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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
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ALLEGHANY CORPORATION
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7 Times Square Tower
New York, New York 10036
April 24, 2009 at 10:00 a.m., Local Time
11th and Market Streets
Wilmington, Delaware
1. | To elect four directors for terms expiring in 2012. | |
2. | 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 2009. | |
3. | To transact such other business as may properly come before the meeting, or any adjournment or adjournments thereof. |
Senior Vice President, General Counsel
and Secretary
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7 Times Square Tower
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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 | 333,690 | 729,194 | 1,062,884 | (1) | 12.8 | |||||||||||
17 DeHart Street, P.O. Box 151, Morristown, NJ 07963 | ||||||||||||||||
Allan P. Kirby, Jr. | 553,058 | — | 553,058 | (2) | 6.7 | |||||||||||
14 E. Main Street, P.O. Box 90, Mendham, NJ 07945 | ||||||||||||||||
Grace Kirby Culbertson | 170,853 | 215,443 | 386,296 | (3) | 4.7 | |||||||||||
Blue Mill Road, Morristown, NJ 07960 | ||||||||||||||||
Estate of Ann Kirby Kirby | 317,881 | 392,786 | 710,667 | (4) | 8.6 | |||||||||||
c/o Carter, Ledyard & Milburn LLP, 2 Wall Street New York, NY 10005 | ||||||||||||||||
Artisan Partners Limited Partnership | — | 527,143 | 527,143 | (5) | 6.4 | |||||||||||
875 E. Wisconsin Avenue, Suite 800, Milwaukee, WI 53202 | ||||||||||||||||
Franklin Mutual Advisers, LLC | 825,544 | — | 825,544 | (6) | 10.0 | |||||||||||
101 John F. Kennedy Parkway, Short Hills, NJ 07078 | ||||||||||||||||
Royce & Associates, LLC | 529,770 | — | 529,770 | (7) | 6.4 | |||||||||||
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; 526,882 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 |
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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 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 223,346 shares directly. | ||
(2) | Includes 311,768 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 9,151 shares issuable under stock options granted pursuant to the 2005 Directors’ Stock Plan, or the “2005 Directors’ Plan,” the 2000 Directors’ Stock Option Plan, or the “2000 Directors’ Plan,” and the Amended and Restated Directors’ Stock Option Plan, or the “1993 Amended Directors’ Plan.” Mr. Kirby held 232,139 shares directly, which include 765 shares of restricted common stock or restricted stock units granted pursuant to the 2005 Directors’ Plan, as adjusted for stock dividends. | |
(3) | Includes 43,695 shares of common stock held by Grace Kirby Culbertson as co-trustee of trusts for the benefit of her children; and 171,748 shares held by trusts for the benefit of Mrs. Culbertson and her descendants, of which Mrs. Culbertson is co-trustee. Mrs. Culbertson held 170,853 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 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 2008 by Old Alleghany or Alleghany; if Mrs. Kirby, her estate and her beneficiaries had continued to hold in the aggregate the 710,667 shares reported in the Schedule 13D statement filed with the SEC in 1982 together with all stock dividends received in consequence through the date hereof, the beneficial ownership reported herein would have increased by 409,969 shares. |
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(5) | According to a Schedule 13G statement dated February 13, 2009 filed jointly by Artisan Partners Limited Partnership, an investment adviser (“Artisan Partners”), Artisan Investment Corporation, the general partner of Artisan Partners (“Artisan Corp.”), ZFIC, Inc., the sole stockholder of Artisan Corp. (“ZFIC”), and Andrew A. Ziegler and Carlene M. Ziegler, the principal stockholders of ZFIC (who, together with Artisan Partners, Artisan Corp. and ZFIC, are referred to herein as “Artisan Parties”), the Artisan Parties share voting and dispositive power over 510,328 shares of common stock, and share dispositive power over an additional 16,815 shares of common stock. The statement indicated that such shares had been acquired on behalf of discretionary clients of Artisan Partners, persons other than Artisan Partners are entitled to receive all dividends from and proceeds from the sale of such shares, and to the knowledge of the Artisan Parties none of such persons has an economic interest in more than 5% of the class. | |
(6) | According to an amendment dated January 9, 2009 to a Schedule 13G statement filed by Franklin Mutual Advisers, LLC, or “Franklin,” Franklin had sole voting power and sole dispositive power over 825,544 shares of common stock. The statement 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. | |
(7) | According to an amendment dated January 23, 2009 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 529,770 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 onForm 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 onForm 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 and disclosure controls and procedures, | |
• | the compensation, activities and performance of Alleghany’s 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. |
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• | reviewing and approving the financial goals and objectives relevant to the compensation of the chief executive officer, | |
• | 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 director 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, individual directors 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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• | the director’s qualifications, | |
