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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
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[ ] | Preliminary Proxy Statement | |||||
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ALLEGHANY CORPORATION
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1. | To elect three directors for terms expiring in 2010. | |
2. | To consider and take action upon a proposal to approve Alleghany’s 2007 Long-Term Incentive Plan. | |
3. | To consider and take action upon a proposal to ratify the selection of KPMG LLP as Alleghany’s independent registered public accounting firm for the year 2007. | |
4. | To transact such other business as may properly come before the meeting, or any adjournment or adjournments thereof. |
By order of the Board of Directors | |
ROBERT M. HART | |
Senior Vice President, General Counsel and Secretary |
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Amount and Nature of Beneficial Ownership | |||||||||||||||||
Sole Voting | Shared Voting Power | ||||||||||||||||
Name and Address | Power and/or Sole | and/or Shared | Percent | ||||||||||||||
of Beneficial Owner | Investment Power | Investment Power | Total | of Class | |||||||||||||
F.M. Kirby | 325,018 | 708,735 | 1,033,753 | (1) | 12.9 | ||||||||||||
17 DeHart Street P.O. Box 151 Morristown, NJ 07963 | |||||||||||||||||
Allan P. Kirby, Jr. | 542,524 | — | 542,524 | (2) | 6.8 | ||||||||||||
14 E. Main Street P.O. Box 90 Mendham, NJ 07945 | |||||||||||||||||
Grace Kirby Culbertson | 164,927 | 237,217 | 402,144 | (3) | 5.0 | ||||||||||||
Blue Mill Road Morristown, NJ 07960 | |||||||||||||||||
Estate of Ann Kirby Kirby | 317,881 | 392,786 | 710,667 | (4) | 8.9 | ||||||||||||
c/o Carter, Ledyard & Milburn LLP 2 Wall Street New York, NY 10005 | |||||||||||||||||
Franklin Mutual Advisers, LLC | 781,492 | — | 781,492 | (5) | 9.8 | ||||||||||||
51 John F. Kennedy Parkway Short Hills, NJ 07078 | |||||||||||||||||
Royce & Associates, LLC | 463,628 | — | 463,628 | (6) | 5.8 | ||||||||||||
1414 Avenue of the Americas New York, NY 10019 |
(1) | Includes 110,344 shares of common stock held by F.M. Kirby as sole trustee of trusts for the benefit of his children; 506,423 shares held by a trust of which Mr. Kirby is co-trustee and primary beneficiary; and 202,312 shares held by trusts for the benefit of his children and his children’s descendants as to which Mr. Kirby was granted a proxy and, therefore, had shared voting power. Mr. Kirby disclaims beneficial ownership of |
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the common stock held for the benefit of his children and for the benefit of his children and his children’s descendants. Mr. Kirby held 214,674 shares directly. | |
(2) | Includes 305,655 shares of common stock held by a trust of which Allan P. Kirby, Jr. is co-trustee (with the final right to vote) and beneficiary; and 12,153 shares issuable under stock options granted pursuant to the 2005 Directors’ Stock Plan, or the “2005 Directors’ Plan,” the Amended and Restated Directors’ Stock Option Plan, or the “1993 Amended Directors’ Plan” and the 2000 Directors’ Stock Option Plan, or the “2000 Directors’ Plan.” Mr. Kirby held 224,716 shares directly, which include 505 shares of restricted common stock granted pursuant to the 2005 Directors’ Plan, as adjusted for stock dividends. |
(3) | Includes 46,617 shares of common stock held by Grace Kirby Culbertson as co-trustee of trusts for the benefit of her children; and 190,600 shares held by trusts for the benefit of Mrs. Culbertson and her descendants, of which Mrs. Culbertson is co-trustee. Mrs. Culbertson held 164,927 shares directly. |
(4) | Prior to her death in 1996, Ann Kirby Kirby had disclaimed being a controlling person or member of a controlling group with respect to Alleghany, and had declined to supply information with respect to her ownership of common stock. Since her death, the representatives of the estate of Mrs. Kirby have declined to supply information with respect to ownership of common stock by her estate or its beneficiaries; therefore, Alleghany does not know whether her estate or any beneficiary of her estate beneficially owns more than five percent of its common stock. However, Mrs. Kirby filed a statement on Schedule 13D dated April 5, 1982 with the Securities and Exchange Commission, or the “SEC,” reporting beneficial ownership, both direct and indirect through various trusts, of 710,667 shares of the common stock of Alleghany Corporation, a Maryland corporation and the predecessor of Alleghany, or “Old Alleghany.” Upon the liquidation of Old Alleghany in December 1986, stockholders received $43.05 in cash and one share of common stock for each share of Old Alleghany common stock. The stock ownership information provided herein as to the estate of Mrs. Kirby is based solely on her statement on Schedule 13D and does not reflect the two-percent stock dividends paid in each of the years 1985 through 1997 and 1999 through 2006 by Old Alleghany or Alleghany; if Mrs. Kirby, her estate and her beneficiaries had continued to hold in the aggregate 710,667 shares together with all stock dividends received in consequence through the date hereof, the beneficial ownership reported herein would have increased by 366,454 shares. |
(5) | According to an amendment dated January 31, 2007 to a Schedule 13G statement filed by Franklin Mutual Advisers, LLC, or “Franklin,” Franklin had sole voting power and sole dispositive power over 781,492 shares of common stock. The statement |
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indicated that such shares may be deemed to be beneficially owned by Franklin, an investment advisory subsidiary of Franklin Resources, Inc., or “FRI,” and that, under Franklin’s advisory contracts, all voting and investment power over such shares was granted to Franklin. The statement also indicated that Charles B. Johnson and Rupert H. Johnson, Jr. were the principal shareholders of FRI, but beneficial ownership of the shares reported therein is not attributed to FRI or Messrs. Johnson because Franklin exercises voting and investment powers over such shares independently of FRI and Messrs. Johnson. Franklin disclaimed any economic interest in or beneficial ownership of such shares. | |
(6) | According to an amendment dated January 17, 2007 to a Schedule 13G statement filed by Royce & Associates, LLC, an investment advisor, Royce & Associates, LLC has sole voting power and sole dispositive power over 463,628 shares of common stock. |
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• | the audited consolidated annual financial statements of Alleghany and its subsidiaries, including Alleghany’s specific disclosures under management’s discussion and analysis of financial condition and results of operation and critical accounting policies, to be included in Alleghany’s Annual Report on Form 10-K to the SEC and whether to recommend this inclusion, | |
• | the unaudited consolidated quarterly financial statements of Alleghany and its subsidiaries, including management’s discussion and analysis thereof, to be included in Alleghany’s Quarterly Reports on Form 10-Q to the SEC, | |
• | Alleghany’s policies with respect to risk assessment and risk management, | |
• | the adequacy and effectiveness of Alleghany’s internal controls, disclosure controls and procedures and internal auditors, and | |
• | the quality and acceptability of Alleghany’s accounting policies, including critical accounting policies and practices and the estimates and assumptions used by management in the preparation of Alleghany’s financial statements. |
• | reviewing and approving the financial goals and objectives relevant to the compensation of the chief executive officer, |
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• | evaluating the chief executive officer’s performance in light of such goals and objectives, and | |
• | determining the chief executive officer’s compensation based on such evaluation. |
• | the compensation of the other Alleghany officers and determining such officers’ compensation, and | |
• | the adjustments proposed to be made to the compensation of the three most highly paid officers of each Alleghany operating subsidiary as recommended by the compensation committee for each such operating subsidiary. |
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• | identifying and screening candidates, consistent with criteria approved by the Board, | |
