation administration.
Sibson & Company, Inc. based its annual compensation recommendations on an
assessment of United States market rates for salary and bonus, with
adjustments to reflect appropriate pay positioning and cost-of-living
differences for Bermuda versus the United States. Sibson & Company, Inc.
developed competitive annual stock option and grant levels based on a market
survey of approximately 50 large financial services companies.
Base salary increases are based on individual and corporate performance and
reflect market and cost-of-living increases. Pay positioning was set at
approximately the 80th percentile of comparative insurance industry segments.
Rationale for pay positioning was based on four primary factors: need for
highly qualified professionals, specialized areas of expertise, retention of
executives critical to Company success and high barrier of recruitment for
potential competitors.
The Company has also engaged other management consultants to review the
effectiveness of the Company's executive compensation program and to assist in
defining appropriate measures of corporate performance for incentive
compensation purposes.
Under the Company's annual bonus plan, bonuses are paid in December based on
individual and corporate performance during the prior fiscal year. Performance
targets are established annually.
Major factors taken into account include share performance relative to a
peer group, premium growth, combined ratio, retention rate, investment
management results and strategic steps to protect and expand the Company's
business in a rapidly changing market, featuring perceived increased linkages
of the risk transfer capabilities of the insurance industry and the capital
access and availability of the financial markets.
The Compensation Committee retained the services of Pearl Meyer & Partners
Inc. to advise on an extraordinary 1996 Performance Recognition Program for
Mr. O'Hara. This special award recognizes the outstanding leadership provided
by Mr. O'Hara as Chief Executive Officer in maintaining the Company's
leadership position in its core business and in positioning the Company for
continued profitable growth and development of related business.
10
<PAGE>
Since July 1991, the date on which the Company's Shares were first listed on
the New York Stock Exchange, the Company's stock has significantly
outperformed both the Standard & Poor's 500 Stock Index and the Standard &
Poor's Property Casualty Index.
The Company's Long-Term Incentive Plan provides annual grants of stock
options and restricted stock intended to motivate executives to improve total
return to Shareholders. The number of options granted is based on competitive
grant values for the salary level/position and the Share price at the time of
grant.
Robert Clements
Ian R. Heap
PERFORMANCE GRAPH
Set forth below is a line graph comparing the yearly dollar change in the
cumulative total Shareholder return on the Company's Shares (assuming
reinvestment of dividends) from July 19, 1991 (the date on which the Company's
Shares were first listed on the New York Stock Exchange) through November 30,
1996 as compared to the cumulative total return of the Standard & Poor's 500
Stock Index and the cumulative total return of the Standard & Poor's Property
Casualty Index.
LOGO
11
<PAGE>
II. AMENDMENTS TO THE 1991 PERFORMANCE INCENTIVE PROGRAM
The Board of Directors of the Company has adopted the First Amendment to the
1991 Performance Incentive Program (the "Program"), subject to shareholder
approval. The amendment modifies the eligibility provisions of the Program to
provide that awards may be granted to non-employee Directors of the Company.
In connection with this amendment, the automatic stock option grants to non-
employee Directors under the Directors Stock & Option Plan have been
eliminated effective as of December 4, 1996. The amendment also increases the
number of shares available under the Program from 5,550,000 to 8,000,000, of
which 3,916,420 have been issued or are reserved for issuance as of January
31, 1997. The amendment also provides that the Program can be administered by
either the Compensation Committee or the entire Board, and it grants the plan
administrator authority to issue awards that are transferable. In addition,
the amendment modifies the definition of "Change of Control" (which results in
accelerated vesting and exercisability of awards granted under the Program) to
eliminate the requirement that a participant's employment shall have been
terminated and to reduce the stock ownership threshold triggering a change in
Control from 50% or more to 40% or more. The amendment also provides that
employees of 20%-owned subsidiaries may participate in the Program. The
Program has provided that employees of majority-owned subsidiaries were
eligible to participate. The amendment deletes the requirement that stock
options granted to individuals subject to the reporting requirements of
Section 16 of the Securities Exchange Act of 1934 shall not be exercisable for
at least six months following the grant.
YOUR BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE PROPOSAL TO AMEND THE
PROGRAM.
III. SELECTION OF INDEPENDENT ACCOUNTANTS
The Audit Committee and the Board of Directors have recommended the
appointment of Coopers & Lybrand, Bermuda, as the independent Auditors of the
Company for the fiscal year ending November 30, 1997. Representatives of the
firm are expected to be present at the Annual Meeting with an opportunity to
make a statement if they desire to do so and to be available to respond to
appropriate questions.
YOUR BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE PROPOSAL TO APPOINT
COOPERS & LYBRAND, BERMUDA.