• | the director’s past and expected future contributions to Alleghany, | |
• | the overall composition of the Board, and | |
• | whether accepting the tendered resignation would cause Alleghany to fail to meet any applicable rule or regulation (including New York Stock Exchange listing standards and federal securities laws). |
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Amount and Nature of Beneficial Ownership | ||||||||||||||||
Sole Voting | Shared Voting Power | |||||||||||||||
Power and/or Sole | and/or Shared | Percent | ||||||||||||||
Name of Beneficial Owner | Investment Power | Investment Power | Total | of Class | ||||||||||||
John J. Burns, Jr. | 75,082 | — | 75,082 | (1)(2) | 0.91 | |||||||||||
Dan R. Carmichael | 20,287 | — | 20,287 | (1)(3) | 0.24 | |||||||||||
William K. Lavin | 11,242 | — | 11,242 | (1) | 0.14 | |||||||||||
Raymond L.M. Wong | 2,833 | — | 2,833 | (1) | 0.03 | |||||||||||
Rex D. Adams | 8,703 | — | 8,703 | (1) | 0.11 | |||||||||||
Weston M. Hicks | 72,150 | — | 72,150 | (4) | 0.87 | |||||||||||
Thomas S. Johnson | 11,759 | — | 11,759 | (1) | 0.14 | |||||||||||
Allan P. Kirby, Jr. | 553,058 | — | 553,058 | (5) | 6.68 | |||||||||||
Jefferson W. Kirby | 63,160 | 153,775 | 216,935 | (1)(6) | 2.62 | |||||||||||
James F. Will | 18,907 | 1,618 | 20,525 | (1) | 0.25 | |||||||||||
Roger B. Gorham | 7,407 | — | 7,407 | (7) | 0.09 | |||||||||||
Robert M. Hart | 17,822 | — | 17,822 | (8) | 0.21 | |||||||||||
Jerry G. Borrelli | 842 | — | 842 | .01 | ||||||||||||
All nominees, directors and executive officers as a group (13 persons) | 863,252 | 155,393 | 1,018,645 | (9) | 12.3(10 | ) |
(1) | Includes 9,151 shares of common stock in the case of Messrs. Johnson, Will, Carmichael and Lavin, 7,190 shares of common stock in the case of Mr. Adams, 1,026 shares of common stock in the case of Messrs. Jefferson W. Kirby and Wong and 506 shares in the case of Mr. Burns, issuable under stock options granted pursuant to the 2005 Directors’ Plan, the 2000 Directors’ Plan, and the 1993 Amended Directors’ Plan. In addition, includes 765 shares of restricted common stock or restricted stock units granted to each of Messrs. Adams, Carmichael, Lavin, Johnson, Jefferson W. Kirby, Will, Wong and 505 shares of restricted common stock granted to Mr. Burns, pursuant to the 2005 Directors’ Plan. |
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(2) | Includes 2,224 shares of common stock held by a trust of which Mr. Burns’s wife is sole trustee and 801 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. | |
(3) | Includes 248 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. | |
(4) | Includes 28,153 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. | |
(5) | See Note (2) on page 2. | |
(6) | Includes 131,720 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 131,720 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 co-trustee and beneficiary 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 62,395 shares directly, of which 1,020 shares were held by a limited partnership with Mr. Jefferson W. Kirby exercising sole voting and investment power in respect of such shares. | |
(7) | Includes 3,858 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) | Includes 4,000 shares of common stock held by a trust of which Mr. Hart is sole trustee. | |
(9) | Includes a total of 3,273 shares of common stock over which certain of the above persons listed had no voting or investment power, as discussed in Notes (2) and (3) above. |
(10) | Based on the number of shares of outstanding common stock as of March 2, 2009, adjusted in the case of each director to include shares of common stock issuable within 60 days upon exercise of stock options held by such director. |
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Nominee for Election: John J. Burns, Jr. Age 77 Director since 1968 Term expires in 2009 | Chairman of the Board, Alleghany Corporation;Member of the Executive Committee. | |||
Nominee for Election: Dan R. Carmichael Age 64 Director since 1993 Term expires in 2009 | Retired President and Chief Executive Officer, Ohio Casualty Corporation (property and casualty insurance); Chairman of the Board and director, Platinum Underwriters Holdings, Ltd. Chairman of the Compensation Committee and member of the Audit Committee. |
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Nominee for Election: William K. Lavin Age 64 Director since 1992 Term expires in 2009 | Financial Consultant; director, American Home Food Products, Inc. Chairman of the Audit Committee and member of the Compensation Committee. | |||
Nominee for Election: Raymond L.M. Wong Age 56 Director since 2006 Term expires in 2009 | Managing Director, Spring Mountain Capital, LP (investment management);Member of the Audit Committee. | |||
Allan P. Kirby, Jr. Age 77 Director since 1963 Term expires in 2010 | President, Liberty Square, Inc. (investments) management of family and personal affairs; Chairman of the Executive Committee. | |||
James F. Will Age 70 Director since 1992 Term expires in 2010 | Vice Chancellor and President Emeritus, Saint Vincent College (education); Member of the Compensation and Nominating and Governance Committees. | |||
Thomas S. Johnson Age 68 Director since 1997 and for1992-1993 Term expires in 2010 | Retired Chairman and Chief Executive Officer, GreenPoint Financial Corp. and its subsidiary GreenPoint Bank (banking); director, R.R. Donnelley & Sons Company and The Phoenix Companies, Inc. Member of the Executive and Nominating and Governance Committees. |
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Rex D. Adams Age 69 Director since 1999 Term expires in 2011 | Director and Chairman of the Board, Invesco Ltd. (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 52 Director since 2004 Term expires in 2011 | President and chief executive officer, Alleghany Corporation; director, AllianceBernstein Corporation. Member of the Executive Committee. | |||
