NOTICE OF ANNUAL MEETING OF THE SHAREHOLDERS | |||||||||
TIME AND | 3:00 P.M. Central Daylight Time, 25, 2023. | ||||||||
PLACE | This year's Annual Meeting of the Shareholders will be held virtually. There will be no physical location and Old Republic's representatives will participate via webcast. | ||||||||
The virtual meeting can be accessed at the following internet link: | |||||||||
www.virtualshareholdermeeting.com/ORI2023 | |||||||||
ITEMS OF | Item 1 | ||||||||
Item 2 | To ratify the selection of KPMG LLP (“KPMG”) as the Company’s independent registered public accounting firm for | ||||||||
Item 3 | To | ||||||||
Item 4 | To approve the amendment and restatement of our Certificate of Incorporation to limit the liability of officers of Old Republic as permitted by recent amendments to Delaware law. | ||||||||
Item 5 | To recommend, by non-binding vote, | ||||||||
Item 6 | To transact such other business as may properly come before the meeting and any adjournment or | ||||||||
RECORD | You can vote if you are a shareholder of record on March 27, 2023. | ||||||||
ANNUAL REPORT TO | SHAREHOLDERS | Our annual report to shareholders for | |||||||
PROXY | It is important that your shares be represented and voted at the | ||||||||
March 31, 2023 | By order of the Board of Directors | ||||||||
Senior Vice President, General Counsel and Secretary |
Table of Contents | |||||
1 | GENERAL INFORMATION | ||||
Voting Procedures | |||||
Householding of Proxies | |||||
3 | Other Matters for the Annual | ||||
3 | Expenses of Solicitation | ||||
3 | Principal Holders of Securities | ||||
Highlights of Some Recent Developments | |||||
7 | ITEM 1: ELECTION OF DIRECTORS | ||||
Leadership Structure and Risk Management | |||||
Board of Directors’ Responsibilities and Independence | |||||
Recent Developments in Our Corporate Governance | |||||
18 | Board Diversity and Skills | ||||
20 | Procedures for the Approval of Related Person Transactions | ||||
Delinquent Section 16(a) Reports | |||||
20 | The Board and Its Committees | ||||
Shareholder | |||||
ITEM 2: RATIFICATION OF THE SELECTION OF AN INDEPENDENT REGISTERED | |||||
PUBLIC ACCOUNTING FIRM | |||||
External Audit Services | |||||
Board of Directors’ Recommendation | |||||
26 | Audit Committee Report for | ||||
COMPENSATION MATTERS | |||||
Compensation Committee Report for | |||||
Compensation Committee Interlocks and Insider Participation | |||||
Directors’ Compensation | |||||
Compensation Discussion and Analysis | |||||
Summary Compensation Table | |||||
Pay versus Performance | |||||
36 | Annual Salary Compensation Practices | ||||
36 | Incentive Awards and Bonuses | ||||
37 | Key Employee Performance Recognition Plans (KEPRP) | ||||
37 | Deferred Compensation Under the KEPRPs | ||||
38 | 2023 Performance Recognition Plan (PRP) | ||||
38 | Summary of the 2023 Performance Recognition Plan | ||||
41 | Stock Option and Restricted Stock Awards Under Incentive Compensation | ||||
42 | Stock Option | ||||
Exercises of Stock | |||||
Equity Compensation Plan Information | |||||
Outstanding Equity Awards at Year End | |||||
45 | Change of Control, Severance or Retirement | ||||
45 | Stock Ownership Guidelines | ||||
46 | Pension Plan | ||||
47 | ORI 401(k) Savings and | ||||
Other Benefits | |||||
ITEM 3: VOTE ON EXECUTIVE COMPENSATION | |||||
2022 Executive Compensation Vote | |||||
48 | Proposed Resolution | ||||
48 | Advisory Vote | ||||
49 | ITEM 4: | ||||
50 | Text of Proposed Amendment | ||||
50 | Timing and Effect of Charter Amendment | ||||
50 | Required Vote | ||||
50 | Board of Directors' Recommendation | ||||
50 | ITEM 5: FREQUENCY OF ADVISORY VOTE ON EXECUTIVE COMPENSATION | ||||
50 | Background | ||||
51 | Proposed Resolution | ||||
51 | Required Vote | ||||
51 | Board of Directors' Recommendation | ||||
52 | OTHER INFORMATION | ||||
52 | Shareholder Proposals or Director Nominations for the 2024 Annual Meeting of the Shareholders | ||||
A1 | APPENDIX 1: AMENDED AND RESTATED CERTIFICATE OF INCORPORATION OF OLD REPUBLIC INTERNATIONAL CORPORATION |
GENERAL INFORMATION |
Title of Class | Name of Beneficial Owner | Amount and Nature of Beneficial Ownership | Percent of Class(*) | |||||||||||||||||
Common Stock | BlackRock, Inc. | 34,047,196 | (1) | 11.2 | ||||||||||||||||
Shareholders’ beneficial ownership | 55 East 52nd Street | |||||||||||||||||||
of more than 5% of the Common | New York, New York 10022 | |||||||||||||||||||
Stock and the ESSOP ownership | ||||||||||||||||||||
The Vanguard Group | 27,820,739 | (1) | 9.1 | |||||||||||||||||
100 Vanguard Blvd. | ||||||||||||||||||||
Malvern, Pennsylvania 19355 | ||||||||||||||||||||
State Street Corporation | 25,905,414 | (1) | 8.5 | |||||||||||||||||
State Street Financial Center | ||||||||||||||||||||
One Lincoln Street | ||||||||||||||||||||
Boston, Massachusetts 02111 | ||||||||||||||||||||
Old Republic International Corporation | 19,363,060 | (2) | 6.6 | |||||||||||||||||
Employees Savings and Stock Ownership Trust | ||||||||||||||||||||
307 N. Michigan Avenue | ||||||||||||||||||||
Chicago, Illinois 60601 |
Common Stock | Name of Beneficial Owner | Shares Subject to Stock Options(*) | Shares Held by Employee Plans(*)(2)(3) | Other Shares Beneficially Owned(*) | Total | Percent of Class (*) | ||||||||||||||||||||||||||||||||
Directors' and Executive Officers' (including nominees) Beneficial Ownership | Barbara A. Adachi | 0 | 0 | 2,300 | 2,300 | ** | ||||||||||||||||||||||||||||||||
Steven J. Bateman | 0 | 0 | 27,559 | 27,559 | ** | |||||||||||||||||||||||||||||||||
Lisa J. Caldwell | 0 | 0 | 10,786 | 10,786 | ** | |||||||||||||||||||||||||||||||||
Thomas A. Dare | 27,125 | 3,893 | 26,306 | 57,324 | ** | |||||||||||||||||||||||||||||||||
Jimmy A. Dew | 0 | 132,207 | 745,657 | 877,864 | (4) | 0.3 | ||||||||||||||||||||||||||||||||
John M. Dixon | 0 | 0 | 21,061 | 21,061 | ** | |||||||||||||||||||||||||||||||||
W. Todd Gray | 28,425 | 3,025 | 42,155 | 73,605 | ** | |||||||||||||||||||||||||||||||||
Michael D. Kennedy | 0 | 0 | 10,272 | 10,272 | ** | |||||||||||||||||||||||||||||||||
Charles J. Kovaleski | 0 | 0 | 14,453 | 14,453 | ** | |||||||||||||||||||||||||||||||||
Spencer LeRoy III | 0 | 0 | 100,686 | 100,686 | (5) | ** | ||||||||||||||||||||||||||||||||
Peter B. McNitt | 0 | 0 | 10,280 | 10,280 | ** | |||||||||||||||||||||||||||||||||
Stephen J. Oberst | 158,600 | 86,832 | 36,805 | 282,237 | (6) | 0.1 | ||||||||||||||||||||||||||||||||
Glenn W. Reed | 0 | 0 | 14,415 | 14,415 | ** | |||||||||||||||||||||||||||||||||
Craig R. Smiddy | 287,500 | 31,851 | 78,584 | 397,935 | 0.1 | |||||||||||||||||||||||||||||||||
J. Eric Smith | 0 | 0 | 0 | 0 | (7) | ** | ||||||||||||||||||||||||||||||||
Frank J. Sodaro | 37,000 | 2,446 | 26,310 | 65,756 | ** | |||||||||||||||||||||||||||||||||
Arnold L. Steiner | 0 | 0 | 638,318 | 638,318 | (8) | 0.2 | ||||||||||||||||||||||||||||||||
Fredricka Taubitz | 0 | 0 | 21,000 | 21,000 | ** | |||||||||||||||||||||||||||||||||
Steven R. Walker | 0 | 0 | 70,000 | 70,000 | (9) | ** | ||||||||||||||||||||||||||||||||
Rande K. Yeager | 0 | 74,993 | 61,297 | 136,290 | ** | |||||||||||||||||||||||||||||||||
Directors and all Executive Officers, as a group (20 individuals) | 538,650 | 335,247 | 1,958,244 | 2,832,141 | 1.0% |
Title of Class | Name of Beneficial Owner | Amount and Nature of Beneficial Ownership | Percent of Class(*) | |||
Common Stock | BlackRock, Inc. | 22,233,440 | (1) | 8.5 | ||
Shareholders’ beneficial ownership | 55 East 52nd Street | |||||
of more than 5% of the Common | New York, New York 10022 | |||||
Stock | ||||||
Loomis Sayles & Co., L.P. | 22,569,582 | (1) | 8.0 | |||
One Financial Center | ||||||
Boston, Massachusetts 02111 | ||||||
The Vanguard Group | 16,645,852 | (1) | 6.4 | |||
100 Vanguard Blvd. | ||||||
Malvern, Pennsylvania 19355 | ||||||
Capital Research Global Investors | 16,417,100 | (1) | 6.3 | |||
333 South Hope Street | ||||||
Los Angeles, California 90071 | ||||||
State Street Corporation | 15,714,324 | (1) | 6.0 | |||
State Street Financial Center | ||||||
One Lincoln Street | ||||||
Boston, Massachusetts 02111 | ||||||
Old Republic International Corporation | 14,764,154 | (2) | 5.6 | |||
Employees Savings and Stock Ownership Trust | ||||||
307 N. Michigan Avenue | ||||||
Chicago, Illinois 60601 |
Common Stock | Name of Beneficial Owner | Shares to Stock Options(*) | Shares Held by Employee Plans(*)(2)(3) | Other Shares Beneficially Owned(*) | Total | Percent of Class(*) | ||||||
Directors’ and Executive Officers’(including nominees) Beneficial Ownership | Harrington Bischof | 0 | 0 | 20,239 | 20,239 | (4) | ** | |||||
Jimmy A. Dew | 0 | 122,759 | 737,657 | 860,416 | (5) | 0.3 | ||||||
John M. Dixon | 0 | 0 | 21,061 | 21,061 | ** | |||||||
James C. Hellauer | 0 | 0 | 42,000 | 42,000 | ** | |||||||
Spencer LeRoy III | 347,400 | 22,244 | 76,716 | 446,360 | 0.2 | |||||||
Karl W. Mueller | 209,375 | 14,576 | 9,330 | 233,281 | 0.1 | |||||||
R. Scott Rager | 296,875 | 67,988 | 2,500 | 367,363 | 0.1 | |||||||
Craig R. Smiddy | 4,875 | 312 | 6,720 | 11,907 | ** | |||||||
Arnold L. Steiner | 0 | 0 | 826,438 | 826,438 | (6) | 0.3 | ||||||
Fredricka Taubitz | 0 | 0 | 19,000 | 19,000 | ** | |||||||
Charles F. Titterton | 0 | 0 | 21,587 | 21,587 | (7) | ** | ||||||
Dennis Van Mieghem | 0 | 0 | 15,800 | 15,800 | (8) | ** | ||||||
Steven R. Walker | 0 | 0 | 50,000 | 50,000 | (9) | ** | ||||||
Rande K. Yeager | 122,350 | 36,430 | 27,279 | 186,059 | 0.1 | |||||||
Aldo C. Zucaro | 860,500 | 553,122 | 1,247,080 | 2,660,702 | 0.9 | |||||||
Directors and Executive Officers, as a group (16) | 1,929,100 | 867,436 | 3,140,247 | 5,936,783 | 2.3 |
ITEM 1 | ||
ELECTION OF DIRECTORS |
Name | Age | Positions with Company, Business Experience and Qualifications | ||||||||||||||||
Nominees For Election: CLASS | ||||||||||||||||||
Barbara A. | Director since | |||||||||||||||||
Charles J. Kovaleski | 74 | Director since 2018. Retired as an attorney, he was formerly with Attorneys’ Title Insurance Fund, Orlando, Florida as well as an officer with one of the Company’s Title subsidiaries for many years. His extensive general business experience, particularly in real estate and title insurance, harmonizes well with the Company’s business needs. | ||||||||||||||||
Craig R. Smiddy | 58 | Director since 2019. President and Chief Executive Officer as of the same date and Chair of the Executive Committee since December 2021. Prior to that, President and Chief Operating Officer of the Company since June 2018. From 2013 to 2018, he was Chief Operating Officer and then later appointed President of Old |
Director since 2003. | ||||||||||||||
Continuing Directors: CLASS 2 (Term expires in 2025) | ||||||||||||||
Steven J. Bateman | 64 | Director since 2017. An audit partner with the accounting firm of PricewaterhouseCoopers LLP until his retirement, he had a 37 year career as an auditor and business advisor for a large number of organizations engaged in all major insurance fields. During that period of time, he gained a wealth of knowledge and experience in the business and the risk factors associated with the insurance industry. His background and experience harmonize well with the Company’s business and the Board’s governance objectives. | ||||||||||||
