<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:
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(4) Date Filed:
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Notes:
<PAGE>
EXEL LIMITED
----------------
NOTICE OF ANNUAL GENERAL MEETING OF SHAREHOLDERS
TO BE HELD ON MARCH 31, 1998
----------------
Hamilton, Bermuda
February 17, 1998
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 Hyatt Regency Grand Cayman,
Grand Cayman, Cayman Islands, British West Indies, on Tuesday, March 31, 1998,
at 8:30 a.m. local time for the following purposes:
1. To elect four Class II Directors to hold office until 2001;
2. To appoint Coopers & Lybrand, Bermuda, to act as the independent auditors
of the Company for the fiscal year ending November 30, 1998; and
3. 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 17, 1998, 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 MARCH 31, 1998
----------------
February 17, 1998
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 March 31, 1998, and any adjournments
thereof.
When such proxy is properly executed and returned, the Ordinary Shares, par
value U.S.$0.01 per share (the "Ordinary Shares" or "Shares"), of the Company
it represents will be voted at the meeting on the following: (1) the election
of the four nominees for Class II Directors identified herein; (2) the
appointment of Coopers & Lybrand, Bermuda ("Auditors"), to act as the
independent auditors of the Company for the fiscal year ending November 30,
1998; and (3) 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 17, 1998,
will be entitled to vote at the meeting. As of February 17, 1998, there were
outstanding 84,640,668 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 General Meeting of
Shareholders and the accompanying proxy card are first being mailed to
Shareholders on or about March 2, 1998.
Other than the approval of the minutes of the 1997 Annual General Meeting,
the Company knows of no specific matter to be brought before the Annual
General Meeting which is not referred to in the Notice of Annual General
Meeting of Shareholders. 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 per cent of the outstanding Shares being present in person or by
proxy). Approval of the appointment of the Auditors will be by similar vote.
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.
1
<PAGE>
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 OF OUTSTANDING
NAME AND ADDRESS SHARES SHARES(1)
---------------- ---------- -----------
<S> <C> <C>
Oppenheimer Group, Inc............................. 16,780,000 19.82%
Oppenheimer Tower
World Financial Centre
New York, New York 10281
Capital Group Companies............................ 14,755,830 17.43%
333 South Hope Street
Los Angeles, California 90071
Scudder, Stevens & Clark, Inc...................... 6,265,000 7.40%
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" 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 in 2000; 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 1997, there were seven 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, a Compensation
Committee, a Nominating and Corporate Governance Committee and a Finance
Committee.
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
2
<PAGE>
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 four
times during fiscal 1997.
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, Hatcher and Heap comprised
the Compensation Committee. The Compensation Committee met five times during
fiscal 1997.
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 five times during fiscal 1997.
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 ten times during fiscal 1997.
DIRECTORS COMPENSATION
During fiscal 1997, 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 $3,000 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 1997, 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..................................... $15,000 435
Alan Z. Senter....................................... $25,000 726
John T. Thornton..................................... $25,000 726
Ellen E. Thrower..................................... $15,000 435
John W. Weiser....................................... $25,000 726
</TABLE>
On December 1, 1996, all non-employee Directors were granted 2,000 options
exercisable at $37.875 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 were eliminated and non-employee Directors are
eligible to receive awards under the 1991 Performance Incentive Program.
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
3
<PAGE>
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 1997 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 1997 comprised a salary of $250,000, pension contributions
of $25,000, bonus of $150,000, a grant of 10,815 incentive stock options at an
exercise price of $64.6875 per share and a grant of 39,185 options at an
exercise price of $61.50 per share.
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.
Through its subsidiaries, the Company has engaged and may continue to
engage, in the ordinary course of its business, in insurance, reinsurance,
investment or other transactions with affiliates of J&H Marsh & McLennan
Companies, Inc. (collectively "J&H Marsh") or companies in which J&H Marsh has
equity interests, including Marsh & McLennan Risk Capital Corp. ("MMRCC") and
Risk Capital Reinsurance Company ("RCRe"). Robert Clements, a Director of the
company, is a consultant to MMRCC and has been the Chairman of Risk Capital
Holdings, Inc., the parent company of RCRe, since its formation in 1995.