Jefferson W. Kirby Age 47 Director since 2006 Term expires in 2011 | Managing Member, Broadfield Capital Management, LLC (investment advisory services); director, Somerset Hills Bancorp. |
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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 | Compensation(3) | Total | |||||||||||||||||||||
Rex D. Adams | $ | 65,000 | $ | 88,221 | $ | 62,105 | — | — | — | $ | 215,326 | |||||||||||||||||
John J. Burns, Jr. | $ | 400,000 | $ | 88,221 | $ | 38,371 | — | — | $ | 23,600 | $ | 550,192 | ||||||||||||||||
Dan R. Carmichael | $ | 67,500 | $ | 88,221 | $ | 62,105 | — | — | — | $ | 217,826 | |||||||||||||||||
Thomas S. Johnson | $ | 52,500 | $ | 88,221 | $ | 62,105 | — | — | — | $ | 202,826 | |||||||||||||||||
Allan P. Kirby, Jr. | $ | 63,000 | $ | 88,221 | $ | 62,105 | — | — | — | $ | 213,326 | |||||||||||||||||
Jefferson W. Kirby | $ | 38,000 | $ | 88,221 | $ | 56,919 | — | — | — | $ | 183,140 | |||||||||||||||||
William K. Lavin | $ | 78,000 | $ | 88,221 | $ | 62,105 | — | — | — | $ | 228,326 | |||||||||||||||||
James F. Will | $ | 55,000 | $ | 88,221 | $ | 62,105 | — | — | — | $ | 205,326 | |||||||||||||||||
Raymond L.M. Wong | $ | 53,000 | $ | 88,221 | $ | 56,919 | — | — | — | $ | 198,140 |
(1) | Represents the dollar amount recognized for financial statement reporting purposes for the year ended December 31, 2008 in accordance with Statement of Financial Accounting Standards No. 123R, “Share-based Payments,” or “SFAS 123R,” of restricted stock and |
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restricted stock units outstanding under the 2005 Directors’ Plan. See Note 10 to the consolidated financial statements of Alleghany contained in its Annual Report onForm 10-K for the year ended December 31, 2008 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 or 250 restricted stock units, each equivalent to a share of common stock, made to each non-employee director on April 28, 2008, computed in accordance with SFAS 123R, is $87,109. At December 31, 2008, each of Messrs. Adams, Carmichael, Johnson, Allan P. Kirby, Jr., Jefferson W. Kirby, Lavin, Will and Wong held 765 shares of restricted common stock and/or restricted stock units and Mr. Burns held 505 shares of restricted common stock. | ||
(2) | Represents the dollar amount recognized for financial statement reporting purposes for the year ended December 31, 2008 in accordance with SFAS 123R of options outstanding. See Note 10 to the consolidated financial statements of Alleghany contained in its Annual Report onForm 10-K for the year ended December 31, 2008 for assumptions underlying valuation of stock-based awards. The full grant date fair value of the stock option for 500 shares of common stock made to each non-employee director on April 28, 2008, computed in accordance with SFAS 123R is $68,383. At December 31, 2008, the aggregate number of stock options outstanding was 9,655 for each of Messrs Carmichael, Johnson, Allan P. Kirby, Jr., Lavin and Will, 7,693 for Mr. Adams, 1,530 for each of Messrs. Jefferson W. Kirby and Wong, and 1,010 for Mr. Burns. | |
(3) | Reflects a payment of $14,231, representing the dollar value of the insurance premiums paid by Alleghany for the benefit of Mr. Burns for life insurance maintained on his behalf pursuant to Alleghany’s life insurance program in which retired Alleghany officers are eligible to participate, and a payment of $9,369, representing the reimbursement of taxes, and the reimbursement itself, on income imputed to Mr. Burns pursuant to such life insurance program. |
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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 | |
• | upon a director’s election either (i) 250 shares of restricted common stock or (ii) 250 restricted stock units, each equivalent to a share 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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Independent Registered Public Accounting Firm for the year 2009
2008 | 2007 | |||||||
Audit Fees | $ | 2,653,717 | $ | 2,884,027 | ||||
Audit-Related Fees | 11,100 | 76,400 | ||||||
Tax Fees | — | — | ||||||
All Other Fees | 1,500 | 1,500 | ||||||
Total | $ | 2,666,317 | $ | 2,961,927 |
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Rex D. Adams
Dan R. Carmichael
Raymond L.M. Wong
of the Board of Directors
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2009 Annual Meeting
Business Experience During | ||||||||
Name | Age | Current Position (date elected) | Last 5 Years | |||||
Weston M. Hicks | 52 | President, chief executive officer (since December 2004) | Executive Vice President, Alleghany (from October 2002 to December 2004). | |||||
Roger B. Gorham | 46 | Senior Vice President — Finance and Investments and chief financial officer (since January 2006) | Senior Vice President — Finance and chief financial officer, Alleghany (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). | |||||
Robert M. Hart | 64 | Senior Vice President, General Counsel (since 1994) and Secretary (since 1995) | Senior Vice President, General Counsel and Secretary, Alleghany. | |||||
Jerry G. Borrelli | 43 | Vice President — Finance and 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). |
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William K. Lavin
James F. Will
of the Board of Directors
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AND COMPENSATION MATTERS
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• | salaries, | |
• | 2008 bonuses, | |
• | annual grants of long-term equity-based incentives, | |
• | retirement benefits, and | |