• | making recommendations to the Board as to persons to be (i) nominated by the Board for election to the Board by stockholders or (ii) chosen by the Board to fill newly created directorships or vacancies on the Board, | |
• | developing and recommending to the Board a set of corporate governance principles applicable to Alleghany, and | |
• | overseeing the evaluation of the Board and Alleghany’s management. |
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• | if addressed to a specific director, to such director, | |
• | if addressed to the non-management directors, to the Chairman of the Nominating and Governance Committee who will report thereon to the non-management directors, or | |
• | if addressed to the Board, to the Chairman of the Board who will report thereon to the Board. |
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• | director or officer of Alleghany or | |
• | immediate family member of such director or officer, which means any child, stepchild, parent, stepparent, spouse, sibling,mother-in-law,father-in-law,son-in-law,daughter-in-law,brother-in-law orsister-in-law and any person (other than a tenant or employee) sharing the household of such director or officer, |
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• | that it is the policy of the Board that the Chairman should not be an executive officer of Alleghany, | |
• | that, because as Chairman Mr. Burns will not be independent as defined under the rules of the New York Stock Exchange, his tenure as Chairman is viewed as a transitional one, | |
• | that the Board intends by 2010 to require that the Chairman be an independent director as determined by the Board consistent with the requirements of the New York Stock Exchange, | |
• | that the Nominating and Governance Committee will annually evaluate the performance of the Chairman, | |
• | that the Chairman will monitor the performance of the President and chief executive officer but not be responsible for making President and chief executive officer compensation recommendations to the Board, and | |
• | for a list of the duties of the Chairman of the Board. |
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Amount and Nature of Beneficial Ownership | ||||||||||||||||
Sole Voting | Shared Voting Power | |||||||||||||||
Power and Sole | and/or Shared | Percent | ||||||||||||||
Name of Beneficial Owner | Investment Power | Investment Power | Total | of Class | ||||||||||||
Allan P. Kirby, Jr. | 542,524 | — | 542,524 | (1) | 6.80 | |||||||||||
Thomas S. Johnson | 14,175 | — | 14,175 | (2) | 0.18 | |||||||||||
James F. Will | 25,046 | 1,556 | 26,602 | (2) | 0.33 | |||||||||||
Rex D. Adams | 9,279 | — | 9,279 | (2) | 0.12 | |||||||||||
John J. Burns, Jr. | 85,651 | — | 85,651 | (3) | 1.1 | |||||||||||
Dan R. Carmichael | 19,103 | — | 19,103 | (2)(4) | 0.24 | |||||||||||
Weston M. Hicks | 62,140 | — | 62,140 | (5) | 0.78 | |||||||||||
Jefferson W. Kirby | 56,331 | 126,605 | 182,936 | (2)(6) | 2.30 | |||||||||||
William K. Lavin | 13,678 | — | 13,678 | (2) | 0.17 | |||||||||||
Raymond L.M. Wong | 1,158 | — | 1,158 | (2) | 0.01 | |||||||||||
Roger B. Gorham | 4,699 | — | 4,699 | (7) | 0.06 | |||||||||||
Robert M. Hart | 22,177 | — | 22,177 | (8) | 0.28 | |||||||||||
James P. Slattery | 6,141 | — | 6,141 | 0.08 | ||||||||||||
Jerry G. Borrelli | 178 | — | 178 | — | ||||||||||||
All directors, nominees and executive officers as a group (14 persons) | 862,280 | 128,161 | 990,441 | (9) | 12.31 | (10) |
(1) | See Note (2) on page 2. |
(2) | Includes 12,153 shares of common stock in the case of Messrs. Johnson, Will, Carmichael and Lavin, 8,309 shares of common stock in the case of Mr. Adams, and 500 shares of common stock in the case of Messrs. Jefferson W. Kirby and Wong, issuable under stock options granted pursuant to the 2005 Directors’ Plan, 1993 Amended Directors’ Plan and the 2000 Directors’ Plan. In addition, includes 505 shares of restricted common stock granted to each of Messrs. Carmichael, Lavin, |
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Johnson, Will and Adams, and 250 shares of restricted common stock granted to each of Messrs. Jefferson W. Kirby and Wong, pursuant to the 2005 Directors’ Plan. | |
(3) | Includes 782 shares of common stock owned by Mr. Burns’s wife. Mr. Burns had no voting or investment power over these shares, and he disclaims beneficial ownership of them. |
(4) | Includes 240 shares of common stock owned by Mr. Carmichael’s wife. Mr. Carmichael had no voting or investment power over these shares, and he disclaims beneficial ownership of them. |
(5) | Includes 27,060 shares representing a restricted stock award and subsequent stock dividends in respect thereof, which are subject to Mr. Hicks’s continuing employment with Alleghany and the achievement of certain performance goals, but does not include any shares that may be paid pursuant to outstanding restricted stock units held by Mr. Hicks. |
(6) | Includes 126,605 shares of common stock held by a trust; such amount reflects Mr. Jefferson W. Kirby’s share of such trust as co-trustee and secondary beneficiary. As such shares are held by a trust of which his father Mr. F.M. Kirby is a co-trustee and primary beneficiary, such 126,605 shares are also included in the amounts set forth for Mr. F.M. Kirby on page 1. Mr. Jefferson W. Kirby granted a proxy to his father with respect to an additional 22,055 shares held by a trust of which Mr. Jefferson W. Kirby is beneficiary and co-trustee, and thus such additional 22,055 shares are included in the amounts set forth for Mr. F.M. Kirby on page 1. Mr. Jefferson W. Kirby held 56,081 shares directly. |
(7) | Includes 3,709 shares representing a restricted stock award and subsequent stock dividends in respect thereof, which are subject to Mr. Gorham’s continuing employment with Alleghany and the achievement of certain performance goals. |
(8) | Of this amount, 19,170 shares were pledged as of March 1, 2007. |
(9) | Includes a total of 1,022 shares of common stock over which certain of the persons listed had no voting or investment power, as discussed in Notes (3) and (4) above. |
(10) | Based on the number of shares of outstanding common stock as of March 1, 2007, adjusted to include shares of common stock issuable within 60 days upon exercise of stock options held by directors. |
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Nominee for Election: Allan P. Kirby, Jr. Age 75 Director since 1963 | President, Liberty Square, Inc. (investments); management of family and personal affairs.Chairman of the Executive Committee. |
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Nominee for Election: Thomas S. Johnson Age 66 Director since 1997 and for 1992-1993 | Retired Chairman and Chief Executive Officer, GreenPoint Financial Corp. and its subsidiary GreenPoint Bank (banking); director, R.R. Donnelley & Sons Company, The Phoenix Companies, Inc. and Federal Home Loan Mortgage Corporation. Member of the Executive and Nominating and Governance Committees. | |||
Nominee for Election: James F. Will Age 68 Director since 1992 | Vice Chancellor and President Emeritus, Saint Vincent College (education); Member of the Compensation and Nominating and Governance Committees. | |||
John J. Burns, Jr. Age 75 Director since 1968 Term expires in 2009 | Chairman of the Board, Alleghany Corporation.Member of the Executive Committee. | |||
Dan R. Carmichael Age 62 Director since 1993 Term expires in 2009 | President and Chief Executive Officer, Ohio Casualty Corporation (property and casualty insurance); director, Ohio Casualty Corporation and Platinum Underwriters Holdings, Ltd. Chairman of the Compensation Committee and member of the Audit Committee. | |||
William K. Lavin Age 62 Director since 1992 Term expires in 2009 | Financial Consultant; director and Chairman of the Board, American Home Food Products, Inc. Chairman of the Audit Committee and member of the Compensation Committee. |
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Raymond L.M. Wong Age 54 Director since 2006 Term expires in 2009 | Managing Member, DeFee Lee Pond Capital LLC (financial advisory and consulting services).Member of the Audit Committee. | |||
Jefferson W. Kirby Age 45 Director since 2006 Term expires in 2008 | Managing Member, Broadfield Capital Management, LLC (investment advisory services). | |||