The Company has provided to Mr. O'Hara, the President and Chief Executive
Officer of the Company, Chairman and Chief Executive Officer of X.L. Insurance
Company, Ltd. ("X.L.") and Chairman of X.L. Global Reinsurance Company, Ltd.
("XLGRe"), 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. Mr.
O'Hara did not borrow any funds under this facility in fiscal 1997.
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 4 were filed after their date
due.
I. ELECTION OF DIRECTORS
At the Annual General Meeting, four Directors are to be elected to hold
office until the 2001 Annual General Meeting. All of the nominees are
currently serving as Directors and, with one exception, have been elected by
the Shareholders at prior meetings. Robert V. Hatcher, Jr. was appointed as a
Director in June 1997 to fill a newly created directorship pursuant to the
Company's Articles of Association. 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 II Directors whose terms expire in 2001:
Robert V. Hatcher, Jr., age 67, has been a Director of the Company since
June 1997. Mr. Hatcher served as Chairman of Johnson & Higgins from 1982 until
his retirement in 1990. Mr. Hatcher also serves as a director of Media
General.
Brian M. O'Hara, age 49, 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 60, 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 66, 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 1997 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.
DIRECTORS WHOSE TERMS OF OFFICE DO NOT EXPIRE AT THIS MEETING
Class III Directors whose terms expire in 1999:
Robert Clements, age 65, has been a Director of the Company since 1986. Mr.
Clements served as Chairman of Marsh & McLennan Risk Capital Corp. from 1994
to 1996. 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 58, has been Chairman of the Board since 1995
and a Director of the Company since 1986. Mr. Esposito has been Vice Chairman
of Inter-Atlantic Capital Partners, Inc. since 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 63, 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 51, 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.
5
<PAGE>
Class I Directors for terms to expire in 2000:
Gilbert Gould, age 47, 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 72, 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 61, 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 Heineken N.V.,
Derby Trust plc, Ocean Group plc, SHV Holdings N.V., Hiscox plc, and Aall
Trust & Banking Corporation Limited.
Robert S. Parker, age 60, has been a Director of the Company since 1991. Dr.
Parker was Dean of the School of Business Administration at Georgetown
University from 1986 to 1997, when he retired to serve as Dean Emeritus and
the Robert S. Parker Professor of Strategy and Finance. Dr. Parker also serves
as a director of Back Bay Restaurant Group, Inc. and Middlesex Mutual
Assurance Company.
Alan Z. Senter, age 56, 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 1997. 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. Mr. Senter also serves as a director of
InterVu, Inc.
EQUITY SECURITIES OWNED BENEFICIALLY AS OF JANUARY 31, 1998
The following table summarizes the beneficial ownership as of January 31,
1998, of the Shares of the Company by each Director and executive officer of
the Company for the year ended November 30, 1997, and all such 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>
Robert Clements........................... 38,591 14,000 52,591
K. Bruce Connell.......................... 32,000 137,800 169,800
Robert J. Cooney (3)...................... 98,550 309,000 407,550
Michael P. Esposito, Jr. (4).............. 28,136 170,000 198,136
Gilbert Gould............................. 2,523 14,000 16,523
Christopher V. Greetham................... 11,000 55,000 66,000
Robert V. Hatcher, Jr..................... 1,024 9,000 10,024
Ian R. Heap............................... 4,000 14,000 18,000
John Loudon............................... 2,580 14,000 16,580
Brian M. O'Hara........................... 334,980 764,490 1,099,470
Robert S. Parker.......................... 3,361 14,000 17,661
Cyril Rance............................... 6,533 14,000 20,533
Alan Z. Senter............................ 3,308 14,000 17,308
John T. Thornton.......................... 10,162 14,000 24,162
Ellen E. Thrower.......................... 2,091 12,000 14,091
Brian G. Walford.......................... 203,000 129,000 332,000
John W. Weiser............................ 31,913 14,000 45,913
------- --------- ---------
All Directors and executive officers of
the Company as a group (17 individuals).. 814,052 1,712,290 2,526,342
======= ========= =========
</TABLE>
6
<PAGE>
- --------
(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 1.3%
of the outstanding Ordinary Shares as of January 31, 1998, had a
beneficial ownership interest in excess of 1% 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 3.0%
of the outstanding Ordinary Shares as of January 31, 1998. 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, 1998.