• | 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, adjusted to exclude the amount of catastrophe losses of our subsidiary RSUI Group, Inc. (‘RSUI”) reflected in such plan. | |
• | “Adjusted Earnings Per Share” means the earnings per share as reported in our audited financial statements for the relevant year, adjusted to exclude the amount of 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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• | Alleghany’s common stockholders’ equity decreased 5% from December 31, 2007 to December 31, 2008, compared with one-year declines in the S&P 500 Index and the S&P Property & Casualty Insurance Index of 37.0% and 29.5%, respectively; | |
• | Alleghany’s compound growth in book value was 8% over the last five years, compared with a compound annual return of (2.2)% for the S&P 500 Index; | |
• | the favorable sale of Alleghany’s 55% interest in Darwin Professional Underwriters, Inc. during 2008; | |
• | management’s success in reducing RSUI’s risk profile, as evidenced by RSUI’s exceptional performance during the 2008 hurricane season; | |
• | excluding the 2008 OTTI charges would result in Adjusted Earnings Per share for 2008 of $30.54 per share, exceeding 110% of Target Plan Earnings Per Share for 2008; | |
• | the OTTI accounting rules, being largely mechanical and short-term oriented, require charges to income for declines in market price existing for 12 months or declines in market price of greater than 50%, while an investor, like Alleghany, investing with a3-5 year horizon, may still anticipate a profitable outcome; | |
• | OTTI charges do not affect stockholders’ equity, since all of Alleghany’s securities are marked to market and already reflected in stockholders’ equity; | |
• | the Compensation Committee had not considered the potential of OTTI charges in setting the performance measures for 2008 awards under the 2005 MIP; and |
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• | the payout of performance shares awarded to Alleghany’s executives is based upon compound annual growth in stockholders’ equity over their respective award periods and, thus, is fully impacted by declines in market values of Alleghany’s investments. |
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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 2007 LTIP) equals or exceeds 10.5% as measured from a specified base equal to stockholders’ equity per share at December 31, 2007 as reported in the Annual Report onForm 10-K for the year ended December 31, 2007, or $302.67 per share, as adjusted for stock dividends in the2008-2011 award period, | |
• | target payouts will be made at 100% if such growth equals 7%, | |
• | 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. |
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• | a maximum payout at 150% of the value of one share of common stock on the payout date for average annual compound growth in our Book Value Per Share of 7.5% or more over the four-year award period2009-2012, as adjusted for stock dividends and as adjusted for performance relative to the S&P 500 Index (as discussed below), | |
• | target payouts at 100% if such growth equals 5%, payouts at 50% if such growth equals 3.25%, payouts at 30% if such growth equals 2.5%, payouts for growth between the foregoing levels to be determined by straight line interpolation, | |
• | and no payouts if such growth is less than 2.5%. |
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Payments | ||||||||||||||||||||||||||||||||||||
Payments | under | |||||||||||||||||||||||||||||||||||
under | Restricted | |||||||||||||||||||||||||||||||||||
Severance | Restricted | Stock | Post- | |||||||||||||||||||||||||||||||||
under | Stock | Unit Matching | 2002 and | Deferred | Retirement | |||||||||||||||||||||||||||||||
Employment | Award | Grant Award | 2007 LTIP | 2008 | Retirement | Compensation | Medical | |||||||||||||||||||||||||||||
Agreement | Agreements(2) | (3) | (4) | Bonus (5) | Plan (6) | Plan (7) | Plan (8) | Total | ||||||||||||||||||||||||||||
Weston M. Hicks | $ | 1,000,000 | (1) | $ | 6,351,542 | $ | 3,650,963 | $ | 4,994,333 | $ | 1,275,000 | $ | 2,697,999 | $ | 856,817 | — | $ | 20,826,654 | ||||||||||||||||||
Roger B. Gorham | — | $ | 870,561 | — | $ | 1,755,790 | $ | 453,150 | — | $ | 321,026 | — | $ | 3,400,527 | ||||||||||||||||||||||
Robert M. Hart | — | — | — | $ | 2,019,768 | $ | 445,500 | $ | 3,643,606 | $ | 1,251,399 | $ | 161,650 | $ | 7,521,923 | |||||||||||||||||||||
Jerry G. Borrelli | — | — | — | $ | 501,678 | $ | 193,800 | — | $ | 144,900 | — | $ | 840,378 |
(1) | This amount would be paid by Alleghany in the form of continued payments of base salary. | |
(2) | Reflects award amounts payable to Mr. Hicks under his 2004 restricted stock agreement and to Mr. Gorham under his 2004 restricted stock agreement if Messrs. Hicks or Gorham were terminated other than for Cause or Total Disability based on the elapsed portion of the award period prior to termination and the performance goal of average annual compound growth in Book Value Per Share through the date of termination having been satisfied as of December 31, 2008. The terms of these agreements are described on pages 46 through 48. | |
(3) | Reflects award amount payable to Mr. Hicks under his 2002 restricted stock unit matching grant award agreement if Mr. Hicks was terminated without Cause or by reason of his death or Total Disability (as such terms are defined in the such matching agreement) on the basis of 10% of the restricted stock unit account for each full year of employment measured from October 7, 2002, or 60% as of December 31, 2008. The terms of this restricted stock unit matching agreement are described on pages 46 and 47. | |