Lisa J. Caldwell | 62 | Director since 2021. Ms. Caldwell is the Chief Executive Officer of Caldwell Collection, LLC, a fashion retail organization, and previously served as the Executive Vice President and Chief Human Resources Officer of Reynolds American, R. J. Reynolds Tobacco Company, and RAI Services until her retirement in 2018. She is a member of the founding board of directors of Triad Business Bank and she has served in leadership roles at many charitable and educational organizations. Ms. Caldwell brings to the Board her general business and entrepreneurial expertise. Her experience as an executive officer of a large corporation and her extensive knowledge of human resource matters harmonize well with the Company’s business and the Board’s governance objectives. | ||||||||||||
John M. Dixon | 83 | Director since 2003. Chair of the Compensation Committee. Formerly Chief Executive Partner with the law firm of Chapman and Cutler, Chicago, Illinois until his retirement in 2002. His qualifications include his extensive background as an attorney and his knowledge of corporate law and the legal and other risks associated with corporations similar to the Company. Mr. Dixon’s skills and experience harmonize well with the Company’s business and the Board’s governance objectives. | ||||||||||||
Glenn W. Reed | 70 | Director since 2017. Mr. Reed served as a Managing Director of The Vanguard Group, Inc., one of the world’s largest asset-management firms, until his retirement from the firm in 2017. While at Vanguard, Mr. Reed had overall responsibility for Vanguard’s corporate finance and mutual fund finance functions, most recently heading up the firm’s Strategy division. Prior to joining Vanguard in 2007, he served as general counsel for a multi-line health and life insurance company following a 21-year career as a partner of the Chicago-based law firm of Gardner, Carton & Douglas (now Faegre Drinker Biddle & Reath). This long experience and deep knowledge in these fields harmonize well with the Company’s business needs and the Board’s governance objectives. |
Continuing Directors: CLASS 1 (Term expires in 2024) | ||||||||||||||
Michael D. Kennedy | 66 | Director since 2020. Mr. Kennedy is a senior client partner with Korn Ferry, the global organizational consulting firm, where he is a member of that firm's global financial services market and a leader with Korn Ferry's Diversity Center of Expertise. Prior to joining Korn Ferry, he served in senior positions at several financial services firms, including GE Capital, Wachovia and J.P. Morgan & Co. He was appointed by President Obama to serve as the chair of the Federal Retirement Thrift Investment Board, the largest pension fund in the U.S., where he served until his term ended in 2020. He brings to the board his expertise and long experience in the financial services industry, which harmonize well with the Company’s business and the Board’s governance objectives. | ||||||||||||
Spencer LeRoy III | 76 | Director since 2015. Chairman of the Board since October 27, 2021. Until his retirement in 2014, he was Senior Vice President, Secretary and General Counsel of the Company since 1992. Prior to that, he was a partner with the law firm of Lord, Bissell and Brook, (now Locke Lord LLP). His legal career involved all aspects of insurance, corporate governance and financial-related matters. He has a long and significant legal experience and extensive knowledge of the Company and its risk factors, which harmonize well with the Company’s business and the Board’s governance objectives. | ||||||||||||
Peter B. McNitt | 68 | Director since 2019. He is the retired Vice Chair of BMO Harris Bank; a position he held since 2006. Prior to that, he led BMO Harris’ U.S. Corporate Banking as Executive Vice President and U.S. Investment Banking as Executive Managing Director. He also serves as a director of Hub Group, Inc. (NASDAQ: HUB), a provider of intermodal highway and logistics services. He has long-term experience and deep knowledge gained during his more than 40 year-long career. His wide range of responsibilities focused on the delivery of the full breadth of wealth, and commercial and investment banking services to customers. His extensive experience harmonizes well with the Company’s business needs and governance objectives. | ||||||||||||
J. Eric Smith | 65 | Director since 2023. He was the President and Chief Executive of Swiss Re Americas from 2011 to 2020. Mr. Smith also held a number of executive roles in his career, including President of USAA Life Insurance Company and President of Allstate Financial Services. He also held various positons in property and casualty insurance with Country Financial over a 20 year period. His significant experience in, and knowledge of, the business and the risk factors associated with the insurance industry and especially the insurance specialty markets harmonize well with the Company’s business needs. | ||||||||||||
Steven R. Walker | 77 | Director since 2006. Lead Independent Director since July 1, 2021 and Chair of the Governance and Nominating Committee. Formerly Senior Counsel and Partner with Leland, Parachini, Steinberg, Matzger & Melnick, LLP, attorneys, San Francisco, California. He has significant experience as both an attorney and a business manager during a long career largely focused on the title insurance industry. His extensive experience harmonizes well with the Company’s business needs and governance objectives. |
CORPORATE GOVERNANCE: | ||
BINDING ORGANIZATION, PURPOSE, AND LONG-TERM STRATEGY |
BOARD AND COMMITTEE MEMBERSHIP | ||||||
Committees | ||||||
Director | Independent Directors(a) | Other Directors(b) | Executive | Audit | Governance and Nominating | Compensation |
Harrington Bischof | l | l | l | l | ||
Jimmy A. Dew | l | l | ||||
John M. Dixon | l | l | l | l(c) | ||
James C. Hellauer | l | l(e) | l | |||
Spencer LeRoy III | l | |||||
Arnold L. Steiner | l(f) | l | l | l | ||
Fredricka Taubitz | l | l(c)(e) | l | |||
Charles F. Titterton | l | l(e) | l(c) | |||
Dennis P. Van Mieghem | l | l(d)(e) | l(d) | |||
Steven R. Walker | l | l | l | l(d) | ||
Aldo C. Zucaro | l | l(c) | ||||
Number of scheduled and special meetings | 4 | 4 | 4 | 4 | 4 | 4 |
Number of written consents and telephone meetings | 3 | 3 | 1 | 3 | 1 | 1 |
BOARD AND COMMITTEE MEMBERSHIP | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Committees | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Director | Independent Directors(a) | Other Directors(b) | Audit | Compensation | Executive | Governance and Nominating | |||||||||||||||||||||||||||||||||||||||||||||||
Barbara A. Adachi | l | l | l | ||||||||||||||||||||||||||||||||||||||||||||||||||
Steven J. Bateman | l | l(c)(e) | l | ||||||||||||||||||||||||||||||||||||||||||||||||||
Lisa J. Caldwell | l | l | l | ||||||||||||||||||||||||||||||||||||||||||||||||||
John M. Dixon | l | l(g) | l | l | |||||||||||||||||||||||||||||||||||||||||||||||||
Michael D. Kennedy | l | l | l | ||||||||||||||||||||||||||||||||||||||||||||||||||
Charles J. Kovaleski | l | l | l | ||||||||||||||||||||||||||||||||||||||||||||||||||
Spencer LeRoy III | l | l | |||||||||||||||||||||||||||||||||||||||||||||||||||
Peter B. McNitt | l | l(c) | l(d)(g) | l(g) | |||||||||||||||||||||||||||||||||||||||||||||||||
Glenn W. Reed | l | l(c) | l | ||||||||||||||||||||||||||||||||||||||||||||||||||
Craig R. Smiddy | l | l(d) | |||||||||||||||||||||||||||||||||||||||||||||||||||
J. Eric Smith (h) | l | l | l | ||||||||||||||||||||||||||||||||||||||||||||||||||
Arnold L. Steiner (i) | l | l | l | l | |||||||||||||||||||||||||||||||||||||||||||||||||
Fredricka Taubitz | l | l(c)(d) | l | l | |||||||||||||||||||||||||||||||||||||||||||||||||
Steven R. Walker | l(d)(f) | l | l | l(d) | |||||||||||||||||||||||||||||||||||||||||||||||||
Number of meetings | 4 | 7 | 5 | 4 | 4 |
Audit Committee | ||||||||
Members: | Barbara A. Adachi | Peter B. McNitt | ||||||
Steven J. Bateman, Vice Chair | Glenn W. Reed | |||||||
Michael D. Kennedy | Fredricka Taubitz, Chair | |||||||
Charles | Steven R. Walker |
Compensation Committee | ||||||||
Members: | Steven J. Bateman | Glenn W. Reed | ||||||
Lisa J. Caldwell | J. Eric Smith | |||||||
John M. Dixon | Arnold L. Steiner | |||||||
Peter B. McNitt, Chair | Fredricka Taubitz |
Executive Committee | ||||||||
Members: | John M. Dixon | Arnold L. Steiner | ||||||
Spencer LeRoy III | Fredricka Taubitz | |||||||
Peter B. McNitt | Steven R. Walker | |||||||
Craig R. Smiddy, Chair |
Governance and Nominating Committee | ||||||||
Members: | Barbara A. Adachi | Charles J. Kovaleski | ||||||
Lisa J. Caldwell | J. Eric Smith | |||||||
John M. Dixon | Arnold L. Steiner | |||||||
Michael D. Kennedy | Steven R. Walker, |
ITEM 2 | ||
RATIFICATION OF THE SELECTION OF AN INDEPENDENT | ||
REGISTERED PUBLIC ACCOUNTING FIRM |
Type of Fees | 2022 | 2021 | ||||||||||||
Audit | $5,986,085 | $5,804,050 | ||||||||||||
Audit Related | 300,391 | 393,700 | ||||||||||||
Tax | — | — | ||||||||||||
All Other | — | — | ||||||||||||
Total | $6,286,476 | $6,197,750 |
Type of Fees | 2015 | 2014 | ||
Audit Fees | $4,993,650 | $4,279,575 | ||
Audit Related Fees | 77,500 | 36,100 | ||
Tax Fees | — | — | ||
All Other Fees | — | — | ||
Total | $5,071,150 | $4,315,675 |
By the Audit Committee: | ||||||||
Barbara A. Adachi | Peter B. McNitt | |||||||
Steven J. Bateman | Glenn W. Reed | |||||||
Michael D. Kennedy | Fredricka Taubitz, Chair | |||||||
Charles | Steven R. Walker |
COMPENSATION MATTERS |
By the Compensation Committee: | ||||||||
Steven J. Bateman | Glenn W. Reed | |||||||
Lisa J. Caldwell | Arnold L. Steiner | |||||||
John M. Dixon | Fredricka Taubitz | |||||||
Peter B. McNitt, Chair |
2022 Directors’ Compensation | ||||||||||||||||||||
Name | Fees Earned or Paid in Cash | All Other Compensation Other | Total | |||||||||||||||||
Barbara A. Adachi | $ 168,000 | $ - | $ 168,000 | |||||||||||||||||
Steven J. Bateman | 175,000 | - | 175,000 | |||||||||||||||||
Lisa J. Caldwell | 168,000 | - | 168,000 | |||||||||||||||||
Jimmy A. Dew (1) | 70,000 | - | 70,000 | |||||||||||||||||
John M. Dixon | 196,000 | - | 196,000 | |||||||||||||||||
Michael D. Kennedy | 168,000 | - | 168,000 | |||||||||||||||||
Charles J. Kovaleski | 168,000 | - | 168,000 | |||||||||||||||||
Spencer LeRoy III | 224,000 | - | 224,000 | |||||||||||||||||
Peter B. McNitt | 175,000 | - | 175,000 | |||||||||||||||||
Glenn W. Reed | 168,000 | - | 168,000 | |||||||||||||||||
J. Eric Smith (2) | - | - | - | |||||||||||||||||
Arnold L. Steiner | 182,000 | - | 182,000 | |||||||||||||||||
Fredricka Taubitz | 203,000 | - | 203,000 | |||||||||||||||||
Steven R. Walker | 210,000 | - | 210,000 | |||||||||||||||||
Segmented Results ($ in Millions) | |||||||||||||||||||||||||||||||||||
2022 | 2021 | 2020 | |||||||||||||||||||||||||||||||||
Segmented and consolidated pretax income | |||||||||||||||||||||||||||||||||||
excluding investment gains: | |||||||||||||||||||||||||||||||||||
General insurance | $ | 689.8 | $ | 589.6 | $ | 439.8 | |||||||||||||||||||||||||||||
Title insurance | 308.8 | 515.7 | 344.0 | ||||||||||||||||||||||||||||||||
RFIG run-off | 35.2 | 32.8 | 9.8 | ||||||||||||||||||||||||||||||||
Corporate & other (a) | 24.6 | 25.7 | 36.7 | ||||||||||||||||||||||||||||||||
Consolidated | 1,058.6 | 1,164.0 | 830.4 | ||||||||||||||||||||||||||||||||
Income taxes on above | 213.4 | 228.1 | 159.6 | ||||||||||||||||||||||||||||||||