Rex D. Adams Age 67 Director since 1999 Term expires in 2008 | Director and Chairman of the Board, AMVESCAP PLC (investment management); Dean Emeritus, Fuqua School of Business at Duke University; trustee, Committee for Economic Development and Woods Hole Oceanographic Institution. Chairman of the Nominating and Governance Committee and member of the Audit Committee. | |||
Weston M. Hicks Age 50 Director since 2004 Term expires in 2008 | President and chief executive officer, Alleghany Corporation; director, AllianceBernstein Corporation. Member of the Executive Committee. |
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Change in | ||||||||||||||||||||||||||||
Pension | ||||||||||||||||||||||||||||
Value and | ||||||||||||||||||||||||||||
Fees | Nonqualified | |||||||||||||||||||||||||||
Earned | Stock | Option | Non-Equity | Deferred | ||||||||||||||||||||||||
or Paid | Awards | Awards | Incentive Plan | Compensation | All Other | |||||||||||||||||||||||
Name | in Cash | (1) | (2) | Compensation | Earnings (3) | Compensation | Total | |||||||||||||||||||||
Rex D. Adams | $ | 60,000 | $ | 70,094 | $ | 62,874 | — | $ | 5,200 | — | $ | 198,168 | ||||||||||||||||
John J. Burns, Jr. | — | — | — | — | $ | 2,756,530 | (4) | $ | 2,756,530 | |||||||||||||||||||
Dan R. Carmichael | $ | 67,500 | $ | 70,094 | $ | 62,874 | — | $ | 6,181 | — | $ | 206,649 | ||||||||||||||||
Thomas S. Johnson | $ | 57,250 | $ | 70,094 | $ | 62,874 | — | $ | 6,567 | — | $ | 196,785 | ||||||||||||||||
Allan P. Kirby, Jr. | $ | 64,000 | $ | 70,094 | $ | 62,874 | — | $ | 8,011 | — | $ | 204,979 | ||||||||||||||||
F.M. Kirby | — | — | — | — | $ | 365,191 | (5) | $ | 365,191 | |||||||||||||||||||
Jefferson W. Kirby | $ | 36,000 | $ | 48,243 | $ | 12,365 | — | — | $ | 149,067 | (6) | $ | 245,675 | |||||||||||||||
William K. Lavin | $ | 79,000 | $ | 70,094 | $ | 62,874 | — | $ | 6,441 | — | $ | 218,409 | ||||||||||||||||
Roger Noall(7) | $ | 14,000 | — | — | — | $ | 9,482 | $ | 23,482 | |||||||||||||||||||
James F. Will | $ | 54,750 | $ | 70,094 | $ | 62,874 | — | $ | 9,461 | — | $ | 197,179 | ||||||||||||||||
Raymond L.M. Wong | $ | 43,500 | $ | 48,243 | $ | 12,365 | — | — | — | $ | 104,108 |
(1) | Represents the dollar amount recognized for financial statement reporting purposes for the year ended December 31, 2006 in accordance with Statement of Financial Accounting Standards No. 123R, “Share-based Payments,” or “SFAS 123R,” of restricted stock awards outstanding under the 2005 Directors’ Plan. See Note 10 to the consolidated financial statements of Alleghany contained in its Annual Report on Form 10-K for the year ended December 31, 2006 for assumptions underlying the valuation of stock-based awards. The full grant date fair value of the restricted stock award of 250 shares of common stock made to each non-employee director on May 1, 2006, computed in accordance with SFAS 123R, is $72,365. At December 31, 2006, each of Messrs. Adams, Carmichael, Johnson, Allan P. Kirby, Jr., Lavin and Will held 505 shares of restricted stock and each of Messrs Jefferson W. Kirby and Wong held 250 shares of restricted stock. |
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(2) | Represents the dollar amount recognized for financial statement reporting purposes for the year ended December 31, 2006 in accordance with SFAS 123R of options outstanding. See Note 10 to the consolidated financial statements of Alleghany’s contained in its Annual Report on Form 10-K for the year ended December 31, 2006 for assumptions underlying valuation of stock-based awards. The full grant date fair value of the option award for 500 shares of common stock made to each non-employee director on May 1, 2006, computed in accordance with SFAS 123R is $55,644. At December 31, 2006, the aggregate number of option awards outstanding was 12,153 for each of Messrs Carmichael, Johnson, Allan P. Kirby, Jr., Lavin and Will, 8,309 for Mr. Adams, and 500 for each of Messrs. Jefferson W. Kirby and Wong. |
(3) | Reflects change in pension value. |
(4) | Reflects a payout in February 2006 under the 2002 LTIP of $2,295,844 for the award period 2002-2005; salary of $370,000, a savings benefit of $55,500 credited pursuant to Alleghany’s Deferred Compensation Plan; a benefit, valued at $20,848, of life insurance maintained by Alleghany on behalf of Mr. Burns; and $14,338 representing payments for reimbursement of taxes and the reimbursement itself. Additional information regarding such amounts can be found on page 23 in the narrative accompanying this table. |
(5) | Reflects $270,846 in salary; a savings benefit of $40,627 credited pursuant to Alleghany’s Deferred Compensation Plan; a benefit, valued at $30,442, of life insurance maintained by Alleghany on behalf of Mr. Kirby; and $23,276 representing payments for reimbursement of taxes and the reimbursement itself. As an employee of Alleghany, Mr. Kirby did not receive any director fees for his service as Chairman during 2006. Additional information regarding such amounts can be found on page 24 in the narrative accompanying this table. |
(6) | Reflects Alleghany’s portion of management fees paid by Broadfield Capital in 2006 to Broadfield Management, of which Mr. Jefferson W. Kirby is the managing member. Alleghany was a limited partner in Broadfield Capital in 2006. Additional information is set forth on pages 8 and 9. |
(7) | Mr. Noall retired from the Board in April 2006 in accordance with Alleghany’s retirement policy. |
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• | a stock option to purchase 500 shares of Alleghany common stock, subject to anti-dilution adjustments, at an exercise price equal to the fair market value on the date of grant; and | |
• | 250 shares of common stock which are subject to potential forfeiture until the first Annual Meeting of Stockholders following the date of grant, and restrictions upon transfer until the third anniversary of the date of grant. |
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• | no future non-employee director was eligible to participate, | |
• | the director’s service after December 31, 2004 was no longer included in measuring the period the director’s annual retirement benefit would be payable, and | |
• | for directors who retire after December 31, 2004, the annual retirement benefit is limited to $30,000, which was the annual retainer at December 31, 2004. |
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Name | Lump-Sum Payout | |||
Rex D. Adams | $ | 103,697 | ||
Dan. R. Carmichael | $ | 128,210 | ||
Thomas S. Johnson | $ | 132,493 | ||
Allan P. Kirby, Jr. | $ | 161,417 | ||
William K. Lavin | $ | 133,853 | ||
Roger Noall | $ | 185,271 | ||
James R. Will | $ | 190,274 |
• | no longer receives any employee benefits apart from life insurance death benefits available to all retired Alleghany officers under its insurance plan, | |
• | received a payout on February 27, 2007 of 11,752 shares of common stock and $3,062,842.50 in settlement of all of the outstanding performance shares awarded to him under the 2002 LTIP in accordance with their terms, and | |
• | will receive a payout of approximately $306,500 representing all of the savings benefits which he had accrued under Alleghany’s Deferred Compensation Plan. |
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• | cash and/or shares of common stock, | |
• | stock appreciation rights, | |
• | options to purchase shares of common stock, including options intended to qualify as incentive stock options under Section 422 of the Internal Revenue Code of 1986, as amended, or the “Code”, and | |
• | options not intended so to qualify. |
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• | revenues, | |
• | operating income, | |
• | cash flow, | |
• | management of expenses, | |
• | loss reserves and loss adjustment expense reserves, | |
• | underwriting expenses, | |
• | income before income taxes, | |
• | net income, | |
• | earnings per share, | |
• | net worth, | |
• | stockholders’ equity, | |
• | return on equity or assets or | |
• | total return to stockholders, |
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• | increase the number of shares of common stock subject to the 2007 LTIP, | |
• | extend the period during which awards may be granted, | |
• | increase the maximum term for which stock options may be issued under the 2007 LTIP, | |
• | decrease the minimum price at which stock options may be issued under the 2007 LTIP, or | |
• | materially modify the requirements for eligibility to participate in the 2007 LTIP. |
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Grant Date | ||||||||