(4) | Reflects payment of all outstanding LTIP awards, including amounts paid in February 2009 for the award period ending December 31, 2008, 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. | |
(5) | Reflects 2008 Bonuses paid to the Named Executive Officers in February 2009 as reported in the Summary Compensation Table on page 42 and as described on pages 31 and 32. | |
(6) | Reflects payment of vested pension benefits, computed as of December 31, 2008, under the Retirement Plan to Messrs. Hart and Hicks. Messrs. Gorham and Borrelli were not vested in the Retirement Plan as of December 31, 2008. The determination of these |
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pension benefits is described in more detail on pages 53 through 55. 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 Hicks. Messrs. Gorham and Borrelli were not vested in such retiree life insurance death benefit as of December 31, 2008. | ||
(7) | Reflects the aggregate vested account balance at December 31, 2008 of the Named Executive Officer’s savings benefit (consisting of Alleghany contributions and interest earned thereon) under the Deferred Compensation Plan. | |
(8) | Reflects accumulated accrued benefit under our Post-Retirement Medical Plan for Mr. Hart. Messrs. Hicks, Gorham and Borrelli were not 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. |
• | received a gross payout on February 26, 2009 of 5,641 performance shares, paid in the form of 3,659 shares of common stock and $520,546 in cash, in settlement of all of the outstanding performance shares awarded to him under the 2002 LTIP and 2007 LTIP; | |
• | received a payout on January 5, 2009 of $2,117,730 representing a lump sum payment of his accrued benefit under the Retirement Plan; | |
• | received a payout of $479,240 representing all of the savings benefits which he had accrued under the Deferred Compensation Plan, of which $214,235 was paid on July 1, 2008 and $265,005 of which was paid on January 23, 2009; and | |
• | became eligible to participate in the Post-Retirement Medical Plan, which had an accumulated accrued benefit of $154,986 at July 1, 2008. |
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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(1) | Awards(2) | (3) | Earnings(4) | sation(5) | Total | ||||||||||||||||||||||||
Weston M. Hicks, | 2008 | $ | 1,000,000 | $ | 1,275,000 | $ | 4,158,233 | — | $ | 1,594,268 | $ | 196,197 | $ | 8,223,698 | ||||||||||||||||||
President and CEO | 2007 | $ | 1,000,000 | — | $ | 5,001,272 | $ | 1,500,000 | $ | 1,160,447 | $ | 192,875 | $ | 8,854,594 | ||||||||||||||||||
2006 | $ | 800,000 | — | $ | 6,527,614 | $ | 1,200,000 | $ | 856,009 | $ | 150,995 | $ | 9,534,618 | |||||||||||||||||||
Roger B. Gorham, | 2008 | $ | 530,000 | $ | 453,150 | $ | 915,986 | — | $ | 295,471 | $ | 106,955 | $ | 2,301,562 | ||||||||||||||||||
Senior Vice President- | 2007 | $ | 510,000 | — | $ | 1,044,759 | $ | 459,000 | $ | 194,684 | $ | 101,585 | $ | 2,310,028 | ||||||||||||||||||
Finance and Investments | 2006 | $ | 490,000 | — | $ | 781,053 | $ | 441,000 | $ | 173,622 | $ | 93,997 | $ | 1,979,672 | ||||||||||||||||||
and CFO | ||||||||||||||||||||||||||||||||
Robert M. Hart, | 2008 | $ | 550,000 | $ | 445,500 | $ | 772,864 | — | $ | 1,411,366 | $ | 123,405 | $ | 3,303,135 | ||||||||||||||||||
Senior Vice President, | 2007 | $ | 530,000 | — | $ | 988,552 | $ | 477,000 | $ | 880,724 | $ | 127,997 | $ | 3,004,273 | ||||||||||||||||||
General Counsel and | 2006 | $ | 510,000 | — | $ | 1,052,687 | $ | 459,000 | $ | 1,006,955 | $ | 103,875 | $ | 3,132,517 | ||||||||||||||||||
Secretary | ||||||||||||||||||||||||||||||||
James P. Slattery, | 2008 | $ | 245,000 | — | $ | 305,176 | — | $ | 246,304 | $ | 165,658 | $ | 962,138 | |||||||||||||||||||
Senior Vice President- | 2007 | $ | 470,000 | — | $ | 872,279 | $ | 423,000 | $ | 557,466 | $ | 108,316 | $ | 2,431,061 | ||||||||||||||||||
Insurance(6) | 2006 | $ | 450,000 | — | $ | 927,032 | $ | 405,000 | $ | 393,476 | $ | 86,343 | $ | 2,261,851 | ||||||||||||||||||
Jerry G. Borrelli, | 2008 | $ | 340,000 | $ | 193,800 | $ | 217,556 | — | $ | 118,964 | $ | 73,004 | $ | 943,324 | ||||||||||||||||||
Vice President and CAO | 2007 | $ | 320,000 | — | $ | 203,411 | $ | 192,000 | $ | 86,051 | $ | 67,822 | $ | 869,284 | ||||||||||||||||||
2006 | $ | 262,538 | (7) | $ | 100,000 | (8) | $ | 234,247 | $ | 174,000 | $ | 64,190 | $ | 53,450 | $ | 888,425 |
(1) | Reflects 2008 Bonuses paid to Named Executive Officers as described on pages 31 and 32. | |
(2) | Represents the dollar amount recognized for financial statement reporting purposes for the years ended December 31, 2008, 2007 and 2006, respectively, in accordance with SFAS 123R, of (i) all performance shares awarded to such Named Executive Officers under the 2002 LTIP and 2007 LTIP and outstanding during 2008, 2007 and 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 onForm 10-K for the year ended December 31, 2008 for assumptions underlying the valuation of stock-based awards. Amounts in this column for Mr. Borrelli for the year ended December 31, 2006 reflect the award of additional performance shares in connection with his commencement of employment with Alleghany in February 2006. |
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(3) | Represents cash incentive earned in respect of 2007 and 2006 pursuant to awards under the 2005 MIP. No cash incentive was earned in respect of 2008 pursuant to awards under the 2005 MIP. | |
(4) | Reflects change in pension value during 2008, 2007 and 2006. The change in pension value between 2008 and 2007 reflects the impact of a decrease in interest rates attributable to post-retirement time frames during such period. | |
(5) | Reflects the following items: |