Net income excluding investment gains | $ | 845.1 | $ | 935.9 | $ | 670.8 |
Segmented Operating Results ($ in Millions) | ||||||||||||||
2015 | 2014 | 2013 | 2012 | 2011 | ||||||||||
Pre-tax operating income (loss) (a): | ||||||||||||||
General insurance | $ | 336.4 | $ | 221.3 | $ | 288.3 | $ | 261.0 | $ | 353.9 | ||||
Title insurance | 166.8 | 99.5 | 124.3 | 73.8 | 36.2 | |||||||||
Corporate and other (b) | 7.6 | 5.7 | 2.1 | (2.7) | (14.6) | |||||||||
Subtotal | 511.0 | 326.7 | 414.7 | 332.1 | 375.5 | |||||||||
RFIG run-off business | 29.4 | 10.3 | 110.0 | (508.6) | (727.8) | |||||||||
Total | 540.4 | 337.1 | 524.8 | (176.4) | (352.2) | |||||||||
Income taxes (credits) on operating income (loss) | 177.7 | 104.3 | 173.2 | (76.6) | (133.7) | |||||||||
Net operating income (loss) (a) | $ | 362.7 | $ | 232.7 | $ | 351.6 | $ | (99.7) | $ | (218.5) |
(a) Represents amounts for Old Republic’s holding company parent, minor corporate services subsidiaries, and a small life and accident insurance operation. |
SUMMARY COMPENSATION TABLE | |||||||||||||||||||||||||||||||||||||||||||||||
(a) Name and Principal Positions | (b) Year | (c) Salary | (d) Bonus (1) | (e) Resticted Stock Awards ("RSAs") (2) | (f) Value of Stock Option Awards (3) | (g) Change in Pension Value and Nonqualified Deferred Compensation Earnings (4)(5) | (h) All Other Compensation (6) | (i) Total ($) | |||||||||||||||||||||||||||||||||||||||
Craig R. Smiddy | 2022 | $ | 890,000 | $ | 1,451,018 | $ | 1,638,000 | $ | 554,400 | $ | — | $ | 6,592 | $ | 4,540,010 | ||||||||||||||||||||||||||||||||
President and Chief | 2021 | 863,333 | 1,244,483 | 261,800 | — | 22,676 | 2,392,292 | ||||||||||||||||||||||||||||||||||||||||
Executive Officer | 2020 | 808,333 | 837,579 | 220,800 | — | 15,386 | 1,882,098 | ||||||||||||||||||||||||||||||||||||||||
Frank J. Sodaro | 2022 | 523,000 | 439,495 | 468,000 | 184,800 | — | 60,837 | (7) | 1,676,132 | ||||||||||||||||||||||||||||||||||||||
Senior Vice President | 2021 | 367,500 | 403,304 | 56,100 | — | 61,065 | (7) | 887,969 | |||||||||||||||||||||||||||||||||||||||
and Chief Financial | |||||||||||||||||||||||||||||||||||||||||||||||
Officer | |||||||||||||||||||||||||||||||||||||||||||||||
Effective July 1, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||
W. Todd Gray | 2022 | 558,667 | 623,678 | 468,000 | 184,800 | — | 22,647 | 1,857,792 | |||||||||||||||||||||||||||||||||||||||
Executive Vice | 2021 | 535,000 | 570,369 | 74,800 | — | 18,665 | 1,198,834 | ||||||||||||||||||||||||||||||||||||||||
President and | 2020 | 520,000 | 436,505 | 46,000 | — | 11,918 | 1,014,423 | ||||||||||||||||||||||||||||||||||||||||
Treasurer | |||||||||||||||||||||||||||||||||||||||||||||||
Stephen J. Oberst | 2022 | 604,808 | 812,032 | 702,000 | 246,400 | — | 52,623 | 2,417,863 | |||||||||||||||||||||||||||||||||||||||
Executive Vice | 2021 | 588,077 | 738,131 | 121,550 | — | 73,037 | (8) | 1,520,795 | |||||||||||||||||||||||||||||||||||||||
President | 2020 | 540,385 | 583,316 | 101,200 | 112,108 | 104,594 | (8) | 1,441,603 | |||||||||||||||||||||||||||||||||||||||
Rande K. Yeager | 2022 | 594,289 | 1,026,878 | 374,400 | 240,240 | — | 37,787 | 2,273,594 | |||||||||||||||||||||||||||||||||||||||
Executive Chairman – | 2021 | 581,635 | 1,235,896 | 121,550 | 4,637 | 35,061 | 1,978,779 | ||||||||||||||||||||||||||||||||||||||||
Title | 2020 | 564,423 | 853,924 | 101,200 | 58,947 | 26,095 | 1,604,589 | ||||||||||||||||||||||||||||||||||||||||
Insurance Group |
SUMMARY COMPENSATION TABLE | ||||||||
(a) Name and Principal Positions | (b) Year | (c) Salary | (d) Bonus (1) | (e) Value of Stock Option Awards(2) | (f) Change in Pension Value and Nonqualified Deferred Compensation Earnings (3)(4) | (g) All Other (5) Compensation | (h) Total ($) | |
Aldo C. Zucaro | 2015 | $870,000 | $582,978 | $268,000 | $416,266 (3) | $18,526 | $2,155,770 | |
ORI Chairman and | 2014 | 855,000 | 31,109 | 306,000 | 368,087 | 17,110 | 1,577,306 | |
Chief Executive Officer | 2013 | 828,333 | 283,340 | 119,700 | 69,315 | 13,677 | 1,314,365 | |
2012 | 810,000 | 155,197 | 89,654 | 224,997 | 13,544 | 1,293,392 | ||
2011 | 792,049 | 138,146 | 189,500 | 228,242 | 12,415 | 1,360,352 | ||
Karl W. Mueller | 2015 | 455,000 | 191,344 | 73,700 | — (3) | 16,610 | 736,654 | |
ORI Senior Vice President | 2014 | 445,000 | 140,701 | 107,100 | 63,151 | 13,034 | 768,986 | |
and Chief Financial Officer | 2013 | 431,667 | 171,469 | 55,575 | 25,395 | 8,568 | 692,674 | |
2012 | 421,667 | 152,045 | 41,625 | 56,292 | 7,984 | 679,613 | ||
2011 | 411,667 | 138,026 | 56,850 | 53,376 | 7,386 | 667,505 | ||
R. Scott Rager (6) | 2015 | 500,000 | 544,828 | 80,400 | — | 31,145 | 1,156,373 | |
ORI President and | 2014 | 490,000 | 303,977 | 113,220 | — | 30,571 | 937,768 | |
Chief Operating Officer | 2013 | 476,667 | 388,708 | 55,575 | — | 24,763 | 945,713 | |
2012 | 466,667 | 336,115 | 41,625 | — | 21,547 | 865,954 | ||
2011 | 456,667 | 429,988 | 56,850 | — | 33,685 | 977,190 | ||
Craig R. Smiddy (7) | 2015 | 475,000 | 428,780 | 33,500 | — | 13,518 | 950,798 | |
President and Chief | 2014 | 460,000 | 375,000 | 44,370 | — | 13,112 | 892,482 | |
Operating Officer- General | 2013 | 184,327 | — | — | — | 239,733 | (8) | 424,060 |
Insurance Group | ||||||||
Rande K. Yeager | 2015 | 495,000 | 606,369 | 80,400 | — (3) | 19,965 | 1,201,734 | |
Chairman and Chief | 2014 | 485,000 | 387,952 | 114,750 | 93,014 | 21,085 | 1,101,801 | |
Executive Officer- | 2013 | 471,250 | 400,656 | 51,300 | 53,308 | 16,683 | 993,197 | |
Title Insurance Group | 2012 | 455,833 | 250,000 | 27,537 | 175,807 | 13,053 | 922,230 | |
2011 | 439,583 | 140,000 | 39,785 | 207,486 | 13,053 | 839,907 |
The ultimate value of the options will depend on the future market price of the Company’s Common Stock, which cannot be forecasted with reasonable accuracy. The actual value, if any that an optionee may realize upon exercise of an option will be based on the excess of the market value over the exercise price on the date the option is exercised. (4)Represents the aggregate change in the actuarial present value of the accumulated benefits under Old Republic’s defined benefit pension plan (“the Company’s pension plan”). Plan benefits were frozen as of December 31, 2013. For 2022, the year-over-year change in the present value of accumulated benefits resulted in negative amounts for Mr. Yeager of $193,981 and for Mr. Oberst of $197,361, respectively, and in 2021 for Mr. Oberst of $26,027, because of changes in underlying actuarial assumptions. SEC rules require that these negative changes be treated as zeros. (5)The Company does not have any non-qualified deferred compensation plans that credit above market or preferential earnings to participants. (6)Includes all non-material amounts for: (a) the Company’s matching contribution to the executive officers’ 401(k) accounts, (b) the Company’s non-elective contributions to the executive officer’s 401(k) Plan (historically, contributions to the Baseline Security Plan) accounts, (c) the value of the Company’s group term life insurance plan treated as income, (d) the value of the personal use of any vehicle supplied for Company business, and (e) the personal value of meals and club dues incurred for Company business. (7) Included in column (h) is $39,469, the value of 1,503 shares of restricted stock that were awarded to Mr. Sodaro in 2017 as a “sign-on” bonus that vested in 2021 and $35,952 the value of 1,503 shares of this restricted stock awarded that vested in 2022. (8) Includes $48,600 and $42,643 in housing expenses covered by the Company in connection with Mr. Oberst's accommodations in Chicago for 2020 and 2021 respectively. No such expenses were covered in 2022. CEO PAY RATIO DISCLOSURE The Compensation Committee and Board of Directors believe that executive compensation, particularly as it applies to the Company’s CEO and other executive officers, should be related to the responsibilities undertaken, and be consistent with the Company’s intermediate and long-term performance. In this context, and in accordance with the requirements of The Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank Act”), as well as the SEC rules adopted pursuant to it, the Company is reporting the ratio of the total annual compensation of the CEO to that of the “Median Employee”. For purposes of computing the ratio, Mr. Smiddy's compensation is the same as is shown in the Summary Compensation Table immediately above. The total annual compensation for the Median Employee was determined as of December 31, 2022 by preparing a list of all United States (“U.S.”) based employees of the Company’s U.S. subsidiaries at year-end 2022 (excluding the CEO) in the order of the highest to the lowest total annual compensation (excluding retirement plan contributions). The number of non-U.S. employees was excluded as they accounted for approximately 125 persons employed in Canada out of a total of approximately 9,500 Company employees. Pursuant to the pay ratio rule, the compensation of those non-U.S. employees was considered to be de minimis. The compensation for employees who did not work for the Company or one of its subsidiaries for all of 2022 was annualized in arriving at the Median Employee’s compensation. The Median Employee’s total compensation was established by using the same elements of compensation as are shown in the Summary Compensation Table for the CEO.
The Board of Directors and the Compensation Committee, in particular, consider company performance in connection with the determination of compensation for the executive officers and certain other senior managers of the Company. The Company makes an effort to align executive officer compensation with shareholder value on an annual and long-term basis. The Company believes that its history of growth over many decades is, in part, a result of its compensation programs that encourage longer-term growth and the building of long-term shareholder value rather than short-term results and believes compensation has been aligned and balanced with shareholder returns. As discussed earlier in this proxy statement, the Board of Directors and Compensation Committee retained Fredrick W. Cook, Inc. to review the Company’s compensation programs and procedures applicable to the Company’s executive officers and directors. The consultant was asked to provide a comparison of the compensation programs of companies similar in size, operation and organization to the Company, including a review of a peer group of companies determined by the Committee to be appropriate for comparison. As a result of this review, during the periods presented in the following tables and charts, the Company made appropriate and necessary adjustments to the named executive officers’ compensation, including a shift to a larger percentage of the named executive officers’ compensation to long-term incentive awards. As required by Item 402(v) of Regulation S-K, we are providing the following table that illustrates the relationship between executive compensation actually paid (as defined by Item 402(v) of Regulation S-K) and certain measures of financial performance of the Company. The table below illustrates the compensation for our principal executive officer (PEO, also known as our CEO) and the average compensation amounts for our remaining named executive officers (NEOs).
