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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
(Rule 14a-101)
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ALLEGHANY CORPORATION
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7 Times Square Tower
New York, New York 10036
April 23, 2010 at 10:00 a.m., Local Time
35 West 44th Street
New York, New York
1. | To elect four directors for terms expiring in 2013. | |
2. | To consider and take action upon a proposal to approve Alleghany’s 2010 Directors’ Stock Plan. | |
3. | To consider and take action upon a proposal to approve Alleghany’s 2010 Management Incentive Plan. | |
4. | 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 2010. | |
5. | To transact such other business as may properly come before the meeting, or any adjournment or adjournments thereof. |
Senior Vice President — Law
and Secretary
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7 Times Square Tower
New York, New York 10036
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Amount and Nature of Beneficial Ownership(1) | ||||||||||||||||
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 | 338,156 | 729,731 | 1,067,887 | (2) | 12.0 | |||||||||||
17 DeHart Street, P.O. Box 151, Morristown, NJ 07963 | ||||||||||||||||
Allan P. Kirby, Jr. | 563,918 | — | 563,918 | (3) | 6.4 | |||||||||||
14 E. Main Street, P.O. Box 90, Mendham, NJ 07945 | ||||||||||||||||
Grace Kirby Culbertson | 171,583 | 192,000 | 363,583 | (4) | 4.1 | |||||||||||
Blue Mill Road, Morristown, NJ 07960 | ||||||||||||||||
Franklin Mutual Advisers, LLC | 835,820 | — | 835,820 | (5) | 9.4 | |||||||||||
101 John F. Kennedy Parkway, Short Hills, NJ 07078 | ||||||||||||||||
Artisan Partners Limited Partnership | — | 829,518 | 829,518 | (6) | 9.4 | |||||||||||
875 E. Wisconsin Avenue, Suite 800, Milwaukee, WI 53202 | ||||||||||||||||
Royce & Associates, LLC | 545,896 | — | 545,896 | (7) | 6.2 | |||||||||||
1414 Avenue of the Americas, New York, NY 10019 |
(1) | Amounts in table do not reflect shares of common stock that may be held by the estate of one or more beneficiaries of the estate of Ann Kirby Kirby, a sister of F.M. Kirby, Allan P. Kirby, Jr. and Grace Kirby Culbertson. 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 |
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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. 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, her beneficial ownership of common stock would have increased by 432,381. | ||
(2) | Includes 110,344 shares of common stock held by F.M. Kirby as sole trustee of trusts for the benefit of his children; 527,419 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 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 227,812 shares directly. | |
(3) | Includes 318,003 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 8,001 shares issuable under stock options granted pursuant to the 2005 Directors’ Stock Plan, or the “2005 Directors’ Plan” and the 2000 Directors’ Stock Option Plan, or the “2000 Directors’ Plan.” Mr. Kirby held 237,914 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. |
(4) | Includes 42,000 shares of common stock held by Grace Kirby Culbertson as co-trustee of trusts for the benefit of her children; and 150,000 shares held by trusts for the benefit of Mrs. Culbertson and her descendants, of which Mrs. Culbertson is co-trustee. Mrs. Culbertson held 171,583 shares directly. |
(5) | According to an amendment dated January 15, 2010 to a Schedule 13G statement filed by Franklin Mutual Advisers, LLC, or “Franklin,” Franklin had sole voting power and sole dispositive power over 835,820 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 |
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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 February 11, 2010 to a Schedule 13G statement 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 813,081 shares of common stock, and share dispositive power over an additional 16,437 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. | |
(7) | According to an amendment dated January 22, 2010 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 545,896 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 estimates, 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 estimates 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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• | Karen Brenner and Phillip M. Martineau, potential nominees who were identified by SpencerStuart, were qualified to join the Board and would make a contribution to the Board; | |
• | subject to reference checks, background reports and completion of director and officer questionnaires, Ms. Brenner and Mr. Martineau should meet the other directors at the Board’s December 15, 2009 meeting; and |
• | if the Board concurred, Ms. Brenner and Mr. Martineau should be elected to the Board. |
• | 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 | ||||||||||||
Karen Brenner | — | — | — | — | ||||||||||||
Thomas S. Johnson | 10,963 | — | 10,963 | (1) | 0.12 | |||||||||||
Phillip M. Martineau | — | — | — | — | ||||||||||||
James F. Will | 18,200 | 1,650 | 19,850 | (1) | 0.22 | |||||||||||
Rex D. Adams | 9,794 | — | 9,794 | (1) | 0.11 | |||||||||||
John J. Burns, Jr. | 72,895 | — | 72,895 | (1)(2) | 0.82 | |||||||||||
Dan R. Carmichael | 21,584 | — | 21,584 | (1)(3) | 0.24 | |||||||||||
Weston M. Hicks | 79,986 | — | 79,986 | (4) | 0.90 | |||||||||||
Allan P. Kirby, Jr. | 563,918 | — | 563,918 | (5) | 6.4 | |||||||||||
Jefferson W. Kirby | 66,205 | 156,409 | 222,614 | (1)(6) | 2.5 | |||||||||||
William K. Lavin | 10,117 | — | 10,117 | (1) | 0.11 | |||||||||||
Raymond L.M. Wong | 3,672 | — | 3,672 | (1) | 0.04 | |||||||||||
Roger B. Gorham | 8,514 | — | 8,514 | (7) | 0.10 | |||||||||||
Robert M. Hart | 18,118 | — | 18,118 | (8) | 0.20 | |||||||||||