• | Post-Retirement Medical Plan: $30,257 for Mr. Hicks, $17,549 for Mr. Gorham, $18,406 for Mr. Hart, $123,030 for Mr. Slattery and $13,624 for Mr. Borrelli, representing the change in Post-Retirement Medical Plan benefit value during 2008; $28,462 for Mr. Hicks, $15,263 for Mr. Gorham, $27,981 for Mr. Hart, $25,329 for Mr. Slattery and $11,533 for Mr. Borrelli, representing the change in Post-Retirement Medical Plan benefit value during 2007; and $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. | |
• | Life insurance and Long-Term Disability: The following amounts represent the dollar value of the insurance premiums paid by Alleghany for the benefit of such individuals for life insurance and long-term disability insurance maintained by Alleghany on their behalf: $9,420 in respect of Mr. Hicks, $5,928 in respect of Mr. Gorham, $13,370 in respect of Mr. Hart, $1,773 in respect of Mr. Slattery and $5,026 in respect of Mr. Borrelli in 2008; $9,060 in respect of Mr. Hicks, $5,754 in respect of Mr. Gorham, $12,012 in respect of Mr. Hart, $7,517 in respect of Mr. Slattery and $4,903 in respect of Mr. Borrelli in 2007; and $7,796 in respect of Mr. Hicks, $5,588 in respect of Mr. Gorham, $10,854 in respect of Mr. Hart, $7,026 in respect of Mr. Slattery and $4,284 in respect of Mr. Borrelli in 2006. These 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. These long-term disability insurance policies provide disability insurance coverage to each such officer in the event he becomes disabled (as defined in such policies) during his employment with Alleghany. | |
• | Tax reimbursement: The following amounts represent the reimbursement of taxes, and the reimbursement itself, on income imputed to such individuals pursuant to Alleghany’s long-term disability and life insurance policies as described above: $6,520 in respect of Mr. Hicks, $4,103 in respect of Mr. Gorham, $9,254 in respect of Mr. Hart, $1,167 in respect of Mr. Slattery and $3,479 in respect of Mr. Borrelli for 2008; $6,603 in respect of Mr. Hicks, $4,193 in respect of Mr. Gorham, $8,754 in |
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respect of Mr. Hart, $5,095 in respect of Mr. Slattery and $3,573 in respect of Mr. Borrelli for 2007; and $5,763 in respect of Mr. Hicks, $4,131 in respect of Mr. Gorham, $8,024 in respect of Mr. Hart, $5,763 in respect of Mr. Slattery and $3,167 in respect of Mr. Borrelli for 2006. |
• | Savings benefits: Savings benefits of $150,000 for Mr. Hicks, $79,375 for Mr. Gorham, $82,375 for Mr. Hart, $39,688 for Mr. Slattery and $50,875 for Mr. Borrelli for 2008; savings benefits of $148,750 for Mr. Hicks, $76,375 for Mr. Gorham, $79,250 for Mr. Hart, $70,375 for Mr. Slattery and $47,813 for Mr. Borrelli for 2007, and 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 for 2006, 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 55 through 57 in the narrative accompanying the Nonqualified Deferred Compensation table. |
(6) | 2008 amounts for Mr. Slattery represent the pro rata portion of amounts earned by Mr. Slattery in respect of, or paid to Mr. Slattery during, his employment with Alleghany through his July 1, 2008 retirement date as described on page 41. | |
(7) | Represents pro rata portion of 2006 annual base salary of $290,000, reflecting Mr. Borrelli’s commencement of employment with Alleghany in February 2006. | |
(8) | Represents a bonus paid to Mr. Borrelli upon the commencement of his employment with Alleghany in February 2006. |
All Other | ||||||||||||||||||||||||||||||||||||
Stock | ||||||||||||||||||||||||||||||||||||
Estimated Possible Payouts Under | Estimated Future Payouts | Awards: | ||||||||||||||||||||||||||||||||||
Non-Equity Incentive | Under Equity Incentive | Number of | Grant Date | |||||||||||||||||||||||||||||||||
Plan Awards(1) | Plan Awards(2) | Shares of | Fair Value | |||||||||||||||||||||||||||||||||
Threshold | Target | Maximum | Threshold | Target | Maximum | Stock or | of Stock | |||||||||||||||||||||||||||||
Name | Grant Date | ($) | ($) | ($) | (#) | (#) | (#) | Units (#) | Awards(3) | |||||||||||||||||||||||||||
Weston M. Hicks | Jan. 14, 2008 | 50,000 | 1,000,000 | 1,500,000 | 1,502 | 5,008 | 7,512 | — | $ | 2,764,011 | ||||||||||||||||||||||||||
Roger B. Gorham | Jan. 14, 2008 | 15,900 | 318,000 | 477,000 | 478 | 1,592 | 2,388 | — | $ | 878,742 | ||||||||||||||||||||||||||
Robert M. Hart | Jan. 14, 2008 | 16,500 | 330,000 | 495,000 | 496 | 1,652 | 2,479 | — | $ | 911,955 | ||||||||||||||||||||||||||
James P. Slattery | Jan. 14, 2008 | 14,700 | 147,000 | 220,500 | 442 | 1,473 | 2,209 | — | $ | 812,878 | ||||||||||||||||||||||||||
Jerry G. Borrelli | Jan. 14, 2008 | 6,800 | 136,000 | 204,000 | 153 | 511 | 767 | — | $ | 282,030 |
(1) | Reflects awards under the 2005 MIP. Threshold amounts reflect estimated possible payout if Adjusted Earnings Per Share equal 81% of Target Plan Earnings Per Share and maximum amounts reflect estimated possible payout if Adjusted Earnings Per Share equal |
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110% of Target Plan Earnings Per Share. If Adjusted Earnings Per Share is 80% or below of Target Plan Earnings Per Share, no payment would be made. No payouts of these awards were made in respect of 2008, as Adjusted Earnings per Share was below 80% of Target Plan Earnings Per Share. All Named Executive Officers, except for Mr. Slattery who was not an employee at December 31, 2008, received the 2008 Bonuses as described on pages 31 and 32, the amounts of which are set forth in the Bonus column of the Summary Compensation Table on page 42. | ||