(1)Mr. Smiddy was the Company's CEO for each year presented. For 2020, the remaining NEOs were Messers. Mueller, Gray, Oberst and Yeager. For 2021, the remaining NEOs were Messers. Mueller, Sodaro, Gray, Oberst and Yeager. Mr. Mueller retired from the Company on June 30, 2021. Mr. Sodaro was appointed the Company's CFO on July 1, 2021 and became an NEO at that time. For 2022, the remaining NEOs were Messers. Sodaro, Gray, Oberst and Yeager. (2)The Company has determined that underwriting income and net operating income are the financial measures that best link company performance to compensation actually paid to the Company's NEOs for the most recently completed fiscal year. Net operating income reflects net income excluding investment gains (losses) which is used in calculating operating return on equity, one of the performance measures of our long-term incentive compensation plan. Underwriting income reflects net premiums and fees earned and the associated combined ratio, both of which are performance measures of our short-term incentive compensation plans. The evaluation of periodic and long term results via these measures excluding consideration of all investment gains (losses) provides a better way to analyze, evaluate and establish accountability for the results of the insurance operations. (3)Amounts are calculated in accordance with the method required by Item 402(v) of Regulation S-K and do not reflect actual compensation paid to the CEO and the remaining NEOs. See table below for the details of amounts deducted and added to the Summary Compensation Table figure to calculate compensation actually paid. 32
(i) Represents aggregate change in the actuarial present value of the named executive officer's accumulated benefit under all defined benefit and actuarial pension plans reported in the Summary Comp Table. 33 Description of Relationship Between CEO and NEO Compensation Actually Paid and Company TSR The following chart sets forth the relationship between compensation actually paid to our CEO, the average of compensation actually paid to our remaining NEOs, and the Company’s cumulative TSR over the three most recently completed fiscal years. Description of Relationship Between CEO and NEO Compensation Actually Paid and Net Income The following chart sets forth the relationship between compensation actually paid to our CEO, the average of compensation actually paid to our remaining NEOs, and the Company’s net income over the three most recently completed fiscal years. 34 Description of Relationship Between CEO and NEO Compensation Actually Paid and Net Operating Income and Underwriting Income The following chart sets forth the relationship between compensation actually paid to our CEO, the average of compensation actually paid to our remaining NEOs, and the Company’s net operating income and underwriting income over the three most recently completed fiscal years. 35 Tabular List of Financial Performance Measures The four items listed below represent the additional most important metrics used to determine compensation actually paid to company performance for the most recently completed year. •Growth in Net Premium and Fees Earned •Combined Ratio •Growth in Book Value per Share, Inclusive of Dividends •Operating Return on Equity ANNUAL SALARY COMPENSATION PRACTICES The Company’s objective in regard to all of its employees is to set annual salaries at amounts The primary factors considered, in varying degrees, in the establishment of annual salaries for •Business size and complexity of operations with which the person is associated; •The person’s level of responsibility and experience; •The success of the •The evaluation of the manager’s contribution to the business unit’s success. When making these evaluations, the prevailing salary scales in the insurance industry, the annual consumer price index, the trends in salary levels in published or private compilations and reports, and the data contained in the proxy statements of selected publicly held insurance organizations are taken into account. No formula, set benchmark or matrix is used in determining annual salary adjustments. The decision regarding each executive officer is subjectively based upon all of the above factors, with the Compensation Committee members exercising their business judgment in consultation with the CEO, as to all executive officers other than the The salaries of the executive officers are reviewed on an annual basis during the first quarter of the year, and concurrently with a promotion or other significant change in responsibilities. Prior compensation, prior cash and/or deferred incentive awards, bonuses and prior gains from the exercise of stock options are not taken into account when setting current annual salaries for the CEO, CFO and any other executive officer of the Company. 36 KEY EMPLOYEE PERFORMANCE RECOGNITION PLANS (KEPRP) For the 2022 performance year and prior, under the ORI KEPRP, a performance recognition pool is calculated each year for allocation among eligible key employees of the Each year’s pool amount takes into account pre-established objectives approved by the Compensation Committee. Calculation of the pool is made in accordance with a detailed formula In addition to Awards under the KEPRPs are usually made in conjunction with equity-based awards under the Incentive Compensation Plan. Any such awards are typically Following issuance of The following table sets forth certain information regarding the portion of KEPRP awards that constitute non-qualified deferred compensation 37 discretion as to whether they wished to defer
(1)The amounts in this column are the portion of current year KEPRP awards that are mandatorily deferred pursuant to the terms of the various KEPRPs. (2)The portion of an executive's account balance accrued on or after January 1, 2005 receives an interest credit calculated under the terms of the applicable KEPRP. The interest credit is a specified percentage of the composite investment income yield for the prior year.
Beginning in 2023 (payable in 2024), the PRP will replace the KEPRPs as a means of providing cash incentive compensation to the named executive officers and certain other senior managers. The adoption of the PRP reflects the Compensation Committee’s desire to shift to a more objective performance-based program and to provide for annual payouts based on satisfaction of specified performance objectives and individual performance. The Board’s approval of the PRP is one part of the overall strategy to develop a clear line of sight between performance, accountability, and incentive compensation. SUMMARY OF THE 2023 PERFORMANCE RECOGNITION PLAN Eligibility. Our Compensation Committee may identify employees of the Company or any of its affiliates (a “Participant”) who will be eligible to earn awards under the PRP and determine the amount of the performance-based award opportunity for a Participant for a designated performance period (“Performance Period”) and the conditions under which they may be earned. Performance Criteria; Performance Objectives. For any given Performance Period, the Compensation Committee will select performance criteria and establish in writing one or more performance objectives (“Performance Objectives”) for each Participant. The performance criteria used by the Compensation Committee may include either objective or subjective criteria that measure performance by the Company, an operating segment or other affiliate and/or a Participant’s performance. These criteria are similar to the performance criteria under the 2022 Incentive Compensation Plan and Vesting. Awards under the PRP will have such vesting provisions (including upon change of control) as specified in the award agreement, which may vary by Participant. In general, awards will vest in accordance with the provisions applicable to the 2023 Awards described below. Payment. The amount paid under an award will depend on the level of achievement of the applicable weighted Performance Objectives during the Performance Period, as determined by the Compensation Committee. The Compensation Committee may make adjustments to the Performance Objectives if the objectives have been affected 38 by special factors that in the Compensation Committee’s judgment should be taken into account in in the equitable administration of the PRP. Awards shall be paid in cash, subject to applicable withholding taxes, during the tax year following the end of the Performance Period. Amendment and Termination. The Board may at any time terminate, in whole or in part, or from time to time amend, the PRP, and in connection therewith adjust the timing of payments to be made in respect of outstanding awards. Clawbacks. All awards granted under the PRP will be subject to recoupment in accordance with the Company’s clawback policies. 2023 Performance Targets under the 2023 Performance Recognition Plan The performance targets set under the PRP for the named executive officers for the 2023 Performance Period (payable in 2024) are specified as a percentage of base salary earned by the executive during the 2023 Performance Period. However, the amount to be paid to the executive officer will depend on the level of achievement (threshold, objective, or maximum) of each of the 2023 Performance Objectives based on the weighted percentages applied to the award, as provided in the table below. Please See Continuation on Next Page 39
(1)The Performance Period under the 2023 Awards is calendar year 2023. The performance criteria consist of the following (and the weighted percentages noted in the table): (i) $/% change – Net Earned Premiums & Fees, which reflects the change in the amount of net earned premiums and fees earned during the Performance Period as compared to the prior year; (ii) % Underwriting Margin/Combined Ratio, which reflects underwriting margin/combined ratio for the Performance Period; and (iii) discretionary. Awards will be paid in the tax year following the Performance Period. The executives must be employed by the Company or one of its affiliates on the date of payment to vest in the award. Notwithstanding the foregoing, if an executive dies or becomes disabled during the Performance Period, the executive’s award will vest pro rata. In addition, if the executive is terminated without cause in connection with a change in control, the award will vest in full. The amount actually paid on a vested (or pro rata vested) award is subject to the level of achievement of the Performance Objectives. (2)Base Salary is defined as the earned base salary during the Performance Period. For illustrative purposes in the table above, the amounts shown in the threshold, objective, and maximum columns are based on the target award percentage of base salary estimated to be earned by 40 the executive for the 2023 year. The actual award payable to each of the named executive officers will be based on the target award percentage of actual base salary earned for the year ended December 31, 2023. STOCK OPTION AND RESTRICTED STOCK AWARDS UNDER INCENTIVE COMPENSATION PLANS The Company believes Under the 2016 Incentive Compensation Plan, an award to a participant The above stated objectives of the 2016 Accordingly, 41 managers, and When making these awards, the other sources of The following table sets forth certain information regarding options to purchase shares of Common Stock granted in
(2)The term of each option is 10 years from the Grant Date. Options (3)Upon retirement, in the The following table sets forth certain information regarding options to purchase shares of Common Stock exercised during
42
EQUITY COMPENSATION PLAN INFORMATION The following table sets forth certain information regarding securities authorized for issuance under
(*) A total of 31,875 options from its 2013 grant year included in this total were either exercised or expired as of March 1, 2023. The following table sets forth information regarding the unexercised options held by the persons listed in the Summary Compensation Table. This table shows the option exercise price for each exercisable and un-exercisable option held by each individual and the date upon which each option expires. 43
PERFORMANCE GRANTS UNDER THE 2022 INCENTIVE COMPENSATION PLAN Beginning in 2024, the Compensation Committee currently anticipates that a portion of 44 CLAWBACK POLICY The Company has adopted a policy that, to the extent permitted by law, it will seek to recoup any incentive-based compensation paid to any current or former executive officer if: (i) the amount of such payment was based on the achievement of certain financial results that were subsequently the subject of a restatement, (ii) the Board determines that such executive officer engaged in misconduct that resulted in the obligation to restate, and (iii) a lower payment would have been made to the executive officer based upon the restated financial results. HEDGING PROHIBITED The Company has a policy prohibiting any director or executive officer (a covered individual) from hedging the economic risk of his or her ownership of the Company’s securities. Under this policy, a covered individual is prohibited from entering into any derivative transaction on the Company’s securities (e.g., any short-sale, forward, option, collar, etc.). Further, the policy does not allow a covered individual to pledge the Company’s securities at any time, which included having Company securities in a margin account or using Company securities as collateral for a loan. CHANGE OF CONTROL, SEVERANCE OR RETIREMENT None of the executive officers or any other employee of the Company and its subsidiaries have employment STOCK OWNERSHIP GUIDELINES The
The Company also has an equity ownership policy for its directors and senior officers. Pursuant to this policy, directors are required to acquire holdings in the Company’s Common Stock
In measuring compliance with the Company's stock ownership requirement for officers, the Company will consider the following: (i) the greater of current market value attained at any time or the acquisition cost of shares owned directly, however acquired; and 45 PENSION PLAN The Old Republic International Corporation Salaried Employees Restated Retirement Plan (“Company Pension Plan”) assumed the obligations and assets of other retirement plans maintained by Under the Company Pension Plan, as it applies to Under the Company Pension Plan, as it applies to Mr. Yeager, who The following table sets forth the payments and present value of the estimated benefits payable to executive officers under the
46 ORI 401(k) SAVINGS AND PROFIT SHARING PLAN The 401(k) Plan, which has been in place since 1978, and was originally called Employees Eligible employees who elect to At the election of the participant, benefits derived from employer matching contributions are Stock at the time of a distributable event. In addition, to the The 47
BACKGROUND The Board of Directors and the Compensation Committee, in particular, review the elements of Company compensation each year. Special attention is devoted to the compensation of the executive officers and certain other senior At the Company’s PROPOSED RESOLUTION Resolved, that the shareholders of the Company approve the compensation policies, practices and procedures as set forth in the Compensation Discussion and Analysis section of this proxy statement for its executive ADVISORY VOTE This vote is advisory and is not binding upon the Board of Directors. The vote is intended to be a measure of the 48
This proposal is to approve the Amended and Restated Certificate of Incorporation of Old Republic International Corporation. BACKGROUND In August 2022, the Delaware General Assembly amended Section 102(b)(7) of the Delaware General Corporation Law, or the DGCL, to authorize corporations to adopt a provision in their certificate of incorporation to eliminate or limit monetary liability of certain corporate officers for breach of the fiduciary duty of care. Previously, the DGCL allowed only exculpation of corporate directors for breach of the fiduciary duty of care. Article Seventeenth of the Company’s Restated Certificate of Incorporation (the “Charter”) currently provides for the exculpation of directors, but does not include a provision that allows for the exculpation of officers. As amended, Section 102(b)(7) of the DGCL authorizes corporations to provide for exculpation of the following officers: (i) the corporation’s president, chief executive officer, chief operating officer, chief financial officer, chief legal officer, controller, treasurer or chief accounting officer of the Company at any time during the course of conduct alleged in the action or proceeding to be wrongful; (ii) named executive officers identified in the Company’s SEC filings because such person is or was one of the most highly compensated executive officers of the Company at any time during the course of conduct alleged in the action or proceeding to be wrongful; and (iii) individuals who have agreed by written agreement with the Company to be identified as officers of the Company. In light of the amendments to Section 102(b)(7) of the DGCL, the Board has proposed and declared it advisable to amend and restate the Charter in its entirety by adopting the Amended and Restated Certificate of Incorporation in the form attached to this proxy statement as Appendix 1 (the “Amended and Restated Charter”) to provide for the exculpation of officers as described herein. The new Delaware legislation permits, and the Amended and Restated Charter would permit, exculpation only for direct claims brought by shareholders for breach of an officer’s fiduciary duty of care, including class actions, but would not eliminate officers’ monetary liability for breach of fiduciary duty claims brought by the corporation itself or for derivative claims brought by shareholders in the name of the Company. Furthermore, as is currently the case with directors under the Company’s Charter, the proposed officer exculpation would not apply to (i) breaches of the duty of loyalty to the Company or its shareholders, (ii) acts or omissions not in good faith or that involve intentional misconduct or a knowing violation of law, (iii) actions brought under Section 174 of the DGCL, or (iv) or any transaction in which the officer derived an improper personal benefit. REASONS FOR THE PROPOSED AMENDED AND RESTATED CHARTER The board of directors desires to amend and restate the Charter to maintain provisions consistent with the governing statutes contained in Delaware law and believes that amending and restating the Charter to add the authorized liability protection for certain officers of the Company, consistent with the protection in the Charter currently afforded directors of the Company, is necessary to attract and retain experienced and qualified officers. In the absence of such protection, qualified officers might be deterred from serving as officers due to exposure to personal liability and the risk that substantial expense will be incurred in defending lawsuits, regardless of merit. Further, the Company has undertaken in its indemnification agreements with each of its directors and certain officers to contract with its directors and certain officers to indemnify them to the fullest extent permitted by law against personal liability for actions taken on good faith performance of their duties to the Company. The board of directors balanced these considerations with the Company’s corporate governance guidelines and best practices and determined that it is advisable and in the best interests of the Company and its shareholders to amend and restate the current exculpation and liability provisions set forth in Article Seventeenth of the Charter to 49 extend exculpation protection to the Company’s officers in addition to its directors as set forth in the Amended and Restated Charter. TEXT OF PROPOSED AMENDMENT As discussed above, Article Seventeenth in the Company’s Charter currently provides for the exculpation of directors. This proposal requests that shareholders approve the amendment and restatement of the Company’s Charter to restate Article Seventeenth thereof to extend the exculpation provision to certain of the Company’s officers as permitted by amended DGCL Section 102(b)(7). As amended and restated, Article Seventeenth of the Amended and Restated Charter provides follows: No director or officer of the Corporation shall be liable to the Corporation or its stockholders for monetary damages for breach of fiduciary duty as a director or officer, except to the extent such elimination or limitation of liability is not permitted under the Delaware General Corporation Law as presently in effect or as the same may hereafter be amended. No amendment or repeal of this provision shall apply to or have any effect on the liability of any director or officer of the Corporation for any acts or omissions of such director or officer occurring prior to such amendment or repeal. TIMING AND EFFECT OF CHARTER AMENDMENT If the Amended and Restated Charter is approved by the Company’s shareholders, it will become effective immediately upon the filing of the Amended and Restated Charter with the Secretary of State of the State of Delaware, which the Company expects to file promptly after the Annual Meeting. Other than the replacement of the existing Article Seventeenth as described above, the remainder of the Company’s Charter will remain unchanged after effectiveness of the Amended and Restated Charter. If the Company’s shareholders do not approve the Amended and Restated Charter, the Company’s current Charter and exculpation provisions relating to directors will remain in place. However, even if our shareholders approve the Amended and Restated Charter, our board of directors retains discretion under Delaware law not to implement it. REQUIRED VOTE To be approved and adopted, this proposal requires the affirmative vote of a majority of the shares outstanding and entitled to vote on this proposal. Abstentions and broker non-votes will have the same effect as votes against this proposal. BOARD OF DIRECTORS' RECOMMENDATION For the reasons stated above, the Board of Directors unanimously recommends a vote FOR the approval and adoption of the Amended and Restated Charter.