Fair | Number of | |||||||
Name | Value(1) | Units (2) | ||||||
Weston M. Hicks | $ | 2,338,807 | 8,531 | |||||
Roger B. Gorham | $ | 859,523 | 3,135 | |||||
Robert M. Hart | $ | 894,480 | 3,263 | |||||
James P. Slattery | $ | 789,610 | 2,880 | |||||
Jerry G. Borrelli | $ | 257,278 | 929 | |||||
Executive officers as a group | $ | 5,139,698 | 18,738 | |||||
Non-executive officer directors as a group | — | — | ||||||
Non-executive officer employees as a group | $ | 1,242,813 | 4,533 |
(1) | These amounts reflect the SFAS 123R value of performance share awards made in 2006 under the 2002 LTIP, as adjusted for dividends, assuming payouts at maximum. |
(2) | Reflects gross amount of performance shares payable, assuming payouts at maximum, in connection with awards of performance shares made in January and February 2006 under |
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the 2002 LTIP. Additional information regarding these awards is set forth on pages 46 and 47. |
(c) | ||||||||||||
Number of | ||||||||||||
(a) | Securities Remaining | |||||||||||
Number of | (b) | Available for Future | ||||||||||
Securities to be | Weighted-Average | Issuance Under | ||||||||||
Issued Upon Exercise | Exercise Price | Equity Compensation | ||||||||||
of Outstanding | of Outstanding | Plans (Excluding | ||||||||||
Options, Warrants | Options, Warrants | Securities Reflected | ||||||||||
Plan category | and Rights | and Rights | in Column (a)) | |||||||||
Equity compensation plans approved by security holders(1) | 74,150 | (2) | $ | 178.15 | 39,645 | (3) | ||||||
Equity compensation plans not approved by security holders(4) | 8,863 | $ | 158.11 | — | ||||||||
Total | 83,013 | 39,645 | (3) | |||||||||
(1) | These plans consist of: (i) the 1993 Amended Directors’ Plan, (ii) the 2000 Directors’ Plan, (iii) the 2005 Directors’ Plan, and (iv) the 2002 LTIP. |
(2) | This amount represents options to purchase 74,150 shares of common stock in the aggregate (subject to antidilution adjustments) outstanding under the 1993 Amended Directors’ Plan, the 2000 Directors’ Plan and the 2005 Directors’ Plan. This amount does not include shares of common stock issuable in respect of 87,192 performance shares outstanding under the 2002 LTIP, (which at maximum payout would be 130,788 shares of common stock) because performance shares do not have an exercise price as their value is dependent upon the achievement of certain performance goals over a period of time. Performance shares payouts are generally made in cash to the extent of minimum statutory withholding requirements in respect of an award, with the balance in common stock. This amount also does not include 21,224 restricted stock units granted to Mr. Hicks on August 25, 2003 pursuant to a restricted stock unit matching grant agreement, the terms of which are set forth on pages 58 and 59. These restricted stock units, which vest on October 7, 2012, are notional units of |
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measurement denominated in shares of common stock and entitle Mr. Hicks to payment on account of such restricted stock units on the payment date of a number of shares of common stock equal to the number of restricted stock units to which Mr. Hicks is entitled to payment. Such amounts are to be paid in cash and/or shares of common stock, as the Compensation Committee may determine, on the date of the filing of Alleghany’s Annual Report on Form 10-K in respect of the year in which Mr. Hicks’s employment is terminated for any reason. | |
(3) | This amount does not include 577,026 shares of common stock that remained available for issuance under the 2002 LTIP upon its termination on December 31, 2006, since no further common stock awards may be made thereunder. As of December 31, 2006, no shares of common stock remained available for future option grants under the 1993 Amended Directors’ Plan or the 2000 Directors’ Plan. Under the 2005 Directors’ Plan, a maximum of 50,000 shares of common stock may be issued to non-employee directors and/or purchased pursuant to stock options granted thereunder, subject to antidilution and other adjustments in certain events specified in the 2005 Directors’ Plan. |
(4) | These plans consist of: (i) the Subsidiary Directors’ Stock Option Plan, or the “Subsidiary Option Plan” and (ii) the Underwriters Re Group, Inc. 1997 Stock Option Plan, or the “URG 1997 Plan.” Under the Subsidiary Option Plan, which was adopted on July 21, 1998, the Compensation Committee selected non-employee directors of our subsidiaries to receive grants of nonqualified stock options. Not more than 25,000 shares of common stock (subject to adjustment by reason of any stock split, stock dividend or other similar event) will be issued pursuant to options granted under the Subsidiary Option Plan. As of December 31, 2006, options to purchase 5,767 shares of common stock (subject to adjustment by reason of any stock split, stock dividend or other similar event) were outstanding. The Subsidiary Option Plan expired on July 31, 2003 and therefore no shares of common stock remain available thereunder for future grants. Each option has a term of 10 years from the date it is granted. One-third of the total number of shares of common stock covered by each option becomes exercisable each year beginning with the first anniversary of the date it is granted; however, an option automatically becomes exercisable in full when the non-employee subsidiary director ceases to be a non-employee subsidiary director for any reason other than death. If an optionholder dies while holding options that have not been fully exercised, his or her executors, administrators, heirs or distributees, as the case may be, may exercise those options which the decedent could have exercised at the time of death within one year after the date of death. Under the URG 1997 Plan, which was adopted on September 17, 1997, options were granted to certain |
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members of URG management in exchange for options to purchase shares of URG. As of December 31, 2006, options to purchase 3,096 shares of common stock (subject to adjustment by reason of any stock split, stock dividend or other similar event) were outstanding, and no shares of common stock remained available for future option grants under the URG 1997 Plan. Under the URG 1997 Plan, options expire if they are not exercised prior to the earliest of (i) the tenth anniversary of the date of grant of the original warrant or option, (ii) three months after termination of the optionee’s employment for any reason except death or a permanent disability, or (iii) one year after termination of the optionee’s employment by reason of death or permanent disability. |
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2006 | 2005 | |||||||
Audit Fees | $ | 2,528,503 | $ | 2,652,247 | ||||
Audit-Related Fees | 656,200 | 20,000 | ||||||
Tax Fees | — | 15,000 | ||||||
All Other Fees | 1,500 | 1,500 | ||||||
Total | $ | 3,177,718 | $ | 2,602,500 |
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William K. Lavin | |
Rex D. Adams | |
Dan R. Carmichael | |
Raymond L.M. Wong | |
Audit Committee | |
of the Board of Directors |
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Business Experience During | ||||||||
Name | Age | Current Position (date elected) | Last 5 Years | |||||
Weston M. Hicks | 50 | President, chief executive officer (since December 2004) | Executive Vice President, Alleghany (from October 2002 to December 2004); Executive Vice President and Chief Financial Officer, The Chubb Corporation (property and casualty insurance) (from June 2001 to October 2002); Chief Financial Officer, The Chubb Corporation (from May 2001 to October 2002); Senior Vice President and Financial Assistant to the Chairman, The Chubb Corporation (March 2001 to May 2001). |
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Business Experience During | ||||||||
Name | Age | Current Position (date elected) | Last 5 Years | |||||
Roger B. Gorham | 44 | Senior Vice President — Finance and Investments and chief financial officer (since January 2006) | Senior Vice President — Finance and chief financial officer (from May 2005 to January 2006); Senior Vice President — Finance, Alleghany (from December 2004 to May 2005); provider of hedge fund consulting services (from December 2003 to December 2004); Senior Vice President and Chief Financial Officer, Chubb Financial Solutions (property and casualty insurance) (July 2000 to July 2003). | |||||