Jerry G. Borrelli | 970 | — | 970 | 0.01 | ||||||||||||
Christopher K. Dalrymple | 1,350 | — | 1,350 | 0.02 | ||||||||||||
All nominees, directors and executive officers as a group (16 persons) | 886,286 | 158,059 | 1,044,345 | (9) | 11.8(10) |
(1) | Includes 8,001 shares of common stock in the case of Messrs. Johnson, Will, Adams and Lavin, 6,782 shares of common stock in the case of Mr. Carmichael, 1,588 shares of common stock in the case of Messrs. Jefferson W. Kirby and Wong and 1,047 shares in the case of Mr. Burns, issuable under stock options granted pursuant to the 2005 Directors’ Plan and the 2000 Directors’ Plan. In addition, includes 765 shares of restricted common stock or restricted stock units granted to each of Messrs. Adams, |
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Burns, Carmichael, Lavin, Johnson, Jefferson W. Kirby, Will and Wong, pursuant to the 2005 Directors’ Plan. | ||
(2) | Includes 848 shares of common stock held by a trust of which Mr. Burns’s wife is sole trustee and 815 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 252 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 28,717 shares of common stock 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 (3) on page 2. |
(6) | Includes 156,409 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 156,409 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 63,578 shares directly, of which 1,040 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 3,936 shares of common stock 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 4,080 shares of common stock held by a trust of which Mr. Hart is sole trustee. | |
(9) | Includes a total of 1,915 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 1, 2010, 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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Karen Brenner Age 54 Director since 2009 Term expires in 2010 | Ms. Brenner has been a Clinical Professor of Business at the Leonard N. Stern School of Business at New York University, where she teaches professional responsibility in law and business in the interdepartmental markets, ethics, and law program, since 2008. Ms. Brenner also has been a principal at Brenner & Company, a financial management and advisory firm she founded, since 1998. Ms. Brenner’s qualifications to serve on the Alleghany Board also include her years of business experience as a Chief Executive Officer and/or board member of public and private companies in a wide variety of industries, and as an advisor to private equity firms, venture capital companies, boards of directors and chief executive officers focusing on enhancing value of operating companies, and her experience in corporate governance and management issues. |
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Thomas S. Johnson Age 69 Director since 1997 and for1992-1993 Member of the Executive Committee Member of the Nominating and Governance Committee Term expires in 2010 | Mr. Johnson was Chairman and Chief Executive Officer of GreenPoint Financial Corporation and its subsidiary GreenPoint Bank from 1993 until his retirement on December 31, 2004. In addition, Mr. Johnson currently serves as a director of R.R. Donnelly & Sons Company and The Phoenix Companies, Inc. and served as a director of the Federal Home Loan Mortgage Corporation and Lower Manhattan Development Corporation during the past five years. Mr. Johnson’s qualifications to serve on the Alleghany Board also include his over 30 years of experience as a financial services industry executive, particularly as Chairman and Chief Executive Officer of GreenPoint Financial Corporation, his experience as a director on the boards of directors of other companies, and his financial literacy. |
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Phillip M. Martineau Age 62 Director since 2009 Term expires in 2010 | Mr. Martineau has been Chairman, President and Chief Executive Officer of Pittsburgh Corning Corporation and Pittsburgh Corning Europe, building materials companies, since June 2005. Prior to that, Mr. Martineau was Chief Executive Officer and a director of High Voltage Engineering Corporation (“High Voltage”), a commercial producer of particle accelerators, from December 2004 until February 2005. The Board of Directors of High Voltage hired Mr. Martineau as Chief Executive Officer to lead High Voltage through a restructuring under Chapter 11 of the U.S. Bankruptcy Code, which resulted in its sale to Siemens in February 2005. Mr. Martineau served as a director of Exide Technologies from May 2004 until August 2006. Mr. Martineau’s qualifications to serve on the Alleghany Board also include his years of executive operational experience with global companies in the materials and manufacturing sectors, particularly his experience as a Chief Executive Officer of such companies, as well as his experience as a director on the boards of directors of other companies. | |||
James F. Will Age 71 Director since 1992 Member of the Compensation Committee Member of the Nominating and Governance Committee Term expires in 2010 | Mr. Will was the President of Saint Vincent College from July 2000 until his retirement in June 2006, at which time he was named Vice Chancellor and President Emeritus of Saint Vincent College. Mr. Will’s qualifications to serve on the Alleghany Board also include his over 20 years of experience as an executive in the steel industry, particularly his tenure as President and Chief Executive Officer of Armco Inc., a steel manufacturing and metals processing company, and his experience as President of Saint Vincent College. |