BACKGROUND The Board of Directors, as part of its commitment to transparency in corporate governance and executive compensation, has determined that submitting to shareholders a resolution to approve the Company’s compensation policies, practices and procedures concerning executive officers, commonly referred to as a “Say-on-Pay” proposal should be done annually. To further enhance this procedure and as prescribed by law and regulation, the shareholders of the Company are asked to indicate their preference concerning the frequency of these votes. Regardless of the frequency selected, the Company must, at least every six years, unless the law or regulations concerning this matter change, provide the shareholders the opportunity to re-evaluate the frequency of voting on this issue. 50 PROPOSED RESOLUTION Resolved, that the shareholders of the Company shall vote on a resolution concerning the frequency of approving the Company’s compensation policies, practices and procedures concerning executive officers, commonly referred to as a “Say-on-Pay” proposal. The choices the shareholders may recommend are: every year, every two years, or every three years. Further, if the shareholder wishes, he or she may abstain on this matter. REQUIRED VOTE This vote is required by law but is advisory and is not binding upon the Company or its Board of Directors with regard to the frequency of such a vote, provided the Company’s shareholders vote at least every three years on a “Say-on-Pay” resolution and the shareholders have an opportunity, at least every six years, to recommend the frequency of such votes. This vote is intended to serve as an indication of the frequency shareholders wish to address this issue. The Board of Directors and Compensation Committee believe a choice of voting on compensation matters every year is appropriate as this practice was approved by the Board over twelve years ago. During the last decade that executive compensation has been voted on by Old Republic’s shareholders, the vote has approval vote has ranged from 88.0% to 98.8% with an average of almost 95% in favor of the Company’s compensation policies, practices and procedures. While the Board believes voting on these policies, practices and procedures every year is appropriate, the choice receiving a plurality of votes shall be considered by the Board of Directors in determining the frequency of such votes. The results of the vote on this matter shall be disclosed in a filing made with the SEC that will be available for review through the Company’s website at www.oldrepublic.com. Any change resulting from this vote shall be disclosed after the Board of Directors has had an opportunity to review and evaluate the vote. Such action shall be announced in a filing made with the SEC that will be available for review through the Company’s website. This filing will be made at least 60 days prior to the deadline for the submission of shareholder proposals for next year’s meeting. Further, it is currently anticipated that a vote on the frequency of having advisory votes on executive compensation shall again occur in connection with the Company’s 2029 election of Directors. BOARD OF DIRECTORS’ RECOMMENDATION The Board of Directors recommends a vote 51
SHAREHOLDER PROPOSALS OR DIRECTOR NOMINATIONS FOR THE Pursuant to the advance notice provisions of our by-laws, in order for a shareholder to properly nominate a Board candidate or bring any other business at the Company’s annual shareholder meetings, notice of such nomination or business must be given in writing to the Corporate Secretary and delivered to or mailed and received at the Company’s principal executive offices, not less than 90 days nor more than 120 days In order for a nominee for election to the board of directors to be included in our proxy statement and proxy card for any annual meeting of shareholders, notice of such nominee must be properly submitted pursuant to the proxy access provisions of our by-laws and have been delivered to or mailed and received at the principal executive offices of the Company not less than 120 days nor more than 150 days prior to the first anniversary of the date of the This proxy statement is filed by order of the Board of Directors. Thomas A. Dare Senior Vice President, General Counsel and Secretary Chicago, Illinois 52 APPENDIX 1 AMENDED AND RESTATED CERTIFICATE OF INCORPORATION OF OLD REPUBLIC INTERNATIONAL CORPORATION (Pursuant to Sections 212, 242, and 245 of the General Corporation Law of the State of Delaware) Old Republic International Corporation (the “Corporation”), a corporation organized and existing under and by virtue of the provisions of the General Corporation Law of the State of Delaware (the “General Corporation Law”), hereby adopts this Amended and Restated Certificate of Incorporation and DOES HEREBY CERTIFY: 1. The name of the Corporation is Old Republic International Corporation and that the Corporation was originally incorporated pursuant to the General Corporation Law on March 6, 1969. 2. That the Board of Directors of the Corporation (the “Board of Directors”) duly adopted resolutions proposing to amend and restate the Restated Certificate of Incorporation of the Corporation, declaring it advisable to amend and restate the Restated Certificate of Incorporation to eliminate or limit the monetary liability of certain corporate officers for breaches of the fiduciary duty of care, and directing such Amended and Restated Certificate of Incorporation be submitted to the shareholders for approval at the Corporation’s next annual meeting. 3. That the following amendment and restatement was approved by the holders of the requisite number of shares of this corporation in accordance with Section 212 of the General Corporation Law. 4. That this Amended and Restated Certificate of Incorporation, which restates and integrates and further amends the provisions of this Corporation’s Restated Certificate of Incorporation, has been duly adopted in accordance with Sections 242 and 245 of the General Corporation Law. RESOLVED, that the Certificate of Incorporation of the Corporation be amended and restated in its entirety to read as follows: FIRST The name of the corporation is Old Republic International Corporation. A 1 SECOND The address of its registered office in the State of Delaware is 251 Little Falls Drive in the City of Wilmington 19808, County of New Castle. The name of its registered agent at such address is The Prentice-Hall Corporation System, Inc. THIRD The nature of the business or purposes to be conducted or promoted are: To acquire, own and dispose of the whole or any part of the capital stock, securities, assets or obligations of other corporations; and To engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of Delaware. FOURTH The total number of shares of all classes of capital stock which the Corporation shall have authority to issue is Six Hundred Seventy-five Million (675,000,000) shares divided into three classes as follows: Seventy-Five Million (75,000,000) shares of Preferred Stock of the par value of one cent ($.01) per share (Preferred Stock). Five Hundred Million (500,000,000) shares of Common Stock of the par value of $1.00 per share (Common Stock). One Hundred Million (100,000,000) shares of Class B Common Stock of the par value of $1.00 per share (Class B Common Stock). The designations, powers, preferences and rights, and the qualifications, limitations or restrictions of the above classes of stock are as follows: DIVISION I Preferred Stock 1. The Board of Directors is expressly authorized at any time, and from time to time, to issue shares of Preferred Stock in one or more series, and for such consideration as the Board may determine, with such voting powers, full or limited but not to exceed one vote per share, or without voting powers, and with such designations, preferences and relative, participating, optional or other special rights, and qualifications, limitations or restrictions thereof, as shall be stated in the resolution or resolutions providing for the issue thereof, and as are not stated in this Certificate of Incorporation, or any amendment thereto. All shares of any one series shall be of equal rank and identical in all respects. 2. No dividend shall be paid or declared on any particular series of Preferred Stock unless dividends shall be paid or declared pro rata on all shares of Preferred Stock at the time outstanding of each other series which ranks equally as to dividends with such particular series. 3. Unless and except to the extent otherwise required by law or provided in the resolution or resolutions of the Board of Directors creating any series of Preferred Stock pursuant to this Division I, the holders of the Preferred Stock shall have no voting power with respect to any matter whatsoever. In no event shall the Preferred Stock be entitled to more than one vote in respect of each share of stock. Subject to the protective conditions or restrictions of any outstanding series of Preferred Stock, any amendment to this Certificate of Incorporation which shall increase or decrease the authorized capital stock of any class or classes may be adopted by the affirmative vote of the holders of a majority of the outstanding shares of the voting stock of the Corporation. A 2 4. Shares of Preferred Stock redeemed, converted, exchanged, purchased, retired or surrendered to the Corporation, or which have been issued and reacquired in any manner, shall upon compliance with any applicable provisions of the General Corporation Law of the State of Delaware, have the status of authorized and unissued shares of Preferred Stock and may be reissued by the Board of Directors as part of the series of which they were originally a part or may be reclassified into and reissued as part of a new series or as a part of any other series, all subject to the protective conditions or restrictions of any outstanding series of Preferred Stock. DIVISION II Common Stock and Class B Common Stock 1. Dividends. Subject to the preferential rights, if any, applicable to shares of the Preferred Stock and subject to applicable requirements, if any, with respect to the setting aside of sums for purchase, retirement or sinking funds for the Preferred Stock, the holders of the Common Stock and the Class B Common stock shall be entitled to receive to the extent permitted by law, such dividends as may be declared from time to time by the Board of Directors; provided that whenever a cash dividend is paid to the holders of Class B Common Stock, the Corporation shall also pay to the holders of the Common Stock a cash dividend per share at least equal to the cash dividend per share paid to the holders of the Class B Common Stock and further provided that the Corporation may pay cash dividends to the holders of the Common Stock in excess of cash dividends paid, or without paying cash dividends, to holders of the Class B Common Stock. 2. Liquidation. In the event of the voluntary or involuntary liquidation, dissolution, distribution of assets or winding up of the Corporation, after distribution in full of the preferential amounts, if any, to be distributed to the holders of shares of the Preferred Stock, holders of the Common Stock and the Class B Common Stock shall be entitled to receive all the remaining assets of the Corporation of whatever kind available for distribution to stockholders ratably in proportion to the number of shares of Common Stock and the Class B Common Stock held by them, respectively. 3. Voting Rights. Except as may be otherwise required by law or this Certificate of Incorporation, each holder of the Common Stock shall have one vote in respect of each share of Common Stock held by him of record on the books of the Corporation on all matters voted upon by the stockholders and each holder of the Class B Common Stock shall have one-tenth (1/10) of one vote in respect of each share of Class B Common Stock held by him of record on the books of the Corporation on all matters voted upon by the stockholders; provided that the holders of the Common Stock and the Class B Common Stock shall vote together as a single class. 4. Definition. Notwithstanding the provisions of the Designations, preferences, and rights of Series A Junior Participating Preferred Stock, the Designations, preferences and rights of Series G-3 Convertible Preferred Stock for the purposes of the Corporation’s Restated Certificate of Incorporation, as amended, the term “Common Stock” shall mean Common Stock as defined in the first paragraph of this Article FOURTH and shall not include the Class B Common Stock of the Corporation, provided, however, that for the purposes of the section titled “Voting,” the term “Common Stock” shall mean both the Common Stock as defined in the first paragraph of this Article FOURTH and the Class B Common Stock of the Corporation. DIVISION III Elimination of Preemptive Rights No holder of stock of any class of the Corporation shall be entitled as a matter of right to purchase or subscribe for any part of any unissued stock of any class, or of any additional stock of any class of capital stock of the Corporation, or of any bonds, certificates of indebtedness, debentures, or other securities convertible into stock of the Corporation, now or hereafter authorized, but any such stock of other securities convertible into stock may be issued and disposed of pursuant to resolution by the Board of Directors to such persons, firms, corporations or associations and upon such terms and for such A 3 consideration (not less than the par value or stated value thereof) as the Board of Directors in the exercise of its discretion may determine and as may be permitted by law without action by the stockholders. DESIGNATIONS, PREFERENCES AND RIGHTS OF SERIES A JUNIOR PARTICIPATING PREFERRED STOCK 1. Designation. The shares of such series shall be designated as “Series A Junior Participating Preferred Stock” (the “Series A Preferred Stock”) and the number of shares constituting the Series A Preferred Stock shall be 10,000,000; such number of shares may be increased or decreased by resolution of the Board of Directors; provided that no decrease shall reduce the number of shares of Series A Preferred Stock to a number less than the number of shares then outstanding plus the number of shares reserved for issuance upon the exercise of outstanding options, rights, or warrants or upon conversion of any outstanding securities issued by the Corporation convertible into Series A Preferred Stock. 