Robert M. Hart | 62 | Senior Vice President, General Counsel (since 1994) and Secretary (since 1995) | Senior Vice President, General Counsel and Secretary, Alleghany. | |||||
James P. Slattery | 55 | Senior Vice President — Insurance (since 2002) | Senior Vice President — Insurance, Alleghany; President, JPS & Co., LLC (insurance consulting) (from April 2001). | |||||
Jerry G. Borrelli | 41 | Vice President — Finance, chief accounting officer (since July 2006) | Vice President — Finance, Alleghany (from February 2006); Director of Financial Reporting, American International Group, Inc. (insurance) (from June 2003); Director of Accounting Policy and Special Projects, American International Group, Inc. (from December 1999). |
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Dan R. Carmichael | |
William K. Lavin | |
James F. Will | |
Compensation Committee | |
of the Board of Directors |
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• | 90.6% for Mr. Hicks, | |
• | 63.6% for Mr. Gorham | |
• | 68.0% for Messrs. Hart and Slattery and | |
• | 41.4% for Mr. Borrelli. |
• | Salaries | |
• | Annual cash incentive compensation | |
• | Annual grants of long-term equity based incentives | |
• | Retirement benefits | |
• | Savings benefits under our Deferred Compensation Plan |
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• | “Target Plan Earnings Per Share” means earnings per share of our common stock as set forth in the strategic plan approved by our Board for the relevant year, less the amount of RSUI catastrophe losses reflected in such plan. | |
• | “Adjusted Earnings Per Share” means the earnings per share as reported in our audited financial statements for the relevant year less RSUI catastrophe losses and realized gains and losses on strategic investments in that year as reflected in our financial statements and adjusted for any stock dividends paid during the year. |
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• | maximum payouts will be made only if average annual compound growth in our Book Value Per Share (as defined by the Compensation Committee pursuant to the 2002 LTIP) equals or exceeds 10.5 percent as measured from a specified base of $231.72 per share, as adjusted for stock dividends (determined by reference to the estimated book value for year-end 2005) in the 2006-2009 award period, | |
• | target payouts will be made at 100 percent if such growth equals 7%, |
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• | no payouts will be made if such growth is less than 3.5%; and | |
• | payouts for growth between 3.5% and 10.5% will be determined by straight line interpolation. |
Performance | Grant Date | |||||||
Name | Shares Awarded (#) | Fair Value | ||||||
Weston M. Hicks | 5,807 | $ | 2,075,422 | |||||
Roger B. Gorham | 1,777 | $ | 635,100 | |||||
Robert M. Hart | 1,846 | $ | 659,760 | |||||
James P. Slattery | 1,637 | $ | 585,064 | |||||
Jerry G. Borrelli | 557 | $ | 199,072 |
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Payments under | ||||||||||||||||||||||||||||||||
Severance | Restricted Stock and | Post- | ||||||||||||||||||||||||||||||
under | Restricted Stock Unit | Deferred | retirement | |||||||||||||||||||||||||||||
Employment | Matching Grant Award | 2002 LTIP | 2005 MIP | Retirement | Compensation | Medical | ||||||||||||||||||||||||||
Agreement | Agreements (2) | (3) | (4) | Plan (5) | Plan (6) | Plan (7) | Total | |||||||||||||||||||||||||
Weston M. Hicks | $ | 1,000,000 | (1) | $ | 19,491,700 | $ | 6,888,000 | $ | 1,200,000 | — | $ | 481,668 | — | $ | 29,061,368 | |||||||||||||||||
Roger B. Gorham | — | $ | 672,293 | $ | 1,664,500 | $ | 441,000 | — | $ | 141,469 | — | $ | 2,919,262 | |||||||||||||||||||
Robert M. Hart | — | — | $ | 4,046,747 | $ | 459,000 | $ | 1,581,838 | $ | 954,157 | $ | 161,650 | $ | 7,203,392 | ||||||||||||||||||
James P. Slattery | — | — | $ | 3,562,037 | $ | 405,000 | $ | 2,069,004 | $ | 356,108 | $ | 154,986 | $ | 6,547,135 | ||||||||||||||||||
Jerry G. Borrelli | — | — | $ | 376,172 | $ | 174,000 | — | $ | 37,902 | — | $ | 588,074 |
(1) | This amount would be paid by Alleghany in the form of continued payments of base salary. |
(2) | Reflects a one-time payment by Alleghany of award amounts payable to Mr. Hicks under his 2002 and 2004 restricted stock agreements and his 2002 restricted stock unit agreement and to Mr. Gorham under his 2004 restricted stock agreement based on the elapsed portion of the award period prior to termination and average annual compound growth in Book Value Per Share through the date of termination, assuming that the Compensation Committee has exercised its discretion to make such payments in accordance with the terms of the restricted stock and restricted stock unit matching agreements. The terms of these agreements are described on pages 58 through 60. With respect to the amount reflected for Mr. Hicks, $12,748,965 million reflects amounts paid to Mr. Hicks in February 2007 upon the vesting of his 2002 restricted stock award. |
(3) | Reflects a one-time payment by Alleghany of all outstanding LTIP awards, including amounts paid in February 2007 for the award period ending December 31, 2006, based on the elapsed portion of the award period prior to termination and average annual compound growth in Book Value Per Share through the date of termination, in accordance with the terms of the awards. |
(4) | Reflects a one-time payment by Alleghany of annual incentive earned in respect of 2006 under the 2005 MIP, subject to downward adjustment in the discretion of the Compensation Committee. These amounts, earned in respect of 2006 performance, were paid to the Named Executive Officers in February 2007 and are reported in the Summary Compensation Table on page 54. |
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(5) | Reflects a lump sum payment by Alleghany of vested pension benefits, computed as of December 31, 2006, under the Retirement Plan to Messrs. Hart and Slattery. No other Named Executive Officer was vested in the Retirement Plan as of December 31, 2006. The determination of these pension benefits are described in more detail on pages 65 through 68. Does not include retiree life insurance death benefit, equal to the annual salary of a participant at the date of retirement, payable to Messrs. Hart and Slattery. No other Named Executive Officer was vested in such retiree life insurance death benefit as of December 31, 2006. |
(6) | Reflects a one-time payment by Alleghany of the aggregate vested account balance at December 31, 2006 of the Named Executive Officer’s savings benefit under the Deferred Compensation Plan. |
(7) | Reflects accumulated accrued benefit under our Post-Retirement Medical Plan for Messrs. Hart and Slattery. No other Named Executive Officer was eligible to receive benefits under this plan at such date. Under the Post-Retirement Medical Plan, Alleghany would pay two-thirds of coverage premium and the Named Executive Officer would pay one-third of the coverage premium. Alleghany may terminate the Post-Retirement Medical Plan at any time. |
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Change in Pension | |||||||||||||||||||||||||||||||
Value and | |||||||||||||||||||||||||||||||
Non-Equity | Nonqualified | ||||||||||||||||||||||||||||||
Incentive Plan | Deferred | All Other | |||||||||||||||||||||||||||||
Name and | Stock | Compensation | Compensation | Compen- | |||||||||||||||||||||||||||
Principal Position | Year | Salary | Bonus | Awards(1) | (2) | Earnings(3) | sation(4) | Total | |||||||||||||||||||||||
Weston M. Hicks, | 2006 | $ | 800,000 | — | $ | 6,527,614 | $ | 1,200,000 | $ | 856,009 | $ | 150,995 | $9,534,618 | ||||||||||||||||||
President and chief executive officer | |||||||||||||||||||||||||||||||
Roger B. Gorham, | 2006 | $ | 490,000 | — | $ | 781,053 | $ | 441,000 | $ | 173,622 | $ | 93,997 | $1,979,672 | ||||||||||||||||||
Senior Vice President-Finance and Investments and chief financial officer | |||||||||||||||||||||||||||||||
Robert M. Hart, | 2006 | $ | 510,000 | — | $ | 1,052,687 | $ | 459,000 | $ | 1,006,955 | $ | 103,875 | $3,132,517 | ||||||||||||||||||
Senior Vice President, General Counsel and Secretary | |||||||||||||||||||||||||||||||
James P. Slattery, | 2006 | $ | 450,000 | — | $ | 927,032 | $ | 405,000 | $ | 393,476 | $ | 86,343 | $2,261,851 | ||||||||||||||||||
Senior Vice President-Insurance | |||||||||||||||||||||||||||||||