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Allan P. Kirby, Jr. Age 78 Director since 1963 Chairman of the Executive Committee Term expires in 2010 | Mr. Kirby has been President of Liberty Square, Inc., a family and personal affairs investment management company, since 1960. Mr. Kirby’s qualifications to serve on the Alleghany Board also include his investment management experience, his long tenure as a member of the Alleghany Board, and his experience as a director on the boards of directors of other public and private companies. | |||
Rex D. Adams Age 70 Director since 1999 Chairman of the Nominating and Governance Committee Member of the Audit Committee Term expires in 2011 | Mr. Adams has been a director and Chairman of the Board of Directors of Invesco Ltd., an investment management company, since April 2006, and a director of Invesco Ltd. since 2001. In addition, Mr. Adams has been Dean Emeritus at the Fuqua School of Business at Duke University since December 4, 2004. Mr. Adams’ qualifications to serve on the Alleghany Board also include his business experience, including over 30 years as an executive of Mobil Corporation, his experience as a director on the boards of directors of other companies, particularly companies in the investment management industry, his financial literacy, his experience as the Dean and as a professor at the Fuqua School of Business at Duke University, and his experience in matters of corporate governance. |
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Weston M. Hicks Age 53 Director since 2004 Member of the Executive Committee Term expires in 2011 | Mr. Hicks has been Alleghany’s President and chief executive officer since December 2004. In addition, Mr. Hicks is a director of AllianceBernstein Corporation. Mr. Hicks’ qualifications to serve on the Alleghany Board also include his years of experience as an executive in the insurance and financial services industry, particularly his experience as Alleghany’s President and chief executive officer during the past five years, and his experience as an analyst of property and casualty insurance companies. | |||
Jefferson W. Kirby Age 48 Director since 2006 Term expires in 2011 | Mr. Kirby has been the Managing Member of Broadfield Capital Management, LLC, an investment advisory services company, since July 2003. Mr. Kirby also currently serves as a director of Somerset Hills Bancorp. Mr. Kirby’s qualifications to serve on the Alleghany Board also include his over 20 years of experience in financial services and investment management, including his service as a Vice President of Alleghany from 1994 to June 2003 and as an investment manager. Mr. Allan P. Kirby, Jr., who is retiring from the Board effective as of the 2010 Annual Meeting, is the uncle of Mr. Jefferson W. Kirby. |
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John J. Burns, Jr. Age 78 Director since 1968 Member of the Executive Committee Term expires in 2012 | Mr. Burns has been Chairman of the Board of Alleghany since January 2007. From January 2005 until January 2007, Mr. Burns was Vice Chairman of the Alleghany Board and served as a non-executive employee of Alleghany assisting the President and chief executive officer on investment matters. Mr. Burns’ qualifications to serve on the Alleghany Board also include his business experience, particularly his over 40 years of experience as an Alleghany executive, including 17 years as President and chief operating officer and 12 years as President and chief executive officer. | |||
Dan R. Carmichael Age 65 Director since 1993 Chairman of the Compensation Committee Member of the Audit Committee Term expires in 2012 | �� | Mr. Carmichael was President and Chief Executive Officer of Ohio Casualty Corporation, a property and casualty insurance company, from December 2000 until August 2007 when he retired in connection with Ohio Casualty’s acquisition by Liberty Mutual Group. From August 2007 until October 2008, Mr. Carmichael was a consultant to Liberty Mutual Agency Markets, a property and casualty insurance division of Liberty Mutual Group. Mr. Carmichael is currently Chairman of the Board and a director of Platinum Underwriters Holdings, Ltd. Mr. Carmichael’s qualifications to serve on the Alleghany Board also include his over 30 years of property and casualty business experience, including as Chairman and Chief Executive Officer of Ohio Casualty Corporation; Chief Executive Officer of IVANS, Inc., a property and casualty technology solutions provider; and as a director on the boards of directors of other technology companies in the property and casualty industry, and his financial literacy. |
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William K. Lavin Age 65 Director since 1992 Chairman of the Audit Committee Member of the Compensation Committee Term expires in 2012 | Mr. Lavin has been a financial consultant since October 1994, and currently serves as a director of American Home Food Products, Inc. Mr. Lavin’s qualifications to serve on the Alleghany Board also include his business experience as an executive with public and private companies, his extensive experience with public and financial accounting matters for such companies, and his financial literacy. | |||
Raymond L.M. Wong Age 57 Director since 2006 Member of the Audit Committee Term expires in 2012 | Mr. Wong is currently a Managing Director of Spring Mountain Capital, LP, an investment management company which he joined in June 2007. Prior to that, from July 2002 until June 2007, Mr. Wong was the Managing Member of DeFee Lee Pond Capital LLC, a financial advisory and consulting services company. Mr. Wong’s qualifications to serve on the Alleghany Board also include his business experience, particularly his 25 years as a managing director in the investment banking group of Merrill Lynch & Co., Inc., and his financial literacy. |
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Fees | ||||||||||||||||||||
Earned | Stock | Option | ||||||||||||||||||
or Paid | Awards | Awards | All Other | |||||||||||||||||