2. Dividends and Distributions. (a) Subject to the rights of the holders of any shares of any series of Preferred Stock (or any similar stock) ranking prior and superior to the Series A Preferred Stock with respect to dividends, the holders of shares of Series A Preferred Stock, in preference to the holders of Common Stock, par value $1.00 per share (the “Common Stock”), of the Corporation, and of any other junior stock, shall be entitled to receive, when and if declared by the Board of Directors, out of funds legally available for the purpose, quarterly dividends payable in cash on the first day of March, June, September and December in each year (each such date being referred to herein as a “Quarterly Dividend Payment Date”), commencing on the first Quarterly Dividend Payment Date after the first issuance of a share or fraction of a share of Series A Preferred Stock, in an amount per share (rounded to the nearest cent) equal to the greater of (a) $1 or (b) subject to the provision for adjustment hereinafter set forth, 100 time the aggregate per share amount (payable in kind) of all non-cash dividend or other distributions, other than a dividend payable in shares of Common Stock or a subdivision of the outstanding shares of Common Stock (by reclassification or otherwise), declared on the Common Stock since the immediately preceding Quarterly Dividend Payment Date or, with respect to the first Quarterly Dividend Payment Date, since the first issuance of any share or fraction of a share of Series A Preferred Stock. In the event the Corporation shall at any time declare or pay any dividend on the Common Stock payable in shares of Common Stock, or effect a subdivision or combination or consolidation of the outstanding shares of Common Stock (by reclassification or otherwise than by payment of a dividend in shares of Common Stock) into a greater or lesser number of shares of Common Stock, then in each such case the amount to which holders of shares of Series A Preferred Stock were entitled immediately prior to such event under clause (b) of the preceding sentence shall be adjusted by multiplying such amount by a fraction, the numerator of which is the number of shares of Common Stock outstanding immediately after such event and the denominator of which is the number of shares of Common Stock that were outstanding immediately prior to such event. (b) The Corporation shall declare a dividend or distribution on the Series A Preferred Stock as provided in paragraph (a) of this Section immediately after it declares a dividend or distribution on the Common Stock (other than a dividend payable in shares of Common Stock); provided that, in the event no dividend or distribution shall have been declared on the Common Stock during the period between any Quarterly Dividend Payment Date and the next subsequent Quarterly Dividend Payment Date, a dividend of $1 per share on the Series A Preferred Stock shall nevertheless be payable on such subsequent Quarterly Dividend Payment Date. (c) Dividends shall begin to accrue and be cumulative on outstanding shares of Series A Preferred Stock from the Quarterly Dividend Payment Date next preceding the date of issue of such shares, unless the date of issue of such shares is prior to the record date for the first Quarterly Dividend Payment Date, in which case dividends on such shares shall begin to accrue from the date of issue of such shares, or unless the date of issue is a Quarterly Dividend Payment Date or is a date after the record date for the determination of holders of shares of Series A Preferred Stock entitled to receive a quarterly dividend and before such Quarterly Dividend Payment Date, in either of which events such dividends shall begin to accrue and be cumulative from such Quarterly Dividend Payment Date. Accrued but unpaid A 4 dividends shall not bear interest. Dividends paid on the shares of Series A Preferred Stock in an amount less than the total amount of such dividends at the time accrued and payable on such shares shall be allocated pro rata on a share-by-share basis among all such shares at the time outstanding. The Board of Directors may fix a record date for the determination of holders of shares of Series A Preferred Stock entitled to receive payment of a dividend or distribution declared thereon, which record date shall not be more than 60 days prior to the date fixed for the payment thereof. 3. Voting Rights. The holders of shares of Series A Preferred Stock shall have the following voting rights: (a) Except as provided in paragraph (c) of this Section 3 and subject to the provisions for adjustment hereinafter set forth, each share of Series A Preferred Stock shall entitle the holder thereof to 100 votes on all matters submitted to a vote of the stockholders of the Corporation. (b) Except as otherwise provided herein or by law, the holders of shares of Series A Preferred Stock and the holders of shares of Common Stock shall vote together as one class on all matters submitted to a vote of stockholders of the Corporation. (c) (i) If, on the date used to determine stockholders of record for any meeting of stockholders for the election of directors, a default in preference dividends (as defined in subparagraph (v) below) on the Series A Preferred Stock shall exist, the holders of the Series A Preferred Stock shall have the right, voting as a class as described in subparagraph (ii) below, to elect two directors (in addition to the directors elected by holders of Common Stock of the Corporation). Such right may be exercised (a) at any meeting of stockholders for the election of directors or (b) at a meeting of the holders of shares of Voting Preferred Stock (as hereinafter defined), called for the purpose in accordance with the By-Laws of the Corporation, until all such cumulative dividends (referred to above) shall have been paid in full or until non-cumulative dividends have been paid regularly for at least one year. (ii) The right of the holders of Series A Preferred Stock to elect two directors as described above, shall be exercised as a class concurrently with the rights of holders of any other series of Preferred Stock upon which voting rights to elect such directors have been conferred and are then exercisable. The Series A Preferred Stock and any additional series of Preferred Stock which the Corporation may issue and which may provide for the right to vote with the foregoing series of Preferred Stock are collectively referred to herein as “Voting Preferred Stock.” (iii) Each director elected by the holders of shares of Voting Preferred Stock shall be referred to herein as a “Preferred Director.” A Preferred Director so elected shall continue to serve as such director for a term of one year; except that upon any termination of the right of all such holders to vote as a class of Preferred Directors, the term of office of such directors shall terminate. Any Preferred Director may be removed by, and shall not be removed except by, the vote of the holders of record of a majority of the outstanding shares of Voting Preferred Stock then entitled to vote for the election of directors, present (in person or by proxy) and voting together as a single class (a) at a meeting of the stockholders, or (b) at a meeting of the holders of shares of such Voting Preferred Stock; called for the purpose in accordance with the By-laws of the Corporation, or (c) by written consent signed by the holders of a majority of the then outstanding shares of Voting Preferred Stock then entitled to vote for the election of directors, taken together as a single class. (iv) So long as a default in any preference dividends on the Series A Preferred Stock shall exist or the holders of any other series of Voting Preferred Stock shall be entitled to elect Preferred Directors, (a) any vacancy in the office of a Preferred Director may be filled (except as provided in the following clause (b)) by an instrument in writing signed by the remaining Preferred Directors and filed with the Corporation and (b) in the case of the removal of any Preferred Director, the vacancy may be filled by the vote or written consent of the holders of a majority of the outstanding shares of Voting Preferred Stock then entitled to vote for the election of directors present (in person or by proxy) and voting together as a single class at such time as the removal shall be effected. Each director appointed as aforesaid by the remaining Preferred Director shall be deemed, for all purposes hereof, to be a Preferred Director. Whenever (1) no default in preference dividends on the Series A Preferred Stock shall exist and A 5 (2) the holders of other series of Voting Preferred Stock shall no longer be entitled to elect such Preferred Directors, then the number of directors constituting the Board of Directors of the Corporation shall be reduced by two. (v) For purposes hereof, a “default in preference dividends” on the Series A Preferred Stock shall be deemed to have occurred whenever the amount of cumulative and unpaid dividends on the Series A Preferred Stock shall be equivalent to six full quarterly dividends or more (whether or not consecutive), and, having so occurred, such default shall be deemed to exist thereafter until, but only until, all cumulative dividends on all shares of the Series A Preferred Stock then outstanding shall have been paid through the last Quarterly Dividend Payment Date or until, but only until, non-cumulative dividends have been paid regularly for at least one year. (d) Except as set forth herein (or as otherwise required by applicable law), holders of Series A Preferred Stock shall have no general or special voting rights and their consent shall not be required for taking any corporate action. 4. Certain Restrictions. (a) Whenever quarterly dividends or other dividends or distributions payable on the Series A Preferred Stock as provided in Section 2 are in arrears, thereafter and until all accrued and unpaid dividends and distributions, whether or not declared, on shares of Series A Preferred Stock outstanding shall have been paid in full, the Corporation shall not: (i) declare or pay dividends, or make any other distributions, on any shares of stock ranking junior (either as to dividends or upon liquidation, dissolution or winding up) to the Series A Preferred Stock; (ii) declare or pay dividends, or make any other distributions, on any shares of stock ranking on a parity (either as to dividends or upon liquidation, dissolution or winding up) with the Series A Preferred Stock, except dividends paid ratably in the Series A Preferred Stock and all such parity stock on which dividends are payable or in arrears in proportion to the total amounts to which the holders of all such shares are then entitled; (iii) redeem or purchase or otherwise acquire for consideration shares of any stock ranking junior (either as to dividends or upon liquidation, dissolution or winding up) to the Series A Preferred Stock, provided that the Corporation may at any time redeem, purchase or otherwise acquire shares of any such junior stock in exchange for shares of any stock of the Corporation ranking junior (either as to dividends or upon dissolution, liquidation or winding up) to the Series A Preferred Stock; or (iv) redeem or purchase or otherwise acquire for consideration any shares of Series A Preferred Stock, or any shares of stock ranking on a parity with the Series A Preferred Stock, except in accordance with a purchase offer made in writing or by publication (as determined by the Board of Directors) to all holders of such shares upon such terms as the Board of Directors, after consideration of the respective annual dividend rates and other relative rights and preferences of the respective series and classes, shall determine in good faith will result in fair and equitable treatment among the respective series or classes. (b) The Corporation shall not permit any subsidiary of the Corporation to purchase or otherwise acquire for consideration any shares of stock of the Corporation unless the Corporation could, under paragraph (a) of this Section 4, purchase or otherwise acquire such shares at such time and in such manner. 5. Reacquired Shares. Any shares of Series A Preferred Stock purchased or otherwise acquired by the Corporation in any manner whatsoever shall be retired and cancelled promptly after the acquisition thereof. All such shares shall upon their cancellation become authorized but unissued shares of Preferred Stock and may be reissued as part of a new series of Preferred Stock subject to the conditions and restrictions on issuance set A 6 forth herein, in the Certificate of Incorporation, or in any other Certificate of Designations creating a series of Preferred Stock or any similar stock or as otherwise required by law. 6. Liquidation, Dissolution or Winding Up. (a) Subject to the prior and superior rights of holders of any shares of any series of Preferred Stock ranking prior and superior to the shares of Series A Preferred Stock with respect to rights upon liquidation, dissolution or winding up (voluntary or otherwise), no distribution shall be made to the holders of shares of stock ranking junior (either as to dividends or upon liquidation, dissolution or winding up) to the Series A Preferred Stock unless, prior thereto, the holders of shares of Series A Preferred Stock shall have received $100 per share, plus an amount equal to accrued and unpaid dividends and distributions thereon, whether or not declared, to the date of such payment (the “Series A Liquidation Preference”). Following the payment of the full amount of the Series A Liquidation Preference, no additional distributions shall be made to the holders of shares of Series A Preferred Stock unless, prior thereto, the holders of shares of Common Stock shall have received an amount per share (the “Capital Adjustment”) equal to the quotient obtained by dividing (i) the Series A Liquidation Preference by (ii) 100 (the “Adjusted Number”). Following the payment of the full amount of the Series A Liquidation Preference and the Capital Adjustment in respect of all outstanding shares of Series A Preferred Stock and Common Stock, respectively, holders of Series A Preferred Stock and holders of Common Stock shall receive their ratable and proportionate share of the remaining assets to be distributed in the ratio of the Adjustment Number to 1 with respect to such Preferred Stock and Common Stock, on a per share basis, respectively. (b) In the event, however, that there are not sufficient assets available to permit payment in full of the Series A Liquidation Preference and the liquidation preferences of all other series of preferred stock, if any, which rank on a parity with the Series A Preferred Stock, then such remaining assets shall be distributed ratably to the holders of Series A Preferred Stock and the holders of such parity shares in proportion in their respective liquidation preferences. In the event, however, that there are not sufficient assets available to permit payment in full of the Capital Adjustment, then such remaining assets shall be distributed ratably to the holders of Common Stock. 7. Consolidation, Merger, etc. In case the Corporation shall enter into any consolidation, merger, combination or other transaction in which the shares of Common Stock are exchanged for or changed into other stock or securities, cash and/or any other property, then in any such case each share of Series A Preferred Stock shall at the same time be similarly exchanged or changed into an amount per share, subject to the provisions for adjustment hereinafter set forth, equal to 100 times the aggregate amount of stock, securities, cash and/or any other property (payable in kind), as the case may be, into which or for which each share of Common Stock is changed or exchanged. In the event the Corporation shall at any time declare or pay any dividend on the Common Stock payable in shares of Common Stock, or effect a subdivision or combination or consolidation of the outstanding shares of Common Stock (by reclassification or otherwise than by payment of dividend in shares of Common Stock) into a greater or lesser number of shares of Common Stock, then in each such case the amount set forth in the preceding sentence with respect to the exchange or change of shares of Series A Preferred Stock shall be adjusted by multiplying such amount by a fraction, the numerator of which is the number of shares of Common Stock outstanding immediately after such event and the denominator of which is the number of shares of Common Stock that were outstanding immediately prior to such event. 8. No Redemption. The shares of Series A Preferred Stock shall not be redeemable. 