(2) | Reflects gross number of shares of common stock payable in connection with awards of performance shares for the2008-2011 award period under the 2007 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% in the2008-2011 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% in the2008-2011 award period. If average annual compound growth in Book Value Per Share is 3.5% or lower, none of these performance shares would be payable. | |
(3) | Reflects 2008 SFAS 123R value of performance share awards for the2008-2011 award period under the 2007 LTIP, as adjusted for dividends, assuming payouts at maximum. |
• | 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 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 Mr. Hicks’s 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. |
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• | 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. 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 vested and was paid out. | |
• | 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, or “Owned 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 Owned Shares (in each case subject to increase to reflect any stock dividend paid in 2003). Material terms of this matching grant agreement, or the “Matching Grant Agreement,” are discussed below. | |
• | Mr. Hicks received a second grant of 28,153 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. Material terms of this restricted stock agreement are discussed below. |
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• | 643 performance shares, as adjusted for stock dividends, for the four-year award period ending December 31, 2009, which entitle him to a payout of cashand/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; and | |
• | 370 performance shares, as adjusted for stock dividends, for the three-year award period ending December 31, 2008, which entitle him to a payout of cashand/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. |
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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 | — | — | 6,866 | (1) | $ | 1,935,961 | ||||||||||
— | — | 8,876 | (2) | $ | 2,502,891 | |||||||||||
— | — | 9,063 | (3) | $ | 2,555,766 | |||||||||||
— | — | 7,512 | (4) | $ | 2,118,384 | |||||||||||
— | — | 28,153 | (5) | $ | 7,939,428 | |||||||||||
22,081 | (6) | $ | 6,227,124 | |||||||||||||
Roger B. Gorham | — | — | 2,632 | (1) | $ | 741,942 | ||||||||||
— | — | 3,261 | (2) | $ | 919,602 | |||||||||||
— | — | 2,774 | (3) | $ | 782,127 | |||||||||||
— | — | 2,388 | (4) | $ | 673,416 | |||||||||||
— | — | 3,858 | (7) | $ | 1,088,201 | |||||||||||
Robert M. Hart | — | — | 3,699 | (1) | $ | 1,043,118 | ||||||||||
— | — | 3,396 | (2) | $ | 957,249 | |||||||||||
— | — | 2,882 | (3) | $ | 812,583 | |||||||||||
— | — | 2,479 | (4) | $ | 698,796 | |||||||||||
James P. Slattery(8) | — | — | 3,256 | (1) | $ | 917,910 | ||||||||||
— | — | 2,996 | (2) | $ | 845,154 | |||||||||||
— | — | 2,555 | (3) | $ | 720,369 | |||||||||||
— | — | 2,209 | (4) | $ | 623,079 | |||||||||||
Jerry G. Borrelli | — | — | 556 | (1) | $ | 156,510 | ||||||||||
— | — | 966 | (2) | $ | 272,412 | |||||||||||
— | — | 870 | (3) | $ | 245,340 | |||||||||||
— | — | 767 | (4) | $ | 216,153 |
(1) | Performance shares under the 2002 LTIP, calculated at maximum payout pursuant to SEC requirements, which vest after completion of the award period ending December 31, 2008. | |
(2) | Performance shares under the 2002 LTIP, calculated at maximum payout pursuant to SEC requirements, which vest after completion of the award period ending December 31, 2009. | |
(3) | Performance shares under the 2002 LTIP, calculated at maximum payout pursuant to SEC requirements, which vest after completion of the award period ending December 31, 2010. |
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(4) | Performance shares under the 2007 LTIP, calculated at maximum payout pursuant to SEC requirements, which vest after completion of the award period ending December 31, 2011. | |
(5) | 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% 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% or more as measured over a calendar year period commencing on January 1, 2005 and ending on December 31, 2012, 2013 or 2014. The performance goal set forth in clause (i) above was not met as of December 31, 2008. 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% 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 28,153 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. | |
(6) | Restricted stock units under the 2002 LTIP vest on October 7, 2012. As further described on page 47, 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 restricted stock units credited to him shall vest and become nonforfeitable on the basis of 10% of such account for each full year of employment with Alleghany measured from October 7, 2002. | |
(7) | 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% 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% or more as measured over a calendar year period commencing on January 1, 2005 and ending on December 31, 2012, 2013 or 2014. The performance goal set forth in clause (i) above was not met as of December 31, 2008. If Alleghany terminates Mr. Gorham’s employment after December 31, 2006 other than for Cause or Total Disability, and the 7% 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 3,858 multiplied by a fraction, the numerator of which is the number of full calendar years beginning January 1, 2005 and |
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ending on or before the date of such termination, and the denominator of which is ten, will vest. | ||
(8) | In connection with his retirement from Alleghany on July 1, 2008, Mr. Slattery received a payout on February 26, 2009 of 5,641 performance shares, paid in the form of 3,659 shares of common stock and $520,546 in cash, in settlement of all performance shares awarded to him under the 2002 LTIP and 2007 LTIP that were outstanding at December 31, 2008. |