Name | in Cash | (1) | (2) | Compensation(3) | Total | |||||||||||||||
Rex D. Adams | $ | 63,000 | $ | 56,343 | $ | 51,027 | — | $ | 170,370 | |||||||||||
Karen Brenner(4) | $ | 1,250 | — | — | — | $ | 1,250 | |||||||||||||
John J. Burns, Jr. | $ | 400,000 | $ | 56,343 | $ | 51,027 | $ | 25,776 | $ | 533,146 | ||||||||||
Dan R. Carmichael | $ | 68,000 | $ | 56,343 | $ | 51,027 | — | $ | 175,370 | |||||||||||
Thomas S. Johnson | $ | 52,500 | $ | 56,343 | $ | 51,027 | — | $ | 159,870 | |||||||||||
Allan P. Kirby, Jr. | $ | 63,000 | $ | 56,343 | $ | 51,027 | — | $ | 170,370 | |||||||||||
Jefferson W. Kirby | $ | 38,000 | $ | 56,343 | $ | 51,027 | — | $ | 145,370 | |||||||||||
William K. Lavin | $ | 78,000 | $ | 56,343 | $ | 51,027 | — | $ | 185,370 | |||||||||||
Phillip M. Martineau(4) | $ | 1,250 | — | — | — | $ | 1,250 | |||||||||||||
James F. Will | $ | 55,000 | $ | 56,343 | $ | 51,027 | — | $ | 162,370 | |||||||||||
Raymond L.M. Wong | $ | 52,000 | $ | 56,343 | $ | 51,027 | — | $ | 159,370 |
(1) | Represents the grant date fair value of the award of 250 shares of restricted stock or 250 restricted stock units (each equivalent to one share of common stock) made to each non-employee director under the 2005 Directors’ Plan on April 27, 2009, and computed in accordance with FASB Accounting Standards Codification Topic 718, or “ASC 718.” The amount of shares or units held at December 31, 2009 by each director under outstanding stock awards was as follows: 765 by each of Messrs. Adams, Burns, Carmichael, Johnson, Allan P. Kirby, Jr., Jefferson W. Kirby, Lavin, Will and Wong and no shares or units by either Ms. Brenner or Mr. Martineau. |
(2) | Represents the grant date fair value dollar amount of a stock option for 500 shares of common stock made to each non-employee director under the 2005 Directors’ Plan on April 27, 2009, and computed in accordance with ASC 718. The amount of outstanding options held at December 31, 2009 by each director pursuant to outstanding stock options |
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was as follows: 8,347 for each of Messrs. Adams, Johnson, Allan P. Kirby, Jr., Lavin and Will; 7,152 for Mr. Carmichael; 2,060 for each of Messrs. Jefferson W. Kirby and Wong; 1,530 for Mr. Burns; and no options for either Ms. Brenner or Mr. Martineau. | ||
(3) | Reflects a payment of $15,543, 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 $10,233, representing the reimbursement of taxes, and the reimbursement itself, on income imputed to Mr. Burns pursuant to such life insurance program. | |
(4) | Amount reflects the pro rata portion of the annual retainer earned by Ms. Brenner and Mr. Martineau, who were elected to the Board effective December 16, 2009, with respect to their 2009 Board service. |
• | a stock option to purchase 500 shares of common stock, subject to anti-dilution adjustments, at an exercise price equal to the fair market value on the date of grant; and |
• | at the individual’s election, either (i) 250 shares of restricted common stock or (ii) 250 restricted stock units, each equivalent to one share of common stock, which are subject |
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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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2010 Directors’ | Restricted Common | |||||||
Plan Number of | Stock and/or | |||||||
Shares Subject to | Restricted Stock | |||||||
Participant | Options | Units | ||||||
Non-Employee Director Group(1) | 5,000 | (2) | 2,500 | (3) |
(1) | Consists of ten persons, including the four current non-employee nominees for election as directors (Ms. Brenner and Messrs. Johnson, Martineau and Will) and the six continuing |
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non-employee directors (Messrs. Adams, Burns, Carmichael, Jefferson W. Kirby, Lavin and Wong). | ||
(2) | Each non-employee director would have received an option to purchase 500 shares of Alleghany common stock had the 2010 Directors’ Plan been in effect in 2009. | |
(3) | Each non-employee director would have received a grant of 250 shares of restricted stock or, at his or her election, 250 restricted stock units, had the 2010 Directors’ Plan been in effect in 2009. |
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Independent Registered Public Accounting Firm for the year 2010
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2009 | 2008 | |||||||
Audit Fees | $ | 2,449,101 | $ | 2,653,717 | ||||
Audit-Related Fees | 7,400 | 11,100 | ||||||
Tax Fees | — | — | ||||||
All Other Fees | 1,500 | 1,500 | ||||||
Total | $ | 2,458,001 | $ | 2,666,317 |
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Rex D. Adams
Dan R. Carmichael
Raymond L.M. Wong
of the Board of Directors
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2010 Annual Meeting
(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) | 159,849 | (2) | $ | 217.48 | (3) | 152,271 | (4) | |||||
Equity compensation plans not approved by security holders(5) | 2,390 | $ | 146.51 | — | ||||||||
Total | 162,239 | 152,271 | ||||||||||
(1) | These equity compensation plans consist of (i) the 2000 Directors’ Plan, (ii) the 2005 Directors’ Plan, (iii) the 2002 LTIP and (iv) the 2007 LTIP. Prior to its expiration on December 31, 2004, the 2000 Directors’ Plan provided for the annual grant of an option to purchase 1,000 shares of common stock (subject to anti-dilution adjustments) to each director who was not an employee of Alleghany or any of its subsidiaries. |