(3) Excludes 5,050 shares owned by Mr. Cooney's family as to which Mr. Cooney
disclaims beneficial ownership.
(4) 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 1997 to the Company and its subsidiaries in
all capacities:
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
-----------------------------------------------
ANNUAL COMPENSATION AWARDS PAYOUTS
------------------------------------------- --------------------- -------------------------
RESTRICTED SECURITIES LONG-TERM
NAME AND PRINCIPAL OTHER ANNUAL STOCK UNDERLYING INCENTIVE ALL 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)...... 1997 $550,000 $ 750,000 $111,775 $ 0 100,000 $ 0 $55,000
President and Chief 1996 550,000 1,000,000 104,358 3,522,375 354,490 0 55,000
Executive Officer of 1995 500,000 450,000 107,652 935,625 35,000 0 50,000
the Company, Chairman
and Chief Executive
Officer of X.L. and
Chairman of XLGRe.
Robert J. Cooney........ 1997 $400,000 $ 400,000 $101,355 $ 0 50,000 $ 0 $40,000
Executive Vice
President of 1996 400,000 350,000 101,365 946,875 50,000 0 40,000
the Company and 1995 330,000 250,000 93,759 623,750 25,000 0 33,000
President and Chief
Operating Officer of
X.L.
Brian G. Walford........ 1997 $345,000 $ 345,000 $ 90,853 $ 0 0 $ 0 $34,500
Executive Vice 1996 345,000 250,000 89,017 568,125 35,000 0 34,500
President and
Chief Financial Officer 1995 320,000 220,000 98,788 249,500 17,500 0 32,000
of the Company and
Executive Vice
President of X.L.
K. Bruce Connell........ 1997 $300,000 $ 250,000 $ 79,278 $ 307,500 30,000 $ 0 $30,000
Executive Vice
President of 1996 250,000 220,000 72,683 568,125 30,000 0 25,000
the Company and 1995 200,000 175,000 73,515 187,125 7,500 0 20,000
President and Chief
Operating Officer of
XLGRe.
Christopher V.
Greetham(4)............ 1997 $270,000 $ 200,000 $ 84,009 $ 189,500 25,000 $ 0 $27,000
Senior Vice President 1996 81,709(4) 100,000 16,500 75,750 10,000 0 8,171
and Chief Investment
Officer of the Company.
</TABLE>
- --------
(1) Mr. O'Hara received $96,000 for housing expenses in each of fiscal 1997,
1996 and 1995. Mr. Cooney received $96,000 for housing expenses in fiscal
1997 and 1996 and $84,000 in fiscal 1995. Mr. Walford received $84,000 for
housing expenses in each of fiscal 1997, 1996 and 1995. Mr. Connell
received $73,500 for housing expenses in fiscal 1997 and $66,000 for
housing expenses in each of fiscal 1996 and 1995. Mr. Greetham received
$66,000 for housing expenses in fiscal 1997 and $16,500 for such expenses
in fiscal 1996.
7
<PAGE>
(2) All other compensation relates to contributions to the Money Accumulation
Pension Plan.
(3) See "Board of Directors--Certain Transactions."
(4) Mr. Greetham commenced employment with the Company on August 12, 1996.
OPTIONS GRANTED IN LAST FISCAL YEAR
The following table shows the options granted in the last fiscal year 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
UNDERLYING EMPLOYEES EXERCISE OR
OPTIONS IN LAST BASE PRICE
NAME GRANTED(1) FISCAL YEAR (PER SHARE)(2) EXPIRATION DATE 5% 10%
---- ---------- ------------- -------------- ---------------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Brian M. O'Hara........ 100,000 18.6 $ 61.50 December 1, 2007 $3,867,702 $9,801,516
President and Chief
Executive Officer of
the Company, Chairman
and Chief Executive
Officer of X.L. and
Chairman of XLGRe.