Jerry G. Borrelli, | 2006 | $ | 262,538 | (5) | $ | 100,000 | (6) | $ | 234,247 | $ | 174,000 | $ | 64,190 | $ | 53,450 | $888,425 | |||||||||||||||
Vice President and chief accounting officer |
(1) | Represents the dollar amount recognized for financial statement reporting purposes for the year ended December 31, 2006, in accordance with SFAS 123R, of (i) all performance shares awarded to such Named Executive Officers under the 2002 LTIP and outstanding during 2006, and (ii) for Messrs. Hicks and Gorham, outstanding restricted stock and stock unit awards. See Note 10 to the consolidated financial statements of Alleghany contained in its Annual Report on Form 10-K for the year ended December 31, 2006 for assumptions underlying the valuation of stock-based awards. Amounts in this column for Mr. Borrelli reflect the award of additional performance shares in connection with his commencement of employment with Alleghany in February 2006 as described in more detail in Note 4 to the Grants of Plan-Based Awards table on pages 56 and 57. |
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(2) | Represents cash incentive earned in respect of 2006 pursuant to an award under the 2005 MIP. |
(3) | Reflects change in pension value. Of such amounts, $244,420 for Mr. Hicks and $505,117 for Mr. Hart resulted from amendments to Alleghany’s Retirement Plan as described on page 67. For Messrs. Gorham, Slattery and Borrelli, the amendments resulted in a decrease which partially offset their respective change in pension value during 2006. |
(4) | Reflects the following items: |
• | Post-retirement medical plan: $17,436 for Mr. Hicks, $11,028 for Mr. Gorham, $8,613 for Mr. Hart, $6,162 for Mr. Slattery and $8,431 for Mr. Borrelli, representing the change in Post-Retirement Medical Plan benefit value during 2006. | |
• | Tax reimbursement: Payments of $5,763 to Mr. Hicks, $4,131 to Mr. Gorham, $8,024 to Mr. Hart, $5,763 to Mr. Slattery and $3,167 to Mr. Borrelli, representing the reimbursement of taxes, and the reimbursement itself, on income imputed to them pursuant to Alleghany’s long-term disability and group term life insurance policies. | |
• | Life insurance: Payments of $7,796 to Mr. Hicks, $5,588 to Mr. Gorham, $10,854 to Mr. Hart, $7,026 to Mr. Slattery and $4,284 to Mr. Borrelli which are equal to the dollar value of the insurance premiums paid by Alleghany for the benefit of such individuals for life insurance maintained by Alleghany on their behalf. The life insurance policies provide a death benefit to each such officer if he is an employee at the time of his death equal to four times the amount of his annual salary at January 1 of the year of his death. | |
• | Savings benefits: Savings benefits of $120,000 for Mr. Hicks, $73,250 for Mr. Gorham, $76,384 for Mr. Hart, $67,392 for Mr. Slattery and $37,568 for Mr. Borrelli, credited by Alleghany to each of them pursuant to the Deferred Compensation Plan. The method for calculating earnings on the savings benefit amounts under the Deferred Compensation Plan are set out on pages 68 to 70 in the narrative accompanying the “Nonqualified Deferred Compensation” table. |
(5) | Represents pro rata portion of 2006 annual base salary of $290,000, reflecting Mr. Borrelli’s commencement of employment with Alleghany in February 2006. |
(6) | Represents a bonus paid to Mr. Borrelli upon the commencement of his employment with Alleghany in February 2006. |
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All Other | ||||||||||||||||||||||||||||||||||
Stock | ||||||||||||||||||||||||||||||||||
Awards: | ||||||||||||||||||||||||||||||||||
Number of | Grant Date | |||||||||||||||||||||||||||||||||
Estimated Possible Payouts Under | Estimated Future Payouts | Shares of | Fair Value | |||||||||||||||||||||||||||||||
Non-Equity Incentive | Under Equity Incentive | Stock or | of Stock | |||||||||||||||||||||||||||||||
Name | Grant Date | Plan Awards(1) | Plan Awards(2) | Units (#) | Awards(3) | |||||||||||||||||||||||||||||
Threshold | Target | Maximum | Threshold | Target | Maximum | |||||||||||||||||||||||||||||
($) | ($) | ($) | (#) | (#) | (#) | |||||||||||||||||||||||||||||
Weston M. Hicks | Jan. 17, 2006 | $ | 40,000 | $ | 800,000 | $ | 1,200,000 | 1,706 | 5,687 | 8,531 | — | $ | 2,338,807 | |||||||||||||||||||||
Roger B. Gorham | Jan. 17, 2006 | $ | 14,700 | $ | 294,000 | $ | 441,000 | 627 | 2,090 | 3,135 | — | $ | 859,523 | |||||||||||||||||||||
Robert M. Hart | Jan. 17, 2006 | $ | 15,300 | $ | 306,000 | $ | 459,000 | 640 | 2,175 | 3,263 | — | $ | 894,480 | |||||||||||||||||||||
James P. Slattery | Jan. 17, 2006 | $ | 13,500 | $ | 270,000 | $ | 405,000 | 565 | 1,920 | 2,880 | — | $ | 789,610 | |||||||||||||||||||||
Jerry G. Borrelli(4) | Feb. 27, 2006 | $ | 5,800 | $ | 116,000 | $ | 174,000 | 185 | 619 | 929 | — | $ | 257,278 | |||||||||||||||||||||
Feb. 27, 2006 | — | — | 160 | 356 | 534 | — | $ | 147,966 | ||||||||||||||||||||||||||
Feb. 27, 2006 | — | — | 112 | 267 | 401 | — | $ | 110,975 | ||||||||||||||||||||||||||
Feb. 27, 2006 | — | — | 75 | 179 | 269 | — | $ | 74,399 |
(1) | Reflects awards made in January and February 2006 pursuant to the 2005 MIP. Threshold amounts reflect estimated possible payout if Adjusted Earnings Per Share equal 81 percent of Target Plan Earnings Per Share and maximum amounts reflect estimated possible payout if Adjusted Earnings Per Share equal 110 percent of Target Plan Earnings Per Share. Does not reflect awards made in December 2006 pursuant to the 2005 MIP which are described on page 46. |
(2) | Reflects gross amount of performance shares payable in connection with awards of performance shares made in January and February 2006 for the 2006-2009 award period under the 2002 LTIP. Threshold amounts reflect estimated future payout of performance shares if average annual compound growth in Book Value Per Share equals 3.6% in the award period; target amounts reflect estimated future payout of performance shares if average annual compound growth in Book Value Per Share equals 7 percent in the 2006-2009 award period; and Maximum amounts reflect estimated future payout of performance shares if average annual compound growth in Book Value Per Share equals or exceeds 10.5 percent in the 2006-2009 award period. Does not reflect awards for the 2007-2010 award period which were made in December 2006 pursuant to the 2002 LTIP and are described on page 47. |
(3) | Reflects 2006 SFAS 123R value of performance share awards made in 2006 under the 2002 LTIP, as adjusted for dividends, assuming payouts at maximum. |
(4) | Amounts reflect performance share awards made to Mr. Borrelli under the 2002 LTIP in connection with his commencement of employment at Alleghany in February 2006 as follows: (i) 619 performance shares for the four-year award period ending December 31, 2009, (ii) 356 performance shares for the three-year award period |
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ending December 31, 2008, (iii) 267 performance shares for the two-year award period ending December 31, 2007, and (iv) 179 performance shares for the one-year award period ending December 31, 2006. |
• | Mr. Hicks’s salary is to be reviewed annually. | |
• | If Mr. Hicks’s employment is terminated by Alleghany other than for “Cause” or other than in the case of his “Total Disability,” Alleghany will continue to pay his base salary after such termination until such payments aggregate $1,000,000 on a gross basis. “Cause” is defined as conviction of a felony; willful failure to implement reasonable directives of the Chairman or the Board of Directors of Alleghany after written notice, which failure is not corrected within ten days following notice thereof; or gross misconduct in connection with the performance of any of your duties; and “Total Disability” is defined as Mr. Hicks’s inability to discharge his duties due to physical or mental illness or accident for one or more periods totaling six months during any consecutive twelve-month period. | |
• | Mr. Hicks and Alleghany entered into a restricted stock award agreement dated as of October 7, 2002, whereby Mr. Hicks received an award of 32,473 performance-based, restricted shares of common stock (which includes shares received in subsequent stock dividends which are similarly restricted) under the 2002 LTIP. Material terms of the restricted stock agreement are discussed below. On February 27, 2007, the Compensation Committee determined that the performance measure for such award had been achieved and as a result, the restricted stock award of 32,473 shares have vested. | |