(2) | This amount includes (i) 33,279 outstanding director stock options issued under the 2000 Directors’ Plan, (ii) 21,795 outstanding director stock options issued under the 2005 Directors’ Plan, (iii) 4,841 outstanding restricted stock units issued to directors under the 2005 Directors’ Plan (the “Director Restricted Stock Units”), (iv) 22,523 outstanding restricted stock units awarded to Mr. Hicks under the 2002 LTIP as a matching grant (the “Matching Grant Restricted Stock Units”), (v) 19,242 outstanding performance shares issued under the 2002 LTIP, assuming payouts at maximum and (vi) 58,169 outstanding performance shares issued under the 2007 LTIP, assuming payouts at maximum. Director Restricted Stock Units are paid out in the form of common stock, with one share of common stock being paid for each Director Restricted Stock Unit. Matching Grant |
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Restricted Stock Units are to be paid in cash and/or common stock, at the discretion of the Compensation Committee, with one share of common stock or, if payment is made in cash, the market value of one share of common stock on the payment date, being paid for each Matching Grant Restricted Stock Unit. Performance shares outstanding under the 2002 LTIP and the 2007 LTIP are paid, at the end of a four-year award period, in a maximum amount equal to one and one-half shares of common stock for each performance share, depending upon the level of performance achieved. Payments in respect of performance shares are made based upon the market value of common stock on the payment date. Recipients of performance shares are permitted to elect to receive payment for performance shares in the form of cash and/or common stock, subject to certain limitations. Since there is no exercise price for restricted stock units or for performance shares, they are not taken into account in calculating the weighted-average exercise price in column (b). | ||
(3) | The weighted-average exercise price is based upon the weighted-average exercise price of the outstanding director stock options issued under the 2000 Directors’ Plan and under the 2005 Directors’ Plan. | |
(4) | This amount does not include (i) 577,026 shares of common stock that remained available for issuance under the 2002 LTIP upon its termination on December 31, 2006 or (ii) 27,485 shares of common stock that remained available for issuance under the 2005 Directors’ Stock Plan upon its expiration on December 31, 2009 since no further awards of common stock may be made under either such plan. As of December 31, 2009, no shares of common stock remained available for future option grants under the 2000 Directors’ Plan. |
(5) | Consists of the Subsidiary Directors’ Stock Option Plan, or the “Subsidiary Option Plan.” Under the Subsidiary Option Plan, which was adopted on July 21, 1998, the Compensation Committee selected non-employee directors of Alleghany 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) were to be issued pursuant to options granted under the Subsidiary Option Plan. 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. |
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Business Experience During | ||||||||
Name | Age | Current Position (date elected) | Last 5 Years | |||||
Weston M. Hicks | 53 | President, chief executive officer (since December 2004) | Executive Vice President, Alleghany (from October 2002 to December 2004). | |||||
Roger B. Gorham | 47 | 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). | |||||
Robert M. Hart | 65 | Senior Vice President (since 1994) — Law (since July 2009) and Secretary (since 1995) | Senior Vice President and General Counsel (from 1994 to July 2009), Alleghany and Secretary (since 1995), Alleghany. | |||||
Jerry G. Borrelli | 44 | 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). | |||||
Christopher K. Dalrymple | 42 | Vice President (since December 2004) — General Counsel (since July 2009) and Assistant Secretary (since March 2002) | Vice President (since December 2004) — Associate General Counsel (from March 2002 to July 2009) and Assistant Secretary (since March 2002), Alleghany. |
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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, | |
• | cash incentive compensation under the 2005 MIP, | |
• | 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. |
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• | “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, realized gains and losses on strategic investments and costs of business acquisitions in that year as reflected in our financial statements and adjusted for any stock dividends paid during the year. |
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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 (as defined by the Compensation Committee pursuant to the 2007 LTIP) 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% of the value of one share of common stock on the payout date if such growth equals 5%, payouts at 50% of the value of one share of common stock on the payout date if such growth equals 3.25%, payouts at 30% of the value of one share of common stock on the payout date 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 | 2009 | Retirement | Compensation | Medical | |||||||||||||||||||||||||||||
Agreement | Agreements(2) | (3) | (4) | MIP(5) | Plan(6) | Plan(7) | Plan(8) | Total | ||||||||||||||||||||||||||||
Weston M. Hicks | $ | 1,000,000 | (1) | $ | 3,929,347 | $ | 4,314,551 | $ | 5,282,577 | $ | 1,500,000 | $ | 3,938,730 | $ | 1,034,290 | — | $ | 20,999,495 | ||||||||||||||||||
Roger B. Gorham | — | $ | 538,563 | — | $ | 1,765,388 | $ | 477,000 | $ | 1,971,522 | $ | 410,762 | — | $ | 5,163,235 | |||||||||||||||||||||
Robert M. Hart | — | — | — | $ | 1,834,873 | $ | 495,000 | $ | 3,496,972 | $ | 1,374,765 | $ | 230,603 | $ | 7,432,213 | |||||||||||||||||||||
Jerry G. Borrelli | — | — | — | $ | 545,372 | $ | 210,000 | — | $ | 201,915 | — | $ | 957,287 | |||||||||||||||||||||||
Christopher K. Dalrymple | — | — | — | $ | 450,217 | $ | 180,000 | $ | 967,552 | $ | 298,760 | — | $ | 1,896,529 |