9. Ranking. The Series A Preferred Stock shall rank, with respect to payment of dividends and the distribution of assets, junior to all series of any other class of the Corporation’s Preferred Stock. A 7 10. Amendment. The Certificate of Incorporation of the Corporation shall not be amended in any manner which would materially alter or change the powers, preferences or special rights of the Series A Preferred Stock so as to affect them adversely without the affirmative vote of the holders of at least two-thirds of the outstanding shares of Series A Preferred Stock, voting together as a single class. FIFTH The number of directors of the Corporation shall be fixed from time to time by, or in the manner provided in its by-laws and may be increased or decreased as therein provided, but in no event shall the number of directors of the Corporation be less than five (5) nor more than eighteen (18). The directors shall be classified with respect to the time for which they shall severally hold office by dividing them as equally as the total number of directors will permit into three classes, and all directors shall hold office until their successors are elected and qualified. The term of service of each class of directors shall be three years or until the third annual meeting of the shareholders following the election of the class. The terms of service of each class of directors shall expire in successive years. At each annual meeting of the shareholders, successors to the class of directors whose terms then expire shall be elected to serve for the full term of three years or until the third annual meeting of shareholders following their election. At each succeeding annual meeting of shareholders, the shareholders shall elect directors only of the class whose terms then expire. SIXTH The Corporation is to have perpetual existence. SEVENTH The private property of the stockholders shall not be subject to the payment of corporate debts to any extent whatsoever. EIGHTH In furtherance and not in limitation of the powers conferred by statute, the Board of Directors is expressly authorized, subject to the protective conditions or restrictions, of any outstanding series of Preferred Stock fixed by the Board of Directors pursuant to the authority conferred upon the Board of Directors by Article Fourth of this Certificate of Incorporation and Section 151 of Title 8 of the Delaware Code: 1. To make, alter or repeal the By-Laws of the Corporation. 2. To authorize and cause to be executed mortgages and liens on the real and personal property of the Corporation. 3. To set apart out of any of the funds of the Corporation available for dividends a reserve or reserves for any proper purpose and to abolish any such reserve in the manner in which it was created. 4. By a majority of the whole Board, to designated one or more committees, each committee to consist of two or more of the Directors of the Corporation. The Board may designate one or more Directors as alternate members of any committee, who may replace any absent or disqualified member of any meeting of the committee. Any such committee, to the extent provided in the resolution or in the By-Laws of the Corporation, shall have and may exercise the powers of the Board of Directors in the management of the business and affairs of the Corporation, and may authorize the seal of the Corporation to be affixed to all papers which may require it; provided, however, the By-laws may provide that in the absence or disqualification of any member of such committee or committees the member or members thereof present at any meeting and not disqualified from voting, whether or not he or they A 8 constitute a quorum, may unanimously appoint another member of the Board of Directors to act at the meeting in the place of any such absent or disqualified member. 5. Subject to the provisions of Article Fourteenth of this Certificate of Incorporation, when and as authorized by the affirmative vote of the holders of a majority of the stock issued and outstanding having voting power given at a stockholders meeting duly called upon such notice as is required by statute, or when authorized by the written consent of the holders of a majority of the voting stock issued and outstanding, to sell, lease or exchange all or substantially all of the property and assets of the Corporation, including its goodwill and its corporate franchises, upon which such terms and conditions and for such consideration, which may consist in whole or in part of money or property including shares of stock in, and/or other securities of any other corporation or corporations, as its Board of Directors shall deem expedient and for the best interests of the Corporation. NINTH Whenever a compromise or arrangement is proposed between this Corporation and its creditors or any class of them and/or between this Corporation and its stockholders or any class of them, any court of equitable jurisdiction within the State of Delaware may on the application in a summary way of this Corporation or of any creditor or stockholder thereof or on the application of any receiver or receivers appointed for this Corporation under the provisions of Section 291 of Title 8 of the Delaware Code or on the application of trustees in dissolution or of any receiver or receivers appointed for this Corporation under the provisions of Section 279 of Title 8 of the Delaware Code order a meeting of the creditors or class of creditors and/or of the stockholders or class of stockholders of this Corporation, as the case may be, to be summoned in such manner as the said court directs. If a majority in number representing three-fourths in value of the creditors or class of creditors and/or of the stockholders or class of stockholders of this Corporation, as the case may be, agree to any compromise or arrangement and to any reorganization of this Corporation as a consequence of such compromise or arrangement, the said compromise or arrangement and the said reorganizations shall, if sanctioned by the court to which the said application has been made, be binding on all the creditors or class of creditors, and/or on all the stockholders or class of stockholders of this Corporation, as the case may be, and also on this Corporation. TENTH Meetings of stockholders and of the Board of Directors may be held within or without the State of Delaware, as the By-laws may provide. The books of the Corporation may be kept (subject to any provision contained in the statutes) outside the State of Delaware at such place or places as may be designated from time to time by the Board of Directors or in the By-laws of the Corporation. Elections of Directors need not be by written ballot unless the By-laws of the Corporation shall so provide. ELEVENTH The Corporation reserves the right to amend, alter, change or repeal any provision contained in this Certificate of Incorporation, in the manner now or hereafter prescribed by statute, and all rights conferred upon stockholders herein are granted subject to this reservation. TWELFTH No contract or transaction between the Corporation and one or more of its Directors or officers, or between the Corporation and any other corporation, partnership, association or other organization in which one or more of its Directors or officers are Directors or officers, or have a financial interest, shall be void or voidable solely for this reason, or solely because the Director or officer is present at or participates in the meeting of the Board or committee thereof which authorizes the contract or transaction, or solely because his or their votes are counted for such purpose if: (a) The material facts as to his interest and as to the contract or transaction are disclosed or are known to the Board of Directors or the committee, and the Board or A 9 committee in good faith authorizes the contract or transaction by a vote sufficient for such purpose without counting the vote of the interested Director or Directors; or (b) The material facts as to his interest and as to the contract or transaction are disclosed or are known to the stockholders entitled to vote thereon, and the contract or transaction is specifically approved in good faith by vote of the stockholders; or (c) The contract or transaction is fair as to the Corporation as of the time it is authorized, approved or ratified, by the Board of Directors, a committee thereof, or the stockholders. Common or interested Directors may be counted in determining the presence of a quorum at a meeting of the Board of Directors or of a committee which authorizes the contract or transaction. THIRTEENTH 1. The Corporation shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the Corporation) by reason of the fact that he is or was a Director, officer, employee or agent of the Corporation or is or was serving at the request of the Corporation as a Director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him in connection with such action, suit or proceeding if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe this conduct was unlawful. The termination of any action, suit or proceeding by judgment, order, settlement, conviction or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that the person did not act in good faith and in a manner which he reasonably believed to be in or not opposed to the best interests of the Corporation, and, with respect to any criminal action or proceeding, had reasonable cause to believe that his conduct was unlawful. 2. The Corporation shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the Corporation to procure a judgment in its favor by reason of the fact that he is or was a Director, officer, employee or agent of the Corporation, or is or was serving at the request of the Corporation as a Director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against expenses (including attorneys’ fees) and amounts paid in settlement actually and reasonably incurred by him in connection with the defense or settlement of such action or suit if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Corporation and except that no such indemnification shall be made in respect to any claim, issue or matter as to which such person shall have been adjudged to be liable to the Corporation unless and only to the extent that the Court of Chancery of Delaware or the court in which such action or suit was brought shall determine upon application that despite the adjudication of liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses which the Court of Chancery or such other court shall deem proper. 3. To the extent that any person referred to in paragraphs 1 and 2 of this Article Thirteenth has been successful on the merits or otherwise in defense of any action, suit or proceeding referred to therein or in defense of any claim, issue or matter therein, he shall be indemnified against expenses (including attorneys’ fees) actually and reasonably incurred by him in connection therewith. 4. Any indemnification under paragraphs 1 and 2 of this Article Thirteenth (unless made by a court), shall be made by the Corporation only as authorized in the specific case upon a A 10 determination that indemnification of the Director, officer, employee or agent is proper in the circumstances because he has met the applicable standard of conduct set forth in paragraphs 1 and 2 of this Article Thirteenth. Such determination shall be made (a) by the Board of Directors by a majority vote of a quorum (as defined in the By-Laws of the Corporation) consisting of Directors who were not parties to such action, suit or proceeding, or (b) if such quorum is not obtainable, or even if obtainable a quorum of disinterested Directors so directs, by independent legal counsel in a written opinion, or (c) by the stockholders. 5. Expenses incurred in defending a civil or criminal action, suit or proceeding may be paid by the Corporation in advance of the final disposition of such action, suit or proceeding in the manner provided in paragraph 4 of this Article Thirteenth upon receipt of an undertaking by or on behalf of the Director, officer, employee or agent to repay such amount if it shall ultimately be determined that he is not entitled to be indemnified by the Corporation as authorized in this Article Thirteenth. 6. The indemnification and advancement of expenses provided by, or granted pursuant to other sections of this Article Thirteenth shall not be deemed exclusive of any other rights to which those seeking indemnification or advancement of expenses may be entitled under any statute, by-law, agreement, vote of stockholders or disinterested Directors or otherwise, both as to action in his official capacity and as to action in another capacity while holding such office. 7. The Corporation shall have power to purchase and maintain insurance on behalf of any person who is or was a Director, officer, employee or agent of the Corporation, or is or was serving at the request of the Corporation as a Director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against any liability asserted against him and incurred by him in any such capacity, or arising out of his status as such, whether or not the Corporation would have the power to indemnify him against such liability under the provisions of this Article Thirteenth. 8. The indemnification and advancement of expenses provided by, or granted pursuant to, this Article Thirteenth shall, unless otherwise provided when authorized or ratified, continue as to a person who has ceased to be a Director, officer, employee or agent and shall inure to the benefit of the heirs, executors and administrators of such a person. Any repeal or modification of this Article Thirteenth shall not adversely affect any right to indemnification or advancement of expenses of any present or former Director, officer, employee or agent of the Corporation existing at the time of such repeal or modification. 9. For purposes of this Article Thirteenth, references to the “Corporation” shall include, in addition to the resulting corporation, any constituent corporation (including any constituent of a constituent) absorbed in a consolidation or merger which, if its separate existence had continued, would have had power and authority to indemnify its Directors, officers, employees or agents, so that any person who is or was a Director, officer, employee or agent of such constituent corporation, or is or was serving at the request of such constituent corporation as a Director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, shall stand in the same position under the provisions of this Article Thirteenth, with respect to the resulting or surviving corporation as he would have with respect to such constituent corporation if its separate existence had continued. 10. For purposes of this Article Thirteenth, references to “other enterprises” shall include employee benefit plans; references to “fines” shall include any excise taxes assessed on a person with respect to any employee benefit plan; and references to “serving at the request of the Corporation” shall include any service as a Director, officer, employee or agent of the Corporation which imposes duties on, or involves services by, such Director, officer, employee or agent with respect to an employee benefit plan, its participants or beneficiaries; and a person who acted in good faith and in a manner he reasonably believed to be in the interest of the participants and beneficiaries of an employee benefit plan shall A 11 be deemed to have acted in a manner “not opposed to the best interests of the Corporation” as referred to in this Article Thirteenth. 