• | Mr. Hicks and Alleghany entered into a restricted stock unit matching grant agreement dated as of October 7, 2002, whereby Mr. Hicks received a restricted stock unit matching grant under the 2002 LTIP of two restricted stock units for every share of common stock Mr. Hicks purchased or received pursuant to stock dividends on those purchased shares on or before September 30, 2003 up to a maximum of 30,000 restricted stock units in respect of up to a maximum of 15,000 purchased shares. Material terms of this matching grant agreement are discussed below. |
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• | Mr. Hicks received a second grant of 27,060 performance-based, restricted shares of common stock (which includes shares received in subsequent stock dividends which are similarly restricted) under the 2002 LTIP upon his election as chief executive officer of Alleghany which has comparable terms and conditions as the 2002 grant of restricted shares, except that performance measurement periods commenced at the time Mr. Hicks became chief executive officer of Alleghany in December 2004. Material terms of this restricted stock agreement are discussed below. |
(i) if Alleghany achieves average annual compound growth in Stockholders’ Equity Per Share (as defined in the award agreement) equal to 10 percent or more as measured over a calendar year period commencing January 1, 2003 and ending on December 31, 2006, 2007, 2008 or 2009, or | |
(ii) if the performance goal set forth in clause (i) above has not been achieved as of December 31, 2009, when Alleghany achieves average annual compound growth in Stockholders’ Equity Per share equal to 7 percent or more as measured over a calendar year period commencing January 1, 2003 and ending on December 31, 2010, 2011 or 2012. |
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(i) if Alleghany achieves average annual compound growth in Stockholders’ Equity Per Share (as defined in the award agreement) equal to 10 percent or more as measured over a calendar year period commencing January 1, 2005 and ending on December 31, 2008, 2009, 2010 or 2011, or | |
(ii) if the performance goal set forth in clause (i) above has not been achieved as of December 31, 2011, when Alleghany achieves average annual compound growth in Stockholders’ Equity Per share equal to 7 percent or more as measured over a calendar year period commencing January 1, 2005 and ending on December 31, 2012, 2013 or 2014. |
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• | 1,686 performance shares, as adjusted for stock dividends, for the four-year award period ending December 31, 2008, which entitle him to a payout of cash and/or common stock up to a maximum amount equal to the value of one and one-half shares of common stock on the payout date for each performance share awarded; | |
• | 1,264 performance shares, as adjusted for stock dividends, for the three-year award period ending December 31, 2007, which entitle him to a payout of cash and/or common stock up to a maximum amount equal to the value of one share of common stock on the payout date for each performance share awarded; and | |
• | 843 performance shares, as adjusted for stock dividends, for the two-year award period ending December 31, 2006, which entitle him to a payout of cash and/or common stock up to a maximum amount equal to the value of one share of common stock on the payout date for each performance share awarded. |
• | 619 performance shares, as adjusted for stock dividends, for the four-year award period ending December 31, 2009, which entitle him to a payout of cash and/or common stock up to a maximum amount equal to the value of one and one-half shares of common stock on the payout date for each performance share awarded; | |
• | 356 performance shares, as adjusted for stock dividends, for the three-year award period ending December 31, 2008, which entitle him to a payout of cash and/or common stock up to a maximum amount equal to the value of one share of common stock on the payout date for each performance share awarded; | |
• | 267 performance shares, as adjusted for stock dividends, for the two-year award period ending December 31, 2007, which entitle him to a payout of cash and/or common stock up to a maximum amount equal to the value of one share of common stock on the payout date for each performance share awarded; and | |
• | 179 performance shares, as adjusted for stock dividends, for the one-year award period ending December 31, 2006, which entitle him to a payout of cash and/or |
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common stock up to a maximum amount equal to the value of one share of common stock on the payout date for each performance share awarded. |
Stock Awards | ||||||||||||||||
Equity Incentive Plan | ||||||||||||||||
Equity Incentive Plan | Awards: Market or | |||||||||||||||
Number of | Market Value of | Awards: Number of | Payout Value of | |||||||||||||
Shares or Units | Shares or Units | Unearned Shares, | Unearned Shares, | |||||||||||||
of Stock That | of Stock That | Units or Other Rights | Units or Other Rights | |||||||||||||
Have Not | Have Not | That Have Not | That Have Not | |||||||||||||
Name | Vested (#) | Vested ($) | Vested (#) | Vested ($) | ||||||||||||
Weston M. Hicks | — | — | 8,277 | (1) | $ | 3,009,517 | ||||||||||
— | — | 8,075 | (2) | $ | 2,935,888 | |||||||||||
— | — | 6,599 | (3) | $ | 2,399,215 | |||||||||||
— | — | 8,531 | (4) | $ | 3,101,690 | |||||||||||
— | — | 32,473 | (5) | $ | 11,807,183 | |||||||||||
— | — | 27,061 | (6) | $ | 9,389,380 | |||||||||||
21,224 | (7) | $ | 7,717,046 | |||||||||||||
Roger B. Gorham | — | — | 1,265 | (1) | $ | 459,772 | ||||||||||
— | — | 1,896 | (2) | $ | 689,386 | |||||||||||
— | — | 2,529 | (3) | $ | 919,544 | |||||||||||
— | — | 3,135 | (4) | $ | 1,139,886 | |||||||||||
— | — | 3,709 | (8) | $ | 1,348,592 | |||||||||||
Robert M. Hart | — | — | 5,394 | (1) | $ | 1,961,258 | ||||||||||
— | — | 4,878 | (2) | $ | 1,773,641 | |||||||||||
— | — | 3,555 | (3) | $ | 1,292,598 | |||||||||||
— | — | 3,263 | (4) | $ | 1,186,245 | |||||||||||
James P. Slattery | — | — | 4,748 | (1) | $ | 1,726,191 | ||||||||||
— | — | 4,292 | (2) | $ | 1,560,389 | |||||||||||
— | — | 3,129 | (3) | $ | 1,137,704 | |||||||||||
— | — | 2,880 | (4) | $ | 1,047,168 | |||||||||||
Jerry G. Borrelli | — | — | 269 | (1) | $ | 97,627 | ||||||||||
— | — | 401 | (2) | $ | 145,622 | |||||||||||
— | — | 534 | (3) | $ | 194,162 | |||||||||||
— | — | 929 | (4) | $ | 337,603 |
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(1) | Performance shares under the 2002 LTIP, calculated at maximum pursuant to SEC requirements, which vest after completion of the award period ending December 31, 2006. |
(2) | Performance shares under the 2002 LTIP, calculated at maximum pursuant to SEC requirements, which vest after completion of the award period ending December 31, 2007. |
(3) | Performance shares under the 2002 LTIP, calculated at maximum pursuant to SEC requirements, which vest after completion of the award period ending December 31, 2008. |
(4) | Performance shares under the 2002 LTIP, calculated at maximum pursuant to SEC requirements, which vest after completion of the award period ending December 31, 2009. |
(5) | Restricted stock award under the 2002 LTIP which vests after achievement of average annual compound growth in Stockholders’ Equity Per Share equal to 10 percent or more over a calendar year period commencing on January 1, 2003 and ending on December 31, 2006, 2007, 2008 or 2009. This restricted stock award was paid in February 2007. |
(6) | Restricted stock award under the 2002 LTIP which vests (i) after achievement of average annual compound growth in Stockholders’ Equity Per Share equal to 10 percent or more over a calendar year period commencing on January 1, 2005 and ending on December 31, 2008, 2009, 2010 or 2011 or (ii) if such performance goal has not been achieved as of December 31, 2011, after achievement of average annual compound growth in Stockholders’ Equity Per Share equal to 7 percent or more as measured over a calendar year period commencing on January 1, 2005 and ending on December 31, 2012, 2013 or 2014. If the performance goals are not achieved as of December 31, 2014, all of the restricted stock will be forfeited. If Alleghany terminates Mr. Hicks’s employment after December 31, 2006 other than for Cause or Total Disability, and the 7 percent performance goal has been satisfied in all respects except for the passage of the period of time required under the new award agreement, that number of restricted shares equal to 27,060 multiplied by a fraction, the numerator of which is the number of full calendar years beginning January 1, 2005 and ending on or before the date of such termination, and the denominator of which is ten, will vest. |