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(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, 2009. The terms of these agreements are described on pages 65 and 66. |
(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 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, 2009. The terms of this restricted stock unit matching agreement are described on page 64. |
(4) | Reflects payment of all outstanding LTIP awards, including amounts paid in February 2010 for the award period ending December 31, 2009, 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 annual incentive earned in respect of 2009 under the 2005 MIP. These amounts, earned in respect of 2009 performance, were paid to the Named Executive Officers in February 2010 as reported in the Summary Compensation Table on page 60 and as described on pages 49 and 50. |
(6) | Reflects payment of vested pension benefits, computed as of December 31, 2009, under the Retirement Plan to Messrs. Hicks, Gorham, Hart and Dalrymple. Mr. Borrelli was not vested in the Retirement Plan as of December 31, 2009. The determination of these pension benefits is described in more detail on pages 70 through 72. This amount does not include retiree life insurance death benefit, equal to the highest annual salary of a participant prior to the date of retirement, payable to Messrs. Hicks, Gorham, Hart and Dalrymple. Mr. Borrelli was not vested in such retiree life insurance death benefit as of December 31, 2009. |
(7) | Reflects the aggregate vested account balance at December 31, 2009 of each Named Executive Officer’s savings benefit (consisting of Alleghany contributions and interest earned thereon) under the Deferred Compensation Plan. |
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(8) | Reflects accumulated accrued benefit under our Post-Retirement Medical Plan for Mr. Hart. Messrs. Hicks, Gorham, Borrelli and Dalrymple 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. |
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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, | 2009 | $ | 1,000,000 | — | $ | 2,435,860 | $ | 1,500,000 | $ | 1,065,643 | $ | 204,501 | $ | 6,206.004 | ||||||||||||||||||
President and CEO | 2008 | $ | 1,000,000 | $ | 1,275,000 | $ | 2,369,145 | — | $ | 1,594,268 | $ | 196,197 | $ | 6,434,610 | ||||||||||||||||||
2007 | $ | 1,000,000 | — | $ | 2,668,401 | $ | 1,500,000 | $ | 1,160,447 | $ | 192,875 | $ | 6,521,723 | |||||||||||||||||||
Roger B. Gorham, | 2009 | $ | 530,000 | — | $ | 774,514 | $ | 477,000 | $ | 316,023 | $ | 111,589 | $ | 2,209,126 | ||||||||||||||||||
Senior Vice President- | 2008 | $ | 530,000 | $ | 453,150 | $ | 753,205 | — | $ | 295,471 | $ | 106,955 | $ | 2,138,781 | ||||||||||||||||||
Finance and Investments | 2007 | $ | 510,000 | — | $ | 816,558 | $ | 459,000 | $ | 194,684 | $ | 101,585 | $ | 2,081,827 | ||||||||||||||||||
and CFO | ||||||||||||||||||||||||||||||||
Robert M. Hart, | 2009 | $ | 550,000 | — | $ | 803,799 | $ | 495,000 | $ | 197,927 | $ | 130,288 | $ | 2,177,014 | ||||||||||||||||||
Senior Vice President — | 2008 | $ | 550,000 | $ | 445,500 | $ | 781,673 | — | $ | 1,411,366 | $ | 123,405 | $ | 3,311,944 | ||||||||||||||||||
Law and Secretary | 2007 | $ | 530,000 | — | $ | 848,264 | $ | 477,000 | $ | 880,724 | $ | 127,997 | $ | 2,863,985 | ||||||||||||||||||
Jerry G. Borrelli, | 2009 | $ | 350,000 | — | $ | 255,645 | $ | 210,000 | $ | 122,570 | $ | 78,241 | $ | 1,016,456 | ||||||||||||||||||
Vice President and CAO | 2008 | $ | 340,000 | $ | 193,800 | $ | 241,740 | — | $ | 118,964 | $ | 73,004 | $ | 967,508 | ||||||||||||||||||
2007 | $ | 320,000 | — | $ | 255,950 | $ | 192,000 | $ | 86,051 | $ | 67,822 | $ | 921,823 | |||||||||||||||||||
Christopher K. Dalrymple | 2009 | $ | 300,000 | — | $ | 219,124 | $ | 180,000 | $ | 118,582 | $ | 68,806 | $ | 886,512 | ||||||||||||||||||
Vice President and | 2008 | $ | 280,000 | $ | 168,000 | $ | 198,796 | — | $ | 161,463 | $ | 62,007 | $ | 870,266 | ||||||||||||||||||
General Counsel | 2007 | $ | 260,000 | — | $ | 207,701 | $ | 156,000 | $ | 98,764 | $ | 57,103 | $ | 779,568 |
(1) | Reflects cash bonuses paid to Named Executive Officers as described on pages 50 and 51. |
(2) | Represents the grant date fair value of performance shares granted to the Named Executive Officers under the 2002 LTIP and 2007 LITP, and computed in accordance with ASC 718. The grant date fair value of such performance shares, assuming payouts at maximum, is as follows: |
Name | 2009 | 2008 | 2007 | |||||||||
Mr. Hicks | $ | 2,841,869 | $ | 2,764,034 | $ | 3,113,170 | ||||||
Mr. Gorham | $ | 903,610 | $ | 878,749 | $ | 952,661 | ||||||
Mr. Hart | $ | 937,776 | $ | 911,962 | $ | 989,652 | ||||||
Mr. Borrelli | $ | 298,256 | $ | 282,033 | $ | 298,611 | ||||||
Mr. Dalrymple | $ | 255,648 | $ | 231,931 | $ | 242,320 |
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(3) | Represents cash incentive earned in respect of 2009 and 2007 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 2009, 2008 and 2007. 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) | All Other Compensation Amounts reflect the following items: |
Life Insurance and | ||||||||||||||||||||||||
Post-Retirement | Long Term- | Tax | ||||||||||||||||||||||
Name | Year | Medical Plan(a) | Disability(b) | Reimbursement(c) | Savings Benefit(d) | Total | ||||||||||||||||||
Weston M. Hicks | 2009 | $ | 37,488 | $ | 9,820 | $ | 7,193 | $ | 150,000 | $ | 204,501 | |||||||||||||
2008 | $ | 30,257 | $ | 9,420 | $ | 6,520 | $ | 150,000 | $ | 196,197 | ||||||||||||||
2007 | $ | 28,462 | $ | 9,060 | $ | 6,603 | $ | 148,750 | $ | 192,875 | ||||||||||||||
Roger B. Gorham | 2009 | $ | 21,598 | $ | 6,055 | $ | 4,436 | $ | 79,500 | $ | 111,589 | |||||||||||||
2008 | $ | 17,549 | $ | 5,928 | $ | 4,103 | $ | 79,375 | $ | 106,955 | ||||||||||||||
2007 | $ | 15,263 | $ | 5,754 | $ | 4,193 | $ | 76,375 | $ | 101,585 | ||||||||||||||