Robert J. Cooney....... 34,550 6.4 $ 61.50 December 1, 2007 $1,336,291 $3,386,424
Executive Vice 15,450(3) 10.9 $64.6875 December 5, 2007 $ 628,531 $1,592,821
President of the
Company and President
and Chief Operating
Officer of X.L.
Brian G. Walford (4)... -- -- -- -- -- --
Executive Vice
President and Chief
Financial Officer of
the Company and
Executive Vice
President of X.L.
K. Bruce Connell....... 14,550 2.7 $ 61.50 December 1, 2007 $ 562,751 $1,426,121
Executive Vice 15,450(3) 10.9 $64.6875 December 5, 2007 $ 628,531 $1,592,821
President and Chief
Operating Officer of
XLGRe.
Christopher V.
Greetham.............. 25,000 4.7 $ 61.50 December 1, 2007 $ 966,925 $2,450,379
Senior Vice President
and Chief Investment
Officer of the Company
</TABLE>
- --------
(1)All options were granted under the Company's 1991 Performance Incentive
Program.
(2)Market price at date of grant.
(3)Incentive stock options.
(4)Due to his retirement from the Company and X.L., Mr. Walford was not
granted any options in respect of fiscal 1997.
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, 1997:
<TABLE>
<CAPTION>
SHARES NUMBER OF SECURITIES VALUE OF UNEXERCISED
ACQUIRED IMPLIED UNDERLYING OPTIONS AT IN-THE-MONEY OPTIONS AT
ON VALUE NOVEMBER 30, 1997 NOVEMBER 30, 1997
NAME EXERCISE REALIZED EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
- ---- -------- -------- ------------------------- -------------------------
<S> <C> <C> <C> <C>
Brian M. O'Hara........ -- -- 395,985/368,505 $14,390,948/$6,502,815
President and Chief
Executive Officer of
the Company, Chairman
and Chief Executive
Officer of X.L. and
Chairman of XLGRe
Robert J. Cooney....... 10,000 $559,375 208,995/100,005 $ 8,252,776/$1,292,849
Executive Vice
President of the
Company and President
and Chief Operating
Officer of X.L.
Brian G. Walford....... 16,667 $704,181 107,333/ 35,000 $ 3,881,657/$ 904,891
Executive Vice
President and Chief
Financial Officer of
the Company and
Executive Vice
President of X.L.
K. Bruce Connell....... -- -- 82,800/ 55,000 $ 3,206,665/$ 624,062
Executive Vice
President of the
Company and President
and Chief Operating
Officer of XLGRe
Christopher V.
Greetham.............. -- -- 10,000/ 45,000 $ 257,953/$ 515,797
Senior Vice President
and Chief Investment
Officer of the Company
</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, 1997:
<TABLE>
<CAPTION>
NO. OF RESTRICTED VALUE OF RESTRICTED
STOCK GRANTS AT STOCK GRANTS AT
NOVEMBER 30, 1997 NOVEMBER 30, 1997
NAME VESTED/UNVESTED VESTED/UNVESTED
- ---- ----------------- ---------------------
<S> <C> <C>
Brian M. O'Hara..................... 67,000/135,300 $4,120,500/$8,320,950
President and Chief Executive
Officer of the Company, Chairman
and Chief Executive Officer of X.L.
and Chairman of XLGRe
Robert J. Cooney.................... 39,000/ 53,000 $2,398,500/$3,259,500
Executive Vice President of the
Company and President and Chief
Operating Officer of X.L.
</TABLE>
9
<PAGE>
<TABLE>
<CAPTION>
NO. OF RESTRICTED VALUE OF RESTRICTED
STOCK GRANTS AT STOCK GRANTS AT
NOVEMBER 30, 1997 NOVEMBER 30, 1997
NAME VESTED/UNVESTED VESTED/UNVESTED
- ---- ----------------- ---------------------
<S> <C> <C>
Brian G. Walford................... 40,200/ 27,800 $2,472,300/$1,709,700
Executive Vice President and Chief
Financial Officer of the Company
and Executive Vice President of
X.L.