11. If this Article Thirteenth or any portion hereof is invalidated by any court of competent jurisdiction, then the Corporation shall nevertheless provide such indemnification and advancement of expenses as would otherwise be permitted under any portion of this Article Thirteenth that shall not have been invalidated. FOURTEENTH 1. Except as set forth in paragraph 2 of this Article Fourteenth, the affirmative vote or consent of the holders of 80% of the outstanding shares of all classes of stock of the Corporation entitled to vote in elections of Directors, considered for the purposes of this Article Fourteenth as one class, shall be required to: (a) for the adoption of any agreement for the merger or consolidation of the Corporation with or into any other Corporation (as hereinafter defined), or (b) to authorize any sale, lease, exchange, mortgage, pledge or other disposition of all, or substantially all, or any Substantial Part (as hereinafter defined) of the assets of the Corporation or any Subsidiary (as hereinafter defined) to any Other Corporation, or (c) to authorize the issuance or transfer by the Corporation of any Substantial Amount (as hereinafter defined) of securities of the Corporation in exchange for the securities or assets of any Other Corporation if, in any such case, as of the record date for the determination of stockholders entitled to notice thereof and to vote thereon or consent thereto such Other Corporation is the Beneficial Owner (as hereinafter defined) of more than 10% of the outstanding shares of the stock of the Corporation entitled to vote in elections of Directors considered for the purposes of this Article Fourteenth as one class. Such affirmative vote or consent shall be in addition to the vote or consent of the holders of the stock of the Corporation otherwise required by law, this Certificate of Incorporation or any agreement or contract to which the Corporation is a party. 2. The provisions of paragraph 1 of this Article Fourteenth shall not be applicable to any transaction described therein if such transaction is approved by resolution of the Board of Directors of the Corporation, provided that (a) a majority of the members of the Board of Directors voting for the approval of such transaction were duly elected and acting members of the Board of Directors prior to the time such Other Corporation shall have become a Beneficial Owner of more than 10% of the shares of stock in the Corporation entitled to vote in elections of Directors; or (b) such transaction is approved by resolution unanimously adopted by the whole Board of Directors of the Corporation at any time prior to the consummation thereof. 3. The Board of Directors shall have the power and duty to determine for the purposes of this Article Fourteenth, on the basis of information known to such Board, if and when any Other Corporation is the Beneficial Owner of more than 10% of the outstanding shares of stock of the Corporation entitled to vote in elections of Directors, and any such determination shall be conclusive and binding for all purposes of this Article Fourteenth. 4. As used in this Article Fourteenth, the following terms have the meanings as set forth below: (a) “Other Corporation” means any person, firm, corporation or other entity, other than a subsidiary of the Corporation. (b) “Substantial Part” means any assets having a then fair market value, in the aggregate, of more than $5,000,000. A 12 (c) “Subsidiary” means any corporation in which the Corporation owns, directly or indirectly, more than 50% of the voting securities. (d) “Substantial Amount” means any securities of the Corporation having a then fair market value of more than $5,000,000. (e) “Beneficial Owner” of stock means a person, or an affiliate or “associate” of such person (as such terms are defined in Rule 12b-2 of the General Rules and Regulations under the Securities Exchange Act of 1934 as in effect on February 1, 1978), who directly or indirectly controls the voting of such stock, or who has any option, warrants, conversion or other rights to acquire such stock. FIFTEENTH In addition to any separate class vote, if any, which may be required by law, the affirmative vote of the holders of 80% of the outstanding shares of all classes of stock of the Corporation entitled to vote in the election of Directors, such outstanding shares of stock to be considered as one class, shall be required in order to amend or repeal any of the provisions of Article Fourteenth or subsection 5 of Article Eighth of the Certificate of Incorporation. The affirmative vote of the holders of 66-2/3% of the outstanding shares of all classes of stock of the Corporation entitled to vote in the election of Directors, such outstanding shares of stock to be considered as one class, shall be required in order to amend or repeal any of the provisions of Article Fifth of the Certificate of Incorporation. The same respective stockholder vote requirements prescribed by the foregoing provisions of this Article Fifteenth shall also be required, respectively, in order to amend or repeal the respective foregoing provisions of this Article Fifteenth prescribing such stockholder vote requirement. SIXTEENTH 1. The provisions of this Article Sixteenth shall apply independently of any other provision of this Certificate of Incorporation if any Other Corporation (as hereinafter defined) seeks to accomplish a Business Combination (as hereinafter defined) within the ten year period following the date the Other Corporation became an Acquiring Entity (as hereinafter defined). 2. As used in this Article Sixteenth, the following terms shall have the meanings as set forth below: (a) “Acquiring Entity” means any Other Corporation which is, and for fewer than ten years has been, the Beneficial Owner of more than 10% of the outstanding shares of stock of the Corporation entitled to vote in elections of Directors, considered for the purposes of this paragraph as one class. (b) “Affiliate” or “Associate” of a person have the same meaning as is assigned to such terms under Rule 12b-2 of the General Rules and Regulations (the “Regulations”) under the Securities and Exchange Act of 1934 as in effect on March 1, 1983. (c) “Beneficial Owner” of stock means a person, or an Affiliate or Associate of such person, who is a “beneficial owner” of stock, as such term is defined under Rule 13d-3 of the Regulations as in effect on March 1, 1983, except that, without limitation, any shares of voting stock of the Corporation that any Acquiring Entity, or any Affiliate or Associate of such Acquiring Entity, has the right to acquire pursuant to any agreement, or upon exercise of conversion rights, warrants or options, or otherwise shall be deemed beneficially owned by the Acquiring Entity. (d) “Business Combination” means any transaction as described in paragraph 1 of Article Fourteenth. A 13 (e) “Continuing Director” means a Director duly elected to the Board of Directors prior to the time the Other Corporation became an Acquiring Entity, and the term “Outside Directors” shall mean a Director who is not (i) an officer or employee of the Corporation or any relative of an officer or employee or (ii) an Acquiring Entity, or an officer, Director, employee, Affiliate or Associate of an Acquiring Entity, or a relative of any of the foregoing. (f) “Other Corporation” shall have the same meaning as set forth in paragraph 4 of Article Fourteenth. For the purposes of this Article Sixteenth, the Board of Directors shall have the power and duty to determine, on the basis of information known to such Board, if and when any Other Corporation is or has become an Acquiring Entity. Any such determination shall be conclusive and binding for all purposes of this Article Sixteenth. 3. Except as set forth in paragraph 4 of this Article Sixteenth, the affirmative vote of the holders of 66-2/3% of all classes of stock of the Corporation entitled to vote in elections of directors, considered for this purpose as one class, excluding stock of which the Acquiring Entity is the Beneficial Owner, shall be required for approval of any Business Combination with any Other Corporation unless all of the following conditions are fulfilled: (a) The cash or fair market value or other consideration to be received per share by common stockholders of the Corporation in such Business Combination will not, at the time of the Business Combination is effected, be less than the greater of: (i) the highest per share price (including brokerage commissions and/or soliciting dealers’ fees) paid by the Acquiring Entity in acquiring any of its holdings of the Corporation’s Common Stock; or (ii) an amount bearing a percentage relationship to the market price of the Corporation’s Common Stock immediately prior to the public announcement of such Business Combination equal to the highest percentage relationship that any per share price (including brokerage commissions and/or soliciting dealers’ fees) theretofore paid by the Acquiring Entity for any of its holding of the Corporation’s Common Stock bore to the market price of such Common Stock immediately prior to the transaction resulting in the acquisition of such Common Stock; or (iii) the book value of the Corporation’s Common Stock as of the end of the most recent calendar quarter determined in accordance with generally accepted accounting principles; or (iv) an amount calculated by multiplying the earnings per share of the Corporation’s Common Stock for the four fiscal quarters immediately preceding the record date for determination of stockholder entitled to vote on such Business Combination by the then price earnings multiple of the Acquiring Entity as customarily computed and reported in the financial press. Appropriate adjustments shall be made with respect to (i), (ii), (iii) and (iv) above for recapitalization and for stock splits, stock dividends, and like distributions. For purposes of subparagraph 3(a) of this Article Sixteenth, the term “other consideration to be received” shall include, without limitation, capital stock of this Corporation retained by its existing public stockholders in the event of a Business Combination in which this Corporation is the surviving corporation. (b) After the Other Corporation has become an Acquiring Entity: (i) the Corporation’s Board of Directors shall have included at all times representation by one or more Continuing Directors unless the lack of such representation A 14 results entirely from either death or normal retirement under retirement policies in effect prior to the time the Other Corporation became an Acquiring Entity; and (ii) there shall have been no reduction in the rate of dividends payable on the Corporation’s Common Stock except as required by law or as may be necessary to insure that the Corporation is not in breach of any covenant in any of its agreements for borrowed money, or except as may have been approved by a majority vote of the Continuing Directors; and (iii) such Acquiring Entity shall not have acquired any newly issued shares of stock, directly or indirectly, from the Corporation (except upon conversion of convertible securities acquired by it prior to becoming an Acquiring Entity or as a result of a pro rata stock dividend or stock split, or except with the approval of a majority vote of the Continuing Directors). (c) Without the approval of a majority vote of the Continuing Directors, such Acquiring Entity shall not have (i) received the benefit directly or indirectly (except proportionately as a stockholder) of any loans, advances, guarantees, pledges or other financial assistance provided by the Corporation, or (ii) made any major changes in the Corporation’s business or equity structure. (d) A timely mailing shall have been made to the stockholders of this Corporation containing in a prominent place (i) any recommendations as to the advisability (or inadvisability) of the Business Combination that the Continuing Directors or Outside Directors may choose to state, if there are at the time any such Directors, and (ii) the opinion of a reputable nationally recognized investment banking or financial services firm as to the fairness (or not) of the terms of the Business Combination, from the point of view of the stockholders of this Corporation other than the Acquiring Entity (such firm to be engaged solely on behalf of such other stockholders, to be paid a reasonable fee for its services by this Corporation upon receipt of such opinion, to be a firm that has not previously been significantly associated with the Acquiring Entity and, if there are at the time any such Directors, to be selected by a majority of the Continuing Directors and Outside Directors). 4. The provisions of paragraph 3 of this Article Sixteenth shall not be applicable to any Business Combination if (a) such transaction is approved by resolution unanimously adopted by the whole Board of Directors of the Corporation at any time prior to the consummation thereof; or (b) the Business Combination is solely between this Corporation and another corporation, 50% or more of the voting stock of which is owned by this Corporation and none of which is owned by the Acquiring Entity; provided that if this Corporation is not the surviving entity, each stockholder of this Corporation receives the same type of consideration in such transaction in proportion to his stock holdings and the provisions of this Article Sixteenth of the Corporation’s Certificate of Incorporation are continued in effect or adopted by such surviving corporation as part of its Articles of Incorporation or Certificate of Incorporation, as the case may be, without any charge. 5. In connection with a proposed Business Combination, the Continuing Directors may retain special outside legal counsel, an investment banking firm, an accounting firm, and such other experts that they, in their discretion, may deem necessary or appropriate to assist them in their evaluation of the transaction, all at the expense of the Corporation. 6. In addition to any other provision of this Certificate of Incorporation, there shall be required to amend, alter, change or repeal any of the provisions of this Article Sixteenth the affirmative vote of the holders of 66-2/3% of all classes of stock of the Corporation entitled to vote in elections of Directors, considered for this purpose as one class, excluding stock of which an Acquiring Entity, if any, is the Beneficial Owner. A 15 7. Nothing in this Article Sixteenth shall be construed to relieve an Acquiring Entity from any fiduciary obligation imposed by law. The conditions and voting requirements of this Article Sixteenth shall be in addition to the conditions and voting requirements imposed by law or other provisions of this Certificate of Incorporation, including, without limitation, Article Fourteenth. SEVENTEENTH No director or officer of the Corporation shall be liable to the Corporation or its stockholders for monetary damages for breach of fiduciary duty as a director or officer, except to the extent such elimination or limitation of liability is not permitted under the Delaware General Corporation Law as presently in effect or as the same may hereafter be amended. No amendment or repeal of this provision shall apply to or have any effect on the liability of any director or officer of the Corporation for any acts or omissions of such director or officer occurring prior to such amendment or repeal. IN WITNESS WHEREOF, this Amended and Restated Certificate of Incorporation has been executed by a duly authorized officer of this corporation as of _________________, 2023. By: Name: Title: A 16 |