Robert M. Hart | 2009 | $ | 22,566 | $ | 14,558 | $ | 10,664 | $ | 82,500 | $ | 130,288 | |||||||||||||
2008 | $ | 18,406 | $ | 13,370 | $ | 9,254 | $ | 82,375 | $ | 123,405 | ||||||||||||||
2007 | $ | 27,981 | $ | 12,012 | $ | 8,754 | $ | 79,250 | $ | 127,997 | ||||||||||||||
Jerry G. Borrelli | 2009 | $ | 16,836 | $ | 5,140 | $ | 3,765 | $ | 52,500 | $ | 78,241 | |||||||||||||
2008 | $ | 13,624 | $ | 5,026 | $ | 3,479 | $ | 50,875 | $ | 73,004 | ||||||||||||||
2007 | $ | 11,533 | $ | 4,903 | $ | 3,573 | $ | 47,813 | $ | 67,822 | ||||||||||||||
Christopher K. Dalrymple | 2009 | $ | 15,532 | $ | 4,848 | $ | 3,551 | $ | 44,875 | $ | 68,806 | |||||||||||||
2008 | $ | 12,533 | $ | 4,491 | $ | 3,108 | $ | 41,875 | $ | 62,007 | ||||||||||||||
2007 | $ | 11,109 | $ | 4,118 | $ | 3,001 | $ | 38,875 | $ | 57,103 |
(a) | Amounts represent the change in Post-Retirement Medical Plan benefit value during each of the years presented. | |
(b) | 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 in each of the years presented. 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. | |
(c) | 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 in each of the years presented. |
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(d) | Reflects savings benefits amounts credited by Alleghany pursuant to the Deferred Compensation Plan in each of the years presented. The method for calculating earnings on the savings benefit amounts under the Deferred Compensation Plan is set out on pages 72 through 74 in the narrative accompanying the Nonqualified Deferred Compensation table. |
All Other | ||||||||||||||||||||||||||||||||||||
Stock | ||||||||||||||||||||||||||||||||||||
Estimated Future 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 | January 19, 2009 | 800,000 | 1,000,000 | 1,500,000 | 2,163 | 7,211 | 10,817 | — | $ | 2,841,869 | ||||||||||||||||||||||||||
Roger B. Gorham | January 19, 2009 | 254,400 | 318,000 | 477,000 | 688 | 2,293 | 3,439 | — | $ | 903,610 | ||||||||||||||||||||||||||
Robert M. Hart | January 19, 2009 | 264,000 | 330,000 | 495,000 | 714 | 2,380 | 3,569 | — | $ | 937,776 | ||||||||||||||||||||||||||
Jerry G. Borrelli | January 19, 2009 | 112,000 | 140,000 | 210,000 | 227 | 757 | 1,135 | — | $ | 298,256 | ||||||||||||||||||||||||||
Christopher K. Dalrymple | January 19, 2009 | 96,000 | 120,000 | 180,000 | 195 | 649 | 973 | — | $ | 255,648 |
(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 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. | |
(2) | Reflects gross number of shares of common stock payable in connection with awards of performance shares for the2009-2012 award period granted under the 2007 LTIP. Threshold amounts reflect estimated future payout of performance shares if average annual compound growth in Book Value Per Share equals 2.5% in the award period; target amounts reflect estimated future payout of performance shares if average annual compound growth in Book Value Per Share equals 5% in the 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 7.5% in the award period (each as adjusted as described above). If average annual compound growth in Book Value Per Share is less than 2.5%, none of these performance shares would be payable. | |
(3) | Reflects 2009 ASC 718 value of performance share awards for the2009-2012 award period under the 2007 LTIP, as adjusted for dividends, assuming payouts at maximum. |
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and Grants of Plan-Based Awards Table
• | 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. | |
• | 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. |
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• | Mr. Hicks received a second grant of 28,717 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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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 | — | — | 9,053 | (1) | $ | 2,498,527 | ||||||||||
— | — | 9,244 | (2) | $ | 2,551,248 | |||||||||||
— | — | 7,663 | (3) | $ | 2,114,863 | |||||||||||
— | — | 10,817 | (4) | $ | 2,985,520 | |||||||||||
— | — | 28,717 | (5) | $ | 7,425,892 | |||||||||||
22,523 | (6) | $ | 6,216,348 | |||||||||||||
Roger B. Gorham | — | — | 3,327 | (1) | $ | 918,219 | ||||||||||
— | — | 2,829 | (2) | $ | 780,707 | |||||||||||
— | — | 2,436 | (3) | $ | 672,363 | |||||||||||
— | — | 3,439 | (4) | $ | 949,285 | |||||||||||
— | — | 3,936 | (7) | $ | 1,086,336 | |||||||||||
Robert M. Hart | — | — | 3,462 | (1) | $ | 955,566 | ||||||||||
— | — | 2,938 | (2) | $ | 811,022 | |||||||||||
— | — | 2,528 | (3) | $ | 697,775 | |||||||||||
— | — | 3,569 | (4) | $ | 985,179 | |||||||||||
Jerry G. Borrelli | — | — | 985 | (1) | $ | 271,952 | ||||||||||
— | — | 887 | (2) | $ | 244,712 | |||||||||||
— | — | 782 | (3) | $ | 215,794 | |||||||||||
— | — | 1,135 | (4) | $ | 313,332 | |||||||||||
Christopher K. Dalrymple | — | — | 815 | (1) | $ | 224,943 | ||||||||||
— | — | 719 | (2) | $ | 198,582 | |||||||||||
— | — | 643 | (3) | $ | 177,459 | |||||||||||
— | — | 973 | (4) | $ | 268,570 |
(1) | Performance shares granted under the 2002 LTIP, calculated at maximum payout pursuant to SEC requirements, which vest after completion of the award period ending December 31, 2009. | |
(2) | Performance shares granted 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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(3) | Performance shares granted under the 2002 LTIP, calculated at maximum payout pursuant to SEC requirements, which vest after completion of the award period ending December 31, 2011. | |
(4) | Performance shares granted under the 2007 LTIP, calculated at maximum payout pursuant to SEC requirements, which vest after completion of the award period ending December 31, 2012. | |