Stock Awards(1) | ||||||||
Number of Shares | Dollar Value | |||||||
Name | Acquired on Vesting | Realized on Vesting | ||||||
Weston M. Hicks | 8,237 | $ | 2,872,818 | |||||
Roger B. Gorham | 1,934 | $ | 674,521 | |||||
Robert M. Hart | 4,976 | $ | 1,735,480 | |||||
James P. Slattery | 4,377 | $ | 1,526,566 | |||||
Jerry G. Borrelli | 408 | $ | 142,298 |
(1) | Reflects the gross amount of performance shares which vested upon certification of performance by the Compensation Committee on February 26, 2008 with respect to the award period ending December 31, 2007. Payouts of such performance shares were made at maximum. Of the gross share amounts reported above, the 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 | 4,629 | $ | 1,258,362 | |||||
Roger B. Gorham | 1,242 | $ | 241,349 | |||||
Robert M. Hart | 2,946 | $ | 708,003 | |||||
James P. Slattery | 2,673 | $ | 594,304 | |||||
Jerry G. Borrelli | 270 | $ | 48,130 |
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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 | 6 | $ | 4,602,217 | — | |||||||||
Roger B. Gorham | Alleghany Corporation Retirement Plan | 4 | $ | 794,195 | — | |||||||||
Robert M. Hart | Alleghany Corporation Retirement Plan | 19 | (2) | $ | 3,229,045 | (3) | — | |||||||
Jerry G. Borrelli | Alleghany Corporation Retirement Plan | 3 | $ | 269,205 | — |
(1) | Reflects the estimated present value of the retirement benefit accumulated under the Retirement Plan as of December 31, 2008 (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, 2008 as determined under the Retirement Plan, which was $2,330,556 for Mr. Hicks; $968,445 for Mr. Gorham; $1,006,167 for Mr. Hart; and $505,972 for Mr. Borrelli. The actuarial assumptions used to compute the present values are: a discount rate of 6.00% for pre-retirement interest, a30-year U.S. treasury rate of 4.00% for post-retirement interest and the unloaded 1994 group annuity reserving unisex (projected 8 years) mortality table. | |
(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 $430,771 if these additional five years were not so included. | |
(3) | The present value of Mr. Hart’s accumulated benefit was reduced by $6,423,249, which represents the present value of an earlier payment made to him from the Retirement Plan. |
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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) | (3) | Fiscal Year End | |||||||||||||||
Weston M. Hicks | — | $ | 150,000 | $ | 37,530 | $ | 2,175 | $ | 856,817 | |||||||||||
Roger B. Gorham | — | $ | 79,375 | $ | 13,322 | $ | 2,050 | $ | 321,026 | |||||||||||
Robert M. Hart | — | $ | 82,375 | $ | 59,250 | $ | 1,887 | $ | 1,251,399 | |||||||||||
James P. Slattery | — | $ | 36,688 | $ | (23,144 | ) | $ | 215,942 | $ | 261,712 | ||||||||||
Jerry G. Borrelli | $ | 361,583 | $ | 47,313 | $ | 25,347 | $ | 3,823 | $ | 674,303 | (4) |
(1) | Such amounts are included as a component of “All Other Compensation” for 2008 set forth in the Summary Compensation Table on page 42 and discussed in Note (5) to the Summary Compensation Table. |
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(2) | With respect to Messrs. Hicks, Gorham, Hart and Borrelli, amounts represent interest earned on amounts credited to their savings benefit accounts during 2008. With respect to Mr. Slattery, amount represents interest earned, as well as depreciation on his common stock account through the date of his retirement on July 1, 2008. Such amounts are not included in the Summary Compensation Table on page 42 as these amounts are not above-market interest. | |
(3) | Represents distribution for tax purposes. | |
(4) | Of this amount, $529,403 consists of compensation earned by Mr. Borrelli that he elected to defer and $144,900 consists of contributions made by Alleghany to the savings benefit account of Mr. Borrelli. |
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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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ALLEGHANY CORPORATION |
7 TIMES SQUARE TOWER |
17TH FLOOR |
NEW YORK, NY 10036 |
VOTE BY MAIL |
Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717. |
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:x |
ALLGH1 |
KEEP THIS PORTION FOR YOUR RECORDS |
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. |
DETACH AND RETURN THIS PORTION ONLY |
ALLEGHANY CORPORATION |
Vote On Directors |
1a. John J. Burns, Jr. 0 0 0 |
1b. Dan R. Carmichael 0 0 0 |
1c. William K. Lavin 0 0 0 |
1d. Raymond L.M. Wong 0 0 0 |
1. Election of Directors — The Board of Directors recommends a voteFOR the listed nominees. |
For Against Abstain |
Vote On Proposal |
2. Ratification of Independent Registered Public Accounting Firm — The Board of Directors recommends a voteFOR the following proposal. |
Ratification of KPMG LLP as Alleghany Corporation’s independent registered public accounting firm for the year 2009. |
For Against Abstain |
0 0 0 |
THIS PROXY WILL BE VOTED IN ACCORDANCE WITH INSTRUCTIONS GIVEN. IF NO CHOICES ARE INDICATED, THIS PROXY WILL BE VOTED FOR ITEMS 1 AND 2. |
For name or address changes and/or comments, please check this 0 box and write them on the back where indicated. |
Authorized Signatures — This section must be completed for your instructions to be executed — Date and Sign Below. |
Please sign exactly as your name or names appear(s) hereon. For joint accounts, both owners should sign. When signing as executor, administrator, attorney, trustee or guardian, etc., please give your full title. |
Signature [PLEASE SIGN WITHIN BOX] Date [mm/dd/yy] |
Signature (Joint Owners) |
Date [mm/dd/yy] |
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Name or Address Changes and/or Comments: | |||||