K. Bruce Connell................... 3,600/ 28,400 $ 221,400/$1,746,600
Executive Vice President of the
Company and president and Chief
Operating Officer of XLGRe
Christopher V. Greetham............ 0/ 11,000 $ 0/$ 676,500
Senior Vice President and Chief
Investment Officer of the Company
</TABLE>
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, is a consultant to MMRCC and has been the Chairman of Risk Capital
Holdings, Inc., the parent company of RCRe, since its formation in 1995. See
"Board of Directors-- Certain Transactions."
COMPENSATION COMMITTEE REPORT
The Compensation Committee, composed of three 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
senior 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.
10
<PAGE>
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 or
January based on individual and corporate performance during the prior fiscal
year. Performance targets are established annually.
Major factors taken into account in making awards to the Chief Executive
Officer and senior management 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.
Since July 19, 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
Robert V. Hatcher, Jr.
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,
1997, 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
<TABLE>
<CAPTION>
XL S&P 500 S&P Property Casualty
- ---------------------------------------------------------
<S> <C> <C> <C>
19-Jul-91 100 100 100
- ---------------------------------------------------------
30-Nov-92 106.3 98.9 94.6
- ---------------------------------------------------------
31-May-92 119.1 111.1 99.1
- ---------------------------------------------------------
30-Nov-92 158.8 117.1 124.2
- ---------------------------------------------------------
31-May-93 165.3 124 129.1
- ---------------------------------------------------------
30-Nov-93 154.8 128.9 126.6
- ---------------------------------------------------------
31-May-94 152.4 129.2 125.8
- ---------------------------------------------------------
30-Nov-94 137.8 130.3 120.7
- ---------------------------------------------------------
31-May-95 174.5 155.3 146.8
- ---------------------------------------------------------
30-Nov-95 236.1 178.4 175.1
- ---------------------------------------------------------
31-May-96 265.9 199.4 175.6
- ---------------------------------------------------------
30-Nov-96 294.5 228 221.1
- ---------------------------------------------------------
31-May-97 349.4 258 252.9
- ---------------------------------------------------------
30-Nov-97 491.8 293 289.4
- ---------------------------------------------------------
</TABLE>
11
<PAGE>
II. 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, 1998. Representatives of the
firm are expected to be present at the Annual General 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.
III. STOCKHOLDER PROPOSALS FOR 1999 ANNUAL MEETING
Proposals intended for inclusion in next year's Proxy Statement should be
sent to the Company's Secretary at Cumberland House, One Victoria Street,
Hamilton HM 11, Bermuda and must be received by October 23, 1998.
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 Company's 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,
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.
IV. 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 its subsidiaries 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
ANNUAL REPORT ON FORM 10-K THAT IT FILES ANNUALLY WITH THE SECURITIES AND
EXCHANGE COMMISSION. A COPY OF THIS REPORT FOR THE FISCAL YEAR ENDED NOVEMBER
30, 1997, 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
12
<PAGE>
PROXY--EXEL LIMITED
The undersigned Shareholder of EXEL Limited hereby appoints Brian M. O'Hara
or, failing him, Paul S. Giordano, 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 March 31, 1998 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 AND 2.
FOR AGAINST
1. To elect the following four [___] [___] (Instructions: To withhold
nominees as Class II Directors to authority to vote for any
hold office until 2001 nominee listed, write that
R.V. Hatcher, Jr. J.T. Thornton nominee's name in the space
B.M. O'Hara J. Weiser provided below)
____________________________
2. To appoint Coopers & Lybrand,
Bermuda, to act as the Independent FOR AGAINST ABSTAIN
Auditors of the Company for the [___] [___] [___]
fiscal year ending November 30, 1998.
_________________________________________
(Name of Shareholder)
Dated:
_________________________________________, 1998
By:______________________________________
PLEASE SIGN, DATE AND PROMPTLY RETURN
THIS PROXY IN THE ENCLOSED ENVELOPE.