(5) | Restricted stock award granted 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, 2009. 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 28,717 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 granted under the 2002 LTIP vest on October 7, 2012. As further described on page 64, 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 granted 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, 2009. 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 |
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respects except for the passage of the period of time required under the new award agreement, that number of restricted shares equal to 3,936 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 | 4,902.00 | $ | 1,287,927 | |||||
Roger B. Gorham | 1,879.00 | $ | 493,679 | |||||
Robert M. Hart | 2,640.00 | $ | 693,620 | |||||
Jerry G. Borrelli | 454.00 | $ | 119,282 | |||||
Christopher K. Dalrymple | 829.00 | $ | 217,807 |
(1) | Reflects the gross amount of performance shares which vested upon certification of performance by the Compensation Committee on February 26, 2009 with respect to the award period ending December 31, 2008. Payouts of such performance shares were made at 107% of target. 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 | 2,779 | $ | 557,786 | |||||
Roger B. Gorham | 1,253 | $ | 164,472 | |||||
Robert M. Hart | 1,707 | $ | 245,132 | |||||
Jerry G. Borrelli | 302 | $ | 39,936 | |||||
Christopher K. Dalrymple | 552 | $ | 72,778 |
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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 | 7 | $ | 5,667,860 | — | |||||||||
Roger B. Gorham | Alleghany Corporation Retirement Plan | 5 | $ | 1,110,218 | — | |||||||||
Robert M. Hart | Alleghany Corporation Retirement Plan | 20 | (2) | $ | 3,496,972 | (3) | — | |||||||
Jerry G. Borrelli | Alleghany Corporation Retirement Plan | 4 | $ | 391,775 | — | |||||||||
Christopher K. Dalrymple | Alleghany Corporation Retirement Plan | 8 | $ | 591,805 | — |
(1) | Reflects the estimated present value of the retirement benefit accumulated under the Retirement Plan as of December 31, 2009 (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, 2009 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; $514,500 for Mr. Borrelli and $427,167 for Mr. Dalrymple. 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. Maximum benefits under the Retirement Plan are attained upon 15 years of credited service. | |
(3) | The present value of Mr. Hart’s accumulated benefit was reduced by $6,808,644, 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 | $ | 29,648 | $ | (2,175 | ) | $ | 1,034,290 | ||||||||||
Roger B. Gorham | — | $ | 79,500 | $ | 11,388 | $ | (1,152 | ) | $ | 410,762 | ||||||||||
Robert M. Hart | — | $ | 82,500 | $ | 41,662 | $ | (1,196 | ) | $ | 1,374,765 | ||||||||||
Jerry G. Borrelli | $ | 368,530 | $ | 52,500 | $ | 5,338 | $ | (761 | ) | $ | 1,115,345 | (4) | ||||||||
Christopher K. Dalrymple | — | $ | 44,875 | $ | 8,533 | $ | (652 | ) | $ | 298,760 |
(1) | Such amounts are included as a component of “All Other Compensation” for 2009 set forth in the Summary Compensation Table on page 60 and discussed in Note (5) to the Summary Compensation Table. |
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(2) | Amounts represent interest earned on amounts credited to savings benefit accounts during 2009. Such amounts are not included in the Summary Compensation Table on page 60 as these amounts are not considered to be above-market interest. |
(3) | Represents distribution for tax purposes. | |
(4) | Of this amount, $913,430 consists of compensation earned by Mr. Borrelli that he elected to defer and $201,915 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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ATTN: ROBERT M. HART
7 TIMES SQUARE TOWER - 17TH FLOOR
NEW YORK, NY 10036
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: | ||||
M20045-P89630 | KEEP THIS PORTION FOR YOUR RECORDS | |||
DETACH AND RETURN THIS PORTION ONLY |
ALLEGHANY CORPORATION | ||||||||||||||||||||
Vote on Directors | Vote on Proposals | |||||||||||||||||||
1. Election of Directors - The Board of Directors recommends a voteFOR the listed nominees. | For | Against | Abstain | 2. Approval of 2010 Directors’ Stock Plan – The Board of Directors recommends a vote FOR the following proposal. | ||||||||||||||||
For | Against | Abstain | ||||||||||||||||||
1a. | Karen Brenner | o | o | o | Proposal to approve the 2010 Directors’ Stock Plan of Alleghany Corporation. | o | o | o | ||||||||||||
1b. | Thomas S. Johnson | o | o | o | 3. Approval of 2010 Management Incentive Plan – The Board of Directors recommends a vote FOR the following proposal. | For | Against | Abstain | ||||||||||||
1c. | Phillip M. Martineau | o | o | o | ||||||||||||||||
Proposal to approve the 2010 Management Incentive Plan of Alleghany Corporation. | o | o | o | |||||||||||||||||
1d. | James F. Will | o | o | o | 4. Ratification of Independent Registered Public Accounting Firm – The Board of Directors recommends a voteFOR the following proposal. | For | Against | Abstain | ||||||||||||
THIS PROXY WILL BE VOTED IN ACCORDANCE WITH INSTRUCTIONS GIVEN. IF NO CHOICES ARE INDICATED, THIS PROXY WILL BE VOTED FOR ITEMS 1, 2, 3 AND 4. | Ratification of KPMG LLP as Alleghany Corporation’s independent registered public accounting firm for the year 2010. | o | o | o | ||||||||||||||||
Authorized Signatures – This section must be completed for your instructions to be executed – Date and Sign Below. | ||||||||||||||||||||
Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor, administrator, or other fiduciary, please give full title as such. Joint owners should each sign personally. All holders must sign. If a corporation or partnership, please sign in full corporate or partnership name by authorized officer. |
Signature [PLEASE SIGN WITHIN BOX] | Date | Signature (Joint Owners) | Date |