(7) | Restricted stock units under the 2002 LTIP vest on October 7, 2012. As further described on pages 58 and 59, if Mr. Hicks is terminated without Cause or by reason of his death or Total Disability prior to October 7, 2012, a pro rata portion of the |
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restricted stock units credited to him shall vest and become nonforfeitable on the basis of 10 percent of such account for each full year of employment with Alleghany measured from October 7, 2002. | |
(8) | Restricted stock award under the 2002 LTIP which vests (i) after achievement of average annual compound growth in Stockholders’ Equity Per Share equal to 10 percent or more over a calendar year period commencing on January 1, 2005 and ending on December 31, 2008, 2009, 2010 or 2011 or (ii) if such performance goal has not been achieved as of December 31, 2011, after achievement of average annual compound growth in Stockholders’ Equity Per Share equal to 7 percent or more as measured over a calendar year period commencing on January 1, 2005 and ending on December 31, 2012, 2013 or 2014. If Alleghany terminates Mr. Gorham’s employment after December 31, 2006 other than for Cause or Total Disability, and the 7 percent performance goal has been satisfied in all respects except for the passage of the period of time required under the new award agreement, that number of restricted shares equal to 3,709 multiplied by a fraction, the numerator of which is the number of full calendar years beginning January 1, 2005 and ending on or before the date of such termination, and the denominator of which is ten, will vest. |
Stock Awards(1) | ||||||||
Number of Shares | Dollar Value | |||||||
Name | Acquired on Vesting | Realized on Vesting | ||||||
Weston M. Hicks | 3,361 | $ | 949,936 | |||||
Roger B. Gorham | 268 | $ | 75,746 | |||||
Robert M. Hart | 3,355 | $ | 948,240 | |||||
James P. Slattery | 2,719 | $ | 768,485 | |||||
Jerry G. Borrelli | — | — |
(1) | Reflects the gross amount of performance shares which vested upon certification of performance by the Compensation Committee on February 27, 2006 with respect to the award period ending December 31, 2005. Payouts of such performance shares were made at maximum as the average annual compound growth in Alleghany’s Earnings Per Share, as defined by the Compensation Committee pursuant to the 2002 Long-Term Incentive Plan, exceeded 12% in the award period, measured from a base of $9.50, as adjusted for stock dividends. Of the gross share amounts reported above, the |
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performance shares were settled in cash (representing the minimum statutory withholding requirements in respect of the award) and in common stock, as follows: |
Name | Net Share Portion of Award | Cash Portion of Award | ||||||
Weston M. Hicks | 1,956 | $ | 397,102 | |||||
Roger B. Gorham | 177 | $ | 25,720 | |||||
Robert M. Hart | 2,135 | $ | 344,815 | |||||
James P. Slattery | 1,806 | $ | 258,046 |
Number of | Payments | |||||||||||||
Years of | Present Value | During | ||||||||||||
Credited | of Accumulated | Last | ||||||||||||
Name | Plan Name | Service | Benefit(1) | Fiscal Year | ||||||||||
Weston M. Hicks | Alleghany Corporation Retirement Plan | 4 | $ | 1,847,502 | — | |||||||||
Roger B. Gorham | Alleghany Corporation Retirement Plan | 2 | $ | 304,040 | — | |||||||||
Robert M. Hart | Alleghany Corporation Retirement Plan | 17 | (2) | $ | 1,006,955 | (3) | — | |||||||
James P. Slattery | Alleghany Corporation Retirement Plan | 5 | $ | 1,313,960 | — | |||||||||
Jerry G. Borrelli | Alleghany Corporation Retirement Plan | 1 | $ | 64,190 | — |
(1) | Reflects the estimated present value of the retirement benefit accumulated under the Retirement Plan as of December 31, 2006 (after giving effect to reduction for earlier benefit payments) by the Named Executive Officers, based in part on their years of service as of such date, as indicated in the table. The estimated present values are also based in part on the Named Executive Officers’ average compensation as of December 31, 2006 as determined under the Retirement Plan, which was $1,606,892 for Mr. Hicks; $802,016 for Mr. Gorham; $835,585 for Mr. Hart; $729,018 for Mr. Slattery; and $464,000 for Mr. Borrelli. The actuarial assumptions used to compute the present values are: a discount rate of 5.75% for pre-retirement interest, a 30 year treasury rate of 4.68% for post-retirement interest and the unloaded 1994 group annuity reserving unisex (projected 8 years) mortality table. |
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(2) | Includes five years of service granted by the Board to Mr. Hart in connection with the commencement of his employment with Alleghany, in addition to the actual number of his years of service with Alleghany. The present value of his accumulated benefit shown in the above table would be lower by approximately $1,006,955 if these additional five years were not so included. |
(3) | The present value of Mr. Hart’s accumulated benefit was reduced by $5,757,308, which represents the present value of an earlier payment made to him from the Retirement Plan. |
(i) 66.67 percent of the participant’s average compensation, which is defined as the highest average annual sum of the base salary and cash bonus earned over a consecutive three-year period during the last ten years of employment, multiplied by | |
(ii) a fraction (not exceeding one) the numerator of which is the number of a participant’s years of service and the denominator of which is 15. |
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Aggregate | ||||||||||||||||||||
Executive | Registrant | Earnings | Aggregate | |||||||||||||||||
Contributions | Contributions | in Last | Withdrawals/ | Aggregate | ||||||||||||||||
in Last | in Last | Fiscal Year | Distributions | Balance at Last | ||||||||||||||||
Name | Fiscal Year | Fiscal Year | (1) | (2) | Fiscal Year End | |||||||||||||||
Weston M. Hicks | — | $ | 120,000 | $ | 30,057 | $ | 1,740 | $ | 481,668 | |||||||||||
Roger B. Gorham | — | $ | 73,250 | $ | 7,120 | $ | 1,062 | $ | 141,469 | |||||||||||
Robert M. Hart | — | $ | 76,384 | $ | 66,758 | $ | 1,108 | $ | 954,157 | |||||||||||
James P. Slattery | — | $ | 67,392 | $ | 39,841 | $ | 977 | $ | 356,108 | |||||||||||
Jerry G. Borrelli | — | $ | 37,568 | $ | 948 | $ | 545 | $ | 37,972 |
(1) | With respect to Messrs. Hicks, Gorham, Hart and Borrelli, amounts represent interest earned on amounts credited to their savings benefit accounts during 2006. With respect to Mr. Slattery, amount represents interest earned, as well as appreciation and earnings on his common stock account during 2006. |
(2) | Represents distribution for tax purposes. |
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• | the nomination of a person for election as a director, other than a person nominated by or at the direction of the Board, and | |
• | the submission of a proposal, other than a proposal submitted by or at the direction of the Board, at a meeting of stockholders. |
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By order of the Board of Directors | |
ROBERT M. HART | |
Senior Vice President, General Counsel | |
and Secretary |
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Using ablack ink pen, mark your votes with anXas shown in this example. Please do not write outside the designated areas. | x |
For | Withhold | For | Withhold | For | Withhold | |||||||||||||||
01 - Allan P. Kirby, Jr. | [ ] | [ ] | 02 - Thomas S. Johnson | [ ] | [ ] | 03 - James F. Will | [ ] | [ ] |
Proposal to approve the 2007 Long-Term Incentive Plan of Alleghany Corporation. | For [ ] | Against [ ] | Abstain [ ] |
Ratification of KPMG LLP as Alleghany Corporation’s independent registered public accounting firm for the year 2007. | For [ ] | Against [ ] | Abstain [ ] |
Signature 1 – Please keep signature within the box. | Signature 2 – Please keep signature within the box. | Date (mm/dd/yyyy) – Please print date below. | ||
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