IV. STOCKHOLDER PROPOSALS FOR 1997 ANNUAL MEETING
Proposals intended for inclusion in next year's Proxy Statement should be
sent to the Company's Secretary at Cumberland House, Hamilton HM 11, Bermuda
and must be received by October 25, 1997.
Any Shareholder entitled to vote at a meeting may nominate persons for
election as Directors if written notice of such intent is delivered or mailed,
postage prepaid, and received by the Secretary at the principal executive
offices of the Company not less than 5 days nor more than 21 days before the
date appointed for such meeting. The shareholder notice must include the
following information about the proposed nominee: (a) name, age, and business
and residence addresses; (b) principal occupation or employment; (c) class and
number of Shares or securities of the Company beneficially owned; and (d) any
other information required to be disclosed in solicitations of proxies
pursuant to Regulation 14A of the Securities Exchange Act of 1934, as amended,
including the proposed nominee's written consent to serve if elected. The
notice must also include information on the Shareholder making the nomination,
such as: name and address as it appears on the Company's books, and the class
and number of Shares of the Company beneficially owned. The nomination of any
person not made in compliance with the foregoing procedures shall be
disregarded.
12
<PAGE>
V. OTHER MATTERS
While management knows of no other issues, if any other matters properly come
before the meeting, it is the intention of the persons named in the
accompanying proxy form to vote the proxy in accordance with their judgment on
such matters.
PROXY SOLICITATION
The Company will bear the cost of this solicitation of proxies. Proxies may
be solicited by mail, personal interview, telephone and telegraph by Directors,
officers and employees of the Company and X.L. without receiving additional
compensation. In addition to the foregoing, the Company has retained Georgeson
& Company Inc. to assist in the solicitation of proxies for a fee of
approximately $10,000 plus reasonable out-of-pocket expenses and disbursements
of that firm. Upon request the Company will also reimburse brokers and others
holding stock in their names, or in the names of nominees, for forwarding proxy
materials to their principals.
THE COMPANY WILL FURNISH, WITHOUT CHARGE TO ANY SHAREHOLDER, A COPY OF ITS
FORM 10-K REPORT THAT IT FILES ANNUALLY WITH THE SECURITIES AND EXCHANGE
COMMISSION. A COPY OF THIS REPORT FOR THE FISCAL YEAR ENDED NOVEMBER 30, 1996
MAY BE OBTAINED UPON WRITTEN REQUEST TO THE COMPANY'S SECRETARY AT CUMBERLAND
HOUSE, ONE VICTORIA STREET, HAMILTON HM 11, BERMUDA.
As ordered,
Brian M. O'Hara
President and Chief Executive
Officer
13
<PAGE>
PROXY--EXEL LIMITED
The undersigned Shareholder of EXEL Limited hereby appoints Brian M. O'Hara
or, failing him, Brian G. Walford to be its proxy and to vote for the
undersigned on all matters arising at the meeting or any adjournment thereof and
to represent the undersigned at the Annual General Meeting of Shareholders of
EXEL Limited to be held on April 11, 1997 in Hamilton, Bermuda.
THE SHARES REPRESENTED HEREBY WILL BE VOTED WITH THE INSTRUCTIONS CONTAINED
HEREIN. IF NO INSTRUCTION IS GIVEN, THE SHARES WILL BE VOTED "FOR" ITEMS (1),
(2) AND (3) ON THE REVERSE HEREOF, ALL SAID ITEMS BEING FULLY DESCRIBED IN THE
NOTICE OF SUCH MEETING AND THE ACCOMPANYING PROXY STATEMENT, RECEIPT OF WHICH
ARE ACKNOWLEDGED, THE UNDERSIGNED RATIFIES AND CONFIRMS ALL THAT SAID PROXIES OR
THEIR SUBSTITUTES MAY LAWFULLY DO BY VIRTUE HEREOF.
(Continued, and to be marked, dated and signed, on the other side)
<PAGE>
Please mark your
votes as indicated [X]
in this example
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
FOR PROPOSALS 1, 2 AND 3.
FOR AGAINST
1. To elect the following five [___] [___] (Instructions: To withhold
nominees as Class I Directors to authority to vote for any
hold office until 2000 nominee listed, write that
G. Gould J. Loudon nominee's name in the space
I.R. Heap R.S. Parker provided below)
A.Z. Senter ____________________________
FOR AGAINST ABSTAIN
2. Ratification of the First [___] [___] [___]
Amendment to the 1991
Performance Incentive Program.
3. To appoint Coopers & Lybrand,
Bermuda, to act as the Independent FOR AGAINST ABSTAIN
Auditors of the Company for the [___] [___] [___]
fiscal year ending November 30, 1997.
_________________________________________
(Name of Shareholder)
Dated:
_________________________________________, 1997
By:______________________________________
PLEASE SIGN, DATE AND PROMPTLY RETURN
THIS PROXY IN THE ENCLOSED ENVELOPE.
